Markethive

EU Commits €5 Million to Fund Blockchain Surveillance Research

A group of government agencies, law enforcement groups and academic researchers are partnering on a new digital currency surveillance project.

EU Titanium Project

Backed by €5m in funding from the European Union, the initiative, dubbed "Tools for the Investigation of Transactions in Underground Markets", or TITANIUM, will be conducted over the next three years.

Participants include Interpol, Interior Ministries from Spain and Austria, Finland's National Bureau of Investigation, and University College London, among others.

In statements, the project's backers cited a recent wave of ransomware attacks around the globe, pointing to the event as a justification for beefing up the ability to track cryptocurrency payments.

At the same time, those involved pledged not to violate user privacy rights.

"The consortium will analyse legal and ethical requirements and define guidelines for storing and processing data, information, and knowledge involved in criminal investigations without compromising citizen privacy," said Ross King, senior scientist for the AIT Austrian Institute of Technology GmbH, one of the research institutions taking part.

That the EU would take this approach — let alone fund one — is perhaps unsurprising, given past efforts and statements from leaders and officials of the economic bloc.

The EU's executive branch, the European Council, began pushing aggressively for greater oversight of digital currency users in early 2016, with the European Parliament following suit earlier this year.

According to a press release published by the Austrian Institute of Technology (AIT), the European Union funded a three-year project investigating the criminal use of virtual currencies and the darknet. Fifteen members from seven European countries are participating in the project. The solutions developed in the research are intended to prevent criminals and attackers from using the blockchain technology for criminal purposes while at the same time preserving the privacy rights of legitimate users.

Blockchain technology makes it possible to organize records in a distributed network without central control and thus presents new challenges for investigating authorities, the press release says. The best-known application of the blockchain technology is Bitcoin, a cryptocurrency currently on its all-time high at almost $2,500, which offers legal use, however, the virtual currency could be also used for criminal purposes. The press release stated that BTC’s illicit use most happens on the dark side of the internet, for example on darknet marketplaces or hacking forums. Since the dark web could not be accessed or crawled via common search engines, such as Google, and provides more anonymity to its users than the clearnet (the normal part of the internet everybody knows), criminals often take advantage of these perks and decide to conduct their illegal activities on the darknet. The press release emphasized that the WannaCry attackers, who locked computers in approximately 150 countries on May 12, 2017, also demanded the payment of the ransom in bitcoins.

The aim of the TITANIUM (Tools for the Investigation of Transactions in Underground Markets) project is the development of technical solutions for investigating and combating criminal and terrorist acts on the internet, which are carried out with the help of virtual currencies and underground marketplaces. The three-year project, worth a total of EUR 5 million, is funded by the European Union.

The tools developed and implemented by the partnership (including four law enforcement agencies and INTERPOL) are intended to support the forensic analysis of criminal transactions, identify anomalies in their application and identify money laundering techniques. In addition, the researchers will carry out training courses in order to “anchor” the corresponding know-how and knowledge to the law enforcement authorities of the EU helping officers in preventing and prosecuting cybercrime more efficiently. Furthermore, the tools and services developed in the project are to be tested and validated on site by the law enforcement authorities in order to check the project results for their success and effectiveness.

“Criminal and terrorist activities related to virtual currencies and dark net markets are developing rapidly and vary widely with regard to technical maturity, resilience and targeted goals,” Project Coordinator Ross King, Senior Scientist at the Austrian Institute of Technology (AIT), said in a statement.

In order to counteract these activities, according to Dr. King, the development of efficient and effective forensics tools is a must, which can use different types of data from different sources, including virtual currencies, online forums, peer-to-peer networks on darknet marketplaces, and on electronic equipment, which law enforcement authorities seized from the suspects. Dr King emphasized that the development of the tools within the framework of the TITANIUM project is an important focus on the protection of the personality and fundamental rights of the users.

“The partnership will analyze the legal and ethical requirements and develop guidelines for the storage and processing of data, information, and findings from criminal investigations without affecting the privacy of citizens, Dr King said.

In addition to the AIT Austrian Institute of Technology, the following partners are part of the TITANIUM consortium: the Federal Criminal Police Office from Germany (BKA), Coblue Cybersecurity from the Netherlands, Countercraft SL from Spain, Dence GmbH from Germany, University of Innsbruck from Austria, INTERPOL (International Criminal Police Organization), Karlsruhe Institute of Technology from Germany, Federal Ministry of the Interior of Austria, Ministry of Interior of Spain, National Bureau of Investigation from Finland, TNO from the Netherlands, Trilateral Research Ltd. from the United Kingdom, University College London from the United Kingdom, VICOMTECH-IK4 from Spain.

