Duy, Author at SynQ

Author: duy

Global Crypto Adoption

Cryptocurrencies have grown from a niche underground market to become a diverse financial industry with many applications in daily life and in economics.

The cryptocurrencies in circulation are versatile, and can be utilized as a store-of-value, investment, and /or as a currency to facilitate the exchange of goods and services.

Growth has been a steady progression on multiple fronts for the market. Adoption has been growing at a faster rate than before since 2017, due to an increase in mainstream awareness. 

As of now, Bitcoin alone has completed and recorded more than 400 million transactions. The daily transactions of BTC is currently an average of 350k transactions per day or 15k/hr. That’s about 4 transactions per second for Bitcoin.

Bitcoin dominance is currently 66.6% in a market of 2957 cryptocurrencies. Due to sheer influence, it is no surprise that BTC’s metrics are often used to gauge the momentum and overall health of the industry.

For BTC, and cryptocurrencies in general, one of the largest issues holding back user adoption interests early on was the lack of convenient access. That has changed since the installation of the first Bitcoin ATM (BTM) in 2013. Six years since that number has grown to be close to 6k BTMs worldwide. 

Whilst the market of cryptocurrencies remains unpredictable, BTM growth remains steady. In fact, the number of BTMs have been doubling per annum in recent years.

Not only do these BTM serves as points of access and exchange for BTC, but support for other alternative cryptocurrencies as well; benefiting the entire crypto sphere and easing user adoption.

                                                               

Approximately 70.6% of BTMs support alternate cryptocurrencies. 68.5% support Litecoin, 59.7% supports Ether, and 40.2% supports BCH. Each averaging +10% growth compared to last month.

Despite progress, in contrast to mainstream and traditional financial platforms, the volume of cryptocurrencies is still very insignificant.

According to the Global Findex database, 69% of adults in the world currently have access to and are using financial institutions or mobile money services.

In comparison, only about ~1% of the global population is using cryptocurrencies.

In America alone, traditional financial institutions still reign supreme. The same rate of adoption among U.S consumers can be assumed of countries with similar economies.

From 2017 – 2018, there was a noticeable decline in consumers’ use of cash and check. Meanwhile, although the shares of digital and mobile payments both increased after 2015, the minimal growth of these transactions from 2017 to 2018, reflects that consumer behavior is generally slow to change. 

Since 2008, use of paper payment methods such as cash and checks has been on a decline. By mode, card payments are the preferred payment method. In a typical month, 60% of an average consumer’s transactions are done using a credit, debit, or pre-paid card.

According to the Census Bureau, there were 189 million adults with credit card accounts in the United States, compared to a University of Cambridge estimates of 2.9 to 5.8 million cryptocurrency users in 2017. In the same year, The Boston Federal Reserve determined that 75.7% of consumers have at least one credit card. 

Out of four major card networks, VISA is the most widely used with a 53.1% dominance in terms of Network Purchase Volume. 49.7% of cards in circulation is a VISA card, and 48.4% of credit cards’ Outstanding Balance belongs to the company as well.

Currently, VISA claims to handle an average of 150 million transactions-per-day (tps). That is roughly 1,700 tps, in comparison to Bitcoin’s 3.8 tps, and Ethereum’s 8.1 tps. The total Purchase Volume of credit cards amounted to $3684 billion, in contrast to the $250 billion market cap of crypto in 2018.

However, even though the majority of market shares is dominated by traditional institutions, there is room for the user base of cryptocurrencies to grow. According to the Global Index database, about 1.7 billion adults remains unbanked in 2017.

With 225 million people, China claims the world’s largest unbanked population, followed by India with 190 million, Pakistan at 100 million, and Indonesia with 95 million. These four economies, together with Nigeria, Mexico and Bangladesh, make up nearly half the world’s unbanked population.

                                             

Generally, account ownership is nearly universal (94%) in high-income economies, compared to (63%) in developing economies classified as low or middle income. There is a wide variation in account ownership across multiple economies, which can vary from about 20% in Cambodia, Mauritania, and Pakistan to as high as 93% in Mongolia.

Whilst they are not the majority, the unbanked still represents a large number of the global population. And it is within these communities that interest in cryptocurrencies is being fostered.

Countries with less privileged economies may not be able to afford to drive adoption progress on a global scale, but the individuals of such economies are ones the cryptocurrency industry can benefit.

