The technology and economic determinants of cryptocurrency exchange rates: The case of Bitcoin

  

We theoretically discuss the technology

and economic determinants of the Bitcoin exchange rate We use the ARDL model with bounds test to address co-integration of a mix of stationary and non-stationary time series We find Bitcoin exchange rate relates more with economic fundamentals and less with technology factors as Bitcoin evolves We find the impact of computational capacities on Bitcoin is decreasing as technology progresses

Xin Li

is an associate professor in the Department of Information Systems at the City University of Hong Kong. He received his Ph.D. in Management Information Systems from the University of Arizona. He received his Bachelor's and Master's degrees from the Department of Automation at Tsinghua University, China. His research interests include business intelligence & knowledge discovery, social network analysis, social media, and applied econometrics. His work has appeared in the MIS Quarterly, INFORMS Journal on Computing, Journal of Management Information Systems, Decision Support Systems, Journal of the American Society for Information Science and Technology, ACM Transactions on Management Information Systems, IEEE Intelligent Systems, among others, and in various conference proceedings.

Chong Wang

is an assistant professor in the Department of Information Systems at the City University of Hong Kong. He received his Ph.D. in Information Systems from the Hong Kong University of Science and Technology. He received his Master's degrees from the Department of Finance at Tsinghua University, China, and his Bachelor's degree from the Department of Applied Mathematics at Peking University, China. His research focuses on understanding the social and economic impacts of information technology. His research projects cover topics in the areas of online social networks, crowdsourcing platforms, and financial information technologies. His work has appeared in the Information Systems Research, Journal of Management Information Systems, Decision Support Systems, and in various conference proceedings.

Chuck Reynolds
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After WannaCrypt, world faces massive cryptocurrency attack

"Adylkuzz attack" for cryptocurrency began on or before May 2, more than a week before "WannaCry" that hit 150 countries, including India

  An alternative to Bitcoin, cryptocurrency is being used for trading in drugs,

stolen credit cards and counterfeit goods. After facing a massive “WannaCrypt” ransomware attack that exploited a vulnerability in a Microsoft software and hit 150 countries, the same Windows vulnerability (MS17-010) has also been exploited to spread another type of malware that is quietly but fast generating digital cash from machines it has infected.

According to a report in The Registrar on Wednesday, tens of thousands of computers globally have been affected by the “Adylkuzz attack” that target machines, let them operate and only slows those down to generate digital cash or “Monero” cryptocurrency in the background. “Monero” — being popularized by North Korea-linked hackers — is an open-source cryptocurrency created in April 2014 that focuses on privacy, decentralisation, and scalability.

It is an alternative to Bitcoin and is being used for trading in drugs, stolen credit cards and counterfeit goods. “Initial statistics suggest that this attack may be larger in scale than WannaCry[pt], because this attack shuts down SMB networking to prevent further infections with other malware (including the WannaCry[pt] worm) via that same vulnerability,” US-based cyber security firm Proofpoint researchers were quoted as saying in the report.

How a cryptocurrency attack works?

The hackers need to mine cryptocurrency using computers/computing devices (IoT included). “Mining of cryptocurrency simply means solving complex cryptography problems designed within the algorithm of a cyber-currency that requires a lot of computing,” Saket Modi, CEO and Co-founder of Delhi-based IT risk assessments provider Lucideus, told IANS. To draw a parallel, there can only be 21 million Bitcoins that can be mined out of which 16 million have already been mined, informed Modi. “Monero”, on the other side, is slightly different than Bitcoin but for simplification’s sake, it can be assumed that it follows a similar architecture and similar mining process.

“Hence, there is a new wave of cyber attacks where the hacker is least interested in the personal information of the victim and instead his only motivation is to gain access to the CPU of the victim’s computer/mobile/IoT device so that they can use it to mine more currencies (and correspondingly make more money),” Modi told IANS. This looks like something more dangerous than “WannaCrypt” as the victim doesn’t come to know that they have been hacked, but, on the other side, “the good part is that the hacker here is not interested in the victim’s personal data,” Modi told IANS.

