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Trading 101 - CoinDesk
Bob The Magic Custodian
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.
Stakenet (XSN) - A DEX with interchain capabilities (BTC-ETH), Huge Potential [Full Writeup]
Preface Full disclosure here; I am heavily invested in this. I have picked up some real gems from here and was only in the position to buy so much of this because of you guys so I thought it was time to give back. I only invest in Utility Coins. These are coins that actually DO something, and provide new/build upon the crypto infrastructure to work towards the end goal that Bitcoin itself set out to achieve(financial independence from the fiat banking system). This way, I avoid 99% of the scams in crypto that are functionless vapourware, and if you only invest in things that have strong fundamentals in the long term you are much more likely to make money. Introduction
Stakenet is a Lightning Network-ready open-source platform for decentralized applications with its native cryptocurrency – XSN. It is powered by a Proof of Stake blockchain with trustless cold staking and Masternodes. Its use case is to provide a highly secure cross-chain infrastructure for these decentralized applications, where individuals can easily operate with any blockchain simply by using Stakenet and its native currency XSN.
Ok... but what does it actually do and solve? The moonshot here is the DEX (Decentralised Exchange) that they are building. This is a lightning-network DEX with interchain capabilities. That means you could trade BTC directly for ETH; securely, instantly, cheaply and privately. Right now, most crypto is traded to and from Centralised Exchanges like Binance. To buy and sell on these exchanges, you have to send your crypto wallets on that exchange. That means the exchanges have your private keys, and they have control over your funds. When you use a centralised exchange, you are no longer in control of your assets, and depend on the trustworthiness of middlemen. We have in the past of course seen infamous exit scams by centralised exchanges like Mt. Gox. The alternative? Decentralised Exchanges. DEX's have no central authority and most importantly, your private keys(your crypto) never leavesYOUR possession and are never in anyone else's possession. So you can trade peer-to-peer without any of the drawbacks of Centralised Exchanges. The problem is that this technology has not been perfected yet, and the DEX's that we have available to us now are not providing cheap, private, quick trading on a decentralised medium because of their technological inadequacies. Take Uniswap for example. This DEX accounts for over 60% of all DEX volume and facilitates trading of ERC-20 tokens, over the Ethereum blockchain. The problem? Because of the huge amount of transaction that are occurring over the Ethereum network, this has lead to congestion(too many transaction for the network to handle at one time) so the fees have increased dramatically. Another big problem? It's only for Ethereum. You cant for example, Buy LINK with BTC. You must use ETH. The solution? Layer 2 protocols. These are layers built ON TOP of existing blockchains, that are designed to solve the transaction and scaling difficulties that crypto as a whole is facing today(and ultimately stopping mass adoption) The developers at Stakenet have seen the big picture, and have decided to implement the lightning network(a layer 2 protocol) into its DEX from the ground up. This will facilitate the functionalities of a DEX without any of the drawbacks of the CEX's and the DEX's we have today. Heres someone much more qualified than me, Andreas Antonopoulos, to explain this https://streamable.com/kzpimj 'Once we have efficient, well designed DEX's on layer 2, there wont even be any DEX's on layer 1' Progress The Stakenet team were the first to envision this grand solution and have been working on it since its conception in June 2019. They have been making steady progress ever since and right now, the DEX is in an open beta stage where rigorous testing is constant by themselves and the public. For a project of this scale, stress testing is paramount. If the product were to launch with any bugs/errors that would result in the loss of a users funds, this would obviously be very damaging to Stakenet's reputation. So I believe that the developers conservative approach is wise. As of now the only pairs tradeable on the DEX are XSN/BTC and LTC/BTC. The DEX has only just launched as a public beta and is not in its full public release stage yet. As development moves forward more lightning network and atomic swap compatible coins will be added to the DEX, and of course, the team are hard at work on Raiden Integration - this will allow ETH and tokens on the Ethereum blockchain to be traded on the DEX between separate blockchains(instantly, cheaply, privately) This is where Stakenet enters top 50 territory on CMC if successful and is the true value here. Raiden Integration is well underway is being tested in a closed public group on Linux. The full public DEX with Raiden Integration is expected to release by the end of the year. Given the state of development so far and the rate of progress, this seems realistic. Tokenomics 2.6 Metrics overview (from whitepaper)
Ticker: XSN. Currency type: Coin.
Consensus: Minting Proof of Stake, Trustless Proof of Stake.
XSN is slightly inflationary, much like ETH as this is necessary for the economy to be adopted and work in the long term. There is however a deflationary mechanism in place - all trading fees on the DEX get converted to XSN and 10% of these fees are burned. This puts constant buying pressure on XSN and acts as a deflationary mechanism. XSN has inherent value because it makes up the infrastructure that the DEX will run off and as such Masternode operators and Stakers will see the fee's from the DEX. Conclusion We can clearly see that a layer 2 DEX is the future of crypto currency trading. It will facilitate secure, cheap, instant and private trading across all coins with lightning capabilities, thus solving the scaling and transaction issues that are holding back crypto today. I dont need to tell you the implications of this, and what it means for crypto as a whole. If Stakenet can launch a layer 2 DEX with Raiden Integration, It will become the primary DEX in terms of volume. Stakenet DEX will most likely be the first layer 2 DEX(first mover advantage) and its blockchain is the infrastructure that will host this DEX and subsequently receive it's trading fee's. It is not difficult to envision a time in the next year when Stakenet DEX is functional and hosting hundreds of millions of dollars worth of trading every single day. At $30 million market cap, I cant see any other potential investment right now with this much potential upside. This post has merely served as in introduction and a heads up for this project, there is MUCH more to cover like vortex liquidity, masternodes, TOR integration... for now, here is some additional reading. Resources
Best places to trade your Ripple/XRP (longer read)
In the past when you heard the word ‘cryptocurrency’, the first thing that came to everyone’s minds was Bitcoin. To some, this is still the case; they believe that Bitcoin is the cryptocurrency and the vice versa to also be true. Of course, the statement is correct in one way; Bitcoin is a cryptocurrency, but cryptocurrency is not made up of only Bitcoin but a host of other currencies. One of these currencies is Ripple. When it comes to the top five cryptocurrencies with the highest capitalization, Ripple needs no introduction as it has managed to secure a position of being the third most traded cryptocurrency around the world. Perhaps this is due to the fact that Ripple is the only cryptocurrency with a backing from traditional legacy financial institutions. In addition, the coin has been integrated into the operation of thousands of small businesses around the world. At this juncture, it is only fair that you learn how to be a part of this great innovation. Thankfully, that is what this guide is all about, showing you some of the best trading platforms for Ripple. There are numerous exchanges that offer decent exchange rates and well-matched trading pairs, but I’ll only narrow down to some of our best picks to help you get started fast.
What is Ripple (XRP)?
Ripple is a cryptocurrency, a currency exchange, a real-time gross settlement payment system, and a remittance network powered by Ripple. As I mentioned before, this is the third most capitalized cryptocurrency asset after Bitcoin and Ethereum. XRP allows enterprises such as banks and other financial service providers to offer their clients a reliable option to source for liquidity for cross-border currency transactions. Ripple is a distributed, open-source platform that seeks to capitalize on the weaknesses of the conventional money payment systems such as credit and debit cards, PayPal, bank transfers, among others. According to Ripple, these payment systems expose users to a lot of transaction delays and restrict the fluidity of currencies. The platform aims at replacing traditional payment systems through offering a faster, safer, and more convenient alternative for making payments. Both the platform’s exchange and tokens are called Ripple, and their mantra states one frictionless experience to send money globally.
Where Can I Trade XRP?
Most exchanges that trade Ripple are limited to crypto-to-crypto transactions. This means that you can only trade Ripple with another cryptocurrency and not fiat currencies such as the euro or the dollar. You’ll need to acquire the currency you wish to trade with XRP on a platform that accepts fiat, and once that happens, you can proceed to trade the two currencies. There are several great platforms that offer XRP trading; below are just a few:
Buying XRP on Binance
Buying XRP on Bittrex
Just like on Binance, you’ll need to create an account on Bittrex to get started. The process is pretty much straightforward, only requiring you to sign up using your email address and password. Once you’re done signing up, click on the wallet tab. You will be taken to a page where you can view all the deposit addresses of the cryptocurrencies on the Bittrex platform. You can then choose the currency to use to purchase XRP, after which, you will be required to type in the code of the currency you will be using to purchase Ripple. If you’re using Ethereum, you can type in the search bar “ETH” and then click on the green arrow to reveal the deposit address. In case you will be sending the funds from a different exchange, you’ll need to paste the address to that platform. Next, you’ll need to send funds to your Bittrex account. Bittrex permits payments using both fiat and cryptocurrencies. So, depending on what you will be using, send money to your online wallet and proceed to trade it with Ripple.
Buying XRP on Changelly
Changelly is another Ripple exchange that requires you to use either Bitcoin or Ethereum to acquire XRP. The exchange doesn’t have an inbuilt wallet, so you’ll need to store your funds on a separate hardware or software wallet. You can pretty much use any type of wallet, but the most secure ones are the hardware ones as they store your coins in an offline cold storage area. Ripple prefers not to have many unutilized accounts being set up on its platform; this is why you’ll need to have a minimum of 20 XRP in your account for you to get started. However, if your first transaction will be more than 20 XRP, then you’re all set. Once you have a wallet ready for your Ripple, head to the Changelly site and click on “input currency”. Here, you will be able to enter the currency you wish to trade for Ripple. You can basically pick and use any coin listed on the site, but it is highly recommended that you use either Bitcoin or Ethereum due to their high liquidity. The output section will have Ripple, which is the currency you wish to receive. The next step will require you to key in your XRP address, which is your Ripple address and the destination tag, which is a description of the transaction. You can now proceed to trade your chosen coins for Ripple. The transaction shouldn’t take long, and you will be able to receive the coins in your Ripple wallet.
Cryptmixer is a platform that assists users to swap XRP with 5 other assets freely. The interface lets users convert assets directly from one’s wallet, without having to create an account or register. Besides, the service helps to compare different providers and find a suitable deal for handling Ripple transactions securely, rapidly, and at the best rate. The process of using Cryptmixer is quite simple:
Go to the main page, choose the currency you’d like to swap, and enter the amount.
Choose XRP to receive.
Review the amount to see how much you will receive. Cryptmixer will automatically find the best rates for your trade.
Then, enter the wallet address that you wish to use.
Send in the deposit to the generated wallet address and wait for the transaction to be processed.
What makes Cryptmixer a great fit is that it provides a very simple layout and quick process so it’s not chore when you trade your crypto. The support line also takes on the job of solving the cases by cooperating with users with top priority. To learn more on how to exchange XRP at the best rate check https://cryptmixer.com
Buying XRP on Coinmama
Coinmama is a cryptocurrency exchange that has been around for quite a while now. The Coinmama team has been adding more coins on their platform over time to be able to provide its users with a wider variety of trading pairs. More recently, the platform included Ripple on its platform. However, Coinmama does not allow US-based users to purchase Ripple due to some stringent laws and regulations surrounding the coin. But for non-US users, you can proceed to create your account on the platform and locate Ripple among the listed assets. Once you’ve created your account, navigate your way to the area with the list of assets. Select one of the provided packages and proceed. You’re required to have a crypto wallet prior to making any purchase on the platform, so be sure to have a valid wallet address before completing the purchase. Once that’s done, purchase your Ripple coins and they will be delivered to your wallet.
