He also gave a presention at Black Hat USA this past week in which he again discussed Bitcoin. He shares his slides from that talk as well.
Dan’s two main assertions are that Bitcoin is not scalable (at transaction levels reaching even a fraction of those for the Visa payment network) and that it is not anonymous. He describes
Dan wrote in a post on the Bitcoin forum that he considers Bitcoin as one of the top five most interesting security projects of the decade.
Bitcoin Currency Stats from PiUK
A new site provides data and other information on the contents of the Bitcoin blockchain similar to the information provided by Theymos’ Block Explorer service that most every Bitcoiner is familiar with.
BitcoinTalk forum user PiUK recently launched the site and is requesting feedback. In addition to providing a standard search box for querying on a Bitcoin address, block number or hash, the site also provides some interesting charts including the daily transaction counts as shown in the image for this post. Another interesting chart is the mining operating margin (profitability) chart.
App Store Now Features Blockchain - Bitcoin Wallet App
[Update: On May 9, 2012 Apple notified Qkos that it removed Blockchain from its App Store.]
After persisting through weeks of rejections by Apple, an app called Blockchain can now be obtained from the App Store.
The app is free and can be installed on iPhone, iPod touch and iPad. Wthin seconds of clicking Install the app can begin receiving bitcoins.
This iOS app is functionally equivalent to Blockchain for Android. That app has been available since March from the much more accommodating Google play. Previously, a fully functional iOS version was available through Cydia for “jailbroken” iPhones. The creator of Blockchain.info, piuk, reported a week ago that the Android version was being installed at a rate 50% higher than its shunned iOS brethren.
When piuk first submitted Blockchain to Apple, the response read:
"We found that your app contains content - or facilitates, enables, or encourages an activity - that is not legal in all the locations in which the app is available."
Suspecting that one or more restrictive countries were the reason for the rejection, piuk resubmitted the app to be included just for App Store customers in the U.S. and UK. Once again, the Blockchain app was rejected.
Further speculation led piuk to believe Apple was not wanting an app that was able to send digital currency payments so he ripped out that functionality and submitted the app yet once again, albeit to the same response. Another approach was used — to submit the app for inclusion only in the Korean App Store. Though that too was declined, the message that time described the offending feature:
Specifically, the facilitation of trading of virtual currency is not appropriate for the App Store.
We encourage you to review your app concept and evaluate whether you can incorporate different content and features that are in compliance with the Guidelines.
Persistance did pay off. Finally, Blockchain v1.9.2 with full wallet capabilities was approved after an appeal and is now available from the App Store globally.
Most other Bitcoin clients for desktop platforms, including the Bitcoin.org “Satoshi” client, incur a delay after installation as Bitcoin data must first be retrieved from other peer nodes. Blockchain communicates through the Blockchain.info servers and as a result can be used instantly after installation.
The server does not have access to the private keys which are required for the bitcoins to be spent. Instead the Blockchain app loads the encrypted wallet from Blockchain.info’s host and performs all the actions requiring access to those keys right from the mobile app. Additionally, this approach allows a user to access the same wallet regardless of which device it is accessed from.
For iOS users who wish to give the Blockchain app a spin but are currently either out of bitcoins or have never transacted with bitcoins before, a free sample amount of the currency is available either from the Bitcoin Faucet or through BitCrate. Simply install first the Blockchain app and tap Receive to get your Bitcoin address. If you have no better use for the millibits you receive (a millibit is one thousandth of a bitcoin) you can either donate them or send them back to the faucet.
The question remains as to why Apple finally let the app in. One factor to consider is that last week Jason Calacanis (@Jason) described how an entrance into payments makes Apple a trillion dollar business. Maybe Apple’s self-imposed “no trading” litmus test used for approving apps would be seen as an anti-competitive maneuver and the company decided that it would be best to not give any reason that might stop their march towards becoming a payments giant? Or perhaps Apple saw the Android version of the app and prefers to maintain its strong iPhone market share?
Whatever the reason, the app is here bringing to over two hundred million devices an easy and secure way to send, receive and store bitcoins. As bitcoin continues its march as a global person-to-person payments system, this day has been eagerly awaited.
Blockchain app stores no personal information such as name and address so there are no privacy protections it must contend with. It does not involve card swiping and thus requires no PCI DSS compliance verification. It does not involve the exchange to or from fiat money (e.g., U.S. Dollars) so it needn’t first get approval from financial regulators. Bitcoin can spread faster globally than any well-funded competitor in the highly regulated payments space could ever hope to.
That a variety of desktop, web-based and now native mobile apps for Bitcoin are now available to well over half the world’s population is really something quite remarkable. The pace of innovation in the Bitcoin-related space is accelerating — something that could be revolutionary even, considering it all comes from participation by individuals as there is no corporation or industry group overseeing Bitcoin endeavors.
Might Bitcoin’s arrival to mobile, putting monetary freedom in our owns hands (quite literally) be the shot heard round the world?