To achieve this, the hackers find a vulnerability in one of the servers in the targeted organization or they would infect a website which employees of a targeted organization often visit. “They would then infect the IT infrastructure of the target with malware and would identify where a server running SWIFT software is installed. They would download additional malware to interact with SWIFT software and would try to drain the organization’s accounts,” Altaf Halde, Managing Director of Kaspersky Lab (South Asia), told IANS. According to Proofpoint, the “Adylkuzz” attack is still growing.

“Once infected through use of the ‘EternalBlue’ exploit, the cryptocurrency miner ‘Adylkuzz’ is installed and used to generate cybercash for the attackers,” Robert Holmes, Vice President of products at Proofpoint, was quoted as saying. According to experts, the “Adylkuzz” began its attack on or before May 2, more than a week before “WannaCrypt” arrived and hit 150 countries, including India. “Indications are that the crooks behind ‘Adylkuzz’ have generated a lot more money than the ‘WannaCrypt’ ransomware fiends,” The Registrar report noted. According to cyberscoop.com, “Monero” doubled in price over the last month to around $23 while other digital currencies, including bitcoin, saw a mixed month. “Cybercriminals intrigued by the currency’s promises of greater anonymity are using it more often on black markets,” it said.

How to save your organizations from cryptocurrency attacks?

“If your organisation has software tools for conducting money transactions like SWIFT software, invest into additional protection and regular security assessment in addition to standard protection measures implemented in all other parts of the organization’s network,” Halde informed. Protect backup servers as they contain information that can be of use for attackers: passwords, logins, and authentication tokens. “When deploying specialized software for money processing follow recommendations and best security practices from your software vendor and security professionals,” Halde added. In a case of suspicion of intrusion, request for professional assistance with incident response.

Chuck Reynolds
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Alan Zibluk – Markethive Founding Member

Top Reasons Why Bitcoin’s Price is Rising Right Now

  

While Bitcoin’s market has been uncertain in the past week,

there is no doubt that the price is holding support surprisingly well. Even though there are quite a few issues that are hindering Bitcoin’s growth, there are also other events which are contributing to the cryptocurrency’s global adoption. This article will discuss the top 3 reasons why Bitcoin’s price is currently rising.

 Wanna Cry Ransomware

I am sure you have heard of the recent world’s largest ransomware attack by the name of Wanna Cry, aka Wana Decryptor. The aggressive ransomware has infected over 200,000 machines and so far has collected over $80,000, according to @actual_ransom – a twitter bot set up to track the ransomware. While it is unfortunate that Wana Decryptor has plagued cyberspace, its coverage in the media has brought attention to Bitcoin, the only payment method accepted by the malware. Furthermore, the fact that the ransomware attack began amid Bitcoin’s price rally only contributed to the positive momentum, which is probably why the current support at $1700 is holding so strong.

Even though using a ransomware to spread awareness about Bitcoin might not be beneficial to the cryptocurrency’s reputation, the idea that Bitcoin is used by criminals is not a new revelation by any means. Most people who know about Bitcoin already know that it is used on dark net markets for illicit purposes, so any more news about it being used by criminals most likely won’t have much of an affect on the market.

The Flippening

Altcoins existed ever since Bitcoin’s creation. Up until this year, they have been considered second-rate projects as they were perceived to be simply clones of Bitcoin. However, as Bitcoin’s scaling debate intensified and users sought a solution, alternative cryptocurrencies started to flourish. The Flippening is a paradigm shift where investors are starting to look at altcoins as having value in different ways compared to Bitcoin. While at first that may seem like bad news for Bitcoin, the whole ecosystem shares the benefits.

While Bitcoin’s dominance among altcoins is dropping, according to cornmarket cap, cryptocurrencies’ overall market cap has been rising exponentially, it benefits Bitcoin as well. Just like altcoins benefited from new money flowing into Bitcoin, BTC benefits from the curious investors interested in the cryptocurrency niche as a whole.

