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Art or digital heresy? – Cointelegraph Magazine

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Cointelegraph By Andrew Fenton

Since 2011, a group of enthusiasts and collectors have been obsessed with the physical manifestation of Bitcoin. 

On the face of it, physical Bitcoin seems like a contradiction to the key terms that define it, so a trustless, instantly transferable virtual currency becomes a real world coin that has all the disadvantages of Earth-bound cash. But there are numerous advantages too when it comes to privacy, storage and ease of use — and they look pretty cool too.

“A lot of people know about Bitcoin, but very few people actually own Bitcoin. Even fewer own physical Bitcoin,” explains Bobby Lee, who has owned a 10 BTC coin since 2011 and designed and produced his own coins under the BTCC Mint brand until 2018. He added:

“Physical Bitcoins are a rarity, they’re sort of like Picasso and Van Gogh paintings were back in those days. Nobody realized how rare they were. I expect these physical Bitcoins will gain in popularity and appreciation by connoisseurs worldwide.”

Physical Bitcoin typically comes in the form of metal coins, with the private key hidden behind a tamper proof holographic sticker Although highly prized by collectors, Lee said the coins are also practical too.

“The reality is that it’s impossible for me to send people Bitcoin if they’re new to Bitcoin,” he said, referring to digital Bitcoin’s steep learning curve to set up wallets and seed phrases. “Physical Bitcoin, there’s no permission needed, I just hand it to them. Recently my cousin got married in Toronto Canada, and I was able to give them some Bitcoin as a gift and they didn’t need to set up a wallet, I just mailed it to them.”

A piece of history

For ‘cryptonumist’ Elias Ahonen, author of the Encyclopedia of Physical Bitcoins and Crypto-Currencies, physical Bitcoin is also a marker of history. “These coins are the physical manifestation, or artefacts, of Bitcoin in every technical phase,” he says. “Anything that happened with miners from the early Bitcoin era we can’t really point to, but these physical coins we can and collectors find that personally meaningful and also something worth preserving.”

Ahonen was a first year political science student at Wilfred Laurier University in Waterloo when he first became interested in Bitcoin.

“I had just bought my first Bitcoin on an exchange and not being technically sound, I was convinced I was going to lose my private key to the wallet and get locked out of my Bitcoin,” he said: “So I decided instead to buy the physical Bitcoins which held the private key inside of them.”

This turned out to be a wise move as he did indeed lose access to his original wallet ,fortunately with less than 1 BTC in it. And of course it led to a whole new career as a Bitcoin historian and coin broker. “It’s taken me around the world on all kinds of adventures where I pick up half a million dollars’ worth of coins at an airport coffee shop,” he said.

Physical Bitcoin seems like a contradiction in terms. (Wikipedia)

Multi billion dollar industry

Precise figures for the size of the industry are hard to come by, but almost $3.25 billion dollars worth of Bitcoin (at today’s prices) was minted under the original ‘Casascius’ coin brand between 2011 and 2013. More than 1.5 billion worth (or 44,000 BTC) remains unspent and out in the wild.

One of the most valuable is the 1000 BTC coin, three of which remain unopened out of the five minted. “It’s actually the most valuable coin in the world,” said Ahonen. Worth $35 million on face value alone today, it’d fetch considerably more as an ultra-rare collectible. That puts it ahead of its nearest mainstream rival, the ‘Flowing Hair Silver/Copper Dollar‘ from 1794 which last sold for $10 Million in 2013.

Right now you can snap up a 1 BTC Casascius coin from 2011 on eBay for $130,000. If your budget doesn’t stretch that far, there’s a 0.5 BTC coin from 2013 that’s a steal at only $30,000 – and there’s even an unfunded 1 BTC coin from BTCC Mint on sale for $4900. On Crypto De Change, they’re offering a 1 BTC ‘Titan One’ silver coin for just $15,100 (sadly, when you try to buy it you just get a 404 error).

Titan One silver coin
This Titan One silver coin contains one BTC and is listed for $15K. Bargain! (cryptodechange.com)

Dim dark days of 2011

Physical Bitcoin traces its history back to 2011 when Utah computer scientist and Bitcoin contributor Mike Caldwell came up with the idea as an educational tool. “Bitcoin was very difficult to explain and in 2013 the average person simply could not get their head around it,” explains Ahonen, adding:

“The idea was that by taking this physical coin, and actually putting the Bitcoin inside of it, you could make a demonstration and say, look here’s a Bitcoin, I’m giving to you and now that you have it, I don’t control it.”

Caldwell’s first plan was to print out the private key to 1 BTC on a bit of paper, stick it in the middle of a washer, and seal both sides with tamper proof stickers. He quickly abandoned this in favour of something a little more high end, contracting a company that made brass tokens for amusement arcades to produce thousands of beautiful Casascius coins. They feature the Bitcoin logo, year and denomination, along with the slogan Vires In Numeris or ‘Strength in Numbers’.

The coins became popular and Caldwell introduced 5, 10, and 25 BTC coins, followed by gold plated bars with 100, 500 and 1000 BTC. As Bitcoin’s price surged in 2013, smaller denominations below 1 BTC began to appear.

