A bitcoin wallet containing a little over 69,000 BTC is doing the rounds in hacking communities all over the internet. The reason? It’s obvious.
Everyone (read seasoned hackers and self-professed bitcoin wallet crackers) wants to break it open and take it all. Or at least, a slice of the almost $750 million pie. For the last two years, however, no one has been able to ‘strike it lucky.’
According to cybersecurity expert Alon Gal, who goes by the handle ‘UnderTheBreach on Twitter, hackers have been trying to break open a bitcoin wallet holding around $720 million worth of BTC (considering today’s rates). However, Gal reported that no one has posted any success regarding the same.
Get this – there is a Bitcoin wallet with 69,000 Bitcoins ($693,207,618) that is being passed around between hackers/crackers for the past 2 years for the purpose of cracking the password, no success so far.
I have the wallet, @Google hook me up with a quantum computer please. pic.twitter.com/GcIqH7kN98
— Alon Gal (Under the Breach) (@UnderTheBreach) September 8, 2020
As it so happens, the bitcoin wallet in the discussion has the 7th largest BTC stash in the world.
While some folks have tried breaking in themselves, most of them admitting failure has advertised the wallet on online hacking forums for somebody else to do the job.
Alon revealed this to Vice in a one-on-one chat regarding the matter:
Stealing Bitcoin wallets from victims worldwide is a common goal among cybercriminals. Wallets tend to be protected by strong passwords and in the event that a cybercriminal manages to obtain a wallet and cannot crack the password he might sell it to opportunistic hash crackers who are individuals with a large amount of GPU power
Gal noticed one such advertisement on a popular hacking forum RaidForums. And not just hacking portals, the wallet showed up on BitcoinTalk on June 29 last year. After that, on All Private Keys and then Wallet-dat(dot)net.
The bitcoin wallet seems like a tough nut to crack. But the important question to ask is – Does it contain the BTC? Although it has an alphanumeric address, it is quite possible that the ‘wallet.dat’ file is ‘doctored.’ There is a public key available but not the private key.
The founder of Wallet Recovery Services, Dave Bitcoin, said that:
It’s possible to doctor a Bitcoin wallet.dat file to make it seem like it contains a high balance. The wallet file contains pairs of public key & encrypted private key of the addresses it controls. So one could modify the file in a binary editor and change the public key of one of the address pairs to that of a high value BTC address.
It may be a bait to beguile folks into making bitcoin payments for a shot at cracking a wallet that doesn’t actually have any BTC.
According to another assumption, cracking open this bitcoin wallet may be outright impossible. But why?
Quite possibly, the wallet is protected by a long, unique, and difficult to crack the password. Apart from this, the wallet.dat file may be encrypted using a combination of AES-256-CBC and SHA-512 algorithms. These are super slow to process, making it all the more difficult to ‘brute force’ them open.
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Bitcoin bulls should take a moment of caution as this might not be the right time for accumulation. As per the latest reports, Bitcoin Whales have accelerated depositing of their BTC holdings to exchanges. Meaning, we can possibly see heaving selling, and dumping in the short term.
Bitcoin is already facing selling pressure as the BTC price corrects another 5% slipping below $17,000. At press time, Bitcoin is trading at a price of $16,886 with a market cap of $313 billion. Cryptocurrency on-chain analyst and CryptoQuant CEO, Ki-Young Ju, has given a red alert.
$BTC Whales are depositing to exchanges. I expect dumping in the short-run.
All Exchanges Inflow Mean(144-block MA) hit 2 BTC. I think we’re in a danger zone. The price is likely to go sideways or down when whales are active on exchanges. https://t.co/eIfHdkIzdL pic.twitter.com/CenxR44h5Q
— Ki Young Ju 주기영 (@ki_young_ju) November 27, 2020
As per the data from Glassnode, the number of Bitcoin Whales (investors holding over 1000 BTC) has reached an all-time high. The total number of Bitcoin whales worldwide is over 2000 as per the Glassnode data.
The number of #Bitcoin whales (entities holding at least 1,000 $BTC) has reached a new ATH after more than 4 years.
