Why Cryptocurrencies Matter [Opinion]

Why Cryptocurrencies Matter [Opinion]

After telling friends and family what I do for a living, I’m often asked, “Why cryptocurrency?” And it’s gotten me thinking: what is it about this space that I find so fascinating, so promising, and so important?

Of course there are a number of good explanations. There’s the obvious fact that cryptocurrencies are new and exciting from a technological point of view. Distributed networks are building censorship resistance; encryption is facilitating trustless online transactions; and blockchains are revolutionizing countless industries across the globe—even if the technology still needs work before realizing its full potential.

Then there’s the other obvious fact: that cryptocurrency is a multibillion dollar industry offering the prospect of lucrative financial returns. While 2018 has certainly put a damper on this side of the crypto industry, hope for the next bull run still lingers in the mind of every cryptocurrency enthusiast, myself included.

But these superficial characteristics are not enough to explain my interest in cryptocurrencies. If I wanted to write about technology, why not quantum computing, AI, genetic engineering or space travel? If I wanted to make money, then why not take the traditional finance route, which offers incredible wealth and significantly less risk?

The truth is that, while the obvious facts still matter, the real reason I and so many others care about this space is the unique set of principles that lie at the heart of cryptocurrency and cryptocurrency alone. What I think many outside of the crypto industry fail to appreciate is that cryptocurrency is more than technology, and it’s more than money. It is a concerted effort to reintroduce two basic principles that have been forgotten in the digital age:

  1. Individuals have a right to privacy.
  2. Decentralized power is preferable to centralized power.

These two beliefs are the foundation upon which nearly every cryptocurrency is built, and they do a decent job of summarizing what is unique about cryptocurrency compared to other fintech industries. What’s particularly interesting about these principles is that they transcend political lines: two individuals can agree with both of the above statements for very different reasons. This contributes to cryptocurrency’s widespread appeal, and is a big part of why cryptocurrency enthusiasts are so passionate about the space.

The remainder of this article will take a closer look at the philosophical underpinnings of cryptocurrency’s two most basic principles. Where did they come from? What reasons do we have to believe them? And how can we convince people outside of the cryptosphere to believe them too?

The Cypherpunk Ethos and the Right to Privacy

No group has played a bigger role in the creation of modern cryptocurrencies than the Cypherpunks. It’s a term you’ve probably seen thrown around in cryptocurrency circles, but maybe never heard a good definition of what it means. The most influential description of the Cypherpunk ethos comes from Eric Hughes’ A Cypherpunk Manifesto (1994), which describes the Cypherpunks as an ideologically motivated group of computer programmers who use cryptography to promote digital privacy.

For Hughes and other Cypherpunks, “privacy” is defined as “the power to selectively reveal oneself to the world.” This power is essential in order for individuals to have a personal life that remains separate from their public one. It’s something we often take for granted in our face-to-face interactions, while simultaneously giving it up altogether in many of our interactions online.

Early discussions about privacy on the Internet tended to focus on naive children making poor choices, first by interacting with strangers in shady chatrooms, then by revealing too much personal information on their publicly viewable MySpace profiles. In retrospect, our concerns were far too narrow.

Only in recent years have we begun to realize how much of our personal data has been collected by tech companies like Facebook and Google. I say “begun to realize” because we still have not fully come to terms with it, and we still have many unanswered questions. Most obviously, what these companies actually do with our data remains somewhat of a mystery: we know that they sometimes sell it to advertisers and other vague entities, but it’s hard not to wonder what Mr. Zuckerberg and Mr. Pichai still haven’t told us.

Indeed, social media companies are a major concern, but they are arguably not the worst offenders with regard to privacy, only because it is still possible to remain anonymous on social media. The arena in which privacy has been completely cast aside on the Internet is in online payments.

Prior to the advent of cryptocurrencies, the only options one had for making payments on the Internet were banks and Paypal, both of which require users to complete know your customer (KYC) requirements which eliminate the possibility of privacy.

Cypherpunks recognized this problem back in the early 90s. “When my identity is revealed by the underlying mechanism of [an online] transaction,” writes Hughes, “I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.”

The Cypherpunk solution to the above problem was to create “anonymous transaction systems.” It might sound unusual in the Internet age to think of anonymous payments, as we’ve become so accustomed to revealing our personal information in many everyday purchases; but people have been making “anonymous” payments for millennia in the form of cash, coins or trade. Such systems are anonymous in that they do not require you to reveal your identity in order to make a purchase. For example, if you buy something with cash at the store, the clerk won’t ask for your name and address—which is handy if you’d prefer some purchases to be private.  

The Cypherpunk influence is clear in the Bitcoin white paper, in which Satoshi describes Bitcoin as “a peer-to-peer electronic cash system.” And true to the cypherpunk emphasis on privacy, bitcoin allows two parties to transact with one another without having to trust each other, and without having to reveal their identities to anyone.

Cryptocurrency enthusiasts generally resonate with the Cypherpunk ethos, but I’ve found when speaking to people outside the cryptocurrency industry that the right to privacy is not always taken very seriously. Many people are not particularly concerned about sharing their online payment histories with their payment providers. Nor are they concerned that such data might be compromised as it was in the notorious Equifax hack.

