US Secret Service Creates Finance-Related Cybercrime Task Force

US Secret Service Creates Finance-Related Cybercrime Task Force

The Cyber Fraud Task Force created by the U.S. Secret Service aims to combat the growing trend of cybercrimes related to financial matters.

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The U.S. Secret Service announced the creation of the Cyber Fraud Task Force, or CFTF on July 10, after merged its Electronic Crimes Task Forces and Financial Crimes Task Forces into a single network.

According to the official announcement, the Secret Service had been planning over two years to create a unified task force to combat cybercrimes related to the financial sector and fight things like ransomware attacks, business email compromise scams, credit card online stealing, among others.

The CFTF appears in a context that the illegal market of credit card stolen data through the dark web and banking details from companies keeps rising.

Concerns Toward Cryptocurrency Transactions

The Secret Service showed concern toward the role of cryptocurrencies behind the online illegal transactions, as these have become “one of the primary means by which criminals launder their illicit profits,” the announcement said.

Speaking with Cointelegraph, Ameet Naik, security expert at PerimeterX, commented on the official launch of the CFTF:

“Financial crimes and cyber crimes are two sides of the same coin. Digital skimming and Magecart attacks fuel dark web marketplaces and surface in the real world as payment fraud. That hurts businesses and erodes confidence in the financial system. The combined FBI Cyber Fraud Task Force will enable better data sharing and strike at the root of the problem.”

The mission of the brand-new CFTF aims to improve the coordination and dissemination of best practices for all its investigations of financially-motivated cybercrime.

Cyber-enabled Financial Crimes Pose a High Risk for the Financial System

The Secret Service said that the country faces a “growing threat” of transnational cybercrime, particularly against the U.S. financial system.

Erich Kron, a security awareness advocate at KnowBe4, told Cointelegraph:

“This consolidation is good news, as so many financial crimes these days have a cyber element and cybercrime has a traditional element, such as the use of money mules to withdraw and muddy the money trail. By consolidating, there is far less bureaucracy and red tape to deal with when crimes cross both sides of the spectrum. Given the sheer amount of money that the organizations within the U.S. are hemorrhaging every year due to financial and cybercrime, it is nice to see the government taking this seriously and making moves to address the issue.”

A recent study by Digital Shadows revealed that over 15 billion credentials are in circulation via the dark web, representing a 300% increase since 2018. Available information ranges from network access credentials, banking login data, and even accounts from streaming services like Netflix.

Also, Cointelegraph reported that the number of successful ransomware attacks witnessed a decrease between January and April 2020 in the U.S. public sector amid the COVID-19 crisis. However, researchers have recently noticed that trend reversing, with incidents now starting to increase.

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The Cyber Fraud Task Force created by the U.S. Secret Service aims to combat the growing trend of cybercrimes related to financial matters.

Cybercriminals Use the Blockchain to Relay Secret Messages

Cybercriminals Use the Blockchain to Relay Secret Messages

SophosLabs published a study that revealed hackers use the blockchain network to share secret messages.

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A group of researchers from SophosLabs state that hackers operating the cryptojacking malware, Glupteba, have been using the Bitcoin blockchain network to communicate in secret.

According to the report published on June 24, cybercriminals rely on a command and control center where they send encrypted secret messages that require a 256-bit AES decryption key.

Encrypted messages used to update malware

The purpose of the communication channel is for hackers to receive updated configuration information for the malware. This data is used by attackers to obtain precise instructions and thus update the malicious software.

Glupteba is what’s known as a zombie or software robot that can be controlled remotely. It has various functions such as a rootkit, security suppressor, virus, router attack tool, browser stealer, and as a cryptojacking tool.

A sample of the encrypted message

A sample of the encrypted message – Source: SophosLabs

SophosLabs explains in detail about the curious feature:

“Glupteba uses the fact that the Bitcoin transactions are recorded on the Bitcoin blockchain, which is a public record of transactions available from a multitude of sources that are unexceptionably accessible from most networks. Bitcoin’ transactions’ don’t actually have to be about money – they can include a field called RETURN, also known as OP_RETURN, that is effectively a comment of up to 80 characters.”

Future malware-delivery-as-a-service provider?

However, the cybersecurity firm warns that the malware could take advantage of this feature as an added value to commercialize it.

