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Binance's deposit problems on 2019 arise from an known, age-old, property of cryptocurrencies, generally known as "malleability". On Feb 5, 2019, Binance was reported to credit, for a second time, some Nano user deposits that had already been credited months before. The presumed reason is that they were upgrading nodes and replaying the block chain, and didn't turn off the deposit engine for this replay. When the new blocks were replayed, they somehow generated new block identifiers on Binance's internal servers (that is, these blocks were not relayed to Binance from outside Binance). These new block identifiers (for old blocks) triggered the deposit processor to create new internal deposits for user accounts, causing these accounts to get unduly credited with extra funds. This general crypto issue has been known for ages and it is surprising that Binance was susceptible to it. For example, the standard bitcoin transaction ID can be changed in a variety of ways without invalidating the transaction. This is called transaction ID malleability. If an exchange considers transactions with new transaction IDs as new deposits, they are susceptible to double deposits. The reason exchanges don't get caught by transaction malleability is that they judge new deposits by the transaction details and not the transaction ID, which can be changed. They also don't credit a user until the transaction has been confirmed a few times. While going down, MtGox famously blamed their problems on bitcoin transaction malleability (even though no one could ever verify these claims). Even though exchanges have adopted workarounds, the general property is potentially problematic enough that bitcoin introduced a new type of transaction identifier with the segwit fork to address this general issue of malleability. The nano protocol doesn't include the concept of confirmations, so counting confirmations to validate deposits can't apply. However, this dissimilarity doesn't mean that the basic problem of transaction malleability isn't known. And it underscores that the general practice of checking transaction details is much better than relying on protocol identifiers (like block or transaction IDs). My understanding is that nano 17.1 fixed the underlying source of malleability that caught Binance, but in upgrading to the fix Binance's deposit processor was running the old protocol and processed a few second deposits.
Hello! My name is Inna Halahuz, I am a sales manager at Platinum, the largest listing service provider for the STO and ICO projects. We know all about the best and most useful STO and ICO marketing services. By the way, we developed the best blockchain platform: [Platinum.fund] (https://platinum.fund/sto/) We also created the UBAI, the unique educational project with the best and most useful online courses. We not only share our knowledge but also help the best graduates to find a job! After finishing our courses you will know all about crypto securities, ICO and STO advertizing and best blockchain platforms. What a Blockchain Wallet is? What is its purpose? Find the answer after reading this article. Public/Private Key The public key is the digital code you give to someone that wants to transfer ownership of a unit of cryptocurrency to you; and a private key is what you need to be able to unlock your own wallet to transfer a unit of a cryptocurrency to someone else. The encoding of information within a wallet is done by the private and public keys. That is the main component of the encryption that maintains the security of the wallet. Both keys function in simultaneous encryption systems called symmetric and asymmetric encryption. The former, alternatively known as private key encryption, makes use of the same key for encryption and decryption. The latter, asymmetric encryption, utilizes two keys, the public and private key, wherein a message-sender encrypts the message with the public key, and the recipient decodes it with their private key. The public key uses asymmetric algorithms that convert messages into an unreadable format. A person who possesses a public key can encrypt the message for a specific receiver. Accessing wallets Methods of wallet access vary depending on the type of wallet being used. Various types of currency wallets on an exchange will normally be accessed via the exchange’s entrance portal, normally involving a combination of a username/password and optionally, 2FA (Two factor authentication, which we explain in more detail later). Whereas hardware wallets need to be connected to an internet enabled device, and then have a pin code entered manually by the user in possession of the hardware wallet in order for access to be gained. Phone wallets are accessed through the device on which the wallet application has been downloaded. Ordinarily, a passcode and/or security pattern must be entered before entry is granted, in addition to 2FA for withdrawals. Satoshi Nakamoto built the Satoshi client which evolved into Bitcoin in 2009. This software allowed users to create wallets and send money to other addresses. However, it proved to be a nightmarish user experience, with many transactions being sent to incorrect addresses and private keys being lost. The MtGox (Magic the Gathering Online exchange, named after the original intended use of the exchange) incident, which will be covered in greater detail later, serves as a reminder of the dangers present in the cryptosphere regarding security, and the need to constantly upgrade your defenses against all potential hacks. The resulting loss of 850k BTC is a still unresolved problem, weighing heavily on the victims and the markets at large. This caused a huge push for a constantly evolving and improving focus on security. Exchanges that developed later, and are thus considered more legitimate and secure, such as Gemini and Coinbase, put a much greater emphasis on vigilance as a direct result of the MtGox hacking incident. We also saw the evolution of wallet security into the physical realm with the creation of hardware wallets, most notable among them the Ledger and Trezor wallets. Types of Wallets & Storage Methods The simplest way to sift through the dozens of cryptocurrency storage methods available today, is to divide them up into digital and non-digital, software and hardware wallets. There are also less commonly used methods of storage of private keys, like paper wallets and brain wallets. We will examine them all at least briefly, because in the course of your interaction with cryptocurrencies and Blockchain technology, it is essential to master all the different types of hardware and software wallets. Another distinction must be made between hot wallets and cold wallets. A hot wallet is one that is connected to the internet, and a cold wallet is one that is not. Fun fact: The level below cold storage, deep cold storage has just recently been implemented by the Regal RA DMCC, a subsidiary of an internationally renowned gold trading company licensed in the Middle East. After having been granted a crypto trading license, Regal RA launched their “deep cold” storage solution for traders and investors, which offers the ability to store crypto assets in vaults deep below the Almas Tower in Dubai. This storage method is so secure that at no point is the vault connected to a network or the internet; meaning the owners of the assets can be sure that the private keys are known only to the rightful owners. Lets take a quick look at specific features and functionality of varieties of crypto wallets. Software wallets: wallet applications installed on a laptop, desktop, phone or tablet. Web Wallets: A hot wallet by definition. Web Wallets are accessible through the web browser on your phone or computer. The most important feature to recognize about any kind of web wallet, is that the private keys are held and managed by a trusted third party. MyEtherWallet is the most commonly used non-exchange web wallet, but it can only be used to store Ethereum and ERC-20 tokens. Though the avenue of access to MEW is through the web, it is not strictly speaking a web wallet, though this label will suffice for the time being. The MEW site gives you the ability to create a new wallet so you can store your ETH yourself. All the data is created and stored on your CPU rather than their servers. This makes MEW a hybrid kind of web wallet and desktop wallet. Exchange Wallets: A form of Web Wallet contained within an exchange. An exchange will hold a wallet for each individual variety of cryptocurrency you hold on that exchange. Desktop Wallets: A software program downloaded onto your computer or tablet hard drive that usually holds only one kind of cryptocurrency. The Nano Wallet (Formerly Raiwallet) and Neon wallet for storage of NEO and NEP-5 tokens are notable examples of desktop wallets Phone Wallets: These are apps downloaded onto a mobile phone that function in the same manner as a desktop wallet, but actually can hold many different kinds of cryptocurrency. The Eidoo Wallet for storing Ethereum and its associated tokens and Blockchain Wallet which currently is configured to hold BTC, ETH and Bitcoin Cash, are some of the most widely used examples. Hardware wallets — LedgeTrezoAlternatives Hardware wallets are basically physical pathways and keys to the unique location of your crypto assets on the Blockchain. These are thought to be more secure than any variety of web wallet because the private key is stored within your own hard wallet, an actual physical device. This forcibly removes the risk your online wallet, or your exchange counter party, might be hacked in the same manner as MtGox. In hardware wallet transactions, the wallet’s API creates the transaction when a user requests a payment. An API is a set of functions that facilitates the creation of applications that interact and access features or data of an operating system. The hardware then signs the transaction, and produces a public key, which is given to the network. This means the signing keys never leave the hardware wallet. The user must both enter a personal identification number and physically press buttons on the hardware wallet in order to gain access to their Blockchain wallet address through this method, and do the same to initiate transfers. Paper Wallets Possibly the safest form of cryptocurrency storage in terms of avoiding hacking, Paper Wallets are an offline form of crypto storage that is free to set up, and probably the most secure way for users, from beginners to experts, to hold on to their crypto assets. To say it simply, paper wallets are an offline cold storage method of storing cryptocurrency. This includes actually printing out your public and private keys on a piece of paper, which you then store and save in a secure place. The keys are printed in the form of QR codes which you can scan in the future for all your transactions. The reason why it is so safe is that it gives complete control to you, the user. You do not need to worry about the security or condition of a piece of hardware, nor do you have to worry about hackers on the net, or any other piece of malware. You just need to take care of one piece of paper! Real World Historical Examples of Different