Bitcoin Magazine’s Week in Review: Lightning and Legislators
Bitcoin development took a major step forward this week when Lightning Labs announced the first beta release of the much anticipated “Lightning” protocol for Bitcoin, while also raising $2.5 million to fund continued development.
Meanwhile, cryptocurrency and ICO regulation stories have continued to dominate the headlines, as the U.S. Federal Government held hearings and the Dutch finance minister released a letter relating to how their respective legislators should approach cryptocurrencies and ICOs. On a positive note, a New York state assemblyman has introduced a bill to protect cryptocurrency investors and ease regulation on crypto-related businesses.
Featured stories by Shawn Gordon, Colin Harper, David Hollerith, Erik Kuebler and Aaron van Wirdum.
Lightning Labs announced lnd 0.4-beta, the first beta release of the Lightning software implementation spearheaded by the development company. This is the first beta release from Lightning, which means they believe the project is feature complete and safe enough to use on the Bitcoin mainnet. CTO Olaoluwa Osuntokun said, “We’re calling this lnd release a beta as it has all the necessary safety, fault-tolerance and security features that we’ve deemed necessary.”
Significantly, the beta release is compatible with various Bitcoin implementations, where the alpha versions required btcd to interact with Bitcoin’s blockchain. The beta allows users the options to use their own preferred backend, such as bitcoind.
In conjunction with the software release, Lightning Labs announced a seed-funding round of $2.5 million to fund continued development of lnd. Investors include big names in the Bitcoin, blockchain and broader tech industry.
The U.S. government held a hearing in their House Financial committee entitled “Examining the Cryptocurrencies and ICO Markets.” This was the first hearing in which members of the U.S. Congress addressed cryptocurrencies and ICOs. Witnesses at the hearing included representatives from Coinbase, and Coin Center, as well as various law firms and others.
The hearing addressed the economic efficiencies and potential capital formation opportunities that cryptocurrencies and ICOs offer to businesses and investors. Notable points addressed included the need for security and investor compliance for U.S. cryptocurrency exchanges; the need for regulators to distinguish the difference between cryptocurrencies that are considered digitally scarce commodities and securities tokens; among other points, all in such a way that won’t stifle domestic innovation by forcing investors and businesses to leave the country.
In New York, state Assemblyman Ron Kim introduced a bill to protect cryptocurrency investors and ease regulation on crypto-related businesses. Known as The New York Cryptocurrency Exchange Act (A9899), the bill relates to “the audit of cryptocurrency business activity by third party depositories and prohibits licensing fees to conduct such cryptocurrency business activity.”
The law would mandate that any cryptocurrency business or entity be subject to routine audits by a public or third-party depository service. Any entity in full compliance will receive a digital New York Seal of Approval to reassure consumers that the outlet is trustworthy and secure. This seal would ideally replace the BitLicenses currently issued by the New York State Department of Financial Services, doing away with this fee-based license in favor of one earned by audit.
Dutch Finance Minister Wopke Hoekstra sent a six-page letter to the House and Senate that outlined his concerns over the rapid and dramatic growth in cryptocurrencies. He emphasized that there has been little time to understand and react to the changing landscape and that the current supervision and regulatory framework is ill equipped to deal with it. He said he will actively be working in a European context, but the entire process will take time and coordination between disparate governments and agencies.
Our reporter Aaron van Wirdum visited the town of Rovereto in the Italian Alps, where it’s easy — and encouraged — to buy pizza with bitcoin. He profiles the local business owners and Bitcoin advocates whose enthusiasm for cryptocurrencies is turning the close-knit community into a thriving “Bitcoin Valley.”
“When people first hear about bitcoin they start asking questions — about the technology, about mining. But what they really want to know is if they can trust it. We were able to skip this step because people trust us. We have familiar faces,” Claudio Gobber of Inbitcoin explains. “This is how we grow Bitcoin: We start small and have it spread from there.”