Online multiplayer games are shifting towards blockchain

Online multiplayer games are shifting towards blockchain

by | Mar 7, 2019 | Blockchain, Blockchain Games

As complex and beautifully designed games are, the only part of the entire experience which is truly owned by the gamer is the feeling of achievement. That is as close as gamers ever get to really “owning” anything in the computerized world.

Online games offer avatars for sale, which gamers purchase from a computerized store as a symbol of their entity within the game and then spend hours on end to customize it, to enhance the feeling that it belongs to you, and yet it doesn’t. It can disappear in an instant. An instant in which the entertainment platform and its servers can be shut down. No warning and no explanations.

But good news strike on the horizon of online gaming. The innovation of blockchain technology can change all of that. Using decentralized systems and non-fungible tokens, or NFTs—like the ERC-721-consistent tokens previously made by Aphorism Zen’s CryptoKitties—players can make characters, vehicles, weapons, and other advanced signs that they claim forever, not simply the timeframe of realistic usability of a diversion.

The innovation can be the entryway for a player’s individualized and tokenized manifestations to move consistently on multiple online blockchains.

The potential is huge, and it’s the reason many trust the expanding blockchain gaming industry could deliver the slippery “killer app” that at last conveys this innovation to the majority.

But is the market prepared for such an extreme move in digitized gaming resources? A consortium of eight of the leading enterprises in this space, including Ubisoft,  considers so. Also, their vision for the eventual fate of gaming and the $140 billion computer game industry has the help of a developing number of gamers and diversion engineers alike.

Ubisoft’s Blockchain Initiative Manager Nicolas Pouard believes the goal of this alliance is to rally stakeholders from both the blockchain and gaming industries and work together to develop solutions for the challenges that await these converging fields, according to Ubisoft’s Blockchain Initiative Manager Nicolas Pouard.

And it’s that last piece of the puzzle—the potential for a breakthrough smash hit on the level of an “Assassin’s Creed” franchise—that fuels the vision for gaming as blockchain’s bridge to the mainstream.

“Gaming will allow people to familiarize themselves with blockchain in an interactive environment, which is the first step to mass adoption,”

Nicolas Gilot, a founding member of the Alliance and co-CEO of Ultra—a blockchain-based “next-generation games distribution platform.”

True Ownership

The ownership in the digital world has its complexities. Let’s take iTunes for example. You can buy a song on iTunes, for example, but it isn’t really yours. There are limits to what you can do with that digital file—and you certainly can’t resell it.

Nowadays, in most cases, players that are done with a game in which they invested a lot are not able to pull any value out of the items or achievements they collected with much efforts.

Blockchain’s value proposition for gaming strongly relies on what we call ‘true ownership,’

Ubisoft’s Blockchain Initiative Manager Nicolas Pouard

This also applies to game platforms. Gaming assets are similarly restricted. In conventional games, servers store all the things that players buy.

“If you stop playing, lose your account, or experience technical issues, you lose those digital goods,”

Manon Burgel, B2Expand CEO

As explained in the blockchain games vs crypto games article, the in-game items are tied to the server of the platform, not to the real-life user of the account. Some even specify in the EULA (End User Licence Agreement that players are not allowed to sell or gift items to others.

The perceived unfairness of this among gamers is what’s driving the desire for blockchain to flip it on its head.

“A game that runs completely on the blockchain is an example of a decentralized platform that could be owned by everyone.”

Dan Biton, founder of Gimli

Worldwide Asset eXchange (WAX), a blockchain e-commerce platform for digital assets, released a survey of 1,000 gamers and 500 game developers in the U.S. that shows solid support for the “true ownership” of in-game assets.

The survey states that 68% of the gamers trust they have the right to “truly own” the things they purchase. In addition, 62% would be bound to spend fiat on virtual assets if they could transfer those assets in between games, and near 75% of gamers said they would enjoy to sell or exchange in-game assets regardless of the type of the game.

What’s more, 86% of the game developers believe that in-game assets are on their way to becoming strategic components of future games, and more than 66% agree that the publisher of the game suppresses the advantages of these assets.

By tokenizing these assets, players can choose for themselves how to manage them: give them away, exchange them, or even offer them. It empowers a “digital second-hand market,” Burgel clarifies, and “its decentralized nature ensures that games and items are not held by one company but by the network.”

Of course, this sounds extraordinary for gamers, but publishers must figure out how to profit from this game model.

Nowadays, blockchain’s involvement in gaming is limited to the tokenization of digital assets. Furthermore, given the administrative atmosphere in the Unified States with respect to tokenized resources, this convolutes matters for an expansive, traded on an open market organization like Ubisoft.

Ultra’s CEO demands, in any case, that he sees “no issues with tokenized assets” from a lawful point of view, while organizations cling to set appropriate administrative rules. “The goal of regulatory bodies such as the SEC is to protect the public from being subject to scams,” he says. “The blockchain and crypto industry is continuously evolving, therefore it is important to keep up-to-date with the latest regulatory decisions to avoid slowing down innovation.”

Gilot additionally takes note of that the tokenized assets that will be exchanged on Ultra and all through the blockchain-gaming space. NFTs do not fall under the same rules as tokens sold during an ICO or STO (Security Token Offering), which may incorporate investment contracts and are subject to securities laws and guidelines. In the meantime, an advanced gaming asset, Gilot says, essentially “guarantees ownership, as well as proves the scarcity of an item is created through a publicly available smart contract.”

NFTs, as it were, are computerized portrayals of unique items, which are different from the collectable exchangeable cards of yesteryear. Those collectables work as a tokenized “proof of purchase” for the proprietor. They are the reason for most by far of blockchain-put together computer games at present with respect to the market, for example, Everdreamsoft’s “Spells of Genesis”— a game of collectable card, arcade-fight style game that makes a case for being the first blockchain-based mobile game.

