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Bank Of Hodlers On The Press was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.

Our core philosophy is people over process. More specifically, we have great people working together as a team of high performers. With this approach, we are an extremely flexible, fun, stimulating, creative, and successful organization.

1. Values are what we value

Judgment

• You make wise decisions despite ambiguity
• You identify root causes and get beyond treating symptoms
• You think strategically, and can articulate what you are, and are not, trying to do
• You are good at using data to inform your intuition
• You make decisions based on the long term, not near term

Impact

• You accomplish amazing amounts of important work
• You demonstrate consistently strong performance so colleagues can rely upon you
• You make your colleagues better
• You focus on results over process

Curiosity

• You learn rapidly and eagerly
• You contribute effectively outside of your specialty
• You make connections that others miss
• You seek to understand our members around the world, and how we serve them
• You seek alternate perspectives
• You un-learn quickly when markets and situations change

Courage

• You say what you think, when it’s in the best interest of Vauld, even if it is uncomfortable
• You are willing to be critical of the status quo
• You make tough decisions without agonizing
• You take smart risks and are open to possible failure
• You question actions inconsistent with our values
• You are able to be vulnerable, in search of truth
• You fight despite the difficulty — for every victory, we’re probably going to have 10 losses.

Selflessness

• You seek what is best for Vauld, rather than what is best for yourself or your group
• You are open-minded in search of the best ideas
• You make time to help colleagues
• You share information openly and proactively

Integrity

• You are known for candor, authenticity, transparency, and directness
• You only say things about fellow employees that you say to their face
• You admit mistakes freely and openly
• You treat people with respect independent of their status or disagreement with you

2. High Performance

Imagine if every person at Vauld is someone you respect and learn from

Our version of the great workplace is a team of high performers in pursuit of ambitious common goals aligning with the company’s vision. It is on such a team that you learn the most, perform your best work, improve the fastest, and have the most fun.

To have an entire company comprise of high performers (rather than just a few people) is challenging. Unquestionably, we have to hire well. We also have to foster collaboration, support information sharing, and discourage politics.

Why so insistent on high performance?

In procedural work, the best are 2x better than average.

In creative/inventive work, the best are 10x better than average — so there is a huge premium on creating effective teams comprising of the best people

We focus on managers’ judgment through the “keeper test” for each of their people: if one of the members of the team was thinking of leaving for another firm, would the manager try hard to keep them from leaving? Given our high-performance orientation, it is very important that managers communicate frequently with each of their team members about where they stand so surprises are rare.

Also, it is safe for any employee at any time to check in with their manager by asking, “How hard would you work to change my mind if I were thinking of leaving?” In the tension between honesty and kindness, we lean into honesty. No matter how honest, though, we treat people with respect.

Loyalty

People like loyalty, and it is great as a stabilizer. Team members with a strong track record at Vauld get leeway if their performance takes a temporary dip. Similarly, we ask employees to stick with us through any short-term dips.

But unconditional allegiance to a stagnant firm, or to a merely-adequately-performing employee, is not what we are about.

Hard Workers

Succeeding in a high-performance culture is about being effective, not about working hard. Sustained “B” performance, despite an “A” for effort, gets let go. Sustained “A” performance, even with a modest level of effort, gets rewarded.

Of course, to be great, most of us have to put in considerable effort, but hard work is not how we measure contribution.

Brilliant Jerks

Some teams tolerate them, not us. The value of cost-effective teamwork is too high. Our view is that brilliant people are also capable of decent human interactions, and we insist upon that. When highly capable people work together in a collaborative context, they inspire each other to be more creative, more productive, and ultimately more successful as a team than they could be as a collection of individuals.

Cutthroat attitude

Some cultures allow for hyper-competitive work environments where, when one person or team succeeds, another fails. We’re not about that. The more talent we have, the more we can accomplish, so our people assist each other. Internal “cutthroat” or “sink or swim” behavior is not tolerated. We’re like a pro sports team, not a kid’s recreational team in many ways but one -> Athletic teams have a fixed number of positions, so team members are always competing with each other for one of the precious slots. At Vauld, we believe the more talent we have, the better our odds are at succeeding.

3. Freedom and Responsibility

We’re a company where everyone feels a sense of responsibility to do the right thing to help the company at every juncture. This means taking care of problems, small and large, as you see them, and never thinking “that’s not my job.” We create a sense of ownership, responsibility, and initiative so that this behavior comes naturally.

Our goal is to inspire people more than manage them. We trust our people to do what they think is best for Vauld — giving them lots of freedom, power, and information in support of their decisions. In turn, this generates a sense of responsibility and self-discipline that drives us to do great work that benefits the company.

We love people who are

• Self-motivating
• Self-aware
• Self-disciplined
• Self-improving
• Acts like a leader
• Doesn’t wait to be told what to do
• Picks up the garbage lying on the floor

We believe that people thrive on being trusted, on freedom, and on being able to make a difference. So we foster freedom and empowerment wherever we can.

Instead of a culture of process adherence, we have a culture of creativity and self-discipline, freedom and responsibility.

Our Data

We share documents internally broadly and systematically. Nearly every document is fully open for anyone to read and comment on, and everything is cross-linked. Documents on every strategy decision, on every competitor, and on every product, feature test are open for all employees to read.

You might think that such freedom would lead to chaos. But we also don’t have a clothing policy, yet no one has come to work naked. The lesson is you don’t need policies for everything. Most people understand the benefit of wearing clothes at work.

There are a few important exceptions to our anti-rules pro-freedom philosophy. We are strict about ethical issues and safety issues. Harassment of employees or trading on insider information is zero tolerance issues, for example. Some information security issues, such as keeping our members’ payment information safe, have strict controls around access. Transferring large amounts of cash from our company bank accounts has strict controls. But these are edge cases.

In general, freedom and rapid recovery are better than trying to prevent error. We are in an industry that is rapidly changing, and we have to stay on top to thrive in the long term. Our big threat over time is lack of innovation, so we should be relatively error-tolerant. Rapid recovery is possible if people have great judgment. The seduction is that error prevention just sounds so good, even if it is often ineffective. We are always on guard if too much error prevention hinders inventive, creative work.

Policy for expenses

Our policy is 8 words long: Act in Vaulds Best Interest

What this means:

• Expense only what you would otherwise not spend, and is worthwhile for work
• Travel as if it were your own money
• Take when it is only inefficient not to take and is inconsequential — “Example — printing personal docs and making personal calls using a work phone”

Here are the exceptions to the freedom rules (the only rules)

• Prevent irrevocable disaster — do all that you can to prevent people stealing from us.
• Moral, ethical, legal issues — Dishonesty, harassment are intolerable

4. Resonance with the vision/Deeply moved
by the problem we’re solving

We’re looking for people who have to understand the applications and implications of the bleeding edge of technology — and who get why we’ve set out to create Vauld.

We know we’re solving a significant problem — this has the potential to completely redefine the way people store and grow their money. We want this person to understand why transparency and honesty are the soul of the firm. We want people to know and believe why we’re doing things the way we have.

The difference between understanding and believing is the jump between people’s rationale and people’s emotions & rationale working in tandem. It’s the belief that we stand to potentially help billions of people significantly for the better that gets people to produce moments of brilliance.

The resonance of capability and conviction of the purpose of work is what defines people’s life’s work. We want everyone’s work at Vauld to be career-defining. We are striving to achieve just this.

Values + Responsibility + High Performance + Conviction of their work adding up to something extremely powerful

We might not be for everyone

Being in a high-performance culture is not right for everyone, and that is OK. Many people value job security very highly and would prefer to work at companies whose orientation is more about stability, seniority, and working around inconsistent employee effectiveness. Our model works best for people who highly value consistent excellence in their colleagues.

