monero - Pwim.Net

IRS Hoping to Deanonymize Monero and ZCash Privacy Coins to Prevent Cybercrime

The Criminal Investigation Division (CID) of the Internal Revenue Service (IRS) is actively hiring private contractors to study and analyze privacy coins, as there has quite been a lot of fraudulent activities revolving around their usage.

Monero — a Popular Choice for Fraud

While the world has undergone coronavirus cybercriminals have been hard at work conducting their habitual illicit operations with the help of privacy coins.

Monero (XMR) and Zcash (ZEC) are quite an attractive option for cyber scammers, as they offer more anonymity and privacy than Bitcoin. The IRS is hoping to eventually deanonymize these privacy coins in order to put a halt to cyber fraud.

Why is Monero in Cybercrime?

XMR currently stands at the top of the list, for the most private cryptocurrencies on the market. Monero transactions operate on blockchain technology and are harder to trace, due in part to its ring signature and stealth addresses. Also, since Monero’s ledger is easy-to-access and is public, it is a popular choice that cybercriminals choose in order to carry out their illicit activities.

Zcash a Close Second

Another privacy coin that IRS is hoping to further investigate is Monero’s counter rival, Zcash. ZEC operates by using an anonymity tool called Zero-Knowledge-Proof, which allows users to transact with each other without revealing their true addresses to anyone.

In other words, this makes it hard for the receiver to trace and figure out the identity of the sender, and vice-versa. Because of its end-to-end-encryption property, Zcash users can remain anonymous despite conducting numerous online transactions.

Privacy Coins and Cybercrime

Privacy coins, such as Monero and Zcash, are common cryptocurrencies used in cybercriminal rings. In contrast, Bitcoin, which offers no anonymity, is less attractive to cyber scammers.

Depending on the privacy coin, anonymity levels differ. This type of cryptocurrency is attractive to cybercriminals, because it obfuscates the transacted amount, wallet addresses, the identities of both sender and receiver; it is also hard to trace the transaction trail.

Because of the anonymity offered by privacy coins, fraudulent activities such as tax evasion and money laundering are common with Monero and Zcash.

How the IRS Hopes to End CyberCrime

Based on the Request for Information (RFI) posted by the IRS Criminal Investigation program, private contractors working for them have developed software used to detect suspicious online transactions.

Illicit activities reported by various law enforcement agencies in the past will be gathered and analyzed in detail to prevent future cases of phishing and fraudulent behavior.

US law enforcers are also looking to come up with more innovative technological strategies to trace privacy coins, layer 2 off-chain protocol networks, and side chains.

Image source: Shutterstock

Crypto for Sex: Blockchain Takes Off in the Adult Entertainment Industry

Cryptocurrencies have become increasingly popular in the adult entertainment industry, as it can guarantee a high level of anonymity to its users, especially for pornography-related businesses.

Anonymity and Privacy

Many adult entertainment websites have created new ways users will be able to protect their identity details through crypto payment systems. In a research conducted by the studio VogoV last year, 470 adult video sites, 50 webcam platforms, and 35 sex shops worldwide now accept cryptos as a form of payment. Dash, Monero, and Zcash are considered to be the best coins for private transactions for adult content sites.

Cryptocurrency transactions are recorded anonymously on a decentralized public ledger, making it challenging to track a person’s pornography habits. For the adult webcam industry, transparency and privacy are the most valued features of crypto, as provides authenticity and parties are known only by online handles and payment addresses.

There is a fear that people in banks or homes will be able to tell which kinds of adult materials a user consumes through their credit card bills. Getting caught viewing or purchasing adult content may cause significant legal and social risks, especially in certain jurisdictions.

The increasing interest in cryptocurrencies being used in the adult entertainment industry is a signal that cryptos are here to stay.

SpankChain

SpankChain is an Ethereum based cryptocurrency payments processor and is focusing on building blockchain-based economic and technical infrastructures for the adult entertainment industry.

SpankChain recently partnered with the adult entertainment industry fan platform, JustFor.Fans and an anonymity service that connects models with clients via Skype, SkyPrivate. The partnership allowed for a new service, SpankPay, which will enable users to pay with instant transactions with different cryptocurrencies, including Bitcoin, Ether, Litecoin, ZCash, and Monero. The merchants will receive a 0.5% processing fee when users use the service.

