Ask Doctor Bitcoin Minute #4: LocalBitcoins Shuts Down Cash Transactions

This really huge news may have slipped past you, but it will certainly have an impact on both the price of bitcoin and how quickly adoption spreads amongst the mainstream.

Without any warning or fanfare, LocalBitcoins.Com today took all advertisements off it’s website that were for bitcoin buyers or sellers dealing with others in person. Not only is this a valuable source of information about bitcoin price and adoption worldwide, but it’s often the bitcoin newbie’s first introduction to crypto.

According my sources from the company who spoke on background, most folks who transacted locally in cash would sidestep the website itself, thus robbing LBC of their fees. It was also a sore spot for them, the source of many of the headaches scammers brought to the table.

Rumored to be prepping the company for a sale, killing cost centers comes as no surprise.

So where to turn now for local-sourced bitcoins? You can always reach out directly to folks you’ve interacted with in the past, or you can search for new sellers and buyers via Paxful, which hopes to fill the gap now.

If you want to sign up, consider using this affiliate link, as it helps me out when you do.

Ask Doctor Bitcoin Minute #3: Could Bitcoin really rise to $150,000?

This is part of a series of videos aimed at audiences on social, quickly answering tough crypto questions. Follow me on Tik Tok to get the videos first!

This question comes in from the Ask Doctor Bitcoin chatroom: “Is a Bitcoin value of $150,000 supported by logic? Forget the moon, what’s the math supporting this?”

Andrew Lowe, a long time business partner of mine (and fantastic crypto technical analyst) answered it thusly:

“It all comes down tot he fundamentals of supply and demand.”

The international money supplies are valued at quadrillions of dollars, and it’s a value we can use to indicate what our total addressable market could be for Bitcoin. Should bitcoin become the successor to any national currency, the market cap of bitcoin would rise to the value of that nation’s oney supply.

Publilius Syrus famously wrote in 100 BC that “Everything is worth what its purchaser will pay for it”

Considering the value of the global money supply, if we reengineer stocks, derivatives, and commodities to be represented by cryptocurrencies, then bitcoin could be worth orders of magnitude more than $150k

You can always ask Andy or I questions in the ADB chatroom and read more in the blog post for this video (links are in my profile!).

Why is Bitcoin Rising Again? (2019 Edition)

This question comes in from Doctor Bitcoin chatroom participant Ife Olaore: “What’s driving the market right now?”

I’m always asked basic variations on the question “Why do bitcoin’s price be like it be?” Most of the time this is a yawn of a question, but the conditions that resulting in this runup in price are actually pretty interesting.

In general, you’ve got a couple things that forced illiquidity on the market: the Bitfinex/Tether thing, and the Binance hack (both of those linked articles are by Duncan Riley, who does a great job of investigating the underbelly of the world of crypto and blockchain).

You’re talking about two of the most used places to trade bitcoin, and together they constitute a large plurality of the general marketcap of crypto.

Bitfinex was seeing, in effect, a bank run, and due to the fact that folks didn’t trust Tether due to the news cycle, they were running up the price of Bitcoin on Bitfinex. How? They were cashing in their (to them, worthless) Tether at market rate for Bitcoin, and then withdrawing the Bitcoin offsite. and waiting for the price of BTC to catch up elsewhere before they cashed out (so they wouldn’t lose money). This activity continues; even through yesterday, whale monitors saw transfers as large as 45,000 Bitcoin leave Bitfinex.

Between Bitfinex and Binance, you’re talking about two of the most used places to trade Bitcoin, and together they constitute a large plurality of the general marketcap and trading volume of crypto.

Simultaneous to the Bitfinex / Tether situation, you had the hack at Binance, which cause a freeze on withdraws for Bitcoin. That means people could trade, but they couldn’t withdraw (although presumably they could deposit other cryptos and liquidate to Bitcoin that they couldn’t withdraw).

This has the net effect of driving up the price of BTC on both sites.

Normally, when these things happen at exchanges, they don’t matter, and the general market continues as it would. But because Binance and Bitfinex constitute such a large percentage of daily volume of crypto trading, it drove a FOMO cycle, causing the price to rise elsewhere.

