Cryptocurrency Market Analysis

Crypto Sentiment Analysis

For the past several weeks, we’ve been interacting with the Ethos community to gather sentiment data around the cryptocurrency sector. On some level, crypto assets are driven by sentiment and the perception of value more so than virtually any other commodity in the world. So we thought we would gather data signals from our community about their sentiment of specific cryptocurrencies, as well as their perception about the industry in general.

We want to gratefully thank everyone who participated in these surveys, and encourage people to continue to respond.


This survey was conducted with a sample size of approximately 2000 respondents queried weekly. They were asked simple questions such as “Do you think Bitcoin will go up and down?” in a simple survey format. While the survey was anonymous, many respondents chose to share email, and participation was limited by IP address to once per week. The respondents were primary “hardcore” crypto enthusiasts.

Bitcoin Sentiment

Sentiment took a dip at the end of March, then steadily grew through April plateauing post tax day. Basically the respondents collectively seemed to sense that Bitcoin would pop after taxes were filed.


Note that the percentage of respondents who believed Bitcoin would go down dropped from 17.5% during the last week of March to 4.1% after April 15th (tax day)

It’s interesting to compare this against actual Bitcoin price performance, and the correlation with price gains around the end of March preceding the post April 15th bump.

Actual Bitcoin Price Performance. Source: World Coin Index.

Ethereum Sentiment

Ethereum sentiment unsurprisingly correlated very closely to Bitcoin price sentiment, with tiny bit more pessimism at the end. In this case, the amount of people who thought Ethereum would go down in price fell from a peak of 18% to 4.6% after April 15th. (Notably close but slightly higher than the 4.1% compared to Bitcoin)


Ethereum price performance again mostly correlated sentiment.

Ripple Sentiment

Interestingly, sentiment regarding Ripple was uniformly more negative. Meaning — the majority still correctly predicted Ripple’s price increase (along with the whole market rise), but a larger percentage disagreed with the majority in believing Ripple would go down in price — a peak of 31.4% declining to 21.6% after April 15th.


This is despite the fact that Ripple basically correlated to Bitcoin’s performance.

Source: World Coin Index

Litecoin Sentiment

Litecoin was similar to Ripple, but had a downtrend in negative sentiment towards the end of April. Litecoin had a very strong “sentiment recovery” during this time.


Again, the Litecoin trend mirrors the other coins almost exactly.

Source: World Coin Index

Bitcoin Cash

Just asking for sentiment data around Bitcoin Cash was in itself controversial, as some respondents objected to the very existence of the question. Given the strong passions involved, it was not surprising to see sharper sentiment trends, as well as the strongest negative sentiment of the coins. This was the only coin that almost had “crossed streams” of negative sentiment overlapping with positive sentiment.

Also World Coin Index doesn’t seem to have Bitcoin Cash charts 🙂


Crypto Enthusiasm

Participants were asked to rank their enthusiasm for the sector from 1 to 10. Enthusiasm was dampened by the drop in prices, but stayed between a fairly narrow range of 9.1 to 8.86. In other words, the volatility didn’t seem to phase anybody very much.


Investment Plan

Participants were asked if they planned to Invest More into Crypto, Stand Pat eg HODL or Cash Out, meaning transfer crypto assets to fiat. Even though these respondents are hard-core crypto enthuiasts, it was stunning to see that virtually nobody planned to cash out (or at least wanted to say they would)


In a similar vein, respondents were asked if they were Satisified or Dissatisifed with the crypto industry in general. There was more of a noticeable uptick with prices, which was unsurpising.


Crypto Scams

Respondents were asked whether they were seeing more serious projects or scams. With the ICO gold rush and various clear scams, the market has clearly gotten more sensitive to out-and-out scams. However, according to the respondents, there has been a noticeable uptick in quality over the last 30 days.


Crypto and the Traditional Financial Ecosystem

Finally, respondents were asked if they thought the tradtional financial system would push back or partake in crypto. Again over the past 30 days there has been a noticable gain in confidence that the crypto will integrate into the traditional system in some form or fashion.

The fact that these data signals are coming from serious crypto enthusiasts needs to be factored in. There may be some degree of wishful thinking or “right answer” for the individual positions respondents might have. However, even with that factored in, this data offers a glimpse of the power of the crowd, and how crypto communities can collectively be smarter than the individual.

Ethos will keep these surveys going! If you’d like to join the list, please visit and sign up for Ethos News & Updates.

Once again, thank you to all participants.

Blockchains Technology Computers

Blockchains from a Distributed Computing Perspective

Blockchains from a Distributed Computing Perspective by Maurice Herlihy, Brown University


Bitcoin first appeared in a 2008 white paper authored by someone called Satoshi Nakamoto [15], the mysterious deus abscondidus of the blockchain world. Today, cryptocurrencies and blockchains are very much in the news. Much of this coverage is lurid, sensationalistic, and irresistible: roller-coaster prices and instant riches, vast sums of money stolen or inexplicably lost, underground markets for drugs and weapons, and promises of libertarian utopias just around the corner.

This article is a tutorial on the basic notions and mechanisms underlying blockchains, colored by the perspective that much of the blockchain world is a disguised, sometimes distorted, mirror-image of the distributed computing world.

This article is not a technical manual, nor is it a broad survey of the literature (both widely available elsewhere). Instead, it attempts to explain blockchain research in terms of the many similarities, parallels, semi-reinventions, and lessons not learned from distributed computing. This article is intended mostly to appeal to blockchain novices, but perhaps it will provide some insights to those familiar with blockchain research but less familiar with its precursors.



The abstraction at the heart of blockchain systems is the notion of a ledger, an invention of the Italian Renaissance originally developed to support double-entry bookkeeping, a distant precursor of modern cryptocurrencies. For our purposes, a ledger is just an indelible, append-only log of transactions that take place between various parties. A ledger establishes which transactions happened (“Alice transferred 10 coins to Bob”), and the order in which those transactions happened (“Alice transferred 10 coins to Bob, and then Bob transferred title to his car to Alice”). Ledgers are public, accessible to all parties, and they must be tamper-proof: no party can add, delete, or modify ledger entries once they have been recorded. In short, the algorithms that maintain ledgers must be fault-tolerant, ensuring the ledger remains secure even if some parties misbehave, whether accidentally or maliciously.


2.1 Blockchain Ledger Precursors

It is helpful to start by reviewing a blockchain precursor, the so-called universal construction for lock-free data structures [12].

