Masternode Deployment Guide header graphic

Masternode Deployment Platforms – A Short Guide

Quality is never an accident. It is always the result of intelligent effort. – John Ruskin

The task of creating a masternode deployment platform and placing it at the disposal of masternode investors should not be taken lightly. And still, some do exactly that, underestimating the technical challenges that come with building such a product, and thus overlooking the investor’s concerns. We’ve gathered some questions that everyone should think about before deciding to use a masternode deployment platform.

Here’s what to pay close attention to.

Geographic distribution of the masternodes

What to ask: Where would my masternode be hosted if I set one up today?

Wrong answers

All the masternode servers are hosted in the same datacenter.
All the masternode servers are hosted on the platform.

Correct answer

When created, each masternode gets a dedicated server, hosted somewhere throughout the entire globe. Plus, the platform uses various server providers, instead of a single data center, so that enhances the distribution even more.

When you go on a trip or on holiday, you know not to keep all your money in the same place. This way, if a piece of luggage gets stolen, you still have some money to purchase a return ticket or to call someone to come pick you up. When you’re writing your doctoral thesis, it’s best if you keep copies in different folders, partitions, USB memories, external hard drives, a printed version plus a bunch of other locations that you’re sure going to come up with.

Same with masternodes. Multiple masternodes should not be kept in the same place.

If a platform holds the masternode servers itself, all bundled up in the same location, it is headed for disaster. No doubt about it. There are so many bad things that could happen, which would disrupt the entire process and bring the platform to a halt, that we don’t know where to start. Let’s just take the most common, usually encountered issue: a power outage. If all of the masternode servers are hosted in the same place and the power goes out, that’s a catastrophe in the making. An inactive masternode equals losing money, and what investor wants that?

If the masternode servers are scattered around, there’s no way they can all crash at the same time.

Dedicated server

What to ask: Does the masternode I’m deploying have its dedicated server?

Wrong answer

Your masternode can be hosted together with others in the same server. This way, we can keep the hosting costs low for you. However, this type of hosting will not affect your masternode in any way.

Correct answer

During the launching process, every masternode gets assigned its own dedicated server. Your masternode will not be sharing the same server with other masternodes at any moment.

A masternode fulfills multiple functions in a network. Anonymity, instant transactions, voting – these are just a few examples. In order for a masternode to deliver a certain level of performance, it needs resources. And a dedicated server provides these resources. Anything in between is just a compromise, that brings with it major disadvantages. Cramming together multiple masternodes in the same server is irresponsible. Imagine a bus absolutely packed with people – they’re definitely not having the best time of their lives. They can’t breathe, they can’t move, they will most likely get off the bus absolutely tired and in an irritated state.

If multiple masternodes are sharing the same server, they will be compelled to split the resources. That leads to a low-quality, adverse, maybe even faulty functioning that could endanger the entire network. To stick with the example method, imagine this: masternodes help secure the network. Who would want to tamper with the security of the network that holds your investments? To be fully protected, you need good soldiers, well-fed and armored. To have a fully secure network, you need each masternode to have enough resources to work properly.

In short, the more masternodes there are in the same server, the more prone to crashing it is. And if the server crashes, all the masternodes become inactive. Eight masternodes in the same server? Eight times more likely that the server crashes. Eight angry investors when the server crashes.

Some might justify this practice of placing multiple masternodes in the same server through the low costs they practice. Don’t be fooled by cheap prices, most of the times, they are an indicator of a low-quality, inferior product.

Setting a maximum number of connections to the masternode

What to ask: Is there a limit put on the number of connections that my masternode can have?

Wrong answer

There is a limit of x connections applied to your masternode. This does not affect your masternode in any way.

Correct answer

We do not limit in any way the number of connections the masternodes can have.

Another thing to check before deciding on a masternode deployment platform is whether the number of connections per masternode is limited. This is a practice that should be frowned upon, because it enables the delivery of a low-quality product. Certain platforms will impose a limit on the number of connections per masternode in order to be able to host multiple masternodes on the same server.

