Resources for Cryptocurrency Writers

Demand is high for cryptocurrency writers who are familiar with and blockchain technology and also fluent in English. Many new cryptocurrency and blockchain developments are occurring outside the English-speaking world, but the innovators behind these developments need quality cryptocurrency writers to explain how their solutions work, and to help them raise money from the venture capital community and through initial coin offerings, or “ICOs.”

Generally, these companies are willing to pay above-market rates for experienced cryptocurrency writers with a grasp of technology, and there is a shortage of capable commercial cryptocurrency writers to foot the bill.

If you’re looking to break in to the fast-growing crypto and blockchain writing trade as a cryptocurrency writer, this article is for you.

Cryptocurrency Writers

Establishing a technical foundation

The crypto industry is still in the Wild, Wild West of the investment world. Regulators are struggling to understand how best to regulate the industry to protect investors without quashing innovation.

As of now, there aren’t any established certifications you can get or courses you can take that can establish you as an expert cryptocurrency writer. Most people who are established now did so “in the trenches,” actually developing products and solutions and marketing them.

There are many organizations now offering courses in blockchain development. If you are a solid writer but new to the blockchain world, you might start with one of these:

Coursera. Coursera makes several college level blockchain courses available over the Web for a very modest cost. A good foundation in computer science in general will be a great help to understanding, as well.

Pluralsight. Pluralsight has many relevant information technology courses available – and several that are blockchain and crypto-specific. Blockchain Fundamentals is a great place to start. You can get unlimited access for $35 per month, or $299 per year. You get a 10-day free trial.

Udemy. Udemy also offers a wide variety of blockchain related online courses. As of this writing, you can purchase them for as little as $12.99. Here’s one to get you started: “The Basics of Blockchain: Bitcoin, Ethereum and More.”

Essential reading

If you’re brand new to being a cryptocurrency writer and you need a “Blockchain for Dummies” resource, you don’t have to go to the book store and spend $25. You can download Blockchain for Dummies by Manav Gupta for free here, courtesy of IBM. It’s the 2nd edition, published in 2018, so it’s reasonably up to date.

Once you’ve digested that, it’s time to familiarize yourself with some of the foundational documents in crypto and blockchain writing and marketing.

Bitcoin: An Electronic Peer-to-Peer Cash System, by Satoshi Nakamoto. Read it from start to finish. Take your time, and really understand blockchain technology and how the cryptocurrency is rooted in it, and how it works. It was the first major white paper in the cryptocurrency industry, but it’s still a relevant foundational document and it will help get your feet firmly on the ground when it comes to understanding the key concepts tying blockchain and cryptocurrency together.

Do the same with the Ethereum white paper. Here’s a link to it on GitHub. The Ethereum white paper starts with a review of the Bitcoin paper and expands on those concepts to introduce you to the Ethereum concept. Many newer cryptocurrency applications can be understood as variations on and expansions of the concepts in these two venerable white papers.

Also, read Vitalik Buterin’s pre-history of the Ethereum protocol, here.

These resources help you establish a foundation in the underlying technology that makes cryptocurrencies possible. But it’s also important to understand how cryptocurrency is bought, sold, stored and transferred by actual consumers and traders.

Hackernoon published a good resource for that: Crypto 101 | How to Start? A Comprehensive Guide to the Basics, Exchanges, Buying & Selling.

Types of cryptocurrency writer jobs

Crypto writing jobs fall into two broad categories: Industry writing, including marketing pieces and white papers, and crypto and blockchain journalism.

Much of the industry writing gigs will be technical writing in nature, and much of it will be targeted for experienced blockchain developers, marketers and investors. These documents may include white papers, brochures, prospectuses, regulatory filings, and annual reports.

The University of Missouri at Saint Louis makes an excellent page of resources for technical writers here.

Cryptojournalism can be less technical and even quite basic, depending on the outlet. But the more time and effort you put into understanding the technical foundations of blockchain, cryptocurrencies and tokens.

Increasingly, there are opportunities for PR and marketing professionals as some of these companies become more established and able to hire PR firms and retain in-house staff for these purposes.

 Getting hired as a cryptocurrency writer

 Currently, there is quite a bit of freelance hiring being done off of freelance platforms like UpWork and Guru.com.

Those looking to focus on blockchain, specifically, may look at BlockchainJobList.com, which has many listings for writers and editors.

Hint: Don’t confine your search to “writer.” You may also find opportunities under terms like “content,” “marketing,” and “blogger” or “blogging.” These may be less competitive as other people are just looking up “writer and editor.”

If you’re interested in journalism, visit JournalismJobs.com, and, of course, your local news outlets, where you may have a ‘home town advantage’ breaking in. If your local newspaper doesn’t have a regular crypto/blockchain column featuring local developers and how businesses are using blockchain technology to change people’s lives for the better, contact the editor and pitch one!

Additionally, the field is wide open for great content writers and producers to make a name for themselves by establishing and monetizing their own blogs, podcasts and YouTube channels Problogger.com is a good resource for getting started in the blogging world, while Chris Ducker explains how to monetize a podcast, here.

Meanwhile, start a blog. This is probably the most cost-effective way to start building a list of clips and writing you can later leverage to paid writing opportunities down the road.

You don’t need a resume as long as your arm to break into crypto and blockchain writing. But you do need to be able to demonstrate that you can tell a story or explain a complicated concept well, that you can write fluently in English, and that you have a grasp of the basic concepts in blockchain and crypto technology.

 

Mark Silverman is a cryptocurrency writer. Follow him on Twitter @MarkSilverman_

 

 

How to be a Cryptocurrency Writer

The tremendous growth in cryptocurrency interest and related topics has led to an explosion of demand for quality cryptocurrency writers. Writers with good knowledge about cryptocurrencies, tokens, blockchain topics, mining and security are currently commanding some of the highest per-word and per-hour rates in the freelance content writing world. If you’re used to writing for content mills at less than 5 cents a word, or clearing less than you would working at a 7/11, it’s time to set your sights higher.

