All posts in “decentralization”

Social investment platform eToro acquires smart contract startup Firmo

Social investing and trading platform eToro announced that it has acquired Danish smart contract infrastructure provider Firmo for an undisclosed purchase price.

Firmo’s platform enables exchanges to execute smart financial contracts across various assets, including crypto derivatives, and across all major blockchains. Firmo founder and CEO Dr. Omri Ross described the company’s mission as “…enabl[ing] our users to trade any asset globally with instant settlement by tokenizing assets and executing all essential trade processes on the blockchain.” Firmo’s only disclosed investment, according to data from Pitchbook, came in the form of a modest pre-seed round from the Copenhagen Fintech Lab accelerator.

Firmo’s mission aligns well with that of eToro — which is equal parts trading platform, social network and educational resource for beginner investors — with the company having long communicated hopes of making the capital markets more open, transparent and accessible to all users and across all assets. By gobbling up Firmo, eToro will be able to accelerate its development of offerings for tokenized assets.

The acquisition represents the latest step in eToro’s broader growth plan, which has ramped up as of late. Earlier in March, the company launched a crypto-only version of its platform in the US, as well as a multi-signature digital wallet where users can store, send and receive cryptocurrencies.

The Firmo deal and eToro’s other expansion activities fit squarely into the company’s belief in the tokenization of assets and the immense, sector-defining opportunity that it creates. Etoro believes that asset tokenization and the movement of financial services onto the blockchain are all but inevitable and the company has employed the long-tailed strategy of investing heavily in related blockchain and crypto technologies despite the ongoing crypto winter.

“Blockchain and the tokenization of assets will play a major role in the future of finance,” said eToro co-founder and CEO Yoni Assia. “We believe that in time all investible assets will be tokenized and that we will see the greatest transfer of wealth ever onto the blockchain.” Assia expressed a similar sentiment in a recent conversation with TechCrunch, stating “We think [the tokenization of assets] is a bigger opportunity than the internet…”

After the acquisition, Firmo will operate as an internal R&D arm within eToro focused on developing blockchain-oriented trade execution and the infrastructure behind the digital representation of tokenized assets.

“The Firmo team has done ground-breaking work in developing practical applications for blockchain technology which will facilitate friction-less global trading,” said Assia.

“The adoption of smart contracts on the blockchain increases trust and transparency in financial services. We are incredibly proud and excited that [Firmo] will be joining the eToro family. We believe that together we have a very bright future and look forward to pursuing our shared goal to become the first truly global service provider allowing people to trade, invest and save.”

NYSE operator’s crypto project Bakkt brings in $182M

The Intercontinental Exchange’s (ICE) cryptocurrency project Bakkt celebrated New Year’s Eve with the announcement of a $182.5 million equity round from a slew of notable institutional investors. ICE, the operator of several global exchanges, including the New York Stock Exchange, established Bakkt to build a trading platform that enables consumers and institutions to buy, sell, store and spend digital assets.

This is Bakkt’s first institutional funding round; it was not a token sale. Participating in the round are Horizons Ventures, Microsoft’s venture capital arm (M12), Pantera Capital, Naspers’ fintech arm (PayU), Protocol Ventures, Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners and more.

Bakkt is currently seeking regulatory approval to launch a one-day physically delivered Bitcoin futures contract along with physical warehousing. The startup initially planned for a November 2018 launch, but confirmed this morning an earlier CoinDesk report that it was delaying the launch to “early 2019” as it awaits permission from the Commodity Futures Trading Commission. Along with the funding, crypto news blog The Block Crypto also reports Bakkt has hired Balaji Devarasetty, a former vice president at Vantiv, as its head technology.

ICE’s crypto project was first announced in August and is led by chief executive officer Kelly Loeffler, ICE’s long-time chief communications and marketing officer. Bakkt quickly inked partnerships with Microsoft, which provides cloud infrastructure to the service, and Starbucks, to develop “practical, trusted and regulated applications for consumers to convert their digital assets into U.S. dollars for use at Starbucks,” Starbucks vice president of payments Maria Smith said in a statement at the time.

Many Bitcoin startups floundered in 2018, despite record amounts of venture capital invested in the industry. This was as a result of failed initial coin offerings, an inability to scale following periods of rapid growth and the falling price of Bitcoin. Still, VCs remained bullish on Bitcoin and blockchain technology in 2018, funneling a total of $2.2 billion in U.S.-based crypto projects — a nearly 4x increase year-over-year. Around the globe, investment hit a high of $4.6 billion — a more than 4x increase from last year, according to PitchBook.

“Notably, 2018 was the most active year for crypto in its brief ten-year history,” Loeffler wrote. “This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily bitcoin transaction value and active addresses. Yet, these milestones tend to be overshadowed by the more narrow focus on bitcoin’s price, which has been seen by some, as a proxy for the potential of the technology.”

Today, the price of Bitcoin is hovering around $3,700 one year after a historic run valued the cryptocurrency at roughly $20,000. The crash caused many to dismiss Bitcoin and its underlying technology, while others remained committed to the tech and its potential for complete financial disruption. A project like Bakkt, created in-house at a respected financial institution with support from noteworthy businesses, is a logical bet for crypto and traditional private investors alike.

“The path to developing new markets is rarely linear: progress tends to modulate between innovation, dismissal, reinvention, and, finally, acceptance,” Loeffler added. “Each step, whether part of discovery or adversity, ultimately strengthens the product. Twenty years ago, it was controversial to suggest that commodities or bonds could trade electronically on a screen, and many steps were required for that evolution to play out.”

