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Crypto Margin Trading Is Going Mainstream, Poses Tremendous Risks

It is no secret that traders make up the majority of crypto adopters, with exchanges serving as by-far the most active players in the blockchain space. The trading framework has thus far mirrored that found in legacy financial markets, such as those specializing in stock, bond, and fiat currencies. Margin trading, a very common legacy practice, is now growing and promises to bring dramatic changes to all aspects of how cryptocurrencies are valued, exchanged, and held.

Margin trading creates the potential for significant profits, yet also comes with increased risk. To do it, an investor will borrow a substantial amount of a given asset, and provide a small portion of his own as collateral. After the trade, if the asset increases in value, the investor is entitled to the full profit, but must also cover the entire cost of any losses. For example, if a person chooses to trade one Bitcoin with 10X leverage, he will trade a full ten Bitcoins, nine of which are borrowed. Should the Bitcoin increase in value, his return will be tenfold than if he had only traded one, yet he must cover the full loss if the price decreases. Exchanges typically liquidate the collateral if the price drops substantially, which is known as a “margin call.”

Until recently, few options existed to trade cryptocurrency on margin. Poloniex has offered it for some time, yet with limited options. Krakken also offers it as does Bitmex and Prime XBT. Notably, however, is the recent confirmation by Binance that it, too, will soon offer margin trading. This move is all but certain to push other large exchanges into the practice.

Simply put, margin trading is not for the faint of heart. Even in relatively stable financial markets huge sums can be gained or lost within minutes. Experts recommend it only for seasoned veterans of any given asset class, with many considering it little more than gambling. Thus, given the tremendous volatility of the crypto space, the practice has the potential to be very disruptive. For example, Bitmex recently had over USD $10 billion in crypto assets traded on margin in a twenty-four hour period.

The cryptocurrencies that Binance offers for margin trading are all but certain to see significant boosts in value, at least in the short term. Nevertheless, if Bitmex is any guide, the process will be quite painful for those that trade without due diligence. It is also certain to bring in more traders from the traditional markets, and perhaps be the catalyst that prompts government oversight of crypto space.

The most important takeaway from recent announcements is that margin trading will soon become a common element of the crypto market. This is, of course, expected and could very well bring greater legitimacy to blockchain assets in the eyes of consumers. Nevertheless, it will also require a degree of responsibility by those that choose to participate in it.

Featured Image via Bigstock

Source: Crypto News

Binance To Block US Customers, Announces New Exchange For American Citizens

Binance has announced that it will no longer allow US citizens to use its primary exchange services. American customers have been given a 90 day grace period, after which deposits and trading will be blocked. This change comes just one day after the company had revealed that it is going to create a platform exclusively for customers in the United States.

The adjustment in Binance’s platform structure is part of an attempt by the Malta-based company to cooperate with different financial regulators. To manage the new US branch, Binance has partnered with BAM Trading Services, a California-based company certified by the US Treasury as a money services business (MSB). Binance has yet to provide further details on its US platform, although it most likely will have strong know-your-customer (KYC) requirements and other mechanisms to ensure compliance with American securities laws.

The lack of information about this change has drawn the ire of many traders, notably from the American community that has played a key role in making Binance a top global exchange. So far, key details about the new platform are still unknown, including how the transition will take place, which trading pairs will be offered, and how Binance’s own token BNB will be integrated into Binance.us, if at all. But most importantly, the ability to trade anonymously is highly valued across the blockchain space, and until now Binance does not force customers to reveal their identities.

It is no secret that the US Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) are struggling to reign in the growing digital currency market, which continues to operate largely outside of their regulatory grasp. The problem for these agencies is that forcing digital currency exchanges to comply with rules designed for traditional financial markets cannot succeed long-term. The result of this is a regulatory game of Whack-A-Mole where one exchange is strong-armed into proper compliance only to be replaced by another willing to ignore the current rules.

Binance CEO Changpeng Zhao has acknowledged the frustration felt by many users, yet has defended the decision, stating that “some short-term pains may be necessary for long term gains.” No doubt many Americans believed that Binance would not easily give in to American regulators given how proactively the company has avoided control from China. Nevertheless, Americans should not be surprised by this announcement. Binance already blocks residents of six US states, and its decentralized exchange BinanceDEX will not be available in the US at all.

