CEO and Co-Founder
The BitFury Group Announces Expansion to Full Service Digital Asset Technology Company
Apr 29, 2016
I co-founded The BitFury Group in 2011 because I deeply believe in the transformational power and potential of the groundbreaking technology of the Blockchain. Over the past few years our company has focused its energies on providing the hardware solutions that allow users all over the world to transfer assets securely and quickly on the Blockchain. I am proud of our hard work, tenacity, dedication and passion for doing good work — it has propelled us to became one of the largest Blockchain transaction processing companies and Blockchain security providers in the world. Thanks to our great success, I am thrilled to announce that we are now expanding our company to include software. We are not at all abandoning our efforts to secure the blockchain (often referred to as mining.)
I co-founded The BitFury Group in 2011 because I deeply believe in the transformational power and potential of the groundbreaking technology of the Blockchain.
Over the past few years our company has focused its energies on providing the hardware solutions that allow users all over the world to transfer assets securely and quickly on the Blockchain. I am proud of our hard work, tenacity, dedication and passion for doing good work — it has propelled us to became one of the largest Blockchain transaction processing companies and Blockchain security providers in the world.
Thanks to our great success, I am thrilled to announce that we are now expanding our company to include software. We are not at all abandoning our efforts to secure the blockchain (often referred to as mining.)
We are evolving our business to become a full service technology company.
With the help and expertise of The BitFury Group, we will ensure that any business, organization, individual or government will successfully plug into the Blockchain — we make it easy, fast, cost-effective and secure.
Our broad suite of software capabilities will include but are not limited to:
Blockchain-Based Property Rights Registry
We just announced our pilot blockchain-based property rights registry project in the Republic of Georgia. This innovative project is a partnership with the National Agency of Public Registry of the Republic of Georgia. Hernando de Soto, The BitFury Group board advisor and a renowned economist famous for evangelizing the importance of property rights, will be advising on project development. We envision that this initiative would expand globally, securing the ownership rights for billions of people worldwide.
The Blockchain contains an unalterable record of every transaction ever made on Bitcoin Blockchain. This immutability allows to trace nefarious uses of digital currency through big data mining and advanced data analytics. We plan to partner with law enforcement agencies globally, just as we have in the U.S. through the Blockchain Alliance, a public-private forum formed by the Bitcoin community to help combat criminal activity involving bitcoin and the Blockchain. Supported by regulators and law enforcement, Blockchain adoption will rapidly accelerate, providing ultimate security and bringing new opportunities.
Lightning — an overlay network to the Bitcoin Blockchain — increases its utility by enabling instantaneous microtransactions. Lightning brings significant transactions scalability and provides a solid foundation for new applications such as the monetization of the Internet of Things. The Lightning Network is among the industry’s most important efforts for Blockchain extensibility. We believe that the Bitcoin Blockchain and its extensible elements such as Lightning Network have the capacity to enable a trillions-of-transactions-per-year economy within a decade.
We are building a digital assets platform-as-a-service (PaaS) framework. This framework will assure privacy, external auditing capability and authentication and can be used for both permissioned and permissionless blockchains. To ensure immutability, the service will allow for anchoring to the Bitcoin Blockchain. Cloud technology enables lower costs while providing the same level of security as on-premises solutions. We see the Blockchain technology becoming even more widely adopted as users reap benefits brought by the cloud technology.
Informational Web Portal
This new web portal is envisioned as an information hub that aggregates bitcoin and Blockchain-related statistics and news from around the web-a valuable resource for bitcoin Blockchain novices and experts. The goal is to demystify the Blockchain by making information available and easy to digest, and establish this portal as a trusted source of information for all-things Blockchain.
We will continue to offer our leading-edge technology for providing and securing Blockchain infrastructure including our custom design application specific integrated circuits (ASICs) and portable data centers packaged in cargo shipping containers. We remain true to our mission as we expand our technology offering to include the software platform capabilities. The Bitcoin network and community continue to evolve and so do we, meeting the increasing performance demands with innovative technology solutions.
