Ethereum Closes Security Hole with Energy-Saving Update

Interesting example of Security problem.

Ethereum Closes Security Hole with Energy-Saving Update

By New Scientist,May 26, 2023.

Running an Ethereum node allows a user to create transactions and broadcast them across the network without relying on a third party.

An update rolled out by the Ethereum cryptocurrency reduced the energy needed to produce it by 99.99% by transitioning from "proof of work" to "proof of stake," and also fixed a security flaw in the Go Ethereum software used to run Ethereum nodes.

Massimiliano Taverna at ETH Zurich in Switzerland explained that combining the attacks would have reduced the required computing resources to launch the attacks to only 5 graphics processing units.

Ethereum Classic developers patched the vulnerability after being notified by the researchers, but the researchers said the Ethereum POW cryptocurrency has not been updated.

From New Scientist

May Require Paid Subscription    

UK Considers the Implications of the Digital Pound

  Implications need to be very closely examined.   Is 'long way down the road' they say

Cryptocurrency: UK Treasury considers plan for digital pound  By Shiona McCallum, Technology reporter   in the BBC.  (Updated)

The government is considering introducing a national cryptocurrency or "digital pound", the economic secretary to the Treasury has told MPs.

The UK was committed to becoming a world crypto hub, Andrew Griffith said.  And the government was "a long way down the road... to establish a regime for the wholesale use, for payment purposes, of stablecoins"., Stablecoins are designed to have a predictable value linked to traditional currencies or assets such as gold.

'Game-changing technology'

A public consultation on the attributes of a digital pound would be launched in coming weeks, Mr Griffith told the Treasury Select Committee.

"I want to see us establish a regime, and this is within the FSMB [Financial Services and Markets Bill, currently being debated in Parliament], for the wholesale use for payment purposes of stablecoins," he said,  Central banks around the world are developing or exploring digital currencies.

And Mr Griffith told the committee: "It is right to look to seek to embrace potentially disruptive technologies, particularly when we have such a strong fintech and financial sector."

He wanted to allow the opportunity for this "potentially disruptive game-changing technology that can challenge but also turbocharge all of those [financial] industries", he said.

Consumer protection

The "crypto winter", a rapid decline in the value of Bitcoin and other assets and , has intensified concerns about whether any cryptocurrency can ever be considered stable.

It also has the potential to raise many public-policy issues.

And there will also be a public consultation on Britain's first general regulatory approach to crypto assets, a sector where consumer protection has come under scrutiny in recent weeks.

But the consultation will form part of a "research and exploration" phase and will help both the Bank of England and the government develop the plans over the following few years.  ... ' 

Cybercurrency/Blockchain Vulnerabilities

 Disclosure for Cryptocurrency/Blockchain  Security Vulnerabilities.   Consider how this mixes through to blockchain applications.

Via Schneier (with comments) :

Stewart Baker discusses  why the industry-norm responsible disclosure for software vulnerabilities fails for cryptocurrency software... 

Why can’t the cryptocurrency industry solve the problem the way the software and hardware industries do, by patching and updating security as flaws are found? Two reasons: First, many customers don’t have an ongoing relationship with the hardware and software providers that protect their funds­—nor do they have an incentive to update security on a regular basis. Turning to a new security provider or using updated software creates risks; leaving everything the way it was feels safer. So users won’t be rushing to pay for and install new security patches.

Second, cryptocurrency is famously and deliberately decentralized, anonymized, and low friction. That means that the company responsible for hardware or software security may have no way to identify who used its product, or to get the patch to those users. It also means that many wallets with security flaws will be publicly accessible, protected only by an elaborate password. Once word of the flaw leaks, the password can be reverse engineered by anyone, and the legitimate owners are likely to find themselves in a race to move their assets before the thieves do. Even in the software industry, hackers routinely reverse engineer Microsoft’s patches to find the security flaws they fix and then try to exploit them before the patches have been fully installed.  .... ' 

U.S. Recovers Over $30 Million in Cryptocurrency Stolen by North Korean Hackers

U.S. Recovers Over $30 Million in Cryptocurrency Stolen by North Korean Hackers

FROM ACM NEWS

Sum is only a fraction of hundreds of millions siphoned in breach of 'Axie Infinity' online videogame this year.

