The growth of the Lightning Network has been remarkable. But there’s a catch. | Mapping out Sybil Resistance Mechanisms | How The Block works

Bitcoin $3,628                    Ethereum $120.96   
Crypto Mkt Cap $123B              BTC Dominance 52.70%  

“The last ICO craze brought us deeply funded “unicorns” that fell over as soon as they stood up. The crypto bear market injected a panic not seen since the dot-com boom. The major figures in the industry are being exposed as either patient pragmatists or charlatans – there is no middle ground. And money is moving through the space at a frenetic pace and the bag holders are dumping. The rats, as they say, have started leaving the sinking ship. But we believe all of us can right that ship.” John Biggs, Editor-in-Chief of The Block

The Big Block

Lightning Network, Bitcoin’s second layer payment protocol, has seen significant growth last year. The first Lightning implementation developed by Lightning Labs launched in beta in March 2018. The other two (main) implementations developed by ACINQ and Blockstream followed in late March and late June respectively.

In a little under a year since being live on mainnet, there are now nearly 2,800 nodes with active channels and about 20,000 total channels. The steeper node growth in the last three months could potentially be connected to the release of the Casa Lightning Node, which made running a node significantly easier for a regular non-technical user.

It’s also worth pointing out that the average number of channels per node has been steadily increasing throughout the last year. There are now nearly 8 channels per each node.

The network’s capacity grew to 575.5 BTC (~$2 million). Interestingly, unlike the number of nodes and channels, the capacity isn’t growing linearly. The largest increase was recorded in early November when the LN’s capacity suddenly increased by 300% in just two weeks.

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Around The Block

Mapping out Sybil Resistance Mechanisms

One of the biggest risks for decentralized networks is Sybil attacks. In a Sybil attack, an attacker creates a large number of accounts to trick a network into thinking that several individual accounts are participating in the network, when in fact they are all controlled by the attacker. The attacker then leverages these accounts to exert influence on the network in variety of ways: manipulating the reputation system of an e-commerce shop, obtaining a disproportionate share of a network’s resources, etc.  — More


Canadian financial watchdog cracks down on the largest crypto exchange

BitMEX, one of the most active trading platforms for bitcoin, is being squeezed out of North American crypto markets, a recent report says. The exchange platform, which facilitates trading for futures contracts tied to bitcoin, has been closing accounts out of the Unites States and Canada’s Quebec region, according to a report by South China — More


How The Block works — More

ChainSecurity: Ethereum’s Constantinople upgrade “enables new Reentrancy Attack” — More

Privacy coin Grin goes live — More

New Pirate Bay malware swaps wallet addresses to steal bitcoin and ethereum — More

Gemini co-founders claim regulation is what’s keeping Bitcoin from superseding gold— More

The first trading platform for security tokens to be launched by Currency.com — More

Huobi hires a new compliance director — More

New Zealand exchange reports ‘significant losses’ following estimated $3M hack— More


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Vlad Zamfir is joining a VC-backed startup racing to launch the Casper upgrade ahead of Ethereum | Constantinople: who, what, where, how?

Bitcoin $3,700                    Ethereum $127.95  
Crypto Mkt Cap $123B              BTC Dominance 52.40%  

“Ethereum is a project that is already up and running. It’s always harder to upgrade like that; it’s like changing a car engine when it’s running, it’s a lot more complicated.” Casper Labs’ CEO, Mrinal Manohar

The Big Block

Vlad Zamfir, one of Ethereum’s lead researchers, is stepping back from the blockchain empire to collaborate with Casper Labs, an R&D startup building a “fully scalable blockchain”, The Block can confirm.

Casper Labs will be an indirect competitor to Ethereum as it endeavours to deliver the much-anticipated Casper protocol upgrade. Zamfir was leading a popular version of Casper (CBC) at Ethereum, helping the network to rely on stake rather than computing power to achieve consensus, as well as addressing scalability issues. 

But while Ethereum’s deadline for the CBC upgrade is not for another few years, Casper Labs is focused on offering the upgrade as soon as possible – offering Zamfir a fresh, more focused platform.

“Ethereum is a project that is already up and running. It’s always harder to upgrade like that; it’s like changing a car engine when it’s running, it’s a lot more complicated,” Casper Labs’ CEO, Mrinal Manohar, told The Block. “Vlad just wants the world to switch to proof of stake. He’s still very supportive of Ethereum because they’re working on Casper [the protocol]. But we have a dev team that’s solely focused on accelerating it.” 

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Around The Block

Constantinople: who, what, where, how?

