The Fall of Constantinople — Part II

Market Report: 16th Jan. 2019 — Subscribe to our newsletter.

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CRYPTO NOTE

The daily view from our desk

Still thinking about that career change? Why not try your hand at driving a taxi, just ensure you don’t pick up any unruly passengers who kick you out of the driver’s seat and yell ‘my turn’. Or how about sports commentary? Please be aware that other people are listening so try not to mistake a group of dwarves for children. Or how about PM? Nope, didn’t think so.

THE FALL OF CONSTANTINOPLE — PART II

Even though no vulnerable smart contract was found, a vulnerability still exists

We didn’t anticipate Monday’s newsletter title could have been so prescient, even if for a slightly different reasons. Instead of falling prey to rogue miners, Ethereum’s Constantinople upgrade fell to a security vulnerability — found by ChainSecurity in a last-minute audit. In brief, one of the five features Constantinople was going to introduce was cheaper gas costs. But the code for this update enabled attacks on smart contracts.

The mechanism behind such vulnerability is akin to that of the infamous 2016 DAO hack — called a reentrancy attack — as technically explained in the above post by ChainSecurity and in layman’s terms by Pete Humiston here. As a consequence, the Constantinople hard fork was postponed during a development call that took place yesterday by 8pm UTC. The new date for this system-wide upgrade to Ethereum will be known sometime on Friday.

THE RISE OF CRYPTO TWITTER

Despite multiple Telegram & Discord groups, Twitter is the cryptosphere

Curiously, this vulnerability served to inform us of two things. Firstly, exchange hacks are no longer a reason for bears to short the market, as trading was going on smoothly for hours after it discovered Cryptopia — a small New Zealand-based alts-focused exchange had been hacked in excess of £3 million, as Larry Cermak overviews. Secondly, Crypto Twitter is still the predominant means of exchange of information in this space.

The natural consequence of this is that the most connected on Twitter are more important than the least social ones. How so? The vulnerability was publicly disclosed at 4:11pm UTC on Chain Security’s Medium, as asked by the Ethereum Foundation — previously aware of it through its bug bounty program. The CTO of Chain Security tweeted about it ten minutes later. The decision to delay the upgrade officially arrived at 8:08pm UCT. But only when CoinDesk broke the news to its wide audience at 8:19 UTC that most became aware of it, as evidenced by the 6.6% dump ETH faced at exactly 8:30 UTC, followed by a 2.2% bitcoin drop just 3 minutes after. Oh, the bots!

WHAT YOU CAN’T MISS TODAY

Don’t leave for the weekend what you should read today

▪ ByteSizeCapital warns traders “not to get burnt by the MimbleWimble hype”. Check their case study of fair-launch Proof-of-Work coins to understand why.

▪ Additionally, @hodlonaut reminds us of Grin’s high supply inflation rate during its first year. And Udi Wertheimer jokes with “the plebs cheering for Grin privacy”.

▪ Back to Ethereum, James Prestwich wrote a great and simple engineer’s guide to ETH 2.0, or “What to Expect When ETH’s Expecting”. Recommended read here.

▪ As for the Bitcoin world, the long-waited Bakkt exchange announced that despite the government shutdown it’s still working hard and had made its first acquisition.

▪ If you are interested in ways to kickstart cryptocurrency adoption, Eric Wall suggests moving from focusing on the unbanked to focusing on children. Learn why here.

▪ Lastly, good cryptoasset conferences are back in Europe! Organised by Melonport, M-1 has world-class speakers and will take place in Zug in February. Apply here.

QUOTE OF THE DAY

Boring trading ranges doesn’t mean boring markets. Just look at all the fighting.

“Jesus, the paid group owners are fighting among each other now. BTC really needs to get out of this eternal range.”