Andrew Brandt, a principal researcher at SophosLabs, told ZDNet:

“I’d say the Glupteba attackers are angling to market themselves as a malware-delivery-as-a-service provider to other malware makers who value longevity and stealth over the noisy quick endgame of, for instance, a ransomware payload.”

But this is not the first case in which the blockchain network is used to send messages in the crypto sphere. On May 25, a message signed by 145 wallets containing Bitcoin (BTC) from a number of early blocks called Craig Wright a “liar and a fraud.”

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SophosLabs published a study that revealed hackers use the blockchain network to share secret messages.

Proof-of-Work vs. Proof-of-Stake for Scaling Blockchains

Proof-of-Work vs. Proof-of-Stake for Scaling Blockchains

It’s no secret that cryptocurrency has a scaling issue, so we look at various ways either proof-of-work or proof-of-stake could be effective.

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Most people in the cryptocurrency world are aware that network validation often comes in one of two forms: proof-of-work or proof-of-stake. There are others, but these systems are common and power many of the most popular blockchains. They take the same basic problem — verifying transactions — and solve it in unique ways. However, both offer different solutions to the ongoing debate over scaling. Does one have a true advantage over the other, or are they just different philosophies? We’ll take a look at both. 

Proof-of-work, explained

Most people have heard of Bitcoin (BTC) “miners,” but just what do they do? In essence, miners work competitively to solve complex math problems in order to secure transactions on the network. See, one of the biggest risks to a blockchain is something called a “double-spend” attack. This is when someone spends the same money twice. This isn’t often a problem with traditional currencies, but with digital currencies, a system is needed to make sure someone can’t send the same Bitcoin to multiple parties. 

This is where miners come in. As mentioned, they use powerful processors in order to validate each block on the chain with elaborate cryptographic functions, ensuring that invalid transactions, such as double-spends, are removed. Using the distributed consensus, all the other miners and nodes on the network then “agree” that these transactions are valid. This process is known as proof-of-work, or PoW.

The main threat to this system comes from the possibility of what is known as a 51% attack. This is where one attacker gains over half of the total computing power on the network, which now means that the “consensus” is whatever it says it is. This has happened before and remains a concern for many blockchains to this day.

With PoW, security is achieved not only due to the complex nature of the cryptographic functions being processed but also by the relatively high cost that it takes in terms of energy. This makes attacking the network expensive. The upside is that taking over the whole thing would require 51% of all processing power associated with the blockchain, which is unfeasible for larger chains such as Bitcoin. The downside, however, is that it takes massive amounts of energy to protect the network, making the whole thing grossly less efficient than a centralized alternative. This also only stands to be a bigger issue as cryptocurrency brings in more users.

For years now, developers have been looking for ways to make blockchain technology faster, more efficient and scalable. If Bitcoin, or any project, is ever going to see global adoption, solutions to these problems must be found. Ideas have included making blocks bigger or splitting them up into “shards,” as well as various multiple-layer solutions such as sidechains. We’ll look at all of these in a moment, but first let’s look at proof-of-stake, which is itself one possible answer to the scaling solution.

How proof-of-stake is different

Proof-of-stake, or PoS, gets rid of miners altogether and instead has “validators.” Validators don’t use processing power to secure blocks, instead they literally “stake” their funds on the blocks that they believe are valid. A validator can generally be anyone willing to stake coins on the network, and an algorithm determines which validators will be chosen for each block. Whereas miners want to increase their chances of solving the complex math problem by throwing more processing power at it, validators increase their chances of being selected to validate a block by throwing more money at it. Miners are incentivized with the reward of new coins, but validators often only receive a cut of the fees included in the block, proportional to the amount they had previously staked.

Should an attacker try to validate a bad block, the attacker will lose its stake and be barred from further validation privileges. As for the 51% problem, now a malevolent party seeking to hijack the network wouldn’t need over half of the processing power — it would need over half of all the coins in circulation. This is obviously very unlikely, as no cryptocurrency community would have much faith in any coin where this was even remotely possible to begin with. Lastly, this fixes the energy consumption issue present with PoW, as now there is no need for large numbers of powerful computers running 24/7.