Japan’s Adoption

Last but not least, one of the biggest driving forces behind Bitcoin’s meteoric price rise is Japan’s adoption and legislation of crypto. After passing official KYC / AML laws regulating exchanges in Japan, the government essentially green-lighted the legal operation of cryptocurrency exchanges.

The new legislation increased Bitcoin’s popularity in the country and also invited Chinese investors who were looking to escape the country’s tight grip on the sector. In fact, withdrawals for Chinese exchanges have been suspended for a few months now. There is a light in the tunnel as the PBoC released a statement which hints that withdrawals may resume soon. While there is no definitive date, rumors have it that things may settle in June. Chinese news resource cnLedger had the inside scoop.

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From Here To Where?
Bitcoin And The Future Of Cryptocurrency

   There’s a number of reasons why cryptocurrencies are so inherently popular.

They are safe, anonymous and utterly decentralized. Unlike conventional currency, they are not controlled or regulated by some singular authority, their flow is determined entirely by market demand. They are also nigh impossible to counterfeit, thanks to the paranoidly complicated code system that encrypts each and every transfer, ensuring complete anonymity and utter safety to each and every user. They even make for a genuinely rewarding, if risky, investment endeavor, despite the fact that any financial advisor in their right mind will caution you against them. Therefore, despite the admittedly high stakes that this sort of dealing entails, not to mention the lack of any government agency to lend credence to them, cryptocurrencies can only thrive and multiply.

If I were to tell you of the history of cryptocurrencies, I would have to begin with cryptographer David Chaum, who in the 1980s devised an extraordinarily secure algorithm that allowed for the kind of encryption required in electronic fund transfers. Chaum’s “blinding algorithm” laid the groundwork for the future development of all types of digitalized currency transactions, be it alternative currencies like Bitcoin or just plain old digitalized cash transfers.

“I am personally excited for the future of cryptocurrencies and blockchain technology in general. Current innovations such as Bitcoin, Ethereum, and others are just the beginning for this technology that can help revamp many industries. There is plenty of opportunity in this space.” – Chalmers Brown, Forbes

In the later part of the 1980s, Chaum relocated to the Netherlands, and, with the help of a few fellow enthusiasts, laid the foundation of DigiCash, a for-profit cryptocurrency network based on his “blinded money” algorithm. Unlike newer cryptocurrencies, DigiCash exercised full monopoly over its supply, a far cry from being a decentralized mode of transactions such as Bitcoin. While DigiCash was founded with the idea of trading directly with individuals, the Netherlands government imposed severe restrictions on the company, forcing it to sell only to licensed banks. This seriously curtailed the company’s profits, and after a decade of struggling and being partnered with by Microsoft, the company finally closed doors in the 1990s. Chaum did go on to try his luck on a few similar cryptocurrency startups at the time, though none of them were really successful to begin with.

Fast forward to 2008, when a whitepaper was released under the pseudonym of Satoshi Nakamoto, detailing what would be widely regarded as the first modern cryptocurrency initiative. The idea combined concepts such as decentralization, perfect anonymity, finite supply and blockchain technology to pave the way for what we know as Bitcoin. Nakamoto, a pseudonymous individual or individuals operating under a fake name, released Bitcoin to the public in 2009. This idea was soon taken up by a gazillion different startups such as Litecoin. In 2010, Bitcoin received recognition as a proper currency after merchants such as WordPress, Expedia and Microsoft began accepting it as a mode of payment.

“Cryptocurrencies can better adapt to the prevalent challenges of both funding and the emerging digital economy in addition to being a way to engage communities through P2P tech and crowdfunding platforms. There are over 2 billion people without access to the financial economy and even basics of modern civilization. Here at Humaniq, we are a blockchain fintech startup aiming to tackle some of these challenges by tapping into the power of digital currencies to leverage social impact. Approaching these issues from the angle of Initial Coin Offerings, we have so far managed to secure over 10,000 investors and $4M in investments in the last two weeks.” – Dinis Guarda, CEO at Humaniq

Speaking for 2017, we’re still far from Bitcoin, or any other cryptocurrency initiative, being officially recognized by a state government as a preferred mode of currency. Mere months ago, Bitcoin saw a 35% fluctuation in price range after a proposed exchange-trade fund by the Winklevoss Bitcoin Trust was denied by the U.S. Securities and Exchange Commission due to concerns that the currency could be used for illegal purposes such as black market trading. However, hope is anything but out, and 2017 will be a year to watch out for as far as alternative currencies are concerned.

