2nd Secure Storage – Be Your Own Bank

You have to be careful here, similar to comparing apples and pears. In theory, anyone can store their gold under a mattress. However, this is not very advisable and also quite uncomfortable in the long run. That’s why most people use the services of a bank, which keeps the deposited gold.

A fundamental value proposition of Bitcoin, on the other hand, is its independence from any intermediaries who may charge fees for their services.

The same applies to Bitcoin loophole

In the case of Bitcoin loophole, the amount of storage costs generally scales with the quantity of gold. Those in possession of large quantities of physical gold would do well to entrust a bank with the custody. But this costs space and money.

To hoddle Bitcoin costs, except nerves, actually nothing. A hardware wallet is a one-time purchase and, although it makes sense, it is not even obligatory. The independence with which Bitcoin can be hodled can be illustrated using the example of the Brain Wallet. If you can remember your 24-word seed, you don’t even need a paper wallet to store your Bitcoin. Admittedly, a risky undertaking and not recommended for everyone.

If you don’t own a hardware wallet yet, you can take a look at our BTC-ECHO shop here.

Better value for the news spy

Among Bitcoin maximumists there is the news spy quite popular that Bitcoin must first establish itself as a value store before the crypto currency can really take off as a means of payment. Read more about it: https://www.forexaktuell.com/en/the-news-spy-scam/ But how can Bitcoin still be described as a veritable value storage medium if the crypto currency has fallen in value by almost 85 percent since the beginning of the year?

A look at the growth rates of the circulating supply can illuminate here.

The rate at which the quantity of physical gold grows annually can only be determined inaccurately. On average, the annual quantity of newly mined gold is around 3,200 tonnes. This corresponds to a growth of about six percent. However, it is completely unclear how long the growth rate will remain so constant.

Compared to this, Bitcoin is the scarcer commodity. As shown in the graph, Bitcoin’s money supply grows at a decreasing rate over time. Every 210,000 blocks, the Coinbase Reward, i.e. the primary pay of the miners, is halved, and so is Bitcoin’s inflation rate.

From a market economy point of view, Bitcoin is also so interesting because money supply growth can be predicted exactly for all eternity. A clear advantage over gold.

Nano-Theft: BitGrail wants to compensate victims „voluntarily

One month after the million dollar hack, the Italian Exchange BitGrail wants to pay back the lost money to its users. Nano-buyers in particular were affected by the theft. However, the promised compensation has more than one catch.

When it became known on February 10 that 17 million units of the crypto currency Nano (XRB) had been stolen on BitGrail, many wondered whether this would mean the end for the Italian trading centre. The market value of 17 million euros was too high, the stock exchange too small to cope with this loss. It has now become known that BitGrail wants to compensate users affected by the hack. To this end, the team led by Francesco „The Bomber“ Firano has created its own token.

In the corresponding accounts, 20 % of the losses are to be transferred in nano immediately, the remaining 80 % are to be replaced in the near future by the new token BitGrail Shares (BGS). At the end of each month, BitGrail intends to use 50% of its profits to repurchase the BGS at a fixed price of $10.50 per share. Alternatively, users can trade the token on their own exchange at the market price.

The news spy: Not our mistake

At the same time BitGrail rejects any responsibility for the news spy. According to her, the vulnerability was Nano’s sole fault. Due to the news spy, a node in the Exchange failed, making double payments possible. The repayments are based on a voluntary basis, exclusively to help those affected.

On the other hand, the company behind Nano (formerly Raiblocks) does not want to know about its own mistake. They accuse BitGrail of not informing them in time about a critical software bug discovered in October 2017 or about the insolvency of their stock exchange. Since February 9, BitGrail has broken off all communication with Nano. The exact details of the hack are still unknown to Nano as they have no insight into the exchange’s system.

Bitcoin secret users have to sign a waiver

Anyone wishing to redeem their compensation in the form of Bitcoin secret must first sign a declaration waiving any legal action against BitGrail: http://www.onlinebetrug.de/bitcoin-secret-scam It is questionable whether this will help to gain confidence, especially as the troubled marketplace wants to finance its repayment from future profits.

BitGrail has sent the comments on the compensation in the form of an Italian-language memo to a telegram group of affected parties. „The Bomber“ Firano did not agree to the publication, only a summarized translation, which is now online as a Google document. Firano’s entire action could prove to be self-damaging in the end. How the conflict between BitGrail, Nano and those affected will continue will become apparent in the next few weeks.

