Tag Archive for Bitcoin

Is China Trying to Kill Bitcoin

Is China Trying to Kill BitcoinCryptocurrency Bitcoin has been on quite a roller-coaster ride the past weeks. From an all time high of $4,950.72 to $3,537.79 during the first 14 days of September 2017 in four days. That is a loss of nearly $1,413.00 which is over 9 shares of Apple (AAPL) or nearly 19 shares of Microsoft (MSFT). Not only am I skeptical about the value of Bitcoin at these levels, but apparently the Chinese government also is skeptical about cryptocurrencies.

CNET reports that the People’s Bank of China, the central bank of China banned initial coin offerings where bitcoin entrepreneurs and speculators raise funds by launching new digital tokens. ICO’s allowed blockchain startups to raise nearly $2 billion from investors worldwide in 2017. There was no mention of cryptocurrencies such as Bitcoin or its rival Ethereum, but the announcement sent stocks sliding anyway.

CNET says PBC ruled that ICOs are a form of “unauthorized and illegal public financing … (which) seriously disrupted economic and financial order” in China. To that end, the country has banned all sales and currency conversions involving digital tokens, and prohibited all financial institutions and non-bank payment organizations from offering any services to ICOs.

The American Banker speculates that the Chinese government may be trying to kill Bitcoin. In a recent article they lay out the case for Chinese regulators putting an end to cybercurrencies.

They point out that the Communist government of China is known for its strict capital controls and sweeping regulatory judgments. This attitude has spilled over to its relationship with cryptocurrencies.

Some observers are quick to point out that China has a long history of using the “Great Firewall of China” to block Western web sites, from Facebook to YouTube to WhatsApp and even VPN’s.

According to AB, the Chinese regulators have instructed all domestic cryptocurrency exchanges to shut down this month, effectively choking off one of the largest markets for the commercial buying and selling of bitcoin and other digital assets.

Further, cryptocurrency exchanges in China must work closely with authorities as they wind down their operations. AB says four major Chinese exchanges—Huobi, ViaBTC, OKCoin and BTC China, at one time the world’s largest by trading volume—have already announced their shutdown.

The moment could be a pivotal one in the evolution of financial services. It could easily be misread both by traditional bankers who could be disrupted and fintech entertainers who see a profit in disrupting the status quo. Bitcoin skeptics such as JPMorgan Chase’s CEO Jamie Dimon who called bitcoin a “fraud” that would soon “blow up.” American Banker believes Mr. Dimon has grown annoyed at the cryptocurrency’s staying power even though his firm is experimenting with blockchain technology—and filed a patent in late 2013 for a bitcoin-style digital payment system.

Next on the chopping block could be bitcoin miners. Bitcoin miners use tremendous amounts of computing power to verify and record transactions on the bitcoin network. In return, they receive new bitcoins which are minted at a predetermined rate. Some 80% of the world’s bitcoin mining takes place in China, the article claims the bottom could fall out of the business if miners have no way to turn their digital gains into fiat currency.

China is doing this “just to show their power,” Oleg Seydak, CEO of the marketplace lender Blackmoon Financial told AB. “They will temporarily close all of these companies, introduce strong regulations and keep the industry and the sector under their control.”

This approach makes sense if Chinese leaders do not want to be seen as falling behind in a new and growing market. In 2016, China accounted for the majority of global bitcoin trading activity. But with the government clamping down, China’s share has dropped to less than 15% of global volume. Japan now holds the top spot, with the  U.S. and South Korea close behind.

Sasha Ivanov, CEO of Waves, a blockchain platform believes the Chinese ICO ban is a positive development for the industry. Mr. Ivanov told AB that most ICOs were nothing but scams. He says Chinese regulators “finally lost patience, as more and more companies tried to raise millions for nothing.” China, he said, “has a reputation of being a harsh regulator that makes abrupt decisions,” but he feels confident that ICOs will be allowed by Chinese authorities once they have put in place an adequate regulatory framework.

“Fundamentally it all comes back to control, and right now the party’s all about control, especially around the 19th” Communist Party Congress, Bill Bishop, head of The Sinocism China Newsletter told CNBC.

