I find it hard to believe that the "crypto revolution" began a decade ago. I vaguely remember first hearing about bitcoin at one of my university's computer labs in 2008, shortly after the bitcoin white paper was published under the pseudonym of Satoshi Nakamoto. Ten years later, blockchain-mania is in full swing when the infrastructure pile of Silicon Valley innovation is choppy to become the next Blockchain for Uber (supported by Deep Learning).
Since the bitcoin debut, many competing "coins" and "tokens" have entered the market. Although there are only about 180 government-backed currencies around the world, Investopedia reports that more than 800 cryptocurrencies have failed. In the first half of 2018, more than $ 6 billion was invested in initial coin offerings where speculators and other customers can purchase a number of digital currencies released. ICO has become notorious for being a high-risk investment, with more than half of all coins dead within four months, according to Bloomberg.
The last 18 months have been a roller coaster of hype, success, and desperation for those who boarded the cryptotrain. As with the gold rush, there are some unsolicited victims as well as some unexpected winners. Take for example Long Island Iced Tea - the tea company that changed its name to Long Blockchain and then saw its share value rise nearly 300 percent. Unfortunately for Long Blockchain, this pivot failed and NASDAQ has since removed the company's shares.
Another surprise pivot came from Kodak photography company, which announced ICO in January. Kodak's main goal is to use its blockchain and cryptocurrency technology, "KodakCoin," to protect the photographer's intellectual property. Like Long Blockchain, Kodak saw its stock price rise immediately after the announcement. Since the announcement of January, Kodak has convinced several professional sports arenas to adopt partnerships associated with KodakCoin.
Only time will tell whether Kodak's bets will pay off, but in the meantime regulators are scrambling to face a wave of companies trying to get into action. In reaction to movements like Long Blockchain and KodakCoin, the Securities and Exchange Commission has issued a warning that it will closely monitor the blockchain market. Speaking to the Securities Regulation Institute recently, SEC Chairman Jay Clayton said:
I doubt anyone in this audience thought it would be acceptable to a public company without a meaningful record in the pursuit of the commercialization of distributed ledgers or blockchain technology to 1) begin to dabble in blockchain activity, 2) change its name to something like 'Blockchain -R -Us, 'and 3) immediately offer securities, without giving adequate disclosure to Main Street investors about the change and the risks involved.
Then there's Dogecoin, cryptocurrency made as a joke. Although his intention was to mock the world of crypto using the "Doge" meme as a mascot, Jackson Palmer instead created a $ 1 billion cryptocurrency in market capitalization earlier this year. Palmer said this reached $ 1 billion:
I have a lot of confidence in the Dogecoin Core development team to keep the software stable and secure, but I think it says a lot about the state of cryptocurrency space in general that the currency with dogs on it that has not released software updates in more than 2 years has a capitalization market $ 1B +.
It looks like a joke, barking like a joke, but then worth $ 1B + so the joke is on us.
When new currency in and leave the market, speculators and initial users need a tool to buy, trade, and money selling their digital. Market facilitate transfer cryptocurrency sprung almost as soon as the coin itself. Services such as coinbase, coinsquare, and blockmarket by blockchain foundry give you the ability to trade currency crypto and also sell currency "matematikan self" digital you to currency classic supported by the government. Speculators, investors, and engineers everything losing the plots in the craze crypto. Leaders in the room crypto roam aimlessly through the landscape technology find a saying more adage to destroy the hammer crypto shiny their new - easy to forget that when you create the ship, you also found shipwreck. Meanwhile the gangster, countries naughty, speculators, and washers money has been in love with the currency crypto what the existence of them. To understand why these groups flocking to bitcoin and cryptocurrency other we have discussed briefly technology itself. Intro to cryptocurrency: this cash digital innovation key in the White paper bitcoin, blockchain, solve the problem unique for money digital. When the two people Exchange money, evidence Exchange of the self-evident: one now have a bill of physical owned others before. Because of the physical properties of cash not possible to double expenses - spending cash require to physically leave his. With digital currency, things not so clear. If I have 20 bitcoin and I "give" them to you, what actually change? Bitcoin do not have the existence of physical, so they could not be transferred in the literal meaning the same that bill $ 20 can be transferred. Every digital data can be copied so have a file data set or certain in your hard drive can not be calculated as evidence of ownership. Historically we rely recording and entities trusted to engage in online transaction. We trust Bank, credit card companies, and trade services other digital to keep the acceptance of adequate and ensure that money transferred reliably between account. When the entities that make the mistake (evil or unintentional) we depend on legal, the court, and records stored to complete each of disputes. Entitled "system cash electronic peer-to-peer," White paper bitcoin describe the payment system does not depend on the entity trusted as Bank or credit card companies, or on the promise of law. Blockchain bitcoin is the records every transaction ever done using bitcoin, and it is the heart of cryptocurrency. To Exchange bitcoin, the two parties need to make a note transactions (block), which will be added to blockchain. In this way blockchain acts as a great books. Book of the revolutionary when they