Catalonia Contemplates Creating Digital Currency and E-Residency Program

Certain parts of the world stand to gain a lot from creating their own digital currencies. That is much easier said than done, though, as no country or central bank has successfully done so to this point. Catalonia, a region in Spain fighting for independence, is looking to create its own digital currency. In this respect, the region aims to emulate Estonia's e-residency program. It's an interesting idea, but is it even feasible?

Anyone who hasn't been living under a rock these past two weeks will be aware of the situation in Catalonia. More specifically, there is a major conflict underway between the regional government and Spanish authorities right now. Catalonia wants to become independent of Spain, but the Spanish officials aren't in favor of its independence whatsoever. However, the Catalonia government is putting up a valiant effort to achieve its goal moving forward.

Given the current institutional crisis in the region and the rest of Spain, it is evident something has to give sooner or later. The latest venture by the Catalonia government revolves around creating its own version of Estonia's e-residency program. That will not be easy by any means, although the precedent is certainly in place to make it become a reality sooner or later. Attracting entrepreneurs to help create an independent economy will benefit the region and help solidify its independence as well.

Dani Marco, the director of SmartCatalonia, has traveled to Estonia on multiple occasions to see firsthand how its initiative works. Meeting with technology experts has been one of the team's top priorities in creating a digital residency solution. In Estonia, the e-residency program has attracted over 20,000 entrepreneurs from over 140 countries already. Whether or not Catalonia can boast similar success in the end remains to be determined.

Moreover, there is growing talk of introducing a national digital currency in Catalonia as well. Considering that this part of Spain aims to become independent, that isn't surprising in the slightest. It seems there are quite a few entrepreneurs working on virtual currencies throughout Spain already. In a way, it's the perfect ecosystem in which to develop a national digital currency for a region attempting to become completely autonomous.

So far, it appears people close to the matter have already reached out to Vitalik Buterin in regards to the creation of a blockchain-based system to support this new currency. It is very likely we will see an ICO of some sort, although most of the details remain shrouded in mystery for the time being. There are quite a few benefits to this project, assuming it's actually feasible in the first place.

As of right now, there is no official timeline or roadmap associated with this venture. It is not even a full-fledged plan of action either, although the option is seriously being considered as we speak. Only time will tell whether or not Catalonia gets its own digital currency in the future. If there ever was a reason to pursue such an option, Catalonia's independence would certainly fit the bill.

Trump’s Attorney General Jeff Sessions: ”Bitcoin is a big problem”

President Donald Trump's Attorney General, Jeff Sessions, testified before the Senate Committee on the Judiciary. The committee is given rather broad powers concerning federal criminal law and internet privacy. During a quick exchange, hours into the hearing, Mr. Sessions was asked about the "dark web." His answers might foreshadow what's ahead for digital privacy and bitcoin users.

At three hours, forty three minutes and thirty seconds into his testimony, ranking member Mrs. Dianne Feinstein, Democrat from California, announced her line of questioning would focus on "the dark web."

Citing a New York Times article, "Opioid Dealers Embrace the Dark Web to Send Deadly Drugs by Mail," by Nathaniel Popper, Senator Feinstein began, "it seems to me, the dark web, being used by criminals, is going to grow in the coming years."

The "dark web" refers to a tucked-away part of the "deep web," which is purposely aloof from mainstream search engines. Authorizations, special software, are often required. If such is considered "dark," then regular internet usage is known as clearnet. 

The phrase strikes deep fear among government officials. Mrs. Feinstein in her questioning was sure to harden the 'b' when pronouncing "dark web," adding a sense of seriousness.

"If you have any plans to address it," she continued, "or would you begin to think about it so that we might have some conversations on this, because I think there's a lot of concern out there in law enforcement communities," the Senator emphasized.

Holding both his hands together, Attorney General Sessions sat fully upright and announced he "would be pleased to do so."

"We are very concerned about that," he elaborated. "The FBI's very concerned about that. They did take down, I think, the two biggest, dark web sites. This last one, Alphabay, we took down recently. They had 240,000 sites where individuals were selling, for the most part, illegal substances or guns on that site, including Fentanyl. And, they use bitcoins and other untraceable financial capabilities, and it is a big problem," he nodded.

