New 22 Petahash Mining Pool Signaling Bitcoin Unlimited

A new mining facility and pool going by the name of ‘CANOE’ has joined the Bitcoin mining race this week, already claiming 0.7% of the total hashrate with 22 Petahashes worth of mining power. Also read: Network Alternative Bitcoin Unlimited Closing In On ‘Opponent’ Segwit Proposal  New Pool Signaling Bitcoin Unlimited News of CANOE’s launch

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A new mining facility and pool going by the name of ‘CANOE’ has joined the Bitcoin mining race this week, already claiming 0.7% of the total hashrate with 22 Petahashes worth of mining power.

Also read: Network Alternative Bitcoin Unlimited Closing In On ‘Opponent’ Segwit Proposal 

New Pool Signaling Bitcoin Unlimited

News of CANOE’s launch came recently when Chinese Twitter account cnLedger revealed that the pool was attracting much attention in China for signaling the Bitcoin Unlimited (BU) software client. BU is a favorite with many Chinese bitcoin miners. All of New 22 Petahash Mining Pool Signaling Bitcoin Unlimitedthe 22 Petahashes are owned by the pool itself, according to cnLedger.

Bitcoin miners signal their support of their preferred bitcoin client by ‘relaying’ the version number when they mine new blocks. If 75 percent of all blocks being relayed over a two week period are signaling for BU, the software ‘locks in’ and activates.

While the share of the overall network hashrate is not a guarantee of the percentage of blocks being relayed, knowing which pools prefer BU is a common way to form an estimation. CANOE’s addition adds to the roughly 20 percent of total hashpower that prefers the BU client.

New 22 Petahash Mining Pool Signaling Bitcoin Unlimited

The person in charge of the CANOE pool is Ang Li, a bitcoin entrepreneur since 2013 who became a miner in 2015. Li started to build a large-scale mine the following year in Sichuan, which has recently been called the capital of bitcoin mining.

Apart from CANOE, a pool called BTC.top is another newcomer that has been publicly supporting BU. BTC.top was launched in December 2016, and now has about 7% of the network’s hashrate. Other pools that have publicly supported BU’s scaling plans include ViaBTC, the Bitcoin.com pool, India’s GBMiners, and a sizable portion of SlushPool.

Why Support BU?

Li told Chinese news website 8btc that Bitcoin’s network congestion is the reason why bitcoin’s block size needs to be increased. While Bitcoin’s users and transactions have been expanding, the network can still only handle between 3 and 7 transactions per second. Li described:

Now the reward for a new block is (only) 12.5 BTC, but the fees are almost 1 BTC. Many people are paying more fees in order to make sure their transaction will be confirmed soon.

A scaling solution called the Lightning Network is being developed by at least five different development teams. Some believe it to be an alternative to the BU client, while others including the BU development team, have pledged support for the Lightning community. New 22 Petahash Mining Pool Signaling Bitcoin UnlimitedThe network’s solution calls for high-valued transactions to be processed on the Bitcoin blockchain while 0.042 BTC or smaller transactions are meant to take place across their network instead. Entrepreneurs who open a Lightning ‘Payment Channel’ for the network will be able to collect fees from users directly using the Lightning Network.

Keeping transactions ‘on-chain’ will require higher fees under this arrangement. “BS [Blockstream] supports Core dev team’s path which will lead to the Lightning Network”, Li said. “They’re thinking of the interest of their own company and team, but they did not consider the interest of the majority of miners. Meanwhile, their solution cannot solve the long-term problem of network congestion. It is also against the original vision of Bitcoin,” he argued.

Helping Guide the Mining Community

Li also believes that as new miners and big money flow into the network, most miners cannot fathom the potential outcomes of the various scaling plans like BU and Lightning. The lack of technical knowledge has, in his opinion, contributed their indifferent attitude towards scaling. “We are much more deeply involved in the mining business”, Li shared. “Therefore we want to guide miners to work toward the best of their interest. This is also the reason to found the pool”. He also explained that:

To support scaling (on-chain) is to defend the interests of the miners. Mining is the foundation of the whole bitcoin network and business. So defending the interests of miners means defending the bitcoin network too.

