Category Archives: Bitcoin

First results #BitcoinAidMexico donation campaign

After the earthquake that affected Puebla, Morelos and Mexico City on the past 19th of September, we launched a second phase of our fundraising during #BitcoinAidMexico. Bitso agreed on donating an extra 50% to all funds received on the first 7 days of the campaign (Monday September 25).

We are grateful and pleased with all the support and solidarity received from the community. We are excited and proud to show you the preliminary results of this fundraising campaign.

Up till Friday September 22, we received:

  • 179 Bitcoin transactions totalling 10.28661568 BTC
  • 94 Ethereum transactions totalling 26.23848868 ETH
  • 51 Ripple transfers for a total of 7,829.16 XRP

Bitso matching 50% of the received funds can be traced with the following links:

On Friday September 22we made a market sale of all the funds in every wallet of BTC, ETH y XRP, resulting in $1,223,688 MXN(approximately $69,000 USD).

As we explained on the campaign’s initial blog posts, these trades were exempt from any fees. Therefore, Bitso did not obtain any profits from them. They will also not be tax deductible. Bitso will not obtain any tax benefits from these donations.

From the funds collected, 50% of the amount $611,844 MXN was diligently transferred to Cruz Roja Mexicana IAP. The official payment slip can be verified on Banco de México’s (the Mexican Central Bank) website http://www.banxico.org.mx/cep/ by following this procedure:

  1. Go to the oficial Banxico website: http://www.banxico.org.mx/cep/
  2. Select date: 23 de Septiembre 2017
  3. On “criterio de búsqueda” choose “Clave de Rastreo” (default option)
  4. On “Clave de Rastreo” write: BITSO5006108508115383
  5. For “Banco emisor del pago” choose: “STP”
  6. For “Banco receptor del pago” choose: “BBVA Bancomer”
  7. For “Cuenta Beneficiaria” write: 012180004040404062
  8. For “Monto de Pago” write: 611844
  9. Enter the “Captcha”
  10. Click “Descargar CEP” and download PDF:

As we expressed in social media, the remaining 50% of the raised funds will be donated to an institution that has the largest impact on rebuilding and next stages caused by this natural disaster. We are currently doing due diligence on foundations working on reconstruction efforts, which is where we — being on the ground — notice that most help will be needed. We are also open to hearing your suggestions on this regard.

We will make an open announcement on the final decision and destination of these funds, as well as the details of the wire transfer and how the funds are used to improve the lives of those affected. We will provide all details of the transfers in the same way we have published the previous donations to Cruz Roja Mexicana IAP.

All wallets for further donations in Bitcoin, Ethereum and Ripple continue active to receive donations until the 18th of October 2017.

Thank you so much to everyone who has been a part of this efforts through donations, spreading the word and all other kind of support.

We would also like to thank and show our admiration to people who have volunteered on the streets of the affected grounds, as well as the people who have one way or another supported the affected people.

Thank you to everyone who has supported Mexico!

¡Gracias a todo el mundo que ha apoyado a México!


First results #BitcoinAidMexico donation campaign was originally published in Bitso (EN) on Medium, where people are continuing the conversation by highlighting and responding to this story.

First results #BitcoinAidMexico donation campaign

After the earthquake that affected Puebla, Morelos and Mexico City on the past 19th of September, we launched a second phase of our fundraising during #BitcoinAidMexico. Bitso agreed on donating an extra 50% to all funds received on the first 7 days of the campaign (Monday September 25).

We are grateful and pleased with all the support and solidarity received from the community. We are excited and proud to show you the preliminary results of this fundraising campaign.

Up till Friday September 22, we received:

  • 179 Bitcoin transactions totalling 10.28661568 BTC
  • 94 Ethereum transactions totalling 26.23848868 ETH
  • 51 Ripple transfers for a total of 7,829.16 XRP

Bitso matching 50% of the received funds can be traced with the following links:

On Friday September 22we made a market sale of all the funds in every wallet of BTC, ETH y XRP, resulting in $1,223,688 MXN(approximately $69,000 USD).

As we explained on the campaign’s initial blog posts, these trades were exempt from any fees. Therefore, Bitso did not obtain any profits from them. They will also not be tax deductible. Bitso will not obtain any tax benefits from these donations.

From the funds collected, 50% of the amount $611,844 MXN was diligently transferred to Cruz Roja Mexicana IAP. The official payment slip can be verified on Banco de México’s (the Mexican Central Bank) website http://www.banxico.org.mx/cep/ by following this procedure:

  1. Go to the oficial Banxico website: http://www.banxico.org.mx/cep/
  2. Select date: 23 de Septiembre 2017
  3. On “criterio de búsqueda” choose “Clave de Rastreo” (default option)
  4. On “Clave de Rastreo” write: BITSO5006108508115383
  5. For “Banco emisor del pago” choose: “STP”
  6. For “Banco receptor del pago” choose: “BBVA Bancomer”
  7. For “Cuenta Beneficiaria” write: 012180004040404062
  8. For “Monto de Pago” write: 611844
  9. Enter the “Captcha”
  10. Click “Descargar CEP” and download PDF:

As we expressed in social media, the remaining 50% of the raised funds will be donated to an institution that has the largest impact on rebuilding and next stages caused by this natural disaster. We are currently doing due diligence on foundations working on reconstruction efforts, which is where we — being on the ground — notice that most help will be needed. We are also open to hearing your suggestions on this regard.

We will make an open announcement on the final decision and destination of these funds, as well as the details of the wire transfer and how the funds are used to improve the lives of those affected. We will provide all details of the transfers in the same way we have published the previous donations to Cruz Roja Mexicana IAP.

All wallets for further donations in Bitcoin, Ethereum and Ripple continue active to receive donations until the 18th of October 2017.

Thank you so much to everyone who has been a part of this efforts through donations, spreading the word and all other kind of support.

We would also like to thank and show our admiration to people who have volunteered on the streets of the affected grounds, as well as the people who have one way or another supported the affected people.

Thank you to everyone who has supported Mexico!

¡Gracias a todo el mundo que ha apoyado a México!


First results #BitcoinAidMexico donation campaign was originally published in Bitso (EN) on Medium, where people are continuing the conversation by highlighting and responding to this story.

HOW IS GRAFT REAL-TIME AUTHORIZATION (“INSTANT CONFIRMATION”) WITHIN A FEW SECONDS POSSIBLE WITH 2…

HOW IS GRAFT REAL-TIME AUTHORIZATION (“INSTANT CONFIRMATION”) WITHIN A FEW SECONDS POSSIBLE WITH 2 MINUTE BLOCK INTERVAL?

Unlike most crypto payment systems, and similar to traditional credit/debit card processing, Graft payment is divided into two phases: authorization and settlement. Like in credit/debit card world, Graft authorization happens in real time (hundreds milliseconds to a few seconds, depending on various conditions), while settlement is performed later on, usually within 2 minutes (compare to several hours and even days in traditional payment networks).

Although there are cryptocurrencies with block (settlement) interval less than 2 minutes, there is no specific reason to reduce it, especially with Graft built in “always on” real time authorization system. First, very short interval complicates the block generation and PoW process, as a lot of supernodes must communicate each other and agree on the new block, so with very short interval the network latency will start affecting the process. Second, reducing the interval still does not resolve the real-time authorization (“instant confirmation”) problem. Even with 30 seconds interval, it is still too long for real time payments (credit card authorizations are in a range of hundreds milliseconds to a few seconds), not to mention the fact that 1 confirmation (1 block) is still not enough to mitigate the risk of fork for significant amounts. So special additional technology is still required to resolve the real-time authorization problem. Graft resolves this problem by implementing a scheme called authorization sample, which is a group of supernodes that is selected by special Proof of Work/Proof of Stake algorithm from a larger pool of candidates.

The supernodes in authorization sample must match several criteria in order to prove their loyalty to the network:

Must be an active miner — solve at least one block within last 1440 blocksMust maintain a collateral (“stake”) deposit account with 1000 graftMust be “always on” (99% of the time within last 48 hours)Must have a public IP

The authorization sample supernodes validate the transaction and guarantee that the buyer cannot spend the same money more than once until the transaction is settled (added into the block which is written into the blockchain). The settlement is performed by the mining part of the supernode within 2 minutes.

The China Effect on Blockchains and Cryptocurrencies Future

In the past 3 weeks, news that the Chinese government was cracking down on ICOs and forcing cryptocurrency exchanges to halt trading has sent the markets tanking.

Trading volumes on the cryptocurrency exchanges are down significantly, and the pull-back in activity is not just from the Chinese Yuan and exchanges, but across all currencies and global exchanges. (see the following 2 charts, from http://data.bitcoinity.org/)

We can analyse what we know and don’t know, and give some context to these developments.

First, let us be reminded that Chinese regulators and authorities decisions and policy statements are aimed at the Chinese market. They are not directives for the rest of the world to follow. China’s government scope is at the national level.

Second, the timing of this crackdown may be related to the upcoming 19th National Congress of the Communist Party of China (CPP), scheduled to start on Oct 18th 2017 in Beijing. That is one of the most important meetings in China’s political calendar, and it has been widely reported that the latest announcements are politically motivated muscle-flexing by the CPP.

We know the following:

  • Capital flight via cryptocurrency was real, and the Chinese authorities didn’t like that. It wasn’t clear to them where the billions of dollars in crypto gains were going, past the exchanges.
  • The KYC/AML practices of Chinese exchanges were not all up to par with the rest of the world. Previously, many exchanges didn’t require stringent KYC, until AML was strictly mandated by the People’s Bank of China in January 2017.
  • The ICOmania had reached another dimension in China with over zealous promoters and real scams that took place. Although the pace of ICOs has been strong outside of China, there were hundreds of ICOs inside the country that we didn’t even know about.

So it was expected that some kind of order was overdue. The political coincidence made the moons align more squarely for that perfect storm to take hold.

Despite this turmoil, the global fundamentals behind blockchain, cryptocurrency and ICOs are intact. As much as one would like to think that what China does doesn’t matter, the reality is that when China sneezes at crypto, the rest of the world catches the cold.

For one, Chinese partcipants represent 30–35% of many ICOs, so their absence has been felt, even if the ban doesn’t officially affect non-China ICOs. Some ICOs who had Chinese investors on their radar (via KYC pre-registrations or direct contacts), have experienced a downturn in money raised from that specific region.

Second, the share of Chinese exchanges on total cryptocurrency volumes used to be close to 45–50% before the ban, and now estimated to have dwindled to perhaps about 15%. Some Chinese users can still get away with trading by using VPNs and accessing external exchanges.

With all that backdrop, let us be reminded that China has also previously banned Facebook and Google, but those companies continued to thrive, while China promoted their own versions of these services (Weibo, RenRen, Baidu Tieba). Furthermore, China has its own Twitter (Weibo), YouTube (Youku Tudou), Yelp (Dianping), Tinder (Momo), Apple (Xiaomi), Uber (Didi Kuaidi), PayPal (Alipay), eBay (Taobao), and other home-grown social media giants like WeChat and Tencent QQ.

You get the idea? So, why not expect China to have their own cryptocurrency too, not based on Ethereum or Bitcoin, but based on their own currency, the Chinese Yuan?

That brings me to the next big rumor coming out of China, which is the possibility of issuing their own crypto Yuan. This shouldn’t come as a surprise given that reports that China’s Central Bank has been looking at the digital currency have been around for more than 1.5 years.

What remains unknown is if this current hiccup will affect the Chinese Bitcoin miners supremacy, which stands at about 80–85% of total market share. So far, miners have not been affected, but I am sure they are worried. Several questions arise:

  • Will the Chinese government require Bitcoin miners to go through the central switch and have their transactions flagged? That would certainly affect the competitive speeds required for transaction mining.
  • Will Chinese miners start to diversify their operations outside of China? One of China’s largest miners, Bitmain has already started activities and shown interest outside of China.
  • Will other countries or organizations jump on this opportunity and start to increase their Bitcoin mining capabilities? Some candidates include Russia, Iceland and Canada for countries, and why not the large multinational banks, Amazon or Google for that matter?

Going forward, my predictions on China are:

  1. China will update their regulation on crypto-exchanges and ICOs after the Party’s convention. Given the current mess, it was easier to wipe the slate clean, and start from that point forward with new rules.
  2. We will see a Crypto Yuan emerge, but with some peculiar parameters around its creation. It won’t be just like another free floating cryptocurrency, and it may not have all the properties of a cryptocurrency, but maybe only selective ones. Even with some restrictions, that move will be a boon for the crypto-markets, as it will serve to validate the future of cryptocurrencies.
  3. The Chinese share of Bitcoin mining will decrease. Some of the existing miners might be tempted to mine for the crypto Yuan, unless the government decides to monopolize (or not require) that function. Simultaneously, other parts of the world will pick-up some of the Bitcoin mining activity.

In summary, China wants control, and China will get control. That’s their default modus operandi. Crypto-Tech is no different than the Internet and Web businesses.

What happens in China doesn’t always stay in China anymore. We have not seen the last of that whale’s boat capsizing moves.

[Originally published on Startup Management]

The China Effect on Blockchains and Cryptocurrencies Future

In the past 3 weeks, news that the Chinese government was cracking down on ICOs and forcing cryptocurrency exchanges to halt trading has sent the markets tanking.

Trading volumes on the cryptocurrency exchanges are down significantly, and the pull-back in activity is not just from the Chinese Yuan and exchanges, but across all currencies and global exchanges. (see the following 2 charts, from http://data.bitcoinity.org/)

We can analyse what we know and don’t know, and give some context to these developments.

First, let us be reminded that Chinese regulators and authorities decisions and policy statements are aimed at the Chinese market. They are not directives for the rest of the world to follow. China’s government scope is at the national level.

Second, the timing of this crackdown may be related to the upcoming 19th National Congress of the Communist Party of China (CPP), scheduled to start on Oct 18th 2017 in Beijing. That is one of the most important meetings in China’s political calendar, and it has been widely reported that the latest announcements are politically motivated muscle-flexing by the CPP.

We know the following:

  • Capital flight via cryptocurrency was real, and the Chinese authorities didn’t like that. It wasn’t clear to them where the billions of dollars in crypto gains were going, past the exchanges.
  • The KYC/AML practices of Chinese exchanges were not all up to par with the rest of the world. Previously, many exchanges didn’t require stringent KYC, until AML was strictly mandated by the People’s Bank of China in January 2017.
  • The ICOmania had reached another dimension in China with over zealous promoters and real scams that took place. Although the pace of ICOs has been strong outside of China, there were hundreds of ICOs inside the country that we didn’t even know about.

So it was expected that some kind of order was overdue. The political coincidence made the moons align more squarely for that perfect storm to take hold.

Despite this turmoil, the global fundamentals behind blockchain, cryptocurrency and ICOs are intact. As much as one would like to think that what China does doesn’t matter, the reality is that when China sneezes at crypto, the rest of the world catches the cold.

For one, Chinese partcipants represent 30–35% of many ICOs, so their absence has been felt, even if the ban doesn’t officially affect non-China ICOs. Some ICOs who had Chinese investors on their radar (via KYC pre-registrations or direct contacts), have experienced a downturn in money raised from that specific region.

Second, the share of Chinese exchanges on total cryptocurrency volumes used to be close to 45–50% before the ban, and now estimated to have dwindled to perhaps about 15%. Some Chinese users can still get away with trading by using VPNs and accessing external exchanges.

With all that backdrop, let us be reminded that China has also previously banned Facebook and Google, but those companies continued to thrive, while China promoted their own versions of these services (Weibo, RenRen, Baidu Tieba). Furthermore, China has its own Twitter (Weibo), YouTube (Youku Tudou), Yelp (Dianping), Tinder (Momo), Apple (Xiaomi), Uber (Didi Kuaidi), PayPal (Alipay), eBay (Taobao), and other home-grown social media giants like WeChat and Tencent QQ.

You get the idea? So, why not expect China to have their own cryptocurrency too, not based on Ethereum or Bitcoin, but based on their own currency, the Chinese Yuan?

That brings me to the next big rumor coming out of China, which is the possibility of issuing their own crypto Yuan. This shouldn’t come as a surprise given that reports that China’s Central Bank has been looking at the digital currency have been around for more than 1.5 years.

What remains unknown is if this current hiccup will affect the Chinese Bitcoin miners supremacy, which stands at about 80–85% of total market share. So far, miners have not been affected, but I am sure they are worried. Several questions arise:

  • Will the Chinese government require Bitcoin miners to go through the central switch and have their transactions flagged? That would certainly affect the competitive speeds required for transaction mining.
  • Will Chinese miners start to diversify their operations outside of China? One of China’s largest miners, Bitmain has already started activities and shown interest outside of China.
  • Will other countries or organizations jump on this opportunity and start to increase their Bitcoin mining capabilities? Some candidates include Russia, Iceland and Canada for countries, and why not the large multinational banks, Amazon or Google for that matter?

