Cryptocurrency Business Use “Reverse Merger” to Enter Mainstream Markets

Cryptocurrency Business Use “Reverse Merger” to Enter Mainstream Markets

Staying true to their creative nature, several cryptocurrency businesses, especially the exchange platforms are following the “reverse merger” approach to move close to mainstream markets, reports South China Morning Post, February 22, 2019.

Taking the Back-Door Entry

Leave it to the brains in the crypto industry to circumvent any obstacle thrown their way.

An increasing number of cryptocurrency exchanges are inching closer to mainstream financial markets by purchasing listed companies and then aiming to raise firms by camouflaging as a veteran of the traditional financial services industry they once despised.

The latest example of the aforementioned approach is February 11, 2019, deal which saw the US-based crypto broker-dealer Voyager Digital sneak its way into the Toronto Venture Exchange after it acquired a controlling stake in a mineral exploration company called UC Resources.

A major upside to this “back door” approach is that it doesn’t require the companies to go through the excruciating and tiring process of a full initial public offer (IPO).

Fei Ding’an, managing partner at Ledger Capital, a digital asset investment firm said:

“Many [cryptocurrency] exchanges have put a lot of strategic effort into trying to legitimize their operations and their reputations, and for some there’s an assumption that having some exposure to the traditional public market will help.”

In fact, Voyager Digital isn’t the first firm to follow the relatively less straining route to mainstream markets.

In January 2019, Star Xu led OKC Holdings acquired 60.5 percent stake in a Hong Kong-listed construction firm named LEAP Holdings for $61.69 million.

Regaining the Lost Confidence

Exposure to mainstream markets could help re-establish the confidence lost in cryptocurrency businesses in recent times.

The industry, especially the cryptocurrency exchanges, have had their goodwill tarnished continually due to unfortunate events like hack attacks, money laundering, and security mechanism failures.

BTCManager reported on September 19, 2018, how the New York Attorney General Barbara Underwood’s office slammed cryptocurrency exchanges like Binance,, and Kraken for running their operations without obtaining the mandatory licenses and breaking the city’s digital currency regulations.

On a more recent note, the dramatic story surrounding Canada’s Quadriga CX has again highlighted the need for a robust and secure exchange platform that puts customer’s safety at the top of their priority list.

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51% Attacks for Rent : The Trouble with a Liquid Mining Market

Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.


In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.

But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.

There are a few things preventing this from happening:

  • Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
  • Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
  • Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.

But times are changing. The mining market is becoming more liquid.

Why is the liquid mining market growing?

Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.

There are two major forces driving this.

  1. The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
  2. The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.

Rent-a-miner attacks are already possible

Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.

Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.

A few caveats:

  • The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
  • Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.

Coins vulnerable to rent-a-miner attacks

Ranked by Market Cap

ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.

Vulnerable coins assuming 2x the rental capacity

Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.

But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.

Vulnerable coins assuming 5x the rental capacity

A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.

So what if 51% attacks are possible? How do attackers make money?

Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.

The mechanics of a double spend attack

When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.

To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.

If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.

Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.

Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.

Where to spend the coins? Exchanges are likely the target

For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.

The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.

Here’s what the attack would look like:

  • Choose a target network that looks profitable
  • Accumulate a significant amount of coins on the target network
  • Rent NiceHash hashing power and silently grow the stealth chain
  • Trade these coins on an exchange for another currency e.g. BTC
  • Withdraw BTC to another wallet.
  • Broadcast the stealth chain to the network
  • Get the initial coins back
  • Repeat with a different exchange.

How exchanges will likely respond

As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.

Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.

Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.

Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.

How cryptocurrencies will respond

Altcoins may find new ways to combat this threat by:

  • Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
  • New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.

Big is beautiful

How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?

Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?

To quote a Hacker News comment:

“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”

Oil slick image via Shutterstock

Coinbase CEO on Misconceptions About Cold and Hot Storage of Private Keys


On Thursday (February 21st), Brian Armstrong, Co-Founder and CEO of Coinbase, decided to address, in an article for Fortune, four common misconceptions about cold and hot cryptoasset custody solutions.

Armstrong started by explaining that “hot” in this context means online (i.e. connected to the internet) and “cold” means offline (i.e. not connected to the internet); naturally, the former implies a much greater risk of attack by hackers.

First, Armstrong says that it is not true that “you can’t trade crypto using funds in cold storage.” In fact, he says, some crypto custody solutions, such as Coinbase Custody, “let you trade over-the-counter (OTC) using delayed settlement,” which means that they let you trade the cryptoassets they are holding for you in cold storage, and the actual transfer out of cold storage only happens after the trade has been executed. 

