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Which Are Your Top 5 Platforms Out Of The Top100? An Analysis.

There are currently a lot of platforms, more specifically, there are 35 platforms within the Top100 only and many do very similar things. How is one supposed to know how they differ? That was the question that I asked myself.
So, I decided to compare all platforms within the Top100. I noticed that they can be put into into 5 different categories. Note: A platform is a cryptocurrency that offers smart contracts at least.
  1. Dapps platforms - 12
  2. BaaS - 11
  3. Liquidity - 2
  4. Misc - 7
  5. Behemoths -3
Here are all platforms in an excel spread sheet in their categories with a description:
In order to find out which one is the best platform in each market currently and made sure to be strict with every platform and point out their flaws.
Let's look at the 5 markets.

1) Dapps platforms

Dapps platforms are definitely a solid bet for the next years. Besides Ethereum, Neo, EOS and Stellar are probably the most known here, however, all 4 are simply extremely centralized and would need to completely change their architecture to become more decentralized. Until that happens, none of these platform can really be considered as a platform with good technology, since everyone can achieve high scalability by letting a few hundred nodes do the consensus algorithm. There is nothing difficult about that. The difficulty is achieving several million TPS with 100,000 nodes deciding consensus.
Cardano, Aeternity are the only ones that seem to be able to maintain excellent decentralization with high scalability, because they scale through side-chains/horizontally.
All platforms considered, Ethereum seems to be on the way there as well with its change to Casper.
  1. Cardano has a great team, has probably the most secure PoS that was peer-reviewed in a scientific approach, has their mainnet launched, has near infinite scalability through sidechains and offers broad usability of Smart contracts in a number of programming languages.
  2. Ethereum is a 2nd generation blockchain that allows the use of smart contracts and dapps on a smaller scope. Ethereum currently has bad scalability, though this concern could be alleviated by the soon to be implemented Sharding concept and its new PoS/PoW consensus algorithm Casper. Still, there are platforms with much more comprehensive dapp ecosystems, and much more scalability. However, Ethereum just closed a partnership with AWS. This is probalby the biggest partnership in the cryptosphere. Though, in order to be better than any of the top 3 platforms, it would need to provide Oracles, a lot more functionality for dapps, partnerships, decentralized data storage, cloud computing.
  3. Neblio is similar to NEO and a good platform, though it has a much smaller market cap.
  4. EOS has high scalability, though is much more centralized than Skycoin, Elastos and Cardano. However, it offers a lot of functionality for Dapps. EOS is overhyped. It is on the same level as Neblio, Neo, Aeternity, but not on the same level as Skycoin, Elastos, IOTA, Cardano.
  5. NEO is a very established platform in this category.However, Neo dapps scale on-chain and can thus clog the network quickly. For that reason, NEO had to pick a very centralized approach to maintain scalability and it looking to rely on hand-picked nodes to maintain scalability in the future, very similar to EOS also very centralized approach of 121 handpicked nodes.
  6. Stellar has similar goals as Ripple, only that it is more a platform than only a currency, so it does offer more functionality. . Stellar uses Byzantine Fault Tolerance in the consensus protocol, which ensures secure consensus can be reached (moving the blockchain forward) even if a large percentage of nodes are disabled or acting dishonestly. It also helps keep nodes distributed. Stellar is a good platform with tight involvement with banks. While it doesn't have as much functionality as all above platforms, it can probably carve out its niche by doing really good business with banks.
  7. Aeternity: We’ve seen recently, that it’s difficult to scale the execution of smart contracts on the blockchain. Crypto Kitties is a great example. Something as simple as creating and trading unique assets on Ethereum bogged the network down when transaction volume soared. Ethereum and Zilliqa address this problem with Sharding. Aeternity focuses on increasing the scalability of smart contracts and dapps by moving smart contracts off-chain. Instead of running on the blockchain, smart contracts on Aeternity run in private state channels between the parties involved in the contracts. State channels are lines of communication between parties in a smart contract. They don’t touch the blockchain unless they need to for adjudication or transfer of value. Because they’re off-chain, state channel contracts can operate much more efficiently. They don’t need to pay the network for every time they compute and can also operate with greater privacy. An important aspect of smart contract and dapp development is access to outside data sources. This could mean checking the weather in London, score of a football game, or price of gold. Oracles provide access to data hosted outside the blockchain. In many blockchain projects, oracles represent a security risk and potential point of failure, since they tend to be singular, centralized data streams. Aeternity proposes decentralizing oracles with their oracle machine. Doing so would make outside data immutable and unchangeable once it reaches Aeternity’s blockchain. Of course, the data source could still be hacked, so Aeternity implements a prediction market where users can bet on the accuracy and honesty of incoming data from various oracles.It also uses prediction markets for various voting and verification purposes within the platform. Aeternity’s network runs on on a hybrid of proof of work and proof of stake. Founded by a long-time crypto-enthusiast and early colleague of Vitalik Buterin, Yanislav Malahov.
  8. IOST: To improve speed and scalability, IOStoken uses a Proof of Believability consensus mechanism eliminating the need for an energy-hungry proof-of-work protocol, which stands as a barrier to blockchain scaling up for widespread adoption. With this system, a node is validated based on its past contributions and behaviors. Moreover, to increase fairness and to most fully embrace the decentralized nature of the blockchain, IOS uses a “fairness” algorithm that randomly distributes data to various nodes. It’s intended to support service-oriented goods and services with large customer bases. Decentralized applications and smart contracts, the hallmarks of blockchain platforms, are a priority for IOS as well.
  9. Request Network: Req payments can be used for online purchases, business to business invoices, escrow, advanced payments and eventually IoT payments between machines. Other than payments, the Request Network is also tackling auditing and budget transparency. Businesses have the ability to track invoices to audit payments as well as record transactions for accounting purposes. Governments, nonprofits, and other organizations can also use Request to bring transparency to their budget and expenditures.
  10. Rchain: Similar to Ethereum with smart contracts, though much more scalable at an expected 40,000 TPS and possible 100,000 TPS. However, Rchain has not launched ye..
  11. Ziliqa: Zilliqa is building a new way of sharding, so that 10,000 tps are soon possible by being linearly scalable with the number of nodes. That means, the more nodes, the faster the network gets. They are looking at implementing privacy as well.Rchain is an ok platform.
  12. Ethereum classic is the original Ethereum that decided not to fork after a hack for philosophical reasons. The Ethereum that we know is its fork.

2) BaaS (Blockchain-as-a-Service)

BaaS take a different route to adoption than mere Dapps platforms. They are also dapp platforms, but focus on businesses (B2B) instead of end-users (B2C) within the cryptosphere. They sell their blockchain services to companies, who then can build their own customizable blockchain as a side-chain to the BaaS without hassle and worry about technology or blockchain architecture. This is all handled by the BaaS company already and the customer only needs to change a few variables and they have their own blockchain. Side-chains are interesting, because they allow virtually infinite scaling, since there can be an infinite number of side-chains that only communicate with the main-chain occasionally and handle the majority of transactions on their own chain. This is also called horizontal scaling.
The success of a BaaS platform largely depends on its ability to close partnerships to sell to large businesses and having the best usability. The more contracts they can sell to businesses and institutions, the more valuable it will be. For that reason, the BaaS with the best ability to form partnerships and do sales will win this market. Technology isn't as important here. Of course, the platform has to work without bugs, but having a platform with outstanding technology, average usability and average marketing will lose against a platform with average technology, great usability and great marketing.
  1. VeChain is a Singapore-based project that’s building a business enterprise platform and inventory tracking system. . While it is not really competing with the above mentioned platforms, any of them can build supply management tools into their platform and compete with VeChain. However, VeChain has very strong partnerships. This gives them some protection of any of the above mentioned entering the market. Examples are verifying genuine luxury goods and food supply chains. VeChain has one of the strongest communities in the crypto world. If you are looking for something more high risk, high return, have a look into Ambrosus and Devery(Eve). Both also seem to be good at building partnerships, which is the most important characteristic for a supply chain platform required to succeed.
  2. Icon is called the Korean Ethereum. However, it specializes more on building customizable blockchains for banks, insurance providers, hospitals, and universities, since it's a BaaS. Icon has a focus on on ID verification and payments. Icon is ery close behind Vechain, because with Samsung and Line.
  3. WTC is a supply chain management platform, similar to Vechain, however, with fewer partnerships.
  4. Komodo’s open-source platform is for doing transparent, anonymous, private, and fungible transactions. They are then made ultra-secure using Bitcoin’s blockchain via a Delayed Proof of Work (dPoW) protocol and decentralized crowdfunding (ICO) platform to remove middlemen from project funding. Offers services for startups to create and manage their own Blockchains. While it doesn't have as many partnerships as other BaaS, it is the only BaaS that offers privacy so far. However, that's. it such a bug competitive advantage, since it can be replicated rather swiftly.
  5. NEM: The NEM blockchain powers what they call the Smart Asset System. This system is intended to be an open, customizable blockchain solution for any number of use cases built on top of simple, powerful API calls. NEM started as a NXT fork and introduced a new consensus mechanism called Proof of Importance (PoI), designed to reward users’ contribution to the XEM community. It is roughly based on proof-of-stake, but it also reflects how active a user is in transacting with other users. POW rewards powerful computers and also requires excessive amounts of energy. POS gives an unfair advantage to coin hoarders. The more coins they keep in their accounts, the more they earn, meaning that the rich get richer and everyone has an incentive to save coins instead of spending them.
  6. Ark is a fork of Lisk, which is doubling down on a smaller feature set than Lisk. Ark is a good BaaS, though it doesn't have many partnerships. Furthermore, they haven't launched their platform yet.
  7. Dragonchain: The Purpose of DragonChain is to help companies quickly and easily incorporate blockchain into their business applications. Many companies might be interested in making this transition because of the benefits associated with serving clients over a blockchain – increased efficiency and security for transactions, a reduction of costs from eliminating potential fraud and scams, etc. Dragonchain is a good BaaS, though it doesn't have many partnerships. However, it was funded by Disney, so it might be able to get partnerships more easy.
  8. LISK: Lisk's difference to other BaaS is that side chains are independent to the main chain and have to have their own nodes. Similar to neo whole allows dapps to deploy their blockchain too. Lisk is a good BaaS, though it doesn't have many partnerships. Furthermore, they haven't launched their platform yet.
  9. Stratis: Different to LISK, Stratis will allow businesses and organizations to create their own blockchain according to their own needs, but secured on the parent Stratis chain. Stratis’s simple interface will allow organizations to quickly and easily deploy and/or test blockchain functionality of the Ethereum, BitShares, BitCoin, Lisk and Stratis environements.Stratis is similar to Lisk, but also doesn't have many partnerships
  10. ARDR: Ardor is a public blockchain platform that will allow people to utilize the blockchain technology of Nxt through the use of child chains. A child chain, which is a ‘light’ blockchain that can be customized to a certain extent, is designed to allow easy self-deploy for your own blockchain. Nxt claims that users will "not need to worry" about security, as that part is now handled by the main chain (Ardor). This is the chief innovation of Ardor. Ardor was evolved from NXT by the same company. NEM started as a NXT clone.
  11. Bytom: Bytom is an interactive protocol of multiple financial assets ( digital currency, digital assets warrants, securities, dividends, bonds, intelligence information, forecasting information and other information that exist in the physical world) can be registered, exchanged, gambled and engaged in other more complicated and contract-based interoperations via Bytom.