Storing Your Ripple Coins
Online storages are never safe for cryptocurrency assets. Individuals have woken up to all sort of horrific sceneries on their accounts that left them bankrupt with no one to turn to. One of the most important concepts you need to grasp about online businesses is the security of your transactions. Cryptocurrency burglars are everywhere and are getting smarter by the day; this means that traditional ways of guaranteeing the security of your online assets are no longer effective. Most exchanges have top-notch security standards, but the safety of your cryptos begins with you. A great way of ensuring that your funds are secure is by getting an offline storage device for your coins. I’ve seen great reviews on two hardware wallets that I highly recommend; these are the Ledger Nano S and Trezor wallets. After getting the wallet of your choice, keep your personal data such as passwords and secret words private; this will ensure that no one else gains access to your wallet even if you misplace it. Writing your password or PIN on open places or somewhere in your phone might not be a good idea; yes, it may be convenient for you, but it will be for the burglar too.
What method of purchasing XRP is considered to be the best?
The most secure and common way of acquiring Ripple is through buying Ethereum or Bitcoin from Coinbase or Coinmama, then transferring the same to Cryptmixer to use to exchange with Ripple. This is because Ripple is currently not available for purchase by using fiat currencies.
What is the best trading platform for Ripple?
Ripple is available on a decent number of exchanges including Binance, Coinmama, Coinbase, Bittrex, Cryptmixer, and more. However, among the stated ones, I have found Cryptmixer to be more secure and easier to use while it also offers the best trading rates and fees.
The Bottom Line
As we conclude, you now have some of the best choices when it comes to the exchange to acquire Ripple coins. After buying your XRP coins, store them offline on a secure device due to the risk of being faced by threats such as hacking or system failures. If you’re serious about making cryptocurrency your investment vehicle in the long run, consider investing in a more lasting security solution such as a hardware storage device. You may not get them for a few pennies, but trust me when I say they are worth every last dime you spend on them.
AMA AT DETECTIVE ID (25/06/2020) Before welcoming any questions, I would like to briefly introduce STATERA PROJECT. Statera is a smart contract deflationary token pegged to a cryptocurrency index fund. By including STA in an index fund with Link, BTC, ETH, and SNX you can buy one token and access the price action of four of the leading cryptocurrencies. You can also invest directly in the index fund (balancer pool) and receive the benefits of fees and BAL tokens paid to you while also having an automatically balanced fund. Lastly the deflationary mechanics of STA increases the chance for positive price action while decreasing beta (volatility). This is all found in a smart contract that is fully decentralized, the founders can no longer augment the contract in any way and this has been confirmed by a third party code audit through Hacken. Q1 : please explain in more detail about Statera, what is the background of this project? and when was it established? The dev of this project had previously created another deflationary token BURN. When the Balancer Labs released the Balancer Protocol, he had an idea to combine the two, deflationary token and a pool of tokens, making the first deflationary index fund. It started in the end of May and on the 3rd iteration, May 29th - a trustless version was launched that we see today. As briefly explained earlier, STATERA or STA is an Index Deflationary Token built on Ethereum blockchain; Index: Contains a token suite of world class leading crypto assests BTC, ETH, LINK, SNX with STA. Deflationary: On every transaction of STA 1% of the transacted amount is sent to 0x address on ethereum, burned forever, thus reducing the circulating supply of STA Index+Deflationary: STA is mixed with BTC, ETH, LINK SNX in a portfolio, backed by liquidity on a protocol known as balancer (balancer.finance) This platform serves as a market maker for the token suit. The Index suite is of equal rate of 20%, that is 20% of BTC, ETH, SNX LINK and STA, Thus, anytime there is an increase in value of any of those coins or tokens, balancer automatically trade them for STA in order to keep the token suit ratio balanced. And anytime there is an increase in the value of STA, the same process applies. while doing this trade, it enables further burning on every transaction, thus facilitating more token scarcity. In addition to this, Statera was deployed with contract finalised, that is, the index suite can not be altered, It is completely out of Dev's control. Q2 : What are the achievements that have been obtained by Statera in 2020? And what goals do you want to achieve in 2020? By this we assume the questionnaire is asking for a roadmap! First, the project is barely a month old, and within just a month, our liquidity has grown from $50,000 to over $400,000 currently above $300,000. Among the things we have accomplished so far is the creation of market value for STA's Balancer liquidity pool token BPT, which is currently over $1000 per one BPT. Regarding what we set to achieve: The future is filled with many opportunities and potentials, currently, we are working on a massive campaign to introduce our product to the outside world. We have already made contact with different and reputable forums and channels regarding marketing and advertisement offers, some which we are currently negotiating, some which we are awaiting response. All we can say for now is that the Team is working hard to make this the Investment opportunity every crypto enthusiast has been waiting for. Statera has the goal of putting cryptocurrency into every portfolio. We believe we have a product that increases the returns of investing in cryptocurrencies and makes it easier to diversify in this space. We have done so much in June: articles, how to videos, completed the audit, tech upgrades like one token liquidity additions, and beginning our many social communities. We have been hard at work behind the scenes but things like sponsorships, features, and media take time, content makers need days if not weeks to develop content, especially the best of the best. We are working tirelessly, we will not disappoint. We have plans for 2020-2025 and will release those in the next month. They are big and bold, you’re going to be impressed by the scale of our vision, when we say “Cryptocurrency in every portfolio” we mean it. In 2020 more specifically we are focused on more media, videos, product offerings, and exchanges. Q3 : What is the purpose of STA token? How can we get STA? The purpose of STA is an investment in the first deflationary index fund. The whole index's value rises from these aspects: 1. The index funds (WBTC,WETH,SNX,LINK) appreciate in value 2. When the index tokens are traded, the pool receives transaction fees - 1% 3. STA burns on transactions, so it's deflationary nature increases its value as the total supply drops 4. Balancer rewards Index holders with BAL token airdrops every week You can invest via the 'Trade' links in stateraproject.com website. Easiest way is to do it using ETH. The monetary policy of our token is set in stone and constantly deflationary. This negative supply pressure is a powerful mechanism in economics and price discovery. Through the lowering of supply we can decrease your beta (volatility) and increase your alpha (gains). Our token is currently only top 40 in liquidity on Balancer, however our volume is top 10! You want to know why? Because Statera works. Statera increases arbitrage, volume, fees, BAL rewards, and liquidity. Our liquidity miners in our Balancer pool are already making some of the highest BAL rewards on the platform, one user we spoke with made 18% in June, that’s over 150% APY! Our product is working, 100% (or you could say 150%), and when people start to see that, and realize the value, the sky's the limit. Q4 : can we as a user do STA mining? The supply of STA doesn't increase anymore, it only decreases due to the burn feature. So there is no way to mine anymore STA. Only way to acquire the tokens is via an exchange. The monetary policy of our token is set in stone and constantly deflationary. This negative supply pressure is a powerful mechanism in economics and price discovery. Through the lowering of supply we can decrease your beta (volatility) and increase your alpha (gains). Our token is currently only top 40 in liquidity on Balancer, however our volume is top 10! You want to know why? Because Statera works. Statera increases arbitrage, volume, fees, BAL rewards, and liquidity. Our liquidity miners in our Balancer pool are already making some of the highest BAL rewards on the platform, one user we spoke with made 18% in June, that’s over 150% APY! Our product is working, 100% (or you could say 150%), and when people start to see that, and realize the value, the sky's the limit. Q5 : The ecosystem of a public chain has a lot to do with the level of engagement and participation of third-party developers. How does Statera support the developers? Not really. Our project is focusing on investment opportunities for the cryptocurrencies. The cryptocurrency tokens that are not used and are just sitting in a wallet can work for you by being added to an index fund and appreciate in value over time. First off, what we have created is a new asset class, I’ll repeat that, a new asset class. This asset has never existed: “Deflationary Index Fund,” what does that mean for finance? What will developers do with this? It’s hard to give a finite answer. We hope there are future economic papers on our token and what it means to be a deflationary index fund. With the addition of synthetic assets and oracles you can put any asset into the DeFi space: Gold, Nikkei 225, USD, etc. STA can be combined with any assets and bring the benefits of it’s ecosystem and deflationary mechanism to that asset. STA, the token itself, also gives you access to the price action of any asset it is paired with. Put simply STA’s balancer pool(s) give you a benefit in holding them, and STA’s price will reflect it’s inclusion in Balancer Pool(s) (and possibly future financial instruments), so STA is a bet on DeFi as a whole. When we say as whole, we mean as whole: what happens if you include STA in a crypto loan, or package it with a synthetic S&P 500 token, or use it as fee payment in a DeFi platform? Being fully decentralized it is up to our community to make this happen, social engagement and community are key. We are constantly bringing community members onto our team and rewarding those that benefit the ecosystem. in addition, Statera is a fully community project now. Paul who is the current team leader was an ordinary member of the community weeks ago, due to his interest and support for the project, he started dedicating his time to the project. Quite a number of community members are also in the same position, while Statera was developed by an individual, it is being built by the entire Statera community Community Questions (Twitter): Q1 From: @KazimKara35 The project tells us that the acquisition and sale of data between participants is protected by code of conduct and how safe is deployed on the blockchain, but how do you handle regulations while operating on a global scale? Statera is decentralized token, similar to other utility crypto tokens and same regulations apply to it as others. his is actually a benefit of our decentralized nature. This isn’t legal advice, however in the past regulating bodies have ruled that the more decentralized a project is, especially from launch, the less likely they are to be deemed a security (see: Ethereum). This means they can be traded more freely and be available on more platforms. We are as decentralized as you can be. The data itself is all secured through the blockchain which has been shown to be a highly secure medium. We do not store any of your data and as long as you follow best practices in blockchain security there are no added security risks of using Statera. We don’t, and literally can’t, hold anymore personal information than is made available in any blockchain transaction. and that "personal information" is more likely than not just your ethereum wallet address, no "real world" data is included in transactions Q2 from: @Michael_NGT353 What is Mechanism you use On your Project sir? Are you Use PoS,PoW or other Mechanism Can you explain why you use it and what is Make it Different? Our token is an ERC-20 token and it's running on the Ethereum blockchain. The Ethereum's POW mechanism is currently supporting the Statera token We run on Ethereum, so we are currently PoW. With ETH 2.0 we will hopefully be PoS this year (hopefully). We use it because ETH has over 100 million addresses and around a million daily transactions. We are currently at about 1,900 token holders, we are just touching the edge of what is possible in this market. We chose the biggest and the best network available right now to launch our product. We think the upside is huge because of this choice. Being the biggest network it is also one of the most secure, no high risk vulnerabilities have been found in Ethereum or in our code (we've had our code audited by a third party, Hacken, and you can read their audit on our Medium page), so we also have security on our side Q3 From : @Ryaaan_Nguyen Can you list some of Statera outstanding features for everyone here to know about? What are the products that Statera is focusing on developing? As mentioned earlier by GC, First off, what we have created is a new asset class, I’ll repeat that, a new asset class. This asset has never existed: “Deflationary Index Fund,” what does that mean for finance? What will developers do with this? It’s hard to give a finite answer. We hope there are future economic papers on our token and what it means to be a deflationary index fund. With the addition of synthetic assets and oracles you can put any asset into the DeFi space: Gold, Nikkei 225, USD, etc. STA can be combined with any assets and bring the benefits of it’s ecosystem and deflationary mechanism to that asset. STA, the token