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Exponential Bitcoin Hash Rate Growth Increases 51% Attack Vulnerability for Other SHA-256 Crypto

Bitcoin’s mining hash rate has seen exponential growth due to the massive increase in Bitcoin’s price long term combined with the advancement of mining chip technology. This has created a feedback loop where miners compete with each other to buy the most mining equipment possible to get the most profits, causing less profits for the same amount of hash rate, causing miners to buy more equipment to keep up, and so on and so forth. Bitcoin’s mining hash rate has grown so large that it would be quite easy for a large Bitcoin miner to conduct a 51% attack on any other SHA-256 cryptocurrency.

Bitcoin’s mining hash rate was 10 MH/s at the start of 2010, 125 GH/s in 2011, 10 TH/s in 2012, 23 TH/s in 2013, 10 PH/s in 2014, 300 PH/s in 2015, 800 PH/s in 2016, 2.5 EH/s in 2017, 15 EH/s at the turn of 2018, and since then, Bitcoin’s hash rate has increased further to over 40 EH/s. This means Bitcoin’s hash rate has been increasing almost exponentially every year.

This has created a dangerous situation for all other SHA-256 cryptocurrencies. Bitcoin uses the SHA-256 hashing algorithm, so Bitcoin miners can mine other SHA-256 crypto but for the most part, choose not to since Bitcoin is the gold standard of crypto. Therefore, SHA-256 crypto have very low hash rates relative to Bitcoin, making them easy targets for 51% attacks. A 51% attack is when a malicious miner has more than 51% of the network hash rate, sends a transaction to a crypto exchange or merchant, and then mines another blockchain that overtakes the original blockchain, without recording the transaction. Essentially, a hacker can reverse a crypto transaction with a 51% attack.

While a 51% attack is essentially impossible for Bitcoin, other SHA-256 crypto have such low hash rates that a 51% attack is a real possibility. The biggest SHA-256 crypto besides Bitcoin is Bitcoin Cash with a hash rate of 4.7 EH/s, Unobtanium and Crown are close behind with 4 EH/s and 3.6 EH/s respectively. For even these major SHA-256 cryptocurrencies, it would only take 5-10% of the Bitcoin mining network to split off and start mining their blockchains to conduct a 51% attack. There is plenty of animosity between some Bitcoin and Bitcoin Cash supporters, so a large Bitcoin mining firm could single-handedly ruin Bitcoin Cash’s reputation with a 51% attack.

The situation is even worse for the other SHA-256 cryptos, which all have hash rates less than 100 PH/s, and many have hash rates less than 1 PH/s. It would take a single Bitcoin miner with a decent farm to 51% attack these crypto.

 

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Bitcoin Used by Russia To Hack 2016 US Elections, New Indictment Reveals

A 29-page Indictment has been released recently, stating Bitcoin’s huge role when it came to Russian interference in the 2016  US presidential elections.

The documents accuse 12 Russian agents of hacking into Democratic Congressional Campaign Committee’s computers and stealing information of over 500,000 voters. Aides close to Hillary Clinton were then tricked into handing over this information by the Russian intelligence officers.

11 of the 12 accused are being charged with breaking into computers and releasing documents with the intent of influencing the last presidential election. The 12th was charged with conspiring to penetrate organizations that directly handled the elections.

“…had multiple units, including Units 26165 and 74455, engage in cyber operations that involve stage releases of document stolen through computer intrusions. These units conducted large-scale cyber operations to interfere with the 2016 US presidential election.”

Bitcoin was mentioned extensively in count 10 (Conspiracy to Launder Money). Money was required for the Russian operatives to acquire infrastructure needed for later actions.

More than $95,000 was laundered through Bitcoin, which was then used to buy servers, register domains, and other online payments. The documents state other currencies like the USD was used as well, but it seems Bitcoin was used primarily due to the enhanced levels of privacy it affords over other payment methods.