Going forward, my predictions on China are:

  1. China will update their regulation on crypto-exchanges and ICOs after the Party’s convention. Given the current mess, it was easier to wipe the slate clean, and start from that point forward with new rules.
  2. We will see a Crypto Yuan emerge, but with some peculiar parameters around its creation. It won’t be just like another free floating cryptocurrency, and it may not have all the properties of a cryptocurrency, but maybe only selective ones. Even with some restrictions, that move will be a boon for the crypto-markets, as it will serve to validate the future of cryptocurrencies.
  3. The Chinese share of Bitcoin mining will decrease. Some of the existing miners might be tempted to mine for the crypto Yuan, unless the government decides to monopolize (or not require) that function. Simultaneously, other parts of the world will pick-up some of the Bitcoin mining activity.

In summary, China wants control, and China will get control. That’s their default modus operandi. Crypto-Tech is no different than the Internet and Web businesses.

What happens in China doesn’t always stay in China anymore. We have not seen the last of that whale’s boat capsizing moves.

[Originally published on Startup Management]

Best Exchange to Buy Large Quantities of Bitcoin

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There are many good exchanges with strong liquidity. Below there’s a list of trading platforms that could help you buy or sell a high amount of Bitcoin. Here’s what I found after some research:

  • BitStamp
  • Poloniex
  • Coinbase
  • GDAX

These exchanges have daily volume which exceeds thousands of Bitcoins and their fees are relatively low. But depending on what you consider a large quantity of money maybe a better choice would be so-called OTC exchanges (OTC = over the counter). OTC exchanges refer to companies or individual wiling to sell you Bitcoins directly and not through a regulated and automated trading platform.

OTC exchanges benefits

  • High liquidity — OTC companies specialize in supplying high volumes of Bitcoin for large buyers such as institutional investors. This means you will be able to get your order fulfilled in full faster than on a traditional exchange most of the time.
  • Fixed price — When you buy large amounts of Bitcoin on a public automated exchange you will probably see the price rise as your order is being executed. This is due to the fact that once you finish buying from the “cheap” sellers, you gradually move to the “expensive” sellers. This means you don’t have a fixed price for your purchase. When you use an OTC exchange you can negotiate a fixed price (e.g. “Bitstamp rate + 1%).

A few OTC exchanges:

  • Genesis
  • ItBit (for companies)
  • Richfund

You can also try buying smaller amounts (up to 50BTC) on multiple regular exchanges in order not to disturb the market. Buying or selling a lot of Bitcoins can have an impact on the market and drive the price up or down, depending on your transaction. So be careful when doing so.

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Best Exchange to Buy Large Quantities of Bitcoin was originally published in Krown on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Alt coin world!!

The Alt coin world!!

I read this answer on Quora last week about how Matej Galvanek does his research about various alt coins that exist.

You can read his answer over here.

Some of the things that I thought were interesting are given below:

Steps

First I have to strongly believe that whole industry (cryptocurrencies) is disruptive and is here to stay and take over. And that belief must come from understanding, not blind wishes. For that, some studying is necessary - I read BTC whitepaperand Whitepaper of every cryptocurrency from TOP 10 by market cap to develop a strong base knowledge of the industry. I ask questions on reddit, etc. I stay clear from spam Facebook groups full of hyped up people talking about random price fluctuations.Then I start researching cryptocurrency by cryptocurrency. I quickly skim through the webpage. If I do not understand the key value proposition of the cryptocurrency, I write it off. I like to understand what I am buying, and there is lot of bullshit out there, with very unclear (if any) value proposition (usually anything regarding social media is bullshit).If I understand and like the value proposition of a coin or token, I am going to see under which blockchain is it build. Most of them are build under Ethereum. So I ask myself - does it make sense to invest in this coin? Isn’t it better to invest directly into Ethereum? How are they correlated?If I see the coin is priced pretty low (comparing market cap), I might go directly for the coin. If it already went up couple of hundreds or thousands of %, I might as well invest directly into ETH.When I decide the price is right, I am going to dig deeper - reading whitepaper, reddit boards (sometimes you find pearls like this ). I ask some hard questions -Is it inflationary and how much? Is it valuable for this project to use blockchain? Most of the services could just as well use SQL database and it wouldn’t matter. I beware of same old business disguising itself as disruptive blockchain tech. There are plenty of them.I pay special attention to team - who are these guys? How experienced are they? Are they fully committed or is this just a sidekick project? Especially - who are developers and how many of them is there? If I see 7 founders, and only 1–2 are devs(the rest usually being “marketing, community management, finance, sales, visionary…”) I run away.If the coin passes all these filters, I am going to close my eyes and buy for couple of bucks. I always only buy for as much as I can lose. I am not going to daytrade, stare into charts or panic sell. I am going to let it lie for 1–5 years, occasionally watching and reading the news about project. I also set up some sell limit order for 1/3 - 1/2 of the investment for 300% - 600% to secure a profit and freeroll if it spikes suddenly (which happens a lot here), depends on the coin and my faith in it.

Using these steps, I thought of building a research journal about every Alt coin that has existed, so that investors do not have to dig deep into researching white papers, blogs, articles, news, etc.

Each week I’ll be publishing about one or two crypto currencies here on Medium and also my blog (which is tba). I’ll be researching their white paper, the team behind it, use case, any significant news which might affect its price, articles from experts about this currency etc. Here on Medium, I’ll just be giving a short summary about that currency, and the rest of detailed article can be found on my website or blog, whatever you’d like to call it.

The Alt coin world!!

The Alt coin world!!

I read this answer on Quora last week about how Matej Galvanek does his research about various alt coins that exist.

You can read his answer over here.

Some of the things that I thought were interesting are given below:

Steps

First I have to strongly believe that whole industry (cryptocurrencies) is disruptive and is here to stay and take over. And that belief must come from understanding, not blind wishes. For that, some studying is necessary - I read BTC whitepaperand Whitepaper of every cryptocurrency from TOP 10 by market cap to develop a strong base knowledge of the industry. I ask questions on reddit, etc. I stay clear from spam Facebook groups full of hyped up people talking about random price fluctuations.Then I start researching cryptocurrency by cryptocurrency. I quickly skim through the webpage. If I do not understand the key value proposition of the cryptocurrency, I write it off. I like to understand what I am buying, and there is lot of bullshit out there, with very unclear (if any) value proposition (usually anything regarding social media is bullshit).If I understand and like the value proposition of a coin or token, I am going to see under which blockchain is it build. Most of them are build under Ethereum. So I ask myself - does it make sense to invest in this coin? Isn’t it better to invest directly into Ethereum? How are they correlated?If I see the coin is priced pretty low (comparing market cap), I might go directly for the coin. If it already went up couple of hundreds or thousands of %, I might as well invest directly into ETH.When I decide the price is right, I am going to dig deeper - reading whitepaper, reddit boards (sometimes you find pearls like this ). I ask some hard questions -Is it inflationary and how much? Is it valuable for this project to use blockchain? Most of the services could just as well use SQL database and it wouldn’t matter. I beware of same old business disguising itself as disruptive blockchain tech. There are plenty of them.I pay special attention to team - who are these guys? How experienced are they? Are they fully committed or is this just a sidekick project? Especially - who are developers and how many of them is there? If I see 7 founders, and only 1–2 are devs(the rest usually being “marketing, community management, finance, sales, visionary…”) I run away.If the coin passes all these filters, I am going to close my eyes and buy for couple of bucks. I always only buy for as much as I can lose. I am not going to daytrade, stare into charts or panic sell. I am going to let it lie for 1–5 years, occasionally watching and reading the news about project. I also set up some sell limit order for 1/3 - 1/2 of the investment for 300% - 600% to secure a profit and freeroll if it spikes suddenly (which happens a lot here), depends on the coin and my faith in it.

Using these steps, I thought of building a research journal about every Alt coin that has existed, so that investors do not have to dig deep into researching white papers, blogs, articles, news, etc.

Each week I’ll be publishing about one or two crypto currencies here on Medium and also my blog (which is tba). I’ll be researching their white paper, the team behind it, use case, any significant news which might affect its price, articles from experts about this currency etc. Here on Medium, I’ll just be giving a short summary about that currency, and the rest of detailed article can be found on my website or blog, whatever you’d like to call it.

Blockchain company will provide one million people in Asia with their first loans

By 2020, about 1 million people in Asia will receive their very first loans ever. Crypto economy is the tool that will help them to merge into financial markets and to apply for approximately 3 million payday loans annually. MicroMoney, a global blockchain company and lending services provider, aims to support this process allowing people with no credit rating score to enter Asian banks with positive credit histories.

MicroMoney’s co-founder, Anton Dziatkovsky, is going to form a market for the credit histories creation from scratch and their further support in emerging markets. Now his company works as a microfinance business helping the unbanked and underbanked people to provide their primary needs with payday loans. On the other hand, MicroMoney helps banks and other financial organizations to access new markets in the Southeast Asia and other emerging regions with lower risks providing them with a database of reliable borrowers in each region with all the segmentation by an audience, risk level and costs related to each segment. MicroMoney’s platform uses Big Data methods, all the data is keeping with the help of blockchain technology, and the unique scoring model based on information received from client’s mobile phone with the special application designed by the company.

The process looks quite simple for a lender: the Big Data platform drives all the data received from the phone through neural networks, analyzes the result, and evaluate a customer’s trustworthiness. Clear and full information about a person based on the analysis of a customer’s data available from all the mobile sources and includes career information, interests, social networks accounts (confirming that this particular person is real), travel notes, family status, penalties received and so on. According to Anton Dziatkovskii, this content sounds more truthful and allows predicting a customer’s behavior to avoid excessive risks.

The company chose the mobile phone because of a high level of smartphones’ penetration, even in countries with a low level of banking services distribution. For example, in Africa, 80% of the population does not have a bank account but 63 of 100 people use mobile phones. Secondly, this is a higher popularity of smartphones above laptops and computers. Finally, it’s practically equal capabilities of smartphones’ and PCs processors and features along with significant progress in financial services mobilization, cloud services, and Big Data systems to analyze all these data.

“95% of our clients take their first loan ever, — Anton Dziatkovsky says. — Usually, they get stuck in a kind of endless circle: if they need a credit, they need a credit history, and to get a credit score and the history they need a credit. Meanwhile, banks are keeping a focus on medium and large enterprises lending in emerging markets. Microfinance companies embrace the others but the process of loan applications approval in Asia is extremely complicated and long due to the lack of automation. The common practice there is to keep all the data in Excel or even in paper ledgers. For the loan application, a person needs a collateral (in Cambodia and Myanmar, for example, it can be real or land property) and a lot of papers such as references from police, municipality, property owner, income statement, a letter from job manager etc. A person may find four or six friends and band them to achieve a group loan. In Indonesia, Cambodia, Myanmar, and Sri Lanka, for example, the process may last from 1 week to 2–3 months. MicroMoney approve or decline a loan application within 15 minutes without any collaterals or documents required. The first loan will be small — about $23 usually but after 5–10 loans, a borrower can rise up to $200–300”.

In turn, banks, credit, and insurance companies have to spend up to 15% of the budget for the customers’ verification and purchase credit histories from credit bureaus in order to explore their risks and loan percentage to establish for each audience segment. According to statistics, banks make 2–3 requests per one person per year with the price of inquiry $1–10 average. MicroMoney plans to give all these financial organizations an access to its list of the most reliable borrowers from each region with positive credit score rates.

The market seems to be very perspective: 39% of the world’s population doesn’t have a bank account. According to the McKinsey, the most affected regions are Africa, Latin America, and the Middle East (about 65–80% of the adult population are unbanked).

MicroMoney now employs about 200 people in Cambodia, Myanmar, Singapore, Sri-Lanks, and Thailand to service its microfinance business and some software developers, marketing, and PR managers, copywriters from the United Kingdom, Israel, and Russia to promote the company. In Asia, the project works with local partners. The first partner is the adviser to the Prime Minister of Cambodia for Economic Affairs, and CEO of one of the largest development companies in the country Sonatra Group, Okna Sorn Sokna. The second is the East Wing ASA Capital venture fund with about $100 million of capital and its member, the head of Sonatra’s affiliate companies — Mr. Tetsuji Nagata. They both are not only the stakeholders and top-managers of MicroMoney but also enthusiastic advisors for the company’s token distribution campaign that will start this October.

Anton Dziatkovsky is sure to win the game and promises that the company’s tokens will grow constantly supported by the growth in the company’s microfinance business and payday loans approved, along with Big Data platform high demand from banks waiting for an entrance to emerging markets. “We will do our best to raise the price of our tokens up to +1000% for the first year due to our launch in five new markets by the end of 2017”.

MicroMoney plans to issue about 600 thousand payday loans per year and, thus, involve 1 million of unbanked people into crypto-economy by 2020. “Now about two and a half billion people worldwide are unserved and don’t have any access to bank services. Our goal is to connect banks and unbanked”, — notes Anton.

Blockchain company will provide one million people in Asia with their first loans

By 2020, about 1 million people in Asia will receive their very first loans ever. Crypto economy is the tool that will help them to merge into financial markets and to apply for approximately 3 million payday loans annually. MicroMoney, a global blockchain company and lending services provider, aims to support this process allowing people with no credit rating score to enter Asian banks with positive credit histories.

MicroMoney’s co-founder, Anton Dziatkovsky, is going to form a market for the credit histories creation from scratch and their further support in emerging markets. Now his company works as a microfinance business helping the unbanked and underbanked people to provide their primary needs with payday loans. On the other hand, MicroMoney helps banks and other financial organizations to access new markets in the Southeast Asia and other emerging regions with lower risks providing them with a database of reliable borrowers in each region with all the segmentation by an audience, risk level and costs related to each segment. MicroMoney’s platform uses Big Data methods, all the data is keeping with the help of blockchain technology, and the unique scoring model based on information received from client’s mobile phone with the special application designed by the company.

The process looks quite simple for a lender: the Big Data platform drives all the data received from the phone through neural networks, analyzes the result, and evaluate a customer’s trustworthiness. Clear and full information about a person based on the analysis of a customer’s data available from all the mobile sources and includes career information, interests, social networks accounts (confirming that this particular person is real), travel notes, family status, penalties received and so on. According to Anton Dziatkovskii, this content sounds more truthful and allows predicting a customer’s behavior to avoid excessive risks.

The company chose the mobile phone because of a high level of smartphones’ penetration, even in countries with a low level of banking services distribution. For example, in Africa, 80% of the population does not have a bank account but 63 of 100 people use mobile phones. Secondly, this is a higher popularity of smartphones above laptops and computers. Finally, it’s practically equal capabilities of smartphones’ and PCs processors and features along with significant progress in financial services mobilization, cloud services, and Big Data systems to analyze all these data.

“95% of our clients take their first loan ever, — Anton Dziatkovsky says. — Usually, they get stuck in a kind of endless circle: if they need a credit, they need a credit history, and to get a credit score and the history they need a credit. Meanwhile, banks are keeping a focus on medium and large enterprises lending in emerging markets. Microfinance companies embrace the others but the process of loan applications approval in Asia is extremely complicated and long due to the lack of automation. The common practice there is to keep all the data in Excel or even in paper ledgers. For the loan application, a person needs a collateral (in Cambodia and Myanmar, for example, it can be real or land property) and a lot of papers such as references from police, municipality, property owner, income statement, a letter from job manager etc. A person may find four or six friends and band them to achieve a group loan. In Indonesia, Cambodia, Myanmar, and Sri Lanka, for example, the process may last from 1 week to 2–3 months. MicroMoney approve or decline a loan application within 15 minutes without any collaterals or documents required. The first loan will be small — about $23 usually but after 5–10 loans, a borrower can rise up to $200–300”.

In turn, banks, credit, and insurance companies have to spend up to 15% of the budget for the customers’ verification and purchase credit histories from credit bureaus in order to explore their risks and loan percentage to establish for each audience segment. According to statistics, banks make 2–3 requests per one person per year with the price of inquiry $1–10 average. MicroMoney plans to give all these financial organizations an access to its list of the most reliable borrowers from each region with positive credit score rates.

The market seems to be very perspective: 39% of the world’s population doesn’t have a bank account. According to the McKinsey, the most affected regions are Africa, Latin America, and the Middle East (about 65–80% of the adult population are unbanked).

