11 Hacks to Erupt Some Bitcoin Right Now habd.as

Bob The Magic Custodian



Summary: Everyone knows that when you give your assets to someone else, they always keep them safe. If this is true for individuals, it is certainly true for businesses.
Custodians always tell the truth and manage funds properly. They won't have any interest in taking the assets as an exchange operator would. Auditors tell the truth and can't be misled. That's because organizations that are regulated are incapable of lying and don't make mistakes.

First, some background. Here is a summary of how custodians make us more secure:

Previously, we might give Alice our crypto assets to hold. There were risks:

But "no worries", Alice has a custodian named Bob. Bob is dressed in a nice suit. He knows some politicians. And he drives a Porsche. "So you have nothing to worry about!". And look at all the benefits we get:
See - all problems are solved! All we have to worry about now is:
It's pretty simple. Before we had to trust Alice. Now we only have to trust Alice, Bob, and all the ways in which they communicate. Just think of how much more secure we are!

"On top of that", Bob assures us, "we're using a special wallet structure". Bob shows Alice a diagram. "We've broken the balance up and store it in lots of smaller wallets. That way", he assures her, "a thief can't take it all at once". And he points to a historic case where a large sum was taken "because it was stored in a single wallet... how stupid".
"Very early on, we used to have all the crypto in one wallet", he said, "and then one Christmas a hacker came and took it all. We call him the Grinch. Now we individually wrap each crypto and stick it under a binary search tree. The Grinch has never been back since."

"As well", Bob continues, "even if someone were to get in, we've got insurance. It covers all thefts and even coercion, collusion, and misplaced keys - only subject to the policy terms and conditions." And with that, he pulls out a phone-book sized contract and slams it on the desk with a thud. "Yep", he continues, "we're paying top dollar for one of the best policies in the country!"
"Can I read it?' Alice asks. "Sure," Bob says, "just as soon as our legal team is done with it. They're almost through the first chapter." He pauses, then continues. "And can you believe that sales guy Mike? He has the same year Porsche as me. I mean, what are the odds?"

"Do you use multi-sig?", Alice asks. "Absolutely!" Bob replies. "All our engineers are fully trained in multi-sig. Whenever we want to set up a new wallet, we generate 2 separate keys in an air-gapped process and store them in this proprietary system here. Look, it even requires the biometric signature from one of our team members to initiate any withdrawal." He demonstrates by pressing his thumb into the display. "We use a third-party cloud validation API to match the thumbprint and authorize each withdrawal. The keys are also backed up daily to an off-site third-party."
"Wow that's really impressive," Alice says, "but what if we need access for a withdrawal outside of office hours?" "Well that's no issue", Bob says, "just send us an email, call, or text message and we always have someone on staff to help out. Just another part of our strong commitment to all our customers!"

"What about Proof of Reserve?", Alice asks. "Of course", Bob replies, "though rather than publish any blockchain addresses or signed transaction, for privacy we just do a SHA256 refactoring of the inverse hash modulus for each UTXO nonce and combine the smart contract coefficient consensus in our hyperledger lightning node. But it's really simple to use." He pushes a button and a large green checkmark appears on a screen. "See - the algorithm ran through and reserves are proven."
"Wow", Alice says, "you really know your stuff! And that is easy to use! What about fiat balances?" "Yeah, we have an auditor too", Bob replies, "Been using him for a long time so we have quite a strong relationship going! We have special books we give him every year and he's very efficient! Checks the fiat, crypto, and everything all at once!"

"We used to have a nice offline multi-sig setup we've been using without issue for the past 5 years, but I think we'll move all our funds over to your facility," Alice says. "Awesome", Bob replies, "Thanks so much! This is perfect timing too - my Porsche got a dent on it this morning. We have the paperwork right over here." "Great!", Alice replies.
And with that, Alice gets out her pen and Bob gets the contract. "Don't worry", he says, "you can take your crypto-assets back anytime you like - just subject to our cancellation policy. Our annual management fees are also super low and we don't adjust them often".

How many holes have to exist for your funds to get stolen?
Just one.

Why are we taking a powerful offline multi-sig setup, widely used globally in hundreds of different/lacking regulatory environments with 0 breaches to date, and circumventing it by a demonstrably weak third party layer? And paying a great expense to do so?
If you go through the list of breaches in the past 2 years to highly credible organizations, you go through the list of major corporate frauds (only the ones we know about), you go through the list of all the times platforms have lost funds, you go through the list of times and ways that people have lost their crypto from identity theft, hot wallet exploits, extortion, etc... and then you go through this custodian with a fine-tooth comb and truly believe they have value to add far beyond what you could, sticking your funds in a wallet (or set of wallets) they control exclusively is the absolute worst possible way to take advantage of that security.

The best way to add security for crypto-assets is to make a stronger multi-sig. With one custodian, what you are doing is giving them your cryptocurrency and hoping they're honest, competent, and flawlessly secure. It's no different than storing it on a really secure exchange. Maybe the insurance will cover you. Didn't work for Bitpay in 2015. Didn't work for Yapizon in 2017. Insurance has never paid a claim in the entire history of cryptocurrency. But maybe you'll get lucky. Maybe your exact scenario will buck the trend and be what they're willing to cover. After the large deductible and hopefully without a long and expensive court battle.

And you want to advertise this increase in risk, the lapse of judgement, an accident waiting to happen, as though it's some kind of benefit to customers ("Free institutional-grade storage for your digital assets.")? And then some people are writing to the OSC that custodians should be mandatory for all funds on every exchange platform? That this somehow will make Canadians as a whole more secure or better protected compared with standard air-gapped multi-sig? On what planet?

Most of the problems in Canada stemmed from one thing - a lack of transparency. If Canadians had known what a joke Quadriga was - it wouldn't have grown to lose $400m from hard-working Canadians from coast to coast to coast. And Gerald Cotten would be in jail, not wherever he is now (at best, rotting peacefully). EZ-BTC and mister Dave Smilie would have been a tiny little scam to his friends, not a multi-million dollar fraud. Einstein would have got their act together or been shut down BEFORE losing millions and millions more in people's funds generously donated to criminals. MapleChange wouldn't have even been a thing. And maybe we'd know a little more about CoinTradeNewNote - like how much was lost in there. Almost all of the major losses with cryptocurrency exchanges involve deception with unbacked funds.
So it's great to see transparency reports from BitBuy and ShakePay where someone independently verified the backing. The only thing we don't have is:
It's not complicated to validate cryptocurrency assets. They need to exist, they need to be spendable, and they need to cover the total balances. There are plenty of credible people and firms across the country that have the capacity to reasonably perform this validation. Having more frequent checks by different, independent, parties who publish transparent reports is far more valuable than an annual check by a single "more credible/official" party who does the exact same basic checks and may or may not publish anything. Here's an example set of requirements that could be mandated:
There are ways to structure audits such that neither crypto assets nor customer information are ever put at risk, and both can still be properly validated and publicly verifiable. There are also ways to structure audits such that they are completely reasonable for small platforms and don't inhibit innovation in any way. By making the process as reasonable as possible, we can completely eliminate any reason/excuse that an honest platform would have for not being audited. That is arguable far more important than any incremental improvement we might get from mandating "the best of the best" accountants. Right now we have nothing mandated and tons of Canadians using offshore exchanges with no oversight whatsoever.

