Bitcoin Cash (BCH) Wormhole vs Ethereum (ETH) ERC20 Token Protocol

Corbin Fraser, one of the lead developers for Bitcoin.com, said, “For better or worse, ICOs and CryptoKitties are probably coming to Bitcoin Cash in the …
Bitcoin Cash

New Token From Bitcoin Cash Brings Forth the Wormhole Protocol, Which is Potential Threat to ERC-20

On August 11th, Roger Ver, the CEO of Bitcoin.com, announced that the company would be unleashing a new tool on Bitcoin Cash. This new tool gives developers the option of issuing tokens, involving a process called the Wormhole Protocol. With these new possibilities, the door is wide open for chain in the blockchain industry. Corbin Fraser, one of the lead developers for Bitcoin.com, said, “For better or worse, ICOs and CryptoKitties are probably coming to Bitcoin Cash in the near future.” However, one of the big suggestions is that this new option has the potential to eliminate the need for ERC-20.

Understanding Tokens and Coins

The two assets dividing the cryptocurrency market are coins and tokens. Though some experts use the phrases interchangeably, they actually are not the same at all. Coins are used as ways to pay and have the support of original blockchains. Tokens, on the other hand, are part of Initial Coin Offerings (ICOs), which are when a company holds a sale before their platform is active. Tokens are also based on an existing blockchain, rather than an original. A good example of that is in the way that 82.86% of tokens are built on the Ethereum blockchain, using technology that is already in place, rather than establishing their own system.

What Makes ERC-20 the Chosen Blockchain?

With such a high number of ICOs developing their platforms on top of Ethereum blockchain, it may be smart to wonder why. After all, it is referred to as “the king of DApps” as a result of the popularity. “ERC” stands for “Ethereum Request Comments,” and it was originally published by Fabian Vogelstellar on GitHub in 2015. The information outlines the way that these tokens are required to work on the ecosystem, even down to how many tokens can be issued.

Through its short lifetime, users have enjoyed how simple and straightforward the ERC-20 principles are, especially considering that it does not take an engineering degree to work with it. Mainly, developers only have to copy the coding from GitHub, decide how many tokens they want to have, establish a name and a symbol. Then, after putting some ETH into the blockchain, the token is ready.

Based on the most recent numbers, it seems that there are over 110,000 tokens under this protocol, with some of the most popular ones being EOS and TRON, which are in the top 12 for market cap. There is a surprising number of those tokens that are not actually directly used, because of the need to adhere to the regulatory measures in the industry still. Though it took a while, Ethereum is “not a security,” according to the SEC, but that does not trickle down to the tokens on the ERC-20 blockchain. The deciding factor is how they are marketed, and most of them are just a representation of shares.

Problems With ERC-20

Since ERC-20 was the first version of Ethereum-based protocol issued in the industry, there are still many problems that come with its use, most of which have revealed themselves over time. One issue that made headlines is the batchOverflow bug. With this flaw, if users send ERC-20 tokens, rather than ETH, the funds get stuck inside the receiving smart contract. Basically, users cannot use tokens from ICOs, and this has accounted for $3 million in losses, and the developers still only are willing to call this a “user error,” rather than assuming the blame of a bug in their system.

After the bug, there were multiple exchanges in April this year that stopped deposits and withdrawals that involved ERC-20 tokens, based on the glitch. As a result, it seems that developers of ERC protocols are trying to eliminate the ERC-20, bringing in options that will either hide the problems or bring in new features. Presently, there is:

  • ERC-223, which corrects the problems in ERC-20
  • ERC-721, which brings in collectible tokens, like CryptoKittens
  • ERC-948, providing an opportunity in a subscription

There are still others in the works, but Wormhole has the potential to truly compete against ERC-20, with no ties to their blockchain.

Bitcoin Cash’s Wormhole

Wormhole is not a bug or a glitch, and it certainly does not hold the same risks at ERC-20. Specifically, this protocol is more of an upgrade or an update that works on the Bitcoin Cash blockchain. It was created and introduced by a team of developers under Jiazhi Jiang, who presented the whitepaper in July. Basically, integration of Wormhole means that users can apply a smart contract feature, but without any of the rules it runs by on Bitcoin Cash’s blockchain. There is an opcode, OP_RETURN, used on the platform to make this possible.

