Tag Archives: cryptocurrency

Five ‘Fantastic’ Piracy Predictions for 2018

Post Syndicated from Ernesto original https://torrentfreak.com/five-fantastic-piracy-predictions-for-2018-180101/

On January 1, the TF newsroom often wonders what copyright and piracy news the new year will have in store.

Today we want to give our readers some insight into some of the things that crossed our minds.

Granted, predicting the future isn’t an easy task, but the ‘fantastic’ forecasts below give plenty of food for thought and discussion.

Power Cord Manufacturer Held Liable for Streaming Piracy

Hollywood’s concerns over pirate streaming boxes will reach unprecedented levels this year. After successful cases against box sellers and add-on developers, the major movie studios will take aim at the hardware.

A Chinese power cord manufacturer, believed to be linked to more than half of all the streaming boxes sold throughout the world, will be taken to court.

The movie studios argue that the power-cords are essential to make pirate streaming boxes work. They are therefore liable for contributory copyright infringement and should pay for the billions in losses they are partly responsible for.

Pirate Sites Launch ‘The Pirate Coin’

In 2017 The Pirate Bay added a cryptocoin miner to its website, an example many other pirate sites followed. In the new year, there will be another cryptocurrency innovation that will have an even more profound effect.

After Google Chrome adds its default ad-blocker to the Chrome browser, a coalition of torrent sites will release The Pirate Coin.

With this new cryptocurrency, users can buy all sorts of perks and features on their favorite download and streaming portals. From priority HD streaming, through personalized RSS feeds, to VIP access – Pirate Coins can pay for it all.

The new coin will see mass adoption within a few months and provide a stable income for pirate sites, which no longer see the need for traditional ads.

YouTube Music Label Signs First Artists

For years on end, the major music labels have complained bitterly about YouTube. While the video service earned them millions, they demanded better deals and less piracy.

In 2018, YouTube will run out of patience. The video streaming platform will launch a counter-attack and start its own record label. With a talent pool of millions of aspiring artists among its users, paired with the right algorithms, they are a force to be reckoned with.

After signing the first artists, YouTube will scold the other labels for not giving their musicians the best deals.

Comcast Introduces Torrent Pro Subscription

While there’s still a lot of public outrage against the net neutrality repeal in 2018, torrent users are no longer complaining. After the changes are approved by Congress, Comcast will announce its first non-neutral Internet package.

The Torrent Pro (®) package will allow subscribers to share files via BitTorrent in an optimized network environment.

Their traffic will be routed over separate lanes with optimal connections to India, while minimizing interference from regular Internet users.

The new package comes with a free VPN, of course, to ensure that all transfers take place in a fully encrypted setting without having to worry about false notifications from outsiders.

Pirate Bay Goes All-in on Streaming

The Pirate Bay turns 15 years old in 2018, which is an unprecedented achievement. While the site’s appearance hasn’t changed much since the mid-2000s, technically it has been changed down quite a bit.

The resource-intensive tracker was removed from the site years ago, for example, and shortly after, the .torrent files followed. This made The Pirate Bay more ‘portable’ and easier to operate, the argument was.

In 2018 The Pirate Bay will take things even further. Realizing that torrents are no longer as modern as they once were, TPB will make the switch to streaming, at least for video.

While the site has experimented with streaming browser add-ons in the past, it will implement WebTorrent streaming support in the new year. This means users can stream high-quality videos directly from the TPB website.

The new streaming feature will be released together with an overhaul of the search engine and site navigation, allowing users to follow TV-shows more easily, and see what’s new at a glimpse.

Happy 2018!

Don’t believe in any of the above? Look how accurate we were last year! Don’t forget the salt…

Source: TF, for the latest info on copyright, file-sharing, torrent sites and more. We also have VPN discounts, offers and coupons

“LOL,” The Pirate Bay Adds Donation Options, Mocks Bitcoin Cash?

Post Syndicated from Ernesto original https://torrentfreak.com/lol-the-pirate-bay-adds-donation-options-mocks-bitcoin-cash-171227/

The Pirate Bay has been both an early adopter and a pioneer when it comes to cryptocurrencies.

Earlier this year the site made headlines when it started to mine cryptocurrency through its visitors, which proved to be a controversial move. Still, many sites followed Pirate Bay’s example.

Pirate Bay’s interest in cryptocurrency wasn’t new though.

The torrent site first allowed people to donate Bitcoin five years ago, which paid off right away. In little more than a day, 73 transactions were sent to Pirate Bay’s address, adding up to a healthy 5.56 BTC, roughly $700 at the time.

Today, the site still accepts Bitcoin donations. While it doesn’t bring in enough to pay all the bills, it doesn’t hurt either.

Around Christmas, The Pirate Bay decided to expand its cryptocurrency donation options. In addition to the traditional Bitcoin address, the torrent site added a Bitcoin Segwit Bech32 option, plus Litecoin and Monero addresses.

While the new donation options show that The Pirate Bay has faith in multiple currencies, the site doesn’t appear to be a fan of them all. The Bitcoin fork “Bitcoin Cash” is also listed, for example, but in a rather unusual way.

“BCH: Bcash. LOL,” reads a mention posted on the site.

BCH: Bcash. LOL

Those who are following the cryptocurrency scene will know that there has been quite a bit of infighting between some supporters of the Bitcoin Cash project and those of the original Bitcoin in recent weeks.

Several high-profile individuals have criticized Bitcoin’s high transaction fees and limitations, while others have very little faith in the future of the Bitcoin Cash alternative.

Although there are not a lot of details available, the “LOL” mention suggests that the TPB team is in the latter camp.

In recent years The Pirate Bay has received a steady but very modest flow of Bitcoin donations. Lasy year we calculated that it ‘raked’ in roughly $9 per day.

However, with the exponential price increase recently, the modest donations now look pretty healthy. Since 2013 The Pirate Bay received well over 135 BTC in donations, which is good for $2 million today. LOL.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and more. We also have VPN discounts, offers and coupons

Bitcoin: In Crypto We Trust

Post Syndicated from Robert Graham original http://blog.erratasec.com/2017/12/bitcoin-in-crypto-we-trust.html

Tim Wu, who coined “net neutrality”, has written an op-ed on the New York Times called “The Bitcoin Boom: In Code We Trust“. He is wrong about “code”.

The wrong “trust”

Wu builds a big manifesto about how real-world institutions aren’t can’t be trusted. Certainly, this reflects the rhetoric from a vocal wing of Bitcoin fanatics, but it’s not the Bitcoin manifesto.

Instead, the word “trust” in the Bitcoin paper is much narrower, referring to how online merchants can’t trust credit-cards (for example). When I bought school supplies for my niece when she studied in Canada, the online site wouldn’t accept my U.S. credit card. They didn’t trust my credit card. However, they trusted my Bitcoin, so I used that payment method instead, and succeeded in the purchase.

Real-world currencies like dollars are tethered to the real-world, which means no single transaction can be trusted, because “they” (the credit-card company, the courts, etc.) may decide to reverse the transaction. The manifesto behind Bitcoin is that a transaction cannot be reversed — and thus, can always be trusted.

Deliberately confusing the micro-trust in a transaction and macro-trust in banks and governments is a sort of bait-and-switch.

The wrong inspiration

Wu claims:

“It was, after all, a carnival of human errors and misfeasance that inspired the invention of Bitcoin in 2009, namely, the financial crisis.”