We will share additional updates on our expansion and specific projects in the coming months. For more information about the BitFury Group and our company expansion please visit our website www.bitfury.com.
CEO and Co-Founder
The Missing Piece of the Internet is Here: 5 Fundamental Facts Everyone Needs to Know About The Bitcoin Blockchain
Mar 10, 2016
I am the co-founder and CEO of the world’s leading Blockchain technology company — The BitFury Group. Everywhere I go — from the World Economic Forum in Davos, Switzerland, to meetings with top public policy influencers — I am asked to explain what Bitcoin is, what the Blockchain is, what the Bitcoin Blockchain is and — most importantly — why it matters. I am thrilled that more people want to know about the Bitcoin Blockchain and I am even more excited to educate and inform inquiring minds. This technology is changing the world and it’s just the beginning.
Here are a few fundamental facts everyone needs to know about the Bitcoin Blockchain:
1) The Internet has succeeded by forever changing the way we move data, voice and video, but it has never had a way to move asset value in a similar fashion — the Bitcoin Blockchain is exactly the technology solution to make this happen.
The Internet has given us unparalleled access to information and we can essentially send anyone any kind of information peer-to-peer, except assets. That has always been off limits — any transferred asset understandably had to go through a trusted emissary. Moving an asset across the Bitcoin Blockchain is secure, transparent, much lower in cost, and will open countless new doors of opportunity for millions of people who are often restricted by various limitations and roadblocks within their current systems.
Want to learn more? This video is helpful.
2) The Bitcoin Blockchain is secure.
This is always the hardest part to explain given some of the more sensational and negative news stories about Bitcoin. But the reality is, with its significant computing power, the Bitcoin Blockchain is one of the most secure computer networks in the world. Thousands of computers verify each transaction with sophisticated algorithms to confirm the transfer of value and create a historical ledger of all transactions. The computers that form the network that process the transactions are located throughout the world and, most importantly, are not owned or controlled by any single entity. This process is real-time, and much more secure than relying on a central authority to verify a transaction.
Read more here:
(Video How Bitcoin Works in 5 Minutes)
The Secure Blockchain is Bitcoin’s Biggest Asset
3) Law enforcement in the US and beyond are encouraged by the Bitcoin Blockchain because they can detect and track bad actors more easily in this new system.
Jason Weinstein, a former deputy assistant attorney general in the Department of Justice in charge of cybercrime and now an advisory board member of The BitFury Group and partner at Steptoe & Johnson LLP, established (with The BitFury Group’s support and backing) the Blockchain Alliance. The Blockchain Alliance is a public-private forum where law enforcement and national security authorities are learning directly from some of the brightest minds in the industry about how to combat criminal activity in the digital space. Weinstein explains in a recent Medium op-ed that, “the reality is that if criminals and terrorists seek to use bitcoin as part of an effort to remain anonymous, they are making a big mistake. In fact, any criminals or terrorists who try to use the bitcoin Blockchain to facilitate their activities are foolish. That’s because reports of bitcoin’s anonymity are greatly exaggerated. The Blockchain technology that makes bitcoin work uses cryptography to verify and confirm all bitcoin transactions and then records those transactions on a searchable — and unalterable — public ledger. That technology has significant benefits for law enforcement. Having a traceable ledger of every bitcoin transaction ever conducted allows law enforcement to ‘follow the money’ in a way that would never be possible with cash. In addition, because this ledger of bitcoin transactions is permanent, law enforcement does not have to worry that the data will be unavailable months or even years down the road. Because the ledger is publicly accessible, law enforcement does not have to worry about what type of legal process — subpoena or search warrant — is required to access the data. And because the ledger is borderless, law enforcement can get the data without having to go through a foreign government.”
Read more here.
