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Summary: Everyone knows that when you give your assets to someone else, they always keep them safe. If this is true for individuals, it is certainly true for businesses. Custodians always tell the truth and manage funds properly. They won't have any interest in taking the assets as an exchange operator would. Auditors tell the truth and can't be misled. That's because organizations that are regulated are incapable of lying and don't make mistakes. First, some background. Here is a summary of how custodians make us more secure: Previously, we might give Alice our crypto assets to hold. There were risks:
Alice might take the assets and disappear.
Alice might spend the assets and pretend that she still has them (fractional model).
Alice might store the assets insecurely and they'll get stolen.
Alice might give the assets to someone else by mistake or by force.
Alice might lose access to the assets.
But "no worries", Alice has a custodian named Bob. Bob is dressed in a nice suit. He knows some politicians. And he drives a Porsche. "So you have nothing to worry about!". And look at all the benefits we get:
Alice can't take the assets and disappear (unless she asks Bob or never gives them to Bob).
Alice can't spend the assets and pretend that she still has them. (Unless she didn't give them to Bob or asks him for them.)
Alice can't store the assets insecurely so they get stolen. (After all - she doesn't have any control over the withdrawal process from any of Bob's systems, right?)
Alice can't give the assets to someone else by mistake or by force. (Bob will stop her, right Bob?)
Alice can't lose access to the funds. (She'll always be present, sane, and remember all secrets, right?)
See - all problems are solved! All we have to worry about now is:
Bob might take the assets and disappear.
Bob might spend the assets and pretend that he still has them (fractional model).
Bob might store the assets insecurely and they'll get stolen.
Bob might give the assets to someone else by mistake or by force.
Bob might lose access to the assets.
It's pretty simple. Before we had to trust Alice. Now we only have to trust Alice, Bob, and all the ways in which they communicate. Just think of how much more secure we are! "On top of that", Bob assures us, "we're using a special wallet structure". Bob shows Alice a diagram. "We've broken the balance up and store it in lots of smaller wallets. That way", he assures her, "a thief can't take it all at once". And he points to a historic case where a large sum was taken "because it was stored in a single wallet... how stupid". "Very early on, we used to have all the crypto in one wallet", he said, "and then one Christmas a hacker came and took it all. We call him the Grinch. Now we individually wrap each crypto and stick it under a binary search tree. The Grinch has never been back since." "As well", Bob continues, "even if someone were to get in, we've got insurance. It covers all thefts and even coercion, collusion, and misplaced keys - only subject to the policy terms and conditions." And with that, he pulls out a phone-book sized contract and slams it on the desk with a thud. "Yep", he continues, "we're paying top dollar for one of the best policies in the country!" "Can I read it?' Alice asks. "Sure," Bob says, "just as soon as our legal team is done with it. They're almost through the first chapter." He pauses, then continues. "And can you believe that sales guy Mike? He has the same year Porsche as me. I mean, what are the odds?" "Do you use multi-sig?", Alice asks. "Absolutely!" Bob replies. "All our engineers are fully trained in multi-sig. Whenever we want to set up a new wallet, we generate 2 separate keys in an air-gapped process and store them in this proprietary system here. Look, it even requires the biometric signature from one of our team members to initiate any withdrawal." He demonstrates by pressing his thumb into the display. "We use a third-party cloud validation API to match the thumbprint and authorize each withdrawal. The keys are also backed up daily to an off-site third-party." "Wow that's really impressive," Alice says, "but what if we need access for a withdrawal outside of office hours?" "Well that's no issue", Bob says, "just send us an email, call, or text message and we always have someone on staff to help out. Just another part of our strong commitment to all our customers!" "What about Proof of Reserve?", Alice asks. "Of course", Bob replies, "though rather than publish any blockchain addresses or signed transaction, for privacy we just do a SHA256 refactoring of the inverse hash modulus for each UTXO nonce and combine the smart contract coefficient consensus in our hyperledger lightning node. But it's really simple to use." He pushes a button and a large green checkmark appears on a screen. "See - the algorithm ran through and reserves are proven." "Wow", Alice says, "you really know your stuff! And that is easy to use! What about fiat balances?" "Yeah, we have an auditor too", Bob replies, "Been using him for a long time so we have quite a strong relationship going! We have special books we give him every year and he's very efficient! Checks the fiat, crypto, and everything all at once!" "We used to have a nice offline multi-sig setup we've been using without issue for the past 5 years, but I think we'll move all our funds over to your facility," Alice says. "Awesome", Bob replies, "Thanks so much! This is perfect timing too - my Porsche got a dent on it this morning. We have the paperwork right over here." "Great!", Alice replies. And with that, Alice gets out her pen and Bob gets the contract. "Don't worry", he says, "you can take your crypto-assets back anytime you like - just subject to our cancellation policy. Our annual management fees are also super low and we don't adjust them often". How many holes have to exist for your funds to get stolen? Just one. Why are we taking a powerful offline multi-sig setup, widely used globally in hundreds of different/lacking regulatory environments with 0 breaches to date, and circumventing it by a demonstrably weak third party layer? And paying a great expense to do so? If you go through the list of breaches in the past 2 years to highly credible organizations, you go through the list of major corporate frauds (only the ones we know about), you go through the list of all the times platforms have lost funds, you go through the list of times and ways that people have lost their crypto from identity theft, hot wallet exploits, extortion, etc... and then you go through this custodian with a fine-tooth comb and truly believe they have value to add far beyond what you could, sticking your funds in a wallet (or set of wallets) they control exclusively is the absolute worst possible way to take advantage of that security. The best way to add security for crypto-assets is to make a stronger multi-sig. With one custodian, what you are doing is giving them your cryptocurrency and hoping they're honest, competent, and flawlessly secure. It's no different than storing it on a really secure exchange. Maybe the insurance will cover you. Didn't work for Bitpay in 2015. Didn't work for Yapizon in 2017. Insurance has never paid a claim in the entire history of cryptocurrency. But maybe you'll get lucky. Maybe your exact scenario will buck the trend and be what they're willing to cover. After the large deductible and hopefully without a long and expensive court battle. And you want to advertise this increase in risk, the lapse of judgement, an accident waiting to happen, as though it's some kind of benefit to customers ("Free institutional-grade storage for your digital assets.")? And then some people are writing to the OSC that custodians should be mandatory for all funds on every exchange platform? That this somehow will make Canadians as a whole more secure or better protected compared with standard air-gapped multi-sig? On what planet? Most of the problems in Canada stemmed from one thing - a lack of transparency. If Canadians had known what a joke Quadriga was - it wouldn't have grown to lose $400m from hard-working Canadians from coast to coast to coast. And Gerald Cotten would be in jail, not wherever he is now (at best, rotting peacefully). EZ-BTC and mister Dave Smilie would have been a tiny little scam to his friends, not a multi-million dollar fraud. Einstein would have got their act together or been shut down BEFORE losing millions and millions more in people's funds generously donated to criminals. MapleChange wouldn't have even been a thing. And maybe we'd know a little more about CoinTradeNewNote - like how much was lost in there. Almost all of the major losses with cryptocurrency exchanges involve deception with unbacked funds. So it's great to see transparency reports from BitBuy and ShakePay where someone independently verified the backing. The only thing we don't have is:
ANY CERTAINTY BALANCES WEREN'T EXCLUDED. Quadriga's largest account was $70m. 80% of funds are in 20% of accounts (Pareto principle). All it takes is excluding a few really large accounts - and nobody's the wiser. A fractional platform can easily pass any audit this way.
ANY VISIBILITY WHATSOEVER INTO THE CUSTODIANS. BitBuy put out their report before moving all the funds to their custodian and ShakePay apparently can't even tell us who the custodian is. That's pretty important considering that basically all of the funds are now stored there.
ANY IDEA ABOUT THE OTHER EXCHANGES. In order for this to be effective, it has to be the norm. It needs to be "unusual" not to know. If obscurity is the norm, then it's super easy for people like Gerald Cotten and Dave Smilie to blend right in.
It's not complicated to validate cryptocurrency assets. They need to exist, they need to be spendable, and they need to cover the total balances. There are plenty of credible people and firms across the country that have the capacity to reasonably perform this validation. Having more frequent checks by different, independent, parties who publish transparent reports is far more valuable than an annual check by a single "more credible/official" party who does the exact same basic checks and may or may not publish anything. Here's an example set of requirements that could be mandated:
First report within 1 month of launching, another within 3 months, and further reports at minimum every 6 months thereafter.
No auditor can be repeated within a 12 month period.
All reports must be public, identifying the auditor and the full methodology used.
All auditors must be independent of the firm being audited with no conflict of interest.
Reports must include the percentage of each asset backed, and how it's backed.
The auditor publishes a hash list, which lists a hash of each customer's information and balances that were included. Hash is one-way encryption so privacy is fully preserved. Every customer can use this to have 100% confidence they were included.
If we want more extensive requirements on audits, these should scale upward based on the total assets at risk on the platform, and whether the platform has loaned their assets out.
