My fellow Americans, tonight I am speaking
to you because there is a growing humanitarian
and security crisis in our southern border.
The U.S. government may have been shut down for a long time
but Cointelegraph did not take any breaks, we are the hardest working team in
the crypto business.
This week, the Winklevii confirmed in an AMA
their commitment to a Bitcoin ETF; Japanese
regulators, on the other hand, denied rumors
they were considering approving Bitcoin ETFs.
Also this week, a 51% attack hits Ethereum
Classic, Right wingers love free speech and
Bitcoin, 70% of central banks are interested
in CBDCs, and Fortnite hasn’t quite embraced
the crypto future.
Ladies and gentlemen, I’m Molly Jane and
this is your weekly Hodler’s Digest.
After reaching the $4,000 benchmark last Sunday,
Bitcoin could not keep it for long.
Let’s have a look at the latest market updates.
On the 5th of January, major crypto exchange
Coinbase detected an attack being carried
out against Ethereum Classic, a cryptocurrency
generated by an Ethereum fork, leading to
of loss of reportedly over $1 million worth
crypto.
According to Coinbase, a malicious agent took
control of over 50% of the blocks making up
the Ethereum Classic’s network, leading
to a so-called “chain reorganization,”
in which nearly half a million dollars worth
tokens were spent twice.
The attack was later confirmed by researchers
at crypto exchange Gate.io and Chinese security
firm Slowmist.
In order to safeguard its customers, Coinbase,
Kraken and other crypto exchanges have temporarily
suspended Ethereum Classic deposits and withdrawals.
A 51% attacks refers to a specific entity
taking control of more than the 50 percent
of the blockchain network, which can lead
to the falsification of transactions and allow
double spending.
Even though they happen quite rarely, 51%
attacks are seen by many as a serious threat
undermining the success of blockchain technology.
In the wake of the ETC attack, creator of
Litecoin Charlie Lee underlined blockchain’s
intrinsic vulnerability to 51% attacks.
He said:
“By definition, a decentralized cryptocurrency
must be susceptible to 51% attacks whether
by hashrate, stake, and/or other permissionless-acquirable
resources.
If a crypto can't be 51% attacked, it is permissioned
and centralized.”
Other experts pointed out that while 51% attacks
are definitely a threat for relatively small
altcoins such as ETC, they are unlikely to
affect bigger players such as Bitcoin and
Ethereum, as that would require far higher
amounts of hashrate.
We talked to Nir Kabessa, president of the
organization Blockchain at Columbia at Columbia
University, and asked him to give us his perspective
on the issue.
I think it becomes extremely difficult to
do something like that to a chain the size
of Bitcoin and Ethereum.
But if there's anything that this attack has
showed us is that it's possible that it would
happen to a top blockchain.
A well-respected blockchain with significant
amount of miner community and developer community.
So yeah, I think specifically Ethereum Classic
was susceptible to something like this because
of the maximalism and fundamentalism of Ethereum
Classic.
The fact that they're big proponents of immutability,
I think makes them sort of a reputational
target for a 51 percent attack to sort of
prove that they're not 100 percent immutable
and that things can be changed or reorganized.
I think there's definitely room for Ethereum
Classic in the future of blockchain.
But serious changes will have to be made and
new reasons to use Ethereum Classic over other
chains will have to come out.
There will have to be new competitive advantages
in one way or another to Ethereum Classic
because one of their strong suits was security
and immutability and that's an argument that
they just cannot make to the same full extent
anymore.
After the attack, the reputation of Ethereum
Classic looks seriously compromised.
We also talked to Ethereum Classic Developers
Donald McIntyre and Zach Belford and asked
them to comment on the accident.
It’s a fallacy to say that because ETC has
been attacked that means a proof of work is
not secure.
That's ridiculous.
In terms of what we spoke about, what to do.
The first thing was to do the postmortem and
we did that meeting today and we're gonna
do several more meetings to continue analyzing
the situation.
One concrete security recommendation is to
use from two thousand five hundred to five
thousand confirmations for medium or large
transactions, study that possibility to implement
a deep reorg protection in ETC which I think
is unlikely because it's also something that
is untested but it's something that is under
review.
Then, to set a limit on the maximum size of
the dag is another thing.
We will not apply any changes hastily without
proper research.
So there were double spends and there were
victims of this attacker that is something
that we're not going to revert on change.
Of course we can help with information to
law enforcement or if there's any investigation.
But the change is never going to be reverted.
In the early days of Bitcoin, it was getting
51% attacked all the time.
All proof-of-work cryptocurrencies can be
51% attacked.
Ethereum Classic is definitely not the cheapest
one to 51% attack but the fact of the matter
is that our hash rates is 4% of Ethereum and
it's been that for a long time.
The point there is that we shouldn't be looking
at making protocol changes in times of crisis.
