Ethereum Core Devs Debate Constantinople Hard Fork and “Difficulty Bomb” During Meeting

Ethereum (ETH) core developers have held their regular meeting on YouTube August 24 on the progress of client implementation and tests of the Enterprise Integration Patterns (EIPs) for the upcoming Constantinople hard fork.

The meeting started with a discussion of the latest updates on the processes of no-proof blockchain tests and the progress achieved on major ETH clients, with one of the devs explaining that there is a need to revamp some of the testing to avoid potential consensus issues.

This week saw the release of a number of new features; however, the devs noticed one instability with a “huge” major miner rewrite, which is supposed to be solved by the next update. By Monday, the devs are planning to push out another release “to have the whole thing completed” and finalize the mining release issue.

In terms of the Constantinople hard fork, hardly anything has changed for the last two weeks, according to the meeting. The devs reported on several bug fixes and new tweaks for the testnet, also noting that EIP-1211 will not be included in the upcoming hard fork.

The devs also came to a decision that it is far better for the network to stay on schedule and release new hard forks in time, as opposed to rushing with involving new EIPs or delaying those ready for implementation at the expense of the ones still under development.

Speaking about the possibility to have a second hard fork if it is “really hard to get the changes bundled for all EIPs for Constantinople,” one of the devs said:

“If we delay the time, we would want more features to this particular [Constantinople] hard fork and we should discuss if it’s good to have many changes in one fork, or it’s better to have less changes in many hard forks.”

The devs also decided to release new hard forks every eight months after the Constantinople hard fork. The proposal of a release every six months was rejected as it would create too much pressure for the devs team.

Further discussion was devoted to the issue of adding a “difficulty bomb” and its impact on the reduction and maintenance of block rewards. According to the devs, EIP-858 would reduce block rewards to 1 ETH per block, EIP-1234 would reduce block rewards to 2 ETH, while EIP-1295 would keep rewards to 3 ETH but will affect other factors such as the proof-of-work (PoW) incentive structure.

In order to determine which of the three possible scenarios is preferable, the devs called on the community members. Some of the participants pointed out the environmental impact of ETH mining, while others insisted on decreasing profitability or even excluding ASIC miners from the ETH network. In the end, the participants in the discussion could not reach common ground, so the devs decided to hold another meeting next week on August 31.

As of press time, Ethereum is currently trading at around $281, down almost 10 percent on the week and 41 percent on the month.



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Experts Debate Crypto’s Future and Discuss Use Cases at BlockShow Americas 2018

The second day of the BlockShow Americas 2018 kicked off with a robust debate on the usefulness of cryptocurrencies between Nouriel Roubini, CEO of Roubini Macro Associates and predictor of the global financial crisis in 2008, also known as ‘Dr.Doom,’ and Alex Mashinsky, founder of Celsius Network. Roubini argued that “in the space of crypto there is zero security,” claiming there is “no democratization and decentralization.”

Mashinsky responded “the current system does not work for seven billion people in the world,” while “only people who work on Wall Street can pay their bills.” He added, “saying that fintech has nothing to do with crypto is not true.”

The conference continued with a discussion of blockchain deployment in e-commerce, and how it can benefit retailers and customers. Some of the speakers expressed doubts regarding crypto use in everyday life like Austin Kimm, COO at Crypterium.

Kimm said that there is “no real use case, [the industry has] to find a reason why older people will pick up using crypto.” Eric Benz, founding member of the U.K. Digital Currency Association, said that the ecosystem was very small, and that consumer uncertainty around cryptocurrencies is affecting its growth and its use.

“The size of this ecosystem is an amoeba… At the end of the day from a consumer perspective, I want to know that my money is with me at night.”

