One of the strengths of Ethereum is its decentralized nature, giving it a wider, more stable base. There are Ethereum project teams in different parts of the world, including Amsterdam, Berlin, Switzerland and Brazil. (For example, Geth was deployed by the Amsterdam team while Eth was produced by the Berlin team.)
If there is a center to Ethereum, it would be in the beautiful town of Zug, Switzerland, home of the Ethereum Foundation that overseas the project’s finances, manages the funds raised in the Ether sale and determines the long-term vision and direction of Ethereum.
Stephan Tual, chief communications officer for the Ethereum project, told Bitcoin Magazine that the new executive director and board members represent a fresh start, a way to reboot the organization.
“[W]e had a very clear goal to recruit from verticals that were varied, ranging from the world of manufacturing, IoT, education, politics, health, finance and more,” he said. “Basically, anywhere where Ethereum could be embedded and make a difference.”
The new foundation executive director is Ming Chan, a Swiss-born Chinese American MIT computer science and media arts graduate, who has extensive experience working with educators, scientists and inventors to found and grow innovative new business ventures.
The new board members are Vitalik Buterin (president of the board), Lars Klawitter, Vadim Levitin, and Wayne Hennessy-Barrett.
For day-to-day decisions an “executive” consisting of Stephan Tual, Gavin Wood and Jeffrey Wilcke is in charge, with assistance from Aeron Buchanan, Jutta Steiner, Kelley Becker and Frithjof Weinert.
How’s the Launch Going So Far?
The launch so far is going far better than expected. The main Ethereum blockchain is in play and already users can access their pre-sale wallets, mine ether at the full reward rate, and use or deploy decentralized applications on the main network.
“We’re delighted with the stability of the network so far, as results have exceeded expectations and more and more developers are generating the Genesis block and joining the network,” Tual said. “Real time statistics on the network health can be viewed at https://stats.ethdev.com ”
“So far the Frontier launch has been exceptionally smooth, due in large part to our intense Olympic test phase, as well as our robust user-guides and the tutorials written by dedicated members of our community,” Ethan Wilding, resident Ethereum philosopher and co-founder of Ledger Labs told Bitcoin Magazine. “This is, however, a development release, and so a willingness to use the command line is required.”
“Most of the questions we’ve had since this launch are from general users eager to learn how to mine ether and get wallet access on the Ethereum platform using command line; we’re always happy to help,” he said. “As our platform is tested further and made even more robust, we will continue to improve upon the user-experience by introducing our graphical user-interfaces for such operations in a future release.”
Bitcoin Magazine will continue to follow this story and keep you informed on new developments.
Writing on CIO Journal, a Wall Street Journal blog for corporate technology executives, Owen Jelf and Sigrid Seibold , respectively global managing director of Accenture’s capital markets practice and managing director of Accenture’s digital capital markets efforts, weigh in on the fashionable debate about the blockchain as a system vs. bitcoin as a currency.
Not surprisingly, the two Accenture writers propose to do without bitcoin as a currency, but they are bullish about the potential of the blockchain in financial markets.
“Blockchains present an enormous opportunity for the world’s banks and financial institutions, which have moved quickly to make investments in it,” they say.
Accenture, a Fortune Global 500 company, is the world’s largest consulting firm as measured by revenues and has scores of high profile clients in the banking, financial and regulatory sectors.
“The bitcoin protocol supports a highly decentralized currency validated through anonymous consensus on a public ledger held by entities around the world,” note the Accenture representatives. “But that objective introduced trade-offs, including a costly proof-of-work algorithm, public transaction data and a validation scheme that adds latency to the transaction process, by design.”
Bitcoin enthusiasts would disagree, and argue that the distributed anonymous consensus model used in the Bitcoin blockchain is not a bug, but a feature – and abreakthrough innovation. In fact, the Bitcoin blockchain represents the first solid, working implementation of distributed consensus – for the first time, everyone can agree on what transactions took place, and who owns what, because everything is recorded on a tamper-proof public ledger that doesn’t need a central server and can’t be controlled by any central authority.
