Bitcoin exchange Mt. Gox’s latest update sets out plan

Bitcoin (BTC) Latest Update: Resolution of Mt. Gox Exchange Bankruptcy Could Boost Value of Bitcoin (BTC) and Digital Currencies – BTC News Today – BTC/USD Price Today - Smartereum

Bitcoin (BTC) Latest Update: Resolution of Mt. Gox Exchange Bankruptcy Could Boost Value of Bitcoin (BTC) and Digital Currencies – BTC News Today – BTC/USD Price Today - Smartereum submitted by ulros to fbitcoin [link] [comments]

A Deep Dive Into IRS Crypto Audits (Podcast & Highlights)

Hey all - the newest episode of The BitcoinTaxes Podcast is live. For anyone unfamiliar, it's a podcast where I interview experts in the crypto/blockchain/fintech spaces. In this episode I speak with a tax controversy lawyer about how to handle a CI agent showing up at your door about your crypto, and what to do to avoid getting to that point.
Full disclosure, I work for BitcoinTaxes and also host this podcast. I typically post my interviews to our own subreddit and one or two other subreddits (not trying to spam people). This subreddit's community seems to enjoy/engage with the episodes when I post them. If there's any issue with me posting here please let me know, otherwise I hope you guys enjoy this episode and gain some valuable knowledge. Feel free to hit me with any questions and I can relay them to Alex.
----
Links:
Podcast Page Link
Audio Only

Brief Summary:
This episode's guest is Alex Kugelman. Alex is a tax controversy lawyer with expertise in cryptocurrency and IRS audits. Alex is a frequent guest on this podcast - back in July 2019 he came on the show to discuss the IRS Educational Letters that were being sent out. Before that, in May, he shared some excellent information about IRS cryptocurrency audits. Today, he elaborates on these topics and goes in-depth about what could happen in a potential crypto audit.
Alex provides tips in the case of an IRS CI agent showing up at your door, revisits compliance post-2019 IRS FAQ update, and gives us his take on the effect of COVID-19 in taxes and crypto.

Some good quotes:
"In the past year, what I've seen, the single common element of all IRS criminal investigations relating to cryptocurrency is that there is evidence that there have been sales of cryptocurrency and it cannot be reconciled to the tax return." (07:10)
"I think it's very likely that exchanges are providing information to the government if it's requested, especially U S based exchanges that are trying to be in the good graces of regulators." (09:44)

EPISODE HIGHLIGHTS AND DISCUSSION

Don't Under-Estimate Over-Reporting (03:12)

Alex: I'm a big believer of over-reporting, which means give as much detail as you possibly can. I think a lot of people get into trouble. They go: “Oh, I reported my transactions”... and you look at the tax return and it's a single line that says “cryptocurrency” and the net number. You have to think through objectively. I've not seen an issue where the IRS has taken a really hard position on lost records as long as you're making reasonable assumptions and using fair market value data.

A CI Agent's M.O. (10:30)

Alex: CI's agents are fairly sophisticated. If they have some information, and they can see these different transfers to different exchanges or wallets - they can piece it together and there's nothing to stop them from going and getting that data at that point as well. That's why I think it's really important that people...try to do the most reasonable good faith effort because it's hard to make a criminal case out of an accounting error. It's much easier to make a criminal case when someone's sold hundreds of thousands of dollars of cryptocurrency and then transferred that fiat into a U S bank account.

Unmatched Trades and Missing Data (12:16)

Alex: The more transactions that you have...with missing information...could lead to more questions. The question becomes where or how did you obtain this cryptocurrency and why is it that you don't have records?
A very common example is Mt. Gox. The exchange goes down, the records go down. That's really common. If that's the story, I wouldn't be worried about it. But, if you were being paid in cryptocurrency for a couple of years, never reported it as income, and now you're selling it - that's more problematic. It could lead to issues down the line.

CI Agents Paying You A Visit (14:35)

Alex: A lot of times when a CI agent shows up it's meant to catch people off guard. If a CI agent is showing up at your door regarding cryptocurrency, it means they already have information that they believe there was a crime and that would lead to a conviction of a crime. So you're not going to explain that away in an hour long conversation in your living room. It's not going to happen. That's not the way it works.
There's always going to be two agents, because one is going to be a witness for this conversation. You just need to remember: decline the interview. There's nothing wrong with that. Get a card and: “my counsel will contact you”. That's it.
The other thing to keep in mind that's really important is that you don't want to start doing things that are new crimes. You don't want to go in and start destroying records or erasing emails. Taking those kinds of steps is only going to make it worse.

Coronavirus, Audits, and Amended Returns (31:05)

Alex: The IRS is, for the most part, shutdown. That means that they're not really issuing new audits right now. It also means that the forced collections, when you owe money to the IRS and they levy your bank account or issue liens - that’s not going on right now. So for clients or for taxpayers who owe the IRS money...if they are currently in an installment agreement with the IRS, then actually they can forego those monthly payments right now.
The IRS is already an underfunded agency, and it was affected by the government shutdown recently. There's really a big backlog to begin with. I mean it's hard to estimate how much this [virus] is going to affect the administration of tax compliance. I think it's a great time to amend a tax return or to get into compliance.
submitted by Sal-BitcoinTax to BitcoinMarkets [link] [comments]

ETX officially announced to change the algorithm, here is a straightforward analysis about the influence

ETX officially announced to change the algorithm, here is a straightforward analysis about the influence
More dispersed computing power, which means that the coins will be further dispersed, and the value will be less controlled and influenced by a few people who controlled many coins. From the above examples of Monero and Monero Classic , we can see that changing the algorithm is a great positive signal for ordinary community users
According to the latest announcement on the official website of Ethereumx·NET (ETX), "Notice about the upcoming change of ETX algorithm and the opening of the testnet '', ETX will change the algorithm within the next 1-2 months. The reason is that the current large computing power miners pose a threat to ETX's long-term ecological planning in the future, because the large computing power mining has caused a very high concentration of chips. This can be seen through the blockchain browser. The future It may take time to balance the number of head coin holders and slowly digest with price space and time.

https://preview.redd.it/xtfbx9wbe6b51.png?width=624&format=png&auto=webp&s=386ccbcb51a658db2db07609152406df1c0927e3
Just like Bitcoin, there were only a few people digging with a computer at the beginning. Later, as the market slowly became aware, and then derived the ASIC algorithm mining machine, as the price increased, some head currency holders slowly reduced their holdings, and slowly reduced the threat they posed to Bitcoin. But even so, there are still an unsolved 200,000 bitcoins in MtGox. Some people even predict that when MtGox closes the case, it will be the crash day of Bitcoin.
It’s impossible for a new currency to go the way which Bitcoin had passed. The market competition environment today is completely different. There are endless new currencies appearing every day, so at the appropriate time to avoid the risk of expanding and taking the lead is necessary. This may be the reason why the ETX development team decided to change the algorithm.
There are many currencies that have changed the algorithm, and most of the results are relatively good. For example, Monero (XMR), Monero should be the most successful currency to resist the ASIC algorithm. In the process of fighting with ASIC repeatedly, without exception, the mining machine manufacturers were expelled from the door, ensuring many communities. But Monroe Classic has retained the ASIC-friendly algorithm because it has not changed the algorithm, and almost no one is interested today. We can get a glimpse of their straightforward price performance in the chart below.

  1. Monero with repeated algorithm changes

XMR's price with frequent algorithm changes, data source Coinmarketcap

  1. Asic algorithm-friendly (unchanged algorithm) Monero Classic

XMC’s price with no algorithm changes, data source Coinmarketcap
More decentralized computing power means that the coins are further dispersed, and the value can be less controlled and influenced by a few people. From the examples of Monroe and Monroe Classic above, we can see that changing the algorithm is a great positive signal to the ordinary community users. And the announcement on the official website mentioned that the testnet will be launched before the end of this month, and anyone who’s interested can go to have a look.
ETX developers take precautionary measures ahead of time, which is a manifestation of responsibility for all community users.
Refer to
Ethereumx·NET " Notice about the upcoming change of ETX algorithm and the opening of the testnet "
Coinmarketcap
Monero: GetMonero
*There are risks in the market, this article is not intended as investment advice
submitted by BitRay2077 to u/BitRay2077 [link] [comments]

Crypto-Powered: Understanding Bitcoin, Ethereum, and DeFi

Crypto-Powered: Understanding Bitcoin, Ethereum, and DeFi
Until one understands the basics of this tech, they won’t be able to grasp or appreciate the impact it has on our digital bank, Genesis Block.
https://reddit.com/link/ho4bif/video/n0euarkifu951/player
This is the second post of Crypto-Powered — a new series that examines what it means for Genesis Block to be a digital bank that’s powered by crypto, blockchain, and decentralized protocols.
---
Our previous post set the stage for this series. We discussed the state of consumer finance and how the success of today’s high-flying fintech unicorns will be short-lived as long as they’re building on legacy finance — a weak foundation that is ripe for massive disruption.
Instead, the future of consumer finance belongs to those who are deeply familiar with blockchain tech & decentralized protocols, build on it as the foundation, and know how to take it to the world. Like Genesis Block.
Today we begin our journey down the crypto rabbit hole. This post will be an important introduction for those still learning about Bitcoin, Ethereum, or DeFi (Decentralized Finance). This post (and the next few) will go into greater detail about how this technology gives Genesis Block an edge, a superpower, and an unfair advantage. Let’s dive in…
https://preview.redd.it/1ugdxoqjfu951.jpg?width=650&format=pjpg&auto=webp&s=36edde1079c3cff5f6b15b8cd30e6c436626d5d8

Bitcoin: The First Cryptocurrency

There are plenty of online resources to learn about Bitcoin (Coinbase, Binance, Gemini, Naval, Alex Gladstein, Marc Andreessen, Chris Dixon). I don’t wanna spend a lot of time on that here, but let’s do a quick overview for those still getting ramped up.
Cryptocurrency is the most popular use-case of blockchain technology today. And Bitcoin was the first cryptocurrency to be invented.
Bitcoin is the most decentralized of all crypto assets today — no government, company, or third party can control or censor it.
Bitcoin has two primary features (as do most other cryptocurrencies):
  1. Send Value You can send value to anyone, anywhere in the world. Nobody can intercept, delay or stop it — not even governments or financial institutions. Unlike with traditional money transfers or bank wires, there are no layers of middlemen. This results in a process that is much more cost-efficient. Some popular use-cases include remittances and cross-border payments.
  2. Store Value With nothing but a smartphone, you can become your own bank and store your own funds. Nobody can seize your assets. The funds are digital and stored on a blockchain. Your money no longer needs to be stored at a bank, in a vault, or under your mattress. I covered a few inspiring use-cases in a previous post. They include banking the unbanked, protecting assets from government seizure, mitigating the risk of a bank run, and protection against hyperinflation (like what recently happened in Venezuela).
The fact that there are so few things one can do with Bitcoin is one of its greatest strengths.
Its design is simple, elegant, and focused. It has been 10+ years since Satoshi’s white paper and no one has been able to crack or hack the Bitcoin network. With a market cap of $170B, there is plenty of incentive to try.
https://preview.redd.it/bizndfpkfu951.png?width=800&format=png&auto=webp&s=456c53b798248e60456a65835a33c69b2fe8daf0

Public Awareness

A few negative moments in Bitcoin’s history include the collapse of Mt. Gox — which resulted in hundreds of millions of customer funds being stolen — as well as Bitcoin’s role in dark markets like Silk Road — where Bitcoin arguably found its initial userbase.
However, like most breakthrough technology, Bitcoin is neither good nor bad. It’s neutral. People can use it for good or they can use it for evil. Thankfully, it’s being used less and less for illicit activity. Criminals are starting to understand that transactions on a blockchain are public and traceable — it’s exactly the type of system they usually try to avoid. And it’s true, at this point “a lot more” crimes are actually committed with fiat than crypto.
As a result, the perception of bitcoin and cryptocurrency has been changing over the years to a more positive light.
Bitcoin has even started to enter the world of media & entertainment. It’s been mentioned in Hollywood films like Spiderman: Into the Spider-Verse and in songs from major artists like Eminem. It’s been mentioned in countless TV shows like Billions, The Simpsons, Big Bang Theory, Gray’s Anatomy, Family Guy, and more.
As covid19 has ravaged economies and central banks have been printing money, Bitcoin has caught the attention of many legendary Wall Street investors like Paul Tudor Jones, saying that Bitcoin is a great bet against inflation (reminding him of Gold in the 1970s).
Cash App already lets their 25M users buy Bitcoin. It’s rumored that PayPal and Venmo will soon let their 325M users start buying Bitcoin. Bitcoin is by far the most dominant cryptocurrency and is showing no signs of slowing down. For more than a decade it has delivered on its core use-cases — being able to send or store value.
At this point, Bitcoin has very much entered the zeitgeist of modern pop culture — at least in the West.
https://preview.redd.it/dnuwbw8mfu951.png?width=800&format=png&auto=webp&s=6f1f135e3effee4574b5167901b80ced2c972bda

Ethereum: Programmable Money

When Ethereum launched in 2015, it opened up a world of new possibilities and use-cases for crypto. With Ethereum Smart Contracts (i.e. applications), this exciting new digital money (cryptocurrency) became a lot less dumb. Developers could now build applications that go beyond the simple use-cases of “send value” & “store value.” They could program cryptocurrency to have rules, behavior, and logic to respond to different inputs. And always enforced by code. Additional reading on Ethereum from Linda Xie or Vitalik Buterin.
Because these applications are built on blockchain technology (Ethereum), they preserve many of the same characteristics as Bitcoin: no one can stop, censor or shut down these apps because they are decentralized.
One of the first major use-cases on Ethereum was the ability to mint and create your own token, your own cryptocurrency. Many companies used this as a way to fundraise from the public. This led to the 2017 ICO bubble (Initial Coin Offerings). Some tokens — and the apps/networks they powered — were fascinating and innovative. Most tokens were pointless. And many tokens were outright scams. Additional token reading from Fred Ehrsam, Balaji, and Naval.
https://reddit.com/link/ho4bif/video/b5b1jh9ofu951/player

Digital Gold Rush

Just as tokens grew in popularity in 2017–2018, so did online marketplaces where these tokens could be bought, sold, and traded. This was a fledgling asset class — the merchants selling picks, axes, and shovels were finally starting to emerge.
I had a front-row seat — both as an investor and token creator. This was the Wild West with all the frontier drama & scandal that you’d expect.
Binance — now the world’s largest crypto exchange —was launched during this time. They along with many others (especially from Asia) made it really easy for speculators, traders, and degenerate gamblers to participate in these markets. Similar to other financial markets, the goal was straightforward: buy low and sell high.
https://preview.redd.it/tytsu5jnfu951.jpg?width=600&format=pjpg&auto=webp&s=fe3425b7e4a71fa953b953f0c7f6eaff6504a0d1
That period left an embarrassing stain on our industry that we’ve still been trying to recover from. It was a period rampant with market manipulation, pump-and-dumps, and scams. To some extent, the crypto industry still suffers from that today, but it’s nothing compared to what it was then.
While the potential of getting filthy rich brought a lot of fly-by-nighters and charlatans into the industry, it also brought a lot of innovators, entrepreneurs, and builders.
The launch and growth of Ethereum has been an incredible technological breakthrough. As with past tech breakthroughs, it has led to a wave of innovation, experimentation, and development. The creativity around tokens, smart contracts, and decentralized applications has been fascinating to witness. Now a few years later, the fruits of those labors are starting to be realized.