Paul Triolo, practice head, geo-technology, at Eurasia Group, told CNBC, “the cyrptocurrency problem has gotten exponentially more difficult for them to get their head around and regulate.”

“Definitely bitcoin and cryptocurrencies’ free [reign] is over. But the issue of how this will affect the blockchain industry is still unknown,” Mr. Triolo said. “China doesn’t want to be left out of that. They’ll probably still end up allowing some parts of blockchain to survive. The financial piece of bitcoin and the blockchain industry is what they’re after.”


Seems to me that China wants to reign in cryptocurrencies rather than kill them off. The free-wheeling de-centralized nature of bitcoin makes the centrally controlled Chinese beureartes nervous. However they will probably adapt bitoin to meet their internal needs which is counter to the stated goals of bitcoin.

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.


CryptocurrenciesThe attackers behind last month’s WannaCry ransomware were planning to extort $300 in Monero cryptocurrency to unlock encrypted files. Until this crisis, who had ever heard of Monero? How could you even buy Moneros to unlock your PC, if you wanted to take that chance? More people are probably aware of Bitcoin (BTC). The Visual Capitalist explains that Bitcoin is the original cryptocurrency, and its meteoric rise has made it a mainstay of conversation for investors, media, and technologists alike.

cryptocurrencyDespite its shady history, Bitcoin has spawned over 800 new markets and cryptocurrencies. While Bitcoin is the dominate cryptocurrency, with a market cap of $37.2 billion, the rest of the cryptocurrencies are worth even more, in combination they are worth nearly $40 billion. The leaders of the altcoin movement are:

Ethereum (ETH) launched in 2015, is the second largest by market capitalization. It is also quite different from Bitcoin. The Visual Capitalist explains that while Bitcoin is designed to be a payments protocol first, Ethereum is designed to work as a blockchain-based computing platform for developers to build and deploy decentralized applications, while also enabling smart contracts. The tokens used to power the network are called Ether, but they can also be traded online. At time of writing, Ethereum’s market capitalization is $15.4 billion.

Ripple logoRipple (XRP) is the native currency of the Ripple Protocol – a broader catch-all for an open-source, global exchange according to the Visual Capitalist. Ripple is aiming to be a settlement protocol for major banks, It’s already being used by banks such as Santander, Bank of America Merrill Lynch, UBS, and RBC. Ripple has a market cap of $10.9 billion.

Ethereum Classic (ETC) The Ethereum network actually split into two in 2016.The Visual Capitalist says it’s a complicated situation. You can read about the hack v. hack battle here. Ethereum Classic is based on the original Ethereum blockchain, and has a market capitalization of $1.4 billion.

Litecoin logoLitecoin (LTC) is one of the first altcoins, and it is nearly identical to Bitcoin after being “forked” in 2011. Litecoin aims to process blocks 4x faster than Bitcoin to speed up transaction confirmation time, though this creates several other challenges as well according to the Visual Capitalist. At time of writing, Litecoin’s market capitalization is worth $1.3 billion.

Monero (XMR) is an open-source, privacy-oriented cryptocurrency launched in April 2014. It is the result of a fork of the Bytecoin cryptocurrency According to CoinDesk, Monero is private by default, and it has achieved the widespread adoption of those interested in using cryptocurrencies to remain anonymous. Monero has a market capitalization of $6.2 million.

Coin Market Cap Monero chartThe price of Monero’s XMR has experienced significant volatility at times, climbing more than 1,300% since it began trading on CoinMarketCap. Since its start, the cryptocurrency has fluctuated between roughly $0.25 (in January 2015) and close to $60 (in May 2017).

Monero leverages ring signatures and stealth addresses to obscure the senders and recipients identity. Ring signatures combine or ‘mix’ a user’s account keys with public keys obtained from Monero’s blockchain to create a ‘ring’ of possible signers, meaning outside observers cannot link a signature to a specific user.

Monero logoOriginally, ring signatures obscured the senders and recipients involved in a Monero transaction without hiding the amount transferred. However, an update called RingCT implemented a new ring signature that concealed both the value of each transaction and the senders and recipients identities to make transaction tracking harder.