Another company that allows this is BitGo, which announced on January 16th that it had partnered with Genesis Global Trading (one of the largest crypto over-the-counter brokers) to allow BitGo Trust clients to “easily execute buy and sell orders without having to manage keys or move their assets from the industry’s most secure cold storage.”

BitGo launches partnership with Genesis Global Trading. Now BitGo clients can Buy/Sell with Genesis directly from cold storage

Second, Armstrong notes that it is wrong to believe that “you can’t ‘stake’ (or earn interest on) funds in cold storage.” One example of a crypto project that uses a Proof-of-Stake (PoS) consensus mechanism with a staking model that works with cold storage is Tezos, and he explains below:

“… you can delegate your funds in cold storage to a “baker” and earn interest. The baker, which acts as the staking equivalent of a miner in the Bitcoin example, keeps a smaller percentage of funds online—and those don’t need to be customer funds. In other words, customer funds are kept safely offline but are still fully able to participate in the network, earning a yield for the customer.”

Third, the Coinbase CEO argues that cold storage does not mean “relying on a single authorized user who could lose funds,” and that a “well-designed crypto custody solution doesn’t rely on any single person,” rather using “multiple keys to achieve consensus and redundancy,” with larger transactions requiring more signatures.

Fourth, he explains that although hardware security modules (HSMs) as part of a custody architecture can provide very good security, they are not as quite safe as cold storage, which forces hackers to perform some kind of physical attack in order to get access to private keys.

Finally, he explains that there is a place for both hot and cold storage solutions:

“Hot storage is best when customers need real-time access to funds, measured in minutes or seconds. In exchange for this, there is some additional security risk, which can be mitigated, in keeping funds live on the Internet.

Cold storage is best when security is paramount, typically when storing larger amounts. As I mentioned above, you can still trade and stake funds in cold storage, but the price you pay is that the time it takes to withdraw funds is typically measured in hours. Depending on how difficult you want to make the withdrawal of funds that may be a pro, not a con.”


Featured Image Credit: Photo via

Old Meets Young: Pension Funds and Crypto Investment

Noelle Acheson is a veteran of company analysis and member of CoinDesk’s product team.

The following article originally appeared in Institutional Crypto by CoinDesk, a newsletter for the institutional market, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.


To the fanfare of vindication, the news dropped last week that two public pension funds were anchor investors in a blockchain fund managed by Morgan Creek. “The institutions are here!,” went the cry, “we knew it would happen!”. It echoed the chorus of jubilation that greeted the news late last year that Yale Endowment fund was dipping its sizeable toe into the blockchain sector via an investment in two crypto funds.

Much like that reaction, this one is overblown – but the news is positive, and highlights a few bigger-picture trends that point to increased institutional involvement.

Not quite

First, let’s look at why it’s overblown.

  1. Technically, it’s not “two public pensions.” It’s actually two separate sections of the same investment program (Fairfax County Retirement Systems).
  2. These pension funds are not investing in cryptocurrencies, they are investing in a blockchain venture fund, which will mainly take equity positions in startups. The fund can hold a relatively small amount of cryptocurrency (up to 15 percent) but currently does not do so.
  3. The amount being invested is small, only $21 million, which is less than 0.3 percent of Fairfax County’s total pension AUM. 15 percent of that (the maximum that can be allocated to cryptocurrencies) is just over $3 million, a tiny drop in the ocean when it comes to the overall market.
  4. It is not at all unusual for a pension fund to invest in venture capital. Pension funds like venture capital. It’s not just the above-average returns (CalPERS, one of the largest pension funds in the world, confirmed last week that private equity was its best-performing asset class both long- and short-term), much-needed given the lackluster expectations for other asset classes. It’s also that they get to “mark-to-model”, which means it is valued at the expected price, not the market price.

Prevailing winds

But here’s the part we can get excited about: We are talking about pension funds, typically the most conservative type of fund there is. It’s not that we have here a pension fund being brave – they’re not allowed to do that. It’s that we have here a pension fund that sees blockchain investments as mature enough that unexpected bravery is not needed.

Also, pension funds like long-term investments. This decision, therefore, sends the constructive message that blockchain projects are not a quick turnaround.

And it’s worth noting that these are not just any pension funds. Fairfax County is the most populous and one of the wealthier areas of one of the wealthier states.

