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Unbelievable $1.7bn ICO from Telegram!



Telegram ICO raises TON of money

In the largest ICO of all time, Telegram has raised a TON of money!

Pavel and Nikolai Durov reported that they raised $850 million in the second round of their initial coin offering (ICO) in a notice signed with the US Securities and Exchange Commission.

Most ambitious crypto token sale to date?

The first round of the ICO took place from Jan. 29 to Feb. 13. It managed to attract $850 million from 81 investors to build it’s Telegram Open Network platform, or TON. After 2021, the name of the Telegram Open Network will be changed to The Open Network.

The ICO sought investment to support the development of the Telegram messenger app and its own Blockchain platform Telegraph Open Network. While the document does not disclose the identity of investors, 94 different entities took part in the ICO, which started on March 14. In the column wherein the applicant specifies which type of securities are on offer, the document states “Purchase Agreements for Cryptocurrency.”

Telegram brings cryptocurrency payments to the masses

That’s right, a messaging platform akin to WhatsApp has raised $1.7bn of funds by selling its new cryptocurrency token. Previously, Filecoin had achieved the biggest ICO raising $257m late last year.

However, $257m feels like a large amount of money for one small team to raise in a very short space of time in a very under-regulated space. Now Telegram has raised 7 times that amount of money its hard to see how things can end well. Even putting aside cybersecurity issues and, heaven forbid, a significant compromise, a project with close to a $1.7bn budget carries a lot of risks if not managed properly. Was Telegram making a money grab and just got greedy? While that’s unlikely to be the whole truth, I think they would have been more responsible by raising smaller amounts of money in several stages – lowering the risks involved for everyone.

Given that Telegram already has a successful messaging platform, itself worth billions of dollars, and an established engineering team that supports it its hard to see what scale of project justifies raising this much money so fast.

Let’s hope that Telegram is responsible with the funding its raised, has impeccable security practices protecting their newly acquired hoard and that the Telegram Open Network delivers on its promises of delivering decentralised digital communication – in whatever form that may be!

Update 02/05/2018: Telegram cancels ICO after raising whopping $1.7 billion

After raising a whopping $1.7 billion from around 200 investors, Telegram decided to cancel their Initial Coin Offering (ICO) for its token, Telegram Open Network (TON) and cryptocurrency ‘Gram’.

According to a report in The World Street Journal (WSJ), the ICO was cancelled because Telegram believed it had raised enough money and did not wish to attract the scrutiny of the Securities and Exchanges Commission (SEC).

Recently in the past few months, the SEC has been clamping down on unregulated exchanges and ICOs. It told the Congress that “ICOs are a security and should be regulated as such.”

Telegram officially intends to use the money raised to build a “third-generation” blockchain named TON. This will use the Gram token as its native cryptocurrency for transactions. The company has used various buzzwords around the proposed technology including an “open network” that “can become a Visa/Mastercard alternative for a new decentralized economy.”

However, there have been complaints about lack of transparency. According to CCN  ” Telegram has been notoriously opaque about its token sale, with even prospective investors complaining about an inability to convince the company to provide them with concrete details about the offering.”

Update 10/05/2018: Telegram had developed the first service for its future TON platform

Telegram has announced the first service which will become part of its upcoming Telegram Open Network (TON) platform. The company is currently testing it behind closed doors, according to Vedomosti, the Russian media portal. The service is called Telegram Passport a login authentication system. According to a source, the service will be available from next month.


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Nano is changing the world and Venezuela is next




Cryptocurrencies are saving lives

Thanks to cryptocurrency and kindness, poor families in Venezuela can buy food. First, it was Bitcoin Cash helping feed the poor in Venezuela. And now its the turn of Nano.

The Nano donations were gifted by kind Reddit users to help Venezuelan families buy much-needed food. Venezuela is among the world’s poorest countries even though it has the largest proven oil reserves in the world.   87% of its people live in poverty.  Its population is 32.3 million. That means around 28 million people living in poverty.

This heartwarming tale of kindness, hope and cryptocurrency began when a Reddit user from Venezuela called Hector received a 0.5 Nano donation from another Reddit user. This is equivalent to an entire month’s salary in this poverty stricken South American country.

For those of you who are unfamiliar with Nano, it is a cryptocurrency project that focuses on instant and feeless transfers for day-to-day transactions. Nano is based on a different structure to bitcoin called a DAG.  It was designed as a ‘digital currency for the real world’ and this is a perfect example of what the cryptocurrency set out to achieve.

