April Saw a 200 % Increase in Average BTC Transaction Fees, According to Diar

Andres Chavez
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April Saw a 200 % Increase in Average BTC Transaction Fees, According to Diar

Bitcoin’s resurrection started a few weeks ago, with turn of the month from March to April. For months, since mid-November, the world’s most prominent crypto asset struggled to keep its value, and alternated brief periods of stability with price falls. Now, however, the scenario is completely different.

As of the moment of writing this piece, BTC’s price was growing steadily, and the planet’s most valuable cryptocurrency was exchanging hands at $5,941, up 3.34% in the last 24 hours. Bitcoin is about to recover from pre-collapse levels: prior to November 14th, it was hovering around the $6,000-$6,500 range.

At the time of this writing, Bitcoin’s market cap was $105,082,037,362, with a 24-hour trading volume of $18,059,891,307. The market dominance rate was holding steady at 56%.

A Stark Increase over March

According to crypto research company Diar, the average bitcoin transaction fees went up by approximately 200 % in the month of April when compared to March’s digits, per the report.

The document, which is behind a paywall, states that Bitcoin miners gained $13.7 million only in transaction fees, a significantly higher number than the $3.9 million (an increment of 71 percent) made in March. When comparing the overall mining earnings, April showed almost $300 million (precisely $291 million,) whilst March came up at 30 percent less than that.

The overall movements also went up, presumably because of the price surge. Remember that, in March 31, Bitcoin’s value was at around $4,100, whereas in April 2nd, the coin soared to the $4,700 levels. From that point on, it has been steadily going up to finally surpass $5,000 on April 6th and $5,500 on April 23rd.

On-chain Transaction Volume also Went Up

As a result, on-chain transaction volume, at least according to Diar’s report, has gone up 43% in April, resulting in full blocks. Meanwhile, SegWit (Segregated Witness) approached 40% of the total transactions per block, with each block frequently surpassing the 1 MB limit. For comparison’s sake, consider that SegWit usage rate was 26%, on average, last year.

The industry growth is also evidenced in the amount of on-chain BTC transactions, which came close to the December 2017 all-time high, leaving behind the cold-ish days of March. According to Diar, 1-2 block confirmation times were 84% lower than what peak moment showed.

Comparing the Increase to 2017

If activity reached the same level than that of December 2017 (when Bitcoin started an impressive price surge that took its value to nearly $20,000,) BTC transaction fees would go significantly up nonetheless. Concerning that idea, here is what Diar had to say:

“Diar estimates that at current SegWit usage levels, fees could go up as high as 300% should on-chain movement of Bitcoins resemble that seen in at the end of 2017,” the crypto research and investigation firm wrote this week.

On the other hand, and according to the Diar report, the transaction volumes on Ether (ETH,) on decentralized applications, registered a new all-time high.

By Andres Chavez

Bitcoin Commissions Rise to become a Problem for Lightning Network

Willmen Blanco
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Bitcoin Commissions Rise to become a Problem for Lightning Network

High commissions in Bitcoin would make smaller payments impractical, as the current problem is the liquidity of nodes and channels

The Lightning Network (LN), developed as a scalability solution for Bitcoin, allows this cryptocurrency to be routed outside the main block chain, only using it as a backup of the state of the LN channels. However, the design of the network still has some difficulties that could make its operation unsustainable in a scenario of high commissions, in addition to the problems associated with the liquidity of the channels.

According to the Chief Scientist of Bitcoin Unlimited, Peter Rizun, these problems are due to Bitcoin’s particular problems, especially the design of its network and the use of Hash Time Locked Contracts (HTLC) for the execution of its transactions.

The LN Operation according to Rizun

HTLC use encrypted password locks (hashlocks) and time locks (timelocks) to require that the recipient acknowledge having received the payment before a time limit, for which this type of smart contract must generate a cryptographic test of payment, which is fundamental in the LN.

Rizun explains that the payment channels composing the network need to be understood as abacus from which funds are mobilized but cannot be withdrawn until users comply with HTLC clauses.

He believes that these difficulties became evident after the recent increase in network commissions, but in a scenario where Bitcoin commissions average US $100, the LN would lose all its potential as a solution to the Bitcoin scalability, since it would be economically impossible to make payments through this network.

Problems with Liquidity and Loss of Funds

Rizun considers that problems associated with the liquidity of the network are due to the operation of the HTLC within the network.

Currently, these contracts involve blockages in the resources within the channels, such as one that opens with the correct password (hashlock) and another one that opens automatically after a certain time (timelock).

