(PDF) A Deep Dive into Bitcoin Mining Pools: An Empirical ...
A Deep Dive into Bitcoin Mining Pools - WEIS 2019
How To Crack Bitcoin Private Key How To Get Bitcoin Deep Web
08-31 07:38 - 'I would appreciate if you explained how I'm wrong. I once wrote a Bitcoin miner (which connects to a stratum mining pool), and have dived quite deep into the math, data structures and algorithms behind Bitcoin, so I think I kn...' by /u/mort96 removed from /r/Bitcoin within 475-485min
''' I would appreciate if you explained how I'm wrong. I once wrote a Bitcoin miner (which connects to a stratum mining pool), and have dived quite deep into the math, data structures and algorithms behind Bitcoin, so I think I know what I'm talking about, but I'm always receptive to a well-reasoned explanation of how I'm wrong so that I can learn something new. ''' Context Link Go1dfish undelete link unreddit undelete link Author: mort96
Bored? Looking for something to do? Start with this list of things to do in the Sacramento area.
(Credit for the below list has to be given to u/BurritoFueled, who created the original list in 2014 and updated it a year later. Almost two-thirds of the items below are still from that original list. All I’ve done with the list is revive it a little bit by updating dead links and making little tweaks when necessary. Also, thanks to those that submitted new additions to the list last week. Over a third of the below items are new and a lot of the original items have had newer information added onto them.) People are always looking for something to do around here. Maybe you’re a transplant, unaware of what this area has to offer, or maybe you’re a lifelong resident, tired of the same old thing. Well friend, if you fall into the latter category, do not despair. There’s actually plenty of things to do in the Sacramento area – things of interest to almost any lifestyle, personality, or budget. So, whether you’re an athlete, geek, eccentric, hipster, weirdo, sexual deviant or just a normal person looking for a new activity, below is a list of activities for you to try. Please note that it includes only activities that take place at least a few times a year – no one-off events or festivals here. Enjoy this list. If you have any suggestions of your own to add, comment below in this thread. I'll try to keep this as up to date as possible. Away we go. UPDATED 10-6-20 (Note: Due to the current pandemic, some of these activities may be curtailed or not offered at all.)
Become the next Tiger Woods (the golf part, not the cheating, getting your windshield smashed by your wife with one of your golf clubs part). Start by hitting up a driving range at Top Golf or Haggin Oaks.
Purchase the sweetest sweet corn in all the land at the Davis Ranch in Sloughhouse.
When you're done in Sloughhouse, head a little further up the Jackson Highway (just past Rancho Murieta), hang a left on Michigan Bar Road, and cross the bridge (it's safe, trust me!) for one of the most historic, beautiful, and adventurous road trips in the entire area. Make sure you bring a hearty vehicle and avoid during winter and spring.
Check out – or offer your services – at the Oak Park Fix-it Café, a community-powered gathering for repairing and maintaining bicycles, clothing, household items, and the ties that bind a healthy community.
Buy some tricks, attend magic workshops, and become the next David Blaine at Grand Illusions.
Go watch some horseracing at Cal Expo. It’s harness racing from November through April and then traditional horseracing during the state fair. Want to end up with small fortune at the end of your day at the track? It’s easy. Just start your day there with a large fortune.
Watch some high school football! The Sacramento region boasts some of the best high school programs in the state. Check out top notch teams like Grant, Elk Grove, Folsom, and Del Oro to see potential NCAA Division 1 and NFL players of the future.
Watch some college football! Sac State had a huge resurgence in 2019 and UC Davis has always had a solid program. You can also check out the JC teams such as ARC and Sac City.
If Live-Action Role Play (LARP) floats your boat, Sacramento Valley Amtgard has the battles, weapons workshops, and skills classes you've been looking for.
Take a ride on the Sacramento River Train. You can ride the train or power along the tracks yourself with railbikes. They have different train excursions, including beer tasting and wine tasting trips. If you want to book a trip on a weekend, book early.
Want to learn how to fish? Try Fishing in the City from the California Department of Fish and Wildlife. After you’ve learned, check out the blog from FishingBooker on where and when to go fishing and what to expect. For some recent local recommendations, check here, here, here or here.
If fishing tours are more your style, catch your lunch on a guided fishing tour of local waterways.
Take in a play at one of Sacramento's smaller, edgier, more contemporary community theatre companies, like the Big Idea Theatre.
Do you like beer and visiting breweries, but don’t like driving between them? Midtown Sacramento has got you covered! Make a day of it by visiting these breweries, all within easy walking distance of each other: At Ease, Sacrament, Big Stump, Golden Road, Fieldwork, and Alaro. If you don’t mind walking a few extra blocks, you can add Device and Urban Roots to the list.
Ever wanted to learn to sail, kayak or row? You’re in luck! The Sac State Aquatic Center offers lessons for those activities and more.
Antiquing never gets old, right? Visit Midway Antique Mall in Citrus Heights (focusing almost solely on midcentury wares), Antique Trove in Roseville, or the Antique Fair that happens every second Sunday on X Street, under the freeway.
Want to become the next Picasso? You gotta start somewhere, so take a paint and sip class at The Painted Cork in Midtown Sacramento or Historic Folsom.
It’s well known that you can play miniature golf at Scandia, but did you know that there are indoor mini golf courses in the area as well? Try SacMiniGolf in Old Sacramento, Flatstick Pub in DoCo downtown, or even glow-in-the-dark indoor mini golf at Monster Mini Golf in Rancho Cordova or at CaliGlo in Elk Grove.
The Sacramento Cactus and Succulent Society meets, and hosts a talk, at the Shepard Garden and Arts Center in McKinley Park monthly and welcomes guests. They also do field trips and their Annual Show and Sale is a must-see event for plant lovers.
Not to diminish the concert series at Fair Oaks Village Park, but when you hear "concerts in the park", everyone knows that is the Concerts in the Park series in downtown Sacramento. Live local and national acts perform on Friday evenings in the summer, and it’s totally free. If you’re not good with crowds you may want to give this a miss because it is packed!
Vacation or day trip so close, yet feel so far away, along the Delta. Rent a boat, jet skis, a cabin or camping spot, buy some bait and tackle, and/or eat out at various locations on the river.
Take a drive around the world’s smallest mountain range: the Sutter Buttes. You can actually drive around and hike the Sutter Buttes in the same day, however hiking is not free, you must do it as part of a guided group and you have to reserve a spot in advance.
