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Category: Cryptocurrency

28 Apr 2020

MICROSOFT WANTS TO MINE CRYPTOCURRENCY USING YOUR BRAIN WAVES

Microsoft applied for an unusual new patent that would read users’ brainwaves in exchange for cryptocurrency like Bitcoin.

The patent application, which has yet to be granted, describes a system that would scan a user’s brain activity or other biological signals to make sure they completed a task, such as watching a commercial. The system would then use those signals to mine for cryptocurrency like Bitcoin, PC Magazine reports, as a way to compensate the user.

We’ve Seen Worse
The logistics for how such a transaction would occur remain hazy: the application includes details on how such a system’s software may work, but less information on how it would actually be used.But this wouldn’t be the first time a tech company tried to patent absurd technology — it’s actually a fairly common practice, even though many of the systems described in these patents never get built.

Biological Captcha
Based on what information is available, the system seems ideal for a system like Mechanical Turk, in which workers complete quick tasks — like helping train AI algorithms — for small sums of money.

The idea there, PC Mag reports, is to make the process of proving that someone actually did the work quick and painless — albeit intrusive — instead of taking up time they could spend on the next job.

Source: https://futurism.com/the-byte/microsoft-mine-cryptocurrency-using-your-brain-waves

21 Apr 2019
Blockchain and Law: Some Insights on Using Blockchain in Governance

Blockchain and Law: Some Insights on Using Blockchain in Governance

We all know by now that blockchain has the capacity to disrupt and transform the way we live. But, how much and to what extent? Given the recent trends, it is expected that blockchain will become mainstream by 2020. For now, let’s explore its surpassing impact on the legal industry.

With respect to blockchain in the blockchain industry, a majority of the disruption lies in a scripting language and a set of protocols commonly known as smart contracts. You can see them disrupting banking, financial services, payment industries for now, though these disruptions are not limited to merely these industries. In simpler terms, smart contracts use blockchain to facilitate transactions and their use is preferable over traditional modes because of their ability to save payment and transaction costs and facilitate the instantaneous clearing of transactions.  

Given the disrupting effects that blockchain has generated over the course of years, by delivering increased convenience, reduced risk, efficiency for service consumers and lower cost of operations for financial services providers, it has become almost essential for lawyers to understand how to communicate securely and protect their client data.

Let us look at some of these governance use cases and their use cases for a blockchain development company in the legal industry.

E-discovery and Evidence: Changing the Rules of the Game

Traditionally, e-discovery software is prevalent in India and other jurisdictions abroad and are used to search documents, emails and other artefacts in the litigation discovery process. Given the fact that blockchain is an immutable and virtually infinite log, it is natural to expect that a majority of legal procedures will be supplemented with blockchain in obviating most evidentiary issues. But this also raises several perplexing issues, for instance, treating blockchain data as evidence will be a crucial problem in making blockchain legally accessible. For instance, in the United States, the standard for admissibility of evidence is dependent upon whether a human has sworn under penalty of perjury that the information is true. Stand-alone documentary evidence such as blockchain records are usually not permissible and are categorized as mere ‘hearsay’.

In India, similar evidentiary principles apply. For example, to submit evidence from the government or other sources, we produce the artefact and attach an affidavit to attest that the artefact was kept in the usual course of business and that the information in the artefact is true, to the best of the custodian’s knowledge. Blockchain technology, an immutable log of events, will change these evidentiary rules and in the process, create a more efficient documentary evidence standard.

Information Governance

It has been seen from past instances that law firms are relatively weak in terms of information governance and employ control mechanisms that are easily subject to breach. For instance, data break-ins at large law firms outside India have resulted in stolen client information, apart from reputational damages. Blockchain can secure this privileged information held by large law firms, especially those pertaining to contracts and other information that is legally protected. Futurists and technology vendors are working on realizing this vision as to how the blockchain will change the way lawyers operate.

