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Here’s why EOS will confiscate your tokens if you HODL for too long

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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.

Over the past days, EOS has received criticism for the delay in the launch of its mainnet, its poorly drafted constitution, and the string of vulnerabilities in its blockchain.

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.”

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Champion Shave to Launch Champion Coin ICO with Usain Bolt, Ronaldinho and Dominique Wilkins

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Champion Shave to Launch Champion Coin in an ICO in 2019 Q2

Champion Shave, a superstar-owned shaving company, has outlined its intentions to launch its own cryptocurrency token. The company was established in 2016 by 100m world record holder, Fusain Bolt, soccer legend, Ronaldinho, and NBA legend, Dominique Wilkins.

Since its inception, the company has sold over 10 million razor products. The products are available in 17 countries across the world. According to Manny Bains, the CEO of Champion Shave, the firm is revolutionizing the men’s grooming sector that is valued at $47 billion. They intend to further this transformation by adopting a blockchain-based solution for their supply chain and customer data management.

Manny states that Champion Shave will use blockchain technology to track the entirety of the supply chain. This would reduce expenses and enhance efficiency by offering a transparent, unalterable and decentralized ledger for tracking movement of freight. Moreover, Champion Shave will conduct an ICO where it will issue its cryptocurrency token, called Champion Coin.

The objective of the Champion Coin and Champion Shave blockchain ecosystem is to eliminate intermediaries and charges in cross-border transactions. In addition to increased efficiency, Champion coin users will get rewards and discounts for shaving products.

Champion Coin ICO

The presale phase of the Champion Coin ICO is expected to start on October 29. The event will be backed by a specially curated marketing campaign meant to appeal to sports fans as well as crypto hobbyists. The main token sale is expected to go live in Q2 2019.

David Trezeguet, a former football star, will represent tie Champion Coin ICO during the Malta Blockchain Summit scheduled for November 1. Trezeguet said that he was excited by the launch of the token, adding that it would be useful to all members of the Champion Shave fraternity.

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Debating Satoshi Nakamoto’s Original Vision Between Blockchain Ledgers or Tokens

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According to Adam Krellenstein, co-founder and CTO at Symbiont.io, says that ten years after the anniversary of Bitcoin’s creation, the community is in a crisis. Symbiont.io is a fintech company that focuses on traditional financial markets and blockchain technology.

Mr Krellenstein says that he has been working during the last decade in order to produce new blockchain protocols that go beyond Satoshi’s original proposal. However, it seems that the industry is still struggling to answer important questions related to the nature of this technology and how it should improve society.

The author explains the struggle to understand the relationship between Bitcoin and distributed ledger technology (DLT). For him, there are some blockchains that want to create smart contracts, while others aim at creating tokens. Additionally, there is a debate on whether blockchain networks should be permissioned or not. Krellenstein believes that token systems are more useful than smart contracts when they are based on a public blockchain consensus protocol.

He mentions that Satoshi Nakamoto was right about the best use of blockchain technology. In this way, he created a payment system and a virtual currency (Bitcoin) that is nowadays the most popular and, perhaps, one of the most resilient in the market.

However, Krellenstein says that he spent a lot of time thinking about this issue and that he analyzed it very well when he created the cryptocurrency Counterparty and Symbiont. He goes on describing how Counter-party and Symbiont work and how they were created.

On the matter, he explained:

“Counterparty is a public blockchain smart contracts platform, albeit one focused on token issuance and trading, while Symbiont is a fintech company that develops and licenses its permissioned blockchain-based smart contracts system to improve the infrastructure of traditional financial markets.”

He said that while working on Counterparty and watching Ethereum – one of the largest virtual currencies and blockchain networks in the market – he saw that although both systems were built to support smart contracts, they were primarily used to create and transfer tokens.

Moreover, he explains that their vision was to create a trustless network of decentralized finance, and in order to do so, they implemented smart contracts for token balances, prediction markets, transparent elections and many other features. Nonetheless, those using Counterparty were focusing around its token rather than on other applications.

