Day: July 11, 2017

Since Russian President Vladimir Putin expressed interest in Ethereum at his meeting with Vitalik Buterin at the World Economic Forum held in St. Petersburg, the blockchain industry in Russia has been quick to heat up. The Blockchain & Bitcoin Conference in Saint Petersburg was held in June, followed immediately by a blockchain-focused hackathon called BlockchainHack in Moscow, with 150 people in attendance competing for $100,000 worth of cryptocurrency.   

The hackathon took place at the Paveletsky Art Center, a massive building in downtown Moscow that has become the de facto hub for blockchain technology in Russia, with an increasing number of blockchain developers and enthusiasts who work out of it. The event was jointly organized by BTC Media, Qtum, Zerion, Waves, the Token Fund and Blockchain School, with additional support from the community in Russia.

The teams presented ambitious demos with winning topics including a mobile application to track and invest into ICOs; an arbitration service based on smart contracts and a reputation system; facial recognition software to determine what ICOs and blockchain projects a blockchain developer has been involved in and is currently active with; among others.

The winning team, Wafer, presented a demo and vision of creating a distributed Wi-Fi network using blockchain technology. They effectively allow routers to sell traffic without being tied to a particular software on the device. It uses smart contracts to ensure that users all pay for their traffic and that a user is guaranteed to get access to the internet after payment.

Qtum was the largest sponsor of the hackathon, and with members of the Qtum Foundation in attendance, many of the developers deployed their applications to Ethereum as well as Qtum. Qtum is a hybrid blockchain that merges the UTXO transaction model of Bitcoin with the EVM on Ethereum. It began as a fork of Bitcoin and the team added in an abstraction layer to integrate the EVM, ultimately allowing any developer tool built for Ethereum to also be available on Qtum, including Solidity smart contracts and Web3. Because of this, many of the decentralized applications presented were built on Ethereum as well as deployed to the Qtum testnet.

Prize money was awarded in Qtum tokens, Waves tokens and ether (ETH): as the grand prize winner, Wafer took home 5,000 Qtum tokens, valued at over $50,000. Qtum also awarded two other teams with 2,500 and 1,000 tokens for second and third prize.

Waves awarded their top three picks with 500 Waves, 300 Waves and 100 Waves, respectively. The winning Waves team developed a platform that uses facial recognition software for investors to quickly determine which ICO projects a person has been involved in.

The winning project in the Ethereum category, as selected by Zerion, created an interface for investors to quickly invest in multiple ICOs, and was awarded 10 ETH.

Patrick Dai, the cofounder of the Qtum project, said to Bitcoin Magazine, “We can see why this was the largest blockchain hackathon in Russia. Lots of developers brought new ideas to the table. We want to promote these projects that can bring the world closer together and spur innovation. We think that’s the purpose of blockchain technology, and it’s our purpose at Qtum.”

Alex Bash, one of the cofounders of Zerion, told Bitcoin Magazine, “I personally was really inspired by the idea of Wafer, a team that implemented a protocol that allows users and routers to share internet [access]. Their idea is based on smart contracts that guarantee the fair prices and conditions for both parties. Also the Lapti team who developed a product that processes various cryptocurrencies, generates a hot wallet for each user and aggregates their payments to a single wallet after collection of statistics and analytics.”

Every one of the 25 teams that participated presented a demo of the software they had created over the weekend.

“Overall, I think it’s a good result for the hackathon, that most of the teams not only came up with interesting ideas, but developed real products and solutions during the weekend,” said Bash.

Rodion Mikhalev, the director of the Blockchain Education Network in Russia, attended both the conference in Saint Petersburg and the hackathon in Moscow. He said that he expects the community in Russia will continue to grow very quickly.

“The Russian Government approved the entire concept of cryptocurrencies a few weeks ago, and a new industry in Russia has been unleashed surrounding blockchain technology,” Mikhalev told Bitcoin Magazine. “At the hackathon, we witnessed something new and extraordinary: a combination of smarts and digital innovation and a sense that through the evolution of blockchain technology, we will see Russia quickly rise as a powerhouse in the tech world. There will be a lot of positive products and services adapted to blockchain technology at a rapid pace.”

What happens next in regard to blockchain development in Russia remains to be seen, as there are still few blockchain companies that operate in the country. One thing we can be certain of though is that the technology is now high on their radar.