Of course, that is precisely the reason why the authorities and the banks don’t like Bitcoin. Today, governments and financial institutions recognize that the blockchain technology behind Bitcoin can offer huge cost savings, efficiency, and operational benefits to financial systems – distributed ledger technology could save banks $15 billion-$20 billion per annum by 2022 according to a recent Santander Innoventures report – but it’s in the nature of power to oppose what it can’t control.
The two Accenture representatives offer their solution: “To be used by financial institutions, including capital markets firms and insurers, blockchains must supplant the costly methods introduced by bitcoin with a mechanism that guarantees security, privacy and speed without paying for anonymous consensus.”
In other words, Bitcoin should disappear and be replaced by a closed blockchain. The new blockchain proposed by the Accenture writers is not “permissionless” like the Bitcoin blockchain, where everyone can download the software and participate without asking anyone’s permission, but a “permissioned” blockchain restricted to vetted participants.
New York Times technology and finance reporter Nathaniel Popper, author of“Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money,” noted that a permissioned blockchain could be jointly run by the computers of the largest banks and serve as the backbone for a new, instant payment system without a single point of failure. The new blockchain, decentralized but closed, would offer the benefits of the current Bitcoin network without relying on end-users for its operations.
Of course, the governments and the banks tend to enthusiastically support the idea of a permissioned blockchain without the troublesome bitcoin. But the Bitcoin system works, and the features that the Accenture writers propose to eliminate could be the very features that make it work. Other solutions to the issues mentioned by the Accenture writers, for example Lightning Networks, could be more effective.
Ripple Inc., payment gateway for hundreds of assets and digital currencies has announced the closure of btc2ripple gateway for all US residents starting September 1, 2015.
Btc2ripple gateway is one of the hundreds of gateways on the Ripple Trade platform which is used to purchase or trade BTC to XRP (Ripple’s IOU). On September 1, Ripple will shut down the btc2ripple gateway for all U.S. residents, which will disallow any Americans from purchasing or depositing BTC using Ripple Trade accounts.
In a statement, the btc2ripple team announced, “We are discontinuing the btc2ripple service for U.S. residents. All non-U.S. customers will have full access to our service as usual. Starting Sept 1, 2015, you will not be able to make BTC deposits to your Ripple Trade account or make BTC withdrawals from your Ripple Trade account.”
If any U.S.-based accounts hold BTC on or after September 1, all bitcoin will be forfeited.
The majority of Ripple Trade users are based in the United States, and so the closure of btc2ripple may lead to a large decline in bitcoin/xrp trading volume on its platform.
Zone Startups India, BitStreet and Block Chain University are hosting India’s first bitcoin hackathon at the Bombay Stock Exchange in India named “HackCoin Mumbai.” The hackathon will be joined by over a hundred developers looking to build blockchain-based applications for payments, big data and digital experience.
“There are three problem statements – one for each theme,” explained Ajay Ramasubramanian, project head of Zone Startups India. “There are possibilities for the winning outputs to be rolled out into full-scale projects.”
The hackathon is sponsored by Microsoft, IBM and Citruspay, and the executives of these companies will participate in the event as mentors and panelists.
“What we are really excited about is not only that we are the first fintech hackathon in terms of blockchain usage, but also that we are getting a lot of bitcoin experts,” said Raunaq Vaisoha, partner of HackCoin, the facilitator of the event.
Vaisoha added that such an event is important to developers, especially now that large global banks are showing strong interest in blockchain technology and blockchain/bitcoin-based startups.
“This event is very important for the blockchain ecosystem,” Vaisoha said. “If you look at 2014, there was $400 million VC funding in the blockchain. Citibank, Barclays and IBM are looking at it.”
The Tokyo Metropolitan Police is reportedly pursuing criminal charges against Mark Karpeles, CEO of the now-defunct, Japan-based bitcoin exchange Mt Gox.
