🤷 Opinions Alexander Goborov

Crypto Wallet Users are on the Rise: Numbers Approaching 30 Million Globally

Opinions
The number of crypto wallet users has increased almost tenfold since 2015
Crypto Wallet Users are on the Rise: Numbers Approaching 30 Million Globally

 

Nowadays, crypto wallets are an integral part of crypto ownership and trading: naturally, one must have a secure place to keep one’s valuable digital belongings.

Whereas not long ago, wallets were somewhat of a rare occurrence, they have since grown in numbers. Substantially.

The graph below shows the situation, past and present, between 2015 and today:

Graph. Number of Crypto Wallet Users Worldwide

After a timid start with ~3 to ~4.5 million users in 2015, the first quarter of 2016 started to approach 7 million users globally, followed by ~11 million users in the last quarter of that year.  

Last year’s first quarter saw a promising start with almost 13 million crypto wallet users, followed by almost twice as much, ~21.5 million, 9 months later, as the year came to a close.

2018 began with the first quarter’s figure reaching for ~24 million, gradually climbing further up to almost 30 million crypto wallet users the world over that we have today.

We hope you found this information useful. Be sure to also check out:

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🎤 Interviews Cyril Gilson

Linda Zeilina of Re-Define on Who is Blockchain’s Worst Enemy

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In an exclusive interview, UK-based think tank Re-Define’s Linda Zeilina talks about the prevalence of groupthink, the lack of diversity and limitations of Blockchain
Linda Zeilina of Re-Define on Who is Blockchain’s Worst Enemy
Contents

As governments and financial institutions grapple with the task of regulating digital currencies, they seem to be embracing Blockchain, the underlying digital ledger technology which powers the world’s most profitable cryptocurrency Bitcoin.

UK-based think tank Re-Define’s Linda Zeilina special advisor on sustainability strategies talks about the prevalence of groupthink, the lack of diversity and limitations of Blockchain in an interview with Cyril Gilson, Editor-in-Chief of CryptoComes.

Cyril Gilson: Could you tell me about your think tank and your audience?

Linda Zeilina: I work with Re-Define, an international think tank that helps corporations and governments implement sustainability strategies to become more environmentally friendly. I work with asset managers and government officials to integrate Environmental, Social and Governance (ESG) factors into their institutions.

Re-Define operates as an academic and consulting body.  We have visiting fellows and a large team of people who work internationally. Our visiting fellow’s program brings together tech pioneers from France, Silicon Valley and other parts of our world to serve as a brain trust. We challenge people to think outside of the box and invite a diversity of opinion.

In the tech industry, there is a strong tendency to have “groupthink.” Tech entrepreneurs passionately believe in their product this mindset sometimes results in overlooking issues and blind spots.

CG: So would you agree that the biggest enemy of the crypto community is the community itself?

LZ: We are all our own worst enemies to an extent. But I think diversity can bring new perspectives to the industry. Corporations are increasing diversity because they have woken up to the fact that women, minorities, people from different regions have a different way of looking at things. Alternative perspectives can be useful to identify opportunities and risks that one may have missed because of a sharp focus in one’s particular area.

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What is essential

CG: How do we change the dialogue? We hear many negative things about cryptocurrencies and comments that Bitcoin is a bubble. It makes people in the industry very defensive.

LZ: Educating the public is essential. The crypto community has been using a top-heavy approach which may not work as well as bottom-up approaches. When you get people involved, you put pressure on governments. It’s been pressure from bottom up that has influenced governments to address climate change. People suffering from direct implications of climate change are going out there, talking about it and bringing attention to the issue. Similarly, you have to think about digital currency as an advocacy and information campaign.

The issues that fire up

CG: But addressing climate change is a matter of life and death while adopting digital currencies is a question of paying a seven or three percent fee. Do you think it’s an issue that will fire people up?

LZ: People can be mobilized;  it’s how you communicate to the public. If you explain to them that healthcare will be cheaper, taxes won’t be as complicated, and they can be more secure from identity theft; then you can fire people up.  People like convenience, the rise of Amazon has been about making things quick and easy. Who doesn’t like quick and easy?

CG: Debates in cryptocurrency community get quite heated. Do you think the community could improve the way in which they communicate?

LZ: Definitely.  Communication is everything.  In a way, this is how technological advancement has always worked. Something gets invented, and then others improve it, and everyone has an opinion. I think that the community needs to solve its own issues because they are the best equipped to address them.  People remain protective because everyone wants to maintain their competitive edge.

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Role of governance

CG: What about the role of governance in Blockchain technology?