DeFi: Decentralized Finance

So as a reminder, tokens are cryptocurrencies. Cryptocurrencies can carry value. And value is a lot like money. Because tokens are natively integrated with Ethereum, it’s been natural for developers to build applications related to financial services — things like lending, borrowing, saving, investing, payments, and insurance. In the last few years, there has been a groundswell of developer momentum building in this area of financial protocols. This segment of the industry is known as DeFi (Decentralized Finance).
https://preview.redd.it/f0sjzqspfu951.png?width=461&format=png&auto=webp&s=8e0a31bf29250fc624918fbd8514b008762f379e
In Q2 of 2020, 97% of all Ethereum activity was DeFi-related. Total DeFi transaction volume has reached $11.5B. The current value locked inside DeFi protocols is approaching $2 Billion (double from a month ago). DeFi’s meteoric growth cannot be ignored.
Most of that growth can be attributed to exciting protocols like Compound, Maker, Synthetix, Balancer, Aave, dYdX, and Uniswap. These DeFi protocols and the financial services they offer are quickly becoming some of the most popular use-cases for blockchain technology today.
https://preview.redd.it/wn3phnkqfu951.png?width=800&format=png&auto=webp&s=02f56caa6b94aa59eadd6e368ef9346ba10c7611
This impressive growth in DeFi certainly hasn’t come without growing pains. Unlike with Bitcoin, there are near-infinite applications one can develop on Ethereum. Sometimes bugs (or typos) can slip through code reviews, testing, and audits — resulting in loss of funds.
Our next post will go much deeper on DeFi.

Wrap Up

I know that for the hardcore crypto people, what we covered today is nothing new. But for those who are still getting up to speed, welcome! I hope this was helpful and that it fuels your interest to learn more.
Until you understand the basics of this technology, you won’t be able to fully appreciate the impact that it has on our new digital bank, Genesis Block. You won’t be able to understand the implications, how it relates, or how it helps.
After today’s post, some of you probably have a lot more questions. What are specific examples or use-cases of DeFi? Why does it need to be on a blockchain? What benefits does it bring to Genesis Block and our users?
In upcoming posts, we answer these questions. Today’s post was just Level 1. It set the foundation for where we’re headed next: even deeper down the crypto rabbit hole.
---
Other Ways to Consume Today's Episode:
We have a lot more content coming. Be sure to follow our channels: https://genesisblock.com/follow/
Have you already downloaded the app? We're Genesis Block, a new digital bank that's powered by crypto & decentralized protocols. The app is live in the App Store (iOS & Android). Get the link to download at https://genesisblock.com/download
submitted by mickhagen to genesisblockhq [link] [comments]

A Deep Dive Into IRS Crypto Tax Audits (Podcast and Highlights)

Hey all - the newest episode of The BitcoinTaxes Podcast is live. For anyone unfamiliar, it's a podcast where I interview experts in the bitcoin/blockchain/fintech spaces. In this episode I speak with a tax controversy lawyer about how to handle a CI agent showing up at your door about your crypto, and what to do to avoid getting to that point.
Full disclosure, I work for BitcoinTaxes and also host this podcast. I typically post my interviews to our own subreddit and one or two other subreddits (not trying to spam people). I've not really posted past episodes to this subreddit, but I thought it would be a pretty interesting listen for bitcoin/crypto enthusiasts and traders. If there's any issue with me posting here please let me know, otherwise I hope you guys enjoy this episode and gain some valuable knowledge. Feel free to hit me with any questions and I can relay them to Alex.
----
Links:
Podcast Page Link
Audio Only (~35 mins)

Brief Summary:
This episode's guest is Alex Kugelman. Alex is a tax controversy lawyer with expertise in cryptocurrency and IRS audits. Alex is a frequent guest on this podcast - back in July 2019 he came on the show to discuss the IRS Educational Letters that were being sent out. Before that, in May, he shared some excellent information about IRS cryptocurrency audits. Today, he elaborates on these topics and goes in-depth about what could happen in a potential crypto audit.
Alex provides tips in the case of an IRS CI agent showing up at your door, revisits compliance post-2019 IRS FAQ update, and gives us his take on the effect of COVID-19 in taxes and crypto.

Some good quotes:
"In the past year, what I've seen, the single common element of all IRS criminal investigations relating to cryptocurrency is that there is evidence that there have been sales of cryptocurrency and it cannot be reconciled to the tax return." (07:10)
"I think it's very likely that exchanges are providing information to the government if it's requested, especially U S based exchanges that are trying to be in the good graces of regulators." (09:44)

EPISODE HIGHLIGHTS AND DISCUSSION

Don't Under-Estimate Over-Reporting (03:12)

Alex: I'm a big believer of over-reporting, which means give as much detail as you possibly can. I think a lot of people get into trouble. They go: “Oh, I reported my transactions”... and you look at the tax return and it's a single line that says “cryptocurrency” and the net number. You have to think through objectively. I've not seen an issue where the IRS has taken a really hard position on lost records as long as you're making reasonable assumptions and using fair market value data.

A CI Agent's M.O. (10:30)

Alex: CI's agents are fairly sophisticated. If they have some information, and they can see these different transfers to different exchanges or wallets - they can piece it together and there's nothing to stop them from going and getting that data at that point as well. That's why I think it's really important that people...try to do the most reasonable good faith effort because it's hard to make a criminal case out of an accounting error. It's much easier to make a criminal case when someone's sold hundreds of thousands of dollars of cryptocurrency and then transferred that fiat into a U S bank account.

Unmatched Trades and Missing Data (12:16)

Alex: The more transactions that you have...with missing information...could lead to more questions. The question becomes where or how did you obtain this cryptocurrency and why is it that you don't have records?
A very common example is Mt. Gox. The exchange goes down, the records go down. That's really common. If that's the story, I wouldn't be worried about it. But, if you were being paid in cryptocurrency for a couple of years, never reported it as income, and now you're selling it - that's more problematic. It could lead to issues down the line.

CI Agents Paying You A Visit (14:35)

Alex: A lot of times when a CI agent shows up it's meant to catch people off guard. If a CI agent is showing up at your door regarding cryptocurrency, it means they already have information that they believe there was a crime and that would lead to a conviction of a crime. So you're not going to explain that away in an hour long conversation in your living room. It's not going to happen. That's not the way it works.
There's always going to be two agents, because one is going to be a witness for this conversation. You just need to remember: decline the interview. There's nothing wrong with that. Get a card and: “my counsel will contact you”. That's it.
The other thing to keep in mind that's really important is that you don't want to start doing things that are new crimes. You don't want to go in and start destroying records or erasing emails. Taking those kinds of steps is only going to make it worse.

Coronavirus, Audits, and Amended Returns (31:05)

Alex: The IRS is, for the most part, shutdown. That means that they're not really issuing new audits right now. It also means that the forced collections, when you owe money to the IRS and they levy your bank account or issue liens - that’s not going on right now. So for clients or for taxpayers who owe the IRS money...if they are currently in an installment agreement with the IRS, then actually they can forego those monthly payments right now.
The IRS is already an underfunded agency, and it was affected by the government shutdown recently. There's really a big backlog to begin with. I mean it's hard to estimate how much this [virus] is going to affect the administration of tax compliance. I think it's a great time to amend a tax return or to get into compliance.
submitted by Sal-BitcoinTax to Bitcoin [link] [comments]

BitcoinTaxes Podcast: A Deep Dive Into IRS Crypto Audits

Hey all - newest episode of The BitcoinTaxes Podcast is live! Full disclosure, I work for BitcoinTaxes and also host this podcast.
Our guest today is Alex Kugelman. Alex is a tax controversy lawyer with expertise in cryptocurrency and IRS audits. Alex is a frequent guest on this podcast - back in July 2019 he came on the show to discuss the IRS Educational Letters that were being sent out. Before that, in May, he shared some excellent information about IRS cryptocurrency audits. Today, he elaborates on these topics and goes in-depth about what could happen in a potential crypto audit.
Alex provides tips in the case of an IRS CI agent showing up at your door, revisits compliance post-2019 IRS FAQ update, and gives us his take on the effect of COVID-19 in taxes and crypto.
Podcast Page Link
Audio Only
Some good quotes:
"In the past year, what I've seen, the single common element of all IRS criminal investigations relating to cryptocurrency is that there is evidence that there have been sales of cryptocurrency and it cannot be reconciled to the tax return." (07:10)
"I think it's very likely that exchanges are providing information to the government if it's requested, especially U S based exchanges that are trying to be in the good graces of regulators." (09:44)
EPISODE HIGHLIGHTS AND DISCUSSION

Don't Under-Estimate Over-Reporting (03:12)

Alex: I'm a big believer of over-reporting, which means give as much detail as you possibly can. I think a lot of people get into trouble. They go: “Oh, I reported my transactions”... and you look at the tax return and it's a single line that says “cryptocurrency” and the net number. You have to think through objectively. I've not seen an issue where the IRS has taken a really hard position on lost records as long as you're making reasonable assumptions and using fair market value data.

A CI Agent's M.O. (10:30)

Alex: CI's agents are fairly sophisticated. If they have some information, and they can see these different transfers to different exchanges or wallets - they can piece it together and there's nothing to stop them from going and getting that data at that point as well. That's why I think it's really important that people...try to do the most reasonable good faith effort because it's hard to make a criminal case out of an accounting error. It's much easier to make a criminal case when someone's sold hundreds of thousands of dollars of cryptocurrency and then transferred that fiat into a U S bank account.

Unmatched Trades and Missing Data (12:16)

Alex: The more transactions that you have...with missing information...could lead to more questions. The question becomes where or how did you obtain this cryptocurrency and why is it that you don't have records?
A very common example is Mt. Gox. The exchange goes down, the records go down. That's really common. If that's the story, I wouldn't be worried about it. But, if you were being paid in cryptocurrency for a couple of years, never reported it as income, and now you're selling it - that's more problematic. It could lead to issues down the line.

CI Agents Paying You A Visit (14:35)

Alex: A lot of times when a CI agent shows up it's meant to catch people off guard. If a CI agent is showing up at your door regarding cryptocurrency, it means they already have information that they believe there was a crime and that would lead to a conviction of a crime. So you're not going to explain that away in an hour long conversation in your living room. It's not going to happen. That's not the way it works.
There's always going to be two agents, because one is going to be a witness for this conversation. You just need to remember: decline the interview. There's nothing wrong with that. Get a card and: “my counsel will contact you”. That's it.
The other thing to keep in mind that's really important is that you don't want to start doing things that are new crimes. You don't want to go in and start destroying records or erasing emails. Taking those kinds of steps is only going to make it worse.

Coronavirus, Audits, and Amended Returns (31:05)

Alex: The IRS is, for the most part, shutdown. That means that they're not really issuing new audits right now. It also means that the forced collections, when you owe money to the IRS and they levy your bank account or issue liens - that’s not going on right now. So for clients or for taxpayers who owe the IRS money...if they are currently in an installment agreement with the IRS, then actually they can forego those monthly payments right now.
The IRS is already an underfunded agency, and it was affected by the government shutdown recently. There's really a big backlog to begin with. I mean it's hard to estimate how much this [virus] is going to affect the administration of tax compliance. I think it's a great time to amend a tax return or to get into compliance.
submitted by Sal-BitcoinTax to bitcointaxes [link] [comments]

Interesting facts about cryptocurrency exchanges

A cryptocurrency exchange from Top 10 earns about $62M per month on average
Exchange platforms generate a profit regardless of whether the market and cryptocurrencies are growing or decreasing on value. The profit of the exchange platform depends mainly on the volume of turnover. A cryptocurrency exchange from Top 10 earns about $62M per month on average, from Top 50 – $26M, and from Top 100 – $13M. The average 24-hour volumes are the following: Top 10: $400M, Top 50: $170M and Top 100: $86M.

About 99% of cryptocurrency trade happens on centralized exchanges

Currently, on the cryptocurrency market, about 99% of transactions are being handled on centralized exchanges. Centralized exchanges provide higher liquidity and a greater volume of trade. Decentralized exchanges bring a higher level of security, but they are way slower. However, there are also hybrid solutions, just like our CoinCasso Exchange 2.0, which is going to combine the advantages of centralized and decentralized exchanges.

There are 255 cryptocurrency exchanges listed on CoinMarketCap

The largest cryptocurrency exchanges today are:
Looking to get started with cryptocurrency? Buy Bitcoin on CoinCasso!