Altcoin values have plummeted on the news, whereas Bitcoin has moved up slightly. Binance has assured that Binance.us will be operational before the 90 days grace period ends. How willing customers are to use it remains to be seen once further details emerge.

Featured Image via BigStock.


Source: Crypto News

Litecoin Surges in Value, Continues To Demonstrate Resiliency

Since its creation in 2011 Litecoin has successful held its status as a top altcoin, despite significant market volatility and competition from more advanced platforms. It has recently seen a significant resurgence in value, once again showing its strength and proving critics wrong. With a strong community and development team as well as solid name recognition, Litecoin could prove to be a remarkable long-term value for investors, yet a number of challenges still remain for it to truly be considered a viable alternative to Bitcoin.

Litecoin has benefitted greatly from the present market recovery, having increased from $30 in early February to around $120 today. Much of this surge has been recent, and some analysts are connecting it to the upcoming halving, which will reduce the block reward from 25 LTC to 12.5 LTC. The halving is expected in early August. Although halvings do tend to result in price increases, there is much more going on with Litecoin that is affecting its price. With the overall market recovery there are many investors that are returning to the crypto space after months or years of inactivity. These individuals are far more likely to purchase familiar platforms, such as Litecoin, that they may have previously owned or have been holding. Also, Litecoin has always enjoyed faster transaction speeds and lower fees than Bitcoin, which has led many to believe that it is the more likely of the two to be mass adopted.

It is also worth noting that Litecoin has avoided the discord that has befallen Bitcoin over the past few years. It adopted Segregated Witness in 2017 without controversy, and has its own version of the Lightning Network operating for well over a year. Unlike Bitcoin, however, the second-layer scaling solution is not yet needed as Litecoin’s on-chain capacity of sixty transactions per second is rarely reached. Presently there are only about two hundred Lightning nodes.

Perhaps the most significant challenge facing Litecoin is its close connection to Bitcoin.Whereas its ability to remain a top 10 platform is impressive, its adopters remain primarily speculators and traders. Should Bitcoin fend off its more advanced rivals and become the standard, mass adopted cryptocurrency, Litecoin (along with many other platforms) will have little reason to exist.

For now, the Litecoin community has reason to celebrate. In addition to the price increase, hash power is also up as is transaction volume. There also appears to be an increase, albeit slight, in businesses accepting it for payment. Thus, any problems with its long-term viability will have to be addressed at a later date.

Featured Image via BigStock.

Source: Crypto News

Permissioned Blockchains On The Rise, Skeptics Question Usefulness

Platform development is in full swing, as many teams are racing to make progress on their roadmaps. Although the basics of blockchain technology are relatively simple, there are many parameters around which it can be implemented. Permissioned platforms are not new, yet purists typically criticize them as lacking the most important characteristics of distributed ledgers. Nevertheless, these platforms are growing, and a number of institutions are choosing them.

Although definitions can vary, blockchain networks are generally considered permissioned if control of the nodes is restricted to one or a few select entities. This arrangement provides a great degree of security, but it also eliminates the immutability of the ledger, as the node operators can easily agree to make changes. Utilizing a permissioned platform thus requires that the user trust the operators not to make alterations, which effectively eliminates the very purpose of the blockchain itself.

Permissioned platforms have found little support among crypto advocates. This is because unlike permissionless platforms like Bitcoin and Ethereum, transactions on a permissioned blockchain can easily be reversed, and any cryptocurrency can be removed from wallets. They are, in effect, very similar to centralized databases in terms of their ability to have their data altered and offer nothing especially revolutionary about how information is processed.

Nevertheless, these platforms have their supporters. One advantage is their ability to keep sensitive information private, as the ledgers themselves are not open for public viewing. Also, a permissioned platform can have a secure consensus mechanism if the node operators come from several independent entities. For example, a large number of similar companies could operate a private blockchain among themselves, with no single one able to rewrite the ledger.