In my experience, such people are quite comfortable trusting the centralized third parties who make their payments possible. They either do not see any reasons why banks should not be trusted, they see the reasons but don’t find them compelling enough to explore alternatives, or, perhaps most commonly, they are willing to sacrifice some individual privacy in the name of safety/regulation/the common good: “Why would you need private transactions—unless you have something to hide?”

Ultimately this is why the right to privacy is the lesser of the two basic principles: because for many people, a transaction between you, your transaction partner, and your bank is private enough. But the types of people who are drawn to cryptocurrency tend to have stricter standards for privacy, standards that are based primarily on a belief that centralized power is inherently untrustworthy.

Decentralization: A Rallying Cry for Libertarians and Anti-Capitalists

A remarkable thing about cryptocurrencies is that they invite people to reevaluate their fundamental conceptions about how the world should work. For example, should governments and banks be in complete control of the money supply? It’s unlikely that this question would have been taken seriously 30 or 40 years ago, simply because there weren’t any viable alternatives to the existing system. With the advent of Bitcoin and other cryptocurrencies, however, many enthusiasts have begun to imagine new worlds without centralized money.

The desire for such a world is rooted in the second, and most important, principle of cryptocurrency: decentralized power is preferable to centralized power.

I was careful when writing this principle to make it very broad, so broad that it is likely to be agreed upon by almost everyone who reads it. Centralized power in its most extreme form is called tyranny, and there is nothing more universally despised than a tyrant.

Many of the most important structures in modern society are explicitly designed to prevent tyranny: democratic voting, governmental checks and balances, term limits, anti-trust laws, anti-discrimination laws, and progressive tax systems. I could go on and on, but the point is that nearly everyone recognizes that too much power cannot reside in one place, or else that power will likely be abused.

With these ideas in mind, I ask once again: Should governments and banks be in complete control of the money supply?

Cryptocurrency enthusiasts answer this question with a resounding “No.” Together, governments and banks have a duopoly on money, which gives them too much control over society as a whole.

As mentioned in the introduction, much of the power of this principle comes from the fact that it can be shared by individuals with completely opposite political leanings. Libertarians and anti-capitalists, for example, are likely to have clashing views on nearly every issue, but can still agree on decentralization.

Libertarians are in favor of decentralization because they are most interested in protecting the rights of individuals, including the rights to privacy, to free enterprise, and to self-defense. Given the focus on the individual, it makes sense that libertarians are generally distrustful of centralized power, as centralization always brings with it an implicit threat of coercion.

When it comes to the financial system, libertarians will argue that both the government and the banks have too much power. A favorite target of libertarians is the Federal Reserve and other central banks, which overtly manipulate a country’s money supply.

Libertarians point to the Fed and say that it is an affront to the free market and exerts too much power over individuals’ financial lives. Cryptocurrencies appeal to libertarian sensibilities because cryptocurrencies are capable of taking power away from the government and putting it back into the hands of individuals.

Anti-capitalists, by contrast, support cryptocurrencies and decentralization for entirely different reasons, usually emphasizing the power—and corruption—of banks rather than of governments. For the anti-capitalist, the ultimate goal is to produce a more equitable society in which resources are more widely distributed among all people. Government can be a valuable tool in bringing about this distribution; but banks consist of profit-minded “1 Percent-ers” who will happily cheat marginalized groups if it helps their bottom line.

For the anti-capitalist then, cryptocurrencies are valuable because they take power away from banks (and the wealthy people who run them) and redistribute that power across society.

The lines of thinking used by the libertarians and the anti-capitalists have almost nothing in common, yet decentralization of financial power is desired by both. It’s rare to find a principle that resonates with such a wide range of people while at the same time being so revolutionary. In my mind, this a strong indicator that there is truth in it.


Though crypto enthusiasts may disagree in profound ways, nearly everyone who cares about this industry shares a belief in two basic principles: individuals have a right to privacy, and decentralized power is preferable to centralized power. In its most favorable light—which admittedly is not the reality much of the time—the ultimate goal of cryptocurrency is to defend these principles in the digital age.

But is it all really necessary? In other words, do these principles really need defending?

If you’re reading this article, you likely live in a country with reasonably trustworthy financial systems. I for one am fortunate enough to live in the United States, which by global standards has incredibly fair institutions—even if it doesn’t always seem that way.

However, it’s important to never assume that stability and prosperity are permanent. A functioning society is a fragile thing, and hubris is a recipe for destruction.

The problem is not necessarily that our existing institutions are fundamentally broken, although many people would certainly agree with that statement. The problem is that we are all subject to those institutions whether we like it or not, and there’s a strong sense among us that the institutions are not always looking out for our best interests.

By providing individuals with privacy while simultaneously stripping power away from the nameless, faceless institutions that dominate society, cryptocurrencies offer a safeguard against tyranny in all its forms—and I cannot think of a more noble goal than that.

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Crypto Users Increased to 35 Million in 2018: What Will 2019 Bring?

Crypto Users Increased to 35 Million in 2018: What Will 2019 Bring?

As we approach the new year, it’s time to reflect on all that happened in 2018. In the cryptocurrency sector, there were a few ups and downs, more so than in 2017, the year the crypto boom took flight. But while various companies (and coins) had their share of plunges, the number of crypto users in 2018 doubled.

Well, almost.

Crypto Users in 2018

On Wednesday, December 12th, the Cambridge Centre for Alternative Finance published a study detailing the number of ‘verified’ crypto users the sector gained in 2018. The figure was over 15 million (17 million, to be exact).

