A new computing breakthrough may just save Bitcoin and cryptocurrency from powerful quantum machines that have the potential to breach public-key cryptography.
Researchers are following the development of a new measure known as lattice-based cryptography that promises to make crypto technology more “quantum-proof,” reports MIT Technology Review.
Lattice-based cryptography may neutralize the massive computational capabilities of quantum computers by hiding data inside complex geometric structures that contain a grid of infinite dots that are spread across thousands of dimensions. The security measure appears to be virtually impenetrable even with the use of powerful quantum computers unless one holds the key.
The emergence of quantum computing machines has grabbed headlines over the past few months as the technology poses a threat to cryptographic algorithms that keep cryptocurrencies, like Bitcoin – as well as the internet at large – secure. The World Economic Forum explains how quantum computers can break current standards of encryption.
“The sheer calculating ability of a sufficiently powerful and error-corrected quantum computer means that public-key cryptography is ‘destined to fail’, and would put the technology used to protect many of today’s fundamental digital systems and activities at risk.”
MIT Technology Review says that while the current iterations are not yet ready for implementation, the solution is promising, especially as a post-quantum future is fast approaching. Ripple CTO David Schwartz says he believes developers have at least eight years until the technology, which leverages the properties of quantum physics to perform fast calculations, becomes sophisticated enough to crack cryptocurrency.
“I think we have at least eight years. I have very high confidence that it’s at least a decade before quantum computing presents a threat, but you never know when there could be a breakthrough. I’m a cautious and concerned observer, I would say.”
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/archy13
Chinese state-endorsed public chain to act as a global DeFi bridge, says Conflux CEO
Conflux Network, a permissionless blockchain project which is endorsed by the Chinese state, told Cointelegraph on Sept. 22 that the project has officially launched its Tree Graph Research Institute with the Shanghai government.
According to Fan Long, CEO of Conflux, the Tree-Graph Blockchain Research Institute will experiment with local states to build a regulatory compliance platform that can bridge global DeFi applications and government regulations. He added that:
“DeFi is a new world and while it appears as though it may pose a challenge for regulators, they appear willing to listen. At this stage, the most important thing is to maintain a reliable communication channel between two sides— the DeFi innovators and the regulators.”
When it comes to new techniques and innovations, the Chinese government has shown signs of tolerance for experimentation in the past. Fan indicated that the complexity surrounding DeFi and other relevant distributed innovations will make open communication crucial for continued legislative acceptance. He stated that:
“Regulators need a reliable way to learn what the new technique is about and where it might lead us to. Innovators need a way to understand the concerns and red lines of regulators.”
At the moment, Conflux is working with the Shanghai government on several sandbox projects. Fan told Cointelegraph that these projects include integrating blockchain borrowing and lending services into Shanghai’s Pudong Development Bank, and leveraging the Shanghai free trade zone’s unique regulatory framework to devise a unique stablecoin for the region, The CEO explained:
“Shanghai Free Trade Zone is outside of capital control of China where RMB is offshore with its own set of rules, so we are trying to come up with some regulation breakthroughs with experimenting under the free zone framework.”
Compared with the central bank’s digital currency, or CBDC, Fan pointed out that although a CBDC will allow the central government to maintain control of the financial activities, it would be hard for such a centralized form of digital currency to be accepted outside of China.
Conflux is trying to either create a free zone stablecoin or build a public permissionless cross chain for the CBDC.
The project, which began its life as a research project at Tsinghua University, has been working to provide a robust and cheap framework for developers to build decentralized finance applications. Fan explained that:
“Conflux Network seeks to provide a POW network with transaction speeds an order of magnitude faster. The key enabler technique is a novel DAG-based ledger structure together with an optimistic concurrency control to achieve a consistent order of transactions among all the nodes in the network.”
Fan believes that DeFi projects will only be able to go mainstream through willfully enacted compliance measures which evolve alongside government regulations. Blockchain and DeFi are new areas for regulators. Although he cannot speak to how regulators will go about this, his predicts that:
“Decentralization will make it more difficult for regulators to control DeFi products, but there are still possibilities to exercise controls at the boundary between the decentralized world and the centralized world.”
The Shanghai Municipal Government, one of the states endorsing the project, is interested in exploring how the city can leverage blockchain techniques to integrate traditional finance with decentralized financial services, says Fan.
In order to connect global DeFi projects and regulations, the company also created the Conflux Open Defi initiative.
Members include: Sequoia Capital, Blockpower Capital, Antelope Holdings, dForce, DeBank, and MCDEX along with Chinese state support through the Shanghai Science and Technology Committee. Fan says Open DeFi aims to unite Eastern and Western DeFi markets through three globally focused program tracks: risk management, new liquidity strategies, and incubation & innovation.
Inside the Mysterious World of Bitcoin’s Mempool
Blocknative’s Mempool Explorer lets you explore the transient space where Bitcoin transactions are suspended in limbo.
- Blocknative has launched its Mempool Explorer to help understand mempool data.
- Transactions pass through the mempool before they reach the Bitcoin blockchain.
- The Mempool Explorer promises to democratize access to mempool data.
