Vitalik Buterin Courted to work for Google

Buterin has apparently been courted by Google according to his Twitter feed.  He initially shared the Tweet but then deleted it.  This makes sense that Google would want to recruit him for their own secret crypto project.  Since Buterin is considered an expert in blockchain and Google wants to make its own cryptocurrency the fit may be a good one, but at what cost?

Many see Vitalik as a champion of the cryptocurrency revolution against big banks and big business. If he were to work with Google there are fears Ethereum may fall in value or that Buterin may try to harm or sabotage ETH in some way, similar to what some fear Ripple may do with XRP. Essentially Google would control ETH by proxy just as banks control XRP through partnerships. The commonality is that Google would view ETH as a rival to its own currency and banks only see value in Ripple’s network to settle payments without needing or using XRP.  Google and Vitalik bv proxy may then have reason to kill off Ethereum in favour of Google’s project.

Ethereum: The Story of Casper the Unfriendly Ghost!

A lot of the industry is treating this as new but it has been on the Ethereum team’s roadmap, including this post from Vlad back in 2015.  In plain English, Casper the Friendly Ghost as they call it is the roadmap and implementation that the Ethereum team is beginning to test.  It is the process of how they will switch their network from PoW (mining) to PoS (Proof of Stake).  I will admit I am not envious of how they will go about this task and it is a big job, but the implementation has me shaking my head.  Before anyone cries foul or FUD, I am speaking from an IT and business perspective because the security issues in the crypto world are puzzling to me.

A lot of the key features of this Casper protocol are for example how they plan to “penalize bad nodes” or nodes who misbehave, broadcast false/fake transactions/confirmations etc..  Why should this be possible in the first place?  No one should be able to run a node if they aren’t trustworthy but there is no basis on this elevated privilege in cryptocurrency networks like Ethereum.  Strangers off the street are being trusted to be honest and not mess with the network.  That’s not how business or the world works, nor is it how IT works if you want to stay safe and stay operating.

The craziest part that “has me shaking my head” is the fact that “Validator Nodes” which are essentially “bonded” by depositing at least 1500 ETH which the Ethereum network and team controls.  The onus is then on the node runner to secure the node, keep it running reliably, preventing DDOS attacks and risks that the actions of other nodes could cost you money.  Make no doubt about it, the team is clear you could lose some or all of your money through no fault of your own as a Validator Node.

But let’s back up here, this is an improvement over the current issues but is it solving anything?  At first mining worked to secure the network and stop centralization.  But here we are today where big players with big money and ASICs have centralized most cryptocurrencies, something that wasn’t supposed to happen.  It is clear the small players will hardly play any role in the network of Ethereum with this change to Casper.

Getting back to the security aspect.  What is to stop extremely wealthy people who don’t care about money or have more than enough money to run the majority of Validator Nodes?  Nothing stops them from losing all of their money and they don’t have to care about it if they could setup a one-time heist to fool enough users or even a single user for a single targeted transaction.  Massive bank-heist type frauds would be possible with collusion and owning enough Validator Nodes, and clearly only the wealthy could pull this off.  It would be immoral but not illegal and I would say the Casper system, with bonded node validators is enabling and encouraging it.

Casper is well-intentioned but to me it shows that the cryptocurrency world is far out of touch with basic norms of computing and IT security.  There has got to be a better way that prevents this in the first place.

Ethereum and virtually all coins are already centralized from the start.  This is and continues to be the case since the developers must be trusted whether you like it or not.  Why don’t some teams just centralize under a trustworthy community rather than depending on the honesty and integrity of strangers, or worse inviting only the wealthy to centralize and participate?

One coin I feel that meets my criteria for a secure, functional, fast and affordable coin for both users and business is from the anonymous Sonajin Team (or Team Satoshi 2.0 if I’m correct).    I believe the coin will revolutionize cryptocurrency and will be the best poised for mass adoption.  Naturally I’m going to add that I have bought into it and have a stake, both for my own interest but also with the expectation that it will be a historically smart choice to own some XSJ.

Kin plans to fork Stellar Lumens instead of using ERC20 Ethereum Coins

The first thing I remember about Kin is that they are Canadian and they raised a lot of money in their ICO.  The last thing I remember is that I tried to buy it and couldn’t find any proper safe exchange to buy it on (they were on what I consider essentially scam exchanges).  I also wasn’t able to gain access to their website (it was broken) so on that basis I will give my thoughts about the project and ideas behind it.

