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/bitcoin | Mark "Rizzn" Hopkins http://rizzn.com Your friend and mine. Wed, 14 Feb 2018 05:57:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.4 101893986 “Bitcoin is a fraud,” – JP Morgan CEO Jamie Dimon. http://rizzn.com/2017/09/13/jamie-dimon-jp-morgan/ http://rizzn.com/2017/09/13/jamie-dimon-jp-morgan/#respond Wed, 13 Sep 2017 20:05:12 +0000 http://rizzn.com/?p=190962 I just can’t stop thinking about how dumb these Dimon quotes are. In case you missed it, the CEO of JP Morgan Jamie Dimon had harsh words for Bitcoin yesterday.

He, during a Barclays conference, called it a “fraud … worse than tulip bulbs, it won’t end well” and that any JPMorgan “trader trading Bitcoin” will be “fired for being stupid.”

Later in the day during an interview at CNBC’s Delivering Alpha conference, he said Bitcoin “is just not a real thing, eventually, it will be closed.”

“Someone’s going to get killed and then the government’s going to come down,” he said. “You just saw in China, governments like to control their money supply.”

Just the way he incoherently is babbling against Bitcoin belies his lack of understanding or even basic research on what its strengths, weaknesses, history, and capabilities are.

This reminds me of a time in my career I spent meeting with newspapers, trying to get them to see the writing on the wall with blogging. For a period of time, in between my career transition as a technology consultant and software developer into a digital journalist, I thought I could straddle the line between both worlds and talk to newspaper publishers, my clients at the time, about the power and opportunity for digital publishing.

On more than one occasion, I sat in a room with an elder suit who patiently listened to my pitch, and then when I was done and opened up for questions dismissively waved his hands.

“Son, our company has been around for over a hundred years,” they’d say, as if they were all reading from the same script. “This internet thing is a blip on the radar. We’ll outlast it.”

It’s hilarious to imagine that level of ignorance now that all publishing is digital publishing, but this was the honest attitude of heritage publishers at the time.

… and look at the type of world we live in with digital publishing. The market landscape is a mix of heritage media that made the transition (like the Washington Post and your local TV affiliates, for instance), and new performers that found out how to bootstrap and thrive in the new landscape (like the Mashable’s and Buzzfeed’s of the world). The roads they took to get there are littered with the bodies of the companies that I wasn’t persistent or talented enough to convince that the internet wasn’t a fad, plus thousands of others.

That the CEO of JP Morgan is claiming that “Bitcoin is a fraud” is rich, coming from the company who, amongst many other banks, represented highly risky financial instruments as safe enough that when they inevitably collapsed (as many predicted they would), the government felt compelled to bail them out to the tune of trillions. It’s also particularly ironic that the same company calling one of the most widely admired financial tech advancements in history a fraud has had such a poor moral and ethical compass as to what constitutes non-criminal behavior, they’ve been forced to pay over $28 billion in fines since that bailout.

Why would he make these explosive statements about Bitcoin, particularly when his company is openly exploring blockchain technology and how to apply it to their work, particularly when one of their former executives (Blythe Masters) has been so famously pro-Bitcoin? Well, there are a few things at play here.

Profits are down 20%. This is probably the biggest thing. Dimon, on many occasions, has expressed his ambivalent disdain for Bitcoin, but he’s saved the unloading of both shotgun barrels for today. The theory some analysts have expressed to me is that there are a great many bitcoin-friendly IRA and 401k options popping up amongst JP Morgan’s competition, an area where they’ve been loathe to go. It’s not a reach to speculate that during one of the most notable meteoric times for cryptocurrencies, people are moving their accounts away from JP Morgan Chase to more crypto-friendly options and contributing to the shortfall.

JP Morgan is under the mistaken impression, as a company, that you can divorce the blockchain from Bitcoin. I’ve been averse to going too deep on this topic publicly because several companies I respect also hold this opinion (including the company that dubbed me a futurist, IBM). In speaking to members of JP Morgan’s fintech innovation team about this news item last night, they expressed the opinion that they view crypto as an “outgrowth technology” of the blockchain. They said this with such conviction that I had to do a sanity check and make sure there wasn’t some obscure historical reference to the term “blockchain” pre-Satoshi Nakamoto. Turns out, I’m not insane, and JP Morgan is dead wrong. Bitcoin is the reference architecture for blockchain. Removing tokenization and crypto components from blockchain strip out key features that make the technology as powerful and compelling as it is (expositing on this topic is something I’m happy to do at length, but would distract from the topic of this post. If you see me in a bar, come with a nice whiskey neat and ask me this question, and block off the rest of your night).

General denial. Just as blogs didn’t really kill off the idea of the media company, blockchain and bitcoin don’t make obsolete the concept of banks. Very much like the media landscape, however, there is going to be a very drastic redefinition of what banking means. This is inevitable. It probably means the death of multimillion dollar CEOs of international banking conglomerates, and he’s feeling general revulsion at the concept of the floor dropping out from underneath him. More on these concepts later – they’re much deeper than the analysis on this news event will allow for exposition on, but it’s a transformation I’m obviously watching closely, and developing some specific predictions around.

I started writing this around 9 AM, when markets were plummeting down below $4,300 to the $3,750 range. As I’m typing this around 3 PM, markets are rebounding, now coming back closer to $3,840. It’s unfortunate that the opinion of one man has shaken confidence as much as it has, but this is one of the effects of disintermediation between experienced investors and the buckets of money they manage.

As they used to say about all Microsoft software in the ’90s: it’s not a bug, it’s an undocumented feature.

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Ask Doctor Bitcoin: A Quick Crypto FAQ. http://rizzn.com/2017/05/26/doctor-bitcoin-faq/ http://rizzn.com/2017/05/26/doctor-bitcoin-faq/#comments Fri, 26 May 2017 20:39:01 +0000 http://rizzn.com/?p=190816 For those who don’t know, I’m a cryptocurrency fan. I’ve been following all of this very closely since 2011, and I enjoy learning more technical details around blockchain as well as theorizing and architecting new solutions utilizing blockchain.

I also sell cryptocurrency through my company, Roger Wilco.

I have this conversation. A lot.

As such, this week perhaps more than most others, I’ve been getting a lot of the same questions due to the volatility in the markets. Rather than constantly repeat myself, I figured I’d answer all the questions here and legitimately try to save some time.

