Ethereum as a security
Kitco News Ethereum network co-founder Anthony Di Iorio is leaving the crypto space, citing personal safety concerns as one of the reasons for quitting. If I was focused on larger problems, I think I'd be safer. Di Iorio added that he would also be selling Decentral Inc. The sale will not be made with crypto. Di Iorio will either accept cash or equity in another company, Bloomberg reported.
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Ethereum as a security
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- Is Ethereum a Security? SEC Chair Sows Confusion
- Norton installs an Ethereum crypto miner with its 360 security suite
- Is Ether a security? Why Ethereum might not be out of the water, despite 2018 clarification
- Bitcoin is Digital Property, Ethereum is Digital Security - Argues Michael Saylor
- Ethereum urges Go devs to fix severe chain-split vulnerability
- Ethereum co-founder is quitting crypto, cites personal security concerns
- Ethereum Jumps 9% After SEC Says It's Not a Security
- Your instructor
Is Ethereum a Security? SEC Chair Sows Confusion
By definition, blockchain platforms offer secure and reliable data exchange between stakeholders without a trusted third party. Private and consortium blockchains implement access restrictions, so that sensitive data is kept from the public. However, due to its distributed structure, only one node with faulty configuration can leak all blockchain data.
For our study, we scanned the Internet for misconfigured private Ethereum nodes. Overall, we found nodes belonging to blockchains that are not one of the large Ethereum-based networks.
For our analysis, we chose a diverse sample of networks. Then, we analyzed in-depth 4 different networks with 10 to 20 nodes enabling to over 34 million transactions. We used graph visualization tools to picture the networks transactions and to identify stakeholders and activities. With our research, we show how to reveal confidential information from blockchains, which should not be exposed to the public and could potentially include identities, contract data as well as legal data.
Thereby, we illustrate the legal and social implications of data leakage by this distributed and supposedly secure technology. In summary, we show that the large attack surface of private or consortium blockchains poses a threat to the security of those networks. The nodes used in this study were not configured according to the Ethereum guidelines and exposed information directly to the Internet.
However, even correctly configured nodes provide an excellent target for attackers as they allow them to gain information about a whole network while only breaching one weak point. Lastly, our study discusses whether private blockchain networks can reach a consensus without sharing all data between nodes and what data distribution strategies defend best against weak links in the chain.
Blockchain technology has sparked interest in a variety of industries. Even after the initial Bitcoin hype, blockchain as a technology is still regarded to have the potential to drive decentralization and disintermediation. The cryptographic primitives and consensus mechanisms make storing and transferring of data not only secure and resistant against manipulation but also not reliant on a trusted third party.
Most commercial blockchain applications rely on a private or a consortium blockchain. The purpose of this sort of blockchain is only to allow a select group of participants to read or write data from or to the ledger. Customer-focused solutions, such as the Diem [ 2 ] cryptocurrency, use this approach to keep customer transaction data private [ 3 ]. The distributed nature of blockchains makes them more failsafe and resistant to manipulation.
However, with each additional node that joins the network, simultaneously its attack surface for data theft increases. This implies that, even for large networks, only one misconfigured node can leak the whole blockchain data to malicious actors. In business contexts, information about internal structures can be leaked to competitors. For private use-cases, information about the individual transaction structures can give deep insights into personal behavior and contain the most sensitive information.
To assess the severity of a data breach on one node of the network, we conducted a study to determine how information can be extracted and visualized to gain as many insights into a private blockchain as possible.
Thus, our study reverse engineers parts of blockchain networks to gain the necessary information. Reverse engineering a system is typically used to infer how an underlying mechanism works. The difficulty of reverse engineering systems is determined by the number of their components and the interdependence of their components as well as the number of their settings. Inspired by the Internet Census [ 5 ] , our approach relies on data reverse-engineered from a security issue in a faulty configuration of Ethereum.
Starting there, we conducted four small case studies on different implementations of the Ethereum platform to identify stakeholders and mechanisms of these networks. Building on this, we want to address the following research questions RQ in this study:. RQ1: Which methods and tools are required to reverse engineer Ethereum networks? RQ2: How much information can be extracted from consortium blockchains with one misconfigured node?
Our paper addresses managers, lawmakers and scientists who are interested in a more technical evaluation of the security of private blockchains. In this paper, we contribute methods used in the process of reverse engineering, as well as the results of the evaluation. Additionally, we provide the insights we gained from the reverse engineering of blockchain networks and the implications they provide for the adoption of the technology.
The rest of the paper is structured as follows: In the next section, we lay the foundations by discussing relevant literature and previous work. We then introduce the methodology as well as the data we used for the analysis. The following chapter contains our main research results, by first providing an overview of the technological side of the market and then a detailed analysis of four different blockchains and their use. The final chapter summarizes and concludes the research.
In its very basics, the blockchain is a distributed ledger of transactions autonomously managed by a consensus mechanism. Technically, it can be pictured as a growing chain of linked blocks, from where its name originates. The blocks of a blockchain are stored distributed by the participants, the so-called nodes.