Hyperledger Fabric is perhaps the best known permissioned platform, having been adopted by a number of large companies including Amazon, London Stock Exchange Group, and software giant SAP. Another is Quorum, an Ethereum-based system being developed by JP Morgan for the banking industry. Also, R3 is a company founded in 2014 that specializes in private blockchain development. Its core product, Corda, has many clients across a broad range of business and government sectors.  

It is worth noting that several of the most popular permissionless platforms have restrictions on node operators, making them semi-permissioned. VeChain, for example, has a maximum of 101 validator nodes, which are called “Authority Nodes.” These have been expressly approved by the VeChain Foundation with many of their operators unknown to the public. Also, Ripple has long been considered quasi-centralized as many of its nodes are controlled by Ripple Labs.

A key takeaway from the progress of permissioned blockchains is the fact that distributed ledgers can come in many forms. Whereas criticism of their utility is valid, it is worth noting that much like their permissionless counterparts, they are becoming more popular. Many of their adopters are successful technology companies with ample expertise to understand their pros and cons. Thus, they are clear examples of how the means by which this revolutionary technology will be utilized has yet to be fully understood, and is likely to be very diverse.

Featured Image via BigStock.

Source: Crypto News

Hackers Manage to Steal $10 Million-Worth of XRP from GateHub

It’s very likely that one of the biggest risks towards cryptocurrency credibility rests in the fairly large number of attackers targeting digital currency exchanges and wallets. While the number is certainly not big enough to put you on high alert, it can’t be ignored either.

Recent reports indicate the security of wallet provider GateHub has been breached by attackers, who managed to get away with roughly $10 million-worth of XRP. Initially, GateHub only made a preliminary statement concerning the hack, yet it seems that more details are becoming available.

The initial statement announcing the hack read: “Recently, we have been notified by our
customers and community members about funds on their XRP Ledger wallets being
stolen and immediately started monitoring network activity and conducted an
extensive internal investigation.”

A full story on how the hack was carried out is not yet available,
but GateHub has shared some of its initial findings. With this in mind, there’s
no trace of brute forcing on the wallet’s service, nor were there any suspicious
logins. However, the GateHub security team has detected a suspicious number of
API calls, backed by valid access tokens. The access tokens were disabled right
after the API calls stopped. They originated from several IP addresses, and may
serve as a lead in determining how the attackers obtained the encrypted secret
keys.

While this is certainly a step forward, GateHub cannot currently
explain how hackers gained access to all other necessary data used to decrypt
the keys in question.

However, the attack might be linked to Ledger wallets being hosted
on GateHub. Preliminary findings showcase that 100 XRP Ledger wallets were fully-compromised,
with all available XRP being stolen.

Thomas Silkjær, an XRP
community member, and one of the first individuals to get in touch with GateHub
after the attack, stated that: “On June 1 we were made aware of a theft of
201,000 XRP … and immediately started investigation. It turned out that the
account robbed was managed through Gatehub.net, and that the offending accounts
(r9do2Ar8k64NxgLD6oJoywaxQhUS57Ck8k) had stolen substantial amounts from
several other XRP accounts, likely to be or have been managed through
Gatehub.net.”

GateHub has announced that it is following procedure, and doing
everything in its power to figure out how the breach occurred. It hopes to
achieve this by collaborating with law enforcement and an IT forensics team. The
wallet service has also contacted all potentially-affected users with
instructions on how to protect their remaining funds.

Analysis has concluded that the stolen XRP has already been laundered through cryptocurrency exchanges and coin mixers, to reduce the effectiveness of tracking efforts. After news of the attack appeared publicly, XRP prices started a steady decline. The coin is currently trading at -4.30%.

Based on everything that has been outlined so far, this hack is yet another alarm calling for a smarter approach towards ensuring the security of cryptocurrency exchanges and wallets. After all, it’s a pity that most cryptocurrencies offer advanced security, yet exchanges are constantly targeted and affected.

Featured image via BigStock.