Its pension payment outlook is far from rosy, however. The two investing pension plans (employees and police) are respectively only 70 percent and 85 percent funded – they don’t have enough assets to meet their expected future liabilities.

To complicate the situation even further, the aging population means that, by 2025, the area is likely to have more people on pension than employees. This makes the need to find sources of “extra” return – even if it means more risk – increasingly urgent.

What ails Fairfax County can be seen across the country.

In 2017, the median funding ratio of public pension plans in the US was just over 70 percent – some states are at 30 percent. Better returns are becoming less of a “nice to have” and more of an imperative – this means that the risk profile of pension funds (for better or worse) is likely to change over the coming years, which in turn will encourage managers to look more closely at alternative investments with low correlation.

It is also significant, but not surprising, that the first pension fund forays into blockchain investment came from the public sector. A report released earlier this month by the Centre for Retirement Research shows that, in the US, 72 percent of public pension portfolios are in “risky assets” (equities and alternatives), vs. just 62 percent for private plans. This is more logical than it seems: Accounting rules dictate that private sector use a bond yield as the discount rate; public sector plans can use the expected rate of return on their investments. The higher the risk, the higher the expected return, and the lower the necessary funding.

Shifting gears

So, while we can’t conclude that “the institutions are here” with this news – it’s not the turning point it may initially seem – we can expect to see more announcements like this as public pension funds around the US decide that blockchain-based investments, including crypto assets, have an acceptable – perhaps even desirable – risk profile.

Fund managers, especially conservative ones, tend to move as a pack, so this could happen relatively quickly. That doesn’t mean it will happen soon, though – the crypto asset market still needs some maturation in both infrastructure and liquidity. But the Morgan Creek announcement, plus a recent report from market researchers Cambridge Associates encouraging institutions to start looking at the sector, indicates that the shift has started.

Old and new image via Shutterstock

Bitcoin ‘Sextortion’ Scheme Netted Cybercriminals Over $330,000

Blackmailers have reportedly managed to rake in over $330,000 worth of bitcoin, the flagship cryptocurrency, through an email-based ‘sextortion’ campaign that has been ongoing since at least 2017, and saw its activity surge last year.

According to a report published by UK firm Digital Shadows, the cybercriminals received said amount from over 3,100 unique BTC addresses. The funds ended up in 92 different bitcoin addresses believe to belong to the same organization, that could reportedly be making an average of $540 per victim.

The firm’s report, first spotted by The Next Web, tracked a sample of 792,000 emails sent to victims. The ‘sextortionists’ reportedly sent them an email that would include a known password as “proof” they hacked them, and claimed to have video evidence of them seeing adult content online.

The threat was that the video would be published online, if a ransom in BTC wasn’t paid. Last year, Cornell University computer science professor Emin Gün Sirer warned potential victims to “never pay, never negotiate” with cybercriminals trying to extort them.

Per Sirer, the emails were being sent to every email account on the popular website haveibeenpwned, which shows whether emails addresses had their data leaked on well-known online security incidents.

A Sophisticated Operation

The UK firm’s report seems to show the ‘sextortion’ operation was a sophisticated one, as scammers were seemingly trying to hire more people to help them target high-net-work individuals.

These hires could be getting high salaries, up to $768,000 a year, if they had experience in network management, penetration testing, and programming. The cybercriminals have notably also been using social media to target their victims.

The scammers’ capabilities are said to have varied in skill, as while some struggled to distribute a large amount of emails that could get past email server or spam filters, others managed to show high levels of sophistication, with emails sent from accounts specifically created for the campaigns.

Moreover, these campaigns were launched on a global scale, as the servers the emails came from were in five different continents. The highest amount of emails came from Vietnam, Brazil, and India. These servers could, however, have been compromised by the scammers as well.

Fidelity Becomes First Financial Institution to Take Bitcoin Lightning ‘Torch’

lightning network fidelity investments digital assets Bitcoin

Fidelity Becomes First Financial Institution to Take Bitcoin Lightning ‘Torch’

Fidelity Digital, the digital assets arm of Fidelity Investments, has become the first financial institution to receive the so-called bitcoin payments ‘torch’ that is being relayed from user to user around the globe via Bitcoin’s Lightning network. 

Fidelity Becomes First Bank to Take the #LNTorch

With more than 27 million customers, Fidelity manages $7.2 trillion dollars in total assets. It’s the United States leader in 401(k) retirement savings plans and is one of the largest 403(b) retirement plan providers for not-for-profit institutions.

