Venezuela wrestles with a dictatorship as the Supreme Court toys with the opposition-led legislature. Also the Venezuelan Bolivar is hyper-inflating past 200% over the last year. Japan now recognizes Bitcoin as a legal method of payment. Litecoin jumps in value and and may be activating SegWit. Pedro joins us in-studio to talk about the Golem Super Computer that runs on the Ethereum blockchain. DASH has an open house and founder Evan Duffield reveals his DASH holdings. GlassHunt hackers have a double-spend tool that may have helped double-spend more than 630 BTC. Vitalik Buterin shares the Casper Contract Code, Ethereum’s future Proof of Stake consensus solution. Slock.it raises $2 Million in funding for the Universal Sharing Network, turning everyday items into smart objects. Bitfinex has made good on their BFX token exchange after last year’s hack. Seedsplit allows you to divide a passphrase or wallet seed into multiple parts to be reassembled later. We discuss hardware wallets and how to handle passing on your crypto post-mortem.
All this and more on the Neocash Radio podcast, episode 201 — Wednesday, April 5th, 2017!
We’ve written out short overviews of the topics discussed on today’s show below! Be sure to listen in to the whole podcast to get more information, insights, and thoughts on each of them from JJ, Darren, and Randy!
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|Traditional Financial Markets||Cryptocurrency Markets|
|Gold $1,253||Bitcoin (BTC) $1,124|
|Silver $18.25||Ethereum (ETH) $52.94|
|Oil $51.10||DASH $84.20|
|Dow Jones 20,755 points||Zcash (ZEC) $63.40|
|30Y UST Yield 3.0%||Monero (XMR) $19.80|
|Litecoin (LTC) $11.65|
The situation has intensified since we last talked about Venezuelan President Nicolas Maduro and his opposition on our podcast. Venezuela’s Supreme Court is filled with Maduro party loyalists, and last week they issued a ruling effectively dissolving thethe opposition-led legislature. Following the international outrage over the decision, the Supreme Court has revised its decision but the damage has been done.
Just as the South American country is poised for a dictatorship, new data shows that Venezuela has inflated its currency by over 200% since this time last year. There are 13.3 Trillion bolivars in circulation now, with only around 10.5 Billion bolivars reportedly held in reserves.
DolarToday currently lists the exchange rate to be 4201.62 Venezuelan Bolivar to 1 U.S. Dollar.
Related listening & reading: Neocash Radio podcast Ep184: AT&T kills net neutrality, Trump’s global conflicts of interest, and the dangers of Venezuelan Bitcoin mining
“The new law defines Bitcoin and other virtual currency as a form of payment method, not a legally-recognized currency. Bitcoin will continue to be treated as an asset unless there are future revisions or directives to Japanese tax law.”
Japan considers profits from Bitcoin trading to be “income from business activities or miscellaneous income” and thus, subject to capital gains tax. This new law also removes the 8% consumption tax that was previously added to the purchase and sale of Bitcoin and other cryptocurrencies.
The new Japanese law also makes it more difficult to open an account at a Bitcoin exchange. Customers now have to disclose their profession and reasons for trading and upload identification documents and wait for the exchanges to process them, after which the exchange will mail a postcard to their registered address with a verification code that activates the account.
Virtual currency exchanges themselves will have to comply with several new regulatory requirements, including holding liquid capital of ¥10 million yen (~US$90,000). Virtual currency exchanges will also have to prove to Japanese regulators that they possess a “sufficient IT system management program, with measures in place to prevent leakage, loss and damage of funds and personal information.” This is less than surprising given Japan’s history with the failed MtGox Bitcoin exchange.
Days after the announcement, leading Japanese retailers Bic Camera and Recruit Lifestyle announced that they would begin accepting Bitcoin at a combined 260,000+ outlets across Japan.
As the Bitcoin Core Segregated Witness (SegWit) vs. Bitcoin Unlimited block size debate drags on, news comes that Litecoin is likely to activate SegWit with 70% of LTC miners signaling support. If 75% of Litecoin miners signal support for four consecutive block cycles (approximately two weeks), then SegWit will be activated on Litecoin. If LTC does implement SegWit, it will be an interesting experiment and potential proof-of-concept for the Bitcoin Core developers.
Our good friend Pedro joins us again in the Neocash Radio podcast studio, and today he talks to us about the Golem Network:
“Golem is a global, open sourced, decentralized supercomputer that anyone can access. It’s made up of the combined power of user’s machines, from personal laptops to entire datacenters. Anyone will be able to use Golem to compute (almost) any program you can think of, from rendering to research to running websites, in a completely decentralized & inexpensive way.The Golem Network is a decentralized sharing economy of computing power, where anyone can make money ‘renting’ out their computing power or developing & selling software.”
