‘Haunts me to this day’ — Crypto project hacked for $4M in a hotel lobby

‘Haunts me to this day’ — Crypto project hacked for $4M in a hotel lobby

The co-founder of Web3 metaverse game engine “Webaverse” has revealed they were victims of a $4 million crypto hack after meeting with scammers posing as investors in a hotel lobby in Rome. 

The bizarre aspect of the story, according to co-founder Ahad Shams, is that the crypto was stolen from a newly set up Trust Wallet and that the hack took place during the meeting at some point.

He claims the thieves could not have possibly seen the private key, nor was he connected to a public WiFi network at the time.

The thieves were somehow able to gain access while taking a photo of the wallet’s balance, believes Shams.

The letter which was shared on Twitter on Feb. 7, contains statements from Webarverse and Shams, explaining that they met with a man named “Mr Safra” on Nov. 26 after several weeks of discussions about potential funding.

“We connected with “Mr Safra” over email and video calls and he explained that he wanted to invest in exciting Web3 companies,” explained Shams.

“He explained that he had been scammed by people in crypto before and so he collected our IDs for KYC, and stipulated as a requirement that we fly into Rome to meet him because it was important to meet IRL to ‘get comfortable’ with who we were each doing business with,” he added.

While initially “skeptical,” Sham agreed to meet “Mr Safra” and his “banker” in person in a hotel lobby in Rome, where he would later show the project’s “proof of funds” — who Mr. Safra claimed was his requirement to begin the “paperwork.”

“Though we grudgingly agreed to the Trust Wallet ‘proof’, we created a fresh Trust Wallet account at home using a device we didn’t primarily use to interact with them. Our thinking was that without our private keys or seed phrases, the funds would be safe anyway,” said Shams. 

However, turns out Sham he was thoroughly mistaken:

“When we met, we sat across from these three men and transferred 4m USDC into the Trust Wallet. “Mr Safra” asked to see the balances on the Trust Wallet app and took out his phone to “take some pictures”.

Shams explained that he thought it was okay because no private keys or seed phrases were revealed to “Mr. Safra.”

But after “Mr. Safra” took a photo and stepped out of the meeting room to consult his banking colleagues, the crew vanished and Shams saw the funds siphoned out.

“We never saw him again. Minutes later the funds left the wallet.”

Almost immediately after, Shams reported the theft to a local police station in Rome and then filed an Internet Crime Complaint (IC3) form to the U.S. Federal Bureau of Investigation (FBI) a few days later.

Shams said he still has no idea how “Mr. Safra” and his scam crew committed the exploit:

“The interim update from the ongoing investigations is that we are still unable to confidently establish the attack vector. The investigators have reviewed available evidence and engaged in lengthy interviews with the relevant persons but further technical information is necessary for them to come to confidently establish conclusions.”

“Specifically, we need more information from Trust Wallet regarding activity on the wallet that was drained to reach a technical conclusion and we are actively pursuing them for their records. This will likely provide us with a better picture on how this has transpired,” he added.

Cointelegraph reached out to Shams and he confirmed he wasn’t connected to the hotel lobby’s WiFi when he revealed the funds on his Trust Wallet.

Related: Just get phishing scammers out of your way

The Webaverse co-founder believes the exploit was carried out in similar fashion to an NFT scam story shared by NFT entrepreneur Jacob Riglin on Jul. 21, 2021.

There, Riglin explained that he met with potential business partners in Barcelona, proved that he had sufficient funds on his laptop, and then within 30-40 minutes the funds were drained.

Shams has since shared the Ethereum-based transaction where his Trust Wallet was exploited, noting that the funds were quickly “split into six transactions and sent to six new addresses, none of which had any prior activity.”

The $4 million worth of USDC was then almost entirely converted into Ether (ETH), wrapped-Bitcoin (wBTC) and Tether (USDT) via 1inch’s swap address feature.

Shams admitted that “the event haunts me to this day” and that the $4 million exploit is “undoubtedly a setback” for Webaverse.