3) Liquidity

There are really only 2 platforms in the Liquidity market, albeit the Liquidity market could be one of the biggest markets with insitutional investors entering the cryptoworld soon, since there is very little liquidity in Bitcoin. For example, say a pension fund wants to buy or sell $10B in Bitcoins. No single exchange has that many Bitcoins available and it would wreak havoc on the market. This wouldn't be a problem with Liquidity platforms, since they pull all order books together and back up market liquidity with FIAT money among other things.
  1. QASH is used to fuel its liquid platform which will be an exchange that will distribute their liquidity pool. Its product, the Worldbook is a multi-exchange order book that matches crypto to crypto, and crypto to fiat and the reverse across all currencies. E.g., someone is selling Bitcoin is USD on exchange1 not owned by Quoine and someone is buying Bitcoin in EURO on exchange 2 not owned by Quoine. If the forex conversions and crypto conversions match then the trade will go through and the Worldbook will match it, it'll make the sale and the purchase on either exchange and each user will get what they wanted, which means exchanges with lower liquidity if they join the Worldbook will be able to fill orders and take trade fees they otherwise would miss out on.They turned it on to test it a few months ago for an hour or so and their exchange was the top exchange in the world by 4x volume for the day because all Worldbook trades ran through it. Binance wants BNB to be used on their one exchange. Qash wants their QASH token embedded in all of their partners. More info here is doing something completely different as the above mentioned. It offers liquidity in an illiquid market. Sell shovels during a gold rush.
  2. Loopring is similar to Qash, only that it functions as a dezentralized exchange, while QASH is more of an API without a user interface. It is a protocol that will enable higher liquidity between exchanges and personal wallets by pooling all orders sent to its network and fill these orders through the order books of multiple exchanges. When using Loopring, traders never have to deposit funds into an exchange to begin trading. Even with decentralized exchanges like Ether Delta, IDex, or Bitshares, you’d have to deposit your funds onto the platform, usually via an Ethereum smart contract. But with Loopring, funds always remain in user wallets and are never locked by orders. This gives you complete autonomy over your funds while trading, allowing you to cancel, trim, or increase an order before it is executed.

4) Misc

These are platforms that are focused on a specialized functionality
  1. Nebulas: Similar to how google indexes webpages Nebulas will index blockchain projects, smart contracts & data using the Nebulas rank algorithm that sifts & sorts the data. Developers rewarded NAS to develop & deploy on NAS chain. Nebulas calls this developer incentive protocol – basically rewards are issued based on how often dapp/contract etc. is used, the more the better the rewards and Proof of devotion. Works like DPoS except the best, most economically incentivised developers (Bookkeepers) get the forging spots. Ensuring brains stay with the project (Cross between PoI & PoS). 2,400 TPS+, DAG used to solve the inter-transaction dependencies in the PEE (Parallel Execution Environment) feature, first crypto Wallet that supports the Lightening Network.Nebulas is the only one doing what it's doing. This makes them very unique and a good investment.
  2. Centrality is a decentralized market place for dapps that are all connected together on a blockchain-powered system. Centrality aims to allow businesses to work together using blockchain technology. With Centrality, startups can collaborate through shared acquisition of customers, data, merchants, and content. That shared acquisition occurs across the Centrality blockchain, which hosts a number of decentralized apps called Scenes. Companies can use CENTRA tokens to purchase Scenes for their app, then leverage the power of the Centrality ecosystem to quickly scale. Some of Centrality's top dapps are, Skoot, a travel experience marketplace that consists of a virtual companion designed for free independent travelers and inbound visitors, Belong, a marketplace and an employee engagement platform that seems at helping business provide rewards for employees, Merge, a smart travel app that acts as a time management system, Ushare, a transports application that works across rental cars, public transport, taxi services, electric bikes and more. All of these dapps are able to communicate with each other and exchange data through Centrality. Centrality is the only one doing what it's doing. This makes them very unique and a good investment.
  3. Salt: Leveraging blockchain assets to secure cash loans. Plans to offer cash loans in traditional currencies, backed by your cryptocurrency assets. Allows lenders worldwide to skip credit checks for easier access to affordable loans.Salt is a good lending platform. However, there is also Elixir, a better investment with a 30x smaller market cap, but also strong technology. Elixir has such a low market cap, because they didn't have an ICO and they only focused on development and no marketing. As of last week, they started marketing.
  4. Aion: Today, there are hundreds of blockchains. In the coming years, those hundreds will become thousands and—with ,widespread adoption by mainstream business and government—millions. Blockchains don’t talk to each other at all right now, they are like the PCs of the 1980s. The Aion network is able to support custom blockchain architectures while still allowing for cross-chain interoperability by enabling users to exchange data between any Aion-compliant blockchains by making use of an interchain framework that allows for messages to be relayed between blockchains in a completely trust-free manner.
  5. Waves is a decentralized exchange and crowdfunding platform by letting companies and projects to issue and manage their own digital coin tokens to raise money.
  6. ChainLink is a decentralized oracle service, the first of its kind. Oracles are defined as an ‘agent’ that finds and verifies real-world occurrences and submits this information to a blockchain to be used in smart contracts.With ChainLink, smart contract users can use the network’s oracles to retrieve data from off-chain application program interfaces (APIs), data pools, and other resources and integrate them into the blockchain and smart contracts. Basically, ChainLink takes information that is external to blockchain applications and puts it on-chain. The difference to Aeternity is that Chainlink deploys the smart contracts on the Ethereum blockchain. Chainlink's main functionality is oracles, a functionality also offered by IOTA.
  7. QTUM: Smart Contracts on the Bitcoin blockchain. QTUM is a smart contracts for BTC, a very niche market. Furthermore, BTC might offer smart contracts itself soon and make QTUM obsolete. Hopefully QTUM will expand into more smart contracts functionality to become relevant again.
Nebulas with Indexing the Blockchain world and Salt with Lending are probably the 2 most interesting platforms here. Nebulas doesn't have a single competitor, though there are several competitors to Salt with a much smaller market cap and with similar development progress, ELIX.

5) Behemoths

There are 3 platforms that have not been discussed yet. However, they can do most what the above platforms can do and have the potential to steal the market of all above mentioned platforms. That's why I call them behemoths.
1.) Skycoin :Skycoin is building what Pied Piper is building in the series HBO's Silicon Valley, a completely decentralized internet that is not run by ISPs, but by IoT devices, making telecom providers like Comcast, ISPs who can control bandwith, cost, net neutrality, filters, access etc. obsolete and completely decentralize them. Skycoin offers what 36 coins are offering:
  1. 12 Scalable Currency (Bitcoin, Ripple, Bitcoin Cash, Litecoin, Dash, Bitcoin Gold, Nano, Bitcoin Diamond, Dogecoin, Digibyte, Decred, Bitcoin Atom)
  2. 10 Smart Contract and Dapps platforms (Cardano, Ethereum, Neblio, EOS, Stellar, Neo, Rchain, IOST, Ziliqa, Eth classic)
  3. 10 BaaS (VeChain, Icon, WTC, Ontology, Komodo, NEM, Ark, Dragonchain, LISK, Stratis).
  4. 4 Decentralized Storage (Siacoin, Maidsafe, Gybte, Storj)
If you think that the decentralized Internet will blow all other markets out of the water and will be the biggest invention of this decade, then Skycoin is your pick, because covers that and what 27 coins do.
2.) IOTA: With the launch of Q 1 week ago, IOTA is about to offer what 27 platforms within the Top 100 are offering (!) and they are probably looking to replace several more.
  1. 12 Scalable Currency (Bitcoin, Ripple, Bitcoin Cash, Litecoin, Dash, Bitcoin Gold, Nano, Bitcoin Diamond, Dogecoin, Digibyte, Decred, Bitcoin Atom.)
  2. 10 Smart Contract and Dapps platforms (Cardano, Ethereum, Neblio, EOS, Stellar, Neo, Rchain, IOST, Ziliqa, Eth classic)
  3. 2 Oracles (Aeternity, ChainLink)
  4. 3 Outsourced Cloud Computing (DBC, Aelf, Golem)
IOTA is at the same level as Skycoin and Elastos. However, SKY's flagship product is the Decentralized Internet and ELA's is the most comprehensive dapps operating system in the cryptosphere, which IOTA cannot really replicate in the near future, because it takes years of reseach and development. This protects ELA and SKY from IOTA for now.
However, it looks like IOTA can snatch up all the smaller, easier to replicate markets, such as cloud computing, oracles, smart contracts, decentralized storage, currency exchange and soon possibly also supply chain management, BaaS functionality, privacy, security identification since none of those are really hard to build. However, Skycoin and Elastos will probably focus on their flagships and leave IOTA to scoop up all the rest. It will be an interesting year.
3.) Elastos started out as a mobile operating system 18 years ago and has now moved towards a smart contracts platform, operating system and a runtime environment for Dapps. Thanks to side-chains they are near infinitely scalable and is thus also very decentralized. Elastos is offering what 36 coins are offering
  1. 12 Scalable Currency (Bitcoin, Ripple, Bitcoin Cash, Litecoin, Dash, Bitcoin Gold, Nano, Bitcoin Diamond, Dogecoin, Digibyte, Decred, Bitcoin Atom.)
  2. 10 Smart Contract and Dapps platforms (Cardano, Ethereum, Neblio, EOS, Stellar, Neo, Rchain, IOST, Ziliqa, Eth classic)
  3. 10 BaaS (VeChain, Icon, WTC, Ontology, Komodo, NEM, Ark, Dragonchain, LISK, Stratis).
  4. 4 Decentralized Storage (Siacoin, Maidsafe, Gybte, Storj)
If you are very convinced that BaaS solutions and dapps platforms will be the big winners for 2018, then Elastos is your pick as far as I can see, because it is probably the best BaaS and dapps platform with near infinite scalability and the best decentralization and thus does what 32 coins do.
3 Closing Questions
All of the above findings leave me with those 3 questions. What are your thoughts?
  1. Why invest in any of Dapps platforms (Cardano, Neblio, EOS, Stellar, Neo, Aeternity, Rchain, IOST, Ziliqa, Ethereum, Eth classic) when Elastos and Skycoin do everything they do, are much more decentralized and scalable through side-chain/off-chain/horizontal scaling and offer lots more functionality beyond that?
  2. Why invest in any BaaS (Ontology, Komodo, NEM, Ark ,Dragonchain, LISK, Stratis, ARDR) if ICX and VeChain offer everything what all of the above offer and already have 10x more partnerships than their competitors?
  3. It looks like out of all 35 platforms, only 5 are really strong: IOTA, Skycoin, Elastos, VeChain, ICX. While the first 3 seem to cover already almost half of the top 100, the last 2 really convince in the partnership department. What's the argument for investing in any of the 30 other platforms? Maybe that they can specialise on a specific feature set, however, is this really a convincing argument? The cryptoworld is harsh and if you can't keep up with competition, you'll be moved out of the market quickly.
submitted by galan77 to CryptoMarkets [link] [comments]

