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Secure Bitcoin self-custody: Balancing safety and ease of use

Republished by Plato

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Bitcoin’s supply is capped at 21 million, but a significant proportion of that total sum is likely lost forever. This situation is due to a variety of reasons such as lost private keys and discarded storage devices containing substantial amounts of Bitcoin (BTC).

When Bitcoin owners are not being careless with their wallet passwords, they can sometimes be targeted by hackers looking to steal their precious crypto. Those who utilize third-party custodial solutions place their Bitcoin fortune at the mercy of the security protocols adopted by such services.

Indeed, several attack vectors are constantly being utilized to try and gain access to people’s Bitcoin funds. These exploits, which range from the simple to the sophisticated, target any perceived weaknesses inherent in any storage method.

Not your keys, not your coins

Crypto exchanges cater to millions of customers, and it’s reasonable to assume that a significant proportion of that number uses these services as their primary Bitcoin custodian. Under such a custodial arrangement, the cryptocurrency owner does not possess the private key of the wallet.

Not your keys, not your coins” is a popular refrain in the crypto space, and the maxim serves to warn people of the risks involved in storing cryptocurrencies with third-party entities. Indeed, the crypto landscape is dotted with numerous exchange hacks where cybercriminals broke into poorly-secured platform wallets to steal customer funds.

Sometimes, the exchange recovers from the theft, and other times, the platform goes bankrupt. Mt. Gox and QuadrigaCX serve as examples of the latter, with affected customers still striving to recover their funds.

These days, exchanges are attempting to upgrade their security protocols to prevent hacks. Exchanges holding uninsured and substantial crypto sums in vulnerable hot wallets is now greatly discouraged. Some platforms still make this grave error and often pay the price.

Crypto forensics is also evolving by the day, making it more difficult for cybercriminals to liquidate their loot. In all, 2020 saw a significant decline in the number of crypto-related thefts with rogue actors reportedly stealing $3.8 billion from over 120 attacks throughout the year. However, the emergence of decentralized exchanges has opened up another way for criminals to launder money.

The reduction seen in 2020 has broken a four-year trend of increasing cryptocurrency crime. However, decentralized finance now seems to be the new playground for crypto thieves and other rogue actors with the novel market niche accounting for more than half of the stolen cryptocurrency in 2020.

No magic bullet

When it comes to robust security for self-hosted Bitcoin storage, it’s perhaps important to realize that there is no magic bullet. Indeed, Ruben Merre, CEO of hardware wallet maker NGrave, touched on this point, telling Cointelegraph that BTC owners are often torn between the choice of keeping their coins on exchanges with decreased security or in cold wallets that are typically not user-friendly.

In theory, every conceivable method for holding BTC has tradeoffs, and some of the drawbacks associated with any of these systems can act as an entry point for malicious actors.

Take air-gapped devices for instance. On the face of it, simply isolating a computer from the internet should provide robust security against hacks. However, according to a study recently published by Mordechai Guri, a cybersecurity researcher at the Ben-Gurion University of the Negev, it is possible to “generate covert Wi-Fi signals from air-gapped computers.”

In the research paper, Guri established that “air-gapped networks are not immune to cyber attacks.” Indeed, a skilled hacker can exfiltrate sensitive data like keylogging credentials and biometrics from air-gapped computers.

Perhaps even more alarming are portions of the research study devoted to the possible means of data exfiltration from air-gapped computers placed in Faraday cages, shielded enclosures that block electromagnetic fields. So, relying only on a Bitcoin wallet stored in a computer isolated from the internet might not be as secure as previously thought. A person utilizing this method might need to run signal jammers continuously.

Then, there are hardware wallets that offer robust security with private keys stored offline. Though these devices interface with a computer when in use, they never actually connect to the internet.

A hardware wallet owner needs to either encrypt their keys or store them in a safe place. For the former, if the encryption is performed using a computer that has or will be connected to the internet, then there is a significant risk of losing the keys to malware.

A user can even utilize every security measure available with hardware wallets and still lose their Bitcoin. Hardware wallet maker Ledger has suffered severe breaches leading to the theft of sensitive customer information. With their phone numbers and personal addresses out in the open, several Ledger customers are facing the threat of physical attack.

For Monero’s former lead developer, Riccardo Spagni, Ledger’s failure to protect customer information has exacerbated the difficult nature of secure crypto self-custody, telling Cointelegraph:

“Securing Bitcoin is hard, and people often overestimate their technical abilities. This is made doubly complex by companies, like Ledger, failing to keep customer data secure. Ledger is amazingly competent at building a secure hardware wallet that is also easy to use, but customers are getting caught out by social engineering due to their customer data being leaked. This makes robust Bitcoin storage even more difficult.”

