Day: September 18, 2018

Grandshores Technology Group, a Hong Kong–listed investment holding company, is seeking to raise around $12.7 million through a digital token fund, according to reports from the South China Morning Post (SCMP). Grandshores Technology plans to use the funding to launch a yen-backed stablecoin.

Chinese investor Yongjie Yao, who currently chairs Grandshores Technology, is also a founding partner at Hangzhou Grandshores Fund, which is backed by the local government of the city of Hangzhou and Chinese crypto billionaire Xiaolai Li.

Yao stated that the company plans to attract investment from qualified investors from outside China to raise funds via Tether, according to the SCMP report. The company will also invest in disruptive startups and other cryptocurrency projects across the globe that are challenging the status quo.

“We are entering the next stage of blockchain evolution, a stage which is akin to when computer operating systems were transiting from MS-DOS [disk operating system] to MS-Windows.”

The founding partners of Hangzhou Grandshores Fund are currently working with an unnamed, mid-tier Japanese bank to develop the yen-based stablecoin. Grandshores has plans to launch stablecoins pegged to the Hong Kong dollar and the Australian dollar in the future.

Yao remains confident regarding the demand for the coin when it launches. He believes the token could be ready by the end of 2018 or the first quarter of 2019.

“We believe cryptocurrency traders and exchanges will be potential takers of this stablecoin,” he added.

Stablecoins help tackle one of crypto’s chief dilemmas — volatility — without compromising its core values. On a smaller scale, they also help investors trade seamlessly while transferring money between crypto exchanges.

Earlier this year, Binance Labs, OKEx and other notable investors funded a stablecoin project out of South Korea called Terra. Liechtenstein’s Union Bank AG also issued its stablecoin, as it aims to become the world’s first blockchain investment bank.  

Paxos and Gemini joined the party last week, launching their stablecoins on the Ethereum blockchain.

Based on blockchain technology, most cryptocurrencies have an open and public ledger. While this is required for these systems to work, it comes with a significant downside: Privacy is often quite limited. Government agencies, analytics companies and other interested parties — let’s call them “spies” — have ways to analyze the public blockchains and peer-to-peer networks of cryptocurrencies like Bitcoin, to cluster addresses and tie them to IP addresses or other identifying information.

Unsatisfied with Bitcoin’s privacy features, several cryptocurrency projects have, over the years, launched with the specific goal to improve on them. And not without success. Several of these privacycoins are among the most popular cryptocurrencies on the market today.

However, as detailed in this month’s cover story, Bitcoin’s privacy features have recently seen significant improvements as well and are set to further improve over the next months and years. This miniseries will compare different privacycoins to the privacy offered by Bitcoin.

In part 3: Verge

Background

Verge (XVG) was originally launched in 2014 as “Dogecoin Dark” by Justin Sunerok, who is still lead developer of the project today. To cultivate a more serious image, the project rebranded to “Verge” in 2016. As a codebase fork of Dogecoin, its base protocol is similar to Bitcoin in many ways. (Dogecoin was a codebase fork of Litecoin, which was a codebase fork of Bitcoin.)

Verge has been in the news several times over the past year, most notoriously because the coin was successfully 51%-attacked on multiple occasions. But Verge is probably best known for its partnership with major porn site Pornhub, which made headlines all over the crypto media and beyond.

At the time of writing, Verge (XVG) claims the 39th spot on altcoin market cap lists, down from a top-25 spot earlier this year. This makes it the fourth (and last) privacy-focused altcoin in the market cap top 50, after Monero, Dash and Zcash.

Privacy

According to the subtitle of the the Verge “Black Paper,” which describes the project, Verge is “the most privacy focused cryptocurrency.” However, even the Verge project leaders themselves appear to be a bit more equivocal on this point. Describing (what seems to refer to) Monero as “too private,” the Verge Currency Beginner’s Guide written and published by Verge Currency Core members instead argues that privacy should be optional.

