Former Steem Witness: ‘I Received Direct Threats From a Hive User’

Former Steem Witness: ‘I Received Direct Threats From a Hive User’

A former Steem witness received death threats from a Hive user, is DPoS to blame for the Steem/Hive drama?

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A former Steem witness, who is also a prominent member of Korea’s crypto community, spoke to Cointelegraph and shared proof that he received death threats from a Hive user ahead of Steem’s 0.23 hard fork.

The former witness, who has requested to remain anonymous, told Cointelegraph that he stepped down shortly before the 0.23 hard fork due to constant threats targeted at him and his family:

“I received direct threats from a Hive user based in Korea who said he would come to my house at night if they had the time and put feces on my door. Users also wrote ‘dead’ in chat groups (discord channels) threatening me and other Korean witnesses. The threats were getting out of control and dangerous, so I stepped down as a Steem witness, along with many other Korean witnesses who were vulnerable.”

The former network validator mentioned that he is only a Steem user now, noting that there are enough Steem witnesses to keep the Steem blockchain safe. “I know that we are trying to find ways to improve the Steem blockchain and get it in a better direction moving forward,” he said.

Dan Notestein, CEO of crypto exchange Blocktrades and a former leading Steem witness who is now one of the core Hive validators, told Cointelegraph that although he isn’t aware of the actual text sent to the former Steem witness, he believes that many Steem witnesses resigned due to legal matters rather than threats. He said:

“It’s my belief that the real reason that a bunch of Steem witnesses all resigned is because they feared legal retribution (which I think they had been threatened with), but they didn’t want to admit that this concerned them.”

Moreover, Notestein commented that the TripleA team, which controlled a Steem witness server, was “openly supporting the theft of STEEM tokens from many people.” A recent Steemit post explains that the TripleA team stepped down as a result of violent threats.

Notestein further commented that “it’s my understanding that one of the account owners whose STEEM was stolen was another South Korean who objected to the behavior of the Steem witnesses.” That being said, he noted that a threat was possible due to this behavior. He added:

“I suppose it’s understandable if he said something in the heat of the moment in an attempt to stop them from stealing his STEEM. But if so, I seriously doubt that the individual in question planned any violent action. I don’t think anyone involved really thinks there’s any violence planned on the part of anyone in this dispute. I think the team is doing their best to ‘save face’ after promoting theft, then backing down at the last minute due to concerns of legal liability, and I think they wanted an excuse to do so, so they latched on to the argument that they felt threatened by ‘heavy threats.’”

0.23 hard fork a result of witnesses at odds

The former witness also claims that Steem’s hostile 0.23 hard fork occurred as a result of Hive unfairly attacking the Steem community. Things started heating up when Hive launched a successful hard fork on March 20. Once the chain split, HIVE tokens were airdropped to STEEM holders at a 1:1 ratio, excluding the founder’s reward.

The former Steem witness noted that some players from Steem were also excluded from the airdrop during the Hive hard fork. Hive claimed that these accounts were excluded because they opposed decentralization. However, the former witness explained that this wasn’t true.” They excluded the users who were at odds with the old witnesses before the Hive hard fork and mediated between Steem and the previous witnesses,” he said.

He further noted that following the Hive hard fork in March, the network’s stability was undermined through different nodes. There was also automated spamming across the Steem blockchain. Additionally, he claimed that threats from Hive users have been made to a number of Steem community members.

“Hive just as decentralized as Steem”

While the Steem blockchain struggles to regain its footing, many of its users have begun migrating to Hive. The most popular decentralized application on Steem, Splinterlands, recently migrated to Hive. The move resulted in the number of daily transactions on Steem to drop below Hive’s for the first time.

The Steem blockchain also powers the popular decentralized social media platform, Steemit. Steemit community members have noted that they are migrating to Hive to share content, particularly those based in the United States. YouTuber Lea Thompson — better known as “Girl Gone Crypto” — told Cointelegraph that she has started putting content on Hive, noting that Steemit has recently deleted some of her videos for no apparent reason. She said:

“Hive better represents my values by providing true decentralization, content ownership and lack of censorship. Besides, the whole point of a social media platform is to be ‘social,’ and it’s pretty clear that most of the community engagement is happening over on Hive.”

Although most of the Steem community is moving to Hive, the former Steem witness explained that the Hive blockchain is just as decentralized as Steem: “Different witnesses are taking control of the stakes from the Hive community while running the blockchain itself. What doesn’t change is that the big stakers have a larger voice on the blockchain versus others.” Notestein, however, begs to differ, mentioning, “The entire Steem blockchain basically functions as a centralized ledger now, because of the huge stake controlled by Justin Sun.”

