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Bittrex to Delist Bitcoin Gold by Mid-September, Following $18 Million Hack of BTG in May

Crypto exchange Bittrex will delist Bitcoin Gold (BTG), a hard fork of Bitcoin (BTC), by September 14 following an $18 million hack of the BTG network in May, The Next Web reported September 3.

Founded in 2007, the hard fork cryptocurrency Bitcoin Gold has suffered a “double-spending” hacking attack that reportedly allowed the unknown hijackers to take control of more than 51 percent of the BTG hashrate. The attack, which reportedly started on May 18, 2018, has managed to amass more than $18 million in Bitcoin Gold from various exchanges, including Bittrex.

Following the hack, the Bitcoin Gold team explained that the attacker was deploying the combination of a 51 percent and double-spend attack in order to defraud crypto exchanges. They noted that the hacker was targeting exchanges since they “accept large deposits automatically, allow the user to trade into a different coin quickly, and then withdraw automatically.”

Specifically, the attacker was making large BTG deposits on exchanges, at the same time sending the same funds to his own crypto wallet. By the time the exchanges realized that the transaction was invalid, the hacker had already withdrawn funds from the exchange and doubled his original funds.

According to the recent report, Bittrex has not specified the amounts of losses the cryptocurrency exchange has suffered as a result of the BTG attack. However, the major crypto exchange has reportedly requested more than 12,000 BTG (worth around $255,000) as a compensation from Bitcoin Gold.

While Bittrex has blamed BTG’s Proof-of-Work (PoW) consensus as a factor that led to the double-spending attack, Bitcoin Gold claimed that their team “is not responsible for security policy within private entities like Bittrex,” adding that the exchanges “must manage the related risks and are ultimately responsible for their own security. With that, BTG developers acknowledged the risks taken by their own blockchain, subsequently posting an upcoming hard fork upgrade plan.

The $18 million hack is not the first successful attack associated with the Bitcoin Gold cryptocurrency. In late 2017, a fake BTG wallet stole private keys worth $3.3 million in crypto.

At press time, Bitcoin Gold’s market share amounts to $373 million, and the coin is trading at around $21.70 and ranked 30th by market cap, according to CoinMarketCap data.

As for Bittrex, the crypto exchange has recently become one of the entrants to the “Virtual Commodity Association Working Group” — the self-regulatory association for digital commodities like cryptocurrencies. The organization is planning to develop industry standards and to “be a precursor to the formation” of self-regulatory activity for cryptocurrencies.

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Bittrex Waves Goodbye To Bitcoin Gold (BTG) After $18M Hack

The entirety of the cryptocurrency industry has indisputably had a dismal year, with prices collapsing by upwards of 70% across the board. But Bitcoin Gold (BTG) may take the cake when it comes to a cryptocurrency that has suffered the most in 2018.

From day 1, Bitcoin Gold’s ethos was to be ASIC resistant, with the team behind the project widely touting this Bitcoin fork as a “cryptocurrency that you can mine with a graphics card (GPU).” But in May, the fImage result for bitcoin goldork’s blockchain fell under a 51% attack, with malicious actors renting out thousands of dollars of ASICs to take control of the network for personal gain.

While in control of the network, the hackers reportedly sent over 388,000 BTG ($18 million at the time of the hack) worth of double-spent transactions to a variety of exchanges, which allowed the attackers to swindle the same amount (388,000 BTG) from an exchange-owned wallet.

It is unclear how many exchanges were hit in this attack, as a good majority of the foremost platforms (Binance, Bittrex, Bitfenix, HitBTC, OKEx etc.) offer support for BTG trading. However, following the attack, Bittrex, a Seattle-based exchange, requested for the Bitcoin Gold team to pay a compensation of over 12,000 BTG ($265,000) for apparent negligence to the rising threat of ASICs.

It is important to note that this is more than a request, as Bittrex is essentially threatening to delist all BTG trading pairs if the sum of 12,000 BTG is not paid by September 14th. In response to the threat, the team behind the project issued a statement in a bid to bring clarity to the situation. They wrote:

Bittrex informed us that they make this decision because the BTG team would not “take responsibility for our chain,” and that taking responsibility meant paying Bittrex 12,372 BTG to cover the loss they incurred. They later informed us they would cover part of the loss from their own BTG reserves and requested we pay the remaining ~6,000 BTG, and that if we did not, we would be delisted.

