George Soros Does a 180 on Cryptocurrency Investment – Pledges To Buy

Everyone’s favorite billionaire investor George Soros to the rescue!  After repeatedly condemning cryptocurrency as being a worthless investment and not a proper store of value it looks like he’s publicly changed his position.

But can the man known for causing the Asian Financial Crisis of the 80s, European Refugee Crisis, Election Hacking and much more be trusted or will his involvement mean a pump and dump that leaves cryptocurrency reeling?

We can be sure there are many big whales and hedgefunds in the crypto market but George Soros could be a game changer, for better or worse.  George Soros has never paid for the crises he’s accused of causing which would clearly be illegal but what if there was a better way?  Cryptocurrency!  The cryptomarket is ripe for the picking because insider trading is not illegal, pumping and dumping is not illegal and essentially all of the dirty Wall Street tactics can be used without any concern, at least for now.  So it is no wonder to me that the cryptomarket is in turbulence as more and more big money flows in.  A hand full of elite, wealthy investors could make or tank the entire market and I think that’s what we’ve been seeing.

George Soros is coming whether we like it or not, it’s time to HODL and divest of 99% of the worthless ERC20 coins if they haven’t produced.

Lightning Network – LN Network DDOS’d and Attacked By Organized Group

A group calling itself Bitpico has bragged about attacking the LN (Lightning Network).  The group claims it is stress testing the network and the LN developers responded that they are analyzing and trying to close any attack vectors before the currency is used more.

It is almost a traditional DOS attack where nodes were flooded with false transactions to overwhelm them so no real transactions could get through (similar to a web attack that opens frivolous connections to overwhelm the server).

Inevitably almost all networks go through this and it really is a typical cat and mouse game in any public, permissionless blockchains.  It is really an IT security nightmare where no one is authenticated or vetted whatsoever.  There is little disincentive for organized and well-funded groups not to attack blockchains if they have enough motivation, and clearly many do.

 

Verge XVG Mining Exploit Results in $1.1M Heist

In all fairness it was just 3 hours, they have corrected the issue and have apologized which is the way to handle it.  This won’t make me panic sell my Verge coins.


XVG-Verge-ApologiesforMiningAttack
However, a scam closely followed right into the tweet discussion about this with a fake Verge account scamming users by apologizing for the hack (very ironic).

 

 

Because of how well they handled it I have a lot of faith in their team.  Lately a lot of blockchains have been attacked and exploited which is only natural.  Contrary to popular belief blockchain is not invincible or infallible.  Likewise, the people who code the applications and algorithms that run them are only human, so let’s give them a break.

To close this attack vector permanently it looks like a hardfork will be necessary (I generally dislike hardforks but this is a case of necessity).  But once again I’ll say it is a flaw in the majority of permissionless blockchains.  The client side shouldn’t care about this (just as we don’t care about the backend of our bank we only care about using our money).

I see the value of XVG has plummeted as a result, even though similar issues have happened with Bytecoin and Monero due to a flaw that allowed the creation of extra coins in Cryptonight.  I would fathom that a lot, if not most blockchains have been attacked and this has gone undetected and/or unreported.  It is likely just a matter of time.  This still puzzles me more because I think the Ethereum, parity issue, Bitcoin Gold Scam and what I suspect was a similar issue with Raiblocks didn’t impact the value as much.  With that said, this is one more reason I feel PoW is unsustainable and doesn’t help secure networks at all, as even without technical exploits you can still cause damage by having more hashing power than others.

I am not overly concerned about this issue and a big part of that is how the team handles things and it looks like they’ve taken ownership of the problem and have corrected it (something rare in this industry).

Nano AKA Raiblocks XRB and Bitgrail Scam $150M Lost!

A good friend of mine asked me about Nano and I honestly haven’t paid much attention to it.  I didn’t even know what it was until I realize it was recently rebranded from Raiblocks (XRB).  That alone set off alarm bells, aside from it being confusing I suspected there must be more of a reason.

The technical side is impressive although I haven’t used it, they have this block-lattice technology which doesn’t use traditional PoW mining.  It confirms transactions individually between two wallets instead of the entire blockchain.  This is a huge plus but the weakness is that they only seem to focus on transaction speed.  The algorithm described that seems to automatically allow successive transactions to be confirmed sounds dangerous.  I may be missing something from the implementation but it sounds like a potentially vulnerability that an attacker could use after doing a transaction with you.  In addition they still use a public ledger so essentially they are solving the transaction speed alone but they may also have introduced a huge attack vector and vulnerability.

They do have some interesting features such as instant transactions and being infinitely scalable.  But I take issue with any team claiming anything is infinite.  To infinitely scale there would have to be infinite computing resources available which there are not.  It could just be marketing but this stuff does catch my attention.  Combined with the timing of their rebrand and a lot of insider trading and selling I am very skeptical of this team.  At the very least, hiding from the Bitgrail fraud by renaming just before the news broke doesn’t seem honest at all.

