Blockchain
Mark Cuban issues burn notice on offensive ENS domain
Cointelegraph By Jeffrey Albus
Someone sent Mark Cuban a profane Ethereum Name Service domain a few days ago. After observant Twitter users recently tracked down his ether address, it was only a matter of time before a wave of unwanted spam transactions made their way into his account. This is, after all, the internet. Here there be monsters.
While it isn’t entirely clear what the presumed troll’s endgame was, the word was nonetheless offensive enough to raise some eyebrows at Cointelegraph, and we don’t intend to reprint it here. Suffice to say, a decent person would not want to be known as the owner of this domain, even if they weren’t a celebrity billionaire.
We reached out to Mark Cuban to find out, first of all, if he knew anything about its origin. Had he purchased it himself? Was he even aware he owned it? And most importantly, what were his plans for the name going forward?
He responded:
“Damn. No, I don’t own [it]. I guess anyone can put an eth address to a domain. I don’t even know if it’s possible to change it. Thanks for the heads up.”
While Cuban has become increasingly involved in the blockchain space of late, he’s still a relative newcomer to certain aspects of the community. As such, his understanding of how Ethereum Name Service, or ENS, domains are acquired, controlled, and transferred was somewhat limited initially.
ENS offers users a decentralized way to use human-readable words for their blockchain address instead of an unwieldy alpha-numeric string. Vitalik Buterin, for instance, is known to utilize vitalik.eth for his address instead of 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045. Easy peasy.
The difficulty with this service is that once you own an ENS domain, you can point it at any address on the Ethereum blockchain without requiring permission from the address’ owner. This allows internet tricksters to target offensive domain names at unsuspecting users in an attempt to make it appear that they are appropriating unsavory words and phrases by choice.
Cuban picked up on this inherent difficulty, noting “it’s obvious that it was sent to me and I didn’t buy it.” He asked Cointelegraph “Is it possible to cancel [the name] or reject the contract?” Digging deeper, it became clear that the troll had made something of an error in judgement. There are three parts to an ENS domain — the Registrant, which is the owner, the Controller, which manages subdomains as well as where the domain name points, and the Record, which notes the actual address where coins are received when the domain is input into a wallet.
Generally, when mischief makers point a domain at an unsuspecting user’s address, they only change either the Controller or the Record. They don’t usually give up total control of the domain itself. This particular troll, who Cuban amusingly referred to as an “idiot”, had instead provided the full Registrant rights to his address. This allotted him unfettered ownership and control of the domain.
With that in mind, and with some technical help from Cointelegraph, Cuban struck on a way to one-up the foolish troll and dispose of the name once and for all. He altered the Controller, Record, and finally Registrant so that they would each be owned by a burner address — i.e. an address whose private keys are nullified either by design or intention. In Mark’s case, this involved creating a new throwaway wallet himself, with the objective of making it inaccessible once his mission was complete. When asked about his timeline for disposing of the wallet’s keys, he quipped:
“What keys? They are gone.”
As a result, the domain now effectively has no owner. And so it will remain (at least until the registration expires.)
When faced with questions as to how similar ownership quirks should be handled in future, Cuban maintained that the responsibility for such transgressions ultimately falls on the developers of decentralized applications:
“This is a problem that ENS is going to have to fix. There needs to be acceptance of a transfer. Otherwise the abuse will be really really bad. This is a weakness in the system that needs to be fixed.”
Mark Cuban has been working to mature his stature within the blockchain community over the last few months. Yesterday, he participated in an Ask Me Anything session on Reddit, using the opportunity to discuss the future of distributed technology and traditional finance. In January, he made headlines by comparing crypto’s current trajectory to the dot com bubble — an era which paved the way for some of his initial success back in the late 90’s.
Blockchain
Fantom brushes off network outage with another 50% price surge
Cointelegraph By Greg Thomson
The decentralized smart contract platform Fantom (FTM) continued its resurgent rally to the tune of 50% on Monday, despite a temporary network outage that saw the blockchain stop producing blocks for seven hours.