This optionality is represented by Verge’s “Wraith protocol.” The Wraith protocol would let users choose whether they want to conduct a regular transaction (like a normal Bitcoin transaction) or a RingCT transaction, similar to Monero. RingCT transactions include “decoy” coins in transactions to obfuscate which coin is really being spent and also hides the amounts involved in a transaction for everyone but the payer and payee.

However, RingCT transactions have actually not yet been implemented at this point in time. As such, Verge users can only make regular transactions.

What has been implemented are optional stealth addresses. Stealth addresses are perhaps best understood as cryptographic puzzles. They essentially allow the sender of XVG to generate a brand new Verge address to send the XVG to, which can then be claimed by the owner (and only by the owner) of the stealth address. The main benefits are that several Verge addresses can be generated from the same stealth address and that the stealth address cannot be linked to the actual addresses on the blockchain by anyone but the payer and the payee. This means that the stealth address can be posted online, perhaps as a donation address, without the user needing to worry about his privacy.

But Verge’s main privacy offering is probably a very different type of privacy: privacy on the peer-to-peer network layer.

The peer-to-peer network, of course, is where nodes transmit and relay all transactions and blocks to one another. Unfortunately, this network can be spied on, specifically by deploying nodes to track the data it receives from other nodes. If done right, this information can be used to figure out where certain transactions originated. If spies can link this originating node to an IP address, they’ve gone a long way toward de-anonymizing the creator of a transaction.

Verge counters peer-to-peer network analysis by having nodes and wallets communicate through Tor. By transmitting their transactions through the privacy-preserving, onion routing network, Verge users escape the prying eye of the spy. Tor is integrated into different Verge wallets by default, even including a mobile wallet for Android.

Bitcoin

Since RingCT isn’t delivered yet, the only privacy features offered by Verge today are stealth addresses and Tor.

Of these, only stealth addresses counter blockchain analysis — to some extent. This is a good feature, especially for some specific use cases (like donation addresses). But it is also a bit limited. Besides, simply generating a new (regular) address for each payment (which is standard in many Bitcoin wallets and also possible on Verge) and not sharing this address with anyone but the payer (which shouldn’t be too difficult) offers similar privacy in most cases. Further, stealth addresses are also available for Bitcoin (via Samourai Wallet).

As such, Verge’s only real differentiator would have to be Tor integration. This is a well-established solution to counter network analysis, and the fact that Verge offers it by default is good from a privacy standpoint — though Tor can slow the network down a bit.

However, Verge isn’t really unique in this regard either. Bitcoin can also be used over Tor, as can other cryptocurrencies. Granted, this does sometimes require some technical knack, which not everyone has. Verge offers a more user-friendly experience in this regard.

Bitcoin is likely to adopt Dandelion, a recent proposal to counter network analysis. This solution doesn’t encrypt all network traffic like Tor does, but it uses a clever trick to obfuscate the source of transactions that goes a long way to achieve the same goal with less overhead. That said, Dandelion is not implemented yet.

The much bigger problem for Verge is that network analysis is only one strategy to de-anonymize cryptocurrency users. And it’s almost certainly not the main one: blockchain analysis probably offers spies much more de-anonymizing data. As long as some addresses can be linked to real-world identities, address clustering tools can go a long way toward breaking all user privacy. In a world where a large chunk of all transactions are to and from KYC/AML compliant exchanges, protecting privacy on the peer-to-peer network alone probably doesn’t achieve much at all.

Thus, at least until RingCT is implemented, Verge can not reasonably be considered a privacycoin on par with Monero, Zcash or even Bitcoin — if it can be considered a privacycoin in the first place. It is definitely not “the most privacy focused cryptocurrency.”

Kin Ecosystem Foundation, the nonprofit governance organization for the Kin cryptocurrency, has announced the appointment of Matthew DiPietro as its chief marketing officer (CMO) today, September 18, 2018. Prior to joining Kin as its CMO, DiPietro was senior vice president of marketing at Twitch, the world’s leading video platform and community for gamers, where he drove mainstream adoption of live streaming.

