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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:
Alice might take the assets and disappear.
Alice might spend the assets and pretend that she still has them (fractional model).
Alice might store the assets insecurely and they'll get stolen.
Alice might give the assets to someone else by mistake or by force.
Alice might lose access to the assets.
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:
Alice can't take the assets and disappear (unless she asks Bob or never gives them to Bob).
Alice can't spend the assets and pretend that she still has them. (Unless she didn't give them to Bob or asks him for them.)
Alice can't store the assets insecurely so they get stolen. (After all - she doesn't have any control over the withdrawal process from any of Bob's systems, right?)
Alice can't give the assets to someone else by mistake or by force. (Bob will stop her, right Bob?)
Alice can't lose access to the funds. (She'll always be present, sane, and remember all secrets, right?)
See - all problems are solved! All we have to worry about now is:
Bob might take the assets and disappear.
Bob might spend the assets and pretend that he still has them (fractional model).
Bob might store the assets insecurely and they'll get stolen.
Bob might give the assets to someone else by mistake or by force.
Bob might lose access to the assets.
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:
ANY CERTAINTY BALANCES WEREN'T EXCLUDED. Quadriga's largest account was $70m. 80% of funds are in 20% of accounts (Pareto principle). All it takes is excluding a few really large accounts - and nobody's the wiser. A fractional platform can easily pass any audit this way.
ANY VISIBILITY WHATSOEVER INTO THE CUSTODIANS. BitBuy put out their report before moving all the funds to their custodian and ShakePay apparently can't even tell us who the custodian is. That's pretty important considering that basically all of the funds are now stored there.
ANY IDEA ABOUT THE OTHER EXCHANGES. In order for this to be effective, it has to be the norm. It needs to be "unusual" not to know. If obscurity is the norm, then it's super easy for people like Gerald Cotten and Dave Smilie to blend right in.
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:
First report within 1 month of launching, another within 3 months, and further reports at minimum every 6 months thereafter.
No auditor can be repeated within a 12 month period.
All reports must be public, identifying the auditor and the full methodology used.
All auditors must be independent of the firm being audited with no conflict of interest.
Reports must include the percentage of each asset backed, and how it's backed.
The auditor publishes a hash list, which lists a hash of each customer's information and balances that were included. Hash is one-way encryption so privacy is fully preserved. Every customer can use this to have 100% confidence they were included.
If we want more extensive requirements on audits, these should scale upward based on the total assets at risk on the platform, and whether the platform has loaned their assets out.
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):
The inspiration for the paragraph about splitting wallets was an actual quote from a Canadian company providing custodial services in response to the OSC consultation paper: "We believe that it will be in the in best interests of investors to prohibit pooled crypto assets or ‘floats’. Most Platforms pool assets, citing reasons of practicality and expense. The recent hack of the world’s largest Platform – Binance – demonstrates the vulnerability of participants’ assets when such concessions are made. In this instance, the Platform’s entire hot wallet of Bitcoins, worth over $40 million, was stolen, facilitated in part by the pooling of client crypto assets." "the maintenance of participants (and Platform) crypto assets across multiple wallets distributes the related risk and responsibility of security - reducing the amount of insurance coverage required and making insurance coverage more readily obtainable". For the record, their reply also said nothing whatsoever about multi-sig or offline storage.
In addition to the fact that the $40m hack represented only one "hot wallet" of Binance, and they actually had the vast majority of assets in other wallets (including mostly cold wallets), multiple real cases have clearly demonstrated that risk is still present with multiple wallets. Bitfinex, VinDAX, Bithumb, Altsbit, BitPoint, Cryptopia, and just recently KuCoin all had multiple wallets breached all at the same time, and may represent a significantly larger impact on customers than the Binance breach which was fully covered by Binance. To represent that simply having multiple separate wallets under the same security scheme is a comprehensive way to reduce risk is just not true.
Private insurance has historically never covered a single loss in the cryptocurrency space (at least, not one that I was able to find), and there are notable cases where massive losses were not covered by insurance. Bitpay in 2015 and Yapizon in 2017 both had insurance policies that didn't pay out during the breach, even after a lengthly court process. The same insurance that ShakePay is presently using (and announced to much fanfare) was describe by their CEO himself as covering “physical theft of the media where the private keys are held,” which is something that has never historically happened. As was said with regard to the same policy in 2018 - “I don’t find it surprising that Lloyd’s is in this space,” said Johnson, adding that to his mind the challenge for everybody is figuring out how to structure these policies so that they are actually protective. “You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it’s not super protective.”
The most profitable policy for a private insurance company is one with the most expensive premiums that they never have to pay a claim on. They have no inherent incentive to take care of people who lost funds. It's "cheaper" to take the reputational hit and fight the claim in court. The more money at stake, the more the insurance provider is incentivized to avoid payout. They're not going to insure the assets unless they have reasonable certainty to make a profit by doing so, and they're not going to pay out a massive sum unless it's legally forced. Private insurance is always structured to be maximally profitable to the insurance provider.
The circumvention of multi-sig was a key factor in the massive Bitfinex hack of over $60m of bitcoin, which today still sits being slowly used and is worth over $3b. While Bitfinex used a qualified custodian Bitgo, which was and still is active and one of the industry leaders of custodians, and they set up 2 of 3 multi-sig wallets, the entire system was routed through Bitfinex, such that Bitfinex customers could initiate the withdrawals in a "hot" fashion. This feature was also a hit with the hacker. The multi-sig was fully circumvented.
