All posts in “Bitcoin”

Inside the Vegas nightclub that launched its own cryptocurrency

It’s 11:15 p.m. on a Friday night and a man in a white button-down shirt named Joey just ordered me a shot of Fireball. It’s a little hard to hear him over the music blasting from the other side of the velvet ropes, but the club’s director of services leans in close to make sure I can hear him. 

“Excellence and hospitality in the crypto world,” Joey says in response to my request that he describe just what, exactly, is going on here. 

I’m sitting on a spacious couch in a private club, inside of another nightclub, inside of a casino, and we’re discussing Las Vegas’s first cryptocurrency nightclub: MORE Las Vegas. Launched in April by Peter Klamka — a man known for, among other things, his involvement with The Legends Room gentlemen’s club which allowed patrons to tip performers in bitcoin — the nightclub comes with all the trappings of a typical VIP Vegas destination. There’s the $250,000 bottles of champagne, high-heeled cocktail waitresses, and view of the Bellagio fountains that’s to die for. 

Unlike every other club in Las Vegas, however, this one has its own cryptocurrency — a currency you need to HODL to even get through the front door. 

Party through the Crypto Winter

It has not been a good year for the price of cryptocurrency. 

Bitcoin and ether are way down from their late 2017 and early 2018 highs, and most altcoins have fared significantly worse. Meanwhile, in the background, ICOs are revealed as scams at a disturbingly regular clip, and the SEC keeps dragging its heels on a proposed bitcoin ETF

The much-maligned talk of Lambos has shifted to progressively less convincing explanations as to why all of this is actually good for bitcoin. 

Still, some people are getting — or, if they sold at the right time, remain — undeniably rich. It is often that crew, the group who either through dumb luck or skill managed to retain its newfound wealth while the market bled, who feels the most committed to its bitcoin maximalist or Ethereum-world vision. 

Their livelihood depends on it, after all. And they like to party with each other. 

MORE Coin

It was with all this in mind that I accepted an invitation to check out MORE Las Vegas. I’d be in Vegas anyway for DEF CON, and this seemed like a great opportunity to see what a city that practically defines opulence does when it sticks its toes into the world of cryptocurrency. 

Well, what is does is MORE Las Vegas — a club with its own token that doubles as a de facto membership fee. Owning 5,000 MORE Coins or more makes you a MORE Las Vegas member. 

“[MORE Coin is] the intersection of nightlife and crypto demonstrating a real-world application of blockchain tech,” Klamka told me later that night.  

The coin trades on the Bittrex exchange, and was created at the behest of Klamka. At the time of this writing, the ERC-20 token built on the Ethereum blockchain is listed at just over 15 cents with a 24-hour trading volume of $201. 

For coin holders only.

For coin holders only.

Image: more las vegas

MORE Las Vegas is essentially a special VIP area inside of the Hyde nightclub, which itself is located inside of the Bellagio hotel and casino. To get in, you have to first reach out to Joey. This both gives you an opportunity to let the club know you’re coming, and to prove your stake in the coin.

The floor staff is trained to accept cryptocurrency as payment, though interestingly all the prices on the bottle-service menu are listed in USD. And the staff isn’t picky about how you pay. Want to send them $100,000 worth of bitcoin for that 15-liter bottle of Ace of Spades champagne? They’re happy to take it. 

Want to pay in MORE Coin? Well, that’s fine too.

According to a MORE Las Vegas spokesperson, the club has around 1,500 members — though, she emphasized, as the only thing that makes you a member is coin ownership, the number changes all the time.  

The place was about a third full when I arrived at 11 p.m. on Friday, which, in all fairness, is well before a Las Vegas club gets going. A look around at the clientele revealed what appeared to be typical Vegas nightclub goers: They were well-dressed and young with money to spend. 

Essentially, just like every other place on the Strip. Had crypto finally hit mainstream adoption?

But that changed shortly after we went outside to the club’s stunning private patio. Directly at ground level, it overlooked the Bellagio fountains and was clearly a big selling point for Klamka. Shortly after our interview concluded, Klamka left the patio to soon return with a group of young men that much more closely aligned with the stereotype of someone all in on crypto. 

One of the group, covered in various crypto tattoos, had a scrolling LED hat that brightly read “BITCOIN.” Below his shorts, high bitcoin-themed socks complimented some form of fuzzy slipper. 

The club had a strict dress code, and while it wasn’t clear if this new arrival’s garb fell within it, that clearly hadn’t stopped him from getting in. 

We struck up a conversation, and soon realized we were both in town for the DEF CON hacking convention. When I asked him if he was worried that his tattoos might make him a target for hackers, he shrugged off the possibility. 

He kept most of his crypto in cold storage, he assured me. His blinding hat made conversation difficult. 

When his friends settled the bill later in the night, they appeared to pay with a credit card. 

Big Plans

In many ways, MORE Las Vegas is just another luxury nightclub in a city full of them. But, in the world of cryptocurrency, it is possibly something more. It’s an actual brick-and-mortar business, after all, in an industry that is flush with grand ideas but lacking in execution.  

Klamka spoke of plans to open additional locations in Miami and elsewhere, and described a business model where people buy and sell club memberships on the blockchain. This was a real-world application, albeit an extremely boozy one, of an ERC-20 token. 

It may not have been what Vitalik Buterin had in mind, but I can’t imagine that would bother Klamka too much. 

After all, he’s got a business to run and a coin to promote — and you’d better believe he’s HODLing. 

Https%3a%2f%2fvdist.aws.mashable.com%2fcms%2f2018%2f1%2f02901cd0 ebe1 8e37%2fthumb%2f00001

Cryptocoins are worth less than $200 billion for the first time since 2017

In May 2017, I’ve called some experts and asked them “Why are Bitcoin and Ethereum growing so fast?” This was after an intense period of growth for both popular cryptocurrencies, especially Ethereum, which was up 1,400% in three months. The market cap of all cryptocurrencies put together at the time seemed unreal: 80 billion dollars. Then — and throughout 2017 — the experts I spoke to invariably advised caution, saying the prices might have risen too high, too fast. 

But the prices kept rising. 

Throughout 2017, crypto prices continued to rise. At one point the crypto market cap was over $800 billion, and one Bitcoin was worth nearly twenty thousand dollars. 

In January this year, the trend reversed. The prices started falling, and they kept at it. Now, it feels like we’ve reached full circle. The collective market cap of all cryptocurrencies is at $191 billion — the first time it went below $200 billion since Nov. 2017. 

