Wednesday, June 29, 2016

China Takes Center Stage in Bitcoin

 

The American delegation flew to Beijing because that was where much of the Bitcoin power was concentrated.


China has become a market for Bitcoin unlike anything in the West, fueling huge investments in server farms as well as enormous speculative trading on Chinese Bitcoin exchanges.
Chinese exchanges have accounted for 42 percent of all Bitcoin transactions this year, according to an analysis performed for The New York Times by Chainalysis.


Just last week, the Chinese internet giant, Baidu, joined with three Chinese banks to invest in the American Bitcoin company Circle.
The American delegation in China had a software proposal, known as Bitcoin Classic, that would change all that.

Tuesday, June 28, 2016

US Bank Stocks Lose 13% Amidst Global Financial Turmoil

 

 

For those investors who own US bank stocks, the past few days have not been pleasant by any means. Both Bank of America and Morgan Stanley dropped by 13% in value, Goldman Sachs, one of the big opposers of Bitcoin, is down 22% throughout 2016 so far. Diversification is essential for investors, and anything tied to US banks is not worth one’s time and effort.

 

Everyone with a basic understanding of the stock markets will have noticed how US bank shares have not been doing well over the past few years. In fact, many people expected these stocks to far off far worse than they are right now. The Brexit has sent stocks of Bank of America and Morgan Stanley down the deep end.

 

But they are not the only ones who are facing negative pressure right now. The KBW Bank Index has seen its biggest 48-hour decline since August of 2011. Keeping in mind how this group monitors 24 different US banks, things are looking not good, to say the least. Selling financial stocks is the best course of action for any serious investor right now.

 

Things will only get worse from here on out, by the look of things. Looming negative interest rates are putting a lot of pressure on US bank stocks right now. Whereas some experts expected the Fed to increase interest rates later this year, that scenario is looking more and more unlikely every day.

 

The Brexit referendum is only making matters worse as well. Throughout all of the stock market turbulence, investors are desperately looking for new safe havens. Government bonds seemed to be an attractive option, but eventually, they will face similar results to what is happening to US banks right now.  Business leaders have lost confidence in traditional big deals linked to investment banks.

 

To make matters even worse, there is a growing amount of regulation banks have to deal with. These rules were put in place to prevent a new financial crisis, albeit it is doubtful these pieces of paper will stave off the inevitable. While it has been confirmed by the Fed all of the 33 US banks will survive during a deep recession; investors will be looking for alternative opportunities during these volatile periods.

Sunday, June 19, 2016

8 Things You Should Know About The Lisk Ecosystem and Currency

 

Since the word ‘cryptocurrency’ first entered our vocabulary, no one expected a flood of other cryptocurrencies to enter the market, one after another, within a short time frame. Without exaggerating, there are hundreds of cryptocurrencies out there. Tough competition, that’s for sure.

 

As a result, many altcoins end up ‘dead’ (defined as no reported market cap). According to CoinDesk’s State of Bitcoin and Blockchain report 2015, there are over 400 ‘dead’ altcoins so far.

 

That being said, some altcoins have managed to persevere and capture some of the cryptocurrency market share. On closer look, one can see why - it is no longer enough for cryptocurrencies to simply be mere cryptocurrencies. The target audience - which includes computer programmers and IT experts - will only give second considerations to outstanding altcoins that deserve their attention. Case in point - Ethereum, the second most popular network after Bitcoin (based on its market cap). This public blockchain platform can be used to execute peer-to-peer contracts using Ether, the cryptocurrency that is compatible with the Ethereum ecosystem.

 

One interesting altcoin that emerged in 2016 is Lisk. Listed as LSK, this cryptocurrency is currently has the eighths biggest market cap, at 45 million US dollars (at the time of writing).

 

Lisk is a new altcoin, having launched on 24 May 2016, so this rise of Lisk's price is very noteworthy for altcoin enthusiasts. Here are 8 things to know about it.

 

#1 - It is a ‘modular’ cryptocurrency

The first of its kind, Lisk brands itself as the “first modular cryptocurrency utilising sidechains”. We’ll get to the sidechains part in a bit and focus on ‘modular’. As the name suggests, this coin involves ‘modules’ that serve as the basis of its design and construction. The overall design is its trump card - the Lisk system allows anyone to use its ‘designing blocks’ to construct their own decentralised apps . The language of choice for Lisk for individual app construction is Javascript, one of the most popular programming languages. Loads of programmers know Javascript, so we can say that the applicability value of Lisk is quite high.