Bitpay in 2015 was another example of a breach that stole 5,000 bitcoins. This happened not through the exploit of any system in Bitpay, but because the CEO of a company they worked with got their computer hacked and the hackers were able to request multiple bitcoin purchases, which Bitpay honoured because they came from the customer's computer legitimately. Impersonation is a very common tactic used by fraudsters, and methods get more extreme all the time.
A notable case in Canada was the Canadian Bitcoins exploit. Funds were stored on a server in a Rogers Data Center, and the attendee was successfully convinced to reboot the server "in safe mode" with a simple phone call, thus bypassing the extensive security and enabling the theft.
The very nature of custodians circumvents multi-sig. This is because custodians are not just having to secure the assets against some sort of physical breach but against any form of social engineering, modification of orders, fraudulent withdrawal attempts, etc... If the security practices of signatories in a multi-sig arrangement are such that the breach risk of one signatory is 1 in 100, the requirement of 3 independent signatures makes the risk of theft 1 in 1,000,000. Since hackers tend to exploit the weakest link, a comparable custodian has to make the entry and exit points of their platform 10,000 times more secure than one of those signatories to provide equivalent protection. And if the signatories beef up their security by only 10x, the risk is now 1 in 1,000,000,000. The custodian has to be 1,000,000 times more secure. The larger and more complex a system is, the more potential vulnerabilities exist in it, and the fewer people can understand how the system works when performing upgrades. Even if a system is completely secure today, one has to also consider how that system might evolve over time or work with different members.
By contrast, offline multi-signature solutions have an extremely solid record, and in the entire history of cryptocurrency exchange incidents which I've studied (listed here), there has only been one incident (796 exchange in 2015) involving an offline multi-signature wallet. It happened because the customer's bitcoin address was modified by hackers, and the amount that was stolen ($230k) was immediately covered by the exchange operators. Basically, the platform operators were tricked into sending a legitimate withdrawal request to the wrong address because hackers exploited their platform to change that address. Such an issue would not be prevented in any way by the use of a custodian, as that custodian has no oversight whatsoever to the exchange platform. It's practical for all exchange operators to test large withdrawal transactions as a general policy, regardless of what model is used, and general best practice is to diagnose and fix such an exploit as soon as it occurs.
False promises on the backing of funds played a huge role in the downfall of Quadriga, and it's been exposed over and over again (MyCoin, PlusToken, Bitsane, Bitmarket, EZBTC, IDAX). Even today, customers have extremely limited certainty on whether their funds in exchanges are actually being backed or how they're being backed. While this issue is not unique to cryptocurrency exchanges, the complexity of the technology and the lack of any regulation or standards makes problems more widespread, and there is no "central bank" to come to the rescue as in the 2008 financial crisis or during the great depression when "9,000 banks failed".
In addition to fraudulent operations, the industry is full of cases where operators have suffered breaches and not reported them. Most recently, Einstein was the largest case in Canada, where ongoing breaches and fraud were perpetrated against the platform for multiple years and nobody found out until the platform collapsed completely. While fraud and breaches suck to deal with, they suck even more when not dealt with. Lack of visibility played a role in the largest downfalls of Mt. Gox, Cryptsy, and Bitgrail. In some cases, platforms are alleged to have suffered a hack and keep operating without admitting it at all, such as CoinBene.
It surprises some to learn that a cryptographic solution has already existed since 2013, and gained widespread support in 2014 after Mt. Gox. Proof of Reserves is a full cryptographic proof that allows any customer using an exchange to have complete certainty that their crypto-assets are fully backed by the platform in real-time. This is accomplished by proving that assets exist on the blockchain, are spendable, and fully cover customer deposits. It does not prove safety of assets or backing of fiat assets.
If we didn't care about privacy at all, a platform could publish their wallet addresses, sign a partial transaction, and put the full list of customer information and balances out publicly. Customers can each check that they are on the list, that the balances are accurate, that the total adds up, and that it's backed and spendable on the blockchain. Platforms who exclude any customer take a risk because that customer can easily check and see they were excluded. So together with all customers checking, this forms a full proof of backing of all crypto assets.
However, obviously customers care about their private information being published. Therefore, a hash of the information can be provided instead. Hash is one-way encryption. The hash allows the customer to validate inclusion (by hashing their own known information), while anyone looking at the list of hashes cannot determine the private information of any other user. All other parts of the scheme remain fully intact. A model like this is in use on the exchange CoinFloor in the UK.
A Merkle tree can provide even greater privacy. Instead of a list of balances, the balances are arranged into a binary tree. A customer starts from their node, and works their way to the top of the tree. For example, they know they have 5 BTC, they plus 1 other customer hold 7 BTC, they plus 2-3 other customers hold 17 BTC, etc... until they reach the root where all the BTC are represented. Thus, there is no way to find the balances of other individual customers aside from one unidentified customer in this case.
Proposals such as this had the backing of leaders in the community including Nic Carter, Greg Maxwell, and Zak Wilcox. Substantial and significant effort started back in 2013, with massive popularity in 2014. But what became of that effort? Very little. Exchange operators continue to refuse to give visibility. Despite the fact this information can often be obtained through trivial blockchain analysis, no Canadian platform has ever provided any wallet addresses publicly. As described by the CEO of Newton "For us to implement some kind of realtime Proof of Reserves solution, which I'm not opposed to, it would have to ... Preserve our users' privacy, as well as our own. Some kind of zero-knowledge proof". Kraken describes here in more detail why they haven't implemented such a scheme. According to professor Eli Ben-Sasson, when he spoke with exchanges, none were interested in implementing Proof of Reserves.