Alice runs an online news service. Articles that arrive concurrently on multiple channels are placed in an in-memory table where they are indexed for retrieval. At first, Alice used a lock to synchronize concurrent access to the table, but every now and then, the thread holding the lock would take a page fault or a scheduling interrupt, leaving the articles inaccessible for too long. Despite the availability of excellent textbooks on the subject [13], Alice was uninterested in customized lock-free algorithms, so she was in need of a simple way to eliminate lock-based vulnerabilities.

She decided to implement her data structure in two parts. To record articles as they arrive, she created a ledger implemented as a simple linked list, where each list entry includes the article and a link to the entry before it. When an article arrives, it is placed in a shared pool, and a set of dedicated threads, called miners (for reasons to be explained later), collectively run a repeated protocol, called consensus, to select which article to append to the ledger. Here, Alice’s consensus protocol can be simple: each thread creates a list entry, then calls a compare-and-swap instruction to attempt to make that entry the new head of the list.

Glossing over some technical details, to query for a recent article, a thread scans the linked-list ledger. To add a new article, a thread adds the article to the pool, and waits for for a miner to append it to the ledger.

This structure may seem cumbersome, but it has two compelling advantages. First, it is universal: it can implement any type of data structure, no matter how complex. Second, all questions of concurrency and fault-tolerance are compartmentalized in the consensus protocol.

A consensus protocol involves a collection of parties, some of whom are honest, and follow the protocol, and some of whom are dishonest, and may depart from the protocol for any reason. Consensus is a notion that applies to a broad range of computational models. In some contexts, dishonest parties might simply halt arbitrarily (so-called crash failures), while in other contexts, they may behave maliciously (so-called Byzantine failures). In some contexts, parties communicate through objects in a shared memory, and in others, they exchange messages. Some contexts restrict how many parties may be dishonest, some do not.

In consensus, each party proposes a transaction to append to the ledger, and one of these proposed transaction is chosen. Consensus ensures: (1) agreement: all honest parties agree on which transaction was selected„ (2) termination: all honest parties eventually learn the selected transaction, and (3) validity: the selected transaction was actually proposed by some party.

Consensus protocols have been the focus of decades of research in the distributed computing community. The literature contains many algorithms and impossibility results for many different models of computation (see surveys in [1, 13]).

Because ledgers are long-lived, they require the ability to do repeated consensus to append a stream of transactions to the ledger. Usually, consensus is organized in discrete rounds, where parties start round r + 1 after round r is complete.

Of course, this shared-memory universal construction is not yet a blockchain, because although it is concurrent, it is not distributed. Moreover, it does not tolerate truly malicious behavior (only crashes). Nevertheless, we have already introduced the key concepts underlying blockchains.


2.2 Private Blockchain Ledgers

Alice also owns a frozen yogurt parlor, and her business is in trouble. Several recent shipments of frozen yogurt have been spoiled, and Bob, her supplier, denies responsibility. When she sued, Bob’s lawyers successfully pleaded that not only had Bob never handled those shipments, but they were spoiled when they were picked up at the yogurt factory, and they were in excellent condition when delivered to Alice’s emporium.

Alice decides it is time to blockchain her supply chain. She rents some cloud storage to hold the ledger, and installs internet-enabled temperature sensors in each frozen yogurt container. She is concerned that sensors are not always reliable (and that Bob may have tampered with some), so she wires the sensors to conduct a Byzantine fault-tolerant consensus protocol [4], which uses several rounds of voting to ensure that temperature readings cannot be distorted by a small number of of faulty or corrupted sensors. At regular intervals, the sensors reach consensus on the current temperature. They timestamp the temperature record, and add a hash of the prior record, so that any attempt to tamper with earlier records will be detected when the hashes do not match. They sign the record to establish authenticity, and then append the record to the cloud storage’s list of records.

Each time a frozen yogurt barrel is transferred from Carol’s factory to Bob’s truck, Bob and Carol sign a certificate agreeing on the change of custody. (Alice and Bob do the same when the barrel is delivered to Alice.) At each such transfer, the signed change-of-custody certificate is timestamped, the prior record is hashed, the current record is appended to the cloud storage’s list.

Alice is happy because she can now pinpoint when a yogurt shipment melted, and who had custody at the time. Bob is happy because he cannot be blamed if the shipment had melted before he picked it up at the factory, and Carol is similarly protected.

Here is a point that will become important later. At every stage, Alice’s supply-chain blockchain includes identities and access control. The temperature sensors sign their votes, so voter fraud is impossible. Only Alice, Bob, and Carol (and the sensors) have permission to write to the cloud storage, so it is possible to hold parties accountable if someone tries to tamper with the ledger.

In the shared-memory universal construction, a linked list served as a ledger, and an atomic memory operation served as consensus. Here, a list kept in cloud storage serves as a ledger, and a combination of Byzantine fault-tolerant voting and human signatures serves as consensus. Although the circumstances are quite different, the “ledger plus consensus” structure is the same.



Alice sells her frozen yogurt business and decides to open a restaurant. Because rents are high and venture capitalists rapacious, she decides to raise her own capital via an intriguing coupon offering (ICO): she sells digital certificates redeemable for discount meals when the restaurant opens. Alice hopes that her ICO will go viral, and soon people all over the world will be clamoring to buy Alice’s Restaurant’s coupons (many with the intention of reselling them at a markup).

Alice is media-savvy, and she decides that her coupons will be more attractive if she issues them as cryptocoupons on a blockchain. Alice’s cryptocoupons have three components: a private key, a public key, and a ledger entry (see sidebar). Knowledge of the private key confers ownership: anyone who knows that private key can transfer ownership of (“spend”) the coupon. The public key enables proof of ownership: anyone can verify that a message encrypted with the private key came from the coupon’s owner. The ledger conveys value: it establishes the link between the public key and the coupon with an entry saying: “Anyone who knows the secret key matching the following public key owns one cryptocoupon”.

Suppose Bob owns a coupon, and decides to transfer half of it to Carol, and keep the other half for himself. Bob and Carol each generates a pair of private and public keys. Bob creates a new ledger entry with his current public key, his new public key, and Carol’s public key, saying: “I, the owner of the private key matching the first public key, do hereby transfer ownership of the corresponding coupon to the owners of the private keys matching the next two public keys”. Spending one of Alice’s cryptocoupons is like breaking a $20-dollar bill into two $10-dollar bills: the old coupon is consumed and replaced by two distinct coupons of smaller value. (This structure is called the unspent transaction output (UTXO) model in the literature.)