Cryptocurrency writer

This article assumes that you can already write well, and turn in clean copy that requires minimal proofing and editing.

The industry needs all kinds of writers that serve different kinds of readers. One of the first steps in becoming a cryptocurrency writer or blockchain industry writer is deciding which of these niches you can bring the most value to for your client. Note that there will be considerable overlap, and, of course, you can work in more than one category.

  • Blockchain technology reporting: Covering the latest developments in coding, mining, smart contracts and other innovations for the programmer, miner or IT professional. Writers can focus on breaking news, opinion and analysis, “inside baseball,” to name a few approaches to the beat. There are lots of available subspecialties, too, including dealmaking, hedge funds, IT security and cybercrime, smart contracts, programming, equipment reviews, personality profiles, private equity and venture capital news, regional or industry-specific beats (i.e., covering blockchain and smart contract applications for the hospitality industry, banking industry, defense, travel, etc. in industry magazines.)

 

  • Cryptocurrency investment reporting: The industry needs experienced investment and financial writers to cover cryptocurrencies, tokens and stocks in crypto-related companies as an asset class and as individual investments for retail and institutional investors. A working knowledge of blockchain technology, IT security and other technical matters will be helpful, but not absolutely necessary to start out, if you have excellent chops as an investment writer. However, you’ll want to bring yourself up to speed on the technical side of things as quickly as you can.

Some common subtopics within this niche include:

  • Asset allocation
  • Valuation
  • Mutual fund and hedge fund reporting and analysis
  • Brokerage and trading platform reviews
  • Cyber security
  • Tax-related subjects
  • Retirement funds
  • Crowdfunding
  • Private equity and venture capital financing
  • Strategy
  • Short-term trading tactics, day trading and automated trading strategies
  • Self-directed IRAs

 

  • Technical writing: Blockchain companies and token issuers need good technical writers who can document their products and services, write instruction manuals and user guides for their own in-house needs as well as for vendors, dealers, miners and end users. Occasionally they need these documents translated into other languages as well.

 

  • ICO White paper writing: This kind of writing requires a synthesis of technical and investment writing, as many times you’ll be explaining a technology and how it serves a need to investors in a specific token, cryptocurrency or related product or service. Some basic design and infographic skills will come in handy in both the technical writing and white paper writing niches, especially.

In some cases, you may be asked to write a legal filing, such as a prospectus or annual report to be registered with the Securities and Exchange Commission. This is a potentially lucrative niche for investment writers who already have some experience with similar pieces.

  • Content, PR and marketing writers. Blockchain and crypto currency issuers need to promote and market themselves in various ways. Many of these companies are startups with just a few people, and they frequently hire blog writers, article writers, and public relations writers to help them with articles, long-form advertorials, press releases, trade show materials and other collaterals. They also need people to manage their social media presence, which is an additional service you may be able to provide.

Possible clients include public relations, advertising and marketing communications firms, as well as crypto and blockchain-related companies themselves. Occasionally crypto industry websites and magazines will have a potential advertiser interested but who needs help writing advertorial copy.

If you’re a quality writer, developing your technical skills in any of these areas should help you command much better rates than most generalists slaving away for the low-paying content mills.

However, the barrier to entry is significant. If you’re not already up on at least one aspect of crypto or blockchain technology, or bringing some significant investment and computer technology writing to the table, you have a lot of reading to do.

But if you’re like a lot of frustrated freelance writers, stuck spending half your time querying and getting rejection letters and the other half writing for 10 cents per word or less, or $15 per hour or less, it’s worth the effort.

Spend a couple of hours per day reading everything you can find. The book  Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World is a good start. Read the industry news sites like CoinTelegraph.com and Coindesk.com. Scour Reddit and Steemit for coin and blockchain-related topics.

Check out Meetup.com. If there’s a crypto meet-up in your area, don’t miss the opportunity.

Breaking In 

If you want to be a crypto writer, you’ll either be joining a media organization as an employee, the marketing/communications department of a crypto or blockchain-related company as an employee, or approaching either of the above as a freelancer.

In any case, you will need to promote and sell your ability as a writer.

When you approach a potential client, they’re going to want to see some samples of your writing. Nobody wants to take a chance on a writer or pay a good rate if they aren’t confident that you’ll be able to deliver quality work.

If you’re an experienced professional writer, this won’t be a problem, since you’ll already have lots of samples to send them. Put the best ones up on your LinkedIn page, or, if you use a freelancing website like UpWork or Guru.com, on your profile page. Mention cryptocurrency and/or blockchain in your bio in both places so anyone doing a web search or site for these terms is likely to land on your page.

If you don’t have any clips yet, you’ll want to get some up on the Web as soon as you can, so that you can link directly to them when pitching a new client.

One great place to start: Keep your own blog on crypto-related topics. This is an excellent tactic if you can already write to an expert level on any niche in the crypto or blockchain world. You may get inquiries about writing just from running a successful blog alone. In many cases, a great blog is all a good writer needs to get started.

Some writers actually make a living from monetizing their own blogs. See www.problogger.com for some ideas on how to do this.

Creating a podcast or YouTube channel of you speaking on various crypto-related topics is also an excellent idea, if you can already speak as an expert on one or more subniches.

Professional tips

In each of these categories, a professional attitude, attention to detail and commitment to accuracy is essential to success. If you get a reputation as someone who is sloppy with the facts, who turns in substandard copy that needs extensive editing, or who disregards deadlines, you will have a hard time finding work.

