Crypto Commentary: Theory vs. Practice

June 28, 2017 
By James Quaid

Intro:

For years I’ve sent the following questions to Crypto Blogs, Wallets, Ambassadors, SME (Subject Matter Experts).

  • Do you know of any Government specified back doors??
  • Are the allegations about SHA-2, SHA-***, true? That NSA installed a back door?
  • What other security problems might BitCoin have?
  • Are there any Android back doors?
  • Plus, have there been any serious postmortems, recoveries and or prosecutions of Bit Coin heists?

Many of my questions have been answered by WikiLeaks Vault Seven revelations. But, please note, I’ve never received any feedback. Again, I invite anyone in the Crypto Community to send comments and or opposing POV’s.

Theory:

Of late there are a wide range of Crypto currencies roaming the digital planes of Cyberspace. All Cryptos can are defined by two attributes.

  • Technology
  • Governance

The link below goes into great detail. Where the “Technology” defines the structure, features and functions of each Crypto currency and the “Governance” defines the internal policies, covenants, regulations, etc. Some coins have better technical and governance attributes than others. These features and functions define Crypto Currencies.

The Blockchain Revolution: An Analysis of Regulation and Technology Related to Distributed Ledger Technologies
Lexology

Each virtual coin carries a ledger of every transaction related to that specific coin or fractional amount of coin. Therefore, upon a theft the governance of that particular currency would provide remedies on how to deal with the theft. They in theory would also address beefing up the technology to deal with any newly discovered technical vulnerabilities.

Question Answered

See the last bulleted item in my introduction. Yes, there have been successful Crypto Currency theft prosecutions, the famous Silk Road bust. But, note how it took FBI involvement. Also note, there is no mention of the stolen BitCoin being returned to their righful owners. But, the theory of how it’s supposed to function is covered well.

Practice:

According to the first link below 99% of Bitcoins stolen have never been recovered. It also describes how most Crypto thieves operate. They steal (x) amount, then sell (x) amount at discounted prices and then take the money and run. Leaving the victim and new owner of the stolen Coin to sort out who owns what. This is the preferred method of operation (MO). Here the limits of the governance and technology are obvious.

Next Up: Crypto Currency Best Practices

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