Category Archive : Blockchain News

election-dilemma:-putting-data-on-blockchain-doesn’t-mean-it’s-correct

Election dilemma: Putting data on blockchain doesn’t mean it’s correct

Until recently, the use of blockchain in elections was perceived as nothing more than an experiment. However, during the recent United States presidential election, some tried to turn the public’s perception of the possibilities of blockchain technology. For example, the Associated Press, one of the largest U.S. media outlets, published the election results on the Ethereum and EOS blockchains. 

Does this results call, however, suggest that the time to use blockchain in elections has come, and does it make sense to use the technology if the information source is centralized?

Being on a blockchain doesn’t make data trustworthy

Criticizing the AP as a data source may seem strange, given that it has been calling U.S. presidential elections since 1848. Perhaps, its nearly 200-year reputation was a reason why two decentralized platforms, YieldWars and Polymarket, chose to use AP data as an oracle for the 2020 elections prediction market. A YieldWars spokesperson called the AP “arguably the most trusted news outlet in the world.” Still, the word “arguably” suggests that data validity might still be in question.

And many people have indeed done just that — considered the AP an insufficiently reliable oracle for use in tandem with trustless blockchains. Some Twitter users met the news with both skepticism and outrage.

Commenting on the validity of such a data source, Juan Aja Aguinaco, co-founder of Shyft Network — a public attestation network for assigning context, trust and validation to data — noted an interesting trend: In some instances, particular outlets showed somewhat different results from one another. Moreover, according to him, the press is not responsible for making that kind of call, as “They do so because it’s what drives readership and ratings, but it’s not up to them to determine the winners of the elections.” He further assumed that the issues raised against the AP being considered an oracle might be valid, with a caveat:

“IF the purpose of using AP, or any other unofficial source of information, as an oracle for a prediction market is fair game as long as the participants fully understand what that means and the fact that AP can say one thing, but until the legal processes are over, the official results are undetermined.”

Still, the risk of any data fraud is minimal with media outlets such as the Associated Press, according to Thomas Stubbings, chairman of the Austrian Cyber Security Platform. He told Cointelegraph: “Probably few people would argue that AP is a more reliable source than, let’s say Breitbart News. Therefore, the reliability and trustfulness of a source like AP can be considered as given.”

By feeding bad data, the AP would effectively destroy its 100-year-old reputation as an unbiased reporter of elections, according to Artem Kalikhov, chief product officer of Waves Enterprise — the company whose technology was recently tested during Russia’s elections. He opined in an interview with Cointelegraph: “Since the data is cryptographically signed, the oracle node can’t manipulate it, only AP could taper with it, which is unlikely to happen.”

But what if the media is attacked by fraudsters? Although there is a possibility that a media outlet could be hacked and fake news spread, this would be noticed rather quickly. Stubbings said:

“Hacks which have a public impact are noticed very fast. As soon as there is any reasonable doubt, cybersecurity and forensic experts would jump in and examine the situation. And if there has been a hack or fraud — it will be found. Therefore, the possibility that an acknowledged medium can be hacked and fake information can be spread over a long time is absolutely impossible.”

He also suggested that a centralized media source could be more reliable than social media, which — ironically — seems to be more decentralized. “If it’s possible to centrally control such a media (like Facebook), it is possible to manipulate decentralized opinions from a central position,” said Stubbings, who added that this is what happened with Cambridge Analytica in 2016, where voters were centrally manipulated.

At the same time, Stubbings noted that any source is only as valid as the trust that is associated with it. The question “When is a source trustworthy?” is much more difficult to answer. Does this mean that the reputation of a trusted news source doesn’t guarantee that it’s actually trustworthy?

Decentralized oracles are not a solution

As it turns out, even if centralized, a trusted data source can supply information about elections to a blockchain. From that moment onward, the data cannot be deleted or changed. However, the question of how blockchain can verify the authenticity of the information remains open.

The problem is that today, smart contracts are not able to check whether the source of real-world information is reliable and complete. All that a smart contract can do is ensure the fulfillment of the prescribed conditions — for example, launching the function of replacing the president’s name on a platform after receiving information of their victory.

The good news is that there is a technology that can verify information, unlike a smart contract, and transfer it to a blockchain. These are trustless information providers — or oracles, as they are called in the blockchain space. However, not every information provider can be a true oracle. The oracle must be able to check the validity of the data — and, therefore, of the source of the information itself — and provide data on a wide range of events from the real world. Thus, having a reliable source of information is essential for the oracle to be reliable and complete.

In a conversation with Cointelegraph, Alice Corsini, chief operating officer at Provable Things — a platform that develops decentralized solutions, including oracles — agreed that when it comes to sensitive operations like political elections, it’s key for anyone to be able to verify the authenticity of data managed by oracles: “On this extent, oracles can adopt security technologies such as Trusted Computing for enabling data-authenticity verification and making the process transparent.”

Today, there are two main approaches to achieving the reliability of oracles. The first is oracle consensus, through which information is verified by several independent validators at once. In the second approach, the user themself chooses the source of information on the internet. Such a solution, for example, is offered by Provable Things, where TLSNotary proofs are used for proving the correct operation of the oracle. TLSNotary proofs provide cryptographic evidence that the data received from the selected source has been transferred to the smart contract unchanged.

Nevertheless, the problem of the reliability of the source itself remains unresolved. While both approaches guarantee the transfer of data from the source to the contract, they do not guarantee the integrity of the source, even if the oracle validators themselves chose it.

