Tag: Bitcoin

Chinese bitcoin mining outfit builds huge data centre

mine The Chinese bitcoin mining outfit Bitmain, is building a massive 45 building solar-powered data centre complex in China.

The complex will be the world’s third most powerful data centre and will operate primarily on wind and solar power. According to Bitmain the entire centre will be dedicated primarily to bitcoin mining and it plans to open source the centre’s detailed plans. Bitmain is hoping that this will improve data centre efficiency for bitcoin miners worldwide.

Jihan Wu, Co-CEO of Bitmain, said: “We have seen that most data centres in the mining industry are wasting considerable money or other resources.  We want to provide a more professional and cost-saving example to the industry.”

However the news was not exactly welcomed by the bitcoin mining community, many of whom are concerned with the increasing power of Chinese bitcoin mining pools driving the cryptocurrency market. One of the reasons they like cryptocurrency is that it is decentralised and if one country gets too much of the action it defeats the purpose.

Bitmain already controls an estimated 18.6 percent of hashpower worldwide, and many independent miners in the community expressed concern that controlling a massive data centre dedicated to mining bitcoin would give the company too much influence over bitcoin.

Bitmain said that it will not own all of the planned facility. “A majority is owned by other miners who can mine bitcoin or any altcoin with any hardware they prefer.”

The Bitmain facility was originally scheduled to be completed by the end of 2016, but the timeline may be extended due to an unusually cold winter in Xinjiang this year.

Accenture tinkers with blockchain

blockchainAccenture is changing a feature of blockchain by patenting a system that will allow data processed and stored using the technology to be edited.

This will effectively kill off a defining feature of the technology which makes it impossible to change. The consultancy said data would only be edited under “extraordinary circumstances,” to resolve fat-finger-type human errors and meet legal and regulatory requirements and address wrongdoing.

Obviously some blockchain users thought this idea was pants.  Blockchain is the latest investment by the financial services industry in the nascent technology, which promises to cut costs, reduce settlement times and increase transparency.

Normally the blockchain underpinning digital currency bitcoin is kept secure by data being shared across a global network of computers, which are incentivized by competing to win new bitcoins by data “mining”.

Technologists say that not being able to edit the technology makes blockchain unique and that without it, the term becomes meaningless.

Gary Nuttall, founder of blockchain consultancy Dislytics said that an editable blockchain was just a database. The whole thing about blockchain is that it’s immutable, so this just defeats the object.”

Because so-called “permissionless” blockchains like bitcoin’s have no centralized authority, it is essential that transactions cannot be tampered with.

Accenture claimed its prototype would be for the private “permissioned blockchains” favoured by banks, which would have designated administrators who manage the network under agreed governance rules.

Richard Lumb, Accenture’s group chief executive for financial services said that for financial services institutions faced with a myriad of risk and regulatory requirements, absolute immutability is a potential roadblock.

Bitcoin controlled by Chinese

mikadoDespite claims that Bitcoin is free of political and business interference, it seems that the whole operation has been sewn up by the Chinese.

A handful of Chinese companies have effectively assumed majority control of the Bitcoin network. They have done so through investments and vast farms of computer servers dispersed around the country.

According to the New York Times  US executives are now having to travel to China to talk to the real powers behind the throne.

More than 70 percent of the transactions on the Bitcoin network were going through just four Chinese companies, known as Bitcoin mining pools. Most flowed through just two of those companies. That gives them what amounts to veto power over any changes to the Bitcoin software and technology.

Bitcoin is fuelling huge investments in server farms as well as enormous speculative trading on Chinese Bitcoin exchanges. Chinese exchanges have accounted for 42 percent of all Bitcoin transactions this year, according to an analysis performed for The New York Times by Chainalysis. Just last week, the Chinese internet giant Baidu joined with three Chinese banks to invest in the American Bitcoin company Circle.

All this is weird given that Bitcoin was supposed to be independent and decentralized.  It was supposed to be away around the sorts of crackdowns that government’s like the Chinese favour.


Hackers ransom a hospital for $3.6 million

bankHackers are holding the Hollywood Presbyterian Medical Centre for a $3.6 million ransom.

The hackers are demanding a 9,000 Bitcoin ransom to release the “electronic keys” to unlock computers.

So far details are nearly impossible to get.

