BLOCKCHAINBOOM

BITCOIN ANDBLOCKCHAIN REVIEW

by CoinFoxin cooperation with Cyber.Fund

May 2016

BlockChain Boom is a helpful guide for investors who know the value of time and relevant information.

CoinFox is a leading provider of bitcoin and blockchain news in Eastern Europe. We offer you first-hand knowledge, spotlight news from the industry, interviews and analytics. Whether you are an experienced investor looking for cutting-edge fintech projects or a beginner only feeling your way towards the whole new world of decentralised economy – we do it for you!

We are proud to present the first issue of the BlockChain Boom in collaboration with Cyber.Fund, a decentralised investment plat-form that makes digital investments comprehensible, accessible, easy and safe.

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TABLE OF CONTENTS

EVENTS .....................................................................4-8

BLOCKCHAINS SYSTEMS .................................. 9-15

CROWDSALES .....................................................16-20

INTERVIEWS ........................................................21-25

COMPANIES ........................................................25-29

REGULATION ......................................................29-33

REVIEWS ..............................................................33-40

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INTERVIEWS

Gavin Andresen and Geff Garzik take shots at rivalling bitcoin technologies. “I would be surprised if there was a robust, ready-for-every-body-to-use lightning-capable wallet before 2018.” Sidechains are “immature, un-known technologies” that have not yet seen the light of day.

The “first attempt at the Internet of Finance” can be slowed down by reg-ulators if they are not wise enough to adopt the “Do No Harm” regulatory model, says CFTC Commissioner.

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“You can ban bitcoin and blockchain within Russia, but it is impossible to ban it as a technology,” believes Rus-sian polar explorer and the founder of the first decen-tralised transborder state.

Ongoing and Expected Crowdsales: Mycelium (Bitcoin Wallet) Elastic Project (Crowd Computation Technology) Project Decorum (decentralised bitcoin forum).The Capitalisation of 25 Blockchain systems: Bitcoin added 12%, Ethereum lost 33%, Ripple lost 11% while Litecoin gained 24%

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J. CHRISTOPHER GIANCARLO

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COMPANIES:

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Russia’s National Settlement Depos-itory: “Russian specialists are among the most experienced in the global FinTech industry, and we have prov-en this fact by implementing a fully functional prototype of e-proxy voting system based on blockchain.”

REGULATIONDo they ban Bitcoin in Russia? Do they support Blockchain in Russia? CoinFox has all the answers.

Meanwhile the European parliament warns against “hasty bitcoin regula-tions”.

The registration of Bitcoin trademark in Russia is “a gesture of good will aimed at developing the industry,” be-lieves Russian entrepreneur.

REVIEWS:

Japan follows the lead with $27 mil-lion investments in BitFlyer while government approves a number of regulatory acts permitting banking groups to use cryptocurrencies and offer related financial services.

BitStamp Gets European License despite loosing $5 million in a hacker attack last year.  The incident did not help with licensing at all, confesses the exchange CEO.

“Fail fast and cheap”: How Microsoft created its Azure blockchain sandbox.

Heroes and villains of “Bitcoin Civil War”: who were original Bitcoin Core developers?

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PAST EVENTSCryptocurrency: The Policy Challenges of a Decentralized RevolutionApril 12 Cato Institute,Washington DC

The conference at Cato Institute ex-plored public policy implications of the decentralised cryptocurrency revolu-tion. Panel members discussed various challenges the disruptive technology poses to traditional financial sector and authorities, namely the consumer protection, permissioned and permis-sionless blockchains, monetary chal-lenge for central banks, financial priva-cy vs. criminal activity facilitation. Cato Institute team was joined by the industry representatives such as Jer-ry Brito, Executive Director at Coin Center, Marco A. Santori, from Pillsbury Winthrop and Global Policy Coun-sel, Blockchain, Paul L. Chou, CEO at LedgerX, Jacob Farber, General Coun-sel at R3CEV, Joseph Lubin, Found-

er of ConsenSys and Co-founder of Ethereum Project, Ryan Zagone, Direc-tor of Regulatory Relations at Ripple, Melanie Shapiro, CEO at Case, Patrick Byrne, Founder and CEO at Overstock.com and Perianne Boring, Founder and President at Chamber of Digital Commerce as well as representatives of states and federal authorities such as Dana Syracuse, former Associate General Counsel, New York Depart-ment of Financial Services, Commis-sioner J. Christopher Giancarlo from U.S. Commodity Futures Trading Com-mission, Eric Lorber, Senior Associate, Financial Integrity Network, Hon. Mick Mulvaney, Vice Chairman at Subcom-mittee on Monetary Policy and Trade, U.S. House of Representatives, Marga-ret Liu, Senior Vice President and Dep-uty General Counsel at Conference of State Bank Supervisors.One of the most noteworthy discus-sions involved the representative of the World Bank and Marco Santori. Speaking on the uses and abuses of bitcoin around the globe the latter stat-ed that in Eastern Europe and Russia bitcoin has become functionally trans-actional currency.Link: http://www.coinfox.info/news/persons/5287-marco-san-tori-bitcoin-is-functional-curren-cy-in-south-america-eastern-eu-rope-and-russiaVideo: http://www.cato.org/multime-dia/events/cryptocurrency-policy-chal-lenges-decentralized-revolution-pan-el-i-consumer

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Blockchain Expo in European ParliamentApril 18-21 Brussels

The EU Blockchain Expo focused on virtual currencies and the blockchain technology took place in the Europe-an Parliament from 18 to 21 April. The event was organised by the education-al charity Cobden Centre together with European Digital Currency & Block-chain Technology Forum (EDCAB) and hosted by Syed Kamall, chairman of European Conservatives and Reform-ists Group. The conference was aimed at familiarising MEPs with the develop-ment of crypto-technologies. European lawmakers were joined by tradition-al financial services players such as Barclays and Nasdaq, as well as rep-resentatives of the World Bank, IMF, Bank for International Settlements, OECD, European Securities and Mar-kets Authority and Europol. In a series of roundtables they discussed devel-oping an optimal regulatory framework for the disruptive technology.

Many MEPs actively participated in the conference and expressed their inter-est in the future development of cryp-to-technologies. Generally, regulators and industry representatives that met at the con-ference share the opinion that Europe needs innovation and expressed the intention to work together. In par-ticular, during the discussion of cryp-to-technology regulation, MEP Ashley Fox urged to be cautious in regard to blockchain not to “regulate it out of existence.”

Link: http://www.coinfox.info/news/5395-v-evropejskom-par-lamente-ne-toropyatsya-s-regu-

lyatsiej-blokchejna-2

Video: https://www.youtube.com/watch?v=jpXIWJSGOuI

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Bitcoin &Blockchain ConferenceApril 8, Moscow

Third annual Bitcoin & Blockchain Con-ference in Moscow gathered major industry players both from Russia and abroad to discuss the present state of the fintech and its emerging perspec-tives.Facilitated by the founder of the first Ukrainian bitcoin agency Kuna Michael Chobanian, the Moscow conference attracted the interest of influential Rus-sian actors such as Sberbank, Moscow Exchange, Qiwi, National Settlement Depository, and Higher School of Eco-nomics, as well as international com-panies like Blockchain, Genesis Min-ing, Cyber.Fund and Emercoin. 2016 has become the first time when “blockchain” was added to the name of the conference previously referred to as “Bitcoin Conference Russia”.

This change reflects the shift in the perception of the technology that has become apparent recently both in the country and worldwide. The list of speakers included Nicolas Cary, Co-Founder at Blockchain, Marina Guryeva, Director of Innovations Office at NRU HSE, Sergei Antonyan, Head of Research on Financial Technologies at the National Agency of Financial Studies, Artem Tolkachev, a lawyer and bitcoin proponent, and Dima Staro-dubtsev, the leader of Cyber.fund.