Transparency does not prove crypto assets are safe. CoinTradeNewNote, Flexcoin ($600k), and Canadian Bitcoins ($100k) are examples where crypto-assets were breached from platforms in Canada. All of them were online wallets and used no multi-sig as far as any records show. This is consistent with what we see globally - air-gapped multi-sig wallets have an impeccable record, while other schemes tend to suffer breach after breach. We don't actually know how much CoinTrader lost because there was no visibility. Rather than publishing details of what happened, the co-founder of CoinTrader silently moved on to found another platform - the "most trusted way to buy and sell crypto" - a site that has no information whatsoever (that I could find) on the storage practices and a FAQ advising that “[t]rading cryptocurrency is completely safe” and that having your own wallet is “entirely up to you! You can certainly keep cryptocurrency, or fiat, or both, on the app.” Doesn't sound like much was learned here, which is really sad to see.
It's not that complicated or unreasonable to set up a proper hardware wallet. Multi-sig can be learned in a single course. Something the equivalent complexity of a driver's license test could prevent all the cold storage exploits we've seen to date - even globally. Platform operators have a key advantage in detecting and preventing fraud - they know their customers far better than any custodian ever would. The best job that custodians can do is to find high integrity individuals and train them to form even better wallet signatories. Rather than mandating that all platforms expose themselves to arbitrary third party risks, regulations should center around ensuring that all signatories are background-checked, properly trained, and using proper procedures. We also need to make sure that signatories are empowered with rights and responsibilities to reject and report fraud. They need to know that they can safely challenge and delay a transaction - even if it turns out they made a mistake. We need to have an environment where mistakes are brought to the surface and dealt with. Not one where firms and people feel the need to hide what happened. In addition to a knowledge-based test, an auditor can privately interview each signatory to make sure they're not in coercive situations, and we should make sure they can freely and anonymously report any issues without threat of retaliation.
A proper multi-sig has each signature held by a separate person and is governed by policies and mutual decisions instead of a hierarchy. It includes at least one redundant signature. For best results, 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7.

History has demonstrated over and over again the risk of hot wallets even to highly credible organizations. Nonetheless, many platforms have hot wallets for convenience. While such losses are generally compensated by platforms without issue (for example Poloniex, Bitstamp, Bitfinex, Gatecoin, Coincheck, Bithumb, Zaif, CoinBene, Binance, Bitrue, Bitpoint, Upbit, VinDAX, and now KuCoin), the public tends to focus more on cases that didn't end well. Regardless of what systems are employed, there is always some level of risk. For that reason, most members of the public would prefer to see third party insurance.
Rather than trying to convince third party profit-seekers to provide comprehensive insurance and then relying on an expensive and slow legal system to enforce against whatever legal loopholes they manage to find each and every time something goes wrong, insurance could be run through multiple exchange operators and regulators, with the shared interest of having a reputable industry, keeping costs down, and taking care of Canadians. For example, a 4 of 7 multi-sig insurance fund held between 5 independent exchange operators and 2 regulatory bodies. All Canadian exchanges could pay premiums at a set rate based on their needed coverage, with a higher price paid for hot wallet coverage (anything not an air-gapped multi-sig cold wallet). Such a model would be much cheaper to manage, offer better coverage, and be much more reliable to payout when needed. The kind of coverage you could have under this model is unheard of. You could even create something like the CDIC to protect Canadians who get their trading accounts hacked if they can sufficiently prove the loss is legitimate. In cases of fraud, gross negligence, or insolvency, the fund can be used to pay affected users directly (utilizing the last transparent balance report in the worst case), something which private insurance would never touch. While it's recommended to have official policies for coverage, a model where members vote would fully cover edge cases. (Could be similar to the Supreme Court where justices vote based on case law.)
Such a model could fully protect all Canadians across all platforms. You can have a fiat coverage governed by legal agreements, and crypto-asset coverage governed by both multi-sig and legal agreements. It could be practical, affordable, and inclusive.

Now, we are at a crossroads. We can happily give up our freedom, our innovation, and our money. We can pay hefty expenses to auditors, lawyers, and regulators year after year (and make no mistake - this cost will grow to many millions or even billions as the industry grows - and it will be borne by all Canadians on every platform because platforms are not going to eat up these costs at a loss). We can make it nearly impossible for any new platform to enter the marketplace, forcing Canadians to use the same stagnant platforms year after year. We can centralize and consolidate the entire industry into 2 or 3 big players and have everyone else fail (possibly to heavy losses of users of those platforms). And when a flawed security model doesn't work and gets breached, we can make it even more complicated with even more people in suits making big money doing the job that blockchain was supposed to do in the first place. We can build a system which is so intertwined and dependent on big government, traditional finance, and central bankers that it's future depends entirely on that of the fiat system, of fractional banking, and of government bail-outs. If we choose this path, as history has shown us over and over again, we can not go back, save for revolution. Our children and grandchildren will still be paying the consequences of what we decided today.
Or, we can find solutions that work. We can maintain an open and innovative environment while making the adjustments we need to make to fully protect Canadian investors and cryptocurrency users, giving easy and affordable access to cryptocurrency for all Canadians on the platform of their choice, and creating an environment in which entrepreneurs and problem solvers can bring those solutions forward easily. None of the above precludes innovation in any way, or adds any unreasonable cost - and these three policies would demonstrably eliminate or resolve all 109 historic cases as studied here - that's every single case researched so far going back to 2011. It includes every loss that was studied so far not just in Canada but globally as well.
Unfortunately, finding answers is the least challenging part. Far more challenging is to get platform operators and regulators to agree on anything. My last post got no response whatsoever, and while the OSC has told me they're happy for industry feedback, I believe my opinion alone is fairly meaningless. This takes the whole community working together to solve. So please let me know your thoughts. Please take the time to upvote and share this with people. Please - let's get this solved and not leave it up to other people to do.

Facts/background/sources (skip if you like):



Thoughts?
submitted by azoundria2 to QuadrigaInitiative [link] [comments]

Nhom VBC CHROMIA AMA TRANSCRIPT (15/05/2020)

