🤷 Opinions Cyril Gilson

The Ridiculously Centralized World of Crypto

Opinions
Cryptocurrencies decentralized nature is becoming more and more theoretical, whereas, in practice, it is an incredibly centralized space dominated by a few men
The Ridiculously Centralized World of Crypto
Contents

Brandon Chez is a thirty-something old programmer allegedly living in New York. His name is not immediately recognizable, yet the domain name that Brandon owns and the website he maintains and controls is the gravitational center of the universe of cryptocurrencies.

It is CoinMarketCap, a website launched in 2013 that has become the source of information for millions of users in possession of billions of dollars. 300 mln of its monthly visitors make their decisions based on the data from CoinMarketCap. And their decisions affect the market big way.

In January, the site decided to expel South Korean exchanges from its listings, without a warning or any sort of orchestration. As a result, the whole crypto market capitalization fell some 20 percent, and the panic spread, leading to a big sell-off by uninformed traders.

Centralized information manipulation

In fact, any moves by CoinMarketCap play a big role in how the markets behave. The ranking system of CoinMarketCap has often been called into question, as its effect can greatly affect things too. The calculation of circulating supply is vital information, yet the way in which it is calculated is shrouded in mystery, and often could be erroneous. Any change in the value of the circulating supply of any project has a direct effect on the capitalization of the project and on the price of the project's coin. Direct, immediate effect.

The speculative nature of the cryptocurrency market and the high competition between coins for investors mean that knowledge and information is king. Information centers like CoinMarketCap has such a strong hold on certain sectors and coins that could be considered virtually indispensable. And yet, they are also incredibly centralized!

But what about the three pillars of Blockchain and cryptocurrencies which are supposed to be transparency, anonymity and decentralization? These are the factors that have made this new technology so enticing in the first place, attracting millions of individuals making their headway in a digitized world largely controlled by overbearing big corporations.

The decentralized nature of cryptocurrencies was intended to give power back to the common man. No longer does your money have to be controlled by an intermediary or a centralized structure like a bank; Blockchain was supposed to be an ultimate middleman to end all middlemen.

The Blockchain and crypto space is getting bigger by the hour and it’s a network of communities consisting of independent individuals. The communities do actually strive to be as decentralized and transparent as possible and work with what they have - from settling in at various crypto subreddits like r/cryptocurrency and introducing public moderation logs for transparency to building their own platforms like U°Community.

They now feel a part of this important decentralized movement as they take power away from the centralized banking system. But so far they have simply traded a Wall Street bank for an Internet bank as some of the biggest and most popular exchanges are in reality centralized and thus have full control over the users' funds.

A person entering the cryptocurrency space looking to buy their first bit of Bitcoin would more than likely go to a popular exchange, such as Coinbase in the US, deposit money to the exchange and trade that money for their digital currency.

💼 Related Article
Market Manipulation Remains a Massive Red Flag For Cryptocurrency Adoption and Regulation
🔥 Hot
3 months
256
Market Manipulation Remains a Massive Red Flag For Cryptocurrency Adoption and Regulation

Authoritarian heroes

More advanced users who want to trade in altcoins could go to another major exchange, Binance. What started as an unknown Chinese exchange in late July 2017, is now competing for the number one spot in the cryptocurrency trading volume.

CEO of Binance Changpeng Zhao has the flair of a rock star with a slight touch of a Robin Hood. Zhao, better known as CZ, has famous in the crypto community when he saved thousands of Binance’s users from the travails of the Viacoin pump and dump affair.

In March this year, a major phishing attack struck Binance as some naive or greedy users recklessly used for trading ready-made bots that were laced with malicious phishing codes. Anyone was able to download these bots from GitHub, input their private keys, and begin bot trading with an eye to make a profit.

The malicious code gave hackers access to people’s assets, but more importantly, it allowed them to control the bots in order to pump and dump a coin. The bots bought as much as they could of a low liquidity and obscure coin named Viacoin. The attackers accessed the phished accounts on Binance and dumped all the crypto on balance of the accounts into Viacoin via market buys.

The price of Viacoin soared multiple hundreds of percents in minutes. Then the attackers sold the pumped Viacoin for Bitcoin and attempted to withdraw their funds in Bitcoin.

Then stepped in CZ. Accounts were frozen permanently, trades were reversed, funds were returned and the attackers’ funds were donated to charities. All's well that ends well? CZ was lauded as a hero, he repelled the attack, saved the users, punished the attackers, and as if it weren't enough donated the funds to a charity.

Judge, jury and executioner

But, just because it sounds like a happy ending does not mean that it should not be scrutinized. Essentially, CZ was at once judge, jury and executioner. He used total control to dish out his justice… No democracy, no decentralization, just one man at the pinnacle of control.

Let’s be frank. Major cryptocurrency exchanges are centralized and operate like digital banks anyway. Their centralization brings about another aspect, less pronounced but no less scary because of that.

Coinbase collects sensitive personal information on its clients, it has the ability to freeze accounts, it charges fees for its services, it can be hacked and it can even collapse with all of its users’ money in it. These are exactly the same problems that normal banks have, aren’t they?

