All posts in “Bitcoin”

Sudden price drop shows largest ‘stablecoin,’ Tether, isn’t so stable after all

Tumbling.
Tumbling.

Image:  Malte Mueller / getty

I mean, it’s right there in the name.

The largest so-called stablecoin by market cap, Tether (USDT), is supposedly pegged to the U.S. dollar and always worth $1. However, if there’s one thing we know for sure about the world of cryptocurrency, it’s that things don’t always go according to plan — a fact emphasized by Tether’s sudden plunge in value over the last 24 hours. 

The stablecoin briefly traded below $.87 on the exchange Bittrex before climbing back up to the still-abysmal price of $.915 at the time of this writing. 

USDT’s instability is a troubling sign not just for those HODLing that particular coin, but for potentially anyone sitting on cryptocurrency. That’s because, as demonstrated by researchers at the University of Texas this past June, Tether has likely been used to “provide price support and manipulate cryptocurrency prices.” 

Not looking good.

Not looking good.

Image: screenshot / bittrex

Critics have long argued that Tether is a scam — a claim bolstered by Tether’s seeming refusal or inability to release an audit — that artificially inflates the price of bitcoin. Even if this were not true, with almost $2.5 billion worth of USDT in circulation, a crumbling of the stablecoin — of which a temporary 13 percent price drop might be an early sign — would be more then enough to spook cryptocurrency investors and the market at large. 

Which appears to be exactly what we’re seeing. On Monday, the exchange Bitfinex, which the New York Times reported last November is “owned and operated by the same people” as Tether, issued a statement declaring that it would “temporarily pause fiat deposits (USD, GBP, EUR, JPY) for certain customer accounts in the face of processing complications.”

Bloomberg suggests that concerns over those “processing complications,” and what they mean for Bitfinex’s relationships with banks, led to a crisis of confidence in Tether and a corresponding sell-off. That sell-off, in turn, both drove down USDT’s price and simultaneously drove up bitcoin’s as traders sought to dump their Tether for BTC. 

None of this was helped by the fact that the exchange Binance temporarily suspended Tether withdraws (they have since resumed). 

Meanwhile, traders are running to stablecoins other than Tether. TrueUSD, a stablecoin that is also supposedly pegged to the U.S. dollar, surged to as high as $1.07 on Bittrex in the last 24 hours. In other words, people were willing to pay a 7 percent premium to hold something that wasn’t Tether.

What all this means for the future of Tether specifically, and stablecoins more broadly, isn’t exactly exactly clear. However, what it means for today perhaps is. Namely, “stable” might be more of a suggestion than an accurate descriptor.

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Google mocks cryptocurrency as ‘not real’ in Call Screen ad

Google thinks your crypto is a joke.  

The search and advertising giant released a new tool on Tuesday known as Call Screen, which helps Pixel owners screen unwanted calls. In a seemingly out of place move, the company used the product’s announcement as an opportunity to dunk on cryptocurrency. 

To promote the feature, Google released a short video starring The Daily Show’s Dulcé Sloan and Ronny Chieng. Meant to demo Call Screen in action, the minute-long ad depicts the two comedians — dressed as Google employees — screening calls from a scammer and the power company. 

“Cryptocurrency? That money’s not real.”

It’s the latter of these two scenarios that caught our attention. 

“It’s the electric company,” Sloan explains to Chieng while reading a transcription of a phone call provided by Call Screen. “They said your bill is super high.”

Chieng replies, noting that “cryptocurrency mining takes a lot of energy.”

Here’s where it gets good. 

Sloan, oozing derision, responds to Chieng with a statement seemingly designed to break the hearts of bitcoin maximalists everywhere: “Cryptocurrency? That money’s not real.”

[embedded content]

Chieng attempts to diffuse the situation by claiming that “money isn’t real,” but it doesn’t go over well with Sloan. 

“You gonna live that lie?” she asks, pointedly.

And yeah, of course this is all a joke meant to promote Call Screen. But hey, that’s kinda the point, isn’t it? Because in Google’s eyes, cryptocurrency is nothing more than a punchline. 

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China is capable of destabilizing or destroying Bitcoin, new research suggests

In 2008, Bitcoin was envisioned by its pseudonymous founder Satoshi Nakamoto as a trustless, decentralized peer-to-peer electronic cash system. 

Ten years and numerous crazy price jumps later, Bitcoin appears to have withstood the test of time. But is it really decentralized and thus resilient to attacks?