Link: http://www.coinfox.info/news/5280-bitcoin-conference-russia-2016-the-unbelievable-adventures-of-bitcoin-more

Video: https://www.youtube.com/watch?v=pLyAA_ug2QI

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FORTHCOMING EVENTSConsensys 2016May 2-4, New York

CoinDesk in collaboration with Digital Currency Group (DCG) and Coin Center will hold 2nd annual blockchain tech-nology summit in New York.This year, headline speakers include Lawrence Summers, Glenn Hutchins, Jack Markell, Balaji Srinivasan and Da-vid Rutter.Delaware Governor Jack Markell will introduce the so-called Delaware Blockchain Initiative – the programme of attracting blockchain companies and unleashing the potential of the technol-ogy in the state. Glenn Hutchins, the head of the invest-ment company Silver Lake, will make a report titled “Why Bitcoin Still Matters”. David Rutter, the head of R3 consor-tium, and Balaji Srinivasan, CEO and

co-founder of 21, the company creating hardware infrastructure for bitcoin, will take part in the discussion “The Future of Blockchains”. Srinivasan will also share with the participants some ideas of “How To Get Bitcoin (Without Mining or Buying Bitcoin)”. Lawrence Summers, Professor and President Emeritus at Harvard Uni-versity and former U.S. Treasury Secre-tary, will hold a discussion about “Block-chain in a Global Context”. Besides all that, the programme lists sev-eral dozen speakers including represent-atives of blockchain firms, major banks (Barclays, Deutsche Bank and Santand-er), tech giants like Deloitte, IBM and Microsoft, and leading regulating bodies such as the CFTC, the Federal Reserve, FinCEN, the Financial Stability Board and the World Economic Forum.

Bitcoin Conference PragueApril 18, Prague

The annual event provides the industry players with an opportunity to gather in a special space for communication, opinion exchange and new acquaint-ances.  The conference envisages 3 tracks: the conference itself, an exhi-bition area, and a start-up alley. Par-ticipants will discuss the future of bit-coin in 2016, the future prospects of blockchain technology, the feasibility of cryptocurrency security, favourable

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investment climates, international ex-perience of bitcoin regulation and the role of bitcoin in gambling. Ronny Boesnig, CEO of CoinsBank; Amin Rafiee from Bitnation; George Basiladze, Founder at Cryptopay; Charles Hoskinson, Chief Executive Officer at Input Output HK; Andrey Zamovskiy, Founder at Ambisafe and Jack Tatar, the author of “What’s the Deal with Bitcoins?” and Founder and Owner of GEM Research Solutions & People Tested Media are expected to speak at the conference.

ForthComing events

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CROWDSALES MONITORINGAll data and calculations are quoted as of 28 April 2016,with the bitcoin price at $447.

CLOSED CROWDSALES

DigixDAO is a decentralised auton-omous organisation aiming at crea-tion and development of a platform that would allow customers to register property rights on real assets (the one currently available is gold) using the Ethereum blockchain. Sales processing and physical assets storage are provid-ed by DigixGlobalPteLtd, a company registered in Singapore with all neces-sary licensing and a certified storage. In brief, DAO’s operation scheme works as follows:

DigixGlobal purchases gold in physical form and puts it in the storage, issuing a DGX token for every gram of gold, which also serves as a certificate of authentic-ity containing the full information on the ingot and is verified by the vendor, Digix-Global and an auditor

A customer buys gold with cryptocurrency and receives a DGX token in return

An owner of DGX tokens can receive ingots in DigixGlobal office after passing KYC (Know Your Customer) and AML (An-ti-Money Laundering) verification.

The DigixDAO crowdsale proved to be one of the most successful events in the history of blockchain: all tokens were

sold out in less than 24 hours. All partic-ipants of the sale received DGD tokens which can be considered a form of DAO share and give their owners the right to vote on any significant DigixDAO deci-sion (update of the source code, devel-opers’ salary etc), as well as to receive a quarterly transaction commission share (1/2,000,000 for every token).The crowdsale was not free of some awkward moments, though. Thus, it was not part of the original plan to limit the total amount of collected funds, how-ever, just a few days prior to the sales DigixGlobal updated their Whitepaper limiting the final amount to $5.5 mln. Moreover, the update was announced neither on the crowdsale web page nor through any other DAO’s media chan-nels. At the moment, the information on the sales limit is removed the whitepa-per as well. As a result, many potential participants were cut off the crowdsale, which made rather a bad impression and may negatively affect the tokens’ price as they appear on exchanges.

A summary on the crowdsale:Dates: 30 March 2016 – 30 March 2016Total amount of tokens: 2,000,000 DGD

Tokens distribution: 85% sold in the crowdsale, 15% is developers’ reward

Collected: $5.5 mln (465,134 ETH)

Crowdsale results are available here: https://sale.digix.io/

For useful links and more information go to https://cyber.fund/system/DigixGlobal

Crowdsales monitoring

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CURRENT CROWDSALES

Project Decorum(from DECentralised fORUM)

The project aims at the creation of a SafeNetwork protocol for unmoderat-ed conversations with comments and realisation of the protocol as a decen-tralised Internet forum.For the purpose of the crowdsale, Om-nitokens are emitted (ID #59), which, after the launch of SafeNet, will be exchanged to Clike tokens used in the protocol ecosystem for messages, likes etc. It is worth noting that the an-nounced 50,000,000 PDC is not the fi-nite number of tokens. After the launch of the protocol mining will start with the difficulty controlled by the amount of tokens issued and their price, while “used” tokens will be deleted.

Risk factors:

The absence of a whitepaper (the pro-ject’s concept is only described on its official website and on the SafeNet forum)

Despite the Live Proof of Concept, the project’s source code remains undis-closed

The project team only lists 1 employee so far.

A summary on the crowdsale:Dates: 4 April 2016 – 3 May 2016

Total amount of tokens: 50,000,000 PDCTokens distribution: 100% to be sold in

the crowdsaleCollected amount so far: ~$389,000

(555 BTC and 2,581,775 MAID)

The crowdsale takes place here: http://www.project-decorum.com/crowdsale/

For useful links and more information go to https://cyber.fund/system/Project_De-

corum

Elasticproject

The project’s aim is the creation of a decentralised platform for parallel computing. The basic idea is clear and has a good appeal: whereas the computation market exists, it would be useful to have a distributed network that provides commercial computation power and can be joined by any PC/tablet/smartphone owner.

Risk factors (mostly as observed in the corresponding Bitcointalk thread):The offer defines all money received during the campaign as voluntary dona-

tions which do not oblige the receiver in any way to provide quality and stable software

The company does not disclose the identities and number of its team mem-bersThe payee’s address has changed 3 times, however, the record of the total amount received seems accurate

Some argue that the model proposed in the project’s Whitepaper cannot be prac-tically implemented (it requires special qualification, however, to assess this statement)

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Crowdsales monitoring

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A summary on the crowdsale:Dates: 29 March 2016 – 12 August 2016

(can be closed earlier, as soon as all tokens are sold)Total amount of tokens: 5,000,000 XEL

Tokens distribution: 100% to be sold in the crowdsaleCollected amount so far: ~$86,000 (194 BTC)

The crowdsale takes place here: http://www.elastic.pro/donationsFor useful links and more information go to https://cyber.fund/system/Elastic

Waves Platform

The project’s aim is to create a custom blockchain token protocol. The project team based the protocol on the Scorex library, which employs PoS consensus algorithm of NXT or Quara systems, at us-er’s choice, and features a wide range of functions: token emission, decentralised exchange, API etc. The developers em-phasise the following advantages of the platform:

Flexible approach to customer assets creation

Expandable platform architecture with new functionality added via plugins

Promotion of the platform as a crowd-funding tool

Integration with fiat assets via gateways provided by current financial institutions and crypto assets using MGW principle

Convenient and lightweight client (or wallet) that does not require to store a full copy of the blockchain

The crowdsale itself is a fairly transparent process with all collected funds being

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stored at a multisignature address and visible on the blockchain.Early participants are offered bonuses:

20% first ICO day bonus

10% from 13 to 30 April

5% from 1 to 15 May

Risk factors:

BitShares already has all the function-ality offered by Waves as well as strong team of developers who have been working on the project for two years and are motivated by receiving a share of transaction fees

JL777, a developer from the NXT com-munity listed by the project’s leader Sasha Ivanov as a member of Waves team, has organised a large number of crowdfunding campaigns over the last two years for NXT-based projects most of which either are abandoned or have never been finished and have their market value dropped drastically since crowdsales (as, for example, SuperNET).