Regarding abacus, bills or invoices can move directly from user #1 to user #2 and, using one of these as bridge when the channel between them is open, to user #3, although with a small extra commission.

The essential rule, and the reason behind the liquidity problems of the Lightning Network, is that bills can move from one place to another but they cannot leave the chain within which they are.

Peter Rizun

Both raising and taking advantage of liquidity of the network are increasingly harder, as well as sending funds between users without channels with each other. This model has been considered to be reliable, but Rizun disagrees.

He explains that, given this scenario of high commissions, some payment channels will be closed and very small payments, lower than the commissions paid within the main network or what he calls “dust” (the minimum amount for a Bitcoin transaction) cannot be made, which would cause the loss of funds from these operations.

This seems to have no relevance, but it could compromise the operation of the LN. He states that the loss of several small payments in rapid succession could lead to a considerable loss.

This suggests that micropayments with small fractions of Bitcoin could become impossible to make. Rizun says that a scenario of commissions at US $100 would make spending less than this amount economically unfeasible, since the commission to be paid in the Bitcoin network would be greater than its value. Therefore, the LN would stop making sense.

Bitcoin would need to reach prices higher than its historical cap for such scenario to have full validity, but Rizun’s observations are still relevant for the improvement of the network, despite his opposing position regarding its future.

Reactions

Although Rizun remarks describe reality faithfully, he omitted some already devised solutions to these difficulties of the LN.

David Harding indicated that Thaddeus Dryja, co-creator of the LN white paper, had proposed establishing threshold of satoshis (always worth more than the “dust” of the main chain) for the execution of probabilistic payments. As a result, only payments higher than a defined amount would circulate through the channels.

Probabilistic payments are only successful a certain percentage of the time, so micropayments below this amount would only be made a limited number of times. “If it is uneconomical to spend an HTLC output worth less than 10,000 nBTC, then we simply require probabilistic payments for any amount below that,” Harding highlighted.

Taking advantage of Harding’s publication, Gregory Maxwel indicated that, after all, the “dust” of the Bitcoin network is irrelevant. He considers that HTLC should not have limits lower than the “dust” of the network. He also believes that these very small transactions are aimed at advertising and discouraging Bitcoin users.

This has been discussed among the LN developers since 2016; therefore, this type of micropayments has been considered in the network, with several solutions compatible with both HTLC and the current state of Bitcoin.

By Willmen Blanco

Over 152,000 Bitcoin Wallets Have Been Infected in Electrum’s Denial-of-Service Attack

Andres Chavez
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Over 152,000 Bitcoin Wallets Have Been Infected in Electrum’s Denial-of-Service Attack

Crypto wallets are necessary resources for traders to hold their earnings and tokens. However, one of the primary reasons that raises concern in the industry is the possibility of external agents inflicting damage by performing a hacking attack, data theft, or even a Denial of Service (DoS) attack. The latter is currently affecting Electrum users.

According to the anti-malware software company Malwarebytes, which explained the case in a blog post this week, there are now more than 152,000 BTC wallets infected in the ongoing Denial of Service attack on the wallet’s servers, an alarming number that could still grow in the next hours or days.

DoS Attacks: What are they?

A denial-of-service (DoS) event refers to any type of attack in which the hackers or offenders try to prevent users from accessing a specific service. The most common way of achieving that is by sending excessive messages asking the network or server to authenticate requests with invalid return addresses, thus overloading the servers.

By sending lots of requests at the same time, or increasing traffic on purpose, the person or entity performing the attack shows the evident and explicit intention of congesting the victim’s network and affecting its device and connection’s performance.

The hackers have stolen, so far, no less than $4.6 million through the 152,000 infected wallets, according to data from MalwareBytes. The firm isolated a loader called Trojan.BeamWinHTTP, which is also related in the download of the Electrum DoSMiner.

“We have been able to correlate two distribution campaigns (RIG exploit kit and Smoke Loader) that are fueling this botnet by dropping malware we detect as ElectrumDoSMiner. Now, we have just identified a previously undocumented loader we call Trojan.BeamWinHTTP that is also involved in downloading ElectrumDoSMiner (transactionservices.exe),” the company stated via a blog post.

A Huge Botnet that Cannot Be Stopped

The Electrum’s DoS attack can be referred to as a botnet. A botnet is a term to refer to a network of connected devices in which each one is running one or multiple bots. They are most commonly used to steal data, perform DoS attacks, send spam, and other dubious activities.