Some of the funds were also used to purchase computing hardware to mine Bitcoin, to help supplement their income for hacking activities. Bitcoin mined by the GRU (Main Intelligence Directorate of the General Staff) were used to purchase the domain dcleaks.com through a Romanian company.

Besides the purchase of the domain and hardware to mine Bitcoin, other notable purchases described in the pages was a VPN to log into the @Guccifer_2 Twitter account, a Malaysian server to host the dcleaks domain, as well as the leasing of another server for X-Tunnel malware injected into DCCC and DNC networks.

An additional two servers were also acquired to hack in the DNC’s cloud network.

The effects this will have on a meeting between the two presidents planned for next week are yet to be determined. Trump and Putin are scheduled to meet Monday in Helsinki, and nothing has changed despite the emergence of this indictment.

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Former Goldman Sachs Executive Says He Would Put His Mother’s Money Into Bitcoin

The former Vice President of the Investment Management Division at major Wall Street financial firm Goldman Sachs, Christopher Mattis, said in an interview on CNBC that he would invest his mother’s money into Bitcoin. He is now the Co-Founder of Crescent Crypto Asset Management and expects Bitcoin’s price to return to USD 15,000.

In general, he says Bitcoin is a long-term investment, and it isn’t proper to look at 1-month price fluctuations when investing since there is a large amount of short-term price volatility. He recommends to all of his investors that they look 2-5 years into the future when dealing with Bitcoin. This is an excellent advice since Bitcoin has a tendency to increase in price by an order of magnitude every 2-3 years. It is combined with a tendency to decline 90% from the peak of a rally, which often scares investors out of the Bitcoin market, only to be followed by an even bigger rally.

Christopher Mattis thinks that more smart regulation in the crypto space can be good for the Bitcoin market, and his view is that regulators have generally been positive towards crypto. Like other cryptocurrency experts, Christopher Mattis thinks a Bitcoin exchange-traded fund (ETF) can be a positive catalyst for the market, and he also says cryptocurrency custodianship will bring in institutional investment money that has been waiting on the sidelines. Additionally, he says it’s hard to draw a causation between the launch of Bitcoin futures and the decline in the market, which is a theory proposed by Thomas Lee at Fundstrat Global Advisors.

Christopher Mattis says that his firm Crypto Asset Management is getting many new crypto investors despite the market downturn, and that these investors recognize that Bitcoin will be going up long term, and that low Bitcoin prices are actually a good thing since it facilitates a better investment entry point.

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Moon Zebra Launches Malta’s First Two-Way Bitcoin ATM

Moon Zebra has installed the first two-way Bitcoin ATM in Malta. The two-way Bitcoin ATMs allow users to both buy Bitcoin with fiat and to convert Bitcoin back to fiat, and are far rarer than typical one-way Bitcoin ATMs that only allow users to buy Bitcoin with fiat. Even though this is only the 4th Bitcoin ATM installed in Malta, it is a major positive step for Malta, which has been called ‘Blockchain Island’ by many for its extremely favorable stance towards crypto and blockchain companies, including giving the world’s biggest crypto exchange Binance a fiat bank account.

Two-way Bitcoin ATMs are essential for the global adoption of Bitcoin as a currency, allowing users to quickly and easily move money between fiat and crypto. Now people in Malta who are paid with Bitcoin by their jobs can easily turn their Bitcoin into cold hard cash and use it to buy food, necessities, and pay rent

According to Coin ATM Radar, there are 1,256 two-way Bitcoin ATMs in the world versus 2,218 one-way Bitcoin ATMs, as of this writing on 15 July 2018. A two-way Bitcoin ATM provides all the functionality of a cryptocurrency exchange and is much faster. Typically it takes several days to convert Bitcoin into fiat when using a cryptocurrency exchange, and it requires a bank account. Bitcoin ATMs are nearly instant, usually requiring 1 confirmation which takes about 10 minutes before dispensing cash for deposited Bitcoin. Also, Bitcoin ATMs don’t require a bank account, making them the only option for unbankable Bitcoin users besides Bitcoin dealers.