There are ways to structure audits such that neither crypto assets nor customer information are ever put at risk, and both can still be properly validated and publicly verifiable. There are also ways to structure audits such that they are completely reasonable for small platforms and don't inhibit innovation in any way. By making the process as reasonable as possible, we can completely eliminate any reason/excuse that an honest platform would have for not being audited. That is arguable far more important than any incremental improvement we might get from mandating "the best of the best" accountants. Right now we have nothing mandated and tons of Canadians using offshore exchanges with no oversight whatsoever. Transparency does not prove crypto assets are safe. CoinTradeNewNote, Flexcoin ($600k), and Canadian Bitcoins ($100k) are examples where crypto-assets were breached from platforms in Canada. All of them were online wallets and used no multi-sig as far as any records show. This is consistent with what we see globally - air-gapped multi-sig wallets have an impeccable record, while other schemes tend to suffer breach after breach. We don't actually know how much CoinTrader lost because there was no visibility. Rather than publishing details of what happened, the co-founder of CoinTrader silently moved on to found another platform - the "most trusted way to buy and sell crypto" - a site that has no information whatsoever (that I could find) on the storage practices and a FAQ advising that “[t]rading cryptocurrency is completely safe” and that having your own wallet is “entirely up to you! You can certainly keep cryptocurrency, or fiat, or both, on the app.” Doesn't sound like much was learned here, which is really sad to see. It's not that complicated or unreasonable to set up a proper hardware wallet. Multi-sig can be learned in a single course. Something the equivalent complexity of a driver's license test could prevent all the cold storage exploits we've seen to date - even globally. Platform operators have a key advantage in detecting and preventing fraud - they know their customers far better than any custodian ever would. The best job that custodians can do is to find high integrity individuals and train them to form even better wallet signatories. Rather than mandating that all platforms expose themselves to arbitrary third party risks, regulations should center around ensuring that all signatories are background-checked, properly trained, and using proper procedures. We also need to make sure that signatories are empowered with rights and responsibilities to reject and report fraud. They need to know that they can safely challenge and delay a transaction - even if it turns out they made a mistake. We need to have an environment where mistakes are brought to the surface and dealt with. Not one where firms and people feel the need to hide what happened. In addition to a knowledge-based test, an auditor can privately interview each signatory to make sure they're not in coercive situations, and we should make sure they can freely and anonymously report any issues without threat of retaliation. A proper multi-sig has each signature held by a separate person and is governed by policies and mutual decisions instead of a hierarchy. It includes at least one redundant signature. For best results, 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7. History has demonstrated over and over again the risk of hot wallets even to highly credible organizations. Nonetheless, many platforms have hot wallets for convenience. While such losses are generally compensated by platforms without issue (for example Poloniex, Bitstamp, Bitfinex, Gatecoin, Coincheck, Bithumb, Zaif, CoinBene, Binance, Bitrue, Bitpoint, Upbit, VinDAX, and now KuCoin), the public tends to focus more on cases that didn't end well. Regardless of what systems are employed, there is always some level of risk. For that reason, most members of the public would prefer to see third party insurance. Rather than trying to convince third party profit-seekers to provide comprehensive insurance and then relying on an expensive and slow legal system to enforce against whatever legal loopholes they manage to find each and every time something goes wrong, insurance could be run through multiple exchange operators and regulators, with the shared interest of having a reputable industry, keeping costs down, and taking care of Canadians. For example, a 4 of 7 multi-sig insurance fund held between 5 independent exchange operators and 2 regulatory bodies. All Canadian exchanges could pay premiums at a set rate based on their needed coverage, with a higher price paid for hot wallet coverage (anything not an air-gapped multi-sig cold wallet). Such a model would be much cheaper to manage, offer better coverage, and be much more reliable to payout when needed. The kind of coverage you could have under this model is unheard of. You could even create something like the CDIC to protect Canadians who get their trading accounts hacked if they can sufficiently prove the loss is legitimate. In cases of fraud, gross negligence, or insolvency, the fund can be used to pay affected users directly (utilizing the last transparent balance report in the worst case), something which private insurance would never touch. While it's recommended to have official policies for coverage, a model where members vote would fully cover edge cases. (Could be similar to the Supreme Court where justices vote based on case law.) Such a model could fully protect all Canadians across all platforms. You can have a fiat coverage governed by legal agreements, and crypto-asset coverage governed by both multi-sig and legal agreements. It could be practical, affordable, and inclusive. Now, we are at a crossroads. We can happily give up our freedom, our innovation, and our money. We can pay hefty expenses to auditors, lawyers, and regulators year after year (and make no mistake - this cost will grow to many millions or even billions as the industry grows - and it will be borne by all Canadians on every platform because platforms are not going to eat up these costs at a loss). We can make it nearly impossible for any new platform to enter the marketplace, forcing Canadians to use the same stagnant platforms year after year. We can centralize and consolidate the entire industry into 2 or 3 big players and have everyone else fail (possibly to heavy losses of users of those platforms). And when a flawed security model doesn't work and gets breached, we can make it even more complicated with even more people in suits making big money doing the job that blockchain was supposed to do in the first place. We can build a system which is so intertwined and dependent on big government, traditional finance, and central bankers that it's future depends entirely on that of the fiat system, of fractional banking, and of government bail-outs. If we choose this path, as history has shown us over and over again, we can not go back, save for revolution. Our children and grandchildren will still be paying the consequences of what we decided today. Or, we can find solutions that work. We can maintain an open and innovative environment while making the adjustments we need to make to fully protect Canadian investors and cryptocurrency users, giving easy and affordable access to cryptocurrency for all Canadians on the platform of their choice, and creating an environment in which entrepreneurs and problem solvers can bring those solutions forward easily. None of the above precludes innovation in any way, or adds any unreasonable cost - and these three policies would demonstrably eliminate or resolve all 109 historic cases as studied here - that's every single case researched so far going back to 2011. It includes every loss that was studied so far not just in Canada but globally as well. Unfortunately, finding answers is the least challenging part. Far more challenging is to get platform operators and regulators to agree on anything. My last post got no response whatsoever, and while the OSC has told me they're happy for industry feedback, I believe my opinion alone is fairly meaningless. This takes the whole community working together to solve. So please let me know your thoughts. Please take the time to upvote and share this with people. Please - let's get this solved and not leave it up to other people to do. Facts/background/sources (skip if you like):
The inspiration for the paragraph about splitting wallets was an actual quote from a Canadian company providing custodial services in response to the OSC consultation paper: "We believe that it will be in the in best interests of investors to prohibit pooled crypto assets or ‘floats’. Most Platforms pool assets, citing reasons of practicality and expense. The recent hack of the world’s largest Platform – Binance – demonstrates the vulnerability of participants’ assets when such concessions are made. In this instance, the Platform’s entire hot wallet of Bitcoins, worth over $40 million, was stolen, facilitated in part by the pooling of client crypto assets." "the maintenance of participants (and Platform) crypto assets across multiple wallets distributes the related risk and responsibility of security - reducing the amount of insurance coverage required and making insurance coverage more readily obtainable". For the record, their reply also said nothing whatsoever about multi-sig or offline storage.
In addition to the fact that the $40m hack represented only one "hot wallet" of Binance, and they actually had the vast majority of assets in other wallets (including mostly cold wallets), multiple real cases have clearly demonstrated that risk is still present with multiple wallets. Bitfinex, VinDAX, Bithumb, Altsbit, BitPoint, Cryptopia, and just recently KuCoin all had multiple wallets breached all at the same time, and may represent a significantly larger impact on customers than the Binance breach which was fully covered by Binance. To represent that simply having multiple separate wallets under the same security scheme is a comprehensive way to reduce risk is just not true.
Private insurance has historically never covered a single loss in the cryptocurrency space (at least, not one that I was able to find), and there are notable cases where massive losses were not covered by insurance. Bitpay in 2015 and Yapizon in 2017 both had insurance policies that didn't pay out during the breach, even after a lengthly court process. The same insurance that ShakePay is presently using (and announced to much fanfare) was describe by their CEO himself as covering “physical theft of the media where the private keys are held,” which is something that has never historically happened. As was said with regard to the same policy in 2018 - “I don’t find it surprising that Lloyd’s is in this space,” said Johnson, adding that to his mind the challenge for everybody is figuring out how to structure these policies so that they are actually protective. “You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it’s not super protective.”
The most profitable policy for a private insurance company is one with the most expensive premiums that they never have to pay a claim on. They have no inherent incentive to take care of people who lost funds. It's "cheaper" to take the reputational hit and fight the claim in court. The more money at stake, the more the insurance provider is incentivized to avoid payout. They're not going to insure the assets unless they have reasonable certainty to make a profit by doing so, and they're not going to pay out a massive sum unless it's legally forced. Private insurance is always structured to be maximally profitable to the insurance provider.
The circumvention of multi-sig was a key factor in the massive Bitfinex hack of over $60m of bitcoin, which today still sits being slowly used and is worth over $3b. While Bitfinex used a qualified custodian Bitgo, which was and still is active and one of the industry leaders of custodians, and they set up 2 of 3 multi-sig wallets, the entire system was routed through Bitfinex, such that Bitfinex customers could initiate the withdrawals in a "hot" fashion. This feature was also a hit with the hacker. The multi-sig was fully circumvented.
Bitpay in 2015 was another example of a breach that stole 5,000 bitcoins. This happened not through the exploit of any system in Bitpay, but because the CEO of a company they worked with got their computer hacked and the hackers were able to request multiple bitcoin purchases, which Bitpay honoured because they came from the customer's computer legitimately. Impersonation is a very common tactic used by fraudsters, and methods get more extreme all the time.
A notable case in Canada was the Canadian Bitcoins exploit. Funds were stored on a server in a Rogers Data Center, and the attendee was successfully convinced to reboot the server "in safe mode" with a simple phone call, thus bypassing the extensive security and enabling the theft.
The very nature of custodians circumvents multi-sig. This is because custodians are not just having to secure the assets against some sort of physical breach but against any form of social engineering, modification of orders, fraudulent withdrawal attempts, etc... If the security practices of signatories in a multi-sig arrangement are such that the breach risk of one signatory is 1 in 100, the requirement of 3 independent signatures makes the risk of theft 1 in 1,000,000. Since hackers tend to exploit the weakest link, a comparable custodian has to make the entry and exit points of their platform 10,000 times more secure than one of those signatories to provide equivalent protection. And if the signatories beef up their security by only 10x, the risk is now 1 in 1,000,000,000. The custodian has to be 1,000,000 times more secure. The larger and more complex a system is, the more potential vulnerabilities exist in it, and the fewer people can understand how the system works when performing upgrades. Even if a system is completely secure today, one has to also consider how that system might evolve over time or work with different members.
