The 2020 United States presidential election was met with an increase in mail-in ballots due to COVID-19 concerns. Yet while many Americans stayed away from polling stations this year, postal delays, rejected ballots, and other challenges emerged.
Unsurprisingly, better ways for casting votes during major elections quickly became a hot topic of discussion. This has also led some in the crypto community advocating with renewed vigor for a blockchain-based voting system to be used in the future presidential elections.
While the promises of blockchain include trust, transparency and immutability, a group of researchers at the Massachusetts Institute of Technology’s Computer Science and Artificial Intelligence Laboratory pointed out security flaws associated with blockchain voting systems. The researchers published a report on Nov. 6 explaining that online voting is fatally flawed since such systems are vulnerable to large-scale cyber attacks. The report specifically discusses blockchain-based voting systems like Voatz, which has been used in U.S. municipal elections, yet reportedly suffers from data security issues.
Security aside, blockchain voting systems may be viable
Despite security concerns, some still believe that blockchain-based voting systems will be leveraged in major elections moving forward. Maxim Rukinov, head of the Distributed Ledger Technologies Center of St. Petersburg State University, told Cointelegraph that blockchain allows for a system of fair elections to take place within a trusted environment between participants who generally do not trust each other: “With blockchain you can make voting available and increase the transparency of any election. In a perfect scenario, the results of such a vote cannot be faked.”
Rukinov shared that he has been working with a team of researchers to develop an online voting system specifically designed for enterprise use. Known as “CryptoVeche,” Rukinov explained that this particular system stores voting results in a blockchain, which is a type of distributed ledger. As such, the system is highly secure against external and internal hacks.
Alex Tapscott, co-founder of the Blockchain Research Institute and a book author, explained this in detail for a New York Times article published in 2018, even before the COVID-19 pandemic brought new challenges to light. Tapscott pointed out that in elections, trust is concentrated within government agencies, which are extremely vulnerable to hacks, fraud, and human errors. To put this into perspective, a study released last year shows that local and federal government entities have fallen victim to 443 data breaches since 2014, but those mostly included lost hardware, mailing errors, and paper breaches.
Tapscott noted that a blockchain system relies on distributed network computers to verify transactions. Once verified, results are recorded in blocks that are linked cryptographically to the preceding block. A secure ledger is then formed, which is transparent to all network participants, yet remains immutable and tamper proof. This feature is also important for ensuring that individuals only cast a single vote, as blockchain-based systems are meant to prevent double-spending.
Don Tapscott, well-known author and co-founder of the Blockchain Research Institute further told Cointelegraph that votes cannot be sent online today because internet-based systems do not work well for such applications:
“If we transmit information like a vote on the Internet we’re actually sending a copy of that file; the original remains in our possession. This is acceptable for sharing information but unacceptable for transactions with assets, like money, securities, songs or recording votes in elections.”
As such, Tapscott noted that within a blockchain-based system, public trust in the voting process is achieved through cryptography, code, and collaboration among citizens, government agencies, and other stakeholders.
Technical challenges must be overcome
Of course, there is no denying that technical challenges related to blockchain-based voting systems remain. In addition to the security concerns mentioned by MIT researchers in their recent report, Rukinov acknowledged that developing an online voting system is challenging.
Rukinov further explained that with blockchain systems the accuracy of transactions, in this case, voter registration is verified by a consensus mechanism between different members of the network. However, when it comes to voting systems independent observers must also be one of the parties involved with the consensus, meaning they would have to hold several validation nodes.
According to Rukinov, in most cases the number of nodes owned by the network organizer are greater than the number of independent nodes. So in the case of a blockchain-based voting system, an attack may occur when those who control more than half of the resources have the ability to change data at random. Rukinov pointed out that this problem is not the case for all types of consensus mechanisms.
Lior Lamash, Founder and CEO of GK8, a cybersecurity company, also told Cointelegraph that while the immutable nature of blockchain makes it an effective platform to ensure the integrity of the voting process, several vulnerabilities remain. Specifically speaking, Lamash noted that voter identification is problematic when using blockchain-based voting systems:
“The security aspect of blockchain-based voting is tricky. On one hand, the blockchain itself is completely secured from even state-level hackers, as it employs hundreds of thousands of nodes on multiple servers across the globe. The challenge would be in securing the ‘endpoints’ of this network – individual ballots and voting stations.”