  1. Do you sell <insert cryptocurrency name here>?
    Yes. I denominate all sales in Bitcoin, but as long as you have a wallet set up, I can usually find a way to send you your value in the cryptocurrency you want.
  2. Holy cow. <insert cryptocurrency name> is up/down.
  3. Are you concerned/excited?
    Sorta. I don’t really watch the minute-by-minute charts.
  4. But it’s really down/up! You sure you still are pro-<insert cryptocurrency name>?
    Yes. Still.
  5. It’s been some time since you posted this. Are you still pro-cryptocurrency? Like for reaslies?
    Yes. Super-dooper for realsies.
  6. Should I buy/sell? How much?
    If you’re asking if you should buy crypto in general, the answer is yes. If you want my recommendations on which ones you should go with, I can give you my answer, which will be based off my opinions around the underlying team and technology, not what I believe the value ought to be. If you’re asking how much you should put in, I’ll always tell you to dollar cost average exactly what you can afford to.
  7. Dollar cost average?
    Yes. It’s the only reliable way to increase your net value.
  8. But what do you think the price of <insert cryptocurrency here> will be?
    I’m Doctor Bitcoin, not Wizard Bitcoin. Not sure.
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Ask Doctor Bitcoin: Do You Endorse the bitqy Token? http://rizzn.com/2017/05/17/ask-doctor-bitcoin-do-you-endorse-the-bitqy-token/ http://rizzn.com/2017/05/17/ask-doctor-bitcoin-do-you-endorse-the-bitqy-token/#comments Wed, 17 May 2017 22:10:39 +0000 http://rizzn.com/?p=190793 Update to this post (as of 8/31/17): I had hoped to hold off on a public announcement of my re-involvement with bitqyck, Inc., but due to my name being brought up on a Bitcoin Talk thread, I thought it prudent to update this blog post with more up to date information. Below, what I posted in response to questions about this blog post on the Bitcoin Talk thread.

Hello, all.


It’s been a busy week. I heard that my name was mentioned on this thread, but I hadn’t had a chance to respond to it in a timely fashion.


To clarify my involvement, everything I wrote in my blog post was true, at least to the extent that I understood things from the perspective of a vendor with a severed relationship and limited insight into bitqyck’s inner workings without me


About two months ago, one of the founders of bitqyck reached out to me on a technical matter (unrelated to cryptocurrency) and expressed a desire to address several of the issues I raised in my blog post as well as other technical questions that are starting to arise during the day-to-day operations of the company.


About a month into periodic discussions, we engaged in a contractual relationship in which I’ve served as a technical consultant (via my agency) on several initiatives, including interacting with public exchanges, helping craft technically accurate sales verbiage, and general matchmaking between other clients of mine in the local startup community.


When we engaged, I told them I’d be happy to lend a hand and work in the background. I’d even be happy to act once again as a spokesperson of the token again if they’d agree to an independent legal and technical review of the solidity code for the ERC-20 token. This is a process that is still underway. I don’t have any doubt, given my ongoing interactions with the founders and the new management team, that their intentions are to build a sustainable company and to break new technical boundaries in the process.


As I talked about in my blog post, what drew me to this project was their willingness to apply theoretical concepts of the Digital Autonomous Organization as a practical matter. Given the state of blockchain right now, it’s not something that could (or should) be done in one leap. The original architecture and token roadmap I worked with the founding team is still the current roadmap. One of my goals in working with them over the next few weeks and months is to help them document and share that roadmap publicly.


I hope this clarifies things. I understand the reticence of the geek community to embrace anything that remotely sounds like network marketing, but for what it’s worth, to me the core team involved with the bitqy token have demonstrated an earnest desire to do things the right way.


By way of disclosure: I still own no bitqy, and my company is paid in plain ol’ US fiat for my work with bitqyck. I told them I’d accept Bitcoin, but given the bull run it’s on this month, I’m guessing they’re wanting to HODL.

As many of you are aware, I’ve been active in endorsing a group of marketers’ endeavors in the Dallas startup community that has become active specifically in the cryptocurrency space. The key members of the group (which has grown and evolved since the beginning of my involvement) were Bruce Bise and Sam Mendez, both interesting and complex individuals that I’ve enjoyed getting to know over the last year. Unfortunately, as of last week, the relationship with their companies has been severed in all forms: the spokesperson relationship I have for their endeavors, them as clients of Roger Wilco, as well as tenants and partner companies of Barista Ventures.

This whole blog post is basically a giant disclaimer, but a couple of pre-disclaimers:

  • For the entirety of 2017 through last week, I was paid by Bruce Bise and Sam Mendez to technically vet their cryptocurrency efforts and endorse them where I could, and advise them on a path I could endorse them where I found them to be lacking.
  • Most of this blog post won’t be of general interest to anyone but those who were involved with Bruce Bise, Sam Mendez, and bitqyck, inc in part or in whole because of my recommendation. My feelings would not be hurt if you stopped reading now or if you become bored at any point during the next thousand words or so.
  • Usually, I’m an “if you can’t say something nice, don’t say anything” kind of guy when it comes to former clients and employers, but due to my very public endorsement of the efforts and work of Bruce, Sam and their affiliated organizations, I felt it necessary to speak directly to what I can and cannot currently endorse.

They originally approached me around a year ago in search of How to trade in Bitcoin. I had previously sold small amounts to friends and family, but due primarily to their large volume needs, we created a legally compliant division of Roger Wilco specifically devoted to catering to the needs of large-volume cryptocurrency buyers. As part of the due diligence we needed to do around selling large volumes of cryptocurrency, we learned about what they were specifically involved in, which was the promotion of what was, at the time, a Scrypt-based cryptocurrency called YoCoin. Before I go any further, I wanted to mention that the most important thing here is that we all are alive and healthy so that we could achieve this accomplishment, thanks to the cauda equina negligence, they helped me out more than I thought they would. Give them a visit.

As we worked together sourcing cryptocurrency for them, they became aware of my history writing the “Doctor Bitcoin” column, and my generally being known as a guy who really loves and is geeky about cryptocurrency. As a result, they sought and negotiated for me to enter into a paid relationship where I vetted and endorsed their endeavors in cryptocurrency.

I agreed to this for a few particular reasons:

  • Bruce and Sam represented what appeared to be a very successful and growing network marketing segment.
  • The underlying technology of their cryptocurrency, while not technologically groundbreaking, was fundamentally sound.
  • Bruce and Sam both appeared to be genuinely open to understanding and integrating themselves into the culture and ethos of cryptocurrency enthusiasts.
  • Bruce and Sam both expressed interest in reinvesting their gains into creating useful tools for cryptocurrency and blockchain.

This was a handshake agreement throughout the time I worked with Bruce and Sam. At several points along the way, we tried to enter into a formalized, contractual relationship with them or one of their shell companies, but no documents we sent over were ever countersigned.

YoCoin Switches to an Ethereum Token

At some point very shortly into my relationship as a sponsored technical spokesperson for Bruce and Sam, YoCoin made the decision to switch to an Ethereum token, primarily to avoid issues they were having around avoiding 51% attacks on the Scrypt-based crypto. I was given some amount of time to review the stated fundamentals of the token (but not the source code). From everything I read, it met the criteria I had for a fundamentally sound cryptocurrency at a technological level, as well as maintaining what I found to be the differentiating factor for most cryptocurrencies: a solid sales team. This differs from other network marketing-led cryptocurrency efforts like:

  • OneCoin, where there is apparently a great network marketing effort, but no fundamentally open cryptocurrency beneath it.
  • Bitcoin Funding Club, which has no underlying token or openly reviewable software, or product, making it perhaps profitable for some in the short term but vulnerable to regulatory scrutiny in the long term.