With freelance writing, much of your success is in developing relationships with regular clients. The more time you spend querying, the less time you can spend focusing on actual paid work. So when you have a client that pays a competitive rate for your work, it’s important to keep them. It’s much easier to do great work for an existing client than to have to beat the streets looking for another buyer for your writing and editing services.

A few closing tips for long-term success.

Don’t get discouraged. It takes time to build up a freelance writing practice. It may be months or years before you’re doing it full-time or meeting your income goals. A career as a writer is a crockpot, not a microwave.

Don’t write for others for free. If you’ve put in the time, your contributions are valuable. Your services are in demand and it isn’t easy to find good writers with the specialized knowledge these companies and media organizations are looking for. Coin and token issuers and equipment companies are making money. They know you should be paid appropriately for your work. If you’re writing for free, it should be for your own blog to demonstrate your own expertise.

If your mother say she loves you, check it out. This is an old saying among reporters. And it’s important. The crypto world is very much still a Wild, Wild West kind of environment: There is no shortage of dreamers, charlatans, con-men and out-and-out criminals looking to fleece others of their money. The industry needs gimlet-eyed, skeptical reporters and writers not just to promote good opportunities, but to protect the public from bad ones.

 

Mark Silverman is a cryptocurrency writer. Follow him on Twitter @MarkSilverman_

 

 

 

Fidelity, TD Ameritrade Bring Household Name Support to Crypto Trading Platform

It was an awful week for bitcoin bulls. Bitcoin fell to $3,629 as of 5 p.m. UTC on December 6th, with technical signs pointing to further trouble ahead. But some big pockets have been moving in – not going long on bitcoin itself, specifically, but signaling support for the crypto economy infrastructure writ large.

Crypto trading platform

Fidelity Investments, the Boston-based mutual fund hegemon, just inked a deal, contributing its capital along with Bitmain, ConsenSys, Nasdaq Ventures and Monex Group to provide $27.5 million in B series funding to Eris Exchange (Eris X), which is building a new platform for the trading of digital assets, cryptocurrencies, tokens and derivatives.

TD Ameritrade, CTC Group Investments, Digital Currency Group, DRW Venture Capital, Pantera Capital and Valor Equity Partners have also contributed funding in this round as well as in earlier rounds. But the attraction of a fairly conservative investment giant in Fidelity is certainly a feather in their cap.

ErisX has announced that the current round of funding will go towards trading platform development and making some key hires. Once the rollout is complete, ErisX will operate an intermediary-friendly, CFTC-regulated futures exchange (registered) and clearing organization (registration pending), as well as a spot market for digital assets. The plan is to combine both spot trading and futures trading of digital assets on the same platform – providing crypto asset enthusiasts with an easy, seamless and intuitive way to combine both direct long and short trading and hedging techniques.

“With increasing financial support from leading edge firms, ErisX stands to provide the most robust, secure and regulated digital asset offering available to both institutional and individual participants,” said Eris X CEO Thomas Chippas in a statement.

“Many of our customers have been seeking various hedging solutions and would be happy to see US regulatory compliant exchanges like ErisX provide spot and futures’ contracts in one platform,” said Jihan Wu, co-founder of Bitmain.

Initially, ErisX will be handling trading in Bitcoin, Bitcoin Cash, Litecoin and Ethereum, as well as futures contracts. The assets will be physically distributed.

Fidelity’s moved comes on the heels of a major strategic decision announced last October to create a new, separate corporation called Fidelity Digital Assets, which will take on the role of custodian for digital assets such as cryptocurrencies. The new Fidelity property will execute trades on a variety of crypto exchanges for institutional investors, family wealth management offices and the like.

With the announcement, Fidelity becomes the first marquee “Wall Street” – level name to formally provide custodial services for crypto assets.

Currently, Fidelity has more than $7 trillion under management, and provides clearing and investment services for more than 13,000 different advisory firms and institutions worldwide, as well as 27 million retail customers.

Fidelity seems to be taking on the role of early adopter of crypto-services among the Wall Street giants (yes, Fidelity is technically headquartered in Boston, not on Wall Street. But you get the idea.)

But Fidelity presumably wouldn’t be taking this step – and putting millions on the line – if it wasn’t responding to existing demand from its client base of old-line institutional investors, brokerages and family offices. Research from Greenwich Associates indicates that the vast majority of institutional financial executives – 72 percent – say that cryptocurrencies are here to stay.

Only 10 percent expect crypto assets to remain as a fringe asset class, according to Greenwich Associates’ study, and just 10 percent believe that regulators will move to eliminate the crypto market altogether.

“This is a recognition that there is institutional demand for these assets as a class,” said Tom Jessop, tagged to lead the new venture, Fidelity Digital Assets. “Family offices, hedge funds, other sophisticated investors, are starting to think seriously about this space.”

In short, Fidelity has recognized crypto as a full-fledged, legitimate asset class – and they want to be in the middle of it.

Fidelity Digital Assets will serve only institutional clients – at least initially. But Fidelity’s decision to back ErisX signals their willingness to at least be involved in crypto activity for the retail investor very soon. Fidelity brings a massive investment capability and pool of millions of potential retail investors to the table, many of which use Fidelity’s popular brokerage platform. TD Ameritrade also brings a smaller retail client base, but one even more focused on aggressive trading strategies.

There are several niche brokers involved in the Series A and B funding drives, of course – but the mass market potential of Fidelity Investments and TD Ameritrade have the potential to provide much improved liquidity to crypto markets. This may have the most beneficial effect on second- and third-tier digital assets that don’t currently enjoy much liquidity.

Financial theory suggests that as more buyers enter the system, prices should rise as asset owners have less of a liquidity premium hurdle to clear.

 

How To Write an ICO White Paper

There’s nothing so good it doesn’t have to be sold – and that even goes for ICOs and other crypto-related projects.

