Why Most Blockchain Projects Are Bullshit – magic. – Medium

https://medium.com/helloitsmagic/why-most-blockchain-projects-are-bullshit-2e3918439270

And How to Spot the Ones That Aren’t

This is a good overview to blockchains and mountains of bullshit talk circulating around it:

The key to separating uses with promise from bullshit projects is asking what can onlybe done with the specific features blockchains provide, and whether those things are worth doing or having. In almost all useful cases, blockchains don’t solve technological problems, they solve people problems.

41 Comments

  1. Tomi Engdahl says:

    Crypto hype moves the market far more than it has any right to, and this is a huge problem

    WTF is happening to crypto?
    https://techcrunch.com/2018/11/20/wtf-is-happening-to-crypto/?sr_share=facebook&utm_source=tcfbpage

    Four days ago the crypto markets were crashing hard. Now they’re crashing harder.

    What is happening? There are a number of theories, and I’ll lay out a few of them here. Ultimately, sentiment is bleak in the crypto world, with bull runs being seen as a thing of a distant past. As regulators clamp down, pie-in-the-sky ideas crash and shady dealers take their shady dealings elsewhere, the things that made cryptocurrencies so much fun — and so dangerous — are slowly draining away. What’s left is anyone’s guess, but at least it will make things less interesting.

    Reply
  2. Tomi Engdahl says:

    Blockchain study finds 0.00% success rate and vendors don’t call back when asked for evidence
    https://www.theregister.co.uk/2018/11/30/blockchain_study_finds_0_per_cent_success_rate/

    Where is your distributed ledger technology now?

    Though Blockchain has been touted as the answer to everything, a study of 43 solutions advanced in the international development sector has found exactly no evidence of success.

    “We found a proliferation of press releases, white papers, and persuasively written articles,” Burg et al wrote on Thursday. “However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development.”

    Blockchain vendors were keen to puff the merits of the technology, but when the three asked for proof of success in the field, it all went very quiet.

    Its adoption by non-technical advocates is faith-based, with vendors’ and consultants’ claims being taken at face value, as Eddie Hughes MP (Con, Walsall North) cheerfully confessed to the FT recently.

    For example, Fujitsu offers fast-track consulting services starting at £9,900 to tell you if blockchain is appropriate for your project (that’s something we can confidently tell you for nothing: no, it isn’t).

    Surely if you hype “blockchain” or “artificial intelligence” (this report details a 95 per cent failure rate at Monsanto) and it was never going to work well, surely that’s indistinguishable from fraud.

    http://merltech.org/blockchain-for-international-development-using-a-learning-agenda-to-address-knowledge-gaps/

    We documented 43 blockchain use-cases through internet searches, most of which were described with glowing claims like “operational costs… reduced up to 90%,” or with the assurance of “accurate and secure data capture and storage.” We found a proliferation of press releases, white papers, and persuasively written articles. However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development.

    We fared no better when we reached out directly to several blockchain firms, via email, phone, and in person. Not one was willing to share data on program results, MERL processes, or adaptive management for potential scale-up.

    From this, we determined the lack of evidence supporting value claims of blockchain in the international development space is a critical gap for potential adopters.

    What we learned

    Blockchain firms supporting development pilots are not practicing what they preach — improving transparency — by sharing data and lessons learned about what is working, what isn’t working, and why. There are many generic decision trees and sales pitches available to convince development practitioners of the value blockchain will add to their work. But, there is a lack of detailed data about what happens when development interventions use blockchain technology.

    Reply
  3. Tomi Engdahl says:

    In the winds of crypto winter
    https://techcrunch.com/2018/12/16/in-the-winds-of-crypto-winter/?sr_share=facebook&utm_source=tcfbpage

    Those were the crazy days. Now, though, a rude awakening has come. Now Bitcoin is down to $3200 and counting, other cryptocurrencies are down well over 90%, and worst of all, none of the billions of dollars which poured into cryptocurrencies during the bubble have led to anything even remotely like a killer app. Instead the crypto space remains a giant casino of penny stocks, with little to no utility outside of financial speculation. Don’t kid yourself — this is nothing like the dot-com crash.

    Reply
  4. Tomi Engdahl says:

    Tokens and blockchains were supposed to change the world; how come nobody is using them?