Updated FAQs for newcomers

TL:DR: Don't bother mining if you want to get rich yo. You're way too late to the party.
Welcome to the exciting and often stressful world of bitcoin! You are wondering what looks like a once in a lifetime opportunity to get rich quick. Of course you guys probably heard about this "mining" process but what is this?
Simply put, a bitcoin mining machine that performs complicated calculations and when deemed correct by the network, receives a block which contains 25 bitcoins (XBT). This is how bitcoins are generated. So your brain instantly thinks, "Holy shit, how can I get on this gold rush?"
Before you proceed further, I would like to explain the concept of mining further. Bitcoin is limited 21m in circulation. It is coded to release a certain number of blocks at a certain time frame, ie: this year the network will release close to 500,000 bitcoins. What this means is that the more people (or specifically the amount of mining power) mine, the less each person gets. The network tries to keep to this time frame through the process of difficulty adjustments which makes the calculations harder and this happens every 2 weeks. So every 2 weeks, you get less bitcoins with the same hash rate (mining power) based on what the difficulty changes are. Recently, the changes have been pretty staggering, jumping 226% in 2 months. You can see the difficulty changes here.
Now, why are these changes so large?
A bit of a simple history. Bitcoin's algorithm runs on SHA-256. This algorithm can be solved using many hardware, from CPU to GPU and dedicated hardware (Application Specific Integrated Circuits). When bitcoin first started, mining on CPU was a trivial process, you can pretty much earn 50 XBT (the block size then) every few hours between Q1 and Q2 of 2010.
In late 2010, due to the difficulty increase that is reducing the effectiveness of CPU mining, people started to harness GPU mining. Only AMD GPU's architecture design are better optimized for bitcoin mining so this is what the community used. Immediate improvements of more than 10x was not uncommon.
In time of course, GPUs reached their limit and people started to build dedicated. In the same vein as the CPU to GPU transition, similar performance increase was common. These ASICs can only perform SHA-256 calculation so they can be highly optimized. Their performance mainly depends on the die size of the chips exactly like CPU chips.
In general, think of bitcoin mining's technological advancement no different to mining gold. Gold panning (CPUs) vs pickaxes (GPUs) vs machinery (ASICs) and we are still in the ASIC mining race.
ASIC mining started with ASICMiner and Avalon being first to the market, both producing 130nm and 110nm chips. The technology are antiquated in comparison to CPUs and GPUs which are now 22nm with 14nm slated for Q1 next year by Intel but they are cheap to manufacture and with performance gains similar to the CPU to GPU transition, they were highly successful and popular for early adopters. At that point in time since there were less competing manufacturers and the low batch runs of their products, miners became really rich due to the slow increase in difficulty.
The good days came to an end mid August with an unprecedented 35% increase in difficulty. This is due to existing manufacturers selling more hardware and many other players coming onto the market with better hardware (smaller die). Since die shrinking knowledge and manufacturing process are well known along with a large technological gap (110nm vs 22nm), you get an arms race. Current ASIC makers are closing in on our technological limit and until everyone catches up, the difficulty jumps will be high because it is just too easy to get a performance increase. Most newer products run at 28nm and most chips are not well optimized, so it will be around another 6 to 9 months before we see hit a hard plateau with 22nm or 14nm chips. The estimated time frame is because manufacturing chips at 22nm or 14nm is a more difficult and expensive task. In the meantime most manufacturers will probably settle at 28nm and we will reach a soft plateau in about 3 months.
Now, you might ask these questions and should have them answered and if you have not thought about them at all, then you probably should not touch bitcoin until you understand cause you are highly unprepared and probably lose lots of money.
No. If you have to ask, please do not touch bitcoin yet. You will spend more on electricity cost than mining any substantial bitcoin. Seriously. At all. A 7990 would produce a pitiful 0.02879 XBT (USD $14 @ $500/XBT exchange rate) for the next 30 days starting 23 Nov 2013 at 35% difficulty increase.
And if you think you can mine on your laptop either on a CPU or GPU, you are probably going to melt it before you even get 0.01 XBT.
Probably not because you probably forgot that GPUs and CPUs produce a ton of heat and noise. You can try but I see no point earning < $20 bucks per month.
No, because your machine will probably not mine as much as buying bitcoins. This situation is called the opportunity cost. While you can still make money if XBT rise in value, it is a fallacy.
IE: if you start mining on 1 Dec 2013, a KnC Jupiter running at 450Gh/sec (KnC lies as not all chips run at 550Gh/sec) will yield you a total revenue of 9.5189 XBT with a profit of 0.7859 XBT in profit by 30th Jan 2014 at a constant difficulty increase of 35%. The opportunity cost is: 8.5910 XBT @ USD $580/XBT with USD $5,000 which is the cost of a KnC Jupiter. This is the best you can earn and it's a bloody optimistic assumption because:
The only circumstances where you will earn money is when XBT exchange rates is so high that it makes the opportunity cost pales in comparison. Unfortunately this is not the case. If XBT stabilized at 900/XBT today (20 Nov 2013) then we might have a good case.
The risk is just generally not worth it. Unless you have at least a hundred thousand and can make a contract with a manufacturer for a lower cost, do not bother. Just wait until the arms race is over then you can start mining.
Okay, go buy an AsicMiner USB Block Erupter. They are cheap and pretty fun to have.
Sure, just read the answer below on who NOT to go for. You are doing bitcoin a service by securing the network and you have our (the users') gratitude.
You can check out the manufacturers and their products below along with a calculator here.
If you still insist on buying, do not to go for BFL. Their track record is horrid and borderline scammish. KnC fucked up a lot with defective boards and chips. Personally, I think CoinTerra is the best choice.
Alternatively, you can go on the secondary market to buy a delivered product. You can get a better deal there if you know how to do your "return on investment (ROI)" calculation. Personally, I will go for a 45%-50% difficulty increase for the next 3 months for my calculations and a 2% pool fee.
However, most products on ebay are sold at a cost much higher than it should. is a cheaper place because everyone knows what are the true value is so you will find less options. If you are unclear or need assistance, please post a question.
I actually do not use any of the pools recommended to the left because I think they lack features.
My favourite is Bitminter (Variable fees based on features used; max 2%). It has all advanced features for a pool, very responsive and helpful owner on IRC. Variable fees is good for those who do not need a large feature set, even with all features turned on, it is still cheap.
Eligius (0% fees) has high value for money but lacks features. It has anonymous mining which might be attractive to certain subset of people but not for others. Many other community member and I disagree highly with the opinions of the owner on the direction of bitcoin. I do use his pool for now but I do so only because I share my miners with a few partners and anonymous mining allows us to monitor the machines without using an account. Bitminter uses only OpenID which is problematic for me.
BTC Guild (3% fees) is another big pool and is fully featured and does charge a premium for their fees. That said, they are the most stable of the lot. I do use them but do so only because my hoster uses them for monitoring. I try not to use them because a pool with a very large hash rate (they are the largest) presents a large vulnerability to bitcoin's network if compromised.
All of them pay out transaction fees.
submitted by Coz131 to BitcoinMining [link] [comments]

A long term outlook at the Dogecoin economy and currency (intro & pt 1 - mining power and a 51% attack) [meta]

Dogecoin is awesome. Dogecoin is too the moon!
But like any moon mission, it's worth asking the question what can go wrong on the way there. What stakeholders exist in the Dogecoin economy, what outcomes are possible in Dogecoin's journey, and how those outcomes could affect the behavior of the stakeholders.
This post is designed to encourage you to ask questions about every aspect of how Dogecoin functions. I do not intend this as investment advice in any sense of the word and have worked hard to avoid any discussion about what will happen to the price of dogecoin in the future.
In this post I will outline the stakeholders, outline the factors that affect the currency, and address the question of how Hashrate is related to miners decisions, and how it protects Dogecoin from a 51% attack
A few of the key facts I'll discuss:
Disclosure: I own a small amount of Dogecoin and Bitcoin (less than $100 in total at current market value) It's purely for entertainment and research purposes.
At the moment, I see the following people in the Dogecoin community:
  1. Long term investors (individuals holding Dogecoin either as a store of value or an investment opportunity)
  2. Short term investors (individuals holding Dogecoin as an investment opportunity)
  3. Professional Dogecoin miners (individuals choosing to mine Dogecoin rather than other Scrypt based coins, motivated by income)
  4. Community Dogecoin miners (individuals choosing to mine Dogecoin because they like Dogecoin, not motivated by income)
  5. Dogecoin buyers and sellers (individuals using dogecoin as a short term medium of exchange)
  6. Dogecoin community members (individuals holding Dogecoin for fun and/or using it for non-monetary compensation {irrelevant of market value}
  7. Dogecoin developers (Individuals who will decide what changes are made to the Dogecoin protocol {some of which may affect market behavior})
It's important to note that individuals in the community can be in more than one category (someone who holds dogecoin for short term investment can also buy and sell dogecoin on the market)
Variables which can affect the above stakeholders:
A. The average (and future) mining reward from a block of Dogecoin per kilohash hour. (How much can I make mining Dogecoin, what will Dogecoin inflation look like)
B. The total mining power (in GH) focused on Dogecoin vs other Scrypt coins (the more distributed miners, the safer the blockchain)
C. The price of Dogecoin/Market Cap (to determine if Dogecoin is worth mining)
D. The market perception about the future price of Dogecoin (to determine if Dogecoin is worth holding/spending and worth mining) {this is harder to quantify}
E. The Transaction volume of Dogecoin (to determine the community interest in the currency)
F. The reliability of Fiat to Dogecoin exchanges and Crypto to Dogecoin Exchanges (to facilitate an efficient/accurate market price for Dogecoin)
G. The speed of Dogecoin conversion into fiat (for instant transactions by merchants)
H. The development pipeline for new Dogecoin compatible mining hardware (how far off are ASICs for Scrypt)
As I see it, there's one major outcome that affects the entire community equally.
A 51% attack on Dogecoin would be of massive adverse value to everyone (except the individuals perpetrating the attack). If Dogecoin's blockchain was corrupted, It would cease to function as a useful medium of exchange and as a store of value. Miners would leave because the value would plummet from it not being trusted. Short term investors would dump their holdings as they started to lose value. Long term investors would do the same.
The currency would die.
How does one prevent a 51% attack? Have a large total mining hashrate in the hands of a diverse number of miners. If the cost of running a 51% attack is so high it's not worth the money, it won't happen.
This leads to a fundamental question: what keeps people mining Dogecoin?
Dogecoin miners are separated into two groups (as mentioned above), Professional miners who will go where they can make the most money, and amateur miners who will mine Dogecoin because they like the currency.
From a community health perspective, the professional miners are the main concern (with a few caveats). If professional miners leave, that affects trust in Dogecoin.
So what keeps them mining for us? There are two major Scrypt based cryptos out right now, Litecoin and Dogecoin, and the community, as of this writing, is essentially split 50/50 is split 55/45 in favor of Dogecoin.
What this reflects is that miners expect to make more money mining Dogecoin than litecoin. Since an efficient market exists for trading Litecoin into Bitcoin and Dogecoin into Bitcoin, it seems to this author that value should be assessed in terms of current actual value (that miners choose what coin to mine based on how much they can sell it for today)
Since two large scale profitable currencies exist (LTE and DOGE) miners are going to choose the more profitable up until the point where the two converge. This depends on three variables:
Difficulty, total hash rate, and average reward.
As of Jan 23, DOGE is a little over twice as profitable as LTC.
This is what has prompted the major switch of the past few days.
I need help modeling is how much total value comes from LTC and how much from DOGE (essentially, if I owned the entire mining pool and split my work equally, how much could I make from each currency?)
At some point, enough miners will leave LTC that it's difficulty will drop. Assuming LTC retains its value (in fiat), falling difficulty will make it more profitable. Eventually, its profitability will once again match that of Dogecoin, and miners will stop leaving LTC for DOGE.
The problem is that as miners leave, it is possible that the currency value will drop as well.
On Jan 20, LTC had a 115GH rate, Doge had 57GH. Doge was trading at .00003 LTC. On Jan 23, Doge had 95, LTC had 75, and Doge more than doubled in price to .0000675. (Litecoin has also dropped about $1 (~5%) in value in USD over the same period.)
This is likely why even though Dogecoin has more miners than LTC, Litecoin is still less profitable for Miners (at this precise moment). Dogecoin has increased in currency value more than it has decreased in mining value.
Thus, the fundamental question is what kind of change is required in the price of DOGE/LTC and what hashing ratio will LTC and DOGE settle on based on their current price. It's important to remember that LTC has not dropped in value significantly, Doge has simply rose dramatically.
Fundamentally, as long as LTC has some value, it will have some percentage of Scrypt hashing power devoted to it. The same is true for Doge. So as long as people still want both currencies to some degree, mining power will be split. *Depending on that split, Dogecoin will be safe if it has enough mining power to prevent a malicious third party, and if that mining power remains in the hands of a diverse group of DOGE mining pools. *
My next post will address the different needs of the Long term investor, the short term investor, and the casual owner. (Some want a long term stable currency, some want a dramatic increase in price (even if it hurts the currency long term)
Please feel free to leave comments about anything you disagree with, any changes I should make, any thoughts about other factors that could affect the health of the currency, any other subjects you'd like to see explored. Thanks!
submitted by harddata to dogecoin [link] [comments]

On Proof-of-Work and "Consensus"

On Proof-of-Work Consensus Mechanisms

Or: how "consensus" became more centralized.


So, just some context, because sometimes it needs to be said.
I'm fairly new to the whole crypto-currency space, so there are a lot of nuances and such that I'm sure I miss out on. My experience with cryptocurrencies is mostly limited to Bitcoin and Ethereum, with some dabbling in day-trading on the side (Full disclosure: I suck at it).
Given that I follow Ethereum pretty closely, I've actually become fairly involved in the whole hard-fork debate. I'm very strongly anti-fork, and am really not very happy about the fact that the hard-fork was not only accepted by the majority, but how that came about. Watching the debate evolve over the last few weeks--and looking back on the history of similar debates in the Bitcoin space--I started to come up with some musings about PoW and what we call "consensus".
More importantly, this is my attempt at articulating why what we know as "consensus" isn't really consensus anymore, at all.

