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Dragonchain Great Reddit Scaling Bake-Off Public Proposal

Dragonchain Great Reddit Scaling Bake-Off Public Proposal

Dragonchain Public Proposal TL;DR:

Dragonchain has demonstrated twice Reddit’s entire total daily volume (votes, comments, and posts per Reddit 2019 Year in Review) in a 24-hour demo on an operational network. Every single transaction on Dragonchain is decentralized immediately through 5 levels of Dragon Net, and then secured with combined proof on Bitcoin, Ethereum, Ethereum Classic, and Binance Chain, via Interchain. At the time, in January 2020, the entire cost of the demo was approximately $25K on a single system (transaction fees locked at $0.0001/txn). With current fees (lowest fee $0.0000025/txn), this would cost as little as $625.
Watch Joe walk through the entire proposal and answer questions on YouTube.
This proposal is also available on the Dragonchain blog.

Hello Reddit and Ethereum community!

I’m Joe Roets, Founder & CEO of Dragonchain. When the team and I first heard about The Great Reddit Scaling Bake-Off we were intrigued. We believe we have the solutions Reddit seeks for its community points system and we have them at scale.
For your consideration, we have submitted our proposal below. The team at Dragonchain and I welcome and look forward to your technical questions, philosophical feedback, and fair criticism, to build a scaling solution for Reddit that will empower its users. Because our architecture is unlike other blockchain platforms out there today, we expect to receive many questions while people try to grasp our project. I will answer all questions here in this thread on Reddit, and I've answered some questions in the stream on YouTube.
We have seen good discussions so far in the competition. We hope that Reddit’s scaling solution will emerge from The Great Reddit Scaling Bake-Off and that Reddit will have great success with the implementation.

Executive summary

Dragonchain is a robust open source hybrid blockchain platform that has proven to withstand the passing of time since our inception in 2014. We have continued to evolve to harness the scalability of private nodes, yet take full advantage of the security of public decentralized networks, like Ethereum. We have a live, operational, and fully functional Interchain network integrating Bitcoin, Ethereum, Ethereum Classic, and ~700 independent Dragonchain nodes. Every transaction is secured to Ethereum, Bitcoin, and Ethereum Classic. Transactions are immediately usable on chain, and the first decentralization is seen within 20 seconds on Dragon Net. Security increases further to public networks ETH, BTC, and ETC within 10 minutes to 2 hours. Smart contracts can be written in any executable language, offering full freedom to existing developers. We invite any developer to watch the demo, play with our SDK’s, review open source code, and to help us move forward. Dragonchain specializes in scalable loyalty & rewards solutions and has built a decentralized social network on chain, with very affordable transaction costs. This experience can be combined with the insights Reddit and the Ethereum community have gained in the past couple of months to roll out the solution at a rapid pace.

Response and PoC

In The Great Reddit Scaling Bake-Off post, Reddit has asked for a series of demonstrations, requirements, and other considerations. In this section, we will attempt to answer all of these requests.

Live Demo

A live proof of concept showing hundreds of thousands of transactions
On Jan 7, 2020, Dragonchain hosted a 24-hour live demonstration during which a quarter of a billion (250 million+) transactions executed fully on an operational network. Every single transaction on Dragonchain is decentralized immediately through 5 levels of Dragon Net, and then secured with combined proof on Bitcoin, Ethereum, Ethereum Classic, and Binance Chain, via Interchain. This means that every single transaction is secured by, and traceable to these networks. An attack on this system would require a simultaneous attack on all of the Interchained networks.
24 hours in 4 minutes (YouTube):
24 hours in 4 minutes
The demonstration was of a single business system, and any user is able to scale this further, by running multiple systems simultaneously. Our goals for the event were to demonstrate a consistent capacity greater than that of Visa over an extended time period.
Tooling to reproduce our demo is available here:
https://github.com/dragonchain/spirit-bomb

Source Code

Source code (for on & off-chain components as well tooling used for the PoC). The source code does not have to be shared publicly, but if Reddit decides to use a particular solution it will need to be shared with Reddit at some point.

Scaling

How it works & scales

Architectural Scaling

Dragonchain’s architecture attacks the scalability issue from multiple angles. Dragonchain is a hybrid blockchain platform, wherein every transaction is protected on a business node to the requirements of that business or purpose. A business node may be held completely private or may be exposed or replicated to any level of exposure desired.
Every node has its own blockchain and is independently scalable. Dragonchain established Context Based Verification as its consensus model. Every transaction is immediately usable on a trust basis, and in time is provable to an increasing level of decentralized consensus. A transaction will have a level of decentralization to independently owned and deployed Dragonchain nodes (~700 nodes) within seconds, and full decentralization to BTC and ETH within minutes or hours. Level 5 nodes (Interchain nodes) function to secure all transactions to public or otherwise external chains such as Bitcoin and Ethereum. These nodes scale the system by aggregating multiple blocks into a single Interchain transaction on a cadence. This timing is configurable based upon average fees for each respective chain. For detailed information about Dragonchain’s architecture, and Context Based Verification, please refer to the Dragonchain Architecture Document.

