Bitcoin Cash Reddit Tip App Users Hacked for Thousands
An ongoing investigation has revealed multiple allegations that hot wallets from users of popular subreddit r/btc were hacked through Tippr, resulting in thousands of dollars worth of bitcoin cash (BCH) stolen. Early theories assumed this to be a new low in the so-called Civil War between supporters of bitcoin core and BCH.
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Bitcoin Civil War Might’ve Gotten Uglier
Using a previously unknown third-party vulnerability, users of Reddit’s increasingly popular subreddit forum, /r/btc, a discussion board which often features positive comments by bitcoin cash supporters, were hacked for thousands of BCH.
Reddit is a news aggregator fueled by subreddit discussion boards which fill every kind of topic niche. It is owned by media conglomerate Advance Publications, and is routinely in the top ten most visited websites.
The attacks were seemingly so base, early thinking went toward an inside job. Perhaps a rogue Reddit admin had snatched bitcoin cash, came an initial theory. In the final month of last year, /r/btc’s moderator and a user who happened to work in the malware field were made vulnerable and hacked. For about half an hour, the subreddit itself was redirected to r/bitcoin. And then a half dozen other bitcoin cash-favoring forum users were compromised, especially those tipped through Tippr.
The conspiracies began. Obviously, bitcoin core supporters had taken to ire, doing so as a new low. They might hate bitcoin cash, but no one turns down free money.
50,000 USD of BCH Flowed Through Tippr in December
Tippr is a bot used on Reddit for the purposes of tipping users in BCH. Tippers send the bot a deposit, and then comment, noting they’re using u/tippr. An example might be: “Great point u/tippr $3.” The bot will chime in, confirming the tip. The recipient must have a BCH wallet, and then message the bot in return, listing the BCH wallet address and include the amount. The bot dutifully answers in confirmation, and so the recipient can now access funds. Estimates in the upwards of 50,000 USD worth of BCH has flowed through the bot in December of last year. The culprit evidently was tracking such public posts, causing Tippr to go dark, pending results, as the developer learned of the investigation.
The attack came as a reset from Reddit in email form. Immediately another email confirmed the password change…even if the email hadn’t opened for whatever reason. “My email provider is a very large provider with a name we all know,” a hacked user explained. “Logging is provided and there was no suspicious activity on my email account. My email account also has 2FA. The emails sent by reddit (first one ‘click here to change your password’ second one ‘your password has been changed) were unopened in my inbox.’”
Whatever the case, this does appear to be something of a new kind of attack allowing access to Reddit accounts, a vulnerability hitherto unknown. It now could at least be plausible NEITHER a Reddit employee was on the make or a dastardly bitcoin core jihadist was involved.
It turns out one or the other might’ve been sufficient but not a fully necessary condition to launch the attacks. Tippr is the common denominator, and where there is money to be taken no other motive need be ascribed. Tippr is used not only on Reddit forums but also on Twitter.
Conspiracy Sufficient But Not Necessary
The bot’s creator, Rob Danielson, mused it was probably “someone [who] realized they had an opportunity to make a quick buck.” Through private messaging via Reddit, accounts gave up as much as $4,000 total worth of bitcoin cash. Once the incidents were discovered, Mr. Danielson disabled the bot for Reddit.
For its part, Reddit is pointing fingers at its automated email subcontractor Mailgun. Though the number of users impacted was roughly a dozen, someone could gain access to resetting emails through Mailgun, a potentially huge problem for Reddit going forward. The hacker could not access Reddit proper nor a user’s email account, they claim. Reddit has since dropped Mailgun in favor of its own server. Mailgun believes “less than 1% of our customer base was potentially affected.” Tippr is now available again on Reddit.
A Reddit engineer did finally respond to multiple requests by users for public comment. “Thanks for reporting – we’re not ignoring. This was reported privately via security at [Reddit] and we’ve been investigating.”
Moderator of /r/btc, Bitcoinxio, noted Reddit maybe “needed a kick in the butt after all this publicity about the hacks in the past couple days, but we’ve been telling them about the hacks now for some time,” he wrote. “I wouldn’t be surprised if the other hacks are related in some way or there are other exploits which they haven’t even investigated because they are ignoring our concerns and just shrugging them off.”
