Builders on Wall Street: Bitcoin Devs Host Lightning Hack Day

It was described as “not a normal conference.”

Sure, speakers took to the podium to present their futuristic ideas – a staple at the cryptocurrency space’s many, many conferences. But the Lightning Hackday, which took place in the heart of Wall Street on October 27th and 28th, was all-in-all more of a community-led endeavor with a heavy coding twist.

Throughout the two-day event, a hackathon whirred in the background. Tiny computers called Raspberry Pis dotted the tables and developers murmured amongst themselves about how to tweak the rules of the system while also not disrupting the incentive schemes.

This eclectic setup is maybe to be expected from a group of hackers building what they hope is the future of money.

Bitcoin’s lightning network is still in its early stages, but many hope it will fix bitcoin’s biggest underlying problems – that it’s simply too slow and clunky, and so doesn’t scale well for a future of mass adoption – at least, that is, without the help of a second layer.

“For those of you who don’t know, blockchains suck,” Chris Stewart, an engineer at blockchain data provider SuredBits, said when kicking off his talk.

That said, he and other developers hope the lightning network will change that.

Passions were so high, in fact, that it was hard to keep track of all the different projects on the floor. But one thing tied them all together – the interest in building for the technology’s potential as a payment mechanism for everyday purchases.

Indeed, Lightning Labs engineer Alex Bosworth admitted that lightning’s “killer app” – what takes it mainstream – might be as simple as that.

“I don’t know what the killer app is, maybe buying a cupcake is,” Bosworth told attendees during his talk.

Ideas, man

Bosworth, though suspects that the best ideas for using lightning haven’t even been created yet.

For comparison, he argued that the early developers behind Linux, the popular open-source operating system, could never have guessed how far the code would go.

“Were they thinking ‘Oh this will be deployed in a billion phones?” he said, implying that they probably didn’t – and couldn’t – have that kind of foresight when it was first deployed.

As such, Bosworth told the developers to not keep their big ideas a secret. And he took his own advice, sharing his many ideas for how lightning could be used in unique ways. For instance, he believes lightning could be used as a “monetized data layer,” with some retouching of the underlying software.

Right now, lightning works by passing around “little proofs” that are essentially “meaningless, random data,” Bosworth said. “But we could turn it into meaningful data,” added.

One idea: use lightning for passing around little pieces of a file, so that when they’re brought together they recreate the full file.

Bosworth also argued that lightning could be used to pay for enhanced payment privacy and to fuel a wave of “self-organizing” games, although, as Bosworth rattled off idea after idea, it was hard to keep up with just how these features would work in practice.

Still, he was only one developer sharing ideas at the event.

Hailing from Japan, Nayuta CEO Kenichi Kurimoto presented a lightning implementation that’s optimized for the “internet of things,” or the vast array of devices – from cars to TVs – that have enhanced capabilities thanks to being connected to the internet.

He sees great potential in this use case, arguing these connected machines might one day send payments between each other. And with that, he envisions that a “money owned by nobody” (i.e. bitcoin) will play a key role, since payments can be so cheap and various devices can execute them without the need for a third party.

Back to the basics

But with all of the futuristic, look-past-the-horizon ideas aside, another key focus of the Lightning Hackday was simply making lightning easier to use.

“There’s a lot going on, but there’s also not,” bitcoin enthusiast Toby Algya said, laughing about how difficult lightning is to set up. “I’m just trying to get lightning working. That’s my personal challenge for the day.”

In this regard, developers are still thinking about the bottom layer, which might someday help with these kinds of problems. For example, a tool called “lightning autopilot” could make things easier by automating the step where users have to set up a “channel” to use the network.

For one, Rene Pickhardt, a lightning developer and data science consultant, is working in this area and argues that these kinds of design questions are important to answer early.

“Why is it important to think about it early? If we grow lightning for a couple of years, we might find out topology is not that great,” he contended.

While Pickhardt offered some ideas at the Lightning Hackday, he noted that no solution is perfect since there’s a “tradeoff between privacy and the quality of recommendations.”

On a related note, a few key lightning developers are meeting in Australia next week to discuss the future of the project’s specifications. Pickhardt noted that the future of autopilot, including his implementation, is something high on their list to discuss.

Bosworth echoed that sentiment, saying that these kinds of technical tweaks are so vital that he’s going to hit pause on his big ideas – for now, at least – to focus on them. Case in point: he recently joined Lightning Labs on a full-time basis in order to work on the nuts-and-bolts aspect of the software.

