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Blockchain mysteries: Biggest crypto transaction fee oddities

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Users can send cryptocurrencies virtually anywhere globally via the blockchains on which they are based. By sending crypto assets, however, fees are incurred. Transactions may take longer for certain assets, depending on their related blockchains. Certain crypto wallets and platforms give users the option to choose a transaction fee. Higher fees typically result in faster transactions.

Over the years, however, some asset holders have put their coin or token values into the wrong fields, resulting in exorbitant, albeit accidental, fee payments. For example, a holder might intend to send 12 Bitcoin (BTC) at a fee of 0.01 BTC, although they might accidentally put 12 BTC into the fee box, spending 12 BTC on fees while sending just 0.01 BTC to the intended destination.

A number of fee mishaps have occurred involving Ether (ETH) and Bitcoin. Here are a few painful fee stories.

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Enough Ether to pay out $1,000 per day for a year

In February 2019, one industry participant mistakenly paid a grand sum of 2,730 ETH for fees as part of three Ethereum-based transactions. The sender paid fees of 420, 210 and 2,100 ETH in the triad of transactions. According to ETH prices at the time of reporting in March 2019, the transaction costs totaled approximately $365,800.

Fortunately, this sender received an act of good will from SparkPool, the mining pool on the other end of the transaction. “Thank you SparkPool and your miners for helping us to recover our loss,” the accidental ETH transactor noted as part of a blockchain message. “We are willing to share half of 2100 ETH with the miners to thanks the miners’ integrity,” the transactor added.

Ether is now valued at $1,850 per coin at the time of publication, making this event worth just over $5 million in total.

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A fee saga involving millions

In the summer of 2020, three Ethereum transactions surfaced, incurring more than $5 million worth of total combined fees, based on ETH prices at the time. Someone sent 0.55 ETH, valued near $134 total back then, in a transaction on June 10, 2020, spending a whopping $2.6 million worth of ETH on gas — an industry term for the funds paid for transactions on Ethereum’s network.

Following the multi-million-dollar fee event, two more hefty transactions surfaced. One saw another $2.6 million paid to send 350 ETH. The other transferred 3,221 ETH, tallying close to the same amount for gas — 2,310 ETH to be exact. All three moves occurred between June 10 and 11, 2020.

This saga may not have been the summation of a few mistakes, however. Subsequent reporting revealed the third transaction — the one costing 2,310 ETH to move 3,221 ETH — was the result of a “malicious attack” involving a victim’s wallet.

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The pair of multi-million-dollar gas transfers remain without conclusive explanation, although theories have included simple user error, hacker-related blackmail efforts, and a suspected Ponzi scheme losing money. However, in today’s market, the three transactions are worth over $43.6 million.

DeFi comes with risks

The decentralized finance boom of 2020 came with stories of significant profit, but also at least one instance of fee turmoil. DeFi took off as another likely crypto industry bubble, complete with surging prices, suspicious project activity and other drama. Largely based on Ethereum’s blockchain, the DeFi sector began seeing high transaction fees.

Even given the high fees, however, one user paid far too much to send one of his trades through on Uniswap, a popular exchange in the DeFi niche. As reported in November 2020, this trader accidentally typed his gas amounts in the wrong places on his MetaMask wallet, pushing through a $120 trade while spending $9,500 on gas.

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“I thought that this kind of things happen to others, but I was wrong,” the trader said on Reddit.

“Metamask didn’t populate the ‘Gas Limit’ field with the correct amount in my previous transaction and that transaction failed, so I decided to change it manually in the next transaction,” he explained. “But instead of typing 200000 in ‘Gas Limit’ input field, I wrote it on the ‘Gas Price’ input field, so I payed 200000 GWEI for this transaction and destroyed my life.”

Bitcoin transactions aren’t usually that expensive

Although multiple Ethereum fee bumbles have arisen, crypto participants have also suffered Bitcoin fee woes. One particular painful transaction surfaced on Bitcoin’s blockchain in December 2020. The transaction shows about 3.49 BTC paid to send just 0.00005 BTC — a fee multitudes higher than would have been necessary to send that amount of Bitcoin.

