Tag: Bitcoin

Are celebrity brand ambassadors worth it?

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, Fintech, ICO, Initial Coin OfferingsLeave a comment

ico

Generally, having a celebrity endorse your product is a ‘good thing’! Advertisers will give their right arms for a famous face to front their product. In 2017, Paris Hilton, Floyd Mayweather, Ghostface Killah (Wu Tang Clan) and Jamie Foxx were among the celebrities who were most vocal about their support for crypto and ICOs and they all used their social media platforms to let their followers know what they’re doing in the crypto world.

One thing that ICOs who use celebrity endorsements need to note is that if celebrities don’t disclose if they are benefiting from making an endorsement, the Securities and Exchange Commission in the USA may view it as illegal.

And that is what has happened to Bitcoiin2Gen (B2G) ICO, which has been using Steven Seagal to endorse its offering. As reported in Cointelegraph and many other outlets, New Jersey Bureau of Securities (BoS) regulators issued a ‘cease and desist’ order on 7th March and have accused the team behind the ICO of “fraudulently offering unregistered securities in violation of the Securities Law.”

Clearly the B2G team didn’t get the memo from the SEC about the dangers of celebrity endorsements!

The BoS order focused on what it said was “the secretive nature” of Steven Seagal’s involvement with the business and its ICO. A statement from the regulators said:

“The Bitcoin Websites do not disclose what expertise, if any, Steven Seagal has to ensure that the Bitcoiin investments are appropriate and in compliance with federal and state securities laws.”  And added, “Additionally, there are no disclosures as to the nature, scope, and amount of compensation paid by Bitcoiin in exchange for Steven Seagal’s promotion of the Bitcoiin investments.”

Perhaps Seagal was not the best choice of celebrity for a blockchain business, as he is better known as an actor specialising in martial arts, but then none of the other celebrities backing crypto in 2017 are immediately linked to Bitcoin or the blockchain either.

But, it is easy to see where the problem lies from a regulatory perspective. These celebrities have an enormous power over their fans, so when Steven Seagal tweeted on March 6th that B2G would shortly be listed on major exchanges, his fans will take his word as gospel. If he says, “invest in this ICO because I have” in so many words, then that is what his followers will do, and many of them will not be savvy investors who understand the risks and rewards of crypto assets. This is something that the SEC is well aware of, and now it is acting on its previous warnings.

So, whilst a celebrity may do wonders for your alcohol brand or similar consumer item, they are not quite so desirable when it comes to promoting your ICO – unless every aspect of their involvement is completely transparent and regulators can see that they are active in and knowledgeable about the blockchain and cryptocurrency.

 

 

 

 

Cybercriminals hijack major cryptocurrencies

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

Cyber Stock

There is a common misconception in the mainstream media that cryptocurrency, especially Bitcoin, is primarily used by criminals as a means of payment. However, the real scenario is that cryptocurrency is a target for criminal hackers. As a result, they have unwittingly created a new market for cyber security firms.

Since cryptcurrencies emerged almost a decade ago, about $1.2 billion of Bitcoin and Ether have been stolen by hackers, according to Lex Sokolin, global director of fintech strategy at Autonomous Research LLP. And as crypto values keep rising, it is more likely that crypto hacking is an ‘industry’ worth $200 million per annum.

It also costs governments and companies a substantial amount in lost revenues and illegal transactions. Susan Eustis, CEO at WinterGreen Research estimates that this figure is around $11.3 billion and she points out that the blockchain ecosystem is also at risk. Eustis also believes that his criminal activity could skyrocket as more investors and businesses enter the cryptocurrency market, especially if they do so without adequate protection.

Setting up for super security

There is a perception that the blockchain is innately secure because its records are shared and hard to alter. But, blockchain security company Comae Technologies says it is no safer than any other form of software. Indeed, its experts argue that because the blockchain is still in its infancy, it may be even less secure than software that has existed for some time. And when you factor in the issue of there being so many cryptocurrencies, each with its own particular bugs, it is a challenge to make them all secure. The answer to this will be to whittle the sector down to a few key players it seems.

Andras Cser at Forrester Research adds:” So while hacking a blockchain may be harder than breaking into a retailer’s database, the rewards are greater and you have much more information you can steal.”

A business opportunity

The situation is good news for cyber security firms. Quantstamp plans to release an automated tool that searches smart contracts for bugs, and established security firms such as McAfee Inc. may also repurpose their products for the blockchain community.

The market for software, services and hardware to secure blockchain activity was $259 million in 2017 and WinterGreen estimates it will grow to $355 billion as the digital economy expands and banks and financial institutions adopt it.  No doubt they will be keeping those funds secure.

 

From strip clubs to FOMO: has the blockchain become too exciting?

On By mehranmuslimiblogIn Bitcoin, Blockchain, FintechLeave a comment

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It is probably fair to say that if you were thinking of attending the North American Bitcoin Conference you’d probably envisage being seated in one of those enormous, and typically anonymous looking conference centres. But that wasn’t the case with this particular meeting of crypto enthusiasts and experts, because the organisers of this event chose instead to host it at one of the top strip clubs in Miami.

The invite said: “Join us at E11even for some networking and R&R. Or dancing.” Surely it must have looked like a scene from “The Big Bang Theory,” with several Sheldon-like Bitcoiners awkwardly busting some moves. At least, if the perception that Bitcoin is the preserve of ‘nerds & geeks’, that is the kind of scene that comes to mind.

