Category Archives: Bitcoin

The US is known to the vast majority of the world as the global financial and economic powerhouse. Yet, the US holds the largest amount of external debt at $19.9 trillion. The UK, France and Germany fall behind the US respectively as the second, third and fourth largest debt holders in the world.

Since mid-2016, investors and traders in the largest bitcoin exchange markets including US, China and Japan began to perceive bitcoin as a safe haven asset and wealth management product (WMP). Since then, bitcoin has been the go-to asset for avoiding economic uncertainty and financial instability.

Conceptually, the debt of the US carries a low level of importance to both the country and the rest of the world due to the US government and its economys impact to the global economy and financial system. As the holder of the worlds largest reserve currency, at times of economic and financial instability, the Federal Reserve, the central bank of the US, rely on its ability to print massive amounts of money to keep the countrys economy afloat.

But, such strategy is leading to the build up of perhaps the largest bubble in modern history; the bubble of the central banks and the global financial system.

Realistically, financial systems of countries are overseen, manipulated and controlled by their respective governments. Thus, similar to the attempts of Greece in 2015, central banks and regulators could impose harsh regulations or policies such as a haircut to seize funds from private investors, individuals and businesses through private banks.

Simply put, funds or money stored in bank accounts and even fiat money or cash carry no actual value that is wholly dependent on the market. Their value is completely based on the governing party and its central bank. As seen in the decline of the British pound, the value of a currency could plunge in short period of time due to political conflicts and financial disagreements.

At this rate, fiat money is approaching its decline and the emergence of a decentralized and market-based currency such as bitcoin or any other cryptocurrencies that hold the philosophy of bitcoin could threaten the global financial system. The US is able to hold on to massive amounts of debt due to their leverage over the global economy and financial system. If it loses its leverage due to a complete restructuring of the financial system as a result of the popularization of bitcoin or other decentralized stores of value, the country could be placed under serious economic trouble.

For instance, the gross debt of the Australian government in 2007 was valued to be $53.25 billion. Today, the debt of Australia is $484.6 billion. Within a decade, the national debt of Australia increased by over 9x, as seen in the chart below.

Bitcoin is a practical and viable hedge against debt-based economies because its value solely depends on its market. Since bitcoin is decentralized by nature and has a fixed monetary supply, the value of bitcoin is decided by a simple concept of supply and demand. But, since the supply of bitcoin is fixed, as long the demand for bitcoin continues to increase, the value of bitcoin will proportionally surge.

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Is Bitcoin a Great Hedge Against Struggling Debt-Based Economies? - CryptoCoinsNews

Creating paper wallets:

Problematic action: Create a paper wallet on a paper wallet service website without disconnecting from the internet. Reason: It's extremely insecure for many reasons, some being 1) the website is hacked with generated private keys sent to the hacker; 2) there may be malware in the browser or in the operating system that sends the private keys to the hacker. Solution: The bottom line is to disconnect the internet before creating the paper wallet. It's not secure enough because 1) the malware can save the private keys and wait for internet connection to send them out; 2) the malware can interfere with the generation process itself and give you a private key that is already known to the hacker, which is called backdooring the random number generator; 3) the private keys may exist on the hard disk therefore may be extracted by malware or after the computer is disposed. Better solution: Use a live operating system, such as a Ubuntu live CD, to run the paper wallet software. This is not ultimately bullet-proof, especially for high-value targets, because there exist malware that can hide in the BIOS and firmware of your computer and can infect your live operating system. It should be secure enough for average Joes.

Problematic action: Create a paper wallet without serious verifying. Reason: There may be incompatible issues with operating systems and browsers. Solution: Run tests on various operating systems and various browsers before putting BTC in. Make sure the generated private keys are identical. This applies to regular paper wallets and BIP38 paper wallets. Make sure the decrypted BIP38 keys are correct.

Problematic action: Use a wireless printer. Reason: It's insecure because wireless networks are insecure. Solution: Use a wired printer.

Problematic action: Use an advanced printer, which has internal storage, such as a hard drive. Reason: It is insecure because the private key of the paper wallet printed may be stored on the internal storage, therefore may be recovered if the printer is sold or scrapped. Solution: Use a dumb printer. Or smash the printer, including and especially the internal storage, or keep it locked up and never sell or scrap it.

Problematic action: Leave the printer open for other people to access after printing without turning it off. Reason: It's insecure because the private key printed may still be in the memory of the printer. Solution: Turn the printer off after printing.

Problematic action: Leave the computer untreated after printing. Reason: It's insecure because the printer driver and/or operating system may be keeping copies of the documents you print in some sort of "spool" or print queue. Solution:

Quote from https://bitcoinpaperwallet.com/#popupDelete (the popup doesn't work).