The team also added that it was not their fault that the Bitcoin Gold network fell under attack by ASICs, as “the Bitcoin Gold team is not responsible for the security policy of Bittrex; those who earn revenue running a private business must manage the related risks and are ultimately responsible for their own security.”

As occurrences like the aforementioned are rare, it is still unclear how exactly this situation should be addressed, but some fear that the “long-term survivability” of Bitcoin Gold could be hampered by Bittrex’s likely delisting. Some beg to differ, however, as Bittrex only accounts for ~$350,000 of BTG’s $10 million trade volume.

Since the hack, Bitcoin Gold team has since sought to restore its ASIC resistance as reported by Ethereum World News in early-July.

Even though moves have been made to restore the ethos of the Bitcoin Gold network, BTG has had a tough year in terms of prices, with the asset falling by over 96% in the span of 8 months. It is still unclear whether the asset will ever recover to its previous all-time highs, as the sentiment surrounding this currency took quite a hit after the hack, but there are some optimists still holding on to fleeting glimmers of hope.

Chart Courtesy of TradingView.com

Photo by Andre Benz on Unsplash
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Crypto Mining Firm Argo Blockchain Listed on London Stock Exchange, Raises $32 Million

Mining firm Argo Blockchain PLC has reportedly become the first crypto company to join the London Stock Exchange (LSE), raising around $32 million for a total valuation of about $61 million, The Telegraph reports August 3.

London-based Argo offers customers to the ability to mine four cryptocurrencies — Bitcoin Gold (BTG), Ethereum (ETH), Ethereum Classic (ETC), and Zcash — through their own computers or mobile devices for a monthly subscription fee. The service provides immediate access to the firm’s mining rigs and enables direct deposits of all mined coins to the users’ digital wallets.

According to an initial admission document from the LSE, a total of 156,250,000 ordinary shares that represent 53.2 percent of the firm’s issued share capital on admission have been placed at 16 pence per share, valuing Argo at a market capitalization of 47 million pounds (around $61 million).

The report notes that the company has raised 25 million pounds (around $32 million), with registered shareholders including Miton Capital, Henderson Global Investors, and Jupiter Asset Management, the Telegraph writes.

Jonathan Bixby, a co-founder of Argo, told The Telegraph that Argo’s mining subscription system was developed to “ take the pain and heartache out of participating in the biggest new technology breakthrough since the launch of the internet.”

Founded in late 2017, Argo aims to build an international data center management business for assisting in crypto mining as a service (MaaS), which would be available to anyone in the world, the company’s LSE document states.

The platform initially launched on June 11, 2018, and all of the subscription packages are currently sold out, according to Argo’s website. Argo’s initial admission notes that the company will be able to both add and remove cryptocurrencies from its offerings in the future.

Earlier this week, the world’s second largest Bitcoin (BTC) mining hardware supplier Canaan Creative introduced the “first ever” BTC mining television set with a processing power of 2.8 trillion hashes per second.

And on Monday, unnamed sources revealed that crypto mining hardware giant Bitmain is reportedly planning to conduct an overseas initial private offering (IPO) “very soon,” after earning about $1 billion in net profit in the first quarter of 2018.

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Bitcoin Gold Introduces Algorithm To Counter ASIC Centralization

Bitcoin Gold Hard Fork At Block 536,200

Bitcoin Gold was founded with the decentralization of mining in mind, adopting algorithms which ASICs cannot mine on. Many critics of ASIC mining machines see these specialized pieces of hardware as a source of centralization, as ASICs can be bought en-masse, putting a copious amount of relatively affordable hash power into the hands of a single entity. 

A group of individuals thought it best to build off of this criticism, forking off the main ASIC-infested Bitcoin blockchain into Bitcoin Gold in October 2017. BTG first enlisted the use of the Equihash algorithm, which was ASIC-resistant at the time. In the nine months since then, new Equihash ASICs have begun to edge out GPU miners, with these specialized machines offering an exponentially higher dollar/hash ratio.

On Tuesday, the Bitcoin Gold team announced that it had successfully implemented a network upgrade by initiating a hard fork on the 536,200 BTG block. The release from the Bitcoin Gold team member, Edward Iskra, noted that the upgrade changed the mining algorithm for BTG. With the algorithm changing from Equihash to an updated version of the aforementioned algorithm, fittingly named Equihash-BTG.

