Merklion Agency

We share insights & agency-side experience of running ICOs.

Airdrop evolution

The airdrop buzzword can be heard numerous times nowadays. Airdrop itself is a popular approach to give away the token to the community.

Airdrop is a popular way to distribute project tokens to the community. So popular that sometimes leads to congestion in the network Ethereum and important commissions in transactions. More recently, this mechanics, which was used to vote on the stock exchange FCoin, has led to sad consequences for the entire network of Ethereum itself. A suitable algorithm allows solving several problems of smart contracts, which operate with extensive lists of users’ addresses. The fact is that putting into the contract a list of even a few thousand addresses and letting this set of addresses do something directly in the contract will not work – in the block, every byte is saved and this is too expensive.

To solve the problem, it is necessary to determine whether the address belongs to the list of “white” addresses in the contract code. If yes, then allow the desired action. The proposed option will enable to solve this problem quite merely by keeping only one number in the contract. The algorithm of brilliant cryptographer Ralph Merkle is widely used in virtually any decentralized software to ensure the integrity of data sets.

Airdrop & ACL

There is such a practice – to release your token and send out its small amounts to tens of thousands of addresses, for which there is, for example, at least 1 ETH. Such spam is extremely popular now to promote your own projects tokens. Few people like the appearance on their balance of someone’s unknown tokens. Nevertheless, the projects need this, and orders for airdrop are prevalent. This is usually done in an old-fashioned way, like this (in the example of Ethereum, but other block contracts with contracts, EOS, for example):

  • Create an address where enough tokens are stored for distribution to all from the list, or they provide in the token contract the ability to create (mint) the required number of tokens to the specified address (when sending the transaction from a particular privileged address);
  • Put on this address is enough Ethereum, enough to pay for the commission for each shipment of tokens to the user;
  • Run a distribution script that iterates through the addresses and for each creates a transaction that transfers (or toms) tokens to the specified address.
    That is, it’s just a pass on the heap of addresses and sending tokens to everyone. In decentralized systems, this push strategy is usually pretty lame, expensive, generates security holes, and generally, it’s spam.

On the commission takes much money (the more addresses, the greater the commission). Besides, at the time of mailing the commission can grow, because the load on the network grows, the cost of the transaction grows too;
Mailing requires writing a script that will send transactions, and the script contains a secret key that gives access to a heap of tokens;

Mailing must be programmed and be able to continue from the place where everything has broken down.

At the same time, the solution is much simpler, which, as is the case in decentralized networks, most of the work is delivered by the software on the client side. This is access control using the Merkle tree – an incredibly convenient data structure to store in the contract only one fixed-size number (merkleRoot), which contains information about all the data included in the tree (about a massive list of recipient addresses, for example).

There is no magic here: information proving that the address is present in the list of allowed, client code provides independently, doing relatively voluminous calculations, and eliminating the need to view a huge list of addresses. The structure of the Merkle tree is extremely useful for a variety of tasks.

So, this algorithm is suitable for creating huge ACL (Access Control List), which allow you to give access to some function of the contract to millions of accounts. To do this, you need to write down a single number in the contract to verify that the account belongs to the list.

Consider the scheme with airdrop, because it is now in high demand on the market and is a demonstrative and straightforward example of smart contracts with large ACLs.

In general, Merkle-proof can be described as “the path that can be traversed from the user’s address in the Merkle tree to Merkle-root itself.”

The Merkle-proof proof consists of log₂N hashes (rounded up to the whole). Each hash is the same size as Merkle-root, which we recorded in a contract-airdrop. That is, for a list of 1024 addresses, the user must provide 10 hashes, and for ~ 4 billion addresses – only 32 hashes. It is in the protocol of construction and presentation of evidence that the main “counter” of the contract hides – the storage of the minimum amount of information to determine the belonging of some data to an extensive list. Also, the more the list is, the higher the gain.

In reality, the contract is supplemented by the ability to take unused tokens, update Merkle root and enter time limits, for example, to prohibit the release of tokens after some time. The contract is quickly updated to distribute an arbitrary number of tokens to each address, in this case, the file contains not just the recipients’ addresses, but also the necessary sums of tokens, and the merkle-proof function is slightly modified, but the general algorithm does not change from this.
Advantages and disadvantages of Merkle-airdrop.

Separately, one can distinguish the advantages and disadvantages of the above method in comparison with the traditional script distribution:

Pros:

The transaction that requires tokens costs little gas, and this number is a constant, depending on the size of the “white” list;
After the launch of the contract, it does not require the slightest support, and all activity is provided by users;
Allows you to work with lists of almost arbitrary size with a minimum consumption of storage block.

Minuses:

It is necessary to spread the public address list somewhere;
The client code needs to see all the addresses in the “white” list and execute a fairly resource-intensive code.
In this algorithm, there are no secrets, such a payoff from the memory of the contract is generously “paid” for the work of the code on the client side to verify the membership of the list. This approach demonstrates very well the difference between the models of using smart contracts in comparison with traditional centralized systems.

The traditional distribution of tokens by the script in response can be countered only by a simple and understandable scheme of work. Moreover, the efforts of the programmer to run ordinary airdrop at times exceed the efforts for laying out the Merkle-airdrop contract, the launched script should be monitored so that it does not fall off in the middle of the list so that it does not run out of funds for commissions for transactions, make sure that no one stole the key with which the script signs transactions. Plus, if you have a file with addresses, you really do not need a programmer-it’s extremely easy to implement such a contract through public services.

Features of the implementation

In addition to the basic smart contract, the full DApp for Merkle-airdrop has some features in the implementation. In the Merkle-airdrop scheme, a significant amount of work is assigned to the code in the user’s browser, for example, building Merkle proof, for which you need to run through the entire address list. The list of addresses should be stored somewhere, and for the user, it should be no more difficult than uploading the file to the server.

Conclusion

The main “advantage” of the traditional distribution of tokens on the list is that this scheme allows you to cast tokens even to those who do not want it. There are also special perversions when you can send out tokens so little that the exchange does not even allow you to make transactions with them, and users are forced to watch these “scraps” on their addresses without being able to get rid of them.
The problem of airdrop, when the company distributes part of the system tokens in the community, is of course extremely important for the development of projects. However, such a decision is unfriendly to users and inefficient in general. So in general, smart contracts tend to gravitate towards the concept of “pull” rather than “push,” in which network users are initiators and controllers of business processes, and stories, when someone centrally imposes something on tens of thousands of users, gradually the past.

Top Cybersecurity menace

What represents the most terrying things for cybersecurity staff?

No doubt, the greatest threats to cybersecurity is ransomware. Now worth over a billion dollars year (and rising), with attacks like WannaCry and Petya/NotPetya wreaking havoc, every expert worth their salt was planning ways to stay ahead of the hackers.

Anyway, things move pretty quickly in the cybercrime space. Hackers are inventive, ingenious and destructive, always coming up with new ways of pushing boundaries. Ransomware was so last year. While no one will deny it’s still a (massive) problem, other types of cybercrime are beginning to spread like the bubonic plague.
Check out the top five threats keeping cybersecurity professionals up at night right now.

Ransomware

Yes, ransomware is still high up on the list, as this vicious form of cybercrime overtakes systems and locks down computer files with strong encryption. And most businesses end up paying the ransom to get their data back (especially when it isn’t backed up).

According to Peter Tran, Head of Global Cyber Defense & Security Strategy at Worldpay, data manipulation or destruction in the form of ransomware is often the most disruptive and can take out critical infrastructures including healthcare, financial services, and supply chains.

“This is a critical threat as we move toward pervasive hyper-converged mobile, cloud and IoT-based data infrastructures. There’s much more at stake now with modern IT,” he warns.

The Cryptojacking

Spiking by a massive 1,189% in Q1 of 2018, cryptojacking propelled its way past ransomware as the number one nuisance on the block. According to CSO Magazine, what makes this form of cybercrime, so “interesting” is that it blurs the ethical line between everyday internet users and criminals.

In fact, some sites like The Pirate Bay are even using it to replace advertising and earn income. How? As long as you have their site open in your browser, they temporarily hijack your device and borrow your computational power to mine cryptocurrency. As soon as you close your browser, the crypto miner goes away. In other, more serious cases, it infiltrates your system and downloads just like malware.
Since crypto jacking overtakes devices and forces them to mine cryptocurrency, it burns through a lot of CPU cycles. But, unlike DDoS attacks, you won’t see disastrous downtime or funds siphoned off into a criminal’s account. You just get servers pushed to the max mining Monero.

Cryptojacking is more of an irritation than a serious disease. It’s like trying to swat a persistent fly in the outback. In fact, according to Matt Downing, Principal Analyst at Alert Logic, the most worrying thing about crypto jacking isn’t really the crypto jacking itself – it’s the fact that you got crypto jacked.

This highlights a “vulnerability in your system,” meaning that something worse could just as easily have hacked its way in.

Data Breaches

The very word “Equifax” sends a shiver down the spines of cybersecurity professionals, especially if the companies they work for hold sensitive data. In fact, according to research by Norton, 54 percent of US consumers report having had some personal information involved in a breach.

What’s particularly worrying about this is that the data may be sold in stolen data marketplaces on the dark web. Not only do hackers stand to make high profits from this, but they can also gather extra social information they need to hack into more accounts.

Micro Breaches

Oftentimes, cybercrime is aggressive and makes a lot of noise, but this is not the case with what Tran calls “low and slow attacks.” In a type of “micro breach” situation, access is gained slowly and quietly over a period of time by subverting traditional detection methods.

He says, “Lack of visibility or ‘flying blind’ puts security professionals in a constant position of disadvantage… you can’t defend against what you can’t see or detect… that leads to a lot of sleepless nights!”

Internet of Things (IoT) Hacking

By 2020 it is estimated there will be over 20 billion connected IoT devices worldwide. This means the amount of attack vectors significantly increases. “This increases their chances of a successful breach into much larger systems that utilize IoT as their main infrastructure,” Tran advises.

Anyway a bunch of medical devices on the blink and cars crashing into each other?
“Think about it like a hub and spokes on a bicycle wheel,” he explains, “where the hub represents a single IoT device and the spokes all lead to other access points… then multiply that by 20 billion… It’s a lot to monitor for security professionals and certainly will have security pros sleep with one eye open.”

Takeaway

You may have noticed that phishing, cyberstalking, weaponization of AI, and other serious cybercrimes didn’t make a list. There are plenty of other forms of criminality on the web taking place which are keeping our dear friends in the IT department from getting a restful night’s sleep. However, right now, these are the top five on most security professionals’ lists.

Citizenship for crypto

Nowadays, the crypto investors are becoming increasingly difficult to maintain and increase their fortunes seeing how the cryptocurrency is taking an increasingly prominent place in the world financial system.

The actual citizenship for money (including digital) can be issued only in a limited number of countries. In fact, there is a little more than a dozen. Moreover, the opportunity to obtain citizenship for Bitcoins is still available only in one state – legitimately and quickly – Vanuatu.

Over the past years, it has been possible to observe many changes in the offshore, banking, investment, and tax spheres. These changes began to occur especially often with the acceleration of the transition to the era of the digital economy, and also against the background of active Internetization and globalization. Each next change brings with it specific opportunities and challenges. Also, as practice shows, only those who are ready to adapt to these changes thrive.

This axiom is still relevant, including for the crypto-currency industry. More recently, crypto-currency investors began to face a growing “snowball” of changes. Governments are stepping up the onslaught through tax instruments and are trying to regulate the ever-increasing crypto-currency market. In response to these events, prudent investors began to explore the possibilities of tax and offshore planning available to them to adapt to the changes.

Cryptocurrencies are still an exciting component of wealth planning tools for any successful person. In this case, cryptocurrency investors, no doubt, must protect their assets with advanced tax, offshore and other strategies.

Those who conscientiously seek to adapt to changing realities and norms should take a small part of their cryptocurrency wealth and invest in alternative residences and passports to ensure long-term prosperity for themselves and their loved ones by protecting their crypto savings.

As noted above, you can get the same additional passport for Bitcoins. This procedure is legal and debugged. The first cases are already positive.