Not true. Bitcoin did not appear fully formed out of the void, but was instead based upon a series of innovations that predate the financial crisis by a decade. Moreover, the financial crisis had little to do with “currency”. The value of the dollar and other major currencies were essentially unscathed by the crisis. Certainly, enthusiasts looking backward like to cherry pick the financial crisis as yet one more reason why the offline world sucks, but it had little to do with Bitcoin.

In crypto we trust

It’s not in code that Bitcoin trusts, but in crypto. Satoshi makes that clear in one of his posts on the subject:

A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.

You don’t possess Bitcoins. Instead, all the coins are on the public blockchain under your “address”. What you possess is the secret, private key that matches the address. Transferring Bitcoin means using your private key to unlock your coins and transfer them to another. If you print out your private key on paper, and delete it from the computer, it can never be hacked.

Trust is in this crypto operation. Trust is in your private crypto key.

We don’t trust the code

The manifesto “in code we trust” has been proven wrong again and again. We don’t trust computer code (software) in the cryptocurrency world.

The most profound example is something known as the “DAO” on top of Ethereum, Bitcoin’s major competitor. Ethereum allows “smart contracts” containing code. The quasi-religious manifesto of the DAO smart-contract is that the “code is the contract”, that all the terms and conditions are specified within the smart-contract code, completely untethered from real-world terms-and-conditions.

Then a hacker found a bug in the DAO smart-contract and stole most of the money.

In principle, this is perfectly legal, because “the code is the contract”, and the hacker just used the code. In practice, the system didn’t live up to this. The Ethereum core developers, acting as central bankers, rewrote the Ethereum code to fix this one contract, returning the money back to its original owners. They did this because those core developers were themselves heavily invested in the DAO and got their money back.

Similar things happen with the original Bitcoin code. A disagreement has arisen about how to expand Bitcoin to handle more transactions. One group wants smaller and “off-chain” transactions. Another group wants a “large blocksize”. This caused a “fork” in Bitcoin with two versions, “Bitcoin” and “Bitcoin Cash”. The fork championed by the core developers (central bankers) is worth around $20,000 right now, while the other fork is worth around $2,000.

So it’s still “in central bankers we trust”, it’s just that now these central bankers are mostly online instead of offline institutions. They have proven to be even more corrupt than real-world central bankers. It’s certainly not the code that is trusted.

The bubble

Wu repeats the well-known reference to Amazon during the dot-com bubble. If you bought Amazon’s stock for $107 right before the dot-com crash, it still would be one of wisest investments you could’ve made. Amazon shares are now worth around $1,200 each.

The implication is that Bitcoin, too, may have such long term value. Even if you buy it today and it crashes tomorrow, it may still be worth ten-times its current value in another decade or two.

This is a poor analogy, for three reasons.

The first reason is that we knew the Internet had fundamentally transformed commerce. We knew there were going to be winners in the long run, it was just a matter of picking who would win (Amazon) and who would lose (Pets.com). We have yet to prove Bitcoin will be similarly transformative.

The second reason is that businesses are real, they generate real income. While the stock price may include some irrational exuberance, it’s ultimately still based on the rational expectations of how much the business will earn. With Bitcoin, it’s almost entirely irrational exuberance — there are no long term returns.

The third flaw in the analogy is that there are an essentially infinite number of cryptocurrencies. We saw this today as Coinbase started trading Bitcoin Cash, a fork of Bitcoin. The two are nearly identical, so there’s little reason one should be so much valuable than another. It’s only a fickle fad that makes one more valuable than another, not business fundamentals. The successful future cryptocurrency is unlikely to exist today, but will be invented in the future.

The lessons of the dot-com bubble is not that Bitcoin will have long term value, but that cryptocurrency companies like Coinbase and BitPay will have long term value. Or, the lesson is that “old” companies like JPMorgan that are early adopters of the technology will grow faster than their competitors.

Conclusion

The point of Wu’s paper is to distinguish trust in traditional real-world institutions and trust in computer software code. This is an inaccurate reading of the situation.

Bitcoin is not about replacing real-world institutions but about untethering online transactions.

The trust in Bitcoin is in crypto — the power crypto gives individuals instead of third-parties.

The trust is not in the code. Bitcoin is a “cryptocurrency” not a “codecurrency”.

"Crypto" Is Being Redefined as Cryptocurrencies

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2017/12/crypto_is_being.html

I agree with Lorenzo Franceschi-Bicchierai, “Cryptocurrencies aren’t ‘crypto’“:

Lately on the internet, people in the world of Bitcoin and other digital currencies are starting to use the word “crypto” as a catch-all term for the lightly regulated and burgeoning world of digital currencies in general, or for the word “cryptocurrency” — which probably shouldn’t even be called “currency,” by the way.

[…]

To be clear, I’m not the only one who is mad about this. Bitcoin and other technologies indeed do use cryptography: all cryptocurrency transactions are secured by a “public key” known to all and a “private key” known only to one party­ — this is the basis for a swath of cryptographic approaches (known as public key, or asymmetric cryptography) like PGP. But cryptographers say that’s not really their defining trait.

“Most cryptocurrency barely has anything to do with serious cryptography,” Matthew Green, a renowned computer scientist who studies cryptography, told me via email. “Aside from the trivial use of digital signatures and hash functions, it’s a stupid name.”

It is a stupid name.

Amazon GuardDuty – Continuous Security Monitoring & Threat Detection

Post Syndicated from Jeff Barr original https://aws.amazon.com/blogs/aws/amazon-guardduty-continuous-security-monitoring-threat-detection/

Threats to your IT infrastructure (AWS accounts & credentials, AWS resources, guest operating systems, and applications) come in all shapes and sizes! The online world can be a treacherous place and we want to make sure that you have the tools, knowledge, and perspective to keep your IT infrastructure safe & sound.

Amazon GuardDuty is designed to give you just that. Informed by a multitude of public and AWS-generated data feeds and powered by machine learning, GuardDuty analyzes billions of events in pursuit of trends, patterns, and anomalies that are recognizable signs that something is amiss. You can enable it with a click and see the first findings within minutes.

How it Works
GuardDuty voraciously consumes multiple data streams, including several threat intelligence feeds, staying aware of malicious IP addresses, devious domains, and more importantly, learning to accurately identify malicious or unauthorized behavior in your AWS accounts. In combination with information gleaned from your VPC Flow Logs, AWS CloudTrail Event Logs, and DNS logs, this allows GuardDuty to detect many different types of dangerous and mischievous behavior including probes for known vulnerabilities, port scans and probes, and access from unusual locations. On the AWS side, it looks for suspicious AWS account activity such as unauthorized deployments, unusual CloudTrail activity, patterns of access to AWS API functions, and attempts to exceed multiple service limits. GuardDuty will also look for compromised EC2 instances talking to malicious entities or services, data exfiltration attempts, and instances that are mining cryptocurrency.

GuardDuty operates completely on AWS infrastructure and does not affect the performance or reliability of your workloads. You do not need to install or manage any agents, sensors, or network appliances. This clean, zero-footprint model should appeal to your security team and allow them to green-light the use of GuardDuty across all of your AWS accounts.

Findings are presented to you at one of three levels (low, medium, or high), accompanied by detailed evidence and recommendations for remediation. The findings are also available as Amazon CloudWatch Events; this allows you to use your own AWS Lambda functions to automatically remediate specific types of issues. This mechanism also allows you to easily push GuardDuty findings into event management systems such as Splunk, Sumo Logic, and PagerDuty and to workflow systems like JIRA, ServiceNow, and Slack.