This is something that is part of proof-of-work.
I think that one of the things that is going
to reaffirm trust within the community is
that there have been a lot of blockchains
that have been 51% attacked in the last year
or two and a lot of them have responded with
protocol level changes which to me shows a
lot of immaturity and a lot of just not knowing
or not understanding what proof-of-work is
and how where this actually stems from and
why.
Technically according to the protocol it's
not an attack.
It's part of the protocol.
Recent reports claiming that the popular video
game Fortnite is accepting Monero for online
payments turned out to be unfounded.
The crypto community was filled with excitement
when Monero CEO Riccardo Spagni announced
on Twitter that Fortnite will accept Monero
as a payment method for its merch store.
However, a few days later, CEO of Epic Games
Tim Sweeney refuted the rumors in a tweet,
defining the adoption of Monero purely as
“accidental.”
With its over 125 million registered players,
Fortnite could have played a major role in
pioneering the integration of crypto in the
gaming industry.
In the last few years, other attempts to integrate
the world of video games with blockchain technology
turned out successful.
One of the earliest example of “crypto-games”
is Dragon’s Tale, a 3D online game released
in 2013 in which players can stake Bitcoin
while competing in a variety of mini challenges.
Marking a deeper integration of blockchain
into gaming, the card trading game Spells
of Genesis was released in September 2016.
This was the first game to use the Bitcoin
blockchain to store the collectible cards
at the center of the game.
But neither of the previously mentioned games
can match the popularity of Crypto Kitties,
the first Ethereum-based video game.
The Ethereum blockchain is at the core of
Crypto Kitties, as it serves to guarantee
the uniqueness of each digital cat owned by
the players.
However, while blockchain is still to gain
traction as a genuine game-play modifier,
on the game developers’ side there is some
exciting news.
After raising $40 million in funds last September,
Cocos Blockchain Expedition, a game development
platform built on blockchain, launched its
testnet last week.
Cocos Blockchain Expedition or Cocos - BCX
is built with the Cocos engine, the top game
engine in Asia and number 2 in the world by
market share, aims to create an open system
where developers can create and test games
built on different blockchains.
To further boost the integration of video
games and crypto, leading companies in both
sectors came together last September to form
the Blockchain Game Alliance.
The group includes big names such as Consensys,
Everdreamsoft and the French gaming giant
Ubisoft.
One thing that blockchain is really good at
is provides value to people.
The transparency, the immutability, so all
those aspects provide a capacity to create
new features and those features are good for
players.
For example, if I'm a player and say I watch
an advertisement, like I do with the mobile
phone for some games, I receive credits but
on a platform you can actually receive some
tokens and those tokens you can use them to
buy games can use them to buy a tournament
and trends.
For example, If I decide as a player to participate
in a beta test, I can participate and I get
paid for it by the developer in tokens again.
So all those mechanism provide me as a player
the capacity to earn currency or money and
I can use that money to actually buy anything
I want.
We're working to allow people to make tokens,
to create their art.
Now it's visual art but as time goes, It can
be more things like levels or sounds or different
aspects.
And the game creator us here will be more
like a moderator, like an orchestra, someone
who will manage the orchestra.
We are shaping our product to allow people
to contribute, to have a marketplace so people
can enrich the game in a way that we even
haven’t think of.
And we're setting the stones to allow users
to do that.
Late last year, Google CEO Sundar Pichai had
to explain to not-so-tech-savvy Republican
senators why the Google search term “idiot”
brought up pictures of Donald Trump.
While many were amused by the exchange, the
real question concerning those senators was
whether Google, and more broadly big-tech,
have a right-wing bias.
Two figures who agree with this sentiment
are the host of Koch brothers-funded talk
show “The Rubin Report,” Dave Rubin and
Andrew Torba, CEO of Gab, a so-called free-speech
social network.
Recently Dave Rubin announced, alongside another
right-winger Dr.Jordan Peterson, that they
were leaving funding platform Patreon.
This is no small gesture, Peterson’s account
makes over $30K a month and Rubin’s about
$22K.
The reason for such an abrupt departure?
Protest against alleged censorship on the
part of Patreon.
The victim of this “assault” on free speech
in their minds is Sargon of Akkad, a far-right
YouTuber who was kicked off Patreon for using
the n-word on a separate platform.
Patreon defended the move, citing its community
guidelines prohibiting hate speech.
Rubin clearly disagrees and plans to delete
his Patreon on January 15.
He announced an alternative censorship-resistant
funding option: Bitcoin via Square’s Cash
App.
One of the first Bitcoin “patrons” was,
unsurprisingly, Gab claiming to have transferred
0.0025 Bitcoin to Rubin’s his Bitcoin address.
Gab CEO Andrew Torba has been voicing similar
concerns with regards to the stifling of free
speech.