The study also said the number of ID-verified crypto users came close to doubling in the first three quarters of the year. It went from 18 million to a whopping 35 million.

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Despite the 2018 crypto market decline, which caused many to run in the opposite direction, the Cambridge Centre study puts the future of crypto in an optimistic light. In fact, Bloomberg, when analyzing the study, concludes that even though the market declined in 2018, the increase in crypto users is evidence that an eventual recovery might be on the way. Bloomberg also believes the study indicates that most crypto users are “still speculators and long-term investors.”

>> Ethereum (ETH) Constantinople Hard Fork Nears and ETH Hacks Rise

Should We Believe the Crypto Study?

Crypto 2018 was a rollercoaster ride. Some lost hope, others did not. Cameron Winklevoss, a co-founder of Gemini, described the year well in a tweet:

One thing, however, that we can take away from the Cambridge study is that it’s not just business clients who are investing in cryptocurrency. Instead, it’s individuals, like consumers, retail investors, and anyone “seeking a better investment or payment alternative.”

As long as there’s an audience seeking these market changes, it’s likely crypto 2019 will see continued user growth; even if the prices of coins plunge from time to time (looking at you, Bitcoin).

What do you think?

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Ontology Embraces Securities With New Token Standard

Ontology Embraces Securities With New Token Standard

Ontology, a blockchain with a focus on identity management, has announced a new token standard called OEP-506. This optional standard will allow developers to create and issue security tokens that are compatible with most Ontology wallets.

Security tokens created under OEP-506 can be controlled in a way that complies with regulations and satisfies user trust. The new token standard will also be tightly integrated with Ontology’s ID system, which can be used to approve investors and other parties.

Will this type of token become a prominent trend?

Security Tokens In a Nutshell

Securities are tradable assets that are subject to certain regulations. Although the SEC has made it clear that ICO tokens in general are securities, Ontology is using the term “security token” to refer to something slightly different.

By Ontology’s definition, security tokens are used to tokenize real-world securities such as corporate equity, trust shares, or precious metals — all of which are the target of the new standard. Traditional ICO tokens can still use Ontology’s regular token standards: OEP-4 and OEP-8.

However, the new standard does support practices that have become commonplace in both traditional ICOs and security token offerings (STOs). Most notably, the new standard facilitates KYC procedures by using Ontology’s ID system to approve investors who want to obtain a particular token.

In conjunction with Ontology’s ID system, the new standard can also provide different degrees of authorization and permission to different participants. For example, it could allow specific exchanges to access investor information. Additionally, the new standard would allow the creation of compliance and notification systems.

Ontology suggests that security token offerings have made access to security ownership widely available. It also claims that its own blockchain infrastructure and identity services will facilitate access on an even greater scale. With the help of Ontology, security tokens will indeed gain some amount of adoption thanks to the new feature.

Nevertheless, securities remain a controversial topic in the crypto world: some see securities regulations as exclusionary and overreaching, while others see blockchain-based securities as a vital bridge between traditional finance and the blockchain. In any case, OEP-586 serves a definite purpose and will likely remain a useful feature.

Suggested Reading Learn about the best EOS wallets.

Alternatives to Ontology

Ontology is not the only platform with an interest in supporting security tokens. In fact, Ethereum proposed a similar standard earlier this year. Since countless tokens can rely on a single underlying standard, this approach is extremely convenient: a new security token can be deposited in almost any Ontology or Ethereum wallet.

However, more full-fledged security token platforms are also available. For example, Swarm exclusively provides security-related features. Some platforms, such as OpenFinance, are committed to complying with U.S. regulations. These platforms usually introduce their own blockchain and token standard, but not always: for example, Tokeny is integrated with Ethereum.

As blockchain technology becomes more widely adopted by mainstream finance, it seems likely that controllable security tokens will become more prevalent — but whether specialized platforms will prevail over popular platforms remains to be seen.

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SeedCX Exchange Is Barring Employees from Crypto Trading

SeedCX Exchange Is Barring Employees from Crypto Trading

Having traded cryptocurrency with his own money since 2014, software engineer Alex Wachli made a difficult choice when he joined the institutional crypto startup Seed CX.

He had to give up trading.

Seed CX forbids cryptocurrency trading by its roughly 40 employees. So Walchli effectively locked up his crypto holdings by handing the compliance team a list of all his wallet addresses, so they could monitor them and confirm his holdings stayed put.

The engineer says he understands how personal investments could create a conflict of interest with regards to the customers he serves and the way his team evaluates support for various assets.

“I think everybody here is not here to try and pick and choose winners, and to let the market to decide,” Walchli told CoinDesk. “If we didn’t have these policies we might be biased and we might not be focusing on the right goals.”

Seed CX’s policy, quietly put into place last year, appears to be one of the industry’s strictest. Few exchange startups have employee trading policies comparable to those found in traditional capital markets, in part because crypto is still considered by some to be a Wild West industry without clear regulatory requirements.

“We don’t necessarily know what ‘material, non-public information’ [MNPI] means in a crypto context,” Justin Steffen, a litigation partner at Jenner & Block LLP, told CoinDesk, referring to the legal term for information that would give insiders an edge over the investing public. “That will be worked out by courts.”

In the securities markets, for example, an executive who trades stock knowing that the company is about to announce a merger or recall a defective product might be a straightforward case of illegal insider trading. But in crypto, where the assets are created with open-source software and network activity is visible to all on a blockchain, different types of news move the markets.