For example, access to electricity and hardware is still a luxury in many places in Africa, making it infeasible to run BTC nodes on the continent. Yet, 3 of the top 5 countries on Google Trends for Bitcoin interests are from Africa, including Nigeria – which has a <0.01% BTC adoption rate.

In countries where their economies’ fiat has failed, the populace has also turned to cryptocurrencies. After the Venezuelan Bolivar’s hyperinflation, cryptocurrencies’ volume in the countries soared. Interestingly, countries that have restricted the use of cryptocurrencies, such as China and Iceland, are usually the leaders in mining. 

Whereas, most of SE Asia are more engaged in remittance. Japan and the Netherlands are taking the initiative in accepting crypto for goods and services, whilst the BTM focus in the U.S and Switzerland places more emphasis on building crypto-based businesses.

Crypto adoption can be measured with more than nodes distributions, BTMs placements, market shares dominance. It also involves aspects such as infrastructure support, mining, remittance and acceptance as payments. Compared to just over 8,000 venues accepting cryptocurrencies in 2017, there are now currently about 15,541 venues taking cryptocurrencies worldwide.

According to a Marketing Manager at CoinGate and Coinmap’s database, the numbers of new vendors are growing at an average of 20-30 per day. Within the past six years, the number of crypto-accepting merchants has exploded by more than 700%. A significant surge has also been noted in the growing variety of business from new regions and unexpected industries.

                                                                                                                              

Crypto friendly businesses typically provide digital services and products, and/or are related to the digital field in various aspects.

As of 2019, over 13 mainstream companies have started to accept cryptocurrencies in exchange for their services. Microsoft has been accepting BTC in it’s Xbox Store since 2014. Newegg, a company well known for computer hardware, also views Bitcoin as a valid payment method. Overstock accepts multiple cryptocurrencies as well.

Sources:

https://finance.yahoo.com/news/bitpay-launches-support-ethereum-135327097.html

https://coin.dance/volume/localbitcoins

https://bitinfocharts.com/bitcoin/

https://coin.dance/stats

https://cryptalker.com/bitcoin-adoption/
https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf

https://www.forbes.com/sites/ktorpey/2019/04/22/3-key-drivers-behind-bitcoins-price-and-potential-mass-adoption-over-the-next-5-years/#a9e1239ae7ee

https://data.bitcoinity.org/markets/volume/30d?c=e&t=b

https://coinmarketcap.com/charts/

https://www.reddit.com/r/CryptoCurrency/comments/d8jwqe/adoption_in_france_starting_next_year_youll_be/

https://www.coinspeaker.com/bitcoin-depot-crypto-atm/

https://coinmetrics.io/charts/#assets=btc,bch,ltc,eth_left=TxCnt_zoom=1279411200000,1571097600000

https://bitcoinist.com/bitcoin-adoption-visual-map/

https://www.forbes.com/sites/billybambrough/2019/04/10/bitcoin-just-crossed-a-huge-adoption-milestone/#76f41ccc5295

https://bitcoinist.com/bitcoin-adoption-visual-map/

https://coinatmradar.com/charts/growth/

https://www.inc.com/kenny-kline/how-this-company-is-spurring-bitcoin-adoption-in-chicago-beyond.html

https://coinatmradar.com/blog/bitcoin-atms-industry-overview-after-2-years-since-first-launch/

https://coinatmradar.com/blog/bitcoin-atm-market-dynamics-september-2019/

https://www.cryptoglobe.com/latest/2019/09/number-of-bitcoin-atms-up-500-percent-since-2016/

https://coinatmradar.com/charts/

https://coinatmradar.com/charts/geo-distribution/

https://coinatmradar.com/blog/bitcoin-atm-market-dynamics-september-2019/

https://coinmap.org/#/world/18.56294744/13.88671875/3

https://www.quora.com/How-many-merchants-accept-Bitcoin#targetText=We%20don’t%20have%20the%20stats%20for%20global%20crypto%20acceptance,new%20vendors%20joining%20every%20day.