4) It is great that people and banks are supportive of the Blockchain technology, but private Blockchains, like the “intranets” of the ’90s, do not provide the reliable security of the Bitcoin Blockchain.
There is one Blockchain. It is the Bitcoin Blockchain. Just as there is one Internet. Even so, I encourage financial institutions and corporations to develop Blockchain technology and bring it into their infrastructure, as it enables a shared single source of truth, which is a powerful innovation. However, without the security provided by the computing power of the Bitcoin Blockchain, the property prized most — immutability — is no longer a given and is just one hack away from someone corrupting not just identity information, but real value as well.
5) Everyone who cares about making opportunities available to anyone in the world, who believes in democracy and the power of the people to have a voice and say in their future, should be interested in and enthusiastic about the Bitcoin Blockchain.
I grew up in Latvia during the fall of the Soviet Union. I saw people lose their pensions, their entire savings, their lives’ work, their dreams. I promised myself that if I could help it, I would work to ensure this never happens again. Billions of people all around the globe do not have the rights to transfer assets and many who do are forced to go through corrupt or dysfunctional emissaries and governments. If we could record and move assets in a way that protects individual citizens, then democracy, rule of law and capitalism will all be strengthened. With this missing part of the internet finally in place, we don’t have to wonder “what if” anymore — the future is here, and we can make a difference.
A Call for Consensus
Feb 11, 2016
Over the past few months there has been significant attention within the bitcoin ecosystem and beyond on what is commonly referred to as the “block size issue” — the size and scale of bitcoin blocks. There is a pressing need for an inclusive roadmap that takes into account the needs of businesses and all stakeholders.
As a community of bitcoin businesses, exchanges, wallets, miners, and mining pools, we have come together to chart an effective path to resolve this challenge and agreed on five positions we hope will guide the larger community as we move forward together.
The following are five key points that we have all agreed on.
We see the need for a modest block size increase in order to move the Bitcoin project forward, but we would like to do it with minimal risk, taking the safest and most balanced route possible. SegWit is almost ready and we support its deployment as a step in scaling.
We think any contentious hard-fork contains additional risks and potentially may result in two incompatible blockchain versions, if improperly implemented. To avoid potential losses for all bitcoin users, we need to minimize the risks. It is our firm belief that a contentious hard-fork right now would be extremely detrimental to the bitcoin ecosystem.
In the next 3 weeks, we need the Bitcoin Core developers to work with us and clarify the roadmap with respect to a future hard-fork which includes an increase of the block size. Currently we are in discussions to determine the next best steps. We are as a matter of principle against unduly rushed or controversial hard-forks irrespective of the team proposing and we will not run such code on production systems nor mine any block from that hard-fork. We urge everyone to act rationally and hold off on making any decision to run a contentious hard-fork (Classic/XT or any other).
We must ensure that future changes to code relating to consensus rules are done in a safe and balanced way. We also believe that hard-forks should only be activated if they have widespread consensus and long enough deployment timelines. The deployment of hard-forks without widespread consensus is dangerous and has the potential to cause trust and monetary losses.
We strongly encourage all bitcoin contributors to come together and resolve their differences to collaborate on the scaling roadmap. Divisions in the bitcoin community can only be mended if the developers and contributors can take the first step and cooperate with each other.
Our shared goal is the success of bitcoin. Bitcoin is strong and transformational. By working together, we will ensure that its future is bright.
Together, we are:
Chief Strategy Officer
BTCT & BW
GHash.IO & CEX.IO
LIGHTNINGASIC & BitExchange
When Everyone Wins: The Bitcoin Consensus Round Table Organized by BitFury
Jan 23, 2016
A day after the North American Bitcoin Conference took place in Miami, Florida, BitFury held a round table discussion. The goal of the gathering that aimed to bring Bitcoin Core developers, Bitcoin Classic developers, bitcoin businesses, bitcoin miners, and other bitcoin network participants together, was to facilitate a consensus-driven discussion on the industry’s hottest issues.