“Spells of Genesis” was launched in April 2017, seven months before CryptoKittis were released on Ethereum. CryptoKitties and its non-fungible cats broadly smashed the Ethereum network in December 2017. CryptoKitties stay in charge of the absolute most costly NFT-based, gaming collectables ever sold—some surpassing the six-figure mark.

When will a major publisher release its first blockchain-based title?

In July 2018, the upstart blockchain gaming protocol MagnaChain announced its partnership with Epic Games, the maker of “Fortnite,” spurring rumours of an inescapable “Fortnite on the blockchain.”  However, MagnaChain hasn’t commented on any details regarding the process.

For Ubisoft, Pouard from Ubisoft is still at a “test-and-learn” stage regarding the blockchain technology, mainly because of their financial obligation to its investors. “True ownership” is an extremely new business model and many tests are still needed to conclude if this is “something publishers can handle long term.”

Burgel’s B2Expand started paying more attention to this use case, having discharged its first game Beyond the Void on Steam. Beyond the Void uses the Ethereum blockchain for its “economic backbone” enabling players to purchase, sell, and exchange “cosmetic in-game items” for the Multiplayer Online Battle Arena and Real-Time Strategy mashup utilizing B2Expand’s local Nexium (NXC) token. Burgel says Beyond the Void would have explored the blockchain technology within the core gameplay if it wasn’t for the early release of the project.

About “true ownership” and the trade made around the exchanging of NFTs, Burgel states that: “the gaming industry has yet to find the right business models fitting these opportunities.” Nevertheless, distributors could, at last, discover an incentive in tools that enable gaming networks to “organically grow and feel involved,” for example, by encouraging the creation and dissemination of user-generated content. That is just “one of many possibilities,” Burgel says, and “many companies are already exploring new ideas.”

Dan Biton, a co-founder of the Gimli platform and a Blockchain Game Alliance board member, says we have to think past the present video-game scene to imagine what these conceivable outcomes may lead to. “A game that runs completely on the blockchain is an example of a decentralized platform that could be owned by everyone, and we could think of something where every player has its share in a voting system to make the game rules evolve,” he says. The game’s logic “or even the game itself” could change as indicated by the wants of its players “in a completely decentralized way.”

It’s a new and unique gaming perspective and one which Ubisoft is now putting its assets and target industry into an investigation. Ubisoft’s Strategic Innovation Lab is an inner research organization gave to analyzing future industry patterns and they are already looking far ahead from the “crypto collectable” use case of the blockchain which is found today in the market.

In recent months, the lab has gone through the process of developing a Minecraft-inspired model, a treasure-chasing and island-investigation game called HashCraft. The game doesn’t utilize NFTs. Indeed, it doesn’t have much to do with tokens. But it joins blockchain and pushes the limits of what was recently thought conceivable in gaming, situating publishers like Ubisoft as basically the makers of the “fantasy”, which are the characters and storylines of the game, and the players as the developers of “experiences” they genuinely possess.

It takes courage to embrace this new trend and Ubisoft is still in its infancy in this journey. “There is still plenty that we need to discover, which can’t be done without continuing our exploration or collaboration within the ecosystem,” says Pouard. Furthermore, cooperation is decisively what the Blockchain Game Alliance looks for. The alliance of game publishers are in the procedure now of formalizing a formal administrative structure for their association. Says Pouard: “This is just the beginning of the adventure.”

Hurdles remain, but much of the promise that this technology brings rests in its ability to redefine antiquated notions of digital rights in a rapidly changing world. We take this as good news, thinking that crypto and decentralized technologies are still in their infancy.

Blockchain Games vs Crypto Games: What is the difference?

Blockchain Games vs Crypto Games: What is the difference?

by | Feb 8, 2019 | Blockchain, Blockchain Games

Blockchain games are surely the future. The main issue is that people today do not understand how this works, perhaps due to the lack of education. Most of the time they believe almost everything they hear or read online. But still, money is made this way, and many startups profit big time from this lack of knowledge.

Note that blockchain technology can be applied to a vast number of industries, not only used in the economic sector for currency transactions. Comparing Blockchain games vs crypto games will hopefully give you a better insight.

Unfortunately, there is a HUGE lack of information and confusion about the difference between blockchain games and crypto games.

Blockchain Games vs Crypto Games: What is a Crypto Game?

The most frequent use for blockchain tech in games so far has been to store your items on the blockchain, tying them to your (Ethereum) wallet and making them permanently your own. Another term for this process is tokenization.

In contrast, in “classic” games, any items that you supposedly own in-game are in fact stored on the game publisher’s servers, as is your whole account. There are many ways for you to lose possession of your assets in this case – server malfunction (failure or attack), halted game development, banned account, etc.

The first generation of blockchain games are actually crypto games or tokenized games. They were solely based on this principle and they focused on collecting unique assets and trading them, for fun, profit, or both. CryptoKitties was the game that started this trend and they’re still quite popular.

The main difference between the two is that a blockchain game has every process in the game recorded on the blockchain as a transaction. No one can change, delete or influence the result of a game, whereas a crypto game has only a token used within the game. 

Even more, crypto games don’t even use their own blockchain. Most, if not all of them, use the Ethereum platform, which requires you to buy another token just to trade the token of the game (Gas on Ethereum).

It’s needless to add that if only 10% of the games which use the Ethereum platform would start trading at once, the network would crash. Therefore, a blockchain game would ideally be a game which uses its own blockchain. Joseph Lubin, the co-founder of Ethereum, acknowledged onstage at Ethereal Tel Aviv 2019 that the network, in its original form, wasn’t built for mass adoption: “We knew it wasn’t going to be scalable for sure,”.