Crowdsales monitoring

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A summary on the crowdsale:Dates: 12 April 2016 – 31 May 2016

Total amount of tokens: 100,000,000 WAVESTokens distribution: 85% to be sold in the crowdsale, 1% is early participants’ reward,

9% is developers’ reward, 5% is community rewardsCollected amount so far: ~$2.6 mln (5,884BTC).

The crowdsale takes place here: https://ico.wavesplatform.com/For useful links and more information go to https://cyber.fund/system/Waves

EXPECTED CROWDSALES

Mycelium

Mycelium is a popular bitcoin wallet for Android with about 500,000 users. To finance further project development the owners sell 5% of the company in the form of tokens issued via Colu (the Color-ed Coins protocol used to store custom data in the bitcoin blockchain). Later, if the company makes an IPO, the tokens could be converted into non-voting stock. The overall number of tokens will only be known after the closure of the crowdsale. One token will be issued for every invest-ed bitcoin. The funding received in the crowdsale will be used for development of the following functions:

API for third-party services

Fiat accounts and debit cards manage-ment

Crypto assets issuance and trade

The crowdsale has already provoked a lively discussion on Reddit.It is worth noting that participants registered before 1 May receive 10% bonus.

A summary on the crowdsale:Dates: 1 May 2016 – 18 May 2016

Total amount of tokens will only be known after the crowdsale is closedTokens distribution: 5% to be sold in the crowdsale; 95% will remain with the company (MyceliumHoldingLtd)

The crowdsale takes place here: https://wallet.mycelium.com/ele-

ments/licenses.htmlThe sales conditions are outlined

here: https://wallet.mycelium.com/crowdsale.pdf

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expeCted Crowdsales

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Slokit

One of the most anticipated crowdfunding campaigns. The start date is not confirmed yet but some details are already available:

100% of the DAO’s tokens will be sold during the crowdsale

The currency unit used for the crowdsale is ETH

The investment round will last 28 days

The token price is set as 100 tokens to 1 ETH and will be increased over the first 14 daysto 1.5 ETH.

More details on the crowdsale: https://daohub.org/

ECONOMY OVERVIEWCalculation methodologyThe analysis is based on the data provided by cyber • Fund on the top 25 block-chain systems from the cyber • Rating list as of 26 April 2016.For the source data see https://goo.gl/wQdEVO

The total capitalisation of the top 25 blockchain systems has reached $9 bln or 19.3 mln bitcoins. The last month’s cap gain for the top systems is $342 mln (+3%), of which 85% was provided by the growth of bitcoin. The total capitalisation in bitcoin, however, has lost 1.3 mln BTC (-7%), with only three systems avoiding the general downward trend: Bitcoin (+0.7%), Litecoin (+11.6%) and Synereo (+3.3%). The fall of the total bitcoin capitalisation proves once again that the blockchain economy is yet rather unstable and prone to speculations due to low technology adoption pace and relatively small number of users (about 10-15 mln). Currently, as bitcoin is growing, in-vestors are trying to diversify their portfolios while speculators are using their chance to gain on volatile assets.

USD Cap dynamics chart: https://goo.gl/wzcwVD

Cap structure chart: https://goo.gl/RVxKnQ

eConomy overview

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CoinFoxtop bloCkChain systems review

TOP BLOCKCHAIN SYSTEMS REVIEW

Rank System Trade Cap in $ Rating

1 High$6,991,100,345

2 Very High $769,029,749

3 Low $629,788,000

4 High $170,712,267

5 Low $77,920,820

6 Very Low $76,352,760

7 Normal $43,628,102

8 Low $29,196,250

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Bitcoin

Capitalisation: $7.2 blnLast month’s dynamics: +$781 mln (+12%)

The price of bitcoin has strengthened over the last month and maintains pos-itive trend. While this may be only a temporary effect of a speculative wave characteristic for every price rise and fall, some factors may result in significant growth of bitcoin price:

Ethereum

Capitalisation: $576 mln / 1.2 mln BTC.Last month’s dynamics: -$280 mln (-33%) / -0.8 mln BTC (-40%)

Over the last month, Ethereum has lost more than all other top 25 projects put together. Does this mean the end of the road for Ethereum? Obviously, not.At the moment, the network is hardly loaded and still has an enormous poten-tial. To stabilise ETH price, big projects are needed which would define the real internal value of tokens. Slockit, Augur, Digix and many others – about 200 projects overall – are still at the devel-opment stage and, when ready, will significantly increase the “useful load” of the network. To extend the client base lightweight wallets are required that would work without the need to store a full copy of the blockchain locally, which is a serious drawback if you consider access to Ethereum trough mobile de-vices. Besides all that, the network was launched only one year ago and Ethere-um Foundation has both an experienced development team and necessary funds to move the project forward. Therefore, $600 mln capitalisation may be only the beginning.

Lisk

The development team announced the launch on 24 May 2016 of Lisk network, which attracted $6.2 mln during their crowdsale ended in March.

top bloCkChain systems review

With the halving of miner’s reward due in July 2016, each block will bring miners

12.5 instead of 25 BTC. From 2014 on bitcoin mining is a professional industry

governed by market laws with profitabili-ty as one of the main objectives. When in July mining companies’ income is halved, it will compel them either to double their efficiency or to start stashing gained bit-coins and thus creating a lack of supply.

Blockchain network maintenance is hugely expensive. On a very rough esti-mate, the total annual electricity cost for the miners is nearing $1 bln. The amount invested in mining hardware is beyond

valuation.

The economy’s infrastructure is constant-ly growing and developing. Aggregate investments in bitcoin-related projects have exceeded $1.1 bln, according to

CoinDesk data only.

The annual bitcoin price chart shows an obvious uptrend: a year ago the price

was fluctuating around ~$220 which is two times lower than today.

BitShares

Capitalisation: $10 mln / 21,000 BTCLast month’s dynamics: -$7 mln (-42%) / -19,000 BTC (-48%)

BitShares is the most underestimated working blockchain system, and that is why:

SafeNetwork

Capitalisation: $25 mln / 53,000 BTCLast month’s dynamics: -$17 mln (-42%) / -48,000 BTC (-48%)

One of the most ambitious projects hav-ing the potential to become an alter-native to the Internet itself is still at the development stage and has not even reached the alpha testing phase. Its re-lease schedule is not published while it has been in development for 10 years now. One glance at the Roadmap is enough to realise the complexity of the project. To assess its potential capitalisa-tion one can use as a guide the cost of the Internet. As for the current price of tokens, it is no more that speculation.

