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Blockchain isn’t as decentralized as you think: Defense agency report

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Blockchain isn’t as decentralized as you think: Defense agency report

Distributed ledger technology (DLT) and blockchains including Bitcoin and Ethereum may be more vulnerable to centralization risks than initially thought, according to Trail of Bits. 

The security firm on Tuesday released its report titled “Are Blockchains Decentralized?”, which was commissioned by the U.S. Government’s Defense Advanced Research Projects Agency (DARPA).

The report aims to investigate whether blockchains including Bitcoin and Ethereum are truly decentralized, though the report appeared to focus largely on Bitcoin.

Among its key findings, the security firm found that outdated Bitcoin nodes, unencrypted blockchain mining pools and a majority of unencrypted Bitcoin network traffic traversing over only a limited number of ISPs could leave room for various actors to garner excessive, centralized control over the network.

Bitcoin nodes

The report stated that a subnetwork of Bitcoin nodes is largely responsible for reaching consensus and communicating with miners and that a “vast majority of nodes do not meaningfully contribute to the health of the network.”

It also found that 21% of Bitcoin nodes are running an older version of the Bitcoin Core client, which is known to have vulnerability concerns such as consensus errors. It states that “it is vital that all DLT nodes operate on the same latest version of software, otherwise, consensus errors can occur and lead to a blockchain fork.”

A Bitcoin node is any computer that stores and verifies blocks in the blockchain. Nodes are used to monitor the health and security of the Bitcoin blockchain and validate the accuracy of transactions. The current version all nodes should run is Bitcoin Core 22.0.

Another takeaway from the report found that Bitcoin’s mining pool protocol Stratum is unencrypted and essentially unauthenticated.

This means that malicious attacks can be made to “estimate the hashrate and payouts of a miner in the pool” and “manipulate Stratum messages to steal CPU cycles and payouts from mining pool participants.”

Funneling through ISPs

The authors also found vulnerabilities in the infrastructure, based on the fact that Bitcoin protocol traffic is unencrypted and 60% of the network traffic traverses only three ISPs.

This is a problem because “ISPs and hosting providers have the ability to arbitrarily degrade or deny service to any node.”

Twenty-six pages of detailed information, data, and infographics are contained within the report. DARPA started in 1958, and is responsible for the development of emerging technologies for use by the agency of the United States Department of Defense and the US military. Trail of Bits is a cybersecurity research and consulting firm that was engaged by DARPA to develop the report.

Related: Centralized vs. decentralized digital networks: Key differences

The report comes at interesting timing, after centralization concerns were highlighted on Solana.

On Sunday, Solana-based decentralized finance (DeFi) lending protocol Solend put together a spur-of-the-moment governance proposal aimed at taking over a whale’s wallet that was facing liquidation which was threatening to put a strain on Solend and its users.

The proposal which was passed by one whale, saw immediate kickback from Twitter, and the creation of another governance vote to invalidate the previously approved proposal. Observers arguing the move could cause damage to the overall image of DeFi as taking control of one of Solend’s wallets means the fundamental principles of DeFi fall into question and reversing a vote wasn’t much better.

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When Will Bitcoin Bottom Out? Pi Cycle Bottom Says It Will Happen on July 9

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When Will Bitcoin Bottom Out? Pi Cycle Bottom Says It Will Happen on July 9

Many cryptocurrency enthusiasts have heard of the Pi Cycle Top indicator, which has “magically” predicted the peaks of several previous bull markets. However, few know that there is also its opposite, Pi Cycle Bottom, which also has some track record in trying to estimate the bottom of a bear market.

But before we take a closer look at Pi Cycle Bottom, let’s remind ourselves why its bullish nemesis has earned so much popularity.

The historic effectiveness of the Pi Cycle Top

We first wrote about the Pi Cycle Top on BeInCrypto over a year ago, when Bitcoin was close to reaching its previous all-time high (ATH). The indicator is based on the relationship between the double of the 350-day DMA and the 111-day DMA. The signal fired on April 12, 2021, and just two days later, Bitcoin reached a historic ATH of $64,900.

This high accuracy of the Pi Cycle Top was not an exception, as the indicator has been very effective in previous cycles as well. All 3 historical ATHs of previous bull markets coincided with the signal flashing up no more than 5 days before or after the peak.

Chart by Tradingview

The only ATH during which the Pi Cycle Top was far from crossed is the most recent one. On November 10, 2021, when BTC reached $69,000, the indicator failed to generate a signal. At the time, this was interpreted as a sign that the second wave of the bull market was not yet over. Today we know that the indicator failed in this case.

