Category Archive : Blockchain News

cryptojacking-attacks-are-seriously-underestimated,-says-blackberry-vp

Cryptojacking Attacks Are Seriously Underestimated, Says BlackBerry VP

BlackBerry exec believes that many businesses don’t have a great visibility about the combination of crypto mining apps with malware.

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Cryptojacking Attacks Are Seriously Underestimated, Says BlackBerry VP

Cryptojacking attacks are both an internal and external threat, as the hacking groups are getting more organized in attempts to exploit vulnerabilities in the networks. However, there are also cases where some admins use valid entitlements to make money from illegally mining crypto using the firm’s network resources, and many organizations “don’t have great visibility” about it, says Josh Lemos, VP of research and intelligence at BlackBerry.

Lemos told Cointelegraph that a crypto mining software is not necessarily malicious but rather opportunistic utilizing compute resources for monetary gain, “although you often find it paired with malicious software,” and it’s also a fact not well-enough observed by some organizations when it comes to protecting their networks.

Any Cryptojacking malware can be dangerous

Lemos further elaborated on crypto mining apps getting sophisticated nowadays, saying that crypto miners don’t need to be sophisticated and can be deliver in various ways: “from JavaScript running on a website as a watering hole attack or embedded in a spear-phishing email to supply chain attacks with miners embedded in docker hub images and malicious browser extensions.” He went on to add that: “Distribution is the primary goal and with detection does not carry a meaningful risk, TAs can spread their miners far and wide.”

Recent cryptojacking cases, like Lucifer, show a pattern — the common usage of XMRig crypto-miner app in the attacks. BlackBerry executive explained why Monero (XMR) is often used in the attacks, rather than other currencies:

“Monero is pitched as more lucrative to the average user due to the nature of the mining algorithm. Anytime you have uneducated users looking for a quick buck, you will have more opportunities for exploitation. The old adage still holds true: the best way to get rich in a gold rush is to sell shovels. In this case, the shovels also contain malware.”

Pandemic driving cryptojacking attacks?

Lemos believes that the fact of hackers using full malware suites with capabilities that leverage numerous vulnerabilities to establish persistence shows a growing trend in such kind of cryptojacking attacks, and Lucifer is “a continuation or evolution of that trend.”

As the COVID-19 pandemic is still active in several countries, Lamos claims that as long as cryptocurrencies are being considered as a “valuable alternative investment,” the rising trend of the cryptojacking attacks “is here to stay,” as it’s not about blaming the coronavirus-related jump specifically.

decentralized-exchanges-are-building-a-life-raft-but-need-a-bridge

Decentralized Exchanges Are Building a Life Raft but Need a Bridge

Recently, crypto traders have shown a lot of enthusiasm for decentralized exchanges, or DEXs. The enthusiasm is warranted. We’re starting to see the fruits of many years of hard work pay off with DEX trading volume and use increasing every day. 

In spite of this growth, the vast majority of crypto trading still takes place on centralized exchanges. DEXs offer a clear set of benefits in terms of fund security, flexible custody and transparency, so why is it that the majority of the market still shuns them in favor of centralized alternatives? We think we know the answer, and we’ve spent the last year and a half working to build a next-generation DEX that can go head-to-head with centralized exchanges. We continue to make progress, and we want to share some reflections, insights and observations that have shaped our innovations.

It’s all about the market makers

Market makers drive the crypto market. They bring much-needed liquidity to platforms, without which it’s impossible to attract traders and end users. Market makers are the linchpin of the exchange flywheel. Additional liquidity brings more traders, which brings more market makers, which brings more liquidity — and so on.

We’ve spent countless hours talking with the most influential traders and market makers in the industry, and two things are clear:

  1. (Almost) none of them are market making on DEXs today

  2. All of them are interested in market making on DEXs in the future.

So, what’s the problem? The glaring issue is that market makers have spent millions of dollars and working hours to build technology and human capital that interface with existing exchanges. These systems are built with certain assumptions around performance and features — assumptions that are broken by all existing DEXs. We can’t expect market makers to rebuild their systems from the ground up for a tiny slice of the overall market. If we want to tackle centralized exchanges with any level of success, we have to meet these important participants where they are today.

What’s missing from DEXs?

You may be thinking you already know the answer. Everyone has heard the criticism that the current generation of DEXs doesn’t scale. Multiple teams are seeking to address this by implementing layer-two systems that can lower transaction costs for trade settlement.

