Bitcoin Gold Hacked for $18 Million

Bitcoin Gold Hacked for $18 Million

It appears Bitcoin Gold (BTG) has been double spend attacked over and over again, totalling something in the neighborhood of $18 million at current prices. BTG forums seem to have been tracking the hack, going as far back as last week, monitoring the controversial coin’s hashrate, ultimately determining a 51% attack was under way.

Also read: Roger Ver and Ryan X. Charles Reveal the Future of Cash

Bitcoin Gold Gets $18 Million Haircut

“An unknown party with access to very large amounts of hashpower is trying to use ‘51% attacks,’” Bitcoin Gold forum poster Mental Nomad announced a week ago, “to perform ‘double spend’ attacks to steal money from Exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits.”

A founding economic principle of bitcoin was its alleviation of the double spend problem. It was a main stumbling block in the historical race to create a viable cryptographic monetary form – foiling a great many coders along the way. Satoshi Nakamoto solved it through a decentralized, distributed ledger confirmation process (blockchain). Going as far back as its genesis block from early 2009, users can be confident transactions aren’t rebroadcast. Like clockwork, 6 times an hour, blocks are added – copied to nodes within the universal network.

Bitcoin Gold Hacked for $18 Million
The offending wallet, according to the BTG team.

One way to achieve double spending is known as a 51% attack. It’s accomplished by bogarting the network’s computing power. With a majority, bad actors can get between the Nakamoto solution and transaction confirmations. By stymieing block completion in the usual manner, all sorts of mischief can arise: blockchain mining rewards redirected, users’ transactions reversed, etc. Not too long after, a double spending attack can commence, acting as the fiat equivalent to counterfeiting. Needless to type, any crypto suffering from such a problem is certain to immediately lose user confidence.

Such attacks are interesting for another reason, as Mental Nomad is careful to point out. “There is no risk to typical users or to existing funds being held. The only parties at risk are those currently accepting large payments directly from the attacker. Exchanges are the primary targets,” he assured last week. “It appears that actions on the part of the exchanges have deterred the attacker, for now.” And hitting exchanges tends to elicit little sympathy, at least initially, due to users being insulated. Exchanges are particularly vulnerable because they generally covet large deposits, which only compounds the problem in cases like these.

Bitcoin Gold Hacked for $18 Million

GTNjvCGssb2rbLnDV1xxsHmunQdvXnY2Ft

Over period of days, batches of BTG were deposited into exchanges supporting the forked coin, only to be sent back to the depositor’s wallet. The lag between such a transaction and some exchanges’ discovery is sufficient enough to nab tokens, doubling the filthy lucre. Exchanges trading bitcoin gold have responded by upping transaction confirmation filters, but evidently to no avail as the attacker gains ever-more BTG network control.

Bitcoin Gold team members seem to have communicated with some exchanges. “Requiring more confirmations greatly increases safety,” the forum details. “Until now, some Exchanges were operating with less than five confirmations required. We have been urging higher limits to prevent such an attack, and urging manual review of large deposits of BTG before clearing the funds for trading.” Indeed, according to BTG, “One of the targeted Exchanges reported that they strongly believe this attacker attempted to hit them with a double-spend of BTC in the past. In their words, ‘we are 100% sure that it is the same person, we found many associations between the accounts.’”

Bitcoin Gold Hacked for $18 Million
The traditional way BTC has been able to thwart double spend attacks.

Evidence put forward by the BTG team points to address GTNjvCGssb2rbLnDV1xxsHmunQdvXnY2Ft as the attacker’s wallet; mined coins, according to the forum post reside at GXXjRkdquAkyHeJ6ReW3v4FY3QbgPfugTx. More than 388,201.92404001 BTG were funneled through the wallet, totalling more than $18 million according to Bitcoin Gold Explorer. That a top thirty crypto by market cap can be so easily troubled is a giant of enough problem, but it could also take exchanges down in the process – something the ecosystem is very sensitive to since Mt. Gox. And though, for now, BTG is confident enough to suggest users are not at risk, history shows that can quickly be the case as an exchange freezes withdrawals in an effort to stop hemorrhaging.

Bitcoin Gold has been beset by controversies since its birth fork late last year, including a recent dust-up between BCH advocate Craig Wright and BTG founder Jack Liao. To be fair, however, it is not the only blockchain to suffer a 51% attack. Mere days ago, recently Chinese government highly rated coin verge (XVG) was made to heel, again. These pages reported XVG, “On the morning of May 22, Suprvona, one of the largest altcoin mining pools, informed its 19,000 Twitter followers that verge was suffering yet another 51% attack, causing all blocks to be rejected.”

Do you think the BTG hack spells doom for the coin? Let us know what you think of this subject in the comments below.


Images via Pixabay, BTG Block Explorer.


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Famed CEO/CMO Erin Patten Gives Her Insights Into The World of Crypto

Erin Patten

Erin Patten is the acting Co-CEO of DāO Detroit, a large haircare company based out of Detroit, Michigan, and CMO at Potencity, a recruiting platform for high potential diverse professionals. As a seasoned entrepreneur globally, Erin first gained her knowledge from the joint degree  MBA/MPP program at Harvard’s Business School and Kennedy School, while spending her summers working at an accelerator in Rio de Janeiro and at  Shinola in Detroit.  

 

We caught up with Erin for a Q&A into her business and worldviews about Bitcoin and other cryptocurrencies and what people should know…

 

...