If you’re involved in a crypto or token offering (ICO/ITO), you’re going to need a white paper, at minimum, detailing the project and the underlying technology and making a compelling case for early adaptors, app developers, potential investors, partners, venture capitalists and other key potential stakeholders.

Here are the key elements that every white paper should address.

Understand the regulatory environment

Before you write your white paper, you should understand the applicable laws and regulations – particularly in the United States, which is still the biggest economy in the world, by far. Compliance is a critical issue with any ICO. If you’re actually trying to raise funds from the public, paying careful attention to regulations and compliance from the very beginning will be important to protecting your investors, keeping your firm out of court and even keeping your founders, managers and promoters out of jail.

Is your ICO a security? Will your launch fall under the auspices of the Security and Exchange Commission (SEC) or the Commodity Futures Trading Commission? Is it a derivative? Will you be raising capital in Canada? What about other countries?

Depending on the jurisdictions you’re operating in, you will probably need to register with securities or derivatives regulators – or you should clearly qualify for one or more exemptions from the registration requirement.

Other jurisdictions

The world’s governments and international organizations such as the European Union are still trying to wrap their heads around how best to regulate ICOs, and balance the interests of encouraging economic innovation against the need to protect investors and speculators against misrepresentation and fraud. The regulatory environment is therefore changing very rapidly.

It’s a good idea to retain a securities lawyer with international experience while you’re still in the concept phase, and get their input as you develop your white paper.

 Accredited investors vs. the general public.

In order to remain in compliance with applicable laws, your white paper may need to  include some or all of the following provisions:

  • Prohibit participation from certain countries or jurisdictions or restrict participation to individuals and entities from certain countries or jurisdictions
  • Restrict participation to accredited or experienced investors. If you choose to market your coin or token offering to the general public, rather than restricting the opportunity to professionals and high-net worth, accredited investors, you may raise more money, in total. But you also generally take on a much heavier burden of compliance. Courts are more inclined to take a caveat emptor (“let the buyer beware”) approach to disputes where the offering is restricted to accredited investors only. They will take on a much more active role in protecting the public against fraud and material misstatements if the issuer is marketing directly to the general public. If an ordinary retail investor takes you to court, you will have a much heavier burden to prevail against them
  • In Canada, accredited investors are defined under Section 2.9 of National Instrument 45 106 – Prospectus Exemptions. Note: Specifics may vary by Canadian province – all the more reason to have an experienced attorney involved from the beginning.
  • In the United States, an accredited investor is defined in Section 230.501 of Regulation D.

You can find the basic requirements for accreditation or its functional equivalent in a variety of jurisdictions around the globe here.

Canadian readers: In August of 2017, The Canadian Securities Administrators (CSA) issued a must-read guidance document that details the principles under which Canadian regulators will be enforcing securities law in their efforts to protect the public against fraud.

Key Elements of a White Paper

Describe a need—and fill it.

The time-honored way to success in sales has been to find a need and fill it. Communicating both the need that will drive demand for your coin or token and how your offering will fulfill the need should be the main thrust of your white paper.

Describe the need.

The more market research you can bring to bear, the better. Look to answer the following questions:

  • What is the nature of the problem?
  • Why is it a problem?
  • What is the extent of the problem?
  • How many people have this problem?
  • What does the problem cost – both individuals and in the aggregate?
  • How will the benefit if this problem can be solved?

Describe the solution

Your ICO should provide a way to solve the problem you define above – as specifically as possible. Your description should attempt to answer these questions:

  • How does the coin or token address the problem?
  • What is the cost and how will the benefit exceed the cost?
  • Why is an ICO an appropriate way to solve this problem?
  • What does your coin or token do for the user that is different from existing solutions?

From the buyer’s point of view, the need and how the token will fill the need are by far the most important topics – and should be covered first. Everything else is in support of those two critical elements.

Provide a “road map”

 Once you’ve explained the problem, and you’ve explained how your token or crypto project will be able to help people by solving it, the next step is the road map. This is a detailed, step-by-step plan of how you plan on getting from your current stage to full implementation.

It should include the following elements:

A timeline. Include key dates all the way back to your founding. It looks good to have a lot of these slots filled with accomplishments before you even get to the date of the white paper release.

Important milestones

Capital requirements at each milestone and how you plan to achieve those

A discussion of how your ICO proceeds will be invested in executing the plan

Detailed discussion of the technology

The next section should contain the technical details from the point of view of app developers and those concerned with security and scalability.

This section should include information on protocols, encryption and security, blockchain management, scalability and other similar issues and how the new token or coin will function in the blockchain environment.

Discuss any technical advantages and disadvantages here.

Use Graphics

Anytime you need to convey complex relational information, it’s a good idea to do so as graphically as possible. Most people are visual by nature, and don’t want to slog through walls of text. And even the people who are willing to read through dense paragraphs of complex information will appreciate quality infographics to refer back to.

Use as much text as necessary to properly explain any graphics you use – but don’t try to go without graphics – especially if you want to have a reach beyond a very narrow market of quants and programmers.

Failure to incorporate graphics as appropriate is likely to needlessly turn off the majority of readers right off the bat. It’s simply too difficult to quickly grasp the needed information. The amount of money a good infographics professional can help you raise will usually pay his or her fee many times over.

Offering memorandum information

In many instances, a white paper and technology description by itself will not pass muster with regulators – especially if you want to market to non-accredited investors. In either case, whether you use a white paper alone to market to accredited investors and institutions, or if you choose to combine it with a prospectus or offering memorandum, it’s a good idea to provide detailed information about the following:

  • Number of tokens or coin that will be created
  • Initial offering price
  • How long the offering will remain open
  • How much will be retained by the company/issuer and management and how much will be held by outside investors
  • How the coin or token supply will be managed and any caps.
  • Buyback procedures and provisions, if any
  • Considerations for a secondary offering
  • How the issuer/management team is compensated

A discussion of risk

Any fundraising effort – whether to accredited or non-accredited investors – should include a frank discussion of risk. Failure to include it could turn off experienced investors who will be looking for that information as well as attract the scrutiny of regulators.