Is DPos to blame?

According to a recent report from Binance Research, delegated proof of stake, or DPos, enables higher network throughput. However, the report states that DPos causes decreased decentralization, since it’s based on a network maintained by a small group of users. Both Steem and Hive rely on DPos consensus mechanisms. In the case of Steem, twenty actors, or node operators, are responsible for maintaining the chain. Following Steem’s hard fork, many of these players moved to the Hive blockchain.

The former Steem witness explained that Blocktrades is the main developer behind Hive and was also involved in developing Steem. The former Steem witness said that 23 million STEEM network tokens, which were promised to be used for the development of the Steem economy, had been transferred to Blocktrades for unknown reasons:

“More than $35 million dollars worth of STEEM tokens were transferred to Blocktrades at the time. He now controls the Hive blockchain. I think the Steem blockchain had been an oligarchy system under the control of a few Steem witnesses, like Blocktrades.”

What’s more is that according to the former Steem witness, Blocktrades implemented a Steem Proposal System, or SPS, on Steem that is now available on Hive. The system is meant to be a development fund, but the former Steem witness claims that the SPS serves as a personal funding mechanism for Hive witnesses:

“On the Hive network, Blocktrades implemented an image server because they were not able to use the Steemit image server. This costs about fifty thousand dollars to implement, and they are asking for these funds from the SPS on Hive. Additionally, someone is communicating with various exchanges to list Hive tokens, which will cost at least thirty thousand dollars from the SPS on Hive.”

Notestein told Cointelegraph that SPS is a general purpose fund, which is now called “Decentralized Hive Fund.” Notestein explained that it’s funded by coin inflation, and Hive stakeholders can vote on proposals that need capital. He elaborated that “proposals don’t even have to be Hive-related, but many of the proposals are.”

Notestein further mentioned that one of the current voted-in proposals is to pay for an exchange liaison named Justine, who will keep the exchanges informed of changes, marketing procedures and promotional events. That being said, he noted that Hive has never paid for an exchange listing:

“I think most Hivers are opposed to the idea of paying for exchange listings: Hive listings are expected to be organic. In fact, most of Hive’s exchange listings occurred before that proposal was created.”

Moreover, Notestein revealed that there is currently 504,000 Hive Dollars (HBD) in the fund, mentioning that the available daily budget for proposals is 5040 HBD. “The fund and available daily budget is slowly increasing, since the funded proposals are drawing only 2505 HBD per day,” he said.

Lead engineer of decentralized finance platform Kava, Kevin Davis, told Cointelegraph that concentration of ownership of DPos tokens on exchanges will eventually threaten the security of DPos: “dPoS systems that have enthusiastic users, committed investors, and ‘hard-to-fork’ code will do best, while others may be effectively taken over by exchanges.”

Like Steem and Hive, Kava relies on a DPos consensus mechanism, however, Davis explained that DPos is bad for neutral platforms such as TRON, which recently formed a partnership with Steem:

“For governance of a single DAO/application (Kava, Band, Aragon), I think dPoS is a pretty effective form of decentralization. In my opinion, it comes down to the fact that the validators (block producers, node operators, etc), need to be incentive-aligned with the developers and users of the system. For a DAO, that seems possible. For a neutral smart-contract platform, I don’t think it is.”

Interestingly, Andrew Levine, the former head of communications and advocacy at Steemit, told Cointelegraph Magazine that while he strongly believes in the potential of the Steem blockchain, the “blue collar work” of producing blocks shouldn’t get mixed in with other functions, as “it’s debatable as to whether it’s the right way to design things,” adding that “the problem with Steem is that everything is connected.”

Although this is the case, Davis mentioned that the split between Steem and Hive was handled correctly up until the initial vote where exchanges voted against users’ wishes: “In my opinion, it’s on communities to find the line for what is and what is not an acceptable hard fork and exchanges should generally honor the wishes of the community.”

Zur Quelle

A former Steem witness received death threats from a Hive user, is DPoS to blame for the Steem/Hive drama?

US Congress Holds Hearing on Crypto: Witness Profiles

US Congress Holds Hearing on Crypto: Witness Profiles

Another U.S. congressional hearing on crypto to begin shortly. Learn what all the witnesses are going to say, based on their prepublished testimonies

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Today, on July 30, United States lawmakers will once again gather to debate cryptocurrency and blockchain policy in a hearing dubbed “Examining Regulatory Frameworks for Digital Currencies and Blockchain.” The hearing is scheduled for 10 a.m. EST and will be broadcast live.