By contrast, offline multi-signature solutions have an extremely solid record, and in the entire history of cryptocurrency exchange incidents which I've studied (listed here), there has only been one incident (796 exchange in 2015) involving an offline multi-signature wallet. It happened because the customer's bitcoin address was modified by hackers, and the amount that was stolen ($230k) was immediately covered by the exchange operators. Basically, the platform operators were tricked into sending a legitimate withdrawal request to the wrong address because hackers exploited their platform to change that address. Such an issue would not be prevented in any way by the use of a custodian, as that custodian has no oversight whatsoever to the exchange platform. It's practical for all exchange operators to test large withdrawal transactions as a general policy, regardless of what model is used, and general best practice is to diagnose and fix such an exploit as soon as it occurs.
False promises on the backing of funds played a huge role in the downfall of Quadriga, and it's been exposed over and over again (MyCoin, PlusToken, Bitsane, Bitmarket, EZBTC, IDAX). Even today, customers have extremely limited certainty on whether their funds in exchanges are actually being backed or how they're being backed. While this issue is not unique to cryptocurrency exchanges, the complexity of the technology and the lack of any regulation or standards makes problems more widespread, and there is no "central bank" to come to the rescue as in the 2008 financial crisis or during the great depression when "9,000 banks failed".
In addition to fraudulent operations, the industry is full of cases where operators have suffered breaches and not reported them. Most recently, Einstein was the largest case in Canada, where ongoing breaches and fraud were perpetrated against the platform for multiple years and nobody found out until the platform collapsed completely. While fraud and breaches suck to deal with, they suck even more when not dealt with. Lack of visibility played a role in the largest downfalls of Mt. Gox, Cryptsy, and Bitgrail. In some cases, platforms are alleged to have suffered a hack and keep operating without admitting it at all, such as CoinBene.
It surprises some to learn that a cryptographic solution has already existed since 2013, and gained widespread support in 2014 after Mt. Gox. Proof of Reserves is a full cryptographic proof that allows any customer using an exchange to have complete certainty that their crypto-assets are fully backed by the platform in real-time. This is accomplished by proving that assets exist on the blockchain, are spendable, and fully cover customer deposits. It does not prove safety of assets or backing of fiat assets.
If we didn't care about privacy at all, a platform could publish their wallet addresses, sign a partial transaction, and put the full list of customer information and balances out publicly. Customers can each check that they are on the list, that the balances are accurate, that the total adds up, and that it's backed and spendable on the blockchain. Platforms who exclude any customer take a risk because that customer can easily check and see they were excluded. So together with all customers checking, this forms a full proof of backing of all crypto assets.
However, obviously customers care about their private information being published. Therefore, a hash of the information can be provided instead. Hash is one-way encryption. The hash allows the customer to validate inclusion (by hashing their own known information), while anyone looking at the list of hashes cannot determine the private information of any other user. All other parts of the scheme remain fully intact. A model like this is in use on the exchange CoinFloor in the UK.
A Merkle tree can provide even greater privacy. Instead of a list of balances, the balances are arranged into a binary tree. A customer starts from their node, and works their way to the top of the tree. For example, they know they have 5 BTC, they plus 1 other customer hold 7 BTC, they plus 2-3 other customers hold 17 BTC, etc... until they reach the root where all the BTC are represented. Thus, there is no way to find the balances of other individual customers aside from one unidentified customer in this case.
Proposals such as this had the backing of leaders in the community including Nic Carter, Greg Maxwell, and Zak Wilcox. Substantial and significant effort started back in 2013, with massive popularity in 2014. But what became of that effort? Very little. Exchange operators continue to refuse to give visibility. Despite the fact this information can often be obtained through trivial blockchain analysis, no Canadian platform has ever provided any wallet addresses publicly. As described by the CEO of Newton "For us to implement some kind of realtime Proof of Reserves solution, which I'm not opposed to, it would have to ... Preserve our users' privacy, as well as our own. Some kind of zero-knowledge proof". Kraken describes here in more detail why they haven't implemented such a scheme. According to professor Eli Ben-Sasson, when he spoke with exchanges, none were interested in implementing Proof of Reserves.
And yet, Kraken's places their reasoning on a page called "Proof of Reserves". More recently, both BitBuy and ShakePay have released reports titled "Proof of Reserves and Security Audit". Both reports contain disclaimers against being audits. Both reports trust the customer list provided by the platform, leaving the open possibility that multiple large accounts could have been excluded from the process. Proof of Reserves is a blockchain validation where customers see the wallets on the blockchain. The report from Kraken is 5 years old, but they leave it described as though it was just done a few weeks ago. And look at what they expect customers to do for validation. When firms represent something being "Proof of Reserve" when it's not, this is like a farmer growing fruit with pesticides and selling it in a farmers market as organic produce - except that these are people's hard-earned life savings at risk here. Platforms are misrepresenting the level of visibility in place and deceiving the public by their misuse of this term. They haven't proven anything.
Fraud isn't a problem that is unique to cryptocurrency. Fraud happens all the time. Enron, WorldCom, Nortel, Bear Stearns, Wells Fargo, Moser Baer, Wirecard, Bre-X, and Nicola are just some of the cases where frauds became large enough to become a big deal (and there are so many countless others). These all happened on 100% reversible assets despite regulations being in place. In many of these cases, the problems happened due to the over-complexity of the financial instruments. For example, Enron had "complex financial statements [which] were confusing to shareholders and analysts", creating "off-balance-sheet vehicles, complex financing structures, and deals so bewildering that few people could understand them". In cryptocurrency, we are often combining complex financial products with complex technologies and verification processes. We are naïve if we think problems like this won't happen. It is awkward and uncomfortable for many people to admit that they don't know how something works. If we want "money of the people" to work, the solutions have to be simple enough that "the people" can understand them, not so confusing that financial professionals and technology experts struggle to use or understand them.
For those who question the extent to which an organization can fool their way into a security consultancy role, HB Gary should be a great example to look at. Prior to trying to out anonymous, HB Gary was being actively hired by multiple US government agencies and others in the private sector (with glowing testimonials). The published articles and hosted professional security conferences. One should also look at this list of data breaches from the past 2 years. Many of them are large corporations, government entities, and technology companies. These are the ones we know about. Undoubtedly, there are many more that we do not know about. If HB Gary hadn't been "outted" by anonymous, would we have known they were insecure? If the same breach had happened outside of the public spotlight, would it even have been reported? Or would HB Gary have just deleted the Twitter posts, brought their site back up, done a couple patches, and kept on operating as though nothing had happened?
In the case of Quadriga, the facts are clear. Despite past experience with platforms such as MapleChange in Canada and others around the world, no guidance or even the most basic of a framework was put in place by regulators. By not clarifying any sort of legal framework, regulators enabled a situation where a platform could be run by former criminal Mike Dhanini/Omar Patryn, and where funds could be held fully unchecked by one person. At the same time, the lack of regulation deterred legitimate entities from running competing platforms and Quadriga was granted a money services business license for multiple years of operation, which gave the firm the appearance of legitimacy. Regulators did little to protect Canadians despite Quadriga failing to file taxes from 2016 onward. The entire administrative team had resigned and this was public knowledge. Many people had suspicions of what was going on, including Ryan Mueller, who forwarded complaints to the authorities. These were ignored, giving Gerald Cotten the opportunity to escape without justice.
There are multiple issues with the SOC II model including the prohibitive cost (you have to find a third party accounting firm and the prices are not even listed publicly on any sites), the requirement of operating for a year (impossible for new platforms), and lack of any public visibility (SOC II are private reports that aren't shared outside the people in suits).
Securities frameworks are expensive. Sarbanes-Oxley is estimated to cost $5.1 million USD/yr for the average Fortune 500 company in the United States. Since "Fortune 500" represents the top 500 companies, that means well over $2.55 billion USD (~$3.4 billion CAD) is going to people in suits. Isn't the problem of trust and verification the exact problem that the blockchain is supposed to solve?
To use Quadriga as justification for why custodians or SOC II or other advanced schemes are needed for platforms is rather silly, when any framework or visibility at all, or even the most basic of storage policies, would have prevented the whole thing. It's just an embarrassment.
We are now seeing regulators take strong action. CoinSquare in Canada with multi-million dollar fines. BitMex from the US, criminal charges and arrests. OkEx, with full disregard of withdrawals and no communication. Who's next?
We have a unique window today where we can solve these problems, and not permanently destroy innovation with unreasonable expectations, but we need to act quickly. This is a unique historic time that will never come again.
How To End The Cryptocurrency Exchange "Wild West" Without Crippling Innovation
In case you haven't noticed the consultation paper, staff notice, and report on Quadriga, regulators are now clamping down on Canadian cryptocurrency exchanges. The OSC and other regulatory bodies are still interested in industry feedback. They have not put forward any official regulation yet. Below are some ideas/insights and a proposed framework.
Typical securities frameworks will cost Canadians millions of dollars (ie Sarbanes-Oxley estimated at $5m USD/yr per firm). Implementation costs of this proposal are significantly cheaper.
Canadians can maintain a diverse set of exchanges, multiple viable business models are still fully supported, and innovation is encouraged while keeping Canadians safe.
Many of you have limited time to read the full proposal, so here are the highlights:
Effective standards to prevent both internal and external theft. Exchange operators are trained and certified, and have a legal responsibility to users.