These new developments are great and bring much-needed room for growth — provided anyone uses the product in the first place. Layer-two systems only remove limitations on growth; they don’t do anything to make the exchange an attractive product in the first place. Any serious trading product must first meet the bar set by existing alternatives before it is able to compete on a unique selling proposition, which in the case of DEXs is custody flexibility and transparent fund security.

So, what’s really going on? If we take a deeper look at the current landscape for decentralized trading products, we can conclude that three primary issues are plaguing DEXs and preventing wider adoption and use:

    1. High latency and low performance

These items lead to a whole host of issues. Front-running and trade collisions break “price-time priority” and lead to unfair trade execution. Delays in execution of trades or cancels make it impossible for market makers to quote deep, tight spreads, lest they risk getting arbitraged due to price changes on other venues.

To address this, an exchange must have a high-performance, in-memory trading engine. It must also be able to handle bursts of traffic and hundreds of thousands of orders per second with low millisecond latency. A simple layer-two system is not sufficient to provide the performance and execution guarantees that the market demands.

    2. Lack of features and non-standard formats

Market makers and algorithmic traders have a large number of venues to choose from. These players assess new opportunities not only by the potential revenue and income they will generate but also by the upfront integration and ongoing maintenance costs. This ratio of opportunity to cost is the most important determining factor, as it’s a representation of the efficiency of their development work and capital.

DEXs need to be 100% plug-and-play in order for new participants to join and provide liquidity with minimal effort. After all, if you’ve already designed a winning strategy, why take the time to redo it to suit a market share of less than 2%? This includes offering the same advanced order types as other top tier exchanges, and an API format and documentation that adheres to the unofficial standards that have emerged.

    3. Lack of compliance

Know Your Customer and Anti-Money Laundering policies are a reality for all participants with significant amounts of capital. We’ve had multiple conversations with market makers that declined to engage with us under the assumption that, as a DEX, we weren’t compliant. Whether we like it or not, it’s impossible for high net worth individuals and institutional players to trade on platforms that don’t meet their basic compliance needs.

Where are we now?

Analyzing current products through this lens, we can see why DEX adoption is still limited. We used off-chain execution to eliminate on-chain front-running and trade collisions, but it did not have the matching engine necessary to provide the execution guarantees that top participants demanded. The API did not adhere to industry standards, which led to unnecessary complexity and stifled development efforts.

Automated market makers, or AMMs, are a clever solution to circumvent some of the latency and performance issues that make it impossible to host a liquid order book on-chain (pricing in AMMs is only updated when someone takes an order). However, these pricing curves are, by definition, a less flexible option than order books and far from ideal for professional market makers who have the capacity to make markets more efficiently. Additionally, due to the use of on-chain execution, these platforms suffer from front-running and manipulation.

Existing layer-two DEXs have a similar set of issues. The lack of a proper matching engine leads to inefficient pricing and robs market makers of necessary execution guarantees. User friction such as the need to register separate keys, asset quanta and other factors makes it time-consuming for developers to adapt their operations to support layer-two DEXs. In addition, market makers still need to contend with the security implications of using relatively immature cryptography to secure valuable crypto assets.

Ultimately, scalability still matters, but only if you have something worth scaling. The issue at the moment for central limit order book DEXs is not so much that we can’t fit enough transactions on-chain but that the process for creating these settlement transactions is clunky and unintuitive. This said, we believe the upcoming release of layer two will address current DEX performance needs and accelerate the adoption of decentralized trading.

By offering the industry an innovative approach to DEX development, DEXs will be able to compete with centralized exchanges where it matters most: at the user experience level. 

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.

Alex Wearn is the co-founder and CEO of IDEX, a cryptocurrency exchange focused on performance and security. . He has spent his career in software development, including time at a marketing analytics startup that was acquired by IBM and as an analytics project manager for Adobe. Prior to IDEX, he led the product management efforts for Amazon Logistics’ capacity planning. He has been hacking on crypto startups since 2014, transitioning to full time with the launch of IDEX in 2018.

blockstack-ceo-says-bitcoin-is-a-better-defi-solution-than-most-think

Blockstack CEO Says Bitcoin Is a Better DeFi Solution Than Most Think

Bitcoin a secure cryptocurrency, whereas Ethereum has been a “frontrunner” when it comes to smart contracts.

