The Enigma Code for Smart Contracts

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During the Second World War, the Enigma Code proved one of the toughest to break. Eventually, Alan Turing, one of a group of elite code breakers working at Bletchley Park in the UK devised a technique to unravel the messages being sent out by the Enigma machine and he became known as the father of modern computing. Fast -forward to 2018 and we are seeing the emergence of another Enigma, a blockchain startup that enhances the privacy of smart contracts.

Privacy and secret contracts

Enigma is working with Intel on perfecting secret contracts. These are a type of smart contract for public blockchains that use cryptographic tricks to keep transaction data hidden from view. The project started at MIT with the aim of creating a more private platform for decentralised applications. To do this it is using Intel’s Software Guard Extensions (SGX).

A spokesperson for Enigma said: “Privacy is currently the biggest barrier to smart contract adoption. Blockchains are good at correctness, but bad at privacy by design. Smart contracts and decentralized applications will need to be able to use private and sensitive data to see global adoption.”

Trusted execution environments

It is expected that a ‘proof of concept’ product will be launched late in 2018 and that it will demonstrate the way the two technologies can work together. The team is also exploring trusted execution environments (TEEs), which are an integral part of Intel’s SGX technology that securitises data and code.

The urgent need for secret contracts

The announcement of the Enigma-Intel comes at a good time. The Bithumb hack this week and memories of past attacks, such as Mt Gox and DAO, are still quite fresh. The DAO hack in 2016 is particularly relevant, because it happened due to flaws in a smart contract.

Enigma’s CEO Guy Zyskind, has been talking up the need for secret contracts for some time and has pointed out the issues “with coin-mixing and zero-knowledge proofs, the latter of which he said are particularly vulnerable in multi-party cases where several “untrusted and pseudonymous” parties are executing computations,” as he wrote in Medium. Zyskind also said, “secret contracts provide the ‘missing piece’ by executing computations using encrypted data that stays hidden from network nodes.”

Churchill said that the work Alan Turing did shortened WWII by two years; perhaps the ‘new’ Enigma will fast-forward the crypto industry into a more secure marketplace before 2020.

Is crypto’s 2018 a total washout?

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So far, 2018 hasn’t been the best year for cryptocurrencies. The bearish sentiment that followed the euphoria at the end of 2017 seems to be running the show, but is this the end of cryptocurrencies, or merely the downside that comes before a resounding turnaround in fortunes?

Yoni Assia, CEO of eToro believs that selling your ryptocurrency now is like selling Apple stock back in 2001, when it was falling in value. It is easy to see why many people are selling off their holdings, especially if you didn’t get into crypto s a long-term investment, but if you do take a longer view of the market, then perhaps there is a good reason to hold on to those crypto assets for a while longer and see how it all plays out.

If we look at Bitcoin’s past trends, it doesn’t seem over ambitious to claim that there is likely to be an upswing towards the end of 2018. If that happens and you sell now, then you stand to lose money.

ICOs are the real ‘bubble’

Assia told Business Insider that one thing to look at in the crypto market is the number of startups issuing tokens in ICOs. He believes that “95% of them will end up as nothing, because that’s startup funding.” What he means is that the majority of tokens will simply fade away, leaving the strongest ones to lead the crypto market. These are probably going to be Bitcoin, Ethereum, Litecoin and a few more.

Dominik Schiener, creator of IOTA said earlier this year that he expects less than 10 of the 1,400 crypto projects that have started in the last year to survive. That’s quite a radical figure.

Neither Assia or Schiener are sceptical about crypto; they are both supporters of the sector, but what they are saying is that as with the dotcom era, many projects will get funding but not survive. However, those that do are likely to transform the world and make their investors big money.

What Assia is really saying is that it is ICOs that are ‘the bubble’, not cryptocurrencies or the blockchain. Many of them simply aren’t viable. But their demise will pave the way for true cryptocurrencies to succeed in the future.

We may not be in quite the same situation as Apple stock holders were in 2001, but it has a ring of familiarity. Still, if we remember that correctly, after that massive sell-off, Apple’s stock went on to gain a staggering amount of value, and who is to say that crypto won’t do exactly the same. It might look like a washout at the moment, but give crypto time and you might be glad you held on to your assets.

