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Not Your Node, Not Your Validation

When you run your own Bitcoin node, you don’t have to rely on a third party to broadcast, propagate, validate or confirm your transactions.

The post Not Your Node, Not Your Validation appeared first on Bitcoin Magazine.

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From afar, the Terracotta Army seems to exhibit homogeneous redundancy, but each soldier’s unique facial features portrays a rather diverse army. Source.

Part 1: The Redundant Reminder Of Node Redundancy

“It won’t succeed unless the user experience is simply better than trusted third parties, but we need to start the education process with the very basic fundamental: trusting a third-party with full access to your Bitcoin is just replacing one centralized banking system with another.”

Eric Martindale

For those in the crypto space who are relatively versed in Bitcoin language, we’ve all heard the proverbial “run your own node” preached throughout Bitcoin literature many times. It’s synonymous and up there with “not your keys, not your crypto” or “HODL.”

Regardless if they are adhered to by the crypto community, they do hold their own merit and ways of conjuring up regret at the worst moments. Human nature tends to make the same mistakes again; Mt.Gox, QuadrigaCX, OKEx, etc.

Then why do we continue to keep falling into the same mistakes time after time?

Because of ease. It’s very easy to open an account with a centralized exchange and keep your bitcoin on there. It’s also extremely easy to buy high and sell low when the concomitant FUD infiltrates our decisions.

But one area of the Bitcoin ecosystem that really hasn’t captured too much retail attention, let alone usage, is running your own bitcoin node. It’s one of the few areas of bitcoin that has not been “institutionalized” or “monetized.” For good reason though, as it’s not supposed to generate monetary incentives. Rather, it consumes costs that are somewhat linear to blocks mined. It was designed to be grown in a grassroots manner rather than the other financially-motivated areas of mining, trading and custody.

When one runs his/her own node, they don’t have to rely on a third party to broadcast, propagate, validate and confirm their transactions. They are completely self-sovereign in this manner.

Therefore, to take the earlier mentioned “not your keys, not your crypto,” idiom, the same spirit can be applied as “not your node, not your validation.”

As the crypto community embraces the third bitcoin bull run, the inevitable next generation of Bitcoin believers will venture down the rabbit hole. This will undoubtedly put more demand, and possibly strain, on third-party services that are already in place ranging from wallet providers, exchanges and even on the mining network. Subsequently, this will also naturally demand an increase of the amount of nodes running. But by whom?

“Members of the bitcoin community seem to be losing interest in hosting full nodes. And it’s something to pay attention to, because over time it might mean that the major companies in the industry may have to pick up the slack.”Daniel Cawrey

The bitcoin community can be divisive at times between the amount of redundancy of having a certain amount of nodes in the network. Does it help the network or does it help the individual?

It’s isomorphic.

But the key word here is “redundancy.” As in the same ecosystemic redundancy witnessed in nature. 

Parrotfish is a species that feeds on the small algae of bio-rich corals under sea. This act alone is essential for the survival of corals to flourish on a seabed full of rivals. In a scenario when the parrotfish species dies out, a collection of other similar functioning species, such as the surgeon fish and rabbitfish, are there to fill the void. This redundancy in terms of our natural ecosystem provides a gradation of resilience to the system as a unit.

Another example that supports this redundancy in biodiversity is seed dispersion done by a range of differently-sized species, which is pervasive in any forest throughout the planet. If one subset of species goes extinct, another subset can fill that void without any downtime. But there is a more precarious caveat in which the extinction of the larger species in size have been researched to inhibit a larger disturbance to the local ecosystem versus its similarly-functioning small species.

“…larger species in size have been researched to inhibit a larger disturbance…”

In short, redundancy manifests the proverbial “don’t put all of your eggs in one basket. ”And it’s this redundancy, which can also be conflated with diversity (we’ll use both terms interchangeably in this piece to make a general point), that is essential to the systems of nature, society, machines, governments, etc. 

When the first string quarterback goes down with an ACL tear, the second string man comes up, who might perform even better. When a subset of Bitcoin nodes suffers some internet outage, the rest of the nodes can easily pick up the slack of validating transactions. It’s a form of risk insurance on network threats. It’s fault tolerant. And this gets cheaper as more smaller individuals run nodes, rather than placing them in the hands of bigger players prone to centralized attacks.

The sentiment has been preached throughout the corners of the crypto world and it is crystal clear: Everyone should run their own node. But it will take some more education, easy-to-use tools or, god forbid, another type of accidental chain fork to wake the masses. By providing users with an all-in-one node kit setup (more at the end), the ease and importance of running a node will be galvanized.

The ubiquity of nodes is not yet present. But the rush of a seemingly hazardous government interest can be the cataclysm that the network needs to push beyond its reach. This could also be characterized as that diversity, or network resiliency. 

On that note, attempts at placing nodes in space are still works in progress (although Blockstream’s satellites can be considered “close enough” at the moment).

See Also

The Top 5 Products That Every Bitcoiner Needs

We’ve always been functioned to strive for maximum efficiencies, but the value of redundancy and diversity is higher, though at the sacrifice of costs.