And yet, Kraken's places their reasoning on a page called "Proof of Reserves". More recently, both BitBuy and ShakePay have released reports titled "Proof of Reserves and Security Audit". Both reports contain disclaimers against being audits. Both reports trust the customer list provided by the platform, leaving the open possibility that multiple large accounts could have been excluded from the process. Proof of Reserves is a blockchain validation where customers see the wallets on the blockchain. The report from Kraken is 5 years old, but they leave it described as though it was just done a few weeks ago. And look at what they expect customers to do for validation. When firms represent something being "Proof of Reserve" when it's not, this is like a farmer growing fruit with pesticides and selling it in a farmers market as organic produce - except that these are people's hard-earned life savings at risk here. Platforms are misrepresenting the level of visibility in place and deceiving the public by their misuse of this term. They haven't proven anything.
Fraud isn't a problem that is unique to cryptocurrency. Fraud happens all the time. Enron, WorldCom, Nortel, Bear Stearns, Wells Fargo, Moser Baer, Wirecard, Bre-X, and Nicola are just some of the cases where frauds became large enough to become a big deal (and there are so many countless others). These all happened on 100% reversible assets despite regulations being in place. In many of these cases, the problems happened due to the over-complexity of the financial instruments. For example, Enron had "complex financial statements [which] were confusing to shareholders and analysts", creating "off-balance-sheet vehicles, complex financing structures, and deals so bewildering that few people could understand them". In cryptocurrency, we are often combining complex financial products with complex technologies and verification processes. We are naïve if we think problems like this won't happen. It is awkward and uncomfortable for many people to admit that they don't know how something works. If we want "money of the people" to work, the solutions have to be simple enough that "the people" can understand them, not so confusing that financial professionals and technology experts struggle to use or understand them.
For those who question the extent to which an organization can fool their way into a security consultancy role, HB Gary should be a great example to look at. Prior to trying to out anonymous, HB Gary was being actively hired by multiple US government agencies and others in the private sector (with glowing testimonials). The published articles and hosted professional security conferences. One should also look at this list of data breaches from the past 2 years. Many of them are large corporations, government entities, and technology companies. These are the ones we know about. Undoubtedly, there are many more that we do not know about. If HB Gary hadn't been "outted" by anonymous, would we have known they were insecure? If the same breach had happened outside of the public spotlight, would it even have been reported? Or would HB Gary have just deleted the Twitter posts, brought their site back up, done a couple patches, and kept on operating as though nothing had happened?
In the case of Quadriga, the facts are clear. Despite past experience with platforms such as MapleChange in Canada and others around the world, no guidance or even the most basic of a framework was put in place by regulators. By not clarifying any sort of legal framework, regulators enabled a situation where a platform could be run by former criminal Mike Dhanini/Omar Patryn, and where funds could be held fully unchecked by one person. At the same time, the lack of regulation deterred legitimate entities from running competing platforms and Quadriga was granted a money services business license for multiple years of operation, which gave the firm the appearance of legitimacy. Regulators did little to protect Canadians despite Quadriga failing to file taxes from 2016 onward. The entire administrative team had resigned and this was public knowledge. Many people had suspicions of what was going on, including Ryan Mueller, who forwarded complaints to the authorities. These were ignored, giving Gerald Cotten the opportunity to escape without justice.
There are multiple issues with the SOC II model including the prohibitive cost (you have to find a third party accounting firm and the prices are not even listed publicly on any sites), the requirement of operating for a year (impossible for new platforms), and lack of any public visibility (SOC II are private reports that aren't shared outside the people in suits).
Securities frameworks are expensive. Sarbanes-Oxley is estimated to cost $5.1 million USD/yr for the average Fortune 500 company in the United States. Since "Fortune 500" represents the top 500 companies, that means well over $2.55 billion USD (~$3.4 billion CAD) is going to people in suits. Isn't the problem of trust and verification the exact problem that the blockchain is supposed to solve?
To use Quadriga as justification for why custodians or SOC II or other advanced schemes are needed for platforms is rather silly, when any framework or visibility at all, or even the most basic of storage policies, would have prevented the whole thing. It's just an embarrassment.
We are now seeing regulators take strong action. CoinSquare in Canada with multi-million dollar fines. BitMex from the US, criminal charges and arrests. OkEx, with full disregard of withdrawals and no communication. Who's next?
We have a unique window today where we can solve these problems, and not permanently destroy innovation with unreasonable expectations, but we need to act quickly. This is a unique historic time that will never come again.
