Top Crypto News – 22/01/2018

Opening Hyperledger: Consortium to Create Experimental Labs for Startups

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Hyperledger, the open-source business blockchain consortium,  just got a little more open.

Founded in 2015 to help businesses more easily spin up enterprise blockchain solutions, the consortium approved a measure last week to create what it’s calling Hyperledger Labs. As an effort to bring early-stage startups together with companies that are formally recognized by Hyperledger, the measure stands to accelerate the rate at which new ideas find traction and reach maturity.

“This is a way to expand the Hyperledger community,” said Chris Ferris, the chairman of Hyperledger’s technical steering committee and chief technical officer of IBM Open Technology.

Companies were previously required to go through a grueling application process to prove the maturity of their code and a commitment of resources before becoming “formally recognized” by the consortium and obtaining “incubation status” for their code.

To give an idea of how rigorous the application process for that status is, there are at least 185 Hyperledger members, but only eight codebases have been formally granted the status.

Of those eight codebases, only three frameworks have graduated to “active status” – Intel-contributed Sawtooth, IBM-contributed Fabric, and Iroha, contributed by Japanese startup Soramitsu, with support from Hitachi and several others.

But this new measure now gives startups access to some of the benefits that only those companies formally recognized – such as IBM, Intel and Monax – had access to.

Perhaps the most important being access to a separate GitHub code repository, where existing Hyperledger members can examine code being pushed to the repository, test it and provide feedback.

In a conversation with CoinDesk, Ferris explained why the labs were necessary in the first place, and in turn, why the measure was unanimously approved by the TSC.

He said:

“We’ve had a couple of projects proposed for incubation [to] the TSC, and the TSC has declined the request, but not because the work was shoddy, but rather because we felt that the project wasn’t ripe enough yet, hadn’t matured to the point where we could really understand and see that there’s a solid community behind it.”

Continuing, Ferris said the measure will be a way to engage those companies more closely, instead of turning them away.

Perks of participation

True, startups could already host a project on the general Hyperledger GitHub. “But then it’s sort of lost in all the other thousands and thousands and millions of projects,” Ferris said.

Having the opportunity to get code directly in front of Hyperledger members is the key advantage to taking part in the initiative, according to Ferris. And with that increased visibility, Hyperledger members can provide valuable feedback that might possibly accelerate a startup’s time to market, he continued.

The code submitted to the Github repository under Hyperledger Labs will not be required to meet any functional requirements, but the startup that pushed the code will also not receive intellectual property rights to identify as a “Hyperledger Project,” like those companies with incubation status have.

The code will also not receive legal and security checks before major releases and will not be supported by the official Hyperledger marketing campaign like those with incubation status. But the companies that pushed code will be shared on the Hyperledger.org website.

Overseeing the initiative will be a group of four “Labs stewards” from Hyperledger’s membership, who will give quarterly project reports to the broader community about participant progress, and kill projects that become dormant.

Bas Van Oostveen, a Lab steward and director of engineering at software firm Context Labs BV, told CoinDesk he hopes Hyperledger Labs “will also provide a solid ground for smaller projects to find more contributors and guidance from the greater community.”

Expanding enterprise

In spite of the complex process for moving code into incubation, Hyperledger, a non-profit part of the Linux Foundation, has had a number of successes over the past year.

Of the several projects admitted for incubation status last year, it was the transition of others into active status that perhaps made the biggest impact.

In March, Hyperledger graduated Fabric, Sawtooth and Iroha to active status, setting the stage for the July launch of Fabric 1.0, deemed the consortium’s first “production-ready” platform.

By the beginning of August, JPMorgan Chase, Microsoft and R3 had demoed a platform using Sawtooth, and Sawtooth Ethereum, or Seth, was revealed at the end of August with the aim of running ethereum smart contracts on Hyperledger Sawtooth.

The following month, an open-source version of Interledger, developed by Ripple, was submitted to Hyperledger, with the goal of streamlining any number of blockchain integrations.

Ferris said that’s just a small taste of what’s in store for Hyperledger in 2018. And if Hyperledger Labs does its jobs, the diversity of contributions will only increase.

He concluded:

“There’s at least three [projects] that have been brought forward and that we’ve reviewed and that didn’t make it to incubation for various reasons. And so those are likely to be in the pipeline for being in the Hyperledger Labs.”

