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Video Demonstrates Double Spending Possibility in Bitcoin Cash SV ‘0-Conf’ Transactions

Findings from a test by an online persona known as “reizu” revealed four nodes control 75 percent of the BSV hashrate.

Bitcoin Cash SV (BSV), a new fork of Bitcoin Cash (BTC), faced new controversy on Dec. 8 after a researcher reportedly showed how any user could spend the same coins twice on its network in a “0-conf transaction.”

Bitcoin Cash, which was created in a hard fork from Bitcoin (BTC) in August 2017, uses 0-conf (or zero-conf) to allow almost instant transactions, meaning they are almost always confirmed in the following block.

In a multi-phase test including a video demonstration posted to Vimeo, the user, known as “reizu,” succeeded in “double spending” BSV tokens in a “0-conf transaction,” demonstrating the network’s vulnerability to attack and disproving major proponent Craig Wright’s claims (in reference to BCH) that “only miners” could do so.

The double spending demonstration was filmed with POP!, a point of sale (PoS) retail application that includes double spending detection.

“I’ve done many double-spending on the Bitcoin SV network,” reizu wrote in a Dec. 8 post on Honest Cash, a BCH-based social network created after the November hard fork. Honest Cash’s information page notes that the site was created in response to the censorship they reportedly observed on other platforms during the Nov. 15 hard fork.

BSV has faced difficulties from the outset since it came into being mid-last month.

During its first week, a blockchain reorganization gained the network considerable negative publicity as high-profile critics accused it of centralization, in contrast to Bitcoin’s (BTC) decentralized network.

As part of the investigation, reizu also reported signs the BSV network was “very centralized.”

“After a few mined blocks I discovered that the transactions that were being mined were those that were sent almost always to the same nodes,” his post continued.

Out of a total of 450 nodes, reize concluded that just four control 75 percent of the network’s total hashrate.

Technical woes have so far failed to halt BSV’s success among investors meanwhile, with the fork overtaking rival Bitcoin Cash ABC (BCH) in market cap Friday.

BSV/USD is trading around $102.25 at press time and ranked sixth on CoinMarketCap, compared with BCH/USD at $100.1 in seventh place.

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Top Cryptocurrencies See Moderate Losses, Bitcoin Below $3,800

Today all but one of the top 20 cryptocurrencies registered losses. Bitcoin is down over 4 percent in the last 24 hours.

Wednesday, Dec. 5: All but one the top 20 cryptocurrencies registered losses in the last 24 hours, Bitcoin (BTC) lost most of its recent gains, sinking below $3,800.

Market visualization from Coin360.io

Market visualization from Coin360.io

Bitcoin started the day near $4,000 and continued to fall until it reached its current price of $3,769, down 4.37 percent on the day. On its weekly chart, BTC is at its lowest point in the past seven days.

Bitcoin 7-day chart. Source: CoinMarketCap

Bitcoin 7-day chart. Source: CoinMarketCap

The co-founder of advisory firm Fundstrat, Tom Lee, provided three reasons behind the collapse of the crypto market: the controversial  Bitcoin Cash (BCH) hard fork, recent actions undertaken by the U.S. Securities and Exchanges Commission (SEC) which forced Initial Coin Offerings (ICOs) to return funds to investors, and the “terrible” conditions in global markets.

Ripple (XRP), the second crypto by total market capitalization, is currently trading around $0.339, down 3.6 percent in the past 24 hours. The current price of the native XRP coin is the lowest registered this week, down from nearly $0.40 seven days ago.

XRP 7-day chart. Source: CoinMarketCap

XRP 7-day chart. Source: CoinMarketCap

Ethereum (ETH) is still the third cryptocurrency by market capitalization after losing nearly 6 percent in the past 24 hours. At press time ETH is trading at $103.58, which is the lowest price point reported by the asset in the last seven days.

Ethereum 7-day chart. Source: CoinMarketCap

Ethereum 7-day chart. Source: CoinMarketCap

Among the top 20 cryptocurrencies, the only ones reporting double-digit losses are Bitcoin Cash (-12.29 percent), Zcash (-10.11 percent) and Maker (-11.12 percent). The only gainer in the considered group is Binance Coin, which is up 3.66 percent on the day.

Total market capitalization of the cryptocurrency market is around $121.2 billion as of press time, the lowest point in the last seven days and down from $146.5 billion on Nov. 29.

Total market capitalization 7-day chart. Source: CoinMarketCap

Total market capitalization 7-day chart. Source: CoinMarketCap

As Bloomberg reported today, “Bitcoin is turning negative again” and, according to their experts, “prices for Bitcoin and other cryptocurrencies are likely to weaken.” Bloomberg analyst Mike McGlone predicted in a note past Wednesday that Bitcoin will fall to around $1,500.

CEO of Japanese cryptocurrency exchange Quoine Mike Kayamori is more positive, stating in an interview yesterday that BTC will see new all-time-highs by the end of 2019, while admitting there’s “no catalyst” to drive prices back up in the near future.

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EOS Community Is Challenged After Node Announces Financial Rewards for Votes

EOS’ governance model has attracted another round of criticism.

This week, the EOS blockchain protocol angered decentralization proponents yet another time. Specifically, Starteos, one of EOS’ officially sanctioned Block Producers (BPs), appeared to publically offer its token holders financial rewards in return for their votes.

Starteos’ vote-buying tendencies seem to fall in line with previous scandals centring around EOS: This year, the blockchain protocol reversed previously confirmed transactions and started an internal investigation after Huobi, its other BP, was accused of running a corruption scheme, among other things.  