LZ: Everybody hopes that governance will change the status quo, but there are inherent limitations. We have examples of failed projects due to lack of underlying infrastructure, like Honduras.  Without decent governance, accurate record keeping, Blockchain may not work.  In some cases, governments can corrupt the system. The whole 51 percent aspect of the nodes is something no one seems to be talking about, and we have heard very little about the weaknesses of Blockchain.

Weaknesses of Blockchain

CG: So what are the weaknesses of Blockchain?

LZ: Well there are several. It is the 51 percent that can change the Blockchain outcome. If you do have a government that creates a land registry, but it’s an unequal society where not everybody will have the computing power or the ability to participate, Blockchain may not work. Moreover, stakeholders can use the technology to protect their interests.

Another major challenge is the amount of energy consumed by Blockchain. If Bitcoin used nearly 160 countries worth of power last year, that is hardly sustainable under the Paris Agreement, and people are not going to be happy.

CG: That’s their algorithm, and it cannot be changed.

LZ: Exactly! We need to invest more in green energy. The majority of Blockchain businesses will probably fail. But I have a firm belief these limitations can be solved through technological advancements in all areas.

Women’s role

CG: Do you think women are under-represented in this community?

LZ: Absolutely.  I also find it kind of funny because women are associated with the softer issues. Every time you go into a crypto conference people always start talking about the technical aspects.  Everybody knows how the technical aspects work; it’s far more interesting to see how the technology will interact with society and what the potential backlash might be.

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CG: Have gender differences played a role in the advancement of agendas because men are about achievement, advancing their agenda and women care more about society?

LZ: I don’t think that’s the division. The community needs an excellent communicator who can translate the message well to the public. Both men and women can be excellent communicators; it is a matter of who has the charisma to get them thinking.

Learn from the East

CG: Do you expect a greater advancement in the use of Blockchain technologies in developed countries or emerging economies?

LZ:  While much of the brain trust exists in the US and Switzerland, it’s important for institutional investors to know that there are real opportunities in the East.  Cities like Vizag, India, can leapfrog more easily because they don’t have massive institutional entrenchment which makes them more open to technology and the benefits it can bring.


Blockchain if appropriately used can reduce the know your customer issue of investing in startups in the East. A lot of sustainable energy startups are emerging in the East that solve everyday problems using a bottom-up approach. There is a lot to learn from that area and I hope Western startups and tech communities wouldn’t be too arrogant to learn from the East.

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🤷 Opinions Darryn Pollock

Think Crypto is a Bubble? What About Silicon Valley Startups Then?

Opinions
Many feel that the cryptocurrency and ICO model is a bubble, but they should look at Silicon Valley startups, in the same manner, more closely
Think Crypto is a Bubble? What About Silicon Valley Startups Then?
Contents

Many have come forward and said that the cryptocurrency ecosystem is a bubble, and a big part of that has to do with the way in which the ICO sector has operated, mimicking the Dot Com boom that was seen in the early 2000s.

However, those same commentators should probably look a little closer to home if they are looking for a bubble, especially one predicated on promises of equity and growth in user base.

ICOs and startups follow a very similar model in terms of capital raising. The biggest deviation, however, is the inclusivity of an ICO whereas startups look to major investors for their funds, and then turn their user base into the commodity.

This play from startups is much more open to collapse whereas the ICO model of individual and open investing allows individuals to become members, rather than a commodity, of the project.

The Silicon Tech Bubble is hitting its peak

Many think that the tech bubble popped in 2000, however, it has emerged as a slightly different beat. We are seeing instances of overvaluation creeping back into the space, especially when successful startups are being taken to IPO.

Venture Capital-funded companies, some reaching the status of unicorns, are dying all the time as they enter the market. These companies are severely overrated when they reach the billion dollar mark, as much as by 50 percent- according to research conducted by Will Gornall at the University of British Columbia and Ilya Strebulaev of Stanford.

Of those 135 unicorns examined, the researchers estimate that nearly half, or 65, should be more fairly valued at less than $1 bln.

This is already a huge indicator of a bubble brewing in Silicon Valley. Keith Wright, instructor of accounting and information services at the Villanova School of Business, explains the way in which this overvaluation occurs.

“Investors focus on growing the unicorn customer base, not turning a profit. New regulatory conditions, including wildly separate share classes, which give some shareholders significantly more rights than others, have resulted in a danger of widespread overvaluation,” Wright said in an interview to CNBC:

“Some shareholders have voting rights to assets, rights to dividends, rights to inspect records.”

ICOs and their similar model

People will argue that at its core, ICOs are often overvalued as well, but while there is a similar model between startups and ICOs trying to raise capital for the company, there is also one major difference.

Startups will go to venture capitalists and other sources of major resources in order to gain capital, and in exchange, as Wright states, these shareholders get huge rights. However, the situation with an ICO is that there is no barrier to entry for individuals to ‘invest’ in the company- it is accessible to everyone.