Ethereum’s latest network upgrade, Constantinople, will take place at block number 7,080,000, which is predicted to occur on Wednesday, January 16. The countdown to Constantinople can be tracked on Ethereum explorer, AmberData. Details Constantinople contains five distinct upgrades, four of which are designed to optimize performance: EIP-1234: Constantinople Difficulty Bomb Delay and Block Reward Adjustment” — More


‘We’re not standing still’: Bakkt announces acquisition of assets from commodities broker

It looks like Bakkt is putting some of the $182 million it raised to work. The cryptocurrency platform run by Intercontinental Exchange announced Monday it completed its first acquisition. “I’m pleased to share that we have entered into an agreement to acquire certain assets of Rosenthal Collins Group (RCG), an independent futures commission merchant with — More


Hackers behind Ryuk malware pocket over $3.7 million in bitcoin — More

Alipay reaches 1B users worldwide; implements blockchain tech in Pakistan’s Telenor Microfinance Bank — More

Bittrex opens OTC trading desk — More

One year into Open Banking, UK banks still expect banking services from tech giants — More

Bitmain downsizes further as Amsterdam office folds — More

0x launches monetary incentive Market Maker Program as volumes reach yearly lows — More


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Despite Core Dev consensus, ‘Proposition ProgPow’ faces community concerns | Segwit adoption tapers off after rapid early growth

Bitcoin $3,705                    Ethereum $127.12 
Crypto Mkt Cap $124B              BTC Dominance 52.40%  

“It’s a nascent technology [blockchain], so there’s bound to be uncertainty around this evolution from year to year. While we don’t know what the future holds, we want to make sure we have a seat at the table shaping it.” Ana Arino, Chief Strategy Officer NYC Economic Development Corp.

The Big Block

Last week’s Ethereum Core Dev Call concluded with renewed discussion of ProgPow, a proposed change to the Ethereum hashing algorithm, Ethash, which would narrow the performance gap between generalized and specialized hardware by as much as 90%.

The rationale behind the algorithm adjustment speaks to Ethereum’s egalitarian ethos: the improved efficiency of specialized versus generalized hardware provides material advantages to ASIC owners, destroying any notion of Satoshi’s ‘one CPU one vote’ and concentrating hashpower in the hands of those who can leverage economies of scale to afford more expensive machines.

After some back and forth between Alexey Akhunov and ProgPow architect Kristy-Leigh Minehan, Ethereum Foundation’s Hudson Jameson noted consensus amongst the call’s participants, asserting that ProgPow should move ahead in the coming months barring the discovery of any major bugs during the test phase. Ethereum 2.0 client developers suggested that the adjustment could be integrated within 2-3 weeks, while the upgrade would go live in the next nine months.

However, despite ostensible agreement among Core Dev members, several notable figures within the wider Ethereum community have pushed back against the proposal, offering convincing rebuttals as to why ProgPow should not be pursued.

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Around The Block

VC-funded Blockfolio downsizes, cuts side-project as monetizing plans hang in the balance

Blockfolio, the popular crypto portfolio tracking app, has reduced its headcount and folded its incubator project three months after a large Series A cash-raise. CEO Edward Moncado confirmed that Blockfolio’s California-based team of employees had decreased from 41 to 37 people. Additionally, its affiliated company, DataBlock, has terminated contracts with five people after Blockfolio decided to “sideline” — More


Segwit adoption tapers off after rapid early growth

The share of Bitcoin transactions that utilize Segregated Witness (Segwit) has steadily grown from August 2017 when it was activated to more than 40% a year later. However, in the past five months, the growth of Segwit adoption appears to have stalled as the share of Segwit transactions stays in the range of 40-50%. Segwit — More


Indian banks are discouraging customers from using cryptocurrencies — More

N26 receives $300 million in funding at $2.7 billion valuation, plans US expansion — More

Researchers claim nearly 4.32% of monero was mined by malware — More

Volatility in the crypto market not yet over, SFOX specialist says — More

SEC inspection unit names digital assets as one of its 6 examination priorities for 2019 — More


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Bitwise files to list bitcoin ETF on NYSE Arca | The Burden of Infura | Veil wants to make decentralized financial products frictionless for mainstream users

Bitcoin $3,681                    Ethereum $128.63 
Crypto Mkt Cap $123B              BTC Dominance 52.30%  

“We believe in a decentralized web and that people should be able to use sophisticated financial products without giving up access to their money.” — Paul Fletcher-Hill, CEO Veil

The Big Block

Crypto asset manager Bitwise filed a Form S-1 with the Securities and Exchange Commission to list its physically held bitcoin ETF on NYSE Arca, the company announced Thursday. 

The bitcoin ETF has been a long-awaited darling of the cryptocurrency world, and a derivative some think could propel the market out of the doldrums and into bullish territory. Still, the SEC has pushed back on all bitcoin ETF applications thus far, citing concerns of manipulation in the underlying spot market. 

Bitwise says its product will be based on an index that draws data from large, trustworthy, exchanges. It also will hold bitcoins for the product with a regulated custodian, the firm said. The firm says those qualifications would address the concerns regulators have had about other proposals. 

“The SEC has asked thoughtful and relevant questions about the quality of the crypto trading ecosystem, the reliability of crypto pricing, the strength of the arbitrage function in crypto and the robustness of crypto custody,” Matt Hougan, Global Head of Research, who oversees the company’s indexing efforts said in a news release. “We have spent the past year researching these questions and look forward to discussing those findings with the SEC staff in connection with the filing and listing application.”

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The Burden of Infura

It’s difficult to be a viable decentralized network when a majority of your applications depend on centralized infrastructure services.