“There are so many cool things that can be built on lightning, it’s important for the underlying protocol to work well,” he said, concluding:

IBM Patents Blockchain System to Create ‘Trust’ Between AR Game Players, Real World Locations

Major global tech giant IBM has applied for another blockchain patent, this time aiming to deter augmented reality (AR) game players from intruding on undesirable locations. The tech firm’s latest patent document was released by the U.S. Patent and Trademark Office (USPTO) on Thursday, Nov. 1.

In the patent, IBM, also known as Big Blue, describes a blockchain-based method and system of interactions between a AR-running mobile device and locational database in order to set and maintain safe boundaries between AR objects and real-world physical locations. According to the document, a distributed ledger is set to continuously maintain a growing list of data records protected from forgery and alterations.

Based on a blockchain-powered location database, the “exemplary method” AR-game allows mobile devices to obtain a signal about whether a certain location on AR is undesirable. Moreover, the described system is able to modify certain AR objects that are indicated as undesirable, also displaying them on mobile devices.

In the patent, IBM provides a brief description of augmented reality, stating that such a form of gaming is tied to a location that is overlaid by images of more game items such as characters, resources, or internal game locations. By applying the new blockchain patent, IBM can provide a guarantee of “trust” between real world locations and location-based AR games.

International Business Machines Corporation, or IBM, is one of the biggest providers of blockchain-related patent technologies in the world in terms of the number of applied patents. Having filed a total of 89 blockchain patent by Aug. 31, the tech giant took second place after China’s Alibaba with 90 patent applications.

In mid-October, Cointelegraph released an analysis devoted to the history of IBM blockchain patents in a number of industries, such as logistics, Internet of Things (IoT), blockchain hardware, and others.

Ethereum Energy Project Now Powers 700 Households in 10 Cities

A little-known ethereum project called Lition is quietly helping real German citizens find cheaper energy.

Launched earlier this year, Lition is already a licensed energy supplier in Germany with clients in 12 major cities (including Berlin, Hamburg and Munich) who are now using its decentralized energy market. Built on top of the ethereum blockchain, the Lition market connects consumers directly with energy producers big and small.

In total, more than 700 households across Germany are now using the decentralized platform to buy their energy, according to the company.

In short, Lition is trying to change how global energy works with a concept very familiar to blockchain enthusiasts: “bypassing unnecessary middlemen,” saving its users money on energy.

In the case of the households, an energy supplier sells the solar or electric energy (or whatever type they’ve produced) to an intermediary, often a giant, multinational company. Customers then buy energy from that intermediary.

The problem is, in the eyes of Lition CEO Richard Lohwasser, these multinational intermediaries have too much influence and don’t give users enough choice in what type of energy they can buy.

So, Lition’s solution is to cut them out completely.

“Our energy exchange connects customers and producers directly. Producers put their energy on the exchange and then customers can buy it,” he told CoinDesk, adding:

“Usually buying directly from producers is limited to energy suppliers that are big corporations. We’re bringing the exchange to the consumer, so consumers can pay for the energy they want.”

Cutting out the giants

Slicing out the middlemen also cuts costs – and not by a minuscule amount either. According to Lition, this saves customers an average of 20 percent on their utility bills, and increases power plant revenue by up to 30 percent.

That’s even though Lition has a strong emphasis on “green energy,” which while better for the environment, is often more expensive. As the app demo shows, Lition users can choose from the categories of wind, solar or biomass, then choose which provider they like the best (which, Lohwasser said is usually just the cheapest option).

Once a user finds the energy they want to buy, they make a payment in euros to Lition. Behind the scenes, an ethereum smart contract detects this payment and automatically sends the customer their energy.

“Lition’s …. blockchain technology simplifies the process of buying energy directly from green producers of any scale by employing transparent smart contracts that allow consumers to circumvent all of the complexity of energy distribution brokers,” the Lition website explains.

For now, users need to be from Germany, where Lition is licensed to operate. Those who are interested in purchasing energy using Lition’s market can query on the Lition website, which also features a price estimator based on the user’s postal code.

But Lohwasser sees all this is a proof-of-concept for a bigger goal.

Maybe, one day, anyone will be able to buy energy directly in this decentralized fashion, perhaps even from tiny solar farms set up by hobbyists in a neighborhood nearby.

Blockchain struggles

The bad news is that, like some other companies, they’ve had problems with ethereum.

“Ethereum is not a good system,” Lohwasser put his opinion bluntly.

As much as he appreciates that the platform is open and “permissionless,” meaning anyone can use it without filing a permission slip, he rattled off a long list of problems Lition users have faced.