And sometimes the people working at crypto exchanges are privy to such information – including trading trends, technical issues related to liquidity, and decisions to list certain assets – before anyone else.

In traditional finance, “it’s rare for exchanges to have this much power to change the price of a token or asset that they list,” said Edward Woodford, co-founder of Seed CX, which has raised $25 million of venture capital and is courting instititonal investors as clients.

As such, Woodford said his company’s no-trading policy aims to foster trust among institutions that are used to established corporate norms beyond MNPI contracts, which state employees may not trade based on internal information that could move the broader market.

Speaking of rumors that some crypto exchanges trade against their customers or allow front-running, where employees make personal trades based on information general customers don’t have yet, Woodford told CoinDesk:

“We wanted to avoid any risk that these [frontrunning] allegations could be levied against us.”

Lay of the land

To put Seed CX’s employee trading ban in perspective, CoinDesk reached out to several other prominent crypto trading platforms about their policies.

A spokesperson for Binance, currently the world’s second-largest exchange by trading volume according to CoinMarketCap, said the Singapore-based company has “a strict policy in place banning insider trading, similar to that of investment banks,” but would not share further details.

In Silicon Valley, industry unicorn Coinbase’s chief legal officer Brian Brooks told CoinDesk his company’s current policy requires a small group of employees with decision-making power to self-report their holdings.

“For rank-and-file employees there is no reporting requirement. There is an MNPI prohibition,” Brooks said, referring to a contract employees must sign. “And you may be subject to certain blackout windows depending on whether we are about to list an asset and other kinds of things.”

Employees are also routinely recused from participating in decisions based on their personal holdings, he said.

A Coinbase spokesperson said this policy has been in place for “several years,” but would not be more specific. The company is fighting an ongoing class-action lawsuit alleging employees engaged in insider trading when the bitcoin network forked in 2017 to create the alternative currency bitcoin cash. Among other claims, the plaintiffs allege that insiders traded bitcoin cash at inflated prices while trading was closed for retail customers.

Coinbase isn’t the sole crypto platform with MNPI contracts. Wall Street veteran and AirSwap co-founder Michael Oved told CoinDesk that, in addition to MNPI restrictions, all employees require written approval from the legal team for trades over a certain amount, a value which Oved declined to specify.

Speaking to this point about clearing trades with an internal legal team, Steffen said MNPI policies may be insufficient without supervision. He added:

“Traditional financial institutions are actively making you report trades, transactions, and issues that may constitute insider trading. That is the norm. That is the standard. When I say ‘every trade you make and every real estate transaction you do has to go through compliance,’ that’s what I mean by supervision.”

Winds of change

Some legal experts believe courts and regulators will encourage exchanges to follow even stricter compliance standards, beyond self-reporting, in the near future.

Attorney Jeremy Deutsch, a partner at the Washington, D.C.-based law firm Anderson Kill, agreed with Steffen that the standard norm among banks and capital market exchanges is for legal experts to monitor or restrict all employee trading, and communications such as emails, and external business transactions like purchasing property.

Even beyond securities markets, Deutsch said professional fiat currency and commodities traders also have numerous restrictions related to their personal assets, adding that he sees no reason why the same should not hold true for crypto:

“What would the justification be to not apply the full scope of compliance obligations to those who are entrusted with early information on the market direction, or potentially the ability to move the markets themselves with their trading, just due to their privileged position?”

Looking forward to 2019, Deutsch said courts and regulators may specify that lower-ranking employees at exchange companies who deal with “the flow of information or orders” also require monitoring, and approvals for most significant financial activities, from the compliance department.

“Otherwise, you’re going to see a tremendous amount of private litigation,” Deutsch said.

Steffen agreed. Crypto markets, he said, involve “very fact-intensive situations” that require legal expertise because “there’s not uniformity among everyone about what is material, nonpublic information or a security.”

That’s why Woodford of Seed CX believes a no-trading policy benefits his employees as much as exchange users.

“An employee may not deem something material whereas we as a company would deem it as material,” Woodford said, concluding:

“It’s also about protecting [employees] as well.”

Edward Woodford image via SeedCX

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Is Bitcoin ABC the Real Bitcoin Cash? OKEx Thinks So!

Is Bitcoin ABC the Real Bitcoin Cash? OKEx Thinks So!

OKEx has officially taken sides in the Bitcoin Cash hash war. According to an official statement made by the Malta-based cryptocurrency exchange today, it will list Bitcoin Cash ABC under the original Bitcoin Cash (BCH) ticker.

Bitcoin ABC Wins with OKEx

The statement reads:

“We will change the ticker of Bitcoin Cash ABC from BCHABC to BCH, and that of Bitcoin Cash SV from BCHSV to BSV at 5am Dec 13, 2018 (CET, UTC +1). At the same time, spot trading of BCHABC and BCHSV will also be suspended. All remaining balance of the original BCH will be settled, and the asset will be removed from your account.”

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The Bitcoin Cash hard fork split took place on November 15th and caused a lot of drama within the cryptocurrency community. In addition to the drama, coins began falling at a rapid rate as investors lost confidence.

From the beginning, Bitcoin ABC has been supported by a number of the major cryptocurrency exchanges. Bitcoin ABC is led by Roger Ver, CEO of Bitcoin.com. The more conservative upgrade to the Bitcoin Cash protocol was supported by Coinbase, Binance, and Bitmain from the beginning. Gemini, the cryptocurrency exchange owned by the Winklevoss twins, also voiced it would only support Bitcoin ABC.

