Bitcoin

Here's Why People Don't Buy Things With Bitcoin (vice.com) 124

An anonymous reader shares a report: One reason for this, if you live in Toronto like me (or anywhere else for that matter), is that there's basically nowhere to spend digital coins in the real world. Coinmap, a service that maps bitcoin-accepting locations all over the world, shows a few places that accept bitcoin in Toronto, but it's clearly out of date -- I called several businesses listed on the site and they had no idea what bitcoin even is. A bigger problem is perfectly illustrated in a Reddit post from Wednesday morning complaining that a bitcoin transaction worth just $9 still hasn't gone through the network after two days of waiting. Two. Days. The likely reason is that the fee attached to the transaction in order to incentivize faster confirmation -- 50 cents, which is about as much of a premium as I'd pay for a $9 transaction -- simply wasn't enough. "Should I have paid $3 on a $9 transfer to get it processed?" the person wrote.
The Internet

How a Tax Inspector Used Google Search To Locate the Founder of SilkRoad (bbc.com) 82

An anonymous reader shares a report: You could buy any drug imaginable, wherever you were in the world, on the Silk Road website. Hidden on the dark web, it made millions of dollars every week. The US government had been trying to shut it down for more than two years when tax agent Gary Alford was brought in to try to trace the money which passed through the site. In his spare time, Gary started searching Google to try to find the mysterious mastermind behind the site: Dread Pirate Roberts. And he was successful. Gary spent hours trawling the internet for the first ever mention of Silk Road. He says he came across a posting on Bitcoin forum. In the post, Roberts had shared his Gmail account. That escalated the investigation. Gary spoke with BBC describing the rest.
Bitcoin

Two-Factor Authentication Fail: Identity Thieves Hijack Cellphone Accounts to Go After Virtual Currency (nytimes.com) 74

Reader Cludge shares an NYT report: Hackers have discovered that one of the most central elements of online security -- the mobile phone number -- is also one of the easiest to steal. In a growing number of online attacks, hackers have been calling up Verizon, T-Mobile U.S., Sprint and AT&T and asking them to transfer control of a victim's phone number to a device under the control of the hackers. Once they get control of the phone number, they can reset the passwords on every account that uses the phone number as a security backup -- as services like Google, Twitter and Facebook suggest. "My iPad restarted, my phone restarted and my computer restarted, and that's when I got the cold sweat and was like, 'O.K., this is really serious,'" said Chris Burniske, a virtual currency investor who lost control of his phone number late last year. A wide array of people have complained about being successfully targeted by this sort of attack, including a Black Lives Matter activist and the chief technologist of the Federal Trade Commission. The commission's own data shows that the number of so-called phone hijackings has been rising. In January 2013, there were 1,038 such incidents reported; by January 2016, that number had increased to 2,658. But a particularly concentrated wave of attacks has hit those with the most obviously valuable online accounts: virtual currency fanatics like Mr. Burniske. Within minutes of getting control of Mr. Burniske's phone, his attackers had changed the password on his virtual currency wallet and drained the contents -- some $150,000 at today's values. Most victims of these attacks in the virtual currency community have not wanted to acknowledge it publicly for fear of provoking their adversaries. But in interviews, dozens of prominent people in the industry acknowledged that they had been victimized in recent months.
Bitcoin

Third Party Trackers On Web Shops Can Identify Users Behind Bitcoin Transactions (helpnetsecurity.com) 62

An anonymous reader quotes a report from Help Net Security: More and more shopping websites accept cryptocurrencies as a method of payment, but users should be aware that these transactions can be used to deanonymize them -- even if they are using blockchain anonymity techniques such as CoinJoin. Independent researcher Dillon Reisman and Steven Goldfeder, Harry Kalodner and Arvind Narayanan from Princeton University have demonstrated that third-party online tracking provides enough information to identify a transaction on the blockchain, link it to the user's cookie and, ultimately, to the user's real identity. "Based on tracking cookies, the transaction can be linked to the user's activities across the web. And based on well-known Bitcoin address clustering techniques, it can be linked to their other Bitcoin transactions," they noted. "We show that a small amount of additional information, namely that two (or more) transactions were made by the same entity, is sufficient to undo the effect of mixing. While such auxiliary information is available to many potential entities -- merchants, other counterparties such as websites that accept donations, intermediaries such as payment processors, and potentially network eavesdroppers -- web trackers are in the ideal position to carry out this attack," they pointed out.
AI