“Crypto enthusiasts would buy these physical Bitcoins from Casascius and give them to friends and family as gifts,” recalls Lee, who’s brother Charlie is the founder of Litecoin. “And that’s precisely what my brother did.”

“That December (2011) he gifted me a 10 Bitcoin and paid about $50 for it. So it was relatively inexpensive. Obviously it’s now worth $100,000.”

By 2013 Caldwell had sealed 90,683.9 Bitcoin into metal coins — around half of which remain unspent in the form of 21,000 or so physical coins.

“It was very much a hobby, I don’t think he ever made any money, or any significant amount of money selling those,” says Ahonen. “Frankly, he took a huge amount of personal risk by basically handling the private keys. He was actually concerned that someone would come and hurt him (to steal them).”

Casascius coins
Casascius physical Bitcoins are the most highly prized.

The Feds object

The whole exercise came to a shuddering halt in 2013 when the Financial Crimes Enforcement Network contacted Caldwell to accuse him of operating an illegal money transmitting business, and he was forced to wind it up.

“It put a damper onto the physical Bitcoin thing,” Ahonen said. “That’s where the rise of these buyer funded coins really came from and also other larger companies that actually have money transmitter licenses.”

A raft of different manufacturers, from boutique artisans to big companies, sprang up in its wake, producing not only Bitcoin but also Litecoin, Dogecoin and Ethereum among others. They included bhCoin, Lealana, Microsoul, Nasty Mining, Recalescence Coins, Ravenbit, Alitin Mint, Cryptmint, Titan Bitcoin and Satori Coin. Ahonen detailed the works of 50 different outfits in his 286 page encyclopedia in 2015, and leveraged the contacts he made writing it to produce a new book called Blockland.

Bobby Lee’s BTCC Mint

The BTCC Mint was an offshoot of Lee’s exchange, BTCC and produced some of the most sought after physical Bitcoin until the company changed hands in 2018. Lee designed the coins himself — “I see myself as an artist having created BTCC Bitcoin” —  with the first coins released in early 2016.

“The idea was to take advantage of our BTCC Mining Pool, to mine fresh uncirculated coins into the physical Bitcoins. Over the three years we ran the BTCC Mint business, we minted over 8,700 BTC worth of physical Bitcoins.”

Lee and a select group of highly trusted team members inserted the private keys into the coins by hand. He added:

“I handled the private keys with extreme caution, and have properly deleted all private key data, so naturally, there have been no reports of funds lost or stolen from any BTCC Mint products. I’m most proud of that pristine track record.”

This touches upon one counterintuitive aspect of physical Bitcoin — it breaks the crypto commandment of: ‘don’t trust, verify’. Ahonen points out that purchasers need to completely trust the manufacturer and everyone in the production process as it’s impossible to tell if the coin even contains a private key, or if it does, if the manufacturer kept a copy.

“Bitcoin comes from a specific type of philosophy, which is around not your keys, not your Bitcoin. It very much goes against the concept of trusting other people. But with any type of physical Bitcoin, you effectively are trusting the person created to not have the private key. So there is this implicit paradox.”

Symbols of wealth

While BTCC Mint coins featured a Bitcoin logo and the slogan “In Crypto We Trust”, other  coins featured artwork that attempted to capture the philosophy behind cryptocurrency. “I would say that with some there’s a very stark, very clear symbolism, which is very philosophical,” explains Ahonen. “With others, it will clearly be something more difficult to decipher and may be personal to the creator.”

 

There are plenty of circuit boards, bulls and rockets going to the moon, as well as mining pools, Greco Roman warriors, Buddhist imagery, famous figures like Adam Smith and Satoshi Nakamato and historic events like the collapse of Mt Gox and Bitcoin Pizza. “For me personally, the most striking had a burning bank that was on fire,” Ahonen said: “And the bankers were kind of crying on the steps as people were pulling down the pillars of the bank using chains which obviously represent blockchain.”

Physical Bitcoin art
This coin leans pretty heavily on Bitcoiner ideology. (Elias Ahonen)

Not just keepsakes

Apart from collecting, there are a couple of real world uses for physical Bitcoin too. One is for inheritance planning. “Several of my buyers actually have been looking for physical Bitcoin because they want to put them in a safe deposit box for the purposes of inheritance,” he said: “They have got 100 individual coins, and will split them up with the kids evenly – which is much harder if you have exchange accounts or (have BTC) on wallets or USB sticks.”

Physical coins are also the ultimate privacy coins as there’s nothing to associate the owner with an address and they can be traded a million times without ever leaving a record on the blockchain. Theoretically of course, this would make physical Bitcoin a very attractive way to launder money or pay for drug deals, hence the interest from the U.S authorities.

“I don’t know of anyone specifically using it that way,” Ahonen said carefully. “But you could very easily imagine someone using that way, it’s extremely plausible.” He went on to add: “It’s the same as having gold coins. You can hide them, you can do anything with them. No one can really track them.”

Where did all the manufacturers go?