Next, Alice must decide how to manage her blockchain. Alice does not want to do it herself, because she knows that potential customers might not trust her. She has a clever idea: she will crowdsource blockchain management by offering additional coupons as a fee to anyone who volunteers to be a miner, that is, to do the work of running a consensus protocol. She sets up a shared bulletin board (sometimes called a peer-to-peer network) to allow coupon aficionados to share data. Customers wishing to buy or sell coupons post their transactions to this bulletin board. A group of volunteer miners pick up these transactions, batch them into blocks for efficiency, and collectively execute repeated consensus protocols to append these blocks to the shared ledger, which is itself broadcast over the bulletin board. Every miner, and everyone else who cares, keeps a local copy of the ledger, kept more-or-less up-to-date over the peer-to-peer bulletin board.

Alice is still worried that crooked miners could cheat her customers. Most miners are probably honest, content to collect their fees, but there is still a threat that even a small number of dishonest miners might collude with one another to cheat Alice’s investors. Alice’s first idea is have miners, identified by their IP addresses, vote via the Byzantine fault-tolerant consensus algorithm [4] used in the frozen yogurt example.

Alice quickly realizes this is a bad idea. Alice has a nemesis, Sybil, who is skilled in the art of manufacturing fake IP addresses. Sybil could easily overwhelm any voting scheme simply by flooding the protocol with “sock-puppet” miners who appear to be independent, but are actually under Sybil’s control.

We noted earlier that the frozen yogurt supply chain blockchain was not vulnerable to this kind of “Sybil attack” because parties had reliable identities: only Alice, Bob, and Carol were allowed to participate, and even though they did not trust one another, each one knew they would be held accountable if caught cheating. By contrast, Alice’s Restaurant’s cryptocoupon miners do not have reliable identities, since IP addresses are easily forged, and a victim would have no recourse if Sybil were to steal his coupons.

Essentially the same problem arises when organizing a street gang: how to ensure that someone who wants to join the gang is not a plain-clothes police officer, newspaper reporter, or just a freeloader? One approach is what sociologists call costly signaling [21]: the candidate is required to do something expensive and hard to fake, like robbing a store, or getting a gang symbol tattoo.

In the public blockchain world, the most common form of costly signaling is called proof of work (PoW). In PoW, consensus is reached by holding a lottery to decide which transaction is appended next to the ledger. Here is the clever part: buying a lottery ticket is a form of costly signaling because, well, it is costly: expensive in terms of time wasted and electricity bills. Sybil’s talent for impersonation is useless to her if each of her sock puppet miners must buy an expensive, long-shot lottery ticket.

Specifically, in the PoW lottery, miners compete to solve a useless puzzle, where solving the puzzle is hard, but proving one has solved the puzzle is easy (see sidebar). Simplifying things for a moment, the first miner to solve the puzzle wins the consensus, and gets to choose the next block to append to the ledger. That miner also receives a fee (another coupon), but the other miners receive nothing, and must start over on a new puzzle.

As hinted, the previous paragraph was an oversimplification. In fact, PoW consensus is not really consensus. If two miners both solve the puzzle at about the same time, they could append blocks to the blockchain in parallel, so that neither block precedes the other in the chain. When this happens, the blockchain is said to fork. Which block should subsequent miners build on? The usual answer is to build on the block whose chain is longest, although other approaches have been suggested [19].

As a result, there is always some uncertainty whether a transaction on the blockchain is permanent, although the probability that a block, once on the blockchain, will be replaced decreases exponentially with the number of blocks that follow it [8]. If Bob uses Alice’s cryptocoupons to buy a car from Carol, Carol would be prudent to wait until Bob’s transaction is fairly deep in the blockchain to minimize the chances that it will be displaced by a fork.

Although PoW is currently the basis for the most popular cryptocurrencies, it is not the only game in town. There are multiple proposals where cryptocurrency ownership assumes the role of costly signaling, such as Ethereum’s Casper [2] or Algorand [9]. Cachin and Vukolic [3] give a comprehensive survey of blockchain consensus protocols.


3.1 Discussion

The distinction between private (or permissioned) blockchain systems, where parties have reliable identities, and only vetted parties can participate, and public (or permissionless) blockchain systems, where parties cannot be reliably identified, and anyone can participate, is critical for making sense of the blockchain landscape.

Private blockchains are better suited for business applications, particularly in regulated industries, like finance, subject to know-your-customer and anti-money-laundering regulations. Private blockchains also tend to be better at governance, for example, by providing orderly procedures for updating the ledger protocol [11]. Most prior work on distributed algorithms has focused on systems where participants have reliable identities.

Public blockchains are appealing for applications such as Bitcoin, which seek to ensure that nobody can control who can participate, and participants may not be eager to have their identities known. Although PoW was invented by Dwork and Naor [6] as a way to control spam, Nakamoto’s application of PoW to large-scale consensus was a genuine innovation, one that launched the entire blockchain field.



Most blockchain systems also provide some form of scripting language to make it easier to add functionality to ledgers. Bitcoin provides a rudimentary scripting language, while Ethereum [7] provides a Turing-complete scripting language. Such programs are often called smart contracts (or contracts) (though they are arguably neither smart nor contracts).

Here are some examples of simple contract functionality. A hashlock h prevents an asset from being transferred until the contract receives a matching secret s, where h = H(s), for H a cryptographic hash function (see sidebar). Similarly, a timelock t prevents an asset from being transferred until a specified future time t.

Suppose Alice wants to trade some of her coupons to Bob in return for some bitcoins. Alice’s coupons live on one blockchain, and Bob’s Bitcoin live on another, so they need to devise an atomic cross-chain swap protocol to consummate their deal. Naturally, neither one trusts the other.

Here is a simple protocol. Let us generously assume 24 hours is enough time for anyone to publish a smart contract on either blockchain, and for the other party to detect that that contract has been published.

• Alice creates a secret s, h = H(s), and publishes a contract on the coupon blockchain with hashlock h and timelock 48 hours in the future, to transfer ownership of some coupons to Bob.

• When Bob con rms that Alice’s contract has been published on the coupon blockchain, he publishes a contract on the Bitcoin blockchain with the same hashlock h but with timelock 24 hours in the future, to transfer his bitcoins to Alice.

• When Alice confirms that Bob’s contract has been published on the Bitcoin blockchain, she sends the secret s to Bob’s contract, taking possession of the bitcoins, and revealing s to Bob.

