News: ETC hit by 51% attack, Tron is a marketing machine, and India’s banks want nothing to do with bitcoin

screen shot 2019-01-12 at 10.30.16 pmEthereum Classic was hit by a 51% attack. A private pool got hold of more than half of the network’s computing power and used that to rewrite history and double spend nearly $1.1 million ETC, the platform’s native currency. Coinbase noted the attack on January 5, and followed with a detailed analysis of what happened.

Here is the irony: Ethereum Classic was founded on the principle of immutability, meaning good or bad, legal or illegal, whatever transactions happen on the network, happen, and you have to live with it. The project took over the pre-fork chain after Ethereum forked to reverse transactions in the DAO hack. If Ethereum Classic wants to stand on that hill, it may have to suffer the consequences, which so far, have not been terrible. ETC was $5 at the time of the attack and is now at $4.66.

Bitcoin saw its 10-year anniversary on January 9. CoinDesk threw a whopping party in New York City, which, judging by photos, was well attended by a lot of white men. For bitcoiners, 10 years is a mark of resilience. But it is worth noting, for the most part, you still cannot buy groceries or pay rent with bitcoin. And if you bought bitcoin a year ago ($14,000) and sold today ($3,700), you would have lost two-thirds of your investment — so much for store of value.

KodakOne announced it generated $1 million in “post-licensing claims” on a beta of its platform. Breaker’s David Z. Morris did a softball interview with KodakOne’s Cam Shell, omitting tough questions like, “How in god’s name did you manage to come out with a beta version of the platform while stiffing all your developers?” I followed up with a story of my own as did Decrypt Media’s Ben Munster and David Gerard, explaining that the $1 million is completely hypothetical money.

Justin Sun, the CEO of blockchain platform Tron, has been unveiled as technically incompetent. Tron recently bought file-sharing client BitTorrent, Now it wants to launch a BitTorrent token. But, in a Breaker interview (another story by Z. Morris, but this one, really good), former BitTorrent executive Simon Morris said there is no way Tron can handle the transaction volume. Simon also said Sun has no technical know-how and Tron is basically little more than a marketing machine.  

Rumors swirled a week ago that the co-CEOs of Chinese crypto miner maker Bitmain, Wu Jihan and Zhan Ketuan were going to step down. Turns out, the rumors are true, and Wang Haichao, Bitmain’s director of product engineering, has stepped in to replace them as CEO. In December, CoinDesk reported that Bitmain may be letting go of half of its 3,100 workforce. None of this bodes well for the company’s upcoming IPO.

If you want to trade bitcoin in India, you better keep that information well hidden from your bank. The country’s banks are sending out notices warning customers that they will close accounts without notice, if customers are found dealing in cryptocurrency.

The Texas Department of Banking released a supervisory memorandum on January 2 in regard to treatment of virtual currencies under the Texas Money Services Act. According to the memo, Texas considers pegged stablecoins, like tether, money, which means that anyone dealing with them may need to apply for a Texas money transmitter license.  

After impressive claims, image rights platform KodakOne still has a lot to explain

KodakOne, a photography rights management platform that operates on a blockchain, launched its private beta in October. Since then, the project says it has generated 1,667 new “post-licensing cases” valued at over $1 million, according to a recent press release.

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Those numbers sound impressive. Until you consider that the post-licensing cases—instances where the images appeared on the web after being uploaded onto the KodakOne database—were likely the result of a simple reverse image search, similar to what services like TinEye, Google Images, and Berify offer. And the $1 million is unlikely to be actual money—or even KodakCoins, the tokens that drive the platform’s economy.

More likely, $1 million is what those post-licensing cases could have been worth if KodakOne was able to actually reach the infringers and get them to fork over the money. But the press release does not make any of this clear.

Still, that did not stop one reporter from handing out accolades. But this is easy to understand given that what lends this particular blockchain project so much credibility is the name: Kodak. After all, who can forget Paul Anka’s “Times of Your Life,” a song made popular by Kodak 70s commercials?

In fact, KodakOne is not an Eastman Kodak company. A company called RYDE Holding (formerly, WENN Digital, which borrowed the WENN name from paparazzi photo agency WENN Media) licensed the iconic Kodak name. RYDE then went on to build the platform in collaboration with ICOx Innovations, the company that issued the recent press release. 

The upside for Eastman Kodak was an increase in its stock price. When Kodak and WENN Digital unveiled the platform in January 2018, Kodak shares went from $3.13 per share to $12.75 in a matter of hours.

How does—or will, or would—KodakOne work? Something like this: Photographers register and archive their work on the site. The platform then trawls the Internet to find unlicensed versions of the images. It then somehow notifies the infringers and tries to get them to pay up. It also matches up buyers and sellers in an online marketplace.

The concept is a good one, except that it makes no sense to put any of this on a blockchain. If you are going to operate a stock photo site, you can do it on a centralized system. And KodakOne could have allowed its users to pay for services in fiat. But then it would not have been able to raise money in an initial coin offering (ICO).

Last spring, KodakOne raised at least $4.1 million via a simple agreement for future tokens (SAFT), meaning it sold rights to future tokens to accredited investors. Unlike a traditional ICO, the idea behind a SAFT is that the tokens are delivered when there is a functioning network in place.

As Bloomberg’s Matt Levine points out, because the tokens were sold in a private placement, this could lead to problems down the road, especially if you want your token to function as an actual utility token on the network.

“But what if the photographer sells her photos for KodakCoins and then wants to sell her KodakCoins for money? Well, she will have a hard time,” Levine wrote, explaining that, for various legal reasons (see U.S. Securities and Exchange Commission Rule 144), you can probably only sell your KodakCoins to accredited investors.

That is just one of the controversies surrounding the project. In June 2018, reports came out that the project was stiffing its developers $125,000 in unpaid fees.

But none of this stopped KodakOne from supposedly moving forward with its plans. According to the recent press release:

“The beta platform is currently operational and being used by agencies including Blaublut Edition and Food Centrale, as well as numerous photographers, with multiple international customers in the pipeline for the next phase of deployment.”

I reached out to Blaublut Edition and Food Centrale for details on how they used the platform, but have yet to hear back.

One critic claims the KodakOne beta platform does not actually exist. Armel Nene, a developer who says he was hired by RYDE to work on the project but has not been paid, wrote in a blog post:

“November 2018, still no payment from Ryde to any of the invoices. Instead the company is publishing fake information on the internet that they are launching their platform in beta mode. This is a lie as the person working on it confirmed that he’s keeping the code as a ransom to the money they owe him.”

So, is the beta version of KodakOne real? How did KodakOne comes up with $1 million? I reached out for comment. If they respond, I’ll update the story. But while how the project came up with this figure is one question, KodakOne still has a lot to answer for.

If you want to dig deeper into the KodakOne project, “Attack of the 50-foot Blockchain” author David Gerard has written a 10-part series on KodakOne and KodakCoin that will tell you everything you need to know.