🤷 Opinions Cyril Gilson

How to Prevent Attackers From Hacking Blockchain Nodes: Professor of Cryptography Opinion

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“It looks like no one really tackles this problem right now- but they should”
How to Prevent Attackers From Hacking Blockchain Nodes: Professor of Cryptography Opinion

Sebastian Gajek is Professor of Cryptography and Information Security and founder of Weeve, a startup in the Berlin ecosystem that brings IoT and Blockchain together. We talk with Mr. Gajek about cybersecurity and vulnerabilities in crypto industry and community.

Cyril Gilson: What can be done to prevent from happening someone hacking nodes in Blockchain, the problem similar to what happened with EOS?

Sebastian Gajek: The recent attack against EOS is about using vulnerabilities in their software that allows to hack the nodes. The consequence was that the attackers could extract secret key material and this allows them to fully control the nodes. It is the worst thing that can happen to any consensus protocol.

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We have developed a very special operation system called the WeeveOS. It is an open-source project available on our GitHub. The operating system leverages cutting-edge security and privacy technologies. So, for example, we use a technique in order to isolate the secret keys from the rest of the operating system. This means in the case of EOS if WeeveOS operating system had been in place when the attacker compromised the nodes, they had got control over the nodes but were unable to extract the secret keys.  

This way you have more security and more trust in the network. We are going to release our operating system officially at Ethereum Dev Conference. A pre-release of the WeeveOS is already available through our GitHub.

We believe a lot of Blockchain technologies like EOS, like Ethereum, like HyperLedger really need to secure the nodes. It looks like no one really tackles this problem right now. This is bad because consensus protocols only work when one can trust the nodes. But for this you really need some super strong security technologies, otherwise, you will not get the trust by the quorum.

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Other vulnerabilities

CG: What other vulnerabilities do you see lately?

Sebastian Gajek: It’s like the general problem with cybercrimes: nodes are just some kind of programs, programs are written by humans and humans make mistakes. It’s natural right? Otherwise, humans would be machines.

Making mistakes is part of our genes. It looks that programming, for example, smart contracts, is like a new art.

People are now trying to understand what it really takes in order to program a proper smart contract. This is one main source where I see a lot of attacks and where devs really have to do better due diligence, take more care and verify whether the smart contract makes sense.

For example, ICOs might have fragile smart contract tokens and could be subject to those attacks.

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False smart contracts

CG: Could you give some examples of this?

Sebastian Gajek: The number one running example is the DAO. That was the greatest example, showcasing what happens if you design the smart contract in a false way. The result was clear, a lot of coins have been shifted differently than expected.

This is a canonical example showcasing you have to put a lot of care in designing smart contracts, and the same holds now for designing the programs that implement nodes. The attack I described against EOS is based on a similar problem. One where developers develop just design some kind of code and have not been careful enough.

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CG: Is there a way for individual investors in crypto to find out how secure is the system? Some indicators?

The point is the whole Blockchain technology is still  young in comparison to other IT industries. I see now first consulting companies building up exactly a kind of business to figure out whether a smart contract is vulnerable. Similar services have to be applied, for example in order to verify whether the nodes are also free from vulnerabilities.

Again this is ongoing work because people first of all have to learn how to properly program and then other people will build up services on top of that in order to verify whether the programming was correct.

Blockchain will change the Internet. It’s just a matter of time until these consulting companies will figure out there’s a huge cake, so they will hire specialists that do have the right skills, in order to give you a better understanding of what’s good or bad.

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CG: Before deciding whether to take part of ICOs or not, investors check the team, go over some lists, but I don’t think security is even in the top three points to check. What shall they do?

Sebastian Gajek: You are totally right, if I were an investor, I would really go through the points you mentioned, but I would also look who designed the contract. Because in the end, it’s all about reputation.

You really need to choose a smart contract design team that has a lot of credibility. That was one of the reasons why we have chosen to work together with ConsenSys because they have the leading experts in Ethereum development.

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The Fight For Democracy in the Crypto Space

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Democracy, in terms of the Blockchain protocol is supposed to be a key feature, but as it stands there is more radicalism happening
The Fight For Democracy in the Crypto Space

Democracy has been a core pillar of society since the days of the ancient Greeks, and since those days it has never abated, merely adjusted and evolved. The idea that the majority have the overall say transcends all facets of life and is an important and fair governance system.

Thus, because of its ability to quash any form of centralized and unfair control, it has also become an important part of Blockchain protocols and their decentralized nature. Governance of Blockchain, especially when it comes to Proof of Work and Delegated Proof-of-Stake, is based entirely on democracy.

