Why Hardforks In Cryptocurrency Are Bad

I’ve always felt this but hardforks are simply bad, even if in the rare case they intend to fix a problem with the original currency.  Most currencies which have issues like Bitcoin are simply not just a “single problem” but a collective bunch of inherent problems.   But most often it is so clear like is the case with Bitcoin Gold that the team just copies and counterfeits a coin to unjustly enrich themselves.

Risks and Issues with Hardforks

  1. Loss of value, normally the original coin is at least temporarily devalued when a hardfork is done.  People wonder which coin will survive or be more popular?
  2. Confusion leading to scams and fraud.  Which is the real Bitcoin or real Bitcoin Gold?
  3. Many forks don’t make a wallet (more evidence of bad intention) and more likely that fraudsters will make a wallet that steals your coins (eg. John Dass and the Bitcoin Gold team).
  4. Community frustration and division.

Instead of hardforking it is much better to do what Cloakcoin or Litecoin did and the many others did by just copying it, making changes and starting their own blockchain.  This ensures the process won’t allow fraud, confusion or devaluation of the original coin and no harm comes to the community that way.

All these coins have stolen value from the main coins like Bitcoin and then people ask why the value went down?  If Bitcoin was not hardforkable I think it should be several times the value we see now, almost certainly 2/3s or more of the crypto market cap.

Bitcoin Private and Cloak Cryptocurrencies

There is a huge emphasis on privacy with a lot of new coins but I do feel that a lot of coins focus on a single issue and leave the overall business and usability aspect out.  How do these newer coins fare?

Cloak

My first impression is why doesn’t the non-www version work while the www version does?  Does their team not know how to properly configure nginx or is it just a simple mistake and oversight?

Cloakcoin.com-Forbidden-ConfigError

They call their encryption ENIGMA which I am not sure is a joke or if they aren’t aware of the ENIGMA encryption box in Germany that was compromised during WWII?  I would more so be worried that it is a read between the lines joke or a hint that the team is doing something more than they claim?  Sorry but I just can’t get over the fact that they would not know about the Enigma box from Germany that was decoded.

For my second point I do like the privacy aspects but this is where I have concerns.  On one head they tout privacy, but then to have more privacy they obfuscate transactions by using other clients wallets?  Why would you allow a third-party and random strange to process or handle any part of the transaction?  I do realize they say it is fully encrypted and obfuscated so the random third party stranger on the network shouldn’t know anything about you or your transaction, but to me it violates the principle of privacy and security.  It reminds me of how everyone believed the TOR network is a good idea and secure, but in reality whoever runs an exit node can spy on other users, including the NSA.  This architecture of Cloak makes me worried that a vulnerability could be found and that privacy could be worse than most other Bitcoin-style coins.  Even if a simple vulnerability was not found, you are essentially passing private information to random strangers on the network, the NSA or other large funded organizations could use this to spy on other users or even perhaps modify transactions and create chaos on the network.

I also find it confusing how they say it is private but you have to enable “ENIGMA” on top of “Cloak Shield” to truly make it private?

Here are the parts I’ve picked on from their website:

Alice’s Cloak wallet then automatically sends a request to the network for other Cloak wallets who have elected to become ENIGMA mixer nodes to obfuscate her transaction. All of this is done privately and securely throughout with no identities or true IP addresses revealed.

Bob has cloaking mode enabled in his wallet and the wallet generates a secure CloakShield encryption channel for communications with Alice’s wallet. Bob’s wallet sends Alice a secure connection, containing encrypted inputs and outputs to commence the transaction.

With this confirmed, Alice, with full anonymity, creates an encrypted ENIGMA transaction containing her true inputs and outputs and Bob’s cloaking (obscured) inputs and outputs. Bob and Alice both sign the ENIGMA transaction before it is submitted to the network for inclusion into a PoS block.

