Day: January 7, 2018

You think you don’t have to declare taxes on crypto? IRS might have a different opinion. #NEW YEAR SPECIAL

In the world of cryptocurrencies, people tend to take unnecessary risks. Especially when it comes to obtaining and storing said cryptocurrencies, there is no reason whatsoever to look for shortcuts or save a few dollars. One Reddit user found this out the hard way. He purchased a malicious hardware wallet from eBay, which allowed the assailant to empty his crypto balances in quick succession. Close to US$30,000 worth of funds were stolen, and the chances of recovering them are slim to none.

Beware of Hardware Wallets on eBay

There is a very good reason why no one should buy anything cryptocurrency-related from auction platforms such as eBay. Besides the fact that sellers cannot be trusted, you also never know what kind of mess you are getting yourself into. Plenty of people buy and sell cryptocurrency on eBay, even though the company offers no protection or refund if things go awry. Unfortunately, it is not just the digital aspect of cryptocurrencies which attracts nefarious vendors on such platforms.

More specifically, one also has to be wary when purchasing hardware wallets or other physical cryptocurrency-related products from eBay. Unless you are dealing with the actual manufacturer of such products, it is advised to stay away from any listing which claims to offer a cryptocurrency hardware wallet. That’s because it is impossible to determine whether or not the item you’re purchasing is 100% genuine.

One Reddit user found this out the hard way. Although it appeared as if he was purchasing a normal Ledger wallet on eBay, the reality turned out to be very different. More specifically, the product itself was an actual Ledger hardware wallet, but it seems the vendor could still access the wallet to clear out the funds a few days later. This is a very serious problem, as there is no way for the user to recover his funds now that they have been transferred out.

The Ledger support team was quick to respond to this matter on Reddit. They are helping the affected individual file a formal criminal complaint against the seller in question. Whether or not this will have any impact remains to be determined. A fair few eBay sellers operate under fictitious names and will never be apprehended. It is unfortunate to see events like these take place, although people should know better than to buy such items on auction sites.

Although it is certain that many people will buy genuine, non-compromised versions of popular hardware wallets on eBay, there is no reason to take any chances. It seems this particular Ledger wallet utilized a scratch-off code to reveal its backup seed, even though the latter is normally generated through a very different procedure. Unfortunately for the buyer, he lost all of his LTC, XRP, and all other currencies stored on the device. Using a recovery seed written on a piece of paper by someone else is asking for trouble, and it was the logical “flaw” in this whole ordeal.

Whether or not such nefarious sellers have made more victims in the world of cryptocurrency remains unknown at this time. It is certainly plausible that people are selling such devices in the hopes of new users relying on the included seed phrase in order to empty the wallets later on. It’s a very disturbing practice, although it’s one that was bound to become popular sooner or later. Only rely on official manufacturer listings for products like these, even if it means dealing with shipment delays.

Earlier this week, the Bitcoin Cash community woke up to a rather nasty and unexpected surprise. Someone – or a group of people – had successfully compromised Reddit’s email provider. As a result, the assailant(s) managed to obtain an unspecified amount of Bitcoin Cash from multiple Reddit accounts. These balances were associated with the Bitcoin Cash tip bot, which has become rather popular over the past few weeks. More information regarding this incident came to light over the weekend.

Reddit Hack Impacts Bitcoin Cash Tips

It is never good to see the Reddit platform be affected by a major hack. Unlike what most people expected, it seems this particular attack was directed entirely at the Bitcoin Cash community. Ever since this hard fork came to market, there has been a lot of interest in obtaining BCH. Moreover, the currency’s value has also soared, making it one of the top 5 cryptocurrencies ranked by market cap. It was evident that this popular currency would eventually attract the attention of cybercriminals.

One such attack took place earlier this week. According to an internal Reddit investigation, a hacker – or group of hackers – successfully breached the platform’s third-party password reset system. This, in turn, gave the assailant(s) access to individual Reddit accounts. It is important to note the hacker never gained access to Reddit’s systems or to Reddit users’ email accounts. However, they did access Reddit accounts, especially those who had recently received Bitcoin Cash tips.