Pi Cycle Bottom and the end of a bear market

Pi Cycle Bottom is the opposite of Pi Cycle Top. The bearish version is the relationship between the 471 SMA and the 150 EMA. Moreover, the former is multiplied by a factor of 0.745. Not a very elegant construction, but historically quite effective.

As it turns out Pi Cycle Bottom indicator could be successfully used to estimate the area of the absolute bottom of two previous bear markets (blue lines).

The first time the 150 EMA fell below the 471 SMA was on January 16, 2015. This happened just two days after the absolute bottom of the BTC price at $152.

The second time the Pi Cycle Bottom generated the same signal was on December 16, 2018. This happened just one day after the absolute bottom of the previous bear market at $3122.

Chart by Tradingview

We are currently approaching the third signal in history and another bearish crossing of the two moving averages (blue circle).

When will Bitcoin bottom out?

If the relationship between the intersection of the two moving averages and the bottom of the BTC price repeats itself in this cycle, Bitcoin could soon reach the bottom of this bear market. Currently, the 150 EMA has begun the sharp decline characteristic of the recent capitulation phase. A crossover is likely in the coming days.

Cryptocurrency market analyst @TheRealPlanC tweeted his own prediction of the date of the intersection and reaching a hypothetical bottom for Bitcoin. Based on the movement trajectory of the two curves, he estimated that the intersection will occur on July 9, 2022.

Source: Twitter

If this were to happen, then in exactly 15 days the Pi Cycle Bottom would generate a signal that very accurately indicated the bottom of the BTC price in the previous two iterations.

One step further went another analyst @el_crypto_prof, who combined the potential signal from the Pi Cycle Bottom with a fractal analysis of previous cycles. In his opinion, if a potential Bitcoin bottom were to happen in the near future, it would fit well with analogies between previous cycles.

Source: Twitter

In the chart above, we can see that for the entire period from April 2021, the analyst includes the post-ATH correction phase highlighted in red. It also includes the latest ATH at $69,000 reached on November 10. Although technically a higher BTC price was reached then, many technical and on-chain indicators suggest that it was already a bear market.

Perhaps this was also the reason why the Pi Cycle Top did not generate a proper signal. If this is true and the correction in the BTC market has been going on for more than a year, then indeed we can soon expect an end to the long-term decline. The Pi Cycle Bottom indicator is just an additional layer of confluence that may make this scenario more likely.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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It seems NFT-themed Bored & Hungry restaurant no longer accepts crypto

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It seems NFT-themed Bored & Hungry restaurant no longer accepts crypto

The alleged removal is a bit strange considering Bored and Hungry only opened its doors back in April.

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It seems NFT-themed Bored & Hungry restaurant no longer accepts crypto

The Los Angeles Times reported Friday that recently opened NFT-themed burger joint Bored & Hungry no longer accepts cryptocurrency as a form of payment for its food.

When questioned, one Bored & Hungry employee told the Los Angeles Times “Not today — I don’t know.” The individual didn’t give any indication of when the decision was made to cut crypto from the menu of payment options, nor did they know if crypto payments would be making a return.

Bored & Hungry initially launched back in April of this year. At the time, one worker told the Los Angeles Times that the majority of its customers didn’t seem to care about crypto payment options, also noting that customers were generally indifferent to “the restaurant’s fidelity to the crypto cause.”

Another Bored & Hungry restaurant patron told the Los Angeles Times “People want to hold onto their ethereum. They’re not gonna want to use it.” Customer Richard Rubalcaba said, “I don’t know how [crypto purchases] would work, with the crash.”

Many of the restaurant’s patrons stated that they are not hardcore crypto enthusiasts, and simply frequent the establishment for the food. Customer Jessica Perez said, “We rate this up there with In-N-Out, maybe even better.”

Changes to venue’s payment policies seem to fall in line with the overarching crypto and macro economical meltdown transpiring across the globe. But never fear, hungry crypto users! You can still visit Chipotle, which began accepting crypto payments earlier in June via Flexa. Several countries are facing relentless regulations and scrutiny and there are issues of contagion in the crypto market.

Cointelegraph reached out to Bored and Hungry owner Andy Nguyen for clarification on the restaurant’s crypto acceptance, but did not receive a response prior to publication.

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Celsius Network hires advisers ahead of potential bankruptcy: Report

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Celsius Network hires advisers ahead of potential bankruptcy: Report

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