This time, the U.S. Senate Banking Committee is planning to hold a broader discussion on crypto following the intense, Libra-focused testimony earlier this month. The witness panel will be represented by Jeremy Allaire, co-founder and CEO of payments company Circle, who will speak on behalf of the Blockchain Association; Rebecca M. Nelson, a specialist in international trade and finance at congressional think tank the Congressional Research Service; and law professor Mehrsa Baradaran from the Irvine School of Law at the University of California.

Here are the brief profiles of all three witnesses, along with their stance on regulation, based on their prepublished testimonies.

Jeremy Allaire

Occupation: Entrepreneur, investor

Stance toward crypto: Positive 

Allaire was born in 1971, in Philadelphia, Pennsylvania. In his early career, he had mostly been dealing with internet technologies, eventually becoming a major investor in the space. In 1995, two years after graduating from Macalester College in Minnesota with a major in political science, Jeremy and his brother J.J. founded Allaire Corp., a company focused on creating web development tools. Their company successfully went public in 1999 and was then merged with its rival Macromedia in 2001. Two years later, Jeremy Allaire left Macromedia to work for venture capital firm General Catalyst Partners. In 2004, Allaire founded Brightcove, an online video platform. After a prosperous initial public offering in 2012, Allaire stepped down as Brightcove’s CEO in 2013 but continued to serve as chairman of the board.

In October 2013, Allaire and Sean Neville founded Circle, a startup for facilitating money transfers with digital currencies like Bitcoin (BTC). The company’s core product, Circle Pay, is essentially a wallet for storing and sending cryptocurrencies. Its main feature is that BTC kept in the wallet is insured, so in the case of funds being stolen from the user’s account, all the money will allegedly be compensated. It has been backed by a number of mainstream, blue-chip investors, including Goldman Sachs

In 2015, Circle became the first company to ever receive a BitLicense, a business permit for conducting digital currency activities in the state of New York. In February 2018, Allaire’s company announced that it purchased Poloniex, a major U.S.-based cryptocurrency exchange for $400 million. In September the same year, Circle launched a USD-backed stablecoin dubbed USD Coin (USDC).

When, at the start of July, U.S. President Donald Trump tweeted regarding cryptocurrencies, blasting Bitcoin and Libra, Allaire responded on Twitter. His statement echoed that of many blockchain industry leaders in stating that the acknowledgment, albeit being a negative one, still goes a long way to promote the cause. Allaire wrote:

“Possibly the largest bull signal for BTC ever. Crypto now a Presidential / Global policy issue. People everywhere will embrace a mix of sovereign and non-sovereign digital currency.”

Allaire is strongly pro-regulation, as he has stressed numerous times that the crypto space needs more regulatory certainty. For instance, in May this year, the entrepreneur argued in a blog post that digital assets represent a fundamental new class of financial instrument and should not be considered as a security, commodity or a currency, while also arguing that the U.S. Securities and Exchange Commission is being forced to develop guidance regarding cryptocurrencies, deeming them to be securities. Allaire also declared in the same blog post that existing laws cannot address the cryptocurrency issue:

“We urge lawmakers to recognize the unparalleled economic power that permissionless innovation has unleashed and to act to let crypto and blockchain technologies flourish. We know lawmakers want to support economic growth and want them to seize the opportunity to lead the charge.”

On the following day, Allaire announced that Circle had to eliminate 30 job positions — roughly one in 10 of Circle’s employees — due to the “increasingly restrictive regulatory climate in the United States.”

According to his testimony, the Circle CEO will stress the existing banking system’s problem with money laundering issues, in which “99% of money laundering goes undetected.” Allaire then envisions a better future, “one that is built on a technological transformation ushered in by digital assets and blockchains,” with decentralized public ledger technology ensuring compliance with Know Your Customer and Anti-Money Laundering (AML) rules, helping to “radically improve privacy and reduce data leakage.”

Moreover, Allaire is going to urge U.S. lawmakers to understand the differences between USD Coin and Libra, given that “the recent announcement of the Libra cryptocurrency was the first time many people heard about the concept of a stablecoin.” Specifically, he argues that USDC has more use cases than Libra because it is built on Ethereum, the most popular smart contracts platform, and that his company’s stablecoin will eventually become “blockchain-agnostic.” Moreover, Allaire reiterated that stablecoins are “critical building blocks for the future digital economy.” One of the finishing sentences in Allaire’s testimony reads: 

“Without a sound, pragmatic, and agile national policy framework for digital assets, I am concerned that the United States will not be the world’s leader in this critical new technology, that it will continue to fall behind, and that it will not fully reap the benefits of the economic transformation that digital assets will bring.”