It gets even worse with decentralized exchanges which operate with a thin veil of decentralization. A company called Bancor, which claimed to be a decentralized exchange, was recently hacked and had their users’ funds frozen. Straight away, there is something wrong here as a decentralized exchange should never have this power… and yet, they did that while still continuing to call themselves decentralized.

💼 Related Article
Giving Each Other a Helping Hand: Traditional Finance and Crypto to Lead Each Other Forward
🔥 Hot
3 months 1 week
256
Giving Each Other a Helping Hand: Traditional Finance and Crypto to Lead Each Other Forward

Decision makers

To call the cryptocurrency space entirely decentralized because of the Blockchain decentralized nature is a strawman fallacy. There are multiple examples of how a few people rule the entire space.  Why is that happening? Partly because in this nascent space, there are still a few pioneers, few names that control certain spaces by default - for many, Binance is a synonym for “crypto exchange,” and CoinMarketCap is another word for “crypto market data.”

These pioneering companies sit at the top of their game without much competition and little precedent or repercussion for actions - which is a prime environment for centralized control.

Anyhow, the modest two men, Changpeng Zhao and Brandon Chez, have already shown to have made huge moves in an ecosystem that prides itself on being decentralized and thus, technically, immune to individual manipulation and control.

The fact of the matter is that in theory, decentralization exists, and can operate perfectly well in an ecosystem that prides itself on it. But in practice, that is not the case. People are inherently controlling, and enjoy the power and pride that comes from it.

💼 Related Article
The Power of One: Do Whales Have the Power to Rock Bitcoin’s Boat?
🔥 Hot
3 months
256
The Power of One: Do Whales Have the Power to Rock Bitcoin’s Boat?

🤷 Opinions
views
👓 Recommended articles
🤷 Opinions Vadique Magenta

Fractals and Jackals in the Cryptocurrency Market

Opinions
A discussion of some hidden market patterns that can help us avoid succumbing to provocations.
Fractals and Jackals in the Cryptocurrency Market
Contents

On March 7, the jackals ripped the market open with razor-sharp teeth and bought whatever was on offer at 75-day record volumes (for the 4H timeframe).

Picture 1

These events transpired when the news broke about the Binance exchange hack. At first there were no details, and when it turned out that all the money was safe, the market had already tumbled down by 10-15 percent. But amidst the bacchanalia, I observed one elegant pattern that allowed me to enjoy very sound sleep and made evident that what happened was just an quick purchases by the hands of a frightened crowd.

Minute timeframes

I will begin with the fact that in technical analysis, I examine every timeframe, from the minute to the week. When there is a battle for a certain level or some kind of emotional movement, I deeply enjoy looking at the price movements within the minutes. That way, you can see the subtlest signs of the market and understand what exactly takes place on the battlefield.

Imagine my surprise when on the minute chart I saw a fractal duplicating the structure of a higher order! So, what is this structure like?

Fractal history repeating

The trek down to $6,000 is still fresh in our memories — at that point, I was looking at the events very carefully and observed an important detail. A large volume was coming directly onto the crowd. This happens occasionally… “Smart” money starts to come in a little before the decline targets, at the same time creating a trap for the buyers and attracting additional volumes. Then, the price is passed around this “trial” run, and met at the next level. Naturally, as a result the price is directed far above the “trial” entry and the costs of the initiative are paid off.

So, in the minute intervals I saw a painfully familiar picture. It was a small duplicate scenario of the decline to $6,000. I hurriedly took a couple of screenshots, such that I couldn’t be accused of falsifying the facts. Take a look for yourselves…

The hourly chart.

Picture 2

The minutes.

Picture 3

As a result of the trades, the fractal truly repeated itself with minor errors!

The hourly chart.

Picture 4

The minutes.

Picture 5

Further on, the fractal forms begin to dissipate and we move to a new logic. At the same time, I see the following probabilities for the recovery scenario: a return to the level of fair price — $10,800 — on March 8 by 10.55 p.m., on March 9 by 8.55 a.m. or 7.35 p.m. (all times given in UTC + 3).

Picture 6

Meanwhile, be vigilant and do not forget about the support at the $9,400 level. If it is broken, we can expect a continued decline by 10-12 percent.

Picture 7

As always, wishing you successful trades!

🤷 Opinions
views
👓 Recommended articles
🤷 Opinions Joseph Young

Investor Ari Paul Calls Out Cryptocurrency TRON For Plagiarism, Exaggeration of Network Size

Opinions
Prominent analyst and investor Ari Paul criticizes TRON for plagiarizing the white paper of Filecoin and IPFS, and doubts of its network existence.
Investor Ari Paul Calls Out Cryptocurrency TRON For Plagiarism, Exaggeration of Network Size
Contents

Prominent analyst and investor Ari Paul, who co-founded cryptocurrency investment firm Blocktower with former Goldman Sachs executive Matthew Goetz, publicly criticized TRON for plagiarizing the white paper of Filecoin and IPFS and condemned its non-existent network.

TRON and IPFS Conflict

A few months ago, TRON was involved in a scandal that accused the organization of plagiarizing the white paper of Filecoin and IPFS. Juan Benet, one of the founders and developers of both IPFS and Filecoin, revealed that Tron employed technologies invented by the two Blockchain projects, and described them as its own technology on its white paper.