This upgrade is an attempt to keep ASICs away from the network, introducing a layer of ASIC-resistance that should stave off any attempts at centralizing BTG mining. Although successful so far, it is likely that ASIC manufacturers may pick up on the new Equihash-BTG algorithms moving into the future.  

The May BTG 51% Attack

Bitcoin Gold experienced a 51% attack in May, amongst growing fears of similar attacks on other blockchains. The double-spend attack saw $18 million worth of BTG being exploited by the malicious attackers, getting a nice payday from the attack.

According to analysis from the cryptocurrency community and BTG team, the 51% attack was a result of rented hash power, which may have consisted of ASIC miners. The new algorithm ensures that there is no rental market for Equihash-BTG miners, making the upgraded blockchain more secure.

Edward Iskra wrote:

The recent “51%” attacks, which may or may not have involved ASIC miners, were channeled through hashpower rental markets – but with this change in algorithm, there’s no longer a rental market for the algorithm we’re using, and it’s harder to set one up than before. This means more safety.

Additionally, this hard fork also introduces a new difficulty adjustment system, ensuring that the BTG blockchain is responsive to large hash power shifts.

LWMA, the improved difficulty adjustment algorithms, allows for the better stabilization of block times, assuring that a new block gets pushed out approximately every 10 minutes after a hashrate swing. Iskra chalked up this change to the auto-switching method which miners enlist to receive the most mining profits.

The release stated:

Our improved algorithm will help the blockchain adjust more quickly, providing a steadier flow of blocks.

Rising Bitmain Power On New Algorithms

Bitmain is one of the most influential companies in the cryptocurrency space, reportedly generating over $3 billion in profits in 2017 alone. The ASIC manufacturer historically built ASICs for the SHA-256 and Scrypt algorithms, or for Bitcoin and Litecoin respectively. However, Bitmain has recently started creating new ASICs for algorithms that were previously ASIC-resistant, algorithms like Equihash and EthHash. 

These news ASICs have begun to affect Equihash and EthHash blockchains, such as ZCash and Ethereum. GPU miners who contribute hash power to these blockchains have been seeing declining profits, with ASICs easily outperforming graphics card rigs.

Ethereum and ZCash have abstained from forking away from ASICs, leading to an environment where GPU miners have had to bow out of mining pools. This will only help Bitmain hold its monopoly on the cryptocurrency mining industry, which lacks competitors to this ever-growing ASIC giant.

Title Image Courtesy of Rebcenter-Moscow

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Respected Wall Street Strategist Says Bitcoin (BTC) Will Reach 25k in 2018

The cryptocurrency space has witnessed many FUDs, it has witnessed uncountable ups and downs, but it seems there is a promising future for cryptocurrencies this year. With just a two-day surge in the price of bitcoin, enthusiasts are raising trust in the cryptocurrency space, saying there is igh possibility the space receives increased boost than it witnessed last year.

One very noticeable, respected Wall Street strategist who believes that bitcoin is on the verge of tripling in price is Thomas Lee, co-founder and head of research at Fundstrat.

Mr. Lee reinvented his bullish forecasts on Thursday, April 12, while conversing on CNBC’s program, “Futures Now”. Lee says the price of bitcoin could reach $25,000 within eight months.

“We still feel pretty confident that bitcoin is a great risk-reward and we think it could reach $25,000 by the end of the year.”

Commentators have weighed in on the sudden surge in the price of bitcoin from around $6,800 to over $8000. Many of them are of the opinion that the beginning of the much-awaited bull run has started.

Lee, who also believe it is time bitcoin increased in price, made known that the time is “overdue”.

“It’s overdue. Bitcoin was incredibly oversold,” he said.

“When you look at metrics like price-to-book, which is money cost, or our bitcoin misery index, it’s pretty much what you saw at the end of the 2014 bear market, not the start.”

If bitcoin rises to $25,000, it amounts to a 225 percent increase using its Thursday value as a yardstick.

Meanwhile, the increasing price of cryptocurrency is not only helpful to Bitcoin alone. It reflects in the value of Ethereum, Litecoin, Ripple and so many other altcoins. However, none can really say what is behind the sudden increase after many months of decline. Many are of the opinion that it is just time for the cryptocurrency world to witness another sudden increment.

Ed Cooper, head of mobile at fintech startup Revolut, in a conversation with The Independent, also holds to this assertion. He said the rise “doesn’t appear to be driven by any significant news stories.”