A Quick Tour
Let’s take a quick tour. I open up the GuardDuty Console and click on Get started:

Then I confirm that I want to enable GuardDuty. This gives it permission to set up the appropriate service-linked roles and to analyze my logs by clicking on Enable GuardDuty:

My own AWS environment isn’t all that exciting, so I visit the General Settings and click on Generate sample findings to move ahead. Now I’ve got some intriguing findings:

I can click on a finding to learn more:

The magnifying glass icons allow me to create inclusion or exclusion filters for the associated resource, action, or other value. I can filter for all of the findings related to this instance:

I can customize GuardDuty by adding lists of trusted IP addresses and lists of malicious IP addresses that are peculiar to my environment:

After I enable GuardDuty in my administrator account, I can invite my other accounts to participate:

Once the accounts decide to participate, GuardDuty will arrange for their findings to be shared with the administrator account.

I’ve barely scratched the surface of GuardDuty in the limited space and time that I have. You can try it out at no charge for 30 days; after that you pay based on the number of entries it processes from your VPC Flow, CloudTrail, and DNS logs.

Available Now
Amazon GuardDuty is available in production form in the US East (Northern Virginia), US East (Ohio), US West (Oregon), US West (Northern California), EU (Ireland), EU (Frankfurt), EU (London), South America (São Paulo), Canada (Central), Asia Pacific (Tokyo), Asia Pacific (Seoul), Asia Pacific (Singapore), Asia Pacific (Sydney), and Asia Pacific (Mumbai) Regions and you can start using it today!

Jeff;

Ethereum Parity Bug Destroys Over $250 Million In Tokens

Post Syndicated from Darknet original https://www.darknet.org.uk/2017/11/ethereum-parity-bug-destroys-250-million-tokens/?utm_source=rss&utm_medium=social&utm_campaign=darknetfeed

Ethereum Parity Bug Destroys Over $250 Million In Tokens

If you are into cryptocurrency or blockchain at all, you will have heard about the Ethereum Parity Bug that has basically thrown $280 Million value or more of Ethereum tokens in the bin.

It’s a bit of a mess really, and a mistake by the developers who introduced it after fixing another bug back in July to do with multisig wallets (wallets which multiple people have to agree to transactions).

You can see the thread on Github here: anyone can kill your contract #6995

There’s a lot of hair-pulling among Ethereum alt-coin hoarders today – after a programming blunder in Parity’s wallet software let one person bin $280m of the digital currency belonging to scores of strangers, probably permanently.

Read the rest of Ethereum Parity Bug Destroys Over $250 Million In Tokens now! Only available at Darknet.

Pirate-Friendly Coinhive’s DNS Hacked, User Hashes Stolen

Post Syndicated from Andy original https://torrentfreak.com/pirate-friendly-coinhives-dns-hacked-user-hashes-stolen-171025/

Just over a month ago, a Javascript cryptocurrency miner was silently added to The Pirate Bay. Noticed by users who observed their CPU usage going through the roof, it later transpired the site was trialing a miner operated by Coinhive.

Many users were disappointed that The Pirate Bay had added the Javascript-based Monero coin miner without their permission. However, it didn’t take long for people to see the potential benefits, with a raft of other sites adding the miner in the hope of generating additional revenue.

Now, however, Coinhive has an unexpected and potentially serious problem to deal with. The company has just revealed that on Monday night its DNS records maintained at Cloudflare were accessed by a third-party, allowing an unnamed attacker to redirect user mining traffic to a server they controlled.

“The DNS records for coinhive.com have been manipulated to redirect requests for the coinhive.min.js to a third party server. This third party server hosted a modified version of the JavaScript file with a hardcoded site key. This essentially let the attacker ‘steal’ hashes from our users,” Coinhive said in a statement.

The company hasn’t revealed how long the unauthorized redirect stayed in place for, but it appears that all coins mined on sites hosting Coinhive’s script were ‘stolen’ during the period, instead of being credited to their accounts.

Coinhive stresses that no user account information was leaked and that its website and database servers were uncompromised. But while that’s good news, the method that the hackers used to access the company’s DNS provider lay in a basic security error.

Back in 2014, crowdfunding platform Kickstarter – which Coinhive used – fell victim to a security breach. After being advised of the fact by law enforcement officials, Kickstarter shut down unauthorized access, began strengthening its systems, while advising customers to do the same.

While Coinhive did respond to the warning to ensure that its data was safe, something slipped through the net. One piece of information – its Cloudflare account password – remained unchanged after the Kickstarter attack. It now seems the most likely culprit for this week’s DNS breach.

“The root cause for this incident was an insecure password for our Cloudflare account that was probably leaked with the Kickstarter data breach back in 2014,” Coinhive says.

“We have learned hard lessons about security and used 2FA and unique passwords with all services since, but we neglected to update our years old Cloudflare account.”

While not mentioning Coinhive explicitly, Kickstarter warned earlier this month that the 2014 incident may not be completely over. In an update posted on the site Oct 6, Kickstarter noted that some of its customers had recently been hearing more information about the breach from notification service Have I been pwned?.

In the meantime, Coinhive has issued an apology and indicated it will find ways to reimburse sites which have lost revenue as a result of the DNS hack.

“We’re deeply sorry about this severe oversight,” the company said. “Our current plan is to credit all sites with an additional 12 hours of their the daily average hashrate. Please give us a few hours to roll this out.”

Based on earlier calculations carried out by TF, The Pirate Bay (if it was mining during the breach) could be potentially owed around $200 for the lost hashes, give or take. After turning off mining in September, the site reactivated it again in October, with no opt-out. The situation appears fluid.

While the hack is obviously a disappointment, Coinhive appears to have advised its users quickly and transparently, which under the circumstances is exactly what’s required. The fact that it’s offering compensation to users will also be welcomed.

The breach is the latest controversy to hit the company. Earlier this month, Cloudflare began banning sites which implemented Coinhive mining without informing their users. The CDN company said it considered non-advised mining as malware.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Pirate Bay is Mining Cryptocurrency Again, No Opt Out

Post Syndicated from Ernesto original https://torrentfreak.com/pirate-bay-is-mining-cryptocurrency-again-no-opt-out-171011/

Last month The Pirate Bay caused some uproar by adding a Javascript-based cryptocurrency miner to its website.

The miner utilizes CPU power from visitors to generate Monero coins for the site, providing an extra source of revenue.

The Pirate Bay only tested the option briefly, but that was enough to inspire many others to follow suit. Now, a few weeks later, Pirate Bay has also turned on the miners again.

The miner is not directly embedded in the site’s core code but runs through an ad script. Many ad blockers and anti-malware tools are stopping these request, but people who don’t use any will see a clear spike in CPU usage when they access the site.

The Pirate Bay team previously said that they were testing the miner to see if it can replace ads. While there is some real revenue potential, for now, it’s running in addition to the regular banners. It’s unclear whether the current mining period is another test or if it will run permanently from now on.

The miner does appear to be throttled to a certain degree, so most users might not even notice that it’s running.

Pirate Bay load requests

Running a cryptocurrency miner such as the Coin-Hive script TPB is currently using is not without risk. Aside from user complaints, there is an issue that may make it harder for the site to operate in the future.

Last week we reported that CDN provider Cloudflare had suspended the account of torrent proxy site ProxyBunker, flagging its coin miner as malware. This means that The Pirate Bay now risks losing the Cloudflare service, which they rely on for DDoS protection, among other things.

