Why Blockchain Alone Cannot Fix Privacy Issue

Privacy on Blockchain is one of the major features that attracts users towards the technology.

Despite its decentralized nature and the ability for anyone to view every transaction or data transfer on Blockchain, encrypted communication prevents third party interference with messages sent across the technology.

Privacy has become expensive

Privacy has become perhaps the most discussed topic in the lives of the average citizen across the entire world over the last decade. The revelations of Edward Snowden erased any doubt that we are living in a time where:

“Some people are willing to give up their freedom and liberty in exchange for the illusion of greater security and in reality, reduced privacy” – Jason Cassidy, Co-Founder at Helium.

Cassidy tells Cointelegraph that the advent of cryptographically secure currency has taken the power dynamic away from governments and banking institutions and put it back in the hands of the people.

He notes that Bitcoin is pseudonymous and gives users some element of privacy and financial freedom. However, there are more privacy-centric currencies out there today like Monero that are gaining popularity for their ability to offer financial liberty.

Cassidy says:

“Governments are using terrorism as the rationale for spying on their citizens’ communications. Many people can see past this, realizing this is an excuse being pushed by governments to take advantage of a situation – gaining complete control over the citizenry’s activities. Instead of addressing the problem at its root where terrorism is first created, they wish to weaken encryption of systems and make the entire world a more dangerous place to operate within.”

Growing concerns about privacy

Peter McClory, CEO of secure messenger application Obsidian, tells Cointelegraph that nowadays, people are more concerned about the security of their activities over the Internet.

The reason for this, he says, is that billions of people have moved more and more of their professional, financial and personal lives into the digital world.

Yet, they are beginning to experience more of the downsides of doing this, e.g. hacked accounts, theft and publication of private information and digital assets, to name but a few.

McClory notes that people have started asking questions about who owns the information they put into large centralised platforms such as Facebook and Google, what they should and should not be entitled to do with it, and whether those companies are in a position to make – and keep – any promises about privacy.

Further, many people have deep unease about the extent to which governments monitor online communications, often illegally and far beyond the needs of law enforcements.

As a result, people are starting to express what they believe privacy is and should be, rather than it being something they take for granted.

Blockchain alone is not private

Contrary to popular opinion, McClory notes that Blockchain does not automatically fix this problem.

He says:

“Messaging platforms in general are a mixed bag in terms of the quality of their security, ease of use and the trustworthiness of their operators. Some messaging platforms have excellent security – Signal, WhatsApp, Wire and others – and have led the way in giving people tools they can trust, and driving privacy as a marketable feature of a platform. However, they are limited by dependence on centralised architectures, dated approaches to identify management, and commercial interests in a way that Blockchain-platforms like the Obsidian messenger is not.”

McClory continues by explaining that Blockchain alone doesn’t fix this, noting that privacy can only be protected when all loopholes are closed, not with a single general technology.

However, Blockchain-based platforms have a big advantage since the responsibility for maintaining the integrity and efficiency of the network that transmits messages is linked to the financial interests of a very large number of individuals, and not a centralised organisation that sees its users as products or datapoints.

This makes them more difficult to censor, manipulate and shut-down; it also makes large scale data mining of people’s digital lives impossible.

Former Harvard Money Manager Sees Future in Hedging Bitcoin

A former portfolio manager at Harvard University’s $35.7 bln endowment is planning on venturing into cryptocurrencies by planning a hedge fund that invests in things like Bitcoin.

Lewis Fellas, who left Harvard Management Co. last year is now hedging his bets on this new venture that will be known as Bletchley Park Asset Management in the hopes of raising $200 mln.

Old money breaking into a new market

Fellas has partnered up fwith Ronnie Potel, a former executive at Morgan Stanley, as more and more institutionalized investors look to cut their teeth in this new digital investment market place.

In utilizing some of their experience as investors, Bletchley Park Asset Management has already tried a few testing arbitrage strategies in the markets for these new currencies.