An entity is a cluster of network addresses controlled by the same individual/institution.
Chart: https://t.co/rK7rYG55SY pic.twitter.com/kZbFEJR734
— glassnode (@glassnode) November 25, 2020
There’s been a steady rise in the number of Bitcoin Whales over the last few years, and more so in 2020. It looks like when the BTC price tanked during the March 2020 correction, whales accumulated in big numbers. Note that despite sizeable institutional participation this year, Bitcoin whales still dominate the BTC ownership and price movement as of date.
Just before Wednesday’s market crash, CNBC’s Brian Kelly had already warned of possible correction and Bitcoin going all the way to $12,000. Kelly noted that massive movement in the altcoin space has triggered the FOMO and attracted speculative investors.
Giddy up for Bitcoin as it rode past the $19K mark today for the first time since 2017. But @BKBrianKelly says you might want to hold your horses with the trade. Here’s why. pic.twitter.com/rc2ZKsBsEQ
— CNBC’s Fast Money (@CNBCFastMoney) November 24, 2020
Kelly noted that the surge in newly created BTC addresses is also a sign of caution. He said: “Whenever you get that big of an address growth implied, that is a caution sign”. Another popular market analyst Peter Brandt said that a 37% correction from the top is on the cards.
A 37% correction from the recent top would bring $BTC back to $14,235
The interesting thing about the psychology of market speculation is this — many traders who swore they would be buyers of a big dip when price was above $19,000 will actually become sellers under $15k https://t.co/lP815MXmDp
— Peter Brandt (@PeterLBrandt) November 26, 2020
One of the major factors preventing BTC to cross its all-time high of $20,000 is that post that level, Bitcoin will enter a price discovery mode. Above $20,000, there’s no historical data to suggest how BTC will show its movement. Analysts think that after crossing its ATH, Bitcoin can settle anywhere between $25,000 and $100K. Thus, BTC bears and sellers are aggressively defending their position and interest while not letting it move past $20,000.
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Source: https://coingape.com/btc-slips-17000-bitcoin-whales-ready-dump/
On Thursday, November 26th, the price of the Dai stablecoin (ordinarily ~$1 USD) exploded up to $1.30 on Coinbase as traders tried to snag up funds en masse to pay back, and thus keep afloat, their DeFi lending positions.
Yet this Dai price spike, combined with an acutely falling ETH price, pushed some Dai positions on DeFi lending protocol Compound into being undercollateralized and thus capable of being liquidated.
This dynamic played out because Compound’s Dai markets centrally rely on Coinbase’s Dai price feed, which skewed upward compared to other exchanges during this episode because many of Coinbase’s users were uniquely piling into Dai all at once.
This sequence of events led to more than $100 million worth of liquidations on Compound, which in turn led to considerable debate around the Ethereum ecosystem as to whether Compound messed up by overly relying on a single oracle of if the whole incident was just an unfortunate possibility panning out in the young DeFi arena.
In the wake of the Compound liquidations, people quickly started started positing that the underlying Dai price spike on Coinbase was the result of manipulation, i.e. a price oracle manipulation attack.
However, it’s not clear at all that an attack was the culprit. Evidence suggests that organic trading and liquidation activity led to the Compound liquidations, as some Ethereum users pointed out on social media.
it does not seem like the big compound liquidation was an oracle problem.
the market price of DAI was $1.30 in a real market with real trading.
it is not even clear if it was manipulation. panic buying DAI to prevent a CDP liquidation as ETH fell is completely pluasible./
— 𝐬𝐜🍥tt 𝐋🌾 (@scott_lew_is) November 26, 2020
Much of the complains levelled at Compound over the last 24 hours have to do with the fact that the DeFi protocol was overly reliant on a singular price feed, Coinbase’s.
Yet this isn’t exactly the case: Compound’s price oracle also incorporates time-weighted average prices (TWAPs), i.e. price oracles, from leading decentralized exchange for further assurances. As Uniswap creator Hayden Adams commented on Thursday:
“From what I’ve heard, the compound liquidations would have been much worse without the addition of [Uniswap] TWAPs to the Compound oracle … While the Coinbase oracle price spiked, Uniswap TWAPs did not increase much, causing the most extreme prices to be rejected.”
