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A message appears in crude, Google Translate English, advising that all your files have been encrypted — rendered unusable — and can be restored only if you pay a ransom.

After some back and forth, you pay out in Bitcoin or some other cryptocurrency, most likely to a Russian-based gang. There’s no choice: It’s cheaper and far quicker to pay up than to rebuild a computer system from scratch....

...A few years ago, the ransom may have been a few hundred bucks. In early May, Colonial Pipeline shelled out $5 million to the DarkSide ransomware gang to get oil flowing through its pipes again. (Some was recovered by the Justice Department.) In June, the meat processor JBS paid $11 million to the Russian-based REvil (Ransomware Evil) gang...

...The other critical factor in ransomware is cryptocurrency. By no coincidence, there were few ransomware attacks before Bitcoin came into being a dozen years ago. Now, cybercriminals can be paid off in a currency that’s hard to track or recover, though the U.S. government managed to do just that when it recouped $2.3 million of the Colonial Pipeline stash.

https://www.nytimes.com/2021/07/31/opin ... d=wa-share

This seems reason enough to outright ban it all.

@Chenda

Ransomware would still exist without cryptocurrency. And even if you could ban cryptocurrency, criminal hacker groups by definition would not abide by such a ban. This argument would be similar to banning cash for everyone because drug dealers use it or banning sidewalks because criminals use them to get around.

The rise of ransomware has more to do with the proliferation of standardized hacker tools and libraries in recent years, so that you don't even need to have much technical skill to pull of an attack. Another reason its proliferated is because it works just like any other crime wave; once one person demonstrates it as a viable technique, there will be countless others who simply copycat it (e.g. see the rise of "flash mob" style retail theft in the last year). A third reason is because governments and businesses now store nearly all of their valuable data digitally, but do not have the resources, will, or know how to secure it properly.

@white belt - true although if victims of ransom attacks were legally unable to pay the ransom through crypto currency (or even if the money was traceable and more recoverable) it would disincentivse the attacks. As the article notes the scale of the attacks has increased since crypto currency arrived. It wouldn't be a panacea, attacks would likely continue for malicious or geo-political reasons. China and Russia clearly tolerate or even encourage it for diplomatic leverage, and I would assume western governments are legally and ethically restrained from retaliating in kind.

Even if it wasn't effective, it may serve as a good reason (or excuse) for governments to further regulate or ban them, rightly or wrongly.

chenda wrote: ↑

Sat Jan 22, 2022 2:37 pm

@white belt - true although if victims of ransom attacks were legally unable to pay the ransom through crypto currency (or even if the money was traceable and more recoverable) it would disincentivse the attacks.

I don't think it would.... it would just change how the attacks are monetized. Crypto is not required the attack itself; those are usually the result of poor security practices.

Decrypting encrypted files is basically just selling data back to it's owner. This is expeditious because there is a default buyer. If this avenue were no longer available (or difficult), the attacker would monetize some other way, such as:

- selling data in bulk on the black market
- selling business data to a competitor
- selling personal data to a "background check" site
- monitoring sensitive data over time and extracting value through trading (in the case of insider information) or identity theft (for personal data)
- performing the attack as corporate or governmental espionage
- straight up bank fraud

chenda wrote: ↑

Sat Jan 22, 2022 2:37 pm

Russia clearly tolerate or even encourage it for diplomatic leverage

Today I read "cyber security law in India is a joke" by some startup founder so I suppose it is not so much that they encourage it but instead simply don't know how to contain. Topmost cause of suicide in Russia is unemployment and it takes a certain type of person- highly educated in subjects related to these things, likely in a university setting to know other people who are to form a gang, unemployed for enough number of years to be loose on morals as well as have enough time to plan and orchestrate an attack. Likely reason why it is mostly scam callers who prey on individuals that are notorious in India, rather than high profile ransomware targeted at organizations, is because by the time someone gains just enough technical knowledge to be dangerous is when they get employed.

fiby41 wrote: ↑

Sun Jan 23, 2022 7:23 am

takes a certain type of person- highly educated in subjects related to these things, likely in a university setting to know other people who are to form a gang,

Yes or possibly recruited and operating under the protection of a larger criminal organisation. Putin's toleration of rampant organised crime both surprises and disappoints me. Putin is not personally corrupt and apparently has distain for the lavish lifestyles of the oligarchs, who have been brought under tighter control but not exactly 'liquidated' as he once promised they would be.

