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dApp Developer ‘Level K’ Discovers GasToken Vulnerability In Ethereum Network

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On Wednesday, November 23, 2018, the decentralized applications producer, Level K, published new revelations about Ethereum on their official Medium channel.

The brief report was written as a warning that the Ethereum network has a potential protocol vulnerability which could easily be exploited by hackers to harm unsuspected users, mainly cryptocurrency exchanges.

A danger for crypto exchanges

According to Level K, if an attacker was to withdraw Ether (ETH) from the exchange’s hot wallet address, he would able to do an arbitrary computation which is paid for by the owner of the wallet from which the ETH is sent (exchange’s hot wallet).

This procedure is known as grieving vector.

Provided that the cryptocurrency exchange in question doesn’t have a reasonable gas limit implemented on their platform, a hacker could perform enough transactions to generate GasToken, turning a grieving vector into a lucrative form of attack.

Since gas on the Ethereum network is paid in ETH, we can see why this scheme could be so profitable.

What’s even worse, this scheme could also be applied to all cryptocurrencies that are leaning on the Ethereum network, meaning ERC-20, ERC-721, ERC-777, and ETC-677 tokens.

Furthermore, GasToken, which makes use of Ethereum’s refund mechanism, allows a hacker to mint huge amounts of GasToken from ETH used to pay for transactions, storing it when prices are down, just to receive a refund when the value rises.

Level K, along with their colleagues from Trail of Bits and IC3, gave a hypothetical example of an affected centralized exchange in their published in-depth report, which we are going to quote in fullness:

“In the simplest exploit scenario, Alice runs an exchange, which Bob wants to harm. Bob can initiate withdrawals to a contract address he controls with a computationally intensive fallback function.

If Alice has neglected to set a reasonable gas limit, she will pay transaction fees out of her hot wallet. Given enough transactions, Bob can drain Alice’s funds. If Alice fails to enforce Know Your Customer (KYC) policies, Bob can create numerous accounts to circumvent single-account withdrawal limits.

In addition, if Bob also wants to make a profit, he can mint GasToken in his fallback function, and make money while causing Alice’s wallet to drain.”

Besides centralized exchanges, this vulnerability could also be used on decentralized exchanges (DEX), where the attacker would hurt individuals interacting with his account instead of the exchange itself, billing them a certain amount of “tax” every time the interaction is made.

Level K warned exchanges

Level K also reported that since they couldn’t deduce which exchanges did implement a gas limit and which didn’t, they sent a warning of this potential vulnerability to as many trading platforms as they could in hope that the ones vulnerable would patch the security hole.

The dApp development firm stated that most exchanges had the gas limit protection in place, but those which didn’t have successfully patched their system.

Despite being one of the most used networks in the market, this example shows that Ethereum could still be used to commit malicious activities as its network hasn’t been perfected yet.

Every day there are new ways to exploit blockchain’s vulnerabilities discovered. However, such revelations may, and hopefully will speed up the process of making this new technology a near-bulletproof stream of transactions. 


Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your own research and/or consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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Source: https://xbt.net/blog/ethereum-blog/dapp-developer-level-k-discovers-gastoken-vulnerability-in-ethereum-network/

Blockchain

New York City to Become the ‘Center of Bitcoins,’ Promised Mayoral Front Runner

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The number of US city mayors, whether current or running, supporting bitcoin continues to grow. After Miami’s Francis Suarez, the favorite to win the race in New York City, Eric Adams, promised to make NYC different in a year, including becoming the “center of bitcoins.”

BTC Going to NYC?

Running as a Democrat, Eric Adams is a polarizing figure that managed to get ahead in the race through an old-school strategy by receiving support from Black and Latino voters with unions.

Although roughly 70% of voters didn’t make him their first choice, the new and controversial voting system in the city has made him the favorite. The latest polls showed a lead of over 75,000 votes over Maya Wiley.

Apart from making the usual political promises of lowering crime rates and creating new jobs, he also outlined a somewhat unexpected strategy, which he believes will bring back economic prosperity to one of the world’s most important cities.

During a recent speech, he spoke about his intentions to turn New York City into a technology hub, and he even briefly mentioned the largest cryptocurrency – bitcoin.


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“I’m going to promise you in one year, you are going to see a different city. We are going to become the center of life science, the center of cybersecurity, the center of self-driving cars, drones, the center of bitcoins.”

New York City. Source: LovelyPlanet
New York City. Source: LovelyPlanet

Somewhat expectedly, the CEO of MicroStrategy, Michael Saylor, was quick to weigh in on the matter, saying that “bitcoin is hope for New York.”

Miami’s Mayor Leads the Way

Months before Adams spoke about bitcoin, another mayor of a large US city was the first to express his support about the asset. Francis Suarez, the mayor of Miami, said he was opened to explore investing 1% of the treasury reserves in BTC.

Since then, he has reaffirmed his stance, indicating that he is a holder of bitcoin and ether. He also attracted the world’s largest Bitcoin conference to take place in Miami, where he praised the primary cryptocurrency once more.

Most recently, Suarez tried to lure BTC miners into relocating to his city and promised them incentives like cheap nuclear energy.

