Bithumb Reveals 11 Cryptocurrencies Lost and Plan to Compensate Customers

Bithumb Plan to Compensate Customers. South Korean crypto exchange Bithumb has announced the 11 cryptocurrencies stolen in last week’s theft and the amount of each coin missing. A compensation plan has also been unveiled for the equivalent value of the lost coins in an undetermined cryptocurrency.

Only Half As Much Crypto Missing

Bithumb officially announced Thursday the details of the cryptocurrency theft which it reported on June 20. Since then, the exchange has been cooperating with the authorities to investigate the cause of the theft.

Initially, the exchange estimated that the “damage caused by the cyber-attack was about 35 billion KWR [~US$31 million],” but that amount was revised to “about 19 billion KRW instead [~$17 million]” after undergoing a “continuous recovery process.” The exchange elaborated:

The main reason for the reduction of the damage is due to the ongoing participation, support and cooperation of cryptocurrency exchanges and cryptocurrencies foundations across the world. Also our quick response to the cyber-attack by removing cryptocurrencies from hot wallet to cold wallet effectively contributed to reducing the overall damage.

At the time of this writing, Bithumb is South Korea’s largest crypto exchange with a 24-hour trading volume of $136,432,719, followed by the Kakao-backed Upbit with $110,435,824 trading volume in the same time period, according to Coinmarketcap.

Which Coins Were Stolen?

Bithumb has provided a breakdown of the 11 cryptocurrencies that it claims were stolen. They are BCH, BTC, ELF, ETH, ETHOS, GNT, HSR, KNC, OMG, VEN, and XRP. The largest damage is in BTC, which had about 13.9 billion won (~$12,377,255) stolen. According to Bithumb, the total amount stolen is 18,945,911,857 KRW or $16,892,614.

Compensation Plan

Bithumb has also revealed its plan to compensate all affected users. Reiterating that it takes full responsibility, the exchange announced that it is organizing “a compensation airdrop event.”

Members must apply for compensation from the theft to be eligible for the distribution.

For the inconvenience of keeping customers’ coins tied up, the exchange is offering interest between the time of application to the date they are fully compensated. “The annual interest rate of 10% will be prorated over the [compensation] period, hence the longer you hold, the higher compensation becomes,” Bithumb emphasized. “The amount of cryptocurrencies held will be calculated from 8:00 PM ~ 9:00 PM (UTC+9) each day starting from the date of application until the end of the [compensation] period.”

However, the eventual selection of which cryptocurrency customers will be reimbursed in has not yet been determined, Bithumb detailed, stating:

The equivalent value of cryptocurrencies will be given away in a form of an airdrop (the type of cryptocurrency is not decided yet).

Commission Fee-Free Coupons

In addition, Bithumb is offering commission fee-free trading coupons for all interested customers for the inconvenience caused to them, starting on June 28.

“Commission fee-free coupons will be available for purchase each day (the coupon is zero cost, useable for 1 day and it can be purchased once UKevery day),” Bithumb detailed, adding that once it is purchased, it does not stack and can only be purchased when another coupon expires@BPI

The great alt-coin migration On June 30th

Great Alt-coin Migration. On the 30th of June major networks Vechain and Ontology will shift from existing as sub-tokens, operating as smart-contracts on parent networks, to their own proprietary networks.

The final day of June 2018 is significant in the crypto world given the mainnet transitions of a number of prominent tokens. Vechain, for example, will move from being an ERC-20 asset on the Ethereum blockchain, while Ontology will say goodbye to NEO and NEP-5.

In addition to these to major migrations, Fusion (FSN) a network with a $177 million market cap,  will also shift from an ERC-20 smart contract to a main network, on the 30th of June.  

While mainnet transitions such as these bring opportunities for the protocols to blossom on their own terms, they can also come with logistical challenges. For example, All Vechain VET token transactions were previously handled by miners from the Ethereum network, which is large, decentralized and possesses immense processing power.  

The Vechain blockchain will now have to depend on its own native miners to provide processing power, handle block production and achieve network consensus for securing transactions. As we have seen with EOS this can be a challenging transition to make.

On the flipside of this, Vechain will be switching to a Proof-of-Authority consensus algorithm — a system said to allow more straightforward network governance and fewer mining bottlenecks. If faster transactions times and greater efficiency is achieved via the new consensus method, this could potentially bring more investors, Dapp developers and enterprise partners to the network.

How a mainnet begins its life

The process of switching ‘temporary’ ERC-20 token to a new network, can be a challenging. It requires a high level of coding literacy from the dev teams behind the networks, as well as coordination, particularly given that a vast majority of switching tokens sit on third party platforms such as wallets and exchanges.

In this sense, mapping to a new network can happen in two broad forms. Token holders can be made to shift their tokens away from sitting in third party addresses like exchanges or wallets, to an address controlled internally by the switching network (manual switching).

However, the process of shifting tokens between addresses is at the very least inconvenient for token holders who have chosen to leave their assets with secure third parties. In a number of cases, third parties support the switching and handle the network mapping on behalf of the transitioning blockchain. This means token holders can leave their tokens sitting on external exchanges and all switching will be handled for them, and the network, by infrastructure within the third parties (automatic switching). TRON during its switch, took this approach and mapping for all token holders could only occur via a third party exchange, a fully automatic token swap.

The ONT approach

Alternate approaches are an option, however. With Ontology, for example, the network lets users choose between leaving their funds with supported third parties, like Binace, Huobi Pro, Upbit, KuCoin, Gate.io, and CoinEgg, or switch manually via a secured Ontology address to be released after the mainnet launch on the 30th of June.

For Ontology (ONG) token holders, there is an additional consideration regarding its upcoming mainnet launch. Ontology post-launch, will be a smart contract network and as such, requires ‘Gas’ to operate. Similar to NEO, Ontology will separate the network and will have two operable tokens. ONT will represent an ownership stake in the network, which will reward the holder with ONG, which will then be used as the Gas to confirm smart contracts.

With the mainnet launch, there is a question of how best for ONT holders to receive ONG on the new network. The most efficient method would appear to be via a native Ontology native, which will deposit new ONG daily for ONT holders, and is run by the Ontology team. However, if a holder prefers, Binance has announced that it will also deposit ONG gas for ONT holders.

Binance handles millions of dollars worth of funds daily, and holders may feel safer with them being their fund’s custodian, versus a new network early in its lifecycle.

Vechain Thor launch - a staggered timeline

With Vechain, similar to TRON before it, the mainnet launch and migration will be two separate events. On the 30th of June, the main network will be launched. Interested developers and the Vechain team will explore code, test for bugs and establish new nodes, before a full migration set for mid-July.

Currently, a few exchanges including Binance and Huobi Pro, have announced support for the Vechain network launch. It should be expected that more will sign-up to handle the switch before mid-July. There will also be a Vechain Thor mobile wallet released before the migration, and it is likely that token holders will be able to choose the mobile wallet for the token swap, rather than use a third party.