Synereo

Capitalisation: $69 mln / 148,000 BTCLast month’s dynamics: +$9 mln (+15%) / +5,000 BTC (+3%)

An outstanding concept that in the future may replace all current social networks. Its capitalisation has grown more than 60-fold after its listing on Poloniex com-paring to what had been collected during their crowdfunding ($126,000). However, the network is not launched yet and, con-sidering the complexity of the task, the realisation may take a quite a while, as in the case of SafeNetwork. Still, the po-tential capitalisation growth is immense, taking into account current Facebook capitalisation of ~$300 bln.

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The network’s scalability allows it to reach the speed of 100,000 transactions per

second, which makes it the fastest public blockchain in existence. Its current load is

1 transaction per second.

An inbuilt decentralised exchange allows users to start trading more than 150 as-

sets immediately after registration.

The DPOS (Delegated Proof of Stake) consensus algorithm is very efficient and does not require excessive computing or

electric power for the network.

The system development is fully funded by a share of transaction fees which is

distributed through direct voting.

Meanwhile, the development pace is rather fast with more than 2 upgrades issued every month.

Apart from that, there are many more reasons to believe that the capitalisation of $10 mln is way too low for a system of such level. There is only one explanation to that, namely, that the client base of the system is yet less than 10,000 users and as soon as their number starts growing the capitalisation will rise exponentially.

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Storj

Capitalisation: $33 mln / 71,000 BTCLast month’s dynamics: -$17 mln (-35%) / -50,000 BTC (-41%)

9 April 2016, after 1.5 years in develop-ment, Storj launched a beta version of their application allowing users to rent out their spare disk space.

Litecoin

Capitalisation: $181 mln / 388,000 BTCLast month’s dynamics: +$35 mln (+24%) / +40,000 BTC (+12%)

At first, the growth of LTC at the time when other systems are losing capitalisa-tion may look surprising. However, if one takes a deeper look it becomes obvious that with every rise of bitcoin, the price of the ‘old school’ Proof-of-Work curren-cies (Litecoin, Peercoin, Dogecoin and others) also grows. The only explanation here is the interest of Chinese investors to the established PoW systems, which is reflected in the huge trading volume of these currencies on Chinese exchanges (over $1.4 bln per day). Another aston-ishing fact: on 27 April the total network transaction volume equalled ~21 mln LTC which is about a half of all existing lite-coins. No other decentralised system has ever achieved such a turnover.

Augur

Capitalisation: $72 mln / 156,000 BTCLast month’s dynamics: -$47 mln (-40%) / -131,000 BTC (-46%)

Despite the announced plan to deliver a fully functional system in the first quarter of 2016, as of now only a beta version is launched while the developers are still working on the accounts system. Still, investors are very optimistic about the project and 6 months after the closure of crowdfunding (which gathered $5.3 mln) the project capitalisation has grown more than 14 times (the peak level once reach-ing 30 times). And this is regardless the fact that REP tokens are not even issued yet and only IOU (I Owe You) obligations are traded. The story of Augur is a fine example of how things are done in the blockchain world: while in the traditional finance paradigm asset holders would have to spend huge time and money to arrange such a scheme, here it is all done quick and cheap.

Ripple

Capitalisation: $718 mln / 1.5 mln BTCLast month’s dynamics: -$86 mln (-11%) / -381,000 BTC (-20%)

On 19 April 2016, Ripple announced the integration of its Intelligent Gateway into CGI financial service, which will allow us-ers to send payments in multiple curren-cies between 23 American and 21 Euro-pean banks in real time and without the need for conversion. The event seems to be a big step forward for the compa-ny, which since its first days has spent a great deal of effort looking for coopera-tion with banks. This project is probably a starting point of the synthesis between the blockchain technology and traditional banking industry.

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INTERVIEWS29 April 2016UNESCO Arctic Expedition Leader: with bitcoin around the world

The founder of the very first decentralised transborder state, polar explorer Sergey Solovyev discusses the changes that dis-tributed technologies are bringing to the world we live in.The years spent by Sergey Solovyev in extremely challenging expeditions with his multinational teams proved to the ad-venturer that every community united by a common goal was always building its own “legal system”. That prompted him to think that every expedition was to some certain extent becoming a quasi-state:“It is not easy to build relationships with the external environment when people in your expedition are citizens of different coun-tries and belong to different jurisdictions. So, we decided to create our own itinerant state with its own jurisdiction that would suit us all and can coexist with any other one.”The founding fathers of Polarex decided quite early that their country will by no means be restricted to any territory. But it is only now when bitcoin and blockchain technologies have emerged that the dream has at last come true:“The state in its traditional form can con-front anything within itself, but cannot confront whatever is outside. You can ban bitcoin and blockchain within Russia, but it is impossible to ban it as a technology… Whereas you can block particular web pages on the Internet, nowadays we see a different Internet emerging based on dis-tributed network… It cannot be “banned”. To stop it, you’ll have to shut down all computers, all network nods; but there is

no such prohibitive legal entity that can do that!”The state has gained the attention of nu-merous enthusiasts from all over the world “from Belgium to China,” but the driving force of Polarex is still the team of explor-ers who have been part of the long-lasting UNESCO World Expedition led by Sergey Solovyev. This autumn the team is planning to move on with a three-month trip during which they are going to use no other mon-ey rather than cryptocurrencies.

Maria Rudinahttp://www.coinfox.info/news/per-

sons/5418-glava-vsemirnoj-ekspedit-sii-yunesko-vokrug-sveta-s-bitkoinom-2

15, 22 April 2016Gavin Andresen and Jeff Garzik on Seg-Wit, Lightning and the future of bitcoin

One of the bitcoin core developers until 2014 and the creator of Bitcoin Classic protocol answered questions of Chinese bitcoin community. Among other things, Andresen expressed a mixed opinion about the latest Core upgrade.A lot of topics were discussed during the conversation, from the centralisation ten-dency in mining to the content of the very first message that Andresen sent to Satoshi Nakamoto. It is little wonder, though, that the most vital matter for the whole bitcoin community soon emerged – the problem of the bitcoin network scalability.Answering to the questions on SegWit and Lightening Network Andresen showed rather a positive attitude towards these solutions, however, he doubted that they

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are able to solve the scalability problem in time. “If everything goes perfectly, we might see a significant number of SegWit transactions in three months. I would guess it will take six months for the miners to adopt segwit and then wallets to start producing segwit transactions, but it could take a year. Unfor-tunately, transaction volume was growing more quickly than that, so even if Segwit helps, it will not help quickly enough.”Andresen was even more pessimistic con-cerning the Lightning Networks: “I think Lightning will take longer than people estimate. Seven months ago Adam Back said that the lightning network might be ready “as soon as six months from now” … but I would be surprised if there was a robust, ready-for-everybody-to-use light-ning-capable wallet before 2018.”The idea of the Lightning Network implies transforming the model of transactions verification. Currently, in a regular bitcoin blockchain, each computer has to validate every transaction. The Lightning Net-works technology makes it possible not to broadcast every single transaction through the whole distributed ledger, the block-chain being only involved in the event of non-cooperation. This can be compared with judicial proceedings in the real world: they only take a person to court if they are offended. Thus, participants of the block-chain won’t have to validate all transactions as long as everything works all right.The first version of the Segregated Witness soft fork was released on 20 April 2016. It allows more transactions to be included in each block due to the relocation of trans-action parts containing digital signatures and, thus, partly contributes to solving the scalability problem.

