Category: Cryptocurrency

30 Jun 2018
Manahel Thabet

How Scalable Blockchain Technology Can Bring Us Closer to Earth 2.0

There’s more to blockchain than Bitcoin.  The cryptocurrency may be one of the most infamous names associated with the platform, but the possibilities for blockchain technology extend into industries far beyond finance. Just ask the third generation blockchain, RChain.

Some of the most imaginative uses for blockchain technology sound like the gadgets and networks that exist only in the world of sci-fi. But the speed and scalability made possible by new blockchain providers are making a futuristic universe more than just a fantasy. The technology has the potential to drastically change the way we mobilize, design smarter communities, and help crack the code on creating social impact.

One of the industries that stands to gain the most from blockchain innovation is transportation. We’ve come a long way from the horse and buggy, where autonomous cars powered by a speedy and secure blockchain network are part of a future where fewer people waste time in traffic and more people have access to a safe ride. The cars will improve safety by eliminating human error that leads to road accidents, and autonomous car services could provide new ways for an elderly non-driver to get to a doctor’s appointment, for instance, or for a tiring commute to turn into extra nap time. An autonomous car owner could also rent their car out via a secure blockchain network, turning an autonomous vehicle investment into another revenue stream.

And the technology doesn’t have to be limited to cars. Amazon has dreamt of a future where autonomous drones deliver its packages, but the potential for a blockchain system that can power such a feat can do more than just same-day delivery. An NGO, for example, could use autonomous drones to send supplies to tsunami victims from Australia to Indonesia. As soon as word spread about the disaster, people from around the world could log into a blockchain-run app that would allow them to instantly donate. More importantly, because of the speed and security only possible on a peer-to-peer blockchain network, that organization would be able to instantly access those funds and start their relief efforts, minimizing the transactional costs and red tape most organizations face in such moments.

Imagining and executing the technology possible to run these kinds of civic applications is critical in today’s world, said Greg Meredith, president and co-founder of RChain, a company creating a blockchain platform that allows its developers to dream big.

“We have to coordinate at a level we have never coordinated at as a species,” he told Futurism. “We have to be able to form groups that are as agile as the best dancers, as clear-minded as the best poets and mathematicians and software engineers. The good news is there are all these coordination technologies that we’ve barely scratched the surface of. It’s a place where tech in the sense of bits and bytes and code meets tech in the sense of how we govern ourselves.”

Credit: Photographer is my life/Getty

The spirit and ability necessary to govern ourselves has gotten lost in industries plagued by bureaucratic slog, inefficiency, and paperwork. But a blockchain technology seamlessly woven into our stodgy systems could make expensive, time-consuming, or confusing tasks suddenly easy and affordable.

“There are so many applications of blockchain technology, it’s hard to know where to start,” Dr. Mike Stay, the CTO of Pyrofex, the partnering company building out the RChain blockchain, told Futurism. “If you’re buying a house, you’ll be able to check a title claim on the blockchain instead of purchasing title insurance for thousands of dollars. You’ll be able to see the history of repairs on your car instead of paying Carfax or AutoCheck. If a company does all its transactions on blockchain and the auditors run some of the nodes, then the audit process is orders of magnitude cheaper.”

In addition to saving time and money thanks to these applications, citizens could also be rewarded via the blockchain for the efforts towards creating a smart community. For instance, a city looking to control water consumption to avoid drought could incentivize homeowners by offering them cryptocurrency via the blockchain that they could then use at local stores or restaurants. Similar rewards exist today, but companies or governments waste valuable time and money on the labor and transactional costs that it takes to distribute those rewards. With the scale of a blockchain like the one the RChain envisions, those incentives could be distributed immediately at a fraction of the cost.

Developing and maintaining these smarter communities could reinvigorate geographic areas that have been restructured as a result of industries dying or relocating, said Nash Foster, the CEO of Pyrofex.

“I became very interested in Greg’s [Meredith]  ideas about decentralization of the global compute infrastructure,” Foster told Futurism. “I realized that Greg’s vision dovetailed with my own desire to re-energize American communities that had been left behind over the last few decades. I’ve seen many of the communities I love lose access to the productive economy as manufacturing and technology jobs were moved overseas. I have long been interested in finding a way to use the Internet to create more economic opportunities in such areas.”