First of all I agree with their assessment of Ethereum  as being like dial-up internet.  But this raises the question of planning and management.  Slow transactions, lack of security and fraud have been synonymous with Ethereum since it debuted.  What I am getting is this choice is rather rush and sudden.  With such a big team why did no one think of the implications before doing ERC20 tokens or was it just a crash grab first and project as an afterthought?  What happens to the value of those ERC20 tokens that so many people bought?  They will become worthless and they are now a megacorporation who is going to make their own private blockchain for payments.  I resent the fact that they could contribute to the downfall of good ICOs and the few real tokens out there.

With that said I think KIN/KIK could kill it in a good way.  Yes they are centralized but if they do it right and are trustworthy in the end (maybe like a PayPal). The good news is that I do believe Stellar/Ripple are a good base for things, it is a fast and relatively secure network, albeit without privacy and first party wallets.  I think Kin has the right idea but possibly wrong execution based on their initial entry.  I have a  high standard of trust or ICOs a good part of that is the team, their decisions and how they treat their investors.  Time will tell how well they execute this one but I hope it works out and that investors do not lose their money.  I, for one am glad that I wasn’t able to buy KIN as they are now about to dump it and make it worthless.

Here’s my experience with the KIK/KIN team (nothing working and no response after they collected millions of dollars):

Kin-Kik-NoReply

Kin gave me the inspiration to realize how bad Ethereum was when trying to buy their tokens and they wanted to charge me about $100 in fees!

Kin-Kik-NoReply1

$98 in fees to buy KIN:

Google’s Co-Founder Sergey Brin Says Ethereum Mining Driving Computer Boom and Renaissance

This is very striking to me in that I find the statement makes no sense and with one word “SETI”.  SETI didn’t set off a computing revolution and still has limited participation.  SETI which is searching for signs of extraterrestrial life has used a sort of grid-computing through unused computing power of its supporters to help search through troves of data that the SETI researchers don’t have the power to do.  I admit back in high school I didn’t want to share my CPU cycles, nor did most other people.

I am drawing this comparison because SETI didn’t start off a frenzy of computer buying to “mine” SETI.  This is because there was no actual reward or benefit to doing it any practical sense.  Mining is only being driven by the hope of big rewards and profits, or in other words greed.  Yes, some computing enthusiasts are getting into mining but does anyone really think that this greed has turned people into computer enthusiasts?  Sales of GPUs would be flat if not for the profits.  If mining because unprofitable the same people who rushed in will rush out, they are speculators and investors, not computing experts or enthusiasts.

Aside from being extremely wasteful, inefficient and ineffective I believe PoW or mining is not sustainable and the long-term currencies that are to survive will be converting to PoS (Proof of Stake).

And this gets to the most ironic point.  Google has recently banned ALL cryptocurrency advertisements.  Maybe Sergey thinks “mining Ethereum is cool and so is cryptocurrency but not if you want to promote it on Google!”.

Wikileaks Shutdown by Coinbase

Apparently Julian Assange’s Wikileaks merchant account on Coinbase was shutdown.  This is not at all surprising since PayPal, VISA, Mastercard and the banks did the same thing to him/them in the past.  In all fairness I don’t think Coinbase is to blame, aside from the fact they are a US based company and under the jurisdiction of the US of course.

PayPal came out and admitted they were forced to close down Wikileaks account, and I am certain the same thing has happened with Coinbase.

They have no say in the matter when the US government comes knocking.  Coinbase even recently had to give out information to the US tax department (IRS).

Of course users can still directly pay and donate to any wallets that Wikileaks controls.  As of now he lists addresses for Bitcoin, Litecoin, Ethereum, ZCash and Monero.  This is where things will heat up if he were to have a centralized currency like Ripple or Stellar Lumens.  The US government could possibly have those accounts in XRP/XLM frozen since they are a US based company.

This comes down to the wider issue of privacy, rights and freedom online and how cryptocurrency can prevent persecution for political reasons.  It also stands to reason that entities based in the US have very little say when the government comes knocking.  Coinbase and PayPal couldn’t have said no to the US government or by doing so they would be in seriously hot water.

I always advocate having some IT resources out of the reach of PRISM countries for reasons of privacy and freedom.  One of my current favorites are Singapore and Hong Kong in Asia.  Hong Kong I place particularly high value on because it has the British based system, yet it is under the protection of China.  Hong Kong is less likely to be influenced by a foreign entity than a smaller country like Singapore.  A good example of this is how Edward Snowden miraculously made it out of Hong Kong as a wanted fugitive.  Surely, Hong Kong was pressured and asked to hand him over, but somehow it never happened.

There are positives here, it looks like some brave entities in Europe have stood up for Wikileaks and at least for now, in France, Germany and Iceland there are some banks, foundations and even a University who are providing him access to the fiat system.