The incentives that Satoshi Nakamoto designed in the Bitcoin whitepaper are not enough to sustain mining for long, Li feels, adding that as the block reward halves every four years, miners income will continue to decline. According to him, keeping the block size where it New 22 Petahash Mining Pool Signaling Bitcoin Unlimitedis now will not provide enough incentive and therefore has to be reconsidered. Li also believes that only a larger mining transaction fee will maintain the balance. “By increasing block size, and transaction numbers, the fees will gradually replace the block reward, providing enough incentive for the miners to defend the bitcoin hashrate. This is the fundamental way to achieve healthy development of the whole ecosystem.”

Nonetheless, he believes that other scaling plans should not be ruled out. “We support increasing the capacity, it does not simply mean that BU’s plan is the best one. But increasing the capacity is essential,” he noted.

His future plan for the pool is to deploy another facility for mining in Xinjiang, named “Dian Jin Blockchain,” or Electric Gold Blockchain. The new project will have a capacity of 130,000kw, and be funded by both Bitmain and Li’s CANOE team, with the intent to become the largest bitcoin mine in the world.

What do you think of CANOE? Let us know in the comments section below.


Images courtesy of Shutterstock, Bitcoin Unlimited, and Blockchain.info


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5 Ways Bitcoins Could Be Transferred to a Sidechain

The idea of sidechains is something that has garnered a large amount of hype in the Bitcoin community ever since the concept was first publicly discussed in the media back in 2014. The creation of a sidechain essentially allows users to transfer bitcoin to and from other blockchains with different features. Examples of sidechains currently

The post 5 Ways Bitcoins Could Be Transferred to a Sidechain appeared first on Bitcoin News.

The idea of sidechains is something that has garnered a large amount of hype in the Bitcoin community ever since the concept was first publicly discussed in the media back in 2014. The creation of a sidechain essentially allows users to transfer bitcoin to and from other blockchains with different features.

Examples of sidechains currently in development include RSK, which is an Ethereum-esque platform for more flexible smart contracts; MimbleWimble, which is an experimental method for improving privacy and scalability on the Bitcoin blockchain; and Bitcoin Hivemind, which is a blockchain-based prediction market platform.

To “move” bitcoins from the main chain to a sidechain, the coins are first frozen on the main chain and then activated on the secondary chain; this is called a two-way peg. There are currently five well-known options when it comes to who or what should control the locked funds on Bitcoin’s main chain for these two-way peg mechanisms.

Also read: Hivemind, Bloq Developer Paul Sztorc Discusses Bitcoin & Sidechains

1. Single Custodian

The simplest way to implement a two-way peg between Bitcoin and a sidechain is by sending the funds to a single custodian to hold on the main chain while the funds are active on the sidechain. The obvious problem here is that this is a completely centralized solution.

In reality, having one party control the frozen funds sent to a sidechain wouldn’t be much different from simply depositing funds at bitcoin banks such as Coinbase or Xapo. In this way, you can view these bitcoin banks’ internal ledgers as sidechains to Bitcoin.

If one centralized party is going to have complete control over the frozen funds, then it may be a better idea to extend the functionality of those funds via a centralized server rather than a new blockchain.

2. Federation

Things get a bit more interesting when you replace the single custodian with a federation of notaries by way of a multisignature address. In this model, a federation of entities must sign-off on movements to and from the sidechain, so more parties must be compromised for a failure situation to unfold where the bitcoins frozen on the main chain are stolen.

Blockstream recently released a whitepaper on “strong federations,” which is essentially their vision of a federated two-way peg system. Liquid is a sidechain created by Blockstream that uses the strong federations model. The sidechain is used to transfer bitcoins between centralized bitcoin institutions, such as exchanges, at a faster pace than the public Bitcoin blockchain.

One of the main selling points of the single custodian and federation models is that they do not require any further changes to the Bitcoin protocol.

3. SPV Sidechain

5 Ways Bitcoins Can Be Transferred to a Sidechain

The SPV sidechain is the original vision of the decentralized two-way peg as outlined in the original sidechains whitepaper.

An SPV sidechain uses SPV proofs to move bitcoins to and from the Bitcoin sidechain. An SPV proof is a way to prove the existence of a transaction in a block via a small amount of data related to that transaction’s existence in a particular block.