https://blog.coingate.com/wp-content/uploads/2019/01/CGMAP.png

https://www.lifewire.com/big-sites-that-accept-bitcoin-payments-3485965

https://blog.blockonomics.co/will-more-retailers-start-accepting-crypto-in-2019-heres-what-the-data-predicts-fd0ff69f5cf

https://fortune.com/2019/05/13/bitcoin-comes-to-whole-foods-major-retailers-in-coup-for-digital-currency/

https://howmuch.net/articles/bitcoin-legality-around-the-world

http://onelovecrypto.com/2018/01/03/bitcoin-legal-bitcoin-legality-based-country/

https://99bitcoins.com/list-countries-banned-bitcoin/#prettyPhoto/0/

https://coin.dance/volume/localbitcoins/VES

https://bitnodes.earn.com/?The

https://cryptalker.com/bitcoin-adoption/

https://coinmetrics.io/charts/#assets=btc,eth_left=TxCnt_zoom=1570637088000,1573229088000

https://hackernoon.com/the-blockchain-scalability-problem-the-race-for-visa-like-transaction-speed-5cce48f9d44

https://usa.visa.com/run-your-business/small-business-tools/retail.html

https://wallethub.com/edu/cc/market-share-by-credit-card-network/25531/

https://www.creditcards.com/credit-card-news/ownership-statistics.php

https://www.bostonfed.org/publications/research-data-report/2017/the-2015-survey-of-consumer-payment-choice-summary-results.aspx

https://globalfindex.worldbank.org/

https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter1.pdf

https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter2.pdf

https://usa.visa.com/dam/VCOM/download/corporate/media/visanet-technology/aboutvisafactsheet.pdf

https://webcache.googleusercontent.com/search?q=cache:0mfZ_YpwQ5MJ:https://www.forbes.com/sites/jeffkauflin/2019/06/11/visa-targets-swift-with-new-blockchain-product-for-global-money-transfers/+&cd=1&hl=en&ct=clnk&gl=us

https://www.frbatlanta.org/banking-and-payments/consumer-payments/survey-of-consumer-payment-choice/2018-survey.aspx

https://www.frbatlanta.org/-/media/documents/banking/consumer-payments/survey-of-consumer-payment-choice/2018/2018-survey-of-consumer-payment-choice.pdf

https://www.creditcards.com/credit-card-news/ownership-statistics.php

https://coinmarketcap.com/charts/

https://bitcoinist.com/google-trends-bitcoin-price-6/

https://bitcoinist.com/bitcoin-adoption-visual-map/

CEO of Crypto Capital Arrested – Allegedly A Member of International Cartel

According to the prosecution, Ivan Manuel Molina Lee is a member of the international drug cartel.

author: Fratria

 

Original (Polish) News Source:

https://wpolityce.pl/kryminal/470013-poszukiwany-ena-ivan-manuel-molina-lee-jest-juz-w-polsce

 

Didn’t we say this was going to happen? Yes…

Corruption, Crypto and Cartels, Part I

Corruption, Crypto and Cartels, Part II

Corruption, Crypto and Cartels, Part III

Corruption, Crypto and Cartels Part IV

Corruption, Crypto and Cartels Part IV

For the finale, let us show you where the Part I – III have been leading.  Though this is not the end of the “rabbit holes” we have been following, it is the point where we felt comfortable to really form a solid hypothesis of what is going on based on all of the data we have found.  

Bank frauds

As of April 30th, 2019, two individuals were charged with bank fraud in connections to cryptocurrency exchanges. Court documents released by the Justice Department reported that the alleged money services businesses operated between February and October 2018. It is interesting to note that this is within the same time frame as when Bitfinex saw $850mil disappear. Prosecutors say during this time, the two “opened and used numerous bank accounts at financial institutions that were insured by the [FDIC]”. [1]

Two of the bank accounts named in the court document are allegedly held under the name Global Trading Solutions LLC, one apiece from HSBC Bank USA and HSBC Securities USA/Pershing LLC.

Global Trading Solutions LLC is tied to licensed financial institution Global Trade Solutions AG. Global Trade Solutions is the parent company of CryptoCapital, and is cited as parent company on CryptoCapital’s website.

The two individuals are Reginald (Reggie) Fowler, former co-owner of the NFL’s Minnesota Vikings, and Ravid Yosef, from Tel Aviv, Israel. Both have been charged by the Southern District of New York (SDNY) with bank fraud and conspiracy to commit bank fraud. Fowler is also accused of running an unlicensed money transmission business and conspiracy related to its operations.