One of the criticisms of PoS is that it still allows for a form of centralization. Basically, having more of an asset means you have more weight for validating, which earns you more rewards for staking, which means you now have even more weight, etc. Others have pointed out the “nothing-to-stake” problem, where validators could arguably stake funds across multiple different blockchain histories. Lastly, having too many validators still slows down the network, as it makes consensus take longer to reach relative to the number of validators. Fortunately, ways to address all these problems are being explored.

Enter delegated proof-of-stake

A potential solution to the shortcomings of the original PoS design is called delegated proof-of-stake, or DPoS. The DPoS model is different because instead of every user staking resources in order to be a validator, users vote on which parties should be the validators of the next block. Staking more resources gives more weight to your vote, but only a limited number of validators are actually used, and they can be voted out or back in with each block. 

As all users are able to stake and vote, the community should retain control if it feels a validator is not acting in its best interest. Validators obviously have an incentive to work with the community because being elected to the position enables you to receive block rewards. Lastly, by limiting the number of parties involved, consensus can be reached much quicker, which potentially could enable a notable boost to network speed. Some of the biggest projects implementing this system include EOS and Tron. 

Of course, centralization is a concern here, as there is still a chance for those with massive resources to manipulate the vote. This is a fair concern, but in general, the larger community should still retain greater voting power than any single entity could have, and an elected validator is still only one of many, thus limiting its real power. 

Other ways to scale proof-of-work

Not everyone is convinced that PoS is the future, hence there are still a few viable avenues being explored for scaling PoW. As mentioned, one of the systems on the table is simply to make the blocks themselves hold more transactions. In the short term, this actually does sound pretty reasonable. Larger blocks are a good way to increase network throughput pretty quickly, but they can come with some caveats. For one, on their own, bigger blocks aren’t necessarily a fix-all solution. In the long term, you can’t just keep making blocks bigger and bigger indefinitely. Switching from 1-megabyte blocks to 2-MB or 4-MB blocks isn’t really a big deal, but where does it end? 1 gigabyte? 10 GB? At least for blockchains designed like Bitcoin, the added size of the blocks would begin to make storing the whole chain exceedingly burdensome. Of course, if transaction speed is less of a priority than storing data on the blockchain, then large blocks again become useful, and it is really making sure that they are synchronized, which becomes the most important aspect.

A different philosophy that some projects are looking into is a technique called “sharding.” Sharding works by dividing up blocks into “shards,” which then get processed on the network — only not every miner has to process every shard. This means each block is only partially mined by each miner, which means that less power needs to be used and the block can be validated faster as well. The same logic can also be applied to a PoS system, only instead of miners, it would be validators. In either sense, the plan is to increase overall latency by not making every player on the network have to process the full extent of every block. 

Sharding does come with some drawbacks that have yet to be sufficiently addressed, however. For one, after breaking up the blockchain into shards, these shards cannot communicate with each other. This could be problematic for applications that rely on multiple shards. While a system for hard communication could be developed, it would be exceedingly complex and be at risk for a plethora of potentially devastating data errors.

In a similar vein, sharding also opens up a new security risk. In theory, hackers now could attack the network by focusing on just a single shard, which would take far fewer resources than trying to take over an entire block. They could then craft seemingly valid transactions into the shard and submit it back to the main chain. An attack such as this makes no sense if blocks are kept whole, so it remains a valid risk to user funds.

One more important area researchers are looking into is something known as “sidechains” or “second-layer solutions.” In a nutshell, this is generally a separate network that sits on top of a blockchain and handles transactions “off-chain.” Users can open up “channels” between each other and transact however they see fit, and only when they close this channel does the data get batched and written onto the main chain to create the immutable record. Multiple channels can be linked together in order to form a global payment network that is backed up by the blockchain but can move much faster in real time. This is especially ideal for frequent and smaller transactions and could provide a road to seeing cryptocurrency used as cash.

There are some downsides, as in the current form channels generally need to be “collateralized.” This means money has to be put into the channel before it can be used. Combined with the fact that not all of the bugs have been worked out, this can certainly mean serious risk to funds should something go wrong before it is recorded on the blockchain. Generally, there needs to be very precise work in these protocols to make sure that the sidechains and main chain stay in perfect sync, but so far, results are optimistic. 