Although Bitcoin ATMs typically charge higher fees than a cryptocurrency exchange for both buying and selling, on the order of 5-10%, the time saved is worth it. This is especially true since the near instant nature of Bitcoin ATMs protect users from market volatility; Bitcoin price fluctuations can easily exceed 5% in a day and sometimes even 10%, so it is worth a fee to make an instant Bitcoin to fiat transaction.

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Possible Addition of 6 Cryptos, New Coinbase Blog Post Reveals

Coinbase recently published a new blog post stating the possible addition of several new cryptocurrencies to their platform.

The assets in consideration are Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX).  The announcement was made at the same time within Coinbase and publicly to remain transparent, and perhaps to avoid a similar situation when Bitcoin Cash was added.

These assets were considered based on the criteria Coinbase has laid out in their Digital Asset Framework. The blog post goes into further details, discussing specific reasons why each asset stood out to the Coinbase team.

The platform says adding any or all of the above tokens will require “additional exploratory work” and places no promises on listing any of them for trading. This is unlike the Ethereum Classic support that is currently being worked on, due to its technical similarity to Ethereum.

Other caveats are discussed in the blog post as well, such as the possibility of some of the new assets only being available for purchase and sell, with no send/receive functionality enabled. This would give some coins purely investing characteristics, like what Circle is doing with their Circle Invest app.

The last two restrictions the post discusses is the way users maybe able to interact with certain assets: for example, Coinbase may only support deposits and withdrawals from transparent Zcash addresses. This is a likely scenario, in order to be in compliance with any financial regulations that may apply.

Coinbase may also stagnate the launch of these assets in certain regions, most likely testing them in other markets before they are available to the US customers.

No promises have been made on timeline for adding support to these tokens, as they have only discussed the possibility of them being on the platform. But if selected, Coinbase will be making their first expansion into smaller capitalization cryptocurrencies.

With many of Coinbase users being intuitional traders as well, this offers them an exposure to the segment of the crypto-market that was previously untapped.

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London Gallery Owner Helps Crypto Wealthy Make Expensive Choices

There is an increasing number of platforms being launched to help wealthy consumers part with their cryptocurrency, usually on luxury items, writes the China Morning Post.

Such entrepreneurs have created a business seemingly out of very little, but nonetheless, they are serving a specific crypto elite and creating a thriving retailer-consumer database.

Working from her gallery in London’s Mayfair, Eleesa Dadiani is one of the new providers to the crypto rich, with clients ranging from 20 to 70 years of age. It started a couple of years ago, she maintains, has noted that those who had made significant profits from cryptocurrency trading really had no idea how to spend it. Using her established clientele through her gallery Dadiani Fine Arts she decided to make it happen by forming a syndicate of retailers and customers to turn some of this wealth into goods. She explained:

“A couple of years ago, when we saw bitcoin perform as well as it did, there was no way to use those coins. You were rich on screen, but what could you do with it? You could invest in ICOs [initial coin offerings], but what about something tangible? The answer was ‘Nothing’.”

Dadiani is certainly a believer and wants to make cryptocurrency do what it was intended for. Her gallery was one of the first globally to accept multiple cryptocurrencies; she currently supports Bitcoin, Ethereum, Ethereum Classic, Litecoin, Ripple, Dash, and NEM. Her customers come to her so she can help them make that otherwise difficult crypto purchase.

The list of her client’s purchases are impressive to say the least, from bloodstock to jets, from gold bullion to rare cars, she’s handled them all. Even the purchase of four Formula 1 cars valued at £4 million ($5.3 million) wasn’t enough to dampen her enthusiasm for her role as crypto “ middle-man.”

She says she has little time for crypto-idealists trying to create decentralized government-free crypto utopias, suggesting that people need to make a “cognitive shift” and find a way of integrating cryptocurrency into real life through gradual change. She argues:

“These libertarians, they don’t understand money, they don’t understand history,” she says. “They know nothing about politics or international relations. You have to understand the world you live in before you can change it.”

