Riddles and Brain-Teasers for Bitcointalk Members (Newbies – Members)

[Pmalek]

I could not participate, because one of the rules is that accounts birthed after the date of the post should not participate. Luckily I saw this on 17 June. So I can participate.

Your account was created in May, so you are free to participate when I post a new riddle. All the previous ones have been solved already.

Ivan your thought is correct here. Since you will be seeding more coins to your brother. I will be good if you can use a Lightening Network, by this, hence you open a channel, you can send more coins to your brother with minimal fees, until the channel is closed.

Actually, this would be a bad use of the Lightning Network. Why? Because it's just one transaction. The LN is suitable if you are sending/receiving multiple (usually low-amount) transactions. If it's just one transaction, it will be more expensive to use the LN.

Here is why.
If I need to send you some bitcoin, all I need to do is make 1 on-chain transaction to move the coins to your address.

If I used the LN, I would have to:

• make an on-chain transaction to open a channel.
• send the coins via the LN and pay LN transaction fees.
• close the channel by making another on-chain transaction.

Some of this can be avoided if used the Blue Wallet LN wallet.

So you see, the LN would require 2 on-chain transactions + a little bit of fees to route the payment to the recipient compared to just one transaction on the first layer. Also, it doesn't matter how much value Ivan sends to his brother. 1 BTC or 0.001 BTC can cost the same or one transaction can be more expensive than the other. What matters are inputs and outputs, address types and scripts. 

[Pmalek]

Riddle #8

Andy believes the current situation on the crypto market is a great time to get involved. Many coins are cheap and undervalued, and he sees great potential in making some money out of it. He uses Telegram daily, and one day one of his online friends added him to a Telegram investment group. Andy has a great feeling about this group because everyone seems friendly. They talk about the profits they made in the past and how there will be great opportunities for new members to earn some serious money if they follow them. They have thousands of members who share their experiences and post screenshots of their profits.

The next day, the group admins posted a notification that another investment round will start two days from now. The rules are very simple. The whole community gets together and starts buying the same coin. The coin's value goes up, and then the community will receive a signal from the organizers when it's time to sell. It's so simple, yet so effective, Andy thinks. He prepares the money he will invest and waits in anticipation on when the day will come.

What kind of investment group has Andy gotten himself involved in?
Is this a bulletproof way of earning money, or what are the potential dangers?   

[KingsDen]

Actually, this would be a bad use of the Lightning Network. Why? Because it's just one transaction. The LN is suitable if you are sending/receiving multiple (usually low-amount) transactions. If it's just one transaction, it will be more expensive to use the LN.

Ok, Thanks! I misunderstood this statement "...and thinks the more coins you spend, the bigger the fees will be." as the more transactions you make, the bigger the fees.

Riddle #8

What kind of investment group has Andy gotten himself involved in?

I can't actually tell if there is a specific name for the investment group. If there is none, I can call it "Coin influencers group" or "Pump and Dump" investment group

Is this a bulletproof way of earning money, or what are the potential dangers?

It is not a bulletproof way of earning money because the rate of manipulation involved can confidently make one call it a scam. It can be a bulletproof way of earning money in two conditions; 1. If Andy is a god of time. 2.if he is one of the organizers.
The Potential Dangers
1.He can loss his money if he enters the market later than the call or withdraws later than the call
2. The organizers most times take extra money from some set of people (VIP), then give them early and privileged information before the call. Thereby making them sit comfortably before the public would be notified. If it is time to withdraw or sell, the VIP will also sell first after they might have ran in massive profits. Before the public is notified, the coin is already down.
3. So, it is either Andy is a time machine, a VIP or not greedy to wait to x2 or x10 they promise before he sells. By so he can make money, yet is not a bulletproof way of making money.

[Amplify]

What kind of investment group has Andy gotten himself involved in?
Is this a bulletproof way of earning money, or what are the potential dangers?   

I have never personally participated in such a groups but I believe they are called pump-and-dump groups.

They are considered illegal in regulated markets like the stock market. As stated on Quora, they are extremely risky in both stock and cryptocurrency markets.
https://www.quora.com/Are-pump-and-dump-groups-risky

[Pmalek]

Andy has been added to a pump & dump Telegram group, it's not an investment community of any kind.

It can be a bulletproof way of earning money in two conditions; 1. If Andy is a god of time. 2.if he is one of the organizers.

Let's focus on the organizers. Some of these groups are free to enter, others ask their members for an entry fee to become VIP or whatever they call it. So, the organizers make money by selling those VIP packages.

