Thailand based Swiss Investor, Marc Faber bought his first Bitcoin after admitting that he was very wrong about cryptocurrencies and blockchain technology. His premier interest of investment is emerging and frontier markets. One of the
There is no question that the entire cryptocurrency sector is in a bear market, with many cryptocurrencies losing over 50% of their value. However, this certainly hasn’t prevented individuals from becoming very wealthy through cryptocurrency-related ventures.
Specifically, despite the decrease in market capitalization of various cryptocurrencies, several Chinese businessmen have landed onto a list of China’s wealthiest individuals thanks to companies associated with cryptocurrency.
The Hurun report is released annually, and 13 cryptocurrency-related businessmen have made the list, which includes individuals with at least a net worth of 2 billion yuan, or $289 million USD.
The highest entry belongs to Micree Zhan Ketuan, the founder of Bitmain Technologies, and the only cryptocurrency-related businessman to penetrate the list of the 100 wealthiest people in China, with an estimated net worth of 29.5 billion yuan. This is not surprising, considering Bitmain – the largest bitcoin mining company in the world – is on track to reach $10 billion in revenue by the end of this year, and is valued at over $10 billion already. Another high entry belongs to the other co-founder of the same company, Bitmain, Wu Jihan, who comes in at #204, with an estimated worth of 16.5 billion yuan.
China has been known to dominate the bitcoin mining sector. In fact, Bitmain, and its two main competitors, Canaan Creative and Ebang International Holdings, have all applied to go public on the Hong Kong Stock Exchange (HKEX). Nine of the thirteen entries on the Hurun report come from these three companies alone.
This is even more interesting considering the fact that China has been cracking down on the cryptocurrency sector in general. The Chinese Central Bank has repeatedly warned bitcoin exchanges about their activity, and went on to ban initial coin offerings, which led to the iconic cryptocurrency exchange BTCC closing, which many in the cryptocurrency community felt was a symbolic end to an era where China seemed to tolerate cryptocurrency – and that the tides were shifting.
Ironically, it was this crackdown that actually helped Binance, the world’s largest exchange by daily volume, adapt and expand to countries such as Japan and Singapore, rather than keep China as headquarters. Zhao Chenpeng, 41, also makes the list, at #230, with an impressive 15 billion yuan.
It is clear that despite the crackdowns on cryptocurrency in China, and the volatility of the markets – the leaders in the cryptocurrency market have certainly been able to accrue substantial wealth in 2018.
In a recent report submitted to the UN, North Korea is accused of accumulation more than half a billion dollars in cryptocurrency. The country is basically a stand-alone pariah due to the tough regime by Dictator Kim Jong Un, which has seen the country suffer economically and get sanction upon sanction and cut off from the global economy. It is therefore not so surprising to hear that the country is slowly accumulating millions in cryptocurrencies.
The regime has had a hand in a few suspicious economic activities fueled by its tight control of its military and intelligence capabilities; that are normally fueled towards funding personal coffers of the Pyongyang elite. In September of 2018, CCN posted an article review of the cryptocurrency atmosphere in North Korea and stated that the country is using crypto assets to circumvent US sanctions.
The country’s mining activities were estimated to earn it between $15 and $200 million which they then push into different international exchanges, mixing and scrambling their services which mask their intentional exploitation of financial institutions that have fostered banking relationships with the United States. That notion pales in comparison to the shitstorm that was the Coincheck hacking scandal that was believed to have been sponsored by Kim Jong Un himself. The UN quoted that Cryptocurrencies will help the country to evade sanctions primarily because crypto is largely untraceable and independent of government regulation.
North Korea’s Office 39 was reported to have used malware commonly refereed to spear phishing to attack South Korean cryptocurrency exchanges to steal Bitcoin in 2017. This reckless ballsy move followed sanctions imposed by the UN against textile exports and severe capping of their fuel supplies. Not to add that the country has positively been identified as a criminal regime due to its nuclear weapon testing and manufacture. The country has invested billions into their military and chemical weapons and literally neglected everything else in the efforts to be the world’s nuclear superpower.
