News: Stopping ransomware, China hates miners, Ecuador CBDC history, NFTs still too hard to buy

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Bitcoin in the enterprise

Is ransomware a plague yet? Insurance companies are already recoiling as ransomware attacks “skyrocket.” [FT, paywalled]

But the most important thing in dealing with ransomware is to work on every part of the problem except the payment channels — because bitcoins are too precious to be hampered in any way.

Also, it’s not possible to do more than one thing at the same time, if it’s about a problem related to crypto. Fix all the corporate networks in the US — then look at the payment channels. If ever.

As the largest actual-dollar exchange in the US, Coinbase directly makes money when ransomware victims buy the coins to pay their ransom. Davide de Cillo, Coinbase’s head of product, is helpfully weighing in on Twitter threads and explaining why you certainly shouldn’t do anything about the payment channels for ransomware. “Thank god that didn’t ask for truly untraceable cash. Can you imagine if we had to ban USD bills?” Nice to see that the response “what about this other thing that isn’t the topic, huh” is fully industry-endorsed. [Twitter, archive]

Others don’t go along with the crypto view of the problem. Nicholas Weaver: The Ransomware Problem Is a Bitcoin Problem. [Lawfare] Jacob Silverman: Want to Stop Ransomware Attacks? Ban Bitcoin and Other Cryptocurrencies. [New Republic]

J. P. Koning has a more creative solution: shoot the hostage. Instead of banning crypto to stop ransoms … punish victims who pay up! [AIER]

Although Koning does point out why ransomware gangs like bitcoin — it’s the censorship resistance. This doesn’t really make the case against taking out the payment channels. [Moneyness]

Governments aren’t taking the crypto industry line either. The US will be giving ransomware attacks similar priority to terrorism. Jake Sullivan, President Biden’s national security adviser, said that ransomware needs to be a “priority” for NATO and the G7 nations. And GCHQ says that ransomware attacks are now a bigger cyber threat to the UK than hostile states. [Reuters; Independent; FT, paywalled]

The future of ransomware may be cyber warfare rather than obtaining bitcoins. NotPetya is already thought to have been primarily a Russian attack on Ukrainian interests, and only secondarily about acquiring bitcoins. [War On The Rocks]

 

Wait for ransomware, and then sell assets as beyond economical recovery. Structural equivalent of writing off a car and all you have to do is park it somewhere you know it'll get phished. It's better than burning the place down for the insurance because you can sell the building.

— crossestman (@crossestman) June 4, 2021

 

Baby’s on fire, but not so much in China

Imagine Bitcoin after the apocalypse, when we’re finally free of computers:

“I guess … three”
“Oh, well done! You win the 0.097 bitcoins!”

China is thoroughly sick of the crypto miners. The province of Qinghai is not permitting new mining projects, and will be closing down existing mining operations. [CoinDesk]

Yunnan province was reported to be kicking the miners out. But what it’s actually doing is forcing the miners to connect to the official grid, and not just strike deals for cheaper electricity with power plants directly, who then don’t pay the state their cut. The Yunnan Energy Bureau is enforcing this with inspections of mining operations. Paying official prices may, of course, effectively push the miners out. [Fortune; The Block]

HashCow will no longer sell mining rigs in China. Sichuan Duo Technology put its machines up for sale on WeChat. BTC.TOP, which does 18% of all Bitcoin mining, is suspending operations in China, and plans to mine mainly in North America. [Time] Mining rigs are for sale at 20–40% off.

Chinese miners are looking to set up elsewhere. Some are looking to Kazakhstan. [Wired] Some have an eye on Texas — a state not entirely famous for its robust grid and ability to keep the lights on in bad weather. [CNBC]

Crypto miners still mean software developers can’t have nice things — cloud computing service Docker is discontinuing their free tier specifically because of abusive miners, as of 18 June. “In the last few months we have seen a massive growth in the number of bad actors who are taking advantage of this service with the goal of abusing it for crypto mining … In April we saw the number of build hours spike 2X our usual load and by the end of the month we had already deactivated ~10,000 accounts due to mining abuse. The following week we had another ~2200 miners spin up.” [Docker]

Are crypto miners money transmission businesses? Well, FinCEN explicitly says that creating fresh coins and distributing them to your pool is not. But miners also process transactions — and the trouble is that they pick and choose which ones they process. One mining pool, Marathon, was blocking transmissions that OFAC didn’t like — but stopped because of …  complaints from pool participants. Nicholas Weaver points out that this completely gives the game away: miners have always been able to comply with money transmission rules, they just got away with not doing it. [The Block; Lawfare]

Why You Should Care About Bitcoin if You Care About the Planet: “Bitcoin is bringing dirty power plants out of retirement. Earthjustice is fighting this new trend in order to put an end to fossil fuels once and for all.” [Earthjustice]