Why invest in alternative residence permits / PZHM / citizenships? Here are five main reasons why each serious crypto-currency investor needs an additional residence and/or a new passport – preferably in an offshore and/or low-tax jurisdiction.

The direct approach

In April 2018, the Hungarian company Ajax Software LLC presented the world a new cryptocurrency – Citizenshipcoin. It is designed specifically for the investment immigration industry (CBI / RBI / EB5 programs) and is the first of its kind in the market. According to the developers, the use of the new digital currency will allow investors to instantly settle for participation in passport programs anywhere in the world.

To date, digital currencies are not used in the field of investment immigration due to anonymity. According to the idea of ​​the authors, it is Citizenscoin (CTZ) that can, in the long run, occupy a free niche. The creators assure that using the new cryptocurrency will allow conducting financial transactions without intermediaries in the form of banks.

It is expected that payments will be faster, cheaper and more efficient. Developers predict that in the foreseeable future, consulting companies, citizenship specialists, development, and legal companies, as well as authorities of countries that have the opportunity to obtain a passport for investment, may prefer this cryptocurrency as the primary settlement instrument.

However, given the fact that the level of mistrust of digital currencies is growing, and more fake projects are appearing on the network, it is easy to assume that CTZ authors are facing many difficulties in the way of promoting their coins. Those wishing to issue the second citizenship are required to prove the legality of the funds they use for the investment. If we talk about Bitcoins, then it’s difficult to do. Moreover, the government is involved in the financial operation, which currently relies only on banks that are guarantors of the legality of the process.

The introduction of a new instrument for settlements cannot yet be interpreted as something revolutionary in the industry. It is essential to understand and take into account the specifics of the market. In the Caribbean, the introduction of any innovations drags on for years, Europe is also not ready for such radical innovations.

In October 2017, the readiness to sell passports for Bitcoins was announced in the Republic of Vanuatu. This information edition of The Vanuatu Independent was reported by Jeffrey Bond, the head of the Vanuatu Information Center. Relevant information had appeared in many world media.

A week later, the information was disproved. Samuel Garay, acting Secretary General of the Office of Citizenship of Vanuatu, said that payments are still made exclusively in US dollars.

The current situation was interpreted by many as a profitable marketing move aimed at increasing investor interest in the passport program of the Pacific state. Also, this gave its results: among crypto assets owners, the demand for second passports is growing.

Meanwhile, on April 27, 2018, James Harris, VIC Managing Director, informed the Investment Migration Insider that Vanuatu had established a system for accepting Bitcoins as payment for a Caribbean passport. He said that several applications for issuing second citizenship for Bitcoins had already been successfully processed in his department.

According to James Harris, a particular system timeframe has been developed. The foreign investor and the Vanuatu authorities are contacted in real time. The applicant is informed of the cost of the passport in digital currency and gives two hours for the transfer of funds to the specified wallet. The procedure for conversion into US dollars is made after the successful completion of the transaction.

The Carribean factor

The fact that the idea of ​​using cryptocurrency to pay for a second passport is not new, according to information messages from other countries. In 2014, the authorities of Saint Kitts and Nevis were ready to accept digital money from the participants of the passport program. Soon the website of the Government of the Caribbean country published a refutation of this information.

The prerequisite for the release of relevant information was a series of events. In 2014, Arthur Porter was detained for holding illegal financial transactions in Canada, who at the time of his arrest stated that he was a citizen of St. Kitts and presented a Caribbean passport. Shortly after that, the US Treasury Intelligence Department issued a statement that persons who had registered the economic citizenship of St. Kitts were carrying out illegal financial transactions. Quite often, fake pages with the proposal to issue citizenship of Saint Kitts and Nevis in exchange for Bitcoins appear over time.

At the same time, the authorities of Antigua and Barbuda are working to legalize operations with the cryptocurrency within the jurisdiction. Stedra Benjamin, the country’s attorney general, is working on a bill that would allow the digital currency to be paid for a second passport.

In particular, in May 2018 the possible introduction of a new option to participate in the passport program on Antigua was reported on. Investors will be offered to invest $ 150,000 in the construction of a new university in Antigua. According to the information provided on the Coingeek website, program participants who choose this option will be able to pay for the passport in Bitcoin Cash (BCH).

On the official website of Antigua and Barbuda, there is no confirmation of this information. Representatives of local media expressed concern that the cryptocurrency, which was put into operation only in August 2017, was able to win such support from the authorities and expressed doubts about the possible implementation of this scheme.

The second passport and the change of tax residency – the ability to freely dispose of its crypto-currency asset

The issue of citizenship in exchange for a cryptocurrency is relevant for residents of countries in which strict currency restrictions apply.

Conducting an illegal currency transaction fraught with the imposition of an administrative fine, the amount of which can reach 100% of its amount.

For example, earlier you bought bitcoins for an impressive amount, and now you transfer profits from their sale to an account opened in a foreign bank. In this case, the fine can be imposed not only on the income received but also on the entire crypto-currency asset.

Registration of the second citizenship and change of the tax residence permit to carry out tax planning, personally manage the available assets and significantly save on paying taxes on income derived from the implementation of the cryptocurrency.

Is it now possible to buy citizenship for bitcoins or other cryptocurrencies?
To explain why on Antigua reported on Antigua reported on Bitcoins and other types of digital currency do not use investment immigration in the industry is not difficult. Some leading states have banned transactions using cryptocurrency because digital money can be used in illegal schemes and for money laundering – the thing we have outlined several times in our articles. Stay tuned.

Hottest crypto industry women

Many people have a wrong though about the industry of the crypto start-ups and blockchain tech to assume that it’s a male-dominated field.

Of course, there has always seemed to be an apparent domination of the technology space in general by Asian and Caucasian males. Women hardly ever get a look-in. This assumption covers all organizational levels within the industry, from the boardroom all the way up to the tech developers huddled behind multiple monitors and processing units. A look at some of the major conferences, seminars, and sundry gathering of minds in the blockchain space will reveal a startling scarcity of womenfolk.

However, to say that there are no women who are making tangible contributions within the blockchain space would be a false assertion. There are a number of notable women who are actively involved in leading projects that are dominating the blockchain and cryptocurrency industry. These women aren’t just restricted to any specific sub-niche of the industry as they are scattered across many of the functional segments. Some of the biggest ICOs, digital currency payment platforms, and even blockchain tech development firms have been founded by women. Apart from being part of the evolution and development of the industry, many of them play active roles in improving the adoption of cryptocurrency in mainstream commerce. Here is a brief look at some of the notable women in the blockchain and crypto industry.

1. Galia Benartzi (Bancor)

Education and Early Career

Galia Benartzi graduated from the Johns Hopkins University in 2005. After college, she became heavily involved in software start-ups including Mytopia, Founders Fund, and Particle Code Inc. She was the co-founder and CEO of Particle Code until it was sold to Appcelerator in the year 2011.

Exploits in the Blockchain and Crypto Space

Galia has been something of a tech genius and also a consummate professional in the field of Business and Economics. She is the co-founder of Bancor as well as acting as the Head of Business Development for the crypto firm. The Bancor ICO is one of the highest grossing ICOs of all time. The campaign raised $153 Million in funding and has since gone into advanced development stages.

Bancor is focused on the cryptocurrency exchange market and is building a platform that significantly simplifies the process of cryptocurrency trading. The platform will also allow users to create their own tokens which can then be monetized and traded for other established tokens like BTC, ETH, and LTC just to name a few.

2. Meltem Demirors (DCG)

Education and Early Career

Meltem Demirors is an alum of the William Marsh Rice University where she graduated with a degree in Mathematical Economics. She went further after her first degree to get an MBA from the Massachusetts Institute of Technology (MIT).
Exploits in the Blockchain and Crypto Space
These days, Meltem Demirors is a top Director at the Digital Currency Group (DCG). The company specializes in creating and deploying blockchain tech protocols. The company also manages cryptocurrency investment portfolios. Many of her colleagues at the New York-based DCG describe Meltem in glowing words. On the team page of the company website, she is described as being the connection that forms the bridge between the core operating areas of the DCG.
In addition to her role as Director of Development at DCG, Meltem has also been an active voice against the trend of centralized cryptocurrency mining pools, especially in the Bitcoin network. As a believer in the equitable distribution of wealth within the crypto space, she uses her position at DCG to develop investment strategies that help spread the wealth of the crypto industry.

3. Elizabeth Stark (Lightning Labs)

Education and Early Career
Elizabeth Stark is a graduate of the prestigious Harvard Law School. She is also the founder of the Harvard Free Culture Group and an affiliate member of the Harvard Berkman Center for Internet and Society. She spent a considerable portion of her professional career as a professor at both Stanford and Yale. During her time at Yale, she established a program to help students come up with projects that would improve the existing Internet technology.

Exploits in the Blockchain and Crypto Space

Together with Olaoluwa Osuntokun, Elizabeth is the co-founder of Lightning; a start-up that is developing protocols to significantly increase the speed of crypto transactions. She serves as the CEO of the company. The company’s focus is primarily on the Bitcoin network but contributors are welcome to develop protocol layers for other blockchains.
Apart from her involvement with Lightning, Elizabeth has been quite active in the blockchain space in general. She has contributed significantly to the Bitcoin community as is also a fellow at Coin Center.

4. Rhian Lewis (London Women in Bitcoin)

Education and Early Career

Rhian Lewis studied at the University College London. She graduated with Second Class Honors (Upper Division) in Economics. She is a consummate professional in the Engineering and Technology fields with a working career that spans across many different organizations. She has worked at firms like DigitasLBi, AKQA, and Beamly. She is currently a Director at Salvia Media Services where is a tech consultant for both SDET and Blockchain.
Exploits in the Blockchain and Crypto Space
Rhian has been actively involved in improving women participating in blockchain and cryptocurrency. She started the London chapter of the Women in Bitcoin organization along with a group of friends. The organization has grown to include 100 members, many of whom are CEOs and COOs of tech companies. Rhian continues to be an advocate for women participation in the Blockchain space regularly attending and speaking at conferences, meetings, workshops, and seminars.

5. Elizabeth McCauley (Bitcoin Foundation)

Education and Early Career

Elizabeth Ploshay McCauley graduated from Wheaton College in the year 2011. She holds a degree in Political Science. Her early career was spent in Washington where she served as both Intern and Staff Assistant to United States Congressmen.

Exploits in the Blockchain and Crypto Space

During her time serving members of Congress, she contributed to the adoption of Bitcoin in the United States. Such was her enthusiasm that she has come to be known as the “Bitcoin Evangelist.” She utilized her considerable expertise in grassroots activism to bolster the adoption of Bitcoin within the United States.
She is currently a member of the Board of Directors at the Bitcoin Foundation. She is an adviser at both the BitGive Foundation and Coin Congress. Her previous roles include a stint with BitPay Inc. where she worked as an accounts manager.
This is by no means an exhaustive accounting of all the leading female figures in the blockchain space. There are also individuals like Kathleen Breitman (co-founder of Tezos), Maxine Ryan (co-founder and COO of Bitspark), Tavonia Evans (CEO of $Guap), and Elizabeth Rossiello (co-founder and CEO of BitPesa). These women are setting high standards in many areas of the blockchain space and are contributing immensely to the growth and development of the industry.

Crypto cybercrime level rises

We do know that the cryptocurrencies are being used for different crimes and fraud activities. There is no wonder, and it’s almost the common knowledge. Fact is, the very small percentage of users do realize the reason underlying that.

However, understanding the magnitude of the problem and how it affects us as we use the internet is an important starting point.

Earlier this week, the FBI’s Internet Crime Complaint Center (IC3) released their 2017 Internet Crime Report. More than 300,000 consumers reported that they were victims of malware and cyber-fraud attacks last year (with registered losses of over $1.4 billion combined).

The most common types of crimes were non-payment and non-delivery, phishing scams, and data breaches. The crimes that cost the most regarding financial loss were compromised email accounts, investment scams, and non-payment/non-delivery. In all, the IC3 received over four million complaints between 2000 and 2017.