Regular Transparent Audits
Provides visibility to Canadians that their funds are fully backed on the exchange, while protecting privacy and sensitive platform information.
Establishment of basic insurance standards/strategy, to expand over time. Removing risk to exchange users of any hot wallet theft.
Background and Justifications
Cold Storage Custody/Management After reviewing close to 100 cases, all thefts tend to break down into more or less the same set of problems: • Funds stored online or in a smart contract, • Access controlled by one person or one system, • 51% attacks (rare), • Funds sent to the wrong address (also rare), or • Some combination of the above. For the first two cases, practical solutions exist and are widely implemented on exchanges already. Offline multi-signature solutions are already industry standard. No cases studied found an external theft or exit scam involving an offline multi-signature wallet implementation. Security can be further improved through minimum numbers of signatories, background checks, providing autonomy and legal protections to each signatory, establishing best practices, and a training/certification program. The last two transaction risks occur more rarely, and have never resulted in a loss affecting the actual users of the exchange. In all cases to date where operators made the mistake, they've been fully covered by the exchange platforms. • 51% attacks generally only occur on blockchains with less security. The most prominent cases have been Bitcoin Gold and Ethereum Classic. The simple solution is to enforce deposit limits and block delays such that a 51% attack is not cost-effective. • The risk of transactions to incorrect addresses can be eliminated by a simple test transaction policy on large transactions. By sending a small amount of funds prior to any large withdrawals/transfers as a standard practice, the accuracy of the wallet address can be validated. The proposal covers all loss cases and goes beyond, while avoiding significant additional costs, risks, and limitations which may be associated with other frameworks like SOC II. On The Subject of Third Party Custodians Many Canadian platforms are currently experimenting with third party custody. From the standpoint of the exchange operator, they can liberate themselves from some responsibility of custody, passing that off to someone else. For regulators, it puts crypto in similar categorization to oil, gold, and other commodities, with some common standards. Platform users would likely feel greater confidence if the custodian was a brand they recognized. If the custodian was knowledgeable and had a decent team that employed multi-sig, they could keep assets safe from internal theft. With the right protections in place, this could be a great solution for many exchanges, particularly those that lack the relevant experience or human resources for their own custody systems. However, this system is vulnerable to anyone able to impersonate the exchange operators. You may have a situation where different employees who don't know each other that well are interacting between different companies (both the custodian and all their customers which presumably isn't just one exchange). A case study of what can go wrong in this type of environment might be Bitpay, where the CEO was tricked out of 5000 bitcoins over 3 separate payments by a series of emails sent legitimately from a breached computer of another company CEO. It's also still vulnerable to the platform being compromised, as in the really large $70M Bitfinex hack, where the third party Bitgo held one key in a multi-sig wallet. The hacker simply authorized the withdrawal using the same credentials as Bitfinex (requesting Bitgo to sign multiple withdrawal transactions). This succeeded even with the use of multi-sig and two heavily security-focused companies, due to the lack of human oversight (basically, hot wallet). Of course, you can learn from these cases and improve the security, but so can hackers improve their deception and at the end of the day, both of these would have been stopped by the much simpler solution of a qualified team who knew each other and employed multi-sig with properly protected keys. It's pretty hard to beat a human being who knows the business and the typical customer behaviour (or even knows their customers personally) at spotting fraud, and the proposed multi-sig means any hacker has to get through the scrutiny of 3 (or more) separate people, all of whom would have proper training including historical case studies. There are strong arguments both for and against using use of third party custodians. The proposal sets mandatory minimum custody standards would apply regardless if the cold wallet signatories are exchange operators, independent custodians, or a mix of both. On The Subject Of Insurance ShakePay has taken the first steps into this new realm (congratulations). There is no question that crypto users could be better protected by the right insurance policies, and it certainly feels better to transact with insured platforms. The steps required to obtain insurance generally place attention in valuable security areas, and in this case included a review from CipherTrace. One of the key solutions in traditional finance comes from insurance from entities such as the CDIC. However, historically, there wasn't found any actual insurance payout to any cryptocurrency exchange, and there are notable cases where insurance has not paid. With Bitpay, for example, the insurance agent refused because the issue happened to the third party CEO's computer instead of anything to do with Bitpay itself. With the Youbit exchange in South Korea, their insurance claim was denied, and the exchange ultimately ended up instead going bankrupt with all user's funds lost. To quote Matt Johnson in the original Lloyd's article: “You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it’s not super protective.” ShakePay's insurance was only reported to cover their cold storage, and “physical theft of the media where the private keys are held”. Physical theft has never, in the history of cryptocurrency exchange cases reviewed, been reported as the cause of loss. From the limited information of the article, ShakePay made it clear their funds are in the hands of a single US custodian, and at least part of their security strategy is to "decline to confirm the custodian’s name on the record". While this prevents scrutiny of the custodian, it's pretty silly to speculate that a reasonably competent hacking group couldn't determine who the custodian is. A far more common infiltration strategy historically would be social engineering, which has succeeded repeatedly. A hacker could trick their way into ShakePay's systems and request a fraudulent withdrawal, impersonate ShakePay and request the custodian to move funds, or socially engineer their way into the custodian to initiate the withdrawal of multiple accounts (a payout much larger than ShakePay) exploiting the standard procedures (for example, fraudulently initiating or override the wallet addresses of a real transfer). In each case, nothing was physically stolen and the loss is therefore not covered by insurance. In order for any insurance to be effective, clear policies have to be established about what needs to be covered. Anything short of that gives Canadians false confidence that they are protected when they aren't in any meaningful way. At this time, the third party insurance market does not appear to provide adequate options or coverage, and effort is necessary to standardize custody standards, which is a likely first step in ultimately setting up an insurance framework. A better solution compared to third party insurance providers might be for Canadian exchange operators to create their own collective insurance fund, or a specific federal organization similar to the CDIC. Such an organization would have a greater interest or obligation in paying out actual cases, and that would be it's purpose rather than maximizing it's own profit. This would be similar to the SAFU which Binance has launched, except it would cover multiple exchanges. There is little question whether the SAFU would pay out given a breach of Binance, and a similar argument could be made for a insurance fund managed by a collective of exchange operators or a government organization. While a third party insurance provider has the strong market incentive to provide the absolute minimum coverage and no market incentive to payout, an entity managed by exchange operators would have incentive to protect the reputation of exchange operators/the industry, and the government should have the interest of protecting Canadians. On The Subject of Fractional Reserve There is a long history of fractional reserve failures, from the first banks in ancient times, through the great depression (where hundreds of fractional reserve banks failed), right through to the 2008 banking collapse referenced in the first bitcoin block. The fractional reserve system allows banks to multiply the money supply far beyond the actual cash (or other assets) in existence, backed only by a system of debt obligations of others. Safely supporting a fractional reserve system is a topic of far greater complexity than can be addressed by a simple policy, and when it comes to cryptocurrency, there is presently no entity reasonably able to bail anyone out in the event of failure. Therefore, this framework is addressed around entities that aim to maintain 100% backing of funds. There may be some firms that desire but have failed to maintain 100% backing. In this case, there are multiple solutions, including outside investment, merging with other exchanges, or enforcing a gradual restoration plan. All of these solutions are typically far better than shutting down the exchange, and there are multiple cases where they've been used successfully in the past. Proof of Reserves/Transparency/Accountability Canadians need to have visibility into the backing on an ongoing basis. The best solution for crypto-assets is a Proof of Reserve. Such ideas go back all the way to 2013, before even Mt. Gox. However, no Canadian exchange has yet implemented such a system, and only a few international exchanges (CoinFloor in the UK being an example) have. Many firms like Kraken, BitBuy, and now ShakePay use the Proof of Reserve term to refer to lesser proofs which do not actually cryptographically prove the full backing of all user assets on the blockchain. In order for a Proof of Reserve to be effective, it must actually be a complete proof, and it needs to be understood by the public that is expected to use it. Many firms have expressed reservations about the level of transparency required in a complete Proof of Reserve (for example Kraken here). While a complete Proof of Reserves should be encouraged, and there are some solutions in the works (ie TxQuick), this is unlikely to be suitable universally for all exchange operators and users. Given the limitations, and that firms also manage fiat assets, a more traditional audit process makes more sense. Some Canadian exchanges (CoinSquare, CoinBerry) have already subjected themselves to annual audits. However, these results are not presently shared publicly, and there is no guarantee over the process including all user assets or the integrity and independence of the auditor. The auditor has been typically not known, and in some cases, the identity of the auditor is protected by a NDA. Only in one case (BitBuy) was an actual report generated and publicly shared. There has been no attempt made to validate that user accounts provided during these audits have been complete or accurate. A fraudulent fractional exchange, or one which had suffered a breach they were unwilling to publicly accept (see CoinBene), could easily maintain a second set of books for auditors or simply exclude key accounts to pass an individual audit. The proposed solution would see a reporting standard which includes at a minimum - percentage of backing for each asset relative to account balances and the nature of how those assets are stored, with ownership proven by the auditor. The auditor would also publicly provide a "hash list", which they independently generate from the accounts provided by the exchange. Every exchange user can then check their information against this public "hash list". A hash is a one-way form of encryption, which fully protects the private information, yet allows anyone who knows that information already to validate that it was included. Less experienced users can take advantage of public tools to calculate the hash from their information (provided by the exchange), and thus have certainty that the auditor received their full balance information. Easy instructions can be provided. Auditors should be impartial, their identities and process public, and they should be rotated so that the same auditor is never used twice in a row. Balancing the cost of auditing against the needs for regular updates, a 6 month cycle likely makes the most sense. Hot Wallet Management The best solution for hot wallets is not to use them. CoinBerry reportedly uses multi-sig on all withdrawals, and Bitmex is an international example known for their structure devoid of hot wallets. However, many platforms and customers desire fast withdrawal processes, and human validation has a cost of time and delay in this process. A model of self-insurance or separate funds for hot wallets may be used in these cases. Under this model, a platform still has 100% of their client balance in cold storage and holds additional funds in hot wallets for quick withdrawal. Thus, the risk of those hot wallets is 100% on exchange operators and not affecting the exchange users. Since most platforms typically only have 1%-5% in hot wallets at any given time, it shouldn't be unreasonable to build/maintain these additional reserves over time using exchange fees or additional investment. Larger withdrawals would still be handled at regular intervals from the cold storage. Hot wallet risks have historically posed a large risk and there is no established standard to guarantee secure hot wallets. When the government of South Korea dispatched security inspections to multiple exchanges, the results were still that 3 of them got hacked after the inspections. If standards develop such that an organization in the market is willing to insure the hot wallets, this could provide an acceptable alternative. Another option may be for multiple exchange operators to pool funds aside for a hot wallet insurance fund. Comprehensive coverage standards must be established and maintained for all hot wallet balances to make sure Canadians are adequately protected.