The investment giant announced it had received the #LNTorch on Friday, February 22nd from Tokyo-based and self-proclaimed ‘Bitcoin Maximalist’ who’s “interested in mining/trading,” Twitter user @Wiz who received it from Bitcoin entrepreneur, Charlie Shrem.

“Who wants to be the next torchbearer?” tweeted Wiz. “Reply with a LN invoice for 3.64M sats and I’ll choose who I deem to be the most trustworthy.”

The 3.64 million satoshis equate to about $142 USD at current market BTC price.

Fidelity Digital Assets then replied:

We and our research team at the Fidelity Center for Applied Technology have received the #LNTorch from @Wiz.

“Who should we pass it to? #LNTrustChain,” Fidelity asks, which is expected to launch its Bitcoin custody service next month.

Fidelity Becomes 229th Torch Bearer

As Bitcoinist reported, Lightning Torch has gained a surprising level of recognition in the few weeks it has existed. The initiative involves passing a lightning payment between nodes, with each receiving user adding 10,000 satoshis ($0.34) and passing on to a new node.

Fidelity Digital Assets becomes the 229th entity overall to get the torch, according to the official tracker website. Previous bearers included BitMexResearch, Binance CEO ‘CZ’ Changpeng Zhao, and TRON’s Justin Sun.

But, more importantly, Fidelity becomes the first financial institution to get its hands on the digital ‘torch.’

Fidelity digital assets bitcoin

This may not be surprising, however, as Fidelity has been spearheading the institutional plunge into cryptocurrencies over the past few months. In October 2018, the investment giant announced it would open cryptocurrency trading to its 27 million customers.

Therefore, participation in this payment relay will likely provide some valuable experience for Fidelity Digital assets that is looking “to create a full-service enterprise-grade platform for digital assets,” according to its founding head, Tom Jessop. He adds that:

…[f]amily offices, hedge funds and other sophisticated investors are starting to think seriously about this space.

It will also be interesting to monitor whether this nascent, albeit rapidly growing second-layer network, will be able to handle the relayed BTC payment as it changes hands and snowballs.

(Though, perhaps that may be the entire point of this whole thing, i.e. bringing awareness to this new technology as it’s already producing some unique use-cases.)

According to monitoring resource, there are currently 6561 reachable nodes and 29,777 channels on Lightning, offering a total payment capacity of 718.25 BTC ($2.85 million). The figures represent an impressive monthly growth of 26 percent in network capacity.

Will Elon Musk Be Next?

Bitcoinist reported that participants in the ongoing transaction relay have been urging Tesla CEO Elon Musk to paste an invoice and receive the torch.

This follows after Twitter CEO Jack Dorsey became the bearer to much fanfare earlier this month while hinting that Bitcoin Lightning payments may be coming to Twitter. (But you can kind of try this already.)

Will Elon Musk eventually take part in the Lightning torch relay? Let us know in the comments below!

Images courtesy of Shutterstock,

An Introduction to Bitcoin’s Scripting Language

An Introduction to Bitcoin’s Scripting Language

In the following introduction, BTCManager will investigate the simple, yet powerful, coding language used in the Bitcoin Network. The Bitcoin Scripting language, or Bitcoin Script, was designed with only a few functions in mind; it is compact, Turing incomplete, and stack-based. In this way, the language serves these ends efficiently and securely.

Despite its minimal functionality, in comparison to networks like Ethereum, it has nonetheless proven itself throughout a decade to be powerful enough to support transactions in value adequately.

Bitcoin Script and “Programmable Money”

The programming language behind the pioneer cryptocurrency is, in the eyes of many, a perfect example of Occam’s Razor.

It is elementary, even compared to pre-cryptocurrency coding languages. More importantly, Satoshi Nakamoto designed this simplicity intentionally. A language that has multiple capabilities and allows for complex transactions of data also allows for a greater number of attack vectors. Critics have explained that a language such as Solidity, while impressive in its scope, falls short as far as security goes.

Moving along this point, Bitcoin Script is Turing incomplete. By comparison, Solidity is Turing complete, meaning it can replicate any Turing machine or an abstract machine capable of autonomously following a particular algorithm. Grasping this concept, one can begin to understand how a smart contract operates.

Returning to the primary focus, Bitcoin Script does not offer this feature, or not in the same way, a deeper dive into smart contracts using the Bitcoin Blockchain will be the subject of later articles.