“Most likely there was a change in sentiment today and traders started to buy thus raising the price.”

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Mysteries About @Bitcoin Twitter Account Suspension And Reactivation.

The hit on @bitcoin’s twitter account signals or wholly indicates that it had violated the rule of the social media platform. There is no doubt that bigwig social media like Twitter, Facebook and their contemporary have guidelines which they use in regulating their activity and users so as to keep the platform as modest as possible.

On Sunday, April 8, @bitcoin was suspended. Although a clear reason has not been aired, but it’s suspected to have resulted from the lasting arguments between BTC and BCH enthusiasts as a sizeable number of the former’s lovers lodged complain.

The CEO of Blockchain start-up @Space Chain, Jeff Garzik, in a tweet said:

“The @Twitter curation of its namespace is amazingly poor, @jack. Squatters and bots abound. The @bitcoin account griefer-jacking is just the latest episode”.

Different speculations continue to rouse as the real reason for the ban is still under obscurity but most agreed that it must have resulted from a bad vice.

Jeff Garzik, in another tweet, said:

“Twitter is rewarding bad behavior. To review, #Core fans – Reported @Bitcoin acct for abuse – Reported my Reddit and GitHub accounts for abuse – Drowned Bitpay and Xapo apps with one-star reviews and votes etc. This is how they “debate” with those who disagree”.

Twitter Rules

Twitter’s rule which can be attributed to having caused the embargo includes the following:

  • Targeted harassment of someone or [inciting] other people to do so.
  • You may not promote violence against, threaten, or harass other people on the basis of race, ethnicity, national origin, sexual orientation, gender, gender identity, religious affiliation, age, disability, or serious disease.

While the account is used to promote Bitcoin Cash, another rule of the social media that can be said to have been perpetrated is;

  • You may not impersonate individuals, groups, or organizations in a manner that is intended to or does mislead, confuse, or deceive others.

Therefore, Maybe Twitter attributed promoting Bitcoin Cash on a platform impersonating the coin but not affiliated to it as a deceit.

The Reinstatement Of The Account And The Mystery Of It.

Surely, after every darkness, there is lightening. 16 hours back, the account owner twitted “I’m back”.

Source: Twitter

Not just coming back, but there had been a mysterious journey before the reinstatement and after.

By default, according to the social platform’s policy, after a ban, the owner is granted an appeal while the account name is reserved. Alternatively, the username was made open to the market.

The account owner, after the reinstatement, in a statement tweeted that within 24hrs of the ban, “A new account using the same username began posting nonsense”.

Another controversial event which the ban ushered is the claim that Twitter’s Jack Dorsey, an investor of Lightning Network, a challenger of Bitcoin Cash for low-cost transactions was believed to have underpinned the taking down of the account.

“In any case, I’d love to hear a public explanation from @twittersupport about why #bitcoin competitor #LightningNetwork investor @jack disabled this account, gave it to someone else”, @bitcoin twitted.

Lastly, the account owner complained that its account which previously had about 700, 000 followers, when returned, had been slashed.

Source: Twitter

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Bitcoin to Get Severely Forked in 2018

The fear and build up towards Aug. 1, 2017, and the creation of Bitcoin Cash which forked off the original chain was monumental. However, it was a damp squib for the future of Bitcoin as it actually spiked in value.

Since then, forks on Bitcoin have become almost as common as ICOs, and in fact, forks on the Bitcoin chain look to be the latest trend for 2018 as new companies look to cash in on the familiar Bitcoin name.

Already a forking mess

Bitcoin Cash is, of course, the most well known Bitcoin fork out there, sitting comfortably in the top five coins in terms of market cap. However, in 2017, there were 19 registered Bitcoin forks. Still, that pales in comparison to the 50 that are expected this year, according to Lex Sokolin, global director of fintech strategy at Autonomous Research.

That number could still rise further as there is even services out there that are providing rudimentary programming skills to launch a clone. This will of course have a big effect in the cryptocurrency market as hedge fund manager Ari Paul predicted in a tweet:

What the fork?

There are a number of reasons to fork off the Bitcoin Blockchain, some do it, in the case of Bitcoin Cash, to seemingly improve facets of the old coin, while others may have different motives. As George Kimionis, chief executive officer of Coinomi puts it:

“Unfortunately, most fork-based projects we see today are more of a sheer money grab. Looking back a few years from now we might realize that they were just mutations fostered by investors blinded by numerical price increases rather than honest attempts to contribute to the Blockchain ecosystem.”