Essentially what this allows is any person who invests in an ICO becomes a member of the company and thus has big and powerful rights over the way in which the company functions.

If, for example, a Blockchain project attempted to raise funds through an ICO by saying they will have complete control of their users and user data once the product launches, it would be considered ridiculous and the project would fail without even starting.

However, with startups, only the wealthy investors have members rights, and those who utilize the project become the commodity with their data and information.

A change in scene

Venture capitalists are starting to become dinosaurs, and the entire startup space is being reworked with the advent of Blockchain and ICOs. But it is not only the startups that are looking at new disruptive technologies.

“Large incumbent companies are learning how to adopt emerging and disruptive technologies faster than ever. Companies such as Actesy.com from St. Gallen have recently perfected and piloted new software that enables Fortune 500 companies such as Porsche, Roche and BASF to quickly and easily adopt emerging technologies while maintaining their existing highly expensive, entrenched legacy solutions,” Wright adds.

“Previously, it may have taken 10 or more years to replace enterprise-wide global systems. When large companies learn to sustain their competitive advantage through disruptive technologies, the unicorn game is limited.”

Trust is the ultimate catalyst for any community. There are projects like U°Community that build a transparent community platform with dynamic reputation. Users could create content, interact with people, direct their own communities, run businesses, and even build dApps without having to leave the ecosystem.

The shift at the top is happening as the incumbent companies look further afield than those big, and overvalued, unicorns in Silicon Valley. And at the grassroots level, individual investors, such as those being seen in ICOs are starting to become as big and as important as your traditional heavy investor.

The exclusivity of backing a project no longer fits the mark, rather the crowdfunding, ICO model is what is working in today’s world, and as such Silicon Valley startups that are still pursuing becoming unicorns and gaining too much funding to become overvalued, are blowing up that tech bubble all over again.

A personal touch

The real crux of the matter between a startup using Venture Capitalist money and that of an ICO using funding from individuals who back the project is the support. Major companies fund projects hoping to mold and control them for their own gains, and they have little to no worry about the company and its users needs or wants.

At the same time, when it comes to an ICO, the people investing in it, have a vested interest in the success of the project, they are supporting it and wanting it to succeed.

When it comes to defining a bubble, overvaluing a project just to pick up users and without looking at the potential and growth of the company, it becomes quite apparent which is more of a bubble.

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Alexander Goborov

ICO Monthly Totals in 2018: USD

June gathers almost 6 billion USD in ICO funds
ICO Monthly Totals in 2018: USD

ICO stands for Initial Coin Offering, a term which is heard pretty much non-stop today in the fast-paced world of cryptocurrency. In many ways, ICO is very similar to the older term IPO (Initial Public Offering), in which members of the public are offered to purchase shares of a company. Accordingly, ICOs are essentially a form of crowdfunding needed to allocate enough monetary resources in order to support and secure a new crypto unit release.

The first cryptocurrency to use this method of funding was Mastercoin in 2013, followed by Ethereum in 2014, and then Waves in 2016. Alas, the ICO scene is shrouded in scandal with some crypto minds allegedly fleeing their investors with stuffed pockets; however, billions of dollars are still being raised every month by new, legitimate crypto players.

The graph below shows what the ICO situation is like right now. The year started with January gathering almost 2 billion US dollars in ICO funds; March saw over 4 billion; and June, this year’s record so far (and likely to remain so), saw close to 6 billion dollars in funding.

After the subsequent wane in the late summer and early autumn, October has gathered around 350 million US dollars in its first ten days. Let’s wait and see how this crypto year wraps up as Christmas is fast approaching.

ICO Total 2018

 

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🎤 Interviews Katya Michaels

Put Your Hookup on Blockchain: Adryenn Ashley Brings Responsible Sexy Back

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Adryenn Ashley’s dating app Loly is out to solve the dating crisis and heal the #MeToo epidemic
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America is experiencing a dating crisis, and it’s about time cutting edge technology was harnessed to address it. Even prominent venture capitalist Tim Draper agrees that modern dating is a problem that needs a solution.

Adryenn Ashley, the CEO and founder of dating app Loly, is the woman getting close to providing that solution.

Loly implements all the hottest technologies– Blockchain, cryptocurrency, augmented reality and digital identity– to make the dating experience safe, secure and completely natural.

More than that, putting trust and consent on an immutable ledger has the potential of encouraging people to take responsibility for their choices, in personal relationships and elsewhere. Improving humanity through a better dating experience? Sign us up.

Katya Michaels: How did you first discover Blockchain?

Adryenn Ashley: I've been in Bitcoin for almost 10 years. I'm a startup consultant, now an ICO consultant as well, and I was asked to take my consulting fee in crypto. That was 2009, and if I could ever recover those Bitcoin, I would never have to work again.

