Bitcoin Cash Miners Undo Attacker’s Transactions With ‘51% Attack’

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Bitcoin Cash Miners Undo Attacker’s Transactions With ‘51% Attack’

Two bitcoin cash (BCH) mining pools recently carried out what is known as a 51 percent attack on the blockchain in an apparent effort to reverse another miner’s transactions.

The move is tied to the bitcoin cash network hard fork that occurred on May 15. The two mining pools — BTC.com and BTC.top — carried out the move in order to stop the unknown miner from taking coins that they weren’t supposed to have access to in the wake of the code change. That day, an attacker took advantage of a bug unrelated to the upgrade (and subsequently patched) that caused the network to split and for miners to mine empty blocks for a brief time.

In the context of cryptocurrencies like bitcoin cash, a 51 percent attack involves an entity or group controlling a majority of the hash rate which thereby allows them to execute several things they aren’t normally allowed to do, such as attempting to rewrite the network’s transaction history.

It’s long been a controversial topic and other cryptocurrencies have suffered similar attacks due to a decline in their hash rates.

At one point BTC.top did alone control more than 50% of the power. But BTC.com and BTC.top they were able to join together to reverse the blocks of transactions. According to stats site Coin.Dance, the two mining pools currently have combined 44% of bitcoin cash hashing power.

The interesting part of this particular attack on bitcoin cash, though, is that it was arguably executed in an attempt to do something ostensibly good for the community, not to reward the attackers or to take the funds for themselves.

But not everyone in the bitcoin cash community agrees. As one bitcoin cash developer, going by the moniker Kiarahpromises, put it in an article from May 17:

“To coordinate a reorg to revert unknown’s transactions. This is a 51% attack. The absolutely worst attack possible. It’s there in the whitepaper. What about (miner and developer) decentralized and uncensorable cash? Only when convenient?”

Anatomy of an attack

The inner details of the mining pools’ attack (as well as the attack that prompted the attack) are complicated.

“Since the original split in 2017, there has been a significant number of coins accidentally sent to ‘anyone can spend’ addresses (due to [transaction] compatibility of sigs, but no #SegWit on #BCH), or possibly they’ve been replayed from #Bitcoin onto the #BCH network,” bitcoin podcast host Guy Swann said, explaining the situation on Twitter.

But once one code change was removed during bitcoin cash’s May 15 hard fork, these coins were suddenly spendable “basically handing the coins to miners,” he added.

The unknown miner attacker decided to try to take the coins. That’s when BTC.top and BTC.com swooped in to reverse those transactions.

“When the unknown miner tried to take the coins themselves, [BTC.top and BTC.com] saw & immediately decided to re-organize and remove these [transactions], in favor of their own [transactions], spending the same P2SH coins, [and] many others,” Swann went on.

But some bitcoin cash users argue this was the right thing to do.

“This is a very unfortunate situation, but it is also what proof of work actually is. The miners in this case did choose to drop prohashes block and from what I heard, it is because they deemed a transaction within it to have been invalid,” responded active bitcoin cash supporter Jonathan Silverblood.

Still, others think that this is a bad sign for bitcoin cash, arguing that the event demonstrates that the cryptocurrency is too centralized.

Yet the thread of a 51 percent attack is a concern shared across proof-of-work crypto networks (and as mentioned above, some blockchains have been left exposed due to falling hash rates). For example, half of bitcoin’s current hashing power is divided among just three mining pools according to stats website Blockchain.

Mining software image via Shutterstock

This article has been updated for clarity.

Lightning App for Sending Bitcoin Tips on Twitter Is Now Easier to Use

A Twitter app for tipping by way of bitcoin’s experimental lightning network is now easier to use thanks to a new update.

Launched earlier this year, Tippin.me took Twitter’s crypto community by storm by making it possible to tip Twitter users with the experimental micropayment layer lightning. The still-nascent network is being built by a series of startups and developers in a bid to create a new level of scaling for the network.

On Thursday night, the Chrome extension app‘s version 1.0 was released with features that aim to make onboarding new users to the app much easier. These elements include a more comprehensive built-in wallet and better messaging system.