"Thank you," Mrs. Feinstein returned a nod, "I'd like to work with you on it, and if it requires legislation in particular. So, thank you very much. I'm going to quit while I am ahead."

Looking for a Way In

More than a few histories of Bitcoin credit darker markets for moving drug traffic off streets, and onto safer environments, limiting potential violence. They're also central, according to theorists, to advancing the idea that bitcoin could be a viable currency in its earliest days.

The History and Evolution of Proof of Stake

Proof of Stake (PoS) was first introduced in a paper by Sunny King and Scott Nadal in 2012 and intended to solve the problem of Bitcoin mining's high energy consumption. At that time, it cost an average of $150,000 a day to maintain the Bitcoin network. Today, this figure is at a staggering $6.7 million (if we assume a $0.12/watt cost and multiply that with the estimated 56,209,833 KWh of electricity that the Bitcoin network consumed on Oct. 13, 2017).

Rather than relying on the energy-dependent work of miners to add blocks, Sunny and Scott suggested an alternative method called "staking" where a deterministic algorithm would choose nodes based on the number of coins an individual had. In other words, stakers would have more chances of being selected to add a block to the chain and reap the reward if they "staked" more coins in their wallet.  They hoped this would avoid the ever increasing energy costs and hashrate difficulty of mining. However, their new consensus mechanism was not without its own issues.  

Four Issues With PoS

There are four main challenges in designing a Proof of Stake system:

Distribution. Since block rewards go to stakers, how do you distribute coins initially?

Monopolization. Those with a significant amount of coins reap a majority of all future coins.

51% attack. Just like how Proof of Work (PoW) has to be wary of a 51% attack from a miner, so too does PoS have to be wary of a staker who has a 51% stake weight.

Nothing at Stake (NoS). PoS adds a block when a node meets a set of conditions which includes stake weight. However, the coin forks when two nodes meet these conditions at the same time. The fork is then resolved by other nodes signing one of the two transactions. The hypothetical problem of NoS arises when 99% of all nodes sign both chains because there is no cost (nothing at stake) to verify these transactions. Therefore a 1% staker could potentially "double spend" by paying with coins on one chain but then verifying the other.

In light of this, the evolution of PoS can be understood by each coin attempting to solve these issues in their own way.  We will now look at Peercoin.

Peercoin PPC

Sunny King created Peercoin (PPC) in 2013 to become the first cryptocurrency to implement Proof of Stake while still keeping Proof of Work (PoW). It addressed the 4 issues of PoS in the following ways:

Distribution. Peercoin uses a PoW-based decreasing distribution. In the beginning, PoW was heavily emphasized for PPC's initial distribution phase but has since then been decreasing.  

Monopolization. Coin age was implemented to prevent coin-rich stakers from dominating the rewards.

51% attacks. PPC's chain is completely secured by PoS even though it is a hybrid. Attacks are highly unlikely because it is incredibly expensive to perform an attack. The attacker must effectively purchase or bribe 51% of the staked coins in order to perform this action. Any attack would significantly devalue the coin and cost the attackers a great deal.

Nothing at Stake. PPC developers don't believe this would happen. However, Sunny implemented optional "checkpoints" at first in case there was a successful attack.  Now that the PPC's network has matured, checkpoints are in the process of being phased out.

Blackcoin BLK

This next phase of PoS history is called considered a pure proof of stake protocol without any mining and was first implemented by NXT on November 24, 2013. However, let's consider another coin, Blackcoin, that was also a pure proof of stake that was released shortly thereafter as it has a simpler protocol and had a fairer initial distribution phase.

