The Decrypt Daily: Bitcoin & Cryptocurrency News Podcast - Oct 12: REAL TALK: Ethereum Classic 51% Attack & Solutions

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00:00:00
This is Matthew Aaron today on the show Bitcoins next upgrade Willis support tour V3 addresses. Spain lawmakers. Get some Bitcoin cryptokitties back in the news and I mean conversation we have on Terry Colbert CEO of ethereum classic labs to talk about ethereum classic upgrades to prevent 51% attacks coming up today under the curve daily.

00:00:25
What's up, everybody? Today is Monday October 12th, 2020. We have a lot of news to get to the day. So I'm just going to cut through the BS and get to not only the crypto prices but also that great conversation with Terry Culver. We talked to 81% attack. We talked the future of ethereum classic. We talked preventive measures of but I think it's one of the biggest threat to any blockchain but it is those prices are we chose money talk not recording this at 3 Eastern Standard Time Bitcoin is sitting at $11,567 up 4.6% from last Friday, aetherium 389 up 7% from last Friday Litecoin, 5123 up 7.2% chain link 1161 up 13.3% again looking in my notes at Chinle for up over 28% since Wednesday last week. That's some big moves and xrp 25.7%

00:01:25
Up 2.7% total market cap for all of cryptocurrency worse than that 366.6 billion dollars for the BTC dominance of 15.4% and FYI. Classic is at $5.51 at a total market cap of 441 million dollars sitting at rank 33 and a little bit more of Bitcoin price news by the way 1000 Satoshi Arabic coin moved at $11 worth of Satoshi to bitcoin moved this weekend. Why who knows if I had $1000000 it would have been sitting there for that long. I promise you if I had that much Bitcoin it probably would have moved a long time ago before I got to 11 million dollars probably around though, maybe one to two made out of range. Anyway it moved. What does that mean for you? Absolutely nothing. So keep having a man for the moon now is get straight into a conversation with Jerry Culver. I'll see you after that for more news.

00:02:21
Siri how you doing? What was the show? I'm great. Thanks for having me ET cie ethereum classic had a 51% attack when I said I think it was multiple 51 / attacks a couple months ago eyewear Packers or attackers took away millions of ethereum. This is a vulnerability. That is the I guess the devoted. What is the Kryptonite of all crypto bot proof of work systems is that 51% to 10% of the hashing power to be able to do what you want with the network that is not only scary but it's kind of disheartening but you guys are making strides to fix this can tell me about one of the attack into what you're doing to correct the situation. So beginning of the end of July through August 51% of tax as you said more than 50% of the highest rate of the network, and with that they were able to double spend on several different exchanges.

00:03:21
Universal Challenge and the other is exchange security. So, you know the space is still relatively young and I think you know until to see platforms where people who are trying to take advantage of weak security. So you guys have made strides to correct that situation where you guys are making it harder for ethereum classic to be 51% attack was called mess. It stands for modified exponential subjective scoring and this is a way that makes 51% attacks exponentially more expensive 51% operating within they're not breaking consensus. They're using a blockchain in the way. It was designed fortunately or unfortunately some solutions to 51% attacks actually.

00:04:21
The fundamental system that box and create and so we came up with mass are our core team led by Isaac came up with a way to remove the profit motive that drives these kinds of attacks would do that. What it what is it? What is it that makes it exponentially more expensive at the moment. You don't knows are they have one job, right they are transaction and they say does this go with the heaviest rain in so they accepted in that's why I possible nodes aren't designed to distinguish between an attack and an honest and they should really be what we've done is we've created a system by which large to have greater difficulty.

00:05:19
So that is if you're mining legitimately and you have a large reward, you'll have that difficulty minor trying to do you need more hashrate sustained over a longer. Of time. I am always a little bit of a philosophical question answers compared with me with some of the questions that I'm thinking a little bit more about your Protections in the future for 51% of taxed you said that you know has to be greater difficulty and like part of the greater difficulty of course could be straight but also have a bigger Network. Where do you know? It's not so concentrated. Where is it was a lot of people running nose. If you are apart of the black teens a decentralized network and somebody was able to get 51.