Changing Privacy laws

Like any formal ledger, blockchain has the ability to become an official record for tracking the validity of transactions and other information. Though this record is effectively visible to all, individual elements of the transactions are encrypted and not publicly visible. Let’s say that if information pertaining to your passport is put on such a ledger, only the proof of transaction could be used publicly on a blockchain to prove your identity for purposes of validating that transaction, while your passport or other identity information might be securely encrypted. Hence, the underlying private data is secured.

On the other hand, there also exists the possibility of severe misuse of blockchain in breaching privacy laws. Nefarious transactions such as the sale of illegal goods or supporting a ransomware payment model can be easily facilitated through public blockchains, due to its anonymous nature.

In order to avoid these, financial organizations may be required by law to be able to permanently remove data when required to do so by a court. In Europe, GDPR is already under scrutiny with respect to its “right to erasure”, which presents issues that need to be addressed when personal information is stored in blockchain-based storage systems like IPFS, primarily since the information stored in the blockchain cannot be altered or deleted once added. With the data protection bill of 2018 in India in sight, it will be interesting to see how the law tackles these perplexing situations.

Another risk that may exist is where blockchain applications are implemented across multiple jurisdictions without a single entity responsible for their operation in any jurisdiction. Applications like these will be required to resolve issues relating to cross-border data flows and also address wider legal questions concerning enforceability, liability, dispute resolution, discovery and extraterritorial application.

Read more:
https://www.entrepreneur.com/article/332538

26 Jan 2019
Regulators snub SA cryptocurrency developers

Regulators snub SA cryptocurrency developers

Regulators have quietly barred cryptocurrency developers from having access to a tax incentive aimed at spurring innovation in SA. It is likely to hinder the country’s chances of being at the forefront of the fledgling digital money market.

But some say SA has far bigger things to worry about: Africa’s most advanced economy appears uninterested in experimenting with blockchain, the technology that powers cryptocurrencies and is slated to have a bright future in almost every industry.

Partly thanks to bitcoin’s torrid year in 2018 (prices slumped 72%), blockchain is starting to seize the limelight from the broader crypto market. In SA, that trend could be accelerated because authorities have sent the signal that they want no part in stimulating cryptocurrency innovation.

Digital currencies have been categorised as “financial instruments” in the Taxation Laws Amendment Bill, which means start-ups, incubators and other companies that develop cryptocurrencies in SA can no longer claim a large income tax incentive, says Rob Hare, senior associate at law firm Bowmans.

In that sense, SA could be shooting itself in the foot. It scuppered its chances of becoming a leading cryptocurrency innovator, a status that would help it attract sought-after technical skills and boost its endeavours to become a fintech hub for Africa. For that reason, Hare says it’s surprising that crypto developers have been snubbed by SA authorities, who have also offered no reasons for the move. “The supposedly small change of categorising cryptocurrency as a financial instrument is an unnecessary step in the wrong direction,” he says.

Incidentally, SA has produced one of the best-known cryptocurrency developers in the world. Riccardo Spagni, who lives in Plettenberg Bay, is the lead developer of the Monero cryptocurrency — the 14th biggest by market capitalisation.

But Monica Singer, the former Strate CEO who’s now ambassador for New York-based blockchain firm ConsenSys, believes SA’s regulators are being prudent — and rightly so. She says the National Treasury and the Reserve Bank are trying to ensure that SA is not seen as a tax haven for cryptocurrency developers, particularly in light of a spate of crypto-scams.

“Imagine how crazy it’d be to give a tax incentive for a scam; that would be a disaster,” says Singer.

On the other hand, she says blockchain — the decentralised public ledger system that records transactions and is largely tamper-proof — is an “ideal” technology for such concessions from the government. “The world is moving towards blockchain development in every industry,” she says.

