What is a 51% Attack? 1 24

With the constant talk about the blockchain being immutable, one could be forgiven for thinking that it is, in fact, impossible to alter a transaction made on the blockchain. There are, however, certain circumstances in which this is not entirely true. And one of them is called a 51% attack.

51% Attack Explained

Bitcoin and other cryptocurrencies are produced by miners who contribute their computing power and technical expertise to the network. Since the blockchain is run by consensus, in which there is no centralized owner, a 51% attack is when an individual miner (or group of miners) manages to control more than 50% of a network’s computing power.

This would allow the miner (often referred to as a bad actor) to disrupt the network and rewrite history if they so desired, making the blockchain, in fact, mutable.

So, The Blockchain is Insecure Then?

Most cybersecurity experts agree that the blockchain is to all intents and purposes the most secure technology the world has ever seen. Thanks to its decentralization, there is no single point of failure, in which one database could be hacked. There is also no way of tampering with records without rewriting the whole network, unlike our current system, in which transactions can be modified an unlimited amount of times.

But, there is the potential for a 51% attack.

Why aren’t people more concerned about such a threat? Mainly, because if we’re referring to a massive network like Bitcoin, because it’s night impossible to pull off.

To gain the majority of such a gigantic network, the perpetrator would need vast sums of money, mining hardware, and electricity to do it. As more and more miners join the Bitcoin network, they bring their computational power with them. And 51% of the computational power of the Bitcoin network is rather a lot, to say the least.

And in actual fact, all they would achieve in doing so is devaluing the currency, which would leave them with less money than the fiat currency they had invested in the attack. So, the financial incentive to carry out such an attack is simply not there. The benefit of carrying out a 51% attack then, is significantly outweighed by the cost and logistical hassle.

Other Cryptocurrencies and a 51% Attack

Altcoins are more susceptible to a 51% attack, as they are not as mature nor have as much computational power as bitcoin. But there are responses to a 51% attack that a cryptocurrency under attack can apply. The most common is known as a “hard fork.” Forking is essentially another way in which the blockchain can be changed and history rewritten, but it is done with the consensus of the majority.

For example, Ethereum decided to hard fork its entire chain to recover after the DAO ‘hack’ in 2016. The majority of Ethereum miners created a fork to keep the blockchain’s history intact, but erase the hack and make it look as if the DAO attack never happened.

This led to a split among those who were not in agreement, and the emergence of Ethereum Classic, which trades at a fraction of Ethereum as we all know it. While purists are against the notion of forking to right a wrong (believing that the “code is law”), forking is starting to become common practice. Had it not been for forking, after all, Ethereum would surely have collapsed.

Similarly, a recent possible 51% attack on the Verge network produced uncertainty and concern about this privacy-oriented cryptocurrency. Close to $1 million of the currency was stolen as one single miner was able to trick the system into thinking it had the consensus. While the Verge team claim to have the “bug” under control, it’s more than likely they will have to carry out a hard fork to prevent attacks like this from happening in the future.

So, just when you thought you were getting your head around the blockchain and getting to know its undisputed qualities, you found out there’s more to this beast than meets the eye. The blockchain is not, in fact immutable. However, the chances of a 51% attack on a major network are smaller than an ant moving a mountain.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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The Patent That Wants to Fix Crypto’s Volatility 0 52

The number of blockchain-related jobs posted on LinkedIn more than tripled last year, according to CryptoCoin News. And blockchain patent filings more than doubled. Companies and individuals alike are innovating, exploring the blockchain’s well of possibilities. Major fintech companies, meanwhile, are gobbling up blockchain patents like they’re going out of style. But cryptocurrencies themselves still have yet to see a mainstream embrace.

The main problem with crypto right now is the same problem people have been talking about since Satoshi Nakamoto said Let there be Bitcoin: volatility. And ever since Bitcoin’s dramatic rise and fall around the turn of last year, cryptos have become virtually synonymous with wild fluctuations.

This reputation has given Bitcoin specifically, and cryptos in general, a mixed reputation. By now we’ve all heard the songs of praises from evangelists and the sour sneers of financial titans alike. Crypto is exciting because it’s unstable; crypto is unrealistic for the same reason.

The Primary Criticism of Cryptos

According to Eric Lamison-White, founder of the investor’s crypto intel platform Pareto Network, volatility is the “primary criticism of cryptocurrencies.”

But he doesn’t think it has to be that way. What if you could stabilize your crypto accounts? Lamison-White says the risks of owning cryptos are “easily mitigated by a variety of hedging techniques that are available in all other asset classes.”

He proposes treating crypto accounts like more traditional assets. “Hedging with options, futures and swaps allow for stable value or any risk profile that an owner or even a speculator would desire.”

That’s the idea behind his patent, filed in 2014, for a structure of interconnected accounts. The system “removes volatility from owning cryptocurrencies,” Lamison-White says, transferring its fluctuations into a hedge account. Here’s how it works.

Lamison-White’s System

The system requires at least two accounts: one for your cryptos and one you’ve funded with fiat currency, let’s say $400 US dollars. These accounts connect to a network of decentralized nodes, which measure the amount of cryptocurrency you have from moment to moment. If there’s any drop in the crypto’s value, the system automatically deducts from your $400 in the other account and transfers it to compensate. When the value of your crypto goes back up, the system re-deposits back into your fiat account.

This holds the value of your crypto assets steady, while transferring its volatility to your hedge account.

What makes it unique compared to other trading systems is that crypto assets can be divided into infinitely small portions. “A futures contract on oil costs $80,000 for example, although a trader only needs to put up maybe $4,000 as a minimum,” Lamison-White says. “This is because the contract represents the price of 1,000 barrels of oil or something crazy.” He notes that even hedging stocks are usually offered in units of 100 or 1,000.