The first Bitcoin exchange is Bitcoinmarket.com

The site was initially announced on the Bitcointalk forum by “dwdollar” on January 15th, 2010. “Hi everyone. I’m in the process of building an exchange,” he wrote. “I have big plans for it, but I still have a lot of work to do. It will be a real market where people will be able to buy and sell Bitcoins with each other.” He continued: I am trying to create a market where Bitcoins are treated as a commodity. People will be able to trade Bitcoins for dollars and speculate on the value. In theory, this will establish a real-time exchange rate so we will all have a clue what the current value of a Bitcoin is, compared to a dollar.” Back then, a single Bitcoin was worth just $0.003!

Magic the Gathering exchange went bankrupt

In 2014, Mt. Gox, which stands for… Magic the Gathering Exchange, was the largest Bitcoin exchange on the globe. It handled about 70% of all Bitcoin transactions. There have been stolen about 850,000 bitcoins from that exchange! That money was worth about $450 million at the time. Since this time, about 200,000 BTC was reported to be “found”. The exchange announced bankruptcy and closed its website.

Crazy sell order by “BearWhale”

One of the most fascinating characters and icons of the cryptocurrency world is a person called “BearWhale”. On October 6th, 2014, he placed a sell order: 30,000 BTC for $300 per 1 BTC. The Bitcoin price at that time was equal to $350, and people were afraid that this large sell order could move Bitcoin price down to the value from a few years back. “BearWhale”’s coins were bought super quickly and after that, Bitcoin price faced fluctuations for 6 hours to return to “normal” price after this period of time.

Binance moving and moving

The largest cryptocurrency exchange is constantly moving from countries that adopt laws that make their activity illegal. Binance, was initially located in China. In 2018, China blocked the operation of foreign trading platforms, so Binance moved to Japan, where it also encountered legal problems. After leaving Japan, the exchange was accepted by the government of Malta, who even… greeted them on Twitter!

Billions of dollars laundered

The exchange used cryptocurrencies to “wash” dollars! BTC-e, the main European cryptocurrency exchange was accused of laundering billions of USD. Its operator, Alexander Vinnik, is also accused of participating and benefiting from some Mt. Gox hacks.

Be aware of a blacklist

Merchants and exchanges can not accept your coins if your last block is “contaminated” by certain transactions, usually involving terrorism or illegal activity, even if you did not know that the person you traded with had a blacklisted wallet before. Monero is an altcoin which was created to omit this issue. Monero’s blockchain, unlike most others, is completely anonymous, making it impossible to check the address activity. Monero is the most widely accepted cryptocurrency in the “deep web” stores.
submitted by PresentType to cryptoinformoreinfm [link] [comments]

My first post on reddit

Hi everyone,
I created this reddit account a while ago for the sole purpose of what is finally starting today: my participation here at nanocurrency. I'd like to introduce myself:
I am a younger gen-X, investor and software developer, hence my nickname inv_dev. I invest using value principles mixed with some macro. I develop in Java. When I compare myself to others, I consider my edge to be much wider in investing vs. development, and my interest in the space has mostly been about making money by HODLing. It all started in 2015 when I found out bitcoin survived the Mt. Gox stuff and VCs are pursuing crypto more than ever. I went long bitcoin at that time.
During Q4 2017, a very respected colleague mentioned this thing called RaiBlocks so I bought a small amount which I still hold today (also hold a bit of xmr and bnb) and since then I've been lurking here to stay updated. I've watched all Nanocast episodes + interviews with Colin. I really like this project and am recently especially inspired by KAPPTURE and the progress in Ghana. On the other hand I also have many questions.
But before delving into any of that, and before experimenting with running a node, trying various applications in the Nano ecosystem etc, I want to place some in cold storage and change my representative. Back in 2015, HODLing btc using a paper wallet was considered a very common/legitimate cold storage option. With Nano I would like to do this but, reading through the posts here, I see people refer to paper wallets as a "fun way to introduce nano to your family" and no mention of using it to HODL. Is there a reason I should not HODL using a nano paper wallet? Is there a difference between using paper wallets for btc vs. those for nano (taking into account the mechanics of sending/receiving or other factors)?
Thanks.
submitted by inv_dev to nanocurrency [link] [comments]

This seat is occupied.

I’ve been in the ETH community since the very beginning. Hell, since before there even was a community. Pre pre-sale. I was around for the rise and fall of Mt.Gox, Bitcoinica, Havelock Investments, BTCT, Trenton Shavers, and the origination of ‘HODL’. I quit a lucrative job in late 2013 to work at a bitcoin startup, and in 2015 I made a personal transition from BTC to ETH and have been here since. I’m as much of a True Believer as you’re likely to find.
I’m writing this to share my view on where I see this space going and why, like the title alludes, I refuse to give up my seat on this rocket.
After my "lightbulb moment" with the blockchain, I had a simple thesis: given what I saw as the foundations of the technology, it seemed likely that this experiment was going to have a binary outcome: either it was foundational, earth-shaking tech worth untold sums, or it was mostly nonsense. And I resolved to seeing one of those two ends. I think the curious child in me wanted to see what happened when the ignition button was pushed. Whether that resulted in a detonation on the launchpad or a liftoff into orbit. Whatever was going to happen, I’d be there.
So that’s what I’ve done. And will continue to do. That’s not to say I haven’t taken profits, I have - but mostly to salvage some semblance of responsibility as I saw the portion of my net worth held in magic internet money grow. Not because I lost confidence in the technology or its potential. Broadly speaking though, I don't believe we're close to seeing the complete fallout from pushing that button. The reaction is still in-progress and will take years to complete.
As I’ve watched this industry grow, and contract, it remains clear that the genie isn’t going back in the bottle. Crypto truly is a brain virus. Once educated, people understand the value of a scarce, programmable, permissionless, non-sovereign asset and I submit society won’t stop seeing value in this. Now, I believe there's ample evidence to suggest that speculative markets move in cycles. And having been through the peaks and valleys of previous crypto cycles, I am confident we’re in a valley. I’m also confident there will be a future peak. The market is utterly manic, for better or worse.
So I see that a 2017 Ethereum — when app/protocol composability was pure theory, there were no DeFi products whatsoever, enterprise interest was cursory, and the largest, most public demonstration of the tech was collectible digital cats — had people tripping over themselves trying to buy at prices almost 10x higher than they are today. I can’t help but think: if the 2017 fundamentals provided enough of a platform to support the speculative rise we saw to peak prices, what will it look like when the price gets out ahead of current fundamentals? Where we’re in the midst of a Cambrian Explosion of composable apps/protocols, a serious (and growing) portion of total supply locked in DeFi, PoS right around the corner poised to gobble up even more supply, more money legos, more devs, more mindshare. We are in an entirely different realm where fundamentals are concerned.
Crypto peaked in 2017 at shy of $1T. If you don’t think the story so far points to crypto being a multi-trillion dollar asset class in the future, I’m not sure what story you’ve been reading. In comparison, the Dotcom bubble brought peak valuations to $6-7T (inflation adjusted.) This all in a silo’d market where the primary participants were those with access to US equities and early stage investment opportunities. Crypto is global. It’s unrestricted and has no minimums. And it has multiple narratives, which are ultimately additive, that all command their own monetary premium. The SoV aspect is independent from the need to pay for contract execution, yet both work in concert driving demand.
Unless the genie does retreat back into the bottle, I believe we will see prices move out in front of fundamentals yet again. Just like in 2011, 2013, and 2017. Thoughtful people are understandably reluctant to throw-in with what seem like pipe dream valuations. They sound too good to be true. Naive, even. I’ll be the first to admit, talking about returns using an ‘x’ instead of a ‘%’ should always be met with skepticism. But there are two factors at play which I feel are under-appreciated that can (and will) legitimately drive returns of those magnitudes:
Liquidity and reflexivity.
In comparison to other financial markets, crypto markets are extremely illiquid. Not necessarily for retail investors who can move a few hundred thousand around with minimal price slippage, but for the sovereign wealth funds, endowments, pension funds — aka Institutional Money™, it’s a different story. A lot of people talk about how crypto will only rise once institutional money arrives. The reality is that crypto needs to grow in order for institutional money to arrive. This transition from illiquid to liquid is a one-way street and will continue to be responsible for profound price moves as illiquidity is the primary reason crypto prices move as intensely as they do. Sellers are always trying to get the most value for their assets, so if you want Asset X right this minute, you’re going to pay out the nose for it if there isn't sufficient supply when you want it. And having that short time preference leads me to...
Reflexivity, which is especially pronounced in this industry because the two driving components, sentiment and trading based on that sentiment, now both move instantaneously. It’s like this cartoon, but everything moves at the speed of light. Once sentiment changes (which will inevitably happen if you believe in market cycles), the air will get sucked out of the room at a blistering pace. This is where FOMO really ramps up and it grips everyone from fund managers to middle-schoolers. Global fund managers to global middle-schoolers. The result is light-speed FOMO mixed with light-speed trading of an illiquid underlying asset, aka the perfect recipe for face-melting price moves.
Long story short, I think crypto is a gift to this generation. Do with this gift what you will. But when the music stops and the sentiment shifts, I hope you've found your seat. They'll go in a hurry.
submitted by Naviers_Stoked to ethfinance [link] [comments]

A HODLer's dilemma - There are likely much fewer Bitcoin millionaires than you think

I first learned about bitcoin through a newsletter reporting a Mt Gox hack in 2011. After reading about its potential to be seriously disruptive, I still avoided making any purchases due to the limited (and shady) means of acquiring any.

But I kept my eye on it. I saw the small pattern of boom-bust cycles but there were too few at the time to consider this pattern to be normal.

I bought my first bitcoins in April 2013. I'd FOMO'ed the runup from $15 to $100 and finally bought in at $138. One of the only ways to buy bitcoin at the time was to deposit cash into some rando's bank account and cross your fingers that they'd actually send you bitcoin in return. I was lucky. They did.

Bitcoin continued to rally to $230. I'd nearly doubled my money in a few days. I finally applied for a Mt Gox account and was hooked.

It only took 3 more months to watch my initial investment be cut in half after the retrace to $66.

My point here is it took balls to invest in the chaotic sphere of crypto from a total bystander who's not a cypherpunk. I had a spare $500, my career was built on the industry Bitcoin was poised to disrupt, so I bought a few as a "hedge" in my mind.

So I hedl. The price eventually stabilized and slowly crept up to my initial buy in. I learned about coinbase and registered an account right before the second bull run of the year.

Bitcoin ran up to $1,100. I was amped. Bought in a ton more on the way up. Convinced buddies to buy in at over $1,000.

Then it tanked again. I praised friends who "called the top" and got out while I hedl.

But at that time I was a lot more convinced that long term growth was inevitable. I explained to my buddies that this is normal and that they should think of their money spent as a shitty night at the casino. They can pull it out now or just forget about it and see where it goes. They listened.

And I kept buying randomly. I set a DCA calendar event but rarely listened to it. I bought here and there with spare funds over the next few years as it traded sideways.

Overall, I spent about $15,000 over the course of 4 years. Who spends $15,000 on an unproven volatile asset with naysayers around every corner? Anyone with any financial sense would think I was insane to put that much money into the space.

Now I own 25 bitcoin and a decent number of the other top coins. I'm in a great position.

But I want you all to heed this story as a means to prepare yourselves for strong hands over the next boom/bust cycle.

I watched my $15k investment balloon to over $600k during the 2017 bull run. Then I watched my portfolio shrink $350k in like 6 weeks. Then another $150k over the following months.

It was painful. But I'm still hodling. I often wonder about how strong my hands can be when I finally see my crypto portfolio in the 8-figure range. I truly believe that Bitcoin stands to insanely disruptive and coexist on a massive level with the fiat powerhouses of today.

But how am I going to react when that valuation means I can retire at age 35? How am I going to react if it grows to unfathomable levels and the next bust sees me losing millions of dollars over a few short months?

I can't tell you. I don't know myself. I know I'll not be happy to sell out at 1MM if it climbs to 10MM in a few years. But I'll have reached a FIRE benchmark at an age that a very rare few can even dream of. It's an insane concept to be able to say you turned $15k into a million dollars. Even more so if it's multi-millions.

That's why I think a lot fewer bitcoin millionaires exist than you think. When reflecting on how much is made over such a little investment, the idea that it could go even higher simply escapes logic. Even if you truly believe that Bitcoin will cement itself as an alternative or replacement to currency/payments/store-of-value, there's still a huge risk it can all collapse at some point.

So. What would you do? How much will you be willing to put on the table once it's real? Once you literally have hundreds of thousands of dollars on the line?
submitted by anoriginstory to Bitcoin [link] [comments]

Technical: A Brief History of Payment Channels: from Satoshi to Lightning Network

Who cares about political tweets from some random country's president when payment channels are a much more interesting and are actually capable of carrying value?
So let's have a short history of various payment channel techs!

