The crypto thread

[Birdjaguar]

Breaking crypto's anonymity:

The U.S. Cracked a $3.4 Billion Crypto Heist—and Bitcoin’s Anonymity

Federal authorities are making arrests and seizing funds with the help of new tools to identify criminals through cryptocurrency transactions.

www.wsj.com

 

[Samson]

Breaking crypto's anonymity:

The U.S. Cracked a $3.4 Billion Crypto Heist—and Bitcoin’s Anonymity

Federal authorities are making arrests and seizing funds with the help of new tools to identify criminals through cryptocurrency transactions.

www.wsj.com

You really need a wallet tool that is designed for anonymity. I like how bisq works, with no wallet being used more than once.

 

[Samson]

Crypto researcher identifies massive wallet draining operation

Crypto researcher Tayvano posted a Twitter thread about a massive, mysterious wallet draining operation that has siphoned more than 5,000 ETH (~$9.88 million at today's prices) as well as other tokens and NFTs from wallets across more than eleven blockchains since December 2022. The operation appears to target more sophisticated crypto users, but the mechanism of attack is unclear. The researcher hypothesized that "someone has got themselves a fatty cache of data from 1+ yr ago & is methodically draining the keys as they parse them from the treasure trove", but emphasized that that was only speculation.

Tweet thread by Tayvano_

The theft and post-theft on-chain movement is VERY distinct. It's incredible. If you've been drained by this attacker you will gasp as you read this. If you don't gasp, this isn't your thief, sorry.

1. Primary theft txns are almost always between 10am–4pm UTC.

2. Secondary thefts and "dust" collecting occurs anytime but usually 4pm-10pm UTC.

Follow-up drains (for assets missed on the initial sweep) usually occur ~4hrs after the initial theft or at ~7am UTC the following day.

Sometimes accounts are re-swept weeks or months later.

Afaik, no one has determined the source of their compromise. Multiple devices have been forensic'd. Nothing. The only known commonalities are:
- Keys were created btwn 2014-2022
- Folks are those who are more crypto native than most (e.g. multiple addresses, work in space, etc)

I'm tired af but I'll lay out some details of the attacker below. Really the ONLY thing you need to read is this:

PLEASE DON'T KEEP ALL YOUR ASSETS IN A SINGLE KEY OR SECRET PHRASE FOR YEARS. THE END.

Split up your assets. Get a hw wallet. Migrate. Now.

 

[warpus]

@MrCynical you can remain ignorant of the facts if you want, that is your own prerogative. I pointed you in some directions you could pursue if you want to really learn about this, but it looks like you don't really care to at all. That's fair, but it seems we have nothing to talk about, since this is the thread for crypto and all things related after all..

 

[MrCynical]

@MrCynical you can remain ignorant of the facts if you want, that is your own prerogative. I pointed you in some directions you could pursue if you want to really learn about this, but it looks like you don't really care to at all.

Claiming anyone who disagrees with you is "ignorant of the facts" is a rather desperate and ineffectual line of argument to go down, Warpus. You've provided two links. The first to a project you failed to notice had already been abandoned when you linked to it, and was a very transparent attempt to greenwash a standard cryptotoken push. The second was a media puff piece on similar projects which failed to address the gaping gap in the logic:

1) Blockchain and crypto
2) ?????
3) Less plastic in ocean

The facts you have presented, such as they are, indicate this is just attempting to add "eco-friendly" as a unique selling point for particular cryptotokens. That is entirely consistent with what I have seen elsewhere, and the idea of any kind of blockchain tech being "green" requires a fair amount of ignorance of how it works anyway. Your stance that crypto is actually helping with ocean cleanup is not a rational conclusion from the facts you've presented, without a severe case of gullibility.

That's fair, but it seems we have nothing to talk about, since this is the thread for crypto and all things related after all..

<Shrugs>. Failures of crypto are entirely on topic for the thread, like it or not. As are claims of blockchain utility that don't even make internal sense.