As the spirited debate about the block size increase and the best ways to switch continues, it is clear that there is a need to lead the important industry-wide discussion, bringing all involved parties together, opening the lines of communications, and providing the venue for all points of view to be heard.
More than 70 people participated in the round table discussion in Miami and via online conferencing.
Some notable active participants included: Adam Back (BlockStream), Luke-Jr (Bitcoin Core team), Blockchain.Info, BitMain, Ledge Marco (Genesis mining), Marshall Long (Classic), Gavin Andersen (Classic), Pindar Wong (Scaling Bitcoin), Henry Brade (Prasos), investor Roger Ver, Kang Xie as a representative of the Chinese bitcoin mining pools, and many others.
The key-points of discussion included:
· Block-size increase requirements
· Bitcoin Core team and the “soft fork”/SegWit proposal
· Bitcoin Classic and the “hard-fork” & risks
· Transparency on financing of developers
· Developers governance
· BIP process consensus
Relatively new to the block size debate, the Bitcoin Classic proposal, is different from the recommendations of the Bitcoin Core developers. The Bitcoin Core developers are advocating that more transaction capacity be added without immediately altering the size of data blocks on the blockchain (the soft fork).
Other bitcoin network participants believe that the solution to the block size challenge is a direct increase of the network’s block size limit. They believe that the block size must be increased in order to enable the bitcoin network’s scalability and for the bitcoin economy to further develop and grow.
BitFury advocates for the pragmatic approach: a careful evaluation of all pros and cons and taking into account all potential risks and benefits. We understand the possible risks behind the hard forking — essentially creating the new version of the blockchain that could be incompatible with the old version of software which could potentially cause monetary losses for bitcoin users and impact bitcoin trust. Any hard-fork release should be well coordinated within the bitcoin ecosystem.
During the round table, the Bitcoin Core team announced that it is ready to address the block size issue and offer a more balanced solution for increasing the block size using a segregated witness feature. The segregated witness removes the signature from the transaction and stores it in a separate data structure. By removing the signature from the transaction, the size of the transaction decreases, hence more transactions can fit into one block. If the Bitcoin Core development team delivers a solution in the next 1–1.5–2 months, it may be a workable approach that keeps the “core” intact without undergoing the hard fork, at least for now.
Bitcoin is an open source software. As an open source community, BitFury believes we should consider and support alternative software solutions and industry-wide consensus is a must. We also do not support banning the soft fork nor do we believe we should ban the hard fork proposed by the Classic project. This process is about finding the most balanced and thoughtful solution that accounts for challenges and risks and benefits the entire Bitcoin ecosystem.
BitFury organized and arranged the Bitcoin Consensus Round Table because we want to bring the larger bitcoin community together. We are pleased that this meeting helped open the lines of communication, provided a venue for exchanging ideas and opinions, and allowed for a constructive discussion. Most importantly, we believe that more meetings like this need to happen in the future.
Bitcoin is a highly innovative technology that opens many opportunities and has earned much praise from renowned economists, prominent technologists, and venture capitalists.
As a Bitcoin community we need to stay united. It is through an open welcoming format like what we saw in Miami that we will find workable solutions that benefit all. The recent Consensus Round Table made it clear: finding consensus means that everybody wins.
Keep Calm and Bitcoin On
Jan 18, 2016
I grew up in Soviet Latvia and witnessed firsthand the elimination of my parent’s life savings. All of their dreams were gone when the Soviet Union and the banking systems collapsed in 1991. Then, like a nightmare, my own investment dreams were shattered in the global financial crisis of 2008. I knew as a child, and I know even more now as an adult that we, as a global technology community, can and must do better.