Wallet Types Web Wallet: Blockchain.info Brief mechanism & Security Blockchain.info is both a cryptocurrency wallet, supporting Bitcoin, Ethereum and Bitcoin cash, and also a block explorer service. The wallet service provided by blockchain.info has both a Web Wallet, and mobile phone application wallet, both of which involve signing up with an email address, and both have downloadable private keys. Two Factor Authentication is enabled for transfers from the web and mobile wallets, as well as email confirmation (as with most withdrawals from exchanges). Phone Wallet: Eidoo The Eidoo wallet is a multi-currency mobile phone app wallet for storage of Ethereum and ERC-20 tokens. The security level is the standard phone wallet level of email registration, confirmation, password login, and 2 factor authentication used in all transfers out. You may find small volumes of different varieties of cryptocurrencies randomly turning up in your Eidoo wallet address. Certain projects have deals with individual wallets to allow for “airdrops” to take place of a particular token into the wallet, without the consent of the wallet holder. There is no need to be alarmed, and the security of the wallet is not in any way compromised by these airdrops. Neon Wallet The NEON wallet sets the standard for web wallets in terms of security and user-friendly functionality. This wallet is only designed for storing NEO, Gas, and NEP-5 tokens (Ontology, Deep Brain Chain, RPX etc.). As with all single-currency wallets, be forewarned, if you send the wrong cryptocurrency type to a wallet for which it is not designed, you will probably lose your tokens or coins. MyEtherWallet My Ether Wallet, often referred to as MEW, is the most widely used and highly regarded wallet for Ethereum and its related ERC-20 tokens. You can access your MEW account with a hardware wallet, or a different program. Or you can also get access by typing or copying in your private key. However, you should understand this method is the least safe way possible,and therefore is the most likely to result in a hack. Hardware: TrezoLedger Brief History Mechanism and Security A hardware wallet is a physical key to your on-chain wallet location, with the private keys contained within a secure sector of the device. Your private key never leaves your hardware wallet. This is one of the safest possible methods of access to your crypto assets. Many people feel like the hardware wallet strikes the right balance between security, peace of mind, and convenience. Paper Wallet Paper wallets can be generated at various websites, such as https://bitcoinpaperwallet.com/ and https://walletgenerator.net/. They enable wallet holders to store their private keys totally offline, in as secure a manner as is possible. Real World Example — Poor Practices MtGox Hack history effects and security considerations MtGox was the largest cryptocurrency exchange in the world before it was hacked in 2014. They were handling over 70% of BTC transactions before they were forced to liquidate their business. The biggest theft of cryptocurrency in history began when the private keys for the hot wallets were stolen in 2011 from a wallet.dat file, possibly by hacking, possibly by a rogue employee. Over the course of the next 3 years the hot wallets were emptied of approximately 650000 BTC. The hacker only needed wallet.dat file to access and make transfers from the hot wallet, as wallet encryption was only in operation from the time of the Bitcoin 0.4.0 release on Sept 23rd 2011. Even as the wallets were being emptied, the employees at Mt Gox were apparently oblivious to what was taking place. It seems that Mt Gox workers were interpreting these withdrawals as large transfers being made to more secure wallets. The former CEO of the exchange, Mark Karpeles, is currently on trial for embezzlement and faces up to 5 years in prison if found guilty. The Mt Gox hack precipitated the acceleration of security improvements on other exchanges, for wallets, and the architecture of bitcoin itself. As a rule of thumb, no small-to-medium scale crypto holders should use exchange wallets as a long-term storage solution. Investors and experienced traders may do this to take advantage of market fluctuations, but exchange wallets are perhaps the most prone to hacking, and storing assets on exchanges for an extended time is one of the riskiest ways to hold your assets. In a case strikingly similar to the MtGox of 2011–2014, the operators of the BitGrail exchange “discovered” that approximately 17 million XRB ($195 million worth in early 2018) were missing. The operators of the exchange were inexplicably still accepting deposits, long after they knew about the hack. Then they proceeded to block withdrawals from non-EU users. And then they even requested a hard fork of the code to restore the funds. This would have meant the entire XRB Blockchain would have had to accept all transactions from their first “invalid” transaction that were invalid, and rollback the ledger. The BitGrailexchange attempted to open operations in May 2018 but was immediately forced to close by order of the Italian courts. BitGrail did not institute mandatory KYC (Know your customer) procedures for their clients until after the theft had been reported, and allegedly months after the hack was visible. They also did not have 2 factor authentication mandatory for withdrawals. All big, and very costly mistakes. Case Study: Good Practice Binance, the Attempted Hack During the 2017 bull run, China-based exchange Binance quickly rose to the status of biggest altcoin exchange in the world, boasting daily volumes that surged to over $4 billion per day in late December. Unfortunately, this success attracted the attention of some crafty hackers. These hackers purchased domain names that were confusingly similar to “binance.com”. And then they created sufficiently convincing replica websites so they could phish traders for their login information. After obtaining this vital info, the scammers created API keys to place large buy orders for VIAcoin, an obscure, low volume digital currency. Those large buy orders spiked VIA’s price. Within minutes they traded the artificially high-priced VIA for BTC. Then they immediately made withdrawal requests from the hacked BTC wallets to wallets outside of the exchange. Almost a perfect fait accompli! But, Binance’s “automating risk management system” kicked in, as it should, and all withdrawals were temporarily suspended, resulting in a foiled hacking attempt. Software Wallets Web/Desktop/Phone/Exchange Advantages and Limitations As we said before, it is inadvisable to store crypto assets in exchange wallets, and, to a lesser extent, Web Wallets. The specific reason we say that is because you need to deliver your private keys into the hands of another party, and rely on that website or exchange to keep your private key, and thus your assets, safe. The advantages of the less-secure exchange or web wallets, are the speed at which you can transfer assets into another currency, or into another exchange for sale or for arbitrage purposes. Despite the convenience factor, all software wallets will at some point have been connected to the internet or a network. So, you can never be 100% sure that your system has not been infected with malware, or some kind of keylogging software, that will allow a third party to record your passwords or private keys. How well the type of storage method limits your contact with such hazards is a good way to rate the security of said variety of wallet. Of all the software wallets, desktop and mobile wallets are the most secure because you download and store your own private key, preferably on a different system. By taking the responsibility of private key storage you can be sure that only one person has possession of it, and that is you! Thereby greatly increasing the security of your crypto assets. By having their assets in a desktop wallet, traders can guard their private key and enjoy the associated heightened security levels, as well keep their assets just one swift transfer away from an exchange. Hardware Wallets Advantages and Limitations We briefly touched on the features and operation of the two most popular hardware wallets currently on the market, the Ledger and Trezor wallets. Now it will be helpful to take a closer look into the pros and cons of the hardware wallet storage method. With hardware wallets, the private keys are stored within a protected area of the microcontroller, and they are prevented from being exported out of the device in plain text. They are fortified with state-of-the-art cryptography that makes them immune to computer viruses and malware. And much of the time, the software is open source, which allows user validation of the entire performance of the device. The advantages of a hardware wallet over the perhaps more secure paper wallet method of crypto storage is the interactive user experience, and also the fact that the private key must at some stage be downloaded in order to use the paper wallet. The main disadvantage of a hardware wallet is the time-consuming extra steps needed to transfer funds out of this mode of storage to an exchange, which could conceivably result in some traders missing out on profits. But with security being the main concern of the vast majority of holders, investors and traders too, this slight drawback is largely inconsequential in most situations. Paper Wallets Advantages and Limitations Paper wallets are thought by some to be the safest way to store your crypto assets, or more specifically, the best method of guarding the pathways to your assets on the Blockchain. By printing out your private key information, the route to your assets on the Blockchain is stored 100% offline (apart from the act of printing the private key out, the entire process is totally offline). This means that you will not run the risk of being infected with malware or become the victim of keylogging scams. The main drawback of using paper wallets is that you are in effect putting all your eggs in one basket, and if the physical document is destroyed, you will lose access to your crypto assets forever. Key things to keep in mind about your Wallet Security: Recovery Phrases/Private Key Storage/2FA/Email Security Recovery phrases are used to recover the on-chain location for your wallet with your assets for hardware wallets like ledgers and Trezors that have been lost. When you purchase a new ledger for example, you just have to set it up again by entering the recovery phrase into the display and the lost wallets will appear with your assets intact. Private key storage is of paramount importance to maintain the safety of your on-chain assets! This should be done in paper wallet form, or stored offline on a different computer, or USB device, from the one you would typically use to connect to the 2 Factor Authentication (2FA) sometimes known as “two step authentication”. This feature offers an extra security layer when withdrawing funds from cryptocurrency wallets. A specialized app, most commonly Google Authenticator, is synced up to the exchange to provide a constantly changing code. This code must be entered within a short time window to initiate transfers, or to log into an