Feed for tag: exchange
Simple Proof of Reserves Transactions

Proof-of-reserve transactions are transactions provided by a certain custodian to prove ownership for an amount of funds. For example, lets say an Exchange currently holds 30 thousand Bitcoins on behalf of its users, if anything happens to the exchange, say a hack, the exchange might need to prove to its customers that their Bitcoin is in safe hands, currently any company that wants to perform a proof-of-reserve must do it in its own way and accordingly, their users have to understand the construction to be able to verify it, this makes the process not very common among custodian companies as it’s both tiresome and would require educating their users on technical terms.

A new BIP was proposed as a way to formalize a standard format for constructing these proofs, making it easier for custodians and users with existing wallet infrastructures to understand these proofs. Proofs are formatted as a regular Bitcoin transaction with small differences. This transaction must be unspendable as its sole purpose is to demonstrate the availability of the funds, not spending them. The proof must be linked to the issuer, preventing custodians from just copying other custodians’ proofs.

Preventing Delay Abuse in a Lightning Based Peer-to-Peer Exchange

Corné Plooy discussed a potential solution to prevent delay abuse in lightning based P2P exchange:

Lately I’ve been thinking about de-centralized crypto/crypto exchange (“atomic swap”) on the Lightning network. In my view, the main problem is that participants can delay transactions (up to HTLC time-out, which can be quite long), in order to speculate on exchange rate changes. I’ve been looking for several approaches to deal with this problem.

[Paper Pick] Privacy Preserving Proofs of Solvency for Bitcoin Exchanges

This is the first brief in a new series called Paper Pick that will occasionally allow our readers to discover published papers related to Bitcoin technology.

This week’s paper pick, published on Oct 26, 2015, is a privacy-preserving proof of solvency for bitcoin exchanges that does not disclose the exchange’s Bitcoin address, its total holdings or liabilities, or any information about its customers.

Bitcoin exchanges function like banks, securely holding their customers’ bitcoins on their behalf. Several exchanges have suffered catastrophic losses with customers permanently losing their savings. A proof of solvency demonstrates that the exchange controls sufficient reserves to settle each customer’s account. We introduce Provisions , a privacy-preserving proof of solvency whereby an exchange does not have to disclose its Bitcoin addresses; total holdings or liabilities; or any information about its cus- tomers. We also propose an extension which prevents exchanges from colluding to cover for each other’s losses. We have implemented Provisions and show that it offers practical computation times and proof sizes even for a large Bitcoin exchange with millions of customers.


If you want to share a paper to include on our weekly briefs, feel free to contact us at authors@bitcointechweekly.com

A Lesson in Sharing Private Keys
The cryptocurrency exchange, ironically named CoinSecure was forced to halt their operations when it was discovered over 430 BTC had been stolen. CoinSecure is a company located in Delphi, India, where the price of Bitcoin relative to the average wage is exponentially greater than the common first world nation. We should consider the magnitude of that difference when evaluating the extent to which this company has failed its customers and shareholders.
Liquid Release Candidate Network Is Ready to Go

Liquid is a sidechain created by block chain company Blockstream, its production release is scheduled for May 2018 and the Liquid Release Candidate Network is a network for the participating exchanges aiming to use Liquid.

Last week, Blockstream launched the Liquid Release Candidate Network for participating Liquid exchanges. This new network marks the conclusion of the Liquid Beta program, and we are on the way to a production release in May 2018. The Liquid Release Candidate Network enables member exchanges to integrate their software with Liquid, to be ready at launch.