The Asia-Pacific region has the most bots, always according to MalwareBytes. In the meantime, Brazil and Peru have also shown a large concentration of bots, as they are markets in which Electrum infrastructure is continually growing.

“By analyzing the IP addresses and mapping them to a country, we are able to have a better idea of where the bots are located. We find the largest concentration in the Asia Pacific region (APAC). For the Americas, most bots are located in Brazil and Peru,” the firm continued.

The Modus Operandi

The attack purportedly started in early April, and was launched by a malicious botnet of over 140,000 devices. The goal was to steal people’s BTC by trying to trick them into installing or updating to fake versions of the firm’s software. The hackers then used compromised versions of Electrum by implementing their own servers.

As per the number of victims that are part of the botnet, MalwareBytes explains that “it is constantly changing. We believe as some machines get cleaned up, new ones are getting infected and joining the others to perform DoS attacks. Malwarebytes detects and removes ElectrumDoSMiner infections on more than 2,000 endpoints daily.”

By Andrés Chávez

Russia Drives Legal Movements for the Adoption of Blockchain Technology and Cryptocurrencies

Maria Rodríguez
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Russia Drives Legal Movements for the Adoption of Blockchain Technology and Cryptocurrencies

A proof will have the purpose of testing the laws before having the final approval of the project done

Russia has prepared a legal environment that can lead to adequate regulation in the use of blockchain technology, cryptoactive, and other new innovative technologies. In this sense, the government of said country has decided to conduct some tests in four different regions. This is how the Russian news agency Izvestia describes it.

According to the official information, the test will take place in the city of Moscow, as well as Kaluga Oblasts, Perm Krai, and Kaliningrad.

The intention is to achieve the massive adoption of blockchain technology. Russia has been optimistic and motivated to promote legal movements and find new ways to use these emerging technologies in various areas of its economy.

In this way, the Ministry of Economic Development of Russia communicated the intention to conduct a test; this is in order to check the progress they have prepared. Among the areas that do not have regulation in the country are blockchain technology and cryptocurrencies, quantum technology, virtual reality, and robotics.

In reference to the test that will be implemented over a period of time, it is known that it will be done in a “regulatory sandbox” mode.

The Deputy Minister for the Economic Area, Savva Shipov, explained that this method will promote projects vis-à-vis these areas. According to what he said, this idea will ensure developers a flexible legal framework that encourages the growth of research and the establishment of new technologies.

Against this, Kirill Kabanov, member of the Presidential Council for the Development of Civil Society and Human Rights, argued that the system of “regulatory sandboxes” will only work if a legal system adapted to the new scientific structure is used.

The official added that some institutions and organizations of the Russian Government are very interested in protecting their interests, under this regulated and controlled environment. In this way, Kabanov argues that the so-called “regulatory sandboxes” can work, but it does not mean that the promoters or developers of the companies should not be subjected to strenuous monitoring, as well as long bureaucratic procedures.

A Long Road towards Legalization

Some years ago, Russia started to show interest in creating a legal framework which allows controlling the new technologies that are emerging around cryptocurrencies and blockchain technology.

Despite the abovementioned, these processes of discussion in the Lower House of the Russian Parliament have been interrupted several times as a consequence of the lack of knowledge in the area. However, the Parliament recently expressed that discussing these issues would be of paramount importance. In fact, it is one of its priorities for future sessions, but at the end of March, the conversation was held once again.

According to sources connected with the Lower House of Parliament, it is known that the decision to postpone the regulation law for blockchain technology and cryptocurrencies is due to the fact that some terms such as “token”, “Cryptocurrencies” and “smart contracts” were eliminated in the second revision, on March 18th, from the document that had been submitted for approval.

By María Victoria Rodríguez

Lenovo Will Use IBM Blockchain to Improve Its Customer Service

Maria Rodríguez
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Lenovo Will Use IBM Blockchain to Improve Its Customer Service

Artificial Intelligence (AI) will allow having a personalized service during the attention of users, as well as collecting suggestions and avoiding millionaire losses of money per year

The US technology giant IBM and the Chinese computer manufacturer PC Lenovo partnered to work on a project which would allow the use of blockchain technology, in order to improve the quality of customer service in that Asian company, which seeks to adopt this new technology.

The information was given through a press release posted on IBM’s website this week. The official document announces that the US corporation will apply blockchain technology in the customer service processes of Lenovo Data Center Group.

The agreement is part of the relationship that was born in 2005 between both technology development companies. The current idea is to design an efficient system which allows storing the necessary information in order to provide clients with a suitable service and, in this way, avoid losing money.