Summary

• We surround ourselves with stunning colleagues and give them big challenges
• We help each other grow
• We share information openly, broadly, and deliberately
• We facilitate an environment for responsible people to thrive
• We are comfortable breaking hard news and being honest with each other
• We want people to love what they do

And finally, while our teammates are fantastic, and we work together very well, we know we can always do better. We strive to have calm confidence, and yet yearn to improve. We suck compared to how great we want to become.

We want everyone to feel like Vauld is their company — and behave like that.

So, do you want to be a part of our culture and disrupt finance?

WORK WITH US

Culture At Bank of Hodlers was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.

We know we’ve been quiet for a while, but here we are today with some exciting updates for you!

OUR PRODUCT UPDATES

BitGo Integration | 6 New Tokens | All New Design | Updated Referral Program

BitGo Integration

The security of your tokens is our top (TOP) priority, and so, we have integrated with BitGo as a third-party custodian. All your tokens are now stored securely in BitGo

Addition of 6 most requested tokens

We have added 6 of the most requested tokens to the platform. You can now earn interest and take loans against a total of 10 tokens now, with the industry’s leading interest rates

All New Design

This is a big one… We have completely revamped our design, to make your experience seamless and enjoyable on our platform. Do explore our new design and let us know what you think!

Updated Referral Program

Now you can refer your friends, and earn $5 in BTC for every person who joins using your link (and deposits $100). Check out our referral page and start earning!

SOME INTERNAL UPDATES

Seed Funding | New Key Hires

Seed Funding

Funding is crucial for an early-stage company, and we are very happy to announce that we have completed our seed funding round. This gives us a long runway and ensures that we can build out the best experience for you.

New Key Hires

We have made some key hires to our team, so we can iterate quickly and efficiently on our product. We are very happy to have Anjani (Backend Developer), Vignesh (Full Stack Developer), Kora (Product Manager), and Sudip (UI/UX Designer) on our team.

IN OTHER NEWS

APIs for Wallets & Lending | 24/7 Human Support

APIs for Wallets & Lending

We love partnerships, and what says love better than some seamless APIs for our partners… We have built out APIs for Wallets & Lending. The documentation is here, and you can reach out to us if you are interested!

24/7 Human Support

We are live on our chat support 24/7. Facing issues, have some feedback, want to chat about the crypto space? Just reach out to us, anytime.

SO WHAT NEXT?

Metamask Integration | Mobile APP | Hardware Wallets | Bank account transfers | Crypto <> Crypto exchange

We have a lot lined up for the coming months. We are integrating with Metamask and hardware wallets as well as partnering with exchanges and wallet providers so that their users can earn interest. And importantly, we are also going to enable bank transfer in top FIAT currencies for both borrowers and lenders, and bring in Crypto <> Crypto exchange so that you can exchange your tokens while still earning interest.

GET IN TOUCH!

Vote for Tokens | Vote for FIATs | Get in Touch

Vote for the next tokens & FIATs

Token integration is always a continuous process. We are always looking to integrate with new, relevant tokens. So just respond to this post with the token you want to see, and we will integrate the most asked-for tokens in the next iteration.

And as we said, we are going to enable Bank Transfers for the top FIAT currencies. So just respond with the FIAT currency of your choice, and we will make sure that the most requested currency is ready with bank transfer capabilities.

Get in Touch

All our work is done hoping that our customers love the output. So we want to hear what you think. Do get in touch with us to leave feedback, raise issues or simply chat about the product. You can find us at hello@bankofhodlers.com or on Telegram (https://t.me/BankofHodlers). We are here to build better products for you.

Check us out at https://app.bankofhodlers.com/

Until the next update (which shouldn’t be too far :) )

We now have Interest on 6 New Tokens, 100% Insurance with BitGo, an All New Design and lots of… was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Internet of Things

IoT stands for “The Internet of Things” and entails everything that is connected to the internet, but more broadly, it also signifies the communication between devices or machine-to-machine interaction.

Early Iterations

Ever since the industrial revolution, humans have largely reduced dependencies on labor-intensive modes of production by the use of machines for the production of goods, and recently, services. Though the concept of IoT or even the “Internet” wasn’t even a thought in the 1800s, the fundamental concept of machine-to-machine communication was a vision shared by many of the pioneers and inventors belonging to that era.

The telegraph, developed in the 1830s and 1840s, is the earliest known example of a direct line of communication between machines. The telephone was a revolutionary device which allowed people to communicate with each other in real-time and was developed in the 1870s with Alexander Graham Bell winning the patent for it in 1876.

The 1900s ushered in the era of wireless communication with the invention of the radio. The first radio voice transmission took place on June 3rd, 1900.

It wasn’t until the 1950s and 60s that humanity started its push towards global communication with the invention of computers and the internet. The internet was started out by DARPA (Defense Advanced Research Projects Agency) and was called ARPANET in 1969. ARPANET allowed for a connection to be established between four university computers. The idea was to communicate and share computer resources among scientific users in the connected universities.

With TCP/IP protocols being developed in the 1970s, the size of the network was expanded, which had by then become a network of networks. Electronic mail was introduced in 1972, motivated by the need of the ARPANET developers for an easy coordination mechanism. The invention and use of “e-mail” formed the basis of a lot of activities that we see in the modern iteration of the “World Wide Web” which corresponds to the growth of all kinds of “people-to-people” traffic.

By 1985, ARPANET was well established as a technology supporting a broad community of researchers and developers, while also being used by other communities for daily computer communications. By this time, commercial supporters also began supporting the public use of ARPANET, which allowed it to evolve into the modern iteration of the internet.

“Global Positioning Satellites” or “GPS” technology became a reality in 1993 with the Department of Defense providing a stable, highly functional system of 24 satellites. Following this, privately owned, commercial satellites were also placed in orbit. With this, satellites and landlines provided much of the basic communications which formed the basis of what we know as the internet today.

IoT as a Concept

As a concept, the Internet of Things was first officially named in 1999. The term has been used to largely define a huge network of devices (with an on/off switch) that are connected to the internet. Basically, any device that can transfer data across the network falls into the category of the IoT. IoT consists of a gigantic network of internet-connected “things” and devices.

By 2013, IoT had evolved into a system using multiple technologies, those ranging from the Internet to wireless communication, and micro-electromechanical systems (MEMS) to embedded systems.

The Internet of Things provides an endless supply of possibilities in terms of connecting our devices.

The industry is set to grow exponentially over the next couple of decades, with IDC speculating 30 billion connected devices by 2020, and IoT revenues hitting $357 billion by the end of 2019. Bain and Company, a management consulting firm, projects IoT revenues hitting $450 billion by the end of 2020.

Concerns regarding Security and Privacy of Data

Privacy

With billions of devices set to be connected to the internet in the near future, it is only natural to be concerned about the privacy and security of one’s data. Surveillance devices and sensors are becoming more commonplace where thoughts, actions, and behaviors are continuously being monitored with the data being collected by government and private entities. Consumers are kept in the dark about such practices with no way of them being able to avoid it.

Customers are forced to continuously give up their privacy as a result of being connected to the Internet of Things, with the only option in sight for them being switching off their devices. In the recent years, there has been a rise in the number of discussions regarding data privacy and how to protect consumer data, particularly with internet tech giants like Google and Facebook coming under fire for their breach of trust regarding data mining.