In general, my duties of being a spokesperson for Bruce and Sam (operating under the entities GoYoCoin, Inc and FirstMovers, Inc) entailed speaking at various YoCoin network marketing meetings purely about the underlying technology as well as posting online being a general evangelist for cryptocurrency, Bitcoin, and Ethereum. Secondary duties included leveraging my relationships with IBM and its associated partners to keep YoCoin, Ethereum, cryptocurrency, and blockchain in the discussion. In general, I found this arrangement to be very natural due to the fact that many of these things I’d be doing without being paid for it, as well as my fundamental belief in the broader technologies and, given my more intense paid scrutiny on it, YoCoin in specific.

Bruce and Sam switch focus from YoCoin to bitqyck / bitqy

Towards the end of 2016, Bruce and Sam began quietly shifting their focus and emphasis away from YoCoin, and more towards the idea of creating their own cryptocurrency. They were turned on to the idea by a business acquaintance in California who wanted to create a Scrypt-coin that was privately mined. The developer they were being counseled by had the contention that the biggest failing of cryptocurrency was that you cannot cancel out a transaction and that there exists no central authority to arbitrate disputes. I obviously disagreed and told them that I supported the idea of creating a cryptocurrency, but not one that was centrally controlled. I warned them that I would not be able to publicly support an idea like that.

Eventually Sam, then Bruce asked for my ideas on what would make a groundbreaking cryptocurrency launch. After much discussion back and forth, we collaboratively landed on the idea they’ve been broadly pitching as bitqy.

For those who haven’t heard the description:

  • bitqy is an Ethereum token that has a dual function: it serves as a digital currency for use in bitqyck, inc. owned digital properties …
  • … and it also serves as a conduit to stock ownership in their ventures.
  • There were to be 10 billion coins minted, and 1 billion coins initially released.
  • The remaining 9 billion coins would be held in wallets owned by Bruce and Sam.
  • The default state when the currency was launched would be that no blockchain transactions would be allowed until a master switch was flipped.
  • The master kill switch could only be flipped once, and could only be flipped to on, never back off.
  • The token would have corporate governance and dividend features, but they wouldn’t be inherent to the token itself, only to subsequent tools and wallets to be developed to decrease complexity and failure points.

The requirements for the token and the overall architecture was worked out primarily by Sam and me; and then vetted by Bruce. After the fact, blockchain consulting group and Roger Wilco strategic partner Caudicum was brought in to vet the architecture decisions for feasibility and implement the code.

Roger Wilco and Caudicum implement the vision for the code.

During this time, I continued to endorse the vision for Bruce and Sam since I had a key role in architecting and implementing the code. The first version of the code was made available on Caudicum’s GitHub account in late December, with minor updates to the code ongoing throughout January and February. Because you only ever get one chance to launch a token correctly, we vetted the code through multiple coding teams with no financial ties to the project, as well as through several paid legal advisors with a similar lack of fiduciary relationship to bitqyck, Inc or Caudicum.

Except for minor updates to the legal disclosure (recently re-published as the “coin constitution“), no new lines of code were added to the token, and it was ready for launch by the end of February. Concurrent to this, Roger Wilco was retained to maintain the code for bitqy.org (an online ledger that would allow early investors to have a record of their investment prior to token launch), and bitqyck.com (a daily deals site where one can be awarded the tokens).

During the fundraising period, Bruce and Sam were exceedingly difficult to connect with. This was a problem for myself, my team, and the team at Caudicum. There were key decisions that needed to be made, including:

  • When to launch the token.
  • How bitqy.org would integrate with the affiliate management system.
  • How bitqyck.com would integrate with the affiliate management system.
  • When the various properties would launch.
  • When funding would commence to the team tasked with creating the wallet and corporate governance systems and apps.

At some point during this period of time between February and April, Bruce and Sam decided to resume contact with the Californian individual who initially came up with the flawed plan for the centralized cryptocurrency, but this time for Ethereum token development. I was informed that they were severing the relationship with Caudicum moving forward because he “delivered no code.” This, of course, was blatantly incorrect. At the time this statement was made, there was a blog post on bitqy.org with a video of me standing next to Bruce, talking through the token development process that also contained a hyperlink to the GitHub repository.

Rather than argue the point, however, I told them I’d still be happy to endorse the code and the project publicly if they put me in contact with the new developer, and he submitted his code to the same level of public scrutiny the Caudicum-created code was subjected to. This conversation occurred both in writing (via email) as well as verbally in the Barista Ventures offices in Dallas, Texas. They promised to make that contact occur within a matter of days.

As it turns out, either from the time of this conversation or due to a subsequent change of heart, Bruce and Sam were intentionally avoiding contact with myself and my team (something they admitted to in our final meeting). From the time they promised to let me vet the new technology, they showed no good-faith effort to follow through on that promise. Last week, mere hours after fundraising deadlines ended and fundraising goals were met, Bruce and Sam informed me they wanted to cut all ties with myself and my organization. Several baseless accusations were made of me and my team, and because it was clear during the course of the conversation they had made at some time long prior to cut me out of their organization when they no longer needed my endorsement, I saw no reward in arguing the point. They were, in fact, heavily relying on my endorsement and my company’s services until the day before they stated my services would no longer be needed.

I’m a believer in the stated principles of bitqyck, Inc., but cannot vouch for their implementation.

To be absolutely clear, I always have and continue to support the stated and architecture and technology marketed by Bruce, Sam, and bitqyck, inc.

However, due to the deception of my team and the refusal of the new technology organization inside bitqyck, Inc., I have no choice but to publicly state that I cannot in good conscious endorse the current technology platform for bitqy, the Ethereum token for bitqyck, Inc. Since they’ve chosen to obfuscate the source code for the token deployment, we can only trust the word of Bruce Bise and Sam Mendez that their tech team has done what they claim to have done.

The beauty and magic of blockchain technology is that it doesn’t require trust – code can be publicly vetted and smart contract terms can be publicly reviewed. Despite this fact, bitqyck has opted to tread in the footsteps of opaque digital currency organizations like PayPal and OneCoin, who obfuscate their operations and technology behind a cloud of legitimate-sounding terminology. Even sadder still, they didn’t have to go this route, since they paid for and were delivered solutions that would put them on a vetted path to an Ethereum token that would have broken new ground in the world of blockchain and open corporate governance.


On a personal note (this is my personal blog, after all), this whole de-coupling has been disappointing and saddening. I enjoyed my time working with their team, and it was gratifying to craft a sellable story around a once-taboo topic of cryptocurrency and see it readily accepted and promoted by large groups of people. I’ve been along for the ride with Bitcoin since the very early days (when it was supposedly only for hackers and criminals). To see the vision come so close to being realized on the principles of a digital autonomous organization and not cross the finish line is a disappointment that will stick with me for a long time. Only can only hope and trust that the new technology team successfully and correctly implemented the architecture plan for bitqy – something you never want to hear when it comes to cryptocurrency.

I heavily debated the wisdom in making this blog post, and even sat on the idea of posting this publicly for over a week. I don’t want to be seen as the guy who badmouths former clients and employers. Despite quibbles with prior employers upon parting, I’ve refrained from publicly airing dirty laundry. That said, given the volume of money raised using my endorsement, if there’s even a slight chance that bitqyck, Inc. could go the way of OneCoin, I (and my legal advice) felt that it was safer to be publicly on the record as to what I endorsed and when.