Thai Nhat Minh | Stably:
First of all, can you have a brief introduction about yourself as well as about Chromia? Henrik_hjelte, Sergelubkin
Henrik Hjelte:
Hello. My name is Henrik Hjelte. I am Co-Founder and CEO of Chromia.
I have more than 30 years of experience in programming and a degree in Economics from Uppsala University.
BTW economics and computers = blockchain, so finally found a job that fits me.
I was introduced to the blockchain by the leader of the colored-coins project Alex Mizrahi in 2013
Colored coins project was a very influential thing
It was the first way for user created tokens
bolted on to the only blockchain at the time (almost) bitcoin
We started ChromaWay 2014, with Or Perelman too, to explore if the world was interested in “tokens” and those kind of applications
We worked with enterprise blockchain for some time, but now we are focused on Chromia, a new public platform for mainstream decentralized applications using relational blockchain technology.
Ok, maybe I should tell something about Chromia and not myself too.
Chromia is a better blockchain for building decentralized Apps.
better because it follows the “normal worlds” way of managing data.
A little history: I found a text/description to paste:
Chromia is a brainchild of ChromaWay. ChromaWay has a long record of delivering pioneering projects around the world. We issued Euros on the Bitcoin blockchain with LHV bank, allowed investors to invest in startups in a wholly decentralized way with Funderbeam, digitized the title transfer process with the Swedish land registry, and mediated the green bond market. ChromaWay’s core team created the world’s first protocol to issue tokens already in 2012, when blockchain was called “bitcoin 2.0”. Then ChromaWay introduced the relational model to enterprise blockchains with a consortium database called Postchain. Now Postchain is going public as the foundation for Chromia, a better blockchain for building decentralised Apps.
Chromia is a new public blockchain based on the idea of integrating traditional databases, Relational databases with blockchain security. Chromia is a general purpose blockchain with full smart contract capabilities, just that it is a lot easier to code, even complex applications. You code with an easy to learn new programming language that combines the power of SQL and normal languages but makes it secure in a blockchain context. Up to 1/10 the code-lines vs other blockchains.
If you don’t believe me, check this blog (later, stay in the chat):
https://blog.chromia.com/reasons-for-rell-compactness/
The aim of Chromia is to combine relational databases, which exist in every kind of organization, with blockchains. We want to provide a platform for our users to develop totally decentralized apps securely. Our goal is for Chromia to be seen as the number one infrastructure for decentralized applications.
Think about it: blockchain is about managing data (in a shared context).
And… What do we use to manage data? A Database!
Serge:
Sure! My name is Serge! And I work in Chromia marketing department. Also, I help coordinate various projects inside the company
My background is in Economics and Marketing
Thai Nhat Minh | Stably:
Question 1️⃣
DApp is currently mainly concentrated in the field of games, and its life cycle is basically short, just like the Crypto Kitty is only hot for a while, how to dig the application of DApp in more fields and how to improve the utilization rate of DApp? u/henrik_hjelte u/sergelubkin
Serge:
Good one, let me answer
Gaming is quite a challenging target because good UX is expected, it needs to be fast, responsive, etc. If we can do that, then we can also do all sorts of other stuff.
Also, it lets us experiment with things without a lot of hassle, it’s easier to get users, and so on. It’s also a growing niche within blockchain. You can check our latest game, Mines of Dalarnia https://www.minesofdalarnia.com
We also have Enterprise projects already, for example Green Assets Wallet https://greenassetswallet.org/about that already launched on the first Mainnet version called Bootstrap Net,we also have https://capchap.se built on our tech, more projects like non-profit review platform Impactoria, public land registries, medical projects and so on
Also don’t forget about our fully decentralized social network/forum that is live already on the testnet https://testnet.chromunity.com.
Thai Nhat Minh | Stably:
Question 2️⃣
How will dapp face the world change after the epidemic? u/henrik_hjelte u/sergelubkin
Henrik Hjelte:
Nobody can say for sure, but maybe people will tend to be online more than offline, so demand on online products and dapps as well will increase.
I just came in from an internal demo of a secret project we do, and it can be seen as a way to hang out online (a bit cryptic answer)
There are also interesting use cases of dapps in the medical field.
For example, we participated in the world-wide hackathon Hack for Sweden. Where our submission was to create an app on Chromia blockchain that increases the coordination between countries and hospitals especially during the hard time and COVID19.
Chromia wants to help the European Union (and the world, but we saw problems in the EU…) and its citizens to provide transparency over the necessary medical and protective devices and appliances of which we see shortage during this emergency crisis.
You can watch our promo here https://twitter.com/chromaway/status/1247557274337447938?s=20.
For me it was a fun Hackathon too because for once I got the opportunity to code… I told everyone else I will not do any bossing…
We try to continue this path on medical applications a bit.
Thai Nhat Minh | Stably:
Question 3️⃣
DApps are still not directly embedded in mobile phones like Apps at this moment, and DApps have also been flooded with bet content. How can guests increase the use of DApps and lower the threshold for using DApps? u/henrik_hjelte u/sergelubkin
Serge:
The answer is — better User Experience. We believe that in order for a DApp to be usable and become more widely accepted it has to feel like a normal App. A DApp needs to have quick transactions, scale well & shouldn’t require users to pay for each transaction. This is something that is possible now with using Chromia. It’s an extremely exciting time since we are going to see a new generation of DApps.
On top of that, we think that we might have an ace coming up. We have built a game to demonstrate the powers and possibilities of Chromia. A little bit about the game: In Mines of Dalarnia (https://www.minesofdalarnia.com), players get to explore the vast expanses of interplanetary treasure mines. With an innovative Dalarnia Token system, players can purchase virtual mining plots, and put them up for rent into the community, allowing for real-estate tycoons to earn more Tokens. Mining plots can also undergo their own upgrades, making them more lucrative to explore, as well as a hot property for rental by miners. The game takes advantage of these NFT-based tokens to securely track exchanges, and provide a sense of ownership and wealth to players as they grow their mining and resource empire.
Watch our trailer https://youtu.be/bDXKOp1Asqw and sign-up for the TestNet on the website!
Thai Nhat Minh | Stably:
Question 4️⃣
Many practitioners think that the main reason for restricting the development of DApp is “incomplete infrastructure”. How effective is the current “cross-chain” and “side-chain” solution? u/henrik_hjelte u/sergelubkin
Serge:
Our infrastructure resembles Alibaba Cloud, so a DApp developer just goes and deploys his DApp’s blockchain into it, it’s easy. Also our language Rell https://rell.chromia.com/en/maste is more robust than any other blockchain programming language.Or Azure or AWS
Rell combines the following features:
  1. Relational data modeling and queries similar to SQL. People familiar with SQL should feel at home once they learn the new syntax.
  2. Normal programming constructs: variables, loops, functions, collections, etc.
  3. Constructs which specifically target application backends and, in particular, blockchain-style programming including request routing, authorization, etc.
Rell aims to make programming as convenient and simple as possible. It minimizes boilerplate and repetition. At the same time, as a static type system it can detect and prevent many kinds of defects prior to run-time.
Maybe Henrik wants to add something. :)
Henrik Hjelte:
Yes, I can add some thing
Consider again the real /normal world. What made the apps you use every day? Behind the bank app is a relational database. Web 1.0, “shopping on the internet” was a relational database hooked up to a webpage.
web 2.0: Thefacebook was PhP and MySQL hack
again, a relational database.
So, we aim to make it just as easy to do decentralized apps as normal apps.
Also “the cloud” inspiration is more normal. In Chromia, the dapp developer pays for hosting the application (normally). Not the USERS.
No gas,this is a big usability improvement.
Thai Nhat Minh | Stably:
Question 5️⃣
There are many DApp development platforms on the market. What are the competitive advantages of Chromia? It can be explained in terms of development cost and ease of use that everyone is more concerned about. u/henrik_hjelte u/sergelubkin
Henrik Hjelte:
This what I’m talking about. I think “Ease of use” combined with “Power” is our biggest strength.
Easiness is our core feature thanks to the relational database aspect of our system. Relational databases are run by 85% of the enterprise market at the moment.
And used in 100% of all organizations.
The largest vendor on that market Oracle, has a bigger market cap than bitcoin,