However, he stressed that the $4 million exploit and pending investigation will have no impact on the firm’s short term commitments and plans:

“We have sufficient runway of 12-16 months based on our current forecasts and we are well underway to deliver on our plans.”

Cointelegraph has also reached out to Trust Wallet for commen



Source link

Binance Halting US Dollar Deposits and Withdrawals via Bank Accounts – Exchanges Bitcoin News

Binance Halting US Dollar Deposits and Withdrawals via Bank Accounts – Exchanges Bitcoin News

Global crypto exchange Binance is suspending deposits and withdrawals in U.S. dollars via bank accounts starting Wednesday as more and more banking institutions try to reduce their exposure to the crypto market. “We are working hard to restart service as soon as possible,” Binance said.

Binance Suspending USD Deposits and Withdrawals

Global cryptocurrency exchange Binance is reportedly suspending withdrawals and deposits in U.S. dollars using bank accounts starting Wednesday. Without providing a reason, a spokesperson for Binance told CNBC:

We are temporarily suspending USD bank transfers as of February 8th. Affected customers are being notified directly … We are working hard to restart service as soon as possible.

“0.01% of our monthly active users leverage USD bank transfers,” the spokesperson continued, noting that bank transfers using other fiat currencies and other methods of buying and selling cryptocurrencies on Binance, such as using credit cards, Google Pay, and Apple Pay, “remain unaffected.”

Nonetheless, the spokesperson claimed: “We’re still overwhelmingly net-positive on net deposits … Outflows always tick up when prices start to level off following a bullish market swing like we saw last week as some users take profits.”

Meanwhile, Binance US, a unit of Binance that is regulated by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clarified on Twitter that it is a separate entity from Binance and its customers are not affected by the suspension.

Banks Reducing Exposure to Crypto Market

A growing number of banks have been reducing their exposure to the crypto market following the collapse of crypto exchange FTX.

Binance said last month that its banking partner Signature Bank will only process transactions exceeding $100,000 from the beginning of this month. The bank previously stated that it plans to reduce up to $10 billion in deposits from cryptocurrency clients.

The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) recently issued a joint statement warning banking organizations about crypto risks. “The agencies have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector,” the joint statement reads.

What do you think about Binance halting withdrawals and deposits in U.S. dollars via bank accounts? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src=”
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));



Source link

Genesis entity going up for sale as DCG makes creditor pact

Genesis entity going up for sale as DCG makes creditor pact

Genesis Global has announced it has reached an “agreement in principle” with Digital Currency Group (DCG) which will eventually see its crypto lending and trading arm sold as part of restructuring efforts.

According to a Feb. 6 press release, DCG would contribute its equity in Genesis Global Trading, a trading subsidiary business, to Genesis Global Holdco, the holding entity for Genesis — bringing all Genesis-related entities under the same holding company.

After the transactions are final — pending necessary court approval — Genesis will seek to put its then-owned Genesis Global Trading entity up for sale.

Crypto exchange Gemini also agreed to contribute $100 million for its Gemini Earn users who have funds frozen with the bankrupt firm.

Genesis is currently restructuring as part of its Chapter 11 bankruptcy proceedings stemming from a liquidity crisis in November 2022, brought on by the bankruptcy of crypto exchange FTX.

Genesis Global Trading was not included in the company’s Chapter 11 filing at the time saying the business would “continue client trading operations.”

At an initial bankruptcy hearing in January Genesis lawyers expressed the firm was looking for a quick resolution to it’s creditor disputes and were optimistic the company would come out of Chapter 11 proceedings by late May.

This is a developing story, and further information will be added as it becomes available.



