The New Last-Ditch Effort to Unfreeze a $260 Million Ethereum Fortune
“The least evil.”
That’s how one ethereum user described the latest effort to recover $264 million in cryptocurrency lost due to a code fault in a popular ethereum wallet. But while the recovery efforts that have proliferated since the November incident have been so far shunned, a new effort, now documented in code, aims for a simpler and less invasive way to implement the fix.
Stepping back, in November, the code library associated with U.K. startup Parity’s multi-sig wallet was deleted by a pseudonymous hacker who “accidentally” exploited a function called “self-destruct.” In the fallout, Parity proposed a modification to the ethereum software whereby the self-destruct mechanism would lose its functionality, but the proposal was found to contain significant security risks.
This new proposal, published on April 15 by Parity Technologies communications officer Afri Schoeden, suggests simply restoring the lost wallet library with a version of the code that does not contain a self-destruct function.
Users would be able to regain access to their funds, and on top of that, the new code would protect Parity from similar exploits going forward. As such, the new proposal sends a clear message – when it comes to fund recovery, some developers have no intention of giving up the fight.
“I think simply recovering funds is both more technically sound and more honest than the original proposal to modify the self-destruct opcode,” ethereum core developer Nick Johnson told CoinDesk.
And a number of others agree.
Co-founder of ethereum prediction protocol Augur, Joey Krug, told CoinDesk:
“I do believe it doesn’t make sense to just have all this capital senselessly locked up.”
What seems to be different about this proposal is its limited reach.
Not only is it focused on the Parity software client only, but it’s also targeted specifically at only the 513,774.16 ether lost in the November hack. (This provides a contrast to past proposals, which have aimed at fund recovery broadly).
“Speaking personally, I’m in favor of helping people recover lost funds if the cost to do so is low relative to the funds being recovered, the owner is unambiguous, and the funds are definitively locked up,” Johnson said. “I think the case with the Parity multi-sig bug fits all three criteria.”
The other thing EIP-999 seems to have going for it is that it’s simple to execute. Instead of trying to rework the whole ethereum virtual machine, the proposal would be released to Parity software clients only by way of hard fork upgrade.
Schoeden emphasized this ease to implement, pointing to the pull-request he already submitted to Parity’s code base.
And Krug, like others, believe this request might actually see enough community support to finally put an end to the Parity fund recovery debate.
Although for some, including Krug, the balance between protecting ethereum users and encouraging good security practices should be taken into account when deciding whether recoveries should happen.
“In my opinion, proposals like these should be accepted provided the code was actually audited,” Krug said, adding:
“If it wasn’t, the community should be less forgiving.”
But with the broader debate over the recovery of funds due to code vulnerabilities splitting the community for years, some aren’t so sure even EIP-999 will settle the mess.
“Allowing case-by-case proposals for mistake reversals is a terrible idea and opens up all kinds of concerns. This would set a terrible and dangerous precedent,” one user wrote on an ethereum forum.
This sentiment seems to be the current majority on social media and GitHub, where many are worried about future corruption and bribery.
Indeed, a Reddit user warned, “Some unknown amount of developer mindshare will leave ethereum if this happens.”
Wrapping up what he sees as the sentiment among the community, Johnson told CoinDesk, “It seems plain to me based on an informal survey that a large proportion of the community is opposed to the idea. I think it’s unlikely this proposal will be implemented.”
Yet, the debates have brought about some sort of silver lining.
After EIP editor Yoichi Hirai stepped down from his role as a result of an eruption of criticism over the frozen fund recovery efforts, the EIP process was streamlined.
Still, Schoeden is aggravated by the opposition, telling CoinDesk:
“Even though I hear the feedback and apply changes to the new proposal, I get the feeling we’re running in circles here.”
Frozen ether coin image via Shutterstock
Written by CoinDesk.com
Data Firm at Center of Facebook Controversy Planned $30 Million ICO: Report
Cambridge Analytica, a British data analytics firm, was planning to raise as much as $30 million by issuing a new cryptocurrency through an ICO before it got swept up in a scandal surrounding the misuse of Facebook Inc. personal data, sources familiar with the matter told Reuters on Tuesday.
Cambridge Analytica had approached a company that advises companies on how structuring ICOs, the sources said.
Current Plans Uncertain
Cambridge Analytica’s current plans are unknown. An unnamed spokesman said the company is considering using blockchain to help secure its online data, but did not comment on the ICO.
The company was creating technologies to allow people to reclaim personal data and gain complete transparency over how their data is used before the Facebook controversy erupted, the spokesperson said in an email to Reuters.
Cambridge Analytica worked for U.S. President Donald Trump’s 2016 election campaign and has faced scrutiny over the past month after the Observer and the New York Times reported that the firm improperly gained access to personal data on millions of Facebook users. Facebook earlier this month acknowledged data from more than 87 million users could have been compromised.
Cambridge Analytica has said it properly licensed data on a much smaller number of users from a research firm.
Chief Executive Left Company
The company’s effort to provide personal data protection was overseen by its chief executive, Alexander Nix, who left in March after being tape recorded boasting about the company’s use of shell companies and strategies to help politicians entrap opponents, The New York Times reported.
The New York Times also reported Cambridge Analytica attempted to promote the Dragon Coin, a coin associated with a Macau gangster known as Broken Tooth. Dragon coin was to be used by gamblers and make it easier for people to get money to Macau casinos.
