Proponents of Bitcoin and its competing cryptocurrency Bitcoin Cash, which was created as a “fork” of Bitcoin’s code and history, aren’t exactly in love with each other. Social media channels are full of squabbles over which coin is better and which one is more deserving of the “Bitcoin” name.
But one Bitcoin Core developer — meaning, a person who develops code for Bitcoin — rose above the petty quarrels and did a big favor for Bitcoin Cash.
In April, Cory Fields discovered what he describes as a “critical vulnerability” in Bitcoin Cash, and alerted Bitcoin Cash developers which implemented a fix before a malicious actor could exploit it.
After Fields had noticed a suspicious change in Bitcoin Cash’s code, it took him “less than 10 minutes” to find the bug, which was serious enough to cause a chain split, which (if unintentional) can cause huge damage to a cryptocurrency.
But it wasn’t just a simple matter of finding the bug and reporting it. “This was a bug in publicly-available, open-source software; any number of people could have already discovered it. There was nothing to stop anyone else from making the same discovery and taking advantage of it before a fix could be fully deployed,” he wrote in a Medium post published Friday.
“Suppose that I privately disclosed the bug using my name — only for someone else to find it independently and exploit it anonymously the next day,” he wrote. “…billions of dollars could have been lost as a result of this exploit. People have been killed for much less. So not only was anonymity important, I considered it a necessity for my safety.”
Fields decided to report the bug anonymously, and luckily, he was able to reach Bitcoin Cash’s dev team before anyone else had noticed the bug (or, at least, had time to exploit it).
Bitcoin ABC (the name of Bitcoin Cash’s software implementation) has posted an incident report after the bug was fixed in May, and promised it would take “several actions in order to prevent such an event from occuring again,” as well as set up a formal bug bounty system.
Fields’ move was lauded by several notable cryptocurrency figures, including Civic CEO Vinny Lingham who tweeted that “Responsible and ethical behavior by everyone in the community, regardless of ideological beliefs, should be applauded.” Vitalik Buterin, the co-founder of Ethereum, retweeted Lingham’s tweet.
Once the second most valuable cryptocurrency, Bitcoin Cash has dropped to fourth place by market cap according to CoinMarketCap, and is roughly eleven times smaller than Bitcoin. And while there’s still a lot of friction between fans of Bitcoin and Bitcoin Cash, Fields’ example shows that it’s still possible to help each other out to the ultimate benefit of all.
A new pilot program in West Virginia aims to take voting into the technological future. In doing so, the state has cast its eye toward one of the most popular tech buzzwords of 2018.
West Virginia has contracted the Boston company Voatz to enable voting via smartphone for troops overseas in the 2018 midterm elections, according to CNN. Members of the military will be able to cast their ballots using an app, with voting data recorded on a blockchain.
Troops will still be able to cast paper ballots if they prefer.
To use the app, voters will have to submit a photo of their government issued ID, as well as, um, a selfie video. Voatz’ facial recognition technology will ensure that the person voting in the selfie video matches the ID.
But the use of smartphone-, app-, and blockchain-based voting prompts concerns, because these technologies may not be consistent with the recommended way to secure an election. Joseph Lorenzo Hall, the chief technologist at the Center for Democracy and Technology, even told CNN that it was a “horrific idea” because of the security vulnerabilities it opens up.
The industry standard for election security is to use devices that produce a paper trail. That way, there is a non-digital, and non-vulnerable back-up, should anything go awry. Facilitating voting via a (hackable) smartphone, and aggregating that data digitally sans paper trail — whether on much-evangelized blockchain technology or not — opens up too many avenues for attack, Lorenzo Hall said.
And attack is nowhere near out of the realm of possibilities for the 2018 midterms. U.S intelligence agencies concluded that in the 2016 election, Russian hackers attempted to hack the voting systems in 21 states, and were successful at accessing voter data in at least one, Illinois (however, there’s so far been no evidence the data was altered or votes were changed).
Federal officials warn Russia is now attempting to interfere with the 2018 midterms. And while they do not see hacking election machines as the main vulnerability, they’re keeping an eye on it.
But the U.S. may not be doing enough to bolster the digital integrity of election infrastructure. Last week, the Senate voted down a bill that would provide $250 million to states to modernize and secure the voting process, because they said it was not clear how states had used the $380 million already allocated. Still, experts say the initial funds are nowhere near enough to fully secure America’s elections.