Cloudflare’s suspension of ProxyBunker occurred even though the site provided users with an option to disable the miner. This functionality was implemented by Coinhive after the script was misused by some sites, which ran it without alerting their users.

The Pirate Bay currently has no opt-out option, nor has it informed users about the latest mining efforts. This could lead to another problem since Coinhive said it would crack down on customers who failed to keep users in the loop.

“We will verify this opt-in on our servers and will implement it in a way that it can not be circumvented. We will pledge to keep the opt-in intact at all times, without exceptions,” the Coinhive team previously noted.

The Pirate Bay team has not commented on the issue thus far. In theory, it’s possible that a rogue advertiser is responsible for the latest mining efforts. If that’s the case it will be disabled soon enough.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Cloudflare CEO Has to Explain Lack of Pirate Site Terminations

Post Syndicated from Ernesto original https://torrentfreak.com/cloudflare-ceo-has-to-explain-lack-of-pirate-site-terminations-171010/

In August, Cloudflare CEO Matthew Prince decided to terminate the account of controversial neo-Nazi site Daily Stormer.

“I woke up this morning in a bad mood and decided to kick them off the Internet,” he wrote.

The decision was meant as an intellectual exercise to start a conversation regarding censorship and free speech on the internet. In this respect it was a success but the discussion went much further than Prince had intended.

Cloudflare had a long-standing policy not to remove any accounts without a court order, so when this was exceeded, eyebrows were raised. In particular, copyright holders wondered why the company could terminate this account but not those of the most notorious pirate sites.

Adult entertainment publisher ALS Scan raised this question in its piracy liability case against Cloudflare, asking for a 7-hour long deposition of the company’s CEO, to find out more. Cloudflare opposed this request, saying it was overbroad and unneeded, while asking the court to weigh in.

After reviewing the matter, Magistrate Judge Alexander MacKinnon decided to allow the deposition, but in a limited form.

“An initial matter, the Court finds that ALS Scan has not made a showing that would justify a 7 hour deposition of Mr. Prince covering a wide range of topics,” the order (pdf) reads.

“On the other hand, a review of the record shows that ALS Scan has identified a narrow relevant issue for which it appears Mr. Prince has unique knowledge and for which less intrusive discovery has been exhausted.”

ALS Scan will be able to interrogate Cloudflare’s CEO but only for two hours. The deposition must be specifically tailored toward his motivation (not) to use his authority to terminate the accounts of ‘pirating’ customers.

“The specific topic is the use (or non-use) of Mr. Prince’s authority to terminate customers, as specifically applied to customers for whom Cloudflare has received notices of copyright infringement,” the order specifies.

Whether this deposition will help ALS Scan argue its case has yet to be seen. Based on earlier submissions, the CEO will likely argue that the Daily Stormer case was an exception to make a point and that it’s company policy to require a court order to respond to infringement claims.

Meanwhile, more questions are being raised. Just a few days ago Cloudflare suspended the account of a customer for using a cryptocurrency miner. Apparently, Cloudflare classifies these miners as malware, triggering a punishment without a court order.

ALS Scan and other copyright holders would like to see a similar policy against notorious pirate sites, but thus far Cloudflare is having none of it.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Private Torrent Sites Allow Users to Mine Cryptocurrency for Upload Credit

Post Syndicated from Andy original https://torrentfreak.com/private-torrent-sites-allow-users-to-mine-cryptocurrency-for-upload-credit-171008/

Ever since The Pirate Bay crew added a cryptocurrency miner to their site last month, the debate over user mining has sizzled away in the background.

The basic premise is that a piece of software embedded in a website runs on a user’s machine, utilizing its CPU cycles in order to generate revenue for the site in question. But not everyone likes it.

The main problem has centered around consent. While some sites are giving users the option of whether to be involved or not, others simply run the miner without asking. This week, one site operator suggested to TF that since no one asks whether they can run “shitty” ads on a person’s machine, why should they ask permission to mine?

It’s a controversial point, but it would be hard to find users agreeing on either front. They almost universally insist on consent, wherever possible. That’s why when someone comes up with something innovative to solve a problem, it catches the eye.

Earlier this week a user on Reddit posted a screenshot of a fairly well known private tracker. The site had implemented a mining solution not dissimilar to that appearing on other similar platforms. This one, however, gives the user something back.

Mining for coins – with a twist

First of all, it’s important to note the implementation. The decision to mine is completely under the control of the user, with buttons to start or stop mining. There are even additional controls for how many CPU threads to commit alongside a percentage utilization selector. While still early days, that all sounds pretty fair.

Where this gets even more interesting is how this currency mining affects so-called “upload credit”, an important commodity on a private tracker without which users can be prevented from downloading any content at all.

Very quickly: when BitTorrent users download content, they simultaneously upload to other users too. The idea is that they download X megabytes and upload the same number (at least) to other users, to ensure that everyone in a torrent swarm (a number of users sharing together) gets a piece of the action, aka the content in question.

The amount of content downloaded and uploaded on a private tracker is monitored and documented by the site. If a user has 1TB downloaded and 2TB uploaded, for example, he has 1TB in credit. In basic terms, this means he can download at least 1TB of additional content before he goes into deficit, a position undesirable on a private tracker.

Now, getting more “upload credit” can be as simple as uploading more, but some users find that difficult, either due to the way a tracker’s economy works or simply due to not having resources. If this is the case, some sites allow people to donate real money to receive “upload credit”. On the tracker highlighted in the mining example above, however, it’s possible to virtually ‘trade-in’ some of the mining effort instead.

Tracker politics aside (some people believe this is simply a cash grab opportunity), from a technical standpoint the prospect is quite intriguing.

In a way, the current private tracker system allows users to “mine” upload credits by donating bandwidth to other users of the site. Now they have the opportunity to mine an actual cryptocurrency on the tracker and have some of it converted back into the tracker’s native ‘currency’ – upload credit – which can only be ‘spent’ on the site. Meanwhile, the site’s operator can make a few bucks towards site maintenance.

Another example showing how innovative these mining implementations can be was posted by a member of a second private tracker. Although it’s unclear whether mining is forced or optional, there appears to be complete transparency for the benefit of the user.

The mining ‘Top 10’ on a private tracker

In addition to displaying the total number of users mining and the hashes solved per second, the site publishes a ‘Top 10’ list of users mining the most currently, and overall. Again, some people might not like the concept of users mining at all, but psychologically this is a particularly clever implementation.

Utilizing the desire of many private tracker users to be recognizable among their peers due to their contribution to the platform, the charts give a user a measurable status in the community, at least among those who care about such things. Previously these charts would list top uploaders of content but the addition of a ‘Top miner’ category certainly adds some additional spice to the mix.

Mining is a controversial topic which isn’t likely to go away anytime soon. But, for all its faults, it’s still a way for sites to generate revenue, away from the pitfalls of increasingly hostile and easy-to-trace alternative payment systems. The Pirate Bay may have set the cat among the pigeons last month, but it also gave the old gray matter a boost too.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Cloudflare Bans Sites For Using Cryptocurrency Miners

Post Syndicated from Andy original https://torrentfreak.com/cloudflare-bans-sites-for-using-cryptocurrency-miners-171004/

After years of accepting donations via Bitcoin, last month various ‘pirate’ sites began to generate digital currency revenues in a brand new way.

It all began with The Pirate Bay, which quietly added a Javascript cryptocurrency miner to its main site, something that first manifested itself as a large spike in CPU utilization on the machines of visitors.