Later on, Roubini joined a debate on how blockchain is seen from the perspective of major institutions, joining industry players like Tone Vays, an ex-Wall Street professional and researcher, Sterlin Lujan, communication ambassador at Bitcoin.com, and David Drake, founder and chairman at LDJ Capital. Roubini asserted that “everything in the crypto space is useless,” and questioned the necessity of blockchain integration:

“Fintech is not blockchain. Why we need blockchain?! Billions of people doing billions of transactions using digital companies – PayPal, etc. What has it to do with blockchain? Zero. A farmer in Kenya can use Intesa. Why does he need blockchain?!”

Speaking about tokenization of physical assets, Mike Butcher, Editor-At-Large at TechCrunch, claimed that a robust legal infrastructure is necessary for the industry to thrive. Butcher said “regulation is the key”, noting that “Poland and France are embracing crypto as a legal methodology.”

Vladimir Tomko, CEO of Blockchain Cuties, argued that by 2019 the gaming industry will embrace tokenization “for sure.” While Tomko admitted that a lot of Initial Coin Offerings (ICOs) were scams and some crypto games are ponzi schemes, Tomko said that the community and developers are working to make the environment more transparent and safer.

In a discussion on how blockchain can affect the Americas’ emerging economies, the panel moderator Michael Gasiorek claimed that there are “a lot of good intentions,” however the “problem is how to get citizens to be involved.”

While Manish Sharma, Senior Product Manager at LinkedIn, proposed to give “power back to the people,” Dan Itkis, co-creator of blockchain payment processor GRAFT, argued that “blockchain is all about decentralization. The more you could divide through people, the more you are towards decentralization.”

During the Bitcoin ETF panel discussion, blockchain media advisor Dallas Santana said he is bored with crypto because “there is no real business behind it,” adding that he is “sick and tired of the Bitcoin story” as it is hurting the development of the industry. Santana argued that funds that do well will build portfolios “the old fashioned way”, by researching companies and their business models.



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Researcher Challenges Bitcoin Mining Energy Consumption Alarmists, Says Debate ‘Oversimplified’

A clean energy expert has hit back against the common perception that high energy consumption is an “Achilles Heel” for Bitcoin (BTC), in an article published by The Conversation August 20.

Katrina Kelly, Strategy Manager at the University of Pittsburgh’s Center for Energy, says that we need to shift the debate around Bitcoin mining away from energy-intensivity and towards where that energy is produced and how it is generated:

“By talking specifically about … the consumption of energy alone..many fail to understand one of the most basic benefits of renewable energy systems. Electricity production can increase while still maintaining a minimal impact on the environment….Not all types of energy generation are equal in their impact on the environment, nor does the world uniformly rely on the same types of generation across states and markets.”

Recent research estimates that mining could account for 0.5 percent of global energy usage by 2018 – but Kelly argues that the sources, not the amount, of energy is ultimately what matters.

China –  a country that has long been a crypto mining superpower due to its cheap electricity supply – uses largely fossil-based sources, which Kelly notes is highly problematic: the country is already ratcheting up devastating levels of carbon emissions.

Iceland, on the other hand – an increasingly popular spot for BTC miners – relies on almost 100 percent renewable geothermal and hydropower energy sources. In this case, Kelly argues,  miners’ power demands are “nearly irrelevant” to the health of the environment. The US Pacific Northwest – which has abundant supplies of low-carbon energy sources – is another such case, according to Kelly.

While carbon-density and “dirty power” supplies are the crux of Kelly’s article, she also offers another perspective to contextualize the Bitcoin mining controversy: if mining consumed an estimated 30 terawatt hours in 2017, banking continues to consume an estimated 100 terawatts of power each year. “[Even] if Bitcoin technology were to mature by more than 100 times its current market size, it would still equal only 2 percent of all energy consumption.”

As a recent Cointelegraph analysis noted, some have argued that energy-intensive and profit-driven Bitcoin mining could inadvertently drive innovation to further develop clean energy sources. Google information security engineer Marc Bevand told CT that:

“Because miners are so sensitive to electricity prices, they are often a driver pushing utilities to further develop renewables which are now the cheapest source of energy…If the energy use of cryptocurrency miners continue[s] to increase, it will help decrease the costs of renewables for society at large (increased demand → increased R&D → increased capacity & higher efficiency → lower costs through economies of scale).”