Hector created a thread in /r/nanocurrency called “Got my first 0.5 NANO – venezuelan user” to share his experience about the Nano donations. As a result, more people started to send more Nano donations to his cryptocurrency wallet and it snowballed!

One week later, Hector was able to buy even more food to help others in the wider community. He bought 102 kgs (224 lbs) of food and donated it amongst his friends and neighbours as well as his family.

And only a few days ago he exchanged 61 NANO for 300 kgs of food with a different supplier. As a result, 40 more families benefited from the donations and were able to buy much needed food.

Nano donations life-changing

Hector described the reaction he received when he told people about the Nano donations as “amazing”. What’s even more amazing is the fact that so many of them actually know what cryptocurrencies are. Others were sceptical or indifferent and were only interested in the food. However, when Hector told them about how the Nano donations were helping them buy the food they were overjoyed.

At the time of writing a total of 90,1 NANO has been invested (equivalent to $230 at the time of the investment) in 402 kilograms (884,2 lbs) of food.

Adopt A Family Nano Project

The project launched in /r/nanocurrency is called Adopt a family  It will focus on helping Venezuelan families by means of Nano donations.

It is a fabulous and heartwarming initiative.  So many families are benefiting from the project. Hector hopes hundreds more families will also benefit from it. And in turn, Nano will become more familiar among the Venezuelan population and cryptocurrencies in general.

Long live Nano!

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Coinbase adds new currency




Ever the trend setter, Coinbase has once again, rocked us with another exciting announcement about its currency listings.

Coinbase announces support for GBP withdrawals & deposits within weeks

The CEO of Coinbase has confirmed that they will be supporting GBP for withdrawals and deposits within the next few weeks. While it might be expected that a new currency coming to Coinbase would result in furious amounts of market activity, it has not.

Are you excited? No, nor were we. But we dug into the details anyway.

Coinbase currently uses Estonian bank LHV to process payments. These are all done in euros. UK users have to withdraw euros from Coinbase using SEPA transfers or via mobile banking apps such as Revolut.

The UK economy is the fifth largest by GDP and 6% of Bitcoin transactions are made in GBP. So, according to Feroz, this opens Coinbase up to the largest market in Europe.  This is a market which can and has been buying cryptocurrency without this GBP withdrawal support already. GBP deposits have been available for a while now, thanks to a partnership with Barclays. However, withdrawals have not been possible before.

In March, Coinbase partnered with Barclays Bank which opened them up to both GBP payments and the Faster Payments Scheme. This is one of the first collaborations where a UK bank has agreed to accept money that was previously held as a cryptocurrency.

As the website currently states, “Coinbase will send your funds as EUR when you make a withdrawal. If your receiving bank account is denominated in GBP, your bank will usually convert EUR to GBP when they receive the funds.”

The CEO confirmed that support for GBP withdrawals and deposits will be rolled out over the next few weeks.  UK users will be able to deposit Sterling and withdraw Sterling out into their bank accounts using faster payments.

In an interview with NewsBTC, he also said that Coinbase Custody has had a ‘lot of interest’ and that they have had to restrict how many investors they can take on.

Feroz was also asked if Coinbase will always support the same coins and tokens on both their consumer products and their institutional products. He made reference to recently-acquired Paradex, an exchange based on the 0x protocol which offers support for ERC20 tokens. Coinbase also said recently that they plan to support ERC20 tokens.

Feroz said: “We will start to take a product-specific view in terms of the regulatory profiles of coins and the service they’re providing and if that allows us to extend it beyond the four coins we have, then that’s what we’ll do. You will see our businesses as they grow, the coins supported will maybe diverge. One example of that is Paradex which today is live in Europe with eight coins.”

Feroz also commented while they are looking for regulatory certainty, it is not getting in the way of adding new tokens. He said Coinbase will ‘continue to look into tokens that aren’t securities and add them in the future.’ Pointing out their new broker-dealer and ATS licences in the US, he said that they will be able to offer tokens that are registered with the SEC.

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The rise of the 51% attack




The prospect of a 51% attack is on the rise, and a threat for which the cryptocurrency community is woefully unprepared.  Therefore, it has become essential for cryptocurrencies to find the solution to this problem ASAP.