For Vechain, the network move will signal a significant shift in the utility and tokenomics of the protocol. Holders should be wary of this. For purely aesthetic purposes, the VEN ticker will change to VET. Additionally, the tokens will be mapped 1 VEN to 100 VET, a psychological decision indicating that Vechain expects their market to expand in the future.

At the time of the launch, if 1 VEN =  $2.50 then 1 VET will equal $0.025. Holders should be assured that their coins are not being diluted and the market cap of the Vechain network will not be changing. They are not being made richer or poorer as a result of the token swap. Any profit or loss for investors will be based on market views of the launch and if the new network is seen as offering novel solutions.

Similar to Ontology, The network is broken up into two tokens. In this case they are separately used as a stake in the network (VET), and as a medium to access more complex smart contracts run on the blockchain (THOR).

Holding VET will ensure that a specific amount of THOR will be allocated to a Vechain address. Unlike Ontology, where nodes will decide the conversion rate for tokens, THOR allocation is based on a static rate that can change monthly. As specified in the Vechain whitepaper, the THOR rate, based on its equation, will adjust to ensure there will always be partners wanting to participate in the network.

The launch also provides an opportunity for token holders to become involved with mining on the Vechain network. There are number of different types of block producers on the network, with each a tiered block reward program. For the highest level, authority masternodes, 25 Million VET will need to be staked (After 1:100 split). At current market rates, this equates to an approximately $650,000 worth of collateral.

The other altcoins switching

Also set to switch to their own mainnets are the smaller networks, Fusion (FSN) and Credits (CS).

Fusion will have a unique method for mapping, and will use its internally developed LILO (Lock in-Lock out) methodology.

In this system, private key information is sharded and spread out across different nodes in the network. Fusion’s algorithm is designed so that during a transaction, nodes holding shards of the private key are online and available during the verification process. Once each node has suitably confirmed the signatures of the shards of the original key making the transaction, the original transaction is confirmed and processed.

Because of the perceived security of the LILO system, Fusion has decided to handle all token-swapping via its own addresses, and not use any third parties.

For Credits (CS), news of its main network launch comes from a roadmap published in 2017. However, there has no been no mention of protocol, or nature of the switch from the official Credits twitter or medium accounts. It is unclear, therefore, if a token swap will actually occur on the 30th of June.

The importance of a testnet

Before a main network is launched, there is normally a test version of the network released where integral new features are trialled. Zilliqa (ZIL) a token with a marcap of $ 812,934,234, will release its testnet v1.0, in preparation for an eventual mainnet arrival in Q3 2019.

 Zilliqa is a network vaunted for its transaction speed capabilities generated by a unique sharding protocol. Based on most recent closed testing, the network may be able to achieve speeds as high as 2,500 transactions per second. 

 The new testnet will begin the process of embedding a new security-focused smart contract coding language, Scilla. Zilliqa is hoping to cut out any potential hacking risks when hosting on the network, at the language level. Safe smart contracts are a recurring  issue within blockchains given flaws such as those in the infamous DAO contracts and more recently found by bounty hunters within EOS’s code@BPI

Bandara Internasional Belanda Pasangkan ATM Bitcoin

ATM Bitcoindi Belanda. Untungnya, bandara internasional Belanda sekarang akan memungkinkan penumpang dan pengunjungnya mengubah “sisa euro ” untuk Bitcoin dan Ethereum. Untuk melayani kebutuhan pelancong yang lebih baik, bandara telah memasang Bitcoin ATM.

ATM Bitcoin Baru di Bandara Schiphol, Bandara Internasional Belanda

Bandara tersibuk ke-11 di dunia, Bandara Schiphol Amsterdam telah merilis Siaran Pers pada 20 Juni, bahwa bandara telah memasang mesin ATM yang menawarkan BTC dan ETH. Namun, Schiphol adalah bandara Eropa pertama yang menawarkan pertukaran crypto melalui ATM.

Direktur Produk & Layanan Konsumen di Bandara Schiphol Amsterdam, Tanja Dik mengatakan;

“Schiphol terus mencari cara untuk berinovasi dan memberikan layanan optimal kepada penumpang. Dengan Bitcoin ATM, kami berharap dapat menyediakan layanan yang bermanfaat bagi penumpang dengan memungkinkan mereka bertukar dengan mudah. Jadi, ‘lokal’ euro untuk ‘global’ BTC dan ETH. Itu bisa bermanfaat jika, misalnya, tidak mungkin menghabiskan euro di negara asal mereka ”.

Namun, mesin ATM terletak di Ruang Kedatangan 2 di Bandara Schiphol dan juga dari jalur menuju Departure Hall 1 dan 2, serta Schiphol Plaza.

Pendekatan baru ini telah diperkenalkan dalam kemitraan dengan Perusahaan Belanda, ByeleX Data Solutions BV. Selain itu, perusahaan menyediakan layanan integrasi pembayaran cryptocurrency untuk bisnis.

Herman Vissia, direktur Byelex mengutip;

“Kami senang bahwa Schiphol bersedia untuk bergabung dengan kami dalam mengeksplorasi cara-cara untuk memperkenalkan penumpang ke cryptoreality baru”.

Provinsi ini mendukung total dunia kelima ATM, meskipun sebagian besar tetap di Amerika Utara. Namun, Belanda memiliki 20 ATM kripto operasional saat ini.

Sebelumnya pada bulan Mei, Bandara Brisbane yang berbasis di Australia telah mulai menerima berbagai aset digital dan melabelinya memiliki salah satu bandara crypto yang ramah secara global@BPI

Coinbase CEO Unveils Crypto Charity for the Unbanked

Coinbase Crypto Charity. Coinbase CEO Brian Armstrong wants to help unbanked individuals around the world gain access to financial services.

On Wednesday, the exchange's co-founder announced he was launching a nonprofit organization to financially empower people and donate cryptocurrency to the unbanked worldwide. GiveCrypto.org aims to partner with other nonprofit entities to find potential recipients who could benefit from these cryptocurrency donations.

In a release, Armstrong wrote that "most people I respect and know in the crypto ecosystem believe we have a moral responsibility to shepherd this technology forward in a way that allows it to reach its full potential." He cited lower fees, reduced transaction times, micropayments and mobile device-friendly payment systems as some of the advantages for blockchain technology.

He wrote:

"Many who invested early in cryptocurrencies understood it could make the financial system more efficient, lower fees, and reduce transaction times. Early adopters saw the potential to unlock widespread innovation if the internet had a native currency. And almost everyone I met in the community early on believed cryptocurrency could finally bank the unbanked of the world—the billions of people who are locked out of the financial system and trapped in poverty as a result."

The nonprofit aims to raise $10 million by the end of 2018 and increase its funding to $1 billion within the next two years, he said. He plans for the organization to "give away less than the amount that the fund grows each year," ensuring its longevity.

Initial recipients will live in "emerging markets who are going through financial crisis," Armstrong said@BPI

Harga Anjlok ke Rp 81 Juta, Valuasi Bitcoin Hilang Rp 286 M

Harga Anjlok Valuasi Bitcoin Hilang.  Investor Bitcoin sekarang mengalami penurunan. Karena di tahun 2018 ini trend Bitcoin sudah tidak sebesar dulu.