Kimionis also sees a new phase in the ICO marketplace with the original hype simmered down somewhat. Forking adds a little edge to a new coin. And Rhett Creighton, who’s working on the upcoming Bitcoin Private fork, predicts:

“Bitcoin forks are kind of the new altcoin. We are going to see now a bunch of Bitcoin forks. And they are going to start replacing some of the top hundred altcoins.”

Danger to the vision

It is hard to see these minor forks, even the likes of Bitcoin Gold and Diamond which reached the news, really, truly, adding much to the Blockchain environment. Even Bitcoin Cash has been linked to a money making scheme for the likes of Jihan Wu and Roger Ver. The difference between trying to improve the Blockchain, and to make money off a name, is a very blurred line.

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Forks in the Road: 2017 Bitcoin Forks

2017 has come and gone, shaking up the cryptocurrency world with a swathe of newcomers interspersed with stellar highs and some sobering price corrections.

Bitcoin ended the year having grown over 1,000 percent in value over 12 months. However, that didn’t stop the community forking away from the preeminent currency.

These forks had varying degrees of success, as they looked to solve some of the major shortcomings of the original Bitcoin protocol.

This mainly comes down to the size limit of Bitcoin’s blocks. As it stands, the size of each block on the Bitcoin Blockchain is 1 mb, which limits the amount of transactions processed each second.

Over time, that limit has caused transaction speeds to decline, while payment fees increased as users were forced to pay more to miners to prioritise transactions.

Segregated Witness

The cryptocurrency community as a whole grew increasingly frustrated with the issues plaguing the Bitcoin protocol and different solutions have been proposed over the past two years.

Segregated Witness grabbed headlines in 2017, proposing two-fold changes to the Bitcoin network. The soft-fork, which was activated in August 2017, cuts a Bitcoin transaction data in two, moving the signature or ‘witness’ data to the end of the transaction, effectively reducing the size a transaction takes on a block which speeds up the network.

The second proposed change, which was ditched at the eleventh hour, is known as SegWit2x. This is a hard-fork, which would see block sizes increased from 1 mb to 2 mb to allow a greater number of transactions to be stored on the Blockchain.

Many of the original signatories of the New York Agreement, which comprised of the world’s largest exchanges, miners and wallets, weren’t comfortable with the hard fork coming so soon after SegWit’s activation. That led to the eventual postponement of SegWit2x.

Bitcoin Cash

The decision to drop SegWit2x inevitably caused a rift between two parties. The ‘big blockers’ who were adamant that an increase in block size would further solve scalability, and ‘Core’ who strongly opposed the hard fork solution.

This led to the creation of Bitcoin Cash, which forked away from the original Bitcoin Blockchain on Aug. 1, 2017.

Bitcoin Cash has been the subject of much debate, as the literal fork has been mirrored by unending debates by parties for and against.

The likes of early Bitcoin investor Roger Ver maintains that Bitcoin Cash is the ‘real Bitcoin.’ saying it stays true to Satoshi Nakamoto’s original whitepaper.

Nevertheless, Bitcoin Cash is nearing six months of existence and fears of a pump and dump situation have subsided.

There are clear differences between the two cryptocurrencies, nevertheless it’s support on exchanges like Coinbase prove that the cryptocurrency is growing in popularity – even amid controversy of it’s launch on GDAX in December 2017.

It seems increasingly clear that Bitcoin Cash is here to stay and it’s survival could well end further debate of a proper SegWit2x revival on the Bitcoin Blockchain.

The other forks

Bitcoin Gold champions the cause of the everyday mining enthusiast, who dreams of making a steady income mining cryptocurrency with high powered graphics cards (GPU). As their website states, Bitcoin Gold aims to making ‘Bitcoin mining decentralised again.’

By simply diverging from Bitcoin’s proof-of-work algorithm SHA256 to equihash, individual miners using GPUs can mine Bitcoin Gold easily, with mid-range GPUs. The fork took place in October 2017.

Bitcoin Diamond is another hard fork from the original Bitcoin Blockchain which took place in November 2017. Created by mining pools Team EVEY and Team 007, BCD will have a total of 210 mln tokens, 10 times as many as Bitcoin and Bitcoin Cash.

