Bridging the gap between financial systems and computer whizzes, cryptocurrencies are poised to gain ground in today's markets. These peer-to-peer systems utilize blockchain technology to conduct and verify transactions.

Since the network is decentralized, there is no main authority to judge whether transactions are legitimate or not. The creator of Bitcoin, Satoshi Nakamoto, worked around this by having participants’ computers solve part of a cryptographic puzzle. Helping to solve this verifies the blockchain and grants a specific number — or fractions — of bitcoins.

Although it sounds complicated, in theory, anyone with some type of computer can get into the cryptocurrency market. Initially, cryptocurrencies were slow to catch on. However, a recent study shows just the opposite.

3 Million Users — and Growing

A recent report released by the Cambridge Centre for Alternative Finance shows that cryptocurrencies have a broader acceptance than originally believed. It estimates that more than 3 million people are actively mining, accumulating and storing cryptocurrencies. This puts its research at odds with previous guesstimates, which pegged the number at around 1 million.

To reach this conclusion, the Cambridge Centre for Alternative Finance analyzed data gathered from roughly 75 percent of the cryptocurrency industry — more than 100 companies in 38 countries.

This study is quite a big deal, and highlights the unprecedented growth of cryptocurrencies. Bitcoin was established in 2009 and enjoyed complete market domination for quite a while. Recently though, it's fallen to 72 percent, thanks to the introduction of other cryptocurrencies.

Even business has jumped on the bandwagon, which is a good thing, as it will be the key to Bitcoin's long-term survival. As more and more companies accept bitcoin as a form of payment, attitudes surrounding the currency itself will change. People will see it as less of an investment — like stock — and more like what it really is — money.

Increased acceptance in the business market is also a positive sign for nonprofits, as it gives them more precedence to accept bitcoin donations. Although this was still in its early adoption phase back in 2014, many nonprofits are now seeing Bitcoin’s advantages over cash, besides providing an additional revenue stream.

For one thing, the processing fees are much lower than those of credit card transactions. Furthermore, some third-party processors even do conversions for nonprofits at no cost. This also greatly simplifies donations from overseas.

Perhaps most surprising is that there are no tax-reporting obligations, as the IRS classifies bitcoins as property for tax purposes. Thus, in the nonprofit world, bitcoins are noncash gifts, which are not assigned any value.

The Future of Cryptocurrencies

As the number of cryptocurrency users grows, the system must change to accommodate them. One subject that's due for an overhaul in 2017 in privacy.

Currently, with the right information, it's quite simple to tie a Bitcoin address to an owner. This opens up a potential avenue for individuals compromising private information.

We may also see the advent of classes focused on cryptocurrencies, such as the ones developed by Ohio University. Colleges may even start to accept bitcoins as tuition payment.

Overall, the future of cryptocurrencies seems bright. With 3 million active users and counting, businesses across the nation may soon support them as payment methods. Nonprofits will have more flexibility with donations, and students will have more options to pay for college. As for the future of the U.S. dollar, only time will tell.

This is a guest post by Kayla Matthews. The views expressed are her own and do not necessarily reflect those of Bitcoin Magazine.

Denver-based bitcoin remittance startup bridge21 announced that it has added 38 new banks to its partner bank roster to enable more U.S.-based individuals to make international money transfers from the U.S. to Mexico.

bridge21’s new banking partners include Bank of America, Citibank, Chase, Fidelity, SunTrust Bank, TD Bank and Wells Fargo, among others. The new additions increased the startup’s partner bank network to 58 banks and credit unions in the U.S.

To provide its low-cost cross-border payment service, bridge21 leverages bitcoin to process the money transfers, while its customers deal purely in fiat currency. That means that users will decide on the amount of U.S. dollars they want to send to Mexico or the amount of Mexican pesos they want their recipients to receive. Once the user has agreed to the conversion rate and has initiated the transfer on bridge21’s platform, the startup then buys bitcoin in the U.S. with dollars and sells them for pesos in Mexico.

Also, as bridge21 uses bitcoin instead of the banking network to conduct its cross-border payments, it can do so at a much lower cost which results in better exchange rates for its customers and a 1 percent fee per money transfer. According to the startup, bridge21 manages to provide savings of over 5 percent compared to their competition.

“Last week we consistently offered 14 percent better than mid-market rates for large amounts,” said Will Madden, bridge21’s founder and CEO, in statement on June 1, 2017.

Since the launch of its U.S. to Mexico money transfer service, bridge21 has integrated BitGo Instant to increase the turnaround time of its transactions.