Leading Chinese Bitcoin Miner Wants To Cash In On AI (qz.com) 23

hackingbear writes: Bitmain, the most influential company in the bitcoin economy by the sheer amount of processing power, or hash rate, that it controls, plans to unleash its bitcoin mining ASIC technology to AI applications. The company designed a new deep learning processor Sophon, named after a alien-made, proton-sized supercomputer in China's seminal science-fiction novel, The Three-Body Problem . The idea is to etch in silicon in some of the most common deep learning algorithms, thus greatly boosting efficiency. Users will be able to apply their own datasets and build their own models on these ASICs, allowing the resulting neural networks to generate results and learn from those results at a far quicker pace. The company hopes that thousands of Bitmain Sophon units soon could be training neural networks in vast data centers around the world.
Bitcoin

Bitcoin Is Forking. Again. (vice.com) 120

Merely weeks after it was announced that Bitcoin was splitting into two separate entities, the initial version of bitcoin and it's new "bitcoin cash," the network is adding a third version, according to a report. From the article: On Wednesday, a group of bitcoiners scheduled yet another split for the network in November, which would create a third version of bitcoin. So, what makes this version different from the others? Right now, the bitcoin network can sometimes take a long time to process transactions due to so many people using it. This is because the "blocks" of transaction data that get added to bitcoin's public ledger, the blockchain, are getting full. In the weeks preceding the fork, bitcoin coalesced around a solution called "segregated witness," which will change how data is stored in blocks to free up some space when it kicks in later in August. But the size of the blocks themselves will stay at one megabyte on the original bitcoin blockchain. Still, some bitcoiners maintained that the only way to speed bitcoin up for the foreseeable future was to increase the size of blocks themselves. So, a group of bitcoin companies and developers got together and launched a fork called bitcoin cash, which does not include segregated witness. It bumped the size of blocks up to a maximum of eight megabytes. That fork was widely anticipated to be a failure before it happened, but at the time of writing, bitcoin cash is trading above $300 USD per coin, which is comparable to cryptocurrencies like ethereum. Sounds like everyone got what they wanted, right? Oh, no. There's a third group of bitcoin developers, companies, and users who advocate for a "best of both worlds approach." This group includes Bitmain, the largest bitcoin infrastructure company in the world, and legendary bitcoin developer Jeff Garzik. They got together back in May and signed what is known as the "New York Agreement," which bound them to implement a two megabyte block size increase alongside segregated witness via a hard fork within six months of the time of signing. They call the fork Segwit2x. Now, that's exactly what's happening. According to an announcement posted to the Segwit2x GitHub repository, a bitcoin block between one and two megabytes will be created at block 494,784.
Bitcoin

Australia Joins China and Japan in Trying To Regulate Digital Currency Exchanges (cnbc.com) 63

Following moves by China and Japan to regulate digital currencies, Australia is attempting to crackdown on money laundering and terrorism financing with plans to regulate bitcoin exchanges. From a report: "The threat of serious financial crime is constantly evolving, as new technologies emerge and criminals seek to nefariously exploit them. These measures ensure there is nowhere for criminals to hide," said Australia's Minister for Justice Michael Keenan in a press release. The Australian government proposed a set of reforms on Thursday which will close a gap in regulation and bring digital currency exchange providers under the remit of the Australian Transactions and Reporting Analysis Centre. These exchanges serve as marketplaces where traders can buy and sell digital currencies, such as bitcoin, using fiat currencies, such as the dollar. The reform bill is intended to strengthen the Anti-Money Laundering and Counter-Terrorism Financing Act and increase the powers of AUSTRAC.
Bitcoin

Bitcoin Just Surged Past $4,000. TechCrunch Explains Why (techcrunch.com) 154

Saturday night TechCrunch reported the following about Bitcoin: 24 hours ago the cryptocurrency was trading below $3,700. About an hour ago it surged passed $4,000 and has no signs of stopping. It's now trading around $4,135.00. For reference, a week ago Bitcoin hit an all-time high as it passed $3,000 for the first time... So the million-bitcoin question is, why now...?

Two weeks ago Bitcoin went through a hard fork, and came out essentially unscathed... A few days later Bitcoin locked in SegWit, a code modification that fixes malleability issues and frees up space in blocks, allowing for more transactions to be stored in each one. These two code-related developments have helped boost conference in Bitcoin's future. Another reason -- the ICO frenzy. The amount recently raised via initial coin offerings have now (at least temporally) topped amount raised via early stage venture capital. Just last week Filecoin raised $180 million in a few hours. Most investors have to convert fiat currency to bitcoin or other cryptocurrencies to participate in ICOs, which could be driving up the price (and providing some investors with their first taste of bitcoin). Another reason -- Wall Street's new obsession is bitcoin.