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).

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.

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.

 

 

300Billion in Market Cap Lost in Cryptocurrency in 2018

Now before we either all panic of HODL our funds I think it’s time to take a step back.  I don’t think cryptocurrency is going anywhere regardless of the bad news and government threats.

But with that said let’s take an even further step back and ask what has worked, what hasn’t worked and why has this happened to the market?

There are a lot of factors but I’ll speak about the ones that I think are most significant.

Bad News

The news is key here because a lot of family and friends are worried that all of us crypto holders have lost all of our money.  Even with Bitcoin around the $7-$10K mark, unless you bought in at the end of last year you’re still probably doing very well.  In general the market for most major currencies is up well over what it was in the first 3 quarters of 2017.  However, there is no denying that the charts look a little bearish but I think there will be a breakout in the coming months.

Government/Finance Manipulation

Much like the news, government and big financiers are having a big impact.  We know hedgefund investors have poured in billions.  Whether by intention or not a lot of them could be pulling money out of certain currencies to create an artificial crash and panic selling.

Too Many ICO Scams

I used to feel the word scam was used too liberally in the digital age of many honest IT companies.   However, in terms of ICO even the Ethereum Founder, Vitaly Buterik says 90% of tokens on his network are scams.  This is a very rational reason that will have a huge chill on investment. I would say blame a good portion of these problems on Ethereum honestly.  The unregulated and wild wild west of ICOs have brought government wrath and regulators banging on the door of all crypto stakeholders.

Lack of Common Sense and Proper Business and IT Practices

It is very clear to me in looking at how a lot of teams and ICOs operate that a good portion of people holding power in the cryptoworld have no clue.  If they did a lot of common sense things would be happening and they simply aren’t.

Such as Coinbase’s decision to open itself and its investors for huge losses and liability by selling Ethereum ERC20 Tokens.

The very idea of “free for all” in the cryptoworld reminds of the 90’s of the wild wild west of the World Wide Web and the lessons I thought we all learned.  Admittedly, and clearly, a lot of people have forgotten or were not old enough to be around for that.

I could say more but it’s so clear that essential business and IT practices have been thrown to the wind.  This is a huge impact on a lot of the issues the cryptoworld has been facing.

The Coming

I am still very optimistic about the long-term crypto outcome, but there are a lot of self-created and external factors at this moment.  I do think it is temporary but a dot bomb in crypto will certainly be repeated and appear.  The currencies and teams who didn’t learn from the 90’s will likely be the first ones swept away, leaving way for the next generation of cryptocurrency that simply just works for people and business.

Coinbase To Support Ethereum ERC20 Tokens

Coinbase just announced it will be supporting the trade of ERC20 tokens.  A lot of times in the crypto world I look and shake my head and I just can’t stop with this one.  I could see if Coinbase wanted to support actual currencies like Ripple, Lumens, Monero etc… those are reasonably safe currencies to invest in.

ICOs which are essentially crowdfunding/pseudo-stocks (depending on who you ask) are extremely risk and I would say about 90% of those are fraudulent in that they collect your coins and never intended to deliver anything.  I think we can all agree at any rate that ICOs are extremely risky and HODLING may be as useful with those tokens as holding RIM stock.

Coinbase has a huge client base and is one of the easiest ways for people to get into cryptocurrency.  However, they risk bringing regulatory wrath and also dampening new investors from coming in when they get burnt on these ICO scams.

It’s recently come to my attention that some people weren’t aware that Ethereum Smart Contracts or ERC20 tokens are not vetted, supported or approved by the Ethereum team in any way.  This is  huge issue of course and why I am so against smart contracts at the moment.  Let’s get cryptocurrency as an infrastructure in terms of B2B,B2C,C2C etc… working fast, efficiently, securely and easily before biting off more than we can chew!

I am also at a loss as to how the Coinbase legal team approved this one?  Did they run it by any counsel at all?  I think if and when people lose massive amounts that Coinbase could be held liable regardless of waivers and disclaimers for losses in some of the huge ICO busts and scams to come.  Especially when there are so many other avenues and stable currencies they could have directed their customers to.

I am fearful for the investors, for Coinbase and the cryptocurrency market as a whole but should these warnings go unheeded and “things go terribly wrong” then it would be a good, fresh start for the industry.  Investors also need to do their diligence and exercise good understanding and judgement before making investment decisions.

It will be interesting to see where this leads but I would never recommend any friend or family member to invest in any Ethereum Based Token ICO and to stick with solid and real cryptocurrencies that solve the problems of today.