Dalam 24 jam terakhir, harga Bitcoin sudah turun 4,17%. Menurut Coinbase, sekitar 8.446 Bitcoin yang diperdagangkan. Hari Jumat (29/6) sampai pukul 9.40 WIB, harga Bitcoin diperdagangkan US$ 5.869,57 per koin atau setara dengan Rp 81,59 juta (asumsi US$1 = Rp 13.900).

Harga Bitcoin

Harga Bitcoin telah turun sebesar 17,61% dalam satu bulan terakhir ini. Penurunan yang drastis ini telah membuat harga pasar Bitcoin turun dari US$ 121,55 juta menjadi US$ 100,96 juta. Yang berarti ada US$ 20,59 juta (Rp 286,2 miliar) yang hilang dalam sebulan terakhir. Ini sangat membuat para pengguna bitcoin merasa kecewa.

Faktor-faktor yang memengaruhi harga bitcoin mengalami penurunan disebabkan oleh peraturan baru-baru ini di seluruh dunia tentang bitcoin, langkah-langkah pemungutan pajak pemerintah yang terhadap dari bitcoin, munculnyacryptocurrency (teknologi membuat mata uang digital) lainnya yang mengduplicate bitcoin, dan menurunnya minat media terhadap Bitcoin.

“Bitcoin akan turun hingga ke US$ 5.350 dalam satu atau dua minggu mendatang” Trader Cryptocurrency Ran Neu-Ner mengatakan akan banyak hal buruk yang akan dihadapi Bitcoin@BPI

The Biggest Asset in the Ethereum Classic (ETC)

Biggest Asset in Ethereum Classic. Ethereum Classic (ETC) has been the center of attention for the last few weeks. That's after Coinbase announces that they will list it on their exchange. This announcement seems to have surprised many people and some investors are wondering why Coinbase chose Ethereum Classic (ETC), on top of many other better known crypto in the market.

Is there anything valuable about this crypto that has been largely ignored in the past? The answer is big. This may not be the same as other projects on the market, but the ETC is actually a very valuable project. The key value lies in its eternity.

For the layman, eternity means that nothing is inserted on the modified Ethereum classic blockchain, no matter what the situation. All information on this blockchain is permanent, and can always be used as a reference point, at any point in the future. This means the only reason Ethereum can be used is to remove bugs from the system

So does this mean that information can be changed in another blockchain, such as Ethereum (ETH)? To answer this, one must return two years ago, when Ethereum branched out to form Ethereum (ETH).

The reason for the fork is the DAO hack which, more than $ 50 million is lost. Through the ETH fork, information about blockchain is changed, thus returning investors. Investors and miners fighting this fork hold the original Ethereum and call it Ethereum Classic (ETC).

The principle of binding them is that blockchain can not be changed to change entries no matter the situation, whether good or bad. If it's bad, those involved have no choice but to deal with it.

The eternal Ethereum Classic is increasingly seen by many as an asset, its resurrection as an upscale crypto project. That's because, if companies use blockchain to generate contracts, they must be confident that the contract can stand the test of time.

Just to give you context, assuming company A sells the property to company B and this contract is done through blockchain. It would be in their best interest if the information is permanent and irreversible.

That's because if there's a legal case in the future, they can always look back at this deal on blockchain. Consequently, eternity is a huge asset to the blockchain platform, and Ethereum classic (ETC) has successfully used it as an asset. In fact, this can be a key determinant feature that will determine which blockchain projects will be adopted in the future, and which ones will wither.

With this in mind, it is quite clear that Ethereum Classic (ETC) is one of the most valuable and highly undervalued crypto projects in the market. After entering Coinbase, the volume will soar, and so will its value. ETC's chances of closing the year at over $ 100 are quite high, based on a strong brand as a lasting blockchain @ BPI

How to Hold Cryptocurrency in a Retirement Account without Feeses

Hold Cryptocurrency without Fees. More and more, savvy investors are sewithout feeseking to diversify retirement funds into nontraditional assets. It’s natural then, that many are considering cryptocurrency. With a potential for tremendous appreciation, it can make sense to invest in cryptocurrency through an IRA so that those gains will escape taxation.

With a potential for tremendous appreciation, it can make sense to invest in cryptocurrency through an IRA so that future gains will escape taxation.

However, holding cryptocurrency in a retirement account has traditionally been difficult. When you hold funds in an IRA (or Roth IRA), the Internal Revenue Code prohibits “direct holdings”. All retirement funds must instead be held by a custodian, which must be a bank or a “nonbank custodian” approved by the IRS under Treas. Reg. 1.408-2(e).

The first obstacle many investors hit is that most custodians will not permit cryptocurrency within retirement accounts. There are a few “Bitcoin IRA” custodians out there which will allow investments in Bitcoin, however, they typically hold the private keys and charge large fees for doing so. Often these custodians operate a multi-sig wallet for the funds, meaning they don’t have complete control, but even then the fees charged make this option unrealistic for many investors.

The good news is that there is a way to hold cryptocurrency directly that eliminates almost all of these middleman fees. You can even be in control of your private keys. This type of retirement account is a “checkbook IRA”. With a checkbook IRA, the custodian maintaining your IRA holds only one asset: an LLC owned solely by the IRA.

The IRA is 100% owner of this LLC, however, the manager of the LLC is you. As manager, you handle the day to day affairs and investing of the LLC. When fiat currency is invested into the IRA, the IRA immediately turns around and contributes it to its wholly owned LLC. 

Perhaps the most important step in the process is to find an attorney with expertise in “checkbook IRAs”. 

From there, as manager, you control how those funds are invested. This includes the ability to invest in cryptocurrency. No approval from the custodian is required, as the investment is legally held by the LLC, not the IRA. The IRS does issue some “prohibited transaction rules”. These rules outright prohibit IRAs (and LLCs owned by IRAs) from investing in certain assets.

The good news is that cryptocurrency is not one of those asset classes.  There are additional “prohibited transaction” rules that may apply to your situation, however, so be sure to consult with an expert to avoid violating them on accident.

Perhaps the most important step in the process is to find an attorney with expertise in “checkbook IRAs”. An experienced attorney will not only set up the IRA and LLC for you, but also draft the operating agreement needed for this setup and provide assistance with opening the LLC’s checking account (which will be important, as described later). It’s very important to note that under IRS rules, all contributions to an IRA must be made in US Dollars, not cryptocurrency.

After receiving the US Dollars, the IRA custodian then transfers those funds into the LLC’s checking account. From the LLC’s checking account, the US Dollars can be used to purchase cryptocurrency. An obstacle here is purchasing cryptocurrency in the name of the LLC, rather than in your personal name.

One option is to purchase directly from a private party. There are numerous websites that connect private party sellers to buyers. Many such sites require you to add “real name” to your Buyer profile. To be extra careful with regard to the prohibited transaction rules, I suggest listing your name like this “Joe Smith, as Manager of ABC LLC”. It is also important that the LLC not purchase any cryptocurrency from a party which is “related” to you, as this is a prohibited transaction under IRS rules.