On Proof-of-Work as Security

The entire point of Proof-of-Work as a security mechanism hinges on its ability to adequately deter attempts to rewrite or control history. The illustrious "51% attack", as the term goes, refers to the concept of obtaining so much hashpower as to be able to (on average) control the writing of the blockchain. The amount of hashpower required to "rewrite history" goes up the further back in time you wish to rewrite. Thus, a "51% attack" merely refers to the minimum amount of hashpower required to, on average, control which blocks get added to the blockchain, and serves as a minimum threshold for anyone who wants to control the blockchain (and potentially rewrite its history). Proof-of-Work, in theory, is designed such that miners, acting in accordance with their own selfish interests, prevent these sorts of damaging attacks from being economically viable.
In other words, it pays better to be honest.
Even if many miners were to collude to control the chain, the idea is that it should cost them more to do so than they could make by doing so.
Attacks such as these are further mitigated by the presence of nodes, which enforce the rules of consensus, refusing to relay blocks that don't follow the agreed-upon protocol. The simplest attack that this prevents is the attack where the miners collude to pay themselves more per block. If the nodes don't also agree to this change, the miners will be wasting their time mining blocks that are then rejected by the network.
Again, it should pay more to be honest.
Note that there are some assumptions at play here. The first is that miners are acting as individual actors, acting in their own individual best interests. This creates a large population of individual, (assumedly) rational actors, leading to an overall more secure consensus among them. The second is that miners are incentivized to maintain the health of the chain, meaning they won't act in such a way as to destroy the value of the chain they're mining.
Another note: "consensus", as used within the context of PoW, refers to agreement among all miners, as individuals. This implies that miners who refuse or fail to act upon a vote that requires their input are implicit votes for the status quo. The idea behind the concept of "a non-vote is a vote for the status quo" is to impart inertia upon the network. If a change is desired by some miners, it needs to be compelling enough that it's in the economic best interest of the majority of them to make the change. If a majority of miners cannot be incentivized to vote, the vote should fail.
This prevents a highly-incentivized minority from seizing control of the chain before the apathetic majority can act. In fact, the idea is that there is never such thing as a "no" vote--just votes for change, and votes for the status quo. This ensures that changes can only be made when there's sufficient incentive for the majority to vote at all.
These concepts--that attacks should be economically infeasible, that miners act in defense of the chain through their own economic self-interest, and that highly-incentivized minorities cannot control the chain--are what govern the security of a PoW blockchain.

On Mining Pools and Altcoins

Since the original implementation of PoW in Bitcoin, many other coins have been created that leverage the same scheme for security. Most of them differ in terms of what algorithm is used to provide the proof of work, and most of the generally rely on the same assumptions and mechanics to guarantee the security of their own chains.
Mining pools (as far as I can tell) originally started out as a measure of convenience, and a way to minimize the variability of getting paid. By joining a pool, the randomness of mining blocks can be smoothed across the entire pool, leading to more regular payouts for everyone in the pool. The pool operator is incentivized to run a pool by skimming a little bit off the top of every block mined, presumably to cover their own expenses.
Altcoins come in many flavors, some of them created as scams, others to fill in perceived gaps in another coin's functionality. It's widely regarded that most are (ultimately) scams, but a few important ones have been created along the way. Ethereum, after all, is one of these altcoins.
The creation of many altcoins, the advent of pools, and the fact that most altcoins can be mined on the same GPUs has led to changes that affect the assumptions of PoW.
One of the more interesting ones is the advent of GPU mining. This allows anyone with a GPU to mine a coin, greatly expanding the set of miners. In the one-chain scenario, this would be a very good thing. However, since that same GPU can mine nearly any other altcoin, it represents a shift in the incentives for that miner. No longer are they only incentivized to see the value of the coin they're mining increase--they're incentivized to see the value of any mineable coin increase. If the one they're currently mining depreciates in value, they can easily switch to another, more profitable coin. If another coin comes along and surpasses the coin they're mining in value, they can easily switch to that one.
This has led to the commoditization of mining power. People can rent their miners out to whomever is willing to pay them the most. People can configure their miners to automatically switch to whichever coin is the most profitable right now. By pointing these miners at mining pools with consistent payout schemes, their losses in the event of needing to switch coins are even futher reduced. Consistent payout schemes reduce the time a miner has to wait until their next "paycheck".
This shift in incentive for miners leads to a very large population of "apathetic" miners--miners who are completely on auto-pilot, and often aren't even in control of which blockchain they're contributing their hashpower towards. All that matters to them is that they're getting paid the most they could be paid right now--regardless of which coin that is.
This breaks the assumption that miners' economic self-interest is aligned with the economic interests of the coin they're mining. This also breaks the assumption that miners are interested in the long-term health of the chain they're mining--since it's now in their best interest to just mine whichever coin is worth most right now.
In essense, miners see mining more like investing in an index fund rather than in an individual company.

On Pool Operators

With miners' investments in mining no longer tied to a single coin, but rather to a large set of coins, we end up in a scenario where the majority of hashpower is entirely apathetic to any single coin's current status. Combined with the fact that the vast majority of hashpower on any given chain belongs to a pool for that coin, the number of economic actors for any given coin has been reduced. Instead of consensus of miners being consensus within the population of all individual miners, it has now been reduced to consensus among pool operators for that coin.
Many pools even service multiple coins, meaning their relative investment in any one coin is reduced.
It also continues to be in a pool operators' best interests--economically, again--to align their hashpower with the will of the other pools. This further shrinks the number of individual actors controlling the hashpower to the few largest pools. Where they go, the smaller pools follow.

On the Modern Hashpower "Consensus"

All this leads to an outcome that mining was supposed to defend against: the centralization of the security of the blockchain among a small group of actors. The original concept of PoW security was partially predicated by an increase in the number of economic actors--the more there are, the harder it is for any subset of them to control the network. However, with the majority of hashpower for most coins belonging to 2-5 pools, the number of actors controlling the hashpower of the network has dramatically shrunk, not increased.
This is further compounded by reducing the likelihood that any split be "contentious", at least from a hashpower perspective. Even when the users of a coin are strongly divided on its future, the outcome will be that the majority of miners are on one side or the other. Some would argue that this is good for the coin--but others argue that it reduces the mindshare of the community by distilling it to one group or another. The other problem is that this is largely divorced from the actual control over the blockchain.
Pool operators, in general, don't care which side of a fork wins. They just care that they all agree, since being in agreement is what's economically rational for them to do. Less important is the how and why a particular side of an argument wins.
This defeats one of the final assumptions that PoW rests upon: the inertia of miners. No longer does an apathetic majority of hashpower lend a dampening effect to the direction of a chain--now it can be used as leverage by pool operators to encourage the agreement of other operators.
Again, given that pool operators will be largely unconcerned about which side of a contentious fork wins, this makes them especially susceptible to manipulation--both social and economic.

On Nodes and Exchanges

Which brings us back to nodes. The only mechanism still in place to prevent collusion among pool operators is the consensus of the nodes that relay their blocks. Among these nodes, however, are a few important actors: exchanges. Given that exchanges are the entrypoints into a coin (from another currency, usually), whichever side of a fork they pick will most likely be the one that retains its value. If a coin is no longer listed on an exchange, it becomes extremely difficult to gain more users, and thus more value.
It's worth examining the incentives of exchanges at this point. Most will, like pool operators, be apathetic to the actual reasons for a fork. This is because their incentives mostly revolve around volume of trades, and less around the relative value of any given coin. Like an index fund, their profitability is "smoothed" across the value of all coins they offer. They can offer one side of the fork, or both, and suffer little in the way of losses.
Like pool operators, that leaves them more susceptible to influence--again, both economic and social. If they can be convinced that it's in their economic best interests to support one side of the fork or the other, they'll support that side. It's also in their best interests to be aligned with the pools on which side of the fork they pick... They only risk losing out if they pick the opposite choice as the pools.
The reverse holds true about the mining pools: they only risk losing money if they pick differently than the exchanges.
So all things being equal, it's in both the exchanges' and pools' best interests to be aligned on the outcome of a fork.
Which leaves us with the rest of the nodes.

On Defaults

With nodes, same as miners, on decisions that are unrelated to the protocol, the default vote is a vote for the status quo. Nodes that do not upgrade should continue to be on the same chain as nodes that do--unless there is a required change in the protocol. The design here is the same as with miners--the inertia of the implicit vote for the status quo protects the network from a highly-incentivized minority taking control.
This is where the concept of defaults becomes a little tricky. For changes to the protocol like bug fixes, it should be assumed that the default would be to support the fix, with nodes that fail to upgrade becoming orphaned. For changes to the protocol along the lines of upgrades, the same story should apply.
However, for forks involving things other than changes to the protocol, it's assumed that the default vote is a vote for the status quo. Again, the assumption is that this for the protection of the entire network, and that nodes should be apathetic to anything other than the nature of the protocol itself.
Where this gets sticky is when the change is a matter of opinion. Here, whichever setting is chosen to be the default exerts extreme control over the outcome of the vote. This, again, is because it leverages the "apathetic" nodes to sway the vote. Instead of them being a "vote for the status quo", they can become an implicit vote for change.
The control over the default is also in the hands of a very small number of actors, even when there are multiple implementations--like exchanges and pools, they're highly incentivized to align on the default. In fact, they're also highly incentivized to align with pools and exchanges, for the same reasons pools and exchanges are incentivized to align.

On "Consensus" and "Trustless Networks."

What this boils down to is this: in the event of a contentious hard-fork--one that is neither a protocol upgrade nor a bug fix--the outcome is likely not determined by individual nodes, individual miners, or individual users. Consensus among miners is likely impossible, due to the lack of involvement--and consensus among users or nodes is mostly predicated by the defaults set within the code they're using.
This reduces "consensus" from "consensus among individual miners, users, and node operators" to "consensus among pools, exchanges, and developers."
Rather than the network securing itself in a "trustless" (trust-minimized) fashion, it now depends on the opinions of a very small set of actors.


The security of Proof-of-Work is still sound in some ways, but it's based on outdated assumptions. The assumption that the number of individual actors mining the chain grows over time is no longer true, as that responsibility has been centralized among the pool operators, whose largest incentive is to be aligned, not pick a side. The assumption that miners' interests are aligned with the blockchain's goals is broken by the ability to switch coins based on current profitability, rather than future profitability.
Which, of course, begs the question... What do we do about this? This should be a question on everyone's minds, especially in the Ethereum ecosystem. Ethereum, in particular, is at risk of forking again, this time over the upcoming "difficulty bomb." It's in pool operators' best interests to fork the difficulty bomb away, since it drastically reduces the profitability of mining Ethereum. This would lead to an exodus of mining hashpower, as Ethereum loses its place as the "most profitable coin to mine."
This, in turn, means it's in the users' best interests to fork the bomb away, as well, since no one wants to be using a blockchain whose security is decreasing over time.
Which leads to the biggest question of all: how does the switch to Proof-of-Stake play out in this world? It's decidedly against any miners' best interests to support a switch to Proof-of-Stake, so how do we prevent them from creating a fork in which Proof-of-Work continues to be supported? Exchanges, on the other hand, might be highly incentivized to see Proof-of-Stake become a reality--because they currently hold the largest reserves of Ethereum, and have the most to gain from staking some portion of it.
The only way I see the switch happening is a clean break, with the nodes defaulting to the switch, and with the exchanges on board.
But the "interest rate" of PoS is small, meaning miners could bribe exchanges into not supporting the PoS coin.
This means the decision might ultimately fall to the users of Ethereum--the same users who just recently revealed they were fine with giving up on some of its core values under extenuating circumstances. This carries the potential of it dividing the community, yet again. With those who feel the mostly strongly about Ethereum's core values--those who opposed the hard-fork and are still on the minority chain--already having left the community, it will be interesting to see how it plays out.
After all, when it comes to manipulating consensus, the cheapest way to do it is with politics.
submitted by DeviateFish_ to ethereum [link] [comments]

