If you are one of those people who love to buy cryptocurrency and forget about it for the next several years, then EOS might not be the one for you. It doesn’t want any of your HODLing.
Block.one — the company behind the EOS Network — has inscribed in the blockchain platform’s constitution that any EOS members who don’t put their tokens to use for three years could get their accounts terminated.
Such accounts will either be put up for auction or the amount held in inactive wallets will be distributed to the rest of the EOS token holders. The constitution says that redistribution will be done “according to the system contract provisions then in effect” for such event.
This is what the current draft reads about HODLing:
Article XV – Termination of Agreement: A Member is automatically released from all revocable obligations under this Constitution 3 years after the last transaction signed by that Member is incorporated into the blockchain. After 3 years of inactivity an account may be put up for auction and the proceeds distributed to all Members according to the system contract provisions then in effect for such redistribution.
So why would EOS have a problem with holding given how popular the HODL strategy is these days? We spoke to Rick Schlesinger, co-founder of EOS New York – a leading block producer candidate for the network – who offered some insight into the controversial Article XV.
According to Schlesinger, the reason is to ensure the platform does not deviate from its intended utility:
EOS is a decentralized operating system with computing resources accessible through the EOS token. EOS encourages token holders to use these tokens to build dApps and communities by staking tokens for RAM, CPU, Network, and eventually storage. These resources are scarce. If a user stakes for something like RAM, and that resource is not being used by a smart contract or other computation action then that user is in violation of Article XV. So long as a user is utilizing the resources they have, staking, and performing an action, then this Article is of no concern to them.
But here is the problem with this explanation: Block.one ran a year-long initial coin offering (ICO) for EOS and distributed tokens to practically anyone interested in buying them. Indeed, many of the people who invested in EOS cryptocurrency are enthusiasts looking to score a profit – and not developers seeking to build on top of EOS.
Schlesinger says that, while he can’t answer for Block.one, actively participating in the EOS ecosystem will be crucial to the success of the platform and this is precisely why the current version of the constitution is discouraging users from idly holding on to their investments.
“Regardless of the outcome of Article XV, we will be encouraging active participation in the EOS community regardless of whether or not someone is a software developer,” Schlesinger told Hard Fork. “Even if someone can just re-vote for a BPC or on a Worker Proposal once every three years that would completely negate any worry about Article XV.”
As Schlesinger also notes, the article does permit holding the coins long term as long as the wallets are performing some actions. So technically, you can HODL your EOS as long as you make at least one transaction (no matter how small) once in every three years.
In any case, Schlesinger points out that the constitution is not yet final and the clause in question might be subject to change. This is just a draft by the Block.one team, and the constitution could be amended by the community in the future.
It’s also important to remember that this is a proposed constitution as noted in Article XX. Also, in Article XI we have the ability to amend the constitution according to the community’s will. I would think that the community will rationally understand the nature of scarce computing resources and develop an alternative solution to the current Article XV, but we’ll have to wait and see once the chain is live and is able to be amended.
The fact that the community can revise the constitution at will means it could go through frequent changes, at least initially. Schlesinger notes that it ultimately depends upon what the majority wants. The community can bring a change to the constitution on whatever grounds they deem appropriate.
Schlesinger told Hard Fork that anyone who holds an EOS account with tokens is a part of this community and can call for a referendum. But, he further suggests that the opinions of influencers like Block.one CTO Daniel Lanimer could have significant impact on the way stakeholders vote.
Influencer impact aside, Schlesinger explains that the voting influence will ultimately depend on the amount of EOS voters hold – the fatter your wallet is, the bigger impact you have on voting.
He further argued that the EOS token is widely distributed, but a recent report by Trustnodes suggested almost 50 percent of all tokens are held by a total of 10 wallets. This clearly raises some doubts over how fair or democratic the voting procedures with EOS will be.
For the record, the largest holder is Block.one with 100 million EOS tokens – a staggering 10 percent of the total supply.