Profitable business

Fact is, that advanced malware protection specialists from Bromium, together with Dr. Mike McGuire, Senior Lecturer in Criminology at the University of Surrey, released a report entitled “Web of Profit” last month. The report digs into the dynamics of cybercrime and looks at how new ‘criminality’ platforms are bringing about a booming cybercrime economy, generating at least $1.5 trillion in illicit profits. In fact, according to their findings, if cybercrime were a country, it would have the 13th highest GDP in the world, comprising illegal online markets, data trading, identity theft, and ransomware.

The CEO of Bromium, Gregory Webb, says, “The platform criminality model is productizing malware and making cybercrime as easy as shopping online… We can’t solve this problem using old thinking or outmoded technology. New approaches to cybersecurity will be required.”

AI blockchained

There are many blockchains and AI startups springing up to fight cybercrime using these new technologies. Blockchain, especially at the application layer, is certainly moving in the right direction by removing easily crackable passwords. Moreover, if AI can be used to help us predict and prevent cybercrime before it happens, that could be the perfect combination.

Scott Schober, author of Hacked Again and President/CEO of BVS, says, “You’re accomplishing things much quicker when you apply machine learning to cybersecurity. You can anticipate and build up your defenses because we don’t have enough manpower to do it. Using AI and machine learning can do everything much, much quicker.”

However, while we can contemplate the uses of new technologies like blockchain and AI to fight cybercrime when it boils down to it, almost all attacks have a common element: human error.

Schober continues, “I think blockchain applied in the right area is definitely going to help secure things, but you can spend billions of dollars in security, you can implement the latest and greatest blockchain to secure things, but blockchain is fundamentally a layer underneath allowing things to happen; it’s not a magic silver bullet to stop hackers in their tracks.”

The Human Element

There are many people making money by preying on unsuspecting internet users. Also, we all know by now the importance of being careful when we go online. We don’t open links from strangers, we don’t download suspicious attachments, and we don’t respond to messages on Skype asking for our bank details.
Most of us have been victims of cybercrime at some point in our lives. It’s not surprising that criminals pick the easiest targets (people over 60, according to the IC3 report). However, even the highly technically minded among us can be affected too. Just look at the continued Binance phishing scams that have duped more than one exchange user.

However, the Schober notes that , the biggest problem in cybersecurity today is people. “We continually fall back to choosing convenience over security… We were lazy with creating passwords, and guess what? It hasn’t changed much today. We don’t take the time to carefully vet what we’re putting out on the internet and then it’s used against us. People are too trusting; we give out information too easily.”
Until we fundamentally change our habits and improve what Schober calls our “cyber hygiene,” all the blockchains in the world won’t be enough to keep our account funds or our identities intact.

So, one should start from himself when thinking about safety in the digital and crypto environment.

The Exchanges hacking – 689% more now

The number of hacked accounts on Bitcoin-exchanges in early 2018 increased by 689%

Right now, the cryptocurrency market situation is undoubtedly not so impressive. Anyway, some time ago the sharp increase in interest in cryptocurrencies led to dozens of attacks on cryptocurrency services. The number of compromised user accounts of crypto-instruments increased by 369% from 2016 to 2017. Moreover, in January 2018, the number of incidents increased by 689% compared with the average monthly indicator of the previous year. The report data was provided by the international company Group-IB, specializing in cyber attacks prevention.

Company experts analyzed the theft of 720 user accounts of the 19 largest crypto exchanges and found that the leaders in the number of cyberattack victims were mostly from the United States, Russia, and China.

Moreover, 50 active botnets, used for cyber attacks on users of crypto-exchange exchanges, had been identified. The infrastructure used by cybercriminals is mainly based in the USA (56.1%), the Netherlands (21.5%), Ukraine (4.3%) and Russia (3.2%).

The report states that the number of malicious programs used by attackers is continually increasing, and the tools themselves are constantly being modified. However, among the most frequently used malicious programs are the AZORult Trojans and Pony Formgrabber, as well as the Qbot bot.

At the same time, researchers add, cybercriminals continue to use tools that were previously used to attack banks, and now successfully use them to crack crypto exchanges, wallets, and gain access to personal user data.

The first and foremost reason for successful theft: ignoring of two-factor authentication, both by users and by the exchanges themselves. The second is the neglect of simple security rules, such as the use of complex and unique passwords for various services. The analysis of the sample, consisting of 720 accounts, showed that one in five users considered the password to be shorter than eight characters are sufficient.

“At the moment, not one crypto exchange, regardless of the scale and duration of the operating history, does not provide absolute security to its users,” the Group-IB experts summarized.

At least five of the 19 exchanges analyzed were victims of targeted cyber attacks: Bitfinex, Bithumb, Bitstamp, HitBTC, Poloniex and, probably, Huobi.

The reasons for the hacking are different: errors in the source code of the program, phishing attacks, unauthorized access to the database of users of exchanges, the vulnerability in the storage and withdrawal of funds. However, all of them are the result of insufficient attention to information security and protection of their digital assets.

The wave-like activation of scammers and the increased attention of hacker groups to the crypto industry, the modification of malicious programs for crypto-currencies, as well as the significant amounts of stolen funds – all these signals that the industry in question is not yet ready to protect itself and its users.

The Group-IB experts suggest that in 2018 the number of incidents will increase, which will require a prompt and effective response from the community, including analysts and scientists.

Fact is that, in March, experts from Group-IB suggested that by the end of 2018 the number of cybercrime in Belarus could grow by 25%.

Speaking about the world scale, the reminder needs to be put – as the worldwide crime scene sees a lot of hacking and fraud regarding the holders of main cryptocurrency and other digital assets owners.

Bitcoin-related crimes – only 10%

The Bitcoin and related cryptocurrencies are being used for different criminal activities all over the world  – little wonder, it’s common knowledge nowadays. Starting from the basic stuff like money laundering and going on to drug and weapon trafficking and so on.

However, the latest report by the US Drug Enforcement Administration (DEA) announced a significant decrease in the use of Bitcoin in criminal activities. As representatives of the agency noted, only 10% of all transactions are related to crime, while their aggregate volume has grown substantially, Bloomberg reports.

As stated by DEA special agent Lilita Infante, over the past five years the number of legal Bitcoin-transactions has exceeded the illegal ones.
“The volume of [transactions] has grown significantly, and their number has also increased. However, in percentage terms the number [illegal transactions] have decreased,” she said.

Such data, Infante said, had been obtained as a result of an analysis of the blockchain data, which DEA ​​started in 2013 after it drew attention to an increase in the use of the Bitcoin in the cases under investigation.
As of today, she says, only 10% of transactions are related to criminal activity; basically the Bitcoin is more used for speculation.

Lilita Infante is also a member of the US Department of Justice’s Cybercrime Investigation Unit. The group consists of 10 people and focuses on the darknet and investigation of cases involving crypto-currencies.
Statements that criminals choose cryptocurrency as an alternative to cash, using it for money laundering and terrorist financing, have long been heard by critics of Bitcoin. First of all, this applies to representatives of central banks, who also regularly repeat the mantra about the “anonymity” of Bitcoins.

The last statement, as is known, is far from the truth, moreover, as Lilita Infante says, even if less liquid coins like Monero and Zcash give more anonymity, its department can cope with this challenge.

“The blockchain gives us many tools for identifying people. Truth be told, I would like that they continued to use crypto-currencies, ‘she added.

Back in July, US President Donald Trump signed a decree on the creation of a working group, whose tasks will be, among other things, the investigation of crimes committed using the Bitcoin and other digital currencies. The crypto industry is mentioned in the context of fraud, the fight against which is one of the priority tasks facing the US authorities.

Time goes forwards, and governmental positions regarding digital currencies are still strict, but the reality check is always useful when making statements about cryptocurrency involvement in fraud and crime activities.

Crypto industry & currency brutal facts

The digital era offers more and more data every coming day, the ways of informational communication become more and more distinguished and sophisticated. Speaking about the security, the more advanced methods are used for protection, the more complex attack tools are used by fraudsters and cybercriminals of the new era to avoid or to break it.

This is not an easy task to stay safe&sound in the modern informational world, let alone the crypto industry itself.

Fact is, the all the data, which is supposed to remain confidential, the personal stuff, they assets and account info – that’s all at stake. The cybercrimes are the more and more often happening, and the forecast is not positive as the industry seems to be only more lucrative over time.

The latest research from RiskIQ does highlight the unpleasant things that are still present though.

Things can really get out of user control

No matter how much efforts one can take into the protection of the customers’ data, the things can always slip away of your control – just like with the MyEtherWallet phishing attack.

With the emergence of the social engineering, the fraudsters become more innovative and creative. Nowadays they can even copy your company – through the website, email, or social media page: all these efforts are to trick the customers and employees into giving away vital information and get the malware installed on their hardware.

It is stated that in just Q1 2018 RiskIQ identified more than 25,000 phishing domains posing as almost 300 brands – moreover, 40 % of them were established in the financial services industry. So, what is the best way to struggle against the phishing? Raise the level of knowledge of your customers, employees, and stay alert – to take the necessary actions to get down the impostor sites down as soon as possible.

The mass attack goes wide

Going on, the RiskIQ states that their company analyzes over two billion HTTP requests every day. Moreover, they deploy web crawling infrastructure that checks terabytes of passive DNS data, millions of SSL certificates, and monitor mobile apps to see how broad the scope of an attack surface really is – or, simply put, how much of an opportunity is there for hackers to break in?

The company analyzed over three million new domains and 77 million hosts that could all be potential targets for a hacker over a two-week period. Since many modern websites share the same frameworks, plugins, and third-party apps, the hacker’s job is even easier. Just as we can create websites faster and easier, so can hackers come up with malicious code to infiltrate them all.

Fact is, one of the most significant vectors is content management systems (CMS) are to attached to WordPress – RiskIQ found that over 13,000 WordPress plugins were among Alexa’s most-visited sites.

Moreover, some 3,390 of them showed critical vulnerabilities running at least one weak web component.

The scale of mobile attack surface is substantial

Most users think of the Google Play Store and Apple’s App Store to be the only mobile app stores available globally. However, there are plenty more of them: a host of affiliate stores serve the Android market, and they can present a wealth of opportunities for bad actors to replace legitimate apps with the fake ones.

Another data from RiskIQ shows an unprecedented 21,948 blacklisted mobile apps, equating roughly to 1.5 percent of all new apps. Almost all of these apps claimed READ_SMS permission, allowing them to intercept messages that could circumvent 2FA.

The best tip could be given – users should always download apps from the primary app stores and be extremely careful when researching the apps they download – if it doesn’t look legit and it’s asking for too much information, it’s probably best to avoid.

Cryptocurrency Miners are set loose

The mining programs and crypto jacking are making the buzz all the time around as more and more computers get infected with the software for mining and lose GPU power as an effect. For example, it is known that more than 50,000 websites have been running Coinhive over the last twelve months – knowingly or otherwise.

Also, there is now an average of 495 new hosts that run cryptocurrency miners every week. Too, even worse than that? Many of the crypto mining scripts found have been active for over 160 days already, meaning companies have failed to detect them.

Hackers may know much more than you expect

Going on, RiskIQ research found that at least 30 percent of companies have more internet assets than they thought. Here counts such stuff as shadow IT, M&As, or a simple lack of organization.

For example, Shadow IT occurs when an IT department outsources for a time and fails to include all internet assets in the company security program. If this happens over a period, it becomes an easy vector for a hacker, since these assets remain unpatched and don’t pass security frameworks.

What is the main reason? Mergers with other companies often lead to this, as the list of assets is frequently incomplete and sometimes chaotic. Internet assets include elements such as domain names, certificates, hosts, and apps.

Still, the modern security strategy for the most companies has shifted to the defense-in-depth approach starting at the perimeter and layering back to the assets that should be protected.

Happy end

In today’s world of digital engagement, users sit outside the perimeter along with an increasing number of exposed corporate digital assets—and the majority of the malicious actors. As such, companies need to adopt security strategies that encompass this change.

