Microsoft: on-chain scaling fails to meet capacity needs

Microsoft concluded in their year-long research that on-chain scaling is inferior to “layer 2” approach and is collaborating in its development
13 February 2018   144

Recently Microsoft has published the results of their one year long research effort to determine what method of scaling is superior in term of future-proof “millions of tx per second” requirement.

And their view of increasing block size, Bitcoin Cash approach to the problem, is negative. Citing the Microsoft's post, such approach is “degrading decentralization” and wouldn't allow further scaling. Director of Program Management at Microsoft’s Identity Division Alex Simons writes in his report:

“While some blockchain communities have increased on-chain transaction capacity (e.g. blocksize increases), this approach generally degrades the decentralized state of the network and cannot reach the millions of transactions per second the system would generate at world-scale.”

He says, that the only viable solution is implementation of “layer 2” protocols. In layman's terms, layer 2 protocol is centered around multiple sidechains being brought under the main chain to further distribute necessary computations, and only the relevant finished result being uploaded to the main chain. If all this sounds to you awfully similar to Lightning Network protocol, then you are right. Lightning Network is, in fact, the proposed solution to the problem, and Microsoft even announces, that they will collaborate in development of layer 2:

“To overcome these technical barriers, we are collaborating on decentralized Layer 2 protocols that run atop these public blockchains to achieve global scale, while preserving the attributes of a world class DID (decentralized identity) system.”

Considering the great success of Lightning Network, which has already surpassed Bitcoin Cash in node count across the globe, it seems, that Microsoft is on to something really benificial. If all the promised qualities of Lightning are true, soon we'll see tx being completed in seconds, and fees in range of cents.

BTC Seller Arrested by US Federal Authorities

Morgan Rockcoons is accused of laundering monetary instruments and the operation of an unlicensed money transmitting business
21 February 2018   53

A US resident was arrested by the Bureau for the Control and Enforcement of Immigration and Customs Law on February 9 after he sold the bitcoins to the agent under cover. This is reported by Bitcoin.com.

According to documents in the case filed by the Southern District Court of California, Morgan Rockcoons (also Morgan Rockwell) is accused of laundering money and servicing cash transfer operations without a license. The government intends to confiscate all assets belonging to it, relevant to the case.

Arrest Document
Arrest Document

In the episode of money laundering, the defendant is accused of deliberately transferring a financial transaction to a representative of law enforcement agencies in order to obtain income from certain unlawful activities. In 2016, Rockoons traded 9,998 BTC, at that time valued at $ 9,208, for $ 14,500 in fiat, which was handed to him by an undercover agent, saying that the money was received from the production and sale of TGC oil (tetrahydrocannabinol-containing oil). TGC is the main active ingredient of cannabis.

As for the charge for servicing money transfer operations without a license, it is less specific, since it is subject to the majority of US citizens who sell large amounts of crypto currency, without the appropriate license. In one of the previous cases of this kind, law enforcement authorities stated that any transaction over $ 3,000 must be made in accordance with all requirements for customer identification.