Domestic news service Nikkei[1] reported on 31st July that, according to an official with the city’s police force, Karpeles is being investigated for allegedly using dummy exchange accounts with fictitious bitcoin balances to meet customer orders.
According to a rough translation[2] of the Nikkei report, speculation is now rising that some of the 650,000 BTC[3] reported stolen last year could have been fraudulently accounted for on the exchange. This suggests some users may have never owned bitcoin lost in Mt Gox’s collapse[4].
A report[5] from April suggested that many of the reportedly stolen bitcoins were gone by mid-May 2013.
Police also suspect that Karpeles may have misappropriated actual bitcoins deposited by users, allegations that could lead to embezzlement charges. Local authorities formally opened their investigation into Mt Gox last year[6].
A representative from US law firm Baker & Mackenzie, which had previously represented the embattled exchange, told CoinDesk it is no longer representing the company.
A company in the San Francisco area is delivering bitcoin-purchased medicinal cannabis to customers via drone.
Trees,[1] which claims to sell the “highest quality” medicinal cannabis to people holding a medical recommendation, accepts payments in bitcoin alongside traditional payment methods such as cash, online bank transfer and credit cards.
The service requires users to provide their driving and medical license when ordering. To get medical approval, consumers must have a short evaluation with a doctor, either online or at a clinic.
Users must give the medical reason for their use of cannabis, declare any pre-existing health conditions, confirm whether they’ve used cannabis before and state their preferred method of ingestion.
Customers can then choose from six different cannabis boxes, ranging in price from $59 to $149, all of which come with a certificate of authenticity.
Currently, Trees only delivers to the San Francisco Bay area.
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Although its delivery method is nothing short of creative, Trees is not the first company to accept bitcoin payments for legal marijuana.
California was the first state to set a medical marijuana program, enacted by Proposition 215[3] in 1996 and Senate Bill 420[4] seven years later.
The Proposition, otherwise known as the Compassionate Use Act, approved by a majority vote, enabled cancer, AIDS and patients suffering from other chronic diseases to grow or obtain marijuana following recommendation by a licensed physician.
Aside from California and Colorado, medicinal cannabis is also legal[5] in 21 other US states.
Eighteen months and roughly $18m after it was first announced, Ethereum has launched.
Arguably the most ambitious ‘crypto 2.0[1]‘ project to date, and the third-largest[2] crowdfunded project of all time, Ethereum[3] is aiming to create a new universe of programmable contracts, powered and secured by its own proof-of-work blockchain.
Grand in scale and flexible by design, it aims to decentralise pretty much anything on the Internet. “What bitcoin does for payments, Ethereum does for anything that can be programmed,” the site reads[4].
This Monday, Steven Tual, Ethereum’s CCO, confirmed in a company blog post[5] that the platform’s code had now been ‘frozen’ for two weeks, with all technical features prepped.
The launch[6] of the Ethereum mining network (via a client called Geth) and the ability to execute contracts happened earlier today, following eight proof-of-concepts and a barrage of stress tests[7] in the last release, Olympic. The formal launch had been pushed back multiple times[8].
Though it’s publicly available, Frontier – which comes in a “bare bones” command line format – is aimed squarely at developers as a live testing environment[9]. Only this time, real funds are at stake.
Speaking to CoinDesk, Tual warned potential users that Frontier will be a complex technical release, not for the faint of heart:
“Don’t put a lot of value at risk unless you really, really are sure you know what you are doing, and you’re confident about your risk assessment of the network.”
Non-developers will have to wait for a UI in Ethereum’s next release, Homestead, which is expected in two to four months. Serenity, the final version of the platform, may be up to 12 months away[10].
Timeline of events
Following the creation of the Ethereum genesis block, which contains all transactions from its $18m crowdsale[11], users are now able to mine and trade the platform’s native token, ether (ETH).
Unlike bitcoin, ether is not intended to be used as a global digital currency. Rather, to perform any action on the network, users need to pay an amount of ether. Those who validate transactions on the network, as with bitcoin, will be rewarded in ether for any resources they contribute via mining.
