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Quantum Resistant Ledger Readies For Battle Against Quantum Computing, Hires Testers And Seeks Feedback

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Quantum Resistant Ledger (QRL), a blockchain technology designed to mitigate quantum computing attacks, has recruited testers to create 50 nodes and released an updated white paper by founder Peter Waterland. QRL is seeking comment on Slack prior to a presale.

Waterland has commented about the bitcoin scaling issue and the danger posed by quantum computing attacks on various bitcoin forums in recent years.

There are no known bitcoin quantum attacks at present. But if a quantum computer is created that can break ECDSA, one of the most common signature schemes, then all existing ledgers are susceptible to attack, according to Waterland.

Founder Sounds Warning

“Classical computers cannot break ECDSA through brute force attacks – there isn’t enough energy in the sun to guess a single private key correctly,” Waterland told Hacked.

“But a quantum computer may use Shor’s algorithm to reconstitute a private key from a public key. And the last time I checked, nearly half of all bitcoin addresses had revealed public keys. The problem is that when a bitcoin or Ethereum transaction occurs, the public key of the sending address is revealed and stored for all time in the blockchain. So at some point in the future, those addresses (currently nearly half) are at risk of quantum theft.”

“Once the public testnet has been hardened and is sufficiently stable, we will announce a launch date for the mainnet release,” Waterland said.

“It is exciting to be the first blockchain in the space to offer ledger-wide post-quantum security to users. Anyone interested may read the whitepaper or inspect our github repository via http://theqrl.org. We currently have a team of four devs, but are always looking for more volunteers.”

Jomari Peterson, a strategy, operations and development expert working with QRL, noted a vibrant community, along with the implementation of an extended merkle signature scheme (XMSS), is key to securing the technology’s future. For the system to be secure, it should not be feasible to break within the next 50 to 100 years.

The tester and public participation are expected to create a scalable and efficient quantum resistant security standard.

A small core of private investors (early bitcoiners and interested parties) are funding the research and development of the open source project, Waterland said.

How It Began

QRL began as a foray into coding a library of post-quantum secure hash-based digital signatures such as Lamport, Winternitz and Merkle Signature Scheme, he said. It then developed into a functional prototype ledger aiming to experiment with the use of post-quantum secure signatures in a live blockchain environment.

Development started around July 2016.

“After discussing post-quantum signatures with some members of the academic community, I realized that the EMSS would be an excellent design choice for a potentially successful blockchain ledger,” Waterland said.

“Over the last six months the QRL has developed gradually and now features fully integrated XMSS transactions with keys generated via a pseudorandom number function to allow much smaller keys and transaction sizes, as well as deterministic wallet recovery.”

While it was initially secured by proof-of-work, the team has moved towards a final proof-of-stake algorithm design.

“An ideal of the project is to allow all nodes to earn passive income, and several members of the team already have the QRL test node running from Raspberry Pi’s, so the hardware requirements are minimal,” Waterland said.

How It Works

The QRL uses a block selection algorithm based upon the closest hash of published reveal hashes from each stake validator (from a pre-signed iterative hash chain, logged to the blockchain as a transaction in the previous epoch) to a pseudo-randomly generated 32-byte number.

“Our latest design is extremely resistant to gaming and collusion as well as providing defenses against block withholding and Sybil stake attack strategies,” he said.

“We plan to integrate a proof-of-stake based voting/governance system regarding regular hard fork upgrades.”

The major aim of the QRL is to extend the longevity of absolute cryptographic security users rely upon with existing chains such as bitcoin well into the far future.

There are some challenges to working with hash-based signatures like XMSS – namely the size of signatures (and therefore transactions) is far larger than for a conventional ECDSA chain like Bitcoin or Ethereum, but also the signature scheme is stateful – so a signature can only be used once safely. The blockchain must store all public keys signed for an XMSS address forever.

Existing Schemes Are Vulnerable

The commonly used ECDSA, DSA and RSA signature schemes are vulnerable to quantum computing attack, the white paper noted. But a quantum resistant blockchain ledger can counter a sudden, non-linear quantum computing advance.

