Two Alleged Ethereum ‘Scam Forks’ Appropriating Users’ Private Keys, Report Finds

Ethereum Nowa and Ethereum Classic Vision are reportedly appropriating the private keys of users trying to redeem the allegedly forked coins.

Altcoins Ethereum Nowa (ETN) and Ethereum Classic Vision (ETCV) are reportedly appropriating the private keys of users trying to redeem their allegedly forked coins. The suspected scam was covered in a report sent to Cointelegraph by the Guarda Wallet development team on Jan. 11.

The official website of the Ethereum Nowa project — which doesn’t contain a white paper — describes the process that users are supposed to engage in to obtain ETN. According to the website, the user should first send ETH to an address, and then export the private key and redeem the cryptocurrency using the dedicated online tool.

A user on Ethereum block explorer Etherscan has commented on the aforementioned address, asserting that the address is engaging in a “scam [hard] fork/airdrop” after warning “Don’t send anything here.” The tool to claim the coins appears to be a clone of the well-known online Ethereum (ETH) wallet MyEtherWallet (MEW), featuring the original logo, website title and page under a different domain.

The main difference compared to the original MEW interface is that all the options that let the user chose how to access the wallet are greyed out, other than the one allowing the user to paste in their private key. Furthermore, some browsers flag the tool as a “Deceptive Site.”

The Guarda Wallet team wrote that, analyzing the code, they found out that the private key is not only being processed by the tool, but also being sent to a remote server. According to the Guarda report, Ethereum Nowa “is a way for the thieves to get your private information and gain access to your wallet.”

Ethereum Classic Vision’s hard fork, according to the project’s white paper, is happening today (Jan. 11) at 20:00 GMT. The website contains links to a downloadable Windows and Linux wallet alongside a web tool. Near the “Claim fork” button, the website states:

“Regardless of which authorized wallet you use to hold your ETH, your free ETCV will be initially sent to the official Ethereum Classic Vision wallet. While we are currently in negotiations with a number of popular wallets, at the moment of the fork we will not be able to send ETCV to those wallets due to certain differences in the algorithms used.”

The Guarda Wallet team noted that while this project looked more solid than ETN, after closer examination, they reportedly found that the ETCV team also appropriated the private keys of the users:

“The analysis on the code performed by our team has shown that the piece of code provided actually sends your private key data on the Ethereum Classic Vision servers, masking it as an API token.”

As Cointelegraph recently reported, a Maltese actor and two hosts of a local TV show have notified the police after a fake news piece indicated that they are involved in a Bitcoin investment scheme called Bitcoin Revolution.

Furthermore, the same day, news broke that the Twitter account of a Belgian non-profit was evidently hacked and made into a fake affiliate account of United States crypto exchange Coinbase.

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Bitmain, Roger Ver, Kraken Sued for Alleged Bitcoin Cash Hard Fork Manipulation

Florida-based UnitedCorp has launched a suit against Roger Ver and some other major industry players for allegedly planning a scheme to take control of the BCH network.

Florida-based United American Corp. (UnitedCorp) has purportedly filed a lawsuit against Bitmain, Bitcoin.com, Roger Ver, and the Kraken Bitcoin Exchange, according to a press release published Dec. 6. UnitedCorp alleges that the defendants planned a scheme to take control of the Bitcoin Cash (BCH) network.

Founded in 1992, UnitedCorp is a development and management firm with a focus on telecommunications and information technologies. The company manages a portfolio of patents and proprietary technology in telecoms, social media and blockchain. UnitedCorp also owns and operates BlockchainDomes stations, that provide heat for agricultural applications.

The suit filed in the U.S. District Court for the Southern District of Florida alleges that the defendants jointly used unfair methods and practices to manipulate the BCH network for their benefit and detriment of UnitedCorp and other BCH stakeholders. The release further specifies:

“UnitedCorp believes that the defendants colluded to effectively hijack the Bitcoin Cash network after the November 15, 2018 scheduled software update with the intent of centralizing the network — all in violation of the accepted standards and protocols associated with Bitcoin since its inception.”

On Nov. 15, the BCH network underwent an update, which divided the community into two main camps, those who support Bitcoin Cash ABC and those who support Bitcoin Cash SV. UnitedCorp states that the defendants took control of the coin’s network right after the upgrade using “rented hashing.” This allegedly led to the adoption of Bitcoin ABC rule sets, precluding other implantations from maintaining a democratic rule sets.

UnitedCorp also alleges that on Nov. 20 the Bitcoin ABC development team put a “poison pill” into the blockchain by way of a “Deep Reorg Prevention” in order to strengthen control over the blockchain ledger. That allegedly enables maintenance of control on implementations for future network updates.

