Windows and Linux devices are under attack by a new cryptomining worm

Windows and Linux devices are under attack by a new cryptomining worm

Enlarge (credit: Getty Images)

A newly discovered cryptomining worm is stepping up its targeting of Windows and Linux devices with a batch of new exploits and capabilities, a researcher said.

Research company Juniper started monitoring what it’s calling the Sysrv botnet in December. One of the botnet’s malware components was a worm that spread from one vulnerable device to another without requiring any user action. It did this by scanning the Internet for vulnerable devices and, when found, infecting them using a list of exploits that has increased over time.

The malware also included a cryptominer that uses infected devices to create the Monero digital currency. There was a separate binary file for each component.

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#biz-it, #cryptocurrency, #cryptomining, #exploits, #malware, #tech, #vulnerabilities

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Crypto trading on Robinhood spiked to 9.5M customers in first quarter

It’s been a big year for crypto, and Robinhood shared some stats today providing more evidence that the crypto boom is more than just hype — at least for now.

In a blog, Christine Brown, Robinhood’s head of crypto operations, revealed that in the first quarter of 2021, 9.5 million of its customers traded crypto via the company’s platform. That’s up big time from the 1.7 million customers who traded crypto in the 2020 fourth quarter.

Brown says the company’s intent behind launching Robinhood Crypto in the first place was to give its customers the opportunity to buy and sell cryptocurrency in addition to the range of assets offered through its brokerage, Robinhood Financial.

Robinhood Crypto currently offers seven tradeable coins: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin. 

Brown also noted that Robinhood’s crypto team has already more than tripled since the beginning of the year, although it’s not entirely clear how many staffers it currently has on that team. There are a number of crypto-related openings on its careers site, including an open “Crypto CFO” role.

The company is making clear that crypto is an important part of its overall business and part of its mission to democratize access to the masses.

“All it takes to spend, trade, and store cryptocurrency, theoretically, is an internet connection — you don’t need access to a big line of credit, or startup capital,” Brown wrote. “You don’t even have to be awake at a certain time of day to trade. The crypto market doesn’t close. Crypto was born out of a mission to take power away from institutions and return it to the people.”

Last August, Robinhood raised $200 million more at a new, higher $11.2 billion valuation in its third raise of the year before filing to go public in March. The company has had a tumultuous past year or so that was filled with time in front of Congress, bad PR from a user’s suicide, and settlements with the SEC.

Meanwhile, TechCrunch also reported earlier this week that in the first quarter of 2021, American consumer cryptocurrency trading giant Coinbase grew sharply, generating strong profits at the same time. Specifically, the company notched revenue of $1.8 billion in Q1 2021, up from $585.1 million in Q4 2020. Net income totaled “approximately $730 million to $800 million,” up from $178.8 million in Q4 2020.

#bitcoin, #cfo, #coinbase, #cryptocurrencies, #cryptocurrency, #cryptography, #digital-currencies, #dogecoin, #finance, #robinhood, #tc

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The Cult of CryptoPunks

Last month, hours before news of Beeple’s $69 million NFT sale grabbed the front pages of newspapers across the country, a pair of 24 x 24 pixel portraits of aliens wearing little hats sold separately for around $7.5 million each.

The sales, which occurred within 20 hours of each other, didn’t garner the same headlines that the Beeple auction received, but there was a bit of coverage in the tech press, mostly because one of the aliens was sold by Dylan Field, the CEO of design software startup Figma. In a Clubhouse conversation following the sale, Field said he hoped that a century from now the blocky image he had sold would be seen as the “Mona Lisa of digital art.”

Punk #7804, which recently sold for 4,200 Ether (about $7.5M at the time of sale)

The pixelated alien portraits belonged to an NFT platform called CryptoPunks. In the world of NFTs, the platform is as close to ancient history as it gets, meaning it’s almost four years old. There are 10,000 punks, all of which were procedurally generated and claimed for free when the project launched in 2017.

Since then, the economy built around trading these images has sauntered on with a small but passionate community, at least until a few months ago. That’s when it suddenly exploded, dragging into the fray Silicon Valley CEOs, prominent venture capitalists, famous YouTubers, poker stars and major business personalities. The platform has seen nearly $200 million worth of transaction volume in official deals since launch, according to NFT tracking site CryptoSlam, with 98% of that volume flowing through the platform in the past few months.

The sudden rise in punk prices is owed to an explosion of interest in NFTs largely brought about by climbing cryptocurrency prices, the rise in popularity of Dapper Labs’ NBA Top Shot and the resurgence of the physical collectibles markets, all of which have made some investors more comfortable with the idea of betting on digital goods.

Today, the cheapest punk you can buy will run you about $30,000 in Ethereum cryptocurrency, while the rarest may be worth just shy of $10 million.

CryptoPunks have captured plenty of attention, but even with all eyeballs on the project, people still aren’t sure exactly what they’re looking at.

“In NFT world, people are talking about selling Jack Dorsey tweets, Top Shots and Beeple in the same sentence right now,” Sotheby’s CEO Charles Stewart told TechCrunch in an interview. “The lines can get a little blurry. When you look at CryptoPunks, are they art? Are they collectibles? Are they… you know, well… what are they exactly?”

Image Credits: Lucas Matney

A ‘more honest’ stock market

Back in early 2017, John Watkinson and Matt Hall were playing with a pixelated character generator they built, and they were pretty enthusiastic about the fun little pop art portraits they had been cooking up. By June, they had created 10,000 characters with different hairstyles, hats and glasses for a project called CryptoPunks that would be hosted on the nascent Ethereum blockchain. Some punks had a handful of attributes, some had none, some were apes, some were aliens. While the creators had a hand in curating some elements, they let their generator take control of the creativity.

They launched to modest interest from a small community of blockchain enthusiasts who only had to pay a few pennies in Ethereum “gas” transaction fees to own their own punk. It was a novel idea, pre-dating the NFT platform CryptoKitties by months and NBA Top Shot by years, but it arrived at the cusp of crypto’s 2017 wave during the early throes of initial coin offerings, where scams were plentiful and attention was hard to come by. Hall said that about 20-30 punks were claimed in the days following launch.

Then a week later Mashable wrote a story about the fledgling crypto art project, and within hours every punk was gone.

Some users went all-in immediately. One user that went by the username hemba has become something of a cautionary figure in the CryptoPunks community, claiming more than 1,000 punks at launch and selling every one of them before the market took off this year, missing out on tens of millions of dollars in profits at current prices. Another user who goes by mr703 claimed some 703 punks in total at launch, hundreds of which they are still holding onto years later in a collection similarly worth tens of millions.

In a Discord chat with the pseudonymous mr703, we asked whether they felt they had enough or if there were any punks they still intended to buy. “I own all the punks I ever really want,” they typed back. Their public wallet shows they paid more than $37,000 for a punk in the minutes in between our question and their answer. They spent $35,000 on another one several hours later.

Some investors who have already gone all-in backing risky cryptocurrencies see NFTs as a way to diversify their crypto holdings. Others see CryptoPunks as more of a game.

CryptoPunks creators Matt Hall and John Watkinson

“I think that with each year that passes the definition of what is gambling and what is investing move closer and closer together,” says Mike McDonald, a 31-year-old professional poker player who recently bought his first punk.

Why are some punks worth tens of thousands of dollars while others are worth millions? Users in the thriving CryptoPunks Discord community have had to decide that on their own, combining objective analysis of the rarity of certain design attributes with the more subjective impressions of punk “aesthetics.”

Things aren’t always predictable. Earrings are the most common attribute for punks, commanding much lower price floors than those with beanie hats, which are the rarest attribute. But hundreds of punks are wearing 3D glasses, yet they tend to earn a hefty premium over those with green clown hair even though fewer of those punks exist. Some attributes gain market momentum randomly; for instance, the market for punks wearing hoodies has been particularly hot in recent weeks.

“Obviously this is a very speculative market… but it’s almost more honest than the stock market,” user Max Orgeldinger tells TechCrunch. “Kudos to Elon Musk — and I’m a big Tesla fan — but there are no fundamentals that support that stock price. It’s the same when you look at GameStop. With the whole NFT community, it’s almost more honest because nobody’s getting tricked into thinking there’s some very complicated math that no one can figure out. This is just people making up prices and if you want to pay it, that’s the price and if you don’t want to pay it, that’s not the price.”

As prices have surged, owning a piece of the CryptoPunks’ finite supply has become a “digital flex” in its own right, especially when used as an avatar on social media sites, several punk owners told us. That has drawn plenty of wealthy buyers outside the blockchain world, including influencers like YouTuber Logan Paul who uploaded a video last month detailing his $170,000 purchase of several punks.

“When you don’t have a punk, the ecosystem seems like this gentlemen’s club of the 10,000 people that can afford these kinds of avatars,” says McDonald.

There is some concern among the community whether all of this outside attention is a sign of an impending crash in prices, though many investors feel reassured by the historical value of CryptoPunks among NFTs. Nevertheless, some of the investors have a hard time convincing those in their lives that what they’re doing is anything but reckless.

After a recent six-figure punk purchase, user Chris Mintern says his girlfriend was exasperated that he had just dropped more money on a punk than her house was worth. “She says it’s all just a bunch of internet nerds who don’t appreciate the value of money. That to them, it’s just a game and numbers on a screen,” he told TechCrunch.

The community surrounding CryptoPunks has largely bloomed on the chat app Discord in a dedicated group where users that are verified as punk owners tend to drive conversations and can gather attention for up-and-coming NFT projects they’re betting on.

“It’s a bit of a cult,” said user thebeautyandthepunk in an interview.

Like many early users, thebeautyandthepunk has stayed pseudonymous since claiming a couple dozen punks at launch, telling us that no one in her life has any idea she’s sitting on an NFT collection likely worth millions — except her accountant. She did recently decide to make it known that she was one of the few female traders who have been present in the overwhelmingly male CryptoPunks community since the beginning.

“I really try to keep my real life and my crypto life completely separate,” she says. “But people need to know that women have been [in this space] for a while and we’re not going anywhere.”

Today, all 10,000 punks are scattered across some 1,889 wallets, according to crypto tracker Etherscan. Some of those accounts are inactive and feared dead, with the punks inside them lost on the blockchain forever. The largest single wallet of punks today belongs to the platform’s creators, holding some 488 punks. It’s their only ownership in a blockchain-based marketplace where most mechanics are already set in stone.

“We’re just users now, too. Nothing about our website is specific to us having created the project,” Watkinson tells TechCrunch. “Our only equity is through the punks we own. We don’t take a cut of the market or anything.”

Image Credits: Lucas Matney

The NFT high-rollers table

Today, CryptoPunks’ creators are working on NFTs full time. While they can’t make any underlying changes to the CryptoPunks contract, they have aimed to improve the website’s marketplace while hopping into the Discord group to keep an eye on the ever-growing community of users.

“It was never our intention for this to sort of be our careers,” Watkinson says.

In 2019, the duo debuted a follow-up project called Autoglyphs, which brought generative art to the blockchain. It didn’t boast the pop aesthetic of CryptoPunks, but it added a new layer to their exploration of blockchain art. Hall and Watkinson have built up a company around their various projects called Larva Labs, and they are in the process of building up a new NFT project that they hope will have a lower barrier of entry than CryptoPunks and Autoglyphs.

“As the CryptoPunks get more and more expensive, they’re just hard to get into,” Hall says.

At around $200 million in official marketplace sales, CryptoPunks’ total lifetime sales volume is about 40% of what Dapper Labs’ NBA Top Shot has achieved in its past several months. Though CryptoPunks has done so with 0.35% of Top Shot’s total transaction volume, which is fewer than 12,000 trades compared to more than 3.3 million, according to CryptoSlam. Those high transaction numbers spread across millions of NFTs mean much less value per transaction on Top Shot, but a much, much bigger pool of active users.

Last month, Dapper Labs announced they had raised $305 million at a $2.6 billion valuation as they look to expand their private Flow blockchain to other blockchain “games” through more high-profile partnerships. Hall and Watkinson have been watching Dapper Labs’ success, but don’t think Larva Labs will need venture funding to continue exploring what’s next for NFTs.