MicroMoney now employs about 200 people in Cambodia, Myanmar, Singapore, Sri-Lanks, and Thailand to service its microfinance business and some software developers, marketing, and PR managers, copywriters from the United Kingdom, Israel, and Russia to promote the company. In Asia, the project works with local partners. The first partner is the adviser to the Prime Minister of Cambodia for Economic Affairs, and CEO of one of the largest development companies in the country Sonatra Group, Okna Sorn Sokna. The second is the East Wing ASA Capital venture fund with about $100 million of capital and its member, the head of Sonatra’s affiliate companies — Mr. Tetsuji Nagata. They both are not only the stakeholders and top-managers of MicroMoney but also enthusiastic advisors for the company’s token distribution campaign that will start this October.

Anton Dziatkovsky is sure to win the game and promises that the company’s tokens will grow constantly supported by the growth in the company’s microfinance business and payday loans approved, along with Big Data platform high demand from banks waiting for an entrance to emerging markets. “We will do our best to raise the price of our tokens up to +1000% for the first year due to our launch in five new markets by the end of 2017”.

MicroMoney plans to issue about 600 thousand payday loans per year and, thus, involve 1 million of unbanked people into crypto-economy by 2020. “Now about two and a half billion people worldwide are unserved and don’t have any access to bank services. Our goal is to connect banks and unbanked”, — notes Anton.

Welcome to Global Jobcoin ICO

Global Jobcoin (GJC) is an ERC20 decentralized token to pay for services related to employment. Using the Ethereum block chain we are creating this token for employers & employees worldwide.

Global Jobcoin will be used on our Job platforms in Switzerland, Germany, Austria & Poland. As we expand our operations worldwide, Global Jobcoin will become the essential choice of payment on all our platforms around the world. We are also partnering with other partner Job boards to offer integration of Global Jobcoin in to their platforms.

Jobstoday is a product of Sunny Look Media LLC. Jobstoday platforms have been completely financed by its founders, Sanket Deshmukh & Lukasz Ochnik, without any venture capital investment.

Our main idea of developing this platform was to help individuals, small & medium businesses afford a platform for finding good talented employees. We have built a profitable business in a short period of time & with the Initial coin offering, we want to grow our operations worldwide & give great incentives to our investors.

We are raising funds to expand Jobstoday in many more countries around the world. With the ICO Crowd Sale we can achieve & cover many more marketing & sales channels & win new customers. Our aim is to make Global Jobcoin a preferred crypto currency for employment services worldwide.

For more information on our ICO, please read our white paper on our official website: https://www.globaljobcoin.com/

Token Economy #15: VC-induced ICOs

+ first cross-chain atomic swaps, new funds, FreeSociety

😈 VC firms pushing for / condoning ICOs: a dangerous game

This week, after a few more calls with startups that are turning into wannabe ICO issuers and most of all after seeing yet another major VC-backed company planning an ICO, I started questioning the intentions and goals of the VCs and investors that are pushing their portfolio companies to raise capital with token sales.

I think we are reaching the limit of the first wave of ICOs, with a constant stream of absolutely bonkers proposals bordering on scams.

I hear your questions: “if you’re so critical of ICOs, why are you even writing this newsletter and caring about this market?”

My interest lies in the technological revolution rather than in the bypassing of venture capital and other traditional funding mechanisms.
Bitcoin and Ethereum have been the two biggest technological and economic revolutions I’ve witnessed in my life, and they’ll be hard to beat in the future.

When I think we now have almost fully-featured trustless, censorship-resistant economic and computing networks, I still get giddy. It’s amazing.

But while I think democratization of access to capital is amazing, I also think we’re not at that stage at the moment, and we won’t be for a while, not until we’re able to move a lot of the economic activity to the blockchain and until we’ll coordinate entrepreneurial endeavors with Aragon or similar structures.

What we’re witnessing now is just a complete cash grab from people that are devising tokens just to justify raising cash from absolutely uninformed market participants.

In my town, asking money from people in exchange for something you think is worth 0 is squarely on the other side of the “OK” line.

If I see a desperate startup do that just to survive, I just recognize it and instantly pass.

BUT, when I suspect that some VCs are actively suggesting to their companies to think about token sales, then I start to worry.
And I really worry for them, but most of all for all of the venture ecosystem.

As usual when something wanders through my neural paths, I posted it to twitter, but this time I’d really like to explore the topic a bit more in depth, as well as solicit the feedback and ideas of both crypto and VC people.

My current view is that the game that ICO-pushing VCs are playing is all risk and very little reward, which doesn’t make it a great one.

- Let’s assume we have a non-performing company in our portfolio with a large user base.
This is maybe a company that has failed to find a way to monetize, or doesn’t have enough growth metrics to attract the next VC round, or just plainly hasn’t found PMF yet.

- Let’s also assume we are well aware of the ICO trend, and are capable of providing a strong signal to the wider market, bumping up the chances of said company to raise substantial funding in a public token sale.

What do we do? And why?

My mental model has to split or fork here, based on one crucial factor:

do we, as investors, actually believe that an application-specific token with no cryptographic reason of existence would generate and retain value both for the company and the token holders?

If we do believe that, then it’s all good. We don’t care about the equity anymore, are happy to relinquish governance to a foundation maybe, and will just hold the token for the long term until the company has developed its ecosystem and has been able to align the value exchanged on the network to the token.

But I have a hard time thinking that some of the smartest minds in the world believe that introducing more friction in an ecosystem, with no underlying “platform protocol” which would need a token, would result in any more value (especially at the valuations for tokens that are flying around).

- So, let’s now also assume that we don’t really believe the token should exist or would improve the chances of success for the company.

What do we do now?
Do we condone / suggest an ICO?
Do we advise against one?

It’s a VERY tricky question.

After a bit of thinking, my bottom line is that there is no real positive outcome in a situation like this for the VC firm.

Let’s assume the positive scenario where there is a successful token sale, and the company raises $100M.

The company gets some nice new runway, but even if it’s then able to find its real path, it would have trouble to get acquired. Who would ever in their right mind acquire a company that sold hundreds of millions of dollars of securities around the world to god knows who? That would not pass one single due diligence meeting with any reasonable acquirer.

Same goes for a public market listing.

So the equity of the company, even if it might not have been worth much earlier, is now worth probably even less.

Obviously if the company raises the money and then fails to achieve anything, we’d now have thousands of pissed “investors” all over the world.

In both cases, the VC doesn’t really come out of it too well, and I think could go down in flames like some firms that were financing pre-bubble internet firms.

Because, now, instead of being remembered as the VC who backed that startup that failed, we’ll be remembered as the VC who backed a startup that failed and also sold extremely high risk securities to users all around the world for a lot of money.

One of my favorite comments on a group was:
“If they were to incorporate a token for a novel use case, and sell a small amount, at a fair valuation. And if they didn’t use that funds to pay back investors, I would be excited to see adoption by a large app.
But this isn’t adoption. This is a bailout.”

And, FWIW, this is the feeling with almost everyone I consider smart and informed in the crypto community.

To my surprise, I got an answer to the previously linked tweet, from none other than Fred Wilson himself.

I’ve revered Fred for most of my life, and have been extremely impressed with his ability to grasp new trends and get conviction on them, so I have nothing but respect for the man,

But the answer wasn’t really too convincing this time around.

Fred answered linking to a blog post from Albert Wenger (another of my favorite people) where he basically argues that we should encourage different ways of pursuing a path to a decentralized future. Some will do it with ICOs for new protocols and some will do it with ICOs for current networks.

My view is that we can accelerate towards a decentralized future without VCs offloading their venture risk to the public.

Companies with existing user bases should absolutely experiment (because let’s remember that here no one has a clue what they’re doing, we’re all just experimenting) with tokens, but they can very effectively and much more safely do that without having people buy them.
They can just give them out to incentivize specific actions or assign monetary value to specific and previously un-valued transactions of any sort.

I think it’s dishonest to not address this point and carry on like ICOs are a must if you want to introduce a token. They aren’t.

And Fred very well knows this. His only argument on this is that these companies have heavy burns because of their large audiences.
Was really surprised to get this type of answer from someone like Fred. Might start believing they actually think that it’s ok because they have a lot of costs.

In a chat with Joe Urgo of district0x he provided a very interesting completely alternative idea to mine, saying that this is the only right behavior.

“Like he says in his follow up tweet, necessity is the mother of invention. Like we were talking about the other day, these companies are dead in the water as is, so they need to try something. I don’t know that I could call what they are doing dangerous at all, they are being prudent, they are advising their dying investments to take a hail mary and at least try to make something work.

If VC firms know this is a viable option at the moment (which they all should), then it could be argued that _not_ advising companies in similar boats to do the same is dangerous. It shows they are more worried about reputational blowbacks to them than in helping their companies succeed.”

I guess only time will tell.

For now, I’m still only writing checks for core cryptographic protocols whose usage is directly linked to the value of the token and still advising anyone which does not have a core need or use for a token to 1) not use one and 2) if they really must, then most definitely don’t do an ICO but just introduce it gradually, test, learn and think about the future repercussions of their actions.

📌 Token Economy

If I’d Known What We Were Starting

An absolute gem from the #3 Bitcoin user, after Satoshi and Hal Finney. I don’t think it deserves a tl;dr because you need to read this now.

Developers Complete First-Ever Atomic Swap Between Litecoin and Decred

Another week, another major milestone for crypto.

If you’re tired of ICOs, this is the news you’re looking for.

Decred and Litecoin developers have successfully completed an Atomic Swap, according to a tweet from the Decred team.

An atomic swap is basically a ShapeShift-like transaction that happens automatically, on-chain.

Unfortunately there hasn’t been too much disclosed on how it actually happened, so we will have to wait to see how it impacts projects like 0x and Kyber.

The first thought here, is that atomic swaps will be better than using a DEX protocol or platform, BUT they won’t have relayers and order books to organize liquidity.

Another thing to add to the “super interesting to think about” stack.

Markowitz portfolio optimization for cryptocurrencies in Catalyst

Very cool article by a former Mexico Central Bank portfolio manager, now an MBA candidate at Sloan, on how to apply portfolio optimization based on standard MPT to crypto portfolios.

The author uses Enigma’s Catalyst platform (a platform to run micro crypto funds using data shared on the Enigma network).

Accelerating Evolution Through Forking

In a follow up post to his excellent funding protocol development through inflation, Fred Ehrsam elaborates on the value of (hard) forks as an evolutionary mechanism for blockchains.

Fred make strong argument for redistribution of tokens at forks (which rarely happens) to ensure incentives are fully aligned, by switching control of foundation-like tokens and diluting all token holders to make grants for the developers leading the fork.

Bitcoin Developers Reveal Roadmap for ‘Dandelion’ Privacy Project

I’m not going to link to the actual BIP thread because it’s too complicated, BUT I think this is interesting.

There is a team that is working on a BIP called Dandelion which would add a privacy layer on top of Bitcoin transactions by removing the ability to find out the IP from the transactions.

The solution is a sort of TOR for Bitcoin.

This is interesting because many of the Bitcoin monitoring tools sold to governments and police around the world use this specific “feature” of the network to identify users.

The race for privacy coins is on, and with Ethereum enabling zk-snarks and Monero’s price rise + ZCash constant development, I don’t really see a future for non-private-by-default coins.

Ethereum’s Metropolis Hardfork Activated on Testnet, a Zcash Transaction Verified

Byzantium, the first part of Ethereum’s Metropolis hardfork, is live on testnet and it was just used to verity a zk-snark transaction.

Zooko also wrote about this from Zcash’s side.

So cool to see core technology advancements go this fast, in a sea of ICO scams.

This is where the future is.

Ethereum founder Vitalik Buterin discusses initial coin offerings, the consensus algorithm, and the most interesting apps

Every day I grow more convinced that our generation’s Steve Jobs will be Vitalik.

“But whereas in bitcoin the protocol exists to maintain the currency, in ethereum, the viewpoint is much more that the currency exists to maintain the protocol.”

A great interview to read.

I am VERY excited about Ethereum, given the amazing pace of development. If my VC investment days have taught me something, seeing a project with this sort of public interest + quality fast code shipping, it’s not going to slow down any time soon.

Vitalik shares his top-three priorities for Ethereum’s development at the moment:
- PoS
- Scalability
- Privacy

🚀

Decentralizing Everything with Ethereum’s Vitalik Buterin | Disrupt SF 2017

25 minutes of Naval interviewing Vitalik.

Amazing background watching.

YC wants to let people invest in its startups through the blockchain

The title is a bit misleading, but Sam is apparently admitting to YC having done work to figure out its approach to ICOs.

In the last YC batch there were only 2 blockchain companies, but that might change with the next one.

We’ll keep an eye out.

An Alleged Ethereum Hacker Gave Back $3 Million And Nobody Knows Why

Well this is a weird one. Remember that CoinDash hack? (Where a bunch of people even suggested that it was an inside job..)

Apparently the hacker just sent back around $3M worth of Ether they stole form Coindash / to Coindash.

I don’t have any mental energy or cycles to spend on this one, so just presenting it like it is.

Announcing Ethereum & Litecoin vaults — Coinbase

FINALLY. This is my #1 favorite feature of Coinbase, but was only available for Bitcoin until this new release.

If you don’t have a hardware wallet, this is what you should be using.

Guide: Coin recovery tool — TREZOR

Every time someone improves on the UX of crypto usage, it’s awesome news.

In this case, Trezor has released some tools to enable the recovery of most erroneous transactions (when you send coins from specific chains to wrong chains or badly formatted addresses).

🚨 Growing pains

The FCA has spoken on ICOs

The UK Financial Conduct Authority (FCA) issued a brief statement warning consumers about the risks involved in ICOs, stating how some ICOs “fall outside the regulated space”, some don’t. Notable difference with US security law is that the UK does not have an equivalent to the Howey test.

On that note, if you are into security law and can bear with Preston Byrne’s marmot jokes, he’s meticulously dissected the FCA announcement here from the perspective on an English lawyer.

Of all the major regulators who have expressed views, the UK FCA appears to have taken the most light touch approach so far.

🤡 ICO Madness

Raiden ICO: Ethereum Scaling Solution to Launch Publicly Traded Token

“Ethereum’s answer to bitcoin’s Lightning Network will have one notable difference — a publicly traded token to be sold in a Dutch auction in October.”

This is a big disappointment for me, as I was really hoping that Raiden would launch without a token and bring Lightning-like capabilities to the Ethereum chain.

Too hard to ignore the millions flying around obviously.

Announcing the SpankChain ICO

I’ll try to not trigger the spam filters here, article is SFW, site is not.

Crypto bubble fears grow as Jamie Foxx, celebrities jump aboard

We’ve spoken about this before, but hopefully peak ICO is almost around the corner.

We wouldn’t be surprised if some of these celebrities are going to end up being prosecuted for the promotion of unregistered securities, insider trading, bribes and so on, as they most likely are receiving both cash and tokens, which they have an incentive to help appreciate in value.

🍿

Is There a Cryptocurrency Bubble? Just Ask Doge. — The New York Times

The NYT interviews the creator of Dogecoin, which has been sounding the alarm for a while now.

Blackmoon Crypto raises $20 million in ICO in 1 day, and $10M in pre-sale

The Blackmoon Crypto platform touts itself as “a one-stop solution for asset managers to create and manage legally-compliant tokenized funds”

😎 Cool new projects

FreeSociety

Roger Ver and a bunch of early Bitcoin millionaires (billionaires?) are planning to buy land and sovereignty over that land from a country. They have more than $100M, which they plan to offer to highly indebted countries to form a “new Monaco” of sorts. It needs to be in a safe zone and be accessible by water.

Libertarians at it again.

I was enamored with the Seasteading Institute efforts, but I’ve also grown more interested and appreciative of the roles that nation states play in our lives.

That being said, I’m all for experimentation in government and monetary policy, so I’m extremely excited by this!

I’m also pretty sure that we might be looking at another ICO here.. but hopefully they’ll just adopt Bitcoin as the national currency instead.

The Ocean Protocol

BigchainDB, in partnership with Dex, unveiled the concept behind the Ocean Protocol, the natural evolution of their work on blockchain + AI.

Ocean will be a protocol and network to facilitate data marketplaces. The protocol will have the role of figuring out who owns what and provide the linking infrastructure.

Data marketplaces have been a pretty obvious idea since the beginning of blockchain and smart contract technologies, so it’s exciting to see more people try to implement them.

Ocean will probably go on to compete with the Enigma network from MIT’s Media Lab.

Harvest — Wind energy used to mine cryptocurrency to fund climate research

“Harvest” is a piece of tech-art commissioned by the Konstmuseet i Skövde museum that uses wind energy to power a computer, connected to the internet via satellite or 4G and geared with an Nvidia graphics card, to mine Zcash. The earnings will fund for climate-change research.