A few helpful suggestions

An ongoing survey by NGrave revealed that 25% of crypto users are not securing their coins as well as they think. While hardware wallets might not offer the ease of use associated with keeping Bitcoin on an exchange, the consensus among commentators was that the former option is still the safest method.

According to Merre, when the user opts to own their own assets, they can no longer use the centralized exchange model and have to move to decentralized exchanges, or hot wallets, like mobile apps, adding:

“With all online solutions, you have some level of convenience as everything is easily accessible, but you’ll be giving up a lot of security. For example, your hot wallet will give you a private key to begin with, and hence, that key’s first touchpoint is immediately with the internet. A huge security risk already.”

For Spagni, Bitcoin self-custody for the less tech-savvy is a balancing act between security and ease of use. The easiest methods tend to have the least security and the most secure methods require a fair few configuration protocols.

Back in November 2020, Whirlpool Stats’ Matt Odell tweeted his favorite Bitcoin storage setup that combined running Bitcoin Core and desktop-based wallet Specter with a ColdCard hardware wallet. According to Odell, the setup costs about $150 and required at least 10 gigabytes of storage space. Specter works directly with the Bitcoin Core, so combining both eliminates the need for running an Electrum server. The user can then verify transactions on ColdCard directly.

For users who might find the above setup overly daunting, it’s important to include as many security layers as possible on top of their chosen storage method. These include two-factor authentication and encrypted keys, among others.

It is also important to note that backups and retrieval processes for additional security protocols must be carefully stored. According to Spagni, Bitcoin owners should treat information such as seed words, wallet passwords, passphrases and encryption keys as though they were physical gold bars and keep them safely ensconced.

The inability to remember key wallet data has led to many Bitcoin owners locked out of their accounts. As many as 3.7 million BTC, or 20% of the circulating supply, is thought to be lost forever. Some examples of such stories include an IT engineer accidentally discarding his BTC into the trash and now offering $72 million for an opportunity to dig it up. Meanwhile, another early-day crypto enthusiast has forgotten a password for his hard drive containing around $266 million in BTC and only has two password tries left to unlock his stash or it will be lost forever.

To ensure that one does not add to that sad statistic, it’s important to treat seed words, encryption keys and the like as valuable data and guard them accordingly.

Source: https://cointelegraph.com/news/secure-bitcoin-self-custody-balancing-safety-and-ease-of-use

Blockchain

GBA Healthcare Working Group Releases White Paper as First Asset inBlockchain Ethical Design Framework for Healthcare

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WASHINGTON, DC –March 2021

Beginning early 2020, theGovernment Blockchain Association (GBA) Healthcare Working Group (HWG)began undertaking the development of an ethical design framework for blockchain solutions in the healthcare industry as a service to the public. The GBA HWG is releasing the first asset in the Blockchain Ethical Design (BED) Framework for Healthcare in the form of a White Paper.

We are excited to offer this guidance to healthcare policymakers, decision-makers and innovators in implementing blockchain featured technology in the healthcare space. The BED Framework for Healthcareis being developed collaboratively by members in the HWG including caregivers, entrepreneurs, healthcare technologists and legal professionals from around the world. We cover a comprehensive spectrum of use cases, regulatory and legal scenarios, and procedural insights based on real world experience in healthcare technology innovation. This White Paper is only the first asset in a suite of guiding tools the GBA HWG will be releasing through 2021, and we are looking forward to the feedback of our audience.” –Marquis Allen, GBA Healthcare Working Group Chair

The purpose of this publication is to:

  • Identify potential ethical issues of blockchain used in health service delivery
  • Discuss potential ethical issues for stakeholders across the healthcare ecosystem including regulatory and compliance segments
  • Propose a conceptual framework of blockchain ethics as it applies specifically to its design, implementation and use in healthcare.
  • Create an outlinefrom which the Blockchain Ethical Design (BED) Framework for Healthcare and its assets, tools, documents and content will be developed by the GBA HWG.
  • Raise awareness and stimulate further debate on the ethics of blockchain in the healthcare IT,health system governance and regulatory communities.

The GBA invites you to contact them for more information.