The blocks of a chain consist of a block header and a list of transactions. In the Ethereum blockchain, each transaction has one sender and one recipient. Today, it is possible to not only store transactions in the blockchain, but also data objects and small programs, which is how smart contracts are implemented.
There are many smart contract-based tokens, often standardized by Ethereum Request for Comments ERC standards, which define their characteristics and interface. Given all transactions in a network, naturally, a graph can be built to model the interactions of the participants.
The nodes of this graph do not necessarily have to correspond to the nodes of the blockchain network and must not be confused.
One physical node of the network could, for example, host multiple Ethereum accounts and therefore represent several nodes in the transaction graph. Additionally, the nodes of the transaction graph can be smart contracts as well. There has been a lot of prior research on the technical analysis of blockchains. This research strongly focuses on large public blockchains, analyzing the transaction structure of public blockchains and the usage patterns therein.
First analyses were used to deanonymize Bitcoin users. To consider all transactions, it would be necessary to include the additional network structure that is built by interacting with smart contracts. Studies researching transaction networks of ERC tokens partially deconstructed those structures. The limited existing research regarding the programming interface JSON-RPC of a network focuses mostly on the possible attack surface it provides, such as stealing mining reward and denial-of-service attacks, [ 13 ] or the use of blockchain-based applications.
In contrast to other security or software engineering related topics, we focus on extracting knowledge for a more research-driven goal. Several researchers used this as a foundation, regarding the provided knowledge as well as the used methods, to get insights in other technologies or security-related issues.
To answer our research questions, we used a multiple case study approach. As units of analysis, we chose the block headers and transaction data, as well as the network node data for different blockchains. To identify potential blockchains for a more in-depth analysis, we first created an overview of the Ethereum platform landscape.
To do so, we used Shodan, a search engine for Internet-connected devices. Technically, this gives everyone the possibility to not only extract data from the whole blockchain but also to manipulate the node.
It should however be noted that each node in our dataset is for some reason not configured according to the official recommendations, as the RPC interface should never be exposed openly to the internet. Therefore, we only cover blockchains where at least one node was not configured properly. To build our overview dataset on the operation of nodes, we queried the RPC interface of each of the 3, nodes.
We extracted the chain version, genesis block i. To determine the age of each blockchain, we additionally queried the second block of each chain. We decided not to use the timestamp provided in the genesis block since it often provided a zero value in the timestamp.
For nodes that are running on the Ethereum main network, we also queried block number 1,, at which the chain splits into Ethereum and Ethereum Classic. We used this as a mechanism to check how valid our data was and how representative our sample of blockchain nodes was.
Our final overview dataset consists of 2, active Ethereum nodes, of which nodes are used in unique blockchain networks and nodes are connected to the Ethereum main network.
The network size of the entire Ethereum main network is at the time estimated at 6, nodes according to ethernodes. Additionally, we compared how many nodes of the mainnet [ 19 ] are operated in different countries and arrived at a very similar distribution, as shown in Figure 1.
We did this estimation with other known networks, such as the various Ethereum test networks, which we extracted from an open-source repository for known networks.
We used the final overview dataset to provide high-level insights into the Ethereum landscape. Additionally, we used this data to identify potential candidates for our case studies. We chose the blockchains according to the number of active nodes, length, and age of the blockchain as well as the distribution of nodes.
The goal was to get a diverse set of blockchains to study and draw generalized conclusions. For the chosen blockchains, we extracted account holders for each node and the complete blockchain record of transactions. To identify usage patterns, we used social network analyses on the transaction networks to identify commonly used smart contracts. We extracted and decompiled the smart contracts with the Panoramix decompiler [ 21 ] to find out what their role in the blockchain is.
While this is a state-of-the-art approach, the decompilation of Ethereum contracts is still in an experimental stage and does not guarantee success. Therefore, we were not able to decompile and analyze all relevant smart contracts. We summarize the overall data extraction process in Figure 2. The mix of source code analysis and social network analysis allowed us to reverse engineer use cases and interaction patterns with the blockchains, and hence provide a suitable way to investigate the proposition.
Figure 2: Overall Data Collection Process. The primary analysis of this paper consists of two parts. First, we describe the overall landscape of the Ethereum protocol using the overview dataset.
From there, we can draw the first conclusions, before providing a more in-depth analysis of four case studies for Ethereum-based blockchains. To get an overall view of the Ethereum Landscape and map our findings, we analyzed the metadata from the collected dataset.
For further analysis, we have chosen different dimensions, which contribute to our overall goal and give us first useful insights in the Ethereum universe to determine the potential case study candidates later. As a first dimension, we analyzed the hosting of the different nodes. With over half of all nodes, the big cloud providers Amazon, Digital Ocean, Microsoft, Google, and Alibaba are claiming a large piece of the Ethereum hosting.
This shows that the Ethereum technology shows great potential for business adoption since the cloud setup process is a fast solution to get started. It is an advantage over other technologies, which currently rely on specialized mining hardware that is not widely available. We were surprised by the large share of cloud providers since one of the main advantages of blockchain applications is its distributed topology that affords the technology security and resilience advantages.