The chaotic world of the crypto industry sees many dangers – let alone ICO start-ups which have numerous vulnerabilities as for the investors, and to their creators as well. One should invest as much as possible to security as this present specific danger even nowadays. The existing defensive methods required need to be developed and continuously updated. The things can get out of hand, and harsh pretty fast in case organizations do not take proper attention to assets protection.

Art & Blockchain

The humanity has been producing art of different kinds since the times immemorial. From the simple cave paintings to the works of the Renaissance period – through the centuries, artworks had become more and more distinguished and sophisticated, new genres appeared and mixed, a lot of prominent artists had influenced the entire generations.

Though the nowadays present questionable forms of artworks, the classics are still a top.

Moreover, these days of digitalization taking over literally everything and blockchain technologies getting involved in daily lives.

The question is – how the new form of technology advancement can help with the today’s problems or improve our experience on a specific stage?

One of the latest recent trends is the blockchain – from the collectible and valuable digital kittens and meme trading cards fetching prices of over $100,000 to artificial intelligence (AI) driven artwork, the blockchain technology has now become another art world trend.

Co-owning of the pictures of Van Gogh, Picasso and so on can soon become popular – impressive enough, with the help of blockchain one can touch the eternal without having to pay astronomical amounts of money.

For example, each picture is divided into pieces. Depending on the picture or pieces size, their amount can vary from 1,000 to 10,000,000 or more. The participant of the project can buy any number of pieces and become one of the co-owners of the picture. Imagine that one can visit the exhibition, see the picture and feel closer to the great work of art – the paintings like “Sunflowers” by Van Gogh or “The Night Watch” by Rembrandt? Digital solutions make the classic pieces of art even more accessible to achieve now.

Blockchain art consists of more than just slapping a piece of art online, however. There are a few things you should know about this emerging market and how it’s changing the artwork for the better.

The Art: ways of blockchain use

Among the approaches used by the today’s digital artists, there is a different way of engaging the blockchain into the industry. Some artists produce stuff in which the blockchain is a subject while others are simply using the technology in their creations.

The Art: blockchain-used

However, beyond the collectibles, artists are finding other ways to utilize blockchain technology for their artwork. One example of this is the Scarab Experiment, which combines artificial intelligence (AI) with tokenized memberships to create one piece of art from the combined 1000 submissions of community members. Once submitting the art piece, an investor receives a tradeable Scarab token that gives you voting rights for what artwork the project includes.

The Art: blockchain-based

Although not built with the blockchain, numerous works of art use the technology as inspiration. Recently, the first-ever publically commissioned Bitcoin monument was erected in Kranj, Slovenia. Citizens of the city submitted ideas for the memorial via Facebook, and officials chose Bitcoin because of the region’s ties with the industry.

Going from there, blockchain has also influenced Bitcoin graffiti art, renditions of Satoshi Nakamoto, and even the Last (Bitcoin) Supper.

The Collectibles

Not the least is one of the most popular forms of the blockchain art like the collectibles – the CryptoKitties and Rare Pepe trading cards have garnered a cult-like following.

These digital pieces of art are directly created, stored, and traded on blockchain platforms like Ethereum and Counterparty.
However, the rareness of each collectible is what drives its value and price. You can quickly pick up collectible blockchain art for as little as $5, but some pieces have price tags of over $100,000.

The Art: Verify & Track with blockchain

One of the vital points that rate essential enough is not the creation of art – authenticity approvement of rare things. Due to the conducted research, The Fine Art Experts Institute (FAEI) in Geneva stated in 2014 that over 50% of the artwork that they examine are either forged or misattributed to the incorrect artists. With pieces in the fine arts market selling for tens or even hundreds of thousands of dollars, it’s essential that one buys exactly what they want to.

Similar to blockchain’s use in agriculture and supply chain, one can use the power of public immutability to maintain art’s integrity. Meanwhile, some projects are working to tokenize art provenance. Blockchain art provenance is a method of proving the ownership of original creations via blockchain.

How does this work? Simply enough:

An artist creates a new piece and certifies it with a token on a blockchain.When one purchases the artwork from the artist, they transfer the associated tokens.When one sells the piece, the token are transferred to the buyer.

The token transactions are stored publicly, so the buyer can easily track the entire history of ownership back to the artist. If the token doesn’t originate with the artist’s wallet, the artwork is a fake.

This process can be used for physical pieces of art as well as digital works sd they are easily reproducible, associating them with tokens preserves their rarity which, in turn, retains their value.

The Art: Eliminating the intermediaries

The blockchain art market is best at making middlemen obsolete. Decentralized art galleries are popping up left and right giving most (if not all) of sale proceeds to the artists.

For example,Curio Cards are GIFs and images tied to Ethereum in which artists receive 100% of their sales. Because the cards are on the blockchain, you, as an artist, can choose exactly how many you want to sell. There’s no need to worry about copying, forgery, or substantial fees. This opens up a whole new world of monetization for digital artists.

Even with physical works of art, galleries are using blockchain. Maecenas is a decentralized platform that democratizes fine art. If you’d like to get involved with art investing but don’t have the bankroll to purchase a multi-thousand dollar piece, this platform is for you. On Maecenas, you can invest in a portion of the artwork using the platform’s ART tokens. Additionally, to finance new pieces, galleries can list their artwork to Maecenas users at a fraction of the cost of what an auctioneer or loan would cost them.

The Art: The Blockchain market

If you’re a collector, creator, or just a casual observer, art’s blockchain revolution probably affects you in some way. Even in this rising industry, there are still plenty of ways to get involved and stretch your creative muscles.

Conclusion

Nowadays we witness the widespread of the blockchain which results in the improvement of many existing fields of human activity, opening new horizons while broadening the existing ones and going over the borders with the innovative technology.

Crypto cemetary – Dead ICO number rises

The rising market competition, new world regulations and investor overfed with scam projects and ideas had led to the point that most of ICOs tend to fail more and more times. As the market is already overwhelmed with the blockchain-based solutions and countless fraud attempts looking like the new industry solutions. Due to the latest statistics, there are already more than a thousand cryptocurrency projects that actually ceased to exist.

The analytical data provided by the DeadCoins and Coinopsy suggests that among such projects, ones can be found which show directly no hints of any planned developments or future activity in its protocol. The crypto coin cemetery is filling up despite to the market experiencing a specific cooldown since the last year. The  Dead Coins lists around 800 tokens which are out of the game for now, while Coinopsy estimates that more than 1,000 that had met their infamous fate.

Fewer than 4 percent of ICOs with market caps of $50 million to $100 million was successful or promising, according to a March analysis from ICO advisory firm Satis Group. Most ICOs were raising money without having an experienced development team or an actual product, just white papers studded with promises.

At the moment, the blockchain startups are faring worse than their counterparts in other industries. Going back in the past, in 2013 and 2014 precisely 103 companies received initial seed or angel funding in, but only 28% percent managed to raise additional financing, according to CB Insights’s report. For comparison – that number went up to 46 % of the 1,098 tech companies that raised a second round in the U.S. between 2008 and 2010. Among tech companies, 14 % went on to a fourth round, while only 2 percent of the blockchain companies did, the researcher found.

Such projects as BRIG, for example, represent the pure scam aimed to lure out money from its investors’ pockets. It goes way worse after that with the numerous fraudulent project such as one of the brothers Jack & Jay Brigov and Titanium for a fact. By the way, the latest one is an investigation which is being handled by the Securities and Exchange Commission USA (SEC) itself. Other latest scams worth mentioning are the CryptoMeth, Droplex, OreoCoin, and Roulettecoin.

Noteworthy is the amount of money wasted – the average amount of money stolen or lost due to these ICO projects gets close to several billion dollars of investment.
Even even though up to this points, numerous legislative acts had been issued in many countries, financial regulators which continuously check the issuers of tokens for legitimacy, the overall amateurness of investor’s approach often neglect one basic rule. Before investing in any suspicious activity which requires an initial project analysis at least, try not to invest all the money you have hoping to get huge profits sooner or later by reaching millions of dollars in extremely questionable projects.

Another enormous problems of ICOs are their either incompetent or openly fraud teams. The widespread disappearance of project authors took part quite often last year mostly – after getting the astronomic amount of investment into “innovative projects or platforms” on their assets globally, CEOs one after another started to disappear alongside with their bags of money flying off to offshore zones or private islands, having their future secured and backed by bankrupt investors.
Numerous exciting stories and legends about website malfunctions or the sudden “death” of developers count here as well.

Hackers and cybercriminals represented another common threat, which affected even the decent projects and their teams. That includes the direct strike on initial coin offering campaigns while the token sale stages, wallets and exchanges hits and more, which resulted in both investors and project creators suffering from this activity.

However, earlier this month, SEC chief Jay Clayton said that his agency’s fight against fraudulent ICO is just beginning. At the same time, companies that raise funds through sales of digital tokens should not have any illusions and think that the government will treat them differently than to firms participating in the traditional securities market.

The previous results of the Satis Group study indicated the amount of $ 1 billion collected by the fraudulent ICOs in 2017. Out of the thousands, 271 projects had issues with the White Paper plagiarism, either had employees who pretended to be somebody they are not or had another vicious indicator of fraud activities.
Moreover, an additional study conducted after had shown that only 8% of the tokens after ICO were able to get listed on the well-reputable exchange.

No doubt, we are about to see a lot more abandoned ICO that never make it to exchange and overall ICO investments may become unprofitable. Due to CoinSchedule info, ICOs have raised $11.75 billion only during 2018 up to this point.

ICO start-up: Defining the marketing strategy

Since the last years, the Bitcoin and other popular cryptocurrencies advanced slightly to the moon. So did the new model of fundraising. Back in the days, IPO was the typical way to achieve money for your company or project, but the blockchain technology involvement in world’s processes had influenced and changed that.

Over the few years that caused a global increase to the technology itself as well as to innovative and revolutionary (well, as most of them humbly present themselves) Initial Coin Offering (ICO) projects in different fields. More and more cryptocurrency startups join the race every day, influencing almost every area of human activity as their aim had shifted from tech-only.

As of Summer 2018, the latest researches suggest that the market dynamic is definitely positive. The volume of funds attracted worldwide through the ICO for the first quarter of 2018 was $ 3.3 billion. For comparison, in 2017 with the help of ICOs, $ 6.1 billion was raised due to the ICORating provided data.

Moreover, most researches indicate the usual investment amount made per ICO project is about $1 million.

Anyway, to gather such substantial money one had to come up with the decent set-up. There can be no success without a serious plan with all the competitions present around. We are going to analyze and define the main points to look up when working on effective solutions and marketing strategy for and ICO project.

I. Get tracked on social media

Nowadays, any modern project is hard to imagine without some serious social media engagement. Of course, no need to go surfing through the whole network, but you have to get to of the major resources like LinkedIn, Facebook, and Twitter, which are crucial to promote the business idea and convince potential investors.

Moreover, you need to establish communication and partnerships with social media networks as well. These, however, should be the resources which know how to attracts your target audience. Apparently, the bound between your social media communication and influencers’ word of mouth marketing should be enough to get you more new and fresh leads and create decent publicity.

However, work with the social media marketing is a time-consuming business itself. One can rarely perform such a job in constant 24/7-mode, and in that way hiring a marketing agency for blockchain social media may help for this purpose, which will let your hands-free and let you focus on the things that really matter for your project.

II. Make the Whitepaper right

No doubt, that the Whitepaper is the core element for any startup aiming at ICO. This document will be examined both by the tech professionals with the background in blockchain industry as well as many newcomers who are willing to invest in your perspective idea.

First of all, you need to be transparent and let potential investors know more about the payment methods and the potential return as well as the investment protection mechanism and the commercial policy of an ICO.

Besides, people who invest in a project expect to gain a profit need the explanation of the existing market potential. That way, the investors will get the idea about the approximate investments return in a specified period of time and the token value.
The perfect balance is required here, so you need to work out the documentation which will satisfy both sides. Describe how your product works and what kind of problem it can solve. This is the part where you really need to impress expert investors.