Bitcoin’s main use-case has always been cryptocurrencies and the transfer of value. The added characteristics of Turing complete languages were, thus, not necessary. That, however, does not mean Script is limited.

Furthermore, the limitations in Bitcoin Script prevents a “logic bomb,” or an infinite loop from being included in any single transaction. This restriction eliminates the possibility of a denial-of-service (DoS) attack on the network. The extent of these constraints, such as transactions that extend beyond merely sending a value to X and Y, will be covered in upcoming installments.

Characteristics of the Bitcoin Scripting Language

Bitcoin’s coding language uses “reverse polish” as a system of notation, meaning lines such as “3 + 4” will appear as “3 4+” with growing complexity. Another feature harks back to Bitcoin Script’s roots in “Forth-like.” This feature is relevant simply in that these two languages are both “stack based.”

An Image of the Numbers "3," "4," and the symbol "+"

Reverse Polish Language Image.

(Source: Wikimedia)

Stacks are a very common data structure which, in the words of Andreas Antonopolous, allows information on “top of the stack” to either “push” or “pop.” The former operation explains the process of adding information to the stack, while the latter describes removing information from a stack. Furthermore, the order in which information is popped or pushed follows the “LIFO” principal, or Last-In, First-Out.

Block Rectangular Blocks Pushing and Popping off of a Column

(Source: BlockGeeks)

An operation like “3 4+,” would behave in the following:

  • Push “3” on to the stack.
  • Push “4” on to the stack.
  • The “+” operator, takes these two parameters, pops them both off the stack, adds them together, then pushes the result back on the stack. (i.e., pop, pop, add, push)
  • The resulting operation leads, in this case, to a “7” on the stack and the program terminates.

In Bitcoin Script, this operation would follow the same steps, but would also include the prefix “OP” before each variable. Let’s next look into how all this new vocabulary comes together in a real Bitcoin transaction.

A Bitcoin Script in Action

The majority of operations are signature transactions. This includes payments, exchanges, and most workings involving public and private keys. For the sake of this article, let’s take apart an exchange between the author and his colleague, Eddie Mitchell. Here the author (sender) will specify the public key of Mitchell (recipient), who will redeem the bitcoin sent by specifying a signature using the same public key.

Strip of Green and Black Writing

(Source: Coursera)

Following this, the first two instructions of such a transaction are the signature and the public key used to generate that signature. This information is identified as “<sig>” and “<pubKey>” and pushed onto the stack. Mitchell determines these values as he is the recipient. This first half of the transaction is often called “scriptSig” or the “Unlocking Script.” In this section of the operation, there is also reference to a previously existing Unspent Transaction Output (UTXO).

The inclusion of the UTXO ensures that the author indeed owns the amount of bitcoin he is looking to send to Mitchell. The Bitcoin network completes this validation via miners and Bitcoin full nodes. In Mastering Bitcoin, author Andreas Antonopoulos explains it thusly:

“Each input contains an unlocking script and refers to a previously existing UTXO. The validation software will copy the unlocking script, retrieve the UTXO referenced by the input, and copy the locking script from that UTXO.”

The second portion of the transaction, the “Locking Script” or “scriptPubkey,” is then executed by the author. Based on the above image, the next instruction “OP_DUP” pops off the <pubKey> from the stack, duplicates it, then returns it to the stack.

Green Stack of Programming Operations in Black Writing

OP_DUP Instruction.

(Source: Coursera)

This top value, or the duplicate of the <pubKey>, is then cryptographically hashed by the “OP_HASH160” instruction and becomes “<pubKeyHash>.”

Green Stack of Programming Operations in Black Writing


(Source: Coursera)

The specific hashing function used for Bitcoin transactions is called SHA-256 (Secure Hash Algorithm) and is part of a larger group of functions known as SHA-2, which comes from a National Security Agency development in 1993. Other members of the SHA-2 family include SHA-224, SHA-256, SHA-384, and SHA-512 with each number representing the bit length of the message they produce.

The applications are vast within the field of information security, with the most relevant being Bitcoin and Haschash’s Proof-of-Work (PoW) consensus mechanism. The most notable feature of SHA-256 is its ability to prevent DoS attacks as mentioned above.

Cross-Coordinated Chart of Different SHA Formulations

(Source: ResearchGate)

Returning to the transaction between the author and his colleague, users still need to add another piece of data to the stack. This next bit of information is the public key that the author specified at the beginning of the transaction. It is needed to generate the signature to redeem the bitcoin requested.