Source link

Former Bitcoin Dev Gavin Andresen Revises 2016 Blog Post, Calls Trust in Craig Wright a ‘Mistake’ – Bitcoin News

Former Bitcoin Dev Gavin Andresen Revises 2016 Blog Post, Calls Trust in Craig Wright a ‘Mistake’ – Bitcoin News

During the first week of Feb. 2023, the United Kingdom Court of Appeal overturned a High Court decision from March 2022 in the case of Craig Wright’s Tulip Trading Limited (TTL) vs. 16 cryptocurrency developers. The case will proceed to trial as Wright, who claims to be Satoshi Nakamoto, stated his team was “delighted” with the judges’ decision to overturn the March dismissal. Meanwhile, former Bitcoin core developer Gavin Andresen revised a 2016 blog post, insisting that it was a “mistake to trust Craig Wright as much as I did.”

Court of Appeal Allows Tulip Trading Case to Proceed to Trial; Gavin Andresen Reflects on Trusting Craig Wright, Refuses to Play ‘Who is Satoshi’ Game Anymore

Craig Wright, the Australian man who claims to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto, won an appeals motion on February 3, 2023, allowing his firm, Tulip Trading Limited (TTL), to take 16 open-source cryptocurrency developers to trial. Three judges overruled a previous dismissal from March 2022. TTL is seeking roughly $3 billion in alleged stolen digital assets and asserts that fiduciary and tortious duties require open-source blockchain developers to encode a digital asset recovery tool. The Bitcoinsv (BSV) network, which forked from Bitcoin Cash (BCH), has already implemented a digital asset recovery tool on its chain.

“We are delighted that the judges have granted permission for TTL to pursue its claim for breach of fiduciary duties and/or duty of care against the developers of blockchain linked digital assets including bitcoin,” Wright explained after winning the appeal.

After the U.K. court overturned the previous decision, former Bitcoin core developer Gavin Andresen revised a blog post he wrote in May 2016. The original post detailed Andresen’s meeting with Craig Wright and it stated, “I believe Craig Steven Wright is the person who invented Bitcoin.” The post now includes an update from Andresen acknowledging that he believes it was a mistake to trust Wright. “Feb 2023: I don’t believe in rewriting history, so I’m going to leave this post up,” Andresen wrote. “But in the seven years since I wrote it, a lot has happened, and I now know it was a mistake to trust Craig Wright as much as I did.”

The former Bitcoin core developer added:

I regret getting sucked into the ‘who is (or isn’t) Satoshi’ game, and I refuse to play that game anymore.

Andresen’s 2016 post received significant criticism when it was initially published on the web. Six years ago, the developer also discussed the situation with members of the Reddit community after the post was released. “Craig signed a message that I chose (‘Gavin’s favorite number is eleven. CSW’ if I recall correctly) using the private key from block number 1,” Andresen said at the time. “That signature was copied onto a clean USB stick I brought with me to London, and then validated on a brand-new laptop with a freshly downloaded copy of Electrum. I was not allowed to keep the message or laptop ([for] fear it would leak before Official Announcement). I don’t have an explanation for the funky OpenSSL procedure in his blog post.”

Later, during a Kleiman vs. Wright deposition in June 2020, Andresen told the court that during the 2016 signing process, he could have been deceived. “There are places in the private proving session where I could have been fooled, where somebody could have switched out the software that was being used or, perhaps, the laptop that was delivered was not a brand-new laptop, and it had been tampered with in some way. I was also jet-lagged,” Andresen noted in the deposition. “My doubts arise because the proof that was presented to me is very different from the pseudo-proof that was later presented to the world.”

It is unclear why Andresen decided to revise the post after Wright won the appeal and obtained the right to take the developers to trial. Despite Andresen’s update, some BSV supporters continue to believe that Wright is the creator of Bitcoin, while other BSV advocates have requested that Wright “demonstrate the same block signing” that he performed privately.