If you wish to review the current smart contract the new technical team put together for bitqy, it is available here.

If you wish to review the solidity code architected and executed by Roger Wilco, Inc and Caudicum, it has been removed from GitHub and archived here.

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Ask Doctor Bitcoin: What does a Trump Administration mean for Bitcoin? http://rizzn.com/2016/11/15/trump-bitcoin-blockchain/ http://rizzn.com/2016/11/15/trump-bitcoin-blockchain/#respond Tue, 15 Nov 2016 15:55:27 +0000 http://rizzn.com/?p=190745 DrBitcoinHeader800x465If you’re an American, last week was really weird. Without a doubt, most folks had reconciled with the fact that we’d have America’s first female president, only to have the apple-cart upset at the eleventh hour. We’re now ushering in the age of Trump, and that means a great deal of un-imagined consequences and uncertainty, which are generally not great things for markets.

So what does a Trump Presidency mean in the context of blockchain? I’ll try to examine this from a few perspectives, since both politics and blockchain are many-tentacled beasts.

With regard to what’s being affected, let’s break it down by these categories: “Bitcoin specifically,” “Crypto-currencies in general,” and “The Future of Blockchain Technology.”

Bitcoin, specifically…

Let’s start here: Looking to the night of the election, initial uncertainty expressed itself in a precipitous fall in the Dow Jones Index fund futures, as well as a corresponding explosion of value in Bitcoin. The DJI futures dropped by 1000 points, and Bitcoin blew up by around 50 points, at peak. Very quickly, though, as is common with Republican administrations, the markets found their footing and has since risen to record highs.

DJIA post 2016 Election

Meanwhile, blockchain has been subject to a more global set of value-inflencers, but one can clearly see the effects of the election and subsequent resignation on the market price in this 30-day view.

Bitcoin post 2016 Election

What does this mean long-term, though? Should we expect things to remain this stable in the next several weeks and months? I don’t think anyone can definitively say that or anything else. For one, Trump has yet to take office, but even more importantly, it’s still unclear how much of what he’s said is going to make it into actual policy. Trump has literally held every position on every issue during the course of the campaign. Many of the most bombastic campaign promises have now been repudiated in the first few hours after his winning the election.

Basically: the most certain thing about the next four years is how uncertain things really are. This is probably the most reliable way to attempt to predict the market over the next four years (and, incidentally, a strong argument for tried and true conservative investment methods like dollar cost averaging).

One of the things likely to increase in uncertain times, particularly for the immigrant workforce, is foreign remittance. This, of course for Bitcoin, is actually good news. Via Justin O’Connell of Cryptocoin News:

Trump still wants a wall. That’s what he said earlier this week, when Trump revealed his plan to block remittances from illegal immigrants to their families – calling it “welfare” – he failed to demonstrate his understanding of the Internet and contemporary, borderless commerce. If it’s not remittances, immigrants in the US will figure out a way to send their money home if they want to do so. For now, it’s not going to be Bitcoin. But, if Trump does block remittances, you better believe that sooner than later increasing numbers of remitters will look into this blockchain technology. A Trump Administration would propose a rule mandating companies like Western Union Co to require customers prove they were earned legally.

Of course, Bitcoin does not (nor does any other cryptocurrency) require such a rule. It may pose an issue for “legitimate” (read: FinCen-compliant) Bitcoin sellers, since they’d be subject to the same rules as a Western Union. It would, however, be great news for the so-called “grey-market.” Individual Bitcoin-sellers that fall under the legal radar and outside their scrutiny due to low volumes could see their businesses increase, which will ultimately have a positive effect on market price as value transfers to the blockchain while in transit to its final destination.

CNBC and Juniper Research tend to agree. In a report issued this summer said as much:

“If Donald Trump becomes president of the U.S., there is the very real prospect of turmoil on world markets — the Economist Intelligence Unit ranks his presidency within the Top 10 global risks,” said Windsor Holden, head of forecasting & consultancy at Juniper Research, in a statement. “However, bitcoin trading would thrive in such an environment, at least until the impact on major fiat currencies becomes clear.”

Crypto-currency, generally…

This is where things start to get interesting, and really cool depending on your general level of geekery and political inclinations.

First, it’s important to note that while Bitcoin saw an election related bounce, most cryptocurrencies did not. This bolsters the general global perception that Bitcoin, like Gold, is a safe store of value in uncertain times. Bitcoin rose by 3%. Gold rose by 4%. Most cryptocurrency prices, however, were largely unaffected or at least non-correlative to Bitcoin.

At the very minimum, there is a cryptocurrency-fan in the transition team for the Trump administration in Silicon Valley alumn Peter Thiel.

“A page in the book of history has turned, and there is an opening to think about some of our problems from a new perspective,” Bitcoin enthusiast, Peter Thiel, who will serve on Donald J. Trump’s presidential transition team, told the New York Times after the election. “I’ll try to help the president in any way I can.”

Something that may help you navigate what the next four years may mean for other crypt-currencies, however, is the realization that cryptocurrencies are becoming more specialized, utilitarian and mature. For instance, take a look at the types of cryptocurrencies that dominate the top ten cryptos ranked by market capitalization:

Nov 2016 coin market cap

Bitcoin still reigns at the top of the chart, but following it you have…

  • Ethereum, at nearly $1B in market cap, which is more of a disruption to traditional cloud like Azure, Rackspace and Amazon AWS than to other cryptocurrencies.
  • Ripple, a coin so fundamentally different than other cryptocurrencies it’s difficult for most Bitcoiners to grok.
  • Monero and Dash, coins devoted to facilitating grey and dark market activity in a way Bitcoin doesn’t aim to.
  • NEM, which is a network designed to, amongst other things, attempt to create a secure messaging network via blockchain.
  • Augur, which is a blockchain-based project aimed at creating a tool for real-world event forecasting.

If you look at the top-ten charts from a year or even six months ago, many of the blockchain projects were also-rans, simple tweaks to existing SHA-256 or Scrypt algorithms. Now you’re seeing a lot of different attempts at facilitating real application value via blockchain protocol. As such, these projects will be broadly affected by who’s in office, but more directly affected by the merits and pitfalls of their own governance and technology choices. One would do better to look at this new class of blockchain market entrants like startups, rather than competing cryptocurrencies.

This, of course, leads me to talk about

The Future of Blockchain Technology under a Trump Administration

trumpymctrumpertonThis is where my personal politics shine through a bit more than in these other categories. Personally, I’ve trended to a political philosophy that has in recent years been termed as Voluntaryist.

Voluntaryism is a philosophy according to which all forms of human association should be voluntary as far as possible (academics over the age of 25 may recognize this philosophy as being, basically, re-branded anarchism). This philosophy is in no part influenced by the things I’ve learned about blockchain technology and cryptocurrency.

Increasingly, technology has been solving societal problems before government has had a chance to put it’s pants on. As I noted in a recent IBM IoT Futurist twitter conversation, the privacy implications of AI in society are vast and need to be addressed immediately to have a real effect for consumers, however the agency governing such things (the FTC) has only one recorded mention of artificial intelligence in their history, and it was a largely ignored set of remarks at an esoteric symposium at NYU last summer.