The stealth addition to the platform, which its operators later described as a test, was extremely controversial. While many thought of the miner as a cool and innovative way to generate revenue in a secure fashion, a vocal majority expressed a preference for permission being requested first, in case they didn’t want to participate in the program.

Over the past couple of weeks, several other sites have added similar miners, some which ask permission to run and others that do not. While the former probably aren’t considered problematic, the latter are now being viewed as a serious problem by an unexpected player in the ecosystem.

TorrentFreak has learned that popular CDN service Cloudflare, which is often criticized for not being harsh enough on ‘pirate’ sites, is actively suspending the accounts of sites that deploy cryptocurrency miners on their platforms.

“Cloudflare kicked us from their service for using a Coinhive miner,” the operator of ProxyBunker.online informed TF this morning.

ProxyBunker is a site that that links to several other domains that offer unofficial proxy services for the likes of The Pirate Bay, RARBG, KickassTorrents, Torrentz2, and dozens of other sites. It first tested a miner for four days starting September 23. Official implementation began October 1 but was ended last evening, abruptly.

“Late last night, all our domains got deleted off Cloudflare without warning so I emailed Cloudflare to ask what was going on,” the operator explained.

Bye bye

As the email above shows, Cloudflare cited only a “possible” terms of service violation. Further clarification was needed to get to the root of the problem.

So, just a few minutes later, the site operator contacted Cloudflare, acknowledging the suspension but pointing out that the notification email was somewhat vague and didn’t give a reason for the violation. A follow-up email from Cloudflare certainly put some meat on the bones.

“Multiple domains in your account were injecting Coinhive mining code without
notifying users and without any option to disabling [sic] the mining,” wrote Justin Paine, Head of Trust & Safety at Cloudflare.

“We consider this to be malware, and as such the account was suspended, and all domains removed from Cloudflare.”

Cloudflare: Unannounced miners are malware

ProxyBunker’s operator wrote back to Cloudflare explaining that the Coinhive miner had been running on his domains but that his main domain had a way of disabling mining, as per new code made available from Coinhive.

“We were running the miner on our proxybunker.online domain using Coinhive’s new Javacode Simple Miner UI that lets the user stop the miner at anytime and set the CPU speed it mines at,” he told TF.

Nevertheless, some element of the configuration appears to have fallen short of Cloudflare’s standards. So, shortly after Cloudflare’s explanation, the site operator asked if he could be reinstated if he completely removed the miner from his site. The response was a ‘yes’ but with a stern caveat attached.

“We will remove the account suspension, however do note you’ll need to re-sign up the domains as they were removed as a result of the account suspension. Please note — if we discover similar activity again the domains and account will be permanently blocked,” Cloudflare’s Justin warned.

ProxyBunker’s operator says that while he sees the value in cryptocurrency miners, he can understand why people might be opposed to them too. That being said, he would appreciate it if services like Cloudflare published clear guidelines on what is and is not acceptable.

“We do understand that most users will not like the miner using up a bit of their CPU but we do see the full potential as a new revenue stream,” he explains.

“I think third-party services need to post clear information that they’re not allowed on their services, if that’s the case.”

At time of publication, Cloudflare had not responded to TorrentFreak’s requests for comment.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Cryptocurrency Miner Targeted by Anti-Virus and Adblock Tools

Post Syndicated from Ernesto original https://torrentfreak.com/cryptocurrency-miner-targeted-by-anti-virus-and-adblock-tools-170926/

Earlier this month The Pirate Bay caused some uproar by adding a Javascript-based cryptocurrency miner to its website.

The miner utilizes CPU power from visitors to generate Monero coins for the site, providing an extra revenue source.

While Pirate Bay only tested the option briefly, it inspired many others to follow suit. Streaming related sites such as Alluc, Vidoza, and Rapidvideo jumped on board, and torrent site Demonoid also ran some tests.

During the weekend, Coinhive’s miner code even appeared on the official website of Showtime. The code was quickly removed and it’s still unclear how it got there, as the company refuses to comment. It’s clear, though, that miners are a hot topic thanks to The Pirate Bay.

The revenue potential is also real. TorrentFreak spoke to Vidoza who say that with 30,000 online users throughout the day (2M unique visitors), they can make between $500 and $600. That’s when the miner is throttled at 50%. Although ads can bring in more, it’s not insignificant.

That said, all the uproar about cryptocurrency miners and their possible abuse has also attracted the attention of ad-blockers. Some people have coded new browser add-ons to block miners specifically and the popular uBlock Origin added Coinhive to its default blocklist as well. And that’s just after a few days.

Needless to say, this limits the number of miners, and thus the money that comes in. And there’s another problem with a similar effect.

In addition to ad-blockers, anti-virus tools are also flagging Coinhive. Malwarebytes is one of the companies that lists it as a malicious activity, warning users about the threat.

The anti-virus angle is one of the issues that worries Demonoid’s operator. The site is used to ad-blockers, but getting flagged by anti-virus companies is of a different order.

“The problem I see there and the reason we will likely discontinue [use of the miner] is that some anti-virus programs block it, and that might get the site on their blacklists,” Deimos informs TorrentFreak.

Demonoid’s miner announcement

Vidoza operator Eugene sees all the blocking as an unwelcome development and hopes that Coinhive will tackle it. Coinhive may want to come out in public and start to discuss the issue with ad-blockers and anti-virus companies, he says.

“They should find out under what conditions all these guys will stop blocking the script,” he notes.

The other option would be to circumvent the blocking through proxies and circumvention tools, but that might not be the best choice in the long run.

Coinhive, meanwhile, has chimed in as well. The company says that it wasn’t properly prepared for the massive attention and understands why some ad-blockers have put them on the blacklist.

“Providing a real alternative to ads and users who block them turned out to be a much harder problem. Coinhive, too, is now blocked by many ad-block browser extensions, which – we have to admit – is reasonable at this point.”

Most complaints have been targeted at sites that implemented the miner without the user’s consent. Coinhive doesn’t like this either and will take steps to prevent it in future.

“We’re a bit saddened to see that some of our customers integrate Coinhive into their pages without disclosing to their users what’s going on, let alone asking for their permission,” the Coinhive team notes.

The crypto miner provider is working on a new implementation that requires explicit consent from website visitors in order to run. This should deal with most of the negative responses.

If users start mining voluntarily, then ad-blockers and anti-virus companies should no longer have a reason to block the script. Nor will it be easy for malware peddlers to abuse it.

To be continued.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

How Much Money Can Pirate Bay Make From a Cryptocoin Miner?

Post Syndicated from Ernesto original https://torrentfreak.com/how-much-money-can-pirate-bay-make-from-a-cryptocoin-miner-170924/

In recent years many pirate sites have struggled to make a decent income.

Not only are more people using ad-blockers now, the ad-quality is also dropping as copyright holders actively go after this revenue source, trying to dry up the funds of pirate sites.

Last weekend The Pirate Bay tested a cryptocurrency miner to see whether that could offer a viable alternative. This created quite a bit of backlash, but there were plenty of positive comments too.

The question still remains whether the mining efforts can bring in enough money to pay all the bills.

The miner is provided by Coinhive which, at the time of writing, pays out 0.00015 XMR per 1M hashes. So how much can The Pirate Bay make from this?

To get a rough idea we did some back-of-the-envelope calculations, starting with the site’s visitor numbers.

SimilarWeb estimates that The Pirate Bay has roughly 315 million visits per month. On average, users spend five minutes on the site per “visit”. While we have reason to believe that this underestimates the site’s popularity, we’ll use it as an illustration.