Bitcoin

Former Bitcoin Developer Shares Early Satoshi Nakamoto Emails (vice.com) 42

Jordan Pearson, writing for Motherboard: Satoshi Nakamoto is Bitcoin's anonymous creator and absentee head of state. In the years since she (or he, or they) disappeared into the ether and left the technology in the hands of a few high-profile developers, Nakamoto's words have become nigh-gospel for some in the Bitcoin world. On Friday, a user going by "CipherionX" on the Bitcointalk forum published five emails allegedly between Satoshi Nakamoto and former Bitcoin developer Mike Hearn. In an email to Motherboard, Hearn confirmed that he shared the emails with the user. While Hearn himself, who was one of the earliest Bitcoin developers, has previously quoted most of the juicy bits from his correspondence with Nakamoto, it appears to be the first time much of the material has been shared in full. None of the emails are included on a popular database of Nakamoto's writings collected from old emails and forum posts.
The Courts

Who's Profiting From The WannaCry Ransoms? (cnn.com) 31

CNN reports: For months, the ransom money from the massive WannaCry cyberattack sat untouched in online accounts. Now, someone has moved it. More than $140,000 worth of digital currency bitcoin has been drained from three accounts linked to the ransomware virus that hit hundreds of thousands of computers around the world in May.
Meanwhile, a Ukrainian law firm wants NotPetya victims to join a collective lawsuit against Intellect-Service LLC, the company behind the M.E.Doc accounting software, said to be the point of origin of the NotPetya ransomware outbreak. An anonymous reader quotes BleepingComputer: The NotPetya ransomware spread via a trojanized M.E.Doc update, according to Microsoft, Bitdefender, Kaspersky, Cisco, ESET, and Ukrainian Cyber Police. A subsequent investigation revealed that Intellect-Service had grossly mismanaged the hacked servers, which were left without updates since 2013 and were backdoored on three different occasions... The Juscutum Attorneys Association says that on Tuesday, Ukrainian Cyber Police confirmed that M.E.Doc servers were backdoor on three different occasions in an official document. The company is now using this document as the primary driving force behind its legal action.
The law firm says victims must pay all of the court fees -- and give them 30% of any awarded damages.
Bitcoin

Why the Bitcoin Network Just Split In Half and Why It Matters (arstechnica.com) 109

In a report via Ars Technica, Timothy B. Lee explains why the Bitcoin network split into two and why it matters: On Tuesday, a faction of the Bitcoin community launched an audacious experiment: a new version of Bitcoin called Bitcoin Cash that's incompatible with the standard version. As a result, the Bitcoin network split into two mutually incompatible networks that will operate side-by-side. The confusing result is that if you owned one bitcoin before the split you own two bitcoins now: one coin on the original Bitcoin network, and a second coin on the new Bitcoin Cash network. The two coins have the same cryptographic credentials, but they have very different values if you sell them for old-fashioned dollars. On Wednesday morning, one standard Bitcoin was worth about $2,700, while -- on paper at least -- a unit of Bitcoin Cash was worth around $600. [...]

For over a year, the Bitcoin network has been bumping up against a capacity limit hard-coded into the Bitcoin software. Each block in the Bitcoin blockchain -- the network's public, shared transaction ledger -- is limited to 1 megabyte. That artificial limit prevents the network from processing more than about seven transactions per second. Technically speaking, it would be trivial to change that 1 megabyte limit to a higher value. But proposals to do so have faced opposition from traditionalists who argue the limit is actually an important feature of Bitcoin's design that protects the network's democratic character. To participate in the network's peer-to-peer process for clearing transactions, a computer needs a copy of every transaction ever made on the Bitcoin network, which adds up to gigabytes of data per month. This argument has dragged on for more than two years with no resolution. So instead of continuing to bicker, a group of big-block supporters took matters into their own hands. They forked the standard, open-source Bitcoin client to create a rival version of the software.

Bitcoin

Bitcoin Splits in Two Amid Feud (cnet.com) 204

Bitcoin is dividing in two. Disagreements about how to operate the cryptocurrency have led to a new strand called Bitcoin Cash, which is breaking off from the bitcoin system. From a report: Bitcoin Cash launches Tuesday in what is known as a "hard fork" from bitcoin, a virtual currency based on peer-to-peer transactions without any central authority or bank behind it. The new offshoot is a response to the increasing popularity of bitcoin, which is struggling to deal with massive numbers of transactions with its underpinning technology. The main bitcoin currency is adopting a system called Segwit2x that moves transactions out of the current blockchain, while bitcoin Cash will use bigger blocks within the blockchain. Bitcoin holders are set to receive the same amount of bitcoin cash as they have in bitcoin if the exchanges and wallets they use support the new coin, another report added. Exchanges including Kraken and ViaBTC have said they'll support both, while others like Coinbase and Poloniex have said they won't, citing uncertainty that bitcoin cash will have lasting market value.
The Internet

