In early September, Cointelegraph reported that Israeli network security startup GK8 had raised $4 million to fund its offline cryptocurrency trading solution. The company has developed a "cold wallet" with a "hot wallet" that is completely unaffected by cyber hackers because it does not require an internet connection.
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In addition to creating an additional layer of security, in theory, offline transactions can also enable cryptocurrency to achieve full censorship resistance. Being able to sign, send, verify, receive, and record value transfers without the Internet may also be key to ensuring that cryptocurrencies are used globally.
To this end, some startups are working on the development of mesh networks (mesh networks or meshnets) to create parallel decentralized networks where blockchains can truly anti-censor.
Achieve complete resistance review
The term “anti-censorship” did not appear in Satoshi Nakamoto's Bitcoin white paper. However, it has become one of the frequently cited terms for blockchain and cryptocurrency supporters.
From the design point of view, encrypted transactions are not affected by the payment blockade of third-party agencies. Therefore, peer-to-peer (P2P) value transfer can be done on the blockchain without the need for centralized intermediaries like banks or clearing houses.
Although cryptocurrencies are immutable in transactions, other forms of censorship can be used by government authorities in different jurisdictions. Government agencies themselves have no control over actual blockchain agreements, but they can make policies such as understanding your customers (KYC), anti-money laundering (AML) terms, or simply blocking access to cryptocurrency-based services.
The government is able to review cryptocurrencies because blockchain technology still requires an interface to the centralized control system. For example, a centralized exchange that accepts and processes statutory deposits and withdrawals requires a bank account.
The government may not be able to prevent people from sending and receiving bitcoins, but they can ask the exchange to comply with regulatory requirements such as KYC and AML. Decentralized file sharing protocols like BitTorrent provide an example of how centralized government agencies can control or even block blockchain systems.
As long as the encrypted transaction requires an internet connection, there is a single point of failure that can be used for review purposes. For this reason, supporters of cryptocurrencies have used Mesh networks, satellites and remote radio technologies to test offline transaction protocols over the past few years.
In early 2019, analysts at JPMorgan Chase said Bitcoin was only useful in a dystopian environment. In addition to discussing the validity of this description, if the Earth encounters a series of large-scale catastrophic events, can Bitcoin or other encrypted blockchains function properly?
Any disruption to the global Internet architecture or government censorship may mean that people will not be able to send and receive cryptocurrencies freely. During the blackout in Venezuela in March 2019, Bitcoin trading volume suffered a severe blow. No electricity means that bitcoin – arguably the life-saving money of millions of people in this country – has become difficult to trade.
After weeks or even months of natural disasters such as hurricanes, the grid in the affected areas is still inoperable. More than 11 months after Hurricane Maria, some parts of Puerto Rico are still in a state of power outage.
As the centralized network infrastructure is prone to failures and is subject to review, the prospects for electronic value transfer can only be said to be very embarrassing. In a global disaster, encrypted transfers are not the only services that are affected, because without Internet access, payments through MasterCard and Visa are almost impossible.
The ability to implement offline encrypted transactions also creates another avenue for wider digital currency adoption. Decentralized payment channels can be used in areas with little or no Internet coverage.
Global Mesh Labs and goTenna's decentralized application engineer Richard Myers commented on the potential impact of a practical offline encryption transaction solution, saying that local Mesh networks can stimulate distributed communication and promote efficiency Bitcoin transactions. Myers' company is committed to the development of Mesh network technology, which wrote in an email to Cointelegraph:
“In many rural and developing countries, Internet connectivity is both expensive and poorly networked. More solutions tailored to these situations will undoubtedly facilitate the adoption of cryptocurrencies where they are needed. Bitcoin transactions can pass alternative low bandwidth The transport layer works, such as Mesh radio and SMS."
Send Bitcoin via satellite and Mesh network
There are already some projects that are focused on creating a centralized ISP network alternative. These projects are investigating the deployment of Mesh networks and remote radios to replace Internet connections.
In addition to creating a parallel P2P infrastructure for encrypted transactions, these networks can also create channels for truly decentralized communications without any government control.
(Wireless Mesh network structure diagram. Source: Cointelegraph)
Mesh networks have a special topology that allows all necessary infrastructure nodes to be connected in a non-hierarchical manner. This arrangement differs from a centralized Internet architecture in that its servers are responsible for passing information between and from the connected nodes.
Since there is no central dependency in the mesh network, the node can configure itself. Therefore, if several nodes in the network fail, other nodes can dynamically reroute and reorganize themselves to allow for uninterrupted information transfer.
The non-hierarchical structure of the Mesh network has obvious similarities with the early iterations of the Internet. This arrangement is also similar to the planar network topology of the Bitcoin blockchain.
With the continuous development of wireless technology, Mesh networks no longer need wiring. Conversely, within a certain range, network nodes can communicate directly. For remote information transmission, the node acts as a relay to send data streams.
For example, blockchain company Blockstream already has a satellite infrastructure that provides Internet-free access to bitcoin networks on five continents. With a simple satellite dish, users can run a complete node to facilitate bitcoin payments.
Using an SMS bridge or Mesh network, users can broadcast these transactions across the entire network without the need for an internet connection. Startups like goTenna offer text messaging without Cellular connectivity, and they have integrated encrypted wallets with SMS offline transactions.
Hosting remains one of the main pain points in the cryptocurrency industry. Solutions that attempt to reduce the need for Internet connectivity still require online access to broadcast transactions over the network. Rotem Finkelman, GK8's marketing communications manager, discussed the need for a true offline crypto-transaction solution in an email to Cointelegraph:
"The reason someone pursues 'offline' encryption transactions is to prevent potential hacking and private key theft, but so-called 'air gap system', Bluetooth, RF and other solutions can be cracked because they need a short time The time (or even milliseconds) is connected to the Internet to create a valid transaction. In this case, they still have an attack vector. If the attack vector still exists in the solution, then the purpose of the 'offline' encryption transaction is Not reached."
With improvements in Mesh networks and remote radio technologies, access to cryptocurrency exchanges and decentralized blockchain protocol networks will be possible without the need for a final uplink connection to the Internet.