To add to the confusion of this type of games, some projects claim they are developing their blockchain so that others can use it to develop blockchain games. None that we know of, yet.

CryptoKitties has collectable and unique cat cards, which are in fact tokens you can exchange, but the entire game is based on Ethereum. Also, the game is not a blockchain game, only the tokens are on the blockchain. But yes, the tokens/collectable cards can be traded and the prices are in ETH, which can indeed be transferred to a cryptocurrency exchange and be traded for another crypto or fiat.

What is the essence of blockchain games?

Just ask yourself who controls or can check the back processes of those games, and how it is decided who scores more or who gets a better crypto kitty? A blockchain-powered game has all of these processes stored on the blockchain, easy to asses and transparent for all who want to verify it.

The many blockchain game names found on Google, have merely a whitepaper, for a future project, but none of them is functional. The market also exploded after the overnight success of CryptoKitties which was at its best a well-developed marketing plan. CryptoPuppies falls into this category as well as other not-so-famous variations of collectable crypto animals. The developers just stopped replying to their early enthusiasts. And this is not a singular case.

Let’s talk about crypto casinos.

Many believe that gambling and crypto put together in the same sentence give the blockchain technology a bad name. As you can see, there are many ways to utilize blockchain, but most developers seem to be in it for the short run, for the quick win. Ethereum platform has become their home and the network is invaded. Even the developers of Ethereum aren’t happy with this, as another short success of such a game would compromise the network.

Fortunately, crypto enthusiasts now know how to better research a project before investing in it. Just try to remember 2017, when ICOs weren’t regulated and nobody understood what they were, but people were just throwing money at anyone with a whitepaper.

Blockchain Games vs Crypto Games: What is a Blockchain game?

Blockchain games are any games that include blockchain technology in its backend or in its mechanics in general.

Blockchain, by definition, is a public and transparent distributed data ledger. It gives the developers and the users the chance to check and verify every transaction ever made, not leaving any place for interpretation or data manipulation. The blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

Nowadays, the blockchain stores not just cryptocurrency and tokens, but also in-game assets and progress. But most processes of the games, remain as they were: clueless of the blockchain technology and nowhere near it.

However, there is hope, as the market is barely starting to understand and embrace this new technology. At the moment there is exactly one cryptocurrency project with the blockchain technology to build a blockchain game, not just for the cryptocurrency inside the game, but for everything that the game implies.

This project which stands out, as a true blockchain game, is one in which not only the cryptocurrency used to develop its in-game economy is stored on the blockchain, but the entire game uses the blockchain technology. FootballCoin is a fantasy football blockchain game. It will probably become known at least for being the first project of its kind.

FootballCoin is the first and so far, the only blockchain game on the market. The rest of them just spend money they don’t have on marketing.

Gaming is evolving and as in any other field, gaming can and probably will adopt the blockchain technology the right way, not just for tokens.

Cryptocurrency Regulation Around the World Report

Cryptocurrency Regulation Around the World Report

by | Jan 22, 2019 | News

This report surveys the legal and policy landscape surrounding cryptocurrency regulation around the world. This report covers 130 countries as well as some regional organizations that have issued laws or policies on the subject.

After analysing how various jurisdictions, it would be possible to identify emerging patterns, as this report is trying to describe. The country surveys are also organized regionally to allow for region-specific comparisons.

The terminology used to describe cryptocurrency

One first aspect the report has revealed is the variety and fluidity of the terminology used to describe cryptocurrency.

Read more on The differences between cryptocurrency coins and tokens

Some of the terms used by countries to reference cryptocurrency include: digital currency (Argentina, Thailand, and Australia), virtual commodity (Canada, China, Taiwan), crypto-token (Germany), payment token (Switzerland), cyber currency (Italy and Lebanon), electronic currency (Colombia and Lebanon), and virtual asset (Honduras and Mexico).

Cryptocurrency regulation: Cryptocurrency warnings and approach

One common action was identified across the surveyed jurisdictions: the government-issued notices about the pitfalls of investing in the cryptocurrency markets.  Such warnings, mostly issued by central banks, are designed to educate people about the difference between actual currencies, which are issued and guaranteed by the state, and cryptocurrencies, which are not.

Most government warnings include the following: the investment risk resulting from the high volatility, many of the organizations that facilitate such transactions are unregulated, investing is done as a personal risk and some even add that cryptocurrency was created for illegal activities, such as money laundering and terrorism.

Read more on What is cryptocurrency and why do we need it?

Some of the countries surveyed go beyond simply warning the public and have expanded their laws on money laundering, counterterrorism, and organized crimes to include cryptocurrency markets, and require banks and other financial institutions to ban or limit any type of activity that cannot be tolerated under such laws.

For instance, Australia, Canada, and the Isle of Man recently enacted laws to bring cryptocurrency transactions and institutions that facilitate them under the ambit of money laundering and counter-terrorist financing laws.

Some countries (Algeria, Bolivia, Morocco, Nepal, Pakistan, and Vietnam) ban any and all activities involving cryptocurrencies. Qatar and Bahrain have a slightly different approach in that they forbid their citizens from engaging in any kind of activities involving cryptocurrencies locally but allow citizens to do so outside their borders.

Other countries are indirectly imposing restrictions, by restricting cryptocurrency transactions of the financial institutions (Bangladesh, Iran, Thailand, Lithuania, Lesotho, China, and Colombia).

Cryptocurrency regulation: ICOs

Cryptocurrency regulation is not the only concern for some. Only a limited number of countries surveyed regulate initial coin offerings (ICOs). Some of these countries ban ICOs altogether (mainly China, Macau, and Pakistan), while most tend to focus on regulating them.