• Bob sends s to Alice’s contract, acquiring the coupons and completing the swap.

function withdraw(uint amount) {

client = msg.sender;

if (balance[ client ] >= amount} {

if ({

balance[ client ] −= amount;


Fig. 1. Pseudocode for DAO-like contract

function sendMoney(unit amount) {

victim = msg.sender;

balance += amount;

victim . withdraw(amount)


Fig. 2. Pseudocode for DAO-like exploit

• Bob sends s to Alice’s contract, acquiring the coupons and completing the swap.

If Alice or Bob crashes during steps one or two, then the contracts time out and refund their assets to the original owners. If either crashes during steps three and four, then only the party who crashes ends up worse off. If either party tries to cheat, for example, by publishing an incorrect contract, then the other party can simply halt and its asset will be refunded. Alice’s contract needs a 48-hour timelock to give Bob enough time to react when she releases her secret before her 24 hours are up.

This example illustrates the power of smart contracts. There are many other uses for smart contracts, including offchain transactions [16], where assets are transferred back and forth off of the blockchain for efficiency, using the blockchain only to settle balances at infrequent intervals.


4.1 Smart Contracts as Objects

A smart contract resembles an object in an object-oriented programming language. A contract encapsulates long-lived state, a constructor to initialize that state, and one or more functions (methods) to manage that state. Contracts can call one another’s functions.

In Ethereum, all contracts are recorded on the blockchain, and the ledger includes those contracts’ current states. When a miner constructs a block, if fills that block with smart contracts and executes them one-by-one, where each contract’s final state is the next contract’s initial state. These contract executions occur in order, so it would appear that there is no need to worry about concurrency.


4.2 Smart Contracts as Monitors

The Decentralized Autonomous Organization (DAO) was an investment fund set up in 2016 to be managed entirely by smart contracts, with no direct human administration. Investors could vote on how the fund’s funds would be invested. At the time, there were breathless journalistic accounts explaining how the DAO wold change forever the shape of investing [17, 20].

Figure 1 shows a fragment of a DAO-like contract, illustrating a function that allows an investor to withdraw funds. First, the function extracts the client’s address (Line 2), then checks whether the client has enough funds to cover the withdrawal (Line 3). If so, the funds are sent to the client through an external function call (Line 4), and if the transfer is successful, the client’s balance is decremented (Line 5).

This code is fatally flawed. In June 2016, someone exploited this function to steal about $50 million funds from the DAO. As noted, the expression in Line 3 is a call to a function in the client’s contract. Figure 2 shows the client’s code. The client’s contract immediately calls withdraw() again (Line 4). This re-entrant call again tests whether the client has enough funds to cover the withdrawal (Line 3), and because withdraw() decrements the balance only after the nested call is complete, the test erroneously passes, and the funds are transferred a second time, then a third, and so on, stopping only when the call stack overflows.

This kind of re-entrancy attack may at first glance seem like an exotic hazard introduced by a radically new style of programming, but if we change our perspective slightly, we can recognize a pitfall familiar to any undergraduate who has taken a concurrent programming course.

First, some background. A monitor is a concurrent programming language construct invented by Hoare [14] and Brinch Hansen [10]. A monitor is an object with a built-in mutex lock, which is acquired automatically when a method is called and released when the method returns. (Such methods are called synchronized methods in Java.) Monitors also provide a wait () call that allows a thread to releases the monitor lock, suspend, eventually awaken, and reacquire the lock. For example, a thread attempting to consume an item from an empty bu er could call wait () to suspend until there was an item to consume.

The principal tool for reasoning about the correctness of a monitor implementation is the monitor invariant, an assertion which holds whenever no thread is executing in the monitor. The invariant can be violated while a thread is holding the monitor lock, but it must be restored when the thread release the lock, either by returning from a method, or by suspending via wait () .

If we view smart contracts through the lens of monitors and monitor invariants, then the re-entrancy vulnerability looks very familiar. An external call is like a suspension, because even though there is no explicit lock, the call makes it possible for a second program counter to execute that contract’s code concurrently with the first program counter. The DAO-like contract shown here implicitly assumed the invariant that each client’s entry in the balance table reflects its actual balance. The error occurred when the invariant, which was temporarily violated, was not restored before giving up the (virtual) monitor lock by making an external call.

Here is why the distributed computing perspective is valuable. When explained in terms of monitors and monitor invariants, the reentrancy vulnerability is a familiar, classic concurrency bug, but when expressed in terms of smart contracts, it took respected, expert programmers by surprise, resulting in substantial disruption and embarrassment for the DAO investors, and required essentially rebooting the Ethereum currency itself [5].


4.3 Smart Contracts as Read-Modify-Write Operations

The ERC20 token standard is the basis for many recent initial coin offerings (ICOs), a popular way to raise capital for an undertaking without actually selling ownership. The issuer of an ERC20 token controls token creation. Tokens can be traded or sold, much like Alice’s Restaurant’s coupons discussed earlier. ERC20 is a standard, like a Java interface, not a particular implementation.

An ERC20 token contract keeps track of how many tokens each account owns (the balances mapping at Line 3), and also how many tokens each account will allow to be transferred to each other account (the allowed mapping at Line 5). The approve() function (Lines 9-13) adjusts the limit on how many tokens can be transferred at one time to another account. It updates the allowed table (Line 10), and generates a blockchain event to make these changes easier to track (Line 11). The allowance () function queries this allowance (Lines 14-16).

The transferFrom function (Lines 17-23) transfers tokens from one account to another, and decreases the allowance by a corresponding amount. This function assumes the recipient has su cient allowance for the transfer to occur.

Here is how this specification can lead to undesired behavior. Alice calls approve() to authorize Bob to transfer as many as 1000 tokens from her account to his. Alice has a change of heart, and issues a transaction to reduce Bob’s allowance to a mere 100 tokens. Bob learns of this change, and before Alice’s transaction makes it onto the blockchain, Bob issues a transferFrom () call for 1000 tokens to a friendly miner, who makes sure that Bob’s transaction precedes Alice’s in the next block. In this way, Bob successfully withdraws his old allowance of 1000 tokens, setting his authorization to zero, and then, just to spite Alice, he withdraws his new allowance of 100 tokens. In the end, Alice’s attempt to reduce Bob’s allowance from 1000 to 10 made it possible for Bob to withdraw 1100 tokens, which was not her intent.

In practice, ERC20 token implementations often employ ad-hoc workarounds to avoid this vulnerability, the most common being to redefine the meaning of allow () so that it will reset an allowance from a positive value to zero, and in a later call, from zero to the new positive value, but will fail if asked to reset an allowance from one positive value to another.