At this point, there are two critical pieces of hashed data on top of the stack: The hash of the public key as specified by the author and the hash of the public key used by Mitchell. From there the “OP_EQUALVERIFY” command is engaged which ensures that the author has indeed used the correct public keys. Following a handful of failed bitcoin transactions in his early days, the author has triple-checked that the public keys are those of Mitchell. As the public keys do match, the OP_EQUALVERIFY command expends these data points. Users are now only left with a signature and a public key. The final step is to verify that the signature of this transaction is indeed correct.  

Green Stack of Programming Operations in Black Writing

Signature and Public Key Stack.

(Source: Coursera)

The Bitcoin scripting language is advantageous here as it needn’t draw from an extensive library to confirm the validity of the signature. All of this is built into the language.

Strip of Green and Black Writing

The “OP_CHECKSIG” instruction at the end, then pops the remaining two items off of the stack, and if the <sig> matches the <pubKey>, then the operation will be rendered valid.

Compare, Contrast, and Adding Complexity

Although the following introduction was brief, it should give a basic idea of how a Bitcoin transaction is executed. Building on this, developers and enthusiasts can begin experimenting with more advanced operations, which will be the subject of later briefs.

Upcoming articles that build on this will dive deeper into digital signatures (ECDSA), multi-signature operations, Pay-to-Script-Hash (P2SH), and Timelocks.

For more information about other blockchain languages, please refer to BTCManager’s coverage of EOS, Ethereum, and TRON programming platforms.

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【Blockchainin Korea】 BlockWater创始人 IssacLee: BlockWater的投资策略

布洛克科技联合Coinin在韩国发起「Blockchain in Korea」系列活动,走访韩国顶级区块链从业者们,促进中韩区块链交流合作。 



本期《Blockchain in Korea》Coinin邀请了BlockWater创始人,Issac Lee就”BlockWater的投资策略”进行了对话。


Issac LeeBlockWater创始人;加密货币交易所 DFlow的创始人兼首席执行官;KRTG的首席运营官,联合创始人;LiveEdu顾问;Fantom基金会顾问



1. 项目在不同国家有不同的优先顺序。 美国项目始终强调合规性,但亚洲项目往往优先考虑应用性和可用性 我不能说哪个更好, 我相信他们都在以不同的方式为区块链的发展做贡献。


2. 由于熊市,许多基金的业绩表现并不理想。 一些基金处于运营的危机之中。 BlockWater也不例外。 为了克服这些困难,我们采取降低风险的对冲策略。 目前许多项目被低估,我认为2019年是投资的最佳时机


3. 区块链最重要的价值是信任。 信任是开展业务的重要组成部分。通过区块链,我们相信未来将在各个领域涌现创意的交易方法和新的业务。


4. 稳定性是稳定币资产的核心价值。 每当交换两种不同的资产时,就需要有一个标准。在我看来,稳定币是交易的标准






Issac Lee:自从学生时期,我对创业非常感兴趣。我想为自己工作而不是为别人打工。虽然风险很高,但回报也很高。所以我一直梦想着经营一家我自己的公司。


BlockWaterCapital是我跟Francisco Jo共同创立的。 我跟Francisco Jo在2017年的一次会议上偶然相遇,因为我们有类似的投资倾向,谈的很投机,后来一起担任了各种项目的顾问,深入讨论了投资,并详细阐述了加密基金的创业的计划。终于在2018年1月,我们共同创立了BlockWater。




Allen:BlockWaterCapital是领先的区块链的项目投资机构,请为我们介绍一下BlockWater Capital。2018年BlockWater Capital投资了35个以上的创业企业。 在投资的区块链项目中,可以介绍一下其中印象最深刻的一个项目吗?


Issac Lee:BlockWaterCapital是一家加密货币对冲基金。 我们与其说是被区块链的美好未来所吸引,不如说实际上是一个投资于加密货币资产及其基础设施的新资产组的基金。我相信加密资产是一个新的金融市场。 

最令人难忘的项目是Bibox。我从这个项目中获得了丰厚的利润,但最重要的是,认识到了Bibox联合创始人AriesWang并成为了好朋友。 看到Bibox从2017年开始的交易所成长之路是一次非常令人印象深刻的体验。