Although the white paper has since been taken down by the TRON development team, Benet and the Filecoin team archived the white paper of TRON in the server of the IPFS network to ensure that the community can access the TRON white paper that has allegedly plagiarized the whitepaper of IPFS and Filecoin.

The cryptocurrency community is open-source so projects often are inspired by the technologies developed by other development teams. For instance, Litecoin has integrated Bitcoin’s Segregated Witness (SegWit) for scaling, and the Ethereum development community has been collaborating with the Zcash team to employ the private features of the Zcash network.

But Ari Paul and Benet noted that it is unreasonable to utilize the technologies of other projects without credit and list them on a whitepaper. One of the sections of TRON’s whitepaper is called Bitswap, and it reads:

BitSwap is a block transmission agreement similar to BitTorrent—where nodes represent the expected block set with want_list, and represent the data block set they can provide with have_list. Unlike BitTorrent, block swapped by BitSwap is not limited to a single torrent.

A section entitled Bitswap on the whitepaper of IPFS, which was released before Tron, reads:

In IPFS, data distribution happens by exchanging blocks with peers using a BitTorrent inspired protocol: BitSwap. Like BitTorrent, BitSwap peers are looking to acquire a set of blocks (want_list), and have another set of blocks to offer in exchange (have_list).

The Bitswap section on both whitepapers evidently have significant similarities, and it is also important to note that the white paper of TRON listed a section called “Bitswap,” which is almost identical to the section of the white paper of IFPS.

Paul’s Criticism

Paul publicly condemned TRON’s continous marketing of its Blockchain network that utilizes the core technologies of other Blockchain projects. Referring to TRON’s network that exists on the Ethereum network as an ERC20 token project, Paul stated:

Did you mean the new filecoin or bitswap @justinsuntron? I thought the TRX paper copied those. Also...Tron doesn't actually *exist* as a network...to be the next Bitcoin you first need to produce...ya know, a network. https://t.co/2r1XFTd2gy

— Ari Paul (@AriDavidPaul) March 25, 2018

The TRON network also claims that it has more than 30 mln users located in more than 100 countries. But, even Bitcoin has less than 60 mln users, at least on wallets like Coinbase and Blockchain.

TRON’s Blockchain is ambiguous and the business model includes services like social media and content distribution. But to claim without evidence that it has more than 30 mln users which is more than Ethereum’s  and all of the tokens combined is simply unsound.

While TRON may have 30 mln users, it is unlikely that the 30 mln users are native users of its network.

🤷 Opinions
views
👓 Recommended articles
🤷 Opinions Alexander Goborov

Let’s Talk Stablecoins: Interview with the Co-Founder of Cred and Former GM at PayPal, Dan Schatt

Opinions
With many HODLers and crypto enthusiasts looking for investment advice, insights from a top expert in the fintech field, Dan Schatt, are sure to come handy
Let’s Talk Stablecoins: Interview with the Co-Founder of Cred and Former GM at PayPal, Dan Schatt
Contents

Dan Schatt is the Co-Founder and President of Cred, former General Manager of Financial Innovations at PayPal, and a bestselling author of Virtual Banking: A Guide to Innovation and Partnering. Earlier this week, we sat down with Dan to talk about the crypto market in general and stablecoins in particular.

From Mainstream to Crypto

U.Today: Hi Dan. You had a solid career in mainstream finance, including a leading position within PayPal. Why did you decide to go crypto?

Dan: I became interested in the Blockchain technology and crypto space in 2012, back when I was working at PayPal. While PayPal hoped to become the Internet of Money, my “Aha” moment was that crypto would become the Internet of Value, eclipsing PayPal in every way, i.e. Blockchain would prove more secure, transparent, and allow for the tokenization of all asset classes. It is unbelievable to me how quickly we’ve moved to a legally permissible, tokenized version of the US Dollar!

I believed crypto would also attract a larger developer community than PayPal could ever hope for. You just can’t compete with a world computer or a non-inflationary world currency that can be used by anyone with Internet access.

I later published a book in 2014 called Virtual Banking, with a chapter on Bitcoin and crypto. I’ll never forget my interviews with Wences Casares, who really opened my eyes to the power of Bitcoin.

U.Today: Please tell us a bit about your present company that you, as we understand, also co-founded. What does Cred do exactly?

Dan: What is the best possible loan you can get, other than a free friends and family loan? Probably a home equity line of credit. The problem is most people can’t get a home… Replace the home with crypto and that is essentially what Cred has created: the world’s first Crypto Line of Credit (C-LOC™). We allow people the ability to use their BTC, ETH and XRP as collateral and get cash. Cred has amassed over $300 million in lending capital to provide liquidity against crypto assets. We are set to revolutionize the lending industry by merging an established global lending network, a diverse fintech team, machine learning, and the power of the Blockchain technology.

U.Today: It seems that education, among other fields, is moving onto the Blockchain. The UC at Berkeley now has its own Blockchain, and your company is somehow connected to it through a third entity, is that right?