Sadly, physical Bitcoin’s best days appear to be behind it, with one of the last commercial scale manufacturers, Denarium, closing down in July 2020 after producing more than 15,000 coins. Lee believes that increasing regulations and the sky high Bitcoin price have made the logistics more difficult.

“You can’t sell physical Bitcoins in the U.S. due to regulations and as Bitcoin gets very expensive, it’s very cumbersome to ship in the mail,” he said. “There’s lots of inherent risks, insurance needs and so on.”

Ahonen added that there are still numerous hobbyists doing it as a labor of love or as a side project: “It’s a niche thing, but they do exist.”

Ballet wallet
The Ballet wallet is designed to appeal to your senses. (balletcrypto.com)

Lee’s Ballet Wallet is probably the closest living relative — it’s a metal card with a QR code address and a scratch off wallet passphrase. Able to be used by complete noobs with zero technical knowledge, the wallets support 50 cryptocurrencies and more than $28 million worth of cryptocurrency is currently held on them.

“The inspiration for Ballet came in large part from how much customers loved the simple design of the BTCC Mint physical bitcoins,” he said. Lee designed it to appeal to our different senses, you can feel the design as it’s in relief and there’s a real heft to it as opposed to a plastic credit card.

“You can also hear it. I mean literally if you tap on the table that’s the sound of Bitcoin. And we have a surprise feature where if you actually scratch the QR code you can smell it.”

He scratches it off an empty wallet and holds it up to my nose. It smells like perfume. But don’t bother licking it though, as Lee didn’t come up with anything for taste.

Bank on the future

While the heyday of physical cryptocurrency appears to have passed for now, what about the future? Is there any chance that after Bitcoin becomes the world’s reserve asset that we’ll see 100 Satoshi notes being used for everyday purchases?

Lee thinks this isn’t likely, due to the need for trust:“So that’s why it’s not very feasible to have real Bitcoin embedded in physical form and go for 100 satoshi (coins) circulating in the real world. I think physical Bitcoin will remain in the art, limited edition … collector’s world, just like gold coins.”

But Ahonen sees a future for physical Bitcoin outside of art and collecting: “I do believe that there’s a future for physical Bitcoins simply because they’re such a simple way to hold and verify through the use of an intermediary.” He added:

“I mean, grandma can buy it and put it in her safe deposit box. It’s not necessarily as feasible to do that with a USB stick with whatever program that gets outdated. It’s fairly future proof and fairly idiot proof. And I could see banks, or some sort of institutions creating some sort of physical Bitcoins in the future.”

 

 



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The crypto whale who wants to give billions away – Cointelegraph Magazine

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Cointelegraph By Andrew Fenton

Like many people in crypto, Sam Bankman-Fried is in it for the money. As the founder of quant trading firm Alameda Research, exchange FTX and DeFi protocol Serum, the curly haired 28-year-old has amassed a $10 billion fortune in just three years in the industry.

Unlike most people in crypto though, he’s building up a fortune in order to give half of it away. An ‘effective altruist’ he’s essentially robbing from the rich, via his preternatural crypto trading strategies, in order to give to the poor. 

“Maybe without the robbing part,” he says. “In the end my goal is to have as much impact as I can, however that is. And right now, I think that’s flowing through donations, so figuring out how I can be able to make as much as I can and donate as much as I can.”

SBF, as he’s sometimes referred to, has been walking the walk for some time now. He spent a couple of months as the director of development at the Centre for Effective Altruism in 2017 and before that, gave away half of his income during his stint on Wall Street. He plans on giving away around 50% of his crypto billions too — but only after he’s finished reinvesting in his ever-expanding empire.

He does donate to causes as they come up however. He was the second largest donor to President Joe Biden’s campaign, after former New York mayor Michael Bloomberg, tipping in $5.2 million.

“I was excited about the impact it might have. I basically thought that it mattered what happened in the election.”

Also, the FTX Foundation launched recently. It’ll give away 1% of the platform’s fees and match user donations dollar for dollar up to $10,000 a day. In its first couple of weeks the Foundation has raised more than $2M, mostly in user contributions, with users able to vote on the recipient charities from a carefully curated list.

The old bean bag

SBF’s growing public profile was given a shot in the arm when he was named on Forbes 30 Under 30 finance list for this year. “I’m honored,” he says. “I tend to be fairly forward looking instead of backward look and so it was cool for a bit but it sort of wore off pretty quickly.”

He also came in at number three in the recent Cointelegraph Top 100.

 

 

Famous for sleeping on his bean bag at his Hong Kong office so he never misses a trade, and it seems a key reason SBF makes more money than anyone else is that he’s barely ever off the clock. 

“I’m at the office, well usually 24 hours a day. I’ll sometimes just nap on a beanbag here and obviously shoot the shit with coworkers and sometimes with people online, but mostly its work.”

He doesn’t have a girlfriend or even see many people outside of work, though he makes time to speak with his family back in the U.S. “a few times a week on the phone.” It’s safe to say SBF isn’t the type of person desperate to strike the perfect work/life balance or who even accepts that productivity decreases after the first 11 hours or so at work.