Source: Crypto News

French Vineyard “P. Ferraud & Fils” Shares Details of its Blockchain implementation

In the world of blockchain there are many things happening at once. It is difficult to keep track of everything, and notable examples of successful implementations often go unseen and unheard. This was not the case with P. Ferraud & Fils, a French wine producer which uses blockchain technology for all exports to China. The purpose of the blockchain system is to prevent fraudulent products being sold in the country. French wine is exquisite and exotic, therefore it carries a significantly high price tag.

Chinese importers have been damaged by unsavory, entrepreneurial individuals in the country which have reused the bottles, filled them with cheap wine, and sold them as genuine. With the help of the VeChain project, Chinese wine importers have a technological tool to protect them from fraudulent sales and ensure that consumers are safe from fake wines. To learn more about this implementation we reached out directly to the producer “P. Ferraud & Fils” and asked a few important questions to Ms. Dana Gasiorowska, a sales official who supported our press request.

Image of Ferraud bottle sold on the Chinese market, front label.

CryptoNews: When did the partnership with VeChain begin? 

Gasiorowska: Our winery, P. Ferraud & Fils (created in 1882), is specialized in Beaujolais and Mâconnais wines. We’ve had a commercial partnership with a prestigious company: D.I.G (Shanghai Waigaoqiao Direct Imported Goods Co., Ltd.) for many years, where they import and distribute our wines, primarily in the area of Shanghai. The project to apply blockchain technology to wines was initiated by our importer in 2016. Then, in January 2017, we entered in contact with the VeChain team from Shanghai and begun to cooperate actively.

CryptoNews: What were the roles of the companies involved?

Gasiorowska: Our importer in Shanghai first set the targets and general specifications. The VeChain team was in charge of creating a solution that combines blockchain and IoT in such a way that it can be used both by us and by our importer and adapted to the specific issues linked to the wine business. From our side, we were often in touch with VeChain team to explain each step of wine production (eg vinification, bottling, labeling) as well as procedures linked to orders. The system is operational now and so we can say that P. Ferraud & Fils is the first company in the world of wine to use blockchain technology.

CryptoNews: What are the estimated losses due to fake products on the market?

Gasiorowska: It is impossible to estimate it. We have seen many examples of fake bottles, and are convinced that every exporter is concerned, us and so many other companies, even the most famous. Our winery has always wished to guarantee the quality of our wines. So this is dramatic for us if people buy fake bottles marked with our winery name, and are deceived with the content. It is damaging for both our brand image and turnover.

CryptoNews: How many wines do you export to China?

Gasiorowska: We export on average 100.000 bottles to China each year, having 2 main importers (only one implements VeChain so far)

CryptoNews: What are the differences between the traditional approach, and now using blockchain technology?

Gasiorowska: In the traditional approach, it is quite easy to duplicate any product and provide to consumers with fake information about it, while Blockchain technology provides a lot of security, as it is inviolable. Only us and our importer
have access to VeChain and the data contained. This data is mostly about
tractability details: for example bottling date, lot number, shipment date and
other.

Traceability is not new to us, we have efficient procedures for many years now to trace precisely each Cuvee, each bottle, from grape harvest until delivery. But, before, these procedures concerned only ourselves.

Now we share this information with our importer. Furthermore, they are also involved, as they send us their order through the VeChain Thor Blockchain platform and can also add further information about the wine, once we delivered it to them (for example: where are wines stocked). Also very important is that consumers get aware of all this. Each bottle has a unique QR code, like a sort of guarantee seal. So that they can be sure that the wine comes really from P. Ferraud & Fils winery.

(However, not all of the details are displayed to the consumers, as it would be supposedly very boring to them, so we made a selection of essential elements. Only professionals can have access to all the traceability details).

CryptoNews: Is the technology operational, i.e. are your wines on the Chinese market currently using the technology?

Gasiorowska: Yes, it is operational. The first order processed through VeChain was in July 2017. There were some issues in the very beginning, but soon after some improvements were done in the system, and all of those issues were resolved.

CryptoNews: What kind of investment was required from your company to implement the system (in terms of manpower, finances, education)?

