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  • Web3 innovations are replacing middlemen with middleware protocols
    by Michael O’Rourke on January 29, 2022 at 2:08 am

    Thanks to the DeFi revolution, it’s no longer companies extracting value from users, rather it’s developers extracting value from protocols. Cryptocurrencies and the wider blockchain ecosystem are helping change the status quo of how we conduct our day-to-day lives. With these emerging technologies, Web3 is being ushered in as a permissionless and open innovation using middleware blockchain protocols. By doing so, they’re replacing middlemen software-as-a-service (SaaS) companies by capturing value at a greater level.Middleware protocols are by no means new. After all, Web2 is supported by middleware applications, the main one being HTTP. Middleware is what enables users to interact with each other and with applications in a computing environment. And with Web3, there are a variety of protocols in the middle layer stack of this new internet to support applications. More vitally, though, are they really important?Creating value with middleware protocolsWith the arrival of blockchain technology, how we go about our daily activities is changing. Whether it’s through financial transactions, purchasing art, buying property or donating to a charity, the blockchain enables this by providing a secure and trusted peer-to-peer (P2P) network between users. Now, it’s no longer the case of companies extracting value from users, but developers extracting value from protocols.But, how does this work? On a middleware protocol, developers can stake the native token once for the equivalent network bandwidth for the lifetime of that stake. The longer applications are staked and using the network, the closer the cost approaches zero. After several months, the service is basically free, and with staking-based tokenomics, there are no monthly costs such as with SaaS fees.Developers can always unstake their initial investment and sell the middleware protocol’s native tokens they have purchased on a secondary market or to another developer. They can also stake the software-as-a-service node to earn more of the protocol’s token for servicing application requests.Related: Decentralized and traditional finance tried to destroy each other but failedOther middleware providers include Arweave, a global hard drive that allows users to store data permanently. Arweave users pay .54 AR once for one GB of permanent storage, and while it delivers near-zero marginal costs, the initial costs aren’t recoverable. Graph, a pay per query model for indexed blockchain data on-demand, is done through micropayments and can be costly for developers depending on the scale and frequency of queries.A synergistic relationshipEach application-specific middleware protocol provides a unique service at a different layer of the stack. For instance, the RPC layer is with the Pocket Network, the indexing layer is with Graph, Akash has the cloud layer, the video transcoding layer is with Livepeer and Arweave, Filecoin and Storj have the storage layer. Because they are at different parts of the decentralized Web3 developer stack, the protocols are complimentary. For instance, the following ETHOnline 2020/2021 hackathon projects used both Pocket and the Graph: ERCgraph, Proxy Poster, LiFinance Bridge Aggregator Analytics and Balancer Chat. And, because they are at different parts of the decentralized Web3 developer ops stack, the protocols are synergistic.This is noted by the fact that the Graph’s subgraph indexers need to ping a base-layer Ethereum archive node, which can be costly to run and maintain. To save money, indexers can leverage a middleware protocol’s RPC endpoints, giving users maximum uptime and no single points of failure. With Livepeer’s orchestrators, they need to ping a base-layer Ethereum full node, which also brings monthly costs to run and maintain. Similar to indexers, orchestrators can leverage a middleware protocol’s RPC endpoints to save money. This, in turn, develops a two-sided marketplace between consumers and provisioners.With this synergistic relationship, better service attracts applications, more app usage generates more node revenue and more node revenue attracts more nodes which boosts redundancy, and so the economic flywheel continues.Disrupting SaaSThe Web3 Index tracks demand-side fees (DSF) of service protocols across various layers of the decentralized developer stack. For instance, Pocket generates $3.9 million of DSF in 30 days because of a novel deflationary payment model. This means that developers pay through dilution and nodes earn through inflation.Graph produces $6,460, Livepeer $50,396, Arweave $171,406, Helium $7,591 and Akash $4,623. This novel economic approach has the potential to disrupt SaaS in a major way while maintaining “perpetual fair launch” mechanisms that individuals in crypto seek when contributing to a growing community.It also means no monthly rent to middlemen allowing developers to reap the rewards of their efforts.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Michael O’Rourke is the co-founder and CEO of Pocket Network. Michael is a self-taught iOS and Solidity developer. He was also on the ground level of Tampa Bay’s Bitcoin/crypto meetup and consultancy, Blockspaces, with a focus on teaching developers Solidity. He graduated from the University of South Florida.