Furthermore, if you are brought into court by an unhappy investor, you don’t want to be explaining to the judge or jury why you didn’t inform the investor of the risks in writing when it counted.

Exit strategy

Your white paper (or offering memorandum or prospectus) should include an exit strategy: How can early investors exit their positions for cash and when can they expect to do so? This section should jibe closely with your roadmap earlier in the white paper.

The Team

Traditionally, a discussion of the management and key personnel involved in the project occurs towards the end of a prospectus or similar document. The same can be true of an ICO white paper.

However, an exception may be warranted if one or more of the key backers is a marquee name in the crypto world. If someone like Natoshi Sakamoto, Elon Musk or Warren Buffett is deeply involved in a project, most investors would want to know about that.

Disclose your location

This isn’t just a matter of national or regional pride. It’s also a matter of attracting capital. One study estimates that with about 32 percent of ICOs, there was no information about the issuing entity’s or promotor’s location.

If there’s no way to be sure of the location, then potential investors have no way of knowing what regulations are in place to protect their interests. Some markets are more regulated and more pro-investor than others. If issuers don’t disclose their country of domicile in their white papers or other sales collaterals, crypto-speculators have to assume the worst-case scenario – and demand a premium return because of the additional risk involved in poorly-regulated or unregulated industries – a phenomenon known in the investment world as a risk premium.

This means fewer funds raised for the project, less potential for valuable partnerships or acquisition offers and more risk for the issuers.

 Invest in a quality ICO White Paper writer

 Lots of excellent programmers can’t write. Lots of excellent promoters can’t write, either. Commercial and investment copywriting is a specialized field. Skilled practitioners are used to writing for an audience of affluent to wealthy decision-makers – the kind of people with the assets to contribute significant amounts of capital to your ICO.

These people are serious-minded, but busy. The English doesn’t have to be native, but it has to be good. Poor English writing skills distract from your message – and reduce the possibility that your reader will read far enough into the sections that can close the deal and turn your readers into buyers.

A good writer will have experience in the crypto field – often writing white papers before. They can alert you to some common considerations and compliance issues, if they are very experienced. But they are no substitute for an attorney and securities/crypto law expert’s guidance from the very beginning of the project.

Mark Silverman is a cryptocurrency writer. Follow him on Twitter @MarkSilverman_

 

 

 

The Hash Wars Begin – Bitcoin Cash Variants Clash in Digital Civil War

It’s like the Confederate attack on Fort Sumpter, but for geeks.

At 18:00 UTC on November 15th, the newly upgraded Bitcoin Cash network mined two new blocks. But some bitcoin cash miners’ servers marked these blocks as invalid – throwing two warring Bitcoin Cash camps – Bitcoin Cash ABC and Bitcoin Cash SV – into a battle for survival. It may well be only one can survive. The other could be totally annihilated.

Cryptocurrency writer

Specifics: The Bitcoin Cash network just completed a hotly-contested scheduled protocol upgrade. But unlike previous protocol upgrades where there was widespread consensus about what upgrades were needed and how to implement them, this upgrade saw widespread disagreement about how the bitcoin cash protocol should best evolve to support users and merchants that support Bitcoin Cash.

nChain responded to the planned update by developing an alternative Bitcoin Cash implementation, Bitcoin SV – a full-node implementation they claim was developed to provide better support for what they call the “Satoshi Vision.” Hence the “SV” in the name.

nChain is issuing a public appeal to miners to use their “hash power” to support the SV implementation under “Nakamoto Consensus Rules.”

In the weeks leading up to the November 15th upgrade, nChain provided miners and exchange operators with the technical details for supporting Bitcoin SV transactions, and the two camps lined up their servers in preparation to engage in what observers call the Hash War.

Meanwhile, bitcoin holders were walloped in a round of selling this week, pushing the asset down to its lowest level in more than a year. At press time, the coin is trading at $5,539.17 – off more than 60 percent off its peak. The contagion also hit Ethereum, litecoin, ripple and bitcoin cash, each down by double digits.

The Split.

November 15th saw the completion of the hard fork in the Bitcoin Cash chain, driving a wedge between Bitcoin SV and Bitcoin ABC users. The two protocols are no longer directly compatible with one another. However, Bitcoin Unlimited, another important Bitcoin Cash implementation, has announced its neutrality and its intention to remain neutral. It will be compatible with both SV and ABC until the digital cage match is resolved.

Miners are now voting for the protocol they want to go with via their hash power under Nakamoto consensus rules. The implementation with the most computing power behind it will likely win, and the losing currency will be consigned to oblivion.

Initially, Bitcoin SV was the favorite, after it seemed to have lined up about 40 percent of the current bitcoin hash total right out of the gate.

At issue: The ‘longest chain’ rule – in which the nodes running a given crypto asset that encounter two competing bitcoin simultaneously recognize by default the longer of the two blockchains – on the theory that the longer blockchain is the more complete and up-to-date blockchain. The other blockchain is eliminated from the system.

“Neither Bitcoin SV nor Bitcoin ABC have implemented transaction replay protection, as the intention is for only one chain to survive,” said nChain in a statement.

In the hours leading up to the hard fork, BCHABC had the advantage in that about 75 percent of node operators were running the ABC client software, vs. only about 8 percent of node operators running SV.

