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Cryptos Struggle to Regain Momentum after Bitcoin Hack

Posted on June 13, 2018June 12, 2018 by Martin S.

On Sunday, June 10, renowned South Korean-based cryptocurrency exchange, CoinRail, announced that they had been victims of a hacking attempt. According to the cryptocurrency exchange’s official website “70% of the coin rail total coin / token reserves are safely stored” and, “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges. The remaining one-third of coins are being investigated with investigators, relevant exchanges, and coin developers.”

Following the cyber-attack and its subsequent announcement, the cryptocurrency market suffered a loss of a whopping $42 billion of its market value. The tweet that announced the hack also triggered a $500 drop in the crypto space in a little over an hour – bitcoin, for one, suffered a 10 percent drop to a two-month low. Many other digital currencies including Ethereum were dragged down as well.

The hack has further triggered a lot of debate regarding the safety of crypto as a whole. Global policymakers, for instance, have warned investors to be cautious in trading cryptocurrencies citing the lack of regulatory oversight.

“CoinRail is not a member of the group that promotes self-regulation to enhance security. It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,” Kim Jin-Hwa, a representative at Korea Blockchain Industry Association pointed out recently.

Unexpected Impact?

Ideally, since the hack was on a relatively small crypto exchange, there is no reason for cryptocurrency holders, investors and even speculators to panic over such an occurrence. Unfortunately, this is not the case. Added to the fact that CoinRail is just one of the growing list of crypto-related companies that have been hacked in the past few years, the fact that many people are switching to crypto represents a much bigger concern.

The hack might not be the absolute cause of the plummeting price of digital currencies but it remains to be a key concern that should be addressed soon if the crypto future that we are hoping for will come to be.

Already, 14 major cryptocurrencies in South Korea have adopted necessary measures that are aimed at protecting crypto users – these include restrictions that allow the users to have no more than a single account. As for CoinRail, cryptocurrency trading has been suspended for now as the exchange collaborates with the local authorities as they investigate the hacking. Hopefully, once the CoinRail issuer is resolved, we will see a reversal in the downward trend in the prices of crypto – that is, if it indeed had something to do with the price drops.

Lightning Network Developers Working on New & Improved Twist

Posted on May 30, 2018May 29, 2018 by Martin S.

The biggest challenge for bitcoin this far has been becoming more mainstream in the financial world which in many ways stems from the fact that it has always had issues with scalability. Before bitcoin can reach the heights of mainstream adoption and use, it will certainly need to deal with the very pressing issue of scalability which has always been a core concern of enthusiasts.

This is where the Lightning Network comes in – this new technology, though fairly young, has facilitated thousands of new payment channels which signals a bright future for bitcoin as well as many other digital currencies.

The Lightning Network allows bitcoin users to open direct payment channels for transactions between one another on a global scale. As of January 19 this year, the Lightning Network only had 89 channels but this has since grown immensely – by May 24, the network had grown to over 6,600 direct connections which might seem small in comparison to the mainstream financial sector but represents a huge leap forward.

While there is a significant level of genuine interest in the technology, the fact that the Lightning Network is yet to be fully developed makes the adoption of the revolutionary technology relatively low. Among the issues that need to be addressed by the developers are double-sided funding and no watching for offline transfers. However, a more pressing one lies within the Lightning Network itself and the developers are quite keen on this one.

A Major Upgrade

The platform has just begun its journey towards global adoption but the developers are already considering a significant upgrade that will involve major architectural changes to the technology.

The key issue is that the Lightning Network requires the users to store a significant amount of data which, in turn, makes it very difficult to download and run it. In an effort to provide a viable solution to this problem, the developers have recently published a new proposal that presents an alternative and simplified way of making the off-chain transactions. The proposed alternative, called “eltoo”, was co-authored by several lightning developers including Lightning Labs co-founder ‘Laolu’ Osuntokun and Blockstream’s Christian Decker and Rusty Russell.

Eltoo not only aims to condense the amount of data the users are required to provide but also ensures that their bitcoin is safe. A major setback for the existing Lightning Network is that it depends on “toxic information” which means that in the case that a user broadcasts older data, there is a possibility that they will lose money.

“This actually happened to me,” Decker said. “I had an old lightning node on my laptop. I restored it. I didn’t know I didn’t have the newest state. The guy closed the connection because they knew it was an old state! Because he could steal it. Which he did, by the way.”