Not so with crypto, where the “infinite divisibility of the asset itself” makes hedging much more finely tuned. Because cryptos are pure math instead of physical assets, “arbitrary sized contracts can be traded just as easily with larger contracts.” One future could represent one bitcoin, for example, but you can also trade in .01 increments. With fractional futures and options, people with very small amounts of cryptocurrency can be shielded from price fluctuations in a way that had only been available to the wealthiest and investment banks for most of the last millennia.

The System at Scale

The system gets even more interesting when you make it scalable. According to Lamison-White, you could have multiple people funding and connecting to the same hedge account, each using it to stabilize their own crypto accounts. Alternatively, you could connect multiple hedge accounts to a single crypto account. Suddenly the possibilities extrapolate, like tinkertoys, developing into an interconnected network of crypto- and fiat-funded accounts, with a variety of owners controlling their assets at a variety of access points, everything regulated with the intelligence and transparency of a decentralized ledger.

Patents Like This are Attracting Corporate Giants

There’s a feeding frenzy going on for patents like these. Visa filed a patent for a B2B blockchain payment system, Mastercard developed its own blockchain patent for anonymous transactions, and Wal-Mart has come out with a few as well. But it’s Bank of America that’s gobbling up the most. With claims to at least 43 live blockchain patents, the financial giant holds more than any other person or company.

Whether they’re just trying to get a leg up on the future of tech, or positioning themselves to harangue the little guy with barrages of lawsuits for intellectual property rights, we’ll just have to wait and see.

Whether or not Lamison-White anticipated the blockchain patent arms race, he was ahead of the curve, filing for his patent in 2014. It could be the thing to finally put skeptical minds to rest about the viability of crypto assets. And with big financial institutions like Bank of America placing a premium on innovative blockchain patents, he may have spun ether into gold.

After the Death of Net Neutrality, We Need a Decentralized Internet 0 77

Net neutrality died more quietly than expected. It’s been almost two months since the FCC’s ruling to make internet access vulnerable to corporate meddling, thanks to FCC chairman and Verizon advocate Ajit Pai. And not much seems to have changed on the web browsing citizen’s end. Major ISPs Comcast, Verizon and AT&T have all indicated that they have no plans to block or throttle traffic, or to prioritize paid content. So rest easy, dear ones. The sharks have promised not to bite.

Of course, that’s really no reason to celebrate. As of June 11th, “there is nothing legally preventing companies like Comcast, Verizon, and AT&T from arbitrarily censoring entire categories of apps, sites and online services, or charging Internet users expensive new fees to access them,” notes Evan Greer, deputy director of Fight for the Future, a nonprofit advocating for digital equality.

Fight for the Future is just one organization working for a free digital world. All around, and in part thanks to the FCC’s ruling, people are switching on to the notion that open connectivity should be a right and not a privilege. And some folks are getting a crazy idea: if we can’t have net neutrality, we may just have to build another internet.

Building Our Own Internet

That’s exactly what people have been doing in Detroit. To combat the emergence of a “digital class system,” and in response to the scarcity and prohibitive costs of ISP connection, residents and volunteer members of the Equitable Internet Initiative, or EII, are building their own internet infrastructure.

Over on the Pala Reservation in Southern California, meanwhile, indigenous communities are tired of waiting for a connection. So they’re taking matters into their own hands and repurposing unused analog TV channels to broadcast their own free and neutral internet across the rez. They call it Tribal Digital Village.

Efforts like the EII and Tribal Digital Village are proving that we can take control of our connectivity and decouple it from the stratification of economic privilege.

Reinventing the Internet Altogether

Radical community efforts to build DIY networks are inspiring and powerful. But perhaps we can go even farther. The internet still works on an old model that has plenty of room for improvement. Let’s say you’re sitting in a public library, messaging your zine collaborator across the table. There’s no direct internet connection between your phones, so your message has to go up into the nebulous cloud of internet before it bounces back down to their phone. Not entirely efficient, considering they’re sitting right there.

If you had a direct connection, the signal could just travel across the table. That would be possible using a mesh network, like the one proposed by RightMesh. In their mesh network model, every device becomes a hotspot in a decentralized connective network.

Why volunteer your device as a public hotspot? Because you get tokens, of course. This is blockchain! Like the EII and Tribal Digital Village, this is a cooperative and participatory system that relies on no centralized authority (like a corporate ISP). Everyone volunteers their device as a hotspot, gets rewarded with tokens, and just like that, we have a decentralized internet.

Without the need for ISPs, we would be free from Verizon, Comcast, and AT&T. We could run open-armed through the proverbial fields of digital wildflowers. The possibilities of this go well beyond urbanite convenience. A global mesh network could bring internet connection to any part of the globe where there are phones—even phones not connected to wifi. In this system, the phones create the wifi.

An Off-the-Grid Internet

RightMesh’s stated goal is to “connect the next billion people and lift 100 million out of poverty.” They claim to be the first P2P network that requires neither infrastructure nor network connectivity to operate.

That said, they’re not alone. Blockmesh is doing something similar. Moeco’s ‘global IoT connectivity platform’ uses mesh network principles for IoT gadgets. And Open Garden allows ISP customers to ‘sell’ your underutilized connection (extra bandwidth at home, or unused data from your mobile plan) to your neighbors for tokens.

All these ideas are packed with possibility. But the point is, with the grassroots efforts of groups like the EII and Tribal Digital Village, and with blockchain innovation pushing the definition of the internet forward, we’re looking at a future where the connection is universal, accessible, fast, cheap, self-generating, decentralized and off the grid. Someday soon we might be thanking the FCC for spurring these advances.

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