However, SV supporters, bolstered by the intervention of Craig Wright and Calvin Ayre, have declared a jihad against ABC, vowing to aggressively mine empty blocks and reorganize the block chain using their hash power until ABC succumbs. nChain claimed to have over 40 percent of the available hash power supporting SV before the hard fork happened.

But mining strength is only part of the picture: Currencies rely on network effects of merchants and vendors who can be trusted to accept the currency in the future – and this may be the decisive factor: Companies supporting bitcoin cash have generally indicated their support for the ABC variant, and will include ABC rather than SV under the Bitcoin Cash header.

nChain, the developer of SV, argues that the BCH business community should recognize the protocol with the longest and most complete blockchain with the most legitimate and sustained Proof of Work. We will shortly see whether that argument holds sway among merchants and vendors.

If SV can’t maintain at least price parity with ABC will miners continue to mine SV at a loss just to prove a point? Jonathan Bier, head of research at BitMEX, says no. On the 14th of November, Bier told Bloomberg editors that “the economics will support BCHABC and reject SV (Satoshi’s Vision). SV will have a low price and miners will leave it in a few weeks.

Trading and volatility

As is to be expected, we’ve seen major volatility on the exchanges, with SV (trading under the symbol BCH SV) falling from a peak of 243.79 on the 14th of November to just $98.05 at press time on the 15th.

But Bitcoin ABC seems to be fighting back, rising from a low of $201 on the 14th to $296.48 at press time on the 15th. This is partly due to the intervention of Roger Ver, owner of Bitcoin.com, who has routed all his significant hash power to support the BTCABC chain.

Until the outcome of the Hash War is decided, Bitcoin Cash is probably an appropriate holding only for the most speculative and risk-tolerant consumer. At this stage, it looks like ABC will prevail, judging from price signals alone. But stay tuned.

Mark Silverman is a cryptocurrency writer. Follow him on Twitter @MarkSilverman_

 

EOS vs. Ethereum – The War for Smart Contract Dominance is On

OLD AND BUSTED: Betamax vs VHS.

NEW HOTNESS: EOS vs. Ethereum

Forty years ago, it was Beta vs. VHS fighting it out for dominance in the videocassette world.

Ten years ago, it was Blu-Ray vs. HD DVD.

Today it’s EOS vs. Ethereum, engaged in a knock-down, drag-out fight for predominance in the world of smart contracts.

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And just as there was in the previous fights over how to format media content, there’s a lot on the line.

Both Ethereum and the newer EOS evolved as a continuation of the blockchain concept, picking up where straight-ahead currencies like bitcoin left off. While bitcoin works as currency – a store of value that is easily transferred electronically while bypassing the banking system – both Ethereum and EOS are designed to support self-executing “smart contracts” in a decentralized environment.

These are contracts that can be designed to automatically self-execute if the system sees that certain conditions exist – and the potential applications are yuuuuuuuuuge.

 While Ethereum certainly has first-mover advantage and a solid advantage in branding and awareness, it has a perception problem: Actual users are treating Ethereum as a currency, and not as a smart-contract execution platform. Only about 10 percent of Ethereum transactions thus far actually involve the smart contract applications for which it was designed (the rest of the traffic is in the form of ICO and direct payments – indicating that users are primarily using Ethereum as a substitute currency).

EOS is positioned to compete directly with Ethereum – and may be successful in exploiting the branding challenges that Ethereum is struggling with.

EOS is being billed by its developers as an operating system for decentralized transactions and smart contracts. And while Ethereum can certainly be used that way, and was designed to be used that way, it hasn’t quite caught on yet.

The Crypto Trilemma

 Architecturally, the difference between the Ethereum and EOS can best be explained using what computer scientists called the trilemma:

Security, scalability or decentralization: Pick any two.

Ethereum chose to maximize decentralization above all other considerations, thus far; EOS chose scalability. Ethereum Ethereum’s current Proof-of-Work (PoW) consensus algorithm (eventually to switch to Proof-of-Stake (PoS)), which allows anyone with a sufficiently powerful computer to mine new blocks – allowing for potentially millions of nodes and a massively decentralized system. There is no limit to the number of block producers.

EOS, on the other hand, chose a Delegated Proof-of-Stake (DPOS) mechanism that allows for just 21 nodes to produce new blocks on the blockchain. It’s a much more centralized system – but one that supports vastly more transactions per second. That’s going to be important if and when smart contracts become as routine as a credit card transaction and computers need to handle thousands of transactions per second.

EOS already demonstrated a greater capacity for traffic than Ethereum could ever handle – up to 1000 transactions per second as of July 2018, compared to Ethereum’s 15. However, Ethereum is moving to address this by introducing a hard fork called Casper.

EOS Advantages

Better user experience. Ethereum’s clunky interface seems a lot more optimized for machines than for people. EOS, on the other hand, has adopted a number of UX factors that actual people now take for granted, like actual readable usernames. People would much rather send money to “@usernamedoubledouble” than to “0ch48hsge1e4c68ilm77dz50hoeb6n3d477svuf2r4vxe87” as they have to do using Ethereum. Especially when missing a single digit means that money is irrevocably lost.

It’s fine for machines, but people are different. The EOS evolution is as significant as the evolution of the Mac operating system over DOS. But it’s not an insurmountable advantage – Microsoft quickly achieved parity with Apple when it created Windows. But Apple never went away.

EOS also built in a mechanism for recovering lost passwords – another advantage over the basic Ethereum platform. Computers have no trouble remembering passwords. Actual humans… not so much.

All that said, while the cryptosphere has been buzzing about EOS since early 2017, we didn’t see the first actual smart contract app launch using EOS until this last September, with MyWish – a platform that has created a variety of self-executing contracts for specific purposes like crowdsales, wedding contracts, self-executing wills that transfer assets at death automatically, automatic deferred payments, investment pooling and more.