Pyrofex, helmed by Foster and Stay, is one of the many companies investing in a future with RChain. Stay is a longtime colleague and collaborator with Meredith, and their research efforts formed the mathematical foundations of RChain’s technology. Like many of the collaborators behind RChain, they understood the possibilities of the blockchain platform but felt stifled by the limitations of its architecture. They knew that the massive centralized data centers that brought us search engines and social media lack the speed and efficiency to power autonomous vehicles and smarter communities. But they also knew that many of the current blockchain technologies were never designed with scale in mind. Original blockchain architecture relies on a single chain that works for small endeavors, but isn’t equipped to handle massive growth without taking up the energy supplies of entire countries.

RChain approached blockchain with that massive growth in mind, setting out to create a network that would have the scale of Facebook and the speed of Visa credit card transactions. Their decentralized system is powered by what they call the Rho Virtual Machine, or RhoVM.

Rather than having to only build up, bit by bit, the RhoVM allows for a network of parallel blockchains. That means that as the platform continues to grow, it can manage the load by building out linearly on top of a solid and secure foundation. Any kid who has played with building blocks can understand the technique. A tower made of a single stack of blocks will crumble in under a minute. But a fortress built short and wide with a strong base is one that will act as a foundation for several more hours of block building.

It’s only a foundation like RChain’s that can support the growth necessary for futuristic blockchain applications like autonomous medicine-delivering drones or smarter communities free of bureaucratic inefficiency. While RChain achieves scaling and safety through fundamental mathematics and computer science, other blockchain infrastructures might attempt to engineer around a problem to manage such a feat in a lab, but to operate on a global scale, these burgeoning technologies need the speed, efficiency, and scale of RChain’s RhoVM. With the help of a growing network of partners, developers, and bright minds that won’t settle in the past, they’re welcoming a future full of sci-fi dreams made into reality.

Source: Futurism

24 Jun 2018
Manahel Thabet

3 Reasons Why Bitcoin Market Remains Optimistic Despite $6,000

On June 23, CNBC Fast Trader hosted a show dedicated to presenting the “Bitcoin Funeral,” a witty introduction to BKCM founder and cryptocurrency investor Brian Kelly’s discussion on the recent bitcoin correction and its future price trend.

Three Reasons why Bitcoin Isn’t Dead

On CNBC Fast Trader, Kelly outlined three major reasons bitcoin will recover in the mid-term back to its previous support levels at over $10,000:

Negative sentiment from investors signalling imminence of a bottom
Positive development within the Japanese cryptocurrency exchange market
Mt. Gox liquidation of bitcoin postponed to 2019

Referring back to the basic rule of investing, Kelly noted that during a period in which the market is extremely bullish and optimistic, it is better to sell and eye a timely opportunity to enter and when the market is overly pessimistic, it is wise to look for a position to enter.

Given the negative sentiment towards the cryptocurrency market by investors, Kelly explained that the major correction of the cryptocurrency market will likely bottom out in the near future, likely in the next two to three months to begin a mid-term rally in the fourth quarter of this year.

More importantly, Kelly stated that the Japanese government’s move to tighten regulations, clean up the cryptocurrency market, and legitimize the Japanese cryptocurrency sector is a positive development for the long-term, as it would prevent major hacking attacks like the Coincheck security breach and allow investors in the public market to gain trust in local exchanges.

Kelly said:

“Japanese exchanges were ordered to improve business conditions [by the government]. It’s actually a good thing. Short run it’s going to be a little tough because they’re stopping new accounts from coming in but actually they’re cleaning up the system. They’re making sure it’s more robust. Making sure it’s better for people.”

South Korea, the third largest cryptocurrency exchange market behind the US and Japan, have also started to prepare a cryptocurrency regulatory framework to regulate cryptocurrency exchanges as banks, to prevent hacking attacks and money laundering, while legitimizing the cryptocurrency sector to protect investors and set an industry-wide standard for businesses.

No More Mt. Gox Liquidation

Throughout 2018, several Mt. Gox sell-offs of tens of thousands of bitcoin led the market to crash, preventing BTC from gaining momentum at certain periods.

Kelly emphasized that the delay of Mt. Gox bitcoin sell-off until early 2019 is an optimistic factor to consider, as a major factor to a potential market sell-off has been eliminated, at least in the mid-term.