Booming market

The most recent boom in cryptocurrencies, which saw Bitcoin crest $4,000 has been attributed partly to many of these sorts of investors and institutionalized money heading towards Bitcoin.

After the Aug. 1 fork turned out to be a non-event and Bitcoin stayed strong, many saw their chance to invest in a currency that broke record after record.

In fact, a number of Harvard Portfolio managers like Fellas have launched their own hedge funds in recent months as the endowment has downsized and reorganized.

Institutional experience

There are still debates among those who have worked in the traditional investment game whether Bitcoin is a worthy investment or just a Ponzi scheme. However, Fellas has had plenty of experience in the game of investment and still believes this is the way to go.

Fellas was a portfolio manager focusing on Asian equity markets during his tenure at Harvard Management until he departed in June 2016. Before joining Harvard in 2014, he was a portfolio manager in Hong Kong at Segantii Capital Management. He also worked as a trader at JPMorgan Chase & Co.

How to Develop White Paper for ICO: Do’s and Don’ts

It can sometimes be tough to stay up to date for those of us who like to keep a keen eye on new currencies entering the market. Initial Coin Offering’s (ICO’s) seem to be almost a daily occurrence.

With cryptocurrencies hitting such a boom period in both practicality and media attention, it’s hardly surprising that there is a rush to develop and deploy new offerings as soon as possible.

If it is done right, an ICO can be a complicated and lengthy processes to structure. Aside from the actual technological development of the coin itself (including any exchanges, wallets or other extras being deployed), there are a huge number of additional commercial and business factors to consider during the process.

Having been fortunate enough to assist with six ICO’s over the last few months (including some of the markets biggest movers) it has become apparent that there is one, often overlooked, pivotal element in the entire process – the White Paper.

For those who have never taken the time to look at a new ICO offering (as some people simply prefer to work in more established currencies), a White Paper is the document prepared by a party in anticipation of launching a new currency.

It details the commercial, technological and financial details of a new coin offering and puts it into digestible chunks that the reader can understand. Put simply, it’s everything you need to know about the currency before making your mind up if you want to invest, purchase or use it.

In light of what a White Paper is supposed to be, it is astounding the number of ICO’s that do not take the White Paper seriously. They produce a sub-par document that gives the reader little to no information about the offering, other than some marketing spiel about how great the currency will be and how it will beat all others that lay before it. Yawn.

For anyone who is currently working with an ICO and confronted with the task of writing a White Paper, I would strongly suggest following these simple points below to assist your audience and boost potential sales during the ICO.

Keep it simple

It goes without saying that sometimes people can go a little over the top with anything they write (myself included). White Papers have frequently fallen victim to the non-stop drumming of information, most of which the reader does not need.

The end goal here is to part the information that is needed onto the reader without the reader getting bored. This is not a boxing match; you’re not trying to put the reader to sleep. Keep information simple, blocked and easy to read.

Kick off with non-technical information and then move onto your more technical stuff, the reader may not have the same level of technical knowledge as the writer, so cater for all types of readers and don’t assume they want the hardcore technical info straight away.

Some people simply invest, with minimal interest in how the currency works, and want to see what your one has to offer.

Show don’t tell

Graphics are everything in a White Paper never underestimate their power. They help to breakdown the monotony of constant words and allow the writer to get key information across using graphics.

Some of the most comprehensive, concise and well put together documents will contain imagery to get their point across.

However, don’t include images just for the sake of putting them in there, this is no magazine, keep them relevant. Only include images that have some kind of information and improve the knowledge that the reader is getting by including them; Charts, Graphs, Logo’s all have a use.

Some people take in information by visualization, give the reader important facts and figures that they can glance at without having to dig through the whole document.

Especially if you are trying to compare your offering to others on the market.

This is finance

Remember folks, the technology of cryptocurrencies is a both technological and financial. The amount of White Papers that have little to no information about the actual financial element of the currency is astounding.