Read more: https://www.businesslive.co.za/fm/fm-fox/digital/2019-01-25-regulators-snub-sa-cryptocurrency-developers/

17 Sep 2018
Manahel Thabet

5 Things You Need to Know Before Investing in Cryptocurrency

However, Bitcoin holders who bought at $19,000 probably rushed to sell their holdings when the Bitcoin price dropped to $15,000. As the bull market progresses, the risk of a major sell off increases. And this is what happened.

At the end of 2017, investors started realizing their gains which caused a minor correction. Then investors who came late to the party saw red in their crypto portfolio so they also started selling their holdings. Further selling means further price declines and that’s how a deep market correction develops.

The market correction brought down everything with it and you ought to be particularly careful with your crypto investments, especially if you participate in new ICOs. You are investing your hard earned income in crypto so make sure you get all the help you need.

To get you started, have a look at the 5 basic rules you need to know about investing in crypto.

1. Understand the risks you’re entering into

Make sure you understand the inherent risks you’re undertaking when buying crypto currencies (more specifically utility tokens).

  • When you buy into an ICO, you are buying into a startup. Most startups fail.
  • Most crypto (especially tokens that can’t be used yet because the platform is not live yet or in its infancy) is illiquid and easier to manipulate than securities
  • Crypto tokens (bar security tokens) don’t pay a dividend
  • Crypto markets are unregulated so a few big boys might corner the market at your expense
  • Also, what the Whitepaper states is rarely reflected in the Smart Contract and even worse, the founders sometimes keep the back door open in case they wish to amend the Smart Contract in the future (e.g. they allow themselves to change the supply of a coin after the ICO; or the Whitepaper mentions a lockup period but the Smart Contract doesn’t have any logic that locks up founders’ tokens). See here if you’d like to read more about this

2. Don’t be Silly

I get it – you see a few token shooting through the roof and you want to join the party. Crypto is risky – for the reasons I mentioned above. Start with small amounts and don’t go all in.

Keep your exposure to crypto to a reasonable level (and stick to it!). My current exposure to crypto is 5% of my total investment portfolio. I might consider upping it to 10% if the market goes much lower but 10% is my hard limit. Of course my exposure limit should be different to yours and your exposure limit depends on your age, your income, your level of wealth and in which asset classes you’ve invested your wealth in. Don’t copy my exposure limits!

Also, diversify your crypto holdings – especially in an asset class that largely depends on the speculation that a certain DLT platform will become popular. The more you spread your coins, the more likely you’ll hit the jackpot.

3. Be choosy

A deep market correction (including the crypto correction) brings everything down: good and bad tokens. Given that you’re within the exposure limits you’ve set yourself, buying during a severe market correction means you have the opportunity to shop around for great tokens at a deep discount.

Look at the drivers that support the price of a token

Go after those tokens with a strong, fundamental demand for the platform they support. Let me give you an example to show you what I mean.

You buy computation power on Ethereum by paying for Ether. Creating a new Smart Contract on Ethereum costs Ether; executing smart contract logic costs Ether and so on. Given that Ethereum seems to be the platform of choice to run Smart Contracts and in a world moving to automation and decentralization, one may take a position in Ether on the expectation that the demand for Ether (to execute even more Smart Contracts on Ethereum) will be strong.

If the thesis is correct, strong demand for executing Smart Contracts on Ethereum will underpin the value of the token in the long term.

Look for large economic moats

I’m not reinventing the wheel here – I’m borrowing the term from Warren Buffet, one of greatest investors out there. Economic moat refers to the degree of competition an Issuer faces (or will face in the future).

There are some business models which are harder to emulate than others. It’s hard to copy the brand loyalty that Apple has and it’s also not easy to build a double sided market place like eBay. On the other hand, it’s less difficult to build an Android-based phone and compete with Samsung. And, LED TVs are sold at low margins in a saturated market. Get the idea?

And this links to the point I made in Section 3.1 above. Most popular Altcoins execute the same function, have similar levels of market capitalisation and are (generally) equally accepted. In other words, they’re interchangeable. Buy coins that give you access to unique platforms if you want to sleep at night – especially in the current market conditions.

