Europol’s European Cyber crime Centre (EC3) recently organized the “4th Virtual Currencies Conference,” hosted at the Europol’s headquarters in The Hague. EC3 was set up in 2013 as the EU’s cyber crime specialist unit to help law enforcement respond to cyber attacks.
Other discussions to prior topics were added on their agenda as the agency’s announcement “Another interesting topic covered was the legitimate use of Bitcoin technology, including the use of cryptocurrencies as a store of value, and as a payment method for legitimate goods and services.”Many Bitcoin companies were chosen to attend because they specialize in “facilitating the lawful use of virtual currencies by providing online exchange, payment processing or wallet services, including: Bitcoin.de, Bitfinex, Bitpanda, Bitonic, Bitstamp, Bitpay, Coinbase, Cubits, Localbitcoins, Spectrocoin and Xapo.
Meanwhile the EU has done significant research on Bitcoin as a store of value and has found that Bitcoin has increasingly gained more acceptance as a store of value.The event, which took place on June 22 and 23 of 2017 aimed “to further strengthen the fight against the abuse of virtual currencies for criminal transactions and money laundering.” This was also the same theme of the 3rd Virtual Currencies Conference which took place on July 14-15 last year.
In addition, the report detailed “With digital currencies becoming more popular as a medium of exchange and also as a store of value, various asset substitutions take place. Households will reduce their cash holdings as they will start to make some payments with the digital currency.”
Cryptocurrencies are a multifaceted phenomenon. They are the latest development in financial technology, or FinTech. Many factors are involved in making up the ‘crypto ecosystem’. These factors are:
1 The unit of currency
- A cryptocurrency is a unit of currency that exists on the internet. A ‘digital currency’ if you will. This unit of currency is created, transacted and traded on the internet.
- There are over 700 cryptocurrencies that have been created. Bitcoin is the first one.
- Cryptocurrency can be bought and sold for other cryptocurrencies, as well as for fiat currencies like USD, EUR, GBP on online trading platforms dedicated to trading crypto.
- Fiat currencies can be deposited to and withdrawn from trading platforms through banks and using credit cards.
2 The blockchain
- Cryptocurrency transactions are recorded in a ‘block’.
- Blocks usually have a fixed size.
- New blocks are issued after a fixed specified length of time, i.e.: every 2 mins.
- Every new block that is created is joined to the end of the previous block, thus creating a chain of blocks, or what has now been referred to as being a ‘blockchain’.
- Each cryptocurrency has its own blockchain.
- Miners, also called nodes, are computers that are connected to a cryptocurrency network.
- Miners verify the transactions of each block to make sure that they are valid and are rewarded a fee in that specific cryptocurrency for doing so. This fee payout is how cryptocurrency is created.
- All nodes keep a copy of the blockchain, which is a sort of encrypted ledger of every transacted made in that cryptocurrency.
- All nodes verify all transactions. The first node to verify a transaction sends a confirmation to the rest of the nodes that it is valid, it is awarded a fee, and all nodes then start work on verifying the transactions of the next block.
- Blocks are always encrypted and nodes use lots of computing power to decrypt blocks in order to verify them.
- Trading crypto is very similar to trading fiat currency, except that there are varying levels of liquidity for all the different cryptocoins and more information about the markets are available to traders while trading.
- Crypto can be stored in an exchange: more liquid, risk of exchange being hacked.
- Crypto can be stored in a ‘wallet’ in your computer or phone: risk of computer or phone being hacked. Some cryptocurrencies have their own official wallets, others don’t and rely on wallets provided by independent third parties.
- Crypto can be stored on a dedicated medium such as a USB device: safest, least practical, usually for big amounts.
- Cold storage refers to when a wallet is created by a computer that isn’t connected to the internet, whereas hot storage refers to one where the creation of the wallet occurs while the wallet is connected to the internet. Cold storage sacrifices practicality for safety, it is the safest way to store your coins.
Hopefully this clarifies any missing pieces of the crypto ‘puzzle’. If anything remains unclear, hit us with any questions in the comments section.
“A wallet is software that holds all your addresses. Use it to send bitcoins and manage your keys.” (from Antonopoulos, Mastering Bitcoin)
Bitcoin ownership is established through digital keys and digital signatures.
These keys are generated locally on Bitcoin end-users’ computers using special software called a Bitcoin client. They can be stored in a file, in a database, or just printed on a piece of paper, but most commonly they are stored in a Bitcoin wallet.
The keys within each user’s wallet allow the user to sign transactions, thereby providing cryptographic proof of the ownership of the bitcoins sourced by the transaction.
A wallet is simply a collection of addresses and the keys that unlock the funds within. There is practically no limit to the number of addresses a user can create.”
A wallet is a collection of data (e.g. the Bitcoin user’s private/public key-pair and his address) enabling a user to receive and send bitcoins, in the form of spendable outputs.