The problem is that approve() blindly overwrites the old allowance with the new allowance, regardless of whether the old allowance has changed. This practice is analogous to trying to implement an atomic decrement as shown in Figure 4. Here, the decrement method reads the shared counter state into a local variable (Line 4), increments the local variable (Line 5), and stores the result back in the shared state (Line 6). It is not hard to see that this method is incorrect if it can be called by concurrent threads, because the shared state can change between when it was read at Line 4 and when it was written at Line 6. When explained in terms of elementary concurrent programming, this concurrency flaw is obvious, but when expressed in terms of smart contracts that ostensibly do not need a concurrency model, the same design flaw was immortalized in a token standard with a valuation estimated in billions of dollars.


4.4 Discussion

We have seen that the notion that smart contracts do not need a concurrency model because execution is single-threaded is a dangerous illusion. Sergey and Hobor [18] give an excellent survey of pitfalls and common bugs in smart contracts that are disguised versions of familiar concurrency pitfalls and bugs. Atzei et al. provide a comprehensive survey of vulnerabilities in Ethereum’s smart contract design.



Radical innovation often emerges more readily from outside an established research community than from inside. Would Nakamoto’s original Bitcoin paper have been accepted to one of the principal distributed conferences back in 2008? We will never know, of course, but the paper’s lack of a formal model, absence of rigorous proofs, and lack of performance numbers would have been a handicap.

Today, blockchain research is one of the more vibrant areas of computer science, with the potential of revolutionizing how our society deals with trust. The observation that many blockchain constructs have underacknowledged doppelgängers (or at least, precursors) is not a criticism of either research community, but rather an appeal to each side to pay more attention to the other.



Modern cryptography is based on the notions of matching public and private keys. Any string encrypted by one can be decrypted by the other. Encrypting a message with Alice’s public key yields a message only Alice can read, and encrypting a message with Alice’s private key yields a digital signature, a message everyone can read but only Alice could have produced.



A cryptographic hash function H(·) has the property that for any value v, it is easy to compute H (v ), but it is infeasible to discover a v′ ≠ v such that H(v′) = H(v).



Here is puzzle typical of those used in PoW implementations. Let b be the block the miner wants to append to the ledger, H(·) a cryptographic hash function, and “·” concatenation of binary strings. The puzzle is to find a value c such that H(b · c) < D, where D is a difficulty setting (the smaller D, the more difficult). Because H is difficult to invert, there is no way to find c substantially more efficient than exhaustive search.

contract ERC20Example {

// Balances for each account

mapping(address=>uint256) balances;

// Owner of account approves the transfer of an amount to another account

mapping(address=>mapping(address=>uint256)) allowed;

// other fields omitted


// Allow spender to withdraw from your account , multiple times, up to the amount .

function approve(address spender, uint amount) public returns (bool success) { allowed[msg.sender][spender] = amount; // alter approval Approval(msg.sender, spender, amount); // blockchain event

return true;


function allowance(address tokenOwner, address spender) public returns ( uint remaining) {

return allowed[tokenOwner][spender]; }

function transferFrom(address from, address to, uint tokens) public (bool success) { balances[from] = balances[from].sub(tokens );

allowed[from][msg.sender] = allowed[from][msg.sender].sub(tokens );

balances[to] = balances[to].add(tokens);

Transfer(from, to, tokens);

return true; }

... // other functions omitted


Fig. 3. ERC20 Token example

class Counter {

 private int counter;

 public void dec() {

  int temp = counter;
   temp = temp + 1;
   counter = temp; 



Fig. 4. An incorrect atomic decrement operation 

To view the original PDF of this article including References, click here.

How Ethos Cryptocurrency Wallet Smart Keys Keep Money Secure

Ethos Smart Keys: How Cryptocurrency Enables Consumers to Protect and Own Their Money

Ethos Cryptocurrency Wallet Smart Keys

How the Universal Cryptocurrency Wallet Smart Keys Enables Consumers to Protect and Own Their Money


Cryptocurrencies, such as Bitcoin and Ethereum, bring unique benefits to the world of personal finance by pairing the ability to own and store your digital assets in a cryptocurrency wallet, with the ability to cheaply, securely and almost instantly transfer them to others.

A blockchain, simply put, is an open record keeping system that’s maintained by a peer-to-peer network where everyone has access to read and potentially write data. Because of the open nature of blockchain, it’s absolutely necessary that all the data on the chain is verifiable as authentic and can’t be manipulated after the fact. To guarantee that all of our transactions are authentic, we turn to cryptography which gives us the ability to generate digital signatures and fingerprints.

The Ethos Cryptocurrency Wallet Smart Key is a unique digital signature that is used to verify the authenticity of transactions originating from your wallet. Any time a digital asset is transferred out of your Ethos Universal Multi Cryptocurrency Wallet, your Smart Keys will provide the authorization needed to execute the transaction. Ethos Keys are “Smart” because your one key represents all of your funds, regardless of what form of cryptocurrency you are using. This allows you to backup and restore all of your wallets with a single key phrase.

How safe is it?

Ethos leverages well-tested cryptographic standards and methods to ensure that your Universal Wallet uses an extremely high degree of security. The passphrase is 24 words (vs the 12 word standard used in many wallets) and the keys themselves are 256 bit, meaning uncrackable.

As discussed in the next few sections, the bulk of the security offered by the Ethos Universal Cryptocurrency Wallet and Smart Keys comes from modern cryptographic techniques, such as public-key and elliptic-curve cryptography, and their ability to generate secure and verifiable digital signatures and fingerprints. Let’s first consider some background to fully understand the mathematical magnitude of the protection.

Ciphers, Hashes, and Digital Fingerprints

The concept of a cipher is fundamental to cryptography. The roots of cryptographic hashing go back to 50 BC, during the reign of Julius Caesar and the Roman Empire. At that time, the official means of communication was a courier service that was highly vulnerable to espionage and interception. To throw off their enemies, the emperor and his consul would communicate by scrambling the letters of their messages before sending them. Upon receipt of a message, the letters would have to be unscrambled to reveal the original message.

One method of doing this was to shift every letter over by one, so that every instance of the letter ‘a’ would be replaced by ‘b’, ‘b’ would be replaced by ‘c’, and so on. This now commonly referred to as a Caesar Cipher, or a Shift Cipher, because the method to conceal the message is simply shifting each letter over one.

In this case the message ‘hello’ would become ‘ifmmp’ and the courier tasked with delivering it would ideally not be aware of the method used to scramble the message. Anyone who intercepted this message would also not know what to make of the seemingly nonsensical message. The “key” in this example is the method of encoding the message.