Some of the most popular versions of this technology include the Lightning Network for Bitcoin and the Raiden Network for Ethereum. These projects are certainly still early on, and there are in fact multiple versions of the lightning network being developed. It is as of yet unclear which version will become the standard, if any. Another example of a second-layer solution project for Ethereum is called Plasma and would see smart contracts used to build sidechains of transaction data that would, again, only occasionally write to the main layer. Similarly, Charles Hoskinson, the creator of Cardano, has discussed the project’s upcoming technology Hydra, which introduces elements of a second layer as well as sharding in the hopes of reaching upward of “1 million transactions per second.”

One other project that is taking elements of many of these different solutions and bringing them together is ILCoin. ILCoin uses something called the RIFT protocol, and it approaches the blockchain in a slightly different way to create a “Decentralized Hybrid Blockchain System,” or DHCB. This is a multilayered system still based upon the PoW SHA-256 algorithm that Bitcoin uses, but here the chain is composed of blocks that are filled with “mini-blocks.” Mini-blocks are fixed at 25 MB, however the amount of them that can fit inside of a regular block has, theoretically, no limit. The team declares it has successfully created blocks of up to 5 GB, and according to its documentation:

“Assuming each transaction is occupying the minimum number of bytes possible, each block may contain up to a maximum of 21551724 transactions. With an average block mining time of 3 – 5 minutes, that equates to between 71839 and 119731 transactions per second using a 5 GB block.”

Thanks to the RIFT protocol, 5 GB blocks and the mini-block architecture, ILCoin has scheduled the launch of its Decentralized Cloud Blockchain, or DCB, for this year. The team says that DCB will allow for on-chain storage of a wide array of digital content, including images, videos and more. Until now, storing large amounts of data on-chain was not possible due to blockchain bloating.

Still a lot of work to do

The reality could be that there isn’t just one correct solution for scaling. Each project may need to look at how it is being used and ask what path or paths are best for it. Not to mention new strategies and technologies are constantly emerging that could shake up the whole game at any time. While all of the ideas here show immense promise, the book is still not yet written on how to scale blockchains. Likely a combination of many of these ideas and more will ultimately shape how cryptocurrency reaches a mass audience, but the problem needs to be solved before it does. Otherwise, it is possible that a centralized, permissioned chain will be the only kind that is accessible to a global population.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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It’s no secret that cryptocurrency has a scaling issue, so we look at various ways either proof-of-work or proof-of-stake could be effective.

Chinese Police Find Secret Bitcoin Mining Operation in Suspected Tombs

Chinese Police Find Secret Bitcoin Mining Operation in Suspected Tombs

Chinese law enforcement discovered an illegal Bitcoin mining operation in what appeared to be multiple underground burial sites.

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Chinese law enforcement discovered a Bitcoin (BTC) mining operation in what appeared to be multiple underground burial sites.

Local English-language news outlet Beijing News reported on May 31 that law enforcement found an illicit mining operation in the northern Chinese city of Daqing. More precisely, the mining operation was located in what appeared to be two burial mounds in the surrounding fields.

Mounds that housed the Bitcoin mining hardware

Mounds that housed the Bitcoin mining hardware. Source: Beijing News

Bitcoin mining with stolen electricity

Police decided to investigate the area after a local oil firm told law enforcement about unexplained power losses. The officers found an entrance in the vicinity of the mounds and — after some digging — discovered Bitcoin mining hardware that was running on stolen electricity.

Local media reported that, earlier the same week, law enforcement found 54 Bitcoin mining rigs under a dog kennel in the same county in Heilongjiang province.

Cryptocurrency mining operation under a dog kennel

Cryptocurrency mining operation under a dog kennel. Source: GNW

China cracks down on Bitcoin mining operations

As cryptocurrency prices started to increase again, so did people’s willingness to get into cryptocurrency mining. 

However, the government of the Chinese province of Sichuan recently announced that local firms must cease their cryptocurrency mining operations. This is particularly noteworthy as, according to a Cambridge University study, the province is responsible for nearly 10% of the global Bitcoin hashrate.

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Chinese law enforcement discovered an illegal Bitcoin mining operation in what appeared to be multiple underground burial sites.

