California City’s Blockchain Token Is Definitely Maybe Happening
In a unanimous vote Tuesday, the city council of Berkeley, Calif., took a step toward approving the issuance of a blockchain-based “microbond.”
Ben Bartlett, the vice mayor and council member who spearheaded the initiative, told CoinDesk by phone on Thursday: “It’s happening. We passed it.”
But the actual decision taken by the vote is a bit more convoluted.
According to Berkeley’s city clerk, the council decided to “refer to the 2018 prioritization process to direct the City Manager to produce a report outlining steps required if the City were to implement a Pilot Project for the Community Microbond Initiative within 90 days.”
Another member of the city council, Susan Wengraf, cautioned that “this action does not imply approval at this time.”
But according to a council member who preferred not to be named, the proposal is moving at a rapid clip through the “byzantine labyrinth” of city government.
“This is a really big win,” the member said, explaining that the strong support signaled by five of the nine council members Tuesday means that, rather than taking a decade, the project is likely to progress rapidly.
Bartlett says that he faced considerable opposition to his blockchain-based municipal bond going into the meeting, with only two members in favor. But his pitch for low-denomination bonds, tokenized on a distributed ledger, found fertile ground.
Currently, he says, costs imposed by financial intermediaries force municipal bond issues to be large and drive the minimum a person can invest up to $5,000 or even $100,000. “No one can buy them,” says Bartlett, adding, “they’re not targeted to specific needs for neighborhoods and communities.”
He believes that blockchain technology could allow for tokenized bonds selling at $5, $10 or $25 each, while simultaneously increasing transparency:
“Blockchain allows us to really disintermediate that process and make bonds more affordable for communities and for people.”
Among the projects he thinks Berkeley could fund using the bonds are a homeless shelter, an ambulance or an individual fire truck – “hyperlocal activities,” in other words.
The world is watching, Bartlett added.
His office has “calls coming in from literally every continent.” And his plans for blockchain-based municipal finance go beyond Berkeley, as a recent Medium post seemingly suggests.
But Bartlett has very little to say about the technical details of the plan. He declined to discuss what network the bonds would be issued on – a freestanding blockchain, Hyperledger, bitcoin, ethereum – or even whether the blockchain would be open or permissioned.
“I can’t speak to that,” he said. “We’ll see what the best proposal that comes in form the market is.”
The city, he continued, will solicit contracts for the project and “vendors will do every step of this process.”
Berkeley image via Shutterstock.
Written by CoinDesk.com
‘Belligerent’ Crypto Miners Prompt Power Utility to Beef Up Security
A public utility in one of the U.S. hot spots for bitcoin mining is adopting new security measures in light of harassment suffered by some of its employees.
The steps are being taken by the Chelan County Public Utility District (PUD) in Washington County – as previously reported, the area has attracted a number of bitcoin miners because of its abundant access to hydropower sources. Yet “confrontations” between staffers and would-be mine operators, as first reported by The Wenatchee World, have sparked a drive to add new cameras, install security panels and institute other actions.
On Monday, Chelan County PUD director of corporate security Rich Hyatt briefed the district’s commissioners during a meeting, attributing the moves to “belligerent behavior by impatient cryptocurrency miners” who are reacting poorly following a moratorium imposed on new bitcoin mines.
“Some of the things we’re doing internally, we’ve got a lot of business security measures, at [headquarters] we’ve [installed] a lot of security panels, we’ve increased the camera coverage. We’ve also designed and are going into the construction phase for a very small store front lobby that would give employees a lot more security without having personnel or customers being able to walk right into their work area. We’re monitoring those areas.”
He also described new measures being taken to dissuade unauthorized bitcoin miners from setting up facilities, saying his office was making agreements with the chief of police, the county sheriff and the county prosecutor to investigate and potentially prosecute repeat offenders.
“We … have an agreement with those agencies that we could use [them] as the mechanism that when we prepare a case and gather the evidence and establish probable cause, we can take that case through their detectives and that can help the county for prosecution considerations,” he said.
The agency has also trained its personnel on how to deal with potentially hostile people by installing panic buttons for front-line staff and adding security officers able to spot “negative body language,” he said.
Security camera image via Shutterstock
Written by CoinDesk.com
How Bitcoin Cash Can Avoid the Same Mistakes as Bitcoin Core, Part 2
It’s Not Complicated, Bitcoin Cash is Money
If you have something of value to offer me, and I’m willing to pay for it, then I send you bitcoin cash. No middleman and low fees.
That’s the vision.
The Challenge of Distributed Consensus
In bitcoin, everyone needs to be using the same set of rules — also called consensus rules, network rules, or protocol rules. What happens when we need to upgrade or change the rules?
We have this nifty thing in bitcoin called “Proof of Work”. It secures the network, and it keeps everyone on the same set of rules.