For the rest of the countries that do address ICOs, its regulations depend on how an ICO is categorized. For instance, in New Zealand,  particular obligations may apply depending on whether the token offered is categorized as a debt security, equity security, managed investment product, or derivative.  In the Netherlands, the rules applicable to a specific ICO depend on whether the token offered is considered a security or a unit in a collective investment, an assessment made on a case-by-case basis.

Read more on How to earn free cryptocurrency (without investing or mining)

Cryptocurrency regulation: Blockchain technology

Some of the jurisdiction surveyed for this report, while not recognizing cryptocurrencies as legal tender, see potential in the blockchain technology behind it and are developing a cryptocurrency-friendly regulatory regime as a means to attract investment in technology companies that excel in this sector. In this class are countries like Spain, Belarus, the Cayman Islands, and Luxemburg.

Read more on Blockchain technology used in non-cryptocurrency applications

Some jurisdictions are seeking to develop their own system of cryptocurrencies.  This category includes a diverse list of countries, such as the Marshall Islands, Venezuela, the Eastern Caribbean Central Bank (ECCB) member states, and Lithuania.

Belgium, South Africa, and the United Kingdom stated that the size of the cryptocurrency market is too small to be cause for sufficient concern to warrant regulation but have issued warnings to the public about the pitfalls of such investments.

Cryptocurrency regulation: Cryptocurrency taxation

The challenge appears to be how to categorize cryptocurrencies and the specific activities involving them for purposes of taxation.

Transactions must first get classified either as income or capital gains to determine the applicable type of tax.

Read more on Top countries where cryptocurrency is legal

The surveyed countries have categorized cryptocurrencies differently for tax purposes, as illustrated by the following examples:

Israel → taxed as asset
Bulgaria → taxed as financial asset
Switzerland → taxed as foreign currency
Argentina & Spain →   subject to income tax
Denmark → subject to income tax and losses are deductible
United Kingdom: → corporations pay corporate tax, unincorporated businesses pay income tax, individuals pay capital gains tax

Mainly due to a 2015 decision of the European Court of Justice (ECJ), gains in cryptocurrency investments are not subject to value added tax in the European Union Member States.

Cryptocurrency mining is exempt from taxation in most surveyed countries. However, in Russia mining that exceeds a certain energy consumption threshold is taxable.

Cryptocurrency regulation: Cryptocurrency payments

In a small number of jurisdictions, cryptocurrency regulation permits cryptocurrencies as a means of payment.

Read more on What Can You Buy Using Cryptocurrency?

In the Swiss Cantons of Zug and a municipality within Ticino, cryptocurrencies are accepted as a means of payment even by government agencies. The Isle of Man and Mexico also permit the use of cryptocurrencies as a means of payment along with their national currency.  Much like governments around the world that fund various projects by selling government bonds, the government of Antigua and Barbuda allows the funding of projects and charities through government-supported ICOs.

Mining Cryptocurrency: Crypto Mining Business Model Used Worldwide

Mining Cryptocurrency: Crypto Mining Business Model Used Worldwide

by | Jan 21, 2019 | Blockchain, Cryptocurrency, News

The most popular way to get into crypto is to start mining crypto. There are a few other ways in which you can earn crypto without spending any fiat money, but serious money is made by mining cryptocurrency.

Mining cryptocurrency like Bitcoin is an automatic process, a decentralized mechanism that creates Bitcoin out of thin air to provide rewards to miners for processing transactions. The result: a booming business in mining.

All you need to get into the business of mining cryptocurrency is a rack of high-speed computers and access to electricity anywhere in the world and you can essentially create cryptocurrency, simply by running free software.

Crypto Mining Business Model #1: Legal, Competitive Mining

In the early days of crypto, mining was a business for small-time entrepreneurs. The business soon became increasingly competitive, as miners purchased massively powerful computers while scaling up their operations to remain profitable.

Risks seemed low, as the original Bitcoin software was supposed to account for falling prices, making it easier to mine as the number of miners remaining in the game dropped, thus ensuring that there would always be enough miners to process all the transactions.

Then the Bitcoin crash came, severely limiting the ability for miners to churn out crypto while still making a profit. As it turns out, inefficiencies in the mining algorithm, combined with market pressure on the transaction fees that were supposed to partially compensate miners, has led to a squeeze on the ability for anyone to mine at a profit.

Legal crypto mining using electricity at market rates is now becoming increasingly unfeasible, even in places like Iceland, which have exceptionally low electricity rates combined with temperatures conducive for data centres filled with heat-generating computers.

Crypto Mining Business Model #2: Subsidized Electricity Mining

In Washington State, hydroelectric power generates far more juice than locals can consume, thus attracting a booming business in crypto mining.

“The region’s five huge hydroelectric dams, all owned by public utility districts, generate nearly six times as much power as the region’s residents and businesses can use,”

Explains Politico journalist Paul Roberts. “Most of the surplus is exported, at high prices, to markets like Seattle or Los Angeles, which allows the utilities to sell power locally at well below its cost of production.”

By 2015, however, the Washington Bitcoin mining craze had run its course. “Margins grew so thin—and, in fact, occasionally went negative—that miners had to spend their coins as soon as they mined them to pay their power bills,” Roberts adds.

If not Washington, then, what about Iran? “I come across some very interesting cases,” notes Mohsen Rajabi, an Iranian blockchain entrepreneur. “I recently set up a rig for a middle-aged customer who was not tech-savvy at all and had simply heard of mining and its potential profits. He wanted to start with ten devices installed at his factory because it can legally use extremely cheap industrial electricity.”