The Wall Street Journal

From ACM News | September 9, 2022

U.S. authorities have seized more than $30 million in cryptocurrency plundered from an online game this year by hackers linked to North Korea, one of the largest successes clawing back digital revenue from Pyongyang, investigators said.

While only a fraction of the hundreds of millions in cryptocurrency purloined, the sum recovered is far higher than previously known. It reflects both the growing capabilities of the Federal Bureau of Investigation and other agencies and the priority the U.S. is giving to thwarting North Korean hackers, whose heists are used to bolster their country's nuclear ambitions, analysts said.

Erin Plante, senior director of investigations at the cryptocurrency intelligence firm Chainalysis, which announced the seizure amount Thursday at a conference in Barcelona, said the recovery was among the largest by U.S. law enforcement and had made it more difficult for the North Korean hacking group known as Lazarus Group to access the funds.  ....

From The Wall Street Journal

View Full Article

Should the Cryptocurrency Crash Scare Retailers?

 Was brought  to my attention.  Implications regarding use cases and trust.  

Should the cryptocurrency crash scare retailers?     by Tom Ryan

Nearly 75 percent of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years, according to Deloitte’s “Merchants Getting Ready For Crypto” study.

The survey of 2,000 U.S. retail executives was taken in the first two weeks of December 2021, just before valuations on digital currencies collapsed.

According to Barron’s, Bitcoin, the dominant token, continues to trade at around one-third of its November 2021 all-time high, with the market capitalization of the overall crypto space also tumbling.

Deloitte’s study, done in collaboration with PayPal, found retailers bullish on the digital asset’s potential:

Eighty-five percent anticipated that digital currency payments will be ubiquitous in their respective industries within five years, with 54 percent having invested more than $1 million towards enabling digital currency payments.

Eighty-seven percent agreed that organizations accepting digital currencies have a competitive advantage. Three ways value is expected to be derived: improved customer experience, cited by 48 percent; increased customer base, 46 percent; and being perceived as cutting edge, 40 percent.

Eighty-six percent see a significant benefit to their finance and cash management from accepting digital currency payments. Value is seen in enabling immediate access to funds, cited by 40 percent; taking advantage of blockchain-based innovations in decentralized digital finance, 39 percent; and allowing in-house management of the revenue cycle/treasury/finance department, 39 percent.

Survey participants saw the top barriers to adoption to be security of the payment platforms, cited by 43 percent; followed by the changing regulatory landscape, 37 percent; and the instability of the digital currency market, 36 percent.  ... ' 

On the Dangers of Crytocurrencies and Uselessness of Blockchain

 Bruce Schneier writes a cautional opinion piece,  I don't agree entirely regarding blockchain.   But the caution is good ... . below the intro, click for the whole thing and further expert comments.

On the Dangers of Cryptocurrencies and the Uselessness of Blockchain

Earlier this month, I and others wrote a letter to Congress, basically saying that cryptocurrencies are an complete and total disaster, and urging them to regulate the space. Nothing in that letter is out of the ordinary, and is in line with what I wrote about blockchain in 2019. In response, Matthew Green has written—not really a rebuttal—but a “a general response to some of the more common spurious objections…people make to public blockchain systems.” In it, he makes several broad points:   .....

Comments on Cryptocurrency and Blockchains

Short link and comments to related topics:  

Independent of the histrionics of the #cryptocurrency market, the practical, real-world work of developing #blockchain technology will keep on going, writes @mariabustillos in @nytimes https://t.co/43g5j1NNv5

Cryptocurrency Meltdown

Why Cryptocurrencies Have Gone from the Next Hot Thing to a Full-on Meltdown    June 17, 2022 5:00 AM ET,  David Gura    in npr

 The cryptocurrency world is in chaos.  Just months ago, crypto companies were advertising heavily during the Super Bowl after virtual currencies enjoyed a dizzying rally in 2021.

Today, Bitcoin and other cryptos are plunging, and companies such as Coinbase, which runs the largest crypto exchange in the U.S, are announcing layoffs.