To make matters crystal clear, let’s talk numbers. If a masternode has its number of connections limited at 8 while most decent VMs support 128 connections, that masternode limitation has most likely been used to allow 8 masternodes to be crammed together. And we already covered the importance of dedicated resources for each masternode in the previous section.

Handling updates

What to ask: Is the update process devised to support simultaneous update for the entire number of masternodes on the platform?

Wrong answer

In case an update is required, our team is ready to implement the changes. It might not be for all masternodes at the same time, but it will be a fast process.

Correct answer

In case an update is required, the platform has automated processes implemented, ensuring that any change made applies to all masternodes at the same time.

When you start your venture in the cryptoworld, be prepared for moving sands. Not in the sense that you’ll sink (although that’s what happens when you don’t have firm control), but because everything will be changing constantly. Algorithms, wallets, or any other piece of code can and will suffer multiple changes throughout time. In cases like these, the masternode platform, and subsequently the team behind it, must be prepared to handle these changes.

Scalability must be taken into account when devising procedures for maintaining the entire system up to date. Firm, automated processes for keeping an eye on all the changes that happen inside each coin available on the platform should be put in place. This way, no piece of information and no masternode gets left behind.

Alpha, beta, gamma, delta

What to ask: Can anyone just register and use the platform?

Wrong answer

Yes, you can register and you’ll be the first to know when the platform is ready for you to start deploying masternodes.

Correct answer

Yes, simply go to the platform, create an account and start using it to deploy masternodes.
When you decide to utilize a product or a service, you expect it to be fully functional. You choose to use it because it advertises it can fix your problems. You choose the one that seems to best fit your needs. That’s why you’re choosing to eat soup with a spoon, not a fork. Would be a shame if your needs would not be met. Still, that’s what happens. Many platforms promise a wide variety of features and then fail to deliver.

It’s absolutely normal to take precautions and impose safety measures, even if that translates into a test period or beta product. This programmers’ joke is well known nowadays: “99 little bugs in the code, 99 little bugs in a code, Take one down, patch it around, 127 little bugs in the code”. What should be avoided, though, is getting stuck in that “testing” condition. The team should be constantly pushing to develop the product and polish all features.

One popular masternode platform, for example, releases everything directly to the public. Of course, one might think: “well, that’s not a very safe method, what if things start getting really awry, what then?”. Let’s put your mind to rest. The team is able to release directly because of two factors: confidence and a very, very thorough monitoring process. Plus, if the smallest error appears, their phones get red. Literally. Monitoring programs oversee everything constantly and send notifications to the system engineers’ phones. Any and every issue that appears is dealt with promptly.

Level of support

What to ask: How fast can I get support from you, in case something goes wrong?

Wrong answer

Feel free to contact our support team at any time. The average response time is somewhere between 24-48h.

Correct answer

You can contact the support team at any time. We understand how valuable a quick response is, so the average response time is just under 5 minutes.

If you’re a service provider, then you know that your job does not end after you’ve delivered the product. It extends to ensuring that your client is satisfied throughout the utilization of your product. Running into problems might mess up the level of satisfaction, especially if you’re not there to guide your client through solving the issue.

In the cryptoworld, simply offering support is not enough, you must deliver. Working in shifts, to cover all timezones (it is a cryptoworld, after all), having properly trained personnel, who can keep the response times low, or keeping an eye on all social channels, not just the dedicated support one, are characteristics of a high quality support.

The ideal situation is when the people who have created the product are the ones that provide the support. They know every little intricacy of the project, they truly understand how it functions, and they are the ones able to offer the best solutions. To use the same example as before, this is how one team managed to have a response time of under 2 minutes and 97% top ratings.

You don’t have to wait until you run into an actual problem to test just how responsive is the platform’s support team. You can simulate an issue or, if you don’t particularly enjoy lying, use the support feature to send feedback, suggestion, or praise.