However, democracy is not all in Blockchain, nor in general society, as there are a few ways in which to bend this governance system, and as such, we are seeing a new movement in the Blockchain space.

Blockchain governance and its democracy is starting to become far more radical rather than more inclusive and open as the space grows. However, for the cryptocurrency communities, the desire is now for a real working democracy on the human level welded with proper machine level. People want a fair democracy and this can happen when supported on the Blockchain protocol level.

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Breaking tradition

One of the core thoughts of Francis Fukuyama in his 1992 book "The End of History and the Last Man" was that democracy was the final form of human governance and that it was easier to see a radical converting to a Democrat than vice versa. But time proved he was wrong.

But, he also added: "What we may be witnessing … is the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government,” leading us to believe that no further improvements are left to be made upon democracy.

Now, in the Blockchain space, we have seen a rapid microcosm of democracy and its evolution. Blockchains, in their original form, such as Bitcoin and its Proof-of-Work algorithm, proved a democratic standing as crypto-anarchists worked in communities.

Anyone who supported the Bitcoin network early on was given a chance to gain more Bitcoins through the PoW algorithm. People received fair rewards for being part of the network and keeping it live. A fair reward for fair effort.

This was then later done differently, but under the same principles when Dan Larimer proposed and implemented the Delegated Proof-of-Stake (dPoS) algorithm, such as in EOS. The idea behind dPoS was voting and democracy. Also a fair system.

EOS’s developers say that by delegating the responsibility for processing transactions to just 21 “block producers,” which are to be elected by the community of token holders, the system will be able to achieve thousands of transactions per second (compared with just 15 per second for rival Ethereum).

These basic principles of democracy in PoW and dPoS are enshrined in order to enact a fair system for communities to operate democratically. However, through the nine years of Blockchain being in existence, the growth of the space has led to a degeneration to radicalism, and even in the newer dPoS system, we are already seeing a movement away from democracy, counter to what Fukuyama predicted.

Importance of democracy

Blockchain’s protocol and its democracy underlying it comes from an important key feature of cryptocurrencies in general, the decentralization and the removal of centralized authorities. Thus, it is understandable why there is such an importance placed on democracy in the Blockchain protocol.

Ethereum founder, Vitalik Buterin explains:

“Over the last half-decade, each of us has, in his own way, been working on a part of an alternative solution: to find ways to harness markets and technology to radically decentralized power of all sorts and shift our reliance from authority and to formal rules.”

He further continues that, Bitcoin and other cryptocurrencies emerged directly as a reaction to the perceived excesses of the traditional financial system.

Democracy may be an essential facet of Blockchain, but it is also key as to how it works. An easy example is provided by Josh Zerlan, VP of Product Development at Butterfly Lab:

“There are thousands of miners around the world, all collectively trying to process various transactions. Although not widely utilized currently, miners have the ability to accept or reject certain transactions. They can choose to refuse to process transactions. Let’s think about that for a moment. An individual miner can choose to not process a transaction, but someone else will, therefore that individual miner’s choice doesn’t make a lot of difference. <...> But what if more than half the miners decided to stop processing transactions from an entity they disagree with? Now the choice of those miners has an impact. If more than half of the network decides something does not belong on the network, the transactions will never make it into the blockchain, effectively being ignored by the bitcoin universe.”

While the democracy in the Blockchains may be moving towards radicalization, it is important to remember why these key democratic features are prevalent and abound.

The grassroots movement and drive is there and it’s strong — projects like Telos and UCOMMUNITY fork the EOS code to create their own consensus algorithms with the objective of fair distribution and voting rights. We are going to see more and more movement in this direction.

The want and ability to have democracy

It is dangerous for those involved in the Blockchain space to become too radical and to leave out democracy as a core concept in the space. There is indeed a fight going on for democracy in blockchain, and with this fight, people are showing that they do indeed want a fair democracy and this can happen when supported on the Blockchain protocol level.

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Alexander Goborov

Selected Cryptocurrencies: Volatility Figures for the Past 3 Months

With more and more traders resorting to minor altcoins for business, these new volatility figures are sure to be of use to many
Selected Cryptocurrencies: Volatility Figures for the Past 3 Months

Volatility is an important parameter to consider whilst preparing to conduct trades, especially with lesser known currencies that these days are bought and sold every hour as a promising pathway to quick profits. It shows how unstable any given cryptocurrency’s market price is and how much periodic price figures deviate from the average, which can be seen by percent.