created, but it really ancient history. Innovation blockchain is about where Ledger stored and how the book is maintained. Consider to process the transactions: both parties in transactions only the identified by "number wallet" they (sometimes called address). Transactions include number wallet sender, number wallet receiver, the number of bitcoin to exchanged, transaction date, and other information. The transaction sent to the computer network distributed running software bitcoin. Computers this verify transactions in and added "cap agreement" themselves to the transaction. After enough computer network has been signed transactions, the resulting data (block) added to the book of common (the blockchain). All computer network distributed it has a copy of blockchain, and so consensus has been achieved about the new deal, they all update copy blockchain them in a way that is exactly the same. This is why the chairman of the SEC Clayton call blockchain as "technology Ledger distributed". Because bitcoin entering the global supply as transactions, blockchain contains auditable of any bitcoin ever "made." Big book also effectively solve the problem key digital currency, make sure there's always a note Exchange bitcoin. This means blockchain effectively encodes the number of bitcoin owned by the wallet certain on a specific time. Bill $ 20 in your wallet is evidence that you have a $ 20; blockchain is evidence that you have a 20 bitcoin. In return to do all the work of computing to verify the transaction with making blocks, computer network (called "miners") given rewards with bitcoin. Anyone who wants to be able to download the software and blockchain, and began to mine own. Buyer beware, though, power required to mine bitcoin often more expensive than the value bitcoin generated. More that can be said about technology and how it works, but I would like to focus questions long: Cui Bono? Market underground new I am sure that more than one person has a venmo'd drug dealers them at the moment, but transfer a lot of money remote has long been a Thorn on the side of the company criminal. Cash is the King of the world criminal because dependence on financial institutions traditional is a great risk. Law enforcement like to follow the money, and many criminals caught as a result. These days cash lose ground for currency crypto as currency the option to the company illegal. Goodness bitcoin most praised - transaction monetary digital without relies on a trusted third party - is ideal for people who do not rely on the entity financial traditional Bank to save and transfer of money. Ease with bitcoin running across the border and Ocean is a major improvement over the transport of a large amount of cash - especially for cash illegally obtained. In the report should not surprising anyone, the researchers from the University of technology Sydney found that about 25 percent of the user bitcoin 41 percent of the transaction bitcoin Associated with illegal activities; the same report estimates that around $ 72 billion bitcoin switch hand for goods and services illegal every year. The majority of the transaction illegal do in black market Web as silk road now is dead. Silk road - and the market that has been replaced the silk road - interested in cryptocurrency like bitcoin due to the level of anonymity unmatched by payment mechanism other online. When the two parties Exchange cryptocurrency they identified by the number wallet. This number is a unique identifier, but that does not have personally identifiable information. The two parties who want to Exchange funds just enter the numbers wallet sender and receiver and the number of the exchanged with transactions that ended in blockchain. No restrictions on how much wallet that can be obtained by you, and no management system centralized track who has a wallet where. Shipping and handling is separate issues that need solution separate to Exchange goods non-digital. But as Mitch Hedberg ever joking, "I like men FedEx me because he is a drug dealers and he did not even know it." Supporting the website and apologists cryptocurrency often show that the goods the most popular for sale on the Web dark is marijuana - very legal in a number of places growing. Take the turn right to track the libertarian and easy to argue, "the government has no place set what I put my body!" Unfortunately, no matter where you personally draw a line on the question "what to humans can buy?", A person on the Web dark sell something pass that line. Credit card number, social security number, hacking zero-day, the combination of users / password compromised, weapons that can not be tracked, recipes for explosive c4, fake passports / SIM / identification of the state, child pornography, and - as in the shock that in the end lower the silk creator road - hitman for hire. All this and more for sale in the market Web dark. Say what would you do about drug dealer, but even links bolster the worst I am not advertise that he can help me to kill someone. Cryptocurrency not create market underground so unfair to blame bitcoin fully for the manufacture of silk road. On the other hand, it is clear for anyone who watch cryptocurrency that appears as a powerful tool very loved by criminals underground. Center on sanctions and illicit finance published memo check laundering bitcoin Associated with the activity prohibited. This report found that the number of the company illegal use bitcoin grow five times between 2013 and 2016, and 95 percent of the washing bitcoin during these years from the transaction made only nine market Web dark, including Agora, alphabay, and the silk road. The memo also noted that: our data should not be construed to rate or estimated total number of transactions bitcoin forbidden that may occur in blockchain bitcoin. The volume of the actual of deals bitcoin forbidden almost certainly significantly greater than represented in our sample. Research group other ciphertrace, reported that the number of cryptocurrency were washed so far this year has three times the amount washed in 2017. Research this kind of the transaction bitcoin it difficult. The use of wallet bitcoin