https://preview.redd.it/vrq329h41vs51.png?width=1000&format=png&auto=webp&s=a9cdd74e5bfd8c7ca678fcb6663d37d87bc9f7b2 With the dramatic increase in the number of traders and investors in Canada that are using PrimeXBT, one question has been asked recently more than others which is whether PrimeXBT is safe for Canadian traders. The number of Canadian users at PrimeXBT has been growing rapidly throughout 2020 as a sign that the tools and features on the platform are opening up new opportunities for interacting in the market in more optimal ways. This guide covers whether or not PrimeXBT is safe for Canadian traders, and looks at some of the features and tools of the platform. The Canadian Market in 2020 Like much of the rest of the world, the Canadian market has seen some of the highest levels of all volatility in 2020 that have been seen in many years, or even at all throughout the history of cryptocurrency. The Canadian market has seen renewed growth following the contractions throughout 2018 and much of 2019 when the global bear market in the cryptocurrency space drove many retail investors back out of the market after the exponential growth of 2017. This has led many Canadian traders to wonder whether we are on the brink of another major bull run as was seen both in 2017 as well as 2013, and that would potentially see the price of Bitcoin driven up to the range of $50,000 or more. The Exponential Growth of PrimeXBT With the backdrop of the excitement within the global cryptocurrency market in general, and the Canadian cryptocurrency market more specifically, PrimeXBT has been perfectly positioned for exponential growth since its launch in early 2018. The platform initially launched at the start of 2018 with a waiting list of more than 150,000 traders, and this showed the interest in the platform that was present even before it came onto the market. As a result of the unique tools and features provided by PrimeXBT, it has grown exponentially over the past few years to become the world’s leading multi-asset margin trading platform and today managing up to $2 billion worth of global trade every day. What is PrimeXBT? https://preview.redd.it/iax449j91vs51.png?width=1000&format=png&auto=webp&s=24ea73d33d4f74afedf75a55b5a51967e95dea04 PrimeXBT is a margin trading-centric platform that provides high leverage trading on a wide range of cryptoassets as well as many of the world’s leading traditional assets. Traders at PrimeXBT are able to access up to 100X leverage on a wide range of cryptoassets that include BTC, ETH, XRP, LTC, and EOS. This is whilst also being able to access up to 500X leverage on a range of traditional assets like stock indices such as the S&P500 and FTSE100, forex pairs such as USD/EUR and AUD/CAD, and commodities such as gold and oil. PrimeXBT: Security Features From a security perspective, PrimeXBT is one of the leading trading platforms in the crypto market, and has built a strong reputation for being a safe and reliable platform to trade on. Much of this is as a result of the bank-grade security features that are implemented throughout PrimeXBT that include mandatory Bitcoin address whitelisting and hardware security modules with rating of FIPS PUB 140-2 Level 3 or higher. By working to add advanced security solutions throughout its platform, PrimeXBT has shown a strong commitment to protecting the funds and data of its users. PrimeXBT: Security Track Record While there are many other platforms in the cryptocurrency space that have suffered devastating hacks over the past 2 or 3 years, PrimeXBT is one of a small number of top tier platforms that have remained hack-free throughout this period. A good example of this is the Binance hack in 2019 that saw the platform lose more than $40 million of its users’ funds, and more recently the KuCoin hack where more than $150 million was lost by that platform. In contrast, PrimeXBT has never been hacked and has never been breached by hackers and as such remains as one of the most trusted platforms in the market, having a clean security track record. PrimeXBT: Excellent Customer Support In 2019, a study of the top 5 crypto margin trading platforms found that PrimeXBT has the best customer service of all 5, and also was the only platform out of the 5 to have full marks for all for metrics. These metrics were politeness, responsiveness, helpfulness, and the range of different communication channels that were available to users. By having an excellent customer support structure, PrimeXBT has ensured that its users are able to get fast and easy solutions to the problems and that there is always a direct line of communication open with the admin at the platform to be able to effectively deal with any issues that arise. Other Advantages of Using PrimeXBT PrimeXBT also provides a number of other advantages that are unique to the platform including providing the lowest fee schedule of any major cryptocurrency trading platform in the market with a low flat rate of 0.05% applied to all trades, irrespective of the size of a trade or the asset being traded. As well as this, PrimeXBT’s users can enjoy a robust trading engine that is built into the core of the PrimeXBT platform and that can execute up to 12,000 trades per second with an average trade time of less than 7.02 ms. PrimeXBT also has a unique 4-tier referral program where the traders can generate revenue streams from direct referrals, as well as indirect referrals up to 4 levels deep, with this dramatically increasing the profitability of affiliate activities, and netting the top 3 affiliates on the platform more than $1 million in 2019. In Summary PrimeXBT is a safe and well-reputed trading platform for Canadian traders and this is the reason for its exponential growth of users and volume within Canada over the past months. As well as being a safe platform to trade at, PrimeXBT also provides a range of unique tools and features to use in order to maximize profitability in the cryptocurrency and traditional asset markets. To understand more about the security features on PrimeXBT that have protected its users, check out PrimeXBT’s Security page.
I was tipped Nano, what's next? Congrats on receiving your first Nano tip! The first thing you should do is move your Nano to your own, secure wallet for safe keeping. This will only take 5-10 minutes. -- Setting up your wallet There is a number of wallets available that support Nano but we recommend: IOS: Natrium or Canoe Android: Natrium or Canoe PC/Web: Brainblocks Wallet Remember to carefully store your seed phrase during the wallet signup process. If you lose this seed you may lose access to your Nano. We recommend writing it down in multiple locations for additional peace of mind. -- Withdrawing your Nano from the Tip-bot Now that you have your wallet set-up you will need to PM the tip bot, u/nano_tipper to instruct it on where to send your funds. To withdraw your Nano, you should PM the bot the following:
send [amount of Nano] [your address]
Where the amount is the total value of the tips you have received ( You can PM the bot, "balance" if you do not know this) and the address is your wallet address, which you can find in the wallet app you have just downloaded, usually under "Receive" or "My Account" pages. e.g:
If you have any problems with this step, leave a comment below, visit the tip-bot documentation or official subreddit. -- What to do with your Nano Once you have your Nano in your own wallet, it's up to you what you want to do with it. Like any currency, you can save it, spend it or sell it: ---- > Spending Nano Like any currency, Nano is meant to be spent! and with zero fees & instantaneous transactions there is no better method to buy the products / services you love. Currently there are a number of things you can purchase with Nano, including: Games, gift-cards, hotel stays, in-game currency, gambling, takeaway food and even pay in-store in certain locations. List of stores accepting Nano Alternatively you can signup for Wirex and within 3-5 days receive a Visa debit card capable of spending Nano at any of millions of physical locations or online stores worldwide in which Visa is accepted. How does paying with Nano compare to other popular payment methods?