  • The biggest crypto heists of all time
    by Jagjit Singh on January 28, 2022 at 11:00 pm

    Crypto exchanges are hacked surprisingly often. A few of the biggest crypto heists that occurred in the past few years are discussed in this article. How to avoid cryptocurrency scams?One of the best ways to protect your crypto investment is to secure a wallet and do your own research about the projects in the market.Don’t believe everything you’re told. Instead, examine any claims made about investment, especially if they appear too good to be true or promise huge returns in a short period. Also, do not trust anyone who contacts you personally, whether a government official, a public personality, or a stranger, and asks for Bitcoin payments or offers you an “investment opportunity.”Whenever possible, enable two-factor authentication on your cryptocurrency wallet and exchange. Moreover, never give anyone your crypto wallet’s private key or seed phrase, and keep that information offline in a cold wallet.Check the URLs of websites two or three times. For example, when trying a phishing scam, scammers will replicate the URL of a valid site and replace letters and numbers, such as an “l” for “1” or a “0” for the letter “O.”  Furthermore, any offer that requires an upfront cost should be rejected, regardless of the amount, especially if the price must be paid in cryptocurrencies.What are the biggest cryptocurrency heists in history?The biggest crypto heists to date are MT Gox, Bitgrail, Coincheck, KuCoin, PancakeBunny, Poly Network, Cream Finance, BadgerDAO, Vulcan Forged and Bitmart.MT GoxMT Gox was the first large-scale exchange hack, and it remains the most significant Bitcoin (BTC) heist from an exchange. The MT Gox robbery, on the other hand, was not a one-off occurrence. Rather, the site leaked cash from 2011 to February 2014.Hackers stole 100,000 BTC from the exchange and 750,000 BTC from its consumers over a few years. These Bitcoin burglaries were valued at $470 million at the time, but they’re now worth approximately ten times this amount. Shortly after the theft, MT Gox went into liquidation, with liquidators recovering roughly 200,000 of the stolen BTC.BitgrailBitgrail was a small Italian exchange that traded in obscure cryptos like Nano (XNO). The exchange was hacked in February 2018, just as the price of XNO soared from a few cents to $33. At least 17 million coins (the equivalent of about $150 million) were taken from Nano wallets.Many users began to express their dissatisfaction with the exchange before the attack (significantly lower withdrawal limits and transaction problems). According to the investigations, the coins were stolen from cold—not hot— wallets. Investigations persisted throughout the preceding three years, with Italian authorities now charging Bitgrail’s owner of being behind the attacks.CoincheckCoincheck, based in Japan, had $530 million worth of NEM (XEM) tokens stolen in January 2018. Hackers took advantage of the fact that the currency was kept in a “hot” wallet, which meant it was connected to the server and thus “online” (a cold wallet sees funds stored offline).The stolen coins were identified and marked as such by NEM developers, although there was conjecture that the monies were available on dark markets.However, given how much the coins lost in value following the attack, it’s unlikely that many people would have thought this was a good deal (the coins are now worth 83% less than they were—roughly $90 million).KuCoinKuCoin announced in September 2020 that hackers had obtained private keys to their hot wallets before withdrawing substantial quantities of Ethereum (ETH), BTC, Litecoin (LTC), Ripple (XRP), Stellar Lumens (XLM), Tron (TRX) and Tether (USDT). Since then, experts have claimed that they have reasonable cause to assume that crypto heist hackers are North Korean.PancakeBunnyThis flash loan attack, in which hackers were able to siphon $200 million from the platform, occurred in May 2021 and is among the more severe cases of cryptocurrency theft. The hacker loaned a big sum of Binance Coin (BNB) before manipulating its price and selling it on PancakeBunny’s BUNNY/BNB market to carry out the attack.This allowed the hacker to obtain a large number of BUNNY via a flash loan, dump all of the BUNNY on the market to lower the price, and then repay the BNB using PancakeSwap.Poly NetworkIn August 2021, a hacker exploited a vulnerability in Poly Network’s infrastructure and stole funds totaling more than $600 million. They didn’t get away with their reward, though, in an odd twist. Instead, the hacker approached the platform and agreed to return the majority of the funds, except $33 million in Tether (USDT) that had been frozen by the issuers.But the saga didn’t end there: $200 million of the stolen assets were locked away in an account that required the hacker’s password, according to Poly Network. The hacker initially refused to hand over the hacked crypto.That is, until Poly Network pleaded with them to release it, gave them a $500,000 reward for discovering the system flaw, and even offered them a job! Poly Network later revealed that the private key had been handed to them by “Mr. White Hat.”Cream FinanceNot only did hackers steal $130 million in the October 2021 incident related to robbing a cryptocurrency, but it was also Cream Finance’s third attack of the year. Hackers took $37 million in February 2021 and $19 million in August 2021.In the most recent attack, hackers used what was deemed a flaw in the DeFi platform’s flash lending system. On the Ethereum network, they were able to take all of Cream Finance’s tokens and assets, totaling $130 million.BadgerDAOA hacker succeeded in stealing assets from multiple cryptocurrency wallets on the DeFi network, BadgerDAO, in December 2021. The problem is thought to have started on November 10 when a malicious script was injected into the website’s user interface.Users’ transactions may have been intercepted while the script was active. The attacker took 896 BTC valued at roughly $50 million at that time.Vulcan ForgedIn December 2021, hackers stole $135 million from Vulcan Forged, a blockchain gaming startup. They stole private keys to 96 separate wallets before draining 4.5 million PYR tokens from them.BitmartIn December 2021, a hack of Bitmart’s hot wallet resulted in the theft of about $200 million. At first, it was thought that $100 million had been stolen via the Ethereum blockchain, but additional research found that another $96 million had been stolen via the Binance Smart Chain blockchain.Over 20 tokens were taken, including altcoins such as BSC-USD, Binance Coin (BNB), BNBBPay (BPay), and Safemoon, as well as substantial quantities of Moonshot (MOONSHOT), Floki Inu (FLOKI) and BabyDoge (BabyDoge).Why is cryptocurrency theft increasing?Crypto fraudsters, especially scammers, prey on naive buyers in the physical world by reading the fine print in contracts.Understandably, crypto heists pique the public’s interest. The first consideration is the massive amount of money to be stolen—legacy financial organizations are rarely robbed of such large sums of money. Second, because cryptocurrencies have only lately piqued the public’s interest, any hack is bound to generate headlines.On top of that, hackers have discovered that stealing cryptocurrency is more straightforward than stealing cash or electronic money in the banking system. As a result, it is becoming more widespread. Moreover, as cryptocurrency is commonly stored in huge sums and can be transferred instantly and anonymously from anywhere using only a private key or passcode, crypto hackers target it.Let’s take a look at the biggest crypto thefts of all time in this article. Also, the article will outline why crypto exchanges keep getting hacked; why are crypto heists getting larger and what we can do to protect ourselves from crypto heists.