We spoke to Coinhive and they estimate that a user with a mid-range laptop would have a hashrate of 30 h/s.

In Pirate Bay’s case this would translate to 30 hashes * 300 seconds * 315M visits = 2,835,000M hashes per month. If the miner is throttled at 30% this would drop to 850,000M hashes.

If Coinhive pays out 0.00015 XMR per million hashes, TPB would get 127.5 XMR per month, which is roughly $12,000 at the moment. Since the miner doesn’t appear on all pages and because some may actively block it, this number will drop a bit further.

Keep in mind that this is just an illustration using several estimated variables which may vary greatly over time. Still, it gives a broad idea of the potential.

Since Pirate Bay tested the miner several other sites jumped on board as well. We’ll keep a close eye on the developments and hope we can share some real data in the future.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Are Cryptocurrency Miners The Future for Pirate Sites?

Post Syndicated from Ernesto original https://torrentfreak.com/are-cryptocurrency-miners-the-future-for-pirate-sites-170921/

Last weekend The Pirate Bay surprised friend and foe by adding a Javascript-based cryptocurrency miner to its website.

The miner utilizes CPU power from visitors to generate Monero coins for the site, providing an extra revenue source.

Initially, this caused the CPUs of visitors to max out due to a configuration error, but it was later adjusted to be less demanding. Still, there was plenty of discussion on the move, with greatly varying opinions.

Some criticized the site for “hijacking” their computer resources for personal profit, without prior warning. However, there are also people who are happy to give something back to TPB, especially if it can help the site to remain online.

Aside from the configuration error, there was another major mistake everyone agreed on. The Pirate Bay team should have alerted its visitors to this change beforehand, and not after the fact, as they did last weekend.

Despite the sensitivities, The Pirate Bay’s move has inspired others to follow suit. Pirate linking site Alluc.ee is one of the first. While they use the same mining service, their implementation is more elegant.

Alluc shows how many hashes are mined and the site allows users to increase or decrease the CPU load, or turn the miner off completely.

Alluc.ee miner

Putting all the controversy aside for a minute, the idea to let visitors mine coins is a pretty ingenious idea. The Pirate Bay said it was testing the feature to see if it’s possible as a replacement for ads, which might be much needed in the future.

In recent years many pirate sites have struggled to make a decent income. Not only are more people using ad-blockers now, the ad-quality is also dropping as copyright holders actively go after this revenue source, trying to dry up the funds of pirate sites. And with Chrome planning to add a default ad-blocker to its browser, the outlook is grim.

A cryptocurrency miner might alleviate this problem. That is, as long as ad-blockers don’t start to interfere with this revenue source as well.

Interestingly, this would also counter one of the main anti-piracy talking points. Increasingly, industry groups are using the “public safety” argument as a reason to go after pirate sites. They point to malicious advertisements as a great danger, hoping that this will further their calls for tougher legislation and enforcement.

If The Pirate Bay and other pirate sites can ditch the ads, they would be less susceptible to these and other anti-piracy pushes. Of course, copyright holders could still go after the miner revenues, but this might not be easy.

TorrentFreak spoke to Coinhive, the company that provides the mining service to The Pirate Bay, and they don’t seem eager to take action without a court order.

“We don’t track where users come from. We are just providing servers and a script to submit hashes for the Monero blockchain. We don’t see it as our responsibility to determine if a website is ‘valid’ and we don’t have the technical capabilities to do so,” a Coinhive representative says.

We also contacted several site owners and thus far the response has been mixed. Some like the idea and would consider adding a miner, if it doesn’t affect visitors too much. Others are more skeptical and don’t believe that the extra revenue is worth the trouble.

The Pirate Bay itself, meanwhile, has completed its test run and has removed the miner from the site. They will now analyze the results before deciding whether or not it’s “the future” for them.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Can an Army of Bitcoin “Bounty Hunters” Deter Pirates?

Post Syndicated from Ernesto original https://torrentfreak.com/can-an-army-of-bitcoin-bounty-hunters-deter-pirates-170917/

When we first heard of the idea to use Bitcoin bounties to track down pirated content online, we scratched our heads.

Snitching on copyright infringers is not a new concept, but the idea of instant cash rewards though cryptocurrency was quite novel.

In theory, it’s pretty straightforward. Content producers can add a unique identifying watermark into movies, eBooks, or other digital files before they’re circulated. When these somehow leak to the public, the bounty hunters use the watermark to claim their Bitcoin, alerting the owner in the process.

This helps to spot leaks early on, even on networks where automated tools don’t have access, and identify the source at the same time.

Two years have passed and it looks like the idea was no fluke. Custos, the South African company that owns the technology, has various copyright holders on board and recently announced a new partnership with book publisher Erudition Digital.

With help from anti-piracy outfit Digimarc, the companies will add identifying watermarks to eBook releases, counting on the bounty hunters to keep an eye out for leaks. These bounty hunters don’t have to be anti-piracy experts. On the contrary, pirates are more than welcome to help out.

“The Custos approach is revolutionary in that it attacks the economy of piracy by targeting uploaders rather than downloaders, turning downloaders into an early detection network,” the companies announced a few days ago.

“The result is pirates turn on one another, sowing seeds of distrust amongst their communities. As a result, the Custos system is capable of penetrating hard-to-reach places such as the dark web, peer-to-peer networks, and even email.”



Devon Weston, Director of Market Development for Digimarc Guardian, believes that this approach is the next level in anti-piracy efforts. It complements the automated detection tools that have been available in the past by providing access to hard-to-reach places.

“Together, this suite of products represents the next generation in technical measures against eBook piracy,” Weston commented on the partnership.

TorrentFreak reached out to Custos COO Fred Lutz to find out what progress the company has made in recent years. We were informed that they have been protecting thousands of copies every month, ranging from pre-release movie content to eBooks.

At the moment the company works with a selected group of “bounty hunters,” but they plan to open the extraction tool to the public in the near future, so everyone can join in.

“So far we have carefully seeded the free bounty extractor tool in relevant communities with great success. However, in the next phase, we will open the bounty hunting to the general public. We are just careful not to grow the bounty hunting community faster than the number of bounties in the wild require,” Lutz tells us.

The Bitcoin bounties themselves vary in size based on the specific use case. For a movie screener, they are typically anything between $10 and $50. However, for the most sensitive content, they can be $100 or more.

“We can also adjust the bounty over time based on the customer’s needs. A low-quality screener that was very sensitive prior to cinematic release does not require as large a bounty after cam-rips becomes available,” Lutz notes.

Thus far, roughly 50 Bitcoin bounties have been claimed. Some of these were planted by Custos themselves, as an incentive for the bounty hunters. Not a very high number, but that doesn’t mean that it’s not working.

“While this number might seem a bit small compared to the number of copies we protect, our aim is first and foremost not to detect leaks, but to pose a credible threat of quick detection and being caught.”

People who receive content protected by Custos are made aware of the watermarks, which may make them think twice about sharing it. If that’s the case, then it’s having effect without any bounties being claimed.

The question remains how many people will actively help to spot bounties. The success of the system largely depends on volunteers, and not all pirates are eager to rat on the people that provide free content.

On the other hand, there’s also room to abuse the system. In theory, people could claim the bounties on their own eBooks and claim that they’ve lost their e-reader. That would be fraud, of course, but since the bounties are in Bitcoin this isn’t easy to prove.

That brings us to the final question. What happens of a claimed bounty identifies a leaker? Custos admits that this alone isn’t enough evidence to pursue a legal case, but the measures that are taken in response are up to the copyright holders.

