Bitcoin developers to tackle security and scalability

Bitcoin contributors and developers released an open letter that asked the cryptocurrency's community to come together to reach a technical consensus on the currency's security and scalability.

Bitcoin developers and contributors have released an open letter to the bitcoin community to share their action plan on reaching a consensus on improving bitcoin security and scalability.

"The bitcoin developer community is dedicated to the future of bitcoin, looks after the health of the network, strives for the highest standards of performance, and works to keep bitcoin secure on behalf of everyone," said the letter.

"We have worked on bitcoin scaling for years while safeguarding the network's core features of decentralisation, security, and permissionless innovation.

"We're committed to ensuring the largest possible number of users benefit from bitcoin, without eroding these fundamental values."

According to the letter, bitcoin is a security-critical system with billions of dollars of users' assets that a mistake could compromise.

"To mitigate potential existential risks, it behooves us all to take the time to evaluate proposals that have been put forward and agree on the best solutions via the consensus-building process."

The 30-plus core developers behind the letter said they are "dedicated to the future of bitcoin", and have organised two bitcoin scaling workshops -- one in Montreal and the second in Hong Kong -- aimed at collaboratively reaching the best outcome for scaling and securing the cryptocurrency.

"Much work has already been done in this area, however, a number of key challenges still remain, each with many significant considerations and tradeoffs to evaluate," the letter said.

On Monday, former US Secret Service special agent, Shaun W Bridges, officially pleaded guilty to stealing more than $800,000 in bitcoins, following his involvement with underground marketplace Silk Road, The Guardian reported.

Bridges is the second US law enforcement agent to plead guilty to connections with the notorious site, following ex-US Drug Enforcement Agency special agent Carl Mark Force.

According to an affidavit [PDF] unsealed by the United States District Court for the Northern District of California in March this year, both Force and Bridges allegedly used their membership of the Baltimore Silk Road Task Force to illegally obtain bitcoin and other funds.

"Force and Bridges abused their positions as federal agents and engaged in a scheme to defraud a variety of third parties, the public, and the government, all for their own financial enrichment," the affidavit said.

In February, Ross Ulbricht, also known as Dread Pirate Roberts, was convicted by a jury in Federal Court in Manhattan of drug and conspiracy counts, in his capacity as the alleged owner and operator of Silk Road, which was shuttered by the FBI in October 2013. Prosecutors said Silk Road had facilitated at least $180 million in sales of illegal drugs on its platform.

In May this year, Ulbricht was sentenced to life in prison.

Before the FBI took hold of the online black marketplace, the Silk Road website suffered a "sizeable" theft of bitcoin -- "bitcoins which were moved into Mt Gox, a digital currency exchange based in Japan", the affidavit said.

Tokyo-based Mt Gox shut down without warning in February last year, following apparent cyberattacks that rinsed the firm of millions of dollars' worth of bitcoin, leaving the company without the funds to operate. The bitcoin exchange filed for bankruptcy later in the same month.

Last month, Mt Gox CEO Mark Karpeles was pursued over fresh allegations of bitcoin embezzlement, accused of pocketing over $2.6 million in customer funds.

Karpeles was previously investigated by the United States Department of Homeland Security under suspicion of being behind the Silk Road marketplace.

Earlier this month, the Australian Senate Economics References Committee said the GST treatment of digital currencies is the most pressing concern for Australian businesses that are using currencies such as bitcoin, and has called for changes to the GST Act to amend the definition of money.

In its report Digital currency-game changer or bit player, the committee took the view that the current ATO treatment of bitcoin as barter for individuals creates a double taxation effect, and results in additional burdens for users. According to the report, CoinJar said the ATO ruling had made it uncompetitive against non-Australian rivals.

"The committee is of the view that digital currency should be treated as money for the purposes of the goods and services tax," the report said.