as the only identifier entity in transactions made analysis more difficult than with agencies and financial instruments traditional. Law enforcement agencies and company data analysis adapt, but coins new with increased focus on the privacy - like a dash, monero, and zcash - are entering the market, making the study of this kind (and law enforcement) the more difficult. In 2016, the last year covered by the memo Center on sanctions and illicit finance, author find a prominent leading source bitcoin illegally obtained. In 2016, about 15 percent of the bitcoin were washed derived from the attack ransomware, meteoric rise of 0,87 percent in 2015. the payments without pay for data ransomed the wannacry ransomware attack in 2016 cost an estimated $ 4 billion-6 billion worldwide. It's hard to know exactly how much money the attackers made, but the upward trend in ransomware attacks suggests that such attacks don't suck at making their perpetrators money. In a microcosm of cryptocurrency-facilitated crime, the North Korean cyber squad that executed the wannacry attack apparently bought the code from a hacker group called the shadow brokers, roomates only accepts payment in the form of two privacy-focused cryptocurrencies, monero and zcash. The shadow brokers likely stole the exploit from the NSA, but that's another story. Those who will redeem the data you are interested to cryptocurrency for the same reason that the operator of the market illegal are: these fixing a lot of problems with the ransom cash classic. All of you seen this scene in the movie or TV drama: a sound posing on the phone to say, "come to the location faint midnight with $ 100,000 cash. Come own, we watching you. "The cash is very important. If the victim to write a check to the criminals, then some banks have to approve the transfer of funds to the Bank account others (may belong to the criminals). Not only the most of the Bank collaborate with law enforcement to capture criminals, but there are many Red tape around withdrawal suddenly a large amount of cash for this reason. For the criminals, go to a place to get the money is a risk very large. What if the sting? What if the victims of bringing a gun? What if the victims of learning enough to identify one of criminals? What if a witness to see such transactions? This all very messy, not to mention around with all the money to make your target the police and the company other criminal. With ransomware no items physical exchanged for data redeemed never really - really brought everywhere. Similarly, using cryptocurrency as a mechanism payment allows attacker to just leave number wallet bitcoin on the computer, along with instructions for victims to: get the wallet bitcoin own, buy bitcoin, and send it to the attacker. Crime perfect - money move hand, and good attacker and victims don't even need to get up of the bed. The lack of Exchange physical also means that the criminals can target the people they never encountered in real life. In this way, cryptocurrency possible candidates the attacker expand a series of potential victims dramatically. Seller Web dark and attacker ransomware equally love something else about cryptocurrency - easier than cash to Wash. The nature of short of money new digital this makes it easier obscure its origin. Memo from the Center on sanctions and illicit finance identify mixing cryptocurrency (also called tumblers) as a mechanism for the main "clean" bitcoin dirty. Tumbler conceptually simple enough. You send bitcoin dirty your address tumbler with address "clean" new your own, tumbler this mixed bitcoin of the many wallet different (some cleaner, most dirty) into the wallet tumbler own, and finally tumbler have wallet it pays to wallet "clean" you provide (after extracting service fees, of course). By combining a lot of coins into the wallet single, then distribute the funds to wallet new glasses make more difficult to associate bitcoin in wallet "clean" with the behavior of the forbidden the original. Glass can add all kinds of complexity noisy to their services with the transfer of funds among many wallet different, more obscure wallet source and destination of any client individual. This process is even more effective when used with the anonymity and cryptocurrency that focuses on privacy like monero and zcash. The future cryptocurrency in addition to allow all kinds of the company criminal new and creative, cryptocurrency have the impact of a very directly on the use of the global energy and climate change. Regardless of all this, investors Silicon Valley can't wait to "installing blockchain on it," regardless of what "it". We have heard this story previous: fast-moving, solve it, and handles the fall of later. Meanwhile, the organization's scholarly predict that the sea level will ride between 2-6 feet in the year 2100, and CEO ciphertrace predict that more than $ 1,5 billion in cryptocurrency will be stolen this year. I believe that the White paper bitcoin is a revolutionary, and that cryptocurrency may here to stay. The idea of the core of bitcoin, including blockchain, has the potential to form back and interfere with more than just a company criminal. Stories like a story about the people Venezuela mine bitcoin as the crowd to survive in the regime hard is a reminder that there is an application valid for payment type "without trust" this, especially in the outside of democracy growing market to good. However, is ignorance to ignore the unintended consequences of the progress of this technology. Such as stand, bitcoin has been the most beneficial to the two main groups: speculators and criminals. When the global community continue to grapple with a new challenge on how to set, the police, and innovate responsible manner in the room digital information age, very important that we take the time to carefully check out the bigger picture. The impact of innovation the future will depend on what to the target of research and what type of policy taken relevant government technology newborn. In making the decision, we should consider carefully all the way to this technology can be used, not just the way we expect to be applied.