Generation 0: Satoshi's Broken nSequence Channels

Because Satoshi's Vision included payment channels, except his implementation sucked so hard we had to go fix it and added RBF as a by-product.
Originally, the plan for nSequence was that mempools would replace any transaction spending certain inputs with another transaction spending the same inputs, but only if the nSequence field of the replacement was larger.
Since 0xFFFFFFFF was the highest value that nSequence could get, this would mark a transaction as "final" and not replaceable on the mempool anymore.
In fact, this "nSequence channel" I will describe is the reason why we have this weird rule about nLockTime and nSequence. nLockTime actually only works if nSequence is not 0xFFFFFFFF i.e. final. If nSequence is 0xFFFFFFFF then nLockTime is ignored, because this if the "final" version of the transaction.
So what you'd do would be something like this:
  1. You go to a bar and promise the bartender to pay by the time the bar closes. Because this is the Bitcoin universe, time is measured in blockheight, so the closing time of the bar is indicated as some future blockheight.
  2. For your first drink, you'd make a transaction paying to the bartender for that drink, paying from some coins you have. The transaction has an nLockTime equal to the closing time of the bar, and a starting nSequence of 0. You hand over the transaction and the bartender hands you your drink.
  3. For your succeeding drink, you'd remake the same transaction, adding the payment for that drink to the transaction output that goes to the bartender (so that output keeps getting larger, by the amount of payment), and having an nSequence that is one higher than the previous one.
  4. Eventually you have to stop drinking. It comes down to one of two possibilities:
    • You drink until the bar closes. Since it is now the nLockTime indicated in the transaction, the bartender is able to broadcast the latest transaction and tells the bouncers to kick you out of the bar.
    • You wisely consider the state of your liver. So you re-sign the last transaction with a "final" nSequence of 0xFFFFFFFF i.e. the maximum possible value it can have. This allows the bartender to get his or her funds immediately (nLockTime is ignored if nSequence is 0xFFFFFFFF), so he or she tells the bouncers to let you out of the bar.
Now that of course is a payment channel. Individual payments (purchases of alcohol, so I guess buying coffee is not in scope for payment channels). Closing is done by creating a "final" transaction that is the sum of the individual payments. Sure there's no routing and channels are unidirectional and channels have a maximum lifetime but give Satoshi a break, he was also busy inventing Bitcoin at the time.
Now if you noticed I called this kind of payment channel "broken". This is because the mempool rules are not consensus rules, and cannot be validated (nothing about the mempool can be validated onchain: I sigh every time somebody proposes "let's make block size dependent on mempool size", mempool state cannot be validated by onchain data). Fullnodes can't see all of the transactions you signed, and then validate that the final one with the maximum nSequence is the one that actually is used onchain. So you can do the below:
  1. Become friends with Jihan Wu, because he owns >51% of the mining hashrate (he totally reorged Bitcoin to reverse the Binance hack right?).
  2. Slip Jihan Wu some of the more interesting drinks you're ordering as an incentive to cooperate with you. So say you end up ordering 100 drinks, you split it with Jihan Wu and give him 50 of the drinks.
  3. When the bar closes, Jihan Wu quickly calls his mining rig and tells them to mine the version of your transaction with nSequence 0. You know, that first one where you pay for only one drink.
  4. Because fullnodes cannot validate nSequence, they'll accept even the nSequence=0 version and confirm it, immutably adding you paying for a single alcoholic drink to the blockchain.
  5. The bartender, pissed at being cheated, takes out a shotgun from under the bar and shoots at you and Jihan Wu.
  6. Jihan Wu uses his mystical chi powers (actually the combined exhaust from all of his mining rigs) to slow down the shotgun pellets, making them hit you as softly as petals drifting in the wind.
  7. The bartender mutters some words, clothes ripping apart as he or she (hard to believe it could be a she but hey) turns into a bear, ready to maul you for cheating him or her of the payment for all the 100 drinks you ordered from him or her.
  8. Steely-eyed, you stand in front of the bartender-turned-bear, daring him to touch you. You've watched Revenant, you know Leonardo di Caprio could survive a bear mauling, and if some posh actor can survive that, you know you can too. You make a pose. "Drunken troll logic attack!"
  9. I think I got sidetracked here.
Lessons learned?

Spilman Channels

Incentive-compatible time-limited unidirectional channel; or, Satoshi's Vision, Fixed (if transaction malleability hadn't been a problem, that is).
Now, we know the bartender will turn into a bear and maul you if you try to cheat the payment channel, and now that we've revealed you're good friends with Jihan Wu, the bartender will no longer accept a payment channel scheme that lets one you cooperate with a miner to cheat the bartender.
Fortunately, Jeremy Spilman proposed a better way that would not let you cheat the bartender.
First, you and the bartender perform this ritual:
  1. You get some funds and create a transaction that pays to a 2-of-2 multisig between you and the bartender. You don't broadcast this yet: you just sign it and get its txid.
  2. You create another transaction that spends the above transaction. This transaction (the "backoff") has an nLockTime equal to the closing time of the bar, plus one block. You sign it and give this backoff transaction (but not the above transaction) to the bartender.
  3. The bartender signs the backoff and gives it back to you. It is now valid since it's spending a 2-of-2 of you and the bartender, and both of you have signed the backoff transaction.
  4. Now you broadcast the first transaction onchain. You and the bartender wait for it to be deeply confirmed, then you can start ordering.
The above is probably vaguely familiar to LN users. It's the funding process of payment channels! The first transaction, the one that pays to a 2-of-2 multisig, is the funding transaction that backs the payment channel funds.
So now you start ordering in this way:
  1. For your first drink, you create a transaction spending the funding transaction output and sending the price of the drink to the bartender, with the rest returning to you.
  2. You sign the transaction and pass it to the bartender, who serves your first drink.
  3. For your succeeding drinks, you recreate the same transaction, adding the price of the new drink to the sum that goes to the bartender and reducing the money returned to you. You sign the transaction and give it to the bartender, who serves you your next drink.
  4. At the end:
    • If the bar closing time is reached, the bartender signs the latest transaction, completing the needed 2-of-2 signatures and broadcasting this to the Bitcoin network. Since the backoff transaction is the closing time + 1, it can't get used at closing time.
    • If you decide you want to leave early because your liver is crying, you just tell the bartender to go ahead and close the channel (which the bartender can do at any time by just signing and broadcasting the latest transaction: the bartender won't do that because he or she is hoping you'll stay and drink more).
    • If you ended up just hanging around the bar and never ordering, then at closing time + 1 you broadcast the backoff transaction and get your funds back in full.
Now, even if you pass 50 drinks to Jihan Wu, you can't give him the first transaction (the one which pays for only one drink) and ask him to mine it: it's spending a 2-of-2 and the copy you have only contains your own signature. You need the bartender's signature to make it valid, but he or she sure as hell isn't going to cooperate in something that would lose him or her money, so a signature from the bartender validating old state where he or she gets paid less isn't going to happen.
So, problem solved, right? Right? Okay, let's try it. So you get your funds, put them in a funding tx, get the backoff tx, confirm the funding tx...
Once the funding transaction confirms deeply, the bartender laughs uproariously. He or she summons the bouncers, who surround you menacingly.
"I'm refusing service to you," the bartender says.
"Fine," you say. "I was leaving anyway;" You smirk. "I'll get back my money with the backoff transaction, and posting about your poor service on reddit so you get negative karma, so there!"
"Not so fast," the bartender says. His or her voice chills your bones. It looks like your exploitation of the Satoshi nSequence payment channel is still fresh in his or her mind. "Look at the txid of the funding transaction that got confirmed."
"What about it?" you ask nonchalantly, as you flip open your desktop computer and open a reputable blockchain explorer.
What you see shocks you.
"What the --- the txid is different! You--- you changed my signature?? But how? I put the only copy of my private key in a sealed envelope in a cast-iron box inside a safe buried in the Gobi desert protected by a clan of nomads who have dedicated their lives and their childrens' lives to keeping my private key safe in perpetuity!"
"Didn't you know?" the bartender asks. "The components of the signature are just very large numbers. The sign of one of the signature components can be changed, from positive to negative, or negative to positive, and the signature will remain valid. Anyone can do that, even if they don't know the private key. But because Bitcoin includes the signatures in the transaction when it's generating the txid, this little change also changes the txid." He or she chuckles. "They say they'll fix it by separating the signatures from the transaction body. They're saying that these kinds of signature malleability won't affect transaction ids anymore after they do this, but I bet I can get my good friend Jihan Wu to delay this 'SepSig' plan for a good while yet. Friendly guy, this Jihan Wu, it turns out all I had to do was slip him 51 drinks and he was willing to mine a tx with the signature signs flipped." His or her grin widens. "I'm afraid your backoff transaction won't work anymore, since it spends a txid that is not existent and will never be confirmed. So here's the deal. You pay me 99% of the funds in the funding transaction, in exchange for me signing the transaction that spends with the txid that you see onchain. Refuse, and you lose 100% of the funds and every other HODLer, including me, benefits from the reduction in coin supply. Accept, and you get to keep 1%. I lose nothing if you refuse, so I won't care if you do, but consider the difference of getting zilch vs. getting 1% of your funds." His or her eyes glow. "GENUFLECT RIGHT NOW."
Lesson learned?

CLTV-protected Spilman Channels

Using CLTV for the backoff branch.
This variation is simply Spilman channels, but with the backoff transaction replaced with a backoff branch in the SCRIPT you pay to. It only became possible after OP_CHECKLOCKTIMEVERIFY (CLTV) was enabled in 2015.
Now as we saw in the Spilman Channels discussion, transaction malleability means that any pre-signed offchain transaction can easily be invalidated by flipping the sign of the signature of the funding transaction while the funding transaction is not yet confirmed.
This can be avoided by simply putting any special requirements into an explicit branch of the Bitcoin SCRIPT. Now, the backoff branch is supposed to create a maximum lifetime for the payment channel, and prior to the introduction of OP_CHECKLOCKTIMEVERIFY this could only be done by having a pre-signed nLockTime transaction.
With CLTV, however, we can now make the branches explicit in the SCRIPT that the funding transaction pays to.
Instead of paying to a 2-of-2 in order to set up the funding transaction, you pay to a SCRIPT which is basically "2-of-2, OR this singlesig after a specified lock time".
With this, there is no backoff transaction that is pre-signed and which refers to a specific txid. Instead, you can create the backoff transaction later, using whatever txid the funding transaction ends up being confirmed under. Since the funding transaction is immutable once confirmed, it is no longer possible to change the txid afterwards.

Todd Micropayment Networks

The old hub-spoke model (that isn't how LN today actually works).
One of the more direct predecessors of the Lightning Network was the hub-spoke model discussed by Peter Todd. In this model, instead of payers directly having channels to payees, payers and payees connect to a central hub server. This allows any payer to pay any payee, using the same channel for every payee on the hub. Similarly, this allows any payee to receive from any payer, using the same channel.
Remember from the above Spilman example? When you open a channel to the bartender, you have to wait around for the funding tx to confirm. This will take an hour at best. Now consider that you have to make channels for everyone you want to pay to. That's not very scalable.
So the Todd hub-spoke model has a central "clearing house" that transport money from payers to payees. The "Moonbeam" project takes this model. Of course, this reveals to the hub who the payer and payee are, and thus the hub can potentially censor transactions. Generally, though, it was considered that a hub would more efficiently censor by just not maintaining a channel with the payer or payee that it wants to censor (since the money it owned in the channel would just be locked uselessly if the hub won't process payments to/from the censored user).
In any case, the ability of the central hub to monitor payments means that it can surveill the payer and payee, and then sell this private transactional data to third parties. This loss of privacy would be intolerable today.
Peter Todd also proposed that there might be multiple hubs that could transport funds to each other on behalf of their users, providing somewhat better privacy.
Another point of note is that at the time such networks were proposed, only unidirectional (Spilman) channels were available. Thus, while one could be a payer, or payee, you would have to use separate channels for your income versus for your spending. Worse, if you wanted to transfer money from your income channel to your spending channel, you had to close both and reshuffle the money between them, both onchain activities.

Poon-Dryja Lightning Network

Bidirectional two-participant channels.
The Poon-Dryja channel mechanism has two important properties:
Both the original Satoshi and the two Spilman variants are unidirectional: there is a payer and a payee, and if the payee wants to do a refund, or wants to pay for a different service or product the payer is providing, then they can't use the same unidirectional channel.
The Poon-Dryjam mechanism allows channels, however, to be bidirectional instead: you are not a payer or a payee on the channel, you can receive or send at any time as long as both you and the channel counterparty are online.
Further, unlike either of the Spilman variants, there is no time limit for the lifetime of a channel. Instead, you can keep the channel open for as long as you want.
Both properties, together, form a very powerful scaling property that I believe most people have not appreciated. With unidirectional channels, as mentioned before, if you both earn and spend over the same network of payment channels, you would have separate channels for earning and spending. You would then need to perform onchain operations to "reverse" the directions of your channels periodically. Secondly, since Spilman channels have a fixed lifetime, even if you never used either channel, you would have to periodically "refresh" it by closing it and reopening.
With bidirectional, indefinite-lifetime channels, you may instead open some channels when you first begin managing your own money, then close them only after your lawyers have executed your last will and testament on how the money in your channels get divided up to your heirs: that's just two onchain transactions in your entire lifetime. That is the potentially very powerful scaling property that bidirectional, indefinite-lifetime channels allow.
I won't discuss the transaction structure needed for Poon-Dryja bidirectional channels --- it's complicated and you can easily get explanations with cute graphics elsewhere.
There is a weakness of Poon-Dryja that people tend to gloss over (because it was fixed very well by RustyReddit):
Another thing I want to emphasize is that while the Lightning Network paper and many of the earlier presentations developed from the old Peter Todd hub-and-spoke model, the modern Lightning Network takes the logical conclusion of removing a strict separation between "hubs" and "spokes". Any node on the Lightning Network can very well work as a hub for any other node. Thus, while you might operate as "mostly a payer", "mostly a forwarding node", "mostly a payee", you still end up being at least partially a forwarding node ("hub") on the network, at least part of the time. This greatly reduces the problems of privacy inherent in having only a few hub nodes: forwarding nodes cannot get significantly useful data from the payments passing through them, because the distance between the payer and the payee can be so large that it would be likely that the ultimate payer and the ultimate payee could be anyone on the Lightning Network.
Lessons learned?

Future

After LN, there's also the Decker-Wattenhofer Duplex Micropayment Channels (DMC). This post is long enough as-is, LOL. But for now, it uses a novel "decrementing nSequence channel", using the new relative-timelock semantics of nSequence (not the broken one originally by Satoshi). It actually uses multiple such "decrementing nSequence" constructs, terminating in a pair of Spilman channels, one in both directions (thus "duplex"). Maybe I'll discuss it some other time.
The realization that channel constructions could actually hold more channel constructions inside them (the way the Decker-Wattenhofer puts a pair of Spilman channels inside a series of "decrementing nSequence channels") lead to the further thought behind Burchert-Decker-Wattenhofer channel factories. Basically, you could host multiple two-participant channel constructs inside a larger multiparticipant "channel" construct (i.e. host multiple channels inside a factory).
Further, we have the Decker-Russell-Osuntokun or "eltoo" construction. I'd argue that this is "nSequence done right". I'll write more about this later, because this post is long enough.
Lessons learned?
submitted by almkglor to Bitcoin [link] [comments]

I'm Mark Karpelès, ex-CEO of bankrupt MtGox. Ask me anything.