Speaking on the use of data published by the AP, Waves Enterprise’s Kalikhov suggested that although blockchain is already being used in national elections, this specific project does not bring real blockchain-based value to the voting process, as it’s only about fixing results in an immutable environment: “In case of oracle approach we still rely on traditional methods of vote collection and keeping vote secrecy before data gets to blockchain.”

More means better?

Some suggest that using multiple data sources and oracles together provides the best results in terms of the reliability and trustworthiness of the voting process. This means that using multiple media sources instead of just the AP might bring more trust to the process — even better if they are both local and foreign, and include social media.

An anonymous co-founder of YieldWars previously told Cointelegraph that future elections and prediction markets will be able to offer a more robust collection of oracles: “I envision there being multiple oracles like AP and I predict in the next election that we will see that. Having a number of trusted oracles settling markets should settle virtually all disputes.”

Kylin Network, a provider of decentralized oracles that recently received a Web 3.0 grant for building data infrastructure, offered to solve the problem of trustworthy data sources by collecting information about a particular event from indirect sources. So, the greater the number of these sources, the better. Dylan Dewdney, CEO of the platform, explained to Cointelegraph:

“So, to determine the election result, posts on social networks with the appropriate tags and date, the number of mentions of the presidential candidate on the Internet, publications in the media, etc. can be taken into account at the same time.”

Dewdney also noted that oracles must process large amounts of data simultaneously to ensure correct results. The best way to maintain that performance, according to him, is to make sure oracles have a stake in the game against a challenge or arbitration nodes.

This way, decentralized application developers can use such platforms to provide a validated premium data feed of their results of calls and validate all the API feeds to the chain. It’s in the interest of data providers to distribute accurate information because if it is challenged, they stand to lose the money they stake, as Dewdney added. “So, as a premium data feeder that has undertaken a validation process that is both decentralized and apolitical, the data I can provide — in this case, election results — becomes very valuable, and access to it, very valuable.”

In part, the experience of rewarding validators for providing information is used in the prediction markets. For example, the platform Augur uses the “wisdom of the crowd” principle to predict future events. Users predict the possible outcomes of these events by buying shares of the reward for correctly guessing the results. This approach results in economic motivation for the participants to ensure a correct prediction, and in the event that they are incorrect, they lose their stake. The forecast in this case is the weighted average of the expectations of all users.

The use of prediction markets greatly increases the completeness of the information provided, as anything can be predicted — if there are enough stakers — and reliability is provided by the economic motivation of the participants.

Has the time for blockchain in voting come?

Ultimately, the mere fact that the Associated Press interacted with blockchain to record voting results is not direct evidence that blockchain’s time in elections has come. Ashley Pope, co-founder of Fortis Block — a company that provides solutions for secure blockchain voting and digital elections for government, enterprise and nonprofits — claimed that instead, the news has shown the limitations and pain points of the current voting system:

“A large part of election processes worldwide are completed manually using a combination of paper/pencil/pen, and in some cases software. Voting is by and large stuck in the 1850’s. We bank online, pay taxes online and go to the doctor online yet voting is still completed manually. ”

Although the use of blockchain can technologically make elections transparent and reliable for voters, the problem of trust in authorities and the media, psychologically, may remain the same, according to Aguinaco: “Most people are distrustful of politicians and of the processes that get them elected. We could be using a 99% secure system and there would still be conspiracy theories, unrest, etc.”

In general, the use of blockchain in voting can have a positive effect on the electoral process. However, the transition to decentralized voting is not yet possible due to the laboriousness of organizing the process and its complexity for voters. It might, however, be more realistic in the short term to use decentralized oracles to validate votes. Although existing solutions provide a sufficiently reliable transfer of this information, the underlying issue of its original reliability still remains unsolved.

chinese-banking-giant-withdraws-$3b-blockchain-bond-from-listing

Chinese banking giant withdraws $3B blockchain bond from listing

The $3 billion blockchain bond has been effectively cancelled.

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Chinese banking giant withdraws $3B blockchain bond from listing

China Construction Bank’s $3 billion blockchain bond has been reportedly withdrawn following an initial delay.

Fusang Exchange, a Malaysian cryptocurrency exchange that was to be responsible for listing the bond, said that it has been withdrawn at the issuer’s request.

According to Reuters on Nov. 23, CCB’s branch in Labuan informed Fusang Exchange on Nov. 20 that the bond issuance would not proceed.

The blockchain-based bond was to be issued by Longbond Ltd, a special purpose platform designed solely to issue digital bonds and deposit the proceeds with CCB Labuan.

On Nov. 13, the day the bond had been due to be traded, Fusang Exchange officially announced that the $3 billion blockchain bond was delayed “at the request of the issuer.” According to the latest report, Fusang Exchange received a letter from CCB Labuan on behalf of Longbond postponing the listing.

As previously reported, CCB, one of the largest banks in the world, planned to raise up to $3 billion with the bond, with an initial tranche of $58 million at launch. 