On a different perspective, maybe the sanctions are counterproductive since they do not really the country’s elite who only work to line their pockets but the sanctions hurt the already critically oppressed North Korean population. It is a warped way to curb the efforts towards nuclear funding. That is why it is not surprising that the country gravitated towards digital assets. But, the blame is not entirely on cryptocurrency because North Korea weapons of mass destruction agenda has existed for a long time. Digital assets merely provided technological advancement and a different avenue to do that especially because of its value that makes it the most attractive option.
In a report earlier this year, financial reviews and the experts at satellite imagery investigating North Korean nuclear plants revealed that the sanctions levied against the country have done very little to stop the manufacture of missiles and warheads. There has simply not been significant political of economic pressure to stifle chemical weapons production.
What North Korea is doing is not unwarranted considering it’s the same thing that is happening in Venezuela. The country has fallen to such economic depravity due to the level of corruption that even its own citizens fled the country as it was impossible to survive. Enter cryptocurrencies which offered a lifeline to those who could access it and invest in it. In many ways, Venezuela and North Korea are similar, for example their weakened population has no time to protest the gross economic indiscretions of the regimes if they are struggling to eat or get healthcare. One economics journalist, Tim Padgett, even referred to President Maduro the Caracas Kim back in 2017.
Many countries doing what North Korea is doing are motivated by currency crises and preposterous hyperinflation of their individual currencies. Such like Zimbabwe, Iran, Turkey and Argentina. Only difference is that these countries do not really pose any kind of threat such as North Korea which is potentially capable of causing world war three.
This week, Bitcoin mining equipment manufacturer and blockchain software firm Bitfury secured a valuation of $1 billion from billionaire investor Mike Novogratz and Korelya Capital’s $80 million investment in the firm.
The multi-million dollar funding round comes after the release of Bitfury Clarke, the firm’s new Bitcoin ASIC miner, designed to compete against Bitmain’s new equipment, the 7nm Antminer.
Valery Vavilov, the CEO of Bitfury, stated that the demand for the blockchain and crypto in general from companies and institutions had increased significantly over the past 11 months.
“We see a lot of demand from companies and public institutions to put their services or products in the blockchain — especially in emerging markets, where administrative systems can be very inefficient.”
Throughout the past four months, despite the sideways market of Bitcoin (BTC) and the 70 percent correction experienced by the cryptocurrency market since January, the hash rate of the Bitcoin blockchain network has increased substantially from 15 million TH/s to over 50 million TH/s.
The increase in the hash rate of the Bitcoin network, which represents the strength of the blockchain’s computing power, led to a surge in the breakeven cost of crypto mining.
In July, cryptocurrency analyst Barclay James reported that the breakeven cost of mining Bitcoin is around $6,900, based on the hash rate of the Bitcoin network at the time which was 35 million TH/s.
According to Blockchain, the most popular cryptocurrency wallet platform in the sector, the hash rate of Bitcoin currently remains above 50 million TH/s, up 42 percent since July. Since the $6,900 breakeven cost of Bitcoin mining was calculated based on 35 million TH/s, the breakeven cost of mining has well surpassed $7,500 even in regions with naturally cold climates and cheap electricity like China that reduces operational costs.
“China has some of the world’s cheapest electricity rates as well as average temperatures consistent with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage,” James wrote.
Due to the rise in the breakeven cost of mining, miners are generating BTC at a fairly large loss. Until BTC breaks out of the $7,000 resistance level and to the high region of $7,800 to $8,000, miners will continue to mine BTC with a loss of around 20 to 30 percent.
Mining companies and mining equipment manufacturers like TSMC and Samsung remain confident in the long-term development of the industry, and the investment of a major venture capital firm in Korelya is considered a confirmation of strength of the industry in a period of uncertainty and doubt.
Korelya is an investment firm financed by Naver, the largest search engine operator in South Korea that is more widely utilized than Google in the region. Bitfury is the first indirect investment in crypto from Naver.