Talk about fundamentals; how much do you see your currency being worth, how big is your market cap, is there any capshare information you can include, is there a FIAT element to your currency – key financial information that will be wanted by an investor.

Most important of all explain why. If the number of White Papers guilty of not putting any real financial information within them was high, the number not including actual reasons for their answers is astronomical.

Explain to the reader why you forecast these numbers, why that market cap, why those items as a FIAT component. Without any tangible backing and explanation, your offering can look like it is only trying to make you rich.

Balance the technology

It goes without saying that a White Paper should contain technological information. However, try and strike that balance between giving away the entire outlook of how your offering will operate technologically and delivering zero information at all around it at all.

Introduce any patents, copyrights or actual protections that your technology set has in place.

Build real confidence

Introduce yourself, talk about why you (or your company) is deploying this coin/token and why they have chosen now to put it into the market. Talk about actual advantages that your coin/token offers, more than just simple “we noticed a need in the market…”.

To be clear, the market doesn’t need your coin but explain why the reader would.

More importantly, invite individuals to communicate further with you about your offering, making it clear that you have an ability to communicate with your future investors, you are all part of the same team.

Remember, cryptocurrencies are now attracting the attention of serious investors that control serious money. Therefore, you should aim to build confidence in both those at the lower end of investment and the higher, more lucrative end.

Make it unique

Finally, make sure that your White Paper reflects both your company and your offering with the style and image that you want to become known for. The earlier you build your brand and make that awareness, the better your offering will do for it.

 

By Cal Evans

Cal Evans is an International Technology Lawyer from London who studied Financial Markets at Yale and has experience working with some of the best-known companies in Silicone Valley. In 2016 Cal left a top 10 California law firm to start Gresham International a legal service and compliance firm which now has offices in the US and UK specializing in the technology sector.

Vitalik Buterin and Thai Central Bank Will Discuss Future of Financial Sector

The Central Bank of Thailand held a meeting with digital currency startup and Ethereum co-founder Vitalik Buterin in mid-August 2017 to talk about such topics as the future of the Thai economy and its finance sector.

The parties particularly discussed the possible integration of the digital currency Ethereum and the Blockchain-based services offered by companies like OmiseGo to further improve the country’s existing banking systems and financial platforms.

What is OmiseGo?

The startup company OmiseGo, which was established in 2013, has developed its Ethereum-based technology in its bid to introduce an efficient and secure infrastructure for payment processing based on the Blockchain technology.

Over the past four years, the company was able to expand its operations across Asia and has secured the support of leading investment firms.

OmiseGo was also able to gain the support of several experts in the industry like Ethereum co-founders Buterin and Gavin Wood and Bitcoin expert Joseph Poon.

In its statement, the OmiseGo team said that it aims to facilitate financial transactions through the Ethereum Blockchain:

“Through the  network connected to the Ethereum mainnet, anyone will be able to conduct financial transactions such as payments, remittances, payroll deposit, B2B commerce, supply-chain finance, loyalty programs, asset management and trading, and other on-demand services, in a completely decentralized and inexpensive way.”

Other Blockchain developments in Thailand and other Asian countries

Meanwhile, several Thai companies have adopted the Blockchain technology in their operations.

Among them is leading Thai commercial bank Kasikornbank, which partnered with technology firm IBM to integrate the Hyperledger Fabric Blockchain into its current systems used in processing letters of guarantees.

Moreover, a number of countries in the region including South Korea, Japan and China have also announced their plans to aggressively test possible applications of Ethereum to improve existing government infrastructures.

November SegWit2x Hard Fork Could See Newbie Users Lose Bitcoins

Bitcoin wallet support for SegWit2x is already a talking point as different plans could mean users lose Bitcoins.

A response from Breadwallet to a user request about November’s SegWit2x hard fork demonstrates the ease with which newbie Bitcoin holders could unwittingly devalue their holdings.

“We are excited about SegWit,” the response reads, “and we will be sure to update the community […] when you can send SegWit transactions.”