Over the next two thousand years, this idea of a cipher was further developed into that of a cryptographic hash, which in simple terms is a more sophisticated way of scrambling a message so that it’s very difficult to reverse. Hashes also have the property of, given some data, being able to reliably create a unique digital fingerprint of that data.

Everytime you submit a transaction to the blockchain, a fingerprint of your transaction is created and used to link the blocks in the blockchain, ensuring that the data in each block hasn’t been manipulated. For example, if you spend one bitcoin and someone tries to go back and manipulate the record to say you spent 10 bitcoin, it would invalidate all of the fingerprints in the blockchain leading back to that transaction.

Digital Signatures

Public Key Cryptography

Equally fundamental to the field of modern cryptography is the concept of Public Key Cryptography. In Public Key Cryptography there is the notion of a shared public-key that can be used by anyone to encrypt a message; then only you, with the corresponding private-key can decrypt to read the original message.

One of the most important properties of Public Key Cryptography is that, given a key-pair, its possible to generate a signature, digital proof of ownership of addresses that derive from your key. So whenever you send a transaction to the blockchain, it includes a signature proving that you are the owner of that address and therefore authorized to make that transaction. If the signature doesn’t match the public wallet address, the transaction is deemed to be unauthorized and is rejected by the network.

Elliptic Curve Cryptography

Elliptic Curve Cryptography is a type of Public Key Cryptography that makes private and public key generation even more secure due to the mathematical properties of elliptic curves that make it extremely difficult to reverse engineer the private key from the public keys.

Ethos Smart Keys are created from a cryptographically random number known as a seed. Sometimes seeds are created by a random number generator. However, this isn’t 100 percent secure because sometimes a hacker can re-generate a random number by knowing when it was generated and using a timestamp.

To ensure a higher degree of randomness, you generate your seed with a combination of a random number and another random number created by shaking your phone the first time you open the app. The unique signal from this process ensures that no one will be able to guess a non-random seed like your birthday, phone number, or a timestamp.

This seed is then used to generate private and public key-pairs on a secp256k1 Elliptic Curve, the results of which are hashed several times and encoded to reveal your public wallet addresses. By creating your Smart Keys this way, you can safely share your public keys and rest assured that only you have access to spend the funds in those wallets with your private key.

A Brave New World

Now that you know a little bit about the technology we use to secure your Universal Cryptocurrency Wallet, you might want to know exactly what we’re protecting you against. The follow are the most common exploits that are used by “bad actors” to gain control of your funds.

Jailbreaking and Mobile Security

Jailbreaking is a popular method of unlocking non-standard features on your mobile device. While this can be an easy and fun way to personalize your phone, doing so goes around some very important security features of your phone, and can give unauthorized apps the ability to snoop around your phone and potentially sniff out your keys.

While the Ethos Universal Cryptocurrency Wallet does everything it can to secure your keys on your phone, it’s very important that you never jailbreak your phone or install apps that aren’t approved by the app store. We can’t emphasize enough how important it is that you never use the Ethos Universal Wallet on a jailbroken phone.

Dictionary Attacks: Cracking Passwords

Someone who wants to gain unauthorized access to your cryptocurrency funds is going to be most interested in finding out your private key. To crack a password, or in this case a key, a hacker would typically use a “brute force” method and employ what is commonly known as a “Dictionary Attack.” This method involves a linear search through a dictionary of common words, comparing passwords systematically against each word until a match is found. While this may sound like a lot of work, remember that an average computer alone can execute billions of operations per second.

Hypothetically, say someone were to chose the very insecure password “castle”. A dictionary attack on this password would take about 3 seconds, which is the time it would take a computer to try all of the words in the dictionary before “castle” is found as a possible password.

Let’s add a little bit more complexity to this password by adding a random number to the end of it, for example, “castle123”. This seemingly more complex password still takes only 27 seconds to hack.

Stringing together dictionary words, ie, “castleone” would take considerably more time to hack (11 days, 8 hours) but still within the realm of possibility for a properly motivated hacker with the right equipment.



Good News: There’s Safety in Numbers

As demonstrated, adding just one additional word to a password provides an exponential increase in its security. If we take this idea to the next level, we can quickly generate a password that would take an unimaginable amount of time and energy to guess, with even the most sophisticated computers available.



Even considering that every 18-months, new computers with twice the computational power are released at half the price, a 12-word password will still be secure for generations to come. And to be extra secure, Ethos uses 24-word passwords.

Introducing the Ethos Cryptocurrency Wallet Smart Keys

An Ethos SmartKey is a unique 256-bit key signature that is yours and yours only. It is generated and secured on your mobile device, and should also be written down on a piece of paper, aka “paper wallet”, and stored in a safe place or memorized.



When you open the Ethos Universal Multi Cryptocurrency Wallet App for the first time, you are asked to shake your phone to create your first wallet. The shaking motion generates a random number that is impossible to recreate, and your key is generated on your phone based on that random number.

Your key is then automatically mapped to a 24 word phrase that gives you the convenience of backing up and restoring your wallets with an easy to read mnemonic. It’s very important that you physically write this phrase down and keep it in a safe place in case you lose your phone. When you get a new phone you can restore all of your wallets easily by entering the backup-phrase.


Important SmartKey Safety Tips

  • Write your backup phrase down in a private place away from any cameras or windows.
  • Never copy / paste your private key, always type it in.
  • Do not store private keys on services like Google Drive or Dropbox
  • Never share your private keys.
  • Reputable firms will never ask for your private keys via email, phone or chat.

How many SmartKeys are there?

SmartKeys are generated with a unique 256-bit signature. There are over 340 trillion trillion trillion different possible SmartKey combinations. To put this number in perspective, that’s more than the number grains of sand on Earth. That’s even more than the number of known stars in our universe. That’s over forty-five octillion possible SmartKeys for every man, woman and child on planet earth; So there are plenty to go around.

SmartKeys and Hierarchical Deterministic Wallets

Under the hood, the Ethos Universal Wallet is built on the BIP-32: Hierarchical Deterministic Wallet specification developed by the Bitcoin developer community. While many Bitcoin exchanges have been hacked, generally with phishing or database hacks, no one has yet to mathematically break or reverse engineer a BIP-32 wallet despite hundreds of billions of dollar equivalent as bait. The underlying algorithms have been battle-tested with trillions of dollars of transactions. In other words, its among the most secure cryptographic standards on earth.


Ethos Universal Cryptocurrency Wallet and Smart Keys:

  • Generates an astronomically complex, and cryptographically secure key that prevents anyone from spending from your wallet.
  • Maps this key to a set of 24 words enabling you to restore your wallet easily.
  • Stores multiple types of digital assets including Bitcoin, Ethereum and ERC20 Tokens.


