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Bitcoin just misses major exploit – are alts next?

Bitcoin just misses major exploit – are alts next?

 

A bug has just been fixed that could have crashed older versions of Bitcoin Core, potentially bringing the network to its knees.

 

Bitcoin Core 0.16.3 was released on 18 September, patching a bug that could have caused mayhem for bitcoin. The update reads:

 

Security issue CVE-2018-17144: it was discovered that older versions of Bitcoin Core will crash if they try to process a block containing a transaction that attempts to spend the same input twice. Such blocks are invalid, so they can only be created by a miner willing to sacrifice their allowed income for creating a block of at least 12.5 BTC (about $80,000 USD as of this writing). This release eliminates the crash, allowing the software to quietly reject such invalid blocks.

 

This is pretty concerning. By sacrificing a block of coins, a rogue miner could have badly disrupted the network by preventing transactions from completing. The cost of that to the miner would have been around $80,000. That is not a large amount of money to destroy billions of dollars of value, which is what would have happened in the event of an exploit: traders would have sold immediately, crashing the market.

 

In fact, a smart miner could have taken out a leveraged short position on BitMEX, then attacked the network and made many, many times his ‘investment’ back.

 

For now, we can breathe a sigh of relief. Two problems remain:

  1. This was a zero-day exploit that could have destroyed Bitcoin’s utility and crushed its price. It was spotted before harm was done – this time. This particular problem was introduced back in 2017 and quietly sat there for 18 months before it was noticed. Are there other serious exploits that could be discovered by less benign researchers?
  2. Many alts are based on Bitcoin’s code. The same vulnerability is likely present in a large number of them – and now it’s publicly known. Expect an attack on any major alt that doesn’t hustle to fix it really fast.

 

Please update your nodes to 0.16.3 as soon as possible!

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Bakkt 2: the future (of bitcoin)

With apologies for the title, Bakkt – a major new bitcoin infrastructure project that seemingly came out of nowhere in August – has published a second update about what it’s planning to do. TL;DR it’s good stuff for crypto.

 

Early in August, the same week the SEC gave the bitcoin markets a kick in the guts by postponing their decision on the SolidX-VanEck ETF, Bakkt entered the scene with its announcement interview in Fortune magazine. The initiative had been developed under strict secrecy for over a year, for launch in November this year.

 

At a time of pessimism over crypto and uncertainty about an ETF, Bakkt is an exciting proposition. Backed by Microsoft and Starbucks (for their experience with digital payments, not for a way to buy coffee with bitcoin), the intention is to drive bitcoin adoption in both the financial sector and, ultimately, in retail.

 

As the Fortune article explains: ‘This morning Intercontinental Exchange—the trading colossus that owns the New York Stock Exchange and other global marketplaces—announced that it is forming a new company called Bakkt. The new venture, which is expected to launch in November, will offer a federally regulated market for Bitcoin. With the creation of Bakkt, ICE aims to transform Bitcoin into a trusted global currency with broad usage.’

 

Bakkt have gone about their business the right way, quietly building the tech and infrastructure and only announcing it shortly before launch, rather than looking to market vapour. Their updates have not been frequent or numerous. This article is only the second from the project itself, and consequently it’s worth a read. (You can read the first, which is about price discovery, here.)

 

As both the first and second article are at pains to state, physical delivery is a critical part of what Bakkt are doing. This is a vital element of price discovery and creating a more stable, liquid and active market for bitcoin. As a first step, Bakkt are offering bitcoin futures, combining existing financial market infrastructure and regulation with the tech to store bitcoin safely. Among other things, that means they’re not offering leverage. ‘Futures’ in this instance isn’t a paper contract, the kind of Monopoly money that’s shuffled around between traders in vast quantities every day. This is not like precious metals – the futures market for which exceeds the actual quantity of gold and silver many, many times over. Buy a Bakkt bitcoin future and it involves purchasing an actual bitcoin: that demand is passed through to the market.