>> Denmark Crypto Taxes: It’s Making Sure You Pay Em!

Its competitor, Bitcoin SV, was founded by Craig Wright. Bitcoin SV was the more radical protocol upgrade and increased the block size of BCH from 32MB to 128 MB. Craig Wright named the upgrade Bitcoin SV or ‘Satoshi’s Vision’ because he believes it is what the original Bitcoin (BTC) was meant to be. Wright has claimed in the past that he is the originator of the Bitcoin whitepaper released in 2008 and has been called ‘Faketoshi’ by the crypto community.

Bitcoin Cash ABC has claimed victory. CoinMarketCap, the world’s most used cryptocurrency index, has even kept Bitcoin ABC’s movement under the original Bitcoin Cash (BCH) ticker. Sorry, Faketoshi.

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Major German Stock Exchange to Launch Crypto Trading Platform

Major German Stock Exchange to Launch Crypto Trading Platform

Germany’s second-largest stock exchange, Boerse Stuttgart Group, is set to launch a cryptocurrency trading platform in the first half of 2019.

The firm announced Wednesday that it has partnered with a local fintech company solarisBank to create an engineering infrastructure for digital assets trading. solarisBank, which operates with a banking license in the country, will also be Boerse’s banking partner for the venture.

“With its combination of technology and banking expertise, solarisBank is a great partner for us to offer central services along the value chain for digital assets,” said Alexander Hoptner, CEO of Boerse Stuttgart.

Initially, trading for bitcoin and ether will be enabled on the platform, with support for other tokens expected once its initial coin offering (ICO) platform – also currently under development – goes live.

Both individual and institutional investors will be able to trade on Boerse Stuttgart’s crypto platform, which will offer features similar to its stock trading platform. This includes open order books and order execution in compliance with relevant laws.

Boerse Stuttgart is also seeking a regulatory approval to offer multilateral trading facility (MTF) for its crypto trading marketplace. MTF is a type of trading system that allows matching buyers and sellers of financial instruments using electronic systems.

The stock exchange first revealed its plans to launch platforms for crypto and ICO token trading platform in August of this year, as well as a trading app called Bison and custody services for cryptocurrencies. The trading app will be launched by Boerse’s subsidiary Sowa Labs and will offer fee-free trading at launch, the firm said at the time.

Just yesterday, SolarisBank also teamed up with a crypto payments startup Bitwala to help them offer crypto banking services in the country.

Boerse Stuttgart image via Shutterstock 

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Razer Releases “Mining” Software for Gaming Loyalty Program

Razer Releases “Mining” Software for Gaming Loyalty Program

PC gamers invest tremendously into their computer rigs. This marks them as prime candidates to be cryptocurrency miners — primarily due to their powerful GPUs. However, getting involved with crypto mining can be confusing for non-enthusiasts. Computer peripheral maker Razer is here to change that.

Based in Singapore, the gaming hardware company revealed Razer SoftMiner this Wednesday via a tweet:

The software enables users with top-tier GPUs (Nvidia GTX 1050 or AMD RX 460 are recommended as minimums) to mine “Razer Silver” while their computers run idle.

Suggested Reading Learn about the best Monero wallets on the market today.

Mining For Fake Crypto

Miners are rewarded in Razer Silver—a digital (non-crypto) asset based in Razer’s loyalty program. Users can trade Silver for gaming mice, keyboards, games, and more. According to the website, a gamer with the “proper setup” can earn 500 silver per day. Silver lasts for a year before expiring and isn’t very valuable. As reported by CCN, the cheapest Razer Silver item is a $5 discount to the storefront, which costs 1,500 Silver. That match converts to $1.67/day or $0.07c/hour. Also, that number doesn’t include electricity prices.

Users cannot convert Silver to fiat currency, though they can purchase a $10 Domino’s Pizza gift card for 14,000 credits. That’s about a month’s worth of consistent mining. In fact, mining for 24 hours a day every day of the year only nets 182,500 Silver. That’s just under 100,000 less than the most expensive item, the Razer Huntsman Elite, at 280,000 points. This news, on top of Silver expiring yearly, doesn’t seem like much of a deal for miners.

Also, these numbers are going to drop as more people get involved. And that’s assuming Razer is entirely forthcoming about all the data.

Twitter users aren’t happy about this at all. The first reply reads, “Seriously? This is an early April fools joke right?” Another user states “Wow. What exploitative, bad for the environment, bad for people’s equipment, fing nonsense. Grats on loosing a customer for good.”

Unsurprisingly, Razer isn’t the only major PC company to release a software miner. Last month, Asus dropped its own version of SoftMiner in partnership with Quantumcloud. Interestingly, Asus enables users to cash out via PayPal or WeChat, while Razer miners are only rewarded in Silver.

We can expect to see some clarification from Razer in the coming days. That said, at least we are getting more mainstream exposure regarding cryptocurrencies. If only it were a bit more positive.

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Kraken Is Seeking ‘War Chest’ Investment at a $4 Billion Valuation

Kraken Is Seeking ‘War Chest’ Investment at a $4 Billion Valuation

Crypto exchange Kraken is on a fundraising drive, offering “select” investors a chance to purchase stakes in the firm.