Monthly Update: Parachute Social Liquidity Pools, Ivan(OnTech) Joins as Advisor, Townhall, Trending on CoinGecko, Covered by EllioTrades Crypto + Altcoin Buzz, …– 31 Jul – 3 Sept'20
Hola folks! Yesterday we got caught up with everything that happened in July 2020 at Parachute and ParJar. Today, I will be sharing news from August. Looking back at those five weeks, they were easily one of the most action-packed ones in the Parachuteverse ever. If you missed my note about the new format from yesterday: “…I thought it would be best to club all the Parachute news into monthly reports and publish them back-to-back over the next few days to catch up with the latest…For a change, we will be focusing on Parachute + ParJar news alone in these monthly reports. Because if we include news from our partner project in these, we might as well publish the Encyclopaedia Britannica”. In case you thought yesterday’s was a long read, boy are you in for a shock today. Make sure to get yourself a beverage and set aside an hour to go through all that will follow. So here’s goes the Parachute scrolls dating 31-Jul-20 to 3-Sept-20 – 31 Jul – 6 Aug'20: $PAR became one of the top trending coins on CoinGecko this week. The token also received a perfect score on DEXTools. Pretty sweet! We crossed 2500 members in the Parachute channel after quite a while. But no sign of Ron yet. Haha. BrainiacChess Network ($CHESS) was added to ParJar. We got a surprise listing on Hotbit ourselves with an ETH and BTC pairing. $PAR was listed on CoinW exchange this week too. More details here. Looks like wrapping up a day at Parachute usually ends with steaks. If you ever thought otherwise, a look at the $PAR contract should dispel that doubt. A community vote was opened up to list the next token on ParJar. Congratulations to Chirag for winning this week’s Parena and taking home 6k+ $PAR. Neat! Everybody knows about the bitcoin pizza. But did you know about the bitcoin burger? Read all about AlBundy185's crazy BTC journey here. What a wild ride indeed! AlBundy185’s BTC ride has to be a stuff of legends Pic of Gian with Diamond Dallas Page taken from his epic WCW Thunder story (https://t.me/parachutetokengroup/395125). Spooky sent us! Gian announced a temporary stoppage of Two-for-Tuesday to make way for the second annual Big Brother contest. Soon after, he opened up entries for the contest. Woot! Fans can also get updates and spoilers from the GC’s BB group. Gamer Boy hosted a “Random Gk” trivia in TTR this week. Naj hosted a Sunday “Mega Trivia”. Afful held a “General knowledge” trivia as well. Sebastian shared the new ParJar Gaming schedule for August. Yes, you read that right. 75k $PAR in the monthly prize pool. Woot! For this week's Friday creative prompt (#nottodaycovid) by Jason, Parachuters talked "about what you are doing to keep yourself sane during the pandemic" for some cool $PAR. Alejandro’s betta fish collection is a sight for sore eyes Elmar, these are all amazing! Model ships made by Bada during the lockdown. Awesome! Ivan (from Ivan on Tech) joined the Parachute channel this week. Looks like next few weeks are going to be super exciting! Doc Vic hosted a flash game in the Parachute War Zone for some cool $PAR prizes. Mario had an interesting idea. Change the ParJar display name to “ParJar Wallet” to actually reflect the true nature of ParJar. And voila! “ParJar” is now “ParJar Wallet”. Instant feedback implementation! We also finally got an unofficial price chatter group running. As we mentioned in the last update, Clinton released a limited edition shirt in the Parachute Store this week to commemorate the Liquidity Program on Uniswap. Some of the Parena merch had to be sunsetted from the store though. So if you grabbed some before that, you are now the proud owner of rare Parena merchandise. James from the Parachute Athletics and Running Club announced a Secret Challenge for 400 $PAR. Cap shared a sneak peek into what’s brewing behind the scenes. He also posted some experimentalvisuals for the website and for ParJar: Cap’s creative spurts are super trippy! Pt. I Trippy creatives from Cap Pt. II 7 Aug – 13 Aug'20: ParJar did some heavy lifting on behalf of Uniswap this week when Uniswap got clogged but ParJar swaps were running smoothly. If you haven’t seen how swaps work yet, CF made another cool video tutorial. Following last week’s community vote, Enjin ($ENJ) won a spot to become the next swappable token on ParJar. DMM DAO’s $DMG token was listed on ParJar as well. Inputs from the community were taken for listing the next DeFi token on ParJar. A new tier was added for the Parachute Uniswap Liquidity Rewards Program this week. Last week’s incredible Parachute run on CoinGecko was noticed by many including DAO Maker and Blockfyre. We got word that Parachute was featured in Ivan’s (Ivan on Tech) private report meant for his closed group of subscribers. Word on the street is that Parachute was reviewed in detail in the Hidden Gems section of the report and received the highest score among all the projects covered there. Super cool! He also talked about Parachute in his latest video. Watch out for timestamps 42:23 and 47:48. And followed it up with another mention in next day’s video as well. Pretty cool! $PAR also saw some crazy movements and activity. And all this started while Cap was chilling on an Amtrack on his way to Vermont. Haha. Cap shared this amazing view from Vermont Check out the Sentivate gear in the Parachute shop. For this week's creative prompt (#donkeyart), Jason had Parachuters "find an image of a piece of art that particularly moved" them and explain how and why. Darren’s Mega Friday Trivia in Tiproom had a sweet 6300 $PAR prize pot. Peace Love (Yanni) hosted another quiz in TTR with some more cool $PAR prizes. Clinton’s charity For Living Independence (FLI) became Lumenthropy’s spotlight charity this week which means they will be matching all $XLM donations to FLI. Lumenthropy is Stellar’s charitable arm. The entries to Gian's Big Brother Contest closed this week with Gian starting to share updates on episodes and $PAR rewards to weekly winners. If you want to catch all the action, head over to the BB Group set up by GC. And the most amazing thing happened this week – As new folks were joining into the Parachute group, someone named Ender Wiggin chimed into the chatter and as we talked we figured that he was not only Cap's neighbour in NYC but was also my school senior. Parachute truly brings the world together! PARs & Recreation wants to create a Parachute foodies group. And if his posts are anything to go by (figs, blueberries, Ikura), it’s going to be a hunger-inducing channel. Doc Vic (from Cuba) announced the start of a team Deathmatch tournament in the Parachute War Zone. Congratulations, Clinton! Looks like an epic ParJar video is underway. Parachute was also covered extensively by EllioTrades Crypto this week. YouTuber CM TopDog too made an awesome video on Parachute where he talked at length about the project, the roadmap, the token and more. Saweet! After seeing Albundy185 struggle with pooling on Uniswap, Cap and Ice had a light bulb moment for an entirely new feature on ParJar that would make pooling social and fun. More details to be released over the next few weeks. Jose’s epic new gif puts Cap’s lightbulb moment about social pools into perspective :D Looks like Alexis’ neighbour is into Uniswap pools as well. Get it, get it? Haha Congratulations on the new store, Hang! Folks who don't know, Hang is building a hempire. World domination next 14 Aug – 20 Aug'20: As mentioned last week, Cap and crew had something cool brewing for folks who pool assets on Uniswap. Presenting Social Liquidity Pools (SLP) by Parachute. No more pooling/staking alone in silos. Get together with others doing what you love most – pool assets on Uniswap (either directly or through ParJar - upcoming), then stake the received liquidity tokens into SLPs on ParJar to get additional rewards and social bonuses like entry into VIP or premium token curated groups. Making Uniswap social! Click here to read about what’s next for ParJar and Parachute. The first Uniswap $PAR Liquidity Pool Rewards Program came to a close. All qualified poolers will receive their rewards in 2 months. DeFi superstar yearn.finance ($YFI) was added to ParJar this week for both sends/tips and swaps. Woohoo! Waifu in the house. After last week’s community inputs regarding the next new token on ParJar, a public vote was started. Uptrennd founder Jeff Kirdeikis’ latest project, TrustSwap ($SWAP), got listed on ParJar after winning that vote which got a shoutout from Ivan as well. So now we have a tongue twister on our hands. Haha. Cap also shared the first hints about $PAR governance. More details to be posted next week. Plus, Cap announced that he will be hosting a townhall next week. Stay tuned! Get your questionnaire ready. Like last week, Parachute chatter popped up in Ivan’s latest video this week as well. Dang! What an amazing place, Victor For all the mobile gamers out there, Tony set up a Parachute Corporation for the EVE Echoes game. Hit him up if you want to join. Naj hosted a Sunday TTR trivia with a 6300 $PAR prize pot. Gamer Boy held one as well. Darren’s Mega Trivia in Tiproom was super fun as always. Jason did an impromptu token giveaway so that fellow collectors could complete their ParJar collection followed by a mini contest to "guess the closest to the number of miles I am about to run" for some cool $PAR. Chris hosted this week’s creative Friday prompt (#adminfunday): “Using the profile image of any Parachute admin as inspiration, draw what you think that admin would like to do on the weekend”. And what an amazing video Hans (Pad of DeFi Chad). Haha! Super hilarious and fun. Some of the radest #adminfunday entries. Clockwise from top left: Skittish, TyReal, Staph It!!, Yosma, Ik Now, Jeff, Chica Cuba, Jhang, Kuuraku 21 Aug – 27 Aug'20: Ivan (from Ivan On Tech) joined Parachute as an advisor. Woot! Welcome to the Parachute fam. Here’s a sneak peek into what the first day discussions with Ivan as an advisor revolved around. The project got featured in France’s largest crypto news platform, Journal du Coin. Noice! Click here for the English translated version. As mentioned earlier, Cap hosted a townhall this week. If you missed it, you can catch up here. He also shared a rough draft snapshot of “how the governance and fee distribution contracts could look for ParJar Wallet”. Plus, some updates from this week and a big picture view at what staking liquidity through ParJar could look like. Parachute also got mentioned in another of Ivan’s videos this week. Snapshot from the Parachute Townhall In partnership with Sentivate, ParJar distributed $SNTVT tokens this week to 1500 people of whom 800 were new users. Sentivate hosted this drop for members of a specific group as a token of appreciation for their support. Reminiscent of the AMGO drop, this was a precursor of “how PAR drops + other token drops could work for our Social Liquidity pooling”. The $PAR Governance whitepaper was released and initial brainstorming started in the tokenomics group. Cap was also interviewed by YouTuber Money Party (@Edward_F) this week to talk at length about where we are at and where we are heading. We also received a super duper shoutout from CryptoTube in his latest video where he did a deep dive into ParJar and Parachute. Thanks a ton! Cryptovator did a cool feature on the project as well. Cap added more changes to the site to show: \"ParJar wallet in action along with…the integrations\" + Big Picture In this week's creative contest, Jason put up a #writingprompt: "...imagine you are a brand new intern at my new mega corporation...Today is your first day and you are told you need to present something about crypto to upper management...all you know is Bitcoin is a thing and some vague information about it. Pick a coin or general crypto subject and write a short story...None of the facts or material can be correct in your presentation...". Haha! After helping fellow Parachuters with their ParJar collection last week, Jason set up a collector’s group this week. If you have more than 30 of the coins/tokens listed on ParJar in your @parjar_bot collection already, send Jason a PM and he will get you in. Victor hosted a “Big Trivia” in TTR this week for 6300 $PAR in prizes. Afful held a quiz in Tiproom on “General Knowledge” as well. Check out these wicked new shorts in the Parachute Store based on Jose’s gif. Epic stuff, Jose! Haha Nice haul from the Parachute Beer Exchange, CF! Markus did you a solid Boldman Stachs pointed out that $PAR had the highest Galaxy Score on social media analytics platform LunarCRUSH this week. Pretty neat! CF took note. And like Cap mentioned, it has mostly been thanks to him. Haha. And big up to Jesús (@JALBARRAN02) for making a ParJar guide video for our Spanish crew. You rock! Interesting results from the DeFi survey: majority of crypto folks are still DeFi-curious. A new community vote was thrown open for listing the next DeFi token on ParJar. Anyone who's been around a bit already knows that Clinton does some amazing work at his charity, For Living Independence, which creates assistive technology for disabled individuals. This week he shared some snaps of a build which now enables a lady in a wheelchair get upstairs in her home. This is so wholesome, Clinton! Thank you for doing what you do. 28 Aug – 3 Sep'20: ParJar was featured in Altcoin Buzz’s latest video. Noice! Click here and here to read some recent updates from Cap. After winning last week’s vote, Akropolis ($AKRO) became the latest token to be listed on ParJar. Woot! bZx crew gave some serious competition too. So we had to get them on ParJar as well. $BZRX was listed this week right after $AKRO. $PAR now has 7k on-chain HODLers. Saweet! Sentivate will be our first partner project to have a Social Liquidity Pool on ParJar. This is amazing! Time for another community vote to get a new project listed on ParJar – this time it is DeFi Pie v/s Ren v/s Proxi DeFi v/s Others. If you’ve missed all the latest Parachute-related videos, we have your back. Check this tweet thread to catch up. Naj hosted a Saturday Tiproom Trivia for 6300 $PAR in prizes. Congratulations to Maria for winning the latest Parena. 8k $PAR in the bag. Woohoo! And congo rats to Yanni as well for winning a special edition shirt from the Parachute store. Gamer Boy’s Big Trivia in TTR saw a ton of participation as always. The Parachute Fantasy Football contest is back! Chris set up the entry rules this week. CF has done wonders for Parachute’s social metrics: “..+500% in our fi(r)st marketing month..” Whew, what a month! And with that we close for August 2020 @ Parachute/ParJar. See you again with one more epic monthly update tomorrow. Cheerio!