KM: What do you find most exciting about Blockchain technology?

AA: Blockchain is an un-****-with-able register of what actually happened. That means there's no go-backsies, you have to own your words and your choices. Blockchain is going to force society into a role it has not been in since the fifties, and I think that's going to be one of the unsung blessings of this technology.

There are things that need Blockchain and there are things that don't– 99 percent of businesses do not need Blockchain. However, the ones that do, voting records, health records, will be changed significantly. I cannot wait until people are no longer dying because of prescription conflicts because nobody bothered to look at their medical record. That will save hundreds of thousands of lives.

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Never break the Blockchain

KM: How does your dating platform Loly implement Blockchain?

АА: There are two different reasons why we need Blockchain. One is digital identity.

If you're like most women, you get hit on by men who are married and if you're like most men, you get hit on by women who aren't real– they’re bots or scammers.

From both sides, it is difficult to ascertain that people are who they really say they are, and we use a digital ID product to verify that.

Your sexual preference data is held in your own device and it's encrypted. Your data is your data. It's not held in our servers. We have security protocols, but even if we are hacked, all they’re going to get is a username and encrypted password. We don’t hold a database which could reveal sensitive information.

The other way we use Blockchain is sexual consent.

We have this #MeToo epidemic, people on both sides not owning their choices, not owning their decisions. But decisions cannot be edited retroactively. Verified consent gives women the safety, security and certainty that they need to say yes, and it gives men the insurance that the yes that they heard last night stays a yes tomorrow, next week, next month, next year, a decade from now.

That's a key piece of Blockchain– that it's immutable. You can't go back and change the records.

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Compos mentis: owning your choices

KM: How does the consent mechanism work in real time? People tend to be emotional in intimate situations and prone to changing their mind unexpectedly.

AA: What our consent does is it opens a consent window, so when you have your fun, then you check out. To verify that this whole experience was consensual, you're agreeing up front and then you are agreeing that you agreed, at the end. It's like a post-nup.

At any time during that encounter, you can change your mind. I factor that in because sometimes, all of a sudden, you can freak out– maybe you're doing it for the wrong reasons, maybe something comes up that changes the encounter. You can still use the app to check out successfully.

Another piece of this revolutionary protocol is about getting people to really understand what they want and to be honest with themselves. You can change your preference data and what you’re looking for in real time. If it’s 2:00 in the morning in a Las Vegas Hotel room and you just want some company, that's very different than “at this moment in time I’m searching for my soulmate.” If you're looking for a long-term relationship at 2:00 in the morning, you're not going to find the right people.

When you sign up for the platform, you enter an ethical contract that basically says– things happen, people change their minds and everybody's going to agree to be kind. I call it the “no douchebags/no crazy chicks” policy.

We're trying to weed out the problem people and create a community.

Seventy percent of the women on existing dating apps have been celibate for more than a year, not by choice but because they cannot find an appropriate match. When you're swiping through these apps, all you have is a photo. People match thousands of times, but the way it works is just not in the moment. The way that we have set it up is as organic and natural as bumping into somebody at the grocery store.

KM: You mentioned Blockchain putting people in situations of taking responsibility for their decisions and choices. I feel there's a question of how ready people are for taking that responsibility.

AA: Oh, we’ve turned into lemmings. We’ve told every woman that she's a victim, that she's got this glass ceiling and that she's not responsible because someone is victimizing her and someone else is to blame. That culture has got to end.

We have to get back to the point where we own our choices, our handshake is our word. Because then and only then are we actually going to move forward as a society.

The trajectory that we have been on is not good for women— the victim mentality and the Violence Against Women Act. I created the California Alliance for Families and Children with a core group of people and we did a large study which showed that domestic violence in the United States, it's 50/50: 30 percent man on woman, 30 percent woman on man and 40 percent mutual. Nobody ever wants to admit that. You these narratives created for power that do not serve the people. That's a problem.

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Beyond the #MeToo bandwagon

KM: I'm getting a sense that you're going to have a unique perspective on the women in Blockchain discourse. Do you feel that the space has changed in the past 10 years in terms of opportunities for and treatment of women?

AA: I have a very skewed perspective, you're right. I'm the only female ever in the cigar room with the Titans who have never asked me out in 30 years. Why? The answer was – I’m a valuable asset, not a female.

Certainly, there are men who are predators and they needed to be called out. The tech industry is similar to the entertainment industry. Everybody knows who the predators are, but nobody's talking about it. And I think that's the problem.

I did have some issues with #MeToo, with the pile on, because I have a friend who got thrown under the bus, I feel unjust. In this case, I was there, I saw that the woman started it and then jumped on the #MeToo bus.