To spend unspent transaction outputs from a bitcoin address, it is necessary to create a transaction containing a valid elliptic curve signature from the private key for the specific bitcoin address. The chance of a specific bitcoin private key collision is one in 2,256. But when a transaction is signed, the sender’s ECDSA public key is revealed and stored in the blockchain. The best practice is not to reuse addresses. However, as of November 2016 49.58% of the bitcoin ledger is held in addresses with public keys that are exposed.

A quantum computer could theoretically reconstitute the private key given an ECDSA public key.

It is not certain how much quantum computing has advanced or that any breakthroughs will be publicized to allow cryptographic protocols to be made post-quantum secure.

Bitcoin could be an early target of a quantum computer.

If a significant quantum computing advance became public, node developers could deploy quantum-resistant cryptographic signature schemes into bitcoin and advise users to move from ECDSA-based addresses to new quantum-safe addresses.

A silent, non-linear quantum computing advance followed by a nuanced attack on bitcoin addresses with exposed public keys would be more problematic. The thefts could devastate the bitcoin exchange price due to heavy sell pressure and a loss of confidence in the system. The role of bitcoin as a store of value would suffer.

Crypotgraphic Schemes Offer Solutions

Several cryptographic systems are believed to be quantum-resistant, the white paper noted. These include lattice-based cryptography, hash-based cryptography, secret-key cryptography, code-based cryptography and multivariate-quadratic-equations cryptography. All are believed to resist both classical and quantum computing attack due to long key sizes.

One-time signatures offer satisfactory cryptographic security for verifying and signing transactions, but they can only be used once safely. Extending the signature scheme to incorporate more than one valid one-time signature (OTS) signature for each ledger address is a solution. A binary hash tree called a merkle tree can achieve this.

The Merkle Tree’s Role

A merkle tree is an inverted tree with parent nodes computed by hashing the linking of child sibling nodes upwards in layers to the root. Any node’s existence can be proven cryptographically by computing the root.

One strategy to defer computation during tree (and key) creation and extend the number of OTS keypairs available is to use a tree that is itself composed of merkle trees – a hypertree.

The cryptographic security of the signature scheme is secure against classical and quantum computing attack in the design of QRL.

QRL proposes an extensible, signature scheme composed of chained XMSS trees.

As the number of trees within a hypertree increases, signature and key sizes grow linearly, but the signature capacity grows exponentially.

A Public Blockchain

QRL is planned as a public blockchain secured by a proof-of-stake algorithm. Each stake validator signs a transaction containing the final hash of an iterative chain of length 10,000 hashes. With the stake transaction confirmed, each node can connect the cryptographic identity of the stake address to the hash chain for the next epoch.

The bigger transaction sizes in comparison to other ledgers require a transaction fee for each transaction. The market should set the minimum fee miners will accept. A minimum value will be set at the protocol level. As a result, miners will order transactions from the mempool to add to a block at their discretion.

The QRL will use a token as the base currency unit.

Like bitcoin, QRL will have a fixed upper limit to the coin supply. A smoothly exponential decay in the block-reward is favored up to the coin supply ceiling. This will remove the volatility associated with the bitcoin “halving” phenomenon.

Also read: Quantum computers will destroy bitcoin, scientists warn

Other Crytocurrencies Vulnerable

Bitcoin isn’t the only cryptocurrency at risk to quantum computer attack.

Other major ledgers use elliptic curve cryptography for their signatures within transactions.

“They are therefore all vulnerable to a quantum computing advance,” Waterland said.

“An important point to consider is that if just 10 or 20% of addresses remain in normal ECDSA, addresses, then funds can be stolen and the value of the whole ledger sent to zero by an attacker with a quantum computer,” he said.

“Some addresses being secure doesn’t protect a ledger with mixed address types. It was for this reason that we decided to create a ledger which is specially designed to be completely secure against classical and quantum computing attack – even if this poses some design challenges!”

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Are Crypto News Sites Allowing Freedom Of Thought?