"The crypto house is on fire, and everyone is just rushing to the exits because there is a complete loss of confidence in the space," says Ed Moya, a senior markets strategist at financial firm Oanda.

Here's what's going on. Why are cryptos falling so sharply?  Because they are being hit by the same factors impacting stocks and other assets.

Consumer prices are surging at the fastest annual pace in over four decades, and the Federal Reserve is hiking interest rates aggressively to bring down inflation.

On Thursday, the Fed raised rates by three-quarters of a percentage point and indicated it could raise them again by the same amount at its next meeting in July if needed to cool down prices.  .... ' 

Bitcoins Anonymous?

Examining implications.. 

Via  ACM NEWS

How One Paper Blew Up Bitcoin's Claim to Anonymity   By ZDNet, June 10, 2022

It has been a totem of the cryptocurrency community that the numeric addresses of Bitcoin and other wallets will protect the identity of those using them to buy and sell. 

A new paper, released this week by researchers at Baylor College of Medicine and Rice University, has shattered that presumed anonymity. Titled "Cooperation among an anonymous group, protected Bitcoin during failures of decentralization," the paper is now posted on the researchers' server.   

Lead researcher Alyssa Blackburn of Baylor and Rice, along with team-mates Christoph Huber, Yossi Eliaz, Muhammad S. Shamim, David Weisz, Goutham Seshadri, Kevin Kim, Shengqi Hang, and Erez Lieberman Aiden, used a technique called "address linking" to study the Bitcoin transactions in the first two years of its existence: January of 2009 to February of 2011.

From ZDNet

View Full Article 

Gen Z and Cryptocurrency and NFT

In a recent encounter also  discovered this, was surprised at the fluency seen in  these technologies.  But not the risk in their use.  

How Gen Z is hooked on cryptocurrency and NFTs

By Mariko Oi   in the BBC Technology, Asia business correspondent

The lure of making a quick buck has always attracted young people to invest in risky assets. For Generation Z, it is the volatility - and the decentralised nature - of digital assets such as cryptocurrency and NFTs which appeals. But they are unregulated, meaning there is little investor protection.

"All my friends were talking about [cryptocurrency] so one day I just decided why not just jump in and see if I can make some money," says 20-year-old Paxton See Tow.  All he needed was his phone and trading thousands of dollars' worth of assets was only a click away.

Generation Z - also known as Zoomers - are the age group born between the mid-1990s to early-2000s. They grew up online, playing games and meeting friends virtually, so the transition is natural., Cryptocurrencies are digital currencies while a "non-fungible token" (NFT) is a way of owning an original digital image, touted as the digital answer to collectables. .... '

Cryptocurrencies Melt Down

Not so stable in this context.

ACM NEWS

Cryptocurrencies Melt Down in a ‘Perfect Storm’ of Fear and Panic

By The New York Times, May 13, 2022

The price of Bitcoin plunged to its lowest point since 2020. Coinbase, the large cryptocurrency exchange, tanked in value. A cryptocurrency that promoted itself as a stable means of exchange collapsed. And more than $300 billion was wiped out by a crash in cryptocurrency prices since Monday.

The crypto world went into a full meltdown this week in a sell-off that graphically illustrated the risks of the experimental and unregulated digital currencies. Even as celebrities such as Kim Kardashian and tech moguls like Elon Musk have talked up crypto, the accelerating declines of virtual currencies like Bitcoin and Ether show that, in some cases, two years of financial gains can disappear overnight.

The moment of panic amounted to the worst reset in cryptocurrencies since Bitcoin plummeted 80 percent in 2018. But this time, the falling prices have broader impact because more people and institutions hold the currencies. Critics said the collapse was long overdue, while some traders compared the alarm and fear to the start of the 2008 financial crisis.

"This is like the perfect storm," said Dan Dolev, an analyst who covers crypto companies and financial technology at the Mizuho Group.

From The New York Times

View Full Article  

War and Crypto

As expected.

War Is Calling Crypto's 'Neutrality' Into Question

By Wired, March 10, 2022

Whose side is cryptocurrency on? If you had asked Satoshi Nakamoto, the pseudonymous person (or persons) who created the Bitcoin platform in 2008, he/they likely would have rejected the question. The whole point of cryptocurrencies like bitcoin was neutrality—the fact that no government, bank, or entity could prevent you from using it, whether you were paying for a pizza, a forbidden book, or a bag of cocaine.