Brief introduction to EOS and its key features

EOS.io is a blockchain-powered smart contracts protocol for the development, hosting and execution of decentralized applications (DApps). It was launched in June 2018 as open-source software, while the first testnets and the original white paper emerged earlier in 2017. The platform was developed by block.one, a startup registered in the Cayman Islands and lead by Daniel Larimer and Brendan Blumer.

EOS has raised the most funds during its Initial Coin Offering (ICO): The startup managed to gather around $4.1 billion worth of investments, after fundraising for nearly a year. That number remains unmatched to date.

The protocol is supported by the native cryptocurrency, EOS — currently the sixth largest crypto by total market cap. Those tokens can be staked for using network resources either for personal use or leased out for developer-use — basically, EOS.io attempts to represent a decentralized alternative to cloud hosting services.

EOS employs a consensus model called delegated proof-of-stake (DPoS). Essentially, that means that its investors are rewarded with voting power and decide who gets to mine the EOS blockchain.

Hence, the EOS ecosystem rests upon at least two major entities: the EOS Core Arbitration Forum (ECAF) — effectively its ‘judicial branch’ — and BPs, who produce blocks on the EOS blockchain — just like miners do within the Bitcoin (BTC) blockchain.

BPs earn EOS tokens produced by inflation — according to some estimations, top EOS BPs obtain around 1,000 tokens per day. They are elected through the constant voting process, and their number is capped at 21 — consequently, the top is fluid by design, and BP candidates who earn enough votes can replace the BPs in power at any minute.

Starteos: Major BP’s explicit vote buying

Starteos is a startup based in Chengdu, China. According to its website, the company “entered blockchain industry [sic]” in 2013.  This year, Starteos has reportedly issued at least two products: the self-titled digital wallet and ‘Memory Box,’ a “one-tap access” cold-storage wallet. Currently, Starteos is the fourth-largest BP, as per eosnetworkmonitor data, meaning that it gets a large portion of the BP revenue.

On Nov. 27, Starteos published a Medium post titled “We Gonna Share BP Proceeds With You — This Is the Way We Warm You Up in This ‘Winter’!” In it, the startup team claimed that “after delegating Starteos.io as proxy, you could get continuous and stable EOS revenue.”

“The ‘winter’ of cryptocurrencies has come. How much faith do you left to have [sic]?” the post reads, continuing:

“Now, Starteos is still gonna stay with YOU, our most important and best friends! And we [are] gonna share the proceeds with you and make [it] through the difficulties together.”

Further, the Chinese startup outlines an instruction on how to claim the benefits: After selecting Starteos as a proxy, users can pick “stable income,” “mining” revenue mode or the “random revenue” mode, where they play “Lucky Fruit Slots Machine” with game tokens to get “EOS revenue.”

Explicit vote buying seems to contradict decentralized and democratic blockchain policies advocated by the EOS administration and the project’s original white paper. Its co-founder and  chief technology officer, Daniel Larimer, wrote soon after EOS mainnet went live:

“EOS is fundamentally different from other governments and blockchain communities in that its community wishes to operate at the highest possible ethical standard of voluntary consent and non-violence.”

More specifically, Starteos’ winter promotional campaign seems to violate Article IV of the current EOS constitution titled “No Vote Buying,” which states the following:

“No Member shall offer nor accept anything of value in exchange for a vote of any type, nor shall any Member unduly influence the vote of another.”

Community reaction: Calls for unvoting, constitutional reform

Expectedly, the crypto community, which traditionally values decentralization, was not happy about an EOS BP openly buying votes.

On Nov. 8, weeks before Starteos published a Medium post explicitly describing how users can claim some of the revenue, EOS investor Maple Leaf Capital pointed out that Starteos was launching a slot machine DApp, where users allegedly could set Starteos as a voting proxy to obtain in-game tokens. According to the original article describing the DApp, the rewards to the gamers would come directly from games.eos’s BP reward, which, in turn, is owned by Starteos.

“It may not be bad-intentioned, but it looks awfully close to transferring block-producing reward value to its voters, with a thin veil of gamification & probability attached to it. This could set a bad precedence and deserves some debate.”

Later, on Nov. 29, the investor announced it would discontinue voting for Starteos, arguing that “swapping block reward for votes in gaming form is detrimental to the long-term economic value for the EOS.”

Steemit user theawakenment stresses that games.eos is holding a paid position, being ranked at the 66th position (game.eos has since moved up to the 50th place). He wrote an open letter after failing to receive a response from the Starteos administration:

“If other BPs copy what Starteos is doing and launch a second or third BP themselves, we will soon end up with the large BPs being owned and run by the same handful of owners.”

After the letter was published, a Starteos representative reportedly did message him:

“[They] admitted to creating the games.eos account and admitted to ‘collaborating’ with games.eos, but they told me they had different owners, which does not match up with what they have stated on their website.”

Australia-based crypto persona Crypto Tim, who covers mostly EOS-related news, published a video titled “EOS BP Starteos Are Vote Buying,” which gathered some commentary from the community on Reddit and YouTube. On Twitter, he called for Starteos “to be removed as a Block Producer.”

Some of the BPs have expressed their views on vote buying as well, albeit without directly mentioning Starteos. On Nov. 27, EOS New York, which is currently the eighth largest BP, wrote that “the EOS constitution is simply not good enough and we deserve a clear document that outlines our basic system of governance,” and then shared their proposal. After being asked in the comment section whether the document features any restrictions on vote buying, EOS New York stated, “There are not. We have it now and we have BPs violating it. No point.”