The other method is to use one of the cryptocurrency exchanges which allow opening accounts in the name of an LLC rather than in the name of an individual. Not all exchanges will allow this. Be extra sure that the account is in the LLC’s name (not yours) and that the linked bank account is an account owned by the LLC (not you).

You’ll also need a wallet for holding your cryptocurrency. If your cryptocurrency holdings are small, you may choose to leave them in your exchange trading account. But if they’re larger, you may wish to transfer them to a more secure external wallet. The LLC must own the wallet, not you personally. This is because any exchange of assets between you and your IRA (or your IRA LLC) is a “prohibited transaction” under IRS rules.

 The best solution is probably cold storage, which is easily “owned” by the LLC and is also very secure. A hardware wallet, or even a paper wallet can fulfill this function. Important: This article is provided is for educational purposes only. Readers should consult with a tax professional and are solely responsible for their own due diligence not only with regard to tax issues, but also in making investment decisions and choosing a custodian and exchange@BPI

Korban MT Gox Segera Mendapat Ganti Rugi, Petaka Yang Menguntungkan

Ganti Rugi Korban MT Gox. Ada angin segar untuk para korban MTGox karena pihak pengadilan di distrik Tokyo telah memerintahkan secara resmi kepada MTGox untuk memberikan kompensasi ganti rugi. Tentu saja masih mudah untuk di ingat, bahwa tahun 2014 lalu, bursa MTGox ini telah banyak merugikan penggunanya. Sebesar 850.000 Bitcoin berhasil diretas dari bursa besar yang saat itu volume perdagangannya mencapai 60% – 70% lebih volume perdagangan bitcoin di dunia.

Pada bulan Nopember 2017 tahun lalu, banyak pihak yang telah dirugikan akibat insiden itu sempat membuat petisi kepada MTGox. Petisi itu garis besarnya meminta agar pihak MTGox segera memberikan ganti rugi kepada para konsumen mereka.

Baca juga : 16.000 Bitcoin Berpindah Dari Wallet MT Gox

Tepat tertanggal 22 Juni bulan ini, pihak MTGox juga memberikan pengumuman secara resmi. Pengumuman tersebut sekaligus memberikan respon atas perintah pengadilan di distrik Tokyo, dalam rangka pemberian kompensasi.

Menariknya, pada saat pihak MTGox menyatakan bangkrut tidak lama setelah insiden peretasan itu, telah menyatakan bahwa kompensasi yang akan diberikan adalah tidak berdasarkan pada kurs fiat dengan rate saat itu.

Artinya, jika pada tahun 2014 tersebut harga per 1 bitcoin adalah senilai USD 483, maka pengguna yang juga akan mendapat kompensasi bukanlah berdasarkan dari nilai rate tersebut, melainkan tetap berdasarkan jumlah bitcoin pada saat itu.

Padahal, harga bitcoin saat tulisan ini dibuat berkisar USD 6.114 atau setara dengan 86,6 juta rupiah per BTC. Situasi dan kondisi atas rencana pemberlakukan kompensasi itu secara tidak langsung memberikan keuntungan tersendiri bagi investor yang telah dirugikan pada insiden MTGox tahun 2014 lalu. Terang saja, karena dari harga bitcoin di tahun 2014 hingga 2018, harga bitcoin telah naik berkali-kali lipat.

Ragnar Lifthrasir, salah satu pengguna bitcoin dan sekaligus pendiri Ibea.org dalam cuitan di akun twitter pribadinya mengatakan bahwa korban MTGox semestinya berterima kasih kepada pihak MTGox karena telah menyimpan (Hodling) bitcoin mereka.

Mt Gox customers will finally be paid back – in bitcoin.

Many or most customers probably would have traded away their bitcoin a couple of years ago. So they should thank MtGox for hodling their bitcoin for them!

— Ragnar Lifthrasir ⚑ (@Ragnarly)June 23, 2018

Sekaligus, informasi tentang mekanisme pemberian kompensasi ganti rugi itu dinilai justru telah menyelesaikan kemelut dan insiden paling tragis dalam sejarah Bitcoin selama ini. Sampai sejauh ini, pihak MTGox masih menyimpan sejumlah 137.891 BTC di cold storage, salah satu jenis wallet bitcoin yang bersifat non online.

Petaka yang membawa untung untuk korban MTGox, namun di sisi lain justru menimbulkan kekhawatiran. Tidak lain, kekhawatiran itu mengingat adanya potensi penjualan bitcoin dalam jumlah yang besar di bursa-bursa bitcoin. Ujungnya, penjualan bitcoin secara besar-besaran itu dikhawatirkan akan mendorong harga bitcoin turun jauh.

Nobuaki Kobayashi, seorang pengacara yang bertanggung jawab dalam penyelesaian kasus itu sejauh ini dianggap sebagai pihak yang telah melakukan devaluasi saat melikuidasi ribuan bitcoin di bursa-bursa kripto. Menangkis kritikan itu, Nobuaki menilai bahwa penjualan itu tidaklah akan mempengaruhi harga di bursa kripto. Alasannya, Nobuaki beranggapan bahwa penjualan itu bukanlah penjualan biasa di bursa kripto@BPI

Can You Trust ICO Ratings?

Trust ICO Ratings. When the ICO market exploded in 2017 it was promptly following by the emergence of dozens of ICO rating agencies — but to what extent should they be relied on when making investment decisions?

With the rise of ICOs also came the rise of the 'ICO economy', which refers to the economic activity that has sprung out of the boom in initial coin offerings, which require a range of peripheral services to succeed. Developers, copywriters, digital marketers, social media managers, PR agencies, lawyers, strategic advisors, media outlets, and ICO rating agencies are all participants in the ICO economy, and everyone is benefiting.

This is arguably an excellent development that shows how cryptocurrencies and blockchain technology are creating jobs and are a driver for economic activity. However, as we know from the wave of ICO scams, underperforming ICO-funded blockchain ventures and questionable ICO marketing practices, some participants in the economy have little regard for business ethics. Unfortunately, some self-proclaimed ICO rating agencies reportedly fall into this category.

How to buy a good ICO rating

According to a recent report by Swiss startup Alethena, it is very easy for a blockchain startup that is launching a token sale to buy a good rating on a popular ICO rating website. In the article, Alethena co-founder Markus Hartmann details how, shortly after its ICO was listed on popular ICO rating platform ICOBench, his company was contacted via Telegram by people selling positive ICO reviews on said platform.

Alethena was reportedly contacted by two separate individuals who ended up selling the startup four positive ratings for around $1500 worth of ether (ETH) that resulted in it receiving an inflated ICO rating on the site. This deceptive practice went as far as allowing the startup to write its own review under the name of supposed blockchain 'expert'.  Funnily enough, the “expert opinion” written by Alethna contained the letters S-C-A-M at the beginning of each paragraph, which the startup purposely wrote to highlight these dubious backroom Telegram deals.