Shocked to see that the timeline for Ethereum moving to ETH2 and getting off proof-of-work mining has been put back to late 2022 … about 18 months from now. This is mostly from delays in getting sharding to work properly. Vitalik Buterin says that this is because the Ethereum team isn’t working well together. [Tokenist]

Detect the malware — or become the malware? Norton 360 Antivirus will soon have a function to mine Ethereum on the user’s graphics card. Nobody knows why they thought this was in any way a good idea. [press release]

Chia farming malware may have been spotted in the wild, infecting QNAP file servers. [QNAP forums]

 

Cops accidentally shut down operation actually harmful to society https://t.co/aC8BgVSWZz

— Tom Hatfield (@WordMercenary) May 28, 2021

 

Regulatory clarity

Bitcoin was invented as a new form of money, free of government coercion! The trouble there is when it interacts with the government-regulated world of actual money.

Governments are stupid and incompetent in a great many ways — I mean, I live in the UK. My natural inclination is that governments can bugger off out of my face. Which is why it annoys me about Bitcoin that it keeps making the case for statism.

I had someone call me out on this: my books are way too much like advocacy of the existing system. And it’s true — because both Bitcoin and Facebook came up with ideas that were even worse than what we have now.

Getting your money out past awful governments is absolutely a crypto use case. I remain sceptical of many of the people advocating it, because a lot are just scammy crooks — or at best, craven number-go-up guys pretending to care about human rights. The Biden administration is proposing to collect data on foreign crypto investors active in the US, to “bolster international cooperation” and crack down on tax evasion. [Bloomberg]

UK legacy fiat banksters can’t cope with the demands of the burgeoning crypto economy, and they’re blocking payments to exchanges, claiming “high levels of suspected financial crime” or some such nonsense. This time it’s Barclays, but also the “challenger” fintech banks Monzo and Starling. Reddit also reports Revolut blocking transactions. [Telegraph; Reddit]

Why are crypto business not getting registered with the FCA in the UK?” A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations.” The deadline is now 31 March 2022. [FCA]

CFTC Commissioner Dan Berkovitz is unhappy with DeFi — specifically, that it’s an unregulated market for the purpose of trading derivatives of commodities. [CFTC]

Thailand has banned crypto exchanges from trading “gimmick” meme tokens, NFTs, and tokens issued by “digital asset exchanges or related persons.” [Bangkok Post]

The SEC has updated its List of Unregistered Soliciting Entities, who use questionable information to solicit investment. Lots of crypto firms here. [SEC press release; Unregistered Soliciting Entities, PDF]

 

I engage in complex trading strategies; in real terms I’m consistently down but my imaginary gains are always limitless.

— Josh Cincinnati (@acityinohio) May 30, 2021

 

Central banking, not on the blockchain

The Bank of England discussion paper “New Forms of Digital Money” is about Libra/Diem-style coins and central bank digital currencies (CBDCs). It’s not at all about crypto trading coins like Tether, though that’s what the press has latched onto, all citing Jemima Kelly in the Financial Times laughing the Tether reserves pie charts out of the room. Anyway, the Bank looks forward to your comments — get them in by 7 September. [Bank of England; FT, paywalled]

In 2015, Ecuador tried to do a CBDC, based on US dollars: Sistema de Dinero Electrónico. It failed pretty hard. I blogged about it here, and wrote it up in chapter 15 of Libra Shrugged. Now there’s a detailed history in the Latin American Journal of Central Banking, by Andrés Arauza, Rodney Garratt and Diego F. Ramos. [Science Direct]

Frances Coppola: “I’ve written up my analysis of the BIS’s proposed capital regulations for cryptocurrencies and stablecoins. With a primer on bank capital and reserves, since people still don’t seem to know what these are and how they differ from each other.” This is about banks’ own capital, not liabilities to customers. [blog post]

 

I have previously simplified that down to: "If someone says 'Blockchain solves X', substitute database for blockchain. If it still makes sense, use a database. If it doesn't make sense, Blockchain doesn't solve it."

— Myz Lilith (@MyzLilith) May 31, 2021

 

Sales receipt fan fiction

Protos: “The NFT market has imploded over the past month, with sales in every single category almost entirely drying up.” This was based on data from nonfungible.com — which they say Protos misinterpreted. Amy Castor, in ArtNet, concurs wth nonfungible.com — the NFT market is down, but not to the extent Protos painted it.  [Protos; nonfungible.com; Artnet, paywalled]

BBC: Buying a pink NFT cat was a crypto nightmare — a normal person tries to buy an NFT, and discovers that, after 12 years, crypto is still basically unusable garbage for normal humans. With quotes from me. Crypto still has the usability of a bunch of wires on a lab bench. Crypto pumpers really hate having that pointed out, and will always blame the victim. In thirty years, the crypto bros will be saying “it’s early days, give it thirty years, time will tell.” [BBC]

TechMonitor: ‘The apotheosis of ownership’: What is the future of NFTs? With quotes from me. [TechMonitor]

 

I have an idea for a data structure, hear me out.