The price action on the cryptocurrency market in the last couple of days can easily be described as a bloodbath. Bitcoin is currently trading at $6,007, down 14.42% in the last week. Ethereum is at $264, down a whopping 35.28% in a week. Other major cryptocurrencies, such as Ripple, Bitcoin Cash and EOS, are down double digits as well. 

Not looking very good today, I'm afraid.

Not looking very good today, I’m afraid.

There’s no clear trigger for this price decline, at least not in the news. The U.S. Securities and Exchange Commission needs to make its mind up about a few proposed Bitcoin Exchange Traded Funds (ETFs) but the fact that it’s taking a little longer cannot be the sole reason behind the extremely negative sentiment of the market.

Charles Hayter, the CEO of CryptoCompare, told me via email that SEC’s decision to decline one Bitcoin ETF has “snowballed negative investor sentiment.” 

“It has to be remembered that Bitcoin and its ilk are opening up a new arena of finance. The hope and speculation that gripped the market last year has been eroded in the last few months,” he said. 

The price drop of ether, the currency of Ethereum, is especially interesting. Ethereum has been the platform of choice to kickstart blockchain projects via initial coin offerings (ICOs) in the past year, and thousands of projects managed to raise millions of dollars this way. 

Now, it’s in a bit of a death spiral. According to data collected by research company Santiment, which tracks how ICOs handle their ether, a large number of startups that raised money in ether is likely selling it for dollars and euros, and fast. This drives the price down, but since the price of tokens built on the Ethereum platform typically follows the price of ether, the market capitalizations of those projects are going down even faster. 

In a bizarre twist, numerous ICO-funded startups now have market caps that are significantly lower than the amount of money they raised in ICO. Crypto mining startup Envion, for example, raised $100 million dollars worth of ether in January, but all of its tokens put together are currently worth below $7 million. 

When will the bleeding stop? It may happen when cryptocurrencies finally reach the mainstream — whatever that means. 

“Under the hood, a lot of work has been moving ahead to form the routes to incumbent institutions and to provide them with tools, mechanisms and assurances for entering the crypto space,” said Hayter. “It’s only a matter of time before the cryptosphere becomes a part of the mainstream but it needs to do a lot of growing up in the process.”

The sentiment is echoed by many who are actively building things in the space. Don’t look at the price, they say, look at the stuff that we’re working on. But that’s easier said than done.

Even in this carnage, there have been experts who said that a big price cryptocurrency price rise is still possible as early as this year. Arthur Hayes, co-founder and CEO of cryptocurrency exchange Bitmex, said in July that Bitcoin needs to go down before it goes up, and he was definitely right about that. He also said that Bitcoin might still rally to $50,000 by year’s end. 

Note, however, that very few people, including experts, were able to accurately predict how high Bitcoin and Ethereum will go in 2017. It’s quite possible that they won’t be able to predict how low they will go, either.  

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

Https%3a%2f%2fblueprint api production.s3.amazonaws.com%2fuploads%2fvideo uploaders%2fdistribution thumb%2fimage%2f85075%2fabccb23e dace 4f3b a350 3066c988a87a

How cryptocurrency brings oppression and hope to Venezuela

Daily life in Venezuela begins and ends with one question: What is my money worth today?

Venezuela has the world’s worst inflation rate at more than 40,000 percent annually and rising, according to John’s Hopkins University. The country’s almost worthless bolivar currency is breaking deli scales and credit card readers as the more than 30 million people of Venezuela struggle to buy basic necessities in a starving economy. Citizens are trapped in an ever-worsening cycle of stagnant income and empty store shelves, their money worth less each day. All the while, the authoritarian government of President Nicolás Maduro maintains a tight grip on power through propaganda, strongman tactics, and increasingly desperate economic ploys.

Venezuela’s economic crisis has triggered mass immigration to neighboring Colombia and other nearby countries. For those still living under the Maduro regime, often the only way to get by is to find creative means to skirt the government’s strict economic policies, which selectively control the country’s food supply for political ends.

Many Venezuelans make ends with money sent by family and friends from abroad and by trading for goods and US dollars on the country’s widespread black market. But they—and the Maduro government—are also turning to cryptocurrency as a potential solution.

A host of practical challenges hinder widespread use of Bitcoin and other cryptocurrencies in Venezuela in lieu of paper currency. But over the past few years, many Venezuelans have embraced the decentralized, censorship-resistant technology as a means of transferring and storing money without being slapped with hefty international transaction fees. The distributed nature of blockchain makes it nearly impossible for governments to alter transaction data or control the network, as long as that network remains decentralized.

Beyond the many cryptocurrency exchanges active in the country, there are also startups like Send. The Send team, including 60 Send ambassadors on the ground in Venezuela, is on a grassroots mission to create a blockchain-based digital money network where users send, store, pay, and exchange bolivars and dollars without volatility risk using Send’s SDT tokens.

“If you see money as a human right, you need to remove the control. You need to remove the high costs. You need to allow people to move their money to pay for goods and medicines,” said Send CEO Camilo Jimenez. “That’s the way that [Send] sees money in Venezuela.”

The Maduro regime has pinned its economic hopes on the Petro coin, a nationalized cryptocurrency ostensibly tied to the price of an oil barrel. The technology behind the Petro is ambiguous at best, and an outright scam at worst: a cash grab to evade international sanctions and raise much needed capital. The Petro offers no material benefit to the Venezuelan people, who have no way to buy tokens.

The government has also begun a broad crackdown on Venezuela’s cryptocurrency market, detaining users and shutting down exchanges, while users bypass website blocks using virtual private networks (VPNs). Cryptocurrencies pose a direct threat to the government’s control over the hyperinflated economy. At the same time, they serve as a means of crowdfunding its continued oppression of the Venezuelan people.

We spoke to blockchain and crypto companies, tech and economic experts, and citizens both inside and outside the country about the stark reality of daily life in Venezuela. As hyperinflation worsens and the economy continues to crumble, Venezuela is a microcosm of the best and worst potential of cryptocurrency technology: as a tool for enabling authoritarian oppression, and a beacon of hope for the Venezuelan people to escape it.

Hyperinflation and State Control

Inflation in Venezuela is nothing new, but in 2018, hyperinflation (when prices rise by 50 percent or more per month and currency begins to become worthless) has escalated to staggering proportions.

Bloomberg’s Cafe Con Leche Index tracks the fluctuating price of a cup of coffee at a bakery in the capital of Caracas. In August 2016, a coffee cost 450 bolivars. By October 2017, the price was 4,500 bolivars. This year alone, the price rose from 20,000 bolivars in January to 1.4 million bolivars in July. Inflation could reach one million percent by year’s end, according to the International Monetary Fund (IMF), which compares hyperinflation in Venezuela to that of the Weimar Republic in Germany following WWI.