Crypto Mining Business Model #3: Steal Electricity

The electricity is the greatest cost of the mining business. If you can manage to cut that out, that chances of making a profit increase at once. In the early days of Bitcoin, college kids would use the university electricity to power their rigs from their dorm.

Today, in contrast, stealing electricity is serious business. “A Shanxi Datong [China] man named Xu Xinghua stole power from the poles near the West Second Plant of the Kouquan Railway, which was borrowed from November to December 2017,” reports Liu Yulin, writing in Chinese for The Paper.

“The coin ‘mining machine’ and three electric fans were operated for 24 hours,” she continues. “Xu Xinghua mined a total of 3.2 bitcoins, earning 120,000 yuan [$17,700], and the electricity generated by the stolen electricity was 104,000 [$15,340] yuan.”

What happened to the thief? “Xu Xinghua was sentenced to three years and six months in prison for committing theft and was fined 100,000 yuan [$14,750],” she reports. He also had to reimburse the electric company for the stolen power and forfeit his equipment.

This story is one of many, notable merely for the fact that the perpetrator was caught and the story appeared in the local paper. Many more instances are sure to be out there, as yet unreported.

Another popular, if potentially unintentional, way to steal electricity: set up a mining operation, take the profits, and then go out of business.

This is the story of one of the Washington State mining companies. “U.S.-based bitcoin mining firm Giga Watt has declared bankruptcy with millions still owed to creditors,” writes Yogita Khatri for Coindesk. “Creditors include the utilities provider in its Douglas County [Washington] base, having a claim of over $310,000, and electricity provider Neppel Electric, which is owed almost half a million dollars.”

One silver lining: there may be a possibility these stiffed utilities will eventually get some of their money back, as Giga Watt raised about $22 million in its ICO – and it’s possible the scammers were unable to spend or secret away all of the proceeds before the bankruptcy shut them down.

Crypto Mining Business Model #4: Cryptojacking

Illicit cryptocurrency mining (known as cryptojacking), has surpassed ransomware as the most popular form of cybercrime targeting enterprises.

Cryptojacking means introducing crypto mining software onto a target victim’s computer without their knowledge. The software starts generating crypto for the hacker while stealing processing power and electricity from the victim.

The cryptojacking problem, in fact, is much worse than it was when I wrote my article Top Cyberthreat Of 2018: Illicit Cryptomining in March 2018.

“Despite the volatility in the value of various cryptocurrencies, the trend of illicit cryptocurrency mining activity among cybercriminals shows no signs of abating,” according to David Liebenberg, senior threat analyst at Cisco Talos.

One of the reasons why the cryptojacking problem is getting worse is because the malware is getting better. One such package: Rocke. “Talos assesses with high confidence that Rocke will continue to leverage Git repositories to download and execute illicit mining onto victim machines,” continues Liebenberg.

Git repositories are where most of today’s enterprise software developers store and manage their source code – but such repositories are not Rocke’s creators’ only target. “It is interesting to note that they are expanding their toolset to include browser-based miners, difficult-to-detect trojans, and the Cobalt Strike malware [malware that leverages Cobalt Strike penetration testing software].”

Crypto Mining Business Model #5: Evading Sanctions

Another cryptocurrency mining business model is to evade sanctions.

For example, a pair of Iranian Bitcoin miners tried to take advantage of their local USD exchange rate: “At the time we bought the mining device, the rate of the US dollar in Iran was still quite high, so we figured we would make about $90 to $100 a month,” explains Ali Hosseini, an Iranian miner. “The cost of electricity is relatively low in Iran, so the math seemed viable.”

Hosseini’s cousin also spoke up. “Foreign exchange rates and Bitcoin prices have fallen and our profits have been slashed, but we’re not seeing losses yet,” says Pedram Ghasemi, another Iranian miner. “According to my calculations, the US dollar must drop below 110,000 Rials [about $2.60] and Bitcoin must be down to $2,000 for us to really lose.”

Another example is North Korea. Priscilla Moriuchi, a former top National Security Agency official and now director of strategic threat development at Recorded Future, estimates that North Korea may have earned up to $200 million in 2017 mining crypto.

How, then, would North Korea turn that crypto into hard currency? “North Korea has such extensive criminal networks that have been well-established for decades to facilitate illegal activities,” Moriuchi says. “If Pyongyang were able to cash out into physical currency, it would be relatively easy for them to move that currency back into North Korea and to buy things with the physical currency. I would bet that these coins are being turned into something — currency or physical goods — that are supporting North Korea’s nuclear and ballistic missile program.”

Crypto Mining Business Model #6: Mining at a Loss

This doesn’t come out as a rational business model, unless ensuring that crypto transactions can be completed is your primary motivation.

We know that crypto is (or at least use to be) essential to the operation of the Darknet. Many illegal businesses and organized crime syndicates depend on the successful exchange of crypto to move their contraband.

Should the value of Bitcoin or any other crypto drop to the point that no one could make money mining it, then such syndicates would likely step in to fill the void – mining at a loss to keep the crypto running.

For all the crypto fanatics out there, therefore, there is a reason to take heart – there’s no way crypto values will ever drop far enough for mining to cease. Organized crime wouldn’t let that happen.

Blockchain: How A 51% Attack Works (double spend attack)

Blockchain: How A 51% Attack Works (double spend attack)

by | Jan 16, 2019 | Blockchain

Let’s give a simple example to illustrate how a 51% attack works (double spend attack):

You spend 10 Bitcoin on a luxurious car. The car gets delivered a few days later, and the Bitcoins are transferred from you to the car company. By performing a 51% attack on the Bitcoin blockchain, you can now try to reverse this Bitcoin transfer. If you succeed, you will possess both the luxurious car and the Bitcoins, allowing you to spend those Bitcoins again.