Tags in this story
$3 Billion, 2016, 2020, BCH, Bitcoin, Bitcoin (BTC), bitcoin cash, bitcoinsv, block number 1, Blog Post, BSV, BSV supporters, BTC, Craig Wright, cryptocurrency developers, deposition, digital asset recovery tool, doubts, Electrum, fiduciary, forked, former Bitcoin core developer, Gavin Andresen, high court, jet-lagged, Kleiman vs. Wright, network, open-source blockchain, OpenSSL, Private Key, private proving session, pseudonymous creator, Reddit Community, Satoshi Nakamoto, Signature, stolen digital assets, tortious duties, Trial, Tulip Trading Limited, United Kingdom Court of Appeal

What do you think about Craig Wright’s ongoing legal battles and Gavin Andresen’s recent revision of his 2016 blog post? Share your thoughts in the comments below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.




Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src=”
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));



Source link

FTX CEO testifies on ‘pure hell’ post-bankruptcy days at exchange

FTX CEO testifies on ‘pure hell’ post-bankruptcy days at exchange

John Ray, who took over as CEO of crypto exchange FTX, has described some of the chaotic experiences at the firm following the company declaring bankruptcy.

In testimony for FTX’s case in the United States Bankruptcy Court for the District of Delaware on Feb. 6, Ray said he and other professionals had “carefully” been conducting an investigation into FTX’s activities, due to the company having no physical office. The FTX CEO seemed to be pushing back against a motion to assign an independent examiner to the bankruptcy case, claiming that “inadvertent errors” could result in “hundreds of millions of dollars of value” being destroyed.

According to Ray, when he took control of FTX in November 2022, there was “not a single list of anything” related to bank accounts, income, insurance or personnel, causing a “massive scramble for information.” The FTX CEO said the same day he helped file a Chapter 11 bankruptcy petition, and there were multiple attempts to steal crypto, resulting in security experts and liquidators moving quickly to secure funds.

“Your normal first-day petition is chaotic as sometimes can be — this was something that I have never experienced,” said Ray. “Those hacks went on virtually all night long […] It was really 48 hours of what I can only describe as pure hell.”

The FTX CEO claimed he had had no connection with former executives at the exchange, including Alameda Research CEO Caroline Ellison, FTX co-founder Gary Wang and former CEO Sam Bankman-Fried or his parents prior to taking control of the company. According to Ray, anyone “that was in a control position” under Bankman-Fried no longer had any authority to direct FTX company actions.

Ray’s testimony came amid a motion from the Office of the U.S. Trustee arguing the court should appoint an independent examiner who would release a public report providing transparency into the bankruptcy proceedings. Juliet Sarkessian, representing the U.S. Trustee’s office, suggested that, although Ray had no connection to Bankman-Fried prior to his taking over as CEO, the appointment of an examiner was still in the public interest.

Related: Justice Dept defends motion to bar SBF from accessing FTX, Alameda assets

FTX’s bankruptcy proceedings are ongoing as debtors and interested parties will make motions over the firm’s assets, investigate the company, and release information potentially affecting Bankman-Fried’s criminal case. The legal team representing FTX debtors requested the issuance of subpoenas for information and documents from Bankman-Fried’s immediate family on Feb. 1.

At the time of publication, Judge John Dorsey had not ruled on the motion for an examiner. This story is developing and may be updated.



Source link

More Than 7,000 Ordinals Inscriptions Have Already Been Included on the Bitcoin Blockchain – Bitcoin News

More Than 7,000 Ordinals Inscriptions Have Already Been Included on the Bitcoin Blockchain – Bitcoin News

Ordinals inscriptions, viewed as a kind of Bitcoin-native NFTs, are picking up steam among some Bitcoin circles, even though the procedures to issue them are far from user-friendly. The protocol, which was unveiled in January, has already served to bring more than 7,000 inscriptions directly to the Bitcoin chain, with some collections already present.

Ordinals Pick Up Steam; More Than 7,000 Inscriptions Issued

Ordinals, the protocol that allows each bitcoin satoshi to be identified with a non-fungible number, is gaining popularity among certain circles, even when the procedures to include an element in the Bitcoin blockchain (an “inscription“) is still very far from user-friendly, as each user must run a full Bitcoin node to make an inscription.