With eltoo, only the most recent off-chain transaction data is stored thus solving the “data symmetry” problem. Eltoo is a phonetic spelling of “L2” which stands for layer-two and is used to describe technologies like the Lightning Network which offer off-chain transactions.

The Coingaming Group Switches to Microbitcoin

Posted on May 16, 2018May 16, 2018 by Martin S.

The Coingaming Group which operates two of the most popular bitcoin-focused gaming platforms, that is Bitcasino.io and Sportbet.io, has made a pioneering switch in its betting units from milibitcoin (m฿) to microbitcoins (µ฿), otherwise known as ‘bits.’ The operator’s radical move is primarily aimed at taking advantage of bitcoin’s extended growth in value in order to make betting services more accessible. Furthermore, the customers of both platforms will be able to choose from a vast selection of premium casino games with the same bankroll.

Coingaming relaunched both the Bitcasino.io and Sportbet.io brands last year in an effort to bring a more improved customer experience that encompassed a proactive approach that involved a modern user interface as well more appropriate customer support services. The idea was to encourage the players to join and experience what the operator had in store – this is governed by a fun, fast and fair policy that guarantees outstanding flexibility options and amazing play time.

“With Bitcoin now well and truly in the mainstream, and its price continuing to surge, we wanted to ensure all games and sports events were accessible to all types of customer. Reducing our gaming unit to bits (µ฿) is the ideal way of doing so and keeps the user at the center of our universe,” said Tim Heath, the Coingaming Group’s CEO. “Our customers can now play and bet more for the same money, and we expect this to encourage even more users to sign up to the leading Bitcoin casino and sportsbook, while also providing existing loyal players with greater flexibility and potential play time.”

Other than the introduction of bits betting, the Coingaming Group also offers a number of generous and exclusive bonuses and rewards. This initiative has served the company quite well as it has helped it to raise awareness of its unique betting propositions. Apart from its online casinos and sportsbooks, the group also boasts of a dedicated Esports betting platform known as Bets.io and a slots-led platform known as Slots.io.

Bitcoin.com Stops Labeling Bitcoin Cash As the Real Bitcoin

Posted on May 2, 2018May 7, 2018 by Martin S.

Amidst a heated backlash and legal threats, Roger Ver’s Bitcoin.com, a proponent of Bitcoin Cash (BCH), recently updated its block explorer page in an effort to remove any language that suggests that Bitcoin Cash is the real bitcoin (BTC). Roger Ver, a renowned cryptocurrency enthusiast who made millions from investments in bitcoin has been an avid supporter of the BCH, which is a fork of bitcoin.

The Bitcoin.com CEO believes that BCH is the digital currency that remains trues to the original Bitcoin Whitepaper idea of being a peer-to-peer electronic cash system. He also adopted an approach to marketing the digital currency in a way that the entire crypto ecosystem with the exception of other BCH holders would consider to be unethical. For instance, he has worked on renaming some of the cryptocurrencies like BTC to “Bitcoin Core” and BCH to “Bitcoin” on websites, wallets, and apps as well as well as on social media platforms.

The reason why this is such a big deal is that it has seen a number of crypto users to incur monetary losses when they send money from their bitcoin wallets to some BCH wallets believing that it is the original currency they are dealing in. For newbies, this is further aggravated by the fact that Roger Ver’s website is among Google’s top search results for “Bitcoin” – the websites BCH wallet also happens to be the first search results for “how to buy bitcoin.”

Before the company listed BCH as “Bitcoin” on its explorer page, it rolled out a “Bitcoin Wallet” for iOS that misleadingly defaulted to Bitcoin Cash addresses. This marketing approach has been deemed as a fraudulent move that will certainly result in the loss of funds. The backlash has since spawned a website that seeks to gather as much evidence as possible from as many people as possible so as to file a lawsuit against Roger Ver and Bitcoin.com.

As mentioned earlier, Bitcoin Cash forked off the original Bitcoin blockchain but owing to changes that were recently introduced to BTC, proponents of BCH have argued that the fork has more resemblance to Satoshi Nakamoto’s original vision for Bitcoin. BCH supporters have been using this argument to justify their claim of the “Bitcoin” label for BCH while dubbing BTC “Bitcoin Core.”