Moreover, Starteos has reportedly been unvoted by at least one BP, Bulgaria-based EOS Titan. Nevertheless, Starteos continues to hold the third/fourth positions in the BP ranking, which suggests that it is still largely supported by other BPs. The list of Starteos supporters can be monitored via a resource powered by EOS Titan — according to their data, Starteos’ largest ally is Huobi, which has been previously accused of running a mutual voting rig.

Source: EOS Titan

Price drop

The EOS vote-buying scandal has correlated with the token’s massive price drop. While it followed an overall bearish market trend, the losses EOS/USD experienced were more significant comparing to other top coins. EOS is trading at $2.36 as of press time, down around 25 percent over the past seven days.

Source: coin360.io

Previous signs of centralization in the EOS protocol

EOS’ model of governance has attracted controversy before: Just a few weeks ago, in November, a screenshot showing an ECAF moderator reversing transactions — which had already been confirmed — was posted on Reddit and gathered hundreds of comments.

According to Reddit user u/auti9003, a dispute allegedly involving a phished EOS account was referred to one of the platform’s “arbitrators” Ben Gates, who decided to reverse transactions that happened without the owner’s permission. This, the user noted, involved undoing transactions which had already received network confirmations.

That move outraged decentralization maximalists, as Reddit responses mostly claimed that EOS had failed to prove its use case versus other, more traditional centralized structures.

“Why would anyone use this over a bank account and traditional legal system?” the most popular comment read, adding:

“These guys raised [$4 billion] to recreate the legal system using a token that is neither censorship-resistant, nor immutable.”

Moreover, in early October, allegations arose accusing the platform’s major BPs — including Chinese crypto exchange Huobi — of “mutual voting” and “collusion.”

Essentially, an alleged leaked Huobi spreadsheet suggested that main EOS nodes were involved in mutual voting along with payoffs to remain in power of the EOS blockchain and keep their profits. Interestingly, Starteos was also listed in the document.

Soon after, Block.one — the developer of EOS — published a statement, saying it was “aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims.” Nevertheless, there was no further update on the matter, while Huobi remains EOS’ top BP as of press time.

Further, in June, another scandal occurred when EOS BPs overrode an ECAF decision and froze seven accounts associated with phishing scams after the arbitration body failed to promptly come up with a response. The ECAF later retroactively ordered the accounts frozen, but the BP conference call-based decision caused some to question EOS’ decentralized system, and to label the move as “power abuse.”

Less than a week after, another ECAF order to stop processing transactions involving 27 more addresses surfaced. Interestingly, it lacked any explanation for blocking the addresses, promising to do so on a later date.

That attracted another round of harsh criticism from the crypto crowd, and, after an apparent fake ECAF order began to circulate on social media several days later, some BPs — notably EOS New York — announced that they would suspend execution of any such orders, as they couldn’t tell if they were legitimate. Yet again, the ECAF and BPs struggled to coordinate their action, and that many decisions on EOS blockchain were handled by centralized entities.

On Nov. 1, more criticism of EOS’ governance model arrived, as blockchain testing company Whiteblock published results of “the first independent benchmark testing of the EOS software.” Essentially, the investigation came to several conclusions about EOS, the most bold of which was that “EOS is not a blockchain,” but “rather a distributed, homogeneous database management system” because its transactions were reportedly “not cryptographically validated.”

Additionally, the research results showed inaccuracies in performance claims. In July, EOS CTO Daniel Larimer tweeted that EOS was performing 2,351 transactions per second (TPS) — Ethereum, for comparison, can process around 15. The Whiteblock report, however, showed that with “real-world conditions” of round-trip latency and 0.01 percent packet loss, EOS performance was below 50 TPS, “putting the system in close proximity to the performance that exists in Ethereum.” The investigation concluded that “the foundation of the EOS system is built on a flawed model that is not truly decentralized.”

Similarly, a report published by Hong Kong-based peer-to-peer cryptocurrency exchange BitMex in late November suggested that EOS resembled a “distributed database system” rather than a blockchain-powered network. The document is no longer available for unknown reasons, but has been covered by various media outlets before going offline.

Still, EOS’ Daniel Larimer has previously confirmed that his company does not aim to be decentralized. In an interview with YouTube blog “Colin Talks Crypto,” which aired on Oct. 3, Larimer clarified his vision:

“Decentralization isn’t what we’re after. What we’re after is anti-censorship and robustness against being shut down.”

Cointelegraph has reached out to various Block.one representatives as well as Starteos for further comment, but none of them have replied to date.

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Binance Releases 2nd Decentralized Exchange Preview After Binance Chain News

Binance has shown how its upcoming decentralized wallet, order book and block explorer will work, vowing to make a testnet available “soon.”

The world’s largest cryptocurrency exchange Binance revealed a second preview of its forthcoming decentralized exchange (DEX) in a video Dec. 4.

Binance, which regularly tops global charts for the largest volume of cryptocurrency traded daily, released an initial sneak peak in August.

The project is part of the wider Binance Chain initiative, through which executives plan to support “millions” of crypto assets.

The latest preview included the unveiling of a fresh user interface, wallet and block explorer for DEX, developers confirming a testnet version would become available for prospective users “soon.”

Commenting on the update, Binance CEO Changpeng Zhao confirmed additional features that are set to come with the final rollout. These include a one-second block time for transactions and the ability for users to control their own funds.

Decentralized exchange platforms differ from traditional exchanges in foregoing centralized databases and storage, with users instead controlling their private keys themselves.

The often-criticized traditional model of centralized storage has resulted in multiple major thefts from users which have continued this year. In January, Japanese exchange Coincheck lost over half a billion dollars in a security breach.

