15-Year-Old Security Researcher Shares Ledger Wallet Exploit

15-Year-Old Security Researcher Publishes Ledger Wallet Exploit

Hardware wallet manufacturer Ledger has published a firmware update to remedy several security flaws. The exploits were independently found by a trio of white hat security researchers, one of whom, Saleem Rashid, is a 15-year-old British boy. The attack vector he discovered is hardware based, and is not limited to Ledger devices, making it difficult to mitigate altogether via software alone.

Also read: Ledger Addresses Man in the Middle Attack That Threatens Millions of Hardware Wallets

Ledger at Loggerheads with Security Researcher Who Found Flaw

On March 20, Ledger released an update to its firmware, 1.4.1, accompanied by a blog post that promised “a deep dive into security fixes”. It began: “Following a transparent and responsible disclosure process, we are giving a full detailed assessment of the fixed attack vectors that the Firmware 1.4 patches, which were initially reported by three security researchers. As the publication of these technical details might elevate the threat level of non-patched devices, we strongly encourage our users to update their firmware”.

It is the exploit discovered by Saleem Rashid that’s gathered the most attention, both on account of his tender age, and his publication today of a detailed explainer on how he achieved the feat. “An attacker can exploit this vulnerability to compromise the device before the user receives it, or to steal private keys from the device physically or, in some scenarios, remotely,” Rashid explains. “I have demonstrated this attack on a real Ledger Nano S. Furthermore, I sent the source code to Ledger a few months ago, so they could reproduce it.” He also told a security blog that “[Ledger] make it so easy to open the device that you can take your fingernail and open it up [to tamper with it]”.

15-Year-Old Security Researcher Publishes Ledger Wallet Exploit

White Hat Hacker Forgoes His Bounty

Ledger says the security researchers were asked to sign a Bounty Program Reward Agreement as one of the conditions of being remunerated for their efforts, while noting that this doesn’t prevent the researchers from publishing their own reports. The article is worded in such a way as to suggest all three researchers were happy to comply with this agreement, but that’s not entirely true. Rashid actually forwent his bounty reward, explaining:

I have not been paid a bounty by Ledger because their responsible disclosure agreement would have prevented me from publishing this technical report. I chose to publish this report in lieu of receiving a bounty from Ledger, mainly because Eric Larchevêque, Ledger’s CEO, made some comments on Reddit which were fraught with technical inaccuracy. As a result of this I became concerned that this vulnerability would not be properly explained to customers.

The teen researcher is of the opinion that Ledger were seeking to downplay the seriousness of the exploit he’d uncovered. Publishing a full and frank report of how he broke the Ledger wallet, and giving up his right to a reward, hasn’t done his reputation or his Twitter follower count any harm either. Saleem Rashid is clever beyond his years, and his article on the exploit is lengthy but fascinating for anyone with an interest in such matters.

Your Cryptocurrency Hardware Wallet Is Safe

One matter in danger of getting lost amidst all this is the status of Ledger wallets. Cryptography teacher Matthew Green posted a tweetstorm in response to Rashid’s blog, exploring the difficulty of fully preventing hardware-based attacks of this nature. He finishes, reassuringly: “Nothing in the post or thread above means you should freak out about these vulns, or that you should assume other wallets are better. Just be safe.” Ledger users should update to the latest firmware, but there is no cause for alarm. Attacks such as the one demonstrated by Saleem Rashid show the difficulty of creating a device that is immune from all known forms of attack.

Do you think Ledger is guilty of trying to downplay the seriousness of the exploit? Let us know in the comments section below.


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Best Cryptocurrency Exchanges 2018 – Infographic

Cryptocurrency Exchanges

The team at BestBitcoinExchange.io sent us a handy infographic to help you navigate your way through the crazy world that can be cryptocurrency exchanges.

The majority of the exchanges on the market can be somewhat confusing to navigate for the crypto newbie. They lack educational content and step by step instructions, on how to use their platforms. However, as more and more education drips out, cryptocurrency investors are moving away from the easy-to-use platforms with high fees such as Coinbase, and the more advanced exchanges such as Bittrex, Binance, and GDAX are preferred.