Allen:作为一家亚洲领先的加密货币投资基金之一,请分享Block Water Capital的投资理念以及投资区块链项目的投资标准。

Issac Lee:BlockWater在投资前对项目进行了非常严格的尽职调查。将市场需求,可行性和市场战略进行细分并评级。 未来,我们计划将此内部投资尽职调查报告作为BlockwaterResearch的投资报告进行发布。 我们希望与大家分享并讨论我们在市场上看到的内容,也向大家学习。 我相信这些尝试将正确地指导加密投资文化。


我最想强调的是人的重要性。 执行业务的人的力量和观念是至关重要的。


Allen:区块链行业从他一诞生开始就是一个世界级的产业, 全球化是该行业的最大的特点。 Blockwater Capital是如何在亚洲或世界范围内寻找优秀项目的?不同国家的区块链项目之间有何不同?


Issac Lee:在区块链行业,韩国是一个巨大的战略中心,BlockWater通过投资和咨询服务积极帮助企业进军韩国市场。 此外,BlockWater的成员拥有全球的行业资源。我们跟通过区块链认识的朋友们一起共享交易,共同投资。我们也经常与NGC,Node,DHVC等知名基金共同投资项目。


项目在不同国家有不同的优先顺序。 美国项目始终强调合规性,但亚洲项目往往优先考虑应用性和可用性。我不能说哪个更好,我相信他们都在以不同的方式为区块链的发展做贡献。


Allen:目前的熊市对投资机构有何影响? BlockWater Capital在目前的行情中是如何克服困难的? 请分享您对当前市场走向的观点。


Issac Lee:由于熊市,许多基金的业绩表现并不理想。 一些基金处于运营的危机之中。 BlockWater也不例外。 为了克服这些困难,我们采取降低风险的对冲策略。 

目前许多项目被低估,我认为2019年是投资的最佳时机。但是,我们认为不太可能在2019年大幅提升。“Bears need tosleep before bulls come raging.”

Allen:区块链的核心价值是什么?从长远来看,区块链将如何改变社会? 您认为区块链的新的风口是什么?


Issac Lee:区块链最重要的价值是信任。 信任是开展业务的重要组成部分。 通过区块链,我们相信未来将在各个领域涌现创意的交易方法和新的业务。 


目前,区块链行业最大的问题是落地。 毕竟没有使用的技术是没有价值的。


Allen:据财富报道,Gemini创始人Tyler和Cameron Winklevoss在接受财富杂志的采访时表示,他们认为只要该行业有类似银行业的法规可以帮助人们信任加密货币则加密货币的前景是光明的。他们仍然相信有一天比特币有望取代黄金,部分原因在于加密货币的可替代性和可分割性。 您怎么看待这个观点?


Issac Lee:我认为比特币不会取代黄金。 但我认为它将成为一种类似黄金的资产。比特币和黄金是高象征性资产。 


我个人期待稳定币的表现。 我看好通过稳定币进行电子商务的业务前景。


Allen:BlockWaterCapital的最新的动向和未来的规划是什么? BlockWater Capital希望在哪些方面与中韩两国的项目或机构进行合作呢?


Issac Lee:BlockWater期待与热情的机构进行合作。我们希望与各种区块链公司进行交流,并创造良好的协同效应。 我们希望成为连接传统资本与区块链/加密市场之间的桥梁。

我们目前正在计划成立美国基金,以对传统投资机构为对象的融资。 我们相信,我们的职责是通过向正确的方向流动资本来促进市场发展。


Allen:您作为韩国的区块链知名人士,必然接触过很多区块链优秀从业者。【Coinin】打造的《Blockchain in Korea》访谈节目,致力于发掘优质中韩项目和从业者,呈现中韩区块链发展实况。如果让您推荐三位访谈嘉宾,您会引荐谁呢?


Issac Lee:第一位想到的人是我的搭档和导师,Francisco Jo。 他在韩国区块链行业是一位最具影响力的人。 第二位是Deconomy的共同组织者Jeff Park。 虽然不太熟,但我知道他的观点很有见地。 最后,我想推荐Muzika的首席运营官Jangwon Lee。






Issac Lee:稳定性是此类资产的核心价值。 每当交换两种不同的资产时,就需要有一个标准。 在我看来,稳定币是交易的标准。




Issac Lee:我认为证券型TOKEN发行很难在短期内落地。 甚至在我们考虑证券型TOKEN发行监管障碍之前,我们需要首先考虑为什么我们需要证券型TOKEN发行。目前的证券市场已经存在坚实的基础设施。 我们可以通过区块链改进现有的基础设施,使其更加透明,更具成本效益。


1)基础稳固的公司不太可能寻求证券型TOKEN发行,因为他们通过传统市场可以更好地获得资金。 这些公司宁愿选择IPO,因为他们很可能通过相关要求。


2)资质不够的公司可能会追求证券型TOKEN发行,因为他们无法满足监管要求。通过证券型TOKEN发行,这些公司可以走进资本市场。 但我不太确定这是否对市场有利。




Issac Lee:我相信Bakkt的推出对加密货币市场以及ETF都有利。 机构将更容易通过ETF进入加密货币市场。



提问1: 您认为区块链的核心价值究竟在哪里?