Dear community,
Many of you know or remember me, especially recently since the MtGox bankruptcy has been allegedly linked with Bitcoin price drops in December 2017 to February 2018. Since taking over the most active Bitcoin exchange in 2011, I ran MtGox until filing for civil rehabilitation on February 28th 2014 (which became bankruptcy less than 2 months later) because a large amount of Bitcoins went missing. Since then, four years have passed, and MtGox is still in bankruptcy today. I’ve been arrested, released under bail after a little less than one year, and am now trying to assist MtGox getting into civil rehabilitation.
I did my best trying to grow the ecosystem by running the biggest exchange at the time. It had big problems but still managed to hang in there. For a while. A quite long while, even, while the rest of the ecosystem caught up. At the end of the day, the methods I chose to try to get MtGox out of its trouble ended up being insufficient, insufficiently executed, or plain wrong.
I know I didn't handle the last, stressful days of the outdrawn and painful Gox collapse very well. I can only be humble about that in hindsight. Once again, I’m sorry.
Japanese bankruptcy law has a particularly nasty outcome here, and I want to address this up front. As creditors claims were registered, those claims were registered in the valuation of Japanese Yen on the bankruptcy date. That's the only way Japanese bankruptcy law can work (most bankruptcy laws around the world operate this way for that matter). This means that the claims can be paid back in full, and there will still be over 160,000 bitcoin and bitcoin cash in assets in the Gox estate. The way bankruptcy law works is that if there are any assets remaining after the creditors have been paid in full, then those assets are distributed to shareholders as part of the liquidation.
That's the only way any bankruptcy law can reasonably work. And yet, in this case, it produces an egregiously distasteful outcome in that the shareholders of MtGox would walk away with the value of over 160,000 bitcoin as a result of what happened.
I don't want this. I don't want this billion dollars. From day one I never expected to receive anything from this bankruptcy. The fact that today this is a possibility is an aberration and I believe it is my responsibility to make sure it doesn’t happen. One of the ways to do this would be civil rehabilitation, and as it seems most creditors agree with this, I am doing my best to help make it happen. I do not want to become instantly rich. I do not ask for forgiveness. I just want to see this end as soon as possible with everyone receiving their share of what they had on MtGox so everyone, myself included, can get some closure.
I’m an engineer at heart. I want to build things. I like seeing what I build being useful, and people being happy using what I build. My drive, from day one, has been to push the limits of what is technically possible, and this is the main reason I liked and have been involved with Bitcoin in the first place. When I took over MtGox, I never imagined things would end this way and I am forever sorry for everything that’s taken place and all the effect it had on everyone involved.
Hopefully, I can make what I’ve learned in this experience useful to the community as a whole, so there can at least be something positive in the end.
Ask me anything you like.
EDIT: With this coming to all there have been an overwhelming number of messages, questions etc. I will continue responding for a little while but probably won't be able to respond to new questions (it is starting to be late here and I've been spending the last few hours typing). Thank you very much to everyone.
submitted by MagicalTux to Bitcoin [link] [comments]

The biggest cryptocurrency thefts in the last 10 years

In this article, we will try to remember all the major theft of cryptocurrencies over the past 10 years.
1. Bitstamp $5.3 mln (BTC), January 4th, 2015
On January 4, 2015, the operational hot wallet of Bitstamp announced that it was hacked by an anonymous hacker and 19,000 Bitcoins (worth of $5 million) were lost.
The initiation of the attack fell on November 4, 2014. Then Damian Merlak, the CTO of the exchange, was offered free tickets to punk rock festival Punk Rock Holiday 2015 via Skype, knowing that Merlak is interested in such music and he plays in the band. To receive the tickets, he was asked to fill out a participant questionnaire by sending a file named “Punk Rock Holiday 2015 TICKET Form1.doc”. This file contained the VBA script. By opening the file, he downloaded the malware on his computer. Although Merlak did not suspect wrong and has opened the "application form", to any critical consequences, this did not open access to the funds of exchange.
The attackers, however, did not give up. The attack continued for five weeks, during which hackers presented themselves as journalists, then headhunters.
Finally, the attackers were lucky. On December 11, 2014, the infected word document was opened on his machine by Bitstamp system administrator Luka Kodric, who had access to the exchange wallet. The file came to the victim by email, allegedly on behalf of an employee of the Association for computer science, although in fact, as the investigation showed, the traces of the file lead deep into Tor. Hackers were not limited to just one letter. Skype attacker pretending to be an employee of the Association for computing machinery, convinced that his Frame though to make international honor society, which required some paperwork. Kodric believed.
By installing a Trojan on Kodriс's computer hackers were able to obtain direct access to the hot wallet of the exchange. The logs show that the attacker, under the account of Kodric, gained access to the server LNXSRVBTC, where he kept the wallet file.dat, and the DORNATA server where the password was stored. Then the servers were redirected to a certain IP address that belongs to one of the providers of Germany.
There are still no official reports of arrests in this case. Obviously, the case is complicated by the fact that the hackers are outside the UK, and the investigation has to cooperate with law enforcement agencies in other countries.
2. GateHub $9.5 mln (XRP), June 1th, 2019
Hackers have compromised nearly 100 XRP Ledger wallets on cryptocurrency wallet service GateHub. The incident was reported by GateHub in a preliminary statement on June 6.
XRP enthusiast Thomas Silkjær, who first noticed the suspicious activity, estimates that the hackers have stolen nearly $10 million worth of cryptocurrency (23,200,000 XRP), $5.5 million (13,100,000 XRP) of which has already been laundered through exchanges and mixer services.
GateHub notes that it is still conducting an investigation and therefore cannot publish any official findings. Also, GateHub advises victims to make complaints to the relevant authorities of their jurisdiction.
3. Tether, $30.9 mln (USDT), November 19th, 2017
Tether created a digital currency called "US tokens" (USDT) — they could be used to trade real goods using Bitcoin, Litecoin and Ether. By depositing $1 in Tether, the user received 1 USD, which can be converted back into fiat. On November 19, 2017, the attacker gained access to the main Tether wallet and withdrew $ 30.9 million in tokens. For the transaction, he used a Bitcoin address, which means that it was irreversible.
To fix the situation, Tether took action by which the hacker was unable to withdraw the stolen money to fiat or Bitcoin, but the panic led to a decrease in the value of Bitcoin.
4. Ethereum, $31 mln (ETH), July 20th, 2017
On July 20, 2017, the hacker transferred 153,037 Ethers to $31 million from three very large wallets owned by SwarmCity, Edgeless Casino and Eternity. Unknown fraudster managed to change the ownership of wallets, taking advantage of the vulnerability with multiple signatures.
First, the theft was noticed by the developers of SwarmCity.
Further events deserve a place in history: "white hackers" returned the stolen funds, and then protected other compromised accounts. They acted in the same way as criminals, who stole funds from vulnerable wallets — just not for themselves. And it all happened in less than a day.
5. Dao (Decentralized Autonomous Organization) $70 mln (ETH), June 18th, 2016
On June 18, 2016, members of the Ethereum community noticed that funds were being drained from the DAO and the overall ETH balance of the smart contract was going down. A total of 3.6 million Ether (worth around $70 million at the time) was drained by the hacker in the first few hours. The attack was possible because of an exploit found in the splitting function. The attackes withdrew Ether from the DAO smart contract multiple times using the same DAO Tokens. This was possible due to what is known as a recursive call exploit.
In this exploit, the attacker was able to "ask" the smart contract (DAO) to give the Ether back multiple times before the smart contract could update its own balance. There were two main faults that made this possible: the fact that when the DAO smart contract was created the coders did not take into account the possibility of a recursive call, and the fact that the smart contract first sent the ETH funds and then updated the internal token balance.
It's important to understand that this bug did not come from Ethereum itself, but from this one application that was built on Ethereum. The code written for the DAO had multiple bugs, and the recursive call exploit was one of them. Another way to look at this situation is to compare Ethereum to the Internet and any application based on Ethereum to a website: if a website is not working, it doesn't mean that the Internet is not working, it simply means that one website has a problem.
The hacker stopped draining the DAO for unknown reasons, even though they could have continued to do so.
The Ethereum community and team quickly took control of the situation and presented multiple proposals to deal with the exploit. In order to prevent the hacker from cashing in the Ether from his child DAO after the standard 28 days, a soft-fork was voted on and came very close to being introduced. A few hours before it was set to be released, a few members of the community found a bug with the implementation that opened a denial-of-service attack vector. This soft fork was designed to blacklist all the transactions made from the DAO.
6. NiceHash, 4736.42 (BTC), December 6th, 2017
NiceHash is a Slovenian cryptocurrency hash power broker with integrated marketplace that connects sellers of hashing power (miners) with buyers of hashing power using the sharing economy approach.
On December 6, 2017, the company's servers became the target of attack. At first, Reddit users reported that they could not access their funds and make transactions — when they tried to log in, they were shown a message about a service interruption. In the end, it became known that the service had undergone a major cyberattack and 4736,42 Bitcoins disappeared without a trace.
Despite heavy losses, NiceHash was able to continue working, but CEO and founder Marco Koval resigned, giving way to a new team. The company managed to maintain the trust of investors and began to strengthen the protection of its systems.
7. Mt.Gox, 850000 (BTC), June 19th, 2011
The Hacking Of Mt.Gox was one of the biggest Bitcoin thefts in history. It was the work of highly professional hackers using complex vulnerabilities.
A hacker (or a group of hackers) allegedly gained access to a computer owned by one of the auditors and used a security vulnerability to access Mt.Gox servers, then changed the nominal value of Bitcoin to 1 cent per coin.
Then they brought out about 2000 BTC. Some customers, without knowing it, conducted transactions at this low price, a total of 650 BTC, and despite the fact that the hacking hit the headlines around the world, no Bitcoin could be returned.
To increase investor confidence, the company has compensated all of the stolen coins, placed most of the remaining funds in offline storage, and the next couple of years was considered the most reliable Bitcoin exchanger in the world.
However, it was only an illusion of reliability.
The problems of the organization were much more serious, and the management probably did not even know about them.
CEO of Mt.Gox, Mark Karpeles, was originally a developer, but over time he stopped delving into technical details, basking in the rays of glory — because he created the world's largest platform for cryptocurrency exchange. At that time Mt.Gox handled over 70% of all Bitcoin transactions.
And, of course, there were those who wanted to take advantage of the technological weakness of the service. At some point, hackers made it so that Bitcoins could be bought at any price, and within minutes millions of dollars worth of coins were sold — mostly for pennies. World prices for Bitcoin stabilized in a few minutes, but it was too late.
As a result, Mt.Gox lost about 850,000 Bitcoins. The exchange had to declare bankruptcy, hundreds of thousands of people lost money, and the Japanese authorities arrested CEO Mark Karpeles for fraud. He pleaded not guilty and was subsequently released. In 2014, the authorities restored some of the Bitcoins remaining at the old addresses, but did not transfer them to the exchange, and created a trust to compensate for the losses of creditors.
8. Coincheck, $530 mln, January 26th, 2018
The sum was astonishing, and even surpassed the infamous Mt.Gox hack.
While Mt.Gox shortly filed for bankruptcy following the hack, Coincheck has surprisingly remained in business and was even recently approved as a licensed exchange by Japan’s Financial Services (FSA).
Coincheck was founded in 2014 in Japan and was one of the most popular cryptocurrency exchanges in the country. Offering a wide variety of digital assets including Bitcoin, Ether, LISK, and NEM, Coincheck was an emerging exchange that joined the Japan Blockchain Association.
Since Coincheck was founded it 2014, it was incidentally not subject to new exchange registration requirements with Japan’s FSA — who rolled out a framework after Mt. Gox –, and eventually was a contributing factor to its poor security standards that led to the hack.
On January 26th, 2018, Coincheck posted on their blog detailing that they were restricting NEM deposits and withdrawals, along with most other methods for buying or selling cryptocurrencies on the platform. Speculation arose that the exchange had been hacked, and the NEM developers issued a statement saying they were unaware of any technical glitches in the NEM protocol and any issues were a result of the exchange’s security.
Coincheck subsequently held a high-profile conference where they confirmed that hackers had absconded with 500 million NEM tokens that were then distributed to 19 different addresses on the network. Totaling roughly $530 million at the time — NEM was hovering around $1 then — the Coincheck hack was considered the largest theft in the industry’s history.
Coincheck was compelled to reveal some embarrassing details about their exchange’s security, mentioning how they stored all of the NEM in a single hot wallet and did not use the NEM multisignature contract security recommended by the developers.
Simultaneously, the NEM developers team had tagged all of the NEM stolen in the hack with a message identifying the funds as stolen so that other exchanges would not accept them. However, NEM announced they were ending their hunt for the stolen NEM for unspecified reasons several months later, and speculation persisted that hackers were close to cashing out the stolen funds on the dark web.
Mainstream media covered the hack extensively and compared it to similar failures by cryptocurrency exchanges in the past to meet adequate security standards. At the time, most media coverage of cryptocurrencies was centered on their obscure nature, dramatic volatility, and lack of security. Coincheck’s hack fueled that narrative considerably as the stolen sum was eye-popping and the cryptocurrency used — NEM — was unknown to most in the mainstream.
NEM depreciated rapidly following the hack, and the price fell even more throughout 2018, in line with the extended bear market in the broader industry. Currently, NEM is trading at approximately $0.07, a precipitous fall from ATH over $1.60 in early January.
The extent of the Coincheck hack was rivaled by only a few other hacks, notably the Mt.Gox hack. While nominally Coincheck is the largest hack in the industry’s history, the effects of Mt.Gox were significantly more impactful since the stolen funds consisted only of Bitcoin and caused a sustained market correction as well as an ongoing controversy with the stolen funds and founder. Moreover, Mt.Gox squandered 6% of the overall Bitcoin circulation at the time in a market that was much less mature than it is today.
Despite the fallout, Coincheck is now fully operational and registered with Japan’s FSA.
As practice shows, people make mistakes and these mistakes can cost a lot. Especially, when we talk about mad cryptoworld. Be careful and keep your private keys in a safe place.
submitted by SwapSpace_co to BitcoinMarkets [link] [comments]

Technical: The `SIGHASH_NOINPUT` Debate! Chaperones and output tagging and signature replay oh my!