Hiring a hacker could reveal security flaws in your organisation. The global cost of cybercrime could reach £4.9 trillion annually by 2021, according to a recent report from Cybersecurity Ventures. Cyber crime incidents continue to plague organisations globally, even as businesses pour money into boosting their security. But how do businesses deal with vulnerabilities they cannot identify? It only takes one smart hacker to discover a backdoor and get access to your sensitive data and systems. Organisations must identify the weaknesses in their cyber security, before -- not after -- they’re exploited by hackers. However, to beat a hacker you’ll need to think like one. Here’s how -- and why -- you should hire a hacker in 2020. The stakes have never been so high State sponsored hacking wreaked havoc in 2016 when Yahoo revealed that 1billion accounts were compromised in the largest data breach in history. And as cyber crime becomes increasingly advanced, the threat hackers pose to businesses will only increase. Leave your organisation open to a data breach and it could cost you a massive £4.25m (on average). And that’s without considering the painful remediation and brand damage you’ll be subject to as a result. These attacks aren’t restricted to huge multinationals, the latest Government Security Breaches Survey found that 74% of small organisations reported a security breach in the past year. For any organisation, a security flaw passing undetected is a huge risk, and when GDPR hits in 2018 the stakes will only increase. The EU General Data Protection Regulation will come into force in 2018 and will govern how businesses handle customer data. Compliance won’t be easy, and the risk of non-compliance is massive, with potential £17million fines. Big businesses aren’t safe from this, and they’ll need to boost their data security to ensure compliance. Tesco were recently lucky to escape a £1.9bn fine for a recent data breach. How hackers will boost your cyber security Not every hacker wants to attack your business and leak your sensitive data. There are hackers out there who are paid to protect, not provoke. Known as ‘white hat’ or ‘ethical hackers’, these security professionals strive to defend organisations from cyber criminals. They’re not your conventional dark web lurking delinquents. Ethical hackers are IT security experts -- trained in hacking techniques and tools -- hired to identify security vulnerabilities in computer systems and networks. According to ITJobsWatch, the average salary for an ethical hacker is £62,500. Considering the average cost of a data breach sits at £4.23m, that’s a small price to pay. Businesses and government organisations serious about IT security hire ethical hackers to probe and secure their networks, applications, and computer systems. But, unlike malicious ‘black hat’ hackers, ethical hackers will document your vulnerabilities and provide you with the knowledge you need to fix them. Organisations hire ethical hackers to conduct penetration tests - safe attacks on your computer systems designed to detect vulnerabilities. To test their security, businesses often set goals or win states for penetration tests. This could include manipulating a customer record on your database, or getting access to an admin account –potentially disastrous situations if they were achieved by malicious hackers. Ethical hackers leverage the same techniques and tools used by hackers. They might con employees over email, scan your network for vulnerabilities or barrage your servers with a crippling DDoS attack. But instead of exploiting your business, ethical hackers will document security flaws and you’ll get actionable insight into how they can be fixed. It’s your responsibility to act on the ethical hacker’s guidance - this is where the hard work begins. Without these harmless penetration tests security holes remain unseen, leaving your organisation in a position that a malicious hacker could exploit. Not your typical dark web delinquents Thankfully, the days of hiring underground hackers and bartering with bitcoins are over. There’s now a rich pool of qualified security professionals to choose from, complete with formal ethical hacking certifications. Ethical hackers, or penetration testers, can be hired just like any other professional, but be certain to get tangible proof of your ethical hacker’s skills. Ethical hackers, or penetration testers, can be hired just like any other professional, but be certain to get tangible proof of your ethical hacker’s skills. Candidates with the CEH certification have proved they know how to use a wide range of hacking techniques and tools. What’s more, CEH certified professionals must submit to a criminal background check. These experts are committed to their profession and do not use their hacking knowledge maliciously. Despite the relative youth of the ethical hacking field, these professionals have already proved their worth to some of the largest businesses in the world. This year Facebook awarded a white hat hacker £32000 -- its largest ever bounty -- for reporting one ‘remote code execution flaw’ in their servers. That’s not the first time Facebook have paid out either. They’ve long supported the efficacy of bug bounties, having paid more than £4 million to ethical hackers since it’s program debuted in 2011. How to hire a hacker (legally) It’s important to understand what you actually want from your ethical hacker. Do this by creating a clear statement of expectations, provided by the organisation or an external auditor. Ethical hackers shouldn’t be hired to provide a broad overview of your policies, these professionals are specialised experts with a deep knowledge of IT security. Instead, ask specific questions like “Do we need to review our web app security?” or “Do our systems require an external penetration test?” Before hiring an ethical hacker to conduct a penetration test, businesses should ensure an inventory of systems, people and information is on-hand. Instead of hiring, many organisations develop ethical hacking skills in their own businesses by up-skilling team members through ethical hacking courses, like EC-Council’s CEH or the more advanced ECSA. Advertisement Your staff will get the skills they need to conduct ethical hacking activities on your own businesses, finding and fixing security flaws that only a hacker could find. Secure your business now Complex threats -- like rapid IoT expansion -- are set to dominate 2020. To defend your organisation in 2020, you’ll need to think like a hacker.
Rage Against the Machine (a guide to beating the market)
I know most of this sub is way too advanced for most of this information, but I wanted to post a general overview because stock trading is a means to an end and I have come very far in my quest to retire young. Maybe I can help someone who is getting started. Recommendations from the Machine Finance recommends buy-and-holding the S&P 500 to anyone who is looking to invest their money. As everyone knows, the market has historically returned 9.8% while the average day trader returns -36.3% and quits within 2 years. In fact, if you make more than minimum wage, then you are the top 1% of all day-traders. Congratulations! Work forever for the Machine The truth is that while the market compounds at 9.8% a year, inflation compounds as well. Taxes will also increase before you get a chance to enjoy your nest egg at 65. Depending on how you count, this takes your return to as low as 5%/year in real growth. On top of that, these returns are averages gathered over 90 years. If there is a market crash before, or during, your retirement, you will have to return to the work force because your investments will take up to 10 years to recover. Beat the Machine (if you are poor) Experts say you can’t beat the market, but ordinary Americans have $5,700 of credit card debt that compounds at ~15%. This means the average American can pay off their credit card, and most forms of debt, and beat the market when considering a risk-adjusted return. Invest to beat the Machine The alternative to buy/hold is to play the stock market directly. Retail investors actually have some pretty large advantages over large institutions. 1) Look into real estate: if you think buying stocks on margin is good for juicing returns, just know that the US government will let you leverage your money 3,233% if you are buying a home. Keep in mind that unlike the stock market, you gain on your home through appreciation, amortization, tax loopholes, and inflation. 2) Excess capital: Most small investors have jobs. If you already paid off your debt and live below your means, you can accumulate a significant amount of cash reserves that can be used to “buy the dip” during market down turns. Compare this to a hedge fund that must raise capital from new/existing investors if they experience a steep decline. 3) Time horizon: Hedge funds must show an increase in assets every quarter or they risk losing investors who can transfer their assets to another firm. If you are a retail investor, you can hold on to assets for years to get a 500% return (I’m looking at you Tanker Gang!) 4) The kiddie pool: Many institutions are just too big to take meaningful risks in small markets. It doesn’t matter if you are about to ride the short squeeze in GME, if you are HODLing your bitcoin, or if you are knee deep in the GDXJ. A lot of these markets are just too small for the big dogs to enter without massively changing the fundamentals. Use these retail advantages by building up an emergency/Yolo fund during good times. Be willing to look at assets (10% of your portfolio) that have explosive value but need a catalyst to make those outsized returns (bitcoin, oil tankers, GME, XLE, etc) Options to beat the Machine Once you build up a significant war chest, you can start playing options. You can wheel your capital (sell covered calls till assigned, then sell puts) until you cash flow 2X what you need to live a happy life, then retire. This may be as little as $200,000 if you are frugal, and as much as $1,000,000 if you want that 6-figure life.