“Mt. Gox is going into rehabilitation and they’re going to distribute the rest of the $1 billion worth of bitcoin. But here’s what is great about that, they’re not going to distribute it until quarter 1 of 2019. All of the sudden everyone thinks there is going to be a wave of selling. Not happening now,” explained Kelly.

The three factors outlined by Kelly could fuel the next mid-term rally of BTC and the positive developments in the Japanese and South Korean cryptocurrency markets will enable the market to grow with stability and trust from investors, that will be largely beneficial in the long run.

Source: CNN

17 Jun 2018

Blockchain Technology Can Revolutionize Global Healthcare Systems

Healthcare in developing parts of the world has remained below standard over a long period of time. The reasons for this can be related to system weaknesses in terms of leadership, governance, workforce, technology, finance among others.

Traditional implementations in attempt to achieve lasting solutions to these problems have left the people going round in circles with most nations depending on international aides. Perhaps the lack of motivation by healthcare beneficiaries who usually go through rigorous processes also plays a huge role in the existing setbacks experienced.

Blockchain in Healthcare, a Growing Trend

Blockchain implementation in the healthcare industry is becoming popular practice. It is being adopted for several purposes which include enhancing supply chain management, especially in the pharmaceutical sector. Data and process management, security and information confidentiality, public health surveillance among other purposes are also being enhanced using blockchain.

Tokenization appears to be one of the most dynamic aspect of blockchain technology that is enabling the extended flexibility ever present in its implementation. The existence of underlying tokens has enabled trustless and transparent transactions and goes a long way to reducing the human influence that has been blamed for most of the bottlenecks that exist within administrative settings. Payments, rewards and incentivisation processes have also been sanitized using smart contracts, thereby re-establishing trust and building motivation for participants in blockchain settings.

With the achievements made so far, it is no secret that blockchain technology presents immense opportunity for healthcare on a global scale. Digital Health expert and CEO of Izzy Care, Kenneth Colon tells CCN that one of the biggest promises of blockchain technology is enabling patients to monetize their health data, if they so choose, allowing them personally to benefit financially from their data, and not the corporations who traditionally maintain control of this data.

Rewards for Regimen


Colon elaborates that blockchain technology can further be used to tokenize a patient’s health and wellness. For example, token rewards can be issued, in a trustless fashion with smart contracts to patients for following their prescribed treatment regimen and making progress towards their personal health and wellness goals.

Such development is expected to enable patients across the globe to bring down the cost of their medical care and benefit financially from achieving their personal health goals.

With the proper structure, token economies could also enable the subsidizing of care for individuals and families with little-to-no annual income, who otherwise may be unable to afford access to the high-quality care they deserve as is obtainable in most developing nations.

Blockchain Alone Is Not Enough

As promising as blockchain technology is, however, it is also important to note that blockchain alone isn’t enough to solve healthcare globally.

One of the key areas that must be addressed is what kind of care is delivered. The type of one-off, transactional model we currently see in healthcare like local and international aides as mentioned above appears to be counterproductive. These methods have a way of discouraging patients from seeking help in the first place, considering the stress and rampant mismanagement that exist in such circles. The siloed nature of this care is equally counterproductive. You cannot expect someone, a patient, to thrive if you’re not caring for them holistically, taking into account their general medical needs, mental health, nutrition, etc.

The focus should be on some robust, all-inclusive payment models to deliver highly personalized, integrated care. This means treating patients as individuals, instead of a one-size-fits-all approach, and taking into account not only their physical health, but their mental health and access to proper nutrition.

Hence, it is also necessary to address provider shortages by embracing other technologies and using them in conjunction with blockchain. For example, using artificial intelligence to further automate clinician workflows, enabling healthcare providers to focus on higher-yield tasks, such as seeing more patients and forming stronger patient-doctor relationships. Or utilizing telemedicine (encrypted messaging, live video) to bridge provider gaps, connecting patients and providers across the globe.

Solutions that allow patients to monetize their own data, reward patients for engaging in their care and drive down costs, make treatment accessible to all, support the evolution of delivery models to support precision medicine and integrated care, and embrace technologies to automate workflows and help physicians have higher-quality interactions with more patients, I believe, are crucial for the advancement of healthcare worldwide.

