Alibaba’s Sesame China’s All-in-One Credit Rating System

Alibaba’s Sesame Credit which launched in 2015 is one of the highest profile Social Credit Systems in China.  In part this is because it gathers a lot of data from Alibaba Cloud services (the same thing as essentially what Facebook, Google and other US companies do).  However, in China the process is more formal and complex as it isn’t just for spying and marketing purposes.

It is a system that essentially rates your associates, activities, lifestyle and not just your financial credit alone.  So it is both a pro and con in some cases that these aspects are used, but it all depends on your lifestyle.

I find it highly controversial and it all really depends on how fair will the system be and is it more fair than the traditional model?

With ICOs like Bloom I wonder how it will fare and compare?

Trezor Hardware Wallet to Support Bitcoin Cash

A maker of hardware wallets for cryptocurrency has recently confirmed they will add support for Bitcoin Cash.  I’ve also been an advocate of not using these even before the Ledger Nano hack came out.

I suspect that some will lose their currency or at least have to try to recover it based on confusion over the two.  I really think it’s a bad idea since most currencies have no built-in protection to sending into the abyss to a non-existent address of another blockchain.

 

Swiss Researchers Forecast Sideways Trading and Downward Pressure on Bitcoin for 2018

They have based it on Metcalfe’s law which says at this point that Bitcoin could lose another 27%.  The group also cites the part I agree with, in that so far cryptocurrency prices are mainly driven by Bitcoin which means Altcoins (other than Bitcoin) have risen and fallen in direct correlation.

Where I am not sure if I agree or disagree is their theory that a lot of this is driven by fear in the news.  While I am sure it is, if the fear is unfounded why should bad news reflect on the long-term valuation?

A sensible market would be wise to react to say the hacks that have happened to Ethereum or the fact that illegal content has been inserted into the Bitcoin Blockchain.  That is bad news that has relevance since these issues potentially threaten the integrity of the entire blockchain.

While we’re on the topic of Metcalfe’s law, since cryptocurrency is a completely new and largely irrational market can we trust this is a valid predictor?  I am not aware that any other traditional models have successfully called any of the major events in cryptocurrency.

I do agree it was time for a significant correction but the same has happened in commodities and stocks before, yet the stock markets keep moving (albeit with a lot of money printing and manipulation-is that what regulators mean by regulation for cryptocurrency? :) ).

Only time will tell where things head but I do think that currencies that are efficient, secure and easy to use will stand the test of time (which admittedly are very few and I cannot think of a single one that solves all of the issues just yet).

Did Facebook, Zuckerberg and Big Data Elect Trump?

New revelations about SCL and CA (Cambridge Analytica) have revealed that they may have even altered the Brexit Vote.  In fact an article quotes the CEO of Camridge Analytica as bragging that they got Trump elected using dirty and undetectable tricks.

If any of these is true it is safe to assume that Cambridge Analytica is not alone, and they have likely influenced more than just the US election.  What’s more, there could be other companies that Facebook, Google, Twitter, Instagram and other US based social platforms used data from whether knowingly or unknowingly.  This has been the big evil that I’ve warned about for years, that these free social platforms are analyzing and mining your data for bad purposes.  Apparently there are no limits to the violation of your privacy, proven social experiments conducted by Facebook and likely the others etc..  It’s all in their TOS essentially.  It’s well known that using any of those platforms including Gmail is the same as typing your most personal thoughts and messages to the bots and analysts at the big social media companies and government minders.

Going back to all of this, I thought we were told that it was the Russians who elected Trump (without any evidence ever being provided mind you)?   Now it comes out that private companies based in the West have been influencing elections and I suspect this is just the tip of the iceberg.  The bigger question is who are the clients of Cambridge Analytica?  I don’t think we have to look far considering the relationship to the UK government and Royal Family.

 

ICOs Still Going Strong in 2018

Despite the slow start and bearish sentiment of the cryptocurrency market this year, apparently ICOs have been going strong.  Various reasons are plentiful for why the ICO market remains this strong and it has me scratching my head.

Some say that serial investors are cashing out and then reinvesting into new ICOs.  Others say new investors from outside the traditional cryptocurrency world are coming into the market.

I am not sure what to think, as someone like myself is shying aware from most ICOs based on my experience that I feel 99% of these are scams and won’t ever deliver anything.  I think most of them are the next dot bombs and it is absolutely right to panic and sell these worthless Ethereum ERC20 tokens.

In ICOs the traditional due diligence is simply not enough.  It is easy to weed out people without IT or business experience.  And from that you have to weed out who has valid experience and qualifications?  Working for big name companies does not make you qualified to deliver on an overly ambitious project, but it does of course help attract investors.  I’ve seen enough big names including the Telegram ICO to be unimpressed (the Telegram ICO tells you to send money and then e-mail them to confirm the transaction……..how on earth will they build a proper blockchain if they can’t make their own API for transactions?).

Sorry for the rant but seriously what is driving the ICO market despite all the bad news?  I suspect it is people in the cryptocurrency world and I suspect they are miners who are thinking “my coins aren’t worth that much at the moment why not invest some of my spare ones into ABC scam ICO in the hopes that it grows and acts as a hedge to my underperforming cryptocurrency”.

