On today’s episode we’re going to be talking about the latest updates on the Silk Road trial, new software for leakers to sell secrets, two p2p services I think you should know about, the Stellar/ Ripple story, and last but certainly not least, Joyce Kim from the Stellar Foundation presents on Stellar’s progress.
Note: some listeners have told me that the last segment with Joyce Kim was too quiet to hear clearly. While editing with headphones I thought it was listenable but after listening to the exported mp3 with speakers, it’s definitely quieter than I thought. I will be making up for this with another Special Episode soon. And to everyone who commented, thank you for your feedback!
Check if your browser is vulnerable –> ipleak.net
Content for today’s episode was provided by John Light, Joyce Kim, and the SF Women in Bitcoin meetup
Music for today’s episode was “Curbside Killers” by Pskov
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With those announcements out of the way, let’s move on to the news.
Ross Ulbricht conviction
On episode 9 on P2P Connects Us I covered the story of Ross Ulbricht’s trial in New York. Ulbricht was facing seven charges stemming from his involvement in the Silk Road darknet marketplace, and on February 4th he was found guilty on all counts. He faces up to a lifetime in Federal prison for his role in administering the website, with at least one of his charges carrying a 20 year mandatory minimum sentence. In Baltimore, Ulbricht still faces one murder solicitation charge stemming from an incident where he unwittingly paid an FBI agent to murder a former Silk Road staffer who he suspected might reveal incriminating evidence to the Feds. This is in addition to five more murders he paid someone claiming to be a member of the Hell’s Angels to carry out. Ulbricht appears to have paid the supposed gang member 4670 BTC, or $650,000 worth of bitcoins at the time, to murder not only someone who was threatening to release identifying information about Silk Road vendors and customers, but the blackmailer’s business partner and roommates too. No bodies were ever found that matched these descriptions, and the bitcoins sent to pay for the murders were not moved for several months after they were sent, which makes it seem like the whole murder-for-hire situation was an elaborate scam. It’s unfortunate that he fell for this scam, because this murder contract is a dark stain on an otherwise friendly image that he portrayed as the Silk Road’s benevolent dictator. Regardless, if you’d like to write to Mr. Ulbricht to share a story, advice for surviving in prison, jokes to cheer him up, a letter of support, or anything else you want to tell him, you can send it to:
MCC NEW YORK
METROPOLITAN CORRECTIONAL CENTER
150 PARK ROW
NEW YORK, NY 10007
You can find more information about his case online at www.freeross.org
In episode 8, I delivered a Public Service Announcement about software called Slur. The developers were making dubious claims about how it would work, and because of their shady marketing and apparent misunderstanding of how information sharing works, I recommended that people stay away from it. Well, this week, unSystem, the team behind Dark Wallet and the original DarkMarket prototype, has released a new piece of software called DarkLeaks which aims to succeed where I think Slur has failed. DarkLeaks uses the Bitcoin blockchain along with some clever cryptographic tricks to enable “trustless” leaking of data. The leaked data is encrypted and then released in provably random chunks which the seller decrypts to prove that the information is what they claim it to be. Potential buyers then determine whether or not they want to pay for the rest of the information. After the bounty is paid, when the bitcoins are spent by the seller, the secret necessary to decrypt the rest of the information is revealed. While I don’t endorse people breaking agreements by leaking benign secrets told to them in confidence, I do see this as a useful tool for whistleblowers to expose violence, fraud, corruption, and other abuses of power. To test this system out, I’m going to release a future episode of P2P Connects Us using this method, at the low price of .001 BTC. Follow the show on Twitter or subscribe to the blog to be notified once the P2P Connects Us Darkleaks bounty is posted.
Instant.io – Secure, anonymous, streaming file transfer; and Bem.tv – P2P and HTTP Live Streaming
I recently found a couple of cool peer-to-peer services that you might be interested to hear about. The first is called Instant.io, which is similar but different than the reep.io service I covered in episode 6. Whereas reep.io uses WebRTC to transfer files, Instant.io is a “secure, anonymous, streaming file transfer service” that uses the WebTorrent protocol, a combination of Bittorrent and WebRTC, to enable p2p file sharing directly in the browser. I tried it out with a picture I took at the beach and it seems to work like a charm, just make sure you allow scripts to run on the website and wait a minute or two if there’s a delay. The second service is called bem.tv, a P2P and HTTP live streaming service that works in the browser. The website says: “BemTV makes use of WebRTC and the popular HTTP Live Streaming (HLS) protocol to build a hybrid CDN-P2P structure in order to decrease the number of requests to CDN servers, reducing the cost of transmission and enhancing system’s scalability.” I have no idea how to actually use it, but if you’re a developer and want to help explain this to me, you can review the website at bem.tv and check out the source code on Github. Hat tip to Ryan Taylor from Bitcoin Magazine for highlighting these projects on Twitter.