The news confirms comments from president of Breadwallet Aaron Voisine, who earlier this month wrote on Reddit:

“Breadwallet follows the majority of hashing power on the original PoW algorithm, SegWit2x or no, it follows the Nakamoto consensus.”

The implications for this lie in the fact that users with coins on the original BTC Blockchain risk losing them if Breadwallet opts for SegWit2x transaction support.

Against a lack of clear information geared towards non-technical users, the issue of a further hard fork could result in their alienation.

“After the hardfork in November, Breadwallet will potentially be doing SegWit2x transactions. In that case, you risk losing your BTC sitting in the Bitcoin Blockchain,” a further Reddit commentary reads in response to Voisine.

“Move your BTC out of Breadwallet before the hardfork.”

In the wider context of a likely second Bitcoin hard fork, SegWit2x is dividing industry opinion.

While some commentators warn the event is similar to a “hostile takeover” of Bitcoin, Bitcoin Core last week sought to debunk various myths associated with the concept.

Lightning Network Will Come to Bitcoin ‘From Tomorrow’: Reports

Lightning Network transactions will be available for Bitcoin from tomorrow, rumors are suggesting.

Just under two weeks after SegWit locked in for the Bitcoin network, Lightning, which offers considerably faster and cheaper transactions for more users, may appear sooner than planned.

Tweeting the as yet unsourced information, commentator Ferdous said that the so-called ‘Layer 2’ technology would be available “from Tuesday.”

For users, he clarified, the move meant “trustless instant nearly zero-fee transactions,” “scaling to billions of users” and “thousands of new apps.”

The technology powering Lightning is still in beta testing, with Blockstream having first tested it with Litecoin transactions back in May.

Last week, ex-Bitcoin Core developer Gavin Andresen forecast the accompanying ecosystem would be “highly centralized” once operational, but that this was “OK.”

Potential applications are already in the offing, with Blockstream CEO Adam Back recently revealing he had held talks with BitTorrent CEO Bram Cohen regarding potential integration of Lightning microtransactions into the platform.   

While Lightning’s introduction marks a major milestone in the Bitcoin network’s journey, concerns are already mounting about the implications of a second hard fork in the form of SegWit2x.

Monero Price Jumps Over 40 Percent on Rumors It Will Soon Debut on Bithumb Exchange

Monero (XMR) is leading an altcoin resurgence Monday as the anonymity-focused asset explodes 37 percent in hours.

Data from cross-exchange monitoring resource Coinmarketcap shows XMR, which had traded around $52 over the weekend, suddenly hit $71 today.

Monero Charts

The uptick appears to be a result of rumors that the South Korean exchange Bithumb will add the coin to its books.

Bithumb remains the biggest volume exchange in the world despite a recent hack, with South Korean appetites for trading coming to the fore in recent months.

Price rises appear far from over, with rates on the major exchange Bittrex encountering volatility and trades hitting more than $80 a token.

Little is currently confirmable about the developments and Monero’s future on Bithumb, with lead developer Riccardo Spagni yet to comment.

Spagni is known for his enthusiastic Twitter activity, having previously defended Monero and his development decisions in his classic wry style after prices peaked and suddenly fell this year.

Altcoin prices have traditionally increased following announcements of exchange deals. Most recently, Civic’s CVC token debuted on the Chinese exchange BTER, resulting in prices per coin rising from $0.22 to $0.68 within 48 hours.

Exploits, Hacks, Phishing, Ponzi Are on the Rise on Ethereum

In its essence, Ethereum extended over the Bitcoin payment mean, by adding a rich programming language enabling the execution of smart contracts.

While this innovative technology attracted a great deal of crypto-enthusiasts that saw in it great potential, it also became home to cybercrime in a significant way.

As it is often the case with new technologies, hackers embraced it and stole millions of dollars in the past years.

The first major cybercrime incident

Many cryptocurrency enthusiasts recall the month of June 2016 as the month of the first major cybercrime incident on Ethereum. The network started gaining momentum when The DAO project was announced, and its ICO managed to raise a historic $150 mln.