There are some vital elements to look for when preparing the Whitepaper, however:
*The business model explained and detailed
*Working MVP (minimum value prototype) model
*Decent team credentials with bio and links to social network accounts
*Roadmap with actual and real dates
*The overall idea popularity and demand within the market

The post-production Whitepaper audit may also be required to make everything look perfect, and no tricky questions may be asked later. A high cost should not stop you in order to gain the positive feedback afterwards.

III. Build a strong community

Today the army of ICO followers are very keen on engaging in the new projects as they see new opportunities for themselves to get rich by investing, participate in bounty & airdrop programs and so on. You should take advantage of this fact and build a group of digital supporters for your startup. Online forums and social networks are the places where the work should be provided.

That approach may help in getting to know the public opinion, small or significant improvements, or you just will a get hints about the idea how to do your project, or it’s performance better. Interactive threads including chatting with the community may also help.

By production of live blog videos speaking about the campaign details, the developers may add points to their score as many users won’t miss an opportunity to engage in discussions.

IV. Keep up the website updates

After seeing the commercials all around, the official website is the first place where enthusiasts and investors will go, so that needs to be continuously updated and fresh content is required. Don’t hesitate to publish valuable information about the campaign and follow the development through blog posts.

Besides that, you need a special FAQ page to answer the most common inquiries. That goes from the primary explanations for those who invest for the first time, going to more complex and technical-related stuff as well as legislative regulations questions.

V.Target Audience analysis

No matter what project type you are working on at the moment, the target audience had to be analyzed before you begin to work with it, and that goes double for blockchain startups as well.

At first, the marketing strategy should be adapted to the blockchain industry. You need to try to align your strategy with the latest trends in this field and match the taste of key opinion leaders.

Besides that, you should know that blockchain technology is still a new thing, which means that many people don’t do anything about it. Yes, they heard of it before but can’t explain how it works or understand the mechanism behind startups.

In that regard, you need to promote the project in a way that is equally logical both to cryptocurrency experts and amateurs who would like to try their luck in this field. This is crucial because you will hardly ever accumulate enough funds without the participation of both sides. Therefore, marketing communication should be two-fold and aim at these two target groups simultaneously.

VI. Get the Paid Advertising

Undoubtedly, the best way to increase the business revenue is through the native searches, but sometimes it’s impossible to achieve it without paid advertising. You shouldn’t save money on this activity because it will probably bring you a bunch of fresh investors in the early stages of the project.

You can research to find the most popular industry-related forums, web pages, and online communities. This is where serious investors spend much time, and they will probably notice your banners or floating ads.

However, even if you don’t find too many interesting niche-related pages to promote the startup, you can always turn to sites specialized in cryptocurrency topics. There are dozens of high-quality options in that regard, but we strongly recommend checking out pages like Coindesk or Cointelegraph and so on.

VII. Reveal your Team and Advisors

Nowadays, most clients tend not to trust “innovative ideas” that had already brought many people to bankruptcy and only some – to million dollars in their bank accounts. They, however, tend to believe the authoritative people standing behind those ideas. It would be smart to reveal the names and resumes of professionals who develop your startup as the part of your marketing strategy in. These steps can certainly adds credibility to the project and reassure the investors.

Nothing questionable about it: if you are an baker and you don’t know anything about this group of individuals and their key developers, how can you trust them? The people from the business industry will always conduct thorough research prior to making any moves.

In that regard, you need post resumes of all team members on the landing page. Include their academic background, work experience, and previous results in the blockchain industry.

Another way to strengthen the reliability of your staff is to add links to their social media profiles preferably LinkedIn – so that everyone can send them a message to learn more about this startup. Of course, you should not forget other partners like official sponsors or expert advisors.

VIII. E-mailing actually matters

A lot of new entrepreneurs forget that email campaigns still represent a decent marketing tool. You should generate emails from your website and send segmented messages for different types of potential investors. Segmentation is critical – as we explained already, some people know more than others about ICO campaigns, so you need to adapt emails to match their knowledge and interests.

When it comes to the first-time investors, try to emphasize commercial aspects of the story because that’s what they know and want to explore even more. On the other hand, blockchain professionals require expert approach, and you need to provide them with technical explanations. Keep them informed about each phase of the project development, and they’ll be ready to start or keep supporting your project further on.

Considering the given tips one should perform well well launching the project idea. Make sure to follow these or other steps – the main things that matter is the general plan, and its decent execution. Working step-by-step on the project you will be sure that everything is smooth. Knowing how to attract the investor to your project properly you increase the chances of your project’s success greatly. Do not hesitate to fail, but keep in mind the things that matter.

2018   Blockchain   ICO   Marketing   Start-ups   Tips

Alcohol industry blockchainization

Alcohol consumption is as old as the humanity itself. There is no way that the civilization will some time in the future give up this habit. and the history had shown us that the different prohibitions are definitely not a solution.

The humanity drank, drink and will continue to consume alcohol in the foreseeable future. Nowadays, the alcohol industry is growing at an undeniably high rate.

This industry includes bar merchants, suppliers, wholesalers, and producers. Due to QYKBAR’s data, the industry grew to an estimated $1.25 trillion in 2016. Considering its current pace, the production is expected to hit the $2 Trillion mark by the year 2025.

The blockchain technology popularity and worldwide adoption grows and has already been implemented in various fields – financial sector mostly, as well as healthcare, logistics, artificial intelligence, new technologies and developments and much more.

Various issues with providers throughout the supply chain exist as well, and it is currently difficult to establish accountability with so many stakeholders involved.

Nowadays, the blockchain tech approach represents a solution for this crisis in the form of smart-contracts that would serve to stabilize this volatile marketplace. Applying blockchain technology and the use of a public ledger that cannot be tampered with, each link in the supply chain would be held accountable. Improved efficiency and greater transparency can be achieved as the result.

Transactions that are currently subject to currency conversions and delays would take place in the specific cryptocurrency, further streamlining the process.

It seems the time has come to use the technology in the production field – particularly the alcohol industry.

Current attempts to bring the market and production together is aimed for solving numerous existing problems of the market and production:

1) The counterfeit problem. According to various studies, 30 to 60% of alcohol nowadays is fake.

2) The issue of product promotion by manufacturers and the decline in the effectiveness of traditional advertising formats.

Fact is, the 1989 year Directive, which is in full force in all countries of the European Union, restricts the way in which information on alcohol is provided. Some states have imposed a total ban on the promotion of alcoholic beverages in Europe, including France, Norway, Russia, and Ukraine.

3) The problem of vast alcohol range choice for consumers. Also, the consumer does not have the opportunity to quickly get acquainted with the variety and prices in different stores.

Considering these problems, specific steps need to be taken to develop the industry and move it on the next circle of production, efficiency, and security.

The unique encoded NFC-tags used for each bottle and specific blockchain tech may help, as the alcohol manufacturers will be able to protect their products from counterfeits and, as a result, increase their product sales and profits of their company.

The mobile application development will be required to be able to verify the authenticity of the products, obtain information from the moment of production until the goods hit the store, aswell as to track availability and prices in the nearest stores.

Blockchain tech can also help the alcohol manufacturers to directly advertise their products at the time of product selection by the end user, showing any information encoded in an NFC-tag (cocktail recipes, ingredients, production method). Moreover, they will be able to create loyalty programs for their customers, use big data to collect information and get targeted at 1,022 metrics, which will increase sales and increase customer loyalty to its brand.

Providing the platform for consumers of alcoholic products reviews, where they could post & read reviews of other users. The artificial intelligence platform will show recommended drinks based on the user’s preferences and experience. Moreover, the consumers can also participate in vendor loyalty programs and receive a reward either in tokens or fiat currencies for writing reviews of alcohol products, depending on the user’s rating and the number of likes of other users.

The industry market size & future

It is estimated, that the current average consumption rate of alcohol per inhabitant of the planet is 6.6 liters of pure alcohol per year, an average of about 60 bottles a year. World consumption number stands on about 450 billion bottles of alcohol per year. The cost of each NFC-tag is 0.06 dollars. The volume of the NFC-label market for alcoholic beverages could be $ 27 billion per year.

Moreover, the recent research indicates that 55% of the inhabitants of the world used alcohol at least once in their lives. The number of potential users of the system is 4.125 billion people. 5 billion people have mobile phones, 80% of them use smartphones that can read the NFC-tag.

There is a global trend both for the use of NFC-tags (the market grows annually) and for protection against counterfeiting, states are obliged to label their products at the legislative level (Bar-codes, QR codes, NFC tags, etc.). IBM company also announced the development of a chip to protect against counterfeit products in the field of drugs, cosmetics and so on.

The identifier itself (NFC-tag) cannot be faked, as it will be produced at the factory and the information will be encrypted in the blockchain. One label can be used in the blockchain only once.

Current existing and future market solutions

There are already blockchain platforms operating in this field. For example, the “Wabi” in China, which focuses on establishing protection from counterfeit products, but it is aimed at the Chinese market exclusively rather than the whole world. IBM is developing a chip and plans a system of protection against counterfeit products in the field of drugs and children’s products. OinSpase conducts a project to protect against the control of the production of QR codes. VeChain (Singapore) solves the problem of counterfeits of luxury goods and product safety for different companies.

The future steps in the vineyard

The world, however, doesn’t escape lightly as verifying authenticity had become as essential as never before – but on a massive scale.

For example, the sales of Pinot Grigio exceeded the amount grown in the 90’s. So what made up the shortfall? Moreover, there had been recent scandals involving Brunello company. Sadly enough, there are plenty of other incidents occured. Fraudsters substitute cheaper inferior wines, cut them with water or use food additives – including even adding such added dangerous chemicals as Diethylene Glycol and Methanol which actually did kill people.

Nowadyas, one of the latest examples regarding alleged fraud involves the large French wine bottler, Raphaël Michel: Carrefour has canceled their supply contracts. The allegation is that part of this scam included passing off as much as 300,000 hectolitres (over 3m cases) of wine classified as cheap Vin de France as far more expensive Côtes du Rhône and Châteauneuf du Pape.

To avoid this, growers could attach an independent DNA fingerprint, Isotopic data, smart sensor data or chemical analysis to the initial Blockchain transaction executed through the specific smart-contract. However, the verification of wine quality, safety and origins are possible from grape to glass.

Moreover, blockchain is being implemented into many projects related to this field – the bars based on the blockchain, the crypto solutions for alcohol logistics, distribution and so on. Well, the future of alchool industry looks bright and sparkle with the blockchain.

Most known ICO Advisor mistakes

ICO model of fundraising still rates high as the new startup appear on the market and there seem to be no end of ideas fueling the numerous blockchain based-start ups. However, the cryptocurrency market is far from its former heights, and the overall cap state is not astronomically high.

Certain prominent industry hype-trainers like John McAfee claims that the BTC price will touch $500,000 by 2020 and even the ICOBENCH report is optimistic with the prediction of the overall market recovery in early Autumn 2018.

ICO advisor is a person responsible fro project development vector, the one that can help in overall idea development and director, concept creation and expert in a specific industry field. All these qualities make him essential as a team member.

Being a famous industry person or a highly-valued professional increase a chance that a team will use advisor as one of their trumps card and investor’s hook.
Problem is, a lot of start-ups creator did overuse that practice, having attract prominent names just to be listed in the project and without having a direct impact on the development process.

One of other problems is the lack of understanding. The hired professional can be the best marketers, analysts or economists, but when it comes to understanding decentralization, and based on these singular utterances their understanding could be quite limited.

Moreover, right now there is another quite popular rumor on the market – as  nobody is interested in ICO investing anymore and there are days of this idea left to be profitable.

No wonder that over the years of million profits going to the scam projects, the regulation around ICOs has finally tightened and many countries had already made their points clear and issues the policies on so-called ‘utility tokens.’

Nowadays, the tax-havens are tricky topics as continually changing regulations make companies change their location quite often. What seemed to be easy to handle a year or a month ago today represents a stricts laws so what will the next day bring is always a question.

Things is, despite all the fraud, exchange hacks, and increasing legislative bodies regulation attempts, the amount of money in this industry gets higher and higher every year.