itself, also gives you access to the price action of any asset it is paired with. Put simply STA’s balancer pool(s) give you a benefit in holding them, and STA’s price will reflect it’s inclusion in Balancer Pool(s) (and possibly future financial instruments), so STA is a bet on DeFi as a whole. When we say as whole, we mean as whole: what happens if you include STA in a crypto loan, or package it with a synthetic S&P 500 token, or use it as fee payment in a DeFi platform? We touched on this a bit in the question on what makes us special compared to other exchanges. We have created a product that synergizes with Balancer Pools creating a symbiotic relationship that improves the outcomes for users (our product can also synergize with future DeFi products). By including STA in an index fund with Link, BTC, ETH, and SNX you can buy one token and access the price action of four of the leading cryptocurrencies. You can also invest directly in the index fund (balancer pool) and receive the benefits of fees and BAL tokens paid to you while also having an automatically balanced portfolio (like an index fund with dividends). Lastly, the deflationary mechanics of STA increases the chance for positive price action while decreasing beta. We want to package Statera with assets across the whole cryptocurrency space, with an emphasis on DeFi. We also want everyday people to be able to invest quickly in crypto while also feeling reassured their investment is set up to succeed. We are focused on developing a name brand that people go to first and foremost when investing in crypto: cryptocurrency in every portfolio. This is all found in a smart contract that is fully decentralized, the founders can no longer augment the contract in any way and this has been confirmed by the third party code audit. This is a feature in and of itself, some argue that Bitcoin’s true value is in it’s network effect, first mover advantage, and immutability. Statera is modeled on all three of those and has those features in spades. The community now owns our token, the power in that, giving finance and power to the people, is why we are here. Q4 From : @futcek What do you think about the possibility of creating new use cases in DeFi space for existing real world assets by using crypto technology? What role do you see in this creation for Statera? I think my answer above actually answers this perfectly, Statera in and of itself is a “new use case”, a “deflationary index fund” has never existed, I’ll copy and paste the other relevant part: “With the addition of synthetic assets and oracles you can put any asset into the DeFi space: Gold, Nikkei 225, USD, etc. STA can be combined with any assets and bring the benefits of it’s ecosystem and deflationary mechanism to that asset. STA, the token itself, also gives you access to the price action of any asset it is paired with. Put simply STA’s balancer pool(s) give you a benefit in holding them, and STA’s price will reflect it’s inclusion in Balancer Pool(s) (and possibly future financial instruments), so STA is a bet on DeFi as a whole. When we say as whole, we mean as whole: what happens if you include STA in a crypto loan, or package it with a synthetic S&P 500 token, or use it as fee payment in a DeFi platform? Being fully decentralized it is up to our community to make this happen, social engagement and community are key. We are constantly bringing community members onto our team and rewarding those that benefit the ecosystem.” Statera is a way to make your investment more successful, and owning Statera let's you benefit from other people using it to make their investments more successful (a self feeding cycle). Q5 From : @Carmenzamorag Statera's deflationary system is based in that with every transaction 1% of the amount is destroyed, would this lead to lack of supply and liquidity in the long term future? How would that be fixed? The curve of supply is asymptote, meaning that it will never reach zero. The idea is that the deflationary process will slowly decrease the supply of STA, which – combined with a fixed or increaseing demand – will result in STA appreciating in value. Evidently, as the STA token increases in value, the amounts of STA being traded will slowly decrease: The typical investor might buy 10.000 STA at the current rate, but in the future (proportional to an increase in the valueation of STA) this number will tend to decrease, hence the future investor might only buy 1000 STA. This of course results in less STA being burned. Additionally, STA is divisible to the 18th decimal, why – even if the supply was to reach 1 STA – there would be a sufficient supply. Well this would be a question for a Mathematician, and luckily we’re loaded with them (as seen above)! I’ll try to illustrate with an example. 1% of 100 million is 1 million, 1% of 10 million is 100,000. As we go down in supply the burn is less by volume. What also happens at lower supply is higher prices (supply and demand economics). So those 1 million tokens burned may be worth $20,000, but by the time overall supply is at 10 million those 100,000 tokens may also be worth $20,000 or even more. This means you transact “less”, if you want to buy 1 Ether now with Statera you need 8,900 STA which would burn 89 tokens. If Statera is worth $100 you only need 2.32 statera (.023 tokens burned). Along with this proportional and relative burn decrease, tokens are 18 decimals long, so even when we get to 1 token left (which mathematically would take decades if not centuries, but that is wholly dependent on usage), you are still left with 10 to the 18th power, or one quintillion “tokens”. So it’s going to take us a while to have supply issues :) Nuked Phase (3rd Part) Q) What is your VISION and Mission? Our working mission and vision: Mission: Provide every investor with simple and effective ways to invest in cryptocurrency. Decrease volatility and increase positive price pressure in cryptocurrency investments. Lower the barrier to entry for more advanced investment tools. Be a community focused and community driven cryptocurrency, fully decentralized by every meaning of the word. Vision: We aspire to put “cryptocurrency in every portfolio”. We envision a world where finance is given back to the people and wealth building strategies withheld only for affluent individuals are given to all. We also strive to create an investment environment based on sound monetary policy and all the power that comes with a sound asset. Q) What are the benefits of STA for its investors in long term? Does STA have Afrika as an important area for its expansion? We have ties to Africa and see Statera as a way for anyone and everyone to invest in cryptocurrency. The small marketcap of statera makes it's price low and it's upside massive. Right now if you wanted to be exposed to the price action of four cryptocurrencies (BTC, ETH, Link, SNX) Statera is a way to gain that exposure in a way that has a huge upside, compared to the other four assets, there are risks in investing in any small cap but with those risk come outsized rewards (not investment advice and all answers are solely my opinions 😊) Q) In the long run, why should we trust and follow STATERA? How do you raise awareness and elimination of the doubts of investors / partners / customers?. You're really asking "How do I trust myself and other crypto investors" The project is FULLY decentralized, it is now in the hands of the community. We would venture a guess that the community wants their investment to succeed and be worth more in the future, so you are betting on people. wanting to make themselves money on their own investment. This is a pretty sure bet. The community being active and engaged is key, and we have short term and long term plans to ensure this happens Q) No one can doubt the strength of #Statera. But can you tell us some of the challenges and difficulties you're presently facing? How can you possibly overcome them? We're swinging outside our weightclass, we don't see litecoin or SNX, or any other crypto product as our competition. Our competition is NASDAQ, Fidelity, etc. We want to provide world class financial instruments that only the wealthy have access to in the traditional world to everyone. Providing liquidity, risk parity, being paid to provide liquidity, unique value propositions, are all things we want to bring to everyone. However we are coming up in a hectic space, everyday their is fud and defamation on the web, but that is the sandbox we chose to play in and we aren't grabbing our ball and going home. We can tell you that we will not disappoint and fighting all the fud that comes along with being a small and upstart project only fuel our fire. Building legitimacy is our largest challenge and looking at our audit, financial report, and some things you will see in the coming weeks, we hope you see we are facing those challenges head on. Q) What is the actual uniqueness of #Statera.??? Can you guys please explain tha advantages of #Statera over other projects.?? When we launched there were no other products like ours. There are now copies, and we wish them the best, but we have the best product, hands down. Over the next couple weeks this will become apparent, if it hasn't already, also a lot of the AMA answers dug deeper into our unique value proposition, especially the benefits we provide to Balancer Pools which shows the benefits we would provide for any index fund. We are a tool to improve cryptocurrency investing Q) Fragmentation, layering and cross-chain are three future solutions for high-performance blockchains. Where is Statera currently? What are the main reasons for taking this direction? We operate on the Ethereum chain, as it upgrades our services and usability will upgrade. We are working on UI and more user friendly systems to onboard people into our ecosystem Q) How STATERA plan to make room and make this project known in the world of crypto, full of technology and full of new projects very good in today's market? We think we have a truly innovative product, which - when first understood - appeals to most investors. Whether you want a high-volatility/medium-risk token like STA or whether you are more conservative and simply just plan on adding to the Statera pool BPT (which is not nearly as volatile but still offers great returns). We plan on making Statera known to the crypto world through a marketing campaign which slowly will be unravelled in the comming days and weeks. If interested, you can check out an analysis of the different investment options in the Statera ecosystem in our first financial report: https://medium.com/@stateraproject/statera-financial-reports-b47defb58a18 Q) Hello, cryptocurrencies are very volatile and follow bitcoin ... and does this apply to Statera? or is there some other logic present in some way? is statera token different from a current token? Are you working on listings on other exchanges? Currently uniswap is somewhat uncomfortable for fees. We are also on bamboo relay, saturn network, and mesa. Statera will be volatile like all cryptocurrency, this is a small and nascent space. But with the deflationary mechanic and balancer pool, over time, as marketcap grows it will become less volatile and more positively reactive to price. Q) Security is one of the most essential characteristics for a project to get reputation. How can #Statera Team assure to their community that users assets and investments will stay safe from unwanted agents? We have been third party audited by the same company that worked with VeChain to audit their code. Our code has been shown to be bulletproof. Unless Ethereum comes up with a fatal security flaw there is nothing that can happen to our contract (there is no backdoor, no way for anyone to edit or adjust the smart contract). Q) Many investors see the project from the price of the coin. Can you give us advantages why Statera is so suitable for long-term investment? and what makes Statera different from other similar projects? Sometimes the simplest solutions are the most effective. A question you can ask is “What if this fails”? But you can also ask, “What if this succeeds”? Cryptocurrency is filled with asymmetric risks, we think if you look into the value proposition you will find that there is a huge asymmetric risk/reward in Statera, and we will make that even clearer in our soon to be released litepaper. You are on the ground floor of a simple but highly effective solution to onboarding people into defi, cryptocurrencies, and investing. Our product reduces volatility and increases gains (decreases beta and increases alpha in investor terms), which is highly attractive in any investment. The down side is there but the upside outweighs it exponentially (asymmetric risk) Q) What your plans in place for global expansion, are Statera focusing on only market at this time? Or focus on building and developing or getting customers and users, or partnerships? Can you explain this? We have reached out to influencers in other countries and things are in the works. We have also translated documents and are working on having them in at least 4 languages by the end of July. We were founded globally, our team is global, and we are focused on reaching all 7 billion people. Q) Now in the cryptofield everyday there are new projects joining in the Blockchain space. They are upgraded, Well-established and coming up with innovative technology. How Statera going to compete with them? What do you think, one day Statera will become useless And will be lost into the abyss of time for not bringing any new technology? We are the first of our kind, no one had a deflationary index fund before us. Index funds will be the future of crypto (look at the popularity of etfs and indexes in the traditional markets). We are a tool to make your index function better and pay you more. As long as people care about crypto index funds they will care about the value STA brings to that. We have an involved and long term plan to reach dominance over a 5 year span, this is not a flash in the pan, big things coming Q1. You say that the weight and proportions of your tokens are constant. So how have you managed to prevent market price speculation from generating hypervolability in your token price? Do you consider yourselves a kind of stablecoin? Q2. How many jurisdictions allow the use of Stratera products and services? Are they available for Latin America? @joloroeowo The