No private keys? No cryptocurrency. Two recent headlines are the latest reminders that if you don't take care of your own keys, you can't be sure your cryptocurrency is secure.
First, a college student who stole $5 million in cryptocurrency by way of hijacking phone numbers—a technique called SIM-swapping—has pled guilty and will go to jail for 10 years, according to Motherboard.
SIM-swapping entails gaining control of telephone numbers (for example, by pretending to be the phones users to their wireless carriers) and then resetting passwords to cryptocurrency wallet applications before draining them. Over the past few years, it's become a particularly popular and damaging attack, and assailants have at times appeared to target prominent people known to hold large amounts of Bitcoin and other cryptocurrencies. In August of 2018 Michael Terpin, a prominent cryptocurrency investor, filed a lawsuit against AT&T, accusing it of fraud and negligence after hackers stole cryptocurrency from his personal account. In November, a cryptocurrency-focused US firm brought another suit against AT&T and T-Mobile on behalf of SIM-swapping victims. And last week, another 20-year-old was indicted in New York and charged with carrying out more than 50 SIM-swapping attacks against targets all over the country.
Second, popular Canadian exchange QuadrigaCX, has claimed in court filings that it can't access nearly $140 million worth of customer funds. Why not? According to its late CEO's wife, her husband held "sole responsibility for handling the funds and coins," and ever since his death in December the company has been locked out of the wallets. As New York Times reporter Nathaniel Popper tweeted: "Welcome to the financial future!"
Facebook deepens its blockchain exploration. The company has made its first blockchain-related acquisition: Chainspace, a small startup that had been focused on techniques for speeding up blockchain smart contract transactions. The news, first reported by Cheddar, suggests that Facebook's nine-month-old blockchain team may be getting serious about whatever it has been working on behind closed doors.
We learned recently that Facebook may be trying to develop a price-stable cryptocurrency meant for users of its popular WhatsApp messaging service. Perhaps it thinks Chainspace's technology can help. An academic paper (PDF) from 2017 describes Chainspace as a smart contract platform that uses a technique called sharding to get transactions passing through an order of magnitude more quickly than Ethereum can. The slow speed at which transactions can be processed and verified is one of the things holding back the wider use of Ethereum and smart contracts. Indeed, Ethereum is also hoping to implement sharding for the same reason. If it works, it would allow a smart contract platform to split its data up and assign small pieces of it to subsets of nodes to compute. That would be much quicker than requiring every node to compute every transaction, and make the whole system more efficient.
If Facebook is intent on using a blockchain to compete with electronic payment providers like PayPal, it will need to figure out some way to handle large numbers of transactions at a time. Perhaps this acquisition is related to that challenge. We can only speculate. Whatever the case, once you're talking about "sharding," you're deep into the blockchain rabbit hole. Just how far will Facebook go?
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Loose Change
Fill your pockets with these newsy tidbits.
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IBM has completed a trial, involving a shipment of 28 tons of mandarin oranges, in which an important shipping document was recorded on a blockchain instead of mailed to the many parties involved in financing the trade. (CoinDesk)
- Popular US crypto exchange Kraken says it has acquired a British trading firm that specializes in derivatives and is on the verge of a big funding round. (Fortune)
- Google is developing tools that are supposed to make blockchain transaction data searchable, starting with Bitcoin, Ethereum, and XRP. (Forbes)
- The US Securities and Exchange Commission is asking the public for tools to help it analyze blockchain data. (The Block)
- Ethereum's developers have pushed back a planned update that's supposed to make specialized mining chips less competitive relative to general-purpose graphics processing units. (CoinDesk)