That, of course, started changing as soon as crypto's value made it the perfect medium for criminal transactions, from ransomware to dark net marketplaces. Regulators around the world demanded that exchanges and other "off-ramps" blacklist cryptocurrency from accounts linked to criminal activities or individuals, despite illicit trades accounting for just 0.15 percent of global crypto movements in 2021.

But Russia's invasion of Ukraine is a different matter. Crypto's nature as borderless money, and the abundance of youngish, passionate people sitting on troves of crypto-millions made it a go-to method for Ukraine to raise funds from people outraged by Moscow's actions. At the same time there were fears that government officials and Russian president Vladimir Putin's moneyed inner circle might side-step western sanctions by moving their assets into crypto.

Cryptocurrency exchanges are reportedly blocking all transactions from accounts known to be linked to sanctioned individuals.

Full Article

Bitcoin Accepted in Russia

 Bitcoin Accepted for Oil and Gas under Sanctions.

Russia considers accepting Bitcoin for oil and gas

By Annabelle Liang, Business reporter

Russia is considering accepting Bitcoin as payment for its oil and gas exports, according to a high-ranking lawmaker.

Pavel Zavalny says "friendly" countries could be allowed to pay in the crypto-currency or in their local currencies.,Earlier this week, Russian President Vladimir Putin said that he wanted "unfriendly" countries to buy its gas with roubles.

The move is understood to be aimed at boosting the Russian currency, which has lost over 20% in value this year.,Sanctions imposed by the UK, US and the European Union, following the invasion of Ukraine, have put a strain on Russia's rouble and raised its cost of living.

However, Russia is still the world's biggest exporter of natural gas and the second largest supplier of oil.... ' 

Evading Sanctions with Crypto?

As was mentioned to me by my DC connections, their concern is that  Crypto evade such government attempts?  Below the intro to a longer article

Russians are using crypto to evade sanctions — but it’s not just the elite in Thenextweb

Is investing in crypto really going to help Russians?

Fearing Russia’s elite will evade economic sanctions by converting their wealth to cryptocurrency, high-profile US Democratic senator Elizabeth Warren has introduced a bill into US Congress to stymie Russian crypto transactions.

Warren warned a Senate committee hearing:  So no one can argue that Russia can evade all sanctions by moving all its assets into crypto. But for Putin’s oligarchs who are trying to hide, you know, a billion or two of their wealth, crypto looks like a pretty good option.

The bill does not seek to impose a blanket ban on all Russian cryptocurrency transactions. But it would give the US government the authority to ban US companies from processing cryptocurrency transactions connected to sanctioned Russian accounts and to apply secondary sanctions to foreign cryptocurrency exchanges doing business with sanctioned Russian individuals, companies, or government agencies.

But is it even necessary?

Even though the evidence shows that Russian cryptocurrency transactions have been increasing in both number and value in the past month, the scale suggests buyers are ordinary Russians seeking to hold on to their savings as the value of the ruble crashes.

Targeting sanctions

The economic sanctions imposed on Russia for invading Ukraine are naturally hurting the entire Russian economy. Their intended target, though, is to hit Putin and the billionaire oligarchs who support his rule where it hurts most.  A cornerstone of this strategy is stopping these individuals from using or moving their wealth around by freezing the assets they hold overseas and blocking financial transactions.

But the continued operation of cryptocurrency exchanges in Russia, such as Binance, Yobit, and Local Bitcoins, has been worrying US officials for some time. Even before Russia’s latest invasion of Ukraine, the US Treasury Department warned cryptocurrencies could undermine the sanctions already imposed on Russia over its 2014 annexation of Crimea.

Ruble’s falling value

Our first graph below shows why ordinary Russians have good reasons to buy cryptocurrency. Since the February 24 invasion of Ukraine, the ruble’s value against the US dollar has fallen by as much as 40%, from $US1 being worth 76 rubles to 132 rubles. At the time of publication, $US1 was worth about 109 rubles.