The lightning network is still rather experimental, and even risky to use. At the time of its release, Tippin.me drew support because the app is fairly easy to set up and use as long as a user has a Twitter account.

But even if it’s easier than many other lightning apps, it still left something to be desired, prompting the app’s developer, Sergio Abril, to work on a series of new updates that were bundled into version 1.0.

Notably, users no longer need to set up a third party lightning wallet app to send tips. Perhaps one of the most confusing parts of the app in a prior version was, if you didn’t have a lightning wallet already, you needed to create one to send a tip. But now, that’s not necessary so long as you have a balance on Tippin.me.

The caveat here though is that Tippin.me is a custodial app, meaning that the app itself has control of the funds sitting on the website, rather than the user themselves.

Tippin.me is even giving out a little bit of bitcoin to people who join – enough that they can send a couple of tips, that is.

In addition, users can now use “on-chain” bitcoin instead of just “off-chain” lightning funds to fill up their tipping jar, and can send messages along with their tips.

Twitter image via Shutterstock

Blockstream’s Samson Mow Is Launching a Space Alien Gaming Token on Bitcoin

An ardent critic of the hype surrounding crypto token sales is set to do the unlikely: launching a token.

Samson Mow, the CSO of bitcoin startup Blockstream, has also been serving as founder and CEO of the gaming company Pixelmatic since 2011. The new plan will see Pixelmatic use Blockstream’s new token platform for launching security tokens on bitcoin via a sidechain.

By way of that platform, Pixelmatic will create a token for its upcoming game Infinite Fleet, a science fiction, humans-versus aliens space fighting game. “Take command of a fleet and join the epic war for humanity’s survival!” as the game’s Twitter profile reads.

Yet perhaps the most unusual part of the plan is that it will be launched on bitcoin – or, at least, a network that is tied to the bitcoin blockchain.

Part of why Mow has been so critical of token sales, he argued in conversation with CoinDesk, is that so many of them have been launched on the smart-contract platform ethereum. (He went so far as to contend ethereum has “failed” investors because of its scalability problems.)

But perhaps most of all, he’s skeptical of pervasive fraud in the space. “My main criticism is there’s no substance. The leaders have no intention of actually creating something,” Mow told CoinDesk.

Mow thinks Infinite Fleet offers substance. “That’s why we’re doing a security token, not a token with no obligation,” Mow said, adding that they’re trying to pioneer a new token model called a “dual-token model,” which effectively uses two tokens for two different purposes.

To raise funds, they’re in the process of selling a so-called “security token,” a breed of crypto-token that’s gotten quite a bit of attention recently, as they’re subject to regulation and require investors get a return on their investment.

The security token sale is private, with a few “bitcoin OGs” participating so far. With this token, Infinite Fleet is aiming to raise $16 million by the end of the year, when they expect more exchanges to be processing security tokens.

Then, the utility token will be disbursed randomly to players in the game. Users will receive coins based on “proof-of-participation,” or how much time they put into the game.

Currency battles… in space!

The idea of creating completely virtual currencies for in-game economies isn’t new, but according to Mow, Pixelmatic is looking to put a unique spin on the idea given its characteristics.

For example, one of the most popular MMOs, the World of Warcraft, utilizes in-game gold as a means of payment for items and between players. But persistent issues with so-called “gold farmers” who were selling their funds to other players led game maker Blizzard to effectively peg the value of gold to a “WoW Token” that can be bought and exchanged for either gold or 30 days of play-time. Conversely, in-game gold can be spent on such tokens.

Then there’s EVE Online, a similarly sci-fi focused game that utilizes several different currencies across its galactic economy. Such designs can grow complicated and have real-world ramifications: EVE once hired an economist in an attempt to steer the economy away from recessions that could have a negative impact on a user’s gaming experience. Not to mention, the population playing the game is larger than Iceland’s, and one of its “wars” cost an estimated $300,000 based on the value of in-game assets lost.

It’s against this backdrop, Mow told CoinDesk last fall, that he originally got interested in bitcoin specifically because he saw a path for disruption of these gaming economies.