The interesting aspect of this experiment is that crypto currency offers an alternative and decentralised way to ‘store’ energy without relying on a centralised grid and the fees typically incurred in transferring energy to it.

Announcing Balanc3: Quickbooks for Token Launches

Balanc3 — a ConsenSys formation — has been working in stealth for over a year to build out a blockchain-based accounting platform.

Super cool. They take live blockchain transaction data and turn it into accounting style data.
Sounds like the worst possible job to me, but really glad someone is doing it — I’m sure this will be massively useful to a number of projects in the future.

Ripio

RIpio is building a global credit network solution that aims to enhance transparency and reliability in credit and lending

😤 First they ignore you, then they laugh at you, then…

ECB’s Constancio compares Bitcoin to Dutch tulip mania

“Bitcoin is not a currency but a mere instrument of speculation”. “Bitcoin is sort of a tulip”.

They just don’t know when to stop the broken record do they?

Stay Away from Bitcoin, It’s an ‘Absolute Bubble’ Says Hathaway

This is just a gem to be added to the Bitcoin Obituaries, and I think we’ll be watching this again and again in a few years.

It’s still fascinating how some people just. do. not. get. it. and feel confident in dismissing the whole asset class and tech movement.

I just hope I’ll never end up making such comments about new technologies when I’m all grown up. Chances are slim unfortunately 😂

Russian Governor Invites Cryptocurrency Miners to Set Up Mining Farms in Leningrad

The regulatory and geopolitical wars (protocolitics as Yannick coined them) continue!
The Russian Leningrad region wants to create an industrial park for cryptocurrency mining including bitcoin.
They are promising cheap energy and some special conditions, to try and attract maybe even some of the Chinese operators.

JPMorgan Chase boss Jamie Dimon faces market abuse report after his comments about bitcoin

Fun times!

Blockswater, an algorithmic liquidity provider, has filed a market abuse report against Jamie Dimon for “spreading false and misleading information” about bitcoin with the Swedish Financial Supervisory Authority.

They say Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) by declaring that cryptocurrency bitcoin was “a fraud”.

They also say that JPM traded BTC derivatives in Stockholm, so they might actually have a real case.

The SEC Got Hacked, Took A Year To Learn People Might’ve Traded On It, Disclosed These Facts Parenthetically In A Bizarre Statement, And Wants Companies To Do None Of These Things

On the internet, everyone gets hacked.

🤑 VC corner

Balderton leads $9 million Series B in Luno

We humbly admit we had not come across Luno before, and praise Nicolas Debock from Balderton for keeping his lips sealed about it at the Venture Retreat last weekend…

The play here is the global mass market adoption of crypto and the need for user friendly front ends for fiat to enter the ecosystem.

💰 New funds

Linda Xie leaves Coinbase to start a yet unnamed crypto-fund

Coinbase spins out crypto fund managers faster than it resolves support tickets.

After Nick Tomaino (1Confirmation) and Olaf Carlson-Wee (Polychain), Linda, former product manager, and Jordan Clifford, software engineer, join forces in yet another crypto hedge fund endeavour.

Steven McKie leaves Purse to start crypto hybrid hedge/venture fund Amentum

Author of Blockchannel podcast and former head of growth at Purse and more recently decentralised-Quora Cent.co, Steven McKie is teaming up with three other partners with a new crypto fund endeavour. Focus will be on public crypto assets as well as ICO pre-sales, with no info yet on fund size and other other GPs.

Steven is a true crypto-native so we very much look forward to finding out more about what he’s been cooking up, we hope it’s not just about muscling in on pre-sale discounts and buy & hold ETH/BTC!

More info soon, we are promised.

ℹ️ About us

Token Economy is written and curated by Stefano Bernardi and Yannick Roux.

If you’re building a new fundamental piece of technology for the future, please reach out 🤙

Token Economy #15: VC-induced ICOs

+ first cross-chain atomic swaps, new funds, FreeSociety

😈 VC firms pushing for / condoning ICOs: a dangerous game

This week, after a few more calls with startups that are turning into wannabe ICO issuers and most of all after seeing yet another major VC-backed company planning an ICO, I started questioning the intentions and goals of the VCs and investors that are pushing their portfolio companies to raise capital with token sales.

I think we are reaching the limit of the first wave of ICOs, with a constant stream of absolutely bonkers proposals bordering on scams.

I hear your questions: “if you’re so critical of ICOs, why are you even writing this newsletter and caring about this market?”

My interest lies in the technological revolution rather than in the bypassing of venture capital and other traditional funding mechanisms.
Bitcoin and Ethereum have been the two biggest technological and economic revolutions I’ve witnessed in my life, and they’ll be hard to beat in the future.

When I think we now have almost fully-featured trustless, censorship-resistant economic and computing networks, I still get giddy. It’s amazing.

But while I think democratization of access to capital is amazing, I also think we’re not at that stage at the moment, and we won’t be for a while, not until we’re able to move a lot of the economic activity to the blockchain and until we’ll coordinate entrepreneurial endeavors with Aragon or similar structures.

What we’re witnessing now is just a complete cash grab from people that are devising tokens just to justify raising cash from absolutely uninformed market participants.

In my town, asking money from people in exchange for something you think is worth 0 is squarely on the other side of the “OK” line.

If I see a desperate startup do that just to survive, I just recognize it and instantly pass.

BUT, when I suspect that some VCs are actively suggesting to their companies to think about token sales, then I start to worry.
And I really worry for them, but most of all for all of the venture ecosystem.

As usual when something wanders through my neural paths, I posted it to twitter, but this time I’d really like to explore the topic a bit more in depth, as well as solicit the feedback and ideas of both crypto and VC people.

My current view is that the game that ICO-pushing VCs are playing is all risk and very little reward, which doesn’t make it a great one.

- Let’s assume we have a non-performing company in our portfolio with a large user base.
This is maybe a company that has failed to find a way to monetize, or doesn’t have enough growth metrics to attract the next VC round, or just plainly hasn’t found PMF yet.

- Let’s also assume we are well aware of the ICO trend, and are capable of providing a strong signal to the wider market, bumping up the chances of said company to raise substantial funding in a public token sale.

What do we do? And why?

My mental model has to split or fork here, based on one crucial factor:

do we, as investors, actually believe that an application-specific token with no cryptographic reason of existence would generate and retain value both for the company and the token holders?

If we do believe that, then it’s all good. We don’t care about the equity anymore, are happy to relinquish governance to a foundation maybe, and will just hold the token for the long term until the company has developed its ecosystem and has been able to align the value exchanged on the network to the token.

But I have a hard time thinking that some of the smartest minds in the world believe that introducing more friction in an ecosystem, with no underlying “platform protocol” which would need a token, would result in any more value (especially at the valuations for tokens that are flying around).

- So, let’s now also assume that we don’t really believe the token should exist or would improve the chances of success for the company.

What do we do now?
Do we condone / suggest an ICO?
Do we advise against one?

It’s a VERY tricky question.

After a bit of thinking, my bottom line is that there is no real positive outcome in a situation like this for the VC firm.

Let’s assume the positive scenario where there is a successful token sale, and the company raises $100M.

The company gets some nice new runway, but even if it’s then able to find its real path, it would have trouble to get acquired. Who would ever in their right mind acquire a company that sold hundreds of millions of dollars of securities around the world to god knows who? That would not pass one single due diligence meeting with any reasonable acquirer.

Same goes for a public market listing.

So the equity of the company, even if it might not have been worth much earlier, is now worth probably even less.

Obviously if the company raises the money and then fails to achieve anything, we’d now have thousands of pissed “investors” all over the world.

In both cases, the VC doesn’t really come out of it too well, and I think could go down in flames like some firms that were financing pre-bubble internet firms.

Because, now, instead of being remembered as the VC who backed that startup that failed, we’ll be remembered as the VC who backed a startup that failed and also sold extremely high risk securities to users all around the world for a lot of money.

One of my favorite comments on a group was:
“If they were to incorporate a token for a novel use case, and sell a small amount, at a fair valuation. And if they didn’t use that funds to pay back investors, I would be excited to see adoption by a large app.
But this isn’t adoption. This is a bailout.”

And, FWIW, this is the feeling with almost everyone I consider smart and informed in the crypto community.

To my surprise, I got an answer to the previously linked tweet, from none other than Fred Wilson himself.

I’ve revered Fred for most of my life, and have been extremely impressed with his ability to grasp new trends and get conviction on them, so I have nothing but respect for the man,

But the answer wasn’t really too convincing this time around.

Fred answered linking to a blog post from Albert Wenger (another of my favorite people) where he basically argues that we should encourage different ways of pursuing a path to a decentralized future. Some will do it with ICOs for new protocols and some will do it with ICOs for current networks.

My view is that we can accelerate towards a decentralized future without VCs offloading their venture risk to the public.

Companies with existing user bases should absolutely experiment (because let’s remember that here no one has a clue what they’re doing, we’re all just experimenting) with tokens, but they can very effectively and much more safely do that without having people buy them.
They can just give them out to incentivize specific actions or assign monetary value to specific and previously un-valued transactions of any sort.

I think it’s dishonest to not address this point and carry on like ICOs are a must if you want to introduce a token. They aren’t.

And Fred very well knows this. His only argument on this is that these companies have heavy burns because of their large audiences.
Was really surprised to get this type of answer from someone like Fred. Might start believing they actually think that it’s ok because they have a lot of costs.

In a chat with Joe Urgo of district0x he provided a very interesting completely alternative idea to mine, saying that this is the only right behavior.

“Like he says in his follow up tweet, necessity is the mother of invention. Like we were talking about the other day, these companies are dead in the water as is, so they need to try something. I don’t know that I could call what they are doing dangerous at all, they are being prudent, they are advising their dying investments to take a hail mary and at least try to make something work.

If VC firms know this is a viable option at the moment (which they all should), then it could be argued that _not_ advising companies in similar boats to do the same is dangerous. It shows they are more worried about reputational blowbacks to them than in helping their companies succeed.”

I guess only time will tell.

For now, I’m still only writing checks for core cryptographic protocols whose usage is directly linked to the value of the token and still advising anyone which does not have a core need or use for a token to 1) not use one and 2) if they really must, then most definitely don’t do an ICO but just introduce it gradually, test, learn and think about the future repercussions of their actions.

📌 Token Economy

If I’d Known What We Were Starting

An absolute gem from the #3 Bitcoin user, after Satoshi and Hal Finney. I don’t think it deserves a tl;dr because you need to read this now.

Developers Complete First-Ever Atomic Swap Between Litecoin and Decred

Another week, another major milestone for crypto.

If you’re tired of ICOs, this is the news you’re looking for.

Decred and Litecoin developers have successfully completed an Atomic Swap, according to a tweet from the Decred team.

An atomic swap is basically a ShapeShift-like transaction that happens automatically, on-chain.

Unfortunately there hasn’t been too much disclosed on how it actually happened, so we will have to wait to see how it impacts projects like 0x and Kyber.

The first thought here, is that atomic swaps will be better than using a DEX protocol or platform, BUT they won’t have relayers and order books to organize liquidity.

Another thing to add to the “super interesting to think about” stack.

Markowitz portfolio optimization for cryptocurrencies in Catalyst

Very cool article by a former Mexico Central Bank portfolio manager, now an MBA candidate at Sloan, on how to apply portfolio optimization based on standard MPT to crypto portfolios.

The author uses Enigma’s Catalyst platform (a platform to run micro crypto funds using data shared on the Enigma network).

Accelerating Evolution Through Forking

In a follow up post to his excellent funding protocol development through inflation, Fred Ehrsam elaborates on the value of (hard) forks as an evolutionary mechanism for blockchains.

Fred make strong argument for redistribution of tokens at forks (which rarely happens) to ensure incentives are fully aligned, by switching control of foundation-like tokens and diluting all token holders to make grants for the developers leading the fork.

Bitcoin Developers Reveal Roadmap for ‘Dandelion’ Privacy Project

I’m not going to link to the actual BIP thread because it’s too complicated, BUT I think this is interesting.

There is a team that is working on a BIP called Dandelion which would add a privacy layer on top of Bitcoin transactions by removing the ability to find out the IP from the transactions.

The solution is a sort of TOR for Bitcoin.

This is interesting because many of the Bitcoin monitoring tools sold to governments and police around the world use this specific “feature” of the network to identify users.

The race for privacy coins is on, and with Ethereum enabling zk-snarks and Monero’s price rise + ZCash constant development, I don’t really see a future for non-private-by-default coins.

Ethereum’s Metropolis Hardfork Activated on Testnet, a Zcash Transaction Verified

Byzantium, the first part of Ethereum’s Metropolis hardfork, is live on testnet and it was just used to verity a zk-snark transaction.

Zooko also wrote about this from Zcash’s side.

So cool to see core technology advancements go this fast, in a sea of ICO scams.

This is where the future is.

Ethereum founder Vitalik Buterin discusses initial coin offerings, the consensus algorithm, and the most interesting apps

Every day I grow more convinced that our generation’s Steve Jobs will be Vitalik.

“But whereas in bitcoin the protocol exists to maintain the currency, in ethereum, the viewpoint is much more that the currency exists to maintain the protocol.”

A great interview to read.

I am VERY excited about Ethereum, given the amazing pace of development. If my VC investment days have taught me something, seeing a project with this sort of public interest + quality fast code shipping, it’s not going to slow down any time soon.

Vitalik shares his top-three priorities for Ethereum’s development at the moment:
- PoS
- Scalability
- Privacy

🚀

Decentralizing Everything with Ethereum’s Vitalik Buterin | Disrupt SF 2017

25 minutes of Naval interviewing Vitalik.

Amazing background watching.

YC wants to let people invest in its startups through the blockchain

The title is a bit misleading, but Sam is apparently admitting to YC having done work to figure out its approach to ICOs.

In the last YC batch there were only 2 blockchain companies, but that might change with the next one.

We’ll keep an eye out.

An Alleged Ethereum Hacker Gave Back $3 Million And Nobody Knows Why

Well this is a weird one. Remember that CoinDash hack? (Where a bunch of people even suggested that it was an inside job..)

Apparently the hacker just sent back around $3M worth of Ether they stole form Coindash / to Coindash.

I don’t have any mental energy or cycles to spend on this one, so just presenting it like it is.

Announcing Ethereum & Litecoin vaults — Coinbase

FINALLY. This is my #1 favorite feature of Coinbase, but was only available for Bitcoin until this new release.

If you don’t have a hardware wallet, this is what you should be using.

Guide: Coin recovery tool — TREZOR

Every time someone improves on the UX of crypto usage, it’s awesome news.

In this case, Trezor has released some tools to enable the recovery of most erroneous transactions (when you send coins from specific chains to wrong chains or badly formatted addresses).

🚨 Growing pains

The FCA has spoken on ICOs

The UK Financial Conduct Authority (FCA) issued a brief statement warning consumers about the risks involved in ICOs, stating how some ICOs “fall outside the regulated space”, some don’t. Notable difference with US security law is that the UK does not have an equivalent to the Howey test.

On that note, if you are into security law and can bear with Preston Byrne’s marmot jokes, he’s meticulously dissected the FCA announcement here from the perspective on an English lawyer.

Of all the major regulators who have expressed views, the UK FCA appears to have taken the most light touch approach so far.

🤡 ICO Madness

Raiden ICO: Ethereum Scaling Solution to Launch Publicly Traded Token

“Ethereum’s answer to bitcoin’s Lightning Network will have one notable difference — a publicly traded token to be sold in a Dutch auction in October.”

This is a big disappointment for me, as I was really hoping that Raiden would launch without a token and bring Lightning-like capabilities to the Ethereum chain.

Too hard to ignore the millions flying around obviously.

Announcing the SpankChain ICO

I’ll try to not trigger the spam filters here, article is SFW, site is not.

Crypto bubble fears grow as Jamie Foxx, celebrities jump aboard

We’ve spoken about this before, but hopefully peak ICO is almost around the corner.

We wouldn’t be surprised if some of these celebrities are going to end up being prosecuted for the promotion of unregistered securities, insider trading, bribes and so on, as they most likely are receiving both cash and tokens, which they have an incentive to help appreciate in value.

🍿

Is There a Cryptocurrency Bubble? Just Ask Doge. — The New York Times

The NYT interviews the creator of Dogecoin, which has been sounding the alarm for a while now.

Blackmoon Crypto raises $20 million in ICO in 1 day, and $10M in pre-sale

The Blackmoon Crypto platform touts itself as “a one-stop solution for asset managers to create and manage legally-compliant tokenized funds”

😎 Cool new projects

FreeSociety

Roger Ver and a bunch of early Bitcoin millionaires (billionaires?) are planning to buy land and sovereignty over that land from a country. They have more than $100M, which they plan to offer to highly indebted countries to form a “new Monaco” of sorts. It needs to be in a safe zone and be accessible by water.