For the time being, it remains unclear how many user accounts were affected. According to Reddit, the attack was limited to “less than 20” users, even though an attack like this one would have never taken place if its third-party service provider hadn’t been compromised. When account owners found out their passwords had been reset without their knowledge, it quickly became clear that something was amiss. Unfortunately, they also noticed that their Bitcoin Cash tip balances were gone altogether.

Incidents like these need to be taken very seriously. Some people may dismiss them as a problem affecting a fringe group of users and claim cryptocurrencies should be avoided. At the same time, an incident like this one could easily have affected any other group of Reddit users, and the consequences could have been a lot worse. It is evident this specific attack was directed against the Bitcoin Cash community, although no one knows for sure who is responsible.

All of this goes to show that reliance on third-party service providers is a very big problem. While it is understandable that Reddit can’t do everything on its own, its partnership with Mailgun has taken a big hit due to this hack. Cybersecurity is still a very pressing problem, even in the year 2018. We can only hope companies will step up their game moving forward, even though cybercriminals are always thinking five steps ahead.

Moreover, it is still unclear how much Bitcoin Cash was stolen. Considering that less than two dozen accounts were affected, it is evident this attack wasn’t as successful as it could have been. Whether or not any of the affected users will ever be reimbursed is highly unlikely at this time. Rest assured this is not the last time criminals will attack cryptocurrency enthusiasts in one way or another.

Bitcoin transaction analysis has become an interesting topic of debate over the past few months. Although most governments claim Bitcoin to be anonymous, most people know that is anything but the case. Bitcoin lacks privacy, anonymity, and fungibility. BitFury Group has come up with a new way to analyze related Bitcoin addresses. Whether or not it will bring criminal activity to an end remains to be seen.

Tracking Down Criminals Using Bitcoin

If there is one major downside to the use of Bitcoin, it is that it will always be associated with criminal activity. Although it is true that the darknet adoption of Bitcoin helped catapult this cryptocurrency into the mainstream, there are some issues associated with BTC that make it useless for criminals. More specifically, without privacy, anonymity, fungibility, or a fast network, it is impossible to conduct major criminal activities just with Bitcoin. There simply isn’t sufficient market liquidity to make Bitcoin the go-to solution in this regard.

Even though Bitcoin is not suited for criminal activity, a lot of people still use it to hide their tracks. As a result, we are seeing more and more companies focus their attention on analyzing patterns associated with Bitcoin transactions and the blockchain. Bitfury Group, one of the largest Bitcoin transaction processors in the world today, is one of the companies conducting research into this matter. It is good to see them doing so, as it should help reduce criminal activity involving Bitcoin.

More specifically, the company has been working on a new solution to analyze related Bitcoin addresses. Because everyone can publicly track all Bitcoin transactions in real time without any software, it’s easy to find connections between specific addresses. At the same time, it can be quite cumbersome to follow the trail of digital breadcrumbs, especially when funds move through exchanges, mixers, and other conversion solutions.

Bitfury Group’s CEO, Valery Vavilov, commented as follows:

Currently, bitcoin users can have multiple addresses, making it easier to conceal identities and commit crimes on the Blockchain. The ability to link related addresses, called ‘clustering,’ is an important new tool that helps law enforcement agencies conduct criminal investigations. Bitfury’s award-winning engineers have come up with an incredibly innovative and novel approach to analyzing transactions on the Bitcoin Blockchain. The Bitcoin Blockchain has the potential to be a strong force for good, and this new method will help ensure that it lives up to that potential by aiding investigations and reducing criminal activity.

Whether or not these efforts will be in vain remains to be seen. Criminals are slowing learning that the Bitcoin ecosystem doesn’t suit their needs. They will move to other cryptocurrencies in the future, or perhaps even to brand-new payment methods. A traceable public ledger such as the Bitcoin blockchain allows law enforcement agencies to follow the money at any given time. 

One thing to keep in mind is that another Bitcoin transaction analysis method, address clustering, is still prone to false reporting. With Bitfury Group’s new method, the number of errors should be significantly reduced. The use of both public information and off-chain data seems to yield far more reliable results. Although there is still room for improvement, this is a major step in the right direction as far as Bitcoin analysis is concerned.