Rebecca M. Nelson

Occupation: Researcher

Stance toward crypto: Neutral

Nelson has been working in international trade and finance at the Congressional Research Service — a public policy research arm of the U.S. Congress — since 2009, the same year she received a Ph.D. in political science from Harvard University. In December 2018, Nelson presented a report to Congress dubbed “International Approaches to Digital Currencies.” At the end of the 20-pages long document, she stated that “a number of potential oversight issues and questions for Congress,” like “what lessons might be gleaned from other countries that could inform U.S. regulations of the cryptocurrency Market?”

Indeed, Nelson stresses that her current testimony also “focuses on the international landscape of digital currencies and emerging policy issues.” After outlining various types of cryptocurrencies and how they are treated in different jurisdictions — such as Malta, China and Japan — Nelson discusses cryptocurrency projects conducted by large corporations and the potential reasons why Libra has been met with an unprecedented amount of resentment. Her written testimony says:

“Facebook has garnered far more interest and backlash against its cryptocurrency plans than other traditional financial MNCs, due to questions about Facebook’s alleged lack of expertise in the banking sector, the size of its network, and concerns about its handling of user data.”

Nelson then concludes:

“Large-scale adoption of digital currencies could have a range of policy implications for the United States, including financial stability, consumer protections, AML/CFT, privacy considerations, and sanctions policy, among others.”

Mehrsa Baradaran

Occupation: Law professor

Stance toward crypto: Negative

Mehrsa Baradaran is an Iran-born law professor specializing in banking law at the University of California, Irvine. She immigrated to the U.S. with her family in 1986, where she enrolled at Brigham Young University. Upon graduating, she went to New York University, where she then obtained her law degree. 

In 2015, her book “How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy” was published to much critical acclaim. In it, Baraban discusses the concept of postal banking, in which public banks offer a wide range of transaction services, including financial transactions, remittance, savings accounts and small lending. “These institutions would remain affordable because of economies of scale and because of the existing postal infrastructure in the U.S. Plus, in the absence of shareholders, they would not be driven to seek profits and could sell services at cost,” she wrote. The idea was subsequently endorsed by Bernie Sanders.

In December 2017, Baradaran stated on Twitter that she is familiar with cryptocurrencies, as she has been following the space for years. The remark was made during her debate with Steven McKie, an active community member and CEO who works in blockchain-backed asset management. As part of the argument, Baradaran criticized Bitcoin for lacking the potential to be a tool to close the wealth gap due to its high volatility and limited adoption, among other reasons.

“I have been following bitcoin and cryptocurrency for years. I do not believe my understanding is limited, but always happy to read more.”

Thus, Baradaran begins her upcoming testimony before Congress by arguing that “banks have abandoned certain low-profit communities and customers” and references the postal banking concept as a potential gateway for the unbanked (who are also the primary audience for Libra, according to its promotional material). 

The law professor then comes up with the ultimate idea behind her testimony, saying that “cryptocurrency is not the way to achieve financial inclusion.” She argues:

“Thus far, fintech has only served the population who is already banked and blockchain use is limited to the technically savvy. There is no reason to doubt the good intention of these technology companies, but I believe there is a fundamental mismatch between the problems and barriers that the unbanked face and the technological solutions being offered. What unbanked customers need are simple and safe places to save their money, and then convenient and inexpensive ways to use it. The most popular product for low-income consumers has been a very simple, and still very expensive, prepaid debit card.”

In Baradaran’s view, cryptocurrencies can help the unbanked only if all of the workforce and organizations move to adopt the cryptocurrencies. She goes on to say:

“Some might argue that total adoption of crypto currency is unnecessary to provide some measure of benefit to the underbanked, but then we are left with debating how much financial inclusion is good enough, who should be included, and still what to do about those who are left out.”

Baradaran finishes her testimony by stressing that there are inequalities and problems in the U.S. banking system and they must be fixed, but only “through democratic means.” She then stresses that “cryptocurrencies want to take over where our public institutions have failed,” but argues that it is ultimately the duty of Congress.

Zur Quelle

Another U.S. congressional hearing on crypto to begin shortly. Learn what all the witnesses are going to say, based on their prepublished testimonies