Security

Security is a major cause for concern when it comes to IoT devices. With billions of devices being connected to the internet, and to each other, it doesn’t take much for a hacker to access a user’s network through one of those devices.

The Internet of Things makes businesses and institutions around the world vulnerable to security threats. It just takes breaching one device to cause havoc in an entire network. So serious is this concern that the Federal Trade Commission has gotten involved, with them exploring the means of guaranteeing privacy and how security safeguards are being installed in new Internet-connected devices.

Hackers can launch DDoS (Distributed Denial of Service) attacks by infiltrating and leveraging IoT devices, where they can cripple infrastructure and shut networks down. They can compromise gateways to reveal and exploit sensitive personal and corporate information.

The Mirai Botnet DDoS attack was the largest DDoS attack ever and was launched on a service provider, Dyn, using an IoT botnet, made possible by a malware called Mirai. Once the network was infected with Mirai, the computers on the network continually searched for IoT devices where they used default usernames and passwords to log in, and infected them with malware. This led to massive shutdowns across huge portions of the internet, resulting in platforms like Twitter, the Guardian, Netflix, Reddit and CNN going down.

Blockchain and IoT

In the Internet of Things, systems are dependent on architecture that is centralized. Centralized systems will have issues of scalability with billions of devices set to join IoT networks. The centralized nature of IoT systems can expose billions of weak points that can compromise network security. Furthermore, this kind of bottleneck will require third parties to constantly check and authenticate each and every micro-transactions between devices — which will result in it being a tedious and time-consuming affair.

Centralized systems also have the inherent problem of a single point of failure which can be exploited by malicious third-parties that can disable the entire network.

Blockchain technology is a distributed ledger that is secured by cryptography. The underlying principle of blockchain is that you don’t need trust in the system for transactions — or data, in this case — to be validated as a result of there being the absence of a centralized, regulatory authority. Data on blockchains are secure and immutable. There is no single point of failure as millions of nodes are distributed all over the network where data can be transferred on a peer-to-peer network sharing protocol.

Smart contracts are a unique feature in blockchains. Smart contracts allow for the creation of certain agreements that will only be executed once the respective conditions are met. This system can be used when buying products and services where payments will only be authorized when the delivery has been made. In case of a lapse in delivery, no payment can be processed. This feature also eliminates any chance of information altering.

Blockchain has a huge potential in terms of revolutionizing IoT. The Internet of Things can be enriched by providing a trusted sharing service via blockchain technology — where information is reliable and can be traceable.

There are, however, a number of challenges in the integration of Blockchain and IoT:

• Storage and Scalability

In the IoT, devices can generate gigabytes of data in real-time.

Most blockchains are not designed to store large amounts of data like those produced in an IoT. Some current blockchain implementations can only process a few transactions per second, thereby posing another bottleneck for integration with the IoT.

• Security

One of the main challenges in the integration of blockchain and the IoT is in regards to the reliability of the data generated by the IoT. Blockchain ensures the immutability of data, and if the data arriving from the IoT is corrupt, then they stay corrupt in the blockchain. Corrupt data in an IoT can arise from situations apart from malicious ones where the architecture is affected by many factors such as environment, participants, vandalism, and failure of devices.

Apart from those, there are many threats that can affect the IoT such as eavesdropping, denial of service or controlling. IoT devices are more likely to be hacked since their constraints limit firmware updates preventing them from addressing possible bugs or security breaches.

IoT and blockchain integration can also have repercussions on IoT communications. IoT application protocols like CoAP and MQTT make use of other security protocols such as TLS or DTLS to provide secure communications. These security protocols are complex and heavy in addition to requiring centralized management and the governance of key infrastructure.

• Anonymity and Data Privacy

Blockchain technology works on the principles of anonymity and transparency where data is public and can be accessed by anyone on the network. Many applications in the IoT work with confidential data. Blockchains can ensure the security of data, but can public and permission-less blockchains solve for the issue of data privacy in the IoT?

Securing IoT devices such that data is stored securely so as not to be accessed by people without permission is a challenge as it requires an integration of security cryptographic software into the device.

What is IOTA?

IOTA is a public distributed ledger that uses an invention called the Tangle at its core. The Tangle is a kind of distributed ledger based on a directed acyclic graph (DAG). There are no blocks, no chain, and no miners.

Approximately $500,000 worth of Bitcoin and other cryptocurrencies were raised through a crowd-sale to fund IOTA in December 2015. None of the tokens were reserved for the founders, developers, or advisors and all the token supply was issued to the crowd-sale participants. The community, however, decided to support the project by donating roughly 5% of all tokens to the non-profit IOTA Foundation.

The principal functions of the IOTA protocol are to enable a “machine economy” that entails feeless machine-to-machine payments and to provide a scaling solution for the upcoming growth of the Internet of Things.

What is a Directed Acyclic Graph (DAG)?

A Directed Acyclic Graph, or DAG, is a complex data structure that moves in one direction without looping back onto itself.

The graph contains a structure of nodes that are connected to each other with edges. The graph only moves in one direction, meaning it will move from “A to B” but not “B to A”, hence “directed”. The graph doesn’t move in a circular direction either, where moving from node to node along the edges means not encountering the same node twice, hence “acyclic”.

The connected nodes are transactional data and consensus is an intrinsic part of the system. Unlike a blockchain, where consensus is decoupled and requires miners, a transaction on the Tangle must confirm two previous transactions, resulting in a self-regulating, peer-to-peer network.

There are no miners on the network, and a person sending a transaction is required to use a small amount of their computing power to confirm the previous two transactions. This means that IOTA transactions are feeless, regardless of how large the network grows.

As a transaction on the Tangle receives confirmation, and the transactions confirming receive confirmations, the cumulative weight of the initial transaction builds up. As this weight builds, the transaction becomes more reliable, immutable and secure within the Tangle forever.

Advantages of IOTA over Traditional Blockchains

Since IOTA is a graph and doesn’t have chains, blocks, or miners, it supposedly doesn’t have most of the issues associated with traditional blockchains.

• Virtually No Transaction Fees

Making an entry on the Tangle requires performing Proof-of-Work (PoW) on two preceding transactions. There is no gas fee, nor the requirement to tip the miners in order to validate transactions.

• Minute Transactions Made Possible

The absence of a transaction fee means that users can transact as little as 1 IOTA which is currently worth $0.479770. This is in stark contrast to most blockchains that have high transaction fees associated with them.

• Advantage of Scalability

Scalability has been one of the fundamental bottlenecks of most traditional blockchains, where it takes time to achieve consensus by creating new blocks. The Bitcoin blockchain can only handle 4.6 transactions per second, while the Ethereum blockchain can handle 15 transactions per second. By comparison, the Tangle has been seen to handle transaction spikes well into a hundred transactions per second.

• Lightweight Computing

With the Tangle, devices with very low computing power can write on to the Tangle by performing PoW in a reasonable amount of time. This is, perhaps, one of the most important features that lies at the core of the Tangle, and hence IOTA, where setting up and running nodes does not consume a lot of resources (electricity) in terms of computing capacity.

Criticisms of IOTA

IOTA has been the subject of debate since the time of its announcement back in 2015. The discourses have ranged from formal debate to all-out attacks on people, from both sides of the spectrum, i.e the people for and against IOTA.

Nick Johnson, one of Ethereum’s core developers, raised certain concerns regarding IOTA in a blog post published in September 2017. His first criticism is in regards to IOTA’s “lack of good technical judgment.”

IOTA uses balanced “ternary” — a numeral with 3 digits, -1, 0 and 1 — as opposed to a “binary” system on which most hardware and communication networks run. Johnson points out that all of IOTA’s internal ternary notation has to be encapsulated in binary, resulting in significant storage and computational overhead.