The new protocol also makes it possible to support native tokens, which are involved in smart contracts on the BCH blockchain to develop ICOs, and the tokens are referred to as Wormhole Cash (WCH).

A Challenge to ERC-20

With these changes, and without the issues that ERC-20 platforms deal with daily, it is clear that there is now a strong rival for the top spot in the industry. ERC-20 is heavily tied in with almost any ICO though, so it is uncertain if they will have the chance to outperform, despite their benefits. They are still new, so the industry will probably be taking a close look to see how potential bugs impact Wormhole.

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UK Regulator Warns Investors of Rising Cryptocurrency Scams

The Financial Conduct Authority, UK’s financial watchdog, is reminding consumers that cryptocurrency scams are rising in the country. Residents in …

The Financial Conduct Authority, UK’s financial watchdog, is reminding consumers that cryptocurrency scams are rising in the country. Residents in the United Kingdom who decide to invest in Bitcoin or any other virtual currency are not protected by the regulatory framework given that cryptocurrencies are not regulated by the FCA.

£2 Million Lost In Cryptocurrency Scams In June And July Alone

A warning of cryptocurrency scams first made in June has been re-posted by the UK regulator to let consumers know that fraudulent schemes are on the rise.

“UK consumers are being increasingly targeted by cryptocurrency-related investment scams […] Cryptocurrency fraudsters tend to advertise on social media, often using the images of celebrities or well-known individuals to promote cryptocurrency investments. […] The firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address.”

Cryptocurrency swindles include posting images of celebrities supposedly endorsing said coins or tokens, according to the statement. The regulator has observed a rising number of reports about virtual currency scams, but its regulatory framework does not protect UK residents that choose to trade their fiat currency for any digital coin or token.

Britain’s financial watchdog has recently warned about two scams that involve companies impersonating respectable UK traders. Good Crypto and Fair Oaks Crypto have quoted the two legitimate firm’s addresses and Firm Reference Numbers as part of the swindle, the FCA said.

A report by the National Fraud and Cybercrime Reporting Centre said that approximately £2 million has been lost in cryptocurrency scams in June and July alone this year, an average of £10,095.59 per person. The statement noted that the most prevalent methods used by scammers are cold calls and social media-based campaigns.

Fraudsters are able to convince victims to sign up to their websites and provide sensitive information such as credit card details and driving licenses to open a trading account. Victims are then persuaded to make sizable first deposits before realizing it is a fraud, said Director of Action Fraud Pauline Smith.

“It’s vital for anyone who invests or is thinking of investing in cryptocurrencies to thoroughly research the company they are choosing to invest with. The statistics show that opportunistic fraudsters are taking advantage of this market, offering investments in cryptocurrencies and using every trick in the book to defraud unsuspecting victims.”

As the FCA handles a rising number of virtual currency scam cases, the regulator announced it has launched investigations into 24 different cryptocurrency companies. In March 2018, a task force was also established with the Bank of England and the Treasury to develop UK’s policy thinking on crypto assets.

Image from Shutterstock

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BitMEX CEO Calls Ethereum a Shitcoin, Says Ether (ETH) Price Under $100

The second-largest cryptocurrency, Ethereum, was traded as low as $249 on Monday 13 August 2018 and is still down 22 percent over the past seven …
BitMEX CEO Calls Ethereum a Shitcoin, Says Ether (ETH) Price Under $100

THE FORTHCOMING DOWNFALL OF ETHEREUM?

The second-largest cryptocurrency, Ethereum, was traded as low as $249 on Monday 13 August 2018 and is still down 22 percent over the past seven days. It is speculated to plunge to double-digit price levels. Although Ethereum has not suffered from much of a loss compared to the bitcoin value itself, bitcoin is certainly dragging all alt-coins with it at this rate. with the ETH/BTC ratio declining, there is no Ethereum price improvement in sight as of right now. In March, the US Securities and Exchange Commission (SEC) said crypto trading exchanges need to register with the federal agency. This was one of the reasons for the market’s bearish performance.

BitMEX CEO Arthur Hayes argued that Ethereum is a “shitcoin” whose price has been reinforced by initial coin offerings (ICOs) since at least early 2017. Most investments have come from Venture Capital firms (VCs), who he says will eventually succumb to the bear market and dump their ether and ERC-20 tokens at whatever price they can get.