No fees. EOS has figured out a way to make it happen without a transaction fee to the user. Yes, the network that supports EOS has to be paid for somehow. Instead of encumbering users with a transaction fee, EOS diverts a fraction of future EOS growth (1 percent of inflation per year) back into the network.

Less risk. With older platforms, losing a password is catastrophic. But EOS developed a recovery partner backup: If you lose your password, you and your trusted recovery partner can use your keys to get you access to your money again. You can even get a hacked account back.

Who’s going to wind up on top? It’s far too early to tell. Ethereum has a powerful advantage in that many app developers have already invested time and money in learning how to use it. They won’t be inclined to move to EOS without good cause.

EOS brings some powerful advantages, but the race is not always to the swift: VHS won over Betamax videocassette formats even though Betamax had important advantages.

Mark Silverman is a crypto writer. Follow him on Twitter @MarkSilverman_

How to protect yourself against cryptocurrency theft

Cryptocurrency trading is still in its infancy. But already there have been numerous horror stories about speculators losing millions to thieves and fraudsters.

The natural volatility of these investments is plenty of risk and uncertainty to bear. And at least volatility has an excellent chance of working in your favor! But fraud and theft have no upside for any honest person – and it’s bad for the crypto asset class as a whole.

Whether you’re a speculator, or you’re just holding on to a few coin for everyday transactions, here’s the bare minimum you need to know to protect your crypto against hackers and thieves.

 Crypto writer

Exchanges are targets.

 Yes, exchanges in some form are necessary to facilitate the buying and selling of bitcoin and other cryptocurrencies. But they are also targets for some of the most sophisticated criminals on the planet. Already there have been multiple instances of exchanges getting hacked and thieves getting away with a fortune. The Mt. Gox exchange lost 750,000 bitcoin to cyberthieves in 2014. NiceHash asset-holders were socked for $78 million in another massive cybertheft.

The exchanges have default online wallets that are convenient – but you should also realize that the default wallets are big, fat, hairy targets for greedy organized criminals with teams of highly skilled hackers. And there’s no equivalent of the Canadian Investor Protection Fund (CIPF) or the U.S.’s SIPC or FDIC to act as a backstop against theft or fraud. In the Wild West of the crypto world, you’re on your own.

So you may not want to keep your assets in the exchange default wallet for long. Even if third-party hackers don’t successfully invade your account, the site owners could, or even a clever and ruthless employee or insider.

Understand “cold” vs. “hot wallet” storage.

 Remote hackers can’t get into your wallet if the hard drive it’s on isn’t connected to the Internet. Computers can’t talk to each other without a network. To protect your crypto assets from hackers, use “cold storage,” rather than “hot wallet” storage. That is, disconnect the computer or your portable wallet device that physically holds your coin from the Internet entirely.

It may not just be a matter of unplugging a cable. Depending on your device, you may need to disable your WiFi as well.

As long as you keep your cryptocurrency holdings in “cold” storage, outside hackers can’t access it. They would need to physically possess your device. Use “hot wallets” only for the crypto assets you are planning to use immediately.

Use strong passwords

This isn’t an application where you want to use your pet’s name and your birthday. Use a variety of ‘best password’ practices:

  • Don’t use a password that can be easily guessed. Hackers are good at this.
  • Avoid unmodified dictionary words. Hacking tools have these hard coded into them and use these first.
  • Write down your password and keep it in a secure location, away from your wallet. There’s no 800 number you can call to reset your password on these digital wallets, so be sure to keep track of it.
  • Use special characters such as $, %, & or *.
  • Use 15 characters or more.
  • Don’t use the same passwords on multiple accounts. Otherwise one lucky guess from someone who knows you can wipe you out.

Practice sound cybersecurity.

Execute computer security basics to perfection. Install anti-virus systems and use them.

Also, Microsoft and Mac operating systems, because they’re so common, are common targets for hackers. Consider using a more secure operating system, such as Unix, Linux or Qubes.

You may want to segregate your computer activity: Use a single dedicated computer for all your crypto activities, and do all your personal and business computing on another. This helps prevent “leakage” of sensitive information and access, and helps keep your crypto offline in a “cold storage” situation, secure from outside hackers.

Use multi-factor security techniques, such as a combination physical device key and a password.

Encrypt your data. Linux makes it easy using Cryptsetup or LUKS. If you choose to use a PC, consider VeraCrypt. Mac users can encrypt their data using Encrypt Files Pro.

Also, never log onto your cryptocurrency accounts over public WiFi. There are people out there with special “sniffers” looking for just that circumstance.

The NiceHash theft occurred because an employee’s computer was compromised. Don’t let it be yours.

Write down your device’s mnemonic seed.

Any hardware device can become corrupted. Your digital wallet comes with a code called a mnemonic seed. Usually, this takes the form of a series of random words – a password on steroids – that you can use to restore your access to your wallet.

But you’ll need to generate it and store it ahead of time.

When you create a new wallet, your device will give you a list of 12, 18 or 24 random words.

This creates an additional layer of security for your wallet and the information it contains.

It’s a separate thing from your password, though – and for maximum security, you shouldn’t keep your password with your mnemonic seed. Hackers will need both to steal your money.

Keep track of your device.

 If you keep your wallet on your own device, rather than using an exchange default wallet or another device, keep careful track of that device. James Howells of Newport, Wales threw out an old computer hard drive when he was cleaning out his desk, and it wound up in a landfill.

Only later did he remember that that hard drive contained 7,500 bitcoin, which he had bought in 2009 when it was worth next to nothing.

When he tossed it, it was worth $500,000.

It’s worth $48 million today.

Treat your physical wallet devices like you would cash: Keep them hidden.

Be discreet.

