February 2016 - Reddheads newsletter (issue 26): Reddcoin Core View this email in your browser Reddcoin Core in testing

Hello Reddcoiners, Welcome to the second Reddheads newsletter of 2016. The first month of the year brought with it a burst of renewed interest in altcoins, with the biggest projects headlining articles and opinion pieces. But it has not only been the top cryptocurrencies that have enjoyed a surge in attention; forums and online meeting places for dozens of digital currencies have been livening up. Reddcoin is no exception, and in his latest updates to the community the lead dev of the project, @gnasher, has announced advances in multiple areas. Major work to Reddcoin Core is in testing. You can read more in this newsletter. Bitcoin is maintaining a steady presence in the media spotlight, and with the arrival of “Blockchain” as a concept mainstream journalists and bankers alike appear to be getting in a muddle over which is which: for a good example read JP Morgan Chase Blockchain Trial: Bitcoin Server Could Streamline Loans And Settlements, Executives Say, published by the International Business Times on 31 January 2016. The beginning of the year has seen Bitcoin discussed for the very first time by the European Parliament, and a ruling in the United States over whether Bitcoin can be used to pay taxes. These are significant milestones in the history of cryptocurrency and they come at a time when financial companies and innovators are poised for a “fintech” revolution. This promises to be an exciting year... Reddibrek Editor Reddcoin v2.0 beta on testnet

At the time of writing Reddcoin v2.0 has been running on testnet for just over a month, with the first three PoSV blocks being staked by @gnasher on 23 December. @henry and I have since joined @gnasher on testnet; we have been running the new software for nearly a month. But what is special about the new Reddcoin release? Why is it Reddcoin v2.0? It is important to differentiate between the ways the numbers “2.0” are bandied about in the cryptocurrency space. The Winklevoss brothers (founders of the New York Bitcoin exchange Gemini) like to refer to Bitcoin as “Gold 2.0”, while discussions about “Cryptocurrency 2.0” usually revolve around next-generation decentralised applications (NGDAs) – in layman's terms clever uses of the blockchain for diverse tasks beyond decentralised currency. Generally-speaking, when used to identify versions in software development, a sequence of 3 or 4 numbers may be used (such as v1.4.1.0) with the first number of the sequence changing only for significant overhauls of the software that include profound changes to the architecture and code.

Based on Bitcoin not Litecoin

The advance made with the latest version of Reddcoin (known as Reddcoin Core), that warrants it being bumped up a major version number, is a complete realignment of the code to follow Bitcoin instead of Litecoin, the cryptocurrency on which Reddcoin originally was based. Reddcoin is still secured by a Proof of Stake algorithm and still functions with the same parameters, block confirmation times, etc. but as of the new version, it is based on Bitcoin. But why do this? As the flagship cryptocurrency Bitcoin has the most developers working on its improvement, and in the years that it has been in development the process of contributing to Bitcoin has stabilised to become a relatively reliable, peer-reviewed, secure system. This results in proper quality control and a professional process when it comes to new releases and features. By “rebasing” Reddcoin to Bitcoin @gnasher is preparing the cryptocurrency for the long-term future. From the moment Reddcoin v2.0 is released and adopted by the community it will be a much easier and efficient process for Reddcoin to integrate the latest upgrades and features being made and added to Bitcoin. Reddcoin will not be obliged to follow every upgrade, but the opportunity to do so will always be there. It should be noted that the idea of rebasing Reddcoin to Bitcoin had been discussed among the original team. Dev @mathy made some headway with the work; @gnasher has picked up from where @mathy left off, to finish the job. We are now ready to invite volunteers to join testnet and run the latest version of Reddcoin. A prolonged test period is the norm for a major new version number in software development; those keen to get involved are invited to contact @gnasher by PM on Reddit (cryptognasher) or Reddcointalk. Further developments and OP_RETURN