A linked list where every node contains a hash of all the data in the nodes behind it, and every time you want to add a new node, you need about 200.000 other computers to say ok and consume the power equivalent of a small nation

— Ólafur Waage (@olafurw) May 6, 2018

 

Things happen

BBC on crypto day trading: “This is the crack cocaine of gambling because it is so fast. It’s 24/7. It’s on your phone, your laptop, it’s in your bedroom.” [BBC]

Someone just told me what IBM Blockchain was charging for “managed blockchain”: on the order of $1000 per node per month. “I was speechless after receiving the quote.” IBM didn’t quite make the case against PostgreSQL.

This is a hilarious story from the 1990s, as told in 2012: How The Government Set Up A Fake Bank To Launder Drug Money. (Podcast plus transcript.) [Public Radio East]

Beginning 3 August, Google will no longer accept ads for DeFi protocols, decentralised exchanges, ICOs, crypto loans or similar financial products. [Google Support]

Wealth manager Ruffer handles large investments for “institutions, wealthy individuals and charities.” Ruffer got into Bitcoin in November 2020, and assured the crypto world that they were in this for the long haul. It turns out Ruffer sold up in April 2021, for a tidy profit. The “speculative frenzy” was making them nervous. [FT, paywalled]

 

I wish people would stop saying “crypto” when they mean “cybercrypto”. Words have meaning, people.

— matt blaze (@mattblaze) June 7, 2021

 

Hot takes

New Bitfinex’ed blog post just dropped: Tether is setting a New Standard for Transparency, that is Untethered from facts. A catch-up on the Tether situation, as the rest of the world finally starts noticing there might be a problem here. [Medium]

There’s another podcast series about the Quadriga crypto exchange and its allegedly-deceased founder, Gerry Cotten. This one is “Exit Scam”. For once, I’m not in this one. [Exit Scam]

Cas Piancey: Michael Saylor of MicroStrategy has always been like this — what actually went down at MicroStrategy, and then at the SEC, from 1998 to 2000. [Medium]

The Marshall Islands SOV Deconstructed, by IMF researcher Sonja Davidson — Sonja was one of the people who helped look over the CBDC chapter in Libra Shrugged. [Global Fintech Intelligencer]

Requiem for a Bright Idea (1999) — a post-mortem on David Chaum’s DigiCash, a predecessor of Bitcoin. [Forbes, 1999]

At last, a worthy successor to brazil.txt, but this time with grown-ups — the founder of Zebi, the “Indian ETH,” pumps, and dumps. [Reddit]

 

help I'm in an abusive relationship pic.twitter.com/VIE3RLiewr

— CryptoFungus (@crypt0fungus) June 14, 2021

 

Living on video

I’ll talk to almost any podcast or media in good faith, at the drop of a hat. (Email me!) But I keep being asked to talk about crypto on Clubhouse. Unfortunately, Clubhouse isn’t on Android yet — and my A5 2016 is apparently too boomer to run the Clubhouse for Android preview.

So if you want me to debate cryptos on Clubhouse, you’ll need to buy me an unlocked iPhone 12 or Galaxy S21. Demonstrate your proof-of-stake on this one.

(I AM BEING SILENCED by BAD FAITH CULTURAL MARXIST WOKEISTS not buying me a new top-end phone.)

When the Music Stops is Aviv Milner’s new skeptical podcast about cryptocurrency. I went on to talk about Chia and the various disk-space coins. [Anchor.fm]

NTD: China’s Robinhoods Eye US Market with Cryptos — with me, 10:50 on. Not very crypto news, this is more about the daytrading, i.e., gambling market, with Chinese stock daytrading companies looking to get into the US and offer cryptos — which they can’t do in China. Because China hates cryptos. [YouTube]

I also did a pile of press on El Salvador — it’s disconcerting to discover that my blog posts and Foreign Policy article seem to be the primary sources of information on the scheme. But those will be in my next El Salvador post!

As well as Bukele, there’s the weird Strike and Bitcoin Beach factions. The El Salvador Bitcoin Caper would make a hilarious slapstick comedy about crook vs. crook vs. crook — if it wasn’t real life, with six and a half million victims.

 

Already loving this book “Attack of the 50 Foot blockchain” by @davidgerard pic.twitter.com/1J0KcNEQb2

— Bichael (@MikeLewisATX) June 5, 2021