The protocol, which rose to prominence due to a feature present in the Taproot update allowing the size of a transaction to be as big as the size of a Bitcoin block, already has served to bring more than 7,000 inscriptions to the bitcoin blockchain as of 12:00 p.m. ET on Feb. 6.

While inscriptions can contain various content, determined by a file type that describes the object inside the inscription, most are images, which will be conserved forever as part of the blockchain. However, this feature has spurred controversy, with some criticizing the effects that this could have on the size of the Bitcoin blockchain in the future, limiting its financial use case.

However, Casey Rodarmord, creator of Ordinals, has declared that the idea behind this protocol is to bring fun and interest to Bitcoin again.

Taproot Wizards and More Collections

Among the more recognizable inscriptions collections being issued is Taproot Wizards, promoted by crypto influencers Udi Wertheimer and Eric Wall. The first Taproot Wizard was issued on top of the biggest block ever mined in the Bitcoin blockchain. It featured an image of the magic internet money meme wizard introduced by Mavensbot, which was used as a Reddit ad in the Bitcoin subreddit back in 2013.

There are already six different inscriptions with art derived from the aforementioned meme. Ordinal Rocks, another collection that claims to be the first one on Ordinals, has 100 images of rocks serialized and present on the bitcoin blockchain. Another collection, called Ordinal Punks, which mimics the Ethereum-based Cryptopunks, also claims to have 100 inscriptions among the first 650 inscriptions on the bitcoin blockchain.

The dynamics of establishing a market for commercializing and monetizing these inscriptions are still a work in progress, as there is currently no marketplace. However, there have been reports of sales in secondary markets, with some inscriptions being sold for almost one bitcoin, but there is currently no way of corroborating if these sales are actually real.

Tags in this story
7000 ordinals, Bitcoin, Bitcoin Node, Blockchain, casey rodarmor, crypto punks, inscriptions, NFTs, Ordinal Punks, ordinals, taproot wizards, Udi Wertheimer

What do you think about the popularity of Ordinals inscriptions? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src=”
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));



Source link

Stablecoin adoption could lead to DeFi growth, says Aave founder

Stablecoin adoption could lead to DeFi growth, says Aave founder

Stani Kulechov, the founder of the decentralized finance (DeFi) protocol Aave, highlighted several issues within the DeFi space at the StarkWare Sessions 2023, held at The Cameri Theatre in Tel Aviv, Israel. 

In a fireside chat titled “DeFi: Resilience in the Face of Global Uncertainty,” Kulechov and Cointelegraph’s managing editor Alex Cohen discussed various topics, including DeFi’s risks compared to traditional finance (TradFi) and how stablecoins can lead to more DeFi adoption.

Fireside chat with Aave founder Stani Kulechov and Cointelegraph managing editor Alex Cohen at the StarkWare Sessions 2023

According to Kulechov, the preciseness of quantifying risks in DeFi is better than TradFi products, which could push further space adoption. The Aave founder explained that operating in DeFi would become cheaper than TradFi as the risks are identified more easily. He said: 

“You have all this visibility, you can actually quantify the risk more precisely which should mean that then you’re operating in an environment where it should be cheaper for you because the risks are more known.”

When asked about onboarding regular people who may not be as “tech-savvy” into the DeFi space, Kulechov noted that stablecoins and payments could play an important role. According to the Aave executive, building the “payment layer,” which involves stablecoins, can potentially hook regular people into the space, eventually introducing them into DeFi.

“It’s more about building that payment layer, and then the whole DeFi loop starts to close because you have a way to exchange value easily,” he said. In addition, Kulechov also noted that pushing the innovation curve further can break more adoption.

However, the Aave executive also recognized several issues within the stablecoins space, including the value within the ecosystem and the collateralization of decentralized stablecoins. Kulechov explained that:

“The current issue is that there is not enough value in the ecosystem that you just have less backing in decentralized stablecoins compared with centralized. And, I think that’s where we have kind of like a big problem at the moment.”