Macintosh:

Enable 'FileVault' to encrypt your filesystem so that cache files cannot be 'undeleted'. Set up a symbolic link from /private/var/spool/cups/cache/ to a removable media volume (e.g. a SD card) and disconnect it when not in use.

Windows:

Use an encrypted filesystem so that your cache files cannot be 'undeleted'. Read this FAQ on how to change the destination of your cache (spool) files to removable media.

Linux:

Use a live-boot CD instead of a regular hard drive OS install. This way when you reboot your computer, all cache files are deleted from memory and no jobs are ever written to disk.

Problematic action: Use a shared printer (at work or school, for example). Reason: It's insecure because 1) the printer may have a glitch and someone else may get your printouts; 2) the printing jobs may be centrally logged. Solution: Don't. Use your own printer.

Problematic action: Use a printer to print the private key or the QR code of the private key. Reason: See above. Solution 1: Don't use a printer for private key stuff. Hand-write the private key. Ignore the QR code since hand-drawing the QR code of the private key may be too time-consuming. Double check. Then check it again, preferably on a different day. Get someone you trust to check it. Then get him/her to check it again, preferably on a different day. (Testing the private key in a wallet app can make it sure. But it comes with risks.) Solution 2: Don't use a printer for private key stuff. Use brain wallet. Write down the passphrase and the relevant information, e.g., the name of the tool used (bitaddress.org/WarpWallet/etc.) and the instructions. Store it the same way as a paper wallet. Save and store some copies of the tool, in case the future versions become incompatible. (There are pitfalls for creating man-made passphrases. It is beyond the scope of this post. In a nutshell, don't create passphrases with your brain.)

Problematic action: Import a paper wallet private key into a wallet app, then spend directly from the paper wallet address.

Mistake: Expect the paper wallet automatically receives/holds changes, similar to a real-life wallet, which may not be the case. Reason: Early wallet apps didn't handle the changes correctly. The changes became the transaction fees of the miners. Explanation: It's a misunderstanding of how Bitcoin works. There is no account balance of any kind in Bitcoin. There is only Unspent Transaction Output (UTXO). The receiving addresses of changes, which will become the new UTXOs, must be specified when BTC is spent. Otherwise, the changes will become the transaction fees. This depends on the implementation of the wallet app, which should not be trusted.

Mistake: Think nothing is wrong if changes are handled correctly. Reason: It's called address reuse, which is not recommended in Bitcoin because 1) it reduces anonymity of both the sender and all the consecutive receivers; 2) it reduces the security by exposing the public key, which is vulnerable to quantum computing. Addresses are hashes of public keys, which are safe from quantum computing.

Mistake: Destroy the paper wallet after it's imported into an HD wallet, thinking that it has become a part of the HD wallet and it's safe to destroy because the master seed of the HD has been backed up. Reason: It is not a part of the HD wallet. If the paper wallet (the paper) is destroyed and the app is uninstalled, the BTC is gone even if the HD wallet is recovered from its master seed.

The right way: Spend (transact) all BTC in a paper wallet to an address of your wallet app. Spend BTC from there. After all the spending is finished, create a new paper wallet and transact all the remaining BTC to it. Store the new paper wallet. Keep the old one for future reference, or destroy it if you don't want the trace.

Problematic action: Destroy a paper wallet after it is used. Reason: You may need to prove you had control of that address some day, e.g., for taxation purpose. In the case of a chain split, you may have a balance on the other chain. Solution: Don't ever destroy a paper wallet. Keep it on file. Mark it with the relevant information, e.g., "Used in April 2017". Unless you don't want to be tied to the address.

Problematic action: Google a famous wallet app, click the first link or the sponsored link, download/install it, and use it, without serious research. Reason: It's insecure because the wallet app may be a scam. Solution: Do thorough research prior to deciding which wallet app to use. Find the official site prior to downloading/installing it.

Additions and corrections are welcome.

Edit: multiple editing for additions, corrections, and clarifications.