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Blockstack CEO Says Bitcoin Is a Better DeFi Solution Than Most Think

As interest in smart contracts surges, some Bitcoiners are asking: why can’t Bitcoin (BTC) become the foundation for smart contracts too, instead of Ethereum (ETH)?

Muneeb Ali, co-founder and CEO of Blockstack open-source platform, believes that the best way to bring about a user-owned internet “is to anchor applications and smart contracts to the Bitcoin network in a way that uses Bitcoin as a reserve currency and its powerful blockchain as a security mechanism.”

In a conversation with Cointelegraph, Ali stated that Bitcoin has been the king of blockchains for more than a decade, as most people have come to recognize that the Bitcoin network is “unparalleled” when it comes to security:

“We believe that the new Stacks 2.0 blockchain, currently in testnet, holds one solution for making Bitcoin the foundation for smart contracts in Web 3.0. With the Clarity smart contract programming language and the Proof of Transfer mechanism, developers can build smart contracts in a much more secure language that is predictable, decidable.”

Ethereum as a frontrunner for smart contracts

Traditionally, Bitcoin has been recognized as a secure network, whereas Ethereum has been a “frontrunner” when it comes to smart contracts, according to Ali. Blockstack’s founder elaborated further on the discussion:

“Bitcoin’s limited scripting language has been seen as a dealbreaker to developers looking to build dapps or deploy smart contracts. As a result, many developers end up building their own blockchains, hoping to bootstrap native proof-of-work protocols or proof-of-stake, but these tend to be much less secure. One of the results is developers assume Ethereum is better suited for launching smart contracts, but I believe this is premature.”

Ali also pointed out that the future of the internet will not be a “tradeoff of convenience for security,” but will instead be tying that security to web applications in a way that uses Bitcoin as a reserve currency along with its blockchain as a security mechanism.

DeFi on the Bitcoin network

Regarding the web 3.0 era, Ali thinks that of particular note is the recent “rise in conversation about the possibilities of ‘DeFi on the Bitcoin’.” For the Blockstack’s founder, this means more people are looking to anchor in the security of Bitcoin when it comes to financial products:

“Many people think that it is easier to recreate Bitcoin on top of Ethereum, but it actually makes more sense to create Ethereum functionality on top of Bitcoin. The adoption of this is still nascent but people are definitely starting to realize the value of building on the Bitcoin ecosystem rather than parallel to it.”

title-token-for-blockchain-estate-registry,-part-2

Title Token for Blockchain Estate Registry, Part 2

Title token is a record of ownership similar to the one made in a traditional estate registry. This concept is designed as an alternative to security tokens and various financial crypto instruments. The title token is not “backed” with real property; this is the record that directly certifies the property right — the same as paper title deeds, or certificate of ownership, etc. It is a digital form of property record and the primary source of knowledge about property rights, which means no paper form is needed.

The title token can represent any legal rights: immovable property (land and buildings), movable (car, boats, aircraft, etc.), corporate rights (shares), and various property rights and derivatives (mortgage, debts and securities). Any legal right, and as you will see later, can be used to certify legal facts and events.

What about official registries?

You can create tokens that represent a flock of sheep because it does not require official registration. But you cannot just create a token of your land rights (car, boat, etc.). It will be a toy token with no connection with your legal rights because they “live” in the official state-owned registries. In most countries, registries, especially for land rights, are mandatory, and the regulations do not provide discretion in choosing one or another.

To enable blockchain technology to replace the traditional registries, the state machine requires reforms, which are unlikely to happen in the nearest future. What is more feasible is the recognition of alternative registries, so citizens themselves may choose. Those who are happy with traditional registries and bureaucracy can stay with these, but those who want to use the full power of blockchain, smart contracts and decentralized applications can transfer their records from the centralized database to any ledger.

Now, states monopolistically own and run public registries. Alternative registries can be enabled through new regulations, technical standards and government supervision to ensure compliance. But the authorities do not need to physically maintain such alternative ledgers and data centers for them to protect records. Blockchain technology ensures an unprecedented level of protection for records from corruption. Acts of public bodies performed on-chain will guarantee their accountability. Undoubtedly, it is better for the investment climate for any world’s region where it will be introduced.

Interestingly, blockchain technology fits into both types of property registries that exist in the world. The American system of the registration of conveyance creates a chain of title deeds. It fits into the blockchain technology, which is based on a familiar chain of transactions. The second type is the Torrens system, and registries in civil law countries, where the registry is designed to track down not deeds but titles fit into the concept of tokens. Tokens on a blockchain enable the title-centric type of public registry and, at the same time, completely mimic the system of a chain of deeds.