The Aave founder added that the stablecoins, which he described as the “most resilient ones,” are overcollateralized.

Related: DeFi enjoys prolific start to 2023: DappRadar report

When asked about DeFi becoming more of a buzzword in the near future, the Aave protocol founder expressed confidence in the space being around for a long time. He said:

“DeFi will be around for quite a long time because it solves one of the first problems that blockchain has been solving. And, it’s an infrastructure that’s going to be used in many applications.”

The founder highlighted that there are many new innovations in the space, even finding their way into non-financial applications.



Source link

Crypto 101: What is a consensus mechanism?

Crypto 101: What is a consensus mechanism?

A blockchain consensus mechanism is a type of automated system that aims to accomplish two objectives:

  1. Provide a distributed, leaderless way to unanimously agree on data stored on a blockchain ledger.
  2. Make sure all network validators follow the rules of the protocol and perform their roles honestly.

While it may be tempting to trust a single individual or entity with the role of making sure everyone behaves according to the rules, hierarchical systems have definite shortcomings. That’s why Bitcoin uses a consensus mechanism.

Bitcoin’s use of consensus mechanisms created a truly peer-to-peer electronic cash system. This system offset the need for centralized intermediaries, like banks and governments, and changed the concept of financial freedom for all.

What does this mean in practice? It means bitcoin is the first currency not controlled by a central bank. The resulting freedom, in theory, allows us to explore some very interesting questions about the nature of trust and consensus.

 

What is the Byzantine Generals’ Problem?

One of the most important things Bitcoin did was solve the Byzantine Generals Problem. Imagine you are the commander of an army consisting of several platoons of soldiers, each located at a different spot on the battlefield. You plan to attack a single fortified area at a specific time. To do this, you must coordinate with each of your platoons to make sure they all know the correct time, location, and plan of action.

But, what if one or more platoons fail to receive the orders? What if they attack too early? What if they arrive at the wrong location? What if there are traitors in a platoon that try to sabotage the plan?

In other words, until Bitcoin there was no safe way to reach consensus among the various parties in an environment lacking implicit trust.

This problem first appeared in a 1982 academic paper that explored how a distributed network could reach agreement in a decentralized way. The answer, as Satoshi Nakamoto laid out in the bitcoin white paper, was a consensus mechanism.

This algorithm allows all nodes in the network to agree on a single version of the truth, even if some of the nodes act maliciously or simply fail. The consensus mechanism works by having each node in the network broadcast and validate all of the transactions to the network. Once a node validates a transaction, every other node adds a record to their copy of an append-only ledger. “Append-only” means that the ledger can only receive new records and no one can change previous records. This is called a blockchain.

In going back to the Byzantine Generals problem, each platoon would individually confirm and store the orders and check with other platoons. If one of them claims the attack is cancelled, for example, further checking with nearby platoons would prove that one leader was lying. This guarantees that all nodes in the network have the same version of the truth. It also means that malicious nodes cannot single-handedly manipulate the network data.

How do consensus mechanisms work?

There are many different methods employed by various blockchains and cryptocurrency protocols to achieve consensus. However, the two most popular are known as the proof-of-work (PoW) and the proof-of-stake (PoS) consensus mechanisms.

Proof-of-work (PoW)

Computer scientists Cynthia Dwork and Moni Naor first developed PoW in 1993 as a means of preventing email spam. Bitcoin’s creator later took the concept and adapted it for use in a decentralized monetary system.

Through the bitcoin mining process, network validators (called miners) use specialized computer equipment to win a cryptography-based competition that repeats every ten minutes.

You can learn more about this concept in our Learn Center article How do cryptocurrencies use cryptography?

PoW makes use of computational resources to make sure that “work” has gone into “proving” newly proposed transactions are valid and abide by the rules of the protocol.