How do the organizers of pump & dump schemes make the most of their money? How does it all work from the organizers' point of view?

[KingsDen]

How do the organizers of pump & dump schemes make the most of their money? How does it all work from the organizers' point of view?

IMO, I think it's a game of timing. Most times the organizers might be the creators of such coin. In this scenario the continues pumping and dumping campaign is indirectly promoting the coin.
Also, the organizers take the first seat in the coin. Just like a 100 students in a hostel, who depend on the sound of a bell for their breakfast. Now, the bell ringer knowing too well that he will ring the bell by 8am, he went and informed 20 of his friends (the organisers) to go the dining at 7:45am. Thereby making them feed well, leaving little/nothing for the rest of the students who will appear by 8am.

[Pmalek]

IMO, I think it's a game of timing. Most times the organizers might be the creators of such coin. In this scenario the continues pumping and dumping campaign is indirectly promoting the coin.

That is one theory and it is a possible one. If they are the developers of that coin, they could do a pump and dump campaign to sell what they own at a higher price. But what if it's not their coin? What if they aren't part of the team? When and where did they get the coin and how will they profit from its sale?

[KingsDen]

But what if it's not their coin? What if they aren't part of the team? When and where did they get the coin and how will they profit from its sale?

The Riddle now developing offsprings
Maybe the organizers gain by first inflating the coin price before the call. While the coin is being bought at already inflated price, then they keep reaping the profits.
The coin is always as low stable asset.
If there are things am not getting as desired, please help to the fullest.

[Pmalek]

The organizers are prepared for the pump & dump scam well in advance. Weeks and maybe even months before the scheme is planned to take place, they start buying the coin in small amounts as to not arouse suspicion or create hype. When they have enough, it's time for the event. They create their sell orders well above market value and send the signal to the unsuspecting members to start buying. When they do, the group members buy up the bags from the organizers earning them a lot of money, and end up becoming the new bag holders of a coin that will probably never get to those highs ever again in the future.

The Riddle was solved by KingsDen.

[KingsDen]

@Pmalek thanks for the detailed explanation. I am happy to have solved the Riddle. I confess this Riddle thread does not only improve reasoning. It will also improve knowledge of cryptocurrency, especially to low ranking members like me. Please, keep it up.

[Myleschetty]

Riddle #8

Andy believes the current situation on the crypto market is a great time to get involved. Many coins are cheap and undervalued, and he sees great potential in making some money out of it. He uses Telegram daily, and one day one of his online friends added him to a Telegram investment group. Andy has a great feeling about this group because everyone seems friendly. They talk about the profits they made in the past and how there will be great opportunities for new members to earn some serious money if they follow them. They have thousands of members who share their experiences and post screenshots of their profits.

The next day, the group admins posted a notification that another investment round will start two days from now. The rules are very simple. The whole community gets together and starts buying the same coin. The coin's value goes up, and then the community will receive a signal from the organizers when it's time to sell. It's so simple, yet so effective, Andy thinks. He prepares the money he will invest and waits in anticipation on when the day will come.

What kind of investment group has Andy gotten himself involved in?

I believe it called crypto pump and dump investment group.

Is this a bulletproof way of earning money, or what are the potential dangers?   

Is not a bulletproof way of earning, most of the admin usually use the members as a prey which is the potential danger.

[Pmalek]

<Snip>

In my last reply I already posted that this riddle was solved by KingsDen who made a few posts just above yours. There is no need to repeat the answers already provided unless you are bringing something new to the conversation that wasn't already said in the thread. Feel free to keep an eye on this topic and try to solve one of the upcoming riddles once they become available.

[Myleschetty]

<Snip>

In my last reply I already posted that this riddle was solved by KingsDen who made a few posts just above yours. There is no need to repeat the answers already provided unless you are bringing something new to the conversation that wasn't already said in the thread. Feel free to keep an eye on this topic and try to solve one of the upcoming riddles once they become available.

Sorry, I guess I miss that cause I have drafted the message before.

[Pmalek]

Riddle #9

Paul has used a software wallet for his crypto for almost two years. Although he has never had any issues with it, he has learned that using a hardware wallet is much safer. So he took advantage of a Black Friday deal and purchased a brand-new hardware wallet with a discount.

Once the product was shipped to him, he started the setup process for his new hardware device. When the installation wizard asked him whether he wants to create a new wallet or restore an existing one from seed, he chose to restore from seed.