“Math must either be performed on individual ‘trits’ or first converted from binary-wrapped-ternary encoding into the machine’s native number representation, and back again afterward — in either case imposing a large computational overhead.”, Johnson adds.

Nick also mentions in his article that IOTA “disregards cryptographic best practices.” In regards to IOTA’s numeral system, he says that it requires IOTA to reinvent basic operations such as cryptographic hashing. This, according to Johnson, violates the first rule of cryptography; don’t roll your own crypto.

Nick cited Neha Narula’s article about “Cryptographic Vulnerabilities in IOTA”, where she pointed out the fact that Curl, IOTA’s self-written hash function, produced collisions when different inputs hashed to the same output.

“Once we developed our attack, we could find collisions using commodity hardware within just a few minutes, and forge signatures on IOTA payments.”, Narula added.

She (MIT Media Lab), along with Ethan Heilman (Boston University), Tadge Dryja (MIT Media Lab) and Madars Virza (MIT Media Lab), informed the IOTA developers, who patched the system. However, she also added that the then current version of IOTA did not have any of the vulnerabilities that they had initially found.

Nick Johnson’s third and most controversial opinion about IOTA is in regards to it “being a bad actor in the open source community.”

He references IOTA’s co-founder, Sergey Ivancheglo’s claims about the flaws in Curl’s hash function being deliberate; “that they were inserted as ‘copy protection’, to prevent copycat projects, and to allow the Iota team to compromise those projects if they sprang up.”

He adds, “It honestly astounds me that anyone would think this justification redeems them; it’s an admission of hostile intent towards the open-source community, akin to publishing a recipe but leaving out a critical step, rendering the resulting dish poisonous to anyone who eats it.”

Billionaire, blockchain thought-leader, author, serial entrepreneur and Bitcoin veteran, Richard Heart had some choice words for IOTA in an interview with crypto-Youtuber, Ivan on Tech.

According to Heart, a DAG is a data structure “that has existed for years and is used in Git.” He doesn’t agree that IOTA is a cryptocurrency, citing the fact that cryptocurrencies have ledgers that contain information in regards to “what private key has access to which public funds.”

He stresses on the fact that a user’s wallet is a collection of private keys that accesses those funds, i.e a wallet contains a user’s private keys. While drawing comparisons to blockchains, he asks whether IOTA has a wallet, with the obvious answer being “no”. He highlights the fact that IOTA, instead, has a “node interface” where users “somehow, magically generate their own keys, that’s very long and only has the number ‘9’ in it.”

His basic arguments are about how IOTA is not a cryptocurrency, expressing extreme disdain for the cryptocurrency and its creators.

Crypto-writer, Andy Octavian, apart from his “10 Reasons why IOTA is a scam”, had this to say about IOTA:

“I have invested a small amount but there is no way of getting it out of the wallet as it’s impossible to connect to the wallet due to “CONNECTION REFUSED”. There are some rumours that this bug is intentionally created by IOTA developers so that they can keep hyping IOTA and the value can’t significantly drop as people can’t withdraw their investments from IOTA wallet. Free transactions, but it took more than 48h before my transaction was confirmed. The reasons why I see people investing in this crypto is that it’s overhyped and no research has been done before investing.”

Legion of Defenders

The crypto-sphere has a vast array of different cryptocurrencies, all designed to solve for specific needs and use-cases and are tied to their respective blockchains. The cryptocurrencies, themselves, each have a dedicated group of followers and proponents that endorse and defend the coins of their choice with communities across all spectrums of the world of social media; on Twitter, Reddit, Facebook, YouTube, DTube, Steemit, Medium, and the likes.

The IOTA community, in particular, is infamous for outing detractors of the cryptocurrency, as well as for getting into public spats with critics and doubters on social media.

A blog website called “Facts About IOTA” has described the IOTA community as being “special” since “they have organized themselves into ‘Evangelist’ networks, as well as ‘anti-FUD’ teams and ‘Counter-intelligence’ accounts.”

The website also created a list of tactics and traits used by IOTA supporters when debating critics. Some of the more severe actions include; threats of doxing/ identity revelation/ gaslighting, attempts at silencing critics by reporting their accounts, and legal threats from the founders. Other concerns have been highlighted in regards to IOTA supporters focusing on the identity of the messenger rather than the contents of their messages, avoiding criticisms, dismissing them outright as irrelevant, justifying their actions as profit-driven, avoiding points being discussed, impersonating accounts to discredit the messenger, sending insults, hate-mail, and personal attacks, among other less savory things.

The bottom of the “Community” landing page on “Facts About IOTA” reads:

“Faced with all these traits and tactics, it is extremely unlikely that someone with legitimate concerns is taken seriously by the IOTA community and their developers since everything is perceived as an attack. While we are sure that cherrypicking, concern trolling, and similar traits shown above are also displayed by those hating the IOTA project, it is not a good sign when the whole community and the Founders themselves engage in the same type of tactics and condone others that do so.”

Avi Mizrahi, writer for Bitcoin.com’s new portal writes, in a post, that though a lot of the startup world is headed by young people bringing a fresh perspective and attitude, “a few appear to completely lack the maturity needed to run a public business.”

“In the case of IOTA, this is exacerbated by sycophants who enable this situation and rather attack critics than have an adult discussion.”, the blog reads.

Mizrahi points out the behavior of the promoters of IOTA, where rather than reflect on the behavior that got them into hot water, they seem to have doubled-down on their efforts to vehemently defend their supported crypto by “embracing an ‘Us vs Them’ mentality. Reporters asking questions, developers objecting to their non-blockchain solution, and former investors with complaints about their funds being stolen; all are perceived only as enemies attacking the group.

Conclusion

The concept behind IOTA seems novel and innovative, especially when considering the shortcomings of traditional blockchains. The raging debates between supporters and detractors show the power and magnitude of a concept such as this. Creating a cryptocurrency that works devoid of a blockchain is truly novel, but how scalable and efficient is such an innovation as of today?

Bitcoin and blockchain technology have been around for a solid 10 years now, and will only continue to grow to a point of mass adoption. The blockchain works on the internet, that is a key fundamental. The Internet of Things is poised to grow massively in scale, where blockchain and IoT are bound to cross paths at some point. The question we need to ask is, “Is IOTA that missing link between blockchain and IoT?”

For all it is worth, we cannot simply ignore IOTA or write it off as another scam. We also cannot afford to stop asking questions as that forms the basis of any kind of progress that might lead to further innovation. The reason that it is so hotly debated in the crypto-sphere, is because it might hold some significance as a concept, even if that concept requires time to come into fruition. However, given that the crypto space is still in the nascent stages of development, the communities within this ecosystem must remain vigilant at all times as such a young and rapidly growing industry can also be home to bad actors that seek to exploit the system for personal gain and leverage.

We may see significant developments in the coming months and years in regard to IOTA. In May 2019, IOTA released “Coordicide”, a tool that will manage transaction security, ensuring that the transactions process and that the same funds are not spent twice (double-spending). This will remove the need for a centralized coordinator in the system, and can be seen as IOTA’s push towards decentralization.

What will the future hold for IOTA? Only time will tell.

This article was written and edited by Rahil Ahmed, Head of Content at the Bank of Hodlers.

About Bank Of Hodlers

Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.

We have recently launched our asset-backed lending product where you can earn interest on your BTC, ETH, TUSD and DAI. You also have the option to borrow DAI against Ethereum. You can sign up to the platform by clicking here: app.bankofhodlers.com/register.