Blockchain finds fake news

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Fake news never used to be an issue; indeed, there was little reason to think it existed. We all knew that different newspapers and news services had particular agendas, but the idea that stories were simply made up never occurred to us. Then came the last U.S. presidential election and suddenly ‘fake news’ was apparently everywhere; at least, Donald Trump seemed to think so.

Russian trolls via social media, allegedly serve most of these ‘fake’ stories, up where they perfectly target a precise readership with the help of firms like the now disgraced Cambridge Analytica. The challenge to the thinking reader has been ever since — how do we spot fake news. Various suggestions have been made, but they are for the most part time consuming, and even if you restrict your news services to those who are historically trusted, like the New York Times, there is a niggling feeling that even the elder statesmen of journalism might have succumbed to publishing the odd fake story. But, there is now another solution to separating the fake from the real — it’s blockchain.

Trusted News on Blockchain

Techcrunch reports that Adblock Plus developer eyeo GmbH is using blockchain technology for its browser extension called Trusted News. Currently this is only available for Chrome and in a beta version at the Trusted News website. It says there that “the browser add-on labels fake news media while marking trustworthy sources and stories. Once added to the browser, the extension displays a small window with a brief description of a news source containing the labels “trustworthy”, “unknown”, “clickbait” or even “satire.” Cointelegraph uses a front page story from the UK’s Daily Mail to show how it works; a good choice as this newspaper is renowned for its bias and its clickbait headlines.

The browser add-on uses data compiled by different sources, for instance with PolitiFact, Snopes, Wikipedia and Zimdars’ List, and works with the MetaCert protocol, which uses an anti-fraud URL registry to maintain the database for the project.

Eventually, Trusted News will be on the Ethereum blockchain and there are rumours that “the company also plans to issue MetaCert tokens to track rewards and to avoid the risk of bad actors manipulating or spoiling data.”

Will the emergence of Trusted News finally prompt Facebook and Google into taking action to alert readers to bias in news stories? Both promised some form of flagging back in early 2017, but we have yet to see Facebook’s ‘trust indicators’ or Google’s News Initiative platform. Until then, we’ll have to use our own judgement — that’s a concept that appears to have become out-of-date way too soon.

Building new nations on the blockchain

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Have you ever considered starting your own country? The constant stream of ‘bad news’ from around the world might well inspire you to create a new nation, not necessarily a utopia, but one that follows a different set of rules and is more efficient and less corrupt than many existing countries.

Bitnation

The blockchain has provided an opportunity to do just that. Bitnation was formed in 2014 and says it is Governance 2.0. You are welcomed to the Internet of Sovereignty, also known as Bitnation Pangea. And here you can create your own Decentralised Borderless Voluntary Nation (DBVN). Choose your Code of Law and Decision Making Mechanism, write a Constitution and provide Governance Services to Citizens. That promises to take up quite a bit of your spare time!

The Free Republic of Liberland

There is also the Free Republic of Liberland with its motto of “To live and let live.” It’s actually a micronation that claims a disputed plot of land on the western bank of the Danube River, between Croatia and Serbia. Its official language is English and it has a flag, a coat of arms, a constitution and laws. It prides itself on offering all its citizens personal and economic freedom and it is accepting applications for citizenship – you can even take a trial to play for its football team. Its economy runs on donations of Bitcoin and Bitcoin Cash and its founder Vit Jedlicka says, “If you are a cryptocurrency enthusiast and disappointed by the attitude of your country towards the emerging crypto assets, becoming a ‘citizen’ of Liberland can be an option for you.”

The Floating Island Project

And then, if you’re a fan of the sea there is the Floating Island Project in French Polynesia, which puts the concept of ‘seasteading’ at the heart of its philosophy. Founded by The Seasteading Institute, it aims to found an indefinite number of floating cities in and around French Polynesia, with the target-year for the establishment of its first city being 2022. The inaugural island will accommodate 300 houses and be making use of its very own cryptocurrency, named Varyon (VAR).

All of these nations are blockchain based, and each one believes that “we can do better with technology and innovation rather than ideology, politics and argumentation.” And, as Vit Jedlicka said, “It’s easier to create a new country than try to fix an existing one.”

Will existing governments tolerate the building of new nations n the blockchain? Only time will tell, but these first few could inspire many more people to create a micronation where innovation and new ideas can breathe. They may not be viable in the long run, but perhaps people will get sufficiently tired of the old nation-states to consider supporting them.