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Stephen Hodgkiss
Chief Engineer at MarketHive
markethive.com

Alan Zibluk Markethive Founding Member

Markethive

Will Investing in Cryptocurrency Make You Rich

Will Investing in Cryptocurrency Make You Rich

Will Investing in Cryptocurrency Make You Rich

 

Have you heard? Cyptocurrency is so hot right now. Bitcoin's price has been climbing for the better part of a year, topping $2,000 per coin for the first time in May, and rising to a record high above $2,500 — before dropping down just above $2,400 a coin as of Friday afternoon, per CoinDesk.

Those numbers mean nothing to you? This one might: If you had made a small investment in bitcoin back in 2010 — buying just $100 worth, when each unit was worth a fraction of a cent — your stash would be valued today at more than $70 million. Talk about an early retirement!

Even if you had been late to the party and bought bitcoin last year, you would be feeling pretty good. At one point, bitcoin prices were up roughly 180% for the year, as CNBC reported. Compare that with the broad stock market, which returned between 7.9% and 15%, depending on which index you look at.

Other cryptocurrencies have been on a tear as well. Ethereum, launched in 2015, is a software platform that has a cryptocurrency of its own, called "ether." Ether, or "ether tokens," hit a new all-time high Wednesday after climbing more than 35% in 24 hours, per CoinDesk. (There's also litecoin, which is similar to bitcoin but easier to obtain, more transactional, and seen as less valuable.)

So does that mean you should buy cryptocurrency today? Some say yes: One bitcoin proponent told CNBC he expects its value to keep rising and hit $100,000 within the decade. While digital currencies may seem alien now, it serves to remember that when Apple and other tech brands began gaining steam in the 1980s, people were skeptical anyone would have use for a personal computer. That story had a happy ending for early Apple investors.

Then again, hindsight can be 20/20, and just because an asset's price is going up doesn't mean it's actually getting more valuable. Just ask someone who bought U.S. real estate in 2007, or a tulip bulb during the infamous Dutch tulip bubble. If all that is driving prices to rise is hype, it's a good time to remember that what goes up must come down.

 

What are bitcoin and ether, exactly?

For the uninitiated, cryptocurrencies like ether and bitcoin are digital forms of money that live online, embedded in algorithms that record their movements. Bitcoin was the first major cryptocurrency, invented by an anonymous hacker known as Satoshi Nakamoto, in 2008. In a paper about the technology, Nakamoto envisioned a "peer-to-peer electronic cash system" that would let people conduct business directly, without the need of any outside institution.

The idea can be an exciting one: No more bank fees, for one, and you wouldn't need credit cards or debit cards, either. You also wouldn't need central banks or treasuries, since the price of currency would be set on the global stage by computers. Proponents of bitcoin, and its underlying technology, blockchain, hope that it could make most middlemen irrelevant by making all transactions instantly trustworthy and automated by Bluetooth.

If you needed a ride somewhere? You'd just summon your self-driving car, it would automatically read your digital wallet and take its fee, and you'd get out. It's a future that could save billions in transaction fees, protect identities and be a whole lot more sanitary. But we're not there yet, not by a long shot.

Currently, the system of using bitcoin relies on programmers to record transactions and build out what's known as a blockchain in exchange for a small bitcoin bounty. That process is called "bitcoin mining," and anyone can participate, although the reward will diminish over time

 

The case for investing in cryptocurrency

Cryptocurrency has come a long way from bitcoin's roots as the shadow currency favored by criminals on the Silk Road. Skepticism over bitcoin reached a boiling point in 2014, when Mt. Gox, the largest bitcoin exchange in the world, abruptly declared bankruptcy after than $460 million in bitcoin essentially disappeared.

Despite a rocky start, bitcoin has arguably entered the mainstream. For one, you can actually use it to buy stuff now. Many retailers, like Microsoft and Overstock, have started accepting bitcoin directly, and for the retailers that don't — notably Amazon — proponents have found a workaround by buying gift cards with their bitcoin and making purchases that way.

"The vast majority of bitcoin proponents are now either in finance or government," said Ian Bogost, an author, professor and game designer who has written about bitcoin for the Atlantic. "And for them, the speculative aspect is like a repurposing. The speculatists couldn’t give a shit what they’re speculating on, what the object is. Just that there is the possibility of substantial gain."