Initial reports suggested that, since the bond would be tokenized and traded on a cryptocurrency exchange, interested buyers could trade Bitcoin (BTC) and other cryptocurrencies for the bond. This claim was since disputed by CCB. 

how-has-the-covid-19-pandemic-affected-the-crypto-space?-experts-answer

How has the COVID-19 pandemic affected the crypto space? Experts answer

Who could have imagined a year ago how different our lives would be in just 12 months? Without any doubt, last November will remain a significant point in humanity’s history — the time when it all started. Although “patient zero” has not yet been confirmed — if it ever will be at all — we now know that everything began in China back on Nov. 17, 2019, when the first patient reportedly presented symptoms of a novel coronavirus disease named COVID-19, according to the South China Morning Post with references to government data.

In January 2020, Wuhan city in central China suffered from the massively expanding COVID-19 epidemic, and “41 admitted hospital patients had been identified as having laboratory-confirmed” cases, according to a publication in The Lancet. Just two months later, in March, the World Health Organization declared COVID-19 a global pandemic. One by one, governments worldwide closed their national borders, suspended public events, and banned people’s gatherings. The conversation unearthed two terms, rarely used before, which have now been declared 2020 words of the year by British Collins Dictionary: “lockdown” and “social distancing.”

It’s hard to imagine which spheres of our lives have not been affected by these dramatic and tragic events, with the number of confirmed global cases exceeding 55 million.

Despite everything, the ongoing COVID-19 crisis has also had a positive impact on the world. European conservatism, which has long relied on the traditional financial system, was questioned as the pandemic forced Europeans to shift toward cashless payments and cryptocurrencies. Some say it even fastened the mainstream adoption of crypto and DLT-based business solutions globally by changing people’s understanding of money.

Related: What the COVID-19 pandemic means for blockchain and crypto

Specifically, the COVID-19 outbreak has propelled Bitcoin’s (BTC) safe haven narrative as central banks print an estimated $15 trillion in stimulus in an attempt to ease the pandemic’s effects on global economies. Amid rising inflation rates, people are turning to Bitcoin as the next inflation hedge.

Related: Not like before: Digital currencies debut amid COVID-19

Meanwhile, in the name of public health, governments are initiating COVID-19 tracking programs, raising serious concerns about privacy violations and the tightening grip of centralization in the process. Not stopping there, governments have also taken another step in eroding civil autonomy via the development of central bank digital currencies, initiatives for which have been boosted globally due to the COVID-19 crisis. While experts see the solution to safeguarding privacy in decentralized technologies, the question about over-promised decentralization remains open.

Nonetheless, the coronavirus outbreak significantly changed everyone’s lives, creating the new normal we now live by. Yet, despite all the challenges we are facing economically, politically and socially since the start of the year, there is no doubt that the pandemic is propelling digital innovation and accelerating humanity 20 years forward in technological development.

It is too early to tell when it all ends, as COVID-19 is still gaining speed. Now, a year since Wuhan’s first case, Cointelegraph reached out to experts in blockchain technology and the crypto space for their opinions on how the coronavirus pandemic has impacted the industry.

What impact has the outbreak of the COVID-19 pandemic had on the crypto space?

Asheesh Birla, general manager of RippleNet:

“COVID-19 exacerbated the inequities for many people who are unbanked or underbanked and highlighted the gaps that we have in our financial infrastructure where those who have the least, pay the most — on average the cost to send $200 is $14. Despite the pandemic, people still need to send money to family and friends abroad. As a result, remittances have continued to surge in some of the largest corridors. The U.S. to Mexico corridor, for example, saw a considerable increase in remittances from the start of the pandemic, with Mexico receiving $4.02 billion from abroad in March 2020, a 36% increase from March 2019. Ripple can help lower the cost of remittance payments by using crypto and blockchain to make cross-border payments faster, cheaper, and more reliable. Bitso, one of Mexico’s leading exchanges, is transacting close to 10% of total remittance flows from the U.S. to Mexico through Ripple’s technology that uses XRP as a bridge currency. In tandem, there’s more interest in the space than ever before with major companies like PayPal and Square placing their bets on crypto, pushing it to the mainstream. Validation from these companies has contributed to more interest in the utility of cryptocurrencies, and their ability to better serve their businesses and customers.”

Da Hongfei, founder of Neo, founder and CEO of OnChain:

“From my perspective, COVID-19 did not negatively impact the blockchain space — if anything, it drove increased demand for blockchain innovation and adoption. By revealing the weaknesses of our current paradigm, COVID-19 also highlighted the urgent need for blockchain technology. For example, COVID-19 demonstrated the failings of today’s centralized supply chain system, revealing its fragility and lack of agility. By leveraging blockchain, we can build a decentralized supply chain which can quickly ascertain and then distribute products based on a specific area’s needs. Similarly, blockchain technology could also be deployed to more efficiently track and trace infection cases while also protecting patients’ privacy. In fact, we’re already seeing this shift to blockchain in a time of uncertainty — increasingly more institutions and people are embracing Bitcoin as it is viewed as a stable, mainstream asset in these trying times. If anything, I believe that COVID-19 firmly proved the need for not only blockchain, but also a truly digital and smart economy. Moving forward, we must break from our current paradigm to embrace a truly digitized and globalized world which has the flexibility, agility, and efficiency to flourish and thrive.”