“Rather than looking at becoming a large company and doing a deal with the NBA or something like that, we’re more just looking forward to kind of just continuing to explore the tech possibilities,” Watkinson said. “What we love about CryptoPunks is the action, and so we’d like to find a way back to sort of that level of action, and our next project is going to try to find ways to sort of keep the deal flow going.”

They have few details to share on the new project, which they said will debut “relatively soon” this year.

Image Credits: Lucas Matney

The origin of the species

CryptoPunks lore is largely steeped in the assertion that they are the oldest NFT project on the Ethereum blockchain. It’s a line that was floated by almost all of the punk owners I spoke with as the main reason they had dumped hundreds of thousands of dollars into the platform. In Paul’s recent YouTube video, he justified prices to his skeptical friends by noting, “[CryptoPunks] is the first and that makes it special.”

But over the past few weeks, holes in that narrative have begun to emerge, as “crypto archaeologists” have begun to unearth abandoned NFT projects that were created in Ethereum’s earliest days, with at least one arriving before CryptoPunks. We recently spoke with Cyrus Adkisson, the creator of a project called Etheria, which he debuted back in 2015, just three months after Ethereum’s mainnet went live. The project allowed users to buy up, sell and build on hexagonal swaths of digital land on a large map. It didn’t develop much of a following at launch and sat abandoned for years on the Ethereum blockchain until Adkisson saw the “fever pitch” developing around NFTs and started searching for the passcode to his old account.

“I remember calling my parents toward the end of February, telling them I may be sitting on a goldmine here,” Adkisson told TechCrunch.

After ultimately gaining access to his Etheria account, he then fired off a few tweets from Etheria’s long-dormant Twitter account, detailing that the bulk of the 914 tiles across two externally tradeable versions were still available and could be claimed for 1 Ether each. Adkisson says by the end of that weekend, his previously empty wallet was filled with $1.4 million worth of Ethereum.

Age alone won’t make Etheria a hit; the major challenge from here is building up a community around the project that brings in more users and pushes the prices of land tiles higher. A tile recently sold for nearly $25,000 worth of Ether, but early adopters are struggling to balance waiting out the market’s development with liquidating enough tiles so that new users can get involved and the project can build hype. 

“With these projects, it’s like, yeah, you have the historical context, but now you need to build a solid foundation with your communities because your real measure is not now, but it’s going to be what your community, size and engagement look like in a year,” says Allen Hena, an NFT enthusiast who helped attract attention to the Etheria community last month with a series of blog posts.

 In the days following the project’s resurrection, the young community has already seen plenty of disagreement and infighting as Adkisson aims to maintain some level of control over the platform on which plenty have already pinned their retirement plans. Owners are mainly frustrated by Adkisson’s attempts to make an older version of Etheria externally tradeable, something that would likely make land tiles on the existing contracts considerably less valuable. Since our interview, Adkisson has left Etheria’s Discord server and admins in the group have vowed to continue on without him as he decides which direction he wants to take Etheria 1.0.

While punk owners we talked with are keeping an eye on these newly reemerged projects, they’re also skeptical that Etheria’s older status will do much to impact CryptoPunks’ value to NFT history.

“On paper it looks cool but it didn’t actually do anything for the community,” says user Daniel Maegaard. “CryptoPunks did all the hard work.”

Punk #6487, which Daniel Maegaard recently sold for 550 Ether (about $1.05M at the time of sale)

Maegaard, a 30-year-old crypto investor based in Brisbane, Australia, is more tied up in the value of CryptoPunks than most. He recently sold a particularly rare female “zero-trait” punk for more than $1 million. He’s also the owner of one of the rarest — some argue the rarest — punks, the only one with seven unique attributes, a qualifier that has earned it the nickname “7-atty” and a sacred place in punk lore. When he bought the punk for about $18,000 in Ethereum last year, it was the most anyone had ever paid. He isn’t keen to let it go anytime soon, saying he recently turned down a private offer for $4.2 million from a group of investors that hoped to tokenize the NFT and sell fractional shares of it to other users. Part of holding onto it is the potential for further gains, but the real reason, he says, is that he’s beginning to feel an emotional bond with his collection of digital files.

“These little pixelated faces, it should be easy to give them up. I’ve sold a few punks and I’ve regretted every sale, I experienced that when I sold my zero-trait punk,” Maegaard says. “Like, yeah, a million dollars is nice, but I really liked her.”

#accountant, #blockchain, #blockchain-art, #blockchains, #brisbane, #crypto-art, #crypto-economy, #cryptocurrencies, #cryptocurrency, #dapper-labs, #decentralization, #dylan-field, #elon-musk, #ethereum, #figma, #gamestop, #jack-dorsey, #logan-paul, #matt-hall, #mona-lisa, #national-basketball-association, #nba, #nfts, #player, #sothebys, #tc

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Signal tests payments in the UK using MobileCoin

Encrypted chat app Signal is adding payments to the services it provides, a long-expected move and one the company is taking its time on. A U.K.-only beta program will allow users to trade the cryptocurrency MobileCoin quickly, easily, and most importantly, privately.

If you’re in the U.K., or have some way to appear to be, you’ll notice a new Signal Payments feature in the app when you update. All you need to do to use it is link a MobileCoin wallet after you buy some on the cryptocurrency exchange FTX, the only one that lists it right now.

Once you link up, you’ll be able to instantly send MOB to anyone else with a linked wallet, pretty much as easily as you’d send a chat. (No word on when the beta will expand to other countries or currencies.)

Just as Signal doesn’t have any kind of access to the messages you send or calls you make, your payments are totally private. MobileCoin, which Signal has been working with for a couple years now, was built from the ground up for speed and privacy, using a zero-knowledge proof system and other innovations to make it as easy as Venmo but as secure as… well, Signal. You can read more about their approach in this paper (PDF).

MobileCoin just snagged a little over $11M in funding last month as rumors swirled that this integration was nearing readiness. Further whispers propelled the value of MOB into the stratosphere as well, nice for those holding it but not for people who want to use it to pay someone back for a meal. All of a sudden you’ve given your friend a Benjamin (or perhaps now, in the UK, a Turing) for no good reason, or that the sandwich has depreciated precipitously since lunchtime.

There’s no reason you have to hold the currency, of course, but swapping it for stable or fiat currencies every time seems a chore. Speaking to Wired, Signal co-founder Moxie Marlinspike envisioned an automatic trade-out system, though he is rarely so free with information like that if it is something under active development.

While there is some risk that getting involved with cryptocurrency, with the field’s mixed reputation, may dilute or pollute the goodwill Signal has developed as a secure and disinterested service provider, the team there seems to think it’s inevitable. After all, if popular payment services are being monitored the same way your email and social media are, perhaps we ought to nip this one in the bud and go end-to-end encrypted as quickly as possible.

#crypto, #cryptocurrency, #e2e, #mobile, #mobilecoin, #payments, #privacy, #signal, #signal-payments, #startups, #tc

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Coinbase’s monster Q1 in context

In the first quarter of 2021, American consumer cryptocurrency trading giant Coinbase grew sharply, generating strong profits at the same time.

For Coinbase, the disclosure of its preliminary Q1 2021 results comes a week ahead of its direct listing, an event that will see the company begin to trade publicly. As it is both cash-rich and well-known, Coinbase is foregoing a traditional IPO in favor of the more exotic method of going public.

In its release, Coinbase disclosed the following metrics, which TechCrunch has compared to metrics from its S-1 filing:

  • Monthly transacting users (MTUs) of 6.1 million, up from 2.8 million at the end of 2020
  • Platform assets of $223 billion, up from $90.3 billion at the end of 2020
  • Trading volume of $335 billion, up from $193.1 billion at the end of 2020
  • Revenue of $1.8 billion, up from $585.1 million in Q4 2020
  • Net income of “approximately $730 million to $800 million,” up from $178.8 million in Q4 2020
  • Adjusted EBITDA of “approximately $1.1 billion,” up from $287.7 million in Q4 2020

The growth of Coinbase from Q4 2020 to Q1 2021 is so extreme that the company’s year-over-year comparisons are farcical. For example, in Q1 2020 Coinbase’s revenues were $190.6 million, or just under 11% of its Q1 2021 top line. The company’s adjusted profits alone in Q1 2021 were more than five times its year-ago revenues.

The new numbers may help solidify some valuation marks that the company has been discussed as approaching, like the $100 billion threshold, or even boost them.

The company did present some warnings in its public release, noting that cryptocurrency price “cycles can be highly volatile, and as a result, [Coinbase] measure[s] [its] performance over price cycles in lieu of quarterly results.” The company also stated that future declines in crypto trading activity will not slow its investment:

MTUs, Trading Volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. This revenue unpredictability, in turn, impacts our profitability on a quarter-to-quarter basis. In terms of expenses, we intend to prioritize investment, including in periods where we may see a decrease in Bitcoin price. This is because we believe that scale is central to achieving our mission and it is still early in the development of this industry. [Emphasis: TechCrunch]

Or more simply, it is willing to sacrifice future profitability if its revenues decline, as it is building for the future instead of hewing to more near-term investor expectations. At least Coinbase is being clear in its messaging to investors; don’t buy Coinbase stock expecting the company to tune its results to quarterly expectations.

Looking ahead, Coinbase did provide some guidance for its full year results. For 2021, the company provided three scenarios. The first “assumes an increase in crypto market capitalization and moderate-to-high crypto asset price volatility,” leading to 7.0 million MTUs. The second “assumes flat crypto market capitalization and low-to-moderate crypto asset price volatility” and 5.5 million MTUs. The third “assumes a significant decrease in crypto market capitalization, similar to the decrease observed in 2018, and low levels of crypto asset price volatility thereafter” and 4.0 million MTUs for the year.

But don’t think that Coinbase is anticipation stagnant growth, simply because its best scenario anticipates mere growth from 6.1 million MTUs to 7.0 million MTUs. The company wrote in its release under the headline “institutional revenue” that it expects “meaningful growth in 2021 driven by transaction and custody revenue given the increased institutional interest in the crypto asset class.”

Coinbase’s quarter was bonkers good. But so was the performance of cryptocurrencies themselves. A bet on the company’s shares, then, could easily be seen as a bet on the value of bitcoin and its ilk. April 14th is going to be a fun day to watch.

#bitcoin, #coinbase, #cryptocurrency, #direct-listing, #fundings-exits, #investment, #startups, #tc, #trading

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What happens to your NFTs and crypto assets after you die?

As consumers build their wealth, assets are typically tangible: cash, investments, property, cars, jewelry, art. But increasingly we’re adding a new type of asset to the mix: digital assets, whether in the form of cryptocurrency or a new asset class, NFTs.

We’re going through the biggest wealth transfer in history right now, with an estimated $16 trillion expected to change hands in the coming decades. While it’s easy to hand over the reins of a physical asset in the event of an emergency or death, it’s not as simple with digital assets.

A new Angus Reid study commissioned by Canadian online will platform Willful finds that only one in four consumers have someone in their life who knows all of their passwords and account details, which begs the question: Will consumers be prepared to pass on digital assets, or will billions in virtual goods be stuck in the digital ether?

While it’s easy to hand over the reins of a physical asset in the event of an emergency or death, it’s not as simple with digital assets.

Digital assets have been dominating the news cycle in 2021. While cryptocurrency isn’t new, it’s attracted a lot of attention in the past year because of its skyrocketing value, promotion from prominent figures like billionaire Elon Musk, and bitcoin offerings from traditional financial firms like Morgan Stanley. If you hold any type of cryptocurrency, the only way to access it is via a private key — typically a 64-digit passcode. No private key, no access to the virtual currency.

There have been many stories reported about people who purchased bitcoin and would be millionaires today if they hadn’t thrown out their hard drive or lost track of their key. One high-profile case is that of Gerald Cotten, the founder of cryptocurrency exchange Quadriga. When Cotten died in 2018, he took with him the private keys to over $250 million in client assets.

Consumers have also been inundated with stories about NFTs, or non-fungible tokens, which are digital assets hosted on the same blockchain that makes cryptocurrency possible. To most, it seems absurd that artist Beeple could sell a $69 million piece of art through a Christie’s auction, or that a virtual home in Toronto could sell for over $600,000, or that people would spend over $200 million trading virtual NBA highlights like we used to trade baseball cards. But this new asset class is proving that digital assets can be as valuable if not more valuable than physical assets — and similar to cryptocurrency, they likely require a private key to access them.