 

Bakkt’s aim at this point is to serve institutional finance by providing them with the infrastructure they need to buy and sell bitcoin within the necessary regulatory framework. We know that’s something for which financial organisations have been crying out, as they see a new and exciting asset class get away from them.

 

We’ll know more in just a few weeks, but this is a great development for crypto. So, while the ETF would be nice, what Bakkt are doing makes it a little less important.

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Tuesday Inferno market report

More turbulence on the markets – and it’s not over yet.

 

We’ll start with a brief sketch of the last week in the bitcoin markets, and then move on to some of the wider factors in play as we eye the next month or so.

 

Bitcoin hit a local low 10 days ago after the crash from $7,400, bottoming at $6,120 (Bitfinex). Since then it has made two successive higher lows, although yesterday’s was only just higher: $6,170 on 11th, before a mini-rally to just under $6,600, and then another fall to $6,203 a few hours ago, after another surprise $200 drop.

 

Moving out to the one-day chart – our preferred timeframe for the bigger picture – we see BTC is drifting in a neutral-to-bearish way. Volatility is decreasing, as is clear from the size of the swings in price over the past seven or eight months. Zoomed out, the bitcoin chart looks like the path of a bouncing ball, losing energy and momentum every time it touches the $6k floor.

 

For all that, we can’t call whether this bear market will end with a bang or a whimper: a final capitulation and hard rally, or a slow attenuation before price gradually picks up. Almost from day to day sentiment changes, oscillating between gloom and excited expectation. Both, clearly, have been misplaced each time – so far.

 

The month ahead

Looking at some of the external factors in play, another decision by the SEC on the VanEck-SolidX bitcoin ETF is due on 30 September. At this point, most traders have probably priced in another delay. The final decision may well be postponed until the spring, though there are no guarantees. That will, as we and many others have commented before, fundamentally change the game in terms of investor confidence and inflow of money.

 

Before that, we have the expiration of CBOE futures tomorrow – something analysts have previously noted as a catalyst for significant downward price movements. Then there is the meeting of MtGox creditors on 26 September with the exchange’s trustee, at which he will update them on the assets held. Creditors will have another month to register their claims. This could potentially see BTC sold by creditors receiving funds back; however, it does mean the full 160,000 BTC held by the trustee won’t be dumped at market price.

 

Thus there are numerous factors that hint at considerable volatility over the coming weeks, likely compounded by the lower than usual trading volumes.

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EdenChain: blockchain protocol focused on practical enterprise use and security

Token: EDN
Price: 1 EDN = 0.06 USD
Bounty: Available
Platform: Ethereum
Accepting: ETH
Minimum investment: 100,000 USD

About

EdenChain is a Korean project that is aiming to build a platform for the enterprises of tomorrow. The ICO hard cap is USD $24 million. Through hardware integration, EdenChain targets a balancing act between leveraging the strengths of public blockchains and a high level of scalability, and meeting the security demands of enterprise companies.

The EdenChain platform allows any user to create a marketplace, attach their assets and trade them using cryptocurrency, all without the need for a third party. They have already introduced their first platform, HelloEden, which includes dedicated support in terms of technology development, as well as in business areas such as legal and marketing/PR.

Protocol – Hyperledger Sawtooth

Hyperledger Sawtooth is considered one of the most promising code bases. Among early companies already using Hyperledger Sawtooth are telecommunications giants Huawei, which is building a decompiler for the software, as well as T-Mobile and Amazon.

Sawtooth includes an advanced parallel scheduler that splits transactions into parallel flows. Based on the locations in state which are accessed by a transaction, Sawtooth isolates the execution of transactions from one another while maintaining contextual changes. This means that when possible, transactions are executed in parallel, while preventing double-spending even with multiple modifications to the same state – providing a substantial potential increase in performance over serial execution.

Main features of EdenChain

  • Parallel transactions via namespace technology allow transactions per second to grow in a linear manner.
  • Secured on-chain and off-chain interoperability enables smart contracts to interact securely with external data sources and modules.
  • EdenChain also aims to provide a comprehensive blockchain and token platform for applications across the board, including IoT, Energy, AdTech, P2P finance, Healthcare and many other sectors.
  • Supports Solidity, currently the most popular smart contract language.
  • Easy integration into existing business via RESTful API.
  • EdenChain has signed a strategic partnership with Tomochain that will allow them to deepen their footprints in Southeast Asia and Vietnam.