 

[Samson]

the idea of any kind of blockchain tech being "green" requires a fair amount of ignorance of how it works anyway.

This I shall debate. Of course you need an appropriate definition of green that includes the realistic alternatives. Let us explore those for an example transaction. Say an internet purchase of about £300. This could be made by visa or monero. The easy thing to measure is how much those cost to the user, visa it would be about 5% so £15. Monero the fees would be about 0.3p.

Now I do not know how much an additional £15 into the financial industry will increase CO2 emissions, but I am willing to be it is more than 0.3p put into a blockchain that is designed to run in the background on users machines, and I have never hear of a farm for.

 

[MrCynical]

This I shall debate. Of course you need an appropriate definition of green that includes the realistic alternatives. Let us explore those for an example transaction. Say an internet purchase of about £300. This could be made by visa or monero. The easy thing to measure is how much those cost to the user, visa it would be about 5% so £15. Monero the fees would be about 0.3p.

The fee charged isn't a useful comparison here. The issue is the computation and hence emissions required, and that's not what conventional financial transaction fees are based on.

I know there are attempts to make blockchain systems more computationally lightweight and practical. The most commonly used ones - most obviously bitcoin - are atrocious for emissions, even with their current limited usage.

 

[Samson]

The fee charged isn't a useful comparison here. The issue is the computation and hence emissions required, and that's not what conventional financial transaction fees are based on.

I know there are attempts to make blockchain systems more computationally lightweight and practical. The most commonly used ones - most obviously bitcoin - are atrocious for emissions, even with their current limit usage.

All that matters is how much CO2 is released in the two situations. In simplified terms one situation is that the visa corporation has £15 pounds more money, and that will either be spent on more stuff (which will have a footprint), more staff in the financial industry (which will have a footprint), or more profits for the shareholders (which will have a footprint). The other is 0.3p in the monero "ecosystem" which will incentivise more people to run miners in the background and so their computers will use more electricity, and similar things up to running farms.

If this was £15 pounds in both I would agree that the blockchain is likely to be worse. If it was £1.5 in the blockchain there would be a serious debate, we could look at the total costs of the two systems and see if a greater than 10x CO2 footprint/£ is realistic. If it was 15p in the blockchain I think you would need some serious argument how the emissions for the tradition finance industry are somehow better than home computers that would make a 100x CO2 footprint/£. If it was 1.5p I would be getting a bit incongruous, a 1000x difference in environmental damage for something so similar? And we still have another factor of 5 to go to get to the real magnitude difference. And we are talking about a service that is preferable to the user, requires no permission, is optimized for easy to use privacy in such a way that is is impossible to do so badly as to expose others and really hard to expose yourself. I do not know much about scams, but monero is not one of the ones you hear about people losing from malware.

 

[MrCynical]

In simplified terms one situation is that the visa corporation has £15 pounds more money, and that will either be spent on more stuff (which will have a footprint), more staff in the financial industry (which will have a footprint), or more profits for the shareholders (which will have a footprint). The other is 0.3p in the monero "ecosystem" which will incentivise more people to run miners in the background and so their computers will use more electricity, and similar things up to running farms.

Sorry - there's a basic issue with the maths and logic here, which makes that £15 literally irrelevant to the question of which is worst for emissions. The £15 hasn't just popped into existence. The difference is whether the consumer has it to spend, or the financial company does. I've no idea of how the per pound carbon emissions of the consumer spending money compares to a finance company spending the same money works out, and I suspect any attempt to calculate that would be wonderfully unproductive. But you can literally switch £15 out for any number. If the company charges, say, Musk, a billion in fees, that doesn't create a billion in extra emissions, because Musk's spending of a billion isn't emission free either. It's a meaningless number, and hence so are ratios derived from it.

Moving over to the 0.3p on monero. This number is more useful, as we can then ask the question - how much carbon is it possible to emit for that sum, assuming the company is trying to make a profit? The assumption of profitability is actually rather dodgy for crypto, since many schemes run at a loss to try and hook users in, but it gives at least some kind of reference point.