Current Draft Proposal
(1) Proper multi-signature cold wallet storage. (a) Each private key is the personal and legal responsibility of one person - the “signatory”. Signatories have special rights and responsibilities to protect user assets. Signatories are trained and certified through a course covering (1) past hacking and fraud cases, (2) proper and secure key generation, and (3) proper safekeeping of private keys. All private keys must be generated and stored 100% offline by the signatory. If even one private keys is ever breached or suspected to be breached, the wallet must be regenerated and all funds relocated to a new wallet. (b) All signatories must be separate background-checked individuals free of past criminal conviction. Canadians should have a right to know who holds their funds. All signing of transactions must take place with all signatories on Canadian soil or on the soil of a country with a solid legal system which agrees to uphold and support these rules (from an established white-list of countries which expands over time). (c) 3-5 independent signatures are required for any withdrawal. There must be 1-3 spare signatories, and a maximum of 7 total signatories. The following are all valid combinations: 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7. (d) A security audit should be conducted to validate the cold wallet is set up correctly and provide any additional pertinent information. The primary purpose is to ensure that all signatories are acting independently and using best practices for private key storage. A report summarizing all steps taken and who did the audit will be made public. Canadians must be able to validate the right measures are in place to protect their funds. (e) There is a simple approval process if signatories wish to visit any country outside Canada, with a potential whitelist of exempt countries. At most 2 signatories can be outside of aligned jurisdiction at any given time. All exchanges would be required to keep a compliant cold wallet for Canadian funds and have a Canadian office if they wish to serve Canadian customers. (2) Regular and transparent solvency audits. (a) An audit must be conducted at founding, after 3 months of operation, and at least once every 6 months to compare customer balances against all stored cryptocurrency and fiat balances. The auditor must be known, independent, and never the same twice in a row. (b) An audit report will be published featuring the steps conducted in a readable format. This should be made available to all Canadians on the exchange website and on a government website. The report must include what percentage of each customer asset is backed on the exchange, and how those funds are stored. (c) The auditor will independently produce a hash of each customer's identifying information and balance as they perform the audit. This will be made publicly available on the exchange and government website, along with simplified instructions that each customer can use to verify that their balance was included in the audit process. (d) The audit needs to include a proof of ownership for any cryptocurrency wallets included. A satoshi test (spending a small amount) or partially signed transaction both qualify. (e) Any platform without 100% reserves should be assessed on a regular basis by a government or industry watchdog. This entity should work to prevent any further drop, support any private investor to come in, or facilitate a merger so that 100% backing can be obtained as soon as possible. (3) Protections for hot wallets and transactions. (a) A standardized list of approved coins and procedures will be established to constitute valid cold storage wallets. Where a multi-sig process is not natively available, efforts will be undertaken to establish a suitable and stable smart contract standard. This list will be expanded and improved over time. Coins and procedures not on the list are considered hot wallets. (b) Hot wallets can be backed by additional funds in cold storage or an acceptable third-party insurance provider with a comprehensive coverage policy. (c) Exchanges are required to cover the full balance of all user funds as denominated in the same currency, or double the balance as denominated in bitcoin or CAD using an established trading rate. If the balance is ever insufficient due to market movements, the firm must rectify this within 24 hours by moving assets to cold storage or increasing insurance coverage. (d) Any large transactions (above a set threshold) from cold storage to any new wallet addresses (not previously transacted with) must be tested with a smaller transaction first. Deposits of cryptocurrency must be limited to prevent economic 51% attacks. Any issues are to be covered by the exchange. (e) Exchange platforms must provide suitable authentication for users, including making available approved forms of two-factor authentication. SMS-based authentication is not to be supported. Withdrawals must be blocked for 48 hours in the event of any account password change. Disputes on the negligence of exchanges should be governed by case law.
Continued review of existing OSC feedback is still underway. More feedback and opinions on the framework and ideas as presented here are extremely valuable. The above is a draft and not finalized. The process of further developing and bringing a suitable framework to protect Canadians will require the support of exchange operators, legal experts, and many others in the community. The costs of not doing such are tremendous. A large and convoluted framework, one based on flawed ideas or implementation, or one which fails to properly safeguard Canadians is not just extremely expensive and risky for all Canadians, severely limiting to the credibility and reputation of the industry, but an existential risk to many exchanges. The responsibility falls to all of us to provide our insight and make our opinions heard on this critical matter. Please take the time to give your thoughts.
List of bitcoin person-to-person (P2P) bitcoin exchanges (e.g., Bisq, HodlHodl, LocalCoinSwap, etc.)
Following is a list of P2P exchanges for trading Bitcoin. Common payment methods include bank transfer, cash deposited in the seller's bank account, in-person cash (face-to-face) trades as well as payment networks such as Zelle, Alipay, even Cash App and PayPal, for example. Any that I am missing?
Monthly Nano News: December 2019 + Year Recap Special
This is what NANO has been up to lately. I don't think I lie if I say it has been quite an amazing year! See you soon and happy new year! Something nice is coming soon that I have been working on for a while, stay tuned..
Useful Info: MTI official URL Link: ➡️https://mymticlub.com/ Click on ‘Member Login’ Bitcoin Mirror Trading UK Invite Link (Telegram) ➡️ https://t.me/joinchat/AAAAAFac2S2fqT_FFJ6ZoA Official MTI Telegram Group ➡️https://mymticlub.com/telegram Official MTI Youtube Link ➡️ https://www.youtube.com/channel/UC96zVhuCPm83_HwGTJZ3x0A Bitcoin Mirror Trading UK Facebook Invite Link ➡️ https://www.facebook.com/groups/278604083278752/?ref=share Bitcoin Mirror Trading UK Subreddit Link ➡️ https://www.reddit.com/MTIUK/ Useful Info: WHERE DO YOUR FUNDS GO? When you add funds to MTI, the BTC you sent to MTI's BTC Wallet physically gets sent to the BROKER to be traded and remains there until you request a withdrawal to your BTC wallet. ⚠️ Remember, no funds are ever physically in the backoffice - the backoffice just REFLECTS the funds you have and allows you to request the movement thereof. ACTIVATION WALLET All BTC Deposits come into your MTI account via the Activation Wallet but gets AUTOMATICALLY transferred to the Trading Pool. P2P transfers from another member's account come into your account via the Activation Wallet but ... ❌ does NOT automatically go into the Trading Pool which means it will NOT be traded until you ... ✅ MANUALLY move it to the Trading Pool. TRADING POOL Only approved BTC Deposits from external BTC Wallets and Daily Trading Bonuses get added automatically to the trading pool. ⚠️ Note: ONLY the funds that are in the Trading Pool will get traded. INCOME WALLET ALL bonuses earned from referring members and building a team, ie. Referral Bonuses, Binary Bonuses and P1/P2 Leadership Bonuses go to INCOME WALLET - it does NOT automatically get added to the trading pool. Referral Bonuses (allocated when your direct referral makes a qualifying deposit) and Binary Bonuses (allocated weekly on Saturdays) have a 7 day waiting period and will reflect in your income wallet's pending balance and after the 7 day waiting period will appear in your income wallet's available balance. P1/P2 bonuses are paid each Saturday and are available immediately and will reflect in your income wallet's available balance. ⚠️ Note: Funds that are in the Income Wallet will NOT be traded, which means it is NOT growing unless it is in the Trading Pool. Whatever is in the available income wallet balance can be: ✅ manually transferred to Trading Pool to grow ✅ transferred to another member via P2P ✅ withdrawn to BTC wallet to be spent, sold or deposited back into MTI 🤑 WALLET TRANSACTION HISTORY All bonuses earned and movement of funds can be seen as "journal entries" under Wallet, Wallet Transaction History. EXCHANGES HOW TO's:
Stellar Lumens HODL alert: 2017 Round up, Partnerships, Lumens vs. Other Cryptos
Welcome everyone! The future of Stellar Lumens is bright! Today we will look at the accomplishments of Stellar.org in 2017. . . 2017 Round Up • IBM / Stellar Partnership • Kik Messenger’s KIN coin to move from Ethereum to Stellar in 2018 • Stellar ATM introduced in Singapore • Jed McCaleb confirms IBM/Stellar has 30 banks on board (Youtube Video) • Lightyear.io enables forward thinking financial entities to easily join the Stellar ecosystem. • IBM adds 8 new validators from 8 different countries onto the Stellar network (article) • Forbes calls Stellar “venmo, but on a global scale - and for larger bodies like banks and corporations.” • Stellar Lumens Is Up 6,300% Since March and Is Aiming for Big Blockchain Partners (article) • Many new partnerships (listed below) that will be using the Stellar network in 2018. • Binance and GoPax Exchanges Adds Stellar • Ledger Nano S support is now available for Lumens (XLM) • The next coin to break into the top 10 cryptos (article) . . 