Messaging app Kik was founded in 2009, and it became known as the first chat app that went viral in 2010, growing from zero to a million users within 15 days. The company also became the first chat app to add its own digital currency when it launched the KIN token early last year.

Kik believes that through its token it can bring together the areas of communications, information and commerce in a new way that will fuel how today’s generation and future ones connect.

The KIN token launched on Ethereum’s blockchain, then switched to Stellar’s, and then in a bid to eliminate transaction fees for its users, it forked Stellar to create the Kin blockchain. The KIN token recently achieved 1.2 million transactions per day.

The Kin Ecosystem Foundation is the nonprofit organization managing the development of the KIN token.

In an interview with Bitcoin Magazine, DiPietro explained why he decided to leave Twitch for the Kin Ecosystem Foundation.

“It reminds me very much of the early days of Twitch. It’s an exciting concept with audacious goals, a talented team, and killer technology,” he commented.

“We have a once-in-a-lifetime opportunity to drive adoption of a transformative technology that can fundamentally change the relationship between consumers and developers. I’m looking forward to creating and executing a marketing strategy that helps make that happen.”

DiPietro joins Kin after spending eight years at Twitch, where he created the company’s brand and led marketing initiatives at all levels, including the creation of TwitchCon in 2015, the company’s annual convention for Twitch creators and their communities.

From being the only marketing employee at Twitch, DiPietro grew the team to over 40 people who worked on the platform’s branding, content, communications and much more. Before Twitch, DiPietro also managed marketing for Socialcam, a social, mobile video application, often called “Instagram for video,” which was later acquired for $60 million.

Kin’s appointment of a former Twitch executive follows the growing trend that sees blockchain startups poach experienced executives from traditional business sectors. Earlier this year, Ripple brought in Kahina Van Dyke, the former global director of financial services and payments partnerships at Facebook, as senior vice president of business and corporate development. Gemini, the Winklevoss twins’ cryptocurrency exchange, also hired Robert Cornish of the New York Stock Exchange (NYSE) to serve as its first chief technology officer.

DiPietro, however, believes the real talent resides in the people making the bets on the companies, not the other way around.

“I think what we’re seeing is the first round of experienced talent coming into [the] space because we can start to see the outlines of what success looks like. There’s now enough information to start making educated bets, whereas previously it was anybody’s guess. I’m betting on Kin.”

In his new role, DiPietro will be driving marketing strategy for the Kin brand, platform and its associated products and services.

“What I hope to be able to do is to bring a level of clarity to the value proposition,” DiPietro said.

“Too many crypto projects can’t identify their customer, the customer problem, and the value proposition, and are unable to tell this story in a clear, compelling way. I want to tell that story for Kin because it’s a good one.”

DiPietro’s appointment comes on the heels of Kin’s accelerated momentum in the crypto industry, including the announcement of the Kin Developer Program and the launch of the Kinit Beta app, the first publicly available app dedicated to Kin.

The Kin Developer Program has committed nearly $3 million for qualified developers who can create relevant use cases using the Kin cryptocurrency in their apps. The program promises to reward individual developers who provide “meaningful experiences in consumer apps” with up to $140,000 in cash and Kin currency.

For Kin’s new CMO, what Twitch did in its early days is similar to what Kin is trying to do for decentralizing messaging services.

According to DiPietro, Twitch stood out for its unwavering focus on the creators. First, it created a category for them and then figured out a way to compensate them for the value they created without burdening the consumer.

“In many ways, what we’re trying to do with Kin is to make that concept scalable across platforms and consumer apps. We are laser focused on the app developer and the consumers they serve. Kin provides a viable path to building a world in which all parts of the ecosystem are compensated appropriately for the value they create,” he concluded.