    The social layer is ironically key to Bitcoin’s security
    https://techcrunch.com/2019/01/19/bitcoin-social-layer/?sr_share=facebook&utm_source=tcfbpage

    A funny thing happened in the second half of 2018. At some moment, all the people active in crypto looked around and realized there weren’t very many of us.

    The tide had gone out from the beach. Tokens and blockchains were supposed to change the world; how come nobody was using them?

    In most cases, still, nobody is using them. In this respect, many crypto projects have succeeded admirably. Cryptocurrency’s appeal is understood by many as freedom from human fallibility.

    Sometimes it feels like crypto developers adopted the defense mechanism of the skunk. It’s working: they are succeeding at keeping people away.

    Some now acknowledge the need for human users, the so-called “social layer,” of Bitcoin and other crypto networks. That human component is still regarded as its weakest link. I’m writing to propose that crypto’s human component is its strongest link.

    For the builders of crypto networks, how to attract the right users is a question that should come before how to defend against attackers (aka, the wrong users).

    What Ethereum got right
    Since the collapse of The DAO, no one in crypto should be allowed to say “code is law” with a straight face. The DAO was a decentralized venture fund that boldly claimed pure governance through code, then imploded when someone found a loophole. Ethereum, a crypto protocol on which The DAO was built, erased this fiasco with a hard fork

    Bitcoin’s social-layer resiliency. The story goes: in the event of a security failure, Bitcoin’s community of developers, investors, miners and users are an ultimate layer of defense. We, Bitcoin’s community, have the option to fork the protocol

    There’s no doubt Bitcoin Core attracts some of the best and brightest developers in the world, but they are fallible and, importantly, some of them are pseudonymous. Could a state actor, working pseudonymously, produce code good enough to be accepted into Bitcoin’s protocol? Could he or she slip in another vulnerability, undetected, for later exploitation? The answer is undoubtedly yes, it is possible, and it would be naïve to believe otherwise.

    why would anyone want to enter this forbidding fortress—let alone attack it? Who will enter, bearing talents, ETH or gold?

    Reply
  5. Tomi Engdahl says:

    Operational cost of perpetually retaining the global ledgers for any entity and transactions make zero sense.

    The problem with crypto adoption is about security (fallible code) and eventual control of the networks (51% attacks). In addition to that, a lot of crypto product companies are trying to replace existing products with blockchain token systems. Why would I want to pay market rate for your tokens to use your network when I can pay $50/mo with a non-volatile asset?

    Also, a lot of the white papers are pure fantasy sprinkled with explanations of profits in pseudoeconomics.

    Reply
  6. Tomi Engdahl says:

    Blockchain is not only crappy technology but a bad vision for the future
    https://medium.com/@kaistinchcombe/decentralized-and-trustless-crypto-paradise-is-actually-a-medieval-hellhole-c1ca122efdec

    Blockchain is not only crappy technology but a bad vision for the future. Its failure to achieve adoption to date is because systems built on trust, norms, and institutions inherently function better than the type of no-need-for-trusted-parties systems blockchain envisions. That’s permanent: no matter how much blockchain improves it is still headed in the wrong direction.

    Reply
  7. Tomi Engdahl says:

    Daniel Heyman / Hacker Noon:
    Looking at 2017′s crypto frenzy through the lens of Carlota Perez’s tech life cycles: blockchain is likely in the “gestation” stage and more bubbles are coming

    Why Blockchain Differs From Traditional Technology Life Cycles
    Why another bubble is likely and what the blockchain space should focus on now
    https://hackernoon.com/why-blockchain-differs-from-traditional-technology-life-cycles-95f0deabdf85?gi=8186998b64ea

    Reply
  8. Tomi Engdahl says:

    Blockchain May Be Overkill for Most IIoT Security
    Without an efficient blockchain template for IoT, other options are better.
    https://semiengineering.com/blockchain-may-be-overkill-for-most-iiot-security/

    Blockchain crops up in many of the pitches for security software aimed at the industrial IoT. However, IIoT project owners, chipmakers and OEMs should stick with security options that address the low-level, device- and data-centered security of the IIoT itself, rather than the effort to promote blockchain as a security option as well as an audit tool.