Dan: Yes! Cred and Blockchain at Berkeley, are two of the founding members of the Universal Protocol Alliance. Howard Wu is Cred’s Chief Scientist and a Founder of Blockchain at Berkeley, the largest US University Blockchain associated in the United States. They have an incredible amount of talent coming through their program and we are lucky enough to benefit from their thought leadership when we created the Alliance, which is dedicated to bringing important pieces of infrastructure to the crypto community and act as a bridge for the next 100 million users of crypto.

Stablecoins and the Current Market

U.Today: What are your thoughts on Bitcoin’s collapse last month? Did it come as a surprise to you? Where does this situation leave us now?

Dan: I guess it all depends on your time horizon. I’m a big believer that crypto assets will become the preferred store of value and means of exchange in the future. As a store of value, just look at BTC and gold in 2011. Gold is down roughly 30% since 2011 while BTC is up ~118,000% but is still just 1% of gold’s market cap. And how many times has BTC “collapsed”?  

Price volatility is massive at this time because wealth is highly concentrated and institutional involvement is still limited. This will evolve as the Internet did. Development of infrastructure and practical applications takes time… You can’t rush a pregnancy to 1 month by adding 9 doctors. It will still take 9 months.

U.Today: Let’s move on to stablecoins. Certain critics claim that some of them, e.g. Tether (USDT), are a disguised form of centralized fiat currency since they are pegged against the USD. How would you rate this assessment?

Dan: For the last few hundred years, governments have legitimized fiat currency by backing it with gold. Eventually, as trust grew in government currencies, there was no longer a need to connect it with gold. The same is now happening with crypto stablecoins. Will it matter at some point if they are “backed” by fiat? Probably not. At some point, the trust will be in the finite supply, greater transparency, stronger security, increased utility and ability for it to travel as far and wide as the Internet. Governments will eventually work to tokenize their own fiat currencies, but there will always be demand for a store of value or means of exchange that cannot be controlled by any government.

U.Today: Do you think businesses should strive to move away from governments? Then isn’t there a dissonance pertaining to how this ideal can be achieved with stablecoins which by default rely on central banks?

Dan: Governments and businesses will increasingly be pulled in a direction by the Blockchain, i.e. a path toward more transparency, inclusion, and the democratization of financial services. It will become increasingly difficult for governments to close their borders, impose capital controls, and attract talent if they do not support crypto. And, crypto communities need to leverage some of the valuable components of the existing financial ecosystem—the role of professional custody and basic investor safeguards—because inheritability and token recoverability are needed if we are to provide crypto services that will appeal to the next 100 million users.

U.Today: For better or worse, do you think the demand for stablecoins is bound to increase since they seem to demonstrate more stability during crashes?

Dan: Absolutely, but not just because they are stable. They will ultimately be used as a better means of exchange, remittance vehicle, and as core component in automated commerce.

But, not all Stablecoins are created equal. They’re more likely to be ‘stable’ if they are pegged 1:1 and verifiable on-chain, and can allow for anyone to review how the value is substantiated, not just a professional auditor.

The Future Talk

U.Today: What are your predictions for 2019? Will we see more widespread adoption of stablecoins? If yes, do you see it as a positive thing?

Dan: We are building to deliver practical use cases. There are many examples of this: an Argentinian who needs to get out of an unstable fiat currency, or a Turkish expat looking to make a remittance more cost effectively. Stablecoins can deliver on these use cases. I may live in a country with an unstable currency, and I’d like to move into something stable as soon as I can. I may not have access to a US bank account, to buy USD, but now I can buy a better version of the US Dollar. There are now lots of opportunities that broaden the use cases and bring more people in… So yes, a very positive thing!

U.Today: Some claim that DLT is the future of commerce: the fintech sector will change the global economy, drastically reshaping how we do business. Your thoughts on this?

Dan:

Commerce needs more than a distributed ledger to function. Cred, for example, is providing low cost credit to be used in commerce. Others are providing core banking services such as payroll for crypto companies. The future of commerce involves a host of next generation financial services. How those ingredients are combined with DLT is the secret sauce.

U.Today: Finally, what advice would you give to those who are thinking about entering the crypto world? How should one behave in order to succeed in this still largely unexplored domain?

Dan: Keep your ear to the ground and listen for real problems that need to be solved. The more specific, the better. Tools and infrastructure are still needed to allow crypto to go mainstream. Think years vs. months. We’re headed in the right direction, so make sure not to get caught up in the hype cycles, whether crypto is on the way down, or on the way up!

💼 Related Article
Bitcoin ETF, a Tail Wagging the Dog: Interview with the Founder of Virtuse Exchange, Ras Vasilisin
🔥 Hot
1 week 6 days
256
Bitcoin ETF, a Tail Wagging the Dog: Interview with the Founder of Virtuse Exchange, Ras Vasilisin

🤷 Opinions
views
👓 Recommended articles
🤷 Opinions Cyril Gilson

Cryptodiplomat: Sweden is the Next Country Where Enthusiasts Will be Doing Their Crypto Business

Opinions
The standard IPO could be done faster and cheaper with all the benefits of ICO: George #Cryptodiplomat Paliani
Cryptodiplomat: Sweden is the Next Country Where Enthusiasts Will be Doing Their Crypto Business

 

 

George #Cryptodiplomat Paliani is a private Blockchain consultant, advisor for several startups and speaker in many international conferences.

