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EOS Block Producer ‘Starteos’ Controversially Offers Rewards For Token Holders’ Votes

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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.

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China’s Tsinghua University Partners with Ripple to Create Blockchain Research Scholarship Program

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From the moment that Ripple first launched its platform, it has been looking for ways to spread cryptocurrency and their own products throughout the industry.

They have even managed to cross a major milestone as they established over 200 partnerships involving 40 separate countries. One of their most recent partnerships involves Tsinghua University, in an effort to launch a new scholarship program that will educate students in China.

While China has held a strict anti-crypto stance, the same has not been true of blockchain technology.

The program, which will be called the Blockchain Technology Research Scholarship program, is the combined venture of Ripple and the Tsinghua University Institute of Financial Technology (THUIFR). This university is one of the top schools in all of China, though THUIFTR was not started until 2017. It has been a collaborative effort between Institute for Interdisciplinary Information Sciences, PBC School of Finance, School of Software and Law School at Tsinghua University.

As students participate in the program, they will learn about the ins and outs of blockchain technology. On Twitter, THUIFR claims to have already hosted a seminar, titled “Innovation and Development of Digital Currency and its Regulatory Path.”

The partnership with Ripple will allow the program to launch in China, focusing clearly on the international regulations that govern the blockchain. Ivy Gao, the Director of International Cooperation and Development for THUIFR, said,

“Most importantly, I believe, this program will greatly help with their future research or career in the field of blockchain technology.”

The SVP of Global Operation at Ripple, Eric van Miltenburg, said,

“The program’s goal – to provide students with opportunities in blockchain research – closely aligns with that of Ripple’s University Blockchain Research Initiative. We’re thrilled to support THUIFR in this endeavor and look forward to its launch.”

Ripple has created an impressive reputation for itself as a major player in the fintech world. There are multiple banks using its xRapid product as their own blockchain solution, with more being added as the word spreads. However, it is perhaps the unique philosophy of Ripple’s platform and products that appeals to China, considering the substantial difference from that of Bitcoin’s ideology.

Their token has become the second-most valuable crypto asset, which could be due to the pattern of collaboration between financial institutions, governments, and universities.

According to the most recent data provided by CoinMarketCap, Ripple is presently being traded at $0.3175, ranking second by market capitalization.

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Was November the Last Big Bitcoin Sell-Off? Trader Expects Slow Grind in 2019

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By CCN.com: According to a trader and crypto technical analyst, November 2018 may have been the last sell-off of Bitcoin and a long consolidation period is expected throughout 2019.

Since experiencing a steep 13 percent drop on January 10 from $4,036 to $3,502, the Bitcoin price has been relatively stable in a tight range in mid-$3,000.

Chart from TradingView

What Does Low Volatility Mean For Bitcoin?

While it seems as if the price of Bitcoin has been volatile throughout the past two weeks, the volatility of the dominant cryptocurrency occurred in a tight range between $3,500 to $4,000.

No major movements below or above key support and resistance levels were recorded, preventing any meaningful short-term price movement.

One trader said that if the trend of relatively low volatility in a tight low price range continues, the sideways action of Bitcoin will extend throughout the year, resulting in a long consolidation period.

“The longer this sideways action takes place the more I think the bottom is in. November was one of the worst monthly candles in history. It’s very possible that was the last of the major selling and now we’ll have a consolidation period that lasts most of 2019,” the trader said.

bitcoin price
The trader is predicting bitcoin to trade sideways through much of 2019. Pic: Shutterstock.

On Sunday, Bitcoin recorded a six percent drop against the U.S. dollar in a 24-hour period from $3,700 to $3,470. The asset has since recovered above the $3,500 mark and based on the performance of the asset in the last 48 hours, Bitcoin is expected to demonstrate stability throughout the week.

Hsaka, a cryptocurrency analyst, said:

Inside Bar; Low that was taken out (3480) holding as support; Continue leaning neutral here, can’t short HTF support, will wait for a break (even moreso when confluent with that CME gap).

A slow grind upwards in the first two quarters of 2019 could allow Bitcoin to establish a proper bottom and a mid-term trend reversal. If the price of asset recovers quickly in a short time period, as seen in the major sell-off of cryptocurrencies in November 2018, it can leave the asset class vulnerable to a large short-term correction.