“I think that sort of narrative is substantially oversold and the brutal or inspiring truth, depending on how you think about it, is that the more you put in, the more you get out,” he says. “It’s motivating for me and it’s fulfilling, but you know, another piece of it is that, it’s how I think I can have the most impact.”

How did I get here?

The child of two Stanford Law professors, SBF discovered the Effective Altruism movement during his Physics degree at the Massachusetts Institute of Technology.

Popularized by philosophers and ethicists including Toby Ord and Peter Singer the movement is focused on pragmatic ways to help others using science and reason to ensure the benefits are maximized, rather than the good intentions and poor outcomes that characterize some charitable organizations. This practical approach also extends to a hard headed examination of the best way an individual can help.

“Imagine the amount of good that you could do working directly for some cause, versus the amount that you could do working on Wall Street and donating to it. In a lot of cases you could probably actually help them out more with the donations. And so basically I checked out Wall Street.”

Friends who’d interned at quant trading firm Jane Street Capital gave him the pathway to Wall Street, and he began working there straight after college in 2014. Why did they hire a physics major with very little financial experience straight out of school you ask? 

It turns out quant trading strategies are “super valuable” trade secrets which means no one teaches the successful ones in Uni degrees. Instead, firms recruit people with raw talent: maths whizzes or people with strong backgrounds in physics or computer science.

“What you need to know about markets, they’ll teach,” he says. He traded a variety of ETFs, futures, currencies and equities and designed an automated OTC trading system. While there he became interested in the insanely profitable arbitrage opportunities in the inefficient crypto markets and set up crypto quant trading firm Alameda Research to profit from it in late 2017.

The whale to rule all whales

Alameda Research has now grown to become one of the biggest companies in crypto with around $2.5 billion in assets under management, although as with his own fortune, SBF qualifies this with some provisos around liquid and illiquid assets.

Alameda is the Moby Dick of crypto whales, responsible for up to 10% of the cryptocurrency moving around the markets at any one time. “I think at particular times it can get up to about that fraction of the volume,” he says. “I think it averages a bit lower. It’s solidly in the group of the five to ten larger trading firms in the space.”

That means any trade Alameda takes has the potential to move markets and cause liquidations. In October last year, Alameda was widely blamed for crashing the price of YFI by shorting, though SBF has downplayed any impact. He believes that with great power comes great responsibility.

“It’s absolutely a responsibility,” he says, adding that he tries to follow the approach of TradFi quant firms. “Their role is to find profitable trades, but it’s also to provide liquidity and promote healthy markets,” he says. “The biggest duty is the duty to do no harm. And to make sure that what you do is, on the whole, promoting liquidity in healthy markets and efficient trading, as opposed to intervening in it.”

He adds that arbitrage trades, for example, can have positive impacts as it makes markets more efficient and brings down prices where there are premiums. Identifying and working out how to profit from arbitrage trades was the whole reason Alameda was founded. “One of the first big ones that we actually made some money on was Litecoin,” he recalls.

“There was a week in late 2017 when Litecoin was trading at a consistent 20% premium on Coinbase GDAX [now Coinbase Pro]. There’s sort of this idea like ‘Oh that’s cool, you just make 10% every half hour I guess you make infinity dollars?’ And of course, that’s not the answer.”

It turns out that trying to exploit the opportunity was hideously complicated and required, getting around trade size limits, and withdrawal limits of a million a day. “Especially a few years ago in crypto an enormous piece of the problem was figuring out the logistical steps,” he says.

Another arbitrage trade saw SBF and friends move up to $25M a day through a series of intermediaries and rural banks in Japan to take advantage of the famous Kimchee premium, which saw Bitcoin trading for up to a third more in South Korea’s hard to access financial system than the U.S.

But it was dealing with the legacy financial system that threw up the biggest challenges. “The single hardest part of the arbitrage, the piece that was slowest and hardest and most expensive and most frustrating was the fiat,” he says, noting difficulties getting accounts, which could then be shut at any moment, the archaic procedures and bureaucracy and insanely slow wire transfers.

“We spent five man hours per day in physical bank branches for a good solid five months, because that’s what it took to send the wire transfers,” he says, adding:

“Like got there at 10am and stayed till 1pm with multiple people there, to have all the meetings we had to have every single f–king day of the week, in order to send the same wire transfer we sent yesterday.”

This is one reason SBF is so passionate about DeFi – his vision is for it to one day replace the lumbering existing financial system. “The current payment rails are not efficient at all,” he says. There’s trillions of dollars of companies, which are just built around trying to abstract that away and you end up with this incredibly complex web of shit to make it usable for most people. They’re running on systems that are old and not designed even with the internet in mind.”

Crypto influencer

For many people SBF sprang fully formed as a major crypto and DeFi personality during the mid-2020 DeFi boom, as he began to make an impact on Crypto Twitter. This was a deliberate move: he’d been happy to fly under the radar in 2018 because Alameda’s quant trading focus had: “Very little need for publicity, it’s sort of mostly downside.” But when he launched the innovative crypto exchange FTX in 2019 he needed to build a community around it and he stepped up to become its public face on social media.

 

 

“With FTX as a retail facing business the more customers the better. You can build the best  product in the world but if no one knows about it it’s not worth anything,” he says.