When someone dies, they either have a will that dictates how their assets will be distributed, or, if they die without a will, a government formula outlines how their assets will be divided. While a will outlines who should receive what, it typically doesn’t have an up-to-date asset list, nor does it contain passwords or access keys. There’s an estimated tens of billions in unclaimed assets sitting in banks today as a result of a family or executor not knowing about those accounts following an individual’s death.

But an executor can do due diligence by calling financial institutions to double-check whether the person held accounts and get access to those funds, which typically requires providing copies of the will and/or death certificate. With digital assets, it’s not as simple as calling the bank and finding out a relative had a valuable NFT. There’s no directory or central body that governs NFTs or cryptocurrency — it’s purposely decentralized, which is great for privacy but less than ideal for family members who want to figure out if someone held valuable digital assets.

And it’s not just about knowing digital assets exist — it’s about knowing how to access them. A recent study from the Angus Reid Forum, commissioned by Willful, showed that consumers under 35 are way less likely to have shared account access with loved ones (19% of those under 35 have shared account info, compared with 32% of those over 55). This makes sense, since the younger you are, the less likely you are to think about passing on assets after you die. But this tech-savvy younger demographic may leave their families in the lurch if something happens.

So what can consumers do to ensure their digital assets are protected? First, consider using a password manager like 1Password — which can store all of your account information, logins, private keys to digital assets and any other key information — and share the master access password with your executor or store it with your will.

While this can ensure easy access to your accounts in an emergency, Lee Poskanzer, the founder of Directive Communication Systems, says it can also put your family or executors at risk, highlighting that in many cases, website and app owners explicitly prohibit password sharing in their terms of service, and privacy laws in some jurisdictions prohibit account holder impersonation (in the U.S., that’s covered by the Stored Communications and Electronic Communications Privacy Act). Not to mention, accounts increasingly require two-factor authentication, which may not be easy to confirm if executors don’t have access to the person’s smartphone.

Directive Communication Systems’ platform helps manage the transfer of digital assets upon death, and Poskanzer says they don’t collect passwords for this reason. Instead, they work with the estate to provide content providers (Google, social media platforms, etc.) with required documentation, which can include a death certificate, obituary, ID or other documents. Upon meeting those requirements, which vary by company, content providers provide a data dump of an account’s contents, making them available via the cloud.

Second, consider using a digital wallet or exchange to store your digital assets — if your family has access to that, it may also include access to your private keys, depending on the wallet’s features, or the exchange itself may have a death-management process.

For example, Coinbase clearly outlines what an executor or family member can do to retrieve digital assets in case of the death of the account holder. As a backup, you can store your private key on a physical piece of paper and ensure it’s stored in a safe deposit box, fireproof safe or other safe place your executor can access in the event of your passing.

Third, create an up-to-date list of your assets that your executor and/or key family members have access to — this should include physical and digital assets, and should be reviewed and updated either annually or when you acquire a new asset or change financial institutions. Finally, create a will that clearly outlines how you want your assets to be distributed and provide specific instructions on how you want digital assets to be distributed.

Not only is this best practice to protect your assets of any kind and to appoint key roles like guardians for minor children, it will also likely be required in order to release any account contents (for example, Coinbase requires a copy of the will as part of its process to release funds to an estate).

As we go through this major wealth transfer between generations, it’s likely that banks, fintechs, crypto exchanges, social media platforms and other content providers will create clear death-management processes that make it easier to alert people about digital assets before you die and provide easy access instructions. But until that happens, following these steps means you can ensure your assets go to the people or organizations you want them to — and that they won’t be stuck in digital purgatory.

#bitcoin, #blockchain, #coinbase, #column, #cryptocurrencies, #cryptocurrency, #digital-currencies, #estate-planning, #media, #nfts, #private-key, #tc

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Blockchain and taking the politics out of tech

Brian Brooks grew up on credit. And for him, that’s a good thing.

Brooks is from a small town in Colorado that took a big hit when the steel factory — the main driver of its economy — shut down. A couple of years later, when Brooks was 14, his father passed away, and it became very clear to Brooks that if he wanted “any kind of life,” he’d have to hustle. He got a job and in order to go to college and then law school, he took out six figures worth of student loans at an 8% interest rate.

But instead of being bitter, Brooks is grateful that he even had that opportunity.

“Credit is what allows you to get something that you couldn’t otherwise afford to pay cash for,” he says.

Years later, Brooks would go on to serve as chief legal officer of Coinbase, a multi-billion-dollar Silicon Valley startup that has become one of the world’s largest digital currency platforms. To Brooks, blockchain and cryptocurrency hold great potential to further financial inclusion, a cause he holds close to his heart.

Then in May 2020, Brooks moved from the private sector to the public sector, when he took on the role of Acting Comptroller of the Currency of the OCC. Brooks’ tenure at the OCC was short, but eventful. He helped enact some controversial legislation around bank charters, cryptocurrency and lending. In January, he left that post with plans to return to the private sector.

In March, Brooks announced he’d be joining Spring Labs as the company’s first independent director. Brooks had come full circle with the data-sharing startup, considering he was among the group that first conceived the idea of Spring Labs five years ago.

His goal there is to bring to bear a combination of an innovation mindset coupled with a knowledge of the traditional banking system that fintechs are trying to disrupt. Having actually been responsible for running the banking system, Brooks believes he has “a good sense of what’s broken.”

“I think that there are a lot of tech companies that have really great ideas but they’re not very expert in what it is that they’re trying to fix,” he says. “And, for me, having spent so much time inside of banks and inside of the credit infrastructure, it’s pretty clear to me what it is that needs to be better. And it really is secure, anonymous data sharing.”

TechCrunch sat down with Brooks to hear more about his return to the private sector, his thoughts on why blockchain is the answer to financial inclusion and why he thinks politics need to be taken out of tech.

This interview has been edited for clarity and brevity.

TC: What does Spring Labs do exactly? 

Brooks: The purpose of Spring Labs is to use blockchain to create a much richer network effect of data that allows the credit bureaus and others to predict the creditworthiness of people who are not in the traditional credit bureau system. And that’s one of the amazing promises of blockchain, considering that all blockchain is an open source network of nodes. 

So the more data sources you can connect up to that network, the richer the environment is to allow you to assess people’s credit worthiness. The vision is that once Spring Labs is successful and has scaled this, we will no longer have to exclude 45 billion people from the credit system because we’ll have data…that allows us to predict that this person is a good credit risk and should get a credit card, regardless of whether they have a mortgage or a credit card. The core mission of the company is to bring credit to more people.

TC: When you say richer data, you mean things like paying rent on time?

Brooks: Yes, stuff like that, but also for example information about recurring bank credits and debits. Also subscription payments, recurring payments of any kind, and also asset and income information — all of which is relevant to whether you’re a good credit risk.

TC: Yes, I’ve written about a couple of other startups that have similar missions.

Brooks: Yes, but the reason I’ve spent so much time on crypto and blockchain personally over the last four or five years, is the idea that a decentralized network is always going to gather more data than a company that has focused for example on signing up all of the landlords in America to do a data sharing service where you can track rent. I mean rent is a good element, but there are hundreds of elements that can be relevant.

Do you own a car, for example? Whether it’s on credit or not is a relevant element to whether you’re likely to pay. Or whether home prices in your neighborhood are rising or falling, that’s another thing that’s relevant. So the point is to be agnostic about the kind of data but to generate a data environment that is rich enough that any given person can be assessed, even if they don’t have this or that element. There are still data elements that would predict future credit performance and it’s refining that and assembling all of that on the network that is kind of the Spring Labs secret sauce.

TC: What do you believe were some of your biggest accomplishments during your time at the OCC?

Brooks: When I was running the OCC, we enacted two regulations, one of which was called a “Valid When Made” rule and the other was called the True Lender Rule. And the purpose of those rules was to provide clarity. 

Another thing I did during my time there was to grant the first charter to a crypto company called Anchorage. We also provided guidance about what banks can permissibly do with cryptocurrencies. Which I believe had a lot to do with driving the adoption of crypto over the last 12 months.

One of the biggest problems and challenges in the world of crypto is how do you make sure that people who are transacting in crypto are not sending money to terrorists or not using crypto to engage in money laundering. And it’s a problem because the whole promise of crypto is to allow people to transact peer to peer without the need for a bank limit, right? So normally if you’re writing a check, it goes to the banking system and the bank looks to see who the payee is and figure out if they’re on some list or if you’re using cash there are these currency transaction reports you have to fill out. That’s not the case with crypto. So one of the things that Spring Labs has built — coming back to this idea of blockchain validation — is a solution that allows people, including the government, to say “I don’t know who the person is that Mary Ann is sending bitcoin to.” 

But the Spring Labs solution tells us that person isn’t a bad guy. We may not know that that person is Brian Brooks because Spring Labs anonymizes the data. But we have brought a lot of identifying information on the blockchain and can tell you that it’s safe, or it’s not safe without violating the basic principles of anonymity that normally exist on blockchain. It’s one of the reasons why having anonymized data sharing is one of the most important breakthroughs in fintech itself.

TC: How is it able to tell whether it’s safe or not?

Brooks: Blockchain identity verification is making probabilistic judgments based on a large amount of data. So, it may not know for sure that you’re not Vladimir Putin. But what it does know is that you’re a person who bought a latte at a Starbucks in Palo Alto yesterday of that you’re a person who has a Netflix subscription you’ve been paying on for 23 months And so when we make these probabilistic judgments, we can reduce to a statistical low rate the likelihood that you’re engaged in some kind of malfeasance. It turns out that’s actually much more likely to be accurate than if we’re pinging a government list to see if you’re on it, because government lists have typos and misspellings and at times, the last name is the first and the first name is the last. So there are all kinds of errors in that. 

TC: A founder I spoke to recently said that this younger generation has a distrust of the banking system and that’s why they’re so open to all these new digital offerings and neobanks. What are your thoughts on this perceived distrust of the banking system right now by the younger generation?

Brooks: I think there are plenty of people in the older generation who have also had trust issues with banking. Anybody who went through the financial crisis probably has a feeling about that. I would say that the banking system as a system is strong and deserves people’s trust. And what I mean by that is you have the agency I used to lead and other agencies who you know have thousands of seasoned professionals who are examining these banks for safety and soundness and compliance, every day. Where they find mistakes and malfeasance, they address it in real time. So I have a lot of confidence in that. 

The problem is though, there are things about just the nature of finance — the idea that somebody is charging you a significant interest rate to borrow money for a period of time because you had a ding on your credit, say five years ago. Those are things that are inherent in the credit management and business of banking, and that’s the thing that makes a lot of people — especially young kids — feel excluded. 

So imagine, for example, if you’re a young kid who just graduated college last year in the pandemic. And you can’t find a job and you don’t have the traditional indicators of creditworthiness, so it’s hard for you to buy a car or get a credit card. Now you feel like the whole banking system exists to exclude you in some way. So that sort of sucks, except it turns out that there are peer-to-peer lending platforms, decentralized finance platforms and other things that will allow you to access credit. So that’s a reason I think why young people are looking to these fintechs — because the fintechs exist to fill the gaps that are left behind by traditional banking.

The banks are trustworthy, but the banks are trying to serve sort of like the middle 60% of society. But if you’re young, lower income, or a minority or an immigrant or whatever…there’s a big gap in the banking sector which we’re always trying to improve. So at some level the banking sector is about serving the middle part of the country, and fintechs are harnessing market incentives to build products for those people that have been excluded. 

That’s why I don’t understand why fintech has become so politicized. There seems to be a war on fintech and I don’t understand where it’s coming from. And it seems to be kind of like a bipartisan war. If you go back and look at the letter that Maxine Waters, the House Financial Services Committee chairman, sent to the Biden transition team back in December — among the things she wanted them to do was to roll back every single thing we did on fintech. I just asked myself, “Why?” I understand there were some things we did that were somewhat political but why is it political to say that we think Stripe should be eligible for a bank charter? What is political about that? Stripe is a company that is engaged in major financial intermediation, which is what the bank charter is all about. Why is that political? And that that extends to bank charters and the true lender rule that I talked about earlier. 