Facebook, meanwhile, is curtailing misleading and deceptive ad practices, including ICOs, cryptocurrencies and binary options, banning ads that “promote financial products and services that are frequently associated with misleading or deceptive promotional practices.”
Featured image from Shutterstock.
Written by CCN.com
Significant Trade Volume Triggers Localbitcoins KYC Requirement
Localbitcoins ‘Error’ Involves Know-Your-Customer Verification
Bitcoin users are frantically searching other exchanges today that don’t require Know-Your-Customer (KYC) verification. A post on the Reddit forum /r/bitcoin on April 17 showed a picture that stated a Localbitcoins user’s trade volume was “significant” this past year, and the trader had to verify their identity in order to keep trading. The picture reads:
Error! Your trade volume has been significant in the last twelve months. Please verify your identity to continue trading.
Localbitcoins does use a verification process but it’s never really been enforced, although some believe more traders will trade with you if you are verified. Much like the rest of the exchanges out there that do require immediate verification, Localbitcoins uses an ID service called ‘Netverify,’ created by a company called Jumio. Basically, the user uploads a picture of both sides of their license or state ID and in a few minutes, the platform reveals if the identification is a legitimate or not.
The Long-Lasting Bastion of Freedom Fell
The post on Reddit submitted on Tuesday is not the first time this news has spread among the cryptocurrency campfire. Back in January of 2018, there are posts on Reddit and Bitcointalk that show another trader required to use their ID to trade on Localbitcoins. Immediately the discussion among bitcoiners turned to decentralized exchanges like Bisq, Hodl Hodl, and Barterdex. The Reddit user /u/yellowcuda who created the post has an account that is three years old, and further down the thread he states:
To clarify: me and many of my peers who use Localbitcoins started getting this notification upon signing in, requiring them to submit their ID. Without it, you cannot continue trading. This is it, folks — The long-lasting bastion of freedom fell.
Many of the decentralized exchanges (DEX) today do have operational platforms, but liquidity on exchanges like Hodl Hodl, Bisq, Openledger, Bartdex, Idex, and Waves is not that much compared to centralized exchanges (CEX). Further, some of the platforms are in the very early stages and don’t have the functionality and features found on large VC-funded trading platforms.
Lastly, a few decentralized exchanges do offer fiat pairs, but a lot of them don’t have access to fiat and most platforms offer cryptocurrency-to-cryptocurrency swaps. It’s safe to say that much of the issues tethered to Localbitcoins users being arrested and the company itself requiring verification is likely because people are swapping for fiat and nation-states like the U.S. don’t appreciate that kind of business without permission. There have been no statements made by the owners of Localbitcoins yet about this issue and there are no official updates on the main page.
Written by Bitcoin.com
IMF Chief Envisages Large-Scale Shift Towards Cryptocurrencies
2 Blog Posts Dedicated to Crypto
The managing director of the International Monetary Fund (IMF), Christine Lagarde, dedicated a blog post on the IMF website to the benefits of cryptocurrencies on Tuesday. This positive post follows her other post last month which she outlined the drawbacks from her viewpoint. Citing that she previously “looked at the dark side of crypto-assets, including their potential use for money laundering and the financing of terrorism,” Lagarde proceeded to say:
Here, I want to examine the promise they [cryptocurrencies] offer. A judicious look at crypto-assets should lead us to neither crypto-condemnation nor crypto-euphoria.
She acknowledged the many cryptocurrencies in circulation and said, “it seems inevitable that many will not survive the process of creative destruction.” According to Coinmarketcap, there are currently 1,568 cryptocurrencies.
“The crypto-assets that survive could have a significant impact on how we save, invest and pay our bills,” the IMF chief believes. “That is why policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit.”
Lagarde Explores Benefits of Crypto
The first benefit Lagarde pointed out was:
Crypto-assets enable fast and inexpensive financial transactions, while offering some of the convenience of cash.
She emphasized that “Some payment services now make overseas transfers in a matter of hours, not days,” adding that “If privately issued crypto-assets remain risky and unstable, there may be demand for central banks to provide digital forms of money.”
The next point Lagarde discussed was a potential balance in the financial landscape brought about by cryptocurrencies. While emphasizing her belief that “the fintech revolution will not eliminate the need for trusted intermediaries, such as brokers and bankers,” she detailed:
There is hope, however, that decentralized applications spurred by crypto-assets will lead to a diversification of the financial landscape, a better balance between centralized and decentralized service providers, and a financial ecosystem that is more efficient and potentially more robust in resisting threats.
No Immediate Danger
Regarding financial stability, Lagarde revealed, “Our preliminary assessment is that, given their still-small footprint and limited links to the rest of the financial system, crypto-assets do not pose an immediate danger.” Nonetheless, the IMF chief calls for regulators to remain vigilant of the potential of cryptocurrencies “to magnify the risks of highly leveraged trading, and to increase the transmission of economic shocks should they become more integrated into mainstream financial products.” She further described:
Moreover, banks and other financial institutions will face challenges to their business models, should there be a large-scale shift away from government-issued currencies toward crypto-assets. Regulators might find it harder to ensure the stability of a more diffuse and decentralized financial system. Central banks might have more trouble acting as the lender of last resort in case of a crisis.