    Only about 6% of Industrial IoT (IIoT) project owners chose to build IIoT-specific security into their initial rollouts, while 44% said it would be too expensive, according to a 2018 survey commissioned by digital security provider Gemalto.

    Currently, only 48% of IoT project owners can see their devices well enough to know if there has been a breach, according to the 2019 version of Gemalto’s annual survey.

    Software packages that could fill in the gaps were few and far between.

    Still, the recognition is widespread that security is a problem with connected devices. Spending on IIoT/IoT-specific security will grow 25.1% per year, from $1.7 billion during 2018, to $5.2 billion by 2023, according to a 2018 market analysis report from BCC Research. Another study, by Juniper Research, predicts 300% growth by 2023, to just over $6 billion.

    Blockchain also can be used to track and verify sensor data, prevent duplication or the insertion of malicious data and provide ongoing verification of the identity of individual devices, according to an analysis from IBM, which promotes the use of blockchain in both technical and financial functions.

    Use of blockchain in securing IIoT/IoT assets among those polled in Gemalto’s latest survey rose to 19%, up from 9% in 2017. And 23% of respondents said they believe blockchain is an ideal solution to secure IIoT/IoT assets.

    Any security may be better than none, but some of the more popular options don’t translate well into actual IIoT-specific security, according to Michael Chen, design for security director at Mentor, a Siemens Business.

    “You have to look at it carefully, know what you’re trying to accomplish and what the security level is,” Chen said. “Public blockchain is great for things like the stock exchange or buying a home, because on a public blockchain with 50,000 people if you wanted to cheat you’d have to get more than 50% to cooperate. Securing IIoT devices, even across a supply chain, is going to be a lot smaller group, which wouldn’t be much reassurance that something was accurate. And meanwhile, we’re still trying to figure out how to do root of trust and key management and a lot of other things that are a different and more of an immediate challenge.”

    Others agree. “Using blockchain to track the current location and state of an IoT device is probably not a good use of the technology,”

    Reply
  9. Tomi Engdahl says:

    Blockchain and Trust
    https://www.schneier.com/blog/archives/2019/02/blockchain_and_.html

    Much has been written about blockchains and how they displace, reshape, or eliminate trust. But when you analyze both blockchain and trust, you quickly realize that there is much more hype than value. Blockchain solutions are often much worse than what they replace.

    First, a caveat. By blockchain, I mean something very specific: the data structures and protocols that make up a public blockchain. These have three essential elements. The first is a distributed (as in multiple copies) but centralized (as in there’s only one) ledger, which is a way of recording what happened and in what order. This ledger is public, meaning that anyone can read it, and immutable, meaning that no one can change what happened in the past.

    The second element is the consensus algorithm, which is a way to ensure all the copies of the ledger are the same. This is generally called mining; a critical part of the system is that anyone can participate. It is also distributed, meaning that you don’t have to trust any particular node in the consensus network. It can also be extremely expensive, both in data storage and in the energy required to maintain it. Bitcoin has the most expensive consensus algorithm the world has ever seen, by far.

    Finally, the third element is the currency. This is some sort of digital token that has value and is publicly traded. Currency is a necessary element of a blockchain to align the incentives of everyone involved. Transactions involving these tokens are stored on the ledger.

    Private blockchains are completely uninteresting. (By this, I mean systems that use the blockchain data structure but don’t have the above three elements.)

    All three elements of a public blockchain fit together as a single network that offers new security properties. The question is: Is it actually good for anything? It’s all a matter of trust.

    Trust is essential to society.

    The word “trust” is loaded with many meanings. There’s personal and intimate trust. When we say we trust a friend, we mean that we trust their intentions and know that those intentions will inform their actions. There’s also the less intimate, less personal trust — we might not know someone personally, or know their motivations, but we can trust their future actions. Blockchain enables this sort of trust: We don’t know any bitcoin miners, for example, but we trust that they will follow the mining protocol and make the whole system work.

    Most blockchain enthusiasts have a unnaturally narrow definition of trust. They’re fond of catchphrases like “in code we trust,” “in math we trust,” and “in crypto we trust.” This is trust as verification. But verification isn’t the same as trust.

