cryptocurrency Archives - James W Montgomery

3 Rules for Healthy Pseudonymous Hygiene with Ethereum

Anonymity with Ethereum is hard. It’s a public blockchain, after all.

Sure, you can create your seed phrase offline or with a hardware wallet, but as soon as it comes to moving funds to your fresh accounts you should expect that eyes will see that transaction – even years later.

Even with all the proper steps taken to create a cold wallet, the currencies you put into those accounts still come from somewhere. And somewhere wasn’t in your control.

Typical Transactions

Let’s take the classic example of where that money comes from: an exchange.

When you sign up for an exchange like Coinbase, you go through KYC. They know who you are, how much you buy, and where you send it.

So, when you send funds from the exchange to your secure cold wallet, they have access to this transaction. They could deduce that wallet as yours (and share that info with the IRS or NSA, etc). Even if you use a mixer, the exchange will still see this and flag or even block your address.

It’s all connected, forever.

Now, in this pure example, nobody else could deduce that this cold wallet is yours. Randos on Twitter wouldn’t be the wiser. On-chain it’s just another transaction.

This is basic pseudo-anonymity: the public doesn’t know that this account is yours, but there is some trail that could identify you to someone. In essence: you are not guaranteed anonymity.

The risk of exposing your addresses and losing that pseudo-anonymity is exacerbated by participation in the network:

Transferring funds
Registering ENS
Buying NFTs
Using DeFi
Transacting with platforms like God’s Unchained

So it’s good to arm yourself with some principles & rules for using Ethereum so you can guard yourself from exposure.

Principle #1: Be Public AND Private

Use specific public & private addresses and keep them completely separate.

With this one principle, you’ll be able to maintain pseudo-anonymity with one reason: intention.

When you commit to using a public address, you acknowledge and understand the public nature of the chain itself. This inherently will train you to think between public and private transactions.

Always think: “Should I use my public address for this transaction?”

For example, I use my public address for:

Registering ENS & mapping it to my Twitter
Connecting to God’s Unchained
Building example transactions for education
Kicking the tires on DeFi platforms before diving in
Linking with 3box and Satellite

Not everything can be private; rather than deprive yourself of using various protocols, use a public address with them instead.

With that, you can expand into a few simple rules (and a handy flowchart).

Rule #1: Use multiple addresses

Not only should you split between public and private addresses, but you should use multiple of each to diversify your pseudo-anonymity.

Maybe you don’t want two public protocols to know that you’re using the other. Consider using a public address for each.

If you want to guard your private address against the risk of exposure, split it into multiple. Use one for DeFi and one for hodling – this way no one can determine your full net worth by uncovering one account.

Use one for a public pseudonymous Twitter account.

With multiple addresses, you limit your exposure to connecting them all.

Unfortunately, as you expand your address collection, your fees for moving those funds around grows. Be sure to consider transaction fees into your privacy plan.

Rule #2: Never cross streams

Never transact directly between your public and private addresses.

Only send assets to your addresses from a centralized exchange (or a mixer).

Due to the way centralized exchanges are set up, they essentially act as a mixer with the way their receive/send currency. So, if you need to send money from your private address to your public one, send it to your exchange first and disperse it to your public address in two transactions to ensure you leverage the mix properly.

Obviously this does still leave you exposed to exchange deduction, but it will keep the public out of the know. You’re not trying to hide from big brother, are you?

Rule #3: Use Brave, a VPN, and Tor

Looking to supercharge your privacy?

Use Brave browser and always clear cookies & local storage when switching between public and private accounts. This prevents individual applications from tracking that two addresses could be linked to the same user.

Use a VPN or Tor to totally obfuscate your internet browsing history from your ISPs.

When you actively commit to dividing transactions between multiple public and private addresses, you’ll be well on your way to concealing your true net worth & activity; limiting your exposure to being a target for crypto theft and questions from your mother-in-law.

What tips do you have?

How to Create a Cryptocurrency: Part 1

Why would you want to create your own cryptocurrency?

I don’t know, I’m not you.

But what I can tell you is why I made my own: for fun.

Now, there are some truly legitimate reasons to make a cryptocurrency, but let’s save that for another blog post.