So, this makes it easy for enterprises to integrate our tech stack to their normal systems without the need to redo them, like in most cases where blockchain pilots have failed.
That’s partially why we had success with enterprise customer which are live in the Chromia network.
And: there is a large set of features that relational databases have that alternatives (noSQL) do not have or do not do as well.
And blockchain is very primitive compared to that.
Data indepence, mathematical foundations etc. Large books have been written about it…
On Chromiam It’s very easy for developers to deploy DApps because they already know SQL-style programming. Keep in mind that we worked with customers and developers to build our tech stack while solving problems for them. We didn’t build something unneeded, we had proof of validation from the market.
SQL is top 3rd language in the world (after HTML and javascript).
source: stackoverflow survey 2019, among 90 000 developers…
Top 4 used databases: different flavors of SQL (relational databases)
So, they are used for a reason: Ease of use/programming, power etc.
Also, Rell is our language, is statically typed (means bugs are discovered when programs are written rather than we they run). It is also more compact, up to 1/7 of the code lines of SQL. And have “normal” programming constructs + blockchain programming built in.
Because we require both relational database properties and more security than SQL, currently Rell is the only choice. It is really easy to learn, please go check https://rell.chromia.com/en/maste.
Chromia also provides news to the database developer community….
millions of developers in potential.
OK, bear this in mind when you wonder how we can compete with blockchain X… Blockchain X is a fart in the ocean compare to the SQL world 😊
Bach Tuyet
You have organized many AMA sessions to the international community in general and Vietnam in particular. What do you most want to get after AMA sessions from the community? u/henrik_hjelte
Sergey
I’ll take this one:) our goal is to grow the community
  1. We want people to join our channels such as telegram, twitter, email also our decentralized forum https://testnet.chromunity.com and participate in discussions
  2. We want people to try our dapps such as Mines of Dalarnia
  3. We want to get feedback and understand the most important issues people care about Chromia and the blockchain industry in general
  4. We want to get more developers building on top of Chromia
LBTS:
What was your motivation for creating RELL and not use other languages? What benefits? Why name it RELL also?
Henrik Hjelte:
We have a private/federated relational blockchain called Postchain, and it allows SQL. But that can work in a small environment when you know all parties, and if you are really careful in checking code. But not for a more secure, distributed on the web setup, so we had to make it more secure (Deterministic, statically typed).
In the process, we also took the opportunity to make it cool and nice.
Also: it is simply not possibly to use evm, jvm, or web assembly. We need/want a database in the bottom. Postgresql is our virtual machine. You do not reimplement that…. 10+ years codebase….
Lee:
Being part of the gamer community, I would like to know what you would think about collaborating with a MOBA, RPG or Arcade game or some kind of project?
Henrik Hjelte:
We are already collaborating with some smaller studios. For bigger fish, we want to show them what is completely unique and visionary with Chromia, and we think we need various examples. So, first arcade game MoD (linked above) is one example, it is not the full potential or anything but a start. In this summer, krystopia 2 a puzzle game from Antler Interactive will be released.
What is even cooler is the “demo project” we do together with them, where we will show how a mutliplayer game with real blockchain features will work.
I just saw it an hour ago and was blown away
OH, and there is another studio releasing something very cool. Full logic on chain strategy game. Chain of Alliance.
oyibo pepper:
Do you encourage HACKATHON programs for intending Developers to test their skills and build on RELL
Can you explain more about CHROMIA AMBASSADORS PROGRAM, CAN I BECOME AN AMBASSADOR
Serge:
Yes, you can, but you will need to change your avatar 🤣
Seriously, we are growing our Chromians community if you want to become one please ping our admins in Chromia telegram group.
Also, we are planning virtual hackathons soon, please subscribe to stay updated
Infinite Crypto:
Since the Chromia project is currently working on the Ethereum blockchain ERC20 standard!
But we know that there are a lot of scalability issues with Ethereum, so why would you choose the Ethereum blockchain over other scalable blockchains? Do you have any plans for Mainnet launch of Chromia?
Henrik Hjelte:
ETH is just used in a pre-phase for tokens. We will have our own mainnet tokens interchangable with ETH.
Oyinbo pepper
What’s CHROMIA SSO and SDK, how can I get started
Henrik Hjelte
Both are 3 letters. That is what they have in common.
SDK = software development kit, check docs on https://rell.chromia.com
SSO = single sign on. A unique UX improvement. You approve an app in your wallet (vault) with super ease. no need to remember codes
sso: https://blog.chromia.com/chromia-sso-the-whys-and-the-whats/
We have a fundamentally different model from bitcoin and ethereum and the likes. The blockchain is not run by anonymous computers in basement and student dorms across the world. We have more of known identities, so 51% attacks is protected not by PoW/PoS but other consensus. Please see our whitepaper. Note that we are not noobs when it comes to this, our CTO Alex has published papers in academic journals on consensus etc. from 2013, and done several important ideas for blockchain. Sidechains we think he was first with, tokens too.
Sheron Fernando:
Is there any plan to makes partnership with local cryptocurrency developers from each country to make $CHR usage more worldwide?
Serge:
Yes, we are looking for cooperation with more external developers. Send me a message if you are interested in developing something on Chromia.
Stella:
What are the underlying problems in the Dapps today that can be solved with the Chromia protocol?
Serge:
  1. Scalability — on Chromia your dapp can have unlimited numbers of users thanks to parallel scaling
  2. Easiness of use — you don’t need external wallets, no need to buy crypto to pay for gas etc
  3. Cost — in general to deploy the dapp and to use the dapp
Marcel Lagacé:
Why build this platform? What is Chromia mission? What are the most prominent features of the platform? Can you clarify the use case for this feature?
Henrik Hjelte:
We build the platform to fix the problems with blockchains, that we ourselves have experienced since 2014 (before ethereum existed).
LBTS:
Can you tell us about Chromia developers? How motivated and experienced are they to always deliver the best products?
Henrik Hjelte:
I can tell you that we recruit developers that are really good, from all parts of the world. Vietnam has been a hub because we found many good, so in Ukraine.
How can we say “we have so good developers”? First one thing that is a bit different is that we are pretty experienced in leadership team of development. I do not code much anymore since I’m a CEO. But I do have now over 30 years of experience. Got published and was payed when I was 15. First full-time professional developer job at 18. Have released open-source projects used by 10: s of thousand developers.
And Alex, our CTO is Extremely good. That is why I recruited him to my old startup 2006 or so… So: we have experience to sort out good developers from bad.
Marcel Lagacé:
Does Chromia staking model is different from other staking platform??
What are the beneficial advantages of chromia staking system?
Serge:
The main difference is that we have independent Providers, entities that are not connected. These serious players are exchanges, data centres, professional staking companies. They provide a backbone of the ecosystem and host dapps. Like Amazon servers in the cloud. They cannot have stake bigger than the maximum thus they can’t control the network. This is probably the main difference with classic DPoS networks
Nguyen Duy Bao:
A lot of people will want to know what the strength of Chromia is but I want to know the weaknesses and problems Chromia faces ? How do you plan to solve it?
Henrik Hjelte:
A weakness I guess is weak compared to “competition”. And there are some blockchain projects that got crazy amount of funding. So how can we compete with that, when they can hire more developers for example? Well here is what experience comes into play: More developers does not always increase productivity a lot, it is diminishing returns. You can see many large projects, with 100 of developers fail miserably with no results.
And actually, sometimes true with marketing spend too. It is generally good with money, but if you are a bit clever you can compete also on marketing with less money than your competition.
Please follow Chromia on Social Media:
Website: https://www.chromia.com
Twitter: https://twitter.com/chromia
FaceBook: https://www.facebook.com/teamchromia
LinkedIn: https://www.linkedin.com/company/chromia
Telegram: https://t.me/hellochromia
Decentralized Social network Chromunity: https://testnet.chromunity.com
Free-to-Play Blockchain Game Mines of Dalarnia: https://www.minesofdalarnia.com
submitted by dam30 to Teamchromia [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
submitted by Stealthex_io to dogecoin [link] [comments]