While Bitcoin experienced a drop in its prices, a cheaper cryptocurrency by the name of Ether reached its all-time highs at $40 a unit. While Ether’s current setup prevents it from being used as a direct method of payment, the cryptocurrency still seems to have a bright future ahead thanks to the concept of smart contracts. In the meantime, more privacy-concerned cryptocurrency alternatives are starting to gain prominence in favor of institutions such as Bitcoin, which despite their vigilant security measures, continue to have loopholes that could be exploited for access to personal data.

“In a reminder of just how fickle the market for such newfangled assets can be, just after 4 p.m. Friday, the Bitcoin price took a U-turn and plummeted to lows not seen in months, dipping below $1000 to as low as $980, after Bitcoin investors received some bad news from the U.S. Securities and Exchange Commission.” – Jen Wieczner, Fortune Magazine

Another interesting turn of events is the acceptance of Bitcoin in the educational industry, what with the University of Ohio hosting classes about Bitcoin and other cryptocurrencies as a part of its MFE curriculum. Several colleges have even begun to accept Bitcoin as a means of payment, a move which will clearly help bring this alternative currency to the mainstream. The acceptance of Bitcoin, in general, has already led to a few companies considering genuine investment opportunities in the currency, further fueling its journey to mainstream.

Will cryptocurrencies be the new norm after 2017? Perhaps it is too soon to tell. But if there is one thing we know for sure, it is that the currency seems to have a wide appeal with a particular section of technologically-savvy individuals, a point that is sure to soon work in its favor.

Chuck Reynolds
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Alan Zibluk – Markethive Founding Member

Bitcoin to rocket to $4000 as blockchain infrastructure sets agenda for cryptocurrencies

ANALYSTS say the cryptocurrency Bitcoin could hit values of $4000 within the year after a new player entered the market.

  

The introduction of Litecoin,

another electronic online currency is adding to investor appetite as the rolling out of blockchain infrastructure gets set to revolutionize the future of the financial sector. Bitcoin has been making gains since April and is rallying in London has risen over 33 percent days, according to the Coindesk bitcoin price index. It comes after Price Waterhouse Coopers (PWC) and the World Economic Forum looked at how cryptocurrencies can be aided by distributed ledger technologies.

Bitcoin is leading the cryptocurrency market

It is better than currency because you don't have to be in the same place and of course for large transactions currency can be inconvenient

Bill gates

Global regulatory challenges continue to affect the market with a test case before The US Securities and Exchange Commission (SEC) throwing up some new challenges. A bitcoin exchange-traded fund (ETF) proposed by Cameron and Tyler Winklevoss was declined by the US sector watchdog as Donald Trump looks at deregulating markets. However, the sector is gaining appeal, particularly in Japan, which legalized cryptocurrency as a payment method recently and is

Helping to get the yen involved.

France invented a cryptocurrency dispenser

Aurelien Menant, founder, and CEO of Gatecoin, a regulated blockchain assets exchange based in Hong Kong says confidence is strong in Asia. Meanwhile, Microsoft founder and philanthropist Bill Gates is keen on distributed ledger technology. He said: "Bitcoin is exciting because it shows how cheap it can be, it is better than currency because you don't have to be in the same place and of course for large transactions currency can be inconvenient.” bitcoin was created in 2009 and has a current Market Capitalization of $29,753,633,028.

