CoinSheet #254 I do not take a single newspaper, nor read one a month, and I feel myself infinitely the happier for it. — Thomas Jefferson (1743-1826) Weekly Bulletin Hello folks, Unfortunately, as soon as I mentioned Game of Thrones, it started getting wayy less excellent.

	Monday Market Update (May 13, 2019) CoinSheet #254 May 13 Public post I do not take a single newspaper, nor read one a month, and I feel myself infinitely the happier for it. — Thomas Jefferson (1743-1826) Weekly Bulletin Hello folks, Unfortunately, as soon as I mentioned Game of Thrones, it started getting wayy less excellent. sigh* Anyways, few bit of news to cover then we'll jump into the markets. Let's go. Binance hack & talk of re-org Binance was hacked and hackers were able to withdraw 7,000 BTC. Exchanges are bound to get hacked and Binance is well enough off that it will use its SAFU fund to cover this incident in full so user funds will be affected. No big deal. The more interesting thing is some of the conversation in the aftermath. Specifically, this. CZ Binance@cz_binance After speaking with various parties, including @JeremyRubin, @_prestwich, @bcmakes, @hasufl, @JihanWu and others, we decided NOT to pursue the re-org approach. Considerations being: May 8th 2019 527 Retweets2,365 Likes CZ Binance@cz_binance pros: 1 we could "revenge" the hackers by "moving" the fees to miners; 2 deter future hacking attempts in the process. 3. explore the possibility of how bitcoin network would deal with situations like these. May 8th 2019 54 Retweets494 Likes CZ Binance@cz_binance cons: 1 we may damage credibility of BTC, 2 we may cause a split in both the bitcoin network and community. Both of these damages seems to out-weight $40m revenge. 3 the hackers did demonstrate certain weak points in our design and user confusion, that was not obvious before. May 8th 2019 135 Retweets1,350 Likes CZ Binance@cz_binance cons: 4 While it is a very expensive lesson for us, it is nevertheless a lesson. it was our responsibility to safe guard user funds. We should own up it. We will learn and improve. As always, thank you for your support! May 8th 2019 358 Retweets4,629 Likes What CZ is referring too is a forced bitcoin chain rollback, a 51% attack (where a party acquires a majority of the network hash rate) . This is how it would work in theory: Antonio Juliano@AntonioMJuliano Binance would sign a Bitcoin transaction which conflicts with the transaction that stole $40M BTC from Binance, and instead gives some of this BTC directly to mining pools May 8th 2019 2 Retweets10 Likes Antonio Juliano@AntonioMJuliano This transaction would obviously be invalid on the current Bitcoin blockchain (a double spend). However the Bitcoin blockchain (and any POW chain) is not immutable - the longest chain is always the real Bitcoin May 8th 2019 1 Retweet11 Likes Antonio Juliano@AntonioMJuliano The theory is if the value given to miners in the double spend transaction is high enough it could make sense for them to reach back in time, mine that transaction instead of the original theft transaction, and then re-mine all of the Bitcoin blocks since then May 8th 2019 1 Retweet13 Likes Antonio Juliano@AntonioMJuliano This would be profitable for miners to do if (value double spend tx > cost to mine say 1 Bitcoin day of blocks). Right now the daily mining rewards for BTC are about $10M, which is a reasonable proxy for how expensive it would be to re-mine a day's worth of blocks May 8th 2019 2 Retweets11 Likes Antonio Juliano@AntonioMJuliano So it's reasonable to assume economically binance could do this and pay say $15M out of the $40M stolen to miners. Both Binance and the miners come out ahead. So we can see that for big enough holders it is possible to make double spends May 8th 2019 3 Retweets16 Likes The problem with this is that while it sounds good on paper, it's largely unfeasible. Even if CZ was to offer miners all 7,000 BTC that were compromised, it would probably not be a financially interesting roll back for the miners. Here are some relevant excepts from a stack exchange discussion. The attack may take a long time if it uses existing mining capacity. The fraction of miners participating (via direct control or bribes) and the amount of blocks to revert will determine how long. For example, to revert just 6 blocks (1 hour worth of confirmations) before coinbases start maturing, the attacker will need to get immediate control over 51.5% of the hashing power. If he falls short of that percentage or requires more time to convince some of the miners, it will take him over 33 hours and reverting more than 100 blocks in total, so rewards from the first blocks may have been spent already. During the time it takes to reorg the chain, the capacity on the longest chain would be reduced to less than half of the usual capacity. You can expect this to have an impact on fees and miner rewards, as the offer for transaction confirmations is not able to satisfy demand. Higher fees on the honest chain will put additional pressure on miners carrying the attack. It's difficult to predict how high they can go in the middle of all that FUD, with many people rushing to move coins to trade. A significant reorg doesn't affect just direct victims, every bitcoin holder would be affected due to a diminished confidence in the system, a reduction in Bitcoin utility and a drop in the price of the coins as a consequence. PoW is a trust-minimized market signal enabling us to scale social consensus. But, if somebody builds heavier chain with a lower value, breaking PoW trust-minimization, users can choose not to follow it and make a UASF, invalidating the reorg: Also consider this: If I had a significant portion of the hashpower, and I wanted my competitors to waste their resources mining a chain that will not end up being accepted, then why wouldn't I just pretend that I was going to mine a rollback chain, but then actually keep working on the already-established chain? If the parties invested in a rollback were counting on my hashpower to succeed in their plan, then by not participating in the rollback I would guarantee its failure, and increase my profits at the same time (since less hashpower would be working on the already-accepted chain). Besides folks, it would damage the whole bitcoin immutability meme and we can't have that can we? Good thing CZ actually came to the same conclusion, good lol from him actually being called out below. Recommended Reading Bitcoin is a Demographic Mega-Trend Blockchain Capital published a report which highlights that younger demographics are leading in terms of Bitcoin awareness, familiarity, perception, conviction, propensity to purchase, and ownership rates. You can read the report here. Nearly half (48%) of those aged 18–34 'strongly' or 'somewhat' agree that 'it's likely most people will be using Bitcoin in the next 10 years'  Market Sentiment The short squeeze Last letter I wrote that there were lots of shorts are pilling up, and a that a short squeeze looked unlikely. I said it looked unlikely because I thought there would be more then enough sellers and ample bitcoin supply, but I was wrong. Here's an explanation. In a short squeeze, people borrow shares to bet against a company. They eventually need to buy those shares back to cover their negative position. If the folks that actually hold the shares, or in this case bitcoin, decide that they don't actually want to sell their bitcoin back to the short sellers, the price can run upwards out of control. When you buy, the price rises = added demand. When you sell, the price falls = added supply. When there are too many shorts, the price can rise rapidly because everyone is buying back at market price (closing their position) to avoid their shorts going underwater. This is called a "short squeeze." And boiii did it squeeze. (Visual representation of the shorts going down and longs going up) Bitcoin (Macro Trend Lines) What a blast. Bitcoin (Moving Averages) The TD Daily TD 3 Day TD Weekly TD Monthly TD Bitcoin (Support/Resistance Levels) Weekly Pivot Points Monthly Pivot Points Volume Daily Volume 4h Volume 2h Volume 1h Volume Bitcoin (Macro Overview) We're about ~375 days away from the next halving event. As of May 13, 2019 my confidence level are: We've already bottomed = about 90%. The end What do you folks think? Continue the discussion in our Telegram group. That's all for now. See you later space Cowboy -Dmitriy You're on the free list for CoinSheet. For the full experience, become a paying subscriber. Subscribe © 2019 CoinSheet LLC Unsubscribe 427 N Tatnall St #84981 Wilmington, DE 19801 Powered by