Ironically, given its roots, many of bitcoin's recent wins have been thanks to governments. Most recently, Japan voted to make bitcoin an officially sanctioned currency, and other countries like Barbados are looking into whether they should start purchasing bitcoin of their own.

Interestingly, many fans of cryptocurrency argue that the real value might not be in the currency itself, but in the technology that enables it — ways to safely and securely move value, for example, or trustworthy ways to validate identity.

"Bitcoin basically operated in obscurity until 2012, when media began reporting on its pseudonymous payments on Silk Road and it hit $1,000 before crashing," said Amanda Gutterman, chief marketing officer of ConsenSys, a blockchain studio which builds products on Ethereum. "As interest picked up, there was a desire to create more sophisticated financial products."

Bitcoin started as an experiment in monetary theory, Gutterman said, but it has already started to inspire real technology. ConsenSys, for example, is working with the city of Dubai to leverage blockchain and make the city government paperless by 2020. Because it's easier to build products around, many experts believe Ethereum could soon supplant Bitcoin.

 

The case against buying cryptocurrency

While the price of cryptocurrencies might be going up, there are still a lot of reasons to be wary, not least because it's virtually impossible to determine what a fair price for bitcoin or ether might be.

Part of what makes currencies and other assets valuable is that they have a history of appreciation, which cryptocurrencies do not share. Then there's the fact that people don't exactly agree on what the rules for bitcoin should be. It's not really a currency, since currencies are backed by a government, which issues them. It's also not really like a stock, either — cryptocurrencies don't report earnings or generate profits, and earnings and profits are how people try to determine what a "fair price" for a given stock might actually be.

Now, a few people have developed formulas to figure out the fair price for bitcoin: The Financial Times spoke to one anonymous London financial analyst who developed a model for pricing bitcoin based on the assumption that its "core utility value" is as the currency for shadow markets. By comparing the total amount of money that's laundered around the world with the overall GDP, he estimates that bitcoin's current price is about 238% higher than it should be. Other skeptics say that bitcoin has no real underlying value at all.

Despite being embraced by corporations and governments, bitcoin is still associated with criminal activity: When the WannaCry ransomware attack hit computers all over the world in May, the hackers involved requested their bounties in bitcoin. That means that even as some governments embrace bitcoin, others are cracking down: In Florida, for example, the state legislature recently passed a law that would make it easier to prosecute criminals who use bitcoin for money laundering.

Somewhat paradoxically, these types of criminal activity might actually be part of what's making bitcoin more valuable at the moment. Confronted with a rise in bitcoin ransoms from hackers, Bogost noted that a very natural response for a company is to buy a little bitcoin in case it happens again.

Bogost said she fears that bitcoin is particularly susceptible to monopoly — as hackers have very successfully cornered the market in the past. "We’ve seen with these sort of ups and downs, these small groups of mostly Chinese pools end up with more than 50% of the capacity. And we don’t know anything about these organizations. Are they state controlled?" Bogost said. "The moment [there is too much consolidation in the mining pools] then effectively the platform is dead, at least as a currency."

Finally, there's the possibility people are unwisely romanticizing a future without middlemen. The people who lost their bitcoin in the 2014 Mt. Gox hack are still trying to get their money back, and are unlikely to. After all, when the value of your cash is held in anonymous, poorly-understood algorithms, it's hard to hold somebody accountable if you lose it.

If you still feel like investing a small amount of money in cryptocurrency, be sure not to dip into your emergency savings. It's rarely a good idea to buy something when its price is at its all-time high. And remember that there are a lot of horses in this race: In addition to bitcoin, ether, and litecoin there's also ripple, namecoin and peercoin.

 

How to buy and store cryptocurrency

If you have some "play" money and want to make a bet on cryptocurrency, you should absolutely feel 100% comfortable with the idea of losing all that money. Cryptocurrencies have crashed before, often, and probably will again in the future. They're also historically expensive — if you must buy some, you might be served by waiting a bit for prices to drop, so you're more likely to get a deal.

There are lots of ways to buy cryptocurrencies, and some countries have even set up ways to purchase them via an ATM.

Coinbase is one of the more well-known bitcoin brokers, and often recommended for beginners. Coinbase allows you buy bitcoin and other cryptocurrencies by linking to your debit or credit card account. Business Insider reports that the mobile app is buggy, and banks will sometimes lock a card after making these transactions. To that end, BI recommends letting your financial institution know before trying to make a purchase.