That’s the best I can do and I suspect that is what is happening.  There are of course the institutional and whale investors who play a role but it’s unclear to what extent.

G20 Summit Proposes To Adopt, Regulate and NOT Ban Cryptocurrency

From reading various news articles I’m going to summarize what I think are the few key take aways from the G20 summit in Buenos Aires, Argentina.

I’ve simplified these into two points although they could have been broken down I think it really boils down to two key conclusions.

Cryptocurrency Should Be Adopted

The G20 agrees that cryptocurrency is part of a transition to digital economy and that eventually fiat (cash) will die.  They also recognize the power of cryptocurrency to bring finance and banking to those who normally wouldn’t have had access.  In a way it is gratifying that they are essentially saying between the lines that cryptocurrency and being your own bank are a good thing for everyone.

I also think it is an act of desperation and I will get more into that in my conclusion.

Cryptocurrency Must Be Regulated

There were several discussions regarding the regulation of cryptocurrency.  As we can see and as I suspected, the main drive is to control and tax cryptocurrency.  They want rules around it so that they aren’t cut out of taxes and control as a middleman.  A strong focus was put on preventing criminal activity and money laundering (you know stuff that NEVER happens with our current financial system).

Why have they adopted this position?

I think it’s natural because as I’ve said companies and people will move to whatever country is friendly to them.  It is almost an act of desperation because I think regulators can see cryptocurrency could head underground and out of the reach of any regulators if they keep cracking down.  I am in no way equating cryptocurrency with piracy or illegal activity but I will say this a similar thing that happened in the days of filesharing such as Napster and Limewire etc… Authorities didn’t understand the new economy was digital and that people wanted to download digital copies of their favorite songs and videos.  Because that void was never filled by the RIAA and MPAA, piracy was rampant and their crackdowns only increased it.  Initially piracy was largely underground but then Bittorrent came out as a decentralized filesharing platform and it has not only made the problem worse but virtually unstoppable.

Cryptocurrency with money being at stake I think would become even larger if the crackdowns continue.  Cryptocurrency would then largely be traded directly without the involvement of fiat if regulators, governments or exchanges (such as Bittrex who recently moved overseas to Malta because they offered them a better deal than the threats they were receiving in the USA).

If Venezuela, Russia or China is more friendly in the end people will move their business and crypto to whatever country they trust.  This can happen in an instant so, really, the regulators should treat the relevant parties well or they can pack up with all of their money.  There is no option to “freeze their accounts” for political reasons like the days of the past.

The rough ride is probably far from over as there will be reasons that governments and regulators may make decisions that are contrary to the G20 logic but I think in the end, reason will win out.

Bitcoin Down 53%? Time to panic or time to be happy?

We’ve got to put this all into perspective when people come panicking and asking if you’ve sold all of your Bitcoin.  Just hold, the chart isn’t a lot different than a lot of stocks or commodities.  Let’s speak in terms of the chart since May of 2016.

 

BitcoinMay-2016-toApril-01-2018

Let’s first look back to May 2016 where it was worth about $423 USD.  Is today’s $6974.84 USD so bad?

How about April 20, 2017 whereit was worth $1216 is that so bad compared to today?

The time that makes people nervous is when Bitcoin went on a bullrun around November 1st, 2017 and was worth around $6700 USD to an all time high of around $19500 on December 16th.  I would expect like with any stock that there will be a digestion period or a pullback.

Am I worried yet?  No, unless Bitcoin drops below a year ago’s $1000 why would anyone worry?

Bitcoin on top of that now owns about 50% of the market with this drop so it has shown resiliency and leadership.

It’s not time to panic, it is time to hold steady and wait for the next bull run.  At the end of the day government policy can’t stop Bitcoin.  There will always be a country where it is legal and exchangeable.  If a blanket ban happens people will start trading directly with Bitcoin for other goods.  There’s no way people who have invested thousands of dollars in hardware and power will be throwing these coins away or walking away from them.

Hardforks Are Scams Says Charlie Lee LTC Creator

Charlie has been saying exactly what I’ve been.  Hardforks are essentially scams that devalue the original coin and cause confusion.  At the same time, I’m sure he meant well but it never helped that he announced he sold all of his LTC.  It’s akin to a CEO selling all of their stock and saying “I still believe in the company”.  Granted this happened well before this scam hardfork so the hardfork is surely what caused the latest drop.

CharlieLee-LTC-Litecoin-Founder-Says-Forks-Scam-Confusing

As we can see after Litecoin Cash, the real and original Litecoin went down in value.

Charlie also correctly warns not to give your private keys to these scammers.  Whether Bitcoin Cash, Bitcoin Gold, Litcoin Cash and the many scam coins they require you to give your private keys to their wallets (if they even create one).  The risk there is that the developers or wallet creator will steal your original coins and this has happened already with the Bitcoin Gold Scam.

LitecoinSlide

I think exchanges should outright refuse to deal with these scam coins.

The underlying issue is simply that why are hardforks possible at all?  Counterfeiting is so easy with these opensource, public and permssionless blockchains.  To me it is a complete security and privacy flaw that was well-intentioned but simply doesn’t work.