In essence, its a kind of pay-as-you-go supercomputer, with ether – computational power – the currency that brings these computerised functions to life. The more you need the supercomputer to do, the higher the fee.
In the first tentative days of the platform – known as the ‘thawing phase’ – the supply of ether will be deliberately scaled back by 90% to 0.59 ETH per block, which are created roughly every 12 seconds.
Technically, anyone with a GPU will be able to act as one of Ethereum’s mining nodes as it employs an ASIC-resistant scrypt mining algorithm to help prevent a single miner monopolising the network. However, should something go awry, the development team will still have ultimate control over the network, in the form of so-called ‘kill switches[12]‘, or canary contracts[13].
True decentralisation comes later, Gupta said:
“We’d originally thought about running Frontier with a huge range of intervention points in case something spun out technically. But for a variety of reasons we’ve pulled back to the kill switches only … Those switches are what make Frontier the ‘live test’ that it is. Once we’re confident it’s all solid, we pull them out.”
Once the platform is deemed stable enough by Ethereum’s developers and auditors it will migrate to ‘Homestead’. Previously, all smart contracts would be wiped during this process, but the team say this is no longer the case.
Development milestone
The brainchild of Vitalik Buterin, a 21-year-old college dropout and Peter Thiel fellow[14], Ethereum first surfaced as a white paper in 2013 and was announced at the Miami’s North American Bitcoin Conference the following January[15].
The glut of 2.0 platforms – such as Factom and Counterparty – often function by running abstratction layers on top of the bitcoin blockchain. However, Ethereum made the decision to create a purpose-built platform for these functions from scratch, building its own programming languages (Serpent, LLL and Mutan), comms system (Whisper), information management network (Swarm) and decentralised browser (Mist).
Whereas bitcoin aimed to take the central processor out of payments, Ethereum is seeking to decentralize all manner of Internet services, making them cheaper, faster and more accessible by moving power away from a central server and placing it into the hands of users.
The platform intends its primary user base to be developers who want to create and distribute peer-to-peer apps.
In the future, Ethereum aims to govern itself using its own system, if it can be mathematically represented it can be modelled, secured and traded.
Much to prove
Given the project’s grand scope, it has drawn some criticism from the bitcoin community and beyond.
Some of the more common complaints center on the fact that the bitcoin network has continued to improve and develop since Ethereum was first conceived. For example, the Tim Draper-backed startup Mirror is reportedly working on bringing native smart contracts to the bitcoin blockchain.
Rudimentary versions of Ethereum smart contracts – one of the project’s principal selling points – are already available on the bitcoin network today to users of Counterpary, which made a point of porting this functionality from the project to its own in November[16].
Bitcoin developers like Mike Hearn, for example[17], have sought to frame the project as overambitious given that bitcoin has a scripting language, that while rudimentary, has yet to be fully explored.
A recent white paper[18] from the National University of Singapore also raised questions about how the Ethereum network incentivizes its users to achieve consensus, finding that honest miners may prove vulnerable to attacks given the Turing-complete nature of its programming.
At issue was the idea that transaction validators on the Ethereum network have arguably more control over operations than in bitcoin, a criticism members of the project addressed.
“The bottom line is that clients have a ton of liberty about what they store, and if people start to feel real pain about blockchain size, clients will adapt to reduce what they store in a variety of ways,” Gupta told CoinDesk, adding:
“The initial clients aren’t particularly optimized for storage efficiency because, frankly, £100 buys you two terabytes in Maplin – disk is nearly free today. Over time it will be more of an issue, and I expect we’ll sort it out then.”
Cornell professor Emin Gun Sirer told CoinDesk that while he believes smart contracts open up a level of expressivity in payment systems, the project’s broader goals of decentralization are perhaps naive.
Sirer said:
“The killer apps for smart contracts have not been designed yet … I’m a big proponent of Ethereum and smart contracts, though I believe in this case the hype and the fantasy-borne use cases overstep the capabilities of the platform.”