exchange, if it has also been enabled for that purpose. You must always consider the level of fees, or the amount of Gas, that will be needed to carry out the transaction. In times of high network activity Gas prices can be quite high. In fact, in December 2017 network fees became so high that some Bitcoin transactions became absolutely unfeasible. But that was basically due to the anomalous network congestion caused by frantic trading of Bitcoin as it was skyrocketing in value. When copying wallet addresses, double check and triple check that they are correct. If you make a mistake and enter an incorrect address, it is most likely your funds will be irretrievably lost; you will never see those particular assets again. Also check that you haven’t input the address of another one of your wallets that is designed to hold a different variety of cryptocurrency. You would similarly run the very great risk of losing your funds forever. Or, at the very least, if you have sent the wrong crypto to a large exchange wallet, for example on Coinbase, maybe you could eventually get those funds back, but it would still entail a long and unenjoyable wait. How to Monitor Funds There are two ways to monitor you funds and your wallets. The first is by searching for individual wallet addresses on websites specifically designed to let you view all the transactions on a particular Blockchain. The other is to store a copy of your wallet contents on an application that tracks the prices of all cryptocurrencies. Blockchain.info is the block explorer for Bitcoin, and it allows you to track all wallet movements so you can view your holdings and all the historical transactions within the wallet. The Ethereum blockchain’s block explorer is called Ether scanner, and it functions in the same way. There is a rival to Ether scanner produced by the Jibrel Network, called JSearch which will be released soon. JSearch will aim to offer a more streamlined and faster search method for Ethereum blockchain transactions. There are many different kinds of block explorer for each individual crypto currency, including nanoexplorer.io for Nano (formerly Rai Blocks) and Neotracker for NEO. If you simply want to view the value of your portfolio, the Delta and Blockfolio apps allow you to easily do that. But they are not actually linked to your specific wallet address, they just show price movements and total value of the coins you want to monitor. That’s not all! You can learn how to transfer and monitor the funds in and out of your wallet by clicking on the link. To be continued! UBAI.co Contact me via Facebook, Instagram and LinkedIn to learn more about the best online education: LinkedInFacebookInstagram
The New Crypto Order & Escaping Financial Repression
The Vigilante’s View It is our first issue in months that bitcoin hasn’t hit an all-time high! And it’s the last issue of the year. And what a year for cryptos it was. To put it in perspective, bitcoin could fall 90% from current levels and it will still have outperformed stocks, bonds and real estate in 2017. Bitcoin started 2017 at $960.79. At the time of this writing it is near $13,000 for a gain of 1,250% in 2017. And, bitcoin was actually one of the worst performing cryptocurrencies in our TDV portfolio in 2017! Ethereum (ETH) started 2017 at $8. It has since hit over $800 for a nice 10,000% gain in 2017. That’s pretty good, but not as good as Dash which started the year at $11.19 and recently hit $1,600 for a nearly 15,000% gain. I hope many of you have participated in these amazing gains! If not, or you are new, don’t worry there will be plenty more opportunities in the years ahead. It won’t all be just home runs though… in fact, some of the cryptos that have performed so well to date may go down dramatically or collapse completely in the coming years. I’ll point out further below why Lightning Network is not the answer to Bitcoin Core’s slow speeds and high costs. And, I’ll look ahead to 2018 and how we could already be looking beyond blockchains. Yes, things are moving so fast that blockchain just became known to your average person this year… and could be nearly extinct by next year. That’s why it is important to stick with us here at TDV to navigate these choppy free market waters! New Years Reflection On The Evolution Of Consensus Protocols Sooner or later crypto will humble you by its greatness. Its vastness is accompanied by a madness that is breathtaking, because you quickly realize that there is no stopping crypto from taking over the world. The moment you think you have everything figured out, is the moment the market will surprise you. We are for the first time living and witnessing the birth of the first worldwide free market. Throughout this rampage of innovation, we all are implicitly aiming for the best means of harnessing consensus. As we leave this bountiful 2017 and aim at 2018, it is important for us to meditate and appreciate the progress we have made in transforming the world through the decentralization of consensus. It is also important to reflect on the changes in consensus building we have partaken in and those yet to come. Consensus is the agreement that states “this is what has occurred, and this is what hasn’t happened.” Throughout the vastness of history, we humans have only really had access to centralized means for consensus building. In the centralized world, consensus has been determined by banks, states, and all kinds of central planners. As our readers know, any centralized party can misuse their power, and their consensus ruling can become unfair. In spite of this, many individuals still praise the effectiveness of consensus building of centralized systems. People from antiquity have had no other option but to trust these central planners. These systems of control have created still-water markets where only a few are allowed to compete. This lack of competition resulted in what we now can objectively view as slow innovation. For many, centralized consensus building is preferred under the pretense of security and comfort. Unfortunately, these same individuals are in for a whole lot of discomfort now that the world is innovating on top of the first decentralized consensus building technology, the blockchain. Everything that has occurred since the inception of bitcoin has shocked central planners because for the first time in history they are lost; they no longer hold power. We now vote with our money. We choose what we find best as different technologies compete for our money. What we are witnessing when we see the volatility in crypto is nothing more than natural human motion through price. The innovation and volatility of the crypto market may seem unorthodox to some, because it is. For the first time in history we are in a true free market. The true free market connects you to everybody and for this reason alone the market shouldn’t surprise us for feeling “crazy.” Volatility is a sign of your connection to a market that is alive. Radical innovation is a sign of a market that is in its infancy still discovering itself. In juxtaposing centralized consensus building with decentralized consensus building, I cannot keep myself from remembering some wise biblical words; “ And no one pours new wine into old wineskins. Otherwise, the new wine will burst the skins; the wine will run out and the wineskins will be ruined.” – Luke 5:37 The centralized legacy financial system is akin to old wineskins bursting to shreds by the new wine of crypto. Decentralized consensus building has no need for central planners. For example, think about how ludicrous it would be for someone to ask government for regulation after not liking something about crypto. Sorry, there is no central planner to protect you; even the mathematical protocols built for us to trust are now competing against one another for our money. These new mathematical protocols will keep competing against one another as they provide us with new options in decentralizing consensus. As we look unto 2018, it is important that we as investors begin to critically engage and analyze “blockchain-free cryptocurrencies.” HASHGRAPHS, TANGLES AND DAGS Blockchain-free cryptocurrencies are technologies composed of distributed databases that use different tools to achieve the same objectives as blockchains. The top contenders in the realm of blockchain-free cryptos are DAGs (Directed Acyclic Graphs) such as Swirlds’ Hashgraph, ByteBall’s DAG, and IOTA’s Tangle. These blockchain-free cryptos are also categorized as belonging to the 3 rd generation of cryptocurrencies. These technologies promise to be faster, cheaper, and more efficient than blockchain cryptocurrencies. Blockchains were the first means of creating decentralized consensus throughout the world. In the blockchain, the majority of 51% determine the consensus. The limits of blockchains stem from their inherent nature, whereupon every single node/participant needs to know all of the information that has occurred throughout the whole blockchain economy of a given coin. This opens up blockchains to issues akin to the ones we have been exposed to in regards to Bitcoin’s scaling. It is important to make a clear distinction in the language used between blockchains and blockchain-freecryptocurrencies. When we speak about blockchains it is more proper to speak about its transactionconsensus as “decentralized”, whereas with blockchain-free cryptocurrencies it is best if we refer to transaction consensus as “distributed.” Swirlds’ Hashgraph incorporates a radical and different approach to distributing consensus. Swirlds claims that their new approach will solve scaling and security issues found on blockchains. They use a protocol called “Gossip about Gossip.” Gossip refers to how computers communicate with one another in sending information. In comparison to the Blockchain, imagine that instead of all of the nodes receiving all of the transactions categorized in the past ten minutes, that only a few nodes shared their transaction history with other nodes near them. The Hashgraph team explains this as “calling any random node and telling that node everything you know that it does not know.” That is, in Hashgraph we would be gossiping about the information we are gossiping; i.e., sending to others throughout the network for consensus. Using this gossiped information builds the Hashgraph. Consensus is created by means of depending on the gossips/rumors that come to you and you pass along to other nodes. Hashgraph also has periodic rounds which review the circulating gossips/rumors. Hashgraph is capable of 250,000+ Transactions Per Second (TPS), compared to Bitcoin currently only allowing for 7 TPS. It is also 50,000 times faster than Bitcoin. There is no mention of a coin on their white paper. At this moment there is no Hashgraph ICO, beware of scams claiming that there is. There is however a growing interest in the project along with a surge of app development. IOTAs DAG is known as the Tangle. Contrary to Hashgraph, IOTA does have its own coin known as MIOTA, currently trading around the $3 mark. There are only 2,779,530,283 MIOTA in existence. The Tangle was also created to help alleviate the pains experienced with Blockchain scaling. IOTAs Tangle creates consensus on a regional