“One of the hardest and most interesting pieces has been figuring out how to get users, and increasing awareness was a big part of that.”

He seems to have figured it out as FTX became the fifth largest derivatives exchange by volume, with a $3.5 billion valuation. It’s launched a range of innovative markets, including tokenized fractional stock offerings of companies like Tesla, Apple and Amazon, as well as pre-IPO trading in Coinbase.

He’s also using his wealth and influence to try and overcome what he sees as the biggest blocker preventing the wide scale adoption of DeFi. He believes that Ethereum, including Eth2 can’t scale enough to allow crypto and DeFi to replace the existing financial system. DeFi can currently handle about 10 transactions per second, with second layer solutions enabling a few thousand TPS.

“This is an absolute hard, immoveable barrier, in terms of growth,” he says. “DeFi just literally cannot grow as an ecosystem until that is addressed. And so no long-term plan that doesn’t address it is viable. […] That is just fatal.” Even Eth2’s goal of 100,000 TPS isn’t enough for what SBF has in mind.

“If your goal is to scale to 100 million or a billion users, […] if you want to have the upside of an application that might grow to the scale of the largest applications in the world, it needs to be able to scale up to about a million transactions a second. And so you can just sort of cross off the list permanently with no recourse and not even needing to consider any other factor, any scaling solution that doesn’t get there, if that’s your goal.”

That’s what led him to become one of the most vocal proponents for Solana, a blockchain that can currently process 65,000 TPS and whose team claim it can eventually scale up to astonishing levels: 710,000 TPS on a 1 gigabit link or 28.4 million TPS on a 40 gigabit link.

 

 

He founded the Serum DEX on Solana and launched the SRM cryptocurrency in August 2020. Bankman-Fried say you can see Solana’s benefits in Serum’s on chain order book matching engine and fees of “100th of a penny to send an order and trades happen in seconds.”

“So you get a lot of juice out of having the higher throughput. And that’s really helped scale up that product base quite a bit. To the point where I think that, you know, our best guess is that, probably Serum DEX in six months of operation has, has consumed more transactions than all of the Ethereum blockchain in history.”

Ethereum’s network effects mean he faces an uphill battle getting DeFi projects and users to migrate to Solana. Even after he was handed control of SushiSwap by Chef Nomi, he was unable to convince the community to port over. “It ended up being way harder than we thought to get the existing projects to port over and way easier to just have new projects built,” he explains, adding:

“We would still be super excited for them to have an outpost on Solana. I think they still may at some point. But I also think that Serums’ gonna march on either way. In the end, like, I sort of want to have the best products and users, you know, however it gets there.”

(Following our interview, a new proposal emerged to build a version of SushiSwap on Solana and Serum, potentially called Bonsai.)

Although SBF says the network effects of having so many interconnected applications built on Ethereum are substantial, he points out that eventually each project will have to “migrate and break composability and tooling with the existing options” in order to switch to layer-two, Eth2, or some other scaling solution. In terms of user numbers he says ETH’s network effects are overstated.

“The other part is that while the current DeFi user base is super devoted, super important and powerful, it’s not that large. Daily active users, I think it’s in the tens of thousands. I think FTX probably has more daily active users than all of DeFi combined.”

SBF’s plan appears to be to embed the Solana blockchain as infrastructure in apps where it’s invisible to most users, in order to onboard millions into DeFi. At the start of 2021, Alameda led a $50 million funding round to embed DeFi style tools in Maps.me, a European offline mapping application with 140 million users. It’ll have a multi-currency wallet with staking and swapping facilities built on Solana. FTX’s purchase of Blockfolio may follow a somewhat similar strategy.

“I think it’s gonna be a really cool product and powerful product suite for the app,” he says of Maps.me. “I’m super excited about it. I think it might really kickstart adoption.



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Monero

What are privacy coins and how do they differ from Bitcoin?

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Cointelegraph By Benjamin Pirus

Cryptocurrencies are typically pseudonymous, but not necessarily private. Bitcoin (BTC) and other assets run on blockchains, with each transaction posted publicly online. During a transaction between two or more parties, assets move to different wallets, each represented by a string of characters. 

With these addresses and transactions visible to all, however, a certain level of trackability exists, especially if a wallet transfers funds to an exchange requiring Know Your Customer verification.

Certain crypto assets, which are often referred to as privacy coins, private coins or anonymous coins, attempt to hide information about transactions, giving users more privacy. Why might someone need privacy if they are not doing anything illegal? It could be preference or a view of privacy as a basic human right could be two reasons. Cash is largely private. Every transaction is not recorded somewhere for all to see with the click of a button.

A number of possible methods exist for adding privacy to Bitcoin, including peer-to-peer trading, although multiple crypto assets focus on privacy more directly via their technology. Some familiar privacy assets in the crypto space include Monero (XMR), Zcash (ZEC), Verge (XVG), Beam and Grin. Dash also makes it on the list, as it allows for added anonymity, although the coin is not technically classified as a privacy asset.