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Operation Crypto Sweep – 70 US & Canadian ICOs Investigated

Crypto Sweep

Operation Crypto-Sweep – The North American Securities Administrators Association (NASAA) just announced that they sent out 70 cease-and-desist letters to operations they believe to be scam crypto companies. The operation is being called ‘Operation Crypto-Sweep’ and it has first reached 40 jurisdictions in both Canada and the United States.

Joseph P. Borg, NASAA’s president, made a statement three days ago saying, “the actions announced today are just the tip of the iceberg.”

Since the beginning of May, the operations have resulted in 35 enforcement actions and the opening of 70 individual investigations. “Not every ...

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Ireland Clarifies Taxation of Crypto Transactions

Ireland Clarifies Taxation of Crypto Transactions

The Irish revenue service has published a manual with guidelines aimed at eliminating the uncertainty surrounding the taxation of crypto transactions. Investors and traders of digital coins, businesses working with cryptocurrency and tax advisors, of course, can now find answers to many but not all of their questions. The notice has been issued at a time when tax authorities across Europe are trying to tap into crypto incomes and profits in the absence of dedicated regulations in most cases.  

Also read: Poland Backpedals on “Irrational” Crypto Tax After Strong Backlash

Cryptos to Be Treated Under ‘Normal’ Tax Rules

The “Tax and Duty Manual” issued by authorities in Ireland attempts to clarify matters related to crypto taxation and mostly confirms that the existing regulations apply to the crypto sector. The document provides guidelines on the tax treatment of various transactions involving cryptocurrencies. The Irish Revenue Commissioners, the government agency responsible for customs and taxation, emphasizes that the advisory published this month is to be used as a reference for tax purposes only, as it does not cover regulatory and other aspects.

According to the instructions, direct taxes such as corporation tax, income tax and capital gains tax are applicable but each case should be reviewed separately, according to the individual facts and circumstances. In general, businesses accepting crypto payments for goods or services should keep records of crypto transactions. No special rules have been introduced so far and taxable profits should be calculated according to the current tax legislation.

Ireland Clarifies Taxation of Crypto Transactions

The profits and losses of a company transacting in cryptocurrency must be reflected in accounts and are taxable under “normal CT rules,” the document states. Ireland’s Taxes Consolidation Act from 1997 recognizes that some businesses operate and prepare their accounts in a “functional currency” other than euro. The authors of the manual point out, however, that cryptocurrencies cannot be considered functional currencies as defined in Section 402(1) of the TCA. Therefore, accounts for tax purposes cannot be maintained in crypto. Instead, euro or other fiat currency should be used.

Irish tax officials have explained crypto income taxation, as well. “Profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal income tax rules,” the notice reads. They have also informed taxpayers that gains and losses incurred on cryptocurrencies are chargeable or allowable for capital gains tax if they accrue to an individual, or for corporate tax on chargeable gains for companies.

Bitcoin Is Currency as Far as VAT is Concerned

In the absence of common European guidelines on how to treat cryptocurrencies for tax purposes, many member-states have decided to base their VAT (Value Added Tax) policies on a ruling by the Court of Justice of the EU from 2015. The Luxembourg-based institution has drawn a parallel between “virtual currencies” and fiat money, when they are used for payments. The Republic of Ireland is now joining these countries confirming that bitcoin constitutes a currency for VAT purposes.

Ireland Clarifies Taxation of Crypto TransactionsIn result, cryptocurrencies like bitcoin are regarded as “negotiable instruments” and exempt from VAT in accordance with the Irish VAT Consolidation Act of 2010. The manual notes this applies to companies buying and selling cryptocurrencies and acting as owners of crypto holdings. On the other hand, value added tax is due from suppliers of goods or services sold for cryptocurrencies. The taxable amount, however, should again be calculated in euro and at the time of the supply.

The Irish Revenue Commissioners point out that the value of bitcoin and other cryptos may vary between trading platforms. In the absence of a single exchange rate, a “reasonable effort should be made to use an appropriate valuation for the transaction in question,” the manual says, without detailing what “reasonable” and “appropriate” may mean in practice.

Income received from mining operations will generally be outside the scope of the value added tax. Crypto mining is not considered an economic activity for VAT purposes yet. It’s worth noting that no instructions have been given on the taxation of incomes, profits and other flows related to initial coin offerings. The document issued by the Irish revenue service does not say anything about digital tokens and token sales.

Do you think the Irish tax manual provides enough clarity in regards to crypto taxation? Share your opinions in the comments section below.  


Images courtesy of Shutterstock.


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NEO and Ontology Announce “Joint Task Force”

NEO and Ontology

NEO and Ontology: After signing a Memorandum of Understanding (MoU) earlier on May 14, 2018, with the Ontology Foundation, the NEO Foundation announced on Thursday that the two would be co-funding a “Joint Task Force”.

NEO and Ontology: The Task Force

The task force will focus on developing “a sharing ecosystem of smart [contracts], building open standards for smart [contracts], and cross-chain technology innovation.”

According to a recent post from NEO, the Joint Task Force was funded with a total of RMB 4 million, or approximately $627,180 USD in capital, and will be comprised ...

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More Litecoin (LTC) Payments Made Possible Through iPayment Inc.

Litecoin (LTC) payments

A payment processing solutions provider, iPayment Inc., is opening the door to even more Litecoin (LTC) payments.

iPayment has partnered with Aliant Payment Systems Inc., a digital payment provider that is a leader in cryptocurrency processing. With the help of Aliant, iPayment will be able to bring crypto payments to its many merchants and channel partners.

Interested merchants and sellers who use iPayment will soon be able to accept Litecoin (LTC) payments. iPayment has under its wings more than 137,000 small and medium businesses, which opens the door to thousands of customers that may ...

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