 

#2 - Utilises ‘sidechains’

By this point, we are all familiar with the blockchain, usually defined as public ledger of all completed transactions. One problem that exists with blockchains is that it can be artificially bloated with test or fake transactions. When there are too many bad transactions, the ‘blocks’ get full faster and slow down the network (this is called ‘bloated’  network). No one likes a slow network.

 

Enter Lisk’s solution, the sidechain. Sidechains are additions to the main blockchain. Think of it like Post-It notes applied on book pages - you can add more value yet not clutter the main text. Sidechains can be attached to independent blockchains and serve as a place to put all the high-volume transactions without interfering with the main blockchain. As a result, this will ensure a fast network all day, every day (in theory). You can read more about sidechains in the whitepaper or Richard Brown's simple explanation.

 

#3 - Former Ethereum core members joined Lisk

On June 8 2016, Lisk CEO Max Kordek announced the addition of Charles Hoskinson (ex-CEO of Ethereum) and Steven Nerayoff (ex-advisor for Ethereum) as Senior Advisors of Lisk, to facilitate Product Development. According to Kordek,

 

“There is no one else in the world like Charles who has the vision to build a successful cryptography project and Steven, who has an invaluable entrepreneur insight after founding six companies and being a venture capitalist.“

Worth noting – Ether’s market cap is impressive, standing at 1.4 billion dollars at time of writing.

 

#4 – Designed for App Developers

We briefly touched this in #1, but this deserves a special mention. Lisk wants to be the 'de-facto standard for blockchain applications and services', that are 'standalone, decentralised, blockchain-based apps developed in Javascript'. Decentralised apps ('dapps') has great potential to be integrated into a wide variety of applications, including 'immutable storage, a decentralized federation of hosting, oracle services, or computation of smart contracts.' (source for quotes)

 

Lisk CEO, Kordek said,

“There is no public cryptocurrency platform which allows developers to easily deploy their own blockchain and build a JavaScript blockchain app on it… This will give millions of developers the ability to create their own sidechains, particularly around consumer applications, including games, social networks and the Internet of Things, but the same core functionality can also be used to develop and scale business applications.”

Basically, Lisk for programmers and developers is like easy-to-use Wordpress templates for web designers. Instead of wasting time with complex coding languages, Lisk can be used to simplify the process of building, publishing, distributing and monetising applications without sacrificing quality.

 

#5 – One of the Most Successful Cryptocurrency Crowdsale

From February to March 20116, Lisk crowdfunded 14,052 bitcoins, or about 9.76 million dollars (as of current bitcoin price at the time of writing). That is a lot of money. It was the second-highest crowdfund for any cryptocurrency, ever.

 

To be fair, it does pale in comparison against the #1 spot The DAO kind of overshadowed Lisk with a ridiculous 164 million raised.

 

#6 - As a Developer Tool, It Works as Advertised (But Small Sample Size)

How does a decentralised app (again, ‘dapps’) look like? The potential of the Lisk network, with its modular cryptocurrency and utilising sidechains is what Lisk is trying to show. In its main page, Lisk showcases some examples: Criterion (Concept; Proof of Existence), Dust (Concept; Decentralised Trust on Lisk), Discovr (Concept; A social network for artists), MarketPlace (Prototype; A Decentralised Store on Lisk) and BlockData (Prototype; Smart Home on Lisk).

 

A quick look in the Blockchain Application section in the official Lisk forum yields some more ongoing projects, including ideas for an online card trading game and P2P drone delivery.

 

#7 - Country Ambassadors

The developer community is a tight-knit community, so it’s little wonder that Lisk started a Country Ambassador initiative to promote the Lisk ecosystem and help provide technical support. So far, they have 11 country ambassadors who were cherry-picked (you can’t volunteer yourself) to act as community managers in their respective countries. According to this document which detailed responsibilities of ambassadors, they are not paid for this role (although bounties are available).

 

#8 - Delegated Proof of Stake (DPoS)

Last but not least, you should know about Lisk’s consensus model. Each LSK carries one vote, and only the top 101 users with the heaviest votes (ie highest number of Lisks individually owned) will be able to cast votes to carry forward motions and have a say in problem solving resolutions. You can learn more about the DPoS model here.

 

Conclusion

Many comparison has been made between Lisk and Ethereum. However, CEO Kordek maintains that Lisk is ‘not competitor to Ethereum’.

 

All in all, the Lisk ecosystem look great from the developer/programmer point of view. How about for investors? As of 16 June 2016, Lisk has the following statistics on CoinGecko's home page:

 

Currently ranking 8 on CoinGecko's overall ranking, Lisk also ranks as an altcoin with the 14th largest community and 13th most active development. As Lisk continues its momentum in the future, it will be interesting to note the improvement on Lisk's rank on CoinGecko.