Jon Matonis (@JonMatonis)’ latest article in Forbes covers the release of the Blockhain app for Apple products. Excerpts:
“Be your own bank? There’s an app for that”.
“Run by Ben Reeves, the small company has released several reliable services and products for the thriving bitcoin community including charts, statistical data, the web-based My Wallet, an Android wallet app, and most recently an impressive bitcoin wallet app for Apple’s iOS”.
“Addresses are clickable to display a QR code and you can also scan QR codes to make payments. Keys are stored securely on your phone and encrypted on Blockchain’s servers so if you lose your phone, no sweat — you’re protected”.
“Why approve the Blockchain app at this time when it was mysteriously rejected before? Maybe Apple no longer wanted it as an illicit app on the Cydia website”.
Bitcoin’s “Hockey Stick” Growth Attributed To Novel Gaming Service
Eleven months ago Bitcoin’s trajectory was nearly vertical as each day brought a higher price and the daily transaction volumes on the Bitcoin network were seeing new record levels each day as well. But then suddenly the ascent stopped and what followed was a long slide back towards earth.
In the months that followed those June 2011 highs the exchange rate had dropped by more than 90% from the earlier highs and the transaction volumes had dropped as low as 68% from the peak. While the exchange rate is still down considerably with bitcoins trading around $5 USD now the daily transaction volume has shot back up and is once again breaking new records.
While the daily transaction volume had been steadily growing at a casual pace since October, there’s been a development in the past weeks that has had a significant impact. The ten-day-old service SatoshiDice.com has been growing at a blistering pace.
The daily totals with the exact numbers haven’t been compiled yet but extrapolations of hourly data show there to be nearly four thousand blockchain transactions resulting from Satoshi Dice for the most recent 24-hour period.
Each wager by a player causes a response from Satoshi Dice as even losing bets earn a payout (the service returns a fraction of what the house earns from each wager). As a result each wager can be responsible for two transactions occurring on the Bitcoin blockchain.
The vast majority of Satishi Dice transactions are for just a single wager but a player can instead combine multiple wagers into a single transaction. Thus there isn’t an exact 1:1 ratio between blockchain transactions sent to Satoshi Dice and the number sent in return.
Wagering on Satoshi Dice occurs without any account needed on any website — the service simply sends a new, return transaction with the full payout when the transaction was a winner or the fractional bit awarded for each losing bet.
Because the payouts include coin from the wager transaction that made the bet, the site can provide payouts immediately and doesn’t need to wait for payments to confirm which is a process that would otherwise take from twenty minutes to two hours, depending on various factors.
Another difference is Satoshi Dice’s novel approach towards determining the winners. At a basic level, the concept of the game is that for each wager a “dice roll” occurs and a number from 0 to 65,535 is the result. Each wager is evaluated to determine if the number rolled is below the wager’s threshold. For instance the “less than 16,000” wager will payout if the roll is any number up to and including 15,999. Other online wagering services would employ a random number generator (RNG) to ensure the roll values are unpredictable and statistically random. PokerStars, for instance, uses a third party auditor to assure players that the output of the RNG used truly is “cryptographically random and truly unpredictable”.
Satoshi Dice’s method uses an alternate form of cryptography, where the cryptographic secret used for the roll is not revealed until a period (from 24 to 48 hours after the wager occurs). To ensure that the secret was not altered, a hash of each secret is published in advance and as a result the integrity of each roll can be verified once the secret is revealed.
There has been a concern expressed that the particular method that Satoshi Dice uses in performing the roll appears to be an approach that is unique and possibly not one that has been verified to be a statistically true RNG. The operator of a competing wagering service was asked about Satoshi Dice’s method and the response was: “It’s probably not equally distributed and worse than something designed to be a PRNG like Mersenne, and almost certainly less random than a real RNG.”
Another area of concern is with the amount of resultant activity on the Bitcoin blockchain. Each of the thousands and thousands of nodes on the Bitcoin network receive and relay each of the transactions and store them on disk once they are included in a mined block. A doubling in the transaction workload then will mean a near doubling in the amount of storage. The Bitcoin blockchain and index is already over 1.7 GB in size. If the blockchain growth rate accelerates, the priority for resolution of the known scalability issue might be raised by Bitcoin’s developers.
There are also levels at which the Bitcoin network maxes out though these are limits set arbitrarily and would likely be increased when the limits might start approaching which would restrict Bitcoin’s future growth. If the use of Satoshi Dice grows much more than an order of magnitude greater than its current level that would likely trigger some attention on the topic.