Pete Rizzo contributed reporting.
For more on the project, watch its latest promotional video below:
A new report from Kaspersky Lab has found developers continue to target users with malware geared toward illicitly generating or stealing bitcoin, though rates have fallen over the past year.
Programs designed to steal bitcoins from wallets accounted for 6%.
Source: Kaspersky Lab
These figures suggest a possible decline in activity. According to Kaspersky Lab’s Q2 report[2] from last year, detection rates for illicit mining programs and wallet stealers accounted for 14% and 8%, respectively. The firm’s Q1 data[3], bitcoin mining and wallet theft malware accounted for 12% and 3% of malware types detected.
What this decline might mean isn’t clear.
The company’s 2013 assessment[4] found that, at the time, year-over-year malware deployments related to bitcoin rose overall. Therefore, it could be suggested that the prominence of bitcoin malware has some relationship with the market price.
The vast majority of financial malware detected by the firm – 83% – related to banking software. Kaspersky also found that mobile threats are on the rise, suggesting that malware developers are taking advantage of rising investments in mobile platforms by the world’s major banks.
An average of 40% of computers worldwide were targeted at least once during the second quarter, according to the report.
This is a guest post by Eugene Illovsky, a partner at Morrison & Foerster in Palo Alto. He advises on corporate compliance and represents companies in their interactions with government investigatory, enforcement, and prosecutorial authorities.
What compliance expectations does the Department of Justice have for businesses entering the virtual currency space? How can a company meet those expectations to stay out of trouble with DOJ, or at least mitigate the effects of any criminal inquiry on it as well as its executives, employees and investors? A recent speech by the Criminal Division head, Assistant Attorney General Leslie Caldwell, provides critical guidance on DOJ’s “approach to the emerging virtual currency landscape” and expands on its view that “compliance and cooperation from exchanges, companies and other market actors can ensure that emerging technologies are not misused to fund and facilitate illicit activities.”[1]
DOJ’s View of How Virtual Currencies Are Used
DOJ is skeptical. While it knows virtual currency has “many legitimate actual and potential uses,” its enforcement stance is informed by the observation that “the inherent features of virtual currencies are exactly what make them attractive to criminals.”[2] For instance, virtual currency systems “conduct transfers quickly, securely and with a perceived level of anonymity,” have an “irreversibility of payments made in virtual currency and lack of oversight by a central financial authority” and have the “ability to conduct international peer-to-peer transactions that lack immediately available personally identifiable information.”
Virtual currency thus “facilitates a wide range of traditional criminal activities as well as sophisticated cybercrime schemes.”[3] For instance, “online black markets” on the dark web offer a “wide selection of illicit goods and services” paid for in virtual currency, including “more traditional crimes such as narcotics trafficking, stolen credit card information, and hit-men for hire.” But there has also been “a significant evolution in criminal activity.” Virtual currency has funded “the production of child exploitation material through online crowd-sourcing.” It has been used to “buy and sell lethal toxins over the Internet,” to make payments in “virtual kidnapping and extortion” and to allow “near-instantaneous transactions across the globe between perpetrators of phishing and hacking schemes and their victims.”
Virtual Currency Businesses as Financial System Gatekeepers
DOJ views these issues as a relatively small-scale problem now, because “[f]ew virtual systems currently can accommodate” the sort of “large-scale money laundering schemes involving government-issued currency.” But “as virtual currencies become more mature and better understood by criminals,” DOJ expects “an increase in both individualized criminal activity and large-scale money laundering enterprises.”[4]
This means “companies and individuals operating in the virtual currency ecosystem are at a crossroads.” This is their chance “to help virtual currency emerge from its association with criminal activities.” But in order to “ensure the integrity of this ecosystem and prevent its penetration by crime, the industry must raise the level of its game on the compliance front.”