Global Trading Solutions LLC, owned by Fowler, was directly connected to CryptoCapital. As written in the indictment, Fowler and Yosef obtained bank accounts after “falsely representing to those banks that the accounts would be primarily used for real estate investment transactions even though Fowler, Yosef, and others used them to transmit funds on behalf of an unlicensed money transmitting business related to the operation of cryptocurrency exchanges.”

The others in that quote includes CryptoCapital, or rather the Swiss-based Global Trade Solutions AG that runs its operations. Both bank accounts, including the one at HSBC, was used by CryptoCapital to process fiat deposits for Bitfinex. Global Trading Solutions LLC also had multiple bank accounts at Citibank, Enterprise Bank & Trust and Wells Fargo; all used by CryptoCapital. 

Fowler additionally co-owns two Portuguese companies through which, CryptoCapital also used to processed fiat withdrawals for Bitfinex. 

As the indictment clarifies, Fowler and Yosef opened numerous bank U.S. accounts under false pretenses. The indictment further presents a list of bank accounts at HSBC, either in the name of Global Trading Solutions LLC or directly in Fowler’s name, from which the funds were seized by the U.S. Government.

This seems to confirm the statements that the $850mil Bitfinex funds were not lost, but were in fact held by the authorities.

The multitude of bank accounts in the name of Global Trading Solutions LLC, and used by CryptoCapital, provides insights and understanding into how Fowler attempted to obfuscate his association with Global Trading Solutions LLC.

For further affirmation, the address of the known HSBC accounts matches the address in Chandler, Ariz. where Global Trading Solutions LLC is registered. Yet the property at that address, a sports complex, is officially owned by another company that is related to Fowler.

As the cryptocurrency publication The Block elaborates more into the story, another bank account at Wells Fargo is listed with an address in Tampa, Fla. That address lists a different company called NLE Consulting, whose registry documents includes Fowler as an officer. CryptoCapital has used the account for its own customers, but there is no indication that it was used to process any Bitfinex fiat deposits or withdrawals. Fowler also used an address in Huntington Beach, Calif. to obtain an account at Citibank. However, no other company is registered at the listed address.

Due to the result of certain AML and financial crimes investigations by the United States’ FBI and cooperative international law enforcement and/or regulatory agencies, according to a letter Ivan Molina published in December of 2018, Global Trade Solutions and related entities have been denied banking services in the U.S, EU and other international locations.

In the same letter, Ivan confirms the account seizures at HSBC in London, as well as bank accounts in the U.S being frozen and blocked, and banking services and access terminated. He also referenced the article by The Block, reporting the use of Global Trading Solutions LLC’s services for depositing funds to Bitfinex.

At this point, it’s not too much of a stretch to assume the same shady approach was used for most, if not all, of CryptoCapital’s affiliated companies to operate under similar questionable structures. (CEX.io, QuadrigaCX, other dead/sketchy companies).

When there is this much evidence and association, it can no longer be brushed off as coincidence.

Additional Sources

Two Charged With Running ‘Shadow Banking’ Service for Crypto Exchanges

Indictment reveals new clues in the Crypto Capital situation

Corruption, Crypto and Cartels, Part III

This is where the pieces come together. Have you noticed how often Bitfinex has been referenced in this story? It doesn’t feel like a coincidence.  

Tether (USDT)

Aside from the multiple incidences of hacks and lost funds, Bitfinex also still have to answer for their sister company’s controversies, Tether. It is no secret that Bitfinex and Tether have received subpoenas from U.S regulators. [1]

Speculations that Bitfinex has been “operating a fractional reserve and is covering over its reserve deficit in complicity with Bitfinex” has existed since early 2017. These allegations are nothing new. [2]

And remember when Bitfinex and CryptoCapital supposedly severed official relations? Not even a few months later, Bitfinex is still associated with CryptoCapital, and the relationship has not improved for the better. 

According to statements in April 26, 2018, Bitfinex sent $850 million of customer and corporate funds to CryptoCapital Corp., and along the way it was “lost”. Representatives of Bitfinex and Tether reported to the NY Attorney General’s office that CryptoCapital claims the funds were seized by Portugese, Polish, and American government officials.

An official confirmation submitted by Bitfinex stated that their respondents did not believe CryptoCapital’s representations that the funds have been seized.