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Based on TradingView data, Bitcoin’s price fluctuated between roughly $22,765 and $24,205 on Dec. 19, the day of the transaction, making the fee worth at least $79,000 back then. At the time of publication, such a transaction currently values approximately $170,000.

A seemingly similar transaction hit Bitcoin’s blockchain on Nov. 18, 2020, revealing about 2.66 BTC spent on fees for the transfer of roughly 0.01 BTC. Based on Bitcoin’s price range for Nov. 18, the sender spent at least $45,000 to transfer a comparatively paltry sum of the asset. This fee is now worth around $130,000.

Many of these transaction fee tales were likely mistakes. In crypto, taking caution is important. Rushing and distraction can sometimes lead to costly mistakes. Education is also vital. Lack of knowledge on crypto wallets, transactions and assets can yield harmful consequences when sending funds.

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The Best Blockchain Developers from All Over the World Will Gather for the International Blockchain-Tech Summit

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On October 27-29, 2021, the International Blockchain-Tech Summit will bring together the world’s best developers in the field of blockchain technologies and fintech on one online platform. Participants will share their experience and discuss the most pressing issues related to the creation of modern smart contracts, the development of digital currencies of central banks, as well as solutions for ETN2.

The speakers of the summit will be:

  • Ziv Keinan, Simetria;
  • Tron Black, Ravencoin;
  • Irina Karagyaur, Polkadot and Kusama, Head Ambassador for Western Europe at Polkadot;
  • Kevin Owocki, Gitcoin;
  • Gregory Markou, Chainsafe;
  • and many others

The top management of such companies as Celo, Unique, Gitcoin, OpenSea, Simetria, Supernova, Algorand and others will also become speakers and participants of the Blockchain-Tech Summit.

Experts will discuss such topics as:

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  • Ethereum Level 2.0 Solutions;
  • Consensus algorithms for compatible platforms (Polkadot and Avalanche);
  • CBDC (Central Bank Digital Currency);
  • Zero Knowledge Proof – Privacy ;
  • The difference between smart contract languages and rust;
  • Smart contracts now and in the future: a master class on creating smart contracts;
  • The difference in structure between rust/solidity/haskell/ink;
  • The social impact of blockchain projects;
  • Regulation + DeFi;

To become a participant of the summit, go to the website and fill out the form. Geekle provides free access for summit participants from all over the world, so that every developer, regardless of their level of training, has access to unique knowledge from world experts in the field of development. A paid package is also provided for professional developers, which includes an expanded set of options. 

The Blockchain – Tech Summit is organized by Geekle, which specializes in holding huge technical summits with more than 10 thousand participants from different technical fields.

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The Future Of Credit: Blockchain And Reputation-Based Scores

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As the wealth gap is growing, individuals denied conventional credit are in a constant struggle. Moreover, conventional institutions are reluctant to provide loans to users without borrowing history.

If they do give approval, it usually comes with exorbitant interest rates. Cryptocurrency loans offer a more holistic approach to credit than personal FICO scores.

How Personal Scores Are Formed 

One of the most popular systems in the United States, FICO, considers five aspects of your financial past to rate your creditworthiness.

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These are your history of payments, the total amount owed, age of history, new accounts, and credit mix. It all boils down to how likely you are to repay a loan.

The higher the score, the cheaper the loan as the interest rate goes down. 

This method has important limitations, which makes platforms that lend coin so popular. First, a person who has just opened their first credit account may have a sterling reputation.

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They may be wealthy and have a history of fulfilling commitments. Secondly, data is updated with a delay. Finally, reports may contain errors, which is why the credit repair industry is so large.

Discover Reputation-based Credit

The paradigm is shifting. Cryptocurrency lending platforms understand that your previous history is not the only factor to assess creditworthiness.

Your values, community impact, reliability, and history of purchases should also matter.

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Suppose you are a talented employee, punctual and hardworking. Your employer should be able to recommend you for a loan or credit card.

Similarly, someone who gives back to the community shows reliability and dedication. Such factors are ignored by conventional scoring systems, but they can play a role in cryptocurrency lending. 