Due to the latest statistics, the market dynamic is definitely positive. The volume of funds attracted worldwide through the ICO for the first quarter of 2018 was $ 3.3 billion. For comparison, in 2017 with the help of ICOs, $ 6.1 billion was raised. The well-known rating agency ICORating provided the data.

As for geography – most of the ICOs were conducted under the United States jurisdiction – 59 projects totaled about $ 583.8 million; in Singapore – 34 projects raised about $ 468.1 million, and in the UK 26 projects raised $ 99.7 million. In Russia, 13 projects raised about $ 20.8 million.

During this year, the overall number of non-accredited investors investing is expected to reach the same number as the number of non-accredited investors in equities and other capital market products.

We sold the decentralization protocols to them as the silver bullet that would usher us into the era of equitable wealth distribution. This turned out to be a lie.

Another deal-breaker for the small investor is the terrifyingly frequent pumping & dumping of the market’s unworthy altcoins. Due to many advisor and consultants, specific points should be outlined of what documents should be issued before meeting investors, private or otherwise. If neglecting them, there is a slight chance that not even the best ICO Advisor could help to raise funds.

1) Decent project tokenomics.  While working on this part, specific rules should be followed as well as specific criteria to derive the token price, utility, and the total number of tokens mined.

2) Tokenization plan —  in case of utility token route, one must find out the best fit for tokenization. Most ICOs these days tokenize the access to the platform badly.

3) Working MVP — Most conservative investors whom I reached out to, “I wanna see how much skin do you have in the game.” What I learned from that conversation was that if the ICO had not invested at least 30% of the planned ICO money from their own pocket, investors are not going to like it.

4) A scalable business model —which is strong money attracting plan. However, it is not about appreciation of token utility and burning of unsold tokens. Explain why will people come to your platform and how will you monetize their interest.

5) Investor pitch deck  — An investor pitch deck must definitely have an elucidation of the business model, existing user base, and team credentials. Additionally, it must have an explanation of your product’s features and scalability potential.

6)  Elevator pitch is the thing that most often. It is useful for pitching an idea to the potential investors that you might meet at meetings and seminars etc. It is better to have an elevator pitch and save yourself from explaining the white paper to someone at a dinner party.

7) Team with decent credentials — a great idea and smart contracts are not always enough to present the successful product. Most people look for those team members who have legitimate experience in that particular space. Having a cryptocurrency advisor whose only claim to fame is that they became ‘Experts’ on ICObench does not cut ice with investors anymore. In case with ARK ICO. They have a team that has been in the business of managing seafood logistics of over 50 years combined.

8) Social media traction — if the product is so revolutionary, it must reflect on social media. While a part of your social media outreach can be seeded inorganically, you must refrain from letting it go beyond 20%. There are tools to find out the engagement on social channels such as Telegram, and it will reflect poorly if these reports come out adverse.

9) Practical market strategy —  as investors and buyers have an uncanny ability to fish out the rotten eggs and reject them.

As of Q3 2018, the ICO could not be regarded as a scheme to get easy and fast benefits from as we need to provide much more than the usual white paper to attract funds. One may also have to fork out equity to the private investor if you are really strapped for funds.

For now, there are no magic recipes to win in ICO market ultimately. One has slight chances of failing even with the decent team. If your marketing, product development, and the team credentials are great, you will raise funds.

However, there is no point in going pessimistic with your perspective ICO idea – the history had shown that even in times of hardships and calamity, man has invested, for profit or for fun.

Gangster-powered ICO: Money laundering in blockchain industry

There are endless efforts of how fraudsters lure out the investor’s money. With the digital age, this activity had acquired new trends and options. With the blockchain technologies, the perfect tool for it became to be known as ICO.

Being developed to help provide the funding for the Internet-start ups which used such crowdfunding services as Kickstarter and Indiegogo before with the help of the new elements and securities, and digital money, over time this model began to be overused by criminal of all kinds due to its hype and convenience.

Recently, the news came around about the super-successful ICO of the former member of the Triad of Macao Van “Broken Tooth” Cup-koy. South China Morning Post officially reported that the gaming industry start-up held the initial placement of HB coins collecting $ 750 million within only 5 minutes.

However, 450 out of 500 million HB tokens intended for the general public have been sold, and the total amount of issued tokens is one billion HB tokens will be released.

At all, three events had been arranged by the same person – Wang. Initial token sale stages had been held in such locations as Cambodia, Taiwan, and the Philippines. Moreover, the people invested are known to be the senior government officials, military, celebrities and people in business from mainland China and Hong Kong, and the last round was held in Malaysia.

Also, it is known that the investment company Wang World Hung Mun Investment concluded a partnership deal with the Beijing firm Zhonggongxin Cosmos Internet Technology Limited, which includes, among other things, asset management and construction projects in Russia.

According to rumors, the parent company of Zhonggongxin Cosmos belongs to the state. However, it’s employees, incidentally, give conflicting answers to questions about the owners of the company.

Moreover, it is reported that Zhonggongxin Cosmos engaged in gambling – in online games in poker and chess. The stated prize fund of the tournament is about $ 1.5 million. Interesting is that the payments will be provided in both the traditional fiat currency as well as nd HB tokens. Moreover, it is noted that in China there is no law prohibiting the use of cryptocurrency as a prize.

The suspiciousness is also raised since the HB cryptocurrency is not provided with the tokens source code and detailed information about the technology. At the moment, the HB coin is traded on the Allin (a.top) exchange launched year by the Hong Kong-based All In Group Limited earlier this year.

The person of the day itself, Wan itself, is known as “Broken Tooth,” a former boss of the dominant 14K Triad that has figured prominently in China and Southeast Asia for decades, spent 14 years in a Malaysian prison for his organized-crime activities before being released in December 2012 for several wicked crimes.

The HB cryptocurrency itself is known to be issued by the shady Chinese company World Hung Mun Investment, and that’s to be among the Wan’s property.
Wan announced the new HB crypto coin in a splashy series of events in Thailand, Cambodia, and the Philippines, with a fourth launch-related event scheduled for Malaysia early this week. Wan’s company plans to sell a billion of the HB coins, which will also be used as the framework for online-gambling offerings. The company plans to pay the winners of its live poker and chess events either entirely or in large part with the HB coin; some smaller portion of the prizes may be paid in cash as well.

The companies’ plans for live poker and chess tourneys throughout China is slated, to begin with, a major poker event in the Chinese city of Hainan this October. That initial event was announced by Zhonggongxin Cosmos (Beijing) Internet Technology Limited, or Zhonggongxin Cosmos, for short, which also announced a deal with Wan’s World Hung Mun Investment a few weeks back. Zhonggongxin Cosmos’s back.

However, exactly how all this online crypto and online/live gaming events will work out in the wake of China’s recent ban on all Texas Hold’em smart-device apps remains to be seen. Oddest of all in this strange tale is that Zhonggongxin Cosmos appears to be claiming at a deal with China’s government to allow these events to proceed.

On its website, Zhonggongxin claimed to be reporting directly to an advisory committee under the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) called the Advisory Committee on the Management of Financial and Energy Resources and Capital.

No matter, what the Zhonggongxin Cosmos’s true nature is, the whole deal looks like a big-time criminal scheme. The HB is already regarded as “suspiciously vague” cryptocurrency, and the existing code gives no idea of how many coins are created.

The launch and gaming tours are also receiving pushback from many of China’s regulated gaming firms. According to Su Guojing, the founder of the China Lottery Industry Salon, “When chess and poker games are paid with tokens such as cryptocurrencies that can be converted to fiat currencies, it becomes a disguised form of gambling in China.”

Moreover, the suspicions regarding the operations to be the money laundering are going to arise due to how the money transfers within the crypto’s exchange framework will occur still a question.

How to return ICO investments?

Being an ICO investor is a tricky thing – no matter how good at digital economics or how smart you are, lack can eventually run out. Nowadays, according to various estimates, fraudulent ICOs activity had brought their creators from up to $ 1 billion incomes of dirty money.

For now, there are different examples when the fraudster ICO organizers got eventually busted and brought to justice. The US SEC is among the best performing in this area up to date.

It is known that in 2017 the founders of the Munchen project were forced to return $ 15 million to investors after the SEC investigation. Moreover, In early April 2018, the organizers of ICO “Centra” were arrested – that one which managed to raise $ 32 million. The SEC especially, in particular, indicates that the founders of the project promised to invest in creating a debit card, which will be supported by Visa and MasterCard payment systems and will allow you to convert cryptocurrency into fiat money easily.

However, the investigation showed that the project had no relationship with cooperation either with Visa or MasterCard firms. Another fine example is from Canadian origin, where the court sentenced the organizer of Plex Coin ICO Dominique Lacroix to two months in prison and a fine of $ 10,000, and the company PlexCorps he founded – to a fine of $ 100,000. The SEC had done a good job here, no wonder.

The latest statistics show, that SEC is very active in the ICO field, but outside the US authorities are not yet successfully combating fraudulent crypto projects. Fact is, the needed ultimate legislation rules are still not established worldwide which makes the prevention of fraud a tough task to accomplish.

Nevertheless, there is still a set of legal instruments, and the necessary steps exist aimed to protect your rights and investments and not to become a victim or consider that the company does not fulfill its obligations for some reason. In fact, for most investors, it does not matter why they lost money in the first place – deception or because of the useless work of the organizers of the ICO. It is essential for them to return the money or at least part of it.

What to do before going to court or police?

In case you think that you have been deceived and want to start an actual case:
First, you need to collect the maximum amount of evidence available to you that you have been cheated or that you owe money. Making screenshots proving the fact of deception or fraud is necessary.

That could be the following stuff:

White Paper with the description of the project, advertising banners, correspondence in Telegram and other messengers will do. Also, it is essential to save and download all communication by e-mail.

If you had any telephone conversations with the fraudsters – you could ask the telephone company to print out the history of your calls, that wo;; serve as perfect proof. If you have personally met with company representatives, you need to specify the address where the meeting was held, the date of the meeting, and try to attract witnesses.

In case your meeting took place in overcrowded business centers, you should have a record of your visit at the security checkpoints. Documents from camcorders can also be saved there, which can later be requested by official representatives and the police. As a result, you should have an impressive folder with information, from which you can already apply to the court or the police. It remains a matter of small – to understand who specifically to write a statement.

Understanding the demanding side

Most ICOs have the same structure at modern market. An issuing company, as a rule, is explicitly created for the ICO, which issues tokens and accepts investors’ money. Very often, such companies are registered in the Cayman Islands, Seychelles or Bermuda, or in ICO-friendly jurisdictions such as Singapore and Estonia. Many ICOs, especially fraudulent, do not specify the information about the company-issuer not in White Paper, or anywhere else. Usually, one can find it in Token Sale Agreement.

However, the issuing company does not conduct operational activities. Moreover, information about the operating company is even more challenging to find – its traces could be seen only by indirect signs. That could be tricky as if the organizers initially wanted to deceive the investors. Most likely, one will first have to demand money from the issuing company.

Visiting the court

The court appeal against the company-issuer for inflicted financial damages could be regarged as the protection in situations where the actions of the responsible person do not contain the corpus delicti. The judicial procedure is relevant for cases when it is not a matter of fraud, but merely an unsuccessful project in which the organizer has not fulfilled his obligations and is in no hurry to return the money. However, in the case of fraud, recourse to a court with a claim against the issuing company can also become an effective way of protection.

One need to present a claim to the issuing company about the return of funds or compensation for damage before going to court with an appropriate application and the evidence collected. With a favorable outcome in court, one will be given a monetary claim to the issuer.

There is a decent worldwide trend – the fewer and fewer jurisdictions are available overtime in which beneficiaries manage to hide from taxes and creditors. Banks exchange information about the funds more actively and there are fewer loopholes. No wonder that over time, opportunities to pursue the issuing company and the real organizers of the ICO will only expand.

However, one can demand to return the money through court only where the company is registered. In case it is registered in the most popular off-shores like Cayman Islands, then one will have to visit the local court. The cost of doing business in the Caymans is up to $50,000 , in Singapore $ 75-125,000 – without regard to state duties, translation services, and other related costs. That is, either one’s investment in the scam-project should significantly exceed the possible costs of conducting the case in a foreign court, or one will need to file a class action together with other cheated investors.