On Tuesday, Binance also said that Binance’s bespoke blockchain Binance Chain could become commercially available in the “coming months.”

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EOS Node Offers Users Financial Rewards for Votes, Reignites Decentralization Debate

Starteos has pledged to reward users financially with the implication they would vote for it as an EOS Block Producer.

Yet another aspect of blockchain protocol EOS has sparked controversy this week after one of its 21 block producers appeared to offer its token holders financial rewards for voting it as a proxy.

Starteos, one of the official sanctioned nodes which can approve EOS transactions, said in a Medium post Nov. 27 that “after delegating Starteos.io as proxy, you could get continuous and stable EOS revenue.”

The Chinese outfit, which has yet to comment on allegations it runs against decentralized and democratic blockchain procedures advocated by EOS itself, framed the revenue scheme as a reward for token holders.

“The ‘winter’ of cryptocurrencies has come. How much faith do you left to (sic) have?” the post reads, continuing:

“Now, Starteos is still gonna stay with YOU, our most important and best friends! And we gonna share the proceeds with you and make through the difficulties together.”

After selecting Starteos as a proxy, users can pick “stable income” “mining” revenue mode or the “random revenue” mode, where they play “Lucky Fruit Slots Machine” with game tokens to get “EOS revenue.”

The post added information on how users can vote for it as part of EOS’ Block Producer voting rubric.

As Finance Magnates noted Dec. 3, effectively paying off users to strengthen a particular node would constitute heavy centralization on the part of EOS, one of the world’s biggest-value blockchain networks.

Cointelegraph has often reported on the controversies linked to various participants in the ecosystem, the most recent involving moderators, one of whom in November reversed transactions from a reportedly phished account, which nodes had already confirmed.

Creator Daniel Larimer, who in October said decentralization was not in fact the goal of EOS, last week revealed was considering plans to start a new currency-focused token.

“Crypto people will hate it,” he wrote about the concept on social media.

EOS remains the blockchain which has by far the highest number of daily transactions, despite a decline in token price. As of press time, EOS is trading for $2.83 according to CoinMarketCap, down more than 14 percent on the week, with a total market cap of around $2.6 billion.

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Amazon Presents Its Quasi-Blockchain Solution, Platform for Ethereum and Hyperledger Fabric

More about Amazon’s recent blockchain-related offerings.

On Nov. 28, e-commerce giant Amazon announced two blockchain-related products: Amazon Quantum Ledger Database (QLDB) and Amazon Managed Blockchain. The company hence marked its further expansion into the field of blockchain technology, which started with blockchain-related patents and collaborations that Amazon has seemingly chose over working with cryptocurrencies, per se.

So what are those new projects and are they going to change the crypto industry?

QLDB: Cryptographic, but centralized database

As per Amazon’s website, QLDB is a ledger database designed to provide “transparent, immutable and cryptographically verifiable log of transactions,” which is overseen by “a central trusted authority.”

Thus, all changes are purportedly recorded on-chain, while the new product is also able to automatically scale to “execute 2–3X as many transactions than ledgers in common blockchain frameworks.” Indeed, Andy Jassy, the CEO of Amazon Web Services (AWS), reportedly stated that the QLDB “will be really scalable, you’ll have a much more flexible and robust set of APIs [application program interfaces] for you to make any kind of changes or adjustments to the ledger database.”

Additionally, QLDB allegedly uses a cryptographic hash function (SHA-256) to generate a secure output file of data’s change history, serving as a proof that “validates the integrity of data changes.”

“With QLDB, your data’s change history is immutable — it cannot be altered or deleted — and using cryptography, you can easily verify that there have been no unintended modifications to your application’s data,” according to the description on Amazon’s website.

Walter Montes, co-founder of the Costa Rican Blockchain Community, told Cointelegraph that — being a centralized product — QLDB cannot be compared to decentralized solutions, although it does attempt to do so in its roadmap:

“It makes no sense to compare things like transactions per second from a centralized service to a decentralized one. There are reasons why these things are decentralized and these are not merely technical ones. Amazon seems to miss the point by comparing QLDB with a blockchain.”

Even if one attempts to compare QLDB with permissioned blockchains, which are common among industry-level corporations because of their security, there are major distinctions between the two, says Montes:

“Permissioned blockchains handle cryptography in a decentralized way, which provides properties like historical evidence […] Another relevant point is the value of the smart contracts or chaincodes, which function as agreed and signed rules on how to modify the data. At least in the public information, they only address the immutability promise, but what about the governing rules of data? Without that, they only log whatever happens, with no real proactive control.”

That technically makes QLDB a database, argues Eyal Shani, a blockchain researcher and former software engineer, as well as Aykesubir consultant:

“QLDB is a normal database from that sense, [while] a blockchain database is also an immutable ledger […] the QLDB tech is another layer of software which eases the development of ledger-like software.”

Montes also agrees that QLDB resembles a conventional database, adding that its cryptography feature still makes it inferior to blockchains in terms of safety.

“Cryptography may calm down some users but doesn’t provide the security and robustness that a blockchain provides. [It is more] like a marketing tool.”

Moreover, the fact that there is a central authority overseeing the whole process might make it less reliable among competing businesses:

“Imagine six banks of the same size trusting one of them (a competitor) to hold a ‘cryptographically linked-list’ that they can verify. They simply won’t trust it. [Instead], they’d end up creating their own data store and then checking data versions daily. Cryptography is there in part to verify things, but when you can’t even do that, it falls short.”

Why QLDB avoids decentralization?