Blockchain as Facilitator

Blockchain can support reputation-based scores in many ways. Here are the top two directions. 

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  1. Snapshot of Your Reputation

It is possible to create a system focused on reputational cultivation. It will provide a snapshot of your background to the lender. Such environments will endorse creditworthiness and responsible behavior, from being punctual to helping strangers.

  1. New Scores

Different companies are experimenting with alternative metrics for loan applicants. For example, BTCJam tried adding new criteria like social media and recommendation letters.

Although this idea did not pan out, recommendations can help users without credit experience. 

Colendi has unveiled an algorithm that assigns a score based on data from the user’s smartphone, from social media activity to past purchases.

This also allows individuals to start with small loans and transactions and build trust gradually.

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Exciting Prospects

Conventional institutions assess applicants based on a very limited number of criteria, and this has to change. Blockchain presents a great opportunity to add different reputational factors to the mix.

It can empower consumers to create unique identities, so they can have simplified access to lending online. This will allow everyone to get a loan and build credit.

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Blockdaemon Blockchain Infrastructure Firm Raises $155M from SoftBank Vision Fund 2 in Series B Funding Round

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Blockdaemon has received that the funding would be channeled into expansion and also increasing its current tech portfolio.

Blockdaemon has raised $155 million in a recently concluded Series B funding round that increased the blockchain infrastructure firm’s valuation to $1.3 billion. The company plans to use the generated funds to scale up in Singapore, Japan, the UK, and Germany. In addition, Blockdaemon is also looking to make key acquisitions to increase its tech stack. The funding valuation makes Blockdaemon the largest blockchain infrastructure firm in the world for node management and staking. 

SoftBank Vision Fund 2 spearheaded the Series B round that comprised several other banks and asset management companies. They include Matrix Capital Management, Sapphire Ventures, and Morgan Creek Digital. Other players were Boldstart Ventures, Goldman Sachs, Greenspring Associates, Kenetic, Kraken Ventures, and Borderless Capital. 

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According to Blockdaemon CEO and founder Konstantin Richter, the latest injection of capital into his company is beneficial. In his own words:

“This latest large infusion of capital will ensure that we continue to revitalize existing financial infrastructure.” 

In addition, Richter also stated Blockdaemon’s commitment to “a future of decentralized financial infrastructure”. He said his firm looks to speed up the ease of integration between traditional banking and the crypto ecosystem. 

Oli Harris, North America head of digital assets at Goldman Sachs, also weighed in on his company’s involvement with Blockdaemon. In a statement Harris said:

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”Goldman Sachs is very pleased to continue our relationship with and investment in Blockdaemon as they continue to innovate for the financial services industry. We believe Blockdaemon has a key role to play in the future of blockchain and crypto adoption.”

Blockdaemon raised $28 million in June in a Series A led by Greenspring Associates with participation from Goldman Sachs. Other investors in that round were Coinfund, CoinShares, BlockFi, Uphold, and Voyager Digital. 

The Latest Funding Round by Blockdaemon Is Indicative of a Thriving Blockchain Industry

The blockchain infrastructure space is now tremendously competitive. This is due to the increasingly mainstream acceptance of crypto, most notably by traditional financial institutions. 

Crypto exchange Coinbase bought blockchain infrastructure startup Bison Trails in January. In May, Alchemy closed on an $80 million Series B funding round valued at $505 million and co-led by Coatue Management. Alchemy powers most of DeFi and almost all the big NFT platforms. Also, another company, Figment, generated $50 million towards building its proof-of-stake infrastructure. Institutional investors Senator Investment Group and Liberty City Ventures led the Series B funding round with participation from other players. Some of them include Anchorage Digital, Galaxy Digital, and 10T Ventures. 

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There is room for added growth and enhancement in the Blockchain space. The general consensus is that the technology of the future will be decentralized. The groundbreaking and key protocols in development today will play a vital role in shaping that future. Blockdaemon continually strives to remain one of those at the vanguard of such initiatives. The company currently sports a series of industry-leading products, including a single command-line API integration.

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