Test tubes and pipette image via Shutterstock
Written by CoinDesk

 

The Bull And The Bear Case For Bitcoin, Ethereum, Ripple, Litecoin, And Other Cryptocurrencies

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There have been better days and worse days for Bitcoin, Ethereum, Ripple, Litecoin, and other cryptocurrencies.

The better days were back in November and December when a “virtuous” rotation helped spread the rally from Bitcoin to other cryptocurrencies. This means that funds cashed out from one currency were invested in other currencies.

That’s a bullish “technical” sign for cryptocurrencies, as it keeps the momentum for the sector alive.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don’t own any cryptocoins or tokens.]

The worse days were early this week when the sell-off in major cryptocurrencies spread across the entire sector. This means that money cashed out from one cryptocurrency didn’t flow to other cryptocurrencies, but moved to cash or to other investments.

And that’s a bearish sign for cryptocurrencies, as it undermines the momentum for the sector.

Apparently, momentum is changing very fast in cryptocurrencies, much faster than in other asset classes.

That’s why technical analysis alone may not be a reliable indicator for trying to guess the direction of the cryptocurrency markets.

What about fundamental analysis?

For the vast majority of cryptocurrencies there are no fundamentals to talk about, other than a website with a message that promises to make capitalism better.

For major cryptocurrencies like Bitcoin, there’s some information to make both a bullish and a bearish case.

The bullish case is about the advantages Bitcoin has a “headless” currency. “Increasingly widely accepted as a means of payment with no bank intermediation and absolutely no fees, Bitcoin has some of the attributes of a headless currency,” says Eric Pichet, a KEDGE professor.

Then there’s the rarity of the cryptocurrency and the low ownership rate, which explain its price spike, and the potential for further gains. “The relative rarity of the virtual product explains its rise in large part because only 0.01% of the world population own any,” adds Pichet. “Therefore, one can imagine the effect on its trading price if the primary cause of speculative bubbles, namely FOMO (Fear Of Missing Out) were to spread to a mere 1% of the world population, or 100 times more holders.”

The bearish scenario centers on two major threats which cryptocurrencies face. One of them is an intrusion in the blockchain system and the circulation of fake coins. Another threat is a concerted effort by governments around the world to ban their use.

As Eric Pichet concludes, “Under these conditions, what type of needles would burst the bubble? The first would be the heist of the century: an intrusion in the blockchain system that created a deluge of fake bitcoins. The second would be the adoption of a common position by all national governments and central banks to prohibit this means of payment in the name of fighting fraud, for example.”

Written by Forbes.

 

New Report: North Korean Hackers Stole Funds From South Korean Cryptocurrency Exchanges

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US cybersecurity firm Recorded Future has released a new report linking Lazarus, a North Korean hacking group, to various South Korean cryptocurrency exchange hacking attacks and security breaches.

In a report entitled “North Korea Targeted South Korean Cryptocurrency Users and Exchange in Late 2017 Campaign,” the firm’s researchers stated that the same type of malware used in the Sony Pictures security breach and WannaCry ransomware attack was utilized to target Coinlink, a South Korea-based cryptocurrency exchange.

“North Korean government actors, specifically Lazarus Group, continued to target South Korean cryptocurrency exchanges and users in late 2017, before Kim Jong Un’s New Year’s speech and subsequent North-South dialogue. The malware employed shared code with Destover malware, which was used against Sony Pictures Entertainment in 2014 and the first WannaCry victim in February 2017,” the report read.

$7 mln stolen from Bithumb

In February 2017, Bithumb, the second largest cryptocurrency exchange in the global market by daily trading volume, fell victim to a security breach that led to the loss of around $7 mln of user funds, mostly in Bitcoin and Ethereum’s native cryptocurrency Ether.

The report released by Recorded Future noted that the $7 mln Bithumb security breach has been linked to North Korean hackers. Insikt Group researchers, a group of cybersecurity researchers that closely track the activities of North Korean hackers regularly, revealed that Lazarus Group, in particular, has used a wide range of tools from spear phishing attacks to malware distribution through communication platforms to gain access to cryptocurrency wallets and accounts.

Insikt Group researchers disclosed that Lazarus Group hackers initiated a massive malware campaign in the fall of 2017 and since then, North Korean hackers have focused on spreading malware by attaching files containing fraudulent software to gain access to individual devices.