Based on what I’m seeing, that cycle may be cooling a bit, but time will tell. It could be a pause before another runup, or it could be just my limited sample set of data. When I started working on this post (and when we were talking about it in the chat room), the price was still well north of $8000 for Bitcoin. A couple of large sales went through, bouncing the price a little and cooling off the bull run, but most of the technical analysts still see us well in

Rapid Report on the Bitcoin Blockchain’s Environmental Impact.

This week, there’s been a wildly incorrect report on the ecological impact of running the world’s Bitcoin mining machine, promulgated primarily by one digital researcher and one columnist over at Vice’s Motherboard.

Our CEO, Mark “Rizzn” Hopkins, has tracked the growth and spread of Bitcoin in general dating back to 2011, and has issued reports via various publishing channels since 2013 on the topic. Today, he re-capped the history of the histrionics of the environmental impact of Bitcoin, as well as an update to its current environmental impact.

The report was underwritten by Roger Wilco client bitqyck, and is made freely available for download here on this site.

To receive the download link, simply fill out the form below.

Download Bitcoin Environmental Report

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“Bitcoin is a fraud,” – JP Morgan CEO Jamie Dimon.

I just can’t stop thinking about how dumb these Dimon quotes are. In case you missed it, the CEO of JP Morgan Jamie Dimon had harsh words for Bitcoin yesterday.

He, during a Barclays conference, called it a “fraud … worse than tulip bulbs, it won’t end well” and that any JPMorgan “trader trading Bitcoin” will be “fired for being stupid.”

Later in the day during an interview at CNBC’s Delivering Alpha conference, he said Bitcoin “is just not a real thing, eventually, it will be closed.”

“Someone’s going to get killed and then the government’s going to come down,” he said. “You just saw in China, governments like to control their money supply.”

Just the way he incoherently is babbling against Bitcoin belies his lack of understanding or even basic research on what its strengths, weaknesses, history, and capabilities are.

This reminds me of a time in my career I spent meeting with newspapers, trying to get them to see the writing on the wall with blogging. For a period of time, in between my career transition as a technology consultant and software developer into a digital journalist, I thought I could straddle the line between both worlds and talk to newspaper publishers, my clients at the time, about the power and opportunity for digital publishing.

On more than one occasion, I sat in a room with an elder suit who patiently listened to my pitch, and then when I was done and opened up for questions dismissively waved his hands.

“Son, our company has been around for over a hundred years,” they’d say, as if they were all reading from the same script. “This internet thing is a blip on the radar. We’ll outlast it.”

It’s hilarious to imagine that level of ignorance now that all publishing is digital publishing, but this was the honest attitude of heritage publishers at the time.

… and look at the type of world we live in with digital publishing. The market landscape is a mix of heritage media that made the transition (like the Washington Post and your local TV affiliates, for instance), and new performers that found out how to bootstrap and thrive in the new landscape (like the Mashable’s and Buzzfeed’s of the world). The roads they took to get there are littered with the bodies of the companies that I wasn’t persistent or talented enough to convince that the internet wasn’t a fad, plus thousands of others.

That the CEO of JP Morgan is claiming that “Bitcoin is a fraud” is rich, coming from the company who, amongst many other banks, represented highly risky financial instruments as safe enough that when they inevitably collapsed (as many predicted they would), the government felt compelled to bail them out to the tune of trillions. It’s also particularly ironic that the same company calling one of the most widely admired financial tech advancements in history a fraud has had such a poor moral and ethical compass as to what constitutes non-criminal behavior, they’ve been forced to pay over $28 billion in fines since that bailout.

Why would he make these explosive statements about Bitcoin, particularly when his company is openly exploring blockchain technology and how to apply it to their work, particularly when one of their former executives (Blythe Masters) has been so famously pro-Bitcoin? Well, there are a few things at play here.

Profits are down 20%. This is probably the biggest thing. Dimon, on many occasions, has expressed his ambivalent disdain for Bitcoin, but he’s saved the unloading of both shotgun barrels for today. The theory some analysts have expressed to me is that there are a great many bitcoin-friendly IRA and 401k options popping up amongst JP Morgan’s competition, an area where they’ve been loathe to go. It’s not a reach to speculate that during one of the most notable meteoric times for cryptocurrencies, people are moving their accounts away from JP Morgan Chase to more crypto-friendly options and contributing to the shortfall.