I wrote my first computer code when I was 8 years young. Mathematics is the language I speak and trust. Enter the emerging idea of Bitcoin. I discovered this exciting open source technology in 2010. Together with my business partner, Valery Nebesny, we realized this new way of processing and transferring assets could actually make our world a better and fairer place for people everywhere — in developed and developing countries — all through the use of math, cryptography and thoughtful programming language based on the fundamental value of trust. Fast forward 5+ years, and the world of Bitcoin has advanced beyond our wildest expectations and continues to be a dynamic innovative ecosystem that is evolving every day.
Needless to say, it was disappointing to see Mike Hearn, a prominent contributor to the Bitcoin developer community, recently offer a lengthy blog post stating that the industry was dead and that bitcoin was a failed experiment. Perhaps the road for Hearn has come to an end, but for me and my many colleagues and fellow Bitcoin Blockchain experts, it is safe to say that we are just beginning down this incredible road and we see a promising future.
While Mike is entitled to his own opinion, of course, I thought I would take a moment to address a few of his points with my views. I will caveat that much of what is happening in the Bitcoin space is highly technical and fairly difficult for those who have not immersed themselves in the math and science of late to fully understand.
With that, let me lay out a few facts:
FACT 1: Bitcoin Is Not an Electronic Payments System Like PayPal
Many Bitcoin newcomers view the network as yet another electronic system for instant payments, like PayPal or Visa. Right here we have a very substantial difference in opinion. Bitcoin was never designed to confirm instant payments and believing that is its function is a mistake.
As Nick Szabo, the renowned author of smart contracts wrote:
“Visa and PayPal already exist, and within national borders they do what they do quite well. It’s silly to try to turn Bitcoin into yet another Visa and PayPal.”
I believe, based on the way the system was designed and developed by Satoshi, that it would be disingenuous to expect instant transaction confirmation from the Bitcoin network — it is simply not wired that way. No increase of the block size limit could help make instant Bitcoin transaction confirmation a reality.
Does this mean that Bitcoin cannot be used for instant payments? Not at all. You simply need an additional system operating on top of the Bitcoin Blockchain (with the Blockchain acting as a settlement layer). These systems already exist in custodial wallet services and Bitcoin exchanges. But the larger point is that the potential of Bitcoin is so much greater and transformative than simply hoping it can compete with PayPal.
FACT 2: Bitcoin Is Not and Should Not Be Free to Use
While the Bitcoin network dramatically lowers the cost of transactions, the reality is that the Bitcoin Blockchain is not free to use. The Blockchain is secured with an enormous amount of computing power, and transaction fees are an important incentive to keep contributing that power.
As the Bitcoin network continues to evolve, transaction fees need to grow in order to maintain a high level of security within and for the network. As BitFury has outlined in our white paper on Bitcoin security incentives, the transaction fee market is currently actively developing. The percentage of transactions satisfying a market-based fee margin has grown from 22% in March 2015 to nearly 40% in October 2015.
Just like with instant payments, expensive on-chain Bitcoin transactions do not mean that one cannot use Bitcoin for cheap value transfer. Overlay networks, such as Lightning and sidechains, can successfully deal with this challenge while in-service ledgers already do.
FACT 3: Bitcoin Transaction Processing Is Not Presently Clogged
There is no observable evidence that Bitcoin transaction processing is presently clogged. Key statistics gathered by Statoshi for the past few months show the pool of unconfirmed transactions has held relatively steady at about 10,000 transactions — a significant decrease from over 75,000 unconfirmed transactions during “the stress test” performed in September 2015. Most of these transactions, according to CoinTape pay zero or near-zero transaction fees.
For Bitcoin wallets with proper fee estimation logic, the clogging challenge simply does not exist. According to web-based fee estimation services, such as CoinTape, as of January, 2016, the optimal transaction fee for an average transaction is less than 0.1 USD — quite small for most use cases. The issue we do face is with “free riders” — applications with a business model relying on non-existent Bitcoin transaction fees.
