However, nothing is risk-free on the blockchain, and exploitative trading strategies such as sandwich trading and front-running actually increase in risk the more the engineer attempts to generalise their ability to capture opportunities.

To illustrate to novice traders the risks of playing in the mempool, I have conducted a demonstration of a new trading alpha I call “Salmonella”, which involves intentionally exploiting the generalised nature of front-running setups. The goal of sandwich trading is to exploit the slippage of unintended victims, so this strategy turns the tables on the exploiters.

source: HN

We showcase one example of how an attacker can inject a low order subgroup group element in threshold EdDSA protocol secure against malicious adversaries, bypassing existing protections.

source: green

In the Ethereum mempool, these apex predators take the form of “arbitrage bots.” Arbitrage bots monitor pending transactions and attempt to exploit profitable opportunities created by them. No white hat knows more about these bots than Phil Daian, the smart contract researcher who, along with his colleagues, wrote the Flash Boys 2.0 paper and coined the term “miner extractable value” (MEV).

Phil once told me about a cosmic horror that he called a “generalized frontrunner.” Arbitrage bots typically look for specific types of transactions in the mempool (such a DEX trade or an oracle update) and try to frontrun them according to a predetermined algorithm. Generalized frontrunners look for any transaction that they could profitably frontrun by copying it and replacing addresses with their own. They can even execute the transaction and copy profitable internal transactions generated by its execution trace.

source: HN

Ethereum’s tokenized man just became a synthetic deepfake—and you can decide what he says for $99.

source: MR

In this paper we examine how, even when faced with this statistical improbability, ISE discovered 732 private keys as well as their corresponding public keys that committed 49,060 transactions to the Ethereum blockchain. Additionally, we identified 13,319 Ethereum that was transferred to either invalid destination addresses, or wallets derived from weak keys that at the height of the Ethereum market had a combined total value of $18,899,969. In the process, we discovered that funds from these weak-key addresses are being pilfered and sent to a destination address belonging to an individual or group that is running active campaigns to compromise/gather private keys and obtain these funds. On January 13, 2018, this “blockchainbandit” held a balance of 37,926 ETH valued at $54,343,407.

In an experiment, we picked a private key of 1, for no reason other than that it is the lower bound of a possible private key for secp256k1 and it also lies within the 1 to 232-1 range of a 32-bit truncated key. We use the private key 0x0000000000000000000000000000000000000000000000000000000000000001 to derive the public Ethereum address 0x7e5f4552091a69125d5dfcb7b8c2659029395bdf.

source: ML

Proof of work algorithm based on random code execution

source: solar

Opera now also includes Web 3-support and a Crypto Wallet, an important new feature. It allows you to browse and make transactions the blockchain-based Internet of the future, also known as Web 3. This makes Opera the first ever Web 3-ready computer browser.

Here we go....

source: HN

Accumulators are a topic of interest in academia since 1994. Similarly to a Merkle Tree, they are used to cryptographically commit to the knowledge of a set of data. At a later point in time, proving membership of a subset of the dataset in the dataset can be proven by publishing a proof. In Merkle Trees the proof is called a Merkle Branch (or Merkle Proof), and grows logarithmically to the size of the committed data (commit 16 elements, prove inclusion by revealing log_2(16)=4).

Accumulators on the other hand, allow proving membership in constant size, as well as batching of proofs for multiple elements (which is not a feature of Merkle trees).

The focus of this post will be on describing the building blocks of RSA Accumulators, how we can construct proofs of (non-)membership as well as batch them across multiple blocks. This particular technique also has applications in UTXO-Based Plasma, and has given birth to the Plasma Prime variant. A lot of effort is being put into designing an accumulator that allows compaction of the UTXO-set in Plasma.

source: green

At the intersection of programming, economics, cryptography, distributed systems, information theory, and math, you will find Vitalik Buterin, who has managed to synthesize insights across those fields into successful, real-world applications like Ethereum, which aims to decentralize the Internet.

