All Things Alt: Ponzi Schemes, Blackcoin USBs and a Time Warp Attack

Stan Higgins
May 2, 2014 at 23:06 UTC
Updated Jun 3, 2014 at 08:46 UTC

With another week gone by, let’s shine the spotlight on recent developments and interesting finds in the world of alternative digital currencies.

Shibes scheme in new online game

Screen Shot 2014-05-02 at 5.46.22 PMThe popular meme-based digital currency dogecoin has been credited by some as providing a friendly introduction to digital currencies. However, now it is being leveraged to welcome people into a not-so-friendly corner of finance: the ponzi scheme.

PonziDoge is billed as a “virtual experiment game” designed to educate people about the nature of ponzi schemes, a form of financial fraud that involves collecting investment funds for fake ventures.

The developers comment on the game’s website that PonziDoge is part of a broader experiment to test transaction settlement technologies. After suggesting that “we assume no responsibility or give any guarantees”, the team adds that PonziDoge is not actually a ponzi scheme.

The site reads:

“Obviously, if it was a real ponzi we would not call it that, since the whole point of a ponzi is to trick investors into believing their investment is legitimate! This game displays [the] ponzi dynamic and all players are willing and knowing participants.”

Whitecoin suffers variant of 51% attack

whitecoinIt appears that in the early hours of 30th April, a coordinated double-spend attack was launched against the whitecoin network. The incident affected digital currency exchanges and mining pools, and has sparked questions regarding the future of the altcoin.

A statement published on 1st May by whitecoin community member and developer Mogonzo detailed the attack.

According to Mogonzo, the event took place in two stages.

The first part of the attack involved a dedicated denial-of-service (DDOS) attack against the mining pool Chunkypools. This enabled the perpetrators to assume control of the network and gain control of the block chain.

A time warp attack was then launched against several exchanges. This is a variation on the 51% attack, which involves artificially lowering the block difficulty in order to generate coins quickly.

The attackers used the time warp attack to generate multiple blocks of whitecoins that were then sent to exchanges and sold. Cryptsy, MintPal and Bittrex were among the exchanges affected by the attack.

In the statement, Mogonzo advised whitecoin users to avoid use of the existing wallet infrastructure:

“We continue to discourage wallet use at this time until our update is provided. It’s taken us some time to develop a full understanding of what happened, as well as develop a solution.”

At press time, representatives from the exchanges were reportedly meeting with members of the Whitecoin Foundation, the coin’s community organisation, on coordinating deployment of the new wallets.

Blackcoin community launches new technology

Screen Shot 2014-05-02 at 5.41.51 PMA member of the blackcoin community has developed a piece of technology that offers a new level of functionality and convenience for personal users that is unique among altcoins.

The BlackCoin Card, also known as the Cryptocurrency Express (CEX) Card, is a multi-gigabyte USB wafer that comes pre-loaded with a wallet and specialized software. Once the USB is plugged into a computer and connected to the network, it automatically updates balances and loads the most recent blocks from blackcoin block chain.

Using a software trigger similar to CD-ROMS, the BlackCoin Card launches automatically upon system startup and brings up a user interface that includes wallet access, price indices and social media content published by the BlackCoin community.

It should be noted that the BlackCoin Card is not a payment card. The developer told CoinDesk that it’s meant to act as an easy-to-use introduction to the concept, as well as a simple means for distributing blackcoins.

The developer said:

“This is the first time the end-user can get started with crypto in just a few minutes without having to search the web for solutions.”

The BlackCoin Card is now available and may be purchased with dollars and BTC, as well as LTC, DOGE and BC.

Strange alt of the week

facebookcoinFacebookcoin (sign: FBC) is an unusually brazen entry into the pantheon of alternative digital currencies for its potential violation of copyright law in both its title and logo.

As detailed on the Bitcoin Talk forum, facebookcoin is a variant of the “airdrop coin” in which a premined amount of coins is distributed among a given population.

According to the coin’s development team, only 5,040 facebookcoins are being mined prior to public launch.

Registered Facebook users who belong to the coin’s social channels are eligible to receive facebookcoins. Additionally, those who pay into an initial public offering (IPO) can also receive facebookcoins in exchange for bitcoins.

CoinDesk reached out to Facebook for comment, but has not received word from the social media company.

Have a tip about a notable happening in the altcoin world? Email CoinDesk at stan@coindesk.com

Old coins image via Shutterstock