Showing posts with label Bitcoin. Show all posts
Showing posts with label Bitcoin. Show all posts
Monday, March 19, 2018
Monday, November 20, 2017
Wednesday, November 8, 2017
The most expensive programming error ever?
Bitcoin users, beware:
My prediction: this isn't the last time we'll see something like this.
There's a lot of hair-pulling among Ethereum alt-coin hoarders today – after a programming blunder in Parity's wallet software let one person bin $280m of the digital currency belonging to scores of strangers, probably permanently.
Parity, which was set up by Ethereum core developer Gavin Woods, admitted today that a user calling themselves devops199 had "accidentally" triggered a bug in its multi-signature wallets that hold Ethereum coins. As a result, wallets created after July 20 are now locked down and inaccessible, quite possibly permanently, thus nuking $90m of Woods' own savings.
Multi-signature wallets mean more than one person has to sign off on a transaction before funds are moved, and are popular with companies and investment groups looking to protect their assets. Unfortunately, Parity's technology is seriously flawed: in July a hacker managed to exploit errors in the multi-signature code to steal about $30m in Ethereum.Quite frankly, it sounds like their code is a mess. Given the high visibility of the cryptocurrency market, there is undoubtably huge pressure to ship software on time. This will not improve code quality.
My prediction: this isn't the last time we'll see something like this.
Tuesday, October 24, 2017
So what is Bitcoin, anyway?
Glen Filthie asked if I could do a post about crypto currencies - what's the big deal, and why does anyone care? I'm not an expert, but here's a quick overview.
Why would anyone want a Cryptocurrency?
Most financial transactions are controlled by central banks like the Federal Reserve or Bank of England, etc. Electronic transactions are done bank-to-bank through networks like the SWIFT network. This is globally scalablable and very convenient, but is explicitly not anonymous - the central bank (i.e. the Government) knows where your money is going.
If you want anonymous financial transactions, you really need to use cash. Credit cards (or ATM/Debit cards) transactions are all done through a centralized organization (your bank or MasterCard/VISA/AmEx/etc), and so are, again, explicitly not anonymous.
The problem with cash is that you have to be physically present to buy something. You can't just go online to order something from Joe's Pretty Good Cake Shoppe. You need to get in the car and schlep on down to Joe's. That's inconvenient if you are in Oklahoma City and Joe is in London.
This is where Cryptocurrency in general and Bitcoin in particular come in. It is a distributed, peer-to-peer currency based on encryption technology. Since it is distributed, there is no central authority involved, i.e. the Government can't get all up in your business when you buy something.
How does Bitcoin Work?
Bitcoin, like all cryptocurrencies (well, the ones I've looked at) use a built-in ledger system. When you spend a bitcoin, both you and the other party cryptographically sign the ledger transferring the coin. The ledger is called the Blockchain and is maintained in a distributed manner by a number of Internet servers that essentially maintain a distributed database of bitcoins. When you sign the blockchain, that transaction is broadcast to the network which validates the transaction and adds it to its transaction database (the blockchain ledger).
You will notice that the government is not involved in any of this, so you have the possibility of anonymous payment without having to physically hand over cash. There's a pretty good introduction to how Blockchain works at Zerohedge.
So who "mints" Bitcoins?
Each cryptocurrency has its own way to cryptographically creating new coins. This is called "mining" and is very CPU intensive. The encryption algorithms used are designed to be highly resistant to forgery (as you can imagine this is an absolute requirement for a currency) but the downside is that you need to do a lot of calculations.
Interestingly, we're starting to see coin mining being used behind the scenes, as a replacement for web ads. We are also beginning to see malware that does coin mining on your computer, rather than doing click fraud. As always, it's the advertisers and Black Hats who figure out how to monitize the 'net.
Each cryptocurrency has designed a limit for how many coins can be mined. Bitcoin will only allow 21 Million coins. They expect this to be reached in 20 years or so.
How do I use it?
You need software (typically called a "wallet"). There are web-based wallets that maintain everything on the 'net, you can install software on your computer (remember to back up your data!), and there are hardware smart cards that will keep your bitcoins on an easily transported (and possibly harder for malware to steal) device.
You can spend Bitcoins wherever they are accepted. Paypal does (or did) accept bitcoins, as do kind of a lot of other places.
C'mon Borepatch - you know this is just for buying weed, right?
Whenever you talk about Bitcoin, there's a lot of talk about the "Dark Internet", underground economy, and black market. There's a problem with this.
Your Bitcoin identity is not anonymous like with cash. You need a pseudonym to use it. Depending on your operational security this may be easy or hard to link to your physical identity. This gets into cloak and dagger tradecraft, which I won't go into here, but caveat emptor. If you're looking to buy weed off the Dark Net then you'd want very good tradecraft indeed I would imagine.
Ransomware (like WannaCry) have demanded payment in Bitcoin, so there's attention in the Bad Guy community.
Other than Anarcho-capitalist techno-cred (which probably has peaked anyway), it looks like most of the action in Bitcoin is financial speculation. This is really high risk because there are nearly a thousand different cryptocurrencies and most are very likely going to end up worthless.
Do Governments hate Bitcoin?