 

Research-wise, Lisk has a higher ‘knowledge’ entry barrier for non-coders, so to fully understand and appreciate how it works, a background in programming won’t hurt. Like other altcoins, Lisk is also not immune to volatility. Since this cryptocurrency is very new, only time will tell if Lisk has what it takes to take off among mainstream Javascript coders, but there are certainly positive signals that they are heading in the right direction.

 

To wrap up, below is an infographic made by Kordek to show differences between Lisk and Ether.

Man forgot he bought $ 27 of Bitcoin, to discover later that he became a millionaire

 

In 2009, a Norwegian man Bitcoin worth $ 27 bought and forgot about it. Four years later, the man discovered that remember his investment of $ 800,000 in his account.

 

Christopher Koch was writing a thesis on encryption and decided to invest in Bitcoin, then forgot about his investment "trivial" then-even Bitcoin got extensive media coverage.

 

Fortunately for him, he was still remembers its own password. When opening his wallet, he received a pleasant surprise: his money has ballooned to US $ 800,000

 

 

At the time of purchase a cottage, it was not his friends  on his thoughts about digital currencies. Kanu and think he sings out of tune. Christopher Koch bought himself a flat in Toyen, one of the richest neighborhoods of Oslo.

 

Friday, June 17, 2016

Will The DAO Become Ethereum's Mt Gox?

 

As stakeholders in the world's largest decentralized autonomous organization (DAO) descend into forums to debate its future, concerns are emerging about what the success or failure of The DAO could mean for Ethereum, the blockchain platform that enabled its creation.

 

Front and center for those invested is the idea that the fate of one of the technology's most visible projects could create a lasting impression among potential users and the public, and the fears are not without precedent.

 

While bitcoin continues to face difficulty with regulators and banks, Ethereum has so far been able to build public bridges with the mainstream financial world. Tests were run by 11 banks on a private version of the network in January, and invitations for its creator to help inform the work ongoing at Hyperledger and R3CEV have so far followed suit.

 

In contrast, bitcoin's network has secured billions of dollars in funds for years, but its reputation was shaped early on by events like the shutdown of online black market Silk Road, the rapid price fluctuations of its token and the collapse of its once-largest exchange, Mt Gox.

 

Against this backdrop, those close to the project are beginning to see The DAO as Ethereum’s "flagship application", one that they believe could hold the key to ensuring a lasting, favorable impression for Ethereum's technology, or scar its reputation.

 

Stephan Tual founder of Ethereum startup Slock.it which created the code on which The DAO is built told CoinDesk:

 

"You don’t want a bad story about Ethereum. If [The DAO] were to crash, people would compare it to Mt Gox."

 

Reality check

But why is so much riding on The DAO?

A decentralized autonomous organization that lets its members vote on how to fund projects and direct operations, The DAO has so far amassed $160m in consumer funds in exchange for voting rights in the way it spends money, prompting mainstream media attention.

Currently, those funds amount to about 14.4% of all the ether in circulation and with a mandate to invest in Ethereum startups The DAO has the potential to exercise considerable influence on the ecosystem.

But shortly after the organization successfully raised the funds its design was challenged with the publication of a critical report authored by three computer scientists who specialize in blockchain. The report advocated for further development of The DAO to be halted until certain issues they claimed to have found in the governance model were fixed.

 

One possible mechanism to help solve those issues is built into the The DAO's voting mechanism. While the organization’s mission is to fund other Ethereum projects the method of selecting those projects can also be used to vote on internal changes, including to its own code.

At the moment, each of the top three proposals for funding from the DAO would redefine how it operates. The moratorium proposal is the most popular to date, followed by a proposal to change the deposit required to make a proposal and a method for returning DAO tokens accidentally sent to the project. Several others are specifically aimed at the governance model.

 

But, it's not just entrepreneurs who are concerned either. Six of the top 10 most discussed threads on The DAO forum pertain to changing The DAO itself, ranging from giving it a new name, to changing the requirements for submitting a proposal, and concerns about the way decisions are made.

 

Learning from the Mt Gox implosion

At its peak, Mt Gox accounted for an estimated 80% of all bitcoin trading volume in the world.

 

When the exchange collapsed in February 2014 losing an estimated $350m worth of bitcoin, many heralded it as one of the many so-called deaths of bitcoin. With a current market cap of over $9bn and a 20% price increase last month, bitcoin clearly hasn’t gone anywhere, but its reputation has visibly suffered.