Indeed, even though the blockchain finally launched on Sunday, it is not yet live — pending the election of block producers.
Update 19:00 UTC, June 12: Schlesinger has since clarified that his sentiment is that the EOS community should actively challenge the constitution and any controversial stipulations it includes.
“I do think the community is going to scrutinize [Article XV] closely (as they should),” said in an email to Hard Fork. “This is why we’re here – to experiment with this nascent technology and learn about how a governed blockchain can respond to the community’s will.”
He has further downplayed the accuracy of Trustnodes’ token distribution report, arguing the publication failed to factor out the wallets of exchange desks from the calculations.
“The key misstep Trustnodes and others have done is that they’re aggregating the exchange wallets which account for many thousands of individual accounts,” Schlesinger told Hard Fork. “If you do not extract these accounts the analysis will be incomplete: garbage in, garbage out.”
After a Tumultuous 2018 for Crypto and the Birth of Stablecoins, Here is what to Expect in 2019
2018 was the year of the bear run and the stablecoin. So what does 2019 hold for the crypto world? While it is impossible to tell what exactly will happen in 2019, one can make a good guess. Here are the five likely scenarios that will play out in 2019 for crypto:
Tether Will Lose Traction
For years, there have been issues raised about how legit Tether is. Despite this, it has remained a popular stablecoin in the crypto world.
However, rival stablecoins such as Coinbase, Circle, and Gemini could offer a challenge. This will erode the monopoly that it has enjoyed in the past. Even if Tether does not shutter as Basis did at the end of 2018, it will most likely not be as dominant.
Facebook Will Mint The WhatsApp Crypto
Facebook has been interested in creating a payments platform for years. The effort started in 2014 when it poached David Marcus of PayPal.
Marcus became the head of messaging products at the company. However, he was picked to head the company’s blockchain project in 2018, which is still shrouded in mystery. Recent reports indicate that he might launch a WhatsApp-based remittance service in India. After a rough period in 2018, the company could use a win in 2019.
The Regulators Will Go After Big Fish
The SEC will take on the major players in crypto in 2019. For instance, it might decide that XRP is unregistered security.
If that happens, Ripple could be hit with huge fines. It might also decide to shut down an exchange for not adhering to anti-money laundering laws. Besides that, celebrities who have used their star power to pump ICs might be in trouble.
The Bitcoin ETF Gets Approved
As the crypto world evolves, it could help the stage for a BTC traded fund also called an ETF. After the bubble burst, investors that are more reasonable are joining the crypto world.
Right now, a firm called Bakkt, created by those behind the NYSE wants to launch a BTC futures market. This could help to improve liquidity in the crypto world. Thus far, it is known that an SEC commission is seeking to have the BTC ETF approved. Before that, a VanEck might or might not be approved next month. It is worth noting how that works out.
The Bear Run Persists
The crypto world has been in a bear run since they reached a high in 2017. Right now, various factors such as volatility in the equity market, a possible economic recession, and global geopolitics might reduce appetite for crypto assets for now.
However, there is a bit of disagreement on this. Some experts believe that prices might bounce back soon. Others believe that crypto prices have not hit their low yet.
There is a lot of agreement and disagreement over whether these predictions will happen. However, there is quite good evidence to support them if you look at the crypto world right now. It is also worth noting that this is a young industry and anything is possible.
Dan Hedl: Satoshi’s Bitcoin Vision was a Viable Banking Alternative, not a New Visa for Payments
The former Blockchain executive and a cryptocurrency veteran, Dan Hedl, has said that Satoshi Nakamoto, the creator of bitcoin, wanted bitcoin to be an “alternative to banks”, and not a “new visa.”
In a series of tweets on January 14, Hedl took up an argument with other cryptocurrencyenthusiasts who believe that the idea of Bitcoin was to be a currency for payments.
1/ Satoshi’s Vision™ is a silly endeavor, as it doesn’t matter what it was, we are where we are now. However, those pushing the “Bitcoin was first made for payments” narrative insist on cherry-picking sentences from the white paper and forum posts to champion their perspective.