The “Trump Boost” for U.S.-Mexico Remittances

In light of President Trump’s plans to build a border wall between the U.S. and Mexico and his suggestion to fund the wall by heavily taxing or fully prohibiting U.S.-to-Mexico cross-border payments to keep the necessary funds in the country, money transfer operations have witnessed a sharp increase in U.S. to Mexico remittances.

A record number of money transfers have been conducted from the U.S. to Mexico between late 2016 and early 2017 in anticipation of potential policy changes by the Trump Administration that could restrict the flow of money across the border. As U.S.-based Mexican migrant workers send around $26 billion a year back home to their families, it is an important source of income for the Mexican economy.

The recent surge in U.S.-to-Mexico remittances, combined with an increasing demand for low-cost money transfer options, should bode well for bridge21 and other bitcoin remittance startups that are looking to service this economically important remittance pathway.

On the Horizon for bridge21

Madden told Bitcoin Magazine that the next step for bridge21 will be in remittances from Mexico to the U.S “going in the other direction, assuming we can tackle some regulatory challenges. Customers are demanding it and the total addressable market is enormous, nearly $300 billion annually. Also, when our Bridge Rate is bad in one direction it is good in the other. This means we can take full advantage of our Mexico rail without much work.”

Outside of Mexico, Madden is eyeing remittances between the United Kingdom and the U.S in both directions. “The U.K. Department for International Trade has opened a lot of doors for us and helped us to make the inroads necessary to expand there quickly and efficiently. We feel that the U.K. is very accommodating to financial technology companies. There’s a huge opportunity to connect the U.S. and U.K. banking systems with bitcoin.”

Aside from Mexico and the U.K., bridge21 is also planning to target large remittance markets in Asia and wants to expand into Europe and South America.

“Also on the list in no particular order are the Philippines, India, the EU and more countries throughout the Americas. China is a massive opportunity, but we’re not jumping in head first. We piloted there earlier in the year but backed out. There is too much regulatory uncertainty and the market is saturated. Japan is on our watch list,” Madden added.

In a report entitled “The Future Is Here,” Singapore’s central bank announced that it has completed the first phase of a project involving the development of a tokenized version of the Singapore dollar (SGD) on an Ethereum-based blockchain.

Project Ubin, which began in November 2016, is an attempt to create a functional replacement for Singapore’s interbank payments network using tokenization and blockchain technology.

The first phase of the project was successful, developing a proof-of-concept replacement of the MAS Electronic Payments System (MEPS+), the Singaporean analog of the Clearing House Interbank Payments System (CHIPS) in the United States, which handles the settlement of interbank debts.

In the prototype model, MEPS+ transfers simply become transfers on a private Ethereum-based blockchain. Although it is still in the early stages, Project Ubin promises a future in which bank customers can send and receive payments and exchange currency without lengthy processing times, fees or intermediaries. In the long term, Project Ubin could herald the overthrow of fiat currency by tokenized cryptocurrency.

It is important to note that the prototype, if implemented, would not affect the net money supply, as all tokens are backed by Singapore dollars held in “custody” by the central bank and which can be freely exchanged back to fiat currency.

In June 2016, the Bank of Canada partnered with R3 and several major banks on Project Jasper to develop a blockchain-based competitor to the country’s current interbank payments solution, the Large Value Transfer System (LVTS).

On May 25, the Bank of Canada announced that a blockchain-based solution was not a viable substitute for the LVTS and abandoned Project Jasper.

However, much of the code and architecture developed for Project Jasper made its way into Project Ubin. In turn, the Monetary Authority of Singapore (MAS) says it plans to make the Project Ubin prototype available to students and professionals in order to further development and innovation.

Other central banks have considered or experimented with tokenization, including the Bank of England, the People’s Bank of China (PBOC) and the Central Bank of Russia.

In February, the PBOC began testing a prototype cryptocurrency that has been in development since 2014.

The Central Bank of Russia is currently testing an Ethereum-based blockchain solution to process online payments and perform customer verification. President Vladimir Putin met with Ethereum’s creator Vitalik Buterin at the St. Petersburg Economic Forum last week and reportedly encouraged efforts to advance blockchain technology in Russia.

Many other countries are already on the blockchain bandwagon; however, if Singapore’s project is fully implemented, it would mark the first tokenized fiat currency and the first blockchain-based interbank payments system.