Conclusion

To sum up, when choosing a masternode deployment platform, keep in mind the following:

  • The distribution of masternodes – make sure that the masternode servers are not stored in the same location
  • Dedicated server – check that each masternode has its own dedicated server
  • Connections to the masternode – verify that the number of connections the masternode can have does not have a limit imposed
  • Updates – find out what are the implemented procedures to maintain the entire system up to date
  • Functionality status of the platform – identify whether the platform has all features functional or is in a testing state
  • Support – review the availability and level of support (response times, response rates, quality of proposed solutions etc.)

That’s it! Good luck in your masternode ventures and don’t forget: always make informed choices!


How to Spot Cryptocurrency Scams

The novelty of digital currency made it appealing to its buyers, sellers, and traders, especially those who have lost interest and trust with the established financial institutions. However, along with this comes unpredictability as well.

While cryptocurrency may be the buzzword that everyone wants to get into, being trendy is not enough to determine stability for the years to come. It didn’t help that Bitcoin’s—perhaps the most notable cryptocurrency today—rise coincided with negative publicity in the form of scams that cost millions in assets lost. As it hit its highest value of $19,000 in December last year, buyers of other crypto like Confido or LoopX were scammed into putting their money on fraudulent companies.

There have been more than 20 crypto scams reported for 2018 so far, resulting in $400,000 of loss. But it shouldn’t come as a surprise that scammers are taking advantage of this new technology to fool honest buyers and traders, especially when there’s not a lot of information available about crypto yet.

The degree of anonymity is also a cause for concern. Hiding behind the false claims of instant wealth is a lot easier that way since there’s virtually no way the people fooled can call the cops on someone they don’t even know. Criminals can quickly run away from the law, with all the stolen money in tow because crypto remains unregulated and decentralized.

But being a centralized and regulated form of market doesn’t guarantee security either, as proven by the number of financial crises that have happened. Additionally, the selling and trading of crypto is generally a safe process, with mining requiring complex computation via expensive and powerful machines, and blockchain prohibiting its use for more than one time.

In a nutshell, both traditional and new financial technologies have its pros and cons, and crooks will find a way to outsmart the system for their personal gain. Avoid falling for these cons. Let NoahCoin guide you on how to keep an eye out for these fraudulent practices through this infographic.

 


FunFair (FUN)

Special: Interview with FunFair (FUN) CEO Jez San

On this weeks episode of Our Two Satoshis, Jez San the CEO of FunFair joined us to talk about what he and his team are working on. FunFair's plan to disrupt the entire Online Gaming market. We also discuss fast cars, his thoughts on Virtual Reality, what it was like creating the worlds first GPU and more!

FunFair Roadmap: https://funfair.io/latest/roadmap/
First Operator Signed (RaketheRake): https://funfair.io/funfair-technologies-signs-raketherake-as-first-operator/
FunDice Game: https://funfair.io/funfair-sets-new-benchmark-for-blockchain-dice-games-with-fundice/
Developer BigWave Gaming: https://funfair.io/funfair-technologies-announces-partnership-with-asia-facing-games-developer-big-wave-gaming/

Podcast Locations

CryptoFizz: https://cryptofizz.com/category/podcasts/
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Overcast: https://overcast.fm/itunes1348383350/our-two-satoshis
Anchor FM: https://anchor.fm/s/27b32f0
TuneIn: https://tunein.com/radio/Our-Two-Satoshis-p1099808/
Alexa: “Alexa, play our two satoshis podcast on TuneIn”

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Not financial advisors, do your own research.


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Zcash Cryptocurrency Mining Is Four Times More Profitable Than Bitcoin

Bitcoin mining in its early days could be likened to a gold rush. The relative anonymity and peer to peer electronic payment transfer capabilities made it attractive.

Couple this with the ability to mine using a regular computer, and the sometimes outrageous profits, and BTC mining became a promising new frontier.

Tech enthusiasts and hackers were among the first groups to dabble into the new Satoshi Nakomoto creation. But as the market grew, bitcoin mining difficulty increased, essentially raising hardware requirements and power consumption, and lowering profitability.