JustFor.Fans creator, Dominic Ford, said: “Using SpankChain, we don’t have to worry about being shut down due to the fact we are an adult company. We’d much rather support our fellow adult solution providers than use outside solutions that are potentially not adult-friendly.” CEO of SkyPrivate also stated that this partnership ensures individuals are accorded equal rights and payments for their services, mostly focused on sexting services and adult models service e-commerce platforms.

Pornhub

Appealing to the privacy concerns of its users, the leading adult entertainment website Pornhub also started accepting crypto payments and began a partnership with Verge, as well as adding TRON and Zcash as payment options.

“Here at Pornhub, it’s important that we cater to our users’ ever-changing payment preferences and, as such, that means accepting cryptocurrencies as a payment method, which provide users with anonymity and security,” Corey Price, vice president of Pornhub, said at the time.

Pornhub also partnered with PumaPay to enable recurring cryptocurrency payments for its subscription service.

CamSoda

Known as one of the world’s most popular adult entertainment websites, ranking in the top 4000 websites, CamSoda started to accept cryptocurrency payments for various features on its platform.

Users on the platform can purchase tokens on the website using a variety of cryptocurrencies including Bitcoin, Litecoin, Bitcoin Cash, Ether, TRON, Monero, and Zcash. Data shows that 1% of CamSoda users already use cryptos as a payment solution, which was more than initially expected.

Bitcast, one of the platforms developed by CamSoda in December 2018, allows users to combine interactive sex toys with the performance of the best cryptos. CokcBlockchain, which was launched in March 2018 by CamSoda, is a platform that allows users to earn cryptos in exchange for their nude photos.

Strippers & Bitcoin

The Legends Room, a strip club in Las Vegas made the first move allowing clients to be able to pay secretly with cryptocurrencies. The strippers have temporary tattoos of QR codes where clients can scan and pay electronically by using cryptocurrencies, mostly Bitcoin. The Legends Room also launched their own ICO, the token known as LGD.

Images via Shutterstock

Crypto Exchange OKEx Delists Five Privacy Coins due to FATF Rules

Cryptocurrency exchange OKEx’s Korean arm will be delisting all five privacy altcoins including Monero (XMR), Dash (DASH), Zcash (ZEC), Horizen (ZEN), and Super Bitcoin (SBTC).

Announced by OKEx Korea on Monday, due to new international regulations, the support for transactions for the five altcoins will be ending on October 10, while withdrawal services will continue until December 10.

The decision to delist the five altcoins has been made considering that the coins violate the “travel rule” of the Financial Action Task Force (FATF).

As the five altcoins focus on privacy, the coins do not fulfill the requirements under the “travel rule” of the crypto guidelines issued by the FATF, which requires exchanges to collect and transfer customer information during transactions.

The customer information includes location information, the beneficiary, and the originator’s name, and account numbers. The privacy coins do not allow the collection of this information; therefore, the support must end for the five altcoins.

Currently, it still remains unclear whether these restrictions will be applied globally for the exchange.

Image via Shutterstock

Bitcoin, Crypto and Porn: Will the Adult Industry Boost the Market?

Porn is a huge industry, according to research, as much as 40% of the internet is related to porn. 65% of all web traffic during peak hours is devoted to video and audio streaming.

Data of Porn every second;

28,000 People watching
$3 million being spent
372 people are typing the word “Adult” into a search engine

This is data by the second. The market is huge.

In America, all social media tweets from top platforms including Facebook can reach 30% of bandwidth, with streaming services like Netflix at 33.3%. They don’t come close to the adult entertainment industry numbers.

Porn globally is 40%. Think about that.

Crypto and porn partnerships to date

“SpankChain is a blockchain-based economic and technological infrastructure built for the Adult Entertainment Industry. By developing a framework, we provide sex workers with the core functionality necessary to create and operate a streaming or static content distribution application, while offering a range of services that provide enhanced functionality for these applications.“ — FAQ

They are offering an Ethereum ERC20 token but accept payments including bitcoin (BTC), Litecoin (LTC) and Monero (XMR).

