カテゴリーアーカイブ: Startups

Decentralized Exchange Hodl Hodl Is Launching a Bitcoin-Based Prediction Market

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Hodl Hodl, a peer-to-peer cryptocurrency exchange, has announced that it is launching a prediction market on Bitcoin. Slated for launch in the spring of 2019, it would be the first Bitcoin-based prediction market to go live on Bitcoin’s mainnet.

A prediction market is a novel application of blockchain technology. The betting platforms allow users to secure odds, futures and outcomes with smart contracts. Two users place funds (traditionally, ether) into a smart contract to bet on futures for any given outcome; when the outcome arrives, the smart contract automatically pays out to the winner.

Most prediction markets are built on blockchains with a more flexible smart contract language, like Ethereum. Augur, for example, pioneered the model when it launched in July 2018 as the first decentralized prediction market to make use of Ethereum’s ERC-20 token contract. Other prediction markets have followed suit, including Gnosis on Ethereum and Bhodi on QTUM.

Despite Augur’s frontrunning status, Hodl Hodl believes that it can improve on aspects of the platform’s operations — specifically, in its solution to the “oracle problem:” How, for example, does the smart contract know who wins the World Cup, if bitcoin closed above $3,850 by midnight on March 8, or who won an election?

You need software and people (oracles) to feed this data to the smart contract. The inherent counterparty risk becomes an issue of trust and accuracy: How do you keep oracles honest and how do you verify their inputs? To mitigate this risk, Augur leverages decentralized oracles. Multiple users are in charge of inputting data/results to make sure that the reported results of an outcome are accurate and that the smart contract pays out to the winning prediction.

Decentralizing the sources of inputs, in theory, should ensure that every prediction market’s payout is consistent with real-world outcomes, but some opponents argue that there aren’t enough participants on these decentralized platform to prevent bad actors from gaming the system.

“We’re approaching this slightly differently,” Roman Ditko, Hodl Hodl’s chief technology officer, told Bitcoin Magazine. “The oracle [is] the two parties participating in a contract. In case of a dispute, Hodl Hodl steps in with its third key and is able to influence the decision.” It is the company’s belief that, whereas a decentralized system for judging bet outcomes can be influenced by bad actors, a peer-to-peer contract might be more ironclad.

To contrast with the established model of prediction markets, on February 27, 2019, Hodl Hodl announced their own prediction market, the first to be built on the Bitcoin blockchain. Additionally, their oracle system, according to Ditko, “is not decentralized — we have a central server. But we’re non-custodial. In the case of a prediction contract, both parties lock bitcoins in a 2-of-3 [key] escrow. Both of their keys are required to send the locked funds somewhere — unless they both sign the release transaction, bitcoins cannot be moved from there.”

Under this system, there is no incentive to try and dispute the outcome of a bet, as the funds will not be released if the two parties disagree. If someone fudges the results of an outcome and both parties claim the coins, a tiebreaker ensues.

“In case of a dispute,” said Ditko, “both parties may actually never come to a decision to unlock the funds, in which case Hodl Hodl can step in and use its third key along with one of the parties keys to unlock funds in their favor. Hodl Hodl cannot unilaterally move bitcoins to wherever it wishes to because we still need one of the user’s keys (which we don’t have) to sign the release transaction.” The company warns, however, that forcing the impartial mediator to step in may negatively impact a user’s ability to convince other users to enter new contracts.

One solution to this problem could be having a third party mediator who, unlike Hodl Hodl, is not a stakeholder in the situation in any regard. Ditko is entertaining the idea, telling Bitcoin Magazine that “in the future we might have a user group called ‘mediators’ who would take on the role Hodl Hodl currently performs in case of a dispute — with a third key.” He added, however, “it’s probably wrong to call that party an oracle, as the decision is not made by that single party.”

“At launch,” he said, “we want to keep it as simple as possible and then see what needs to be improved.”

Bitcoin Magazine asked Hodl Hodl to explain how its reputation system works but has not yet received a response.

This article originally appeared on Bitcoin Magazine.