Are the authorities still needed?

Undoubtedly, yes. For example, there is a “smart will,” and after the owner’s death, it must bequeath the tokens to the rightful heir. How will the smart will know that the landlord is deceased? Or what if another heir has a claim? The belief of many crypto enthusiasts that with blockchain technology, we can get rid of third parties is not realistic, at least not at this level of science and technology. 

A blockchain as a repository of evidence does not need a third party to maintain it, but we still need third parties to certify various facts of our life. It is not just about birth and death. A person from Argentina will not buy a bungalow remotely on Bali because the bungalow token that represents the title is just a declaration of the owner. To make the transaction happen remotely, they need a third party whom the buyer and the seller can trust, which will confirm that this token represents this property right. Normally, this job is done by public bodies and registry.

Cross Reference is a basic protocol to maintain the validity of records. A typical scenario is that the end-user creates a token, which can represent a digital identity, property rights, a physical object, a fact or event, and includes the reference (link) to the token, which provides the information of its validity. Changes in both records reflect legal changes in the object. The token owner can make a transfer of the token to change ownership, while the validator can change its validity (legal status).

Use case. Alice creates a token (a key-value record that carries some user’s data) for her title, and Bob, who is a town clerk, creates his token that says “Alice’s Title is valid.” If Alice loses her private key, she will ask Bob to update his token, mark it “invalid,” and reissue a new token certificate.

Certification of a title right

Invalidation scheme of a title right

In a more general scheme, cross-referencing is a method of providing status records by trusted third parties that have knowledge about legal facts and events. The blockchain doesn’t make them valid, but the authority that certifies the fact. Blockchain technology just has a better infrastructure for this system to make sure these records are uncorrupted.

Maintaining the validity of records on blockchain

Alice creates a record (token) on a blockchain. Bob says it is valid. If Alice loses her private key, Bob will publish the record that says it is not valid anymore.

If you have heard from some crypto skeptics that the problem of blockchain technology is that it does not tolerate mistakes because no one can alter or delete data, as you can see, the ledger immutability is not a problem; it is just a matter of better application design. 

The idea of creating permissioned ledgers to fix mistakes leads us back to centralized registries where censorship and altering records are legitimate tools and all are built around the trust to those who maintain the ledger. Due to no censorship, any junk data is possible on public blockchains. So, the validity here is provided by the traditional trusted parties through cross-referencing. Though their acts are not hidden as in any state-owned database, they are transparent and, hence, accountable. With cross-reference, it is possible to address not only the loss of private keys but legal disputes and various procedures for obtaining permits from the government agencies.

Use case: Building permit. Alice wants to build a house on her land. She applies for permits to: (1) a town clerk; (2) the architecture department; (3) the department for environment and heritage, and so on. Each of these authorities creates its own tokens (certificates) on ledgers to certify permits. Alice adds references to each of these certificates in her token record. To check whether Alice built the house lawfully, the inquirer searches Alice’s token and verifies references whether they are valid and issued by authorized agencies.

Multi-referencing

Digital authorities and digital dictatorship

But what if Bob, a town clerk, corrupted the system? For example, Alice was unlawfully deprived of her rights to land. There is a system of root records. Firstly, the public body may be hierarchical, and therefore, the higher authorities may deem the clerk’s record as unlawful. Here comes the real power of blockchain technology. The entire time, Alice still owns her token even if Bob issues a transaction that it is invalid. After her claim, Alice has been restored in her rights. She will update her token to include a new reference to Dave’s (a new town clerk) record, who says she has the right.

To eliminate dead-end situations when neither party has access to their records, there is a root record, which can issue patches to the system. Patches are also published on-chain, though they must belong to the root address, which is initially set up in the public registry. We need patches to filter out those records that aren’t relevant or illegal. Technically, we don’t delete them because it is impossible on a blockchain. But because we have an overlaid system scanning records on a blockchain and detecting valid ones from it (as we remember blockchain can carry on a lot of junk data), the patch is the record, which is also published on a blockchain but comes from a trusted address. This patch “tells” your system which record or address must be filtered out.

The root can belong to a court. There might be multiple roots based on branches of power (legislative, executive, judicial), and of course, the root can be controlled collectively through a multi-signature scheme — to make sure that those who have a mandate of power make lawful decisions. Eventually, we will likely see the system of a direct e-voting (e-referendum) where not only the representatives of a collective body (council, parliament, committee) make transactions but all the citizens of a town, a state or a whole country.