    Blockchain technology is often centralized. Bitcoin might theoretically be based on distributed trust, but in practice, that’s just not true. Just about everyone using bitcoin has to trust one of the few available wallets and use one of the few available exchanges.

    Moreover, in any distributed trust system, there are backdoor methods for centralization to creep back in. With bitcoin, there are only a few miners of consequence. There’s one company that provides most of the mining hardware. There are only a few dominant exchanges. To the extent that most people interact with bitcoin, it is through these centralized systems. This also allows for attacks against blockchain-based systems.

    These issues are not bugs in current blockchain applications, they’re inherent in how blockchain works. Any evaluation of the security of the system has to take the whole socio-technical system into account. Too many blockchain enthusiasts focus on the technology and ignore the rest.

    To the extent that people don’t use bitcoin, it’s because they don’t trust bitcoin. That has nothing to do with the cryptography or the protocols. In fact, a system where you can lose your life savings if you forget your key or download a piece of malware is not particularly trustworthy. No amount of explaining how SHA-256 works to prevent double-spending will fix that.

    Similarly, to the extent that people do use blockchains, it is because they trust them. People either own bitcoin or not based on reputation; that’s true even for speculators who own bitcoin simply because they think it will make them rich quickly.

    To see how this can fail, look at the various supply-chain security systems that are using blockchain. A blockchain isn’t a necessary feature of any of them. The reasons they’re successful is that everyone has a single software platform to enter their data in. Even though the blockchain systems are built on distributed trust, people don’t necessarily accept that. For example, some companies don’t trust the IBM/Maersk system because it’s not their blockchain.

    Irrational? Maybe, but that’s how trust works. It can’t be replaced by algorithms and protocols. It’s much more social than that.

    Still, the idea that blockchains can somehow eliminate the need for trust persists.

    Do you need a public blockchain? The answer is almost certainly no. A blockchain probably doesn’t solve the security problems you think it solves. The security problems it solves are probably not the ones you have. (Manipulating audit data is probably not your major security risk.) A false trust in blockchain can itself be a security risk. The inefficiencies, especially in scaling, are probably not worth it. I have looked at many blockchain applications, and all of them could achieve the same security properties without using a blockchain­ — of course, then they wouldn’t have the cool name.

    Honestly, cryptocurrencies are useless.

    To answer the question of whether the blockchain is needed, ask yourself: Does the blockchain change the system of trust in any meaningful way, or just shift it around? Does it just try to replace trust with verification? Does it strengthen existing trust relationships, or try to go against them? How can trust be abused in the new system, and is this better or worse than the potential abuses in the old system? And lastly: What would your system look like if you didn’t use blockchain at all?

    If you ask yourself those questions, it’s likely you’ll choose solutions that don’t use public blockchain. And that’ll be a good thing — especially when the hype dissipates.

    Reply
  10. Tomi Engdahl says:

    https://www.tivi.fi/uutiset/tv/36d731e3-6c31-4641-b1a7-e69877a19760?ref=ampparit:eff5

    China could soon ban cryptocurrency mining: Report
    https://www.zdnet.com/article/china-could-soon-ban-cryptocurrency-mining-report/?_ga=2.50099043.451955122.1554874713-823292296.1534855651

    The South China Morning Post has reported the country’s economic planning body is moving to ban cryptocurrency mining facilities.

    China is looking to ban cryprocurrency mining, with the National Development and Reform Commission (NDRC) proposing new laws that consider cryptocurrency mining facilities to be a waste of resources and adding pollution.

    Reply
  11. Tomi Engdahl says:

    Ben Munster / Decrypt:
    Interviews with contractors who write crypto white papers reveal startups routinely force them to fabricate business models, inflate funding budgets, and more — We dive into this murky industry to find out who writes these things, what goes into the research and how much it really costs to get one written.

    Confessions of a White Paper writer
    https://decryptmedia.com/6643/confessions-of-a-white-paper-writer

    We dive into this murky industry to find out who writes these things, what goes into the research and how much it really costs to get one written.