The government is thus enlisting this emerging business community as financial system gatekeepers. DOJ often notes that the country’s banks “are our first line of defense against fraud, money laundering, terrorism financing and violations of sanctions laws.”[5] It expects nothing less here: “Virtual currency exchangers and other marketplace actors comprise the front line of defense against money laundering and financial crime.”[6]
And DOJ is not kidding. AAG Caldwell bluntly says, “industry participants are now on notice that criminals … make regular use of” virtual currencies. Robust compliance programs in virtual currency businesses are thus “essential to keeping crime out of our financial system.” At a minimum, raising “the level of its game” will require the industry to exhibit “strict compliance with money services business regulations and anti-money laundering statutes.”
The Costs of Compliance—and of Noncompliance
DOJ expects virtual currency businesses “to take compliance risk as seriously as they take other business risk.” And they must think about compliance broadly. On other occasions, AAG Caldwell has noted that compliance efforts “are too often behind the curve” and fail to “prevent tomorrow’s scandals” because they “target the risk of regulatory or law enforcement exposure of institutional and employee misconduct, rather than the risk of the misconduct itself.”[7] DOJ wants the focus to be on the broader “compliance risk” and not the narrower regulatory risk.
What about the cost? DOJ “recognize[s] that new entrants in emerging fields may find that compliance requires a significant expenditure of resources” and promises to be “context‑specific” in analyzing the adequacy of compliance frameworks.[8] Nevertheless, “a real commitment to compliance is a must, particularly given the significant risks in the virtual currency market.” The bottom line: “In the long run, investment in effective compliance programs will be well worth it, especially in the event a company has to interact with law enforcement.”
That “interaction” with law enforcement may well involve DOJ deciding whether to indict a company (and individuals) or give it some kind of break. As AAG Caldwell says, “[i]f a money services business finds itself subject to a criminal investigation,” DOJ will look to the so-called Filip factors in its Principles of Prosecution of Business Organizations. In particular, it will examine “the existence of an effective and well-designed compliance program” (Filip factor 5) and “a company’s remedial actions, including steps to improve upon an existing compliance program” (Filip factor 6).
As for Filip factor 5, “effective anti-money laundering and other compliance programs must be tailored to meet the circumstances, size, structure and risks encountered” by the business. For instance, “virtual currencies, with their perceived anonymity, pose risks that money transmitters such as Western Union do not face.” The risks in the virtual currency arena may be difficult to deal with, but DOJ’s view is simple: “Industry participants must address those risks, even when it may be costly to do so.” Filip factor 6 requires that a company fix a problem if one occurs. That means not only that it must patch any hole in the compliance program, but also “replace responsible management,” “discipline or terminate wrongdoers,” “pay restitution,” and “cooperate with the relevant government agencies.”[9]
Recommendations
Here are some specific steps for emerging virtual currency businesses to consider when ensuring their compliance efforts align with DOJ’s guidance and expectations:
It’s Never Too Early. Anticipate compliance issues as soon as possible in the company’s lifecycle. Develop a compliance system at the same time that you are refining your product or service (and well before you interact with customers).
People, People, People. It’s hard to understand cryptocurrencies, and even harder to explain them well to skeptical law enforcement personnel. Make excellent compliance people part of your initial team and include them in important decision-making.
Money, Money, Money. There must be the financial commitment to compliance that is required in this industry space. While DOJ seems sympathetic to the “significant expenditure of resources,” it will not likely go easy on those whom it concludes have skimped.
Think About the Technology’s Regulatory Future. The technology of, and related to, your virtual currency will shape the government’s expectations. Take bitcoin for example. Unlike dollar bills, say, every bitcoin carries its own transaction history. The blockchain is a public ledger of all bitcoin transactions. And new products are being refined that can analyze that blockchain and seek to determine every place a bitcoin has been and perhaps even who transferred or held it. It may become possible to give bitcoin a risk score, since those of suspicious provenance (for instance, those having once been through a mixer or in a dark wallet) could be separated from those that are squeaky clean.