Tokens

An exchange listing date for EDN tokens is expected in Q3 2018. The total supply is 1 billion EDN (no more tokens will ever be created) while circulating supply is 400 million EDN.
EdenChain offers a bounty/income – node participants are compensated through rewards for staking their token or running their Eden nodes. Enterprise users can secure their own nodes or use the rewards to offset part of their running costs. The team will also be giving 400 EDN each to the top 5 posts that have been upvoted and shared through social media.

Roadmap

Q4 2018
EdenChain ICO; 3rd Developers meet-up; CleanDeal Service Launch; EdenChain Real Service PoC; Partnership with major blockchain network; Testnet for OpenEdenChain Platform; Custom Coin Issuance Service; EdenChain API Service; Mobile Wallet.

2019 Q1
ICO continues; Blockchain Conference; 4th Developers meet-up; Partnership with major blockchain network; Platform migration to Cloud; E-Oracle Network Launch; EdenChain Optimization; Mainnet Launch.

Conclusion

EdenChain aims to create the best possible solution for solving global and technical business issues – starting with performance and security. Their approach to solving efficiency issues without sacrificing user security could turn their platform into one of the most appealing up-and-coming projects out there. But at the same time, it is extremely ambitious and their attempt to tackle multiple issues and markets all at once could end up being overwhelming.

Resource links

Website
Twitter 
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Telegram
Reddit

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Inferno Poll: what will BTC price be at the end of the year?

Back at the end of 2017, the predictions were outlandish. $50,000, $100,000, $1 million BTC by the end of 2018.

 

Even when the bear market was well under way, we still saw plenty of predictions for an ATH (all-time high) for bitcoin before the year was out, if not higher – though the six-figure forecasts started to disappear.

 

At the end of June, BitMEX CEO Arthur Hayes was still publicly standing by his $50,000 prediction for the end of the year. Around the same time Tom Lee, co-founder and head of research at Fundstrat Global Advisors – someone with some track record of success in these matters – reiterated his earlier claim that bitcoin would end the year at $25,000. And in June Tim Draper, who famously purchased a large tranche of bitcoins from the FBI’s raid on the Silk Road during the last bear market in 2014, said he too expected $25,000 by the end of the year – and $250,000 by 2022.

 

If there’s one thing we’ve learned about crypto, it’s that the picture can change in an instant. As the year wears on, however, those predictions of $25,000 are looking less and less likely. (Admittedly, some were predicated on the SEC approving one or more bitcoin ETFs in the near future, and America’s regulators haven’t exactly been racing to make that happen.) But the question remains: What will one bitcoin be worth when midnight on 31 December 2018 rolls around?

 

With a little over a hundred days to go, we thought we’d hold a poll of our own.

 

How much do you think BTC will be worth at the end of the year?

  • <$3,000
  • $3,000–$5,000
  • $5,000–$6,000
  • $6,000–$7,000
  • $7,000–$8,000
  • $8,000–$10,000
  • $10,000–$12,000
  • $12,000–$15,000
  • $15,000–$20,000
  • Above the ATH

To cast your vote, please use this Google Form. We’ll keep the poll open for a week, after which we will publish the results and the insights we gain from it. Thank you for your participation!

 

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Every airdrop at your fingertips

Airdrops can be a lucrative way to build your crypto portfolio or gain additional income, thanks to the fact that they have become so popular among crypto projects and the community. The problem is, there are now so many that it’s easy to miss even the big ones. Given that some can be worth tens or hundreds of dollars, it’s worth knowing when they’re happening. A new website, TopAirDrops, makes sure you don’t miss anything.

 

Crypto marketing takes many forms, from quality explainer videos to scammy Twitter posts. Some is effective, some annoying. The one kind that everyone loves, however, is airdrops.