Mike Belshe, CEO at BitGo:

“The economic upheaval due to our pandemic times are creating shifts in attitudes and greater interest in digital assets. COVID-19 has significantly accelerated the adoption and interest in crypto around the world. Important to note is that the determined effort of companies like ours to build a secure, compliant foundation is enabling the influx of new crypto investors, including large institutional firms such as investment banks and major custodians. Fortunately, we are able to meet the moment as a result of all the hard work we’ve put into building a new monetary system from scratch these past 10 years. Prior to COVID-19, most people weren’t paying as much attention to the economic factors that make Bitcoin relevant. Frankly, they didn’t need to. If you’re generating a return from the stock market, you stay with what you know, and you don’t have to worry about learning something new. But now that’s all changed with the pandemic — fiscal policy around the globe is causing governments to wildly print money, reducing its value and causing inflation. Investors now understand they have to get ahead of this. They are asking a lot more questions and are grasping the underpinning of Bitcoin’s thesis — that an asset’s scarcity matters. Digital assets are a hedge against inflation and a safe store of value. Investment leaders such as Paul Tudor Jones, Stanley Druckemiller and Bill Miller are demonstrating that Bitcoin is now an important part of any portfolio. This year has brought so much uncertainty but people are feeling empowered to educate themselves on what they need to do to get involved with crypto. All the building blocks are in place — compliance, custody, liquidity, portfolio management and wallet technology, as well as tax tools — giving investors the tools they need to invest in digital assets.”

Preston Byrne, Partner at Byrne & Storm, P.C.:

“The COVID-19 outbreak’s most tangible impact on crypto was validation of crypto’s core thesis that our societies are brittle and math, not men, is likely to form a sounder basis for future social organization. The reliance of practically every major economy on fiscal and monetary stimulus to stay afloat reinforced and widened public perception of the weakness of fiat money and institutions. ‘Crypto,’ so-called, is a diverse array of beliefs and areas of interest ranging from hard money, to censorship-resistance, to secure communications. These technologies are uniquely responsive to social and enterprise adaptation to stressors that have dominated headlines in the last year, whether we’re talking about ‘Money printers go brr,’ the ongoing exodus from big tech, or widespread social unrest in the cities.”

Tim Draper, venture capitalist and noted Bitcoin investor:

“A lot of people, stuck in their homes finally made the time to set up a Bitcoin wallet, but the real impact of Covid was that the lockdown was devastating for many families, and when the government printed $13 trillion to try to put a bandaid on it, it made it clear that you would rather be holding Bitcoin than these diluted and dilutable dollars. I expect ‘fiduciary duty’ to now include owning some Bitcoin as a hedge against government currency flooding and manipulation.”

These quotes have been edited and condensed.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

kucoin-inches-closer-to-recovery-by-reopening-deposits-and-withdrawals

KuCoin inches closer to recovery by reopening deposits and withdrawals

After a crippling hack, KuCoin looks to return to normalcy — but what’s next for the troubled exchange?

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KuCoin inches closer to recovery by reopening deposits and withdrawals

In the latest step towards full recovery after a devastating hack in September, Crypto exchange KuCoin announced today in a blog post that it has “restored the deposit and withdrawal services of all tokens.” 

The announcement follows a partial reopening that took place in October where users could move their BTC, ETH, and USDT off the exchange. This latest step opens withdrawals and deposits to all coins and tokens, though certain tokens may have withdrawal limits due to what the exchange called “ongoing judicial proceedings.”

The re-opening is a promising step towards normalcy after a crippling hack on Sept. 26. The exchange initially said the losses stood at $150 million, but crypto analytics giant Chainalysis pegged the number closer to $275 million

The hack mobilized a massive response across the cryptocurrency world, with multiple projects choosing to freeze their tokens, reclaim them from the hackers, or even initiate hard forks to help the exchange restore user funds.

By Oct. 1st, the exchange claimed that it had both identified the suspected attacker, as well as recovered upwards of $200 million in stolen funds. 

But, as the exchange looks to put the hack and its fallout in the past, not all is looking bright for KuCoin’s future.

As Cointelegraph has previously reported, more trouble awaits KuCoin as the exchange is facing down legal trouble on two fronts: in Singapore, where it faces a web domain lock, as well as in the US, where it must fend off a class-action lawsuit.

the-word-‘decentralized’-has-lost-all-meaning-—-enough-is-enough

The word ‘decentralized’ has lost all meaning — Enough is enough

Decentralization: It’s a word that holds so much power and promise. But over the years, it’s become painfully clear that this concept isn’t being given the respect it deserves — and the consequences can be downright dangerous.

We live in a world where DAOs aren’t DAOs, where independent validators aren’t independent, and where PR departments breezily gloss over the fact that some blockchain projects are far more centralized than they may seem.

Emotionally and financially, countless crypto enthusiasts have bought into decentralized projects — full of belief that these platforms will bring about change and hopeful that they could make a lasting contribution that would make the world a better place.

Back in September, Glassnode questioned whether Uniswap was as decentralized as it appears to be. An “immense proportion” of the total supply of UNI tokens, 40% to be exact, has been allocated to the platform’s teams and investors, and the only entity with enough UNI to submit a governance proposal is Binance, a centralized rival. Glassnode went on to accuse the Uniswap team of “somewhat deceptive” marketing, adding: “The narrative of a shift toward decentralized community ownership feels somewhat disingenuous.”

And in March, the supposedly decentralized Steem blockchain fell victim to a “hostile handover” by Tron founder Justin Sun. One major stakeholder, Dan Hensley, accused Sun of bribing his way to the top of Steem with “money, power and users” — and went on to claim that his domination “turned Steem into a centralized security.”

Enough is enough.

