EOS Block Producer Offers Rewards For Token Holders’ Votes
Decentralization supporters within the EOS community were quite angered once more this week after one of EOS’ official Block Producers — Starteos — offered token holders financial rewards in exchange for votes.
What Is EOS?
As many already know, EOS is a blockchain-based project with a strong focus on smart contract and dApp creation. It is a relatively young coin, which was launch in 2017, although it only got its own MainNet working in June 2018. It was created by block.one, which is a startup led by Brendan Blumer and Dan Larimer.
EOS is also known for having the most successful ICO in the history of cryptocurrencies, which lasted for almost an entire year, and it raised around $4.1 billion. Its native coin is also called EOS, and it is currently the 6th largest coin by market cap.
The project uses a consensus model named DPoS, meaning that its investors get voting power, and can decide who can mine EOS blocks. In other words, the ecosystem consists of two entities — the ECAF (EOS Core Arbitration Forum), and Block Producers, who are creating blocks, just like Bitcoin miners.
EOS BPs earn different amounts of tokens, with some estimates saying that the biggest ones get around 1,000 coins per day. There are always 21 of them, and they are elected via the constant voting process. Now that we understand how the process works, let’s see what the problem is.
EOS Block Producer Tries To Buy Votes
The source of the issue is Starteos, a China-based startup that claims to have entered the blockchain industry as far back as in 2013. The company issued several large products since then, two of which — a digital wallet and a cold storage wallet — came out this year.
The company is currently EOS’ fourth-largest Block Producer, which means that it gets a big portion of the revenue. However, a little over a week ago, on November 27, they published a post on their Medium page that started the new wave of controversy. The post was titled “We Gonna Share BP Proceeds With You — This Is the Way We Warm You Up in This ‘Winter’!”, and in it, the company offered a stable and continuous EOS revenue in return for voting for the company.
All that the voters need to do is select Starteos as a proxy and pick a revenue model, which can be either stable income or random revenue. The community quickly stood against this offer, as it goes against democratic blockchain policies and decentralization itself.
The Community Reaction
As mentioned, the community was not happy with this development. Not only does it openly defy decentralization, but the BP did it without even trying to hide their intent. About a month ago, on November 8th, Starteos announced the launch of a dApp that would act like a slot machine. They stated that users can earn tokens by using this dApp and that the tokens will be coming from their EOS BP rewards. At the time, it was believed that there is no bad intention behind the project, although it came really close to offering block rewards for votes.
Soon enough, these suspicions were confirmed, as the company tried to make the same offer via Medium, this time more directly. The move quickly spread through different social networks such as Twitter, Reddit, and even YouTube. Before long, the community demanded Starteos to be removed from the ranks of BPs.
Some of the other BPs also left statements against vote buying, although they never openly mentioned Starteos. EOS New York, the eight largest EOS BP, stated that EOS lacks a document that will outline some basic system of governance. Despite the community, and at least one other BP turning against it, however — Starteos still holds a high position among the BPs.
Previous EOS Centralization Incidents
Unfortunately, this is not the first time that there were signs of centralization within EOS. Another example came only a few weeks before the latest ones, and it includes ECAF moderator reversing already confirmed transactions. The community was outraged on this occasion as well, and many started claiming that EOS is failing in its mission to remain decentralized.
Some comments on Reddit even accused EOS of raising $4 billion just to recreate the legal system that uses tokens, while it is neither immutable nor resistant to censorship.
Before that, in October 2018, Huobi and a few other major BPs were accused of mutual voting. The claims were that a Huobi spreadsheet leaked information that indicates that several nodes are intentionally voting together in order to remain in power. Interestingly enough, Starteos was mentioned as well.
Even before that, in June, another BP scandal occurred, when BPs went against ECAF decision and have frozen seven accounts believed to be connected to a phishing scam. While this was later considered to be the right call, the BPs taking matters into their own hands was still heavily criticized.
There was also an incident where suspicious ECAF orders were received, and BPs decided not to obey them as they were unsure if the orders truly came from the ECAF.
On November 1st, a blockchain testing firm called Whiteblock released results of testing EOS software. The report surprised everyone with claims that EOS is not a blockchain, but a distributed, homogeneous database management system. This was due to the fact that its transactions were supposedly not cryptographically validated.
The list goes on, and EOS has been going from one controversy to another, with more suspicion regarding the quality of the project and its decentralization rising each time when a new issue hits. While EOS is doing its best to go through this rough period and save whatever it can, many believe that a few more incidents such as these might damage project’s reputation beyond repair.
Bitcoin Price Could Crash by 50% in 2019: Veteran Crypto Traders
Throughout the past week, the bitcoin price has increased from $3,901 to $4,048, by nearly 4 percent against the U.S. dollar.
The relatively strong short-term performance of bitcoin led alternative cryptocurrencies to engage in large upside price movements, allowing the valuation of the crypto market to rise by about $7 billion.
However, while traders, technical analysts, and strategists generally remain positive on the mid-term price trend of bitcoin, some traders foresee the dominant cryptocurrency retesting key support levels in the mid-$3,000 region.
WILL BITCOIN DROP BACK TO $3,000 OR WAS IT THE BOTTOM?
Since December 2018, bitcoin tested the $4,200 resistance level twice and cleanly broke out of the $4,000 mark on three occasions.
Following the two attempts to reach $4,200, the bitcoin price pulled back to the $3,700 to $3,900 range, unable to sustain momentum possibly due to a lack of capital inflow and volume in the cryptocurrency exchange market.
As such, some traders believe that if bitcoin is not able to demonstrate a promising rally above the $4,200 to $4,600 range in the near-term, there exists a high probability that the asset drops back to its support levels at $3,500 and above.
