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Daily Byte: Monday, October 29, 2018

By

Frederick

Reese

WriterETHNews.com

Coincheck still in the red post-hack, Coinbase fires 15, Belgium issues new fraud alert, EOS block producer says bitcoin and Ethereum are energy hogs, blockchain film premieres, and Ethereum gets a new best friend.

Here is some of what's happening on Monday, October 29, 2018:

Crypto Exchange Coincheck Reports More than $5 Million in Losses in Q3 2018

The effects of January's $520 million USD hack on the Japanese exchange Coincheck continue to be felt. Per financial results released Monday by Coincheck's parent company, Monex Group, the exchange has endured a 66 percent drop in revenue in its third quarter from the previous quarter.

Monex's crypto assets segment, which consists of Coincheck, reported approximately 315 million yen (approximately $2.8 million) in revenue for July to September – down from approximately $8.4 million the previous quarter. The cost of dealing with the hack increased from $2.3 million in the second quarter to $5.25 million in the third.

The acquisition of Coincheck has, so far, cost Monex about $7.5 million in losses. Monex bought the exchange in April for $33.5 million.

Coincheck has blocked all new user registrations since the hack and has agreed to act on all the action points presented to the exchange in a business improvement order from the country's Financial Services Agency.

"Since the service suspension in January 2018, Coincheck only allowed existing customers to sell their cryptocurrency," the report reads. "This limited revenue stream resulted in segment loss of ¥ 0.6 B. Coincheck has improved in governance, internal control and internal audit, aiming for full service resumption."


Coinbase Moves to Layoff Staff, Despite Expansion Plans

Yahoo! Finance is reporting that Coinbase, the most prominent US crypto exchange, has cut more than 15 staffers, most of them remote.

This comes at a time when Coinbase is preparing to go public, with an announced valuation of $8 billion. Most of the laid-off employees work remotely, with some serving on the customer service team. The acquisition of former Salesforce and Twitter executive Tina Bhatnagar as head of customer service has led to a centralization of the customer support staff at the Coinbase offices. Staff unwilling to relocate were let go.

"We've learned that certain teams who are co-located are more efficient, effective, and happier in their roles," Coinbase said in a statement to Yahoo! Finance. "So moving forward, some teams – including Support, Fraud, and Compliance – will only hire employees into Coinbase offices."

Coinbase argues that its customer service has improved, with its average first response time for emails at under four hours. Coinbase also reports that its telephone response time is under three minutes, with over 90 percent of all cases being resolved in 48 hours.

Handling customer service complaints remains an issue for Coinbase. According to the Consumer Financial Protection Bureau, Coinbase received 1,681 customer complaints for 2018 to date. This is up from 1,073 the year prior.


Belgium Identifies 21 New Fraudulent Crypto Trading Platforms

The Belgian Financial Services and Markets Authority (FSMA) has identified 21 new websites as trading platforms showing signs of fraud. These new additions bring the Belgian crypto blacklist to 99 sites.

The list encompasses websites that are in violation of the Belgium's financial or securities regulations, sites that demonstrated "serious evidence of investment fraud," and sites that have committed "recovery room" fraud. The latter is the defrauding of a fraud victim by posing as a professional who – for a fee – can help recover monies or assets previously loss. The fraudster runs off with the fee, hitting the victim a second time.

The newly added sites are: afaeu.com, bk-coin.com, capital-traders.com, cryptoallday.com, cryptonetto.com, cryptosafe.tech, dca-finance.com, elos-patrimoine.com, finances-markets.com, iminage.com, investissement-crypto.com, kryptonexlabs.com, kryptowize.com, london-exchange.net, lacentraledescryptomonnaies.com, parel-invest.com, positiva-ad.com, save-coins.com, tradabank.com, trade-my-bitcoin.net, and vip-brokers.com. The FSMA notes that there is no supervision of online crypto platforms.

This addition follows a new warning published Friday against crypto fraud. "In spite of prior warnings by the FSMA, cryptocurrency fraud continues to trap ever more victims in Belgium," the warning reads.