The most fundamental thing here is that a digital dictatorship has no chance. Even if abuse of power occurs, acts of public bodies must be recorded on-chain. Otherwise, they will not influence any records on the blockchain, including patches. Each node is independent and can be run by any user because it is a blockchain. And each node adds the list of trusted roots, but we always have the right not to trust them, and this discussion is not about blockchain technology as you see it.

Technically, the system can be completely reset. You specify new roots, from which new authorities publish new patches. Your node scans the ledger from the very beginning, and the system applies new filters and rules provided by the patches. As a result, you get a new representation of the current state of the public property registry.

Governance is not a matter of mathematical consensus. The interpretation of records is a layer above blockchains that represents the social consensus. How we decided which root addresses we trust, how and when we reset roots, is a matter of the political system. The only thing that is unchanged is the blockchain. As a public repository it keeps all kinds of records as evidence of everything that happens in the real world.

This is part two of a three-part series on the theory of title token — read part one on the blockchain estate registry here, and part three on the new generation of public property registries here.

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.

Oleksii Konashevych is the author of the Cross-Blockchain Protocol for Government Databases: The Technology for Public Registries and Smart Laws. Oleksii is a Ph.D. fellow in the Joint International Doctoral Degree in Law, Science and Technology program funded by the EU government. Oleksii has been collaborating with the RMIT University Blockchain Innovation Hub, researching the use of blockchain technology for e-governance and e-democracy. He also works on the tokenization of real estate titles, digital IDs, public registries and e-voting. Oleksii co-authored a law on e-petitions in Ukraine, collaborating with the country’s presidential administration and serving as the manager of the nongovernmental e-Democracy Group from 2014 to 2016. In 2019, Oleksii participated in drafting a bill on Anti-Money Laundering and taxation issues for crypto assets in Ukraine.

total-value-locked-in-defi-hits-new-ath-of-$4b

Total Value Locked in DeFi Hits New ATH of $4B

A total of $4 billion in value is now locked in the DeFi markets, according to DefiPulse.com.

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Total Value Locked in DeFi Hits New ATH of $4B

The Decentralized Finance, or DeFi, industry continues its massive growth trajectory as the total value locked in the DeFi markets hits $4B, according to data from major industry website DefiPulse.com.

Total value locked in DeFi markets, August 1

Total value locked in DeFi markets, August 1. Source: DefiPulse.com

DeFi markets refer to the use of blockchain, digital assets, and smart contracts in financial services like credit and lending to provide financial services without a need for a centralized authority.

The new threshold means that a total of over $4 billion is now locked across smart contracts, protocols, and decentralized applications, or DApps, built on Ethereum. As of press time, the largest DeFi provider, MakerDAO’s DAI stablecoin, is responsible for just over 30% of DeFi markets, with $1.23 billion locked.

Top 10 DeFi markets, August 1

Top 10 DeFi markets, August 1. Source: DefiPulse.com

As reported by Cointelegraph, Ethereum has rallied recently both in anticipation of Ethereum 2.0, and due to the optimism surrounding DeFi.

As of press time, Ether trades at around $356, up more than 7% over the past 24 hours, according to data from Coin360. As previously reported, DeFi applications have some correlation to the Ether price, but are not entirely dependent on it.

Earlier this week, crypto market analytics firm Messari reported that the total capitalization of the DeFi sector is equal to only 1.5% of the entire crypto capitalization. This now accounts for about $332 billion.

a-17-year-old-was-just-arrested-in-connection-with-twitter’s-recent-hack

A 17 Year Old Was Just Arrested in Connection With Twitter’s Recent Hack

Authorities have taken a 17-year-old into custody, alleging the not-yet-adult cooked up the massive Twitter breach.

“Early this morning, the FBI, IRS, US Secret Service, and Florida law enforcement placed a 17-year-old in Tampa, Florida, under arrest — accusing him of being the ‘mastermind’ behind the biggest security and privacy breach in Twitter’s history,” a July 31 article from The Verge said.

The massive exploit saw many top Twitter accounts breached on July 15, including the likes of Elon Musk, Joe Biden and Bill Gates.

“Our offices found 30 felony charges against Clark, including organized fraud, communications fraud, identity theft and hacking,” Andrew Warren, a Hillsborough State Attorney, said in a July 31 press conference on the ordeal.