The fee cost may be of great interest from the consumer's point of view, but it's not a plus from a "green" standpoint.

 

[Samson]

Perhaps there is some misunderstanding in how I do "environmental economic" calculations.

To take a trivial example say I want to decide if I should drive or fly somewhere. I might calculate how much petrol I would use and work out the cost of that. I could compare this to the cost of the plane ticket. I could then estimate the relative footprints of these two things. It is going to be difficult to be exact, there are so many externalities and the way the CO2 is emitted is different and the way my spending money relates to the actual CO2 release is very different. However if you only care about orders of magnitude it is probably good enough. If I would be spending ten times the money on one or the other, then the planet is probably better off if I choose the cheaper option. If I would be spending 5000 times the money it is a no brainer.

It seems a very similar calculation. In much the same why that if I do not get on a plane the plane will still fly, but if noone got on the plane it would not, if I do not use visa then it will continue to exist and probably have much the same carbon footprint. If no one used visa it would not exist and would not have a carbon footprint. That excuses the visa users no more than the regular flight schedule excuses flyers. Your example of Musk is very appropriate. If no one had used paypal we would not have Musk releasing as much CO2 as we do. Every transaction on paypal (when it was Musks) contributed to Musk being Musk, and therefore his carbon footprint. Exactly how you factor this into a calculation is difficult, but to say the CO2/£ is 5000x different seems to need a bit more justification.

 

[MrCynical]

To take a trivial example say I want to decide if I should drive or fly somewhere. I might calculate how much petrol I would use and work out the cost of that. I could compare this to the cost of the plane ticket. I could then estimate the relative footprints of these two things. It is going to be difficult to be exact, there are so many externalities and the way the CO2 is emitted is different and the way my spending money relates to the actual CO2 release is very different. However if you only care about orders of magnitude it is probably good enough. If I would be spending ten times the money on one or the other, then the planet is probably better off if I choose the cheaper option. If I would be spending 5000 times the money it is a no brainer.

The emissions calculation for driving vs flying comes down just to the fuel consumed. The cost of the plane ticket is does not in any way effect the amount of CO2 emitted. It is relevant to personal trade offs as to how much more you're willing to pay for eco reasons, but that's not the same thing. You can however make an assumption that a significant factor in the cost of the plane ticket is the cost of the fuel consumed - and so make some inference of how much CO2 is emitted from the price.

But that isn't at all applicable to the previous example of financial transactions, because the electricity/computational cost is not a limiting, or even a relevant factor on the cost of a conventional financial transaction. That £15 or whatever fee, has no connection to the electricity or CO2 emissions whatsoever. I think we'd previously established that? If so, it necessarily contains zero information on the "greenness" of the transaction.

By it's nature, the blockchain is more computationally complex, and so will always consume more power for the same transaction that conventional financial systems. Various attempts to make it more lightweight cannot make it more efficient than not bothering with it at all. At best they can reduce the number of orders of magnitude it is worse by (which in the case of Bitcoin is several).

 

[Samson]

The emissions calculation for driving vs flying comes down just to the fuel consumed. The cost of the plane ticket is does not in any way effect the amount of CO2 emitted. It is relevant to personal trade offs as to how much more you're willing to pay for eco reasons, but that's not the same thing. You can however make an assumption that a significant factor in the cost of the plane ticket is the cost of the fuel consumed - and so make some inference of how much CO2 is emitted from the price.

But that isn't at all applicable to the previous example of financial transactions, because the electricity/computational cost is not a limiting, or even a relevant factor on the cost of a conventional financial transaction. That £15 or whatever fee, has no connection to the electricity or CO2 emissions whatsoever. I think we'd previously established that? If so, it necessarily contains zero information on the "greenness" of the transaction.

By it's nature, the blockchain is more computationally complex, and so will always consume more power for the same transaction that conventional financial systems. Various attempts to make it more lightweight cannot make it more efficient than not bothering with it at all. At best they can reduce the number of orders of magnitude it is worse by (which in the case of Bitcoin is several).