Before explaining how this can happen, you should be acquainted with the blockchain mining process and technology.

51% Blockchain Attack (double spend attack) Definition

The ability of someone controlling a majority of network hash rate to revise transaction history and prevent new transactions from confirming.

What does this mean?

A 51% attack or double-spend attack is a miner or group of miners on a blockchain trying to spend their crypto’s on that blockchain twice. They try to ‘double spend’ them, hence the name. The goal of this isn’t always to double spend crypto’s, but more often to cast discredit over a certain crypto or blockchain by affecting its integrity.

Why can a 51% blockchain attack theoretically work?

As we have banks and the states central institution, the blockchain governs using a distributed ledger, where it can store all kind of information, like transactional data, in the case of cryptocurrency. That is why we call blockchains to be decentralised.

The protocol of the Bitcoin blockchain is based on democracy, meaning that the majority of the participants (miners) on the network will get to decide what version of the blockchain represents the truth.

How does a 51% PoW attack work?

Each transaction sent by a bitcoin owner is put into a pool of unconfirmed transactions. The miners select the transactions which will be part of the block. The miners need to find the solution to a very difficult mathematical problem (using computational power) to be able to add this block to the blockchain. This is the process of hashing.

Of course, the bigger the computational power of a miner, the better the chances are for him to be the first to find a solution. When a miner finds a solution, it will be broadcasted (along with their block) to the other miners and they will only verify it if all transactions inside the block are valid according to the existing record of transactions on the blockchain.

Note that even a corrupted miner can never create a transaction for someone else because they would need the digital signature of that person in order to do that (their private key). Sending Bitcoin from someone else’s account is therefore simply impossible without access to the corresponding private key.

How does a 51% blockchain attack start? With a corrupt miner!

A corrupt miner will try to reverse transactions. Why is a miner called malicious? Because when a miner finds a solution, it is supposed to be broadcasted to all other miners so that they can verify it whereafter the block is added to the blockchain (the miners reach consensus). a corrupt miner can create his own version of the blockchain by not broadcasting the solutions of his blocks to the rest of the network. There are now two versions of the blockchain.

The corrupted miner is now working on his own version of that blockchain and is not broadcasting it to the rest of the network. The rest of the network doesn’t pick up on this chain, because it hasn’t been broadcasted. It is isolated of the rest of the network.

The corrupted miner can now spend all his Bitcoins on the truthful version of the blockchain, the one that all the other miners are working on. On the truthful blockchain, his Bitcoins are now spent. Meanwhile, he does not include these transactions on his isolated version of the blockchain. On his isolated version of the blockchain, he still has those Bitcoins.

Meanwhile, he is still picking up blocks and he verifies them all by himself on his isolated version of the blockchain. This is where all trouble starts… The blockchain is programmed to follow a model of democratic governance (the majority).

The blockchain does this by always following the longest chain, after all, the majority of the miners add blocks to their version of the blockchain faster than the rest of the network (longest chain = majority). This is how the blockchain determines which version of its chain is the truth, and in turn what all balances of wallets are based on. A race has now started. Whoever has the most hashing power will add blocks to their version of the chain faster.

The corrupted miner will now try to add blocks to his isolated blockchain faster than the other miners add blocks to their blockchain (the truthful one). As soon as the corrupted miner creates a longer blockchain, he suddenly broadcasts this version of the blockchain to the rest of the network. The rest of the network will now detect that this (corrupt) version of the blockchain is actually longer than the one they were working on, and the protocol forces them to switch to this chain.
The corrupted blockchain is now considered the truthful blockchain, and all transactions that are not included on this chain will be reversed immediately. The attacker has spent his Bitcoins on a Lamborghini before, but this transaction was not included in his stealth chain, the chain that is now in control, and so he is now once again in control of those Bitcoins. He is able to spend them again.

This is a double-spend attack. It is commonly referred to as a 51% attack because the malicious miner will require more hashing power than the rest of the network combined (thus 51% of the hashing power) in order to add blocks to his version of the blockchain faster, eventually allowing him to build a longer chain.

And just for the fun of it, check the cost of the Proof-of-Work 51% Attack for some top cryptocurrencies.

How To Keep Your Cryptocurrency Safe In Crypto Wallets

How To Keep Your Cryptocurrency Safe In Crypto Wallets

by | Dec 27, 2018 | Cryptocurrency

Crypto wallets are software programs that store private and public keys and interact with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other cryptocurrency, you will need to use crypto-wallets.

What you need to remember is that all transactions are recorded and stored on the blockchain.

Some cryptocurrencies offer their own official wallets, while other products allow you to store multiple currencies within the same cryptocurrency wallet.

But different digital currencies have different address types, and you’re usually able to send coins between like wallet addresses only. For example, you’ll need to send Bitcoin to a Bitcoin wallet address and Ethereum to an Ethereum wallet address.

What is a cryptocurrency wallet used for?

What is a cryptocurrency wallet used for? A crypto wallet (or more generically, an electronic wallet) keeps tabs on security keys used to sign transactions digitally, but also, it stores the address onto a blockchain in which a specific asset resides.

There are two varieties of crypto wallets: hardware and software (also called hot and cold storage pockets ( respectively). Hot storage pockets are available via an online service like Coinbase, among the most significant cryptocurrency exchanges which provide online wallets for consumers, and it may be further segregated into online wallets and client-side wallets handled locally on an individual’s personal computer or mobile device.

Additionally, there are paper pocket generators, which make keys which may be printed out or left as QR codes.