Chuck Reynolds
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Alan Zibluk – Markethive Founding Member

State of Palestine mulling crypto-currency of its own

Palestinian officials are planning to launch their own crypto-currency

for use in the State of Palestine. The move will see the country become one of the first to adopt a crypto-currency as the national currency. This will also be the first time the state will have its own, singular official currency since citizens currently use the euro, US dollar, Israeli shekel, and Jordanian dinar. The Palestinian Monetary Authority (PMA) said the move was designed to safeguard against interference from Israel, as the PMA has no control over the money supply being used in the country. Azzam Shawwa, head of the PMA, referring to the new currency,

he said:

That is something we would like to see. It will be called the Palestinian pound.

The biggest reason Palestine is considering a digital currency is that it owns no money-printing facilities of its own, and thus has to get them from elsewhere. Shawwa said that getting the money from abroad would be

an issue:

If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle. So that is why we don't want to go into it.

Bitcoin, the flagship crypto-currency, has been increasing in value in waves according to one analyst. The first wave was when it was adopted by tech enthusiasts, the second wave, which we are currently in, refers to growth in the value spurred on by investors. with the third wave expected to be when it becomes more accessible to the public. It's at this stage that the technology is more mature, which would allow countries to begin implementing their own digital currencies.

Chuck Reynolds
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Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk – Markethive Founding Member

  

The Cryptocurrency Ecosystem: A New Benchmark Study

It is clear by now to even the most hardened skeptic that cryptocurrency, the class of assets of which bitcoin is the paradigm, is much more than a passing fad. Yes, the field may once have been too closely associated with survivalists, cranks, and bit players in the story of the founding of Facebook, but as of April 2017, by which time the combined market value of all such currencies was $27 billion, writing off the whole field looked very much like a form of blindness.

It isn’t merely that $27 billion is an impressively big number (though it is). It is that along the way to this size, the industry has generated new ways of doing business and thinking about doing business which is in turn, proving themselves. Cryptocurrency isn’t a fad: it’s an ecosystem.

Accordingly, a little more than nine years after the publication of the landmark paper by Satoshi Nakamoto, Cambridge Centre for Alternative Finance has issued its “first global cryptocurrency benchmarking study.” It offers the public “an empirical picture of the current state of this still maturing industry.”

The graph below illustrates the dramatic growth of the industry in little more than one year, from

February 2016 through March 2017.

Bitcoin retains its dominance,

though there are significant challenges included in the yellow space at the bottom of that graph. The most important of these challenges is Ether (ETH), “the native cryptocurrency of the Ethereum network,” as the Centre’s report says.

Ninety-eight percent of the “participating exchanges, wallets, and payment companies” surveyed supported bitcoin. Ether came in a distant second place by that metric, at 33%. Litecoin (LTC) came in third, at 26%. Some key points in the report concern the exchanges sector of the industry. This sector has the highest number of operating entities in the broader industry and the highest employment numbers. It also shows significant geographical dispersion. As to that dispersion, the authors of this study collected data from 51 exchanges in 27 countries. They observe that the countries include “all world regions.” Europe has the largest sheer number of exchanges followed by the Asia-Pacific area: but North America, Latin America, the Middle East and Africa – all have exchanges.

Large and Small Exchanges

The likelihood that a cryptocurrency exchange will “hold a formal government license” is inversely related to its size. The smaller are licensed entities, the larger tend not to be.  In geographical terms, the Asia-Pacific region has upheld its reputation for laissez-faire. Eighty-five percent of cryptocurrency exchanges in that region have no license. On the other hand, a full 78% of exchanges in North America have “a formal government license or authorization.”

The study also looked into the distribution of the (traditional) currencies supported by the cryptocurrency exchanges. The graph above illustrates the result of that inquiry. The U.S. dollar is dominant, and the “other” figure is high because of many small exchanges “service local markets and make cryptocurrencies more available in many countries,” they naturally specialize in their local currencies.

There have been scandals and failures among the centralized exchanges, and a priori one might have expected those events to generate an exodus to peer-to-peer exchanges.  Yet there has been no such exodus. Only 2 of the 51 exchanges surveyed might be described as P2P. One of the problems with running a small cryptocurrency exchange is that it can be difficult to obtain or maintain banking relationships. Larger exchanges “have this risk factor under control,” the report says.