Krellenstein says that Ethereum makes it difficult to create real applications using the Solidity language. For him, one of the most advanced Ethereum smart contracts is related to CryptoKitties, something that is very similar to other games launched on Counterparty before. Although both platforms, Counterparty and Ethereum, were created to perform many other powerful things, they are exclusively used for tracing tokens.

This is why he thinks that smart contract systems for the general public are not a good idea. Additionally, he says that efficiency is sometimes more important than universality and that interaction among individuals is not yet as complex enough to justify a not efficient decentralized computer program.

Permissioned blockchains could work properly for some participants such as insitutions, governments or corporations. With these blockchains, it is possible to improve consistency and correctness of the current infrastructure.

This is something that some companies such as JP Morgan are already implementing and something that they properly understood.Quorum is the network that has been developed by the recognised bank and that is being used by different institutions and parties.

Krellenstein explains that blockchain can be valuable when replacing a consistent centralized system with a consistent decentralized one. He concludes saying that blockchain technology could become valuable as well when turning an inconsistent decentralized system into a consistent decentralized system.

“The conclusion that I’ve come to is that, just as was originally envisioned by Satoshi Nakamoto, the greatest use of a public blockchain is in fact as a digital currency and payment system,” he says. “Generalizations of Satoshi’s innovations in the time since he launched bitcoin, manifest partly in the enterprise DLT space, are not competitive with bitcoin.”

Perhaps, instead of replacing fiat currencies, blockchain technology could be used to build new databases that support workflows that are un-amenable to management within traditional client-server frameworks.

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Coinbase Adds Circle’s USD Coin (USDC) Stablecoin, Doubles Down on Digital Dollar Doubts

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Coinbase Adds Circle’s USD Coin (USDC) Stablecoin

San Francisco-based cryptocurrency giant Coinbase just announced that it has added support for USD Coin (USDC), a stablecoin designed by competing crypto exchange Circle, the owner of Poloniex.

One USDC is a 1:1 representation of a US dollar on the Ethereum blockchain. Each USDC is 100% collateralized by a corresponding USD held in accounts subject to regular public reporting of reserves. The underlying technology behind the USDC was developed collaboratively between Coinbase and Circle.

“Coinbase and Circle share a common vision of an open global financial system built on crypto rails and blockchain infrastructure, and realizing this vision requires industry leaders to collaborate to build interoperable protocols and standards,” Circle co-founders Jeremy Allaire and Sean Neville said

Distinctly, USD Coin will be the first stablecoin supported by Coinbase. Circle was the first issuer of the coin in September. The consortium, called Centre, will serve as a platform for users to make deposits from traditional bank accounts, convert fiat currency into tokens issued by members to facilitate transactions and provide the ability to shift back to the greenback.

Use cases of USDC

To start off with, two Ethereum wallets can quickly send and receive any amount of USDC at any time of day. Large transfers for business purposes become as easy as small e-commerce payments. Consumers can use the Coinbase app to send USDC to someone while remaining confident the value is stable.

There is a burgeoning ecosystem of crypto dApps, exchanges, and blockchain-based games. A USDC follows the ERC20 standard, which means it can be used with any app that accepts tokens based on that standard. The USDC can thus be used as a stable digital dollar to buy items in the crypto ecosystem, from Cryptokitties to tickets for blockchain-based games.

Additionally, for developers and fintech companies, a digital dollar like USDC is easier to program with. For example, given the private keys for USDC, a program can easily send and receive them back and forth using the public Ethereum blockchain.

Final Take

Recently, there has been a large amount of new issuance of stable coins recently as industry enthusiasts try to find more uses for crypto. Tether is the largest of the bunch but is plagued by doubters amid concern as the company has refused to be audited and won’t disclose its banks. Critics of Tether have called into question whether that cryptocurrency is truly backed by the equivalent amount of U.S. dollars.

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