Moreover, Lamash noted that while each ballot stores a user’s private keys, a hacker could obtain that information and manipulate the entire election process: “This issue is quite similar to the challenge that banks and other financial institutions face when offering blockchain-based services.”
Although challenges remain with blockchain-based voting systems, it’s clear that blockchain has huge potential for use in future elections. Dylan Dewdney, chief executive officer of Kylin, a cross-chain platform designed for Polkadot-based data economy, told Cointelegraph that the trusted outcome of an election must also be taken into consideration. He further determined that blockchain being applied for data validation is highly useful in this case.
According to Dewdney, a decentralized infrastructure could help improve the trusted outcome of an electoral process. Dewdney explained that Kylin has created a data validation process using an oracle node, which serves as an information feed. An arbitration node is then used to judge if that data is valid or not. Dewdney said:
“Anyone operating an arbitration node would have an excellent incentive to challenge inaccurate information as they would be rewarded in a native token to do so. Similarly, providing accurate, validated (challengeable) information as a premium data feeder to consumers like news organizations, is incredibly valuable as a premium data feed in a data marketplace.”
Although Kylin is a solution that can easily be applied in the decentralized finance space, the same concept can be used for voting systems. “Decentralized validation of local electoral results could provide a very powerful tool against some of the problems we are currently seeing.” He further added: “This could easily operate as the linked consensus of the validated API feeds of literally thousands of local election results reported to websites within a Dapp developers premium data sourcing.”
Rukinov believes that the ideal blockchain-based voting system must cater to voter eligibility, verifiability, and immutability. He mentioned that these features can be achieved in the future through cryptographic protocols including digital signatures, zero-knowledge proofs, and homomorphic encryption: “In order to achieve additional benefits, it’s necessary to add the possibility of cancelling the registration; observers being able to detect the facts of falsification; and the permanence of the register change history.”
Ethereum Maintains Bullish Market Structure Despite Selloff; Rebound Imminent?
- Ethereum has seen an intense selloff ever since its price reached highs of $1,450 just a few days ago
- The selling pressure here was rather intense and came about right as BTC started reversing its uptrend
- This caused the aggregated market to see some intense selling pressure that has yet to alleviate
- The crypto is now down nearly 20% from these highs, with bears continually placing massive selling pressure on its price
- Where ETH trends will generally depend on Bitcoin, as the benchmark crypto has been guiding Ethereum’s general trend over the past few weeks
- Any continued weakness could lead to a further breakdown, as many analysts are looking towards a test of the support at $1,100 and $1,000
Ethereum has erased almost all of the gains that came about due to the recent push higher, with bears taking full control of its price action as BTC also slides lower.
The cryptocurrency’s weakness shows no signs of ending for now, which may be due to Bitcoin’s inability to see any significant strength.
One analyst is noting that ETH is still looking technically poised to see further upside from a macro perspective, as the cryptocurrency’s long-term technical structure actually remains quite bullish.
Ethereum Struggles to Gain Momentum as Bitcoin Plunges
Bitcoin has caused the entire crypto market to nuke lower today. At the time of writing, Ethereum is trading down over 13% at its current price of $1,190, which marks a notable decline from its recent highs of $1,450 set just a couple of days ago.
The selling pressure seen at these highs was intense and, coupled with BTC’s bearishness, created an intense stream of selling pressure that has yet to subside.
It is currently trading above a strong support zone, but it remains unclear how long this will hold.
Analyst: ETH Shows Some Signs of Strength Despite Capitulatory Selloff
One analyst explained that Ethereum is still flashing some signs of strength today despite the intense selloff seen throughout the past two days.
He notes that ETH’s overall market structure is still looking strong despite the severity of this latest pullback.
“Ethereum: it is still by far the best looking » Read more
” href=”https://www.newsbtc.com/dictionary/altcoin/” data-wpel-link=”internal”>altcoin in terms of price structure. – Above the cloud – Just tested all time high – Rejection but still above the previous low.”
Image Courtesy of Teddy. Source: ETHUSD on TradingView.
Unless Bitcoin continues plunging lower, there’s a strong possibility that Ethereum will begin bottoming out and revert its momentum into bulls’ control.