Libertarians at it again.

I was enamored with the Seasteading Institute efforts, but I’ve also grown more interested and appreciative of the roles that nation states play in our lives.

That being said, I’m all for experimentation in government and monetary policy, so I’m extremely excited by this!

I’m also pretty sure that we might be looking at another ICO here.. but hopefully they’ll just adopt Bitcoin as the national currency instead.

The Ocean Protocol

BigchainDB, in partnership with Dex, unveiled the concept behind the Ocean Protocol, the natural evolution of their work on blockchain + AI.

Ocean will be a protocol and network to facilitate data marketplaces. The protocol will have the role of figuring out who owns what and provide the linking infrastructure.

Data marketplaces have been a pretty obvious idea since the beginning of blockchain and smart contract technologies, so it’s exciting to see more people try to implement them.

Ocean will probably go on to compete with the Enigma network from MIT’s Media Lab.

Harvest — Wind energy used to mine cryptocurrency to fund climate research

“Harvest” is a piece of tech-art commissioned by the Konstmuseet i Skövde museum that uses wind energy to power a computer, connected to the internet via satellite or 4G and geared with an Nvidia graphics card, to mine Zcash. The earnings will fund for climate-change research.

The interesting aspect of this experiment is that crypto currency offers an alternative and decentralised way to ‘store’ energy without relying on a centralised grid and the fees typically incurred in transferring energy to it.

Announcing Balanc3: Quickbooks for Token Launches

Balanc3 — a ConsenSys formation — has been working in stealth for over a year to build out a blockchain-based accounting platform.

Super cool. They take live blockchain transaction data and turn it into accounting style data.
Sounds like the worst possible job to me, but really glad someone is doing it — I’m sure this will be massively useful to a number of projects in the future.

Ripio

RIpio is building a global credit network solution that aims to enhance transparency and reliability in credit and lending

😤 First they ignore you, then they laugh at you, then…

ECB’s Constancio compares Bitcoin to Dutch tulip mania

“Bitcoin is not a currency but a mere instrument of speculation”. “Bitcoin is sort of a tulip”.

They just don’t know when to stop the broken record do they?

Stay Away from Bitcoin, It’s an ‘Absolute Bubble’ Says Hathaway

This is just a gem to be added to the Bitcoin Obituaries, and I think we’ll be watching this again and again in a few years.

It’s still fascinating how some people just. do. not. get. it. and feel confident in dismissing the whole asset class and tech movement.

I just hope I’ll never end up making such comments about new technologies when I’m all grown up. Chances are slim unfortunately 😂

Russian Governor Invites Cryptocurrency Miners to Set Up Mining Farms in Leningrad

The regulatory and geopolitical wars (protocolitics as Yannick coined them) continue!
The Russian Leningrad region wants to create an industrial park for cryptocurrency mining including bitcoin.
They are promising cheap energy and some special conditions, to try and attract maybe even some of the Chinese operators.

JPMorgan Chase boss Jamie Dimon faces market abuse report after his comments about bitcoin

Fun times!

Blockswater, an algorithmic liquidity provider, has filed a market abuse report against Jamie Dimon for “spreading false and misleading information” about bitcoin with the Swedish Financial Supervisory Authority.

They say Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) by declaring that cryptocurrency bitcoin was “a fraud”.

They also say that JPM traded BTC derivatives in Stockholm, so they might actually have a real case.

The SEC Got Hacked, Took A Year To Learn People Might’ve Traded On It, Disclosed These Facts Parenthetically In A Bizarre Statement, And Wants Companies To Do None Of These Things

On the internet, everyone gets hacked.

🤑 VC corner

Balderton leads $9 million Series B in Luno

We humbly admit we had not come across Luno before, and praise Nicolas Debock from Balderton for keeping his lips sealed about it at the Venture Retreat last weekend…

The play here is the global mass market adoption of crypto and the need for user friendly front ends for fiat to enter the ecosystem.

💰 New funds

Linda Xie leaves Coinbase to start a yet unnamed crypto-fund

Coinbase spins out crypto fund managers faster than it resolves support tickets.

After Nick Tomaino (1Confirmation) and Olaf Carlson-Wee (Polychain), Linda, former product manager, and Jordan Clifford, software engineer, join forces in yet another crypto hedge fund endeavour.

Steven McKie leaves Purse to start crypto hybrid hedge/venture fund Amentum

Author of Blockchannel podcast and former head of growth at Purse and more recently decentralised-Quora Cent.co, Steven McKie is teaming up with three other partners with a new crypto fund endeavour. Focus will be on public crypto assets as well as ICO pre-sales, with no info yet on fund size and other other GPs.

Steven is a true crypto-native so we very much look forward to finding out more about what he’s been cooking up, we hope it’s not just about muscling in on pre-sale discounts and buy & hold ETH/BTC!

More info soon, we are promised.

ℹ️ About us

Token Economy is written and curated by Stefano Bernardi and Yannick Roux.

If you’re building a new fundamental piece of technology for the future, please reach out 🤙

Market Summary for 24 September 2017

  • Market surged today, with C3 (+5.5%) and C10 (+5.4%) going up
  • Maximum gainer was ETH/USD (+8.6%); Minimum gainer was DASH/USD(+2.3%)l Other coins were between 3% to 7%
  • Charlie Shrem, the head of business developer at Jaxx, has claimed that China has no impact on Bitcoin and its losing relevancy in the market

Market surged today, with C3 and C10 going up by 5.5% and 5.4%.

Maximum gainer was ETH/USD which rose up 8.6%, while the minimum one was DASH/USD which only rallied 2.3%. Other coins were between 3% to 7%.

Charlie Shrem, the head of business developer at Jaxx, has claimed that China has no impact on Bitcoin because Bitcoin is about censorship free and an alternative non government controlled financial system. Governments can either create efficient regulations or losing relevance in the market.

Want to diversify your cryptocurrency portfolio? Visit our website to learn more!


Market Summary for 24 September 2017 was originally published in Cryptomover on Medium, where people are continuing the conversation by highlighting and responding to this story.

Market Summary for 24 September 2017

  • Market surged today, with C3 (+5.5%) and C10 (+5.4%) going up
  • Maximum gainer was ETH/USD (+8.6%); Minimum gainer was DASH/USD(+2.3%)l Other coins were between 3% to 7%
  • Charlie Shrem, the head of business developer at Jaxx, has claimed that China has no impact on Bitcoin and its losing relevancy in the market

Market surged today, with C3 and C10 going up by 5.5% and 5.4%.

Maximum gainer was ETH/USD which rose up 8.6%, while the minimum one was DASH/USD which only rallied 2.3%. Other coins were between 3% to 7%.

Charlie Shrem, the head of business developer at Jaxx, has claimed that China has no impact on Bitcoin because Bitcoin is about censorship free and an alternative non government controlled financial system. Governments can either create efficient regulations or losing relevance in the market.

Want to diversify your cryptocurrency portfolio? Visit our website to learn more!


Market Summary for 24 September 2017 was originally published in Cryptomover on Medium, where people are continuing the conversation by highlighting and responding to this story.

CoinLoan Crowdsale to Start Soon. Should You Subscribe?

CoinLoan is an innovative project designed to integrate the traditional banking system with modern cryptocurrency technology. It offers an affordable solution where users will be able to receive real money in any currency secured by crypto assets when they are in need. This will reduce the loss of possible revenue from a further appreciation of … Continue reading CoinLoan Crowdsale to Start Soon. Should You Subscribe?

The post CoinLoan Crowdsale to Start Soon. Should You Subscribe? appeared first on NEWSBTC.

Four Challenges to Consider When Launching Your Fund Raise on the Blockchain

ICOs (Initial Coin Offerings) or token sales have seen a dramatic increase over the past year as a method for raising capital. According to CoinMarketCap, Bitcoin market capitalization sits at around $70 billion at the time of writing (even after the China ICO market correction), up from $11 billion in June 2016. Overall, the cryptocurrency market cap is now over $150 billion, roughly the size of Algeria or Iraq’s GDP.

Many organizations have, therefore, become interested in using token sales (aka ICOs and token generation events) as a way of raising capital. Mostly, companies look at token sales as a way to raise startup capital; they issue “utility tokens” to avoid being classified as a security. This method is in line with traditional “crowdfunding” that companies have been doing for many years.

I also believe there is a lot of pent up demand from traditional asset classes and established companies to utilize the blockchain to raise capital and conduct their business. This is because there are a many benefits for both the issuer and the investor.

For the issuer, it’s a frictionless process of raising capital that opens up a global market of potential investors. Costs of raising capital via this process can be a fraction of what it may cost to address the same size market with a traditional raise.

For the investor, it provides access to a wider range of investment opportunities, which a regular person may never otherwise have access to. Typically, there are zero or very low investment minimums, and one can easily participate in a token sale anywhere on the globe — just set up a wallet, buy some bitcoin or ether, and get in on time. As a bonus, there’s also often the existence of a secondary market where tokens can be traded after the initial token sale, thus providing fast liquidity to those that desire it.

However, the process is not without its challenges, and there are several things to consider when launching your next fund offering on the blockchain.

What are traditional asset classes and why may a blockchain be of benefit to them?

Traditional asset classes are those that generally come up when people talk about investments. They include stocks, commodities, real estate, private equity funds and derivatives, VC funds, REITs and others.

Most, if not all, traditional assets would fall under the SEC’s definition of a security,as stipulated by the Howey test. However, due to the decentralized nature of blockchains, the U.S. is not the only jurisdiction where tokens can be sold from; many countries around the world such as Switzerland, Cayman Islands, Estonia and others are stepping up to welcome ICOs, be they utilities or a securities.

So, how is blockchain technology and tokenization beneficial to traditional asset classes? Consider this example based on the logic illustrated by Stephen McKeon. If we take real estate as an example, it’s estimated that the size of commercial real estate in the U.S. alone is about $11 trillion. Let’s say 10 percent of that can be tokenized; that immediately puts over $1 trillion of liquidity back into the marketplace and removes an “illiquidity premium” which issuers are forced to pay because investors have no way to exit their investment for a number of years. This is a win-win for both the issuer and the investor.

Challenge #1 — Jurisdiction

Even if one decides to tokenize an existing asset, there are several challenges that must be addressed, and finding the right home for your fund is key. Since most traditional assets may be considered a security, finding the right jurisdiction will be very important during and immediately following your token generating event. Let’s take a look at some of the options available to us today.

The State of Delaware has a newly invoked law that will allow businesses to maintain shareholder lists and other corporate records on the blockchain. This move is even more significant when you consider that this jurisdiction is the corporate domicile capital of America, with 66% of Fortune 500 companies calling it home. If your plan is to make token holders Limited Partners or equity holders of your new fund, this may be a reasonable option.

Also in the U.S., Regulation A, Regulation A+ and Regulation D contain rules that could exempt entities selling securities from registering with the SEC, including a specific look at equity crowdfunding. These rules can be applied to any crowd sale, and potentially encompass token sales as well. It’s also possible to raise under Regulation S, which would exclude U.S. investors altogether, thereby removing the need for protection of unaccredited investors.

Switzerland, one of the leading centers of capital in Europe and known for recently abolishing its banking secrecy laws, has become a fintech hub and is considered a friendly jurisdiction. A number of leading Swiss companies have formed an alliance called Crypto Valley, where one of the most prominent law firms, MME, hosted a recent conversation about the legalities of token sales and what may constitute a security under Swiss law.

The Cayman Islands, a leading offshore jurisdiction with a 0 percent tax rate for foreign-controlled companies, have seen an uptick in ICOs lately. Recent token sales events from the Caymans include EOS, Domain Developers Fund and others. The Cayman Islands and other offshore jurisdictions have taken a friendly view on blockchain assets and have the service provider infrastructure in place, with lots of experience creating and operating traditional funds. I believe incorporating in the Caymans and other offshore jurisdictions have many benefits and is a practice that will continue to increase.

Estonia is another interesting example of a jurisdiction where several ICOs — which would almost certainly be considered securities in the U.S. — have been domiciled. Recently, Agrello, Polybius and a number of other companies completed successful token sales. Estonia is unique because of its e-government initiatives, which encompass e-citizenship, e-voting, e-tax and government blockchains. Further, Estonia recently announced its own cryptocurrency called Estcoin. Estonia currently doesn’t regulate crowdfunding (though some EU laws may apply) and is one of the top friendly jurisdictions for launching tokenized funds.

Challenge #2 — Knowing Your Customer

Another roadblock to conducting legal and compliant token sales is the issuer’s ability to follow KYC and AML regulations effectively. KYC (Know Your Customer) is the method in which issuers verify the identity of its investors. Many cryptocurrencies of choice for token generation events have anonymity features built in (cryptocurrencies such as Monero and Zcash are prime examples, and bitcoin can be anonymized as well). Further, the crypto investment community likes the idea of not having to go through lengthy and intrusive KYC processes. This practice doesn’t bode well for the issuer, however, since KYC is a key requirement for many banks. Strong KYC during the token generating event will make it easier to work with banks and follow AML (Anti Money Laundering) regulations.

Challenge #3 — Tax, Compliance and Custody

There are further complications with taxes, compliance and custody. There are not yet clear standards for cryptocurrency compliance to be followed. Further, if your fund is going to be holding crypto-assets and cryptocurrencies, security and custody needs to be considered. Luckily, there are some players such as Gemini that offer crypto-custody services; some reputable banks such as the Swiss Falcon Private Bank are also starting to offer bank-level cryptocurrency trading services. There are still more challenges around custody and compliance for altcoins.

On the tax side, there are open questions about treatment of virtual currencies. IRS guidance 2014–12 classifies cryptocurrencies as an asset class, imposing capital gains taxes on profits in certain situations. Some other countries such as Vietnam have proposed making digital currencies like bitcoin a form of currency. The world tax authorities still need more time to figure out how to tax this new asset class.

Challenge #4 — What Happens Next?

Once you’ve jumped through a lot of hoops and successfully executed a tokenization event for your fund, the real work starts. If you accepted U.S. investors, think about how you can prevent them from selling your tokens in the first 12 months (if you raised under Regulation D). If you didn’t accept U.S. investors, how do you prevent them from buying your tokens in the future? What exchanges do you want to list on to make sure you can comply with AML and other regulations? This is a complex process that needs to be thought of before you start planning your token generation event.

Looking to the Past

Launching a tokenized fund on the blockchain is a relatively new concept; however, we have some successful precedents. The biggest and most interesting example is Blockchain Capital, founded by Brock Pierce. Their token, BCAP, was sold under Regulation D exemption to 99 accredited U.S. investors (and unlimited foreign investors with many exceptions), who, per SEC regulation, can’t sell their tokens for 12 months. Blockchain Capital has a complex structure, with entities in Singapore, the Cayman Islands and the U.S. According to their memorandum, they spent up to 10 percent of their raise on legal expenses (they raised $10 million), which is a hefty sum. Also, questions remain: What prevents non-accredited U.S. investors from buying BCAP tokens post ICO? How are the 99 accredited investors forced to comply with the requirement to hold these tokens for the time allotted?

Conclusion

Launching token generation events for your fund can be a worthwhile activity, but you need to plan carefully and entrust your process to qualified professionals.

Some things to think about before going ahead with launching a tokenized fund:

  • Is your token a security (Howey test)?
  • Have you chosen the right jurisdiction?
  • Do you comply with the applicable regulations, including KYC and AML?
  • What are tax and custody implications for your cryptocurrency?
  • What happens after the token sale is over?

This article was originally published in Bitcoin Magazine and reprinted with permission.

About the Author: Kirill Bensonoff is an entrepreneur who has successfully bootstrapped two startups with successful exits. Kirill is the co-organizer of the Boston Crypto meetup, angel investor and an investor into multiple successful ICOs, such as Civic, Bitquence, SALT and others. He has also written for the Huffington Post, Inc. and Medium. Follow him on Twitter @prankstr25

Quantum IOTA

IOTA appears as having a most versatile solution to the challenge of asynchronous trust, avoiding the bitcoin blockchain bottleneck. And as such it is the most attractive platform for the vision of quantum trust building. Its robust validation history will be a collapsed option selected from a superposition of the same. And unlike quantum physics where the superposition generating laws are fixed, in designing a network, the applicable platform law (rule) itself may be a collapsed option from a super position of applicable laws. Reverse engineering should be exponentially difficult. A good quantum simulation can be achieved via the BitFlip protocol.

How I Cornered the Bitcoin Mining Market Using a Quantum Computer

Whenever I would tell my friends about the potential of Quantum Computing, how a Quantum Computer (QC) can do a large number of calculations in parallel worlds they look at me like I’m kind of crazy.