In my opinion, creating a cryptocurrency is now like building a Hello World page when you first start to code – it’s a great foundation and gets you started with a new skill, but we have so many it’s a bit of a running joke now.

With that in mind, here’s the gist of what needs to happen in order to create your own cryptocurrency.

Download Ethereum’s Mist client
Load some Ethereum on it
Paste some code
Publish

Sounds pretty simple, right?

It is. It’s really that simple.

So simple, that there are (of course) tools that automate all of that for you in one click.

But you’re here for something more .. in depth.

If you just copy and paste some code or use a one-click launcher, you won’t really understand how your new cryptocurrency works or how to make it better.

Let’s learn together.

Basic Cryptocurrency Principles and Definitions

First, let’s tackle the basics in the context of the Ethereum blockchain.

Protip: Since we’re publishing our cryptocurrency on top of an existing blockchain, it’s technically called a token. If we had our own blockchain, it would be considered its own (alt)coin.

Blockchain

Think of it like a group chat – we all have a copy of the history of every message and can add new messages ourselves – but we can’t go back and change any messages.

The blockchain is the history of every message while the messages are transactions that contain simple actions like “send tokens” or complex ones like “publish a smart contract”.

Since the entire history is stored, we can always refer back to any message and trust that it is accurate.

Address

Much like it sounds, an address is where something is located on the blockchain.

It looks like this 0xE798e24428621C24f40C48A70E……

If you wanted to send some ether to your friend, it would come from your address and go to their address.

With the Ethereum blockchain, every address can store ether – this is called the balance.

Ethereum is different from Bitcoin because it can also store the code from a smart contract.

Protip: Smart contract addresses are special because no one person owns the address. Be sure to add code into your smart contract that makes it accessible from your personal addresses.

Transaction (Tx)

A transaction is just a public message added to blockchain that says four things:

Which address it’s going to
Which address it came from
How much ether it wants to transfer
Additional data payload (like smart contract code.. we’ll cover this later)

Through Mist (or apps like Coinbase), when you send/receive coins they’re actually packaged in a transaction and stored in the blockchain.

This history of transactions on the blockchain allows us to ultimately come to an address balance.

Smart Contract

A smart contract is a bunch of code that lives at a special owner-less address on the blockchain.

It’s completely public, but the code can prevent/allow access to certain functions to a limited number of addresses.

For example, our cryptocurrency smart contract will allow users to send tokens from their own address, but not from others.

Smart contracts also have a balance and even a storage system for keeping track of data.

We’ll be diving deep into this throughout our tutorial.

Protip: A DApp (Decentralized Application), at a basic level, is just a collection of smart contracts that interact with each other. They can be as simple as a cryptocurrency issuance or as complex as payroll or voting.

Mist

Mist is Ethereum’s desktop application for managing your addresses (accounts) and smart contracts.

It can sync up with the main Ethereum blockchain (real money), with its test blockchains Ropsten/Rinkeby (fake money), or even a local blockchain you made on your own.

Mist is how you will deploy and interact with your new cryptocurrency smart contract – download it from Github.

Note: It can take a little while for the blockchain to download onto your computer, so be patient when it first loads.

Overview of Creating a new Cryptocurrency Token

Let’s talk about the broader context of what we’ll actually be doing. We’ll dive deeper a bit later.

First, we’re going to download and initialize Mist

Mist is our connection to the Ethereum blockchain.

It stores our ether, publishes smart contracts, and can technically even browse the internet.

Download it, connect to one of the test networks (so we can try it for free), and wait for a while as it downloads the blockchain.

Meanwhile, we’ll create a Mist account, head to the test faucet, and send some free ether to your Rinkeby test account. (no, it’s not real ether)

After the blockchain is finally downloaded, we get into the code.

Next, we’ll write a smart contract

This code needs to contain all the necessary pieces of our new token because we can’t edit it once we deploy.

The code will include the coin’s name and functions for creating an address framework, minting coins on launch, sending coins from one address to another, and even burning coins from existence.

Then, we send it to the Ethereum blockchain via a transaction

In Mist, we’ll package our code in a transaction and send it to the blockchain for processing.

Like any transaction, it will cost ether. Luckily, the test networks offer free ethereum for testing.