Best of the best Q&A Stephens and Shingos. BQX Bible Regulations

Shingo about regulation, [19.08.17 02:40] Regulation is meant to protect consumers. Everyone hates regulation until an unregulated market bites them in the ass. Complying with regulations will also force us to build a robust consumer protection framework which will be beneficial long-term When we enter the U.S. market we want to be extremely prepared and have the technical considerations already built into the platform for the U.S. regulatory landscape. It has always been our plan to get to U.S. as soon as possible from day 1. That was part of the reason we were excited to bring Stephen Corliss on board. US is gold standard of regulation. Being compliant in the US would also necessitate having a solid product.
stephen corliss, [08.09.17 18:47] Don't be afraid of regulations! Yes, some will be written and implemented poorly as legislators never get these things right BUT the most important thing is how much value this industry already generates (income, capex, etc) and the massive potential it delivers to create the next economic wave or revolution. Everything else is just noise!
stephen corliss, [23.08.17 02:14] The SEC isn't the issue really as their position shouldn't have come as a surprise to anyone. I know it did but it really shouldn't have. Regardless, we can help exchanges understand how to manage through this as we know this space inside and out. Now don't shoot me for saying this but the SEC actually is on our side, as long as we show that we are protecting consumers. That is their original mandate but unfortunately they get the bad wrap because the financial industry keeps forcing them to write regulations in response to fraud and bad behavior by financial firms that consistently hurts consumers.
stephen corliss, [16.11.17 01:43] [In reply to EstimatedProphet: What has been your experience when speaking with regulators so far? Many individuals I speak with tend to be very concerned about the SEC and the impending regulation/ restrictions on how we can utilize and or liquify our assets. In your experience, is there much room for concern?] Thank you. I believe the main concern of regulators are those tokens that clearly are violating securities laws. Unfortunately, many of the tokens issued in earlier cycles clearly are or may be securities and will face some headwinds if they don’t self-correct and adjust their models. I believe regulators will allow “utility” tokens to continue with a slight potential for a move in the future involving some sort of a “regulation-lite” solution. From our perspective, we chose to develop our model and platform in a way that embraces regulations by accommodating for them in all of processes, which allows us to operate with minimal disruptions and business risks. More importantly, this approach allows us to service consumer and business customers interested in BOTH crypto and traditional assets thus enabling us to engage newbies on the traditional asset side while slowly introducing them to crypto. I believe this optimizes our customer growth plans as it removes many of the onramp issues we would have in meeting our objective to deliver mass adoption in crypto. Personally, I’m not concerned about regulators in the least as worst case is our industry is pulled into the fold, which has already occurred at some level anyway because of money transmitter regulations.
stephen corliss, [02.10.17 16:13] Now the toxic question, would this get caught up in jurisdictional definitions of a security? My answer, no but only with the right model. Let me expand on this.. First, I'm not going to do all the work for our existing or future competitors so give me some leeway as this is one of many competitive advantages. Yeah, maybe they will figure it out after we launch but by then it won't matter...! First, a security is something that is defined prior to issuance as it sets the legal structure and parameters of the token itself. As most of you know, almost all POS coins define upfront a dividend paying model that in effect sets the legal rights of all coin holders. Without revealing all the reasons why, this is the first big mistake as to sell coins like this to the public, one must first go to their local regulator (company origin) and submit documents to authorize a public sale. Additionally, a firm like this will also have to understand the foreign issuer rules for every jurisdiction their holders reside. Not an easy task let me tell you. Now, small business exemptions exist in most developed economies for capital raised below a certain amount but these almost never involve holders/investors who are not "accredited investors". Out dated rules but nevertheless they exist on the books almost everywhere. Is there a better model? Yes sir ee! What is this model? Ah, why mess around, the functional token with a very specific overlay business model. That's where I will stop but I promise I will reveal more details as we move forward as we do want to ensure new entrants get this right so that all of you don't have to worry about all this legal mumbo jumbo One last point, for those firms like us residing within the financial side of the blockchain industry, the complexity level increases 10x minimum as everything must be assessed versus global rules involving many different types of financial business types, products or services. It is a painstaking process but if this is where you choose to hang your hat, you best know all of the ins and outs and, no offense to all my lawyer friends, you best not depend entirely on your law firm as they can only advise you on the facts you present to them. If you present them wrong, which many do even large financial firms, you will find yourself on the end of a major fine and maybe even banned entirely. This last point is huge as what I see when I look out across the competitive landscape are firms who have made very big mistakes in their business models. This will mean they will face severe legal headwinds going forward that when combined with strategic pivots that will have to come, they will be left behind by those of us who got this right.
stephen corliss, [23.08.17 02:24] Hello there! I will stay away from tax authorities opinions but with regards to the SEC it will depend on the behavior of our peers and industry. If the fraud and theft continues, they will have no choice. This is unfortunate as I've worked with many financial products over the years that were "self-regulated" and it works well. Unfortunately, the financial industry messed that up too so now there are basically no self-regulated products. If we don't fix this from within, regulation "around the world" is inevitable.
stephen corliss, [23.08.17 22:22] It is actually quite positive really as this means we are growing up. Sometimes that seems like a bad thing but it truly isn't especially if we want this eco-system to thrive. I love this stuff!! Easy as pie! Everything I've done for the last 25+ years has been regulated whether it was in Europe, Asia or United States so I embrace things like this, just a part of life. This is actually our advantage!
stephen corliss, [23.08.17 22:26] [In reply to Benjamin: stephen nice to hear that! take the time you need to build a good ground for bqx!]
We absolutely will! The most prudent thing we can do for all of you, besides building you a badass platform, is mitigate all the risks so BQX can absolutely flourish. That is what we will do, bank on that!
stephen corliss, [23.08.17 22:33] [In reply to Rawls: This guy knows how the things are supposed to be done. Nice.] Thanks Raul! The more we do up front the more we remove all the unknowns to ensure the platform maintains its superiority. If you mitigate for all risks now then that removes chances of unwanted outside disruptions. We have 100% clarity and a detailed plan to do just that.. Fun stuff!!
stephen corliss, [27.08.17 03:49] I wholeheartedly believe that regulations are inevitable and that regulations are the thing that allows this space to explode. Initially, the immediate reaction would be a very short term negative price reaction (could be a period of hours or several days) before the market realizes that this is just what happens to any product as it matures. Its the maturity of the eco-system that requires it to be regulated, which allows it to move to mass adoption and price explosion driven by massive demand. This is why everything we do here at Bitquence assumes we operate in a regulated environment and thus is embedded in our "immediate" and longterm strategic plans". By doing so, we remove most, if not all, potential future business disruption, unlike most others who will get caught off-guard. Consider the most recent disruption to Exchanges and Exchangers, where most of the industry were negatively effected by the opinions put out by the SEC (US) and MAS (Singapore) regulatory bodies regarding ICO's. What happened in a lot of cases here was that firms operating in these spaces had to hit the pause button while they sought legal advice on how to adapt their business operations and procedures. By planning ahead, one can remove much of these known and unknown variables by building a model that can flourish in such an environment. This is our approach.
stephen corliss, [27.08.17 04:23] Almost all global regulators follow a process that entails first publishing "proposed rules" to the public for comments, 2nd An internal assessment of all commentary received and finally, the issuance of final rules. The entire process averages about 9-15 months. Now, lets assume the first to enter is the SEC in the United States. Not a bad assumption because one of its key National Legal Bodies, NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS, has just approved something called "UNIFORM REGULATION OF VIRTUAL CURRENCY BUSINESSES ACT". This is important as this provides a National Law Framework for each of the States to approve and add to State Laws. With this key piece of law defined, we could assume that others will begin to build off of this. Thus, my best guesstimate for you would be we could see some regulations in early 2019. There are a lot of moving parts here all around the globe so we need to monitor a lot of things across a lot of countries! But, the first mover historically tends to be regulators from the US.
stephen corliss, [03.09.17 05:13] [In reply to catmando: Now the impacts of more regulations. im not sure. Will it slow growth but help promote better products? will regulations dampen much at all? Idk, but im sure by the end of next year the prices of a good handful of these coins will be significantly higher.] Regulations may, if not will, be a major disruption for most of our industry. However, we are building Bitquence to sustain this liquid rule environment by embracing rules and structures that are commonplace with traditional investments. This is one of many differentiators for bitquence over the long term.
stephen corliss, [03.09.17 14:09] [In reply to Bodhisattwa: Does bqx has clarify on it not being a security ?] Hello, BQX is a Functional Token that enables users to access services on the Platform. It is not a Tokenized Security because of the above reason along with the facts that it does NOT carry with it any rights other than "access", like voting, profits, dividends or any other feature common with traditional "shares".
stephen corliss, [03.09.17 15:51] All, We hear you 100%. Let me make one point reference competition. Competition will be and is a healthy thing for any industry as it provides options for consumers while also allowing consumers to choose the better service provider and technology. However, when building a model in an industry such as this one that has to align with a complex financial industry centuries old, most will either fail or miss the mark significantly. What we have right now is a classic "square peg round hole" situation where ONLY those with the necessary technical, business AND industry expertise will win. What I can share here is this, we've done all of the necessary work designing a comprehensive solution that can flourish in a highly fluid business environment, where most others will be confused and distracted. I've set up many financial firms in my life worldwide so this is not unchartered territory and we will do whatever is necessary to ensure BItquence can flourish. FOCUS, BE BOLD, BE FAST, BUILD AND DELIVER, it is as simple as that.
stephen corliss, [03.09.17 22:35] A little more color: "Our list of younger members in our forums is growing because of the mission for mass adoption is resonating with them and a lot of these younger folks need help understanding this complex space." Thus, lets be sure to operate accordingly.
stephen corliss, [04.09.17 23:23] Ben, There are some overlapping parts but many do not. At the end of the day we could simply conclude that a critical differentiating factor is they are more "active" focused and we are focused more on the "passive" end. However, these two investor types and related features do overlap in similar respects but our Universal Wallet feature is unparalleled and is not something they offer. Now, I have a much stronger opinion with detailed specifics of the numerous functionality that separates us but lets keep that to ourselves so we can maintain the advantage over the competition.
stephen corliss, [06.09.17 14:34] Brian, we are a Functional Token and should not be thought of as any type of Tokenised Security as our Tokens represent access to services on the Bitquence Platform. Our Customer Acquisition Strategy is broad in scope and is aligned with our product roadmap to ensure we reach all desirable markets and grow our user base. Exchanges are a critical component of extending our customer reach so anything we do here would be part of our business development efforts, which is a continuous process. Let me remind the community that coins and tokens involve significant volatility and risks and, more importantly, according to our Terms, Token Sale Participants were not submitting Contribution Tokens to obtain BQX for the purpose of speculative investment. Furthermore, market liquidity was not guaranteed and the value of any token could depreciate in full, be highly volatile and inherently risky. With regards to development progress, our Alpha version has been released to the Product Council for review and testing, which will most likely run for a few weeks. Beta will immediately follow for a period and we expect to release the Bitquence Prediction functionality in Q4.
stephen corliss, [14.09.17 04:48] [In reply to John Weston about news: Upcoming changes regarding Canadian users] John, I know of them well. I want to be respectful here so I'm just going to speak big picture rather than speak of any other firm.
First, one must first understand if a token is a Functional Token or Tokenized Security. A Tokenized Security is evident if tokens represent ownership in the company and token owners have rights to vote and participate in company profits/dividends. Tokens facing fact patterns like this are going to be very problematic in a lot of OECD member jurisdictions, including US, Canada, EU, EN, Asia, etc. (Basically all developed and emerging economies). The big issue here would involve the legal hurdles anyone must overcome and adhere to when raising money from the public. If a firm runs a global ICO and it involved a tokenized security, and the firm didn't meet the legal requirements across all regions before issuing, this could be a big problem to overcome.
Secondarily, the business model operated by any Token company must also be assessed to understand if it is involved in securities activities. Again, in most OECD jurisdictions when somebody accepts any type of funds from investors in-kind for a share of something being offered by the Token company, it is quite typical for regulators and courts to find a security because investors are investing capital, in a common enterprise (the tokens firms structure which represents a value to the investor, like a fund for instance) with the expectation of profit (literature claiming returns) from the efforts of others (whether the Token firm itself or a 3rd party who manages the fund). This would be the same for a mutual fund for instance. This situation could be made even more problematic for several reasons, beginning with 1) a companies own Token being classified as a "security", 2) a token firms structure for accepting investors money as part of its business (post ICO) will most likely also be classified as securities, and 3) if neither the token firm or its outside 3rd party service providers were licensed as authorized investment advisors or asset managers, they could face some severe regulatory difficulties. Furthermore, because any transactions involving any of the above would be considered securities, a token firm could also have a fourth issue stemming from the trades they accepted from users, as these could be securities and thus require a broker dealer or brokerage license. I hope this helps but ping me back here or directly if you have any other questions. Sorry, there's a potential 5th issue, if a company such as the above were handling transactions that ultimately were determined to be securities AND that firm executed customer trades (rather than send them to an external exchange), that firm could be found to be a securities Exchange and require those authorities in every region.