Investor Z Fights to Redact its ‘Secret Sauce’ in Telegram ICO Case

Investor Z Fights to Redact its ‘Secret Sauce’ in Telegram ICO Case

An investment firm has likened its strategic analysis of Telegram’s ICO to ‘McDonald’s Secret Sauce’ and demanded its redaction in the SEC’s lawsuit

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An unnamed investment firm dubbed ‘Investor Z’ is one of almost a dozen firms battling the U.S. Securities and Exchange Commision (SEC) to keep their Gram token investment strategies secret.

The 11 investment firms want their proprietary analyses of the Telegram initial coin offering (ICO) to be redacted from the case. Investor Z argued that divulging their strategies is like publicly revealing the recipe for Coca Cola.

The long running case has seen the SEC granted an injunction against the worldwide distribution of Grams as they have been deemed securities under US law. 

VC firms want strategic analysis sealed

On Feb. 4, Investor Z filed a motion to seal what it describes as sensitive information revealing the identity of the firm, its employees, and its proprietary investment strategy.

While the SEC has agreed to redact “the names of certain investors and prospective investors” from its evidence in the case, the regulator is opposed to sealing analyses of the Grams offering from Investor Z and other non-party VC firms. Investor Z stated:

“[The SEC] contend[s] that redacting identifying information of the various non-parties involved in the communication alone is sufficient to protect their privacy interests. The SEC is wrong.”

Investor Z said it, and all the other investment firms that have asked for redactions “rely upon their proprietary internal decision-making processes for investments and other strategic decisions.”

“Thus, […] the analyses in this document from these non-parties is likely their version of the ‘formula for Coca Cola or McDonald’s Secret Sauce’.”

Secrets may hinder future investigations

Investor Z makes three arguments for the sealing of the disputed documentation.

Firstly, the filing asserts that courts “routinely protect the categories of non-party proprietary information […] from public disclosure,” including “trade secrets and other proprietary information.”

Second, the firm asserts it “voluntarily complied with requests for information from the SEC with an expectation of confidentiality”, arguing that the privacy concerns of it and other non-parties “supersede the public’s right of access to their proprietary information.”

Lastly, the firm warns that “denying the Motion could potentially impair law enforcement by quelling the participation of non-parties in future SEC investigations.”

In February, Cointelegraph reported similar redaction requests filed by anonymous VC firm ‘Investor F.’

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An investment firm has likened its strategic analysis of Telegram’s ICO to ‘McDonald’s Secret Sauce’ and demanded its redaction in the SEC’s lawsuit

Binance Reveals the Secret Behind Its Cryptocurrency Futures Success

Binance Reveals the Secret Behind Its Cryptocurrency Futures Success

Binance’s VP of futures tells Cointelegraph how it managed to become the second-largest platform in terms of 24-hour Bitcoin futures trading volume

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Aaron Gong, vice president of futures at major cryptocurrency exchange Binance, explained to Cointelegraph how the firm managed to become one of the top crypto futures trading platforms.

As Cointelegraph reported earlier this week, Binance recently overtook BitMEX and became the second-largest platform in terms of 24-hour Bitcoin (BTC) futures trading volume. When asked whether he is surprised by such success, Gong said that the firm created the product with the plan of becoming the top Bitcoin futures trading platform:

“We knew we would be there soon, and we made it in slightly more than 6 months’ time.”

The reasons for Binance’s futures success

According to Gong, the three primary reasons behind the success of Binance’s futures products are the low taker fees, new features and a large amount of altcoin pairs. He said that too many exchanges offer negative maker fees:

“Too many other exchanges offer negative maker fees, where most orders are just computerized market makers competing for best bid and ask with extremely limited taker interest during periods of low-volatility.”

Gong also said that innovation also drives trading volumes when it comes to Binance’s futures. He claimed that the exchange has had a few firsts when it comes to the crypto futures market:

“We are the first major crypto exchange to launch max 125X leverage for BTC contracts, and the first of its kind to launch cross collateral and smart liquidation mechanism. These features have gained tremendous popularity amongst our users.”

The third reason for the success of Binance’s futures contracts, Gong explained, is the number of altcoin contracts. He said that the firm launched 24 futures contracts on the platform, adding:

“As of today, Binance Futures houses half of the top 10 most liquid altcoin contracts, many of which are also the most traded pairs amongst all futures exchanges.”