Okay, after many years of cooperation I got request from well known exchange to provide documents for my Bitcoins origination. Their demand is so ridiculous and annoying so I even don't know where to start explain why.
I worked with that exchange for many years, and passed verification long time ago. And now hello!
When I bought my first tens BTC that wasn't much expensive as few beers and now I must find documents confirming that transaction which now costs like brand new Tesla X.
I also mined Bitcoins with pools like DeepBit and 50BTC which already dead. And for the god's sake most my coins were got for fun and long time ago, so long so traces were lost.
When I got my coins many years ago, retard bureaucrats like that laughed hard when I talked about future of Bitcoin money. And now they ask documents where did I fucking got that expensive assets!
Bitcoin is money with documents attached. Everyone can trace any coins origination down to fucking genesis. But that cunts stupidly asking engine volume of my Tesla and how much gas does it consume and aren't passing me forward because I can't provide answer their tiny brain could understand.
Eth 2.0 vs Polkadot and other musings by a fundamental investor
Spent about two hours on this post and I decided it would help the community if I made it more visible. Comment was made as a response to this
I’m trying to avoid falling into a maximalist mindset over time. This isn’t a 100% ETH question, but I’m trying to stay educated about emerging tech. Can someone help me see the downsides of diversifying into DOTs? I know Polkadot is more centralized, VC backed, and generally against our ethos here. On chain governance might introduce some unknown risks. What else am I missing? I see a bunch of posts about how Ethereum and Polkadot can thrive together, but are they not both L1 competitors?
What else am I missing?
The upsides. Most of the guys responding to you here are full Eth maxis who drank the Parity is bad koolaid. They are married to their investment and basically emotional / tribal in an area where you should have a cool head. Sure, you might get more upvotes on Reddit if you do and say what the crowd wants, but do you want upvotes and fleeting validation or do you want returns on your investment? Do you want to be these guys or do you want to be the shareholder making bank off of those guys? Disclaimer: I'm both an Eth whale and a Dot whale, and have been in crypto for close to a decade now. I originally bought ether sub $10 after researching it for at least a thousand hours. Rode to $1500 and down to $60. Iron hands - my intent has always been to reconsider my Eth position after proof of stake is out. I invested in the 2017 Dot public sale with the plan of flipping profits back to Eth but keeping Dots looks like the right short and long term play now. I am not a trader, I just take a deep tech dive every couple of years and invest in fundamentals. Now as for your concerns:
I know Polkadot is more centralized
The sad truth is that the market doesn't really care about this. At all. There is no real statistic to show at what point a coin is "decentralized" or "too centralized". For example, bitcoin has been completely taken over by Chinese mining farms for about five years now. Last I checked, they control above 85% of the hashing power, they just spread it among different mining pools to make it look decentralized. They have had the ability to fake or block transactions for all this time but it has never been in their best interest to do so: messing with bitcoin in that way would crash its price, therefore their bitcoin holdings, their mining equipment, and their company stock (some of them worth billions) would evaporate. So they won't do it due to economics, but not because they can't. That is the major point I want to get across; originally Bitcoin couldn't be messed with because it was decentralized, but now Bitcoin is centralized but it's still not messed with due to economics. It is basically ChinaCoin at this point, but the market doesn't care, and it still enjoys over 50% of the total crypto market cap. So how does this relate to Polkadot? Well fortunately most chains - Ethereum included - are working towards proof of stake. This is obviously better for the environment, but it also has a massive benefit for token holders. If a hostile party wanted to take over a proof of stake chain they'd have to buy up a massive share of the network. The moment they force through a malicious transaction a proof of stake blockchain has the option to fork them off. It would be messy for a few days, but by the end of the week the hostile party would have a large amount of now worthless tokens, and the proof of stake community would have moved on to a version of the blockchain where the hostile party's tokens have been slashed to zero. So not only does the market not care about centralization (Bitcoin example), but proof of stake makes token holders even safer. That being said, Polkadot's "centralization" is not that far off to Ethereum. The Web3 foundation kept 30% of the Dots while the Ethereum Foundation kept 17%. There are whales in Polkadot but Ethereum has them too - 40% of all genesis Ether went to 100 wallets, and many suspect that the original Ethereum ICO was sybiled to make it look more popular and decentralized than it really was. But you don't really care about that do you? Neither do I. Whales are a fact of life.
VCs are part of the crypto game now. There is no way to get rid of them, and there is no real reason why you should want to get rid of them. They put their capital at risk (same as you and me) and seek returns on their investment (same as you and me). They are both in Polkadot and Ethereum, and have been for years now. I have no issue with them as long as they don't play around with insider information, but that is another topic. To be honest, I would be worried if VCs did not endorse chains I'm researching, but maybe that's because my investing style isn't chasing hype and buying SUSHI style tokens from anonymous (at the time) developers. That's just playing hot potato. But hey, some people are good at that. As to the amount of wallets that participated in the Polkadot ICO: a little known fact is that more individual wallets participated in Polkadot's ICO than Ethereum's, even though Polkadot never marketed their ICO rounds due to regulatory reasons.
generally against our ethos here
Kool aid. Some guy that works(ed?) at Parity (who employs what, 200+ people?) correctly said that Ethereum is losing its tech lead and that offended the Ethereum hivemind. Oh no. So controversial. I'm so personally hurt by that. Some guy that has been working for free on Ethereum basically forever correctly said that Polkadot is taking the blockchain tech crown. Do we A) Reflect on why he said that? or B) Rally the mob to chase him off?
Also Parity locked their funds (and about 500+ other wallets not owned by them) and proposed a solution to recover them. When the community voted no they backed off and did not fork the chain, even if they had the influence to do so. For some reason this subreddit hates them for that, even if Parity did the 100% moral thing to do. Remember, 500+ other teams or people had their funds locked, so Parity was morally bound to try its best to recover them. Its just lame drama to be honest. Nothing to do with ethos, everything to do with emotional tribalism. Now for the missing upsides (I'll also respond to random fragments scattered in the thread):
This isn’t a 100% ETH question, but I’m trying to stay educated about emerging tech.
A good quick intro to Eth's tech vs Polkadot's tech can be found on this thread, especially this reply. That thread is basically mandatory reading if you care about your investment. Eth 2.0's features will not really kick in for end users until about 2023. That means every dapp (except DeFI, where the fees make sense due to returns and is leading the fee market) who built on Eth's layer 1 are dead for three years. Remember the trading card games... Gods Unchained? How many players do you think are going to buy and sell cards when the transaction fee is worth more than the cards? All that development is now practically worthless until it can migrate to its own shard. This story repeats for hundreds of other dapp teams who's projects are now priced out for three years. So now they either have to migrate to a one of the many unpopulated L2 options (which have their own list of problems and risks, but that's another topic) or they look for another platform, preferably one interoperable with Ethereum. Hence Polkadot's massive growth in developer activity. If you check out https://polkaproject.com/ you'll see 205 projects listed at the time of this post. About a week ago they had 202 listed. That means about one team migrated from another tech stack to build on Polkadot every two days, and trust me, many more will come in when parachains are finally activated, and it will be a complete no brainer when Polkadot 2.0 is released. Another huge upside for Polkadot is the Initial Parachain Offerings. Polkadot's version of ICOs. The biggest difference is that you can vote for parachains using your Dots to bind them to the relay chain, and you get some of the parachain's tokens in exchange. After a certain amount of time you get your Dots back. The tokenomics here are impressive: Dots are locked (reduced supply) instead of sold (sell pressure) and you still earn your staking rewards. There's no risk of scammers running away with your Ether and the governance mechanism allows for the community to defund incompetent devs who did not deliver what was promised.
Wouldn’t an ETH shard on Polkadot gain a bunch of scaling benefits that we won’t see natively for a couple years?
Yes. That is correct. Both Edgeware and Moonbeam are EVM compatible. And if the original dapp teams don't migrate their projects someone else will fork them, exactly like SUSHI did to Uniswap, and how Acala is doing to MakerDao.
