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World Economic Forum Examines How Blockchain Can Reshape Financial Services

On August 11, 2016, the World Economic Forum (WEF) released a 300-page report entitled “The future of financial infrastructure: An ambitious look at how blockchain can reshape financial services,” exploring how the financial sector “could overcome current-state pain points through distributed ledger technology (DLT).”

The WEF has been one of the most vociferous advocates for the potential of the blockchain technology. Bitcoin Magazine reported that in 2015 the WEF predicted that blockchain technology was one of the 21 changes in technological transformations and that the tipping point for its adoption would be in 2025.

A year later, World Economic Forum repeated that “virtual currencies and their underlying technologies can provide faster and cheaper financial services and can become a powerful tool for deepening financial inclusion in the developing world.”

In this latest report, the WEF concluded that blockchain technology could have impressive ramifications but would need the collaboration of government and technological experts to succeed.

It took a year for the World Economic Forum (WEF) to research how blockchain technology could help nine financial sectors, which included global payment and foreign trading. More than 200 innovators, subject matter experts and executives from prominent institutions, such as JPMorgan Chase, Visa and MasterCard, contributed their opinions. The results was assembled in this latest report. These are some ifs most significant conclusions:

Blockchain helps by being transparent and effective

“Distributed ledger technology (blockchain) has the potential to drive simplicity and efficiency by establishing new financial services infrastructure and processes” (p.19).

The blockchain ledger can be proven enormously useful to banks and financial institutions by providing them with an unprecedented layer of transparency and trust. The operational transparency of DLT will cut down, if not eliminate, the number of disputes, minimize frauds and ensure that obligations and settlements are met. The ledger could also give companies a more secure, effective way of moving money and tracking transactions. Regulators could employ real-time monitoring of transactions, while operations could better source liquidity of assets and move money between accounts.

Blockchain merges with other transformative technologies

“Distributed ledger technology will form the foundation of next generation financial services infrastructure in conjunction with other existing and emerging technologies” (p.20)

Over the last 50 years, a number of emerging technologies have merged to transform the financial services industry of the future. These include biometrics, cloud computing, cognitive computing, quantum analytics, predictive analytics and robotics. Distributed ledger technology is one of these but the WEF cautions that blockchain should be seen as “part of the toolbox” rather than a panacea. Each industry, too, would use DLT in its own ways and for its own means, so for instance, the trading sector will likely use the ledger for real-time tracking and efficacy while payers that deal with global payments will use DLT for, among other reasons, preventing friction.

Blockchain is revolutionary

“Similar to technological advances in the past, new financial services infrastructure will transform and question traditional orthodoxies in today’s business models” (p.24)

Blockchain upends all aspects of the traditional financial services sector from standard accounting habits to lending practices. Blockchain provides its own distributed, transparent record-keeping, leverages real-time trust among market participants and balances the information flow between lenders and borrowers. It also boosts dispute resolution since it provides regulators and regulated entities with a common transparent ledger. Finally, DLT reduces the need for intermediaries because of its shared and trusted environment.

Blockchain needs collaboration to succeed

“The most impactful distributed ledger technology applications will require deep collaboration between incumbents, innovators and regulators, adding complexity and delaying implementation” (p.23)

The World Economic Forum cautions that “updating financial infrastructure through DLT will require significant time and investment.” The three imperatives are: Resolving security issues, aligning competing interests and imposing a legal, regulatory and governance framework. This sounds easier than stated since divergent company interests are involved. If, and once achieved, this would provide DLT with a standardized system and superior efficacy that would boost the financial success of all nine sectors.

Looking ahead

To date, more than 24 countries and 90 corporations use blockchain technology with many more expressing interest. The WEF notes that large banks around the world, including more than 90 central banks, have developed blockchain groups that hail its potential impact and study how to harness its technology. In fact, the report predicted that a full 80% of these banks could launch their own blockchains by 2017. Blockchain technology has “captured the imagination and wallets of the financial services ecosystem” but the WEF concluded that DLT has to resolve critical issues moving forward. These include: How to develop a roadmap to achieve market collaboration and standardized regulation, how to structure a regulated tax framework and how to implement a cost-benefit analysis to determine the financial viability of distributed ledger technology.