Even with Satoshi Dice being no threat to the Bitcoin network, there is the matter of transaction fees causing the payout amount to be misrepresented for a fairly decent portion of all wagers. Though the Bitcoin network will pass along most transactions even without a fee, most players are using a client which will either require a transaction fee or will strongly encourage the player to include a fee. When a fraction of a percent of odds can mean the difference between coming out ahead and losing money this transaction fee can become a significant drawback. For the smallest wagers on Satoshi Dice, even the sub-penny transaction fees typical with Bitcoin can extract more from each wager than what the house earns on odds. Additionally, every transaction sent by Satoshi Dice back to the player includes a fee as well, reducing the house’s take. Asked about this topic, the operator of a competing online wagering service suggests that “in practice this is not efficient for large-scale betting where you have thousands of small bets [like this] taking place.”
Efficient or not, players appear to not mind. Getting a payout in a matter of seconds after placing the wager provides the speedy reward that keeps the players in the zone.
Though the desire for a dopamine hit may be the main reason Satoshi Dice is seeing so much activity, there is another potential contributing factor. One of the misconceptions about Bitcoin is that it is an anonymous currency. Bitcoin can be used in an anonymous manner, but Bitcoin transactions are traceable. For this reason, there has been interest in mixing services which help to improve anonymity.
What may be occurring then is that Satoshi Dice is seeing some level of participation by those intending to alter the makeup of the coins held in their wallets. Satoshi Dice in its present form makes a poor solution for mixing however the operator of the service has indicated that some features such as alternate payout addresses and a time delay that might improve on this specific use are forthcoming.
Whatever the reasons for using Satoshi Dice’s service, the fact remain this is the fastest growing business to-date in Bitcoin’s short history. In the past couple of hours while researching for and writing this post, the wagering activity has increased at an even greater level. The level of wagers occuring during this 8am - 9am UTC hour caused there to be more transactions on the blockchain due to Satoshi Dice than there were for all other Bitcoin transactions, combined.
Houston, We Have Liftoff!
New to Bitcoin? Play SatoshiDICE for free!
SatoshiDICE is a blockchain-based online wagering service that has been so popular that it has affected the service levels for other users of the Bitcoin network. SatoshiDICE now accounts for half or more of all Bitcoin transactions occuring each day. That’s quite an accomplishment for a service that is just two months old.
This week Blockchain.info introduced a feature in My Wallet (photo above) that allows SatoshiDICE to be played without installing any software.
If you aren’t already holding bitcoins but would like to play then available for free from The Faucet is a sample amount of bitcoins. The Faucet, operated by Gavin — the lead developer of the Bitcoin.org open source project, is one source for a few pennies worth of bitcoins.
Here are the steps:
The faucet only pays out once per person, so this is likely a one shot deal for most people.
If you won and would like to share your great fortune, there many ways to donate your bitcoins. If you’ld like to send them to a friend, you can use Coinapult to send your bitcoins to any e-mail address or mobile number (via SMS, in the U.S. and Canada).
If you’ld rather save your bitcoins, feel free — there is no expiration for funds in your wallet.
If you didn’t give an alias when signing up then don’t forget to bookmark your wallet’s URL (or save a copy of the identifer) so that you can use the wallet from your mobile or from another computer at a future time.
Also, don’t forget your password — Blockchain doesn’t know it so there is no method to recover it in the future (unless you provide your e-mail address in the account details).
Enjoy … and good luck!
A significant new release of the Bitcoin-Qt and Bitcoind clients from Bitcoin.org, v0.8.0, is now available for download.
This v0.8 release includes a number of new features, performance improvements and bug fixes and is the first major feature release since the v0.7 release about five months ago. This release was designed to improve performance and to handle the increasing volume of transactions on the network.
A subset of the improvements, features and fixes includes:
With a huge increase in the amount of transaction activity the Bitcoin network is receiving, previous versions of the Bitcoin.org client had been taking an unacceptable amount of time to synchronize the blockchain. This release will reduce the amount of time to reach the synced status to a level that should be acceptable for those with even the least capable computing hardware.
The first time v0.8 is ran the program will migrate the blockchain data and reindex, a process that can take several hours on lower end computing hardware. Proper shutdown from a previous version before installing this release is required.
While it is recommended to back up the wallet.dat before performing this upgrade, the update will not overwrite an existing wallet or blockchain database.
When performing a new installation (versus upgrading from a previous release), a file called bootstrap.dat may obtained as a torrent and placed in the Bitcoin data directory to speed the installation process.
Alternatives to the Bitcoin.org client, now featured on the Bitcoin.org Clients page, have seen updates recently as well:
A review of various wallet options was recently updated by Bitcoin Magazine and is a good resource when choosing a wallet.
There is a developing situation in which a bug in the Bitcoin client software is causing a blockchain fork. Those using Bitcoin-Qt v0.8 should not trust the transactions as being non-reversible even if the client shows the transaction having received six or more confirmations.
This latest on the situation may be monitored on the #bitcoin-dev IRC channel.
[The tl:dr on the bug … the v0.8 client software allows a larger transaction that the previous releases did not. As a result v0.7 clients aren’t accepting those blocks.]
[Upate: The original post on the BitcoinNews will include any updates.]