JP Morgan is under the mistaken impression, as a company, that you can divorce the blockchain from Bitcoin. I’ve been averse to going too deep on this topic publicly because several companies I respect also hold this opinion (including the company that dubbed me a futurist, IBM). In speaking to members of JP Morgan’s fintech innovation team about this news item last night, they expressed the opinion that they view crypto as an “outgrowth technology” of the blockchain. They said this with such conviction that I had to do a sanity check and make sure there wasn’t some obscure historical reference to the term “blockchain” pre-Satoshi Nakamoto. Turns out, I’m not insane, and JP Morgan is dead wrong. Bitcoin is the reference architecture for blockchain. Removing tokenization and crypto components from blockchain strip out key features that make the technology as powerful and compelling as it is (expositing on this topic is something I’m happy to do at length, but would distract from the topic of this post. If you see me in a bar, come with a nice whiskey neat and ask me this question, and block off the rest of your night).

General denial. Just as blogs didn’t really kill off the idea of the media company, blockchain and bitcoin don’t make obsolete the concept of banks. Very much like the media landscape, however, there is going to be a very drastic redefinition of what banking means. This is inevitable. It probably means the death of multimillion dollar CEOs of international banking conglomerates, and he’s feeling general revulsion at the concept of the floor dropping out from underneath him. More on these concepts later – they’re much deeper than the analysis on this news event will allow for exposition on, but it’s a transformation I’m obviously watching closely, and developing some specific predictions around.

I started writing this around 9 AM, when markets were plummeting down below $4,300 to the $3,750 range. As I’m typing this around 3 PM, markets are rebounding, now coming back closer to $3,840. It’s unfortunate that the opinion of one man has shaken confidence as much as it has, but this is one of the effects of disintermediation between experienced investors and the buckets of money they manage.

As they used to say about all Microsoft software in the ’90s: it’s not a bug, it’s an undocumented feature.

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Ask Doctor Bitcoin: A Quick Crypto FAQ.

For those who don’t know, I’m a cryptocurrency fan. I’ve been following all of this very closely since 2011, and I enjoy learning more technical details around blockchain as well as theorizing and architecting new solutions utilizing blockchain.

I also sell cryptocurrency through my company, Roger Wilco.

I have this conversation. A lot.

As such, this week perhaps more than most others, I’ve been getting a lot of the same questions due to the volatility in the markets. Rather than constantly repeat myself, I figured I’d answer all the questions here and legitimately try to save some time.

  1. Do you sell <insert cryptocurrency name here>?
    Yes. I denominate all sales in Bitcoin, but as long as you have a wallet set up, I can usually find a way to send you your value in the cryptocurrency you want.
  2. Holy cow. <insert cryptocurrency name> is up/down.
  3. Are you concerned/excited?
    Sorta. I don’t really watch the minute-by-minute charts.
  4. But it’s really down/up! You sure you still are pro-<insert cryptocurrency name>?
    Yes. Still.
  5. It’s been some time since you posted this. Are you still pro-cryptocurrency? Like for reaslies?
    Yes. Super-dooper for realsies.
  6. Should I buy/sell? How much?
    If you’re asking if you should buy crypto in general, the answer is yes. If you want my recommendations on which ones you should go with, I can give you my answer, which will be based off my opinions around the underlying team and technology, not what I believe the value ought to be. If you’re asking how much you should put in, I’ll always tell you to dollar cost average exactly what you can afford to.
  7. Dollar cost average?
    Yes. It’s the only reliable way to increase your net value.
  8. But what do you think the price of <insert cryptocurrency here> will be?
    I’m Doctor Bitcoin, not Wizard Bitcoin. Not sure.

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IBM Waston IoT interviews Mark Hopkins on how to secure IoT

Mark Hopkins, the founder of Roger Wilco Agency, attended IBM’s InterConnect conference in Las Vegas from March 19th to 23rd. During his visit, IBM Waston IoT held a brief Twitter interview with him about how to address security in the Internet of Things (IoT). Mark briefly explained using Blockchain hash files to secure devices accessing the internet.