A client is the software that connects a user to the Bitcoin network. It handles all the communication, updates the wallet with incoming funds and uses information from the wallet to sign outgoing transactions.
Having your keys stored locally or remotely (i.e. on a third-party’s server) is a question that depends on your Bitcoin wallet and client choice. Bear in mind that, the security of your funds also heavily depends on this choice, thus your decision must be made carefully. Below we examine some of the pros and cons of storing your wallet locally or remotely.
- Locally: If your computer is compromised by a hacker, if it crashes (and you have no backups), or if you forget your passwords, your private keys (and bitcoins) will most probably be lost forever! However, if you take reasonable steps to avoid intrusion or exposure, your keys will be reasonably safe and protected from third-party failure or intent. In this case, you exchange convenience for increased security.
- Remotely: If the third-party exchange’s security is compromised, or if they act maliciously, your bitcoins will most probably be lost forever! Bitcoin exchanges are not Banks. Most will provide a method of changing your passwords if you forget them, and employ security experts and suitable infrastructure, so you will not have to worry about taking extensive security measures. However, third-party exchanges are more likely targets for intruders, and if compromised, they could steal your bitcoins. In this case you exchange security for increased convenience.
When first created, a Bitcoin wallet is empty.In order to receive some bitcoins we have to inform the sender about your wallet’s Bitcoin address, just like we would provide our email address to someone who wants to send us an email. To send bitcoins e.g. when using a desktop client, a sender can just copy and paste the receiver’s address:
After every transaction is confirmed, it becomes a part of Bitcoin history, and is included in the public ledger, i.e. the blockchain.
Each transaction corresponds to a chain of ownership transfer and is maintained in a distributed, peer to peer network of Bitcoin nodes.
These are instructions to start mining certain AltCoins (ethereum, monero and others) which limit their mining to only using graphics cards. These instructions are based on the Ubuntu 16.04 operating system.
First, gather all the required hardware. Note that this is just a guide which refers to the above video, you can modify your mining rig to your liking:
- X8 – RX 570
- X1 – Motherboard capable of total eight slots.
- X1 – CPU with fan and thermal grease.
- X2 – PCI-E 4X Female to NGFF M.2 M Male Adapter Key
- X2 – Thermaltake 850W PSU
- X1 – 16GB RAM
- X1 – 256GB SSD
- X8 – 1X to 16X Risers
- X8 – 6-pin PSU to SATA cables
- X1 – PSU Y-Connector to connect two PSUs to one motherboard
- A cooling solution
Step 1 – Connect all the hardware together as shown in the video:
Step 2 – Download and install the Ubuntu 16.04 desktop iso on the rig.
Then, run in the terminal:
sudo apt update && sudo apt -y dist-upgrade
Step 3 – Download and install the AMD video driver.
Step 4 – Install a miner.
For ethereum, run in the terminal:
sudo apt clean sudo add-apt-repository -y ppa:ethereum/ethereum-qt sudo add-apt-repository -y ppa:ethereum/ethereum sudo apt update sudo apt -y install cpp-ethereum
ethminer -G -F http://eth-eu.dwarfpool.com/0x2a65aca4...firstname.lastname@example.org
Investing in Bitcoin (or other crytpto) is similar to the way it’s done in any other country, you spend your dollars in a crypto exchange for coins. The only issue is that in Lebanon, not all exchanges accept transfers to and from Lebanon except most notably the London-based exchange, CEX.io.
Just read their instructions on their pages to get started.
If your are privacy conscious or don’t want to deal with any exchanges you can go to localbitcoins.com and buy them from someone face-to-face.
Cryptocoins.cc has a list of cryptocurrencies with the exchanges that they can be traded on, so be sure to look at that website.
Another notable exchange is Kraken.com but they will not deal in cash with Lebanon, so for that exchange, and all other exchanges like it, transfer your coins to them through CEX.io or Localbitcoins.com.
Most coins have their own default wallet app which can be installed in your computer or phone, so storing them on you personally in this way is also an option. Just send your crypto back to an exchange (CEX) and sell them for dollars once you want to withdraw your investment.
Edit: 9/Jan/2018 – CEX.io has stopped accepting Lebanese cards some months ago. Contact us for available options in Lebanon.
Edit: 27/1/2018 – See BDL Governor Riad Salemeh say that the Lebanese are “free to buy these types of currencies.”
Digital currencies are a reality. Nothing points to their disappearance as of today. With prices and market caps of the major cryptocurrencies constantly rising, we think to ourselves that we better get on board the crypto train before it passes us by.
Cryptocurrencies are a multifaceted phenomena. Essentially, they touch one of the most important aspects of our lives. Our money. The earliest adopters of crypto have been the ones who have had the most to gain. But crypto is still in its infancy and has much room to grow.