Unfortunately, based on data seen on Coinmarketcap, the volume has been relatively steady but the price of the token continues to drop.

Crypto for Sex: Blockchain Takes Off in the Adult Entertainment Industry

Pornhub

A multi-billion-dollar company in this field is yet another that has entered into toying with crypto payment features.

Earlier this year, they partnered with Privacy based crypto platform Verge (XVG). Privacy tokens and this industry certainly make a lot of sense.

Verge has a larger token economy with a strong market ranking and open-source.

Pornhub had a reported 92 million visitors per day last year (2018) according to their analytics.

Data was also released stating that 1% of the user base paid in crypto. In response to this, Pornhub made further developments in partnership with crypto payment systems, PumaPay joining the billion-dollar company.

If the 1% continue to increase, what effect can it apply to the crypto markets?

Is adult entertainment a market for crypto?

“In 2016 enough porn was watched, that if we took all of the data and stored it on USB drives, the distance would get us to the moon.“—Original quote

It’s one way to get to the moon, right?

Mass adoption will take time, but if Crypto can ride the porn industry to the top, it might happen a little bit faster.

Currently the main cases against crypto include;

Ease of use
Design interfaces

In the very worst case, if this market can truly continue to grow, people would have every chance to test, improve and continue to develop our mind set of what cryptocurrency is.

If we are currently at 1% of this market with major players becoming more determined to adopt the technology, the future can only be a happy one.

What do you think? Is it a match? Or a left swipe?

Tell us in the comments below.

Image via Shutterstock

Amun AG: What are the Top Valuation Approaches for Altcoins?

We continue to explore the top Bitcoin valuation approaches stated in Part 1, which include NVT, NVRV, NVHR, Cost of Mining and Active Address method. In addition, we also looked at the field of altcoin valuation, including Ethereum, top privacy and payment coins.

Bitcoin Valuation

NVT/NVRV Ratio Method

The Network-Value-to-Transaction Ratio (NVT) measures the dollar value of on-chain transaction activity of a given crypto asset network relative to its Network Value. Its formula is as follows:

In the NVT approach, network value refers to all circulating units of a given crypto asset, which is similar to market capitalization of the stock. Value of on-chain transaction activity refers to the dollar value of transactions settled on the crypto asset’s blockchain. However, NVT is a lagging indicator and it cannot properly account for Bitcoin’s usefulness as a store of value.

The Network-value-to-Realized value (NVRV) measures the crypto asset’s realized value relative to its network value. Its formula is as follows:

Q1: What is the limitation of NVT ratio which can be addressed by the NVRV ratio?

A1: One limitation of the NVT ratio is that it tends to be a lagging indicator for Bitcoin’s price — Bitcoin’s NVT tends to reach a local maximum of six to nine months. After Bitcoin reaches its price peak. As such, it can be useful in ascertaining for a fact whether a bull or bear market had occurred but has little predictive power. Interestingly, the NVRV ratio seems to have a good amount of ability to predict the local minimum within a bear market — the point at which the market has bottomed out, for example in January 2019 — as these are typically periods where NVRV hits to below 1.

Q2: For NVRV ratio, it sounds very complicating to gather the information for Realized value, as it relates to the UTXO for the given Bitcoin was last spent. What measures can be taken to facilitate the gathering of such information?

A2: CoinMetrics is a great source for daily data on the NVRV metric for various UTXO-based coins. It would also be possible to write a simple script in SQL in one has a set-up that allows them to query blockchain data through a relational database — something like Google Bigquery. Data gathering for blockchains has never been easier!

Q3: For NVRV ratio, when are the high time preferences and low time preferences in 2019?

A3: According to woobull.com, Bitcoin’s NVRV peaked at 2.22 in late June 2019 and was at its low of 0.812 in January 2019. The higher the NVRV the more reason there is to suggest that the current’s market dynamic is being driven by those with high-time preferences — this is during price run-ups as we experienced in Q2 2019 — comparably, the periods where Bitcoin’s NVRV dropped below 1 signal that investors with high-time preferences no longer held significant positions of Bitcoin.

