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Announcements from Consensus 2018

One of the blockchain industry’s biggest conferences, Consensus, was last week and there were a number of announcements from some of the most exciting projects and companies in the space, such as Coinbase, Circle, and Blockstack.

As mentioned in our daily cryptoasset newsletter, Coinbase announced a range of institutional products such as a cryptocurrency storage offering, a suite of tools for institutional investor trading, and a group providing services to their institutional clients.

Blockstack, a network for decentralized applications, also released app.co, the first universal app store for decentralized apps. The store will provide apps across all protocols including Ethereum, Blockstack, EOS, and IPFS.

Moreover, Circle announced their latest $100M financing round led by mining manufacturer Bitmain, and their plans to release their own fiat-backed stablecoin.

Finally, GoTenna announced the forthcoming release of txtenna which enables censorship resistant off network Bitcoin transactions. The txTenna app will enable users to sync up their mobile with a goTenna device then transact offline and send the bitcoin. A user’s device needs to be within roughly a mile of another goTenna device to relay the message across the mesh network, which wirelessly connect devices directly to each other without passing through any central authority (such as an ISP).

Criticisms of Proof-of-Work and alternative consensus algorithms

Last week, research was released in the science journal Joule which stated that, by the end of the year, the Bitcoin network would use around 0.5% of the world’s electricity. Alex de Vries, the founder of the Digiconomist blog and the author of the new study, estimates that Bitcoin currently requires about 2.55 gigawatts of electricity. His work analyzes current trends in Bitcoin mining production, as well as ASIC electricity use, and predicts that Bitcoin’s energy consumption could reach 7.67 gigawatts later this year.

Estimated Lifetime Costs for an Antminer S9 under Various Lifetime Assumptions and a Production Cost of US$500 (Assuming Electricity Costs 5 US Cents per Kilowatt-Hour). Source: https://www.sciencedirect.com/science/article/pii/S2542435118301776?via%3Dihub

“With the Bitcoin network processing just 200,000 transactions per day, this means that the average electricity consumed per transaction equals at least 300 kWh, and could exceed 900 kWh per transaction by the end of 2018,” de Vries wrote, “Bitcoin has a big problem, and it is growing fast.”

There was also talk of alternative blockchain architectures over the last week which “unlike blockchains that rely on proof-of-work, [could be] quiescent and green”. Cornell University professor and blockchain researcher Emin Gün Sirer announced several new consensus protocols — created by the pseudonymous Team Rocket — on Thursday at Token Summit. “The way this protocol works is … simple yet incredibly powerful. They rely on randomness and … random interactions and yet they ensure after [said] interactions everyone has decided the same thing,” Sirer said.

According to the white paper:

“Inspired by gossip algorithms, this new family gains its safety through a deliberately metastable mechanism. Specifically, the system operates by repeatedly sampling the network at random, and steering the correct nodes towards the same outcome.”

However, the white paper hasn’t been without criticism; Ethereum researcher Vlad Zamfir argued that “[The outlined protocol is] not asynchronously safe and it’s probabilistic,” he said, later adding “We don’t get to take a probabilistic model of the network for granted [in my opinion].”

Bitcoin batching

Nic Carter and hasufly recently released an article on Bitcoin batching.

Batching is when users include payments to multiple other users within a single transaction. The article considers how the usage of batching on the Bitcoin network has changed over time and what effect it has had on reported transaction counts.

The main takeaway from the article is that transaction count has become an unreliable measure of Bitcoin’s usage because of batching. The article shows how batched transactions make up an average of only 12% of all transactions, yet move between 30%-60% of all bitcoin, at peak times even 70%. As a result, using transaction count as a measure for activity on the Bitcoin network can lead to underestimations of how many payments are being carried out.

The article builds on some of work done on Bitcoin batching analysis by David A. Harding and we look forward to more research on the topic.

End of weekly roundup

We hope you have enjoyed reading about some of our favourite features and news pieces for the week May 14–20. Subscribe to our daily newsletter to stay up-to-date with cryptoasset news. Click here to visit our website.

This article is intended for informational purposes only. The views expressed herein are not and should not be construed as legal or investment advice or recommendations. Recipients of this article should do their own due diligence, considering their specific financial circumstances, investment objectives, and risk tolerance before investing. The individuals contributing to this article have positions in some or all of the assets discussed. This article is neither an offer, nor the solicitation of an offer, to buy or sell any of the assets mentioned herein.