Lessons need to be learned

To understand why the facade of decentralization can be downright dangerous, here’s a real-world example.

On a boat in the middle of the Nile 10 years ago, I proposed to my girlfriend. She said yes. We returned to the United Kingdom, yearning to go on vacation to Upper Egypt again.

A short time later, the failed Egyptian uprising began. My background as a journalist, mixed with the paranoia of the country’s authoritarian government, made it too risky to return.

Back then, pro-democracy protesters — who were mostly young, secular and “connected” — put their faith in social media platforms and messaging apps, believing they were decentralized enough to give them a fair hearing and an accurate view of what was happening in Egypt.

Their faith turned out to be misplaced.

Before their movement was crushed, I actually wrote an article about this exciting use of technology — contrasting it against centralized, state-controlled broadcasters. I had been naive: Twitter and Facebook turned out to be centralized organizations like any other. These platforms quickly turned into tools of suppression, censorship and propaganda by the various forces operating within Egypt (including the military, Islamist extremists and foreign powers). Internet service providers handed over user data to the government, Facebook admins and posters lost their freedom, and some lost more than that.

The internet was born free, but decisions made by corporations infected this revolutionary technology with centralization. Since then, several decentralized blockchain networks — Ethereum among them — have suffered a similar fate.

Lessons need to be learned. We now know that decentralization can diminish over time unless the issue is tackled head on. The only way to do this is by hardwiring the principle of decentralization into the blockchain itself… from day one.

What decentralization must look like

After years of broken promises and disappointment, it’s little wonder that the meaning of decentralization has been lost. Crypto enthusiasts have had to manage their expectations and make do with the downsides of current governance models.

We need to take a step back and acknowledge that deep flaws exist in the way many blockchains are set up. These flaws, which often sow unfairness and a lack of transparency, drag us to the centralized world we are trying to avoid.

Take grants as an example. On the face of it, these programs have the potential to spread wealth and influence among a community — but look a little closer, and you start to see things in a different way.

As Lane Rettig recently wrote, grants are often very centralized. Founders use them to further existing agendas, and funds tend to be given to people they already know and trust. It can be a breeding ground for bias and nepotism — and means blockchain’s unique selling point of “permissionless innovation” goes to waste. He pointed out how some of the largest grants dished out by the Ethereum Foundation were awarded to close friends of Vitalik Buterin, adding: “I have yet to see a well-run grants program in the blockchain space.”

It doesn’t have to be this way. What if contests were held instead? This would ensure that everyone in the community can have their say in how funds are distributed — creating a meritocracy where tokens are awarded based on talent, not connections. Vote results would be recorded on-chain, meaning any conflicts of interest would be easier to detect. Better still, it would make getting involved in a community far less daunting. The quietest people in the room often have the best ideas.

Concerted action to stop the creeping threat of centralization in its tracks doesn’t end here.

The funds it takes to get involved in staking can often be prohibitively high. And when an individual stakes tokens with a validator, this can mean that they’re forfeiting the right to vote how they please, as the validator will make decisions on their behalf. But what if all these individuals retained their voting rights during the staking process, preventing power from being concentrated into the hands of a few?

And there’s more hard work to be done. Decentralized governance only works if it’s truly scalable. If a network collapses because 100, 1,000 or 1,000,000 people want to participate, it’s game over. Blockchains need to be built with mass-scale messaging in mind and must be able to cope with a high throughput of secure transactions — enabling large-scale votes and contests to be held in real time.

And last but not least, there need to be adequate incentives for long-term participation. Sub-governance groups are key here, as they can give individuals the freedom to build their experience and reputation in the areas they enjoy most. Passionate about social media strategy? There’s a group for that. Fascinated by how node cores are maintained? That’ll be the second door on the right.

Once people see that a successful combination of decentralized governance and decentralized money is possible, there will be no going back — and blockchains that merely have the veneer of decentralization will have tough questions to answer.

I hope it’s just a matter of time before this new way of cooperating, free from any central control or hierarchy or manipulation, reaches people in every country — including Egypt.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sharif Sakr is a former BBC and Engadget journalist who now works as a product management specialist for blockchain investment fund BR Capital, as well as teaching product management workshops at the University of Oxford. He is an initial launch member of the Free TON Community.

bretton-woods-2.0-is-knocking-at-our-door,-and-it’s-not-here-to-help

Bretton Woods 2.0 is knocking at our door, and it’s not here to help

Barely 100 years ago at the start of the 20th century, people were able to exchange dollars for gold at their local bank. While gold was too hard to trade between people, banking institutions held gold and gave people cash for it. This was during what was known as the gold standard. Each sovereign currency’s value was determined relative to a fixed amount of gold. However, in the decades ahead, that standard quickly changed.

Toward the end of World War II, dozens of powerful people organized a meeting to discuss a new monetary agreement designed to minimize the economic damage done by the war. This meeting was named after the location where it took place: Bretton Woods, New Hampshire, in the United States.

It was a long-term plan with several parts that spanned over decades. And the Bretton Woods delegates decided that multiple fiat currencies would now be backed by the U.S. dollar as opposed to gold itself. At first, the dollar proved to be stable enough to support the Bretton Woods agreement in 1944 — until it wasn’t in the decades ahead. During the Vietnam War, President Richard Nixon called for more money. There wasn’t any more money in circulation. So, he started printing.

In 1971, President Nixon ended the dollar’s convertibility to gold, which effectively ended the Bretton Woods agreement after nearly 30 years.