TC: Can you elaborate on how you think fintech has become politicized?

Brooks: It seems to be that people, especially Democrats, don’t like fintech. You’d argue that that’s why there’s a particular candidate for my old job, that apparently was kiboshed because he said positive things about fintech. The whole point of fintech is to serve people that aren’t well served by the banking system, right? 

For example, if Americans really think that we should ban fossil fuels, then we should ban fossil fuels. Politicians should enact that and bear the consequences if that isn’t what people want. We don’t want bank CEOs making those decisions for us as a society, in terms of who they choose to lend money to, or not. We need to take the politics out of tech. 

All of us do a lot of different things, and we have no idea on a given day, whether what we’re doing is popular with our neighbors or popular with our bank president or not. I don’t want the fact that I sometimes feel Republican to be a reason why my local bank president can deny me a mortgage.

TC: I read that you had a personal experience growing up that maybe led you to this desire to help increase financial inclusion in the country. Is that something you’re comfortable talking about?

Brooks: It’s no big secret that I grew up on credit. I grew up in a small town and I guess the way I usually put it there were sort of these two seminal tragedies in my life. I don’t want to say that my town died but when I was growing up…but I was a young kid in this lovely prosperous factory town in Colorado that was pretty and had high employment with good union jobs for steel workers. It was great. And then when I was like 11 or 12 or whatever age, the factory closed, and suddenly we went from being a lovely prosperous little town to having enormously high double digit unemployment. It was a disaster and really really sad. 

And then a couple years after that, my dad died, and so the town died and then my dad died. What I had to do pretty quickly, if I was going to have anything like a life, is I had to get a job on my 16th birthday. I also had to borrow a lot of money to go to college and law school. And as I tell everybody, I didn’t borrow it at a federally subsidized rate. Those days you couldn’t deduct your student loans on your income tax, so I had to pay 8% interest on my six figures of student loans. And thank God that was available. 

So I’m not one of these people who thinks it’s a bad thing for people to have credit. I mean, all of the studies show that more credit equals less poverty. And yet whenever I say that on Twitter or whatever, the politically minded will say “No, more credit equals more debt.” It’s like, I don’t know what that means because credit and debt are the same thing, but what I mean by it is that credit is what allows you to get something that you couldn’t otherwise afford to pay cash for — whether that’s an education or start a business, or buy a house, right?

As a guy  who benefited from all of that, I don’t take a moralistic or elitist stance that other people should be able to take a risk on themselves. I took a risk on myself at 8% interest, and it’s what allowed me to have the life that I have and I don’t think it’s up to me to tell other people that they shouldn’t be allowed to do that. So I’m a big credit evangelist. I really believe that more credit is better for society than less. And I think fintechs are likely to deliver that to people that are not well served by the banking system. I am a believer in the idea that decentralized networks take some of the discrimination out.

#bank, #banking, #bitcoin, #blockchain, #coinbase, #cryptocurrencies, #cryptocurrency, #finance, #fintech, #government, #u-s-treasury

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Coinbase to direct list on April 14th, provide financial update on April 6th

Today Coinbase, an American cryptocurrency trading platform and software company, said that it will begin to trade via a direct listing on April 14th. In a separate release the company also said that it will provide a financial update on April 6th, after the close of trading.

Coinbase’s impending public debut comes at an interesting market moment. As some tech companies delay their offerings over demand concerns, Coinbase is pushing ahead with its flotation perhaps in part because it will not price its debut in the traditional sense; direct listings forgo raising capital at a specific price point, and instead merely begin to trade, albeit with a reference price attached.

That Coinbase will release new numbers before beginning to trade is at once interesting and pedestrian. It’s interesting as TechCrunch cannot recall a private company looking to go public holding a similar event. And, Coinbase deciding to share “first quarter 2021 estimated results” and “provide a financial outlook for 2021” is also in part a common move, as many companies provide updated financials in their S-1 documents if time passes from when they first file to when they actually trade.

We’ll be tuned into that call, as the numbers shared will impact not only how Coinbase trades when it does float, but will also provide insight into how active consumer trading is writ large, and particularly in the cryptocurrency space; more than one startup in the market today depends on trading incomes to generate top-line, so seeing new numbers from Coinbase will be welcome.

The company will trade under the ticker symbol “COIN.”

#bitcoin, #coinbase, #crypto, #crypto-economy, #cryptocurrencies, #cryptocurrency, #digital-currencies, #financial-technology, #fundings-exits, #software, #startups

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QuikNode is building a blockchain developer cloud platform to compete with AWS

As hot as the blockchain space appears to be these days, it’s still far from simple to get a decentralized application reliably up-and-running. The NFT boom and rising cryptocurrency prices have brought more attention to applications running on the blockchain, but the dominant cloud service platforms aren’t quite ready to make a full-commit to the needs of these developers.

QuikNode, which recently raised funding from Y Combinator and is in the process of wrapping its seed funding, has been building out a Web3 cloud platform for blockchain developers that can help them create and scale applications. The startup seems to be further along than most of its fellow YC batch mates, founded back in 2017.

At the moment, running a decentralized app can involve a lot of base infrastructure headaches that take developer attention away from their actual products. The initial setup can require days worth of downloads to sync to these networks for the first time while maintenance costs can also be high, the startup says. QuikNode allows app developers to rent access to nodes that let them operate on the blockchain network of their choice, enabling them to sidestep maintaining and monitoring their own node.

Alongside node management and maintenance, QuikNode’s product integrates developer tools and analytics to simplify running a decentralized app. The challenge for QuikNode will likely be maintaining an edge here in the shadow of cloud giants if the decentralized app market grows to a sizable (and consistent) presence on the web. QuikNode is itself a customer of these large cloud companies, opting to focus on software rather than building up physical data centers, nevertheless they’re still directly competing with these big players.

“I think we have about two years on Amazon, we’re on their radar,” CEO Dmitry Shklovsky tells TechCrunch.

For the time being, QuikNode’s small size gives it a distinct pricing advantage compared to nascent programs from other cloud providers. Plans start at just $9 for users launching the most basic applications, with structured plans increasing depending on the amount of “method calls” being performed. Renting a dedicated node is $300 per month. From there, the startup offers several chain-specific add-ons with options like Archive mode that give applications access all historical value states inside smart contracts on the network or Trace mode, which lets developers request nodes to re-execute transactions.

The team currently operates over 1,000 nodes and has around 400 customers. As QuikNode aims to scale their customer base, Shklovsky says that one of the best paths to customer acquisition have been guides educating decentralized app developers on how to connect to the most popular networks. 

Currently, the largely Miami-based team supports networks on six chains including Ethereum, Bitcoin, xDai, Binance Smart Chain, Polygon and Optimism.

#amazon, #articles, #blockchain-network, #blockchains, #ceo, #cloud-computing, #cryptocurrencies, #cryptocurrency, #decentralization, #ethereum, #miami, #smart-contract, #tc, #technology, #y-combinator

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Atari’s corporate zombie raises $110,000 overnight from Centipede NFTs

The corporate entity managing the Atari brand name (which has only the slightest connection to the original company known as Atari at this point) is the latest company to get in on the speculative mania surrounding non-fungible tokens (NFTs).

Atari SA’s first NFT auction, which concluded Wednesday night on OpenSea, raised 47.582 ether (about $92,000 USD at current prices) through the sale of 10 cryptographically signed NFTs, each representing a 3D model of an Atari 2600 Centipede cartridge. The cheapest of the 10 NFTs sold for 3.25 ether (about $6,300) while the most expensive (numbered “1 of 30” in its digital stats, even though only 10 have sold so far) went for a whopping 9.4395 ether (about $18,300).

A separate set of 100 NFTs representing red Centipede cartridges also sold on the Harmony One marketplace for the equivalent of $180.78 each, raising an additional $18,000 in just one and a half hours, according to a spokesperson.

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#atari, #cryptocurrency, #gaming-culture, #nfts

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The Weeknd will sell an unreleased song and visual art via NFT auction

Abel Tesfaye, the Super Bowl-headlining musician known as The Weeknd, is the latest artist to embrace the excitement around NFTs (non-fungible tokens).

Specifically, he’s teaming up with Nifty Gateway, the same marketplace that worked with Beeple to auction off a piece of digital art for $6.6 million earlier this year (a very impressive number, though quickly overshadowed by the $69 million that another Beeple piece sold for through Christie’s).

The Weeknd and Nifty Gateway will be holding a sale on Saturday with two main components, both of them involving a previously unreleased song — which will not be available on any other platforms in the future — plus visual art developed by Strange Loop Studios in consultation with The Weeknd.

There will be a flash sale of three different pieces of art, each with different filtered clip of the song. These pieces will be available in unlimited quantities, albeit for a limited amount of time. And there will be a 24-hour exclusive auction of a one-of-a-kind piece — accompanied by the song, full and unfiltered.

“Blockchain is democratizing an industry that has historically been kept shut by the gatekeepers,” The Weeknd said in a statement. “I’ve always been looking for ways to innovate for fans and shift this archaic music biz and seeing NFT’s allowing creators to be seen and heard more than ever before on their terms is profoundly exciting. I intend to contribute to this movement and can see that very soon it will be weaved into the music industry’s mechanics.”

NFTs are basically assets on the blockchain tied to digital art, whether that’s images, audio, video or another format. The art itself is usually reproducible, but the NFTs indicate the true ownership. Interest has exploded in recent months, thanks to auctions at eye-popping prices, as well as hopes that the technology will bring more financial benefits to artists in the digital world. At the same time, they’ve also faced criticism for factors including their energy usage and resulting impact on climate change.

The auction will begin at 11am Pacific on Saturday, April 3.

#cryptocurrency, #media, #tc

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Cryptocurrency wallet and blockchain tech startup imToken raises $30 million Series B

imToken, the blockchain tech startup and crypto wallet developer, announced today it has raised $30 million in Series B funding led by Qiming Venture Partners. Participants included returning investor IDG Capital, and new backers Breyer Capital, HashKey, Signum Capital, Longling Capital, SNZ and Liang Xinjun, the co-founder of Fosun International.

Founded in 2016, the startup’s last funding announcement was for its $10 million Series A, led by IDG, in May 2018. imToken says its wallet for Ethereum, Bitcoin and other cryptocurrencies now has 12 million users and over $50 billion in assets are currently stored on its platform, with total transaction value exceeding $500 billion.

The company was launched in Hangzhou, China, before moving to it current headquarters to Singapore, and about 70% of its users are in mainland China, followed by markets including South Korea, the United States and Southeast Asia.

imToken will use its latest funding to build features for “imToken 3.0.” This will include keyless accounts, account recovery and and a suite of decentralized finance services. It also plans to expand its research arm for blockchain technology, called imToken Labs and open offices in more countries. It currently has a team of 78 people, based in mainland China, the United States and Singapore, and expects to increase its headcount to 100 this year.

In a press statement, Qiming Venture Partners founding managing partner Duane Kuang said, “In the next ten to twenty years, blockchain will revolutionize the financial industry on a global scale. We believe that imToken is riding this trend, and has strongly positioned itself in the market.”

#asia, #blockchain, #china, #cryptocurrency, #digital-wallet, #fundings-exits, #gadgets, #imtoken, #singapore, #southeast-asia, #tc

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NFT art marketplace SuperRare closes $9 million Series A

The NFT ecosystem is having an explosive moment and the startups that were ready to run with it are getting lots of cash to continue capturing that momentum.

SuperRare, an NFT art platform that has garnered tens of millions in new sales in recent weeks, has just raised millions from investors. The $9 million Series A round was led by Velvet Sea Ventures and 1confirmation. Other investors participating in the round include Collaborative Fund, Shrug Capital, Third Kind, SamsungNext, Ashton Kutcher and Guy Oseary’s Sound Ventures, Mark Cuban, Marc Benioff, Naval Ravikant, and Chamath Palihapitiya, among others.

In an announcement of the raise, the team called the crypto art scene a “global phenomenon.”