Cost of Mining

The Cost of Mining method assumes that the price of Bitcoin should be valued off the total cost of mining. The method also states that with the assumption of a competitive market, miners will produce until their marginal costs equal to their marginal product. The formula of Cost of Mining is as follows:

Source: Amun AG

Q4: Why does the result of the cost of mining method have a large deviation against other valuation approaches? Is it related to some of the key assumptions made?

A4: As mentioned earlier, the cost of mining is inherently problematic due to the endogeneity of difficulty variable — this explains why there is a large deviation against the other valuation approaches.

NVHR

The Network value to hash rate (NVHR) method measures the dollar value of crypto asset’s mining power or hash rate measured in terahashes per second (TH/s), relative to its Network Value. Its formula is as follows:

As defined in the Amun AG’s report, the network hash rate refers to the amount of computational power being used by Bitcoin miners to mine on the Bitcoin blockchain to help maintain Bitcoin’s economic security.

Q5: Is NVHR a valid valuation approach for cases such as hash war during the Bitcoin Cash hard fork?

A5: To some extent, yes. It can be argued that a decider of which crypto asset can be considered to be the ‘legitimate’ is the one that garners the most hash power following a fork— a variable which would show in the calculation of Bitcoin and Bitcoin Cash’s NVHR metric. However, it’s important to note that hash power isn’t the only way consensus is reached on which crypto asset post-fork can be considered the ‘legitimate one’; factors like community sentiment and infrastructural support are also major determinants.

Active Address Method

The active addresses method measures the number of individual Bitcoin addresses to transact or receive Bitcoin during a given time period. There are two ratios of this approach: Network value to Metcalfe’s Law (NVML) and Network value to Odlyzko’s Law (NVOL) and their formulas are as follows:

Source: Amun AG

Q6: What are the key differences between NVML and NVOL?

A6: The key difference between NVML and NVOL is the relationship that each ratio describes between the number of users within a network and the network’s value. NVML uses Metcalfe’s law which argues that a network’s value is proportional to the square of the network’s users; whilst NVOL uses Odlyzko’s law which states that a network’s value is proportional to the natural logarithm of a network’s users multiplied by the network’s users. As such, Odlyzko’s law models a network effect of adding new users as having diminishing returns as the network becomes larger and larger.

Valuation on Ethereum and other cryptocurrencies

Apart from Bitcoin, Lanre also shares with us some of the possible methodologies in valuing Ethereum, top privacy coins and payment coins like XRP.

Q7: Is relative valuation applicable to measure public blockchain protocols such as Ethereum, EOS and Cardano? What are the parameters?

A7: Many of the relative valuation metrics used in this report such as NVT, NVHR, and NVRV can be used for inter-crypto comparisons for assets such as Ether, EOS, and Cardano.

Q8: Do you have any appropriate valuation approaches in mind for privacy coins like Monero, Dash?

A8: One interesting metric that could be used to better understand the valuation for privacy coins would be the proportion of transactions on the network which are entirely private (in Zcash’s case, for example, the proportion of transactions that go from z-address to z-address). However, privacy coins share many similarities with an asset like Bitcoin from a valuation perspective and therefore can be valued in a similar way.

Q9: For valuation in Ripple and Stellar Lumens, do you think the remittance market will be the best comparable?

A9: Potentially, given that one of the ostensible use cases of XRP and Stellar is as a means to facilitate cross country payments like remittances. However, the question is over how exactly the crypto asset is involved in this process, that fact would determine whether the crypto assets can be used in the remittance market as a comparable.

BitBay Exchange Plans to End Market Trading of Monero on its Platform

As reported on BitBay’s site on Nov. 25, the cryptocurrency exchange platform will stop offering market support for the privacy-focused coin, Monero (XMR) starting from Nov.29, noting that buy or sell orders placed by the users will be canceled at the end of their support for XMR.

BitBay outlined that on Nov. 29, the company will stop accepting deposits in Monero. They noted that withdrawals will be blocked from Nov. 29 to about Dec. 5because of a Monero network fork, and by June 20, 2020, all possible withdrawals will be stopped permanently, and Monero will no longer be available on their platform for any form of transaction.