In other words, an SPV sidechain moves bitcoins between the main chain and the sidechain after receiving proof that a transaction signaling for the movement of some bitcoin between the two chains has been mined in a block. To be enabled, SPV sidechains require a soft-forking change to Bitcoin.

Unlike the other two-way peg mechanisms discussed in this article, SPV sidechains do not give direct control of real bitcoins on the main chain to a custodian; however, the ability for a majority of miners to produce and build upon fraudulent SPV proofs gives them indirect control over the funds, including the ability to send to themselves. Having said that, there are ways to mitigate this issue.

4. Drivechain

5 Ways Bitcoins Can Be Transferred to a Sidechain

A drivechain is an alternative to the sidechain vision outlined in the original whitepaper. In a drivechain, miners signal the current state of a sidechain. In other words, the miners are essentially the custodian of funds, and they’re able to unfreeze funds for users who wish to move their coins back to the main chain.

The drivechain concept was developed by Paul Sztorc, who is an economist at Bloq and the creator of Bitcoin Hivemind.

One of the key tenets of drivechains is that miners are the least problematic custodians of funds being used on a sidechain from a game theory perspective. According to Sztorc, drivechains can be structured in a way in which any theft of coins frozen on the mainchain would obviously be orchestrated by miners. 

“Such brazen theft would indicate [1] that Bitcoin would be (in the near future) without sidechains of any kind, and [2] that Bitcoin itself may be in danger from the miners (and we may need to consider using an alternate proof-of-work hash function),” he explained the impact of this setup in his original post on the topic. Like SPV sidechains, drivechains require a soft-forking change to Bitcoin.

5. Hybrids

Combinations of the aforementioned methods of achieving a two-way peg are also possible.

For example, a concept explored by RSK Labs is the combination of a drivechain with the federation model. In other words, both the miners and members of a federation will have to sign-off on a movement of funds from the sidechain back to the main Bitcoin blockchain.

As mentioned previously, a drivechain requires a soft-forking change in Bitcoin, so RSK currently uses a federation-only model.

Although a federation will be used in conjunction with the drivechain model, the federation’s role in the RSK blockchain will no longer be necessary once (if) 90 percent of Bitcoin miners have decided to merge-mine RSK.

Bonus: Extension Blocks and Soft-forked Sidechains

Another idea similar to the concept of sidechains is called extension blocks. Much like sidechains, extension blocks allow users to opt-in to blocks of transactions with different validation rules.

The key difference between a traditional sidechain and an extension block is that upgraded Bitcoin full nodes validate the transactions on the extension block. This means that the extension block is tied much more closely to the main Bitcoin network than a traditional sidechain.

The level of separation between extension blocks and the Bitcoin network is almost non-existent, which means issues on extension blocks are more likely to cause issues for the entire Bitcoin network.

With sidechains, there is a layer of separation between two blockchains, which means the main chain can be protected from issues on the sidechain. For this reason, it’s likely that more experimental ventures, such as RSK, will be implemented as a sidechain rather than extension blocks.

Recently, Bitcoin Core contributor Johnson Lau posted an early version of a BIP draft for effectively increasing Bitcoin’s block size limit through the use of extension blocks.

Since extension blocks can be implemented via soft forks, the features of the extension blocks are essentially opt-in for users. Even in the case of extension blocks with a larger block size limit, users are not forced to upgrade and validate or propagate blocks that are much larger in size. Those who wish to enjoy the level of decentralization offered by 1MB blocks can continue to do so, while those who would like to experiment with much larger block size limits can do so on an opt-in basis.

Although users are able to opt-in to extension blocks, miners must upgrade to continue mining valid blocks on the main chain.

Soft-forked sidechains are similar to extension blocks, with the key difference being that soft-forked sidechains are merge-mined rather than mined as part of the main Bitcoin blockchain.

This article is largely based on a recent presentation by RSK Labs Chief Scientist Sergio Lerner on Zeppelin’s YouTube channel and conversations the author had with Blockstream CEO Adam Back.

What do you think about using sidechains to extend Bitcoin’s functionality? Let us know in the comments!


Images via Shutterstock, RSK


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