A prominent Iranian banker has come out in support of digital currencies. Masoud Khatouni, a senior member at Iran’s largest bank, has called for Bitcoin and other cryptos to be recognised and accepted into the nation’s banking system. According to Bank Meli Iran’s deputy for information technology and communications:

“Iran must formally recognise activities using digital currencies as they are currently shaping the future of banking. Banks themselves must also enter this field to use them.”

Khatouni’s stance is markedly different from other prominent bankers in Iran, however. The governor of the Central Bank of Iran (CBI) and their head of innovative technologies have both recently urged citizens to exercise great caution when dealing with digital currencies.

However, Khatouni believes that his nation could benefit from digital currency, particularly as they have a history of dealing with the burden of economic sanctions. He told prominent Iranian financial news source IBENA:

“The future of banking throughout the world is intertwined with digital currencies, which are entering the banks silently as most banks remain oblivious to their presence.”

The BMI official went on to state that there should be “no limitations” on the use of digital currencies. This, he believes, will allow companies to reap the benefits of cryptos with greater confidence and transparency. He proposed that the CBI should create a group entirely focused on integrating digital currencies into their banking practices. Such a department should then be used to determine regulations going forward.

“I ask central bank officials to refrain from creating restrictions for digital currencies by way of laws and regulations, because based on the current realities of the world, they have taken form and the Iranian people have also moved toward them.”

Despite the mixed signals coming from Iran’s banking sector, it appears that the nation is generally supportive of cryptocurrencies. In October last year, we reported on the Iranian central bank’s desire to see a cryptocurrency infrastructure developed for the nation. Nima Amirshekari, head of Electronic Banking at the Monetary and Banking Institute, said:

“CBI views it [Bitcoin] as something that can be controlled and does not see it as multi-level marketing or a pyramid scheme.” 

It’s believed that the Middle Eastern State are aiming to have a regulatory frame work for digital currencies setup by September of this year. How this will sit with the religious elements of the nation’s leadership remains to be seen, however. Member of parliament Mohammad Reza Pour-Ebrahimi believes that digital currency is against Islam. This sentiment was echoed as recently as last week in Egypt too. Counsellor of the Republican’s Mufti, Dr. Magdy Ashour told a local news source that Bitcoin was “not an Islamic concept”.

The post Iranian Banker: “Digital Currencies… are Currently Shaping the Future of Banking”. appeared first on NewsBTC.

The Tether company has quickly made an impact in the world of cryptocurrencies. Although there are some concerns about the company and its liquidity, it is moving ahead in an effort to expand its presence. Its latest venture involves using both USDT and EURT on top of the Ethereum blockchain. It is a pretty interesting development, considering that both of these currencies are compatible with the ERC20 token standard.

Ethereum-based EURT and USDT Have Arrived

It is always interesting to see how companies deal with the concept of fiat-backed stablecoins. Although Tether has built up a rather solid reputation in this regard, there are still people who voice concerns over its actual fiat currency reserves. Whether or not any of those concerns are valid remains to be determined. For now, we have to focus on the positive news first and foremost. Tether has officially embraced the Ethereum blockchain, which is a rather interesting decision.

More specifically, Tether has announced that it has introduced both USDT and EURT tokens on top of the Ethereum blockchain. As a result, it is now possible to transfer these USD and EUR-backed tokens over the Ethereum network. The company is confident this will spell a bright future for all Ethereum-based protocols and decentralized applications making use of this technology. It’s an interesting step forward for both Tether and Ethereum; that much is evident.

Do keep in mind that these new tokens will not replace the Bitcoin-based USD Tether, which is issued through the Omni Layer Protocol. Instead, these new ERC20-compatible tokens are designed to complement the existing Bitcoin-based versions. These USDT and EURT tokens will be completely separate from their Bitcoin-based counterparts. The tokens are not cross-chain compatible, which should make it easy to keep tabs on both versions without too much friction.

One of the main reasons for Tether to explore the Ethereum network is the latter’s lower transaction fees. Moreover, compared with Bitcoin, the Ethereum-based tokens will confirm a lot faster. Although it remains to be seen if there is sufficient interest in these new tokens, it is evident that Ethereum’s network has some advantages over Bitcoin in terms of usability, costs, and speed. Moreover, these new tokens should allow for more efficient exchange arbitrage, assuming the tokens are integrated by some of the more popular exchanges in the near future.