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As the interest in cryptocurrencies has exploded during the past couple years, crypto news sites have been on the rise.  These sites are quickly becoming an invaluable resource for traders who enjoy learning about new crypto projects and trade ideas.  The content distributed through these platforms is typically created by a combination of full-time staff and guest contributors/bloggers.  Many of these writers also have a lot of experience in crypto trading so the articles are extremely beneficial for readers.

One thing that readers should always keep in mind is that the content from these sites normally represents the independent thoughts of the writer.  This is important because writers/traders aren’t infallible.  They can make mistakes like all of us.  So, the best approach for readers is to try to attain a diversity of thought.  A diversity of thought means to gather as much information as possible, from a wide selection of sources.  This is absolutely necessary before reaching a conclusion on a certain topic.

But what happens when a website prevents writers from writing about specific topics?  A colleague of mine recently tried publishing an article at Coinnounce.  The writer wanted to publish an article about the buying opportunity that the Bitcoin crash was affording investors.  Normally an article is rejected for legitimate reasons such as poor grammar, plagiarism, or promotional work.  Unfortunately, Coinnounce cited that the website was bearish on Bitcoin and that they wouldn’t be publishing bullish articles.  Even more troubling is that when Bitcoin rebounded in price, Coinnounce reached out to my colleague and told him they would now be willing to publish the bullish article.

When I found out about the rejection and the reason given, I decided to browse the Coinnounce website (which I had never heard of) to find out what kinds of articles were being published.  And sure enough, the articles were nearly all bearish in some fashion.  The problem with this approach is that nobody knows where Bitcoin is going.  It’s 100% speculation.  What actually matters is the logic presented in the article that helps back up a prediction.  So, while Coinnounce is free to run its business as it sees fit, the website (or the articles published) should have a disclaimer that the information presented represents the thoughts of the website’s owners/editors.  Otherwise, readers may not have a clear understanding of what is being presented.

The point of this article is not to call out Coinnounce.  Rather, the point is to make sure readers are aware that some sites may have different motivations than others.  It’s important to read from a variety of sources to get as much information as possible.  This is true not just for cryptocurrency markets, but for everything in life.  I’m proud to write for Hacked which runs an open and honest platform.  The articles written do represent the thoughts and feelings of the writers.  So, while the editors may not always come to the same conclusions that the articles do, they will never suppress freedom of thought.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Are Cryptocurrency Exchanges Asking Low Volume Coins For Bribes?

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Over the last few years, as cryptocurrency trading volume has soared, there has been tremendous growth in the number of exchanges.  Crypto trading volume really took off in 2017 as retail traders and institutional money flooded into the market.  This presented an opportunity for savvy entrepreneurs to stake their claim and start an exchange.  Unfortunately, not all exchanges are created equal.  Crypto trading is still an industry in its infancy which means it’s not regulated nearly as tough as many other industries.

Big Exchanges Charge Expensive Listing Fees

During the crazy bull run that lasted through the very early part of 2018, crypto projects were desperately trying to get listed on the biggest and most active exchanges.  The most coveted exchanges include Binance, Bittrex, Poloniex, Kraken, and BitStamp.  And while these exchanges certainly offer an attractive landing spot, there is a major problem; the listing fee.  As these exchanges have grown and gained power, only projects that are willing to pay an expensive fee receive a listing.

In August, Bitcoinist.com ran a story about the reported listing fees that Binance was charging.  Christopher Franko, the co-founder of Expanse, submitted a listing request in early August.  According to Franko, Binance contacted him and requested a $2.6 million payment to list his coin.  This approach is problematic for small projects as they can’t afford to pay the fee. Only the biggest projects which are extremely well capitalized and have money to burn can get listed on the most popular exchanges.

In October, Binance issued a listing fee update.  The company now claims that the exchange “will make all listing fees transparent and donate 100% of them to charity.  Project teams will still propose the number they would like to provide for a “listing fee,” or now more appropriately called a ‘donation.’ Binance will not dictate a number, nor is there a minimum required listing fee.”