Once the transaction is confirmed, we will be given the address where the contract lives. This is the address where all transactions will be sent to in order to send your new token.

Finally, we’ll send some tokens from one Mist account to another

Since our smart contract is publically available on the blockchain, we can send transactions to it that modify address balances and effectively “send” cryptocurrency to one another.

Luckily, Mist handles this pretty seamlessly so you’ll be able to do it right within the Send panel.

Enough overview, let’s get started .. in the next post!

Why “Cryptojacking Malware” is exactly what you want on every website

I’ve only ever clicked on one ad.

Congratulations to the Otter Box social media retargeting team, they reminded me to order a phone case that I’d meant to order for 3 months while I left my iPhone unprotected.

The rest of the 500 – 5000 ads I see per day are simple wastes of screen time, my attention, my battery, my data, and my patience.

I am literally paying to see ads when up to 79% of a webpage’s size could be advertising and tracking codes.

Months and months of phone bills and overage all for the sake of that one single advertisement that might make it through and convince me to purchase.

We gave ourselves no choice

Publishers continue to struggle with monetization of their content.

Every day I consume content from bloggers, web cartoonists, photographers, videographers, gurus, and more and I don’t pay them anything. Nothing.

In exchange for free content, publishers hosted advertisements on their sites to help monetize their crafts.

I don’t pay anything, but they still get paid. It was a win-win.

But somewhere along the line, we got fed up with advertisements and installed Ad Blockers.

Faster load times, less eye strain, no distractions – an excellent content consumption experience.

All at the expense of the publisher of course who now struggles more than ever to make ends meet.

On top of that, if they try to block our access and ask me to whitelist their site to allow ads, I either don’t bother, actively avoid, or even treat the brand with disdain.

So how can we have our content and eat it for free?

What if you spend that same 79% of ad load… no, make it 10%…

What if you could spend 10% of a page’s load and a bit of battery generating a small amount of cryptocurrency for the publisher.

You get no ads, smaller data fees, and support the publisher without pulling out your wallet.

Seems like a no brainer…

Sounds cool, but what is it?

In general, this process is called cryptocurrency mining.

Specifically for websites, it’s just called browser mining.

In short, the mining script (aka miner) is doing a whole bunch of math and needs computer (CPU) power to do it. The more power the better.

It doesn’t use any private data, it doesn’t download anything to your computer, and it certainly isn’t stealing your money.

So, if all it does is use some of your unused CPU power, what’s the problem?

Well, like anything, stupid people are ruining it.

Now labelled as a ridiculous “Cryptojacking Malware”, this type of simple monetization strategy has been stained repeatedly by people trying to abuse consumer trust.

Typically, they introduce it with high CPU rates and without user consent.

Mining at too high a rate will cause your electricity bill to increase and your computer to slow down, freeze, or even crash.

Also, let’s stop for a minute and address what a terrible misnomer “Cryptojacking” is. It makes it sound like cryptocurrency theft. NO ONE IS STEALING YOUR CRYPTOCURRENCIES. Though abusers make be taking a disproportionate amount of your data limits and CPU speed, nothing is compromised or stolen. It’s not even malware – it doesn’t live on your computer, only in the browser.

So, it makes me so furious to see people abuse it and then media following up blaming the technology with this misnomer.

And now, these mining scripts are just being outright banned by the Ad Blockers they are meant to work together with. Ironic really.

This is a real solution that needs to be guided and implemented in a fair way for everyone.

What needs to happen next

Ideally, browser mining needs to integrate with the browsers.

Chrome has already begun throttling tabs that cause resource burn, but what we need is a browser hook that allows a site to say “hey, I’m running a browser miner, allocate me resources according to protocol or user’s settings”.

Instead of a hard ban on browser mining, we need browsers to include options for consumers to opt-in to this amazing and liberating feature.

Think of settings like:

Enable/disable browser mining
Set max % CPU power allowed for mining
Whitelist/blacklist publishers
Select priority of publishers
Mine for publishers while not engaged in their content
Mine in the background and use payments later

Help me Chromey-one Kenobi, you’re my only hope!

Though Chrome is set to block annoying audio ads, Google is still a member of the Coalition for Better Ads and their primary income by far is advertising.

Since advertising is directly threatened by browser mining, don’t expect movement from Chrome anytime soon.