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Can Blockchain Impact the Future of Real Estate?

With increasing reports of both Bitcoin and Ethereum being used to purchase property, it appears that digital currency is finding its place in the Real estate sector.

Although a recent Bitcoin News report illustrates that some banks are not prepared to allow customers to use mortgage equity to purchase cryptocurrencies, it is clear that real estate agents are not adverse to taking investors’ digital funds in exchange for bricks and mortar.

A recent article by the Washington Post revealed that in the US, a Miami penthouse listed at the time for 33 Bitcoin carried the stipulation that the client would not take any other form of currency. In the UK buying property using Bitcoin is far rarer. In fact, Bitcoin News recently reported that a Harris survey revealed that 27% of male millennials considered Bitcoin to be a better long-term investment than buying a property, assuming that they were even able to get on to the housing ladder.

It appears that buying property using cryptocurrency is more limited to groups that have made substantial profits trading the digital currency; the crypto “nouveau riche.” In the US the buying of real estate using currencies such as Bitcoin is far more widely accepted and new concepts are beginning to facilitate sales in innovative ways.

Longstanding real estate and private equity firm, Muirfield Investment Partners, have joined with the company in an attempt to use blockchain to introduce more liquidity to the real estate market by developing a token which can be freely traded, whilst remaining compliant with US security laws. Thomas J Zaccagnino, Muirfield’s founder, commented, “By tokenizing a real estate investment vehicle, investors are for the first time, able to freely trade their ownership on regulated secondary exchanges.”

Blockchain itself has become a boon to the industry with numerous applications. According to the Washington Post, in 2016 Goldman-Sachs projected a $2-$4 billion savings in the title insurance industry as a result of using blockchain to verify and store land titling. This said blockchain is not the only solution to finding cheap, speedy, solutions to recording land and property ownership.

The Post suggests that DLT can’t detect a forgery nor will it detect a foreclosure issue, which effectively means that such titles can’t be marketed, indicating that despite DLT’s effectiveness in real estate transactions, it does have its limitations, in that it can’t necessarily offer buyers title insurance.

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National Bank of Slovakia Illuminated by Massive Bitcoin Sign

Slovakian banks including the country’s central bank found themselves advertising Bitcoin on July 11th as a giant icon was illuminated on the exterior of banking institutions around Bratislava.

A local action group, an arm of Czech crypto group Paraleni Polis, were responsible for the giant batman style logo which advertised the coin.

The group, which is based in the Czech capital Prague, is a well-established anti-bank, pro-crypto organization which even has its own cafe and crypto hub. Along with an uploaded video of the central bank illuminated by the Bitcoin logo they added a statement referring to the hostility shown by Czech banks towards cryptocurrencies, part of which read:

“Slovak banks, instead of embracing the unlimited possibilities of cryptocurrencies and supporting the emerging crypto companies, due to state regulators or unclear legislation remain in the darkness.”

Further, the group drew attention to the age of enlightenment and the creation of the printing press in the 15th century making the analogy that a new contemporary witch hunt instigated by government legislators is now targeting the latest innovations. The Bitcoin illumination appeared to be a reference to the banking system needing to move from the “darkness” of the status quo into the dawn of a new era, presumably blockchain.

There have been a few reported incidents this year of banks denying services to customers who have Bitcoin investments, and some exchanges have been denied services as well. Also, there has been evidence that appears to suggest that mortgages may not be quite so easy to acquire for those with a cryptocurrency selling history as Bitcoin News reported recently. A major Australian bank has also recently informed its customers that they can no longer use mortgage equity for purchasing cryptocurrency.

This is not the first time that the anti-banking logo has been used, however, this time in Switzerland, where another activist group, Trust Square, projected the same Bitcoin logo onto the wall of the National Bank of Switzerland in May, according to InsideBitcoins.