O'Reilly Media Asks: Is It Time To Build A New Internet? (oreilly.com) 305

An anonymous reader shares an article from O'Reilly Media's VP of content strategy: It's high time to build the internet that we wanted all along: a network designed to respect privacy, a network designed to be secure, and a network designed to impose reasonable controls on behavior. And a network with few barriers to entry -- in particular, the certainty of ISP extortion as new services pay to get into the "fast lane." Is it time to start over from scratch, with new protocols that were designed with security, privacy, and maybe even accountability in mind? Is it time to pull the plug on the abusive old internet, with its entrenched monopolistic carriers, its pervasive advertising, and its spam? Could we start over again?

That would be painful, but not impossible... In his deliciously weird novel Someone Comes To Town, Someone Leaves Town, Cory Doctorow writes about an alternative network built from open WiFi access points. It sounds similar to Google's Project Fi, but built and maintained by a hacker underground. Could Doctorow's vision be our future backboneless backbone? A network of completely distributed municipal networks, with long haul segments over some public network, but with low-level protocols designed for security? We'd have to invent some new technology to build that new network, but that's already started.

The article cites the increasing popularity of peer-to-peer functionality everywhere from Bitcoin and Blockchain to the Beaker browser, the Federated Wiki, and even proposals for new file-sharing protocols like IPFS and Upspin. "Can we build a network that can't be monopolized by monopolists? Yes, we can..."

"It's time to build the network we want, and not just curse the network we have."
Security

Crooks Reused Passwords On the Dark Web So Dutch Police Took Over Their Accounts (bleepingcomputer.com) 38

An anonymous reader writes: Dutch Police is aggressively going after Dark Web vendors using data they collected from the recently seized Hansa Market. According to reports, police is using the Hansa login credentials to authenticate on other Dark Web portals, such as Dream. If vendors reused passwords, police take over the accounts and set up traps or map the sales of illegal products. Other crooks noticed the account hijacks because Dutch Police changed the PGP key for the hijacked accounts with their own, which was accidentally signed with the name "Dutch Police." The second method of operation spotted by the Dark Web community involves so-called "locktime" files that were downloaded from the Hansa Market before Dutch authorities shut it down on July 20. Under normal circumstances a locktime file is a simple log of a vendor's market transaction, containing details about the sold product, the buyer, the time of the sale, the price, and Hansa's signature. The files are used as authentication by vendors to request the release of Bitcoin funds after a sale's conclusion, or if the market was down due to technical reasons. Before the market went down, these locktime files were replaced with Excel files that contained a hidden image that would beacon back to police servers, exposing the vendor's real location. Dutch Police was able to do this because they took over Hansa servers on June 20 and operated the market for one more month, collecting data on vendors.
Bitcoin

US Indicts Suspected Russian 'Mastermind' of $4 Billion Bitcoin Laundering Scheme (reuters.com) 99

schwit1 shares a report from Reuters: A U.S. jury indicted a Russian man on Wednesday as the operator of a digital currency exchange he allegedly used to launder more than $4 billion for people involved in crimes ranging from computer hacking to drug trafficking. Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the U.S. Justice Department along with several other federal agencies and task forces. U.S. officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011. They alleged Vinnik and his firm "received" more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes. U.S. authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik "obtained" funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.
Bitcoin

SEC Rules That ICO Tokens Are Securities (vice.com) 96

schwit1 shares a report from Business Insider: On Tuesday, the Securities and Exchange Commission (SEC) said that "ICOs" (Initial Coin Offerings) can sometimes be considered securities -- and as such are subject to strict laws and regulations. For the uninitiated, ICOs are a fancy new way of fundraising enabled by digital currencies like Ethereum -- participants invest money and receive digital "tokens" in return. Thus far, it has been largely unregulated, with some ICO crowdfunding events raising hundreds of millions of dollars -- leading some observers to argue that it is a massive bubble. But the SEC's warning means that this free-for-all may not last forever.

"Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission," reports Motherboard. "This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges."

schwit1 adds a quote from Benito Mussolini: "All within the state, nothing outside the state, nothing against the state."