level; basically neighbors looking at what other neighbors are doing. As the tangle of neighbors grows with more participants the security of the system increases, along with the speed of confirmation times. IOTA has currently been criticized for its still lengthy confirmation times and its current levels of centralization via their Coordinators. This centralization is due to the fact that at this moment in time the main team works as watchtower to oversee how Tangle network grows so that it does not suffer from attacks. Consensus is reached within IOTA by means of having each node confirm two transactions before that same node is able to send a given transaction. This leads to the mantra of “the more people use IOTA, the more transactions get referenced and confirmed.” This creates an environment where transactional scaling has no limits. IOTA has no transaction fees and upon reaching high adoption the transactions ought to be very fast. Another promising aspect about IOTA is that it has an integrated quantum-resistant algorithm, the Winternitz One-Time Signature Scheme, that would protect IOTA against an attack of future quantum computers. This without a doubt provides IOTA with much better protection against an adversary with a quantum computer when compared to Bitcoin. ByteBall is IOTA’s most direct competitor. They both possess the same transaction speed of 100+ TPS, they both have their own respective cryptocurrencies, and they both have transparent transactions. ByteBall’s token is the ByteBall Bytes (GBYTE), with a supply of 1,000,000; currently trading at around $700. ByteBall aims to service the market with tamper proof storage for all types of data. ByteBall’s DAG also provides an escrow like system called “conditional payments;” which allows for conditional clauses before settling transactions. Like IOTA, ByteBall is also designed to scale its transaction size to meet the needs of a global demand. ByteBall provides access to integrated bots for transactions which includes the capacity for prediction markets, P2P betting, P2P payments in chat, and P2P insurance. ByteBall’s initial coin distribution is still being awarded to BTC and Bytes holders according to the proportional amounts of BTC or Bytes that are held per wallet. IOTA, ByteBall and Hashgraph are technologies that provide us with more than enough reasons to be hopeful for 2018. In terms of the crypto market, you don’t learn it once. You have to relearn it every day because its development is so infant. If you are new to crypto and feel lost at all know that you are not alone. These technologies are constantly evolving with new competitive options in the market. As the technologies grow the ease for adoption is set to grow alongside innovation. We are all new to this world and we are all as much in shock of its ingenuity as the next newbie. Crypto is mesmerizing not just for its volatility which is a clear indication of how connected we are now to one another, but also because of the social revolution that it represents. We are experiencing the multidirectional growth of humanity via the free market. Meanwhile Bitcoin Is Turning Into Shitcoin It is with a great degree of sadness that I see bitcoin is on the cusp of destroying itself. Bitcoin Core, anyway. Bitcoin Cash may be the winner from all of this once all is said and done. Whether by design or by accident, bitcoin has become slow and expensive. Many people point out that IF the market were to upgrade to Segwit that all would be fine. I’ll explain further below why many market participants have no incentive to upgrade to Segwit… meaning that the implementation of Segwit has been a massively risky guess that so far has not worked. Others say that the Lightning Network (LN) will save bitcoin. I’ll point out below why that will not happen. Lightning Networks And The Future Of Bitcoin Core If you’ve been following bitcoin for any length of time, you’re probably aware of the significant dispute over how to scale the network. The basic problem is that although bitcoin could be used at one time to buy, say, a cup of coffee, the number of transactions being recorded on the network bid up the price per transaction so much that actually sending BTC cost more than the cup of coffee itself. Indeed, analysis showed that there were many Bitcoin addresses that had such small BTC holdings that the address itself couldn’t be used to transfer it to a different address. These are referred to as “unspendable addresses.” In the ensuing debate, the “big blockers” wanted to increase the size of each block in the chain in order to allow for greater transaction capacity. The “small blockers” wanted to reduce the size of each transaction using a technique called Segregated Witness (SegWit) and keep the blocks in the chain limited to 1MB. SegWit reduces the amount of data in each transaction by around 40-50%, resulting in an increased capacity from 7 transactions per second to perhaps 15. The software engineers who currently control the Bitcoin Core code repository have stated that what Bitcoin needs is “off-chain transactions.” To do this, they have created something called Lightning Networks (LN), based on an software invention called the “two-way peg.” Put simply, the two-way peg involves creating an escrow address in Bitcoin where each party puts some bitcoin into the account, and then outside the blockchain, they exchange hypothetical Bitcoin transactions that either of them can publish on Bitcoin’s blockchain in order to pull their current agreed-upon balance out of the escrow address. Most layman explanations of how this works describe the protocol as each party putting in an equal amount of Bitcoin into the escrow. If you and I want to start transacting off-chain, so we can have a fast, cheap payment system, we each put some Bitcoin in a multi-party address. I put in 1 BTC and you put in 1 BTC, and then we can exchange what are essentially cryptographic contracts that either of us can reveal on the bitcoin blockchain in order to exit our agreement and get our bitcoin funds. Fortunately, it turns out that the video’s examples don’t tell the whole story. It’s possible for the escrow account to be asymmetric. See:. That is, one party can put in 1 BTC, while the other party puts in, say, 0.0001 BTC. (Core developer and forthcoming Anarchapulco speaker Jimmy Song tells us that there are game theoretic reasons why you don’t want the counterparty to have ZERO stake.) Great! It makes sense for Starbucks to participate with their customers in Lightning Networks because when their customers open an LN channel (basically a gift card) with them for $100, they only have to put in $1 worth of Bitcoin. Each time the customer transacts on the Lightning Network, Starbucks gets an updated hypothetical transaction that they can use to cash out that gift card and collect their bitcoin. The elephant in the room is: transaction fees. In order to establish the escrow address and thereby open the LN channel, each party has to send some amount of bitcoin to the address. And in order to cash out and get the bitcoin settlement, one party also has to initiate a transaction on the bitcoin blockchain. And to even add funds to the channel, one party has to pay a transaction fee. Right now fees on the bitcoin blockchain vary widely and are extremely volatile. For a 1-hour confirmation transaction, the recommended fee from one wallet might be $12 US, while on another it’s $21 US. For a priority transaction of 10-20 minutes, it can range from $22-30 US. Transactions fees are based on the number of bytes in the transaction, so if both parties support SegWit (remember that?) then the fee comes down by 40-50%. So it’s between $6 and $10 US for a one hour transaction and between $11-15 for a 15 minute transaction. (SegWit transactions are prioritized by the network to some degree, so actual times may be faster) But no matter what, both the customer and the merchant have to spend $6 each to establish that they will have a relationship and either of them has to spend $6 in order to settle out and get their bitcoin. Further, if the customer wants to “top off” their virtual gift card, that transaction costs another $6. And because it adds an address to the merchant’s eventual settlement, their cost to get their Bitcoin goes up every time that happens, so now it might cost them $9 to get their bitcoin. Since these LN channels are essentially digital gift cards, I looked up what the cost is to retailers to sell acustomer a gift card. The merchant processor Square offers such gift cards on their retailer site. Their best price is $0.90 per card. So the best case is that Lightning Networks are 600% more expensive than physical gift cards to distribute, since the merchant has to put a transaction into the escrow address. Further, the customer is effectively buying the gift card for an additional $6, instead of just putting up the dollar amount that goes on the card. But it gets worse. If you get a gift card from Square, they process the payments on the card and periodically deposit cash into your bank account for a percentage fee. If you use the Lightning Network, you can only access your Bitcoin by cancelling the agreement with the customer. In other words, you have to invalidate their current gift card and force them to spend $6 on a new one! And it costs you $6 to collect your funds and another $6 to sell the new gift card! I’m sure many of you have worked in retail. And you can understand how this would be financially infeasible. The cost of acquiring a new customer, and the amount of value that customer would have to stake just to do business with that one merchant, would be enormous to make any financial sense. From time immemorial, when transaction costs rise, we see the creation of middlemen. Merchants who can’t afford to establish direct channels with their customers will have to turn to middlemen, who will open LN channels for them. Instead of directly backing and cashing out their digital gift cards, they will establish relationships with entities that consolidate transactions, much like Square or Visa would do today. Starbucks corporate or individual locations might spend a few USD on opening a payment channel with the middleman, and then once a month spend 6 USD to cash out their revenues in order to cover accounts payable. In the meantime, the middleman also has to offer the ability to open LN channels for consumers. This still happens at a fixed initial cost, much like the annual fee for a credit card in the US. They would continue to require minimum balances, and would offer access to a network of merchants, exactly like Visa and MasterCard today. This process requires a tremendous amount of capital because although the middleman does not have to stake Bitcoin in the consumer’s escrow account, he does have to stake it in the merchant’s account. In other words, if the Lightning Network middleman wants to do business with Starbucks to the tune of $100,000/month, he needs $100,000 of bitcoin to lock into an escrow address. And that has to happen for every merchant. Because every month (or so) the merchants have to cash out of their bitcoin to fiat in order to pay for their cost of goods and make payroll. Even if their vendors and employees are