He entered the seed of his multi-coin software wallet, which he has kept written down on a piece of paper in his new hardware device. Within a few minutes, all his portfolio and crypto balance became visible to him on screen.

Paul is happy to have increased the security of his assets and that they are now safe thanks to his new hardware wallet.


But are they really?
Did Paul make any mistakes in the setup process, and is there something he should have done differently?

Help Paul to figure out the correct steps.

[roosbit]

Riddle #9

Paul has used a software wallet for his crypto for almost two years. Although he has never had any issues with it, he has learned that using a hardware wallet is much safer. So he took advantage of a Black Friday deal and purchased a brand-new hardware wallet with a discount.

Once the product was shipped to him, he started the setup process for his new hardware device. When the installation wizard asked him whether he wants to create a new wallet or restore an existing one from seed, he chose to restore from seed.

He entered the seed of his multi-coin software wallet, which he has kept written down on a piece of paper in his new hardware device. Within a few minutes, all his portfolio and crypto balance became visible to him on screen.

Paul is happy to have increased the security of his assets and that they are now safe thanks to his new hardware wallet.


But are they really?
Did Paul make any mistakes in the setup process, and is there something he should have done differently?

Help Paul to figure out the correct steps.

Paul bought the hardware wallet with the intention of better security, but the power of better security from the hardware wallet isn't utilized because his portfolio is still connected to the software wallet which means if he loses his seed phrase written down on a piece of paper, then access  to his coins is also lost.

The best he  should have done imo is create a totally new wallet on the hardware wallet and sent the coins from software wallet to this hardware wallet without forgetting to backup the hardware wallets seed or private key.  

[Pmalek]

Paul bought the hardware wallet with the intention of better security, but the power of better security from the hardware wallet isn't utilized because his portfolio is still connected to the software wallet which means if he loses his seed phrase written down on a piece of paper, then access  to his coins is also lost.

You would lose access to your coins on a hardware wallet as well if you lost the corresponding recovery phrase. So it doesn't matter if that seed is used on a software or a hardware wallet.

The best he  should have done imo is create a totally new wallet on the hardware wallet and sent the coins from software wallet to this hardware wallet without forgetting to backup the hardware wallets seed or private key.

OK, we are moving in the right direction. You are saying that he should create a new wallet on his hardware device and generate a new seed. Why can't he use the old seed that was entered in a hot wallet? Is that not a good option and why not?

A small correction in regards to your quote. When you are using a hardware wallet, the private keys remain on the device at all times. You don't have access to them. They are only used during the transaction signing process. There are advanced methods to get them them out, but that's another story.

[Pegiz]

Paul has moved his wallet to a more secure device, but his wallet data is still in his hot wallet. This means that Paul did not get rid of the hot wallet vulnerabilities by moving to a new device. If Paul has any doubts about the hot wallet, then he'd better create a new address using a new device and transfer coins there.

[mersal]

Riddle #9

But are they really?
Did Paul make any mistakes in the setup process, and is there something he should have done differently?

Help Paul to figure out the correct steps.

First of all, I want to know that Paul bought the hardware wallet from the official website or some online site where we can buy things with high discounts, if he bought it from a third party website then,

I assume Paul is going to be one of the victims to lose all his portfolio to the scammers because he bought a Ledger wallet which already tampered with by the scammers who sell the actual product for cheaper price with a flash drive so all those recovery seeds entered by Paul will be sent to the scammer then the scammer will take all the money from the wallet will be moved by the scammer to his wallet in no time.

Because for the past couple of years people are losing their money by buying those fake hardware wallet/ or hardware wallets which are already compromised and shipped.

[Pmalek]

Let's switch the focus from potential phishing exploits and fake devices back to the recovery phrase. Paul already has a seed. The seed he used in his software wallet. Instead of wasting time in generating and writing down a new seed, why not just recover the wallet with his old seed? The one used with his hot wallet - the software wallet.

[UKprod]

Riddle #9

Since Paul used the same seed phrases that are in his hot wallet, it totally defeats the purpose of having a hardware wallet. If Paul copies the same seed phrases, if his hot wallet gets compromised, others can access it. Further, if the hot wallet stores the private keys online, then if a hacker is able to hack into the database, the wallet can still be compromised. Further, if the hot wallet stores the private keys on the device, even though Paul deletes the hot wallet, hackers can recover the file from residual data and get the private keys (hence such data should ideally be erased and not deleted).

The right steps would have been to create a new wallet and write down the seed phrases in the piece of paper. Then he should transfer all of the assets in his hot wallet to the newly created wallet.