4. Don’t be Lazy

If you really insist on buying into ICOs, you need to get a lot of dirty work done. Around 600 ICOs went to market in the first half of 2018 (and I’m not mentioning those ICOs which didn’t reach their soft cap!) . That’s a lot of Whitepapers to analyse. Being a hard worker isn’t enough though:

  • You need to make sure you’re good at distinguishing a good startup from a bad one
  • You need to look at the founders, their expertise and their track record
  • Determine if certain major organisations are backing the blockchain application or otherwise

Or you can engage an advisor which does this. Really and truly, you need a team of analysts to sift through Whitepapers on an ongoing basis.

5. Technical Analysis is key

In a token world where no dividends are paid and no earnings are attributed to (utility or payment) tokens, it’s quite impossible to determine the fair value of a crypto asset (in the traditional finance world, the price of equity is a function of the future dividend that the Issuer is expected to pay). How much, say is Bitcoin worth? Coming up with a reply is impossible. If you can’t value an asset you can’t determine if you’re over paying for it or otherwise. It’s like walking blindfolded.

Technical analysis may come in handy (but trust me, it’s not a perfect science). Technical analysis is basically a study of how the psychology of the market is manifested in how a chart for an instrument looks. For example, when prices are going up and volumes dry up, you ought to be very careful with that price movement because it indicates that a very tiny portion of the market is participating in that price increase. Conversely, if there’s a market correction accompanied with large volumes in that token, then it should mean that the correction is supported by a relatively large portion of the market.

Source: Blockonomi

19 Aug 2018
Manahel Thabet

TECH Ripple’s CTO invented a distributed computer system 20 years before blockchain

he mysterious Satoshi Nakamoto is often credited with inventing blockchain – the tech behind the recent cryptocurrency and decentralization boom. But long before Nakamoto published his seminal paper that shaped Bitcoin as we know it, Ripple $XRP▼3.08% chief technology officer David Schwartz had already come up a similar concept.

Almost 30 years ago on August 25, 1988, Schwartz filed a patent for a “multilevel distributed computer system” that would “preferably” run on “personal computers.” The technology was designed to leverage the combined processing power of numerous devices to accomplish singular tasks.

Three years later, Schwartz was eventually granted the patent. While the undertaking ultimately didn’t pan out, we spoke with the Ripple CTO about what his vision for the distributed system entailed – and how it overlaps with today’s blockchain tech.

The origin story

One of the main problems Schwartz, whose background is in cryptography, was trying to solve was how to distribute computing-intensive tasks (that would’ve been otherwise impossible to process by a single machine) to a network of devices.

“A distributed computer system is a network of computers each of which function independently of but in a cooperative manner with each other. Versatility of a computer system can be increased by using a plurality of small computers, such as personal computers, to perform simple tasks and a central computer for longer more complex tasks,” the patent documentation reads. “Such an arrangement lessens the load on the control computer and reduces both the volume and cost of data transmission.”

“I was working on graphics rendering problems that require significant amounts of CPU power,” Schwartz told Hard Fork. This is how the idea for his invention was born – and ironically, how it came to a halt.

“CPUs improved in performance much more quickly than expected and there didn’t seem to be much need for distributing tasks dynamically to CPUs with available processing power,” Schwartz explained.

But before this so-called distributed computer system got shelved, the cryptographer and his team were able to run some experiments on the technology.

“We had a working implementation that generated images of fractals,” Schwartz revealed to Hard Fork. “You could add more CPUs to the cluster and workloads would dynamically distribute to them.”

Distributed computing and blockchain tech

That said, Schwartz’s system was far from perfect. For one, establishing a connection between various computers was much more complicated back then than it is now. Another challenge had to do with breaking the intended tasks down into smaller portions that can be processed and transferred from one computer to the next.