And though Mozilla Firefox has at least started to build in ad-blocking, we have a long way to go before these types of browser mining integrations exist.

At the very least, we need to share a better understanding of what exactly “Cryptojacking” is so we can support better online experiences and even support charity.

Comment below with your thoughts and questions!

Ledger Nano S Cryptocurrency Hardware Wallet Review

Today is an exciting day: my Ledger Nano S has finally arrived!

For those that don’t know, the Ledger Nano S is a cryptocurrency hardware wallet meant to store your coins safely off the internet to keep them less prone to hacks, exchange theft, or software failure.

I bought mine because I don’t trust keeping my coins on an exchange and because my laptop has been acting up and crashing frequently.

So instead, I’ll keep my coins safe on this little USB stick.

AND in case I lose or destroy it, it has a 24 word seed that I can use to restore my wallets on any other Ledger product.

TL;DR

This wallet was super easy to setup, intuitive to manage, built solid, and feels like an Apple product. I highly recommend it to investors of all calibers. Buy it now.

Quick Timeline

I bought the Ledger Nano S for about $100 straight from the manufacturer in France.

Ordered – Dec 21, 2017
Shipped – Jan 2, 2018 (via La Poste Colissimo)
Arrived – Jan 8, 2018

This was before they announced a 3 month product delay, so pre-order now while you can.

The Physical Product

The product package measures 5″ x 3 1/8″ x 1 1/8″ and came shrink wrapped as a nice touch.

As expected, the Ledger Nano S is extremely light and is about the size of any USB thumb drive (~2 1/4″ long).

Opening up the package felt super satisfying in the same way it feels to unbox an iPhone.

The wallet itself it smooth and shiny, but easily takes fingerprint smudges. Inscribed on the back is “Vires in numeris” – Strength in Numbers.

Also included is a small welcome packet including instructions on setting up your device, a note about device security, and a blank 24 word seed store card.

Though I probably won’t be swinging mine around on a keychain, they do provide a small key chain and even a lanyard – and a micro-usb to usb connecting cable of course.

Working with the Device

Once connected to my computer, the Ledger Nano S lit up and scrolled through some basic instructions on setting up the device.

The device itself only has two buttons on it, but the Ledger team made their app very intuitive even with just two buttons to work with.

Note: the device itself doesn’t turn on without being connected to your computer, so don’t go pressing buttons with hope.

The startup sequence was actually quite short.

First, you select a 4-8 digit pin for use in unlocking your device. This pin can be changed or even randomized in the device settings.

Then, you are taken through the seed generation process. One by one it shows you your 24 word seed. Make sure to write this down in triplicate and store them safely – these are your lifelines in case something goes wrong with your product.

After it takes you through the initial 24 words, it will prompt you to confirm 2 of the words’ orders – like “select word #19″. This acts as the final stage in setting up your device.

Then you’re all done with setup! Once authenticated with your PIN, you can navigate through to the default applications: BTC and ETH wallet.

I didn’t want to risk my BTC to start, so I opted to add Ripple.

Adding Ripple to the Ledger Nano S

Note: Though I don’t go over it here, you would take the same steps to work with BTC etc – download the Ledger Wallet BTC and navigate to the corresponding app on your device.

By default, the Ripple wallet app is not installed on the Ledger Nano S.

Luckily, it’s very straightforward to do so.

First, download the Ledger Manager app through chrome. It was a bit weird for me to do this the first time because it’s a chrome extension that acts like an application on your computer.

Open it on your computer, then connect your Nano S and unlock it with your pin. This should prompt the Ledger Manager to unlock itself and present the dozens of wallet apps you can install.

It took me a couple tries, but finally the one-click Ripple wallet install worked.

Now that my Ledger Nano S had the Ripple wallet app installed, I needed to download the Ledger Wallet: Ripple onto my computer.

This chrome application, just like the Ledger Manager, is installed on my computer and only unlocks once your device is plugged in, authenticated with PIN, and has the Ripple app open.

Once it’s unlocked, you can easily see your Ripple address, send coins, and check your balance. It even generates easy QR codes and allows you to print or even send via email.