Learn more about the GBA: gbaglobal.org

For more information about the GBA Healthcare Working Group: gbaglobal.org/HWG

To download the whitepaper: gbaglobal.org/download

Contact: Kathy Dache @ Kathy.Dache@gbaglobal.org

________________________________________________________________________

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Blockchain

Big Data Protocol Staking Surges Over $6 Billion in Latest DeFi Frenzy

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Boasting three and four-digit annual percentage yields, Big Data Protocol (BDP) has become the latest DeFi frenzy as total liquidity on the protocol has skyrocketed to $6.1 billion just two days after liquidity mining incentives were launched.

The protocol announced its fair launch on March 6 where 100% of the initial circulating supply, which is 30% of the total of its BDP token, will be distributed to the community over six days. It is backed by a team of technologists, crypto investors, and data scientists and designed to incentivize liquidity mining over the long term.

There are liquidity pools for twelve different DeFi assets and they have attracted a lot of collateral in just two days.

Big Returns for DeFi Stakers

Over a million ETH has been deposited in the wrapped Ethereum pool according to the BDP data vault, earning an APY of 40%. Almost 17,000 BTC is currently in the wBTC pool earning 82% APY while the Tether vault has gained 728 million USDT earning 96%.

The top earning pools are boasting four digit returns with OCEAN at 1,375% and TOMOE at 1,315% at the time of writing.

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A blog post explaining the tokenomics elaborated:

“Users provide liquidity to earn bALPHA over the course of 3 months. Subsequent data tokens, named bBETA and bGAMMA, will launch after bALPHA, which will further incentivize liquidity.”

A portion of BDP and data tokens are burnt as the usage of the Protocol and marketplace grows over time, it added.

The total supply of 80 million tokens will be divided as follows: 30% distributed in the initial six day yield farming incentive, 35% allocated to future staking rewards, 25% held as an ecosystem reserve, and 10% to the team and advisors.

The bALPHA data token will have a total supply of just 18,000 tokens which will all be allocated to liquidity mining rewards. Two more data token sets, bBETA and bGAMMA, will be announced in due course the blog post added.

BDP Price Update

At the time of writing, BDP was trading at $5.85, falling 19% on the day after hitting a peak of just over $14 on Sunday, March 7.

The bALPHA price is a little over $10,000 per token after skyrocketing to over $40,000 at the weekend according to Coingecko.

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Source: https://cryptopotato.com/big-data-protocol-staking-surges-over-6-billion-in-latest-defi-frenzy/

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Blockchain

TA: Bitcoin Turns Attractive Above $50K, Why BTC Extend Its Rally

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Bitcoin price gained bullish momentum above the $50,000 resistance against the US Dollar. BTC traded towards $52,000 and it remains supported for more upsides.

  • Bitcoin started a fresh increase above the $50,000 and $50,500 resistance levels.
  • The price is now trading well above $50,000 and the 100 hourly simple moving average.
  • There is a key rising channel forming with support at $50,500 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The pair could correct a few points, but the bulls are likely to protect $50,000 and $49,500.

Bitcoin Price Starts Fresh Increase

After a strong close above the $48,000 level, bitcoin started a fresh increase. BTC was able to clear the key $50,000 and $50,500 resistance levels to move into a positive zone.

There was also a break above a major bearish trend line with resistance near $48,400 on the hourly chart of the BTC/USD pair. The pair extended its rise above the $51,000 level and traded to a new weekly high at $51,853.

It is now correcting lower, but it is trading well above $50,000 and the 100 hourly simple moving average. An initial support is near the $50,750 level. It is close to the 23.6% Fib retracement level of the upward wave from the $47,141 swing low to $51,853 high.

Bitcoin Price

Source: BTCUSD on TradingView.com

There is also a key rising channel forming with support at $50,500 on the same chart. The next major support is near the $50,000 level. Any more losses may possibly lead the price towards the 50% Fib retracement level of the upward wave from the $47,141 swing low to $51,853 high near $49,500. The main support is now forming near the $48,800 level and the 100 hourly simple moving average.

More Upsides in BTC?

If bitcoin stays above $50,500 and $49,500, it could start a fresh increase. An initial resistance on the upside is near the $51,500 level. The first major resistance is near the $52,000 level.

A successful close above the $52,000 resistance level could open the doors for a larger increase in the coming sessions. The next major resistance could be $53,200, followed by $54,500.

Technical indicators:

Hourly MACD – The MACD is now gaining momentum in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well above the 50 level.

Major Support Levels – $50,500, followed by $50,000.

Major Resistance Levels – $51,500, $52,000 and $53,200.

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Source: https://www.newsbtc.com/analysis/btc/bitcoin-turns-attractive-above-50k/

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