Investor enthusiasm in bitcoin has faltered in the past year in the face of increased international regulations targeting cryptocurrencies. The huge price drop also shook investor confidence. And, the present price swings don’t offer much hope.

Now, according to data compiled by Anything Crypto, Zcash (ZEC) beats other Proof of Work coins such as Bitcoin (BTC) and Ethereum (ETH) in mining profitability. This is based on current difficulty levels.

According to the site, Zcash miners using the Antminer Z9 mini can expect to make returns of about $8,000 within two years. Ether mining comes in second at $2,800 using the Antminer E3, within the same period.

Bitcoin miners using the GMO B2 rig, which is considered to be the most worthwhile ASIC, would be able to rake in about $1,500 in about two years. Based on these calculations, ZEC beats BTC mining profitability by more than four times. Mining difficulty predictions were factored into the calculations.

The Future of Zcash Mining

The Zcash cryptocurrency was developed in 2016 with the aim of providing greater anonymity to users than Bitcoin. It works by publishing payments on a public blockchain and users have a privacy option to conceal the amount transacted, the sender, or recipient.

Utilizing the Equihash hashing algorithm, its first ASIC, the Bitmain Antminer Z9 mini, was unveiled in May. It boasts a maximum hash rate of 10ksol/s and has a power consumption of 300W.

There’s already a growing number of individual mining projects cashing in on ZEC’s mining profitability, which boasts an overall value of about $666m.

That said, Bitcoin and Ether have a greater market value than Zcash, but also have a huge number of corporations with immense resources dedicated to mining, not to mention the mining pools.

This makes profitable BTC mining much more difficult and pits ZEC as a great alternative for individual miners before huge corporations start to muscle in.

 

 

This article was originally published at CoinCentral.com


bull market podcast image

EP 18: The Bull Market Starts and Government Asks Questions

The bull market has started and Bitcoin has crossed over the 7k mark. Goldman Sachs has a new Crypto Friendly CEO who moonlights as an EDM DJ. Blackrock announced their research in Crypto Trading and their 6.3 trillion in assets. Steve Bannon sets sites on a populist cryptocurrency and some Blockchain leaders were on the hill to answer questions from Congress and much more!

CryptoFizz Podcasts: https://cryptofizz.com/category/podcasts/
Download Brave Browser: https://brave.com/cry208

Podcast Locations

CryptoFizz: https://cryptofizz.com/category/podcasts/
Spotify: https://open.spotify.com/show/6ualRmhV4M4b5Eh5RdpzAG
Podbean: http://cryptofizz.podbean.com/
Itunes: https://itunes.apple.com/us/podcast/our-two-satoshis/id1348383350
Google Play: https://play.google.com/music/listen?u=0#/ps/I3afdrr2y7d767aeyowfk2gveey
Overcast: https://overcast.fm/itunes1348383350/our-two-satoshis
Anchor FM: https://anchor.fm/s/27b32f0
TuneIn: https://tunein.com/radio/Our-Two-Satoshis-p1099808/
Alexa: “Alexa, play our two satoshis podcast on TuneIn”

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Not financial advisors, do your own research.


Bitcoin Billionaires header image

Win or Lose: The Gamble Some Are Taking to Become Bitcoin Billionaires

Recently, we looked at a few stories about how some people became bitcoin millionaires. While this feat is impressive, there are a few people who are vying to become part of an even more elusive group of bitcoin billionaires.

In this article, we will look at a few stories about the richest people in cryptocurrency. We will also examine some of the risks that the ultra-rich are taking and some of the potential benefits they hope to gain.

Jihan Wu – Bitcoin Mining

Jihan Wu is the CEO of Bitmain, the world’s top company of bitcoin mining rigs. Even though the company has only been around since 2013, it was able to bring in $2.5 billion in revenue in 2017 alone. According to Wu, most of the revenue is generated through the direct sale of mining rigs to bitcoin miners. Bitmain also has additional revenue sources like BTC.com and AntPool, two prominent bitcoin mining pools that account for 40% of the world’s Bitcoin mining. All of this has put the company at a private evaluation of anywhere between $9 billion and $12 billion. Wu and co-founder, co-CEO Micree Zhan own about 60% of Bitmain.