In addition to leveraging ring signatures, Monero also enhances anonymity through stealth addresses, which are randomly generated, one-time addresses created for each transaction on behalf of the recipient. With this feature, recipients publish a single address and transactions they receive go to separate, unique addresses. As a result, Monero transactions cannot be linked to the published address of the sender or recipient.

By providing a high level of anonymity, Monero offers fungibility, meaning that each individual unit of a currency can be substituted for another. Another way of putting this is that every coin has equal value.

Due to Monero’s untraceable nature, no two coins are distinguishable from one another, and they are both equal in the eyes of merchants. Without this level of fungibility, a vendor that accepts cryptocurrency might refuse a unit of one of these assets because of its past possibly illegal transaction history.

CoinDesk points out that Monero has enjoyed a steady increase in adoption since its release. This adaption seems to be led by Dark web marketplaces like AlphaBay and Oasis which have embraced it, reportedly due to popular demand.

For those who want to purchase Monero’s, to pay a ransom or for other reasons, can purchase them at an exchange. The Monero market operates like that of many other cryptocurrencies. Those interested in buying the cryptocurrency can get it through exchanges including Poloniex, Bitfinex and Kraken.

Bitfinex, offers XMR/USD and XMR/BTC exchanges along with deposits and withdrawals of Monero. Kraken offers the same options as Bitfinex as well as XMR/EUR.

Other cryptocurrencies in the altcoin universe include NEM, Dash, ByteCoin and Golem.


If the fraudsters who set off the WannaCry crisis were expecting to make a fortune in cryptocurrenncy, it didn’t work. Apparently there have only made approx. BTC 50.91735344 or just under $150,000 on 320 payments world-wide according to a twitter bot actual_ransom from @collinskeith which is watching the bitcoin wallets tied to the ransomware attack.

I dunno know – Until somehow cryptocurrencies break their implied link to illegal activities online, they will be relegated to the black market. 

The value of cryptocurrencies are really hard to pin down because no one really knows how much they should be worth. Unlike a company there are no assets or revenues that can be used to assess a predictable valuation. So they are subject to wide swings in valuations because they operate without any tangible value behind it.

The underlying technology of blockchain seems to have a brighter future


Related articles

Ralph Bach has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.


Visual Capitalist The Coin Universe Keeps Expanding

Blockchain Basics

Blockchain BasicsThis is the season for predictions. Many tech prognosticators say that 2017 will be the year for Blockchain. As an emerging technology, Blockchain is approaching what Gartner (IT) calls the Peak of Inflated Expectations – a period the analyst refers to as “when early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.”

BlockchainJust to prove the point, Business Insider claims blockchain has the capability to transform the world of digital banking and finance — and beyond. The author suggests that the complex technical nature of blockchain makes it difficult for people to fully grasp how the technology works. BI helps blockchain novices understand exactly what blockchain is and how it works.

Blockchain is a distributed database or ledger that allows companies to initiate trade digitally without the need for approval from a central authority. Because blockchains are distributed, an industry or a marketplace can use them without the risk of a single point of failure.

Blockchain ledgerThe ledger is the central part of a blockchain. The ledger is publicly available and shared among all parties within the network. It can’t be changed or tampered with, making it secure. The ledger keeps track of all the details of a transaction, including time, date, parties involved and the transaction amount.

The article examines how the most common blockchain application, a bitcoin transaction, works.

  1. Alice decides to buy bobbles from Bob’s Bead Boutique online.
  2. Bob’s Bead Boutique accepts bitcoin.
  3. Alice has a 3rd party bitcoin wallet set up to hold her digital funds.
  4. Bob at Bob’s Bead Boutique shares his unique numerical bitcoin address with Alice.
  5. Alice makes her payment to Bob’s Bead Boutique by signing it with her private key of her own address. The transaction is called a block.
  6. The block is broadcast to everyone within the peer-to-peer network.
  7. Users who verify the buyers block via a process called “mining” will be rewarded with bitcoins.
  8. To verify and validate the block, miners take information from the block and run it though an algorithm.
    The approved block is attached to the previous transaction in the network.
  9. Collectively all the transactions form a blockchain which cannot be altered making it permanent and transparent
  10. The transaction is verified and completed.

disruptive technologyBI claims that the most important aspect of blockchain is its versatility. The author claims that the disruptive technology has implications far beyond bitcoin. The article points out there are more than 100 blockchain projects spread across many different industries. Here are some industries blockchain could disrupt.