What are your thoughts on the bitcoin cash hacks? Let us know in the comments section below.
Images courtesy of Pixabay, Reddit, Tippr.
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Man’s Life Savings Stolen from Hardware Wallet Supplied by a Reseller
Hardware wallets are regarded as one of the safest means of storing bitcoin and other cryptocurrencies. Each device grants the holder possession of their private keys and adds a PIN code plus other tamer-proof tech for enhanced security. Hardware wallets are not impregnable, however, as one British man found to his peril after purchasing the device on Ebay.
Also read: Cryptocurrency Valuations Have Created Very Wealthy Founders
Man in the Middle
Redditor moodyrocket is coming to terms with having his “life savings” wiped out this week, after $34,000 of crypto was stolen from his newly acquired Nano Ledger hardware wallet. The device was compromised, not due to any flaws in its design, but thanks to a man in the middle attack that saw the reseller insert their own recovery seed. The buyer then unwittingly began using the wallet, unaware that the default seed they were using had not been randomly assigned by the manufacturer. He explained:
I have not used my Ledger in a week, today I decide to check the value of my XRP, Litecoin and Dash only to discover that all of them showed up as zero and had been transferred somewhere else yesterday all around the same time at 7:30pm. I am not sure how this is possible as I have not access my Ledger in a week.
The victim was initially confused as to how the attack could have been successfully pulled off, before eventually twigging that the Ebay seller must have tampered with the device. After sharing his story on Reddit, Ledger reached out to moodyrocket and encouraged him to report the crime to “bring the eBay seller to justice”.
An Elaborate Hoax
The odds of the British-based victim getting his cryptocurrency back are remote, but his loss can at least be the community’s gain. The widespread attention the tale has received serves to highlight the dangers to anyone considering purchasing a hardware wallet from a third party. Auction sites, unaffiliated vendors, and merchants who have no formal partnership with wallet manufacturers should all be avoided.
The vast majority of resellers stocking wallets such as Ledgers and Trezors have no intention of meddling with the devices. But it only takes one unscrupulous entity to interfere with a wallet and pass it on to the unsuspecting buyer. The Ebay seller who duped moodyrocket had gone to great lengths to orchestrate the scam. The seed is meant to be generated by the device, but this purchase came with “scratch off” paper that revealed the seed.
Despite the security of hardware devices themselves, the weakest link is always the people using them. Even a raft of anti-theft tech can’t atone for human error. Had the victim reset the device and created a new seed he would have been fine. When presented with convincingly forged documentation, though, he naturally felt safe in sticking with the default seed. Purchasing hardware wallets directly from the manufacturer may take longer and cost more, but the alternatives just aren’t worth it.
Would you feel comfortable buying a hardware wallet from a third party? Let us know in the comments section below.
Images courtesy of Shutterstock, and Reddit.
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British Bank Says “No” to Crypto Firms from Gibraltar
Less than a week since it started licensing blockchain businesses, Gibraltar has received bad news from the United Kingdom. A leading British bank has refused to process orders from crypto firms based in the overseas territory. Gibraltan banks are now on the lookout for another UK banking partner.
Also read: Britain: Where You Can Bet on Bitcoin but Can’t Find a Bitcoin Exchange
Slots are Fine, Coins – Nah
The negative reaction to Gibraltar’s decision to seduce the crypto sector came from the Royal Bank of Scotland. Its partner, the Gibraltar International Bank, has received notification that RBS will no longer process transactions connected to firms dealing with cryptocurrencies. The Scottish bank has effectively closed the clearing system for companies licensed under the new Digital Ledger Technology Regulatory Framework implemented by Gibraltar.
The new DTL legislation went into effect on January 1, after Gibraltar Parliament approved a bill last month designed to update its financial regulations. Along with online betting and gaming, financial services provide a great deal of Gibraltar’s domestic product and income. Local authorities have decided to tap into the profits of the new cryptocurrency segment, rather than ban or ignore it. The territory has also become the first in European jurisdiction to regulate ICOs through its Financial Services Commission (GFSC).