Blackcoin was created by Pavel Vasin (a.k.a. Rat4) and was released in February 2014.  When Rat4 decided to create BLK, he set out to remove coin age and PoW.  He believed coin age would increase the chance of a 51% stake attack as older aged coins would need less than 51% of staking coins to cause a fork. He also believed that coin age disincentivized users from staking consistently. Rather, stakers were incentivized to remain offline for 90 days to maximize their chances of getting a stake thereby making the network less secure. Rat4's implementation of PoS v.2 protocol addresses the four issues of PoS in the following ways:

Distribution. BLK went through a temporary Proof of Work phase with no pre-mine to ensure fair distribution.

Monopolization. This was addressed via a fair distribution period.

51% attacks. It is incredibly expensive to buy enough coins in order to perform this attack.  Also, the coin would lose significant value.

Nothing at Stake. BLK dev's also believed this was not a threat. However, BLK included checkpoints to protect against hard forks.  Checkpoints will be removed in PoS 3.

Ether ETH

Since Blackcoin, there have been several iterations of the PoS protocol. For example, Bitshares was the first to implement Delegated Proof of Stake.  But the newest iteration of PoS is Ethereum's (ETH) attempt at PoS.  The motivation for ETH to switch is primarily a desire to move towards a more eco-friendly and decentralized system.  If the Ethereum Virtual Machine is truly to be adopted world-wide, Bitcoin's current $6.7 million daily electricity cost would quickly be surpassed.

Ethereum's PoS system will implement a Byzantine Fault Tolerance (BFT)-style PoS. Validators will be randomly assigned block rewards, however consensus is formed through a multi-round process where every validator votes for a chain. Ethereum is NOT utilizing Proof of Stake at the moment and there have been some doubts as to whether or not it will actually be implemented. With that being said, here's how Ethereum hopes to solve the four ssues involved with PoS:

Distribution. ETH has already been distributed with approximately 70% sold in it's ICO in 2014 representing 70% of total of Ether in circulation. Eleven million was given to the Ethereum Foundation and continues its distribution via PoW.

Monopolization. ETH has already been distributed.  Another way ETH hopes to solve this issue is by locking coins in a smart contract in order to stake. Therefore, staking comes at the cost of liquidity.

51% attacks. As mentioned above, it is incredibly costly to buy or bribe nodes to participate in a 51% attack. Should an attack happen, Michael Gubik proposes utilizing social/business/exchange forums to select one of the forked chains in his Proof of Stake FAQ on Ethereum's github.

Nothing at Stake. Validators will be disincentivized from signing orphaned blockchains as they will be punished.

Conclusion

There have been many fully functional and secure iterations of PoS over the history of cryptocurrency from the Hybrid PoS-PoW to pure PoS to Delegated PoS.  The BFT-style PoS is the newest attempt to address the four main issues surrounding the protocol initially proposed by Sunny and Mark. Each coin reflects a different approach and each has its own strengths and weaknesses. However, the move to PoS reflects a larger philosophical move in the world of cryptocurrency towards a more eco-friendly and decentralized system.

Meet the New Bitcoin Cash P2P Exchange Localbitcoincash.org

Meet the New Bitcoin Cash P2P Exchange Localbitcoincash.org

On October 14 a new bitcoin cash exchange was launched called, Localbitcoincash.org, a platform that enables people to trade the decentralized currency in a peer-to-peer fashion.

Localbitcoincash.org Launches Beta Platform

Meet the New Bitcoin Cash P2P Exchange Localbitcoincash.orgThis week the beta version of Localbitcoincash.org (LBC) was released after bitcoin cash (BCH) fans were teased with screenshots of the platform two weeks ago. The developer of the site states that the platform is in its very early stages and the team plans to improve the marketplace over time. Further, the LBC developer says he tried to contact the team from Localbitcoins so they could offer assistance with forking the code but received no reply. "We have decided to take matters into our own hands," explains the LBC developer.

"We aim to keep transactions free, including escrows and bank transfers, to encourage more people to use Bitcoin Cash," explains the LBC website announcement. "However, currently all expenses came from the founder's savings so to ensure the site sustainability, we will be charging optional fees."

As long as we can pay the bills, we are happy. We are determined as hell to make bitcoin cash become a household name.