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Colombian Senate Debate: ‘Blockchain Could Change Lives’

The Colombian Senate held a debate on cryptocurrencies and blockchain “as mechanisms to modernize the digital economy” on Wednesday, according to a Senate press release published today, June 7.

The Third Committee of the Senate was convened by the senator of Colombia’s Green Alliance party, Antonio Navarro Wolff, with participants including the Colombian central bank, the Ministry of Finance, the ICT Ministry, and Colombia’s Financial Superintendent.

Navarro Wolff opened his speech by advocating that the Colombian state investigate blockchain “in greater depth,” saying that the technology “could change the lives of Colombians” in its application across the administrative, economic and political spheres.

The senator mentioned blockchain’s potential to reinforce the security and transparency of the electoral system, facilitate smart contracts, and benefit the management of public services.

Navarro Wolff characterized both cryptocurrencies and blockchain as “mechanisms to modernize the country’s digital economy.” He also noted that digital assets have come to Colombians’ attention following the meteoric rise of crypto markets in 2017, with widening interest raising the need for regulatory protections. To this end, he appealed to the Ministry of Finance to pursue both implementation and regulatory oversight of the new technologies.

A representative from Colombia’s Financial Superintendent spoke of a new taskforce, dubbed INNOVA, that was recently founded to investigate the uses of blockchain, as well as to promote “prudence and protection of citizens.”  

For his part, Juanita Rodríguez of the ICT Ministry said that blockchain systems “generate confidence and are safe,” and should be pursued if the country’s digital economy is to thrive.

Last month, the Colombia Blockchain Association was launched in order to act as an interlocutor to the national government and encourage “informed” adoption of new financial technologies, without compromising the decentralized principles of blockchain. A Green Alliance representative similarly warned against stifling overregulation of the emerging industry, suggesting that disintermediated systems would help to allay Colombians’ “distrust” of the traditional financial sector.



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Biggest Crypto Tax Debate Is Not What You Think: Expert Take

In our Expert Takes, opinion leaders from inside and outside the crypto industry express their views, share their experience and give professional advice. Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation, and cryptocurrency adoption by different sectors of the economy.

If you would like to contribute an Expert Take, please email your ideas and CV to george@cointelegraph.com.

The views expressed here are the author’s own and do not necessarily represent the views of Cointelegraph.com

You might think the biggest tax debate about Bitcoin and other cryptocurrencies is about whether you should or shouldn’t report it. Or perhaps about whether the US Inland Revenue Service (IRS) will catch people who don’t report. Perhaps, but there’s not too much debate about those topics these days. Everyone seems to know that you should report, and that the IRS is after taxing cryptocurrencies in a very big way.

The IRS is tracking with software, and the IRS summons of Coinbase is already bearing fruit with files for the IRS to review. In fact, the biggest cryptocurrency tax debate still seems to be about 1031, the tax code provision providing for like-kind exchanges.

Under US tax law, 1031 exchanges can only be of real estate for real estate, starting in 2018.  The Trump tax law passed right around Dec. 2017 made it clear that that swaps of one cryptocurrencies for another are not tax free in 2018. But it is surprising how much debate there is about whether this argument can work for 2017 and prior tax years.

If you are about to file your 2017 tax return, should you claim tax-free treatment for past cryptocurrency transactions? If you are cleaning up your past tax reporting before the IRS finds you, you might have the same issue for 2016 too. So, is claiming 1031 treatment for cryptocurrency trades for the past smart or stupid? It turns out to be a nuanced subject, which is one reason it is debated.

Until the Trump tax bill killed it, depending on how aggressive you were, and how you could orchestrate it, you could try swapping one digital currency for another. The IRS has been asked about this repeatedly but remained mum. Broadly stated, a 1031 or like-kind exchange is a swap of one business or investment asset for another.