Gab, which purports to be an uncensored space
for free speech online, but critics call a
far-right echo chamber, had their Coinbase
account closed for allegedly promoting hate
speech.
Also, last year, for example, the New York
Times cited Gab as the social network where
the Pittsburgh shooter posted his final message
before shooting up the Synagogue.
Torba stated that the shooter did not represent
the broader user base of his platform.
Nonetheless, Gab’s account was shut down.
Whether or not you give any credence to Rubin
or Torba’s views, it is clear that the decentralized
utopia the internet once was is now dominated
by very centralized platforms that have complete
control over a lot of our content and communications.
One answer could ironically be to break up
big-tech companies, regulate them by subjecting
them to anti-trust laws.
That way at least they would be defended by
the first amendment; second only to the Second
Amendment in the hearts of many conservatives.
Last year, after heavily criticizing crypto,
the IMF head came out in favor of CBDC’s.
Now it seems they are growing in popularity
across the globe.
70% of the world’s central banks are currently
looking into launching digital currencies
otherwise known as CBDCs.
This is according to a recently published
a survey by the bank of international settlements,
BIS, in Switzerland, which comprises 60 central
banks around the world.
CBDCs are of course controversial in the crypto
community because they would have legal tender
status, be heavily regulated and, of course,
centralized.
Of the 63 central banks surveyed, 22 are in
advanced economies and 41 in emerging ones--that
accounts for 90% of the world’s economic
output.
The survey found that 70% were actively engaged
in establishing a CBDC, or at least at the
research phase.
To date, only 5 banks have actually run pilot
or test runs.
Ahead of the pack are Uruguay and Sweden;
the latter’s Riksbank plans to launch the
E-Krona pilot project this year and begin
issuance as early as 2021.
Uruguay, on the other hand, is leading the
pack, their pilot project of the E-Peso successfully
ended in April of last year.
CBDCs do raise some very interesting questions
regarding censorship, surveillance and even
the demise of Stablecoins.
Prominent Swedish Youtuber Ivan on Tech last
yeah voiced concerns that Swedes may be at
risk in the future of going to the wrong protests
and facing financial consequences.
KMPG for their part released a report questioning
the need for something like Tether if there
ever was is a “Fedcoin”
We spoke to Thomas Moser of the Swiss National
Bank about the emergence of CBDCs and what
that could mean for a crypto-friendly nation
like Switzerland.
We are clearly in terms in terms of research
we're looking into it but this is really theoretical
research and also conceptual research.
But we have not had the intention to try out
the pilot or to put that into a proof of concept.
So it's really theoretical research but we
came to the conclusion like other central
banks that we do not think that at this stage
at least that the benefits are larger than
the negatives or disadvantages or the risks
at least that we could see.
If you would provide a CBDC that would basically
fulfill the function of a stablecoin unless
again you have all these ideological issues
that you do not want to trust the central
bank or if you have good reason that you do
not want to rely on the central bank currency
if you again if you have a central bank that
that is not that provides a currency with
hyperinflation I guess then that would clearly
not be a good substitute for a stablecoin.
But in that case the stablecoin would probably
not fix its value towards the national currency
but towards the US dollar or the euro.
Earlier this week, the French anti-establishment
movement known as the Yellow Jackets called
for the French public to take part in a massive
bank run as a mean of protesting against the
financial elite.
Dubbed “The Collector’s Referendum,”
the initiative aimed at bringing people to
withdraw their savings from banks and other
financial institutions this Saturday.
This, according to the activists, was going
to be “elected officials’ worst nightmare”
and its goal was “to scare the State completely
legally and without any violence”.
The announced event resounded widely within
the crypto community, as it aligned with crypto
in criticizing the flaws of the traditional
financial system.
Many saw a clear parallel between the Yellow
Vest’s bank run and the Proof of Keys event,
a protest against centralized crypto exchanges
announced by entrepreneur Trace Mayer earlier
this month.
Mayer called upon traders to withdraw their
funds from exchanges as a reminder of Satoshi’s
original vision of decentralization and monetary
independence.
While the French activists made no reference
to crypto, by highlighting people’s distrust
towards traditional financial actors, the
Yellow Vests protests could have a positive
knock-on effect for the crypto industry.
To underline the connection between crypto
and the Yellow Vest movement, street artist
Pascal Boyart hid a Bitcoin puzzle in his
latest graffiti dedicated to the protest.
According to the artist, solving the riddle
will unlock a prize worth $1000 in Bitcoin.
Boyart said the enigma can be solved only
by physically standing in front of the graffiti.
What are you waiting for, hodlers?
Time to jump to the next flight bound for
Paris!
Charlie Lee has accused Bitcoin maximalists
of being Bitcoin extremists, do you agree,
and where would you put yourself on his survey?
Are you a Bitcoin Extremist, Bitcoin Maximalist,
Altcoin Maximalist or Nocoiner?
Comment below!
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