One method Lazarus Group employed was the distribution of Hangul Word Processor (HWP) files through email, the South Korea equivalent of Microsoft Word documents, with malware attached. If any cryptocurrency user downloads the malware, it autonomously installs itself and operates in the background, taking control of or manipulating data stored within the specific device.

CVE

“By 2017, North Korean actors had jumped on the cryptocurrency bandwagon. The first known North Korean cryptocurrency operation occurred in February 2017, with the theft of $7 mln (at the time) in cryptocurrency from South Korean exchange Bithumb. By the end of 2017, several researchers had reported additional spear phishing campaigns against South Korean cryptocurrency exchanges, numerous successful thefts, and even Bitcoin and Monero mining,” Insikt Group researchers wrote.

Motivation of North Korean hackers

Prior to the release of Recorded Future’s report, several other cybersecurity firms had accused North Korean hacking groups of targeting South Korean cryptocurrency trading platforms with sophisticated malware and phishing attack tools.

Researchers at FireEye linked six targeted cyber attacks against South Korean cryptocurrency exchanges to state-financed hackers based in North Korea. Most recently, as Cointelegraph reported, police investigators and the Korea Internet and Security Agency initiated a full investigation into a security breach that led to the bankruptcy of YouBit, a South Korean cryptocurrency trading platform.

At the time, local investigators stated that they have found evidence to link the YouBit security breach to North Korean hackers. FireEye senior analyst Luke McNamara also told Bloomberg that similar tools widely utilized by North Korean hackers were employed in the YouBit hacking attack.

“This an adversary that we have been watching become increasingly capable and also brazen in terms of the targets that they are willing to go after. This is really just one prong in a larger strategy that they seem to be employing since at least 2016, where they have been using capability that has been primarily used for espionage to actually steal funds.”

Written by CoinTelergraph

Don’t HODL, BUIDL: How Blockchain Tech Will Add Value in 2018

 

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I have come to trust Vitalik Buterin to ask the most important questions in blockchain.

The ethereum founder did that again last month when he asked in a tweet: “Alright, the crypto market is now worth $525 billion, but how much of that valuation have we really earned?”

We can answer Vitalik’s question by using the tried-and-true method of discounted cash flows.

This time isn’t different

During the 1990s dot-com boom, valuation by counting eyeballs and various other body parts was rampant.

During the housing boom, valuation was whatever you wanted by tuning projects’ default rates, prepayment rates, volatility and correlation.

During the current crypto boom, science fiction such as network-based valuation, technical analysis, Metcalfe’s law and Moon-based valuation have all blossomed.

Unfortunately, whenver bubbles burst, discounted cash flows return with a vengeance.

So, while we all believe blockchain technology can solve all our problems including valuation problems, let’s pretend this time is not different, and one day either everyone in crypto will have to generate fiat cash flows in some form.

The less likely that you will get the cash you think you will get in the future, the higher the discount rate. That is a big mess when you are dealing with anything except government bonds, which academic orthodoxy treats as risk-free (never mind the humongous national debt).

Asset pricing gets even worse when commodities and currencies are involved and we have to start watching costs and benefits of HODLing all your digital GODL or any “implied interest rate” you might earn on your GODL. That forecast of net benefit to the HODLer is basically your cash flow forecast.

So, as Vitalik pointed out – the crypto market is worth $525 billion but what did we do that is worth that in the future?

The question is what did we solve, enhance, or deliver that will make individuals, companies or governments produce more, be more efficient, or enjoy their lives and relationships more?

At a high level, we can ask:

1. What features (e.g. Truffle), products (e.g. UPort) or platforms (e.g. Digital Trade Chain) did we build that a consumer is using or benefiting from? No, I don’t mean tether, Telegram chat channels, or proofs of concept.

2. Which enterprise solutions went live and how much new revenue or efficiencies did they create? This includes the work ConsenSys and IBM are doing in Dubai, trade finance platforms by IBM and R3, MUFGCoin and so on.

3. How much did we improve the infrastructure and stack by in terms of scalability, privacy, confidentiality and other such nice things? Quorum, zcash, Fabric, Corda, Coco – all count.

4. What original business models and technologies were created in 2017? ERC-20 tokens and CryptoKitties are included. Stablecoin crypto exchanges are excluded.

5. For each of these, what’re the odds that we will see the invention used by a real person or enterprise over time? In the absence of any information, let’s assume 50% for each.