I think we have it here straight from their own blog.  I believe the Raiblocks team knew of a massive fraud about to go down with Bitgrail well before they let on or claim to have known something was wrong.  I am not saying they were involved but the timing of their re-branding is extremely suspicious.

This is because on January 31st they suddenly announce the rebrand to Nano.

Raiblocks-Rebrands

Then just 8 days later the Bitgrail $150M loss of XRB happened.  As you will see from the Raiblocks own timeline it appears they were possibly aware for weeks or months that something was going down.

Raiblocks-Rebrands1

The Raiblocks own timeline seems to imply they were aware of issues for weeks if not months before.   It does not mean they were directly involved but it gives the appearance that for publicity and to shrug off this massive fraud associated with their project they rebranded just before things hit the fan.

Raiblocks-XRB-ScamOn 10/19 – 2017 it is not clear if Raiblocks knew about the suspicious transaction but they definitely did in February.  Being under maintenance for no good reason to withdraw is always cause for concern on January 8th.  I am sure when the Bitgrail owner left the joint Telegram channel for Raiblocks they knew something was very amiss on 2018-01-25 (6 days before the rename and about 2 weeks before the public announcement of fraud).  I find this timing to be highly suspicious, it reminds of the Bitcoin Gold scam and I have no confidence in this team or currency because of that alone.

Bitgrail in March 2018 has gone on to make a statement claiming they are reopening and that they insist there is a flaw in Raiblocks that caused the theft.  Of course both sides may have motivation to blame the other.  In all fairness at least Bitgrail has pledged to offer some ERC20 tokens they are creating and that users will have access to all of their coins upon reopening (aside from the lost XRB of course).

Cash Fund dedicated to the victims of the NANO theft In view of the forthcoming reopening of Bitgrail.com (we will soon announce the exact date), BitGrail srl intends to inform its users of the details of the soon to be established cash fund dedicated to NANO owners, victims of the theft that was communicated on February 9 2018. Prior to that, a premise concerning the suffered theft and Bitgrail's obligations arising from the theft itself. BitGrail S.r.l intends to stress having been subject to theft, a crime made possible by taking advantage of faults in the team NANO's softwares (rai_node and the official block explorer) and therefore, for these reasons and in accordance with the law, it is not in any way responsible for the situation. We confirm that an investigation led by the legal authorities is underway The purpose of the investigation is to shed light on the theft, therefore we have already provided all the useful elements in order to reconstruct the facts, including the evidence concerning those involved in the fraudolent activity, who took advantage of the vulnerability of NANO's software, thus not Bitgrail's. Those grounds are alone sufficient to relieve BitGrail S.r.l of any refund obligation and/or repayment of the stolen amounts. However, as further demonstration of the good intentions and seriousness of the company, in order to meet its users half-way though without recognition of any liability, BitGrail S.r.l intends, on a voluntary basis, to establish a cash fund (by creating a token) dedicated to the users damaged by the theft. Doing so, they'll be enabled to recover their stolen funds over time. We must specify that, since they are not victim of the theft, users that didn't own NANO will have full access to their coins at the site reopening. (all the coins are safe, apart from XRB). Token BGS (BitGrail Shares) A new token (BGS, BitGrail Shares) is already present on the wallet page. 15.6 MLN of them have been distributed in a 1 to 1 ratio with the stolen NANO. The users who have been damaged by the theft (Meaning solely and exclusively all the NANO owners on Bitgrail) can already see their 20% updated XRB balance and, at the same time, the remaining part (80%) converted into BGS. Access and ownership to/of the BitGrail's token is granted only to users who will accept the settlement agreement, as stated in the next point. The new BitGrail Shares token will have its own market on Bitgrail's platform. It will be possibile to trade the token, but not deposit it or withdraw it. It is not excluded that the abovementioned token could be converted into an apposite cryptocurrency, thus enabling withdrawal and deposit. The first of the month BitGail will use the 50% of the previous month trading fees income in order to reacquire the BGS token, proportionally among the users who have them in their Balance. The tokens' buyback will occurr at the fixed price of 10.5 $ per unit (in Bitcoin), considering an average of BTC/USD pair among various exchanges ( Bitfinex, Binance, Bitstamp...) As said, it will be possible to trade BGS on the platform. Users who own said token will be able to buy and/or sell at a different pricing from the one required for the buyback. Doing so, users will have the chance of liquidating their BGS in advance, whenever there is an adequate market situation with the desired price. Any amount that can, in case, be recovered from those who have perpetrated the unauthorised withdrawals (therefore materially in the availabilty of BitGrail S.r.l) will be immediately destinated to the tokens' owners up to the extent of the pro rata sums subracted from the damaged users. (with value of 10.5$) Agreement with the users With the reopening of the site, the use of the platform for the victims of the theft will be bound by the signature of a settlement agreement. The latter will be characterised by an expressed renouncement from the users to every type of legal action, and will have to be formalized through the compilation of a form. The last will have to be printed, signed and uplodaded with the attached documents. Such renouncement will allow the availability of the BGS tokens above described. In denegata hypothesis, subjects who won't accept the settlement agreement will have no alternative except for the account termination in compliance with the TOSs. Extra UE users As already anticipated in the past, BitGrail won't be able to guarantee the trading to the extra UE users for a limited period of time. Our intention is to reopen the access to the whole world as soon as possible. Extra UE users will be able to deposit and withdraw. The BGS token buypack will also be available. Implementations of the platform With the purpose of guaranteeing a faster execution of the plan concerning the purchase of the tokens owned by the victims of the theft who have accepted the agreement, BitGrail S.r.l. will immediately work on the implementation of the site, focusing on: Markets/pair increasing by adding other criptocurrencies Interface and charts improvements an APP for smartphone / tablet the realization of a referral link system A voting system based on the BGS tokens for the list of new emergent criptocurrencies will be implemented. Thanks for the attention. Bitgrail S.r.l.