paid in bitcoin and they have LN channels open with them, someone somewhere will want to convert to fiat, and trigger a closing channel creating a cascading settlement effect that eventually arrives at the middleman. Oh, and it triggers lots of bitcoin transactions that cost lots of fees. Did I mention that each step in the channel is expecting a percentage of the value of the channel when it’s settled? This will come up again later. Again, if you’ve worked in the retail business, you should be able to see how infeasible this would be. You have to buy inventory and you have to sell it to customers and every part that makes the transaction more expensive is eating away at your margins. Further, if you’re the middleman and Starbucks closes out a channel with a $100,000 stake where they take $95,000 of the bitcoin, how do you re-open the channel? You need another $95,000 in capital. You have revenue, of course, from the consumer side of your business. Maybe you have 950 consumers that just finished off their $100 digital gift cards. So now you can cash them out to bitcoin for just $5700 in transaction fees, and lose 5.7% on the deal. In order to make money in that kind of scenario, you have to charge LN transaction fees. And because your loss is 5.7%, you need to charge in the range of 9% to settle Lightning Network transactions. Also, you just closed out 950 customers who now have to spend $5700 to become your customer again while you have to spend $5700 to re-acquire them as customers. So maybe you need to charge more like 12%. If you approached Starbucks and said “you can accept Bitcoin for your customers and we just need 12% of the transaction,” what are the odds that they would say yes? Even Visa only has the balls to suggest 3%, and they have thousands and thousands of times as many consumers as bitcoin. The entire mission of bitcoin was to be faster, cheaper and better than banks, while eliminating centralized control of the currency. If the currency part of Bitcoin is driven by “off-chain transactions” while bitcoin itself remains expensive and slow, then these off-chain transactions will become the territory of centralized parties who have access to enormous amounts of capital and can charge customers exorbitant rates. We know them today as banks. Even for banks, we have to consider what it means to tie up $100,000/month for a merchant account. That only makes sense if the exchange rate of bitcoin grows faster than the cost of retaining Bitcoin inventory. It costs nothing to store Bitcoin, but it costs a lot to acquire it. At the very least the $6 per transaction to buy it, plus the shift in its value against fiat that’s based on interest rates. As a result, it only makes sense to become a Lightning Network middleman if your store of value (bitcoin) appreciates at greater than the cost of acquiring it (interest rate of fiat.) And while interest rates are very low, that’s not a high bar to set. But to beat it, Bitcoin’s exchange rate to fiat has to outpace the best rate available to the middleman by a factor exceeding the opportunity cost of other uses of that capital. Whatever that rate is, for bitcoin, the only reason the exchange rate changes is new entry of capital into the “price” of bitcoin. For that to work, bitcoin’s “price” must continue to rise faster than the cost of capital for holding it. So far this has happened, but it’s a market gamble for it to continue. Since it happens because of new capital entering into the bitcoin network and thus increasing the market cap, this results in Bitcoin Core becoming the very thing that its detractors accuse it of: a Ponzi scheme. The cost of transacting in Bitcoin becomes derived from the cost of holding bitcoin and becomes derived from the cost of entering bitcoin. Every middleman has to place a bet on the direction of bitcoin in a given period. And in theory, if they think the trend is against Bitcoin, then they’ll cash out and shut down all the payment channels that they transact. If they bought bitcoin at $15,000, and they see it dropping to $13,000 — they’ll probably cash out their merchant channels and limit their risk of a further drop. The consumer side doesn’t matter so much because their exposure is only 1%, but the merchant side is where they had to stake everything. If you’re wondering why this information is not widely known, it’s because most bitcoin proponents don’t transact in bitcoin on a regular basis. They may be HODLing, but they aren’t doing business in bitcoin. Through Anarchapulco, TDV does frequent and substantial business in bitcoin, and we’ve paid fees over $150 in order to consolidate ticket sale transactions into single addresses that can be redeemed for fiat to purchase stage equipment for the conference. For Bitcoin to be successful at a merchant level via Lightning Networks, we will have to see blockchain transactions become dramatically cheaper. If they return to the sub-$1 range, we might have a chance with centralized middlemen, but only with a massive stabilization of volatility. If they return to $0.10, we might have a chance with direct channels. Otherwise, Lightning Networks can’t save bitcoin as a means of everyday transaction. And since that takes away its utility, it might very well take away the basis of its value and bitcoin could find itself truly being a tulip bubble. One final note: there are a some parties for whom all these transactions are dramatically cheaper. That is the cryptocurrency exchanges. Because they are the entry and exit points for bitcoin-to-fiat, they can eliminate a layer of transaction costs and thus offer much more competitive rates — as long as you keep your bitcoin in their vaults instead of securing it yourselves. Sending it out of their control lessens their competitive advantage against other means of storage. It comes as no surprise, then, that they are the least advanced in implementing the SegWit technology that would improve transaction costs and speed. If you buy bitcoin on Poloniex, it works better for them if it’s expensive for you to move that coin to your Trezor. In fact, an exchange offering Lightning Network channels to merchants could potentially do the following… 1) Stake bitcoins in channels with merchants. These coins may or may not be funds that are held by their customers. There is no way to know. 2) Offer customers “debit card” accounts for those merchants that are backed by the Lightning network 3) Establish middle addresses for the customer accounts and the merchant addresses on the Lightning Network. 4) Choose to ignore double-spends between the customer accounts and the merchant addresses, because they don’t actually have to stake the customer side. They can just pretend to since they control the customer’s keys. 5) Inflate their bitcoin holdings up to the stake from the merchants, since the customers will almost never cash out in practice. In other words, Lightning Networks allow exchanges a clear path to repeating Mtgox; lie to the consumer about their balance while keeping things clean with the merchant. In other words, establish a fractional reserve approach to bitcoin. So, to summarize, Bitcoin Core decided increasing the blocksize from 1mb to 2-8mb was “too risky” and decided to create Segwit instead which the market has not adopted. When asked when bitcoin will be faster and less expensive to transfer most Bitcoin Core adherents say the Lightning Network will fix the problems. But, as I’ve just shown, the LN makes no sense for merchants to use and will likely result in banks taking over LN nodes and making BTC similar to Visa and Mastercard but more expensive. And, will likely result in exchanges becoming like banks of today and having fractional reserve systems which makes bitcoin not much better than the banking system of today. Or, people can switch to Bitcoin Cash, which just increased the blocksize and has much faster transaction times at a fraction of the cost. I’ve begun to sell some of my bitcoin holdings because of what is going on. I’ve increased my Bitcoin Cash holdings and also increased my holdings of Dash, Monero, Litecoin and our latest recommendation, Zcash. Other News & Crypto Tidbits When bitcoin surpassed $17,600 in December it surpassed the total value of the IMF’s Special Drawing Rights (SDR) currency. Meanwhile, Alexei Kireyev of the IMF put out his working paper, “ The Macroeconomics of De-Cashing ,” where he advises abolishing cash without having the public aware of the process. Countries such as Russia are considering creating a cryptocurrency backed by oil to get around the US dollar and the US dollar banking system. Venezuela is as well although we highly doubt it will be structured properly or function well given the communist government’s track record of destroying two fiat currencies in the last decade. To say that the US dollar is being attacked on every level is not an understatement. Cryptocurrencies threaten the entire monetary and financial system while oil producing countries look to move away from the US dollar to their own oil backed cryptocurrency. And all this as bitcoin surpassed the value of the IMF’s SDR in December and in 2017 the US dollar had its largest drop versus other currencies since 2003. And cryptocurrency exchanges have begun to surpass even the NASDAQ and NYSE in terms of revenue. Bittrex, as one example, had $3 billion in volume on just one day in December. At a 0.5% fee per trade that equaled $15m in revenue in just one day. If that were to continue for 365 days it would mean $5.4 billion in annual revenue which is more than the NASDAQ or NYSE made this year. Conclusion I never would have guessed how high the cryptocurrencies went this year. My price target for bitcoin in 2017 was $3,500! That was made in late 2016 when bitcoin was near $700 and many people said I was crazy. Things are speeding up much faster than even I could have imagined. And it is much more than just making money. These technologies, like cryptocurrencies, blockchains and beyond connect us in a more profound way than Facebook would ever be able to. We are now beginning to be connected in ways we never even thought of; and to some degree still do not understand. These connections within this completely free market are deep and meaningful. This is sincerely beautiful because we are constantly presented with an ever growing buffet of competing protocols selling us their best efforts in providing harmony within the world. What all of these decentralized and distributed consensus building technologies have in common is that they connect us to the world and to each other. Where we are going we don’t need foolish and trite Facebook’s emojis. As we close a successful 2017 we look with optimism towards a much more prosperous 2018. The Powers That Shouldn’t Be (TPTSB) can’t stop us. As we move forward note how much crypto will teach you about ourselves and the world. In a radical free market making our own bets will continue to be a process of self discovery. Crypto will show us the contours of our fears, the contours of our greed, and will constantly challenge us to do our best with the knowledge we have. Remember, randomness and innovation are proper to the happenstance nature of a true digital free market. Happy New Year fellow freedom lovers! And, as always, thank you for subscribing! Jeff Berwick
