Weiss Ratings announced last week that they would be releasing the world’s first professionally rating cryptocurrency grades. Weiss Ratings, established in 1971, is one of the leading financial institution rating agencies in the United States. The grades were scheduled to be released on January 24th, 2018, and were to include many popular cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash, Litecoin, EOS, NEM, Monero, and more.
But on the day before they could release the inaugural grades, Weiss Ratings ran into some familiar issues in the cryptocurrency space.
Delays Due To Distributed Denial of Service Attack (DDoS)
On the eve of the grades’ official release, the Weiss Ratings website experienced a DDoS attack from Korean actors.
According to their blog:
“Weiss Ratings staff was up all night last night fending off denial of service attacks from Korea, as evidenced by numerous mentions on Korean social media of a concerted call to bring down the Weiss Ratings website.”
Weiss founder Martin D. Weiss, Ph.D, believes this could have been an attempt to prevent their release. They go onto explain that the majority of their site traffic comes from American viewers and they rarely see visitors from Asia. However, on that night, they had more than 100,000 unique visitors “in a matter of hours, almost entirely from Asia.” The following morning they saw the traffic had shifted to Europe, due to this the Weiss staff expanded the site’s server capacity through cloud services. The effective DDoS attack temporarily paralyzed the website leaving user’s unable to access it in the morning hours of January 24, 2018. As of now, Weiss Ratings is fully operational.
Fake Grades surface online
In the wake of the DDoS attack, a series of fake ratings began surfacing online the day of the true ratings’ release.
Fake reports shortly went viral, reaching many outlets. One “report” gave Tronix (TRX) an A++ grade, a rating that does not exist under Weiss’ system.
In true Reddit fashion, on r/cryptocurrency and through many users, a warning of the fraudulent ratings went out to the cryptocurrency community.
To combat the fake ratings, Weiss tweeted that its consumers should be cautious of fraudulent reproductions, redirecting them to their official cryptocurrency subdomain.
Doubts are In and Trust is Out
Seemingly legitimate ratings have been posted through Reddit and Twitter. These ratings line up with the tease grades that Weiss mentions in one of its blog: Bitcoin (C+), Ethereum (B), Novacoin (D), Steemit (B-)– a full list of ratings can be found on Scribd.
Since the attack and fake reports the community is skeptical of new ratings. User’s through Twitter and other platforms are holding their judgments for only the Official Weiss release. Stating things like “It appears the Weiss website has been hacked.” and “Don’t take any ratings for granted, wait for the the official word from Weiss Ratings.”
The publication CoinSquare, released a statement following their ratings article to ease the community of doubts about the accurate ratings. The statement reads:
“Update: Coinsquare confirmed via telephone with Weiss Ratings that the ratings were released today (January 24th, 2018). Weiss further clarified, going against rumours, that their site was not hacked. Weiss also confirmed they own https://weisscryptocurrencyratings.com/ and their statement announcing the ratings is accurate.”
According to the order page on Weiss’ cryptocurrency website, you can have full access to Weiss’ cryptocurrency ratings service for $468.
Dogecoin Foundation works with Ethereum co-founder Vitalik Buterin on DOGE staking
The Dogecoin Foundation, a non-profit organization behind the meme-based cryptocurrency Dogecoin (DOGE), is collaborating with Ethereum co-founder Vitalik Buterin on a staking mechanism.
On Thursday, the Dogecoin Foundation launched its Dogecoin Trailmap, a “dog-walk” that it promises to explore and which it believes would help contribute to Dogecoin’s success.
The Dogecoin Foundation is collaborating with Buterin on developing a “distinctly Doge” proposal for a “village staking” version of proof-of-stake (PoS).
The Dogecoin Foundation’s explanation implies that a modified version of Dogecoin would enable all Dogecoin users to stake their DOGE, resulting in extra tokens for supporting the network.