Binance’s key to future success

Gong’s strategy to drive the volume of futures contracts on Binance is to continue bringing more functionalities and products to the industry. He said that he believes Binance has outdone its competitors, as other crypto trading platforms suffered problems such as overloads, poor risk management, and counterintuitive product designs. He explained that Binance’s design was largely driven by user’s complaints about other platforms:

“We specifically aimed to address these issues and improve the users’ experience. As such, we put tremendous efforts to build an industry-leading matching engine that is able to process more than 100,000 orders per second. […] Whilst there were issues of system overloads, outages, glitches, and even rollbacks elsewhere, we’ve proven time and again to be a safe, reliable, cheap and liquid venue for hedging.”

It is worth noting that Binance’s trading platform ran into a number of issues in February. On Feb. 19, the exchange halted trading to resolve an unexpected technical issue with its infrastructure.

As a Feb. 25 Cointelegraph analysis illustrated, this incident took place after a week in which the platform was often unresponsive to trader input as the exchange was unable to manage a large uptick in user volume.

In early March, Binance halted trading again to fix a malfunction. The exchange’s co-founder and CEO Changpeng Zhao purportedly blocked Jay Hao — the CEO of competing exchange OKEx — on Twitter, after he publicly offered to help fix the infrastructure.

However, Gong said that the malfunctions did not affect Binance’s futures trading infrastructure and that futures traders were not affected:

“Our futures system has been proving to be performing well during the most volatile period since we launched. The futures market is running on a separate matching engine.”

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Binance’s VP of futures tells Cointelegraph how it managed to become the second-largest platform in terms of 24-hour Bitcoin futures trading volume

Social Innovations and Secret Conversations (on the Blockchain)

Social Innovations and Secret Conversations (on the Blockchain)

There’s a novelty in finding new ways to communicate through coded conversations and secret languages. How is this being implemented for good — or otherwise — on blockchains?

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There’s a novelty in finding new ways to communicate through coded conversations and secret languages. How is this being implemented for good — or otherwise — on blockchains?

Since its beginnings, blockchain technology has led to many movements, including the formation of a unique crypto community. This blockchain community is forming its own lexicon (including a more formal vocabulary that industry opinion-makers are creating and debating and Twitter-based crypto slang like hashtagging Lambos and Bitcoin whales.) 

There is also another language that has developed, the one in blockchain platforms themselves — developed through a “glitch” in the blockchain system — through a coded instruction that was meant for something else entirely. This is a conversation created through transaction signatures — the method of transfer — with coded messages built into the hash. 

What started this trend? In part, it came from necessity, the need to find an anonymous way to converse with each other — to complete a private transaction. It may also be rooted in psychology. “Groups of people form their own private lexicons because coded language is exclusive, exciting and defiant,” Gary Nunn wrote. An exclusive argot gives ownership, pride and a sense of being part of something greater than oneself.

Private interactions on blockchains

A coded language can be used for harmless activities such as in-jokes or conversations, but they are often developed by a person or people in need of a way to communicate as anonymously as possible. And so, it stands to reason that transaction signature conversations have been used for harmless fun between online friends and also for illicit activities between bad actors.

What are some of the ways that transaction signatures have been used for conversing, for better or for worse? Let’s start first with a description of how a conversation actually works using blockchain technology.

Signed on the dotted line, with a public and private key

A digital signature or transaction (TX) signature is the detail of an electronic document that is used to identify the person transmitting data on a blockchain. The signature acts as a transaction validation, linked to the public key of the entity involved. It’s a confirmation that the transaction has not been tampered with in any way — a trustless transaction. Here’s how it works:

How digital signatures work: signing the message with private key

How digital signatures work: verifying the message with public key

Coded conversations through a “glitch” in the tech

Users of the technology at some point or another realized that it’s possible to add a so-called “OP_Return output” to the transaction — an instruction coded into the Bitcoin blockchain by Bitcoin developers. This output would be nonspendable, the data attached to it, however, would remain on the blockchain forever. And so, coded conversations on the blockchain began.

Some believe that this is an irresponsible use of the technology, as the Bitcoin blockchain was created solely for financial transactions and not a record for arbitrary data. Either way, it has become a function used by transactors, whether it was initially intended as such or not.