What is a 51% attack?

The short answer is that a 51% attack is when a miner or group of miners controls more than 50% of a network’s mining power, also known as hash rate or hash power. With most of the power, they can therefore control the network, in terms of what it accepts and confirms. Using this, a attacker could theroretically spend a coin multiple times by refusing to confirm transactions, and do a whole host of other malicious things.

Hash Rate

A network’s hash rate is a measure of the rate at which hashes are being computed on the network, a process that is known as hashing. Simply put, hashing involves taking an input string of a given length, and running it through a cryptographic hash function in order to produce an output of a fixed length.

Hashing on the Bitcoin network requires the use of Secured Hashing Algorithm 256 (SHA-256), which is the cryptographic hash function that is used on the Bitcoin network. Numerous cryptocurrencies make use of different hash functions e.g. Ethereum utilizes the ‘Ethash’ hashing function, whilst Litecoin’s cryptographic hash function is ‘Scrypt’.

A network’s hash rate can usually be measured in the following denominations:

  • 1 KH/s (kilohash per second) is 1,000 (one thousand) hashes per second
  • 1 MH/s (megahash per second) is 1,000,000 (one million) hashes per second
  • 1 TH/s (terahash per second) is 1,000,000,000,000 (one trillion) hashes per second
  • 1 PH/s (petahash per second) is 1,000,000,000,000,000 (one quadrillion) hashes per second

The 51% attack concept was first explained for Bitcoin but could be undertaken on many blockchains. Even though this kind of hacking is possible, it’s extremely difficult.

All cryptocurrencies are based on the blockchain network. In a network that uses the PoW consensus algorithm, in order to add a new block, the miners must perform complex calculations, thereby proving that they have done the work. The first miner who offers the right solution to the problem gets the opportunity to create a new block and an appropriate reward for it. The more processing power at the disposal of the miner, the higher the chances of finding the right solution faster than everyone and the greater the amount of remuneration. When the miner finds the right solution, the system notifies all network participants about it.

It is this key role of computing power that leads to the threat of  51% attack. If the miner or the pool of miners controls more than half of the hash rate, then they have the ability to fully control the network as they can add new blocks, manipulate two-way operations and refuse to confirm new transactions. Also, a 51% attack can lead to the fact that unscrupulous miners can use the same coin several times by recalling transactions made with it, which is called double spending, or double waste. At the same time, the attacking side cannot change information in already added blocks or generate new cryptocurrencies.

It should be noted that blockchain networks using the PoS consensus algorithm are much less subject to the threat of a 51% attack, since under this algorithm, the validators work on maintaining the operational capacities of the blockchain and their work is based on their share of the network’s cryptocurrency (or stake), and not on the computing power of their nodes. Any attack attempt in this system becomes unprofitable.

Most often, new “cryptocurrencies” are jeopardized by the 51% attack  which has not yet managed to garner the support and trust of the crypto community, and accordingly, the miners need less capacity to get a “controlling stake” of the hash of such a network. This attack, however, is unlikely to bring financial benefits to the miners and will more likely be used as a way to eliminate competitors. Another case is an attack on a commercially successful cryptocurrency, but this is an order of magnitude more difficult since the cybercriminals will require huge computing power that is available to only a handful of them.

How easy is it to obtain 51% of the network?

For a big market cap coin like Bitcoin, it would be impossible for one person to acquire the majority power of its network. The majority of the network would require a hash rate of over 14 EH/S, which is thousands of times stronger than the world’s fastest supercomputers. However, mining pools could easily coordinate a pool stronger than half of the network’s power. In July 2014, a mining pool called GHash was close to obtaining 51% power but agreed to limit its mining.”power to 39.99% to preserve trust in the Bitcoin ecosystem.

There is one option that can remove the risk altogether: centralisation. Tokens, like Ripple, simply have a single central authority. Although it’s actually pretty easy to say that Ripple acts like a token constantly under 51% attack; because, well, it is constantly under a 51% attack.

Ripple unveiled a strategy in 2017 to ‘become more decentralized than Bitcoin’. Their (now ex) technology chief Stefan Thomas claimed that Ripple validators are less likely to be malicious or attacked successfully since they are chosen on ‘merit’.

“Bitcoin chooses validators solely based on their mining power, which actually deincentivizes security,” Thomas wrote. “Security measures cost money, but don’t improve on the speed of mining.”