“[The PoS version] will allow everyone, not just the big players to participate in a way that rewards them for their contribution to running the network, and at the same time gives back to the whole community through charitable causes.”
The Dogecoin Foundation reestablished its initiative in August 2021, after six years of almost no media attention, according to Cointelegraph. The foundation published a list of advisory board members, including Buterin, Dogecoin co-founder Billy Markus, and Dogecoin core developer Max Keller.
“As you can imagine, setting off on such an adventure is not a small feat and we are still just getting started. We already have some influential friends on our side and a growing group of people who are getting ready to contribute development time to these open-source projects,” the latest post from the foundation reads.
Dogecoin was created in 2014 by software engineers Billy Markus and Jackson Palmer, who conceived DOGE’s payment system as a joke. The Dogecoin Foundation eventually shut down after its creators departed the project.
Hackers Have Continued To Target Cryptocurrency Exchanges, And Little Can Be Done About It.
This month, the crypto trading platform Bitmart announced that hackers had stolen nearly $200 million after breaking into a company account.
It’s not just about investors getting rich from cryptocurrencies.
Hackers have stolen billions of dollars in virtual assets from cryptocurrency exchanges during the last year by attacking some of the marketplaces that have developed throughout the bitcoin boom.
There have been at least 20 successful robberies of crypto exchanges or projects this year, totaling more than $10 million in digital currencies. In at least six cases, hackers stole more than $100 million, according to data compiled by NBC News. Bank robberies last year resulted in offenders pulling off an average of less than $5,000 per job, according to FBI statistics.
Despite the fact that these robberies have a large price tag, they do not usually have the same degree of drama or attention as traditional bank robberies. But cryptocurrency experts believe they provide a cautionary tale for would-be cryptocurrency investors: exchanges are now attractive targets for hackers.
“If you hack a Fortune 500 company today, you might steal some usernames and passwords,” said Esteban Castaño, the CEO and co-founder of TRM Labs, a company that builds tools for companies to track digital assets. “If you hack a cryptocurrency exchange, you may have millions of dollars in cryptocurrency.”
Modern-Day bank robbers
Cryptocurrencies, which were once an obscure technology requiring a high degree of technical knowledge to purchase, have evolved into a more accessible investment and speculation tool, prompting over 300 businesses to start up in recent years to provide individuals with an easy method to invest in and trade everything from bitcoin to less prominent “altcoins” like dogecoin and shibu.
Exchanges that trade cryptocurrencies work similarly to traditional money exchanges, establishing rates for various currencies and collecting a fee to enable trades. However, while several countries have tough rules in place, it is rather simple for technology entrepreneurs to establish an exchange almost anywhere throughout the globe and run it as they choose.
Cryptocurrencies, as the name implies, are decentralized, secure currencies. However, because cryptocurrency exchanges generally start with a small staff and few if any full-time cybersecurity specialists, they are especially vulnerable to cybercriminals. Their developers may work at breakneck speeds to get the code to run correctly, inadvertently creating vulnerabilities that allow hackers access.
Cryptocurrency exchanges keep many of their cryptocurrencies in so-called cold wallets, which are stored securely offline. Everything else is kept in “hot wallets,” which are liquid and can be sent to clients. That means if a hacker compromises a staff member’s account — a frequent internet security breach – they may pull off a large theft, according to Dave Jevans, the founder of CipherTrace, a company that tracks theft and fraud in cryptocurrencies.
“If you steal the private keys to a hot wallet, it’s not like stealing a database of people’s names and Social Security Numbers,” Jevans said. “You’ve just basically stolen all their money.”
If an exchange has adequate funds and plans ahead to create an emergency fund, it can reimburse customers if its system is assaulted, according to Jevans. If not, they are generally forced out of business.
“Not every exchange is so wealthy or has so much foresight. It just goes, pop, ‘We’re out of business. Sorry, you’re all screwed,’” he said.