---- > Selling Nano You may wish to sell your Nano for your local currency (USD/EUGBP etc.) or exchange it for another cryptocurrency such as Bitcoin. This is easy to do and should only take an hour even for someone new to Nano. To sell your Nano for a local / fiat currency, there are a number of services you can use, such as the following: Sell to USD: Kraken, Coingate Sell to EUR:Wirex, Kraken, Bitvavo, Coingate Sell to GBP:Wirex Other: Wirex (AUD, HKD, JPY, CAD) To sell your Nano in exchange for a cryptocurrency such as Bitcoin or Ethereum, we recommend the following: BTC: Binance, Kucoin ETH: Binance, Kucoin USDT: Binance Nollar: Txbit Full list of exchanges -- More information / Need help? For more information and/or help on moving/using/selling Nano, you can turn to the helpful folks on the official subreddit, nanocurrency or the official Nano Discord. --- --- --- What is Nano worth? At the time of posting, 1 Nano = $1.02 USD but you can check the current price here as it will fluctuate over time. --- --- --- What is Nano? Nano is a digital currency for the real world - the fast and free way to pay for everything in life. It features instant transactions, zero fees and is infinitely scalable. Gone are the days of complicated and energy-inefficient transactions - Nano is green and easy to use. --- --- --- What is Nano For Good? Nano For Good is a community-run (initially by three community members) initiative to help better promote Nano, fund Nano-based projects and support helpful community posts. With 45,000 Nano in our fund and over 18,000 Nano distributed & tipped to date. Follow our progress here: https://nanocrawler.cc/exploreaccount/xrb_3cnhdppkx46f9jnagbizhxo84zjfp17tznpcf6x9q47jkujjqbq48aag5fid
•Korean exchange Bithumb has been allegedly hacked for 3 million EOS (USD 12.5 million) and 20 million XRP (worth USD 6.2 million).
CRYPTOCURRENCY TRADING SERVICES
•Japanese exchange Coincheck launches a new OTC service allowing traders to purchase 50 or more BTC in a single transaction. •Binance announces Binance Singapore, a fiat-to-crypto exchange to support SGD (Singapore Dollar) onramps. The platform is slated to launch sometime this April. •Indian exchange Coindelta ceases operations as a result of regulation that has affected cryptocurrency businesses in the country. •BitMEX refunds traders who lost funds as a result of positions being closed due to auto-deleveraging. •Huobi lists Dogecoin (DOGE) and accompanies the newly listed token with a 10M DOGE giveaway. •Korean exchange Bithumb has been allegedly hacked for 3 million EOS (worth $12.5 million USD) and 20 million XRP (USD 6.2 million).
•Founders of Vancouver based Vanbex Group Inc and Etherparty Smart Contracts Inc are being accused of fraud as a result of an USD 30 million ICO that took place in 2017. The pair allegedly took crowdsale funds which was intended to fund that platform which never materialized. Vanbex has since released a statement denying all allegations. •The U.S. Securities and Exchange Commission (SEC), releases a framework that outlines considerations which will help token issuers determine whether a digital asset would classify as a security. •In what would be Canada’s largest cryptocurrency forfeiture, a Toronto Judge orders a previously identified drug dealer, Matthew Phan, to forfeit USD 1.4 million worth of Bitcoin. •The U.S. Securities and Exchange Commission (SEC) issues its first ever no-action letter to token issuer Turnkey Jets.
•Coinsquare announces the intention to launch the first ever stablecoin backed by the Canadian dollar dubbed “eCAD”.
•The Cyberspace Administration of China has approved 197 companies on its list of registered blockchain service providers. Of the 197 companies, major tech giants Baidu (Baidu Blockchain Engine), Alibaba (Alibaba Cloud BaaS) and Tencent (Tencent Blockchain as a Service) made the list.
•The U.S. Securities and Exchange Commission (SEC) releases a job posting aiming to hire an Attorney Advisor specializing in cryptocurrency.
•@ErikVoorhees - “The US dollar has fallen to 1/5000th of a Bitcoin” •@elonmusk – “Dogecoin might be my fav cryptocurrency. It’s pretty cool” •@krugermacro – “Everybody outside crypto is talking about bitcoin today. From banks to funds to family offices to brokers.”
Buying Ether in Canada, my experience with different exchanges
Hello, I'm writing about my experiences buying ethereum in Canada, essentially converting CAD to ETH. The goal is to help beginners that are interested in getting started but don't know where to actually buy ether. There's a lot of info out there but most of it seems to be centered around USD, which doesn't always translate for CAD and our banking system. I'm by no means an expert but I figured someone might find this information helpful. I've verified and used the following sites, so I'll be writing about them:
If you just want the gist of it, a super-quick summary of what I found:
Coinbase: great if you just want to try things out. Fast to get ether, fast to verify, high fees.
QuadrigaCX: great if you're looking to get more seriously into cryptocurrency. Most deposit options, lower fees.