— Dan Hedl (@danheld) January 14, 2019
He argued that those who have this mere belief haven’t quite understood bitcoin’s full implications from Satoshi’s vision, which is clearly shown in Bitcoin Whitepaper. In his main tweet, he said that:
“Satoshi’s Vision™ is a silly endeavor, as it doesn’t matter what it was, we are where we are now. However, those pushing the “Bitcoin was first made for payments” narrative insist on cherry-picking sentences from the white paper and forum posts to champion their perspective.”
World Needed An Alternative Bank, Not Another Visa
In 2008 when bitcoin whitepaper was published, it happened that there was a financial crisis the same year. During that time, many had lost their trust in Banks, so it was perfect timing for bitcoin to be popularized. According to Hedl, Nakamoto has cleverly planted a seed at the right timing.
Hedl also noted that:
“How do we determine Satoshi’s intention? We need to look at his ideology, description of functionality/architecture, timing, and audience. Let’s start with how Satoshi describes the problem Bitcoin solves. In his first public comms after the whitepaper, in the first paragraph: ‘The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.’”
Hedl believes that bitcoin is largely a store of value and not an alternative to payment networks such as MasterCard and Visa.
In a tweet, Hedl noted that:
“The world didn’t need a new VISA; they needed an alternative to banks.”
When it comes to capacity, though, bitcoin will outdo payment processing networks like MasterCard and Visa, especially through the Lightning Network, which allow transactions to be processed off-chain.
Ford and LG to Use IBM’s Hyperledger Fabric Blockchain to Track Supply Chains to End Child Labor
IBM will be working in order to improve the supply chain in the metals industry using the Hyperledger Fabric as a blockchain platform. The intention is to track cobalt that is mined in the Democratic Republic of Congo until it reaches a car maker plant. Another project will also be tracking metals from Mexico until they reach the Ford Motor Company plant.
The first project will start with a 1.5 ton of cobalt that will be mined in the Democratic Republic of Congo. After it, it will be transported to China, where it will be refined. In Korea, it will be used to create a battery and it will be used in the United States as a battery for an electric car. However, everything will be tracked using IBM’s blockchain.
With this pilot, each company will be checking that the material has been treated with the standards followed by the Organization for Economic Cooperation and Development (OECD). The information was shared by IBM’s general manager for global industrial products, Manish Chawla.
On the matter, Chawla commented:
“Blockchain is the most effective technology to provide real-time access to all the due diligence processes, provide visibility to the supply chain from the miners to the market. Our role in IBM is that we are bringing people together for this project and developing the platform.”
Although the intention is to improve the supply chain and have better control over the products handled there is still going to be needed human intervention. There will be inspectors controlling that the mines work properly and following international standards.
Currently, if there are workers that are working in bad conditions, the employee will be recording this on the system and the RCS Global headquarters will be alerted. In this way, they can inform the mine that the batch that they will deliver does not meet the international guidelines.
If everything goes as expected, the employee will just print a code bar that allows other companies and parties in the supply chain to confirm that this batch was mined according to international regulations.
Using blockchain technology the process will be easier. The initial monitoring will take place at the mining site. RCS employees will not have to be there full-time. Instead, everything will be auditing information provided by the management of the mine. Barcode tags will be used for assets on the blockchain and audits and other reports will be stored using an IBM server.
Each of the participants will be working as validators having their own nodes. As more companies join this pilot and program, the will have the possibility to have their node supported by IBM.
At the same time, using Hyperledger technology, customers will be able to protect their information. Companies will be able to share the information they have with third-party partners such as NGOs. In the future, and if the project succeeds, other companies could join such as automakers or electronics manufacturers.
IBM is also working with other companies such as the Canadian startup called MIneHUb Technologies, Goldcorp, Wheaton Precios Metals and many others, including ING Bank.
Back in 2018, IBM and other mining companies and refiners started to work together to leverage blockchain technology and improve the mining industry in different countries in Africa.