Although realistically Ethereum has a 5 yr headstart and devs haven't slowed down at all
Just because it's "EVM Compatible" doesn't mean you can just plug Ethereum into Polkadot or vica versa, it just means they both understand Ethereum bytecode and you can potentially copy/paste contracts from Ethereum to Polkadot, but you'd still need to add a "bridge" between the 2 chains, so it adds additional complexity and extra steps compared to using any of the existing L2 scaling solutions
That only applies of you are thinking from an Eth maximalist perspective. But if you think from Polkadot's side, why would you need to use the bridge back to Ethereum at all? Everything will be seamless, cheaper, and quicker once the ecosystem starts to flourish.
I see a bunch of posts about how Ethereum and Polkadot can thrive together, but are they not both L1 competitors?
They are competitors. Both have their strategies, and both have their strengths (tech vs time on the market) but they are clearly competing in my eyes. Which is a good thing, Apple and Samsung competing in the cell phone market just leads to more innovation for consumers. You can still invest in both if you like. Edit - link to post and the rest of the conversation: https://www.reddit.com/ethfinance/comments/iooew6/daily_general_discussion_september_8_2020/g4h5yyq/ Edit 2 - one day later PolkaProject count is 210. Devs are getting the hint :)
"My transaction is stuck, what to do?" - an explainer [DRAFT]
In the last days we have been experiencing a sharp rise in price, which is historically correlated with many people transacting over the Bitcoin network. Many people transacting over the Bitcoin network implies that the blockspace is in popular demand, meaning that when you send a transaction, it has to compete with other transactions for the inclusion in one of the blocks in the future. Miners are motivated by profits and transactions that pay more than other transactions are preferred when mining a new block. Although the network is working as intended (blockspace is a scarce good, subject to supply/demand dynamics, regulated purely by fees), people who are unfamiliar with it might feel worried that their transaction is “stuck” or otherwise somehow lost or “in limbo”. This post attempts to explain how the mempool works, how to optimize fees and that one does not need to worry about their funds.
TL;DR: Your funds are safe. Just be patient* and it'll be confirmed at some point. A transaction either will be confirmed or it never leaves your wallet, so there is nothing to worry about in regards to the safety of your coins.
You can see how the mempool "ebbs and flows", and lower fee tx's get confirmed in the "ebb" times (weekends, nights): https://jochen-hoenicke.de/queue/#0,30d * if you are in hurry there are things like RBF (Replace By Fee) and CPFC (Child Pays For Parent), which you can use to boost your transaction fees; you will need an advanced wallet like Bitcoin Core or Electrum for that though. Keep also in mind that this is not possible with any transaction (RBF requires opt in before sending, f.ex). If nothing else works and your transaction really needs a soon confirmation, you can try and contact a mining pool to ask them if they would include your transaction. Some mining pools even offer a web-interface for this: 1, 2. Here’s how Andreas Antonopoulos describes it:
In bitcoin there is no "in transit". Transactions are atomic meaning they either happen all at once or don't happen at all. There is no situation where they "leave" one wallet and are not simultaneously and instantaneously in the destination address. Either the transaction happened or it didn't. The only time you can't see the funds is if your wallet is hiding them because it is tracking a pending transaction and doesn't want you to try and spend funds that are already being spent in another transaction. It doesn't mean the money is in limbo, it's just your wallet waiting to see the outcome. If that is the case, you just wait. Eventually the transaction will either happen or will be deleted by the network. tl;dr: your funds are safe
How is the speed of confirmations determined in bitcoin?
Open this site: https://jochen-hoenicke.de/queue/#0,2w Here you see how many transactions are currently (and were historically) waiting to be confirmed, i.e how many transactions are currently competing with your transaction for blockspace (=confirmation). You can see two important things: the differently coloured layers, each layer representing a different fee (higher layer = higher fees). You can point at a layer and see which fees (expressed in sat/byte) are represented in this layer. You can then deduct which layer your own transaction is currently at, and how far away from the top your position is (miners work through the mempool always from the top, simply because the tx's on top pay them more). You can estimate that each newly mined block removes roughly 1.xMB from the top (see the third graph which shows the mempool size in MB). On average, a new block is produced every ten minutes. But keep in mind that over time more transactions come into the mempool, so there can be periods where transactions are coming faster than transactions being “processed” by miners. The second important observation is that the mempool "ebbs and flows", so even the lower paid transactions are periodically being confirmed at some point. In short: what determines the speed of a confirmation is A) how high you set the fees (in sat/byte), B) how many other transactions with same or higher fees are currently competing with yours and C) how many transactions with higher paid fees will be broadcast after yours. A) you can influence directly, B) you can observe in real time, but C) is difficult to predict. So it's always a little tricky to tell when the first confirmation happens if you set your fees low. But it's quite certain that at some point even the cheap transactions will come through.
So what happens if my transaction stays unconfirmed for days or even weeks?
Transactions are being broadcast by the full nodes on the network. Each node can adjust their settings for how long they keep unconfirmed transactions in their mempool. That’s why there is not a fixed amount of time after which a transaction is dropped from the mempool, but most nodes drop unconfirmed tx’s after two weeks [IS THIS CORRECT?]. This means that in the absolute worst case the unconfirmed transaction will simply disappear from the network, as if it never happened. Keep in mind that in those two weeks the coins never actually leave your wallet. It’s just that your wallet doesn’t show them as “available”, but you still have options like RBF and CPFP to get your transaction confirmed with higher fees, or to “cancel” your transaction by spending the same coins onto another address with a higher fee.
Helpful tools to estimate fees for future transactions:
Here are some resources that can help you estimate fees when sending a bitcoin transaction, so you don't end up overpaying (or underpaying) unnecessarily. Keep in mind that in order to take advantage of this, you need a proper bitcoin wallet which allows for custom fee setting. A selection of such wallets you can find here or here. The order here is roughly from advanced to easy. 1) https://jochen-hoenicke.de/queue/#0,24h Here you can see a visualization of how many unconfirmed transactions are currently on the network, as well as how many were there in the past. Each coloured layer represents a different fee amount. F.ex the deep blue (lowest layer) are the 1sat/byte transactions, slightly brighter level above are the 2sat/byte transactions and so on. The most interesting graph is the third one, which shows you the size of the current mempool in MB and the amount of transactions with different fee levels, which would compete with your transaction if you were to send it right now. This should help you estimating how high you need to set the fee (in sat/byte) in order to have it confirmed "soon". But this also should help you to see that even the 1sat/byte transactions get confirmed very regularly, especially on weekends and in the night periods, and that the spikes in the mempool are always temporary. For that you can switch to higher timeframes in the upper right corner, f.ex here is a 30 days view: https://jochen-hoenicke.de/queue/#0,30d. You clearly can see that the mempool is cyclical and you can set a very low fee if you are not in hurry. 2) https://mempool.space This is also an overview of the current mempool status, although less visual than the previous one. It shows you some important stats, like the mempool size, some basic stats of the recent blocks (tx fees, size etc). Most importantly, it makes a projection of how large you need to set your fees in sat/byte if you want your transaction to be included in the next block, or within the next two/three/four blocks. You can see this projection in the left upper corner (the blocks coloured in brown). 3) https://whatthefee.io This is a simple estimation tool. It shows you the likelihood (in %) of a particular fee size (in sat/byte) to be confirmed within a particular timeframe (measured in hours). It is very simple to use, but the disadvantage is that it shows you estimates only for the next 24 hours. You probably will overpay by this method if your transaction is less time sensitive than that. 4) https://twitter.com/CoreFeeHelper This is a very simple bot that tweets out fees projections every hour or so. It tells you how you need to set the fees in order to be confirmed within 1hou6hours/12hours/1day/3days/1week. Very simple to use. Hopefully one of these tools will help you save fees for your next bitcoin transaction. Or at least help you understand that even with a very low fee setting your transaction will be confirmed sooner or later. Furthermore, I hope it makes you understand how important it is to use a wallet that allows you to set your own fees.
Summary: Everyone knows that when you give your assets to someone else, they always keep them safe. If this is true for individuals, it is certainly true for businesses. Custodians always tell the truth and manage funds properly. They won't have any interest in taking the assets as an exchange operator would. Auditors tell the truth and can't be misled. That's because organizations that are regulated are incapable of lying and don't make mistakes. First, some background. Here is a summary of how custodians make us more secure: Previously, we might give Alice our crypto assets to hold. There were risks:
Alice might take the assets and disappear.
Alice might spend the assets and pretend that she still has them (fractional model).
Alice might store the assets insecurely and they'll get stolen.
Alice might give the assets to someone else by mistake or by force.
Alice might lose access to the assets.
But "no worries", Alice has a custodian named Bob. Bob is dressed in a nice suit. He knows some politicians. And he drives a Porsche. "So you have nothing to worry about!". And look at all the benefits we get:
Alice can't take the assets and disappear (unless she asks Bob or never gives them to Bob).
Alice can't spend the assets and pretend that she still has them. (Unless she didn't give them to Bob or asks him for them.)
Alice can't store the assets insecurely so they get stolen. (After all - she doesn't have any control over the withdrawal process from any of Bob's systems, right?)