SuperRare launched its art platform in 2018, since then it has differentiated by maintaining a closed early access platform that more closely curates the art they sell. Everything on the platform is a single-edition 1/1 sale. The team has said they plan to launch the site widely next year. The company earns a 3% transaction fee on art sales on the platform in addition to a 15% gallery fee for primary sales. One unique facet of the platform is that creators can continue to earn on a piece’s appreciating value following with 10% commissions on secondary sales.

While NFT art sales have taken off in recent weeks, there are still many structural issues facing their mainstream adoption largely due to scalability issues with Ethereum’s mainnet, which SuperRare operates on. Plenty of firms are building layer-two infrastructure that improves speed, and cuts down on energy usage and transaction fees. Today, ConsenSys launched a platform called Palm featuring artists Damien Hirst as the platform’s first artist drop.

After a lengthy crypto winter, blockchain startups are coming back with a vengeance amid a surge in startup investing, a surge in enthusiasm around NFTs and a surge in bitcoin prices. Today, NBA Top Shot maker Dapper Labs announced in had raised $305 million in venture funding.

 

#artist, #ashton-kutcher, #blockchain-art, #blockchains, #chamath-palihapitiya, #collaborative-fund, #consensys, #crypto-art, #cryptocurrencies, #cryptocurrency, #dapper-labs, #distributed-computing, #ethereum, #finance, #marc-benioff, #mark-cuban, #national-basketball-association, #naval-ravikant, #nba, #velvet-sea-ventures

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ConsenySys launches a more energy-efficient NFT ecosystem with a project from artist Damien Hirst as its first drop

The NFT craze has been an intriguing moment for digital artists who have seen seen great leaps in how tech has allowed them to create their work, but not as much progress in shifting how they profit off of it.

Though crypto’s early adopter artists have seemed to gain the most attention thus far, more institutionally present artists are dipping their feet into the token world. One of the bigger barriers has been the environmental concerns tied to the Ethereum blockchain which required intense energy usage to mint new artwork, tied to incredibly high transaction fees, something that has invited controversy for early artists because of climate change cocerns.

There have been a number of blockchain products to emerge in recent months that promise the benefits of Ethereum with greater speed, lower costs and lower energy usage, most notably Dapper Labs’ Flow blockchain which powers their NBA Top Shot product. Today, we saw the debut of a new “layer-two” entrant from ConsenSys, called Palm, which operates as a sidechain on Ethereum’s main network but will be supported via the popular crypto wallet MetaMask.

As part of Palm’s launch, the artist Damien Hirst announced he will be launching an NFT project, his first, called The Currency Project on the platform’s Palm NFT Studio.

Ethereum has already committed to transitioning to a more energy-efficient proof-of-stake consensus structure, but it’s unclear how quickly that’s going to happen. The network currently relies on a proof-of-work system (as does bitcoin), which use an energy-intensive manner of prioritizing where the next block in a chain is mined that gets more intensive as a network sees more traffic. It’s a reason why crypto mining operations have had to consistently invest in the latest hardware to maintain an edge and use more power. Proof-of-work does away with most of that, instead choosing nodes on the network to mine the next block based on reputation or their existing stake. There are some real security tradeoffs which have required workarounds though plenty in the crypto community aren’t quite satisfied with the compromises, though proponents argue that environmental concerns should take precedent.

In a press release, the team behind Palm says the ecosystem is “99% more energy efficiency than proof of work systems.”

Unlike Dapper Labs’ Flow, Palm benefits from its interconnectedness with the community of Ethereum developers, something that was present in today’s announcement which showcased several industry partnerships including Nifty. The news arrived alongside details this morning of Dapper Labs’ monster $305 million fund raise which will give the company backing to build on the momentum of Top Shot which has given the broader NFT space the wave of enthusiasm it’s currently experiencing.

#artist, #blockchains, #consensys, #crypto-art, #cryptocurrencies, #cryptocurrency, #distributed-computing, #energy-efficiency, #ethereum, #joseph-lubin, #national-basketball-association, #nba, #technology

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PayPal’s new feature allows U.S. consumers to check out using cryptocurrency

PayPal this morning announced the launch of Checkout with Crypto, a new feature that will allow consumers to check out at millions of online businesses using cryptocurrency. The feature expands on PayPal’s current investments in the cryptocurrency market, which include its partnership with Paxos to power its service that allows customers to buy, sell and hold a range of cryptocurrencies, and more recently, its acquisition of cryptocurrency security startup Curv.

According to PayPal, customers with cryptocurrency holdings in the U.S. will be able to check out using their cryptocurrency at millions of businesses. The company plans to expand the service to reach PayPal’s 29 million global online businesses in months ahead. The feature will also work without any additional integrations or fees required by the businesses themselves.

Essentially, Checkout with Crypto allows the customers to sell their cryptocurrency through PayPal at the time of checkout, then settle the actual transaction in U.S. dollars. For the businesses, that means nothing really changes on their end — they’re still being paid in USD, not cryptocurrency. But PayPal’s feature makes it possible for this transaction to take place within the same checkout flow, making it easier on shoppers to quickly make their purchases using cryptocurrency.

At launch, the service will support Bitcoin, Litecoin, Ethereum and Bitcoin Cash — but only one type of cryptocurrency can be used for each purchase.

If the customer has enough cryptocurrency to pay for their online purchase, then the Checkout with Crypto feature will appear, alongside other traditional payment methods, like the customer’s bank account, PayPal balance, or credit or debit card. Like other payment methods, Checkout with Crypto will also include PayPal’s safety and security benefits, including fraud protection, return shipping and purchase protection on eligible items, PayPal notes.

After the transaction completes, the customer will receive both a record of the cryptocurrency sale, as well as their purchase receipt.

The company had announced its plans to launch support for checkout with cryptocurrency last year, when it first entered the cryptocurrency market. It said that after providing support for buying and selling cryptocurrencies, it would launch a checkout feature in 2021.

Today, PayPal makes makes money by charging transaction fees when customers buy or sell their cryptocurrencies, which is why it’s not placing any fees on their merchants themselves.

PayPal’s launch will help to dramatically expand the number of places where cryptocurrency can be used for real-world purchases, which could help accelerate mainstream adoption of digital currencies.

According to Jim Magats, PayPal SVP, Omni Payments, it’s historically been difficult for businesses to offer cryptocurrency as a payment option due to integration requirements, technical barriers, and general lack of awareness among consumers.

“Checkout with Crypto allows businesses to accept the proceeds from sales of cryptocurrency as a payment type, all within the current PayPal integration, removing the need for any additional action for businesses,” Magats said. “PayPal handles the crypto sale and conversion with the consumer and passes on U.S. dollars to the business for the purchase, streamlining the process for businesses.”

PayPal’s move comes shortly after last week’s announcement from Tesla, which said U.S. customers could now buy a car using bitcoin, and Japanese e-commerce giant Rakuten’s news earlier this month where it said users could check out with online merchants in Japan using cryptocurrencies.

“As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies, while continuing to offer PayPal customers choice and flexibility in the ways they can pay using the PayPal wallet,” President and CEO Dan Schulman said, in a statement about the launch. “Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies,” he added.

 

 

#bitcoin, #coinbase, #cryptocurrencies, #cryptocurrency, #dan-schulman, #digital-currencies, #financial-technology, #litecoin, #money, #paypal, #tc, #united-states

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NFTs are part of a larger economic development in finance capital

Non-fungible tokens (NFTs) are trending hotter than pogs right now, and the number of articles published on the subject in the last few weeks has ballooned into the thousands. So a pardon must be begged at the outset here, but the overlooked potential of token economies is simply too important to let slip away.

NFTs are but one small part of a much larger development in the world of finance capital. What leaves some scratching their heads and chuckling could, within a decade, completely transform the model of investment that has been in place since the rise of Silicon Valley.

Non-fungible what?

NFTs have had a strange first step into the spotlight, bringing wealth to a very small group of people and making most people simply perplexed. Before NFTs are written off as a flash in the pan, it might be worth considering that NFTs were never designed to be very useful in traditional investment frameworks.

It can be hard to imagine how this might all play out, but we are already seeing the outlines of this new economy begin to poke through the dried-out skin of the old model.

An auction house selling a $69 million JPEG is akin to a horse-and-buggy driver strapping a small nuclear reactor to the top of the cab and declaring, “This is an atomic buggy!” as the horse continues to chug along, doing all the work. You’ll get the attention of bystanders, but nothing has fundamentally changed here.

Each of the headline-grabbing NFT sales seen recently are instances of exactly this kind of backward thinking. And the bystanders criticizing the buggy driver and saying, “nuclear reactors are hype,” are not really seeing the long-term implications, or they just don’t like horses.

Whales, dogs and unicorns

From early conceptions of investment as a way to fund transoceanic ship voyages, to the rise of venture capital as we know it today, the entire cosmos of finance capital has remained an elite sport. This is because the current model is based on big investors getting big wins.

Almost the entire world of finance capital is structured on big whales and unicorns, mythical creatures that mere mortals consider themselves lucky to have glimpsed. The word “structured” is chosen here carefully, as the “big-dog” theory of capital is literally built on powerful intermediaries that facilitate the will of these top investors.

The invention of bitcoin is an epochal event in the development of finance. Bitcoin itself has crystallized into merely another playground of power, but the technological tremors it left in its wake are starting to emerge as the real game-changers. Primarily, distributed ledger technologies (DLTs) — of which blockchain is but one instance — are a breakthrough on par with being able to send a message instantaneously to a person on the other side of the world.

DLTs mean that finance capital no longer has a need for powerful intermediaries — or intermediaries of any kind. Middlemen are currently very necessary in order for parties to establish trust in transactions, trades contracts or investments. Paying for the services of these middlemen can be written off as the cost of doing business for large companies and wealthy individuals, but these expenses remain prohibitive barriers for many.

DLTs break down these barriers because trust is established by and built into the very architecture of the network itself. With DLTs, anybody with an internet connection can do big-dog-style business deals at whatever level they can afford, and the way that these deals are transacted is through tokens.

Token economies will be transformative

DLT economies are going to be adopted by all of the major investment players in the next few years as the advantages of decentralizing investment are too numerous to ignore — lower friction for transactions due to automation, much quicker (real-time) results and analysis of market conditions, greater security through transparency, and a higher level of customization for financial products and services. The adoption of decentralized finance by major players will have a net-positive impact for everyone else.

Tokens are the lifeblood of this new system, and non-fungible tokens are just one type of token. In this emerging model, there are payment tokens that behave like money, security tokens that are comparable to stocks, utility tokens that provide functions like space or bandwidth and hybrid tokens that mix these tokens into new forms. If it sounds a bit confusing and exciting, that’s because it is.

The main takeaway to understand here is that tokens are going to replace not just stocks and other investment products but also the entire idea of having middlemen between you and your purchases, whether that middleman is an investment broker, a credit card company, a platform provider or a bank. The decentralized economy is going to be a much more open and direct kind of market.

The rubber hits the road like this

It can be hard to imagine how this might all play out, but we are already seeing the outlines of this new economy begin to poke through the dried-out skin of the old model. These protrusions are most apparent where economic reality doesn’t really make sense.

Think of the emerging gig economy, where nobody really seems to have a steady job anymore, where each of us is some kind of professional mercenary, moving from gig to gig. Think of the huge number of subscriptions that most of us carry like millstones around our necks. Think of the paradoxically frustrating relationship of musicians to streaming platforms, or artists to galleries. Think about the amount of crushing poverty that still remains on our planet.

These are all instances of models of living and working not really fitting into old containers. We can all sense that these aspects of our lives aren’t really functioning optimally, but we can’t quite say why and we certainly don’t know what the solution might look like. Decentralized, tokenized economies have the potential to erase all of these pain points, paradoxes and kludges and replace them with something much more intuitive and elegant.

This new reality is easy to imagine in some of its attributes: Instead of nine different subscriptions, you can just pay directly for the content that you want, when you want it. Instead of artists giving up half of their earnings to galleries or musicians giving, well, all of their earnings to streaming platforms, they now just take direct payment for their work through fluid networks built by and for this type of content. Instead of paying brokers to facilitate your investments, you can now just invest directly in the enterprises that interest you, including formerly out-of-reach sectors like real estate investment. Instead of crushing poverty and fiercely protected borders between classes, we break down barriers and give everyone access to value.