The XRP Ledger’s biggest difference from most cryptocurrencies is that it uses a unique consensus algorithm that does not require the time and energy of “mining”, the way Bitcoin, Ethereum, and almost all other such systems do. Instead of “proof of work” or even “proof of stake”, The XRP Ledger’s consensus algorithm uses a system where every participant has an overlapping set of “trusted validators” and those trusted validators efficiently agree on which transactions happen in what order.

Economics of a 51% attack

If a malicious miner acquires 51% of the network’s power and performs a 51% attack and double spends some coins, the value of that cryptocurrency will presumably drop in value. The result for the attacker would be:

Net value for the attacker = Number of coins double spent * (value of the coin – the coin’s drop in value)

In some instances the net value from that attack would be less than the value rewarded from mining the coin benevolently.

The monetary economics of a 51% do not always make sense from a profit standpoint, but could make sense if greater politics were at stake i.e. a government or competing cryptocurrency that tampers with Bitcoin or another cryptocurrency to distill fear in its network.

Who is affected by a 51% attack?

While a 51% attack is happening, if you hold the associated coin on a wallet you control, you don’t really need to worry. Many sites make a big deal of 51% attacks, but unless they’re sustained for a significant amount of time, only specific people & services are affected by them.

The people affected by such an attack are:

  • Holders: if you hold your coins on a centralised exchange/wallet, if that exchange/wallet is affected by the 51% attack they may lose a lot of money, and potentially forward this loss to their users (similar to where when exchanges are hacked they sometimes absorb losses by taking away from user balances).
  • Exchanges & crypto payment processors: the attacker may try to deposit to an exchange or buy something during the attack. Any payments made during a 51% attack may be invalid (e.g. after the attack is over you might lose the received coins).
  • Miners: the attacker may receive all block rewards, causing any other miners to temporarily lose out on their mining profits.

One reason some people keep their crypto on exchanges is because holding each coin on its own wallet can be difficult to keep track of.

How much do these attacks cost?

The cost of a 51% attack varies per coin, with Bitcoin being the most expensive to attack (as it has a very high hashrate). Many of the coins that have been attacked recently are on the cheaper end.

Reddit user xur17 has created a webiste called that tracks the costs of performing hourly 51 percent attacks on PoW cryptocurrencies. Alarmingly it’s as cheap as $500 per hour to attack some coins.

The site reaches its figures by the following method: “Using the prices NiceHash lists for different algorithms we are able to calculate how much it would cost to rent enough hashing power to match the current network hashing power for an hour. Nicehash does not have enough hashing power for most larger coins, so we also calculated what percentage of the needed hashing power is available from Nicehash.”

Why has there been a sudden rise in 51% attacks?

The first attacks to gain public attention happened back in 2014 and caused a lot of Bitcoin exchanges to increase their proving standards. But recently we’ve been having a whole new wave of 51% attacks, and it doesn’t sound like they are going to stop any time soon.

Its no coincidence smaller coins are the ones being attacked. The cost to launch a 51 percent attack against many altcoin networks is shockingly low, especially since hashpower can easily be rented from so-called “cloud mining” firms.

Zencash co-creator Rob Viglione has argued the rise of mining marketplaces has made it easier, since attackers can use it to easily buy up a ton of mining power all at once, without having to spend the time or money to set up their own miners.

Meanwhile, it’s grown easier to execute attacks as these marketplaces have amassed more hashing power.

“Hackers are now realizing it can be used to attack networks,” he said.

The growing list of recent 51% attacks

Below is a list of recent 51% attacks. As you can see they are on the rise!

April 2nd 2018

Electroneum (based on CryptoNight at time of the attack) was hit with a 51% attack.

April 4th 2018

Verge fell victim to the so-called “51% attack.

May 13th 2018 – May 15th 2018

Monacoin (based on Lyra2REv2 at time of the attack) was hit with a 51% attack, estimated to have caused around $90k in damages.

May 16th 2018, 10:38pm UTC

Bitcoin Gold (based on Equihash at time of the attack) was hit with a 51% attack against block 528735.

May 19th 2018, 5:26am UTC

Bitcoin Gold (based on Equihash at time of the attack) was hit with a 51% attack that ended on block 529048.