Mayne, a recognized cryptocurrency trader, said:
“If the bulls don’t step in soon here I’m gonna have to short $BTC earlier than expected. I don’t suspect the yearly open holds this time either.”
Give the inability of bitcoin to surpass $4,200, one trader boldly predicted that the asset could establish a new 12-month low below the $3,122 mark, possibly at $2,000.
“Selling BTC in the $4,000 region and up if need be. Trade duration: weeks to months. Target: $2.000. Noobs buy at $4,000 so they can panic dump their bags at $3,000. The market is a device for transferring money from the impatient to the patient. Always has been and always will be,” the trader said.
Whether bitcoin moves to the upside or breaks down to the low $3,000 region, traders see a high level of volatility incoming due to the noticeable increase in the volume of the cryptocurrency exchange market.
Depending on the price trend of bitcoin in the upcoming few days, several traders have said that bitcoin could either continue to gradually climb to the $5,000 region or retest recent lows.“Volume MA (on bottom) is at historic bounce levels on the 1W. Volatility incoming. Confident in continuation to the upside, although positioned to be fine in event of price dump. Always prepare for best and worst case. One bear thought I have, is a lack of sell climax thus far,” an analyst known as Crypto Thies wrote.
But, some analysts also foresee bitcoin testing the last phase of the 15-month bear market and found striking similarities between the price trend of bitcoin in 2015 and 2019.
THE CRYPTOCURRENCY INDUSTRY IS CONTINUING TO EXPAND
Although many traders remain cautiously optimistic in the price trend of major crypto assets including bitcoin, the cryptocurrency industry is demonstrating signs of growth and expansion.
On Wednesday, Binance, the world’s largest cryptocurrency exchange by daily trading volume, enabled users in Australia to purchase bitcoin at more than 1,300 physical storefronts, an initiative that could increase the accessibility of cryptocurrencies to a fast-growing blockchain market.
Bexplus Analyst: A Bigger Bullish Run Will Come If Bitcoin Successfully Surpass $4600
Since April 2018, it’s the first time for Bitcoin price to maintain a fourth consecutive week with a green candle close, reaching highs during the week of $4040 with strong volumes backing and finding support when $3900 was tested. The short-term bullish outlook for BTC has been strengthened. However, according to some analyst predictions, bear-to-bull will not achieve until BTC crosses the $4600 mark and moves towards $6000. If to take a long-term look of the cryptocurrency market, everything may remain bullish. But if you prefer making profits at a faster rate, BTC futures trading with 100x leverage is a better option for you.
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‘Bitcoin Is Not Money’ Because We Cannot Print It – Banks
“Bitcoin is not money”, the European Central Bank published a statement regarding bitcoin as not being a monetary asset. These words from the bank are immensely harsh for the crypto community. The crypto analyst and investor, Joseph Young suggests that the bank has released the statement as per the crypto assets being unprintable. Though this is an absurd manner to qualify a monetary asset as ‘money’, the bank does praise the technology in the working behind bitcoin. The technology, being the entire crypto protocols, most specifically, decentralization is breakthrough and can make up for some decent projects in the future. He said;
The European Central Bank does not consider Bitcoin as ‘money’ for some specific reason. The reason that they cannot print more of bitcoin on their own is the one, I’m afraid.
Young was very elaborate, chatting with BlockPublisher, over why ECB is hesitant in declaring bitcoin a form of money. On the other hand the ECB suggests that the technology behind the cryptos, more specifically, bitcoin sure is awe-inspiring. The bank, in another statement describes that they bear the privileges to create more money. Young tends to pile up the facts and declare that the bank declared bitcoin, “not money”, owing to the very situation. This can be directly related to the bank suggesting that they cannot make more bitcoins and thus, the standards of being a currency or money do not fit at all.
SEE ALSO: UBS Fined $5.1 Billion for Money Laundering and they Still Blame Bitcoin
The duel between the banking system and the digital assets have always been going strong since day one. This is a direct hint to the later one eventually toppling the previous one. Anthony Pompliano, the founder and partner at Morgan Creek Digital is sure that the day is near when people will see bitcoin entirely incorporated into the system. This will obviously be because of the upper hand that the cryptos have over the fiat system. Pomp suggests that the banking system has turned archaic. The sloppy manual system now needs to be taken over by the more established and 24/7 framework of bitcoin. He said;
he sloppy unsafe infrastructure of the banking system is the primary reason Bitcoin needs to take over.
SEE ALSO: Banks Are The Best Custodians If You Don’t Want Your Money Back
The Security and Exchange Commission (SEC) has never bothered to pay real heed to the cryptos owing to the reality that the crypto market is indeed full of scammers and fraudulent agents. The recent scam of BitConnect is a terrible addition to the crypto history. BitConnect reached a market cap of $3 billion but collapsed due to false claim of their intelligent algorithm. They claimed that their algorithm buys bitcoin when the price is low and sell it for higher price but they were very hesitant to talk about it because there was no such thing. These sort of incidents has always sidelined the cryptos to become a part of the global financial system.
SEE ALSO: SEC Commissioner Thinks Governments Shouldn’t Regulate Crypto
The debate, that the banking system and the crypto industry cannot co-exist has been blowing the roof up recently with frequent verbal assaults from both sides. In reality, the crypto framework can work as an improvement for the current financial system which is the thing, analysts and enforcers from both side should get their heads around. This can be pulled off by the likes of bitcoin ATMs, which have been operating successfully in many states of US, London and Australia. The crypto mask can provide the additional security protocols while the banking system pros will work as us.