Images from Shutterstock

Source: CNN

07 Jun 2018
Manahel Thabet

The SEC Is Not Messing Around, Appoints New Leader To Tackle Crypto

21 May 2018

A Crypto-Trading, Floating Island Nation Promises Utopia, If It Happens

Imagine a world where millions of people abandon the land to live on the sea. On their floating habitats, and free from governmental overreach, people can dine on sustainable algae and live in harmony. They can sail from their own artificial island micro-nation to whatever country they’d like to be part of for a day. Plus, the people would trade exclusively using the cryptocurrency Varyon.

But this isn’t just a strange thought experiment. The Floating Island Project is a very real collaboration between the Seasteading Institute and Blue Frontiers. The latter intends to build floating island habitats after selling enough of the cryptocurrency Varyon to fund the ambitious endeavor. The team hopes to launch the first settlement by 2020, as Futurism previously reported.

In an interview with CNBC, Nathalie Mezza-Garcia –researcher for the Floating Island Project – spoke about the project’s goals to create hundreds of floating island-nations, where people could live by whatever rules they so please. Other goals include: housing refugees who are displaced as climate change gives rise to higher sea levels, enriching the poor, curing the sick, feeding the hungry, living in balance with nature, and powering the world.

But ultimately, it does seem like a daydream. Advanced, sustainable island technology is flashy, downright awesome, and makes for an invigorating experiment on how future societies could interact with the world. But thus far, it seems little thought has been given to how all of this will work.

It may be difficult to convince the various nations of the world to interact or trade with these floating libertarian utopias, especially if the seasteaders intend to float in and out of sovereign waters as they so please while basing their entire economy on a cryptocurrency. One can tell from the history of the Principality of Sealand that it’s no small task for new, small, seafaring nations to be recognized by their neighbors.

And all this leaves out that the Floating Island Project’s original goal is to help people — like the indigenous and other marginalized people who are displaced by climate change. So far, it’s unclear how they’re supposed to buy into these high-tech, floating vessels. Rather, we may have just found the next great plaything for the rich.

Source: Futurism


19 May 2018
Manahel Thabet

Bitcoin Is Going To Use As Much Electricity As Austria By The Year’s End

At this point, mining Bitcoin requires such intensive, specific hardware that the only way for most people to get in on the crypto game is to simply purchase the coin via an exchange. But that doesn’t mean mining has slowed down. Rather, the opposite has been happening, giving environmentalists (and anyone but the most adamant cryptobros) cause for concern.

Between cooling fans, manufacturing hardware, and the outrageous, ever-rising energy costs needed to operate a bitcoin mining rig, the world’s Bitcoin network is expected to use as much as 7.67 gigawatts of power by the end of 2018, according to new research and models. That’s one two-hundredth of all the electricity used on the planet. And that’s terrible.

Let’s put that another way. According to that research, which is admittedly based on some imperfect assumptions and averages, the Bitcoin network currently uses about as much power as the entire country of Ireland (which uses 3.1 gigawatts) and is expected to grow to the same energy consumption level as Austria, which is currently at 8.2 gigawatts.

The world’s population is right around 7.6 billion people. If everyone used the same amount of energy (which they don’t but bear with me) that would put Bitcoin’s energy consumption — and toll on the environment — at the same level as that of 38 million people.

Now, this certainly doesn’t mean that bitcoin should be cancelled. And while it seems like nothing can convince crypto fans that bitcoin is anything but the way of the future, these findings show just how much of an impact the cryptocurrency is having on the world. And not a “we’re gonna take back the financial markets and build a better tomorrow!” kind of impact. More of a tangible “oopsy-daisy, we’re accidentally scorching the planet” kind.

If cryptocurrencies are truly going to become the money of tomorrow, then we’ll absolutely need to grapple with the environmental damage caused by this major energy suck (assuming the price of Bitcoin continues to climb). Or, figure out how to mine more efficiently. Because again, in the next six months we may see Bitcoin using as much electricity as a major industrialized nation.


Source: Futurism


15 May 2018

How Finance Began 4000 Years Ago, And Why Blockchain Will Completely Change It

The blockchain, the technological innovation underpinning cryptocurrency, has profound implications for the ability of a state to govern its people. To really understand these implications, one must first understand the complex relationship between the state and money, the role of the state in the formation of currency as we know it today, and the state’s use of money as a tool of governance. Money is not simply a unit of account, a store of value, and a medium of exchange—it is a governance institution, designed to organize, incentivize, and control the people of a state. As early as the fourth millennium B.C., we see the hand of the state setting the rules of the financial system. In Ancient Egypt, gold bullion of a set weight was established by the political authority of the time as the standard measurement of value—the dominant unit of account. The same was done in Mesopotamia with silver.