Here are some of the more novel ways that the OP_Return output has been used so far:


One of the first OP_Return messages that gained notoriety was the use of the lyrics “Never Gonna Give You Up” by Rick Astley (following the theme of the well-known rick-roll meme) to play pranks on users. A hacker, for example, who demanded payment by blackmail was rick-rolled by a prankster who used the first few symbols of addresses to spell out the lyrics of the song and send only tiny amounts of Bitcoin. Each transaction made by the prankster was worth 0.001337 BTC, and was effectuated in homage to leet, a code of modified spelling using numbers in place of letters.

Rickrolling on the blockchain

Ethereum DApps

A relatively slow uptake in decentralized application (DApp) adoption might be due to users having to pay a transaction fee to complete an action — Mahesh Murthy of Zastrin noted the fee as a pain point in a blog post he wrote about a voting DApp he created. He mentions an idea by John Backus as a solution to this bottleneck using a similar function to OP_Return for Ethereum DApps through a private key.

Ethereum DApps

Eternity Wall

Eternity Wall, a service for writing short messages on blockchain, is mostly used for writing proverbs, jokes and love declarations, but it can also be used to reply to a message sent via the service, so conversations may be created. 

Eternity Wall

Ricardo Casatta, creator of Eternity Wall, has also promoted the potential political use case for such a tool as an uncensorable means of communication, having written in a post, now unavailable:

„If you live under a dictatorship, you could use it for saying something that your government would remove or block.“ 

Eternity Wall

Blockchain riddles

An entertaining way of using OP_Return is to organize quizzes on a blockchain. The address 1HoTZGKwXY2HM8UBpiBKtBUd8otPpsJ5Pc has sent several riddles via OP_Return messages, for example.

Here’s what was sent by the address:

  1. Five riddles, one-word answers. Start at 1HKGame213Part2xxxxxxxxxxxxzQajrj
  2. What English word has three consecutive double letters?
  3. What disappears as soon as you say its name?
  4. Which word in the dictionary is always spelled incorrectly?
  5. You can hold it without using your hands or arms. What is it?
  6. What word becomes shorter when you add two letters to it?

And probably the answers lead you to some private key, since the last message was:

„PrivateKey=SHA256(tolower({2} {3} {4} {5} {6})). Transfer to prove solution.“

Blockchain riddles

The webpage Bitscribble was created as a simple interface that could be used to write messages on a blockchain via the OP_Return script. 

In January 2019, Parisian-based street artist Pascal Boyart created a mural with a hidden Bitcoin prize, announcing the treasure hunt on Twitter to participants eager to win the coveted reward. The stunt was a celebration of the 10th anniversary of the first mining of a Bitcoin block. If you’re wondering if it’s been solved yet, you can find out here.

Image with a hidden message

There has been everything from marriage proposals to cryptic clues to messages supposedly written by Satoshi encrypted on the Bitcoin blockchain.

If you’d like to learn how to write a blockchain message yourself, here’s a step-by-step guide.

Blockchain messaging used in elevated situations

The OP_Return script may be used to contact a person on the Bitcoin blockchain if you only know their Bitcoin address. There are some incidents in which this tool has proven very useful for transactors: For example, a person may be contacted if they received stolen funds for some reason or if someone accidentally sent them a transaction that needs to be returned.

When communicating with a hacker following a security incident in August 2016, Bitfinex offered the OP_Return instruction as a potential method for anonymous communication, should the hacker wish to get in touch with the exchange and find a compromise in return for a bug bounty.

Going back as far as 2014, the OP_Return script has often been used by spammers

Bitcoin Cash as a messaging service

Messaging on the Bitcoin Cash blockchain is not something done in secret anymore, either. Memopay, for example, is a service that offers its customers advertising opportunities on the Bitcoin Cash (BCH) blockchain. Bitcoin Cash has proven to be more popular for messaging services, likely due to lower blockchain transaction fees.

There is, in fact, a social network called Memo in which all networking actions are recorded to the BCH blockchain. Bitmain co-founder Jihan Wu has publicly tweeted that he has an account on Memo, inviting his Twitter followers to sign up for an account and get in touch with him.