Gasiorowska: From our side, the investment concerns mostly time spent during the conception of the system as we provided advice linked to wine specificities. Furthermore, as we use VeChain systematically now, it means that additional time is spent on the occasion of each order: we need to enter details to the system about each new Cuvee, about labels, and about the shipment. However, these time investments are very reasonable, and of all this can be done quickly.

CryptoNews: How did you come up with the idea to start using blockchain for this purpose?

Gasiorowska: The idea comes from our importer in Shanghai, D.I.G.. They’ve been using blockchain already for other luxury products for some time and it seemed relevant to all of us to adapt it to the wine market.

This project has been supported by the Chinese government, as the fight against counterfeiting is now their priority. They decided to create an organization specialized in the safety and traceability of wine and spirits: “Shanghai Wine and Liquor Blockchain Alliance” (the launching ceremony took place last June, with the participation of our manager, Mr. Yves-Dominique Ferraud)

CryptoNews: Now, after more than a year has passed in trials, would you recommend a similar system for other wine manufacturers?

Gasiorowska: The system has helped us circumnavigate a difficult problem for our partners. We hope to remain the only one in the wine sector and to keep this competitive advantage for ourselves.

CryptoNews: Can you briefly describe the process of placing product information on your blockchain?

Gasiorowska: We first select wines and enter several details about them into the system, for example: label pics, alcoholic degree, lot number, available quantity. Then our importer places the order through VeChain, and we confirm it on our turn. We still need to complete some details later, once they are known: lot number, shipment exact date, container number…

Our importer confirms order reception in the system when wines arrive in Shanghai. At this step, they generate QR codes, one per bottle. QR codes are then printed on the Chinese back labels (for wines delivered before VeChain creation, stickers were put on neck labels). Our importer also takes
care of commercial information transmitted to consumers through QR codes links.

CryptoNews: Are there any plans to incorporate the technology the entire range of products?

Gasiorowska: The technology is meant to cover all of our wines in China in the future. We do not plan to extend this proceeding to other countries so far, as we do not face the same difficulties.

CryptoNews: Thank you very much for your time, Ms. Gasiorowska. It was a pleasure to speak with you about this successful blockchain use case, and we would like to congratulate you and P. Ferraud & Fils for being a pioneer, one of the first well-established companies in the world to incorporate blockchain technology.

Gasiorowska: We would also like to thank you for the opportunity to talk about our experiences with this technology and share our views with your readers. Blockchain made sense for us to protect the integrity of our brand, and for our partners to protect their local consumers. It was an easy decision to make. With the help of VeChain the process was seamless and simple, only adding minor difficulties to our accounting process, while increasing the value of our brand. Once again, thank you very much.


Blockchain technology often receives criticism about the low amount of use cases that are practically tested around the globe. However, many times, successful implementations remain unnoticed and unheard.

Featured Images courtesy of VeChain Foundation & Unsplash.

Source: Crypto News

Bitcoin Cash Miners Carry Out 51% Attack to Prevent Unauthorized Access

Recent reports indicate that a 51% attack has been carried out on the BitcoinCash (BCH) blockchain, where two mining pools decided to reverse several transactions confirmed by another miner. From the start, it is important to mention that this is not an ill-willed attack, meant to take control over the BCH blockchain, but rather an attempt at preventing unauthorized access to coins.

The situation

This recent action is directly linked to the Bitcoin Cash fork that took place on the 15th of May. The scheduled hard fork was disrupted when Bitcoin ABC, a developer group, uploaded buggy code that ended up affecting the mempool, a database of pending transactions that are awaiting miner confirmation. The bug caused the mempool’s operation count to be validated via the old rules, rather than the new ones implemented by the hard fork, thus causing a string of empty blocks. Basically, the miner was able to access coins found on ‘anyone can spend’ addresses, which have been there since the original BTC–BCH split in 2017. The code simply handed the coins in question as spendable currency to any miner interested. While the bug was quickly patched, this did not stop an unknown miner from attempting to transfer these extra coins.

BitcoinCash miners were quick to spot the activity, and then concluded that a 51% attack could rewrite the blockchain history, and ensure that no lasting damage is done. As such, BTC.com and BTC.top are the two mining pools involved, which were quick to leverage their combined hashrate to rewrite existing blockchain records. By doing so, the anonymous miner was stopped and the coins were returned.

Was a 51% attack necessary?

In theory, the 51% attack was needed to revert unauthorized transactions, rather than to steal coins. Thus, it kept the good of the community in mind, but there are people who disagree. For instance, Kiarahpromises, a BCH developer stated: “To coordinate a reorg to revert unknown’s transactions. This is a 51% attack. The absolutely worst attack possible. It’s there in the whitepaper. What about decentralized and uncensorable cash? Only when convenient?”

One of the biggest attributes associated with digital
currencies is the immutability of records stored via blockchain technology.
This means that the ledger responsible with keeping all transaction data cannot
be modified once a block has been formed. In other words, transactions cannot
be reversed. Or at least that’s what most people think.

In truth, things are a bit more complicated. The
immutability attribute exists thanks to decentralization, provided by miners
and node operators throughout the world. The general rule of blockchain-based cryptocurrencies
is that blocks can only be altered if the majority of the network agrees with
the change. Any change can be made on the network as long as at least 51% of
miners are willing to support the edit. Network protocol changes are carried
out via hard forks, which are carefully-planned and discussed events that most
miners agree with.

However, there is a significant danger worth keeping in mind. An ill-willed 51% attack could easily help the parties involved to steal coin, change protocols, or majorly damage the trustworthiness of the cryptocurrency in question. Those who are against BitcoinCash’s recent 51% attack argue that it proves how the coin is too centralized, granted that only two mining pools managed to do it, with the first one holding most of the power.

However, this aspect is prevalent for other digital currencies as well. For instance, in the case of Bitcoin, the majority of the mining hashing power is currently divided between three mining pools only. In theory, they could join forces to change everything we know about Bitcoin, thus deeming the currency worthless. There are, of course, regulatory, ethical and business-wrecking impediments that reduce the chances of such events.

What’s next?

This event showcases the importance of creating standards
amongst miners throughout the world, meant to facilitate better communication, code
checks, and smart decisions in unexpected events. Additionally, it is important
for the community to carefully consider the implications of 51% attacks. Lastly,
we must decide whether we should aim for more extensive and verifiable
decentralization for the world’s biggest digital currencies.  Currently, most of the cryptocurrency
community agrees that no miner or pool should hold majority.

The market already has precedents with similar events in the past, such as the hard fork meant to reverse the Decentralized Autonomous Organization’s (TheDAO) vulnerability. Additional standards would ensure better dialogue between miners, developers and the community, to protect the cryptocurrency community.

Featured Image via BigStock.

Source: Crypto News

Bitcoin Cash Miners Carry Out 51% Attack to Prevent Unauthorized Access

Recent reports indicate that a 51% attack has been carried out on the BitcoinCash (BCH) blockchain, where two mining pools decided to reverse several transactions confirmed by another miner. From the start, it is important to mention that this is not an ill-willed attack, meant to take control over the BCH blockchain, but rather an attempt at preventing unauthorized access to coins.

The situation

This recent action is directly linked to the Bitcoin Cash fork that took place on the 15th of May. The scheduled hard fork was disrupted when Bitcoin ABC, a developer group, uploaded buggy code that ended up affecting the mempool, a database of pending transactions that are awaiting miner confirmation. The bug caused the mempool’s operation count to be validated via the old rules, rather than the new ones implemented by the hard fork, thus causing a string of empty blocks. Basically, the miner was able to access coins found on ‘anyone can spend’ addresses, which have been there since the original BTC–BCH split in 2017. The code simply handed the coins in question as spendable currency to any miner interested. While the bug was quickly patched, this did not stop an unknown miner from attempting to transfer these extra coins.

BitcoinCash miners were quick to spot the activity, and then concluded that a 51% attack could rewrite the blockchain history, and ensure that no lasting damage is done. As such, BTC.com and BTC.top are the two mining pools involved, which were quick to leverage their combined hashrate to rewrite existing blockchain records. By doing so, the anonymous miner was stopped and the coins were returned.

Was a 51% attack necessary?

In theory, the 51% attack was needed to revert unauthorized transactions, rather than to steal coins. Thus, it kept the good of the community in mind, but there are people who disagree. For instance, Kiarahpromises, a BCH developer stated: “To coordinate a reorg to revert unknown’s transactions. This is a 51% attack. The absolutely worst attack possible. It’s there in the whitepaper. What about decentralized and uncensorable cash? Only when convenient?”

One of the biggest attributes associated with digital
currencies is the immutability of records stored via blockchain technology.
This means that the ledger responsible with keeping all transaction data cannot
be modified once a block has been formed. In other words, transactions cannot
be reversed. Or at least that’s what most people think.

In truth, things are a bit more complicated. The
immutability attribute exists thanks to decentralization, provided by miners
and node operators throughout the world. The general rule of blockchain-based cryptocurrencies
is that blocks can only be altered if the majority of the network agrees with
the change. Any change can be made on the network as long as at least 51% of
miners are willing to support the edit. Network protocol changes are carried
out via hard forks, which are carefully-planned and discussed events that most
miners agree with.

However, there is a significant danger worth keeping in mind. An ill-willed 51% attack could easily help the parties involved to steal coin, change protocols, or majorly damage the trustworthiness of the cryptocurrency in question. Those who are against BitcoinCash’s recent 51% attack argue that it proves how the coin is too centralized, granted that only two mining pools managed to do it, with the first one holding most of the power.

However, this aspect is prevalent for other digital currencies as well. For instance, in the case of Bitcoin, the majority of the mining hashing power is currently divided between three mining pools only. In theory, they could join forces to change everything we know about Bitcoin, thus deeming the currency worthless. There are, of course, regulatory, ethical and business-wrecking impediments that reduce the chances of such events.

What’s next?

This event showcases the importance of creating standards
amongst miners throughout the world, meant to facilitate better communication, code
checks, and smart decisions in unexpected events. Additionally, it is important
for the community to carefully consider the implications of 51% attacks. Lastly,
we must decide whether we should aim for more extensive and verifiable
decentralization for the world’s biggest digital currencies.  Currently, most of the cryptocurrency
community agrees that no miner or pool should hold majority.

The market already has precedents with similar events in the past, such as the hard fork meant to reverse the Decentralized Autonomous Organization’s (TheDAO) vulnerability. Additional standards would ensure better dialogue between miners, developers and the community, to protect the cryptocurrency community.

Featured Image via BigStock.

Source: Crypto News

Belfast Announces Incentive-Based Digital Currency for Civic Duties

Over the last couple of months, governments and central banks throughout the world have issued their own response to the digital currency revolution – central bank digital currencies, known as CBDCs. While most of these projects are work-in-progress, they do showcase how digital currencies will actively shape our lives in the future.

According to recent reports, the city of Belfast has come up with a different idea. As such, the Belfast City Council has announced the development of an incentive-based digital currency which will reward citizens in exchange for participating in a variety of civic duties. These include supporting local businesses, participating in environmental clean-up initiatives, or volunteering for other forms of civic activities. In exchange for their time, citizens will be rewarded Belfast Coin tokens which can then be spent at several preselected merchants, restaurants and cafes.

From a technical standpoint, the coin will not be designed as a cryptocurrency, although it will run on blockchain technology. Therefore, it will not be listed on exchanges and it won’t have a volatile market value. Its price is linked directly to the British pound, thus 1 coin will equal £1. The platform will be built through a partnership between the Belfast City Council and Colu, an Israeli technology company.

At this time, the Colu app is already available for download in several regions of Great Britain, yet Belfast will be the first city where the incentive system is implemented. The company has also announced that once released, the platform will also allow users to link a bank card, thus facilitating card-based token payments.

The idea behind the coin was born after Belfast signed the memorandum to participate in The Rockefeller Foundation’s ‘100 Resilient Cities Program’. The main purpose of the project is to improve the quality of life in the participating cities, by promoting civic duties, and encouraging shopping at local businesses. The Rockefeller Foundation has also talked about its short-term and long-term goals. As such, in the near-future, the project will attempt to improve local economies, whereas from a long-term perspective, its goal is to create stronger and better-linked communities.

Belfast’s Mayor, Deirdre Hargey has confirmed these goals in a recent press statement, when he mentioned: “Belfast Coin will be introduced later this year and it’s our hope that it will initially give an economic boost to local businesses, as well as helping the Council achieve other long-term goals, including environmental.”

Work on the Belfast Coin is already underway. Currently, the City Council is trying to attract partners and stakeholders for the project. Apart from enlisting local businesses, Belfast also wants the support of larger companies and educational institutions. Doing so will ensure that the coin’s popularity and usability will be well-spread, thus ensuring the fulfilment of the project’s goals.

Based on everything that has been outlined so far, the project shows how digital currencies can serve higher purposes apart from the transfer of value. After all, who would have thought that a coin can improve the environment, help local businesses and create stronger communities?

Featured Image via BigStock.

Source: Crypto News

Iota Foundation Announces Impeding Removal of the Coordinator, Platform to Become Fully Decentralized

The Iota Foundation has announced that it will soon remove the Coordinator, a security related addition to the platform protocol. This move will be the most significant development to-date on Iota’s roadmap. If successful, it could transform the entire blockchain space.

As has been previously discussed, Iota is different from traditional blockchains in that it uses a directed acyclic graph to reach consensus. This programming architecture enables feeless transactions as well as unlimited scalability, at least in theory. However, this design is complex and highly experimental. In its present state, Iota’s core feature, known as “The Tangle,” is vulnerable to attack. The Coordinator protects The Tangle, yet also keeps Iota quasi-centralized.

Removing the Coordinator will enable Iota to become fully decentralized, and is a giant leap forward. Termed “Cordicide,” it has the potential to make Iota the most functionally useful platform in the entire blockchain space, as it will have resolved what is commonly called the “trilema.” This concept, first defined by Ethereum’s Vitalik Buterin, states that distributed ledger platforms must sacrifice either security, decentralization, or scalability in order to function properly. With this issue resolved, Iota will be able to claim vast technical superiority over any existing platform, possibly even rendering all ordinary blockchain-based networks obsolete.

By any measure, Iota is having a good year. Its well-publicized adoption by Jaguar-Land Rover as well as the foundation’s partnerships with Avery Dennison, Evrythng, and the city Austin, Texas are impressive additions to an already long list of institutional supporters. The development team continues to add top-notch talent, and has weathered the crypto winter with more than enough money to continue to grow.

Nevertheless, a number of challenges lie ahead. First and foremost, there is no guarantee that Iota will work correctly without the Coordinator. The foundation has had to build a new layer onto its consensus mechanism, which it has named “Shimmer.” This layer gives nodes a reputation ranking as well as voting authority to ensure honesty. Despite being thoroughly tested, failure of Shimmer would be a disaster. There are also a number of competitors vying for adoption in the Internet of Things (IoT) sector, which Iota seeks to dominate. These include IoTX, Hederal Hashgraphy, and IoT Chain.

Also, removing the Coordinator does not eliminate all of Iota’s technical shortcomings. Notably, as a means of protecting against quantum decryption, Iota does not permit permanent, reusable addresses. This characteristic is not an issue for machine-to-machine transactions, but can be a hassle for persons or businesses seeking to use it as a simple cryptocurrency. Even Iota’s staunchest supporters agree that a solution for this issue is sorely needed.

Another major hurdle for Iota will be the implementation of Project Qubic, a long-anticipated layer on top of The Tangle that promises to enable distributed computing and smart contracts. Qubic could create entirely new economic models, such as a global data marketplace and microtransactions, which ordinary blockchains cannot match. Much of Iota’s long-term success depends on Qubic, which because of its tremendous complexity remains far from complete.

Although many more details of Cordicide have yet to be announced, including an activation date, the market has responded positively. Iota’s value has surged 20%, and is poised to move much higher. Nevertheless, as with all distributed ledger platforms, only time will tell if Iota will be worth the present investment.

Featured Image via BigStock,

Source: Crypto News