Without a doubt, the world is more connected than ever, thanks in large part to smartphones and tablets. Untethered from large bulky computers, people can access information from anywhere as long as they have a solid connection to the internet. This is called the Internet of Things, which has garnered much attention, partially due to its lack of security. In October of 2016, DynDSN, a company that creates a bridge between smart devices and the internet, servers came under attack which took down large portions of the internet in one of the biggest distributed denial-of-service attacks (DDoS) ever. (See NPR’s talk on the attack here). Smart devices are known to have weak security, and this was taken advantage of by hackers who tapped into several devices to launch a DDoS attack on DynDSN. Now the world is looking for a way to prevent such attacks from happening in the future, and Blockchain might just be the answer.

In his article “2 ways Blockchain technology could have prevented last week’s massive IoT-launched DynDNS attack” on, Hopkins gives an overview of how to utilize Blockchain technology to authenticate a smart device. Hopkins suggests using hash files to create a static-like IP for devices. Here’s how it works:

  • The connecting IoT device checks its hash file against a Bitcoin node and looks for the most recent ledger entry.
  • If the hash file returns a different number or hash file, the device will know it has been tampered with.
  • The user is notified of the tamper and can take action.

“I think the Blockchain poses a much more elegant solution to this particular issue,” Hopkins puts it.

Blockchain is an in-market technology, can be very affordable, and easily accessible with the use of Hyperledger from IBM or other Blockchain technology.

Ask us more about Roger Wilco’s work on Blockchain by visiting our site.

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Ask Doctor Bitcoin: What does a Trump Administration mean for Bitcoin?

DrBitcoinHeader800x465If you’re an American, last week was really weird. Without a doubt, most folks had reconciled with the fact that we’d have America’s first female president, only to have the apple-cart upset at the eleventh hour. We’re now ushering in the age of Trump, and that means a great deal of un-imagined consequences and uncertainty, which are generally not great things for markets.

So what does a Trump Presidency mean in the context of blockchain? I’ll try to examine this from a few perspectives, since both politics and blockchain are many-tentacled beasts.

With regard to what’s being affected, let’s break it down by these categories: “Bitcoin specifically,” “Crypto-currencies in general,” and “The Future of Blockchain Technology.”

Bitcoin, specifically…

Let’s start here: Looking to the night of the election, initial uncertainty expressed itself in a precipitous fall in the Dow Jones Index fund futures, as well as a corresponding explosion of value in Bitcoin. The DJI futures dropped by 1000 points, and Bitcoin blew up by around 50 points, at peak. Very quickly, though, as is common with Republican administrations, the markets found their footing and has since risen to record highs.

DJIA post 2016 Election

Meanwhile, Bitcoin has been subject to a more global set of value-inflencers, but one can clearly see the effects of the election and subsequent resignation on the market price in this 30-day view.

Bitcoin post 2016 Election

What does this mean long-term, though? Should we expect things to remain this stable in the next several weeks and months? I don’t think anyone can definitively say that or anything else. For one, Trump has yet to take office, but even more importantly, it’s still unclear how much of what he’s said is going to make it into actual policy. Trump has literally held every position on every issue during the course of the campaign. Many of the most bombastic campaign promises have now been repudiated in the first few hours after his winning the election.

Basically: the most certain thing about the next four years is how uncertain things really are. This is probably the most reliable way to attempt to predict the market over the next four years (and, incidentally, a strong argument for tried and true conservative investment methods like dollar cost averaging).

One of the things likely to increase in uncertain times, particularly for the immigrant workforce, is foreign remittance. This, of course for Bitcoin, is actually good news. Via Justin O’Connell of Cryptocoin News:

Trump still wants a wall. That’s what he said earlier this week, when Trump revealed his plan to block remittances from illegal immigrants to their families – calling it “welfare” – he failed to demonstrate his understanding of the Internet and contemporary, borderless commerce. If it’s not remittances, immigrants in the US will figure out a way to send their money home if they want to do so. For now, it’s not going to be Bitcoin. But, if Trump does block remittances, you better believe that sooner than later increasing numbers of remitters will look into this blockchain technology. A Trump Administration would propose a rule mandating companies like Western Union Co to require customers prove they were earned legally.