A former diplomat, he’s advising Zeus.exchange and Swiss Smart Valley and has his own crypto channel called Crypto Diplomat. We speak with Mr. Paliani about the future of ICOs, why they happen to fail or succeed.

CG: The ICO is becoming more like VC financing and of course VC financing also learn from ICOs, so these two currents are merging in a way. Also, one can notice that ICOs are becoming more and more expensive, so what do you think of the future of ICO at all? Would the whole approach be replaced by something else, some other type of tokenization?

GP: To my mind, there is going to be some kind of a collision, cooperation. Right now big companies are watching small startups closing their ICOs and raising funds in a more efficient and easy, fast way. Getting $10 mln in 10 seconds is not a joke right now– it is the new reality.

I am not going to argue with the fact that maybe there are only VCs mainly investing in ICOs and this new ICO wave is turning into a classical market one. ICO and IPO could be done in a hybrid way like a digitalized IPO or something similar. From my point of view, this is the nearest future, we will see that happening in just two to three years.

The standard IPO could be done in a faster, cheaper, and, what is important, legal way with the use of all the benefits that ICO has.

💼 Related Article
Crypto Trading Legend MasterLuc: “You Can Visit Cemetery of Dead Alts, Won’t Find Bitcoin There”
🔥 Hot
5 months 2 weeks
256
Crypto Trading Legend MasterLuc: “You Can Visit Cemetery of Dead Alts, Won’t Find Bitcoin There”

CG: But that would render ICOs useless if the IPOs take over in such a way.

GP: I wouldn’t say that the ICO will become useless. This could show us the third path, just as Sweden had its own original way between communism, socialism and capitalism.

The same goes here: it could be a whole new option. We have ICO from the one side, IPO from the other, and there is a third way- collaboration between these two worlds, the crypto and the classical financial one. Still, I wouldn’t say the ICO will become useless.

💼 Related Article
NEM’s Latin America Head: “In the Next Bullish Wave We will Surely See NEM in First Positions”
🔥 Hot
5 months 3 weeks
256
NEM’s Latin America Head: “In the Next Bullish Wave We will Surely See NEM in First Positions”

CG: But one of the issues with ICOs, of course, is lack of accountability before investors. So what are the ways of solving these problems? Some talk of smart money or community regulation when the community has the world, or what is your take?

GP: I think the main question you are posing here is the lack of trust, lack of escrow and some fundamentals that are in the process of building. We see this right now at the conference, in different countries and legislations, companies, etc. It is just a matter of time, first of all. The second thing is that there are already some platforms addressing these problems.

Let’s take the Smart Valley team as an example. What they do is selecting the most perspective startups and filtering off scam by getting the opinion of experienced investors and qualified business experts, checking with their analysts, gathering the information from all the accessible sources, and, finally, using so-called ‘wisdom of the crowd’. Everything is being done transparently on the platform built on Blockchain. Thus the lack of trust fades away.

It is just one of the solutions, though. Other guys are doing something like a community based on trust and a public Blockchain where people vote for ICOs. Well, it is a more complicated product, but could be an extra option too.

These institutions are forming right now, and everything is being structured. The crypto market itself is currently at the stage of formation.

Some governments are facilitating this process, others are just overcomplicating it because they cannot figure out what is Bitcoin, ICO, or whatever else that is dedicated to the cryptocurrencies. This all is just a matter of time, believe me.

💼 Related Article
Ex-Central Banker on Crypto: “There is no Limits to Where This is Going to Go”
🔥 Hot
5 months 3 weeks
256
Ex-Central Banker on Crypto: “There is no Limits to Where This is Going to Go”

CG: Another reason why ICOs fail is the internal fighting. Take the case of Tezos where the foundation and the owners of the code are at odds. What can be done with it?  

GP: Nobody can be 100 percent sure that money gathered from an ICO will be distributed or managed properly.

Here is a nice Swiss example- they have a financial regulatory body which is now creating a protocol for crypto sphere and ICOs that says that after submitting and signing a certain plan it should be realized- this reminds me the core idea of smart contracts, by the way. Abu Dhabi is moving in the same direction in the regulatory aspect.

I can give you several examples of big businesses that also had such problems with the owners, investors or founders. We can recall the case of Facebook, when Mr. Zuckerberg thought he would be the only owner of the idea and later he got all those lawsuits from Winklevoss brothers. He had many more problems, but, well, that guy survived.

The main idea I wanted to share is that you cannot be 100 percent confident that any business, be it an ICO or the one functioning on the classical market will be 100 percent secure and that your investments will be safe. You know, it is business, after all. But, some people say that if you are buying Bitcoin, it is already an investment. Basically, if you are keeping some of your money in euros, this is also a type of risk hedging, it just depends on the approach you choose.  

You will probably agree that a multiple signature wallet gives you a really nice opportunity to gain more security as an investor. This way cryptocurrency funds cannot be spent with only one man’s decision. But, of course, there are pros and cons here as well.

💼 Related Article
CryptoKitties Co-Founder Benny Giang: Spend a Week Understanding Why Crypto Matters to You
🔥 Hot
6 months 2 weeks
256
CryptoKitties Co-Founder Benny Giang: Spend a Week Understanding Why Crypto Matters to You

CG: But if they are locked, no one can use them.