CEO Jesse Powell confirmed to CoinDesk that his company is looking to tap a small number of clients for a fundraising round valuing the firm at $4 billion.

“There is presently a limited time opportunity available to a very small, select number of clients to purchase Kraken shares” at a $4 billion valuation with a $100,000 minimum, he told CoinDesk via email.

The general public will not have access to these shares, and the exchange is not looking to make a public offering.

The company has not so far determined how much it will look to raise, and any final number will depend on the amount of interest, Powell said. He added that “the amount of shares available is relatively limited,” and the exchange will close its offer on Dec. 16.

An email sent to investors describes the move as “presenting our most valued clients with the opportunity to become equity holders in the company,” going on to say:

“We’re profitable and sitting on significant reserves so fundraising is not a necessity, however, further aligning interests with our top clients while building a war chest for acquisitions in the bear market presents a win-win opportunity.”

Asked what types of acquisitions Kraken might make, Powell pointed at the exchange’s previous purchases of Coinsetter, CAVirtex, CleverCoin and Cryptowatch.

“We’d be looking for more along those lines, anything that would have strong synergies with our existing product/service offerings, and with great teams,” he explained.

While he could not speak to any specific acquisitions at press time, he said the exchange’s venture arm “has been very active in the last year,” and may make some announcements at the beginning of 2019.

The exchange will use the services of an undisclosed third party to verify that interested parties are accredited investors in the U.S., as well as oversee the actual transactions.

Kraken joins its fellow U.S. exchange Coinbase in raising funds during the bear market. The latter raised $300 million earlier this year, with an $8 billion valuation.

Like Kraken, Coinbase said it was building a “war chest,” with vice president of corporate and business development Emilie Choi saying the funds would be saved for a “rainy day.” Unlike Kraken, though, Coinbase is not looking at any specific acquisitions or other moves at this time, Choi said.

Jesse Powell image via CoinDesk Consensus archive

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What is Tezos? | The Complete Beginner’s Guide

What is Tezos? | The Complete Beginner’s Guide

Although it is a relative newcomer to the blockchain market, Tezos has been propelled through the ranks after enduring a rocky start. Tezos offers dApp blockchain features that make it comparable to Ethereum or EOS, but Tezos’ underlying blockchain introduces significant technical innovations. This guide provides a broad overview of the Tezos platform.

Table of Contents

  • What is Tezos?
    • Legal Roadblocks
    • The Long-Awaited Launch
  • The Technology Behind Tezos
    • Liquid Proof-of-Stake Consensus
    • Verifiable Smart Contracts
    • Self-Amending Updates
  • Tezos Advantages
  • Tezos Disadvantages
  • How to Buy Tezos
  • Tezos Wallets
  • Conclusion

Tezos was conceived by Kathleen and Arthur Breitman as a platform that would fulfill the same role as Ethereum: a programmable blockchain capable of supporting decentralized applications.

Tezos Co-founder Arthur Breitman

However, Tezos was also an attempt to innovate on existing consensus mechanisms, governance models, and upgrade practices. In short, Tezos was meant to be a flexible blockchain that would operate smoothly and continuously.

Tezos finally came into existence in 2017, when the Breitmans held an ICO to raise money for the project. This ICO campaign raised $232 million, making Tezos the largest ICO at that time. The project also gained high-profile investments from firms such as PolyChain Capital and independent investors such as Tim Draper. However, Tezos would soon face legal issues that would threaten the success of the project.

A few months after Tezos’ ICO ended, the Breitmans entered a dispute with Johann Gevers, who served as co-founder and president of the Tezos Foundation. This dispute concerned intellectual property ownership and Tezos’ free software license. In addition to causing Gevers to part ways with Tezos, this also caused Tezos’ launch to be delayed.

More critically, the dispute prevented Tezos tokens from being distributed to ICO investors. As a result, investors filed a number of lawsuits against Tezos, arguing that the project’s tokens were unregistered securities. These lawsuits sought refunds, although Tezo’s ICO had called investments “non-refundable donations,” which complicated matters.

The Tezos tokens were eventually distributed in June 2018 when Kathleen Breitman took the initiative to push through the project despite legal uncertainties. Unfortunately, more complications came with this decision: investors who had already purchased tokens were forced to comply with KYC identity checks. This quickly split the Tezos network into two parts: the standard Tezos chain, and an alternative chain without KYC called nTezos.

The standard Tezos network ultimately prevailed, putting the project back on track. Tezos’ first testnet was finally launched on June 30th, 2018, and this version of the platform was used to gradually implement and test the platform’s technical features. Later, in September 2018, the Tezos mainnet was launched, bringing the platform to the public. Tezos has now attracted over 450 “bakers” who produce blocks, plus many more general users.

Like all blockchains, Tezos uses a series of blocks to manage transaction data and other information. It also has a unique consensus mechanism, upgrade system, and programming language, all of which are explained below.

Consensus is the manner in which blockchain participants come to an agreement on the validity of blocks on a blockchain. Tezos’ consensus mechanism can be described as a combination of traditional and delegated proof-of-stake.

Traditional proof-of-stake, which is used in Ethereum’s upcoming Casper protocol, allows node operators to lock up their own tokens for a chance to validate blocks and earn token rewards. This system allows an unlimited number of nodes to vie for control over block validation, and the fact that countless stakers can exist makes the model highly decentralized. Unfortunately, staking is too expensive for many basic users: even if Ethereum lowers the minimum staking amount to 32 ETH, staking will still require thousands of dollars.