Fantom emerged among the top 100 in the market cap rankings in January — eventually going on a 5,000% run that peaked in late February. Since then, the coin’s bull run subsided, but its value against the United States dollar still stands 3,434% higher than it did on Jan. 1.
But Fantom was subject to a brief blackout on Feb. 25, when block production was halted after two validators slowed down the rate of emissions. Fantom is a Proof-of-Stake blockchain where 39 validator nodes oversee block creation on behalf of stakers. The two validators in question represented one-third of the FTM staked on the platform.
The development team successfully coordinated and applied a temporary patch which got the network up and running again seven hours later. A recent announcement by Fantom stated:
“On Thursday, February 25 2021 at 3.04 PM UTC, Fantom Opera mainnet halted new block confirmations, which resulted in a temporary outage. The core developer team and Fantom validator community immediately responded and successfully resumed the network within 7 hours.”
The fix required the consensus of 39 validators in multiple time-zones, and the development team notes that no staked funds were at risk during the outage.
In response to the incident, the development team decided to address the imbalance of power among validators and will attempt to distribute influence more evenly among nodes. To achieve this aim, the amount of FTM required to set up a validator node will be reduced from its current prohibitive figure of 3,175,000 FTM.
In January, this equated to a dollar value of just over $30,000. Now, following Fantom’s recent surge, that figure stands over $1.8 million.
Fantom’s recent surge has been attributed to developments made in the realm of interoperability and decentralized finance. The project was recently integrated into Multichain.xyz — a decentralized token swap protocol that bridges disparate blockchains such as Ethereum and Binance Smart Chain, and enables token swaps without any intermediary.
On Monday morning, Fantom’s ascension continued, as the coin price climbed from $0.3827 to $0.58, equating to 54% growth by time of publication.
Blockchain
Crypto in a post-pandemic world
Cointelegraph By Diogo Monica
Everyone knows the story. When the first block of Bitcoin (BTC) was mined, the protocol itself entered a world of grave economic uncertainty. Not long before the market would hit its lowest point of the 2009 recession, Bitcoin was quietly created, dropped like a life raft alongside a then-sinking economy. The now infamous phrase “Chancellor on brink of second bailout for banks” was cribbed from the headlines, immortalized in code in the origin story of one of the most compelling, innovative, best-performing assets of the last decade.
But Bitcoin did not immediately take root beyond a small community of true believers. Bitcoin and digital assets, in general, have been a lot of things in their relatively short histories, from purely speculative investments and “magical internet money” to a crisis-time safe haven and an attractive hedge against “the great monetary inflation.”
In the face of the COVID-19 pandemic, an associated market meltdown and huge amounts of central bank stimulus, cryptocurrencies have proved themselves to be remarkably resilient.
But as we watch vaccines being distributed around the country, cautiously optimistic that the end of the pandemic is within reach, where will crypto fit in a post-pandemic world? If its history of resilience shows us anything, we expect crypto to adapt to whatever the next few years will bring — crisis or not.
Related: How has the COVID-19 pandemic affected the crypto space? Experts answer
Crypto banks
Just three years ago, leaders of some of the largest banks in the world refused to even talk about Bitcoin in interviews, calling the asset itself a “fraud” and referring to those who would buy it as “stupid.”
Today, the general sentiment across banks is markedly different. On the heels of the United States Office of the Comptroller of the Currency’s Interpretive Letter #1170, which made explicitly clear that federally chartered banks can provide banking services to legally operated companies in the digital asset space and custody digital assets on behalf of their clients, banks have been looking for the best way to get their clients the crypto exposure they demand. We anticipate legacy financial players’ interest in crypto to only grow in the coming years, with crypto becoming a mainstream requirement of financial services.
In the short term, banks will almost certainly rely on subcustody relationships with digital asset specialists to safely and effectively get crypto into their clients’ hands. And this is because the complexity is easier to address from the crypto-native side than the other way around.
Related: The need for a dialogue between crypto businesses and regulators
We also anticipate some number of acquisitions to occur, with some crypto service providers being swallowed up by banks with pockets deep enough to buy them. As demand for crypto services grows, and as regulatory clarity comes, more and more institutions will enter.