Anna Lavinskayahttp://www.coinfox.info/news/5370-

gavin-andresen-segwit-and-lightening-won-t-be-quick-to-help-bitcoin

During an interview with Bitcoin Uncen-sored, Jeff Garzik was asked to assess pos-sible implications of the emerging Lightning Network which supposedly is able to pro-cess millions or even billions of operations per second.Though generally approving of the tech-nology, Garzik pointed out at several “un-answered questions” related to it. First, Garzik noted, one “cannot assume that all payments are going to go through.” It is not likely that the whole community will be eager to join the network at once. Moreover, even if it were, the adoption pro-cess would take some time. What seems most troublesome to Garzik is the fact that the system is restricted to instant payments and there is no guarantee that all users will be willing “to commit BTC simply to have access to instant payments.”The developer sees some alternatives which could be more efficient than the Lightning Network, such as sidechains, for instance. According to Garzik, while sidechains have a number of advantageous features, just like the Lightning Network, they are “immature, unknown technologies” that have not yet seen the light of day.In the same interview, Garzik restated his endorsement of Segregated Witness (Seg-Wit) which, unlike any hard fork, leaves users a choice whether to adopt it or not.

Maria Rudinahttp://www.coinfox.info/news/5308-jeff-

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interviews

However, the “first attempt at an Internet of Finance” can be slowed down by regu-lators if they are not wise enough to adopt the “Do No Harm” regulatory model, says Giancarlo. The problem is that blockchain is developing “faster than underlying legal and regulatory frameworks” and govern-ments do not coordinate their actions:“When regulation does come, it will come from a dozen different directions with different restrictions stifling crucial tech-nological development before it reaches fruition.”The CFTC Commissioner believes that the US should contact other governments and, instead of “burdening the industry with multiple onerous regulatory schemes,” set forth uniform principles that would “provide the flexibility, certainty and har-monization necessary for the technology to flourish.” The initiative should be left to the private sector and any regulatory uncertainty should be avoided, as well as the “rigid application of existing rules de-signed for a bygone technological era.”Without explicitly naming BitLicense, Gi-ancarlo deplored the loss of jobs in the New York financial service industry and pointed at Japan and the UK as the exam-ples of a more sensible approach, saying that the British attitude could be “very good for London’s burgeoning FinTech industry and job creation in the United Kingdom.”As to the practical steps, Giancarlo sug-gested CFTC to change its recordkeeping rules to make them compatible with block-chain and other innovations.

Alexey Tereshchenkohttp://www.coinfox.info/news/per-

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13 April 2016CFTC Commis-

sioner: blockchainregulation should be “light-touch”

J. Christopher Giancarlo believes that blockchain could bring transparency to the banking sphere if not strangled by regulators.In a kеynote address to the Cato Institute, the representative of the Commodity Futures Trading Commission spoke at length about blockchain and its promises for the future, but only after specifying that his remarks do not necessarily reflect the views of his agency.He started with describing the crisis that hit the US in 2008 when Lehman Broth-ers bank became insolvent. The absence of transparency made inquiring into Leh-man’s accounts a tough job. Seven and a half years later, “global regulators still do not have full visibility into the swaps trading portfolios of major financial insti-tutions.” And the US financial regulatory system is “ill-suited to meet the nation’s needs in the 21st century.” The block-chain technology, Giancarlo said, could change the situation.The Commissioner believes that the range of uses for blockchain is immense, and it “is likely to have a broad impact on global financial markets,” inter alia making new “smart” securities and de-rivatives possible. It does not go without risks: nearly 2 million banking jobs in Europe and the US could be eliminated over the next decade. However, the po-tential benefits are enormous, not only for financial institutions but also for regu-lators who could finally get transparency and be able to cope better with crises.

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cialists are among the most experienced in the global FinTech industry, and we have proven this fact by implementing a fully functional prototype of e-proxy vot-ing system based on blockchain.” Astanin believes that the fintech boom seen in the past decade cannot be ig-nored by the national finance industry, therefore, “outdated platforms” should not be maintained but rather displaced by innovative ones like blockchain.

“Over the period of four months, we man-aged to develop a working prototype of the blockchain-based e-proxy voting sys-tem that has no analogues in the world. During the testing process, we reached a submission speed of 80 voting instruc-tions per second. We are currently aiming to increase the system’s capacity and to enable the support of new voting types. Our next step would be to subject our new prototype to legal and cryptograph-ic expert evaluation, which will give us a more definite idea whether the prototype is suited for real voting,” commented Sergey Putyatinskiy, IT Director at NSD.

The idea of blockchain voting has be-come quite popular recently, with British company Smartmatic enabling the US Republican party to use blockchain vot-ing system during their Utah primaries in March, and Blockchain Technologies Corp software company announcing the development of its own voting machine back in November 2015.

Maria Rudina

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28 AprilRussia’s National Settlement Depository succeeds in blockchain test

The central securities depository in Rus-sia has announced successful results as it finished the testing of an e-proxy voting system running on a distributed ledger.The prototype based on the NXT distrib-uted cryptographic platform was devel-oped by NSD together with DSX Technol-ogies. The project’s open-source code is available on GitHub.E-proxy provides for electronic inter-action between securities holders and issuers for the purpose of exchanging information and documents. The block-chain-based e-proxy voting prototype brings all the information on voting into a distributed database accessible to all of its members. The database contains the full cryp-tographically protected history of the activities. Securities holders vote via their personal account using their digital signa-ture.According to NSD’s Chair of the Execu-tive Board Eddie Astanin, “Russian spe-

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demonstrate a high level of trust to cryp-tocurrency and blockchain-related start-ups. Apparently their confidence is rein-forced by the positive attitude of Japanese financial authorities towards digital currencies. Regardless of some legislative proposals in the recent period which could significantly limit and slow down the adoption of cryptocurrencies in the country, the Japanese government took a favourable stance and approved a number of regulatory acts permitting banking groups to use cryptocurrencies and offer related financial services.

At the same time, the authorities are tak-ing steps to strengthen regulation of this fintech segment and oblige exchanges trading bitcoin and other digital curren-cies to undergo official registration. This is regarded as a protective measure for exchange customers to minimise risks and prevent the use of these trading plat-forms for money laundering.In 2014, the bitcoin community saw the collapse of Tokyo-based bitcoin ex-change Mt. Gox, then one of the biggest cryptocurrency markets in the world, which used to control over 70% of all bit-coin turnover at that time.The number of bitFlyer’s customers has risen 10 times over a year up to 150,000. Currently, the exchange holds two offic-es in Tokyo and Luxemburg with total 23 employees. Elena Platonova

http://www.coinfox.info/news/5381-japa-nese-bitcoin-exchange-bitflyer-raises-27-

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Japanese bitcoin exchange attracts $27 mln investments

Japanese marketplace bitFlyer an-nounced today a record high amount at-tracted during its Series C funding round, shortly after the government allowed banks in the country to use digital curren-cies.A group of companies led by Venture Labo Investment and SBI Investment, both being venture capital divisions of the financial giant SBI Group, provided bitFlyer with 3 billion yen ($27 million). According to the exchange, raised cap-ital will help the company to intensify research and development of block-chain-based projects, as well as bitcoin trading applications. “Investors value our technical advantage. We are almost the only company that has been focusing on both virtual curren-cy and blockchain from day one,” Yuzo Kano, CEO of bitFlyer, told CoinDesk.BitFlyer’s previous funding round took place in August 2015. As a result, the exchange raised 510 million yen ($4 mil-lion) from a group of investors including Dentsu Digital Holdings, Mitsubishi UFJ Capital Co, Mitsui Sumitomo Insurance Venture Capital and Venture Labo.So far Japanese investment funds

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25 AprilBitstamp gets EU licence

One of the largest bitcoin exchanges Bitstamp has got a licence allowing it to trade in all 28 countries of the European Union. The licence was given by the Lux-embourg Financial Industry Supervisory Commission.The licence guarantees a high level of security as well as customer protection, reads the statement published today on the company’s website. It claims that this level of security was formerly affordable only for traditional financial institutions working with fiat currency.The Luxembourg licence makes it possi-ble to work throughout all EU thanks to the “single passport” allowing financial organisations from a member country to operate in the other member countries without additional licensing.