AlphaBay, the most popular market on the dark net, has been offline since July 4. Since the administrators of the website failed to issue an official statement about the current issues, many users are suspecting an exit scam. The absence of AlphaBay has since resulted in users looking for alternative underground marketplaces.

AlphaBay is infamous for being a site where vendors sell all kinds of goods, including illegal ones such as drugs, weapons and stolen financial credentials. There have been previous downtimes at the market; however, since neither the admins, nor the moderators have stated the actual cause of the issue, many users are suspecting an exit scam. An “exit scam” is when either a seller or an illicit marketplace decides to close down shop and make off with the funds (held in escrow) of clients and customers. In March 2015, Evolution Marketplace — one of the largest underground markets at the time — left with the funds of its users, cashing out an estimated 40,000 BTC worth approximately $12 million at the time (as of today, the BTC would be valued at $102 million).

“Trappy,” who is considered the main contact person for AlphaBay, submitted a post on Reddit on July 5 claiming he is in touch with the admins of the dark web marketplace; however, he did not specify the reasons why the market is down. The moderator also warned the users about the dangers that can ensue when a marketplace is offline, such as increased phishing activity in an attempt to steal the cryptocurrencies of misled buyers and sellers.

“I have been in touch with our devs and admins and they are working to restore AlphaBay as soon as possible. As I have said before, during downtimes, there are added risks that you should understand and be wary of,” Trappy wrote on the /r/DarkNetMarkets subreddit.

However, many users were not satisfied with the moderator’s post. There are plenty of posts with various theories speculating as to why the market has gone down. One user, “Artificial93,” claimed he followed the trail of his bitcoin address on AlphaBay, which pointed to a BTC wallet receiving large amounts of cryptocurrency in the past few days while the marketplace was down. Dark web users also spotted a large bitcoin transaction (1,479 BTC valued at $3.8 million) conducted on July 5. Because of this transaction, more users accused AlphaBay of executing an exit scam. On the other hand, “SarahLKJSGDHF” made a separate post on Reddit in an attempt to calm the community down and call for rationality.

“Yes, [the Bitcoin transaction is] large, and yes, it looks suspicious. But until someone can actually confirm that it’s linked to AB, it’s really just that — a large bitcoin transaction. The timing, admittedly, does fit,” the user wrote on the /r/AlphaBayMarket subreddit. “People have always screamed ‘exit scam’ in the past, and they’ve always been wrong. And I really hope this turns out the same.”

“XanaxBoss,” a verified vendor on the /r/DarkNetMarkets subreddit, speculated that the reason for the downtime is connected to a law enforcement operation in Quebec, Canada, where authorities raided two separate locations “in connection to a worldwide network with [the] sale of illicit products on the Dark Web.” In the police action — where the FBI was also involved — investigators were searching for computer equipment. According to XanaxBoss, the reason why AlphaBay is down at the moment is that one of their servers was seized in Quebec which they are trying to restore.

“The FBI didn’t bust the market as a whole like they did for Silk Road because Alphabay is much bigger than Silk Road ever was, so it would be logical to believe Alphabay is operating through several servers in different areas of the world. Maybe the FBI just seized one of the mirror servers of Alphabay in Quebec, and there are many other servers located around the world. It would explain the ‘worldwide’ aspect of the FBI’s ongoing investigation that is talked about in the article. I believe right now the ‘updates’ promised by Trappy and Bigmuscles are actually Alphabay’s bosses attempting to secure the rest of their network and replace Quebec’s seized server,” XanaxBoss wrote.

Until either law enforcement or the administrators verify any of these claims, they all remain speculation. The only fact we know is that AlphaBay is still down.

Since the largest dark web marketplace went down, AlphaBay users have been looking for alternative markets. On Reddit, there appear to be multiple posts suggesting Hansa Market as a viable alternative because of the high security the website provides. In addition, the moderator (AlphaBay_mod) for the AlphaBay subreddit has suggested that Hansa admins are unlikely to be able to conduct an exit scam since the “money is never kept by Hansa.” The AlphaBay alternative has also eliminated a sticking point for AlphaBay users: finalizing early (FE). In FE listings, the customers have to send the payment directly to the vendors without escrow. This practice has resulted in numerous scams in the dark web community.

Because of the “high influx” of AlphaBay users joining Hansa, the marketplace closed down registrations for a while. In an update to the Reddit topic, AlphaBay_mod hasadvised the community to use the Dream Market since “it seems the only decent market for new users.”