Bitcoin price isn't moving oh no!!! You know WHAT ELSE isn't moving?? SIGHASH_NOINPUT that's what!!!
Now as you should already know, Decker-Russell-Osuntokun ("eltoo") just ain't possible without SIGHASH_NOINPUT of some kind or other. And Decker-Russell-Osuntokun removes the toxic waste problem (i.e. old backups of your Poon-Dryja LN channels are actively dangerous and could lose your funds if you recover from them, or worse, your most hated enemy could acquire copies of your old state and make you lose funds). Decker-Russell-Osuntokun also allows multiparticipant offchain cryptocurrency update systems, without the drawback of a large unilateral close timeout that Decker-Wattenhofer does, making this construction better for use at the channel factory layer.
Now cdecker already wrote a some code implementing SIGHASH_NOINPUT before, which would make it work in current pre-SegWit P2PKH, P2SH, as well as SegWit v0 P2WPKH and P2WSH. He also made and published BIP 118.
But as is usual for Bitcoin Core development, this triggered debate, and thus many counterproposals were made and so on. Suffice it to say that the simple BIP 118 looks like it won't be coming into Bitcoin Core anytime soon (or possibly at all).
First things first: This link contains all that you need to know, but hey, maybe you'll find my take more amusing.
So let's start with the main issue.

Signature Replay Attack

The above is the Signature Replay Attack, and the reason why SIGHASH_NOINPUT has triggered debate as to whether it is safe at all and whether we can add enough stuff to it to ever make it safe.
Now of course you could point to SIGHASH_NONE which is even worse because all it does is say "I am authorizing the spend of this particular coin of this particular value protected by my key" without any further restrictions like which outputs it goes to. But then SIGHASH_NONE is intended to be used to sacrifice your money to the miners, for example if it's a dust attack trying to get you to spend, so you broadcast a SIGHASH_NONE signature and some enterprising miner will go get a bunch of such SIGHASH_NONE signatures and gather up the dust in a transaction that pays to nobody and gets all the funds as fees. And besides; even if we already have something you could do stupid things with, it's not a justification for adding more things you could do stupid things with.
So yes, SIGHASH_NOINPUT makes Bitcoin more powerful. Now, Bitcoin is a strong believer in "Principle of Least Power". So adding more power to Bitcoin via SIGHASH_NOINPUT is a violation of Principle of Least Power, at least to those arguing to add even more limits to SIGHASH_NOINPUT.
I believe nullc is one of those who strongly urges for adding more limits to SIGHASH_NOINPUT, because it distracts him from taking pictures of his autonomous non-human neighbor, a rather handsome gray fox, but also because it could be used as the excuse for the next MtGox, where a large exchange inadvertently pays to SIGHASH_NOINPUT-using addresses and becomes liable/loses track of their funds when signature replay happens.

Output Tagging

Making SIGHASH_NOINPUT safer by not allowing normal addresses use it.
Basically, we have 32 different SegWit versions. The current SegWit addresses are v0, the next version (v1) is likely to be the Schnorr+Taproot+MAST thing.
What output tagging proposes is to limit SegWit version ranges from 0->15 in the bech32 address scheme (instead of 0->31 it currently has). Versions 16 to 31 are then not valid bech32 SegWit addresses and exchanges shouldn't pay to it.
Then, we allow the use of SIGHASH_NOINPUT only for version 16. Version 16 might very well be Schnorr+Taproot+MAST, with a side serving of SIGHASH_NOINPUT.
This is basically output tagging. SIGHASH_NOINPUT can only be used if the output is tagged (by paying to version 16 SegWit) to allow it, and addresses do not allow outputs to be tagged as such, removing the potential liability of large custodial services like exchanges.
Now, Decker-Russell-Osuntokun channels have two options:
The tradeoffs in this case are:
The latter tradeoff is probably what would be taken (because we're willing to pay for privacy) if Bitcoin Core decides in favor of tagged outputs.
Another issue here is --- oops, P2SH-Segwit wrapped addresses. P2SH can be used to wrap any SegWit payment script, including payments to any SegWit version, including v16. So now you can sneak in a SIGHASH_NOINPUT-enabled SegWit v16 inside an ordinary P2SH that wraps a SegWit payment. One easy way to close this is just to disallow P2SH-SegWit from being valid if it's spending to SegWit version >= 16.

Chaperone Signatures

Closing the Signature Replay Attack by adding a chaperone.
Now we can observe that the Signature Replay Attack is possible because only one signature is needed, and that signature allows any coin of appropriate value to be spent.
Adding a chaperone signature simply means requiring that the SCRIPT involved have at least two OP_CHECKSIG operations. If one signature is SIGHASH_NOINPUT, then at least one other signature (the chaperone) validated by the SCRIPT should be SIGHASH_ALL.
This is not so onerous for Decker-Russell-Osuntokun. Both sides can use a MuSig of their keys, to be used for the SIGHASH_NOINPUT signature (so requires both of them to agree on a particular update), then use a shared ECDH key, to be used for the SIGHASH_ALL signature (allows either of them to publish the unilateral close once the update has been agreed upon).
Of course, the simplest thing to do would be for a BOLT spec to say "just use this spec-defined private key k so we can sidestep the Chaperone Signatures thing". That removes the need to coordinate to define a shared ECDH key during channel establishment: just use the spec-indicated key, which is shared to all LN implementations.
But now look at what we've done! We've subverted the supposed solution of Chaperone Signatures, making them effectively not there, because it's just much easier for everyone to use a standard private key for the chaperone signature than to derive a separate new keypair for the Chaperone.
So chaperone signatures aren't much better than just doing SIGHASH_NOINPUT by itself, and you might as well just use SIGHASH_NOINPUT without adding chaperones.
I believe ajtowns is the primary proponent of this proposal.

Toys for the Big Boys

The Signature Replay Attack is Not A Problem (TM).
This position is most strongly held by RustyReddit I believe (he's the Rusty Russell in the Decker-Russell-Osuntokun). As I understand it, he is more willing to not see SIGHASH_NOINPUT enabled, than to have it enabled but with restrictions like Output Tagging or Chaperone Signatures.
Basically, the idea is: don't use SIGHASH_NOINPUT for normal wallets, in much the same way you don't use SIGHASH_NONE for normal wallets. If you want to do address reuse, don't use wallet software made by luke-jr that specifically screws with your ability to do address reuse.
SIGHASH_NOINPUT is a flag for use by responsible, mutually-consenting adults who want to settle down some satoshis and form a channel together. It is not something that immature youngsters should be playing around with, not until they find a channel counterparty that will treat this responsibility properly. And if those immature youngsters playing with their SIGHASH_NOINPUT flags get into trouble and, you know, lose their funds (as fooling around with SIGHASH_NOINPUT is wont to do), well, they need counseling and advice ("not your keys not your coins", "hodl", "SIGHASH_NOINPUT is not a toy, but something special, reserved for those willing to take on the responsibility of making channels according to the words of Decker-Russell-Osuntokun"...).

Conclusion

Dunno yet. It's still being debated! So yeah. SIGHASH_NOINPUT isn't moving, just like Bitcoin's price!!! YAAAAAAAAAAAAAAAAAAA.
submitted by almkglor to Bitcoin [link] [comments]

Nuvmining | What Is Bitcoin, How Is It Various Than "Real" Cash and also How Can I Get Some?

Bitcoin is a digital money. It does not exist in the kind of physical type that the currency & coin we're used to exist in. It does not even exist in a type as physical as Syndicate cash. It's electrons - not molecules.
nuv mining
Yet consider just how much cash you directly handle. You obtain an income that you require to the bank - or it's autodeposited without you even seeing the paper that it's not printed on. You after that utilize a debit card (or a checkbook, if you're old school) to access those funds. At finest, you see 10% of it in a money form in your pocket or in your pocketbook. So, it turns out that 90% of the funds that you take care of are online - electrons in a spreadsheet or data source.
nuvmining
However delay - those are UNITED STATE funds (or those of whatever nation you come from), safe in the financial institution and also ensured by the complete belief of the FDIC approximately about $250K per account, right? Well, not exactly. Your banks might just called for to maintain 10% of its deposits on down payment. In some cases, it's much less. It offers the rest of your cash bent on other individuals for approximately thirty years. It charges them for the funding, and also costs you for the advantage of letting them offer it out.
Just how does money obtain developed?
Your financial institution reaches produce money by offering it out.
State you deposit $1,000 with your bank. They then lend out $900 of it. Unexpectedly you have $1000 as well as another person has $900. Magically, there's $1900 floating around where prior to there was only a grand.
Currently claim your bank instead offers 900 of your dollars to another financial institution. That financial institution in turn lends $810 to an additional financial institution, which after that offers $720 to a client. Poof! $3,430 in an immediate - virtually $2500 produced out of nothing - as long as the bank follows your federal government's central bank rules.
Production of Bitcoin is as different from bank funds' creation as cash money is from electrons. It is not managed by a government's reserve bank, but rather by consensus of its customers as well as nodes. It is not developed by a restricted mint in a structure, however rather by dispersed open source software program and computer. As well as it needs a type of real work for production. Extra on that particular shortly.
Who created BitCoin?
The very first BitCoins remained in a block of 50 (the "Genesis Block") created by Satoshi Nakomoto in January 2009. It really did not really have any type of worth initially. It was simply a cryptographer's toy based on a paper published two months earlier by Nakomoto. Nakotmoto is an evidently imaginary name - nobody appears to know that she or he or they is/are.
That monitors everything?
Once the Genesis Block was developed, BitCoins have actually because been produced by doing the work of keeping track of all deals for all BitCoins as a kind of public journal. The nodes/ computers doing the computations on the journal are awarded for doing so. For each collection of effective calculations, the node is rewarded with a specific quantity of BitCoin (" BTC"), which are after that freshly produced right into the BitCoin community. For this reason the term, "BitCoin Miner" - because the procedure develops new BTC. As the supply of BTC increases, and also as the number of transactions boosts, the job essential to update the public ledger gets harder and also much more complicated. As a result, the variety of new BTC right into the system is created to be concerning 50 BTC (one block) every 10 minutes, worldwide.
Although the computer power for mining BitCoin (as well as for upgrading the public ledger) is currently boosting exponentially, so is the intricacy of the mathematics problem (which, incidentally, additionally needs a certain amount of thinking), or "evidence" needed to mine BitCoin as well as to settle the transactional publications at any type of provided moment. So the system still only generates one 50 BTC block every 10 minutes, or 2106 blocks every 2 weeks.
So, in a sense, everyone tracks it - that is, all the nodes in the network keep track of the background of every single BitCoin.
Just how much is there and also where is it?
There is a maximum variety of BitCoin that can ever before be produced, and that number is 21 million. According to the Khan Academy, the number is anticipated to peak around the year 2140.
Since, today there were 12.1 million BTC in flow
Your very own BitCoin are kept in a documents (your BitCoin purse) in your very own storage space - your computer system. The data itself is evidence of the number of BTC you have, and also it can move with you on a mobile phone.
If that data with the cryptographic key in your wallet obtains lost, so does your supply of BitCoin funds. And also you can't obtain it back.
Just how much is it worth?
The value differs based on just how much people believe it deserves - similar to in the exchange of "real cash." Yet due to the fact that there is no central authority trying to maintain the value around a certain level, it can vary a lot more dynamically. The very first BTC were generally worth absolutely nothing at the time, however those BTC still exist. Since 11AM on December 11, 2013, the general public value was $906.00 United States per BitCoin. When I completed composing this sentence, it was $900.00. Around the start of 2013, the value was around $20.00 United States. On November 27, 2013 it was valued at greater than $1,000.00 United States per BTC. So it's kind of unstable presently, yet it's expected to calm down.
The complete value of all BitCoin - since the period at the end of this sentence - is around 11 billion US bucks.
How can I get me some?
First, you have to have a BitCoin purse. This post has links to get one.
Then one method is to purchase some from one more private party, like these individuals on Bloomberg TV. One method is to purchase some on an exchange, like Mt. Gox.
As well as finally, one means is to dedicate a lot of computer power as well as power to the process as well as become a BitCoin miner. That's well outside the extent of this post. However if you have a couple of thousand extra dollars lying around, you can obtain rather a gear.
Exactly how can I spend it?
There are numerous vendors of all sizes that take BitCoin in payment, from cafes to auto dealers. There's also a BitCoin ATM in Vancouver, British Columbia for transforming your BTC to cash in Vancouver, BC.
And so?
Money has had a lengthy background - centuries in size. Somewhat recent tale tells us that Manhattan Island was bought for wampum - seashells & the like. In the very early years of the United States, different financial institutions printed their own money. On a recent visit to Salt Spring Island in British Columbia, I invested currency that was just good on the beautiful island. The common style among these was a trust agreement amongst its customers that specific currency held value. In some cases that worth was tied directly to something strong and physical, like gold. In 1900 the U.S. connected its currency straight to gold (the "Gold Requirement") and in 1971, ended that tie.
Currently money is traded like any kind of various other commodity, although a certain nation's currency worth can be propped up or decreased through activities of their reserve bank. BitCoin is an alternative money that is also traded as well as its value, like that of various other products, is figured out via trade, yet is not stood up or lessened by the action of any kind of bank, however rather straight by the activities of its individuals. Its supply is minimal as well as known nevertheless, and also (unlike physical money) so is the history of each and every single BitCoin. Its viewed worth, like all various other money, is based on its utility and also count on.
As a form of currency, BitCoin not specifically a new thing in Production, however it absolutely is a new means for cash to be created.
submitted by Nuvmining to u/Nuvmining [link] [comments]

I'm Mark Karpelès, ex-CEO of bankrupt MtGox. Ask me anything.