May 22nd 2018

Verge (based on 5 mining algorithms at time of the attack) was hit with a 51% attack. It looks like the attacker took control of two of these algorithms, Scrypt and Lyra2RE, and the attack was between blocks 2155850 and 2206272 (with a loss of around 35 million XVG).

May 31st 2018

Litecoin Cash (based on SHA-256 at time of the attack) was hit with a 51% attack. See a Reddit thread confirming it here.

June 3rd 2018, 2:43am UTC

ZenCash (based on Equihash at time of the attack) was hit with a 51% attack. They experienced 3 double spends; the first for 3,317.4 ZEN, the second for 6,600 ZEN, and the third for 13,234.9 ZEN. The Zen Team recommended exchanges to increase required confirmations to 100 to deter the attack happening again (currently Binance & Cryptopia require 100 confirmations for ZEN deposits, and Bittrex requires 200).

How can a 51% attack be prevented?

The development of a more decentralized network with a greater number of individual miners would be able to provide a strong base for defense against the chance of a 51% attack. The larger mining groups are able to make use of specialist ASIC mining rigs and ASIC-resistant algorithms. Coins that would allow CPU mining are also realistic defense mechanisms against 51% attacks.

The Proof of Stake consensus mechanism is also less susceptible to this kind of attack. This is because purchasing of more than 50% of all the coins available on a network is normally far more expensive than trying to take control of 51% of the hashing power.

Furthermore, any individual with a large stake in any network would be risking their own holdings by launching an attack on the network to make it malfunction critically.

Charlie Lee suggests the best way to prevent the future 51% attacks would be to implement merged mining.

Merged mining allows for the miner’s pool to mine several cryptocurrencies simultaneously, as long as they are implemented on the same algorithm. This would allow the smaller cryptocurrencies to piggyback off the already established mining networks and increase their own hashrate.

Another suggestion of his is to pay miners more — which would in turn drive up the rent for the mining capacities. Unfortunately, that’s not something a lot of cryptocurrencies can afford in the foreseeable future.

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Will utility tokens replace traditional loyalty schemes?




Utility tokens could help solve the issue of the inactive but high number of loyalty scheme subscribers by introducing a blockchain monetary system that re-imagines the entire concept of reward programmes.

Find out what Utility Tokens are here.

The loyalty and rewards industry ripe for disruption

With the growth of an internet savvy global society and the borderless supply of information, it is highly likely the future has more disruptive technologies in store. On such global industry ripe for disruption is the multibillion-dollar loyalty and rewards industry. Basically, consumers have become frustrated with the existing friction that is characteristic of the traditional loyalty and rewards industry. Now they are quickly seeking alternatives thanks to the advent of blockchain and cryptocurrencies. One entity that is certainly at the forefront of this wave of disruption is Ovato.

A new blockchain project, GATCOIN, will use blockchain and mobile targeting technology to simplify and extend the means by which retailers connect with their customers. They are banking on blockchain and utility tokens to be the solution to acquiring and keeping new customers.

Gyft Block, which is a partnership between Gyft and bitcoin API developer Chain, issues digital gift cards that can be securely traded on the blockchain’s public ledger.

Cryptocurrency – the new coin of the realm for loyalty programmes

In a recent report by Bloomberg News, cryptocurrency is described as  ‘a new ‘coin of the realm’ for loyalty programs’.

In February, Tokyo-based e-commerce giant Rakuten said it planned to issue its own rewards coin convertible to cash. EZ Rent-A-Car is letting reward-program members convert points into digital currencies such as Bitcoin. Hewlett Packard Enterprise is trying to figure out how to make tokens work for gas-station rewards.

They still face an uphill climb. Total loyalty programs’ user growth has slowed to 15 percent over a two-year period ending 2016, down from 26 percent in the prior similar period, according to the 2017 Colloquy Loyalty Census, based in part on a survey of about 4,500 American and Canadian consumers.

More than half of loyalty memberships in the U.S. are inactive, and about 30 percent of consumers have abandoned a program without ever redeeming a point or a mile.

Companies are hoping digital coins can reverse these trends by capturing the attention of younger consumers. Almost one in five Millennials owns digital currencies, according to a survey of 2,001 Americans commissioned by

The changeover could also help boost the bottom line. While unredeemed reward points often sit as liabilities on companies’ balance sheets, digital coins representing those same reward points and convertible into cash likely won’t have to. When redeemed, the coins may even be booked as revenue.

Can issuing tokens reduce fees?

