The Segwit2x working group has been quiet lately, but now it seems the development wheels are turning once again. On Wednesday, October 25 the lead developer of the Segwit2x (BTC1) working group, Jeff Garzik, addressed the public with a status update. According to Garzik, everything is "still full steam ahead for Segwit2x upgrade" scheduled for mid-November.

Segwit2x Upgrade is "Full Steam Ahead"

Segwit2x Developer Says November Hard Fork is Full Steam AheadThe maintainer of the Segwit2x code, Jeff Garzik has revealed an October "status update" to the development community through the Linux mailing list. The last time Garzik greeted the public was back in August when the Segregated Witness (Segwit) protocol was applied to the Bitcoin network. Like the previous time, Garzik's email seems upbeat and cuts to the formalities right away with the developer stating:  

To state the obvious, everything is still full steam ahead for the Segwit2x upgrade in mid-November.

Garzik notes that back in August the project was in a "code freeze" and emphasizes the BTC1 repository is currently still enforcing the freeze. A code freeze basically means that changes made to the source code have a stricter degree of rule sets. As Garzik states "only changes or fixes thought to be important pre-fork will be included."

Segwit2x Developer Says November Hard Fork is Full Steam Ahead

Garzik's October status update riled up some members of the bitcoin community over his claims regarding "Core bugs."

Segwit2x Will Stay on Bitcoin Core Version 14 Through the November Fork Due to Version 15 Bugs

The developer also explains the BTC1 source code is a fork of the Core software, and the team tracks that repository's updates. Additionally, Garzik gives a link to the production release branch and explains that specific Segwit2x code is based on Core version 0.14.x, and the developer release is associated with version 0.15.x.

"I've been paying close attention to the Bitcoin Core 0.15.x rollout," explains Garzik. Based on instability and bugs that upstream Bitcoin Core project is seeing – ie. Core's bugs, not ours – Segwit2x will stay on Bitcoin Core 0.14.x. through the November fork."  

This week the lead Bitcoin ABC developer, Amaury Séchet, proposed to add a Bech32 address format to the Bitcoin Cash (BCC) network. Currently, the BCC community has been discussing modifying the bitcoin cash address format, alongside preparing to fix the protocol's Emergency Difficulty Adjustment (EDA).

Bitcoin Cash Developers Propose a New Address FormatOn October 14, Amaury Séchet proposed to implement a new address format to the bitcoin cash network. The subject of changing the BCC address format has been debated for a few months now, but even more so after Bitpay released a new address format for the company's BCC integration in its Copay wallet. The discussion initially started on the Bitcoin ABC Github repository back in July. A few weeks ago Bitpay stated it had created "new conventions to ensure users don't accidentally send BTC to a BCC wallet or vice versa." However, Bitpay's new address format wasn't received well by the BCC community and developers.

Electron Cash Wallet Developer Weighs In

Bitcoin Cash Developers Propose a New Address FormatFor instance, the Electron Cash wallet developer, Jonald Fyookball, detailed on the Yours network, that "Bitpay's new bitcoin cash address format breaks wallet compatibility and requires community discussion." Fyookball explains he's a "fan of Bitpay," but he believes releasing a new format without community discussion creates issues. The "main problem" Fyookball details, is that unless every single BCC user within the entire community upgrades to this new software there will be address "incompatibility between the new (Bitpay format) and the existing format for addresses."   

"Newer wallets theoretically should still be able to support sending to old addresses unless those wallets intentionally stop supporting legacy addresses," Fyookball explains. "But actually, it appears that Bitpay has done just that on their own platform."

This may be a matter of design choice if the idea is to prevent a user from sending to a BTC address — Yet, since many users still use old addresses, it breaks backwards compatibility.

Amaury Séchet Favors the Bech 32 Address Format

Bitcoin Cash Developers Propose a New Address FormatThe community believes it is essential for bitcoin cash addresses to be distinguished from bitcoin addresses, but think Bitpay's method may not be the best answer. Bitcoin ABC's Amaury Séchet explains on the team's developer mailing list that maybe BCC programmers "have been moving too slowly and that is why Bitpay has gone ahead." But Séchet also says he thinks they should have discussed the move as address upgrades can be "disruptive." Séchet also revealed at the time he is in favor of Bech 32 address styles, a proposal first introduced by bitcoin developer Pieter Wuille.         

"At this point, I am in favor of the Bech 32 style addresses as they have a number of advantages — The most notable one, is that the format can be extended to support new features in the future," Séchet's developer mailing list post details. "The current address format or the variation proposed by Bitpay doesn't, which means we'll likely have to change it again in the future."