The ruble falls off a cliff  .... ' 

Building a Better Wallet

 Digital wallets in the past have been insecure on some systems, and they are the primary user interface into cryptocurrency. 

Square is building a hardware crypto wallet and service with the goal of making bitcoin 'more mainstream'

By Tyler Sonnemaker in BusinessInsider

Square plans to build a hardware cryptocurrency wallet and software service, company execs said Thursday.

Square's goal is to "make bitcoin custody more mainstream," said hardware lead Jesse Dorogusker.

CEO Jack Dorsey in June outlined the company's initial thinking about the product.    ... '

Opportunities and Dangers of Decentralizing Finance

Useful definitions and opinions on the state and future of what is being called DeFi.  Much on the Podcast and text below at the link.

The Opportunities and Dangers of Decentralizing Finance

MIC LISTEN TO THE PODCAST:

Wharton’s Kevin Werbach speaks with Wharton Business Daily on SiriusXM about the opportunities and risks of decentralizing finance.

Audio Player :Use Up/Down Arrow keys to increase or decrease volume.

Decentralized Finance — or DeFi — has experienced explosive growth in the past year. But in order for DeFi to fulfill its promise as a disintermediated ecosystem that helps rather than harms, “now is the time to evaluate its benefits and dangers,” write Wharton legal studies and business ethics professor Kevin Werbach and David Gogel, a recent Wharton MBA graduate, in the article that follows. Werbach is author of the book The Blockchain and the New Architecture of Trust and leads Wharton’s Blockchain and Digital Asset Project. Werbach and Gogel recently collaborated with the World Economic Forum to create the Decentralized Finance (DeFi) Policy-Maker Toolkit,  providing guidance to regulators and blockchain watchers everywhere.

Intermediaries have always played essential roles within financial markets, facilitating trust, liquidity, settlement, and security. Yet these benefits come with costs. Intermediation contributes to slow settlement cycles, inefficient price discovery, and limitations on market access. Financial services markets tend to be highly concentrated, with a few powerful intermediaries exercising significant control and extracting substantial rents. Since the 2008 Global Financial Crisis, there has been increased attention on structural inequalities and hidden risks of the financial system. Recent controversies such as the GameStop short squeeze, in which retail investors were blocked from trading during a period of volatility, also cast a spotlight on the shortcomings of legacy financial infrastructure.

Until now, however, intermediation was a necessary feature of finance. Even peer-to-peer fintech lending platforms such as Prosper and cryptocurrency exchanges such as Coinbase retain an important central role. This is the environment in which Decentralized Finance (DeFi) has emerged .... ' 

China Blocking Banks

 Complete implications unclear.

China Says Banks Must Block Crypto Transactions; Market Falls

China's central bank says institutions must not provide trading, clearing, and settlement for crypto transactions ... 

By Omkar Godbole, Jun 21, 2021 at 6:30 a.m. EDT

China Says Banks Must Block Crypto Transactions; Market Falls

The People’s Bank of China (PBOC) on Monday told the country’s major financial institutions to stop facilitating virtual-currency transactions, increasing the negative sentiment in crypto markets.  ... '

Emergence of Central Bank Digital Currencies

 As usual, an interesting piece from Irving's Blog (Below an intro, details and much more at the link) 

The Emergence of Central Bank Digital Currencies   By Irving Wladawsky   by IWB

Economist Digital Money V1Bitcoin was created in October of 2008 with the release of Bitcoin: A Peer-to-Peer Electronic Cash System, the original design paper which also introduced the blockchain architecture. A decade later, The Economist published a detailed evaluation of Bitcoin which succinctly concluded that “Bitcoin and other cryptocurrencies are useless.”

“Bitcoin, the first and still the most popular cryptocurrency, began life as a techno-anarchist project to create an online version of cash, a way for people to transact without the possibility of interference from malicious governments or banks,” it further argued. “A decade on, it is barely used for its intended purpose. Users must wrestle with complicated software and give up all the consumer protections they are used to. Few vendors accept it. Security is poor. Other cryptocurrencies are used even less.”

But last month, the May 8 issue of The Economist reached a very different conclusion in its assessment of central bank digital currencies (CBDCs), - i.e., e-dollars, e-yuans, or e-euros, - which it called “The digital currencies that matter.”