Cold storage pockets are downloaded and live offline onto a piece of hardware like a USB drive or a smartphone. Exodus.io and Dash QT are two examples of cold storage wallet software. Cold storage pockets may also be bought as devices using the applications already installed; vendors like Trezor and Ledger offer these sorts of devices.

Hardware pockets can be divided into crypto-assist type wallets, which deal with the keys and registering of random data and are occasionally referred to as hardware security modules (HSMs). “And then there are hardware wallets that handle generating and signing complete transactions that are then sent to the distributed ledger network,” Huseby said.

When you speak with all the blockchain, the hardware communicates via the codes onto the apparatus.

There are 2 kinds of wallets: Cold and hot crypto wallets

A cold storage pocket is more secure than the usual hot wallet since it is not on the web. Many cryptocurrency heists have happened when a hacker strikes an internet wallet support and transports the critical keys to their wallet. Basically, transferring the related funds.

In 2014, as an instance, the Japanese online crypto trade Mt. Gox endured the theft from the hot wallet of 850,000 bitcoins valued at over $450 million. In 2018, bitcoin exchange support Coincheck suffered a theft of nearly $1 billion worth of cryptocurrency out of its alluring wallet support. Many smaller thefts have happened within the previous five decades, mainly through the hacks of internet wallets.

How To Keep Your Cryptocurrency Safe In Crypto Wallets: How do crypto wallets work?

Instead of holding physical coins, a cryptocurrency wallet is electronic and includes a public and private key.

  • Public key. This is a long sequence of letters and numbers that forms the wallet address. With this, people can send money to your wallet. It’s similar to a bank account number in that it’s used to send money to an account only.
  • Private key. This is used to access the funds stored in the wallet. With this, people can control the funds tied to that wallet’s address. Like a PIN, you’ll need to keep your private key secret and secure. However, not all wallets give you sole ownership of your private key, which means you don’t have full control over your coins.

What are the desired traits of a crypto wallet and how hard can choose a wallet to be?

  1. Cost. Is it free? What are the drawbacks of using this wallet?
  2. Security. Does the company have a track record of security excellence?
  3. Mobility. Is it easy to keep and difficult to lose? Is it accessible anytime, anywhere?
  4. User-friendliness. Is the wallet UI intuitively designed? Can I store a range of altcoins?
  5. Convenience. Am I able to make a fast purchase when the time calls for it?
  6. Style. Do I have a weakness for cool tech gadgets?

What are the different types of crypto wallets?

Wallets can be broken down into three distinct categories – software, hardware, and paper. Software wallets can be a desktop, mobile or online.

  • Desktop: wallets are downloaded and installed on a PC or laptop. They are only accessible from the single computer in which they are downloaded. Desktop wallets offer one of the highest levels of security however if your computer is hacked or gets a virus there is the possibility that you may lose all your funds.
  • Online: wallets run on the cloud and are accessible from any computing device in any location. While they are more convenient to access, online wallets store your private keys online and are controlled by a third party which makes them more vulnerable to hacking attacks and theft.
  • Mobile: wallets run on an app on your phone and are useful because they can be used anywhere including retail stores. Mobile wallets are usually much smaller and simpler than desktop wallets because of the limited space available on a mobile.
  • Hardware: wallets differ from software wallets in that they store a user’s private keys on a hardware device like a USB. Although hardware wallets make transactions online, they are stored offline which delivers increased security. Hardware wallets can be compatible with several web interfaces and can support different currencies; it just depends on which one you decide to use. What’s more, making a transaction is easy. Users simply plug in their device to any internet-enabled computer or device, enter a pin, send currency and confirm. Hardware wallets make it possible to easily transact while also keeping your money offline and away from danger.
  • Paper: wallets are easy to use and provide a very high level of security. While the term paper wallet can simply refer to a physical copy or printout of your public and private keys, it can also refer to a piece of software that is used to securely generate a pair of keys which are then printed. Using a paper wallet is relatively straightforward. Transferring Bitcoin or any other currency to your paper wallet is accomplished by the transfer of funds from your software wallet to the public address shown on your paper wallet. Alternatively, if you want to withdraw or spend currency, all you need to do is transfer funds from your paper wallet to your software wallet. This process, often referred to as ‘sweeping,’ can either be done manually by entering your private keys or by scanning the QR code on the paper wallet.

How to send cryptocurrency from your crypto wallet

To send funds from your wallet, you’ll need a wallet address — or the recipient’s public key. These addresses are either:

  • A long alphanumeric string of numbers and letters.
  • A QR code for smartphone wallets.
  • A URL-like web link that’s clickable and opens your wallet automatically.

Once you have this address, you will need to:

  1. Log in to your wallet.
  2. Click Send.
  3. Enter the recipient’s wallet address. You can generally only send and receive like coins — for example, bitcoin to bitcoin or Ethereum to Ethereum. You can’t send bitcoin to an Ethereum wallet address.
  4. Specify the amount, and possibly the currency, you want to transfer.
  5. Check any transaction fees that apply, and make sure you have enough coins in your wallet to pay the fees.
  6. Review the details of the transaction to make sure you’ve correctly entered all the information.
  7. Click Send.

Note that the exact process varies depending on the brand of wallet you choose. For example, hardware wallet users typically need to connect their wallet device, enter a PIN or password and manually verify the transaction on the device.

How to keep your crypto wallet safe

Most experts recommend keeping crypto keys in a colt wallet. This means creating a paper copy of these keys and keeping that newspaper in a safe place like a bank safety deposit box.

Paper may also be utilised as a kind of wallet via applications that produce a QR code which may be scanned to allow blockchain transactions. Otherwise, Gartner urges the use an internet exchange with a pocket service which enforces two-factor authentication through drive technology. Push technology evolves the next aspect to some documented cellular phone so that an operator’s telephone can accept an entry request pushed out from the market wallet’s authentication support.