balancer ensures an equal ratio of 20% amongst the five tokens included in our fund. This, however, does not imply that the tokens are stable. Rather, the Balancer protocol helps mitigating price fluctuations. Q) How can I as a Statera participant participate in liquidity mining, and receive BAL as reward? What are the use cases of $STA token, and how are users motivated to buy and hold long term? The easiest way is to go to stateratoken.com and click trade then BPT. You can also buy all five tokens and click on portfolio then add liquidity. Balancer is working on a simpler interface to add liquidity with one token, we are waiting on them. I think we explained the use cases above Q) What do you plan have for global expansion, is Statera currently focused solely on the market? Or is it focused on building and developing or acquiring customer and user or partnership relationships? Can you explain it? We are currently working on promoting the project and further develope our product, making it lucrative for more new investors to join our pool and invest in the STA token. Q1) Statera have 2 types of tokens, so can you tell me the differences between STA and STAC ? What are their uses cases? Is possible Swap between them? Q2) Currently the only possible Swap or "exchange" possible is Uniswap, so you do have plans to list the STA token into a more Exchanges? STAC is obsolete, we only have STA and BPT (go to our website and click on trade) stateratoken.com BPT gives you more diversification and less risk, STA gives you more volatility and more chance for big gains. Q2 we are on multiple exchanges (4), bamboo relay, saturn, and mesa we do have plans for future exchanges but the big ones have processes and hoops to jump through that can't be done so quickly Q) What business scenarios can STATERA support now? In which industries can we see the mass adoption of STATERA technology in the near future? Statera increases the effectiveness of your cryptocurrency investments. Specifically it makes cryptocurrency index funds function better, netting you higher returns, which we have already seen in just one month of implementation. Right now, today, you can buy our BPT token and increase the functionality of holding a crypto index fund. In the future we want every single web user to see and use our product Q) Do you plan to migrate to other platforms like Tron, BinanceChain, EOS, etc. if it is feasible?? Migrating our current contract is not. Starting new offerings on those other chains could be possible, they aren't on our radar currently but if the community requests them we are driven by our community Q) ETH Blockchain is a Blockchain have many token based in it, i have used ETH blockchain long time and i see it have big fee and need much time to make a transcation so Why you choose to based STA in ETH blockchain not other like Bep2 or Trc20 ? Simply: 100 million addresses, 1 million transactions a day. The more users we have the more we will benefit our community. We hope ETH 2.0 scaling will fix the problems you mention. Q) No one achieve anything of value on its own, please can you share about Statera present and future partnerships that will drive you to success in this highly congested crypto space? We have a unique product that no one else has (there are people who have copied us). We can't announce our current and future partnerships yet, but they will be released soon. Our future hopes of partnerships are big and will be key to our future, know we are focused on making big partnerships, some you may not even be thinking about. Q) According to the fact that your algorithm causes 1% of each transaction to be destroyed, I would like to know, then, how you plan to finance yourself as a project in the long term? The project is now in the hands of the community and we are a team of passionate people volunteering to help promote and develope the Statera ecosystem. But then, how do we afford running a promo campaign? We have lots of great community members donating funds that goes to promoting the project. In other words, the community helps financing the project. And so far, we have created a fantastic community consisting of passionate and well-educated people! Q) There are many cryptocurrency startups were established by talent teams, but they got problem in raising capital via token sales due to many factors as bear market, bankrupt etc. This leaded their potential startups fail. So how will Statera break these barriers and attract more funds from outside crypto space? We are community focused and community ran. When you look at centralized cryptocurrencies you can see the negative of them (Tron, ADA, etc.) We believe being fully decentralized is the true power position. You the owner of statera can affect our future and must affect our future. This direct ownership means people need to mobilize and organize to push us forward, and it is in their best self interest to do so. It's a bet on our community, we're excited about that bet Q) What business scenarios can STATERA support now? In which industries can we see the mass adoption of STATERA technology in the near future? Statera increases the effectiveness of your cryptocurrency investments. Specifically it makes cryptocurrency index funds function better, netting you higher returns, which we have already seen in just one month of implementation. Right now, today, you can buy our BPT token and increase the functionality of holding a crypto index fund. In the future we want every single web user to see and use our product Q) Why being a hybrid of a liquidity pool and an index fund? What are the main benefits about this? By being a liquidity pool the exchange side of the pool (balancer also functions as an exchange) gives you added liquidity for more effortless, effective, and cheaper rebalancing. You also benefit from getting paid the fee when people use the exchange AND getting paid BAL tokens that are worth $15-20 USD. These are not benefits you get with an index fund, meanwhile the liquidity pool rebalances just like an index fund would Q) Which specific about technology and strategy of #STA that make you believe it will be successful and what does #STA plan do to attract more users in the upcoming time? I think the idea behind Statera is truly ingenious. We have made an index fund, which investors are highly(!) incentivised to invest in, namely because the ROI, so far, has been huge. An increase in the pool liquidity (index fund) indirectly translates into an increase in the price of STA, why we think the STA token - combined with its deflationary nature - will increase in the long run. The mechanism behind this is somewhat complex, but to better get an understanding of it, I suggest you visit our medium page and read more about the project: https://medium.com/@stateraproject
Yeah, it’s another one of “those”. But honestly, after being in the game for long enough, you end up developing an eye for the good coins. Not the “good” ones, the GOOD ones. Believe it or not, research and common sense is the name of the game!
A little bit more about me: I come from a business & logistics management background. I started investing in cryptocurrencies and trading a little more than six months ago. As a person, I am very detail oriented and I’ve been researching all kinds of cryptos, for hours a day, for the past six months. The more I researched, the more I learned, the more I became hungry for knowledge, and therefore the more i researched. From trading to cryptocurrency basics, their economics, their political implications, the technology revolution they represent, the human psychology aspect as well as emotional trading behaviours (FOMO, FODO, etc.), all of it!
I’ve purchased Ethereum at 150$ (when I first started in crypto). Then NEO back when it was still AntShares and trading under 3$. Gas (Antcoin back then) at 30c, OMG when it was sub-1$, and ETP at exactly a dollar (selling it later at 5$). This was all before I even knew how to do a basic margin trade & was still in the process of learning about crypto (and while tether still had a “reasonable” market cap! LOL)
My approach is pretty simple when it comes to crypto. I split coins into seven main categories:
-Store of Value (BTC) -Payment (DASH, BCH, LTC) -Pure Anonymity and/or Evil Stuff (XMR) -Platform/platform’ish (ETH, NEO, LISK, CARDANO, ETP, Iota, Factom and the likes) -Shitcoins (99% of ERC20 tokens) -Absolute Shitcoins (Boolberry, Embercoin et al.) -Fee Split / Dividend Coins
That last category is my favorite. While I do strongly believe in diversification (10% store of value, 10% payment, 5% anonymity, 25% platform in my case), I always have a “lean” towards coins that make business sense. Coins that derive their value directly from the amount of usage the platform gets (Factom, for example). Coins such as NEO, BNB, Kucoin, Coss, ICN, TenX and the likes, basically coins that either have a direct “dividend-paying” property (NEO generating gas, Kucoin/Coss awarding holders with a % of the exchange’s trading fees) or an indirect “dividend paying” property such as BNB, ICN, TenX using quarterly profits to buy back their own coins and burn them, thus raising the value of the rest of the coins in circulation over time.
Now let’s look at market caps of these direct and indirect “dividend” coins.
Neo: 2.3B TenX: 246M Binance: 200M Iconomi: 155M Kucoin: 44M (68M at ath, not too long ago) Coss: 5M
You see that odd one there with only 5M market cap? Yeah. That’s the great buy right now. That’s the x10, x20 or even x30 that most people haven’t realized yet. That’s also the “dividend coin” you can scoop a ton of while it’s on the cheap, and make massive recurring revenue from as the exchange solidifies and evolves.
What is COSS? COSS stands for Crypto One Stop Solution. They’re a Singapore based cryptocurrency exchange with an amazing team that’s currently expanding. They aim at becoming the “One Stop” solution for crypto, meaning A) an exchange, B) a payment gateway for merchants to accept crypto payments, and probably sometime in the future C) crypto debit/credit cards. They offer their own coin (COSS coin), and holders of this coin receive 50% of the trading fees generated by the exchange (more on this later).
Now, what a lot of people still don’t realize in crypto, you don’t invest in the bigger market cap coins expecting to make a killing (“the moonshot”). Sure, they’ll bring you nice long term growth as the whole market matures, and that’s where you want to diversify and solidify your portfolio, solid coins with a purpose. But what if you want more thrill? An actual opportunity to “moon”? You find a project that makes business sense, that has at least a working product, and a good team. Buying NEO at 2.5B market cap? You missed the boat, it was a dollar a few months ago and already went x60 (“mooned”), and now stabilized at roughly x38. OMG had it’s x10-15 already. BNB as well. Their market caps are big, and a lot of buying needs to happen to even double in price.
Antshares (NEO) back then was a steal at 1, 2 and 3$. It was a huge risk, with huge rewards. They didn’t even have a product other than their blockchain. No dApp running or even being built on it, no english resources to even figure out how to code on it and deploy a smart contract, no marketing, hell we didn’t even know if Da Hongfei was still alive. All it was is a Chinese based smart contract platform, with an innovative dBFT concensus algorithm. It was a 100M market cap coin that early adopters believed in, and essentially invested in when it was not much more than a website and a blockchain. Look where it’s at now, with more than a dozen dApps being built on it, a solid team of roughly 10 devs, with the NEO council also funding City of Zion (team of 20+ NEO devs). NEO has grown into an incredible community, and is now launching coding dApp contests left and right, with the latest one in partnership with Microsoft china & offering half a million dollar’s worth in prizes.
NEO holders get rewarded with GAS on a daily basis. When NEO gets further adoption, all fees such as registering an asset, deploying a contract, changing an asset, etc. will be redistributed to NEO holders as well on a pro rated basis. Only transaction fees are not, as those will go out to MasterNodes. If you got yourself a thousand NEO’s back when they were a dollar or two a piece, you’re now generating 7 gas per month. That’s roughly 161$ USD per month, on a recurring basis, at current gas prices, out of a 1000$ investment. That’s a whopping 16.1% PER MONTH on original investment, and not even counting the fact that you pretty much made 37000$ profit on the NEO’s themselves. Today? Well, you gotta dish out 38000$ to buy a thousand neos and make 161$ per month, basically bringing you 0.4% per month on original investment.
Same with bitcoin. Early adopters that got it at pennies. It just hit $10K USD a piece. For every 30 cent spent purchasing bitcoin in 2009, you’d have $10K USD in the bank account. Invested 3$? 100K. Invested 30$? 1M.
Ethereum? From a dollar to half a grand now.
Moral of the story? Early adoption pays off. History repeats itself, and it will continue to do so. Bitcoin was digital money for nerds, ethereum was a cool project that nobody really gave a crap about until they got EEA which showed credibility (early adopters of eth had a great vision, I’ll give them that!). Neo was chinese vaporware. What do they all have in common? Their.Early. Adopters. Made. A. Killing.
Look where they stand now. Look where a lot of coins stand now. Even a lot of ERC20 tokens that don’t even really have a reason to exist have market caps over 100M. And for what? They don’t reward you with anything other than price increasing because more people buy (greater fool theory)? They don’t reward you with dividends from the project/platform itself? Their value isn’t derived directly from the amount of usage it gets (a la Factom, PaulSnow you genius.)? They still don’t even have a minimum viable product to show? When you ask yourself why does it need a coin, and the answer is either “uhh…” or “oh it grants you voting rights” (that nobody gives a crap about, let’s be honest), you should reconsider your investment strategy. Cause I can tell you a lot of people don’t know what the hell they’re doing, and they’d be better off diversifying in the top 5 or 10 coins and holding than investing in the shitcoinfest that crypto has become.