Instill a High-Integrity Culture Now for the Company You Will Become. The government has high expectations for those it views as running “gatekeeper” businesses. The regulatory bar is bound to get even higher as large banks and financial institutions — with their established and highly professional compliance staffs — develop their own virtual currencies. As “gatekeeper” businesses grow, they face pressures to be “ethical” and not simply to meet legal and regulatory minimums. Adopt a broad view of compliance risk that focuses on the risk of misconduct and on reputational risk and then communicate that view clearly and compellingly in the onboarding process.
Conclusion
Emerging virtual currency businesses will face progressively higher compliance expectations from DOJ. They can maximize their potential market value by acting early in their lifecycles to install compliance systems and instill a high-integrity culture that will enable them to meet those expectations.
[1] Assistant Attorney General Leslie R. Caldwell Delivers Remarks at the ABA’s National Institute on Bitcoin and Other Digital Currencies in Washington D.C. on June 26, 2015 (“June 26 speech”).
[5] Assistant Attorney General Leslie R. Caldwell Speaks at Treasury Roundtable on Financial Access for Money Service Businesses in Washington D.C. on January 13, 2015 (“[f]inancial institutions that have money services businesses as customers have a particular responsibility to be attuned to the risks involved and not turn a blind eye to suspicious conduct”).
The National Science Foundation has awarded research grants on the science and applications of crypto-currency, with approximately $1 million awarded to date. The NSF initiative is part of the “Secure and Trustworthy Cyberspace” program for cybersecurity research and development to minimize the dangers of cyber technology, promote education and training in cybersecurity, establish a science of cybersecurity and convert promising cybersecurity research into practice.
The NSF grant has been awarded to Emin Sirer at Cornell University (grant information here), Elaine Shi, Michael Hicks, Jonathan Katz and David Van Horn at the University of Maryland (grant information here), and Dawn Song at the University of California-Berkeley (grant information here).
Emin Sirer, an associate professor of computer science at Cornell University, researches operating systems, networking and distributed systems. His current projects involve a novel secure operating system and system infrastructure for high-performance cloud computing applications.
“We plan to investigate the fundamental principles of cryptocurrency protocols, develop programming language support for smart contracts, and open-source secure systems infrastructure for cryptocurrency services, such as exchanges,” Sirer told CoinTelegraph in reference to the NSF grant.
Elaine Shi, an assistant professor of computer science at the University of Maryland Institute for Advanced Computer Studies and the Maryland Cybersecurity Center, and the principal investigator for the largest NSF grant at the University of Maryland, launched the world’s first undergraduate laboratory course that combines “smart” contracts – computer programs that can automatically execute the terms of a contract – and cryptocurrency.
“Smart contracts will shape the future of our financial transactions and e-commerce,” Shi said after the laboratory course. “They carry out high-value financial transactions, so their security is particularly important. We learned many lessons from this lab, including it is very tricky to write a safe cryptocurrency contract.”
“We believe that our research can help establish cryptocurrency as a prominent research area, and make a big impact in shaping the future of financial transactions and e-commerce,” Shi told CoinDesk referring to the NSF grant.
Dawn Song, a professor of computer science at U.C. Berkeley, researches security and privacy issues in computer systems and networks, including software security, networking security, database security, distributed systems security, and applied cryptography.
The NSF project wants to establish a rigorous scientific foundation for cryptocurrencies by leveraging cryptography, game theory, programming languages and systems security techniques. Expected outcomes include new cryptocurrency designs with provable security properties, financially enforceable cryptographic protocols whose security properties are backed by enforceable payments in case of a breach, smart contract systems that are easy to program and formally verifiable, as well as high-assurance systems for storing and handling high-value cryptocurrencies and transactions.
This is one of the first large research grants on digital currencies awarded by a government. Earlier this year, the U.K. government launched a new research initiative to bring together the Research Councils, Alan Turing Institute and Digital Catapult with industry in order to address the research opportunities and challenges for digital currency technology, and decided to increase research funding in this area by £10 million ($14.6 million USD).