While WebRTC is a powerful new way to do p2p communications in the browser, it’s also exposing new vulnerabilities that can be exploited. The Hacker News reports a “massive security flaw that enables website owner to easily see the real IP addresses of users through WebRTC, even if they are using a VPN or even PureVPN to mask their real IP addresses.” You can visit ipleak.net to see if your browser is affected, and if it is, follow the steps in the Hacker News article to fix your browser. You can find a link to that article in the show notes on p2pconnects.us or letstalkbitcoin.com
Stellar / Ripple expose
On February 5, Michael Craig over at Observer.com released a story called “The Race to Replace Bitcoin,” a tell-all expose on the fall-out between Stellar Fondation co-founder Jed MaCaleb and his former company Ripple Labs. The story seems to be a hit piece on McCaleb, though the criticisms may be deserved, so I’ll let you make your own judgements. Here’s the TL;DR according to the story Michael Craig wrote:
Jed McCaleb wanted to create a cryptocurrency without mining and hired David Schwartz, who was on episode one of this podcast, to be CTO of the company then known as OpenCoin Inc. After raising $100,000 from Jesse Powell, CEO of the Kraken cryptocurrency exchange, they then brought on futurist Arthur Britto as Chief Strategist and seasoned entrepreneur Chris Larsen to be CEO. Once they got the new cryptocurrency called Ripple working, since there was no mining, all of the cryptocurrency, called “XRP”, was generated up front. Britto, Larsen, and McCaleb split 20% of the 100 billion total XRP amongst themselves, with McCaleb getting 9 billion, Larsen getting 7 billion, and Britto getting 4 billion. This generous pre-allocation of XRP has been a major point of contention in the cryptocurrency community. This community prides itself on valuing decentralization over just about everything else, so it’s not hard to understand how three people owning 20% of the supply of what could one day be the dominant global cryptocurrency might be controversial.
Shortly after OpenCoin released their public beta of Ripple, Powell introduced McCaleb to an entrepreneur named Joyce Kim, who needed funding for her company Simple Honey. Instead of giving her funding, McCaleb gave her his affection, and the two soon entered a relationship that saw OpenCoin acquire Simple Honey. The situation quickly deteriorated from there. Internal conflicts, including a failed deal which would have seen the payments processor Stripe acquire OpenCoin for $13 million cash, led to McCaleb and Kim leaving OpenCoin along with several other employees. They would go on to form a new company, a nonprofit called the Stellar Foundation, and fork the Ripple protocol to create a new cryptocurrency called Stellar.
This time it would be different. 95% of the Stellar cryptocurrency, called STR, would be given away, with only 5% retained by the nonprofit to fund operations. Stripe provided initial funding for the nonprofit with a $3 million loan that was paid back with 2 billion STR. Since launching, the Stellar Foundation has given away over 1.5 billion STRs to people who create a Stellar wallet on their website and authenticate their identity using Facebook. This method of identity verification has apparently been troublesome. As I’ve reported before, there are many known methods for gaming this system and untold numbers of STR have been essentially scammed from the Stellar Foundation. It’s unclear what effect this will have on their IRS application for 501(c)(3) charity status. Stellar has also experienced multiple forks, leading to long periods of network downtime. All the while, OpenCoin, which later changed their name to Ripple Labs, has been humming along relatively smoothly, gaining favor amongst economists and regulators at the Federal Reserve and adoption amongst banks, payment gateways, and exchanges like Fidor Bank in Germany, Cross River Bank in New Jersey, the Earthport cross-border payment network, the Bitstamp bitcoin exchange, and more. Will Stellar be able to overcome their setbacks and go on to compete with Bitcoin and Ripple for the title of top cryptocurrency? We’ll have to wait and see.
Overall this was a really interesting story, if only as a lesson on how not to launch a cryptocurrency. You can find the full story linked in the show notes. Though I think it could have been written better – it almost reads like a tabloid piece at some parts of the story – I still think it’s worth the time to read. Note the differences between the account that Mr. Craig tells in his article and the story that you’re about to hear in a presentation I recorded at a Women in Bitcoin meetup featuring Stellar Foundation co-founder Joyce Kim.