Plan To Recover Our Losses


Background on the Initiative

My name is Matt. I’ve lived in Calgary my whole life, and been running businesses and programming since I was 10 years old. I’m a recent graduate of the University of Calgary in a business and computer science double major, and I currently manage the software team (6 students) at a small Calgary IoT startup. My past business experiences include running a window cleaning franchise across 6 communities, a popular concession stand, and a free web hosting service with over 10,000 clients.
I first got involved with cryptocurrency in 2017, when we had the big run up. Prior to that, I’d done a ton of research but never actually invested. While my losses in Quadriga are significant, they’re nowhere near some of the losses I’ve been hearing about. I’m fortunate to be in a “walk away” position if I so choose and I more or less did for the first week. But I couldn’t stay away. It isn’t right. Especially not now when the solution is so close and the potential impact is so significant.
Quadriga Initiative is the result of 6-7 months of on and off brainstorming, collaboration, and iteration around the central goal of recovering what's been lost.
The money is almost certainly not accessible. (I'm pretty sure it would have been found already.) We'll all get something from the bankruptcy, and I appreciate the legal team and official committee working hard on our behalf, but I fear it won't even come close to making up for what was lost. For many people - their whole life savings. It's not a very satisfying recovery. It doesn't leave anyone whole. It leaves a lot of people behind.
Without funds to pull from, any full recovery solution has to center around creating new value. Entrepreneurs and business leaders are creating value every day, and this is where the idea comes from.
We take advantage of the fact we have a large affected user community, tons of economic bargaining power, and a vast network. Many in the business community were affected, know someone who was affected, or feel horrible about what happened. My discussions with business leaders have shown that they generally desire to make this right, and businesses regularly do "goodwill" donations or gestures for marketing. The Quadriga Initiative provides a way businesses can help easily and in a "win win" way by running token-accepting promotions. We then provide a competitive framework that helps to promote businesses which make the biggest impact, highly incentivizing a faster recovery.
At this stage, everything is more or less ready. We have a primary exchange partner, a growing team of affected users, and multiple business connections. What remains is the incredibly tough challenge of creating trust and understanding among a community that's been completely devastated in the worst way. This is no easy task.
We need your help! If things don't make sense, or you still have questions, or you don't understand something, please take the time to ask and reach out! In addition to commenting here, please feel free to chat with us on Telegram: https://t.me/QuadrigaInitiative



Where Does the Money Come From?

The money (value) comes out of the profit margin of businesses. Businesses normally sell a product or service at a profit over the cost of production. Instead, a business would sell the product or service at a discount (less profit), accepting tokens in place of the difference.
While this may seem generous, like the business is giving something away, it also benefits the business as well:
Once a successful marketplace is established, affected users will have a multitude of businesses where they can spend tokens and get good deals. As well, other consumers can buy the tokens at a discount (supporting affected users), then use them to save money.
The leaderboard and large affected user community give a strong advantage to businesses to participate and offer the best deals. Businesses that have recovered the most are rewarded with more people seeing their promotion (free advertising).



The Various Uses For Tokens

Our Partner Exchange: Tokens will be tradable and accepted at face value towards the trading fees on the partner exchange. A trader who wants to save money on trades can stock up on the tokens to gain a discount over other customers who don't bother. The tokens can be used towards 50%-100% of the trading fees depending on the calendar date. This means a heavy discount for affected users and is essentially a price segment for the exchange.
In addition, the primary exchange partner we have is looking into giving back a small portion (15%) of gross trading revenue towards cashing tokens. This is done to incentivize the affected user community to spread the word about the exchange.
Participating Businesses: Businesses in the community accept the tokens towards purchases to promote to Quadriga victims, supporters, and deal seekers. It functions similar to a discount, where the tokens are applied as a portion of the sale price, with a few additional advantages for the business:
Businesses sell promotions for tokens, and send the tokens to a burn address that encodes the business website URL. To further encourage business participation, a leaderboard is set up to promote those businesses which have burned the most tokens. The leaderboard is a useful place to go shopping if you have tokens. You can find businesses who take them and get the best deals. All information is on the blockchain, enabling anyone to set up a leaderboard or start accepting tokens.



Token Flow Diagram

The linked diagram is a handy visualization of the initiative and how the various parties interact:
https://www.quadrigainitiative.com/Quadriga%20Initiative%20Diagram.pdf
The complete initiative is a full marketplace, enabling the beneficial (win win) interaction of all parties and the gradual recovery of losses over time. The token supply is finite, limited by the amount of losses we can verify, and all tokens eventually get cashed for $1 worth of products/services (or primary exchange gross trading revenue) as the program runs.


Our Primary Exchange Partner

Since the primary exchange is handling validation and distributing the tokens, it's important they be trustworthy. Given the history with Quadriga, most affected users (including every member of our team) are legitimately concerned about anyone losing their funds again. This is the primary reason we've selected to work with TxQuick.


Proof of Reserves and Why It Matters

In case you missed them, so far this year we've seen 3 large scale exchange collapses:
Each one represents massive losses for those involved - hundreds and thousands of affected lives. These are real people and families at the other ends, with hopes and dreams, who worked hard for their money.
In the case of QuadrigaCX, it took the freezing of the bank accounts, the death/disappearance of the CEO, and concerted legal action to even realize it was insolvent.
Exchanges can easily continue to operate for years with whatever level of reserves they like. Third party audits are riddled with holes like:
On top of that - most exchange platforms still don't even bother to audit. Despite the warnings about storing funds on exchanges, people still do. And remember that many affected users weren't storing funds on Quadriga - they simply got stuck with no way to withdraw.
Proof of Reserves asks exchanges to:
What it doesn't prevent:
What it does prevent:
Check this link for more details on Proof of Reserves, including the full hash tree algorithm.
Despite the relative simplicity of publishing wallet keys, the vast selection of exchanges we have in Canada, and the many millions of dollars stored, not a single exchange has done so. The hash tree algorithm has existed since 2014. It's presently on one exchange (last audited in 2014).
We feel that Proof of Reserves is key to preventing future exchange collapses, which is why we are so pleased to have a primary exchange partner which will be implementing the full algorithm. While we can't control other exchanges, traders now have an option to use an exchange which proves full backing of all deposits and we hope this will encourage wider adoption and greater industry transparency.