Article written by Leah Zitter for the Bitcoin Magazine | Original article: https://bitcoinmagazine….

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Batch 12 and Batch 13 of the Antminer S9

Batch 10 and batch 11 of the Antminer S9 sold out in roughly 10 hours of launch. They were considerably stocked and so we were overwhelmed by the response again.

Unfortunately many Bitmain fans and miners missed their chance to order before the two batches sold out.

So we have good news for everyone: we are going to release two new batches!

Batch 12 and batch 13 can deliver a hashrate of 11.85TH/s and 12.93TH/s, respectively.

They will be available to order after 2300 hours (Beijing time, GMT +8) tomorrow (18 August 2016).

We suggest everybody to confirm their order here (https://goo.gl/w3G2NB) for batch 12 or here (https://goo.gl/jpvZU3) for batch 13 before they sell out.

We wish all a very happy mining experience with Bitmain.

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Mimblewimble: How a Stripped-Down Version of Bitcoin Could Improve Privacy, Fungibility and Scalability All at Once

All (full) Bitcoin nodes verify all transactions on the network. This allows the system to be entirely trustless and decentralized, but also presents significant drawbacks. Privacy and fungibility are at odds, because public transactions allow anyone to trace the flow of bitcoins over the blockchain. Meanwhile, verifying a growing number of transactions adds to the cost of running a node, which could be a centralizing force.

But perhaps these drawbacks can be tackled. Last week, a new white paper was somewhat mysteriously dropped on a Bitcoin research channel, written by the pseudonymous author “Tom Elvis Jedusor” (Voldemort’s real name in the French edition of the Harry Potter novels). His proposal “Mimblewimble” — a reference to a Harry Potter spell — presents a radical slimming-down of the Bitcoin protocol that could not only dramatically increase privacy and fungibility, but also present significantly more scalability than Bitcoin’s current blockchain architecture.

Mimblewimble may just hit two giant birds with one stone. Here’s how.

Hiding Amounts

Mimblewimble is based on some of Bitcoin’s familiar privacy features. One of these is Confidential Transactions, which was mostly developed by Bitcoin Core and Blockstream developer Gregory Maxwell and is currently deployed on Blockstream’s Elements Alpha sidechain.

Confidential Transactions lets senders encrypt the bitcoin amounts in transactions with random strings of numbers called “blinding factors.” This process works because transactions also include information with which (only) receivers can decrypt the amounts. And, by utilizing a cryptographic trick called the Pedersen Commitment, anyone else can still perform math on the encrypted amounts. Specifically, Bitcoin nodes can subtract the encrypted amounts on the sending side of transactions (“inputs”) from the encrypted amounts on the receiving side of transactions (“outputs”). If the two sides cancel out to zero, it means the combined inputs and the combined outputs are equal, and no bitcoins were created out of thin air.

Mimblewimble sort of turns this trick on its head as the receiver of a transaction generates the blinding factor. This is important because as one of the main deviations from the current Bitcoin protocol, this blinding factor is effectively used to prove ownership of the (blinded) bitcoins — private keys are no longer in play at all. (Nor are public keys or addresses.)

Proving ownership of the blinding factor itself revolves around a series of cryptographic tricks that are Mimblewimble’s closest equivalent to Bitcoin’s cryptographic signatures, though the full extent of these tricks is beyond the scope of this article.

It is important to note, however, that part of these mathematical maneuvers includes the introduction of a sort of “dummy output.” Where transaction outputs normally indicate under what conditions the receiver of a transaction may later spend the bitcoins, these dummy outputs are really just random numbers to ensure that only the person who generated the blinding factor can spend the bitcoins in the real outputs.

Combining Transactions

Another familiar Bitcoin trick that inspired Mimblewimble is CoinJoin, first proposed by (again) Maxwell.

CoinJoin allows users to bundle their transactions into one bigger transaction, scrambling all inputs (the “from” part of a transaction), as well as all outputs (the “to” part). This potentially obfuscates which bitcoins were sent from which address to which address, and breaks the assumption that all inputs belong to the same user.