The ...

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Russia ‘Secretly’ Helped Venezuela Launch State Crypto Petro: Report

Venezuela’s oil-backed cryptocurrency, the Petro, was the work of a joint collaboration between Venezuelan and Russian government officials with Putin’s personal approval, Time Magazine said Tuesday. Citing anonymous sources close to the ‘half-hidden joint venture’ between Venezuelan and Russian officials, Time Magazine is reporting that Russian president Vladimir Putin signed off on Kremlin aiding Venezuela … Continued

The post Russia ‘Secretly’ Helped Venezuela Launch State Crypto Petro: Report appeared first on CCN

Official: G20 Calls for Cryptocurrency Regulation Recommendations by July 2018

The world’s economic leaders gathered in Buenos Aires, Argentina for the G20 summit, and sought for proposals of cryptocurrency regulations to come by July 2018 according to the G20 communique. The document backs the words of Frederico Sturzenegger, Argentina’s Central Bank chief, who noted cryptocurrencies need to be examined. Having seen the document, CCN can

The post Official: G20 Calls for Cryptocurrency Regulation Recommendations by July 2018 appeared first on CCN

Altcoin Markets in ‘Purgatory’, Will Turn Bullish Late Summer: Bitcoin Bull Tom Lee

The altcoin bloodbath may finally be nearing its culmination, but small-cap coins will likely spend the next quarter in “purgatory” as they await a late-summer bull market. That’s according to market strategist and noted Bitcoin bull Tom Lee, whose firm — Fundstrat Global Advisors — was the first Wall Street strategy firm to recommend cryptocurrencies … Continued

The post Altcoin Markets in ‘Purgatory’, Will Turn Bullish Late Summer: Bitcoin Bull Tom Lee appeared first on CCN

Court Orders Telegram to Hand Russia Its Encryption Keys

Court Orders Telegram to Hand Russia Its Encryption Keys

Telegram has lost a court battle against handing its encryption keys to Russian security services. The messaging platform, which forms a pivotal network for the cryptocurrency community, has said it will appeal to the Supreme Court in a bid to prevent Russia obtaining the private data of millions of users.

Also read: Some of Bitcoin’s Earliest Adopters Find it Difficult to ‘Cash Out’

Telegram Battles for User Privacy

Supreme Court Judge Alla Nazarova today rejected an appeal filed by Telegram, objecting to Russia’s Federal Security Services (FSB) obtaining the encryption keys to its platform. As a result, Telegram will be legally obligated to grant security forces access to the private messages and other data of its users, unless it can convince an appellate court to reverse the decision. Shortly after the ruling was made public, Telegram CEO Pavel Durov had this to say:

Court Orders Telegram to Hand Russia Its Encryption Keys

The company finds itself in a difficult position. With the pre-sale for its own cryptocurrency underway, Telegram is seen as a flagbearer for a movement that prides itself on respecting user privacy, deploying encryption, and thwarting attempts at government interference. But as a Russian enterprise, Telegram is bound by the draconian laws that give the country’s security forces extensive surveillance powers.

Putin Wants a Backdoor Because Terrorists

In 2016, President Putin decreed that messaging services should provide a means of decryption for the benefit of its security services. Monitoring terrorists was the excuse cited. Russia is known for its human rights abuses and covert surveillance of journalists and dissidents, however, and it is hard to imagine that access to Telegram’s vast trove of user data would be used responsibly to identify terrorists only.

Western governments, including the UK and U.S., have found themselves engaged in an encryption war with tech companies, who insist that it is impossible to implement backdoors without weakening protocols. Create an entry point for state security, they insist, and it will be exploited by hackers and state-sponsored attackers.

Court Orders Telegram to Hand Russia Its Encryption Keys

Security Forces Plead Their Case

In court, the FSB argued that they would not be violating user privacy by obtaining encryption keys, because they would still require a court order to extract the data of specific users. Following the hearing, Telegram’s legal team dismissed this claim, stating: “The FSB’s argument that encryption keys can’t be considered private information defended by the Constitution is cunning. It’s like saying, ‘I’ve got a password from your email, but I don’t control your email, I just have the possibility to control.’”