So who are the potential users of Amazon’s QLDB solution? Perhaps those who have become skeptical of the blockchain buzzword, now that the hype has begun to settle, suggests Shani:

“Some believe in that as much as Satoshi and some don’t want to hear about decentralization, possibly because of the bad reputation it had and the excessive amount of speculators in the cryptosphere.

“It’s marketing buzz, we see it with artificial intelligence and [the] Internet of Things, too. That may continue to happen until creating a real decentralized blockchain is as easy as creating a database today.”

Therefore, with further development of blockchain comes greater adoption. It might take more time until decentralization becomes a more trusted solution among corporations looking to shield their data from tampering:

“Decentralization of trust as a concept is something that could fundamentally disrupt some industries, but it’ll take time until we get there. The public and the regulators would have to change their mindset in order for that to happen fully […] Meanwhile, the use of blockchain-like applications and tokenization of assets is already a big jump to many industries and will ease the change into blockchains in the long run.”

Amazon Managed Blockchain: Add-on to QLDB or independent blockchain solution?

Amazon Managed Blockchain, which was announced along with the QLDB, “makes it easy to create and manage scalable blockchain networks using the popular open source frameworks Hyperledger Fabric and Ethereum,” but also works with QLDB itself, according to the company’s website.

Further, the product automatically scales depending on the needs of specific applications and is deployed in managing certificates, inviting new users to the network and tracing metrics, such as memory and storage resources and usage of computer, Amazon argues. AWS CEO Andy Jassy claims that this service “is going to make it much easier to use the two most popular blockchain frameworks [Ethereum and Hyperledger Fabric].”

Shani questions that argument by stating that Ethereum and Hyperledger blockchains are already “easily” set up in the industry’s present circumstances. The blockchain researcher also emphasizes the vagueness of Amazon’s press release:

“Governance in distributed protocol is an important aspect, but it’s unclear in what manner Amazon achieves this. If they implemented it in a centralized manner, how different is that from QLDB?”

Montes, in turn, doesn’t believe that a managed blockchain service offering may be around for long because “it limits open scalability (in a technology that is based on network-effects) by locking it up into a single cloud provider.” However, such solutions might be useful for testing and proof-of-concept (PoC) operations, he adds.

Still, the fact that a company as large as Amazon announced new blockchain-related products might seem like a healthy sign for the industry.

“From a macro point of view, the more research and development being done around Ethereum, the more the protocol strengthens and grows into a global adoption as a standard,” Shani concludes.

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Oldest Swiss University Awards Honorary Doctorate to Ethereum Co-Founder Vitalik Buterin

Switzerland’s oldest university, the University of Basel, has awarded an honorary doctorate to Ethereum co-founder Vitalik Buterin

The University of Basel has granted an honorary doctorate to Ethereum (ETH) co-founder Vitalik Buterin, according to an official statement on the university’s website today, Nov. 30.

The Faculty of Business and Economics of Switzerland’s oldest university has awarded Buterin for “outstanding achievements in fields of cryptocurrencies, smart contracts, and the design of institutions,” as the university noted in a recent tweet on the official Twitter account.

Photo

The honorary doctorate of the faculty of economics is awarded to Vitalik Buterin by dean Prof. Dr. med. Aleksander Berentsen. Source: Universität Basel

The honorary degree was granted by dean Aleksander Berentsen, Professor of Economic Theory and Dean of the Faculty of Business and Economics during the university’s annual celebration “Dies academicus” that took place on Friday, Nov. 30.

The University of Basel specifically noted Buterin’s “groundbreaking” contribution to promoting the idea of decentralization, as well as “equal participation in the digital revolution.” The faculty emphasized that Buterin “wrote his scientific papers without a degree and commitment to a university.”

In July 2018, Buterin criticized centralized exchanges, stating that such institutions should “burn in hell.” The software developer argued that the crypto community should confront the idea of the “stupid King making power,” and confirmed his strong positive stance toward decentralization.

In early November, Buterin revealed some details of the upcoming upgrade to the Ethereum network. Dubbed “Serenity,” the upcoming Ethereum 2.0 will reportedly embrace multiple Ethereum projects that have been collected since 2014. Without specifying the expected date of the upgrade, Buterin only claimed that it was “really not so far away.”

Launched in summer 2015, Ethereum is a major cryptocurrency, as well as a public blockchain platform featuring smart contracts and providing а basis for decentralized applications (DApps).

The major altcoin is the third top cryptocurrency in terms of market capitalization, having recently lost its position as second to Ripple (XRP). ETH saw its all-time high of $1,400 in mid-January, which was followed by a massive sell-off this year. Ethereum is trading at $112.72 as of press time, according to CoinMarketCap.

ETH

Ethereum price chart. Source: CoinMarketCap Ethereum Price Index

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IT Analyst Jason Bloomberg: What I’m Really Saying Is ‘Shut Down Permissionless Blockchains’

IT industry analyst Jason Bloomberg tells CT why he doesn’t believe in trustless systems and how he sees permissionless blockchains being “shut down.”

This interview has been edited and condensed.

Aside from occasional blisteringly anti-crypto commentary from the likes of Warren Buffett and Bill Gates, one of the crypto industry’s most consistent and vocal naysayers is IT industry analyst Jason Bloomberg.

Bloomberg is a published author, Forbes contributor and president of the firm Intellyx, which helps enterprises integrate new technological developments and trends into their business models.