Kraken: great if you have a ton of money you want to transfer into cryptocurrency or if you want to play around with trading. Low fees, slow CAD deposit because wire transfer.
Coinsquare: Fees aren't bad, low volume though.
With every one of these sites, there's usually some form of verification. This involves taking a picture of some piece of government ID (usually passport or drivers license), as well as some sort of proof of address such as a utlity bill. Some sites require you to take a selfie with some of that documentation or holding a handwritten sign. It seemed sketchy to me at first, but every place does it. Coinbase This was the first place I tried. Their only payment methods I could find are Visa and MasterCard, of which they charge a 3.75% convenience. With reward cards you might get 1%-2% back, but this is a fairly high fee. The bright side is it's just about instantaneous. One thing I noticed is that their sell price is about ~$5 higher than a few exchanges. For example, as I write this, it's $119.23 on coinbase. On kraken it's 113.99 for a market order. There is a weekly $200 limit on the amount to buy. A 30 day countdown started after I spent $500 to increase the limit. I can't find what the new limit amount will be once that countdown reaches 0 though. So far, I've been with them for over a month and I've bought $600 worth of ether. The first time I bought it only took a minute to get sent to my private address. The second time it took ~40 minutes for it to actually get sent to my private ether address, but this was due to some issues they were having, probably just a fluke. I've bought two more times since then and both times it was instant. To summarize Pros:
Fast to verify, took a couple minutes, seemed to be completely automated
Almost instantly sent funds via Visa/Mastercard
Instantly got the ether I bought
Probably the easiest to use
Generally $5 over Kraken prices
High fees at 3.75%. Might be able to brought lower with a good rewards card
Low $200 weekly limit
QuadrigaCX Hoping to get lower fees, this was the second place I tried. They accept a lot more payments with a variety of fees, I'll list them out:
Electronic Funds Transfer
Min $250, Max $10,000
5 Business Days
Min $500, Max $5,000
Next Business Day
2% + $5
Min $50, Max $2,000
Instant (but may be held 24 hours by security)
1.5% (min. $5)
Min $100,000, Max $500,000
2-4 Business Days
Min $500, Max $500,000
Electronic Funds Transfer replaced their "direct bank transfer" option, and while I think it's great since I think every bank supports it, it unfortunately has a rather high fee at 5%. I don't really see why you would use this though, if you can use Interac Online, it's faster. If you need the higher daily limit, a bank wire would be cheaper too. Interac e-Transfer I'd go with this if your bank doesn't support Interac Online and if you don't mind the 2% fee. If you're doing a large amount, the Bank Wire would be a better choice, depending on how much your bank charges you. Interac Online seems like the best choice for less than $2000. Unfortunately even though my bank card says "Interac" on it, and the bank is listed as supported, I can't use it for Interac Online because the card is both a debit and visa card. I've read that RBC and BMO are the only banks that support this, so it may be worth signing up with them. Bank Wire ended up being what I used (EDIT: back then the minimum for a wire transfer was $500). I wanted to deposit a larger sum, so just paying my bank for the cost of the transfer ended up being worthwhile (about 0.5% fee). The downside is I had to go in person to a branch to send a wire transfer and it's only really worthwhile for larger transfers. Crypto Capital seems like a 3rd party that you can wire to and then transfer that to QuadrigaCX. I don't see the appeal in using this to fund an account since you can just wire to QuadrigaCX directly. I sent the wire transfer a few days ago, and it seems like it will take 3-5 business days for it to complete. I'll update this post if the money somehow just disappears. Wire transfer came through today, no problems :) Once you do get CAD on QuadrigaCX, the fees to buy Ether are 0.5%. Combined with my wire transfer cost, I expect to only have paid a total of 1% in fees. To summarize Pros:
Fast to verify, I was able to verify the same day I made my account
Lots of variety in funding choices
Lower fees compared to coinbase
High daily fund limits
Not as many deposit options if they don't support your bank
0.5% per completed trade is a little high compared to other exchanges
Some transfer options have higher fees than coinbase for low amounts
Some transfer options can take up to 5 days
Kraken The latest site I've tried, they have multiple tiers of verification. You can't deposit CAD until you reach tier 3 verification, which can take up to 48 hours. Tier 1 and tier 2 were verified within the hour but tier 3 was still not verified 3 days later. When I submitted a support ticket, they were very quick to respond the next day and told me I needed to submit a Confirmation ID. Their site listed the Confirmation ID for a few countries and some criteria but it didn't seem like Canada applied to any of the criteria. Regardless, I submitted the Confirmation ID and was verified with tier 3 that same day. The only way to deposit CAD with Kraken is through wire transfer and it seems like there's some unlisted fees based on what their banks charge them to receive a wire transfer (as well as any intermediary bank). I have not done this so I cannot tell what the costs would be. Once you do have CAD on their exchange, their fees are better than QuadrigaCX with a MakeTaker rate at 0.16%/0.26%. I have sent ether to Kraken just for playing around with trading and I've had no problems. To summarize Pros:
Low trading fees
Potentially lower CAD->ETH fee than QuadrigaCX, depending on if there are wire transfer hidden costs. Lower trading fee helps
High fund limits
Only one way to deposit CAD and it's slow
Unclear what the wire transfer costs are
Little confusing verification process for tier3
Min $100, Max $2,000
Instant (withheld for 3 days)
Min $100, Max $3,000
1-3 days (withheld 0-7 days)
Min $20, Max $500
Min $1000, Max $9,000
0-2 days (withheld 0-5 days)
Min $100, Max $1,000
0-2 days (withheld 0-5 days)
Min $10,000, Max $300,000
0-1 day (withheld 0-2 days)
They have this concept of withholding funds, where you basically have to keep the money on the account. You can trade with it as much as you want, but you won't be able to withdraw until after the withholding time. Pros:
Lowish trading fees
Some options are fast to fund
Reasonable fund limits
The direct way to go from CAD->ETH has higher trading fees. Have to go CAD->BTC and then BTC->ETH.