While the invention of the internet has mostly solved the interconnection issue, some of the issues Schwartz encountered back in the 1990s continue to persist today. Indeed, breaking down large network components into smaller portions is a challenge Ethereum is still trying to solve.

As far as Schwartz’s adventure into distributed computing from 30 years ago goes, he says the experience is still coming in handy in his work today.

“It does seem that the things I worked on in the past keep coming up in the things I’m working on now,” Schwartz added. “I think that’s more just due to most of my work being in the same general area of distributed computing and cryptography.”

Source: https://thenextweb.com/hardfork/2018/08/16/blockchain-cryptocurrency-bitcoin-ripple/

08 Aug 2018
manahel thabet

This app makes writing Ethereum smart contracts super easy, perhaps too easy

Writing smart contracts for Ethereum $ETH▼8.17% is no longer the preserve of coders and programmers: there is now software that can automatically do that for you – or so the claims go.

Enter Fondu. The app provides a tool that helps non-coders get into the Ethereum smart contract game and launch their ICO without the need for learning how to code, or even pay a coder to write it for them.

The process is simple. All you have to do is answer some questions regarding the characteristics of your ICO, and the required code is automatically generated. The files required to launch your ICO are also made available for download. What’s more, the deployment program is also included in the downloaded files, so it will walk you through the launch process too.

I was concerned that if more tools like this become prevalent, the market would begin to see a flood of weak, buggy or illegitimate ICOs, compiled by people with no intention of delivering a product or service attached to the ICO’s token. However, Kolmogorov believes that this won’t be the case, as an ICO smart contract is such a small part of the overall launch of a cryptocurrency or token.

Nikita Kolmogorov assures us, “I’m pretty sure that my tool — making ICO’s slightly more accessible — will not cause any new scam-projects to appear. They would’ve appeared even if I didn’t launch the product — and fortunately, smart-contract is like at most 10 [percent] of the ICO costs, so a scam company wouldn’t benefit from it that much. Even more — just launching website, smart-contract and media-campaign is no longer enough to hold a successful token sale, so we should be safe here.”

That said, this isn’t a guarantee, clearly Kolmogorov means well and has honest intentions, but there is nothing to stop Fondu becoming a factory for future “shitcoins.” The market was already saturated with mindless cryptocurrency projects – many of which are now defunct.

If a project like Fondu makes it easier to start a cryptocurrency project, it’s reducing a barrier to entry which might be good, but it also opens the flood gates for anyone to get involved. And as history has taught us, not everyone’s intentions are as pure as Kolmogorov’s.

Kolmogorov continued, “Way more important is that now anybody can launch ICO with ERC20 [a popular Ethereum token protocol] tokens in [about] 15 minutes. My real cause here is to democratize the ICO and crowdfunding concepts. So that anybody can launch crowdfunding or token sale campaign in no time and for free. Like a house-wife or a house-husband launching a book club economy with ERC20 tokens. Could you imagine this before? I couldn’t — that’s why I tried to reimagine things.”

If we have whole swathes of inexperienced coders developing and deploying smart contracts with little motivation to build quality products – or worse, a huge ambition to build products that might not be all that well-engineered. Consider the fact that one single bug in a smart contract wrought havoc across the entire Ethereum blockchain.

Currently, Fondu is just a proof of concept to see if functional smart contracts could be written and deployed from just a few clicks of a mouse. Fondu urges users to check the code before it is deployed, so some knowledge – or rather access to someone with knowledge – is still required, so it’s not a full democratization of smart contracts just yet.

It’s clear that Fondu is trying to do a good thing, and bring the world of the Ethereum blockchain and smart contracts to the masses and the average Joe, but as is the case with most do-good software, there is nothing stopping bad guys from using it to their advantage.

Source: TNW

02 Aug 2018
Manahel Thabet

SBI Invests $9 Million in Institutional-Grade Cryptocurrency Derivatives Platform

Japanese financial services giant SBI Holdings has invested $9 million in U.S. digital marketplace architect Clear Markets to fund the latter’s creation of a cryptocurrency derivatives trading platform built for institutional investors.