Bloomberg also devotes a significant amount of his time to attending crypto and blockchain-related conferences and events, speaking and debating with industry leaders. His public stance, however, can be characterized as anti-crypto, but more accurately it is anti-decentralized, permissionless crypto — against the original dream of truly decentralized, peer-to-peer interactions laid out in the Bitcoin (BTC) white paper that captured the imaginations of early adopters.

Last month at BlockShow Americas in Las Vegas, Cointelegraph had a chance to speak with Bloomberg about why he wants to “shut down” decentralized crypto, what he sees as the threat of crypto-related crime and why he comes to blockchain industry events like BlockShow.

What’s wrong with permissionless blockchains

Olivia Capozzalo: So, you have a reputation for saying some pretty bold things about cryptocurrency. This spring you wrote an article in which there was a sentence stating something like “We need to make cryptocurrency as we know it illegal.”

Jason Bloomberg: Right. The challenge that most cryptocurrencies have is that they run on a permissionless blockchain infrastructure. By permissionless, we mean that there’s nobody in charge, right?

In a proof-of-work system, every transaction processor has to process the transactions. Because it’s permissionless, anybody can sign up as a miner, including criminals.

Now, not all miners are criminals, obviously, but criminals are welcome to be miners. There’s nothing stopping them from being miners. As a result, many criminal enterprises, including organized crime syndicates, have gotten into the mining business.

There’s really no way to stop this, aside from moving away from permissionless blockchain-based approaches.

So, when I say, “Shut all the cryptocurrencies down,” what I’m really saying is “shut down the permissionless ones.” If cryptocurrency is going to survive, we’ll have to move to a permissioned infrastructure.

OC: Just hypothetically, if people start taking you up on this call to action, what would that look like? Do you have a vision of how that would start to affect what we know today as the crypto industry?

JB: Well, in practical terms, it would be very difficult to shut down, say, Bitcoin, because it doesn’t exist in any one country. So each country would have to decide what laws it wanted to create in order to make transactions illegal, or whatever it would be.

What I would expect to happen is, over time, as various organizations and governments, as well as banks and Wall Street trading firms realize that permissionless cryptocurrency has these issues, then gradually the trend would be to encourage permissioned systems versus permissionless — and that would drive down the value of Bitcoin and other cryptocurrencies that run on permissionless systems.

So if you drive down the value sufficiently, then it is no longer cost-effective to mine the cryptocurrency. And at certain point, then, essentially it will fall apart.

Nobody will be running transactions because there will be no money made in conducting transactions, and fewer and fewer countries will allow cryptocurrency. And hopefully, other cryptocurrencies that are based on permissioned systems will essentially take the line and investment is going to move to them.

But I would say that the permissionless ones will essentially fade over time. There will be less interest in them, they’ll be less valuable, and fewer and fewer people will want to mine them.

Watch the full interview with Jason Bloomberg here:

Against a trustless system

OC: For many, if not most people in the crypto industry, the fact that anyone can send money from one person to another directly — without intermediaries, without an enterprise, without a bank — is a core value.

What do you say to the people who really care about the decentralized aspect of cryptocurrency when you are talking about shifting the entire value system?

JB: You’re quite right, and this is a very astute point — the whole perspective on decentralized cryptocurrency blockchain versus the centralized permissioned approach. And for many people in this community, it’s all about decentralization, and some of them don’t even see permissioned blockchain as being blockchain at all.

In terms of decentralization, I still don’t see that there’s a way to implement decentralization without opening the doors to criminal enterprise.

And so, all of these people with these libertarian priorities, libertarian visions for a decentralized world with no government intervention — the problem there is that, if you don’t have sufficient regulation, if you don’t have sufficient permissioning of the transaction processors, then essentially, it becomes just a playground for criminal enterprise.

OC: What about the fact that not all cryptocurrencies are proof-of-work, you don’t need to mine all of them. You can have permissionless and proof-of-stake blockchains, right?

JB: Well, this is an important trend away from these permissionless systems to the more permissioned approach. And there could be a lot of different variations, whether it’s proof-of-stake…you know, Ripple is an example of a centralized, permissioned approach — and I would say that is really where the focus will be.

But whether or not there’s a way to solve the crime problem and still be decentralized, I just don’t see that because I think the whole point is that we need to have, essentially, a centralized entity that people put their trust in, who is now extending their trust to the participants in the infrastructure to the miners.

And without that, we are just allowing criminals in. And this has happened over the years with various approaches, right? This is nothing new.

Crypto and crime

OC: In the research that you’ve done, you see that the criminal involvement is increasing?

JB: The criminal involvement in cryptocurrency was one of the original reasons why cryptocurrency took off, so it’s one of the reasons why Bitcoin became as popular as it did in the earlier days.

And now, it’s only continuing to expand. I mentioned in my panel this morning that in 2017, the most active form of hacking of big business was ransomware. Ransomware is only practical when you can pay the ransoms in some sort of cryptocurrency. Before cryptocurrency, there was no ransomware, it just wasn’t feasible. So, cryptocurrency now gave the criminals a way to conduct ransomware.

That was 2017. Ransomware is no longer the most popular. In 2018, the most popular is cryptojacking — or illicit crypto mining — where the hacker puts crypto mining software either in a browser, but increasingly on servers, both in enterprise centers and cloud environments that essentially sucks up electricity and pays the criminal in some sort of cryptocurrency.

This is now the most popular, the most predominant way of hacking a big company.

So essentially, what cryptocurrency has become is not only a way for criminals to get into the mining, but it’s a way to conduct criminal transactions, it’s a way to conduct hacking.

If you look at the dark web, the whole economic context for the dark web is cryptocurrency. The dark web wasn’t really practical — because there was no good way of exchanging funds — until cryptocurrency came along.