Featured Image Courtesy of TownandCountryMag

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Source: https://cryptopotato.com/new-york-city-to-become-the-center-of-bitcoins-promised-mayoral-front-runner/

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Blockchain

Palestine Reportedly Working On Its Own Digital Currency

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Cryptocurrencies are back in the geopolitical scenario. The Palestinian Monetary Authority is reportedly working on issuing a digital currency as a strategy to achieve a higher level of financial independence.

This effort would put Palestine on the same list as other nations like Venezuela, the Marshall Islands, the Bahamas, China, and the latest endeavors of El Salvador, who are interested in the power of the blockchain to improve the efficiency of their financial infrastructure —and gain a little more independence from other economic powers, bypassing their sanctions since we’re there.

A Palestinian Sovereign Digital Coin: Practical Solution Or Political Statement?

Palestine has a rather peculiar political situation, although 138 of the 193 United Nations (UN) recognize it as an independent country, the United States and Israel (two of its most important political rivals to say the least) do not recognize its existence, and Israel currently exercises an important military and even financial control on the region.

Countries that recognize Palestine as a free country (Green) vs Countries that do not (Grey). Image: Wikipedia
Countries that recognize Palestine as a free country (Green) vs. Countries that do not (Grey). Image: Wikipedia

And this is where the blockchain comes in as a possible relief valve or perhaps a means of political protest by Palestine against Israel. Palestine does not have its own currency and instead relies on a mixed economy in which Israeli shekels, Jordanian dinars, and U.S. dollars move in and out.

So, with an economy controlled by a rival third party, it is almost impossible for Palestinians to have any financial sovereignty when Israeli banks dictate their movements.


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Currently, Israel prohibits banks from conducting large cash transactions. It also imposes limits on the amount of money Palestinians can transfer to Israel each month.

According to a Bloomberg report, this hinders financial transactions between Palestinians and could be one of the most important practical reasons for trying to create a sovereign currency free from Israel’s influence.

As a result, they [the palestinians] sometimes have to borrow to cover foreign exchange payments to third parties and are stuck with a glut of Israeli banknotes. That could be one reason a digital currency would be attractive to the Palestinian monetary system.

Experts Don’t Expect Much

Palestinians might be optimistic, but many experts don’t see much hope for the Palestinian efforts. Among this group is Raja Khalidi, director of the Palestine Economic Policy Research Institute, who believes that it is practically impossible for the Palestinian cryptocurrency to see the light of day.

“The macroeconomic conditions don’t exist to allow a Palestinian currency — digital or otherwise — to exist as a means of exchange.

For his part, Barry Topf, former senior adviser to the Bank of Israel governor, assured that this currency will fail to fulfill two of the main functions of money:

“It’s not going to replace the shekel or the dinar or the dollar. It’s certainly not going to be a store of value or a unit of accounting.”

However, Palestine seems determined to pursue a venture in which it has nothing to lose. Two cryptocurrency studies are currently underway to help experts understand the landscape. In the end, much of its success will depend on the support it receives from other international bodies, and especially from other states.

And this is a matter of discussion for political analysts, not crypto enthusiasts.

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Source: https://cryptopotato.com/palestine-working-digital-currency/

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Ethereum Testnet Burns 88K ETH in Preparation for EIP-1559

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Ethereum’s London hard fork launched on the Ropsten testnet on June 24 in preparation for the mainnet rollout in July.

The upgrade will usher in the implementation of the highly anticipated EIP-1559 modification that will adjust the Ethereum transaction fee calculation mechanism.

The next phase in the London hard fork rollout is deployment on the Goerli testnet, which is scheduled for June 30. Following that, it will be launched on the Rinkeby testnet on July 7 and then mainnet later in the month.

Watch The Burn

Part of the EIP-1559 mechanism, aside from changing the fee auction structure, is to burn the “base fee,” which will make the Ethereum economy deflationary over time.

A website called Watch The Burn has been set up to see this in action. At the time of press, 88,483 ETH had been burned on the testnet. This is equivalent to around $177 million at current prices.


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Ethereum software solutions firm ConsenSys estimates that the annual supply change will be minus 1.6 million ETH. At current prices, this equates to the burning of $3.2 billion in ETH, which will reduce the annual supply rate by 1.4%.

The deflationary properties of the network will be further compounded when proof-of-stake launches on mainnet for ETH 2.0 in 2022 some time, and the asset is no longer mined.

In February, Predictions Global founder Ryan Berckmans detailed how, in his opinion, Ethereum prices could surge to five figures through these deflationary mechanisms. He argued that this effectively gives ETH back to holders and not miners as the asset increases in scarcity through fee burns.

Unfortunately, hopes of major gas savings from the upgrade have been dashed. ConsenSys confirmed that it was not the intent of the EIP, adding:

“As a side effect of a more predictable base fee, EIP-1559 may lead to some reduction in gas prices if we assume that fee predictability means users will overpay for gas less frequently.”

Ethereum Prices Lackluster

Ethereum prices had regained the psychological $2,000 level at the time of press. The asset has gained 4.2% on the day but remains in a downtrend.

CoinGecko has reported a 20% decline in the price of ETH over the past fortnight. The world’s number two crypto asset is currently 54% down from its all-time high of $4,350 on May 12.

So there may be a bit longer to wait before these properties of scarcity and demand are reflected in its price action.

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Source: https://cryptopotato.com/ethereum-testnet-burns-88k-eth-in-preparation-for-eip-1559/

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