FACT 4: Miners Embrace Bitcoin’s Popularity
Bitcoin miners and transaction processors such as BitFury, are likely the biggest supporters of the Bitcoin ecosystem and any suggestion otherwise is simply ridiculous. Bitcoin miners invest enormous amounts of money and efforts into developing and maintaining bitcoin mining hardware. As the Scaling Bitcoin conferences have shown, miners are generally in support of cautious increases of the block size limit — just not abrupt increases — because such sudden change could undermine the foundation of the Bitcoin network. BitFury has detailed these points in our white paper.
FACT 5: Bitcoin Mining Is Decentralized
Most existing mining pools are public. This means that they consist of tens of thousands of independent users who are free to join or leave the pool at any time. Private mining pools are frequently operated by firms that publicly sell mining equipment, including BitFury.
Even if there were merely ten entities controlling Bitcoin mining (which there are not), this would still not be a threat. There are many Bitcoin nodes not controlled by miners, which would act as a barrier against rogue miners’ misbehavior. However, a rapidly rising block size could put most of these nodes out of work because they would simply have to switch off due to a lack appropriate hardware to perform transaction processing), paving the road to the real centralization (see [The Decentralist Perspective]).
FACT 6: Mass Rule is Not Appropriate for Bitcoin
The pipe dream of some in the Bitcoin community is to govern the system by having ordinary users vote for changes by adopting the corresponding full node software. This approach is not only impractical, it is also not desirable. Most ordinary Bitcoin users do not own a full node and ironically, if they did, it is quite possible they could not afford its maintenance after a hypothetical abrupt block size increase. Users of Bitcoin should most certainly have a say in the direction of this technology, but in order to appropriately and continuously secure the Blockchain, it is responsible for all of us who are knowledgeable about the science to take a leadership role where and when it is necessary.
FACT 7: Bitcoin XT Would Not Have Solved Bitcoin’s Challenges
Bitcoin XT was considered by some a remedy for perceived problems with the Bitcoin ecosystem. However, upon closer inspection, XT leaves at least some of these challenges, and the reality is that XT would not have made transaction confirmation immediate and would not have reduced the risk of double-spending for unconfirmed transactions.
· XT would not have eliminated transaction fees — it would have merely delayed the development of the fee market. (The perspective of having no fees forever is much worse; as the block reward steadily diminishes, the security of the network would eventually take a nosedive.)
· XT would have done nothing about the “mining centralization” problem. In fact, it would have made things worse by pushing small mining pools out of business.
· XT would not have helped decentralization and would have made things worse by elevating the requirements to maintain a full Bitcoin node.
· XT code updates would not have differed from Bitcoin Core in the expressive means of its users — all voting rounds would still need to be introduced into the code by developers.
Bitcoin XT and its predecessor — Bitcoin improvement proposal (BIP) 101 — were not supported by the Bitcoin community simply because they contained too many controversial features in the areas where each mistake could cost the most in terms of Bitcoin value. These proposals were hard forks, meaning that their implementation could break Bitcoin as a system for value transfer.
I believe in Bitcoin. I believe in the Blockchain. I know that the vast potential is just being realized. We wish Mr. Hearn all the best as he commences his work with our friends at R3CEV. It is important that we respect various input but simultaneously resist the temptation to give Mr. Hearn’s voice too much weight.
Bitcoin is not an instant payment network and not a fancy replacement for PayPal or Visa. It is first and foremost a decentralized system, which sacrifices speed in favor of security. A key feature provided by decentralization is permissionless entry for users and developers — and it is thanks to this component that Bitcoin has grown into much more than a currency and has become a platform for Blockchain innovations.
Most importantly, Bitcoin is a new world created for anyone — especially for someone like me — who didn’t grow up in a world where “trusted emissary” was a reality and the idea of “asset security” was something other people in other parts of the world enjoyed.
I believe in Bitcoin because I believe in democracy and I believe in open societies. And as Winston Churchill once said: “Democracy is the worst form of Government, except for all the others.” Open source projects are not perfect, but they unite the best and most innovative thinkers, and I am honored to be a part of this mission.
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