Meanwhile, the $850 million loss severely impaired Bitfinex’s ability to process funds and withdrawal requests as “CryptoCapital, which held all or almost all of Bitfinex’s funds, refused to process customer withdrawal requests and refused or was unable to return any funds to Bitfinex.”

This clearly caused Bitfinex major difficulties and processing delays, despite official denials from the company’s representatives.

Allegedly, funds from Tether’s reserve were then used to make up the shortfall, but neither the loss nor Tether’s fund movements were disclosed to customers and investors. If true, this would very much validate the speculations of 2017. [3]

It is also a testament to the fact that CryptoCapital has never had a good public reputation. CryptoCapital never had the performance track record of being the most reliable financial processor either. Complaints regarding speed and reliability has been a common occurrence and regularly affects related exchanges. It is very questionable how they earned the reputability needed to associate with such a wide network of exchanges. [4]

It would also explain Bitfinex’s history of hostility towards critics, especially ones who would question the secrecy of their banking processes, unsurprisingly. The company is known to respond defensively to negative comments by threatening accusers with legal litigation, instead of transparency. [5]

But not just Bitfinex, remember that CryptoCapital’s very well connected network. Their website names among its customers the now-defunct QuadrigaCX and Coinapult, among others. And according to the Wayback Machine, past customers also included exchanges like Kraken, BTCC and Bitt.

Yet it seems as time progresses, the number of CryptoCapital’s allies dwindle.

Most have met their ends under questionable circumstances. Not just exchanges such as QuadrigaCX and Coinapult (whose office was reportedly across the hall from CryptoCapital), but internal members as well in more recent times.

Next week, we will conclude and discuss the implications of the entire picture.

Sources  

[1] https://cointelegraph.com/news/bitfinex-tether-get-subpoenas-from-us-regulators

[2] https://cointelegraph.com/news/unconfirmed-polish-prosecutors-seize-400-mln-amid-allegations-bitfinex-is-implicated-in-fraud

[2] https://www.bloomberg.com/news/articles/2017-12-05/mystery-shrouds-tether-and-its-links-to-biggest-bitcoin-exchange

[3] https://www.coindesk.com/bitfinex-ny-prosecutors-tether-850-million-allege

[4] https://github.com/ccxt/ccxt/issues/4826

[4] https://bitcointalk.org/index.php?topic=5118599.0

[4] https://bitcointalk.org/index.php?topic=2822223.0

[4] https://bitcointalk.org/index.php?topic=2810707.0

[5] https://www.coindesk.com/bitfinex-vs-bitfinexed-exchange-hires-law-firm-challenge-critics

[5] https://cointelegraph.com/news/worlds-largest-bitcoin-exchange-bitfinex-threatens-critics-with-legal-action

Corruption, Crypto and Cartels, Part II

Laundering money is one of the hardest things for cartels to do…so we are told.  As Part 2 unfolds,  we dig into the “potential” cartel involvement and start to paint the larger picture of how this is all intertwined together.  

Cartel association

On April 7th of 2018, reports originating from Poland sources informed readers that Polish prosecutors seized €400 mil from two companies, referred to as company M and company C, involving a long link of individuals and eventually leading to Bitfinex; and potential association to cartel involvements.

[1] The story began when the Belgian Ministry of Foreign Affairs was in the process of building a new embassy in the Democratic Republic of the Congo. Company M, owned by a Canadian of Panamanian descent, impersonated the building contractor and intercepted the $400mil payment. Through an investigation with Interpol, it was revealed that company M was associated with company C, owned by a Colombian with Panamanian citizenship, who was in turn associated with a large online exchange of cryptocurrencies.

Polish authorities reported that the two companies specialize in money laundering. “The scale of financial operations indicates that these bills were to hide money from smuggling cocaine to Europe. The companies were also used for large scale scams. Criminals have hidden their operations, also exchanging money for cryptocurrencies, obliterating traces.”

The funds from the two companies were deposited at a branch of one of the banks in the accounts of the two companies registered in Poland, which is coincidentally the Banku Spółdzielczym w Skierniewicach – the bank where Bitfinex is registered. Surprise!