The Maduro government is combating hyperinflation and poverty with measures such as stricter price controls, which have led to mass food shortages: Businesses can’t afford to sell goods at the artificially low prices set by the state, so store shelves remain bare. The state also tried to sell off much of its debt following Maduro’s disputed re-election earlier this year, resulting in fresh sanctions imposed by the Trump administration and European Union.

As Venezuela’s economic woes have worsened, Maduro has proclaimed that the US and other countries are waging an “economic war” against Venezuela. He has cracked down on the military and given a bonus to police amid rising violence and rumors of a coup. (The US State and Treasury Departments declined to comment for this story.)

“These people invented themselves an economic war, and they’re losing the war they invented”

This month, Maduro survived an alleged assassination attempt by two explosive-laden drones during a speech in Caracas. Since then, he has blamed “ultra right” Venezuelans and the US, but now claims he has proof that the Colombian government is behind the attack.

“These people invented themselves an economic war, and they’re losing the war they invented,” said Oswaldo Gomez.

Gomez is an expat and former civil servant from Maracaibo, the capital of Venezuela’s Zulia state near the Colombian border. He fled Venezuela in 2015 and is now working as a web developer in Buenos Aires, Argentina. He stays in regular contact with family and friends still living in Venezuela, where he says people now deal with increasing power outages, escalating crime, and regular inspections of small businesses to ensure no one is selling goods at speculative prices.

In May, the government took over Banesco, Venezuela’s largest bank. Top bank execs were arrested and withdrawals were halted over claims that the bank speculated on the exchange rate and smuggled paper money out of the country.

Maduro’s latest stopgap measure against hyperinflation is simply to lop off three zeros and issue new bank notes, changing the currency’s name from the Bolivar Fuerte (Strong Bolivar) to the Bolivar Soberano (Sovereign Bolivar). The change, originally set to take effect on June 4, was delayed 60 days to Aug. 4 after Venezuela’s national banking association said it simply couldn’t print and distribute the new currency in time. It has since been pushed to Aug. 20 and Maduro upped the cut to five zeros.

The leader also said the Bolivar Soberano will be “anchored” to the Petro. But as with most technical details surrounding the Petro, specifics are vague on how the cryptocurrency and paper currency will coexist.

“This is a cosmetic change. They’re just changing the name and cutting zeros,” said Gomez. “There’s already a shortage of cash, and now because the monetary scheme wasn’t ready, it’s 60 more days without cash in the streets. It’s havoc.”

In a country where the government wields absolute control over the economy, hyperinflation has made the people of Venezuela ever more dependent upon the state. “The government delaying putting out the new currency adds one more complication on top of an economic situation where hyperinflation has made people’s lives absolutely miserable,” Darrell West, VP and director of governance studies at Brookings, told PCMag.

The roots of Venezuela’s economic woes go back decades, from the Bolivarian Socialism reforms of former president Hugo Chávez through Maduro’s increasingly authoritarian reign. Maduro took power in 2013 after Chávez’s death, laying out his plans in a doctrine called the Plan for the Fatherland. In essence, Gomez said, the plan is designed to turn citizens into servants of the state.

Venezuelan citizens are increasingly dependent on the government’s social benefits, despite the fact that the government doesn’t have a budget to provide them. The Maduro regime continues to increase the money supply and the minimum wage, leaving workers with more currency that affords them steadily less.

“For many people around the world, money is a way to attain freedom,” said Gomez. “In Venezuela, money has become a means of slavery. You are controlled by your own money. The government tries to keep you in an eternal state of desperation.”

El Bachaqueo

In the lead-up to Venezuela’s presidential election this past May, the Maduro government began issuing new electronic ID cards using technology from Chinese telecom company ZTE called “Carnet de la Patria,” or Fatherland Cards.

Venezuelans now must scan their Fatherland Cards to receive government benefits including subsidized food, medicine, and cash bonuses. The cards were also scanned for voting during Maduro’s re-election, where the government used hunger as a political weapon. Venezuela has used an ID system to manage its food purchasing system for years, a process long plagued by corruption. Fatherland Cards have made the process even more difficult for all but the privileged political elite.

“You can only buy products at protected prices on a particular day of the week. Years ago, if I went to the supermarket looking to buy chicken on a Thursday but they ran out, I had to wait a week to try to buy chicken again,” said Gomez.

“Now it’s much worse. You have to show your ID and scan your fingerprint, but the food mafia had evolved to the point that they skip the fingerprint verification with the tellers and cashiers. They go into the supermarket, take the protected price products, go into the line where the cashier knows them, skip the fingerprint verification, and show a false ID.”

Julian, another Venezuelan who chose to remain anonymous and spoke to us through a translator, said that lately the privileged have also begun to feel the effects of food scarcity and hyperinflation. He talked about a friend of his, a university professor earning 2.5 million bolivars per month. Nowadays, that’s enough for about one kilo of meat or a dozen eggs per month. Julian said even the wealthy are now restricted to what their ID cards say they can and cannot buy.

“I could go to the supermarket with all the money in the world, but I’m still only going to be able to leave with a loaf of bread or a pound of chicken; whatever my card says. Or I end up with nothing because they’ve already run out,” said Julian.

In an economy where access to currency, food, and basic goods and services has been restricted to the point of a humanitarian crisis, Venezuela’s black market, or “bachaqueo,” is booming. Gomez explained that bachaqueo originally came from the practice of buying food and subsidized goods at controlled prices in a supermarket and reselling them at speculative market prices as contraband, either on the street or exported over the border to Colombia.

“Bachaqueo is supply and demand in its wildest form” said Gomez.

Gomez said fellow government employees in Maracaibo would abandon their office jobs to stand in line under the hot sun in supermarket queues, because “adopting the bachaqueo way of life” yields more profit than government work for the average civil servant. He said many people also trade directly, exchanging goods like homemade bread for homemade cheese simply to “stay out of that totalitarian scheme applied by the government.”

The Almighty Dollar

Venezuela’s black market doesn’t traffic solely in food and goods. As hyperinflation worsens, Venezuelans look for any way to earn and save livable amounts of money that will retain some semblance of its value from one day to the next.

US dollars are the most commonly exchanged currency. Dollars trade for hundreds of thousands of bolivars apiece in wildly fluctuating street prices. Several Venezuelans explained that despite government price controls and crackdowns, many stores charge in dollars. It’s the only way to keep their businesses afloat amid widespread cash shortages of a currency that’s increasingly worthless.