 

Jihan Wu

 

Risks of Becoming a Mining Giant

Considering the cryptocurrency market was quite new when the company was founded in 2013, the risks were quite large. Many of these risks are heightened even more in 2018. For example, Bitmain’s headquarters remains in China, even despite the national ban of cryptocurrency trading, mining, and other potential obstacles.

Regulations in China and throughout the world aren’t the only risk that Bitmain has to consider.

Throughout 2018, there has been an increase in prominent projects that have made changes to their consensus algorithms to combat ASIC mining. For Bitmain, sudden changes can mean that some mining equipment (i.e. ASIC mining rigs) can become obsolete quickly and difficult to sell. Depending on production costs, the company risks losing serious amounts of money each time that a project makes algorithm updates.

In addition, it’s difficult to predict whether mining is or isn’t the future of consensus algorithms as a number of projects (i.e. Ethereum) have started to move from Proof-of-Work to Proof-of-Stake, potentially reducing the need for mining equipment.

Despite these risks, Bitmain’s founders have found success and gained bitcoin billionaire status by becoming the biggest player in the cryptocurrency mining market.

Investing to Become a Billionaire

While it’s possible to become a bitcoin billionaire through related industries like mining or possibly by becoming a successful founder of a blockchain project, investing directly in cryptocurrencies appears to be one of the most common ways to gain wealth.

As noted in our recent article that features stories about new, small investors who became rich through cryptocurrency investments, in a lot of cases, investments were only in the thousands of dollars. Even though there are stories where people sell everything to invest they own to invest in cryptocurrencies, the aggregate amount of funds invested is still low when compared to some ultra-rich investors.

There are a few examples where people who are already ultra-rich in terms of fiat currency holdings have decided to invest heavily in cryptocurrencies. One example of this is Alan Howard. Despite the fact that Howard already has an estimated net worth of $1.35 billion, Bloomberg has reported in March 2018 that Howard had invested $400 million. Going by these stats, this investment accounts for roughly 30 percent of his Howard’s wealth. This bitcoin story is quite interesting for a few reasons.

 


Alan Howard

 

First, the timing of the investment is essential to understand. Did Howard buy during the bear market or bull market? Given the nature of cryptocurrency price volatility, it can be considered quite risky for someone who is already extremely fiat wealthy to bet big on cryptocurrency. Timing can make a big difference in understanding whether this has or hasn’t been a successful move to date. Either way, this could pay off as a long-term investment.

Second, this gamble is a story that runs counter to the narrative that many ultra-wealthy people have told about cryptocurrencies. For example, both Warren Buffett and Bill Gates have criticized cryptocurrencies.

Other Well-Known Cryptocurrency Investors

While Howard’s cryptocurrency investment might seem like a big risk for someone who is already wealthy, there are a few other cases where millionaires have decided to take similar risks. For example, Mike Novogratz ($2.3 billion) and Steven Cohen ($11.4 billion) have also invested large sums of fiat funds into cryptocurrencies.

Steven Cohen’s investment took place in July 2018, which is important to note due to the fact that it was likely prompted by the SEC’s ruling that Ether is not a security. While the ruling didn’t have an immediate impact on the short-term prices of Ethereum, this decision possibly mitigated some risk in the eyes of major investors, making Ethereum and many other cryptocurrencies more appealing as long-term investments. Cohen, in particular, invested in several different cryptocurrencies, with Ripple being a notable exception possibility due to speculation that it could potentially be considered a security in the future.

 


Steven Cohen

 

Market Impact of Bitcoin Billionaires

The success or failure of those aspiring to become bitcoin billionaires will continue to be an important factor for all investors to watch.

On the one hand, adoption of cryptocurrencies by people who are already fiat billionaires or the creation of large crypto-related companies could lead the market towards more mainstream adoption over time. One thing to consider when looking at the many criticisms of cryptocurrency is whether or not the critics or supporters have invested. Ultimately, it might be beneficial to have a few champions of cryptocurrency who not only have interests in the market but also could help promote market growth.