Meanwhile, delegated proof-of-stake (DPoS) allows users to stake their tokens in order to vote for a limited number of block producers. EOS, for example, elects only 21 block producers, all of whom are large organizations that must dedicate massive amounts of computing power. This model has come under fire for centralizing power in the hands of a few block producers. However, delegation and voting make it possible for less wealthy users to have an indirect say over the course of the blockchain.

Tezos combines these two models with its unique “liquid proof-of-stake” mechanism. This model allows up to 80,000 block validators or “bakers” to accept delegated tokens. Bakers must hold 10,000 XTZ, which is, again, thousands of dollars. However, Tezos also allows users with smaller holdings to delegate their tokens to bakers and receive rewards in return. In other words, liquid proof-of-stake permits users to either become a full-fledged block validator or merely delegate tokens to validators.

The following infographic gets into some of the specifics of the baking process, which involves unique features like a “quality assurance team” and a “bonding” or “cooldown” phase:

Just like Ethereum and EOS, Tezos supports smart contracts, which are blockchain programs that can execute automatic transactions. However, Tezos uses its own programming language, which is called Michelson. Michelson is Turing-complete, meaning that it has a level of complexity that is found in almost all current programming languages. That means that Michelson can be used to program almost any modern program.

Additionally, Michelson allows for formal validation, a process that mathematically detects problems in code. This process is not perfect, but it does catch some bugs that would otherwise become costly when exploited by hackers.

Ethereum and EOS also have some third-party projects that are attempting to implement formal verification, but Tezos already has this feature built into its smart contract language. Incidentally, Cardano’s Haskell language also has formal verification features.

Tezos is self-amending, meaning that it does not need to go through regular hard forks in order to be upgraded. Even when hard forks are agreed upon by an entire network, they can create a lot of work for developers and node operators. Tezos has a more seamless upgrade process that does not involve regularly forking the blockchain.

That said, it is possible for part of the network to decide to fork Tezos — indeed, this has already happened during the initial KYC controversy.

  • Affordable staking: Tezos provides a relatively affordable way for users to stake or delegate their tokens and receive rewards. There is no minimum amount of tokens that a user must delegate, although some bakers may set their own limits. Users who delegate their tokens receive payouts every seven cycles (approximately 20 days).
  • Accessible governance: Tezos combines the best features of proof-of-stake and delegated proof-of-stake. In addition to generating and distributing token rewards, liquid proof of stake gives most participants a chance to influence the network, either directly or indirectly.
  • Seamless upgrades: Blockchains may experience downtime or price fluctuations around the time of routine hard fork upgrades — this was recently a problem for Steemit, for example. Tezos can avoid those issues with its self-amending ledger.
  • Verifiable smart contracts: Tezos’ smart contracts may provide improved security and resistance against attackers thanks to its formally verifiable contracts. Admittedly, the absence of attacks on Tezos is partially due to the fact that the platform hosts very few dApps at the moment.
  • Education initiatives: Tezos has offered generous grants in order to encourage developers to study the platform. So far, Tezos has given away at least $30 million worth of grants and is working with Kingsland University to provide online training.

  • Lack of commercial support: Although it is technically impressive, Tezos is not widely supported in commercial transactions, nor is this a major goal of the platform. Although XTZ tokens may be appropriate for investors, bakers, and delegators, those who intend to spend their crypto should stick with Bitcoin, Ethereum, or another leading coin.
  • Immature network: Much of Tezos’ development team has a focus on programming language theory, possibly to the detriment of other areas. Although the network has gained a considerable amount of users, it is still fairly young and has not reached its capacity. It is difficult to predict what Tezos’ transaction fees and transaction speeds will be once the platform becomes more widely used, and developers have been mostly silent on this matter.
  • Delegation issues: Tezos allows users to delegate their tokens to bakers and receive rewards, as noted above. However, the growth of the network has caused many popular bakers to surpass their capacity, causing a number of users to miss out on their rewards without being notified. A solution to this problem is still uncertain as of December 2018.
  • Past controversies: Tezos’ past legal issues resulted in key Tezos figures (including Johann Gevers) leaving the organization. Although Tezos has restored its public image and seems to have a stable organization, it is not clear whether new divisions between key figures will form.

The Tezos coin (XTZ) can be obtained through a number of prominent exchanges, including Kraken and Bittrex. Each exchange has different trading pairs, meaning that you can purchase XTZ by spending ETH, BTC, Tether, or fiat currency.

A complete list of Tezos trading pairs is available on CoinMarketCap. Additionally, reviews of most major exchanges are available on Unhashed. These resources can help you decide which exchange to purchase coins on.

It should be noted that Gate.io, an otherwise minor exchange, trades a substantial amount of XTZ tokens. This is because Gate.io is involved with the Tezos baking process and distributes rewards to users of the exchange.

Since Gate.io is a minor exchange, this reward scheme is not recommended: you should instead purchase tokens from a well-known exchange and delegate tokens to trusted bakers.

Suggested Reading Learn more about Kraken and Bittrex respectively, here and here.