Andreas M. Antonopoulos, the author of “Mastering Bitcoin” and a self-proclaimed “computer geek” who has dedicated his career to bitcoin, has a bone to pick with Bitly, the web-link shortening service.
Bitly has seemingly blacklisted cryptocurrency sites from its service, prompting readers with a warning prior to redirecting to the original website, a Twitter thread between the bitcoin expert and one of his readers reveals.
Antonopoulos is close to publishing his fourth book, which is comprised of hundreds of crypto-related bit.ly links that Bitly is blocking. A reader seemingly brought this to his attention, questioning why Bitly was issuing a warning when the sites “don’t point to any harmful location at all.” Antonopoulos asks the company for an explanation, threatening to remove and replace all of the bit.ly links with a competitor. The fourth book he references appears to be “Mastering Ethereum”, which comes out in less than four weeks.
The “Mastering Bitcoin” author went on to canvas the crypto community for a solution, asking: “What (reliable, neutral, established) link-shortening service can I use that doesn’t filter/block links based on a broken blacklisting service? I need to replace all @Bitly links in my book ASAP.” While he wasn’t looking for “roll your own” suggestions, this is largely what he received from the Twitter sphere.
Other followers suggested that Antonopoulos avoid shortening links in his new book altogether, saying that readers aren’t keen on clicking on a link shrouded in mystery anyway. Others still suggested taking a more decentralized approach by using an archive system at the end of the page or chapter to avoid relying on a third-party altogether.
Antonopoulos is an influencer in the cryptocurrency community and probably someone that Bitly doesn’t want to alienate, as it would likely trigger a ripple effect among blockchain-content publishers. He is an early bitcoin investor who previously sold his holdings to pay his rent, in response to which he became in a millionaire thanks to donations by the crypto supporters inspired by Roger Ver.
His books, which also includes “The Internet of Money”, are best sellers. Most recently, “Mastering Bitcoin” has made its way into China’s media programming, though they replaced Bitcoin in the title with Blockchain. Antonopoulos said that “even with a slightly sanitized title…the content is the same.”
Meanwhile, tech leaders including Facebook and Google earlier this year attempted to officially block crypto-related ads but those bans have since been lifted. Investors cried foul at the time, pointing out how tech giants continued to allow ads for other risky sites like gambling. Meanwhile, ads are a key component to the tech revenue model.
It’s unclear if Bitly has taken an official position on crypto-related links, and the company has yet to respond to an email seeking comment.
Why are you blocking https://t.co/9gk4wWPQnN links to crypto-currency sites?
I’m about to publish my 4th book and it has about 200 https://t.co/9gk4wWPQnN links in it. If you are going to block links, I will need to remove all 200 and replace them with a competitor https://t.co/Xg4FkemcA7
— Andreas M. Antonopoulos (@aantonop) November 3, 2018
Bitcoin (BTC) turned ten on Oct. 31, but there were no fireworks to mark the celebrations: the cryptocurrencies continue to trade in a tight range. Arthur Hayes, CEO of BitMEX, believes that the current period of low volatility can remain for another 12 to 18 months and can drag the price of the leading cryptocurrency to the $2,000–$3,000 zone.
However, we have a different opinion. We believe that the volatility is unlikely to stay subdued for long. Within the next few weeks, we should get a large range move that will start a new trend, either up or down.
This week, we have a new leader, Bitcoin Cash, that has risen about 9 percent during the past week. Until Thursday, the price of the digital currency was languishing similar to the other cryptocurrencies. However, on Friday, prices soared following an announcement by crypto exchange Binance that it would support the impending hard fork on Nov. 15. After the initial bump up, can the rally continue? Let’s find out.
The long-term trend on the BCH/USD pair is clearly down. Throughout this year, it has failed to hold on to the support levels and has continually made a lower low. Though the bulls have held onto the $408.32 mark for the past seven weeks, they haven’t been able to push prices higher. This shows a lack of demand at higher levels.
The current pullback will face a stiff resistance in the zone of $591.41–$660.0753. If price sustains above this zone, it can climb to $891.4634 and thereafter to $1,200.
