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MIT Researchers Demo a Smart Contract-powered Lightning Network for Bitcoin

The Digital Currency Initiative (DCI), a cryptocurrency and blockchain-focused research community at MIT, are demonstrating an experimental use case in the backdrop of Bitcoin’s Lightning Network that would amalgamate smart contracts with the Bitcoin network to scale further.

The Lightning Network is an open protocol layer that is built on the bitcoin blockchain network, enabling faster and cheaper transactions. The new MIT pilot is not just limited to manage millions of transactions but to make it possible with added complexity.

Scaling the Bitcoin Network

The MIT test envisages a mechanism wherein transactions would occur automatically when certain defined conditions are met such as when the U.S dollar value meets a predefined price.

To make it possible, DCI’s Research Scientist Tadge Dryja and Head of Strategic Partnerships Alin S. Dragos developed “oracles” that would relay data to smart contracts. The demo is built as an independently operating feature of the Lightning Network software, first proposed in summer 2017.

For the demo, Dryja and Dragos used these oracles to broadcast the value of U.S. dollars in satoshis, and the data could be used by anyone for their smart contracts. Dryja is the creator of the Lightning Network, the second layer payments protocol, which is viewed as one of the most promising scaling solutions for Bitcoin

As per Dragos, the demo is at present in its experimental stage and is not to be tested with monetary transactions. The “oracle” is trusted and cannot be tampered with, but in the future, there could be a way to diminish the trust. Therefore, researchers are developing a prototype where oracles are unaware of who is using the data.

Bitcoin Has the Same Potential as Ethereum, With Some Tweaks of Course!

DCI’s researchers view Lightning Network as a promising solution to overcome Bitcoin’s scalability issue and scale to the level envisioned by its creator Satoshi Nakamoto.

Researchers at DCI believe Bitcoin has the same capabilities as Ethereum when it comes to smart contracts. According to Dragos, Bitcoin can achieve the same with some add-on protocols; although, the network was not initially designed for that purpose, and hence it is necessary for developers to develop workarounds.

DCI aims to develop a prototype that would clearly define how the underlying technology can work. However, after forming a working model, the research seeks to pass the technology to big companies that would know how the technology can help benefit a wider audience.

The system developed by MIT researchers are a step forward highlighting how Bitcoin could scale to new levels, but would still need a lot of work to make it user-friendly.

 

Bitcoin

Bitcoin’s 2017 hardfork-triggered ‘BCH treasure-hunt’ still dividing mining pools

On 1 August 2017, Bitcoin Cash had forked away from Bitcoin after weeks of speculation and on 24 August, Bitcoin activated its SegWit upgrade.

Considered to be an important update, SegWit added a different P2SH address: nested Segwit which started ‘3’. The only difference between a normal P2SH address and a SegWit one is their spending scripts. The launch of SegWit is one of the main reasons for the lost 19,000 BCH to SegWit addresses.

Coinmetrics’ Recent State of the Network discussed the BCH tokens that have been mistakenly lost since 2017 and remain inaccessible because BCH did not have SegWit.

With time, it was figured out that miners would be able to access the lost BCH if they are able to break the standardness rules. The report said,

“Transactions spending from a nested SegWit address on Bitcoin Cash break one of these standardness rules (the clean stack rule, to be precise) and therefore will not be relayed; they can only be mined if included directly by a miner. So miners, or a user in direct contact with a miner, can spend from nested SegWit addresses on Bitcoin Cash, while normal users cannot.”

After such an opportunity was deciphered by a Russian Bitcointalk user, it was understood that only slightly more than 400 BCH sent to SegWit addresses on BCH could be claimed by miners.

It was clear as day that a capable miner was crucial to breaking the standardness rule. On 14 November 2017, the news that over 470 BCH worth $644k was available on a SegWit address went public. It did not take much time thereafter as two days later, BTC.com recovered the first batch of 100.7 BCH that were mistakenly sent to the nested SegWit addresses.

