This week Blockchain.info is bringing the thunder–in a literary literal sense–with the Thunder Network, a proof-of-concept side-chain system developed from the Lightning Network whitepaper proposal for the Bitcoin blockchain. The Lightning network has been in research and development for some time and suggests a future solution that will allow transactions in Bitcoin to run faster by providing payment channels that can scale outside of the Bitcoin blockchain but still provide security, efficiency and low cost.

Another interesting bit of news is that johoe, also known as Dr. Jochen Hoenicke, is joining the SatoshiLabs team to aid with the development of the next Trezor hardware wallet. Hoenicke is known for his work with the Bitcoin community in saving vulnerable coins after a security error at Blockchain.info’s web wallet and returning them to users.

In hack news, Hong Kong-based cryptocurrency exchange Gatecoin was hit this week and over $2 million in bitcoins and other currencies were taken. The site is currently offline as damage is fully assessed and the exploit that allowed the heist is repaired. More details below for current customers interested in withdrawing their funds still on the site.

All of this and more in this week’s Bitcoin Weekly!

Image credit: SatoshiLabs s.r.o.

Ethical hacker johoe to join SatoshiLabs to help develop TREZOR 2.0

Today SatoshiLabs s.r.o., maker of the Trezor hardware wallet, proudly announced that Dr. Jochen Hoenicke aka johoe, computer scientist and white hat hacker, has joined the company as a cryptographer.

Hoenicke received a Masters and Doctorate in Computer Science from the University of Oldenburg and now holds Chair of Software Engineering at University of Freiburg as Research Group Leader. He is known as the white hat hacker who caught an error caused by Blockchain.info in 2014, and error causing numerous Bitcoin wallets to become vulnerable, and swept up over 800 BTC—then he promptly returned the coins to their owners.

He has also assisted Trezor in the past due to the open-source nature of the hardware wallet. In 2015, Hoenicke discovered a side-channel attack against the hardware wallet (using an oscilloscope) and assisted SatoshiLabs in resolving the problem.

By joining the team at Trezor, Hoenicke will be bringing his expertise and enthusiasm to the R&D team to help develop new cryptographic functionality for the Trezor 2.0 and to conduct security reviews of upcoming code.

Gatecoin exchange hacked, $2M in Bitcoin and Ethereum stolen

Another heist has happened at a cryptocurrency exchange, Hong Kong-based Gatecoin Ltd was hacked last week to the tune of approximately $2 million USD in stolen Bitcoin (BTC) and Ethereum (ETH).

“On Friday night HKT, May 13, we detected some suspicious transactions and immediately suspended our services to investigate,” said Founder and Chief Executive Officer Aurélien Menant about the incident, “and to prevent any more unauthorized access to the ETH and BTC hot wallets.

“We have previously communicated the fact that most clients’ crypto-asset funds are stored in multi-signature cold wallets. However, the malicious external party involved in this breach, managed to alter our system so that ETH and BTC deposit transfers by-passed the multi-sig cold storage and went directly to the hot wallet during the breach period. This means that losses of ETH funds exceed the 5 percent limit that we imposed on our hot wallets.

“In total, the hot wallet breach resulted in the loss of ETH 185,000 and BTC 250, which is equivalent to USD 2 million. This represents 15 percent of total crypto-asset deposits held by Gatecoin.”

While the platform is currently offline and inaccessible, Menant assured customers that a way to withdraw their funds from the site will become available later this month. On May 28 a withdrawal mechanism for current customers to receive remaining funds in BTC, DAO, DGD, REP, USD, EUR and HKD will be made available. As for funds in Ethereum (ETH) there is no date yet set.

photo credit: Striking Photography by Bo Insogna via photopin cc

Blockchain.info announces alpha release of Thunder Network

Bitcoin web-wallet and services company, Blockchain.info (Blockchain Luxembourg S.A.), just announced the public availability of the alpha version of a payment channel technology called the Thunder Network. The name is meant to evoke a reflection on the Lightning network, a blockchain-based Bitcoin payment channel, also open source, that has been out for longer–the project is in fact an implementation of the protocol detailed in the Lightning network white paper.

As the Lightning Network has been largely research-based and has had little to no practical implementation, Blockchain.info has seen fit to change that and claims the Thunder Network is the first implementation of the Lightning network.

“Today, we release the alpha version of our Thunder Network,” the Blockchain.info team wrote on the company’s blog, “the first usable implementation of the Lightning network for off chain bitcoin payments that settles back to the main bitcoin blockchain.”

The Lightning network proposal has a number of benefits that it should bring to the Bitcoin blockchain (and other blockchains), and, as implemented by the Thunder Network, includes:

• Settlement to the bitcoin blockchain
• Scale: According to our tests so far, we can achieve better-than-Visa scale (100,000 TPS) with only a few thousand nodes on the network
• Extremely cheap payments: fees will develop naturally, due to the free market in an open and permissionless network and will fundamentally be lower than on-chain payments
• Encryption and Authentication: All communications between all nodes and wallets are encrypted using AES-CTR and take place only after completing authentication.
• Seed Peers and automatically provide them with network topology using a basic gossip protocol similar to the one used in the bitcoin network, which allows complex routes over multiple hops
• Payment Channels can be opened and closed at will, with transactions settling onto the bitcoin blockchain
• Payment Debate: Across the route each hop will renegotiate a new status with the next hop, as a payment makes its way through the network with cryptography in place to prevent fraud
• Relaying Payments: TN will relay payments over multiple nodes in the network automatically, using encrypted routing. No one knows who made a payment, allowing for more privacy
• Settle payments automatically, no manual intervention needed. The settlement will ripple back through the network to provide proof-of-payment
• Instant Payments that are irrevocable the moment you see them

Developers interested in deploying and testing their own version of the Thunder Network can do so by visiting the GitHub repository of the code.

The company also has put up a spiffy-looking webpage that includes a FAQ, a link to the announcement and a sign up for the mailing list.

Check out Bitfortip.com

Bitfortip is a somewhat minimalist website designed to bring people together who are looking for information and willing to pay bitcoin micropayments to get it. The site allows people to submit small amounts of bitcoin as a reward for information.

This is somewhat similar to the website Zapchain, which works similar to the online forum Quora, allowing people to ask questions and receive answers. On Zapchain information seekers can offer bitcoins as reward to favored or good answers.

On Bitfortip, the forum and social network works extremely similarly but it’s far less structured. People pose questions related to any information they like and then offer a reward for good answers. People on the front page are asking questions related to product comparisons–Galaxy 7 vs. Galaxy 7 Edge–or finding a particular shirt, or even VR headsets.

Image credit: Dawson/Bloomberg News