Telegram is a Russian success story, led by the crypto-friendly Pavel Durov. He founded Telegram after a successful spell as CEO of VK, which grew to become Russia’s largest social network. Durov is also a major bitcoin holder, and Telegram’s own ICO to launch an integrated cryptocurrency and blockchain is already halfway towards its $1.7 billion goal. If Telegram can’t convince the Supreme Court to overturn today’s ruling, its only option may be to up tools and exit Russia altogether.

Do you think Telegram has a chance of overturning today’s ruling? Let us know in the comments section below.


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Sierra Leone Election: Blockchain Was NOT Used

Sierra Leone election

Previous reports of the Sierra Leone election being the first ever to use blockchain have turned out to be false.

As reported by The Next Web, the Sierra Leone election didn’t actually use blockchain to tally the votes. This was confirmed by the National Electoral Commission (NEC) of Sierra Leone, which tweeted on March 18th that “the NEC has not used, and is not using blockchain technology in any part of the electoral process.”

Later, on March 19th, the NEC tweeted how the Sierra Leone election process does work:

The emphasis was, ...

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Ripple (XRP) Futures – Next Big Crypto Market Shift?

Ripple (XRP) Futures

The Bitcoin futures made major headlines back last November, as it propelled BTC’s price higher just before their launch. The market had a sharp correction a few weeks later after the market hit record highs. Bitcoin breaking into Wall Street meant a wider adoption, aimed specifically at the cautious traditional investors.

Source: CoinMarketCap

Even though the market has been on a downward trend since the beginning of January due to various events and reasons, there could be a new futures market to take the crypto world by storm. Surprisingly enough, Ripple futures ...

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Op Ed: The Many Faces of Sharding for Blockchain Scalability

Op Ed: The Many Faces of Sharding for Blockchain Scalability

Any programmer who has ever sat down to build a DApp at one point has had to think about the limits of current public blockchains, the most important and obvious one being their limited throughput, i.e., the number of transactions processed per second. In order to run a DApp that can handle real-world throughput requirements, blockchains must become scalable.

One answer to blockchain scaling is sharding. Sharding promises to increase the throughput by changing the way blocks get validated by the network. The key feature of sharding that makes it unique among all (on-chain) scaling solutions is horizontal scaling, i.e., the throughput increases as the mining network expands. This particular characteristic of sharding may make it the ideal fuel to spur rapid adoption of blockchain technology.

This article will briefly discuss the scaling issues with existing blockchain platforms — briefly only, because most readers must already be familiar with it. It will then discuss how sharding and its different forms can be a promising solution to the scaling problem. It will also touch upon some of the theoretical and practical challenges to implementing sharding and how some of these challenges can be overcome.

Scalability Issues With Existing Blockchains

One of the biggest problems that public blockchain platforms face today is scalability. All popular platforms are struggling to handle a larger number of transactions per second. In fact, today the public Ethereum and Bitcoin networks can handle 7-10 transactions per second on average. These figures are far inferior to those of centralized payment processors like Visa, which processes roughly 8,000 transactions per second on average.

Slow transaction processing creates a major problem because they choke up the networks, making it difficult to use the blockchain for applications such as real-time payments. The longer a payment takes to be processed, the more inconvenient it becomes for the end user; this is one of the main reasons why payment methods like PayPal and credit cards like Visa are still much more attractive. As more complex DApps start to rely on the same network, the problems caused by slower transaction speed will only compound.

From a more technical standpoint, all blockchain consensus protocols have a challenging limitation: Every fully participating node in the network must validate every transaction and must seek agreement from other nodes on it, and this is the component of blockchain technology that creates distributed ledgers and makes it secure.

In most chains like Bitcoin and Ethereum, nodes are run by the public. While the decentralized consensus mechanism provides some vital advantages such as fault tolerance, security, political neutrality and authenticity, this method to verify chains comes at the cost of scalability. It will take more and more processing power to verify these public blockchains as they get larger, and this may create bottlenecks in these networks and slow down the creation of new applications.