Chainalysis Raises $30 Million in Series B Funding From Accel Ventures

Chainalysis Raises $30 Million in Series B Funding From Accel Ventures

Blockchain analysis firm Chainalysis has completed a $30 million Series B round led by American VC firm Accel and Benchmark, who led the startup’s Series A funding in April 2018. Accel partner Philippe Botteri will also join the firm’s board of directors.

The fund injection will be used to expand the startup’s operations including its Chainalysis Know-Your-Transaction (KYT) tool which allows more than 100 crypto exchanges and financial institutions to vet their clients.

The analytics firm known for investigating the Mt. Gox case will open a new office in London, its second office in Europe, which will serve as a base devoted to research and development.

Chainalysis provides bitcoin transaction analysis to crypto exchanges, law enforcement agencies and other private clients to help them identify illicit transactions on the blockchain. Per a Diar report, Chainalysis was singled out as the preferred blockchain forensics contractor for the U.S. government, receiving $5.3 million from government agencies.

The New York-based startup was founded in 2014, and it has now raised $47.6 million, suggesting that investors are still investing in crypto businesses despite the slump in prices.

Speaking with Fortune, Chainalysis CEO Michael Gronager said the company’s target audience had seen a gradual shift from what it was a year ago. According to Gronager, the company made the bulk of its money from law enforcement agencies — approximately 90 percent of its revenue — which has fallen to 40 percent. Corporate clients now make up the lion’s share of its revenue streams.

One reason for this is the rise of stablecoins which has continued to prop up an industry that has been hit by the longest bear market in its history. Chainalysis has been benefiting from the fast-rising stablecoin sector, whose adoption grew based on the increasing number of on-chain transactions.

“Born out of the ashes of this was the stablecoin as another way to easily and safely create tokens. This ability to trade U.S. dollars against crypto is very powerful,” Gronager noted in the interview.

According to Gronager, the firm hasn’t turned in a profit, but it has grown three times since its Series A.

While Chainalysis is quite visible in the crypto analysis sector, Elementus is a competitor that is gradually making a name for itself. The analytics firm was pivotal in reporting the actual figures stolen in the Cryptopia hack.

This article originally appeared on Bitcoin Magazine.

FastBitcoins.com Enables Cash-for-Bitcoin Exchange Via the Lightning Network

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Many are predicting that 2019 will be the year Bitcoin’s Lightning Network sees massive growth and becomes a more common way to make bitcoin payments, and a new company based in England’s East Midlands hopes to help with that process.

Today, FastBitcoins.com has announced the launch of its cash-based bitcoin exchange, which includes Lightning Network integration. With this new exchange, users will be able to avoid touching the blockchain when they decide to buy or sell bitcoin for cash.

The new exchange was founded by former Neo & Bee Managing Director Danny Brewster, who says he is on a mission to restore his credibility after his last venture infamously failed in spectacular fashion.

How It Works

Brewster is also behind AAO Global, a company that provides store operators with digital kiosks that can be used by customers to purchase anything from prepaid cell phone minutes to Xbox Live subscriptions. The plan is to add FastBitcoins.com as one of the 5,000 voucher options on these hardware terminals.

“We take away the current pain points blocking normal people buying bitcoins; there is no complex process involving signing up to a Bitcoin exchange or network and having to convert your money,” said Brewster. “Customers can now just walk into a Fastbitcoins.com partner shop and buy bitcoins with the same ease and speed as buying a prepaid telephone/cell-phone credit/top up voucher.”

The FastBitcoins.com terminal was originally debuted in December 2018 when a reporter bought 10 pounds worth of bitcoin from a touchscreen in the back of a London taxi.

In addition to the terminals, FastBitcoins.com also plans to sell physical bitcoin gift cards, integrate with existing bitcoin wallets, and build a FastBitcoins.com mobile app.

“We are also building relationships with other distributors for integrating with our FastBitcoins.com systems to enable the sale of vouchers through their existing hardware,” added Brewster.

FastBitcoins.com also has a partnership with crypto payment platform Bitrefill, which means any of the gift cards and other services sold via Bitrefill will also be available for sale via the FastBitcoins.com terminal. Additionally, FastBitcoins.com voucher codes can be purchased via Bitrefill.

Earlier this month, Bitrefill also stepped into the Lightning space when it launched Thor, a service that allows customers to open Lightning channels on demand.