A teen named Clark

Residing in Tampa Florida, the teen in question known as Clark will face legal proceedings in that jurisdiction, Warren detailed in the press conference.

Warren added:

“The state attorney’s office is handling this prosecution rather than federal prosecutors because Florida law allows for us greater flexibility to charge a minor as an adult in a financial fraud case like this.”

Warren said he could not elaborate on whether Clark had accomplices, citing the case’s current investigation in tandem with federal authorities.

“Make no mistake, this was not an ordinary 17-year-old,” Warren said. “This was a highly sophisticated attack on a magnitude not seen before,” he added. “It could have been an extremely high amount of loss.”

Clark’s efforts toward the Twitter breach began on May 3, 2020, ending on July 16, 2020, Warren said based on his entity’s findings.

Other charges coming in

A July 31 statement from the U.S. Department of Justice, or DoJ, citing involvement from the FBI, the U.S. Secret Service, the IRS and others noted accusations against three persons allegedly in connection with the Twitter affair.

The three accused — 19-year-old U.K. resident Mason Sheppard, also known as “Chaewon,” 22-year-old Orlando Florida resident Nima Fazeli, also known as “Rolex,” and an unnamed “juvenile” delegated to authorities in Tampa, Florida. The unnamed juvenile lines up with Warren’s recent press conference details.

“Today’s charging announcement demonstrates that the elation of nefarious hacking into a secure environment for fun or profit will be short-lived,” David Anderson, U.S. attorney for Northern District of California said in the DoJ statement.

blockchain-could-help-content-generation-industry-be-more-profitable

Blockchain Could Help Content Generation Industry Be More Profitable

Chinese content generation platform TikTok, a video-sharing app that has been called the fastest-growing social networking service in history, has been in the spotlight since early 2019 and now surpasses 800 million users. Despite the fact that the app’s data security breaches are raising controversy worldwide, more and more young people are using it as the go-to social media for the new generation, with a reported 69% of TikTok’s global audience being between the ages of 16 and 24.

Despite its overwhelming success and rapidly growing user base, the truth behind the worldwide sensation is that “the new Instagram” is hardly profitable. One of the key reasons behind it is IT infrastructure costs — and blockchain might have the solution.

Tackling profitability challenges

Currently, the majority of content creation and short-video platforms like TikTok have a lot of expenses and two major revenue streams: advertising and e-commerce. The latter is only popular in China. TikTok’s parent company, ByteDance, was able to pull off billions of dollars in profit due to its smooth integration with all major e-commerce platforms in China. When it comes to the ad revenue model, it has proven to be efficient in the United States by Google-owned YouTube and Amazon-owned Twitch, which leverage the ad optimization algorithms of their parent companies.

Both YouTube and Twitch are also utilizing the idle servers of Google Cloud or Amazon Web Services. This makes them an exception among similar platforms that have to pay millions of dollars for bandwidth and data storage, which are the main expenses for any video content generation platform. YouTube, especially, has been leveraging Google peering for almost free bandwidth. This is especially relevant for companies in China where bandwidth costs are very high due to the fact that the majority of data centers belong to state-owned telecommunications companies.

As more and more users look for high-quality videos in 4K resolution and at 60 frames per second, servers and user acquisition costs for user-generated content platforms grow exponentially. Back in 2011, Tudou — the “Chinese YouTube” — reported in a financial statement that its bandwidth expenses were $28.6 million U.S. dollars, which accounted for 42.1% of its cost of revenue. With 227 million monthly unique visitors at the end of 2011, that equates to 7.9 unique visitors per month per dollar spent on bandwidth. Nearly a decade later, Bilibili — another Chinese counterpart of YouTube — reported in its 2019 annual financial statement that it spent $132 million on servers and bandwidth and had 130 million active monthly users, meaning it had only slightly less than one monthly user per dollar spent. Both companies, as well as “Chinese Instagram” Kwai, are currently having a very hard time turning a profit.

TikTok, with its 800 million monthly active users uploading millions of videos on a daily basis —  500 million users within China and 300 million elsewhere — takes this issue to a whole new level. With an estimated data consumption of around 6.9 exabytes (over 7,000,000 terabytes), it would have to spend roughly $8 million just for content delivery infrastructure per month, according to software development company Trembit. With its monetization strategy still not figured out, such breakneck costs can be a huge obstacle on TikTok’s way to profitability. 