Wallets and Miners

The humbly named “wallets” for such currencies are also a critical part of the ecosystem and a focus of the report. It observes that they have “evolved from simple software programs … to sophisticated applications that offer a variety of technical features and additional services that go beyond the simple storage of cryptocurrency.” More than four-fifths of wallet providers (81%) are based either in North America or in Europe, which seems high since on 61% of wallet users are in one of those two areas.

Finally, in their concluding observation, the authors of the report say that they expect that as block awards decrease the cryptocurrency miners will have to use innovative economic incentives “in order to continue providing hashing power to secure the system,” powering a new security-driven direction in its evolution.

Chuck Reynolds
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Alan Zibluk – Markethive Founding Member

Cryptocurrencies like the Bitcoin are starting to reach a broad mainstream audience

and they’re here to stay. There are now more than 400 cryptocurrencies in circulation, worth more than $75billion. Some businesses in New Zealand already accept Bitcoin as payment, although cryptocurrencies can be very volatile so it’s a pain as a buyer or seller continuously adjusting prices in Bitcoin rather than just setting prices in New Zealand dollars. This problem has highlighted the need for an NZD cryptocurrency token, which can be traded with all the benefits of Bitcoin, but has the same value as a New Zealand dollar.

New Zealand cryptocurrency exchange Cryptopia recently launched the 'NZed' (Code NZDT), the first cryptocurrency token tethered to the New Zealand dollar. The move came after several speakers at The Blockchain NZ conference, including Xero's Grant Anderson, raised the need for Kiwis to have a crypto-based New Zealand dollar that could be traded with most of the benefits of cryptocurrencies like Bitcoin. The Cryptopia developer team created the new currency then, and within eight hours had ordered on the exchange for more than $40,000 NZDT.  

Currently, total tokens available are limited to $100,000 NZDT, an amount Cryptopia can easily back from retained funds. Cryptopia CEO Rob Dawson says “while that's not enough liquidity to allow widespread adoption, it gets the ball rolling with a challenge to government, and to the broader industry that blockchain technologies and cryptocurrencies are here to stay”. “Right now, we can only accept cash deposits for tokens from overseas clients, although pending regulatory confirmation we expect to be able to offer the full service to Kiwis shortly.”

“We need to get moving if we want to establish New Zealand as a global leader in this space,” says Dawson. Australia is starting to eye the industry, recently announcing the removal of a sales tax in the 2017 Federal Budget that has hindered the cryptocurrency trade there until now. “Historically, New Zealand has led the world in financial innovation, for instance with the world-first introduction of eftpos in the 90s,” adds Dawson. “We think Kiwis are great at adopting new technologies so New Zealand makes a great test market.”

Chuck Reynolds
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Adylkuzz Cryptocurrency Mining
Malware Spreading for Weeks Via EternalBlue/DoublePulsar

Attackers spread a Massive Ransomware attack worldwide

On Friday, May 12, attackers spread a massive ransomware attack worldwide using the EternalBlue exploit to rapidly propagate the malware over corporate LANs and wireless networks. EternalBlue, originally exposed on April 14 as part of the Shadow Brokers dump of NSA hacking tools, leverages a vulnerability (MS17-010) in Microsoft Server Message Block (SMB) on TCP port 445 to discover vulnerable computers on a network and laterally spread malicious payloads of the attacker’s choice. This particular attack also appeared to use an NSA backdoor called DoublePulsar to actually install the ransomware known as WannaCry.

Over the subsequent weekend, however, we discovered another very large-scale attack using both EternalBlue and DoublePulsar to install the cryptocurrency miner Adylkuzz. Initial statistics suggest that this attack may be larger in scale than WannaCry: because this attack shuts down SMB networking to prevent further infections with other malware (including the WannaCry worm) via that same vulnerability, it may have in fact limited the spread of last week’s WannaCry infection.