2017 Partnerships & Financial Institutions • IBM - is an American multinational technology company headquartered in Armonk, New York, United States, with operations in over 170 countries. IBM partnered with Stellar to help financial institutions address the processes of universal cross-border payments, designed to reduce the settlement time and lower the cost of completing global payments for businesses and consumers. • SatoshiPay - a web payment system that helps online publishers monetize digital assets like news articles, videos, or PDFs in tiny increments without friction. • EXCH.ONE - is a FinTech software company based in Switzerland currently working to integrate its platform and its first technology adopter Euro Exchange Securities UK Ltd. into the Stellar network. This addition to the Stellar network will bring access to currency markets of South and Central America,UK and a number of EU countries. • Novati (ASX:NOV) - is an Australian-based software technology and payment services provider. Novatti is currently working to integrate it’s platform into the Stellar network with the ultimate aim to build a global money transfer solution to provide cross border, cross currency and cross asset payments. • Pundi X - is an Indonesia based fintech company that provides POS device, debit card, multi-currency wallet that empowers individuals to buy and sell cryptocurrency at any physical store in the world. They say "buying cryptocurrency should be as easy as buying a bottled water." • MoneyMatch - is a Malaysia based fintech startup that provides a fully-digital peer-to-peer currency exchange platform for customers to transfer and exchange foreign currencies with complete ease and at great value. The company plans to integrate with the Stellar network and enable pay in and pay out from Malaysia. • Streami - is a Korea based fintech company that offers blockchain enabled cross-border remittance service and recently launched a cryptocurrency exchange. The partnership extends both on the exchange side and remittance operations. • Neoframe - is developing and marketing trading solutions for big brokerage firms in Korea and extends its business to blockchain based applications. Neoframe developed high performance centralized cryptocurrency exchange as well as secure wallet solutions and is working with big financial players. The company is planning to launch a remittance business for ASEAN countries (Thailand, Vietnam, Indonesia, Malaysia, Philippines, Singapore, Myanmar (Burma), Cambodia, Laos, Brunei) using Stellar. • SureRemit($RMT) - is a Nigeria based global non-cash remittances company. SureRemit leverages the Stellar blockchain platform to connect immigrants abroad directly with merchants that provide the services needed by their loved ones back home. With Remit tokens, immigrants all over the world can access digital shopping vouchers that can be spent on goods and services at accepting merchants wherever they are. • Cowrie Integrated Systems - is a Nigerian based Value Added Service Provider. Cowrie provides services at the intersection between telecoms and finance. Cowrie recently joined the Stellar network to bring novel fintech services to the African market. • Smartlands - is a Stellar-based platform designed to create a new class of low-risk tokens, secured by real, profitable assets in the real-world economy. Smartlands is designed to promote investments in the agricultural sector by allowing investment in individual projects, agricultural companies or indexes of groups of projects. These investments will be fully collateralized by agricultural real estate, other productive assets such as fruit or nut trees or, in some cases, the actual crop. • Klick-Ex - is an award winning regional cross-border payments system delivering financial infrastructure for emerging markets. It has been responsible for dramatic uptake in digital financial services in unbanked regions of the world, and lowering costs for banks, central banks and consumers in low liquidity currencies. Its key presence is in the Pacific and Europe, and it is a founding member of www.APFII.org processing more than 775,000 transactions per second, per billion of population (source). • Mobius - Mobius connects any app, device, and data stream to the blockchain ecosystem. Our simple and easy to use bidirectional API allows non-blockchain developers to easily connect resources to smart contracts and more. The Mobius MVP acts like Stripe for Blockchain by introducing innovative standards for cross-blockchain login, payment, smart contract management, and oracles. The Mobius Team includes David Gobaud, Jed McCaleb (Stellar.org founder), Jackson Palmer (creator of Dogecoin), and Chandler Guo (notorious Bitcoin & blockchain investor). • Chaineum - Chaineum, the first French ICO Boutique, will use the Stellar network for upcoming ICOs. “Chaineum is positioned as the first “ICO Boutique” in France, providing a range of end-to-end services to companies and international start-ups wishing to develop with this new funding mechanism. Chaineum is preparing 8 ICOs by the end of 2017, for European, North American and Asian companies, of which cumulative amount could reach € 200 million." (source) • Poseidon Foundation - Poseidon will simplify the carbon credit market with the creation of an ecosystem built on Stellar.org’s blockchain technology. This technology will prevent double counting of carbon and will be consistent across jurisdictions, making it easier for companies to deliver and measure progress towards their climate targets or other goals such as deforestation-free commitments. • Remitr - Remitr is a global platform for cross border payments, licensed in Canada. Remitr uses the Stellar network for international settlements for businesses as well as other payment partners. Remitr’s own payout network of 63 countries, comprising several currencies, is extended onto the Stellar network. • MSewa Software Solution (MSS) - MSewa Software Solution (MSS) Payments provides a one-stop digital payment service available across the Globe. MSS Payments aims at serving the consumers (Banked, Unbanked and Underbanked) with mobile banking facilities on the move from anywhere by transferring funds in their mobile phone. • PesaChoice - PesaChoice is a leader in international bill payment services for the African diaspora. PesaChoice aims at making international bill payment process easy, seamless, secure, with reasonable and competitive service fees, and up to date technological advances. • SendX - Singapore based SendX, in partnership with Stellar, is the better way to move money worldwide. The SendX team believes that the future of transactions is decentralized and distributed, bringing true equity to everyone across the value chain. • VoguePay - VoguePay, with offices in the United Kingdom and Nigeria, is partnering with Stellar to become the cheapest and most efficient way to send money between the United Kingdom and Nigeria. In the coming months, they expect to expand this service to other selected African countries. • HashCash - Hashcash consultants build financial solutions for banks and financial institutions over blockchain. We leverage the Stellar platform to build products that vastly improve the remittance and payments experience for banks and their customers. Transfers happen lightning fast at a fraction of current rates and operational cost is significantly reduced. HashCash is headquartered in India, with operations across South Asia and the Gulf. . . Stellar Lumens vs Other Cryptocurrencies • Lumens vs. Bitcoin: Jed McCaleb spoke at Distributed Markets in 2017 about the advantages, but more importantly, the disadvantages of Bitcoin. Listen to the talk here. Jed said, “Bitcoin is this awesome innovation. The first thing it does is converts a real world resource, electricity, into a digital asset. So it takes something from the real world and puts it into the digital realm. The second thing it does is provides immutable public record. It’s basically a database that everyone can see but no one change arbitrarily… That’s great, Bitcoin solves the double spin problem [ of proving possession and transmitting volume]… [However, to fix the problems of bitcoin] you might think well maybe we’ll just kind of keep adding [software] to Bitcoin until we get there, but that’s not really the way software works. You want to have the design from the beginning and solve these simple issues. Bitcoin was designed to be a new currency, it wasn’t really designed to be this unifying universal payment network. So that’s what Stellar does. It solves these three remaining issues.” • Lumens vs. Bitcoin #2: According to wired.com, "Bitcoin mining guzzles energy - and it's carbon footprint just keeps growing." Wired says "Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the US for one day... The total energy use of this web of hardware is huge—an estimated 31 terawatt-hours per year. More than 150 individual countries in the world consume less energy annually. And that power-hungry network is currently increasing its energy use every day by about 450 gigawatt-hours, roughly the same amount of electricity the entire country of Haiti uses in a year." Because Stellar is based on a consensus algorithm rather than mining, it takes much less energy to run the Stellar network. The Poseidon Foundation decided to build their platform on Stellar rather than Ethereum or Bitcoin because of this (twitter source). • Lumens ICO tokens vs. Ethereum ICO tokens: According to Stellar.org, "traditionally, ICO tokens have been issued on the Ethereum network in the form of ERC20 tokens. ERC20 tokens are easy to issue and are infinitely customizable using Ethereum’s smart contracting language. However, recent events have highlighted and exacerbated some weaknesses of the network, including slow transaction processing times for the network during ICOs and increasingly expensive gas prices (by fiat standards) for transactions and smart contract execution. Moreover, many organizations require only basic tokens; they adopt the risk of Ethereum’s Turing complete programming language without taking advantage of many of its benefits." "While Ethereum has the most expressive programming capabilities, we believe Stellar is the best choice for ICOs that do not require complex smart contracts. Stellar’s primary goal is to facilitate issuing and trading tokens, especially those tied to legal commitments by known organizations, such as claims on real-world assets or fiat currency." • Stellar vs. Ethereum #2: The median transaction time on Stellar is 5 seconds, compared to approximately 3.5 minutes on Ethereum (source). Stellar has a negligible transaction fee (.00001 XLM ~= $0.0000002) with no gas fee for computation, while depending on the complexity of the computation, the median cost for a transfer on the Ethereum network is $0.094. Security: While both Stellar and Ethereum run on a decentralized network, the Stellar network has fewer security pitfalls. Stellar uses atomic transactions comprised of simple, declarative operations while Ethereum uses turing complete programming capabilities which produces less auditable code and greater risk of exploitable vulnerabilities(source). Recently, a security flaw in the Ethereum network froze millions of dollars. According to Mobius ariticle written by David Gobaud, "On November 6, 2017, Github user deveps199 'accidentally' triggered a bug in Parity, a popular Ethereum mult-sig wallet, that froze more than $152 million in Ether across 151 addresses. The bug impacted several token sales including Polkadot, which has had ~$98 million out of its recent $145 million sale frozen." "Mobius had none of its ongoing pre-sale Ether frozen because we do not trust Ethereum’s Smart Contract based multi-sig wallets given the vast Turing complete attack surface and did not use one. Security broadly is one of the main reasons the MOBI token that powers the DApp Store is a Stellar Protocol token and not an Ethereum token." • Lumens vs. Ripple: According to Wall Street Bitcoin Exchange, "Many investors like to compare the company [Stellar] to Ripple, and there are a lot of similarities, being that some of the founders worked on the Ripple team. In what can now be looked at as another blockchain development drama that plays out on chat boards and in interviews all across the globe. Stellar declared they fixed Ripple’s problems with their hard fork, however, Ripple has failed to admit to any of the flaws in its design that the Stellar team has pointed out." The article concludes by saying, "We Choose XLM Over XRP For 2018. That is why we are going with Stellar Lumens over Ripple in our portfolio for the rest of 2017 and 2018. After holding Ripple for a long time this year, it just never seems to make the big break like other names with bigger market caps like Bitcoin Cash, Dash, and Litecoin have. While we are holding on most all our larger market caps, we feel that Stellar Lumens will be one of the break out coins for 2018." . . Conclusion The stellar.org team is doing an amazing job making partnerships and pioneering the use of blockchain technology for various types of transactions. What we are seeing is a new technology that can actually be used to solve real-world problems. As a community, we need to continue supporting Stellar and we will quickly see it power transactions across the world. What are your thoughts about Stellar? What do you see in the future of Stellar? Any important news you want to share? Comment below.