Seyfi Günay: „Most money laundering still happens in cash“

Seyfi Günay, Director of Financial Crime and Terrorism at LexisNexis Risk Solutions, is an anti-money laundering expert and helps financial institutions in Europe, the Middle East and Africa build effective risk management systems. In an interview with BTC-ECHO, he spoke about the role of crypto currencies in international terrorism and financial crime. Mr. Günay – You are Director of Financial Crime and Terrorism at LexisNexis Risk Solutions.

What kind of Bitcoin revolution do you specialize in?

Every day I work with Bitcoin revolution companies that have to comply with strict national and international regulations on financial crime such as terrorism, money laundering and tax evasion. These Bitcoin revolution companies operate in many different industries, including industry, e-commerce and banking. The banking system, perhaps more than other industries, is at the centre of financial crime because criminals need to move money in order to carry out their crimes.

People who work within the banking system, especially in compliance departments, are decision makers and not only need to be able to keep track of the vast amounts of data they are confronted with on a daily basis. It’s just as important to evaluate information quickly and efficiently to quickly filter out suspicious people or institutions in the system – and that’s where I come in.

The anti-terrorism measures that I manage in Germany and throughout Europe, the Middle East and Africa are based on technology and advanced analytics. Technology solutions, combined with data sets and analytical techniques, help compliance analysts classify and understand all the information they face, so they can make better decisions about the identity and intent of a consumer or business.

What does Bitcoin revolution mean to you?

It aims to spread fear through acts of violence in order to achieve a certain result – whatever the cost. Basically, Bitcoin revolution function like large corporations and as such also rely on the banking and financial system to transfer money, for example.

What do you think are the top 3 sources of income in terrorism?

A terrorist organisation, like legitimate companies, needs capital to survive. Among other things, money is needed to pay activists, finance training camps and acquire weapons.

In my view, the majority of terrorist organisations rely on three main sources of income to finance their illegal activities: Donations, drug production and trafficking, kidnapping and ransom extortion. Oil trading, ore mining and smuggling are other sources of income.

Do you have your own crypto currency department in your company?

Instead of a separate department specializing exclusively in crypto currencies, our focus is on providing our customers with technology solutions, advanced connectivity technologies and data to locate suspicious individuals. Banks, telecommunications companies, e-commerce companies and FinTechs and crypto exchanges use our technology to stop cybercrime and fraud as well as financial crime and terrorism.

One of the reasons why crypto exchanges are currently the focus of public attention is that many users are longing for the same control mechanisms as those in the banking sector. The establishment of a similarly complex control system is essential for the success of the crypto-currency industry. However, if crypto exchanges succeed in introducing control measures at bank level, I see no reason why the crypto industry should not be able to develop its full potential.

Digidip founder Spielberger about cryptos: „There are two extremes felt“

Digidip is an affiliate network that earns money through clicks. We asked founder Sabrina Spielberger about Blockchain, Bitcoin & Co.

Hi Sabrina. You have built something with digidip in the last years, which can be seen. With 95 networks, 40,000 dealers and three million daily users, you have grown into a profitable company since 2013.

What role does blockchain technology play in your cryptosoft business?

Unfortunately, the big problem in our cryptosoft industry is that almost all AdTech companies rely on extremely high scaling. A network like digidip alone, which forwards 35 users per second, reaches the limits of current blockchain technologies relatively quickly, although most of them are already working on this challenge of scaling, such as here in Berlin – Polkadot, Cosmos or Herdius. Nevertheless, at the moment we are unfortunately still too far away from solving tracking or anti-fraud problems in our industry.

No one has yet asked for crypto trader

As payment options you list on your website PayPal or bank transfer – wouldn’t crypto currencies also be a good option? Why not? On the one hand, we mainly work with professionally positioned crypto trader who have many employees and are therefore still dependent on cash payments, and on the other hand, surprisingly, no one has actually asked for payments in cryptos. But we can also well imagine offering crypto payouts soon, at least via onlinebetrug.de.

You probably have quite a good insight into the German market. What do you think the Germans think about crypto currencies?

There are two extremes. The people who are totally convinced. They are happy about the new possibilities, about the independence through decentralization and are excited about the future. And then there are also some on the completely different spectrum, for which usually crypto currencies consist entirely of Bitcoin and are very skeptical about the topic. Here still much clearing-up work must be carried out.

Legal framework is very important
What do you think has to happen for that to change? What chances do you see for crypto currencies?

Even though many people see regulation as a problem, I think it is very important that a legal framework is created. That will happen one way or the other, if you just resist it, you can’t do any further training for decision-makers, nor can you influence the direction of regulation. It would be important for more people from the community to be actively involved in educational projects.