Unlike Mr Xi, who periodically likes to crush organised crime in China to remind everybody who's boss.

Absolutely stunning to see this level of volatility for such a large asset class. This makes the commodity market look like fixed income investing lol

BTC about half of ath now. My portfolio up about 70% from a year ago. Added to BTC this past week, made enough on my network growth coins, got like 5 -10 years expenses in BTC now depending on if I'm tight or lavish. Also set up an emergency fund in UST.

There are now 12,657 different kinds of crypto-currencies. Which one will ultimately win? Insofar "they all win" then for practical usage there would need to be some kind of automated currency exchange. Not very convenient to have to quote a price for a good or a service in 12000+ different currencies. Insofar such an exchange doesn't exist, Gresham's law would enter and effectively make unused coins worthless, since they crypto currencies aren't mutually fungible (unlike e.g. precious metals).

Keeping track here.
https://www.coingecko.com/

Assuming cryptocurrency will give a future world currency (no comment) there is likely to be one dominant cryptocurrency for the whole world, which was broadly the situation during the gold standard era.

Other chains may trade if they have some particular use case but not at a large premium to utility, as the USD does.

Ego wrote: ↑

Fri Feb 18, 2022 12:41 pm

https://coinmarketcap.com/alexandria/ar ... oken-swaps

If this is like the regular currency market this would expose holders to counterparty risk, specifically, whether the service that sold the swap can actually deliver the underlying. They're have to work hard unloading their risk. The swap system itself would risk winding up leverage as one party unloads risk to the next which unloads it again ...

It's beginning to look more and more like the regular financial system just like the internet is increasingly resembling cable tv and old school phone service.

I’m personally of the belief that in the long term you’re going to see fragmentation into a few chain ecosystems and their roll ups (so like AWS v Azure v Google Cloud). There can be many tokens on a single ecosystem representing apps and services on that ecosystem (see e.g all the ERC-20 tokens).

Exchanges between these ecosystems will be best dealt with centralized exchanges. For what it’s worth, Binance has the lead here due to low transaction costs and focus on developing markets. People are going to spend a lot of time trying to make trustless cross-chain bridging happen at scale but I doubt that’ll end up going far (security risk).

A lot of tokens are ultimately going to end up worthless from lack of liquidity.

jacob wrote: ↑

Fri Feb 18, 2022 1:01 pm

The swap system itself would risk winding up leverage as one party unloads risk to the next which unloads it again ...

Decentralized cross-chain swaps use smart contracts generated by the individuals directly from their wallets. As I understand it, there are very low (or no) fees other than the fees from the blockchains involved and both people in the transaction commit their funds to the contract within a particular period of time thereby eliminating counterparty risk (at least I believe it does).

An example https://www.catamaranswaps.org/

WFJ wrote: ↑

Fri Feb 18, 2022 4:59 pm

All cryptos will eventually be worth as much as Hunter Biden's art collection. There will be volatility, but this is the eventual equilibrium value.

This is the case for everything.
I assume that you mean before USD does. I'm pretty sure that for btc, you're wrong, but we'll see. You show so much confidence that i suspect you of trolling. But with Canada allowing itself to freeze bank accounts on the fly, we might be able to make a lot of intersting observation about crypto usecase and how govt reacts to it.

Or AI could eventually just price every possible good and service in terms of every possible good or service. Humans need money to mediate barter, but maybe AI won't. For instance, if you were a very smart SmartFurnace wouldn't you mostly be interested in token tied to Natural Gas futures?

State currencies do not have an indefinite lifetime either as is clear from a long view study of history.

Most historical civilizations have transitioned from gold-backed currency to scrip over their lifecycle.

Many cryptocurrency advocates look like fanatics to me who do not look objectively at the risk involved in their own investments, but the problem they are trying to solve is real and important (unlike beanie babies, tulips, ...)