And that’s why COSS is a pretty buy right now. You’re investing in a platform that’s already up and running, not a whitepaper or vaporware. Hell even Eth and Neo were riskier investments for early adopters. Let’s go over the cons first:
It’s ugly. The UI sucks. It doesn’t have API’s yet, meaning there’s no bots to create liquidity, and therefore low volume. It’s been fudded to death by KuCoin shills (and their referral links you’ve seen everywhere a month ago). Charts are horrible
That’s about it. Whenever you read up about coss, those are the cons you’ll find. But what about the pros? Well, all of this is in the process of being fixed, as we speak.
Singapore has lax laws about cryptocurrencies and issued a statement it does not feel the need to regulate them. It’s securing exclusive ICO’s already despite being a tiny exchange, and has mentioned being able to secure from 4 to 6 per month. The team listens to the community’s feedback and takes it seriously. This is Gold. One of the first things they were criticized about was trying to do too many things at once (an exchange, a payment gateway, a full one-stop solution for crypto, etc.) and they’ve taken the community’s advice and decided to focus solely on the exchange for now and build it properly, before branching out to the rest. “Better excel at one thing and build from there, than be mediocre at multiple things at once” Also following community feedback, they are implementing trading promotions “a la Binance”. Part of the total supply of COSS tokens will be donated to charities (the community votes to who they go). First of all, that’s just plain nice. Secondly, I find it pretty damn cool that we donate this for good causes, and they basically keep “generating” income from it. It’s basically like a “perpetual donation” on behalf of COSS and all of its users, and definitely will make a lot of people feel good about using the exchange. Thirdly, this pretty much guarantees millions of COSS tokens are going to be in perpetual “HODL” mode, essentially taking them off the market. They will be implementing a FIAT gateway sooner than later. We all know FIAT gateways are game changers. They are constantly hiring. The team growing is definitely a good sign. They are revamping the overall UI and charts, once again following the community’s advice, and the proposed new look is fantastic! Check it out here, as well as other great announcements: https://medium.com/@runeevensen/coss-io-7379b7628d93EDIT: It has been brought to my attention that there is a UI upgrade scheduled for tomorrow (Dec. 3rd), although it isn't clear if it's a minor one or the actual major overhaul, might wanna keep an eye out on that! They are upgrading the matching engine and releasing API’s soon to allow bots to create liquidity and significantly raise the trading volume. Unlike KuCoin, the revenue split (COSS token holders) will always receive 50% of the fees, whereas kucoin will start decreasing it in 4-6months and it will bottom out at 10-15% The revenue split from trading fees is controlled by a DAO, meaning the COSS team cannot arbitrarily decide to change it later down the line, unlike KuCoin where the control over the fee split is centralized and they decrease it as they please. The DAO model also avoids it being labeled a security. First of all, those aren’t really “dividends” as dividends would require them to calculate income minus expenses to determine profit, and then distribute this profit to shareholders, and obviously that’s a legal nightmare. With the DAO model, you don’t get a percentage of the “profits”, you get a revenue split from the exchange fees, and it’s done by clicking a “distribute” button which makes a call to the smart contract and distributes your coins. COSS itself is not giving you anything COSS is still in Beta. It has a tiny market cap. Now’s the time to pick it up, not when it’s out of beta and has become successful, or you’ll be in another Antshares/NEO situation. A ridiculously small move from 5M to 50M in Mcap and that’s x10, a move from 5M to 150M (still under binance levels) and that’s x30. In the long run, COSS aims to be more than just an exchange. Holders of the token, who currently get 50% of the exchange’s trading fees, will also get 50% of other fees charged from coss. This includes their eventual payment gateway. Merchants around the world wishing to accept crypto payments will be able to use COSS’s gateway and COSS will charge a 0.75% fee per transaction. We, as COSS holders, also get 50% of that. You believe crypto is the future and going mainstream? Well your COSS will entitle you to the revenue generated by tens of thousands, if not hundreds of thousands of businesses accepting crypto payments via COSS Point-Of-Sale. COSS also mentioned that all other COSS “fee generating” products to come will all be subject to the same DAO/50% split. Logically, If they have 1) The trading platform, and 2) the payment gateway, then the third step is solving the problem of spending the crypto in places that don’t accept direct crypto payment, AKA a crypto credit/debit card. Well, guess what? Users of such cards will be charged a small fee as well when their crypto is being converted to fiat in real time for payment at a gas station. We as COSS holders are, again, getting 50% of that fee. As you can see, this is a coin that makes business sense to invest in. Unless you really, reaaaaaally care about a coin being the “Future of decentralized prediction markets” or “the future of decentralized dating” or the “decentralized gambling coin” and whatnot. Smart money is smart. It's only a matter of time before savvy investors discover this coin.
ALTHOUGH, keep in mind, the calculations above take into consideration an average trading fee of 0.2% and while this fee is accurate right now, it will most likely average 0.1% once API’s are released and liquidity/market maker bots start operating on the platform. Also, the calculations above do NOT take into consideration that in 4 years from now, there will be 200M (hard cap) COSS tokens on the market. HOWEVER, these calculations also do not take into consideration that by then, COSS will have a fully up and running payment gateway, crypto credit cards, and other revenue-generating products such as a crowdfunding platform, smart contract deployment platform, etc. that are also generating revenue for COSS holders.
All in all, if all goes as planned, the payment gateway/cards/other products will negate the additional COSS tokens released in the market as well as the average trading fee of 0.1%, and therefore the numbers presented in the excel docs will remain sensibly the same. Also, if crypto really takes off in the mainstream, then the revenue split to coss holders from the payment gateway & credit card spending could very well double, triple or quadruple all the numbers you’re seeing in these excel sheets, and that’s on the low end. Remember, the exchange only charges 0.2% (0.1% average once we have bots) out of which we get half, but the payment gateway on the other hand charges a flat 0.75% (7.5x the what the exchange’s fee), out of which COSS holders get half. This could be a massive revenue driver, easily surpassing the exchange itself, and honestly if at that point in time this coin is NOT valued at 3B+ (I mean, even ethereum classic is over that right now..), then I’ll just give up on the whole notion of logical thinking.
Quick example, assuming in 4 years 50M in gateway processing daily (18B yearly), 0.375% of that would be 187.5K USD daily for COSS holders. With 200M Coss tokens total supply, if you hold 10K coss you’d generate 9.375$ per day (65$ per week, 282$/mo.), and that’s purely from the gateway (totally excluding the exchange revenue, crowdfunding revenue, credit card revenue, etc.).
If you have 100K coss you’d generate 93.7$/day, 650$/week, 2820$/mo, again purely from the gateway.
If you’d rather assume more conservative figures (let’s say 25M in daily gateway processing on COSS, all around the globe, or 9B yearly), then simply divide these figures by half. If you wanna go balls to the walls, double them (100M daily, 36B yearly). Play around, have fun with the numbers! To keep things in perspective, square has processed 50B’s worth of transactions in 2016. Therefore I believe using 9B, 18B and 36B for our calculations isn’t too far fetched, and actually pretty reasonable.
Anyway, to sum this up, no matter how you look at it, COSS is an extremely promising project with huge potential, and actually has working math (and a working beta!) behind it. It’s only a matter of a month or two before they’re out of their Beta, have upgrades to their UI and engine, and start really growing from there. The team listens to the community, which is super important, and they’re working on a multitude of revenue streams, out of which not only them, but all coss holders will benefit from, fifty fifty.
Their crowdfunding platform will be a competitor to indiegogo, gofundme, kickstarter, and they’ll have a small percentage fee (50% of which goes to COSS holders). The crypto Point-Of-Sale will be a competitor to Square and the likes (50% revenue to COSS holders). The crypto credit card (also 50% revenue to COSS holders). It is truely an admirable project. Shovel manufacturers made a killing during the gold rush, and COSS is positioning itself as the shovel manufacturer in the crypto adoption gold rush. This is a coin that makes sense to invest in, it is ultra tangible, and will give greater returns than any type of “decentralized [insert function here]” type coins.
On a personal note: Honestly, I believe this is the proper way to ICO, by NOT giving people worthless tokens that only go up in value due to speculation (looking at you, 99% of ERC20 tokens). Let investors guide you, let them reap 50% of the rewards as THEY are the ones funding you. This’ll keep the investors interested in the project, and every single one of them will have a direct incentive to vouch for your product. It’s only right for the investors to get rewarded with something tangible, I’d take that any day over a speculative shitcoin who’s only purpose was to put money in the project’s founders pockets
Quoted directly from said link:“For those that are most interested in discussions regarding the trading price of COSS. Please have in mind that when we entered our token sale, our clear sales message was a 3–5 year road-map, and not a 3–5 months pump and dump. We are a small team, doing our utmost to deliver and all we ask is for you to continue to give us feedback and also for you to give us some time to deliver. *That being said. We still aim to be out of BETA as soon as possible with a new engine for the exchange in Q1 2018. New UI should be in place well before that.** Once we feel we have this in place we will roll out massive marketing campaigns to attract users and increased volume. So although we have a 3–5 year road-map ahead, you should expect to see 2018 being “our year”. The 3–5 year plan is more on the complete roadmap when we proudly can call ourselves a one-stop solution. For now it is all about the exchange, and there we will see rapid changes over the coming weeks/months.”*
All in all, i’d like to thank the COSS team for actually caring about their investors, keeping them in the loop, listening to their feedback and giving them a unique and tangible opportunity. I’d also like to thank all the other COSS investors, who see a huge potential in this project and support the team, and lastly, all of you crypto-heads for reading through!
Happy hodling, and hopefully see you all at 500M+ market cap by late 2018 :)
-Some random guy on Reddit.
PS: Not investment advice. Always do your due diligence. Also, if you’d like, you can join the discussion at /cossIO
Friendly reminder: ETH is the quickest way to get your funds on the COSS exchange, and COSS/ETH pair has 4x the volume of the COSS/BTC pair.