Sharding: Divide and Conquer

Sharding is a scaling technique that was inspired by a traditional concept of database sharding, whereby a database is partitioned into several pieces and placed on different servers. In the context of a public blockchain, the transaction load on the network would be divided into different shards comprising different nodes on the network. As a consequence, each node would process only a fraction of incoming transactions, and it would do so in parallel with other nodes on the network. Breaking the network into shards would result in more transactions being processed and verified simultaneously. As a result, it becomes possible to process more and more transactions as the network grows. This property is also referred to as horizontal scaling.

We could imagine that existing blockchains operate like a busy highway with one toll station operating on only one toll booth. The result would be a traffic jam as people wait in long lines to pass the toll station. Implementing a sharding-based blockchain is like adding 15 or 20 toll booths to the highway. It would dramatically improve the rate at which traffic can progress through the stations. Sharding would make a tremendous amount of difference and dramatically improve transaction speed.

The implementation of sharding-based blockchains could have various benefits for public blockchains. First, thousands of transactions or even more could be processed every single second, changing the way people feel about the efficiency of cryptocurrencies as payment methods. Improving transaction throughput will bring more and more users and applications to decentralized systems, and this will, in turn, advocate further adoption of blockchains, making mining more profitable and attract more nodes to public networks, creating a virtuous cycle.

Furthermore, sharding could help bring down transaction fees since less processing will be needed to validate a single transaction; nodes can charge smaller fees and still be profitable to run. Coupling low fees with high transaction processing capability, public chains will become increasingly attractive to real-world use cases. The more these positive trends continue, the more mainstream adoption we’ll see of cryptocurrencies and blockchain applications in general.

Sharding Strategies

This is the basic concept, but there are more granular ways to implement sharding strategies like network and transaction sharding, and state sharding. With network and transaction sharding, the network of blockchain nodes is split into different shards, with each shard formed to process and reach consensus on a different subset of transactions. This way, unconnected subsets of transactions can be processed in parallel, significantly boosting the transaction throughput by orders of magnitude.

On the other hand, on today’s mainstream public blockchains, the burden of storing transactions, smart contracts and various states is borne by all public nodes, which could make it prohibitively expensive in terms of required storage space to maintain ongoing operations on the blockchain.

One potential approach, called state sharding, has been proposed to resolve this issue. The crux is to divide the entire storage into pieces and let different shards store different parts; thus every node is only responsible for hosting its own shard’s data instead of the complete blockchain state.

Complexities Underlying Sharding

While all the different forms of sharding may be very intuitive, unspooling the technical details can reveal the complexity of the approaches and the underlying challenges. Some of these challenges are easy to overcome, while others not quite so. Generally speaking, network and transaction sharding are easier to accomplish while state sharding is much more complicated. Below, for the different sharding mechanisms, we categorically discuss some of these challenges and how feasible are they to be overcome.

Network Sharding

The first and foremost challenge in sharding is the creation of shards. A mechanism will need to be developed to determine which nodes reside in which shard in a secure way in order to avoid possible attacks from someone who gains a lot of control over a particular shard.

The best approach to beat an adversary (at least in most of the cases) is through randomness. By leveraging randomness, it should become possible for the network to randomly sample nodes to form a shard. Random sampling prevents malicious nodes from overpopulating a single shard.

But, where should the randomness come from? The most readily available source of public randomness is in blocks, for instance, the Merkle tree root of transactions. The randomness available in blocks is publicly verifiable and (close to) uniform random bits can be extracted from it through randomness extractors.

However, simply having a randomized mechanism to assign nodes to a shard is not sufficient. One must also ensure that the network agrees on the members in a shard. This can be achieved through a consensus protocol like proof of work, for example.

Transaction Sharding

Transaction sharding isn’t as simple as it may sound. Consider introducing transaction sharding in a Bitcoin-like system (without smart contracts), where the state of the system is defined using UTXOs. Let us suppose that the network is already composed of shards and a user sends out a transaction. The transaction has two inputs and one output. Now, how should this transaction be assigned to a shard?