GP: I understand this, but still, for instance, let’s talk about the corporate structure, but with Blockchain, so that any decision made by the CEO or any member of the board of directors is kept transparent and cannot be approved by CEO’s signature alone. Basically, this gives us a more secure way of building a new era- era of trust, possibilities and businesses where everything is 100 percent transparent and secure. Don’t you think it sounds really good? We are all living in that exact transition period right now.

💼 Related Article
Put Your Hookup on Blockchain: Adryenn Ashley Brings Responsible Sexy Back
🔥 Hot
6 months
256
Put Your Hookup on Blockchain: Adryenn Ashley Brings Responsible Sexy Back

CG: I think these problems arise because of the whole crypto industry is still under-regulated. That’s why it lacks trust and it lacks the ways of enforcement. Besides of how can we make people share the tokens properly even if in the eyes of law enforcement they don’t exist, or they exist as some strange thing, they still have a problem to deal with. But if governments will be persuaded to introduce some really strict regulations that would kill the whole idea. Or you don’t think that this perspective is possible?

GP: Frankly speaking, I am moved by the idea of anarchy inspired by a concept of free will. Although, as a guy who has studied at Humboldt University in Berlin and lived in Germany for a long time, I like everything being structured, planned and regulated. So, to my mind, there has to be decent regulation, because we cannot live in a society where business grows without any rules or laws.

My favorite concepts include balance and opportunities. As does, for example, the idea of American capitalism where a state gives you the rules and if you abide by them, everything is fine. It may not be the best example in the cryptocurrency sphere, but Switzerland, Japan or Singapore, maybe Gibraltar, Malta and Lichtenstein are good examples of countries for doing crypto business.

I think there is a high potential in Sweden. Sweden is moving towards crypto sphere at a fast pace- they are studying the experience of other governments. There is a nice guy from Swedish Parliament named Mathias Sundin who is moving the crypto idea and Blockchain business forward in a progressive manner. Sweden is the next country that young enthusiasts will be doing their crypto business. Mark my words.

CG: Well, we all hope that normal governments will find a way to thread between these two paths very unpleasant for us.

💼 Related Article
Generational Crypto-Investment Gap: Why Warren Buffett Just Doesn’t Get It
🔥 Hot
6 months 2 weeks
256
Generational Crypto-Investment Gap: Why Warren Buffett Just Doesn’t Get It

🤷 Opinions
views
👓 Recommended articles
🤷 Opinions Cyril Gilson

CryptoKitties Co-Founder Benny Giang: Spend a Week Understanding Why Crypto Matters to You

Opinions
How much psychology is involved in the crypto industry? Do ICOs have a future? What’s the next thing?
CryptoKitties Co-Founder Benny Giang: Spend a Week Understanding Why Crypto Matters to You
Contents

CryptoKitties’ co-founder Benny Giang philosophizes on the kitty’s latest adventures, Vitalik Buterin, cats and wallets, cryptopsychology and incentivizing Blockchain adoption, and revolutionizing ICOs.

Cryptophychology

Cyril Gilson: How much psychology is involved in the crypto industry? I think there is a lot of talk about finance, trading, these kind of things but people underestimate the role of psychology.

Benny Giang: Well really what got me into it was, when I first started to dive deep into Blockchain, it wasn’t necessarily the technical aspects that drew me in, what drew me in was the philosophical approach on why does this matter, why does this technology matter. Then the psychology of it, the whole game theory, incentivizing behavior and trying to solve the classic problems in computer science that have been so difficult to solve, like the Byzantine Fault Tolerance or the general problems.

These things in combination are so interesting to see. I would encourage to listen to a couple of Vitalik’s talks. Vitalik along with a couple other people are really really smart. He is super deep into economics and he is also deep in philosophy and then he talks about the technical aspects.

One of the things I encourage for new people who have no clue what crypto is, is for you to spend the first or second week to try to understand why it matters to you. Why do you care about it? With anything you do in life if you don’t understand why you care about it, then why are you doing it? Besides money. Why is this technology going to change everything?

That took me about two weeks to really just keep asking myself that question and reading more until I found that answer and I was like okay this is the reason why!  

I encourage you to read Naval Ravikant, the founder of Angellist, he has a lot of tweet storms about crypto. Andreas Antonopoulos, he is amazing. He did a talk, and the whole talk wasn’t about Bitcoin it was about why does this matter. It’s about decision making, collective decision making, where a corporation is a group of people making decisions, or back when kings and monarchies when one or two people or family.

Understanding why is so important and then you can dive in the technical aspect. Then you could go to these conferences and network with people. If you don’t then you are coming in for the wrong reasons I think.

💼 Related Article
NBA Superstar Stephen Curry Releases Celebrity CryptoKitties
🔥 Hot
7 months 2 weeks
256
NBA Superstar Stephen Curry Releases Celebrity CryptoKitties

Kitty goes to the market

Cyril Gilson: How are things going with CryptoKitties lately?

Benny Giang: Well we recently just raised 12.6 mln venture funding. We had investors from Silicon Valley and Union Square from New York City. Chris and Fred have been super helpful in really guiding us, we have a bunch of angels as well.