When and how to contact the police

If there is an obvious deception (for example, the organizers received money, did not conduct an ICO and stopped communication), it would be appropriate to contact the police. The criminal case provides additional opportunities, which is a significant plus. For example, an investigator can obtain all the necessary information much faster than if one requested it through a court.

However, there are also several disadvantages: since there is very small legal practice, it will be difficult for the police to understand the matter of this category. The task is to bring the maximum amount of evidence of the violation of the law, and the statement is as simple as possible to describe the crime.

On the other hand, there is a parallel practice when, for example, clients money are stolen from a current bank account. In such cases, the crime scene is considered to be the bank’s registration address, although it is clear that the theft itself occurred somewhere on the Internet. So in the fraudulent ICO crime scene, there may be an address where the computer was located when you invested money in ICO.

Anoter vital question that investigators may have is a problem with determining what Bitcoin is, cryptocurrency, tokens and so on. The legislation does not yet have a precise definition. For the police, the qualifications of such crimes may not be apparent, although there are signs of fraud (theft of property or the right to fraud). Here, by the way, one can recall the cases in which cases of robbery of game artifacts in computer games were considered.

The conduct of both a criminal and civil-law case, especially international – along (and also expensive) process. Therefore, no matter how trite it may sound, it is best to study all documents carefully and all available information, weigh risks at the investment stage. Also, just in case everything is fixed – it will come in handy.

However, it is better to describe the case in the application as simple as possible, without overloading with technical terms. If everything went well for you: the application was accepted, you were interviewed, and the case started according to your application, – the question arises that such crimes, as a rule, are of a transboundary nature. Investigators will have to send a request to conditional Singapore or the Cayman Islands so that local authorities can conduct the necessary investigative actions. The state has much more leverage to handle such cases than an ordinary citizen who is unlikely to wait for help from a foreign court.

Top cryptocurrency deceptions

The cryptocurrency market had its moments of glory last year and that attracted the sharks from all around – hackers, criminals and fraudsters, despite the current shifts, market dips and regulations, are still aim strong on luring the digital assets out of consumer wallets.

Basically, there is no shortage of ways of how to lose money in today’s crypto industry, which includes overestimated predictions, fraud commercials, Ponzi schemes and financial pyramids, an overwhelming number of ICOs made solely on purpose to make their creators rich, weak investment strategies and most importantly – the lack of market understanding.

Moreover, today’s crypto investors highly lack profile education as well as proper strategic thinking and, in turn, the market players capitalize on it big time.

For example, Andrew Smith, the director of the trade watchdog’s Bureau of Consumer Protection, speaking recently during an event focused on cryptocurrency scams and fraud, told that the consumers would lose more than $3 billion by the end of 2018.

Becoming an ICO investor is not so hard and overcomplicated as being the IPO participant due to numerous reason, and the entry barrier into the Blockchain niche is not high at all. However, the statistics show that the lack of knowledge and experience results in high losses and over-the-top revenues for ICO creators.
We need to consider the most known and usable cases of these fraud activities:

1)Overestimated false perspectives

There are numerous examples over the Internet where companies and specific people offer the so-called “investment boosts” or “the new strategies” to lure out trustful investors or enthusiasts.

That start’s at doubtful offers of participation in new Ponzi/Pyramid schemes (of course, they all seem legit and solid at the start) or mining bigt time-solutions and goes further with an invitation to invest in a new shiny fake coin to get huge profits in a long-term perspective.

Thus, an investor should be smart and careful in projects selection and not to overestimate the real possible profits of the industry in 2018 – nowadays, market and it’s returns are not skyrocketing as it had been last year.

Of course, these kinds of commercials visuals appeal to classic good old desires like shiny resorts lor luxurious life, or newly-born teenager millionaire stories or just something new. Anyway, if one’s not eager to lose the money he should not buy this and not participate in giving back to anonymous teams or getting involded in another become-a-millionaire-in-3-days-offers.

2)Simple phishing

So far, it is the oldest and most often used method of cyber fraud and crime – little wonder these things had reached into the crypto world. Phishing itself is the way of intrusion of the malicious programs, viruses or other programs aimed to harm your computer or digital device to your device while pretending to look at usual software. For this to work, things used as website creation to require the password, newsletter with viruses, open wi-fi networks, etc.

Moreover, cryptocurrency wallet prompts are often used for tricking out users to send their original keys to hackers. For example, the fraudsters targeted PCs using this Ethereum browser wallet to hijack the accounts by adding a window requesting users to «confirm» their seed phrase – as a matter of fact, that happened to MetaMask.

So, the phishing is a mass and often used method working on the large-scale, and it is not on the list of the witzy-looking fraud solutions.

3)Risky Crypto Exchanges

Basically, the exchanges at large are used to buy/sell and trade the cryptocurrency. Most people praise Bitcoin, and a few main digital assets only and over time try to people trade the less popular currencies into Bitcoin or transfer it to traditional fiat currencies. Though even the most known and well-established exchanges with good reputation provide specific security options and look solid, holding the substantial amount of money on these accounts during the extended time is still a risky game – nowadays no can tell about the malfunctions, hacks or something worse.

Overtime as the crypto assets popularity rose to the moon, the amount of operating and fake exchanges increased as well. So, losing money had become even easier by participating in those shady exchanges operations and trading there only to find out soon enough that the funds you want to withdraw are no longer available.

4)Mining operations faked

Getting Bitcoins and cryptocurrency through mining operations had been trends years ago and building massive mining farms including numerous machines in the second- and third-world countries are things of one can hardly be surprised nowadays.

Thus, commercial offer for investing in those mining operation had become quite popular with shiny prospects and promises about the more and more improved and vast GPU processing units and power levels. No matter to mention the astronomic revenues from this activity.

Quite often, proofs are not provided and money requested are promised to return usually in a long-time perspective only – these make months if not years. Moreover, the payback never actually comes. Do notice the vital point – chances of getting robbed or lose the money increase the less control over your assets and money you have.

So, by attracting the funds to these companies and investing in their hardware one can only make rich the wrong people.

5)Lack of assurance

As the digital age advances, more and more fraudsters activities appear over time. However, the technologies like social engineering are still strong. In case one keeps little attention on what’s going on with his wallet and it’s actives, he’s surely making a perfect target and prey out of his himself.

Actually, the now-popular Initial Coin Offerings (ICOs) at large can as well be regarded as scam activities, and they even are getting banned in certain countries. However, before the industry boom in 2017, a lot of ICOs had made many people become millionaires.

ICOs rather represent a fundraising tool for innovative technology startups in the world of blockchain made to receive funding directly from the crypto enthusiasts and investors as well as future users. As it often happens, this became a convenient method for a lot of quick-thinking fraudsters to get their hands on a new shiny Lamborghini or a full-stacked island with a condo in the Pacific.

Of course, even right now one can still earn fat X’s for investing into the right project with decent team and perspective idea, or you can just accidentally invest into some joke coin and hit an unexpected price growth which makes you a millionaire.

How to get scammed?

So, what is the surest way of losing your money?

To invest in ICOs that without any innovative ideas, no website or media presence or advisors who are the developers. Whitepaper full of wordiness and no actual business model/tokenomics is another point to look out. Of course, the less you know about the people involved in the project and their plans, the better is for its scammy developers. What happens next? The coin’s price usually goes down in an instant as it hits exchanges. Its team disappears with profits leaving you empty-pocketed.

One part of the problem is a lack of care on the part of investors. This was an issue highlighted by Joe Rotunda, enforcement director for the Texas State Securities Board. Also, it’s an especially acute one set against the backdrop of a huge rise – and subsequent fall – in the value of cryptocurrencies over the past six months.
Coin Center director of research Peter Van Valkenburgh said that people get sucked into fraud – from exit scams to pump-and-dump schemes – merely because they’re looking to see a higher return on their investment.

“I think nobody should ever buy any more cryptocurrency, put anymore [into] cryptocurrency than what they are completely willing to lose … if you are willing to participate at all,” Van Valkenburgh remarked.

However, at all times the best strategy is to take any actions with a clear mind and always think in advance where your desires to get rich instantly can get you in the end.

Blockchain technology in gaming industry

Online gaming already represents one of the most popular kinds of entertainment in the digital age. The number of games utilizing online modes and their popularity rises every year. The highly valuable items and loot boxes had already become one of the latest things to keep an eye on for the developers and community.

However, that’s not the case of the future. The world of technology has been in great shake during the last few years – and blockchain is the reason. The emerging revolutionary solutions comes to different areas while promising modern innovations, security, and convenience.

For example, cryptocurrency and blockchain technology were the hottest topics during the Game Developers Conference (GDC) that took place in early 2018.

The recent estimates show the generation of more than $120 Billion in revenue every year by the gaming industry. The game industry has been in the rapid development for the many years, and the popularity is indeed and undoubtedly is as high as never before. Also, this number is snowballing with the constant involvement from players in almost every country in the world. Moreover, the blockchain technology and cryptocurrency are also having an impact on fantasy sports games, a market that is estimated to be worth more than $7 billion a year.

What causes that? The virtual reality experience and play go far beyond the borders, races, beliefs, and languages. Moreover, your age or gender does not matter here. During a recent decade with the advent of the internet-technologies and platforms like Youtube and Twitch, more players had been engaged even in watching others play rather than playing themselves. By entering this industry, this is just another way in which self will change the world.

Most popular online games had already implemented this feature, enabling different built-in mechanics for random rewarding and exchanging between the players. Some companies had already managed to gain profit from it and even organized black market trades. Of course, most players do enjoy the overall game reward systems as they are supposed to be played and sometimes just by so-called “booster packs” for increased chances of getting the rewards. The others use the real, fiat money, to their advantage on the online battlefields. Anyway, the growing popularity of these items between the players seen the trading rise on the black markets. In this case, the cryptocurrencies already do play a part in trades, as valuable in-game items are already selling for different digital assets and even specific platform tokens.

Nowadays, over 2,3 billion people play games every day on different platforms and devices. The gaming industry reached $100 billion of revenue in 2016 and is still booming. Only around 4,000 pro gamers are making profits out of their time spent on games and pursued skills. Just a couple of games with 6% auditory already turn over close to $4 billion trading in-game items. Selling virtual items can also include: Currency or gold; Virtual items such as armor, weapons, mounts, etc.; Boosting services such as PvP, leveling, items drop rate increase; Game account selling. Moreover, the most expensive items ever include $330,000 for the Crystal Palace in “Entropia Universe” as well as $635,000 for Club Neverdie in “Entropia Universe.” One will have a tough time finding a virtual item selling for these massive amounts, but these five games are helping people swell their bank accounts to this day: “Entropia Universe,” “Eve Online,” “Counterstrike Global Offensive,” “Dota 2”, and “World of Warcraft.”

When speaking about the blockchain-based startups, an Ethereum-powered strategy PC-game “Beyond-the-Void” should be mentioned.

Another example is “WAX” – a decentralized platform that enables anyone to operate a fully functional virtual marketplace with zero investments in security, infrastructure or payment processing. WAX is developed by the OPSkins company founders, and it’s designed to serve the 400+ million online players who already collect, buy and sell in-game items.“D-Market” is the marketplace that allows its users are turning every virtual item into a real asset. Though, it is known that 94% of gamers are not involved in global trading at all yet.

Some companies, like the DMarket, a leading global marketplace that uses blockchain technology to transform virtual gaming items into real-world assets, hosted a blockchain and gaming panel discussion during GDC. The purpose of the panel was to provide an explanation as to why cryptocurrency and blockchain technology is having an impact on the gaming sector, which is expected to become a $143 billion global industry by 2020, according to the Newzoo research.

However, modern gamers do understand cryptocurrency options due to the fact that virtual money has been a part around in gaming for the last ten years. For example, dating back to the World of Warcraft which came in 2004, there was a one-hundred million dollar market for buying digital gold. In Wow it was used as the main currency to buy in-game assets, like armor, weapons, different merchandise, dragons or unicorns. However, there was a point – it would take gamers a tremendous amount of time to acquire digital gold, so they would use real money instead to buy in-game assets.