https://www.mtgox.com/press_release_20140210.html Original message from their website: Dear MtGox Customers and Bitcoiners, As you are aware, the MtGox team has been working hard to address an issue with the way that bitcoin withdrawals are processed. By "bitcoin withdrawal" we are referring to transactions from a MtGox bitcoin wallet to an external bitcoin address. Bitcoin transactions to any MtGox bitcoin address, and currency withdrawals (Yen, Euro, etc) are not affected by this issue. The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending bitcoin withdrawals until this technical issue has been resolved. Addressing Transaction Malleability MtGox has detected unusual activity on its Bitcoin wallets and performed investigations during the past weeks. This confirmed the presence of transactions which need to be examined more closely. Non-technical Explanation: A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue. Technical Explanation: Bitcoin transactions are subject to a design issue that has been largely ignored, while known to at least a part of the Bitcoin core developers and mentioned on the BitcoinTalk forums. This defect, known as "transaction malleability" makes it possible for a third party to alter the hash of any freshly issued transaction without invalidating the signature, hence resulting in a similar transaction under a different hash. Of course only one of the two transactions can be validated. However, if the party who altered the transaction is fast enough, for example with a direct connection to different mining pools, or has even a small amount of mining power, it can easily cause the transaction hash alteration to be committed to the blockchain. The bitcoin api "sendtoaddress" broadly used to send bitcoins to a given bitcoin address will return a transaction hash as a way to track the transaction's insertion in the blockchain. Most wallet and exchange services will keep a record of this said hash in order to be able to respond to users should they inquire about their transaction. It is likely that these services will assume the transaction was not sent if it doesn't appear in the blockchain with the original hash and have currently no means to recognize the alternative transactions as theirs in an efficient way. This means that an individual could request bitcoins from an exchange or wallet service, alter the resulting transaction's hash before inclusion in the blockchain, then contact the issuing service while claiming the transaction did not proceed. If the alteration fails, the user can simply send the bitcoins back and try again until successful. We believe this can be addressed by using a different hash for transaction tracking purposes. While the network will continue to use the current hash for the purpose of inclusion in each block's Merkle Tree, the new hash's purpose will be to track a given transaction and can be computed and indexed by hashing the exact signed string via SHA256 (in the same way transactions are currently hashed). This new transaction hash will allow signing parties to keep track of any transaction they have signed and can easily be computed, even for past transactions. We have discussed this solution with the Bitcoin core developers and will allow Bitcoin withdrawals again once it has been approved and standardized. In the meantime, exchanges and wallet services - and any service sending coins directly to third parties - should be extremely careful with anyone claiming their transaction did not go through. Note that this will also affect any other crypto-currency using the same transaction scheme as Bitcoin. Conclusion To put things in perspective, it's important to remember that Bitcoin is a very new technology and still very much in its early stages. What MtGox and the Bitcoin community have experienced in the past year has been an incredible and exciting challenge, and there is still much to do to further improve. MtGox will resume bitcoin withdrawals to outside wallets once the issue outlined above has been properly addressed in a manner that will best serve our customers. More information on the status of this issue will be released as soon as possible. We thank you for taking the time to read this, and especially for your patience. Best Regards, MtGox Team
Trying to withdraw to a GreenAddress.it generateed address, Kraken gave the error: "invalid bitcoin address provided" I emailed them. The response: "At this time, your multi-sig address generated with the GreenAddress service is not compatible with Kraken (or with many other services in the Bitcoin world). We're hoping to add multi-sig address support in the future, but it's not a top priority at this time. If you want funds sent to a multi-sig address, you may want to locate and withdraw your bitcoin to a third party service which offers this capability." I'm surprised by this. From what I understand (from reading this http://bitcoinmagazine.com/11108/multisig-future-bitcoin/ which Lawrence from GreenAddress has commented on), multi-sig is the way of the future ("Bitcoin 1.5") and addresses the problems which led to MtGox et al.. So it strikes me as odd that Kraken wouldn't support them. If I understand & remember correctly, I could use my permanent payment URL, but as Lawrence said on his blog, he expressly recommends people don't do that as it compromises the inbuilt security of the anonymity of multi-sig which is a core feature and point of GreenAddress? [edit: this is wrong, see edit2] Do people on here already know about this? Is it a big deal? It seems surprising to me but I'm still learning. Kraken is one of the top 3 recommended exchanges for getting into bitcoin IMO, and GreenAddress is increasingly recommended as a secure* hot wallet. I can therefore envision that the Kraken-GAit combo will be becoming increasingly common and this will only occur more and more. What do people recommend I do immediately to get my funds into GAit? What do people propose in the long term? Abandon Kraken? Pressure them with the weight of the community to re-prioritise this more highly? Cheers. EDIT: responding to question by Harda : I provided them with an address starting with a 3 (a P2SH address) and they currently don't support it. EDIT2: just chatted to Lawrence. I misunderstood because 'am n00b'. One should never re-use a bitcoin URI e.g. as generated in the GAit app. One can send one's bitcoin URL to anyone they like: it directs to the GA site which generates a unique bitcoin URI to send to you. I strongly suspect that the permanant URL wouldn't work in Kraken as a bitcoin address, however. EDIT3: Email response from Kraken: "Thanks for this. We really appreciate the feedback. I'm going to forward your comments directly to our developers for their review. Let me know if you need anything else from me. Have a good one.". So if the fix really is as simple as harda and gorillamania suggest, it might not be too far off...
https://www.mtgox.com/press_release_20140210.html Dear MtGox Customers and Bitcoiners, As you are aware, the MtGox team has been working hard to address an issue with the way that bitcoin withdrawals are processed. By "bitcoin withdrawal" we are referring to transactions from a MtGox bitcoin wallet to an external bitcoin address. Bitcoin transactions to any MtGox bitcoin address, and currency withdrawals (Yen, Euro, etc) are not affected by this issue. The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending bitcoin withdrawals until this technical issue has been resolved. Addressing Transaction Malleability MtGox has detected unusual activity on its Bitcoin wallets and performed investigations during the past weeks. This confirmed the presence of transactions which need to be examined more closely. Non-technical Explanation: A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue. Technical Explanation: Bitcoin transactions are subject to a design issue that has been largely ignored, while known to at least a part of the Bitcoin core developers and mentioned on the BitcoinTalk forums. This defect, known as "transaction malleability" makes it possible for a third party to alter the hash of any freshly issued transaction without invalidating the signature, hence resulting in a similar transaction under a different hash. Of course only one of the two transactions can be validated. However, if the party who altered the transaction is fast enough, for example with a direct connection to different mining pools, or has even a small amount of mining power, it can easily cause the transaction hash alteration to be committed to the blockchain. The bitcoin api "sendtoaddress" broadly used to send bitcoins to a given bitcoin address will return a transaction hash as a way to track the transaction's insertion in the blockchain. Most wallet and exchange services will keep a record of this said hash in order to be able to respond to users should they inquire about their transaction. It is likely that these services will assume the transaction was not sent if it doesn't appear in the blockchain with the original hash and have currently no means to recognize the alternative transactions as theirs in an efficient way. This means that an individual could request bitcoins from an exchange or wallet service, alter the resulting transaction's hash before inclusion in the blockchain, then contact the issuing service while claiming the transaction did not proceed. If the alteration fails, the user can simply send the bitcoins back and try again until successful. We believe this can be addressed by using a different hash for transaction tracking purposes. While the network will continue to use the current hash for the purpose of inclusion in each block's Merkle Tree, the new hash's purpose will be to track a given transaction and can be computed and indexed by hashing the exact signed string via SHA256 (in the same way transactions are currently hashed). This new transaction hash will allow signing parties to keep track of any transaction they have signed and can easily be computed, even for past transactions. We have discussed this solution with the Bitcoin core developers and will allow Bitcoin withdrawals again once it has been approved and standardized. In the meantime, exchanges and wallet services - and any service sending coins directly to third parties - should be extremely careful with anyone claiming their transaction did not go through. Note that this will also affect any other crypto-currency using the same transaction scheme as Bitcoin. Conclusion To put things in perspective, it's important to remember that Bitcoin is a very new technology and still very much in its early stages. What MtGox and the Bitcoin community have experienced in the past year has been an incredible and exciting challenge, and there is still much to do to further improve. MtGox will resume bitcoin withdrawals to outside wallets once the issue outlined above has been properly addressed in a manner that will best serve our customers. More information on the status of this issue will be released as soon as possible. We thank you for taking the time to read this, and especially for your patience. Best Regards, MtGox Team ok, so where do we go from now?