Following RBS’s warning, the Chief Operating Officer of GIB Derek Sene announced that his bank would look for another UK correspondent to establish a mechanism for processing crypto related transfers. He said that making strategic decisions such as this was standard practice. The Gibraltar International Bank is not dealing with cryptocurrencies but has started opening accounts for companies using blockchain technology in October last year. Quoted by local media, Sene stated that GIB would continue operating within the DLT industry.
A Sign from Dante’s Inferno
RBS is yet to comment officially on its decision to reject crypto related transactions from Gibraltar but its management’s attitude towards digital currencies is well known. “Put up the sign from Dante’s Inferno – ‘Abandon hope all ye who enter here” – that’s the only thing authorities could do about cryptocurrencies, according to the bank’s chairman Sir Howard Davies. That’s what needs to be done by the Fed, the ECB and the Bank of England, he told Bloomberg TV in December when Bitcoin touched $15,000.
Davies also said that Bitcoin seemed to him to be a “frothy investment bubble” but admitted he didn’t see how it could be outlawed. He noted the difficulties in defining “alternative payment systems” but also pointed out that “the market is telling us something” about the demand for new, faster payments. That demand is driving customers and companies towards cryptocurrency financial services. It seems Gibraltar authorities have sensed the trend better than those in Britain.
While the Bank of England is “pretty actively” studying Bitcoin and British spies are closely monitoring, UK banks are left to decide what to do with crypto businesses and are mostly turning their backs on them. At the same time British companies have started looking for more hospitable climates on the Continent, as the FT reported a couple of months ago. Poland and Bulgaria have been mentioned but Gibraltar is now taking the lead in Europe. Its authorities have been busy adopting regulations with incentives for companies providing crypto-financial services. And, of course, the climate there is much more clement.
Do you think Gibraltar banks will find UK correspondents willing to work with crypto companies? Tell us in the comments section below.
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Finance ‘Guru’ James Altucher Is Launching a Cryptocurrency Exchange
Lately across the web, mainstream media has been highlighting an individual named James Altucher an American author, hedge fund manager, podcaster, and financial jack-of-all-trades. These days Altucher has been riding the trend of the bitcoin phenomenon, and some people call him a “cryptocurrency guru.” This week, public records show Altucher and his colleagues plan to raise $10Mn USD to launch a digital assets trading platform.
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The Man Mainstream Media Calls the ‘Guru of Finance’ Plans to Launch a Digital Currency Exchange
“Bitzumi is a vertically-integrated Bitcoin exchange and marketplace. Our mission is to drive growth to the cryptocurrency industry — We plan to launch our business divisions with a phased approach,” explains the firm’s SEC filing on January 4.
Initially, our primary focus will be to develop a publishing and marketing company to educate potential Bitzumi exchange/wallet consumers, and to gain name recognition — Ultimately, we intend for our primary product to be our cryptocurrency exchange and digital storage — We also plan to develop various educational and information products and newsletters focusing on the cryptocurrency industry.
Bitzumi Exchange Plans to Raise $10 Million and Publish a Newsletter Backed by James Altucher
The co-founder, Altucher, and his company hope to raise $10 million USD, with a minimum of $1Mn for Bitzumi’s initial phases. The first phase will be a newsletter procured by Altucher, and the firm started that period already on October 9, 2017, when Bitzumi Publishing partnered with Altucher’s Agora Financial, LLC. Phase two will be the exchange and wallet system, two services that Bitzumi says will compete with the likes of large exchanges like Bitstamp. Initially, Bitzumi will offer bitcoin, litecoin, ripple, and ethereum trades.
Bitzumi’s application details that the business will also offer cryptocurrency payment processing and escrow features. Additionally, the exchange will be fully regulated working with U.S. officials from Fincen, SEC, CFTC, and the IRS. The business venture looks like it will be relying heavily on Altucher’s backing and his newsletter, but Bitzumi will be led by the chief executive officer, Scot Cohen, an executive involved with oil and gas entities. Becoming a business involved with popular digital currencies, Bitzumi aims to be positioned as an “emerging growth company” the filing emphasizes.