The suit seeks injunctive relief against the defendants, asking to prevent them from ongoing actions against the BCH network and doing so in the future. Additionally, UnitedCorp seeks compensation, the value of which it claims will be determined at trial.

Bitcoin Cash has registered the major losses on the day. The altcoin is down by over 20 percent over the last 24 hours and is trading at around $103 at press time, according to CoinMarketCap.

Bitcoin SV (BSV), in turn, has seen noteable daily gains of over 27 percent, and is trading at around $112 at press time. BSV’s maximum supply is 21 million, while its market capitalization is around $1.9 billion at press time.

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Bitcoin Cash SV Blockchain Reorganization Draws Further Centralization Criticism

Bitcoin Cash SV’s recent blockchain reorganization has led to well-known industry figures labelling it as centralized.

Controversy over Bitcoin Cash’s (BCH) hard fork continued Nov. 19 after Bitcoin Cash SV (BCHSV), one of the two new forks of the altcoin, suffered what is known as a blockchain reorganization.

The latest setback to affect the nascent fork, the reorganization (often referred to simply as “reorg”) lasted for two blocks and was initially feared to be a malicious attack.

Reorgs occur when two miners solving a block at the same time cause a temporary fork in the network. The miner that solves the next block then dictates how the blockchain continues as their fork now has now performed more work as per the Proof-of-Work (PoW) algorithm rules.

When the network agrees on which fork to use, the redundant block which will not see a continuation of the blockchain built on top of it, as it is “orphaned.”

When blockchains experience congestion, however, information about blocks may reach miners slower than usual, resulting in blocks being made redundant.

In this aforementioned event, the BCHSV reorg came about due to the mining arm of cryptocurrency news publication Coingeek, a party in favor of competing fork Bitcoin Cash ABC (BCHABC), orphaning its own blocks.

The events were relayed to social media by Peter Rizun, chief scientist of Bitcoin Unlimited.

Emin Gün Sirer, creator of the world’s first cryptocurrency to deploy a PoW concept and vocal critic of BCH, continued the debate, noting that the possibility for miners to make their own blocks redundant raised questions about the BCHSV’s level of decentralization.

“This should not be possible in a decentralized system,” he wrote, adding:

“You can only invalidate your own block and create a new tail if you’re the majority miner. BCHSV is a centralized coin.”

BCHSV has seen limited uptake on major cryptocurrency exchanges, among which was U.S. platform Kraken, which issued a strongly-worded warning to users when it allocated tokens and opened trading.

Prices have also declined, Kraken’s BCHSV/USD (written at BSV/USD) pair hitting lows of $32.40 Nov. 21. At press time, BCHSV is trading at around $49.77 on CoinMarketCap, down about 6.66 percent over a 24 hour period.

Bitcoin Cash has drawn accusations over centralization before, veteran cryptographer Nick Szabo openly labeling the coin as “centralized sock puppetry” last year.

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BitMEX: Not Competing with Bitcoin Core?

BitMEX: Not Competing with Bitcoin Core?

An article appeared on the BitMEX blog this week comparing competition to the Bitcoin Core software project. It concluded that, even if the Bitcoin Core repository were hijacked or deleted, Bitcoin should remain largely unaffected. Competing Approaches BitMEX initially considered three different ways to compete with the Core project prior to examining at arguments for and against them. The types of competing projects fall into the following categories: Competition between chains: A competing project which deliberately changes

The post BitMEX: Not Competing with Bitcoin Core? appeared first on Bitcoinist.com.

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Ethereum’s Constantinople Hard Fork Faces ‘Consensus Issue’ in Testing

Recently tested Ethereum hard fork Constantinople has reportedly caused a “consensus issue” on a testnet, which will delay its launch.

An alleged “consensus issue” in the testing of a planned hard fork of Ethereum, called Constantinople, has caused a testnet to be “not usable,” according to a tweet from Ethereum blockchain infrastructure firm Infura October 13.

Infura’s tweet also advises developers to use other testing networks while the Ethereum developer community is “investigating” the issue.

As reported by multiple Ethereum developers the hard fork became active on the Ropsten testnet Oct. 13 at block 4,230,000.

However, the testing reportedly caused a “consensus issue on ropsten,” which led Ethereum developer Afri Schoedon to state in a thread of tweets following the test that there would be “no constantinople in 2018,” adding “we have to investigate.”