Going forward, community maintained coins that cannot be forked, that are secure, private and are real time will be the long-term ones to invest in and the long-term winners.

Telegram Raises 1.2Billion in unnecessary ICO

I’ve checked their website but not the whitepaper (it took forever and never loaded-why use a PDF and a slow server?) and I’m shaking my head.  There is little to no background on the website about exactly why this coin is needed, what it does or what it solves.

Granted they do say it is fast, allows decentralized apps but there are little details that are discernible to me.  I remain unconvinced that it is really anything but a cash grab like most ICOs are.

It’s hard to figure out if they are trying to be an Ethereum or a currency and how they would do things better?

Based on the website having just about 2 paragraphs of information I am very skeptical but time will tell.  I’m certainly not going to invest based on this information.  The question really remains is why would Telegram even need the money?

Surely they would already have enough to do this project and it should already be done based on their resources.  For that reason alone it reminds me of another regret from FINOM.  FINOM convinced me because they have existing projects up, running and making money and it turned it to be a scam (I never received my tokens and see no evidence of anything being delivered in terms of performance).

Telegram looks to be about the same, they have a working application that is successful.  Why do you need to collect money at all if it’s not just a cash grab?

I think that is the litmus test for judging ICOs which appear to come from trustworthy teams and successful projects.  If they should already have the money and resources and are doing an ICO, they chances are it’s only to collect your coins.

 

Ethereum Developers Consider Bricking Bitmain’s Antminer ETHash Based ASIC

ETHash has always been considered “ASIC resistant” which is that the made algorithm so it wouldn’t be easy to make an ASIC for it like SHA-256 for Bitcoin, Scrypt for Litecoin and others.  This has been a very controversial issue especially since Bitmain announced they have Cryptonight miners for Monero and ETHash miners for Ethereum to be released soon.

At first I thought the developers had a plan to inject some malicious code that would literally brick the miners firmware or something similar, but the idea of hardforking is much more tame and harmless to everyone but Bitmain and their clients.  There’s also a lot at stake for Bitmain who could be in serious trouble from its buyers if they ship miners that are completely useless.  It remains unseen to know if they could update their firmware to compensate or if completely new ASIC hardware would be required for the update in algorithms.  Either way if Bitmain cannot deliver, it could push them to the brink or at least serious financial damage.  It does cost a lot to R&D and manufacture these ASICs and I could see this pushing them out of business or close to it.

Monero is hardforking in less than 5 days to combat this issue but the Ethereum team is still debating what to do.

Monero-Hardforks-Response-To-Bitmain-ASIC

This is a very interesting situation with competing interests and warring camps involved.  But to me this really outlines serious security flaws with Monero, Ethereum and all other Public, Permissionless Blockchain cryptocurrencies (the vast majority including Bitcoin, Litecoin etc..).

Hardforks are usually done for bad reasons, to counterfeit and copy an existing coin as an easy cashgrab (eg. Bitcoin Gold, Bitcoin Cash etc.. Litecoin Cash).  That is one serious integrity and security issue there.  Why is it even possible to literally copy, counterfeit almost any coin?  It devalues the original coin and is essentially stealing from the original coin holders and developers.

But in this case Monero and Ethereum would be doing hardforks for a “good reason” but it’s still a pain.   Would you accept it if your bank did a hardfork and your account stopped working or by not upgrading on time your currency could be lost or converted to another?  I understand why they want to stop ASICs but to me Bitmain is not the problem itself, they are simply exploiting, for profit the weakness that all cryptocurrencies have.  This weakness of PoW or mining is supposed to secure the network but in its absurdity it just makes things slow, insecure and ensures “whoever has the most money to buy more hashing power will control the currency”.  Making it even worse, mining pools and large farms could wreak havoc by broadcasting false transactions, causing others to lose money where they think they’ve received money they haven’t.

Going back to the purpose of mining, in reality today it guarantees two things.  0 security, slow transactions and centralization.  It creates a virtual arms race of whoever can buy enough hashing power is the winner and owner.  This was never the intention of Satoshi or cryptocurrencies.  There’s no way a small, average person will ever be an equal stakeholder in cryptocurrency.  Whether everyone uses an ASIC, CPU or GPU the issue remains the same.  It is a flaw and weakeness in how cryptocurrencies work.

The solution in my view is to make a community-based coin that works off PoS (Proof of State).  Typically these kinds of currencies will be faster and they can be more secure if they are not permissionless (a nice way of saying no security at all and EVERYONE can access the network and broadcast any transaction whether valid or fraudulent).  The whole world shouldn’t be involved in processing my payment for a coffee and they definitely shouldn’t know about it!

So to me when I see people say “mining secures the network”, that was the intention but in practice it’s not the case.

Some serious rewrites in the architecture of all currencies need to be rewritten and the permissionless design and PoW must come to an end for cryptocurrencies to be actually be usable, functional and sustainable for both personal and business use.

The fact that hardforks are even possible or even worse, necessary to stop others from obtaining too much hashing power is proof of concept that mining just doesn’t work.