Crypto is Fallacy, Bank of Finland Says

Adviser on digitalization and head of the Digital Central Bank under the Ministry of Financial Stability and Statistics of Finland criticized crypto
03 July 2018   1048

The Central Bank of Finland issued a document entitled "The Great Illusion of Cryptocurrencies", in which he expressed its attitude to digital currencies. This is reported by Cointelegraph.

The author of the document is Aleksi Grym, adviser on digitalization and head of the Digital Central Bank under the Ministry of Financial Stability and Statistics of Finland.

With the help of this document, Grim tries to convey how "shows how poorly understood the concept of money itself still is today" and how much the Internet and social networks "muddled our sense of fact and fiction".

A representative of the Bank of Finland believes that cryptocurrencies are not real currencies, but only "accounting systems for non-existent assets". As an argument, he cites the fact that technologies such as blockchain are essentially data storage systems. And their use for cryptocurrency "unrelated to the fundamental characteristics of money". The document also contains several citations from other studies, mostly with a negative connotation.

For all intents and purposes, that ledger is a centralised ledger. The fact that there are multiple synchronised copies of it, distributed across a network, is irrelevant, as each one has the same data.

Aleksi Grym

Adviser on Digitalization and Head of the Digital Central Bank process, Financial Stability and Statistics Department

According to the document, the main motive for buying crypto-currencies is criminal actions, a sense of belonging to the community, an attempt to defend themselves against "real or fictional" state oppression, or speculative trade.

In addition, Alexi Grym asks the question: "What is money?". He notes that over time the meaning of this word has changed, but until now, money means a unit for exchange, which can be stored and counted. But the cryptocurrencies, in his opinion, appear "out of thin air".

Potentional Vulnerabilities Found in ETH 2.0

Least Authority have found potentional security issues in the network P2P interaction and block proposal system
26 March 2020   964

Technology security firm Least Authority, at the request of the Ethereum Foundation, conducted an audit of the Ethereum 2.0 specifications and identified several potential vulnerabilities at once.

Least Authority said that developers need to solve problems with vulnerabilities in the network layer of peer-to-peer (P2P) interaction, as well as in the block proposal system. At the same time, the auditor noted that the specifications are "very well thought out and competent."

However, at the moment there is no large ecosystem based on PoS and using sharding in the world, so it is impossible to accurately assess the prospects for system stability.
Also, information security experts emphasized that the specifications did not pay enough attention to the description of the P2P network level and the system of records about Ethereum nodes. Vulnerability risks are also observed in the block proposal system and the messaging system between nodes.

Experts said that in the blockchains running on PoS, the choice of a new block is simple and no one can predict who will get the new block. In PoS systems, it is the block proposal system that decides whose block will fall into the blockchain, and this leads to the risk of data leakage. To solve the problem, auditors suggested using the mechanism of "Single Secret Leader Election" (SSLE).

As for the peer-to-peer exchange system, there is a danger of spam. There is no centralized node in the system that would evaluate the actions of other nodes, so a “malicious" node can spam the entire network with various messages without any special punishment. The solution to this problem may be to use special protocols for exchanging messages between nodes.