Dear community,
Many of you know or remember me, especially recently since the MtGox bankruptcy has been allegedly linked with Bitcoin price drops in December 2017 to February 2018. Since taking over the most active Bitcoin exchange in 2011, I ran MtGox until filing for civil rehabilitation on February 28th 2014 (which became bankruptcy less than 2 months later) because a large amount of Bitcoins went missing. Since then, four years have passed, and MtGox is still in bankruptcy today. I’ve been arrested, released under bail after a little less than one year, and am now trying to assist MtGox getting into civil rehabilitation.
I did my best trying to grow the ecosystem by running the biggest exchange at the time. It had big problems but still managed to hang in there. For a while. A quite long while, even, while the rest of the ecosystem caught up. At the end of the day, the methods I chose to try to get MtGox out of its trouble ended up being insufficient, insufficiently executed, or plain wrong.
I know I didn't handle the last, stressful days of the outdrawn and painful Gox collapse very well. I can only be humble about that in hindsight. Once again, I’m sorry.
Japanese bankruptcy law has a particularly nasty outcome here, and I want to address this up front. As creditors claims were registered, those claims were registered in the valuation of Japanese Yen on the bankruptcy date. That's the only way Japanese bankruptcy law can work (most bankruptcy laws around the world operate this way for that matter). This means that the claims can be paid back in full, and there will still be over 160,000 bitcoin and bitcoin cash in assets in the Gox estate. The way bankruptcy law works is that if there are any assets remaining after the creditors have been paid in full, then those assets are distributed to shareholders as part of the liquidation.
That's the only way any bankruptcy law can reasonably work. And yet, in this case, it produces an egregiously distasteful outcome in that the shareholders of MtGox would walk away with the value of over 160,000 bitcoin as a result of what happened.
I don't want this. I don't want this billion dollars. From day one I never expected to receive anything from this bankruptcy. The fact that today this is a possibility is an aberration and I believe it is my responsibility to make sure it doesn’t happen. One of the ways to do this would be civil rehabilitation, and as it seems most creditors agree with this, I am doing my best to help make it happen. I do not want to become instantly rich. I do not ask for forgiveness. I just want to see this end as soon as possible with everyone receiving their share of what they had on MtGox so everyone, myself included, can get some closure.
I’m an engineer at heart. I want to build things. I like seeing what I build being useful, and people being happy using what I build. My drive, from day one, has been to push the limits of what is technically possible, and this is the main reason I liked and have been involved with Bitcoin in the first place. When I took over MtGox, I never imagined things would end this way and I am forever sorry for everything that’s taken place and all the effect it had on everyone involved.
Hopefully, I can make what I’ve learned in this experience useful to the community as a whole, so there can at least be something positive in the end.
Ask me anything you like.
EDIT: With this coming to all there have been an overwhelming number of messages, questions etc. I will continue responding for a little while but probably won't be able to respond to new questions (it is starting to be late here and I've been spending the last few hours typing). Thank you very much to everyone.
submitted by MagicalTux to btc [link] [comments]

Bitcoin is to the Blockchain what Land is to the Earth. Bitcoin is digital real estate.

Bitcoin is often called digital gold. Gold being what has been used as sound money and currency for millenia, is what Bitcoin is now to us in the modern digital age and future. Now, besides gold, thorughout history there has been a different and more ancient kind of a store of value. Land.
Before people even used currencies to barter with each other, there were territories of these ancient humans. They had boundaries which separated their cultures and wealth. I think there is merit in calling Bitcoin digital real estate. The first of its kind. There are 15.77 billion acres of habitable land available on Earth. Just to compare, there are 21,000,000 Bitcoin ever to be made. The value to the entire habitable land mass of Earth in today's dollars is 217,000,000,000,000. Thats trillions. Dividing the total number of Bitcoins with the value of the Earth's hablitable land gives us 10,333,000 usd per BTC. Also, having just one Bitcoin is just like having 750 acres of land, in proportion.
All in all, if Bitcoin is to absorb most of the worlds value and then create a new economy based on cryptocurrencies, we still have a lot of room to grow in terms of dolla value. My advice to those getting in and to those that arent sure to buy because of the risk: Dollar Cost Average a portion of your paycheck, however large or small, just as long as its on a reguar basis. As a side note, those that have been here for a while now know that if Bitcoin survived Mt Gox and the bear market that came after, Bitcoin sure as hell is going to survive in the future.
At this stage in the game, there is more risk in not buying Bitcoin. Seeing today's economic tensions worldwide, turmoil in Iran, USA vs CHINA, Brexit, Argentina's and Venezuela's hyperinflation. Those living in the nice parts of the world only value Bitcoin as a currency. Not so much as a store of value or a hedge against the state currency. Those living in Argentina and Venezuela do. They dont care about buying a coffe with Bitcoin, they want Bitcoin in its rawest form. Value. Dont wait for calamity to befall your country. In today's globally connected economy, any issue could trigger a worldwide recession.
Buy Bitcoin for your future's sake.
submitted by cryptonaut414 to Bitcoin [link] [comments]

The Future Of Cryptocurrency in 2019 and Beyond

A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption techniques known as cryptography. Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April 2013 when it peaked at a record $266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin sported a market value of over $2 billion at its peak, but a 50% plunge shortly thereafter sparked a raging debate about the future of cryptocurrencies in general and Bitcoin in particular. So, will these alternative currencies eventually supplant conventional currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a passing fad that will flame out before long? The answer lies with Bitcoin.
The Future of Cryptocurrency
Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market. Moreover, there is the possibility that crypto will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that all that crypto needs is a verified exchange traded fund (ETF). An ETF would definitely make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which some say may not automatically be generated with a fund.
Understanding Bitcoin
Bitcoin is a decentralized currency that uses peer-to-peer technology, which enables all functions such as currency issuance, transaction processing and verification to be carried out collectively by the network. While this decentralization renders Bitcoin free from government manipulation or interference, the flipside is that there is no central authority to ensure that things run smoothly or to back the value of a Bitcoin. Bitcoins are created digitally through a “mining” process that requires powerful computers to solve complex algorithms and crunch numbers. They are currently created at the rate of 25 Bitcoins every 10 minutes and will be capped at 21 million, a level that is expected to be reached in 2140.
These characteristics make Bitcoin fundamentally different from a fiat currency, which is backed by the full faith and credit of its government. Fiat currency issuance is a highly centralized activity supervised by a nation’s central bank. While the bank regulates the amount of currency issued in accordance with its monetary policy objectives, there is theoretically no upper limit to the amount of such currency issuance. In addition, local currency deposits are generally insured against bank failures by a government body. Bitcoin, on the other hand, has no such support mechanisms. The value of a Bitcoin is wholly dependent on what investors are willing to pay for it at a point in time. As well, if a Bitcoin exchange folds up, clients with Bitcoin balances have no recourse to get them back.
Bitcoin Future Outlook
The future outlook for bitcoin is the subject of much debate. While the financial media is proliferated by so-called crypto-evangelists, Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggests that the “overwhelming sentiment” among crypto advocates is that the total “market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”
The historic volatility of the asset class is “no reason to panic,” he says. Still, he tempered his optimism and that of the “crypto evangelist” view of Bitcoin as digital gold, calling it “nutty,” stating its long-term value is “more likely to be $100 than $100,000.”
Rogoff argues that unlike physical gold, Bitcoin’s use is limited to transactions, which makes it more vulnerable to a bubble-like collapse. Additionally, the cryptocurrency’s energy-intensive verification process is “vastly less efficient” than systems that rely on “a trusted central authority like a central bank.”
Increasing Scrutiny
Bitcoin’s main benefits of decentralization and transaction anonymity have also made it a favored currency for a host of illegal activities including money laundering, drug peddling, smuggling and weapons procurement. This has attracted the attention of powerful regulatory and other government agencies such as the Financial Crimes Enforcement Network (FinCEN), the SEC, and even the FBI and Department of Homeland Security (DHS). In March 2013, FinCEN issued rules that defined virtual currency exchanges and administrators as money service businesses, bringing them within the ambit of government regulation. In May that year, the DHS froze an account of Mt. Gox – the largest Bitcoin exchange – that was held at Wells Fargo, alleging that it broke anti-money laundering laws. And in August, New York’s Department of Financial Services issued subpoenas to 22 emerging payment companies, many of which handled Bitcoin, asking about their measures to prevent money laundering and ensure consumer protection.
Alternatives to Bitcoin
Despite its recent issues, Bitcoin’s success and growing visibility since its launch has resulted in a number of companies unveiling alternative cryptocurrencies, such as:
• Litecoin – Litecoin is regarded as Bitcoin's leading rival at present, and it is designed for processing smaller transactions faster. It was founded in October 2011 as "a coin that is silver to Bitcoin’s gold,” according to founder Charles Lee. Unlike the heavy computer horsepower required for Bitcoin mining, Litecoins can be mined by a normal desktop computer. Litecoin’s maximum limit is 84 million – four times Bitcoin’s 21-million limit – and it has a transaction processing time of about 2.5 minutes, about one-fourth that of Bitcoin.
• Ripple – Ripple was launched by OpenCoin, a company founded by technology entrepreneur Chris Larsen in 2012. Like Bitcoin, Ripple is both a currency and a payment system. The currency component is XRP, which has a mathematical foundation like Bitcoin. The payment mechanism enables the transfer of funds in any currency to another user on the Ripple network within seconds, in contrast to Bitcoin transactions, which can take as long as 10 minutes to confirm.
• MintChip – Unlike most cryptocurrencies, MintChip is actually the creation of a government institution, specifically the Royal Canadian Mint. MintChip is a smartcard that holds electronic value and can transfer it securely from one chip to another. Like Bitcoin, MintChip does not need personal identification; unlike Bitcoin, it is backed by a physical currency, the Canadian dollar.
The Future
Some of the limitations that cryptocurrencies presently face – such as the fact that one’s digital fortune can be erased by a computer crash, or that a virtual vault may be ransacked by a hacker – may be overcome in time through technological advances. What will be harder to surmount is the basic paradox that bedevils cryptocurrencies – the more popular they become, the more regulation and government scrutiny they are likely to attract, which erodes the fundamental premise for their existence.
While the number of merchants who accept cryptocurrencies has steadily increased, they are still very much in the minority. For cryptocurrencies to become more widely used, they have to first gain widespread acceptance among consumers. However, their relative complexity compared to conventional currencies will likely deter most people, except for the technologically adept.
A cryptocurrency that aspires to become part of the mainstream financial system may have to satisfy widely divergent criteria. It would need to be mathematically complex (to avoid fraud and hacker attacks) but easy for consumers to understand; decentralized but with adequate consumer safeguards and protection; and preserve user anonymity without being a conduit for tax evasion, money laundering and other nefarious activities. Since these are formidable criteria to satisfy, is it possible that the most popular cryptocurrency in a few years’ time could have attributes that fall in between heavily-regulated fiat currencies and today’s cryptocurrencies? While that possibility looks remote, there is little doubt that as the leading cryptocurrency at present, Bitcoin’s success (or lack thereof) in dealing with the challenges it faces may determine the fortunes of other cryptocurrencies in the years ahead.
submitted by Sasha__SAc to u/Sasha__SAc [link] [comments]

The Struggle of Dogecoin: A Lesson on the Importance of Community in Crypto

The Struggle of Dogecoin: A Lesson on the Importance of Community in Crypto

https://preview.redd.it/ww0g3r560r141.jpg?width=640&format=pjpg&auto=webp&s=e47dffcfa931461855aa71e89905346ff8dd02fd
When crypto began garnering mainstream attention, critics were quick to point out the lack of intrinsic value, an aspect of these assets that many believe made them doomed for failure. Of course, the immediate price crash of Bitcoin around the time of the Mt. Gox scandal served as proof for these individuals. That is, until Bitcoin gradually rebounded, soaring to heights that far exceeded our expectations.
A lack of intrinsic value is an interesting concept as those who utilize the argument forget that fiat currencies like the U.S. dollar, for example, have no true value but still manage to maintain their importance in the economies where they operate. While there are several factors supporting digital assets, there is one major factor that is easily forgotten: community.
A cryptocurrency only has the chance to survive and thrive if it has a community that supports it and seeks to further its growth. If one wants to understand the importance of community for digital assets, one need only turn their attention to Dogecoin.
What Is Dogecoin?
Unless you were an early adopter of Bitcoin, Dogecoin has likely flown under your radar. Developed in 2013 as a joke currency that used the likeness of the Shiba Inu as a result of the popular “doge” meme that was circulating at the time. When it was developed, many of these emerging coins followed the same layout as Bitcoin and Litecoin, meaning there was very little variation between altcoins at the time. Still, that didn’t manage to dissuade a community from developing around the coin. Whereas Bitcoin was serious and was designed to be a financial tool, Dogecoin was seen as a refreshing break and a perfect digital currency to experiment with if you were new to the industry.
What Happened to It?
While Dogecoin wasn’t meant to follow in the footsteps of major competitors like Bitcoin and Litecoin, the digital currency was faced with a slew of issues from its inception that greatly weakened its growth potential. From Alex Green, a man who stole hundreds of thousands of dollars from the community through an investment scan, to the draining of 30 million coins from Dogewallet, Dogecoin is no stranger to theft. However, while some markets have been able to grow despite these setbacks, Dogecoin simply never saw the growth that the community expected. That said, that doesn’t mean that the project isn’t successful in its own right.
Dogecoin Today
Even seven years after its release, Dogecoin still has a strong, active community that continues to take part in fundraising for special causes, share updates and encouraging news about Dogecoin, and enjoy doge-related topics and pictures. With a market capitalization of approximately $288 million and a price of $0.002 per coin at the time of writing, Dogecoin may not be one of the high-performing assets on the market. But when it comes to community, Dogecoin may very well be one of the strongest assets across the board.
Trakx is building a one-stop shop for Crypto Traded Indices. Discover more about our project on our website and social media channels, such as Telegramhttp://t.me/trakx_io.