What do you think about blockchain technology and crypto currencies?

I follow the topic very curiously, of course, also through my husband, who works actively in the industry. There are an incredible number of great application examples and I am sure that many industries will look fundamentally different in 5-10 years.

Do you still want to get something off your chest?

Finally, I want to say that it will be important to work on solutions for the known scaling problems and to provide better information. Almost everyone can participate here, be it only with Meet-ups or the active employment e.g. with the federal block registered association.

Proof of Stake thanks to Casper: the future of the Ethereum

After years of development, the consensus algorithm of the Ethereum network will now be updated to Proof of Stake.

Ethereum is doing something: Vitalik Buterin, the inventor of the crypto currency, has published an article some time ago which says that soon a hybrid system between Proof of Work and Proof of Stake will be set up. The consensus known in Bitcoin mining as Proof of Work is to be combined with a Proof of Stake system known as Casper. In concrete terms, this means that 1% of the blocks are to be secured via Proof of Stake.

But beware: validators who choose the wrong Bitcoin secret lose money

Parallel to Ethereum developer Vlad Zamfir, Buterin has advanced his version of the Bitcoin secret. According to Karl Floersch, a developer at ConsenSys who also participates in Bitcoin secret, the network with Casper will first decide in favor of the more secure version – not necessarily the more revolutionary one:

„Vitalik has ultimately written a well-functioning version of the Proof of Stake consensus, but it may not be as revolutionary as Vlad’s.“

If that really happens, it would be very exciting: you would have started the first Proof of Stake system on the Ethereum platform. That would of course also mean that the Proof of Stake concept from the laboratory tests would be tested in the real world in a large network. So you can see whether Proof of Stake is better or worse than Proof of Work.

Supporters of this consensus system believe that this will significantly reduce Ethereum’s electricity consumption: Miners consume a lot of electricity, which is then no longer needed.

Critics, on the other hand, stress that it is precisely the constant postponement – and now the only partial implementation of Proof of Stake – that ultimately shows that this consensus system will never be fully implemented.

Buterin, however, sees it as an important first step. According to him, this step should be realized with the third phase of Ethereum development known as Metropolis:

„Proof of Stake will be an important focus of Metropolis. We are currently working on a prototype in Python.“

Proof of Stake – virtual cryptosoft mining on Ethereum

What exactly is cryptosoft? Ultimately, it can be imagined as a kind of „virtualization“ of mining. Proof of Work is the classic consensus protocol and the basis of the mining process: Miners search for a block that meets certain conditions according to the difference. In addition to the transactions that are to be combined in the block, a counter called Nonce is varied until a calculated checksum – the hash – has a structure that corresponds to the conditions. These calculations cost money for equipment and electricity.

In the proof of stake process, the stakeholders ultimately invest money in this consensus process. However, the money is not invested in electricity and equipment. In Casper, virtual miners known as Validadors will make their money available to the system: They know that they will lose their money if they do not play by the rules of consensus.

Casper’s first step
Buterin’s plan is to use Proof of Stake as a kind of checkpoint in the first step: Every hundred blocks is checked quasi as a random sample whether the blocks contain correct transactions.

Floersch is currently working on the so-called „Fork Choice Rules“ for Pythereum, the Ethereum client in Python. These rules determine how validators choose the correct chain for adding blocks.
Validators look at these different versions of the blockchain and make a decision as to which is the correct one. The amount of ether associated with a blockchain version is an orientation in this choice.

„Thus a consensus and a single chain are found instead of constantly forming a new fork,“ says Floersch.
The Smart Contract that regulates this is published by the Casper developers on Ethereum. Via this contract any ether can deposit and participate in the virtual mining process.

As soon as the Pythereum version is finished, the whole thing should be implemented in the Casper Deamon. This package can then be used with any Ethereum client.

Will it work?
Of course, there are also some challenges with the Proof of Stake concept. If all this doesn’t work as planned, it would mean that transactions or whole Smart Contracts won’t be processed correctly.

Others take a critical view of the planned hybrid approach of sharing proof of work and proof of stake.
On the part of IOHK, a company that works a lot on Ethereum Classic, the following are equivalent

Warning against Bitcoin

Yesterday, Thursday, several politicians issued an urgent warning about Bitcoin. Two left-wing MPs warned that the Bitcoin hype is feeding the illusion that you can get rich completely without work. But this is only granted to the wealthy or fraudsters. Warning tones came also from the boss of the Japanese central bank, Haruhiko Kuroda likewise from CDU European delegate Elmar Brok, who fears that the people could lose thereby their small houses.