Ethereum Classic Loves Raspberry Pi.

Take a look inside another project bridging ETC and the IoT. Can't see images? Click here... Hi there, Today we're talking DIY, ETC, IoT, & Pi. The Ethereum Classic Co-op recently published a straightforward do-it-yourself project using the popular Raspberry Pi processor.  Yaz Khoury, our resident hacker and Director of Dev Relations, dives into the set-up and installation process of building your own client host using a cross-compiled version of Parity on the ETC Network. His comprehensive project guide lays out the potential security, smart contract, and other Internet of Things applications that will be explored on his newly configured ETC Pi. We're excited to see what comes out of this project next! Learn about ETC's History here! Thanks again for choosing to keep up with ETC. Until next time, ~Anthony Lusardi Director, US | Ethereum Classic Cooperative @pyskell Know someone else that needs to keep up with all things ETC? Share this message!  ETC Cooperative 636 Avenue of the Americas 3rd Floor New York, NY 10011 Add us to your address book SHARE TWEET FORWARD You received this email because you signed up on our website or made a purchase from us. Unsubscribe

It's been done before 😱

May 13, 2019	View in browser

Good morning! Thanks for reading. If you enjoy our free newsletter, please share us with a friend and tell them they can subscribe here.

Today's top reads

1. Bitcoin has "reorged" before
2. The pump heard around the world
3. Sherman's real fear of crypto
4. Facebook's next frontier

This week's poll: Do you hodl Bitcoin forks?
Click to answer:
Nope, don't need them
Yes, got my stack

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Market update

COIN	PRICE	7-DAY
BTC	$7,318.98	+ 29.68%
ETH	$193.03	+ 17.19%
XRP	$0.322	+ 7.67%
LTC	$87.64	+ 18.04%
EOS	$5.47	+ 12.30%

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1. Bitcoin has "reorged" before

Last week, Binance announced that it had lost 7,000 bitcoin from a massive phishing attack that took control of users' API keys to withdraw the coins in a single transaction.

