‘œThe business model for surveillance, which can be used for ill, is advertising.’
‘” Nathaniel Whittemore
Interview location: Skype
Interview date: Wednesday 28th Nov, 2018
Company: NLW & CO
Role: Lead
The crypto industry is blessed with many smart thinkers and content producers. Across Twitter, Medium, news sites and blogs there is a regular supply of thought pieces and analysis where contributors speculate on the future of the industry.
There are often opposing views which can stretch to disagreements and impassioned debates. Keeping up with all this content can be difficult, which is why Nathaniel Whittemore’s Long Reads Sunday has become an essential follow for anyone in the industry.
Nathaniel carefully curates all the news, articles and discussions into a super thread of threads on Twitter where he carefully knits together the narratives from the week into a coherent story.
Nathaniel came on the podcast this week to discuss Long Reads Sunday and other key narratives, from the problems with crypto marketing to how technology is advancing faster than society can adapt.
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Dan Larimer, founder of the EOS blockchain network and CTO of Block. One, has recently failed in his new project dubbed MonerEOS. On Wednesday, November 28, Larimer made an announcement about his non-EOS project through his handle. There he affirmed that he is working on a completely new cryptocurrency project.
Popularly known as BM in the developer circle, Larimer gave little information about the project and plans further for a “hypothetical token”. He said that the token would be “immutable, non-programmable, and limited to a currency role.”
Larimer is also the co-founder of popular projects like DAO BitShares and Steemit. However, he had his own reasons to leave both these project. He left BitShares because the community didn’t want to proceed further with his vision. He left Steemit because there intractable problems there. Larimer said: “… starting over with new blockchains is not something I do lightly. I do it only when there are intractable problems with the underlying foundation.”
Stumbling on the MonerEOS Project
Larimer says that this idea of MonerEOS token clicked him while working on EOS’ scalability and security solutions.
“In the process of working on EOSIO security and scalability I stumbled upon a new set of tradoffs for a potential crypto token and I have merely been exploring whether there is a market for those tradeoffs. EOSIO is the future of blockchain and each day our team at block one is making it faster, more secure, more scalable, and more flexible,” Larimer wrote on his Telegram channel.
In another message, Larimer further wrote that this new hypothetical token would be non-programmable and immutable. Moreover, it would also limit itself to the role of cryptocurrency. He added that the token in no way would compromise larger use cases for the EOS applications.
In another Telegram on Thursday, Larmer gives the list of attributes for the MonerEOS token. Below are the 13 attributes which he mentions.
1. Complete privacy. No risk of future disclosure
2. User-created tokens
3. Potential for gambling apps
4. 2 trx per second per account
5. No staking or voting
6. 200ms confirmation and irreversible
7. Unknowable exact supply, estimates only.
8. Generally deflationary.
9. Require initial trusted setup
10. Not possible to detect breach in security until new supply enters market
11. Security would likely take nation state level resources to crack
12. No new crypto math
13. Tech foundation already used by governments for most secure infrastructure
He also wrote that “Crypto people will hate it”.
Recent Controversies Surrounding EOS
EOS has recently received a huge criticism over its governance model. Moreover, the network fueled further controversy recently when reversed previously-confirmed transactions. Last month in October, Larimer also noted that was not properly focused on providing decentralization.
Earlier this month, a questioned whether EOS was really a blockchain or just a distributed database? The report authors revealed several aspects of the EOS protocol, and comes to the conclusion that it suffers from serious security breaches as well as network performance that is significantly lower than what was claimed.
It further notes:
“EOS is not a blockchain, rather a distributed homogeneous database management system, a clear distinction in that their transactions are not cryptographically validated.”
bitcoin investors are eagerly waiting for the arrival of derivative products like bitcoin ETF. The arrival of bitcoin ETF is likely to flood the crypto market with institutional money, as claimed by some experts. However, the U.S. Securities and Exchange Commission has remained reluctant to approving ETF products. The agency explains it denial citing several cases of market manipulations and the exchanges’ inability to deal with it.
Speaking at the Consensus: Invest conference earlier this week, SEC chairman Jay Clayton that crypto exchanges have the lack of proper market surveillance tools. Clayton also referred to stock exchange like Nasdaq and NYSE having proper surveillance tools preventing manipulative activities.
“When you see an asset trade on [the] Nasdaq or NYSE, there’s a great deal of surveillance preventing you and me from teaming up and pretending we’re decentralized. Those sort of safeguards do not exist in a lot of markets where digital currencies trade,” he said.