Given the vast number of projects being built on top of the Ethereum blockchain, it simply made sense for Tether to introduce these new tokens. Such projects can now benefit from the introduction of fiat-backed tokens which can be transferred across the same blockchain. The only potential issue is that the Ethereum blockchain has gotten clogged up several times in the past already. Whether or not it will be able to handle this extra “traffic” remains to be seen.

At the time of writing, it seems around US$110,000 worth of USDT has been authorized on the Ethereum blockchain, compared with EUR 14,585,500 worth of EURT. This is a rather interesting development, considering that EURT is far less popular than USDT when issued on top of the Omni Layer. It will be interesting to see how all of these statistics will change in the next few weeks and months. All things considered, this may be a very smart move on the part of Tether, although it is still too early to gauge the full impact of these new tokens.

It has proven to be another difficult weekend for the Bitcoin network. With the number of unconfirmed transactions rising again, the scaling issues become more apparent. It is not the first time we see incidents like these occur either. Until Bitcoin scales, such problems will only become more common.Especially users with low-fee transactions will feel the brunt of these problematic developments. Waiting over two full days for one network confirmation is anything but fun.

Bitcoin network issues are occurring virtually every week now. Not a long period goes by without transaction delays, high fees, or some other issue. This situation has been present for some time, but seemingly one grows worse. This weekend has proven to be no exception in this regard. Some users are waiting for two full days to get just one network confirmation. It is an unacceptable situation which needs to be resolved sooner rather than later.

Another bad Weekend for Bitcoin Transactions

With over 165,000 unconfirmed transactions, things will not improve soon. It is very unfortunate. to say the least. Bitcoin is still the world’s leading cryptocurrency but it struggles to operate as such. In fact, it has become fairly clunky to use Bitcoin for transactions unless you want to pay an arm and a leg in fees. Not paying the fees results in major transaction delays. While one can use a free accelerator to speed things up, it’s far from ideal. Only 100 transactions can be sped up every hour, which is next to nothing.

In fact, some accelerators now charge high fees to speed things up. Such fees can range anywhere from $25 all the way to $70. This is simply not acceptable, especially where the world’s leading cryptocurrency is concerned. If Bitcoin had scaled properly years ago, none of this would even be an issue at this point. Unfortunately, service providers are slow to upgrade in this regard. Adoption of SegWit is still lagging behind, but things are slowly improving.

Unfortunately, there is little light at the end of this long and dark tunnel. Bitcoin is not in a good place when it comes to transactions. Although there is no shortage of transfers, there is an excess of issues. Problems like these are almost so common people hardly bat an eye these days. That doesn’t mean the issues should be ignored, mind you. Something needs to change for Bitcoin sooner rather than later. When that will be, remains anyone’s guess at this point.

Header image courtesy of Shutterstock

The post Another Weekend Full of Delayed Bitcoin Transactions appeared first on NewsBTC.

Late last year, the United States Federal Communications Commission voted 3-2 in favor of dismantling Obama-era regulations that prohibited ISPs from privileging content. This was a huge defeat for internet rights activists and consumers everywhere. However, while the case seems shut to many, there is still a resistance ongoing – with some rather large companies in its ranks.

Netflix tweets litigative threats at the FCC

While I find it truly amazing that our world today has tech giants, government agencies, and influential people all duking it out 280 characters at a time, a tweet from Netflix demonstrates just how willing the company is to defend net neutrality.

In 2018, the Internet is united in defense of #NetNeutrality. As for the FCC, we will see you in court. https://t.co/Ucf4H1xhne

— Netflix US (@netflix) January 5, 2018

The tweet reads: “In 2018, the Internet is united in defense of #NetNeutrality. As for the FCC, we will see you in court.” I imagine that many of us expected to see these kinds of lawsuits begin to crop up in the wake of an absolute perfect storm of a vote, where voices were muffled and decisions made with poor information. (My opinion is that the vote should have been delayed to at least get everything properly laid out so that the decision could be made properly. I’d be less wary of the same outcome if the process had been better executed.)

What happens next with these sorts of lawsuits is anyone’s guess, but it will definitely be interesting to follow, especially for any law junkies in our readership. The implications of these sorts of lawsuits and decisions will be massive.