Bitcoin Diamond mining uses the X13 hashing algorithm, which favors mining using GPUs much like Bitcoin Gold, opposing ASIC miners needed to mine Bitcoin, which are expensive.

Trash?

Almost tongue in cheek, Chinese Blockchain investor Chandler Guo announced the launch of Bitcoin God in December. Claiming charitable intentions, holders of Bitcoin would receive their holding of 17 mln tokes, while the remaining four mln tokes of the 21 mln cap would be donated to charity, according the the website. It was ironically due to fork on Dec. 25, 2017 – Christmas Day. We’re taking this one with a pinch of salt.

Another intriguing, albeit sketchy fork is the so-called revival of SegWit2x. A completely new set of developers have reworked the original SegWit2x code, and the hard fork was announced on Dec. 28.

The group have admitted that they have no affiliation to the original developers, and the new fork has made some outlandish promises to supporters of the fork. As this writer reported, the project seems far-fetched and it’s progress will be monitored with skeptical eyes over the next couple of weeks.

The list goes on

While we’ve narrowed our focus to the four major Bitcoin forks of 2017, namely Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond and Bitcoin God, there are many more hard forks to mention.

The list is extensive, including Bitcoin Clashic, Super Bitcoin, Bitcoin Hot, Bitcoin X, Oil Bitcoin, Bitcoin World, Lightning Bitcoin. There are more, with at least 14 forks in December 2017.    

It’s hard to believe that many of these forks will survive or provide any real value to the wider cryptocurrency community. However, the discourse and ideas generated by developers looking to improve cryptocurrency protocols will inevitably benefit the community and drive the evolution of Blockchain technology into the future.

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Hacks, Scams and Attacks: Blockchain's Biggest 2017 Disasters

Hard forks? Soft forks? ICOs?

Bombarded by no shortage of unfamiliar technical terms in 2017, consumers in the blockchain sector once again proved a ripe target for hackers and criminals. But, not all hacks and scams were created equal. Some rose above the froth – either due to their size or impact – as well as what they said about the state of blockchain technology and the industry itself.

Still, the impacts of these incidents were far from academic. Whether it was a simple wallet hack, fraudulent ICO or a bug in a piece of software code, investors lost millions, with nearly $490 million taken in the incidents below.

So far, none of the perpetrators of these crimes has been caught or even identified, and it’s questionable whether most of these funds can be found or returned.

1. CoinDash ICO Hack

Payment and shipment startup CoinDash launched an initial coin offering (ICO) campaign early this summer, but it quickly had to pump the brakes after its ethereum address was compromised.

The startup raised $7.3 million before a hacker changed the address, causing donations to go to an unknown party. The company shut down the ICO, but promised to send its native token award, CDT, to those who attempted to donate.

While the company stated that donations sent after it had released its statement would not be honored, some investors continued to show support by donating to the hacked address, inadvertently raising the amount of stolen funds from $7 million to $10 million at the time.

All in all, the incident showcases the growing pains experienced by ICOs, which despite raising massive amounts of funds, still had to navigate the complexities of an early-stage technology.

2. Parity Wallet Breach

It was a tough year for cryptocurrency wallet provider Parity, which has the rare distinction of being cited twice on our year-end list.

Issues began in July when the U.K.-based startup discovered a vulnerability in version 1.5 of its software, resulting in at least 150,000 ethers being stolen from user accounts.

The bug was found in its multi-signature wallets, compromising several companies’ ICO fundraisers. At the time, the ethers were worth roughly $30 million, but are worth closer to $105 million as of mid-December.

The issue was deemed “critical,” with the company’s CTO, Gavin Wood, announcing at least three compromised addresses and saying efforts were being made to prevent further loss of funds.

It was later found that more than 70,000 ethers were already cashed out or otherwise redeemed in some way, ensuring that their loss was permanent.

3. Enigma Project Scam

Back in ICO-land, issues weren’t limited to compromised addresses.

Blockchain startup Enigma saw its website, mailing lists and an administrator account on its Slack channel compromised when fraudsters launched a fake token pre-sale in August, defrauding potential investors of more than 1,500 ethers.

The hijacked accounts promised a large return on investment, and masquerading as the genuine operators of the project, those behind the effort were able to convince unsuspecting consumers to donate to the compromised website.