stephen corliss, [22.09.17 16:23] [In reply to Ron Mata: good morning . So Jamie Dimon is at it again. He just had another interview where he says government will shut down bitcoin and throw people in jail like china. But from your end it sounds different. You are bullish on this and was approached by china to help transition china. Do you know something Jamie Dimon doesn't know? Do you respect the man?] Remember, not everything is as it appears. To answer you last question first, I would say he is a smart man who is aligning his public comments with current conventional thinking. Meaning, we all know there is a lot of dark money flowing around our industry along with some firms who are committing fraud. With that as the backdrop, he cannot publicly support this industry as he cannot be at odds with the rules that are in place to safeguard the global system. Until we start embracing KYC/AML, nobody in the financial industry or those who regulate it will support it, at least publicly. However, what he is not saying is that because of rules and conventional thinking, he cannot participate in Token-Sales or this broader economy and this is a problem as at some level it impacts his businesses. For instance, it is expected that at least $3billion will pile into Blockchain startups in 2017 and ONLY 25% of this total will come from traditional Venture Capital firms and 75% will come from Token-Sales. The financial industry already struggles with their capacity to put Institutional Investors capital to work in alternative investments strategies. If we are drawing away larger pools of potential venture investment, this leaves them in a bit of a bind as their customers need higher performing assets in their total portfolios. Additionally, if this model continues to flourish, this will have a knock on effect across Private Equity as they will have much less firms to provide later stage funding or acquire, which also means they will have less capacity to put capital to work. This also means that the financial industry loses a bit of control they currently have over typical fintech firms where it is a major source of innovation for them that they typically acquire through acquisitions, which also increases competitive threats to their business that they cannot mitigate. So, what do you do? You speak negatively about this industry for all of the above reasons. I haven't even touched on the larger issues about how an industry left unmanaged or unchecked could lead to systemic failures. This is the bigger issue that I think none of us are really talking about as we cannot simply change the way capital markets work without carefully and respectfully thinking about its impact on the system as a whole. This is what regulators and central banks must, and are, thinking very carefully about, which is why I believe every national economy will begin to shift towards our model and force us all to play by the rules. (which is exactly what China is doing). In essence, a lot of this noise at some level is intended to scare the dark money out of this space, which I actually believe is working. Not a bad thing for those of us who are legitimate, both consumers and businesses. Respect? Not sure as I prefer transparency and this is very rarely what you get from leaders.
stephen corliss, [24.09.17 17:27] [In reply to CB: hi mate, are you guys concerned about Change Bank??] All, let me give a bit more thought on my Change Bank comments. Although we think about competitors, my biggest concerns are almost always driven by a single question, which is "Can a token be part of the population of tokens available to our customers in their baskets?". This is important as a token can only be included in the Basket Service if it passes a few tests. 1) Is it legitimate and 2) Would adding it expose Bitquence to serious legal, financial and reputational risk? This 2nd question is absolutely critical as we only need to look to the DAO and to discover how 1 firm's mistake can expose the entire industry. Why does this matter to Platform users? Because the business risks associated with any Token you hold are correlated 1:1 with the firm sponsoring the token so if they face serious legal/regulatory headwinds, and fines, this could drive the value of their token to zero leaving token holders with a worthless token and no service to use it with. Since our mission is to provide tech and services to our users that helps them build wealth and make prudent decisions, Bitquence will need to do whatever it takes to provide them with critical information through our Token Rating System to help you mitigate or manage risks.
stephen corliss, [25.09.17 12:33] [In reply to Dean Jaman: stephen with all the news coming out of China, I read an article that speculates China is working on placing a proportion of their currency on the blockchain, to be able to offer liquidity to its people and moreover the world. It would essentially function as Tether USDT. Can you shed some light on this theory?] Hi Dean, Moving some of a countries monetary system on to a DLT based structure makes sense but it has its challenges as understanding the impact on existing lending, credit and other macroeconomic factors will be quite difficult. However, we know China believes and invests in the technology. Purely from an economic perspective, being first in this space has tremendous potential advantages on future economic activities. If governments believe in the technology, why would they not invest in the innovation to secure a leading position in the field, generate employment and investment , etc. Personally, I know China is investing in the technology and I know the US is doing the same but to a lesser extent. However, indirectly, the US through its Venture Capital Sector is investing a growing amount of capital in DLT. I also know through some initiatives I've been involved with that the US is intently focused on how to use DLT to tackle the unbanked and underbanked, internationally. So, with all that said, I know governments see the potential benefits of this innovation and that this will have a positive impact on our efforts to move towards mass adoption. Is China actually looking to move a small share of the monetary base on chain? No idea but the fact pattern does seem to support such a move but only if they can truly understand the implications of doing so (macroeconomic factors). Plausible for sure. However, we all do need to understand how very complicated such a shift would/will be and how dangerous it could be if a central bank got it wrong. Baby steps is the only possible approach, which will require us to be very patient as this will be extremely complex and take decades to occur, if it ever does.
stephen corliss, [25.09.17 21:45] [In reply to Greg: Thanks for video and explenation of TCF. So coins from all categories will be on the platform? Will you be able to add "tokenized security" coins to portfolio without colision with the law?] Tokenized Securities can be either those that are "registered" by Issuers with National Regulatory Bodies or those that are not, whether knowingly or not. The latter example, cannot be traded on any platform whatsoever whether the platform itself is regulated or not because the Issuer has not registered their tokens. If it is, then all of the firms involved in a transaction like this could be in violation of certain rules and subject to fines.
The former, Or registered Tokenized Securities, can be transacted on a Platform but only if the platform itself is structured appropriately. What I mean by this is that unless a Platform is structured correctly, registered Tokenized Securities can only involve other regulated entities such as a licensed Broker, Exchange or Advisor depending on ones role in the process.
stephen corliss, [02.10.17 12:53] [In reply to Greg: If team figure out how to deal with asian regulators it will be a big step ahead.] Been working with Asian regulators for years so this is covered!
stephen corliss, [14.10.17 23:57] [In reply to EstimatedProphet: I think these individuals deal with government regulation all the time. They have a much more realistic perspective on how the government might come down on it. I think Stephen disagrees but I may be wrong.] Most leaders don’t really understand regulations and investment law and this is typically a conscious decision. Many of the leaders I know or have met over the years actually have very little knowledge about the rules involving global finance and almost none of them understand market structures and there inner mechanics. Knowledge is something you desire for yourself, or if you don’t have this desire you mostly rely on others. Unfortunately most opt for the latter and this is how most companies operate nowadays. Its a personal choice, simple as that. What leaders unfortunately do have is the ability to apply leverage over policy. This is what I worry about and develop strategies to protect against.
Shingo, [23.10.17 01:53] [In reply to Harshad Thakar: Do you think that the way you guys are developing the "upper layer" that might involve such crypto stuff, it will be subject to incremental scrutiny by these countries?] This is more of a @BQXStephen question, but I think that this is an area that the law hasn't fully caught up to the technology. When you send funds to an address, it is just that. The address doesn't "reside" anywhere. You could look at who owns the private key and where they reside, but it can often be unclear and unenforceable. I think the best solution that any crypto company can do is operate ethically and under the auspices of reputable regulators. For services that can clearly be tied to a jurisdiction (fiat transfers etc.) then you restrict based on location of origin.
Stephen: Thanks Harshad. Shingo is absolutely right. I want to tread carefully here but without exposing our strategic model too much, the problem our industry faces is that our default strategy is to run “from” regulation rather than to it. By taking such an approach, our industry sends signals to those whose mandate is to protect consumers that we don’t care or respect rules or that we have something to hide. That position, stance or strategic approach, is fundamentally flawed in our view and we believe there is a better approach that allows a firm to minimize obstacles rather than create new and additional ones.
Shingo, [04.11.17 17:33]* I think blockchain has the ability for us to rethink the global financial system from the ground up. Financial firms tend to do a lot of abstraction: securities, funds, etc. in order to make the system more efficient. The entire system we have now can be made more transparent, ethical and accessible through blockchain. That is really the holy grail of blockchain technology
stephen corliss, [06.11.17 03:36] Questions From User (Oscar) In Response To The Securities Question From Earlier 1.) Does BQX consider people holding BQX currently as investors or gamblers betting on a "utility token"? This is important... From a fundamental standpoint, why should we hold bqx if it does not consider us investors, offer returns, offer voting, etc? Why hold a measely utility token if its only use is for powering an app? Doesnt bode well for the long term.
2.) Are you considering selling/converting bqx for stock/stoken at some point? Perhaps some % share in fees etc? I think if bqx could incorportlate a way to incentivise $$ people to hold and buy more, they could use this opportunity to gain more popularity and lead the way. Telling people who very much consider this an investment that they are "thinking wrong" makes it sound like bqx has very little value.
3.) What happens if the sec labels BQX a security?
This is key... Lots of people are backing a project and you are right they are not being promised ownership or voting rights - and you say the problem is how people think of utility tokens - yeah we handed you 40 million to "just" play on your app... that does not make me want to hold BQX.
You guys may want to find a better incentive than "using the platform," to encourage long term holding and building value or further investment. Im sure all coins will have to deal with this Indeed, but we all know how to use a VPN, and a coin offering a return or stake in the comoany is a lot more valuable than one that does not. This could really help or hurt BQX.”
My Response:
  1. Your Question: Does BQX consider people holding BQX currently as investors or gamblers betting on a "utility token"? My Answer: Neither. We see token holders as members, supporters and customers who have purchased tokens necessary to access and use products and services they desire and deem essential and critical with regards to financial services. I liken this to a cooperative where those with shared interests came together to solve shared problems to improve outcomes for all members.
  2. Your Question: Why should we hold bqx if it does not consider us investors, offer returns, offer voting, etc? My Answer: Customers should hold BQX because they believe it has value to them personally AND that others will also believe it has value, and thus purchasing the token and holding it could serve 2 benefits, 1) It allows holders to lock in their cost to access the system at a lower cost while 2) potentially selling some of their lower cost tokens to others in the future at a higher price because of increased demand by new customers / users
  3. Your Question; Why hold a measely utility token if its only use is for powering an app? My Answer: In conjunction with the potential benefits in #2, the utility provided to customers can also replace services available today at a lower cost, allowing customers to pocket cost savings. Additionally, depending on the product or service, benefits can come in the form of better outcomes that could take the form of increased returns and decreased risks. There are numerous others but lets leave it there for now.
  4. Your Question: Are you considering selling/converting bqx for stock/stoken at some point? My Answer: We have not furthered our thoughts on this with an actual strategic plan, as of yet, but if customers would benefit we wouldn’t hesitate. However, this may be the end result anyway when regulators mature their thinking, which is also why we would consider making such a transition anyway in order to remove any unknowns or uncertainties and allow us to operate with minimal distractions.
  5. Your Question: Perhaps some % share in fees etc? I think if bqx could incorportlate a way to incentivise $$ people to hold and buy more, they could use this opportunity to gain more popularity and lead the way. My Answer: Absolutely.
  6. Your Comment - Telling people who very much consider this an investment that they are "thinking wrong" makes it sound like bqx has very little value. My Response: I didn’t say people were thinking wrong, what I said was even though some firms are not issuing tokenized securities, the mentality of holders is identical, which may create a regulatory “problem” with regards to the legal structure of functional / utility tokens. This is important from the perspective of regulators because of their consumer protection mandates. As such, whether something is a utility token or not may not matter at the end of the day as regulators will protect the public when they see the need. Personally, I believe this review will be necessary as we all know predators and fraudsters are out there.
  7. Your Question: What happens if the sec labels BQX a security? My Answer: First, we didn’t offer tokens during our Token Sale to US residents and Secondary offerings made subsequent to our token sale are not made between the company and customer but rather customer:customer. However, as mentioned, we think and plan for all variables so any such determination would have limited impact as we’ve done a ton of work to mitigate risks such as these.
  8. Your Comment: This is key... Lots of people are backing a project and you are right they are not being promised ownership or voting rights - and you say the problem is how people think of utility tokens - yeah we handed you 40 million to "just" play on your app... that does not make me want to hold BQX. My Response: First of all, the 40m number doesn’t apply to BQX so lets make sure that is clear. Please read everything I post and comment on very carefully as I believe you are using my comments out of context. This disconnect is not a pro blem for me but rather a problem with respect to current laws and opinions, which presents a gap that courts will need to close so everyone has the clarity they need.
  9. Your Comment: You guys may want to find a better incentive than "using the platform," to encourage long term holding and building value or further investment. Im sure all coins will have to deal with this Indeed, but we all know how to use a VPN, and a coin offering a return or stake in the comoany is a lot more valuable than one that does not. This could really help or hurt BQX. My Response: I’m feeling like you misunderstand how we think of our customers. We don’t believe the only incentive we offer customers is “using the platform”. The token provides access to countless benefits both from products and services AND the benefits listed above under #2 and #3 Bitquence will be the currency that enables new projects, products and services to launch within a new global financial eco-system. So, yes there are differences but a lot of similarities as well.
submitted by Greeegi to Bitquence [link] [comments]

[Table] IamA Hacker for the Government(s) AMAA!