Proliferation of decentralized apps
Just as Bitcoin was built in response to the failings of a legacy system, decentralized finance has emerged as crypto’s answer to financial intermediaries. Until recently, though, entire portions of this ecosystem have been unavailable to institutions, mostly for lack of a secure means to participate.
Slowly but surely, institutional-grade DeFi tools are coming to market, and we anticipate this trend to continue. Not only will we see a continued proliferation of DeFi growth, but institutional-grade tools will make institutional participation far more accessible.
Related: Was 2020 a ‘DeFi year,’ and what is expected from the sector in 2021? Experts answer
Despite its significant growth, the DeFi space is still very much fragmented. Cross-chain interoperability — or lack thereof — is still a problem. Institutions want to be able to put their assets to use across the DeFi ecosystem. We anticipate significant growth in this area, with more and more layer-one protocols being bridged to DeFi and the broader Ethereum ecosystem — a development that also has the potential to improve liquidity along with market stability and efficiency.
Corporate treasuries and lowered barriers to entry
Against a backdrop of seemingly endless monetary stimulus, a significant number of private companies are treating digital assets as an inflation hedge. Some of these, like Square and MicroStrategy, have taken significant positions in recent months. We’ve seen MassMutual buy up $100 million in Bitcoin. And with Tesla’s $1.5-billion dollar Bitcoin purchase this month, the trend shows no signs of slowing. In the coming years, we expect digital assets to become an instrumental part of private-company balance sheets.
Related: Tesla, Bitcoin and the crypto space: The show Musk go on? Experts answer
Another factor at play is the lowered barrier to entry on the retail front. With tools like Celo’s Valora coming to market, Diem expected to launch in 2021 and firms like PayPal making it easy for their clients to buy crypto, we expect to see more of crypto as a tool for banking the unbanked — for putting financial tools into the hands of the millions without access to traditional banking services.
Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer
Beyond the crisis narrative
By virtue of being built in response to one economic crisis, crypto seems to be locked into a crisis narrative. In reality, digital assets have more than proved to be resilient in even the most challenging economic times. Just this past year, crypto proved itself in the grips of a once-in-a-century global emergency, earning a place in the portfolios of institutional and retail investors alike.
As the pandemic (hopefully) fades into the rearview, it’s exciting to think about what crypto can do without being forced into a defensive posture — without being defined against legacy assets like gold. It would be naive to say that crypto will never face another crisis — it almost certainly will. But from here, at what feels like the tail end of the pandemic, it’s exciting to think about what crypto can do in whatever “new normal” comes next.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Diogo Monica is a co-founder and the president of Anchorage. Before co-founding Anchorage, Diogo was the security lead at Docker — an open platform for building, shipping and running distributed applications. He has a B.Sc., an M.Sc. and a Ph.D. in computer science, has published several papers in peer-reviewed security conferences on the topic of distributed systems and information security, and is the author of several patents in secure communications, encrypted hardware and payment systems.
Blockchain
While Washington dithers, Wyoming and other US states mine for crypto gold
Cointelegraph By Andrew Singer
The United States is divided politically these days into red states and blue states, and increasingly, it seems to be fracturing into cryptocurrency-friendly and crypto-wary locales, too. On Feb. 21, it was revealed that San Francisco-based Ripple Labs had registered as a Wyoming business. Wyoming is arguably the most blockchain and cryptocurrency-welcoming state in the United States.
Meanwhile, several days later, New York State’s attorney general announced a settlement of the office’s long-standing investigation into crypto trading platform Bitfinex for illegal activities. As a result, Bitfinex and affiliated Tether must pay $18.5 million for damages to the state of New York and submit to periodic reporting of their reserves.
Wyoming and New York — poles apart on the crypto regulatory spectrum — were both making industry headlines in the same week in other words. The irony wasn’t lost on Timothy Massad, former chairman of the U.S. Commodity Futures Trading Commission and now a senior fellow at Harvard University at Kennedy School, who told Cointelegraph:
“Federal regulation of crypto assets is like swiss cheese — full of holes — and that has meant a smorgasbord at the state level, with Wyoming actively luring crypto businesses and the New York attorney general bringing aggressive enforcement actions as we saw this week with Tether and Bitfinex.”