Alice can't give the assets to someone else by mistake or by force. (Bob will stop her, right Bob?)
Alice can't lose access to the funds. (She'll always be present, sane, and remember all secrets, right?)
See - all problems are solved! All we have to worry about now is:
Bob might take the assets and disappear.
Bob might spend the assets and pretend that he still has them (fractional model).
Bob might store the assets insecurely and they'll get stolen.
Bob might give the assets to someone else by mistake or by force.
Bob might lose access to the assets.
It's pretty simple. Before we had to trust Alice. Now we only have to trust Alice, Bob, and all the ways in which they communicate. Just think of how much more secure we are! "On top of that", Bob assures us, "we're using a special wallet structure". Bob shows Alice a diagram. "We've broken the balance up and store it in lots of smaller wallets. That way", he assures her, "a thief can't take it all at once". And he points to a historic case where a large sum was taken "because it was stored in a single wallet... how stupid". "Very early on, we used to have all the crypto in one wallet", he said, "and then one Christmas a hacker came and took it all. We call him the Grinch. Now we individually wrap each crypto and stick it under a binary search tree. The Grinch has never been back since." "As well", Bob continues, "even if someone were to get in, we've got insurance. It covers all thefts and even coercion, collusion, and misplaced keys - only subject to the policy terms and conditions." And with that, he pulls out a phone-book sized contract and slams it on the desk with a thud. "Yep", he continues, "we're paying top dollar for one of the best policies in the country!" "Can I read it?' Alice asks. "Sure," Bob says, "just as soon as our legal team is done with it. They're almost through the first chapter." He pauses, then continues. "And can you believe that sales guy Mike? He has the same year Porsche as me. I mean, what are the odds?" "Do you use multi-sig?", Alice asks. "Absolutely!" Bob replies. "All our engineers are fully trained in multi-sig. Whenever we want to set up a new wallet, we generate 2 separate keys in an air-gapped process and store them in this proprietary system here. Look, it even requires the biometric signature from one of our team members to initiate any withdrawal." He demonstrates by pressing his thumb into the display. "We use a third-party cloud validation API to match the thumbprint and authorize each withdrawal. The keys are also backed up daily to an off-site third-party." "Wow that's really impressive," Alice says, "but what if we need access for a withdrawal outside of office hours?" "Well that's no issue", Bob says, "just send us an email, call, or text message and we always have someone on staff to help out. Just another part of our strong commitment to all our customers!" "What about Proof of Reserve?", Alice asks. "Of course", Bob replies, "though rather than publish any blockchain addresses or signed transaction, for privacy we just do a SHA256 refactoring of the inverse hash modulus for each UTXO nonce and combine the smart contract coefficient consensus in our hyperledger lightning node. But it's really simple to use." He pushes a button and a large green checkmark appears on a screen. "See - the algorithm ran through and reserves are proven." "Wow", Alice says, "you really know your stuff! And that is easy to use! What about fiat balances?" "Yeah, we have an auditor too", Bob replies, "Been using him for a long time so we have quite a strong relationship going! We have special books we give him every year and he's very efficient! Checks the fiat, crypto, and everything all at once!" "We used to have a nice offline multi-sig setup we've been using without issue for the past 5 years, but I think we'll move all our funds over to your facility," Alice says. "Awesome", Bob replies, "Thanks so much! This is perfect timing too - my Porsche got a dent on it this morning. We have the paperwork right over here." "Great!", Alice replies. And with that, Alice gets out her pen and Bob gets the contract. "Don't worry", he says, "you can take your crypto-assets back anytime you like - just subject to our cancellation policy. Our annual management fees are also super low and we don't adjust them often". How many holes have to exist for your funds to get stolen? Just one. Why are we taking a powerful offline multi-sig setup, widely used globally in hundreds of different/lacking regulatory environments with 0 breaches to date, and circumventing it by a demonstrably weak third party layer? And paying a great expense to do so? If you go through the list of breaches in the past 2 years to highly credible organizations, you go through the list of major corporate frauds (only the ones we know about), you go through the list of all the times platforms have lost funds, you go through the list of times and ways that people have lost their crypto from identity theft, hot wallet exploits, extortion, etc... and then you go through this custodian with a fine-tooth comb and truly believe they have value to add far beyond what you could, sticking your funds in a wallet (or set of wallets) they control exclusively is the absolute worst possible way to take advantage of that security. The best way to add security for crypto-assets is to make a stronger multi-sig. With one custodian, what you are doing is giving them your cryptocurrency and hoping they're honest, competent, and flawlessly secure. It's no different than storing it on a really secure exchange. Maybe the insurance will cover you. Didn't work for Bitpay in 2015. Didn't work for Yapizon in 2017. Insurance has never paid a claim in the entire history of cryptocurrency. But maybe you'll get lucky. Maybe your exact scenario will buck the trend and be what they're willing to cover. After the large deductible and hopefully without a long and expensive court battle. And you want to advertise this increase in risk, the lapse of judgement, an accident waiting to happen, as though it's some kind of benefit to customers ("Free institutional-grade storage for your digital assets.")? And then some people are writing to the OSC that custodians should be mandatory for all funds on every exchange platform? That this somehow will make Canadians as a whole more secure or better protected compared with standard air-gapped multi-sig? On what planet? Most of the problems in Canada stemmed from one thing - a lack of transparency. If Canadians had known what a joke Quadriga was - it wouldn't have grown to lose $400m from hard-working Canadians from coast to coast to coast. And Gerald Cotten would be in jail, not wherever he is now (at best, rotting peacefully). EZ-BTC and mister Dave Smilie would have been a tiny little scam to his friends, not a multi-million dollar fraud. Einstein would have got their act together or been shut down BEFORE losing millions and millions more in people's funds generously donated to criminals. MapleChange wouldn't have even been a thing. And maybe we'd know a little more about CoinTradeNewNote - like how much was lost in there. Almost all of the major losses with cryptocurrency exchanges involve deception with unbacked funds. So it's great to see transparency reports from BitBuy and ShakePay where someone independently verified the backing. The only thing we don't have is:
ANY CERTAINTY BALANCES WEREN'T EXCLUDED. Quadriga's largest account was $70m. 80% of funds are in 20% of accounts (Pareto principle). All it takes is excluding a few really large accounts - and nobody's the wiser. A fractional platform can easily pass any audit this way.
ANY VISIBILITY WHATSOEVER INTO THE CUSTODIANS. BitBuy put out their report before moving all the funds to their custodian and ShakePay apparently can't even tell us who the custodian is. That's pretty important considering that basically all of the funds are now stored there.
ANY IDEA ABOUT THE OTHER EXCHANGES. In order for this to be effective, it has to be the norm. It needs to be "unusual" not to know. If obscurity is the norm, then it's super easy for people like Gerald Cotten and Dave Smilie to blend right in.
It's not complicated to validate cryptocurrency assets. They need to exist, they need to be spendable, and they need to cover the total balances. There are plenty of credible people and firms across the country that have the capacity to reasonably perform this validation. Having more frequent checks by different, independent, parties who publish transparent reports is far more valuable than an annual check by a single "more credible/official" party who does the exact same basic checks and may or may not publish anything. Here's an example set of requirements that could be mandated:
First report within 1 month of launching, another within 3 months, and further reports at minimum every 6 months thereafter.
No auditor can be repeated within a 12 month period.
All reports must be public, identifying the auditor and the full methodology used.
All auditors must be independent of the firm being audited with no conflict of interest.
Reports must include the percentage of each asset backed, and how it's backed.
The auditor publishes a hash list, which lists a hash of each customer's information and balances that were included. Hash is one-way encryption so privacy is fully preserved. Every customer can use this to have 100% confidence they were included.
If we want more extensive requirements on audits, these should scale upward based on the total assets at risk on the platform, and whether the platform has loaned their assets out.