IOTA: Promising or Polarizing? was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.

By Bank of Hodlers on ALTCOIN MAGAZINE

With personal privacy being one of the hottest topics of discussion in the latter half of the last decade, it’s easy to forget just how relatively new this concept really is. The fact that many privacy-related laws in most countries were written before social media websites were even a staple in our everyday lives, is a massive contributing factor to tech companies getting away with extremely unethical practices.

The Cambridge Analytica Scandal And Its Fallout

Then 2018 happened, which was a big year for a variety of reasons and one that forever changed how we view online privacy. The Cambridge Analytica scandal proved to be the biggest scandal in the history of the largest social media company in the world, Facebook.

For the uninitiated, Cambridge Analytica was a political data consulting firm based out of the UK that did something truly horrifying. They harvested the personal data of millions of Facebook users without any form of consent whatsoever, in order to use it for political campaigns. To cut this really sinister, convoluted and long story short, the leaders of the world finally turned their attention towards the pathetic state of data privacy laws that allowed something like this to happen in the first place.

It shook the very foundation of what ‘online data privacy’ meant to the world and the company is still dealing with the fallout and the loss of trust that came with it.

A senator actually told Mark Zuckerberg to his face that, “Your user agreement sucks!”

All of a sudden, online privacy became the top priority for all major social media companies in the world and all of them began the hunt for possible solutions.

Blockchain And Cryptocurrency As A Solution

As long as the main revenue model for Facebook relies on using people’s data for advertising, it can never guarantee that the data of its users will not fall into the wrong hands. Which is why Facebook is planning to use the power of blockchain technology to win back the faith of its users with its data protection promises.

Facebook has been circling around blockchain technology for the past couple of months, and now they are finally ready to go ahead with it, with them announcing the launch of their very own stablecoin — an announcement that was met with mixed reactions from the cryptocurrency and blockchain community.

Some people have taken it as a hint that Facebook is seeking out blockchain for business models outside of running ads and to start generating revenue through a transaction-based model using its stablecoin. It’s going to be rolled out in India first and it would be exciting to see if their plans work or if they end up failing miserably.

Hello “GlobalCoin”

Facebook has announced that “GlobalCoin” will be launched in early 2020, and will be available in close to a dozen countries before the first quarter of next year comes to a close.

Facebook isn’t playing around with their cryptocurrency plans either, they plan on using it to become a powerhouse that manages a large number of payments on a global scale, in a way that no other bank or company has ever done before.

A “Pay with FB” option might soon be on the horizon, according to experts, which will be a solid win for Facebook if it does turn into reality as the number of digital payments is rising exponentially every single year. This will give Facebook a great incentive to move away from advertising and thus it would feel much less inclined to sell off users data to make money.

But There’s More

“GlobalCoin” is not the only way Facebook is looking to use blockchain technology in order to further secure data or its users. According to reports, Facebook is planning something truly revolutionary. Facebook is trying to figure out a way to integrate blockchain technology into its user login and post sharing system.

If it turns out to become a reality, it will the biggest change to Facebook’s core in over a decade and it will definitely bring the interest of other big tech corporations to an all-time high.

While Facebook reported that it already has a 40 people team working on this project, there is no official word of confirmation that this is what they are working on. If successful, a blockchain based login and data sharing platform will definitely be a big step in winning back the good-will it drastically lost because of the Cambridge Analytica scandal.

This article was written by Haroon Beg. (The views and opinions expressed in the article are solely the author’s and does not necessarily represent any of the actual entities mentioned above)

About Bank Of Hodlers

Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.

We have recently launched our asset-backed lending product where you can earn interest on your BTC, ETH, TUSD, and DAI. You also have the option to borrow DAI against Ethereum. You can sign up to the platform by clicking here: app.bankofhodlers.com/register.

Altcoin Magazine

What Are The Implications Of Facebook Using Blockchain Technology? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

With personal privacy being one of the hottest topics of discussion in the latter half of the last decade, it’s easy to forget just how relatively new this concept really is. The fact that many privacy-related laws in most countries were written before social media websites were even a staple in our everyday lives, is a massive contributing factor to tech companies getting away with extremely unethical practices.

The Cambridge Analytica Scandal and its Fallout

Then 2018 happened, which was a big year for a variety of reasons and one that forever changed how we view online privacy. The Cambridge Analytica scandal proved to be the biggest scandal in the history of the largest social media company in the world, Facebook.

For the uninitiated, Cambridge Analytica was a political data consulting firm based out of the UK that did something truly horrifying. They harvested the personal data of millions of Facebook users without any form of consent whatsoever, in order to use it for political campaigns. To cut this really sinister, convoluted and long story short, the leaders of the world finally turned their attention towards the pathetic state of data privacy laws that allowed something like this to happen in the first place.

It shook the very foundation of what ‘online data privacy’ meant to the world and the company is still dealing with the fallout and the loss of trust that came with it.

A senator actually told Mark Zuckerberg to his face that, “Your user agreement sucks!”

All of a sudden, online privacy became the top priority for all major social media companies in the world and all of them began the hunt for possible solutions.

Blockchain and Cryptocurrency As a Solution

As long as the main revenue model for Facebook relies on using people’s data for advertising, it can never guarantee that the data of its users will not fall into the wrong hands. Which is why Facebook is planning to use the power of blockchain technology to win back the faith of its users with its data protection promises.

Facebook has been circling around blockchain technology for the past couple of months, and now they are finally ready to go ahead with it, with them announcing the launch of their very own stablecoin — an announcement that was met with mixed reactions from the cryptocurrency and blockchain community.

Some people have taken it as a hint that Facebook is seeking out blockchain for business models outside of running ads and to start generating revenue through a transaction-based model using its stablecoin. It’s going to be rolled out in India first and it would be exciting to see if their plans work or if they end up failing miserably.

Hello “GlobalCoin”

Facebook has announced that “GlobalCoin” will be launched in early 2020, and will be available in close to a dozen countries before the first quarter of next year comes to a close.

Facebook isn’t playing around with their cryptocurrency plans either, they plan on using it to become a powerhouse that manages a large number of payments on a global scale, in a way that no other bank or company has ever done before.

A “Pay with FB” option might soon be on the horizon, according to experts, which will be a solid win for Facebook if it does turn into reality as the number of digital payments is rising exponentially every single year. This will give Facebook a great incentive to move away from advertising and thus it would feel much less inclined to sell off users data to make money.

But there’s more

“GlobalCoin” is not the only way Facebook is looking to use blockchain technology in order to further secure data or its users. According to reports, Facebook is planning something truly revolutionary. Facebook is trying to figure out a way to integrate blockchain technology into its user login and post sharing system.

If it turns out to become a reality, it will the biggest change to Facebook’s core in over a decade and it will definitely bring the interest of other big tech corporations to an all-time high.

While Facebook reported that it already has a 40 people team working on this project, there is no official word of confirmation that this is what they are working on. If successful, a blockchain based login and data sharing platform will definitely be a big step in winning back the good-will it drastically lost because of the Cambridge Analytica scandal.

This article was written by Haroon Beg.

(The views and opinions expressed in the article are solely the author’s and does not necessarily represent any of the actual entities mentioned above)

About Bank Of Hodlers

Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.

We have recently launched our asset-backed lending product where you can earn interest on your BTC, ETH, TUSD and DAI. You also have the option to borrow DAI against Ethereum. You can sign up to the platform by clicking here: app.bankofhodlers.com/register.

What are the implications of Facebook using Blockchain Technology? was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.