Whether this “smorgasbord” is a good thing is a matter of some debate. Crypto havens like Wyoming can be centers of innovation, pushing a potentially revolutionary technology further forward, as Wyoming’s recently elected U.S. Senator Cynthia Lummis emphasized this week in a Chamber of Digital Commerce panel discussion with Miami’s Mayor Francis Suarez, another crypto enthusiast.
A complex fabric
But it also leads to regulatory uncertainty that gives entrepreneurs a case of hypertension. As Stephen McKeon, an associate professor of finance at the University of Oregon, told Cointelegraph: “Our regulatory system is a complex fabric of multiple agencies at both the state and federal level.” He further emphasized that “they need to coordinate on the topic of crypto assets because this asset class doesn’t map cleanly to the existing regulatory structure.”
Asked if, from a business standpoint, Ripple and others were making a smart business move registering in crypto-warm states like Wyoming with a higher degree of regulatory certainty and freedom — as well as lower taxes — McKeon added: “Businesses strive to reduce regulatory uncertainty. If moving to Wyoming helps to achieve that objective, then it’s a smart move.”
Others could follow Ripple. Zachary Kelman, managing partner at Kelman Law, told Cointelegraph: “Many crypto projects fled New York after the introduction of the onerous BitLicense back in 2015. I expect more projects to relocate in Wyoming, as well as other crypto-friendly states like New Hampshire.”
Wyoming created a stir in 2019 when its legislature authorized the chartering of special purpose depository institutions, or SPDIs, that can receive both deposits and custody assets, including cryptocurrency. The state’s banking division itself acknowledged that “it is likely that many SPDIs will focus heavily on digital assets, such as virtual currencies, digital securities and utility tokens,” though they could also deal with traditional assets. SPDIs can’t make loans like traditional banks, however.
Kraken Bank was the first business to receive a Wyoming SPDI bank charter in September 2020, followed by Avanti Bank and Trust in October, and there are “three more [SPDIs] in the pipeline” said Lummis at the Chamber of Digital Commerce’s Feb. 25 event. Avanti founder and CEO Caitlin Long had earlier suggested that Wyoming’s SPDIs potentially were “a solution to the #BitLicense problem” faced by crypto companies because “New York law exempts national banks from the BitLicense.”
But even though the Wyoming SPDI’s are state-chartered institutions, not national banks, “federal law protects parity of national banks and state-chartered banks,” continued Long, and following that logic, she concluded that SPDIs represented “a passport into some 42 U.S. states without the need for additional state [crypto] licenses.”
An accident waiting to happen?
Not all are enthralled by Wyoming’s new special-purpose banks, though. The Bank Policy Institute suggested that Wyoming’s SPDIs could be an “accident waiting to happen.” The BPI noted in September that Kraken was “the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law” but warned that its business model “is inherently unstable under stress” because the new bank is funded by uninsured, demandable retail deposits “and relies on a pool of assets such as corporate bonds, munis and longer-term Treasuries to fund redemptions under stress.”
David Kinitsky, CEO of Kraken Bank, in a conversation with Cointelegraph, said that he believes the BPI blog post “comes from a lobbyist group funded by, and working on behalf of, the world’s biggest banks” and rests “on a slew of faulty assumptions,” adding further:
“[It’s] comical and hypocritical that they think their fractional reserve model along with its total reliance on asset exposure and interest rate environment is somehow less risky than a full reserve custodian bank that won’t do any lending and has a diverse set of adjacent revenue streams.”
Others have opined that innovation centers like Wyoming were merely filling the void left by the federal government, which has yet to take a coherent stance vis-a-vis the burgeoning crypto market. Benjamin Sauter, a lawyer at Kobre & Kim LLP, told Cointelegraph: “Wyoming is showing that individual states can play a meaningful role in crafting a coherent legal framework for the crypto/blockchain industry — particularly when it comes to state taxation as well as commercial and some banking issues.”