The state’s role in money only expanded from there.  The minting of coins from precious metals expanded the state’s ability to set the unit of account. By the eleventh century A.D., so-called “free minting” came to be a common practice in medieval England. Free minting, contrary to what the name implies, was a service provided by the Crown for a fee. Individuals could bring gold or silver bullion to a mint and have it melted down and returned in coin form, known as pennies.  The Crown used pennies as the unit of account in which it collected taxes, which forced people to either hold pennies or mint them to meet their tax obligation. This, essentially, created a demand for coined money and gave the state monopoly power over currency minting.

In late 17th century England, the supply of silver coins was running low. War expenses were on the rise, and the Crown needed much more than they were able to collect in taxes. This led the state to partner with the private sector to create the Bank of England—a private institution which had the legal authority to create money in the form of loans to the state. The money would take the form of bank notes, which the state could then circulate through society by spending. The Crown also created a demand for them by collecting taxes in bank notes. This gave people a reason to hold onto this form of currency, rather than immediately exchanging it for precious metals. The Bank of England would receive interest on its loans as well, which incentivized them to make the loans in the first place. This is the birth of the central bank—a private institution granted the legal authority to create money by the state. Central banks synthesize public authority and private investor interest to create a standardized and expandable currency for use in both the public and private sector.

The Gold Standard, the former monetary system of the United States, operated by the same rules. The Federal Reserve promised to redeem dollars for gold on demand.  Thus, the “value” of a dollar was backed up by the state’s promise of a fixed amount of gold. In 1971, President Nixon brought an end to the gold standard in the US (for the second time in the country’s history). The decoupling of the dollar from gold established the era of fiat currency and floating exchange rates, in which the value of a currency was determined by the supply of, and demand for, that currency. A fiat currency is one that has no intrinsic value, apart from its designation as legal tender by the state.

Bitcoin is not the only currency that has no intrinsic value. State monopoly currencies, such as the U.S. dollar, the euro, and the Swiss franc, have no intrinsic value either. They are fiat currencies created by government decree. The history of state monopoly currencies is a history of wild price swings and failures. This is why decentralized cryptocurrencies are a welcome addition to the existing currency system.

Federal Reserve Bank of St. Louis

Under the guidance of the state, money transitioned from precious metal coins to government-issued paper, which gave the state monopoly power over currency. With the invention of blockchain-based digital currency, we now have the potential to disentangle the institution of money from the authority of the state, which would take away the state’s ability to directly utilize the financial system as a tool of governance and hand control of the financial system over to the decentralized network of nodes that run digital currency networks.

Decentralized is a popular term right now, in large part because of the interest in digital currency and blockchain—but what does it really mean? In the traditional financial system, we rely on the master ledgers of centralized organizations (banks, governments, companies, etc.) to keep track of who owes what and who owns what. With a blockchain, there is no centralized ledger. No single entity is managing a master ledger the way a bank or PayPal does. Instead, the task of maintaining the ledger (referred to as “the blockchain”) is distributed across thousands of nodes (computers) that make up the network. Each individual node has a downloaded copy of the entire blockchain that is continuously updating with each new transaction.

Every time any amount of data moves, these nodes are hard at work checking their individual copies of the blockchain to prevent any fraudulent activity. When the validity of the transaction is confirmed via a consensus between multiple nodes, that transaction is added to the ever-expanding blockchain. Instead of relying on a single master ledger held by a trusted, third-party, such as a bank, the network distributes thousands of copies of the ledger across all of its nodes, which means there is no single point of failure that could be targeted by hackers. Even if a malicious actor were to gain control of a node with the intention of altering past transactions, that malicious actor could only comprise that single node’s copy of the blockchain. If this were to occur, the other nodes on the network would immediately be able to recognize that the comprised node was trying to defraud the system and would disregard that node’s falsified copy of the blockchain. This is the fundamental innovation of the blockchain: It distributes its ledger across a decentralized network of nodes. This replaces the need for a centralized third-party to verify the authenticity of the ledger. It eliminates the need for trust. It also democratizes the money transfer process. Rather than relying on an oligopoly of banks and payment processors to safeguard master ledgers, it allows anyone with a computer and an internet connection to participate in maintaining the distributed ledger.