Conversely, there are real, existential threats to the internet using new technologies (like the aforementioned IoT) that even the leaders in enterprise have no answer for that in-market, proven blockchain already present silver-bullet solutions for.

Meanwhile, you have Donald Trump making incoherent assertions on the campaign trail, and how he’s going to shut down the Internet to prevent terrorism. This is not the administration from which innovative technological solutions or regulation will flow. They’ll still be grappling with whether Trump should be allowed access to his Twitter account while Blockchain endeavors to solve some of the most difficult problems of our age.

  • Tezos tackles decentralizing governance itself.
  • OpenBazaar tackles decentralizing all commerce.
  • NameCoin tackles decentralizing power over the Internet.
  • DevCoin tackles decoupling open source funding from enterprise interests (but itself serves as a model for funding public works projects).
  • Hyperledger is an IBM-initiated project that makes dead-simple using blockchain for a variety of functions, including logistics and supply-chain management.
  • Farmshare, which aims to make trustless the concept of community-supported agriculture.
  • NXT and Ethereum, both of which aim to be a platform of deployment for decentralized applications – a disruption not only for traditional IT, but new-wave cloud service providers (cloud being an arena in which legislation hasn’t even fully caught up to yet).

In all of these cases, there is very little an administration of any stripe could do to impede the progress of these technologies once they’ve been unleashed upon the world, which is a bit of the beauty of blockchain itelf. These tend to be meritocratic, autocratic solutions to societal ills; that is to say, that if they work, they self perpetuate, and if they don’t work, they fail and are replaced by something that does work.

In short, regardless of who’s in charge, the world of blockchain broadly looks bright, indeed.

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2 ways Blockchain technology could have prevented last week’s massive IoT-launched DynDNS attack http://rizzn.com/2016/10/26/iot-blockchain/ http://rizzn.com/2016/10/26/iot-blockchain/#respond Wed, 26 Oct 2016 21:34:23 +0000 http://rizzn.com/?p=190722 I’m attending IBM’s “World of Watson” event this week in Las Vegas, and one of the most murmured-over topics of conversation is the massive malicious application of IoT to execute one of the world’s biggest distributed denial-of-service attacks in the history of the Internet.

In case you missed it, the short version is that millions of connected devices with known vulnerabilities were used to launch an attack on DynDNS, a company that provides DNS service for a broad cross-section of the internet.

From their company blog:

Starting at approximately 7:00 am ET, Dyn began experiencing a DDoS attack. While it’s not uncommon for Dyn’s Network Operations Center (NOC) team to mitigate DDoS attacks, it quickly became clear that this attack was different (more on that later). Approximately two hours later, the NOC team was able to mitigate the attack and restore service to customers.

While it’s been the subject of quiet hand-wringing of IoT advocates and loud criticism from those making their living selling security services, the silver-bullet solution to the problem was clear to me immediately: blockchain.

NameCoin: The solution to a great many looming ills on the internet.

FadiChehade-1024x713I’ve talked about it a few times on my personal blog as well as elsewhere after then ICANN CEO Fadi Chehade came TheCUBE in January of 2014 and dropped a bit of a bombshell: the world has eighteen months to come up with a new governance model for the internet. We asked him on the show if Chehade thought world leaders are prepared to take on the complex and very layered information needed to understand and implement a new model for governance.

Chehade laughed fadingly.

“They are scrambling. Most countries are scrambling, few countries are prepared,” said Chehade. When pressed again for a more direct answer of if they can figure it out in 18 months, Chehade shows his hand. By dodging the question in pulling from in prepared facts dance that avoids saying yes or no definitively, Chehade says in turn says no and rather empathically.

Throughout the interview, he discussed the reasons why the governance model wasn’t tenable (it has to do with perceived political corruption and conflict of interest that other world states hold about America, and its former role in overseeing ICANN). The whole interview is riviting, and worth a watch.

Despite acknowledging that distrust of humans and the organizations built around them is the root of the issue, ICANN hasn’t to this day sought to explore a blockchain solution to the problem, despite it being one of the oldest proof-of-concept applications of blockchain technology.

From the NameCoin foundation’s website:

Namecoin was the first fork of Bitcoin and still is one of the most innovative “altcoins”. It was first to implement merged mining and a decentralized DNS. Namecoin was also the first solution to Zooko’s Triangle, the long-standing problem of producing a naming system that is simultaneously secure, decentralized, and human-meaningful.

It was and continues to be a very elegant solution to the corruption problem. Because it’s commonly merge-mined with Bitcoin, it’s not succeptible to a 51% attack like many other niche cryptocurrencies. It operates according to some rules inherent to the protocol, and isn’t subject to human whims or influence. In short, it solves the dilemma Chehade describes.

More germane, decentralization solves the issue a DDoS attack on DNS systems would present. The record of domain ownership is public information and self administered by the protocol, so targeting one specific set of DNS servers would be a minor inconvenience rather than a far-reaching catastrophe. Literally anyone can pop up a node, block explorer and bolt on a DNS service with NameCoin with no cost other than the hardware it runs on (for a more technical explination, head to this GitHub repo).

Securing the Internet of Things with Blockchain.

I had a conversation with an IBMer when I first arrived about the DynDNS attack, and how IBM’s cognitive analytics could have possibly prevented the attack by hardening security on the specific attack vectors by recognizing patterns in the attack. It is an interesting and highly complex solution to a very difficult problem, but I think the blockchain poses a much more elegant solution to this particular issue (and is implementable with already in-market technology).

One of the lowest hanging fruits would be device firmware hashing, which works a little like this:

  1. screenshot-2016-10-26-at-1-23-21-pmA device (like a connected thermostat or a lightbulb) essentially has a complete system on it akin to any other computing device. It has a lightweight OS, usually imaged on a chip or an SSD and a wireless connection to a hub or the internet itself.
  2. In a world where it’s secured by the blockchain, it would periodically “phone home,” by connecting to the internet, looking up it’s nearest Bitcoin node, and looking for the most recent ledger entry that contains a hash file, or even possibly an encrypted boot image for the device.
  3. It will compare the hash files with the hash files on the device itself. Because the blockchain is immutable once a write operation has occurred, if the hashes do not match, the device can immediately know whether it’s been tampered with or had it’s boot image altered.
  4. As a hardcoded part of the boot sequence, you can have the device re-image itself (or brick, depending on the situation) when it fails the checksum.

This is not dissimilar to an immune system flagging a foreign body. In this way, scaling security for a wide variety of devices becomes simple, and it’s attainable today. This method not only adds a layer of security it adds longevity to IoT devices, particularly for devices created by startups with uncertain futures.

Every IoT-style light bulb or thermostat requires a ‘cloud,’ or someone else’s computer, in other words. Surely, no manufacturer will want to maintain a portion of a database servicing such devices for 10 or even 15 years. ‘A publicly accessible computing protocol married to a database with impenetrable security;’ this basically describes both Ethereum and a perfect scenario for IoT. Any device with the built capability can spend ETH from it’s wallet to communicate via the blockchain.