And yet, it's OK in our society for women to behave like that. I think that is actually going to be the downfall of women if we don't hold each other accountable to better behavior and owning our choices.

The women who are dressed properly, have a business pitch, no flirtation, not leaning on their femininity–  those women getting hit on, that has to stop. I don't think everybody has to lose their femininity and vulnerability, but it's hard to create a safe place for everyone. Because of that, the fact that we have women in Blockchain and women investing in women allows us to focus more on creating opportunity in a safe pipeline, a safe funnel for women that need the extra support.

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A Blue Ocean amidst bro culture

AA:

If we create the infrastructure and the environment where women feel safe, they will thrive. We already know that women are a better investment. They're a better long-term risk. They're gonna make more money, they're going to fail less, they're going to work harder, they're going to put more into it.

We already know this, so women should be getting more investment, but they're not– just because of the way the system is designed. Unless you’re a 25-year-old Stanford grad, Asian male, you can't write something on a napkin and get a $5 mln seed round.

In addition, with this whole #MeToo thing, we now have the blowback which is men not taking any meetings with women. That's going to take a while to settle down. It's up to the women in Blockchain, the women in tech to create that safe place for the men to come in who will support women. When these men end up making a lot more money, that's where we get to have our “I told you so” moment. Then the industry will shift. We have to create our own breaks.

Instead of trying to change the existing bro culture, we have to do a Blue Ocean Strategy from scratch where we go– here's what we're doing over here. Blockchain gives women the opportunity to do it and democratizes the entire investment field with ICOs, token sales.

Normally, we would have to pitch a VC, and in my case, they wouldn’t touch a dating app– even though the only apps out there are mostly built by men and they don't address what women need, to feel safe, secure and certain to say yes.

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Omnipotence addiction

KM: Many people feel that technology has infringed too much on human interaction. We have apps to help us communicate, take care of each other, spy on each other. Now Blockchain introduces a kind of technology-assisted trust. Do you feel that’s something that might be difficult for people to accept? Or are we tired enough of ambiguity to be ready for it?

AA: I'm tired of being asked out by married men. I’m tired of going out to dinner with men that I think are single and available only to find out that they are not. I'm definitely ready to only date available, eligible, appropriate people, and I need technology to do that.

What's interesting is it's already in our everyday life. Our phones are listening to us all the time. I've sold my soul to Google and Apple, and I'm OK with that, it makes my life easier. I have tried to function without them. I go on cruises where they don't have internet and it's frightening– I’m on shore in Turkey, trying to figure out how to type on the Turkish keyboard in an internet cafe.

Is there an addiction? Yes, I have an omnipotence addiction. I am omnipotent when I have my phone and my laptop, I can find or do anything I need to. There's no escaping technology.

I think that you would have to convert to be Amish if you want to avoid it and that is backbreaking labor, I'm not sure I'm up for it.

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Bitcoin, Blockchain and love

KM: Any predictions about Bitcoin and mass crypto adoption, when is that coming?

AA: So there are several apps coming out, mine being one of them, that are mainstream and understandable. We're calling them apps, not wallets. These are projects that everyone can adapt and learn to use. People will create digital identities in order to use these products.

That will help with mainstream adoption. We're at five percent now– it's the tipping point. I expect we’ll be 30-35 percent by the end of 2019. I think Bitcoin is going to hit $30,000 by the end of the year.

I said $10,000 by the end of last year and it hit $20,000, it was $10,000 in November. I said that when it was $800 and my friends thought I was crazy. It's math, and I majored in math, so I'm pretty sure I can read the algorithm.

Because it’s diminishing supply, proof of work gets harder– Bitcoin is designed to increase in value, so it will.

KM: Your token generating event is coming up. Do you think regulations are going to impede token offerings in general?

AA: I think there will be laws passed that will make it easier. I think that every prosecution so far should have been prosecuted, in the same way, had they been stocks, not tokens. Fraud, Ponzi, misrepresentation– that's already illegal. That should continue to be illegal in the token economy. Do the right thing, own your choices.

I prefer to run token sales like a Kickstarter for subway tokens– full utility. I check with the SEC first. We're running a fully compliant utility token. If you want to buy in bulk, you're going to have to get a reseller agreement, but it's not for investment purposes.

It’s for love. Who doesn't want to get laid?

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🤷 Opinions Masha Beetroot

EOS42 Head of Strategy David Packham: It Could Be Multiple Blockchain Models Thrive

Opinions
Blockchain is still in this discovery phase, says David Packham of EOS42
EOS42 Head of Strategy David Packham: It Could Be Multiple Blockchain Models Thrive
Contents

 

Hot sunny day in London, with its normal hustle and bustle, and I’m inside Henry’s cafe in Piccadilly. I have an interview with David Packham, Head of Strategy & Community EOS42, who’s been elusive for three days during my stay in UK. Now it’s arranged although the last moment he changed the venue.  Loud music and conversations around, glasses clinking- definitely the right place for talking about the global EOS community…

CryptoComes: What do you think of the future of EOS?