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Summary: pitfalls of paper wallets : Bitcoin

TechCrunch

Bitcoin and Ether prices hit all-time high TechCrunch Something is going on in the cryptocurrency world, but it's hard to figure out why prices are jumping. Both bitcoin and Ether prices are currently trading at an all-time high. According to Coindesk's price index, you could buy one bitcoin for $1,343 ... Bitcoin hits all-time high in trading against the dollarUPI.com Bitcoin Exchange Rate Hits New RecordMarket Leader - news and previews making you rich. all 5 news articles »

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Bitcoin and Ether prices hit all-time high - TechCrunch

Bitcoin now out-values gold, but could new BitTorrent plans be the beginning of the end for the virtual currency? We explain what is Bitcoin and how you can earn the virtual currency on your PC or laptop. We explain how you can use your PC or laptop to generate bitcoins, and whether you'll ever get rich in doing so

By Jim Martin | 27 Apr 17

Bitcoin is wildly confusing. And heres the bad news: the fact youre reading this now means youre late to the game, and its going to be tough to turn a profit in Bitcoin mining. Nevertheless, if you want to try your hand at mining bitcoins, here we present the beginner's guide to generating bitcoins. Also see: How to make money from your hobby.

Following a dodgy patch in 2016, Bitcoin's value has recovered and actually surpassed the value of gold. At the time of writingone Bitcoin is equivalent to 1021.66, whereas an ounce of gold is equal to 981.89. This increasehas been attributed to a surge in demand in China.

But now Bitcoin is once again said to be under threat, as BitTorrent founder Bram Cohen plans to launch his own crypto-currency within the next few months.

Bitcoin is overhyped, Cohen told Steal This Show, and his alternative willrely on the power of pre-existing digital storage rather than mining.

"I have this plan, a slightly crazy plan, for making something that doesn't have computers burning electricity as part of its mining," Cohen said. "The short of it is what you do instead of computers burning electricity to mine you have storage space that's mining."

If you're finding yourself baffled as to what we're talking about, please let us explain.

Bitcoin is a digital currency that operates independently of a central bank. Encryption is used to regulate both the generation of Bitcoin units and the transfer of the currency.

According to Reuters, the European Union will move to clamp down on this digital currency which has reportedly been used to anonymously fund terrorism - the Paris ISIS attackers reportedly had a Bitcoin wallet worth more than $3m.

EU interior and justice ministers will gather in Brussels later this week to discuss ways in which they can"strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards", according to draft conclusions of the meeting seen by Reuters.

In essence, the more bitcoins mined or found, the harder it is to find more coins. While once it may have been possible to use a high-powered PC at home to mine Bitcoin on its own, the sheer popularity of mining Bitcoin means its viable only to join a pool. This is where your computer works alongside others to mine bitcoins. Its much like [emailprotected], where clusters of computers work together to try and find extra-terrestrial life. See also: The rise of Bitcoin and why you can't mine them on your own.

Without getting bogged down with the technicalities, the groups of computers in a Bitcoin pool are crunching numbers to mine a block. For every block mined, you get 25 coins.

Update March 2017: Currently each coin is worth 1507, which is almost10 times the value it was when we originally wrote this in 2015.

Indeed, some analysts thought in 2015 that Bitcoin was doomed. Here's what the graph looked like around two years ago:

Google's currency converter lets you check very quickly how much a Bitcoin is worth.

As we mentioned in the introduction, these days it's difficult to turn a profit miningBitcoin. But it has been known, especially for early adopters of the virtual currency.

For example, the Guardian reports on how aNorwegian mans $27 investment in Bitcoin turned into a $886,000 windfall four years later.

"Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption. He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory," reports the Guardian. At which point, they were worth a small fortune at $886,000.

Let's say you try and mine a block of bitcoins with just one home PC. This is a bad idea: the electricity costs will be higher than the money you make from any mined bitcoins and you may have to wait months - or longer - before you get any return. By joining a pool, you should get smaller payments more regularly.

However, you could still end up out of pocket even if you join a pool such as Slushs Bitcoin pool one of the most popular ones. When a block is completed, you get a share based on the number of other workers who helped mine the block. A fee around 2 percent will be deducted from this, and you could well earn only half the amount youve spent in electricity costs.

Of course, if youre able to run the mining software on a computer for which you dont pay the electricity bill, you might be quids in (but we dont recommend running it on your work PC!).

So, if youre still interested, heres a simple step-by step guide to getting started with Bitcoin mining:

Step 1. Youll need a wallet to start with. This is a bit like a PayPal account where your bitcoins can be stored. You can store this wallet online, or locally on your PC. Youll need to download a large blockchain file to use a wallet. For an online wallet, you might like to try coinbase.com. With a coinbase account, you can buy, use and accept Bitcoin currency.

Step 2. Join a pool, such as Slushs Bitcoin pool. Theres always a danger that the pool owner might keep all 25 bitcoins when a block is mined, since the whole 25 coins are paid to one person: the pool owner.

Youll need to choose a trustworthy pool owner. Slushs pool was the first and has been operating since December 2010. By the sites own words, it has a a long history of stable and accurate payouts.