There are ways to structure audits such that neither crypto assets nor customer information are ever put at risk, and both can still be properly validated and publicly verifiable. There are also ways to structure audits such that they are completely reasonable for small platforms and don't inhibit innovation in any way. By making the process as reasonable as possible, we can completely eliminate any reason/excuse that an honest platform would have for not being audited. That is arguable far more important than any incremental improvement we might get from mandating "the best of the best" accountants. Right now we have nothing mandated and tons of Canadians using offshore exchanges with no oversight whatsoever. Transparency does not prove crypto assets are safe. CoinTradeNewNote, Flexcoin ($600k), and Canadian Bitcoins ($100k) are examples where crypto-assets were breached from platforms in Canada. All of them were online wallets and used no multi-sig as far as any records show. This is consistent with what we see globally - air-gapped multi-sig wallets have an impeccable record, while other schemes tend to suffer breach after breach. We don't actually know how much CoinTrader lost because there was no visibility. Rather than publishing details of what happened, the co-founder of CoinTrader silently moved on to found another platform - the "most trusted way to buy and sell crypto" - a site that has no information whatsoever (that I could find) on the storage practices and a FAQ advising that “[t]rading cryptocurrency is completely safe” and that having your own wallet is “entirely up to you! You can certainly keep cryptocurrency, or fiat, or both, on the app.” Doesn't sound like much was learned here, which is really sad to see. It's not that complicated or unreasonable to set up a proper hardware wallet. Multi-sig can be learned in a single course. Something the equivalent complexity of a driver's license test could prevent all the cold storage exploits we've seen to date - even globally. Platform operators have a key advantage in detecting and preventing fraud - they know their customers far better than any custodian ever would. The best job that custodians can do is to find high integrity individuals and train them to form even better wallet signatories. Rather than mandating that all platforms expose themselves to arbitrary third party risks, regulations should center around ensuring that all signatories are background-checked, properly trained, and using proper procedures. We also need to make sure that signatories are empowered with rights and responsibilities to reject and report fraud. They need to know that they can safely challenge and delay a transaction - even if it turns out they made a mistake. We need to have an environment where mistakes are brought to the surface and dealt with. Not one where firms and people feel the need to hide what happened. In addition to a knowledge-based test, an auditor can privately interview each signatory to make sure they're not in coercive situations, and we should make sure they can freely and anonymously report any issues without threat of retaliation. A proper multi-sig has each signature held by a separate person and is governed by policies and mutual decisions instead of a hierarchy. It includes at least one redundant signature. For best results, 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7. History has demonstrated over and over again the risk of hot wallets even to highly credible organizations. Nonetheless, many platforms have hot wallets for convenience. While such losses are generally compensated by platforms without issue (for example Poloniex, Bitstamp, Bitfinex, Gatecoin, Coincheck, Bithumb, Zaif, CoinBene, Binance, Bitrue, Bitpoint, Upbit, VinDAX, and now KuCoin), the public tends to focus more on cases that didn't end well. Regardless of what systems are employed, there is always some level of risk. For that reason, most members of the public would prefer to see third party insurance. Rather than trying to convince third party profit-seekers to provide comprehensive insurance and then relying on an expensive and slow legal system to enforce against whatever legal loopholes they manage to find each and every time something goes wrong, insurance could be run through multiple exchange operators and regulators, with the shared interest of having a reputable industry, keeping costs down, and taking care of Canadians. For example, a 4 of 7 multi-sig insurance fund held between 5 independent exchange operators and 2 regulatory bodies. All Canadian exchanges could pay premiums at a set rate based on their needed coverage, with a higher price paid for hot wallet coverage (anything not an air-gapped multi-sig cold wallet). Such a model would be much cheaper to manage, offer better coverage, and be much more reliable to payout when needed. The kind of coverage you could have under this model is unheard of. You could even create something like the CDIC to protect Canadians who get their trading accounts hacked if they can sufficiently prove the loss is legitimate. In cases of fraud, gross negligence, or insolvency, the fund can be used to pay affected users directly (utilizing the last transparent balance report in the worst case), something which private insurance would never touch. While it's recommended to have official policies for coverage, a model where members vote would fully cover edge cases. (Could be similar to the Supreme Court where justices vote based on case law.) Such a model could fully protect all Canadians across all platforms. You can have a fiat coverage governed by legal agreements, and crypto-asset coverage governed by both multi-sig and legal agreements. It could be practical, affordable, and inclusive. Now, we are at a crossroads. We can happily give up our freedom, our innovation, and our money. We can pay hefty expenses to auditors, lawyers, and regulators year after year (and make no mistake - this cost will grow to many millions or even billions as the industry grows - and it will be borne by all Canadians on every platform because platforms are not going to eat up these costs at a loss). We can make it nearly impossible for any new platform to enter the marketplace, forcing Canadians to use the same stagnant platforms year after year. We can centralize and consolidate the entire industry into 2 or 3 big players and have everyone else fail (possibly to heavy losses of users of those platforms). And when a flawed security model doesn't work and gets breached, we can make it even more complicated with even more people in suits making big money doing the job that blockchain was supposed to do in the first place. We can build a system which is so intertwined and dependent on big government, traditional finance, and central bankers that it's future depends entirely on that of the fiat system, of fractional banking, and of government bail-outs. If we choose this path, as history has shown us over and over again, we can not go back, save for revolution. Our children and grandchildren will still be paying the consequences of what we decided today. Or, we can find solutions that work. We can maintain an open and innovative environment while making the adjustments we need to make to fully protect Canadian investors and cryptocurrency users, giving easy and affordable access to cryptocurrency for all Canadians on the platform of their choice, and creating an environment in which entrepreneurs and problem solvers can bring those solutions forward easily. None of the above precludes innovation in any way, or adds any unreasonable cost - and these three policies would demonstrably eliminate or resolve all 109 historic cases as studied here - that's every single case researched so far going back to 2011. It includes every loss that was studied so far not just in Canada but globally as well. Unfortunately, finding answers is the least challenging part. Far more challenging is to get platform operators and regulators to agree on anything. My last post got no response whatsoever, and while the OSC has told me they're happy for industry feedback, I believe my opinion alone is fairly meaningless. This takes the whole community working together to solve. So please let me know your thoughts. Please take the time to upvote and share this with people. Please - let's get this solved and not leave it up to other people to do. Facts/background/sources (skip if you like):
The inspiration for the paragraph about splitting wallets was an actual quote from a Canadian company providing custodial services in response to the OSC consultation paper: "We believe that it will be in the in best interests of investors to prohibit pooled crypto assets or ‘floats’. Most Platforms pool assets, citing reasons of practicality and expense. The recent hack of the world’s largest Platform – Binance – demonstrates the vulnerability of participants’ assets when such concessions are made. In this instance, the Platform’s entire hot wallet of Bitcoins, worth over $40 million, was stolen, facilitated in part by the pooling of client crypto assets." "the maintenance of participants (and Platform) crypto assets across multiple wallets distributes the related risk and responsibility of security - reducing the amount of insurance coverage required and making insurance coverage more readily obtainable". For the record, their reply also said nothing whatsoever about multi-sig or offline storage.
In addition to the fact that the $40m hack represented only one "hot wallet" of Binance, and they actually had the vast majority of assets in other wallets (including mostly cold wallets), multiple real cases have clearly demonstrated that risk is still present with multiple wallets. Bitfinex, VinDAX, Bithumb, Altsbit, BitPoint, Cryptopia, and just recently KuCoin all had multiple wallets breached all at the same time, and may represent a significantly larger impact on customers than the Binance breach which was fully covered by Binance. To represent that simply having multiple separate wallets under the same security scheme is a comprehensive way to reduce risk is just not true.
Private insurance has historically never covered a single loss in the cryptocurrency space (at least, not one that I was able to find), and there are notable cases where massive losses were not covered by insurance. Bitpay in 2015 and Yapizon in 2017 both had insurance policies that didn't pay out during the breach, even after a lengthly court process. The same insurance that ShakePay is presently using (and announced to much fanfare) was describe by their CEO himself as covering “physical theft of the media where the private keys are held,” which is something that has never historically happened. As was said with regard to the same policy in 2018 - “I don’t find it surprising that Lloyd’s is in this space,” said Johnson, adding that to his mind the challenge for everybody is figuring out how to structure these policies so that they are actually protective. “You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it’s not super protective.”
The most profitable policy for a private insurance company is one with the most expensive premiums that they never have to pay a claim on. They have no inherent incentive to take care of people who lost funds. It's "cheaper" to take the reputational hit and fight the claim in court. The more money at stake, the more the insurance provider is incentivized to avoid payout. They're not going to insure the assets unless they have reasonable certainty to make a profit by doing so, and they're not going to pay out a massive sum unless it's legally forced. Private insurance is always structured to be maximally profitable to the insurance provider.
The circumvention of multi-sig was a key factor in the massive Bitfinex hack of over $60m of bitcoin, which today still sits being slowly used and is worth over $3b. While Bitfinex used a qualified custodian Bitgo, which was and still is active and one of the industry leaders of custodians, and they set up 2 of 3 multi-sig wallets, the entire system was routed through Bitfinex, such that Bitfinex customers could initiate the withdrawals in a "hot" fashion. This feature was also a hit with the hacker. The multi-sig was fully circumvented.
Bitpay in 2015 was another example of a breach that stole 5,000 bitcoins. This happened not through the exploit of any system in Bitpay, but because the CEO of a company they worked with got their computer hacked and the hackers were able to request multiple bitcoin purchases, which Bitpay honoured because they came from the customer's computer legitimately. Impersonation is a very common tactic used by fraudsters, and methods get more extreme all the time.
A notable case in Canada was the Canadian Bitcoins exploit. Funds were stored on a server in a Rogers Data Center, and the attendee was successfully convinced to reboot the server "in safe mode" with a simple phone call, thus bypassing the extensive security and enabling the theft.