With events that are considered as catalysts to fuel the momentum of Bitcoin in the first two quarters of this year including Bakkt and Bitcoin exchange-traded fund (ETF) far from being materialized due to the shutdown of the U.S. government, it has become more likely for the cryptocurrency market to demonstrate a low level of volatility in the upcoming months.

How About Alternative Crypto Assets?

Historically, alternative crypto assets, especially low market cap cryptocurrencies, have tended to perform strongly against Bitcoin when the asset is in a sideways market.

However, as seen in the performance of tokens and other major crypto assets in the past 48 hours, the stability in Bitcoin is unlikely to trigger short-term rallies for assets with lower volumes and valuations due to the current conditions of the market.

Some analysts believe November to have been the last sell-off for Bitcoin and expect a several-month-long consolidation period to occur.

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Dow Futures Prep for Opening Bell Plunge as Bitcoin Price Turns Volatile

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By CCN.com: The US stock market returns to action this morning following Monday’s holiday break, and the Dow is gearing up for a triple-digit loss at the opening bell. The bitcoin price, meanwhile, experienced a jolt of volatility ahead of the US trading session to break out of what had previously been a relatively calm day for the cryptocurrency market.

Dow Futures See Triple-Digit Pullback

As of 8:29 am ET, Dow Jones Industrial Average futures had declined by 144 points or 0.58 percent, implying an opening-bell loss of 135.35 points. The broad S&P 500 and tech-heavy Nasdaq also steeled themselves for losses at the open, with futures for the two indices down 0.60 percent and 0.68 percent, respectively.

dow jones futures nasdaq S&P 500
Dow Jones Industrial Average (blue), S&P 500 (red), and Nasdaq (orange) futures declined on Monday and Tuesday ahead of the week’s opening bell.

With the US stock market closed on Monday in observance of Martin Luther King Jr. Day, futures trading had nevertheless portended Tuesday declines. As CCN reported, China published its official GDP growth statistics for 2018, which showed that the world’s second-largest economy had expanded at its slowest pace in 28 years.

That data emboldened US President Donald Trump, who implored China to “stop playing around” and “finally do a Real Deal” that would end the ongoing US-China trade war.

“China posts slowest economic numbers since 1990 due to U.S. trade tensions and new policies,” the president tweeted on Tuesday. “Makes so much sense for China to finally do a Real Deal, and stop playing around!”

Hu Xijin, the editor of the China-based Global Times, responded to that tweet with a warning that Beijing won’t sign an “unequal deal,” even if the country experienced negative economic growth.

“China has hoped to reach a reasonable trade deal with the US. When China’s GDP grew at double digit rate, we wished China-US relations go well. But if the US forces China to sign an unequal deal, Beijing won ‘t yield even it is a negative growth, let alone 6.6%.”

Meanwhile, the March 1 end to the US-China tariff truce continues to inch closer, placing more pressure on the two economic superpowers to find common ground.

Bitcoin Price Turns Volatile on Tuesday

Though not on a holiday itself, the cryptocurrency market had been relatively calm on Monday following Sunday’s moderate pullback. This morning, though, bitcoin and its would-be peers have begun to regain a bit of their characteristic volatility.

bitcoin price
A relatively calm bitcoin price broke out of its slumber on Tuesday, at least for five minutes.

After range-trading between $3,550 and $3,500 for most of the day, the bitcoin price took a sudden drop shortly before 11:40 UTC, slipping as low as $3,401 before recovering above $3,520 in a whipsaw movement that took less than five minutes. As of the time of writing, the bitcoin price sat at $3,557 on Bitstamp, about $33 below its intraday high of $3,590.

Day-over-day movements were relatively muted throughout the wider cryptocurrency market. The ripple price (XRP) declined by 1.22 percent to a global average of $0.317, while ethereum, bitcoin cash, EOS, litecoin, and bitcoin sv all moved by less than 1 percent. Stellar, whose price often moves in tandem with ripple, declined 1.33 percent to $0.102, and tron outperformed the index with a 4.51 percent jump to $0.026 that was likely connected to the announcement that TRX holders would earn an airdrop when the new BitTorrent cryptocurrency arrives.

Altogether, the cryptocurrency market cap — which measures the aggregate valuations of all cryptocurrencies — stands at $119.7 billion, representing a 24-hour increase of around $100 million.

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