Getting those dollars and other outside currencies into Venezuela is its own fraught effort. Despite a bevy of issues with exchange rates, credit limits, and transaction fees, Venezuelans have turned to everything from PayPal transfers to Amazon gift cards in an effort to get money into the country and preserve its value.

Elisa used to make her living on the bachaqueo selling PayPal funds. Until recently, she also lived in Venezuela’s Zulia region (her name has been changed to protect her family’s safety).

Elisa would receive money online, through PayPal and other services, and sell those funds at a markup on the black market. She had to pay 5 percent in transfer fees and another 5 percent to exchange the funds from dollars into bolivars, but she said without that extra income, she doesn’t know whether her family would’ve had food on the table each day.

A few months ago, Elisa began working as an ambassador for Send. She has been spreading the word to small businesses, families, and people all over the region about how cryptocurrency and Send’s blockchain protocol work. The goal of Send’s ambassadors is to build up both a user base and a network of businesses to support Send’s SDT token, where users can buy and sell “stable digital money” through an app.

Elisa said Venezuelans are desperate. They don’t know what the Maduro regime wants, or how they’re expected to live on the hyperinflated bolivar and whatever the government provides. Under threat of arrest or worse, Elisa said she’s not scared. Be it bachaqueo or cryptocurrency trading, people are doing what they need to survive.

“The government wants to control everything. Not only money but food, clothes, everything. They want us to be numb and uncertain,” she said. “I have more fear that my family doesn’t have something to eat, that we don’t have somewhere to sleep, that my kid cannot go to school, than anything the government is going to do to me. I am doing the best I can with what I have for my family. That is what every Venezuelan is doing.”

Image: vicky leta/mashable

Venezuela’s Crypto Boom

“For Venezuelans, access to digital currencies is a window to personal freedom, to economic freedom,” said Gomez.

Blockchain technology gives Venezuelans a way to exchange and store value, free of transaction fees and government exchange-rate manipulation. Tech-savvy citizens began adopting Bitcoin and other cryptocurrencies around 2013 or 2014, and in the past few years, crypto use has evolved to serve a number of different purposes as hyperinflation has soared.

Venezuelans use cryptocurrencies like Bitcoin as currency, for person-to-person trading, and for remittances (transfers or payments from outside the country) to exchange into bolivars and dollars. Bitcoin miningoperations have spread throughout the country as well, thanks to cheap electricity provided by the socialist government’s heavily subsidized power utility.

Increasingly, cryptocurrencies are also becoming makeshift bank accounts: Venezuelans hold coins in wallets, exchange them into bolivars, and spend them before they lose too much value.

Venezuelans have turned to Bitcoin and other coins, including Dash, Ether, Stellar, TRON, and controversial stablecoin Tether for this kind of slapdash means of value preservation. Stablecoins are cryptocurrencies with stable price characteristics, sometimes pegged to physical currencies. Tether coins, for example, are backed one-to-one to US dollars.

As crypto activity ramped up, numerous exchanges opened up shop in Venezuela, including SurBitcoin, Rapid Cambio, and others. One of the biggest exchanges is AirTM, which launched in 2015 and has 300,000 Venezuelan users. AirTM CEO Ruben Galindo said AirTM has 4,000 daily users, around half of whom are Venezuelans.

“AirTM is a platform where people who have dollars can sell them to people who want them freely, without restrictions. It caught on like wildfire because people were desperate to get dollars,” said Galindo. “[In 2015] it was already considered hyperinflation. The first dollar we allowed people to exchange was worth 490 bolivars. Now it’s worth two million bolivars or well above it.”

Over the past three years, AirTM’s scope has expanded. The platform can now connect users’ accounts to banks, online wallets including PayPal and Venmo, gift cards, cash networks such as Western Union, and of course, cryptocurrencies; it has a recent partnership with Zcash. AirTM gives users a cloud-based dollar account to deposit and withdraw local currency, send and receive payments, and save money by transferring funds from local bank accounts.

“Right now in Venezuela, we’re being used for a bunch of reasons, but about 20 percent of our usage is wealth preservation. We’re basically the only place people can buy dollars where we give them the correct price for their bolivars that’s not street prices,” Galindo explained. “People are afraid their money’s going to be worth less tomorrow, so they buy dollars.”

Alex Torrenegra is a Colombian serial entrepreneur and one of the investor judges on Shark Tank Colombia. He’s also a Send adviser. He thinks both the Venezuelan people and immigrants scattered throughout the Americas are ready to embrace a crypto solution, but he said there are two main challenges to crypto adoption in Latin America.

One is usability. Torrenegra said getting crypto to the masses needs to be “easier than using a credit card.” The other is simply getting people to believe the solution will work.

“The challenge with any crypto project, especially any kind of currency or electronic unit of value, is that you need a lot of people to believe in the same idea for it to take off,” said Torrenegra. “The significant amount of immigrants leaving Venezuela for Colombia [and other countries] have to pay exorbitant fees every time they send money back to their relatives. It creates the perfect storm for a solution like this to be not only adopted but for people to want it.”

Send’s Mission

Venezuelan cryptocurrency usage spiked in 2016 and 2017, when inflation began to worsen dramatically. But the uptick coincided with last year’s Bitcoin price frenzy and wild price fluctuations throughout the market. Cryptocurrencies are an attractive censor-proof tool for remittances, but volatility can make crypto tokens a dangerous medium for transfers and savings. Venezuelans are already petrified of their money losing value overnight.

Send’s mission is to take the volatility out of the equation. Send CEO Camilo Jimenez explained how the Singapore-based company with team in Bogotá, Colombia is working to bring stability to emerging economies with its “semi-stable” SDT token.

“There is no cash in Venezuela, and no mobile apps or working digital payment systems. If you try to make a purchase at the supermarket, you need to leave the cart at the cashier, go home to do a bank transfer to the supermarket’s bank account, and come back with a printed copy,” said Jimenez. “We are focusing on Venezuela because if we can use blockchain and digital money to solve the people’s needs in this country, we can scale the protocol worldwide.”

Send’s growing blockchain-based network of businesses and consumers buy, sell, deposit, withdraw, and transfer the company’s SDT crypto tokens at a consensus price. That means the US dollar exchange value remains stable for seven days at a time.

