Crypto ₿its: Virtual Bloodbath, Getting Hacked, ICOs & Tokenize

8 min readJun 30, 2017

June 30— Issue #2

Crypto Bits is a weekly curation of links, commentary, tweets and news I’ve seen across the crypto world and thought were interesting. You can follow me on twitter @callmethebear . Not getting Crypto Bits? Click here to subscribe!

News:

Here’s a little recap of Ethereum and the crypto markets this week

The big news of the week was the virtual bloodbath across the crypto asset space on Monday and Tuesday led by a 50% pullback from all time highs by Bitcoin’s cooler, younger cousin Ethereum. While it’s been a roller coaster ride the past couple of weeks and over $25bn of value was shaved in total network value across the board, the market has remained resilient, rebounding sharply on Wednesday and stabilizing, as we close out the month of June up 33% overall from May.

Hackers are hijacking your cell phone number and breaking into your accounts

I got hacked. A few weeks ago, a friend asked me on Twitter if I owned Bitcoin. I quickly replied “yes, everyone should” without thinking and went about my day. This simple interaction set off a chain of attacks that began less than 3 hours later, lasted for the next 36 hours and resulted in the compromise of all of my email and financial accounts.

The key to the attack is your cell phone number and the weak link is your cell phone operator, in my case Verizon. Hackers called into Verizon 13x over the next 3 hours, pretending to be me and trying to port my number to a new device. They did not have my “pin code” and were routinely denied, which prompted a warning call from Verizon about switching to a new device. I personally spoke with Verizon and told them this was not me and that I was under attack from hackers and to put my account on high alert. I requested a second layer of protection on top of the pin code and asked that no changes be made to my account over the next 24 hours. Terrified, but aware of the threat, it was my understanding Verizon would protect me, but this would not be the end of it.

Less than 24 hours later, I was suddenly signed out of all my email accounts. My phone lost service. I realized I was under attack. Even after I flagged my account with Verizon for suspicious activity/potential hacking, the hackers continued to call in to Verizon over 16 more times before finding a weak link in customer service who allowed a person calling in pretending to be me bypass the security pin code requirement and port my number to a new device. The hacker used nothing more than some clever social engineering from my public profile.

Once they had full control of my cell number, it was all over. They were able to reset all of my passwords to my email accounts, which had my cell phone number linked to it as a password recovery method. As they took control over my email, they were able to reset the passwords to every financial account I had. I’m not going to get into the details about what was compromised, but I was able to regain control over my accounts by moving quickly, removing my cell from my email password recovery, and using *611 to call Verizon over wifi to port my number back to my original device which they never should have allowed to happen in the first place.

This entire experience was incredibly terrifying, but I learned some critical lessons for cryptocurrency ownership and general digital security:

DO NOT use your phone number as a password recovery method from your email. The cell phone operators are behind the curve. Between call centers and unmotivated employees that are the gatekeepers to your personal info, they do not have proper security in place to protect your account
Use a 2 Factor Authentication(2FA) like Google Authenticator to secure your accounts. Google Authenticator is an application that implements two-step verification services using a Time-based One-time Password Algorithm. This saved me ass and will save yours too. Highly recommend its use.
NEVER, EVER EVER talk about owning Bitcoins, or any crypto in the public domain. Talk positively about it yes, but be careful with your words as you can become a target to sophisticated hacker programs using bots and crawlers to scrape social media for new targets.

The good news after all this is that now I feel more secure and in control of my personal information, accounts and security than ever before. If you want to get a head of this too, follow my recommendations above and read the following detailed posts here and here about this sophisticated hacking scheme.

Stuff worth reading

Investing Legend Calls Cryptocurrencies “Biggest Bubble Of A Lifetime”… But also believes Bitcoin can reach $5 Trillion in 5 years — NewsBTC , Zero Hedge

New York Preschools Accept Bitcoin and Ether for Tuition Payments — CoinDesk

Scaling Ethereum to billions of users — Medium/FredEhrsam

Bitcoin development similar to 1800’s Gold rush — CoinTelegraph

FBI: Hackers Extorted $1.33bn to cyber criminals last year, $28 Million in Cryptocurrencies — BTCM

The Road to Segwit Activation — UASF, Segwit2x and Segwit Signalling Explained (bitcoin scaling) — Medium

Barclays Talks Regulators Into Bringing Bitcoin, Altcoins Into Financial Play — CoinTelegraph