He wrote:

“The VC investor who has never suffered the vagaries of the market is as green as the noob who thinks he or she can go from 1 to 100 Bitcoin in a few trading days. They don’t have the mental strength to cut positions to limit further losses, or backup the truck and buy opportune dips even though they are down. More importantly, LPs can now see an objective last price for a particular token, and can’t be hoodwinked. They will attempt to be a Monday morning quarterback, and that only adds to the VC investors’ anxiety. At a certain point, they go ‘fuck it’, and dump everything they can.”

The sell-off is surmised by some analysts to be the result of ICO-funded startups cashing out their ether, due to the fear of the bear market extending further than many people had initially expected. Hayes argues that it will be VCs who deal the real death-blow since fund managers tend to operate according to a herd mentality.

There are those who believe that a sustainable token economy can exist but no one will be buying at these levels. Will the prices ever go up or will the bloodbath continue, making investors wary?

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Former CIA Analyst Says Cryptocurrencies are Not a Threat to National Security

The article was prompted by recent news stories regarding Iran’s plans to make a state-backed cryptocurrency. It is suspected that the Iranian …

Former CIA analyst Yaya Fenusie has published a new article on Forbes arguing that although authoritarian governments are working to build cryptocurrency-based financial systems, cryptocurrencies themselves should not be feared or discouraged from a national security point of view.

Cryptocurrencies are Relevant to National Security

The article was prompted by recent news stories regarding Iran’s plans to make a state-backed cryptocurrency. It is suspected that the Iranian government has been researching blockchain technology since 2007. In July of this year, news broke that Iran’s official department for science formed a joint venture with the country’s central bank to work on developing a national cryptocurrency. The plan was intended to create a financial loophole for imposed US sanctions. Russia, one of Iran’s major allies, is reportedly pushing Iran to continue with the operation. Interestingly, Russia also attempted to help Venezuelan dictator Nicolas Maduro develop a national cryptocurrency following Venezuela’s economic collapse, but the project was quickly abandoned.

While details surrounding Iran’s national cryptocurrency project have yet to be revealed, the token is expected to be used by domestic banks for daily financial transactions. The authoritarian regime has stated that it intends to officially launch its token within three months; however, given the complexity of the project, Fenusie suspects that Iran has been secretly developing its cryptocurrency platform for well over a year.

“There should not be any doubt about the relevance of the crypto space to U.S. foreign policy and national security,” writes Fenusie. “Russia, Venezuela and now Iran are making it clear that they intend to resist U.S. sanctions by adopting blockchain technology-based mechanisms. These authoritarian regimes are looking to build an alternative financial system where there will be no repercussions for funding corruption, oppression and other malfeasance. U.S. sanctions are not perfect, nor exhaustive, instruments of foreign policy, but they are important for enforcing global standards of accountability to check nuclear proliferation, human rights abuses and terrorism.”

Suggested Reading: Learn more about potential applications of blockchain technology in our ‘What is Blockchain?‘ guide.

But Cryptocurrencies are Not a Threat

Despite the actions of authoritarain regimes, Fenusie argues that blockchain and cryptocurrency should not be perceived as direct threats to national security. As with many new technologies, criminals and corrupt governments often attempt to explore the potential for using said technology to commit nefarious acts. Fenusie doesn’t believe that Iran’s cryptocurrency will do much to bolster its national economy, as the new cryptocurrency is reported to be linked to Iran’s weak paper currency, the Iranian Rial. This will likely cool off investor interest, and even Iranian citizens are likely to find workarounds to invest in more worthwhile cryptocurrencies.

Nevertheless, in the event of future authoritarian threats involving cryptocurrencies, Funusie recommends the following policies:

  1. The US treasury department should reinforce the message that any US persons or institutions banking within the US financial system providing anything of financial value to the Iranian regime are in violation of US sanctions, regardless of whether the value is in fiat or cryptocurrencies.
  2. “The U.S. and other governments concerned about nations exploiting blockchain technology to entrench authoritarianism should acknowledge that, similar to the space race of decades ago, there is now a ‘crypto race’ emerging. The Group of Seven (G7) countries should be watching coordination among the rogue actors in this race and strategize ways to foster crypto/blockchain innovation that truly enhances economic and political freedom.”
  3. “The broader crypto space should not treat rogue regime crypto with ambivalence. Instead, blockchain tech influencers should ‘call out’ crypto schemes that fund oppressive regimes. Just as responsible cryptocurrency enthusiasts know that ICO scams hurt crypto’s image, they should understand the risk of authoritarian crypto to tarnish the technology’s reputation.”