For example, a consensus price might be $0.20. So for the week after the price is set, all third-party applications (such as mobile wallets and payment services), local businesses, and users participating in the blockchain-based consensus agreement would exchange SDT tokens at $0.20. The consensus price is determined algorithmically according to the Send network’s liquidity, which is why Send calls itself a “semi-stable” token and not a stablecoin.

The WeSend peer-to-peer (P2P) consensus network officially launches later this year, but Send already has 85,000 pre-registered users. Sixty percent of those are Venezuelans. Jimenez said more than half of Send’s Venezuelan users are located inside the country, and the rest are migrants in other countries sending remittances back to Venezuela. Since June 20, the beta WeSend network has executed hundreds of transactions totaling more than $30,000 USD. Send’s mobile app recently launched in the Google Play store. The company said 80 percent of its users in Venezuela are on Android.

On the Ground

Send’s model doesn’t work without infrastructure on the ground. The blockchain network facilitates transactions, but people need physical exchange and payment points to either buy goods directly with SDT tokens or to cash out into bolivars and US dollars.

Jimenez had previously founded InstaKiosks, which operates around 150 Bitcoin ATMs across the US and Europe. He’s employing a similar strategy with Send, including letting people buy SDT tokens from InstaKiosks machines.

The startup has partnered with a few different companies to build out its liquidity network. The biggest is PuntoRed, one of the largest payment networks in Latin America with more than 73,000 physical point-of-salelocations. PuntoRed installs its terminals primarily in small shops and supermarket franchises. The terminals will operate as cash-in/cash-out points for SDT tokens.

Two other Send partners will support SDT transactions: ePayco, a large Latin America-based online payment gateway, and online cryptocurrency-trading platform Cryptobuyer.

“If a Venezuelan wants to buy SDT in Miami to send money to Caracas, they just need to go to a retail store or use their debit card to buy SDT, and then in the last mile we will cash out the SDT at a similar rate,” Jimenez explained. “We created a consensus in the first mile and last miles around the world; we integrated over 70,000 point of payments to cash the SDT tokens in and out.”

Arguably the most crucial element of Send’s operation is also its most dangerous. Send’s 60 ambassadors operate in a legal gray area. They’re all Venezuelan citizens working to mobilize their local communities, putting themselves at potential risk of government detainment by spreading monetary solutions that speculate prices.

The startup’s grassroots campaign aims to expand Send’s network both by convincing local businesses to accept SDT as currency and by recruiting local “WeSend agents” to do the exchanges from SDT to bolivars.

Jimenez said agents are key to the cash-out process because it means the network is less reliant on local stores adopting SDT as a payment method. He confirmed that agents’ physical exchanges and all transactional data are recorded on the blockchain, including ID verification info for everyone accessing the WeSend app for P2P transactions. Agents have the most dangerous job, because they’re either carrying out the in-person exchange or showing the transaction on their bank account.

“The first level for Venezuelans is to be a user. You can use SDT to buy goods or to receive remittances. The second level in the platform is to become an agent,” he said. “Any person with an internet connection on a laptop or mobile device can be an agent to buy and sell SDT in local currency. So if you want to buy SDT in Venezuela, the app connects you with an agent who has a good reputation to make that local exchange.”

Elisa helped coordinate Send’s ambassador program for several months. She made phone calls, reached out over social media, and carefully approached citizens and local businesses to spread the word and build out the network of cash-in/cash-out points.

Much of her initial outreach has simply been educating people about how digital currencies work. She explains why they’re a better option than paying high transaction fees through services like PayPal or paying exorbitant markups for dollars on the bachaqueo. Eventually, she shows Venezuelans demos of the WeSend website and app, teaching them how to buy and sell tokens.

“Many people are afraid. When I try to talk to them about this new way of sending and receiving money from other countries, they think it is related to the Petro. But after I explain how it works, people are excited. They want to have faith in a solution,” Elisa said.

“We know the government will keep trying to block it; to shut us down. But once people are familiar with this platform, it’s going to be a way to be free.”

The Petro’s Deceit

Venezuelans have good reason to be skeptical of cryptocurrency as a blanket answer to the nation’s myriad problems.

Hugo Chavez first introduced the idea of a national currency backed by raw materials in the early 2000s. Chavez’s vision became reality in December 2017 when the Maduro government announced the Petro, an oil-backed cryptocurrency to “advance monetary sovereignty.”

In reality, the Petro is a means for the cash-starved government to bypass international sanctions without providing much tangible benefit to its struggling people. In March, the Trump administration banned US citizens from buying Petros, the first time the US has outlawed a cryptocurrency.

Independent research institution Brookings concluded not only that the Petro circumvents sanctions, but went as far as saying it undermines other cryptocurrencies by centralizing and manipulating a technology meant to be decentralized.

“Cryptocurrencies provide a way to move money beyond the control of government, so the whole idea of government issuing a cryptocurrency runs completely counter to the prevailing norms in that market,” said Darrell West, a co-author of the report who also serves as founding director for the Center for Technology Innovation at Brookings.

“The major reason [behind the Petro] is to get around the sanctions. It’s a way for the Venezuelan government to bypass the efforts of other countries,” said West. “I think it is an effort to cash in on the market interest in cryptocurrencies and raise money. The government desperately needs money in the short run. Their hope was this would provide a short term cash infusion.”

As for how the underlying blockchain tech behind the Petro actually works, there’s still a good deal of confusion. The official white paper provides very little clarity. It offers a basic explanation of how blockchains and tokens work, and the rest of its pages cover the Petro’s presale, why the country needs a crypto token tied to oil, and how the government plans to use it.

The white paper briefly mentions the use of pre-mined ERC-20 tokens and Ethereum-based smart contracts. But the Maduro government sowed confusion soon after the white paper’s release by announcing an abrupt switch to the NEM Mosaics blockchain platform instead.

The NEM Foundation released a statement confirming the Venezuelan government’s intent to use NEM’s blockchain but also stressed that the Foundation has no direct involvement in the Petro’s development. It’s also unclear how exactly the asset is tied to oil, particularly in light of Maduro’s latest proclamation that the Petro will also be anchored to the physical Bolivar Soberano currency.

“The government has changed where the assets are based multiple times,” said Robert Greenfield, the global social-impact technical lead at ConsenSys, a blockchain software company that builds decentralized apps and services on Ethereum. Greenfield said he’s been working on a guide for how to spot fraud in crypto white papers, and the Petro exhibits telltale signs.

“The white paper doesn’t explain how the token works within a broader system; it doesn’t talk about the crypto economics, or the distribution and scalability of ownership across a population that’s more or less starving,” said Greenfield. “They’re using oil as a physical asset but don’t explain the economic policies around how that’s going to be tracked. You almost know for certain that it’s fraud.”