As a result, I think we should adopt an extensible address format rather than doing a quick fix that makes us feel better now but fails to anticipate needs down the road — We are in this for the long run.

Lots of Bitcoin Cash Proposals and Ideas Being Tossed Around

The Github proposal pushed forward by Séchet seems to be favored by other developers who assist with the BCC protocol. One reviewer writes, "very elegant proposal, I like it," and the pull request was also sent to the Bitpay/Copay code repository. The developer who recommends the address format changes to Bitpay asks, "Would you remove your new address format starting with C and add the Bech32 format (described here: Bitcoin-UAHF/spec#21) if some wallets start using it? It is more useful."  

Bitcoin Cash development and infrastructure seems to be moving along with the recent EDA proposals and the latest address format idea. Further, the community has been greeted by another plan to create color coins on the BCC network. Bitcoin Unlimited developer, Andrew Stone recently proposed bitcoin cash scripting applications on October 16, in order to issue representative tokens on the network. 

Proof of Stake (PoS) was first introduced in a paper by Sunny King and Scott Nadal in 2012 and intended to solve the problem of Bitcoin mining's high energy consumption. At that time, it cost an average of $150,000 a day to maintain the Bitcoin network. Today, this figure is at a staggering $6.7 million (if we assume a $0.12/watt cost and multiply that with the estimated 56,209,833 KWh of electricity that the Bitcoin network consumed on Oct. 13, 2017).

Rather than relying on the energy-dependent work of miners to add blocks, Sunny and Scott suggested an alternative method called "staking" where a deterministic algorithm would choose nodes based on the number of coins an individual had. In other words, stakers would have more chances of being selected to add a block to the chain and reap the reward if they "staked" more coins in their wallet.  They hoped this would avoid the ever increasing energy costs and hashrate difficulty of mining. However, their new consensus mechanism was not without its own issues.  

There are four main challenges in designing a Proof of Stake system:

Distribution. Since block rewards go to stakers, how do you distribute coins initially?

Monopolization. Those with a significant amount of coins reap a majority of all future coins.

51% attack. Just like how Proof of Work (PoW) has to be wary of a 51% attack from a miner, so too does PoS have to be wary of a staker who has a 51% stake weight.

Nothing at Stake (NoS). PoS adds a block when a node meets a set of conditions which includes stake weight. However, the coin forks when two nodes meet these conditions at the same time. The fork is then resolved by other nodes signing one of the two transactions. The hypothetical problem of NoS arises when 99% of all nodes sign both chains because there is no cost (nothing at stake) to verify these transactions. Therefore a 1% staker could potentially "double spend" by paying with coins on one chain but then verifying the other.

In light of this, the evolution of PoS can be understood by each coin attempting to solve these issues in their own way.  We will now look at Peercoin.

Sunny King created Peercoin (PPC) in 2013 to become the first cryptocurrency to implement Proof of Stake while still keeping Proof of Work (PoW). It addressed the 4 issues of PoS in the following ways:

Distribution. Peercoin uses a PoW-based decreasing distribution. In the beginning, PoW was heavily emphasized for PPC's initial distribution phase but has since then been decreasing.  

Monopolization. Coin age was implemented to prevent coin-rich stakers from dominating the rewards.

51% attacks. PPC's chain is completely secured by PoS even though it is a hybrid. Attacks are highly unlikely because it is incredibly expensive to perform an attack. The attacker must effectively purchase or bribe 51% of the staked coins in order to perform this action. Any attack would significantly devalue the coin and cost the attackers a great deal.

Nothing at Stake. PPC developers don't believe this would happen. However, Sunny implemented optional "checkpoints" at first in case there was a successful attack.  Now that the PPC's network has matured, checkpoints are in the process of being phased out.

This next phase of PoS history is called considered a pure proof of stake protocol without any mining and was first implemented by NXT on November 24, 2013. However, let's consider another coin, Blackcoin, that was also a pure proof of stake that was released shortly thereafter as it has a simpler protocol and had a fairer initial distribution phase.

Blackcoin was created by Pavel Vasin (a.k.a. Rat4) and was released in February 2014.  When Rat4 decided to create BLK, he set out to remove coin age and PoW.  He believed coin age would increase the chance of a 51% stake attack as older aged coins would need less than 51% of staking coins to cause a fork. He also believed that coin age disincentivized users from staking consistently. Rather, stakers were incentivized to remain offline for 90 days to maximize their chances of getting a stake thereby making the network less secure. Rat4's implementation of PoS v.2 protocol addresses the four issues of PoS in the following ways:

Distribution. BLK went through a temporary Proof of Work phase with no pre-mine to ensure fair distribution.