But what is the mempool? It’s the gateway to Bitcoin’s blockchain and many others. Before any transaction is written on a blockchain, the information first enters the mempool. There it sits, almost in purgatory, waiting for a Godly miner to select it and inscribe it into a block—or discard it forever. But the very nature of this in-between world, which differs for each miner, has always made it challenging to analyse. And it is often exploited by bad actors with the expertise to see things the rest of us can’t.
“At a minimum, our platform represents sunrise in the Dark Forest. The alpha predators are still operating, but now everyone can monitor their actions,” Matt Cutler, CEO and co-founder of Blocknative, told Decrypt.
The main problem is that the Bitcoin mempool is built upon the shifting sands of pending Bitcoin transactions. As there is no one central source of mempool data—each miner has their own version of events—it is difficult to gather and utilize this data. This, in turn, makes it hard to take a reliable snapshot of events, and present them to developers.
“It is pre-consensus by definition. It is constantly changing—literally at a sub-second level,” said Cutler.
How the Mempool Explorer works
The Mempool Explorer tries to make sense of the pre-consensus data found in the mempool, making it accessible and easy to analyze.
In the mempool, pending transactions are ordered, fees are prioritized, and new blocks are sent to the blockchain. The Mempool Explorer examines this data and makes it available to developers. Using the Mempool Explorer, users can track pending transactions, monitor exchanges, and share mempool data with others. In other words, it is a purpose-built environment for crunching data before it hits the blockchain.
The Mempool Explorer works as a global network of nodes, all enabling the Explorer to detect and record data on the mempool in real time. The Mempool Explorer can record more than 7 billion Ethereum mempool events in just one month. That is over 2,000 events per second on a 24/7 basis.
How mempool data fights frontrunning
While mempool data is tricky to get hold of, it’s very useful for several different purposes.
One of its main, albeit shady, uses is for frontrunning. Frontrunning is a way of making trading decisions based on knowledge of future events, similar to insider trading. And traders use frontrunning to get ahead of people on decentralized exchanges, typically on the Ethereum blockchain.
Alex Svanevik, CEO at Nansen, told Decrypt, “There’s certainly demand for mempool data. Trading in traditional finance is often a latency game, and crypto is no different,”
Here’s how frontrunning works when blockchain is involved. Since blockchain data is public, someone watching the mempool can see a trade being made and then make the same trade, offering a higher transaction fee. Since miners tend to pick transactions from the mempool that have higher fees (so they make more money), this means the later transaction is more likely to get included in the block—and the person gets ahead of the trade.
Until now, only some individuals use such techniques. “Today, these techniques are the domain of a well-equipped, and well-financed, elite few. Everyone else is at best a spectator to their actions – at worse, unaware,” said Cutler. This means general people using decentralized exchanges are often subject to frontrunning—but may have no idea.
Now anyone who uses the Explorer will now be able to fight back.
“Any adversarial action that goes on chain must—just like everything else—first traverse the mempool. So our platform can give concerned parties advanced warning that adversarial actions are underway,” Cutler added.
It’s time to embrace the mempool.
Congress sees two new bills looking to chart CFTC and SEC regulatory turf in crypto
Two major crypto bills were introduced in the U.S. House of Representatives on Thursday. One aims to establish which cryptocurrencies are securities. The other looks to put regulation of exchanges in the hands of the country’s commodities regulator.
The securities bill
The Securities Clarity Act, from the office of Representative Tom Emmer (R-MN) establishes a new distinction in securities law between an investment contract and the “an asset sold pursuant to an investment 22 contract, whether tangible or intangible (including an 23 asset in digital form).”
The new bill is basically a direct response to recent controversy over the Simple Agreement for Future Tokens framework under which currencies like EOS were distributed and which caused immense controversy in the case of Telegram. If passed, the act would restrict the Securities and Exchange Commission from pursuing digital assets on the basis of the initial contracts under which they were sold.
…and the commodities
Conaway may be less familiar to Cointelegraph’s readers than Emmer, but his position on the Agriculture Committee is critical. Today’s bill would put crypto exchanges under the jurisdiction of the CFTC, which answers to the Agriculture Committee. That registration would save exchanges from the patchwork of state-by-state licensing required of money service providers.
Though the new bill would seem to put retail crypto under the same rules as commodities exchanges, it is careful to leave space for the SEC for sales involving “a securities offering or transaction associated with a digital commodity presale.”
Blockchain4 weeks ago
Market Wrap: Bitcoin’s Powell-Induced Price Swing; Ethereum Still High on Gas
Blockchain1 month ago
The US Post Office Files a Patent for a Blockchain-Based Voting System
Blockchain4 months ago
How to Identify the ‘Third Wave’ of Cannabis Investments
Blockchain2 months ago
Wealthfront Lures Millenials With Crypto Memes and Tactics
Blockchain2 months ago
Top Five Most Advanced Cryptocurrencies
Blockchain2 weeks ago
Blockchain Bites: Is DeFi an Inside Deal?
Blockchain4 months ago
5 Tips to Interest the Press in Your Cannabis Business
Blockchain3 months ago
Top 5 Most Effective Cannabis Marketing Strategies