As a clarification following the strong statement, Schoedon noted Oct. 14 that at the most recent Ethereum core developers call, developers had agreed they would “not be able to activate Constantinople this year if there are any major issues on Ropsten.” He also added that the next scheduled call on the topic would be Friday, Oct. 19, telling the community to “stay tuned” until then.

The Constantinople hard fork is a system-wide Ethereum update designed to increase the network’s efficiency.

Earlier this year, Ethereum developer Piper Merriam opened an Ethereum Improvement Proposal (EIP) suggesting the idea of a possible Ethereum hard fork to invalidate ASIC miners, which are regarded as highly centralizing.

At press time, Ethereum is trading at $197, down about 1.5 percent over the past 24 hours.

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Bitcoin’s Block Size Can Be Increased Without Hard Fork, Says Blockstream Co-Founder

One of the Blockstream co-founders suggests a new Bitcoin scaling concept that allegedly does not deploy a hard fork.

Bitcoin (BTC) protocol developer Mark Friedenbach introduced a method for Bitcoin scaling he claims will not require a hard fork at a workshop in Tokyo October 5.

The new concept presented at the Scaling Bitcoin workshop, entitled “Forward Blocks,” suggests a major on-chain capacity boost by means of a Proof-of-Work (PoW) alternation that is done as a soft fork, combined with use of alternative private ledgers.

The proposal describes a method for scaling that claims to be able to increase “settlement transaction volume to 3584x current levels” and improve censorship resistance via sharding.

During the presentation, Friedenbach suggested  major improvements for on-chain Bitcoin transactions, or those that appear on the Bitcoin blockchain. The so-called “soft-fork” alternation implies a strengthening of consensus rules where old nodes “still see the chain advance.” The research also represents a definition of “forwards compatible soft-fork,” for which non-upgraded nodes still receive and process all transactions.

In his presentation, Friedenbach emphasized the role of sharding for increased censorship resistance, noting that he borrowed the “sharding” term from the “database field.” However, the term that is described in the research is “largely not” the sharding that is implied by other major crypto-related projects, but is “nevertheless the correct term to use” in terms of the study.

The sharding term has garnered most popularity in reference to the Ethereum (ETH) blockchain’s upcoming major upgrades. Announced in reference to Ethereum’s by its co-founder Vitalik Buterin in April 2018, the term implies a method of increasing the number of transactions that a blockchain can process. The idea of sharding is that for on-chain transactions, multiple network computers can divide the transaction workload between them.

Friedenbach, who is also a former NASA contractor, claimed in his talk that he did not set out to consider Bitcoin scaling solutions originally, but was thinking about “the development of a dual PoW change where you introduce a new PoW with a soft-fork.” While suggesting the addition of another PoW algorithm, the developer stressed that his work is not actually a proposal for subsequent changes, but rather an idea for developers to consider and “a good place to start.”

The problem of Bitcoin scalability is one of the major topics of discussion around the top cryptocurrency.

In July of this year, a group of Bitcoin engineers announced the launch of the Bitcoin Operations Technology Group (Bitcoin Optech) to address the issue of scaling the Bitcoin blockchain. The non-profit team is backed by leading industry actors, such as PayPal Board Member Wences Casares, executive of Kohlberg Kravis Roberts & Co. Ltd John Pfeffer, and cryptocurrency research and development group Chaincode Labs.

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Sia Announces Hard Fork to Brick Bitmain ASICs

After close to a year of debates within its community, Sia has finally gone ahead with a hard fork to brick out Bitmain and Innosilicoin ASICs. Following the hard fork, only miners using Obelisk hardware will be able to mine on the blockchain. Pushing Back on Bitmain and Innosilicon ASICs Sia cofounder, David Vorick announced the news in a blog post on October 1st via the project’s Medium Account. According to Vorick: Sia is forking today

The post Sia Announces Hard Fork to Brick Bitmain ASICs appeared first on Bitcoinist.com.

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Casper: What Will the Upgrade Bring to the Ethereum’s Network?

New friendly protocol to solve the problems of scalability and high transactions costs in Ethereum network. The upgrade means more decentralization, functionality and competitiveness to the system.

On May 8, developers released a planned improvement to Ethereum’s network – a new version of the code of Casper. Hybrid Casper Friendly Finality Gadget was introduced to move network away from mining-related problems, as “excessive energy consumption, issues with equal access to mining hardware, mining pool centralization, and an emerging market of ASICs”, the ultimate goal being to move the network from a PoW to a PoS system.

Let’s see what is known about “possibly the most significant” change to the network to date, according to Ethereum News.

