Bitcoin Weekly 2016 March 2: OpenBazaar opens on testnet, Coinbase debit card buys, Bitcoin network DoS, Japanese BTC tax-exemption debate

Bitcoin Weekly 2016 March 2: OpenBazaar opens on testnet, Coinbase debit card buys, Bitcoin network DoS, Japanese BTC tax-exemption debate

This week the distributed peer-to-peer marketplace project OpenBazaar opened up on the Bitcoin testnet so that the system can be alpha tested for bugs. Bitcoin wallet company Coinbase, Inc. has begun to offer debit card instant purchase of bitcoins to U.S.-based users.

Japan is currently debating how to treat virtual currencies, such as bitcoin, and a legislator has called for an exemption from taxation when bitcoins are bought.

The Bitcoin network has been under an apparent denial of service attack from the end of last month. While DoS attacks have happened in the past, this one is filling up blocks with malicious spam transactions during a time when the block size debate is ongoing. See below for details and discussion as well as a video showing off the origin of the malicious spam transactions.

Finally, for readers interested in the world of gaming and the blockchain IBTimes has run an article looking at the current market for digital assets secured by blockchain technology. The ecosystem includes the game Spells of Genesis (SoG), not-yet-launched startup companies AvatarTrader and Ownage, and finally a discussion of how blockchains could be used to enable indie developers to monetize games and engage players.

Bitcoin market value currently sits at $422 (bitcoinaverage.com), which is about the same as last week—the price as seen a brief rise during the weekend to around $440, but it fell once again to the current value.

Peer-to-peer marketplace OpenBazaar released to the testnet

The open-source, decentralized peer-to-peer marketplace network OpenBazaar just announced that the project is now available on the Bitcoin testnet alternative blockchain. This release will allow for rigorous testing by the community to make sure that everything is operating properly, it is available for download at the website.

OpenBazaar represents the first functional implementation of a distributed marketplace that provides a method for smart-contracts for exchange. It uses the Bitcoin blockchain for peer-to-peer commerce that allows users to digitally sign transactions (multisig) with two sellers and a moderator (appointed as a trustee in case of an issue) so that two are required to verify.

When a transaction takes place the bitcoin is sent to the multisig address and a message is sent to the seller that the money has been received. The seller then ships the product and when the buyer receives it the seller can then use their signature to unlock the money. If something is wrong at the buyer’s end the third party becomes involved (a trusted moderator) who then can decide if the bitcoins can be released.

Testers are directed to take a look at the Tester’s Guide on setting up as vendor, buyer or moderator and how to report bugs.

RELATED:  Winklevoss twins' Gemini Bitcoin exchange opens up shop in the U.K.

General users interested in running and using the OpenBazaar app can look at the OpenBazaar User Tutorial. And, for people interested in selling on OpenBazaar there is a Vendor’s Guide available.

Coinbase will soon allow U.S. customers to use debit cards for instant purchase of bitcoins. Image credit: Coinbase, Inc.

Coinbase will soon allow U.S. customers to use debit cards for instant purchase of bitcoins. Image credit: Coinbase, Inc.

Coinbase now connects with debit cards to buy bitcoin instantly

Monday, Bitcoin wallet and payment processor Coinbase, Inc. launched with a method for using debit cards to buy bitcoins quickly and easily. The new product has been launched (in beta) for users in the United States. Initially the service will become available to one percent of U.S. customers and the company plans to extend the feature to all its customers over the span of a month.

Users who have this feature enabled will be able to add a debit card to their payment methods via the Coinbase.com website or through the iOS and Android apps.

European Coinbase users can already purchase bitcoins with credit/debit cards.

Bitcoin network targeted by block spam denial of service attack

The Bitcoin network has intermittently seen denial of service (DoS) attacks designed to fill blocks with fake spam transactions, which forces out legitimate transactions. The result is that transaction verification takes longer while the DoS attack is underway. One such attack that took place last week happened while blocks were nearly full (most blocks mined on February 29 were 999 Kb, which is nearly at the 1 Mb limit).

Some in the bitcoin community believe current delays are due to the overloading of transactions on the current blocks (with the 1 Mb limit in place) by normal traffic, using the delays to call for a swift resolution to the Bitcoin blockchain block debate. However, Alex Petrov, CIO of BitFury Group Limited says at the current delays are due to a DoS attack.

Petrov argues that the DoS attack is just an example of someone attempting to sway the block size debate by artificially pushing network boundaries.

An enterprising Bitcoin community member put up a YouTube video showing the origin and activity of the malicious bitcoin network spam. Many of the transactions appear to end up at Chinese Bitcoin exchanges such as BTCC (BTCC Technology Limited, formerly BTCChina) and Houbi.

Japanese legislator seeks bitcoin tax exemption

A recent report from CoinDesk shows how Japan is working to position itself with virtual currencies, including Bitcoin. A legislator in Japan’s ruling party has called for an exemption for bitcoin purchases from the country’s 8 percent consumption tax.