It needs to be noted that ICOBench compiles reviews of several individuals who claim blockchain expertise as opposed to offering an evaluation itself, which means this practice of paid-for ICO reviews may happen without the knowledge of the platform’s operators. Having said that, despite the publication of Alethena’s report, its paid-for ICO reviews remained visible on ICOBench.com for some time. In a delicious irony, after the fake reviews were removed, one of the other experts who had previously rated the company's management team a '3' dropped that to a '1' saying he "originally ranked this as 3,3 and 3 , but reduced team to 1 as it has been proven they were paying for ratings."   

Of course, is it easy to argue that a startup that is raising funds through a token sale to build an ICO rating agency itself, is highlighting the flaws of its competitors only to position itself in a good light. Nonetheless, the report illustrates what many industry experts have been suggesting for a while, which is that ICO ratings are often not as independent as they claim.

Should you look at ICO ratings at all?

To answer the question: “Can You Trust ICO Ratings?” the answer is not a simple yes or no. There are ICO rating platforms that employ ex-Wall Street analysts who conduct in-depth research on token sales before sharing their verdict on the project. These ratings can be valuable indicators of a project’s viability and potential profitability and are definitely worth a look as part of an investor’s overall research into a project.

Then, there are platforms run by “online entrepreneurs” and Internet marketers who simply want to cash in on the ICO boom while they can. Their ICO ratings are de facto worthless as these platforms do not employ experienced analysts nor are they run by individuals who have the knowledge or skillset to evaluate startup projects. These are also the “rating agencies” that are more likely to encourage startups to buy a high ICO rating on their platforms. Needless to say, these “rating agencies” need to be avoided as they provide no added value to investors.

Of course, Issues with rating agencies are not a new phenomenon. For example, the 2011 Financial Crisis Inquiry Report stated that at the time of the global financial crisis, the world’s three leading credit rating agencies (Moody’s, Standard & Poor’s, and Fitch) were “essential cogs in the wheel of financial destruction” and were “key enablers of the financial meltdown.” And this was in a sector that, compared to the current ICO space, was thoroughly regulated.

The dominant business model for rating agencies at the time was ‘issuer-pays’. This means the organisation issuing the security was the one that paid for its rating review. With rating agencies competing against each other for clients, there was an incentive for securities to be rated highly to keep the clients happy and the business rolling in. The same issuer-pays model still exists today in the traditional financial sector, and it is also now the dominant model in the ICO rating business.

In light of the malpractice in the ICO rating space, it is more important than ever for investors to conduct their own research before investing in a new blockchain project. Relying solely on ICO ratings could lead investors to place funds into mediocre projects or even into ICO scams that simply paid for good ratings and reviews. Hence, the old cryptocurrency investing acronym “DYOR” (do your own research) cannot be repeated enough@BPI

Cryptocurrency Issued By The Central Bank Can Be More Stable, But Critpo Too Fluctuate

Central Bank Cryptocurrency More Stable. Researchers at the Kiel Institute for the World Economy have identified the digital currency issued by the central bank as an opportunity for a more stable financial system, while at the same time, they reject cryptocurrency.

Kiel researchers published a report on Tuesday (26/6), which will serve as a guide to the "Monetary Dialogue" on the ECON Committee of the European Parliament. According to the report, cryptocurrency is not an alternative to the traditional currency issued by the central bank.

"Currently, cryptocurrencies such as Bitcoin can not replace traditional currency to a significant degree. Available technologies face scalability-related limitations. In particular, the cost would be very expensive to do a moderate part of the transactions that are now handled through the traditional currency, "Kiel researchers wrote in the report.

The Kiel Institute report confirms that instead of being a medium of exchange cryptocurrency and related assets has been used as a means of financial speculation. Since they are not based on a fixed value, they can not be rationally assessed. This will lead to strong price fluctuations, which in turn will attract more speculators. Lack of regulation also increases the effect of non-transparency.

In addition, the report also states that digital currencies can be an opportunity for central banks, even if they "interfere" because they do not use traditional bank accounts.

"To avoid instability from the banking system, commercial banks will come with more reliable funding sources than deposits. Because the fractional reserve characteristics of the current banking system can be a major source of instability, these disturbing changes are not necessarily bad developments, but ultimately can pave the way for a more stable financial system, "wrote Kiel analysts in the report.

Some global banks have considered introducing their own digital currencies, such as the Bank of Thailand and the Central Bank of the Bahamas. Even the governor of the Bank of England, considered a heavyweight in the international monetary system, said he was open to the idea of ​​the central bank's digital currency. @ BPI

Why Litecoin Prices (LTC) Up and Down In The Market?

Litecoin Price Stability (LTC). Litecoin (LTC) is a peer to peer crypto currency and an open source project licensed under the MIT / X11 license. This is a decentralized network. It was released by Charlie Lee on October 7, 2011. Litecoin market capital crossed 1 billion USD in November 2013. Litecoin has reached at most 350 USD per coin.

Reportedly LEE has worked for GOOGLE and COINBASE. He also has experience in IT companies, he worked in some of them for almost 7 years. He was inspired by Bitcoin technology and he became a fan of crypto and developed his own Litecoin crypto (LTC) currency. He gave all his shares in Litecoin and reportedly will leave Litecoin in the future. But he insists and believes that LTC has a bright future ahead of him.

Litecoin (LTC) got a big blow in recent months where its price fell from 300 USD to 80 USD.

From the market, LTC price prospects will not fall again but will likely rise due to the fact that the UK-based platform has just started the market for litecoins. So by adding a new platform that most definitely gives a boost to its volume in the market, so its value will undoubtedly rise. Litecoin is one of the strongest and fastest crypto in the crypto financial market. It has low transaction costs and high processing speed.

Very unlikely LTC will drop to 50 USD and at that point the investor will push the price back up to 100 USD based on the basics.

After recovery begins, it is assumed that LTC will be one of the fastest crypto currency to recover. LTC processes blocks every 2.5 minutes, faster than Bitcoin which processes the blocks every 10 minutes. LTC has a strong blockchain network and functionality is also legit so that it will regain market value and market capitalization.

Litecoin (LTC) uses scrypt in its algorithm, much more complicated. It's much more difficult and expensive to complete, so mining a new LTC is harder than the Bitcoin mining process.

Litecoin (LTC) is currently lying low and its value is down from 80 USD to 78.81 USD. Currently a large number of companies are using Litecoin and we will also witness some serious partnerships in the future, it talks with amazon to convince them to adapt to LTC as a payment method. If this deal is solved then it could be a big boost for Litecoin (LTC) and can start to recover from below@BPI

Lupa Password Wallet Anda? Apa Yang Anda Lakukan?

Lupa Password Wallet. Keamanan bitcoin memang cukup menjanjikan untuk penggunanya. Namun bagaimanapun, seseorang tetap bisa saja melakukan kesalahan, seperti lupa password wallet sendiri. Pada berbagai jenis atau varian wallet dalam dunia kripto telah ada begitu banyak versi, baik yang bersifat hot storage maupun cold storage.