By comparison, according to him, the U.S. federal government “hasn’t really made an effort to create such a framework, and this has led to a lot of regulatory inefficiencies and general confusion.”
Innovator or loophole?
So, what about the notion that Wyoming merely created a means for its new banks to lure firms and investors based in more regulated states like New York? Kelman told Cointelegraph on the matter: “Many institutions operate entities all over the world, not just the United States. New York has jurisdiction over New Yorkers — but not any company related to a company that has had operations there.”
“Wyoming can and is becoming a center for crypto business and innovation,” Kinitsky told Cointelegraph, adding: “Certainly, there are ready similar examples within financial services like the credit card industry in South Dakota and ILC banks in Utah….SPDI banks have similar frameworks for being able to operate across the country and indeed internationally.”
McKeon agreed that Wyoming was following the South Dakota playbook: “South Dakota created favorable legislation for banks around interest rates and fees in the 1980s and now has one of the highest concentrations of bank assets in the U.S.,” adding further:
“By creating an environment that allows crypto projects to operate with a higher degree of regulatory certainty and freedom, Wyoming is likely to attract similar relocation within crypto.”
Will others join in?
Of course, other states could follow Wyoming’s lead. Kelman said: “I also expect larger states, like Florida, to follow suit with more crypto-friendly guidance, especially after Miami Mayor Francis Suarez’s overtures to the crypto community.” However, he further stressed that “given Wyoming’s small size and relative obscurity, I don’t know if it will remain a haven for an entire industry in the way Delaware has been for incorporations and corporate governance.”
As reported, Mayor Suarez is looking to develop some of “the most progressive crypto laws” and proposing within his jurisdiction innovations like paying city workers’ wages in Bitcoin (BTC) and purchasing BTC for the municipality’s treasury. Senator Lummis applauded the mayor’s initiatives at the Chamber of Digital Commerce’s panel, inviting him to “look at Wyoming’s legislative framework as a template and then build on it” by developing new Bitcoin “components,” including a pension plan for Miami workers that includes Bitcoin — something Suarez is looking into.
Multiple innovative centers like Miami and Wyoming, among others, could advance technological progress generally, she suggested. Suarez, for his part, said: “One of the things that we want to do is imitate Wyoming’s very successful integration of crypto into their community.”
Meanwhile, Avanti’s Long remains an ardent booster for her state: “Why should crypto companies redomicile to Wyoming?” she asked rhetorically on Feb. 21 following the news that Ripple Labs had registered as a Wyoming limited liability company, adding:
“No state corp tax, no franchise tax, crypto exempt from property & sales tax, our commercial laws clarify crypto legal status, crypto-friendly banks opening soon, access to crypto-open gov/legislators/US senator — all laws open-source.”
Is Wyoming good for BTC adoption?
What exactly do these tech-friendly states and cities mean for cryptocurrency adoption? Sauter was cautiously optimistic: “It’s possible that Wyoming’s efforts will have some trickle-up effects, should the federal government ever get its act together.” He stated further that there is also a major risk as businesses may be “lulled into a false sense of security and potentially conflating Wyoming’s regime for compliance at the federal level.”
Kinitsky told Cointelegraph that the convergence between crypto and banking, as is happening in Wyoming, “portends an important step toward mainstream adoption,” while McKeon added that crypto users “are primarily concerned with access to products and features. Better products translate to increased adoption.” Therefore, if Wyoming-type legislation enables crypto projects “to provide new and desirable features by mitigating regulatory risk for the providers, then it will be a positive force for general public adoption.”
Many, though, still seem to be treading water until the federal government acts to provide some legislative/regulatory structure to the nascent blockchain and cryptocurrency industry. According to Sauter, “as great and encouraging Wyoming’s recent actions are, there is only so much one state can do.” Massad also told Cointelegraph:
“This regulatory confusion creates higher costs and uncertainty. There’s still plenty of money and talent in this country flowing into crypto innovation, but we need greater regulatory clarity to ensure investor protection, financial stability and responsible innovation.”
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