Nikkei Asian Review reports that SBI Crypto Investment has obtained a 12 percent stake in Clear Markets, which is headquartered in Charlotte, NC and has branch offices in New York, London, and Tokyo. Though the terms of the deal were not disclosed, the publication states that SBI likely paid 1 billion yen ($9 million) for its minority ownership position in the company.

In funding Clear Markets, SBI aims to build a derivatives exchange that allows institutional investors to trade investment products tied to the price movements of bitcoin and other cryptoassets. Such products — which may include futures, options, and swaps — allow institutions to hedge other positions that they may have in the cryptocurrency market, reducing risk and enabling them to lock in profits or mitigate losses.

Along with lack of access to regulated custodians, the dearth of cryptocurrency derivatives products is often cited by institutional investors as a reason that they have not felt comfortable allocating capital into this burgeoning industry.

At present, the U.S. is home to two regulated exchanges — CBOE and CME, both based in Chicago — that offer bitcoin futures contracts. Cryptocurrency trading platform LedgerX offers institutional investors several other derivatives products, including calls, puts, and day-ahead swaps, but it has yet to attract consistent, meaningful volume.

Nevertheless, industry analysts are confident that the tide will turn over the course of the next calendar year, largely due to the entry of new custodians into the market and the development of new platforms that provide institutions with more flexibility in how they obtain exposure to cryptoassets.

Earlier this month, SBI became the first banking institution to directly launch a cryptocurrency exchange. That platform, VCTRADE, serves Japanese retail investors.

Previously, SBI — which has formed a close partnership with U.S. blockchain startup Ripple — led funding rounds in several large cryptocurrency exchanges, including the Tokyo-headquartered bitFlyerand the San Francisco-based Kraken.

Featured Image from Shutterstock

Source: CNN

17 Jul 2018
Manahel Thabet

BitPay Becomes New York’s First Standalone Crypto Payment Processor

Cryptocurrency payment processor BitPay has become the eighth firm to receive a “BitLicense” from the New York Department of Financial Services (NYDFS), which oversees what is arguably the most-restrictive state-level framework for the U.S. cryptocurrency industry.

The NYDFS announced on Monday that it had approved the Atlanta-based BitPay’s application, following a “comprehensive review” of the firm’s anti-money laundering, anti-fraud, capitalization, consumer protection, and cybersecurity policies.

“DFS welcomes BitPay to New York’s expanding and well-regulated virtual currency market,” said Financial Services Superintendent Maria T. Vullo. “We continue to work to support a vibrant and competitive virtual currency market that connects and empowers New Yorkers in a global marketplace while ensuring strong state-regulatory oversight is in place.”

Beginning today, BitPay can process cryptocurrency payments for New York merchants and residents, and the license also authorizes the company to issue cryptocurrency-funded debit cards in the state. At present, the company, which was founded in 2011, supports bitcoin and bitcoin cash.

BitPay is the first standalone cryptocurrency payment processor to receive a BitLicense. Coinbase, which received its virtual currency license in 2017, also operates a merchant platform, but its core business revolves around cryptocurrency trading.

“New York state has one of the strictest policies around businesses involved in cryptocurrency and working through the approval processes to obtain a License was important to BitPay,” said Stephen Pair, CEO of BitPay. “We believe this hard work will pay off as New York presents significant business opportunities for BitPay.”

BitPay is just the eighth firm to receive a full BitLicense, despite the fact that the framework has been in force since 2015. However, the NYDFS has approved half of those applications in the past three months, perhaps suggesting that the agency is becoming more comfortable with the nascent but maturing industry.

Other NYDFS virtual currency license recipients include Square, Xapo, Genesis Global Trading, bitFlyer USA, Coinbase, Ripple (through a subsidiary called XRP II), and Circle. Gemini and Paxos (formerly itBit) have received NYDFS charters but not full licensure.