Berbagai karakter wallet apapun bentuknya, pada dasarnya berfungsi sebagai media untuk menangani dan mengelola key pair antara public dan private key saja. Kedua key pair tersebut dipergunakan bersama-sama sebagai akses mutlak pada wallet tersebut.

Untuk pengguna yang tidak begitu mengetahui hingga perihal teknis tentang bitcoin maupun kripto secara umum, kadang-kadang juga tidak terlepas dari kesalahan yang diperbuatnya sendiri. Termasuk juga, urusan soal lupa password walletnya sendiri tersebut. Password wallet ini, sebagian besar menjadi sebuah fitur tambahan di sebagian besar versi wallet kripto yang ada sekarang.

Kenyataannya, memang telah banyak juga pengguna bitcoin yang telah kehilangan hak aksesnya di wallet mereka. Padahal, jika kita menengok perjalanan harga bitcoin dari beberapa tahun sebelumnya hingga saat ini telah menjulang tinggi. Tentu saja nilainya juga akan menjadi meningkat lebih tinggi jika aset itu telah tersimpan beberapa tahun sebelumnya.

Lantas bagaimana jika memang lupa password wallet dan kesulitan lagi untuk mengaksesnya? Sebenarnya, jika password wallet ini hilang, atau bahkan lupa private key maupun seed yang berelasi dengan wallet itu, maka sama saja hak akses mutlak atas wallet itu juga hilang. Terlebih, jika tingkat kerumitan password wallet itu terdiri dari 15 karakter lebih.

Hampir tidak ada cara yang bisa dilakukan untuk bisa mengembalikan password tersebut kecuali pemiliknya sendiri yang mungkin di kemudian hari mengingat betul password yang digunakan. Namun ada secercah harapan, mengingat sejak tahun 2013 lalu, ada sebuah layanan bernama Walletrecoveryservices yang mungkin dapat membantu persoalan itu.

Meski demikian, tentu saja ada beberapa kondisi bakal menjadi dasar, namun berdasarkan apa yang dijelaskan di situs itu, pihaknya menyebut bahwa layanan mereka bisa menangani untuk banyak varian wallet yang ada saat ini.

Jika layanan itu terbukti dapat membantu kasus lupa password wallet, mengapa tidak sekalian saja mengambil atau mencuri sejumlah aset kripto tersebut? Pertanyaan ini tentu saja adalah pertanyaan logis yang cukup mempunyai dasar yang kuat.

Jangan terlalu cepat memberikan konklusi dulu, mari kita tengok bagaimana kemungkinan itu bisa dilakukan tanpa harus mengungkapkan private key yang berelasi dengan wallet tersebut. Untuk bisa membantu, yang dibutuhkan hanyalah beberapa bagian saja dari file wallet yang digunakan, namun tidak berelasi dengan file private key itu disimpan.

Kalau kita melihat pada bitcoin misalnya, pada bitcoin core, file wallet bitcoin tetap akan tersimpan di dalam perangkat yang digunakan. Sedangkan, setiap seseorang menggunakan bitcoin pertamakali, sebenarnya secara otomatis akan membuat hingga 100 address baru yang langsung tersimpan ke dalam “key pool” (tempat key pair disimpan). Dalam hal ini, hanya sebagian saja informasi dari address yang umumnya tidak pernah terpakai itu. Karena sebagian besar pengguna, kebanyakan hanya menggunakan satu atau beberapa address saja, kecuali jika pengguna itu adalah pengguna aktif dan mengetahui betul bahwa memang sebaiknya 1 address bitcoin, digunakan untuk sekali transaksi saja. Address bitcoin ini, bisa digenerate sendiri sebanyak yang kita mau.

Potongan informasi tersebut, selanjutnya dikombinasikan dengan metode brute force decryption. Cara itu adalah satu-satunya cara yang memungkinkan dapat dilakukan. Namun tentu saja hal itu akan membutuhkan resource yang cukup untuk bisa menanganinya. Namun jika password tersebut terdiri dari 15 random karakter lebih, maka itu menjadi cukup sulit untuk untuk dilakukan, terlebih untuk wallet bitcoin@BPI

Japanese Finance Minister Wants To Change Crypto Tax Rule, But People Doubt

Japanese Crypto Tax Rules. Japan's Finance Minister thinks that the public doubts if he will make changes in the taxation of cryptocurrency transactions, Cointelegraph Japan reported.

During the current meeting of the Upper House Budget Committee, Senator Fujimaki asked the Japanese Deputy Prime Minister Taro Aso whether crypto transactions should be taxed through a "separate tax settlement," rather than their current classification as "other income." Aso said that his prospects were " "By the public and expressed concern over the public reaction due to" tax justice. "

The current tax rate for maximum crypto transactions is 55 percent, and Aso plans to change to 20 percent similar to stock or forex trading.

Aso noted that the position of cryptocurrency in the international financial sector is uncertain. He also talked about the importance of developing blockchain technology, but added that he supported the controversial technology, given it underlies the cryptocurrency.

The Japan Financial Services Agency (FSA) issued a business improvement notice for the crypto exchange market as part of its ongoing regulatory oversight following a $ 530 million theft in the Japanese crypto exchange market, Coincheck in January.

On Monday (25/6) yesterday, two vice presidents of the Japanese foreign exchange crypto exchange market resigned after the two exchanges each received notice of increased FSA business last week@BPI

Facebook Relaxes Ban, Accepts Some Crypto Ads

Facebook is Easing Its Ban.The social media giant has launched a "cryptocurrency products and services onboarding request" form that will allow some companies to get their ads on the platform, according to a blog post published Tuesday.

Facebook, however, won't allow advertisements for initial coin offerings or binary options. The prohibition on these remains in effect months after Facebook first took action against crypto-ads in a move that was followed by similar actions byTwitter, Google and other major sites.

The request sheet shows that the social media company wants specifics on the kinds of services companies wishing to advertise offer. For example, Facebook asks whether companies have the relevant licenses in order to operate, or if they are a publicly-listed company. Facebook has also published a legal addendum outlining its policy toward cryptocurrency ads.

Notably, the social media company suggested that its policy could see additional tweaks in the future.

Rob Leathern, product management director for Facebook, wrote in the blog post:

"Given these restrictions, not everyone who wants to advertise will be able to do so. But we'll listen to feedback, look at how well this policy works and continue to study this technology so that, if necessary, we can revise it over time."

The move has won early plaudits from the cryptocurrency PR space.

Trey Ditto, the founder of Ditto PR, a crypto public relations firm, described Facebook's shift as "the first step in allowing credible blockchain projects, crypto companies and ICOs to get in front of new potential customers and investors."

"This will be a big boost for Facebook advertising revenue as the majority of projects out there are interested – and have the money – to run paid ads," Ditto added.@BPI

Bank Sentral Bahama Memperkenalkan Cryptocurrency

Cryptocurrency Bank Sentral Bahama. Pemerintah Bahama telah memutuskan untuk membentuk cryptocurrency nasional untuk membantu yang tidak memiliki rekening bank dan memudahkan proses melakukan bisnis di banyak pulau yang membentuk negara.

negara kepulauan yang dikenal dengan matahari dan pantainya, atau, dalam pandangan Uni Eropa, status suaka pajaknya, akan memperkenalkan mata uang kripto sendiri melalui bank sentralnya.