This is certainly validating for Uniswap’s TWAPs, but it also highlights that Compound’s price oracle performance was further strengthened by such multi-dimensionality. And for the folks who critiqued Compound for its latest major liquidations, that was the crux of the matter: that Compound would have been even better served by using many price oracles rather than less than few.
Chainlink is the premier decentralized oracle solution in DeFi today, and its price feeds already power an impressive range of DeFi projects. That includes lending protocol to Aave, which generally works somewhat similarly to Compound but relies instead on Chainlink’s decentralized oracles.
Aave’s worth highlighting here, then, because its Chainlink-powered Dai markets didn’t experience a raft of liquidations like Compound’s did. That’s on account of Chainlink bundling a range of price feeds rather than just relying on one.
On the news, Blockonomi reached out to Chainlink co-founder Sergey Nazarov to see what he thought the latetst Compound liquidation episode represented for DeFi. In a statement shared with Blockonomi, Nazarov noted:
“We predicted this exact exploit more than a year ago, spoke publicly about this attack vector at multiple conferences, and issued a public advisory for the wider developer community. During this specific exploit, the Chainlink network performed as expected thanks to its extensive decentralization at both the node and data source levels, returning an accurate global price for these assets. Throughout this exploit, combined with high gas prices, DeFi smart contracts consuming data from the Chainlink network remained unaffected and accurate in the proper operation of their protocols.”
In the very least, then, this Compound incident should have more than a few DeFi projects doubling down on defense by exploring how to integrate with Chainlink’s oracle tech.
991
Source: https://blockonomi.com/chainlink-compound-liquidations/
Coinbase’s CEO Brian Armstrong has sent a letter to the US Treasury Secretary Steven Mnuchin regarding new rumored regulations on self-hosted cryptocurrency wallets. Armstrong believes that if implemented, the new legislation could harm users and, ultimately, the role of the US in the cryptocurrency financial field.
The CEO of the largest US-based digital asset exchange took it to Twitter to outline the potential importance of these regulations if indeed implemented. The rumors indicate that the current Treasury Secretary Mnuchin plans to make them official before the end of his term.
Armstrong explained that self-hosted cryptocurrency wallets (also referred to as non-custodial or self-custody wallets) are “a type of software that lets individuals store and use their own cryptocurrency, instead of needing to rely on a third-party financial institution.”
They enable users to access basic financial services through this technology – “just like anyone can use a computer or smartphone to access the open market.”
Should the proposed regulations become official, they would require financial institutions, including Coinbase, to verify the recipient (owner) of the self-hosted wallet. Meaning, it would collect identifying information on that party before completing the transaction.
According to Armstrong, such requirements would lead to several potential issues because “it is often impractical to collect identifying information on a recipient in the crypto-economy.”
Some of those issues could affect users that send cryptocurrencies to various merchants online or to other people in emerging markets, where “it is difficult or impossible to collect meaningful know-your-customer information.”
Even simpler transactions like upvoting some content on Reddit or transferring an item in a game would also require the verification of the recipient, which makes the process prolonged and complicated.
Armstrong believes that the impact of these “barriers” would prompt US-based users to initiate fewer transactions. This would “effectively create a walled garden for crypto financial services in the US, cutting us from innovation happening in the rest of the world.”
US customers would turn to foreign cryptocurrency companies to access such services, which could put the country’s status as a financial hub at risk in the long-run.
“If this crypto regulation comes out, it would be a terrible legacy and have long-standing negative impacts for the US. In the early days of the internet, there were people who called for it to be regulated like to phone companies. Thank goodness they didn’t.” – added Armstrong.
He also asserted that Coinbase and other cryptocurrency companies have sent a letter to the Treasury last week to articulate these concerns. However, he hasn’t specified if the Treasury has responded in any way yet.
Featured Image Courtesy of Observer
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