CryptoGraffiti is a solution that allows anyone to easily decode and read arbitrary messages that have been saved to the blockchain. The tool detects transactions that contain either “human-readable text messages or files of known formats” and publishes it under a reader tab.

Social networking on a public, immutable ledger

With the advent of social media as a powerful communication and advertising tool, the conversation has inevitably — and regularly — returned to how a decentralized technology like blockchain can be harnessed to provide enhanced social networking opportunities. Realistically, though, until the user interface and user experience are at the level of major current social networks, the tech won’t appeal to those who already have easy-to-use messaging applications at hand.

Not only that, but the question of whether people want their private (or indeed public) conversations permanently imprinted on a ledger remains to be seen. Transparency is important, but people still want to feel a certain sense of privacy. 

That being said, the world is no longer a private forum, with public data becoming so available as users sign their rights away. Perhaps it’s not such a stretch to envision a decentralized, international social networking platform on a public and permanent ledger.

The article was co-written by Kyrylo Chykhradze and Pavel Mischchenko. 

Kyrylo Chykhradze is the Head of Product at Crystal Blockchain, Bitfury’s analytics tool for blockchain and cryptocurrencies. He joined Bitfury after having worked as an academic researcher for five years, where his areas of focus were graph theory and real-world network analysis. Along with being deeply involved in forming the global product strategy for Crystal Blockchain, Kyrylo is also leading its internal forensic investigation department.

Pavel Mishchenko  is the Head of R&D at Crystal Blockchain. He joined Bitfury in 2015 after obtaining a master’s degree in Advanced Mathematics at the Ecole Normale Supérieure de Lyon. His primary areas of interest are statistics, data analysis, and probability theory. Pavel actively participates in mathematics competitions and has been awarded gold medals at the International Mathematical Olympiad. Pavel is the Research & Development Lead at Crystal, and is also heavily involved in the development of algorithms for efficient cryptocurrencies data analysis.

The views and opinions expressed here are solely those of the authors and do not necessarily reflect the views of Cointelegraph.

Zur Quelle

There’s a novelty in finding new ways to communicate through coded conversations and secret languages. How is this being implemented for good — or otherwise — on blockchains?

Goldman Sachs Ramps Up Development of New Secret Crypto Project

Goldman Sachs Ramps Up Development of New Secret Crypto Project

A new job listing from investment banking giant Goldman Sachs reveals apparent intentions to pursue digital asset development at an unprecedented pace

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A new job listing from investment banking giant Goldman Sachs reveals apparent intentions to pursue digital asset development at an unprecedented pace. 

The listing, now live, seeks a Digital Asset Project Manager under the aegis of the bank’s GS Accelerate in-house incubator program.

In a summary of the role, the bank indicates that the future hire will be expected to “develop comprehensive road maps for distributed ledger technology (DLT) development,” “foster a deep understanding of relevant products, technology, and markets,” and “maintain and iterate a complex project planning document with multiple stakeholders.”

While few details of the Digital Asset project are revealed in the listing, the job has notably been classified under the bank’s securities division. 

As part of GS Accelerate, the project will be situated within a fast-paced internal unit that aims to swiftly develop solutions and products that can innovate the traditional financial services industry. 

The listing reflects this urgency, underscoring that the hire will be expected to “work to demanding timescales in a fast-paced team environment,” and that the broader ambition of GS Accelerate is to build out “brand new business ideas for GS, while offering employees the opportunity to work in a fast-paced, entrepreneurial environment.”

This is further indicated in the core desirable skills sought in prospective candidates, which include a “passion for and understanding of digital assets / blockchain / distributed ledger technology, capital markets, and financial services regulations.”

As reported, Goldman’s chief executive David Solomon has recently revealed that he believes global payment systems are heading in the direction of stablecoinscryptocurrencies pegged to fiat assets such as the U.S. dollar.

While stopping short of confirming the bank could pursue a project similar in scope to  JPMorgan Chase’s forthcoming JPM Coin, Solomon said that market participants must assume that all major financial institutions are looking closely at the potential of tokenization, stablecoins and frictionless payments.

Zur Quelle

A new job listing from investment banking giant Goldman Sachs reveals apparent intentions to pursue digital asset development at an unprecedented pace