But Project Ubin is not over yet. The first phase was successfully completed on March 9, and the report only summarizes its conclusions and outlines the goals of the second phase.

The project’s next goal, according to the report, will be to test the viability of a tokenized blockchain-based solution to domestic and international securities transactions — such as the global stock exchange — and cross-border interbank payments.

Coin Center was invited to present testimony on Thursday to both the House Subcommittee on Digital Commerce and Consumer Protection and the House Subcommittee on Terrorism and Illicit Finance. They explained to both subcommittees the role that digital assets play in the world, what the future of the sector may look like, and how regulators could interact with the sector in a way that protects both the consumers and the innovators and encourages businesses in the industry to reside in America.

Peter Van Valkenburgh, director of research at Coin Center, spoke to the House Subcommittee on Digital Commerce and Consumer Protection. He explained to the subcommittee the revolutionary role blockchain technology is playing in the world around us. “Just as the PC democratized computing, and the web democratized news and entertainment, open blockchain networks are democratizing financial services.”

Van Valkenburgh, however, drew a stark contrast between the regulatory safe harbors given to early internet innovators, specifically the Communications Decency Act and the Digital Millennium Copyright Act, and what little is being done to protect blockchain technology innovators today.

“Both laws created safe harbors for infrastructure-building businesses,” noted Van Valkenburgh. The laws protected the creators of the internet’s infrastructure from third-party liability stemming from the users of that infrastructure.

In a conversation with Bitcoin Magazine, Van Valkenburgh gave the example of Google. Google isn’t liable for a user who illegally downloads pirated material from a website whose link popped up on their search engine. This is because of the aforementioned Digital Millennium Copyright Act, which provided a safe harbor and allowed Google to continue to build the infrastructure of the internet (in this case, a search engine) free from crushing copyright liabilities.

A similar distinction should be drawn when it comes to regulating innovators in blockchain technology, Van Valkenburgh noted in the conversation. There are two main entities innovating in the space: custodians who hold the valuable digital assets for consumers, and developers who are building the infrastructure of blockchain technology, but who don’t hold consumer funds. “These very different entities,” said Van Valkenburgh, “should be regulated in very different ways.”

An example of a “custodian” would be Coinbase, who regularly holds a consumer’s bitcoin, ether or other digital assets. An infrastructure developer would be more like a software wallet developer, who simply creates a tool with which a consumer can interact with the blockchain, safekeep their own digital assets and send transactions. The wallet developers themselves don’t exercise any control over their users’ digital assets.

The infrastructure developers, Van Valkenburgh points out, should not then be regulated as money transmitters who must get licensed state by state before starting their business. Their role is just to create portals and pipelines through which the transactions can flow, not to direct or control the transactions themselves. If the developer were found to be misleading the consumer with his/her software product, then ex-post-regulatory punishment may be appropriate, but again, there should not have to be a permission process that precedes these developers’ endeavors.

When it comes to the custodial financial services, much of the regulation, and therefore protection for innovators, is at the state level. This makes it complicated for innovators to be based in the U.S. because of the plethora of different regulators in the space. Each regulator has the ability to affect how an innovator in blockchain technology operates.

Van Valkenburgh said in his statement to the subcommittee, “In order to reestablish the U.S. as a leader we need to rationalize the chaos of financial services regulation, starting with state-by-state money transmission licensing.”

These custodial services, the ones holding a consumer’s value, should be regulated, argues Van Valkenburgh, but they should not have to repeat a licensing process 50 or more times over. Because of that costly barrier to entry, someone innovating in the space today would be best-advised to leave the U.S. and start their business in a country with simpler regulatory structures. We must regulate at the federal level if we want a simpler licensing process.

Bitcoin and Terrorist Financing

On the same day, Jerry Brito, executive director of Coin Center, joined a panel to discuss with the United States House of Representatives Subcommittee on Terrorism and Illicit Finance any national security implications of these financial innovations.

Brito explained to the subcommittee, “[Bitcoin] is open to bad actors who take advantage of it. Criminals certainly use it today, and we have begun to see some nascent interest from terrorist groups. According to a recent report on the potential of terrorist use of digital currencies by the Center for a New American Security, however, ‘Currently there is no more than anecdotal evidence that terrorist groups have used virtual currencies to support themselves.’”

Brito views the infancy of interest by these bad groups as an opportunity to get in front of the problem. “This means there is time to develop an appropriate response to the possibility; a reasoned response that targets the threat while preserving the freedom to innovate.”