Economic Scaling

An interesting feature of Dragonchain’s network consensus is its economics and scarcity model. Since Dragon Net nodes (L2-L4) are independent staking nodes, deployment to cloud platforms would allow any of these nodes to scale to take on a large percentage of the verification work. This is great for scalability, but not good for the economy, because there is no scarcity, and pricing would develop a downward spiral and result in fewer verification nodes. For this reason, Dragonchain uses TIME as scarcity.
TIME is calculated as the number of Dragons held, multiplied by the number of days held. TIME influences the user’s access to features within the Dragonchain ecosystem. It takes into account both the Dragon balance and length of time each Dragon is held. TIME is staked by users against every verification node and dictates how much of the transaction fees are awarded to each participating node for every block.
TIME also dictates the transaction fee itself for the business node. TIME is staked against a business node to set a deterministic transaction fee level (see transaction fee table below in Cost section). This is very interesting in a discussion about scaling because it guarantees independence for business implementation. No matter how much traffic appears on the entire network, a business is guaranteed to not see an increased transaction fee rate.

Scaled Deployment

Dragonchain uses Docker and Kubernetes to allow the use of best practices traditional system scaling. Dragonchain offers managed nodes with an easy to use web based console interface. The user may also deploy a Dragonchain node within their own datacenter or favorite cloud platform. Users have deployed Dragonchain nodes on-prem on Amazon AWS, Google Cloud, MS Azure, and other hosting platforms around the world. Any executable code, anything you can write, can be written into a smart contract. This flexibility is what allows us to say that developers with no blockchain experience can use any code language to access the benefits of blockchain. Customers have used NodeJS, Python, Java, and even BASH shell script to write smart contracts on Dragonchain.
With Docker containers, we achieve better separation of concerns, faster deployment, higher reliability, and lower response times.
We chose Kubernetes for its self-healing features, ability to run multiple services on one server, and its large and thriving development community. It is resilient, scalable, and automated. OpenFaaS allows us to package smart contracts as Docker images for easy deployment.
Contract deployment time is now bounded only by the size of the Docker image being deployed but remains fast even for reasonably large images. We also take advantage of Docker’s flexibility and its ability to support any language that can run on x86 architecture. Any image, public or private, can be run as a smart contract using Dragonchain.

Flexibility in Scaling

Dragonchain’s architecture considers interoperability and integration as key features. From inception, we had a goal to increase adoption via integration with real business use cases and traditional systems.
We envision the ability for Reddit, in the future, to be able to integrate alternate content storage platforms or other financial services along with the token.
  • LBRY - To allow users to deploy content natively to LBRY
  • MakerDAO to allow users to lend small amounts backed by their Reddit community points.
  • STORJ/SIA to allow decentralized on chain storage of portions of content. These integrations or any other are relatively easy to integrate on Dragonchain with an Interchain implementation.

Cost

Cost estimates (on-chain and off-chain) For the purpose of this proposal, we assume that all transactions are on chain (posts, replies, and votes).
On the Dragonchain network, transaction costs are deterministic/predictable. By staking TIME on the business node (as described above) Reddit can reduce transaction costs to as low as $0.0000025 per transaction.
Dragonchain Fees Table

Getting Started

How to run it
Building on Dragonchain is simple and requires no blockchain experience. Spin up a business node (L1) in our managed environment (AWS), run it in your own cloud environment, or on-prem in your own datacenter. Clear documentation will walk you through the steps of spinning up your first Dragonchain Level 1 Business node.
Getting started is easy...
  1. Download Dragonchain’s dctl
  2. Input three commands into a terminal
  3. Build an image
  4. Run it
More information can be found in our Get started documents.

Architecture
Dragonchain is an open source hybrid platform. Through Dragon Net, each chain combines the power of a public blockchain (like Ethereum) with the privacy of a private blockchain.
Dragonchain organizes its network into five separate levels. A Level 1, or business node, is a totally private blockchain only accessible through the use of public/private keypairs. All business logic, including smart contracts, can be executed on this node directly and added to the chain.
After creating a block, the Level 1 business node broadcasts a version stripped of sensitive private data to Dragon Net. Three Level 2 Validating nodes validate the transaction based on guidelines determined from the business. A Level 3 Diversity node checks that the level 2 nodes are from a diverse array of locations. A Level 4 Notary node, hosted by a KYC partner, then signs the validation record received from the Level 3 node. The transaction hash is ledgered to the Level 5 public chain to take advantage of the hash power of massive public networks.
Dragon Net can be thought of as a “blockchain of blockchains”, where every level is a complete private blockchain. Because an L1 can send to multiple nodes on a single level, proof of existence is distributed among many places in the network. Eventually, proof of existence reaches level 5 and is published on a public network.