The IMF urges banks to invest in cryptocurrencies — Investopedia

As inflation rises to triple digits and the crisis deepens, Venezuelans turn to Bitcoin as a safe haven — B TCManager

China’s central bank is testing a prototype digital currency — MIT Review

Blockchain: the new technology of trust (this is a well put together interactive primer on blockchain) — Goldman Sachs

Daimler AG (yes,https://tezos.com/pdf/position_paper.pdf the car company) issues €100 Million Corporate Bond in Blockchain Trial — CoinDesk

Price Action

BITCOIN (BTC) was down -$183.53 (-6.74%) this past week with total volume of over $ 1.86 B . The price saw a high of $2,751.64 last Friday, June 23 and a low of $ 2,309.63 on Tuesday, June 27.

ETHEREUM (ETH) was down -$30.67 (-9.36%) this past week total volume of over $1.86 B . The price saw a high of $330.28 last Friday, June 23 and a low of $209.55 on Monday, June 26.

Stats

This is a chart of Ethereum’s recent run (and correction) overlayed against Bitcoin’s famous run up in 2013 before crashing and burning. Will Ethereum follow Bitcoin’s post crash trading pattern? only time will tell….. h/t Chris Burniske @ARKblockchain

New user growth is exploding. Coinbase, the most popular site for new buyers of Bitcoin and Ethereum has added 1,000,000 new users alone in the last 30 days. Thats insane growth and it doesn’t seem to be letting up. h/t Alistair Milne @alistairmilne

Initial Coin Offerings (ICO’s)

Everyone’s talking about them and every Tom, Dick and Harry is launching one. A recent hedge fund just launched $100mm fund specifically to invest in them?!?!? So what the hell are ICO’s anyways?!?!?

ICO’s or tokens, are the driving force between a new phenomenom known as the protocol economy, a derivative of blockchain technology. The beauty of this new protocol economy is that its open and egalitarian, allowing anyone to participate and contribute work or a scared resource for a reward. In the Bitcoin world, miners provide computing power and consensus to earn Bitcoin which are released every 10 minutes while consumers like me pay a price to purchase Bitcoins in order to access the network and make use of its services(or invest in its future perceived value).

The most fascinating design of these token based networks or protocol economies is that the real value produced within each of these developing economies is the network itself. To organically grow a network and achieve the network effect, incentives must be set up correctly and the network must be well funded with initial capital at inception. ICO’s or token pre-sales, have become the de facto industry response to fund development by offering pre-mined tokens to the general public for sale.

Right now, ICOs have been popping off the shelf left and right like its the wild wild west. Some are worthy of their distinct underlying technologies and potential network value while some are nothing more than get rich/take all the money you can scheme with no products, scant development teams and fancy white papers. Nevertheless, the market is developing, a new token is being generated every couple of days and there is money to be made… Hopefully I’ll be able to guide myself and you through this wild new industry.

Links I’m reading on tokens:

Easiest path to riches on the web? An initial coin offering — NY Times
What I look for in cryptocoins — Blog
ICO Tokens, Buyer Beware — Fred Wilson, USV
Economics of Entangles Tokens — Medium
Pantera Capital barrels ahead with $100mm ICO fund — T ech Crunch

White papers I’m reading:

IOTA — Economy of Things (extra credit: primer w/ slides)
Tezos — the self amending crypto ledger
Kin — A decentralized ecosystem of digital services for daily life (by KIK)

Noteworthy things this week

Tokenize, has launched a sharp looking biometric-based wearable ring to rule all your passwords, make payments, power up a computer and part doors — all with a wave of one magic finger. On its own the ring costs $249 and is available in three finishes. Watch the video below:

Twitter Spotlight

Follow Naval Ravikant and read more about his thoughts on the ability for Bitcoin to destroy tyranny in the modern world here — Forbes

Consider this comment and think about all the times you heard about an exciting new technology, product or team but didn’t do anything about it because you didn’t quite understand it or thought it was too risky…

If there are any lessons to be learned or words to live by when it comes to Bitcoin and crypto assets its the above. Stay safe…. and #HODL (hold on for dear life)

That’s it for this week. If you liked what you read, share this with your friends and colleagues. I’m hoping to contribute weekly and if you want to subscribe directly to Crypto Bits, my Bitcoin/Crypto newsletter you can subscribe directly HERE.

-Adam