So, rather than talk about it in the abstract, I decided to show them how radical QCs can be. I ordered one the other day and when I got it, I decided to look for an application that could demonstrate this power.

Some of my friends know that I have been a bitcoin enthusiast for some time, and it occurred to me that bitcoin mining might be the problem to solve to show the power of a quantum computer, and to make some money while I sleep.

As you might expect, a quantum computer capable of solving the bitcoin mining algorithm was very expensive (this particular brand, the QIntellize Quantum Computer, costs at least $ 1million). Since the reward for mining a bitcoin block is now at 12.5 bitcoins, at $4000 per bitcoin I should be able to pay it off after mining a few blocks quickly!

So I ordered a QC and set it up. It wasn’t easy to get my one quantum computer to do the work that thousands of computers around the world are currently doing in mining bitcoin blocks; but I finally figured it out!

This article is meant as an introduction to both bitcoin mining and QC’s, to discuss some of the difficulties I had in cornering the bitcoin market in this way. While I won’t reveal all of my secrets (I’d rather keep my monopoly, mind you), there should be enough clues here to guide you in the right direction if you wanted to duplicate my experiment!

How Bitcoin Mining Works: A Brief Overview

I won’t go into all the details of bitcoin (you can do a simple search more about bitcoin since there are thousands of sites dedicated to it), or bitcoin mining (you can read more about it here: bitcoinmining.com), but this is a quick summary.

Bitcoin is a de-centralized currency and ledger where a very big file (called the blockchain), consisting of blocks, each of which has a list of transactions. The blockchain is the general ledger to say what happened to each bitcoin over time and where it went. Since multiple computers are managing the blockchain, there is no one computer in charge of what’s happening — the system is built on these distributed computers agreeing about what blocks should be on the blockchain.

New bitcoin are created by bitcoin miners, who are actually computers that are trying to add blocks to the blockchain. The mining itself is an algorithm that adjust in difficulty so that a new block can be added on average once every 10 minutes or so. Miners computers are trying a set of random numbers to see if they “match” the current criteria for a new block.

A small random number (4 bytes) is added as part of a blockheader (which is generated based on a proposed block of transactions), and the resulting number is hashed (twice using the SHA 256 algorithm) which produces a random number at the end. If the random number is less than a certain threshold, then you have successfully generated a new block in the blockchain, which is put forward and then validated by other computers. Figure 1 shows an overview of this process (source: bitcoinmining.com)

Figure 1: How Bitcoin Mining Works (source: bitcoinmining.com)

So why bother? Bitcoin mining is sometimes called a “lottery” because if you successfully generate the block, you are given some bitcoin in return. Since the price of bitcoin is several hundred dollars per bitcoin, and the total amount of bitcoin in circulation is in the many billions of dollars, this can be

Why is this difficult? Because thus far hashing, which is the basis of current cryptography using secure keys, is a one way operation. At current, it’s impossible to know what a specific set of bits will hash to without actually doing the hashing algorithm, which has multiple cycles of moving bits around.

As a result, the best way to do mining currently is to keep trying random numbers to see which one hashes to a number that is less than the target difficulty. This is why bitcoin mining pools have cropped up where a large number of computers are working in parallel to find the solution to the problem — if one of them finds the solution then the pool gets the reward, sharing it with all the other miners.

How Quantum Computing Works: An even Briefer overview

This idea of pools working in parallel was what gave me the idea to use a Quantum Computer instead.

While it sounds like science fiction, quantum computers work, by taking into account the idea from quantum physics that there are parallel worlds out there. Every time we make a decision, we branch into multiple realities, or according to some physicists, there are multiple future probabilities that exist around us all the time.

This quantum foam, consisting of multiple probably realities, can be thought of as a quantum probability wave. Quantum physics tells us that an electron is really a set of probabilities of where that electron is likely to be, or that a photon is likely to be either a wave or a particle. When we observe the position or velocity of a particle, the quantum wave is said to collapse into a specific reality.

Sounding now more like Eastern Mysticism than even science fiction, it’s the conscious act of observing a particle that collapses the probability wave into a single, measurable reality.

Richard Feynman first proposed the idea of a quantum computer back in the 1980s, saying that if we could create device that could use this idea of parallel universes of probability waves to try out all possible values of a specific variable and then “collapse” it into the “right” answer. It’s taken a few decades, but we are finally at the point where quantum computers are becoming viable.

Quantum computers actually make difficult problems (those which require lots of computing power) significantly easier, because you are able to distribute the processing power across numerous probable realities.

To bring it in to the parlance of computer science, if x is a number, and f(x) is a function of x which produces an output y, then a quntum computer can try out all possible values of x, in parallel universes, and then if you make the right observation and add up all the results from different universes in a certain way, you can figure out which value of x produces y.

In regular computer science, the kind I learned at MIT, all data is represented as numbers which consist of a series of bits. Each bit is either a zero or a one — either on or off. By collecting bits we can represent any number in binary (b1011 for example is four bits and represents the number 11. If you have x bits, you can represent up to 2 raised the power of x. In most computers, 32 bits or 64 bits are the standard for how numbers are stored

The thing that makes QCs different form regular computers is that in addition to regular bits, they are able to use qubits. Qubits are quantum bits which like a quantum particle, can have two different states. This means that while a regular bit must be a zero or a one, a qubit can be either a zero or a one. You don’t know until the quantum wave collapses based on some observation taken by the conscious mind.

If you have a certain number of bits, to try out all the possible numbers can try out all the possible combinations by running through all the values of 0 and 1. For example, to try out all the numbers between 0 and 512, you need 9 bits . If you write a computer program to try each of the possible values of the 9 bits (0 and 1 for each bit), you can try each of the possible values of each of the 10 bits (ranging from 1 = b000000001 to 511 = b111111111).

How To use a QC for Bitcoin Mining

So this brings us to how I used the quantum computer to solve the bitcoin mining problem.

If you have 9 qubits, you can try out all the values from 1 to 511 simultaneously. If you had 64 bits, you could try out the hash algorithm for all possible values of x to figure out which ones when input into function f(x) lead to a result of y, or in the case of bitcoin mining, less than some target value y.

The bitcoin algorithm, relies on an input shown in Figure 1 (source: bitcoinmining.com), if you think of a potential new block of transactions, you have to generate a header. The header consists of block as a bitcoin mining uses several 4 byte (32 bit) portions of the block, including a nonce which is a random 32 bit number. See Table 2 for a list of the possible values.

The exact algorithm is described here: https://en.bitcoin.it/wiki/Block_hashing_algorithm. The result of the hash is a 256 bit integer.

Figure 2: Table of Inputs for Bitcoin Hash

Closer inspection will reveal that of all the bytes that are used as input, only 4 bytes, the nonce, or 32 bits are actually random. The other bytes are actually coming from a block of transactions and timestamp, etc. The output is a 256 bit number which has to be less than a target.

This is complicated, however by the fact that there may not be a solution for a given block of transactions, so you may be trying to find a nonce for a block of transactions which doesn’t have a solution!

A qubyte is 8 qubits. So basically, what I needed was to program my QC to use 4 qubytes, or 32 qubits, which represented all of the possible values of the random number, nonce, and append this value to a set of 76 regular bytes, and then run them through the hashing algorithm. Then I could take the output, which is a 256 bits, and choose one of the output values which is less than the target.

Programming the Quantum Computer Circuit

It’s not quite that simple. Today, with my quantum computer, I had to come up with an actual circuit to accomplish this. In the future, there will be much simpler ways to program quantum computers — I envision a simple programming language, let’s QBASIC for Quantum BASIC which would be like the BASIC language that I learned computer programming on with my Apple II back in the day. Though first I suppose an assembly language would need to be made out of the basic circuits that perform logical operations like AND, NAND, OR, XOR, etc., and then someone can write, as Bill Gates and Paul Allen did for the ALTAIR computer in 1977, write a higher level language like BASIC.

The beginnings of languages like this are out there — QASM, QCL, but each of these have different models and results in quantum circuits, at least for the moment.

The Quantum Computer I used didn’t have a good language, so I had to build the circuit myself. Figure 3 shows the basic circuit architecture for how I programmed my quantum computer, but simplified to 6 bits. It’s much simpler to see how this would all work with a smaller number of bits.

The first four bits are the “conventional bits” and the second two bits are the qubits, which are in a super-positioned state of zero or 1.

The implementation of the actual Hash Algorithm used by bitcoin (SHA-256) is left as an exercise to the reader. The idea in the bitcoin mining that the output of the hash has to be less than M, the hashing difficulty, which is adjusted in the bitcoin network every so often.

From a binary perspective, what this means is that the first x bits out of n ( in our case, n = 6 bits, in the bitcoin case, n=256 bytes). For each level of difficulty, the number of 0’s at the front of the system have to be measured.

Figure 3: A simplified version of the Hash circuit

The hard thing about quantum circuits isn’t just about actually designing the circuit/program, but to find a way to measure the output in a way that will give you the right answer!

In a quantum computer, although all possible values of qubits are processed in all possible worlds, it’s difficult if not impossible to get the output of a single case.

When you observe the output bits, the quantum probability wave collapses and you see only one set of possible values. My quantum computer was good at having all of the values of the qubits simultaneously.

We are still at the point of needing to loop through all of the possible outputvbalues to find the one that we want at random.

The real problem was how do you measure all of the possible values to get the one you want? It might seem we are still back to step one, as we’d have to loop through all possible solutions one by one.

Finding the Optimal Solution From All Possible Worlds

The key is to find some function f2(x1,x2,x3..xn) which sums up the values in all possible worlds. Using f2 as simple addition, if the values of x1… xn were all 0 for example, then you would observe the result as 0. If the values were all 1, then you would observe a value of n (x1+x2+x3).

The key is what’s called quantum shaking. A quantum shake is a way to generate a wave such that the output is adjusted in the quantum universe/probably reality where the right answer is present differently from how it’s adjusted in other universes where the right answer is not present. It’s called a quantum shake because it adjusts the value in one universe.

By doing this shaking a certain number of times, the input values of the nonce which resulted in outputs of less than target t, are isolated. We just take those 4 bytes, append them to the other 76 regular bytes that we put as input, and then submit the transaction to the blockchain.

Another way to represent this is to use Grover’s algorithm, a well known quantum computing algorithm that cuts down the time needed to find one out of many possible solutions, as shown in Figure 4. In a simple example of Grover’s algorithm, you might have four qubits as an input, which would result in 24 possible values or16 possible values.

Figure 4: Using Grover’s Algorithm to Find the Optimal Solution

Grover’s algorithm reduces this to the square root of N. So, for 16 possible values you’d have to go through 216 or 65,536. The square root of this is 256, a significant difference.

Pulling it all together

The output of bitcoin mining hash algorithm produces 256 bit output (that’s why it’s called SHA-256) which produces a very large number.

While I won’t go through the bitcoin mining in detail, the final solution involved a bit of regular computing (assembling transactions into a block, calculating the merkle root of the proposed block), the quantum computer was useful for the “hard part” which is to find the nonce, if one exists, that will produce an output. Using a combination of circuits for the hashing of the bits and Grover’s algorithm or quantum shaking to reduce the search time of the solution, I was able to mine blocks. Since each mined block has a reward 12.5 bitcoins per block. At the current price of near $4000 per block, I’ll be able to pay off my quantum computer pretty quickly.

OK, Did I Really Do This?

Those readers who are familiar with both hashing algorithms and the state of Quantum Computers today will realize that I didn’t really do this today (I’m writing this in 2017).

For one thing, you can just look at who’s mining the blocks and you’ll see that they are being mined by mining pools. For another thing, the bitcoin mining algorithm uses the SHA256 algorithm — which takes 512 bits as input and outputs 256 bits. For all quantum computers today, the inputs and the outputs need to be the same number. Astute observers will notice that the bitcoin algorithm actually requires running SHA-256 twice, so you could theoretically do what I proposed for the second SHA-256 if you could design a quantum circuit to implement it.

Also, although there are now languages to help generate the underlying circuits, they have to be fed to the quantum computer. The languages are becoming better and though some are simulating the quantum computer on conventional hardware, this is an area that is moving fast.

So, the full extent of what I “did” is not possible. At least not yet.

Although there are algorithms that can be used by quantum computers to break public/private key cryptography (Shor’s algorithm for factoring for example), the computers themselves are not yet practical.

While not many people know this, the reason there are two values of a bit on a computer today and not 3 is that a zero is represented by a certain range of volts and a 1 is represented by a range of volts, there is always room for physical error. Qubits are much more complicated and the implementation varies with each type of QC! When dealing with Quantum Computers, the chances of a physical measurement error corrupting your results are much higher! In fact, you need to run the algorithm many times to be sure that there wasn’t a physical error.

This was meant to be a (theoretical) discussion that would introduce both concepts — bitcoin mining and quantum computers — for those who hadn’t been exposed to them. Experts in both areas will no doubt find some errors or omissions or other reasons that I over-looked here why it’s not possible (at least not yet!).

Feel free to leave comments on how/when/if you think this will ever be possible.

7 reasons to invest in SmartBillions ICO, including downsize protection

Downside protection — Prime reason for investing in SmartBillions.

SmartBillions is the first fully decentralized and transparent lottery managed by an Ethereum smart contract. All bets and results are public and recorded on the Ethereum blockchain without 3rd party involvement.

The recently-revealed SmartBillions PLAY tokens offering is a unique and secure investment opportunity. Finally, there’s the transparent “ICO” whereby Investors and their funds are protected like never before.

The SmartBillions PLAY token sales (“ICO”) goal is set at 200 000 ETH.

Here’s a quick summary of the upcoming ICO key features of the groundbreaking global lottery (est. Jackport 2.5 billion USD).

  1. Token Allocation
  • Crowdsale backers will receive 79.37 % of all PLAY Tokens issued
  • The development team will receive 20.63 % of all PLAY Tokens issued
  • Tokens will be sent to the Crowdsale backers immediately receiving their funds
  • 1 PLAY Token = 0.001 ETH
  1. Funds allocation:
  • 90 % of the raised sum will be allocated to the Jackpot.
  • 10 % of the raised sum will be send to the development team for the marketing budget and to the Affiliates to pay for the affiliate and bounty campaigns.

2. Funds management

All funds are under smart contract administration and fund distribution rules are unalterable. The funds management scheme is presented below.

3. SmartBillions smart contract funds management:

a. Prior to the ICO:

  • Prior to the ICO, there are no funds stored in the smart contract. Exactly 7 days before the ICO is initialized, the development team will put 1 500 ETH into the smart contract to fund the Hackathon prize.

b. During the ICO

  • Over the course of the ICO, the smart contract will collect ETH from Crowdsale backers, with 90 % of the sum remaining in the smart contract.
  • 10 % of the raised sum will be send to the development team for the marketing budget and to the Affiliates to pay for the affiliate and bounty campaigns.

c. After the ICO

  • Income from the ticket sales will be retained by the smart contract.
  • Prizes will be paid to the lottery winners via the smart contract
  • Token holders will receive dividends every month, 5 % of the value of the ticket sales every month will be assigned to the dividend fund.
  • Affiliates will receive 1 % from the ticket sales from the players using their affiliate links.
  • The development team will be allowed to withdraw 0.25 % of the Jackpot value every week for the marketing purposes. This is possible only if the overall Jackpot value is larger than the combined liabilities of potential redemptions of all PLAY Tokens in circulation as well as current unpaid lottery winnings

4. Dividend payouts.

  • Token holders will receive a dividend every 16 384 Ethereum blocks (approx. 1 month apart). A fixed 5 % of all lottery income coming from ticket sales is unchangeably allocated to the dividend payout.
  • Payouts will be made directly from the smart contract balance, which is inaccessible to any of the parties. Ticket sale revenues, and the smart contract balance, are public and cannot be modified by any third party. Nobody can influence the dividend payout or its value.

5. Downside protection — Token redemption possibility

Any time after the PLAY Token sale is complete, holders may redeem their Tokens and receive the majority of their invested funds back. Token holders will receive 71,43 % of the invested funds back if they redeem their Tokens. This feature reduces investors’ risk to a minimum in the event that the lottery’s performance falls below expectations or any unexpected events affect the lottery.

6. Contract security — Hackathon

Exactly 7 days before the initial PLAY Token sales offering, the SmartBillions development team will allocate 1500 ETH to the Jackpot as a reward to anyone who proves they can hack the smart contract and withdraw the funds. This own-risk solution will indisputably validate the contract’s security.

7. Lottery ticket sales — Distribution of funds

Between 94% and 95% of Ticket sales revenue will go directly toward the Jackpot. Another 5% is designated for PLAY Token holders’ dividend payments and the remaining amount (up to 1%) will go toward compensating the lottery’s affiliates.