Today, merchants pay third-party processors like First Data Corp. about $35 billion a year for servicing prepaid or private-label credit cards that are tied to loyalty points, according to Richard Crone, chief executive officer of payments consultant Crone Consulting.

By issuing tokens, merchants could cut up to 80 percent of the fees, he said. The underlying blockchain technology can help them keep track of transactions.

“You are creating your own card with your own prepaid balances,” Crone said. Many major merchants are piloting such programs this year, and will launch them next year, he said.

Within five to 10 years, 5 percent of U.S. adults will use crypto loyalty points, and the annual issuance of related tokens should reach US$3.6 billion, said Lex Sokolin, global director of fintech strategy for Autonomous Research LLC. Within 10 to 20 years, 15 percent of Americans are likely to use digital loyalty points, he estimated.

Rakuten could become the biggest provider of blockchain-based loyalty coins. CEO Hiroshi “Mickey” Mikitani said this year that the company plans to issue a loyalty coin that can be used on its websites and converted to fiat. The e-retailer has already issued US$9 billion of points in the last 15 years, he said.

Mobile apps and loyalty coins

Other companies aren’t far behind. Startup Qiibee, which worked with about 900 brands including Subway and Burger King on a mobile app, is now placing customers such as Lattesso on blockchain. By the end of the year, 20 brands will likely have issued loyalty coins.

“It doesn’t mean it will replace the mile, it will replace the technology behind it,” said Qiibee CEO Gabriele Giancola. “It’s no more points, it’s a token.”

Another startup, the DigitalBits Project, said tokens for the Caddle app, which offers Canadians cash-back rebates from companies like Pepsi and Mars, could eventually be converted to Ether or Bitcoin.

Others expect blockchain-based loyalty programs to evolve beyond tradeable coins.

Hewlett Packard is working with Streamr to test using blockchain to provide rewards to motorists. In the future, cars may collect their own acceleration data, fuel usage and location information, and let nearby gas companies offer drivers incentives through coupons or loyalty points.

Are blockchain based loyalty programmes more gimmick than deal?

Tradeable tokens don’t come without some drawbacks. Instead of using them to shop at the issuing company’s stores or website, users could spend them elsewhere.

And some of the first blockchain-based loyalty programs are admittedly more marketing gimmicks than deals. Advantage Rent A Car started a new coin-based loyalty program in May. Members of its EZ Money loyalty program can get US$25 of Bitcoin for earning 5,000 reward points – or spending US$5,000 on rentals – a hefty commitment by most measures. The company may adjust the amount.

“The benefit of a program is when you give customers what they want, they will come and rent from you again,” said Advantage CEO Scott Davido.

Launch of the LGBT Token

The LGBT Token announced today, will activate the $4.6 trillion global LGBT+ economy, enabling members to assert and protect their LGBT+ identity, creating a new medium of exchange and loyalty for LGBT+ persons and businesses, and making a global social impact

Other notable tokens include:

Sweatcoin – which lets you earn cryptocurrency for working out.

Storm Play – allows you to earn free STORM Tokens, Bitcoin, and Ethereum for trying out new games, products, and services.

Final thoughts on utility tokens

The blockchain could assist businesses that offer loyalty schemes, gift cards, and other digital assets. By using the blockchain’s unique verification capabilities it makes the process cheaper and more secure by cutting out the middlemen.

It will be exciting to see whether utility tokens catches on. What do you think?

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What is a utility token?




You’ve heard of Bitcoins, you’ve heard of altcoins and you’ve heard of the blockchain. But where does the utility token fit in?

What is a utility token?

Utility tokens represent future access to a company’s product or service. They are also known as user tokens or app coins. The defining feature of utility tokens is that they are not designed as investments; if properly structured, this feature exempts utility tokens them from federal laws governing securities.

Basic Attention Token (BAT) is an example of a utility token.  BAT radically improves the efficiency of digital advertising by creating a new token that can be exchanged between publishers, advertisers, and users. It all happens on the Ethereum blockchain.

By creating utility tokens, a startup can sell “digital coupons” for the service it is developing. For example, Filecoin raised $257 million by selling tokens that will provide users with access to its decentralized cloud storage platform.

What makes a utility token valuable?