Of course, Bitcoin does not (nor does any other cryptocurrency) require such a rule. It may pose an issue for “legitimate” (read: FinCen-compliant) Bitcoin sellers, since they’d be subject to the same rules as a Western Union. It would, however, be great news for the so-called “grey-market.” Individual Bitcoin-sellers that fall under the legal radar and outside their scrutiny due to low volumes could see their businesses increase, which will ultimately have a positive effect on market price as value transfers to the blockchain while in transit to its final destination.

CNBC and Juniper Research tend to agree. In a report issued this summer said as much:

“If Donald Trump becomes president of the U.S., there is the very real prospect of turmoil on world markets — the Economist Intelligence Unit ranks his presidency within the Top 10 global risks,” said Windsor Holden, head of forecasting & consultancy at Juniper Research, in a statement. “However, bitcoin trading would thrive in such an environment, at least until the impact on major fiat currencies becomes clear.”

Crypto-currency, generally…

This is where things start to get interesting, and really cool depending on your general level of geekery and political inclinations.

First, it’s important to note that while Bitcoin saw an election related bounce, most cryptocurrencies did not. This bolsters the general global perception that Bitcoin, like Gold, is a safe store of value in uncertain times. Bitcoin rose by 3%. Gold rose by 4%. Most cryptocurrency prices, however, were largely unaffected or at least non-correlative to Bitcoin.

“A page in the book of history has turned, and there is an opening to think about some of our problems from a new perspective,” Bitcoin enthusiast, Peter Thiel, who will serve on Donald J. Trump’s presidential transition team, told the New York Times after the election. “I’ll try to help the president in any way I can.”

Something that may help you navigate what the next four years may mean for other crypt-currencies, however, is the realization that cryptocurrencies are becoming more specialized, utilitarian and mature. For instance, take a look at the types of cryptocurrencies that dominate the top ten cryptos ranked by market capitalization:

Nov 2016 coin market cap

Bitcoin still reigns at the top of the chart, but following it you have…

  • Ethereum, at nearly $1B in market cap, which is more of a disruption to traditional cloud like Azure, Rackspace and Amazon AWS than to other cryptocurrencies.
  • Ripple, a coin so fundamentally different than other cryptocurrencies it’s difficult for most Bitcoiners to grok.
  • Monero and Dash, coins devoted to facilitating grey and dark market activity in a way Bitcoin doesn’t aim to.
  • NEM, which is a network designed to, amongst other things, attempt to create a secure messaging network via blockchain.
  • Augur, which is a blockchain-based project aimed at creating a tool for real-world event forecasting.

If you look at the top-ten charts from a year or even six months ago, many of the blockchain projects were also-rans, simple tweaks to existing SHA-256 or Scrypt algorithms. Now you’re seeing a lot of different attempts at facilitating real application value via blockchain protocol. As such, these projects will be broadly affected by who’s in office, but more directly affected by the merits and pitfalls of their own governance and technology choices. One would do better to look at this new class of blockchain market entrants like startups, rather than competing cryptocurrencies.

This, of course, leads me to talk about

The Future of Blockchain Technology under a Trump Administration

trumpymctrumpertonThis is where my personal politics shine through a bit more than in these other categories. Personally, I’ve trended to a political philosophy that has in recent years been termed as Voluntaryist.

Voluntaryism is a philosophy according to which all forms of human association should be voluntary as far as possible (academics over the age of 25 may recognize this philosophy as being, basically, re-branded anarchism). This philosophy is in no part influenced by the things I’ve learned about blockchain technology and cryptocurrency.

Increasingly, technology has been solving societal problems before government has had a chance to put it’s pants on. As I noted in a recent IBM IoT Futurist twitter conversation, the privacy implications of AI in society are vast and need to be addressed immediately to have a real effect for consumers, however the agency governing such things (the FTC) has only one recorded mention of artificial intelligence in their history, and it was a largely ignored set of remarks at an esoteric symposium at NYU last summer.

Conversely, there are real, existential threats to the internet using new technologies (like the aforementioned IoT) that even the leaders in enterprise have no answer for that in-market, proven blockchain already present silver-bullet solutions for.