Energy consumption and commissions

While 2017 was exciting due to the exponential price speculation of cryptocurrencies, it emerged that neither Bitcoin nor Ether in their present form would be able to become a fully fledged alternative to fiat currencies because of their very low transaction speeds.

An additional concern was the high amount of energy required to mine leading cryptocurrencies. Therefore, it should come as no surprise that among journalists and analysts, the latest trend has been comparing mining costs to the rate of the energy consumption in each country to determine where mining would be most profitable.

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Image source: Powercompare.co.uk

To date, developers of leading cryptocurrencies have failed to solve the issues related to scalability. In particular, Ethereum scales poorly despite a huge number of miners. Hypothetically, it may seem that as more people mine the cryptocurrency, the more transactions the network can handle. The reality is that as all these miners simultaneously try to process one block, the complexity of production increases and the network bandwidth remains the same. This means that even if the number of miners grows a thousand times, one block will still be produced in ten seconds and the cost of electricity would noticeably increase.

A direct consequence of poor scalability is high commissions. Miners choose transactions with a higher commission, as they are hunting for a greater reward. This leads to thousands of low commission transactions which accumulate and await processing for several days to infinity, turning the blockchain into a universe of unprocessed requests – not to mention small payments which are impossible to process.

Moreover, in recent months a fundamentally new problem has emerged. The arrival of super powerful ASIC miners in the market has become a serious threat for decentralized networks, as they increase the chances that one of the mining pools will occupy a significant share of the hash and make the network centralized.

Ethereum archipelago

Attempts to solve these problems led to an epidemic of Bitcoin hard forks aimed at creating a “new Bitcoin” with higher transaction speed. They were followed by a wave of forks among the most popular cryptocurrencies, such as Ethereum, Monero, and Litecoin. This movement was assigned the name of “ASIC resistance” and has started to gather more and more supporters as the threat of ASIC mining dominance becomes more real.

So far, one of the reasonable approaches to solving this avalanche of problems was demonstrated by the Ethereum team, who decided to create a protocol combining the parameters of two algorithms – Proof-Of-Stake (PoS) and Proof-Of-Work (PoW).

This new protocol is called Casper – Friendly Finality Gadget (FFG) and it completely changes the principles of creating and distributing Ethereum blocks, while reducing the overall complexity of the whole blockchain.

Ethereum developers are sure that the root of all the problems faced by leading cryptocurrencies is the principle of PoW:

“Although effective in coming to a decentralized consensus, PoW consumes an incredible amount of energy, has no economic finality, and has no effective strategy in resisting cartels.”

Furthermore, the performance of the blockchain operating on the PoW algorithm is limited and can hardly provide several dozen transactions per second.

Cryptocurrencies Transaction

Image source: HowMuch

For these reasons, the Ethereum team plans to move from the PoW to the PoS algorithm. The difference between the two is that in the PoW case, users buy real computers that consume energy and calculate blocks at a rate proportional to costs. The subject of purchase in the PoS case is virtual coins inside the system, which are then converted into virtual computers calculating blocks. Under this approach, the probability of signing a block depends not on the processing power, but on the number of coins on the account of a user-validator. If the validator decides to participate in the confirmation of transactions, their funds are frozen with each confirmed block rewarded.

Proof of work

The Casper protocol would become an intermediate step in the transition from PoW to PoS, combining the possibilities of both principles:

“Through the use of Ether deposits, slashing conditions, and a modified fork choice, FFG allows the underlying PoW blockchain to be finalized. As network security is greatly shifted from PoW to PoS, PoW block rewards are reduced.”

Sharding

In addition to the PoS algorithm introduced in Casper, there is another technological novelty being developed – sharding. The idea is that the nodes store only part of the distributed registry, and the underlying mathematics would ensure the system’s transparency and accountability in such a way that each node could rely on the information of others.

The founder of the Ethereum network, Vitalik Buterin, compared the elements of the sharding with islands belonging to the same archipelago:

“Imagine that Ethereum has been split into thousands of islands. Each island can do its own thing. Each of the islands has its own unique features and everyone belonging on that island, i.e. the accounts, can interact with each other and they can freely indulge in all its features. If they want to contact with other islands, they will have to use some sort of protocol.”

In other words, Ethereum’s main chain will be divided into separate chains, or shards, that associated with each other and the main block. The purpose of shards is to provide parallel processing of transactions. Each node can process its shard separately, while together nodes can work in parallel, increasing the network’s bandwidth and transaction speed by several times. At the same time, the task of scalability is solved.