RELATED:  Global majority wants the dark web to be shut down

The news comes from the regional outlet Nikkei, which reports that Japan is currently debating the possibility, but regulators and legislators are pushing back against the concept seeking to define bitcoins as a virtual psudeo-currency and not tax-free status.

Other countries across the world have been working to treat bitcoins as a currency providing it a tax-free status, such as the European Union’s highest court ruling that bitcoin purchases should be free from value added tax (VAT, a type of sales tax). This ruling followed the United Kingdom already exempting bitcoins from VAT, but other countries outside the U.K. had not yet signed on.

“Can’t you consider not imposing consumption tax on bitcoins in line with the international trend?” Tsukasa Akimoto, a member of the ruling Liberal Democratic Party, asked Finance Minister Taro Aso at a lower house budget committee meeting on Feb. 5.

Although Japan would not be alone in taxing virtual currencies, for example Australia currently does not exempt them.

Yuzo Kano, head of the Japan Authority of Digital Assets, an industry group for virtual currencies argued that Japan is going against the world when it comes to taxing virtual currencies and this could place the country behind on industry standards.

Most notably Japan is the home-country of Mt. Gox, a Tokyo-based Bitcoin exchange that fell into insolvency in 2014 and led to a criminal investigation against its CEO. This event may have darkened views of virtual currency—especially those of bitcoin—for Japanese regulators and legislators.

Artwork from Spells of Genesis, "Satoshi", copyright EverdreamSoft

Artwork from Spells of Genesis, “Satoshi”, copyright EverdreamSoft

How the blockchain engages gaming and digital asset ownership

On Bitcoin Weekly blockchain-based games have been mentioned such as Spells of Genesis, but EverdreamSoft SA’s game is not the only one in the market and Ian Allison at IBTimes has written an article reporting on the current ecosystem.

As the best example, Spells of Genesis (SoG) takes full billing. It is a mobile game that works as a role playing game (RPG) and a trading card game (TCG). The TCG aspect of SoG uses the Bitcoin blockchain in order to track and enable ownership of individual cards, which is a novelty for TCG-style games where the cards are “owned” only as data in a database held by the company that runs the game such as Hearthstone.

Next is AvatarTrader, a stealth startup set to go live this month working on a service with plans that work in the intersection between gaming and the blockchain, said founder Kyle Berkley to IBTimes UK.

“AvatarTrader was born when I was ripped off making a trade 10 years ago,” said Berkley. “It has evolved into something that gamers and the game companies will love as we’re for them both. We strive to increase the longevity of each games life, so they will be enjoyed longer. We love MMO’s and we’re anti-pay-to-win. Protect your virtual goods.”

RELATED:  What you missed in Cloud: The blockchain rises

Pay-to-win (or P2W) is a pejorative used against massively multiplayer online (MMO) free-to-play games that allow players to spend money to gain an advantage over players who pay no money. If blockchain-technology and digital asset ownership can help relieve pay-to-win problems, it would be an instant boon to many parts of the industry.

Next is Ownage, a smart contract system based on the Ethereum public blockchain designed to provide asset ownership and exchange for in-app purchases such as collectable items, limited edition digital content, trading cards and even games themselves. Ownage is also not yet launched.

A blockchain-based trade system also allows publicly-viewable auditability and accountability to customers—since the smart-contract transactions are viewable by anyone but the pseudonymous nature means that only people who know the transaction keys can identify the parties involved.

Finally mentioned is the possibility of content creation and streaming using the blockchain to provide incentives and payments to creators. Peter Borah, an engineer with ConsenSys studio, cites that blockchain-based technology could be used to allow content creators to monetize and license their works.

By allowing creators to register content on a blockchain, those who interact with that content (by licensing, downloading or approving) could benefit from smart-contracts. One example of how content creators could benefit is content placed on the blockchain could be tied into a revenue share with other content-creators that could be then distributed on a periodic basis.

Also, indie game developers could reward players for advertising the game by providing rewards (via blockchain) for sharing on social media, bringing in new downloads, etc. or even streaming from within the game via Twitch or another streaming outlet. Already streaming services that pay bitcoin have appeared on the market such as Streamium.

Photo: Dawson/Bloomberg News
Kyt Dotson

Kyt Dotson

Kyt Dotson is a Senior Editor at SiliconAngle and works to cover beats surrounding DevOps, security, gaming, and cutting edge technology. Before joining SiliconAngle, Kyt worked as a software engineer starting at Motorola in Q&A to eventually settle at Pets911.com where he helped build a vast database for pet adoption and a lost and found system. Kyt is a published author who writes science fiction and fantasy works that incorporate ideas from modern-day technological innovation and explore the outcome of living with those technologies.
Kyt Dotson

SIGN UP FOR THE SiliconANGLE NEWSLETTER!

Join our mailing list to receive the latest news and updates from our team.

SIGN UP FOR THE SiliconANGLE NEWSLETTER!

Join our mailing list to receive the latest news and updates from our team.

Submit a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Share This

Share This

Share this post with your friends!