Following the breach, Binance CEO Changpeng "CZ" Zhao took to Twitter to alert his 350,000 followers about the incident. While worried replies rolled in, one MIT developer, @JeremyRubin, suggested that CZ could recoup his $40 million loss with a blockchain "reorg."

Put simply, a reorg is like having an undo button for the blockchain - an action that makes an immutable ledger, well, mutable.

Though Binance's security update did say that all of the 7,000 BTC stolen would be returned out of an emergency fund (meaning funds are, in fact, #safu), CZ did say he would be exploring all options - including replaying transactions or reorging the blockchain to recoup the lost funds.

The response? Not great. Crypto Twitter erupted as users debated the morality of reverting the hacker's transaction back to Binance. Some pondered whether or not this action would even be possible.

But it's actually been done before. Twice.

• 2010: A bug in the code was discovered after it caused the software to read transactions wrong. To correct it, a new version was published, the blockchain was forked, and the new chain eventually took over - 53 blocks later.
• 2013: Once bitcoin was upgraded from version 0.7 to 0.8, the chain incidentally split in two and developers settled on reverting the blockchain back to version 0.7. Mining pools were quickly notified and the blockchain reorg took place.

That was back then though. Since, Bitfinex's 2016 hack was the only event that came close to causing a reorg but the idea was quickly dismissed.

Regardless, it's a wake-up call: A social consensus can trump Bitcoin's immutability...it just takes a lot of agreement.

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2. The pump heard around the world

Bitcoin is back. Or rather, it's showing signs of life after returning to over $7,000 a pop - a benchmark not seen since September of last year.

Here's what happened: Putting it lightly, shorts got pummeled. Specifically, on BitMEX, a popular crypto exchange where users can use leverage, short positions began liquidating soon after bitcoin jumped close to the $7,000 mark.

The result? Liquidated shorts had to buy bitcoin back at market prices - creating instant buy pressure - which sent the cryptocurrency flying a few hundred dollars higher.

But besides price movements, here are a few important stats from this weekend's pump:

• Trading volume spiked. Notably, volume on BitMEX hit a record $10 billion - a number that surpassed previous highs set in bitcoin's 2017-2018 boom.
• Dominance gained 4%. While cryptocurrencies across the board mirrored bitcoin's gains, they couldn't keep up. Following the pump, bitcoin's market dominance surged from 55 to 59%.
• BNB is the outlier. Looking at the top 10 cryptocurrencies by market cap, only Binance's BNB token was left without gains due to the exchange's recent 7,000 bitcoin hack.

The bottom line: Bitcoin's price movements have since taken a breather, but zooming out, May has historically been pretty good to the coin with only three monthly candles closing in the red.

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3. Sherman's real fear of crypto

Finally, someone in D.C. gets it. On Thursday, Coincenter tweeted a video of Congress representative Brad Sherman asking to ban cryptocurrencies. The video, which garnered more than 600,000 views from the tweet, left the crypto community with a sour taste.

But Sherman's reasoning wasn't just the typical "terrorists and criminals" bit. Actually, Sherman explained that cryptocurrencies look to undermine the power of the United States dollar internationally.

And they could. That's why China has already banned bitcoin and why it wouldn't be unreasonable for other governments to follow suit.

In March, Coinmetrics' Nic Carter predicted that within the next 12 months, a "high-profile, western" government will criminalize bitcoin ownership specifically because cryptocurrencies are:

1. Used for terrorism.
2. Owned by regimes like North Korea.
3. Transacted on darknets.

Now, with Sherman's recent proposal, Carter's prediction might not be that far off the mark.

The only difference? Sherman's fear is fueled by the power of cryptocurrencies, not their weaknesses.

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4. Facebook's next frontier

The company that conquered social media now wants to disrupt finance. While we've known that Facebook has been recruiting for its blockchain division heavily, we still don't know what for exactly.

However, that doesn't mean the project isn't chugging along. According to New York Times reporter Nathaniel Popper, the social media giant is now looking for venture capital investors to get a piece of the pie. Big pieces. Like pieces worth $1 billion.

That may seem like a lot, but for a company that has over 2 billion users under one roof, it might be a steal.

It's also probably quite scary to some. Spencer Bogart of Blockchain Capital told Bloomberg that the rumors have "lit a fire in the pants of every major [financial technology] and financial institution in the U.S."

More than that, the project has the United States Senate frazzled about consumer protections if the tech giant - who doesn't have the best privacy reputation on the block - will be handling finances.

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5. You should also know

• Honeyminer launched on MacOS so Apple users can use their computers to mine cryptocurrencies in the background.
• CoinGecko released a "Trust Score" in an attempt to fight fake exchange volume.
• The average crypto hedge fund lost 46% in the 2018 bear market according to a new PWC report.

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6. Shout out #SatStackers

From last week's poll, 76% of respondents answered that they are actively #stackingsats.

That's pretty good. But we can do better. If you want to learn about three passive ways to earn bitcoin, check out our latest exclusive here.

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