Getting there isn’t a real big challenge, surprisingly.

disney-chainThe beauty of these solutions from PagerDuty is that there’s no need to re-invent the wheel on this. IBM has a great set of tools I’ve learned a bit about this week in Hyperledger, which can be very useful for a variety of functions where a semi-private blockchain can come in handy. There are some great low cost solutions for launching IBM’s Hyperledger implementations, but growing it to meaningful size could get quite pricey (some implementations can be upwards of $10,000 a month).

Implementing a device-level hashing function can be quite cheap, though, and run off existing public blockchains. A non-Turing-Complete implementation can literally cost pennies to maintain, and an Ethereum implementation could be only marginally more expensive.

Likewise, a NameCoin-like solution could not only be a silver bullet solution to ICANN’s security weakspots, but a profitable venture to engage in. A NameCoin has a market value of greater than zero (a $3.7 MM market cap), and it’s essentially nothing more than a functional prototype. Depending on the approach to the creation of the ledger, the foundation that develops the solution can fund itself for the foreseeable future with a crowdsale of their initial token (or pre-mine, depending on the underlying ledger type).

And the excuses against taking the leap into blockchain are rapidly shrinking. Just this morning, Disney corporation announced the release of the opensource framework they’re going to use to issue their own blockchain-based tokens and coins; it was an interesting announcement, but they key take-a-way is that those still resisting blockchain based solutions are now getting lapped by a literal Mickey Mouse solution.

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Ask Doctor Bitcoin: What Makes Ripple a Unique Blockchain Technology? http://rizzn.com/2016/09/17/ask-doctor-bitcoin-makes-ripple-unique-blockchain-technology/ http://rizzn.com/2016/09/17/ask-doctor-bitcoin-makes-ripple-unique-blockchain-technology/#comments Sat, 17 Sep 2016 03:45:41 +0000 http://rizzn.com/?p=190701 DrBitcoinHeader800x465Kevin Rose, founder of the famous Web 2.0 startups Digg and Rev3 Networks recently announced that one of his blockchain investments from his tenure at venture partner firm Google Ventures has raised even more money from some particularly unlikely sources: big banking. According to CNBC (and ostensibly confirmed by Kevin himself) the banking institutions include:  Standard Chartered, Accenture Ventures, SCB Digital Ventures, the venture arm of Siam Commercial Bank, and Japan’s SBI Holdings.

That Ripple is raising is not unheard of – to date, they’ve raised around $93 million, and continue to try to journey towards profitability. This recent fundraising round is undoubtedly pushed forward on the recent news of the consortium of banks creating their own protocol based on Ripple (which I talked about a couple of weeks ago).

UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank,Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.

Ripple does contain some interesting properties presently unique to it’s protocol, which are nicely explained on WhatIsRipple.info. The first two things listed there are pretty common to any blockchain-based currency.

One of the more interesting principles, though, is the decentralized exchange/transaction facilitation.

ripple3There are many other payment providers on the Ripple network.

Brent is a customer of Justcoin, and his Justcoin balance is stored on the Ripple network alongside the Bitstamp balances of Alice and Bob.

Brent also wants to buy from Alice. However, Alice does not accept his Justcoin balance. She does not want to sign up with Justcoin to withdraw her money.

ripple4Bob does a lot of business with other Justcoin customers, and so he wouldn’t mind a Justcoin balance. Because Bob agreed to this, the network will automatically transfer some of Bob’s Bitstamp balance to Alice, in exchange for an equivalent Justcoin balance from Brent.

Bob acted as an intermediary and facilitated a payment between Brent and Alice, and two different payment providers. He can choose to charge a small fee for this service.

Because customers from different providers constantly want to send money between each other, there are many people like Bob on the network, and the market will keep the exchange fee low.

It’s early days with Ethereum, and this capability could easily be written into an Ethereum token, but currently only exists in Ripple-based blockchains. This another reason why banks are gravitating towards this protocol, since it has the built in functionality of handling the ownership and transfer of multiple financial instruments – even instruments that have their own blockchains.

As I talked about a couple weeks ago, the Ripple protocol isn’t without it’s downsides. Ripple has some fundamental flaws that must be examined and weighed both for the benefit of banks looking to move to this new technology as well as folks looking to innovate on blockchain technology in the crypto-sector. A report commissioned by distributed ledger consulting group R3CEV and authored by bitcoin developer Peter Todd has raised questions about Ripple and it’s ability to withstand the rigorous security demands of high-finance.

“Ripple still holds the majority of XRP, and it is in their favor for its value to increase,” says the report. “Ripple justifies XRP as an ‘anti-spam mechanism’ to deter transactions… However, as the volume of transactions increases the server load, transaction speed is slowed while the cost of the transaction and the amount of required XRP continues to increase.”

Todd next walks readers through a number of theoretical attacks that could take place against the Ripple protocol, discussing his estimates of the cost, scope, duration and probability of the scenarios.

Perhaps the most glaring, Todd’s writing infers, is the damage that could be done due to a “software backdoor”, as he finds that Ripple “does not provide a secure way to download any of their software”.

“This is a serious omission that has lead to significant monetary losses in the past. Ripple Labs should be following industry best-practice by signing git commits and tags as well as PGP signing their Ubuntu packages,” Todd added.

Todd ends by highlighting the potential real-world implications of these attacks in an elaborate scenario involving a dispute between the Russian government and Shell Oil, forecasting how these parties might attempt to achieve their aims through coercion on the network.

This is a common flaw in some implementations of cryptos as well – those looking to launch a new cryptocurrency and looking to avoid being 51% attacked during the nascent moments of the life of the coin may look to private mining or some other form of centralization, but in these cases, they’re creating honeypots for hackers as well as the key thing blockchain technology was designed to mitigate: central points of failure. As we discussed in the Bitfinex post a couple weeks ago, the common key component to every major loss, theft or hack in cryptocurrency history has been central points of failure.

My prediction is that this group of banks will move forward with their implementation of Ripple, and see some gains from using this new technology, and likely use it as a stepping stone to more open versions of the technology in the future. As I said, this is technology of particular importance to financial institutions, but it isn’t remarkably complex technology, and could easily be achieved on a more robustly supported blockchain like Ethereum, or even future updates to Bitcoin.

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Ask Doctor Bitcoin: What are the implications of Sandtander’s new cryptocurrency? http://rizzn.com/2016/08/24/ask-doctor-bitcoin-santander-ubs-bny-mellon-deutsche-bank/ http://rizzn.com/2016/08/24/ask-doctor-bitcoin-santander-ubs-bny-mellon-deutsche-bank/#respond Wed, 24 Aug 2016 16:27:26 +0000 http://rizzn.com/?p=190694 DrBitcoinHeader800x465According to a report in the Financial Times this morning, Santander’s long promised foray into blockchain technology was finally disclosed upon.

UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank, Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.

Bitcoin and related crypto-currencies primarily promise to cater to the so-called “un-banked,” so why would a major bank attempt to leverage blockchain technologies?

Simply put – it saves tons in administrative fees. Those who are regular users of Bitcoin (particularly for large-scale and/or international transactions) may not realize how much of a value they’re attaining at the expense of the banks. According to the report by Santander Innoventures that heralded today’s announcement, blockchain technologies could reduce banks’ infrastructural costs by $15-20bn a year by 2022. Simply put, there are enormous administrative staffing and technology requirements to reconcile international and inter-bank transfers.That’s why there’s been a number of coin, blockchain and crypto startups created to tackle this issue specifically (Setl and Ripple being two prime examples).