In order to create an account on BitMEX, users first have to register with the website. Registration only requires an email address, the email address must be a genuine address as users will receive an email to confirm registration in order to verify the account. Once users are registered, there are no trading limits. Traders must be at least 18 years of age to sign up. https://preview.redd.it/0v13qoil3cc41.jpg?width=808&format=pjpg&auto=webp&s=e6134bc089c4e352dce10d754dc84ff11a4c7994 However, it should be noted that BitMEX does not accept any US-based traders and will use IP checks to verify that users are not in the US. While some US users have bypassed this with the use of a VPN, it is not recommended that US individuals sign up to the BitMEX service, especially given the fact that alternative exchanges are available to service US customers that function within the US legal framework. How to Use BitMEX BitMEX allows users to trade cryptocurrencies against a number of fiat currencies, namely the US Dollar, the Japanese Yen and the Chinese Yuan. BitMEX allows users to trade a number of different cryptocurrencies, namely Bitcoin, Bitcoin Cash, Dash, Ethereum, Ethereum Classic, Litecoin, Monero, Ripple, Tezos and Zcash. The trading platform on BitMEX is very intuitive and easy to use for those familiar with similar markets. However, it is not for the beginner. The interface does look a little dated when compared to newer exchanges like Binance and Kucoin’s. Once users have signed up to the platform, they should click on Trade, and all the trading instruments will be displayed beneath. Clicking on the particular instrument opens the orderbook, recent trades, and the order slip on the left. The order book shows three columns – the bid value for the underlying asset, the quantity of the order, and the total USD value of all orders, both short and long. The widgets on the trading platform can be changed according to the user’s viewing preferences, allowing users to have full control on what is displayed. It also has a built in feature that provides for TradingView charting. This offers a wide range of charting tool and is considered to be an improvement on many of the offering available from many of its competitors. https://preview.redd.it/fabg1nxo3cc41.jpg?width=808&format=pjpg&auto=webp&s=6d939889c3eac15ab1e78ec37a8ccd13fc5e0573 Once trades are made, all orders can be easily viewed in the trading platform interface. There are tabs where users can select their Active Orders, see the Stops that are in place, check the Orders Filled (total or partially) and the trade history. On the Active Orders and Stops tabs, traders can cancel any order, by clicking the “Cancel” button. Users also see all currently open positions, with an analysis if it is in the black or red. BitMEX uses a method called auto-deleveraging which BitMEX uses to ensure that liquidated positions are able to be closed even in a volatile market. Auto-deleveraging means that if a position bankrupts without available liquidity, the positive side of the position deleverages, in order of profitability and leverage, the highest leveraged position first in queue. Traders are always shown where they sit in the auto-deleveraging queue, if such is needed. Although the BitMEX platform is optimized for mobile, it only has an Android app (which is not official). There is no iOS app available at present. However, it is recommended that users use it on the desktop if possible. BitMEX offers a variety of order types for users:
Limit Order (the order is fulfilled if the given price is achieved);
Market Order (the order is executed at current market price);
Stop Limit Order (like a stop order, but allows users to set the price of the Order once the Stop Price is triggered);
Stop Market Order (this is a stop order that does not enter the order book, remain unseen until the market reaches the trigger);
Trailing Stop Order (it is similar to a Stop Market order, but here users set a trailing value that is used to place the market order);
Take Profit Limit Order (this can be used, similarly to a Stop Order, to set a target price on a position. In this case, it is in respect of making gains, rather than cutting losses);
Take Profit Market Order (same as the previous type, but in this case, the order triggered will be a market order, and not a limit one)
The exchange offers margin trading in all of the cryptocurrencies displayed on the website. It also offers to trade with futures and derivatives – swaps.
Futures and Swaps
A futures contract is an agreement to buy or sell a given asset in the future at a predetermined price. On BitMEX, users can leverage up to 100x on certain contracts. Perpetual swaps are similar to futures, except that there is no expiry date for them and no settlement. Additionally, they trade close to the underlying reference Index Price, unlike futures, which may diverge substantially from the Index Price. BitMEX also offers Binary series contracts, which are prediction-based contracts which can only settle at either 0 or 100. In essence, the Binary series contracts are a more complicated way of making a bet on a given event. The only Binary series betting instrument currently available is related to the next 1mb block on the Bitcoin blockchain. Binary series contracts are traded with no leverage, a 0% maker fee, a 0.25% taker fee and 0.25% settlement fee.
BitMEX allows its traders to leverage their position on the platform. Leverage is the ability to place orders that are bigger than the users’ existing balance. This could lead to a higher profit in comparison when placing an order with only the wallet balance. Trading in such conditions is called “Margin Trading.” There are two types of Margin Trading: Isolated and Cross-Margin. The former allows the user to select the amount of money in their wallet that should be used to hold their position after an order is placed. However, the latter provides that all of the money in the users’ wallet can be used to hold their position, and therefore should be treated with extreme caution. https://preview.redd.it/eg4qk9qr3cc41.jpg?width=808&format=pjpg&auto=webp&s=c3ca8cdf654330ce53e8138d774e72155acf0e7e The BitMEX platform allows users to set their leverage level by using the leverage slider. A maximum leverage of 1:100 is available (on Bitcoin and Bitcoin Cash). This is quite a high level of leverage for cryptocurrencies, with the average offered by other exchanges rarely exceeding 1:20.
BitMEX does not charge fees on deposits or withdrawals. However, when withdrawing Bitcoin, the minimum Network fee is based on blockchain load. The only costs therefore are those of the banks or the cryptocurrency networks. As noted previously, BitMEX only accepts deposits in Bitcoin and therefore Bitcoin serves as collateral on trading contracts, regardless of whether or not the trade involves Bitcoin. The minimum deposit is 0.001 BTC. There are no limits on withdrawals, but withdrawals can also be in Bitcoin only. To make a withdrawal, all that users need to do is insert the amount to withdraw and the wallet address to complete the transfer. https://preview.redd.it/xj1kbuew3cc41.jpg?width=808&format=pjpg&auto=webp&s=68056f2247001c63e89c880cfbb75b2f3616e8fe Deposits can be made 24/7 but withdrawals are processed by hand at a recurring time once per day. The hand processed withdrawals are intended to increase the security levels of users’ funds by providing extra time (and email notice) to cancel any fraudulent withdrawal requests, as well as bypassing the use of automated systems & hot wallets which may be more prone to compromise.
BitMEX operates as a crypto to crypto exchange and makes use of a Bitcoin-in/Bitcoin-out structure. Therefore, platform users are currently unable to use fiat currencies for any payments or transfers, however, a plus side of this is that there are no limits for trading and the exchange incorporates trading pairs linked to the US Dollar (XBT), Japanese Yen (XBJ), and Chinese Yuan (XBC). BitMEX supports the following cryptocurrencies:
Bitcoin Cash (BCH)
Ethereum Classic (ETC)
Ripple Token (XRP)
EOS Token (EOS)
BitMEX also offers leverage options on the following coins:
5x: Zcash (ZEC)
20x : Ripple (XRP),Bitcoin Cash (BCH), Cardano (ADA), EOS Token (EOS), Tron (TRX)
HDR Global Trading, the company which owns BitMEX, has recently announced a partnership with Trading Technologies International, Inc. (TT), a leading international high-performance trading software provider. The TT platform is designed specifically for professional traders, brokers, and market-access providers, and incorporates a wide variety of trading tools and analytical indicators that allow even the most advanced traders to customize the software to suit their unique trading styles. The TT platform also provides traders with global market access and trade execution through its privately managed infrastructure and the partnership will see BitMEX users gaining access to the trading tools on all BitMEX products, including the popular XBT/USD Perpetual Swap pairing. https://preview.redd.it/qcqunaby3cc41.png?width=672&format=png&auto=webp&s=b77b45ac2b44a9af30a4985e3d9dbafc9bbdb77c
The BitMEX Insurance Fund
The ability to trade on leverage is one of the exchange’s main selling points and offering leverage and providing the opportunity for traders to trade against each other may result in a situation where the winners do not receive all of their expected profits. As a result of the amounts of leverage involved, it’s possible that the losers may not have enough margin in their positions to pay the winners. Traditional exchanges like the Chicago Mercantile Exchange (CME) offset this problem by utilizing multiple layers of protection and cryptocurrency trading platforms offering leverage cannot currently match the levels of protection provided to winning traders. In addition, cryptocurrency exchanges offering leveraged trades propose a capped downside and unlimited upside on a highly volatile asset with the caveat being that on occasion, there may not be enough funds in the system to pay out the winners. To help solve this problem, BitMEX has developed an insurance fund system, and when a trader has an open leveraged position, their position is forcefully closed or liquidated when their maintenance margin is too low. Here, a trader’s profit and loss does not reflect the actual price their position was closed on the market, and with BitMEX when a trader is liquidated, their equity associated with the position drops down to zero. In the following example, the trader has taken a 100x long position. In the event that the mark price of Bitcoin falls to $3,980 (by 0.5%), then the position gets liquidated with the 100 Bitcoin position needing to be sold on the market. This means that it does not matter what price this trade executes at, namely if it’s $3,995 or $3,000, as from the view of the liquidated trader, regardless of the price, they lose all the equity they had in their position, and lose the entire one Bitcoin. https://preview.redd.it/wel3rka04cc41.png?width=669&format=png&auto=webp&s=3f93dac2d3b40aa842d281384113d2e26f25947e Assuming there is a fully liquid market, the bid/ask spread should be tighter than the maintenance margin. Here, liquidations manifest as contributions to the insurance fund (e.g. if the maintenance margin is 50bps, but the market is 1bp wide), and the insurance fund should rise by close to the same amount as the maintenance margin when a position is liquidated. In this scenario, as long as healthy liquid markets persist, the insurance fund should continue its steady growth. The following graphs further illustrate the example, and in the first chart, market conditions are healthy with a narrow bid/ask spread (just $2) at the time of liquidation. Here, the closing trade occurs at a higher price than the bankruptcy price (the price where the margin balance is zero) and the insurance fund benefits. Illustrative example of an insurance contribution – Long 100x with 1 BTC collateral https://preview.redd.it/is89ep924cc41.png?width=699&format=png&auto=webp&s=f0419c68fe88703e594c121b5b742c963c7e2229 (Note: The above illustration is based on opening a 100x long position at $4,000 per BTC and 1 Bitcoin of collateral. The illustration is an oversimplification and ignores factors such as fees and other adjustments. The bid and offer prices represent the state of the order book at the time of liquidation. The closing trade price is $3,978, representing $1 of slippage compared to the $3,979 bid price at the time of liquidation.) The second chart shows a wide bid/ask spread at the time of liquidation, here, the closing trade takes place at a lower price than the bankruptcy price, and the insurance fund is used to make sure that winning traders receive their expected profits. This works to stabilize the potential for returns as there is no guarantee that healthy market conditions can continue, especially during periods of heightened price volatility. During these periods, it’s actually possible that the insurance fund can be used up than it is built up. Illustrative example of an insurance depletion – Long 100x with 1 BTC collateral https://preview.redd.it/vb4mj3n54cc41.png?width=707&format=png&auto=webp&s=0c63b7c99ae1c114d8e3b947fb490e9144dfe61b (Notes: The above illustration is based on opening a 100x long position at $4,000 per BTC and 1 Bitcoin of collateral. The illustration is an oversimplification and ignores factors such as fees and other adjustments. The bid and offer prices represent the state of the order book at the time of liquidation. The closing trade price is $3,800, representing $20 of slippage compared to the $3,820 bid price at the time of liquidation.) The exchange declared in February 2019, that the BitMEX insurance fund retained close to 21,000 Bitcoin (around $70 million based on Bitcoin spot prices at the time). This figure represents just 0.007% of BitMEX’s notional annual trading volume, which has been quoted as being approximately $1 trillion. This is higher than the insurance funds as a proportion of trading volume of the CME, and therefore, winning traders on BitMEX are exposed to much larger risks than CME traders as:
BitMEX does not have clearing members with large balance sheets and traders are directly exposed to each other.
BitMEX does not demand payments from traders with negative account balances.
The underlying instruments on BitMEX are more volatile than the more traditional instruments available on CME.
Therefore, with the insurance fund remaining capitalized, the system effectively with participants who get liquidated paying for liquidations, or a losers pay for losers mechanism. This system may appear controversial as first, though some may argue that there is a degree of uniformity to it. It’s also worth noting that the exchange also makes use of Auto Deleveraging which means that on occasion, leveraged positions in profit can still be reduced during certain time periods if a liquidated order cannot be executed in the market. More adventurous traders should note that while the insurance fund holds 21,000 Bitcoin, worth approximately 0.1% of the total Bitcoin supply, BitMEX still doesn’t offer the same level of guarantees to winning traders that are provided by more traditional leveraged trading platforms. Given the inherent volatility of the cryptocurrency market, there remains some possibility that the fund gets drained down to zero despite its current size. This may result in more successful traders lacking confidence in the platform and choosing to limit their exposure in the event of BitMEX being unable to compensate winning traders.
How suitable is BitMEX for Beginners?