One antecedent of this initiative is an investigation that IBM conducted about certain buying and selling processes. In its research, IBM found that more than US $ 1 trillion is spent on customer service calls each year. Additionally, this problem is added to the fact that 50% of those calls do not achieve their purpose (to close the sale and provide a better service) or are left without a solution.

Another point that the IBM research highlighted was the poor service provided to clients. Nowadays, inadequate attention costs more than USD $ 75 billion per year, whilst in 2016 the loss amount was about USD $ 13 billion. According to these data, the amounts could be increasing.

Better Attention, More Profits

With the aim to reduce the number of annual losses caused by inadequate user attention, this agreement seeks to improve Lenovo Brands’ customer service experience, using a virtual assistant.

Knowing the user’s necessary information according to each case is vital. As it is explained in the publication, the Virtual Assistant for IBM Technical Support puts into operation its natural language skills and its contextual recognition to personalize the conversation with users.

When a customer connects with an agent for Lenovo’s server, storage, or network services, the assistant can ask specific questions about service issues to get pieces of advice solutions provided. In this way, the assistant will have access to the client’s key information.

“Data can have an unprecedented impact on the company, and artificial intelligence can take customer service to a whole new level of customization. This global collaboration with Lenovo strengthens our long-standing relationship and will help train technicians from all corners of the world to work with excellence, using the power of blockchain technology and also the power of cognitive computing”, explains Vivek Mahajan, General Manager of IBM Technology Support and Services.

IBM highlights that the implementation of blockchain technology will help create a secure and transparent environment in which the purchase and distribution of software and hardware from Lenovo centers can be processed and monitored.

By María Victoria Rodríguez

Developer Introduces Friendly Zcash Fork

Willmen Blanco
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Developer Introduces Friendly Zcash Fork

The hard fork will occur on July 18th and the Zcash Foundation will be involved in the new Project

Developer Howard Loo, member of the Zcash community, announced the creation of a new chain derived from Zcash hard fork, which will occur next July 18th. The information was spread through a publication in the Zcash forum, where the developer stated that it dealt with a friendly fork.

Loo informed that the hard fork, which will occur at the height of block 570,000, will generate a new Ycash chain. The new project aims at restoring the mining of basic hardware, left in Zcash Blockchain, due to the proliferation of ASIC mining equipment. Similarly, it indicates a “fair distribution of currencies” and the maintenance of the total issuing in 21 million tokens.

Among the changes that the Ycash project offers with respect to Zcash, is the reduction of the rate of Founders’ Reward, which would change from 20% to 5%. This aspect aims at maintaining the original limit of 2.1 million coins for the founders, which, according to what Loo said, will be surpassed as soon as October 2020, in the case of Zcash. On the other hand, the new project will be supported by a non-profit foundation, which is the process of being created, whose name will be Ycash Foundation.

Besides, Ycash plans to change the algorithm of Proof of Work (PoW) that is currently used in Zcash, for one that favors the mining of basic hardware, like CPU or GPU. In this sense, they are evaluating RandomX, ProgPoW and several Equihash versions.

In the publication it is clarified that the owners of Zcash tokens, at the moment that the fork occurs, will receive the same amount of Ycash tokens. The ZecWallet wallet will also fork in order to support Ycash, and the official version will be distributed among compatible platforms.

Friendly Fork?

Loo indicated that this process is framed within a “friendly fork” as it does not derive from a division of the community. On the contrary, he personally stated that he will continue participating actively in the Zcash activities. In the same way, he said that he expects that advantage is taken in Ycash of the strengths of Zcash, at the moment of incorporating most of the changes made to the infrastructure of Zcash in Ycash.

However, this process does not seem to stick to the concept of “friendly fork” managed by Zooko Wilcox, Founder and Executive Director of Zerocoin Electric Coin Company (ZECC), responsible for Zcash protocol. In January 2017, Zoko explained in the official blog of the project that a friendly fork would imply two chains supported by the very/same community.

In the publication, titled “A future friendly fork”, Zooko indicates:

“I hope that when that moment arrives the Zcash community fills the space emptied in the previous matrix, displaying different technologies that are well adapted to the different needs, but still continue being tolerant and cooperating with each other, for the benefit of all.”

Zooko Wilco, Cofounder of Zerocoin Electric Coin Company (ZECC)

It is relevant to highlight that a friendly fork would require the participation and consensus of the community. In the case of Ycash, a representative of Zcash Foundation said in the forum of the Project that “the Foundation categorically was not and is not involved with Ycash. The information was confirmed by Howard Loo.

By Willmen Blanco

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