There are a few other options, though they have less of a track record: Kraken is one reputable alternative; it has been around since 2011 and works with a wide range of traders and governments. There's also Gemini, but it is not yet available in every state.

Finally, because exchanges, even the largest ones, have crashed abruptly, it's also important to get yourself a safe place to store your bitcoin, in case your provider goes out of business or suffers a hack. These devices are often referred to as bitcoin "wallets." Ledger is a popular option.

by James Dennin

 

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Markethive

Amid Bitcoin Trading Resurgence, Chinese Miners Shut Down Without Warning

Amid Bitcoin Trading Resurgence,
Chinese Miners Shut Down Without Warning

    

A strange phenomenon is unfolding in China

as Bitcoin miners mysteriously close down or relocate their operations. Mines in the country’s Sichuan province were “reluctant” to discuss the reasons for withdrawal, major news resource People.cn reports. Bitcoin has recently continued its expanding price as Chinese exchanges get the green light to allow Bitcoin withdrawals. As traders delight in the new possibilities for sanctioned exchange use, however, a lack of corresponding regulation for miners is causing problems.

“A local official said the closure of the Bajiaoxi Mining Company aims at cracking down on illegal cash operations and on controlling systemic risks,” People reports, while no party was directly cited giving an explanation for the upset. Sichuan’s hydroelectric power is among the world’s cheapest, but the departure of miners is set to cost one power station $147,000 per month in lost billing. At a time when Bitcoin fees are higher than ever, the effect on miners themselves is also significant. “The southwestern region has abundant hydropower resources,” an “insider” source told fellow publication YiCai Global. “So electricity costs about half the price during the wet season. It’s hard to imagine why any mine would want to relocate now.”

Chuck Reynolds
Contributor
Please click either Link to Learn more about – TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Markethive

Financial Times Praises ‘Innovator’ Greek Lawyer For Bitcoin Use

Financial Times Praises
‘Innovator’
Greek Lawyer For Bitcoin Use

    

A Greek lawyer has made the Financial Times’ list

of top legal innovators in Europe for his use of Bitcoin during the country’s financial

crisis.

"Panos Giannissis came second on a list of eight finalists shortlisted by the publication, which praised his use of the virtual currency when capital controls appeared in Greece two years ago."

“When capital controls were imposed during the Greek financial crisis last year, Panos Giannissis helped clients to stay in business by converting some of their working capital to Bitcoin, the virtual currency,” it writes. “He also led the development and implementation of the information systems at his firm.”

Giannissis’ triumph is conspicuous for mainstream press’ continued treatment of Bitcoin as a bonafide “innovation.” “…He negotiated a deal with his clients’ suppliers from abroad to accept Bitcoin as collateral to back importation of supplies in case his clients would not be able to make payments in fiat money,” an accompanying press release further explains.

“After the Capital Controls were imposed, the deal was activated and his clients continued to receive their supplies as usually, while their suppliers were covered by the Bitcoin collateral.” The broader international media tone has shifted away from Bitcoin as a highly volatile, insincere investment towards one full of potential with valid use cases. As Cointelegraph reported earlier this week, however, a lot of the latest supportive comments appear tied solely to Bitcoin’s price.

Chuck Reynolds
Contributor
Please click either Link to Learn more about – TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Markethive

‘Russian Bitcoin’ Will Be Country’s ‘Only Freely Tradable’ Crypto: Sberbank CEO

‘Russian Bitcoin’ Will Be Country’s
‘Only Freely Tradable’
Crypto: Sberbank CEO

    

Sberbank CEO Herman Gref has “agreed” on the development of a Russian national cryptocurrency

with the country’s central bank. Sberbank is Russia’s major state-controlled bank. In unofficial reports from local news aggregators, the so-called “Russian Bitcoin” will use Sberbank as its base and will be “the only cryptocurrency freely available for sale and purchase” in the country. “All other [cryptocurrencies] will only be available via exchanges or trading platforms,” the Telegram news channel DeСenter reports Friday.

The news comes amid the ongoing economic forum in St. Petersburg, where the central bank deputy Olga Skorobogatova announced work had “already begun” on developing the national cryptocurrency. Skorobogatova had previously outlined plans to regulate Bitcoin and its like in 2018, on the basis that an outright ban was no longer feasible. On the topic of Blockchain, she told forum members that it “is without a doubt necessary to buy into” such “revolutionary technology,” yet understanding the associated risks was essential.