This distribution of revenues from Ticket Sales guarantees the Jackpot’s continued growth and ensures that the SmartBillions lottery will consistently and dynamically rise in popularity.

— — — —

All the presented features summed up together prove the high value of the SmartBillions investment.

For the SmartBillions lottery ICO, the funds’ allocation to the Jackpot is crucial. The Jackpot value is the key to the Lottery success, and in the case of SmartBillions, 90 % of funds raised is allocated to the Jackpot. Only 10 % of the raised funds will be accessible to the Development Team. These funds will be spent on marketing activities aimed and driving interest and excitement upon potential users of the SmartBillions lottery. The Tokens allocation is fair and favourable for investors, as they will receive almost 80% of the Tokens issued.

When it comes to the smart contract itself, its most important aspect is its complex self-amending mode of operation. The funds are under smart contract management with no possibility for access by a 3rd party. The project is independent and there are no circumstances that would allow any member of the development team to use the funds contrary to their purpose.

Because the Dividend value depends on the (publicly disclosed) Ticket sales revenue, there’s no risk that the dividend value or the payment itself can be influenced by any party. Dividend payouts are transparent and the whole process is managed by the Ethereum smart contract. There is no technical risk that the Dividend payouts will be influenced by any party and in any way.

The SmartBillions Team was very serious about guaranteeing Investor protection.

The most important aspect of the project’s security is that the securing of the funds within the smart contract. No party will be ever able to access the funds. It is the smart contract that manages the funds — the rules are set and cannot be changed. This guarantees that the funds will be allocated only in accordance with the predefined rules detailed in the Whitepaper. There’s no risk that the funds can spent in any manner that violates the rules.

The Smart contract will be proven 100% secure during the hackathon, which will commence 7 days before the start of the PLAY tokens offering (“ICO”). This is the first time in history a Hackathon will be held with the aim of proving the self-amending smart contract quality and security. As we can see, the development team is so confident about their product and its security that they will risk their own funds to demonstrate its safety. The success of the Hackathon will prove the smart contract’s stability and security. At the same time, it will indisputably guarantee that the investors funds are to be protected in full.

The possibility to redeem tokens is another revolutionary feature introduced by the SmartBillions lottery project. This feature allows Token holders to redeem Tokens and receive most of the invested funds back any time after the end of the PLAY tokens offering. This is another strong and unalterable guarantee for the Investors that their funds are comprehensively protected. If the lottery performance doesn’t match the Investors’ expectations or there are unforeseen circumstances that affect the lottery, Investors can redeem their Tokens at any time, receiving the majority of their invested ETH. It’s the first time an entire party of Investors and all their funds are protected on such scale.

The distribution of funds from the SmartBillions ticket sales guarantees Jackpot growth over time, which will drive the lottery’s popularity up and attract more players. The Jackpot’s growth over time is guaranteed by the house-edge-to-ticket-sales-revenue-distribution ratio. The house edge is set at 13.85 %, so 86.15 % of the Ticket sales revenue will be paid to the players as prizes, while 94–95 % of the tickets sales revenue goes to the Jackpot. This guarantees steady Jackpot growth over time and rising lottery popularity.

The innovative character of both the SmartBillions lottery product and the process of the PLAY Tokens offering creates a secure investment framework never before seen in any “ICO” or token offering projects.

How to Trade China

I’ve been asked a lot about how to think about trading the recent shenanigans in China. While predicting the future is hard, living closer to the present is a function of information. If you are more aware of the present state of the world than other traders, you can contextualize new knowledge faster. Here’s how we think about news abstractly in Cryptocurrency.

News is like Wind

Wind gusts combine to create more powerful gales; so too does the news. While any individual piece on China is likely to be wrong on precise details, a plurality of pieces on similar subject matter suggest the direction the wind blows. In this way, it is not enough to read in-depth reporting, but also reports from many sources. Even a reputable news source should be discounted in a vacuum. A chorus of voices rings louder.

Moral: read more news sources.

Confluence of Forces

When we first started hearing rumors of Chinese exchanges closing down, we dismissed it as ludicrous since so many members of the communist party own crypto assets. When we began to hear rumors of Chinese citizens with large crypto holdings being detained at the airport, it sounded unreasonable. When reports started to surface suggesting that mining could be banned, we thought it was simply impossible for such a rule to come to pass. At the same time, upon hearing about all of these separate but interleaved events purportedly taking place, we had to trade. It turned out that all of these events, in retrospect, are obviously related to a central government crackdown on crypto due to capital control fears. China sees cryptocurrency as a method of expatriating money with little oversight and wants cash to stay at home. In this way what might at first look like a series of impossible events might just turn out to be related.

Moral: keep an open mind; unrelated events may turn out to have shared causality.

Talk to People

I start making phone calls as soon as news begins to appear. It’s always surprising to me how much information people surrender on phone calls or in person compared to email or SMS. Synchronous communication methods leave no room to hide intonation or awkward pauses which often provide more information than the words shared. I try to key into places where things feel uncomfortable. Simply put, if you ask a question and your counterparty has to sit with it for a while before they can answer, that means something. Many people make the mistake of disarming the tension before it resolves which may result in a lower quality answer.

Moral: let conversations breathe, you might be surprised by what bubbles up.

How to put this into Action

We decided to trade on the news coming out of China before the Wall Street Journal report hit because of the increase in drama in articles on the subject, the increasing number of articles with loosely correlated subject matter, and personal reports from the ground in China. While we expect that the long term prognosis for cryptocurrency may still be interesting, the short term market dynamics remain complicated. One suggestion is to only trade when you can predict the future, but that is admittedly a significant feat.

How to Trade China

I’ve been asked a lot about how to think about trading the recent shenanigans in China. While predicting the future is hard, living closer to the present is a function of information. If you are more aware of the present state of the world than other traders, you can contextualize new knowledge faster. Here’s how we think about news abstractly in Cryptocurrency.

News is like Wind

Wind gusts combine to create more powerful gales; so too does the news. While any individual piece on China is likely to be wrong on precise details, a plurality of pieces on similar subject matter suggest the direction the wind blows. In this way, it is not enough to read in-depth reporting, but also reports from many sources. Even a reputable news source should be discounted in a vacuum. A chorus of voices rings louder.

Moral: read more news sources.

Confluence of Forces

When we first started hearing rumors of Chinese exchanges closing down, we dismissed it as ludicrous since so many members of the communist party own crypto assets. When we began to hear rumors of Chinese citizens with large crypto holdings being detained at the airport, it sounded unreasonable. When reports started to surface suggesting that mining could be banned, we thought it was simply impossible for such a rule to come to pass. At the same time, upon hearing about all of these separate but interleaved events purportedly taking place, we had to trade. It turned out that all of these events, in retrospect, are obviously related to a central government crackdown on crypto due to capital control fears. China sees cryptocurrency as a method of expatriating money with little oversight and wants cash to stay at home. In this way what might at first look like a series of impossible events might just turn out to be related.

Moral: keep an open mind; unrelated events may turn out to have shared causality.

Talk to People

I start making phone calls as soon as news begins to appear. It’s always surprising to me how much information people surrender on phone calls or in person compared to email or SMS. Synchronous communication methods leave no room to hide intonation or awkward pauses which often provide more information than the words shared. I try to key into places where things feel uncomfortable. Simply put, if you ask a question and your counterparty has to sit with it for a while before they can answer, that means something. Many people make the mistake of disarming the tension before it resolves which may result in a lower quality answer.

Moral: let conversations breathe, you might be surprised by what bubbles up.

How to put this into Action

We decided to trade on the news coming out of China before the Wall Street Journal report hit because of the increase in drama in articles on the subject, the increasing number of articles with loosely correlated subject matter, and personal reports from the ground in China. While we expect that the long term prognosis for cryptocurrency may still be interesting, the short term market dynamics remain complicated. One suggestion is to only trade when you can predict the future, but that is admittedly a significant feat.

DES or Dolphin: who is better?

The ICO market grows. Every day we get to know about one more project at a stage of fund raising. However the most important problem of this segment the scam-projects, hasn’t been solved yet.

It is because ICO market is still rather young and causes ambiguous opinions at public. For example, the authorities of China and Great Britain have limited such format of fund raising, Switzerland has started a hunt for scammers. And in Thailand, on the contrary, there is a very positive attitude to this phenomenon. However it is clear enough that market needs consolidation and control, both external and internal.

The niche of projects which represent multipurpose platforms for carrying out ICO is already quite filled. Several projects fight for the place under the sun, but all of them are deprived of arbitration function: when the third party estimates risks, provides guarantees and even an insurance. Today it is only Decentralised Escrow.

Another vision of control over ICO offers Dolphin blockchain intelligence which tries to unite in one project all modern trends: from blockchain and neuronets till external examination and ratings. Let’s compare these two models today: simple, but clear and reliable DES with DBI — difficult and bulky, but with all popular “counters”.

Dark dolphin

The Dolphin blockchain intelligence project positions itself as the platform and marketplace, working at the smart contract which offers services of the combined investment analysis of digital assets. The purpose of the project consists in creation conditions for more effective investment into blockchain projects. One more projects exchange estimated by users appears.

Developers plan to realize on their platform various widgets / applications with the indication of their sources. Users will be able to independently develop these applications.

Creators of the platform have gone by the principle “everything and much”. Therefore they have brought into the development not only a possibility of check startups by carrying out their expert assessment, but also the algorithms of machine learning, neuronets making the automatic analysis. Subscribers can also take part in assessment. Generally the project offers the most various format of estimates a blockchain startups which plan entry into ICO.

As the team states, the innovations used in development will allow to achieve the deep analysis of startups. As a result investors receive bigger flexibility in making decisions on investment.

Advantages of Descrow

The Decentralised Escrow project (DES) also represents the platform for placement of the startups preparing for entry into ICO. However it will be not just the exchange of projects — it is only one of services in the general control system for ICO.

The platform works at the principle of decentralised escrow with the existence of the third party which can be charged for the project and the investor. The main idea is scam fighting. Descrow developers intend to change the attitude of investors to investment of blockchain projects. New approaches to teams and investors interaction are proposed. Thanks to that appears transparency in control, safety of financing and also the confidential relations of the parties.

DES provides ways of impact the activity of the team which has collected on ICO the necessary sum for further development. Financing is carried out step by step that guarantees pointed monetary investments. If there are any doubts in reliability of developers and their aspiration, the project loses funds.

As a result DES creates such conditions that are not favorable to “scammy” projects. Therefore all startups presented on it automatically get trust from potential investors. Even if the team of the project on the platform won’t be able to fulfill the obligation, investors risk minimizes — only the first tranche can “burn down”.

Besides, after ICO DES will create special insurance fund.

Of course, in comparison with Dolphin DES looks not so technological. However simplicity is successful. Who will cope better with project assessment either the skilled expert or neural network which computing capacities have to be paid additionally.

Announcement of so extensive format of estimates by the Dolphin team in practice can not to “shoot”. The more technologies it is necessary to unite together, the higher are the risks, search of one more team of developers is out of question.

Use of machine learning algorithms is especially risky, despite its active use , this sphere is still far from an ideal. For full application of machine learning large volumes of the checked and structured data are necessary. There is no data market today and that is the greatest problem. Therefore Dolphin can be classified as a high-risk project.

Thus, despite technical innovations and loud words, Decentralised Escrow looks more perspective and less risky for investment, than Dolphin blockchain intelligence. Why to build a rocket if it is possible to buy the plane ticket?

Follow us:

web: https://descrow.org/en — — — — — — — — — — — — — — — — — — — PreICO: https://preico.descrow.org/en________________________________ Telegram channel: https://t.me/descrow ______________________________ Twitter: https://twitter.com/descrow3 ________________________________ FB: https://www.facebook.com/descrow3 ____________________________ VK: https://vk.com/descrow________________________________________ Bitcointalk: https://bitcointalk.org/index.php?topic=2089578.0_________ Linkedin: https://www.linkedin.com/company-beta/18142266/_________

DES or Dolphin: who is better?

The ICO market grows. Every day we get to know about one more project at a stage of fund raising. However the most important problem of this segment the scam-projects, hasn’t been solved yet.

It is because ICO market is still rather young and causes ambiguous opinions at public. For example, the authorities of China and Great Britain have limited such format of fund raising, Switzerland has started a hunt for scammers. And in Thailand, on the contrary, there is a very positive attitude to this phenomenon. However it is clear enough that market needs consolidation and control, both external and internal.

The niche of projects which represent multipurpose platforms for carrying out ICO is already quite filled. Several projects fight for the place under the sun, but all of them are deprived of arbitration function: when the third party estimates risks, provides guarantees and even an insurance. Today it is only Decentralised Escrow.

Another vision of control over ICO offers Dolphin blockchain intelligence which tries to unite in one project all modern trends: from blockchain and neuronets till external examination and ratings. Let’s compare these two models today: simple, but clear and reliable DES with DBI — difficult and bulky, but with all popular “counters”.

Dark dolphin

The Dolphin blockchain intelligence project positions itself as the platform and marketplace, working at the smart contract which offers services of the combined investment analysis of digital assets. The purpose of the project consists in creation conditions for more effective investment into blockchain projects. One more projects exchange estimated by users appears.

Developers plan to realize on their platform various widgets / applications with the indication of their sources. Users will be able to independently develop these applications.

Creators of the platform have gone by the principle “everything and much”. Therefore they have brought into the development not only a possibility of check startups by carrying out their expert assessment, but also the algorithms of machine learning, neuronets making the automatic analysis. Subscribers can also take part in assessment. Generally the project offers the most various format of estimates a blockchain startups which plan entry into ICO.

As the team states, the innovations used in development will allow to achieve the deep analysis of startups. As a result investors receive bigger flexibility in making decisions on investment.

Advantages of Descrow

The Decentralised Escrow project (DES) also represents the platform for placement of the startups preparing for entry into ICO. However it will be not just the exchange of projects — it is only one of services in the general control system for ICO.

The platform works at the principle of decentralised escrow with the existence of the third party which can be charged for the project and the investor. The main idea is scam fighting. Descrow developers intend to change the attitude of investors to investment of blockchain projects. New approaches to teams and investors interaction are proposed. Thanks to that appears transparency in control, safety of financing and also the confidential relations of the parties.

DES provides ways of impact the activity of the team which has collected on ICO the necessary sum for further development. Financing is carried out step by step that guarantees pointed monetary investments. If there are any doubts in reliability of developers and their aspiration, the project loses funds.

As a result DES creates such conditions that are not favorable to “scammy” projects. Therefore all startups presented on it automatically get trust from potential investors. Even if the team of the project on the platform won’t be able to fulfill the obligation, investors risk minimizes — only the first tranche can “burn down”.

Besides, after ICO DES will create special insurance fund.

Of course, in comparison with Dolphin DES looks not so technological. However simplicity is successful. Who will cope better with project assessment either the skilled expert or neural network which computing capacities have to be paid additionally.

Announcement of so extensive format of estimates by the Dolphin team in practice can not to “shoot”. The more technologies it is necessary to unite together, the higher are the risks, search of one more team of developers is out of question.

Use of machine learning algorithms is especially risky, despite its active use , this sphere is still far from an ideal. For full application of machine learning large volumes of the checked and structured data are necessary. There is no data market today and that is the greatest problem. Therefore Dolphin can be classified as a high-risk project.

Thus, despite technical innovations and loud words, Decentralised Escrow looks more perspective and less risky for investment, than Dolphin blockchain intelligence. Why to build a rocket if it is possible to buy the plane ticket?

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Welcome to Bitcoin Country: Silk Road and the Lost Threads of Agorism

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Dr Paul Ennis is a research assistant at the Centre for Innovation, Technology & Organisation at University College Dublin, specializing in bitcoin and blockchain studies.

In this opinion piece, Ennis takes a dive into the kinds of sub-cultures bitcoin and cryptocurrencies enable, tracing their origins in libertarianism – and beyond.


Not everything is tameable – that’s a truism that might apply to bitcoin above all.

Recently, researchers from City University and Stockholm University introduced the concept of the “bandit organization,” calling it “a form of association or ‘band’ (frequently led by a charismatic individual) that occupies a space outside national and/or international credibility but inside the everyday practical and moral organization of specific audiences.”

Bitcoin, as we all intuitively seem to sense, is not quite a community in any usual sense.

For this reason, I’ve started to describe it as a land of bandits, “Bitcoin Country,” a term that denotes a semi-autonomous lawless region full of bandits, some noble, some not, and most certainly not cohesive.

Too formless to be a country, too amorphous to be a company, you can think of Bitcoin Country as a kind of digitally decentralized frontier.

