- A Lightning Network developer says that despite his successful hacking of a Bitcoin wallet, the network is still secure and safe
- Bitcoin whale withdrawals pattern suggest a July rally
Bitcoin markets have emerged from the cocooning weekend more or less where it was when it entered on Friday, with prices creeping up to approach USD 9,500 today.
For a Monday, we look at network sentiment, which is decidedly positive, even though it involves the hacking of a Bitcoin wallet. The good news comes from a project developer called John Cantrell, who spends most of his time with Bitcoin and the second-layer solution for it called Lightning Network.
The developer recently shared that he has successfully hacked a Bitcoin address during a Twitter contest launched by the Atlanta Digital Currency Fund. He then wrote an article detailing some of the methods he used, whereby he checked about a trillion different seed combinations in just over 30 hours, finally hitting on the right combination and accessing the funds.
Public feedback on his article, however, seemed to think that his hack meant that the Bitcoin network simply wasn’t secure enough, ans Cantrell was forced to return to Twitter to being some clarity to the explanations, confirming that Bitcoin was as safe as ever.
I got a lot of great feedback and questions after posting my article about brute forcing yesterday
I wanted to address a question that came up over and over again because I think a lot of people extrapolated what I did to the false conclusion that Bitcoin isn't safe or secure /0
— John Cantrell (@JohnCantrell97) June 19, 2020
He began by saying that a 12-word mnemonic seed that can be used to restore a Bitcoin wallet is completely secure, and that he had only found success because the competition exposed 8 of the 12 words from the wallet he hacked. He explained:
“It would take the same system that brute forced the last 4 words of his mnemonic 837 quintillion millennium to brute force all possible 12 word mnemonics […] if you know as few as 5 words. To brute force all 12 words (just to break even on your $100B investment, assuming you can actually liquidate all the BTC) still takes 422 TRILLION YEARS.”
Despite the numbers seemingly small to the human mind, our limits of comprehension cannot really fathom just how big the number is of different possibilities that can be thrown up with 12 different and random seed phrases. Essentially, if you don’t reveal the seed words, no one can gain access to your wallet. He concludes:
“Your bitcoin is safe. 2^128 is a REALLY big number. Just don’t let anyone near your seed words.”
But if it’s market talk that gets your blood flowing, then we’ve got good news on that front too!
BUY #BTC when whales send bitcoins out of the exchange. The BULL market usually starts four months after the exchange average withdrawal hits year-high.https://t.co/JPbe3Pcaaw pic.twitter.com/UMBtAacyTh
— Ki Young Ju 주기영 (@ki_young_ju) June 22, 2020
The CEO of crypto analytics firm CryptoQuant, Ki Young Ju, has come out to tell the public that if they ever wanted to buy Bitcoin, then now was the time. This is based on his analysis that whales were sending Bitcoins out of exchanges right now, and for him, this is a sign that bull markets are about to kick off. He wrote on Twitter:
“BUY #BTC when whales send bitcoins out of the exchange. The BULL market usually starts four months after the exchange average withdrawal hits year-high.”
Sharing two charts looking at the bull runs in 2017 and 2019, the CEO showed that after peaks were reached in whale Bitcoin withdrawals, four months later, the bulls entered the scene. The data was based on CryptoQuant’s a seven-day moving average metric of whale exchange withdrawals.
Many traders will be welcoming this boost, since March this year was the withdrawal peak for 2020 so far, suggesting that we could be seeing a bull market by next month. Of course, this could still be delayed if we were to see higher peaks in whale withdrawals before then.
But bulls will be pleased to say that there are other Bitcoin metrics that seem to pinpoint a lasting rally from the year’s bottom of March 2020, including the fact that Bitcoin reserves on exchanges are at a low not seen since December 2018, when Bitcoin was at USD 3,100.
Miners are also switching to hoarding mode, selling less and less Bitcoin, with only a temporary period during the May halving time frame when they sold a bit more than what they were generating.
As we wrote yesterday as well, it is a season of accumulating for everyone involved with Bitcoin, as 90% of the year 2020 has been spent buying Bitcoin and seeing net assets increase.
But despite all the converging positive factors, we should remember that risk is always present, especially in times of a delicate global economy just teetering on the brink of collapse.
Risk only what you can afford to lose, diversify well, and take care not to expose yourselves to risks that you don’t fully understand!
Image Courtesy: Pixabay