The reason why modern online gaming companies do have such profits is simple – most gamers used fiat currency like dollars to purchase gaming items, and the so-called free-to-play games become very expensive to play.

The latest info from the SuperData shows that the gaming industry generated $108.4 billion in revenue in 2017. Mobile games were the most significant sector, making $59.2 billion, followed then by PC games, which generated $33 billion last year. The interesting fact is that “free-to-play” games drove both the PC and mobile sectors – an estimated $82 billion was spent on these games.

Due to the additional expenses associated with free-to-play games, blockchain-based games are gaining traction primarily because the blockchain technology allows gamers to use cryptocurrency to trade virtual gaming items with one another – without an intermediary (which is actually one of the main points of the blockchain at large). That eliminates the need for gamers to use fiat currency to purchase items directly from game developers.

Another vital point of the blockchain technology is the tokenization as the use of cryptocurrency in gaming also solves the problem behind ownership of in-game assets. This means that once gamers acquire assets, they remain in their possession within a digital wallet until they decide to trade or sell the tokenized asset – just like any other cryptocurrency.

The real problem with the free-to-play games is the illusion this segment implies heavily in order to attract gamers pool – anyway, to achieve real progress and buy decent items, lots of money has to be spent. That problem applies to the whole industry problem, as profit drives all of the major companies. Moreover, most of the modern gaming-producing companies do value profit over everything else, and that creates specific market problems.

With the help of the blockchain technology, gamers will finally have the best options for setting their in-game items, while providing a strong focus on trade and the gaming economy. The best things are that the direct player asset ownership and managing allow for a proportion of game revenues to go back to the player base.

Over time the gaming community continues to show increased interest in blockchain-based games, traditional venture capitalist firms and investors do find value in decentralized gaming platforms.

No wonder that the future union of gaming and blockchain is inevitable as the encrypted blockchain guarantees safe storage of all in-game digital assets, what makes the data transparent to the core. Smart contracts exclude third parties from payment processes, making transactions fast and safe. Blockchain technology is the solution we are all looking for, due to the decentralized network and capability to record each transaction to combat fraud. That actually can trigger the gaming industry’s next evolution.

As the potential for blockchain-based games continues to pique interest from both gamers and investors, the declining prices of major cryptocurrencies could also see a definite shift. The value of cryptocurrencies will become more evident as the gaming community continues to gain more active users through blockchain games.

Rule of 56% – ICO fail number rises

While the cryptocurrency market is quite live, it is still far from its autumn 2017’s heights. Nevertheless, the ICO start-ups market shows the constant growing tendency – due to official statistics of ICORating, the amount of ICO projects in 2018 had significantly grown. The overall market dynamic is definitely positive. The volume of funds attracted worldwide through the ICO for the first quarter of 2018 was $ 3.3 billion. For comparison, in 2017 with the help of ICO funding model, $ 6.1 billion was raised.

For now, not only scam projects and fraud are the worst enemies of the investor though. While more than 4,000 ICO projects have managed to raise a combined total of around $12 billion during all the time – a majority of them fail within four months of their token sales, a new study suggests.

The latest research, conducted by a small team at Boston College in Massachusetts, found that a mere 44.2 percent of token projects are active into the fifth month or beyond, using their social footprint via Twitter as a live indicator.

About 56% of ICO start-ups ceased to exist during the first four months after the successful end of the token sale. According to many analysts, the most secure investment strategy for various tokens is the sale on the first day of trading. Either way, almost all investors get rid of coins purchased under the ICO in the first six months.

More than 1,000 different tokens have already ceased to exist, and overall return on investment is steadily declining.

It should be noted that the monthly investment in ICO projects still holds over $ 1 billion. This trend has been maintained since the beginning of 2018.

While the figures are perhaps shocking, they should maybe be taken with a pinch of salt, as the methodology of the study leaves some wiggle-room for ICOs to exist beyond that 120-day time-frame and not be indicated so in the data.
The tokens usually continue to grow in price, generating average buy-and-hold abnormal returns of 48% in the first 30 trading days.

Dead on arrival

Going for an experiment in determining the usual lifespan of an ICO project, the team behind the research, Hugo Benedetti and Leonard Kostovetsky, chose to use the availability and intensity of Twitter posts to analyze the lifespan of projects and found out that tweet absence during the fifth month meant the absolute project fail or, so to say, it’s death.

The analytics data of the research indicates that the safest way of performing for the projects would be managing to list on exchanges after the token has been launched:
“Breaking it down by category, 83% of the 694 ICOs that don’t report capital and don’t list on an exchange are inactive after 120 days. For the 420 ICOs that raise some capital but don’t list, this figure falls to 52%, and for the 440 ICOs that list on an exchange, only 16% are inactive in the fifth month.”

Moreover, their work beside went on with determining the value of ICOs as investments and the average returns over the different time-frames, after going on for the overall moves in the value of the cryptocurrency markets.
Fact is, the researchers Benedetti and Kostovetsky found that “in contrast to IPOs, tokens continue to generate abnormal positive average returns after the ICO,” with token values continuing to climb for six months after launching.

“We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100% to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82%.”

Conclusion

Further, the researchers say that startups sell their tokens during the ICO at a significant discount to the opening market price, generating an average return for  investors of 179%, accrued over an average holding period of 16 days from the ICO end date to the listing date.

During his interview, Kostovetsky told Bloomberg that “once you go beyond three months, at most six months, they don’t outperform other cryptocurrencies.”The strongest return is actually in the first month,” he added.

Anyway, the overall conclusion shows that, despite the shocking figures of failed projects, high rewards could be achieved for those that accept the risk of investing in “unproven pre-revenue platforms through unregulated offerings.”

However, the market future looks promising as a lot of promising startups in different areas continue to flourish every passing week.

First world’s ICCO – from Malta with love

The emerging world of blockchain industry had seen different kinds of investment and crowdfunding approaches. The nowadays most popular instrument which is ICO had surely been around for some time and literally rocketed to the moon during the last year, but it’s certainly not the only and top tool to collect money from the investors around the globe.

Malta is known, amongst many other reasons, to be the country which recently applied specific official regulatory measures to make the fundraising for blockchain-based projects fully legislatively regulated within its territory. That implies the first milestone in the industry – the ICCO which stands for Initial Convertible Coin Offering.

The first in the history ICCO was announced by the blockchain company Palladium, and the leading bitcoin-exchange Bittrex – as the first fully regulated environment in Malta.

As stated in the Bittrex press release, the difference between convertible coins is that within three years after the release holders of these coins can at any time change them for shares of Palladium company.

Moreover, Malta is enacting comprehensive blockchain legislation and has a dedicated blockchain unit at the MFSA. This ICCO is one of the unique investment opportunities in the blockchain world. The University of Malta will also offer a special Blockchain degree which will start in October this year.

An ICCO model differs from the now-more-traditional Initial Coin Offering in that investors will be able to convert tokens into company shares at a later date – in Palladium’s case, three years after the sale.

“We expect this project, which will create more than 100 job opportunities, to be a historic landmark and to bridge the gap between traditional financial services and cryptocurrencies,” – founder and chairman Paolo Catalfamo commented. Moreover, he also spoke very positively about Malta, as a country located at the front of blockchain technologies.

The launch of the project was attended by the Prime Minister of Malta Joseph Muscat, Secretary of the Parliament for Digital Innovation and Finance Silvio Schembri, and the head of the Maltese Financial Services Department Joseph Kushiri.

“This ICCO will become one of the largest investment opportunities in the world of the blockchain. Institutional investors understand all the advantages of investing in the cryptocurrency industry, but the lack of regulation discourages them. The decision of Palladium will change this and allow users to use their accounts to manage cryptocurrency and fiat assets in full compliance with regulatory requirements, ‘says Paolo Catalano.

The goal of this particular ICCO is to collect financing of $ 150 million. The official campaign is scheduled for the period from July 25 to September 30, and the prescription of tokens began on Tuesday, July 10.

‘Our cooperation will lead to a new trading platform based on blockbuster technology, and users of this site will have access to many tokens available at Bittrex,’ said Bill Shihara, CEO of Bittrex.

Malta had adopted the new legislative acts governing the cryptocurrency industry only last week. Silvio Schembri noted back then that Malta had become one of the first countries with such official regulation.

No doubt, during the next months we are about to witness if this recent approach would be appreciated by any other countries which try to apply the ICO regulation rules or other legislative measures within their territory.

ICO Smart-contracts vulnerability

Initial Coin Offering Models of fundraising still have a lot of loops which makes the money fraud and steal quite often and large-scaled.

According to the latest security researchers made by Positive last year as stated by the Bleeping Computer an average number of vulnerabilities in ICOs stands at number of 5.

The results had shown the very negative trends and outcomes. According to researchers, only one draft of the original offer of coins did not contain bugs.

The study found that 71% of the projects contained vulnerabilities in smart contracts. Among the common problems, analysts pointed out the inconsistency with the ERC-20 standard, the incorrect generation of random numbers and other significant shortcomings.

Experts said that such vulnerabilities appear due to lack of proper qualification of programmers and insufficient testing of the source code.

Most of the security breaches analysts found in ICO-projects to develop mobile applications. Among the common vulnerabilities were named the following: unsafe data transmission, unreliable storage of user data in phone backups and disclosure of the session identifier.

Some vulnerabilities in web applications were aimed at attacking investor funds. For example, because of a lack of proper security, hackers could register a domain similar to ICO, create phishing sites, thereby deceiving investors.

According to the research, every third project contained vulnerabilities that allowed hackers to access data and savings of companies-organizers. Analysts also noted that many initiators of ICO did not use two-factor authentication for important accounts.

https://www.bleepingcomputer.com/news/security/researchers-last-year-s-icos-had-five-security-vulnerabilities-on-average/

Speaking about the background of the this research and former industry vulnerability issues, other things should also be remembered.

Currently, there are hundreds of thousands of smart contracts in the Ethereum blockchain that manage wallets, tokens, applications or are used to store funds. A group of some British researchers alone was able to identify 34,200 vulnerable smart contracts according to the Motherboard data.

An assistant professor from University College London Ilya Sergey and his colleagues conducted a large-scale study to detect all possible vulnerabilities of smart contracts on the Ethereum blockchain. To do this, they downloaded the Ethereum, in effect creating its fork for personal use, and began to launch a variety of scenarios, trying to achieve undesirable consequences. When these consequences came, they marked a smart contract “with a tracked vulnerability.”

Having analyzed about a million smart contracts in this way, the researchers found that 34,200 of them contained critical vulnerabilities. They tested their assumptions on 3,000 smart contracts, and in 89% of cases, they caused the most undesirable consequences. In theory, this could allow them to steal $ 6 million in Ethereum.

According to experts, early detection of vulnerabilities prevents
possible negative consequences. So, for example, in November 2017, a user under the pseudonym DevOps19 found a vulnerability in the code of the Ethereum-purity library Parity and accidentally blocked $ 150 million.

“We are working with applications that have two very unpleasant features: they are used to manage your money and can not be fixed,” Ilya explained.

Attempts to find the creators of vulnerable, smart contracts were in vain. However, since researchers do not say which vulnerabilities were found in smart contracts, they can be considered as safe.
“If someone wants to take advantage of our idea, he, at least, will have to do as much work as we did,” the researcher summed up.
Recall, in January, the Cisco unit detected many vulnerabilities in the Ethereum-client Parity. First of all, it was about the creation of operating code, the incorrect operation of which could lead to a large-scale DoS-attack on its supporting nodes. Moreover, some “loopholes” in the purse software allowed access to private information.

A few days later, representatives of Parity Technologies said that the vulnerabilities were corrected in new versions of the software Ethereum-client.

As we see, the ICO suffers from numerous vulnerabilities, and the further develops the market the points of hacker intrusion also appears.

Read the similar material about how to ensure safety from Ddos-attacks in our official blog

https://blog.merklion.com/all/how-to-ensure-security-from-ddos-attacks/

Earlier Ctrl + ↓