Right now we are focused a lot on growing CryptoKitties to new markets. We are going to be launching the Android version very soon in China. We have been exploring Japan and Korea. We have been talking to lawyers and figuring out the crypto and the gaming laws that exist in those two areas.

But really for CryptoKitties we want to expand this concept of KittyVerse. KittyVerse is third party developers who are building on top of CryptoKitties. So imagine that you buy a CryptoKitty from CryptoKitties ICO, right from the marketplace, and then you can use the same kitty you bought to raise it. You can play a racing game, you can play a battling game, you can put a hat on your cat. And so these experiences are built by third party developers who are part of our community.  We call this the KittyVerse because they play the game as well, they are incentivized to create content and experiences for the kitties. So that’s Kittyverse!

At the core of CryptoKitties is making it easy for people to come in and buy a kitty. Right now if you come into the marketplace there is over 750,000 kitties, so it’s a little bit difficult for you to select the kitty you want or you don’t know which kitty you want to buy.

Imagine Amazon where instead of curating things they suggest you to buy, they had millions of items just displayed in a list and they are like ‘hey go buy it.’ That’s gonna be a huge problem! We are actively solving it on the CryptoKitties side.

On the other side we formed a team to really look at the full UX experience. So that includes everything up until you are interested in CryptoKitties and then you need to buy crypto, you need to buy Ether, and then you need to download metamask to play the game, and then you go to the marketplace. So the team is looking at every single step and seeing what can we do to make it better, make it smoother. What kind of tools can we create to bridge this gap, so the its seamless?

The ideal experience is you have a credit card and you can buy a kitty. But right now you capped your card and you need to buy crypto, then you need to buy a cat. The US is a huge unwrap for us, and we are working on both of these things.

💼 Related Article
Ripple’s David Schwartz: What Bitcoin and Ethereum Should Do to Catch Up With Ripple
🔥 Hot
6 months 3 weeks
256
Ripple’s David Schwartz: What Bitcoin and Ethereum Should Do to Catch Up With Ripple

Not a joke

CG: I was just thinking that you might consider some other project besides CryptoKitties? Because for many people it’s still a joke, for some at least.

BG: Well the funny thing is that CryptoKitties has always been an experiment. We are part of a larger parent company called Axiom Zen based in Vancouver, Canada. Axiom Zen is a five year old company, venture studio, it’s a startup that builds startups. So previous to CryptoKitties, we were building B2B Saas companies. We worked with fortune 500 companies to build ventures and products together, then we took the revenue from these fortune 500 partnerships and then we built our own startups. We spun out two startup companies, and they are both profitable.

Around last summer we started poking around: let’s explore Blockchain, let’s explore what we can do with smart contracts. So we built CryptoKitties and we decided we are not going to do an ICO, because everything last year was the price of Bitcoin, ICOs and the hacks and scams that were happening. That’s really here in Coindesk and Cointelegraph. We were like it just can’t be like this forever, there needs to be more real products that are building their shipping code and building real products. So we didn’t do an ICO, we launched a product, a Blockchain game.

For us it’s always been about education and mainstream adoption. If we can get your mom and dad to think about and get excited about Blockchain and crypto means our mission has gone right. Frankly a lot of people have struggled to explain Bitcoin, Ether, especially smart contracts to your mom and dad or whoever, they just don’t understand or are uninterested.

We had so many emails sent to us like the boyfriend is in crypto, my girlfriend never understands what I do, I tell her about Bitcoin, but she doesn’t care. Then we get an email like I told her about CryptoKitties and she is all like I wanna buy one, and she went through the floor of buying a kitty, and she was like wow now I own this kitty, and she got interested!

For us that’s perfect, that’s what we want. We want a billion people, a billion consumers to be on the Blockchain. We are not targeting a few 100 people who would download a crypto wallet app or a 1,000 people who want to use a fintech investment app. Not everybody in the world are investors, there are more gamers than investors out here.

💼 Related Article
EOS vs. Ethereum - Which Сoin is More Promising?
🔥 Hot
6 months 2 weeks
256
EOS vs. Ethereum - Which Сoin is More Promising?

Beyond ICOs

CG: Last year was a year of hype but now comes some sobriety, ICOs are becoming more like VC investing, those people from VC are getting more like ICOs in a way. So do ICOs have a future?

BG:So ICOs to be clear are an amazing funding mechanism that allowed people from areas in the world that don’t have access to VC funding to get to raise money to build their own businesses. I have heard many stories of people in Singapore, Indonesia or some place in China, they are just not in Silicon Valley where they could walk to the office of a VC firm and ask for money.  So ICOs are a revolutionizing funding for business and companies.

That being said there were so little parameters around ICOs that there were a few bad players that took advantage of ICOs and just ran away and took the money and bought expensive cars. It’s the mentality that kind of was set by some of the early crypto people, where they spent a lot of their money on Lamborghinis. There was at New York Blockchain week, Consensus 2018, they had a boat party and the Aston Martin Giveaway. We look at it as a team and we are like sure those things are really cool but for us if you think that perspective ‘I want to be at a boat party, I want to win a Lambo’ it’s just really toxic kind of behavior.

CG: It doesn’t help with adoption...