A Bitcoin FAQ for GBS -Short version- 1) Should I buy bitcoins? No. 2) But if they drop down to a dollar, then I can snap some up and No. You are one of thousands of people who want to do this. Telling the thread that you are going to do this doesn't make you look smart. 3) How does this shit work? It doesn't make any sense! No, it really doesn't. It's impossible to explain bitcoin in anything less than tl;dr terms so you should probably just not worry about it. Go do something useful instead of reading this awful thread full of socially inept people laughing at another group of socially inept people. -Long version- 1) I really want to understand how bitcoin works. Please. Okay, you asked for it. With some severe simplifications and a painfully neutral pov: Bitcoin is a decentralized "cryptocurrency". It is a network of software that shares a common protocol designed to allow secure transfer of bitcoins between users. It uses distributed cryptography to verify transfers and balances. Bitcoin is also the subculture that has sprung up around this software, which includes additional software that is not part of the core design. The most high-profile of these are trading services that allow users to buy and sell bitcoins using US dollars and other real-world currencies. Bitcoins users have files called "wallets". This is sort of a misnomer, because these wallets do not actually contain anything except a cryptographic private key. One's bitcoin balance is actually recorded inside the distributed network, which is why you cannot edit your wallet file to give yourself more bitcoins. Bitcoins can be added to a particular balance using a public bitcoin address, which acts as a cryptographic public key. The private key is contained in the wallet, and bitcoins cannot be transferred out of a balance without that private key. (If you don't understand public-key cryptography, do some reading because you can't understand bitcoin without it. While you're at it, read up on cryptographic hash functions.) Transfers between wallets are recorded in "blocks", which are verified by the distributed cryptography system. The act of verifying transactions and then adding those transactions to the historical "blockchain" is called "mining". Transactions are stored in the blockchain using cryptographic hashing methods which allow the entire blockchain to be independently verified for consistency and integrity. In order to make blockchain verification an attractive prospect, the design of bitcoin gives "bitcoin miners" two reasons to tie up their computing hardware to maintain the network, both based around competition. The first reason is that bitcoin transfers can contain optional transaction fees which are paid to the miner that verifies the transaction. Paying a transaction fee makes it more likely that your transaction will be processed in a timely manner, because those transactions are more attractive to the miners. The second reason is that mining gives the miner a chance of receiving a batch of newly created bitcoins. The more cryptographic power one brings to bear, the more likely it is that the next batch of new bitcoins will be yours. There are a fixed number of bitcoins which can ever be mined, and the difficulty of the cryptography will continue to increase over time. An important aspect of mining is that the network is designed to handle one complete block (containing a specific number of transactions) every ten minutes. If more computing power is added to the distributed network, making the blocks take less time to process, the difficulty of the cryptography increases. The inverse is also true. This scaling difficulty is meant to help prevent a single user or group of users from gaining complete control over the network by using more computational power. The distributed verification process determines the "truth" of a transaction block by whether or not the majority of the network (as measured by contributed cryptographic work) considers it valid. The original designer thought it unlikely that any one user or organization could acquire a majority of the network's cryptographic power and therefore "cheat" the system in some way. Bitcoin verification power is typically measured in the speed at which a system can perform cryptographic hashes, which are required to verify the blockchain and to add transactions to it. The difficulty of the mining process is determined by the amount of "hashing" required to add a new block to the chain. These are the core aspects of the original bitcoin design. In short, bitcoins are assigned to "wallet" addresses, with balances stored in a distributed "blockchain". The accuracy of the blockchain is verified by "miners", who have a vested interest in doing so through a reward system. Attacks (such as double-spending) are prevented by the distributed nature of the network, where any invalid transactions will be caught by other mining systems. 2) That was painful to read. It was painful to write. 3) So what went wrong? A lot of things, some of which are due to problems with the original design, and others which are due to problems with the bitcoin community. Bitcoin was originally a proof-of-concept project by an anonymous crypto specialist who used the pseudonym "Satoshi Nakamoto". It is unlikely that he was actually Japanese, but his identity still remains a mystery. Bitcoin was meant to be a testing ground for theories about how cryptocurrencies might work. Initially, bitcoin was a curiosity and there was little participation in the network, as bitcoins had no real-world worth. This all changed as bitcoin was discovered by three types of people. First, there were the internet libertarian types who liked the idea of a currency that was not controlled by a government. For them, bitcoin represented an ideology. Second, there were people who wanted to use bitcoin as a semi-anonymous international currency for illegal transactions, such as drugs, weapons, or illicit pornography, as well as a possible method for laundering money. For them, bitcoin represented safety from the law. Third, there were people who viewed bitcoin as a method to get rich by getting in on the ground floor of a new kind of money. These people saw bitcoin as an investment. The history of bitcoin is too complicated to go into detail here, but these three groups shaped the bitcoin network and community into what it is today, which is a gigantic goddamn mess of idiocy, greed, and bad decisions. 4) What happened to the neutral pov? I'm tired. 5) Well, then where is bitcoin right now? Right now, the bitcoin community has been overwhelmed by the use of bitcoin as, essentially, a commodity to be bought and sold. Individual bitcoiners may talk about the future of bitcoin as a currency, but the vast majority of bitcoin transactions today are the buying and selling of bitcoins themselves using real-world money, and not the buying of goods or services using bitcoins. There is an extremely limited number of things you can spend bitcoins on without first converting them to dollars (or whatever), and many of those are done through third-party bitcoin-to-dollars systems where the merchant never sees any bitcoins. Bitcoins are purchased and sold much like other commodities such as gold, petroleum, and the like. Exchange services are set up, where people who wish to buy the commodity put forth "buy orders", where they offer to buy a certain amount of the commodity at a given price, and these buy orders are matched with "sell orders" put in by people who wish to sell that commodity. There are several bitcoin exchanges that let one buy and sell bitcoins using dollars and other currencies, but the most important one is "mtgox". Amusingly, Mtgox started life as "Magic: The Gathering Online eXchange", an exchange service for virtual Magic: The Gathering cards. When someone says "bitcoin is at $50" or something similar, usually they mean that the most recent buy order on mtgox was for $50 a bitcoin. The market prices for bitcoin have historically tended to rapidly inflate and then crash spectacularly. Bitcoin's market value has dropped by 50% in less than a day on multiple occasions. Regardless, true believers in bitcoin (typically the libertarians or the investors, who are sometimes one and the same) keep throwing more money at the speculative market, in the hopes that one day their currency will be treated with respect by the world, or at least they'll eventually make up for their losses. Neither scenario is likely. 6) Why is this funny? Because we're children who like laughing at dumb people, and bitcoin people are a truly spectacular level of stupid. 7) So could bitcoin ever be a real currency? No, for one simple reason. Bitcoin does not scale. The network is already creaking under the weight of relatively few transactions, and more importantly, the blockchain size is increasing rapidly. The blockchain file is currently several gigabytes in size, and the entire chain must be downloaded in order to mine or verify your own transactions. You can use a third-party service to store and transfer your bitcoins, but these services have historically tended to get hacked or just suddenly vanish, taking all your internet funny-money with it. If bitcoin actually became popular as a currency and not just as a speculative commodity, the network would rapidly become even more unusably slow than it already is, and the blockchain would swell to an absurd and unmanageable size. 8) Some people seem legitimately angry about bitcoin. Bitcoin would appear to be a mostly harmless way for idiots to throw money at each other, except for the fact that bitcoin mining has (not surprisingly) become an arms race to see who can get the most hashing power online. The original design of bitcoin did not account for the possibility of specialized, expensive hardware which could make mining without that hardware almost useless. Certain kinds of ATI Radeon video cards proved so effective at performing bitcoin hashing that mining solely on a general-purpose PC CPU gives negligible results, due to the vastly increased hashing difficulty. Miners purchased huge amounts of these video cards to create custom (and often hilarous) "mining rigs", essentially converting electricity into heat and bitcoins. The stakes have been raised again with the advent of specialized bitcoin-only ASIC hardware which is even more effective than the video cards were. The future of bitcoin mining appears to be in the hands of a small minority of users who can afford this specialized equipment, making the "distributed" nature of bitcoin something of a joke. The bitcoin network now must use vast amounts of power, far out of proportion to its actual usefulness and typically generated by fossil fuel plants, just to maintain itself. It is a tremendous waste of actual real-world resources that could be better used on something important (like, for example, watching cat videos) and this makes some people actually angry at the situation. 9) Wait, what about this "BFL" thing, and who's "Atlas"? What the hell are you people talking about? Look at all these fucking words I've already written. God, what a waste of effort.
tldr: why don't you go buy beanie babies or a wayne gretzky rookie card instead?
So I jumped in bought 1.42BTC worth of GoxBTC for an average buy in @ 0.27 and there is no way I am going to sell them without a statement that there is no way I am not going to see ownership of these. Now that being said, here is my position and I am interested in what others are:
My GoxBTC is in the BitcoinBuilder wallet, I never transferred it to my Gox wallet*
I have a RealBTC and GoxBTC payout address locked into my account before all of this went down.
I decided that I was going to leave my GoxBTC in the BitcoinBuilder wallet due to the wording of this paragraph on their FAQ:
What happens to my "gox" BTC if MtGox disappears with everybody'sBTC, or decides the bitcoin builder "gox" BTC are invalid? We would do our utmost to reclaim the funds of course... but this is > exactly the risk you are taking on when agreeing to buy "gox" BTC at > a discount. Caveat emptor!
.... if Gox went tits up, which it totally finally did, that to recoup anything from this gamble my best bet would be to leave my balance with BitcoinBuilder and let them pursue getting the BTC they are owed versus me going after the 5.2244 myself. That was my gamble if this scenario played out and it totally has. What I want to know is...who was stealing the BTC and for how long...it is suggested it was for a looonnnngg time. That person must be shitting themselves laughing right now.. kind of hate you right now but gotta give you props for the heist Bro....now go eat a dick asshole!! :D Hope nobody lost the farm on this one, it was pretty clearly a hail mary throw and if caught would have roooooocccckkk haha edit: I am verified on Gox on ages ago but never really used them for trading much, just a little back after the april 2013 crash. Stuck with cavirtex and VoS.