On the other hand, there is still the possibility that the ultra-wealthy could create a new kind of wealth centralization of token supplies, something which many cryptocurrencies were initially created to prevent.

It will be interesting to note how the creation of bitcoin billionaires will influence the future direction of the market. As of 2018, we have seen a decent mix of bitcoin stories from both individual investors and institutional investors that have found success.

 

 

This article was originally published at CoinCentral.com


Hack the DAO: Blockchain Startup Daox to Announce a $100K Hacking Contest

This is a PRESS RELEASE. The views herein are not of cryptofizz.com

 

Daox, the blockchain startup that provides the platform and the ecosystem for ICOs based on the concept of a decentralized autonomous organization, has announced $100k hacking contest to make sure that their DAOs are safe.

According to the rules, participants should either find a way to completely freeze or steal the funds that reside on a DAO’s Ethereum smart contract. One who will be able to do this will be unconditionally rewarded with a $100k prize in bitcoins and an offer to join their team.

The safety of funds is probably the most important concern for those projects that are going to fundraise via cryptocurrencies, especially after the latest Parity incident when the funds turned out to be completely stuck in the Ethereum smart contract.

On top of that the credibility of the DAO concept suffered a negative impact after the famous “TheDAO” hack when the attacker managed to steal a vast amount of ether, which consequently led to the hard fork in the Ethereum network.

Daox Project will obviously need to put a lot of effort to make their users feel safe, and this contest might be considered as a good start for that.

More information at https://daox.org/contest/


How Location Data Will Affect the Future of Urban Mobility

As cities across the world continue to grow in population, density and economic diversity, urban planners are looking for ways they can use data to better design cities for all inhabitants. Currently, over 50 per cent of the world’s population lives in urban areas, with an expected two thirds of the world’s population to live in cities by 2050.

With growth of that size on the horizon, many planners and city systems developers are especially focused on the future of mobility. How are we able to connect the ways people move and predict the needs of our mobility systems? Traditionally, the only data collected was by roadside surveys, which of course did not provide a comprehensive picture of the multimodal ways people commute.

Data collection in mobility is essential to creating a functioning city that works for all methods of transportation – both for people and goods. As the use of connectivity and autonomy increases, the need for data and insights provided through blockchain technology increases as well. This provides a major opportunity for new innovations to improve mobility across the globe.

For tech companies, three proposed mobility models provide a chance to disrupt the current industry. These mobility models have the potential to demonstrate profound effects of mobility innovation on everything from large-scale systematic urban planning to the use of public space and are achievable as early as 2030.

Clean and Shared

The first mobility model focuses on cities shifting to cleaner methods of transport, which includes increased use of electric vehicles, optimizing shared mobility while decreasing the number of private vehicles, and increased public transport systems. Through this model both traffic flows and safety could be improved in conjunction with connectivity and autonomy. This model would work in cities in developing countries with densely populated urban centres, such as Delhi and Mexico City.

Private Autonomy

Due to urban sprawl and commuting patterns in the development of cities, the second mobility model focuses on the increase of self-driving cars and other autonomous electric vehicles. Connectivity could make it easier to plan routes around traffic and congestion, which would in turn increase the efficiency of existing infrastructure rather than building more. Ride sharing and ride hailing would act as complementary systems to support the use of autonomous vehicles. This model is proposed for large, car-centric cities such as Los Angeles.

Seamless Mobility

The third proposed mobility model is predominantly door to door and on demand, relying heavily on the integration of self-driving shared vehicles, a strong public transportation system and electric vehicles. A mix of clean, cheap and flexible mobility options are enabled through the use of smart software platforms. This final proposed model is most likely to emerge in cities that are both densely populated and predominantly high-income, such as London or Singapore.

