Lightning Network Grows To 1,700 Channels!

  • Bitcoin's future looks bright again with lightning
  • Professor Steve Hanke says something rash about bitcoin

Comment of the Day @brakmic

Lightning Network Grows

The future of Bitcoin is looking bright once again and it seems as though the enormous fees that we saw only weeks ago are starting to dissipate. The price taking a huge dive certainly helped reduce the $ cost of fees as well as reducing the trading volumes and general velocity of bitcoin. However SegWit has also helped to reduce fees and the first 'organic' 2MB block was mined recently. Even Coinbase has said they will be implementing SegWit shortly as well as batching transactions, all of which will put less stress on the network.

 

 

However, 'Satoshi's vision' and many early bitcoin adopters' vision was to provide cheap and fast transactions that would allow you to buy your cup of coffee and send $1 Billion. Unfortunately this vision had been lost as security and censorship resistance come at a cost but the much hyped and long awaited layer two scaling solution is here - lighting. 

The testnet launched late 2017 and I even had the pleasure of taking part as the 2657 node. I managed to pay for my 'Starblocks' coffee with fake bitcoin and the fee was less than a cent and the payment instant. It gave me a warm fuzzy feeling but I dared not hope that we could truly revive 'Satoshi's vision' from the grave. For one it was very buggy and not that easy to set up and secondly there are the issues with having to lock your money in a channel until you settle your balance, which means part of your wealth is trapped and if the other side of the channel doesn't pay up, your BTC stake can remain frozen for some time. 

Looking at the beautiful map of the 1,700 channels setup on the mainnet its exciting to imagine the potential retail adoption of Bitcoin with cheap and instant transactions. I dare to hope that Bitcoin will really be used as a common medium of exchange one day.

In the meantime, help get this lonely node a payment channel!

Steve Hanke On Crypto

Cryptocurrency seems to encourage a hasty and often stupid response from some of the world's most intelligent people. Professor Steve Hanke has joined the long list of these high profile remarks, behind Nobel laureate Joseph Stiglitz who said Bitcoin 'Ought to be outlawed' and Jamie Dimon who garnered the most publicity for calling bitcoin 'a fraud'. 

Professor Steve Hanke is an American applied economist at the Johns Hopkins University in Baltimore and he recently tweeted:

Its clear that the anonymity of cryptocurrencies scares some people and governments but as many were quite to respond it kind of the point... Seeing as bitcoin emerged from the 'Cypherpunk' group  who were activists advocating widespread use of strong cryptography and privacy-enhancing technologies as a route to social and political change.

Regardless of whether Bitcoin and cryptocurrencies succeed they are without doubt one of the most disruptive innovations as they allow wealth to be stored outside of the control of governments for the first time since fiat money was invented. It is also the first form of money thats supply is controlled by math. Unlike fiat supply which is controlled by centralized groups of power who enjoy the freshly minted currency before generously 'spreading the wealth' to everyone. This debases the currency by the time it reaches the average citizen and their dollar is worth less than the same dollar printed, this is called inflation.

Hopefully as time passes the great thinkers of our time will take a bit more consideration when weighing up the good and bad of cryptocurrenices to elevate the debate from - is it a Fraud, Yes of No? 

Are Crypto Investors 'Indifferent' or 'Insensitive' Towards Hacks of Exchanges?

  • Security of centralized crypto exchanges continues to be compromised with the recent hack of Bithumb.
  • Crypto analysts argue that investors have either become insensitive to these incidents or they are simply indifferent towards hacks due to the struggling crypto market. 

Dovey Wan, a prominent crypto investor and analyst, has argued that “the fact … a top exchange was hacked [recently] did not affect the crypto market” could mean that the evolving digital asset ecosystem is now “more robust” than it was during the “Mt. Gox age.”

Wan, a partner at Primitive Ventures, a team of “market cycle agnostic” crypto investors who’ve invested an undisclosed amount in Zcash (ZEC) and Dfinity (“the world computer”), believes that security breaches of small or medium-sized exchanges may not necessarily have an adverse effect on cryptocurrency prices or investor sentiment, in general.

Are Crypto Investors “Insensitive” Or “Indifferent” To Exchange Hacks?

However, she acknowledged that this might not be the case if the security of leading digital asset exchanges such as Malta-based Binance and San Francisco-based Coinbase was compromised. Moreover, Wan thinks investor confidence and sentiment towards the cryptoasset market could be quite low at the moment. Because of this, she noted that traders and investors may be “insensitive to negativity or just indifferent.”

Although Wan did not specify which “top” exchange she was referring to, her comments were most likely in reference to the recent hack that took place on Bithumb. On March 29th, 2019, South Korea-based crypto exchange Bithumb suffered a security breach, resulting in millions of EOS tokens being stolen.

At the time of hack, Wan had alerted her followers with periodic and timely updates as the hacker(s) reportedly began transferring the large amount of stolen tokens to other exchanges, some of which did not require know-your-customer (KYC) checks. This, most likely in an attempt to quickly cash out on their illicit earnings.

Centralized Exchanges Still Holding Millions In Hot Wallets

Commenting on these types of incidents, Wan also believes that “the size of the hack is insignificant.” Moreover, she revealed that “many centralized exchanges [are still] holding hundreds of millions of assets in their hot wallets” which “is just a time bomb” or invitation ”for the next hack."

In response to Wan’s comments and observations, Twitter user Christopher.Baradaran (@cbaradaran1) said that these types of hacks strongly suggest that we need to start building and using more decentralized exchanges (DEXs).

“Not Your Keys, Not Your Bitcoin”

While there have recently been arguments about what type of platform may qualify as a DEX, as some of these peer-to-peer (P2P) trading platforms such as LocalBitcoins now require know-your-customer (KYC) checks (suggesting they’re not truly decentralized), many security researchers recommend not sharing your private keys with anyone.

There’s also a saying, “not your keys, not your bitcoin” - which means that users only have true ownership of their cryptoassets if they have access to the private keys associated with those assets. If any entity manages to obtain access to a users’ private keys, then they can also gain access to the funds and potentially steal them.