To confirm how easy it was, I downloaded Ledger Wallet Ripple on an entirely new computer, plugged in my device, and confirmed that my Ripple was safely stored.

Final Notes

I love this product!

It was sold to me for a fair price and delivered in a fair amount of time for an international shipment.

It has an intuitive UI, was incredibly easy to setup, and the Wallet apps are incredibly simple yet refined.

That being said, it does have some room for improvement.

It does not support every crypto wallet at this time – though new wallets are being created and rolled out. For me, that means my XRB and REQ are not compatible yet.

At this time, the Ledger Manager does not show a list of the apps I have installed or provide any settings for those installed apps – though I can select and manage settings for these apps on the device itself.

Vastly small improvements compared to the value you’re getting with the Ledger ecosystem.

Maybe one day I’ll be lucky enough to upgrade to a Ledger Blue.

Getting Started with Bitcoin

A number of people continue to ask me how to get started with cryptocurrencies.

How do I buy Bitcoin?
How much should I invest?
How much have you bought?
Which coins should I invest in?
What would you spend $100 on?
What’s the blockchain?

I wanted to jot down some fundamentals here that should hopefully answer any questions you may have about cryptocurrencies and beginning to get involved.

Bitcoin, though it has seen explosive growth, is a highly speculative investment. Please do not bet the farm. We’ve seen people taking out mortgages in order to buy Bitcoins – this type of behavior en masse could lead to a global depression. Bet only what you can afford to lose.

How to buy Bitcoin

Currently, the easiest and safest way for a beginner to get some Bitcoin is to create an account on a Cryptocurrency Exchange. Use Coinbase to start and move on to explore other exchanges as you begin your exploration into other coins.

At present, you will need to verify your identity and provide credit card or banking information. Be smart when handing over this information and try your best to hedge against the worst case scenario – like your information being stolen or misused.

This leads us to a very important topic:

How to protect your Bitcoin (and other coins)

If you leave your coins on an exchange, you are asking for pain.

Please, please, please do not underestimate this advice. We have seen time and time again people losing all their money because they did not store their coins in a wallet.

Either download a software wallet to your computer or purchase a physical hardware wallet to store your coins safely off the exchange.

Each cryptocurrency will have its own supported wallets, so do some research online to what is supported. For Bitcoin, I use Electrum software wallet and the Ledger Nano S hardware wallet.

How much you should invest

Imagine you go to a casino. You see the roulette table is getting some great action. Everyone at the table has bet on black and won all night long – doubling, tripling, 200x’ing their money.

How much would you bet on black, knowing full well that it could land on red?

How much I have invested

Somehow, this is a question that comes up within 5 minutes every time. Most likely born of a natural curiosity, this question is deeply personal to me akin to asking how much money I have at all.

Instead of asking someone how much money they have, ask them which price points they managed to buy in at or how their portfolio growth has been. This is a bit more exciting and revealing of a conversation in many regards and will not offend someone who is protective of their assets.

What other coins should you invest in

One of the big problems I see is a lack of understanding of the core problems each cryptocurrency solves. Instead, people focus on the ROI of their investment.

This same mentality led to the .com collapse because we threw money at any website with page hits. We all now know that page hits aren’t gold and that same principle should apply here.

Go and research the different technology behind the coins and justify whether it has legs – otherwise it’s a gamble.

Personally, I believe Ethereum has a solid foundational technology that has tremendous applications. Remember, cryptocurrency is a byproduct of blockchain technology.

The blockchain and how it related to cryptocurrency

Most of the cryptocurrencies you’ve heard of are primarily transactional blockchains – meaning they are built to send money from A to B etc.

But blockchains can be so much more – from renting a car to registering land rights.

Cryptocurrencies are a way of incentivizing computer power to be spent on maintaining a blockchain. If the blockchain is good, the crypto is a good long term bet.

If the blockchain is only solving for cryptocurrency, it better do well otherwise it will be defeated by competition, just like any product or service. There is a lot of competition.

Should you get involved with mining

Probably not.

Mining on your computer is obsolete and setting up your own rigs is a complicated task even for people who’ve built a computer before.

Beware of cloud mining contracts as there’s hardly a way to determine if it’s a Ponzi scheme or not.

—

This is a buyer beware, wild west market. Be careful and be prepared to lose money.