Consumer Adoption

In order for these proposed models to be successfully driven by mobility data, citizens have to be open to adopting new technologies and services provided by their city’s organizations. While there may be some aversion to the idea of data collection when it is formally introduced, the use of data in cities is essential in improving mobility for all.
One company, Fysical, is supporting technological innovations through the use of location data. The world’s first decentralized and largest crypto-powered data protocol helps cities, companies and other organizations better understand how people move within their world. Fysical’s location data and insights, such as foot and traffic sensors and commute route tracking, can support technological innovations that promote electrification, connectivity, and autonomy.

How does Fysical work?

As a data market, Fysical provides the platform and insights for sharing location data by connecting data suppliers and data buyers. Essentially, a data supplier could be you or me – anyone that is willing to provide data to Fysical for payment in FYS token. The data available for sale is always owned by the supplier and stored securely on blockchain technology, for additional ease of sale and increased security.

The data buyers would then pay FYS tokens for location data provided by suppliers, in this example perhaps the data buyer would be an urban planner or a city’s governing body. Data buyers can then use the data they purchased to better plan for the movement of people, such as installing new infrastructure on the most congested routes based on car and pedestrian traffic flow data. Through secure interactions recorded on the blockchain, suppliers can stay in control of the data they are providing and buyers can trust that the data they’ve purchased is reliable and accurate.

Fysical aims to support technological innovations that promote the three mobility trends of electrification, connectivity, and autonomy. As our global urban centres continue to become denser and more diverse, the need for smarter mobility planning is essential. Through the implementation of location data collection and blockchain technology, urban planners can finally begin to understand and prepare for the future of urban mobility.

 

 

This article was written by Hayley Davison.


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Why Is Cryptocurrency Associated with Criminal Activity?

Despite countless examples to the contrary, many people still toss cryptocurrency and criminal activity into the same bucket. But is this born out of ignorance or fact? We all fear the unknown. Perhaps it’s partially because, to the layman, digital currencies suddenly seem to be taking over.

Despite proving that cryptocurrency is about more than evading taxes, why do so many people still make the link between Bitcoin and nefarious deeds?

The Silk Road

If The Silk Road conjures up images of an ancient trade route between the East and West, and intrepid merchants thirsty for adventure, your version needs a little updating. Many people think of cryptocurrency and criminal activity because of The Silk Road website that used Bitcoin as its main currency.

It was an online marketplace for buying and selling drugs, weapons, and all things illicit on the dark web. Alongside giving rise to Bitcoin’s popularity, The Silk Road also tainted its reputation. Just like that toxic ex-lover you knew was bad for you, Bitcoin and The Silk Road just couldn’t be separated.

When Bitcoin reached parity with the dollar in 2011, buying and selling on The Silk Road was easy. It was also relatively anonymous–until the Feds began to investigate, find, and prosecute criminals and the website was shut down. But the stain on Bitcoin’s reputation lived on.

Cybercrime

Are cryptocurrencies and cybercrime synonymous?

Another reason people associate cryptocurrency and criminal activity is cybercrime. Unfortunately, being natively digital, cryptocurrencies like Bitcoin fast became cybercriminals’ payment method of choice when using Ransomware. Since there’s no physical location connected to a cryptocurrency wallet, the perpetrators are much harder to trace.

Think of Bitcoin and other cryptocurrency wallets as the cyber equivalent of an offshore account in the Cayman Islands. Drug dealers and crooks have used those for many years, now they’re just on the net.

However, since Bitcoin isn’t as anonymous as people thought, the kicker comes when the criminals try to convert their Bitcoin into dollars.

There are workarounds of course, such as a crypto to crypto exchanges that don’t ask users to create an account. In the US, protocols of KYC and AML are effectively preventing this kind of transaction. But many other countries still allow for them to be anonymous.

Cryptojacking is another problem looming ever larger in the cybersecurity space. While the hackers’ intent is to use computational power to mine cryptocurrency, not to overtly steal funds, they’re still stealing electricity and making devices run slower. All while accumulating millions of dollars’ worth of coins like Monero.

Most companies are a step ahead of the cryptojackers by now. They’re using effective patch management and improving employee cyber hygiene. Individuals can also protect themselves by installing adblockers and antivirus programs. But that doesn’t stop ingenious hackers who’re getting more creative every day, whether they use a free WordPress design or a malicious advert.