Decentralized storage as the solution

Today, the cloud computing market, which is estimated to be worth $364 billion by 2022, is the primary solution for large data storage around the world. It is largely dominated by public clouds such as Amazon Web Services, Microsoft Azure and Google Cloud Platform that store their clients’ data in their own data centers.

At the same time, according to research conducted by McKinsey & Company in 2008 and by a researcher at Stanford and a partner of Anthesis Group in 2015, 30% of servers in data centers around the world are “functionally dead,” which means they are active and available but have not been used in six months or more. This infrastructure is still consuming power, which means a continuous drain for its owners.

Just imagine if TikTok was able to use these idle servers to store its video content around the world — at a much lower cost than any public cloud. This is exactly what computing on the blockchain enables.

Decentralized computing aims at using idle servers to store user data that is broken into smaller chunks and immutably stored across multiple nodes on a peer-to-peer network of providers, which can make money on otherwise loss-making servers.

This allows for much lower storage costs for end users compared with the notoriously expensive Amazon Web Services and other public clouds. On top of that, using existing hardware limits one’s carbon footprint, which makes it the most ecologically sound solution for cloud computing.

Sooner or later, we can expect enterprise distribution of some Web 3.0 storage networks. Not only will these networks solve high storage cost issues, but they will also provide content distribution network services similar to Cloudflare.

If hundreds of thousands of nodes are distributed across all the major metropolitan areas, we will see people and companies gaining quicker and cheaper access to content in the form of photos, audios and videos.

In the case of TikTok and Bilibili, utilizing such a network could really give the platforms a boost to potentially turn profitable and be closer to their users — and become a game-changer for the entire content generation industry.

What’s next for the industry

Before becoming a recognized alternative to popular public clouds and the choice of giants with hundreds of millions of users like TikTok, a “decentralized Amazon Web Services” needs a viable industry use case. Decentralized hosting and management of blockchain nodes — the equivalent of a platform-as-a-service solution on top of public clouds — is one of them.

Enabling the deployment of thousands of decentralized storage nodes at 100 times the speed, this technology takes away substantial hours and costs from businesses and developers — showing the benefits of blockchain in cloud infrastructure and driving adoption across various industries.

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.

Chandler Song is the co-founder and CEO of Ankr Network, a Web 3.0 infrastructure company based in San Francisco, and a Forbes “30 Under 30” laureate. He previously worked as an engineer at Amazon Web Services.

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As Private Seed Funds Dry Up, European Blockchain Firms Seek Public Backing

A Slovak blockchain startup serves as the chief example of pandemic venture capital developments in central and eastern Europe (CEE), in a new report from Reuters on July 31.

In the former Eastern bloc — where venture funding hit close to $1.6 billion in 2019 —  uncertainty during the COVID-19 crisis has hit the start-up sector hard, particularly when it comes to early-stage deals.

Alftins, a Slovak startup that is developing an online platform to trade digital assets, has recently secured funding from publicly-funded venture firm Crowdberry. The latter had earlier missed out on a version of the deal in fall of last year, but was reportedly able to secure better terms this time round. 

Alftins founder Richard Fetyko told Reuters that securing funding from Crowdberry was “the path of least resistance” at a time when publicly-backed venture capital appears to be stepping in to help the industry weather the pandemic fallout.

Michal Nespor, a partner at Crowdberry, affirmed that “a number of emerging companies will have no other choice but to tap these funds because private money will be very cautious because of the pandemic.”

Market players still “waiting to see what will happen”

A large percentage of the capital that stands behind publicly-backed VC funds like Crowdberry in the CEE region stems from the European Investment Fund. Its senior mandate manager, Michal Kosina, said:

“In times of crisis, limited partners may lower their appetite for this asset class and in some cases may even default on or try to renegotiate their existing commitments. So, in this sense, the public capital in the region is good for startups because with public sources the money remains there.”

The report notes that, prior to the pandemic, private funds and the promise of connections to Silicon Valley were a more attractive route for CEE emerging startups to take. But publicly-funded alternatives like Czech venture firm Nation 1 claim they can now offer “protection and advantage,” in the words of general partner Martin Bodocky. 

“We don’t expect any venture capital firm to die here,” Bodocky said.

The report further notes the role that is being played by Polish state-backed PFR Ventures and Hungarian state-owned investor Hiventures. 

The latter was already the most active seed investor in European firms last year and has now increased its funding for startups during the pandemic, according to EO Bence Katona.