OC: But one of the arguments that people make is that crime-related transactions are not the majority of the transactions happening with cryptocurrency.

There’s always going to be crime, so why would you fight the medium of exchange — cash, crypto, whatever it is — rather than looking for other ways to prevent or prosecute crime?

JB: Well, criminals have been using cash since the invention of cash, obviously. But that’s actually a false comparison. You’re saying, “Well, because criminals can use cash, we shouldn’t worry about criminals using cryptocurrency.”

It’s like saying, “Well, if I get stopped for speeding, my argument to the cop should be that other people are speeding,” or, “Other people were going faster than I was.” No cop is going to let you off of a ticket because you said that somebody else has committed a crime. That is not a justification for a crime.

OC: But here’s the comparison. Why can the car go faster than the speed limit? Why don’t they just make cars that can’t go faster than a certain speed?

If you start controlling the means, it restricts people’s freedom. And I think that is a really important thing for people in crypto — it’s like, I want the freedom to be able to send you, transact with you on a peer-to-peer basis. I feel like It’s sort of crushing the dream of a decentralized world.

JB: Well, I don’t think it’s a question of crushing the dream, it’s that the technology that people have come up with does not support the dream. The dream of being able to conduct a transaction as easily as giving you a dollar bill, but be able to do it internationally, electronically — okay, well that makes sense on the superficial level, so why come up with this huge technology infrastructure that is hugely valuable to the criminals and becomes a central element of organized crime, globally speaking.

And this has happened over the years. In fact, I’ve just read some research that came in a newsletter this morning, about how this notion of decentralized network communication — we’ve never come up with a way of doing it without it just ending up being a means for criminal activity.

Back in the 80s, hardcore pornography was hard to come by. The web wasn’t around. You’d go to your local store, you could get Playboy — but that wasn’t hardcore — so this was it. And it was mostly illegal until the Clinton administration relaxed the obscenity rules in the 1990s. Once the Clinton administration did that, mainstream pornography moved to the web, and it’s been there ever since.

Now along comes BitTorrent. We’re now using the internet, internet speeds are going faster, we’re now able to download videos. So, what do we do? We come up with a peer-to-peer, decentralized protocol that allows anybody to exchange big files with anybody else. So, what do you use that for? Well, pirated software, pirated videos and illegal pornography. Because that was the primary use. This is just human nature: If you have a way of exchanging information or files that is hidden from view, then it is going to be primarily used by criminals to conduct criminal activity.

The problem with BitTorrent was that BitTorrent itself was not particularly anonymous — you had to identify your IP address — so it wasn’t very good for organized crime. It became, sort of, a disorganized crime protocol. It also didn’t provide a payment mechanism. It was more about sharing that illegal porn with your buddies than building a business.

What do we need? We needed a way of greater anonymity in the payments and a payment infrastructure. And along came Bitcoin. That’s why Bitcoin exploded, it was because BitTorrent did not have those things.

Now, you add Bitcoin to BitTorrent and now you can build a global, professional black market for illegal contraband and that’s the dark web.

This is the history of distributed technologies — it’s been one of facilitating criminal enterprise. Bitcoin played right into that, and now we have the dark web and now we have hackers who are leveraging the technologies as well.

This is the story. This is the story of cryptocurrency.

And people are pretending or fooling themselves that it’s about some sort of a libertarian ideal, where people are going to behave. No, people will not behave. Criminals are going to come in, and they are going to take over, and it’s going to be the whole reason why we have this stuff.

The cryptojacking threat

OC: You have this arguably pessimistic vision of how this all will turn out. Let’s get back into the nitty-gritty of cryptojacking, that particular type of hacking. What’s the exact harm being done there?

JB: So, with illicit crypto mining or cryptojacking, the early days were all about the browsers — you have some sort of compromised website that would give you some Javascript you would run on your browser. And so, your own computer would spin for a while, and it steals a little bit of electricity and a little bit of processor power from you.

That software has gotten better and now, even when you close your browser, it will still run on your computer. So, it’s sucking up your processor on your laptop. That is relatively minor compared to crypto mining software on a server. You put it on a server, it’s getting more sophisticated, it’s now consuming electricity and processor power on the server. If it’s in the cloud, it’s running up the cloud bill.

So, companies are paying money for their cloud services, including any crypto mining that is running on there. If it’s on premises, it’s still consuming electricity and processor power, and will continue to do so until the miners proliferate and take the entire network down. It’s not just one hacker doing this. If a company is vulnerable, then multiple different bad guys are going to figure this out and put mining software, which is forming itself into botnets.

So, many different computers mining software, consuming electricity and processor power, unbeknownst to the other crypto mining software on the same servers.

Essentially, at certain point, it just uses up all the processing power, the server stops working and this could happen across the entire network. It could take down the entire company’s data center.

But because it is running behind the scenes, the way that criminals make their money is simply processing transactions and they get money from the Bitcoin or Monero infrastructure directly. The money isn’t going directly from the victim to the perpetrators. It’s indirect.

But as a result, it’s catching a lot of the CSOs, the chief security officers, unaware until such time that it takes down their entire network. So, this is already the biggest problem on corporate networks today, but it’s not going to take as much attention as perhaps it should because it doesn’t have the command-and-control link and, in the early days, it doesn’t have much impact.

OC: Okay, I see. And you think the solution, just to clarify, is not to deal with preventing that kind of an attack or mitigating it in some way, but actually shut down cryptocurrency because cryptocurrency is the problem here.