Something I'm surprised that no one caught on to yet...
So some of us who were hedging that MtGox would recover, and using bitcoinbuilder.com to accumulate cheap "GoxCoins", I found something disturbing just now. I used the site, and indeed my MtGox account was credited with the bitcoins I just bought from bitcoinbuilder. Now when I checked the blockchain to check for inputs to the address that MtGox provided me for deposits... none. zero. I wonder how this is technically possible. If you don't believe me, check for yourself. Use the same address that you used on bitcoinbuilder for deposits to your mtgox account, and if your account was credited with btc, but it doesn't show up on the blockchain... that means that mtgox was pulling some kind of technical feat, that i don't quite understand. i would post my address, but i wouldn't want someone to deposit into it, and invalidate this claim. can i ask you guys in the community to verify this for me?
Major Bug Found in Bitcoin Network By Largest & Oldest Bitcoin Exchange MtGox - Bitcoin Foundation Trying To Cover Up
The Bitcoin Foundation is trying to cover up the major bug that was found in Bitcoin's network by the oldest and largest Bitcoin exchange, MtGox. The Bitcoin Foundation claims that there is no such thing, but the fact that MtGox is experiencing major problems linked to this bug, reveals the lies spread by the Bitcoin Foundation. Negative confirmed news:
China banned Bitcoin
Russia banned Bitcoin
Denmark banned Bitcoin
Bitcoin will not be regulated in the USA
Bitcoin linked to criminal activities
Bitcoin extremely volatile and unreliable
Bitcoin crashed yesterday, to as low as $102 at a major bitcoin exchange (BTC-e)
FBI holds over 144,000 bitcoins. Yesterday's crash was caused by a 3-6k Bitcoin sell off, if the FBI decides to dump the 144k coins, Bitcoin WILL (inevitable) drop to below $100 USD.
MtGox: ear MtGox Customers and Bitcoiners, As you are aware, the MtGox team has been working hard to address an issue with the way that bitcoin withdrawals are processed. By "bitcoin withdrawal" we are referring to transactions from a MtGox bitcoin wallet to an external bitcoin address. Bitcoin transactions to any MtGox bitcoin address, and currency withdrawals (Yen, Euro, etc) are not affected by this issue. The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending bitcoin withdrawals until this technical issue has been resolved. Addressing Transaction Malleability MtGox has detected unusual activity on its Bitcoin wallets and performed investigations during the past weeks. This confirmed the presence of transactions which need to be examined more closely. Non-technical Explanation: A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue. Technical Explanation: Bitcoin transactions are subject to a design issue that has been largely ignored, while known to at least a part of the Bitcoin core developers and mentioned on the BitcoinTalk forums. This defect, known as "transaction malleability" makes it possible for a third party to alter the hash of any freshly issued transaction without invalidating the signature, hence resulting in a similar transaction under a different hash. Of course only one of the two transactions can be validated. However, if the party who altered the transaction is fast enough, for example with a direct connection to different mining pools, or has even a small amount of mining power, it can easily cause the transaction hash alteration to be committed to the blockchain. The bitcoin api "sendtoaddress" broadly used to send bitcoins to a given bitcoin address will return a transaction hash as a way to track the transaction's insertion in the blockchain. Most wallet and exchange services will keep a record of this said hash in order to be able to respond to users should they inquire about their transaction. It is likely that these services will assume the transaction was not sent if it doesn't appear in the blockchain with the original hash and have currently no means to recognize the alternative transactions as theirs in an efficient way. This means that an individual could request bitcoins from an exchange or wallet service, alter the resulting transaction's hash before inclusion in the blockchain, then contact the issuing service while claiming the transaction did not proceed. If the alteration fails, the user can simply send the bitcoins back and try again until successful. We believe this can be addressed by using a different hash for transaction tracking purposes. While the network will continue to use the current hash for the purpose of inclusion in each block's Merkle Tree, the new hash's purpose will be to track a given transaction and can be computed and indexed by hashing the exact signed string via SHA256 (in the same way transactions are currently hashed). This new transaction hash will allow signing parties to keep track of any transaction they have signed and can easily be computed, even for past transactions. We have discussed this solution with the Bitcoin core developers and will allow Bitcoin withdrawals again once it has been approved and standardized. In the meantime, exchanges and wallet services - and any service sending coins directly to third parties - should be extremely careful with anyone claiming their transaction did not go through. Note that this will also affect any other crypto-currency using the same transaction scheme as Bitcoin. Conclusion To put things in perspective, it's important to remember that Bitcoin is a very new technology and still very much in its early stages. What MtGox and the Bitcoin community have experienced in the past year has been an incredible and exciting challenge, and there is still much to do to further improve. MtGox will resume bitcoin withdrawals to outside wallets once the issue outlined above has been properly addressed in a manner that will best serve our customers. More information on the status of this issue will be released as soon as possible. We thank you for taking the time to read this, and especially for your patience. Best Regards, MtGox Team Source: https://www.mtgox.com/press_release_20140210.html
Mtgox data theft + Bitstamp data theft - how many times will it happen again?
In hindsight, the decision to take down the entire mtgox website could have been related to a larger hack (not just malleability, hackers had access to the system in some way at some point). I was wondering, could the decision to take down the ZenDesk support for mtgox be related to the data theft at mtgox? Reason I am wondering is, "only" 20 GB of data has been stolen. As another redditor suggested, this number corresponds with roughly 20k accounts' documents, which is only a few percent of their total verified customer base. What if these documents were submitted to ZenDesk because they needed additional handling (e.g. invalid and/or incomplete documents) and got picked up there by the hackers? Furthermore, it is (afaik) still unknown when the data was stolen (according to user "nanashi____" in this chat the data is "old"). ZenDesk was breached before in February 2013, could this be the leak? Maybe it would be a good idea to ask ourselves, are there other exchanges that use ZenDesk for this purpose and do you feel safe submitting your identity to ZenDesk? Should we not only ask the exchanges to prove their solvency, but also their security standards for handling our documentation? How long do they retain these documents? And are these stored online and/or offline and where exactly? Who has access? Allegedly, Bitstamp's database has also been compromised by hackers recently. I could not find any news statement from Bitstamp about it. All they did is ask everybody to turn on two-factor authentication. They also added this message after you log in: "YOUR PASSWORD IS TOO OLD. PLEASE CHANGE IT NOW". Does this mean the hackers got to the hashed(?) passwords as well? This worries me, what other data was retrieved here? Account balances + home addresses? Passport scans? This is serious and people need to know about it. What could be done to prevent this from happening over and over again? What can be done if it already happened to you?
Mt. Gox, called "Mount Gox" or simply "Gox", was the most widely used bitcoin currency exchange market from shortly after its inception in 2010 to its insolvency late 2013. The market was closed February 25, 2014 and has since filed for bankruptcy protection in Japan and the United States, after losing 640 thousand bitcoins.. A registrant on Mt. Gox had at least two sub-accounts: one for ... Well, just my luck. Not 10 minutes after posting this comment, the transaction went through. So, I think that BTC withdrawals from Mt. Gox are delayed right now, but they will eventually go through.. I guess I should have checked this sub before relying on an instant withdrawal from Mt. Gox, but I never though that would be necessary. The 200,000 Bitcoin recovered is now worth around $1.5 billion, which would easily recover the $450 million lost at 2014 prices. Mt. Gox: The Cautionary Tale. In many ways, Mt. Gox mirrors Bitcoin itself. The infrastructure was still immature, and it lacked the infrastructure to address the enormous security risks that came with cryptocurrency. The MTGox transaction API (https://data.mtgox.com/api/0/bitcoin_tx.php) shows transactions MTGox authors. Throughout the outage— e.g. as early... Bitcoin is a distributed, worldwide, decentralized digital money. Bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. You might be interested in Bitcoin if you like cryptography, distributed peer-to-peer systems, or economics. A large percentage of Bitcoin enthusiasts are libertarians, though people of all ...
craig wright now claims to own an address containing 79,000 stolen bitcoin from the mt gox hack event and asks blockstream to recover it for him. amazing. Social Media: Follow me on Dlive: https ... Bitcoin BTC March 3rd - Technical Analysis, Resistance, Supports, ... Bitcoin python tutorial for beginners - keys and address - Duration: 35:19. Shlomi Zeltsinger 7,625 views. 35:19 . The Secret ... Hello everyone in this video I talk about how we are just a few days away for when the claims period of MtGox's Bankruptcy will end. Go clam your coins now. ... This video is unavailable. Watch Queue Queue. Watch Queue Queue Queue My Second Channel: https://www.youtube.com/channel/UCvXjP6h0_4CSBPVgHqfO-UA ----- Supp...