It’s hard to know for sure what has gone on in this case.  But this week XVG (Verge Coin) was hacked due to a flaw in how coins are mined, and something similar with Cryptonight for Monero and Bytecoin was also disclosed recently.    Who is to say that the Coincheck NEM issue also wasn’t due to a similar but unknown or undisclosed flaw?

Alibaba’s Sesame China’s All-in-One Credit Rating System

Alibaba’s Sesame Credit which launched in 2015 is one of the highest profile Social Credit Systems in China.  In part this is because it gathers a lot of data from Alibaba Cloud services (the same thing as essentially what Facebook, Google and other US companies do).  However, in China the process is more formal and complex as it isn’t just for spying and marketing purposes.

It is a system that essentially rates your associates, activities, lifestyle and not just your financial credit alone.  So it is both a pro and con in some cases that these aspects are used, but it all depends on your lifestyle.

I find it highly controversial and it all really depends on how fair will the system be and is it more fair than the traditional model?

With ICOs like Bloom I wonder how it will fare and compare?

Trezor Hardware Wallet to Support Bitcoin Cash

A maker of hardware wallets for cryptocurrency has recently confirmed they will add support for Bitcoin Cash.  I’ve also been an advocate of not using these even before the Ledger Nano hack came out.

I suspect that some will lose their currency or at least have to try to recover it based on confusion over the two.  I really think it’s a bad idea since most currencies have no built-in protection to sending into the abyss to a non-existent address of another blockchain.

 

Swiss Researchers Forecast Sideways Trading and Downward Pressure on Bitcoin for 2018

They have based it on Metcalfe’s law which says at this point that Bitcoin could lose another 27%.  The group also cites the part I agree with, in that so far cryptocurrency prices are mainly driven by Bitcoin which means Altcoins (other than Bitcoin) have risen and fallen in direct correlation.

Where I am not sure if I agree or disagree is their theory that a lot of this is driven by fear in the news.  While I am sure it is, if the fear is unfounded why should bad news reflect on the long-term valuation?

A sensible market would be wise to react to say the hacks that have happened to Ethereum or the fact that illegal content has been inserted into the Bitcoin Blockchain.  That is bad news that has relevance since these issues potentially threaten the integrity of the entire blockchain.

While we’re on the topic of Metcalfe’s law, since cryptocurrency is a completely new and largely irrational market can we trust this is a valid predictor?  I am not aware that any other traditional models have successfully called any of the major events in cryptocurrency.

I do agree it was time for a significant correction but the same has happened in commodities and stocks before, yet the stock markets keep moving (albeit with a lot of money printing and manipulation-is that what regulators mean by regulation for cryptocurrency? :) ).

Only time will tell where things head but I do think that currencies that are efficient, secure and easy to use will stand the test of time (which admittedly are very few and I cannot think of a single one that solves all of the issues just yet).

Did Facebook, Zuckerberg and Big Data Elect Trump?

New revelations about SCL and CA (Cambridge Analytica) have revealed that they may have even altered the Brexit Vote.  In fact an article quotes the CEO of Camridge Analytica as bragging that they got Trump elected using dirty and undetectable tricks.