Fully-controlled integration would require “ seven to 10 years,” she added and continued: “In the coming years we will be concentrating on digital letters of credit, custodian accounting and digital bank guarantees using the Blockchain.” Gref had also been encouraging on Blockchain, estimating initial implementations by 2019. “Two to two-and-a-half years is the timeframe in which we could be talking about seeing Blockchain technology commercially operating,” he said in February.

Chuck Reynolds
Contributor
Please click either Link to Learn more about – TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Markethive

Bitcoin Scaling: Jeff Garzik AsicBoost Comments Lead to Frustration

Bitcoin Scaling:
Jeff Garzik AsicBoost Comments
Lead to Frustration

    

Bitcoin Core developer

Jeff Garzik has sparked contention with a post asking if further measures were needed to prevent covert AsicBoost. Addressing the work group (WG) on Github, Garzik put forward a selection of next steps aimed at “testing protocol/software changes that ban/disable/render ineffective this hardware optimization.” However, fellow contributor Greg Maxwell responded accusing Garzik of attempting to allow AsicBoost to, in fact, continue under his “modified version” of Segregated Witness with a hard fork.

Maxwell wrote:

“So to be clear about what you've written between the lines: you have decided that impeding covert asicboost would be a violation of the "SegWit2x charter" and so you will assure that covert asicboost continues to function in your modified version of segwit and HF as people have been alleging you would do? This will require further departure and incompatibility with the segwit proposal.”

Infighting among Core members has continued on the topic of Bitcoin’s future following Barry Silbert’s attempt to ratify an agreement which would see SegWit introduction in September followed by a cooling-off period for a block size increase to 2 MB. Reactions have been mixed, while practicality problems on the Bitcoin network are resulting in greater user calls than ever to initiate a binding solution. Garzik, meanwhile, faced pressure to state whether he intends to have AsicBoost disabled. “Anything that was not discussed is, by definition, A New Issue To Raise And Discuss. Which is what was done here,” he wrote.

Chuck Reynolds
Contributor
Please click either Link to Learn more about – TCC-Bitcoin.

 

Alan Zibluk Markethive Founding Member

Markethive

Ponzi Alert: New Zealand Lawyer Labels “We Grow Bitcoins” Simple Scam

Ponzi Alert:
New Zealand Lawyer Labels
“We Grow Bitcoins”
Simple Scam

    

A New Zealand lawyer has called suspected pyramid scheme

We Grow Bitcoins a “simple scam” after a news investigation. In an article by local platform Newshub, consumer law specialist Prajna Moodley concluded that investors funneling money into the scheme, which promises 62 BTC ($148,300) monthly returns, would never see their cash again.

“I would go as so far as to say it's a simple scam, from what I can work this involves people investing money and never hearing from the company again," she told the publication. The investigation focuses on the story of a New Zealand investor by the name of Daniel Tepania, who sent the so-called “crowdfunding community” the required NZ$30 minimum entry fee and is awaiting payouts. "It's only been here about a month so I thought I would give it a go, sounded quite good," he told Newshub.

New Zealand’s Commerce Commission pointed journalists to its legislation on pyramid schemes when approached about We Grow Bitcoins, such schemes being illegal under local law. “WeGrowBitcoins is a member to member donation platform,” the website states. “Members pay a monthly subscription to have access to the platform. Platform access allows members to receive donations directly into their bitcoin wallet from other members.” Cointelegraph would like to remind readers that investing in projects purporting to deliver unproven profits in return for direct payment should be avoided.

Chuck Reynolds
Contributor
Please click either Link to Learn more about – TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Markethive

How Do Bitcoin Transactions Actually Work

How Do Bitcoin Transactions Actually Work

How Do Bitcoin Transactions Actually Work

 

Whether you’re interested in becoming a developer for blockchain applications, or you’re just looking to understand what happens under the hood when you send bitcoin to a friend, it’s good to have a working knowledge of what happens when you create and broadcast Bitcoin transactions to the Bitcoin network. Why?

Because transactions are a basic entity on top of which the bitcoin blockchain is constructed. Transactions are the result of a brilliant collision of cryptography, data structures, and simple non-turing-complete scripting. They’re simple enough that common transaction types aren’t overly-complex, but flexible enough to allow developers to encode fairly customized transactions types as well. Today we’ll take a tour of the former.

As a developer, how does your bitcoin client post a new transaction to the network (and what happens when it’s received)?

What exactly is happening when you send some bitcoin to a friend?