The Ethos Universal Cryptocurrency Wallet is designed for you to store and secure a wide variety of coins/tokens with a single Smart Key and backup-phrase. We leverage decades of cryptographic research in addition to widely used industry standards that enable the self-custody of your assets, as well as their safe transmission and backwards compatibility with popular devices such as the Ledger Nano S and Trezor hardware wallets.

Ethos Summit Recap!

Ethos Summit Recap!

The First Ever Ethos Summit

Saturday April 14th, 2018 was hands down one for the books. It was not only the day Beyonce took over Coachella but it also marks the very same day our beloved team held our first ever Ethos Summit. Beyonce couldn’t wait to hit the stage after a year on mat leave and we couldn’t wait to share our vision in-person and via live stream! Who could ask for a more perfect alignment of groundbreaking events?

Left to right: Kevin Pettit (Chief Product Officer), Dan Caley (Director of Portfolio Management), Derek Barrera (Core Engineer)

But in case you missed it (aka what were you thinking?!), we’ve put together this nifty recap of the Ethos Summit for your enjoyment.

One of the most exciting elements of the Summit was that some our team members were able to connect in person for the very first time. Countless hours, days and months of virtual team meetings courtesy of video hangouts, screen shares and on Slack channels finally came together to real life fruition in Providence, Rhode Island.

To kick off the live talks, we first welcomed to the stage our fearless leader Shingo Lavine. His keynote mapped out the origins of crypto and went on to explain how Ethos will launch a blockchain platform that will truly be open, safe and fair for everyone. In doing so, even crypto newbies would understand the motivation to build a distributed ledger in a personal device.

Shingo also highlighted the Ethos commitment to nurturing communities through education – a key missing ingredient to decentralizing crypto and bringing it to a wider audience.



It became obvious that the positivity that fuels the Ethos movement has reached contagion-level momentum. The Summit was an opportunity to meet international community members from far and wide. We shook hands and chatted with attendees from Poland, Venezuela, Japan and beyond. Each guest had a story or use case to share, emphasizing the need to create a decentralized financial ecosystem.



Some of the Ethos team also took the stage, delighted to offer an inside scoop on the vibrant Ethos work culture – as well as addressing the ever-present anticipation around, what is now known as, #WhenWallet.


Panelists, left to right: Ellen Jiang, Gloria Feng (UI/UX Designers), Laura Lee Boykins (Lead UI/UX Designer), Derek Barrera (Core Engineer), Kevin Pettit (Chief Product Officer) and Dan Caley (Director of Portfolio Management)


The team examined the processes involved with bringing such a complex system and breaking it down into beautiful, usable pieces for the everyday user.

Some of the Summit attendees even had the opportunity to take the latest version of the app for a test drive! Pro-Tip: On the off chance you haven’t already, you probably want to pre-register for our Universal Wallet.





Later in the day we caught up with Blockchain and Smart Contract Technology expert Maurice Herlihy who demystified blockchain technology by exploring ICOs, self-custody and mining. Maurice was followed by a virtual visit from our Chief Investment Officer Vishal Karir who hung a light on correlations, diversifications and trends.



From top to bottom, the first ever Ethos Summit was a massive hit. We are so pleased with the level of engagement and curiosity of our community and the crypto industry at large.



We look forward to the many questions and conversations yet to come, so in the meantime (what are you waiting for?!) here are ways to keep up to date and in touch with us:



We’ll be chopping up the video from the Summit and posting the program as segments, but in the meantime, feel free to take it in in full! Here’s the recording of the live stream:

Ethos Dev Update + Genesis Build Demo

Multi Cryptocurrency Wallet Dev Update + Genesis Build Demo

Hey Ethos Fam!

KDP here to announce three major updates to get you excited for the Universal Multi Cryptocurrency Wallet launch.

  2. Next steps from Release Candidate to Global Product Launch.
  3. Ethos Trello board to track our progress.

You asked and we listened. We want to unveil all the hard work we have been doing and create a system to keep you informed of our progress every step of the way.

1. Preview of the Universal Multi Cryptocurrency Wallet Genesis Build

Today we gathered some of our rockstar engineers and a few members of the leadership team to shoot a demo of the genesis build! Light hearted and panel style, we took a deep breath to look up from our computers, reflect on the journey thus far and share our progress with you all. I hope you gain insight from the diverse perspectives that helped shaped the app and learn about some of the core Universal Multi Cryptocurrency Wallet features.

You can also check out our new Universal Wallet feature page for an overview of the rich app features by clicking here.

Enjoy! Let the feedback flow free. We hold your opinion in high regard.

2. The Path from Release Candidate to Global Launch

What next?

We are hard at work to get the wallet in your hands as quickly as possible. As you can see, we are really close, but it needs a little bit more polish. We are at the last part of the development cycle for the Universal Wallet!

What does that mean?

Well, here’s exactly what we’re working on:


Optimizing our databases, services, caching and queries so that we can accommodate a global user base.


Testing, code reviews, penetration tests, and hardening the technology stack. We cannot confidently release a product like this without extensive and exhaustive security and external audits.


Building the app infrastructure to easily support multiple languages from day one. People have signed up for Universal Wallet from literally all over the world – we want to make it available to everyone in their first language as quickly as possible.

Push Notifications

Event listeners integrated with push notifications to keep you informed of all your blockchain transactions.

Data Integrity

Sniffing out and eliminating data quality issues and data inconsistencies.

Biometric/PIN Authentication

Enabling native biometric authentication layered with a PIN to add an additional layer of security and encryption to protect you.

Design Polish

Checking every pixel to give you the easy and beautiful aesthetic experience that you deserve.

Coin Coverage

Expanding the supported coins within the app to make it truly universal.


Now that we have unveiled the Genesis build we are no longer holding back! We are happy to send you frequent GIF updates on the small wins we make every day as we progress towards launch.

3. The Ethos Trello Board

All of the tasks above, including coin integrations, feature enhancements, partnerships, airdrop updates, and release milestones are available on our Ethos Trello Board. We hope to answer many of your questions by increasing the transparency. The Board will be a great way for us to communicate updates and gather your feedback.


Sit tight, get excited! Every member on the team is right there with you, counting down the days until we can delete all other wallet apps and watchlists and use the Universal Wallet. We appreciate your support and encouragement to help push us across the finish line!

With much aloha,

How Secure Is Blockchain Technology

Just How Secure is Blockchain Technology?