Meanwhile, you have Donald Trump making incoherent assertions on the campaign trail, and how he’s going to shut down the Internet to prevent terrorism. This is not the administration from which innovative technological solutions or regulation will flow. They’ll still be grappling with whether Trump should be allowed access to his Twitter account while Blockchain endeavors to solve some of the most difficult problems of our age.

  • Tezos tackles decentralizing governance itself.
  • OpenBazaar tackles decentralizing all commerce.
  • NameCoin tackles decentralizing power over the Internet.
  • DevCoin tackles decoupling open source funding from enterprise interests (but itself serves as a model for funding public works projects).
  • Hyperledger is an IBM-initiated project that makes dead-simple using blockchain for a variety of functions, including logistics and supply-chain management.
  • Farmshare, which aims to make trustless the concept of community-supported agriculture.
  • NXT and Ethereum, both of which aim to be a platform of deployment for decentralized applications – a disruption not only for traditional IT, but new-wave cloud service providers (cloud being an arena in which legislation hasn’t even fully caught up to yet).

In all of these cases, there is very little an administration of any stripe could do to impede the progress of these technologies once they’ve been unleashed upon the world, which is a bit of the beauty of blockchain itelf. These tend to be meritocratic, autocratic solutions to societal ills; that is to say, that if they work, they self perpetuate, and if they don’t work, they fail and are replaced by something that does work.

In short, regardless of who’s in charge, the world of blockchain broadly looks bright, indeed.

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2 ways Blockchain technology could have last week’s massive IoT-launched DynDNS attack

I’m attending IBM’s “World of Watson” event this week in Las Vegas, and one of the most murmured-over topics of conversation is the massive malicious application of IoT to execute one of the world’s biggest distributed denial-of-service attacks in the history of the Internet.

In case you missed it, the short version is that millions of connected devices with known vulnerabilities were used to launch an attack on DynDNS, a company that provides DNS service for a broad cross-section of the internet.

From their company blog:

Starting at approximately 7:00 am ET, Dyn began experiencing a DDoS attack. While it’s not uncommon for Dyn’s Network Operations Center (NOC) team to mitigate DDoS attacks, it quickly became clear that this attack was different (more on that later). Approximately two hours later, the NOC team was able to mitigate the attack and restore service to customers.

While it’s been the subject of quiet hand-wringing of IoT advocates and loud criticism from those making their living selling security services, the silver-bullet solution to the problem was clear to me immediately: blockchain.

NameCoin: The solution to a great many looming ills on the internet.

FadiChehade-1024x713I’ve talked about it a few times on my personal blog as well as elsewhere after then ICANN CEO Fadi Chehade came TheCUBE in January of 2014 and dropped a bit of a bombshell: the world has eighteen months to come up with a new governance model for the internet. We asked him on the show if Chehade thought world leaders are prepared to take on the complex and very layered information needed to understand and implement a new model for governance.

Chehade laughed fadingly.

“They are scrambling. Most countries are scrambling, few countries are prepared,” said Chehade. When pressed again for a more direct answer of if they can figure it out in 18 months, Chehade shows his hand. By dodging the question in pulling from in prepared facts dance that avoids saying yes or no definitively, Chehade says in turn says no and rather empathically.

Throughout the interview, he discussed the reasons why the governance model wasn’t tenable (it has to do with perceived political corruption and conflict of interest that other world states hold about America, and its former role in overseeing ICANN). The whole interview is riviting, and worth a watch.

Despite acknowledging that distrust of humans and the organizations built around them is the root of the issue, ICANN hasn’t to this day sought to explore a blockchain solution to the problem, despite it being one of the oldest proof-of-concept applications of blockchain technology.

From the NameCoin foundation’s website:

Namecoin was the first fork of Bitcoin and still is one of the most innovative “altcoins”. It was first to implement merged mining and a decentralized DNS. Namecoin was also the first solution to Zooko’s Triangle, the long-standing problem of producing a naming system that is simultaneously secure, decentralized, and human-meaningful.

It was and continues to be a very elegant solution to the corruption problem. Because it’s commonly merge-mined with Bitcoin, it’s not succeptible to a 51% attack like many other niche cryptocurrencies. It operates according to some rules inherent to the protocol, and isn’t subject to human whims or influence. In short, it solves the dilemma Chehade describes.