It does nothing to help separate the association of cryptocurrency and criminal activity either.

Anonymity

There’s no one who wants to remain as anonymous as a gangster or mafia thug. After all, most upstanding citizens have no qualms about their data. Unless it’s being used without their knowledge by companies like Facebook, it’s generally not essential to them that their transactions are kept covert.

The fact that some cryptocurrencies are anonymous gives rise to the public’s association of cryptocurrency and criminal activity. That a person’s details are replaced by account keys is certainly an enabler of many types of criminal activity. This includes tax evasion, buying illegal goods, money laundering, and even capital flight.

Quite a few people so far have used cryptocurrency to send large sums of money outside of their country. On top of that, the sources of the amounts may be unknown, unlike a bank that requires customers to justify the source of funds.

Yet, many argue that anonymity and privacy are a person’s right. And actually, Bitcoin came about as a response to the 2008 financial crisis. That was arguably one of the darkest pits of criminal activity ever witnessed.

Thanks to the widespread corruption of centralized agencies and governments, Bitcoin was born. And early developers of cryptocurrency identified as cypherpunks, argue that privacy is necessary for an open society in the electronic age.

Ironically, fiat currencies are much more suitable for money laundering than crypto, with the US dollar being the criminal denomination of choice. It’s actually far easier to not leave any trail with dollar bills than it is by using cryptocurrency since your digital footprint is almost always trackable.

Scams

Howey Coin, an SEC “scam” to help teach investors a lesson about the dangers of ICO fraud.

Rather than hearing about all the successful ICOs, headlines pay far more attention to cryptocurrency scams. The wider public not involved in the cryptocurrency sphere may not hear about charitable donations being made in Bitcoin, or Ethereum building a decentralized world. But they do hear that 10 percent of all ICO funds were stolen in 2017. Or that over 80 percent of all ICOs are scams.

ICO scams are such a big problem that the SEC issued one to demonstrate how easy these scams are to fall for and to educate investors. With regulators starting to pay more attention and getting stricter on ICOs, the number of scams should start to diminish. And with companies like Google and Facebook banning ICO advertising and celebrities starting to endorse less ICOs (including “Shitcoin Shiller” John McAfee), more investors may be saved.

But ICO scams are yet another trigger for the cryptocurrency and criminal activity association. And the scammers always find a way to get around the ad bans, using social media and offering to send Ether back to people who send it to them first.

You have to admit, it’s hard to have sympathy for the type of person who would fall for a scam this glaringly obvious, yet there have been plenty of unfortunate victims. This scam has caused many high-profile names in crypto to include “not giving away ETH” after their name. Just check out Vitalik’s Twitter.


Vitalik “Not giving Away ETH” Buterin

Cryptocurrency and Criminal Activity–the Association Lives On

The lack of regulation thus far has caused the criminal association to reach fever pitch, with the crypto space often referred to as the Wild West. However, regulation is starting to appear in various forms around the world this year.

In the US, the SEC is calling on all exchanges to register as securities exchanges. Around the world, other countries are drawing up legal frameworks to protect investors without restricting innovation.

We’ll always associate large amounts of cash with criminals. But as people become more knowledgeable about cryptocurrency, hopefully, the knee-jerk reaction about its criminality will begin to dissipate. And already, there seems to be a change in the air.

That said, it’s inevitable that criminals will use cryptocurrencies for nefarious deeds, as long as there are criminals in our world. In the same way that they will continue to rob banks, kill each other, and start wars. We don’t associate major banks with criminal activity even after 2008, so maybe it’s time to let cryptocurrencies off the hook.

 

This article was originally published at CoinCentral.com


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EP 17: Major Players Making Moves

Swiss Stock Exchange announces plans to open a CryptoCurrency Exchange. The CIO of the New York Stock Exchange set to become Gemini's first CTO. BIS throws shade on digital currency. The Binance Syscoin hack and more on this weeks episode.

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