The removal of the gold standard turned each country’s fiat currency into a floating exchange rate that was no longer fixed. Money was not measured by the dollar anymore; now, each currency was measured in relation to every other currency, with prices that constantly changed, creating foreign exchange market volatility.

Bitcoin as an opposition

Today, one asset that fiat currencies are measured against is Bitcoin (BTC). As I mentioned in 2019, I think Bitcoin is the best investment when it comes to currencies in the sense of sound money.

In certain countries — such as Brazil, Argentina and Venezuela, to name a few — Bitcoin’s price is currently at an all-time high compared with their national fiat. Relatively speaking, that’d be equivalent to Bitcoin price already being around $20,000.

The problem is that Bitcoin is not ready to be a monetary system in and of itself. Most people who have Bitcoin are just holding it — they’re not selling it or using it as currency due to its potential to rapidly appreciate, despite the downside risks.

Bretton Woods 2.0

Meanwhile, the International Monetary Fund is now calling for a second Bretton Woods era to be announced in 2020. This would establish the Special Drawing Right, or SDR, as the new reserve currency as opposed to the U.S. dollar. The SDR serves as the most stable investment option for the IMF. Its value consists of the top five global fiat currencies as a protection against volatile movements in forex markets. The problem with the SDR approach is that it could make the economic situation even worse than it is today.

History has shown that when people have an inflated amount of power with regard to money, they will use it. Just look at President Nixon during the Vietnam War and the original Bretton Woods agreement in the mid-20th century. Even worse is that now, nearly all central banks are printing more money, which in turn leads to inflation as fiat currencies lose their purchasing power.

We can’t have a single powerful entity with the power to print itself out of temporary trouble, especially while it would be putting us in future debt that would be impossible to manage. This is the opposite of democracy, where only a few people control big monetary decisions that affect everyone. Cryptocurrencies like Bitcoin aim to solve this dilemma, thanks to their limited supply, among other favorable qualities inherent in blockchain technology.

Blockchain tech has a solution

Blockchain has raised our standards to expect decentralization in the institutions that are meant to serve us. True decentralization is reached when the hierarchy is broken. Everything becomes transparent, and incentives are offered to push the system forward in the right direction.

Sogur, for example, is a startup tackling the ambitious challenge of creating a new monetary system based on its cryptocurrency SGR that models the SDR while leveraging blockchain and an intelligent economic design advised by world-renowned economists.

I like the idea of currency baskets that serve as a much more reliable, stable means of exchange. I don’t like that the IMF gets endless decision-making power over our global monetary system. Blockchain-based solutions are different — they have a foundation that’s governed by an assembly and, for example, can give SGR holders veto power over every decision at any given time.

Blockchain technology can combine the elements of decentralized governance into a classical corporate structure, in order to comply with international laws and Anti-Money Laundering requirements, while using a smart-contract-based bonding curve to tame inflation and volatility, which remain two of the biggest problems with traditional fiat currencies that can be solved.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Charlie Shrem was an early Bitcoin entrepreneur and has been a founding member of the Bitcoin Foundation since 2012, serving as vice chairman from 2012 to 2014. He is best known for founding BitInstant in 2011, one of the first platforms to buy Bitcoin. Starting in 2014, he spent two years in prison for operating an unlicensed money transmission business. Since then, Shrem has served as chief operating officer of Decentral, which developed the cryptocurrency wallet Jaxx, and founded Crypto.IQ. He currently hosts the podcast Untold Stories where he interviews crypto industry leaders.

multiparty-computation:-the-trojan-horse-of-crypto-regulation

Multiparty computation: The Trojan Horse of crypto regulation

Every once in a while, the crypto community crowns a new king for secure transactions, and the latest king seems to be multiparty computation, or MPC. This year, MPC adoption by custodial and noncustodial players has progressed and gained market traction at a rapid pace.

However, it could come at a price. MPC providers offer regulators a backdoor into cryptocurrency transactions. As the industry becomes more reliant on MPC for security, it could end up compromising on the long-held principles of decentralization and censorship-resistance.

The hidden features of MPC

In order to identify where the risks exist, let’s briefly recap on MPC and how it’s used. At the most basic level, MPC technology involves splitting private keys into segments and distributing them between different parties. Most commonly, the client holds one key segment, and the MPC provider holds another. The aim is to improve security by ensuring that no party has full control over any given transaction, which can only be executed if both parties provide their key segments.

MPC service providers usually present their technology as something that merely helps to secure transactions. It’s sold under the premise of: “We keep half a key, you keep the other half, but you are the boss — only you decide when and where to transfer your funds. You can also pull all your funds from our account whenever you want.”

But in reality, that isn’t exactly the case. MPC service providers act as middlemen whose approval is needed for a transaction to be executed.

In this sense, MPC providers are playing a near-identical role to banks, with blockchain serving the role played by the SWIFT system. You could replace the sender’s bank with an MPC third-party service provider and replace the SWIFT system with the blockchain. The sole difference here lies in how the sender sends the payment. With a bank, the sender instructs the bank to release the funds; with an MPC provider, the sender and provider jointly sign the transaction. Both parties submit a partial key that is then transmitted to the blockchain by the MPC service provider.

One could make the argument that there’s a significant difference between banks and MPC providers not accounted for in this comparison: Banks can freeze funds and even confiscate them. However, the issue is that such backdoors also exist in MPC providers.