It might just be too soon to rest our faith in American democracy on the blockchain.
Recent news that Starbucks has partnered with Microsoft, the International Exchange, and a few other companies to launch a cryptocurrency venture called Bakkt has fueled reports that Starbucks is getting ready to start accepting Bitcoin in its stores.
Speaking to Motherboard, however, the company has stated that this is not true.
“Customers will not be able to pay for Frappuccinos with bitcoin,” a Starbucks spokesperson told the outlet, refuting a CNBC story published Friday.
Starbucks’ press release, dated Aug. 1, said Bakkt will be a “regulated, global ecosystem for digital assets” that will enable customers and institutions “to buy, sell, store, and spend digital assets on a seamless global network.”
But Bakkt will initially only let users trade and convert Bitcoin into fiat currencies, which (obviously) can be used at Starbucks.
Being the first significant foray the cryptocurrency space by Starbucks, as well as a platform that will likely bring Bitcoin to the attention of mainstream users, Bakkt is a boon for cryptocurrency proponents. But right now, it appears Starbucks is more interested in helping customers turn bitcoins into dollars than actually using them for purchases at its stores.
A Starbucks spokesperson told Motherboard that the company will “continue to talk with customers and regulators as the space evolves,” but it appears that directly spending Bitcoin or any other cryptocurrency at Starbucks is still ways off.
Bitcoin’s price has been on the decline since late July, when it hit a two-month high of $8,340 according to CoinMarketCap. Right now, Bitcoin is trading at $6,993 with a market capitalization of $120 billion.
Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.
The prices of Bitcoin, Ethereum and all other major cryptocurrencies are sharply down Wednesday following an announcement by the U.S. Security and Exchange Commission (SEC) that it will postpone the decision on approving what would be the first-ever Bitcoin ETF.
The SEC, which recently rejected a proposal by Tyler and Cameron Winklevoss to launch a Bitcoin ETF, now has to approve or disprove another similar proposal, issued by the VanEck SolidX Bitcoin Trust. But the regulator has extended the deadline in which it must reach a decision to September 30, 2018.
A document posted by the SEC Tuesday says it has received more than 1,300 comments on this proposal; the regulator found it “appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change.”
In July, the SEC extended the deadline for deciding on Direxion’s Bitcoin ETF proposal to September 21, with similar reasoning.
These delays aren’t overly negative for Bitcoin; in fact, given that one SEC commissioner dissented from the regulator’s decision to reject the Winklevoss brothers’ proposal for a Bitcoin ETF, the fact that the SEC needs more time to make a decision on another proposal might be a positive sign for Bitcoin proponents.
However, it appears that anything resembling bad news can send the crypto market plummeting these days. Shortly following the announcement, the price of Bitcoin dropped by more than 6% and is currently trading at $6,580. Ethereum, the second largest cryptocurrency by market cap, fared even worse, having dropped by more than 8% at one point. It’s currently trading at $375, its lowest level since April. Ripple, Bitcoin Cash and EOS — the third, fourth and fifth largest coins by market cap — have all dropped more than ten percent in the past 24 hours.
The market capitalization of the entire cryptocurrency market is also sharply down at the time of writing. At $230 billion, it’s at its lowest point since November 2017.
Despite short periods of optimism here and there, the prices of Bitcoin, Ethereum and most other major cryptocurrencies have been on the decline since their January highs, when the total crypto market cap was over $800 billion. The launch of a Bitcoin ETF would likely be a big boost for Bitcoin and other coins, as it would open the doors to institutional investors to invest in the crypto market.
Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.
The SEC has rejected a second proposal to list and trade shares of the Winklevoss Bitcoin Trust on the Bats BZX Exchange, which would essentially be the launch of the first Bitcoin ETF. Cameron and Tyler Winklevoss, founders of the Gemini cryptocurrency exchange and big proponents of Bitcoin, have already been rejected in March 2017.
The SEC dismissed the amended proposal on Thursday with a 3 to 1 vote, disproving BZX’s claim that Bitcoin markets are “uniquely resistant to manipulation,” and questioning whether BZX can do enough to deter fraud and manipulation on the market.
But this time there’s a but.
Following the SEC’s decision, which sharply drove the price of Bitcoin down from $8,287 to about $7,900, the SEC published Commissioner Hester Peirce’s dissent from the SEC’s decision.