Daily analysis of cryptocurrencies 20190922(Market index 37 — Fear state)
https://preview.redd.it/rra4l595mco31.png?width=526&format=png&auto=webp&s=5c8129568754561b537845f97a1898394d6e1c23 I am very sorry for everyone, due to network reasons, delayed update Facebook Buys Chatbot Startup To Integrate Into Calibra According to a report of Israeli business newspaper the Marker on Sept 19, Facebook has acquired the artificial intelligence-based chat-bot startup Servicefriend for customer service for Calibra, the digital wallet for Facebook’s planned Libra cryptocurrency. UK Regulators Attempting To Ban Crypto Derivatives, CoinShares Fights Back CoinShares is responding to UK regulators over a potential ban of various crypto products. The London-based digital asset management firm, which provides financial products and services for professional investors, says that UK regulator are “cherry picking” information about cryptocurrencies to cobble together enough ammunition to stop the sale of certain investment products that reference crypto assets. Huawei Partners WIth Blockchain-Powered Social Media Platform Howdoo Huawei Mobile Services confirmed via its official Twitter handle the partnership with Howdoo, a blockchain-powered social media platform. Howdoo claims that they are huge fans of Huawei devices, and they have been in proactive conversations with Huawei about how they can develop Howdoo to best fit into the Huawei ecosystem, including mobile, Harmony OS, and other exciting innovations. As per the announcement, the Howdoo App will be available next week as a featured App in the Huawei App Gallery Armenian IT Company Accused Of Illegal Electricity Use To Mine Crypto On Sept. 21, in an announcement from the Armenian National Security Service, the organization accused an IT company of illegally mining cryptocurrencies from inside a hydropower plant. The state agency reported that the IT company had installed cryptocurrency mining equipment inside one of the hydropower plants operating in Armenia and as a result illegally consumed 1.5 kilowatt-hours of electricity — worth more than $150,000, locally — over the course of 1.5 years.
Encrypted project calendar（September 22, 2019）
NPXS/Pundi X:Pundi X (NPXS) PundiX Labs will officially launch the XPOS transaction at the “AkiColle” event in Tokyo on September 22.
Encrypted project calendar（September 23, 2019）
BTC/Bitcoin:Bakkt, the digital asset platform led by ICE, the parent company of the New York Stock Exchange and the world’s second largest trading group, will launch a bitcoin physical delivery futures contract on September 23.EOS/EOS:EOS main network is expected to upgrade version 1.8 on September 23DCDecred:Project leader Jake Yocom-Piatt of Decred (DCR) Decrex will attend the Encryption Community Party in San Francisco on September 23 and will deliver a speech.
Encrypted project calendar（September 24, 2019）
ENG/Enigma:Enigma (ENG) ENG main network token snapshot will end on September 24, the original start time is August 26.LINA (LINA):Lina Review will host the Lina network launch event in Ho Chi Minh City, Vietnam on September 24th and release a 10-year operational strategy.Cappasity (CAPP):Cappasity will showcase its digital signage solutions in luxury stores at the Paris Retail Week from September 24th to 26th.
Encrypted project calendar（September 25, 2019）
MIOTA/IOTA:IOTA (MIOTA) IOTA will host a community event on September 25th at the University of Southern California in Los Angeles on the theme of “Building Your Own IoT.”Quant (QNT):The Quant project will participate in a marketing conference in London from September 25th to 26th, which will focus on data technology.
Encrypted project calendar（September 26, 2019）
ADA/Cardano:The Cardano (ADA) Cardano community will host a party in Washington, DC on September 26.
Encrypted project calendar（September 27, 2019）
BTC/Bitcoin:Cripto Latin Fest will be held in Cordoba, Argentina from September 27th to 29th.Switcheo (SWTH):After a one-year token exchange process, the project team will officially end the SWH→SWTH token exchange process on September 27.
Encrypted project calendar（September 28, 2019）
ADA/Cardano:Cardano (ADA) Cardano (ADA) 2nd Anniversary, Cardinal Foundation, IOHK and EMURGO main members will participate in community celebrations in Plovdiv, Bulgaria on September 28.TOP Network (TOP):The TOP Network team will hold a hackathon in Prague, Czech Republic from September 28th to 29th.Horizen (ZEN):Horizen project BD Rep Vano Narimandize will discuss the current status and development of sidechain technology at the Industry 4.0 Blockchain Summit on September 28.
Encrypted project calendar（September 29, 2019）
GAME/GameCredits:GameCredits (GAME) is expected to perform hard forks on September 29th at block height 2519999
Encrypted project calendar（September 30, 2019）
INS/Insolar:Insolar (INS) will be on September 30thERD/Elrond:Elrond (ERD) will conduct main network test on September 30thNULS/NULS:The NULS team will plan to beta the ChainBOX in the third quarter.CS/Credits:Credits (CS) will exchange tokens and bug rewards in the third quarterQTUM/Qtum:Quantum Chain (QTUM) is expected to complete lightning network beta in the third quarterXEM/NEM:New World Bank (XEM) will release mobile wallet and computer wallet in the third quarterHC/HyperCash: hypercash (HC) will complete community management agreement in the third quarter
Encrypted project calendar（October 01, 2019）
HT/Huobi Token:The financial base public link jointly created by Firecoin and Nervos is expected to be open source in October.RVN/Ravencoin:Ravencoin (RVN) Ravencoin will perform a hard fork on October 1.ADA/Cardano:Cardano (ADA) plans to hold technical consensus meeting in Amsterdam on October 1stXRC/Bitcoin Rhodium:Bitcoin Rhodium (XRC) will record account balance awards on October 1stPPC/Peercoin:Peercoin (PPC) will perform Peercoin v0.8 (code tang lang) hard fork on October 1st
Encrypted project calendar（October 02, 2019）
BNB/Binance Coin:The 2019 DELTA Summit will be held in Malta from October 2nd to 4th. The DELTA Summit is Malta’s official blockchain and digital innovation campaign.CAPP/Cappasity:The Cappasity (CAPP) London Science and Technology Festival will be held from October 2nd to 3rd, when the Cappasity project will be attended by the Science and Technology Festival.
Encrypted project calendar（October 03, 2019）
ETC/Ethereum Classic:The 2019 Ether Classic (ETC) Summit will be held in Vancouver on October 3–4
Encrypted project calendar（October 05, 2019）
Ontology (ONT):Ony Ji will attend the blockchain event in Japan on October 5th and explain the practical application based on the ontology network.
Encrypted project calendar（October 06, 2019）
SPND/ Spendcoin:Spendcoin (SPND) will be online on October 6th
Encrypted project calendar（October 07, 2019）
GNO/Gnosis:Gnosis (GNO) will discuss the topic “Decentralized Trading Agreement Based on Ethereum” will be held in Osaka, Japan on October 7th. Kyber and Uniswap, Gnosis and Loopring will attend and give speeches.
Encrypted project calendar（October 08, 2019）
BTC/Bitcoin:The 2nd Global Digital Mining Summit will be held in Frankfurt, Germany from October 8th to 10th.
Since early-July, the Bitcoin price has entered into a drawn-out lull, with there being a clearly tightening trade range that has resulted in Bitcoin’s realized volatility falling into a range of 1.2%/day. Here’s Why Not only is volatility decreasing but so are volumes.out that CME’s BTC futures saw their lowest volumes in four months, implying indirection in this market. This declining volume in the CME BTC futures market has been echoed over in the spot market. According to CoinMarketCap, cryptocurrency exchanges in aggregate have processed $51 billion worth of trades over the past 24 hours, which is a far cry from the $120+ billion seen during late-June and early-July of this very year. Sure, the data site is known not to be 100% accurate, but the decline in registered crypto volume accentuates the consolidatory period that Bitcoin is in. But this lull might be about to come to an abrupt end. Review previous articles:https://firstname.lastname@example.org Telegram： https://t.me/Lay126 Twitter：https://twitter.com/mianhuai8 Facebook：https://www.facebook.com/profile.php?id=100022246432745 Reddi：https://www.reddit.com/useliuidaxmn LinkedIn：https://www.linkedin.com/in/liu-wei-294a12176/
I wrote a 30,000 ft. "executive summary" intro document for cryptos. Not for you, for your non-technical parents or friends.