A forum user admitted to being a interrogated witness in the case, and that the company has paid them used a Bitfinex account, further strengthening the allegations. [2]

Now why would Bitfinex need to pay a witness? And what does that have to do with CryptoCapital? [4]

Members of CryptoCapital Management

Well, when Bitfinex opened its Polish bank account in Nov 2017 with the reported intention of trading euro pairs, the company name under the account was registered as Crypto SP, and as located in Panama. This company, Crypto SP, is owned by Crypto Capital Corp, the director of which is the very same Ivan Manuel Molina Lee.

But according to them? Nothing! CryptoCapital has since denied affiliations to the scandals and associated materials, contents, and media related to Bitfinex has subsequently been removed. This was not the first incidence of CryptoCapital removing bad publicity either. [3]

So the reality is we have two companies known for money laundering putting their cash into the same bank as Bitfinex.  Furthermore, one of the owners of these companies is affiliated with a large online exchange and also has Panamanian citizenship, where CryptoCapital is based out of.

If you think the picture can’t be clearer, wait for Part 3…

Sources  

[1]https://www.financemagnates.com/cryptocurrency/news/bitfinex-mixed-colombian-cocaine-polish-media-reports/

[2]https://forum.bitcoin.pl/viewtopic.php?f=79&t=28309&p=472711#p472711

[3]https://twitter.com/rolflobker/status/1090542851262423040

[4]https://opencorporates.com/companies/pa/810263

Corruption, Crypto and Cartels, Part I

For the next few weeks we will be releasing the first investigative piece from SynQ I/O. We will be detailing this story with all of what we know in multiple releases with public sources included.  Given the nature of this story, we will be adding our own opinions, conjecture, and potential implications along the way in separate releases so we can keep the facts and opinions clearly separated.

Part I

Nobody would be surprised if cryptocurrencies has been used for nefarious means, the same could be said for any measure of currency that exists. But what if you found out the industry has been systematically exploited to blatantly launder cartel cocaine money right underneath our noses (pun intended)?

After all, the Devil’s greatest trick is convincing the populace he doesn’t exist.

CryptoCapital – A Shady History

Mathias Grønnebæk, an early ETH developer, was one of the earliest people who noticed that a number of crypto companies are connected to a remote company. CryptoCapital, a fiat banking platform, is responsible as the banking/payment processor for a number of platforms, namely Decentralized Capital, Bitfinex, QuadrigaCX, CEX.io, etc.

Yet they are relatively anonymous, with only a few known details of significance; such as the fact that they are a Switzerland-based company and headquartered out of Panama.

Anonymity is not a crime, but for a company with smudgy associations, it’s a huge red flag, especially when a number of associated companies shares similar sketchy traits. Where there is smoke, there is usually fire. [1]

CryptoCapital’s conception can be traced back to Reddit user /u/Bitfan2013, who has divulged a few key details throughout his post history. It is known that the user is from a family of bankers, and were involved with the Panamanian acquisition of Havelock 5 years ago as well.

Havelock Investments, was the investment platform used to IPO Crypto Financial, the original name of CryptoCapital. Once a popular choice for users to invest in crypto projects, it has since gained a reputation for associations to security fraudulent projects. It is rather curious that a company has to circle around and buy out it’s originating platform, perhaps as an attempt to control sensitive information.

[2] The trail goes further, as CryptoCapital is also linked to a Polish company, Crypto Sp. Z.O.O. This company secured and provided a banking account for both Bitfinex and CEX.io with a Polish bank, Bank Spółdzielczy w Skierniewicach, which translates to Cooperative Bank in Skierniewice.

For scale reference, this smaller sized bank only had assets of around $13 million in 2011, making estimated profits of ~$5 million. Coincidentally, it’s also the equivalent of what Bitfinex handles in around one hour.

Crypto Sp. Z.O.O’s ownership can be traced back to CryptoCapital , and the director of both Crypto Sp. Z.O.O and CryptoCapital is one Ivan Manuel Molina Lee, who is thought to be an accountant, or a consultant. This individual is thought to be a “shell” CEO for hire, a scapegoat for those who would want to mask their identity.

While the working the history of the company goes further, details are surfacing as evidence of money laundering and nefarious activities have been coordinated by the individuals behind CryptoCapital.

Some of our questions

  • Why would a Swiss based company be headquarter in Panama?,
  • Why the need for multiple ‘shell’ corporations
  • Why so anonymous?

Over the next couple of weeks, we’ll be publishing our findings when looking into the answers of these questions, and what we’ve found.