If you take any column of price values, calculate their average (i.e. mean), then look at how much each value is different from that average (i.e. get the deviations), square all those deviations and, in turn, calculate their own mean, you will get statistical variance. Calculate the square root of that variance, and you will get what is known as standard deviation. Turn that standard deviation into percentage representations, and here is your volatility.  

Having processed prices of the selected altcoins taken at five minute intervals for the past three months and calculated their respective variance and standard deviation, our partners Datalight are now providing their corresponding percentage figures, i.e. the volatility, with market cap ratings relevant to the time of the statistical analysis having been written underneath:

VOLATILITY GRAPH

MobileGo (MGO), Holo (HOT), LockTrip (LOC) are all at around 60%; Haven Protocol (XHV) and Energi (NRG) are at around 70%; Smartlands (SLT) is at around 80%; Nasdacoin (NSD) and Everipedia (IQ) are at around 90%; Etheera (ETA) is at around 110%; and finally, Box Token (BOX) is at over 550%, very volatile indeed.

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🤷 Opinions Eyal Hertzog

Eyal Hertzog’s Cryptosophy: Why Online Economies Will Win

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Decentralized ecosystems aren’t zero-sum, they’re “infinity sum.” Nonprofit economies empower for-profit businesses, driving growth.
Eyal Hertzog’s Cryptosophy: Why Online Economies Will Win

I’ve been an entrepreneur since the dot-com days, and I always thought there was only a single path to realizing a technological vision: founding and scaling a for-profit company. But there is a better model for building technologies based on decentralized systems and community-owned networks.

This new model is not an alternative to for-profit companies. Rather, it is a collaborative framework for creating an online economy made up of many for-profit participants who collectively provide an integrated set of solutions, sharing the same database, user base and currency.

Developing a standard

The path to becoming an online economy inevitably involves defining a standard for value exchange.

“Currency moves energy in various forms (such as products, services and knowledge) between the people and organizations that participate in it. This happens much like blood moves oxygen between organs in the body.”

The first wave of online economies to utilize a non-national currency was centralized in nature- game currencies, loyalty points, and virtual world currencies operated by private businesses and in some cases traded in online exchanges. The first online economy not controlled by a central authority was Bitcoin, a simple, single, decentralized and permissionless digital currency.

Non-profits  

The second major online economy to emerge was Ethereum, which added a programmable layer for “automated trustees” (aka smart contracts), providing solutions for commercial collaboration between parties that may not fully trust (or even know) each other.

Ethereum’s economy, which uses the ETH currency, is structured as a non-profit (as I believe economies should be structured). However, an economy without active for-profit participants can be compared to a company with no employees.

ConsenSys and Jaxx are two for-profit companies founded by team members who were part of the effort behind Ethereum and are now playing an important role driving its economic growth. They are motivated and mobilized by the ability to make a profit in this economy. Their profit is also indicative of the economy growing, benefiting participants, including those who bet on this economy by holding its currency.

The Ethereum case-study has clearly demonstrated that substantial profits, for the team, contributors and early adopters, are very much possible. This can be done without needing to generate profit from the economic entity itself (in this case, the Ethereum Foundation). This allows the project to focus on what economies should focus on: growth.

Driving growth

Individual companies are comparatively slower to scale, while online economies scale horizontally, through the work of many different entrepreneurs simultaneously. Since online economies use their own unique currencies, economic growth means that participating businesses will see the value of their tokens grow, enabling them to scale their operations as well. This is the essence of a distributed model and the main driver of its network effect.

As an example is the Bancor Network, an online economy providing technological solutions for liquidity. The token of this economy (BNT) is staked by participants, providing them with access to the liquidity network, which enables decentralized conversion of any integrated token.

Bancor is also managed by a non-profit foundation whose mandate is to grow the economy. This may even take the shape of empowering companies that were once considered competitors, to build services and solutions alongside the original creators. This accelerates adoption in this “infinity sum” game where all participants win as the online economy grows.

Bitcoin, Ethereum and other crypto networks have demonstrated the power of secure and decentralized currencies to yield vibrant online economies focused on cooperation over competition.

Big businesses can be painful. We all know it. They tend to become “evil.” It’s in their DNA because by nature they are incentivized to work primarily for their own profits, rather than for the growth of their ecosystems.

“It now seems that a model in which smaller businesses collaborate to provide solutions within a framework of online economies could deliver superior results across almost every vertical and be a lot more fun to build in the process.”