While the team behind Enigma was able to recover control of the company’s accounts, the ether wallet used by the hacker was emptied, and the funds were not recovered.

4. Parity Wallet Freeze

Perhaps the year’s biggest security incident, this entry on the list is also distinguished by being one the few to take place without the apparent aid of a malicious party.

Occurring suddenly this November, a Parity user accidentally found a bug in the software code, freezing more than $275 million in ether in the wallet’s second major incident of 2017.

But, one of two widely used clients for ethereum, the miscue effectively called into question what was and is a central infrastructure component of the network, prompting some to doubt the company’s offerings and renewing criticisms of ethereum itself.

In subsequent updates, developers have pushed to restore the funds, though it’s now believed that doing so would require all ethereum users to upgrade their software.

5. Tether Token Hack

In another incident notable for its unresolved controversies, more than $30 million was stolen from the cryptocurrency proxy marketplace Tether in late November.

At the time, Tether claimed that roughly $31 million’ worth of tokens were taken from their virtual treasury and sent to an unknown bitcoin address.

Not a significant number in the cryptocurrency economy, the hack was more relevant as it effectively renewed long-standing criticisms of Tether the company, prompting scrutiny in the form of blog posts and mainstream news exposes.

The company later moved to blacklist the tokens stolen through an update to the Omni protocol, the blockchain on which it is based. Still, the company continues to be dogged by allegations in which the incident played no small part.

6. Bitcoin Gold Scam

Think forks were confusing? So did scammers, and those seeking to cash out bonus tokens awarded in blockchain splits often proved all too easy to target.

Shortly after the launch of a bitcoin fork called bitcoin gold, for example, some users had their cryptocurrency wallets drained after using a service seemingly endorsed by the project’s development team.

Marketed as a way to authenticate whether a user was eligible for the funds (effectively free money), the website’s operators instead stole more than $3 million in bitcoin, bitcoin gold, ethereum and litecoin.

Bitcoin gold’s development team claimed no formal relationship with the website’s developer, arguing he reached out offering to build a wallet checking service and offering to make his code open-source. The site’s developer initially claimed the site was hacked, but later wiped his GitHub and ceased responding to users on the fork’s Slack channel.

All in all, however, it was another case of consumers falling into traps over promises of free funds.

7. NiceHash Market Breach

That’s not to say that long-standing companies were spared by the year’s attacks.

This was the case when cryptocurrency mining marketplace NiceHash, a well-known marketplace for mining power, reported being hacked early in December, later confirming that about 4,700 in bitcoin was stolen. At the time, that was worth approximately $78 million.

An employee’s computer was compromised, allowing the perpetrator to gain access to the marketplace’s systems and remove bitcoin from the company’s accounts.

NiceHash CEO Marko Kobal later announced that his team was trying to determine how the hack occurred, but that it would take time to establish what happened.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Enigma.

Various images courtesy Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

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2018's Big Question: Can Bitcoin Forks Deliver Value?

Elly Zhang is a London-based global marketing professional who leads Asia growth initiatives for bitcoin and ether wallet startup Blockchain.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.


This year has been pivotal for digital assets like bitcoin and ether, resulting in unprecedented price increases, capital investment and general awareness.

But despite these successes, one of the fundamental properties of all cryptocurrencies – their decentralized nature – has been under attack in 2017.

With this in mind, it’s worth remembering that a core value proposition of blockchains is that there is no one central intermediary or organization that controls them. Instead, these protocols are used to enable the network to come to a consensus on the validity of transactions and data.

Bitcoin was the first digital payment system to function without a central repository, and the concept (fairly novel in 2009) is now widely accepted and becoming more ubiquitous. But the world’s first blockchain has evolved since its humble beginnings, and today there are variations on the original – most notably, bitcoin cash and bitcoin gold.

Forks have become so prevalent one might call the model an initial fork offering (IFO).

Not just bitcoin gold and bitcoin cash, but more bitcoin variations initiated by Chinese companies such as “super bitcoin,” “bitcoin diamond” and “bitcoin god” are on the way.

And while all may be finding a market, it’s worth asking the question, are these networks delivering on the promise of the technology? And should consumers care?

Framing the question

An argument can be made that the three cryptocurrency networks are all different in how well they encapsulate the vision of bitcoin as a decentralized network.

But it’s worth noting, too, that decentralization is frequently achieved by market economics.