Golem can take resource-heavy computing—CGI rendering, stock market predictions, big data analysis, AI & machine learning, DNA analysis, protein folding, cryptography, integer factorization—and distribute it across many users’ computers who will in turn earn Golem Network Tokens (GNT) through an Ethereum-based transaction system to clear payments between providers, requesters, and software developers.
Related Listening: We first previewed the Golem Network last August on Neocash Radio podcast Ep170: Bitcoin Core Update, 5th Quill Studios, What’s Monero?
In the past week, DASH held its very first “open house” welcoming curious cryptocurrency enthusiasts into their home office in Scottsdale, AZ. During a video Q&A, one of the attendees asked DASH founder Evan Duffield about the infamous “DASH instamine” (or DarkCoin instamine) a reported bug which saw millions of coins produced and mined the day of the coin’s launch and it took a little time before the code was fixed. It has been speculated that Evan holds most of those coins, though there are several in-depth posts which dispute this claim. In his response, Evan claims to hold 256,000 DASH in his possession, said that he does not operate any DASH Masternodes (and thus cannot/does not vote on any governance issues), and that he will be donating 80% of his DASH toward funding DAOs in the DASH Treasury.
Glass Hunt allows Bitcoin double-spends & offers bounties for hackers who crack smart contracts
A collective of hackers loosely based in South Korea launched a website last September which pointed out a serious flaw in the world’s largest cryptocurrency: that there was an easy way to double-spend Bitcoin, especially as the BTC transaction mempool fills and confirmation times take longer. Moreover, the hacker collective published their Bitcoin Double-Spend Tool for anyone to use. Their website explains that their actions are meant to draw attention to security flaws so that they can be patched, but meanwhile, a 10% fee is taken by GlassHunt when someone uses their BTC double-spend feature, which is reportedly used to fund bug bounties for white-hat hackers. As of this podcast episode, the GlassHunt BTC address shows more than 63BTC worth of transactions, meaning that more than 630BTC has potentially been double-spent using this tool (~$713,000USD as of the time of this writing).
This affects merchants most and is a reminder that merchants should wait for block confirmations on their Bitcoin transactions, not just a notification that a transaction was broadcast. Newer cryptocurrencies like Ethereum and DASH have shorter block times and features like “InstantSend” which significantly reduce the potential for double-spending.
Related Reading: a 2012 whitepaper entitled “Two Bitcoins at the Price of One? Double-Spending Attacks on Fast Payments in Bitcoin”
It is now being revealed that the PoW to PoS changeover will be implemented in sequential steps, beginning with a hybrid PoW/PoS system before going fully into PoS. Ethereum founder Vitalik Buterin shared the code that would implement the hybrid system for his Casper contract, which he said is about 75% complete during his recent Taipei Ethereum Meetup presentation. While Casper is the protocol set to govern Ethereum’s PoS system, it will be implemented as an Ethereum smart contract to lessen the chance of consensus issues between clients.
Slock.it is the company behind “The DAO,” which failed famously after a massive hack that ended up causing a hard fork, splitting the Ethereum blockchain into two separate chains: ETH and ETC (Ethereum Classic). Slock.it has now received $2M USD in seed funding for a new project called the “Universal Sharing Network” which “aims to commoditize underused assets via an Ethereum based application”:
“As shown by the success of several resource sharing platforms from AirBnB to Zipcar, a share of the population is extremely willing to rent their assets for a premium. This trend signals that the world may be moving from an era of ownership to an era of communal utilization.”
“With the [Universal Sharing Network], rental apartments and offices will become fully automated, smart objects will be rented on demand and unused vehicles get a new lease on life.” The global beta release of Slock.it’s Universal Sharing Network is set to launch next year.
Cryptocurrency exchange Bitfinex has announced that BFX token redemption is complete. After a hack last August, Bitfinex found that around 120,000 BTC had been taken. They responded by socializing losses, with a 36% haircut across the board, exchaging newly-created “BFX tokens” valued at $1 for a commensurate amount of BTC they had taken from the users.
Cryptocurrency hardware wallets like KeepKey, Ledger, or Ledger, create mnemonic seed phrases—usually 12 or 24 words—that can be used to recover your private keys and cryptocurrencies in case of loss or breakage. But if someone discovers your seed phrase, whether online or on the piece of paper you wrote it on, they would be able to take control of your crypto funds. A new program called “seedsplit” breaks your existing seed phrase into new mnemonic phrases that you can had out to your friends and family, and your original seed phrase can only be generated if several of your trusted parties come together to do so.
“Seedsplit lets you split a mnemonic seed into a selected number of shards which are also encoded as mnemonics. n-of-m shards can then be combined in order to get the initial mnemonic seed. This is accomplished by using Shamir’s Secret Sharing.”
This could be helpful for many applications, including providing post-mortem instructions for your Bitcoin and other virtual currencies.