More germane, decentralization solves the issue a DDoS attack on DNS systems would present. The record of domain ownership is public information and self administered by the protocol, so targeting one specific set of DNS servers would be a minor inconvenience rather than a far-reaching catastrophe. Literally anyone can pop up a node, block explorer and bolt on a DNS service with NameCoin with no cost other than the hardware it runs on (for a more technical explination, head to this GitHub repo).

Securing the Internet of Things with Blockchain.

I had a conversation with an IBMer when I first arrived about the DynDNS attack, and how IBM’s cognitive analytics could have possibly prevented the attack by hardening security on the specific attack vectors by recognizing patterns in the attack. It is an interesting and highly complex solution to a very difficult problem, but I think the blockchain poses a much more elegant solution to this particular issue (and is implementable with already in-market technology).

One of the lowest hanging fruits would be device firmware hashing, which works a little like this:

  1. screenshot-2016-10-26-at-1-23-21-pmA device (like a connected thermostat or a lightbulb) essentially has a complete system on it akin to any other computing device. It has a lightweight OS, usually imaged on a chip or an SSD and a wireless connection to a hub or the internet itself.
  2. In a world where it’s secured by the blockchain, it would periodically “phone home,” by connecting to the internet, looking up it’s nearest Bitcoin node, and looking for the most recent ledger entry that contains a hash file, or even possibly an encrypted boot image for the device.
  3. It will compare the hash files with the hash files on the device itself. Because the blockchain is immutable once a write operation has occurred, if the hashes do not match, the device can immediately know whether it’s been tampered with or had it’s boot image altered.
  4. As a hardcoded part of the boot sequence, you can have the device re-image itself (or brick, depending on the situation) when it fails the checksum.

This is not dissimilar to an immune system flagging a foreign body. In this way, scaling security for a wide variety of devices becomes simple, and it’s attainable today. This method not only adds a layer of security it adds longevity to IoT devices, particularly for devices created by startups with uncertain futures.

Every IoT-style light bulb or thermostat requires a ‘cloud,’ or someone else’s computer, in other words. Surely, no manufacturer will want to maintain a portion of a database servicing such devices for 10 or even 15 years. ‘A publicly accessible computing protocol married to a database with impenetrable security;’ this basically describes both Ethereum and a perfect scenario for IoT. Any device with the built capability can spend ETH from it’s wallet to communicate via the blockchain.

Getting there isn’t a real big challenge, surprisingly.

disney-chainThe beauty of these solutions is that there’s no need to re-invent the wheel on this. IBM has a great set of tools I’ve learned a bit about this week in Hyperledger, which can be very useful for a variety of functions where a semi-private blockchain can come in handy. There are some great low cost solutions for launching IBM’s Hyperledger implementations, but growing it to meaningful size could get quite pricey (some implementations can be upwards of $10,000 a month).

Implementing a device-level hashing function can be quite cheap, though, and run off existing public blockchains. A non-Turing-Complete implementation can literally cost pennies to maintain, and an Ethereum implementation could be only marginally more expensive.

Likewise, a NameCoin-like solution could not only be a silver bullet solution to ICANN’s security weakspots, but a profitable venture to engage in. A NameCoin has a market value of greater than zero (a $3.7 MM market cap), and it’s essentially nothing more than a functional prototype. Depending on the approach to the creation of the ledger, the foundation that develops the solution can fund itself for the foreseeable future with a crowdsale of their initial token (or pre-mine, depending on the underlying ledger type).

And the excuses against taking the leap into blockchain are rapidly shrinking. Just this morning, Disney corporation announced the release of the opensource framework they’re going to use to issue their own blockchain-based tokens and coins; it was an interesting announcement, but they key take-a-way is that those still resisting blockchain based solutions are now getting lapped by a literal Mickey Mouse solution.

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Ask Doctor Bitcoin: What Makes Ripple a Unique Blockchain Technology?