Timeline for the Initiative

The initiative process breaks down into roughly 3 stages:
Pre-Claim Stage - We are working to save affected user balances for later validation, as well as determine if there is sufficient interest in the project. This is ongoing.
Exchange Stage - We bring the primary exchange online, and process claims. Recovery starts through exchange trading fee discounts and eventually gross trading revenue. The exchange platform is expected to launch within a few months.
Marketplace Stage - Once we have enough individuals with tokens, we bring in the first businesses from the wider community. After we have several initial businesses, the marketplace grows organically as more businesses sign up over time. This is approximately a year after launching the exchange.
Full recovery (all losses) is likely to take multiple years, anywhere from 2 to 25 years. There are a lot of factors to consider.


Verification of Claims

Accurately capturing losses is key. Businesses are interested in helping honest victims of a crime who had their money stolen from them, and not too interested in supporting any fraud. We've been working hard to make our process as easy as possible for affected users, while being as hard as possible for false claims (claiming wrong amounts, losses of others, or fake claims).


How To Sign Up

If you wish to participate, please sign up at https://www.quadrigainitiative.com/.
You can do a pre-claim to save your balance, or an email only sign up just to show interest and get the launch email.



How You Can Help

We are stronger together!


Thanks so much!
submitted by azoundria2 to QuadrigaCX [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
submitted by Stealthex_io to Bitcoin [link] [comments]

Quadriga Initiative - Additional Information and Clarifications

Quadriga Initiative - Additional Information and Clarifications

Introduction / Summary

The Quadriga Initiative is an independent process where affected users and businesses in the community work together to recover losses from QuadrigaCX. An exchange (the primary exchange) will verify claims and distribute free tokens representing losses. Tokens will be accepted at the primary exchange and by participating businesses at face value. There is a white paper here with more detail:
https://quadrigainitiative.com/Quadriga%20Initiative.pdf
If you wish to participate in the Quadriga Initiative and receive free tokens representing your loss, there is a pre-claim process now open. A pre-claim uses your QCX client ID, first name as registered on the QCX platform, and a valid email address to copy your balance information and associate it with your email address.
https://quadrigainitiative.com/
Although a personal email will work, it is recommended for privacy and security to set up a new "forwarder" email account that doesn't personally identify you, with a unique password. Make sure that whatever email process you set up is one which still works to reach you in a few months time.
  • We are a community initiative which is not connected with the bankruptcy process. Participation does not impact your bankruptcy claim. You can find the official bankruptcy information on the Miller Thompson website.
  • We have taken all reasonable measures to protect our website and stored data against SQL injection. The website back-end is simple, all input is sanitized, and all access passwords are 16+ character full random. (I have a background in web hosting.)
  • There is no cost to participate and the pre-claim process takes approximately 3 minutes.
  • Please be sure to keep a copy of your bankruptcy claim paperwork for later validation!


Background on the Initiative

My name is Matt. I’ve lived in Calgary my whole life, and been running businesses and programming since I was 10 years old. I’m a recent graduate of the University of Calgary in a business and computer science double major, and I currently manage the software team (6 students) at a small Calgary IoT startup. My past business experiences include running a window cleaning franchise across 6 communities, a popular concession stand, and a free web hosting service with over 10,000 clients.
I first got involved with cryptocurrency in 2017, when we had the big run up. Prior to that, I’d done a ton of research but never actually invested. While my losses in Quadriga are significant, they’re nowhere near some of the losses I’ve been hearing about. I’m fortunate to be in a “walk away” position if I so choose and I more or less did for the first week. But I couldn’t stay away. It isn’t right. Especially not now when the solution is so close and the potential impact is so significant.
Quadriga Initiative is the result of 6-7 months of intense brainstorming, collaboration, and perpetual iteration around the central problem of how to recover what's been lost.
The money is almost certainly not accessible. (I'm pretty sure it would have been found already.) We'll all get something from the bankruptcy, but for most of us I fear it won't really make up for what was lost. For many people - their whole life savings. It's not a very satisfying recovery. It doesn't leave anyone whole. It leaves a lot of people behind.
Without funds to pull from, any full recovery solution has to center around creating new value. Entrepreneurs and business leaders are creating value every day, and this is where the idea comes from.
We take advantage of the fact we have a large affected user community, tons of economic bargaining power, and a vast network. Many in the business community were affected, know someone who was affected, or feel horrible about what happened. My discussions with business leaders have shown that they generally desire to make this right, and businesses regularly do "goodwill" donations or gestures for marketing. The Quadriga Initiative provides a way businesses can help easily and in a "win win" way by running token-accepting promotions. We then provide a competitive framework that helps to promote businesses which make the biggest impact, highly incentivizing a faster recovery.
At this stage, everything is more or less ready to launch. We have a primary exchange partner, a small team of affected users, and multiple business connections. What remains is the incredibly tough challenge of creating trust and understanding among a community that's been completely devastated in the worst way. This is no easy task.
We need your help! If things don't make sense, or you still have questions, or you don't understand something, please take the time to ask and reach out! In addition to commenting here, please feel free to chat with us on Telegram: https://t.me/QuadrigaInitiative



Where Does the Money Come From?

The money (value) comes out of the profit margin of businesses. Businesses normally sell a product or service at a profit over the cost of production. Instead, a business would sell the product or service at a discount (less profit), accepting tokens in place of the difference.
While this may seem generous, like the business is giving something away, it also benefits the business as well:
  • The business can get additional sales. Even though the profit per sale is less, the business still makes profit on those additional sales.
  • The business can find new customers. Even if a business sells a product or service "at cost" (meaning zero profit), they've established a relationship. The customer may buy other products or services in the future, or it could be part of a subscription.
  • The business is seen positively as "giving back", creating a better future, helping fraud victims, etc...
Once a successful marketplace is established, affected users will have a multitude of businesses where they can spend tokens and get good deals. As well, other consumers can buy the tokens at a discount (supporting affected users), then use them to save money.
The leaderboard and large affected user community give a strong advantage to businesses to participate and offer the best deals. Businesses that have recovered the most are rewarded with more people seeing their promotion (free advertising).



The Various Uses For Tokens

The Primary Exchange: Tokens will be tradable and accepted at face value towards the trading fees on the primary exchange. A trader who wants to save money on trades can stock up on the tokens to gain a discount over other customers who don't bother. The tokens can be used towards 50%-100% of the trading fees depending on the calendar date. This means a heavy discount for affected users and is more or less a price segment for the exchange.
In addition, the primary exchange partner we have at the moment is looking into giving back a small portion (15%) of gross trading revenue towards cashing tokens. This is done to incentivize the affected user community to spread the word about the exchange.
Participating Businesses: Businesses in the community accept the tokens towards purchases to promote to Quadriga victims, supporters, and deal seekers. It functions similar to a discount, where the tokens are applied as a portion of the sale price, with a few additional advantages for the business:
  • It price segments. The business doesn't lose revenue on customers who would have paid full price. With a 20% discount, the business loses revenue on some customers who would have bought anyway. Nobody likes to throw away free money.
  • It can run continuously. A 20% discount running continuously would mean the perceived value of the product would just be 20% less. A promotion accepting tokens can run long-term, enabling the business to attract more customers with less effort.
  • It's a give-back play, showing the business is caring about the wider community, and maybe has a larger agenda than pure profits. (ie Trying to create a better future.)
Businesses sell promotions for tokens, and send the tokens to a burn address that encodes the business website URL. To further encourage business participation, a leaderboard is set up to promote those businesses which have burned the most tokens. The leaderboard is a useful place to go shopping if you have tokens. You can find businesses who take them and get the best deals. All information is on the blockchain, enabling anyone to set up a leaderboard or start accepting tokens.