Small Exchanges Offer An Alternative

Crypto projects that aren’t as resource rich will have a very difficult time getting listed on the most popular exchanges.  The expensive initial listing requirement will consequently relegate many projects to listing on smaller exchanges such as KuCoin, OKEx, and Cryptopia.   While there is nothing wrong with these exchanges, volume isn’t as pronounced as it is on the largest exchanges.

Instead of generating revenue from expensive initial listing fees, these small exchanges rely on trading volume for the bulk of their revenue.  From 2017 through the early part of 2018, that wasn’t a problem.  Cryptocurrency trading volume exploded as retail and institutional money flooded into the market.  Both traders and exchanges were reaping the benefits.  But now that crypto has been in a prolonged bear market, volume has cooled off.  Some of the small exchanges now rely on other gimmicks to generate revenue.

Many of the gimmicks center around advertising/marketing expenses.  For example, on Cryptopia, companies can pay fees to have their coin advertised on the trading landing page.

Bribes To Maintain Listing

While there is nothing wrong with generating revenue from advertising, there have been some troubling reports lately about exchanges asking coins to engage in “liquidity management.”  Rahul Sood, the Chief Executive Officer of Unikrn, recently took to Twitter to let the world know that both OKEx and KuCoin had delisted his UKG token because he refused to engage in liquidity management.

Sood made it clear that he was entirely focused on building his business and not trying to “game” volume to appease the likes of OKEx and KuCoin.  And Sood certainly isn’t the only crypto executive who’s voicing his frustration.  David Koepsell, CEO of Encrypgen, also stated on Telegram that Encrypgen’s token, DNA, was delisted on KuCoin because he refused to pay a bribe.

It’s unclear what bribe KuCoin was asking for but most likely related to a fee for “market making.”  Unfortunately, given the current lack of trading volume in the crypto markets, these small exchanges have had to resort to questionable tactics to bring in additional revenue.

Conclusion

KuCoin and OKEx don’t appear to be playing the long game.  They are delisting solid coins like UKG and DNA that refuse to pay bribes.  While that may not be a problem now, it may become one in the future when the volume returns to the alt market.  Projects that were delisted for refusing to pay a bribe won’t return and, instead, will take their business elsewhere.

One bright spot in the story is that Cryptopia doesn’t appear to engage in the same questionable tactics.  While the company does charge a small fee for an exchange listing, there are no reports of demanding coins pay a market making fee to stay listed.  Since the OKEx and KuCoin delisting, Encrypgen’s volume has exploded on Cryptopia.  Only time will tell but Cryptopia may end up being the big winner in all of this.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4 Reasons Why Traders Shouldn’t Miss Out On ABCC Exchange

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As most crypto traders are aware, 2018 has been a bloodbath beyond anyone’s wildest imagination.  Most, if not all, gains from 2017 have been wiped out.  And while the pain will certainly end at some point, it’s unclear when that will be.  But as Harvey Dent famously said in The Dark Knight, “the night is darkest just before the dawn.  And I promise you, the dawn is coming.”  When brighter times do finally come, trading volume will certainly explode again as old investors return and new investors discover cryptocurrencies for the first time.  A platform that is poised to benefit from that growth is ABCC Exchange.

ABCC Exchange is a world-class digital assets exchange that aims to provide a frictionless, user-centric trading experience. The company is focused on embracing the philosophy of decentralized technology which essentially means open, frictionless and participatory.

The company’s main goal is assisting investors with identifying valuable decentralized technology assets, offering a secure online trading platform and providing professional trading services.  Below are four reasons why ABCC may be on the verge of revolutionizing crypto trading.