It’s also a voting mechanism: The miners can vote on changing the rules because the “longest” chain (the chain with the most accumulated proof of work) is accepted by convention.
In other words, the ultimate decision as to what rules the network follows are in the hands of the largest combined group of mining power. This is commonly known as Nakamoto Consensus.
Because of Metcalf’s Law, commonly referred to as “the network effect”, miners with a dissenting opinion are highly incentivized to capitulate and rejoin the majority.
Their only alternative is to “fork off” and continue mining a minority chain. This is usually not worth it, unless the direction that the majority wants to go is so radical that it’s deemed unacceptable.
…which is precisely what happened when Bitcoin Cash forked off from BTC on August 1st, 2017.
The BTC community had wandered too far off the reservation. They focused on making it cheap to run a node even if it was expensive to send a transaction. They valued being a digital commodity over being a payment system. They worked on ethereal problems of the future rather than the real problems facing us today. And worst of all, they allowed censorship to flourish.
Nakamoto Consensus works and is simple. We all stay together until it no longer makes sense.
Its limitation is that bitcoin is also a social experiment — it’s not just miners that make up the ecosystem. The miners (who are actually voting) are also trying to make the decisions they believe the developers, users, investors, and businesses will support. That’s why education (and communication) are so important.
A Magic Formula For Governance?
What happens when we think we all want the same thing, but disagree on the best way to achieve it?
For example, last year Bitcoin Cash’s difficulty adjustment algorithm (DAA) was updated but there was some contention between developers on the best algorithm to use.
It would be nice to have some governance process by which competing ideas could be resolved. So far, no one has invented a “magic formula” one-size-fits-all solution, although some have tried. For example, here is a proposal that attempts to create a simple, effective governance process.
In the above proposal, who decides if “a fix/improvement is under time pressure”, and what the “period of time” should be for voting on a proposal? Most importantly, how do you make sure miners have enough time (and unbiased information) to make the proper voting decisions?
Even though there’s no silver bullet or magic formula, that may be ok. In the end, decisions are made and Bitcoin Cash moves on.
BCH is a Peer to Peer Electronic Cash System
The Bitcoin Core approach was to avoid making any protocol changes without broad consensus. Generally, in a system that depends on consensus, there is wisdom in this.
Some would say that Core took this too far; that they impractically avoided making needed changes by looking for perfection. Others believe that this was merely an excuse and that those in control had already made up their minds against raising the blocksize.
Either way, the common thread is that the community lacked clarity around wanting to be a peer to peer electronic cash system and what that really means.
Knowing exactly what we want, and why, will help us to avoid stagnating and splintering in the future.
Images courtesy of Shutterstock.
Portuguese Parliament to Discuss Cryptocurrency Payment Regulations
Portugal’s parliament is set to discuss cryptocurrency payment regulations this week, with the goal of adopting a new legal framework for cryptocurrency payment services, while guaranteeing users’ safety using these services.
According to local news outlet Jornal de Negócios, applicable sanctions and the issuance of digital currencies – presumably initial coin offerings (ICOs) – will also be discussed. The government will reportedly discuss cryptocurrencies so new payment services can emerge in the market, while ensuring users can choose between safe, cost-effective options.
Per the Portuguese government, regulations will allow cryptocurrency-related services to expand within the country, which will benefit consumers by promoting competition, while ensuring safety and transparency in “the issuance of cryptocurrencies.”
The government argued (roughly translated):
“The regulation of certain aspects, not yet regulated, will allow for the expansion of new types of payment services, contributing to a legal framework to accommodate the innovation, to the benefit of consumers, and to even promote competition.”
The regulatory framework is set to apply “new rules to access payment accounts,” so as to prevent unjustified setbacks and ensure payments are safe. It’ll also introduce rules on managing operational risks, while offering service providers and ICO operators “complaint mechanisms.”
Per the somewhat vague information available, when it comes to dispute resolutions “payment service providers are obliged” to work with dispute resolution organizations over potential disputes. The government also plans on introducing “complaint mechanisms for payment service providers and for electronic money issuers, as well as for the respective supervisory authority. “.
As CCN recently covered, the European Parliament saw a majority agree to enforce closer regulation of cryptocurrencies, as an agreement with the European Council that proposed closer cryptocurrency regulations to prevent their abuse in money laundering and terrorism financing found the Parliament’s support
Portugal’s Securities Market Commission (CMVM) has in the past revealed it was supervising banks and brokerages toclose eye on the “bitcoin euphoria” that was sweeping the nation back in December 2017.
Hélder Rosalino, a director at Portugal´s central bank, Banco de Portugal, has back in November claimed he doesn’t see bitcoin as a currency, and that’s important that people know “a cryptocurrency isn’t a currency” to the financial institution. Last year, CCN reported Portuguese authorities were looking to tax cryptocurrency users, despite the lack of regulations.
Featured image from Shutterstock.
Written by CCN.com