Haruhiko Kuroda sees the Bitcoin revolution as an object of speculation

The two deputies Fabio De Masi and Sahra Wagenknecht felt compelled yesterday to warn the Handelsblatt against new forms of investment. According to the two politicians of the left-wing faction, sharp price drops at Bitcoin would also pose a threat to the stability of the entire financial market. They criticize in particular the permission of the US financial supervisory authority to be allowed to bet for some days on the price of the Bitcoin by means of issued futures. The Bitcoin revolution does provide for more security, but for the opposite, they believe. Nevertheless, there are good reasons not to leave the monetary system solely to the banks‘ control. The Bitcoin is nothing more than another financial bubble that will burst sooner or later. This could lead to a „rapid decline in the value of shares, bonds or even real estate“ in the Bitcoin revolution area. De Masi and Wagenknecht do not see crypto currencies as an alternative to central monetary systems. On the contrary: „They serve the total privatisation of money, which repeatedly leads to crises,“ the two politicians believe.

Haruhiko Kuroda, the head of the Japanese central bank, also blew the same horn yesterday. For him, the BTC is an „object of speculation“. The current price seems „abnormally high“ to him. Because the Bitcoin does not behave like a normal means of payment, many experts would deny it the status of a currency.

When Lieschen Müller gambles up her house with Bitcoin loophole crypto currencies

The conservative European politician Elmar Brok worries about the savings of citizens who could lose them with new investments and the Bitcoin loophole. Currently there are many people with a small fortune who are hoping for quick money. In the event of failure, politicians would be insulted because they had not prevented the Leue from „losing their houses“ in the process, Brok said. On the other hand, it would not be acceptable for „the greedy to be compensated by the state“, which is why he publicly pleads for clear conditions and transparency rules. Warnings would have to be so clear that even „Lieschen Müller“ knows that it will go away empty-handed if its speculation backfire. In addition, the Merkel confidant misses a real value in the Bitcoin loophole. When in the 17th century at the end of the tulip mania, the world’s first well documented speculation bubble, the price fell into the bottomless, people would at least still have had their (albeit worthless) tulips. In the case of the Bitcoin, you would have nothing more in your hand as a countervalue.

What Brok stands for strongly sounds like the bold warning notice that has to be printed on every cigarette packet throughout the EU. Time will tell which measures the European politicians will come up with to protect their citizens from trading in crypto currencies. It remains to be hoped that investors will then be warned against all other speculative transactions in the same way as against trading in BTC & Co. But equal treatment of the EU for all speculative transactions is probably too much to ask again, right?

Ethereum Classic – with sidechains to a new identity

With sidechains, improved interoperability with other blockchains and a light client for IoT applications, the crypto currency separated from Ethereum now wants to finally gain its own identity. A quick look at the Ethereum Classic roadmap.

Ethereum Classic is growing up

Before the Hard-Fork-Mania Bitcoins, Ethereum already had such a roadmap: In the course of the DAO explosion, there was a passionate debate about whether a blockchain should be changed after dramatic events or not. In the case of Ethereum, the decision was made to change the state of the blockchain, so that the DAO explosion, which cost the investors behind The DAO several million euros in total, was undone.

For the investors, this meant that they could withdraw their money from the DAO and the matter had a happy ending for them. Since the immutability of the Ethereum blockchain was temporarily suspended at that time, this option is discussed in the case of a parity bug.


But not everyone was satisfied with the strategy

The immutability of the blockchain was so important to them that they separated from the Ethereum network – Ethereum Classic was born. For a long time, the great raison d’être was the preservation of immunity. There was indeed something happening with regard to the emission of ETC tokens, which are no longer produced indefinitely, but are limited in a similar way to the Bitcoin case. Otherwise, however, Ethereum Classic was ticked off as „Ethereum without immutability at 2016“.

The development team behind Ethereum Classic, also known as the ETCDEV team, grew to 8 full-time developers in 2017 and has achieved several milestones: In addition to Emerald, the desktop wallet of the crypto currency, a hard fork for pausing the Difficulty Bomb, a relic from the Ethereum protocol, was realized.

Furthermore, a new Ethereum (Classic) virtual Machine was written, which is currently being tested and can be used as an optional EVM for processing the Smart Contracts. The complete list can be found on the Ethereum Classic website. Already in 2017 the naughty stepson of Ethereum has emancipated himself a bit.