BitMEX generates high Bitcoin trading levels, and also attracts good levels of volume across other crypto-to-crypto transfers. This helps to maintain a buzz around the exchange, and BitMEX also employs relatively low trading fees, and is available round the world (except to US inhabitants). This helps to attract the attention of people new to the process of trading on leverage and when getting started on the platform there are 5 main navigation Tabs to get used to:
**Trade:**The trading dashboard of BitMEX. This tab allows you to select your preferred trading instrument, and choose leverage, as well as place and cancel orders. You can also see your position information and view key information in the contract details.
**Account:**Here, all your account information is displayed including available Bitcoin margin balances, deposits and withdrawals, and trade history.
**Contracts:**This tab covers further instrument information including funding history, contract sizes; leverage offered expiry, underlying reference Price Index data, and other key features.
**References:**This resource centre allows you to learn about futures, perpetual contracts, position marking, and liquidation.
**API:**From here you can set up an API connection with BitMEX, and utilize the REST API and WebSocket API.
BitMEX also employs 24/7 customer support and the team can also be contacted on their Twitter and Reddit accounts. In addition, BitMEX provides a variety of educational resources including an FAQ section, Futures guides, Perpetual Contracts guides, and further resources in the “References” account tab. For users looking for more in depth analysis, the BitMEX blog produces high level descriptions of a number of subjects and has garnered a good reputation among the cryptocurrency community. Most importantly, the exchange also maintains a testnet platform, built on top of testnet Bitcoin, which allows anyone to try out programs and strategies before moving on to the live exchange. This is crucial as despite the wealth of resources available, BitMEX is not really suitable for beginners, and margin trading, futures contracts and swaps are best left to experienced, professional or institutional traders. Margin trading and choosing to engage in leveraged activity are risky processes and even more advanced traders can describe the process as a high risk and high reward “game”. New entrants to the sector should spend a considerable amount of time learning about margin trading and testing out strategies before considering whether to open a live account.
Is BitMEX Safe?
BitMEX is widely considered to have strong levels of security. The platform uses multi-signature deposits and withdrawal schemes which can only be used by BitMEX partners. BitMEX also utilises Amazon Web Services to protect the servers with text messages and two-factor authentication, as well as hardware tokens. BitMEX also has a system for risk checks, which requires that the sum of all account holdings on the website must be zero. If it’s not, all trading is immediately halted. As noted previously, withdrawals are all individually hand-checked by employees, and private keys are never stored in the cloud. Deposit addresses are externally verified to make sure that they contain matching keys. If they do not, there is an immediate system shutdown. https://preview.redd.it/t04qs3484cc41.jpg?width=808&format=pjpg&auto=webp&s=a3b106cbc9116713dcdd5e908c00b555fd704ee6 In addition, the BitMEX trading platform is written in kdb+, a database and toolset popular amongst major banks in high frequency trading applications. The BitMEX engine appears to be faster and more reliable than some of its competitors, such as Poloniex and Bittrex. They have email notifications, and PGP encryption is used for all communication. The exchange hasn’t been hacked in the past.
How Secure is the platform?
As previously mentioned, BitMEX is considered to be a safe exchange and incorporates a number of security protocols that are becoming standard among the sector’s leading exchanges. In addition to making use of Amazon Web Services’ cloud security, all the exchange’s systems can only be accessed after passing through multiple forms of authentication, and individual systems are only able to communicate with each other across approved and monitored channels. Communication is also further secured as the exchange provides optional PGP encryption for all automated emails, and users can insert their PGP public key into the form inside their accounts. Once set up, BitMEX will encrypt and sign all the automated emails sent by you or to your account by the [[email protected]](mailto:[email protected]) email address. Users can also initiate secure conversations with the support team by using the email address and public key on the Technical Contact, and the team have made their automated system’s PGP key available for verification in their Security Section. The platform’s trading engine is written in kdb+, a database and toolset used by leading financial institutions in high-frequency trading applications, and the speed and reliability of the engine is also used to perform a full risk check after every order placement, trade, settlement, deposit, and withdrawal. All accounts in the system must consistently sum to zero, and if this does not happen then trading on the platform is immediately halted for all users. With regards to wallet security, BitMEX makes use of a multisignature deposit and withdrawal scheme, and all exchange addresses are multisignature by default with all storage being kept offline. Private keys are not stored on any cloud servers and deep cold storage is used for the majority of funds. Furthermore, all deposit addresses sent by the BitMEX system are verified by an external service that works to ensure that they contain the keys controlled by the founders, and in the event that the public keys differ, the system is immediately shut down and trading halted. The exchange’s security practices also see that every withdrawal is audited by hand by a minimum of two employees before being sent out.
BitMEX Customer Support
The trading platform has a 24/7 support on multiple channels, including email, ticket systems and social media. The typical response time from the customer support team is about one hour, and feedback on the customer support generally suggest that the customer service responses are helpful and are not restricted to automated responses. https://preview.redd.it/8k81zl0a4cc41.jpg?width=808&format=pjpg&auto=webp&s=e30e5b7ca93d2931f49e2dc84025f2fda386eab1 The BitMEX also offers a knowledge base and FAQs which, although they are not necessarily always helpful, may assist and direct users towards the necessary channels to obtain assistance. BitMEX also offers trading guides which can be accessed here
There would appear to be few complaints online about BitMEX, with most issues relating to technical matters or about the complexities of using the website. Older complaints also appeared to include issues relating to low liquidity, but this no longer appears to be an issue. BitMEX is clearly not a platform that is not intended for the amateur investor. The interface is complex and therefore it can be very difficult for users to get used to the platform and to even navigate the website. However, the platform does provide a wide range of tools and once users have experience of the platform they will appreciate the wide range of information that the platform provides. Visit BitMEX
With the large number of new readers coming to this sub we need to make information easy to access so those readers can make informed decisions. We all know there is an unusually large amount of Fear, Uncertainty and Doubt (FUD) surrounding EOS. Frankly, when clear evidence is provided it’s not that difficult to see EOS for the extremely valuable project it is. This post hopes to begin to put an end to all the misinformation by doing the following:
Giving a clear and concise answer to the most frequently asked questions in regards to EOS.
Giving a more in-depth answer for those who want to read more.
Allowing readers to make informed decisions by making credible information easy to access.
As EOS climbs the ranks we need to recognise there are going to be a lot of skeptical readers coming over and posting their questions. Sometimes they will be irrational, hostile and often just looking for a reaction. We should make it our responsibility to welcome everyone and refrain from responding emotionally to provocative posts, instead providing factual and rational answers. I will add to this post as and when I can, if you have any ideas or spot any mistakes let me know and I'll get them fixed ASAP. Im planning to add a bit on the team, centralisation and DPOS, governance and EOS VC shortly but please let me hear your suggestions!
1. How do you registeclaim your EOS tokens before June 2018?
Select Metamask, MyEtherWallet, or Ethereum Wallet
Follow the guide.
Remember that the reason you need to register your Ethereum ERC-20 address is to include your EOS tokens in order for the balance of your EOS Tokens to be included in the Snapshot if a Snapshot is created, you must register your Ethereum address with an EOS public key. The EOS snapshot will take place prior to the 1 June 2018. After this point your ERC-20 EOS tokens will be frozen. And you will be issued EOS tokens on the EOS blockchain.
So PLEASE REGISTER your Ethereum address NOW, don't forget about it, or plan on doing it some time in the near future.
There are a lot of submissions about this in /eos, so rather than making a new one please reply to this thread with any questions you may have. Don't forget to join the EOS mailing list: https://eos.io/#subscribe and join the EOS community on your platform(s) of choice: Telegram, Discord and/or Facebook. And remember, if anyone instructs you to transfer ETH to an EOS contract address that doesn't match the address found on https://eos.io you are being scammed.
2. How will the token the ERC-20 EOS tokens be transferred to the native blockchain?
There isn't one! Read the long answer then read it again, registering your Ethereum wallet is mandatory!
Within 23 hours after the end of the final period on June 1, 2018 at 22:59:59 UTC, all EOS Tokens will become fixed (ie. frozen) and will become non-transferrable on the Ethereum blockchain. In order to ensure your tokens are transferred over to the native blockchain you must register your Ethereum address with an EOS public key, if you do not you will lose all your tokens! I am not going to link any tutorials as there are many that can be found by searching Google and YouTube. block.one is helping with the development of snapshot software that can be used to capture the EOS token balance and registered EOS public key of wallets on the Ethereum blockchain. It is then down to the community to create the snapshot. This snapshot can be used when generating a genesis block for a blockchain implementing eos.io software. block.one will not be launching EOS blockchains or operating any of their nodes.
Exchange Support Some exchanges have announced that they will support the token swap. Although using this method will undoubtedly be much simpler than registering the tokens yourself it also comes with its pitfalls.
It is highly likely there are going to be multiple networks running on the eos.io software that use the snapshot. It is highly unlikely that exchanges will support them all.
It is highly likely that exchanges will not support airdrops that use the snapshot.
Exchanges that have announced support for the token swap include:
EOS.IO software is aiming to provide a decentralized operating system which can support thousands of industrial scale DApps by enabling vertical and horizontal scaling.
EOS.IO is software that introduces a blockchain architecture designed to enable vertical and horizontal scaling of decentralized applications. This is achieved through an operating system-like construct upon which applications can be built. The software provides accounts, authentication, databases, asynchronous communication and the scheduling of applications across multiple CPU cores and/or clusters. The resulting technology is a blockchain architecture that has the potential to scale to millions of transactions per second, eliminates user fees and allows for quick and easy deployment of decentralized applications.
CEO Brendan Blumer - Founder of ii5 (1group) and okay.com. He has been in the blockchain industry since 2014 and started selling virtual assets at the age of 15. Brenden can be found on the Forbes Cypto Rich List. Brendan can be found on Twitter.
CTO Dan Larimer - Dan's the visionary industry leader who built BitShares, Graphene and Steemit as well as the increasingly popular Proof of Stake Governance and Decentralised Autonomous Organization Concept. He states his mission in life is “to find free market solutions to secure life, liberty, and property for all.”. Dan can also be found on the Forbes Cypto Rich List. Dan can be found on Twitter and Medium.
Partner Ian Grigg - Financial cryptographer who's been building cryptographic ledger platforms for 2+ decades. Inventor of the Ricardian Contract and Triple-Entry Accounting.
6. Which consensus mechanism does EOS use and what are Block Producers?
Delegated Proof of Stake (DPOS) with Byzantine Fault Tolerance. Block Producers (BPs) produce the blocks of the blockchain and are elected by token holders that vote for them. BPs will earn block rewards for their service, these block rewards come in the form of EOS tokens produced by token inflation.
“EOS.IO software utilizes the only known decentralized consensus algorithm proven capable of meeting the performance requirements of applications on the blockchain, Delegated Proof of Stake (DPOS). Under this algorithm, those who hold tokens on a blockchain adopting the EOS.IO software may select block producers through a continuous approval voting system. Anyone may choose to participate in block production and will be given an opportunity to produce blocks, provided they can persuade token holders to vote for them. The EOS.IO software enables blocks to be produced exactly every 0.5 second and exactly one producer is authorized to produce a block at any given point in time. If the block is not produced at the scheduled time, then the block for that time slot is skipped. When one or more blocks are skipped, there is a 0.5 or more second gap in the blockchain. Using the EOS.IO software, blocks are produced in rounds of 126 (6 blocks each, times 21 producers). At the start of each round 21 unique block producers are chosen by preference of votes cast by token holders. The selected producers are scheduled in an order agreed upon by 15 or more producers. Byzantine Fault Tolerance is added to traditional DPOS by allowing all producers to sign all blocks so long as no producer signs two blocks with the same timestamp or the same block height. Once 15 producers have signed a block the block is deemed irreversible. Any byzantine producer would have to generate cryptographic evidence of their treason by signing two blocks with the same timestamp or blockheight. Under this model a irreversible consensus should be reachable within 1 second."