Stablecoins

Blockchain technology and cryptocurrency set the stage for massive disruption in banking and finance by providing an efficient and improved payments system which is said to be secure, transparent and fast with decentralization being the forefront — the absence of middlemen or regulatory authorities in the network.

However, Bitcoin and other cryptocurrencies are digital currencies with their values being based on, mostly, speculation. This means that although Bitcoin and most other cryptocurrencies are created for more secure transactions, their values highly fluctuate on a daily basis. You could amass a fortune overnight only to lose it weeks later. This is a cause for concern among hodlers as it makes cryptocurrencies like Bitcoin and other altcoins unreliable, especially as a mode of payment.

In the last couple of years, stablecoins have been increasingly gaining attention in the crypto-sphere because of their relatively fixed values as a result of being pegged to assets such as the U.S. dollar and gold.

Stablecoins are cryptocurrencies that are collateralized to the value of an underlying asset. This means that the digital coin has many of the benefits of being a cryptocurrency, like transparency, security, privacy along with having the relative stability of fiat money.

Stablecoins have been the subject of many a debate, with one side arguing that the extreme volatility of Bitcoin and some other cryptocurrencies make them extremely unreliable, especially for merchants and businesses. On the other hand, you have the argument that stablecoins are the modern reinvention of the banknote. Further, stablecoins like Tether don’t really solve for currency risk as much as they solve for liquidity.

Tether (USDT)

Tether or USDT is a cryptocurrency — a stablecoin to be more specific — whose value is pegged to the U.S. dollar, where one USDT equals one U.S. dollar in value. The circulation of USDT is equal to the reserves of USD that the Tether organization has in its bank account.

The Mastercoin protocol’s white paper (later renamed to Omni Foundation) was published in January 2012 by J. R. Willet and formed the technological foundation for Tether. One of the founders of Mastercoin, Brock Pierce, would go on to become one of the co-founders of Tether along with Craig Sellars, who served as the CTO at Mastercoin.

Tether first started out as “RealCoin” and was first announced in July 2014 by co-founders Brock Pierce, Reeve Collins and Craig Sellars in Santa Monica. The first coins were issued in October 2014 on the Bitcoin blockchain, using the Omni-layer protocol. In November 2014, an announcement was made by Reeve Collins that the project was being renamed to Tether.

Tether was created because a lot of exchanges were having issues dealing with U.S. dollars. Dealing with U.S. dollars comes with a plethora of bottlenecks like compliance issues, legal issues, KYC and anti-money laundering policies. For that reason, exchanges keep their customer deposits in the U.S. dollar Tether and price their coins in USDT.

The main use case of Tether is that it is mainly used by cryptocurrency exchanges because of being pegged to the U.S. dollar, as these exchanges don’t want to deal with fiat money or actual U.S. dollars due to the regulatory issues related to the United States’ jurisdiction.

The idea behind using Tether is that the users on those cryptocurrency exchanges who trade and pair with USDT, and want to exit the crypto-market, don’t have to transfer their cryptocurrency out of these exchanges. Instead, they can exchange their cryptocurrency for USDT and hopefully redeem their cryptocurrency for the appropriate amount in USD in the future.

According to the Tether website, the platform “currently holds 100% of actual fiat currency and it is in their reserve account.” When people deposit fiat money into their accounts, the company will issue out the Tethers and the currency can always be redeemed for USD in the future.

Issues of Transparency

The real issues with Tether start from the platform’s claim of being absolutely transparent with unaudited details of them having over 2 billion dollars worth of USD in their accounts (along with 14 million dollars worth of EUR). What they want to say is that they have the specified amount of money and that users can redeem their USDT for USD in the future.

A lot of investors and participants in the crypto-sphere have voiced their concerns over the use of Tether, and rightfully so. What if Tether is not holding all that money their reserve account?

In terms of legality, Tether is not a legal tender currency or a financial instrument. The ownership of Tether has no contractual rights, other legal claims, or guarantees against losses. Tether Limited is not a bank and is not required to (and does not) hold its reserves at the Federal Reserve. Tether tokens are not a legal tender currency and are not covered by deposit insurance.

If a user violates any of the terms and conditions stated on their website, they can refuse to issue USD to that user even if he or she has deposited any USDT onto their platform. Tether Limited can basically reserve the right to prevent users from redeeming their Tether tokens, according to their exceptionally well-worded terms of service on their website.

The Bitfinex Conundrum

According to leaked Paradise Papers; in 2014, an offshore law firm helped the operators of cryptocurrency exchange, Bitfinex (one of the largest Bitcoin exchanges in the world) — Phil Potter and Giancarlo Devasini — incorporate Tether in the British Virgin Islands. A lot of critics and users in online communities allege that Bitfinex and Tether Limited are one single entity.

Tether is said to be pegged to USD and it enjoyed relative amounts of stability up until April 2017, when Tether hit its biggest FUD (Fear, Uncertainty, Doubt) wave. Tether experienced an 8% drop in value to 92 cents in relation to USD. The reason for this can be attributed to the fact that Bitfinex had its accounts frozen. This happened because Tether had been processing USD transactions through Taiwanese banks, which then sent the money through Wells Fargo to allow for the funds to be moved out of Taiwan. Tether, along with Bitfinex slapped a lawsuit on Wells Fargo, but the case was withdrawn a week later.

The drop in Tether’s value created a lot of uncertainty as to whether the accounts having USD held by Tether were closed and if that money could be withdrawn. As a result, a lot of people ended up selling their Tether for really cheap. When the values of cryptocurrencies started dropping, a lot of people wanted to use Tether, thereby sending its value up. Fear, uncertainty, and doubt (month-on-month) in regards to Tether have always been related to the solvency of Tether.

Tether & Friedman LLP

Many people in the crypto community wonder whether Tether truly maintains adequate reserves to redeem all the Tether tokens in existence. Following rising concerns among members of the crypto community, accounting and advisory services firm, Friedman LLP, was scheduled to conduct an audit of Tether Limited. In January 2018, it was announced that Tether had ended its relationship with Friedman LLP. Doubts were raised by members of the online community that Friedman had even dropped Bitfinex from its list of clients on its website.

With no oversight or regulation of the company, Tether Limited can essentially issue or mint coins as per its convenience. This is very similar to a centralized bank where they can just print money as and when the need arises. There is no actual transparency or audit issued to the creation of USDT. There has been no audit issued or record of what goes on within Tether Limited, right from its inception, and that is the biggest problem hodlers have with the digital currency.

Tether and Bitcoin’s Price Rise

According to a document published in June 2018 by John M. Griffin, titled, “Is Bitcoin really Un-Tethered?”, the value of Bitcoin surged in 2017 through the use of Tether. In the document, findings showed that 87 hours of trading Tether might have been responsible for a 50% rise in the price of Bitcoin. The paper says that Bitfinex pushed (increased the supply of) Tether immediately after a slump in its price. The pushing of Tether is mainly present in two instances; after periods of negative returns, and the periods following the issue of more tokens.

In March 2019, Tether Limited issued 300 million new tokens in one day. Co-incidentally (or not), this had a massive impact on the value of Bitcoin. Whenever there has been a pump in the minting of USDT, the price of Bitcoin has also surged.

In April 2019, New York’s Attorney General, Letitia James, stated that Bitfinex used Tether to cover up losses of about 850 million USD of client and corporate funds. Until recently, Tether claimed that its tokens were 100% backed by cash reserves, with each token being pegged at a 1:1 ratio to the U.S. dollar. Recently, in 2019, Tether made changes (added) to its original statement to include loans being made to its affiliated companies. NYAG, Letitia James, alleged that “Bitfinex treated Tether’s cash reserves as its own corporate slush fund” and that it was “hiding its massive undisclosed losses and inability to handle customer withdrawals.”