Bitstamp is the first cryptocurrency ex-change to get such a licence within the EU. This was a complicated process that has taken about two years, says the com-pany. During this period, the exchange was audited by Ernst & Young Luxem-bourg. The companies to follow will find it easier to undergo such a procedure, claims the founder and CEO of the ex-change Nejc Kodrič, so we will soon witness more licensed bitcoin exchanges in the EU.

The Minister of Finance of Luxembourg Pierre Gramegna believes this step is “a milestone for Bitcoin and digital finance in Europe,” writes Forbes in a recent article.The company emphasises in its state-ment that Luxembourg, a country with long-standing financial traditions and European headquarters for such compa-nies as Skype, PayPal and Amazon, treats security issues with great responsibility. Therefore, the Luxembourg licenсe is a reliable document.After receiving the licence, in addition to BTC/USD trade, the exchange is launch-ing BTC/EUR trade from 11 am UTC, 26 April. The licensed status is supposed to help the exchange in its work with big financial institutions, which are not always keen to cooperate with non-licensed compa-nies, thinks Kodrič. The step will also help to form a better public opinion towards bitcoin. People will see that a cryptocur-rency exchange is a part of the financial mainstream and is supported by govern-mental institutions, and there will be more trust, claims the financier.Bitstamp began working to get a li-cence from Luxembourg after having failed to obtain it in the UK. To make things even more complicated, in January last year the exchange was attacked by hackers when more than 5 million dol-lars were lifted, which did not help with licensing at all, says Kodrič as quoted by Wired.

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Andrew Levichhttp://www.coinfox.info/

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REGULATION20 April 2016Russian Minfin postpones bitcoin ban bill due to criticism

The draft law prohibiting the circulation of cryptocurrencies in Russia will enter the State Duma later than expected. The Min-istry of Finance explains the delay saying the document still needs a lot of correc-tions.Various additions and corrections to what was regarded as the final version of the draft are being made following multiple comments and suggestions from review-ers, Deputy Finance Minister Alexei Moi-seev told Banki.ru. According to the offi-cial, the basic guideline of the document remains the same: it suggests up to 7 years in prison for issuance and exchange operations with cryptocurrency, bitcoin included.“We carry on working on the draft law, however, it is taking its time. Every person who starts reading it again and again says we need to clarify the wording. So we are clarifying it,” said Moiseev.Yet, the ministry is still planning to intro-duce the bill to the parliament before the closing of the spring session early in July.As CoinFox reported earlier, the amend-ments to the law “On the Central Bank” suggest for private individuals found guilty of cryptocurrency mining the draft pre-scribes up to 4 years of imprisonment or 500 thousand rubles in fines. For organ-ised groups, the punishment would be up to 6 years in prison or fines of 500,000 to 1 million rubles. For senior managers of banks and other financial institutions involved in issuing of cryptocurrency, or “surrogate money”, the punishment is the

most severe – up to 7 years in jail with deprivation of the right to hold specific posts or fines of up to 2.5 million rubles.Apart from the Ministry of Finance, total prohibition of bitcoin in Russia is support-ed by the Investigative Committee and Central Bank. The head of the former Alexander Bastrykin recently declared that cryptocurrency is used to finance extrem-ism and information war against Russia.

Elena Platonovahttp://www.coinfox.info/news/5346-rus-

sian-finance-ministry-to-introduce-a-cryp-tocurrency-ban-bill-to-the-parliament-

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27 April 2016European Parliament confronts hasty blockchain regulations

Following the Blockchain Conference and Expo held in the European Parliament, its Committee on Economic and Monetary Affairs (ECON) has voted against hasty regulatory steps regarding the blockchain technology.The idea of avoiding pre-emptive regula-tion was part of the report on virtual cur-rencies made by German MEP Jakob von Weizsäcker. Such measures may turn out to be harmful, claims the politician, be-cause the blockchain technology is still at

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an early stage of development.“One reason why regulating now in detail would be difficult is that we don’t know yet what the most important use of blockchain might be,” von Weizsaecker told Reuters.In the meantime, the MEP suggests mon-itoring “to avoid stifling innovation.” But in the future regulative steps, too, will be nec-essary. The document contains a recom-mendation to create a task force focused on the distributed ledger technology that in the future would offer legislative bodies expertise on technological and regulato-ry issues both on the European level and within member countries.“IT innovations can spread very rapidly and become systemic. That’s why we call on the Commission to establish a taskforce to actively monitor how the technology evolves and to make timely proposals for specific regulation if, and when, the need arises,” said the politician as quoted on the website of the European Digital Currency & Blockchain Technology Forum (EDCAB).ECON voted to adopt the report by 54 votes to 1 (with 2 abstentions). The docu-ment will now be considered at the Parlia-ment’s plenary meeting in May.A conference and expo focused on virtual currencies and the blockchain technolo-gy took place in the European Parliament from 18 to 21 April. The event was organ-ised by the Cobden Centre educational charity together with EDCAB. The confer-ence was non-commercial and was held for an educational purpose, that is familiar-ising MEPs with the development of cryp-to-technologies. The event was hosted by Syed Kamall, who has the right to organise an exhibition within the Parliament as a chairman of one of the parliamentary frac-

tions (namely, the European Conservatives and Reformists Group).The conference is very timely, claims Ste-ve Baker, UK Member of Parliament and founder of the Cobden Centre. It is now when the destructive outcomes of finan-cial policy worldwide are becoming more and more evident, that the society needs a free market currency, he said. And such a currency is created by means of the cryp-to-technology.The event was attended by blockchain industry leaders, as well as representatives of such organisations as the World Bank, IMF, Bank for International Settlements, OECD, European Securities and Markets Authority and Europol.Roundtables were held during the confer-ence, covering such important topics as trusting distributed ledgers or virtual cur-rency regulation. Many MEPs actively par-ticipated in the conference and expressed their interest in the future development of crypto-technologies. Generally, regulators and industry repre-sentatives that met at the conference share the opinion that Europe needs innovation and expressed an intention to work togeth-er, reads a recent EDCAB article. In particu-lar, during the discussion of crypto-technol-ogy regulation, MEP Ashley Fox urged to be cautious in regards to blockchain.“There is a consensus in the Parliament, that policymakers should be careful not to regulate the technology out of existence,” he said.

Andrew Levichhttp://www.coinfox.info/news/5395-v-ev-

ropejskom-parlamente-ne-toropyat-sya-s-regulyatsiej-blokchejna-2

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18 April 2016Bitcoin trademark registered in Russia

Russia has become the first country to have the word “bitcoin” as a registered trademark, due to cryptocurrency enthu-siast Alex Fork (aka Alexei Vasiliev). How-ever, its future remains quite uncertain.The trademark has the registration num-ber 552645. In an interview to “Izvestiya” Alex Fork, the author of the first Russian book on bitcoin and the head of “Bitcoin”, “Blockchain Community” and “Future Fintech”, says he does not intend to use the trademark for commercial purposes, as that would mean making money at the expense of the bitcoin community mem-bers.“On the contrary, the whole process was launched to prevent monopolising the Bitcoin brand by one person and pump-ing money out of Russian cryptocurrency users. This is a gesture of good will aimed at developing the industry,” said the busi-nessman.Nevertheless, Vasiliev does not deny he is going to use the trademark actively. “Bitcoin” company, which holds the rights for the trademark, is dealing with block-chain-related information resources, the financier told Bits.media in an interview. The company will use the brand name, but will not try to prosecute anyone else for using it: firms should not worry about “patent trolling” on his part, he said.Some earlier attempts to register “bitcoin” as a trademark were probably aimed at using it for commercial purposes. In late 2013 and early 2014 several applications were submitted to the Russian Federal