Miners and validators: rescue rangers

The verification of transactions inside each shard will be performed by validators who are the main marshals of the Casper system along with the miners. The validators will ensure the legitimacy of operations with coins and act as a kind of escrow in the system, confirming transactions with their deposit. It should work the following way – if the validator has found a block that, in their opinion, should be included in blockchain, they will be able to approve it by placing a part of the deposit on this block. In the event that this block is added to blockchain, the validator will receive a reward proportional to the share that they invested. Otherwise, if they approve an incorrect or malicious block, they will lose their deposit.

Another task of validators is to create checkpoints every fifty blocks. This will ensure the completion of the blockchain and significantly increase the security of the network, since it excludes the possibility of returning transactions before the checkpoint. According to Ethereum developer Vlad Zamfir, economically any manipulation or an attempt to attack will be of no interest for validators:

“It’s as though your ASIC farm burned down if you participated in a 51 percent attack.”

The minimum deposit size the validator can make for confirmation is set at 1500 ETH which is a significant enough amount to lose and the more reason to think twice before taking part in any manipulation schemes.

The developers also provided a solution to the scalability problem which has been a critical condition for the further development of the network and Ethereum’s ability to compete with more advanced blockchain systems like Graphene.

The increase in processing speed has been reached by developers by means of participation of smaller amount of nodes and delegation of the major work to light clients. Therefore the transaction processing speed will be much higher than on a separate computer, and at the same time the entire network will be able to work on a large number of conventional laptops, while maintaining full decentralization.

Additionally, the network’s security is significantly shifted from the complexity of PoW to the completeness of PoS with the reward given to both validators and miners. At the same time, the reward for the miners for the production of ethers will decrease fivefold – from the current 3 ETH to 0.6 ETH. This will make the coin less attractive for ASIC miners and will reduce the risks of network centralization.

Validators will also become the recipients of rewards, however, in a smaller amount. Their total award is to be only 0.82 ETH per block, which is almost four times lower than the current amount. In the future, according to Vitalik Buterin, Ethereum developers will completely get rid of the PoW algorithm, leaving the reward only for validators in the amount of 0.22 ETH per block:

“Come up with an estimate for the annual rewards given out by the full Casper and sharding mechanisms. Currently, an expected value is 10 mln ETH staking at 5 percent interest, which is 500,000 ETH per year – approximately 0.22 ETH per block.”

At the same time, the efficiency of the network will increase significantly for two reasons. First of them is behind the PoS algorithm consensus which to be provided without mining, reducing energy costs and ensuring the necessary emission of ETH. Secondly, the generation time of the block will be reduced to a minimum, since it is easier to check who owns the largest share rather than to find out which of the miners has the greatest computing power.

Latest news

At the Edcon conference in early May 2018, the creator of Ethereum Vitalik Buterin reported new details about the “friendly ghost”. In particular, Casper, in addition to the reward system of validators, will provide a system of penalties. The main principle of the new reward system is the following – the greater the stake is, the lower the interest rate. For example, the owner of 2.5 mln ETH will receive an annual fee of 10 percent, and the owner of 10 mln ETH – only 5 percent.

Table

Image source: HowMuch

The amount of penalties will depend on the severity of the validators’ faults and can reach 100 percent. In particular, the validators will be subject to fines in case of frequent absence from the network. The emergence of problems with the shard or disk on which the wallet is located will be punished with a fine of 2 percent of the deposit amount. For a group of validators whose shards are simultaneously out of order, penalties will be much higher and measured in double digits. At the same time Buterin notes that the main problem of this approach will be the risk of hacker attacks, because in this case, collective penalties can leave validators without any deposits.

The last news related to the “friendly ghost” came on May 8, when one of Ethereum developers Denny Ryan published the first version of Casper’s updated code on GitHub:

“v0.1.0 marks us more clearly tagging releases to help clients and external auditors more easily track the contract and changes.”

He also added that client developers can now start writing and testing software in their own languages.

What can we expect from Casper?

The launch of the Casper FFG is planned for the summer – autumn of 2018. Since the system will be incompatible with previous versions of Ethereum software, the update will be implemented through a hard fork.

As a scalability solution, Casper remains an important blockchain upgrade and solution for both developers and ordinary users. The Ethereum foundation spent three years to apply all the accumulated experience in making the network decentralized, efficient and competitive industry improving in the long run.

With the bandwidth increased, more transactions are expected to be processed at higher speeds, which means that big companies will be able to build complex structures and develop ecosystems based on the network. A loyal enthusiastic community behind the platform will help to contribute to its development and improve its functionality.

There is still a lot of work to be done on how a new reward system will work in practice and how validators will manage the protocols, but one thing is obvious – Casper is getting closer.

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