Mimblewimble (and a fix by Blockstream mathematician Andrew Poelstra) takes this concept a bit further and completely gets rid of transactions once a new block is created. Instead of transactions, Mimblewimble blocks mainly consist of three lists: a list of new inputs (referring to old outputs), a list of new outputs and a list of cryptographic signatures created with the aforementioned dummy outputs.

Utilizing the Pedersen Commitment scheme, all nodes can use the input list and the output list, and verify that no bitcoins were created out of thin air. The dummy output signatures, meanwhile, prove that all individual transactions must have been valid. Acting rather like “stamps of approval,” these dummy output signatures only add up mathematically if the whole transaction itself does.

And since it is never revealed which inputs spent bitcoins to which outputs exactly, nor how many bitcoins were actually spent, no trace of funds can be established at all. As such, Mimblewimble presents a tremendous boon for privacy and fungibility.

Scalability

And then there’s the scalability improvement.

Currently, many transactions on the Bitcoin network are linked. Spending a bitcoin really takes an output from a previous transaction and turns it into an input of a new transaction. This means that if an older transaction is invalid, a newer transaction that relies on the older transaction is invalid, too. So to be able to validate all transactions on the Bitcoin network, nodes must know all transactions that ever took place; the entire blockchain. (That’s currently some 80 gigabytes worth.)

But with Mimblewimble there is no longer really such a thing as a transaction history per coin. Each coin does have a specific block in which it was first created. But from then on, its value simply becomes part of the combined Unspent Transaction Output (UTXO) set, which defines all outputs that store coins and could potentially be spent at any time.

This means that in order to verify new transactions, nodes no longer need to care about previous transactions. All they need to care about is that the specific outputs used are valid.

With even more clever math, nodes can establish the validity of outputs relatively easily. They just need the block headers of all blocks (a sort of index of blocks without all transaction data) and the aforementioned dummy output signatures: both relatively compact data-sets. All other transaction data — almost the entire blockchain — can be safely discarded.

The benefit compared to other anonymizing techniques is substantial. If Confidential Transactions and CoinJoin had been used in Bitcoin from day one, nodes would currently require more than a terabyte of data to operate. With Mimblewimble, they would need closer to 120 gigabytes. And perhaps even more interesting: where the blockchain necessarily has to grow over time, the required Mimblewimble dataset does not, and can actually shrink if more bitcoins are stored in fewer outputs.

Compatibility

Now for the bad news. Mimblewimble, in its current form, is not very compatible with the Bitcoin protocol. This is mainly because for Mimblewimble to work, script must be purged from transactions. As such, there would no longer be room for a whole set of Bitcoin features, like time-locked transactions (used for the Lightning Network among other things), atomic swaps (for cross-blockchain interoperability), and more.

But that doesn’t make Mimblewimble useless. Mimblewimble may, for instance, be the perfect fit for a privacy-focused sidechain. Bitcoin users could lock their bitcoins into a specific output on the Bitcoin blockchain and “move” their coins to the Mimblewimble chain. On this sidechain, users could transact freely and privately for as long as they want, until the new owner decides to “move” the funds back to the Bitcoin blockchain by unlocking the original output.

Due to the efficiency offered by Mimblewimble’s sidechain, the added burden of maintaining it would be very manageable. Moreover, it could potentially unload much data from the Bitcoin blockchain, increasing scalability even for those who don’t use Mimblewimble at all. Where sidechains are typically not considered a scaling solution, Mimblewimble offers one.

For a full technical explanation of Mimblewimble, including the mathematical details, see the white paper.

 

Written by  Aaron van Wirdum for the Bitcoin Magazine | Original article: https://bitcoinmagazine.co…

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Releasing Two Limited-edition Batches of the Antminer S9

We have been receiving an increasing number of queries asking about the release of the next batch of the world’s most efficient bitcoin miner the Antminer S9.

We are now happy to inform all fans and bitcoiners that we are releasing two new limited-edition batches of the Antminer S9 tomorrow (16 August 2016) at 2300 hours (Beijing time).

Batch 10 and batch 11 can deliver a hashrate of 11.85TH/s and 12.93TH/s, respectively.