Source: Futurism

11 Jul 2018
Manahel Thabet

Ledger Sold 1 Million Crypto Hardware Wallets in 2017, Attracts Investors in Samsung and Google

Leading hardware crypto wallet manufacturer and developer Ledger sold more than 1 million hardware wallets in 2017, recording a profit of $29 million.

In an interview with Forbes, Ledger president Pascal Gauthier stated that the lack of secure platforms which users can utilize to sign transactions on the immutable public blockchain led the demand for Ledger and hardware wallets in general, to rise.

“Blockchain itself is secure, but signing on the blockchain is a flaw. If you lose the [private key], there’s no bank looking after your assets or any way to recover them,” Gauthier told Forbes.

Eyeing Another Multi-Million Dollar Funding Round

In early 2018, Ledger raised $75 million led by billionaire early stage technology investor Tim Draper and Draper Venture Network funds. The Series B funding round of Ledger was a significant boost from its previous Series A funding round that closed a $7 million investment.

After having recorded a profit last year with impressive financial results, Ledger is set to raise yet another multi-million dollar funding round this year. Already, some of the largest technology conglomerates in the world such as Samsung, Siemens and Google’s ventures arm have viewed the financials of Ledger, with interest of investing in the company, Forbes revealed.

The previous Series B funding round of Ledger was mainly utilized to improve the infrastructure of Ledger and creating products targeted at retail traders and individual investors. In the future, Gauthier said that the company will focus on delivering products for large-scale institutional investors, whose entrance into the cryptocurrency sector is considered to be imminent primarily due to the debut of Coinbase Custody.

Currently, the majority of large-scale investors holding bitcoin are using vault systems of Xapo and Coinbase to store their funds. But, requesting vaults to hold massive amounts of bitcoin still require investors to trust the operators of the vault.

The vision of Ledger in the long-term is to enable an ecosystem that will allow even large institutions to hold cryptocurrencies like bitcoin, ether, and tokens without relying on third party service providers.

“You need a Ledger Nano S solution for institutions, products that are made for big and small financial institutions,” Gauthier explained, emphasizing that clients are “queueing” outside the office of Ledger in France to buy Ledger Vault.

Increasing Demand for Hardware Wallets is Positive

In 2018, the cryptocurrency sector has seen four major hacking attacks, suffered by Coincheck, Bithumb, and Coinrail, large crypto exchanges in the Japanese and South Korean crypto market.

Coincheck for instance experienced a $500 million hacking attack, due to a simple error in the company’s decision making to store all of its funds in NEM in a hot wallet.

The fundamental purpose of cryptocurrencies as decentralized peer-to-peer financial networks is to enable anyone on a public blockchain to send and receive information securely, in a trustless manner. Rising demand for hardware wallets like the Ledger Nano S and Ledger Vault demonstrate increasing awareness of cryptocurrency investors and users on the importance of security and non-custodial platforms.

Featured image from Ledger.

Source: CNN

09 Jul 2018
Manahel Thabet

How A Leading Cyber Security Company Uses Blockchain Technology To Prevent Data Tampering

While cryptocurrencies remain vulnerable to a number of cyber security attacks, the underlying blockchain technology is being used to protect user data from being modified.

We believe that blockchain technology will be transformative in the tech and IT sector in the coming years, similar to what the internet did for the world back in the 90s and early 2000s,  said John Zanni, President of the Acronis Foundation. We started a few years ago working with the Ethereum blockchain to see how to better protect data. Today, part of our storage and backup software lets users notarize any digital data and put that fingerprint on the blockchain to ensure it can’t be tampered with.

As the physical world meets the digital world, data has become a key player for a number of businesses. Yet ensuring that data remains safe, secure, private and authentic has become an ongoing challenge.