The work involves electrical, maintenance, and initial outlay costs that each miner must cover themselves. This cost is important because it helps to deter bad actors from joining the network and attempting to corrupt it with spam or fraudulent transactions. After all, you’re less likely to want to corrupt something when you’ve invested your own money into it.

Proof-of-stake (PoS)

PoS is a relatively new type of consensus mechanism pioneered by Sunny King and Scott Nadal in 2012.

Like proof-of-work, PoS fulfills the same key objectives of a consensus mechanism, but in a uniquely different way.

Rather than competing with other validators on the network to win a cryptography-based competition first, PoS requires network participants to “stake” or lock their assets to become validators.

PoS uses a system of reward and penalty incentives to make sure that transactions are validated and added to the blockchain in an honest way. Those willing to lock away a greater amount of cryptocurrency gain a greater chance of proposing new blocks and earning rewards. But, if validators break the rules of the protocol, their staked assets risk being automatically confiscated in a process known as “slashing.”

What is the best blockchain consensus mechanism?

The debate about which consensus mechanism is “best” will likely never be settled. There are too many factors regarding each blockchain’s specific use case to draw a definitive conclusion.

Many perceive PoW to offer greater security against 51% attacks, but the process consumes a significant amount of energy. We’ve already busted the myth that bitcoin is destroying the environment in a previous blog post, but the perception remains.

While many PoS blockchains consume significantly less energy than PoW chains, many feel these blockchains are compromised. For example, they believe PoS blockchains focus on decentralization in favor of security. You can learn more about this in our discussion of the Blockchain trilemma.

In short, experts generally perceive PoW to offer better security and decentralization guarantees, while sacrificing some degree of scalability in the process. PoS is seen to offer better scalability, while sacrificing some degree of security and decentralization.

The best choice ultimately depends on numerous factors, including a given blockchain’s primary use case.

Keep learning about crypto

Interested in learning more about the Byzantine Generals’ Problem and the various tradeoffs of different blockchain consensus mechanisms? The Kraken Learn Center is here to help!

Check out one of our latest articles, What is a blockchain consensus mechanism?, to continue learning about the important role consensus mechanisms play in crypto and blockchain technology.

 


 

These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, or hold any digital asset or to engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets and you should seek independent advice on your taxation position.



Source link

FTX Debtors Demand Return of Funds Given to US Politicians and Super PACs – Bitcoin News

FTX Debtors Demand Return of Funds Given to US Politicians and Super PACs – Bitcoin News

FTX debtors are seeking to claw back millions of dollars given to U.S. political action committees (PACs) and political figures. Confidential letters have been sent to individuals and organizations, requesting the return of the funds by Feb. 28, 2023. Some bureaucrats, such as Democratic Senators Joe Manchin and Tina Smith, have already pledged the funds to charity. It is uncertain whether they will be required by law to repay the funds to the now-bankrupt FTX estate.

US Political Elite Under Pressure to Repay FTX Contributions Before Deadline

It is widely recognized that lawmakers in Washington, D.C. and U.S. political action committees received significant funds from FTX, its co-founder Sam Bankman-Fried (SBF), and top executives. Estimates indicate that SBF and the FTX team donated an estimated $90 million to U.S. bureaucrats and political organizations since the exchange’s inception. For example, SBF and former FTX executives Nishad Singh and Ryan Salame donated roughly $70.1 million to the Democratic and Republican parties for the 2022 midterm election cycle.

Research shows that 196 U.S. lawmakers, or one out of every three members of Congress, took direct contributions from SBF, or FTX executives.

A press release, dated Feb. 5, states that FTX debtors aim to retrieve funds distributed among Washington, D.C.’s political elite. The announcement reads, “FTX debtors are sending confidential messages to political figures, political action committees, and other recipients of contributions or payments made by or under the direction of the FTX debtors, Samuel Bankman-Fried, or other officers.” It also states that “recipients are requested to return the funds to the FTX debtors by Feb. 28, 2023.”