7. How does the voting process work?
The voting process will begin once the Block Producer community releases a joint statement ensuring that it is safe to import private keys and vote. Broadly speaking there will be two methods of voting:
Command Line Interface (CLI) tools
EOS Canada has created eosc, a CLI tool that supports Block Producer voting. Other Block Producer candidates such as LibertyBlock are a releasing web portal that will be ready for main net launch. There will be many more options over the coming weeks, please make sure you are always using a service from a trusted entity. Remember: Do not import your private key until you have seen a joint statement released from at least five Block Producers that you trust which states when it is safe to do so. Ignoring this warning could result in tokens lost.
8. What makes EOS a good investment?
Team - EOS is spearheaded by the visionary that brought us the hugely successful Bitshares and Steem - arguably with two projects already under his belt there is no one more accomplished in the space.
Funding - EOS is one of the best funded projects in the space. The block.one team has committed $1B to investing in funds that grow the EOS echo system. EOS VC funds are managed by venture leaders distributed around the world to insure founders in all markets have the ability to work directly with local investors. Incentives such as the EOS hackathon are also in place with $1,500,000 USD in Prizes Across 4 Events.
Community Focus - The team is aware that the a projects success depends almost entirely on its adoption. For this reason there has been a huge push to develop a strong world wide community. There is already a surplus number of block producers that have registered their interest and started to ready themselves for the launch and incentives the EOS hackathon are being used to grow the community. A index of projects using EOS can be found at https://eosindex.io/posts.
Technical Advantages - See point 9!
9. What are the unique selling points of EOS?
Potential to scale to millions of transactions per second
This depends entirely on your definition of working product. If a fully featured developer release meets your definition then yes!. Otherwise the public release will be June 2018.
EOS differs from other projects in that it aims to deliver a fully featured version of the software on launch. The Dawn 3.0 RC1 feature complete pre-release became available on April 5th. This version has all the features of the final release that is due June 2018. Further development will involve preparing the final system contract which implements all of the staking, voting, and governance mechanics. The common notion that there is no viewable code published is wrong and the initial Dawn 1.0 release has been available from September 14th 2017.
11. EOS is an ERC-20 token, how can it possibly be a competitor to other platforms?
The ERC-20 token is used only for raising funds during the token distribution; all tokens will be transferred to the native blockchain once launched.
EOS team has clearly stated their reason for choosing the Ethereum network when they described the rationale behind the ICO model. Specifically, the ICO should be a fair and auditable process, with as little trust required as possible. If you believe that an ICO should be fair, auditable, and trustless, you have no choice but to use a decentralized smart contract blockchain to run the ICO, the largest, and by-far most popular of which is Ethereum. Since EOS is intended to be a major competitor for Ethereum, some have seen this as a hypocritical choice. - Stolen from trogdor on Steam (I couldn’t word it any better myself).
12. Why do the eos.io T&C’s say the ERC-20 token has no value?
The EOS T&C’s famously state:
"The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform."
This is legal wording to avoid all the legal complications in this emerging space, block.one do not want to find themselves in a lawsuit as we are seeing with an increasing amount of other ICOs. Most notably Tezos (links below).
This all comes down to legal issues. Anyone who’s been into crypto for 5 minuets knows that government bodies such as the Securities and Exchange Commission (SEC) are now paying attention to crypto in a big way. This legal wording is to avoid all the legal complications in this emerging space, block.one do not want to find themselves in a lawsuit as we are seeing with an increasing amount of other ICOs. Many token creators that launched ICOs are now in deep water for selling unregistered securities.
A filing from the Tezos lawsuit:
"In sum, Defendants capitalized on the recent enthusiasm for blockchain technology and cryptocurrencies to raise funds through the ICO, illegally sold unqualified and unregistered securities, used a Swiss-based entity in an unsuccessful attempt to evade U.S. securities laws, and are now admittedly engaged in the conversion, selling, and possible dissipation of the proceeds that they collected from the Class through their unregistered offering."
To ensure EOS tokens are not classed as a unregistered security block.one has made it clear that they are creating the EOS software only and won’t launching a public blockchain themselves. This task is left down to the community, or more precisely, the Block Producers (BPs). The following disclaimer is seen after posts from block.one:
"block.one is a software company and is producing the EOS.IO software as free, open source software. This software may enable those who deploy it to launch a blockchain or decentralized applications with the features described above. block.one will not be launching a public blockchain based on the EOS.IO software. It will be the sole responsibility of third parties and the community and those who wish to become block producers to implement the features and/or provide the services described above as they see fit. block.one does not guarantee that anyone will implement such features or provide such services or that the EOS.IO software will be adopted and deployed in any way.”
It is expected that many blockchains using eos.io software will emerge. To ensure DAPPs are created on an ecosystem that aligns with the interests of block.one a $1bn fund will be has been created to incentivise projects to use this blockchain.
“A lot of token distributions only allow a small amount of people to participate. The EOS Token distribution structure was created to provide a sufficient period of time for people to participate if they so choose, as well as give people the opportunity to see the development of the EOS.IO Software prior to making a decision to purchase EOS Tokens.”
It is also worth noting that block.one had no knowledge how much the the token distribution would raise as it is determined by the free market and the length of the token distribution is coded into the Ethereum smart contract, which cannot be changed.
14. Where is the money going from the token distribution?
Funding for the project was raised before EOS was announced, the additional money raised from the token distribution is largely going to fund projects on EOS.
A large portion of the money raised is getting put back into the community to incentivise projects using eos.io software. block.one raised all the money they needed to develop the software before the ERC-20 tokens went on sale. There are some conspiracies that block.one are pumping the price of EOS using the funds raised. The good thing about blockchain is you can trace all the transactions, which show nothing of the sort. Not only this but the EOS team are going to have an independent audit after the funding is complete for piece of mind.
From eos.io FAQ:
“block.one intends to engage an independent third party auditor who will release an independent audit report providing further assurances that block.one has not purchased EOS Tokens during the EOS Token distribution period or traded EOS Tokens (including using proceeds from the EOS Token distribution for these purposes). This report will be made available to the public on the eos.io website.”
A more complete list of EOS projects can be found at eosindex.io.
16. Dan left his previous projects, will he leave EOS?
When EOS has been created Dan will move onto creating projects for EOS with block.one.
When a blockchain project has gained momentum and a strong community has formed the project takes on a life of its own and the communities often have ideas that differ from the creators. As we have seen with the Bitcoin and Ethereum hark forks you cant pivot a community too much in a different direction, especially if its changing the fundamentals of the blockchain. Instead of acting like a tyrant Dan has let the communities do what they want and gone a different way. Both the Bitshares and Steem were left in a great position and with Dans help turned out to be two of the most successful blockchain projects to date. Some would argue the most successful projects that are actually useable and have a real use case. What Dan does best is build the architecture and show whats possible. Anyone can then go on to do the upgrades. He is creating EOS to build his future projects upon it. He has stated he loves working at block.one with Brendan and the team and there is far too much momentum behind EOS for him to possibly leave.
No one could have better knowledge on this subject than our Block Producer candidates, I have chosen to look to EOS New York for this answer:
"DDoS'ing a block producing is not as simple as knowing their IP address and hitting "go". We have distributed systems engineers in each of our candidate groups that have worked to defend DDoS systems in their careers. Infrastructure can be built in a way to minimize the exposure of the Block Producing node itself and to prevent a DDoS attack. We haven't published our full architecture yet but let's take a look at fellow candidate EOSphere to see what we mean. As for the launch of the network, we are assuming there will be attacks on the network as we launch. It is being built into the network launch plans. I will reach out to our engineers to get a more detailed answer for you. What also must be considered is that there will be 121 total producing and non-producing nodes on the network. To DDoS all 121 which are located all around the world with different security configurations at the exact same time would be a monumental achievement."
18. If block producers can alter code how do we know they will not do so maliciously?
Block producers are voted in by stake holders.
Changes to the protocol, constitution or other updates are proposed to the community by block producers.
Changes takes 2 to 3 months due to the fact block producers must maintain 15/21 approval for a set amount of time while for changes to be processed.
To ensure bad actors can be identified and expelled the block.one backed community will not back an open-entry system built around anonymous participation.
For this question we must understand the following.
Governance and why it is used.
The process of upgrading the protocol, constitution & other updates.
Dan’s view on open-entry systems built around anonymous participation.
Governance Cryptography can only be used to prove logical consistency. It cannot be used to make subjective judgment calls, determine right or wrong, or even identify truth or falsehood (outside of consistency). We need humans to perform these tasks and therefore we need governance! Governance is the process by which people in a community:
Reach consensus on subjective matters of collective action that cannot be captured entirely by software algorithms;
Carry out the decisions they reach; and
Alter the governance rules themselves via Constitutional amendments.
Embedded into the EOS.IO software is the election of block producers. Before any change can be made to the blockchain these block producers must approve it. If the block producers refuse to make changes desired by the token holders then they can be voted out. If the block producers make changes without permission of the token holders then all other non-producing full-node validators (exchanges, etc) will reject the change.
Upgrade process The EOS.IO software defines the following process by which the protocol, as defined by the canonical source code and its constitution, can be updated:
Block producers propose a change to the constitution and obtains 15/21 approval.
Block producers maintain 15/21 approval of the new constitution for 30 consecutive days.
All users are required to indicate acceptance of the new constitution as a condition of future transactions being processed.
Block producers adopt changes to the source code to reflect the change in the constitution and propose it to the blockchain using the hash of the new constitution.
Block producers maintain 15/21 approval of the new code for 30 consecutive days.
Changes to the code take effect 7 days later, giving all non-producing full nodes 1 week to upgrade after ratification of the source code.
All nodes that do not upgrade to the new code shut down automatically.
By default, configuration of the EOS.IO software, the process of updating the blockchain to add new features takes 2 to 3 months, while updates to fix non-critical bugs that do not require changes to the constitution can take 1 to 2 months.
Open-entry systems built around anonymous participation To ensure bad actors can be identified and expelled the block.one backed community will not back an open-entry system built around anonymous participation. Dan's quote:
"The only way to maintain the integrity of a community is for the community to have control over its own composition. This means that open-entry systems built around anonymous participation will have no means expelling bad actors and will eventually succumb to profit-driven corruption. You cannot use stake as a proxy for goodness whether that stake is held in a bond or a shareholder’s vote. Goodness is subjective and it is up to each community to define what values they hold as good and to actively expel people they hold has bad. The community I want to participate in will expel the rent-seeking vote-buyers and reward those who use their elected broadcasting power for the benefit of all community members rather than special interest groups (such as vote-buyers). I have faith that such a community will be far more competitive in a market competition for mindshare than one that elects vote buyers."
19. What is the most secure way to generate EOS key pairs?
Block producer candidates EOS Cafe and EOS New York have come forward to help the community with this topic. The block producer candidate eosnewyork has kindly posted a tutorial on steemit detailing the steps that need to be taken to generate key pairs using the official code on the EOS.IO Github. The block producer candidate eoscafe has gone a step further and released an Offline EOS Key Generator application complete with GUI for Windows, Linux & Mac. Not only can this application generate key pairs but it can also validate key pairs and resolve public keys from private keys. This application has also been vouched for by EOS New York
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