My prediction is that these court cases will be dramatic, with content creators and ISPs vying for both the blessing and support of the United States government. At the end of the day, even though companies like Netflix and Google are currently aligned with the majority of the American public, they likely are more closely aligned with their bottom lines.

Who should guarantee your rights?

Largely, my issue with the repeal, and what worries me about large companies suing the FCC over it, is the question of who should guarantee your rights. Clearly the FCC has interests with a certain group and has marginalized the digital rights of US citizens, but I don’t know that we should all be ready to jump into bed with big businesses. After all, they are beholden to their shareholders, not the public. While companies like Netflix and Google may be useful in (maybe) clawing back the digital rights guaranteed by the UN Human Rights Council – not to mention the US Constitution’s First Amendment – we should still be very skeptical of their motives if net neutrality does get saved at the last minute or reinstated later as a result. Giant corporations’ interests can align – and do quite often, in fact – with the best interests of citizens, but not often enough that they should be who we look to for help – unless we hold shares in them.

Raising more awareness for cryptocurrency has not been easy. In fact, one could argue there need to be far more efforts in this regard. Over in Japan, things are being done very differently in this regard. A group known as the Virtual Currency Girls is trying to bring more awareness to the masses. Considering how every member of this group represents a different currency, the initiative is well worth keeping an eye on. Some of the represented coins may raise a lot of questions, though.

Japan has always been an odd country for many different reasons. This is also part of the region’s charm, mind you. When it comes to promoting cryptocurrencies, they are not just relying on billboards or flyers. Instead, there is the group of eight Virtual Currency Girls to do all of the legwork. Every individual represents a different currency, including Bitcoin, XRP, Ether, and so forth. Surprisingly, Cardano is also on this list, rather than Litecoin, Dash, or Monero.

Virtual Currency Girls can Thrive in Japan

This particular initiative raises a lot of questions. The female idol group is a pretty interesting development, to say the least. It is worth noting the Virtual Currency Girls are indeed real people spreading the word about cryptocurrencies. The oldest member if 22 years old, whereas the youngest is just 15 years old. An interesting approach, especially when considering how they all seemingly wear wrestling masks with their currency’s logo on the front.

As is always the case, it remains to be seen if this concept will effectively work. More specifically, cryptocurrency is very popular in Japan ever since the government legalized Bitcoin. The Virtual Currency Girls may play a big role in the coming months and years. Training youngsters to market this new form of money certainly sets an interesting precedent for the rest of the world. Cinderella Academy has gone down a very intriguing path in this regard, to say the very least.

What is perhaps most intriguing is how the Virtual Currency Girls also host live performances. There is even a dedicated line of merchandise. Tickets and goods can be purchased with all of the supported cryptocurrencies. It is a very interesting take on educational efforts. It is highly unlikely we will see a similar trend in other parts of the world, though. Crazy ideas like these would only be socially acceptable in Japan and other Asian countries.

Header image courtesy of Shutterstock

The post Japan’s Virtual Currency Girls Educate the Masses on Cryptocurrency appeared first on NewsBTC.

Steve Deng, associate professor of software at Tsinghua University, a well-known scientist of Artificial Intelligence and the chief Artificial Intelligence scientist of MATRIX blockchain team.

After getting his bachelor and master degrees in Tsinghua University in 1995 and 1998, Steve Deng went to Carnegie Mellon University in 2006 to pursue his Ph.D in Computer Science. Before he got his Doctor degree, Steve Deng had already been hired as a counseling engineer in American Incentia Design Automation company. In January 2006, Steve Deng joined American Magma Design Automation company and became a counseling researcher. In March 2008, he came back to China acting as the assistant professor in the Institute of Microelectronics of Tsinghua University.

Steve Deng’s major research direction is Al, the automation of electrical design, parallel algorithm and image processing machine structure. He used to design and develop an AI predicting safety plan for Chinese high-speed railway.

Steve Deng has published many well-known college textbooks such as Structured Integrated Circuit Design and High – level Synthesis and also published over 20 theses in leading journals. He used to lead a team for Pascal AI international competition and won the first prize.

We visited Prof. Steve Deng on October 18 to gain this impressive interview. In the Bayesian laboratory of Software School of Tsinghua University, with his profound academic background, Steve Deng showed us how blockchain technology would blend with AI in the future.