Will VanEck bitcoin ETF Address Clayton’s Concerns?
In July 2018, CBOE for bitcoin ETF proposal pitched by the VanEck Solidx bitcoin Trust (“the Trust”). The CBOE bitcoin ETF is physically-backed by Bitcoins which will be held by the Trust. However, the VanEck bitcoin ETF is facing repetitive delays and the final decision is likely to arrive by February 2019.
While the SEC has turned-down several bitcoin ETF proposals this year, the VanEck bitcoin ETF is different. The VanEck ETF filing shows that it will allow over-the-counter (OTC) trades for accredited investors in the traditional financial market. This can certainly fall in the advantage of VanEck.
Gabor Gurbacs, a digital asset director at VanEck says that the OTC trading desks are liquid, robust, and better regulated as compared to traditional crypto exchanges. Gurbacs believes that this could probably help to address SEC’s concerns.
“The OTC trading desks are more robust, efficient and liquid, as well as better regulated, than most of the crypto trading platforms. They are an important and often unsung heroes in institutional crypto space,” Gurbacs said.
Gurbacs notes that these are his personal views and not of VanEck.
“I believe that the comments raised on pricing, surveillance and custody all have appropriate answers. Digital asset market structure is developing rapidly and towards the right direction,” he further added.
Last week itself, VanEck subsidiary MV Index Solutions (MVIS) the launch of bitcoin OTC Index. This will further help to strengthen VanEck probability of the bitcoin ETF approval by the SEC. VanEck hopes that deriving price data from OTC desks will help to alleviate market manipulation concerns.
“We are excited to be the first provider to launch a bitcoin index based on the pricing feed of OTC trading desks,” said Thomas Kettner, Managing Director at MV Index Solutions. “This enables clients who trade over the counter to use this index as a reliable benchmark for their trades or potential investment products.”
A court in Switzerland has ordered the closure of bitcoin mining startup Envion AG over concerns of poor corporate governance. The company raised $100 million in an initial coin offering (ICO) in January, but a succession of boardroom wrangles have led to a breakdown in its corporate structure, bringing operations to a halt.
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Founding Partners Sue Each Other
Founding partners Michael Luckow and Matthias Woestmann have repeatedly gone to court to sue each other over allegations of subterfuge, which supposedly took place at the time of the ICO or immediately after, to a Handelsblatt Global report on Nov. 28.
Among other things, Woestmann, who has since resigned as board chairman, “accused Luckow of manufacturing more coins than agreed on, so he engineered a capital increase that diluted Luckow’s share,” the paper alleged.
In the capital increase, Woestmann allegedly issued actual shares, rather than tokens, effectively diluting the 81 percent stake of Luckow and his partners to 31 percent.
Now, the cantonal court in Zug — Switzerland’s cryptocurrency haven — has ordered Envion to shut down, citing its lack of a functional board of directors and “the complete lack of any auditing function.” The company is to be liquidated, the court ruled.
The article quoted a Zurich-based lawyer, Urs Schenker, as saying that Envion would likely go under. Schenker said liquidation was “unavoidable” because the financial regulator appeared to have reached a decision to investigate the cryptocurrency miner.
The Lure of Riches
raised about $100 million in an ICO that attracted 30,000 investors between December 2017 and January 2018, when the cryptocurrency gold rush was at its peak. Investors paid $1 for each token in the offer, lured by the promise of over 160 percent growth and Envion’s low-cost approach to mining, using renewable energy. Today, the token is worth just $0.05, say.
However, relations between the founders went sour after the ICO, with accusations of cheating, causing operations at the company to come to a standstill. Handelsblatt Global reports that both Luckow and Woestmann are now under investigation by regulators in Switzerland and Germany.
It turned out that Envion’s finances and operations were being run from Berlin by Luckow’s company, Trado, even though the startup was registered in Switzerland. “Woestmann continues to blame Luckow, accusing him of not providing information about the ICO. Luckow says Woestmann always planned to push the firm into liquidation, but he will fight it and believes the original concept can still work,” the article said.
The Zug court ruling is not final, as either party can still appeal the decision. In the meantime, all that investors can do is wait and hope for the best, as failed ICOs have already cost investors billions of dollars in losses throughout the world.
What do you think about the counter lawsuits at Envion? Let us know in the comments section below.
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