Verified? (This bot cannot verify AMAs just yet)
Date: 2013-12-25
Link to submission (No self-text)
Questions Answers
Was there a time when you felt demoralized because of your job? Over 15 years, there are times when you aren't succesfull. Example, we were tracking a terrorist group and one of the actors popped up on our radar from his Aim traffic (yes aol instant messenger) and the gist of it is, he suspected we were after them and they made the decision to kill their hostages then and there across the wire. By the time we sent someone in to the location we identified they were dead.
I would love to share stories with you. You sound like you've been around the block. :) Oh that I have, too many to be honest. That's why I like the desk work much more.
What's the most fucked up thing you've found on an "victims" compute server? I've seen death footage, child pornography, bestiality, pretty much everything you'd find online. I think the footage that always bothered me was footage where you saw victims looking in the camera. This goes for anything seen anywhere, seeing the real despair in their eyes ages your soul quickly.
When you found these videos & photos, what are you required to do with them? Is there some database to store all the shit found? In most instances we archive them. It's important to realize that we don't just jump on and grab everything. Ideally we pull the least amount of data necessary and many times it takes hours due to bandwidth limiting / restrictions we place to stay under the radar. In the case of pulling a video, you better have a good justification for that much utilization. In that case we did, so it was archived.
What is it like compared to movies/tv? It's long hours of a black screen with white text. I wish I could send animated rabits and cookie monsters.
What is your daily schedule like? Daily schedule is based on work i'm doing. We're always on call and i've pulled a few days - weeks at my desk sleeping on a cot before with very little leaving the office.
HACK THE PLANET. I'm surprised you didn't chose They're Trashing our rights
<--- Insert Orbital - Halcyon and on and on -
What would you have to be monitoring that closely that you'd have to sleep at the computer? Waiting for a "callback" or response from a computer your operating on, waiting for an opportunity, or possibly a Humint resource to do his task. Maybe i'm on call for troops on the ground.
Hackers, my all time fav movie. It's a great one. So cheesy but in a good way. Whenever someone made a noob error or comment at work our collective punishment was to make them watch that in the background on their next operation. That lasted about two weeks. .. Sometime later the Nyan Cat popped up for an 8 hour rotation. Last time I saw anything non news playing on the screens.
Interesting , so if you were providing support to troops on the ground what sort of things would that entail? thanks for your response! Well you could be monitoring for insurgent chatter, maybe you're there to help take down obstacles electronically. If I can do something that keeps troops out of harms way it's worth losing sleep. Maybe they're their to dispatch a small drone to get me closer access or something. Who knows, let your mind run. It'll probably hit one or two correct ideas ;)
Fuckin' Nyan cat Thank god it wasn't Nein cat. that would have gone over like a fart in church!
How's the Intersect Project going? Daniel Shaw stole it last I heard.
3) What risks do Intel structures that lack transparency have of being captured by undemocratic interests? And how would that capture affect our society? And how could that be reversed? 5) Why do you think people continue to adhere to the illusion that we are separate from one another? 6) what will the world look like in 10 years? 100 years? 1000 years? 10,000 years? 1) Nope, the risk is all my own. 2) The fragile dependance on electronics in general 3) The risk is lower than you'd think, but a risk none the less. Domestically it wouldn't crush us as it's just not how things are setup. Internationally, they're all already doing the same thing. 4). I think it's a bit of both. I know a cop out answer. I think whom you're born to or where you're born can give you advantages in life, making it much harder for honest hard working individuals to reap the same benefits. I think technology is the gift changing that. All the old rules really don't apply. Any kid in his basement as often said, could be the next billionaire. 5) I think people over estimate their individual importance. No species survives because of one, it's because of group effort and sacrifice. Free will sorta messes this up a bit. 6) 10 years, I hope we've really made 3d printing economical and domestic goods are able to be produced as cheaply and efficiently as foreign made goods. 100 years, I hope we have the ability transcend more of our differences. Africa as a continent has been given new life, partially restored to it's pre imperialist state. That we've eradicated many diseases and can cure if not manage cancer to where it's negligible.
Note: This is a hypothetical situation produced merely to satiate my curiosity. I do not condone any illicit activities, nor do I mean to imply that I have participated in anything similar to the scenario about to be described. Let's say I buy a laptop, giving the store I bought it from false information. I then log onto a public wi-fi source. Let's say I have my face concealed the whole time and avoid identification via cameras. I hack into major corporations with this laptop and copy, and subsequently distribute sensitive data. I do not do this at the same location twice, and I am constantly moving. I use a random number generator to determine my next location. How would you catch me? That's a good question, Every attacker has a profile or standard modus operandi so to speak. That said, unless it was something that impacted the federal government directly (or someone in a powerful position) chances are it wouldn't even cross my radar. You'd be surprised though how many people slip up with careless mistakes. Things like not forwarding their DNS requests as well as traffic, or using the same pitch / tunnel for personal work.
Let's say I was publishing classified information from governments of the top 20 most powerful nations in the world and my modus operandum was "you can't catch me!" being left everywhere I visit, in combination with total anonymity. You'd basically just wait for me to slip up? You'd be one of hundreds of targets being analyzed.
You start by working with what you know, locations, data types, pretty much any info and start filling back from there. In all actuality it could take years and likely it would be a slip up.
Interesting: If you're a hacker for governments (and do people say hacker??), one wonders why you're breaking the rule to talk about it when you don't actually want to say anything substantial in the first place. That's a tough question, I would say that yes in the end it is. Now the tough part is where do you draw the line? The US constitution primarily applies to us citizens and that affords certain legal protections for its citizens. Alternatively, look at the EU where they grandfather every person in the world regardless of their citizenship. It's these varying policies that make it murky water.
I guess my first question is why are you doing this AMA when you can't actually give us insight into what you do? Because I don't think that question will be very productive, I have a more academic one about cybersecurity as warfare vs cybersecurity as intelligence. Mis information is just as powerful as truthful information. No one needs to know everything and honestly that sheltered bubble is what makes our way of living here work. That said, there is always a place for reform and regulation to protect citizens. When it comes to protecting and minimizing, there is a pretty well accepted standard that a lot of the world follows. There are however a few people that are selfish and fail to look at the impact on a global scale. Any excessive electronic warfare will have residual effects that can far outweigh the gains.
question: Do you think that cybersecurity is an extension of intelligence (i.e., everything is fair game) – which is implied through cyber being an extension of technological enabling intelligence methods – or of international conflict (i.e. warfare), which triggers a number of international laws and norms? Where we start is by educating people to protect themselves. The majority of successful attacks aren't extremely sophisticated, but merely rely on the lack of basic knowledge of users. We should probably invest here as well, it would certainly create a higher level of difficulty for the average cyber criminal.
If the former, i.e., intelligence, why is there such a disjunction between the media and public (who see things like international spying as illegitimate, confronting, immoral, etc) and those who are educated about international relations (who understand that spying is part of the international system)? Moreover, how can we reduce this disjunction and make the public realise that countries spy on each other, that it's a norm, and that it serves a purpose for the country and for the international system? If the later, i.e., warfare, how do we then go on to create a framework of laws and norms that will help guide cyber-warfare in such a way that it minimises harm to civilians, focuses on outcomes, operates within a relatively predictable system, and so on? I think a large part of the disparity lies exactly on what the public knows. Disinformation can work to your benefit to. I.
I don't really understand, though: do you think cybersecurity is mainly warfare or intelligence? Intelligence, but once again If I found out you were in my network i'd be mad. Some will retaliate, others know it's part of the game. That's what makes it Warfare. The hard attacks on critical infrastructure, that could be deemed warfare because the only beneficial outcome is destruction / immobility etc.
Say you find a key to a bazillion bitcoin wallet on a terrorist's computer do you transfer it to your wallet or the government's wallet? ... assuming the gov't has a wallet. That's a good question. I'd have to be a long con, i'm pretty sure a transfer that large would be noticed by the majority of the bitcoin universe.
I will say this, black op funds are just that. Not everything is funded from traditional financing. Think of it like this, cops often use drug dealers cars and re purpose them. This sometimes happens for us too. Though never direct, usually into generic fund pools.
Can you provide my personal details via pm? :3 Nope couldn't even if I wanted to. It'd break a few laws and regulations. Plus everyone deserves their privacy :D
Either way, I'm afraid to down vote you. Well I may have told Kim Jon-Un to put his army at the ready! Good choice : )
Plus everyone deserves their privacy. Coming from a hacker. Who works for the government. Y ^ ___ ^ Doesn't mean I don't believe it ;)
Hahah i hope i wasn't offensive brother, i was just pointing out the irony in the conversation. made me chuckle. No offense taken :D.
It's definitely ironic. Plus i'm sure plenty think i'm just some shill to say the government is great and infallible.
Do you have any favorite stories from your work? I understand if you can't disclose any of that but I figured it doesn't hurt to ask! Well one fun one is, we one evening while I was working on a project we broke out into what started as an impromptu nerf/soft toy war and ended up becoming this crazy venting point (as i'm sure happens everywhere), usually not a problem after hours. The problem was as soon as someone went crazy and started throwing foam footballs one of the Senior aids to the President walked in un-announced. This was crazy because it just doesn't happen like that, there's always a heads up and and an entourage with everyone putting on their a game. We all just stood there with a "whats up" look not realizing who they were.
It wasn't until after the incident in the next days morning brief that we were informed. Apparently he though it was funny.
How do you "hack" these people, lets say they run linux or whatever? Or is it on the people using aol and unpatched windows xp that are easy ones? I would say a large part is simple laziness on the targets perspective. Work smarter not harder. Things like using FTP with credentials in the clear text. On the harder tasks, maybe there's a human intelligence piece, maybe there's a targeted attacked on a lateral target (girlfriend or mother that may use their systems). There are hundreds of possibilities. There isn't one system that is weaker, it's the implementation and adherence to security policies that are the keys to the city.
What do you make of the 9/11 conspiracy theories? Most are crap, it was truly a horrific terrorist attack. I won't deny that it increased spending in the Intel community, but there were plenty of things already in motion kicking that off.
Have you seen the other videos from the pentagon other than 1fps vidoe released? Everyone knows there are more than just that video that could be released. Why are those videos not released? (if you know). There's always the thought and notion of more videos. If they exist they're well hidden and covered.
There is always a possibility of a larger darker conspiracy, i'll be the first to admit it. I can promise though that something like that wouldn't stay hidden for long, too many people with immense emotions attached to it.
Most are crap. It's a generic statement as i'm not aware of every theory, therefore I can't comment on each one.
Not sure if the conspiracy nuts are right, but I want the truth, the whole truth and nothing but the truth. I mean fuck sake we still have JFK docs that are classified. I agree, there are a lot of the older generational classified docs that really make no sense. We've come a long way and we have along way to go.
Well played, in the nicest way possible: when you hack for politics you start to speak like a politician :P. And that is one of our problems. We're segmented. Those that can speak in groups and the techies. It's vary hard to traverse both and that's where many redditors can make an impact. Even if they grasp 1/3 of what we're talking about, it's more than the average person knows. On the plus side, my mom can't tell a pc from a toaster and even she's afraid of virus's. Though she though Norton caused them, because of what she heard on NPR. :P.
The hackers I've met/been all have about 1/3rd of your social skills.
What's the most corrupt country? Have anything bad happened to you in the times of your career? What is it feel like being a hacker? I mentioned on another question corrupt is subjective. I would say the worse the human rights violations are the worse the actor.
I have had bad things happen, i've made mistakes and taken gambles that didn't always pay off as I'd like.
I consider it a job of learning daily and for that sole fact it's great!
