JPMorgan Strategists: A Crypto ETF Approval Would Cannibalize Bitcoin’s Price

JPMorgan Strategists: A Crypto ETF Approval Would Cannibalize Bitcoin’s Price

Bitcoin’s price would take a serious hit in the event that an ETF were to be approved. That’s according to a team of analysts at JPMorgan Chase. The analysts, led by one Nikolaos Panigirtzoglou, compiled and released a report after studying the possible effects of an ETF based mainly on the large cache of BTC […]

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The Battle For P2SH: The Untold Story Of The First Bitcoin War

The saga of P2SH showcases Bitcoin’s unique dev community, the difficulty in making such changes and the tone for protocol debates ahead.

The post The Battle For P2SH: The Untold Story Of The First Bitcoin War appeared first on Bitcoin Magazine.

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Ledger wants to help MicroStrategy secure its $400m Bitcoin treasury

Square’s SubZero cold wallet is great, but Ledger Vault is better says the company’s VP of Product.

Ledger is mostly known for its consumer-facing hardware wallets, but since last year, a number of enterprises have also begun to use Ledger Vault, according to the company’s vice president of product, Jean-Michel Pailhon. This product is focused on providing custody solutions to enterprise clients.  In fact, the Ledger team is currently trying to sell MicroStrategy on the advantages of its product.

MicroStrategy is a business intelligence company that made a splash in August 2020 by converting a large portion of its treasury into Bitcoin (BTC). More recently Square, who just acquired $50 million worth of Bitcoin, developed an in-house open-source SubZero framework to secure its assets.

Source: Ledger.

Pailhon said that both employ HSMs, or Hardware Security Modules, for the management of digital assets. HSMs have been used for decades for securing critical data and are generally considered invulnerable. Though SubZero may be a great framework, Pailhon opined that its best suited for tech companies like Square that know how to deploy and manage HSMs. He said that Ledger will set these up for its clients, and that “they don’t necessarily need to know how it works. They just need to use the solution.”

We asked Paihon to walk us through onboarding a company like MicroStrategy. He said that one of the first steps would be to decide how many people will be involved in authorizing transactions, a typical setup would require 2-of-3 signatures; where perhaps, the CEO, chief financial officer, and general counsel hold one signature each. All the private keys would be stored on an HSM. At the same time, parts of the private keys may be stored in several physical vaults.

When a company officer wants to initiate a transaction, he would log into Ledger Vault and input the desired transaction. Then, a notification would be sent to all three signatories. To approve it, they would have to log in and connect their Ledger Blue hard wallet to their computer. Finally, they would enter their unique Ledger Blue pin to sign the transaction. There is also an additional layer of protection, which involves one of the signatories choosing to abort the transaction altogether, provided that the minimum number of signatures had not yet been authorized.

Pailhon elaborated that though Ledger provides the backend and takes care of the HSM infrastructure, the client acts as its own custodian. This may present a problem as some companies may be required by law to use a regulated custodian. He explained that this does not present a real challenge though:

“If you need a regulated custodian, you can ask a regulated entity to become one of the signees in the transaction process.”

Meanwhile, MicroStrategy has not named its Bitcoin custodians, though it publicly acknowledged the associated risks:

“While we hold the bulk of our BTC assets with established cryptocurrency custodians, a successful security breach or cyberattack could result in a partial or total loss of our BTC assets in a manner that may not be covered by insurance or indemnity provisions of our custody agreements with those custodians.”

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Would Bitcoin suffer if the lead maintainers were kidnapped by aliens?

As lead maintainer Wladimir van der Laan takes a break from Bitcoin duties, we ask what would happen if the entire Github maintenance team disappeared.

It is a question that many in the crypto community must have asked themselves at least once. The news of Wladimir van der Laan taking a temporary hiatus, prompted us to explore what some might consider to be an improbable, yet highly impactful situation.

A Bitcoin Core developer that is also a maintainer of the project’s GitHub account (i.e., someone who can “merge code into the master branch”) is a rare commodity. To put this in perspective, if a Bitcoin Core developer is a black belt, then someone like van der Laan is a third-degree black belt.

To set the record straight we interviewed the well-known sensei and master of the Blockstream dojo, Adam Back. He said that neither Laan’s departure, nor the disappearance of all the maintainers in the event of a potential catastrophe, would present a challenge to Bitcoin (BTC):

“It’s no problem either way technically because even if all maintainers had a plane crash or very unlucky IT failure. A new Github can be created.”

Back also opined that most in the crypto community do not truly understand the role of Core developers in the ecosystem and tend to overestimate their importance. In his view, the changes that Bitcoin Core developers can introduce are bound by being backward compatible and should not change the key properties of the protocol like finality, censorship resistance, or rate of inflation. He also noted that changes should preserve or improve privacy. Back believes if the developers tried to introduce ideals outside of this paradigm, they would be rejected by the ecosystem:

“So I do not think a given implementation of bitcoin’s developers can change things outside of that area, as the economic ecosystem would reject it, use a different implementation.”

Back is also against any sort of on-chain governance as he believes that this would lead to the “centralized lobbying groups” taking control of Bitcoin, noting that this is a problem inherent to proof-of-stake protocols. We parried that with the current system, some believe that organizations like Back’s Blockstream, Lightning Labs, Chaincode Labs and others that support Bitcoin Core developers, have a disproportional amount of influence in the ecosystem. Back replied that Blockstream purposefully does not take a position on Bitcoin proposals. At the same time, Core developers under the company’s employ can quit Blockstream if they believe they are being pressured to do something bad for Bitcoin and the company would have to pay their salary for another year.

We asked the Hashcash inventor why, if the decision-making process within the Bitcoin ecosystem is so harmonious, do debates sometimes become so heated? It is well known that some have even lead to schisms, like in the case of the block size debate. In his view, this happened because some participants were trying to force their way to a change:

“I consider that to largely be because some companies and mining pools tried to forcibly change the change process to benefit their businesses financially.”

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