Rise of Ethereum:
Why this cryptocurrency skyrocketed 3000% in 2017

Like bitcoin, ether is a blockchain based asset (similar to a security, like a bond, issued in physical form) which acts as a fuel operating the distributed application platform Ethereum.

Sidhartha Shukla – Moneycontrol News

Overshadowed by the more illustrious bitcoin,  altcoins —  alternative cryptocurrencies launched after the success of Bitcoin — traded in a narrow range for a long time. But that changed in 2017 when investors  decided that they needed to have a diversified portfolio of digital currencies, sparking a rush for altcoins. The most noticeable rally has been for ether, which has appreciated over 3000 percent year-to-date (YTD) from levels of USD 8 to USD 268, as per the CoinDesk price index.

Trading at all-time highs, ether is creating a new price record every other day. Like bitcoin, ether is a blockchain based asset (similar to a security, like a bond, issued in physical form) which acts as a fuel operating the distributed application platform Ethereum. As per Coinmarketcap, ether at present has the second largest share in the cryptocurrency market space only after bitcoin and many believe that it can overtake its senior in the coming days.

While it is known that only a finite amount of bitcoins — 21 million —  will be mined, people tend to think of it as virtual gold, a safe haven investment, and hence its price movement resonates with the characteristics of a limited commodity. Such an intrinsic characteristic is not available for ether which can explain the price movement. However there are a few factors experts says may have influenced this rally. Here is a list of developments which can explain this price movement.

Rise of the Ethereum Alliance

The recently formed Enterprise Ethereum Alliance (EEA) to connect large companies to technology vendors in order to work on projects using the blockchain is believed to be one of the major influencers on the ether price up move, as per a survey done by CoinDesk. Under this alliance global giants like JPMorgan, Microsoft and Intel have come together to explore the benefits of enterprise blockchain technology.

Bitcoin civil war

Many believe that it was the bitcoin scaling debate which led to this rally. As a consensus was not being reached on how to update the bitcoin blockchain to accommodate the increasing volume of transactions, many shifted their money to the second most popular option — ether.

ICOs

Initial coin offerings (ICOs), a new way to raise capital for cryptocurrency ventures, have picked up pace since the start of the year and many of these crypto-ventures are based on the ethereum blockchain, which means this will lead to more utilization of ether tokens, helping in the price uptick.

All aboard the hype train!

But the major reason  which can be attributed to the sudden spike in interest for buying ether could be a result of a herd mentality. Clearly visible from the graph below, a comparison of ethereum price and the rise in its search interest run directly proportional to each other. The rise in bitcoin's price since 2016 sparked a global interest in cryptocurrencies in general, experts believe that the sudden rally in altcoins like ether can be a result of that as people who missed the bus with bitcoin are rushing to get onboard the altcoin hype-train.

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

Alan Zibluk – Markethive Founding Member

Linux Malware Mines for Cryptocurrency Using Raspberry Pi Devices

A Linux trojan detected under the generic name of
Linux.MulDrop.14 is infecting Raspberry Pi

devices with the purpose of mining cryptocurrency. According to Russian antivirus maker Dr.Web, the malware was first spotted online in the second half of May in the form of a script that contains a compressed and encrypted application. Experts say the initial infection takes place when Raspberry Pi operators leave their devices' SSH ports open to external connections. Once a Raspberry Pi device is infected, the malware changes the password for the "pi" account to:

$6$U1Nu9qCp$FhPuo8s5PsQlH6lwUdTwFcAUPNzmr0pWCdNJj.p6l4Mzi8S867YLmc7BspmEH95POvxPQ3PzP029yT1L3yi6K1

Malware targets only Raspberry Pi devices

After this, Linux.MulDrop.14 shuts down several processes and installs libraries required for its operation, including ZMap and sshpass. The malware then launches its cryptocurrency mining process and uses ZMap to continuously scan the Internet for other devices with an open SSH port. Once it finds one, the malware uses sshpass to attempt to log in using the username "pi" and the password "raspberry." Only this user/password combo is used, meaning the malware only targets Raspberry Pi single-board computers. This is somewhat out of the ordinary since most malware tries to target as many platforms as it can. Nonetheless, this version of the malware may be still under development, and other username & password combos may be added at a later date.

Still better than Mirai

Most users would dismiss the idea of using Raspberry Pi devices to mine for cryptocurrency, which is a very computational-heavy operation. While Raspberry Pi single-board computers do have some hardware resources at their disposal for the task the malware is attempting to perform, they are not as powerful as classic desktop or laptop computers, and nowhere near the efficiency of dedicated mining equipment. Nevertheless, people have used Raspberry Pi devices to mine for cryptocurrency in the past, with moderate success.

Either way, Linux.MulDrop.14 is certainly more equipped for the task at hand compared to a version of the Mirai IoT malware spotted in mid-April, which also tried to mine for cryptocurrency for a short period of time. At the time, Errata Security researcher Robert Graham estimated that if a Mirai botnet of 2.5 million bots mined for cryptocurrency, it would be earning only $0.25 per day because of the low computational power of the devices Mirai is capable of infecting (usually security cameras, DVRs, routers, and other IoT equipment).