The main take-home message from this meeting, however, was that, as Van Valkenburgh explained in his conversation with Bitcoin Magazine, there doesn’t actually appear to be much use of digital currency in the funding of terrorism. In fact, it is a bit unwieldy for terrorists to use because of the public nature of the distributed ledger. However, this shouldn’t stop the U.S. from developing solutions to curb the use of digital currencies by terrorists.

What Coin Center wanted these subcommittees to understand, at the end of the day, is that digital currency is here to stay. It cannot be destroyed. The technology is neither bad nor good, but instead is a new tool at the disposal of anyone with a computer. To ignore the technology is to allow other countries to take the lead in adopting and incorporating it, and gaining the benefits of it in the process.

Beginning the process of effectively and sensibly regulating digital currency is a must if the government wants to derive any benefits from its existence and prevalence.

Over the past year, there have been fortunes made with winning investments like bitcoin, ether and ripple. And yet many people don’t know how to buy a single bitcoin. If you are new to digital assets, you may find it a tap dance just to get your money in, between digital wallets, online exchanges and questionable regulations. If you are perplexed by blockchain technology and feel more comfortable having your money in traditional markets, there are companies you can invest in to get the technology in your portfolio. Companies like IBM and Microsoft are betting heavily on blockchain tech, and are positioning themselves as leaders for the Internet of Everything.

Here are some familiar, publicly traded companies that have invested in blockchain technology:

Microsoft (MSFT), Nasdaq 

Microsoft has been sponsoring blockchain technology and is now a founding member of the Enterprise Ethereum Alliance (EEA), along with dozens of other companies including J.P. Morgan and Toyota. The alliance was formed to create standards for Ethereum in business use cases and to collaborate for a blockchain-based online marketplace. Microsoft’s Azure cloud computing service platform also supports Ethereum, offering Blockchain-as-a-Service (BaaS) tools for app developers.

Quoted in the MIT Technology Review, Marley Gray, who leads Microsoft’s blockchain efforts, said, “We see a huge opportunity here. Enterprise-scale and enterprise-grade infrastructure is going to be vitally important for this financial infrastructure that will be woven using blockchain over these next few years.”

As Microsoft adds development tools and industry expertise, its early bets on blockchain tech should grow in years to come. The stock is now sitting at a 52-week high in the $72 range, with a trailing annual dividend of $1.53 per share.

IBM (IBM), NYSE 

With a different approach, IBM has joined Hyperledger in its foray onto the blockchain. Governed by corporations, Hyperledger has five blockchain and distributed ledger projects in incubation. The one that IBM is most invested in is called Fabric, a blockchain layer for enterprise solutions, which also has support from companies including Accenture, Airbus, American Express, CME Group, Intel and others.

In 2016, IBM focused specifically on introducing blockchain technology to the company’s artificially intelligent computer named Watson. Potential applications include machine-to-machine communications and payments, machine self-diagnostics, and machine self-learning.

Similar to the Microsoft Azure developer platform, IBM also offers blockchain building tools for corporations. Shares of IBM are now trading around $152, with a trailing annual dividend of $1.40 per share.

Overstock.com (OSTK), Nasdaq  

In 2014, Overstock.com started a VC fund to manage investments in firms leveraging blockchain technology. Named Medici Ventures, the fund now owns a 2.5 percent stake in Factom, which may become a leading data hashing company. And in April 2017, Medici invested $428,000 in Bitcoin company Ripio, a leading digital wallet and exchange in Argentina. Medici has also invested in several platforms related to equity trading.

Overstock.com CEO Patrick Byrne has long been a proponent of Bitcoin and blockchain technology. In 2016, he announced a new subsidiary blockchain-based equity trading platform named t0, which he thinks could revolutionize equity trading. t0 combines cryptographically secure distributed ledgers with existing market processes to reduce time and costs, and increase transparency, efficiency and auditability.

Medici continues to invest in promising blockchain startups. The company’s stock is trading in the $14.50 range, with a market cap of only $363 million.

FastForward Innovations (FFWD.L), London Stock Exchange  

FastForward Innovations is a VC firm investing in emerging technologies. In 2015 FastForward made a £279,000 ($431,300) investment in Factom, which in 2016 was revalued at £560,000 ($709,800) after another successful funding round. The latter round included funds from well-known investor Tim Draper, who stated, “Governments also need better security from hackers, and the blockchain avails them of better security than they currently have. I believe that the Factom team has the opportunity and the potential to build a company greater than Oracle and Palantir and IBM combined.”