Security

Fourth Ethereum Platform Hacked This Month: Hacker Steals $8.4 Million From Veritaseum Platform (bleepingcomputer.com) 99

An anonymous reader writes: "Veritaseum has confirmed today that a hacker stole $8.4 million from the platform's ICO on Sunday, July 23," reports Bleeping Computer. "This is the second ICO hack in the last week and the fourth hack of an Ethereum platform this month. An ICO (Initial Coin Offering) is similar to a classic IPO (Initial Public Offering), but instead of stocks in a company, buyers get tokens in an online platform. Users can keep tokens until the issuing company decides to buy them back, or they can sell the tokens to other users for Ethereum. Veritaseum was holding its ICO over the weekend, allowing users to buy VERI tokens for a product the company was preparing to launch in the realm of financial services." The hacker breached its systems, stole VERI tokens and immediately dumped them on the market due to the high-demand. The hacker made $8.4 million from the token sale, which he immediately started to launder. In a post-mortem announcement, Middleton posted online today, the Veritaseum CEO said "the amount stolen was miniscule (less than 00.07%) although the dollar amount was quite material." The CEO also suspects that "at least one corporate partner that may have dropped the ball and [might] be liable." Previous Ethereum services hacks include Parity, CoinDash, and Classic Ether Wallet.
Bitcoin

Ethereum Co-Founder Says Cryptocurrencies Are 'a Ticking Time Bomb' (bloomberg.com) 64

randomErr writes from a report via Business Insider (alternate source): Ethereum, the rival to bitcoin, has been on a tear. Its founders said the latest trend in the cryptocurrency space may not be as good for the cryptocurrency as some might think. Ethereum is up 1,700% over the last year, and that spike has occurred in tandem with the growth of the hottest new trend in fundraising: initial coin offerings. Approximately $1.2 billion has been raised by the new cryptocurrency-based capital raising method this year, according to Autonomous Next, a financial technology analytics service. It is a trend that has sparked excitement across Wall Street. But the cofounder of the company behind the cryptocurrency, Charles Hoskinson, told Bloomberg that initial coin offerings may not benefit Ethereum. "People say ICOs are great for ethereum because, look at the price, but it's a ticking time-bomb," said Hoskinson. "There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money."
Bitcoin

Hacker Allegedly Steals $7.4 Million In Ethereum After Hijacking ICO (vice.com) 64

An anonymous reader writes: An unknown hacker allegedly took over the website of an ethereum startup called Coindash, directing investors to send money to his or her own ethereum digital wallet, instead of the one controlled by Coindash. While Coindash noticed the hack almost immediately, the damage was done, and the hacker amassed more than $7 million in stolen cryptocurrency.
AMD

Chipmakers Nvidia, AMD Ride Cryptocurrency Wave -- For Now (bloomberg.com) 57

During California's Gold Rush, it was often the sellers of pickaxes and shovels who made the most money. In the frenzy to get rich quick from cryptocurrencies, some investors are calling computer chipmakers the modern-day equivalent. From a report: Shares of Nvidia and Advanced Micro Devices have gained at least 14 percent since the beginning of June, spurred in part by about a 10-fold boom from April to June in a market, known as ethereum, for a currency that can be used to buy computing power over the internet. What's the link between ethereum and these Silicon Valley chipmakers? It lies in the really powerful graphics processors, designed to make computer games more realistic, that are also needed to gain access to encrypted digital currencies. Nvidia and AMD have rallied in the last month and a half even as investors have ignored chip stocks leaving the benchmark Philadelphia Stock Exchange Semiconductor Index up about 1 percent. Nvidia has gained 14 percent and AMD rallied 27 percent. While some of that has come from optimism around new products for other markets, analysts are projecting that sales related to cryptocurrencies will result in a spike in revenue for both companies. Even so, investors shouldn't bank on a lasting impact from the cryptocurrency boom, said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co. "This has happened before," Rasgon said. "It lasted about a quarter." [...] Like bitcoin, ethereum is an attempt by an online community to create an economy that doesn't rely on government-backed currencies. Unlike bitcoin, it's focused solely on offering decentralized computing and storage services. Those seeking to use these services -- and speculators looking for a quick profit by creating and then selling ether -- have seized on graphics cards, which excel at performing multiple simple calculations in parallel, as a faster way to claim the blocks of code that act as the currency of the ethereum market. Demand from ethereum miners has created temporary shortages of some of the graphics cards, according to analysts, who cite sold-out products at online retailers. Estimates of additional sales from this demand run as high as $875 million, according to RBC Capital Markets analyst Mitch Steves. That would roughly equal AMD's total sales from graphics chips last year, or half of Nvidia's quarterly sales of those components. But Steves and other analysts are also quick to warn that the market opportunity could fizzle out.

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