Step 3. Install a Bitcoin miner on your PC. There are two types: CPU and GPU. For beginners, Kiv's GUI miner is recommended. You can find out more about how to use Kiv's GUI miner here.

Step 4. Log into your Bitcoin pool account, and enter your wallet address. You will be able to get this by checking your wallet account which you created in step 1.

Step 5. Register your workers. Each worker is a sub-account within your Bitcoin pool account. You can have more than one worker running on each computer.

Step 6. Enter your worker credentials into your Bitcoin mining software, and then enter the main pool URL so your workers can start mining.

See also: How to mine altcoins

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What is Bitcoin? How to Mine Bitcoin - PC Advisor - PC Advisor

The Cabinet of Antigua & Barbuda has instructed the Attorney General, Steadroy CutieBenjamin to draft laws for the implementation of Bitcoin.

This, after a group connected with the Antigua Leisure & Gaming Association met with Cabinet, on Wednesday, to discuss and share knowledge and experience on a new method of transacting the sale of goods and services, which is known as the Bitcoin technology.

The Cabinet has agreed to place the country on the cutting edge of this new technology.

Here in Antigua & Barbuda we know we are always very much front and centre of new developments; we are leaders, trendsetters in the Caribbean, Minister of Trade and Consumer Affairs, EPChet Greene said at the post-Cabinet briefing, yesterday.

He added that what is of interest to the country is the fact that this new currency is immutable; you can always go and trace transactions, so in the context of allegations of our country being involved in tax havens, it allows for better traceability.

The currency benefits us in Antigua & Barbuda in respect to our Internet gaming sector. It will allow us,the satisfaction needed as a jurisdiction in respect to questions that would be asked of us in the Global Environment, Greene said.

Several countries, including Korea and Japan, have already begun the process of recognising and regulating the use of the virtual currency, BitCoin, for business transactions, while other countries, such as Switzerland and Malta, are either already engaged in this technology or have given commitments to get onboard with this development.

The minister is encouraging the public to conduct online searches on BitCoin which came onstream in 2009, and has increased in value several times since it was patented.

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A&B looking to embrace Bitcoin | Antigua Observer Newspaper - Antigua Observer

Lawmakers in the state of West Virginia have completed work on a bill that would make it a felony to use bitcoin or other cryptocurrencies for money laundering.

As reported in February, West Virginia House Bill 2585 constitutes an update to the state's anti-money laundering statutes, specifically creating a definition for cryptocurrency that is recognized as a 'monetary instrument' in the state.

The definition included in the bill reads:

"'Cryptocurrency' means digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, and which operate independently of a central bank."

The measure is on the cusp of becoming state law, public records show.

Lawmakers have finished drafting the bill following a conference period, according to LegiScan, a legislation data service provider. The state'slower chamber initially passed the bill by a 7821 vote, with the senate approving the measure unanimously a month later in a 340 vote.

The bill, though subject to approval by the states governor, Democrat Jim Justice, forms part of a larger legislative trend happening in the US today.

State lawmakers in a number of states, including Arizona, New Hampshire and Nevada, have passed or advanced bills focusing on either bitcoin or blockchain in recent months.

West Virginia State House image via Shutterstock

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West Virginia Lawmakers Complete Bitcoin Money Laundering Bill - CoinDesk

A new branded bug (sigh) has landed, specific to an ASIC-based Bitcoin miner: dubbed Antbleed, it allows remote shutdown of hardware sold by a company called "Bitmain".

Bitmain's Antminer cryptocurrency-mining hardware performs a start-up with a remote server, handing over MAC address, serial number and IP address but as this site details, there's also a curious piece of code in the current firmware:

The upshot is described by the Antbleed site is that at each check-in (a random time between 1 minute and 11 minutes), the firmware expects a response true from Bitmain.

If the response is false, the device will stop mining Bitcoin and that could be applied to any device, which the Antbleed site claims could be up to 70 percent of the global hashrate.

Not to mention that the information Bitmain collects is personally-identifiable, and as Bitcoin Magazine says, mining is a small industry, so it shouldn't even be hard to connect the machine to specific pools, or blocks.

Since the device runs an unauthenticated API, MITM, DNS or domain hijack attacks make it possible that third parties could exploit the same problem.

The Antbleed site suggests users force the API to treat localhost as the unit's connection to the Bitmain server (auth.minerlink.com) to block the issue at least until the firmware is patched.

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Unplug the Bitcoin miner and do us all a favour: Antminer has remote shutdown flaw - The Register

Forbes

How To Spot A Bitcoin Scam Forbes Whenever something gets hot, the only guarantee is that scamsters will lock onto it like a heat-seeking missile. The virtual currency bitcoin is no exception. For those living off the grid, bitcoin is a digital currency. Its value, not backed by any ...