There are a number of reasons why utility tokens gain value. Some of the more obvious ones include:

The niche of operation: A utility token works within a certain niche, in order to pay for the services within such a field. Utility tokens usually gain value as a sub-currency in the cryptocurrency market depending on the size of the niche they cater for. Blockchain platforms that operate in decentralized marketplaces the likes of Amazon, for example, have a huge potential, as customers can get discounts by using their tokens to pay for services or charges instead of using the mainstay coins like Bitcoin.

Exchangeability: Another important factor that determines the rise in the value of a utility ten is the ability of its holders to exchange it for another cryptocurrency or sell it off entirely for fiat currency. The more fluid a utility token, the more likely it is that its value appreciates with time.

Scarcity: This is an important principle that has a big effect on the rise in the value of any utility token. The general trend is that the scarcer a token is, the more likely it is that it will gain in value. Tokens that come in inordinate numbers often get any appreciation in their value mostly diluted, while those that are relatively scarce and are finite in their nature often gain value faster and have a greater chance of retaining such value.

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Ripple is a shitcoin




Why Ripple is a shitcoin

Ripple is a shitcoin because Ripple is shit.

The fact that media outlets continue to feverishly report on it is as mind boggling as it is disheartening.

Ripple’s unit of currency is known as XRP. XRP are Digital Disney Dollars printed by the company Ripple Labs who own over 60% of them. You can buy them from Ripple and you can sell them to other people, and that is it. They serve no other purpose and probably never will. They’re Disney Dollars and there’s no Disneyland to go spend them at.

Western Union decided to experiment with XRP six months ago. But, since they began using it for payment, there have been complaints that it has not brought them any financial gain. Recently, two other money transfer companies Viamericas and MercuryFX tested xRapid and XRP. However, they are not currently being used by banks because of scalability and privacy issues according to Ripple.

Wait, isn’t that all cryptocurrencies? No.

Other cryptocurrencies are decentralised. The supply of the currency, like Bitcoin (although Bitcoin is pretty shit too), is distributed among a large number of people. Whether that’s through a faucet, an airdrop or plain and simple mining. There will likely always be the “whales” but nothing compares to Ripple Labs owning 60% of all the XRP. Decentralisation also applies to network authority. In Proof of Work currencies, the miners have control of the network. In Proof of Stake currencies, all currency owners have control of the network. In the case of Ripple, Ripple Labs maintains 100% control of the network.

Other cryptocurrencies are fungible. Privacy coins like Monero, Dash or PIVX have fungibility which means that because of the anonymity of each transaction, nobody can ever identify the source (or destination) of any given unit of that currency. That is a useful to protect against actors like Coinbase arbitrarily freezing and locking accounts because they don’t like how you spend your funds.

Other cryptocurrencies are feeless. Nano has no fees and is lightning fast.

Ripple is often celebrated under the misguided notion that XRP is somehow going to light the financial world on fire. This is misleading. Ripple Labs, as in, Ripple the profit-making company, is changing the world in its own way, and it uses private blockchains.  Some banks might even be using Ripple Labs’ private blockchain technologies. In no way whatsoever does that make Ripple, as in, XRP, the useless cryptocurrency, more useful.

Stellar is a publicly available cryptocurrency, like XRP, that does have financial partners integrated into it, and a wealth of projects being built on top of it already. Does Ripple have that? No.

Ripple is barely even a cryptocurrency. Your Digital Disney Dollars can be frozen at any time, anywhere on the network, because Ripple Labs controls the network. More can be issued at any moment from the vast supply held by Ripple Labs. The blockchain can be rewound at any moment. Your XRP can do nothing that can’t be done more easily and more cheaply with other cryptocurrencies.

But.. but…!?

Yes, Ripple Labs are doing very well, have hundreds of millions of dollars at their disposal and are working very hard at becoming a bank. That does not mean they care about you, or that buying their Disney Dollars will do anything for you. The technology behind XRP is implemented better in lots of other cryptocurrencies. Will Ripple Labs be here for the long term, yes, they are just too big. Will XRP increase in value again ever? Why would it?

What is a shitcoin?

A shitcoin is a coin that is bought into due to its brand, marketing and uneducated euphoria at buying what could be “the next bitcoin.” Often the price of the cryptocurrency rockets up – particularly true for several coins in January 2018 – and then collapses just as fast. As it becomes quickly apparent that technically, there is nothing interesting or useful about the cryptocurrency, its price drops like a stone.

Helluva chart.

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