“A claim of a bounty is never a sufficient legal proof of piracy, instead, it is an invaluable first piece of evidence on which a legal case could be built if the client so requires. Legal prosecution is definitely not always the best approach to dealing with leaks,” Lutz says.

Time will tell if the Bitcoin bounty approach works…

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

The Pirate Bay Website Runs a Cryptocurrency Miner

Post Syndicated from Ernesto original https://torrentfreak.com/the-pirate-bay-website-runs-a-cryptocurrency-miner-170916/

Four years ago many popular torrent sites added an option to donate via Bitcoin. The Pirate Bay was one of the first to jump on board and still lists its address on the website.

While there’s nothing wrong with using Bitcoin as a donation tool, adding a Javascript cryptocurrency miner to a site is of a totally different order.

A few hours ago many Pirate Bay users began noticing that their CPU usage increased dramatically when they browsed certain Pirate Bay pages. Upon closer inspection, this spike appears to have been caused by a Bitcoin miner embedded on the site.

The code in question is tucked away in the site’s footer and uses a miner provided by Coinhive. This service offers site owners the option to convert the CPU power of users into Monero coins.

The miner does indeed appear to increase CPU usage quite a bit. It is throttled at different rates (we’ve seen both 0.6 and 0.8) but the increase in resources is immediately noticeable.

The miner is not enabled site-wide. When we checked, it appeared in the search results and category listings, but not on the homepage or individual torrent pages.

There has been no official comment from the site operators on the issue (update, see below), but many users have complained about it. In the official site forums, TPB supermoderator Sid is clearly not in agreement with the site’s latest addition.

“That really is serious, so hopefully we can get some action on it quickly. And perhaps get some attention for the uploading and commenting bugs while they’re at it,” Sid writes.

Like many others, he also points out that blocking or disabling Javascript can stop the automatic mining. This can be done via browser settings or through script blocker addons such as NoScript and ScriptBlock. Alternatively, people can block the miner URL with an ad-blocker.

Whether the miner is a new and permanent tool, or perhaps triggered by an advertiser, is unknown at the point. When we hear more this article will be updated accordingly.

Update: We were told that the miner is being tested for a short period as a new way to generate revenue. This could eventually replace the ads on the site. More info may be revealed later.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Bitcoin Anonymity Compromised By Most Vendors

Post Syndicated from Darknet original http://feedproxy.google.com/~r/darknethackers/~3/ONgF504Ytqs/

Cryptocurrency is getting a lot of press lately and some researchers dug a little bit deeper in Bitcoin anonymity as it’s a touted selling point for most cryptocurrencies. It’s not a problem with Bitcoin itself, or any other coin, more the fact that shopping cart implementations and analytics systems aren’t built with the anonymity of…

Read the full post at darknet.org.uk

A Poloniex / Bitfinex cryptocurrency lending bot

Post Syndicated from Григор original http://www.gatchev.info/blog/?p=2074

… offering its services. Its site is http://beebot.zavinagi.org .

The bot already has some clients and manages their loans quite well. (As well as mine.) If you want your crypto to bring you the best interest that can be obtained, with no effort from you at all, be welcome! 🙂

The bot can manage your cryptocurrencies at the popular exchanges Poloniex and Bitfinex. All it needs from you is an API key that allows it to manage loans (and does NOT allow withdrawing or trading the funds!). Has plenty of settings that allow tuning its work to your taste. Has also a lot of loaning-related data, both current and historical, that you can find nowhere else.

Is it good? I believe so. In my comparisons, it appears at least as good as the best and most established lending bots around. Constant tracking of the optimal loan interest is only where it starts. It varies the lending period to ensure biggest probability for and most exposure to high-interest lending. It analyses the situation and tries to predict optimal interest movement. It tries to detect attempts to manipulate the lending interests and takes appropriate measures… The list is pretty long.

The usage tax is 10% of the interest earned by the loans secured by the bot. This is only a small part of the benefits it provides. If you would like to manage through it bigger sums (eg. BTC 100 and up), we can negotiate a lower tax – write me at ‘grigor’ in the site you read this blog post in. 🙂

Steal This Show S03E06: ‘The Crypto-Financier Of The Underground’

Post Syndicated from J.J. King original https://torrentfreak.com/steal-show-s03e06-crypto-financier-underground/

stslogo180If you enjoy this episode, consider becoming a patron and getting involved with the show. Check out Steal This Show’s Patreon campaign: support us and get all kinds of fantastic benefits!

In this episode, we meet Dan Hassan, a very early Bitcoin enthusiast who’s taking a different approach to making use of his cryptocurrency wealth. Instead of moving to Silicon Valley, buying a Tesla and funding dubious startups, Dan’s helping activists and progressives find their feet in crypto.

His aim is to create an extended gang of independently wealthy individuals who can dedicate themselves to disruption and the building of radical, new social alternatives. What could be more STEAL THIS SHOW?

*Please note, although we did manage to screw some crypto tips out of Dan, nothing in this show is to intended as financial advice. These are weird times. Literally no one can predict what’s going to happen!

Steal This Show aims to release bi-weekly episodes featuring insiders discussing copyright and file-sharing news. It complements our regular reporting by adding more room for opinion, commentary, and analysis.

The guests for our news discussions will vary, and we’ll aim to introduce voices from different backgrounds and persuasions. In addition to news, STS will also produce features interviewing some of the great innovators and minds.

Host: Jamie King

Guest: Robert Barat and Rob Vincent

Produced by Jamie King
Edited & Mixed by Riley Byrne
Original Music by David Triana
Web Production by Siraje Amarniss

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Ethereum, Proof-of-Stake… and the consequences

Post Syndicated from Григор original http://www.gatchev.info/blog/?p=2070

For those who aren’t cryptocurrency-savvy: Ethereum is a cryptocurrency project, based around the coin Ether. It has the support of many big banks, big hedge funds and some states (Russia, China etc). Among the cryptocurrencies, it is second only to Bitcoin – and might even overtake it with the time. (Especially if Bitcoin doesn’t finally move and fix some of its problems.)

Ethereum offers some abilities that few other cryptocurrencies do. The most important one is the support for “smart projects” – kind of electronic contracts that can easily be executed and enforced with little to no human participation. This post however is dedicated to another of its traits – the Proof of Stake.

To work and exist, every cryptocurrency depends on some proof. Most of them use Proof-of-Work scheme. In it, one has to put some work – eg. calculating checksums – behind its participation in the network and its decision, and receive newly generated coins for it. This however results in huge amount of work done only to prove that, well, you can do it and deserve to be in and receive some of the newly squeezed juice.

As of August 2017, Ethereum uses this scheme too. However, they plan to switch to a Proof-of-Stake algorithm named Casper. In it, you prove yourself not by doing work, but by proving to own Ether. As this requires practically no work, it is much more technically effective than the Proof-of-Work schemes.

Technically, Caspar is an amazing design. I congratulate the Ethereum team for it. However, economically its usage appears to have an important weakness. It is described below.

—-

A polarized system

With Casper, the Ether generated by the Ethereum network and the decision power in it are distributed to these who already own Ether. As a consequence, most of both go to those who own most Ether. (There might be attempts to limit that, but these are easily defeatable. For example, limiting the amount distributed to an address can be circumvented by a Sybil attack.)