“Contrary to the Commission’s determination, I believe that the proposed rule change satisfies the statutory standard and that we should permit BZX to list and trade this bitcoin-based exchange-traded product (“ETP”),” Peirce wrote.
She argues, essentially, that this is a case of catch 22: the Bitcoin market has its problems but these problems would be “mitigated by institutionalizing the market”. In other words, allowing the first Bitcoin ETF to launch would improve the Bitcoin market precisely in the way the SEC would want it to.
“The disapproval order discourages new institutional participants from entering this market. Worse, it suggests that approval for bitcoin ETPs will come only when bitcoin spot and derivatives markets have matured substantially, yet, at the same time, contributes to further delay in their maturation, as potential institutional investors may reasonably conclude that the Commission will continue to repress market forces for the foreseeable future,” Peirce wrote.
On broader terms, Peirce also believes that “the disapproval order demonstrates a skeptical view of innovation, which may have an adverse effect on investor protection, efficiency, competition, and capital formation well beyond this particular product.”
Peirce’s dissent is interesting, as it shows how the SEC might be swayed to change its decision on cases like this in the future. Cameron and Tyler Winklevoss’ bid was rejected, but there’s another active application for a Bitcoin ETF, coming from the VanEcx SolidX Bitcoin Trust. The SEC did not comment on that application at this time, and it still has until August 16 to do so according to CNBC.
Because cryptocurrency prices are almost comically volatile owing to challenges involved in valuing them, it’s hard to know when or why to sell.
Enter crypto-asset backed loans, around which a small but growing number of startups is beginning to spring up. The idea is to lend money to cryptocurrency holders who don’t want to offload their holdings but also don’t necessarily want so much of their assets tied up in cryptocurrencies.
Among these is Lendingblock, a London-based startup that enables holders of crypto assets to lend them out and accrue interest on their holdings. Other outfits — and we aren’t vouching for these so much as letting you know they exist — include CoinLoan, a 1.5-year-old outfit in Estonia that is itself trying to raise money through an initial coin offering; Nexo, a Switzerland-based platform powered by a Bulgarian consumer finance company called Credissimo; and SALT Lending, a Denver-based outfit that started crypto lending earlier this year, and recently told American Banker that it has already made just shy of $40 million in loans and has had no losses. (AB notes that the company’s founder, Blake Cohen, refers to himself at “The Blockchain Cowboy.”)
Still, it’s already looking like if there is one to watch in this new world, it might be BlockFi, a year-old, 12-person, New York-based non-bank lender that had raised roughly $1.5 million in seed funding earlier this year from ConsenSys Ventures, SoFi and Kenetic Capital, and just today quietly announced a massive infusion of capital — $52.5 million — led by Galaxy Digital Ventures, the digital currency and blockchain tech firm founded by famed investor Mike Novogratz.
Most of the capital — $50 million — will be used to loan to BlockFi’s customers. The rest — $2.5 million — is an equity investment in the company from Galaxy and earlier backers, including ConsenSys.
Founder Zac Prince comes from a background of consumer lending, having worked recently as a senior vice president with the company Cognical (now operating as Zibby). He’d also logged time as a vice president at the broker dealer Orchard Platform (since acquired by the lending company Kabbage).
As he told us of BlockFi’s origins earlier today, Prince started personally investing in crypto in early 2016 and also started attending related events. It was there that he “watched the crowd shift from purely computer scientists and anarchists to [also] VCs and bankers.”
As it happens, he was in the process of getting a loan for an investment property around the same time. instead of using a traditional bank, he decided to list his crypto holdings to see what would happen, and the response was overwhelming. It was, he says, a “lightbulb moment. I realized that there was no debt or credit outside of [person-to-person] margin lending on a few exchanges and I had the feeling that this was a big opportunity that I was well-suited to go after.”
Clearly, Novogratz agrees. So does former Bank of America managing director Rene van Kesteren, who ran a seven-person equity-structured financing business before joining BlockFi in May as its chief risk officer.
Currently, BlockFi allows investors to take out a loan as high as $10 million using either bitcoin or ethereum as collateral.
Prince wouldn’t say how much money the company has lent to its retail, corporate and institutional clients. He did offer that the number is “seven figures,” adding half-kiddingly that it “may be eight” figures by later today.