Many of the other developments in a token economy have yet to be imagined, and this is probably the most exciting aspect of all. When we distribute the economy globally, in a way that allows anyone with an internet connection the ability to interact and contribute in a meaningful way, we are unlocking the value of untapped assets that are worth literally trillions of dollars. So what is holding us back, and how do we get there as soon as possible?

The work ahead is very clear

The hardest part of unlocking this new economy has already been achieved — we have the technological understanding of how to distribute and decentralize a system of consensus that combines with a system of digitizing assets for trade and investment.

The remaining work that will actually bring this system online is fairly obvious — first and foremost, we need to take a look at the ecological impacts that this new system has had in its infancy. We should absolutely outlaw mining farms or set the strictest limits for how much of their energy comes from nonrenewables. If the backbone of this new economy is destroying the planet, we need to shut it down before it grows, full stop. The system needs to be ecologically sustainable.

The second most immediate concern is that there are currently no standards, no common network, that the multitude of different cryptocurrencies and tokens agree on. It’s astounding and absolutely frustrating that the various cryptos are hardly even talking about this.

It’s as if we have a bunch of different companies not only inventing the light bulb but also inventing their own light sockets and wiring protocols, and each one is insisting that they are the best and they will win out in the end. Light bulbs are great, but can we please agree on one socket? This beautiful new economy will never get off the ground unless we build a neutral, interoperable network, and this network needs to be feeless and scalable.

The last cause of immediate concern is regulation and legal frameworks. There are too many people still in crypto that have some kind of anarchist’s deathwish to just be completely left outside, and this is not serving the long-term goals of our communities.

I’m all for knocking intermediaries out of the value chain, but this doesn’t automatically entail the establishment of a never-never land that no regulatory agencies are invited to. Legal frameworks for decentralized economies go hand in hand with our ethos of open-source, community-building, transparent operations. We all need to be advocates for thorough and precise regulation of our nascent technology.

With ecology, interoperability and regulation as our watchwords, we can begin work on building the actual apps and other infrastructure that will allow users to leverage the power of a new economy. The uses are limitless, from selling excess electricity to your regional smart power grid, to investing in your favorite artists’ network, to accepting direct payment for your own labor, to — yes — buying NFTs, which will make a lot more sense in the new economy.

#bitcoin, #blockchain, #blockchains, #column, #cryptocurrencies, #cryptocurrency, #digital-currencies, #media, #nfts, #opinion

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The NFT craze will be a boon for lawyers

The non-fungible token (NFT) mania has inspired Ethereum fans to spend more than $224 million on crypto collectibles so far in 2021 through marketplaces OpenSea and Rarible, but many buyers may not understand what they actually own.

“An NFT is not that different from any other crypto purchase in that you are buying control over information in an entry in a ledger,” said attorney Nelson Rosario, one of the founders of Smolinski Rosario Law.

NFT buyers don’t actually own the media files associated with their blockchain receipts, whether those files are JPEGs or GIFS or MP3s. The best way to know which aspects of the NFT craze will outlast this trendy boom is to look at the history of comparable assets. As it turns out, people have been making crypto collectibles for nearly seven years.

Zebedee co-founder Christian Moss, who has been working on blockchain-based games since 2014, said he stopped making Bitcoin-based collectibles because transaction fees shot up. To make matters worse, some buyers viewed tokens as investments instead of as toys.

“They were tokens on Bitcoin,” Moss said. “A lot of developers ended up trying to pump their tokens and prices. … It felt like people who played those games felt like they were investors on the board. I don’t want my game to be an investment vehicle. Then players might try to sue me if they lost their tokens. It changed the dynamic of the game.”

These days, Moss helps people earn small amounts of bitcoin by playing mainstream video games like “Counter-Strike.” That way, there’s no confusion about how to value virtual assets; cryptocurrency is money and in-game assets are toys.

“NFTs aren’t game items at all; they are receipts,” Moss said. “If you have the receipt, you might be able to get an item in a game, but they can’t allow a Zelda sword NFT [in “Counter-Strike”], for example, because that might be copyright infringement. There are legal implications there.”

Indeed, legal implications are the crux of the NFT trend. Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors.

“It’s great if the artist intends to transfer any copyright for a work of art to an NFT purchaser, but can that be perfected to the point where a court of law or copyright office would recognize that transfer? That gets into additional questions of jurisdiction,” Rosario said. “Brands and platforms need to make sure they have the right agreements in place to govern these relationships.”

With regard to NFT sellers who take screenshots of other people’s content and profit from a corresponding NFT, Rosario said it’s hard to say whether that violates any laws.

“You probably start by looking at Twitter’s terms of service and begin the investigation there. It really depends,” he said, adding that impersonation or stealing someone’s passwords are different issues entirely.

And there are still open questions beyond copyright issues and fraud, such as sanctions and porn regulations.

Finding a space for adult content

A growing number of adult content creators are selling erotic NFTs on platforms like Rarible, often earning hundreds of dollars per photo. One such artist, PolyAnnie, said she has earned more from selling NFTs on Rarible alone than her average annual earnings across platforms like OnlyFans, Patreon and ManyVids combined.

“I sold 90 NFTs, bringing in 10.11 ETH in 5 months,” she said. “I purchased 18 NFTs from other creators, too.”

Some jurisdictions have age-verification requirements for platforms with adult content, while other jurisdictions make platforms potentially liable for child porn or revenge porn if the platforms don’t heavily moderate explicit content. As such, platform providers tend to be conservative about their terms of service.

“A lot of these NFT platforms don’t want to deal with the risks of sexually oriented content,” PolyAnnie said.

That’s why some sex workers have had their content censored by platforms like Rarible. As for the most popular NFT platform, OpenSea, which raised a Series A round from a16z earlier this month, CEO Devin Finzer said his team moderates the platform and limits search results for adult content, so those NFTs can only be found by someone going directly to the creator’s profile.

“We haven’t exactly nailed it down, but one option is a separate section of our site for that type of content,” Finzer said.

#blockchain, #cryptocurrency, #ec-ecommerce-and-d2c, #ec-media, #ec-news-analysis, #media, #nft, #tc

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Visa supports transaction settlement with USDC stablecoin

Payment card network Visa has announced that transactions can be settled using USD Coin (USDC), a stablecoin powered by the Ethereum blockchain. Crypto.com is the first company to test the new capability with its own Visa-branded cards.

USDC is a stablecoin co-founded by Circle and Coinbase and managed the Centre consortium. As the name suggests, USDC is a cryptocurrency that follows the value of USD. One USDC is always worth one USD — hence the name stablecoin.

In order to make sure that the value of USDC remains stable, USDC partners keep USD on bank accounts every time they issue new tokens. Those accounts are audited to make sure that there are as many USDC in circulation as there as USD in those accounts.

So why do stablecoins exist even though money is mostly digital these days? Like other crypto assets, stablecoins present some flexibility when it comes to sending, receiving and storing value. You don’t need a bank account and everything can be easily programmable. And you don’t need to support legacy systems, integrate with banks and pay transaction fees to other financial institutions.

While USDC originally started as a token on top of the Ethereum blockchain, USDC also supports two other blockchains — Algorand and Stellar. Visa has chosen to focus on the Ethereum variant of USDC for now.

The payment company already supports 160 currencies across the globe. That’s why you can seamlessly use your Visa card when you travel abroad. You’ll see a card transaction in your home currency on your card statement, but the merchant gets paid in their own local currency.

Thanks to a partnership with Anchorage, Visa is adding support for its first digital currency. Anchorage recently received a federal banking charter and is positioning itself as a digital asset bank. Visa was probably looking for a trustworthy partner for this program. As Anchorage got a thumbs-up from regulators, the partnership makes sense.

For Crypto.com, it means that it can send USDC directly to Visa. For instance, if a Crypto.com customer holds USDC in their wallet and makes a card transaction, Crypto.com doesn’t have to first convert USDC tokens to USD.

It can send USDC to Visa’s Ethereum wallet address at Anchorage to settle the transaction. The merchant then gets paid by Visa in their own currency. Visa says there will be more partners down the road in addition to Crypto.com.

#anchorage, #blockchain, #cryptocurrency, #finance, #usd-coin, #usdc, #visa

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Pussy Riot shows the cypherpunk power of feminist NFTs

It might seem like everyone and their mom is selling a non-fungible token (NFT) these days, but Pussy Riot co-founder Nadya Tolokonnikova is one of the few strategizing beyond the hype cycle.

“I’ve been using cryptocurrency before this,” Tolokonnikova told TechCrunch, noting Pussy Riot members have been interested in blockchain technology since around 2015. “Masha [Alyokhina, Pussy Riot co-founder] had problems with her bank accounts. Whenever she would open one, the government would shut it down because she would use some of her money for protestors. Right now she can’t even have her own credit card.”

Now Tolokonnikova is raising hundreds of thousands of dollars worth of ether this month by dropping a four-part series of NFTs for the group’s newest music video, “Panic Attack.” She says these profits will be donated to a clandestine women’s shelter in Eastern Europe, which caters to women who violated social norms.

“Women in this region are still being treated as property. There’s a stigma. A lot of these women are queer or did something like smile at a stranger, things that are associated with shame on the whole family. If we publicized the location of this shelter, it would motivate people to find the shelter and try to destroy it,” Tolokonnikova said. “As an activist, it’s really exciting to see a tool that’s not controlled by any government.”

It might be easy to dismiss this NFT initiative as a publicity stunt for Pussy Riot’s first studio album, “Rage,” scheduled for release in May. Plus, the NFT platform the group is using, Foundation, could censor the group and make it difficult for buyers to view or trade NFTs. Crypto collectibles, and any corresponding cryptocurrency earnings, are only censorship resistant when held in a creator’s personal wallet, not on a private company’s platform.

On the other hand, Tolokonnikova said her “interest in the technology is long-lasting,” and that she’s already exploring ways to utilize crypto tools to subvert sexist power structures. In addition to donating cryptocurrency to activists, Pussy Riot is also sponsoring an NFT scholarship program to cover the Ethereum transaction fees for feminist artists.

“Right now it’s now only for activists and political art works,” she said. “It’s also about educating the Pussy Riot community … we are looking at ways to make NFTs more accessible at a lower price point.”

Nadya Tolokonnikova of Pussy Riot performs in Birmingham, Alabama. (Photo by David A. Smith/Getty Images)

In the meantime, the group is working on collaborations with other NFT artists like Viktoria Modesta, known for avant-garde fashions for people with disabilities. From Tolokonnikova’s perspective, NFTs offer a way for women artists to gain recognition from the traditional art world. She said that because Pussy Riot focused on performance art and digital art, traditional galleries and collectors rarely took her work seriously. Now, with crypto collectibles, museums and galleries are taking note.

“That is a game-changing dynamic for so many artists who, for the first time in their careers, will be recognized as artists,” Tolokonnikova said. “Before, as part of Pussy Riot, I would use speaking fees or other types of event fees and use that to fund the performance art. I was never paid for the art directly. Now I’m focused on these NFT drops and I’m treating it really seriously.”

While many of the NFT boom’s breakaway stars are white men with traditional credentials and years of professional experience, like Beeple and Trevor Jones, women like Tolokonnikova are a fast-growing segment of the crypto ecosystem. Crypto exchange surveys show women make up roughly 15 to 50 percent of tallied users, depending on the region. Organizations like Metapurse, She256 and Meta Gamma Delta offer some mentorship and funding opportunities for women, as well.

“Metapurse is already doing some of this work, but we want to make our own tiny steps to bring more female and queer artists in the space,” Tolokonnikova concluded. “I think it provides amazing tools for the business of the creators’ market. It’s more than just for art. It enhances a creator’s power.”

#blockchain, #cryptocurrency, #nft

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Crypto wallet and exchange company Blockchain.com raises $300 million at $5.2 billion valuation

As Coinbase is about to go public in the U.S., another cryptocurrency company is having a blockbuster first quarter of 2021. Blockchain.com, the company behind a popular cryptocurrency wallet, an exchange, a block explorer and more, has raised a $300 million Series C round.

If you’ve been paying attention, you may remember that I wrote about Blockchain.com last month. At the time, the company announced a $120 million funding round. In other words, the company is raising once again just a few weeks after its previous funding round.