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Japanese Police Seize Crypto For Parking Tickets, Setting Legal Precedent

Japanese police from Hyogo Prefecture have seized cryptocurrency, albeit a small amount, for unpaid traffic tickets for the first time in history. Apparently, a revised fund settlement act issued in April 2017 which legalizes cryptocurrency as a payment method gives police the ability to seize crypto for unpaid fines.

Typically real-estate, vehicles, bank savings, salary, and life insurance payouts can be seized by Japanese police for unpaid fines. However, the man, in this case, has no bank accounts and police don’t know where he works, so they went into his cryptocurrency exchange account and took the balance. Police seized JPY 5,000 (USD 44), which is actually a small fraction of the total of JPY 99,7000 in unpaid traffic tickets the man accrued for leaving his vehicle unattended and illegally parked. If payment for these fines is not received by the end of July 2018, the Japanese police will liquidate the seized cryptocurrency into fiat.

This is a miniscule amount of cryptocurrency, but it’s not the amount of cryptocurrency seized that matters, but the fact that Japanese police have now set a precedent for seizing cryptocurrency to pay fines. It goes further than that, now government officials across Japan have been given the precedent to seize cryptocurrency for any unpaid debt.

This is yet another reason to keep cryptocurrency in your own wallet instead of an exchange. It is important to keep cryptocurrency in wallets where you are in complete control of the private keys and no one else. If the man followed this simple rule, there would be no way for Japanese police to seize his crypto. The only reason this cryptocurrency was seized is because the man kept it on a centralized exchange where he did not control the private keys. Literally, someone could have USD 1 billion sitting in Bitcoin and an entire police department surrounding them in an interrogation room, but if the private key is properly secured then the police have no way to access the Bitcoin.

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The Day A Hacker Created 184.4 Billion Bitcoins

Bitcoin has an excellent track record, with nearly 100% uptime and impregnable cryptographic security. However, during the early days of Bitcoin there were many bugs to work out, and on 15 August 2010, a hacker caused the value overflow incident at block 74,638, which resulted in the creation of 184.4 billion bitcoins. Bitcoin’s lead developer at the time, Wladimir Van Der Laan said: “It was the worst problem ever”.

The hacker figured out that the code used for checking transactions didn’t work if outputs were so large that they overflowed when summed. The hacker exploited this flaw and outputted 184.467 billion Bitcoins, sending 92.2 billion Bitcoins to 2 addresses. There will only be 21 million Bitcoins ever created, so this single transaction created 8,784 times more Bitcoins than the total possible Bitcoin supply. If this wasn’t fixed it could’ve caused an early death for Bitcoin, since it would crash markets to zero, and completely ruin Bitcoin’s credibility.

Fortunately, the value overflow incident was noticed almost immediately and a code fix was put into place within 5 hours by Satoshi Nakamoto, with the help of Gavin Andresen and other Bitcoin developers. The new code rejected transactions whose output was a value overflow and also rejected outputs that for any reason have more than 21 million bitcoins.

The only way to fix the hack was to implement the code fix and re-start the blockchain from the time right before the value overflow incident occurred. This resulted in a fork and 2 competing blockchains, but at block 74,691 the corrected blockchain overtook the hacked blockchain, after which all nodes accepted the corrected blockchain as the mainchain and the 184.4 billion bitcoins disappeared.

This means that the hacked blockchain with 184.4 billion Bitcoins was dominant for 53 blocks, which is roughly 9 hours. Transactions sent on the hacked blockchain during these 9 hours were reversed, which might have resulted in the loss of money for some Bitcoin users, and is a very serious incident that could cause people to lose trust in Bitcoin. Fortunately, Bitcoin was used by only a small number of people back then, so any damage was limited, and the incident didn’t stop Bitcoin from growing into a major global currency.

A very positive lesson that can be learned from the value overflow incident is even if Bitcoin encounters an error, it can be fixed with the help of the developer team and good communication.

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