However, cryptocurrency hackers also have successfully stolen the SIM identity of a cell phone using a phone-based wallet onto it.

It is crucial to realise that hackers can circumvent most mobile authentication techniques utilising an assortment of technologies, according to Gartner. These include “SIM swaps,” in which a hacker registers an existing to their telephone so that it pushes messages or notifications to be delivered to this phone, rather than to the valid owner. Hackers do so typically through social technology of cell phone customer support agents, Gartner’s report stated.

There are ways to mitigate all of these attacks, but the best solution so far is to use some hardware wallet and also to have a hard copy backup of your secret keys somewhere safe,” Huseby said. “The hardest part of wallets is that they are responsible for the secure storage of small, highly sensitive data. Most people are not familiar with the levels of security and paranoia that is required to truly defend against people determined to steal your keys.”

Wallet security is crucial for any crypto owner, so keep these tips in mind to keep your funds as safe as possible:

  • Research before you choose. Don’t just choose the first bitcoin wallet you come across. Thoroughly research the security features and development team behind a range of wallets before making your final decision.
  • Enable two-factor authentication. This simple security feature is available on an increasing number of wallets. It’s simple to use and provides an extra layer of protection for your wallet.
  • Pick your password carefully. Make sure all usernames, PINs and passwords related to your crypto wallet strong.
  • Consider a multisignature wallet. Multisig wallets require more than one private key to authorize a transaction, which means another user or users will need to sign each transaction before it can be sent. It can take longer to send funds, but you may find that extra peace of mind is worth the minor hassle.
  • Update your antivirus protection. Your PC, laptop, smartphone or tablet should have the latest antivirus and anti-malware software installed. Set up a secure firewall on your computer, and never install software from companies you don’t know.
  • Update your wallet software. Regularly update your wallet software to the latest security upgrades and protections.
  • Make a backup. Store a wallet backup in a safe place so that you can recover your crypto funds if something goes wrong — like if you lose your smartphone.
  • Check the address. When sending or receiving funds, use the correct wallet address. Similarly, if using an online wallet, make sure it’s secure by checking that the URL starts with “https.”
  • Don’t use public Wi-Fi. Never access your wallet over a public Wi-Fi network.
  • Split your holdings. Consider splitting up your crypto coins between online and offline storage. For example, keep a small portion of your funds in online storage for quick and convenient access, and store the bulk of your holdings offline for extra security.
  • Private key protection. Never share your private key with anyone. Check whether the wallet you choose allows you to keep full control of your private keys, or if you have to surrender ownership to a third party, such as an exchange.

TWO-FACTOR AUTHENTICATION CRYPTO WALLET

Used by the most secure and trustworthy wallets, two-factor authentication requires a regular username and password combination and another authentication method.

It’s often a PIN code texted to your smartphone, expiring after a set time and different every time you log in. This means that an attacker would need to know your username and password and also have your phone.

Some crypto wallets require you to install a secondary app on your smartphone that generates these PIN codes for you, adding another layer of security.

The threat of losing your access keys to your crypto wallets

The most critical problem with a cold pocket, however, is in case you have not backed up the info on it or saved a hard copy of it somewhere secure, and you also lose that device,  you shed your electronic assets once and for all. In other words, you do not understand where your cryptocurrency resides to a blockchain or possess the keys to authenticate that those assets belong to you.

Hot storage wallets, by comparison, have the advantage of the support of the provider. Should you lose your access code into the wallet, you will find challenge-and-answer queries which will make it possible for you to regain them.

There are limited procedures for recovering private keys at a cold storage pocket that’s been missing, and they’re generally not simple to use. By way of instance, Coinbase permits consumers a restore mechanism which is composed of 24 arbitrary word retrieval phrase users should record when they produce their own wallet.

Blockchain ledgers work predicated on a trustless consensus mechanism, which means that you do not need to be aware of the individual or people you are transacting with about the ledger. A dispersed ledger will anticipate any trade properly signed with a legitimate secret key.

“Wallets serve the purpose of storing those keys securely and doing the digital signing necessary for the distributed ledger to accept the transaction,” Huseby said.

Beyond electronic money: additional applications for crypto wallets

While the vast majority of crypto wallet software is utilised to store cryptocurrencies like Bitcoin, Ethereum, Ripple or even Litecoin, the program may also save the keys to fungible and non-fungible digital tokens representing products, monetary resources, securities, and services.

By way of instance, a token saved in a crypto wallet can signify concert or airplane tickets, unique art or products in a supply chain. Practically anything using an electronic value attached to it.

All distributed ledgers with decentralised consensus mechanics trust the capacity security model, meaning possession of an encryption key,  demonstrated with an electronic signature over a trade, authorises the actions the trade represents.

“So any application modelled on a distributed ledger requires users to have wallets that they use to sign transactions that work for that application,” Huseby said. For Bitcoin, the transactions just transfer bitcoins to another encryption key and therefore to another owner. For things like a supply chain, they sign transactions that track the asset being managed (e.g., electronic parts, raw materials, etc.).”

Later on, a brand new, “trustless” global market could be contingent upon blockchain and crypto wallets which allow everything from individual professional or financial histories, tax info, medical advice, or customer tastes to corporations preserving employee or spouse electronic identities and controlling program access.

How To Keep Your Cryptocurrency Safe In Crypto Wallets: Conclusion

There’s no one-size-fits-all cryptocurrency wallet. The right crypto wallet for you is the one that matches your needs. If security is your No. 1 concern, you’ll likely choose a different wallet than someone who wants fast and easy access to their coins.

Do your research and compare wallets. Start with our crypto wallet reviews to get an idea of what’s available and key features to consider.