On the downside, $408.32 is the critical support, below which the fall can extend to $282. The longer the virtual currency stays in a tight range, the sharper the next move will be. It has a history of vertical rallies; therefore, the traders can buy when a reliable buy setup forms.
After the recent listing of BAT on crypto exchange and wallet Coinbase, will Stellar be the next cryptocurrency that will make the cut? Many believe that XLM has the requisite credentials to be listed on Coinbase. If that happens, we might see a rally. What are the key levels to watch?
The XLM/USD pair has formed a large descending triangle pattern that will complete on a breakdown and close (UTC time frame) below $0.184. Currently, the bulls are attempting to break out of the downtrend line of the triangle, which will invalidate the bearish pattern. Failure of a bearish pattern is a bullish sign.
We like the way the digital currency has stayed above $0.2 levels for the past five weeks, which shows demand at lower levels. If the bulls succeed in sustaining above the downtrend line, a rally to $0.36 followed by a move to $0.47 is likely. Traders can wait for prices to sustain above $0.30 before buying. That is because if the prices turn down sharply after a break out of the downtrend line, the probability of a break down of $0.184 increases.
ARK is currently ranked 71st in terms of market capitalization. It is about to release the much-anticipated new core code base, making it faster and modular with full plugin capabilities similar to WordPress.
Anyone can create their own fully customizable cross chain compatible blockchain using ARK. It will also be the first delegated proof of stake (DPOS) with a switch from static/flat fees to a customizable dynamic fee structure. There are a number of new features and partnerships being added regularly whose details can be accessed on its blog.
Similar to the other cryptocurrencies, the ARK/USD pair has also been in a strong downtrend since topping out in early-2018. The bulls attempted to stall the decline around the $2 mark, which was a strong support. However, the bears broke below it in early-June, resulting in a sharp fall.
The virtual currency bottomed out in mid-August at $0.50712042. Since then, the price has gradually inched higher, which is a positive sign. On the upside, $1.02093420 might act as a stiff resistance. If the bulls scale this level, a rally to the overhead resistance zone of $1.68–$2 is probable. The digital currency is likely to pick up momentum above $2.
On the downside, if the bears sink prices below $0.50712042, a fall to $0.40 and $0.30 is possible.
Monero rose by just over 1 percent in the past seven days, claiming the third spot in the list of top performing cryptocurrencies with a market capitalization of more than $1 billion.
Since early July, the XMR/USD pair has been trading in the range of $81–$150. For the past seven weeks, the range has shrunk to $100.453–$128.65. From last week, the weekly range has reduced further. The tighter and longer the range, the stronger the eventual breakout or breakdown will be.
However, the first move is often a false one. Therefore, traders should wait for the breakout to sustain and show follow up buying before jumping in to buy. There are no significant resistances above $150 until $300.
Conversely, a break below $100.453 will increase the probability of a fall to $81. This is a major support, as it has not been breached convincingly for more than a year. Hence, if this level gets broken, the digital currency can quickly correct to $52–$58.
EOS again received the top standing in China’s 6th global public blockchain technology assessment index. On the other hand, research conducted by benchmarking firm Whiteblock for ConsenSys concluded that EOS lacks “the fundamental components of a blockchain or peer-to-peer network” and is “fundamentally same as a centralized cloud computing architecture.”
The EOS/USD pair has been trading inside the range of $4.493–$6.8299 since August. For the past five weeks, the range has tightened further. This shows a balance between the bulls and the bears. Currently, neither party is making a major move and new investors are sitting on the sidelines.
If the price breaks out of the tight range, it can move up to $6.8299. Above this, we anticipate buying to resume that can carry the digital currency to $9.4456 and $15. However, if the price breaks below the current tight range, it can drop to $4.49, which is a minor support. $3.8723 is the critical support, below which the price might plummet to $2.40 and $1.70.
Ripple has been making progress in signing various institutions to its platforms, mainly targeting cross-border payments. The Middle East is a lucrative market for the company because of the high level of payments that go in and out of the region. Ripple has already tied up with a few banks in Saudi Arabia, Kuwait, Bahrain and Oman, and the company now reportedly plans to open an office in Dubai by the end of the year. How does its chart look?