The most intuitive approach would be to decide on the shard based on the last few bits of the transaction hash. For instance, if the last bit of the hash is 0, then the transaction is assigned to the first shard, else it is assigned to the second shard (assuming we have only two shards). This allows the transaction to be validated within a single shard. However, if the user is malicious, he may create another transaction with the same two inputs but a different output — yes, a double spend. The second transaction will have a different hash and, hence, the two transactions may end up in different shards. Each shard will then separately validate the received transaction while being oblivious of the double-spend transaction being validated in the other shard.

In order to prevent the double spend, the shards will have to communicate with each other while the validation is in progress. In fact, since the double-spend transaction may land in any shard, a given shard receiving a transaction will have to communicate with every other shard. The communication overhead may, in fact, defeat the entire purpose of transaction sharding.

On the other hand, the problem is much simpler to solve when we have an account-based system (without smart contracts). Each transaction then will have a sender’s address and can then be assigned to a shard based on the sender’s address. This ensures that two double-spend transactions will get validated in the same shard and hence can be easily detected without any cross-shard communication.

State Sharding

With the promises of state sharding come a new set of challenges. As a matter of fact, state sharding is the most challenging of all sharding proposals so far.

Continuing with our account-based model (let us not bring in smart contracts for the moment), in a state-sharded blockchain, a specific shard will only maintain a portion of the state. For instance, if we have two shards and only two user accounts, say for Alice and Bob, respectively, then each shard will keep the balance of one single user.

Imagine that Alice creates a transaction to pay Bob. The transaction will be handled by the first shard. Once the transaction is validated, the information about Bob’s new balance must be shared with his shard. If two popular accounts are handled by different shards, then this may entail frequent cross-shard communication and state exchange. Ensuring that cross-shard communication will not outweigh the performance gains from state sharding is still an open research problem.

One possible way to reduce the cross-shard communication overhead is to restrict users from making cross-shard transactions. With our example, this would mean that Alice would not be allowed to transact directly with Bob. If ever Alice has to transact with Bob, she will have to hold an account in that shard. While this does eliminate any cross-shard communication, it may limit the usability of the platform somewhat.

The second challenge with state sharding is data availability. Consider a scenario where, for some reason, a given shard is attacked and goes offline. Since the state of the system is not replicated across all shards, the network can no longer validate transactions that have dependency on the offline shard. As a result, the blockchain may become largely unusable. A solution to this problem is to maintain archival or backup nodes that can help the network troubleshoot and recover from data unavailability. However, those nodes will then have to store the entire state of the system and hence may introduce centralization risks.

Another point to consider in any sharding mechanism (certainly not specific to state sharding) is to ensure that shards are not static for resilience against attacks and failures; the network must accept new nodes and assign them in a random manner to different shards. In other words, the network must get reshuffled once in a while.

However, reshuffling in the case of state sharding is tricky. Since each shard only maintains a portion of the state, reshuffling the network in one go may render the entire system unavailable until some synchronization is completed. To prevent outage, the network must be reshuffled gradually to ensure that every shard has enough old nodes before a node is evicted.

Similarly, once a new node joins a shard, one has to ensure that the node is given ample time to sync with the state of the shard; otherwise the incoming node will reject outright every single transaction.

Conclusion

In conclusion, sharding is definitely an exciting and promising direction for blockchains to pursue in order to solve scalability problems without compromising decentralization and transparency. However, there is no doubt that sharding, particularly state sharding, is notoriously difficult to do right both at the design level and at the implementation level.

Sharding should be handled with care. Also, more research needs to be done to establish the viability of state sharding as it may not be the silver bullet to storage problems. Researchers and developers are actively seeking alternate solutions at this moment. And perhaps, the answer is just right around the corner.

This is a guest post by Dr. Yaoqi Jia, head of technology at Zilliqa. Views expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine.




This article originally appeared on Bitcoin Magazine.