So what is Santander and the other banks using for this application?

One might imagine that they would try to use an already in-market solution, or even Bitcoin itself, but instead they’ve deigned to create a custom implementation of Ripple, a digital currency solution that’s been around for quite some time. Details on the banks’ implementation of Ripple are scant at this time, but from what we do know about Ripple, we can make a few sets of assumptions on how their system will work.

Ripple is a fundamentally different system of value exchange than Bitcoin or most other cryptos. Adam Levine of Let’s Talk Bitcoin summarized it neatly back in 2013. Some parts of Ripple have changed since then, but it’s essentially still an apt description of how value exchange compares and contrasts with traditional crypto:

For those of you not familiar with the Ripple system, it can be thought of as a parallel development to Bitcoin that tries to solve many of the same problems; trustless, bankless money transmission to anywhere in the internet connected world.   Ripple goes about solving the problems slightly differently.

There are no miners; transaction validity is determined by a cascading consensus engine.  Ripples themselves (XRP) were fully pre-mined and initially owned by Ripple Labs. They aren’t really traded as currency themselves, instead they are intended as an anti-spam mechanism – Like a stamp on an envelope with a check inside.

Where Bitcoin is an ownership based person-to-person system, Ripple is built on interconnected networks of p2p credit. Bitcoins are wholly owned with no risk of the redeeming party defaulting.

The Bitcoin system transfers ownership of one thing – Bitcoins.  People can build layers on top of it to do other things, but at a protocol level it’s just bitcoins on the Bitcoin network.

What if you don’t want to send Bitcoins?  Ripple is a good option.  When you send US dollars through the Ripple system, you’re really sending IOUs that will be redeemed somewhere else in the system. Depending on your need to transact in non-Bitcoin terms, this might be important- or you might prefer instead the wholly-owned nature of cryptocurrency.

In some situations, Ripple sounds like it could work – and in the case of banks that don’t want to transfer vast sums of value onto a blockchain, perhaps a Ripple-like IOU approach is the way to go.

In my opinion, though, Ripple has some fundamental flaws that must be examined and weighed both for the benefit of banks looking to move to this new technology as well as folks looking to innovate on blockchain technology in the crypto-sector. A report commissioned by distributed ledger consulting group R3CEV and authored by bitcoin developer Peter Todd has raised questions about Ripple and it’s ability to withstand the rigorous security demands of high-finance.

“Ripple still holds the majority of XRP, and it is in their favor for its value to increase,” says the report. “Ripple justifies XRP as an ‘anti-spam mechanism’ to deter transactions… However, as the volume of transactions increases the server load, transaction speed is slowed while the cost of the transaction and the amount of required XRP continues to increase.”

Todd next walks readers through a number of theoretical attacks that could take place against the Ripple protocol, discussing his estimates of the cost, scope, duration and probability of the scenarios.

Perhaps the most glaring, Todd’s writing infers, is the damage that could be done due to a “software backdoor”, as he finds that Ripple “does not provide a secure way to download any of their software”.

“This is a serious omission that has lead to significant monetary losses in the past. Ripple Labs should be following industry best-practice by signing git commits and tags as well as PGP signing their Ubuntu packages,” Todd added.

Todd ends by highlighting the potential real-world implications of these attacks in an elaborate scenario involving a dispute between the Russian government and Shell Oil, forecasting how these parties might attempt to achieve their aims through coercion on the network.

This is a common flaw in some implementations of cryptos as well – those looking to launch a new cryptocurrency and looking to avoid being 51% attacked during the nascent moments of the life of the coin may look to private mining or some other form of centralization, but in these cases, they’re creating honeypots for hackers as well as the key thing blockchain technology was designed to mitigate: central points of failure. As we discussed in the Bitfinex post a couple weeks ago, the common key component to every major loss, theft or hack in cryptocurrency history has been central points of failure.

My prediction is that this group of banks will move forward with their implementation of Ripple, and see some gains from using this new technology, and likely use it as a stepping stone to more open versions of the technology in the future.

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Ask Dr. Bitcoin: What is Dollar Cost Averaging? http://rizzn.com/2016/08/16/ask-dr-bitcoin-dollar-cost-averaging/ http://rizzn.com/2016/08/16/ask-dr-bitcoin-dollar-cost-averaging/#respond Tue, 16 Aug 2016 02:17:54 +0000 http://rizzn.com/?p=190687 DrBitcoinHeader800x465The typical cryptocurrency enthusiast goes through a few steps as they continue their journey, particularly if they see any early gains with their crypto investments.

  1. Initially, they’ll put in some sum of money – usually small – into a cryptocurrency and see some amount of gains and get excited. They’ll either be excited by the gains themselves, or they’ll be excited by the process of learning how easy it is to do (compared to the mountain of challenges one has to go through in a more traditional investing situation).
  2. Subsequently, if they’ve invested via an exchange, they may try their hand at day trading. If they invested by buying from someone in person, they’ll watch the price of the coin several times a day, perhaps obsessively with a dedicated screen, rejoicing and decrying minute moves in the market.
  3. After burning out on watching the market obsessively, they settle on either buying and holding (and putting their head in the sand on price), or taking a measured approach to watching the price on a periodic basis.

I know this is the journey I took – and my third step included a detail that has become common amongst advanced bitcoin users: buy-and-replace.

Essentially, using a constellation of tools that allow me to easily buy and spend my bitcoin, I kept a relatively stable amount of bitcoin in my account by buying goods and services with BTC and then immediately re-buying that same amount. As I grew more comfortable with holding large amounts of money in bitcoin regardless of what the price per bitcoin was, I added another step to this – I’d buy-and-replace, but when I replaced, I’d buy whatever I spent plus an additional 10%.

Screenshot 2016-08-15 at 9.10.55 PMOver the first year or so of doing this, I noticed that the amount of bitcoin I held grew rather quickly as compared to years past, as did the total value of the amount – which was particularly interesting considering that it was a bear year (that is a year where the price on average decreased over the course of the year).

I thought I had stumbled onto something unique, but my larger-than-expected gains were due to a time-worn technique called Dollar Cost Averaging (DCA). Dollar cost averaging is an investment technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. The investor purchases more shares when prices are low and fewer shares when prices are high. The end result is that a disciplined investor can spend a sum of money spread out over time in a fluctuating market and net more value than investing a lump sum of the same amount.

I invited one of my friends (as well as my family’s financial adviser) David Salmon of Primerica over to the offices better explain the concept using a couple of analogies he uses when asked about the concept. He uses two stories to help explain it that are particularly illustrative, and can likely help you formulate an investment strategy of your own that will help you take advantage of fluctuations in the markets that will allow you to not sweat the small (and large) market changes that are all-too-common to cryptocurrency.