Horrible interface. Until they fix their site, some stuff is broken (unless it works in other browsers?), or if you know how to edit html. Wow! They really fixed their site and it looks great now! Only thing that bothers me is in the advanced section, it lists the CAD/BTC price in terms of bitcoin. So instead of saying $3400/bitcoin, it says 0.00029378BTC
Fairly high withdraw fees (unfortunately I can't find them listed on their site, and I can't find it listed anywhere, but some people have reported it being far too high)
Alternatives There are of course other sites to get ether, and there's always the option of getting bitcoin and exchanging it through an exchange like Kraken or Poloniex for ether. There are bitcoin ATMs scattered around as well, but I can't comment on any fees involved or how close they match exchange prices. Other sites I checked out:
Local Bitcoins - It looks like I'd have to find another user to trade with and prices seem far higher than the exchanges.
Poloniex - Doesn't look like you can deposit CAD.
Gemini - Don't see a way to deposit CAD. Also sent verification 2 days ago and have not been verified.
Bitfinex - Can't wire transfer USD out at this moment and I don't see a way to deposit CAD.
Coinswitch - Can't deposit CAD.
GDAX - Can't deposit CAD.
CEX.IO - Price quotes are signficantly higher than other exchanges, and it looks like it only does USD. Right now, their site says you can buy 1 ETH as $289.25 USD, compare that to GDAX which has them trading at $259.98 USD. You can sell on it too, but again, the price isn't favorable, sell on it for $250 USD vs selling on GDAX for $260 USD.
QuickBT - Only small amounts of ETH, and fees seem to range between 5-9% depending on how much you buy. Only supports interac online and flexepin.
Alt Coins The main sites for getting CAD into the cryptocurrency space like QuadrigaCX, Coinbase, Kraken, and Coinsquare don't have a lot of altcoins. Fortunately once you have ether you can send it to another exchange and trade that for altcoins. These are my favourite ones:
Bittrex - You can't buy ETH with CAD directly, but it has a lot of other cryptocurrencies. I used this until Binance came out. They closed accounts for people unverified or from some countries, so I'd be wary about using it.
Binance - You also can't buy ETH with CAD directly on this one, but it's my favourite for getting into other cryptocurrency coins. Fees are also lower than bittrex if you hold their BNB coin and they add new coins much faster. Referral | Non-Referral
Kucoin - Registration on Binance/Bittrex has been up and down lately and I've had success using this exchange. They seem to add coins even faster than Binance, but the site is a little bit slower and less polished. Still functional and good to pickup a few alts that you can't get elsewhere. Referral | Non-referral
Funnily enough, this whole experience has made me appreciate the flexibility cryptocurrency like ether has and served as a reminder to how slow and cumbersome transactions become once the banking system is involved. EDIT: received wire transfer through QuadrigaCX, made account with coinsquare. EDIT2: added coinsquare section EDIT3: updated QuadrigaCX and coinsquare section, updated alternatives list EDIT4: Added e-transfer for QuadrigaCX! EDIT5: Cleaned up alt coins section.
Hello Bitcoin Canada, I am new to cryptocurrency and I've been messing around with a small amount of money lately, but I just made my first decent size purchase and I plan to HODL!... I somehow lost some money though along the way and I am trying to understand where. So.... I bought approx 2 ETH (~$1970) on quadrada and transferred to binance. I Then bought 600 XRP at 0.00330517 ETH/XRP but I basically immediately had a value of ~$1740. Where did I go wrong here? I'll try to provide as much information as I can on my trades. My only guess is that the ETH on Quad was $985 CAD each, but ETH on binance at the time was worth $754 USD which I didn't realize. Id lose about $70 there over both ETH. It still doesn't add up to over $200 lost in these trades.... Thank you!