If I am faced with a choice between two options A and B, and I want to determine which option is better for the climate all that matters is how much CO2 alternatives are released under a compared to B. This applies if I am choosing to be a merchant banker or a hippy living in a yurt, if I fly or drive or if I use visa or monero. This much we agree on right? It makes no difference if the CO2 is released doing the actual sums involved in running or preparing the annual report for the shareholders or paying for an executives private flight. It makes no difference what the limiting factor is. All that matters is what is released under one alternative compared to what is released under the other.

That just leaves us with how to calculate the cost when you are not directly releasing the CO2. It seems that the situations of monero is more similar to visa than car use compared to flying. In both monero and visa you have a global IT infrastructure funded by a combination of current fees and expected future earning. In both cases the individual use is adding a very small amount of the total profitability, and it is this profitability that incentivises people to continue to run the system and release the CO2. In both cases you stopping would have an insignificant or zero effect on the total CO2 footprint. In both cases if everyone stopped using it it would go away and have zero CO2 footprint.

Therefore it seems to me reasonable to assign the costs in each instance to be the total industry footprint/proportion of my contribution to total. This is difficult, and just reducing it to cost is the easy way to come up with a quick and dirty estimate. Note I can give this estimate a two order of magnitude confidence interval and still the confidence intervals would not overlap. As long as the answers are separated by this much the inaccuracies in the comparison kind of do not matter, as long as they are within an order of magnitude or two.

This seems a reasonable way to do it, and I think you will agree it is more actionable than anything you have suggested. If you can come up with an objective way you can compare these two options that you are willing to put number to I would love to hear it. What you are referring to with "That £15 or whatever fee, has no connection to the electricity or CO2 emissions whatsoever. I think we'd previously established that?" I do not know. If noone paid the £15 fee then visa would not exist. If that does not make a connection then it must be more a semantic point than an objective one.

This is really similar to comparing the CO2 footprint of linux and windows. Sure, linux may have released more CO2 in actual CPU time in developing/compiling/distributing them (because it had so many more developers working independently), but Microsoft as an organisation has released many times the CO2 that the linux developers/distributors have. Had no one spent any money on microsoft products and all used FOSS less CO2 would have been released, so in my view linux is greener. Does this logic make sense to your idea of environmental economics?

 

[uppi]

The 0.1p figure for a transaction in monero is completely misleading. In reality, a transaction costs about $4, financed mostly by the creation of new money. Electricity costs will make up the bulk of that, so we know that a Monero transaction will consume close to $4 in electricity.

The Visa fee also includes insurance, so part of it will be insurance payouts, which is just numbers in systems going up and down, with negligible Co2 emmission.

 

[MrCynical]

It makes no difference if the CO2 is released doing the actual sums involved in running or preparing the annual report for the shareholders or paying for an executives private flight. It makes no difference what the limiting factor is. All that matters is what is released under one alternative compared to what is released under the other.

To summarize what I'm hearing your stance as:

Conventional financial consumptions add sufficient unnecessary externalities (private jets, whatever) to outweigh the lower electricity costs of their computationally simpler transactions.

I'm not convinced that is true, given the extreme computational inefficiency of most blockchain networks. In addition to that, any crypto service that expands to carry out a significant fraction of financial transactions will accumulate stakeholders, corporate extravagance and all of the other baggage of existing financial systems. It doesn't seem a great rationale for switching to an inherently less energy efficient basic technology.

Just to conclude on the last couple of posts. Uppi points out that the current transaction fee for monero is also in fact not connected to the electricity costs, so the 0.3p figure is in fact as useless for calculating emissions as the £15 was. Neither of these numbers in fact have any connection to the basic electricity cost of making the transaction. The distinction is that Visa is running at a profit for the company, while monero is running at a huge loss on each transaction, relying on what looks suspiciously like a typical cryptotoken bubble to prop it up.

 

[Samson]

The 0.1p figure for a transaction in monero is completely misleading. In reality, a transaction costs about $4, financed mostly by the creation of new money. Electricity costs will make up the bulk of that, so we know that a Monero transaction will consume close to $4 in electricity.