FastForward is also invested in digital gaming, wearable technology and online media. The company’s stock is currently trading at £12.65 ($16.24).

Bitcoin Investment Trust (GBTC), OTC  

If you want exposure to bitcoin and only bitcoin, you can buy into the Bitcoin Investment Trust through your traditional brokerage account. A financial product of Grayscale, which is owned by Digital Currency Group, GBTC is meant to track the bitcoin market price on behalf of investors, who then don’t have to buy and safekeep bitcoins for themselves.

The fund’s bitcoins are kept in deep storage vaults with Bitcoin company Xapo, where they are protected by intense cryptographic and physical security. With $390 million in assets under management, the fund has a market cap of $882 million on Yahoo Finance. Recently, the price of the fund has soared above the market price of bitcoin, which shows an active demand for a bitcoin investment vehicle. Currently trading at $516, GBTC is up from $101 just six months ago.

Blockchain Capital  

Though not publicly traded, if you would like to dabble in digital assets but don’t know which projects to invest in, Blockchain Capital offers an interesting way to play this space. Calling themselves the “First Ever Digital Liquid Venture Firm,” Blockchain Capital invests in promising blockchain projects and the platforms that support them, and now has what looks to be a strong portfolio. Their holdings include industry leaders Blockstream, Bitfury, Coinbase, Ripple, ShapeShift, BitPesa and more.

What is unique about Blockchain Capital is that they have their own digital token called BCAP, which represents an indirect fraction of non-voting interest in their Digital Liquid Venture Fund. By buying the BCAP tokens, you will own a share of the fund of companies that Blockchain Capital invests in. When the fund released these tokens to the public earlier this year, the entire offering of 10 million BCAP sold out in less than six hours, raising a total of $10 million USD at $1 per token. Today the token trades on Liqui.io for $2.25.

This article is for general information purposes only and should not be taken as investment advice. Investors should conduct their own due diligence and consult with a qualified tax/investment professional before attempting anything described in this article.

The number of job posting for blockchain talent has increased more than threefold on LinkedIn in the last 12 months, signaling the high demand by commercial industries to develop distributed ledger technology–based solutions.

The demand for blockchain developers reportedly greatly exceeds the supply as corporations are struggling to find experts in the field who are not already employed by the hundreds of blockchain startups that have emerged in recent years.

According to data collated by the Financial Times, there are over 1,000 blockchain jobs listed on LinkedIn, and the number of blockchain-related ads has been growing at over 40 percent per quarter.

Currently, there are around 10,000 users on LinkedIn who list “blockchain” as one of their skills, while over 37,000 results appear when searching for the keyword “blockchain” using LinkedIn’s “people search” function. However, these users are composed not only of the highly sought-after blockchain developers but also of CEOs, CFOs, academics, advisors, consultants and journalists, among others.

Given the high demand for blockchain developers, it is not surprising that salaries are exceeding standard market rates for developers. Today, a blockchain developer can easily make a salary north of $130,000 per year, while top blockchain developers can earn up to $650,000, according to a report by the Financial News.

The average total remuneration for senior traders and mergers & acquisitions bankers in London are £281,000 ($360,000) and £326,000 ($420,000) respectively according to data collated by City A.M. That places top blockchain developers among the best-paid professionals in the financial services industry.

Josh Graff, U.K. country manager at LinkedIn, told Bitcoin Magazine: “We’ve seen the number of blockchain-related jobs posted on LinkedIn more than triple over the last year. There are nearly 10,000 blockchain professionals on LinkedIn, out of our 500m members, so it’s a niche field, but one with strong potential.”

He added, “Professionals in related areas such as cryptography and machine learning may want to look at the roles available and the skills they need to develop, as there is certainly a growing demand within the technology, finance and insurance industries for blockchain expertise.”

According to LinkedIn data, currently four out of five blockchain jobs have been successfully filled within the quarter for the past year; however, that also means that companies are still not able to fill 20 percent of their blockchain talent demands.

The recent surge in blockchain-related job listings is a testament to the high hopes that financial institutions have for blockchain technology. For the future cost reductions and increases in efficiency that blockchain technology promises, financial services companies are willing to dig deep into their pockets to source the right talent that can make that happen for them.

If blockchain technology becomes as impactful on the financial industry as predicted, it will not be the traders and M&A bankers but the blockchain developers who will become the new “masters of the universe.”