Could you walk me through what exactly you do in your line of work? If I wanted to steal money of a bank website, how exactly would I go about that? Would I have to do the cliché'd "find their admin page" whatever, and if I made off with the money, would I have to patch it up with fake code? Are you a complete white hat, or a few spots of grey here and there? As far as a database, likely the original analyst would have tasked up and researched a lot of the information i'd need. Systems and their related com info (ip etc) and usually they would have already had an advanced vulnerability scan performed. From there i'd attempt to leverage an exploit through some means (attack directly or in most instances latterly) , priv escalate, do a bunch of recon and most likely sit on it for a few days. No one is every numb to what is going on, it's their level of response that you worry about. I won't comment on specific individuals or groups.
May be you can do a little favor here, Bro Hug I wish I could tell you one way or the other. I've been there and it sucks.
The girl I m dating - is she currently seeing someone else or is it just a suspicion, Who did she call last night? I'd hope she called family or an old friend to wish them well for the holidays.
Are you a wizard? Well I can make packets do tricks, but I suck and spells.
So a Muggle with a stolen broken wand maybe?
I've actually had my eye on computer science and specifically network security and would love to get some info or pointed towards some resources that you'd recommend? :) I'd say it 10% school and 90% on the job. Reach out to your school network admins / comp sci departments and get that hands on time. If you have passion, you'll make it.
Thanks so much. :) I've actually been putting in the effort to reach out to my school IT to see if I could follow him around, and then I mess around on the comp quite often(being all the time), so there's that haha. You rock man! A good cheap learning method is a Virtual Lab - the Deice iso's are great.
People specialize in different focus's here. We have the firewall / router guys, the unix guys, the windows guys, the web app guys etc.. Find something that intrigues you and sponge it up!
Best of luck!
You said you've worked around the globe. What was the biggest shithole that you've been to? As for the various governments, do they themselves think of the work you do as more glamorous than it really is? (Do the expect you to just "hack" your way through anything?) Thanks for the AMA! Biggest shithole, probably Western Sahara figuratively and literally.
Yes the majority of policy / decision makers in the various forms of government are very far from understanding what's going on let alone how it's handled. I think this is where a lot of questionable or confusing statements are made. Sadly, you're taught to give a presentation to the lowest possible denominator (aim for a 4th grade level and build up as needed). It really is time we re-assess and move younger more tech savy individuals into the decision making process. Limit the duration on congressional and senate terms, bring in the young blood.
One time we mirrored one computer across multiple systems (and I mean dozens) and sat whomever we could find in a chair to pretend otherwise they would think it was impossible for small teams to handle an operation. It really is a dog and pony show and that detracts from quality work and decision making.
I'm not an ageist, there are a few that get it, most though are playing the politics game and trying to make a few bucks with no real interests.
How common is it for government hackers to be former black hats? Not very common, Most would fail the background checks.
JESTER? Feigned ignorance is bliss. You can deny deny deny.
Just kidding... Actually, I'm curious. We hear about high-profile cyber activists working for Russia, China, Eastern Europe, etc and they often seem to have some sort of governmental support. How much does the government know about pro-government hackers operating within its borders? That's all I'll say on that one.
I would think they might be supported and possibly even receive coordination so they don't interfere with official government ops, but are you able to elaborate? There are instances where internal groups will battle each other for credibility in those countries, that's always fun to watch. The power struggle, the victor and the spoils. All the while emotions cause sloppiness.
How did you start hacking? Hacking is a generic term. I think anyone intrigued by how things work and follows through with learning is essentially hacking their mind. So in that regard I went that way. I learned a lot messing with Bulletin board systems in the early 90's, that's also where I learned the power of social engineering and leveraging resources. From there it was school and then work applying everything up to that point.
I don't know if it's been asked already.. But, how much money do you make per year? Federal pay scales are made public, there's the GS system band with multiple variables and then it goes extended. There are also Private entities owned and operated that sub contract to the government for certain positions as well. This is to keep pay fair and commensurate.
My highest pay i've held private was just shy of $200k. For the Government the average for a 5 -7 year analyst is GS9-11 pay. Most of us started at GS 13 depending on experience. It's convoluted. I'm not going to revel my pay band and or stepping now because of identifiable information. Bottom line is you can make good money. The positions advertised will give you the starting ranges.
Why do the goverments work against each other? Instead of doing the next step towards a better world, we basicly are on a good way to extinct ourselfs. Or is it a fight against corrupt goverments? It's all about power plain and simple. Always will be as long as man has free will and the ability to want more.
Is there any "truth" being spread out there about the govt/whatever you do that you'd like to refute because it's just too exaggerated? No one has the time to listen to phone calls or read the emails of everyone in the world.
Lets stop and think about how much data that is, then how many man hours it would take. Just not feasible. It's like throwing a rock at the moon and hoping to hit it (even though we know it'd never make it). It's very specific and focused or else it'd be a waste of resources.
What questions should we be asking? Whatever you want I'll censor what I need to.
No, my question was what should I ask you? I'm obviously not as informed as you are, and my questions would be superficial at best and terribly ignorant at worst. I don't know enough to even comprehend what I don't know. Well, you can ask me about clarity with anything in the leaked docs. Ask about anything you want really.
So I asked you, what questions I should be asking. So if you were me, what would you want to know and ask about? What's important knowledge? A question I'd always ask is, do you consider yourself good or evil? To which I replied, it's subjective. One countries hero is another's terrorist. I like to think I live a moral life, but as we know morality is a flawed notion.
What'd the attitude towards snowden and what he did? I think information is important and some should be shared. I think in the context of Snowden, the issue you have is he didn't work in any of the directorates he stole from, nor was he privy to all the info. It's easy to paint a picture when certain parts are withheld. I believe he did what he felt was right and that's what matters to him.
I will say that these things often backfire though making things much worse in the long run. Things will be more compartmentalized and it will make it harder for those of us that have concerns to voice them and address them.
maybe you shouldn't break the law (the 4th amendment) and someone with clearance won't have to leave the country to tell the truth. Well that's it. Any data acquired would be through appropriate warrants through the FISA courts. Accidental collect is legal as long as it's not actioned upon and properly disposed of. I'm not going to comment on him as a person as I don't know him, but despite claims by the media there are measures in place. Nothing being done has been done without government approval or sanction. It's very easy to paint a picture to your liking when you limit your pallet to only the colors you like.
Maybe you should just tell congress, anonymously if needed or just inform the press like Snowden did.
Any data acquired would be through appropriate warrants through the FISA courts. Remember your data is traversing public infrastructure privately owned and operated, which makes it even stickier. Logging on any firewall would be metadata.
This also ignores the vast data collected on all Americans, I do not care if you or anyone considered meta data fair game, it is a violation of 4th amendment because I know for a fact you do not have a warrant for such collection of every American. I agree with your concerns, but unfortunately you don't have all the facts and honestly that's what needs to change for everyone. There is a need for more transparency I agree. But there will always be limits.
Can you hear a good story about you shitting your pants? I have lots of them myself, but this thread isn't about me. So... I've literally shit my pants more than once (though that was usually because of shitty 3rd world sanitation and food quality),
One time while on an operation in the field my laptop got hit by a 7.62 round. That made me pucker up a slight bit. Fortunately most work was from the safety of a desk and that wasn't too often.
Do you have any information that is secret/classified that would shock the general public if it were released? I think anything could be shocking given the wrong context. You would be surprised at how many people are really victims to fraud and more so the businesses unaware of the IP theft. I once sat in on a meeting with a firm trying to sell a multi million dollar platform to the government, only they didn't realize we had already pulled the source code of a foreign adversary network.
What branch of the government do you officially work for. Is it NSA, CIA, FBI or something more mundane? I work for the US IC community. I've performed operations for all three and each of them are different, the tools, techniques, procedures all have restrictions and specific requirements. I mostly operate CNE which by default is an NSA covered operation.
Thanks for the answers. I guess I never really thought about how big and involved fraud and IP theft is, but once you say it, it makes perfect sense. Everyone always says numbers are exaggerated. Their not, no one knows how much, but i've seen billions personally.
Could you talk about the data gathering practices of private companies? One company in the valley had a cluster with multiple petabytes of raw live user data that anyone could perform research on with no restrictions. In addition to acccess to live data as needed.
It was the wild west there, and they wondered why hackers were exfiling so much data. Sigh
It's probably not who you think either.
Do you have teams developing and banking 0 days for different ops? What % of your attack vectors would you say are technical intrusion vs. social engineering. Have you ever 'framed' other agencies or groups with noisy callbacks to known group / agency cnc? Would you agree that most "protection" is essentially useless vs a targeted attack? Can't comment on most of these.
I would say social engineering / user error is a vast majority of our luck (or at least getting through layer 1/ outer network perimeter).
Imitation is flattery, subvert the subverted or something like that.
Yes, most targeted attacks will succeed. Actually most attacks will, give the right time and resources (bankroll to buy time / equipment / 0days etc).
Hacker or IA? Because offensive hacking is not an every IC branch ordeal. Contractor or civilian? And by hack, do you mean CNA or CNE? Or just analysis after the red team has done their thing? I can ask a million questions but they don't really matter much without the previous being answered. The operations are directed by the IC in charge. Each agency has its own rights and restrictions. 99% of the work is CNE across the IC. CNA is not something that's just done on a whim, it requires a lot of boxes to be checked by a lot of people. Most CNA would be field related operations in a somewhat controlled environment. There isn't a whole, lets take down wallstreet time operation going on, more of the shut down these forums, or this communications tower etc.
Rarely is CNA directly authorised or sanctioned. If so those operations are directed by military personnel
Hi, and thanks for your AMA. You've answered a few times questions regarding enrolment, degrees or "how do you get into this field". I'm wondering if you could tell us more about the background checks. What's in them? What findings during a background check would be a deal-breaker? Are they executed right after you apply somewhere (i.e. right after you sent an email, before you get any replies)? Like some previous screening? Or rather when you've already been considered for an interview and it becomes an integral part of the interview process? Background checks are interesting. There are your traditional screenings for your security clearance. Depending on the level, you may go back 2 years, 7, 13 or even more if you're getting specific caveat access. Additionally there are routine background checks during your employment. The more sensitive the job, the more frequent. Sometimes they'll do them before they even approach you about specific opportunities. Sometimes you'll have plants in your office there specifically to observe you in your normal habbit. It's pretty sur-real sometimes.
Blondes or brunettes? Brunettes, though I'm never one to turn away a beautiful woman.
What is your favorite port? Favorite port... that's a tough one, depends too much on network restrictions I might face so there's never really anything consistent. I will say it's better to hide in plain sight in some instances.
When you say private security firms are you talking about Booz and the bigger guys who contract desk jobs? Or are you talking about Xe/Blackwater which contracts people downrange? I didn't think those guys were involved in any sort of intelligence work. Both. Xe is definitely in Intel, i'm pretty sure they have job postings for it. Humint is still intel for the IC (aka boots on the ground). Most of the Xe guys are ex operators too. We have had our fair share of people looking at screens saying this is awesome looks good (when it was really just an MRTG diagram or a Nagios system status etc.) They all fake the funk when they visit the IC community and their varying offices.
How many times do you type "nmap" on any given day? Fellow Hacker. Trick question.. anything repeated more than twice you script ;)
Last updated: 2013-12-29 04:19 UTC
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