There is no argument here that MPC providers are just bad guys who want to rob their clients of their funds. As reputable, professional companies working with institutions, they need to meet a primary demand from their clients — that crypto funds are recoverable if someone loses their key.

Private key security has long been a sticking point for institutions and crypto firms. So the ability to recover funds in the event of a key loss is absolutely critical for any firm that is claiming to offer secure crypto storage. Imagine a bank that didn’t allow you to recover a forgotten password, simply telling you that if you’ve lost your password, your money has gone forever.

Here comes the regulator

In light of the responsibility they hold for customer’s funds as a third party, it’s evident that MPC providers offer a backdoor for regulatory intervention. Ultimately, this means that MPC companies could play the same role as banks.

If a legal authority demands an MPC service provider to stop a transaction, it will be compelled to do so. Furthermore, if MPC providers allow users to recover lost keys, it means that a regulator could also issue a demand to confiscate funds. Again, assuming this is a legally binding request, the provider would be forced to comply if they want to stay in business.

This isn’t mere hyperbole. The regulators are already here. In June 2019, the Financial Action Task Force, or FATF, approved an initiative to regulate virtual assets and virtual asset service managers. While overall compliance is still low, we can rest assured that the FATF will continue to widen the net until all Virtual Asset Service Providers are included.

While the crypto community’s focus has been on how exchanges will manage the FATF regulation, MPC providers also perfectly match the profile of a Virtual Asset Service Provider, which manages and transfers client funds in a similar way to a banking wire transfer. The same regulatory conditions apply to all companies who directly or indirectly hold, manage or control virtual assets.

So it follows that this regulation creates the same expectations from MPCs as those that are currently applied to the banking system. In the end, this could mean large transactions become reportable to the regulator, and clients are subject to the same Know Your Customer and Anti-Money Laundering requirements as they are for a bank account.

Traditional banks to run MPCs?

If more evidence were needed, we only need to look at the big banks who have already recognized that MPC technology offers benefits that fit with their existing compliance frameworks. Citibank and Goldman Sachs have already invested in MPC providers, and we can expect many more to be announced very soon. With the United States Treasury Office of the Comptroller of the Currency having already green-lit crypto custody services for federally chartered banks, MPC offers a regulator-friendly way for banks to start digging into the crypto pile.

The fact that MPC service providers limit the mobility of their customers by creating dependency on their own wallets could also prove to be attractive to banks, creating a kind of forced loyalty far removed from the vision of open finance that is held dear by many in the crypto space.

It’s easy to assume that such a network will manage only “authorized” currencies and coins. “Unchecked” assets, like your personal Bitcoin (BTC), won’t generate the kind of fees they could levy on authorized transactions, and might even be banned over time.

To sum it all up

On a technical level, MPC is impressive and might fit perfectly for players who have no concerns about regulators getting involved in crypto. However, for those who do, it’s worth being aware that it also provides a backdoor to the regulated and centralized cryptosphere in just the same way as regulated and centralized exchanges are already experiencing. This is a good enough reason to think twice before advocating or using it.

As a final point, it’s worth adding that the technology is still very much in its infancy. There is a vision for the creation of a decentralized MPC, but it’s far from a developed solution. The route there is still long and winding, but it would be a step in the right direction for those who advocate the original vision of decentralized, open networks underpinning an internet of value. I urge you to ask your MPC service provider what happens if you lose your wallet or your seed.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Asaf Naim is the CEO of Kirobo, which develops a logic layer into the blockchain that protects users from human error. He first discovered crypto in 2013 and was hooked. He believes in the future of digital currencies and is an ardent supporter of the concept of network decentralization. Asaf is an accountant with a master’s degree and has over 15 years of experience in fintech as well as expertise in blockchain and cryptocurrencies, startup development, online banking, and technological solutions and products.

$pickle-in-a-pickle-as-attacker-swipes-$20-million-in-“evil-jar”-exploit

$pickle in a pickle as attacker swipes $20 million in “evil jar” exploit

The perils of decentralized finance in the spotlight yet again after the latest major DeFi exploit

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$pickle in a pickle as attacker swipes $20 million in “evil jar” exploit

In yet another attack on a major decentralized finance (DeFi) protocol, farming project Pickle Finance has been exploited today to the tune of $20 million. 

The attack transpired roughly two hours ago, and ETH-savvy Twitter users were quick to notice that pickle’s cDAI jar — Pickle’s term for a yield-bearing vault — had been emptied:

I think @picklefinance‘s cDAI jar just got attacked and drained. https://t.co/Lxwi2dWSSZ pic.twitter.com/nUBE1KjEPh

— mattyb (@mattybchats) November 21, 2020

Unlike other recent attacks however, this particular exploit did not feature flashloans — an increasingly maligned DeFi tool that allows would-be exploiters additional liquidity with which to manipulate on-chain prices. Instead, this hacker swapped funds between a malicious copycat contract and the cDAI jar. 

In an interview with Cointelegraph, Emiliano Bonassi — a self-described whitehat hacker and the co-founder of DeFi Italy — explained that the attacker created “evil jars, ” smart contracts which “have the same interface of traditional jars but do bad things.”

The attacker then swapped funds between his “evil jar” and the real cDAI jar, making off with the $20 million in deposits.