Politics aside, it is quite obvious that the concerns raised are relevant and by agreeing to drop the misleading language from its website, Bitcoin.com will definitely help to solve the confusion that cryptocurrencies have to deal with. Better yet, the fight over labels is petty and supporters of both coins need to work towards ways of co-existing.

Bitcoin Receives Praise from IMF Chief Christine Lagarde

Posted on April 18, 2018May 9, 2018 by Martin S.

Bitcoin recently received an unexpected boost thanks to praises from International Monetary Fund (IMF) chief Christine Lagarde that detailed the global benefits of the decentralized digital currency. In a blog post that was published on Monday, April 16 the IMF boss pointed out that digital currencies such as bitcoin have the potential of offering fast and cheap transactions while blockchain, the underlying technology, can be used to make financial transactions more secure.

About a month ago, Lagarde published a blog post that was intended to caution people against the potential risks of cryptocurrencies. While she still has a few of the previous sentiments regarding precautionary measures to ensure a sustainable crypto framework, her most recent blog post leans more towards the potential benefits of crypto assets.

Lagarde still believes that there is a dire need for a crackdown on illicit activity involving crypto, something that she initially spoke of during the World Economic Forum 2018 back in January. Even so, she reiterates the essence of an “even-handed approach” from now on.

“Understanding the risks that crypto-assets may pose to financial stability is vital if we are to distinguish between real threats and needless fears. That is why we need an even-handed regulatory agenda, one that protects against risks without discouraging innovation,” Ms. Lagarde said. “A clear-eyed approach can help us harness the gains and avoid the pitfalls of the new crypto-assets landscape.”
“An important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play. Because crypto-assets know no boundaries, international cooperation will be essential,” she added.

New York Opens Probe into Exchanges

Barely a day after Christine Lagarde made her support for bitcoin public, the office of the New York Attorney General sent out letters to 13 cryptocurrency exchanges. The letters require that the exchanges provide information that would help to improve transparency in the digital currency industry.

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” NY Attorney General, Eric Schneiderman wrote. “Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

The letters included a questionnaire that requested information about the basic operation and fees, trading policies and procedures as well as the anti-money laundering and anti-hacking control measures they have put in place. While this probe is meant to protect the interests of New York-based cryptocurrency traders, it might have significant implications for the exchanges’ international customers.

IMF’s Christine Lagarde Calls for Bitcoin Crackdown

Posted on March 14, 2018March 14, 2018 by Martin S.

Lagarde, an International Monetary Fund (IMF) chief recently called for a crackdown on bitcoin, and potentially other cryptocurrencies, using their underlying blockchain technology in what she describes as “fighting fire with fire.” She pointed out that authorities around the world could harness the potential of cryptocurrencies and eventually be able to control them. Failure to do so would allow the unshackled development of “potentially major new vehicle for money laundering and the financing of terrorism”, she warns.

In an IMF blog post, Lagarde suggested the idea of “harnessing the potential of crypto-assets while at the same time ensuring that they never become a haven for illegal activity or a source of financial vulnerability.” This mostly pointed towards blockchain, the distributed ledger technology that authenticates crypto transactions without the need for administration of or verification from a central authority. The technology has huge potential for certain applications such as the speeding up of information sharing between regulators so as to improve the way they monitor financial systems.

Lagarde agrees to the fact that the developments that drive cryptocurrencies, blockchain included, are exciting advances that could help revolutionize financial services through the provision of low-cost ( or even zero-cost) payment methods for individuals who do not have bank accounts. However, she said, that there was some “peril that comes with the promise.”

Avid bitcoin followers and enthusiasts have pointed out that the technology could potentially revolutionize everyday payments not only cheaper but easier as well. A number of economists, on the other hand, believe that bitcoin is a dangerous speculative bubble. Lagarde’s stand as far as all this is concerned is rather complicated – she is, however, not the only one. She joins a good number of other senior financial officials who have been issuing warnings about the potential dangers that bitcoin poses while at the same time hailing the potential of the underlying technology.

Bill Gates: Anonymity in Cryptocurrencies Isn’t a Good Thing

Posted on February 28, 2018March 14, 2018 by Martin S.