Monero

One of the industry’s most well-known privacy-focused assets, Monero came on the scene about seven years ago, having spurred numerous headlines in the years since. Monero prides itself on decentralization, touting origins that back such stated values. “It was a fair, pre-announced launch of the CryptoNote reference code,” Monero’s website says. “There was no premine or instamine, and no portion of the block reward goes to development.”

Monero, a coin based on its own proof-of-work blockchain, touts multiple different privacy technology features, per its website, including stealth addresses and RingCT. Added to XMR in 2017, “RingCT, short for Ring Confidential Transactions, is how transaction amounts are hidden in Monero,” Moneropedia, the explanatory section of the asset’s site, explains.

Monero piqued the interest of the United States government in the latter part of 2020. The Internal Revenue Service put out a bounty on the asset’s head, promising as much as $625,000 in exchange for cracking the coin’s privacy tech. Two blockchain analytics outfits, Integra FEC and Chainalysis, took home the prize just a few weeks after the IRS announced the bounty.

Zcash

Zcash hails as another popular privacy-focused asset in the crypto space. It started in 2016 and was initiated by the Electric Coin Company, which is headed up by cypherpunk Zooko Wilcox. Zcash stems from the same code as Bitcoin, according to the asset’s website. ZEC operates on its own blockchain with PoW mining consensus, separate from Bitcoin.

ZEC allows both private transfers, called shielded transactions, and public transactions. “Zcash gives you the option of confidential transactions and financial privacy through shielded addresses,” Zcash’s website explains, adding: “Zero-knowledge proofs allow transactions to be verified without revealing the sender, receiver or transaction amount. Selective disclosure features within Zcash allow a user to share some transaction details, for purposes of compliance or audit.”

Dash (sort of)

Dash is another well-known cryptocurrency hosting privacy features. The entity managing the coin’s development, the Dash Core Group, however, clarified on several occasions that Dash is not a privacy asset, although it comes with elective characteristics for added anonymity.

“Dash is a payments cryptocurrency with a strong focus on usability, which includes speed, cost, ease of use and user protection through optional privacy,” the group’s chief marketing officer, Fernando Gutierrez, told Cointelegraph previously.

“Dash is not an AEC!” Ryan Taylor, CEO of DashPay, said in a January 2021 tweet referring to anonymity-enhanced cryptocurrencies, or AEC — a term used by U.S. regulating bodies. “As a literal fork of Bitcoin, all Dash transactions are completely transparent,” his tweet added: “All inputs, outputs, addresses, and amounts are recorded on each and every transaction and viewable – by anyone – on its public blockchain.”

XCoin joined the crypto world as a 2014 Bitcoin fork, later rebranding as Darkcoin, and subsequently Dash. The asset is based on its own proof-of-stake blockchain.

The coin lets users transact anonymously, if they so choose, through what is referred to as PrivateSend. “The technology that Dash utilizes in our PrivateSend function is CoinJoin, which is a technique for complicating transactions to the point that they’re more difficult for analytics firms to analyze those,” Gutierrez explained, as previously reported.

Verge

A PoW asset running on its own blockchain, Verge exists as yet another cryptocurrency touting privacy capabilities. Verge started with a different name. “Verge Currency was created in 2014 under the name DogeCoinDark,” the asset’s website states, but was later rebranded into Verge Currency.

An open-source asset, Verge enables private transfers through I2P and Tor tech, which conceal transactors’ locations (IP addresses), according to information from BitDegree, as well as previous Cointelegraph reporting.

Verge gained significant price traction in late 2017, hitting highs around $0.31, based on TradingView data. The asset currently trades at roughly $0.023.

Beam and Grin

Grin and Beam burst onto the crypto market in 2019, touting a different technology called Mimblewimble. A type of blockchain technology, the concept of Mimblewimble went public in 2016 as a PoW variation, according to a community submission article from William M. Peaster on Binance Academy.

Grin and Beam launched based on Mimblewimble, although Litecoin (LTC), a long-time prominent asset in the crypto space, has been working on implementing the technology.

“In a MW blockchain, there are no identifiable or reusable addresses, meaning that all transactions look like random data to an outsider,” the Binance Academy article reads. “A Mimblewimble block looks like one large transaction rather than a combination of many,” the article adds, subsequently diving into other aspects of the technology.

Privacy coins and regulation

Government overwatch on privacy coins has grown in recent years, as shown in part by the IRS’ efforts against Monero’s technology. Privacy coin references also surfaced in the U.S. Financial Crimes Enforcement Network’s proposed regulation on self-hosted crypto wallets in December 2020.

“Several types of AEC (e.g., Monero, Zcash, Dash, Komodo, and Beam) are increasing in popularity and employ various technologies that inhibit investigators’ ability both to identify transaction activity using blockchain data,” the December document said referring to anonymity-enhanced cryptocurrencies. Additionally, South Korea outlawed anonymity assets in November 2020.

Some crypto exchanges have delisted the abovementioned assets. In October 2019, OKEx Korea ceased trading on its platform for Monero, Zcash, Super Bitcoin (SBTC), Dash and Horizen (ZEN). BitBay removed Monero near the beginning of 2020. Bittrex removed Zcash, Dash and Monero from its exchange in January 2021. A number of other crypto platforms have also delisted privacy-enhanced assets over the past year or two, including ShapeShift.