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🤷 Opinions Masha Beetroot

Bitcoin Price $1 mln by 2020, Regardless Current Performance: John McAfee

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Antivirus Pioneer and “Chief Cybersecurity Visionary” John McAfee explains why Bitcoin will be worth $1 mln by 2020 and why every company in the future will have to have its own token.
Bitcoin Price $1 mln by 2020, Regardless Current Performance: John McAfee

Antivirus Pioneer and “Chief Cybersecurity Visionary” John McAfee explains why Bitcoin will be worth $1 mln by 2020 and why every company in the future will have to have its own token.

CryptoComes: How did you first learn about Bitcoin and what was your initial reaction?

John McAfee: I was introduced to Bitcoin by friends of mine who insisted that I understand it. At first, it made no sense to me, but then I read Satoshi’s white paper. As a mathematician, I thought it was beautiful. I saw that this is something for the future, that it will change the world.

I didn’t get intimately involved until three years ago when I started mining Bitcoin with my company, MGT. We are now one of the largest miners in the world, with 6,000 supercomputers and [we’re] getting another 6,000 very soon. It’s not exciting or interesting, but it generates a lot of money which I can use for the projects I am interested in.

“Mine More” Economic Model

CC: If you were Satoshi Nakamoto, how would you use your Bitcoins?

JMA: Well, I’m not Satoshi, so I do not know. Here’s what we do: as soon as we mine them, we simply sell them and buy more machines [to] mine more Bitcoins. It’s the best economic model.

CC: Who would you say are the greatest enemies of Bitcoin?

JMA: Banks, federal reserves and governments. Banks - because they will simply disappear. My Bitcoin wallet does everything that my bank can do. Governments - because they will lose income.

Most governments tax income, or goods and services. If you use a private cryptocurrency like Monero, there’s simply no way to track how much money you’ve made or spent [and] no way to track any transaction to its source or its destination.

That terrifies governments because you are now counting on people to be honest about what they are earning and what they are doing with that money. That’s unrealistic. We are people, we have our faults and we like our privacy.

“They will simply be ignored”

CC: Many experts in the crypto community think that regulation of Bitcoin will hurt it, at least in the short term. What is your opinion?

JMA: First of all, if you create legislation or laws prohibiting something, you must have the ability to enforce those laws. How can you enforce the use of Bitcoin? You would have to have one enforcer for every citizen of the country and that’s impossible.

Let’s take an obvious absurd law as an example. In America, smoking marijuana is illegal in almost every state. And yet, I don’t know anybody who does not do it. Why? It cannot be enforced.

It’s much harder to enforce the use of Bitcoin or Monero or Ethereum than it is to enforce [laws against] smoking marijuana. It’s absurd to think that governments will pass laws that mean anything. They will simply be ignored.

CC: What about your expectations? Do you still think that by 2020 Bitcoin will be worth a million dollars?

JMA: Absolutely. We all know that within 15 or 20 years [nearly] all the Bitcoins will be mined. There are 10,000 mining companies working for a year and a half, paying millions of dollars in electricity alone, trying to get to the last Bitcoin.

Imagine what this last coin is going to be worth: trillions. Toward the end, we will all have to work together to form a global mining pool, so that no matter who mines it, we all get our percentage.

All you have to do is work backwards and you see that in 2020 it has to be a million dollars, or 10 million. I’m a mathematician: one plus one is two, two plus two is four — it’s simply the truth.

“Every company will have to have its own token”

CC: Do you see a future for ICOs in 2018?

JMA: The number of ICOs is doubling every two months. In just two weeks almost 1,000 new ICOs have been submitted to me and my team for evaluation. Think about this: in six months there’ll be 5,000, in a year there’ll be 10,000.

So absolutely there’s a future, because everything in life, ultimately, will be on the Blockchain. [It will influence] our religious preferences, the way we drive cars, the way we live at home, the way we entertain  and educate ourselves. Every company will have to have its own token. It’s like when we started the Internet, and people thought it was nonsense, no big deal.

Companies ignored it, but try to find a single company today that doesn’t have a webpage. If you don’t have one, you’ll be out of business. So, in 5 or 10 years every company will have to have its own currency, or else be irrelevant and simply disappear.

My staff and I review 200 new ICOs every week and 90% of all the ICOs are scams. You can’t tell which is a scam unless you dig into it like my team does.

If I find something interesting, something real and helpful, I try to make sure the world knows about it. Without public knowledge, the chance of that coin or that token surviving is very slim.

CC: Do you think there is conflict of interest when ICO advisers are paid huge sums of money? Perhaps the institution outlived its time and needs to be replaced by a Blockchain-based model?