Monopolization. This was addressed via a fair distribution period.

51% attacks. It is incredibly expensive to buy enough coins in order to perform this attack.  Also, the coin would lose significant value.

Nothing at Stake. BLK dev's also believed this was not a threat. However, BLK included checkpoints to protect against hard forks.  Checkpoints will be removed in PoS 3.

Since Blackcoin, there have been several iterations of the PoS protocol. For example, Bitshares was the first to implement Delegated Proof of Stake.  But the newest iteration of PoS is Ethereum's (ETH) attempt at PoS.  The motivation for ETH to switch is primarily a desire to move towards a more eco-friendly and decentralized system.  If the Ethereum Virtual Machine is truly to be adopted world-wide, Bitcoin's current $6.7 million daily electricity cost would quickly be surpassed.

Ethereum's PoS system will implement a Byzantine Fault Tolerance (BFT)-style PoS. Validators will be randomly assigned block rewards, however consensus is formed through a multi-round process where every validator votes for a chain. Ethereum is NOT utilizing Proof of Stake at the moment and there have been some doubts as to whether or not it will actually be implemented. With that being said, here's how Ethereum hopes to solve the four ssues involved with PoS:

Distribution. ETH has already been distributed with approximately 70% sold in it's ICO in 2014 representing 70% of total of Ether in circulation. Eleven million was given to the Ethereum Foundation and continues its distribution via PoW.

Monopolization. ETH has already been distributed.  Another way ETH hopes to solve this issue is by locking coins in a smart contract in order to stake. Therefore, staking comes at the cost of liquidity.

51% attacks. As mentioned above, it is incredibly costly to buy or bribe nodes to participate in a 51% attack. Should an attack happen, Michael Gubik proposes utilizing social/business/exchange forums to select one of the forked chains in his Proof of Stake FAQ on Ethereum's github.

Nothing at Stake. Validators will be disincentivized from signing orphaned blockchains as they will be punished.

There have been many fully functional and secure iterations of PoS over the history of cryptocurrency from the Hybrid PoS-PoW to pure PoS to Delegated PoS.  The BFT-style PoS is the newest attempt to address the four main issues surrounding the protocol initially proposed by Sunny and Mark. Each coin reflects a different approach and each has its own strengths and weaknesses. However, the move to PoS reflects a larger philosophical move in the world of cryptocurrency towards a more eco-friendly and decentralized system.

PNC Bank Threatens to Close Customer's Account for Buying Bitcoin

The PNC bank recently threatened one of their customers for purchasing bitcoin. The bank wanted to shut down the customer's account. This has been a story floating around the internet the last few days. The victim was Elitoohey. He elaborated on the situation in a Reddit post, saying the bank started by asking him questions about recent bitcoin purchases. 

"For What Purpose are You Buying Bitcoin?"

The banker wanted to know why he was purchasing bitcoin. The bank PNC Bank Threatens to Close Customer's Account for Buying Bitcoinseemed to be concerned about him buying and owning the digital currency. They goaded him about his purchase and pried into his business.

Toohey said, "He asked me to confirm a couple transactions then asked, 'For what purpose are you buying Bitcoin?' (he saw Coinbase and Xapo transactions). I told him I wouldn't answer, he then asked 'What are you going to do with the Bitcoin?' I again told him I wouldn't answer."

The conversation escalated to the level of threats.

"Exit the Relationship"

The banker went on to tell Toohey that their security team would "exit the relationship" with him if he did not provide them with information. Under their threats and pressure, Toohey relented. He provided them with information, because he appears to not want to close his account and change banks.

I relented and told him "for investment purposes" hoping to avoid needing to switch banks. He said he thinks that might satisfy them but that PNC Bank wants nothing to do with Bitcoin.

The Story Emerges as Influential Bankers Voice Concerns

This story crops up as more news emerges of bankers and well known investorsPNC Bank Threatens to Close Customer's Account for Buying Bitcoin voice concerns about bitcoin and cryptocurrency. They are usually calling it a fraud as with the case of Jamie Dimon, or talking about how it is a bubble ready to pop in the case of Ray Dalio.

However, since some people in the cryptocurrency ecosystem believe bitcoin will undermine banks, it seems logical that bankers are pushing back against the technology.