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submitted by Trakx_io to Trakx [link] [comments]

The biggest cryptocurrency thefts in the last 10 years

In this article, we will try to remember all the major theft of cryptocurrencies over the past 10 years.
1. Bitstamp $5.3 mln (BTC), January 4th, 2015
On January 4, 2015, the operational hot wallet of Bitstamp announced that it was hacked by an anonymous hacker and 19,000 Bitcoins (worth of $5 million) were lost.
The initiation of the attack fell on November 4, 2014. Then Damian Merlak, the CTO of the exchange, was offered free tickets to punk rock festival Punk Rock Holiday 2015 via Skype, knowing that Merlak is interested in such music and he plays in the band. To receive the tickets, he was asked to fill out a participant questionnaire by sending a file named “Punk Rock Holiday 2015 TICKET Form1.doc”. This file contained the VBA script. By opening the file, he downloaded the malware on his computer. Although Merlak did not suspect wrong and has opened the "application form", to any critical consequences, this did not open access to the funds of exchange.
The attackers, however, did not give up. The attack continued for five weeks, during which hackers presented themselves as journalists, then headhunters.
Finally, the attackers were lucky. On December 11, 2014, the infected word document was opened on his machine by Bitstamp system administrator Luka Kodric, who had access to the exchange wallet. The file came to the victim by email, allegedly on behalf of an employee of the Association for computer science, although in fact, as the investigation showed, the traces of the file lead deep into Tor. Hackers were not limited to just one letter. Skype attacker pretending to be an employee of the Association for computing machinery, convinced that his Frame though to make international honor society, which required some paperwork. Kodric believed.
By installing a Trojan on Kodriс's computer hackers were able to obtain direct access to the hot wallet of the exchange. The logs show that the attacker, under the account of Kodric, gained access to the server LNXSRVBTC, where he kept the wallet file.dat, and the DORNATA server where the password was stored. Then the servers were redirected to a certain IP address that belongs to one of the providers of Germany.
There are still no official reports of arrests in this case. Obviously, the case is complicated by the fact that the hackers are outside the UK, and the investigation has to cooperate with law enforcement agencies in other countries.
2. GateHub $9.5 mln (XRP), June 1th, 2019
Hackers have compromised nearly 100 XRP Ledger wallets on cryptocurrency wallet service GateHub. The incident was reported by GateHub in a preliminary statement on June 6.
XRP enthusiast Thomas Silkjær, who first noticed the suspicious activity, estimates that the hackers have stolen nearly $10 million worth of cryptocurrency (23,200,000 XRP), $5.5 million (13,100,000 XRP) of which has already been laundered through exchanges and mixer services.
GateHub notes that it is still conducting an investigation and therefore cannot publish any official findings. Also, GateHub advises victims to make complaints to the relevant authorities of their jurisdiction.
3. Tether, $30.9 mln (USDT), November 19th, 2017
Tether created a digital currency called "US tokens" (USDT) — they could be used to trade real goods using Bitcoin, Litecoin and Ether. By depositing $1 in Tether, the user received 1 USD, which can be converted back into fiat. On November 19, 2017, the attacker gained access to the main Tether wallet and withdrew $ 30.9 million in tokens. For the transaction, he used a Bitcoin address, which means that it was irreversible.
To fix the situation, Tether took action by which the hacker was unable to withdraw the stolen money to fiat or Bitcoin, but the panic led to a decrease in the value of Bitcoin.
4. Ethereum, $31 mln (ETH), July 20th, 2017
On July 20, 2017, the hacker transferred 153,037 Ethers to $31 million from three very large wallets owned by SwarmCity, Edgeless Casino and Eternity. Unknown fraudster managed to change the ownership of wallets, taking advantage of the vulnerability with multiple signatures.
First, the theft was noticed by the developers of SwarmCity.
Further events deserve a place in history: "white hackers" returned the stolen funds, and then protected other compromised accounts. They acted in the same way as criminals, who stole funds from vulnerable wallets — just not for themselves. And it all happened in less than a day.
5. Dao (Decentralized Autonomous Organization) $70 mln (ETH), June 18th, 2016
On June 18, 2016, members of the Ethereum community noticed that funds were being drained from the DAO and the overall ETH balance of the smart contract was going down. A total of 3.6 million Ether (worth around $70 million at the time) was drained by the hacker in the first few hours. The attack was possible because of an exploit found in the splitting function. The attackes withdrew Ether from the DAO smart contract multiple times using the same DAO Tokens. This was possible due to what is known as a recursive call exploit.
In this exploit, the attacker was able to "ask" the smart contract (DAO) to give the Ether back multiple times before the smart contract could update its own balance. There were two main faults that made this possible: the fact that when the DAO smart contract was created the coders did not take into account the possibility of a recursive call, and the fact that the smart contract first sent the ETH funds and then updated the internal token balance.
It's important to understand that this bug did not come from Ethereum itself, but from this one application that was built on Ethereum. The code written for the DAO had multiple bugs, and the recursive call exploit was one of them. Another way to look at this situation is to compare Ethereum to the Internet and any application based on Ethereum to a website: if a website is not working, it doesn't mean that the Internet is not working, it simply means that one website has a problem.
The hacker stopped draining the DAO for unknown reasons, even though they could have continued to do so.
The Ethereum community and team quickly took control of the situation and presented multiple proposals to deal with the exploit. In order to prevent the hacker from cashing in the Ether from his child DAO after the standard 28 days, a soft-fork was voted on and came very close to being introduced. A few hours before it was set to be released, a few members of the community found a bug with the implementation that opened a denial-of-service attack vector. This soft fork was designed to blacklist all the transactions made from the DAO.
6. NiceHash, 4736.42 (BTC), December 6th, 2017
NiceHash is a Slovenian cryptocurrency hash power broker with integrated marketplace that connects sellers of hashing power (miners) with buyers of hashing power using the sharing economy approach.
On December 6, 2017, the company's servers became the target of attack. At first, Reddit users reported that they could not access their funds and make transactions — when they tried to log in, they were shown a message about a service interruption. In the end, it became known that the service had undergone a major cyberattack and 4736,42 Bitcoins disappeared without a trace.
Despite heavy losses, NiceHash was able to continue working, but CEO and founder Marco Koval resigned, giving way to a new team. The company managed to maintain the trust of investors and began to strengthen the protection of its systems.
7. Mt.Gox, 850000 (BTC), June 19th, 2011
The Hacking Of Mt.Gox was one of the biggest Bitcoin thefts in history. It was the work of highly professional hackers using complex vulnerabilities.
A hacker (or a group of hackers) allegedly gained access to a computer owned by one of the auditors and used a security vulnerability to access Mt.Gox servers, then changed the nominal value of Bitcoin to 1 cent per coin.
Then they brought out about 2000 BTC. Some customers, without knowing it, conducted transactions at this low price, a total of 650 BTC, and despite the fact that the hacking hit the headlines around the world, no Bitcoin could be returned.
To increase investor confidence, the company has compensated all of the stolen coins, placed most of the remaining funds in offline storage, and the next couple of years was considered the most reliable Bitcoin exchanger in the world.
However, it was only an illusion of reliability.
The problems of the organization were much more serious, and the management probably did not even know about them.
CEO of Mt.Gox, Mark Karpeles, was originally a developer, but over time he stopped delving into technical details, basking in the rays of glory — because he created the world's largest platform for cryptocurrency exchange. At that time Mt.Gox handled over 70% of all Bitcoin transactions.
And, of course, there were those who wanted to take advantage of the technological weakness of the service. At some point, hackers made it so that Bitcoins could be bought at any price, and within minutes millions of dollars worth of coins were sold — mostly for pennies. World prices for Bitcoin stabilized in a few minutes, but it was too late.
As a result, Mt.Gox lost about 850,000 Bitcoins. The exchange had to declare bankruptcy, hundreds of thousands of people lost money, and the Japanese authorities arrested CEO Mark Karpeles for fraud. He pleaded not guilty and was subsequently released. In 2014, the authorities restored some of the Bitcoins remaining at the old addresses, but did not transfer them to the exchange, and created a trust to compensate for the losses of creditors.
8. Coincheck, $530 mln, January 26th, 2018
The sum was astonishing, and even surpassed the infamous Mt.Gox hack.
While Mt.Gox shortly filed for bankruptcy following the hack, Coincheck has surprisingly remained in business and was even recently approved as a licensed exchange by Japan’s Financial Services (FSA).
Coincheck was founded in 2014 in Japan and was one of the most popular cryptocurrency exchanges in the country. Offering a wide variety of digital assets including Bitcoin, Ether, LISK, and NEM, Coincheck was an emerging exchange that joined the Japan Blockchain Association.
Since Coincheck was founded it 2014, it was incidentally not subject to new exchange registration requirements with Japan’s FSA — who rolled out a framework after Mt. Gox –, and eventually was a contributing factor to its poor security standards that led to the hack.
On January 26th, 2018, Coincheck posted on their blog detailing that they were restricting NEM deposits and withdrawals, along with most other methods for buying or selling cryptocurrencies on the platform. Speculation arose that the exchange had been hacked, and the NEM developers issued a statement saying they were unaware of any technical glitches in the NEM protocol and any issues were a result of the exchange’s security.
Coincheck subsequently held a high-profile conference where they confirmed that hackers had absconded with 500 million NEM tokens that were then distributed to 19 different addresses on the network. Totaling roughly $530 million at the time — NEM was hovering around $1 then — the Coincheck hack was considered the largest theft in the industry’s history.
Coincheck was compelled to reveal some embarrassing details about their exchange’s security, mentioning how they stored all of the NEM in a single hot wallet and did not use the NEM multisignature contract security recommended by the developers.
Simultaneously, the NEM developers team had tagged all of the NEM stolen in the hack with a message identifying the funds as stolen so that other exchanges would not accept them. However, NEM announced they were ending their hunt for the stolen NEM for unspecified reasons several months later, and speculation persisted that hackers were close to cashing out the stolen funds on the dark web.
Mainstream media covered the hack extensively and compared it to similar failures by cryptocurrency exchanges in the past to meet adequate security standards. At the time, most media coverage of cryptocurrencies was centered on their obscure nature, dramatic volatility, and lack of security. Coincheck’s hack fueled that narrative considerably as the stolen sum was eye-popping and the cryptocurrency used — NEM — was unknown to most in the mainstream.
NEM depreciated rapidly following the hack, and the price fell even more throughout 2018, in line with the extended bear market in the broader industry. Currently, NEM is trading at approximately $0.07, a precipitous fall from ATH over $1.60 in early January.
The extent of the Coincheck hack was rivaled by only a few other hacks, notably the Mt.Gox hack. While nominally Coincheck is the largest hack in the industry’s history, the effects of Mt.Gox were significantly more impactful since the stolen funds consisted only of Bitcoin and caused a sustained market correction as well as an ongoing controversy with the stolen funds and founder. Moreover, Mt.Gox squandered 6% of the overall Bitcoin circulation at the time in a market that was much less mature than it is today.
Despite the fallout, Coincheck is now fully operational and registered with Japan’s FSA.
As practice shows, people make mistakes and these mistakes can cost a lot. Especially, when we talk about mad cryptoworld. Be careful and keep your private keys in a safe place.
submitted by SwapSpace_co to ethtrader [link] [comments]

Mt. Gox Bitcoin Delay, Ripple + Justin Bieber, Monero Futures & Bitcoin Price Bounce Mark Karpeles Mt. Gox Bitcoin Documentary 2019 Bitcoin Brief - Mt.Gox Liquidation, BLS signatures vs Schnorr, BCash Stress Tests thebitcoingroup - YouTube Bitcoin Price CRASH! Ethereum Analysis! MT Gox Settlement!? Risk Management Tutorial! Bitcoin TA

The volatility was fueled by rumors of poor security on Mt. Gox exchange, which was part of about 70 percent of Bitcoin transactions of the time. This was likely a contributing factor in the drop of Bitcoin’s price from $1,230 on Dec. 4, 2013, to $750 by Dec. 7. Bitcoin and Bitcoin Cash amounts will be paid to crypto exchanges. Other cryptocurrencies will be converted to fiat. Mt. Gox was once the biggest Bitcoin exchange. By 2014, it was handling more than 70% of global Bitcoin trading volume. It closed down in February 2014 after suffering an extended hack of 650,000 Bitcoin—worth $4.3 billion today. The second attack on Mt. Gox happened in 2014. This time, hackers stole around $350 million worth of Bitcoins. Yes, you read that right! $350 million! The mistake was that Mt. Gox stored their Bitcoin in an online wallet — making it easy for hackers to access. Investment management Fortress has come up with a new offer for Mt. Gox creditors. Due to Bitcoin's rapid appreciation, $1,300 per one Bitcoin (BTC) is now on the table, which represents 88 percent of their account value. Today, we are discussing the most iconic cryptocurrency exchange hack: the infamous Mt. Gox hack. Mt. Gox was the most renowned cryptocurrency exchange in the early days, having been founded in 2010. The exchange handled over 70% of all Bitcoin transactions in the world at its time.

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Mt. Gox Bitcoin Delay, Ripple + Justin Bieber, Monero Futures & Bitcoin Price Bounce

Bitcoin News Today and Bitcoin Friday's Winner Announced Bitcoin news today entails the big bad Mt. Gox. It seems, for now, that there will be no more BTC sold to pay back investors going forward. This is the best Mark Karpeles Mt. Gox Bitcoin Documentary 2019! #mtgox #markkarpeles #goxxed #bitcoin #documentary #bitcoindocumenatry Bet with your bitcoin completely anon! Double up today with ... Mt. Gox Bitcoin Delay, Ripple + Justin Bieber, Monero Futures & Bitcoin Price Bounce ... Bitcoin Donations Address: ... Vitalik Buterin ETH competition & Ethereum 2.0 News Today on price, analysis ... CRAIG WRIGHT CLAIMS HE HACKED MT GOX AND STOLE 80,000 BITCOIN! Bitcoin LAST CHANCE BULLRUN! The Stock MArket TUMBLES!! Crypto News! Time to buy Altcoins Like XRP and ETHereum! Crypto and Financial ... Bitcoin Brief - Mt.Gox Liquidation, BLS signatures vs Schnorr, BCash Stress Tests ... Bitcoin Algo Trading on Deribit. BTCUSD Price Chart. Deribot 260 watching. ... Authorities Say TODAY ...

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