— Emiliano Bonassi | emiliano.eth (@emilianobonassi) November 21, 2020

Particularly after the attack on Harvest Finance, Pickle Finance had looked to be on its way towards becoming one of the preeminent farming protocols. As of press time, Pickle’s stats website reported nearly $75 million total value locked remaining on the books, while the price of pickle, Pickle Finance’s governance token, is down 50% on the day to $11.16.

Pickle Finance’s woes are just the latest in a troubling trend across the DeFi space. Recent exploit victims in just the last few weeks include Harvest Finance, Value DeFi, Akropolis, Cheese Bank, and Origin Dollar, among others.

Perhaps, however, the vulnerabilities of one DeFi vertical might lead to the success of another. Said one Twitter trader:

Security audits are a meme.

The new “audit” will be having proper insurance coverage.$Nsure $Cover

— Cope_Infinitum (@CryptoMessiah) November 21, 2020

crypto-hedge-fund-pantera-capital-files-for-massive-$134-million-raise

Crypto hedge fund Pantera Capital files for massive $134 million raise

The monster raise might be an indication that Pantera’s ambitions are inflating in lock-step with Bitcoin’s rising price.

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Crypto hedge fund Pantera Capital files for massive $134 million raise

In a filing with the SEC yesterday, Bitcoin hedge fund giant Pantera Capital announced an equity offering of up to $134 million — among the largest capital fundraising efforts in the seven year history of the firm. 

Formed in 2013 as the first-ever Bitcoin fund in the United States, Pantera initially raised a comparatively measly $13 million, and later $25 million, according to reporting from Cointelegraph.

But in 2018, the fund directed its efforts towards a larger raise that would result in the formation of a third investment fund, dubbed Venture Fund III. This new fund attracted $164 million from 2018-2020, with the bulk of the capital inflows bookending crypto’s dreadful 2019 year.

Now, as crypto seems poised to enter yet another raging bull market, the SEC filing indicates that Pantera has big plans ahead. 

While there has been no word as to if this new raise will result in a new fund or simply expand the scope of Venture Fund III, Pantera’s latest investments and executive comments might offer hints at its forthcoming strategy.

In an interview with Contelegraph, Pantera CEO Dan Morehead said he believes the growth of decentralized finance has the potential to outstrip Bitcoin’s rise, and that the firm is focusing their new bets on the emerging financial vertical. Additionally, Pantera seems to have their eye on the expanding cryptoasset derivatives market, as shown by a recent investment in derivatives platform Globe.

Bitcoin bulls shouldn’t feel scorn by the interest in DeFi and derivatives, however. Morehead has also previously made a moonshot price target for the largest cryptocurrency, as he once called for a Bitcoin price of $350,000.

blockchain-is-good-for-hodling,-but-not-for-voting:-bad-crypto-news-of-the-week

Blockchain is good for hodling, but not for voting: Bad Crypto news of the week

Analysts make a slew of wild predictions as Bitcoin continues its moon mission in this week’s Bad Crypto podcast

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Blockchain is good for hodling, but not for voting: Bad Crypto news of the week

Bitcoin continues to move through the gears. The currency is up more than 12 percent over the week and is now playing with the $18,000 mark. And it’s not just the US dollar that Bitcoin is bashing. It’s also hit all-time highs against the Russian ruble, the Colombian peso, the Brazilian real, the Turkish lira, and the Sudanese pound among others. Its rise, now 375 percent above the point that gold investor Peter Schiff accidentally called as Bitcoin’s bottom, is inevitably causing analysts to ask how high it can go.

One expert is predicting that Bitcoin will soon hit $22,000, citing HODL and funding rates, the fall in Bitcoin reserves, and the growth of institutional accumulation. Investor Mike Novogratz has his eye on $65,000, powered by high demand and limited supply. Thomas Fitzpatrick, a senior analyst at Citibank, is looking even higher. In a report aimed at the bank’s institutional clients, he predicted $318,000 by December 2021.

And yet despite Bitcoin’s current rise, and its positive direction, it’s all happening very quietly. While the coin’s last rush towards $20,000 generated headlines around the world, the press has barely noticed the current price increase.

In China, at least one bank has noticed. The China Construction Bank chose the digital exchange Fusang to issue $3 billion worth of debt securities. The bonds would be tokenized and exchangeable for Bitcoin. But it’s not happening, at least not any time soon. Shortly after the announcement, Fusang said that the issuance would be delayed until further notice “at the request of the issuer.”

In the US, Jay Clayton, the chairman of the United States Securities and Exchange Commission has announced that he is leaving his post. Clayton previously told Bitcoin investors they couldn’t expect to trade on mainstream exchanges without robust regulation.

The blockchain, though, continues to find new uses. IBM is teaming up with German textile manufacturer Kaya&Kato to use the blockchain to track supply chains in the fashion industry. Albany Airport in New York is using the blockchain to track cleanliness, while BitPay is launching a new service to enable businesses to make payments using cryptocurrencies. And Cointelegraph is using Rarible to offer single edition NFTs of its illustrators’ art-inspired illustrations.

But the blockchain might want to steer clear of voting systems for a while. Security experts at MIT say that using blockchain voting technology might increase the risk of hackers trying to tamper with elections.

It’s not all good news for cryptocurrency journalists though. Binance is suing Forbes and two of its journalists. The publication had alleged that Binance had a plan to avoid US regulators. The company denies the allegation and is demanding compensation and punitive damages.

Check out the audio here:

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.