Blockchain technology also democratizes the process of money creation through this same system. Nodes on the network generate, or “mine,” new bitcoin by utilizing their processing power to group the most recent transactions together and package the transaction data into a new “block” on the blockchain. This is subsequently broadcast out to the entire network, so that every node can verify the authenticity of the transactions in the new block and add it to their copy of the blockchain. Since running nodes is vital for adding new blocks to the blockchain, which is necessary to process new transactions, there is a two-fold incentive structure built into the protocol that promotes mining. The first incentive is that the first miner to solve the cryptographic puzzle necessary to parcel together the newest block receives a reward. The second incentive is that the first miner to parcel together the newest block also receives a fee (paid by the sender) from each transaction it bundles into a block.  Since mining requires large amounts of electricity and computational power, these incentives are necessary to offset the costs of running a node and ensure that the network will always have computational power available to process new transactions.

The transaction confirmation process is, as I said, referred to as “mining.” It takes the power to introduce new money into the economy and to manage the existing money away from governments and banks, and gives it to the people. Mining also importantly serves as a way to imbue digital currency with value. If resources are needed to produce something, that thing can be valued based on the cost of those resources. If mining did not demand the amount of electricity and computational power that it does, or in other words, if it were free, then digital currency would be free to obtain—and in a market context, free is worthless.

Of course, no system is perfect, and blockchain-based digital currencies are certainly no exception. Concerns abound about scalability, high transaction fees, long transaction processing times, traceability, and the environmental impact of the networks’ energy demands. Then, of course, there is the price volatility—although that has nothing to do with the protocols of the system. There are also concerns that the industrialization of mining has lead to a concentration of network power in large “farms” which employ special computers designed solely for mining. The result of this is that, unlike in the early days when digital currency could be mined off of a desktop computer, it is now virtually impossible for an individual to simply mine on their home computer. To mine (and actually earn something from it), one now needs thousands of dollars worth of hardware. Essentially, a segment of society has been priced out of Bitcoin mining. The concentration of mining power in these Bitcoin farms marks a turn toward network centralization, which is cause for concern when the promise of an asset class is its decentralized nature.

Regardless of one’s opinions on the benefits and drawbacks of disentangling money from state authority, the fact remains that it is one of the most important implications of blockchain technology. However, it is important to remember that this technology is still in its infancy, and it is still very much an experiment. At this point in time, it is impossible to predict exactly what effects blockchain will have on the governing capacity of state authorities. The potential of blockchain to allow individuals to store and transact wealth outside of state control is, though, already being realized in countries that lack a stable national currency. In Venezuela, for instance, thousands of people are choosing to mine and hold digital currencies as an alternative to earning and holding the hyper-inflated bolívar. Naturally, the notion of a form of money that exists outside the control of the state holds the most promise for those who can’t trust their state’s fiscal judgment.

As the blockchain experiment continues to unfold, the popularity of blockchain-based financial instruments in regions without a strong national currency will likely grow. As more and more people choose to use blockchain technology to conduct their financial affairs outside of state control, it will be of vital importance to observe the effects this has on the ability of a given state authority to govern. The potential for financial freedom and individual sovereignty offered by the blockchain is unparalleled in the history of money, thus it is uncertain what will come of the paradigm shift that this technology is initiating. Regardless, we can be almost certain that this technology will have an undeniable impact on the global financial system and the authority of governments around the world.


Source: Futurism


09 May 2018

Bitcoin ABC Patches Critical Vulnerability in Bitcoin Cash Mining Software

Cryptocurrency development team Bitcoin ABC has released a patch to address a critical vulnerability in bitcoin cash mining software.

According to Bitcoin ABC’s incident report, the vulnerability would have allowed an attacker to initiate a split in the bitcoin cash network.

To accomplish this, the attacker would have constructed a malicious transaction that included the bitflag of “0x20” in the signature hash type. The transaction would have been accepted by Bitcoin-ABC 0.17.0 and mined into a block but rejected by all other bitcoin cash mining software — including previous versions of Bitcoin-ABC.

Bitcoin ABC was made aware of the vulnerability on April 26, and developers quietly distributed a patch to mining pool operators and “verified bitcoin cash miners” before disclosing the potential exploit to the general public.