The Coinmine One is a box that mines crypto at home

For $799 you can start mining cryptocurrencies in your home, a feat that previously either required a massive box costing thousands of dollars or, if you didn’t actually want to make any money, a Raspberry Pi. The Coinmine One, created by Farbood Nivi, soundly hits the sweet spot between actual mining and experimentation.

The box is about as big as a gaming console and runs a custom OS called MineOS. The system lets you pick a cryptocurrency to mine – Monero, for example, as the system isn’t very good with mature, ASIC-dependent currencies like BTC – and then runs it on the built in CPU and GPU. The machine contains a Intel Celeron Processor J Series processor and a AMD Radeon RX570 graphics card for mining. It also has a 1 TB drive to hold the massive blockchains required to manage these currencies.

The box mines Ethereum at 29 Mh/s and Monero at 800 h/s – acceptable numbers for an entry level miner like this one. You can upgrade it to support new coins, allowing you to get in on the ground floor of whatever weird thing crypto folks create tomorrow.

I saw the Coinmine in Brooklyn and it looks nice. It’s a cleverly-made piece of consumer tech that brings the mystery of crypto mining to the average user. Nivi doesn’t see this as a profit-making machine. Instead, it is a tool to help crypto experimenters try to mine new currencies and run a full node on the network. That doesn’t mean you can’t get Lambo with this thing, but expect Lambo to take a long, long time.

The device ships next month to hungry miners world-wide. It’s a fascinating move for the average user to experience the thrills and spills of the recent crypto bust.

Blockchain media startup Civil is issuing full refunds to all buyers of its cryptocurrency

Many doubted The Civil Media Company‘s ambitious plan to sell $8 million worth of its cryptocurrency, called CVL. 

The skeptics, as it turns out, were right. Civil’s initial coin offering, meant to fund the company’s effort to create a new economy for journalism using the blockchain, failed to attract sufficient interest. The company announced today that it would provide refunds to all CVL token buyers by October 29.

Civil’s goal was to sell 34 million CVL tokens for between $8 million and $24 million. The sale began on September 18 and concluded yesterday. Ultimately, 1,012 buyers purchased $1,435,491 worth of CVL tokens. A spokesperson for Civil told TechCrunch an additional 1,738 buyers successfully registered for the sale, but never completed their transaction.

Civil isn’t giving up. The company says “a new, much simpler token sale is in the works,” details of which will be shared soon. Once those new tokens are distributed, Civil will launch three new features: a blockchain-publishing plugin for WordPress, a community governance application called The Civil Registry and a developer tool for non-blockchain developers to build apps on Civil.

ConsenSys, a blockchain venture studio that invested $5 million in Civil last fall, has agreed to purchase $3.5 million worth of those new tokens. The purchase is not an equity; all capital from the token sale is committed to the Civil Foundation, an independent nonprofit initially funded by Civil that funds grants to the newsrooms in Civil’s network.

In a blog post today, Civil chief executive officer Matthew Iles wrote that the token sale failure was a disappointment but not a shock. Days prior, he’d authored a separate post where he admitted things weren’t looking good.

“This isn’t how we saw this going,” Iles wrote. “The numbers will show clearly enough that we are not where we wanted to be at this point in the sale when we started out. But one thing we want to say at the top is that until the clock strikes midnight on Monday, we are still working nonstop on the goal of making our soft cap of $8 million.”

A recent Wall Street Journal report claimed Civil had reached out to The New York Times, The Washington Post, Dow Jones and Axios, among others, but failed to incite interest in its token.

Separate from its token sale, Civil has inked strategic partnerships with media companies like the Associated Press and Forbes, both of which confirmed to TechCrunch today that the failed token sale doesn’t impact their partnerships with Civil. 

Forbes became the first major media brand to test Civil’s technology when it announced earlier this month that it would experiment with publishing content to the Civil platform. As for the AP, it granted the newsrooms in Civil’s network licenses to its content. 

Civil, of course, isn’t the only blockchain startup targeting journalism. Nwzer, Userfeeds, Factmata and Po.et, which was founded by Jarrod Dicker, a former vice president at The Washington Post, are all trying their hand at bringing the new technology to the content industry.

Which, if any, will actually find success in the complicated space, is the question.

SpankChain spanked

SpankChain, a cryptocurrency aimed at decentralized sex cams, has announced that a hacker stole about $38,000 from their payment channel thanks to a broken smart contract. They wrote:

At 6pm PST Saturday, an unknown attacker drained 165.38 ETH (~$38,000) from our payment channel smart contract which also resulted in $4,000 worth of BOOTY on the contract becoming immobilized. Of the stolen/immobilized ETH/BOOTY, 34.99 ETH (~$8,000) and 1271.88 BOOTY belongs to users (~$9,300 total), and the rest belonged to SpankChain.

Our immediate priority has been to provide complete reimbursements to all users who lost funds. We are preparing an ETH airdrop to cover all $9,300 worth of ETH and BOOTY that belonged to users. Funds will be sent directly to users’ SpankPay accounts, and will be available as soon as we reboot Spank.Live.

The hacker used a ‘reentrancy’ bug in which the user calls the same transfer multiple times, draining a little Ethereum each time. The bug is the same one that previously affected the DAO.

The company pointed out that a security audit on their smart contract would have cost $50,000, a bit more than the amount lost. “As we move forward and grow, we will be stepping up our security practices, and making sure to get multiple internal audits for any smart contract code we publish, as well as at least one professional external audit,” they wrote.

I’ve reached out to the company for clarification but in short it seems the spanker has become the spankee.