Service for Intellectual Property. It was when Alex Fork decided to send his ap-plication as well. Three claims were with-drawn by the applicants or turned down, while Fork’s one was the only accepted, and on 18 September 2015 the trademark was officially registered.All the same, the new brand may have two week points. The first is the reason why the Federal Service turned down the application of “M-Group” to register the word “Bitcoin”: it was considered a com-mon term in finance, economics and tele-communication services. As a result, this word is free for use within these areas of activity, concluded the Federal Service as quoted by Russian Legal Information Agency.“M-Group” objected at that time that the word “bitcoin” was neither listed in any reliable dictionaries nor in encyclopae-dias. The company also referred to cas-es when common terms were used for trademarks, for example «WEBMONEY», «Yandex-Money», «QIWI-Wallet», «Dollar» etc.Secondly, the new trademark right ap-plies to a graphical image rather than to a word. However, speaking to Banki.ru Alex Fork insisted that the registration covers both to the text and the logo, despite the fact that the certificate only mentions the image. That is why the patent agent quot-ed by Banki.ru claims that the registration of the trademark “bitcoin” may be easily challenged.

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4 April 2016.Microsoft Azure: the blockchain sandbox

As the number of partners within Azure Blockchain-as-a-Service is constantly growing, CoinFox reviews the history of the project considered to be the first to create blockchain test environment.

The unique move

In autumn 2015, during the first Ethere-um Developer Conference, director of technology strategy for financial services at Microsoft Marley Gray announced the company’s partnership with a then-lit-tle known Brooklyn Ethereum applica-tions’ provider ConsenSys. The decision came up as a response to the interest expressed by the corporation’s clients throughout the summer. Together the companies created a relatively safe envi-ronment to let startups and market lead-ers develop and test their blockchains.The move was one of a kind. “Fail fast and cheap,” said Gray, which sounded like a motto. Paradoxically, the call to “fail” seemed attractive for many compa-nies that joined the project afterwards. The idea standing behind was simple: BaaS as a way to give it a try. At a low cost you get access to a sandbox – a “playground” where one can test a blockchain and see how it works. If the

experiment fails, the costs for you are not so great, and you get valuable feed-back. Moreover, creating a blockchain within the program is so simple that it is supposed to take just 20 minutes, even for inexperienced players, claimed Gray boldly.Other important players in the IT field didn’t offer anything of that kind at the moment, and, in fact, they still do not. For instance, Hyperledger, a blockchain development project launched by Ly-nux Foundation, is supposed to produce something different: a global standard for business blockchains. IBM has its large prospering blockchain branch which offers blockchain solutions for business. But IBM Blockchain is rather an active participant in the real blockchain-for-busi-ness market than a neutral platform for others to test their developments. Apple, Microsoft’s long-term rival, does offer several blockchain apps but seems to be interested in the technology far less than its competitor. As BlockApps CEO Victor Wong put it, Microsoft “kind of missed mobile a little bit” (with Apple presumably taking the lead), so perhaps the corpora-tion’s move for blockchain is an attempt to regain the leading position in the IT innovation sector.The innovative trend seems clear when we see which aspect of blockchain Mi-crosoft has chosen. Still keen on bitcoin (Microsoft Store accepts the digital cur-rency, and the recently issued roadmap for Microsoft Office 365 shows that the next version of Excel is going to be bit-coin-friendly), the corporation has picked a brand believed by some to be bitcoin 2.0: Ethereum.

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Developing the ecosystem

Ethereum fits Azure’s ideology like a glove. Ethereum is a platform that is spe-cifically designed to make it possible for users to create their own permissioned blockchains (that is, blockchains with var-ious degrees of accessibility). Microsoft Azure positions itself as a cloud platform specifically designed for developers to create their own apps with the wide range of tools the company provides. So no surprise that Marley Gray reacted promptly when ConsenSys (aka Consen-sus Systems) offered the IT giant a part-nership.The flagship offering included Block-Apps Strato and Ether.Camp. The former is “a full-stack solution for creating your own private or consortium (semi-private) blockchains based on Ethereum stand-ards,” as the startup’s website puts it. The latter is “a blockchain explorer and a web-based IDE” (integrated develop-ment environment) that allows navigating transactions on an Ethereum blockchain. Together the applications make it possi-ble to fully create and run an Ethereum blockchain app. Thus, the task Microsoft had to fulfill was to create an environment that could bring these products to the customer. The eco-system of Ethereum seemed “daunting” at first, admitted Gray. Indeed, the Fron-tier version of Ethereum that was relevant at that time explicitly stated that it didn’t guarantee safety (although offering free-dom for experiment and innovation – just like a proper frontier should do). So Mi-crosoft did what was necessary to attract customers. It reduced the risks.

“The tools were rough, it’s not enterprise grade. It was hard to attract people and to scale, to be able to work with it. So we set out upon making it easier for our enterprise customers to do development testing on blockchain based applications very rapidly without costing a fortune. So they could do innovative work without risking anything,” Gray said.Since then Gray has uploaded seven BaaS updates in the corporate blog, announcing partnership with several companies including (in order of appear-ance) Ripple, Eris, CoinPrism, Factom, Emercoin, BitPay, Manifold Technology, LibraTax, MultiChain, Netki, AlphaPoint, IOTA, Augur, Lisk, BitShares, Syscoin, Slock.it, Algorythmix, Expanse, Influx, Monero, Radium and Tendermint. All these companies provide blockchain-re-lated services (or sometimes even offer an alternative for blockchain, like IOTA’s Tangle distributed ledger), specializing in digital assets, Internet of Things, bitcoin payment, altcoins and other fields that imply blockchain. Azure interconnects them, providing the opportunity of “trying before buying”.

What’s the goal?

Azure sees itself as a world-scale market-place for blockchain services. Decentrali-zation is very good for cutting edge de-velopment, agrees Gray, but a common cloud environment might prove useful for everyone. There are various issues to be addressed by developers and to be con-sidered by businesses, including security and legislation. The Cloud is the proper environment to check them, which makes

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Azure exactly the place to provide such an environment.A blockchain built within Azure needn’t run within it, claims Gray. It can simply be connected to Azure but work inde-pendently. Thus, outside the system an Azure blockchain can be used for a risk service, while the general environment remains safe.The number of offerings made by the company’s partners is growing. In order to provide newcomers an easy start, Az-ure has made a BaaS Marketplace Tem-plate which automatically provides a new lab with the most popular settings and offers a library of applications issued by Azure’s partners. Thus, the general trend is to marry simplicity and diversity. In the limit, every user can easily create their own “lab”, getting all the general settings automatically, but still retaining room for customization that will make their block-chain unique.

Andrew Levichhttp://www.coinfox.info/news/re-

views/5231-microsoft-azure-the-block-chain-sandbox

15 April 2016Benevolent dictators and disenchanted believers: Bitcoin Core developersrevisited

The “Great Bitcoin Debate,” “Bitcoin’s civil war” or the “Blocksize Wars” are just some of the expressions used to label the controversy concerning the size of the block in bitcoin’s blockchain. Having started as a technology-prompted dis-cussion about the scalability of bitcoin’s

system, the debate eventually reached the issue of governance and thus, be-came philosophical and even political. CoinFox revisits the history of the debate and takes a closer look at original Bitcoin Core developers.At the end of March 2016, Andrew Quent-son reiterated a question asked numer-ous times during 2015, namely whether Bitcoin’s civil war was over. According to Quentson, with Bitcoin Core developing SegWit, Ethereum rising and the potential competition in blockchain development coming out from the banking sector, “a compromise of sorts has been reached” and “there is a general feeling that all the arguments that had to be made have now been made.”Whether the so-called “Bitcoin civil war” is now over or not, we cannot tell, but what is certain is that the blocksize de-bate has brought up to the surface the issue of Bitcoin’s governance and has significantly altered the leadership model among Bitcoin’s Core development team moving from the ‘benevolent dictatorship’ of bitcoin’s creator Satoshi Nakamoto and his heir Gavin Andresen towards the of-ten criticized detached guidance embod-ied by current lead maintainer Wladimir J. van der Laan.