The outlaws

Historian Eric Hobsbawm provided an early model of outlaws as social bandits that, although often violent, were celebrated by the local community as heroic or defiant.

In this way, the origin story of bitcoin is deliciously outlaw, essentially one of the individual who, through an amazing feat, harangues the evil king. It’s all the better if the king has devolved into vice and avarice to the point of financial ruin.

The other, slightly more contentious hero, operated on the edge of the edge, is the black market within the black market, the bayous of Bitcoin Country.

“The fascists always use the narrative of ‘We are the white knights in shining armor protecting against the threats. We come here and we move out the dark with pure whiteness.’ That’s a false narrative because there is corruption in those castles. The real base of power lies with us. We are the darkness.”

In the above quote, anarchist bitcoin developer Amir Taaki sets out, in the context of a documentary about the original darknet marketplace, Silk Road, a common theme within digital libertarian culture: the establishment, broadly construed, is corrupt.

Not just corrupt, its corruptness is clouded in “whiteness,” traditional forms of organizational legitimacy, and it uses narratives of fear to ensure we place our trust in them.

We need police to stop crime, we need armies to stop invaders and intelligence services to stop terrorists. Taaki’s rhetoric is hyperbolic, but it contains, implicitly, two important insights. The first is that the organizational legitimacy of central authorities is connected to our placing our trust in them in exchange for protection from threats (Taaki calls this “babysitting” a little later in the speech).

The second, a cypherpunk view, is that a powerful response to this situation, in the context of the digital world, is the creation of technological systems that subvert this power relation, “the real base of power lies with us.”

Radical dimension

These systems Taaki discusses would strive to be trustless, having no central authority and, strikingly, they would not require legitimacy. It is crucial to remember that digital libertarians do not propose a counter-legitimacy belonging to them.

They do not claim to be the truly legitimate position. Rather they revel in being “the darkness.”

Their ideal systems necessitate no “babysitters,” no trusted third party, no “legitimacy” in any traditional sense. Given such an anarchic spirit, it is no surprise that digital libertarians are drawn toward those areas deemed off-limits by authority, such as the shadow economy.

Silk Road was never just an exercise in deviant entrepreneurship, but was “presented as a means to dismantle the state.” University professor David Golumbia notes that in the wider bitcoin discourse “the idea that government itself is inherently evil” appears with “particular force.”

It was a form of activism involving a political “prefiguration” that sustained the community.

Prefiguration is a concept found in the left anarchist and autonomist Marxist traditions and developed in relation to cryptomarkets. Like most forms of political radicalism, libertarianism relies on envisioning a world that does not yet exist. Aware that this is the case, radical activists often must discover methods that justify their faith in the project.

For the anarchist and autonomist traditions, this tension has emerged quite visibly in movements such as Occupy Wall Street.

As Mathijs van de Sande explains, prefigurative politics need to be seen in terms of the ever-evolving act of bringing into being the world its adherents wish to see, but without any mainstream engagement. Crucial to prefiguration is a subtle inversion within leftist thinking.

In traditional Marxism, the relation to the state is directly antagonistic; one is against the state.

In the anarchist and autonomist view, this becomes inverted. There, to borrow from the Spanish Indignados, “We are not against the system. The system is against us.”

This redefines the nature of defiance as a focus on how best one can build new worlds despite state “interference.” It manifests as a process of instantiation of abstract ideals to come through practices occurring in the here and now.

The overriding aim is to act “as if one is already free.”

Exit over voice

The state is to be escaped rather than replaced. In other words, “exit over voice.”

According to economist Albert Hirschman, the two options open to all dissatisfied members of an organization are exit or voice. One can either exit the organization or voice dissatisfaction.

Libertarians are infamous for their preference for exit or, at least, the option of exit and, as journalist Brian Doherty charts, there have been many attempts to escape what they perceive as the ultimate closure of options, the state.

The concept of exit has even led to attempts to establish entirely new countries, known as micro-nations, their failures documented in an obscure libertarian classic “How to Start Your Country.” Arguably the most successful forms of exit have occurred by simply moving out to sea, as encapsulated in our romantic vision of anarchistic pirates, but also in the most successful micro-nation of all time, the Principality of Sealand, an offshore oil platform located not far from the coast of Suffolk, England.

The Dread Pirate Roberts name evokes this pirate outlaw status quite explicitly (Ross Ulbrich, who ran Silk Road under that name, even notes this in discussion with Variety Jones). He had not just prefigured the world his community wanted to see, but had generated a space, a micro-nation located off the coast of the clearnet, where the law (seemingly) no longer applied.

In effect, what Ulbricht achieved was a quite unique marriage of high-minded digital libertarian ideals with the routine process of buying and selling narcotics.

For most participants, their engagement with Silk Road operationalized a sense of freedom to consume their drug of choice in the context of doing no harm to others, aligning participants with the cyber-libertarian philosophy of DPR.

Konkin’s influence

In more formal terms, organizational legitimacy on the Silk Road was ensured by reimagining the “mundane” act of buying and selling narcotics as an act of liberty.

For Ulbricht, the success of Silk Road was precisely in line with the teachings of his most important intellectual influence, Samuel Edward Konkin III. A relatively obscure figure, Konkin developed a strand of libertarianism known as agorism in the early 1970s. In his exceptionally detailed and thorough-going history of American libertarianism, Doherty references Konkin a mere five times and not once in any especially important manner.

Indeed, Konkin seems to have “fallen” out of the tradition, but this is consistent with his rejection of the Libertarian Party as inherently paradoxical, preferring instead to promote black market activism where one might “commit civil disobedience profitably.” It is not clear how Ulbricht first came across Konkin, but perhaps there was something of the kindred spirit to them, both had studied chemistry to an advanced degree.

Konkin proposed a dual course to bringing agorism into being: (1) a theoretical position known as “counter-establishment economics,” or “counter-economics” for short, and (2) the practical dimension of “counter-economic activity.” For Konkin only a small handful understand agorism, in the theoretical sense, but this does not mean that counter-economic activity does not occur.

Konkin was keen to celebrate the unconscious agorists that populate our world: tax-dodgers, black market operators, prostitutes and so on. This is where Konkin can be considered explicitly radical.

The creation of black markets was for Konkin an agorist act where small “pockets” of outlaw culture create markets more efficient than the state can provide. The more efficient these pockets the more people in the white economy will turn to agorism.

Konkin died in 2004, but he had foreseen, as early as the middle of the 1980s, that the internet opened up agorist possibilities. His remarks are worth quoting in full, given his influence upon Ulbricht:

“The internet explosion has led the American State – for now, at any rate – to throw up its tentacles at regulation of the information industry. Every legislative session, however, brings up new attempts to tax and control the World Wide Web. But consider this well: should the counter-economy lick the information problem, it would virtually eliminate the risk it incurs under the State’s threat. That is, if you can advertise your products, reach your consumers and accept payment (a form of information), all outside the detection capabilities of the State, what enforcement of control would be left?'”

This is, to be direct, quite simply what Silk Road was.

Even more prescient is that Konkin recognized the importance of encryption around the same time.

Noting that encryption meant the state “cannot reach the invoices, inventory lists, accounts and so on of the Counter-Economist,” Konkin’s proto-conception of the cryptomarket means he arrived at the idea before even the cypherpunks.

Rusted train image via Shutterstock

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Better in Byzantium? Ethereum Takes Baby Steps Toward a Privacy Boost

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Ethereum users may soon be getting a much-needed privacy boost.

Long a shortcoming for all public blockchain networks, the world’s second-largest blockchain is nonetheless aiming for big improvements in its upcoming Byzantium release. For most buy-and-hold users, these limitations might not be apparent, but that’s not to say there aren’t potential implications that could affect the wide variety of users the network is trying to attract.

As an example, the software upgrade comes at a time when regulation is putting a strain on the network – at least one government has already taken aim against what has emerged in 2017 as its biggest use case. In the past month, China issued not only an all-out ban on ICOs, but ordered exchanges (including those that buy and sell ether) to hand customer data to the authorities.

This added attention is just one of the things that has shone a light on the limitations of the network. Currently, every transaction is permanently visible on the ethereum blockchain, meaning that investments made by individuals – including those that might be illegal – can be widely observed. Not quite a bug and not quite a feature, this availability of user information is still something that many developers have set about to correct.

Complicating matters, however, is that ethereum hasn’t been known for its privacy features to date.

While zcash helped pioneer the use of zk-snarks and monero popularized ring signatures and stealth addresses, ethereum has perhaps struggled to find a similar value-add when it comes to anonymity.

But the upcoming Byzantium hard fork, currently expected to occur in October, will introduce two new cryptographic procedures which should eventually pave the way for increased privacy.

Ethereum’s first major upgrade since 2016, Byzantium is actually one-half of a much larger upgrade designed to enhance the usability of the platform, named Metropolis. It will also be the first major technical upgrade since the network has been valued in the billions, a development that could add drama to the proceedings.

Looking ahead, the second part of Metropolis, Constantipole, has been postponed indefinitely, meaning users will have to wait before they can enjoy maximum privacy on the platform.

Still, that’s not to say there aren’t substantial efforts toward that goal.

Where are we now?

Privacy on ethereum is a notoriously complex endeavor, as it contradicts some basic methods of how a blockchain functions.

Transparency on a blockchain is vital such that it protects its users from the risk of double spending, which is when a malicious user sends the same coin to two different places at once. This risk is resolved by rendering the details of each transaction visible and storing them in a widely distributed ledger.

As this procedure is fundamental to the technology, rewriting it requires high-level mathematics which have never before been attempted.

As such, ethereum’s developers are taking that attempt seriously and are reaching out to peers in other blockchain platforms for new ideas and features. For example, ethereum’s team has been working together with the privacy-centric currency zcash on zk-snarks, which could make it possible for ethereum users to make their transactions more private.

By using that technology, a statement can be verified without requiring any information to be revealed beyond its validity. As an encryption method, zk-snarks work by translating what you want to prove into an equivalent form – without anyone knowing the solution to the algebraic equations that produced it.

Notably, the upcoming Byzantium hard fork introduces new elliptic curve primitives and a pairing function for a specific curve which will make the cryptography possible and toughen the security of a zk-snark computation. The larger the curve, the more secure it is, but it does bring higher costs for each operation.

As a result, these heavy mathematical procedures are now far too expensive to run on the ethereum platform.

In principle, prior to Byzantium, a zk-snark could be completed by the ethereum virtual machine, but it would be too expensive to fit inside a single block. However, the Byzantium hard fork will introduce a gas-subsidized pairing check that makes a zk-snark less costly to compute. If you’re unsure, “gas” is a unit used to measure the computational effort that goes into a transaction and is used to calculate fees.

What needs to be done?

Due to this new feature, the first zk-snark transaction was verified on the Byzantium testnet earlier this week. The transaction, which is viewable on the test network here, cost a total of 1,933,895 gas. To put this in some context – a non-private transaction currently costs far less, around 21,000 gas.

Still, aside from this costliness, and beyond the verification itself, there’s nothing in ethereum that today can support the tech.

As explained by ethereum’s lead zk-snark researcher, Christian Reitwiessner, the “missing piece” is the part of the system that would communicate with the ethereum virtual machine, which translates instructions and relays them to network nodes.

“We need practical implementations of all the other components of a zk-snark system (apart from the verification),” he told CoinDesk.

Some of these features might be figured out soon. For example, work needs to be done to translate a computational task from source code into the form required by a zk-snark. Reitwiessner said this is currently in heavy development, and will likely be released by the ethereum developer conference in November.

However, other milestones still need extensive research before they can be reached.

At present, regardless of whether an ether transaction is private, it will always be visible to the person who pays for the gas.

Eventually, new features released in the second ethereum upgrade, Constantinople, will aim to provide a newly flexible ether wallet, allowing users the option to pay for gas in tokens instead of ether. According to Reitwiessner: “This could include paying for gas with tokens which might be zk-SNARK tokens.”

Postponing this feature until Constantinople also gives ethereum developers some time to tease out other complex challenges.

For one, ethereum must counter a security problem within zk-snark tech itself, known as the trusted setup. When zcash launched its zk-snark-powered currency back in October 2016, it corresponded with an elaborate performance, whereby each member of the z-cash development team set fire to the computers they had used to bring z-cash to life.

This was to prove that there was no backdoor into the technology that could potentially allow developers the ability to manipulate the network. The catch now is that ethereum must develop something equivalent to this, but one that can scale to thousands of participants.

Alongside this, solutions need to be developed so that mathematical proofs are generated alongside a zk-snark. And, more programming is needed to establish the possibility of zk-snarks occurring off the blockchain.

In light of this, it could be that a smoother alternative to zk-snarks is developed in the meantime.

Reitwiessner hinted at this, adding:

“Furthermore, we are not tied to a specific zk-snark or even zk-snarks themselves.”

As such, his statements hint that, for ethereum, the privacy conversation is only just beginning.

Baby steps image via Shutterstock

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Beside other factor, Indian Government still concerns Bitcoin

Tax agency and investigation team from India were more concerned with money laundering and black-market activities acquainted with Bitcoin. Counting the issues on decentralized currency, SIT (India’s special Investigation Team) is in the process of drafting the detail report.

India’s special concern on Bitcoin operation

Indian publication reported — the country’s Government agencies linked an illegal activity which they are connecting it to Bitcoin. Furthermore, it is also revealed that the team is drafting report detailing the concern and will be completing this month. The statement processed with the illegal transmissions and money laundering activities.

“There are issues with large investments flowing into this currency,” said a senior tax department official.

However, there had been report revealed on September 13 that “the institutions still feels uneasy regarding Bitcoin”.

“In regard to non-fiat cryptocurrencies, I think we are not comfortable,” explained Sudarshan Sen, Executive Director at the Reserve Bank of India (RBI).
“There are concerns on the way [bitcoin] operates — Some unaccounted money could be flowing into [cryptocurrencies],” explained the source familiar with the matter.

Bitcoin News: Here is latest update on Bitcoin by Indian press

Laxmicoin as new version of Bitcoin

After all these matter, Bitcoin is still thriving in India.

Despite the central Bank’s opinion on Bitcoin, it is still thriving in the nation- according to Unocoin.

“The Indian Bitcoin ecosystem is thriving — In metropolitan cities such as Delhi, Bengaluru, and Mumbai, there are a large number of existing and upcoming bitcoin quarriesthat are running in temperature controlled rooms, around the clock, every day,” explained Unocoin.
Beside other factor, Indian Government still concerns Bitcoin | Bitcoin news
Here is latest Bitcoin news — Tax agency and investigation team from India were more concerned with money laundering and black-market activities acquainted

Special release

Special release

In this release: successful PROVER pre-ico passes; fixed rate for pre-ico 1ETH = $350; Developers will create 2 implementations of PROVER technology: for Ethereum and Emercoin platform; Owners of PROOF tokens will be able to vote for the direction of product development — this and other news you can see in video.


Special release was originally published in Koles Coin News on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Value of Bitcoin

Bitcoin is a lousy payments system. It will never be as efficient as Visa, and there are other cryptocurrencies with greater capacity — even Litecoin and Bitcoin Cash, which are almost identical in their code to Bitcoin. But Bitcoin’s value today is not derived from its value as a payments system.

The Bitcoin Cash hardfork is instructive: Bitcoin Cash has a blocksize of 8 megabtyes compared to Bitcoin’s 1 megabyte, which all else equal implies 8x the capacity. The contentious “Segwit2x” hardwork in November has a similar motivation of increasing capacity.

If you view it with an adversarial mindset, however, the design decisions of Bitcoin core developers make sense. Many people live in places where faith in government is a luxury they don’t have, and the core developers assume a future in which governments will try to attack or censor the network. Taking this view, minimizing the bandwidth required to run a node is a much higher priority that transaction capacity.

It’s easy to look at Blockstream’s “Bitcoin in space” satellite initiative and see it as some bizarre science project; really it is about providing access to the Bitcoin network in denied areas, whether through lack of communications infrastructure or due to a coordinated crackdown.

Today the value of the Bitcoin network is about $60 billion. There’s a decent chance the long-term value is zero. But if the network proves itself to be robust and resilient, if it continues to gain acceptance as a store of value¹ and people find cause to trust their savings with the network more than with other assets — if Bitcoin is digital gold — then the eventual value of the network is $10+ trillion.

¹ : this may sound like a pyramid scheme, which is certainly an argument which has been made against Bitcoin. And in a sense it is, just as gold is, because money is a shared illusion — it is whatever we come together and believe it is. Thousands of years ago someone was the first person to convince others that gold was valuable. “Bitcoin is a long-term self-fulfilling prophecy. If it survives for 20 years, there is a generation that will consider it as good as gold.” -Naval Ravikant