    Reply
  12. Tomi Engdahl says:

    Will Blockchain handcuff the hackers and cut corruption?
    https://www.electropages.com/blog/2019/05/will-blockchain-handcuff-hackers-and-cut-corruption?utm_campaign=2019-05-13-Electropages-Email-Newsletters&utm_source=newsletter&utm_medium=email&utm_term=article&utm_content=Will+Blockchain+handcuff+the+hackers+and+cut+corruption%3F

    RF technology can be (and is) used for a enormously wide array of applications – from sensing through to power transmission. The problem is that sometimes, as the saying goes, it is difficult to “see the wood for the trees.”

    There’s no question that Blockchain is one of those technologies. When it is mentioned, many people can’t help but think of Bitcoin or other cryptocurrencies. Although, admittedly, Blockchain is a primary component of cryptocurrency construction, it is a bit like saying that oxygen is a primary component of fire. There is, in fact, a lot more to it than that.

    Blockchain technology has attracted a great deal of media attention over the last 18 months – some good, some bad.

    The shady environment that sometimes surrounds cryptocurrencies may have impacted upon the public’s perception of Blockchain, but in reality it has real value when it comes to transforming the management of assets, either tangible or intangible, and smart cities will have a lot of both.

    Blockchain can enable systems and services to achieve levels of security and trust that were previously unimaginable – significantly improving existing technologies and empowering new applications.

    Many are of the opinion that it will become the backbone upon which future smart city infrastructure will rely.

    Through this distributed-ledger technology it is possible to create a trusted community of shared information related to the assets controlled – these could be in terms of the city’s street lighting network, data relating to traffic flow, waste management, and various other facets that are part of modern urban life.

    With each node comprised within the system having access to a real-time ledger of everything going on in that system, what is created is effectively impervious to the effects of outside influences.

    The trust community established by a shared ledger not only increases security and control, it also enables decentralisation. This lends itself very well to edge computing and the roll-out of cloud-enabled devices.

    Because Blockchain is effectively a concept, and not reliant any specific technology, it is incredibly scalable, as well as being easy to implement on (and to subsequently migrate to) any technology platform.

    These characteristics are particularly valuable in a smart city context. Firstly, the size of deployments will make scalability not just desired, but totally essential.

    Now, because Blockchain is immutable, it can create secure, fast, trustworthy and transparent solutions that can be public or private. What this means to smart city/facility/home developers is that any asset-oriented aspects of a municipality can be digitised and made more secure and functional.

    An intelligent management framework will be required. This will mandate secure asset tracking, user accountability and real-time management – and Blockchain can clearly contribute to all of these.

    It is important to remember, however, that Blockchain is not a magic wand that is destined to deliver us into a utopian ideal. You can’t simply open a box of Blockchain and sprinkle it on the problem, then expect it to be miraculously resolved.

    Reply
  13. Tomi Engdahl says:

    The Unbearable Lightness of Bitcoin
    https://blog.paessler.com/the-unbearable-lightness-of-bitcoin

    So I asked myself: What is so evidently in need of improvement about Bitcoin (and the other cryptocurrencies) from Facebook’s point of view? What bothers them about the lightness of a decentralized network that benefits the people?

    In three words: lack of scalability.

    Libra promises some interesting technical specifications. It uses a BFT (Byzantine Fault Tolerance) consensus method to accelerate transactions due to lower verification thresholds and faster validation times. It also makes it much more resistant to criminal activity.

    The issue of centralization is of great importance to many critics of Libra.

    Libra contradicts the central ideological basis of cryptocurrencies, since Libra is not decentralized.

    Libra as a Facebook currency could have very far-reaching consequences, because the digital dominance of Facebook would translate into an actual dominance in the financial market. Many analysts see this as problematic

    Reply
  14. Tomi Engdahl says:

    People like “is there a blockchain based X?” Generally neither understand blockchains nor X

    Reply
  15. Tomi Engdahl says:

    Buzzword Bingo: What the Heck Is Distributed Ledger Technology?
    https://blog.paessler.com/what-the-heck-is-distributed-ledger-technology

    Reply
  16. Tomi Engdahl says:

    Considering the AGC took a crew to the moon, this enlightens how shitty of a tax avoidance solution bitcoins are …

    To put the AGC’s mining performance in perspective, a USB stick miner performs 130 billion hashes per second. The stick miner costs under $70, compared to $150,000 for the Apollo Guidance Computer. For its time, the Apollo Guidance Computer was an extremely compact, low-power system, using 55 watts and taking up under a cubic foot of space. The USB miner, though, uses 12 watts and fits in your hand.