What do you think about James Altucher and his plans to start a cryptocurrency exchange? Let us know your thoughts on this story in the comments below.
Images via Recode, Youtube, and the Bitzumi SEC filing.
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Trading Tip `The Wall´ – Did Ripple Almost Dethrone Bitcoin “Using This One Simple Trick”?
2017 was the year cryptocurrency speculation went mainstream, which is something many bitcoiners have been yearning to happen for years. But going mainstream means that the market is no longer dominated by cryptocurrency enthusiasts, and until Wall Street steps in, we’re simply going to have to accept that mainstream speculators with little knowledge of cryptocurrencies are in charge of the market.
Also read: Absurd Profits from Zclassic a.k.a. Bitcoin Private
A Wall Between Investor and the Unimaginably Stupid
If you’re a cryptocurrency old-timer, things that annoy you will become popular for reasons that seem unimaginably stupid. If you were a musician in 2012 and competing for the #1 spot on YouTube, it didn’t matter if you were the best singer in the world if your competition was “Oppa Gangnam Style”. In the same way, it won’t matter if your cryptocurrency is the most sophisticated and decentralized in the world, if the market doesn’t value those characteristics.
The “Gangnam Style” Era of Crypto
To explain what I mean, I’ve analyzed the percentage gains of each of the top 27 coins by market cap since 2017. One thing that is clear to me is that the cryptocurrency characteristic the market favored more than anything else in 2017 was not so much decentralization, technological soundness or real world usage, but rather the dollar digit bracket the coin belonged to; in this case, sub-cent unit prices.
Of course, the unit price of a coin is a totally senseless basis for making investment choices on. Any cryptocurrency–even Bitcoin–could have been a sub-cent item, if Satoshi chose the final cap to be 21 quadrillion instead of 21 million. In that case, the unit price of a bitcoin (price per each whole bitcoin) would be $0.00001697 right now instead of $16,790 but the total market cap would still have been $284 billion. Everything would be the same, except that everyone would have a million times more bitcoin–and the unit price would be cheaper.
Since bitcoins (as well as many other cryptocurrencies) are divisible down to 10^8 satoshis (smaller units), it doesn’t really matter what the supply is, as long as there’s enough “particles” of the currency to go around for the economic use cases imagined to function properly. The number itself is not important. But it does directly effect the unit prices, which apparently has an enormous impact of the investment choices of mainstream investors. As stupid as it may seem, I contend that apart from what’s outlined in this great summary, the perceived “cheapness” of Ripple’s XRP (100 billion supply) is one of the reasons why it overtook Bitcoin as the largest cryptocurrency in the world by implied market cap this week.
Ripple $XRP last night overtook Bitcoin $BTC as the largest cryptocurrency by fully diluted market cap. Further to my tweet a few weeks ago – I'd be very cautious in the space. #dashfortrash pic.twitter.com/qbIorRfMES
— Leon Warburton (@Leon_Warburton) January 4, 2018
The reason why we look at market caps when we compare coins is because that’s how we compare the values of a cryptocurrency as a whole rather than just looking at the unit prices, which we know, as illustrated before, to be completely arbitrary and therefore not a good measure of anything. To visualize this is in the clearest way possible, we can normalize the supply for different altcoins to see what the prices really would look like if they all had the same supply. This is how they would compare (as of 5 Jan 2017):
In these tables, I’m using the “fully diluted market cap” (max supply) as a basis for the normalization. The currencies for which the max supply is unknown such as Ethereum, I’ve used the Y2050 estimations given by Onchainfx(*). The calculation I’ve used for the normalization table is as follows:
Altcoin price x Altcoin max cap / 21M
And the bitcoin equivalent altcoin holding amounts:
Altcoin max cap / 21M
I recommend always doing this when trying to gauge the relative value of a coin to bitcoin for long-term investments. In my opinion, it’s better than looking at unit prices or market caps based on circulating supply, because it’s the only way to correctly assess the actual valuation you’re giving a coin when buying.
I think the easiest way to understand what I mean is by looking at Zcash as an example.