  • Kyber Network (KNC) bucks the market-wide downtrend with a 57% gain in January
    by Jordan Finneseth on January 28, 2022 at 10:30 pm

    KNC shook off the current downtrend by posting a 50%+ monthly gain following the launch of Kyber 3.0 and integration across many decentralized exchanges. In the crypto market volatility continues to reign supreme, and fear, uncertainty and doubt (FUD) run rampant. This makes it challenging for any project to rise above the noise and post positive price gains but there are a few projects that are showing strength during the current downturn. Kyber Network (KNC) is a multi-chain decentralized exchange (DEX) and aggregation platform designed to provide decentralized finance (DeFi) applications and their users with access to liquidity pools that provide the best rates. Data from Cointelegraph Markets Pro and TradingView shows that since hitting a bottom of $1.18 on Jan. 6, the price of KNC has rallied 57% to a daily high at $1.87 on Jan. 27 despite the wider weakness in the crypto market. KNC/USD 4-hour chart. Source: TradingViewThree reasons for the strong showing from KNC include the release of Kyber 3.0, which included a rebrand to KyberSwap, the expanding list of DEXs integrated with the Kyber ecosystem and the widespread availability of KNC on centralized and decentralized exchanges. The release of Kyber 3.0The most significant development driving momentum for the Kyber Network was the release of Kyber 3.0. The launch included a rebrand of the platform’s exchange interface to KyberSwap and an integration with six blockchain networks, including Ethereum, Polygon, Binance Smart Chain, Avalanche, Fantom and Cronos. We’re excited to announce Kyber 3.0 transitioning Kyber from a single protocol to a hub of purpose-driven liquidity protocols catered to various DeFi use cases. This is the biggest change to Kyber’s architecture incl. the new DMM & a KNC Migration proposal https://t.co/pgffnUKjsx— Kyber Network (@KyberNetwork) January 21, 2021 On top of the integration of multiple popular blockchain networks, the Kyber 3.0 upgrade was also designed to address some of the biggest limitations in DeFi, like high gas fees and the limited access some projects get by only being available on one exchange. Kyber has achieved its new functionality through the implementation of dynamic market makers (DMM), which allows adjustments to be made to the key parameters of a liquidity pool based on recent fee data and trade volume. This approach helps improve concerns that have been raised about automated market makers (AMM), including reducing capital requirement, preventing front-running and mitigating impermanent loss. Integration of new DEXsAnother for the bullish momentum driving KNC higher has been the continued integration of new decentralized exchange protocols into the Kyber Network ecosystem. Most recently, KyberSwap integrated pools from multiple DEX protocols including ShibaSwap, DefiSwap, MMF, EmpirDEX, PhotonSwap, Morpheus, BeethovenX, Gavity, Cometh, DinoSwap and PantherSwap. The new additions mean that the KyberSwap protocol now supports more than 40 DEXs and 31,000 liquidity pools across six major blockchain networks. The developers at KyberSwap have also indicated that the support and integration of additional blockchain networks and decentralized exchanges is currently underway. Related: Kyber plans to become a hub for DeFi with massive DEX upgradeWidespread availability of KNC on exchangesKNC also has widespread availability on exchanges across the cryptocurrency ecosystem. Top-11 DEX tokens by presence on Exchanges. Source: TwitterAs shown in the graphic above which was posted on Twitter by pseudonymous user ‘Cryptolaxy’, KNC is the second-ranked DEX token by the presence on exchanges and it is currently available on 80 separate exchanges. The only other projects with similar availability are ZRX with 105 exchange listings and Uniswap at 76. VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for KNC on Jan. 22, prior to the recent price rise. The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.VORTECS™ Score (green) vs. KNC price. Source: Cointelegraph Markets ProAs seen in the chart above, the VORTECS™ Score for KNC climbed into the green and hit a high of 79 on Jan. 22, around 35 hours before the price increased 44% over the next three days.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