 

Airdrops became popular over the course of the last year as ICOs sought to attract attention in what had become a very crowded market. In short, an airdrop is a free distribution of tokens to members of a new or established crypto community. The criteria for getting tokens might be signing up on Telegram or reposting a tweet, or it might be nothing at all — the tokens are just sent to addresses on the blockchain that meet the right conditions.

 

The advantage of this for ICO projects is that they gain lots of free exposure — hundreds or thousands of potential investors receive the token and have the opportunity to find out more about the crowdsale. The more investors, the more money they attract for marketing and development. And, as importantly, the better token distribution they will have. For the recipient, the benefits should be obvious: free digital cash, in return for little or no work at all.

 

Never miss another airdrop

 

In 2016 and early 2017 it was relatively easy to keep up with the different airdrops going on. There weren’t many. With the explosion of ICOs last year and the growing popularity of airdrops, it became almost impossible to participate in every single one. Airdrops now happen on a daily basis, across many different blockchains (Ethereum, Ethereum Classic, Neo, Waves, EOS…). It’s too much work to keep up with them all.

 

The good news is that you don’t have to, because TopAirDrops does it for you. The site gives you details of current and incoming airdrops, information about the platform used and conditions for claiming them, even approximate USD value and a rating for the project.

 

ICO issuers can register their airdrops on the site, immediately informing a large community and gaining awareness and potential investment.

 

Simply head over to https://topairdrops.io, and take a look at what’s coming. You’ll find further information about each project, including links to the official site and white paper, as well as instructions for participating.

 

TopAirDrops has a lot of other new features on the way, as well as its own token for powering a complete ecosystem of services. So stay tuned, and enjoy the airdrops!

 

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Decentralised dollars on the blockchain

It’s finally happening: more and more companies are launching dollar-backed crypto tokens, meaning the Age of Tether might finally be coming to an end.

 

Let’s face it: fiat isn’t going out of fashion. The Bitcoin Faithful might rail against the Almighty Dollar and its history of depreciation since America left the gold standard, but it’s still the reserve currency of the world (and, as it happens, the currency in which most holders value their BTC). Whatever the long-term fate of the dollar and its fiat cousins, it’s not going anywhere just yet.

 

But the conventional fiat world doesn’t interface smoothly with crypto, thanks to the frictions and costs of the banking system. That’s where crypto dollars come in: tokens that are backed by fiat reserves but move around the world as easily as any other crypto coin.

 

Here at Inferno, we’ve never been hesitant to show our suspicion of Tether, currently the foremost such ‘stablecoin’. Tether have never been transparent about the dollar reserves that supposedly back their USDT token, leading many critics to claim it’s not fully backed at all and that Tether have been printing money – effectively running a fractional reserve. (For our part, we believe the facts are better explained by Tether printing unbacked USDT, using them to buy BTC on Bitfinex, then selling those bitcoin on different exchanges for USD with which they retrospectively back the USDT. Very sneaky if so.)

 

And so we were very happy to learn that TrustToken were getting in on the act with their TrueUSD token. This is also a stablecoin, backed by dollars, but TrustToken don’t hold any funds themselves – unlike Tether. They use multiple third parties, who have fully audited accounts, and the system is governed by smart contract for transparency. This approach removes the centralisation and opacity of Tether’s method, and we hope they will be rewarded for doing what Tether should have been doing from the very start.

 

But that’s not all! Only yesterday the Winklevoss Twins announced that Gemini – their regulated exchange – would be launching the Gemini Dollar. Billed as the ‘world’s first regulated stablecoin’ (by the Winkies, anyway) this is an ERC20 Ethereum token, again backed by real dollars, that can be cashed out for the real thing on the Gemini exchange.

 

And there’s still more! Also yesterday, startup Paxos announced it was launching a fully-backed dollar token, regulated by the state of New York – apparently competing to beat Gemini Dollars to the punch.  

 

Well, we don’t care who was first. We’re just pleased we’re seeing more and more options for dollar-backed crypto tokens. The easier it is to send money around the world and to get into and out of crypto, the faster the crypto economy can grow. We’re expecting the fiat-backed token space to get pretty crowded in the future. And that will be great for everyone.