At the time of the Mt Gox collapse, Tony Sakich was just getting started in the industry at his first job with a bitcoin company, BitPay. Now an Ethereum consultant with blockchain services firm Vanbex Group, Sakich told CoinDesk the reason bitcoin is thriving in spite of the collapse of its largest exchange is that so much activity existed in other areas of the bitcoin economy, a point he says the Ethereum community could learn from.

 

To help lead the development of the Ethereum ecosystem, investment firms which have traditionally focused on bitcoin startups — such as Blockchain Capital and Digital Currency Group — have recently begun evaluating Ethereum startups as potential portfolio members.

In April some of that research culminated in a $775,000 investment in Ethereum co-founder Gavin Wood’s operation Ethcore, led by Blockchain Capital and Fenbushi Capital. Other firms such as Trust Stamp have also begun to receive VC investment.

While The DAO is naturally attractive to Ethereum entrepreneurs looking for funding, Sakich said investments from outside the organization also need to increase.

 

"I’m hoping that developers don’t hear all this about The DAO and stop there and think that’s their only way to get an Ethereum project done," Sakich said, adding:

"To have a strong ecosystem in Ethereum you need projects outside of The DAO and there needs to be as many projects as possible."

Friday, June 10, 2016

Bitcoin Exchange Owner Extradited Following Cybercrime Indictment

 

Two individuals tied to the now-defunct US bitcoin exchange Coin.mx have been extradited to the US from Israel, prosecutors announced today.

The US Attorney's Office for the Southern District of New York announced today that Gery Shalon and Ziv Orenstein have been extradited after being arrested last year. Both appeared in Manhattan court today and have been indicted on securities fraud and computer hacking charges. The two plead not guilty, according to The Wall Street Journal.

Shalon is alleged to be the owner of Coin.mx, an exchange based in Florida that has been tied to a string of cyberattacks on a number of companies including Wall Street bank JPMorgan, which resulted in the theft of personal data from tens of millions of client accounts. Reports from last year suggest that the alleged operation spanned the globe, targeting a range of major businesses.

The two were arrested in July of last year, prosecutors said, a move that came as charges were filed against alleged co-conspirators Anthony Murgio and Yuri Lebedev, who were accused of running an unlawful money transmission business. Murgio later plead not guilty.

US prosecutors have said that Coin.mx was used as a conduit for funds tied to the alleged cybercrime network.

US attorney Preet Bharara said in a statement:

"For the alleged hacks into numerous U.S. companies, including the largest theft of customer data from a U.S. financial institution in history, in furtherance of their securities fraud, Sharon and Orenstein will now face prosecution in a U.S. court."

US prosecutors have said that Coin.mx skirted money services rules by mis-marking credit card purchases for bitcoin and effectively taking control of a New Jersey credit union to route international transactions. A pastor and former executive of the credit union was later charged for taking bribes in exchange for facilitating that arrangement.

Sunday, June 5, 2016

FBI Claims They Breached Tor Security Without Malware

 

 

The Federal Bureau of Investigation has announced the tools they used to get PlayPen members convicted was not malware. After refusing to disclose the methods use when ordered to by a judge, a lot of the FBI’s evidence was thrown out. Despite all of that, law enforcement officials continue to deny their network investigative technique uses malware.

FBI STILL REFUSES TO PROVIDE PROOF

The issues between the FBI and PlayPen convicts is far from resolved, as judges continue to offer contradicting rulings. One judge in Virginia ruled how the case against PlayPen member Edward Mathis should stand, regardless of how the evidence was gathered. Not too long ago, a different judge ruled against using FBI evidence in a similar case; the law enforcement agency refused to disclose details.

 

But the FBI is still not proving any insights as to how their network investigative technique works. One spokesperson told the media on Wednesday how they are not using malware, yet failed to provide any evidence to back up these claims. While no one is asking them to explain everything from a to z, some insights would be more than welcome.

 

Mathis, who will not have the case against him dismissed, felt he was being coerced into signing a statement detailing his crimes. However, the Virginia judge ruled there was no evidence to support these claims. However, there is the question of how the FBI obtained the evidence against this person, as well as the 134 other PlayPen members.

 

Revealing the true IP address of a Tor user is next to impossible with an exploit or malware. The FBI’s network investigation technique managed to do exactly that, albeit many feel the warrant for taking down PlayPen did not give them the legal right to use the malicious or illegal software.

 

This investigation may come around to bite the law enforcement agency in the rear, though. In a previous case, the FBI revealed the source code of their NIT tool. While this software does not alter security settings of target computers, the lines are blurring as to which part of that explanation suddenly makes it alright to deliberately infect consumer devices.