Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | China is tightening its grip on blockchain companies. First, the Chinese government came for cryptocurrency—now it’s planning to impose restrictions on nearly any online firm whose business involves blockchain technology. The Cyberspace Administration of China, the country’s top online censorship agency, is mulling a new policy that would impose a number of regulations on “blockchain information services.” According to CoinDesk, it defines these as “entities or nodes” that provide online services to the public using blockchain technology.
Though China’s government has cracked down on cryptocurrency trading and its surrounding industry, it has publicly praised blockchain as a database technology. Unsurprisingly, though, it also wants control. The new rules would require blockchain companies to register their names, service types, and server addresses with the government, and submit to annual reviews. Companies would also need to gather users’ real names and national identification numbers, and store the data so it can be accessed by law enforcement.
The rules would also call for blockchain services to censor content “deemed to pose a threat to national security,” according to the South China Morning Post. But it’s not clear what that means, since once information is stored on a blockchain it can’t be removed. How exactly does China intend to censor a technology designed to be censorship-resistant? | | Ethereum is delaying a crucial upgrade to its monetary system. After finding bugs in the code they were testing, Ethereum’s core developers have decided to postpone the network’s scheduled hard fork, which was supposed to happen next month, until 2019. The delay of the software upgrade, called Constantinople, will give the group more time to stew over the most controversial aspects of the changes.
The contentious proposal is related to something called the “difficulty bomb,” a piece of Ethereum’s code that steadily increases the difficulty of mining new blocks. The bomb was originally conceived as part of a larger plan to transition the Ethereum network from the energy intensive process it uses to agree on its ledger, called proof-of-work, to a more energy-efficient one called proof-of-stake. It’s supposed to deter miners from continuing to mine the old chain once the network switches.
But developing a proof-of-stake system is taking longer than expected, so the difficulty bomb must be delayed. And since that will make mining easier, Ethereum’s core developers have decided they must reduce the reward to counterbalance this effect. How to do this is a matter of some dispute. Unlike Bitcoin, which has a capped supply, Ethereum’s currency is uncapped and has no formal monetary policy. There are a range of opinions in the community about how to best adjust the issuance rate to account for delaying the bomb. Ultimately, the core developers had landed on changing the block reward from three ether to two, but now the upgrade is delayed until at least January. Decentralized decision-making is hard. | | Loose Change Fill your pockets with these newsy tidbits. | | | North Korean state-sponsored hackers have stolen more than half a billion dollars worth of digital coins from cryptocurrency exchanges since January of 2017, according to a new report from cybersecurity company Group-IB. (The Next Web) | | | | The owner of the New York Stock Exchange’s new digital asset trading platform, Bakkt, could begin offering Bitcoin futures contracts as early as December. (CoinDesk) | | | | The Financial Action Task Force, an intergovernmental organization that acts as a global watchdog for money laundering, says it will issue a set of global rules for focused on preventing the use of cryptocurrency for money laundering and other crimes. (Reuters) | | | | dYdX, a startup that lets people create their own cryptocurrency-based financial products, like interest-generating loans, has raised $10 million from investors led by Andreessen Horowitz and crypto hedge fund Polychain Capital. (Fortune) | | | | HTC has started selling its “blockchain phone,” which features a hardware wallet for storing cryptographic keys. (Wired) | | | | Accenture says it has developed an “interoperability node” that can connect the most popular enterprise blockchain platforms to each other. ( CoinDesk) +How to get blockchains to talk to each other (TR) | | | The Money Quote “If you were investing in any other asset class, you’re probably not worried about the asset just disappearing—but this one, people still have that fear.” —Mike Belshe, cofounder and CEO of BitGo, a startup that specializes in storing and securing crypto-assets. BitGo just raised $15 million from investors including Goldman Sachs. (Bloomberg) | | | |