“The resource requirements of a full node are moving beyond the capabilities of casual users. This isn’t inherently a problem – after all, most people don’t grow their own food, tailor their own clothes, or keep blacksmith tools handy in to forge their own horseshoes either.”

Justus Ranvier

To circle back to the beginning, ease has subsequently led to reliance. Reliance can be misconstrued as laziness or even lack of knowledge. These characteristics are prime meat for entities in taking care of things for you, in more ways than one. But running nodes is one area of the Bitcoin ecosystem we don’t want institutions to start pouring in to. Hypothetically, if that ever happens, then they dictate your transaction validations. And in the context of ecosystemic redundancy, as Marten Scheffer of Wageningen University has stated, “While redundancy may be the rule in smaller creatures, the functional uniqueness of larger ones could imply that they are often the Achilles heel for ecological functioning.”

Part 2: What Is The Node Ecosystem Like Now?

Currently and historically, capturing an accurate number of the bitcoin full nodes that are up and running has been a less than perfect science. According to bitnodes.io, which is a community-developed platform still in beta, there are close to 11,000 nodes running a full node client. This number is what it deems as “reachable” or, as others would more accurately say, “listening nodes.” Other sources, including Luke Dashjr, have stated that the number of nodes is much larger, in the area between 50,000 and 100,000, maybe more, which includes private nodes.

In the chart seen from coin.dance, the number of nodes more than doubled after the 2017 bull run, from around 5,000 to a current reading of over 10,000. Although there is no perfect linear relationship between the amount of transactions and number of nodes, the trend is clear.

Source: Coin Dance

Running a full node can be complex and daunting for users. And, unlike miners, node operators don’t receive transaction fees or rewards. There are some costs attached to running a node, although miniscule, which include having extra disk space and internet bandwidth. These costs may be miniscule, but they could increase as the bitcoin transaction history increases.

Besides going the direct raw route and downloading the Bitcoin Core software with some complexity and limited features, there have been a host of providers out there providing Bitcoin full node products that not only allow you to sync the whole transaction history of blocks, but provide a plethora of features such as multisig, Tor, user-friendly UI, Lightning Network full nodes, the necessary hardware and more. The most notable providers are Casa Node, Nodl One, Lux Node, BitBoxBase, myNode, Umbrel and even the HTC Exodus 1 mobile solution.

These different providers are the redundancy we need that also can exhibit small beneficial nuances related to diversity in form, speed and resilience to disturbances in the network.

Sources:

  1. https://www.sciencedaily.com/releases/2015/10/151008142620.htm
  2. https://www.nature.com/articles/s41559-018-0519-1
  3. https://www.coindesk.com/bitcoin-nodes-need
  4. http://luke.dashjr.org/programs/bitcoin/files/charts/security.html
  5. https://bitcoinmagazine.com/articles/buy-or-diy-an-overview-of-7-bitcoin-full-node-products

This is a guest post by Eric Choy. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Source: https://bitcoinmagazine.com/articles/not-your-node-not-your-validation?utm_source=rss&utm_medium=rss&utm_campaign=not-your-node-not-your-validation

Blockchain

Following Coinbase And Bakkt: Winklevoss’ Gemini Reportedly Considers Going Public

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Cameron and Tyler Winklevoss are reportedly exploring the option of making their cryptocurrency exchange Gemini public. The brothers could follow the steps of other US-based digital asset-related companies with similar intentions, such as Coinbase and Bakkt.

Gemini To Go Public?

Bloomberg reported today that the founders of the US-based crypto exchange Gemini are open to the idea of going public.

“We are definitely considering it and making sure that we have that option. We are watching the market, and we are also having internal discussions on whether it makes sense for us at this point in time. We are certainly open to it.” – said Cameron.

Gemini, based in New York City, employs over 350 people. The exchange obtained a trust charter from the New York State Department of Financial Services shortly after its establishment and is licensed as a money transmitter in multiple US states.

Making a company public has been a hot topic within the cryptocurrency industry lately. Firstly, the largest US exchange Coinbase announced such plans with an estimated value of nearly $30 billion.

More recently, Bakkt, the Bitcoin futures trading platform owned by the Intercontinental Exchange, stated similar plans after a merger with a special acquisition company. Bakkt’s estimated enterprise value is at approximately $2.1 billion.

Gemini Releases A Credit Card With Crypto Rewards

The exchange also announced that it will launch a credit card that will provide users with cryptocurrency rewards. Dubbed Gemini Credit Card, it will enable up to 3% back in bitcoin and other digital assets. The rewards will be automatically deposited into the cardholder’s Gemini account.

The card comes after Gemini acquired Blockrize – a company specializing in building such products. The distribution will start later in the year, and the statement informed that there’s already a substantial waitlist with over 10,000 people requesting early access.

The card will work like traditional ones and will be available to US residents in every state while also accepted in merchants that accept regular cards.

“The Gemini Credit Card will make it easier for any consumer to invest in bitcoin and other cryptos without changing their existing behavior. Rather than deciding how and when to buy crypto, customers can do so when making their everyday purchases. We are excited to welcome the Blockrize team to Gemini and work together to continue to mainstream crypto.” – commented Tyler Winklevoss.