This caused Bitcoin’s price to drop momentarily before surging back up again, as a result of people pulling their funds out of Tether and investing it in Bitcoin. Tether’s value dropped to 90 cents the same day.

Conclusion

As a stablecoin, Tether’s value must always be consistent at 1 USD per coin and should never cross or fall below that specified value. There’s a fear that Tether will crash at some point, and be removed from the market altogether. This can be attributed to the lack of transparency and the frequency of FUD created by Tether. Furthermore, the cryptocurrency space is only poised for more regulation in the future, and Tether will have to be audited at some point.

Tether has been the subject of a lot of controversies right from its affiliation with Bitfinex, to its constant issues related to a lack of transparency and unaudited accounts. Furthermore, fluctuating prices don’t paint a very pretty picture for something that positions itself as a stablecoin, the key word being ‘STABLE’.

What does the future hold for Tether? Only time will tell.

This article was written and edited by Rahil Ahmed, Head of Content at the Bank of Hodlers.

About Bank Of Hodlers

Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.

We have recently launched our asset-backed lending product where you can earn interest on your BTC, ETH, TUSD and DAI. You also have the option to borrow DAI against Ethereum. You can sign up to the platform by clicking here: app.bankofhodlers.com/register.

Tether: The least transparent or customer-centric Stablecoin was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.

However, the disruptive nature of this technology in relation to the economy, as well as financial and banking services created a gap in the mission of bitcoin. This system, over time, has shown a number of merits and demerits — but the mission of bitcoin is facing barriers to ubiquity due to the skeptical nature of various governments, not willing to get onboard with decentralization.

The skepticism can be attributed to:-

Understanding the Content

The blockchain network and cryptocurrency exchanges have their basis in cryptography. Merely trying to understand the processes involved in it can be an arduous task. Imagine trying to incorporate this technology into a larger economic framework based on centralization.

This technology has the ability to cause a paradigm shift in economic and financial services. However, for this technology to be successfully implemented into the larger scheme of things, it is important to get on board with understanding blockchain technology and cryptocurrencies, as a whole — to be able to successfully be used by entities, both people and organizations.

Fear of the Unknown

Banks and other financial institutions charge a high rate of interest on loans, as well as recurring transaction, service and maintenance fees, among other things. These institutions often make high levels of profits, sometimes at the cost of the customer. The 2008 financial crisis gave rise to the need for transparency and accountability, leaving financial experts and academicians to look for a reasonable solution.

Blockchain technology facilitates new and innovative processes that cannot be modified retroactively without being verified by a majority of the network. This provides a considerable amount of transparency and operational efficiency to users. It also eliminates the need for intermediaries charging high transaction fees, which generally increases the time taken to execute transactions.

Banks and financial institutions are the backbones of the traditional economic structure which a significant part of the world is still dependent on. The move to blockchain technology and cryptocurrency trading strikes fear at the heart of these institutions. Banks generate large amounts of profits from transaction fees and high rates of interests charged on loans. They stand to lose these generated revenues because of blockchain’s decentralized trading on p2p networks.

Ripple’s Entry into this space

Ripple exists to solve these problems posed to banking institutions. It is the third largest cryptocurrency, after Bitcoin and Ethereum. It has a market cap of over $12 billion and trades at around $0.30, as of 30th April 2019.

Ripple is considered to be a digital asset for payment transactions. The XRP token mainly helps enterprises and banks for payment transactions at a faster rate with minimal transaction costs.

Ripple’s model is based on partnerships with banks to solve for cross-border payment issues associated with bitcoin. Its purpose is to solve for the aspect of inflation as a result of fiat currencies being pumped into the economy. It also solves for geographical issues by providing real-time global payments across 27 countries.

Bitcoin’s framework removed the need for centralized banking, for the provision of financial services. The framework shed light on the fact that; While financial services are necessary, financial institutions aren’t.

According to Bill Gates, the principal founder of Microsoft, “We need banking, but we don’t need banks anymore.”

How do you Facilitate Banking without Banks?

I believe we need to find a middle ground between the vision of bitcoin, and the actual prevailing situation of regulatory hurdles, low network hurdles in blockchain solutions, etc. The goal should be to create actual value as a medium of exchange and as a store of value.

There are multiple companies out there that aren’t banks but facilitate banking and financial services. Without a centralized regulatory authority, how does one ensure that customers pay back the amount they’ve borrowed?

The first way to ensure this would be to operate within the banking system itself. If customers don’t pay back the loan amount, it affects their credit scores.

The second way to do this would be to ensure that companies have some security in place, that they can liquidate in the event of a shortage.

The problem with this is the fact that credit score data is subjective, prone to errors and inaccurate. Since it is a subjective parameter, it is not a good metric and hence, it isn’t a reliable one at that. Most people have their credit scores affected due to mistakes. Furthermore, credit score data isn’t the most secure since credit score companies get hacked all the time. For example, in 2017, Equifax had undergone one of the largest security breaches in history where over 140 million users’ data had been stolen by an unidentified thief.

What, then, would be a Viable Solution to Ensure Effective Repayment of Loans?

The first step would be to ensure that the loan is collateralized if they can be. The loan would have to be collateralized against cryptocurrency assets. Assets in the form of cryptocurrencies would replace the funds going out of the company in the form of loans.

The second step is pre-emptive in the sense that customers who don’t own the right assets cannot avail these services.

The collateralized system would be able to give a far better user experience. It would allow a company to be objective in the way they offer their services.

The best sort of collateral would be one where the price can be understood on a dynamic base, where we can understand their volatilities in terms of Loan to Asset Value (LAV). The items that are considered as collateral against loans are equities held in national or international exchanges, national or treasury bonds, and cryptocurrencies.

In regards to equities and bonds, one would need to buy it while operating under stringent rules by the national centralized financial authority, where one can argue that these rules protect the customer- which is mostly true. This, however, defeats the purpose of operating without a centralized authority.

The only logical thing to offer is crypto-backed financial services. It still doesn’t solve for the decentralized approach that bitcoin was trying to foster.

The next best thing is to distribute the firm’s profits amongst token holders, put out the transaction data on the public ledger of the tokens, facilitate these financial services through decentralized applications, and ensure that the firm isn’t the middlemen in any of these services.

This is as close to Satoshi’s vision that can work without having to rely on any particular coin or currency becoming the ubiquitous international one.

This article was written by Darshan Bathija, the CEO and co-founder of Bank of Hodlers.

About Bank Of Hodlers

Bank of Hodlers is a blockchain-based firm focused on providing financial services to those who hold crypto assets. We have recently released our asset-backed lending platform where you can borrow using your cryptocurrencies as collateral, and earn interest on them as well.

If you would like to know more about Bank of Hodlers, and what we are striving to achieve, you can read it here in ‘Inside BoH.’

Banking doesn’t require Banks was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.

But what is the guarantee that the bank manager or your financial advisor has your best interests at heart instead of their own fee and commissions? Your contract explicitly states that they are not responsible for your loss even as they verbally assure you otherwise.

How do you know that the digital assets won’t be hacked or stolen or even taken by fraud?

Governments fall all the time, or change their monetary policies — and your currency today can literally have no value tomorrow. Take, for example, the recent case in Venezuela.

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As of October 2018, Venezuela’s annual inflation rates have crossed 60,324%. This can be attributed to corruption and a collapsing oil industry in the country. The new economic policies brought up by the government haven’t contributed to much, and the inflation rate continues to be on the rise.