With Infinite Fleet, Mow envisions this same model, but with a cryptocurrency thrown in, giving it the same benefits.

“Our token will be like that but not under anyone’s control,” he said.

As far as use cases, Mow highlighted one that addresses an issue experienced by players in MMOs where players can pool resources, only to suffer when one bad actor walks away with the loot unseen.

“People have been known to infiltrate guilds and steal the funds,” Mow said, arguing that with bitcoin, guild members can build a more secure guild model governed by certain rules, like “multi-signature” bitcoin transactions, which require, say, five of 10 guild members to sign the coins with their private keys before they can be released.

“There are many interesting applications,“ he argued.

Why Liquid?

So, why is Pixelmatic launching the token on Liquid? Is it because Mow is the CSO of Blockstream, the company the built the sidechain tech?

“I do believe in the technology,” Mow said, arguing its “well-suited” for financial transactions because it doesn’t “stuff smart contracts in the chain.”

He added that Liquid allows for more privacy than the main bitcoin blockchain because it uses “confidential assets,” an experimental privacy technology that shields the types of assets associated with transactions.

He added that, down the road, there are other features that Blockstream plans to add to Liquid, including the lightning network, a technology that could help bitcoin improve its overall scalability.

Blockstream has been working on an implementation of lightning specifically for Liquid, which Mow sees as a useful feature that could be used in the game if enough people play it and transact with the native digital currency.

“In case of a game, if you have critical mass you can use lightning,” Mow said.

Game image via Infinite Fleet trailer video

Long-Term Bitcoin Price Indicator Rises for First Time in a Year

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  • Bitcoin has risen back to $8,000 with the widely tracked 200-day moving average beginning to curl upwards in favor of the bulls for the first time since May 2018. 
  • A bull flag breakout seen in the hourly chart indicates scope for a rise to $8,400. The breakout is backed by bullish readings on both the hourly and 4-hour charts. 
  • A rally to $8,400 may not be sustainable, unless the move is backed by a rise in trading volumes. The daily chart is reporting a bearish divergence of trading volumes.
  • On the downside, $7,205 is the level to beat for sellers. A UTC close below that would confirm a double-top breakdown and shift risk in favor of a slide toward $6,000.

Bitcoin (BTC) has moved back above $8,000 as a widely followed long-term indicator turns bullish for the first time in over a year. 

The world’s largest cryptocurrency by market value is currently trading at $8,020 on Bitstamp – up more than $500 in the last 24 hours. Prices hit a high of $8,032 earlier today.  

The 7 percent rise from the previous day’s low of $7,468 is noteworthy as the short-term technical charts had turned bearish earlier this week. 

For instance, bitcoin dived out of a narrowing range on Wednesday, strengthening the case for pullback to $7,200 put forward by Monday’s “hanging man” candle. 

The rise back to $8,000, therefore, could embolden buyers – more so, as the list of long-term technical indicators signaling a bull market continues to grow.

The latest to join the bandwagon is the 200-day moving average (MA) – a widely tracked barometer of long-term market trend. 

The MA shed bearish bias (flattened out) in the first half of this month and is now beginning to curl upwards, further confirming a long-term bearish-to-bullish trend change signaled by several indicators over the last few weeks. 

Bullish 200-day MA

As seen above, the 200-day MA has turned bullish for the first time since May 2018. As of writing, the average is located at $4,500.

It is worth noting that moving average studies are based on past data and tend to lag price. The 200-day MA’s bullish turn, therefore, likely reflects the recent price rally.

Hence, short-term corrective pullbacks are not ruled out. Should prices move below that MA, the long-term bullish outlook would weaken.

As for the next 24 hours, BTC could rise to $8,300, according to a bull breakout seen on the short-term technical charts.

Hourly and 4-hour charts

BTC witnessed a bull flag breakout on the hourly chart (above left) earlier today – a continuation pattern that often accelerates the preceding bullish move. The cryptocurrency, therefore, has a scope for a rise to $8,400 (target as per the measured height method).

The hourly chart also shows an upside break of the falling channel (lower highs and lower lows). 