Reason #1 – State of the Art Trading Features

While many other trading exchanges have only basic functionality and very limited order types, ABCC is just the opposite.  It’s a state of the art platform that caters to both beginner and experienced crypto traders.  For a while, ABCC offered just its base trading platform.  But on November 2nd, the company launched its beta version of the ABCC Pro.  The Pro version benchmarks with the user experience on top exchanges such as BitMEX.  It also includes the following enhancements:

  • A chart section that includes both candlestick chart and line graph
  • Night mode
  • Enhanced security
  • A “My Assets” section where traders can now view real-time updates in their total assets
  • Full-screen mode
  • Ability to see customer orders directly within the depth
  • 160+ trading indicators
  • Stop loss and stop limit
  • Easy-to-use mobile APP

Crypto volatility has been astronomical during the past few weeks causing traders to spend a lot of time managing their portfolios.  Because of that volatility, traders are always trying to find new ways to risk manage and limit potential losses.  One of the best ways to limit losses is with stop loss orders.  And with seemingly perfect timing, ABCC released the addition of stop loss functionality.

Most crypto traders probably already know what a stop loss is but for those who don’t, here is a quick overview.  A stop loss order is designed to limit an investor’s loss on a position.  For example, setting a stop loss order for 10% below the price at which one bought the crypto asset will limit the loss to approximately 10% should the asset fall to that price level.

As someone who has generally used only the most basic of crypto exchanges, these features are extremely welcome and useful.

Reason #2 – Trading Strategy Competition

Accompanying the release of stop loss functions, ABCC has announced a trading competition in which first place will receive a prize of 2,000 USDT.  The competition is scheduled to begin on December 5 and last for one week.  During the competition, each user will be ranked based upon their rate of return from all trading pairs.  The total prize pool for all competitors is 4,500 USDT.

These competitions are beneficial on several different levels.  It’s obviously beneficial for traders as they get to practice and hone their trading skills on ABCC’s state of the art platform while hopefully doing well enough to earn prizes.  And it’s beneficial for ABCC as it should serve as an opportunity to generate additional revenue through increased trading volume from both existing and new customers.

In August, the company held another trading competition with prizes that included a Tesla, 40,000 USDT, and smaller daily rewards.  So new traders and competitors should expect that the December competition won’t be the last one that ABCC holds.  So if a trader doesn’t do well this time around, keep practicing and perhaps their fortune will change the next time around.

In addition to increased revenue, trading competitions always bring a lot of hype and publicity which should do well toward enhancing ABCC’s brand recognition and ability to serve more customers in the future.

Reason #3 – ABCC Token (AT)

AT, an original token of ABCC Exchange, is mined automatically when ABCC users conduct trading activities via the Trade-to-Mine mechanism. 80% of trading fees from crypto trading and 80% of net profits from options trading are rewarded back to AT Holders in the form of BTC, ETH and USDT.

A new product, Daily Options, was recently launched by ABCC.  This new product also introduces a new use case for AT as traders will be able to make predictions regarding the future price changes of BTC.  ABCC users can expect additional product offerings, such as Daily Options, in the future.

Reason #4 – Vitalik Buterin Endorsement

As blockchain startups look to disrupt industries, it never hurts to have a major endorsement from one of the most prominent figures in the blockchain movement.  Earlier this year, Ethereum founder Vitalik Buterin participated in an interview with Jon Evans at TechCrunch Sessions: Blockchain.  During that interview, Buterin stressed his desire for everything to be decentralized.  Additionally, when the conversation turned toward exchanges, Buterin had this to say: “I definitely hope centralized exchanges go burn in hell as much as possible.”  He said there is no reason whatsoever why some projects need to pay up to $15 million in listing fees just so that people can trade their tokens on centralized exchanges. While it’s still in the early phase for decentralized exchanges, it never hurts to have someone like Buterin on your side.

Conclusion

While the crypto trading environment isn’t what it was in late 2017, the recent volatility has certainly created an opportunity for new exciting platforms like ABCC to fill a void for traders.  One thing not previously mentioned is that ABCC Exchange aspires to list as many good projects as possible.  Unlike other exchanges that attempt to bleed companies dry, ABCC hopes to build strong partnerships and relationships with their listed clients.  Conducting business in this fashion allows both ABCC and the listed projects to grow and prosper together.

The existing platform and the coming enhancements should certainly go a long way to helping traders manage their existing portfolios while simultaneously exploring the market for those undervalued projects that are working on breakthrough technology.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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