Banking and Financial Services – Blockchains is more secure and efficient so financial processes powered by blockchain could save banks up to $20 billion dollars annually by 2022.

Healtcare – Blockchains could allow patients to securely share their health records across a vast network of healthcare providers more securely. Preventing many of the recent healthcare data breaches.

Music –  Blockchain could potentially be used to help prevent piracy in music while also increasing sales.

Insurance – Blockchain could allow wholesale insurers to overcome complex transactions that involve a large number of participants and increase efficiency in areas like documentation and claims management.


The Brookings Institute correctly argues that Blockchain is a foundational technology, like TCP/IP, which enables the Internet. And much like the Internet in the late 1990s, we don’t know exactly how the Blockchain will evolve, but evolve it will.

Blockchain is a foundational technologySimilar to the Internet, the Blockchain must also be allowed to grow unencumbered. This will need careful handling that recognizes the difference between the platform and the applications that run on it. TCP/IP empowers many financial applications that are regulated, but TCP/IP is not regulated as a financial instrument.

Disruptive technologies rarely fit neatly into existing regulatory considerations, but rigid regulatory frameworks have repeatedly stifled innovation.

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

What is Bitcoin?

What is bitcoin?Bitcoin is the name of probably the best-known cryptocurrency or digital currency or digital gold or virtual money. A cryptocurrency is a medium of exchange, such as the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds. Blockchain is the technology that enables the existence of cryptocurrency.

Occupy Wall StreetThe cryptocurrency has populist roots. It made its debut in relative obscurity at the start of 2009, when the great recession  financial crisis was still raging. A person or group of people known as Satoshi Nakamoto purportedly created the bitcoin protocol and reference software. The populist ideology behind Bitcoin is to take power out of the hands of the central bankers and governments who usually control the flow of currency.

Bitcoin is both a digital currency and a payment system. The basic idea behind Bitcoin is that you can use it to pay for things without a third-party broker, like a bank or government. The value of a bitcoin depends on the bitcoin market at the time. One bitcoin = 100,000,000 Satoshi like 1 dollar = 100 cents. There are no transaction fees and no need to give your real name. Merchants have to pay a transaction fees on each credit card sale of 2.5% to 3.5% to the likes of Visa, MasterCard or Discover.

Accounting ledgerThink of Bitcoin like one big ledger shared by all the users: When you pay for something with bitcoin, or get paid, then your transaction is recorded on the ledger to ensure there is no double spending of the currency.

Members of the network collectively contribute processing power from their computers to maintain Bitcoin’s integrity. And every time a transaction is made, a record of it is sent out to be recorded in a public ledger where the transactions are effectively set in stone. Anyone can download and install the Bitcoin software for free so these records are distributed permanently across the entire network. This publicly distributed ledger is called the blockchain.

Peer to peerIn order to get more Bitcoins, computers running bitcoin software compete to confirm the transaction by solving complex cryptographic equation, and the winner is rewarded with more bitcoins. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes. The process is known as “mining”. Don’t get too wrapped up in Bitcoin mining because only the computer powerhouses get their bitcoins this way.

The Consumerist explains that Bitcoin mining math is complicated and hard to forge, so the block chain stays accurate. Because anyone can download and install the Bitcoin software for free, the payment processing and record keeping for Bitcoin is done in a widely distributed way, rather than on one particular server.

Bitcoin miningWhen block chains are created, so are new bitcoins — but there’s a hard limit to how many will ever exist. The system was designed to create more bitcoins at first, then to dwindle exponentially over time. The first set of block chains each created 50 bitcoins. The next set each created 25 bitcoins, and so on. New block chains are created roughly every 10 minutes no matter what; when more computers are actively mining, the program they’re running gets harder (and therefore slower) to compensate. The Bitcoin FAQ estimates that the final bitcoin will be mined in the year 2140, bringing the permanent circulation to just under 21 million. (Currently, there are roughly 15.8 million bitcoins in the world.)