BG: Exactly it doesn’t help with adoption. Then you ask yourself a great funding ICO mechanism to help business around the world to acquire capital, to build business, now people are just taking the money and running. We see people facing the consequences, like those guys in Miami who ran away with $12 mln and then the FCC came after them and now they are in jail. Those are some examples of like you taking advantage of many many many people who invested in your project and ran away with it. You certainly can’t get away with it.

So from my opinion regulation is good for ICOs. There needs to be more proactive regulation that allow for ICOs to happen, but happen in a way where it’s more safe for the normal person who wants to buy into an ICO.

The second thing is, Vitalik Buterin had this concept of a decentralized autonomous ICO, where the community that bought the tokens of your ICO, that they get to control the percentage that is basically given to the team. They are like this month we wanna give five percent of this money to the field of development and the community controls it. Now that’s just one example of kind of taking the ICOs and raising money but then having responsibility in place where people can’t run just run away very easily.

💼 Related Article
Fitness Monetized: Past ICO Review
🔥 Hot
6 months 2 weeks
256
Fitness Monetized: Past ICO Review

The next thing

CG: The next thing is another way of tokenization...what do you think?

BG: There are people still building protocols who want to raise money. There are people who are building dapps on protocols who want to have tokens. For us it’s the CryptoKitties they are non-fungible tokens, they are ERC7-21. People are thinking CryptoKitties is a digital asset, it’s a gaming item, but its a digital asset so a lot of people are exploring this space.

Now there is also this hybrid. I have seen these people basically using a hybrid approach of I have a Van Gogh painting and I want to tokenize it, so then multiple people can buy parts of the Van Gogh like a token, and then we lock up the Van Gogh somewhere where nobody or one person or multiple people have access. This kind of hybrid approach of a physical item being tokenized is something that is challenging. You can say the same for real estate or registering your land.

These are physical things that have existing systems in place that people now want to tokenize, but it’s going to take some time to do that. We picked a digital world where you can create a digital item and then you can tokenize it. Everything is digital because in the future there is going to be a combination of physical and digital, as the Internet and the Blockchain get bigger, they allow for digital assets to exist.

Soon enough it will be like Ready Player One or West World where people can live in two worlds and own things in two worlds. It can be just as real as the physical world.

💼 Related Article
Fitness Monetized: Past ICO Review
🔥 Hot
6 months 2 weeks
256
Fitness Monetized: Past ICO Review

Kitty and the wallet

CG: So you are interested in arts?

BG: Right now we are focused in three areas. It’s the crypto area, the gaming area and the arts area. We are going to be in an art exhibit in Germany, I forgot the city, it’s a very big exhibit for contemporary art. In September we will be back in Berlin at the Schlinker Pavilion, and we will be doing an exhibit with a very famous contemporary artist. That is to say that this is not only a crypto project, it’s a gaming project and its an art project. That is just building the dialog just think of this as a digital asset, it’s not just one thing.

CG: Is the coming arts project going to be digital art as well?

BG: It’s still early to tell, I think it will be a combination of physical and hardware. Two weeks ago we were in NY and we had an art auction for the Ethereal Summit. We had a Christie’s auctioneer there and we sold a kitty for $140,000. That all went to charity to help artists to fund art projects. It’s not the first time we had Kitties raise lots of money to help charities.

In the beginning, Nick Johnson from the Ethereum Foundation sold one of his Buck hats for $90,000 and he bought a bunch of cows for farms in Africa. A 10-year old girl Bella raised $15,000 and gave it all to Seattle Children’s Hospital in the US. So people are using these Kitties to really solve big problems and help other people and teach other people. It’s more than just the image, it has something deeper to that.

For us the whole art angle, digital asset is very interesting and you can have a hardware wallet. Right now you think of the hardware wallet it looks like a usb stick, now they work but they don’t look that cool. But imagine a Tamagochi, which is a hardware wallet, and you can put your kitty in it. Imagine all the people playing our game, but the normal consumers- maybe your children, will want to carry it around. Its my kitty I own it and it’s in a Tamagochi device. They would want to carry the ledger around then right?

💼 Related Article
How to Buy Bitcoin Anonymously, Without ID and Verification
🔥 Hot
6 months 2 weeks
256
How to Buy Bitcoin Anonymously, Without ID and Verification

User experience

CG: How secure is it?

BG: We haven’t built it yet. It’s just an idea. If someone robs you they steal it. If someone robs your ledger they also steal it too, right? When you bring it to the physical world whether its a software or a hardware wallet you always run that risk. Losing your phone, you lose everything right? People have lost millions of dollars.

That actually brings us to the point that user experience for a crypto is really difficult as I mentioned. This one area specifically about decentralized wallets and key management, people can’t even remember their own passwords. People use the same password all the time, so if you tell someone you shouldn’t use the same password, you shake your head ‘yeah that’s true’ but then you still use the same password. Then you go tell a normal person, hey remember your safeword and your private key, and make sure you don’t forget it or you lose all your money. That’s just too much to ask from a normal person.

💼 Related Article
5 Ways to Earn Bitcoin Without Mining & Investing
🔥 Hot
6 months 2 weeks
256
5 Ways to Earn Bitcoin Without Mining & Investing

🤷 Opinions
views
👓 Recommended articles