Probably. Remember, it was designed to be distributed, not requiring a central bank. Governments like central banks because it gives them a control point. There's some speculation that governments will crack down, and China (at least) has outlawed purchase of physical goods using bitcoin. Where this will go remains to be seen.
So there you have it, the world's shortest overview of Bitcoin.
UPDATE 20 December 2017 10:16: Robert Graham has some interesting thoughts on Bitcoin here.
Why would anyone want a Cryptocurrency?
Most financial transactions are controlled by central banks like the Federal Reserve or Bank of England, etc. Electronic transactions are done bank-to-bank through networks like the SWIFT network. This is globally scalablable and very convenient, but is explicitly not anonymous - the central bank (i.e. the Government) knows where your money is going.
If you want anonymous financial transactions, you really need to use cash. Credit cards (or ATM/Debit cards) transactions are all done through a centralized organization (your bank or MasterCard/VISA/AmEx/etc), and so are, again, explicitly not anonymous.
The problem with cash is that you have to be physically present to buy something. You can't just go online to order something from Joe's Pretty Good Cake Shoppe. You need to get in the car and schlep on down to Joe's. That's inconvenient if you are in Oklahoma City and Joe is in London.
This is where Cryptocurrency in general and Bitcoin in particular come in. It is a distributed, peer-to-peer currency based on encryption technology. Since it is distributed, there is no central authority involved, i.e. the Government can't get all up in your business when you buy something.
How does Bitcoin Work?
Bitcoin, like all cryptocurrencies (well, the ones I've looked at) use a built-in ledger system. When you spend a bitcoin, both you and the other party cryptographically sign the ledger transferring the coin. The ledger is called the Blockchain and is maintained in a distributed manner by a number of Internet servers that essentially maintain a distributed database of bitcoins. When you sign the blockchain, that transaction is broadcast to the network which validates the transaction and adds it to its transaction database (the blockchain ledger).
You will notice that the government is not involved in any of this, so you have the possibility of anonymous payment without having to physically hand over cash. There's a pretty good introduction to how Blockchain works at Zerohedge.
So who "mints" Bitcoins?
Each cryptocurrency has its own way to cryptographically creating new coins. This is called "mining" and is very CPU intensive. The encryption algorithms used are designed to be highly resistant to forgery (as you can imagine this is an absolute requirement for a currency) but the downside is that you need to do a lot of calculations.
Interestingly, we're starting to see coin mining being used behind the scenes, as a replacement for web ads. We are also beginning to see malware that does coin mining on your computer, rather than doing click fraud. As always, it's the advertisers and Black Hats who figure out how to monitize the 'net.
Each cryptocurrency has designed a limit for how many coins can be mined. Bitcoin will only allow 21 Million coins. They expect this to be reached in 20 years or so.
How do I use it?
You need software (typically called a "wallet"). There are web-based wallets that maintain everything on the 'net, you can install software on your computer (remember to back up your data!), and there are hardware smart cards that will keep your bitcoins on an easily transported (and possibly harder for malware to steal) device.
You can spend Bitcoins wherever they are accepted. Paypal does (or did) accept bitcoins, as do kind of a lot of other places.
C'mon Borepatch - you know this is just for buying weed, right?
Whenever you talk about Bitcoin, there's a lot of talk about the "Dark Internet", underground economy, and black market. There's a problem with this.
Your Bitcoin identity is not anonymous like with cash. You need a pseudonym to use it. Depending on your operational security this may be easy or hard to link to your physical identity. This gets into cloak and dagger tradecraft, which I won't go into here, but caveat emptor. If you're looking to buy weed off the Dark Net then you'd want very good tradecraft indeed I would imagine.
Ransomware (like WannaCry) have demanded payment in Bitcoin, so there's attention in the Bad Guy community.
Other than Anarcho-capitalist techno-cred (which probably has peaked anyway), it looks like most of the action in Bitcoin is financial speculation. This is really high risk because there are nearly a thousand different cryptocurrencies and most are very likely going to end up worthless.
Do Governments hate Bitcoin?
Probably. Remember, it was designed to be distributed, not requiring a central bank. Governments like central banks because it gives them a control point. There's some speculation that governments will crack down, and China (at least) has outlawed purchase of physical goods using bitcoin. Where this will go remains to be seen.
So there you have it, the world's shortest overview of Bitcoin.
UPDATE 20 December 2017 10:16: Robert Graham has some interesting thoughts on Bitcoin here.
Monday, June 23, 2014
Does the NSA own bitcoin?
Hmmm:
Eventually, selfishness will lead one group to rig, cheat, control, etc. the system so they can get better returns. That's exactly what happened. Here's the flaw they exploited.I don't know enough about bitcoin mathematics, but there seems to be a fair amount of buzz about this.
When a single entity ("a single miner" or "a mining pool") controls over 50% of the transaction processing it can control the entire system. This means they can "see" every transaction, spend the same coins more than once, and deny transactions they don't approve of.
That's finally happened. According to analysis from Cornell researchers, a mining pool called GHash has now reached 51% for large stretches of time (effective "ownership" is likely much less).
Friday, March 14, 2014
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