Sources

Pirate Chain (ARRR)

Komodo was undoubtedly one of the most underrated cryptocurrencies of 2018, even though fundamentally it was one of the soundest projects. The security, privacy advantages and impressive 10k tx/s offered by the KMD platform went largely unnoticed by the market. However, Komodo wasn’t entirely ignored. Within the community and discussions present on the KMD platform were a handful of capable individuals that eventually conceptualized a new and better cryptocurrency, ARRR.

Fundamental

ARRR, or also known as Pirate, is an independent blockchain built as an asset chain to the KMD platform. Designed as a combination of ZEC and XMR, Pirate looks to improve the privacy and security features of XMR whilst fixing the fungibility problem of ZEC through the enforcement of forced shield-transactions.


The issue is that transactions from shielded balances to transparent balances are often the cause of decreased fungibility, as it is possible to identify coin mixing patterns. Concerns are also had about coins being “tainted” by affiliations to past transactions. The solution is to completely prevent this from happening.


This means that Pirate is a forced shield-transactions (z-transactions) only blockchain, making transparent transactions impossible on the Pirate blockchain. The ultimate objective of the project is to be the next-gen privacy cryptocurrency with completely anonymous transactions, except for mining rewards and notary node logs.


As an asset chain of the KMD ecosystem, Pirate also inherits much of Komodo’s features such as Zero Knowledge Privacy and delayed Proof-of-Work (dPoW). Also included, is the ability to backup asset chain records into the Komodo main chain and record them on as a hash on Bitcoin. This effectively enables the asset chain’s records to be then included in the backup that is pushed into the protective hash rate of the main Proof-of-Work (PoW) blockchain, Bitcoin.


This is made possible due to KMD being a fork of ZEC, which was a fork of BTC. In this way, the asset chain records can be protected by the largest hash-rate available on one blockchain. To compromise an asset chain that is employing Komodo’s dPoW protocol, the attacker would have to destroy all existing copies of the asset chain, all copies of the KMD main chain, and the accompanying PoW network (Bitcoin) into which the dPoW backups are inserted.

A visualized schematic of dPoW protocol.


Komodo’s security service is performed by notary nodes, chosen through a stake-weighted vote. These notary nodes have the option to switch notarization to another PoW network besides BTC if needed. For an example, in the event where worldwide miners’ hashing power changes to that of another PoW network, or the cost of notarization becomes unsustainable.
In addition, since KMD derive from ZEC and BTC, all features included in the Bitcoin protocol and Zcash parameters are also available on ARRR. This includes Zk-SNARKS, the top-tier standard for blockchain privacy at this time.


Even for individuals with the utmost priority for privacy will require the need for receipts to verify transactions, therefore Pirate will utilize view keys for this purpose. With view keys, one can prove they paid a certain amount of coins to a certain address. A node processing an incoming viewing key for a z-address can view all past transactions received by that address, as well as all future transactions sent to it. The viewing party cannot spend any funds from the address.

Cryptocurrency

According to information included in the Pirate whitepaper, current block-time is 60 seconds, using the Equihash Proof-of-Work mining algorithm. The maximum supply is approximately 200 million ARRR, with a speed of 6-26 TPS and a transaction fee of 0.0001 ARRR. 

The emission schedule for ARRR coin.


Included is also an emission schedule of the Pirate cryptocurrency, halving in block rewards every 388885 blocks, equating to an estimated 270 days per reward period.

Development

Though early in its infancy, the Pirate team has been able to facilitate the use of z-address deposits and withdrawals with the exchange DigitalPrice and successfully launched coin trading at the end of October 2018. And because it is an KMD integration, Sapling is planned for mid-December 2018, enabling future development of Point-of-Sale (PoS) integration, hardware wallet, Web Shop Plugins, and mobile wallets through Simple Payment Verification (zSPV). The development of a Pirate Foundation is also planned for Q1 2019, with hardware wallet integrations being estimated for Q3 2019.

The Pirate team has already set themselves apart from the existing competitors due to it’s open-sourced, community approach and the progress they’ve achieved thus far. For a market with a waning trust in the current cryptocurrency teams, Pirate may be the fresh breath of air private-centric consumers are looking for. The pioneers of ARRR are enthusiastic and looking to continue to contribute and/or improve the project at a pace not seen by very many other altcoin projects.