From the statement:

“After analysis of the vulnerability and possible responses, Bitcoin-ABC developers prepared a patch for the vulnerability, and a private release, to distribute directly to mining pool operators. Due to the decentralized nature of the mining community it was not possible to reach everyone directly. This release was provided to verified Bitcoin Cash miners to forward to trusted miners once they had upgraded.”

That patch has now received a general release, so miners using Bitcoin-ABC 0.17.0 are advised to upgrade to Bitcoin-ABC 0.17.1, which closes the attack vector.

“Bitcoin ABC will be taking several actions in order to prevent such an event from occurring again, as well as reduce the overall response time in the case of emergent issues in the future,” the company promised in its statement. “Additionally, Bitcoin ABC is in discussions with industry participants to establish a formal bug bounty system.”

Notably, Bitcoin ABC said that they were alerted to the vulnerability by a “clear and professional” report from an anonymous tipster, to whom they intend to give a reward if he or she comes forward.

Featured image from Shutterstock.

Source: CNN

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06 May 2018

Cryptocurrency: Investment Phase Vs. Utility Phase

Can What Cryptocurrency is Evolve into What it Was Meant to Be? Brian Armstrong Eludes to the Answer Being Mostly Yes

Coinbase’s CEO Brian Armstrong wrote an article about the current state and future of cryptocurrency. I’d like to address one point he made, the concept of an investment phase and utility phase in cryptocurrency.

First, here is his article on Medium: Is Coinbase creating a centralized or decentralized financial system? (the centralized vs. decentralized argument is his focus, but he touches on another concept which is what I’ll focus on below).

Onto my point: The idea I want to address is the idea that cryptocurrency isn’t yet at the stage it will be or was meant to be, a stage he calls the “utility stage,” a stage in which people are using decentralized technology (blockchain / smart contracts) and using crypto for peer-to-peer payments. Instead, it is mostly in what he calls the “investment stage,” a stage in which people invest in tokens and speculate on centralized exchanges (where a blockchain is nothing more than a platform for hosting a token and a smart contract nothing more than a means for creating a token).

Armstrong presents the idea that currently 90% of what is happening with crypto today is that it is being traded on centralized exchanges (i.e. used for making money; AKA “investments”). Meanwhile, the other 10% is decentralized peer-to-peer transactions and the utilization of the underlying tech (i.e. used for its original purpose; AKA “utility”).

Or in his own words,

Adoption of cryptocurrency will happen in several phases.

In the investment phase people speculate and try to make money on crypto. This is where 90% of activity is happening today, primarily via centralized exchanges.

In the utility phase people begin using crypto as a payment network, transacting for real goods and services, interacting with dapps, etc. This is where about 10% of activity is happening today, primarily via decentralized (user controlled) wallets.

In other words, the investment phase draws enough people in that a critical mass of people is reached to spark the utility phase, or come for the tool, stay for the network.

The problem with that is, while the investment stage is fun, valid in its own right, and arguably even a necessary part of the evolution of crypto, it has little to do with the initial concept or purpose behind cryptocurrency… and instead looks an awful lot like its on-paper antithesis.

Meanwhile, the 10%, the purpose and intent of crypto and its founders (like Satoshi), is often almost lost in the background somewhere behind the speculation.

Of course, the good news is that Armstrong (one could argue correctly) predicts that we will transition towards a utility dominated future as adoption occurs over time.

Still, in the here and now, there is a big disconnect between what crypto is supposed to be and what it actually is.

In fact, to restate the above clearly before adding detail, one could argue that the current investment stage is in some ways the antithesis of everything cryptocurrency was supposed to be in the first place (AKA “Satoshi’s vision”).

Satoshi’s actual vision was, and correct me if I’m misreading the white paper and his early forum posts, a peer-to-peer decentralized and trustless digital payments system that could protect the people of the world from the shenanigans of states, banks, and brokers that lead to the 2007 – 2009 global financial crisis.

The problem then is obvious, right? If not, I’ll spell it out:

  1. The system in practice constantly relies on centralized entities from the developers who pre-mine, to the big miners who mine, to the exchanges that cryptos trade on. There is a problem of centralization.
  2. Arguably no market in the history of humankind has produced as large and nasty and frequent of economic bubbles than cryptocurrency. There is a problem of global financial crises(specifically ones that hurt the plebs and benefit speculators and the few and specifically those who run centralized systems).
  3. The fluctuations in price, if nothing else, makes for a lackluster currency (as although we all love the random deflation when it occurs, the constant and rapid inflation and fluctuations are real problems). There is a problem of utility, especially in terms of the use-value and usage of tokens in peer-to-peer payments.