Such a distribution will create with the time a financial ecosystem where most money and vote are held by a small minority of the participants. The big majority will have little to no of both – it will summarily hold less money and vote than the minority of “haves”. Giving the speed with which the cryptocurrency systems evolve, it is realistic to expect this development in ten, maybe even in five or less years after introducing Casper.

The “middle class”

Economists love to repeat how important is to have a strong middle class. Why, and how that translates to the situation in a cryptocurrency-based financial system?

In systemic terms, “middle class” denotes in a financial system the set of entities that control each a noticeable but not very big amount of resources.

Game theory shows that in a financial system, entities with different clout usually have different interests. These interests usually reflect the amount of resources they control. Entities with little to no resources tend to have interests opposing to these with biggest resources – especially in systems where the total amount of resources changes slowly and the economics is close to a zero-sum game. (For example, in most cryptocurrency systems.) The “middle class” entities interests are in most aspects in the middle.

For an economics to work, there must be a balance of interests that creates incentive for all of its members to participate. In financial systems, where “haves” interests are mostly opposing to “have-nots” interests, creating such a balance depends on the presence and influence of a “middle class”. Its interests are usually the closest to a compromise that satisfies all, and its influence is the key to achieving that compromise within the system.

If the system state is not acceptable for all entities, these who do not accept it eventually leave. (Usually their participation is required for the system survival, so this brings the system down.) If these entities cannot leave the system, they ultimately reject its rules and try to change it by force. If that is impossible too, they usually resort to denying the system what makes them useful for it, thus decreasing its competitiveness to other systems.

The most reliable way to have acceptable compromise enforced in a system is to have in it a “middle class” that summarily controls more resources than any other segment of entities, preferably at least 51% of the system resources. (This assumes that the “middle class” is able and willing to protect their interests. If some of these entities are controlled into defending someone else’s interests – eg. botnets in computer networks, manipulated voters during elections, etc – these numbers apply to the non-controlled among them.)

A system that doesn’t have a non-controlled “middle class” that controls a decisive amount of resources, usually does not have an influential set of interests that are an acceptable compromise between the interests poles. For this reason, it can be called a polarized system.

The limitation on development

In a polarized system, the incentive for development is minimized. (Development is potentially disruptive, and the majority of the financial abilities and the decision power there has only to lose from a disruption. When factoring in the expected profits from development, the situation always becomes a zero-sum game.) The system becomes static (thus cementing the zero-sum game situation in it) and is under threat of being overtaken by a competing financial system. When that happens, it is usually destroyed together with all stakes in it.

Also, almost any initiative in such a financial system is bound to turn into a cartel, oligopoly or monopoly, due to the small number of participants with resources to start and support an initiative. That effectively destroys its markets, contributing to the weakness of the system and limiting further its ability to develop.

Another problem that stems from this is that the incentive during an interaction to violate the rules and to push the contragent into a loss is greater than the incentive to compete by giving a better offer. This in turn removes the incentive to increase productivity, which is a key incentive for development.)

Yet another problem of the concentration of most resources into few entities is the increased gain from attacking one of them and appropriating their resources, and thus the incentive to do it. Since good defensive capabilities are usually an excellent offense base, this pulls the “haves” into an “arms race”, redirecting more and more of their resources into defense. This also leaves the development outside the arms race increasingly resource-strapped. (The “arms race” itself generates development, but the race situation prevents that into trickling into “non-military” applications.)

These are only a part of the constraints on development in a polarized system. Listing all of them will make a long read.

Trickle-up and trickle-down

In theory, every economical system involves two processes: trickle-down and trickle-up. So, any concentration of resources on the top should be decreased by an automatically increased trickle-down. However, a better understanding how these processes work shows that this logic is faulty.

Any financial exchange in a system consists of two parts. One of them covers the actual production cost of whatever resource is being exchanged against the finances. The other part is the profit of the entity that obtains the finances. From the viewpoint of that entity, the first part vs. the resource given is zero-sum – its incentive to participate in this exchange is the second part, the profit. That second part is effectively the trickle in the system, as it is the only resource really gained.

The direction and the size of the trickle ultimately depends on the balance of many factors, some of them random, others constant. On the long run, it is the constant factors that determine the size and the direction of the trickle sum.

The most important constant factor is the benefit of scale (BOS). It dictates that the bigger entities are able to pull the balance to their side more strongly than the smaller ones. Some miss that chance, but others use it. It makes the trickle-up stronger than the trickle-down. In a system where the transaction outcome is close to a zero-sum game, this concentrates all resources at the top with a speed depending on the financial interactions volume per an unit of time.

(Actually the formula is a bit more complex. All dynamic entities – eg. living organisms, active companies etc – have an “existence maintenance” expense, which they cannot avoid. However, the amount of resources in a system above the summary existence maintenance follows the simple rule above. And these are the only resources that are available for investing in anything, eg. development.)

In the real-life systems the BOS power is limited. There are many different random factors that compete with and influence one another, some of them outweighing BOS. Also, in every moment some factors lose importance and / or cease to exist, while others appear and / or gain importance. The complexity of this system makes any attempt by an entity or entities pool to take control over it hard and slow. This gives the other entities time and ways to react and try to block the takeover attempt. Also, the real-life systems have many built-in constraints against scale-based takeovers – anti-trust laws, separation of the government powers, enforced financial trickle-down through taxes on the rich and benefits for the poor, etc. All these together manage to prevent most takeover attempts, or to limit them into only a segment of the system.

How a Proof-of-Stake based cryptocurrency fares at these?

A POS-based cryptocurrency financial system has no constraints against scale-based takeovers. It has only one kind of clout – the amount of resources controlled by an entity. This kind of clout is built in it, has all the importance in it and cannot lose that or disappear. It has no other types of resources, and has no slowing due to complexity. It is not segmented – who has these resources has it all. There are no built-in constraints against scale-based takeovers, or mechanisms to strengthen resource trickle-down. In short, it is the ideal ground for creating a polarized financial system.

So, it would be only logical to expect that a Proof-of-Stake based Ether financial system will suffer by the problems a polarized system presents. Despite all of its technical ingenuity, its longer-term financial usability is limited, and the participation in it may be dangerous to any entity smaller than eg. a big bank, a big hedge fund or a big authoritarian state.

All fixes for this problem I could think of by now would be easily beaten by simple attacks. I am not sure if it is possible to have a reliable solution to it at all.

Do smart contracts and secondary tokens change this?

Unhappily, no. Smart contracts are based on having Ether, and need Ether to exist and act. Thus, they are bound to the financial situation of the Ether financial system, and are influenced by it. The bigger is the scope of the smart contract, the bigger is its dependence on the Ether situation.

Due to this, smart contracts of meaningful size will find themselves hampered and maybe even endangered by a polarization in the financial system powered by POS-based Ethereum. It is technically possible to migrate these contracts to a competing underlying system, but it won’t be easy – probably even when the competing system is technically a clone of Ethereum, like Ethereum Classic. The migration cost might exceed the migration benefits at any given stage of the contract project development, even if the total migration benefits are far larger than this cost.

Eventually this problem might become public knowledge and most projects in need of a smart contract might start avoiding Ethereum. This will lead to decreased interest in participation in the Ethereum ecosystem, to a loss of market cap, and eventually maybe even to the demise of this technically great project.

Other dangers

There is a danger that the “haves” minority in a polarized system might start actively investing resources in creating other systems that suffer from the same problem (as they benefit from it), or in modifying existing systems in this direction. This might decrease the potential for development globally. As some of the backers of Ethereum are entities with enormous clout worldwide, that negative influence on the global system might be significant.