Shining some light on RCN's recent growth and it's future
Hi, I found a coin that not many people talk about here so I would like to get some thoughts. It's getting more exposure on 4chan but there has been maybe 2 threads about it here. Since the price increased of 30% today I felt that I should give some more information. This is a copy and paste of some information that is circulated around 4chan about this coin. Market cap= 67 Million. What problem it solves: A global peer-to-peer credit network based on co-signed smart contracts. With RCN you aren't limited to just borrowing crypto (btc,eth etc) you can borrow any currency in the world. (USD,CAD,YEN) The RCN team has over 15 developers and genius advisors such as Sergio Lerner the cofounder of rootstock. Key investors= Bilionaire Tim Draper; The guy that found skype in 2005 and sold his share for 1 billion USD recently, the guy that bought 30,000 bitcoin from the us goverment during the silk road closure. Bilioniare Lu Guanqiu ceo of the company Fenbushi Capital;Once called “China’s Elon Musk” for buying out an American hybrid-electric car company, Lu Guanqiu is the founder of Wanxiang Group, one of China’s largest automotive parts manufacturers. ^ These guys do not fuck around google there history. This coin was added on bittrex A WEEK AFTER being released. Name one coin recently that was added to bitterx instnatly? This coin is serious... do you think these billionaires would invest in this coin if it wasn't going to literally 50x? Follow the smart money /biz/ It literally is around ICO price. The ICO pre-sale had NO BONUSES. Do some googling please. But even if there were, what does Tim Draper have to gain from making 10% on 10 Million? When you're in the billions you're only concerned with making 100s of millions. Thats why they invest in ICO and HOLD. Maybe he'll dump some when its 3-400M market cap, probably not till its nearing a billion (est. Q1 2019) or more. In developing countries such as in South America, it has been reported that up to 65% of the population are Unbanked and may have no access to Credit Facilities through traditional banking. Ripio intends to solve these problem by providing these users with an alternative Credit Facility. The Ripio Credit Network works to connect borrowers, lenders, and other network agents all over the world, allowing each one of them to manage the credit in their local currencies, as long as they have Internet access. In developing countries such as in South America, it has been reported that up to 65% of the population are Unbanked and may have no access to Credit Facilities through traditional banking. Ripio intends to solve these problem by providing these users with an alternative Credit Facility. The Ripio Credit Network works to connect borrowers, lenders, and other network agents all over the world, allowing each one of them to manage the credit in their local currencies, as long as they have Internet access. How does it work? The Network will consist of a Borrower, Lender, Wallet Provider, and Credit Exchange. All of which will be connected through a Smart Contract. The flow of money is as below: Borrower <- Wallet Provider <- Smart Contract <- Credit Exchange <- Lender To illustrate: Let’s say Juan in Argentina wants to borrow $5,000. Lin, who is halfway around the world in Shanghai is willing to loan him the $5,000 + 10% Interest. Once the terms are agreed, Lin sends the money through the Credit Exchange in Fiat. The Credit Exchange uses that Fiat to purchase RCN Tokens to send it over to Juan’s Wallet Provider through a Smart Contract. Juan receives the RCN Tokens and converts it back to Fiat. When it is time to repay the loan, Juan returns $5,500 through the same Channel, by using RCN Tokens as a medium. The borrower receives Fiat after converting the RCN Tokens. All loans work on a Fiat basis between borrower and lender, by simply using RCN Tokens as a medium of exchange. What does this mean and how can we benefit from it? There are 2 main ways to benefit from the Ripio Credit Network ecosystem: If you are a lender, you can lend in Fiat and earn interest in Fiat. If you are a RCN token holder, you will become a liquidity provider to facilitate the P2P loans, and earn through the increase in value of RCN Tokens. What value does the RCN token holders have and why should the price increase? All RCN token holders will become liquidity providers. For any loan to go through, RCN tokens will need to be purchased from the Market to facilitate the transfers. The higher the number of transactions, the higher the demand for RCN, and thus the higher the Price of RCN tokens. Investment Proposition • The ONLY source of RCN Tokens at the moment are held by the public, as the Company’s tokens are locked for 1 year. • Ripio has an actual working product with 100k users, all 100k of whom will be migrated to the RCN Exchange next week! - http://rcn.exchange/ • Ripio themselves will be the first big lender, which means that they will go to the market and acquire the RCN tokens, generating demand. • As new credit exchanges and lenders join to the network there will be even more demand for the RCN token. • Top A-grade institutional investor such as Pantera Capital, Fenbushi (Vitalik Buterin's Fund), Tim Draper, Digital Currency Group, Medici Ventures, Huiyin Blockchain Ventures has invested in the company What exchanges have listed RCN? • Bittrex (despite extremely strict with listing recently) • Binance • Huobi Pro • More to follow.. My personal opinion: Being from a developing country myself, it is easy to underestimate the number of Unbanked people who have no access to Credit Facilities. Like it or not, Credit is an essential part of expansion and development in an Economy. As for the Company, what makes Ripio stand out is the creation of a true Utility for their token, whereby all parties in the ecosystem are incentivized to use it and will benefit from it’s increase in Price. As Vitalik Buterin would say, the Crypto-Economics of their Model is spot on. This is my personal opinion. As always, do your own research and feel free to leave any comments or questions. TLDR; • RCN Tokens are used as “gas” to facilitate P2P loans • RCN Tokens have to be bought from the open market • Ripio themselves will act as lenders and purchase RCN Tokens from market • RCN Exchange launching next week. 100k users migrating • The higher the number of transactions, the higher the demand, the higher the price of RCN Tokens For an in-depth review, you can read their whitepaper, which is available at https://ripiocredit.network/ The market for alternate finance gained popularity in recent years. A finding by Transparency Market Research suggests that “the opportunity in the global peer-to-peer market will be worth $897.85 billion by the year 2024, from $26.16 billion in 2015. The market is anticipated to rise at a whopping CAGR [Compound Annual Growth Rate] of 48.2% between 2016 and 2024.” While Research and Markets estimates the global P2P lending market to grow at a CAGR of 53.06% during the five year period between 2016 and 2020. Morgan Stanley in a report in 2015 predicted that such marketplace lending would command $150 billion to $490 billion globally by 2020. http://www.nasdaq.com/article/the-rise-of-peertopeer-p2p-lending-cm685513 Ripio's value is not based on a coin gimmick, the tech behind RCN is nothing special. Ripio's value comes from the fact that it has proven people going into an industry that is sure to rise and they will start making money in the near future, not 2-3 years from now, but NEXT year. By april their roadmap will be complete. So, what do you guys think?
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