The XRP/USD pair rallied sharply in mid-September. However, the bulls could not sustain the momentum and the pullback extended to 78.6 percent retracement levels. Usually after such a deep retracement, a range bound action for a few weeks is likely. For the past two weeks, the 20-week EMA is acting as a resistance. If the bulls break out of the immediate resistance zone at $0.475–$0.5, a move to $0.62 and $0.7644 is plausible. We expect a new uptrend to begin above $0.76440.
If the bears sink the price below $0.37185, the virtual currency will complete a 100 percent retracement and drop to the critical support at $0.24508.
As reported by the trusted news source in China, CnLedger, the country’s merchants can legally accept cryptocurrency as payment. According to reports by the Shenzhen Court of International Arbitration, Bitcoin is now officially recognized property, which allows individuals as well as businesses to transfer and own BTC without conflicting with current financial regulatory protocol.
Crypto researcher, Catherine Wu, who also analyzed court documents by the Shenzhen Court Of International Arbitration, delved into the reason behind the decision by the courts.
Wu explained that due to the decentralized nature of BTC in which it can provide economic value and financial freedom to the owner, the asset is therefore recognized as personal property.
The court also emphasized that regardless of the legality behind the Bitcoin and other cryptocurrencies, the circulation and payment of BTC is not illegal. Bitcoin does not have the same rights as fiat currency, however that doesn’t mean that holding or paying with cryptocurrency is the illegal.
Several hotels located in China have also started to accept cryptocurrency. One such hotel has branded itself as the “Ethereum Hotel” which provides discounts to those who pay for their services utilizing Ethereum.
China’s stance towards blockchain technology and cryptocurrency seem to be positive overall. It’s becoming more and more apparent that the Chinese government has temporarily placed a blanket ban on cryptocurrency trading only, in order to prevent the devaluation of Chinese Yuan. Overall, the government remains open to cryptocurrency usage as well as the implementation of blockchain to improve existing infrastructures as well as issues pertaining to software and data protocol.
The Court Of International Arbitration in China (a high Chinese court), involving half a million worth of cryptocurrency, led to an unprecedented event in which Bitcoin and other cryptocurrencies were deemed as valuable personal property and therefore protected under Chinese law. The court also noted that there is no law currently prohibiting the possession of cryptocurrency.
The plaintiff who originally brought the suit against the defendant, who he had hired as a steward to trade his cryptocurrency for him, had scheduled a deadline to return the coins. The defendant had missed this deadline, thus keeping the coins in his possession. The cryptocurrency held in question are 20 Bitcoins, 70 Bitcoin Cash, and just over 12.5 Bitcoin Diamond.
The defenses argument was that the contract between the two was invalid due to the Chinese ruling to ban ICOs and crypto trading. According to the defendant’s stance, this would make all crypto transactions illegal and therefore the contract was outside legal bounds of the courtrooms enforcement. However, the court strongly disagreed with the defendant’s interpretation where, according to a Chinese news source, the final conclusion was drawn:
|“The Bitcoin contract between the plaintiff and defendant does not violate mandatory legal provisions and regulatory affects which may be considered invalid. Under Chinese law, cryptocurrency is a digital asset and does not prevent it from becoming an object of delivery.”|
As a result of this ruling, the defendant was forced to pay 100,000 Yuan in damages on top of returning the coins back to its rightful owner.
Cryptocurrency continues to be a grey area around the world, especially in China, where rumors of Bitcoin bans have repeatedly brought turbulence to the cryptocurrency marketplace. Despite being legal, there has been numerous incidences where the government had to take action against its operations as it was being improperly regulated. These instances have often had global implications.
As a result of this court proceeding, one can speculate that the case for cryptocurrency is far from settled. ICO’s and exchanges have been shut down and even banned. Many exchanges like Binance have found ways to adapt, thus moving their operations to Malta, which seems to bring hope to Chinese crypto enthusiasts. At the time of this ruling, which can later be challenged by an even higher court, private individuals are free to utilize Bitcoin amongst themselves.
