Friday, October 5, 2018

#93: Cloudflare's gateway to a user-run internet

Break on through (to the other side) 
MIT Technology Review
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Chain
Letter
Blockchains, cryptocurrencies, and why they matter
10.05: Break on through (to the other side)

Welcome to Chain Letter! Great to have you. On Thursdays (well, sometimes Fridays) we take a closer look at a key concept in the world of blockchains and crypto-assets. Feel free to suggest topics that you think we should touch on in the future.

Perhaps the most grandiose proclamation made by blockchain enthusiasts is that the technology, and others like it, can form the basis for a new kind of internet—one in which control over access to websites is distributed among its users, instead of mostly in the hands of a few big corporations like Amazon and Google. The idea is that such a distributed (or “decentralized,” in blockchain parlance) web would be more resilient to denial of service attacks, censorship, and even natural disasters. There would be no single point of failure that could bring the system down.

Components of the decentralized web may already be emerging, but they are not ready for prime time. Cloudflare, a company that makes its money by hosting the internet’s contents on far-flung servers and uses algorithms to deliver them to users as fast as possible, wants to help change that. The first step is what the company calls a “gateway,” to which anyone can connect their website and begin serving data stored in a peer-to-peer file sharing network called the Interplanetary File System (IPFS).

Cloudflare aims for IPFS to become a legitimate alternative to the four-letter internet acronym that begins almost every web address: HTTP (which stands for hypertext transfer protocol). At its heart HTTP is a set of rules for governing how information is delivered to the internet’s users. Unlike HTTP, in which data is identified by its location, IPFS addresses data with unique cryptographic fingerprints that can’t be faked. Instead of requesting content by referring to the IP address of the server where it is stored, IPFS users must request the content’s fingerprint.

Nick Sullivan, Cloudflare’s head of cryptography, says this approach can make the internet more trustworthy, since users don’t have to rely on third parties to deliver the actual data they requested. “If you know what you are trying to get, you can’t be tricked into downloading something else,” says Sullivan. The IPFS network functions similarly to other peer-to-peer file sharing services, like BitTorrent. As long someone on the network is sharing a digital asset like a video file or a web page, the protocol can make it available to users who request it.

Here’s the catch—two catches, actually: it’s difficult to use, and it's still far too slow to make sense for most users. That’s where Cloudflare thinks it can make a difference. The company already stores caches of popular pages, files, and other content in 154 data centers around the world, and uses its network to rapidly deliver those files to web users upon request. With the launch of its gateway system, Cloudflare could quickly offer data stored through IPFS at a massive scale.

Consider the case of CryptoKitties, a game that uses an Ethereum smart contract to let people breed one-of-a-kind digital cats. Each kitty’s ownership and digital “genetics” are tracked on Ethereum’s blockchain—they’re decentralized. But the images live on Amazon servers because there hasn’t been a good option for storing them in a decentralized way, says cofounder Dieter Shirley. It would be “inconceivably expensive” to store them on a blockchain, he says, and though there are publicly-available tools available for using IPFS to load website images, up until now they have been slow and unreliable. But the performance gain that Cloudflare’s gateway makes possible has inspired the company to seriously consider using IPFS.

Of course, the gateway is itself centralized since it’s under the control of a single company. But Cloudflare says it has taken advantage of the way IPFS works to ensure that neither users nor site owners must trust the company to serve the correct data. Cloudflare can’t change or remove content from the IPFS network, and if it turned the gateway off, the content would still be there. So while it’s not a fully decentralized experience, it’s at least incrementally less centralized than before.

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Loose Change

Fill your pockets with these newsy tidbits.

•
A new bill introduced in the US House of Representatives calls for creating a “consensus-based definition of blockchain.” (CoinDesk)
•
Yale University is among the investors in a new cryptocurrency-focused investment fund worth $400 million. (Bloomberg)
•
TD Ameritrade is backing a new cryptocurrency exchange. (CNBC)
•
Trading bots, described as “rampant,” are likely affecting cryptocurrency prices. (WSJ$)
•
The Russian intelligence agents the US Justice department indicted this week are alleged to have used Bitcoin in an attempt to cover their tracks. (CoinDesk)

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The Money Quote

“Satoshi was not a really great protocols engineer.”