How do you know that this will not happen to your country sometime in the future? Every government is one bad leader away from this.

To find out solutions to these issues, we have to dive into the details of how banking evolved.

A Brief on the Evolution of Banking

As early as the 2nd century BC, people who could save money started lending them out to people who could borrow and pay back with interest. Banking as an industry thrived in Italy and grew with the expansion of the Roman Empire.

During the 20th century, developments in telecommunication and computing caused major changes to the way banks operate letting banks dramatically increase in size and geographic spread. Traditional banks started investigating methods of delivering limited online services with the purpose of reducing operating costs.

This led to a lot of online services being made instantaneous. Although this improved transaction speeds and costs, it opened up many vulnerabilities such as hacks, thefts and fraudulent transactions. This is mainly since banks had still retained their basic model of physical transactions. Large amounts of documentation and paperwork were still deemed necessary to rectify and protect transactions. Adding to this, the lack of transparency remained.

Fast forward to 2007, and the banks’ recklessness caused the financial crisis of 2007–2008 forcing the failure of many banks, including some of the world’s largest banks.

The taxpayer bailed out the biggest banks, thus, giving them the status of “Too Big To Fail.” This label gives them the fallback that no matter how irresponsible they are, the citizens of the nation will pay for them to thrive.

The government let the banks live by infusing 1.2 trillion dollars of the taxpayer’s money into a handful of banks and in turn, created the need, wave of innovation and a community for blockchain and the concept of decentralization to thrive.

The Internet of Money

In 2009, something incredible happened, Satoshi Nakamoto released his white paper which removed the need for a centralized authority to facilitate transactions in a purely peer to peer and decentralized fashion and making truly beneficial for every user holding the currency. Bitcoin is the first system of money that isn’t controlled by a centralized entity. It was the first most popular application of blockchain technology.

The highlight of this technology was to create a system operated on ‘trust’ without the need for a centralized authority. Bitcoin, having been built on this framework, removed the need for a centralized bank for the provision of financial services. The framework shed light on the fact that while financial services are necessary, financial institutions aren’t.

Although the technology provides the necessary means to change how banks and financial institutions are run, it is still nascent and very complex for people to actually use. We are still in the early stages of blockchain.

Another major issue is the volatility of the space. The sudden rise and fall in the price of bitcoin and other cryptocurrencies has lured away many potential investors as well as firms from investing in this space. This, in turn, affects adoption, making it difficult for two parties to accept payments and transactions.

The potential of this system to remove the need for banks and governing bodies has made it difficult for bitcoin to overcome regulatory hurdles. Many governments and banks don’t want to let go of the control of funds and, in turn — power.

How do we solve for this?

The way we solve for this is to ensure that there’s a system that works without the need for every entity or person to accept Bitcoin today.

Bank of Hodlers is trying to find a middle ground between the vision of Bitcoin, and the actual prevailing situation of regulatory hurdles, low network effects in blockchain solutions, etc. The goal is to facilitate mass usage of financial services, enabled (and made better) by the Blockchain technology in a decentralized manner wherever possible.

We plan on achieving this by offering crypto-backed financial services that will eliminate inefficiencies and the lack of transparency which comes with central authorities.

Read More about the Bank of Hodlers

1. The Bank of Hodlers White Paper
2. Crypto-Backed Loans
3. Crypto-Backed Cards

We are one step ahead of achieving our goal. We are live with our asset-backed lending platform where you can earn interest on your cryptocurrencies, and take a loan using your crypto as collateral. You can experience our platform here.

Don’t forget to give us your 👏 !

A Story of Money and the Future of Banking was originally published in Crypto Currency Hub on Medium, where people are continuing the conversation by highlighting and responding to this story.

When President Nicholas Maduro announced the launch of ‘Petro’, a new cryptocurrency in December 2017, Venezuelans and crypto fans, alike, rejoiced. According to the government, the coin was meant to supplement the Bolivar as well as help the nation overcome sanctions imposed both by the US and the EU.

Further, details emerged that the coin was backed by natural resources such as oil, gas, gold, and diamonds. The government even went as far as to claim that issuing the Petros could help raise as much as $6bn which could help Venezuela fund part of the country’s obligations. Sources relating to the government cited that Venezuela allocated as much as five billion barrels of oil to back its new form of digital currency.

Additionally, all of these ventures showed promise that international governments were warming towards cryptocurrency and were finally realizing its benefits. However, fast forward to a little over a year and the high hopes that fans of the scheme have long since diminished.

Petro in 2019

Despite the mass publicity and weight of the promises it once held, Petro has had very little to show for its initial hype. The currency was finally rolled out in February 2018 and is estimated to have raised 3.3 billion USD by selling 38.4 million tokens during its pre-sale. According to sources from within the country, state-sanctioned exchange, Amberes, as well as other platforms such as Afx Trade, Bancar, Cave Blockchain, etc. facilitate the trade of the same.

However, the genuineness of these reports has also been highly doubted and it is important to note that no independent audits were carried out to verify these claims. The scheme was also met with widespread controversy and faced international backlash, with the President of the United States, Donald Trump signing an executive order barring any US-based transactions involving the cryptocurrency. US government officials even warned that it was nothing more than a scam by President Maduro to further undermine democracy in the politically unstable nation.

Furthermore, the structure of the coin was regarded as highly complex and vague from the very beginning with the white paper of the currency initially stating that the currency would be based on the Ethereum platform while actually changing to NEM during the actual launch. Petros were also designed to be solely pre-mined by the government, which means that no new coins can be created upon its final issuance.

Additionally, while it is legal in Venezuela to utilize Petro for virtually any payment in a large number of sectors, as per multiple reports on the matter, no one has actually been able to purchase any form of goods and services with the currency. These factors combined with unexpected shutdowns of the platform led prominent economists and experts on the matter to brand it ‘a blatant scam.’

According to Bloomberg, various sites such as ICOindex, Cryptorated, and ICOreview who are regarded as important players in the crypto rating market either gave the coin negative reviews or failed to even rate it at all due to its status.

It is safe to conclude that the Petro is a poor example of a digital coin being adopted by a government and cannot even truly be regarded as a cryptocurrency, but merely a ploy to leverage the blockchain hype. While the negative coverage has not stopped President Maduro’s efforts to generate publicity for the coin, with the government going as far as to approach several exchanges to make it tradable, the coin is widely regarded as fraudulent and useless in the crypto community.

Despite these disappointing factors, there is still hope for formal adoption of cryptocurrency around the world, with skeptics slowly warming to it. However, the example of Petro in Venezuela is daunting enough to crash the dreams of even the most seasoned investors, especially with the number of ICO scams running rampant in recent times. Hence, despite all the promises of a new dawn, only time will truly tell whether cryptocurrencies will be recognized and used internationally for transactions on a global scale.

Will cryptocurrencies be adopted by governments in the near future? Can measures be undertaken to restore widespread faith in ICOs and prevent situations like the Petro Coin in the future? Please let us know your thoughts and views on the matter in the comment section below.

This article was written by Noah Adrian Burges.

(The views and opinions expressed in the article are solely the author’s and does not necessarily represent any of the actual entities mentioned above)

About Bank Of Hodlers

Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.

We have recently launched our asset-backed lending product where you can earn interest on your BTC, ETH, TUSD and DAI. You also have the option to borrow DAI against Ethereum. You can sign up to the platform by clicking here: app.bankofhodlers.com/register.

The Reality of Petro in Venezuela was originally published in Vauld on Medium, where people are continuing the conversation by highlighting and responding to this story.