This post will assume that the reader has a basic understanding of hashing, asymmetric cryptography, and P2P networking. It’s also a good idea to have a good sense for what exactly a blockchain is, even if you’re unfamiliar with any specific mechanics.

Bitcoin Transactions and their role in the bigger picture

Bitcoin is comprised of a few major pieces: nodes and a blockchain. The role of a typical node is to maintain its own blockchain version and update it once it hears of a “better” (longer) version. Simply put, the blockchain has blocks, and blocks have transactions.

 

With this simplified but accurate picture in mind, you might be wondering what exactly a transaction is made out of.

How will understanding transactions help me to become a better blockchain developer?How do transactions allow me to transfer some bitcoin to a friend?

It turns out that the answers to these questions vary based on many things. Even assuming that we’re talking only bitcoin, we can use transactions in a number of creative ways to accomplish a variety of personalized goals. Let’s start at the beginning, that is, let’s take a look a good old-fashioned pay-to-PK-hash transaction type. After all, this type of transaction accounts for over 99% of all transactions on the bitcoin blockchain.

First, let’s build a mental model. It’s tempting to think of bitcoin as an account-based system. After all, when I send bitcoin to somebody, that person receives money and I’m left with a remaining balance. In the real world though, things are represented a bit differently. Generally speaking, when I send money to somebody I am sending spending all of that money (minus transaction fees). Some of that money will be spent back to my own personal account if there exists a remaining balance. The point is that all of the money moves every single time.

How Do Bitcoin Transactions Actually Work?Save

This was somewhat confusing to me when I first saw it, so I’ll elaborate a bit. When I post a transaction, I’m essentially “claiming” an output and proving that I have permission to spend the amount of money at that output. So if I’m Bob and I want to pay Alice, those inputs are my proof that I have been given a certain amount of money (although this might just be a portion of my total balance), and the outputs will correspond to Alice’s account. In this simple case, there would be only a single input and a single output.

A deeper look into Bitcoin transactions

Let’s understand the mechanics of a real bitcoin transaction. We’ll use the image above as a reference.

If you were to cut open a typical bitcoin transaction, you’d end up with three major pieces: the header, the input(s), and the output(s). Let’s briefly look at the fields available to us in these sections, as they’ll be important for discussion. Note that these are the fields that are in a so-called raw transaction. Raw transactions are broadcast between peers when a transaction is created.

The Header

hash: The hash over this entire transaction. Bitcoin generally uses hash values both a pointer and a means to check the integrity of a piece of data. We’ll look at this more in the next section.

ver: The version number that should be used to verify this block. The latest version was introduced in a soft fork that became active in December 2015.

vin_sz: The number of inputs to this transaction. Similarly, vout_sz counts the number of outputs.

lock_time: We’ll look at this more in later articles, but this basically describes the earliest time at which a block can be added to the blockchain. It is either the block height or a unix timestamp.

Input

previous output hash: This is a hash pointer to a previously unspent transaction output (UTXO). Essentially, this is money that belongs to you that you are about to spend in this transaction.

n: An index into the list of outputs of the previous transaction. This is the actual output that you are spending.

scriptSig: This is a spending script that proves that the creator of this transaction has permission to spend the money referenced by 1. and 2.

 

Output

value: The amount of Satoshi being spent (1 BTC = 100,000,000 Satoshi).

scriptPubKey: The second of two scripts provided in a bitcoin transaction, which points to a recipient’s hashed public key. More on this in the last section of this article.

Transaction verification

One of the jobs of a bitcoin node is the verify that incoming transactions are correct (data hasn’t been tampered with, money isn’t being created, only intended recipients spend UTXOs, etc). A more exhaustive list can be found online, but I’ll list out a few of the important ones here:

 

All outputs claimed by inputs of this transaction are in the UTXO pool. Unspent outputs can only ever be claimed once.

The signatures on each input are valid. More precisely, we’re saying that the combined scripts return true after executing them one after the other. More on this in the last section.

No UTXO is spent more than once by this transaction. Notice how this is different than the first item.

All of the transaction’s output values are non-negative.

The sum of this transaction’s input values is greater than the sum of its output values. Note that if the numbers are different, the difference is considered to be a transaction fee that can be claimed by the miner.

A basic pay-to-PK-hash transaction

Bitcoin has its own custom (Forth-like) scripting language that is powerful enough to allow developers to create complicated and custom types of transactions. There are five or so standard transaction types that are accepted by standard bitcoin clients [5], however, there exist other clients that will accept other types of transactions for a fee. We’ll just cover the mechanics of pay-to-PK-hash here.