In order to use Bitcoin You’ll have to install a “bitcoin wallet” app on your phone or computer, and then buy them from a bitcoin exchange. A bitcoin digital wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money via an exchange of public and private security keys. Bitcoin wallets can exist either in the cloud or on a user’s computer. The wallets have all of the risks of any other app on your device or in the cloud. Unlike bank accounts, the FDIC does not insure bitcoin wallets. CNN Money points out some of the risks in using bitcoin.

Bitcoin miningIn order to buy bitcoins you have to use a marketplace called a “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. These exchanges have dubious history.

Bitcoin exchanges are vulnerable to hacking, collapse or a ”run on the bank.” A run on a bank occurs where customers are scared and demand to withdraw their deposits so fast that the bank makes payments and shutdowns. If something like that happens, good luck getting your money back: This isn’t like an FDIC-insured bank account.

Bitcoin can be used in a few places; Marketwatch says there doesn’t seem to be much rhyme or reason to where you can use Bitcoin:


Bitcoin in DetroitThe use of bitcoins in Michigan has not really taken off. Last summer, according to the FreeP, there were only a handful of businesses in metro Detroit that took bitcoin included:

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

Schools Face RansomWare Risk

Schools Face RansomWare RisKMore than 2,000 machines at K12 schools are infected with a backdoor in unpatched versions of JBoss that could be used at any moment to install ransomware such as Samsam. TargetTech defines ransomware as malware designed for data kidnapping, an exploit in which the attacker encrypts the victim’s data and demands payment in Bitcoins for the decryption key.

TolosRansomware has typically been spread through drive-by downloads or spam emails with malicious attachments. One of the latest victims of Samsam was MedStar Health, a not-for-profit organization that runs 10 hospitals in the Washington, D.C., area.

PCWorld reports that the Cisco (CSCO) Talos threat-intelligence organization, announced that roughly 3.2 million machines worldwide are at risk. The article says that many of those already infected run Follett’s Destiny library-management software, used by K12 schools worldwide. According to Cisco, Follett responded quickly to the vulnerability,”Follett identified the issue and immediately took actions to address and close the vulnerability”.

JBossIn a presser, Follett offers patches for systems running version 9.0 to 13.5 of its software and says it will help remove any backdoors. The author states that Follett technical support staff will reach out to customers found to have suspicious files on their systems. Follett even offers SNORT detection rules on the presser page.

Snort is a highly regarded open-source, freeware network monitoring too which detects attack methods, including denial of service, buffer overflow, CGI attacks, stealth portscans, and SMB probes. When suspicious behavior is detected, Snort sends a real-time alert to syslog, a separate ‘alerts’ file, or to a pop-up window.

BitcoinJBoss the vulnerable underlying system is described as an open-source Red Hat product which serves as an application server written in Java that can host business components developed in Java. Essentially, JBOSS is an open source implementation of J2EE that relies on the Enterprise JavaBeans specification for functionality.

PCWorld reports that compromised JBoss servers typically contain more than one Web shell. Talos advises that it is important to review the contents of a server’s jobs status page. “This implies that many of these systems have been compromised several times by different actors,” the company said.

Backup your filesWeb shells are scripts that indicate an attacker has already compromised a server and can remotely control it. The list of those associated with this exploit are listed in Talos’s blog post.

Companies that find a Web shell installed should begin by removing external access to the server, Talos said in the article. The security firm recommends quick action.

Ideally, you would also re-image the system and install updated versions of the software … If for some reason you are unable to rebuild completely, the next best option would be to restore from a backup prior to the compromise and then upgrade the server to a non-vulnerable version before returning it to production.


I have worked with a number of customers on their library automation projects. The cost of these systems is as usual in the data. There is a great deal of time and effort that goes into creating the proper MARC records, especially for books that are out of print and kiddie books. If these files get locked up by the ransomware, the system is useless and expensive to replace.

K12 schools are notoriously cheap, but the advise is the same as always,

  1. Keep your software UP TO DATE
  2. Use a real virus scanner on your servers and administrative stations
  3. Back Up – Back Up – Back Up – With a good backup, you can just blow the machine away, re-install and restore the data. and be back in business.

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.