Coinrail Reports a $40m Heist – So just how secure are cryptocurrency exchanges against cyber theft?

Colleagues, the recent Coinrail loss of some $40m is just the latest in a steady stream of cybercrime attacks against cryptocurrency exchanges. Coincheck lost an approximately $400m earlier this year, last November saw Tether claim it lose $31 million following an attack. Mt. Gox hacking in 2014 is the mother of all crypto attacks. In total the exchange lost around 744,408 BTC. That was worth around $350m in 2014.  While Coinrail is by no means a tier 1 exchange this cyber heist raises serious questions about the security of cryptocurrencies in general, and second the exchanges on which they are traded. There is no silver bullet mitigation strategy, however, the Cryptocurrency Academy would a couple of best practices for minimizing the risk to your crypto investments: Currencies, exchanges and wallets. First, the top-tier currencies such as BTC, Ethereum, Ripple, Litecoin, etc. generally have more security on-board. Second, the larger and more established exchanges are likely to be built on more secure platforms with cyber security professionals on staff. And third, although opinions surely vary, hardware wallet such as the industry-leading Nano Ledger S are believed to offer more security … especially when compared to cloud-based wallets. Send us a comment and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)

SEC Chair Jay Clayton wrestles with whether cryptocurrencies are in fact securities

Colleagues, is Bitcoin a security? The answer you receive likely will depend upon to whom you ask the question. As of June 2018 Jay Clayton does not consider Bitcoin as a security according to the 1933 Securities Act. To paraphrase his rationale may be a little risky, nonetheless, we will do our best. Clayton’s definition of a security is when an investor provides funds to a designated third party and expects to receive – with some level of risk – a return on his or her investment. Traditional IPO stocks most definitely meet his definition of a security. Enter the emerging universe of ICOs. Now the definition become much more blurry. All indications are that Clayton’s view is that ICOs border on pure “speculation” regarding the investors’ expectation of a return. So which firms and/or products do meet the definition of a security? Surely any public company which produces a digital or tangible product related to the cryptocurrency or the broader Blockchain ecosystem are securities. So where does this leave ICOs and the currencies they represent? The Cryptocurrency Academy perceives a rather large black hole … at least for the foreseeable future. This phenomenon is not uncommon when the rate of technology innovation outpaces the government’s due diligence to define and enforce regulations. We predict that this issue will be resolved, but not for another 2-3 years leaving ICOs and potential investors hanging in the balance. Share a comment and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)

How to mitigate the increased threat of cryptocurrency theft?

Colleagues, currency theft is nothing new. However, with the meteoric rise in cryptocurrency trading in the past 2-3 years the opportunity for cyber thieves and risk to investor has never been greater. Cloud security firm Carbon Black has issued a new threat report entitled “Cryptocurrency Gold Rush on the Dark Web“ in which it claims some $1.1b USD in cryptocurrencies have been illicitly stolen so far this calendar year. Moreover, Japanese cryptocurrency exchange Coincheck had $600m in XEM stolen by hackers in January 2018. A number which is likely to grow dramatically over time. The malware needed to commit cryptocurrency theft can be obtained for a mere $224. Two key questions emerge: First, which components of the cryptocurrency ecosystem are vulnerable to attack – mining, wallets, exchanges, etc? And second, which mitigation strategies can the ecosystem in general and investors in particular, take to reduce risk? For the moment, concrete answers to these question appear illusive. Nonetheless, the Cryptocurrency Academy will pursue these issues and keep you informed. Please share a comment and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)

Beyond Stratum - What impact will the BetterHash protocol have on cryptocurrency mining?

Colleagues, Matt Corallo from Bitcoin Core goal is to replace the existing Stratum mining protocol with a new system which divides payouts and block construction – Pool and Work. The stratum overlay protocol was extended to support pooled mining as a replacement for obsolete getwork protocol in late 2012. The mining service specification was initially announced via Slush's pool's website^.  Shortly thereafter, alternative "cheat sheet" style documentation was provided by BTCGuild. Bottom line question: Can a new protocol such as BetterHash deliver both decentralization and scalability in crypto mining? Share a comment and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)

Cryptocurrency Wallet Competition – Which category will be the big winner?

Colleagues, while the primary competition in the crypto universe is which specific currency or currencies (whether Bitcoin, Ethereum, Ripple, Litecoin, etc.) will gain mass adoption, there is no shortage of competition among cryptocurrency wallet categories. Hardware, Software, Paper, Cloud-based and Mobile App based wallets are all vying for market share particularly among individual investors. While each categories has its own advantages and disadvantages, the Cryptocurrency Academy believes that Mobile App-based wallets – with the requisite security and ease of use – hold a competitive edge quite simply due to the ubiquity of smartphone users worldwide. Yes, the Ledger Nano and other hardware-based wallets hold a market share majority today. However, Mobile App-based wallets such as GreenAddress, Airbitz, CoPay, Jaxx, MyCelium and BreadWallet (BRD) are highly likely to gain share based upon their convenience, security and ease of use. One critical issue must first be resolved: The winner will need to be either a multi-currency or universal currency capabilities. What to you predict? Share a comment and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)

Will Blockchain-base Immutable Coupons Give MasterCard a Competitive Advantage?

Colleagues, EMV (EuroPay, MasterCard and Visa) is a standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. Fraud prevention and reduction is critical to maintaining the credibility of these credit cards among consumers and businesses around the globe while also reduce EMV OPEX. MasterCard’s “Method and System for Authentication of Coupons via Blockchain” patent originally filed in  November of 2016 was approved by the UPPTO on May 18, 2018 giving the payments processing company the green light to develop so-called ‘immutable coupons’ using Blockchain technology. This technology will surely help merchants to preserve the integrity of their transactions. It remains to be seen when the new system will be implemented. Nonetheless, the Cryptocurrency Academy predicts that EuroPay, Visa, AMEX will soon follow with related patent requests. Bottom line question: How much value will immutable coupons in fact deliver to MasterCard and its customers? Comment and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)

Will cryptocurrencies one day rival the demand for sovereign central bank fiat currencies?

Colleagues, recent remarks by the International Monetary Fund (IMF) raise the specter of cryptocurrencies one day challenging the credibility of sovereign bank fiat currencies. Such prescient statements paint a picture of a brave new world with a dualistic global economy. One component of the global economy will surely continue to be central bank fiat currencies backed in some cases by little more than the stability and reputation of the sovereign governments from which they are issues (e.g. the US dollar which until 1971 was pegged to the value of gold bullion). The purchasing power of fiat currency is pegged to the state’s authority and any damage to that authority leads to a decrease of fiat money’s value and results in inflation. By contrast a global crypto-based economy could emerge with specific currencies backed either by tangible commodities (e.g. gold, silver or crude oil) or even the stability and reputation of the organization that issues the currency (e.g. a cartel such as OPEC, let alone a short list of the world’s most valuable corporations such as Apple, Google or Aramco). We at the Cryptocurrency Academy fully recognize that this scenario looks far into the future and has many – valid or invalid – dependencies. Bottom line: What is the probability of such a dual-currency global economy coming to the fore by 2028? Share your thoughts and subscribe today! Lawrence, Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com)