The crypto crowd has changed

But what this event and its chosen location signalled is this; that crypto is no longer just for those nerds who went to Stanford or MIT and can write code that the average person needs a new form of the Rosetta Stone to decipher. There is a new flock of investors who want to be a part of the crypto scene and to hell with the coding. As long as someone understands it, we don’t all need to. Nothing wrong with that: after all, since the idea of investing in other people’s enterprises began, investors haven’t necessarily understood all the nuts and bolts of how a product works; they see the big picture and the overall potential, and that is what propels them into putting money into it.

It has changed the ‘cryptosphere’ from one populated by cyberpunks and anarcho-techies, to one where those who want to make money fast, buy Lamborghinis and hold conferences in strip clubs dominate. Ariel Deschapell writing in Coindesk calls it: “this newer, shinier, get-rich-quick crypto culture.”

And so, the conversation about crypto drifted away from a serious, adult discussion about real use cases for the blockchain, how to overcome its limitations and identifying the key challenges. Instead, the mainstream media, and crypto community publications to some extent, ran the more exciting stories about the newly minted blockchain millionaires and billionaires; the luxury properties being bought for Bitcoin and of course, the inevitable scare stories about the perils of putting your money into crypto.

And along came FOMO

And then there was FOMO. People were terrified of missing out on the “next Bitcoin.” With Bitcoin’s price soaring at the end of 2017, new arrivals at the party were seeking new coins that could be bought for cents, just like Bitcoin at its inception. The problem with this was that the FOMO encouraged more than just a few bad actors to get involved, selling crypto tokens on the back of ICOs that had no sound technological basis. The problem of course was one of ignorance about the blockcahin. Having skipped the basic ‘Blockchain 101’, it looked like every new blockchain-based business had the potential to be the next Bitcoin. Only the experienced investors with technological know-how knew which projects were likely to have longevity and technological integrity.

The speed at which the new crypto enthusiasts rushed headlong into putting money into fraudulent ICOs stunned seasoned blockchain investors. The flow of money into them was like a torrential river that threatened to burst its banks. With the result that the ‘real banks’ started to clamp down on people using credit cards to purchase crypto, with a kind of “it’s for your own good” message.

Deschappell provided a neat illustration of the recklessness involved, saying: “Even more alarming than a simple lack of education or due diligence, however, is the fact that perhaps many new cryptocurrency investors don’t actually care,”  and illustrated the point with the example of Ponzicoin, a self proclaimed scam set up as a joke raised $25,000 in a few hours, proving that people really didn’t care, even when it actually said “this is a scam.

It’s time to learn about the blockchain

The upshot of all this is something pretty critical to the continued success of the blockchain: it is not a shiny, new exciting plaything and if you want to invest in it, do it because you understand the potential of a specific project. No cryptocurrency is a magic bean that will grow you a beanstalk or show you the way to the pot of gold at the end of the rainbow, yet, that is what we have been witnessing. It is not about hosting parties at strip clubs in the Magic City, nor will everyone have a Walt Disney ending with their crypto investments.

It is time for all of us to learn more about blockchain technology, to read the whitepapers of ICOs and do proper due diligence. In the end, that will play an integral role in the evolution of the blockchain. It might not be quite as sexy approach as the ‘get rich quick’ one, but it’s the one that will ensure the blockchain’s survival.

 

 

 

Challenge to Ethereum smart contracts

On By mehranmuslimiblogIn Bitcoin, Ethereum, Smart ContractsLeave a comment

It had to happen sooner or later; a new programming language for smart contracts has emerged to challenge Ethereum’s dominance in the market.

Ethereum-city

Ivy, the smart contract programming language developed by CHAIN, which is a blockchain development platform, will write smart contracts for Bitcoin’s blockchain. This might cause some upset for Ethereum, which is the platform everyone associates with smart contracts and the main system for ICOs, where it has something of a market monopoly.

CHAIN announced Ivy this week and explained that it has always been possible to write smart contracts on the Bitcoin blockchain, but that up until the arricval of Ivy, the Bitcoin Script was low level and had limited functionality. In its announcement, CHAIN said: “Bitcoin script development is considered somewhat esoteric,” and whilst some wallets, exchanges and payment platforms have used it successfully, it just wasn’t fit for purpose when it came to smart contracts.

Ivy by contrast is a much higher level language that make sit easier to write contracts for the Bitcoin network. CHAIN described it thus: “Ivy helps you write custom, SegWit-compatible Bitcoin addresses that enforce arbitrary combinations of conditions supported by the Bitcoin protocol including signature checks, hash commitments and timelocks.”

However, even Bitcoin developers are not convinced that this presents a threat to Ethereum. Jimmy Song told Cointelegraph: “Ivy makes SCRIPT easier to handle. It doesn’t change Bitcoin fundamentally, just makes coding it easier. ETH is Turing complete, which BTC cannot have without some sort of soft fork at a minimum. I don’t see the “smart contracting” ability of ETH as a “feature”, but more as a vulnerability. The attack surface on the ETH smart contracting platform is much greater. The fundamentals haven’t changed, this is more like a nice tool for developers.”

This is an interesting perspective, because it suggests that the Bitcoin blockchain still has a long way to go to catch up with Ethereum, However, there are those who are feeling more positive about Ivy, such as Matej Michalko, the CEO of Decent commented in Cointelegraph: “Ivy is an excellent example of the multifaceted development of blockchain products. Cross chain referencing is proliferating and it is on its way to dominate the ecosystem. Bitcoin can now be on par with Ethereum as a great smart contracts prototyping tool for a full range of Blockchain applications. Both platforms, however, remain fundamentally different in their architectures and market adoption. It remains to be seen what blockchain use cases and platforms are going to be adopted by masses. Scalability will be one of the decisive factors. 2018 is going to be a Blockchain year.”

Who will win the battle of the smart contracts? We will have to wait and see.