A new paper, signed by researchers from from Princeton University and Florida International University, suggests that Bitcoin is largely at the whim of one powerful entity: China. 

The paper (found via The Next Web), which hasn’t been peer reviewed yet, outlines numerous potential attacks and disruptions China could launch against Bitcoin. It also argues that China has both the means and motivation to potentially launch such attacks, and that it is already influencing the network in some ways. 

Bitcoin’s network is powered by miners, who employ a vast amount of computing power to process transactions and create new bitcoins in the process. The total amount of that power is represented as total hash rate, and according to the paper, 74% of it resides in China. 

This has been a well-known and worrying fact for quite some time, as it theoretically enables the Chinese miners (collected into large entities called mining pools) to band up and launch a so-called 51% attack on Bitcoin, essentially taking over the entire network (though the viability and practicality of such an attack in this scenario is up for debate). 

But the paper also points out that China’s Great Firewall and Great Cannon, tools used to filter, monitor and modify internet traffic in the country, could be used to affect Bitcoin’s network in certain ways. In fact, the paper argues that some properties of the Great Firewall had, for a certain period of time, incentivized Chinese miners to mine so-called “empty blocks,” which slowed down the entire network. This particular issue has been fixed with an upgrade to Bitcoin’s software called BIP152. The paper, however, argues that this issue demonstrated “the power of China’s technical capabilities for domestic control to weaken Bitcoin, even unintentionally, on a global scale.”

The paper outlines numerous other ways in which China, armed with a number of regulatory and technical “weapons,” can affect Bitcoin. These include censorship attacks, which would prevent a certain user to commit transactions to Bitcoin’s blockchain. There are also deanonymization attacks, which could tie Bitcoin transactions — which are theoretically anonymous — to real world entities. With its vast, concentrated mining power, China could disrupt competing mining operations. And finally, a number of attacks could be launched to completely destabilize, disrupt or destroy the network. 

Things aren’t that simple, though. The researchers note that China does not directly control the miners operating in its territory, though it certainly can influence or strong-arm them in certain ways. There’s also the question of motivation — why would China be interested in disrupting or destroying Bitcoin? The paper argues that “Bitcoin stands in ideological opposition to China’s centralized governing philosophy.” China also may want to attack Bitcoin for the purpose of law enforcement, and it could simply want to increase control over it. 

“Finally, as Bitcoin becomes more widely used and more tightly integrated into global financial systems, it becomes a possible vector for attacking foreign economies,” the paper states. 

The research paints a dire picture for Bitcoin, whose biggest advantage over traditional payment networks is the fact that it doesn’t have to rely on any one central entity to operate. This property is far less useful if a single entity is able to disrupt, censor or destroy Bitcoin’s network. 

“We singled out China for analysis because they are the most powerful potential adversary to Bitcoin, and we found that they have a variety of salient motives for attacking the system and a number of mature capabilities, both regulatory and technical, to carry out those attacks,” the paper concludes. “As future work, we suggest an analysis of existing solutions to the specific threats China poses to Bitcoin and the identification and mitigation of gaps in those protections.”

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

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Sikur turned a Sony smartphone into a cryptocurrency vault

If you need to carry a substantial amount of cryptocurrency on you at all times, but you just don’t trust the average smartphone, a company called Sikur might have a solution. 

On Wednesday, Sikur launched the SIKURPhone, a customized variant of a Sony smartphone, its Android enhanced with the secure, crypto-oriented SikurOS software. 

SikurOS comes with a cryptocurrency wallet and numerous security-oriented features, such as the ability to remotely wipe the device, and Sikur’s own Secure App Store (launching later this year) which should host only vetted and thoroughly checked apps. A security-oriented chat app and browser are also on board.  

The phone comes in two flavors: One is based on Sony’s XZ1, a 5.2-inch smartphone with a Snapdragon 835 chip, 4GB of RAM, 64GB of storage, a 2,700mAh battery and a 19-megapixel camera on the back paired with a 13-megapixel selfie camera. 

The other is based on Sony’s mid-range XA2, which has a Snapdragon 630 chip, 3GB of RAM, 32GB of storage, a 23-megapixel rear camera, and 8-megapixel selfie camera, and a 3,300mAh battery. 

Neither of these devices are particularly new — Sony launched two more XZ-series flagships after the XZ1 — but their specs are still good enough to hold their own against most modern phones. 