JB: Well, I don’t think this is really a practical solution. It would be great if I could say, “Well, we’ll just shut down cryptocurrency, that’s going to stop crypto mining.” And yes, it would, but I don’t think it’s practical for the reasons I listed: There’s no one country, it’s no one country’s laws.

So, it’s going to take a lot of time. And it’s going to be, really, the economic forces, right? It has to be less valuable to own certain cryptocurrencies over others. And once we shift the economy to the safer cryptocurrencies, then that is going to be a long-term, gradual solution.

In the short term, yes, it’s essentially traditional cyber security methods: malware detection and threat prevention. And this is where a lot of big companies are spending their cybersecurity dollars today.

Why we’re here

OC: Let me ask you a question that’s a little bit pointed, but what are you hoping to do by coming to BlockShow or any other crypto/blockchain-related events? Like, why are you here exactly?

JB: Why am I poking my stick into all these people? Well, I write for Forbes. I am a Forbes contributor, so I write five articles a month for Forbes. I’m always looking for good stories, and that’s a part of the story.

But I’m also, essentially, looking for the gems in the rough. I’m looking for those enterprise blockchain companies that have real solutions, at least in the works — obviously, it’s still early days, so it’s usually proofs-of-concept — but real solutions in the sense that they are solving business problems for companies who aren’t just other companies in the blockchain echo chamber.

Those are the stories that I think are the most important to tell. But yes, I can tell the stories about the flaws of cryptocurrencies or the problems with the libertarian perspective on things, but that only gets you so far.

Really, it’s more important to focus on the positive stories, right? The real business cases for real companies, who are solving real customer problems. And that’s really what I am looking for.

OC: Great, thank you so much.

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Cardano (ADA) Blockchain Infrastructure Grows More Creating Promising Atmosphere for Investors

The first born out of philosophic research – Cardano (ADA) protocol. Very similar to Ethereum’s PoS mechanism but with improved speed and efficiency the platform delivers more advanced features without stepping down the original idea of crypto – decentralization.

While maintaining the balance of the three big ones: Decentralization, Security and Speed, Cardano attempts to improve proportionally forward with each release or published paper. This is the real vision of its founder – Charles Hoskinson, who is at the same time one of the individuals that commenced the Ethereum project.

“What we’ve done with Cardano is start with asking ourselves what a blockchain is. Does proof of work actually make a blockchain secure? Is there a way to build PoS with the exact same outcome? […] Can we do things in a way where we can achieve classical performance with decentralization so that we’re moving the tradeoff profile in a certain way? […] Every time Cardano publishes a paper we are taking a step forward.”

Bittrex, one of the leading cryptocurrency exchanges by trade volume around the world, announced a few hours ago its decision to enable crypto/fiat trading pairs for Cardano and Zcash. Its official account tweeted this and later confirmed via an email sent to its subscribers.

Bittrex is excited to open two new US Dollar (USD) markets, Cardano (ADA) and Zcash (ZEC), on September 5, 2018! …

The approval process is fast and once approved you can trade all USD markets Bittrex offers today and in the future. When approved for USD deposits and withdrawals we will reply with wire transfer instructions and you will enjoy industry-leading same or next-US-business-day deposits and withdrawals. Follow us on Twitter for new USD market announcements and the latest updates.

Its architecture and project infrastructure as a whole widespreads even more. Cardano Wallet specification will most likely produce the highest quality cryptocurrency wallet that meets certain standards. These specifications can vary  from what is expected as for example the user interface but more concentrate on the communication blockchain-software. IOHK CEO Charles Hoskinson added:

“The release of the formal specification of the Cardano Wallet Backend is a major milestone for us and for all crypto. You should demand this standard for all protocols”

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Decentralization: Justin Sun Thinks TRX Network Beats Ethereum And Bitcoin

Justin Sun has been known to make great efforts in drumming up support for TRX. Justin is the founder and current CEO of the Tron Foundation. The foundation is the creator of the fast-expanding Tron (TRX) network.  TRX is the crypto token of the network. In his latest effort during the launch of the Tron Virtual Machine, Justin claimed that when it comes to matters decentralization, Tron wins hands-down against both Bitcoin and Ethereum.

Explaining further, Justin went on to inform that the main reason for his claim lies in the fact that the mining power of Bitcoin and Ethereum is under the control of a large mining pool, saying that the Tron network is doing way better than the two great cryptos in that aspect. He pointed out that with Tron, the Super Representatives call the shots.

Tron Has Super Representatives

The Tron network has 27 elected SRs from all around the world, and they all hold equal voting rights. The Tron Foundation doesn’t interfere with the elections and doesn’t even take part in it. That goes to suggest that the foundation doesn’t hold any hard grips on its network. Basically, this is what decentralization is all about.

To better bring his point home, Justin said that Super Representatives would be demoted and terminated as Tron’s network representatives if they fail to deliver in producing blocks. He also pointed out that this kind of scenario has happened before.  Currently, there are 14 SRs in the US, 7 in China, and 1 each for Vietnam, Romania, South Africa, Brazil, South Korea, and Germany. There are now about 100 candidates contesting for SR positions. Sesameseed is leading the pack.

The Role Of Super Representatives

The 27 elected SRs represent the whole Tron community and take on a huge role in the general governance structure within the Tron network. They perform calculations and validation tasks as well as act as the guardians of the network.

To keep its SRs well motivated, the Tron Foundation will be awarding the well-performing SRs. The winners will be given trophies, and announcements will be made about them to ensure they keep the good memory of the winning moment. In an earlier announcement, Justin Sun said that the awards will be given to the first-time elected SRs and those who get elected constantly for more than 30 days.

Girl in a jacket

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