For any transaction to be valid, a combined scriptSig/scriptPubKey pair must evaluate to true. More specifically, a transaction spender provides a scriptSig that is executed and followed by the scriptPubKey of the claimed transaction output (remember how we said inputs claim previous unspent transaction outputs?). Both scripts share the same stack.

In the interest of efficiency, let’s use (official bitcoin wiki) a reference as we discuss. When you visit the link, go about halfway down to find a table containing 7 rows. This table shows how the scripts are combined, how execution occurs, and what the stack looks like at each step.

One thing to note is that, because bitcoin addresses are actually hashes (well, it gets even a bit more complicated. See ), there is no way for the sender to know the actual public key to check against the private key. Therefore, the Redeemer specifies both the public key and private key, and the scriptPubKey will duplicate and hash the public key to make sure that the Redeemer is indeed the intended recipient.

During execution, you can see that constants are placed directly onto the stack when they are encountered. Operations add or remove items from the stack as they are evaluated. For example, OP_HASH160 will take the top item from the stack, and has it twice, first with SHA-256 and then with RIPEMD-160. When all items in our script have been evaluated, our entire script will evaluate to true if true remains on the stack, and false otherwise.

All in all, the pay-to-PK-hash is a pretty straightforward transaction type. It ensures that only a redeemer with the appropriate public/private key pair can claim and subsequently spend bitcoin. Assuming that all other criteria are met (see the previous section), then the transaction is a good one and it can be placed into a block.

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Markethive

Walmart Wants to Track Delivery Drones With Blockchain Tech

Walmart Wants to Track Delivery Drones With Blockchain Tech

  

Retail giant Walmart is seeking to patent a system

that uses blockchain technology to track packages delivered by unmanned drones. The US Patent and Trademark Office (USPTO) published the application, innocuously titled "Unmanned Aerial Delivery to Secure Location", on 25th May, and while that title may not give away much of Walmart's plans, the application itself reveals further details. As outlined, the retailer is looking at blockchain tech as a way to track shipments that involve flying drones.

The patent application explains:

"In some embodiments, the delivery box may also include a delivery encryption system comprising a blockchain for package tracking and authentication. Package tracking by blockchain may include elements including but not limited to location, supply chain transition, authentication of the courier and customer, ambient temperature of the container, temperature of the product if available, acceptable thresholds for ambient temperature of the product, package contents placed in the container system (products & goods), or a combination thereof."

It's a notable release from the global retailer, which has revealed some of its work with blockchain in the past. For example, last October, Walmart announced that it was working with IBM to develop a supply chain solution focused on China’s pork market, the largest in the world.

At the time, the retailer indicated that it was looking to apply the tech to other supply chains. And while it provided no hint that it was looking at blockchain as an underlying mechanism for aerial drones, Walmart told CoinDesk that it wanted to leverage blockchain to facilitate "fresher and faster deliveries". The application also details how the tech could be used to establish identity within the package system. "Authentication and access may be restricted to specific blockchain keys to access the contents of a parcel's payload, and may include specific times and locations," the authors write. "Access to the contents may be determined at the scheduling and purchase of a delivery or products."

Chuck Reynolds
Contributor
Please click either Link to Learn more about – TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Markethive

How the blockchain could fight grid cyber-threats

How the blockchain could fight grid cyber-threats

  

The recent ransomware saga is a potent reminder

of just how vulnerable our information and data is to cyber-threats. But it’s not just our information that’s vulnerable; these threats extend into the physical world of electricity as well. In fact, today’s electrical grid is incredibly insecure against cybersecurity threats; for example, the massive 2015 cyberattack on the Ukranian power grid that left 230,000 people in the dark and the intrinsic level of insecurity presented by smart meters used all over the world. And with billions of energy-using, Internet-connected devices expected to come online over the next decade (PDF), the grid is about to experience a several-orders-of-magnitude increase in the number of vulnerabilities to

cyber-threats.

As … billions of energy-using devices are integrated into the electricity system, malicious actors will see the potential to exploit these systems and attempt to usurp this new reality.