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Who are Bitcoin Core?

When in November 2015 the Director of the MIT Media Lab Joi Ito asked Gavin Andresen “What does it mean to be a core developer and what is the architec-ture of the group that you guys are in?”, Andresen responded:“It depends on who you ask. In the past when I’ve said core developer, I mean one of the five people who has the abil-ity to pull changes into the Bitcoin Core open source software project. That’s me, Wladimir, Pieter Wuille, Greg Maxwell and Jeff Garzik. … Overtime that term has tak-en on a larger meaning.” Bitcoin Core is a free open-source soft-ware project. Initially known as Bitcoin-Qt and developed by Satoshi Nakamoto, the current bitcoin client is maintained by the Netherlands-based Wladimir J. van der Laan who is also a developer at the MIT Digital Currency Initiative. As a lead main-tainer, van der Laan is responsible for reviewing the code, troubleshooting bugs and coordinating the new releases, such as, for instance, the release of Bitcoin Core 0.12.0 announced in February 2016.Van der Laan is joined by another main-tainer named Jonas Schnelli anda num-ber of contributors:“The Bitcoin Core project has a large open source developer community with many casual contributors to the code-base. There are many more who contrib-ute research, peer review, testing, docu-mentation, and translation.”Among the major sixteen contributors singled out at Bitcoin Core’s web page, one recognizes the names of some of the long-term Core developers such as

Dr. Pieter Wuille, Cory Fields, Gregory Maxwell and Peter Todd. Judging the developer’s degree of involvement based on the number of commits van der Laan is unsurprisingly on the top of the scale with 3442 followed by Gavin Andresen with 1100, Pieter Wuille with 972 and Cory Fields with 332.

Size Does Matter

The conversation concerning the possi-ble increase of the blocksize has been going on publicly at least since 2013 with lead developers such as Peter Todd, Gavin Andresen, Peter Wuille and Mike Hearn exchanging opinions at bitcointalk.org under the thread titled How a Float-ing Blocksize Limit inevitably Leads to-wards Centralization.It was already then that the now former Bitcoin Core developer Mike Hearn ex-pressed his growing concern with Bit-coin’s scalability:“At the same time, as evidenced by the disagreement on this thread, there are too many unknown variables for us to figure out what will happen ahead of time. The only way to really find out is to try it and see what happens. If Bitcoin does fail to scale then the end result will be a smaller number of full nodes but lots of people using the system – this is still better than Bitcoin being deliberately crippled so it never gets popular because even if the number of full nodes collapses down to less than 1000, unknown future advances in technology might make it cheap enough for everyone to run a full node again.”The blocksize debate reached its peak in

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2015 and largely dominated the discus-sion among bitcoiners. In January 2015 Gavin Andresencirculated his proposal for a blocksize increase and expressed his belief that “there are no technical bar-riers to scaling up.”By August 2015 there were already sev-eral BIPs at hand, such as Jeff Garzik’s BIP 100 and Gavin Andresen’s and Mike Hearn’s BIP 101, the latter becoming the basis for forking Bitcoin and developing the so-calledBitcoin XT. In other words, during the summer of 2015, the rift between the Bitcoin Core developers had grown so wide as to leave the supporters of a block increase Garzik, Andresen and Hearn out of the Core in a manner of speaking. As a result, by January 2016, even newer proposals were being developed such as Bitcoin Classic and Bitcoin Unlimited. By Febru-ary 2016, Andresen announced that he was withdrawing the BIP 101 as, accord-ing to him, it was clear that it would not be adopted.Also in February 2016, Bitcoin Classic released a new code (0.11.2) which had the potential to double the block size, while at the beginning of March 2016 version 0.12.0 was officially launched. Bitcoin Classic 0.12.0 is based on Bitcoin Core 0.12.0 and, according to the release announcement, “is compatible with its blockchain files and wallet.” At the same time, on 21 February 2016 Bitcoin Core contributors Cory Fields, Johnson Lau, Luke Dashjr, Matt Corallo and Peter Todd achieved consensus on scaling roadmap with industry leaders and miners, endorsing the implementa-tion of SegWit.

CoinFox 2016

Questions of Leadership

The Oxford Dictionary of English defines ‘civil war’ as “a war between citizens of the same country.” While the citizens of Bitcoin Core’s developers’ community are numerous, only selected few have commit access and are able to implement the changes previously discussed by the collective of contributors. Among them, three have created a particular image of a leader or an anti-leader during the block-size debate.

The Protagonist

Gavin Andresen, who took over as lead maintainer after the withdrawal of Satoshi Nakamoto, currently works as a software developer at the MIT Digital Currency Initiative and acts as the Chief Scientist of the Bitcoin Foundation. In his ‘farewell letter’ to Bitcoin, Mike Hearn describedAn-dresen as “a solid and experienced leader who can see the big picture” whose only problem, according to Hearn, was that he did not want to job. “So the first thing Gavin did was grant four other developers access to the code as well. These devel-opers were chosen quickly in order to ensure the project could easily continue if anything happened to him. They were, es-sentially whoever was around and making themselves useful at the time.”While supporting a blocksize increase, Andresen has maintained respectability as his contributions to the development of Bitcoin Core could not be denied. Even Trace Mayer, while criticising recently the supporters of Bitcoin Classic, admitted that he considers Andresen a bitcoin expert.

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The Antagonist

Another supporter of blocksize increase and long-time collaborator of Andresen is Mike Hearn who announced his disen-chantment with bitcoin in August last year with the Bitcoin XT release stating that “I feel sad that it’s come to this, but there is no other way. The Bitcoin Core project has drifted so far from the principles my-self and many others feel are important, that a fork is the only way to fix things.”Hearn publicly left the bitcoin commu-nity in January 2016 when he published an open letter entitled The resolution of the Bitcoin experiment in which he de-scribed bitcoin as “a payments network that: couldn’t move your existing money,” “had wildly unpredictable fees that were high and rising fast,” “allowed buyer to take back payments they’d made after walking out of shops, by simply pressing a button,” “is suffering large backlogs and flaky payments,” “which is controlled by China,” “and in which the companies and people building it were in open civil war.”At the same time his personal journey in and out of bitcoin became the subject of a widely circulated article by the New York Times which dubbed him a bitcoin believer whose faith is in crisis, thus mak-ing him both one of the most heard bit-coin voices among the wider public and at the same time a voice of disillusion-ment and disappointment.

The Neutral and Detached

Wladimir J. van der Laan, the current lead maintainer of Bitcoin Core has demon-strated a more distant attitude compared

to his predecessor Andresen and his former collaborator Hearn by refusing to get involved in bitcoin politics. Hence, his style of ‘leadership’ has seen a fair amount of criticism within the commu-nity, as evidenced for instance by the r/btc thread started three months ago and entitled “the real problem of Bitcoin now: wladimir j. van der laan - a leader that can’t take action, is just not a leader.”User parban333, for instance, described van der Laan as “a great analytical mind and a great programmer”, adding “but a leader he’s not,” while user scotty321 stated his belief that “Wladimir VanDer-Laan will go down in history as one of the biggest failures in open source leader-ship history, ever.”

CoinFox 2016

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