The Chinese government is not completely opposed to cryptocurrency. Those of us within the cryptocurrency space realize that central banks as well as private banks do what they can to impede the progress of digital currency. However, within the law, these institutions are not all powerful. Citizens of China can still hold cryptocurrency and therefore hope that over time they will be able to legally participate in activities such as trading and ICO investment opportunities.
This week, the US stock market deleted all of its gains made in 2018 amidst a major sell-off. The crash had no impact on the crypto market, showing no signs of inverse correlation.
Possibly affected by the trade war between China and the US along with the increase in Fed rates, the US stock market suffered one of its worst short-term crashes in recent history.
Analysts stated that Asia markets are more vulnerable than the US if the stock market crash of the US is to intensify, given the gradual decline in the growth rate of China’s economy.
“Then, there are worries about what’s happening abroad. China, the world’s second-biggest economy, is showing slower growth. Last week, it reported economic growth of 6.5 percent in the third quarter, falling short of expectations. And it has been drawn into a trade dispute with the U.S., with each side digging in on tariffs on billions of dollars of each other’s imports,” CNBC investing editor reported.
Similar to gold and other types of precious metals, the value of the crypto market solely depends on the supply and demand within the market, unaffected by the performance of the global economy.
Hence, the instability of the Chinese yuan and US stock markets, in theory, could positively affect the cryptocurrency market if investors in the traditional finance market utilize cryptocurrencies to hedge their holdings with an asset class that remains unimpacted by the slump of the global finance market.
Analysts expected the cryptocurrency market to increase in value more so when reports were released that Asia markets are likely to suffer a harder crash than the US stock market in the days and weeks to come.
Kathy Lien, managing director of FX strategy at BKAM, stated:
|“It’s not in an environment of positive growth trend so the pressure will be exacerbated in the emerging markets compared to the U.S. market. Unfortunately this is the beginning. I think that when we get sentiment shifts like these, they always last longer than we would like to see and we could see the selling continue for some time.|
The vulnerability of Asian markets is relevant because the majority of over-the-counter (OTC) trading in the cryptocurrency market is said to be settled during Asian hours, primarily due to the presence of large mining facilities.
“One of the biggest criticisms of crypto by institutional investors has been the volatility. Over the last four to six months, the market has been trading in a very tight range, and that seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space,” Bobby Cho, Cumberland’s global head of trading, said.
Lack of correlation is not equivalent to inverse correlation, and there exists no clear trend which suggests that the struggle of the global finance market leads to a positive price movement in the crypto market.
However, in the upcoming years, as the cryptocurrency sector becomes more appealing to institutional investors, digital assets could become a viable alternative to gold and other traditional stores of value.
A decade on from the launch of the first ever Android phone, Taiwanese consumer electronics giant HTC has taken the wraps off its blockchain-powered smartphone, dubbed ‘Exodus’.
HTC has officially announced the early access release of Exodus 1, the company’s first-ever blockchain phone. Available for preorder on its website, the phone will ship sometime in early December and can only be purchased using cryptocurrency, specifically bitcoin and Ethereum.
Genesis Block. Exodus Phone.
This is official early access release to the EXODUS 1. We are inviting a community of developers and enthusiasts to work with us to keep building security. Join us in rebuilding trust together, one phone at a time. Get your early access now! pic.twitter.com/sPcNc7wnzj
— HTC EXODUS (@htcexodus) October 23, 2018
With a 6-inch, QHD+ display at an 18:9 aspect ratio and a Snapdragon 845 processor with 6 GB of RAM and 128 GB of internal storage, the Exodus 1 also packs a 3,500mAh battery with IP68 waterproof rating, comparable to mainstream Android flagships currently sold in the market by Samsung and Google and other mainstream phone makers. The device is being sold at 0.15 BTC or 4.78 ETH, about $960 – also comparable to the Samsung Galaxy Note 9 or the Google Pixel 3 XL.