In an interview with Bitcoin Magazine, Ethereum co-founder Vitalik Buterin discussed some of the scaling issues Ethereum is currently dealing with, the rising interest in Ethereum in Asia and his thoughts on the ICO ecosystem in general.

In late May, developers from the Ethereum-based job market platform Ethlance introduced an issue its freelancers were struggling to deal with. Twelve months ago, when the price of Ethereum’s token Ether was around $14, a smart contract to set up a freelancer profile on Ethlance cost less than $1.

As the price of Ether started to surge beyond $250, Ethlance freelancers were required to pay around $8 to set up their profiles. Issues of Ethereum-based decentralized applications (DApps) and the rising fees on Ethereum led the community and supporters of Ethereum to express their concerns over the platform’s scalability.

Discussions on Etheruem’s scaling issues intensified as Buterin’s interview with Epicenter, conducted in December of 2014, resurfaced, during which he characterized Bitcoin’s $0.05 fee as “absurd.” Currently, Ethereum’s average fee is over $1 and its median fee is around $0.05, close to the level Buterin described as absurd.

Bitcoin Magazine spoke to Buterin to address some of these scaling issues Ethereum applications are currently dealing with, the rising transaction fees on Ethereum and the ICO ecosystem.

Scaling Issues of Decentralized Applications and How They Can Be Resolved

In regards to the issues that Ethlance and other DApp developers are facing, Buterin explained, “There are a lot of applications and contracts even now that are being built inefficiently. One major example is that there are a lot of applications that make one separate contract for each user which means that for every single user, it adds several kilobytes of data that cost a few million gas.”

Instead, Buterin explained that the same logic or contract is not required to be copied onto each other and replicated tens of thousands of times. There are more efficient ways to process smart contracts that can significantly reduce gas costs for users. He noted that by implementing efficient smart contracts, users can save anywhere from 50 to 90 percent in gas costs.

According to Buterin, the Ethereum Foundation and its development team recently asked writers to reduce their gas prices and some of them have agreed to do so to ensure that users are not required to spend upwards of $8 per smart contract. However, these solutions can only last for the short and midterm. Buterin explained that, in the long run, the only way to maintain low gas or transaction fees is to scale the entire Ethereum network and blockchain proportionally as it grows in size.

Another long-term solution or development plan the Ethereum Foundation is looking into is the possibility of switching the consensus protocol of Ethereum from Proof of Work (PoW) to Proof of Stake (PoS).

As it did after the execution of the DAO hard fork, which resulted in the creation of Ethereum Classic, another major hard fork could lead to another network split. Ethereum Classic is currently the fifth largest cryptocurrency in the world.

Buterin recognized that there are some members of the community that are concerned over the possibility of a split chain.

“I feel like recently, most of the people that are really against PoS have moved over to Ethereum Classic, so I’m not really sure if that substantial of a community will want to make another fork or split of Ethereum once the Casper switch happens. That’s just my instinct,” said Buterin.

In terms of development of the overall Ethereum ecosystem, progress has been slow but steady. “A lot of the things that we’ve wanted to do around Metropolis, privacy, proof of stake, Serenity, scaling, sharding, all of those things have been taking more time that we had expected,” Buterin admitted, “but I also think that the results that we’ve been moving towards are much better than we thought that we would get.”

He mentioned, as an example, that over the past two or three years, there have been improvements in protocol security that they hadn’t foreseen and that are of great benefit. “I think the end result of a lot of our work and a lot of our research is much stronger than it would have been two years ago.”

Ethereum Demand on the Rise in Asia

South Korea has become the largest Ethereum exchange market in the world with a 19 percent market share, surpassing the U.S. and China in terms of daily trading volume. China, within a few days of its exchanges adding support for Ethereum, became a contender for top spot in market share.

Ethereum is being actively developed by educational institutions such as universities and government agencies including the Chinese Royal Mint. Recently, the People’s Bank of China stated that Ethereum is heading in the right direction, validating the network and project. As Bitcoin Magazine’s China-based journalist Bradley Fink previously reported, some of the largest companies in China, including Alipay and Peking University, are actively investing in the potential of the Ethereum protocol.

Furthermore, the Enterprise Ethereum Alliance (EEA), connecting Fortune 500 enterprises, startups, academics and technology vendors with Ethereum, recently announced its expansion into China with a new office in Hangzhou. It will focus on providing Ethereum-based infrastructure to ensure Chinese enterprise can meet domestic market needs.