I think this is wrong. Electricity costs are nowhere near $4. Mining profitability is slightly positive using this tool, and that assumes you turn your computer on to mine, but does not include purchase cost. The idea is that you run the miner in the background while you are doing less intensive things. No one knows what actually happens, by design, but I have never heard of a monero farm and the relative stability of the monero price at a level that means it is always very slightly profitable is evidence that it is working as designed.

I cannot see any maths that could possibly justify your 100x inflation of environmental footprint.

Spoiler Relative stability :

The Visa fee also includes insurance, so part of it will be insurance payouts, which is just numbers in systems going up and down, with negligible Co2 emmission.

All that matters is the CO2 emissions of one compared to the CO2 emissions of the other. Most of these insurance payouts they take the money from the other party, so what you are actually paying for is the investigators time and effort. That most certainly does have a CO2 footprint.

 

[uppi]

I think this is wrong. Electricity costs are nowhere near $4. Mining profitability is slightly positive using this tool, and that assumes you turn your computer on to mine, but does not include purchase cost. The idea is that you run the miner in the background while you are doing less intensive things. No one knows what actually happens, by design, but I have never heard of a monero farm and the relative stability of the monero price at a level that means it is always very slightly profitable is evidence that it is working as designed.

I cannot see any maths that could possibly justify your 100x inflation of environmental footprint.

That tool says that roughly 90% of the mining reward is spent on electricity.

Mining reward is 0.6 XMR per block.
At current price that is $97 mining reward.

Average number of transactions per block: 25, so roughly $4 reward per transaction. 90% of that in electricity - > $3.6 worth of electricity consumed for your one transaction

 

[Samson]

To summarize what I'm hearing your stance as:

Conventional financial consumptions add sufficient unnecessary externalities (private jets, whatever) to outweigh the lower electricity costs of their computationally simpler transactions.

Pretty much, but total costs. From the electricity that runs the card reader in the store to the CEOs luxury holiday. This is just a maths thing, if I am wrong the data should be easy to demonstrate considering the orders of magnitude difference we are talking about.

I'm not convinced that is true, given the extreme computational inefficiency of most blockchain networks. In addition to that, any crypto service that expands to carry out a significant fraction of financial transactions will accumulate stakeholders, corporate extravagance and all of the other baggage of existing financial systems. It doesn't seem a great rationale for switching to an inherently less energy efficient basic technology.

If you think my maths or logic do not stand up please point out the hole. One pound of every twenty we put through our cards is going into this industry. Your argument seems to be that it has a carbon footprint so small that its CO2/turnover is less than one five thousandth of the alternative. This seems a quite strong claim that requires some sort of maths or something to back up.

Just to conclude on the last couple of posts. Uppi points out that the current transaction fee for monero is also in fact not connected to the electricity costs, so the 0.3p figure is in fact as useless for calculating emissions as the £15 was. Neither of these numbers in fact have any connection to the basic electricity cost of making the transaction. The distinction is that Visa is running at a profit for the company, while monero is running at a huge loss on each transaction, relying on what looks suspiciously like a typical cryptotoken bubble to prop it up.

You do get that this is calculating that if you run a monero miner you get in fees almost exactly what you will spend in electricity, with the default settings it is predicing you will make $0.10 Monero mining profit per day. This means that the whole system is taking in almost exactly the money in fees as it is spending in electricity, assuming everyone was paying $0.1/kWh.

That does not look there is a massive disconnect between the CO2 footprint and the cost to me.

That tool says that roughly 90% of the mining reward is spent on electricity.

Mining reward is 0.6 XMR per block.
At current price that is $97 mining reward.