    Bitcoin mining on an Apollo Guidance Computer: 10.3 seconds per hash
    http://www.righto.com/2019/07/bitcoin-mining-on-apollo-guidance.html?m=1

    Reply
  17. Tomi Engdahl says:

    Blockchain: Uses for engineers may happen someday
    https://www.edn.com/design/test-and-measurement/4462104/Blockchain–Uses-for-engineers-may-happen-someday

    Why the lack of enthusiasm in the engineering community? Despite the hype and large number of blockchain descriptions and tutorials available, there is still not even a formal, accepted definition of a blockchain.

    “Blockchains need additional software to make them usable. You can construct a relational database that uses the blockchain-stored data to perform queries.”

    “It’s possible,” he continued, “to query a blockchain’s data block by block, but that’s inefficient. The relational database can cache the blockchain’s data for queries, provide a more useable interface for the data, and perform data processing.”

    Reply
  18. Tomi Engdahl says:

    Home> Test-and-measurement Design Center > How To Article
    Blockchain: Uses for engineers may happen someday
    https://www.edn.com/design/test-and-measurement/4462104/Blockchain–Uses-for-engineers-may-happen-someday

    Reply
  19. Tomi Engdahl says:

    Crypto means cryptotheology
    https://techcrunch.com/2019/08/25/crypto-means-cryptotheology/?tpcc=ECFB2019

    Cryptocurrencies are a religion as much as they are a technology. They almost have to be, given their adherents’ gargantuan ambition of fundamentally changing how the world works. This means they attract charlatans, lunatics, frauds, and false prophets, and furious battles are waged over doctrinal hairspliitting; but it also means they inspire intransigent beliefs which can, and do, unify many thousands of wildly different people across continents and time zones.

    Reply
  20. Tomi Engdahl says:

    Church of holy Blockchain? Techcrunch article claims that cryptocurrencies are a religion as much as they are a technology.

    “it’s also fair to say that now that cryptocurrencies are no longer new, unknown, and fascinating, interest among both individuals and enterprises who are not true believers has waned considerably.”

    https://techcrunch.com/2019/08/25/crypto-means-cryptotheology/

    Reply
  21. Tomi Engdahl says:

    There are two options on some advertisemenrs, ‘I am stupid and don’t want to buy BitCoin because I don’t understand it’ and ‘I am really clever and excited to put all my money in BitCoin because I am so incredibly smart’.

    The classic technique of the con-man: make the mark feel like they would be stupid to reject the scheme.

    Cowrie shells were once a highly valuable currency. So were peppercorns. And then suddenly, they weren’t.

    Reply
  22. Tomi Engdahl says:

    Credit giant Visa has confirmed it is leaving the Libra Association, started by Facebook to create and manage the libra cryptocurrency.

    Visa Exits Facebook’s Libra Cryptocurrency Group
    http://on.forbes.com/618611Zro

    Reply
  23. Tomi Engdahl says:

    EBay, Stripe and Mastercard drop out of Facebook’s Libra Association
    https://tcrn.ch/35BdhpU

    Oof — a week after PayPal announced plans to part ways with Facebook’s Libra cryptocurrency project and the related association of the same name, three more names are reportedly breaking away: eBay, Stripe and Mastercard. (Update: and now Visa!)

    Reply
  24. Tomi Engdahl says:

    Cryptoqueen: How this woman scammed the world, then vanished
    https://www.bbc.co.uk/news/amp/stories-50435014

    Ruja Ignatova called herself the Cryptoqueen. She told people she had invented a cryptocurrency to rival Bitcoin, and persuaded them to invest billions. Then, two years ago, she disappeared. Jamie Bartlett spent months investigating how she did it for the Missing Cryptoqueen podcast, and trying to figure out where she’s hiding.

    The inescapable conclusion was that those rising numbers on the OneCoin website were meaningless – they were just numbers typed into a computer by a OneCoin employee.

    MLM’s most successful product

    MLM is not illegal. Big companies like Amway and Herbalife use these techniques. But it is controversial, because usually only a small number of people make all the money. It’s also notorious for exaggerated promises of high earnings and tough sales targets. When there is nothing of value to sell, though, and all the money is made by recruiting other people, it is illegal and goes by another name: a pyramid scheme.