Image: Sikur

If you’ve followed Sikur over the past couple of years, this launch is probably quite confusing. The company’s original SIKURPhone, launched in February 2018, had both its hardware and software built by Sikur (the company now refers to it as GranitePhone). Now, the company appears to have pivoted to building only software which it will deploy on phones made by other manufacturers. 

To build the new, Sony-based SIKURPhone, Sikur joined Sony’s Open Devices Program, which allowed the company to built its software on top of Sony’s hardware, the company COO Alexandre Vasconcelos told me via e-mail.

“We are already talking to other manufacturers to port the SikurOS for other devices,” he said. 

In its promo materials, Sikur claims that the pivot to software is an advantage, but one could argue that controlling both the hardware and the software can ensure better security. Furthermore, using a Sikur device to store your cryptocurrency, or any sensitive data (Sikur positions the device as a tool for businesses and governments, not just crypto users) means placing trust in a very young company to be able to protect it. 

To test the security of its software, Sikur employed the penetration testing company HackerOne which, according to Sikur, was unable to penetrate the SikurOS’ defenses. 

“SIKURPhone has a clear separation between hardware and software layers, the solution is very consistent. Even though the hardware/software layers are apart, we plan to run a permanent bounty program so that we keep the high-quality product level,” Vasconcelos said.

The new SIKURPhone devices are already available with Sikur resellers. The recommended price for the XZ1 is $850, while the XA2 costs $650. 

As for the original GranitePhone, it’s still out there and supported for existing customers. “A new version should be available in mid-October, following the same software features that the SIKURPhone is delivering now,” Vasconcelos said. 

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Now any idiot can apply to list their altcoin on Coinbase

Bring on the altcoin spring.

Cryptocurrency exchange Coinbase teased an opening of the shitcoin floodgates today with an announcement that it will allow issuers of obscure altcoins, tokens, and even digital collectables like CryptoKitties to officially apply to be listed on its exchange. 

At present, Coinbase only lists a few cryptocurrencies — bitcoin, bitcoin cash, ether, ethereum classic, and litecoin — that are for the most part generally considered to be not a scam. According to a company blog post, that is all about to change. 

“Today we’re announcing a new process that will allow us to rapidly list most digital assets that are compliant with local law, by satisfying listing requests in a jurisdiction-by-jurisdiction manner,” reads the blog post. “The new process begins with a form for issuers to submit assets for listing at Coinbase, which we will evaluate against our digital asset framework.”

Have an altcoin that’s in desperate need of a pump? How about a digital collectible that needs an aura of credibility? Well then, this handy Coinbase application form is for you.

Hello yes I am a major investor.

Hello yes I am a major investor.

Image: google form / coinbase

Of course, Coinbase may not accept your application. But hey, when has the almost certainty of failure stopped anyone in the cryptocurrency space?

Notably, the application form doesn’t appear to be limited to issuers (“Lead Developer or Founder”). “Major Investor (>$1M invested)” is also an option for your “position with this project” when filling out the form, as is “Executive or Employee.” 

“[There] are now thousands of digital assets of all types, including coins, tokens, forks, stablecoins, and collectibles,” notes Coinbase’s post. “One of our top customer requests is to add support for these new assets, and we have been determining how to do this in a secure and compliant way for those assets meeting our standards.”

As the most popular U.S. cryptocurrency exchange, what Coinbase decides to list or not list can have a huge impact on the market at large. In December of 2017, for example, Coinbase announced it would support bitcoin cash — and the price of the cryptocurrency skyrocketed almost immediately. The price of ethereum classic also went up following the Coinbase announcement that it would soon support the coin.

More questions.

More questions.

Image: Google form / coinbase

We can practically hear altcoin developers licking their lips. And why shouldn’t they be? At present, it’s free to submit an application to the company. 

That may change in the future, however. 

“Depending on the volume of submissions,” Coinbase explains, “we reserve the right to impose an application fee in the future to defray the legal and operational costs associated with evaluating and listing new assets.”

In other words, if you have a coin you’d love to see listed on Coinbase you should get while the getting’s good. If you wait too long, you may end up paying for the pleasure of Coinbase rejecting your application and telling you your project is a worthless and possibly criminal scam.

But hey, nothing’s stopping you from submitting your application today! So go ahead and grab that Google Form by the horns and ride it all the way to the moon. 

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