Yesterday, Microsoft founder Bill Gates gave his opinion on bitcoin, other cryptocurrencies and initial coin offering (ICOs) during his appearance at a Reddit AMA. According to Gates, the use of cryptocurrencies for anonymous transactions or payments is not such a good thing especially because of the challenges it presents to law enforcement when following up on criminal transactions. This is despite the fact that a philanthropy under his name is currently in a partnership with a cryptocurrency firm, Ripple, in a bid to cater to the unbanked. Also in previous interviews, in 2014, for instance, Mr. Gates said that bitcoin is “better than currency” and that it was “exciting because it shows how cheap transactions can be.”

During the Ask Me Anything (AMA) session, Gates was asked about his thoughts on bitcoin and cryptocurrencies as a whole. His full response read:

“The main feature of cryptocurrencies is their anonymity. I don’t think this is a good thing. The government’s ability to find money laundering and tax evasion and terrorist funding is a good thing. Right now cryptocurrencies are used for buying fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way. I think the speculative wave around ICOs and cryptocurrencies is super risky for those who go long.”

Is It Justified?

Well, first of all, the key value proposition of bitcoin and many other altcoins is censorship resistance and not anonymity – this is perhaps what has made bitcoin the most widely used cryptocurrency in the world. In its current state, bitcoin is still far from anonymous but a number of proposals have been brought forward seeking to have the system’s privacy buffed up.

On to Gate’s point, the more anonymous digital currencies like ZCash and Monero have gained a lot of attention and recognition by criminals and darknet users. Anonymous electronic cash payments have the potential of making the criminal dealings that are already thriving on fiat currency more efficient. A typical example would be how easy it would be to collect ransoms from someone you do not want to meet physically. This widely applies to hackers who often install ransomware on victim’s computers.

It Is Not All Bad

Even though Gates pointed the negative aspects of cryptocurrencies as a store of value, he still vouched for the underlying technology. In fact, the Microsoft founder has in the past made some very positive comments on the technological advancements that the Bitcoin represents, rather than bitcoin itself. Notably, in 2015 BackChannel interview, he pointed out that users needed to “draw on the revolution of Bitcoin, but Bitcoin alone is not good enough.”

European Central Bank Trashes Ban Fears, Crypto Surges On

Posted on February 15, 2018February 15, 2018 by Martin S.

Bitcoin and other cryptocurrencies’ prices have been on the rise after the European Central Bank dismissed rumors of an imminent ban on crypto. In fact, European Central Bank (ECB) president, Mario Draghi cleared out the entire issue by pointing out that the organization’s job description does not in any way involve the regulation of bitcoin. Simply put, it is not the ECB’s problem, or so it says.

“Many of you posted questions about whether the ECB is going to ban bitcoins or it’s going to regulate bitcoins,” Draghi said. “I have to say it’s not the ECB’s responsibility to do that.”

Since then, the prices of many of the top digital currencies have been climbing although every single crypto-market remains very volatile and prone to dramatic surges and crashes. Bitcoin currently stands at about $8,800 which is $400 higher than its lowest price point on Tuesday 14th. This is quite a significant increase especially when bitcoin’s recent woes are put into consideration. A number of factors had a hand in this and as it turns out, fears of an impending ban by the ECB was one of the most prominent.

ECB’s officials took to their website to iron out issues in this regard in what appeared to be a general service note that outlined the most nagging issues that have been plaguing the bitcoin community as a whole. The service note shed a lot of light on the organization’s thoughts on bitcoin – one of the most significant being the fact the digital currency is mostly used as a highly speculative asset. It further outlined the flaws of bitcoin as a legitimate currency.

“Bitcoin is a speculative asset. In other words, it is something that you can gamble on to make a profit, but with a risk that you will lose your investment,” the central bank’s management pointed out.

Some Central Banks Have Done It

However, the speculations surrounding the ECB’s stance on bitcoin are well founded. Governments cannot seem to be able to resist the urge to set up new rules designed for the purpose of regulating the crypto-market. The justification, in this case, is the wild price swings, the series of heists on various exchanges as well as the rapid proliferation in nearly all the cryptocurrencies.
Also, a similar stand had been taken by the head of the Bank for International Settlements, Agustín Carstens who last week called for all central banks to stop what he refers to as the ‘Ponzi scheme’ of cryptocurrencies by restricting access to banks and financial infrastructure.

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Author: Martin S.