The relative strength index (RSI) is now biased bullish above 50, having breached the descending trendline in favor of the bulls earlier this week. 

Meanwhile, on the 4-hour chart (above right), the moving average convergence divergence (MACD) histogram has crossed over to bullish territory above zero and the RSI has violated the falling trendline in favor of the bulls. 

With the odds stacked in favor of the bulls, BTC could challenge the recent high of $8,390 in the next day or two. A violation there would expose next major resistance at $8,500 (June 2018 high). 

Even so, the bulls need to observe caution, as trading volumes have dropped over the last seven days as seen in the chart below.

Daily chart

Bitcoin’s rise from last Friday’s low of $6,178 is accompanied by lower highs on the volume bars. 

That bearish divergence puts a question mark on the sustainability of recent gains and a further rise to $8,300, if any. 

That said, the case for a fall back to $6,000 would strengthen only if the price closes below $7,206, confirming a double-top breakdown, as discussed yesterday.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

LocalBitcoins Bans Bitcoin Buying in Iran in Blow to Rising Crypto Commerce

LocalBitcoins has officially shut off service for Iran-based users, a move that follows weeks of rising rial trading volumes on the platform.

The Helsinki-based peer-to-peer exchange has not explicitly said why Iranians are suddenly being cut off from its service, though U.S. sanctions are almost certainly the cause.

News of the move first circulated across local language Telegram channels earlier this week that the exchange had blocked Iranians. Users reported encountering problems in posting new trades and updating previous ones on the website.

“If you have an account already, you will be able to withdraw your bitcoins, but you will not be able to use the platform for trading,” reads a response by LocalBitcoins to an Iranian user that has circulated in social media and local news websites.

A message also appeared on the platform’s Iran country page that read: “Unfortunately, LocalBitcoins is currently not available in your selected region.” On Twitter, the exchange told several Iranian users: “Our services are not available in your region for risk-based reasons.”

LocalBitcoins has been perhaps the most popular bitcoin trading website among Iranian users, as it doesn’t require international credit card information – something Iranians have been bereft of for decades – and allows users to pay with their local bank accounts.

According to Iranian users, the website was also open to reviewing local bank account documents to resolve potential problems, signaling that they have advisors familiar with the largely isolated Iranian banking system.

Moreover, LocalBitcoins was trusted by Iran-based bitcoin users because it holds funds in escrow until both sides have given final confirmation, thereby ensuring transaction safety and lowering fraud.

“Since I traded in relatively high volumes, LocalBitcoins was my best option because I could find good offers with real people,” bitcoin trader Soroush Hakimi told CoinDesk.

He continued:

“In local exchanges, rates are unfavorable in many instances while total volume of assets is low. For instance, you can barely find two bitcoins for sale in any given day.”

Sanctions a likely cause

LocalBitcoins did not respond to several requests for comments by CoinDesk on the reasons behind its decision to ban Iranians. But almost undoubtedly, the escalating “maximum pressure” campaign of the U.S. against Iran has prompted the Finnish website to block Iranian users.

Just over a year ago, U.S. President Donald Trump unilaterally withdrew from Iran’s nuclear deal with world powers, announcing reimposition of new rounds of stringent economic sanctions.

Legitimate Iranian crypto users have already felt the sting of sanctions several times during the past year as multiple exchanges, including Binance, Bittrex and ShapeShift have stopped offering services.

According to Milad Jahandar, CEO of Iranian fintech Bahamta, the elimination of Localbitcoins as one of the few remaining viable options for Iranian bitcoiners will lead to more fraud in cryptocurrency-related commerce.

“Users will be forced to resort to person-to-person transactions and trusting each other, which increases risks of fraud, sets back the local community, and delays bitcoin prevalence,” he told CoinDesk.

Jahandar also believes that excluding users from any country due to political reasons runs counter to the very decentralized nature of bitcoin.

“Bitcoin is a global network that knows no borders, colors or ethnicities,” he said. “So when an exchange bans Iranian users, it is basically downgrading its applications to that of fiat currencies.”