Under the tax code, most swaps are actually taxable, just like a sale for cash. That’s one reason the IRS has gone after the barter community, trying to tax goods and services that are exchanged. Section 1031 is an exception to the rule that swaps are fully taxable. 1031 allow you to change the form of your investment without cashing out or paying taxes.

Your tax basis stays the same, switching from what you gave up to what you acquired. That way your investment continues to grow, tax-deferred. If you qualify, there is no limit on how many times or how frequently you can do a 1031. Donald Trump and other real estate investors can roll over their gain from one investment to another.

Despite a profit on each swap, they avoid tax until they sell for cash years later, paying only one tax, ideally as a long-term capital gain. Whether 1031 applied to cryptocurrency before 2018 is debatable. Some exchanges of personal property, say a painting or a private plane have qualified. But exchanges of corporate stock or partnership interests never did. For many purposes, cryptocurrencies are not stock or securities, but there has often been debate on this point too.

Classically, an exchange involves a simple swap of one property for another between two people. But the majority of exchanges are not simultaneous, but are delayed or “Starker” exchanges – Starker was the name of the man whose tax case made these delayed exchanges famous. In a delayed exchange, you need a middleman who holds the cash after you “sell” your property and uses it to “buy” the replacement property.

The intermediary must meet a number of requirements. That is one reason delayed exchanges of cryptocurrency may not qualify. There are also two timing rules you must observe in a delayed exchange. Once the sale of your property occurs, the intermediary will receive the cash. Then, within 45 days of the sale of your property, you must designate replacement property in writing to the intermediary, specifying the property you want to acquire.

The second timing rule in a delayed exchange relates to closing. You must close on the new property within 180 days of the sale of the old. These two time periods run concurrently. You start counting when the sale of your property closes. If you designate replacement property exactly 45 days later, you’ll have 135 days left to close on the replacement property.

You may have cash left over after the intermediary acquires the replacement property. If so, the intermediary will pay it to you at the end of the 180 days. That cash is called “boot,” and is taxed as partial sales proceeds from the sale of your property. You must consider mortgage loans or other debt on the property you relinquish, and any debt on the replacement property. If you don’t receive cash back but your liability goes down, that too will be treated like cash.

Many holders of cryptocurrency probably can say they are holding their cryptocurrency for investment. The tougher hurdle is whether they swapped for property of like-kind. Section 1031 does not apply to trades of stocks or bonds, and the IRS could rely on this to disqualify any cross-species trade of cryptocurrency. However, different types of cryptocurrency are arguably like different types of gold coins.

If a swap of one type of gold coin for another qualifies, why not swaps of cryptocurrency? The IRS may argue that swapping Ripple for Bitcoin is really more like swapping silver for gold, or vice versa. Silver for gold would be taxable, so the IRS may say that a swap of cryptocurrency should be taxable too. Some of this may turns on the size of your gains, and how much of a chance are you willing to take.

But one of the biggest remaining issues is about the mechanics of tax reporting. You need to claim Section 1031 treatment on your tax return to be able to say that you met the rules. It might seem tempting not to report swaps of cryptocurrency at all. But for those trying to use 1031, failing to report would be a mistake, in my view. If you want to see what to report to the IRS, check out IRS Form 8824.  

 

Robert W. Wood is a tax lawyer representing clients worldwide from offices at Wood LLP, in San Francisco (www.WoodLLP.com). He is the author of numerous tax books and frequently writes about taxes for Forbes.com, Tax Notes, and other publications. This discussion is not intended as legal advice.



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Former SEC Commissioners Debate Cryptocurrency Regulation | CNBC



Harvey Pitt, former SEC chairman and Kalorama Partners, and Paul Atkins, former SEC commissioner and Patomak Global Advisors, discuss the popularity of cryptocurrencies and which regulatory actions could be ahead.
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Former SEC Commissioners Debate Cryptocurrency Regulation | CNBC

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This Is What Happens To Your Bitcoins When You Die | CNBC



Your bitcoins could go to the grave with you if you’re not careful.

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This Is What Happens To Your Bitcoins When You Die | CNBC

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