The indictment filed today against 12 Russians accused of, among other things, hacking the DNC and undermining Hillary Clinton’s campaign also notes that the alleged hackers paid for their nefarious deeds with bitcoin and other cryptocurrencies. This unsavory application of one of tech’s current darlings will almost certainly be wielded against it by opportunists of all stripes.
It is perhaps the most popular and realistic argument against cryptocurrency that it enables anonymous transactions globally and at scale, no exception made for Russian intelligence or ISIS. So the news that a prominent and controversial technology was used to fund state-sponsored cyber attacks will not be passed over by its critics.
Look, cryptocurrency is complicated. We get it. What with all the different coins, tokens, ICOs, exchanges, scams, protocols, and DApps, it’s borderline impossible for the casual observer to keep it all straight.
And so, with that in mind, let us now turn to approximately three combined hours of our elected officials rambling on about the blockchain and our decentralized future.
The fun started early Wednesday, when members of the House Committee on Agriculture held a hearing to discuss the future of the crypto-verse.
“We should prohibit US persons from buying or mining cryptocurrencies.”
“This hearing will shed light on the promise of digital assets and the regulatory challenges facing this new asset class,” committee chairman Rep. K. Michael Conaway of Texas (R-Texas) explained. “Our committee has a deep interest in promoting strong markets for commodities of all types, including those emerging through new technology.”
But that wasn’t the only fun to be had today. Later in the afternoon, the House Financial Services Committee met to “examine the extent to which the United States government should consider cryptocurrencies as money and the potential domestic and global uses for cryptocurrencies.”
And what did we learn from this esteemed group? Well, for starters, that bitcoin’s got to go.
“We should prohibit U.S. persons from buying or mining cryptocurrencies,” Rep. Brad Sherman of (D-Calif.) blasted from the podium. “Mining alone uses electricity which takes away from other needs and-or adds to the carbon footprint. As a store, as a medium of exchange, cryptocurrency accomplishes nothing except facilitating narcotics trafficking, terrorism, and tax evasion.”
Did you catch that? Mining uses electricity, and therefore should be banned.
But not everyone agreed with Sherman. Conaway, in his closing statements, seemed to argue in favor of bitcoin — at least as opposed to more privacy-focused cryptocurrency like Monero or Zcash.
“As long as the stupid criminals keep using bitcoin, we’ll be great,” he observed when commenting on the pseudonymous nature of bitcoin.
Hear that, stupid criminals? Stick to bitcoin.
Other fun gems include Rep. Collin Peterson (D-Minn.) admitting that “there’s a lot of things here that don’t make much sense to me.” And yet, Peterson actually seemed to have some relevant statistics at hand, like the fact that “over 80 percent of the initial coin offerings are scams.”
Good on you, Peterson.
Over all, the two hearings painted a picture of our elected officials attempting to wrap their heads around this brave new cryptoworld. And hey, that’s a good thing. Everyone has to start somewhere.
After all, we can’t all be self-assured teen crypto millionaires.
Oh hell yeah. Bitcoin’s back, baby.
After languishing in the depressing realm of the six thousands for what seemed like forever, the price of bitcoin has skyrocketed straight to the moon!
Well, skyrocketed past $7,000, anyway.
Yes, friends, it’s time to join the hordes of true believers on Twitter and Reddit in celebration. And while you’re at it, you definitely want to ignore the fact that last December, bitcoin briefly hit $19,000, which means that the current price is less than half of that. But you’re not going to let a little thing like context get in the way of your fun, right?
Right. Let’s start things off with r/Bitcoin, which celebrated the destruction of the so-called “7k wall.”
And there’s definitely nothing remotely ironic about this roller coaster that only goes up.
Also, it isn’t a party without bitcoin choking out Warren Buffett!
Twitter also dropped some of the old-time favorites.
Meanwhile, presidential candidate John “I’ll eat my own dick on TV if Bitcoin doesn’t hit $1,000,000 by 2020″ McAfee has been surprisingly quiet about this rally, but we should expect celebratory comments from him any time now.
Of course, those meddlesome nocoiners are trying to rain all over this cryptocurrency parade.
But don’t let them yuck your yum! This price spike is totally organic, has nothing to do with fraud, and can only continue going up forever!
So bask in that sweet, sweet $7,000 feeling — it’s not like it could all come crumbling down in the blink of an eye. Again.