NBC Los Angeles is reporting that the hospital’s IT network has been crippled and that staff is redirecting emergencies to other hospitals.

Meanwhile staff are using pen and paper to record patient information and a fax to communicate with other departments. Patients need to come in person to the hospital to pick up test results since the email servers are inaccessible.

Computers are not allowed to be turned on, as the managers fear that more workstations will be affected by the incident. The hospital’s Radiation and Oncology departments have been completely shut down.

So far there is no evidence that patient or employee information has been taken but that is just a small blessing.  Still it is America and the hospital could free itself by paying up and selling a few more asperin to make up the cost.

Microsoft launches cloudy bitcoin experiment

cloudMicrosoft has launched a cloud-based blockchain platform on which will allow financial institutions to experiment cheaply and easily with bitcoin.

Vole has teamed up with ConsensYs to create a huge, decentralized ledger of every bitcoin transaction, which is verified and shared by a global computer network. It is supposed to be virtually tamper-proof.

Blockchain technology is not limited to bitcoin and can be used to secure and validate the exchange of any data. Others are building blockchains to provide additional features to the bitcoin. Vole is using one of them, called Ethereum, as its blockchain platform.

Microsoft’s cunning plan is to make the platform will be available to banks and insurance companies that are already using Azure. Vole said four large global financial institutions had already signed up to the service.

Vole claims the platform provided a “fail fast, fail cheap” model for firms: they can experiment with the cloud-based technology using templates provided by Microsoft without having to build their own systems.

The technology allows companies to create their own private blockchains, or so-called “smart contracts” that automatically execute the terms of an agreement, in 20 minutes, even with no prior experience.

Microsoft has been attempting to shift its focus to cloud services as demand for the Windows operating system slows. Last month it reported an eight percent increase in its cloud business for the first quarter.

US kid jailed for ISIL technical support

PALESTINIAN-ISRAEL-PRISONERS DAYA 17 year old high school kid in Virginia was sentenced to 11 years porridge for conspiring to assist the Islamic State (ISIL) death cult, by telling them to switch off and switch on their computers.

Well sort of.  Ali Shukri Amin was charged for assisting ISIL via blog and Twitter posts about encryption and Bitcoin.

Attorney General John Carlin said that Amin used social media to provide material support to ISIL and this sort of sentence would stop propaganda seeping into communities and reaching those who are most vulnerable.

Amin is one of the youngest people in the US to face terror charges. He pleaded guilty in June and faced a maximum 15 years in prison.

He founded the @amreekiwitness Twitter handle a year ago, garnering more than 4,000 followers and tweeting more than 7,000 times.  Last year, the authorities said, he tweeted on the now-defunct Twitter handle about how jihadists could use Bitcoin “to fund their efforts”.

He explained what Bitcoins were, how the Bitcoin system worked, and suggested using Dark Wallet, a new Bitcoin wallet, which keeps the user of Bitcoins anonymous.

The article included statements on how to set up an anonymous donations system to send money, using Bitcoin, to the mujahedeen.

The Prince William County Osbourn Park High School student said he became lost and caught up in something that takes the greatest and most profound teachings of Islam and turns them into justifications for violence and death.

On his blog, the boy said he “authored a series of highly technical articles targeted at aspiring jihadists and ISIL supporters detailing the use of security measures in online communications to include the use of encryption and anonymity software, tools and techniques, as well as the use of the virtual currency Bitcoin as a means to anonymously fund ISIL.”

Any sympathy we might have had for the kid, who was essentually running low level technical support, was lost when he was also accused of radicalising an 18-year-old Virginia youth, Reza Niknejad, who travelled to Syria in January to join ISIL.

California allows Bitcoin

A Californian law has removed a ban on using currencies other than the US dollar.

The new law will allow for the growing use of alternative payment methods such as bitcoin.

Signed by state Governor Jerry Brown, the new law will boost confidence around bitcoin, as regulators and tax authorities worldwide examine how to handle it.

For years Section 107 of California’s Corporations Code has prohibited companies or individuals from issuing money other than US dollars.

The bill was introduced by Assembly Member Roger Dickinson who said that digital currencies, community currencies and reward points were technically in violation of the law but not penalized.

Amazon’s Coins to Starbucks‘ Stars were cash alternatives and were illegal too.

In March, the US Internal Revenue Service said it will treat bitcoin as a form of property for tax purposes, rather than as currency, making it subject to similar rules as stocks and barter transactions.