FastBitcoins.com’s fees start at 6 percent to buy bitcoin and 3 percent to sell for unregistered users. Fees become lower if the user is willing to register an account or verify their personal information.

In terms of buy and sell limits, Brewster stated, “You must be registered to sell to us, and the limit depends on the retail locations near the user and their limits for paying out cash. The buying limits depend upon jurisdiction, but you can buy up to £250 worth of bitcoin in the UK per voucher without an account. However, we do have monitoring in place to ensure the structuring of transactions isn’t occurring.”

Currently, FastBitcoins.com’s products and services are available at locations in the U.K., but the company plans to have some locations set up in Canada before March as well. Locations set up in the U.K. right now include convenience stores, money transfer agents, a tattoo parlor, and the aforementioned London black cab.

Bitcoin Magazine was able to try out the FastBitcoins.com system before launch. An image of a test voucher was shared by FastBitcoins.com, and it was easily redeemed for bitcoin via the Lightning Network after entering an email address and copying and pasting a Lightning Network invoice.

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Tippin.me was used as the destination for redeeming the voucher via the Lightning Network. Thankfully, FastBitcoins.com had a Lightning channel open with Tippin.me.

Danny Brewster’s Controversial Past: Neo & Bee

Those who are new to the Bitcoin space may not be familiar with Brewster’s controversial past.

Back in 2014, Neo & Bee was building a “bitcoin bank” and payment system in Cyprus. This was not long after the bail-ins happened in the European country, and there was a lot of hype around the Neo & Bee project. Shares of Neo & Bee’s parent company, LMB Holdings, were made available via the Havelock Investments platform, which was sort of a more centralized precursor to the ICO mania seen in 2017.

Neo & Bee seemed to collapse as soon as it was open for business. In short, Brewster was facing allegations of fraud, LMB Holdings trading was halted on Havelock Investments and Brewster ended up leaving Cyprus to go back to the United Kingdom.

Brewster claimed a threat was made on his daughter’s life after he returned to the U.K.

“Regular messages directing me to hang myself were commonplace for the first year,” said the former Neo & Bee managing director.

According to Brewster, he eventually met with Cypriot police in the U.K. for a five-hour interview regarding the various allegations against him on the condition that he did not have a lawyer present.

“I knew I was innocent,” said Brewster. “I attended what turned out to be a five-hour interview and made a recording using my mobile phone. By the end of the interview the officers stated that the case would now be closed and passed to the Attorney General’s office for them to close it, because it was evident that no crime had been committed and the allegations were false. They also offered the advice to see those responsible in court for the accusations they have made, in an effort to recover the financial losses caused by their actions.”

At the end of 2014, Neo & Bee was listed, behind the collapse of Mt. Gox and the ongoing trial of alleged Silk Road administrator Ross Ulbricht, as the third biggest crypto scandal of the year, as rated by CoinDesk.

Mastering Bitcoin author Andreas Antonopoulos and Adamant Capital founding partner Tuur Demeester both posted their accounts of what had happened with Neo & Bee, as Antonopoulos consulted for them and Demeester had bought one share in the company.

According to Brewster, the company’s issues started with a simple accounting error. He shared his full take on the saga in a 2017 interview with Bitcoin Uncensored.

“When all that was happening I was polishing my coding abilities and building FastBitcoins.com,” Brewster told us.

For Brewster, FastBitcoins.com is part of his plan to make Neo & Bee investors whole again. The business is structured in a way where it never holds customer funds, and they offer complete transparency when it comes to exchange rates and fees.

“Given my past, I am fully aware that I will be under more scrutiny than anyone else in the Bitcoin community,” said Brewster. “But I see this as an opportunity because it also puts more onus on me than anyone else in this space to deliver a safe and trustworthy service. The easiest thing for me to have done would have been to walk away from the industry altogether, or employ someone to be the public face of the business. Yet, despite my past and all of the false allegations thrown at me, I’m committed on two things: correcting mistakes made and bringing the benefits of Bitcoin to society.”

Brewster has pledged to take profits from his new venture at FastBitcoins.com to help make all Neo & Bee investors whole. Brewster says around 20 percent of outstanding Neo & Bee tokens have been settled one way or another, and two of those former Neo & Bee investors are now shareholders in Brewster’s new company.