After the first recovery, BTC.com sent up its recovery service which started at a period of recovering BCH, at press time. BTC.com charged a recovery finder’s fee of 10 percent that was sent to the same address and it was identified that the revenue pool had 368.03 BCH.

Source: Coinmetrics

Over time, other mining pools have joined in the quest for the lost BCH, something that was observed in the table shared above. The major problem with such a scenario is that the situation could have been easily avoided if necessary precautions were taken before the hard fork on 1 August 2017. Bitcoin’s quick update to SegWit right after the hardfork should have been activated after users were clear on Bitcoin and Bitcoin Cash’s network situation.

Source: Coinmetrics

Data from the report suggested that at press time, over 8,979 BCH has been recovered, but the extra finder’s fee allocated to these pools could have been avoided in the first place. Since last year, mining pools such as BTC.com and BTC.top are at 5,779 BCH and 3,846 BCH, respectively. With more than 9000 BCH still out there in nested SegWit addresses, the eventful hardfork from 2017 continues to stir a tussle between these pools over a lost jackpot.

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Bitcoin briefly slips under $9k; triggers liquidations worth $11M

Bitcoin has been taking continuous hits in the spot market and at press time, the coin was noting a fall of 3.37% – a fall that pushed the price of the coin under $9k. According to the Chaikin Money Flow [CMF] indicator, the digital asset surged to occupy the overbought zone after Bitcoin’s price recorded a sudden plunge on 26 February.

Source: BTC/USD on Trading View

Source: BTC/USD on Trading View

According to the chart provided by data analytics firm Skew, almost $11 million longs were liquidated. $9,300 was looked upon as strong support since 5 Feb, however, as the coin went under this mark sell-order might have been triggered.

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FBI REPORT: BITCOIN RANSOM PAYMENTS TOTAL $144M

The Rundown

  • Most Ransomware Required Payment in Bitcoin
  • Ransomware Demands Grew in 2019

Ransomware attacks and similar extortion schemes took in an estimated $144 million in the course of 7 years. FBI estimates show most of the ransoms were paid in Bitcoin (BTC) and went straight to mixers or exchanges.

MOST RANSOMWARE REQUIRED PAYMENT IN BITCOIN

Attacks that lock files and require a ransom to decrypt them have lined up among the biggest cyber threats in the past few years. Ransomware has locked down airports and hospitals, entering older, vulnerable machines. Most ransomware versions share a message requiring a bitcoin payment to unlock all files. Despite advice not to pay, it turns out multiple targets actually sent in BTC to the ransomware extortionists.

FBI supervisory special agent, Joel DeCapua, shared the US agency’s discoveries during the RSA Conference 2020. He explained that any BTC or other coins acquired went immediately to coin mixers, or were sold on exchanges. But there is also a curious reason why so much was paid in ransoms – the companies affected may make an insurance claim.

No one wants to pay the ransom actors. I think a lot of companies get insurance now. They say, ‘Well, if we are hit by ransomware, we are just going to defer to what our insurance company wants to do… They can say it wasn’t their choice to pay the ransom, because like I said, no one wants to pay the ransom. So I think that because ransom payments are insurable, I think it has caused more ransoms to be paid.

Ransomware attacks have been linked to both Russian and North Korean hackers. The attack message usually contains a bitcoin address and instructions on how to acquire and send coins. However, paying the ransom on some occasions has left the files locked, hence the advice to avoid paying.

RANSOMWARE DEMANDS GREW IN 2019

Even now, a variation of bitcoin extortion is still making the rounds, marking a payment into one of the known wallets of a sextortion scheme.

The $144 million paid in ransoms is rather small and spread out in comparison to exchange hacks, and general crypto scams. Those accounted for billions in the past few years. Ransoms in BTC, however, spread a negative message about crypto coins as a tool for illegal activities.14 BTC & 30,000 Free Spins for every player, only in mBitcasino’s Crypto Love Affair! Play Now!

Ransomware demands grew significantly during 2019, based on data from a periodic Kaspersky cybersecurity report. Ransomware spreads on darknet sites, offering new variations of locking programs and even affiliate programs for spreading the files.

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