This time, DST Global, Lightspeed Venture Partners and VY Capital are leading the round. Existing investors also participated. Following today’s funding round, the company has reached a post-money valuation of $5.2 billion.

Originally named Blockchain.info, the company first launched a blockchain explorer. If you’re not familiar with the blockchain industry, an explorer lets you enter the hash of any transaction that occurs on a blockchain to get more information — you can retrieve the transaction amount, the number of confirmations, the wallet addresses of the sender and the reveiver, etc.

But Blockchain.com is better known for its open-source wallet. The company offers a noncustodial wallet, which means that you’re in control of your private keys. Blockchain.com can’t directly access your funds.

31 million users have verified their identities on Blockchain.com. The number of active users have tripled over the past 12 months.

Blockchain.com has diversified its activities over time. It has launched an exchange so that you can buy and sell cryptocurrencies from Blockchain.com directly. The startup also offers services to institutional investors. Blockchain.com can help you when it comes to buying and selling cryptocurrencies, custody, large over-the-counter transactions, etc.

When it comes to revenue, “Blockchain.com is highly profitable across each of our business lines,” co-founder and CEO Peter Smith wrote. The new influx of funding is all about working with late-stage investors and growing rapidly. You can expect some Blockchain.com acquisitions down the road for instance.

#blockchain, #blockchain-com, #blockchain-info, #cryptocurrency, #startups

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Roll still doesn’t know how its hot wallet was hacked

Move fast, break things, get hacked.

That’s what happened at Roll, the social currency platform that allows creators to mint and distribute their own Ethereum-based cryptocurrency known as social tokens. Last week, Roll disclosed a hacker had stolen $5.7 million from its hot wallet, a little over a year after the company launched.

Roll set up a $500,000 fund to help creators recoup their losses, and the company promised to hire a third-party to audit its security infrastructure.

But the company has so far been unable to contract with security investigators to probe the breach, leaving the startup to look for clues itself. A week has passed since the breach, and the social currency startup says it still doesn’t know how the hacker broke in or stole its private keys.

In a call with TechCrunch this week, Roll executives confirmed its infrastructure never underwent a security audit, a process designed to help find and fix vulnerabilities, prior to its launch.

“We weren’t ready from a security standpoint,” said Roll CEO Bradley Miles.

“This incident was a big setback for us, we will revamp a lot of infrastructure around this that we have in place to prevent something like this from happening again,” said Roll’s chief technology officer Sid Kalla, who oversees cybersecurity because the company does not have dedicated staff.

The executives said while its smart contracts — the technology that underpins the blockchain — were audited by a third-party firm, the rest of the company’s infrastructure was never stress-tested.

“That was a shortcoming on our end, and we should have done this earlier,” said Kalla.

The emptying of Roll’s hot wallet comes as social currency climbs to new levels of popularity. Roll has netted high-profile creators like actor Terry Crews, along with hundreds of other social currency on the platform, many plummeting in value after the hot wallet was hacked.

Some of the larger social currencies, like $WHALE, bounced back fairly quickly after the breach of Roll’s hot wallet. A month earlier, $WHALE “serendipitously withdrew” a large amount of its supply to its cold wallets, which aren’t connected to the internet, in anticipation of community distributions. The social currencies that had measures in place proved some resiliency against the hack.

After the company realized its hot wallet was emptied, the company spent the first two days following the money trail. Miles said the company engaged with forensic blockchain company Chainalysis for help. The company said it was looking at his logs, but says they have not seen any anomalous logins. Roll uses Amazon’s cloud for its infrastructure, and only a handful of employees have access to the private keys, and their accounts are secured with app-based authentication codes, said Kalla.

“We’re a young company, we’re growing extraordinarily quickly,” said Miles, who admitted that the company’s response “could have been better.”

“There’s no scenario in which you can lose that kind of money and not bring in incident response,” said Jake Williams, founder of cybersecurity firm Rendition Infosec. “The idea that you would try to do a DIY incident response, especially if it’s not your core capability, is just ridiculous.”

“To rebuild trust, the company has to come clean on where the failures were at,” said Williams, a former NSA hacker turned incident responder.

Roll is rebuilding its infrastructure, but did not give a timeline for when the work would be completed. The company said it won’t allow users to make withdrawals until it’s confident that its infrastructure is secure. The company says it will engage a security company to audit the changes to its infrastructure. Roll also said it will reduce how many tokens it holds in its hot wallet.

Miles said the company’s relief fund for creators was raised to $750,000, which he said will go directly to affected communities. The company also plans to hire a dedicated chief information security officer when its next financing round closes.

#blockchains, #chainalysis, #computer-security, #computing, #crypto-economy, #cryptocurrencies, #cryptocurrency, #cryptography, #decentralization, #ethereum, #hack, #payments, #roll, #security, #social-currency, #technology

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Afriex raises $1.2M seed to scale its payments and remittances platform across Africa

Sending money from the U.S. to Nigeria can be a painstaking process. For remittance platforms like Western Union, it will cost a transfer fee and take between one to five business days for money sent from a U.S. debit card to enter a Nigerian bank account

Crypto remittance platforms are rising to the challenge of fixing these cross-border payment issues by reducing time and fees. Just yesterday, we talked about Flux, a Nigerian fintech solving this problem in the present YC W2021 batch. Today, another YC-backed startup, Afriex — but from the Summer 2020 batch — is raising a $1.2 million seed round. 

The company founded by Tope Alabi and John Obirije in 2019 provides instant, zero-fee transfers to Africans at home and in the diaspora. It allows users to deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card

Like other crypto remittance platforms, Afriex has built its business on stablecoins — cryptocurrency backed by the dollar. In essence, the company buys cryptocurrency in one country and sells it in another to offer better exchange rates. This is in contrast to better-known platforms like Western Union and Wise that use traditional banking systems.

Last year while the startup graduated from YC, it claimed to be processing about $500,000 per month in transaction fees and is used in over 30 countries. At the time, Afriex was only present in Nigeria and the U.S. But having started operations in Ghana, Kenya, and Uganda, Afriex claims to be processing millions of dollars each month. On its website, though, Afriex states that customers can only send money to and from Nigeria, Ghana, Kenya, Canada, and the U.S.

With the new investment, the Lagos and San Francisco-based startup is looking to scale up by growing the team and expanding to other markets.

Pan-African VC firm Launch Africa led the seed round. Other investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures, and Ivernet Holdings. Angel investors like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan, and Andrea Vaccari also took part.

The SoftBank Opportunity Fund, a subsidiary of the SoftBank Group, targets founders of color in the U.S. running early-stage startups. Since launching in June 2020, it has invested in 22 startups and Afriex seems to be the only one catering to a set of users in the US and another continent.

This is due to Alabi’s upbringing as an immigrant child who has had a mix of both worlds. It was difficult to send money to Nigeria and his experience as a blockchain developer at Consensys made him realize he could solve a problem.

“We would go back home every two years and even then, I would always take note of what was missing and what could be improved. I would find myself having to pay for foreign expenses with money that was sitting in a US bank account,” said Alabi. “Traditional remittance companies were so slow and expensive that I knew I could do it better with crypto. Remittance is the best and most important use case for crypto. Our goal is to build the world’s largest remittance company, starting with emerging markets.”

#africa, #blockchain, #cryptocurrencies, #cryptocurrency, #funding, #payments, #remittance, #softbank-opportunity-fund, #stablecoin, #tc

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Crypto social network BitClout arrives with a bevy of high profile investors, and skeptics

While much of the recent wave of relentless hype around NFTs — or non-fungible tokens — has been most visibly manifested in high-dollar art auctions or digital trading cards sales, there’s also been a relentless string of chatter among bullish investors who see a future that ties the tokens to the future of social media and creator monetization.

Much of the most spirited conversations have centered on a pre-launch project called BitClout, a social crypto-exchange where users can buy and sell tokens based on people’s reputations. The app, which launches out of private beta tomorrow morning, has already courted plenty of controversy inside the crypto community, but it’s also amassed quite a war chest as investors pump tens of millions into its proprietary currency.

Early backers of the platform’s BitClout currency include a who’s who of Silicon Valley investors including Sequoia Capital and Andreessen Horowitz, the startup’s founder tells TechCrunch. Other investors include Chamath Palihapitiya’s Social Capital, Coinbase Ventures, Winklevoss Capital and Reddit co-founder Alexis Ohanian. A report in Decrypt notes that a single wallet connected to BitClout has received more than $165 million worth of Bitcoin deposits suggesting that huge sums have already poured into the network ahead of its public launch.

BitClout falls into an exploding category of crypto companies that are focusing on tokenized versions of social currency. Others working on building out these individual tokens include Roll and Rally, which aim to allow creators to directly monetize their internet presence and allow their fans to bet on them. Users who believe in a budding artist can invest in their social currency and could earn returns as the creator became more famous and their coins accrued more value.

“If you look at people’s existing relationships with social media companies, it’s this very adversarial thing where all the content they produce is not really theirs but it belongs to the corporation that doesn’t share the monetization with them,” BitClout’s founder, who refers to themselves pseudonymously as “diamondhands,” tells TechCrunch. (There’s been some speculation on their identity as a former founder in the cryptocurrency space, but in a call with TechCrunch, they would not confirm their identity.)

The BitClout platform revolves around the BitClout currency. At the moment users can deposit Bitcoin into the platform which is instantly converted to BitClout tokens and can then be spent on individual creators inside the network. When a creator gets more popular as more users buy their coin, it gets more expensive to buy denominations of their coin. Creators can also opt in to receive a certain percentage of transactions deposited into their own BitClout wallets so that they continue to benefit from their own success.

The company’s biggest point of controversy hinges on what has been opt-in and what has been opt-out for the early group of accounts on the platform. Most other social currency offerings are strictly opt-in. Users come to the platform in search of a way to create tokens that allow them to monetize a fanbase and build a social fabric across multiple platforms. The thought being that if the platforms own the audience then you are at their mercy.

BitClout has taken an aggressive growth strategy here, turning that model on its head. The startup has pre-populated the BitClout network with 15,000 accounts after scraping information from popular public Twitter profiles. This means that BitClout users can buy shares of Kim Kardashian’s social coin or Elon Musk’s without those individuals ever having signed up for a profile or agreeing to it. This hasn’t been well-received by all of those who unwittingly had accounts set up on their behalf including many crypto-savvy users who got scooped up in the initial wave of seeding.

The startup’s founder says that this effort was largely an effort to prevent handle squatting and user impersonation but he believes that as the platform opens, a sizable pre-purchase of creator coins reserved for the owners of these accounts will entice those users to verify their handles to claim the funds.

Perhaps BitClout’s most eyebrow raising quirk is that the platform is launching with a way to invest into the platform and convert bitcoin into BitClout, but at launch there’s no way to cash out funds. The project’s founder says that it’s only a matter of time before this is resolved, and points to Coinbase and the Winkelvoss twin’s status as coin holders as a sign of future exchange support to come, but the company has no specifics to share at launch.

While the founders and investors behind the project see a bright future for social currencies on the blockchain, many in the decentralized community have been less impressed with BitClout’s early efforts to achieve viral adoption among creators in a permission-less manner.

“BitClout will make a great case study on how badly crypto projects can mess up incentive engineering when they try to monetize social networks.” Jay Graber, a decentralized platform researcher involved in Twitter’s bluesky effort, said in a tweet. “Trust and reputation are key, and if you create a sketchy platform and mess with people’s reputations without their consent it is not going to go well.”

If BitClout comes out of the gate and manages to convert enough of its pre-seeded early adopter list that there is value in joining its closed ecosystem version of a social token then it may have strong early momentum in an explosive new space that many creators are finding valuable. The concepts explored by others in the social currency space are sound, but this particular execution of it is a high-risk one. The network launches tomorrow morning so we’ll see soon enough.