00:06:19
Text wouldn't the obvious answer to that would be the Network's just not big enough. Maybe it's not a sustainable Network for what? We're trying to accomplish. I don't think it's the size of the Assyrian classic network is it's not big enough certainly, but it's not too small. That's not what is the vulnerability with ethereum classic is really with a straight. And this is a consequence of being a boxing that shares Hash A hashing algorithm with etherium. And so with the growth of the profitability of you have a lot of miners cerium leaving the hash rate low, and so the cost to attack under a previous circumstances was was very low

00:07:19
Watching that's listed on many exchanges. So there's liquidity bear. So if you're an attacker and you see a combination of access to liquidity a lot of exchange listings and it's a good target attack if their own classic Labs Secrets criminal charges to the people who attacked and hat or or taken funds or double spend ethereum classic tokens, you stated earlier that they use the network exactly how it was intended to be used yet still see criminal charges for the people who use a network. How is supposed to be used? Do you think that's fair? I absolutely so I see this operating on on two parallel paths one is a technical bath. Technically if you can gain 51% of the network, you're operating within the terms under which the system was designed. We've addressed the technical.

00:08:19
Without breaking consensus or really compromising the Integrity of of first principles the second issue here, which is non-technical is social there's a social problem. If you have to steal money from exchanges and from customer, those are two completely separate things the funds that they stolen they don't stay on the blockchain there funnel into you know, whatever they want to do with that money. So we're not pursuing criminal charges is a way to change how parking works on criminal charges to deal with people who've done something quite simple and that's been around since

00:09:16
And this space can't mature. We will never see widespread adoption or Confidence from mainstream or institutional investors as long as participants and stakeholders in this ecosystem of all that kind of behavior in what do you think that this did to the confidence in the serum classic blockchain and how is mess going to restore that confidence for the person that wants to build an ethereum classic invest in ethereum classic pull the tokens and so on and so forth, you know, I think in terms of attacks with mash we've done something Innovative addresses at Universal Challenge in a way that hasn't been addressed before in terms of a media conference for the security of the network.

00:10:16
Long-term confidence is a complicated thing. If you are concerned about 51% of tax, you have to look at hashrate, but even then it's still of our ability Bitcoin, for example, you know how many people think it's impervious to attack. But the truth is it's not any state actor or non-state actor could easily attacked for what for that would be nominal cost because of high hashrate is is as you mentioned it's a fundamental vulnerability and proof of work systems soda, look at aetherium Classic and to say that you can't have confidence because it was attacked in a way. He's blaming the victim. I think it shows a complete misunderstanding of how these systems work. I think it shows a complete lack of regard for emerging technology in emerging-market.

00:11:16
Is there an classic itself it's resilient. It's got a lot of potential and it's got a bright future that you for that again what you just said and this was my last question. I want to thank you for your time and your patience with my questions not often that I get to interview the ethereum classic and a bigger chain that had a 51% attack. So I apologize that my questions are so direct but you said it's a universal challenge that every blockchain even Bitcoin has the potential of being 51% of tasks. I mean most of the miners 70% of Bitcoin miners are in China. So for them to Rally upside the troops in Uno game at 51% might not be too unfeasible. So I agree with you it with that one is another thing that you're doing classic also stated a while back that said rented hashrate is a big problem for blockchains. Talk a little about what

00:12:16
Read to hashrate and how this Innovation that you are putting out with the the the blockchain in mess can prevent Bad actors with rennet hashrate attack in boxing shorts. The house rental market on its own is not good or bad. It's neutral and you know under the best case scenario. It's actually efficient. You have minors with excess capacity for people who it's a way of redistributing mining power really it's not the fault of the hash rental market that etc's hashrate was low. So I just want to be clear. I think the hash rental market needs to mature are there are within it as in a lot of emerging sectors good actress and actors and I think

00:13:16
making out, you know, I think what that helps all proof of what changes more versatility with mind power is for minors is very high and you know for them to be able to switch between genes, you know, it's a difficult thing for if your on classic that may have power is really something that we need to pay more attention to what we say and what kinds of incentives can we build that create a healthy mining ecosystem, but don't undermine the Box in itself and good luck with the rollout of mess and I can't wait to see the

00:14:16
Future up there in classic.

