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Beginner’s guide to Privacy Coins

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Every bitcoin can be traced back and identified if there’s illegal activity. Therefore, some people use a Bitcoin mixer, for example, bestmixer.io to make transactions untraceable and fungible. It can distort  the trail from the original source but it is not completely untraceable. Therefore, several cryptocurrencies that specialise on concealing transaction data have been introduced. The three major privacy coins (Monero, Dash & Zcash) will be discussed in this article.   Monero Monero (XMR) is the first altcoin to provide untraceable transactions. Monero’s privacy  is provided by CryptoNote protocol that implements a ring signature system. During each transaction, numerous  addresses will be included for mixing. An observer cannot tell which address is the real sender. It provides privacy  for everyone included in the ring signature. Also, the transaction amount is confidential. A Math Function is applied so that only the sender and the receiver can know the actual amount. The technology behind is called Ring CT. For each transaction, a one-time random address is generated. Therefore, transactions are unlinkable to your public address. The diagram illustrates how XMR transactions are obscured with more routes the transaction  goes through. After implementing ring signatures, all users referenced will have an equal possibility of being the actual sender.   Dash Dash (DASH) was launched in Jan 2014 as Xcoin and rebranded as Darkcoin. In Mar 2015, it rebranded again with the name Dash to avoid correlation to the dark market. The Masternode performs its private transaction through Privatesend. Privatesend can break down your transaction into specific denominations (0.01,0.1,1 and 10 DASH) and mix it with transactions from different people. After a few mixes, the coins will be indistinguishable from other coins on the network. However, the Privatesend function is optional. Other transactions are as transparent as those on Bitcoin’s blockchain. The anonymous transactions may

Crypto Classroom Lesson #7: Stellar Lumens (XLM) – Part 1

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Stellar Lumens are the native asset of the Stellar Network. 100 billion lumens was created with the launch of Stellar network in 2014. Like  Ripple, Stellar Lumens is a mining-free crypto which allows near-instant and low-cost transactions. While Ripple was created specifically to appeal to banks, a huge market with a great deal of potential for profit. By contrast, Stellar’s creation was to extend the reach of financial services around the globe, helping the unbanked. Lumens are used in transactions. Each transaction has a 0.00001 lumens transaction fee to prevent spam attack. All accounts also have to hold a minimum balance of 20 lumens. Lumens’ supply is inflationary with a fixed inflation rate of 1% of Lumens each year. These new stellars will be generated on a weekly basis and distributed via a direct voting method. In this article we will focus on the Stellar Consensus Protocol. Stellar Consensus Protocol (SCP) The Stellar Consensus Protocol (SCP) is the underlying consensus algorithm of the Stellar Network that functions as a provably safe construction of Federated Byzantine Agreement System (FBAS) and making Stellar a decentralized and permissionless network at the same time. Federated Byzantine Agreement System (FBAS) The Federated Byzantine Agreement System is a pair of 1) set of nodes V and 2) quorum function Q specifying one or more quorum slices for each node. It allows nodes to reach a universal agreement without knowing the trustworthiness of all other nodes. Nodes in the SCP can pick quorum slices with other nodes that they think are important and trustworthy. The FBAS guarantees four key properties: Decentralized Control, Flexible Trust, Low Latency and Asymptotic Security. What is a Quorum and a Quorum Slice A Quorum is a set of nodes sufficient to reach agreement while a quorum slice is a subset of a

Crypto Classroom Lesson #6: Ripple (XRP)

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What is Ripple Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network. It aims to enable fast cross-border payments with low transaction fees and all of the other benefits of digital currencies. Transactions on the system are verified by consensus among members of RippleNet and it is designed to handle transactions much faster than Bitcoin and Ethereum. Ripple’s global payment transfer system is called RippleNet, which aims to provide real-time messaging, clearing and settlement of transactions. Ripple plans to offer three products on RippleNet to suit different users: xCurrent, xRapid and xVia. xCurrent is currently used to enable real-time messaging and settlement between institutions. While xRapid (which uses XRP) aims to resolve the liquidity problem over international payments. Another product, xVia is currently under development to provide a more standard and simpler interface than the other two. What is XRP Many confuse Ripple with XRP. While XRP is an independent cryptocurrency issued by Ripple Labs (who owns Ripple), XRP is only used in one of Ripple’s products (xRapid). 100 billion XRP was created at the beginning and no more are allowed to be created. 20% were retained by the founders while 80% went to Ripple Labs to further develop XRP. As of today, Ripple still owns over 60 billion XRP. Ripple releases 1 billion XRP to themselves through a smart contract each month to promote and fund XRP operations. XRP can handle 1,500 transactions per second and settle payment in 3-4 seconds. This is because Ripple uses a cooperative consensus rather than an adversarial one such as proof-of-work. Transaction fees are adjusted based on transaction demand to ensure quick transaction speed. The minimum transaction fee required by the network for a standard transaction is 0.00001 XRP. Unlike Bitcoin, the transaction fee will not be rewarded to