 

Except Tether.

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Monday Inferno market analysis

After the carnage of the end of last week, it’s been a fairly quiet weekend for bitcoin – but that never lasts for long, especially not at the moment.

 

To recap, last week saw a brutal fall in the value of bitcoin from $7,400 down to a low of just over $6,100. While that was a ‘higher low’ that didn’t break the previous low of $5,877 (Bitfinex), itself higher than June’s low of $5,755, it was still an dramatic move that caught many traders unaware.

 

While mainstream media reported the immediate trigger was Goldman Sachs’ decision to shelve their plans for a crypto trading desk, when Goldman denied this as ‘fake news’ the price failed to recover. As we reported, a far more likely explanation are the $10 million in BTC that were sent from an old wallet, somehow connected to the Silk Road, to Binance and Bitfinex at the very end of last month.

 

While that’s not much in the context of overall volumes, it is a lot when dumped at market rates on a single exchange. The crash was most likely a catalyst for further selling by traders and the lower prices that followed. However, it’s worth saying that even this volume of coins wouldn’t have been a problem if the market hadn’t already been at a fragile point in its recovery. Traders didn’t have the confidence to absorb the sells, instead bailing out before matters got any worse. In short, the recovery up to $7,400 had been too fast. It was looking promising, and perhaps it would have continued and gained momentum, but the Silk Road coins had the effect of a bucket of cold water.

 

Since the initial falls, the market stabilised somewhat around $6,400. We then saw a ‘Double Bart’ formation, with a crash-consolidation-spike followed by the reverse spike-consolidation-crash. Right now bitcoin sits at $6,270, but that figure is likely to be out of date in minutes.

 

Zooming out to the daily chart, we can see that the 200 MA is really coming down fast now, since the price on a large number of the last 200 days has been beneath it. The 50 MA, which reacts more quickly, of course, is heading south even faster – but conversely it picks up more quickly too with a recovery. Price is well below both, indicating downward momentum. However, resistance around the $6,000 zone has once again held, demonstrating the strength of demand here. RSI has come off its lows, indicating deceleration of downward movement. That’s hardly surprising after such massive selling, though: on the 4h chart, RSI signalled BTC was more oversold than at any point since June.

 

In short, a day of reckoning is on the way. The downward-sloping resistance line that has held since February will soon meet the demand zone at $6,000. One will give. That must happen in the next month – and it’s highly unlikely the pattern will play to the end without a breakout.

 

Traders will rightly be cautious here. If it does go south in a meaningful way, lots of analysts are talking about $5,000, but this is a point where both big risk and big opportunity lie. $6k has proved a demand level many times before. On the other hand, markets are inherently unpredictable and Mr Silk has plenty more BTC to dump. If you buy, be prepared to HODL or set a tight stop loss.

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What coins have any users?

A look at the data suggests that only a handful of coins and tokens have any kind of significant userbase.

 

We know that bitcoin has a large and genuine userbase – that is, people who actually own it or use it long term, hold it in their own crypto wallets and make real transactions, rather than just trading it on exchanges. You can read that information from the blockchain easily enough. The same is true of Ethereum. People are holding it and transacting with it, and building real applications with its smart contracts.

 

But can the same be said for many of the almost 2,000 cryptos that now exist?

 

We’re afraid not.

 

We used the site https://onchainfx.com/ to compare not just prices and market cap (which is all that most people care about) but active addresses (send/receive in the last 24h) and numbers of daily transactions.

 

As expected, Bitcoin has the most active addresses (664,000) followed by Ethereum (307,000), Litecoin (89,000), Dogecoin (73,000 – yes, that’s still a thing) and EOS (58,000).

 

After that, it rapidly declines. There are just 19 cryptos shown with more than 1,000 active addresses. Only 21 show more than 1,000 transactions a day.

