Bitcoin’s Resplendent Week — Bitcoin Rallies In China |

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Milan, Italy was the host of a formal bitcoin conference to address scaling and a protest conference that addressed, well, everything that the formal conference didn’t.

Scaling of bitcoin is a thorny issue and one that caused some dissension at the Scaling Bitcoin conference that took place on October 8 and 9. Emin Gün Sirer from Cornell made a pertinent statement on the final day of the Scaling Bitcoin conference: “We were all busy arguing about the block size, but everything else is crucial.”

For many, block size is no longer the way to increase the network’s capacity. SegWit, or Segregated Witness, is a planned soft fork that will change how transactions are stored by the network. Blockstream’s Greg Sanders said: “Let’s stop talking about the block size. Let’s talk about weight, the weight of a transaction, the weight of a block, the externalities it puts on the system. Let’s talk about throughput. We can put more information in small spaces, so let’s look at these problems.”

Meanwhile, proponents for larger blocks met in a nearby hotel to discuss proposals that had been rejected from the Scaling Bitcoin conference, one of which was that capacity should be dramatically increased to accommodate more users. A proposal for “Xthin blocks” was discussed, along with research on an alternative proposal called “Bitcoin Unlimited” that could increase the time it takes for the data from those blocks to reach nodes and miners located around the globe.

This rogue group also voiced fears that bitcoin’s strong position in the market could be usurped by an alternative digital currency. The group maligned the Scaling Bitcoin conference, suggesting that it was not “data-driven,” and other scaling initiatives, such as Lightning, were dismissed as “vaporware.”

Bitcoin Unlimited’s Jerry Chan attended and presented at both events. His opinion was that some topics were excluded to avoid contention. Chan also said: “I think that some of the talks that were excluded would have been very useful because they directly address issues that were brought up in the past.” Attendees at the protest conference included major miners, such as Bitmain’s Jihan Wu and ViaBTC’s Haipo Yang.

Sounds like the two sides need to just chill.

Bitcoin Faces Restricted Access In Turkey

In Turkey, however, bitcoin stakeholders are one group that is definitely not able to relax as they face the blocking of many online services by Turkish authorities. According to NewsBTC, Dropbox, GitHub and OneDrive were rendered inaccessible as of Oct. 8, and the fear is that bitcoin services could be next.

The Turkish government has enforced the restrictions because of a hacking incident. A hacker group, Redhack, claimed to have accessed the email account of Turkey’s minister of energy and resources. Turkish ISPs have experienced this situation before, and there is some discussion that Turkey should have a fall-back for users to access U.S. online services.

The situation in Turkey highlights the problems inherent in centralized platforms and solutions, such as the ease with which governments and ISPs can easily restrict internet access, which affects millions of users. A decentralized internet is complex but is a way to avoid potential internet blocks or restrictions.

Bitcoin stakeholders are worrying that the Turkish authorities might, at some point, block access to bitcoin platforms. According to NewsBTC, the Turkish government would like to “wall off the internet as China is doing.”

PayPal has recently fallen victim to shenanigans by Turkish authorities. Although user access to the payments platform was not restricted officially, delays by financial regulators that seemed to have no intent in resolving issues meant that PayPal did not renew its financial license.

Bitcoin Regulations

But when governments fail to represent the public’s best interests, or take their time to do so, George Takach, senior partner at McCarthy Tetrault LLP, has a laid-back approach.

Bitcoin regulation, as Turkey is emphasizing, is a bane in bitcoin’s behind. Governments the world over are struggling with bitcoin and blockchain; regulatory frameworks for conventional financial systems are not applicable to digital currencies. But Takach is confident that the law will catch up with technological innovation.

Takach compared bitcoin to the internet decades ago and compared the approach of some states in the U.S. versus Canada, according to NewsBTC. The state of New York, for example, rushed to develop the BitLicense, while the Canadian government issued directives only for countering money laundering using digital currencies, preferring to avoid any premature and unnecessary action. Takach’s point is that different states and countries will have a different reaction to disruptive technologies, and a rushed and ill-thought-out policy could be counterproductive.

Takach noted that the cryptocurrency industry is still nascent, and evolving bitcoin or blockchain technology could look very different a few years from now. Takach referenced the distributed ledger, initially created to record all bitcoin transactions but which is now used for many other applications.

Takach suggested that the general legal rules of libel, taxation, securities and regulations, originally applied to internet models, apply to cryptocurrencies now, and regulations to prevent terrorist financing, privacy rules and consumer protection can be created based on internet-related precedents.

So, as Takach advocated, just chill!

New Hampshire Town Keene On Bitcoin

The New Hampshire town, Keene, has more bitcoin-accepting businesses per capita than San Francisco, according to CryptoCoinsNews, and its inhabitants are forward-thinking and proactive. A local bitcoin radio ad campaign is attempting to win support for local bitcoin owners to allow them to pay a lower percentage fee to credit card companies from their sales.

It’s not clear why bitcoin is so popular, but in August, a local food truck selling vegetarian, Vietnamese and French food advertised that it was accepting bitcoin. There is also a bitcoin vending machine that first appeared in 2014. The radio ads list local businesses that accept bitcoin, such as Local Burger, the Farm Concessions and Route 101 Local Goods. A second ad due for release in a few weeks will provide information for local business owners on how to accept bitcoin and its benefits to the local community.

Although bitcoin is widely used in other areas, this is the first time a bitcoin ad has featured on local radio. So, residents of Keene have it right. They’re eating French cuisine, chilling and jamming to the bitcoin beat.