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Ask Dr. Bitcoin: What does the Bitfinex Heist mean for cryptocurrency? http://rizzn.com/2016/08/03/bitfinex-85-million-heist/ http://rizzn.com/2016/08/03/bitfinex-85-million-heist/#respond Wed, 03 Aug 2016 16:54:05 +0000 http://rizzn.com/?p=190673 IMG_6069So last night, as my team was readying itself for one of the most well-attended #BigDNT presentations in memory, my attention was elsewhere, as one of the most precipitous price falls in Bitcoin history was underway. I posted to my Facebook account a quick update at the time:

So if you’re wondering why Bitcoin is dropping in price today (and why your other crypto portfolio is hurting as well), one of the leading American crypto exchanges has had a major hack, and has lost around $70-85 MM of user funds, according to reports on Reddit and Twitter.

Bitcoin will recover, but it’s unclear if Bitfinex (the affected exchange) will.

This further highlights the need for decentralized exchanges.

Technologies like Ethereum and OpenBazaar are the primary beneficiaries of today’s events (after the thieves themselves, of course).

Those are the hard facts. Here are some more:

  • Bitfinex was one of the highest volume crypto exchanges on the planet, and was based in Hong Kong.
  • They have temporarily ceased trading after the company reported a security breach that led to the theft of a large number of bitcoins.
  • The amount believed to have been stolen is 119,756 bitcoin, which at the time of writing is valued at $65.6 million.
  • Bitfinex said in a blog post that they were investigating the breach to determine what had happened, but they “know that some of our users have had their bitcoins stolen.”
  • Some of the blame almost undoubtedly rests with their security partner BitGo.
  • The theft itself is said to have been reported to legal authorities.

The market very quickly punished the Bitcoin price, dropping within hours of the news all the way to $465 per BTC before “dead cat bouncing” back well above 560. As of the time of this blog post, the price was steadily rising past $550 per coin.

Screenshot 2016-08-03 at 11.01.30 AM

What does it mean, though?

13876114_1718535025076699_4679288151748508142_nWhile this is certainly a highly significant event in the world of cryptocurrency, it’s not the most significant, it won’t be the last of its kind, and it will not kill cryptocurrency in general or Bitcoin in particular. The market capitalization of Bitcoin is nearly $9 billion, and $85 million only represents a small fraction of that.

There will certainly be many experts with very salient advice about what went wrong and how it could have been prevented, but the most fundamental thing to address in my opinion is the issue of centralization.

Bitcoin and most cryptocurrency was designed with many core principles in mind, and fundamentally these principles require decentralization. In the minds of the early founders of Bitcoin, decentralization represents the ability of Bitcoin to survive corruption, security threats, and “bad actors” like thieves and criminals (or more cynically, bad actors like regulators and administrators). Simply put, if you don’t have a central authority regulating and hoarding large pools of capital, you get rid of many of the existential threats that exist and threaten traditional monetary systems.

What’s interesting, though, is that while the means of decentralized transfer and maintenance of the system was built into the design of Bitcoin, one key piece was left out: the means of deriving market value or currency exchange. As such, to fill that gap, people and organizations started creating what basically look like traditional marketplaces – places where capital pools and becomes vulnerable in the typical ways that banks and other capital pools are vulnerable to bad actors and bad circumstance.

How does this benefit Ethereum?

This is why in my original post I said that this leaves Ethereum and OpenBazaar as the primary beneficiaries. Both of these technologies enable large-scale decentralized exchange. The technologies and digital organizations that enable this are still nascent and lesser known, but the concept is solid, and the outcome is real: trustless exchange of value in an environment less attractive to hackers. These large pools of capital are always going to be a honeypot for those that would like to make off with the money. In a decentralized exchange situation, you can store your own value in wallets that you control until it’s time to make an exchange, at which time the value exchange happens.

Any technology companies or cryptocurrencies that continue to adhere to the principles of openness, transparency and decentralization will be the primary beneficiaries of the natural evolution of this technology, and now is the tail end of the time to be considered a first mover in this space. It was in response to some of the large heists several years ago that OpenBazaar and other decentralized marketplaces were started. It won’t take too many more major heists like this to further push users towards experimenting and using as a natural course of things these decentralized technologies.

[Notes: A small portion of this post was quoted verbatim from a SiliconANGLE post by Duncan Riley, re-used under their published Creative Commons BY-SA license. -mrh]

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Dr. Bitcoin on How to Install the Ethereum Mist wallet. http://rizzn.com/2016/07/22/ethereum-mist/ http://rizzn.com/2016/07/22/ethereum-mist/#comments Fri, 22 Jul 2016 21:55:12 +0000 http://rizzn.com/?p=190649 IMG_6067There’s been some interesting positive movement in the world of Ethereum, both locally in DFW as well as for the larger crypto markets. Just yesterday, Coinbase and GDAX announced support for Ethereum wallets and accounts on their web and mobile wallets – and last night at the weekly YoCoin meetup at Barista‘s event space, YoCoin made the announcement that they’re moving off the Scrypt algo over to an Ethereum based blockchain (the developers are doing a buy-back/swap).

As such, I was asked to do my Dr. Bitcoin thing and talk a little bit about what I knew of Ethereum and Turing-complete blockchains, which I enjoyed.

There’s a lot still not known by the general public about Ethereum and how it works tactically, so I thought I’d put together a brief tutorial for those that asked about how to download and install the Mist wallet (the name for the developer-supported wallet for Ethereum and Ethereum-based coins).

I’ll be adding a video tutorial and some additional screenshots for the YoCoin users as soon as I get the details from the developers. This step-by-step guide will get you as far as having your Mist wallet ready for action.

Update: Video walkthrough embedded below! Scroll past the video for written and illustrated instructions.


Head to the Download Page

Head to the “Github” repository. The only authorized place to currently download the Ethereum Mist wallet is right here. If someone tells you to download an Ethereum wallet, but sends you to another URL, it’s not the authorized place. The page should look like this one


Scroll Down to the Downloads

You’ll see a lot of different files listed. You’ll want to download the appropriate file that matches your operating system. Download the one labeled “Mist”, not Ethereum Wallet.


Save the File

Depending on your browser, it’ll look something like this.


Find the downloaded file

You should have a zip file in your downloads folder. Most operating systems know how to use this without any special configurations.


Extract the files on your computer

I like to create directories in my “Documents” folder to store downloaded software, but you may have a different way of doing things. You can easily do this in Windows by right-click dragging the file inside the zip file over to your Documents folder, like so. It’ll pop up a submenu to confirm – just say yes.


This might take a while.

There’s a lot of files.


Make it easy on yourself…

… and make a shortcut. Just right-click drag the Mist.EXE file in the newly created folder over to your desktop, and it’ll give you the submenu you see below. Select the option “Create Shortcuts Here.”


Click Confirm a few times.

You’ll see some pop-up windows about security and ToS acceptance. Say yes on both.


Setup and install.

You’ll a pop up window asking if you want to use the test network or the main network. Use the main network.


Password Creation

You’ll want to create a password. Use something easy to remember but hard to guess.


Wallet Import

You’ll be asked to import your old wallet. If this is your first time setting up, just ignore this screen.


Add some ETH and you’re Good to Go

Eventually you’ll need to load up a little bit of ether so that you’ll have what’s called “GAS” to cover your transaction fees (which you’ll be charged any time you send ETH or YOC. You can skip that for now.


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