Just How Secure is Blockchain Technology? by Gregory Rocco

What is Blockchain Technology?

Blockchain technology is best known for both its security and immutability. In a blockchain ledger, blocks act as a living record of transactional flow and are secured through heavily incentivized consensus mechanisms. These consensus mechanisms are incentivized due to the distributed nature of the system and anonymous participants. Its underpinnings have been around for several years but it wasn’t until the creation of bitcoin that the first example of a successful implementation of a decentralized ledger was deployed in a secure fashion.


Bitcoin and Asymmetrical Cryptography

The Bitcoin network relies on what’s called “public key cryptography,” where both a “public key” and a “private key” are used to transact. A public key is the equivalent of your address, or rather, where you will receive cryptocurrency. In the case of bitcoin, when transacting, ownership rights of the bitcoin in question are signed off on by using a private key to do so.



For example, let’s say Alice wants to send Bob one bitcoin. Alice will create a transaction to be sent to Bob’s address, and in doing so, she is giving Bob the right to transfer that bitcoin. Both her transaction and Bob’s future transactions involve proving ownership using their keys. The public key acts as ownership proof on the network while the private key exists to sign off on transactions.

It is important to remember that private keys should never be given out, as it is what keeps your funds secure. Giving away your private key is the equivalent of giving away access to your bank account – you wouldn’t want it falling into anyone’s hands. However, a public key must be given to any party wishing to send funds to your wallet. A recommended security practice to protect one’s privacy is to never reuse public keys and to instead generate a new one for each transaction.




The public key is derived from the private key, and both are required in the movement of value on the network. After the transaction is sent, it is then relayed to the network and included in the next block on the blockchain to eventually be mined and secured on the ledger.


How Bitcoin is Secured Through Proof of Work

Consensus algorithms are a key component in distributed computing systems, and “proof of work” is the consensus algorithm the bitcoin network utilizes to both confirm transactions and add blocks. By that point, proof of work was also the first consensus mechanism to be deployed in a blockchain network.

In a proof of work system, individuals are pointing computing power to the network to solve a cryptographic equation and find what’s called a “hash.” Once solved, they have the chance to mine the next block, which contains a bundle of recent transactions that have yet to be secured on the ledger. As the network grows, so does the difficulty of solving that equation which leads to more computational power being added to secure the network.  

Related to security, each new block hash contains the hash of the previous block which allows the longest chain to continue to grow. Once mined, transactions in the block are now considered to be confirmed.

The mining incentive to secure bitcoin’s blockchain is what’s called a “block reward.” The first miner to solve the required computation correctly and mine the next block is rewarded with a fixed amount of bitcoin which “halves” after a certain period. This is to ensure that miners are paid for adding their power to secure the network, and to keep bitcoin with a controlled supply. The current block reward is 12.5 bitcoin.

Imagine the case of a horse race occurring on average every ten minutes. The gun fires, and the first horse to cross the finish line earns the bitcoin and transaction fees associated with each block. The race then resets in perpetuity. The process itself is like finding a needle in a haystack – with enough computational power and generation, the answer is bound to be found eventually. The block reward is what keeps miners incentivized to continually try to find a solution to the puzzle and lend their computational power to the network.

Over time, the bitcoin network has experienced an exponential amount of hashrate being added at the cost of the centralization of mining. Over 75 percent of the mining is currently controlled by five large pools, each containing both large organizations and individual miners contributing their hashing power. All of this has effectively led to a form of delegated proof of work in which hashing power is delegated to larger pools due to efficiency rather than individual miners each competing for the block reward at the expense of their computing power.

Although this has added plenty of hashing power to the network and allowed individuals to be granted fractions of a block reward otherwise unobtainable, this does leave the network open to threats due to its concentration. However, incentive mechanisms inherent to the blockchain makes the risk of attacking the network not worth the reward.



Attacking the Network

Distributed ledgers aren’t necessarily free from malicious actors, but incentive systems exist within the networks to keep participants in line. There are a few ways in which disruptors could potentially wreak havoc on the network, with one of the major attack vector being a 51 percent attack.

A 51 percent attack is where an entity controlling a majority of the network hashrate can take control by preventing new transactions from confirming and modifying the history of the ledger. However, the cost of acquiring the computational power necessary to assume that level of control is immense, considering the current hashing power of the network.

Malicious actors are also incentivized to stay in-line due to market effects. If users of the bitcoin network knew that the network was compromised, a mass exodus would occur, dramatically dropping the price of bitcoin which would effectively leave the miners with less than what they spent to control the majority of the hashing power. Information leading to this conclusion is public, as network hashrate distribution can be found with a simple search.


Other Consensus Models

Bitcoin’s proof of work isn’t the only consensus algorithm that secures distributed networks. Another popular type of consensus mechanism is proof of stake, which involves individuals “staking” their cryptocurrency to potentially be selected to create the next block. In this system, blocks aren’t “mined” through hashing power, but “forged” or “created” by participants. This eliminates the arms-race involved in proof of work systems to secure the most computational power, and is a greener consensus mechanism due to reduced emissions.

An argument in favor of a proof of stake consensus mechanism relates to a deeper conversation, specifically on ethics. As we’re tapping into a financial goldmine and securing a network, how can we best protect that which is inherent and has been slowly drained in the background due to increased energy consumption? Methods of liberating those in financial need should also best-serve their surroundings as well.

The likelihood of an individual being selected to create the next block is directly dependent on how much of that cryptocurrency they own. Although the consensus could be affected by a smaller group of large holders due to the increased likelihood of them being selected, they are incentivized to act efficiently, as the value of their holdings are proportional to the success of the network. In the future, Ethereum will be switching to a proof of stake system to replace their existing proof of work consensus.

Some platforms even use a combination of both proof of work and staking to both have a form of block reward to secure the network and using the latter for network maintenance. One example of hybrid system is DASH where typical proof of work mining is deployed but nodes staking DASH participate in its governance.

New blockchain consensus mechanisms are being explored every day to bring higher levels of efficiency and security to distributed systems. Considering how far we’ve come from an original proof of work deployment in a short span of time, the innovation soon to come will be incredible.

Announcing the Ethos Summit! Ethos, Blockchain & The New Economy

Announcing the Ethos East Coast Summit

Join us for the first ever Ethos East Coast Summit on April 14th! The Ethos team and community will be gathering in Ethos’ birthplace – beautiful Providence, Rhode Island – for a day of ideas, discussion and networking with like-minded people passionate about Ethos, blockchain and unlocking the New Economy!