Such an amount inevitably peaked the interest of hackers that began exploring the project’s code, and ultimately finding a “bug.” It was used to drain $74 mln of the raised pot, which represents nearly 40 percent of the total ICO funds.

While some of it was eventually recovered, the incident rang a first red alarm and called for more security and caution when dealing with Ethereum.

The rise of the Ether thieves

Since Ethereum makes it relatively easy for developers to build complex smart contracts and decentralized autonomous apps (DApps) and given the rising price of ETH, it became the platform of choice for these token sales that became more popular than ever.

“The rise of cybercrime on Ethereum has risen in tandem with the big ICO financing, with total cybercrime revenue rising from $100 mln in June to $225 million in August this year.”

Source: Chainalysis

Not only do these ICOs cripple the Blockchain on a regular basis, but there is also a significant security risk associated with such projects. Chainalysis estimates that out of the $1.6 bln invested in ICOs this year, $150 mln have ended up in the hands of cybercriminals.

In other words, 10 percent of raised funds end up in the wrong hands. This accounts for approximately 30,000 victims losing an average of $7,500 each.

Exploits, hacks, phishing and Ponzi

The common cybercrimes on Ethereum can be categorized into four categories: exploits, hacks, phishing and Ponzi schemes.

The highest grossing exploit was the DAO, but another $30 mln was stolen from the Parity wallet in June 2017.

While some cyber criminals have opted for high profile hacks and exploits, phishing is actually driving the most revenue today.

It now makes up more than 50 percent of all cybercrime revenue generated this year ahead of exploits which sometimes get the most coverage in the press due to their nature.

Cybercrime

Stolen funds

Number of victims

Phishing

115,000,000

16,900

Exploits

103,000,000

11,000

Hacks

7,400,000

2,100

Ponzi

4,000

260

Total

225,400,000

30,260

 

Statistics on cybercrime on Ethereum are made possible given the public nature of the Blockchain that allows the analysis and auditing of transactions made on the network.

More and more solutions are launched to keep tabs on Blockchain trends and extract intelligence out of it.

The Ethereum technology is improving, and developers are writing more secure contracts which are positive trends. However, protecting users from phishing is a different matter.

The Ethereum Scam Database, which has been created in 2017 by the MyEtherWallet team, regularly identifies and lists the ongoing scams, and it is worth checking before investing in an ICO.

OmiseGo Price Recovers after Support from Thai Ministry of Finance

The price of the digital currency OmiseGo (OMG) has been experiencing decline as of mid-August 2017, and eventually recovered after the show of support by the Thai Ministry of Finance.

The company is actively operating in Asia, particularly in such countries as Indonesia, Thailand, Singapore and Japan. Among the company’s investors are Golden Gate Ventures and SBI Investment.

Omise’s prominent list of advisors include industry experts Vitalik Buterin, Vlad Zamfir, Gavin Wood and Joseph Poon.

The cryptocurrency has previously reached an all-time high of $9.3 per token recently, but this came down to $7.9 and has recently recovered to $8.02, as of press time.

The Omise team launched the OmiseGo platform with a goal to unbank the banked individuals rather than banking the unbanked. The platform aims to provide real-time peer-to-peer (P2P) value exchange and payment services to participating customers.

It utilizes Ethereum Blockchain in providing its financial services to customers around the world and can be accessed by any user as it does not require a customer’s bank account to conduct business.

Just recently, Omise has successfully completed its digital currency initial coin offering (ICO). The company has raised $25 mln in the crowdsale that paved the way for the introduction of the OmiseGo token.

This token is used in all the services currently offered in the OmiseGo Blockchain, including those in the firm’s decentralized exchange, liquidity provider and asset-backed gateway.

The company’s market cap has increased to $777 mln in recent weeks.

Smith + Crown Token Sale Listing Policies

Smith + Crown is inundated with requests to list and review token sales. Below you can see a graph of the number of weekly responses we receive to our token sale intake form. 