When thinking about this, I’m reminded of the classic question asked by Soviet leader Mikhail Gorbachev in 1988:

“I haven’t seen a single bread queue. Please take me to meet the person in charge of supplying bread to London. I must learn his secret.”

In fact, there was no one in charge for supplying bread to the city of London, that’s why there were no queues.

Though bitcoin was the first so-called “decentralized” product built on blockchain technology, there are arguments within the community as to whether it constitutes real “decentralization.”

There are those who argue that the power and influence of the mining industry results in the network being more centralized than most people expected. To support this point of view, it’s valuable to revisit Satoshi Nakamoto’s email regarding the original design of bitcoin.

He writes:

“Long before the network gets anywhere near as large as that, it would be safe for users to use Simplified Payment Verification (section 8) to check for double spending, which only requires having the chain of block headers, or about 12 KB per day. Only people trying to create new coins would need to run network nodes. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node.

The bandwidth might not be as prohibitive as you think. A typical transaction would be about 400 bytes (ECC is nicely compact). Each transaction has to be broadcast twice, so lets say 1KB per transaction. Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day.

That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices. If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal.”

This email makes clear that Satoshi Nakamoto predicted that running network nodes would become the responsibility of a few mining pools or “specialists” rather than individual users.

What’s less clear is what he would have made of the results of his plan.

The bitcoin cash problem

So far, it seems Satoshi’s original scaling proposal actually increases the power mining pools have in deciding the future of the network.

We saw an example of that firsthand when China’s developers and miners tried to come up with a new solution to perceived network congestion – forking off to create bitcoin cash.

Bitcoin cash is essentially a blockchain asset created using a software implementation called Bitcoin ABC. The software excluded a somewhat controversial code change called SegWit and has a block size of 8 MB, up from 1 MB on bitcoin. The new rules created a new network.

Now, there is still some ongoing disagreement among the community as to whether bitcoin cash constitutes a hard fork of bitcoin or should be considered a separate “altcoin,” but we’ll save that for another time.

Relevant for this conversation is the fact that 70% of bitcoin’s mining power belongs to China’s miners, and the fact is that these entities can easily join forces. Bitcoin Cash, I believe, is a prime example of that.

Thanks to the support of BTC.com, BTC.Top, ViaBTC, AntPool (all of which have direct or dubious connections to Bitmain), it can be argued that bitcoin cash became a centralized commercial product controlled by China’s miners.

Weak links in bitcoin gold

With the increasing price of bitcoin cash as a backdrop, others followed the model.

Another fork of bitcoin took place this fall, bitcoin gold, which sought to incorporate technology used by other cryptocurrenices designed to block factors that led to more centralized mining.

Less is known about bitcoin gold, but according to its website:

“Bitcoin gold decentralizes mining by adopting a PoW algorithm, Equihash, which cannot be run faster on the specialty equipment used for bitcoin mining (ASIC miners). This gives ordinary users a fair opportunity to mine with ubiquitous GPUs.”

Efforts are underway already to create FPGA chip miner for zcash, though, and with progress here, it might only be a matter of time before they develop an ASIC chip. If that’s the case, then mining might again shift away from users back to traditional mining pools.

To this possibility, we might ask, what was the point of the fork to begin with?

One possible reason: since initial coin offerings (ICOs) are banned by the Chinese government, there is an appetite by Chinese-based crypto companies to develop new business models.

Open questions

Entering 2018, I believe it’s important that we answer key questions about this trend.

These include whether forks of bitcoin might actually be weaker in providing consumers with decentralization, whether buyers want access to those properties or if “decentralization” is simply a buzzword and marketing ploy for all cryptocurrencies.

Ultimately, time will tell whether bitcoin, bitcoin cash, or bitcoin gold becomes the most prevalent, but the great thing about an open market is that users get to decide what has the best value or utility.

If the groups behind the scenes can’t offer more value than competitors, then their asset will struggle to survive.

That said, I don’t expect to ever see full consensus across any of these crypto assets. As prices continue to rise, I suspect more external powers, whether they’re government, institutional or within the bitcoin community, to try and exert their influence and power.

When the time comes, we may be thankful that we took the time to understand how to fulfill Satoshi’s vision in the way he wanted it to be, if not exactly how he expected it to be done.

Disagree? CoinDesk is looking for submissions to its 2017 in Review series. Email news@coindesk.com to pitch your idea and make your views heard.

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