Announced with much hype as the ‘world’s first native blockchain phone’ earlier in May, HTC Exodus enables support for decentralized applications (DApps) like CryptoKitties and doubles as a hardware wallet for cryptocurrency adopters.
The phone’s “secure enclave” – a locked area secluded from the rest of the phone and the Android operating system – holds the user’s private cryptocurrency keys, HTC explained. Further, a ‘Social Key Recovery’ mechanism allows the user to regain access to their crypto funds in the event of losing their private keys by picking select trustworthy contacts.
HTC is inviting cryptographers to test the early access version of its device and is also releasing APIs for third-party developers.
Speaking to CNBC, HTC’s decentralized chief Phil Chen stated:
|“We believe blockchain is the new paradigm for smartphones and it will form part of HTC’s wider smartphone strategy. This marks a change in HTC, with increased focus on software and IP.”|
The phone is available for pre-order in 34 countries including the US, the UK, Hong Kong, Singapore and a number of European nations, with the notable exception of China, where cryptocurrency trading and exchanges are effectively banned.
The HTC Exodus already has a competitor in its niche category, with Swiss startup Sirin Labs expected to release its own $1,000 blockchain smartphone Finney – to be manufactured by iPhone-maker Foxconn – before the end of the year.
When cryptocurrency development firm Block.one concluded its initial coin offering (ICO) and released the first version of the EOSIO software, it didn’t just raise a record ~$4 billion in crowdfunded contributions — it also received 100 million of the 1 billion EOS tokens distributed through the network’s Genesis block. Now, the well-funded blockchain startup is vowing to use those tokens to stave off any block producer voting cartels, whether they are present now or arise sometime in the future.
Writing in an official statement published on the company’s blog, Block.one CEO Brendan Blumer stated the firm intends to use its EOS stake to ensure that the network’s on-chain governance model is characterized by a “free and democratic election process.”
|“We are aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims. We believe it is important to ensure a free and democratic election process within EOS and may, as we deem appropriate, vote with other holders to reinforce the integrity of this process. We continue working on our potential involvement with the goal of empowering the intent of the greater community through a transparent process that incorporates community feedback.”|
Blumer’s statement was prompted by allegations, first circulated on Chinese social media platform WeChat, that a group of block producers was operating a voting cartel.
Unlike Bitcoin and other Proof-of-Work (PoW) cryptocurrencies, EOS does not use mining to secure the network, verify transactions, and introduce new coins into circulation. Rather, it uses a Delegated Proof-of-Stake (DPoS) consensus, through which users can “stake” their tokens to vote for a group of 21 entities — called “block producers” — who take turns validating transactions and adding blocks to the blockchain. According to an unverified document allegedly leaked by an employee of a top 21 block producer, node operators have formed a cartel to circumvent that democratic process.
Per the document, various block producers have inked mutual voting pacts, through which they agree to stake their tokens to vote for a group of candidates in exchange for the other candidates voting for them in return. The document further purports to show that at least one cryptocurrency exchange is also operating a pay-for-play scheme, voting for certain block producer candidates in exchange for a percentage of their revenue or outright EOS payments.
China-based cryptocurrency news source cnLedger reports that this exchange — Huobi — has denied having a financial relationship with other block producers.
Huobi denies having financial business with the nodes ($EOS BPs) in the leaked spreadsheet. However they have not yet denied the authenticity of the leaked file. “Relevant information is still under further investigation”https://t.co/4oQYY6xM4I https://t.co/qL0wXNbfSI
— cnLedger (@cnLedger) September 30, 2018
Block.one first announced in June that it planned to use its EOS tokens, which still account for nearly 10 percent of the cryptocurrency’s circulating supply, to participate in block producer elections.
However, those funds account for an even larger percentage of the network’s votes, since many token holders decline to stake their tokens and participate in on-chain governance. According to data compiled by block producer candidate EOS Authority, 54 percent of EOS tokens are currently staked, though — because votes “decay” over time to encourage users to remain active in network governance — actual voting power is much lower, at just under 26 percent.
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