BitBay pointed that the anonymity features of XMR are subject to the end of transaction support because it supports money laundering, noting that Monero and other cryptocurrencies with the same anonymity features which make it difficult to track users have been already delisted on other cryptocurrency exchanges.

Expectedly, BitBay, as a licensed exchange, has to respect and comply with the market standards as it permits them to provide their clients with legal security, and the convenience of a secure exchange.

Image via Shutterstock

Fluffypony, the Master behind Monero Steps Down after 5 Years of Leadership

Riccardo Spagni, the lead maintainer of cryptocurrency Monero (XMR), has stepped down from his current position. Spagni, also known as Fluffypony, was the lead maintainer of the Monero project since 2014 when it first launched. According to an announcement, he will continue to be a part of the project but as a backup maintainer. ‘Snipa’, a steady contributor to Monero, will be the new leader of Monero. At present, it is unclear as to the reason for which Fluffypony has resigned though in the past he had expressed his thoughts on quitting the project, to quote, “I was the lead maintainer across all the projects, and at some point last year I was like: I can’t do this,’.

During an interview with Coindesk in May 2018, Spagni stated “I will always be an advocate for privacy, and Monero, a part of the Monero community, but my actual responsibilities by definition need to be reduced.” More specifically, Fluffypony’s other duties have also been delegated to other contributors, for example, approving announcement emails sent to members of the Monero community. Instead, he will be focusing on tasks such as engineering, administration, and server access.

Currently, Monero prices have dropped from $51 to $44 in these two days.

Image via Shutterstock

Ethereum's Vitalik Buterin Thinks Mining Monero on HTC Phones is a “Fool’s Game”

In a recent Twitter post, Vitalik Buterin, the co-founder of Ethereum blockchain, did not hide his feelings when it comes to the concept of cryptocurrency mining through the use of smartphones. He considers crypto mining via mobile phones as something still not possible with any real efficiency.

Ethereum’s Buterin Faults the HTC-Midas Labs Partnership

Vitalik tweeted: “Mining on phones is a fool’s game. Goes against everything we know about hardware economies of scale and more likely to trick users with false hope than help them.” In other words, Vitalik downplays the recent partnership deal between HTC and Midas Labs to enable users to mine Monero cryptocurrency on HTC blockchain mobile phones. On April 13, Taiwan computer manufacturing firm HTC collaborated with Midas labs, a designer of programmable blockchain mining chips, to enable Monero (XMR) mining on the HTC blockchain-enabled phones via DeMiner app, a Monero mining application developed by Midas Labs. The DeMiner app will likely be released in the second quarter of 2020 (April 1 – June 30). It will allow direct mining from the mobile phone because of its low energy consumption.

However, critics identified faults in the innovation, saying that it is fruitless and somehow worthless. They condemned the DeMiner app, stating that it would take an estimate of 37 years to earn a Monero cryptocurrency if a person mines on the smartphone every day. A series of condemnations continue over the ineffectiveness of the application, which explains why the founder of Ethereum, Vitalik Buterin, intervened and said that such initiative only gives users false hopes.

Buterin said that the idea of a mobile phone managing to mine stands as a contradiction of everything the cryptocurrency industry has learned. It spits in the face of the economies of scale, which has dominated in the cryptocurrency industry. Buterin describes it as a trick to give potential users false hope, rather than helping them. He highlighted that staking would rather work well on smartphones, describing it as quite promising. He mentioned that staking on smartphones does not require any particular resources, and the cost/benefit ratio is greater than the ordinary crypto mining.

However, there were mixed reactions on social media over Buterin’s remarks. Some people think that he underestimated the concept of mobile crypto mining, citing the cryptocurrency mining of Ardor that specializes in mobile phones. Others agree with his comments. But some people feel that mobile phones can maximize connectivity and crypto mining, including staking on smartphones in the future.