Average number of transactions per block: 25, so roughly $4 reward per transaction. 90% of that in electricity - > $3.6 worth of electricity consumed for your one transaction

I do not think this is right, though it is something I do not get. You cannot examine the transactions in monero the same way as you can bitcoin, but I am fairly sure I only paid 0.3p of that $4 and that is where the money comes from. I am not sure how that all works out, but your maths seems to support that the fees paid are roughly equal to the CO2 costs. That kind of ends the discussion about the footprint of the blockchain. As long as we are willing to distribute that cost according to who pays it it just leaves us to calculate the CO2 footprint of visa, right? And that needs to be five thousand times as efficient in taking fees with releasing little CO2 than monero for your point to hold?

 

[MrCynical]

I took a slightly different approach for trying to calculate per transaction cost:

This paper gives a 2018 monero power consumption for the entire year of 645GWh. The stats for monero give about 5,000 transactions per day over that period. A little arithmetic works that out at 353 kWh per transaction, which was about $45 per transaction in electricity costs as 2018 prices.

OK, there's room for quibbling at the paper's exact estimates, and maybe there's been some incremental improvement in efficiencies, but when it comes to orders of magnitude, the evidence is that it costs way more than a fraction of a penny per transaction. Discussion threads seem to hover on the order of a few hundred kWh per transaction - e.g. 234 kWh here. So in the right ball park.

 

[Samson]

I took a slightly different approach for trying to calculate per transaction cost:

This paper gives a 2018 monero power consumption for the entire year of 645GWh. The stats for monero give about 5,000 transactions per day over that period. A little arithmetic works that out at 353 kWh per transaction, which was about $45 per transaction in electricity costs as 2018 prices.

OK, there's room for quibbling at the paper's exact estimates, and maybe there's been some incremental improvement in efficiencies, but when it comes to orders of magnitude, the evidence is that it costs way more than a fraction of a penny per transaction.

This is relying on the assumption that costs follow transaction number rather than money paid in. I do not get that logic, in either monero or visa. It is the environmental cost of the whole system divided by how much we are paying for that system that is the crucial number.

If we both spend £3,650 on our visa cards, I buy one £10 beer every day at the pub and you make one order of 365 beers online do we contribute equally to visa, or do I contribute 365 times as much as you?

Also, do note their assumption that all the electricity costs are going for mining. If this is running in the background it is far more efficient than that, in 2018 in a lot of home computers it would use no additional electricity in many cases.

 

[MrCynical]

If we both spend £3,650 on our visa cards, I buy one £10 beer every day at the pub and you make one order of 365 beers online do we contribute equally to visa, or do I contribute 365 times as much as you?

We are discussing the unavoidable electricity cost and hence CO2 emissions of running the system. Whether a company runs at a huge profit (visa) or a huge loss (monero) really is a distracting irrelevance to that.

Given that the cost of editing a number in an electronic record is not dependent on the magnitude of the number, one transaction per day (i.e. 365 transactions) will have about 365 times the functional processing costs and emissions.

If you think my maths or logic do not stand up please point out the hole. One pound of every twenty we put through our cards is going into this industry. Your argument seems to be that it has a carbon footprint so small that its CO2/turnover is less than one five thousandth of the alternative. This seems a quite strong claim that requires some sort of maths or something to back up.

Again - because an industry can be run either at a huge profit, or a huge loss, the amount actually spent transaction fees tells you absolutely nothing about the electricity and CO2 emissions costs, because those are not the limiting factor on the transaction fee.

You are also muddling up these inherent costs with whatever Visa spends its profits on. Firstly this is no longer a like for like comparison. If we're going to bring in the CEO's luxury holiday, then, to even make any relevant calculation, I now need a number for CO2 emissions per pound spent by a CEO, vs emissions from a pound spent by the average Joe. Remember, reducing transaction fees only alters who spends the money, not how much is spent. I'll accept the CEO is more wasteful, but 5,000 fold for that ratio seems implausible. On top of that, the 5,000x figure seems to be based on an extremely incorrect assessment of monero's per transaction electricity costs. There's a limit to how much digging I'm willing to do on that, but the plausible electricity cost per transaction for monero seems to be anywhere in the $2 -$50 range, even the low end of which is awful compared to conventional financial systems.