Last Sunday a documentary was released on Canadian television profiling the life and death of Gerald Cotten, the 30 year-old CEO of QuadrigaCX exchange. Nine days after arriving in India on honeymoon in November 2018, he left this Earth and took with him the private keys to ~$250 million of investor money.
This tale only reinforces the importance of the much loved crypto phrase “not your keys, not your crypto”, a warning to those who trust centralised businesses to safeguard their funds. But more than that, it raises questions about a more fundamental issue – what happens to my crypto after I die? 🪦
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⏰ Read and Run?
Here’s 5 things you should know about the crypto markets today:
Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
💀 Dead Man’s Switch
“Where’s my money? Where’s everyone’s money?”
☠️ Hidden in Plain Sight
Trustless systems are a double-edged sword: on the one hand they provide you maximum security as only you can access your assets, but that responsibility comes at a price. While there are some who would rather take their crypto to the grave than hand over their keys, many others want to ensure loved ones can locate, access and extract their store of value when they pass to the other side. And to do that requires some preparation, as:
According to some estimates, more than 3 million Bitcoin are considered lost or inaccessible, with a significant number assumed to be due to holders dying without leaving a trace
According to a survey by The Hustle, only 44% of cryptocurrency investors have a will, and only 22% of those include their crypto assets
🪦 Coffin Up
If you do want people to find your hidden stash they’re going to need some clues. Here are some things you can do:
Keep a list of the location and/or addresses of all of your crypto holdings, so there is a starting point. Include URLs and usernames, but don’t keep your passwords or keys in the same place
Arrange a ‘Dead man’s switch’, which is based on a smart contract that sends your chosen recipient the ‘secret information’ when you fail to respond to a regular message.
🏴☠️ Vest in Peace
You’ll notice that there is an increasing degree of centralisation and/or security risk in the options above. Smart contracts and companies can be hacked and for most it may be a simpler first step to just keep an offline file at home.
So let’s assume you’ve done that – how will your relatives know how to convert your crypto back to fiat if they need to? With the rise of staking and yield farming, and the limited number of exchanges that allow fiat off-ramps, it’s probably a good idea to leave a guide.
Here at Market Meditations we’ve put together a simple Excel template that you can download and adapt as you see fit. It is based on a few simple questions:
Where is my crypto stored?
How is it currently being used?
How do I move it to a fiat off-ramp?
Link 👉 here.
Why not take a look? And as always, we appreciate feedback from the community if you think this tool can be improved.
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According to this Coindesk report, which one of these is not an Attack Vector listed as a vulnerability for the Bitcoin Lightning Network?
Flood and Boot
⛽ Set-Up Shop
Is it a bird? Is it a plane? No, it’s Litecoin rocketing to the moon, before seeing the Lite and unceremoniously crashing back down again, the gravitational pull of reality proving too strong.
As we covered yesterday, the crypto token’s price was all over the shop and pumped by more than 36% in less than an hour on the ‘news’ that Walmart had entered into “a major partnership” with Litecoin. With it later coming to Lite that it was not authentic. Here are some tips for you to see if the news checks out:
Location: Does the news appear on the social media channels of all of the involved parties? Typically parties coordinate the timing and content of major press releases.
Contact Details: does the author exist anywhere else on the web and are they associated with the companies involved e.g. on LinkedIn. You can use ICANN to check who a domain name belongs to and when it was created.
Consistency: does the news match the look and feel of typical press releases from this company? Major companies often have templates and standard phrasing, carefully selecting words that are vetted by external relations staff to prevent misunderstandings.
Professionalism: does the news contain any spelling or grammar mistakes, or does the tone seem unprofessional? This may especially apply to smaller projects where scams are more prevalent and the emphasis is on urgency.
Check out this article on MindTools for more ways you can spot the difference between real and fake news. And next time your eye catches something and the pulse quickens, take a moment to first shop around to make sure it’s not just a trick of the Lite.
3. Flood and Boot
The correct name for this attack vector is Flood and Loot. But, before we dive into some of the attack vectors here is a quick overview of what the Lightning Network is and aims to do. It is a “Layer 2” protocol that works parallel to, rather than on the blockchain. In simple terms, it completes transactions off the blockchain which increases speed of transactions whilst decreasing fees. But there are some vulnerabilities the network has currently, these come in the shape of attack vectors. Here is a brief definition of each of the types.
Griefing - This attack involves freezing bitcoin committed to Lightning channels by spamming the channel with small payments. This can cause funds to be held for two weeks until the time-out cancels the contract.
Eclipse Attack - This involves the attacker launching hundreds of nodes to the victim such that they cant connect any honest nodes. Thus if the victim completes the transaction the attacker will take their funds.
Flood and Loot - To carry out this, the attacker must open a source node and a target node. They connect the source node to the victim, and from the victim’s account send as many payments as they can to the target node. Once they reach the target node the attacker accepts them then sends them back to the source node.
Pinning - This attack is taken from two sides both on the Lightning and Bitcoin protocols so that the victim is “pinned in” and can’t make any transactions until they have sent the attacker their funds.
If you wish to find out more check out the Coindesk report here. Whilst there are faults with the current Lightning Network, developers are currently working on fixing them and we are certainly excited for when they do.
🌎🧘♂️✍️ Stories in this newsletter were written by Isambard FA, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.