As he has worked on the latest version of Reddcoin Core, @gnasher has been careful to incorporate new features from Bitcoin, which he requires as he builds further applications for the Reddcoin blockchain. Top of his list of priorities has been planning a major Redd-ID style service. To ensure that the new code is ready to support this service, @gnasher has integrated a feature specific to Bitcoin: the ability to create what is known as an OP_RETURN transaction. On 22 October 2013, Bitcoin developer Gavin Andresen merged pull request 2738 into Bitcoin (part of the subsequent v0.9 release). The first single-line comment appended to the pull request was made by Jeff Garzik, who had submitted it: “Add new standard transaction type, that permits small amount of data to be attached to a transaction, in the form of an additional TxOut that is provably prunable.” The reason for this proposal, which was accepted and merged into Bitcoin, was to cater for the increasing numbers of people who, at the time, wanted to record information into the blockchain... and who were beginning to find novel and unorthodox ways of doing so. Using an OP_RETURN transaction anyone is able to associate up to 80 bytes of data with a transaction, the key point being that as the transaction is confirmed by the blockchain (and becomes embedded into the verifiable history of Bitcoin) so also is the associated data. The maximum size of the data allowed, 80 bytes, is enough to store a “hash” (a fixed-size piece of data typically encoding a piece of larger arbitrary data such as a contract) along with metadata (information about the encoded data). @Gnasher plans to leverage the ability to store data in the blockchain in this way as he works to develop an ID system for Reddcoin.

Wider news

While staying focussed on Reddcoin and keeping to a schedule of communication, active team members are also regularly discussing Bitcoin and other cryptocurrency projects. There has been plenty to read in the mainstream media, as Bitcoin continues to provide journalists and news outlets with newsworthy material.

Virtual currencies discussed at the European Parliament

Virtual currencies were discussed at length at a hearing of the European Parliament's Committee on Economic and Monetary Affairs at the end of January. Many of the questions raised by those attending the meeting were on the subjects of potential tax evasion and the use of virtual currencies to launder money. The upshot of the meeting was an indication from a senior Commission official, Olivier Salles, that the EU executive body would prefer to take a hands-off approach to the regulation of digital currencies for the time being: “It’s easy to fail when you regulate, you can be too early and too late. From the European Commission’s perspective, we are more on the monitoring side. We want to understand better what is happening.” A good article on the European Parliament Committee meeting was published by Luke Parker on BraveNewCoin. Can I pay tax in Bitcoin?

On 28 January Forbes reported the ruling by the New Hampshire House of Representatives not to require the state's treasurer to develop an implementation plan for the state to accept Bitcoin as payment for taxes and fees. The “HR522” bill had been introduced by New Hampshire State Representative Eric Schleien and was defeated by a vote of 264 to 74, despite the fact that Schleien had worked to educate his colleagues about Bitcoin and had explained how the instant conversion of the Bitcoin received into US dollars would protect the state from Bitcoin market volatility. Schleien himself maintains a positive outlook and says that he was amazed to see that 74 representatives had voted in favour of the bill. He vows to try again and estimates that it will take two or three more years before the House of Representatives rules in favour of his proposal.

Fintech and cryptocurrency

The financial services sector is gearing up for a year in which “fintech” (financial technology – the use of software to provide financial services) will take centre stage. This month Bloomberg reported that at the 2016 World Economic Forum in Davos (Switzerland) the major global banks were scrambling to present themselves as fintech innovators: “Fintech was every banker’s buzzword at the World Economic Forum, as leaders of the world’s largest financial companies both touted the potential of new innovations and leaned on regulators to control the startups threatening parts of their business.” As a relatively small but vibrant part of the financial technology landscape, the subject of cryptocurrency is being brought up in articles that address the wider scene. The names of cryptocurrency projects, including Reddcoin, are beginning to surface in articles about the future of fintech. Writing for Information Age, Ben Rossi introduces his article How the shape and definition of money will transform in 2016 with the following preface: “2016 will see a sandstorm of change in financial services and, when the dust finally settles, a landscape that has been transformed beyond recognition.”

Not just Bitcoin, but Cryptocurrency

As the first month of the year has gone by anyone following the evolution of digital currency will have noticed that we are moving into a phase where it's not just about Bitcoin – it's about Cryptocurrency.