How does blockchain work?Blockchain is a shared, immutable ledger for recording the history of transactions.It fosters a new generation of transactional applications that establish trust, accountability and transparency.IBM Blockchain has joined The Linux Foundation's Hyperledger Project to evolve and improve upon earlier forms of blockchain.Instead of having a blockchain that is reliant on the exchange of cryptocurrencies with anonymous users on a public network (e.g.Bitcoin), a blockchain for business provides a permissioned network, with known identities, without the need for cryptocurrencies.Russia is exploring ways to regulate bitcoin, the country's central bank governor has told CNBC, but sees "doubts" over the benefits of the cryptocurrency and even questions whether it should be considered a virtual currency at all.In an interview with CNBC, Elvira Nabiullina, governor of the Russian Central Bank, explained that she views bitcoin as a digital asset rather than a currency, and this is the way it should be thought about with regards to regulation.

When asked whether the Russian Central Bank is looking to regulate bitcoin, Nabiullina said that the authority is "analyzing" the possibility and needs to "understand more about this internalization of bitcoin and our regulatory systems."She added that there are "risks" with the cryptocurrency."We don't consider that bitcoin can be considered as a virtual currency.It's more digital assets with the regulation of assets," Nabiullina told CNBC in a TV interview.The central banker did not elaborate on what specific regulation would look like and said she is in no rush to put any policy into place.The governor said that the central bank does have doubts about bitcoin."We have some doubts, we don't see some huge benefits from introducing digital assets in our economy," Nabiullina said.Bitcoin recently hit a record high of $2,791, according to data from industry website CoinDesk, marking around a 180 percent rally year-to-date.There's bullishness in the market with some predicting the price could go as high as $6,000 this year and even $100,000 in a decade.

With surging prices and a market capitalization of around $38 billion, governments are becoming increasingly interested in ways to regulate the digital currency, especially as more retail investors are getting involved in the market.Japan recently passed a law to legalize payments in bitcoin which helped boost the price, with major trading volumes now coming from the country.The stance of Nabiullina marks a changed view from Russian authorities who have been trying over the years to ban bitcoin.github bitcoin miningIf Russia somehow regulates bitcoin, this could potentially affect the price, especially if more investors get involved in the asset.bitcoin wallet koreaSean Walsh, a partner at Redwood City Ventures which invests in bitcoin and blockchain companies, said that further regulation could boost the price of the cryptocurrency and get rid of the handful of "bad actors" using it for illegal things.bitcoin steam wallet

"I agree with the view that for retail and professional investors greater regulatory structure is very supportive because it adds to the legitimacy of the whole network," Walsh told CNBC in a phone interview.Still, it's unclear where Russia plans to go with bitcoin regulation.The country's Deputy Finance Minister Alexey Moiseev recently said the authorities hope to recognize bitcoin and other cryptocurrencies as a legal financial instrument in 2018 in a bid to tackle money laundering.bitcoin bic"The state needs to know who at every moment of time stands on both sides of the financial chain," Moiseev told Bloomberg in an interview.asic bitcoin miner uk"If there's a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations."dogecoin history

The Russian Central Bank's Deputy Chairwoman Olga Skorobogatova has also reportedly revealed plans to tax the cryptocurrency."(Digital currencies already circulating in Russia will see) certain regulations with regard to taxes, monitoring and reporting, as a digital commodity," Skorobogatova said, according to news agency Interfax.Blockchain in focus Bitcoin has traditionally been known to allow users to make payments and money transfers anonymously.So it may seem that any taxation policy from the authorities could be difficult.bitcoin upload walletBut Walsh said some developments in the bitcoin community could make this policy feasible.bitcoin wallet location mac os xFirstly, bitcoin transactions have become slower and more expensive.ethereum coin stock

This makes the practice of trying to split up transactions to cover your tracks very difficult.Secondly, several start-ups have emerged that are able to use algorithms to track transactions on the blockchain - the public ledger of bitcoin activity.This could allow authorities to see who owns bitcoin.While Nabiullina admitted there were still risks with bitcoin, she expressed the Russian Central Bank's interest in blockchain technology.Because of the way blockchain technology can create a tamper-proof ledger of activity, many major banks are looking into how it can be used for tasks such as trading."I think it's more important to understand (the) benefits of new technologies … like blockchain which is on the basis of bitcoin," Nabiullina told CNBC.AS THE bitcoin price continues to fall, sceptics have started to wonder what will happen to the industry underpinning this digital “crypto-currency”.Around the world, hundreds of thousands of specialised computers have been built to create (or “mine”) bitcoins and, in the process, validate transactions and protect the system.

How does bitcoin mining work?The aim of bitcoin—as envisaged by Satoshi Nakamoto, its elusive creator—is to provide a way to exchange tokens of value online without having to rely on centralised intermediaries, such as banks.Instead the necessary record-keeping is decentralised into a “blockchain”, an ever-expanding ledger that holds the transaction history of all bitcoins in circulation, and lives on the thousands of machines on the bitcoin network.But if there is no central authority, who decides which transactions are valid and should be added to the blockchain?And how is it possible to ensure that the system cannot be gamed, for example by spending the same bitcoin twice?The answer is mining.Should the Lions pick all 15 players from one team?A new front in the legal fight over Donald Trump’s travel banQatar Airways wants a 10% stake in American AirlinesIreland and Afghanistan become the first new Test nations in 17 yearsWhy calculating a British parliamentary majority is so trickyHumanist nuptials are popular in Scotland but only beginning in UlsterEvery ten minutes or so mining computers collect a few hundred pending bitcoin transactions (a “block”) and turn them into a mathematical puzzle.

The first miner to find the solution announces it to others on the network.The other miners then check whether the sender of the funds has the right to spend the money, and whether the solution to the puzzle is correct.If enough of them grant their approval, the block is cryptographically added to the ledger and the miners move on to the next set of transactions (hence the term “blockchain”).The miner who found the solution gets 25 bitcoins as a reward, but only after another 99 blocks have been added to the ledger.All this gives miners an incentive to participate in the system and validate transactions.Forcing miners to solve puzzles in order to add to the ledger provides protection: to double-spend a bitcoin, digital bank-robbers would need to rewrite the blockchain, and to do that they would have to control more than half of the network’s puzzle-solving capacity.Such a “51% attack” would be prohibitively expensive: bitcoin miners now have 13,000 times more combined number-crunching power than the world’s 500 biggest supercomputers.Clever though it is, the system has weaknesses.

One is rapid consolidation.Most mining power today is provided by “pools”, big groups of miners who combine their computing power to increase the chance of winning a reward.As mining pools have got bigger, it no longer seems inconceivable that one of them might amass enough capacity to mount a 51% attack.Indeed, in June 2014 one pool, GHash.IO, had the bitcoin community running scared by briefly touching that level before some users voluntarily switched to other pools.As the bitcoin price continues to fall, consolidation could become more of a problem: some miners are giving up because the rewards of mining no longer cover the costs.Some worry that mining will become concentrated in a few countries where electricity is cheap, such as China, allowing a hostile government to seize control of bitcoin.Others predict that mining will end up as a monopoly—the exact opposite of the decentralised system that Mr Nakamoto set out to create.Dig deeper:Minting digital currency has become a big, competitive business (Jan 2015)How do bitcoin transactions work?