Going back to the concerns I have above, I really don’t like how Alice’s wallet would ever communicate with anyone other than the receiver or the Cloak network.  By introducing Bob, there is the chance that Bob could decipher and identify what Alice is doing.  Of course that’s not what should happen, but I believe it is a huge security whole to involve random third parties in confirming or obfuscating transactions.  The situation reminds me a lot of the vulnerabilities in the TOR network.  Essentially Bob is like an exit node, running transactions for Alice.  Bob shouldn’t know who Alice is or what she is doing, but what if there is an implementation error or other issue?  This could be avoided by not using any random third party.

I think Cloak does a great job but they’ve actually introduced a huge security hole by doing the random, third party, processes the transaction part.  It would be like saying “my data is encrypted so I’ll send encrypted copies to everyone”.  Sure it is encrypted but if someone can ever hack your encrypted data either through bruteforce or an algorithm/implementation error then you are done for.  The best solution is to never send private and sensitive data to an extra, third party.

I do think the Cloak project has worked hard and it has some great ideas but aside from privacy and what I believe are security holes in how they implement it, they have done a great job but it is not a coin that does everything right.

Bitcoin Private

For those who know me, I am very much against forks.  As I’ve stated before they decrease, value, lead to scams and confusion.  This can be evidenced with Bitcoin Gold regardless of who you believe was responsible.  Right off the bat Bitcoin Private is warning of scammers trying to confuse you with a warning on their website.

BitcoinPrivate-BTCP-Scam-Private-Keys

The problem with these types of coins, hardforks or what I think are really counterfeits is that you need to give up the very “private keys” of your real, valuable Bitcoin to claim the “new counterfeit coin”.  This is a huge security problem, regardless of who made the wallet what if the wallet is designed or hacked to maliciously steal your real Bitcoins?  There is no easy and secure way to claim your coins from these counterfeits.   Once you give up your private keys to Bitcoin Cash, Bitcoin Gold, Bitcoin Private they could steal your real Bitcoins.

Now there is a way around it, you could transfer your coins to another wallet but it’s a huge pain and a mistake could cost a novice user all of their Bitcoin.

Now in all fairness I appreciate this team at least has official wallets ready for download, unlike Bitcoin Cash.

Users who have the currency called “ZClassic” are also involved here, which is also another confusing fork of ZCash.

This is what I mean about all of the confusion.  It creates an environment where holders and buyers are easily confused about which is the real “Bitcoin”, which is the real ZCash.  And really, I can’t see any reason why people are forking except as a cash grab and counterfeiting spree.

For this reason I don’t trust Bitcoin Private anymore than I trust the other forks (although I trust Bitcoin Gold the least).  I personally feel there is no good reason to trust any of them.  If they want to make a new or better currency they should really just make their own, or at least copy it under a new name.  But of course forking, creates unwilling participants and owners of the new currency, while enriching and rewarding the hardforkers for their counterfeiting.

For those reason if I had to pick between the two, I think Cloak has our best interests at heart and hardforked coins are just a scam, counterfeit and cash grab by unscrupulous people.

Hardforks Are Scams Says Charlie Lee LTC Creator

Charlie has been saying exactly what I’ve been.  Hardforks are essentially scams that devalue the original coin and cause confusion.  At the same time, I’m sure he meant well but it never helped that he announced he sold all of his LTC.  It’s akin to a CEO selling all of their stock and saying “I still believe in the company”.  Granted this happened well before this scam hardfork so the hardfork is surely what caused the latest drop.

CharlieLee-LTC-Litecoin-Founder-Says-Forks-Scam-Confusing

As we can see after Litecoin Cash, the real and original Litecoin went down in value.

Charlie also correctly warns not to give your private keys to these scammers.  Whether Bitcoin Cash, Bitcoin Gold, Litcoin Cash and the many scam coins they require you to give your private keys to their wallets (if they even create one).  The risk there is that the developers or wallet creator will steal your original coins and this has happened already with the Bitcoin Gold Scam.

LitecoinSlide

I think exchanges should outright refuse to deal with these scam coins.