David Packham: I didn’t expect such a bumpy first month..I am happy we are where we are. I was not sure whether we would be in the top 21 for a long period of time so it’s very humbling and a huge relief for us. The team haven’t been paid in five months, I am about to get my first paycheck since January.

So yes, it’s humbling to be voted up in the top 10 right now, but it’s always challenging: with DPoS you never know where you will be. Regarding this I think these are the healthy times in the community debating in a decentralized manner- very, very complex things about the future of the network. And of course the beauty is if some people fundamentally disagree with the way the direction goes, say in governance, they can and will be able to just simply set another instance of EOS. It’s open source- so it’s not difficult to set another chain up in theory. Their big challenge will be getting the economic gravity of the community to move with them. It requires a fundamental split in creative energy. If you keep debating like we are, eventually the community should reach a form of consensus. The mainnet is always going to be king and now its established it will likely always be the most important EOSIO network of all, but there is going to be others for sure.

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Decentralized, but how?

CryptoComes: Critics often say that EOS is not, in fact, a decentralized network, but subject to control by something akin to a government. They specifically mention the recent decision by the EOS centralized body to ban transactions from the specific 27 wallet addresses. What would you respond to the critics?

David Packham: There’s a few points on that. If the system is centralized, decision making will be quick, fast and efficient and you would see no external debate. We couldn’t be less like that! You see so much continual controversy, debate and people just prevaricating between the most inane details: that’s because we are decentralized. It took us a long time to even agree the frequency of the Block Producer meetings, because you’ve got a decentralized group trying to reach consensus. So I believe we are highly decentralized. If you look at Delegated Proof of Stake, it’s decentralized but making trade offs for performance. When you look at mining pools in both Proof of Stake and Proof of Work it is far more centralised in reality; Bitcoin has got six pools, the other governance structure is the unelected core devs, they effectively run the entire Bitcoin network in a meaningful sense. Therefore our interests as elected Block Producers is a lot better in line with the token holders.

CryptoComes: You think in delegated proof of stake they can change this consensus?

David Packham:Ultimately it is governed by understanding how the real world works, in which we delegate our power. You and I in a democracy delegate our power to representatives to run the government. So in this case in EOS, the token holders delegate their power to run the network to individuals, groups- the block producers. We have very strict controls on what we are allowed to do or not. That is all found in our constitution and our code of conduct.

That is why I disagree we at least have 21 individual groups at any one time running the network. Now there is some controversy about whether or not some of those groups may be controlled by multiple parties. They are being looked into actively by the community, and if they are they will try to shut them down. This is why it’s so important to have a really involved community that care. They are looking at this and I can see some evidence of voting that makes them suspicious and they are worried about it. The community are saying we are going to try and find proof and if so try and get these BP’s taken out of the top 21.

I genuinely don’t know if that is true or not but we are in the group listening to these discussions saying yes, we need to try and find out if that is true and act if so.

Right now we have got 21 different BP’s from all around the world and another 42 paid standbys- any one of which can switch in and out the moment you as a group of token holders decide this bad actor is taking bribes or underperforming.

For example if I am sitting here with Masha right now, and Masha is giving me an envelope of money to try and behave in a certain way and it gets found out. The community would say right, your reputation is destroyed and we as a Block Producer would be gone so fast- the penalty is enormous. So it’s a powerful system in that sense as our interests are highly aligned.

Regarding the 27 accounts, they are all direct byproducts of EOS 911. What happened is that those individuals raised a case with ECAF- the default interim arbitration service - they all submitted information onto the Ethereum account that EOS42 built, which proved they can move and control the Ethereum account where the tokens were, but could not control the underlying other account and each one of those 27 accounts had escaped mysteriously by somebody lets say a hacker, potentially, hasn’t been proven yet.

What ended up happening is that ECAF, being brand new and the network brand new, is that the block producers were put in a tough position as the only elected representatives in the entire network at present. ECAF has not yet been elected, the constitution has not yet been ratified and is interim. So following the spirit of that we collectively all reached 100 percent consensus between all the block producers and all the standbys on a two hour call, and said the right thing to do is for each of the accounts to be frozen to enable ECAF to investigate. Nothing more, no judgment just enablement of the constitution to function as intended.