Featured image from Unsplash. Charts from TradingView.
Genesis Mining head forecasts importance of layer-two Bitcoin solutions
Would Bitcoin and its blockchain be able to handle mainstream adoption as a store of value without requiring second-layer solutions? Genesis Mining’s head of mining operations, Philip Salter, holds a mixed view.
“I think Bitcoin is a good store of value regardless of transaction fees,” Salter told Cointelegraph. “The issue is — the higher the fees are the larger is also the minimum value that can be efficiently transferred.”
Bitcoin (BTC) has stood the test of time up to this point, with BTC maintaining its place as the crypto industry’s highest market cap asset for the past 12 years. Bitcoin is seen as more of a store of value than digital cash these days, however, and Salter thinks complications may still arise from this shift in perceptions:
“Some years ago it was possible to store and transmit $1 efficiently, since tx fees were effectively zero. Currently, sending a transaction can easily cost $15, so it is not sensible to transmit $1 any more. If this trend continues due to more use of BTC and higher BTC prices, it will become prohibitive to transfer value in common amounts and it will be only an effective store of value for very large amounts.”
“That’s why I think that 2nd Layer solutions are a necessity not only for the use of BTC as a currency but also for the long term feasibility of BTC as a store of value,” Salter added. Industry players have worked on layer-two scaling solutions, such as Lightning Network, in an effort to facilitate small transaction capabilities.
Salter himself uses Lightning Network solutions for his own Bitcoin endeavors. “I personally upgraded my personal phone wallet to a lightning-only wallet (Phoenix), so that I can even in these crazy times pay with coins quickly and cheaply,” he said. “To anyone who tried to use lightning two years ago and found it confusing, I strongly suggest that you give it another try now that it’s far more established and user friendly to use.”
Bitcoin’s scaling debate was a focal point of discussion in 2017 and 2018. In September 2020, MicroStrategy said it faced no major issues during one of its BTC accumulations. The firm bought 38,250 BTC using a combination of off-chain and on-chain avenues.
90% of these altcoins outperformed Bitcoin recently
Experts often say the altcoins rally with Bitcoin, and even fall with it. On 21 January, Longhash revealed that in the last seven days, 92% of crypto tokens “outperformed Bitcoin.”
Bitcoin rallied to new ATHs and has remained over the $30,000 range, which still accounted for less volatility compared to previous rallies. However, with increasing prices, and FUD taking over traders, the asset seems to be facing a period of stagnation, at least for now. In the past week, the asset’s price fell 12% against the dollar.
Based on Messari’s price data, Longhash tracked 69 crypto tokens — each of which daily reported trading volume of about $100 million. Among these, 66% of tokens’ prices increased in the past week, and over half of the 46 tokens that gained against the dollar increased more than 10%.
A mere 33% of tokens’ prices went down against the dollar. Specifically, prices of five tokens, including Wrapped BTC, Dash, Bitcoin SC, Zcash, and Maker fell by much more.
Longhash data stated that Bitcoin “has seen one of the most dramatic drops,” among tokens that have been falling over the week. However, experts predict the current dip in BTC prices is a temporary setback before the asset rallies to bigger numbers.
Days after ECB President called for regulating Bitcoin because of its association to illegitimate activities, the asset gained a new critic, which could have fueled FUD. Recently, President Biden’s pick for Treasury secretary, Janet Yellen, believed that cryptocurrencies “are a particular concern.”
Although altcoins seem to perform better than Bitcoin, at the moment, no crypto would be able to replace Bitcoin, given its large market capitalization. For instance, Ethereum was up 22% against Bitcoin in the past week, but as Longhash noted, “Ether’s market cap could quadruple and it would still be behind Bitcoin.”
In the last 24 hours, about $1 billion in crypto was liquidated and Bitcoin has been down by roughly 7%. The asset was trading at $32,043.96 at press time. Further, whales were depositing Bitcoin to exchanges, which could further influence prices, according to CryptoQuant’s Ki Young Ju:
Whales are depositing $BTC to exchanges.
Should keep eyes on Coinbase outflow and Coinbase Premium(will launch by tmr) pic.twitter.com/kotHydfxfM
— Ki Young Ju 주기영 (@ki_young_ju) January 20, 2021
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