“There definitely is a fairly large Chinese Ethereum community and there are several companies based in Shanghai and Hangzhou that have been working on Ethereum applications for a couple of years. There has been increasing amount of interest in the technology and the platform. In general, it is continuing to grow,” said Buterin.

He noted that while the Chinese community used to concentrate its interest solely on Bitcoin, that has changed. “But more recently, it does seem like more people are starting to look at both Bitcoin and Ethereum. The one thing that’s made me feel optimistic over the last year is that there is a lot of interest, not just on the cryptocurrency side and buying ether and holding it, but actually using it to build applications.”

Buterin also explained that developers of Ethereum are trying to match the rising demands and expectations from its investors. In the past week, Ethereum has surged exponentially in market cap, accounting for around 50 percent of Bitcoin’s market cap. He noted that the Ethereum Foundation and its developers are working to live up to the expectations of investors and rising demand in regions such as Asia.

“I think the success that Ethereum has seen is definitely putting a lot of pressure on the core developers of the actual protocol of the platform to step up and deliver on the admittedly high expectations that the community has of us,” he said. “That’s an expectation that we’re eager to see if we can match.”

Ethereum-based companies are also coming to the forefront at a time when the ICO market is growing at a rapid rate, creating new opportunities for startups and investors alike.

Buterin was recently appointed as an advisor to the board of Primalbase, a startup that is aiming to tokenize a WeWork or Regus-type co-working space provider and grant micro-ownership to its investors.

“I’m definitely very interested in all these applications, particularly the semi-financial ones with some components of finance and monetary value but also some components outside of it” said Buterin. “The general idea that we can create this economy where we micro-tokenize and let people have their own micro-ownership, I think that is definitely a very interesting and promising idea.” 

Hong kong photo credit: By Diliff - Own work, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=3963125

Vitalik Buterin photo credit: By Romanpoet - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=49232633

Bitmain subsidiary BTC.com is now offering its wallet users discounted priority transactions. Though currently still a beta feature, this will let BTC.com users pay some 94 percent less in fees for three transactions each month to have them confirm faster. The funds allocated toward the discounted transaction fees will be “subsidized by the BTC.com Wallet.”  

The new service comes at a time when transaction fees on the Bitcoin network are reaching all-time highs.

Speaking on recent transaction fees reaching all-time highs, and how it may impact potential Bitcoin adopters, BTC.com’s Alejandro De La Torre told Bitcoin Magazine:

“The effect of rising tx costs mostly affects the perception of bitcoin to new users. They might think it’s too expensive or might use a low tx fee and have their bitcoin transaction confirm in a very long time. Both scenarios are not good for adoption.”

This is not the first time that bitcoin wallets have offered discounted transaction fees. “Many wallets have previously paid for transaction fees on behalf of users, but stopped doing so recently (such as Coinbase and Xapo),” said De La Torre.

BTC.com is currently the only bitcoin wallet that also serves as a fully operational mining pool, currently controlling approximately 7 percent of hash power on the Bitcoin network.

The Scalability Problem

The Bitcoin community has been embroiled in arguments over the best solution to scale the network for years now. Perhaps the most popular solution is Segregated Witness, a soft fork protocol upgrade proposed by the Bitcoin Core development team. Bitmain in particular has explicitly stated their refusal to implement SegWit if it’s not combined with a hard fork increase of the block size limit, and its pools — which include the BTC.com mining pool — have enough signaling power to block SegWit’s activation.

As for solutions to the scalability issue, “BTC.com is supporting Segwit2x.” Segwit2x is a hybrid of the solutions proposed above: It implements SegWit followed six months later by a hard fork increase in the block size limit from 1 to 2 MB.

If the Bitcoin community is unable to agree on a solution to the scalability issue, the growth potential of the network limits its application. “We need to work together and stop bickering,” says De La Torre, “There are some good scaling options on the table.”

On June 7, 2017, at MoneyConf 2017 in Madrid, David Bailey, CEO of BTC Media, moderated a discussion with Jon Matonis, Founding Director of the Bitcoin Foundation, and Huy Nguyen Trieu, CEO of The Disruptive Group, on the topic of how blockchain technology can go mainstream.

Watch the panel below.

OpenTimestamps, a project led by Bitcoin Core developer Peter Todd, just made sure the Internet Archive cannot be forged.

Well, sort of. In a blog post published last week, the developer and consultant explained how he used his OpenTimestamps project to timestamp all the Internet Archive’s 750,000,000 files onto Bitcoin’s blockchain. This means that no one — not even the Internet Archive itself — can modify this collection of books, videos, images and other records; not unnoticeably.