Crypto Classroom Lesson #5: P2PKH

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What is P2PKH? P2PKH stands for “Pay-to-PublicKeyHash” and it is the most common form of transaction in bitcoin. A Public Key Hash is synonymous to a bitcoin address. It is one format of a bitcoin address (the other being Pay-to-Script Hash). At a basic level, P2PKH means to “pay to this bitcoin address”. It is an instruction on the blockchain to transfer bitcoin from the current owner to the new owner of a bitcoin address. Behind every bitcoin transaction, there is some code working in the background, this code is the Bitcoin Scripting language. Terms you need to know 1. PubkeyScript (also called scriptPubKey or locking script); and 2. SignatureScript (also called scriptSig or unlocking script). A PubkeyScript is a list of recorded instructions that accompany output transactions, it governs how the next person can unlock received bitcoin and spend it. To do this, the recipient of sent bitcoin will generate a signature script which must satisfy the parameters of a PubkeyScript created by the last sender. These parameters are 1. Public Key Hash (bitcoin address) 2. Digital Signature An owner of a P2PKH address can only unlock the PubKey Script and spend sent funds, by providing a public key hash and a private key signature. In a typical scenario, Bob will give a bitcoin address to Alice and Alice will send bitcoin to Bob. The output of Alice’s transaction will create a PubkeyScript. Alice’s job is done and the transaction is broadcasted onto the bitcoin network and bitcoin appears in Bob’s wallet. For Bob to spend his newly received bitcoin, he must prove that he is the owner of the bitcoin address that Alice attached the BTC to. Bob does this by building a scriptSig with his signature and his public key. The scriptPubKey places conditions on the transfer of

Copay Wallets affected by Malware

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Event-stream, a module on the Node.js JavaScript run-time environment was reportedly compromised with malware. The malware is designed to steal from hot wallets with balances over 100 BTC or 1000 BCH and transfer their balances to a server located in Kuala Lumpur. The code library was downloaded over 2 million times and used by various web applications, including BitPay’s open-source bitcoin wallet Copay.   It is reported that Copay versions 5.0.2 through 5.1.0 were affected by the backdoor. Any users using Copay versions 5.0.2 to 5.1.0 are advised NOT to run or open the app. Users with affected versions of Copay SHOULD first update the affected wallets to the security updated version of Copay (v5.2.0) before moving funds to a more secured cold wallet or to the Copay v5.2.0 wallet. It is advised to transfer all funds using the Send Max feature.   Should the user choose to move their funds to Copay v5.2.0, they should set open a brand new wallet on Copay v5.2.0 and SHOULD NOT attempt to move funds to new wallets by restoring the affected wallets’ twelve word backup phrases.   Users of other crypto-related applications should also notify and confirm with developers to ensure that the application is not affected by the malicious version of event-stream. For developers, it is recommended to update event-stream dependency to event-stream version 3.3.4 to protect users with cached versions of event-stream.

Crypto Classroom Lesson #4: Bitcoin Cash (BCH)

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Background Bitcoin Cash is a cryptocurrency hard forked from Bitcoin on 1st August 2017, with the aim to speed up transaction time and cost. Towards the end of 2017, Bitcoin transactions reached an all-time high and its 1MB block size were a concern for many users. Unconfirmed transactions started to pile up and increased the transaction time up to a few days. Users had to pay a higher transaction fee  to gain priority. Two solutions were brought up to solve this problem: Hard fork (increasing block size) and Soft fork (SegWit). Due to disagreement between the two solutions, part of the community decided to hard fork the network. The hard fork split the network into a new blockchain, i.e. Bitcoin Cash.   What is a hard fork A hard fork occurs when a new set of consensus rules are introduced to the network. It requires network participants to update to the latest version to continue to verify and validate new blocks on the new blockchain. Also, new blocks will no longer be compatible with the old chain. When there is disagreement between community stakeholders on the underlying protocol (i.e. some refuse to follow the new consensus rules) a chain split will occur. Both chains will have identical transaction history prior to the fork but transactions on the chain will be separated independently after the fork.   Initial Features (Aug 1, 2017) – Block size: 8MB – Average block time: 10mins. – Consensus algorithm: Proof-of-work – Supply limit: 21,000,000 BTC – Cryptographic Algorithm: SHA-256   Latest fork On 15th November 2018, a hard fork on the BCH network caused a chain split into BCHABC (Bitcoin Cash ABC) and BCHSV (Bitcoin Cash Satoshi Vision). The below table shows a summary of both chains: Written by Peter Chan Trader @Genesis Block For any