Fenusie asserts that although the attempts by Russia, Venezuela or Iran to develop a globally accepted cryptocurrency are likely to fail, the protection against such an attempt comes from encouraging developers in free nations to produce better crypto products that defend key values like liberty.

Totalitarian regimes will always make attempts to exploit new technologies to support their corrupt systems, but this by no means implies that cryptocurrency itself is something that should be looked upon with scorn by the free world. In fact, it is only through encouraging development and productive use cases for technologies like cryptocurrencies that those who love liberty are able to protect themselves from corrupting forces.

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Vitalik Buterin Shares State of Ethereum, Blockchain’s Future & Google Job

In The Thoughts Of Vitalik Buterin – The State Of Ethereum, The Future Of Blockchain, And Google’s Attempts To Hire him. One of the earliest stories …
In the Thoughts of Vitalik Buterin - The State of Ethereum, The Future of Blockchain, and Google's Attempts to Hire him

In The Thoughts Of Vitalik Buterin – The State Of Ethereum, The Future Of Blockchain, And Google’s Attempts To Hire him

One of the earliest stories told about Vitalik Buterin, the long-revered creator of Ethereum, was during his time working as a programmer. When working one night, the database was subject to a series of hacking attempts, which threw members of the team into a panic. But with the report from one team member that ‘Vitalik is on it’, what was once a forum in anarchy, suddenly settled into a relaxed regularity.

This goes to demonstrate with what skill Buterin developed Ethereum and continues to be an active presence within the blockchain world. During an event hosted by Berkeley University’s student-run organization, ‘Blockchain at Berkeley’, Buterin shared a number of his thoughts regarding the state of Ethereum, and the future of blockchain technology to a small, but highly attentive congregation.

Among his experiences, Buterin’s fireside chat with Jason Hsu, Software Engineer and ‘Crypto Congressman’, according to Buterin, provided insights into major topics currently facing the crypto community.

“The reason why I hosted the panel with Vitalik is that I believe the industry needs a correction of course, as too much money comes too quickly. I feel too much focus is on the price of crypto and not on executions of projects. I’ve got to know Vitalik for over a year and see him as guardian of Ethereum.”

The conversation also shed light onto the reason for Buterin’s obscure new title for Jason Hsu.

“In fact he gave me the nickname “Crypto Congressman,” which now becomes my mandate in Taiwan’s Parliament. I invited Vitalik for a deep conversation to express his concern and give an update on the development of Ethereum. It’s important to think the force driving cryptocurrency shouldn’t just be money-seeking, but rather we should think how blockchain technology will bring about a fundamental shift in the way our trust system is built, Hsu told me.”

While the conversation with Vitalik was just about to begin, Buterin made it clear that there were a number of aspects that he was focusing on with regard to the Ethereum blokchain, most notably, with its ongoing issues with scaling.

“Recently, I am spending a lot of time working on the proof-of-stake and sharding protocols. This is what the Ethereum research community is focusing on more than anything else at this point.”

The twin issues of scaling and sharding have seen a number of Ethereum Improvement Protocols developed by the community, hit the metaphorical desk both in July and through 2018 as proposed solutions.

Buterin commended the community on its support and commitment in finding solutions to these pressing issues.

“We think that proof-of-stake and scaling are both really important and there has been a lot of progress on improving the algorithms and the development of multiple limitations over the last couple of months.”

One of the other pressing matters which coincides with the current limitations caused by scaling is the issue of transaction fees, something that has come up consistently for a number of developers using the Ethereum blockchain, most notably CryptoKitties.

“I’ve also been looking at the economic analysis of transaction fees and how transaction fee algorithms can be improved to basically cut fees down and make the protocol alignment centers better and more efficient. Those are the main things I’ve been working on myself.”

While there remains a certain amount of friction in gaining momentum around it, Buterin reacted with a great deal of optimism when asked about the Casper protocol.

“I think that there has been a lot of frameworks for state channels coming out recently. The Casper protocol is getting much closer to being finalized at this point. It’s just pending review on academic analysis,” Buterin noted.