This has included a mix of nonsense projects, wildly ambitious entrepreneurs, wildly unrealistic entrepreneurs, scammers, and jokes. Even satire projects have proven sophisticated and more numerous than we would have guessed.

We feel the need for a public update of our listing policies, to help guide both token sale launchers and potential token sale participants, and to offer some thoughts on how Smith + Crown is responding to this increasingly wild market.

S+C Listing Policies

Below is some clarification of the most common misconceptions people have.

  1. We do not charge for listing or research, and we won’t accept offers to do so. We retain the right to list the projects we choose and the right to research projects we choose.
  2. We currently have only one requirement to be listed: provide third-party verification that you are who you say you are. Do not try to raise anonymously. In this industry, there are few protections for token sale participants beyond escrow and public reputation. Our list currently is not curated, though we are considering several options for changing this (see below)
  3. In order to be eligible for an interview and review, contact at least three weeks before your sale. We receive plenty of requests for listing mere days before a sale will launch, then follow up complaints that we haven’t written a review. If you contact us two weeks before your sale or less, we will not consider researching your project. If you contact us three weeks before your sale, we most likely won’t research your project. Even if you contact us in advance, we don’t guarantee that we will research your project. We are expanding our team to help us cover more of the market.
  4. The things we look for when deciding which projects to research include the following factors: progress toward a working product, reputation within the community, available code for review, track record within both the blockchain industry (particularly as a developer) and history within the industry the project is trying to disrupt, a long marketing period, openness to feedback and critique, and general novelty within the industry.

If you want your sale to be listed, please contact us at tokens@smithandcrown.com, with plenty of time to spare, and share as much information as you can. We respect all project requests to withhold listing until a certain date.

You should be public with your project and intent to distribute your token via token sale with plenty of time for the community to debates the merits of your business model, token economy, team, roadmap, and technical solution. If some information hasn’t yet been decided, that’s ok—just get on our radar.

Responding to the Market

There are many troubling signs in the token sale market today.

  • Projects raising money without developers
  • Projects raising money without security or escrow measures
  • Projects announcing sales without giving enough time for community review
  • Projects raising more money than a clear roadmap—should one exist—suggests they need
  • Projects raising money without even a basic minimum viable product

This frenzy has led to deep skepticism—even satire—from mainstream media. The July 27 2017 issue of Forbes Magazine depicts the industry (unfairly) as filled only with hucksters and the hopelessly naïve. For anyone looking at the market at a high level, this view is understandable.

Barring a major external event to chill the entire industry, this trend will likely continue. More tools for issuing tokens are coming online, more service providers (many with little understanding of the legal implications of their work) are offering various “ICO services,” and more people are launching from more jurisdictions.

In 2013, the ease with which anyone could fork existing blockchain code bases and launch their own coin spawned a wave of what became affectionately known as “shitcoins.” Many pre-mined a hefty portion of tokens to the founding team and then opened up mining. We may be on the verge of that with token sales.

This is a shame and will soil a growing and promising industry at a time when more people are getting involved.

We at S+C are considering several measures to help people make sense of this increasingly chaotic market.

  1. Launching an initiative to promote self-regulation within the industry. This will include clear guidelines and standards that projects should follow. It should hopefully help sale participants sift wheat from chaff and well intentioned entrepreneurs stand out.
  2. Launch a curated listing of serious projects. This would remain a free service, with listing done at our own discretion. We aim to be an open platform where projects can expect to be treated equally regardless of their ability to pay for marketing services.
  3. Launching new features with which to distinguish projects. We intentionally don’t ‘rate’ projects because we think such rating at so early a stage is an exercise in false precision. We do, however, try to label projects according to objective criteria. This can help people sort through the jumble of sales. To provide finer definition, we may add more criteria, possibly more subjective ones, while launching new search and sort features.

If you have any ideas about the above—or want to be involved in any initiatives around industry self-regulation—please contact us.

Best,

Matt

Director of Research