“Produksi layanan pembayaran digital modern sepenuhnya adalah jalan ke depan untuk era pemerintahan ini. Mata uang Bahama digital sangat penting bagi banyak pulau keluarga karena mereka telah melihat banyak bank komersial berhemat dan keluar dari komunitas mereka, meninggalkan mereka tanpa layanan perbankan. Sebagai sebuah negara kepulauan, di mana transportasi dapat menjadi ketidaknyamanan bagi banyak orang, terutama orang tua, dan mahal, kita harus menawarkan jasa keuangan secara digital dan aman, ”kata wakil perdana menteri K Peter Turnquest.

Saat ini, bisnis dari seluruh dunia bermarkas di Bahama, sebagian besar untuk kebijakannya memastikan privasi pemegang saham dan melonggarkan persyaratan pajak apa pun atas pendapatan yang diperoleh dari luar negeri. Bisnis yang ingin mengambil keuntungan dari insentif pajak dapat memantapkan dirinya sebagai perusahaan bisnis internasional (IBC) di pulau itu, yang membebaskannya dari semua pajak selama 20 tahun ke depan. Setelah periode itu, perusahaan bertanggung jawab atas pajak hanya atas penghasilan yang dihasilkannya di salah satu pulau itu, serta pajak stempel dan estate.

Dengan memperkenalkan cryptocurrency, perusahaan yang didirikan di Bahama, seperti perusahaan akuntansi Big Four, dapat melakukan bisnis dengan lebih mudah dan dengan cara yang jauh lebih pribadi daripada yang mereka lakukan saat ini. Banyak dari klien mereka juga menghadapi ketidakmampuan untuk melakukan transaksi secara pribadi dengan menggunakan sistem perbankan, sehingga sulit untuk menghindari beberapa pajak yang dikenakan oleh negara-negara asing.

Namun, pemerintah Bahama tidak berhenti di sana. Turnquest ingin memperluas ini lebih jauh dan menawarkan infrastruktur blockchain untuk penerbitan sertifikat kepada orang-orang yang menyelesaikan studi mereka di National Training Agency@BPI

What are security tokens and how will they transform ICOs?

Security Tokens Transform ICOs. 2017 was arguably the year of the initial coin offering, with over $4.6 billion raised through startup financing. 2018 looks like it will become the year of regulations for the cryptocurrency industry. In fact, the tremendous growth in ICOs is one of the reasons why financial regulators across the globe have decided to hone in on the crypto asset market.

For the most part, startups launching token sales claim that they are issuing a utility token, which would preclude them from the realm of securities law in most jurisdictions. However, many of these tokens have the characteristics of securities, which is why financial regulators are taking a closer look.

To continue using this method of funding, a new form of token sale has emerged that marries the benefits of initial coin offerings and the sale of regulated financial securities in an initial offering.  

What is a security token?

Issuing a security token is a new form of financing that enables companies to raise funds from investors through issuing a fully-regulated “digital share” of its equity, assets or part of its revenue. Security token offerings combine aspects of ICOs with IPOs to provide the seemingly perfect balance between gaining access to capital at a low-cost while remaining compliant with securities laws.

Furthermore, security tokens can go beyond the current cryptocurrency-based crowdfunding model to also incorporate other types of financial securities such as debt offerings, for example. Tokenized securities projects such as Overstock’s T-Zero exchange are banking on security tokens becoming the next big thing and they may be correct.

Through issuing digital tokens that provide similar rights to shares, companies have the potential to access more investors and at a lower cost than if they were to list shares on a stock exchange, making them more appealing to younger investors.

However, before that can happen, the digital token trading ecosystem must mature to the level where exchanges are secure and liquid enough to be able to handle trading volumes approaching those found on international stock exchanges.

SAFT: The predecessor to security token ICOs

Before securities tokens started to appear in the ICO market, we saw the utilization of so-called Simple Agreement for Future Tokens (SAFT) by startups that wanted to ensure that they remain fully compliant with U.S. securities law.

SAFT agreements enable accredited investors to purchase contracts during a token offering for which they will be rewarded with the newly-issued tokens that the startup is launching, once the company has developed a fully-functional utility token that is being actively used in the project’s platform.

SAFT agreements are based on the idea behindSAFE (Simple Agreement for Future Equity)contracts, which were spearheaded by San Francisco-based tech accelerator Y Combinator as an alternative to convertible notes. SAFE contracts allow angel investors to put cash into a startup and then receive their shares once a specific trigger event has happened such as a new funding round or the sale of the company.

The first high-profile SAFT contracts that were sold to investors was during the ICO of the decentralized cloud storage platform Filecoin in mid-2017, which raised over $257 million. Messaging giant Telegram also made use of SAFT agreements when it raised $850 million during its token pre-sale in Q1/2018.

How security tokens will transform utility ICOs

Financial regulators are keeping a very close eye on initial coin offerings due to a large number of scams that have flooded this market. Moreover, many regulators consider ICOs that sell a utility token should still fall under securities law as most are effectively securities.

For many issuers the risk that their ‘utility token’ will be considered by regulators as a regulated security will become too great to bare. Accordingly, many will choose to issue utility tokens in a compliant way (as if they were securities).

Additionally, the introduction of truly compliant security token exchanges like TZero will enable a new breed of token issuer to come to the market that offers economic incentives similar to dividends in shares, or other revenue streams that are undoubtedly categorized as securities.  

Issuing a security token will, eventually, become more straightforward than launching a utility ICO from a regulatory and legal standpoint, with the caveat that the overheads will probably be higher as it involves regulatory compliance and more legal fees. A “normal” token sale can be conducted with very little upfront capital, especially if the startup has an exciting product that the cryptocurrency community is willing to invest in. A security token ICO, on the other hand, will require more capital regardless of the quality of the company’s product.

It is thus unlikely that utility token ICOs will be replaced entirely by security tokens as smaller startup projects will choose to either run the risk of operating in a regulatory grey area or will merely engage in regulatory arbitrage and base their operations and crowdsale in countries that have ICO-friendly regulations.

The future of security tokens

Having said that, security tokens have the potential to become the go-to form of funding for more established startups and for companies that want to tokenize their securities offering instead of listing shares on a stock exchange.

Security ICOs will thus likely become a real competitor to traditional IPOs as the costs for an ICO remain cheaper and as more investors realize the advantages of digital tokens over “real shares”.@BPI

IOTA and SinoPac Now Announce Their Cooperation

IOTA and SinoPac Cooperation. IOTA have now established a partnership with SinoPac, a major financial holding company in Asia, which will see both parties explore fintech innovation.

What is SinoPac?

SinoPac Financial Holdings Company Ltd., is a bank company created in 1992 by Samuel Yin and Paul L. who offer financial services with a solid business network and a highly innovative product portfolio.