Those receiving goods and services in bitcoin will have to add the value of the virtual currency at the time it was received into their gross income.

In the UK, HM Revenue & Custom said exchanging or mining bitcoins was exempt from value added tax (VAT) in the UK, but accepting the virtual currency for goods and services is subject to it.

China cracks down on Bitcoin

While the Chinese government might be a big fan of market forces, it does not want to have a method of payment in the country which it does not control.

Two Bitcoin exchanges dealing in the virtual currency have been forced to suspend bank transfers from customers depositing yuan to buy bitcoins.

FXBTC said several banks had ordered it to close accounts used for taking customer deposits, due to tightened regulations from China’s central bank. Now all commercial banks and third-party payment platforms have been ordered to close all related services tied to bitcoin transfers, the exchange said.

Another exchange, BTC38, issued a similar notice, and said due to the “influence from China’s central bank” the site had been forced to revoke deposits via bank transfer.

The move was expected last month the Chinese said they wanted to tighten regulations covering the virtual currency. By April 15, the nation’s central bank would require all banks and third-party payment companies to close accounts operated by bitcoin exchanges.

It seem the enforcement is uneven one exchange, BTCTrade.com said on its website it would temporarily suspend currency transfer over the Internet, but that bank transfers were still accepted. OKCoin, said its bank transfers were still in operation.

Bitcoin was doing well in China, but the government is concerned with Bitcoin’s lack of central monetary authority, and its potential use for laundering money. So far though the government has said consumers are free to buy bitcoins. 

Bitcoin taken out by hackers

Cyber currency Bitcoin is being walloped by attacks from unknown computer hackers who are sending “mutated” lines of code into the program that runs the virtual currency.

So far, the attacks have caused major headaches for the two Bitcoin exchanges that caused them to temporarily halt withdrawals by customers who stored bitcoins in digital wallets provided by the exchanges

According to a spokesperson for the Bitcoin Foundation, it appeared to be a denial-of-service attack.

“Whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming. The DoS attacks do not affect people’s bitcoin wallets or funds.”

The spokesman said a team of core software developers who focus on Bitcoin were working to fix the problem, but until it was solved some users would not be able to do anything with their Bitcoins, and the affected funds would appear to be “tied up” in transactions.

The only people who are being harmed are those who make multiple transactions in a short period.

The Slovenia-based Bitstamp became the second major Bitcoin exchange to halt customer withdrawals in the past several days, citing “inconsistent results,” and blaming a denial-of-service attack.

That was a day after Mt. Gox, the best-known digital marketplace operator, said a halt on withdrawals would continue indefinitely. Traders reacted to the halt by sending the value of Bitcoin to its lowest in nearly two months.

It has not been a good week for Bitcoin with both the US, Canadian and Russian authorities ordering investigations into the currency. The Russians claim that Bitcoin breaks its laws and could be used for money laundering.

Canada said it will toughen rules targeting money laundering and terrorist financing to keep a closer eye on the use of virtual currencies.

New York’s Department of Financial Services, expects to adopt consumer disclosure rules, capital requirements and a framework for permissible investments with consumer money. 

US arrests BitInstant CEO

The US government has fingered the collar of Charlie Shrem, the CEO of Bitcoin exchange BitInstant, charging him with laundering money for customers of the dark web Silk Road exchange.

The US attorney in the Southern District of New York said Shrem helped Robert Faiella, sell more than $1 million worth of bitcoins to Silk Road customers. Faiella, 52, allegedly ran an underground Bitcoin exchange using the alias BTCKing.

Coppers swooped on Shrem at John F. Kennedy International Airport in New York and cuffed Faiella at his home in Cape Coral, Florida prosecutors said. Both are charged with conspiracy to launder money and operating an unlicensed money transmitting business. Shrem faces a charge failing to fess up to the Feds that something was up.

Shrem, 24, is a major player in the Bitcoin world. His BitInstant exchange lets people buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. It received a $1.5 million investment last year from Cameron and Tyler Winklevoss. Shrem is also vice chairman of the Bitcoin Foundation, one of the currency’s biggest advocates.

The Winklevoss twins said they were “deeply concerned” about Shrem’s arrest as their investment was on the basis that BitInstant would abide by all applicable laws – including money laundering laws.