If any of these is true it is safe to assume that Cambridge Analytica is not alone, and they have likely influenced more than just the US election.  What’s more, there could be other companies that Facebook, Google, Twitter, Instagram and other US based social platforms used data from whether knowingly or unknowingly.  This has been the big evil that I’ve warned about for years, that these free social platforms are analyzing and mining your data for bad purposes.  Apparently there are no limits to the violation of your privacy, proven social experiments conducted by Facebook and likely the others etc..  It’s all in their TOS essentially.  It’s well known that using any of those platforms including Gmail is the same as typing your most personal thoughts and messages to the bots and analysts at the big social media companies and government minders.

Going back to all of this, I thought we were told that it was the Russians who elected Trump (without any evidence ever being provided mind you)?   Now it comes out that private companies based in the West have been influencing elections and I suspect this is just the tip of the iceberg.  The bigger question is who are the clients of Cambridge Analytica?  I don’t think we have to look far considering the relationship to the UK government and Royal Family.

 

ICOs Still Going Strong in 2018

Despite the slow start and bearish sentiment of the cryptocurrency market this year, apparently ICOs have been going strong.  Various reasons are plentiful for why the ICO market remains this strong and it has me scratching my head.

Some say that serial investors are cashing out and then reinvesting into new ICOs.  Others say new investors from outside the traditional cryptocurrency world are coming into the market.

I am not sure what to think, as someone like myself is shying aware from most ICOs based on my experience that I feel 99% of these are scams and won’t ever deliver anything.  I think most of them are the next dot bombs and it is absolutely right to panic and sell these worthless Ethereum ERC20 tokens.

In ICOs the traditional due diligence is simply not enough.  It is easy to weed out people without IT or business experience.  And from that you have to weed out who has valid experience and qualifications?  Working for big name companies does not make you qualified to deliver on an overly ambitious project, but it does of course help attract investors.  I’ve seen enough big names including the Telegram ICO to be unimpressed (the Telegram ICO tells you to send money and then e-mail them to confirm the transaction……..how on earth will they build a proper blockchain if they can’t make their own API for transactions?).

Sorry for the rant but seriously what is driving the ICO market despite all the bad news?  I suspect it is people in the cryptocurrency world and I suspect they are miners who are thinking “my coins aren’t worth that much at the moment why not invest some of my spare ones into ABC scam ICO in the hopes that it grows and acts as a hedge to my underperforming cryptocurrency”.

That’s the best I can do and I suspect that is what is happening.  There are of course the institutional and whale investors who play a role but it’s unclear to what extent.

G20 Summit Proposes To Adopt, Regulate and NOT Ban Cryptocurrency

From reading various news articles I’m going to summarize what I think are the few key take aways from the G20 summit in Buenos Aires, Argentina.

I’ve simplified these into two points although they could have been broken down I think it really boils down to two key conclusions.

Cryptocurrency Should Be Adopted

The G20 agrees that cryptocurrency is part of a transition to digital economy and that eventually fiat (cash) will die.  They also recognize the power of cryptocurrency to bring finance and banking to those who normally wouldn’t have had access.  In a way it is gratifying that they are essentially saying between the lines that cryptocurrency and being your own bank are a good thing for everyone.

I also think it is an act of desperation and I will get more into that in my conclusion.

Cryptocurrency Must Be Regulated

There were several discussions regarding the regulation of cryptocurrency.  As we can see and as I suspected, the main drive is to control and tax cryptocurrency.  They want rules around it so that they aren’t cut out of taxes and control as a middleman.  A strong focus was put on preventing criminal activity and money laundering (you know stuff that NEVER happens with our current financial system).

Why have they adopted this position?

I think it’s natural because as I’ve said companies and people will move to whatever country is friendly to them.  It is almost an act of desperation because I think regulators can see cryptocurrency could head underground and out of the reach of any regulators if they keep cracking down.  I am in no way equating cryptocurrency with piracy or illegal activity but I will say this a similar thing that happened in the days of filesharing such as Napster and Limewire etc… Authorities didn’t understand the new economy was digital and that people wanted to download digital copies of their favorite songs and videos.  Because that void was never filled by the RIAA and MPAA, piracy was rampant and their crackdowns only increased it.  Initially piracy was largely underground but then Bittorrent came out as a decentralized filesharing platform and it has not only made the problem worse but virtually unstoppable.

Cryptocurrency with money being at stake I think would become even larger if the crackdowns continue.  Cryptocurrency would then largely be traded directly without the involvement of fiat if regulators, governments or exchanges (such as Bittrex who recently moved overseas to Malta because they offered them a better deal than the threats they were receiving in the USA).

If Venezuela, Russia or China is more friendly in the end people will move their business and crypto to whatever country they trust.  This can happen in an instant so, really, the regulators should treat the relevant parties well or they can pack up with all of their money.  There is no option to “freeze their accounts” for political reasons like the days of the past.

The rough ride is probably far from over as there will be reasons that governments and regulators may make decisions that are contrary to the G20 logic but I think in the end, reason will win out.