What is IOTA?

IOTA is a non-profit foundation based in Germany and launched in June 2016, its main objective is to improve the adoption of the protocol with a view to making it a standard.

Currently this association is formed by: David Sonstebo (founder of IOTA), Dominik Schiener, Serguei Popov (Mthcl), Sergey Ivancheglo (Come-from-Beyond), Gianluigi Popov.

Cooperation of IOTA and SinoPac

In a blog post released on Friday, IOTA announced that both parties signed a MoU to innovate using Tangle technology. Holger Kother, Head of Partnership at IOTA Foundation IOTA noted that an effective MoU will soon position both parties as innovation leaders in the sector.

Taiwan-based SinoPac as a major financial player in the Asia Pacific region is one of the companies that has explored ways to improve its service offerings. It uses Tangle technology developed by IOTA to develop its products, iCertificate and hope to explore further as well as other distributed ledger technology (DLTs).

iCertificate can be used both in the private and public sectors to ensure data security, this is achieved through IATA and special hash encryption. Tina Chiang, Senior Executive Vice President, Chief Digital & Technology Officer for SinoPac described the importance of iCertificate. He says:

"ICertificate is a notary service that is always required in digital certification applications, not only in education or public utilities but in the trade and supply chain industries."

Wilfried Pimenta de Miranda, Head of Business Development at IOTA said that IOTA is delighted to see SinoPac bring their notary certification platform to the next level. He continues:

"This not only demonstrates the potential of IOTA to use Tangles in a wide range of enterprise products and services, but also demonstrates the increasing practical and real world usage of distributed technology in the financial sector."

IOTA has many strategic partnerships including agreements with Volkswagen, and more recently, Nordic Semiconductors are continuing to innovate in the field of Internet of Things (IoT)@BPI

Lessons Learnt and Questions Raised from the EOS Mainnet Launch

EOS Mainnet Launch. The highly anticipated EOS project has made headlines in blockchain media in the last few weeks. The coverage, however, has not always been favorable with EOS being plagued by a number of challenges, both before and after the launch of its mainnet

EOS is a blockchain-based operating system that has been developed by software company Block.One. The company is composed of notable names within the cryptocurrency space including Dan Larimer, the creator of Bitshares and Steemit, who also invented the Delegated Proof-Of-Stake consensus algorithm.

Due to its accomplished team and its promise of a highly scalable blockchain platform through which developers can build decentralized applications, its year-long token sale managed to amass over four billion dollars. This is the largest amount ever raised via an ICO and signaled a significant amount of interest and faith in the project.

Where does the money go?

The large amount of funds raised for the EOS project raises concerns over the validity of ICOs as a fundraising method. ICOs are the most common method of raising capital within the cryptocurrency space but they have come under criticism recently due to several shortcomings.

Reports estimate that about ten percent of funds raised in ICOs are lost through theft or hacking. Additionally, there is the fact that many projects hold an ICO without a product.— EOS was one of these. Moreover, Block.One was fairly vague with its plans for the money rais

Last Week Tonight - no laughing matter for EOS co-founder Brock Pierce

These concerns reached a fever pitch, eventually gaining mainstream recognition with popular TV host John Oliver referencing the project in amonologue on Last Week Tonight about the dangers of investing in crypto projects that are yet to create a minimum viable product (MVP). The EOS team issued a tongue-in-cheek response to Oliver, which was worded to agree with the safety-promoting essence of the TV hosts’ sentiment.

However, they did ensure to explain why they are a safe bet for investors. The reasons included a change in Block.One leadership (co-founder Brock Pierce left after the John Oliver segment ) as well as the utmost focus on security.

Security flaws

Only two days before its scheduled mainnet launch, a Chinese infosec company reported it had found a number of vulnerabilities in the EOS software. In a report released on May 29, Chinese cybersecurity company Qihoo 360 explained how bugs could be exploited to serious consequences for the EOS ecosystem. These included the creation of new tokens, theft of existing tokens as well as a total system takeover. Additionally, 360 stated it had revealed these bugs to the EOS team, which had then allegedly committed to postponing the release of the mainnet until the issues were resolved.

Following media coverage of the report, the EOS team clarified their position stating: “Media has incorrectly reported a potential delay in the release of EOSIO V1 due to software vulnerabilities. Our team has already fixed most and is hard at work with the remaining ones. EOSIO V1 is on schedule; please stay tuned to our EOSIO channels for official information.”

This announcement did little to allay fears with an additional blow coming when EOS announced its bug bounty program on May 31. The timing of the announcement worried a section of the cryptocurrency space and was seen as a last-ditch effort by some.

Additionally, Larimer had tweeted a $10,000 reward for any bugs found in the code. Seeing as vulnerabilities in the software of a project like EOS is likely to result in losses greater than this amount, this raised questions as to how motivated developers will be to participate in a program like this. While many will still participate in such programs, these are valid concerns for the incentivization mechanism for bug hunters in an open-source economy.

Lastly, the fact that hackers were able to gain access to a Block.ONE email client and use it to distribute a fake email that resulted in the theft of users’ money through misdirected funds further highlights the importance of security in the cryptocurrency space.

Governance in a decentralized community

One of the most discussed aspects of the EOS launch was its governance structure. The project was designed in such a way that all decisions were to be governed by its constitution. Concerns have ranged from the wording and ambiguity of the document as well as a lack of adherence to the protocols contained therein.

For instance, one clause states that no member can control more than 10 percent of the token supply. Due to the fact that Block.One holds about ten percent of the EOS token, this is seen as an attempt to assert undue control over the project. Additionally, there are concerns about how much power block producers have over the blockchain. As evidenced in leaked minutes, the block producers have an immense amount of influence, going as far as to create new tokens. There was a public outcry over this state of affairs.

While decentralization is an important aspect of the free economy that Block.One claims to support, as well as the cryptocurrency space in general, the governance structure that the project is aiming to have raises questions about how governance works in a decentralized economy. Larimer explains that while the structure is likely to have growing pains, in the beginning, the end goal is “over time the community will formalize arbitration processes, constitutional amendments, division of power, and limitations of liability. In the meantime, the community is using the tools it has today to enforce its contracts and combat the blatant fraud & theft so prevalent in the cryptocurrency industry.”

Why is a mainnet transition so hard?

EOS is not the only project that has faced challenges in the buildup to and after its mainnet launch. This can be attributed to the to the fact that blockchain technology is still in its infant stage. As Qihoo 360 stated, due to the age of the industry, many vulnerabilities are likely to be revealed in this current epoch. While this may be a concerning development, it is better in the long run.

Moreover, the potential that the cryptocurrency space and the technologies surrounding it carries lend themselves to a significant amount of over-enthusiasm and speculation, which can be witnessed by EOS’ current valuation. This creates a scenario where it is easy to over promise and under deliver. While the technology is revolutionary, it is important to note that there are many moving parts that can affect how a project performs and that growing pains will be an inevitable part of every new blockchain venture.