Fortunately, blockchain technology is inherently robust against cyber-threats, and many energy companies are considering how blockchains may bolster the grid’s cybersecurity. This is because blockchains are built for:

  • Tamperproofing data (PDF): 
    Blockchains make it very difficult to change data after it has been written. This eliminates a number of risks, including man-in-the-middle attacks, in which a hacker modifies data that’s en route to its destination. With a proper blockchain implementation, all computation is "hashed" and made tamperproof at the point of origin, so there is no risk of data being modified while in transit.
  • Disintermediation (PDF): 
    With blockchains, intermediaries (escrow corporations) often are no longer necessary, significantly reducing transaction costs.
  • Complete data availability (PDF): 
    Blockchains can store data in a decentralized fashion across many nodes. With this architecture, even if some nodes or servers are compromised, users still can access a complete dataset.
  • Redundancy (PDF): 
    Blockchains operate without a central point of failure, so reliability through redundancy is intrinsic to this architecture.
  • Privacy and control: 
    Users of a blockchain can choose which data to make immutably transparent and which data to keep encrypted so only the intended recipients can view the contents.
  • Outsourcing computation (PDF): 
    Encrypted data can be sent for processing to a third party, without the contents of the data being revealed.

As the world of energy becomes more digitized and decentralized, the need for solid defense against cybersecurity threats increases drastically. When a blockchain is implemented properly, it offers a strong defense against external and internal threats by mitigating internet-connected and data communications vulnerabilities, and increasing data confidentiality and privacy.

Mitigating vulnerabilities

Internet-connected energy-using devices have the most room for improvement when it comes to cybersecurity. Between January and April, the research found that over 2 million Internet of Things (IoT) devices in homes were hacked into and rendered useless (bricked). This attack was to protest manufacturers’ poor cybersecurity policies for the devices, chiefly, thousands of devices set by default to use basic login and authentication credentials (username=user and password=password). In this case, hackers could have been much more malicious than simply bricking devices, but they wanted to prove their point: Unsecured IoT devices are unsafe, and should not be allowed to operate in a real-world environment where people’s lives and property are at risk.

Blockchain technology and those working on making it more usable for everyone are paving the way toward a new user-authentication paradigm. The current system of username/password combinations has been obsolete for many years. A much more secure mode of authentication is that of the public–private key pair (also called public key cryptography), the default in systems such as Bitcoin and Ethereum. As these blockchain implementations become more user-friendly, we will see a natural evolution of all login systems toward this more modern and secure method.

With a properly integrated cryptographic key login system for blockchain-based applications, IoT device owners will bear a significantly reduced risk of loss of power, theft of data and threats to privacy. What's more, integrating pricing and settlement on wholesale electricity markets into a secure blockchain significantly minimizes the risk of false data injection and pricing manipulation. This is largely because of the tamperproof characteristic of blockchains, which ensures immutability of a given dataset or series of communications between transacting parties.

The blockchain is also relevant for addressing data privacy and security issues. As more data is collected and transported over the internet, the risk of data exploitation and breach increases, as evidenced by the release of confidential information from hacks of LinkedIn, Yahoo, Target and other large organizations. Blockchains allow for the encrypted transportation of private data, ensuring that data is readable only by the intended recipient.

Introducing a new risk: Key mismanagement

Blockchains are great at mitigating several cybersecurity risks, but they also introduce a new risk that is often overlooked: key mismanagement. Key management is the secure storage of digital keys in a fashion that prevents unauthorized access — something of significance for distributed energy resources, which eventually will be connected to the web and authenticated mostly through asymmetric cryptography (the method used for all blockchain-based transaction and authentication). Many early adopters of blockchain technology that don’t have a background in IT have lost their private keys, rendering their blockchain assets or devices inaccessible.

However, key management is getting some much-needed attention, and innovators are creating new ways to store and recover private keys securely. One innovative way to tackle this problem is to integrate key pairs in actual, physical devices (think key fobs for your car) and use them to activate devices. This minimizes, or in some implementations renders impossible, the risk of hackers accessing private keys that confirm the identity and authority of a signing entity. Keys that exist on a personal device enforce secure signing on, for example, an energy-using internet-connected device (an electric vehicle). For a malicious actor, if all signing must be on a device, then the physical device must be compromised in a way that allows a hacker to remotely execute commands on the device instead of just reading data, which is much more difficult for the hacker and therefore a more secure implementation.

As digitized and distributed systems in energy become more common and billions of energy-using devices are integrated into the electricity system, malicious actors will see the potential to exploit these systems and attempt to usurp this new reality. Therefore, it is paramount that we ditch the "build-then-patch" approach, and build systems integrated with holistic security. Fortunately, much of this security is inherent in a properly implemented blockchain.

Chuck Reynolds
Contributor
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