Recent Cryptocurrency Exchange Hacks
In early December, when the cryptocurrency trading platform Bitmart announced that hackers had stolen almost $200 million from a firm account, one of the most significant robberies that has occurred. The firm shut down client transactions for three days before allowing them to resume trading their money.
The problem is made worse by the fact that many cryptocurrency projects, in order to avoid government controls, operate from nations where law enforcement agencies have little power to go after transnational hackers. Or if they are hacked, they are less likely to ask for government assistance on principle because of their beliefs, according to Beth Bisbee, CEO of Chainalysis a company that tracks cryptocurrency transactions for both private companies and government agencies.
“Some people want to be anti-bank and anti-oversight,” Bisbee said. “They’re not necessarily wanting to work with law enforcement, even though they’d be considered a victim and it’d be beneficial for them to do so.”
Keeping A Low Profile
Exchange hacks, unlike bank robberies of old, don’t have the same characteristics that made them front-page news in the past. Despite their significant dollar amounts, public attention to these breaches may be limited. The majority of exchange hackers are not caught, leaving customers with little closure. There is rarely any physical evidence or real-world aftermath like traumatized bank tellers or perp walks.
Some hacks, however, have pleasant endings. A hacker stole $600 million from the cryptocurrency platform Poly Network in a strange, public occurrence. Instead of blaming the thief, Poly Network instead appealed to his better nature by calling him “Mr. White Hat,” which is a cybersecurity term for a researcher working to make things more secure. Poly Network thanked him for exposing a flaw in its code and asked for the money back. The hacker eventually relented and returned it all.
When big law enforcement organizations tackle a major cryptocurrency breach, they typically attempt to track down every lead, which is a time-consuming procedure that moves much slower than the offenders they’re pursuing.
Europol has been of an increase in data breaches, including those that involve hackers stealing digital assets. However, forming a strong case is a time-consuming and laborious process that doesn’t keep up with the rate of attacks.
“We have a slew of investigations in progress right now,” Georges added. “They take a long time to complete because we also want to dismantle the entire criminal network,” she continued. “These instances frequently crossover with one another.
“They might go on indefinitely,” she added. “These inquiries generally take a long time.”
Will A War With Iran Send Bitcoin (BTC) To The Moon?
It behooves a speculator to speculate, and nothing gets the attention of the speculator more than the classic market catalyst of “war in the Middle East.” So last night’s U.S. strike, killing Iranian General Soleimani, is the sort of event that gets markets moving.
As one might expect, oil jumped and so did gold. Oil is up 3% and gold jumped 2%.
In this new world there is a third safe haven asset, bitcoin (BTC). It is up 5%.
Here is a chart of that action:
This is a very interesting chart because it shows the global professionals reacting to the news much faster than the private traders and it might be suggested this hike is the result of Middle Eastern retail piling into BTC as a flight to safety rather than the relatively non-existent institutional money.
In any event, bitcoin has the most beta in this situation and what’s more there appears to be plenty of time to get your trade on in response to the news.
This, of course, is a gift to all skilled traders, a three-hour warning to buy.
Longer term, however, it is clear to see that in instances where there is trouble in capital controlled countries like Iran and China, bitcoin will be a key asset when times get sketchy.
As such, for those speculators who think of gold and oil as the place to trade when war in the Middle East is on the rise, then bitcoin is the place to be.
For those wanting to trade what might be a U.S./Iran escalation, bitcoin is the place to do your thing because while there are trillions in gold and oil to suck up demand, there is only a smattering of bitcoin to take the sort of buying surge a country like Iran could create were the situation to spin up into a large scale conflict.
Bitcoin is the best place for flight capital and haven capital for those in Iran wishing to protect their assets, and that alone is enough to drive Bitcoin back towards its previous and all-time highs. Then there is the exaggerated Beta of Bitcoin that will draw in the global speculators and their wall of money, so that in an extended and fraught US/Iran conflict only one thing is certain about the price of Bitcoin and that is, it will be far higher than it is now.