Katona has claimed that market players aren’t taking the risk now, stating,“I am seeing they are waiting to see what will happen in the next three months.” 

By contrast, he noted that Hiventures “made more investments during this period. It has been a busy time for us.” 

In a recent opinion piece for Cointelegraph, Celsius Network CEO Alex Mashinsky surveyed the current landscape for venture capital investors. He made the case that the funding models pioneered in the crypto industry —  notably “community-driven” token offerings — can offer unique advantages to emerging projects as against their VC predecessors.

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Blockchain Is Part of Australia’s Cyber Security Solution, Say Experts

A cyber security and blockchain forum with leading Australian experts and government officials has identified blockchain technology as a direct response to an increase in cyber attacks targeting the integrity of systems through manipulating data.

Recently appointed Blockchain Australia CEO Steve Vallas held a panel discussion on July 30 regarding blockchain’s use-case in cyber security with experts from various fields being part of the 300 attendees. 

The panel consisted of National Blockchain Lead Chloe White from the Department of Industry and Liberal Senator Andrew Bragg, CEO of cyber security firm CyberCX John Paitaridis, and founder and CTO of blockchain database firm ProvenDB Guy Harrison.

The experts, with decades of experience in the cyber security sector, defined the emerging technology as a critical component in protecting Australia from future attacks. They further outlined that blockchain, although not a complete solution, should be considered by businesses across the board as the country works to keep ahead of would-be attackers. 

Blockchain is about data integrity

During the panel, Paitaridis  explained that attacks are increasing in frequency and severity, suggesting China was behind the major state actor attacks from June that threatened many industries including the Australian government: 

“In June this year, the Australian Prime Minister announced an ‘unnamed state actor’, you can read into that — China — as being targeting businesses and government agencies across Australia as part of a large, dedicated, persistent scale attack.”

These cybersecurity breaches have increased by almost 80% in the last 12 months with a specific adjustment in their focus, he elaborated:

“What concerns me greatly is the integrity of our systems. Rather than deleting information, Australia is increasingly seeing attacks that manipulate data to reduce a system’s integrity.”

This will cause mayhem, Paitaridis explains, as “senior government officials, corporate executives and investors can be imparied if they can’t trust the information they are seeing”. It’s not all bad news, as this vulnerability can be addressed through blockchain, Paitaridis concluded. 

It isn’t about keeping people out, but rather in maintaining the integrity of the data Harrison explained, “the implications of people tampering with data are huge […] and that’s where blockchain comes in.”

“For the first time in computer science, we have a storage mechanism where we can write something, and we can be sure that it hasn’t been overwritten.”

In response to a question around live data manipulation — that is, manipulation of data prior to being injected onto the blockchain — Harrison suggested that blockchain will need to be used in conjunction with other solutions such as artificial intelligence. 

“Most blockchain’s do not have many of the other features that we need to use data effectively,” he concluded, stating that, although an essential part, they are not the only technology required in a proper cyber security solution.

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William Shatner’s NFT Collectibles Sell Out at Warp Speed

Fans bought 125,000 non-fungible token trading cards featuring Star Trek’s William Shatner on the WAX Blockchain.

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William Shatner’s NFT Collectibles Sell Out at Warp Speed

Digital collectibles featuring personal memorabilia from the actor best known as Captain Kirk of the USS Enterprise have sold out in just minutes.

Non-fungible token (NFT) trading cards featuring images from William Shatner’s personal life and career, from the 1930s to today, sold out in nine minutes according to WAX. The online marketplace for virtual items offered 10,000 “packs” for sale, featuring roughly 125,000 digital collectibles in total.

Collectors can now buy, sell, and trade the cards amongst themselves. Some of the scenes included Shatner’s headshots and characters from his early acting days and there are also more personal moments including him hugging fellow actor Leonard Nimoy, AKA Spock, and even an X-Ray of Shatner’s teeth.

“I’m astonished at how quickly it all happened,” Shatner told Cointelegraph, adding he hopes people who purchased the NFTs would be able to find new friends in trading them.

“The cards themselves represent a beautiful past,” he said. “The verification of being on the blockchains represents a great future. So we have the past and the future mixing together.”

Blockchain advocate

The Star Trek actor has been a blockchain advocate for some time, promoting the technology on his Twitter account. Shatner spoke to Cointelegraph Magazine in June, saying that “putting something on a blockchain is forever.”