Symptoms of this attack include loss of access to shared Windows resources and degradation of PC and server performance. Several large organizations reported network issues this morning that were originally attributed to the WannaCry campaign. However, because of the lack of ransom notices, we now believe that these problems might be associated with Adylkuzz activity. However, it should be noted that the Adylkuzz campaign significantly predates the WannaCry attack, beginning at least on May 2 and possibly as early as April 24. This attack is ongoing and, while less flashy than WannaCry, is nonetheless quite large and potentially quite disruptive.

The Discovery

In the course of researching the WannaCry campaign, we exposed a lab machine vulnerable to the EternalBlue attack. While we expected to see WannaCry, the lab machine was actually infected with an unexpected and less noisy guest: the cryptocurrency miner Adylkuzz. We repeated the operation several times with the same result: within 20 minutes of exposing a vulnerable machine to the open web, it was enrolled in an Adylkuzz mining botnet.

The attack is launched from several virtual private servers which are massively scanning the Internet on TCP port 445 for potential targets. Upon successful exploitation via EternalBlue, machines are infected with DoublePulsar. The DoublePulsar backdoor then downloads and runs Adylkuzz from another host. Once running, Adylkuzz will first stop any potential instances of itself already running and block SMB communication to avoid further infection. It then determines the public IP address of the victim and download the mining instructions, crypto miner, and cleanup tools.

It appears that at any given time there are multiple Adylkuzz command and control (C&C) servers hosting the crypto miner binaries and mining instructions. In this attack, Adylkuzz is being used to mine Monero cryptocurrency. Similar to Bitcoin but with enhanced anonymity capabilities, Monero recently saw a surge in activity after it was adopted by the AlphaBay darknet market, described by law enforcement authorities as “a major underground website known to sell drugs, stolen credit cards and counterfeit items.” Like other cryptocurrencies, Monero increases market capitalization through the process of mining. This process is computationally intensive but rewards miners with funds in the mined currency, currently 7.58 Moneros or roughly $205 at current exchange rates.

One of several Monero addresses associated with this attack is shown in Figure 4. The hash rate shows the relative speed with which the specific associated instance of the botnet is mining Moneros, while the total paid shows the amount paid to this particular address for mining activities. In this case, just over $22,000 was paid out before the mining associated with this address ceased. Looking at the mining payments per day associated with a single Adylkuzz address, we can see the increased payment activity beginning on April 24 when this attack began. We believe that the sudden drop that occurred on May 11 indicates when the actors switched to a new mining user address (Figure 5). By regularly switching addresses, we believe that the actors are attempting to avoid having too many Moneros paid to a single address.

Statistics and payment history for a second payment address are shown in Figure 6. This address has had just over $7,000 paid to date. A third address shows a higher hash rate and a current payment total of over $14,000. We have currently identified over 20 hosts setup to scan and attack, and are aware of more than a dozen active Adylkuzz C&C servers. We also expect that there are many more Monero mining payment addresses and Adylkuzz C&C servers associated with this activity.

Conclusion

Like last week’s WannaCry campaign, this attack makes use of leaked NSA hacking tools and leverages a patched vulnerability in Microsoft Windows networking. The Adylkuzz campaign, in fact, predates WannaCry by many days. For organizations running legacy versions of Windows or who have not implemented the SMB patch that Microsoft released last month, PCs and servers will remain vulnerable to this type of attack. Whether they involve ransomware, cryptocurrency miners, or any other type of malware, these attacks are potentially quite disruptive and costly. Two major campaigns have now employed the attack tools and vulnerability; we expect others will follow and recommend that organizations and individuals patch their machines as soon as possible.

Acknowledgments

We want to thank:

• Our friends at Trend Micro for input allowing us to add more IOCs
• Cloudflare and Choopa for their immediate action upon notification.
• @benkow_ for several inputs.

Chuck Reynolds
Contributor
Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk – Markethive Founding Member

Distributed financial technology firm Ripple

is on the verge of locking up billions of dollars worth of its native XRP cryptocurrency inside dozens of smart contracts designed to hold value in escrow until a certain time, or certain conditions are met. The move to voluntarily freeze its own assets in escrow contracts is designed to combat fears that Ripple might flood its booming market with some of the $16bn worth of cryptocurrency it currently stores and that resulted from holding large amounts of its own currency that hasn't been made available to the public.