Linux malware used to create a proxy network

Last but not least, Dr.Web researchers also said they discovered a second Linux malware strain, which they named Linux.ProxyM. As this malware's name implies, this Linux trojan is used to start a SOCKS proxy server on infected devices, which the trojan's author then uses to relay malicious traffic, disguising his real identity and location. No other details are available at this time about Linux.ProxyM, but researchers said the number of devices infected with this strain has grown to 10,000 systems after being first spotted in February 2017.

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

Alan Zibluk – Markethive Founding Member

What is happening to cryptocurrency valuations?

    
The total market cap for all cryptocurrencies just surpassed $100 billion.

The vast majority of these gains have come in just the last few months — on April 1st the total market cap was just over $25 billion — representing a 300 percent increase in value in just over 60 days. While some of these gains are from bitcoin itself (BTC is up ~160 percent in the same two-month time frame), other digital currencies like Ethereum are also responsible for the increase, which on its own has increased ~439 percent over the last two months. There’s perhaps no better way to show this diversity in gains than by looking at a chart of bitcoin’s “dominance” — i.e. what percent of the entire cryptocurrency market cap is represented by bitcoin. For years this had always hovered around 80 percent, but in the last few months has fallen to below 50 percent — with currencies like Ethereum and Ripple taking its place.

Bubble talk? 

It’s hard to be an experienced investor, or even an at-home part-time trader, and not think of a massive bubble when you see that some asset has increased more than 400 percent in just a few months. It’s just how history works — when an asset rises that fast it’s a near certainty that it will come back down. Markets are irrational, after all. So don’t be surprised if there’s at least some type of correction. There already was, a few weeks ago — bitcoin pulled back from a high of $2,700 to around $2,000, but, as of today, has slowly climbed back up to a new all-time high of ~$2,850.

Latest Crunch Report

That being said, we may look back in 12 months and realize that this two-month period of insane growth was less of a bubble and more of a rebirth of cryptocurrencies as a whole. The fact that these gains have come from currencies other than bitcoin are a good sign that this is less of a bubble and more of a resurgence of interest in crypto. It makes sense that Ethereum is on a tear — the cryptocurrency has technological improvements over bitcoin, including the ability to code smart contracts directly into the blockchain, which in turn allow for things like the ability to build totally new tokens and even host ICOs

(initial coin offerings).

And similarly, Ripple, a cryptocurrency based on inter-bank settlements, has signed up more than 100 banks worldwide. Even if this takes a while to implement (which anyone who works in the old-school banking industry will confirm), it’s still tangible news and a reason for people to get excited about the currency. These recent developments certainly don’t justify increases of 400 percent in 60 days. Both Ethereum and Ripple have been around for a lot longer than a few months. So if these were publicly traded companies, there would be (almost) no reason for drastic rise in value. But cryptocurrencies are new — most of the world has no idea what bitcoin is, let alone Ethereum and Ripple and other currencies. The public has never been able to put their money directly into a technology that has so much potential but is still developing.

For example, a technology enthusiast in the 1990s may have foreseen the rise of the internet, but had no way to directly take a stake in the technology. The idea of applying cryptography to the storage and transmission of data is still very new. And the fact that anyone can directly buy the currency that powers these cryptographically secured blockchains is much like the public actually getting a chance to invest in the internet during its infancy.

Impossible to value?

There is one rational explanation that, if true, would totally justify this rapid increase in price across some of the major cryptocurrencies. And that is, maybe these currencies are actually worth these high prices, and maybe even worth many times more than that at which they are currently trading. But the problem is we have no way to figure out their value. Cryptocurrencies aren’t public companies with earnings and expenses and EPS. For example, we can look at Apple’s financials and determine its book value — what the company’s assets would be worth if hypothetically liquidated today. Of course, stocks trade at a premium to this, because people are enthusiastic that Apple will continue to perform well and this book value will continue to rise.

But we can’t do this with cryptocurrencies. We could guess — and compare it to things like the total money or gold supply in the U.S. For example, if you’re someone who thinks of cryptocurrencies as a store of value, the total estimated value of all gold in the world is more than $8 trillion dollars… meaning if bitcoin would ever replace or supplant gold, its current value is pennies on the dollar. If you’re someone who thinks of cryptocurrencies as a genuine currency, you could compare the market cap to M2, which is the total money supply in the U.S. — cash and checking accounts, as well as “near-money” accounts like savings, mutual funds and money-market securities. The total value of M2 is about $13.5 trillion, also meaning cryptocurrencies are just a small fraction of that.

Be an informed “investor”

I’ve long cautioned readers (and friends) from buying cryptocurrencies because they have seen it rise and just want to make a quick buck. The past two months have led to a tremendous surge in public interest, with mainstream news like CNBC and CNN explaining how to “invest” in bitcoin and other cryptocurrencies. Just make sure you’re doing it for the right reasons. Buy cryptocurrency to learn about it and transact with it. Or buy it because you are betting that this new technology will change the world by:

• Supplanting gold as the main store of value in the world
• Transforming inter-bank settlements
• Making international remittance affordable
• Revolutionizing the fundraising and IPO process

These are just a few options, and if you’re in tune with the cryptocurrency world, you’ll know the opportunities are endless. So if you’re going to buy cryptocurrency, do it because you see the long-term vision (and sure, ostensibly the financial gains that may come from them), not because you think it will blindly appreciate and give you a good return on your “investment.”

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

Alan Zibluk – Markethive Founding Member