This document was originally written for my dad, an intelligent guy who was utterly baffled about the cryptocurrency world. The aim was to be extremely concise, giving a broad overview of the industry and some popular coins while staying non-technical. For many of you there will be nothing new here, but recognize that you are in the 0.001% of the population heavily into crypto technology. I've reproduced it for Reddit below, or you can find the original post here on my website. Download the PDF there or hit the direct link: .PDF version. Donations happily accepted:
This document is purely informational. At the time of writing there are over 1000 cryptocurrencies (“cryptos”) in a highly volatile, high risk market. Many of the smaller “altcoins” require significant technical knowledge to store and transact safely. I advise you to carefully scrutinize each crypto’s flavor of blockchain, potential utility, team of developers, and guiding philosophy, before making any investment  decisions. With that out of the way, what follows are brief, extremely high-level summaries of some cryptos which have my interest, listed in current market cap order. But first, some info: Each crypto is a different implementation of a blockchain network. Originally developed as decentralized digital cash, these technologies have evolved into much broader platforms, powering the future of decentralized applications across every industry in the global economy. Without getting into the weeds,  most cryptos work on similar principles: Distributed Ledgers Each node on a blockchain network has a copy of every transaction, which enables a network of trust that eliminates fraud.  Decentralized “Miners” comprise the infrastructure of a blockchain network.  They are monetarily incentivized to add computing power to the network, simultaneously securing and processing each transaction.  Peer-to-peer Cryptos act like digital cash-- they require no third party to transact and are relatively untraceable. Unlike cash, you can back them up. Global Transactions are processed cheaply and instantly, anywhere on Earth. Using cryptos, an African peasant and a San Francisco engineer have the same access to capital, markets, and network services. Secure Blockchains are predicated on the same cryptographic technology that secures your sensitive data and government secrets. They have passed seven years of real-world penetration testing with no failures. 
The first cryptocurrency. As with first movers in any technology, there are associated pros and cons. Bitcoin has by far the strongest brand recognition and deepest market penetration, and it is the only crypto which can be used directly as a currency at over 100,000 physical and web stores around the world. In Venezuela and Zimbabwe, where geopolitical events have created hyperinflation in the centralized fiat currency, citizens have moved to Bitcoin as a de facto transaction standard.  However, Bitcoin unveiled a number of issues that have been solved by subsequent cryptos. It is experiencing significant scaling issues, resulting in high fees and long confirmation times. The argument over potential solutions created a rift in the Bitcoin developer community, who “forked” the network into two separate blockchains amidst drama and politicking in October 2017. Potential solutions to these issues abound, with some already in place, and others nearing deployment. Bitcoin currently has the highest market cap, and since it is easy to buy with fiat currency, the price of many smaller cryptos (“altcoins”) are loosely pegged to its price. This will change in the coming year(s).
Where Bitcoin is a currency, Ethereum is a platform, designed as a foundational protocol on which to develop decentralized applications (“Dapps”). Anyone can write code and deploy their program on the global network for extremely low fees. Just like Twitter wouldn’t exist without the open platform of the internet, the next world-changing Dapp can’t exist without Ethereum. CurrentDapps include a global market for idle computing power and storage, peer-to-peer real estate transactions (no trusted third party for escrow), identity networks for governments and corporations (think digital Social Security card), and monetization strategies for the internet which replace advertising. Think back 10 years to the advent of smartphones, and then to our culture today-- Ethereum could have a similar network effect on humanity. Ethereum is currently the #2 market cap crypto below Bitcoin, and many believe it will surpass it in 2018. It has a large, active group of developers working to solve scaling issues,  maintain security, and create entirely new programming conventions. If successful, platforms like Ethereum may well be the foundation of the decentralized internet of the future.
Ripple is significantly more centralized than most crypto networks, designed as a backbone for the global banking and financial technology (“fintech”) industries. It is a network for exchanging between fiat currencies and other asset classes instantly and cheaply, especially when transacting cross-border and between separate institutions. It uses large banks and remittance companies as “anchors” to allow trading between any asset on the network, and big names like Bank of America, American Express, RBC, and UBS are partners. The utility of this network is global and massive in scale. It is extremely important to note that not all cryptos have the same number of tokens. Ripple has 100 Billion tokens compared to Bitcoin’s 21 Million. Do not directly compare price between cryptos. XRP will likely never reach $1k,  but the price will rise commensurate with its utility as a financial tool. In some sense, Ripple is anathema to the original philosophical vision of this technology space. And while I agree with the cyberpunk notion of decentralized currencies, separation of money and state, this is the natural progression of the crypto world. The internet was an incredible decentralized wild west of Usenet groups and listservs before Eternal September and the dot-com boom, but its maturation affected every part of global society.
Cardano’s main claim to fame: it is the only crypto developed using academic methodologies by a global collective of engineers and researchers, built on a foundation of industry-leading, peer-reviewed cryptographic research. The network was designed from first-principles to allow scalability, system upgrades, and to balance the privacy of its users with the security needs of regulators. One part of this ecosystem is the Cardano Foundation, a Swiss non-profit founded to work proactively with governments and regulatory bodies to institute legal frameworks around the crypto industry. Detractors of Cardano claim that it doesn’t do anything innovative, but supporters see the academic backing and focus on regulation development as uniquely valuable.
Stellar Lumens (XLM)
Stellar Lumens and Ripple were founded by the same person. They initially shared the same code, but today the two are distinct in their technical back-end as well as their guiding philosophy and development goals. Ripple is closed-source, for-profit, deflationary, and intended for use by large financial institutions. Stellar is open-source, non-profit, inflationary, and intended to promote international wealth distribution. As such, they are not direct competitors. IBM is a major partner to Stellar. Their network is already processing live transactions in 12 currency corridors across the South Pacific, with plans to process 60% of all cross-border payments in the South Pacific’s retail foreign exchange corridor by Q2 2018. Beyond its utility as a financial tool, the Stellar network may become a competitor to Ethereum as a platform for application development and Initial Coin Offerings (“ICOs”). The theoretical maximum throughput for the network is higher, and it takes less computational power to run. The Stellar development team is highly active, has written extensive documentation for third-party developers, and has an impressive list of advisors, including Patrick Collison (Stripe), Sam Altman (Y Combinator), and other giants in the software development community.
Iota was developed as the infrastructure backbone for the Internet of Things (IoT), sometimes called the machine economy. As the world of inanimate objects is networked together, their need to communicate grows exponentially. Fridges, thermostats, self-driving cars, printers, planes, and industrial sensors all need a secure protocol with which to transact information. Iota uses a “Tangle” instead of a traditional blockchain, and this is the main innovation driving the crypto’s value. Each device that sends a transaction confirms two other transactions in the Tanlge. This removes the need for miners, and enables unique features like zero fees and infinite scalability. The supply of tokens is fixed forever at 2.8*1015, a staggeringly large number (almost three thousand trillion), and the price you see reported is technically “MIOT”, or the price for a million tokens.
The most successful privacy-focused cryptocurrency. In Bitcoin and most other cryptos, anyone can examine the public ledger and trace specific coins through the network. If your identity can be attached to a public address on that network, an accurate picture of your transaction history can be built-- who, what, and when. Monero builds anonymity into the system using strong cryptographic principles, which makes it functionally impossible to trace coins,  attach names to wallets, or extract metadata from transactions. The development team actively publishes in the cryptography research community. Anonymous transactions are not new-- we call it cash. Only in the past two decades has anonymity grown scarce in the first-world with the rise of credit cards and ubiquitous digital records. Personal data is becoming the most valuable resource on Earth, and there are many legitimate reasons for law-abiding citizens to want digital privacy, but it is true that with anonymity comes bad actors-- Monero is the currency of choice for the majority of black market (“darknet”) transactions. Similarly, US Dollars are the main vehicle for the $320B annual drug trade. An investment here should be based on the underlying cryptographic research and technology behind this coin, as well as competitors like Zcash. 
Zero fees and instantaneous transfer make RaiBlocks extremely attractive for exchange of value, in many senses outperforming Bitcoin at its original intended purpose. This crypto has seen an explosion in price and exposure over the past month, and it may become the network of choice for transferring value within and between crypto exchanges. Just in the first week of 2018: the CEO of Ledger (makers of the most popular hardware wallet on the market) waived the $50k code review fee to get RaiBlocks on his product, and XRB got listed on Binance and Kucoin, two of the largest altcoin exchanges globally. This is one to watch for 2018. 
Developed as a single answer to the problem of supply-chain logistics, VeChain is knocking on the door of a fast-growing $8 trillion industry. Every shipping container and packaged product in the world requires constant tracking and verification. A smart economy for logistics built on the blockchain promises greater efficiency and lower cost through the entire process flow. Don’t take my word for it-- VeChain has investment from PwC (5th largest US corporation), Groupe Renault, Kuehne & Nagel (world’s largest freight company), and DIG (China’s largest wine importer). The Chinese government has mandated VeChain to serve as blockchain technology partner to the city of Gui’an, a special economic zone and testbed for China’s smart city of the future. This crypto has some of the strongest commercial partnerships in the industry, and a large active development team.
“Investment” is a misnomer. Cryptos are traded like securities, but grant you no equity (like trading currency).
It is impossible to double-spend or create a fake transaction, as each ledger is confirmed against every other ledger.
Some utility token blockchains use DAG networks or similar non-linear networks which don’t require mining.
In practice, these are giant warehouses full of specialized computers constantly processing transactions. Miners locate to the cheapest electricity source, and the bulk of mining currently occurs in China.
Centralized second-layer exchange websites have been hacked, but the core technology is untouched.
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