Ep245: NEO Warnings, Ledger Update, Venezuelan Petro

Ledger has a new wallet firmware with a mandatory update. The Pineapple fund is donating millions of Bitcoin to charities! Senators in the U.S. state of Georgia submitted a bill to allow taxes and license fees paid in crypto. Shapeshift is batching Bitcoin transactions to save on network congestion. We discuss the NEO blockchain and how the hype may be misplaced. JJ interviews ODEM in the first NeoCash Newsmakers.

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Bumper music by: Lamprey
Song: Stuck up

Traditional Financial Markets Cryptocurrency Markets
Gold $1,334 Bitcoin Cash (BCH) $1,188
Silver $16.75 Bitcoin SegWit (SW) $10,716
Oil $62.46 Ethereum (ETH) $811
Dow Jones 24,875 points DASH $577
30Y UST Yield 3.142% Litecoin (LTC) $195

Ledger Nano S hardware wallet new firmware v1.4.1 released

Ledger reports that on March 20th, this update is mandatory though it’s unclear what will happen if the device is not updated by after that time.  Worth noting is that if a device is updated to v1.4.1, it can not be downgraded to the last major update v1.3.1.

  • The number of apps which can be loaded onto the Nano S at the same time can be raised to up to 18 (depending on the cryptocurrencies see FAQ),
  • The screen lock management has been slightly modified. A long press (3 seconds) on both buttons of your Nano S will enable you to lock the screen.
  • To ensure that the user has backed up correctly the 24 words, all of them must now be confirmed during the onboarding.
  • Several other optimizations have been implemented in order to improve the user experience. For instance, the device is now faster using some cache optimizations.
  • The cryptographic support has been widely extended. A lot of new Elliptic Curves are now supported: SEC curves (SECP384R1, SECP521R1), Brainpool Curves (P256R1, P320T1, P320R1, P384T1, P384R1, P512T1, P512R1) ANSSI Curve (FRP256V1), Edwards Curves (Ed448), and Goldilocks’s curve (Curve448).
  • The firmware 1.4 includes a few other security improvements. For instance, the policy to load 3rd party apps slightly evolved. The custom Certification Authority (CA) management is now only available under recovery mode. It is intended to make malware applications less attractive to promote for inexperienced users.

The update process is available on the Ledger website and it notes that with this upgrade, there is no need to restore the seed words.

The Pineapple Fund: Donating bitcoins to charity

The Pineapple fund @ pinneapplefund.org was started in December 2018 by an anonymous donor by the nickname Pine who claims to be among the 250 largest holders of Bitcoin.  The aim of the fund is to give away $86 million dollars worth of Bitcoin and has so far, given away 20 million to 13 organizations.

One one of the largest recipients has been the Open Medicine Foundation which received $5 million dollars from the fund, which is more than the $2 million it was able to raise in all of 2017. The Open Medicine Foundation focuses on research for chronic complex diseases.

There are many wealthy crypto currency holders who are going to have a major impact on funding not just medical research, but charitable giving overall.


The US State of Georgia is considering Bitcoin and other cryptos for tax payments

Two senators of the state have proposed a bill that will allow citizens to pay their tax liabilities in Bitcoin.  The bill states, “The commissioner shall accept as valid payment for taxes and license fees any cryptocurrency, including but not limited to Bitcoin, that uses and electronic peer-to-peer system.”

Shapeshift is now batching Bitcoin transactions 

Shapeshift, which accounts for 2% of the Bitcoin network is now batching transactions.  This is allowing lower miner feels while utilizing less transaction space. This update, along with Shapeshift integrating Segwit in the fall of 2017 has resulted in Shapeshift offering one of the lowest miner fees in the industry.

Batching is a process where multiple transactions are bundled into one TXID which reduces the aggregate number of transactions.  For example, prior to batching if 10 customers did one transaction the exchange would send one separate TXID for each order. With batching, only one TXID might be needed.

NEO Blockchain goes down after a node temporarily disconnects

Formally Antshares, NEO the 6th largest market cap cryptocurrency went down on March 3rd after a single validator node disconnected.  NEO is a blockchain for smart contracts.