    In May 2015, already a very successful MLM seller, Igor Alberts was invited to a OneCoin event in Dubai, where he met lots of people, all apparently making fortuned with this new currency. Dr Ruja herself made a powerful impression too, with her “princess’s dresses” and her vision of a financial revolution. Igor returned with a new mission – and gave new instructions to all the salespeople in his downline: stop whatever you’re doing, and start selling OneCoin.

    “We gathered the teams together and we started to work like crazy,” he says. “We made in our first month almost €90,000 out of nothing. Bang!”

    Dr Ruja’s genius was to recognise that established MLM sellers with huge downlines were the perfect vehicle to market her fake coin – a plan the FBI says she privately referred to as “the bitch of Wall Street, meets MLM”. This was the secret of OneCoin’s success. It wasn’t just a fake cryptocurrency, it was an old-fashioned pyramid scheme, with the fake coin as its “product”. No wonder it spread like wildfire.

    Fairly soon Igor Alberts was making more than €1m a month from OneCoin, which quickly became the biggest product in network marketing. “No other company even came close,” Alberts says.

    Sixty per cent of the income Igor Alberts and Andreea Cimbala made from OneCoin (in the end, more than €2m per month) was paid in cash, the rest in OneCoin. But they used some of this cash to buy more OneCoin. They, like almost everyone else involved, were convinced they were earning a fortune.

    The nature of MLM networks – where people often recruit others who are close to them – creates a blurred sense of responsibility. Blame is not easy to apportion. And if sellers have invested their own money, they are victims too.

    Reply
  25. Tomi Engdahl says:

    Is blockchain a fad? No.
    Is blockchain the solution to every problem? No.

    The blockchain hype is going to settle once many people realize that for most applications it’s harder and less beneficial than just deploying a database instance in the cloud.

    But there are also applications where blockchain can be very beneficial or almost only way to do them.

    Reply
  26. Tomi Engdahl says:

    Robert Armstrong / Financial Times:
    Mastercard CEO details why the company pulled out of Libra, says he had concerns about how Libra went from an “altruistic idea” to Calibra, a proprietary wallet
    https://www.ft.com/content/16bec8aa-42e8-11ea-a43a-c4b328d9061c

    Reply
  27. Tomi Engdahl says:

    Not to mention the most common attack against election systems is acquiring votes under fictitious names, not double-spending the vote you are assigned under your own name. A blockchain solution logically can’t prevent someone from acquiring additional tokens any better (as acquiring the token is your entry into participation in the blockchain network)

    Democratic candidate Andrew Yang says he will implement blockchain-based mobile voting if he wins the 2020 United States presidential election.

    On his campaign website, the blockchain advocate says he believes American citizens should have the option of voting on a mobile device — with blockchain technology used for verification purposes.

    “It’s ridiculous that in 2020 we are still standing in line for hours”

    https://cointelegraph.com/news/andrew-yang-wants-to-make-us-elections-fraud-proof-using-blockchain

    Reply
  28. Tomi Engdahl says:

    “They say they’ve fixed it with something called blockchain”

    https://xkcd.com/2030/

    Reply
  29. Tomi Engdahl says:

    Sloppy’ Mobile Voting App Used in Four States Has ‘Elementary’ Security Flaws
    https://www.vice.com/en_us/article/akw7mp/sloppy-mobile-voting-app-used-in-four-states-has-elementary-security-flaws

    MIT researchers say an attacker could intercept and alter votes, while making voters think their votes have been cast correctly, or trick the votes server into accepting connections from an attacker.

    The app, called Voatz, also has problems with how it handles authentication between the voter’s mobile phone and the backend server, allowing an attacker to impersonate a user’s phone. Even more surprising, although the makers of Voatz have touted its use of blockchain technology to secure the transmission and storage of votes, the researchers found that the blockchain isn’t actually used in the way Voatz claims it is, thereby supplying no additional security to the system.

    https://voatz.com/faq.html

    Reply
  30. Tomi Engdahl says:

    Besides the fact that they are using 0.5% of global energy supply, Bitcoiners do keep going on about how inevitable their cruddy scheme is. Utterly ignoring the fact that we saw tens of billions of dollars in exit scams in 2019 alone.

