The St. Petersburg City Court on Tuesday canceled a decision of the court of first instance to block Internet sites that post information about bitcoin, the joint press service of the city courts reported, according to Russia Today. The regulation of bitcoin and cryptocurrencies continues to draw conflicting actions among Russian government officials. In May, the Oktyabrsky District Court of St. Petersburg decided to block websites that post information about bitcoin. The St. Petersburg prosecutor’s office appealed the decision in order to supervise the execution of laws on “especially regime objects” and acting on behalf of the Russian Federation and an indefinite group of individuals. The regional department of Roskomnadzor was the interested person.
Upon completion of its first phase of inspecting cryptocurrency exchanges, Japan’s financial regulator is reportedly set to issue business suspension orders for unregistered exchanges. According to the Nikkei, Japan’s Financial Services Agency (FSA) is due to announce punitive measures that include business suspension orders for some cryptocurrency exchange operators. The country’s financial regulator has increased its scrutiny of exchanges and trading platforms following the $530 million hack of Tokyo-based exchange Coincheck in late January. One of 32 exchanges operating in the country, Coincheck is notably not among the 16 operators registered with the regulator, under new legislation. As reported at the time, the financial regulator confirmed it would conduct on-site inspections of all domestic exchanges to check their internal auditing practices, anti-money laundering measures and cybersecurity infrastructure to ensure robust security measures to safeguard customers’ assets. The regulator has now completed its first phase of inspections, the Nikkei report confirms, with the FSA set to issue ‘business suspension’ orders for an ‘unspecified’ number of exchanges.
Merriam-Webster has added 850 new words in its dictionary along with their definitions. Three of these words include cryptocurrency, blockchain and initial coin offering (ICO).
According to the post last updated on Mar. 3, cryptocurrency is:
any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions
First Known Use: 1990
Blockchain is defined as:
a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network; also : the technology used to create such a database
First Known Use: 2011
While, ICO is:
the first sale of a cryptocurrency to the public conducted for the purpose of raising funds (as to support a start-up)
— called also ICO
First Known Use: 2014
Ethereum is based on Bitcoin’s protocol and its Blockchain design but is tweaked so that applications beyond money systems can be supported. The two Blockchains’ only similarity is that they store entire transaction histories of their respective networks, but Ethereum’s Blockchain does a lot more than that. Besides the history of transactions, every node on Ethereum network also needs to download the most recent state, or the current information, of each smart contract within the network, every user’s balance and all the smart contract code and where it’s stored.
Essentially, the Ethereum Blockchain can be described as a transaction-based state machine. When it comes to computer science, a state machine is defined as something capable of reading a series of inputs and transitioning to a new state based on those inputs. When transactions are executed, the machine transitions into another state.
Every state of Ethereum consists of millions of transactions. Those transactions are grouped to form ‘blocks,’ with each and every block being chained together with its previous blocks. But before the transaction can be added to the ledger, it needs to be validated, that goes through a process called mining.
Mining is a process when a group of nodes apply their computing power to completing a ‘proof of work’ challenge, which is essentially a mathematical puzzle. The more powerful their computer is, the quicker it can solve the puzzle. An answer to this puzzle is in itself a proof of work, and it guarantees the validity of a block.
A lot of miners around the world are competing with each other in an attempt to create and validate a block, as every time a miner proves a block new Ether tokens are generated and awarded to said miner. Miners are a backbone of the Ethereum network, as they not only confirm and validate transactions and any other operations within the network but also generate new tokens of the network’s currency.
Advantages of Ethereum
Ethereum platform benefits from all the properties of the Blockchain technology that it runs on. It is completely immune to any third party interventions, which means that all the decentralized apps and DAOs deployed within the network can’t be controlled by anyone at all.
Any Blockchain network is formed around a principle of consensus, meaning that all the nodes within the system need to agree on every change made within it. This eliminates possibilities of fraud, corruption and makes the network tamper-proof.
The whole platform is decentralized, which means there is no possible single point of failure. Hence, all the apps will always stay online and never switch off. Moreover, the decentralized nature and cryptographic security make the Ethereum network well protected against possible hacking attacks and fraudulent activities.
Disadvantages of Ethereum
Despite the fact that smart contracts are meant to make the network fault-proof, they can only be as good as the people writing the code for them. There is always room for human error, and any mistake in the code might get exploited. If that happens, there is no direct way to stop a hacker attack or an exploitation of said mistake. The only possible way of doing so would be to reach a consensus and rewrite an underlying code. However, this goes completely against the very essence of the Blockchain, as it is supposed to be an unchangeable and immutable ledger.
‘The DAO,’ which is a name of a particular DAO launched on April 30, 2016, was attacked and more than 3.6 mln Ether tokens were stolen from it. The attacker exploited a ‘recursive call bug’ in the code, essentially just draining the funds from DAO into a ‘child DAO,’ that had the same structure as The DAO. The loss of a massive chunk of The DAO’s funding wasn’t the only consequence of the attack, as it basically undermined the users’ trust in the whole Ethereum network, with Ether’s value falling from over $20 to under $13.