It has been highly controversial! It led to a lot of thought about whether or not that’s really how things should work or not. And so the community is doing what it should and is having a massive debate. Dan Larimer the chief architect of EOS has strong views, other hugely influential community members are expressing different views. We will get there, we will work out what the right constitution is and we are going to have a referendum and then we will vote on that.

Certainly amongst those accounts in question, some of the admins of the EOS 911 channel are alleged account holders that have been defrauded. One account got missed by one BP and the money was moved immediately to exchange, so they lost 3,000 EOS as a result. It shows there is strong evidence relating to those accounts. These are individuals mostly from places like Korea who registered with a fake portal.

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Governance

CryptoComes: How will you describe the EOS approach to governance, on a scale between a totalitarian state and complete anarchy?

David Packham: The best way, I think, to view EOS is it's more of a very large DAC. It’s a decentralized autonomous company in its own right. So when you put in place its governance structure, it is all hard wired, or it should be, into the code with Ricardian contracts which explain the interpretation of that into human language. So there is nothing that you and I can do, even if we were say part of the governance layer, to start making arbitrary decisions- everything needs to be constitutionally voted. Anybody can put forth an amendment to that constitution and if they get enough support for it have it voted on. So there is no sort of centralized control its decentralized governance but people look at the likes of ECAF, which looks very centralized. That actually reflects a lack of understanding of what arbitration is, and its limited role in the EOS governance and economic ecosystem.

CryptoComes: Btw this ECAF they are taking care of the same as you do at 911, for example like if there is a problem with the account, with the private keys, or they are officially the Block.one’s arbitration?

David Packham: They have nothing to do with Block.one technically. When Thomas Cox finished the draft constitution, and nominated an interim arbitration service to be created, called ECAF- that needs to be set up from scratch. Right now it doesn’t have any funding, the people working in it are working for free as volunteers and they are trying to get setup but it’s nothing to do directly with Block.one. Block.one actually deleted all the governance constitution documents in GitHub ahead of launch, it was left for those of us setting up the network to decide what we wanted to pull and restore. We ultimately as a group decided to implement the interim constitution, and decided it had been circulated widely throughout the community, debated, ratified, and agreed as best we could prior to a real referendum.

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Block.one role

CryptoComes: What is the role of Block.one now? What happens if some producers will join forces to challenge the principles ingrained by Block.one into the system?

David Packham: In theory if ,all the block producers turned hostile to Block.one, said right we are going to freeze your account so you can never move money again. Block.one would simply set up a new EOS Blockchain. Why not? Literally any,body can set one up, and with their last commercial backing and the funds they have I am sure they would pull across the economic momentum of gravity and a lot of the community with them.

It’s a hypothetical question that’s not a serious proposition, in the sense that people would never do that. You also would be able to challenge them in the constitution. Block producers cannot arbitrarily freeze an account, the rule is as soon as the constitution were enacted it would need an ECAF order or another arbitration order to freeze an account. But actually the alternative constitution proposed by Dan Larimer is that this power should not sit at the base protocol level and that it would be above at the dApp layer.

So in that vision, each app could decide “we are going to use a different arbitrator for any dispute resolution on EOS and we are not going to use ECAF.” Any customer that signs up with you has to sign the terms which agree with that. What that would mean is there is no base layer going on at all, it’s all handled in yours. Your governance can be quite different from the governance rules of another app. That’s what Daniel Larimer wants and that’s his vision, which differs quite substantially from others. It’s an interesting one, the problem with it is much of the code and support mechanisms required to support that vision do not currently exist yet. So we would have no arbitration or protections for potentially years in the interim and be equivalent to say Ethereum. The community will decide what they want in that respect, and EOS42 will honor that decision and serve the network as a Block Producer.

CryptoComes: How big is the community you are working with? How will you describe it? What are your major principles in working with your community?

David Packham: The main thing I think is very simple with regards to community: if can never lose sight of the fact that as a block producer, you literally work for the token holders. The token holders are our collective boss to serve, if you lose sight of that then you will not last very long as a block producer. You will be out of the top 21 and will become a standby or unpaid even.

CryptoComes: How many user members do you have so far in the community? Individual wallets?

I don’t actually the estimated size oof hand I am afraid.

CryptoComes: How many are involved in the your Telegram group?

David Packham: The main EOS channel has got over 65,000 in it. For EOS42 it depends if you look at EOS London or our main BP one. EOS London blurs the line with us. We haven’t got a huge, huge group because we prefer to build up the community in real life, there’s enough Telegram groups already. You know some people have got 10,000 people but half of them aren’t real community members. Ours has got about 300 or 400 but that’s fine, thats a nice number and that means the community in that are the really active ones. If you think about our meetups, we get about three-400 at EOS London events, that means quite a few of them are engaged and actively on these groups too and its nice. I am not worried about numbers, there’s more to it than that!