That’s the situation many in the community want Ethereum to grow away from, as the cost and requirements to sufficiently run a fully synced node have pushed developers and dapp teams to opt-out of maintaining their own local infrastructure, and instead defer to third-party centralized infrastructure service providers like ConsenSys-owned Infura. — More


Veil wants to make decentralized financial products frictionless for mainstream users

One of the major drawbacks preventing consumers from adopting decentralized products and apps is the friction-filled user experience. For a decentralized prediction market platform like Augur, users are often forced to go through a time-consuming multi-step process just to interact with its features.

Veil hopes to change that. Founded by Y Combinator Alumni Paul Fletcher-Hill, Graham Kaemmer, and Feridun Mert Celebi, Veil’s goal is to make Augur’s platform accessible to mainstream users. Augur enables users to create and trade prediction markets on a variety of topics from sports, to elections, to crypto prices. Every market is settled by a decentralized set of oracles — eliminating the need for centralized market makers. However, as previously mentioned, the process to access Augur is often too confusing and time-consuming for your average consumer. — More


Seed CX is hoping its shake-up of crypto exchange wallet management will attract Wall Street investors — More

Recently lauded crypto exchange addresses criticisms over security issue that exposed user data — More

Bitmain to appoint new CEO as co-founders Wu and Zhan step aside — More

Genesis Trading’s OTC volume is up 50% year-over-year — More

Cryptocurrency coverage remains crowded despite 2018 market shake-up, CryptoGlobe finds — More

‘We are playing the long game:’ New York sticks with plan to open Blockchain Center — More

Blockchain Capital’s BCAP security tokens to be listed on SharesPost Marketplace — More

Bloomberg hits $10 billion annual revenue milestone, and employees are set to cash in — More

Number of daily bitcoin transactions reaches 1-year high — More


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The inside story of the Coinbase crypto OG and Wall Street guard power struggle | Analysis of cryptocurrency exchange wallets shows holdings are decreasing

Bitcoin $4,037                    Ethereum $150.69  
Crypto Mkt Cap $137B              BTC Dominance 51.50%  

“The problem they [Coinbase] have, and it is the single biggest difference between Silicon Valley and Wall Street, is that Wall Street has learned in financial markets that there is a need for a cooperative environment. Competing at all cost and giving no quarter to your competition to become the Facebook or Uber of this space is not a winning strategy.” David Weisberger, CEO CoinRoutes

The Big Block

For many crypto enthusiasts, mid-2018 feels like a lifetime ago.

In those heady days, crypto’s market capitalization stood at $300 billion; rumors swirled that bulge bracket investment banks such as Goldman Sachs were entering the market; and Intercontinental Exchange excitedly announced plans for Bakkt, lauded to be the New York Stock Exchange of crypto.

Since then, the market has effectively halved, Goldman’s exact plans for crypto remain unclear, and Bakkt’s launch date is up in the air.

Things at Coinbase, once a retail exchange powerhouse, also look different. In 2018, the exchange had big ambitions to lure Wall Street’s savviest investors and fastest traders to its marketplace.

But times have changed, and now the firm, which recently scored a $8 billion valuation, is returning to its roots, focusing on San Fran’s Market Street over Wall Street. That is to say, the firm is shifting its client focus away from the likes of Goldman Sachs and BlackRock to crypto-native funds like Pantera and Polychain.

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Around The Block

Analysis of cryptocurrency exchange wallets shows holdings are decreasing

There are currently approximately 716,000 bitcoins (4.1% of circulation), 7 million ether (6.8% of circulation) and 1.2 billion tether (63.5% of circulation) held in the publicly known wallets of crypto exchanges according to research conducted by The Block (see the table). It’s important to note that: 1) the included exchanges could control even more wallets, which are not publicly known; and 2) some major exchanges including Coinbase and BitMEX, which hold significant amounts of cryptocurrencies on behalf of customers, do not have publicly known wallets so they are not included in this summary — More


A look at OP_RETURN and whether embedding arbitrary data into Bitcoin’s blockchain is spam

Bitcoin’s role as a data repository is often a topic of debate for many in the space. In the past, Bitcoin community members have argued the benefits of allowing arbitrary data unassociated with bitcoin transactions to be embedded into Bitcoin’s blockchain.

On one side of the debate, we have those that claim that as long as embedded data is paid for with transaction fees, any data should be accepted into the blockchain. On the other side, we have the purists who believe Bitcoin’s blockchain should only contain data necessary to validate bitcoin transactions and nothing else. Their argument stems from concerns of blockchain bloat. That is to say, because each node on the Bitcoin blockchain has to maintain and reference unspent transaction outputs (UTXOs) sets, excess data produced by these arbitrary data points would create upward pressure on the size of the blockchain — increasing the rate at which it grows. — More


Parity progresses with $5 million grant from Ethereum Foundation — More

Tracking the rise in crypto-ransoms as Norwegian kidnappers demand payment in Monero — More

USDC now supported by nearly 100 companies; exceeds $300 million in market cap — More

StopSIMCrime warns about the dangers of SIM swapping — More

TenX co-founder Julian Hosp steps down as president — More

Beam team: “Critical vulnerability” found in Beam Wallet — More


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