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Source: https://cryptopotato.com/following-coinbase-and-bakkt-winklevoss-gemini-reportedly-considers-going-public/

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Blockchain

FinCEN Extends Comment Window on Proposed Crypto Regulations

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With the initial deadline for comments long expired, FinCEN has decided to extend the comment period for its proposed controversial crypto regulation for an additional 15 days.

FinCen Sets New Deadline

The Financial Crimes Enforcement Network (FinCEN), an office of the U.S. Department of Treasury, announced the news of the extension via a press release on Thursday (Jan. 14, 2021). FinCEN’s earlier deadline was set on January 4, 2021.

Following the different requests for extension, it appears that FinCEN would not be hasty to implement the proposed regulation. The extension is beneficial for the industry, as affected entities can have time to analyze the proposal. Since the initial comment period, the bureau has received thousands of comments and is ready to receive more feedback.

An excerpt from the press release reads:

“FinCEN is providing an additional 15 days for comments on the proposed reporting requirements regarding information on CVC or LTDA transactions greater than $10,000[…] that involve unhosted wallets or wallets hosted in jurisdictions identified by FinCEN. FinCEN is providing an additional 45 days for comments on the proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers, and on the proposed recordkeeping requirements.”

The Proposed Regulations

FinCEN’s proposed crypto regulation required that cryptocurrency exchanges would keep records and verify “the identity of their customers if a counterparty uses an unhosted or otherwise covered wallet and the transaction is greater than $3,000.” Also, exchanges are expected to submit to FinCEN transactions that exceed $10,000.

However, the proposal saw pushback from the crypto community, with many saying that the rule was harmful to the industry. Companies like Jack Dorsey’s Square and Andreessen Horowitz opposed the rules, with Square noting that it could create unnecessary friction between crypto users and regulated entities.

Other comments noted that the original 15-days comment period was too short. As reported by CryptoPotato, days after FinCEN released its planned regulatory policy, U.S. crypto exchange Coinbase asked for an extension of the comment period.

According to Coinbase, the comment time frame was rushed and asked the bureau to instead consider a 60-day time frame. Also calling for an extension was a U.S. Senator and several members of Congress. The lawmakers also asked for an extension between 15-60 days to give concerned parties time to evaluate the proposed rule.

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Source: https://cryptopotato.com/fincen-extends-comment-window-on-proposed-crypto-regulations/

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Blockchain

Bulgarian Crypto Exchange Owner Sentenced To 10 Years in Prison for Laundering $5 Million

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A Bulgarian national was sentenced to serve ten years in prison after a major crypto-related fraud. Not long ago, the man was convicted in a transnational multimillion-dollar scheme to defraud over 900 American citizens.

An Auction Fraud That Victimized over 900 Americans

According to an official announcement by the United States Department of Justice, Rossen G. Yossifov, a 53-year-old man, had defrauded hundreds of American citizens during a well-masterminded illegal endeavor.

He managed and promoted the so-called RG Coins – a cryptocurrency exchange headquartered in Sofia, Bulgaria. Now, the US court has sentenced him for conspiracy to commit a Racketeer Influenced and Corrupt Organizations Act (RICO) offense plus a conspiracy to commit money laundering.

During the crime, Iossifov and his Romanian co-conspirators, part of the Alexandria Online Auction Fraud (AOAF) Network, engaged a large-scale online fraud. They organized a false auction that victimized at least 900 Americans during its course.

As CryptoPotato reported, Iossifov was officially charged with participating and dictating the international fraud a few months ago. 

Providing Favorable Crypto Exchange Rates To Victims

According to initial court documents, the scammers made everything seem legit, providing invoices with trademarks of reputable firms to their victims.

One of the primary ways to lure people into the scam was that the conspirators designed their scheme to cater to criminal enterprises by providing better exchange rates to the AOAF Network members.

The Romania-based fraudsters posted false advertisements to popularize online auctions for expensive goods and vehicles that did not exist. They had also established call centers to offer customer support to advise client questions and “alleviate concerns over the advertisements.”

When convinced, victims had to fulfill a payment. Domestic associates of the criminals would accept the money, convert them into cryptocurrency, and transfer them to foreign-based money launderers. As per the announcement, Iossifov was the final gear that facilitated the last stage of the scheme.

Some of the trial’s evidence revealed that, in less than three years, Iossifov had laundered nearly $5 million in cryptocurrency for just four of his partners.

“This represented over $7 million in funds defrauded from American victims. In return, Iossifov made over $184,000 in proceeds from these transactions”, read the official court publication.

Apart from Iossifov and the five co-operators, so far, 17 more members of the Romanian crime network will face court for their role in this scheme. Seven others have already faced sentences with verdicts between 30 to 96 months. Three of the members of the scam are fugitives.

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Source: https://cryptopotato.com/bulgarian-crypto-exchange-owner-sentenced-to-10-years-in-prison-for-laundering-5-million/

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