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Beeple on his 5040 day labor of love – Cointelegraph Magazine

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Cointelegraph By Elias Ahonen

At the age of 26, Wisconsin web designer Michael Winkelmann began creating a new piece of digital art in his personal time every single day. He calls them ‘Everydays’.

“I saw a pretty big step-up in the work that I do,” he says. “The ‘Everydays’ are basically just the pictures that I do every single day, and I’ve been doing those for over 5,000 days now.”

Thirteen years later Beeple, as he’s better known, has been commissioned by huge acts like Justin Bieber and Imagine Dragons and he emerged in 2020 as a trail blazing figure in the NFT community. His digital art collections have fetched record prices in the millions at NFT auction houses including Rarible and Nifty and he’s about to take a major step into the mainstream, with Christies offering a collage of 5000 Everydays pieces at auction from Feb. 25 until Mar. 11.

“This monumental digital collage marks the first time Beeple’s work will be sold at a major auction house,” Christies said in an announcement. “It’s also the first-ever purely digital artwork (NFT) to be offered at a traditional auction house, with its authenticity assured thanks to blockchain technology,”

Beeple’s work touches on politics and pop culture, with a typical example being a recent image depicting Amazon’s Jeff Bezos as an octopus that he created on the day that the billionaire announced his upcoming retirement as CEO. Winkelmann says his daily ritual has made him a better artist.

“The broader message with this entire Everyday project is just about practicing and looking at things long term. I look at it as one long-term project. And so, incrementally improving and just sticking with something.”

NFT artist Beeple has created a new digital artwork every day for 13 years. (beeple-crap.com/everydays)

 

Winkelmann, 39, only discovered NFT’s around four months ago, and immediately set to work converting his freely available Instagram art into highly sought after digital collectibles. In November he sold an election-themed digital collectible for $66,666.60, and a December auction brought in $3.5 million dollars. While one piece went for as much as $777,777, he also sold hundreds of images for $969 each of which have since gained in value exponentially.

NFT stands for Non-Fungible Token, which means each token is unique and thus distinct from other tokens. Unique tokens make it possible to designate them as representing ownership of specific digital goods, allowing for transferable ownership of digital images, texts, or even in-game items.

“I think it’s just going to be seen as the digital art revolution. I truly believe this is the start of the next chapter in art history.”

The Wisconsin artist says that while everything is reproducible on the internet, NFTs allow for individual ownership of a piece even though it is copied and circulated widely.

“I’m very open with allowing people to share stuff and post it wherever,” he says. “You can’t police the f—ing Internet. You post on the Internet, it’s the f—ing Internet! The cool thing about the blockchain is that you can kind of have it both ways.”

He adds that NFT’s are a “very advantageous way of collecting art, because it will live on as long as the blockchain lives on, and it can take all different forms.”

 

Turning point

Last December, Winkelmann hit the crypto news headlines after he auctioned off a collection of digital artworks for $3.5 million on the Nifty platform. While the previous 13 years of Everydays accompanied a steady career progression of better clients and ever-increasing paychecks, he wasn’t quite prepared for “overnight” success.

“That was the big shift where it was like ‘oh shit this is it’, this is a crazy opportunity to look at my work that I never really thought about as being collectible, and now suddenly it’s like ‘wow this is very collectible!’”

But he points out he wasn’t a starving artist before the auction: “[Many people] think this is a little bit more rags to riches than it is. I was making pretty good money before.”

While he credits his success to a large social media following and established name as “one of the most well known digital artists,” Winkelmann acknowledges that he was also in the right place at the right time with little competition.

“There’s a lot of low hanging fruit […] In more mature spaces, you really need to come up with a fantastic idea to stand out, everybody has already got the easy shit. It feels like there’s still a lot of easy shit to try.”

Nevermind by Beeple
Nevermind by Beeple, created April 29, 2020 (beeple-crap.com/everydays)

An artistic revolution

It is said that art is either plagiarism or revolution. The art world is in a constant state of redefinition, and it’s normal for new styles to begin as underground ‘degenerate’ movements that struggle for acceptance in the established art world. In this way it’s similar to cryptocurrency, which was first dismissed and derided by traditional investors and institutions, many of whom are now re-evaluating.

In the past, Winkelmann says that neither graphic art, nor graphic artists, could really exist in the traditional sense. No graphic artist could truly sell their personal work — they had to work as artisans because working as an independent digital artist was not an option.

“It wasn’t. There was just no way to collect your work. The technology did not exist, and the market did not exist… Everybody was just, you know, freelance, or they just had a job or whatever.”

This means that the innovation of NFT’s representing ownership of digital art represents a pivotal moment in art itself: art no longer needs be a physical item to be sold and displayed, but is equally legitimate as a digitally expressed and cryptographically transferrable manifestation of the artist’s mind.

Winkelmann said the upcoming Christies auction of his collage will be another milestone, as its a major auction house conducting “their first ever 100% digital auction. There will be no physical piece; they’re literally just auctioning off a JPEG. And so, I think that will be a very big moment, and big validation for this space. They’ll also be accepting Ether for this auction for the first time ever.” (Christies auctioned a combination physical work/NFT piece last year for $130,000.)