Token Flow Diagram

The following diagram is a handy visualization of the initiative and how the various parties interact:
Quadriga Initiative Diagram
The complete initiative is a full marketplace, enabling the beneficial (win win) interaction of all parties and the gradual recovery of losses over time. The token supply is finite, limited by the amount of losses we can verify, and all tokens eventually get cashed for $1 worth of products/services (or primary exchange gross trading revenue) as the program runs.


Our Primary Exchange Partner

Since the primary exchange is handling validation and distributing the tokens, it's important they be trustworthy. Given the history with Quadriga, most affected users (including every member of our team) are legitimately concerned about anyone losing their funds again. This is the primary reason we've selected to work with TxQuick.
  • TxQuick is being developed by Ethan Burnside, who has demonstrated his integrity in 2012-2013 when he ran BTC Trading Corp. When it was shut down, he spent significant personal funds to keep it running so everyone could get their money out - likely the only time in history that an exchange shut down and everyone got their funds. You can learn more about him from his post here.
  • We've had extensive discussions on Telegram about security. Ethan is open, transparent, and extremely knowledgeable. He has invested heavily in developing a system of secure multi-sig wallets. His previous exchange was never successfully hacked. If you have any questions, Ethan is happy to answer them!
  • Ethan is strongly in favour of publishing wallet public keys. The exchange will feature a full transparency page to allow anyone to see that all funds are fully backed. In the future, a full proof of reserves will be deployed to assure all customers that their balances are represented.
  • In addition to the token validation/verification function:
    • TxQuick will be the first platform to allow buying and selling of the tokens.
    • TxQuick proposes to accept the tokens at face value towards trading fees on the exchange. Affected users can use tokens to get free or discounted trading (50%+ off).
    • TxQuick will also handle a slow token payback, enabling tokens to be exchanged 1:1 for cash over time using 15% of gross trading revenue.
  • This proposal is subject to approval by the TxQuick board. It could be changed. There is a necessary interest level from the affected user community of at least 1,000 sign-ups.
  • While it might seem like Ethan is being super generous and giving a lot away for free, again this is mutually beneficial (win win). Here are some of the benefits to the primary exchange:
    • Lots of sign-ups from affected users and, later, interested consumers, many of whom will stay to use the platform. Ethan desires to achieve a dominant position in the Canadian marketplace.
    • The token program provides an effective price segment, increasing revenue over time. (Low prices = lost profit, high prices = less customers, price segment = more profit and customers.)
    • Customers with recovered funds are likely to be more loyal and prefer the platform, and the profit share incentivizes spreading the word about the platform. (Interests are aligned.)
  • It is not required to use the primary exchange platform for trading or deposit any money. You are free to sign up, receive your free tokens, and continue trading on any other platform or just use the marketplace.


Proof of Reserves and Why It Matters

In case you missed them, so far this year we've seen 3 large scale exchange collapses:
  • QuadrigaCX
  • EZ-BTC
  • Cryptopia
Each one represents massive losses for those involved - hundreds and thousands of affected lives. These are real people and families at the other ends, with hopes and dreams, who worked hard for their money.
In the case of QuadrigaCX, it took the freezing of the bank accounts, the death/disappearance of the CEO, and concerted legal action to even realize it was insolvent.
Exchanges can easily continue to operate for years with whatever level of reserves they like. Third party audits are riddled with holes like:
  • How can they possibly know the client list they're given is legitimate and fully inclusive?
  • How can you know the funds weren't borrowed for the audit purposes?
  • How old is the report? How can you trust the auditor?
On top of that - most exchange platforms still don't even bother to audit. Despite the warnings about storing funds on exchanges, people still do. And remember that many affected users weren't storing funds on Quadriga - they simply got stuck with no way to withdraw.
Proof of Reserves asks exchanges to:
  • Publish the wallet public keys so people can see that funds are fully backed. (A satoshi test can prove ownership of those wallets.)
  • Publish a hash tree to let each customer validate that their balance is included in the total.
What it doesn't prevent:
  • Same as presently, if funds are not secured in proper multi-sig wallets or multiple exchange operators are corrupt, the funds could still be taken, up to what's stored. However, this would be immediately known to everyone instead of revealed whenever admins felt like it (or never).
  • The balances of customers who never check the hash tree could be excluded by a dishonest exchange, which wouldn't be noticed until one of those customers decided to check.
  • A dishonest exchange could still dispute the balance of a customer or arbitrarily prevent withdrawals. In this case, the customer and exchange would have to sort that out.
  • A dishonest exchange could pretend to own wallets it doesn't. A satoshi test would help with this, where the exchange operators send a small amount at a specified time.
  • While it makes things safer, it's still not a good idea to store funds on the exchange.
What it does prevent:
  • The exchange owner can't spend funds of active customers, and still claim to hold them.
    • ie QuadrigaCX, EZ-BTC
  • The exchange owner can't conceal if funds are hacked or stolen. It becomes known immediately.
    • ie Mt. Gox, Cryptopia
  • Anyone can see if the exchange is solvent before trading.
    • ie Anyone with "bad timing" using an insolvent exchange.
Check this link for more details on Proof of Reserves, including the full hash tree algorithm.
Despite the relative simplicity of publishing wallet keys, the vast selection of exchanges we have in Canada, and the many millions of dollars stored, not a single exchange has done so. The hash tree algorithm has existed since 2014. It's presently on one exchange (last audited in 2014).
We feel that Proof of Reserves is the key to preventing future exchange collapses, which is why we are so pleased to have a primary exchange partner which will be implementing the full algorithm. While we can't control other exchanges, traders now have an option to use an exchange which proves full backing of all deposits and we hope this will encourage wider adoption and greater industry transparency.


Timeline for the Initiative

The initiative process breaks down into roughly 3 stages:
Pre-Claim Stage - We are working to save affected user balances for later validation, as well as determine if there is sufficient interest in the project. This is ongoing.
Exchange Stage - We bring the primary exchange online, and process claims. Recovery starts through exchange trading fee discounts and eventually gross trading revenue. The exchange platform is expected to launch within a few months.
Marketplace Stage - Once we have enough individuals with tokens, we bring in the first businesses from the wider community. After we have several initial businesses, the marketplace grows organically as more businesses sign up over time. This is approximately a year after launching the exchange.
Full recovery (all losses) is likely to take multiple years, anywhere from 3 to 25 years. My best estimate would be 10 years, although there are a lot of factors to consider.


