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).

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).

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.

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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.

300Billion in Market Cap Lost in Cryptocurrency in 2018

Now before we either all panic of HODL our funds I think it’s time to take a step back.  I don’t think cryptocurrency is going anywhere regardless of the bad news and government threats.

But with that said let’s take an even further step back and ask what has worked, what hasn’t worked and why has this happened to the market?

There are a lot of factors but I’ll speak about the ones that I think are most significant.

Bad News

The news is key here because a lot of family and friends are worried that all of us crypto holders have lost all of our money.  Even with Bitcoin around the $7-$10K mark, unless you bought in at the end of last year you’re still probably doing very well.  In general the market for most major currencies is up well over what it was in the first 3 quarters of 2017.  However, there is no denying that the charts look a little bearish but I think there will be a breakout in the coming months.

Government/Finance Manipulation

Much like the news, government and big financiers are having a big impact.  We know hedgefund investors have poured in billions.  Whether by intention or not a lot of them could be pulling money out of certain currencies to create an artificial crash and panic selling.

Too Many ICO Scams

I used to feel the word scam was used too liberally in the digital age of many honest IT companies.   However, in terms of ICO even the Ethereum Founder, Vitaly Buterik says 90% of tokens on his network are scams.  This is a very rational reason that will have a huge chill on investment. I would say blame a good portion of these problems on Ethereum honestly.  The unregulated and wild wild west of ICOs have brought government wrath and regulators banging on the door of all crypto stakeholders.

Lack of Common Sense and Proper Business and IT Practices

It is very clear to me in looking at how a lot of teams and ICOs operate that a good portion of people holding power in the cryptoworld have no clue.  If they did a lot of common sense things would be happening and they simply aren’t.

Such as Coinbase’s decision to open itself and its investors for huge losses and liability by selling Ethereum ERC20 Tokens.

The very idea of “free for all” in the cryptoworld reminds of the 90’s of the wild wild west of the World Wide Web and the lessons I thought we all learned.  Admittedly, and clearly, a lot of people have forgotten or were not old enough to be around for that.

I could say more but it’s so clear that essential business and IT practices have been thrown to the wind.  This is a huge impact on a lot of the issues the cryptoworld has been facing.

The Coming

I am still very optimistic about the long-term crypto outcome, but there are a lot of self-created and external factors at this moment.  I do think it is temporary but a dot bomb in crypto will certainly be repeated and appear.  The currencies and teams who didn’t learn from the 90’s will likely be the first ones swept away, leaving way for the next generation of cryptocurrency that simply just works for people and business.

What does “HODLING” mean in cryptocurrency and Bitcoin Trading Strategy?

HODLING-POST-AreebYasir

So here’s the post on Bitcointalk.org that apparently started it all once it made the rounds on reddit:

 

I type d that tyitle twice because I knew it was wrong the first time.  Still wrong.  w/e.  GF’s out at a lesbian bar, BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY.  It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.  Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro.  Likewise the weak hands are like OH NO IT’S GOING DOWN I’M GONNA SELL he he he and then they’re like OH GOD MY ASSHOLE when the SMART traders who KNOW WHAT THE FUCK THEY’RE DOING buy back in but you know what?  I’m not part of that group.  When the traders buy back in I’m already part of the market capital so GUESS WHO YOU’RE CHEATING day traders NOT ME~!  Those taunt threads saying “OHH YOU SHOULD HAVE SOLD” YEAH NO SHIT.  NO SHIT I SHOULD HAVE SOLD.  I SHOULD HAVE SOLD MOMENTS BEFORE EVERY SELL AND BOUGHT MOMENTS BEFORE EVERY BUY BUT YOU KNOW WHAT NOT EVERYBODY IS AS COOL AS YOU.  You only sell in a bear market if you are a good day trader or an illusioned noob.  The people inbetween hold.  In a zero-sum game such as this, traders can only take your money if you sell.

My wife asked me what the term “HODLING” or “HODL” meant because it’s been referenced all over social media.  I honestly just thought it was the ticket symbol for Interstellar Holdings HOLD spelled wrong!

In the above post the poster goes on a rant about why they decided to hold apparently to spite the “day traders”.  Some have said the poster was drunk but could it also just be an angry rant, combined with life issues and a few typos?

We may never know for sure because I haven’t read the hundreds of pages in the thread and I am not sure where the poster is now or if they’ve still held their BTC or not.  If they’ve still hold on until recently they’ve obviously been right to hold but as we all say “hindsight is 20/20” back in those days no one was sure Bitcoin would continue its metaphoric rise to hit the 20K mark and settle back down at the approximately 13K mark at the time of this writing.

Whatever the real story may have been behind the post, a lot of crypto traders and investors are really referring this rant to explain just how wise it is to hold onto their currency despite apparent crashes.

Personally I’m all for HODLING if it’s based on fear and not by a real technical or game changer in a currency.