  • CertiK’s identification of Crypto Cars as ‘rug pull’ was a false alarm
    by Zhiyuan Sun on January 28, 2022 at 10:00 pm

    A temporary website outage of the project’s main site, among other factors, led to the error. In a period of market downturns, rumors of crypto bans and decentralized finance, or DeFi scams, blockchain enthusiasts can be sensitive to the smallest abnormalities within projects they follow and sometimes erroneously fear for the worse. The day prior, CertiK, a leading cybersecurity ranking platform in the blockchain space, issued a warning via Twitter regarding CryptoCars, alleging that it was a “rug pull.” However, the staff quickly deleted the post as it was a false alarm.Via a series of Twitter screenshots obtained by Cointelegraph, CertiK first claimed that the website and Telegram for CrytoCars were down. However, users quickly pointed out that both the CryptoCars website and Telegram apps were still functional, resulting in CertiK rescinding the community alert.According to the developers of CryptoCars, the project’s Telegram chat will be temporarily closed “until the end of the Lunar New Year from 27th Jan to 7th Feb.” The CryptoCars development team is based in Vietnam, which celebrates the Lunar New Year holiday.Sources at CertiK issued the following statement to Cointelegraph regarding the incident:”Incident reporting, although complex, is rapid in nature and is done in a manner to alert the community on up-to-date suspicious activity. In this situation, we noticed [their] Telegram went offline, funds dropping to zero, and the $CCARs website being unavailable. This created an alert of a possible rug pull.”Despite the error, CertiK has done much to benefit the blockchain community. As recently as the day prior, it issued a verified community alert for Qubit Finance as the protocol suffered an $80 million hack.CryptoCars launched in September 2021 as a nonfungible token, or NFT, car racing game. Structured under a play-to-earn model, CryptoCars requires players to purchase an NFT car minted on the Binance Smart Chain through a blind box created by its developers for 6,600 CCAR or from another user starting at 490 CCAR. According to its official site, the project claims to have 721,683 players, 582,666 NFT cars, and 248.8 million in-game transactions at the time of publication. It also has over 124,500 followers on Twitter.

  • Fitch says proposed Russia crypto ban eases risks but curbs innovation
    by Zhiyuan Sun on January 28, 2022 at 9:45 pm

    Russia’s retail cryptocurrency operations currently stand at about $5 billion per year. On Friday, credit rating agency Fitch published a research piece about Russia’s proposed ban on cryptocurrencies. Although the report agreed with the Central Bank of Russia’s (CBR) position that the ban would limit its financial system’s exposure to risks, it also cautioned that such a proposal could “hold back the diffusion of technologies that could improve productivity.”In addition, Fitch warned:”Suppose this slows the spread of crypto-driven innovations that, for example, improve the speed and security of payments or asset liquidity via tokenization. In that case, it could over time weaken this aspect of the Russian banking sector’s operational environment relative to peers.”Additionally, Fitch commented on the adoption of a central bank digital currency, or CBDC, in Russia, saying that “[the digital ruble] should increase the authorities’ capacity to monitor and manage financial flows, which might otherwise be eroded by the growth of cryptocurrency transactions.” The report also clarified that a primary motive for the CBR proposing harsh cryptocurrency restrictions might be to reduce competition against its upcoming CBDC.Like India, Russia’s crypto regulatory environment has been chaotic lately, with policymakers frequently oscillating between an outright ban on digital currencies versus calling for an established regulatory framework. At the same time, even former Russian president Dmitry Medvedev offered his comments on the crypto ban proposal as reported by local news outlet rbc.ru on Friday, and translated by Cointelegraph:”I’ll say it frankly — when they try to ban something, it very often leads to the opposite result of what is intended. But the position of the Central Bank has, of course, its own reasons, which are also known to everyone.”