Encountering the Blockchain

While Steve Deng’s worked in the United States, he was engaged in the computer-aided design of integrated circuits, which is a variety of algorithms for designing integrated circuits. At that time, Sun Jiaguang, academicians of Tsinghua University, was working on a research program to solve the problem about the control chip of the national railway train data. One of Sun’s students recommended prof. Steve Deng, thus, Steve started designing the train data communication chip.

After working on the design of the communication chip, Steve Deng found some new possibilities in his research. He found that the existence of the virtual currency is reasonable and the currency is created by trust; currency is the embodiment of the trust mechanism. However, Steve reckons that people should understand that there is no need for binding blockchain to encryption currency. Encryption currency will use blockchain technology, but encryption currency is only one part in blockchain applications. Blockchain is a kind of generic technology, it can be applied to a scene which requires credible data.

MATRIX Blockchain Team     

Steve Deng has always been devoted to academic research, he hopes he can do something better than others. So he set up MATRIX team with a group of like-minded scholars, to “do something” by using their knowledge and imagination.

Plan One is to use the computational functions needed in academic research to replace the calculation function of bitcoin mining.

MATRIX team considers the algorithm as an alternative, the reason is that (1) the algorithm needs enough computation; (2) the end of each sampling charge for inspection verifier cannot ensure the calculation results, which conforms to the design of bitcoin mining function to some extent. Importantly, this study can be applied to the internal brain computation, image analysis, data processing and financial analysis in academic research.

Plan Two is to use artificial intelligence to solve two core problems in the practical application of blockchain, so as to realize blockchain’s self-iteration.

A: The hierarchy of blockchain (keywords: security/efficiency/speed)

Blockchain technology would apply into peer-to-peer networks, each transaction is on broadcast and it would need 51% of the computing force if change the record. One of the best ways to manage is to make it hierarchical and change the existing consensus structure from flat network to hierarchical network. It is not necessary for some consensus to descend to all nodes, it could be in the middle; the middle node is a random selection, and it also represents physical time and a group of nodes around. To realize this kind of screening method requires the application of artificial intelligence’s cluster technology.

B: Intelligent design and verification of intelligent contract (keywords: universality/safety/practicality)

The so-called “second blockchain technology generation” in the industry refers to the smart contracts of Ethereum. It requires each user to write a piece of code to generate a contract, but in reality it’s very difficult to implement. If using artificial intelligence, it can provide the following solutions : (1) script forms the intelligent contract code automatically; (2) analyzing the bug in the intelligent contract code that is already formed; (3) applying the depth neural network and antagonistic network technology to the in-operation code, attacking and repairing the code at the same time and make it became a safe contract gradually.

Embracing the Great Times

In October 2017, a research paper published in the international academic journal Nature showed that Deepmind, the affiliated company of Google, reported the new program “AlphaGo Zero”, the program can learn chess quickly by itself without any input from human, and finally with a 100:0 result defeat the master chess player. This exciting achievement inspires people to pursue the higher goals, the so-called strong AI, which builds machines that learn and think just like humans.

For Steve Deng, as the Turing award winner Alan Newell says, the most worthwhile thing to study is how human mind emerges from the universe. To find out the answers, an effective way is to realize the intelligence, which is the Artificial Intelligence. On the other hand, Steve considers the blockchain must be the trend in the future. The development of human society, or a better society, must be based on the credibility of consensus.

About MATRIX

MATRIX AI Network is a new generation Blockchain that leverages the latest AI techniques to revolutionize the cryptocurrency landscape. With a fusion of Blockchain and AI technology, MATRIX has built a revolutionary cryptocurrency that supports significantly boosted transaction speed, superior accessibility to general users, enhanced security under malicious attacks, and highly flexible operations.

MATRIX will launch its ICO on Jan 16, 2018. Check the following sites for more information:

Official Website: http://matrix.space

Business White Paper: http://bit.ly/bizwp

Technical White Paper: http://bit.ly/technwp

Facebook: https://www.facebook.com/MATRIXAINetworks/

Twitter: https://twitter.com/matrixainetwork

Telegram Group: https://t.me/matrixainetwork

This is a sponsored press release and does not necessarily reflect the opinions or views held by any employees of The Merkle. This is not investment, trading, or gambling advice. Always conduct your own independent research.