Zcash’s supply when all coins are mined will be the same as bitcoin, 21 million, but currently, there’s only ~3 million mined (circulating supply). As such, when you’re looking at sites like Coinmarketcap, it will tell you that Zcash has a market cap of just $1.7 billion. That’s just 0.6% of bitcoins market cap and places Zcash far down the list, at #27 where it looks small and leaves much room for growth.
But the price of Zcash is $589 which is actually 3.5% of bitcoin’s $16,790. If you’re buying with bitcoin, that means you have to pay 0.035 bitcoin to buy Zcash. Another thing you have to factor in when buying Zcash at $589 is that in order for Zcash to actually keep that price over time, Zcash must amass a market cap of $12bn, climbing to what’s currently the 12th spot on Coinmarketcap. And even if Zcash were to somehow do that, you would still only break even on your investment–because you bought it at a price ($589) that implied a valuation of $12bn. That’s the reason why the Onchainfx site is listing the coins the way they are–because it tells us what the implied valuation are for coins when bought at current prices.
Unfortunately, using the slightly deceitful metric “circulating supply” seems to be the norm when comparing valuations in the crypto-space. In a recent example, the Twitter-user 
Removing Unit Bias. If everything had the same supply cap as Bitcoin, would you still buy it? pic.twitter.com/0xrDiytPzR
— boxmining (
With this tweet he got the key message across – at the time, the implied valuation of XRP valued it above bitcoin. But if we look carefully, we’ll see Zcash at #28 on that list, with the deceitful price tag of $105, implying that the relative price of Zcash to Bitcoin is 0.6%, when as we know in reality, you have to pay 0.035 bitcoins (3.5% for a Zcash).
The point I want to make is that you can get far in your ambitions to become a more informed trader than most people in the market just by using common sense and a calculator. But being able to properly compare coin valuations doesn’t matter if nobody else is doing it — at least not in the short term. It can take a long time before the market fundamentals eventually force these prices to sort themselves out. And until they do, I recommend you do your diligence to make sure you’re on the right side of that correction.
(*) For Qtum, Onchainfx estimates the Y2050 supply to be 100 billion, which is erroneous. Speaking to one of the Qtum developers, David Jaenson, I confirmed this number to instead be 107822406.25.
What do you think about the cryptocurrency valuations? Let us know in the comment section below!
Images via Shutterstock
Disclaimer: Bitcoin price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”
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Indians Confused Over Crypto Taxation – Exchanges Ask Government to Clarify
The Indian government has been cracking down on cryptocurrency-related tax evasion. While the tax authority has notified crypto exchanges and wealthy traders that they must pay taxes, no clear guidelines have been provided. Indians are confused about how cryptocurrencies are taxed and seven bitcoin exchanges are asking the regulators for clarification.
Also read: Russian Regulators Draft Law to Restrict Crypto Mining, Payments, and Token Sales
Bitcoin Exchanges Seek Answers
The Indian National Tax Service has recently inspected top cryptocurrency exchanges as well as sent out notices to wealthy crypto traders informing them to pay taxes. However, the government has not issued guidelines on how cryptocurrencies are taxed, leaving crypto users and exchanges confused.
The India Times reported on Friday that the country’s top seven bitcoin exchanges including Zebpay, Unocoin, Coinsecure, and Btcxindia are planning to ask the AAR for clarification. “At least one bitcoin exchange has already filed an application with the Maharashtra AAR for future tax liability,” the publication quoted sources with direct knowledge of the matter, adding that:
The tax department is currently researching the concept since bitcoin is a very complex subject.
Which Taxes Are Applicable?
“The question for many bitcoin players is whether GST is applicable on the total revenue or on the margins they earn,” explained Abhishek A Rastogi, a partner at Khaitan & Co law firm, noting that:
This is mainly because the tax authority must give clarity on whether bitcoin exchanges are selling goods and services, or are mere trading platforms that earn margins.
“For the exchanges, the rate could depend on what the authorities deem bitcoins to be — goods, services or currency,” the news outlet elaborated. “If bitcoin is held to be a currency, there will be no GST. If it’s a good, then a tax of 18% could be levied, and 12% if deemed to be a service.”
What kind of taxes do you think the Indian government will impose? Let us know in the comments section below.
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