Report: EOS Consumes Significantly Less Electricity Compared to Bitcoin and Ethereum

As Ethereum debates the future of its proof-of-work consensus protocol, a major wrinkle appeared in the debate. According to a new report from EOS block producer candidate GenerEOS, EOS utilizes virtually no energy compared to bitcoin and Ethereum.

Using data derived from Digiconomist, GenerEOS determined that bitcoin utilizes about 73.1 TWh per annum. This is on par with the 2017 CIA estimate of the Philippines' electricity consumption. It is, however, just slightly more than one percent of China's annual electricity consumption. Ethereum utilizes 18.96 TWh of electricity per year.

Proof of work requires the repetitive hashing of blocks to properly guess the address of the successive block. As every miner participates in this "guessing game" to claim the new block's reward, this produces many computational cycles worldwide, which has reportedly placed severe strain on local power grids. Several cities have banned mining within municipal limits or have proposed new restrictions, such as higher electricity rates.

According to GenerEOS' calculations, EOS only uses 0.0011 TWh of electricity per year. EOS utilizes delegated proof of stake, which uses delegated block producers to confirm incoming transactions. This reduces the computational workload to confirm transactions.

While the upcoming Constantinople fork will not make Ethereum proof of stake, there is hope in the Ethereum community that the planned transition away from proof of work will be coming soon.


Blockchain Documentary Opens in New York

A documentary profiling blockchain technology had its theatrical release Friday in New York City. "Trust Machine: The Story of Blockchain" is "the first blockchain-funded, blockchain-distributed, and blockchain-focused movie," per the movie's IMDb page, focusing on the evolution of crypto and distributed ledger technology.

Produced by SingularDTV and Futurism Studios, the film is narrated by Rosario Dawson and was written and directed by Alex Winter of the "Bill & Ted" film franchise. Trust Machine points to the 2008 global financial crisis as Satoshi Nakamoto's motivation for developing the blockchain and highlights bitcoin's past involvement with illicit activities as one of the major hurdles still blocking crypto's and blockchain's mass adoption.

As pointed out by The New York Times' film reviewer Ben Kenigsberg, while the film does a serviceable job introducing the concept of blockchain to the uninformed, the film at times undercuts itself:

"[The] arguments contradict one another. (Blockchain means privacy! And also, look at these supermarket shoppers in Jordan who pay with eye scans instead of cash). The film also conflates issues. You can believe that blockchain has potential and still think that Bitcoin is a bubble — as many economists, not just banking executives with vested interests, do."

This is not Winter's first blockchain movie. In 2015, Winter produced "Deep Web," which documented the arrest of the Silk Road's Ross Ulbricht. "Deep Web" was narrated by fellow "Bill & Ted" alum Keanu Reeves.


Hyperledger Fabric Now Supports Ethereum Virtual Machine

In a move that will likely have deep implications for the deployment of blockchain-as-a platform, the IBM-based, Linux Foundation-hosted Hyperledger Fabric announced Friday that it "now supports Ethereum Virtual Machine bytecode smart contracts."

This follows an announcement earlier this month that the Enterprise Ethereum Alliance and the Hyperledger Fabric Consortium would be joining each other's groups as associate members.

Theoretically, Hyperledger Fabric's support of Ethereum contracts mean that Dapps can be written in Solidity that operate on permissioned blockchains. As Hyperledger Fabric is being used as a backbone for many corporate blockchain solutions, this would allow these companies to share data and transaction data between a permissioned and permission-less framework easily.

"Our two organizations have similar objectives, such as broadening and strengthening the community around and the adoption of enterprise blockchain technologies," the EEA wrote about the new partnership. "What we hope to get across to the public is that anyone who ever put a 'versus' between EEA and Hyperledger got it wrong; it's now conclusively 'EEA AND Hyperledger.'"


Be fast, be clever, be wise. Most importantly, be here tomorrow for your Daily Byte.


Correction: An earlier version of this article stated that "Hyperledger Fabric's support of Ethereum contracts mean that Dapps can be written that operate on both blockchains." It has been revised to clarify that Solidity-based smart contracts have been incorporated into the Hyperledger Fabric framework.


Frederick Reese

Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.

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