Crypto Classroom Lesson #3: Lightning Network

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When Satoshi Nakamoto introduced Bitcoin in 2008, they envisioned a world where Bitcoin would be used as a new form of digital money. However most people today consider Bitcoin as a digital store of value rather than a currency. As Bitcoin grew in popularity, its low transaction throughput and high transaction cost became more apparent and impractical for everyday small payments. The Lightning Network proposed by Joseph Poon and Thaddeus Dryja in 2015 aims to provide the solution to these problems. What is Lightning Network The Lightning Network is a second layer payment network built on top of the Bitcoin blockchain that enables instant payments between connected users at extremely low fees. How does it work In the below example we will illustrate how Adam can purchase a cup of coffee using bitcoin (BTC) via the Lightning Network.   Adam first opens a payment channel with the coffee shop by depositing BTC into a multi-signature wallet. A multi-signature wallet requires more than one user to authorize a transaction, in this case between Adam and the coffee shop owner. This transaction is publicly recorded on the blockchain for each party to see. To pay for a coffee, Adam subtracts the cost from his balance and adds it to the coffee shop’s balance. Both parties then sign a signature on the updated balance sheet with their private keys to confirm the balance. This transaction simply updates the state of the balance sheet and will not be recorded on the blockchain. This can happen an unlimited number of times as long as there is sufficient balance. When either person wants to close the channel, they can broadcast the latest balance sheet (signed by both parties’ private keys) to the blockchain. Other network nodes will then validate the signature on the balance sheet and the funds will be

Why you should trade Over The Counter

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In Hong Kong, there are a number of ways by which one can buy and sell crypto-assets; through an online exchange like (www.gatecoin.com), ATM’s (click here for list), person-to-person trading via www.localbitcoins.com, and over-the-counter (OTC) at Genesis Block. OTC is essentially trading crypto-assets offline, away from the public eye, via a private messaging channel between two counterparties. There is a minimum trade amount, for example US$25,000, this will vary for each OTC operator. This is beneficial for investors in Asia for a number of reasons.   KYC OTC operators, as with other types of exchanges, must conduct know-your-customer (KYC) procedures, and conform to anti-money laundering guidelines for new accounts. This means collecting data and documents from the applicant, including a valid proof of ID and valid proof of address. This has two main benefits. Firstly, it assures the public that the OTC is running legitimately and in a proper manner. It also plays a role in protecting the OTC from investigation by governments and financial authorities seeking to detect and prohibit fraudulent transactions. Christine Lagarde, Managing Director of the International Monetary Fund wrote in her blog in April, “before crypto-assets can transform financial activity in a meaningful and lasting way, they must earn the confidence and support of consumers and authorities.” Price One of the biggest appeals of OTC is the price competitiveness that can be offered when compared with using an ATM or online exchange. ATM’s are great to acquire crypto instantly without KYC, but the higher fees means it will be costly for large orders. Online exchanges are public and offer a whole range of ‘alt’ coins to trade within the platform’s orderbook. On the flipside, often there is not enough depth in the orderbook to fulfil large orders without causing an upward spike in price for a buy order, or a downward

A simple guide to set up your TREZOR One wallet

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Inside the box should contain the following: 1x Trezor device 1x Micro USB cable 2x Recovery seed card 1x Lanyard 4x Stickers 1x User Manual   Setting up your Trezor Start by connecting your Trezor via USB to your PC, and then in a web browser visit trezor.io/start to begin your set up. 2. Click on the left model if you have purchased a Trezor One. (This guide is for Trezor One, the Trezor Model T set up process may be slightly different.)   3. Click ‘Create new’ to create a new wallet.   4. Then click ‘Continue to the wallet’.   5. Click ‘Create a backup in 3 minutes’.   6. Tick ‘I understand and I agree’ and press ‘Continue’ to proceed.   7. Now with your recovery seed card, write down the 24 words shown on your Trezor device. Triple check there are no words misspelt. This is a very important step if you ever have to recover your funds. After you have done that, store away your recovery seed card in a secure place.   8. Then click ‘Continue’ to proceed.   9. Click ‘Continue’ again to set a name for your Trezor.   10. Give your Trezor a name and then click ‘Confirm to continue’.   11. Your device will prompt you to confirm your name. Click ‘Confirm’ and ‘Continue’ on your PC to proceed to the next step.   12. On your Trezor again, click ‘Confirm’ to set a PIN number.   13. Create a PIN number up to nine digits. You will need to enter your PIN every time you access your Trezor wallet. This is highly recommended to do to ensure only you have access to your funds.   14. Once you have set a strong PIN, click ‘Continue’. 15. Click ‘Finish’ to complete the set-up process.