Unlike most cryptocurrencies, the Tezos team has not introduced an official wallet, nor does it intend to. Although the Tezos client does provide a command-line tool that serves this purpose, most users should select a community-developed wallet that is easy to use. There are several options to choose from:

  • Tezbox: Tezbox was the first-ever Tezos wallet, which makes it a reliable choice. It supports mobile devices and desktops, although it can also be accessed through a desktop web browser. It stores addresses locally on your device, which is a good security practice. Tezbox may also appeal to developers, who can integrate the wallet with their dApps.
  • Kukai: Kukai is a desktop wallet that supports Windows, Mac OSX, and Linux. A web interface is also available. Notably, it features offline transaction signing, which implements security in a manner similar to hardware wallets.
  • Tezos.blue: Tezos.blue is available for Android, iOS, and Windows. Like Tezbox, it can be used by developers to connect a wallet to an application.
  • Galleon: Galleon is a desktop wallet for Windows, Mac, OSX, and Linux. It has a fairly basic GitHub page with little information and few instructions; it may not be a good choice for new users.
  • Wetez: Wetez is a mobile wallet for Android and iOS. It promotes itself as a security-focused wallet. However, its security features are fairly basic: it stores private keys locally, a standard practice that is also carried out by Tezbox and other wallets.
  • Magnum: Magnum is a web wallet. Unlike some web wallets, it merely is accessed through a web browser and does not store coins or private keys online. It stores private keys on your device, just like desktop wallets do.
  • Hardware wallets: Ledger (via a Tezbox plugin) and Trezor also support Tezos.

It is important to ensure that you are obtaining your wallet from the correct source. It is possible for phishers to upload fake software that impersonates a real wallet.

Although Tezos has not yet suffered such an attack, this problem has become increasingly common on app stores. Whenever possible, download wallets directly from official websites rather than through an app store.

Despite a rough start, Tezos has become a promising platform. It offers impressive technical innovations in the areas of consensus, smart contract security, and upgrade procedures. It has also attracted a fair amount of users and “bakers.” The XTZ token has achieved an impressive total value: as of December 2018, it is resting at #22, with a market cap of $342 million, and has remained in line with the overall crypto market for several months.

However, market cap is not everything. Tezos is still quite young, and it will have to attract plenty of app developers if it wants to succeed against up-and-coming app-focused blockchains like NEO and TRON. Tezos’ generous development grants may facilitate app development, although this is far from certain. Additionally, the platform’s lack of focus on commercial applications and user experience may hamper Tezos’ popularity with general audiences.

The post What is Tezos? | The Complete Beginner’s Guide appeared first on UNHASHED.

Major Brands Are Now Using Blockchain Tech for Customer Loyalty

Customer loyalty is one of the cornerstones for every successful business, which is why it is no surprise that many businesses offer club memberships, frequent customer rewards and many other loyalty program incentives to their customers. However, the massive multitude of clubs and programs can be frustrating for customers to navigate, as they try to maneuver between the numerous club cards in their wallets and online, often finding it difficult to keep track of their point status and where they can be redeemed.

While cryptocurrencies made a splash in recent years, making headlines and causing general public interest, it is the underlying blockchain tech that is proving to be the real game-changer. The ability to transfer and verify information on a decentralized network opens up many possibilities across multiple industries and could become the new standard in many ways – including customer loyalty.

Using blockchain tech for loyalty programs is already showing great promise as several of the world’s biggest brands have already converted some or all of their programs using the technology. The ability to manage a large customer base while maintaining perfect tracking of each client’s token count, without the need for a central governing entity, is a major step up in this industry, which sees $360 billion in points go unredeemed each year. From airlines to small restaurants, it seems that any business can harness the new technology to benefit customers as well as themselves.

Major Brands Are Making the Move to Blockchain

On top of the decentralization and easy tracking, another main advantage of blockchain is the ability to exchange and redeem tokens of values, such as frequent flyer miles or phone minutes. While this ability is widely in use on cryptocurrency platforms such as Ripple and Stellar, it is also being used in other industries.

One such example is Singapore Airlines. Considered the best airline in the world, Singapore is also a pioneer in using blockchain for its business, introducing a loyalty program built on the technology. The advantages of Singapore Airlines’ loyalty program are twofold: Using blockchain to track each customer’s account status to accurately reward them with miles, and enabling clients to redeem them with other service providers that are partnered with the airline. Launched last July, if the loyalty program takes off, it could become the yardstick by which all other airline clubs are measured.

Naturally, blockchain-based loyalty programs are not limited to airlines. Car rental giant E-Z Rent-A-Car has also created a similar program, which includes features such as payment with cryptocurrencies and even redeeming points for crypto assets within the company’s app. Japanese technology giant Rakuten, HP, and many other companies are also in the process of creating blockchain loyalty programs.

Bringing Blockchain Technology to SMBs

But what about the little guy? Many small and medium businesses (SMBs) don’t have the resources to develop their own blockchain networks, but would still benefit from the advantages it has to offer. For that reason, several companies have begun offering services which take care of the infrastructure and enable these businesses to build blockchain-based loyalty programs of their own.

The Building Blocks of Brand Loyalty

As blockchain solutions become more widespread, it is safe to assume that a growing number of brands will implement blockchain into their loyalty programs. Larger brands will most-likely build their own blockchain, or use the services of companies such as IBM, which is already offering an API for creating loyalty programs.

As a growing number of businesses are looking into blockchain tech, it seems that these solutions could prove to be the holy grail of customer loyalty.

The post Major Brands Are Now Using Blockchain Tech for Customer Loyalty appeared first on BitcoinLinux.