Verification of Claims

Accurately capturing losses is key. Businesses are interested in helping honest victims of a crime who had their money stolen from them, and not that interested in supporting any fraud. We've been working hard to make our process as easy as possible for affected users, while being as hard as possible for false claims (claiming wrong amounts, losses of others, or fake claims).
  • Our ideal verification is based on:
  • If we don't have all the information, or there are problems, claims may be limited or rejected. This is at our full discretion, along with our primary exchange partner.
  • The user balance website is available to confirm balances for a limited time. It could go offline as early as August 31st. Once it goes offline, pre-claims will no longer be possible. As no list of claimants is being published through the bankruptcy, and paperwork can easily be manipulated, larger balances will then have to be validated through the courts.
  • Anyone with a balance on Quadriga can create a pre-claim by providing:
    • Client ID and first name for the purposes of saving the total which you had.
    • An email address for a future launch announcement (which can be a forwarder).


How To Sign Up

If you wish to participate, please sign up at https://www.quadrigainitiative.com/.
You can do a pre-claim to save your balance, or an email only sign up just to show interest and get the launch email.

  • We are a community initiative which is not connected with the bankruptcy process. Participation does not impact your bankruptcy claim. You can find the official bankruptcy information on the Miller Thompson website.
  • We have taken all reasonable measures to protect our website and stored data against SQL injection. The website back-end is simple, all input is sanitized, and all access passwords are 16+ character full random. (I have a background in web hosting.)
  • There is no cost to participate and the pre-claim process takes approximately 3 minutes.
  • Please be sure to keep a copy of your bankruptcy claim paperwork for later validation!


How You Can Help

We are stronger together!
  • Get yourself to a solid level of understanding of what we are doing by asking any questions or giving any feedback if anything doesn't make sense. This is the biggest thing!
  • Send in your pre-claim or do an email-only signup. (Every sign-up helps show interest.)
  • Upvote.
  • Share on social media.
  • Let us know your ideas/thoughts!
  • Join our Telegram group. Come meet our team!
  • Help us get the word out. Tell your friends.


Thanks so much!
submitted by azoundria2 to BitcoinCA [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
submitted by Stealthex_io to BitcoinCA [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
submitted by Stealthex_io to CryptoCurrencyTrading [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
submitted by Stealthex_io to btc [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
submitted by Stealthex_io to Anarcho_Capitalism [link] [comments]

The Biggest Scams In The Crypto History

The cryptocurrency market is often compared to the Wild West. Digital gold, lawlessness, and unlimited Internet space attract not only honest people but also rascals. Today we will show you the loudest scam projects and cyber-attacks that seriously shattered the crypto society.
PayCoin
A mix of cloud mining and Ponzi scheme, which was promoted by Geniuses at Work Corporation Miners (GAW) in 2014. These guys make the first move by renting and selling virtual HashSet miners, which helped them form a loyal audience. Seeing that this project began to go down, the team decided to invent their own coin — PayCoin. People were promised a breakthrough technology, support from banks and other organizations, huge profits, free and fast transactions all around the world. As a result, the project started just awesome, which attracted the attention of a large number of miners and users. As you can guess all creators’ promises didn’t come true — Paycoin started to fall and users filed a lot of court complaint.
In the fall of 2018, the creator of PayCoin, Joshua Garza, was sentenced to 21 months in prison, obliging investors to pay damages of $9.2 million, although the total amount of financial investments was over $54 million.
BitConnect
Do you know how to tell that you’re participating in a scam? Just start with “Wasa Wasa Wasup BitConnect” as Carlos Matos did. BitConnect platform appeared in 2016 and immediately announced its intention to join the elite of the digital economy, bringing super-profits to all project participants without exception. The essence of the criminal scheme was simple: “Invest and get 100% and more.” The organizers promised investors an income of 365% per year! After the enormous excitement of the crypto market, the cost of the BitConnect token was equal to $463. This attracted the attention of reputable persons like Mike Novogratz, Charlie Lee, and Vitalik Buterin. For example, the creator of Litecoin — Charlie Lee — twitted the following:
“From the surface, BitConnect seems like a classic Ponzi scheme. I wouldn’t invest in it and wouldn’t recommend anyone else to.”
But even after such concerns, many people continued to invest in BitConnect. However, in early January 2018, the project unexpectedly turned down all of the activities and closed its platform. Investors were left with nothing. According to general estimates, the investors were deceived for more than $2.5 billion! In the summer of 2018, the head of Bitconnect India Divyesh Darji was arrested.
Beware that on July 1, 2019, a project Bitconnect 2.0 can be launched according to the news posted on Twitterby the same-named user.
Ifan and Pincoin
Start-ups Ifan and Pincoin, owned by the Vietnamese company Modern Tech, raised a whopping $660 million from approximately 32.000 people. The majority of the victims were the citizens of Vietnam. This scam project was labeled the “largest exit scam in recent memory” by TechCrunch.Project’s marketing strategy was so perfect that it was impossible to resist. So Ifan was promoted as “the most advanced social network” for celebrities and their fans. On the other side, Pincoin attracted investors with a promised investment return of 40% per month. The creators of Pincoin wrote about the development of an online platform covering an advertising network, a service for auctions, an investment portal, and P2P platform based on the blockchain.
But in fact both ICOs used a Ponzi scheme: users invested money, received their interest, brought friends and received additional interest. After some time, Modern Tech stopped paying out dividends in fiat and invited users to switch to their own tokens. As a result, they just made a fool of the investors.
This provoked massive rallies in front of the Modern Tech office, during which investors demanded a refund. But the scammers just escaped into the night with a $660 million jackpot.
Mt.Gox
In 2014 Mt.Gox exchange platform was one of the most popular resources for Bitcoin trading: it accounted for more than 70% of all transactions with BTC. A real tidbit, isn’t it?
Unfortunately, Mt.Gox was slowly turning into chaos. In the fall of 2013, US federal agents collected $5 million from the company’s bank account, since Mt.Gox was not registered as a financial intermediary. At the same time, Coinlab, the company’s former partner, filed a lawsuit against Mt.Gox, demanding $75 million. The lawsuit stated that Mt.Gox violated the terms of the agreement with Coinlab and continued to trade in the United States and Canada.
These problems led to failures with the platform. For example, American users waited for months to withdraw funds. In February 2014, Mt.Gox stopped the withdrawal of coins at all and the CEO of Mt.Gox — Mark Karpeles — refused to give any comments. Around the same time, an internal company document became available to the press explaining the reason for the failures — over the past several years around BTC 745,000 were stolen from the service. The total amount worth around $450 million at the time! What’s more, this was approximately 7% of all Bitcoin existing at the time.
“Even the sloppiest of audits should have shown that something had gone wrong, that money was flowing out of Gox accounts.” — The Verge.
Later the 200,000 stolen Bitcoins was found on an old wallet of the company. However, approximately 650,000 remain lost forever. According to Mt.Gox version, hackers used a bug in the transaction system that existed from the first day and quietly transferred small amounts of coins to their wallets. For sure the Mt. Gox case is the biggest crypto heist in history.No doubts, scam projects, and hack attacks will continue to emerge in a crypto world. Unfortunately, there is no universal remedy from them, but here are a few tips on how to reduce the risks of being scammed:
Like and share this article if you find it useful. Want more interesting articles on the crypto world? Follow us onMedium, Twitter, Facebook, and Reddit to get Stealthex.io updates and the latest news about the crypto world. For all requests message us at [[email protected]](mailto:[email protected]).
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