Crypto theft

CryptoComes: According to recent research, theft in crypto industry is booming, with the volumes stolen this year times exceeding similar numbers in 2017. What are EOS tactics on dealing with this?

David Packham: On EOS every single account potentially compromised so far, has been purely down to the the registration process. It was down to the fact that we were doing a token swap, in effect, from Ethereum on to the mainnet. So the fraud occurred off chain, it occurred because of the registration process. So no lasting effects are known, I don’t think there any new ones occuring.

What’s happening other than that is that people are losing their private keys and having accidents but that was always going to happen. To a large extent that can be in theory resolved going forward, but before that we need to confirm whether or not ECAF will be the long term arbitration service or not - we need the referendum. Hence why many EOS block producers, including EOS42, are working together building a referendum contract and interface, and making it a priority.

CryptoComes: Do you think anything can be improved in the EOS voting system? Do you think it could be more fair?

David Packham: I don’t think it can be more fair than a referendum, where its one token per vote. I think it is a pretty powerful way of representing views. Some people are concerned about whales, concerned about individuals with what they would define to be too much power. But another way to look at it is those with the most tokens are the most invested in the long term success of the network. There are few who are going to care more about the success of EOS, than those with say 10 mln tokens- you care more about its success, not less.

It’s delegated proof of stake, but at the same time you are right it’s still the one who has the stake can vote than the one who doesn’t have them. That’s the minus of it.

The guy with 10 mln tokens, has so much more money than you and I have combined.  The counter argument is they have put in all that investment, they have so much on the line, it’s not fair for them to not have a bigger say. It is directly equivalent to shares in a company. Should the person who owns $10 mln dollars in Amazon only have the same say as you, who has put down $10,000?

If you look at what EOS token is for, it buys you a percentage of the bandwidth of the computational capacity of the network as well as the ability to vote. So in effect it gives you two things: it gives you a say in how the network is run and it gives you access to the power of the network directly linked to the amount you put in. So to me that is pretty powerful as a way of saying it is fair and right, but other people may disagree.

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CryptoComes: When do you think EOS will dethrone Ethereum or it’s not on the current agenda?

David Packham: I think actually the individuals up at the top, like Vitalik and Dan Larimer, are way beyond simplistic things like EOS vs. Ethereum. I think they are true believers who are in it for the right reasons, that’s why for example Vitalik was in the EOS code base giving advice pointing out errors and things to think about right up to the EOS launch. You couldn’t see a better example of people cooperating and in it for the right reasons. They are way beyond money these guys, all of them.

I think it is fair to say they all want to see the benefits of decentralization. They are both trying different flavors of the same idea, which is they want to build a decentralized operating system and economy. No one is yet sure how best to do that. So you have to try a variety of ways, to really experiment and find out what works best. Until we try we will never know. That’s how most of the great experiments have led to discoveries. How many different chemical formulas did we try before the lightbulb. Blockchain is still in this discovery phase; we are trying different configurations and theories, and at some point we will get one that works extremely well and everyone will pursue that path. DPOS is the only scalable, proven model we have for public blockchains so far.

What we realize with Ethereum is some brilliant ideas and the concept, flaws with scalability, dispute resolution is non-existent, forking seems to be the only way they can handle and resolve. No protection comparable for current day bank accounts, if your money is stolen or you lose your private key you are left a hapless victim.

So these are problems that Ethereum is also trying to resolve by gradually upgrading the system.  In the meantime Dan Larimer’s own invention, DPOS, is taking this great idea and marrying the lessons from Bitshares and Steemit, the things that went right and wrong, to produce this third generation blockchain - EOS.

You know we may be talking again in five years time about a version 4 Blockchain project. Who knows, or it may be that EOS for example is so scalable and adaptable that unlike those before it can morph fully into a version 4 Blockchain and beyond as intended. It is designed to have every aspect of it re-coded on the move, which is something that Ethereum struggles with: you can’t do it that easily, you cannot change contracts once they are deployed. If you get one bug in them like the parity wallet hack where someone initialized the contract for the first time (as Parity forgot to do that in testing and deployment), the inadvertent hacker took ownership of the contract as the initializer of it, and then they selected to kill contract and it froze all the money in the parity wallet. Now in EOS you can actually fix that, you can go back and actually fix the problem. This is where you are getting more sophisticated models than before. It’s going to be really interesting seeing how it works.

But I do think going back to the original question these guys are not hostile to one another.

It could be multiple Blockchain models thrive and they are all part of a giant economy.

When I spoke at an EOS/Ethereum debate the core Ethereum developer and myself agreed on the same thing: we are all in this, it could very well be that EOS is London and Ethereum is NY, and they are two cities interacting economically together within the Blockchain community in the future.

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