JMA: If you watch television, every celebrity in the world is promoting something - an automobile, an insurance company. Why? Because when a celebrity comes out and says “I drink this coffee,” whether they do or not, we all want to drink that coffee.

The crypto community has its own celebrities, so of course they are going to become advisers and make money. They are not going to do it for free.

There’s no difference between what’s happening here and what’s been happening in any industry since the beginning of marketing and advertising.

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🤷 Opinions Alexander Goborov

The Market's Down, but No Need to Panic: Consider Both Sides of the Crypto Coin

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Many claim we’re in a pretty pickle, but there’s no reason to scream Mayday yet: the big picture remains reassuring
The Market's Down, but No Need to Panic: Consider Both Sides of the Crypto Coin

Some of the present market’s indices appear rather alarming: the bear does tend to roar and stomp. But exceedingly more alarmingly, some experts view it as the green light to peddle pessimism and panic to all around. While, for aught we know, this is but a phase, and must be taken as such. Traders should probably be less reckless, newcomers more vigilant, but the market isn’t going anywhere: it shall recover soon enough. Don’t sweat it.

Signs of the Supposed Crypto Armageddon

Bitcoin is down to around 5 500 USD, the lowest figure in over a year. To make matters worse, Bitcoin’s market cap figure has dropped below 100 billion USD, also for the first time in over 12 months. The past 24 hours have seen a decrease in total crypto market capitalization numbers by more than 30 billion USD.

Tether, being a stablecoin pegged to USD, saw a drop in its price on Kraken, where it trades for fiat. In addition to other factors, because of this compromised parity, crypto exchanges that trade against Tether, e.g. the Hong-Kong based Bitfinex, have seen the price of Bitcoin move down against the USD in return.

The fork-riddled Bitcoin Cash, which is about to be split into two separate altcoins (core/ABC and Satoshi’s Vision), Ethereum, and Ripple are all seeing declines of up to 12% a day in their values on the market. As a by-product of this freneticism, Ripple (18.7 billion USD) is now in second place by market cap after Bitcoin having recently surpassed Ethereum (18.35 billion USD).

The Bright(er) Side of the Coin

It’s important to understand that any industry, any financial sector, any economy will go through a period of stagnation and recession. There have been numerous examples of it from the Revolutionary War to the Great Depression. Heck, the Blockchain technology itself emerged in the aftermath of the 2008 global crisis. Lows give way to highs and improve the nature of the market in the process. It’s inevitable.

At the same time, even in today’s dire crypto-economic conditions, many vital indicators tell a positive story nonetheless. While there may be problems with diminishing cryptocurrency market cap values and falling prices on exchanges, the big picture is not solely a grey one. The Blockchain market itself is growing regardless, and it is projected to continue doing so in the future.

The Blockchain market

One of the very reliable sub-indicators of the fact that it is happening is the number of crypto wallets, which is growing by the day. Too promising a figure for those trapped in quicksand, surely.

 the number of crypto wallets

Furthermore, the ICOs are not vanishing, quite on the contrary. In spite of the Chinese government’s ban on this type of fundraising, the global figures are going up, which has been corroborated by numerous independent publications.

the ICO

Concurrently, some of the economic trends, however fragmental, are still bullish; Bitcoin, for one, until very recently, has been demonstrating a great deal of stability, and where longitudinal volatility is low, the whining voices should perhaps be tactfully sidelined.

All in all, despite the pressure and the stress, there is little time for poor-me-ness right now, when the overall crypto aura is that of vigor and, as mundane as it sounds, hope: after all, right this very second, whole crypto communities are working on new and yet newer ways to crypto-revolutionize the world and change the very nature of modern economy, from payment methods to employment.

Afterthought

“Abandon your posts! Flee, flee for your lives!”

image

A memorable line borrowed from Denethor, the infamous character from The Lord of the Rings trilogy. And we all know how that strategy worked out for him. Not too well really...

Instead, perhaps we should follow Gandalf’s orders and prepare for battle, the crypto battle that never ceases, be the market bear or bull. And yes, right now we are indeed in a bear market. The prices are plummeting, the grip is becoming weak: this is the very definition of it.

In actuality, all this means nothing more than the fact that the bull market has got to be on the way, its eager horns already glaring through thick mist somewhere in the distance. It’s coming. Despite the rocky road ahead, sooner or later, it is. In the meantime, keep your head above water and do not overdramatize. Be Zen. It’s going to be fine.

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