DrBitcoinHeader800x465Kevin Rose, founder of the famous Web 2.0 startups Digg and Rev3 Networks recently announced that one of his blockchain investments from his tenure at venture partner firm Google Ventures has raised even more money from some particularly unlikely sources: big banking. According to CNBC (and ostensibly confirmed by Kevin himself) the banking institutions include:  Standard Chartered, Accenture Ventures, SCB Digital Ventures, the venture arm of Siam Commercial Bank, and Japan’s SBI Holdings.

That Ripple is raising is not unheard of – to date, they’ve raised around $93 million, and continue to try to journey towards profitability. This recent fundraising round is undoubtedly pushed forward on the recent news of the consortium of banks creating their own protocol based on Ripple (which I talked about a couple of weeks ago).

UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank,Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.

Ripple does contain some interesting properties presently unique to it’s protocol, which are nicely explained on The first two things listed there are pretty common to any blockchain-based currency.

One of the more interesting principles, though, is the decentralized exchange/transaction facilitation.

ripple3There are many other payment providers on the Ripple network.

Brent is a customer of Justcoin, and his Justcoin balance is stored on the Ripple network alongside the Bitstamp balances of Alice and Bob.

Brent also wants to buy from Alice. However, Alice does not accept his Justcoin balance. She does not want to sign up with Justcoin to withdraw her money.

ripple4Bob does a lot of business with other Justcoin customers, and so he wouldn’t mind a Justcoin balance. Because Bob agreed to this, the network will automatically transfer some of Bob’s Bitstamp balance to Alice, in exchange for an equivalent Justcoin balance from Brent.

Bob acted as an intermediary and facilitated a payment between Brent and Alice, and two different payment providers. He can choose to charge a small fee for this service.

Because customers from different providers constantly want to send money between each other, there are many people like Bob on the network, and the market will keep the exchange fee low.

It’s early days with Ethereum, and this capability could easily be written into an Ethereum token, but currently only exists in Ripple-based blockchains. This another reason why banks are gravitating towards this protocol, since it has the built in functionality of handling the ownership and transfer of multiple financial instruments – even instruments that have their own blockchains.

As I talked about a couple weeks ago, the Ripple protocol isn’t without it’s downsides. Ripple has some fundamental flaws that must be examined and weighed both for the benefit of banks looking to move to this new technology as well as folks looking to innovate on blockchain technology in the crypto-sector. A report commissioned by distributed ledger consulting group R3CEV and authored by bitcoin developer Peter Todd has raised questions about Ripple and it’s ability to withstand the rigorous security demands of high-finance.

“Ripple still holds the majority of XRP, and it is in their favor for its value to increase,” says the report. “Ripple justifies XRP as an ‘anti-spam mechanism’ to deter transactions… However, as the volume of transactions increases the server load, transaction speed is slowed while the cost of the transaction and the amount of required XRP continues to increase.”

Todd next walks readers through a number of theoretical attacks that could take place against the Ripple protocol, discussing his estimates of the cost, scope, duration and probability of the scenarios.

Perhaps the most glaring, Todd’s writing infers, is the damage that could be done due to a “software backdoor”, as he finds that Ripple “does not provide a secure way to download any of their software”.

“This is a serious omission that has lead to significant monetary losses in the past. Ripple Labs should be following industry best-practice by signing git commits and tags as well as PGP signing their Ubuntu packages,” Todd added.

Todd ends by highlighting the potential real-world implications of these attacks in an elaborate scenario involving a dispute between the Russian government and Shell Oil, forecasting how these parties might attempt to achieve their aims through coercion on the network.

This is a common flaw in some implementations of cryptos as well – those looking to launch a new cryptocurrency and looking to avoid being 51% attacked during the nascent moments of the life of the coin may look to private mining or some other form of centralization, but in these cases, they’re creating honeypots for hackers as well as the key thing blockchain technology was designed to mitigate: central points of failure. As we discussed in the Bitfinex post a couple weeks ago, the common key component to every major loss, theft or hack in cryptocurrency history has been central points of failure.

My prediction is that this group of banks will move forward with their implementation of Ripple, and see some gains from using this new technology, and likely use it as a stepping stone to more open versions of the technology in the future. As I said, this is technology of particular importance to financial institutions, but it isn’t remarkably complex technology, and could easily be achieved on a more robustly supported blockchain like Ethereum, or even future updates to Bitcoin.

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