Specifically, the San Francisco firm has promised to lock-up 88% of those funds, or about $14bn worth, in a series of smart contracts that briefly make 1bn XRP available each month for a period of at least four-and-a-half years. Revealed today exclusively to CoinDesk, Ripple hopes the self-inflicted freezing of funds will give XRP owners and aspiring owners a sense of certainty that the market will not suddenly be flooded with the currency, potentially lowering the price. While Ripple CEO Brad Garlinghouse argued in an interview with CoinDesk that flooding the market would be irrational, and go against his firm's own self-interest, he added that it was time to move the tokens to the smart contracts and remove the element of trust altogether.

Garlinghouse said:

"We want to make sure that the Ripple Consensus Ledger is the most robust, and that XRP is the most liquid, and I think this is a very positive step towards that."

Currently, Ripple’s market cap is listed on most tracking sites as about $11bn, based on 38.3bn XRP in circulation. But unlike other cryptocurrencies including bitcoin and ethereum, not all the cryptocurrency is in circulation. In fact, according to Ripple’s own numbers the company owns almost twice the amount in circulation, or 61bn XRP.

A sense of security

   To help give potential future XRP owners

the certainty that the market won't be flooded with this trove of cryptocurrency, Ripple built 55 smart contracts using its own escrow feature released for public used in March, each holding 1 billion XRP and expiring on the first day of every month for a period of 54 months. As each contract expires, the cryptocurrency will briefly become available for Ripple to use as it sees fit.

Historically, Garlinghouse said funds have been spent at a rate of about 300m XRP per month for the past 18 months to incentivize market makers to offer tighter spreads for payments, methods he describes as Ripple being "good stewards" of the nascent XRP economy. For example, he says funds have also been sold to institutional investors to help raise additional capital above the $93m already raised to help pay for engineers that oversee the open-source code base. Then, at the end of the month whatever XRP is unused will be added to the end of the escrow queue in the form of an additional month-long contract, starting the process all over.

A specific timeframe for implementation has not been revealed, but Garlinghouse expects the process to be completed by the end of this year. Head of research at Ripple investor Blockchain Capital, Spencer Bogart, said that if the contracts are safely implemented they could positively impact XRP user perception. "The fact that Ripple owns the majority of outstanding XRP and could potentially flood the market with supply has historically discouraged investors from evaluating XRP any further," he told CoinDesk. "Properly implemented cryptographic escrow with sufficiently limited supply would go a long way toward alleviating that particular fear." Blockchain Capital does not currently have a stake in XRP, he said, but does own equity in the company.

More than speculation

Collectively, the total number of XRP in existence is worth about the same as the entire bitcoin market cap, elevating the stakes far beyond just cryptocurrency speculation in its own right. In addition to the cryptocurrency's explosive growth over the past few months, the company that wants to make it easier for banks to send each other cross-border payments has continued to grow the number of its partners. With the help of Germany’s former Minster of Defense who is an advisor to Ripple, the company has been increasingly engaging global customers. For example, the firm recently added 10 new financial firms to its network and completed a pilot with 47 global banks.

While Garlinghouse said the banks weren't among the XRP owners concerned about Ripple flooding the market with currency, he does believe that the more stable sense among open-source developers of liquidity being released into the wild could result in increased activity among the community. In the end, the result could, in fact, trickle down to the banks as the end users, he said. The increased liquidity being created by the cryptocurrency safely entering the market could, in turn, make it easier for a larger number of banks to conduct transactions without negatively impacting the price of doing so.

Garlinghouse concluded:

"I think increasingly, the market has realized that if we have a bank using us for messaging and settlements, there’s an opportunity to also introduce them to how they can lower their liquidity costs by leveraging a liquidity solution enabled through XRP."

Chuck Reynolds
Contributor
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