Venezuelan President Nicolas Maduro delivers a speech before supporters gathering outside the presidential palace in Caracas on March 12, 2015.

Venezuelan President Nicolas Maduro delivers a speech before supporters gathering outside the presidential palace in Caracas on March 12, 2015.

Image: FEDERICO PARRA/AFP/Getty Images

Crowdfunding Oppression

Back in February, the Venezuelan government launched a presale for its new Petro token.

Maduro claimed the presale raised $735 million in one day and a total of $5 billion on more than 186,000 certified Petro purchases over a period of approximately three weeks. At the time, there were only 4.2 million tokens transacted, which would mean buyers accepted a price point of $173.80 per token — the highest token presale price in history.

Greenfield said this was virtually impossible, partly because the Petro’s token sale portal dealt with technical problems and payment issues during the presale. He suspects the numbers can be chalked up to money laundering, or could be outright fabrication to drum up investor interest.

“Venezuela has a longstanding tradition of taking over people’s Bitcoin miners and essentially siphoning any type of value that comes from it,” he said. “They could be doing the same here, due to sanctions, with money laundering from illicit sources of revenue. If they did embellish the sales numbers, a primary reason would be a signal to novice investors in the west to put money into the Petro.”

Both Brookings and ConsenSys believe the Petro sets a dangerous example. The coin not only facilitates potential fraud but centralizes and controls a technology that’s designed to be decentralized and censor-proof. Maduro has already announced plans for a second nationalized asset-backed coin called Petro Gold.

Greenfield said the Petro’s initial coin offering (ICO) is akin to crowdfunding oppression.

The US and other countries have levied escalating sanctions against Venezuela, exacerbating its economic and humanitarian crisis to increase government costs in hopes of inciting a rebellion against Maduro. Raising billions of dollars in capital through Petro sales gives the authoritarian government an out.

In Greenfield’s analysis, he wrote that the Petro gives the regime a way to pay down its international debt and “crowdfund its human rights abuse expenses” while Venezuelan citizens living in extreme poverty bear the economic hardship of sanctions.

“Authoritarian governments always run into a sustainability problem with maintaining a dictatorship. You see the same issue with North Korea. At a certain point and time, every decade or so, the government doesn’t have any money,” Greenfield explained.

“When your political capital is weakened borrowing from countries like Russia and China, you risk giving over your sovereignty or being put into a coup situation,” he continued. “Increased economic sanctions don’t really solve the problem, because Maduro and his cabinet don’t feel those, the people do. So we have to ask, what is this money going toward? Authoritarian states can leverage these new methods of crowdfunding in ways that trick naïve investors in the west toward giving money to something that they would never otherwise fund.”

The majority of Petro token sales have reportedly been made by foreign investors. The government’s white paper states that Petros can be used by Venezuelan citizens to to pay taxes, fees, and public service costs, but those limited uses are meaningless if Venezuelans can’t access the token.

Julian emigrated from Venezuela and now lives in Pereira, Colombia. He’s spoken to several tech-savvy friends in Venezuela who’ve tried to buy Petros out of both curiosity and necessity. He said they’ve all gone to the website, followed the instructions, and gotten a message that the site is shut down or the token is not available.

The Petro is not run on a transparent blockchain, which means there’s no immutable transaction log where citizens can look for price and ownership information.

“People are curious and open to maybe giving it a shot, but then they try, and they’re let down by lack of input. The government’s trying to control competition, but they don’t actually have a viable product,” Julian said. “Nobody knows how the Petro’s being sold, how to access it, who has the tokens, where they’re in circulation right now, who possesses them, or how they’re being priced … Every day, Venezuela is looking a little bit more like North Korea and Cuba.”

Meanwhile, Maduro is using the Petro as a bargaining chip in international trade negotiations. Venezuela offered India a 30 percent discount on petroleum imports if India pays in Petro. Darrell West of Brookings said the institute has observed interest from countries including Iran, Russia, and Turkey in following Venezuela’s crypto playbook as a vehicle to bypass international sanctions.

“The government did not set this up to help the average citizen. The way they set up the pre-market and how they plan to operate the Petro is set up to help the government itself,” said West. “Ordinary Venezuelans have a huge problem buying food and medicine. This cryptocurrency, it’s not going to help them at all.”

Operation Paper Hands

On a late-April morning, AirTM received a letter from the Venezuelan government. It said the platform was allowing people to exchange dollars at an unofficial rate and they were banned from operating in the country. AirTM was one of three exchanges shut down that day, along with Intercash and Rapid Cambio, in the latest step of Operation Paper Hands.

Venezuelan Prosecutor General Tarek William Saab described the operation in a press conference as a crackdown on cryptocurrency exchanges and financial institutions that have “incurred misappropriation [and] dissemination of false information about the exchange rate.” Rapid Cambio shut down its operations indefinitely, posting a message on its website blaming unjust persecution by the government.

Saab said the operation had so far led to 112 arrests and 1,382 bank accounts frozen containing more than 711,900 bolivars, and that he had already requested 40 new arrest warrants and 104 additional raids. An April raid executed 125 search warrants for 596 businesses across the country.

The Venezuelan government’s crypto clampdown started long before this. As the Maduro administration looks to nationalize the cryptocurrency market and stop bolivar speculation, it has shut down banks, exchanges, and remittance services. The government first pressured national bank Banesco into closing the accounts of popular exchange SurBitcoin in 2017. The government has also taken aim at DolarToday and other websites that post the average black-market exchange rate from bolivars to USD.

Authorities have cracked down on crypto mining, as well. The government now monitors the electric grid and raids homes that consume large quantities of energy. Police seize mining rigs and sometimes detain miners.

CEO Ruben Galindo said AirTM, which is headquartered in Mexico City, is still operational in Venezuela. Operation Paper Hands blocked AirTM’s website, but he said the exchange simply decided to stop posting its rates for a week while the company got all of its employees out of the country. Others were not so lucky.

“They shut down this one really popular website called Dollar Pro, and [the government] kidnapped the owner [Carlos Eduardo Marron]’s father in order to get the guy back into Venezuela so they could arrest him,” said Galindo.

Out of the 300,000 users in Venezuela who signed up for AirTM, Galindo said the company identified nine cases of AirTM users who were arrested. He’s unsure whether it was AirTM use or other activities deemed illegal that led to the arrests. He said AirTM is working with lawyers to figure out exactly why users were detained and how the company can help.