Maybe it makes sense on some levels that the stage that leads to an end goal contains so many opposites (that a thesis on-paper, itself a reaction AKA antithesis of sorts, led to an antithesis that looks like what the original thesis was reacting to, and that eventually all this conflict will resolve into a synthesis that provides an answer to the original thesis), but that is one existential road map (an odd, but clearly not historically uncommon, form of peoples’ revolution).

Anyway, there is the theory of how things maybe could have and should have been different, and then there is realism.

The reality is we are on a path that Armstrong believes paves the way for a future in which centralization and decentralization and investment and utility naturally meld together as new adoption occurs and crypto evolves.

Frankly, for all the collateral damage and irony, that makes sense and hints at a bright future and a fun-for-what-it-is ride along the way.

Of course, until we get to that future, we should expect volatility, bubbles, speculative finance, and a degree of centralization. Given that, it is likely that when we get to utility, someone will have to step up and create a 3.0 version of tokens and technology that circumvents that intense centralization and consolidation of wealth happening right now. If not, the end result will be just another widget in the long line of widgets that already are consolidated and centralized.

NOTE: For some people, namely for speculators and investors, the volatility is the best part. The reality is I enjoy that part myself (check out our robust section on cryptocurrency investing and trading). The fact that a token can be bought cheap in an ICO, is then pumped, and then you can parachute out at the right moment to 10x+ your investment is the main draw of crypto for many (and let’s not lie, it is getting new users in the door, which sets us up for the next stage in theory). I don’t deny that joy in that, and I don’t deny the logic in how things might play out because of it, my sole point above is that this investment stage is common. Speculative finance was a hallmark of the old system. It created antitheses like Satoshi and Assange, it was clearly part of the problem that crypto said it was trying to solve. If crypto stopped here, then I’d say it was like building a casino to stop casinos. My point being, such a thing is ironic. My other point being, I like Armstrong’s idea as to why we won’t get stuck like glue in the current absurdity and may eventually realize parts of the original vision and/or use the underlying tech for something other than creating tokens to speculate on.

Source: CCF

30 Apr 2018

Ethereum Foundation Developer Proposes Smart Contract Insurance Fund

Ethereum Foundation developer Alex Van de Sande has unveiled a proposal for an insurance pool that he believes will mitigate the risk of network splits stemming from a desire to recover funds frozen due to code faults in smart contracts.

Van de Sande, who is team lead for the Mist browser, wrote in a blog post that creating a recovery contract with a dedicated insurance fund would reduce the incentive that a person or group — e.g. the owners of the more than $320 million in ETH that was rendered unspendable after Parity’s multi-signature wallet contract library self-destructed — would have to pursue a contentious hard fork to regain some or all of the value lost due to the bug.

Here’s how the system would work.

Developers would insure their smart contracts by locking up Ether for a predetermined period of years in a recovery contract. In exchange, they would receive an equal number of “recover-ether tokens,” which they could then either hold or sell to speculators.

If the Ether insured by the contracts becomes frozen (hacks and other exploits in which the tokens remain liquid would not be covered by the fund), the recovery process would allow recover-ether holders to redeem their tokens for an equivalent percentage of the pool’s funds at a 90 percent rate, with the remaining 10 percent used to fund the general insurance fund of all tokens.

On the other hand, if the lock-up period passes and no recovery process is initiated, the recover-tokens would be automatically destroyed and the issuer would receive back their locked Ether — and would keep any profits realized by selling recover-tokens at the outset.

The recovery contract would be governed by token holders, who could vote on decisions such as which contracts the fund should insure.

One hurdle to the proposed system would seem to be that the recover-tokens would likely be classified as securities by many regulatory agencies.

However, perhaps the most controversial component of Van de Sande’s proposal involves launching the fund with more than 513,000 ETH in liabilities by issuing recovery tokens to the victims of code fault in Parity’s multi-signature wallet contract library.

In addition to mitigating the risk of a contentious network split, which, to be clear, Parity says it has “no intention” of pursuing, Van de Sande argues that this would turn the victims — a group that includes many of Ethereum’s top developers — into stakeholders in the new fund. This, in turn, would likely give the pool a greater chance of gaining traction when it launches.

Featured image from Shutterstock.

Source: CNN