“Whoever buys it, I will work with them in the future to be like ‘okay, so how do we want to show this?’ Do we want to project it on the side of a building, do we want to make a giant canvas of it? Do we want to put it on a big screen? The artwork itself can take a bunch of different forms; that’s the beauty of digital art.”

 

Banksy on it

Beeple’s NFT journey from avant-garde to acceptance follows an arc not dissimilar to other hugely successful artists like Banksy, whose graffiti stencil art reliably sells for millions today. “20 years ago that wasn’t the case. That was vandalism. Like graffiti is not, you know, ‘art’, it’s vandalism.”

Indeed, we need not go far back in time to find similar narratives within the blockchain space. Back in early 2018 Cryptokitties, one of the first NFT projects, was slowing down the entire Ethereum network causing people to accuse the lovable but useless NFT cats of ruining Ethereum.

It is an unfortunate arc d’art that experimental artists are often under-appreciated in their time, with the likes of Van Gogh and Monet dying in obscurity before achieving wide recognition for their work. “So are you saying I’m going to die?” Winkelmann asks sarcastically but with a hint of existential dread, to which I reassure him that he appears well ahead of his historical peers. He agrees. “I feel very lucky to be in this position, especially so young to be able to capitalize on this.”

While he may now have a lot of money, Winkelmann won’t be rushing out to buy a Lamborghini.

“Honestly, I’m really just putting it back in, making more and more art and cooler projects that I didn’t have the ability to do […] anybody who is collecting my artwork, I very much look at them as ambassadors, and they’ve sort of given me that money to like ‘OK there you go, go do even cooler things’, and that’s what I want to do. I want to do bigger projects, that obviously requires more money, or hiring people, or this or that.”

Considering his generous art budget, I suggest an NFT Bitcoin Lamborghini that comes with a real, physical lambo as a bonus physical token. “I think that’s a good idea, that would be great! Is it a green or a yellow lambo?” he asks. “I’ve got to figure out something like that, I feel like that would be very interesting.”

I tell him I’m claiming a 10% cut on that idea. Beeple laughs. “You’ve got your royalties all set up there!”

 

Endgame by Beeple
Endgame by Beeple. Created Jan. 6, 2021 in response to the Capitol insurrection. (beeple-crap.com/everydays)

Art markets re-imagined

Speaking of royalties, NFTs open up new opportunities for artists because the pieces can be programmed so that whenever they are sold, a 10% royalty payment is returned to the artist.

This means that if an artist originally sells a piece for $100 and the buyer sells it to someone else some months later for $1,000, the artist will double their earnings to $200. Even more exciting, a $100,000 sale will net the artist $10,000 even years after the original sale, and the artist’s great grandchildren could theoretically benefit from the sale of the art a hundred years after the fact. In this new order, artists have a lifelong relationship with and ambassadorship to their pieces. “When you buy one of my NFT’s, it’s the beginning of us having a relationship,” says Winkelmann.

There are several platforms in which NFT’s can be traded. Winkelmann prefers Nifty Gateway, owned by the Winklevoss twins, for his sales. He’s far from a cryptocurrency maximalist, preferring instead to make his blockchain-enabled artwork as widely accessible as possible.

“The things I liked about Nifty is that they accept credit card payments. And again, I look at the NFT’s and the blockchain as sort of a means to an end, and not like the end. It’s one of these things where nobody really cares how credit cards work. They just work, they make your life easier and that’s how I look at NFT’s”

He adds: “Nobody’s going to give any shit about how NFT’s work or what blockchain they’re on.”

 

 

Until recently, a large portion of NFT art has been decidedly close to the ideas surrounding cryptocurrency and blockchain, giving them a sort of meta-quality. Winkelmann believes this will change, as NFT’s are merely “the mechanism used to make these, prove provenance, prove ownership. I don’t think moving forward it’s going to have as much to do with crypto.”

Crypto- themed art will certainly continue to exist, he says, but as “a subset of digital art”.

Future visions

Winkelmann believes that everything is being digitized, and our lives will soon revolve around virtual and augmented reality. This recalls the concept of The Metaverse, which refers to an ongoing, shared 3D space that connects various virtual worlds together. It was originally described by Neil Stephenson in 1992.

This future may be closer than we think. Twenty 1/1 NFT’s in Beeples latest auction were purchased for $2.2 million by an NFT fund (yes, such things exists) for the purpose of launching VR digital art galleries in several virtual words including Cryptovoxels, Decentraland and Somnium Space. The pieces were bundled together along with virtual land and museums, and tokenized as the B.20 token so that anyone can own a piece of NFT history. Winkelmann says we’re only just getting started exploring the possibilities:

“I think we will look back fondly on the days when we were just glued to our phones as the ‘good old days’. The alternate realities that people are living in now will be nothing compared to the alternate reality people will be living in when AR really becomes a very viable thing and people are wearing these headsets all day. I think you’re gonna see some f—ing crazy shit happening.”

 





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