#alexis-ohanian, #andreessen-horowitz, #artist, #bitclout, #bitcoin, #co-founder, #coinbase, #coinbase-ventures, #cryptocurrencies, #cryptocurrency, #cryptography, #currency, #digital-currencies, #gemini, #kim-kardashian, #reddit, #sequoia-capital, #social-media, #social-networks, #tc, #winklevoss-capital

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Binance-backed Xend Finance launches DeFi platform for credit unions in Africa

Nigerian startup Xend Finance uses decentralized finance (DeFi) to address currency devaluation. DeFi aims to bridge the gap between decentralized blockchains and financial services. Aronu Ugochukwu and Abafor Chima founded the startup in 2019, and Ugochukwu is quite familiar with currency devaluation. 

Currency devaluation is a common economic nightmare faced in most African countries and other developing countries worldwide. It has become imperative for organisations like credit unions to hedge their collective funds against their local currency’s devaluation.

“We’ve experienced three massive currency devaluations in the last three years in Nigeria, and this is similar to different economies in the world with unstable economies,” Ugochukwu said to TechCrunch. “My mother and I belong to different cooperatives where we save and make monthly contributions to help one another in the cooperative. Realizing that despite saving regularly, we were losing more value for our money. This gave birth to Xend Finance.”

Today, the company announced its mainnet launch, opening up the ability for credit unions to access DeFi for their members by using decentralized stablecoins such as DAI and BUSD.

Not only is Xend Finance trying to protect credit unions from fluctuation, but it is also changing how they operate. In these unions, groups of individuals contribute to informal savings for their different mutual benefits.

However, they are often limited by three factors. One is in its size — only a small knit of people in a particular locale can access the service. The second is lack of insurance which means people don’t have the confidence to join saving cycles. The third has to do with how credit union members default in payments, affecting how much is paid down the line.

Image Credits: Xend Finance

Xend Finance is plugging these gaps using blockchain technology. The platform allows credit unions to have over 1,000 members who don’t stay in the same geographical location. It also employs smart contracts to lock each member’s contribution and enable flexible payouts when a payment cycle is due, which reduces default payment rates. The company also says it offers decentralized insurance to protect members against any form of asset loss that results from contract failures. However, this isn’t a traditional insurance contract from an insurance company. 

Besides, the company says credit union members can earn interests in their savings by exchanging their crypto or fiat currency for stable cryptocurrencies and locking crypto assets on lending platforms. According to the company, there’s a possible 15% available annual percentage yield on the platform.

The company claims to be the world’s first decentralized finance (DeFi) credit union platform and the first DeFi company to launch out of Africa. Its technology is built on Binance Smart Chain (BSC), a blockchain for developing high-performance decentralized applications.

In 2019, the startup based in Enugu, Nigeria, took part in the Google Launchpad Africa accelerator and the Binance Incubation Programme. It has since secured $2.2 million from Binance, Google Launchpad, NGC Ventures, Hashkey, and AU21 Capital, amongst others.

From December 2020 to January 2021, Xend Finance executed a testnet with over 1,500 participants in 75 countries. This helped them find product-market fit, and last week, the company did a beta launch of its mainnet where it received over $500,000 in deposits. They also signed a credit union partnership with a software service provider, TechFusion Africa and its 5,000 members

Image Credits: Xend Finance

The company intends to onboard a lot of customers now and focus on revenue later, Ugochukwu says. And when it does, the play will be to charge a commission (not more than 5%) on the return on investment when members of cooperatives or regular individuals save or perform contributions on the platform.

Having run some tests and passed several iterations, Xend Finance is fully going public today, and Changpeng “CZ” Zhao, CEO of Binance, expects the platform to show what can be built on BSC.

“Africa is one of the most important continents, representing the future and emergence of DeFi and blockchain capabilities,” said Zhao. “We are very excited about the mainnet launch of Xend Finance, with a team we backed early on that has a strong foothold in Africa and have been strong advocates for what Binance Smart Chain can accomplish. With their platform, they can bring stable currency and DeFi investment opportunities to those who normally wouldn’t have them.”

Along with the mainnet launch, Xend Finance will introduce the $XEND token through a Token Generation Event (TGE) on Balancer. The company says the token will reward users for performing different operations in “the protocol, as well as allows a decentralized governance of the Xend Finance ecosystem.”

For Ugochukwu, Xend Finance presents people with the opportunity to channel their savings into stablecoins without worry that their money will devalue overnight and earn higher interest rates through DeFi. “We are very excited that blockchain will have a positive impact on the people of Africa,” he said. 

#africa, #binance, #bitcoin, #blockchain, #blockchains, #cryptocurrency, #decentralization, #decentralized-finance, #digital-currency, #finance, #startups, #tc

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NFTs could bridge video games and the fashion industry

Non-fungible tokens (NFTs) offer new ways for consumers to collect, wear and trade fashion online, and now that most fashion shows have scaled back or gone virtual, they may become an important tool for the industry.

Because some of the most profitable NFTs are produced by celebrities with teams, it makes sense that music corporations, fashion brands and designers are venturing into the NFT market as well. Just this month, sneaker brand RTFKT Studios garnered $3.1 million in seven minutes by selling crypto collectibles. In December 2020, NFT startup Enjin partnered with Netherlands-based fashion house The Fabricant on a virtual collection. Real-life fashion brands use NFTs for marketing in virtual worlds like Minecraft, plus several Atari and Microsoft video games.

The fundamental value NFTs offer to bridge virtual fashion items with video games is the option to secure custody of the item for use in other games or mobile apps.

“Brands are coming up with some creative solutions because the pandemic is persistent, and fashion is something that is so close to our identities,” said Bryana Kortendick, Enjin’s VP of operations and communications. “You can snap a photo of yourself wearing your Atari-branded NFTs. You’ll also be able to wear them in video games.”

Breakout NFT star Beeple said he imagines a future where fashion NFTs could be redeemed for specific items in physical stores, especially at luxury retailers like his former client Louis Vuitton.

“You can relate NFTs to clothing in new and interesting ways,” he said. “This will be seen as the next chapter of digital art history. This is a continuation of digital art history that started decades ago, by that I mean art made on a computer and distributed through the internet.”

Fashion designers like Schirin Negahbani are already creating NFTs that represent actual clothing. Precisely because multimillion-dollar NFT sales are breaking records, spectators have been prompted to question the role speculative trading plays in this trend.

Textile designer Amber J. Dickinson says fashionable NFTs shouldn’t primarily be viewed as speculative trading opportunities. “The way I think fashion translates to the digital world is to view an NFT as a collectible piece of the garment for history,” said Dickinson, known for hand-made silk scarves and her work with Alexander McQueen. “I would only buy art as a piece that I liked. Whether digital or in the real world, I don’t take an investor’s point of view.”

There are many fashion fans who disagree with Dickinson, preferring to invest through assets like Birkin bags. They may have a different approach to NFTs. The DIGITALAX crypto fashion platform, for example, is being built with a plethora of trading features. As for Dickinson, she said she is still looking for her tribe of crypto-savvy artists on Twitter.

#blockchain, #cryptocurrency, #ec-ecommerce-and-d2c, #ec-gaming, #ec-media, #gaming, #media, #nfts, #non-fungible-tokens, #startups, #tc

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These undergraduates left university to build Flux, a payments startup now in YC

Traditional remittance companies, while necessary, currently have two flaws in speed and exorbitant fees. It can take a long while (days to weeks) for money sent from an immigrant in the U.S. to reach a relative in Nigeria. The fees charged depend on the amount sent — and let’s not forget the extra charges for withdrawals and deposits.

Ben Eluan and Osezele Orukpe, two software engineers based in Nigeria, faced this problem in 2019. They had executed a project for a client in the U.K. and when the time came for them to get paid, they settled with Skrill. However, it took a week for the friends to get their money, and they lost a considerable chunk of it to charges.

“The experience made us think of the payments and, more importantly, cross border payments,” Eluan said to TechCrunch.The gig economy and the service economy for small businesses economy is very massive, and we care about it enough to dedicate all our time into building payments for Africa.”

Over the last three years, crypto remittance companies have emerged to fill in this need, as well. Via an application and from a wallet, people can convert fiat into crypto and send it to the wallets of people in other countries who convert back to fiat if they choose.

Image Credits: Flux

That’s the same proposition Eluan (CEO), Orukpe (CTO) and the team have with their product, Flux. The crypto remittance company was built to enable merchants to send and receive money from anywhere in the world, Eluan tells me.

He adds that what differentiates Flux from other crypto remittance startups lies in the ease and speed of the platform’s transactions. He claims that facilitating payments on Flux is 100x faster than fiat, and is cheaper too. The platform charges $0.50 for every transaction, regardless of the amount.

In May 2020, Flux got accepted into Pioneer, an accelerator launched by ex-YC partner Daniel Gross. Pioneer gives founders access to funding streams and talent hardly found outside Silicon Valley. It has already backed more than 100 founders who give up 1% equity to join the accelerator. Depending on their progress, Pioneer can decide to give either $20,000 for 5%, $100,000 for 5%, or $1 million for 10%.

After the program, Flux subsequently raised $77,000 pre-seed investment from different investors — Hustle Fund and Mozilla, among others.

Eluan says the six-month-old company has 5,000 customers who have transacted over $750,000 in payments volume. According to the CEO, the startup is growing 40% month-on-month and has made $25,000 in revenue.

The company witnessed this growth despite the Central Bank of Nigeria’s clampdown on crypto exchange activities. The country’s apex bank ordered local banks to stop aiding crypto transactions. This meant that crypto users on Flux and other crypto platforms could no longer convert fiat to crypto using their bank accounts or cards.

“We had to be compliant because of the CBN policy and our customers can’t really convert their crypto to fiat but can still transact their crypto. This is why we want to make Flux available in the US and UK, where people can use Flux and send money to Nigeria. It’s currently not available but that’s what we’re building and is the next phase of our application,” he said.

The team is also working on a peer-to-peer feature that will see users seamlessly transact crypto and fiat with one another. The company has launched Flux Merchants, a product that allows merchants to accept payments by creating payment links for their products and services.

Eluan, Orukpe, Israel Akintunde (VP, Engineering) and Ayomide Lasaki (head of Marketing) — met in their freshman year at Obafemi Awolowo University (OAU) in Ile-Ife, Osun. Studying various engineering disciplines, the four friends formed a “programming club” with other software developers on campus where they would basically meet to write code and make applications. Eluan even tells me they regularly skipped class for these sessions.

Before Flux, the friends built an e-commerce platform called Joppa that helped people find merchants around them within the city. Although they had 20,000 users, Eluan says the team didn’t understand the dynamics of what it entailed to run a startup, so the business had to shut down

A factor that eventually led to founding Flux was the university’s budding tech talent ecosystem, which is teeming with stories of prominent startups launched by alumni. Some include Jobberman, Africa’s largest recruitment site; Kudi and Cowrywise, two YC-backed companies; and Techstars company Farmcrowdy among others

“These founders came from our school and it was a huge motivation for us. We always knew that we wanted to build something but we weren’t sure what this would be. We eventually landed on Joppa, then Flux,” Eluan added.

In fact, according to Techpoint Africa, OAU alumni have founded startups that have cumulatively raised $1 million more than other alumni from other universities in West Africa. Think of OAU as the region’s Stanford University.

Image Credits: Flux

However, unlike others, the founders dropped out of the university to start Flux. 

“We dropped out to focus on our startup and scaling it into a $1 billion company. We believe the opportunity here is huge. So for us, the right thing to do is to get the job done well. Startups need time so dropping out was inevitable,” he said.

Not only are they the first set of African founders that are all dropouts to get into Y Combinator, but they’re arguably the youngest. It is a feat Flux is thrilled about, and Eluan believes it will open the doors for more young founders on the continent.

“Well, we are excited about that, and it simply means brilliant young people in Nigeria and Africa can definitely go ahead to build stuff and get funded too just like founders from the U.S.,” he said.

But while their acceptance into Y Combinator is a much-needed validation for their work and sacrifice, there’s still a lot of work to be done. The startup, now based in Lagos, is playing in a competitive payments space. Different companies like Chipper Cash, Flutterwave, MFS Africa and other crypto startups are trying to fix cross-border payments, and there’s a race against time to capture market share. Hopefully, YC, Pioneer, other backers, and the team’s understanding of the market will propel Flux to dominance

#africa, #crypto-economy, #cryptocurrency, #flux, #payments, #startups, #tc, #y-combinator

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