Bitcoin Through The Generations

Who knew that bitcoin mining could be passed down the generations? It’s just not that old, is it? But in Raleigh, North Carolina, a father-and-son team from the home water and heating industry are upending the bitcoin mining industry, according to CoinDesk. Bitcoin mining typically requires high-energy miners who race to add the next block or batch of transactions to the blockchain. The payoff is 12.5 BTC — just under $7,700 at a bitcoin price of $615.

Jason Gantt and his father, Vernon, operate two bitcoin mines out of their respective homes and are in the process of constructing a third. CoinDesk likened their trade to the early days of bitcoin mining, when miners would connect to a network, hash and maybe gain their own bitcoin in the process.

But it’s back to the old scaling argument again because increased competition, costs and network difficulties mean that successful miners must be able to scale. Mines nowadays consist of huge data center-based operations with hundreds of machines clicking away, and these types of operations are more common where power costs are low, such as the Washington river valleys or the Tibetan mountains, said CoinDesk.

“It wasn’t until I hit my first block when I had some [AntMiner] S7s that I told my father about it. He became very interested, was asking all sorts of questions about what bitcoin is and whatnot. And so, he thought it was a great idea and wanted to go big. So, that’s how we got our start,” said Jason Gantt.

The father-and-son team began experimenting with bitcoin in 2010, and their experience with electrical, plumbing and home heating systems gave them “an understanding of what these machines require.” Early efforts have led to an operation that now produces roughly 600 terahashes per second and around $9,000 per month in revenues after expenses, paying an average of six and a half cents per kilowatt hour.

The duo has documented on YouTube some of the trials and tribulations they have experienced along the way, including exploding power transformers and flooding as a result of Tropical Storm Hermine that hit the U.S. East Coast in September.

Jason told CoinDesk: “We’re currently considering adding one or two investors to possibly speed things up. We’re in talks with one, but they kind of want more than we’re willing to give. We’ll possibly do crowdfunding to get to that point.”

But until then…

The Central Banks Are Beckoning Bitcoin

It’s ironic that a distrust of central banks and their national currencies spawned the creation of bitcoin, but it is now the central banks that are intent on leveraging bitcoin technology. Well, to be specific, the banks want to use blockchain and its decentralized record-keeping to manage real transactions.

Both the Bank of England and the People’s Bank of China are open to placing their currencies onto a distributed ledger, according to CNBC.

For the central banks, they hope to gain a more transparent, fast and secure financial system through real-time tracking of currency. The Bank of England suggests that the benefits of issuing a digital currency on a distributed ledger could be as much as an additional 3 percent on a country’s economic output.

So excited are the banks that Fan Yifei, deputy governor of People’s Bank of China, wrote for Bloomberg View: “The conditions are ripe for digital currencies, which can reduce operating costs, increase efficiency and enable a wide range of new applications.” Lael Brainard, the Fed governor overseeing new technology, said: “We are paying close attention to distributed ledger technology, or blockchain, recognizing this may represent the most significant development in many years in payments, clearing and settlement.” Even Fed Chair Janet Yellen was bullish, saying: “Innovation using these technologies could be extremely helpful and bring benefits to society.”

The big banks are actively experimenting with distributed ledgers, such as the Dutch central bank, the Bank of Canada and the Russian national bank, all of which are considering the roles that distributed ledgers could play. But Carolyn Wilkins, senior deputy governor of the Bank of Canada, said that a great deal of testing is still necessary before the bank can decide whether distributed ledger technology is ready for the real world.

Critics note that blockchain was created to allow bitcoin transactions to be recorded communally to avoid the need for a central bank. If a central bank is involved and keeping track, why bother keeping records communally? Also, distributed ledgers discussed by central bankers are less open than those of the bitcoin network. The Bank of England announced that the next version of the bank’s basic software and infrastructure will support distributed ledgers.

Bitcoin In Asia

The news from Asia is good for bitcoin. CoinDesk reported that Japan is planning to exempt bitcoin and other virtual currencies from a national sales tax, which is around 8 percent. According to Nikkei: “Discussions between the Finance Ministry and Financial Services Agency are expected to lead to a formal decision after talks by a ruling-coalition tax panel at the end of the year.” The removal of the sales tax could decrease administrative costs for bitcoin exchanges.

And in China, according to, the yuan is at a six-year low, while bitcoin is on a 10-week high. The yuan is at 6.72 per dollar, while bitcoin broke the $630 ceiling early on Oct. 13, at $635.79, with a trade volume of $13.85 million, the highest it has been since July.

A similar event occurred in May, when bitcoin rose by 15 percent, which was attributed to the devaluation of the yuan and bitcoin’s use as a safe haven when economies start to slide. Bitcoin trades with yuan account for around 95 percent of trading volume, according to CoinDesk.

Analysts expect further depreciation of the yuan because of weak guidance by China’s central bank for the yuan.

And For The Winklevosses, More Delays

But the bitcoin news would not be complete without an update on the Winklevoss ETF.

The Securities and Exchange Commission declined to make a ruling on Oct. 12 on the first digital currency ETF, claiming that it needs additional public feedback on the proposal, according to MarketWatch.

Yet more delay for Tyler and Cameron Winklevoss. The public has 21 days from the Oct. 12 document publication to provide feedback, and responses must be filed within 35 days after that.

So, that leaves the Winklevosses with plenty of time to chill, too, while the price of bitcoin slowly rises — for now.

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