The very nature of custodians circumvents multi-sig. This is because custodians are not just having to secure the assets against some sort of physical breach but against any form of social engineering, modification of orders, fraudulent withdrawal attempts, etc... If the security practices of signatories in a multi-sig arrangement are such that the breach risk of one signatory is 1 in 100, the requirement of 3 independent signatures makes the risk of theft 1 in 1,000,000. Since hackers tend to exploit the weakest link, a comparable custodian has to make the entry and exit points of their platform 10,000 times more secure than one of those signatories to provide equivalent protection. And if the signatories beef up their security by only 10x, the risk is now 1 in 1,000,000,000. The custodian has to be 1,000,000 times more secure. The larger and more complex a system is, the more potential vulnerabilities exist in it, and the fewer people can understand how the system works when performing upgrades. Even if a system is completely secure today, one has to also consider how that system might evolve over time or work with different members.
By contrast, offline multi-signature solutions have an extremely solid record, and in the entire history of cryptocurrency exchange incidents which I've studied (listed here), there has only been one incident (796 exchange in 2015) involving an offline multi-signature wallet. It happened because the customer's bitcoin address was modified by hackers, and the amount that was stolen ($230k) was immediately covered by the exchange operators. Basically, the platform operators were tricked into sending a legitimate withdrawal request to the wrong address because hackers exploited their platform to change that address. Such an issue would not be prevented in any way by the use of a custodian, as that custodian has no oversight whatsoever to the exchange platform. It's practical for all exchange operators to test large withdrawal transactions as a general policy, regardless of what model is used, and general best practice is to diagnose and fix such an exploit as soon as it occurs.
False promises on the backing of funds played a huge role in the downfall of Quadriga, and it's been exposed over and over again (MyCoin, PlusToken, Bitsane, Bitmarket, EZBTC, IDAX). Even today, customers have extremely limited certainty on whether their funds in exchanges are actually being backed or how they're being backed. While this issue is not unique to cryptocurrency exchanges, the complexity of the technology and the lack of any regulation or standards makes problems more widespread, and there is no "central bank" to come to the rescue as in the 2008 financial crisis or during the great depression when "9,000 banks failed".
In addition to fraudulent operations, the industry is full of cases where operators have suffered breaches and not reported them. Most recently, Einstein was the largest case in Canada, where ongoing breaches and fraud were perpetrated against the platform for multiple years and nobody found out until the platform collapsed completely. While fraud and breaches suck to deal with, they suck even more when not dealt with. Lack of visibility played a role in the largest downfalls of Mt. Gox, Cryptsy, and Bitgrail. In some cases, platforms are alleged to have suffered a hack and keep operating without admitting it at all, such as CoinBene.
It surprises some to learn that a cryptographic solution has already existed since 2013, and gained widespread support in 2014 after Mt. Gox. Proof of Reserves is a full cryptographic proof that allows any customer using an exchange to have complete certainty that their crypto-assets are fully backed by the platform in real-time. This is accomplished by proving that assets exist on the blockchain, are spendable, and fully cover customer deposits. It does not prove safety of assets or backing of fiat assets.
If we didn't care about privacy at all, a platform could publish their wallet addresses, sign a partial transaction, and put the full list of customer information and balances out publicly. Customers can each check that they are on the list, that the balances are accurate, that the total adds up, and that it's backed and spendable on the blockchain. Platforms who exclude any customer take a risk because that customer can easily check and see they were excluded. So together with all customers checking, this forms a full proof of backing of all crypto assets.
However, obviously customers care about their private information being published. Therefore, a hash of the information can be provided instead. Hash is one-way encryption. The hash allows the customer to validate inclusion (by hashing their own known information), while anyone looking at the list of hashes cannot determine the private information of any other user. All other parts of the scheme remain fully intact. A model like this is in use on the exchange CoinFloor in the UK.
A Merkle tree can provide even greater privacy. Instead of a list of balances, the balances are arranged into a binary tree. A customer starts from their node, and works their way to the top of the tree. For example, they know they have 5 BTC, they plus 1 other customer hold 7 BTC, they plus 2-3 other customers hold 17 BTC, etc... until they reach the root where all the BTC are represented. Thus, there is no way to find the balances of other individual customers aside from one unidentified customer in this case.
Proposals such as this had the backing of leaders in the community including Nic Carter, Greg Maxwell, and Zak Wilcox. Substantial and significant effort started back in 2013, with massive popularity in 2014. But what became of that effort? Very little. Exchange operators continue to refuse to give visibility. Despite the fact this information can often be obtained through trivial blockchain analysis, no Canadian platform has ever provided any wallet addresses publicly. As described by the CEO of Newton "For us to implement some kind of realtime Proof of Reserves solution, which I'm not opposed to, it would have to ... Preserve our users' privacy, as well as our own. Some kind of zero-knowledge proof". Kraken describes here in more detail why they haven't implemented such a scheme. According to professor Eli Ben-Sasson, when he spoke with exchanges, none were interested in implementing Proof of Reserves.
And yet, Kraken's places their reasoning on a page called "Proof of Reserves". More recently, both BitBuy and ShakePay have released reports titled "Proof of Reserves and Security Audit". Both reports contain disclaimers against being audits. Both reports trust the customer list provided by the platform, leaving the open possibility that multiple large accounts could have been excluded from the process. Proof of Reserves is a blockchain validation where customers see the wallets on the blockchain. The report from Kraken is 5 years old, but they leave it described as though it was just done a few weeks ago. And look at what they expect customers to do for validation. When firms represent something being "Proof of Reserve" when it's not, this is like a farmer growing fruit with pesticides and selling it in a farmers market as organic produce - except that these are people's hard-earned life savings at risk here. Platforms are misrepresenting the level of visibility in place and deceiving the public by their misuse of this term. They haven't proven anything.
Fraud isn't a problem that is unique to cryptocurrency. Fraud happens all the time. Enron, WorldCom, Nortel, Bear Stearns, Wells Fargo, Moser Baer, Wirecard, Bre-X, and Nicola are just some of the cases where frauds became large enough to become a big deal (and there are so many countless others). These all happened on 100% reversible assets despite regulations being in place. In many of these cases, the problems happened due to the over-complexity of the financial instruments. For example, Enron had "complex financial statements [which] were confusing to shareholders and analysts", creating "off-balance-sheet vehicles, complex financing structures, and deals so bewildering that few people could understand them". In cryptocurrency, we are often combining complex financial products with complex technologies and verification processes. We are naïve if we think problems like this won't happen. It is awkward and uncomfortable for many people to admit that they don't know how something works. If we want "money of the people" to work, the solutions have to be simple enough that "the people" can understand them, not so confusing that financial professionals and technology experts struggle to use or understand them.
For those who question the extent to which an organization can fool their way into a security consultancy role, HB Gary should be a great example to look at. Prior to trying to out anonymous, HB Gary was being actively hired by multiple US government agencies and others in the private sector (with glowing testimonials). The published articles and hosted professional security conferences. One should also look at this list of data breaches from the past 2 years. Many of them are large corporations, government entities, and technology companies. These are the ones we know about. Undoubtedly, there are many more that we do not know about. If HB Gary hadn't been "outted" by anonymous, would we have known they were insecure? If the same breach had happened outside of the public spotlight, would it even have been reported? Or would HB Gary have just deleted the Twitter posts, brought their site back up, done a couple patches, and kept on operating as though nothing had happened?
In the case of Quadriga, the facts are clear. Despite past experience with platforms such as MapleChange in Canada and others around the world, no guidance or even the most basic of a framework was put in place by regulators. By not clarifying any sort of legal framework, regulators enabled a situation where a platform could be run by former criminal Mike Dhanini/Omar Patryn, and where funds could be held fully unchecked by one person. At the same time, the lack of regulation deterred legitimate entities from running competing platforms and Quadriga was granted a money services business license for multiple years of operation, which gave the firm the appearance of legitimacy. Regulators did little to protect Canadians despite Quadriga failing to file taxes from 2016 onward. The entire administrative team had resigned and this was public knowledge. Many people had suspicions of what was going on, including Ryan Mueller, who forwarded complaints to the authorities. These were ignored, giving Gerald Cotten the opportunity to escape without justice.
There are multiple issues with the SOC II model including the prohibitive cost (you have to find a third party accounting firm and the prices are not even listed publicly on any sites), the requirement of operating for a year (impossible for new platforms), and lack of any public visibility (SOC II are private reports that aren't shared outside the people in suits).
Securities frameworks are expensive. Sarbanes-Oxley is estimated to cost $5.1 million USD/yr for the average Fortune 500 company in the United States. Since "Fortune 500" represents the top 500 companies, that means well over $2.55 billion USD (~$3.4 billion CAD) is going to people in suits. Isn't the problem of trust and verification the exact problem that the blockchain is supposed to solve?
To use Quadriga as justification for why custodians or SOC II or other advanced schemes are needed for platforms is rather silly, when any framework or visibility at all, or even the most basic of storage policies, would have prevented the whole thing. It's just an embarrassment.
We are now seeing regulators take strong action. CoinSquare in Canada with multi-million dollar fines. BitMex from the US, criminal charges and arrests. OkEx, with full disregard of withdrawals and no communication. Who's next?
We have a unique window today where we can solve these problems, and not permanently destroy innovation with unreasonable expectations, but we need to act quickly. This is a unique historic time that will never come again.
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