Those who invested in Neo & Bee can make a claim on their investment losses at NeoDisrupt.com.

This article originally appeared on Bitcoin Magazine.

This Bitcoin Startup Is Working on Free Speech Alternatives to Patreon

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Patreon has been making the case for censorship-resistant money increasingly apparent.

The platform allows members to contribute to artists or creators that they support. These contributions are made via standard payment methods like credit cards.

Over the past few months, there has been an increase in public outcry over multiple separate instances where Patreon has removed creators from its platform. BitPatron, a Bitcoin-friendly version of the website, has recently come to the surface as a possible alternative.

A Series of Bans

One of the first well-known bans dates back to August 2018 when James Allsup, a far-right political commentator, was banned from the funding platform.

In December, a wave of media attention ensued when another alt-right activist and spokesperson, Milo Yiannopoulos, was shut down almost 24 hours after he had set up an account to fund his “magnificent 2019 comeback tour.” Patreon’s reasoning for removing Yiannopoulos’s account was due to his past association with the Proud Boys, a violent, far-right political group (whose founders were kicked off of Facebook and Twitter recently as well).

Only a day after Yiannopoulos’s ban, British YouTuber Sargon of Akkad had his account removed for violating Patreon’s hate speech guidelines by making racist and hateful remarks toward minority groups.

Another notable example occurred when Patreon had to close an account against their will when Mastercard required them to remove the account of Robert Spencer, a political activist and author of several “counter-Jihad” books.

In response to Spencer’s removal and other account bans, Jordan Peterson, professor of psychology at the University of Toronto, and David Rubin, creator and host of The Rubin Report, announced they were leaving Patreon because of the way that the platform has handled these situations.

Bitcoin and BitPatron

Bitcoin is a censorship-resistant currency. One of its many valuable attributes is that nobody can tell anyone what they can or cannot do with their bitcoin. As long as someone is able to receive bitcoin (which, by design, is very easy to do), no transaction from anywhere can be stopped.

BitPatron is a direct response to Patreon’s proclivity to censor content on the platform. It will offer a similar crowdfunding platform as its predecessor, but will allow users to support creators with bitcoin.

By using Bitcoin and Lightning as payment methods, BitPatron expects to offer lower fees than its competitor. BitPatron’s payment processing system is built on top of BTCPayServer, an open-source payment processor for Bitcoin and Lightning. According to the website, there is no minimum pledge amount, compared to Patreon’s $1 minimum. Total fees for the platform are 4 percent, much lower than Patreon’s 10 percent.

The platform’s co-founder believes that, more than just offering users a lower fee competitor to Patreon, BitPatron’s focus on bitcoin is about free speech.

“Patreon publicly admitted that Mastercard required them to remove accounts. This is where Bitcoin and BitPatron come in. Bitcoin is censorship-resistant, free-speech money, and BitPatron is taking a leading role at building a Bitcoin-based, censorship-resistant platform that gives the power back to the community where it belongs,” Vin, co-founder of BitPatron, told Bitcoin Magazine.

But BitPatron is still not a completely, “anything goes” platform yet. A spokesperson for the company told Bitcoin Magazine: “For now, we are planning to monitor and block only in extreme cases, such as illegal pornography, threats or calls for violence, or terrorism-related content.

He added that ideally, in its purest form there would be no centralized control, but there’d be some sort of decentralized algorithm to perform the necessary checks. “That’s why we are considering blockchain platforms that would allow users to self-host their content and be responsible for it.

“We want to remain a platform for every voice, which is, in our opinion, a far greater task than monitoring ‘hate speech.’ We therefore need to make sure that the platform remains interesting for voices of the entire spectrum.”

Who Is It For?

BitPatron will first allow podcasters and video creators to offer exclusive content to their supporters, and it also has plans integrate with Discord groups to support chat rooms.

In the bigger picture, a platform like BitPatron could support content creators from all walks of media. It is a platform where people receive financial support from others all across the world in a seamless and instant way with a censorship-resistant currency.

According to the platform, the public beta will go live next month.

This article originally appeared on Bitcoin Magazine.