“[The government] bends and changes the rules to achieve their agenda every day of the week,” he said. “People are being detained because they are exchanging their national currency for dollars to preserve their wealth, but they can’t shut us down. They can’t stop a network of people exchanging dollars freely at the non-official government rate that is imposed on people.”

The Maduro administration didn’t block all of Venezuela’s exchanges. In fact, the government officially certified 16 of them under the condition that they list and trade the Petro. One of the exchanges is India’s Coinsecure. CEO Mohit Kalra told the Business Standard that Venezuela wanted to add the Petro as cryptocurrency to trade against Bitcoin and the rupee. He also said Coinsecure is providing whitelisting services to build a nationalized exchange operated by the government.

So, Venezuela isn’t shutting down the cryptocurrency industry. The government is simply relaunching it on its own terms under centralized control.

Alejandro Beltrán, CEO of the Colombian branch of Buda Exchange, told PCMag he was approached several months ago in Miami by a Venezuelan with ties to the Maduro government. The contact proposed opening a Banesco account and securing an exchange license in Venezuela. There were two conditions: They’d be required to trade the Petro, and the government would have full control over user data. Buda declined the offer.

“He said if you are going to operate a crypto exchange, you need to trade Petro,” said Beltrán. “I give you the license, you don’t have no problem. I manage the data and the information.The government is in charge of it.”

Former Venezuelan Vice President Tareck El Aissami said in a press conference that Operation Paper Hands froze 5 billion bolivars in Banseco accounts and seized 12 trillion bolivars the government said were headed for contraband use in Colombia. El Aissami was appointed minister of industry and national production after Maduro’s re-election. Along with many other high-level Venezuelan officials, he has been sanctioned by the US as an international drug trafficker.

The government is expanding its control over the Venezuelan crypto market, but the crackdown is far from over. In June, El Aissami announced the next step: “Operation Metal Hands.” Part of the operation is focused on gold smuggling, but El Aissami also revealed that the government will begin monitoring bank accounts for crypto transactions that speculate prices and “undermine the national currency.”

El Aissami said: “All the accounts that we identify that are linked to the manipulation are going to be severely punished and [those responsible will be] placed at the order of justice.”

A Tech-Fueled Resistance

The government’s tightening grip can’t stop tech solutions from slipping through its fingers. AirTM, for example, never stopped offering exchange services to Venezuelans, Galindo said. The platform initially recommended users change their DNS to the new privacy-first 1.1.1 DNS service to get around internet service provider (ISP) bans, but the government restricted that option quickly. Now users simply access the site through VPN clients.

Venezuela’s largest ISP, which is government-owned, has attempted to block and censor the Tor browser as well. Nonprofit humans rights group Access Now said anonymity tools such as Tor are crucial for activists, independent journalists, and civil society actors to stay safe online and for Venezuelan citizens to access censored news. Tor rolled out a workaround for the block, but the censorship battle rages on.

Send was also caught up in the crypto blocking spree. Although the WeSend network is still in beta, Jimenez said the “viral diffusion of communication” among Venezuela’s growing pre-registered user base put it on the government’s radar sooner than expected. The startup’s roadmap hasn’t changed.

Send’s private pre-sale is closed; the company sold 43.4 million SDT tokens and raised $4 million USD. The public pre-sale begins this month with 26.6 million more available tokens, followed by a one-year distribution that will determine token supply and the network’s starting consensus price. The network and distribution will officially launch once it hits $100,000 in accumulated transactions. The startup will also launch its own crypto wallet later this year and has plans to migrate the consensus network from Ethereum to its own blockchain in 2019.

Elisa said the website block was yet another challenge for ambassadors, but they’ve found ways around it.

“The government keeps trying to block websites, but we will always find a way,” she said. “We’ve shown people how to configure proxy DNSes and use VPNs. We will always fight back and keep going when the government tries to stop us from moving forward to having a better life.”

Increased government censorship is surmountable, but it adds another technological barrier to widespread use of crypto technology. Solutions such as Send offer an accessible, user-friendly way to get money into the country, but Venezuelans like Julian are wary of the logistical hurdles of blockchain-based solutions replacing local currency.

Julian said VPNs and other workarounds add a degree of complication for average citizens who are already running into conversion issues from cryptocurrency to bolivars. If crypto can operate as its own underground economy, he thinks the solution has huge transformative potential. If not, Send and others will run into the same issues as the local currency on which they rely.

“One issue is not being able to get money into the country, but a second layer is if you have money, what does it actually buy you? I hope to see WeSend’s digital currency being accepted into more businesses,” he said through a translator. “It needs to be a way not just to get bolivars into people’s hands but [also] to bypass the need to use bolivars in the first place.”

Challenges, Hope, and Escape

Send knows conversion and payments are its biggest friction points, but there’s no one surefire way to bridge that gap. That’s why Send is partnering with payment networks, recruiting WeSend agents, and lobbying local businesses to accept SDT. The startup isn’t sure which way will work.

Robert Greenfield of ConsenSys agrees that stablecoins or semi-stable coins like Send might hold the most promise as crypto solutions for starving economies like Venezuela’s. “Stablecoins can start to enable more frictionless remittances in the way people were promising when Bitcoin came out 10 years ago that really didn’t materialize,” he said.

The value starts with international transfers and asset conversion protected from hyperinflation, but ultimately, he said, you still run into the crypto-to-cash problem. The issue comes when businesses want to convert crypto into an asset they can use to actually pay the bills and don’t have a payment gateway to do so.

“Crypto-to-cash involves creating networks of communities that allow these transactions. This could be done through networks of vendors who accept it [and] who can afford that type of risk, or through community and rural banks accepting these types of stablecoins,” Greenfield explained.

He believes we need to rethink the financial tools available for unbanked or underbanked populations. For better or worse, other countries will learn from how cryptocurrencies are used in first-mover countries like Venezuela.

When the Petro-backed Bolivar Soberano begins circulating later this month, it will mark the first time a nation’s official currency is tied to crypto. Maduro has ordered government services, the tourism industry, airlines, and border gas stations to start accepting cryptocurrencies. The government is also touting the Petro as a funding mechanism for many of the nation’s Bolivarian Socialism programs, including homeless housing projects and youth initiatives. Maduro has even spoken about universities running crypto mining farms to support the national economy.

“We’re setting a precedent in terms of economic sanctions and repercussions towards the misconceived usage of digital assets, which in turn will make laws against crypto in the west pretty strict,” said Greenfield. “I think what we don’t understand is how we’re opening the door for cryptocurrencies to be used in ways we don’t want them to be used.”