The underlying issue is simply that why are hardforks possible at all?  Counterfeiting is so easy with these opensource, public and permssionless blockchains.  To me it is a complete security and privacy flaw that was well-intentioned but simply doesn’t work.

Going forward, community maintained coins that cannot be forked, that are secure, private and are real time will be the long-term ones to invest in and the long-term winners.

Pablo Escobar’s Brother Trafficks an ICO and new Bitcoin Fork!

Pablo Esobar’s brother makes some very bold claims surrounding his new cryptocurrency launch.

https://www.ccn.com/pablo-escobar-brother-diet-bitcoin/

One of those claims is that Bitcoin was created by the CIA, however this may be contradicted by the fact he also claims he met a Satoshi Nakamoto of Japan.  As proof he shows a Passport bearing the same name:

satoshi-passport

Of course it is possible someone from Japan could be working for the CIA, most people don’t believe a single person created Bitcoin.  So I do think there is credence to believing a large organization such as the CIA or other resourceful and skilled group created Bitcoin (so I call this one plausible).

Some critics have said his website for his coin Diet Bitcoin was nearly copied from the original bitcoin.org and that so are the specs.  I’m going to be fair in that I don’t see how Diet Bitcoin is any worse than other Bitcoin forks such as Bitcoin Gold.  As many know I am against hardforks as I see them as counterfeiting, being confusing and just simply wrong but it also illustrates weaknesses in any currency which can be copied in such a manner (where I believe forks should be impossible to keep the network secure and ensure integrity).

 

 

Bitcoin Gold Scam Heist – Who Should Be Held Responsible?

For those who don’t know Bitcoin Gold is yet another fork from Bitcoin.  As many users warned even before this, with BCH (Bitcoin Cash) to be careful of these coins because they have NO official wallet and rely on random third party wallets.  Particular there were warnings for BCH that if you try claiming your free BCH that a bad wallet creator could take your wallet.dat to steal your actual BTC (Bitcoins) so prudent users moved money from their original wallet before claiming.

With Bitcoin Gold the issue was different, there was no wallet (I have no idea how so many projects don’t have their own guaranteed, safe original wallets) so people were understandably looking to get into BTG with a wallet.  One such wallet was “mybtgwallet.com” who the BTG team recommended on their website and Twitter.

JohnDassbtg

This wallet was apparently created by someone they claimed to work with and a developer named “John Dass”, essentially the wallet asked users to upload keys and passwords for their other currencies and ultimately many people lost a lot of money totaling in the millions of various coins including Bitcoin and Ethereum.  The BTG team seems to dispute this version of events and claim John Dass was not a developer but then why and how can some random person declare themselves a developer and scam users so easily?  This is a big part of the basis of the lawsuit against the BTG team.

Making matters worse, their official Twitter account advised the mybtgwallet was safe to use.  Deleted Tweet sourced from here:

BitcoinGoldRecommends-mybtgwallet-scam-walletbtg2

Lots of users on Reddit began calling the BTG team out and some have apparently filed a lawsuit.

WARNING: Bitcoin Gold’s official website linked to a scam wallet that stole user funds, including my own, for weeks. from BitcoinMarkets

I don’t see that BTG has been up front about the issue.  It’s been reported that the BTG team did their best to silence news of this and threatened the victims that they wouldn’t be compensated if they made their experience public.  If that is true it really speaks volumes about the project, team, trustworthiness and integrity of the coin.

If the Reddit community and experiences are true as posted online then I would say BTG is liable for the losses for many reasons with aggravating factors being that they did little to vet, warn or stop this scam from happening and have appeared to have not helped the victims.

 

Screenshot-CRITICAL WARNING - Bitcoin Gold - Mozilla Firefox

What are my personal thoughts and opinion?

Looking at their team profile looks has little to no information.  Most projects at least have a bio and more info about their background.

Their lead developer is named “h4x3rotab” with no picture or info at all so I’m very skeptical.

Screenshot-Team - Bitcoin Gold - Mozilla Firefox

I’ve reached out to the BTG team and will post any response if any.