Glitch Freezes Hundreds Of Millions Of Dollars Of Ethereum

Ethereum, the competing digital currency to bitcoin, was dealt a blow on Tuesday (Nov. 7) when a vulnerability in a cryptocurrency wallet froze as much as hundreds of millions of dollars.

According to a news report in TechCrunch, Parity Technologies – which makes the hugely popular wallet Parity – said an issue could cause the contents of the wallets to be erased. The issue is impacting a multi-signature wallet that was issued after July 20; any ICOs that were held in the digital wallet after that date could be impacted.

This is the second time in months that a bug has been discovered at Parity that could hurt Ethereum, which is the second highest valued cryptocurrency with a market capitalization of $27 billion. Back in July, the first Parity issue led to the theft of around $30 million of Ethereum. That first scare caused people to move away from the multi-sig wallet technology, which could lessen the blow from Tuesday’s disclosure.

While there haven’t been any reports of Ethereum coins being stolen or lost, a large amount of the digital currency is at risk, to the potential tune of around $150 million. In a comment on Twitter, Parity said the company is looking into the problem and that it thinks the wallets are locked.

The issue with an Ethereum wallet provider comes at a time when digital currency is gaining legitimacy, which has been driving the value of the coins higher. As an example, Ethereum’s rival, bitcoin, started the year trading at around $1,000 and is now higher than $7,000. The market got a boost last week when CME, the world’s largest futures exchange, said it would launch futures for digital currency. Meanwhile, Cboe Global Markets is pushing ahead with its cryptocurrency, ETF.

via pymnts

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Bitcoin

Bitcoin is the world's first decentralized digital currency and online payment system, which allows users to conduct transactions without the need of any third party intermediary (banks for example).

Bitcoin, which is the name given to one unit of the virtual currency, can be divided further into subunits (similar to cents and pennies), the smallest of which is referred to as a satoshi (one hundred millionth of a bitcoin). The bitcoin protocol and reference software (free and open-source), which works on any computer or smart phone, was developed from the one that had been introduced in 2008 by pseudonymous inventor known as Satoshi Nakamoto.

The currency is secured by cryptography thereby making it impossible to duplicate. To begin using bitcoin, a user can sign-up for a free account with any of the bitcoin wallet providers (Blockchain.info and Coinbase are the popular ones). Once signed up, a unique 34-character address (a combination of letters and numbers) is assigned to the user. Alternatively, for better security, a user can download an appropriate wallet and store the bitcoins offline (so called cold storage).

All transactions between the bitcoin users are verified by network nodes and recorded in open shared ledger referred to as the block chain. A record of each transaction is shown in the log of the user as well. Thus, a transaction commences only if there is spendable balance in the wallet. The bitcoin payment system uses a seed or a private key to prevent thieves from stealing the coins from the wallets and to prevent loss or duplication of the coins in the block chain.

The process of confirming the transactions (usually begins in 10 minutes) or record-keeping service is called mining. The computers involved in such a process are called the network nodes. There is a cap of 21 million bitcoins that would be ever created (through reward for the mining process). The rate of creation halves every four years until the cap is reached.

There are four ways of acquiring bitcoins:

• Mining process.
• Sell goods or services for bitcoin.
• Public exchanges (Bitstamp, Bitfinex, Coinbase, etc.)
• Exchanger services (CoinMama, ALFAcashier, SuperChange, etc.)

Advantages over other forms of payment systems:

• No government or central bank has direct control. All other payment systems (Neteller, WebMoney, Skrill, PayPal, etc.) are directly influenced by the decisions of governments. The closedown of Liberty Reserve is a well-known example.
• No obligatory usage fees. Fees are optional and are paid by the sending party to speed up transaction confirmation. All centralized payment systems charge a fixed percentage of the transaction value as a service commission.
• Totally anonymous. Transactions through any other payment processor can be easily traced.
• No identity theft. Identity verification is mostly a must for other forms of payment systems.
• Conversion to fiat currencies is possible in a transparent manner through exchanges. In case of other electronic payment systems, the service operator determines the conversion rate.
• Bitcoin does not face the issue of counterfeit or deliberate devaluation.

Disadvantages:

• Price is highly volatile. A movement of 10% or more against the US dollar in a single day is not uncommon.
• Limited supply and liquidity.
• Facilitates illegal activities because of anonymity. The underground website Silk Road, taken down by FBI, is a classic example.
• Highly susceptible to rumors.

Here are some picks from the list of the Forex brokers working with Bitcoin:

• Whaleclub
• RoboForex
• eToro
• InstaForex
• AvaTrade

You may also want to consider a possibility of getting almost passive income through margin lending investment.

To open a Bitcoin wallet, please visit Coinbase or Bitcoin.it.

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