Venezuela is a powder keg for the duality of this still-young technology. The government has embraced cryptocurrency as an answer to hyperinflation and sanctions, exerting centralized control over how it’s used to ensure the Petro’s supremacy. At the same time, the Venezuelan people endure crackdowns and persevere, seizing upon the crypto’s decentralized nature to hold onto a shred of control over their own money.

All the while, everyday living conditions are deteriorating. Crime rates have soared, the nationalized oil industry continues to collapse, and power and internet outages have grown more frequent, and often last for multiple hours a day. For many, the best course is escape.

A few weeks ago, Elisa joined the more than a million Venezuelans who have fled over the border to Colombia in the past two years. She left for a better life but also out of fear of the government’s ongoing raids and detainments targeting the crypto community.

She’s now based in Bogotá and working full-time for Send on administrative tasks and human resources, though she’s still helping coordinate the Send ambassador program. She’s been sending food and money back to Venezuela and is working on a plan to get her husband and son out of the country soon.

“I have an 11-year-old son, and I have to go back for him. I’m scared, because I don’t know if they are going to let me out again or if Colombia is going to let me back in with my whole family, but it’s a risk I have to run,” she said.

On her first day in Bogotá, Elisa walked into a supermarket. She saw toilet paper on the shelves, after years of massive shortages. For the first time in almost a decade, she saw an aisle full of liquid milk. She had drank only powdered for as long as she could remember.

“When I went into the supermarket, I cried,” she said. “It was full of food; full of everything I needed…fruit, rice, flour for arepas. I felt like I was dreaming.”

Https%3a%2f%2fvdist.aws.mashable.com%2fcms%2f2018%2f1%2f02901cd0 ebe1 8e37%2fthumb%2f00001

This article originally published at PCMag
here

22-year-old man loses $24 million worth of bitcoins in apparent scam

5,500 bitcoins you say? No problem, let me transfer that right now.
5,500 bitcoins you say? No problem, let me transfer that right now.

Image: nito100/gettyimages

Bitcoin is a risky investment, but for one young crypto millionaire, traditional forms of investing into assets such a casino and company stock turned out to be even riskier. 

According to Bangkok Post, a 22-year-old Finnish man called Aarni Otava Saarimaa lost a total of 5,564.4 bitcoins (worth roughly 24 million dollars at the time) to scammers in Thailand. 

In June 2017, Saarimaa was approached by a group who convinced him to send him the bitcoins, the report claims, quoting findings by Thailand’s Crime Suppression Division’s (CSD), which has been conducting an investigation into the case for six months. 

Saarimaa believed he was investing in shares of three companies, a casino and a new cryptocurrency called Dragon Coins, but after seeing no returns at all, his business partner Chonnikan Kaeosali filed a complaint to the CSD. 

As it turned out, the group converted the bitcoins into Thai currency, deposited it into accounts belonging to seven suspects, and spent some of it on plots of land.

The group of fraudsters, which the police believe numbers nine people, allegedly includes Thai actor Jiratpisit ‘Boom’ Jaravijit, who was arrested in July, and two of his siblings, one of which has left the country. The siblings face money laundering charges and, potentially, fraud charges. 

It’s worth noting that, even though cryptocurrencies were involved, this appears to be the type of fraud that’s far more complex than your typical “please send bitcoins” e-mail. For example, the group of fraudsters had at one point brought Saarimaa to a Macao casino in order to convince him the Dragon Coins would be used there. 

The fact that bitcoins were involved did complicate matters for the investigators, though. “We had to carefully examine documents and trace the money trail (…) it took us almost seven months to get approval for the arrest warrants for the first group,” CSD deputy commander Pol Col Chakrit told Bangkok Post. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

Https%3a%2f%2fblueprint api production.s3.amazonaws.com%2fuploads%2fvideo uploaders%2fdistribution thumb%2fimage%2f86151%2f248ac21e 26dd 4b1f 83f1 d088566172d9

Bitcoin developer finds bug in competing coin, does the right thing

Proponents of Bitcoin and its competing cryptocurrency Bitcoin Cash, which was created as a “fork” of Bitcoin’s code and history, aren’t exactly in love with each other. Social media channels are full of squabbles over which coin is better and which one is more deserving of the “Bitcoin” name. 

But one Bitcoin Core developer — meaning, a person who develops code for Bitcoin — rose above the petty quarrels and did a big favor for Bitcoin Cash. 

In April, Cory Fields discovered what he describes as a “critical vulnerability” in Bitcoin Cash, and alerted Bitcoin Cash developers which implemented a fix before a malicious actor could exploit it. 

After Fields had noticed a suspicious change in Bitcoin Cash’s code, it took him “less than 10 minutes” to find the bug, which was serious enough to cause a chain split, which (if unintentional) can cause huge damage to a cryptocurrency. 

But it wasn’t just a simple matter of finding the bug and reporting it. “This was a bug in publicly-available, open-source software; any number of people could have already discovered it. There was nothing to stop anyone else from making the same discovery and taking advantage of it before a fix could be fully deployed,” he wrote in a Medium post published Friday. 

“Suppose that I privately disclosed the bug using my name — only for someone else to find it independently and exploit it anonymously the next day,” he wrote. “…billions of dollars could have been lost as a result of this exploit. People have been killed for much less. So not only was anonymity important, I considered it a necessity for my safety.”

Fields decided to report the bug anonymously, and luckily, he was able to reach Bitcoin Cash’s dev team before anyone else had noticed the bug (or, at least, had time to exploit it). 

Bitcoin ABC (the name of Bitcoin Cash’s software implementation) has posted an incident report after the bug was fixed in May, and promised it would take “several actions in order to prevent such an event from occuring again,” as well as set up a formal bug bounty system. 

Fields’ move was lauded by several notable cryptocurrency figures, including Civic CEO Vinny Lingham who tweeted that “Responsible and ethical behavior by everyone in the community, regardless of ideological beliefs, should be applauded.” Vitalik Buterin, the co-founder of Ethereum, retweeted Lingham’s tweet. 

Once the second most valuable cryptocurrency, Bitcoin Cash has dropped to fourth place by market cap according to CoinMarketCap, and is roughly eleven times smaller than Bitcoin. And while there’s still a lot of friction between fans of Bitcoin and Bitcoin Cash, Fields’ example shows that it’s still possible to help each other out to the ultimate benefit of all.

Https%3a%2f%2fvdist.aws.mashable.com%2fcms%2f2018%2f1%2fc1d630c0 4101 48d1%2fthumb%2f00001