Blockchain Phones with Built-In Crypto Wallets

Huobi Global is among the first crypto exchange platforms that launched a new version of smartphones, which include cryptocurrency or blockchain features like DApp store, cold-storage wallet, crypto wallet …etc. The affordable blockchain phones have features like blockchain-related apps and are alerting users when the price of specific crypto increases or decreases. The phones have an optional cold storage wallet with in-built cryptocurrency money wallet app. However, users cannot mine every kind of cryptocurrency using a smartphone. The process may not be profitable because of the low processing power of mobile devices. Buterin’s comments are right because crypto mining is normally a highly sophisticated and complex exercise that average smartphones may not handle.

Image via Shutterstock

Norwegian Police Arrest Millionaire For Wife's Murder After Two-Year Goose Chase for Kidnappers Demanding $10M Monero Ransom

In October 2018, a Norwegian millionaire named Tom Hagen reported that his wife had been kidnapped and presented a ransom note to police that demanded $10 million worth of the privacy-centric cryptocurrency Monero.

According an article published by Reuters, Hagen was arrested on April 28 on the suspicion of murdering his own wife, Anne-Elisabeth Hagen, although his lawyer has denied the allegations.

Although Hagen has not officially been charged with any crime, Police Legal Counsel Aase Kjustad Eriksson was quoted in the report saying that police now have “reason to suspect Tom Hagen of murder or conspiracy for murder.”

But what about the $10 million Monero ransom?

According to Police Inspector Tommy Broeske, “There was no kidnapping, no real negotiating counterpart or real negotiations.” Inspector Broeske said there appears to be substantial evidence that the investigation has been intentionally misled.

Hagen’s wife, Anne-Elisabeth, was reported missing from their Oslo home in late October last year. While Hagen is considered to be one of the richest people in Norway, with a value of over $150 million, it is unknown how much Bitcoin or other crytptocurrency he may hold.

Hagen’s lawyer Svein Holden denied the allegations and said that, “He (Hagen) strongly maintains that he has nothing to do with this.”

Under Norwegian law, people may be held under suspicion of a crime prior to any formal arrest being made. Hagen will appear in court on April 29.

Hacking Ransomware Group REvil Threatens to Strike Again

Previously known to be the company that hacked entertainment media firm Grubman Shire Meiselas & Sacks, the cyberattack gang REvil does not appear to be giving up their devious activities any time soon.

Their new scheme once again entails ransomware but this time the demands are targeting big-shot celebrities, such as rap star Nicki Minaj, NBA superstar Lebron James, and Mariah Carey.

Grubman Shire Meiselas & Sacks

The reputed American law firm Grubman Shire Meiselas & Sacks caters mainly to Hollywood celebrities. Among other well-known entertainment performers, they are the official legal representatives of known celebrities such as Lady Gaga, Elton John, Mary J. Blige, and many more.

News of the cybercriminal activities pertaining to REvil group surfaced last month. The hacking group boasted that it had previously managed to hack and extract a massive amount of encrypted data from a reputed American IP law firm, and stolen data from the US navy. They then proceeded to auction off the data that was illegally stolen during their ransomware attacks.

In fact, their criminal gains amounted to a cumulative sum of 756 gigabytes worth of documents, most of which contained sensitive information on stolen music and private information on the entertainment biz.

REvil ransomware group has previously been known to target companies such as Travelex, which guarantees the lowest transactional prices for foreign exchanges in the United States of America.

Revealing the devious schemes behind REvil

REvil is notorious for demanding popular cryptocurrency payouts such as Bitcoins, in exchange for a release of the stolen data. However, the ransomware gang has decided to switch to heists targeting Monero (XMR) payouts. These are known to be more safe, secure, and highly untraceable.

What is Monero?

Monero is a cryptocurrency that was founded in 2014. It resulted from a fork of ByteCoin. With Monero, the advantage is that account privacy and fund transactions are completely in the power of the crypto user himself.

The ransomware group has revealed future plans that include hacking President Donald Trump. Judging by the POTUS’ reaction to Bitcoin, ransomware hacking threats such as Revil’s may lead to an angry Twitter comment or another huge reaction of the POTUS.

Trump has previously been known to be quite vocal about his reservations on cryptocurrency trends, such as Bitcoin. This was evidenced in a Tweet he made in July 2019, that talked about their high volatility and thin air concept.