—Bram Cohen, creator of BitTorrent, to Wired. Cohen is building his own cryptocurrency (of course) that’s supposed to use less energy than Bitcoin. Needless to say there are many who would disagree on this point.

Mike Orcutt
We hope you enjoyed your tour of what's new in the world of blockchains and crypto-assets. Send us some feedback or follow me at @mike_orcutt.
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Russian Hackers / 'Kimchi Premium' / Wine

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$BTC (1:17 p.m. EST): $6,576.17 (-0.05%) // 90-day high: $8,245.16 // 90-day low: $5,889.64/ / More…

$BCH (1:17 p.m. EST): $511.36 (-1.24%) // 90-day high: $872.84// 90-day low: $420.58 // More…

$ETH (1:17 p.m. EST): $223.49 (-0.08%) // 90-day high: $531.53 // 90-day low: $171.58 // More…

$LTC (1:18 p.m. EST): $58.02 (-0.96%) // 90-day high: $107.31 // 90-day low: $49.35 // More…

$XRP (1:18 p.m. EST): $0.51 (-3.22%) // 90-day high: $0.57 // 90-day low: $0.22 // More…

Here are the 10 most important stories about bitcoin and cryptocurrencies today

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1. Seven Russian intelligence officers mined bitcoin to fund an attack against anti-doping agencies. The attacks were in response to the organizations' efforts to expose Russian athletic doping. The Justice Department indicted the seven officers for money laundering for their use of bitcoin. The group targeted the U.S. Anti-Doping Agency, the International Association of Athletics Federations, and FIFA, among others. –MASHABLE

Russian intelligence officers indicted for bitcoin laundering
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2. The so-called "Kimchi Premium" has reappeared on South Korean exchanges. The term refers to a trend of inflated prices of cryptocurrencies in South Korea. It was common for South Korean customers to pay higher prices for coins during the earlier days of cryptocurrencies, but that has dissipated as the market has matured. The premium has reappeared recently, though, with bitcoin selling more than 40 percent higher than the global average of some exchanges. –COINGAPE

'Kimchi Premium' mysteriously reappears
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3. Who would have guessed? Bitcoin traders are largely young, well-off men living in big cities. A recent survey from Clor showed that the biggest bitcoin users are millennial men who earn more than $75,000 per year and live in urban areas. However, the main reasons most people purchase bitcoin is a belief that it will skyrocket in value, not because they necessarily believe in a future of digital currency. –CNN

Breaking news: Bitcoin owners largely young men
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4. Medici Ventures, the venture capital arm of Overstock.com, has invested in an Israeli company that developed a blockchain-powered wine futures platform. The company, VinX, is developing a token-based digital wine platform based on the Bordeaux futures model. The initiative will allow users to trade wine futures on a secure blockchain platform. –COIN TELEGRAPH

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5. Soulja Boy has a new bitcoin-themed song. –ETHEREUM WORLD NEWS

6. A virtual monument to Satoshi Nakamoto has been created in Kiev. –BITCOIN.COM

7. Alibaba files a patent application for a blockchain-based system that allows a third-party administrator to intervene on a smart contract. –COIN TELEGRAPH

8. A Binance user claims he bought 1,200 BTC on the exchange, but now it is locked. –CRYPTOGLOBE

9. An analyst believes bitcoin adoption could be in for a big boost. –FORBES

10. 30 bitcoin ATMs have been placed in Argentina. –AMB CRYPTO

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Written and curated by David Stegon. He has been a reporter for 15 years, the past 10 focused on technology. Follow him @davidstegon.

Editing team: Lon Harris (editor-in-chief at Inside.com, game-master at Screen Junkies), Krystle Vermes (Breaking news editor at Inside, B2B marketing news reporter, host of the "All Day Paranormal" podcast), and Susmita Baral (editor at Inside, recent bylines in NatGeo, Teen Vogue, and Quartz. Runs the biggest mac and cheese account on Instagram).

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