There are only 7 node validators on the NEO blockchain and all of them are run by the project.  The fact the network came to a stop when only one of these was offline is in direct contrast with almost every other cryptocurrency that accounts for offline nodes.

The NEO senior R&D manager Malcolm Lerider posted on Discord: “The problem happens when a consensus node gets disconnected during the consensus.  Other consensus nodes are waiting for a reply from that node. It was restored by restarting all nodes for a forced changeView. There is a pending patch to handle this edge case automatically.”

Statement for the Neo Council:

A Statement from NEO Council (JJ)

Author chris@neo.org posted on 3/6/2018

Da Hongfei, Founder of NEO, explains with below facts to answer the questions and clarify recent confusion regarding NEO dBFT consensus mechanism, the latest block delay, as well as NEO’s plan for the decentralization of consensus nodes.


Facts about NEO’s consensus mechanism dBFT:

1)   dBFT is short for delegated Byzantine Fault Tolerance. Delegation means NEO (the governance token) holders do not participate in the consensus process directly. Instead, NEO holders vote in Consensus Nodes by a special voting transaction.

2)   Elected Consensus Nodes reach consensus block by block in a BFT style algorithm. The list of elected Consensus Nodes for the next block can be deterministically calculated from voting transactions in historical blocks including the latest block.

3)   The number of Consensus Nodes is also set by the same voting process of NEO holders, from 7 at minimum to 1024 at maximum.

4)   Currently NEO Council is managing almost 50% of all the NEO tokens as described in whitepaper from day 1.

5)   NEO Council values efficiency (quick response and protocol upgrade) over decentralization (sometimes a crypto-political correctness) at this early stage. Therefore we used tokens and influences we have and voted in 7 Consensus Nodes managed by NEO Council in the past.

6)   NEO has hundreds (if not thousands) of full nodes online at any given time, though the exact number is difficult to measure due to its peer-to-peer nature. We are happy with this level of redundancy and believe further redundancy adds little value to the network considering correspondent network/storage/computing resources needed.

7)   When NEO’s core protocol stabilizes, we expect to see one to a few dozens of Consensus Nodes to be elected by NEO holders. In 2018, we predict the number of Consensus Nodes will stay at 7 to 13.

Facts about NEO’s recent delay of block producing:

1)   The delay is not out of the reason described by the statement of Malcolm Lerider in Discord, although he is NEO’s Senior R&D Manager. His statement was then misused as evidence that 1 Consensus Node failure will bring down the NEO network. It is a ridiculous and ignorant accusation and can be debunked easily. The actual reason is more complicated and we were aware of this issue and had been working on it long before the recent delay happened. Malcolm also wrote a blog to clarify this although the blog simplifies technical details quite a lot.


2)   One or even two Consensus Nodes going offline or colluding maliciously will not trigger this issue because dBFT tolerates “f” (in NEO’s case f=2) faulty nodes given there are “3f+1” (in NEO’s case 7) Consensus Nodes. We are pretty sure the block delay is caused by a corner case lying deep in NEO’s p2p protocol implementation: in some unusual scenarios, Consensus Nodes disconnect from the networks temporarily but reconnect shortly after. In such scenarios block delay is observed. We had been testing fixes for weeks on testnet and it was planned to be deployed on mainnet this week.


Ultimately I think this demonstrate one aspect of the NEO blockchain: it is capable of being strictly controlled: a 51% attack does not depend on the hashing power but rather which consortium owns 51% of the tokens. The majority decide the number of nodes and vote for nodes of their own. If one group controls the block propagation they can effectively determine which transactions and contracts get included in blocks.

Now factor in the possibility of a digital asset exchange run by the People’s Bank of China.

FinCEN https://coincenter.org/link/fincen-raises-major-licensing-problem-for-icos-in-new-letter-to-congress


Earlier this week NeoCash Media published the first installment of NeoCash Newsmakers, a sponsored interview series, featuring an interview about ODEM – an On-Demand Education Marketplace. I interviewed CEO Richard Maaghul and CTO Dr. Adel Elmessiry. We’ll have links in the show notes in case you missed the conversation.

or Direct Download this episode as an MP3 – ODEM Interview with CEO Richard and CTO Dr. Adel

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