 

It’s not quite as bad as it seems. Onchainfx doesn’t supply data for all cryptos, so there are some glaring omissions here. For example, it doesn’t offer active addresses or transaction numbers for Waves, which is an extremely active network, averaging around 40,000 transactions per day for this month so far, which would put it above Litecoin on that measure.

 

On the other hand, there are some anomalies: Bitcoin Cash, for example, has twice the daily transactions of Bitcoin Core, but less than 10% of BTC’s active addresses. Clearly, some shenanigans are afoot here, because that’s certainly not organic usage. A spammer or stress test or just plain old fake tx volumes can skew figures.

 

Still, the overall picture for the majority of cryptos isn’t great. These are tiny communities with very few real users. Where it gets interesting is the smaller number of cryptos that do have a real and active userbase. Network effect counts, and those communities will give their blockchains a stronger chance of long-term success.

 

And, of course, deeper analysis of that list may show some interesting opportunities to pick up coins that are undervalued on their fundamentals.

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Friday Inferno market analysis

Staring up from – what is hopefully – the bottom of the abyss, we can’t help but suppress a wry smile that bitcoin’s murky past continues to set the agenda from time to time.

 

Every now and again the crypto markets throw traders a curveball. This was one such week.

 

Analysts were broadly in agreement that the picture for bitcoin was looking rosier by the day. The major indicators were all flipping positive with the steady rally from the recent low of around $5,900 to over $7,400 – an impressive 25% uptick in just three weeks. MAs were converging and crossing, resistance levels turning to support, RSI climbing with the momentum – and then carnage. An initial crash briefly stabilised around the $7,000 mark, before a further $600 fall. In all, bitcoin’s price plummeted a thousand dollars in a matter of hours.

 

Mainstream news scrambled to find a reason, with many outlets citing Goldman Sachs’ decision to cancel their plans for a crypto trading desk. Perhaps that helped, but in reality it probably occasioned little more than a shrug from most genuine traders. In any case, earlier today Goldman’s CFO denied the bank had scrapped its plans, calling reports ‘Fake News’.

 

A far more plausible reason is the huge stash of bitcoins, somehow connected to the Silk Road, that was recently moved to Binance and Bitfinex.

 

Manipulation on a grand scale

Given that the blockchain is transparent but the identity of traders on exchanges is hidden from public view, it’s impossible to know for sure what’s going on here. It could have been lots of small traders panicking or our whale dumping lots of coins at once. There’s some circumstantial evidence that this was more than an early holder cashing out quickly and clumsily, so we’re going to take a shot at drawing some conclusions.

 

One thing to bear in mind is that a smart trader doesn’t dump a lot of coins onto the market at once. They trickle in sell orders, or set a sell wall, assuming they can’t get access to an OTC trade. That way, you don’t crash the price and get less USD than you otherwise would.

 

Another factor – possibly coincidental, but we’ve been in crypto long enough to keep the tinfoil hat on – is that DOGE saw a massive rise in volumes and value a few days before BTC crashed. That may be consistent with other insiders pumping it to offset losses just before BTC went south. DOGE always has been a favourite coin for pumpers to fleece the market. As we say, though, this may have been an unconnected manipulation. Binance doesn’t list DOGE, so the Silk Road whale himself probably didn’t do it.

 

Lastly, the holder sent 210 BTC to BitMEX. That’s a derivative exchange that offers very high leverage: up to 100x.

 

A whale with deep pockets could make an absolute killing by dumping BTC on one exchange, while going leveraged short on another.

 

In short, this episode looks like a deliberate manipulation that likely netted the perpetrator or perpetrators many tens of millions of dollars, if not more.

 

The big question, of course, is what happens next. Is there another BTC crash to come? Or will the whale reverse the pattern, go long and reset the market back to where it was a few days ago – pocketing enormous gains while maintaining or even increasing his BTC position?

 

We don’t know – and as ever in these circumstances, we would advise extreme caution if you’re trading. This kind of thing has become less frequent over the last couple of years, as the crypto markets become larger and more liquid, but bitcoin’s early legacy refuses to die.

 

Someone out there with access to a stash of over 100,000 BTC still wants to party like it’s 2014.

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