New alternatives emerge

Still, local Iranians seeking to buy and sell cryptocurrency are not without options. The restrictions are increasingly pushing Iranians toward truly decentralized exchanges that won’t discriminate based on nationality.

Programmer Ziya Sadr says two alternatives to Localbitcoins have already proven to be better and are attracting Iranian users. The first is Bisq, he said, an open-source decentralized peer-to-peer application that runs on Tor, and has recently integrated Farsi for Iranian users.

“Bisq doesn’t require you to do KYC and all deals run either privately or anonymously,” Sadr told CoinDesk in reference to know-your-customer identification protocols. “This makes it perfect for Iranian users who are always censored or blocked.”

He also referred to Hodl Hodl as another option, which is similar to Localbitcoins but has also recently added a Farsi interface for Iranian users.

“This seems to be a way for the founders of Hodl Hodl to welcome Iranian users to their website,” Sadr said.

Lastly, some Iranian users have also turned to the KeepChange peer-to-peer exchange, which in the wake of the LocalBitcoins ban sought to reassure possible users that it remains loyal to the bitcoin philosophy of preventing government interference and resisting censorship.

“Iranian users, as well as any other nationalities anywhere in the world, can use KeepChange for buying and selling bitcoin without worrying of any kind of censorship, sanctions, money seizures, etc.,” the exchange told an Iranian website on May 19.

Bitcoin on Iranian banknote via Shutterstock

Price Dip Leaves Bitcoin Exposed to $7.2K Support

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  • Bitcoin suffered a contracting triangle breakdown on Wednesday, as expected.
  • The range breakdown is backed by bearish developments on the daily and 4-hour chart indicators. BTC, therefore, risks falling to $7,206 (May 18 low) in the next day or two.
  • A UTC close below $7,206 would confirm a double-top breakdown and open doors for a drop to $6,070 (target as per the measured move method).
  • The outlook would turn bullish if the price finds acceptance above $8,050 in the next 24 hours.

Bitcoin (BTC) dived out of a narrowing price range on Wednesday, opening the doors for a deeper drop to $7,200.

The leading cryptocurrency by market value fell below $7,850 in the U.S. trading hours yesterday, confirming a downside break of a contracting triangle pattern – a series of higher lows and lower highs – created in the first two trading days of the week.

The period of indecision ended with sellers gaining an upper hand, and the resultant range breakdown neutralized the immediate bullish view put forward by the near 13 percent price rise seen on Sunday.

As a result, BTC could continue to lose altitude in the short term. Currently, the cryptocurrency is trading at $7,530 on Bitstamp, representing a 4 percent drop on the day. Prices hit an intraday low of $7,468 earlier today.

Looking forward, the focus is on the key support at $7,200– a level the bulls must defend, as a break lower would confirm a short-term bullish-to-bearish trend change on the technical charts.

4-hour chart

BTC dived out of the contracting triangle yesterday, validating bullish exhaustion signaled by multiple rejections at $8,300.

More importantly, the range breakdown is backed by a bearish below-50 reading on the relative strength index (RSI) and a drop into bearish territory below zero on the the moving average convergence divergence (MACD) histogram.

The path of least resistance, therefore, is to the downside.

Daily chart

On the daily chart, early signs of temporary bearish reversal have emerged in the form of a “hanging man” candle, as discussed earlier this week. Further, the daily MACD has turned bearish for the first time since May 2 and the RSI continues to create bearish lower highs.

BTC, therefore, could complete the forming double-top pattern seen above with a drop to $7,206 (May 18 low) in the next day or two.

A UTC close below $7,206 would confirm a double-top breakdown – a short-term bullish-to-bearish trend change – and would create room for a slide to $6,070 (target as per the measured move method).

That said, the historically strong support of the 30-day moving average (MA) is currently located at $6,475. That average is seen sloping upwards to $6,500 in the next couple of days. As a result, any following sell-off could be cut short near that level.

The outlook would turn bullish if prices rise above $8,050 in the next 24 hours, contradicting the bearish developments on the short-term charts. In that case, a rally to $8,500 (June 2018 high) could be seen.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; technical charts by Trading View