“Bitcoin has gone from being an obsession of anarchists to a $1trn asset class that many fund managers insist belongs in any balanced portfolio. … Yet, as our special report explains, the least noticed disruption on the frontier between technology and finance may end up as the most revolutionary: the creation of government digital currencies, which typically aim to let people deposit funds directly with a central bank, bypassing conventional lenders. These govcoins are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated. They are to be treated with optimism, and humility.”

Let me summarize a few of the special report’s key points.

Over 50 governments are exploring digital currencies. In October 2020, the Central Bank of The Bahamas issued the digital Sand Dollar, the first nationwide deployed CBDC. The Sand Dollar has the same value and consumer protections as the traditional Bahamian dollar, to which it can be instantly converted. The Bahamas also introduced the Sand Dollar prepaid card in collaboration with Mastercard, which can be used to pay for goods and services anywhere Mastercard is accepted.

China has a major e-yuan pilot underway. Over 500,000 individuals received 200 yuan ($30) from the government, which they can use to pay for goods and services using an e-yuan digital wallet offered by six commercial banks. Legally, e-yuans are as real as traditional hard cash. A few weeks ago, the US Digital Dollar Project announced that it will launch at least five programs over the next 12 months to explore the uses and designs of a US e-dollar. The European Central Bank has been developing the concept of the digital euro by conducting practical experiments and engaging with stakeholders and the broader public. And in April, the Bank of England announced the creation of a taskforce to coordinate the exploration of a potential UK CBDC. ... " 

China to Ban Bitcoin Mining

Surprising, perhaps?   What are the details? 

China will likely ban all bitcoin mining soon

Country’s top financial regulator homes in on the source.    By Tim De Chantin   in  ArsTechnica

Bitcoin took investors on another rollercoaster ride over the weekend after a top regulator in China announced a crackdown on mining, a new tack in the country’s ongoing fight against the cryptocurrency.

The government will “crack down on bitcoin mining and trading behavior and resolutely prevent the transfer of individual risks to the society,” said the statement, which was issued by the Financial Stability and Development Committee of the State Council, the country’s cabinet equivalent. The committee is chaired by Vice Premier Liu He, who acts as President Xi Jinping’s top representative on economic and financial matters.  ..... " 

Why Regulation Won't Harm Cryptocurrencies?

Though I imagine they could.

Why Regulation Won’t Harm Cryptocurrencies   From Knowledge @ Wharton,  Apr 27, 2021 

MIC LISTEN TO THE PODCAST:

Wharton’s Brian Feinstein speaks with Wharton Business Daily on SiriusXM about the regulation of cryptocurrencies.

Audio Player

The confirmation on April 14 of Gary Gensler as chairman of the Securities and Exchange Commission has fueled worries that increased regulation of cryptocurrencies would hurt trading volumes and prices and stifle innovation in the nascent segment, and prompt industry participants to flee to less stringent jurisdictions. However, those fears are unfounded, and tighter regulation could purge the industry of bad actors and engender trust, which in turn would help it grow, according to Brian Feinstein and Kevin Werbach, Wharton professors of legal studies and business ethics.

The day of Gensler’s confirmation coincided with the $85 billion IPO of Coinbase, the largest cryptocurrency trading platform in the U.S. The Coinbase IPO was “a watershed moment for an industry that began a decade ago as an experiment in digital money,” according to The Wall Street Journal. Cryptocurrencies will be high on Gensler’s agenda. He had described them as “catalysts for change” in his confirmation hearings, but also said they raise “new issues of investor protection.” In the least, he promised that the SEC would provide “guidance and clarity” on regulating the cryptocurrency market.

“With the confirmation of a new SEC chair who has his eye on cryptocurrency, we can expect the imposition of securities law framework onto cryptocurrencies in the U.S. and new investor protection measures,” Feinstein said in an interview on the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast above.)

A Wall Street Journal editorial titled “The SEC’s Cryptocurrency Confusion” echoed the concerns raised by critics who are worried about regulatory overreach, stating that “regulators are creating danger for currency developers and retail investors” in the cryptocurrency market, the size of which it estimated at $2 trillion in market capitalization.  .... "