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How To Spot A Bitcoin Scam - Forbes

Wednesday, April 26, 2017 at 10 a.m.

A local trader of bitcoins, the popular online cryptocurrency, was a focus of a federal task force raid in Mesa last week.

BTC Bitcoin via Flickr

A multi-agency federal task force raided the Mesa apartment of local bitcoin trader Morpheus Titania last week in a case that seems ready-made for one of the suspect's anarchist-leaning blog posts.

Morpheus, whose real name is Thomas Mario Costanzo, is being held at least until Thursday, when his case has a detention hearing scheduled.

Federal court records show he's been charged so far only with possession of three boxes of Winchester ammunition, for a total of 60 cartridges "in different calibers." He denied they were his, but admitted they were in his apartment, records state.

Costanzo's not supposed to possess any firearms or ammunition because of a 2015 conviction in Maricopa County for felony marijuana possession.

Yet the April 20 raid, led by Homeland Security Investigations, had nothing to do with Costanzo being a prohibited possessor.

Thomas Mario Costanzo, a.k.a. Morpheus Titania, was detained after his April 20 arrest for 60 Winchester bullets. He's a prohibited possessor because of a 2015 felony conviction for marijuana possession.

Maricopa County Sheriff's Office

A warrant signed by U.S. Magistrate Judge David Duncan sought evidence that Costanzo may have operated an "unlicensed money transmitting business," engaged in illegal drug sales, and tried to hide any profits.

Agents were authorized to seize illegal drugs, bitcoin records and other financial documents, computers, cellphones, and other items. A separate search warrant asked Costanzo's cellphone company to produce tracking information about his prior whereabouts.

The warrant records were obtained and published on Tuesday by Freedom's Phoenix, an offbeat news-and-conspiracy website run by local Libertarian activist Ernest Hancock.Costanzo works for Freedom's Phoenixas sales and marketing manager and has been Hancock's friend since they met in 2003, Hancock said in a podcast on Friday.

Hancock didn't return an e-mail seeking comment.

The site also published photos from the raid at 417 North Loma Vista Circle in Mesa, showing heavily armed SWAT team members and other officers, and an armored vehicle.

The apartment landlord told agents that Costanzo has lived there by himself for about a year.

In various online articles, Costanzo touts himself as one of the area's most prolific traders of bitcoin, the popular crypto-currency currently trading online for nearly $1,300 per coin. Online records show he's made more than 100 trades in the past four years.

"Awesome to work with!" one of his customers wrote in a review.

"Because of his rock-solid reputation, he is one of the biggest sellers in the Phoenix area," Costanzo wrote about himself in 2014 on one of his web sites, Titanians.org. "Morpheus is now semi-retired as a bitcoin trader / entrepreneur."

The site has been a venue for writers including "visionary" physicist Bob Podolsky, and features anarchist essays, 9/11 conspiracy rants, advice on business and ethics, and plenty about bitcoin.

Costanzo ran into trouble with Arizona's stiff felony cannabis-possession law with a trio of offenses during April to December 2014. Without a medical-marijuana card, possession of any amount of pot is a felony, but prosecutors usually knock it down to a misdemeanor or offer drug treatment instead of prosecution.

Costanzo has had numerous prior arrests in recent years and served eight months in prison in the mid-1980s for fleeing from police. He wasn't offered any sweet deals. Following guilty pleas in 2015, he received probation after being convicted of misdemeanors in two of the marijuana cases and of a felony in a third, records show.

Still, despite Costanzo's bad luck or bad judgment, the heavy hand of the government that Morpheus writes about shows through in the cannabis cases. Eight states and Washington D.C. have now legalized marijuana for adults 21 and older, and if Arizona had a similar law, Costanzo wouldn't have been charged and convicted of possession three times, nor been stripped of his gun-and-ammo rights.

However, as local Homeland Security spokeswoman Yasmeen Pitts O'Keefe tells New Times, the investigation is "open and active" meaning it's possible thatadditional charges could be forthcoming.

Where are Neo and Trinity when you need them?

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What's Really Behind the Feds' Raid of Bitcoin Trader Morpheus Titania's Home? - Phoenix New Times

Wall Street Journal (subscription)

Risk-Wary Banks Chill Bitcoin Market Wall Street Journal (subscription) At least three bitcoin exchanges have said in recent weeks that they can't process transactions in dollars, as global banks pull back from sectors they deem too risky. Hong Kong-based Bitfinex, the largest cryptocurrency exchange by market share, said ...

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Risk-Wary Banks Chill Bitcoin Market - Wall Street Journal (subscription)