We suggest that those who missed the previous S9 batches or have been waiting for the next batch confirm their order here (https://goo.gl/Iq7zQX) for batch 10 and here (https://goo.gl/OI8r7S) for batch 11 while stock lasts.

The miners will be shipped out within 5 days of order confirmation, on a “first-order-first-ship” basis.

We will also be offering quantity-based discounts on these batches.

Happy mining,

the Bitmain team

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Bitmain has Acquired Blocktrail

 

We are pleased to inform you that Bitmain has acquired Amsterdam-based Blocktrail B.V., the company behind the Blocktrail bitcoin wallet.

In addition to the popular bitcoin wallet, Blocktrail is well known in the bitcoin space for its developers API and its block explorer. As part of the acquisition, Blocktrail’s products, services and team will gradually be merged into BTC.com

With this acquisition, we will continue providing even better products and services to users of Bitmain and all its businesses.

Thank you for your continuous support.

 

Sincerely,

The Bitmain team

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Bitmain Invests in BitKan

Beijing-based mining giant Bitmain has invested $1.6m in bitcoin-focused data and trading services provider BitKan.

Bitmain was the sole investor in the Series A round, which follows an angel round investment from Lanqi Venture Capital Investment last November. Based in Shenzhen, BitKan offers bitcoin data and pricing services, and recently launched an over-the-counter (OTC) bitcoin trading service.

Founded in 2013, BitKan was launched by former employees of China-based IT giant Huawei. The firm offers Google Play and iTunes apps, and the startup hopes to leverage its existing reach to encourage trading on its platform.

The firm said in statements that the investment and the new trading feature represent a formal change in the company’s business strategy, one that positions it more as a competitor to existing peer-to-peer bitcoin trading services.

A spokesperson told CoinDesk:

“The new feature, when leveraging BitKan’s existing user base and news and price charting functionality, holds great potential that has already been demonstrated by services with similar functionality such as LocalBitcoins.”

In addition to manufacturing mining hardware, Bitmain also operates Antpool, the world’s largest bitcoin mining pool at press time with 28% of the network’s hashrate.

The investment finds Bitmain becoming increasingly willing to invest its funds in the wider bitcoin ecosystem, following its participation in a March funding round for smart contract platformRootstock and its February investment in Israeli payments service Simplex.

 

Source: http://www.coindesk.com/bitkan-1-6-million-series-a-bitmain/

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Bitmain Invests in Simplex

The startup is hoping to bring bitcoin purchasing into the mainstream by adding credit card payment options.

Israeli bitcoin payment company Simplex has closed a $7 million Series A financing round with the participation of angel investors and companies in the bitcoin ecosystem, such as Bitmain and Cumberland.

Founded by serial entrepreneur CEO Nimrod Lehavi and two PayPal veterans, Erez Shapira and Netanel Kabala, the company has raised $8.4 million to date, including the most recent financing round. Simplex says it has already processed over $3.5 million in transactions since going live in beta a year ago and now plans a full launch.

The firm is hoping to bring bitcoin purchasing into the mainstream through an API that makes it easy and risk-free for exchanges, brokers and wallets to add a credit card payment option on their checkout pages and process consumer purchases.

Simplex offers an alternative to the most common method of payment for bitcoin purchases – wire transfers to exchanges, which can take up to three days and entail KYC requirements by banks, including providing explanations for purchases as well as copies of IDs.

Lehavi said, “Banks often place additional restrictions on which countries Bitcoin exchange customers can send wire transfers to. For example, it may be difficult for the average US resident to use a wire transfer to buy bitcoins from countries outside of the US like Slovenia, Hong Kong or China. This clearly creates very high friction and makes mainstream adoption of bitcoin far from easy.”

He added, “With Simplex, transactions are convenient, carry less restrictions, and occur almost instantaneously. Bitcoin buyers can use Simplex’s checkout page on Bitcoin exchanges, broker websites, and wallet applications, then proceed with their purchases, as they would on any e-commerce site.”

Published by Globes [online], Israel business news – www.globes-online.com – on February 7, 2016 | Original Article: http://www.globes.co.il/en/article-israeli-bitcoin-payment-co-simplex-raises-7m-1001101223

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