    I take such statements as a challenge. If someone says their scheme is invulnerable to government regulation, I start thinking of ways governments can destroy it.

    Crypto-currency supporters love top blather on about how they are replacing governments and fiat currency. And that is exactly how governments can destroy the crypto-currencies: declare a limited time amnesty for exit frauds.

    It is pretty obvious that most crypto-currencies and exchanges are some form of scam.

    We are assured that stablecoins are backed 1:1 by gold or some fiat currency but such assurances are never backed up by legitimate audits.

    The key to making money from any Ponzi scheme is to get out before everyone else.

    Reply
  31. Tomi Engdahl says:

    Once hailed as unhackable, blockchains are now getting hacked
    https://www.technologyreview.com/s/612974/once-hailed-as-unhackable-blockchains-are-now-getting-hacked/?utm_medium=tr_social&utm_campaign=site_visitor.unpaid.engagement&utm_source=Facebook#Echobox=1582042906

    More and more security holes are appearing in cryptocurrency and smart contract platforms, and some are fundamental to the way they were built.

    Early last month, the security team at Coinbase noticed something strange going on in Ethereum Classic, one of the cryptocurrencies people can buy and sell using Coinbase’s popular exchange platform. Its blockchain, the history of all its transactions, was under attack.

    An attacker had somehow gained control of more than half of the network’s computing power and was using it to rewrite the transaction history. That made it possible to spend the same cryptocurrency more than once—known as “double spends.” The attacker was spotted pulling this off to the tune of $1.1 million. Coinbase claims that no currency was actually stolen from any of its accounts. But a second popular exchange, Gate.io, has admitted it wasn’t so lucky, losing around $200,000 to the attacker (who, strangely, returned half of it days later).

    Just a year ago, this nightmare scenario was mostly theoretical. But the so-called 51% attack against Ethereum Classic was just the latest in a series of recent attacks on blockchains that have heightened the stakes for the nascent industry.

    In total, hackers have stolen nearly $2 billion worth of cryptocurrency since the beginning of 2017, mostly from exchanges, and that’s just what has been revealed publicly. These are not just opportunistic lone attackers, either. Sophisticated cybercrime organizations are now doing it too

    We shouldn’t be surprised. Blockchains are particularly attractive to thieves because fraudulent transactions can’t be reversed

    If set up correctly, this system can make it extremely difficult and expensive to add false transactions but relatively easy to verify valid ones.

    That’s what’s made the technology so appealing to many industries, beginning with finance. Soon-to-launch services from big-name institutions like Fidelity Investments and Intercontinental Exchange, the owner of the New York Stock Exchange, will start to enmesh blockchains in the existing financial system. Even central banks are now looking into using them for new digital forms of national currency.

    But the more complex a blockchain system is, the more ways there are to make mistakes while setting it up.

    Reply
  32. Tomi Engdahl says:

    More and more security holes are appearing in cryptocurrency and smart contract platforms that already sre estimated to use around 0.5% of global electrical power.

    Early last month, an attacker had somehow gained control of more than half of the Ethereum Classic network’s computing power and was using it to rewrite the transaction history.

    “In total, hackers have stolen nearly $2 billion worth of cryptocurrency since the beginning of 2017, mostly from exchanges, and that’s just what has been revealed publicly.”

    Once hailed as unhackable, blockchains are now getting hacked
    https://www.technologyreview.com/s/612974/once-hailed-as-unhackable-blockchains-are-now-getting-hacked/?utm_medium=tr_social&utm_campaign=site_visitor.unpaid.engagement&utm_source=Facebook#Echobox=1582042906

    https://www.forbes.com/sites/niallmccarthy/2019/07/08/bitcoin-devours-more-electricity-than-switzerland-infographic/
    Bitcoin uses an estimated 61.76 terawatt-hours (TWh) of electricity per year

    Genius hacker exploits DeFi again, takes $1 million in total
    The mysterious trader has now taken nearly a million dollars out of the DeFi ecosystem, by making just two transactions.
    https://decrypt.co/19790/genius-hacker-exploits-defi-again-takes-1-million-in-total

    Reply

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