I had this passed to me earlier this week. The author is one of the early creators of decentralized consensus proof of work systems (half a decade before bitcoin) among a host of other accolades.

https://blog.dshr.org/2022/02/ee380-talk.html?m=1

Fun quotes:

With regards to e waste and bitcoin: “ That's an average of one whole MacBook Air of e-waste per "economically meaningful" transaction.”

With regards to dropping a new cryptocurrency that used proof of space (ssd and hdd in particular for this quote): "we've kind of destroyed the short-term supply chain"

With regards to immutability and crime: “ Vulnerabilities are equally inevitable, as we see with the $38M, $19M and $130M hacks of Cream Finance last year, the $115M hack of BadgerDAO, the $196M hack of BitMart, the recent $323M hack of Wormhole, and of course the $600M hack of Poly Network.”

With regards to pseudonymity and not anonymity: “ 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity.
In other words, 90% of Bitcoin's carbon footprint is used in a partially successful attempt to compensate for its deficient anonymity.”

With regards to decentralization (and btc, eth): “ It isn't just the mining pools that are centralized. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity.”

“ The centralization of Ethereum's mining pools and exchanges enabled Poly Network to persuade them to blacklist the addresses involved. This made it very difficult for the miscreant to escape with the loot, much of which was returned. But it also vividly demonstrated that in most blockchains it is the mining pools that decide which transactions make it into a block, and are thus executed. The small number of dominant mining pools can effectively prevent addresses from transacting, and can prioritize transactions from favored addresses. They can also allow transactions to avoid the public mempool, to prevent them being front-run by bots.”

Overall paper conclusions:
“ Although the techniques used to implement decentralization are effective in theory, at scale emergent economic effects render them ineffective. Despite this, decentralization is fundamental to the cryptocurrency ideology, making mitigation of its externalities effectively impossible. And attempts to mitigate the externalities of pseudonymous cryptocurrencies are lijkely to be self-defeating. We can conclude that:
Permissioned blockchains do not need a cryptocurrency to defend against Sybil attacks, and thus do not have significant externalities.
Permissionless blockchains require a cryptocurrency, and thus necessarily impose all the externalities I have described except the carbon footprint.
If successful, permissionless blockchains using Proof-of-Work, or any other way to waste a real resource as a Sybil defense, have unacceptable carbon footprints.
Whatever Sybil defense they use, economics forces successful permissionless blockchains to centralize; there is no justification for wasting resources in a doomed attempt at decentralization.”

Super interesting talk / blog / paper and I think worth a read if you have the 30 mins and are interested in the externalities of crypto, and how inbuilt mechanisms are causing centralization of networks that are supposed to be “decentralized” by design. Any of the folks here that are more into the crypto space think he’s heavily misrepresenting some of this stuff in his criticisms?

Jean wrote: ↑

Sat Feb 19, 2022 3:34 am

This is the case for everything.
I assume that you mean before USD does. I'm pretty sure that for btc, you're wrong, but we'll see. You show so much confidence that i suspect you of trolling. But with Canada allowing itself to freeze bank accounts on the fly, we might be able to make a lot of intersting observation about crypto usecase and how govt reacts to it.

Not trolling.

All assets have a long-term value of Zero, but some assets provide cash flows before they eventually end up worthless, except whale teeth.

As long as Socialist can find a boot and a crypto holders face, they can take it away in an instant. The use case for end of world is delusional for crypto holders as all are dependent on a large network which can/will be shutdown during chaos.

People still trade tullips and Beenie Babies and are sitting on paper losses.

Heard about this watching the Olympics speed skating where a family still sells tulips.

https://www.bing.com/videos/search?q=du ... &FORM=VIRE

Full disclosure, I made enough money to pay for a lifetime of vacations in tulips/crypto trading in 2016-2017, also did the same with penny stocks in 2000-2001. Have no problem dabbling in bubbles, but don't drink the Kool-Aide or confuse luck with skill.

[Moderator: Deleted a bunch of political dog whistling. It doesn't really add anything but extra work for me.]