Here’s how he did it.

Merkle Trees

The effort is an interesting showcase of the OpenTimestamps project, an open-source and freely available timestamping service.

OpenTimestamps works by combining two cryptographic tools.

The first of these is a Merkle Tree, a cryptographic structure of hashes.

Any piece of data can be hashed, which means it’s scrambled and condensed into a short string of numbers: a hash. This string of numbers is seemingly random; it can’t really be used for anything in itself, not even to reconstruct the original data.

But it can be used as a sort of check. Anyone who has access to the original data can hash this data once again, and will get the exact same hash. Meanwhile, even if the original data is altered minimally (perhaps a picture includes an extra pixel), the resulting hash turns out completely different. A hash proves that the data you have is the exact same data used to create a hash.

A Merkle Tree, then, hashes multiple hashes together. Two hashes become one hash. And another two hashes also become one hash. Then these two resulting hashes become a new hash, so all four hashes are now represented by a single hash. And these four combined hashes can perhaps be hashed together with the hash of four other combined hashes, to once again conclude into a single hash. Etcetera. Because this hashing of hashes can continue in perpetuity, a Merkle Tree can ultimately “store” virtually unlimited amounts of data.

The real magic of a Merkle Tree is that any of the original data included in the tree can be checked against the single remaining hash of a Merkle Tree: the “Merkle Root,” even without requiring any of the other data hashed into the Merkle Tree. You just need to know where in the tree to find the hash.

The second piece of the puzzle is establishing when that Merkle Tree was created.

Bitcoin’s Blockchain

Establishing when a Merkle Tree came into existence is done by utilizing the power of Bitcoin’s blockchain. Literally, Bitcoin’s power-consuming, proof-of-work system guarantees that data must have existed at a certain point in time.

The Bitcoin blockchain is essentially a cryptographic structure, just like a Merkle Tree. But while a Merkle Tree merges hashes into a single compact hash, the blockchain merges them into a timeline. Each Bitcoin block is hashed and included in the next block. That block is hashed too and included in the block after that.

Meanwhile, Bitcoin’s proof of work makes it so that each of these blocks requires real resources to mine. Right now, this already costs thousands, perhaps even tens of thousands, of dollars per block.

This is what makes Bitcoin’s history immutable.

“Changing history,” for example, by removing a transaction from an old block, cannot be done by simply removing that transaction. That would entirely change the hash of the block that included the transaction, invalidating that block. That would in turn invalidate the subsequent block as well, as it doesn’t include the valid hash from the previous block, and as such it would invalidate all blocks that came after it.

Instead, the only way to change Bitcoin’s history is to completely re-mine it. An old transaction can only be “removed” from a block by mining that same block again, without the transaction. And then you’d need to mine the next block, and the block after that … all the way until you’ve mined the longest chain. (Technically, the chain with the most accumulated proof of work.)

This will become very expensive very quickly. Even without any competing miners, proof of work requires that re-mining a day of Bitcoin’s history should cost hundreds of thousands of dollars’ worth of energy. With competing miners to catch up on, you need at least a majority of hash power.

Especially with competing miners, rewriting even a couple weeks of Bitcoin history is practically unaffordable for anyone … never mind re-writing a couple of years.

And to top if off, re-writing this much history would be very obvious too. Many Bitcoin users would notice and would possibly take precautions to make it impossible.

OpenTimestamps

OpenTimestamps combines the magic of Merkle Trees with the immutability of Bitcoin’s blockchain.

To showcase it, Todd took 750,000,000 hashes of files from the Internet Archive last week to combine them all into one Merkle Tree. The “root” of that tree, then, was placed into a Bitcoin transaction. He sent that transaction over the Bitcoin network to have it included in the Bitcoin blockchain. This is now a couple of weeks ago and virtually impossible to ever revert.

As a result, almost the entire Internet Archive is now hashed into Bitcoin’s blockchain. Anyone can take any document from the Internet Archive and verify that it existed in its current form four weeks ago. If the hash checks out, the document has not been altered since, nor could it have been created later.

Finally, to make this timestamp actually useful, the OpenTimestamps team — specifically Riccardo Casatta, Luca Vaccaro and Igor Barinov — created an accessible search interface and an in-browser timestamp verifier. With it, anyone can easily browse through the Internet Archive’s database and immediately see whether the records check out with the corresponding hash, as embedded in Bitcoin’s blockchain.

For the first time in history, historical archived data cannot be altered without being noticed.