FTX debtors specify that the funds can be returned through a designated email account by the specified date. The bankrupt estate states that it reserves the right to “initiate actions in bankruptcy court to demand the return of these payments, along with interest accruing from the date of initiation.” In addition to the press release from FTX debtors, the Twitter account “Unusual Whales” released a list of U.S. bureaucrats and political action committees that are believed to have received funding from SBF and top executives of FTX.

“There was not a list of the politicians they gave money to, and the amounts, until now,” tweeted Unusual Whales. The information can be verified through the U.S. Federal Elections Commission (FEC) and Coindesk’s research, which estimates that one in three members of Congress received funds from SBF or senior FTX staff.

Prior to the press release and the release of the list of American politicians who accepted funding from FTX’s leaders, some bureaucrats chose to redirect the donations to charity. For example, Republican senators John Boozman and Bill Cassidy announced their intention to donate the funds to charitable organizations. Democratic senators Joe Manchin and Tina Smith also donated funds to specific charities after the collapse of FTX.

Smith, a Democrat from Minnesota, told the media she had “serious concerns about cryptocurrency and the financial risks it poses for retail investors.” However, during the election cycle, Minnesota representative Angie Craig and senator Tina Smith had no issues accepting $2,900 each before the exchange failed. It is unclear who directed these politicians or why they decided to donate the funds to charity instead of returning them to the bankrupt estate, which owes billions to the retail investors that these bureaucrats claim to care about.

Tags in this story
$70.1 million, $90 million, American politicians, Angie Craig, Bankruptcy, Bankruptcy Court, Bill Cassidy, bribes, Bureaucrats, Charitable organizations, Charity, co-founder, confidential letters, crypto lobbying, Cryptocurrency, D.C., D.C.’s political elite, Democratic Senators, Election Cycle, Estimated, Feb. 28, Feb. 5, FEC, financial risks, ftx, FTX debtors, inception, Joe Manchin, John Boozman, lobbying, midterm election cycle, Minnesota representative, now-bankrupt FTX estate, one in three members of Congress, pledged, Political Corruption, political figures, political organizations, press release, Repay, Republican senators, retail investors, retrieve funds, return of funds, Sam Bankman-Fried (SBF), senior FTX staff, Tina Smith, Top Executives, U.S. bureaucrats, U.S. PACs, Unusual Whales, Washington

What do you think about the move by FTX debtors to reclaim funds from U.S. political figures and action committees? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.




Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src=”
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));



Source link

South Korean regulator provides guidance on security tokens

South Korean regulator provides guidance on security tokens

South Korea established guidance that specifies which types of digital assets will be considered and regulated as securities in the country.

In a press release, the Financial Services Commission (FSC) highlighted that digital assets that fit the characteristics laid out in the country’s Capital Markets Act will be treated as securities.

The law considers securities as financial investments where investors are not required to make additional payments after their original investment. The FSC also provided examples of which digital assets will most likely be classified as securities. According to the FSC, this may include tokens that provide a stake in business operations, gives holders rights to dividends or residual assets, or provide profit to the investors.

Cryptocurrencies that fit the descriptions of security tokens will be regulated under the country’s Capital Markets Law. Meanwhile, digital assets that do not fit the characteristics of securities will be governed by other upcoming regulations.

According to the FSC, token issuers and brokers like crypto exchanges will evaluate which crypto will be classified as securities based on the regulations. The regulator also pointed out that the evaluation will be case-by-case.

The financial regulator also noted that the new guidance is part of preparations for the legalization, issuing and distribution of security tokens within the country.

Related: Seoul government opens city’s metaverse project to public

South Korea has actively participated in the crypto ecosystem. On Jan. 19, the city of Busan revealed plans to establish a decentralized digital commodities exchange. Government officials noted that the platform would begin its operations this year.

Apart from this, the country’s Ministry of Justice also plans to deploy a tracking system for crypto. On Jan. 29, the South Korean government said it would introduce a tracking system to combat money laundering efforts and recover funds connected to criminal activities.



Source link