For example, the recent Equifax cyber-security breach that occured in September 2017 compromised sensitive information of nearly half the U.S. population. Cybercriminals accessed approximately 145.5 million U.S. Equifax consumers’ personal data. Equifax has also confirmed that at least 209,000 consumers’ credit card credentials were taken in the attack.

Moreover, one of the biggest challenges a business faces today in terms of cybersecurity is “data tampering,” which is the threat of data being altered in authorized ways, either accidentally or intentionally.

Authenticity of data is actually one of the most important factors when it comes to cyber protection. Data can always be changed and modified, Serguei Beloussov, CEO and founder of Acronis, told me. Blockchain technology can be used so that data can be signed with a digital signature. That digital signature, called hash, can then be stored on either a public or private blockchain ledger, which is highly immutable, making its possible to check if data was modified at any given time.

How Blockchain Technology Protects User Data

While blockchain technology is most commonly defined as a decentralized, distributed ledger used to record transactions across multiple computers, it can also be seen as a distributed database that maintains a growing list (also known as a chain) of data transaction records.

Consider that every participant of this decentralized system has a copy of the list of transactions. This means that no “official” copy exists. The distributed nature of the chain prevents tampering and revisions, as every action on the blockchain is fully transparent. In turn, data that is stored on a blockchain can easily remain authentic, since the security of every transaction is recorded.

For example, in order to ensure that data isn’t tampered with, Acronis applies blockchain technology to compute a cryptographic hash, or “fingerprint,” that is unique for each data file it stores. This hash is an algorithm that produces the same output when given the exact same input file, making it useful for verifying the file’s authenticity. Any change in the input file, however slight, results in a dramatically different fingerprint. Because the hash algorithm is designed to work only in one direction, it is impossible to determine the original file inputs from the output alone, making the process tamper-proof.

Let’s image that we have a piece of data and we create a unique description for this data. Even if we modify only a single bit of that data and generate the signature again, created hash value will be completely different. So such hash value is effectively a unique signature of your data, explained Beloussov. With Blockchain, you store that hash in multiple places, so you have multiple journals where you have written your signature in a specially encrypted fashion. If someone would want to modify such a record, they will have to get all of those places to agree to modification. Even after that, one would need to spend a lot of compute capacity to un-encrypt it from all of the journals after the record, and encrypt it back. Even if this theoretically could be possible to get done, it would be extremely expensive to compute, as well as complicated

Dr. Abdalla Kablan, who is a renowned fintech expert and advisor on blockchain and AI for the Government of Malta, further explains why data stored on the blockchain is immutable.

Typically, once data is stored on the blockchain it cannot be manipulated or changed – it is immutable. This is because of the architectural nature of blockchain structures where every block has a specific summary of the previous block in the form of a secure hash value.  Since these blocks are structured in the form of a ‘chain’ sequence, the timing, order and content of transactions cannot be manipulated. Also, these blocks cannot be replaced unless all the ‘nodes’ achieve consensus or agree with the proposed change, Dr. Kablan told me.

Blockchain In The Real World

When applying blockchain technology for protecting against data tampering in the real world, common use cases often involve protecting transaction logs, proving the existence of legal documents and even confirming creative works originated on a certain date.

For example, a use case might involve a musician who is skeptical about publishing music on the internet due to plagiarism and other security concerns. Using blockchain technology, however, allows the artist to create a backup that contains pieces of digital music or other materials that can be copyrighted. Once the backup is complete, a certificate with cryptographic evidence is issued to help copyright claim, in case of infringement. The record of the original music pieces and their creation dates are recorded in the blockchain, allowing for confirmation that a piece of music existed at a certain time in the past and was authored by that artist.

“In general, blockchain technology today focuses mainly on cryptocurrency and fintech. Yet the world needs to look beyond that to see how businesses and individuals can take advantage of this technology. The day someone figures out how small businesses can apply blockchain technology in a multitude of applications is the day it will really flourish,” said Zanni.

Source: Forbes