Norton installs an Ethereum crypto miner with its 360 security suite
This item in japanese. Sep 19, 2 min read. Kent Weare. On September 18 th , hours before the Ethereum Foundation devcon 2 conference was about to start, a DOS security alert was posted on the Ethereum blog.
Is Ether a security? Why Ethereum might not be out of the water, despite 2018 clarification
On Thursday, June 14, , the U. His comments focused on how the entire economic reality of any given digital asset must be considered. In making this point, Hinman likened utility tokens to the oranges being grown on the parcels of land at issue in Howey 1 , the landmark U. As part of his analysis, Hinman provided a non-exhaustive list of questions to consider when analyzing the extent to which a digital asset is decentralized:. How much decentralization is sufficient to make a token not a security? How will decentralization be measured? Will it be measured by how distributed token ownership is? Or the distribution of hashrate for proof-of-work networks? Will the distribution of nodes be a factor? These questions and more will start to be answered on a case by case basis as the SEC and other regulators analyze the various economic realities of digital assets moving forward.
Bitcoin is Digital Property, Ethereum is Digital Security - Argues Michael Saylor
Top news. Instead, he took the opportunity to reiterate his pitch for a more comprehensive regulatory environment for the crypto sector. Analysts believe Gensler avoided repeating his earlier stance on Ethereum because of the ongoing SEC-Ripple legal dispute where the Commission charged the payment processor with selling unregistered XRP securities. In the much-publicized legal tussle, Ripple maintains that its tokens are not securities. But as the size of the market has expanded significantly both in terms of value and customer base in the past few years, US watchdogs have pitched strongly for greater regulation.
Ethereum urges Go devs to fix severe chain-split vulnerability
This has been received by the market as semi-official opinion of the agency, as it should be. In practice, I suspect this means that some might expect a great many unregistered investment schemes — no matter how harebrained or illegal — dating back to the era will get a free pass. Just about everyone appears to agree that Ethereum was a security when it was first issued. Hinman suggests, however, that the wide adoption of secondary market transactions have caused the Ether instrument to lose its qualities as a security. Or more to the point, that the transactions in Ether are not sales of a security.
Ethereum co-founder is quitting crypto, cites personal security concerns
Connecting the worlds of security tokens and decentralized finance DeFi is the next logical step for Securitize, a kind of regulatory-compliant fixer when it comes to tracking and trading blockchain-based securities. Announced Monday, Securitize is teaming up with a protocol called Tinlake from Centrifuge, which uses a clever system of non-fungible tokens NFTs to enable real-world assets to participate in DeFi. In an ideal world, any elements within the Ethereum ecosystem should be able to be built into one another, sharing new and useful features like automated market-making or other functions. All securities, whether private or public require know-your-customer KYC identification of the person buying them, as well as mandatory investor qualification to determine which type of investor they are retail or accredited, depending on the rules of their local jurisdictions. Focused on smoothing the fragmented world of private securities trading, the firm has been honing its approach to identifying the owners of assets and the regulated peer-to-peer transfer of private security tokens. DeFi protocols often operate pseudonymous liquidity pools powered by automated smart contracts. The Securitize Tinlake integration, by contrast, will be strictly for wallets that are associated with Securitize ID, so that the person on either side of a trade is known, said Domingo.
Ethereum Jumps 9% After SEC Says It's Not a Security
Skip to search form Skip to main content Skip to account menu You are currently offline. Some features of the site may not work correctly. Smart contracts present a foundation for possessing digital assets and a variety of decentralized applications within the blockchain area.
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We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy. This week the Commission concluding that a token sale violated the Securities Act. The Securities and Exchange Commission is taking an interest in the hottest craze in cryptocurrency, the initial coin offering ICO , and apparently the SEC is not into the hype. The commission published a report on Tuesday advising that ICOs, or token sales, are subject to securities laws. It concluded that a certain multimillion-dollar ICO last year — the first of its kind — violated securities law.
On the other hand, he insisted that there is no doubt that bitcoin BTC is a digital property, and thus not subject to regulatory headaches. Saylor, who has appeared on a recent episode of the UpOnly podcast, said that the most important thing for a long-term crypto investor to understand is the political status of a cryptoasset -- i. Bitcoin was created by the pseudonymous Satoshi Nakamoto , who released the original Bitcoin white paper in The coins are created through mining, which means there never was a pre-mine or an initial coin offering ICO. Bitcoin uses the proof-of-work PoW mechanism, which is according to Saylor a "fair distribution.
Ethereum is a system for decentralized applications that uses blockchains, but in a completely different manner than how they are used in bitcoin. Ethereum has at its core a way to apply arbitrary rules for ownership, transaction formats and state transition functions — taking both the state of a blockchain and a transaction for that chain, and then outputting a new state as its result. The state is made of objects called accounts, which have a byte address and state transitions that exist between accounts. Accounts have four fields: a nonce, so each transaction is processed only once; a balance of ether, or the internal numbers used to pay fees; a contract code that may be empty; and storage, which may also be empty.
Other variant is also possible