Tyler sat down with Vitalik to discuss the many things he’s thinking about and working on, including the nascent field of cryptoeconomics, the best analogy for understanding the blockchain, his desire for more social science fiction, why belief in progress is our most useful delusion, best places to visit in time and space, how he picks up languages, why centralization’s not all bad, the best ways to value crypto assets, whether P = NP, and much more.

source: MR

In both cases, this hack presents a strong argument for tending towards sticking to things proven to work and to be wary of overcomplicating things and thereby introducing unnecessary risks when people’s financial assets are involved.

When more is less.

source: L

Hoping to convert his daily constitutional into cash, a correspondent recently amassed more than a hundred sweatcoins by walking around New York, and then investigated what he could reap from his labors. At the Gap, when a clerk ringing up the correspondent’s purchase asked, “Do you have a Gap card?,” the correspondent said, “No, but I have sweatcoin.” The clerk furrowed his brow and demanded legitimate currency. A cashier at Astor Place Hairstylists was impressed by the concept, when it was explained to him (“Sounds like a million-dollar idea”), but was unwilling to accept sweatcoins as payment for a haircut.

Also Uber drivers, financial technology, Fannie and Freddie and a crypto tween.

I feel like “financial literacy” as it is usually conceived is terrible, just a lot of “if your bank pays 10 percent compound interest and you start with $100 then in three years will you have more or less than $130?” and other arithmetic trivia that is of limited interest in our world of low interest rates and flourishing Ponzi schemes. “Financial literacy” will tell you that the answer is “more than $130,” because compound interest Einstein blah blah blah, but the correct answer is “less than $130,” and likely zero, because if your bank pays you 10 percent interest in the United States in 2018 it is a Ponzi and will steal your money.

Like here is a financial-literacy quiz: Are these companies? If you get at least five of those right then I will allow you to drive for Uber.

A fantastic money stuff.

source: ML

So, what’s on the horizon as bitcoin prepares for Lightning to strike? To truly understand, it’s important to first understand how Lightning uses the cryptographic primitives of the bitcoin network to make secure payments outside the blockchain (you’re in luck—we’ll explain). From there, we’ll take a step back and consider the key strengths and weaknesses that the new network is likely to have once it’s deployed at scale.

It was invented by Satoshi Nakamoto, a developer at Nintendo who mysteriously disappeared in the 1990s. The multiplayer mode in Goldeneye N64, on which he was lead developer, uses a primitive form of Bitcoin to keep track of high scores.

Secure PRNG implementation in the Ethereum blockchain remains a challenge.

source: green

TL;DR: you can hijack certain Lisk accounts and steal all their balance after only 2^64 evaluations of the address generation function (a combination of SHA-256, SHA-512, and a scalar multiplication over Ed25519’s curve).

source: green

We have been conducting a longitudinal study of the state of cryptocurrency networks, including Bitcoin and Ethereum. We have just made public our results from our study spanning 2015 to 2017, in a peer-reviewed paper about to be presented at the upcoming Financial Cryptography and Data Security conference in February.

Here are some highlights from our findings.

source: green

Here we report the first realization of a transparent ZK system (ZK-STARK) in which verification scales exponentially faster than database size, and moreover, this exponential speedup in verification is observed concretely for meaningful and sequential computations, described next. Our system uses several recent advances on interactive oracle proofs (IOP), such as a “fast” (linear time) IOP system for error correcting codes.

source: green

And this leads me to my final point, a provocation: once you address the problem of governance, you no longer need blockchain; you can just as well use conventional technology that assumes a trusted central party to enforce the rules, because you’re already trusting somebody (or some organization/process) to make the rules.

source: L

What if, ten years after it was invented, the reason nobody has adopted a distributed ledger at scale is because nobody wants it?

That’s just, like, your opinion, man.

source: MR