A Good Thing About Bitcoin Cash is That Transaction Fees Are Less Than a Penny

Additionally, deposits and withdrawals are free as well except for the network transaction (tx) fee. However, the LBC developer says tx fees on the Bitcoin Cash network are typically "less than a penny, depending on your transaction size." The site offers escrow options for trades, bank transfers and local meetups for bitcoin cash exchanges. Currently, a majority of the individuals with trades listed on the platform are choosing the meetup option.

"Please do not deposit anything if you are uncomfortable doing so — Use the meetup option to trade with other users off-site," details the LBC developer emphasizing the platform is still in beta.

Localbitcoincash.org's listings for October 14, 2017.

Further, the website gives step-by-step instructions for trading BCH with escrow, and methods of meeting up locally as well. The website also has a price index covering a variety of the top cryptocurrencies, so users don't need to go to a separate website to find various prices. A trader reputation will be added to the LBC platform in roughly a month, the developer details on Reddit. Moreover, the LBC administrator says they have big plans for the peer-to-peer website stating:         

It has been a wild ride for bitcoin cash owners as the price swings between a low of $200 to a high of $1000 in the two months since bitcoin cash was born. As a founder, I would like to share that we have extremely ambitious plans for bitcoin cash over the next 12 months.

What do you think about the new Localbitcoincash.org platform? Let us know your thoughts in the comments below.

Disclaimer: Bitcoin.com does not endorse this product/service. Readers should do their own due diligence before taking any actions related to the mentioned company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Current Batch of Bitmain Miners Can Only Be Paid for With Bitcoin Cash

Most Bitcoin users are well aware that Bitmain is one of the largest ASIC hardware manufacturers in existence today. It is also one of the few companies still selling cryptocurrency mining equipment to mainstream consumers. The company recently made the decision to only accept Bitcoin Cash payments for its latest batch of Antminer S9 units. It's an interesting decision, although a controversial one as well.

Although the Bitcoin Cash ecosystem has seen its fair share of growth as of late, there is still a lot of work to be done. When it comes to spending BCH especially, things are not necessarily straightforward. A lot of companies still don't accept BCH payments right now and that situation will not change anytime soon. Bitmain is setting an interesting precedent in this regard, even though it may hurt business in the process.

Indeed, the mining hardware manufacturer has made a very bold decision by requiring that the new batch of Antminer S9 mining units be paid for with Bitcoin Cash exclusively. That is a rather surprising turn of events, considering the company has always accepted payment with Bitcoin. Interestingly enough, the unit price is still denominated in BTC, BCH, and LTC right now. However, after scrolling down to the "Payments" section of the page, only BCH is shown as an accepted payment method.

While this decision may bring more usability to the Bitcoin Cash ecosystem as a whole, it is not necessarily a smart business decision. That's not because people don't want to spend their BCH on things they can use, mind you, but rather because Bitcoin Cash is still a rather small – albeit valuable –  ecosystem right now. In a way, it was to be expected that one of the biggest proponents of BCH would accept this payment method, although exclusivity was not necessarily something anyone saw coming.

The big question is what Bitmain hopes to gain from this course of action. It is in its best interest to see BCH succeed.  The company's Antpool is still one of the largest supporters of BCH right now, although not the largest entity by any means. Moreover, Bitmain may still support SegWit2x when that hard fork occurs, although it is unknown whether they would ever accept that new altcoin for payment purposes. With this rather surprising precedent, it is only a matter of time before we see other companies follow its example.

Moreover, it is also unclear if future batches of Bitmain products will support BCH payment. It is certainly possible this is just a "test run" by the company to gauge interest in the concept. A lot of people hold BCH as a means of speculation, rather than an actual intent to use it to make purchases. Moreover, not everyone wants to mine cryptocurrency at home with such machines, either due to costs, noise, or genuine disinterest.

All things considered, this decision comes at a time during which Bitcoin Cash is struggling to retain its value in the market, and whether or not things will improve for BCH remains to be seen. It is good to see some more positive attention for different cryptocurrencies, especially by such a well-established company. Rest assured this controversial decision will not go by unnoticed for long.