00:14:20
And in other news, I think I'm project w l e o hack for $42,000 on unit Swap. This is not the first time you swap has been hacked. But since I had to W Elio's prices drop 99% play some games now worthless. This will not be the last hack, but we can hope that it's the last hack. But unless I'm serious serious vulnerabilities in smart contracts get addressed and some serious auditing starts happening with these projects. We can expect more.

00:14:47
Bitcoin's next upgrade will support tour V3 addresses tour V3 addresses offer stronger cryptography and enhance security the old V2 addresses will become obsolete on October 15th of 2021 and they will be disabled.

00:15:06
Earlier this week the Chamber of digital cameras set every US Representative and Senator $50 in Bitcoin, which basically doesn't even get you a round of beers in Washington DC. But hey, you know how still take it now very reminiscent to the US campaign Spanish cryptocurrency company sent Spanish legislators Bitcoin as well. The project is similar to the crypto for Congress and educational campaign to teach lawmakers about digital currencies. However, the Spanish campaign only got one Euro in Bitcoin. I would have to say it's not even enough to be useful as time enough to make a bullet because who's going to care if I have 50 box in a while and maybe I'll figure out how to play with it. Take it out by some beers. But with one Euro I could probably care less. However, pretty cool. I wonder if this even legal for them to accept that money interesting.

00:15:53
And cryptokitties is back in the news not even worth it for me to talk about because why cryptokitties there an Artis non fungible token there cats that breed to make more cats on the blockchain and they sell for a crazy amount of money. They just raised $89 inflow crypto token sale MK. Why are we still talking about this? I apologize for even bringing this up if you want to know more because in the description

00:16:19
and finally this message come straight from the top the US Treasury Inspector General for tax administration says the Internal Revenue Service IRS, his opponents weight and must do more to get cryptocurrency exchanges were also not pulling the wait to send the correct tax forms to their customers who are grossly misreporting tax returns. So here's a supposed to happen cryptocurrency exchanges should provide you with a 1099 form which outlines all your transactions you place on their exchanges. What really happened is tax season comes in if you want to play ball and you want to do if the right you have to find their API codes and Link them to some crazy-ass random app or so paid surveys online try to sync up and go through line by line with all of your transactions all over whatever sings you can remember you even used throughout the year or two years or whenever that's actually what is happening issued any guidance clarifying the proper information reporting associated with Virtua cryptocurrency transactions. And the third one is is it's that it's very damn difficult for exchanges.

00:17:19
Pilot in 99 because not all exchanges talk to each other. They're not exist as transparent coinbase might be cool might be able to talk to Jim and I but it can't talk to you as well have probably not what up. I thought you was are they the same what about cracking? What about sushi? What about other food exchange that could have pop up next week Taco Taco Dex that's another big problem. But the fact is pay your taxes. Once we get closer to the end of the year. I will for sure or put out a tax guideline episode highlighting what you should do how to do it and the laws associated with it.

00:17:58
Thank you for listen to this episode of the crypt daily. My name is Matthew Aaron. If you have not, please go to their apple podcast subscribe. There's a 5-star rating in a, to help to stay visible. If you feel that we're going into something good with the space, but $11,500 Bitcoin right now, so you can go to 12. Do you think your mom your dad your cousin your answer by the sisters are going to want to get into the space. Do you want to give him the best information and Daily News possible to navigate this days? It's going to take us being more visible. So please share subscribe and rate. I'll see you tomorrow. Happy Halloween.
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