Thinking About The Future – Blockchain

While blockchain has enjoyed a remarkable amount of airtime from media outlets, including a spectacular volume of investment for startups using it. One of the biggest problems that it faces is the very real disparity between theoretical and practical application, with the amount of hype-generated uses being far higher than tangible use cases.

“The amount of sustainable usage of blockchain is very low. Although it exists, there are a lot of people giving value to cryptocurrencies, yet the amount of useful stuff happening is still much lower than the $200 billion market cap makes it seem. The main challenge for the industry as I see it is basically understanding how to bridge that gap and get to the point where there is $200 billion in some sense of actual final value being generated.”

While blockchain has obtained a significant amount of press as being a step up for users in terms of security, Buterin reiterates that preserving privacy is something that blockchain has to deal with too.

“Currently, there are no good ways to use blockchain while preserving privacy. There have been good efforts to solve this using Zcash for example, along with research on top of Ethereum. However, there is still a way to go in terms of preserving privacy on the blockchain.”

Blockchain – Talking About My Regulation

The matter of regulations is something that won’t be going away anytime soon, but with each country having their own take on it, it certainly paints a biographical portrait of what each country thinks of blockchain.

Two juxtaposed stances appear to be the United States, which still struggles with finding a clear, legalistic description of blockchain and the various cryptocurrencies that come with it. Meanwhile, Malta has been taking the space by storm with its firm but fair approach, attracting major names like Binance.

Buterin, when asked about regulation, stated that countries should be passing regulatory policy which, while assuring the security of users, should be working towards incentivizing the small-scale use of cryptocurrencies.

“I want to be able to walk into a convenience store, get a card and pay a small fee to start using Bitcoin Cash. Allowing people to use small amounts of cryptocurrency for everyday use is valuable within crypto, and also particularly for use cases of blockchain that go beyond crypto. Even non-financial blockchain use cases still require transaction fees. If we can reduce this friction with one trip to the convenience store, it would be simple to start using cryptocurrency.”

The first step for governments to take on a more friendly approach towards blockchain, which necessitates an understanding of the significance of blockchain for the future.

“One simple use case would be to design national ID cards to sign digital signatures. Another more far-fetched example would be state-issued cryptocurrencies. This would be an interesting way for small counties to put themselves on the map and provide some economic power in the world economy.

Also, on the regulatory side, cryptocurrency exchanges, project fundraising, etc. need to have crypto-friendly regulations. Most importantly, encouraging a strong academic ecosystem is also needed for governments looking to pass regulations.”

A Moment Of Reflection – The State Of Ethereum

There has never really been a dull or news-light moment for Blockchain as an area, but where the amount of buzz, hype, and speculation around blockchain has never really ceased, there’s a lot of curiosity surrounding Ethereum, especially now as we see its overall price fall to a year-low in spite of the constant positive attention.

While Ethereum still dominates the world of smart contracts, and serving as the blockchain of choice for companies looking to start up an Initial Coin Offering, Buterin argues that the concept of an ICO is becoming ‘old and boring’.

Upon reflection, Buterin expresses a significant amount of satisfaction when it comes to the ongoing progress within Ethereum. Particularly, he was satisfied with the progress of both the state and plasma channels.

When it came down to the issue of scalability, Buterin stated that the Ethereum Foundation is currently in the process of authorizing scalable properties, and reaching higher levels of consensus. While the movement toward completing these objectives have been slower than previously anticipated, Buterin points out that this was considered, to him, far better progress than what was possible five years earlier.

“I am seriously looking forward to when the cryptocurrency community basically passes away with proof-of-work.”

Being On The Shortlist – Google Trying To Hire Buterin

While a great volume of highly analytical discussions were held during the extent of the talk with the Berkeley hosted talk, Buterin managed to end the conversations on a very humorous note. One of the best notes being on the time when Google made a concerted effort to hire Buterin for some undisclosed reasons.

“There were rumors a few months ago that Google wanted to hire you. I take it you are in town for your job interview,” Hsu asked Buterin in a comical inquiry.

“I hope we all realize that this was a joke. Some random HR person from Google emailed me, most likely because some machine-learning algorithm analyzed my GitHub and saw that I had some high score in the international Olympiad. Apparently, I fit the blueprints as a great candidate to hire at an intern salary.”

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