Criminals are beginning to physically rob people at gunpoint and forcing people to transfer their crypto assets. A group of four thugs broke into one crypto trader’s house and forced him to transfer millions in crypto assets to untraceable accounts.

Don’t be too public about your trading activities and crypto holdings. Someone knew about this trader’s crypto wealth, or he wouldn’t have attracted their attention.

In another incident in Kiev, Ukraine, Pavel Lerner, managing director of the EXMO cryptocurrency exchange, was kidnapped leaving his office at the end of December, 2017. He was only released after being forced to transfer $1 million in bitcoin to his captors.

Don’t paint a target on your back by bragging about how well your crypto assets are doing, and don’t walk around with all your currency on a single drive in your pocket. Just take what you need.

Mark Silverman is a cryptocurrency writer. Follow him on Twitter @MarkSilverman_

Thinking Beyond Bitcoin – Three Alternative Cryptos With Promise

Bitcoin has had a meteoric rise, peaking at over US$20,000 – and a heart-sickening though widely-predicted fall, closing at $6,487.70 as of 24 October, according to data from Coinmarketcap.com.

The market for bitcoin seems to have leveled off substantially, and though there’s been some interim volatility, things have been quiet since last summer, and nearly flat since early September.

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Yet more crypto assets – competing with bitcoin for limited capital allocation to crypto – seem to be coming online on a nearly daily basis. So far, there are more than 1,600 distinct cryptocurrencies in existence today.

So if you aren’t happy with bitcoin, you have a lot of other alternatives within the crypto asset universe.

Furthermore, the constant supply of new crypto assets would seem to put a damper on future bitcoin demand. Now that bitcoin’s biggest and most obnoxious bulls from the heady days of 2017 have been taken down a peg or two by the rapid selloff early in the year, the market has finally developed at least a modicum of respect for risk.

It’s an important part of growing up.

But even as the realities of the market was popping the egos of the bitcoin fanatics and driving their assets from $20,000 to $6,600 within a matter of weeks early this year, the market absolutely slaughtered a lot of lesser-known cryptocurrencies. Bitcoin was slashed. But at least 800 cryptocurrencies are now dead in the water, worth less than a penny.

Some of them were just bad ideas. A few were outright scams, designed to lure in suckers just wanting to get in on the craze, but who weren’t willing to go through any kind of due diligence process on the currency founders or backers or even the basic rationale for the currency’s existence. One scam alone – an initial coin offering (ICO) called Gizo, cost investors an estimated $2 million when the founders simply walked away with their investors’ money.

EOS

But a few have done very well for those with the foresight or luck to get involved in the early stages. EOS didn’t even exist before July of 2017, and if you got in a year ago, in late October of 2017, you would have bought EOS around US$0.50 each. Today it’s worth more than 10 times that much, currently trading at US$5.37 as of this writing.

This particular currency has promise as a basis for the implementation of smart contracts, and developers took steps to address difficulties in scalability that have been hampering older cryptocurrencies like Ethereum and Bitcoin, according to Coinswitch.  It can also reduce or eliminate transaction costs that are involved in most older crypto transactions.

Monero

Monero, launched in May, 2014, peaked with Bitcoin in January of 2018 at US$434, but has settled in for the moment at US$109, and it’s been in that neighborhood since June. For those who got involved in the spring of 2017, when Monero was trading around $20, they did very well indeed.

For both of these currencies, the key has been to get involved before the hype, and don’t succumb to the urge to buy in when the bulls are running, the amateurs are bragging, and when digital currencies are grabbing all the headlines on the investing talk shows.

In Monero’s case, the currency also had a competitive advantage and a reason for existing that set it apart from other crypto-currencies: The blockchain it was built on is designed to support anonymity. Yes, the blockchain records transactions, but effectively encrypts them to make them all but untraceable to government officials and anyone else who might want to track its users down.

The anonymity could also come in useful to corporations and investment companies who might want to commit to transactions in a way that their competitors can’t discern what they’re up to, or to anyone doing business abroad in a foreign country with reasons to fear government interference.

Monero got another boost late last year when a number of prominent recording artists, including people like Dolly Parton, Marilyn Manson, The B-52s and Motley Crüe, announced they would be accepting Monero as payment and even providing discounts on merchandise for Monero transactions.

Monero transactions are considered to be more private than Bitcoin, and transactions tend to close faster.

IOTA

Unlike many cryptos, IOTAs developers aren’t anonymous. It was created by David Sønstebø, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov. It’s a young one, which started trading in June of 2017. It was developed to be a low-to-no friction currency supported by devices in the so-called “Internet of Things.” (IOT = “Internet of Things,” get it?)

Its key advantages: No transaction costs (hence the term “no-friction,” the capacity for offline transactions, and again, unlike bitcoin and Ethereum, infinite scalability.

Investors piled in after reports surfaced that IOTA’s developers had struck a partnership deal with Microsoft. But those reports were wrong, and no such partnership existed. So speculators trying to climb on the bandwagon got stung as prices corrected. And they certainly got stung if they bought in at the speculative peak of the cryptocurrency craze.

But the currency still has promise as the Internet of Things becomes more and more a daily part of our lives.

So unlike many of the 800+ currencies that essentially collapsed to the point of worthlessness over the past few years, Monero, EOS and IOTA actually had some competitive advantages and – critically for any currency – a base of people willing to accept it for goods and services.

All currencies are a matter of faith, after all.

Does this mean these three currencies will appreciate from here? Nobody knows. Those interested in speculating in any cryptocurrencies should carefully assess the unique competitive and practical advantages of any crypto asset, the background and reliability of developers and promoters, security considerations, and perhaps above all else, market sentiment, before getting in.

Mark Silverman is a cryptocurrency writer. Follow him on Twitter @MarkSilverman_