Incremental value added in 2017

There is simply no way that we baked $500 billion worth of additional consumer value last year that we didn’t have in 2016 and all we had then was PoCs and a few promising ideas.

Any which way you make your list, there was just not enough useful kit in consumer or enterprise production last year.

Bitcoin scraped through to Segwit and all sorts of forks. A very large set of ethereum tools and solutions was released; Quroum, Corda, and Fabric became useful in the enterprise ecosystem, and a very small number of consortia got into technical production.

We bypassed VCs and made it possible for good, bad, and ugly blockchain startups alike to fund their runway.

When we calculate the value of ERC tokens and CryptoKitties, we will subtract the future disasters from future Amazons and probably get a much smaller number than the $3 billion that was raised last year in ICOs.

Then we will thank Vitalik that all this money that could have gone into a largely useless coin instead went into useful tech.

Why I bet on ethereum

Yes, there will be a lot more value created with blockchain in 2018 and even more the year after but there’s so much future baked into the prices today – and it may need to be swapped around as we learn more.

I suspect that each year, half of the ICO-funded startups from the previous year will die – if they even make it that long.

Yet there will be the next Amazon or Google or Netflix in there. If you know how to pick them, go ahead. I don’t.

This is why I am making a big bet of time on ethereum rather than a bet of money in crypto.

Ethereum has momentum, developer adoption, and a team that is willing to address the technical limitations even at risk to the price of ether.

It has people who are serious about the Web 3.0 vision and solving real consumer and business problems.

Does that mean $7, $70, or $700 billion is a fair value for ether? I can’t say. Whether ether will go to the moon in 2025 depends on if ethereum is still the public blockchain in widespread use or if someone comes up with something much better, and if ethereum refused to evolve like some other crypto networks have.

Does that mean you should buy ether today? I can’t and don’t offer investment advice.

Should you start learning how to use ethereum to build solutions and decentralized businesses? Definitely – my son is learning how to build with ethereum and he is 14. He can do quite well just knowing how to build solutions for other people.

BUIDL, not HODL

When we are dead, it’s not what we HODL or SODL that matters. It’s what we BUIDL

So I advise everyone to think about that and BUIDL. Those who BUIDL do seem to enjoy it and look happier than the rest of us.

Besides, since BUIDLers don’t have the time to day trade or buy dodgy coins, they are also a lot less likely to get REKT.

Written by CoinDesk.

 

Consumer Protection Association Slams Bank for Blocking Transfers to Bitcoin Exchanges

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From Israel to Australia, commercial banks in various parts of the world have tried preventing people from entering the cryptocurrency market by blocking money transfers to bitcoin exchanges. Now the largest consumer association in Portugal has called out a local bank for trying to do the same.

Banco Santander Totta

Consumer Protection Association Slams Bank for Blocking Transfers to Bitcoin ExchangesDECO, the Portuguese Association for Consumer Protection, has came out against the actions of Banco Santander Totta S.A., the fourth largest bank in Portugal. This happened following reports by Portuguese clients of the bank that it is blocking interbank transfers to accounts related to bitcoin exchanges. The association has confirmed that the bank is acting in this manner as a policy, despite not having any known legal basis to support its actions.

Founded in 1974, DECO is an independent non-profit association with charity status. It is the largest consumer association in Portugal and has been afforded the status of ‘public utility’. Hopefully its position will help clients make Santander Totta reverse its policy towards transfers to bitcoin exchanges.

Banco de Portugal

Consumer Protection Association Slams Bank for Blocking Transfers to Bitcoin ExchangesAfter trying to make a transfer from Santander Totta to a Coinbase bank account in Estonia and getting rejected, a DECO associate asked the bank for the reason it blocked the transaction. After initially avoiding the question, the bank finally answered that the operation was not allowed because it related to a “virtual currency that is not regulated.”

The consumer association has determined this action has no legal support basis in Portuguese or European Union laws.

The Portuguese central bank, Banco de Portugal, said that there is no regulatory framework established in the country for virtual currency exchange platforms and its supervisory activity does not include actions related to this specific operational reality, essentially meaning that the central bank hasn’t issued any guidelines instructing banks not to approve money transfers to accounts of bitcoin exchanges. Additionally, at least one other Portuguese commercial bank, Novo Banco, commented to DECO that it has no current restrictions in place to inhibit these operations.

Images courtesy of Shutterstock.

 

 

 

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