王岳华:我认为区块链本身作为一个技术的角度来解读,其核心价值就是解决信任的问题, 也就是经济学人说的 Trust Machine. 但是基于区块链技术而延展出来的通证经济的核心价值,可能更是我们要关切的。因为这直接涉及到应用的场地,具体的落地方法。


提问2: 人工智能,区块链,物联网三者有何联系?


王岳华:人工智能的核心是算法,算法必须要与数据作为源头。 物联网是通信加上数据,通信我们也可以简单理解成互联网,而数据可以作为人工智能所需要的源头。

那区块链呢,区块链也是通信加上数据,首先区块链一定是在互联网上运行的,而数据是经过处理的数据,比如加密,比如分布式账本的数据,这些数据透过区块链层级的再处理而产生了新的应用,商业价值,商业业态。 以及其他今天我们想不到的可能的场景。 所以人工智能,区块链加上物联网,我认为在未来会带来非常大的商业机会,我非常期待有这样的新创公司可以出现。


· END ·

本文根据Coinin原创栏目「Blockchain in Korea」访谈内容整理,不表明Coinin立场。




微信社群: blockchain-in-台湾

对话嘉宾 :



















因此我们发现 DLT 是可能可以取代过去internet TCP/IP 的 protocol。我们除了自己从事研究外,也发现全世界都在做类似事情,同时被邀请进IEEE做实证, 更加深了我们相信DLT在物联网内可以做点事情的。




Wade:您近来对 2019 年的趋势分析中提到,政府本来就具有信任基础,导入区块链的使用是比产业更合适的应用场景。您也提到与政府结合的溯源、文件交换与追踪会是趋势 ; 同时 BiiLabs 与北市府的MOU也是去年的热门话题,想听听您与政府在市民卡整合「数字识别」的合作经验,以及政府在导入新系统时最在意的会是什么?透过政府实现分布式技术应用落地,会是您认为2019最有效率的路径吗?






























Wade:谈起「数位身份」,您有一个比较保守的说法:「数字识别」,因为您看到了物理世界 (例如:人) 与数字证明真实验证的困难。我们从现有做数字身份的项目如 Sovrin,Civic,Uport,IDHub 等来看,提出的解决方案包括:结合生物辨识(如:指纹,脸孔)、中心机构的登录验证、群体评鉴等,您怎么看这些用来证明「唯一性」的方法呢?


















Wade:谈论「数字身份」的团队,都是试图透过区块链或分布式技术解构「身份」这件事,譬如你可能依照不同情境,变换或者部分暴露身份 ; 或者在在验证身份上可以更有效率,保留隐私。您认为「数字识别」或者「数字身份」的实际应用场景会是什么?




而这种全球性级别的backbone,老实讲在过去只有Facebook及Google等业者有,但它们也因为掌握有过多隐私而形成问题,造成不同国家面对到国安危机。所以,区块链公链则形成一个global backbone且够轻量化,并成为营运成本及效率堪用的基础架构。














我们最近试着透过参与国际大型数字身份项目、四大会计师事务所合作,讨论哪些东西可以被写在区块链上、哪些不行。由于 GDPR 本身所谓的被遗忘权,与区块链的不可窜改性互相抵触,因此我们花很多时间与专业人士学习、国际大型项目协作去学习跟定义什么样的信息适合上链。








Wade:BiiLabs 在2019年有什么样的规划以及展望呢?








那未来是什么呢?未来可能还是聚焦在大数据的应用,因此我们已经在开发下一代的数据经济及data market的应用,我相信这会是现在在讨论区块链的更大几个级别的市场。未来,数据就像是石油,区块链在数据中扮演非常重要的角色,甚至比AI重要。因为隐私不处理好,基本上AI是没有办法处理事情的。我们欢迎更多业者及伙伴一起来讨论后区块链时代-「资料经济」的未来。