Newsletter May 30 2018
Bitcoin gold 51% Attack (May 18th) (0:29)
A malicious miner accessed more than 51% of the hashpower to mine Bitcoin Gold and successfully double spent some Bitcoin Gold to steal money from exchanges. CCN reported that the attacker could have received more than $18M worth of funds. If you are unfamiliar with a 51% attack, you can visit BlockWolf’s text and video guide here: https://blockwolf.com/what-is-a-51-attack/ . In short, a dishonest miner can:
- Send coins to an exchange, lets say 200 BTG
- Trade those coins for different coins on the exchange, lets say 1 BTC
- Withdraw the 1 BTC
- Use the 51% hashpower to revert the original blockchain back to step 1 so that the attacker would still have 200 BTG.
- Now the attacker has 200 BTG and 1 BTC
Takeaway: This 51% attack shows that Proof of Work may not be a reliable consensus mechanism for smaller cryptocurrencies. Although some more popularly mined coins like Bitcoin and Ethereum may be safe to use Proof of Work, it may not be safe for other cryptocurrencies.
Ellen Degeneres Receives $4M XRP Donation (May 23rd) (1:57)
On behalf of Ripple, Kutcher sent $4M worth of XRP to Ellen on her television show. He described Ripple as a “platform to allow people to transfer money from bank account-to-bank account, person-to-person, really securely, really quickly.” This is not he first time Ripple has made a big donation. On March 27th, 2018, they donated $29M worth of XRP to DonorsChoose.org
Takeaway: Just like the story from March 27th, this donation creates some positive media attention for Ripple, which is not always the case with cryptocurrencies in the news. Fair or not, cryptocurrencies are oftentimes associated with crime and drugs in the media, and the publicity from Ellen’s show demonstrates how easily it is to transfer money using XRP and potentially other cryptocurrencies.
Coinbase Acquires Paradex (May 23rd) (2:53)
Coinbase acquired Paradex, a decentralized platform where users can trade cryptocurrencies while having self-custodianship over their coins.
Takeaway: Paradex is built on the 0x (ZRX) protocol, so some people speculated that 0x would be listed on Coinbase. Perhaps more importantly, Coinbase’s acquisition for a decentralized exchange indicates that they may offer decentralized trading in the future with the option for users to preserve the custodianship of their own coins. That would be significant for two reasons. 1) It would reduce the impact if Coinbase ever gets hacked because users would not lose their coins. 2. It may mean that more coins will be available on one of Coinbase’s exchanges, creating more exposure for altcoins.
Probe into price manipulation (May 24th) (3:58)
The US Justice Department launched a probe into whether traders are manipulating the price of Bitcoin and other cryptocurrencies. Specifically, the probe will investigate spoofing and wash trading. Spoofing is when a trader creates a trade order to indicate intent of buying or selling and cancels it. If the orders are large enough, they could persuade somebody to make a trade in reaction to their “spoof” order. Washing is when somebody trades with themselves to make it appear that there is high volume for a coin. This Tweet from the CEO of Binance may suggest that other exchanges are wash trading to make it seem like their exchanges are more used than they really are.
Takeaway: It would be great for the long run if the Justice Department could route out some dishonest actors in the cryptocurrency industry. However, depending on their findings, a significant shakeup could occur if they discover that a major player or exchange has been active dishonestly. Outing market manipulators may lead to less cryptocurrency volatility, which would be a good thing for cryptocurrencies.
EOS Bugs Before Launch (May 29th) (5:20)
Qihoo 360, a Chinese tech security company found loopholes in EOS’s code that make it vulnerable to malicious attacks. Such loopholes could lead to attackers gaining control of private keys and cryptocurrency transactions. Dan Larimer, EOS’s lead developer, addressed the bugs and said that the vulnerabilities have been fixed. Larimer also tweeted on May 28th that there is a $10,000 bounty for anybody that finds a bug with EOS’s code. This is all pertinent news because EOS is expected to launch on June 2nd.
Takeaway: With just a couple of days before its expected launch, this news may scare EOS fans. Even if the bugs found by Qihoo have been fixed, it suggests that there could be other bugs within EOS’s code that could weaken its platform. Some people think that the recent news may delay EOS’s mainnet launch but Larimer there has been no official statement to support that claim.
South Korea to Legalize ICOs (May 29th) (6:40)
South Korea banned ICOs in September 2017 but now plans to regulate ICOs and cryptocurrency trading.
Takeaway: Perhaps officails were disappointed that South Korean businesses were fleeing to Singapore and other locations to conduct ICOs and other cryptocurrency related business. Hopefully new legislation will provide more transparency for South Korean cryptocurrency projects.