“It’s very slow. It takes 20 to 30 seconds to tell a customer whether they can buy energy or not,” he said, adding that as a company that’s trying to promote renewable energy, they began to feel uneasy about using a system that relies on mining, which is a rather energy-sucking process.

Realizing all the high costs associated with the platform put Lition in a bit of a bind. They started a hunt for something better, but looking at at least a dozen blockchains, they couldn’t find one that was both permissionless and scalable.

“They all have their drawbacks,” Lohwasser said. He seemed skeptical of private blockchains, different from its public cousin in that not just anyone can participate. “You might as well not have a blockchain,” he remarked.

So, they found partnering with one of the world’s largest software companies, SAP, to build their own system, a “hybrid” blockchain for enterprise, which combines what they believe are the best aspects of private and public blockchains. SAP is working on the smart contract layer, while Litiom tackles the consensus layer.

The company is quick to stress that they managed to create all this technology without funding via an initial coin offering (ICO). The new type of fundraising enabled by blockchain technology is exciting, but has also drawn quite a bit of skepticism, partly because dubious projects have been able to raise millions of dollars in this way.

In order to pursue their private-public blockchain, to be used for more than just energy use cases, Lition plans to launch their own ICO to get it off the ground later this year.

Brazilian Tax Regulator Publishes Draft on Cryptocurrency Taxation

The Department of Federal Revenue of Brazil (RFB), which administers tax collection in the country, is seeking to receive monthly reports on crypto assets operations, according to a document released by the RFB Tuesday, Oct. 30.

In the paper, the RFB has announced that Brazil-based crypto exchanges are now obliged to send them detailed reports on all crypto-related operations on monthly basis. For instance, the companies have to reveal the amounts of transactions and the identity of the customers.

Moreover, both legal entities and individuals residing in Brazil are now obliged to report all the transactions they have carried out at foreign crypto exchanges if they surpass $10,000 Brazilian reals ($2,700) per month.

The RFB’s draft on crypto taxation also sets a range of fines for those who fail to report their transactions. For the delay of a tax declaration, citizens will have to pay up to 1,500 Brazilian reals ($400). In case the information provided is insufficient or false, the RFB could charge up to 3 percent of transaction value as a fine as well.

The tax watchdog has already opened a public consultation to receive proposals on the new regulation: notes will be accepted from Oct. 31 till Nov. 19.

In the explanatory note, the regulator states that such measures have been taken due to the significant growth of the crypto industry in the country. According to the RFB, the number of crypto exchange clients has already exceeded the number of users registered at B3 — the Brazilian stock exchange based in Sao Paulo. In its turn, the daily volume of transactions conducted by five major Brazilian crypto exchanges surpasses 8.3 million reals (around $2.2 million).

The regulator’s draft follows a move by Brazilian banks to close some crypto-related accounts, which led to a probe launched by local antitrust agency CADE. The investigation was initiated on the request of the Brazilian Blockchain and Cryptocurrency Association (ABCB) following several complaints from crypto industry.

CADE has sent a questionnaire to ten Brazilian crypto exchanges targeted by the bank’s decision. The companies were requested to explain how their business functioned in Brazil.

In late October, the Federal District Court of Brazil forced major banks Banco do Brasil and Santander Brasil to reopen the accounts for local crypto exchange Bitcoin Max. The judge ruled that the banks’ decision to close the crypto-related accounts was “abusive conduct” violating consumer protection rules.

Azerbaijan Targets Utilities, Justice System for Blockchain, Smart Contracts Use

Azerbaijan is planning to use blockchain and smart contracts in the country’s legal system and housing sector, Central Asian-focused Trend News Agency reported Nov. 2.

Speaking to the publication, chairman of the Azerbaijani Internet Forum Osman Gunduz noted that plans for smart contract introduction in these areas by the country’s justice ministry had “attracted attention” at a meeting held Oct. 30.

“It was announced that in the future, the smart contracts will be introduced in the field of public utilities (water, gas and electricity supply),” he said, adding:

“This refers to the switch-over of existing contracts of citizens for utility services to smart contracts, which will ensure transparency and will allow to suppress the cases of falsification in this area. The citizens themselves will be able to independently control all these processes.”

Gunduz’s comments continue an increasing tendency to preference blockchain as a source of innovation in Azerbaijan.

As Cointelegraph reported last month, the Trend News Agency wrote that an intensive five-year economic plan involving the county’s central bank and IBM would seek to deploy the technology as part of a “digital transformation.”

For the justice ministry, meanwhile, the courts system forms a natural target for improvement, with Gunduz noting that progress had been suboptimal thus far.

“This refers to ‘electronic courts.’ So far, the work in this direction is very weak,” he continued, adding: