The notorious 51-percent attack: it's the major fault in cryptocurrency protocols but it's rarely seen, especially among the most popular cryptocurrencies.

Yet, in the past couple months, the exploit – whereby a single miner (or group of miners) takes control of over half of the network's total computing power and can then bend the protocol's rules in their favor – has been seen twice. And on the same blockchain.

Indeed, verge, a privacy-oriented cryptocurrency recently propelled into the limelight by a partnership with popular adult entertainment site Pornhub, suffered two hacks perpetrated through 51-percent attacks that saw the attackers absconding with millions of dollars-worth of its native cryptocurrency, XVG.

During the first attack in April (only a couple of weeks before the Pornhub partnership), the hacker was able to get away with 250,000 XVG. And during the latest in mid-May, an attacker was able to exploit $1.7 million-worth of the cryptocurrency from the protocol.

According to researchers, the exploits are a product of simple changes to the underlying code which cryptocurrency protocols are typically built on and the challenges of being able to predict what unintended consequences will arise from those changes.

Sure, verge developers were only trying to design a better cryptocurrency for payments, but by tweaking small parameters, such as the length of time a block can be valid, the group has opened its blockchain up to attacks.

"Getting incentives right and keeping them right is hard," Imperial College London assistant professor and Liquidity Network founder Arthur Gervais said.

That is blockchains are built on very precariously stacked incentives whereby all stakeholders work together toward a common goal so as to remove the chance that one entity takes full control.

"Things obviously don't look good," said Daniel Goldman, the CTO of cryptocurrency analysis site The Abacus who's been tracking the attacks. "The issues that initially slipped into the codebase were a result of pure carelessness — incorporating code from other open-source software without understanding its implications."

Goldman added:

"I hate to say it, but if I had to summarize: the attacker is doing better due diligence than the developers. I'd try to poach him if I were them."

And since veteran blockchain developers, including litecoin creator Charlie Lee and monero lead developer Riccardo Spagni, have long argued the kinds of adjustments the platform made have obvious downsides, such naysayers – who have been readily attacked by a group of enthusiasts calling themselves the "Verge Army" – are feeling vindicated.

"So many important lessons to be learned from this," Fidelity investment research analyst Nic Carter tweeted, summing up the general state of verge's development.

Representatives from the verge developer team did not respond to a request for comment from CoinDesk.

See more: https://www.coindesk.com/verges-blockchain-attacks-are-worth-a-sober-second-look/

Days after first initiating its launch in an unorthodox, distributed process, the EOS blockchain isn't yet live, but so far, the software appears to be progressing toward that goal without major issues.

As profiled by CoinDesk, after raising a reported $4 billion over the last year to create the software necessary to launch the blockchain, the company that created it is leaving it to its community to actually get it off the ground. That doesn't mean there haven't been material updates, however, or that Block.One, the company in question, hasn't been involved in the initial booting effort.

Rather, the company released version 1.0.0 of the EOS software on Saturday and already it's published one update to the code, version 1.0.1, a release that Block.One CTO Daniel Larimer described as preventing a "potential crash" in the update notes, along with other minor issues.

This means that, as of now, participants in the EOS initial coin offering (ICO), which ended on Friday, have purchased all the initial ethereum tokens that will ever be used to bootstrap the project. The plan was always for these tokens to be frozen at the end of the ICO, in preparation for a formal blockchain launch, meaning those coins won't be tradeable again until EOS is live. (It's unclear at this time how exchanges are managing their book-keeping while trading continues.)

The last big event took place June 2 at 10:59 UTC, when the tokens froze on ethereum and so-called "snapshots" were taken in order to preserve a record that can later be used to allocate tokens issued on the EOS blockchain to their owners. By all accounts, this occurred on time and without any issues (here's one description).

"Things are going about as we expected. A few road bumps, no show-stopping problems. I'm expecting the [blockchain] to be live in the next couple of days," Kyle Samani of Multicoin Capital, one of EOS's most prominent endorsers, told CoinDesk.

Still, it has been remarkable how unified block producers, or the entities jockeying to process transactions on the new blockchain (and thus receive its rewards) have appeared outwardly given the global scale of the launch.

"I've been part of calls of 60 to 90 people every day," Marc-Antoine Ross, the CEO of EOS Canada, told CoinDesk, adding:

"What I think is important is we all published agreement to launch one chain."

Bumps and bruises
But this outward coordination has not been without a lot of behind-the-scenes effort.

Indeed, a controversy broke out in the EOS launch community last week when a group calling itself "Ghostbusters" published a critique of the launch approach led by EOS Canada, another group vying to become a block producer.

EOS Canada had published a piece of open-source software called "EOS BIOS" on April 9, a suite of code that aimed to coordinate the launch of the EOS software. Its had dozens of subsequent releases since then, with version 1.0.0 coming out on Saturday. "A lot of block producer candidates validated this solution to launch the network," Ross said.

That said, the critique was seconded by other block producer candidates.

The May 28 blog post argued:

"Using the EOS BIOS process will create unnecessary risks for the EOS blockchain launch and ultimately all EOS token holders. Also, any negative press on insecurities in EOS blockchain launch or failed attempt to launch the blockchain will have a negative impact on EOS price and reputation."

It argued that the channels between the various nodes needed to be more secure, using layers that obscure IP addresses and encrypt data as it passes between block producers.

EOS Canada promptly responded with a call for "increased collaboration" arguing that some of the vulnerabilities identified were settings needed for efficient testing, not a production launch.

In a subsequent post, Ghostbusters described theirs as the "security first" approach.

See more: https://www.coindesk.com/eos-blockchain-isnt-live-yet-getting-closer/

Brick 'em? Maybe not anymore.

What was once a phrase that echoed across message boards, one that defined an aggressive shift in sentiment against the companies that today make hardware required to run cryptocurrency software, is falling out a fashion as the so-called 'War on Miners' enters a less decisive period.

Indeed, in the wake of new research and analysis, leading developers now appear to believe that standing in the way of a shifting mining landscape might be hopeless. At least, that was the testimony of many blockchain software developers at Consensus 2018, who indicated that hardware manufacturer Bitmain's recent distribution of high-performance ASIC miners is proof of their inevitability for all cryptocurrencies.

Still, controversy surrounding the idea optimized mining hardware will soon be available for previously ASIC-resistant cryptocurrencies (including ethereum, monero and zcash) has continued to escalate.

Because the chips force more general-purpose mining hardware, such as graphic cards or GPUs, out of the market, each cryptocurrency has witnessed efforts to enact software changes so the hardware can no longer operate. Monero, the 13th largest cryptocurrency, for example, has committed to changing its underlying algorithm.

Driving the defense is the ideological belief that lacking sufficient competitors, ASIC manufacturer Bitmain commands too substantial a portion of the network share, a market reality that threatens to undermine the open, decentralized participation that cryptocurrencies strive for.

"You have centralization of manufacturers and you also have centralization of consumers. You have this sort of constant clustering," Riccardo "fluffypony" Spagni, a lead developer at monero, told CoinDesk.

For now, monero is willing to go it alone, with regular anti-ASIC updates that aim to keep ASIC hardware off the network until such time that ASICs become ubiquitous, like USB drives, so that they can be run by a wider pool of participants.

"Ultimately ASIC resistance is futile but between now and then, before we capitulate to ASICs, let's resist it for as long as possible until ASICs are commoditized," Spagni told CoinDesk.

However, given the financial incentives at play – optimized hardware can quickly dominate a network, and swallow the rewards in exchange for the increased hashpower – others warned that ASIC manufacturers will always be a step ahead.

Lead developer of siacoin, David Vorick, told CoinDesk:

"I think any GPU-mined coin is going to become an ASIC-mined coin at some point. Bitmain has been pretty methodical about demonstrating this."

See more: https://www.coindesk.com/cryptos-war-miners-might-already/

After a year-long initial coin offering (ICO), perhaps what has become the most hotly anticipated blockchain is scheduled to launch on June 2.

That blockchain is EOS, which has raised more than $2 billion in its token sale for Block.one, the company that created what's being touted as a dramatically more scalable and user-friendly version of today's blockchains. Those assertions rest on the projects consensus algorithm, delegated proof-of-stake (dPoS), whereby a set number of nodes – in the EOS case, 21 – will be chosen to act as validators (or "block producers").

These nodes will take turns verifying blocks at a rapid clip, with each one taking a turn every three seconds or so. The idea is that with only a few validators it becomes easy to process lots of transactions very quickly (although there have been critics of these claims).

Since these validators will have a lot of responsibility, they will, therefore, be rewarded for their work (through the governance process, the EOS community will get to decide on what the rewards should be) with newly-minted EOS tokens, similar to how bitcoin rewards miners.

As such, it not only looks highly desirable financially to be a validator node but will also come with a certain amount of power. And vying for those spots (or backup node spots, which will also receive rewards) are several dozen organizations.

Companies aiming to serve as block producers range from existing crypto-mining operations, exchanges, blockchain consultancies and teams of EOS enthusiasts. Candidates are spread out all over the world, but China shows the most interest, followed by entities in the U.S.

This question of power has been at the center of quite a bit of debate, with skeptics, led by ethereum creator Vitalik Buterin, saying that EOS's governance system is easily manipulable. According to Buterin in a post titled  "Plutocracy Is Still Bad," it would be easy for cartels to form within such a small system.

Those spots, though, won't be chosen by Block.one; the company merely created the software, but once the mainnet blockchain launches, the choices made over the blockchain will no longer be Block.one's responsibility.

Sure, the company may be investing millions of dollars into the EOS ecosystem, but for now, just days before the launch, it doesn't seem to have invested in educating the community on how they can participate in its governance.

Even Katie Roman, an EOS cheerleader and self-described Dan Larimer (who co-founded Block.one) fangirl, acknowledged the issue stemming from Block.one's hands-off approach after launch.

"Block.one has said since the beginning of this project that they are not launching the chain, so the details of where and how to vote are not up to them," she told CoinDesk, adding:

"This is the hard part about decentralization and DPOS in general. Anyone can lead an effort, but that also means that there is a chance that no one leads an effort."

Nathan James, the founder and CEO of Scatter, a Metamask-like application for storing and interacting with EOS, echoed much the same, telling CoinDesk, "A lot of this launch has fallen to the community."

Block.One has not replied to multiple requests for comment for this story.


See More: https://www.coindesk.com/eos-coming-anyone-can-figure-vote/

That decision will cost you half a cent. Are you sure that's the right move?

If you're a gamer, decentralized applications (dapps) hold an enticing promise: you might finally be able to truly own virtual in-game items and accumulate them without worrying about a company changing the rules and taking them away. But as with other big blockchain ideas, that's not quite a reality today.

One reason is the economics of how this would work are uncertain. To commit an action to the ethereum blockchain, users need to expend gas, a unit of value that's priced in ether, the network's cryptocurrency, and that fluctuates based on how much other people are using the network at any given time.

For Loom Network, a startup specializing in applying blockchain technology to gaming dapps, that just won't do. Constant microtransactions harm user experience, even if network traffic isn't pushing up gas prices at a given moment, as happened during the recent CryptoKitties boom.

Loom co-founder James Duffy told CoinDesk in a recent interview, "there's just a mental transaction cost."

He continued:

"Even if you're spending a fraction of a penny every time you move your character, people still have to make decisions about whether it's worthwhile to make a move [when] they know every single thing they're doing is costing them."

With that problem in mind, Duffy announced Loom's newest offering – a ready-made "shared sidechain" that dapp developers can use in exchange for a monthly fee – this week. ZombieChain, as it's called, is expected to launch in a month or two.

So far, not developers have signed up to build dapps on it, but the Loom team is excited about how it advances their ideas and vision.

"ZombieChain's model more closely parallels traditional web hosting," Duffy wrote in the announcement, "where developers pay a flat monthly fee based on the resources consumed by their application, upgrading their web server and paying more as their app grows in popularity over time."

The idea of a shared sidechain, Duffy believes, has the potential to help gaming dapps achieve scale while making life easier for users and developers alike.

The alternatives, as the stand today, are: one, to house games on ethereum's main chain, with its poor user experience; or two, to build a dedicated sidechain for each game.

"Not everyone wants to do that," Duffy told CoinDesk – hence ZombieChain has come to life.

See more: https://www.coindesk.com/zombiechain-comes-alive-can-ethereum-sidechains-save-dapps/

Startup Behind Zk-Starks Breakthrough to Seek Cryptocurrencies as Customers

A breakthrough blockchain privacy solution forged at the Technion in Israel is taking its first steps from theory to reality.

Heralded by developers, so-called zk-starks offer a promising way to compress large amounts of information into small proofs, named starks, and can use zero-knowledge to preserve the privacy of that information. They're also efficient, transparent and secure against quantum computation, something that in the past, has pushed excitement surrounding the tech.

But rather than launching a new cryptocurrency, founders Eli Ben-Sasson and Alessandro Chiesa are going the corporate route, offering their novel technology to actual blockchains in exchange for their native assets, or what the team calls the "tech for tokens model."

Starkware will provide stark-powered technology to cryptocurrencies in exchange for a fee priced in the local currency, and if the market cap rises as a result, Starkware profits as well.

"Development teams are really like investors, but instead of investing money, they invest technology and skills," Ben-Sasson told CoinDesk.

But the Israel-based startup has some notable investors of its own as well, having raised $6 million in a seed-funding round from Pantera, Floodgate, Polychain Capital, Metastable, Naval Ravikant, Vitalik Buterin, the Zcash Company and hardware supplier Bitmain.

In the first stage of the company, Ben-Sasson told CoinDesk they'll be partnering with some major figures from the blockchain space, ("the usual suspects," Ben-Sasson said,) to bring zcash-style private transactions to public ledgers.

While the partnerships are yet to be confirmed, Ben-Sasson said that there is "plenty of interest" from a range of different on-chain and off-chain cryptocurrency efforts.

Indeed, advocates from many communities have spoken positively about the technology in the past, including ethereum founder Vitalik Buterin, who previously hinted that such a system could be deployed on top of "ethereum 3.0."

It's notable considering while Ben-Sasson and Chiesa were both founding scientists at zcash, the new technology offers a wholly different outcome.

Ben-Sasson told CoinDesk:

"Our technology is unique because it is the only one out there right now that allows true exponential speedup of verification for arbitrary computations with no setup assumptions and no keys to be distributed in advance."

See more: https://www.coindesk.com/starkware-6million-startup-funding-zkstarks/

Maja Vujinovic, a member of CoinDesk's advisory board, is the CEO of OGroup LLC and a former Chief Innovation Officer of Emerging Tech & Future of Work at General Electric.

The following article originally appeared in Consensus Magazine, distributed exclusively to attendees of CoinDesk's Consensus 2018 event.

Since the Industrial Revolution in the 18th and 19th centuries, manufacturing has exponentially increased in volume and demand; supply chains have grown ever more complex, and industry has progressively required less direct manual labor.

To add even more complexity, we now have a need not only for supply chain management (SCM) but also for business process outsourcing, as well as for corporate social responsibility and sustainability. To succeed, one must continuously innovate and keep up with a rapid technological change.

One outcome of this radical uncertainty for businesses is that they face an increasingly wide and diverse cast of counterparties, which is forcing them to rethink their trust infrastructure. Existing, time-consuming approaches to compliance and on-boarding can't keep up.

Blockchain technology, with its decentralized, consensus-based approach to proving the veracity of each users claims and statements, offers a promising solution - with the added bonus that it might also foster a more equitable world. Manufacturers cannot depend on blockchains alone to make their operations more manageable -- no one technology or business model will singlehandedly solve these issues - but they should all be looking closely at their potential.

See More:https://www.coindesk.com/manufacturing-blockchain-prime-time-yet-come/

We're all excited for self-driving, even autonomous, cars, and many tout blockchain as the technology needed to make that happen.

But while that conversation is an exciting one today, CoinDesk's Consensus 2018 conference played host to an array of esoteric use cases for the mobility space that showcase how many executives in the automotive space are currently taking a more conservative approach to applying blockchain technology to the industry.

Sebastien Henot, manager of business innovation at Renault Innovation Silicon Valley, is such a pragmatist, opting for the low-hanging fruit of using the technology to better manage carmakers' supply chains.

"Blockchain can bring cost savings to supply chains thanks to new levels of transparency and auditability, which would be of vital help in the unfortunate event of recalls," Henot told CoinDesk.

And that process could also mark the birth of automobiles with their own unique digital identity.

"If you have an Audi and you want to sell it to buy a Renault, it would be very useful for the Renault dealer to be able to access the Audi birth certificate and see a standardized history," Henot said.

But it's still early days, and the process for what kind of data will be shared and how that data will be coded still needs to be standardized.

That's one of the reasons the Mobi consortium, a kind of standards body for decentralized mobility and data sharing, was launched earlier this month with founding members including BMW, Ford, General Motors and Renault, as well as technology providers like IBM, ConsenSys and IOTA.

And while the futuristic use cases made possible by tokenized incentive structures is indeed what interests many members of the consortium, Henot said:

"My philosophy is let's start small."


Read more: https://www.coindesk.com/auto-industry-gears-up-for-future-powered-by-blockchain/

China's IT Ministry: 2017 Saw Peak Investment in Domestic Blockchain Industry

A major Blockchain Industry White Paper published by China’s Ministry of Industry and Information Technology reveals that the domestic blockchain industry saw “exponential” growth in 2017, according to a ministry press release today, May 21.                            

The 157-page report shows that 178 new blockchain startups were launched in China in 2017, bringing the total number to 456. This compares with 136 new startups in 2016, a figure that had already tripled the growth of the preceding two years.

The paper also shows that 2017 saw peak investment in blockchain technology to date, with 100 out of a total 249 equity financing initiatives in blockchain startups reported in 2017, more than all those reported between 2014 and 2016. Notably, 68 new financing initiatives have already been reported within the first quarter of 2018 alone.

The comprehensive report states that “blockchain technology has risen to the level of a national science and technology strategy,” noting that China’s policy and regulatory framework for blockchain has been “gradually improved”. The Ministry’s report also states that the new sector is “boosting” the development of traditional industries by “bringing down costs and improving efficiency.”

The report also reiterates reports that China has filed the most blockchain patents of any country in the world to date, while noting that the country’s outdated 2008 patent law may need to be revised to keep up with innovation in the sector.

The ministry nonetheless reiterates its position regarding “certain risks that cannot be ignored,” particularly in regards to Initial Coin Offerings (ICOs), pyramid schemes and fraudulent behavior. Drawing a parallel with the early internet, the paper advises vigilance against the “excessive speculation” and “false propaganda” that may compromise the blockchain space.

The paper also isolates technical risks – such as “loopholes” in cryptographic security, the potential for 51% attacks, and the new “unproven” consensus mechanisms that have been proposed to replace Proof-of-Work – emphasizing that these all need to be carefully considered in order to prevent the collective loss of digital assets.

Last month, the Chinese government cooperated with a local VC firm to launch the Blockchain Industrial Park in Hangzhou in an effort to spend over $1.6 bln on blockchain projects, over 20 percent of which will be funded by local government. Two weeks later, China’s National Audit Office, which handles all government-related financial transactions, revealed that it is considering a blockchain system to rehaul its unwieldy data storage and management infrastructure.

In March, a Chinese government memo was leaked detailing plans to create an “International Blockchain Investment Development Center,” and in February, news broke of a patent filed by the state-run Bank of China for a solution to scale blockchain technology platforms.

Source:https://cointelegraph.com/news/chinas-it-ministry-2017-saw-peak-investment-in-domestic-blockchain-industry

Hi guys,

There are a lot of different hardware wallets on the market. What would you suggest for a beginner? 

The sound of Ledger is pretty good.

It's an awesome and unique project.

Information is really good, thank you for sharing!