API Documentation

APIs (on chain & off)

SDK Source

Nobody’s Perfect

Known issues or tradeoffs
  • Dragonchain is open source and even though the platform is easy enough for developers to code in any language they are comfortable with, we do not have so large a developer community as Ethereum. We would like to see the Ethereum developer community (and any other communities) become familiar with our SDK’s, our solutions, and our platform, to unlock the full potential of our Ethereum Interchain. Long ago we decided to prioritize both Bitcoin and Ethereum Interchains. We envision an ecosystem that encompasses different projects to give developers the ability to take full advantage of all the opportunities blockchain offers to create decentralized solutions not only for Reddit but for all of our current platforms and systems. We believe that together we will take the adoption of blockchain further. We currently have additional Interchain with Ethereum Classic. We look forward to Interchain with other blockchains in the future. We invite all blockchains projects who believe in decentralization and security to Interchain with Dragonchain.
  • While we only have 700 nodes compared to 8,000 Ethereum and 10,000 Bitcoin nodes. We harness those 18,000 nodes to scale to extremely high levels of security. See Dragonchain metrics.
  • Some may consider the centralization of Dragonchain’s business nodes as an issue at first glance, however, the model is by design to protect business data. We do not consider this a drawback as these nodes can make any, none, or all data public. Depending upon the implementation, every subreddit could have control of its own business node, for potential business and enterprise offerings, bringing new alternative revenue streams to Reddit.

Costs and resources

Summary of cost & resource information for both on-chain & off-chain components used in the PoC, as well as cost & resource estimates for further scaling. If your PoC is not on mainnet, make note of any mainnet caveats (such as congestion issues).
Every transaction on the PoC system had a transaction fee of $0.0001 (one-hundredth of a cent USD). At 256MM transactions, the demo cost $25,600. With current operational fees, the same demonstration would cost $640 USD.
For the demonstration, to achieve throughput to mimic a worldwide payments network, we modeled several clients in AWS and 4-5 business nodes to handle the traffic. The business nodes were tuned to handle higher throughput by adjusting memory and machine footprint on AWS. This flexibility is valuable to implementing a system such as envisioned by Reddit. Given that Reddit’s daily traffic (posts, replies, and votes) is less than half that of our demo, we would expect that the entire Reddit system could be handled on 2-5 business nodes using right-sized containers on AWS or similar environments.
Verification was accomplished on the operational Dragon Net network with over 700 independently owned verification nodes running around the world at no cost to the business other than paid transaction fees.

Requirements

Scaling

This PoC should scale to the numbers below with minimal costs (both on & off-chain). There should also be a clear path to supporting hundreds of millions of users.
Over a 5 day period, your scaling PoC should be able to handle:
*100,000 point claims (minting & distributing points) *25,000 subscriptions *75,000 one-off points burning *100,000 transfers
During Dragonchain’s 24 hour demo, the above required numbers were reached within the first few minutes.
Reddit’s total activity is 9000% more than Ethereum’s total transaction level. Even if you do not include votes, it is still 700% more than Ethereum’s current volume. Dragonchain has demonstrated that it can handle 250 million transactions a day, and it’s architecture allows for multiple systems to work at that level simultaneously. In our PoC, we demonstrate double the full capacity of Reddit, and every transaction was proven all the way to Bitcoin and Ethereum.
Reddit Scaling on Ethereum

Decentralization

Solutions should not depend on any single third-party provider. We prefer solutions that do not depend on specific entities such as Reddit or another provider, and solutions with no single point of control or failure in off-chain components but recognize there are numerous trade-offs to consider
Dragonchain’s architecture calls for a hybrid approach. Private business nodes hold the sensitive data while the validation and verification of transactions for the business are decentralized within seconds and secured to public blockchains within 10 minutes to 2 hours. Nodes could potentially be controlled by owners of individual subreddits for more organic decentralization.
  • Billing is currently centralized - there is a path to federation and decentralization of a scaled billing solution.
  • Operational multi-cloud
  • Operational on-premises capabilities
  • Operational deployment to any datacenter
  • Over 700 independent Community Verification Nodes with proof of ownership
  • Operational Interchain (Interoperable to Bitcoin, Ethereum, and Ethereum Classic, open to more)

Usability Scaling solutions should have a simple end user experience.

Users shouldn't have to maintain any extra state/proofs, regularly monitor activity, keep track of extra keys, or sign anything other than their normal transactions
Dragonchain and its customers have demonstrated extraordinary usability as a feature in many applications, where users do not need to know that the system is backed by a live blockchain. Lyceum is one of these examples, where the progress of academy courses is being tracked, and successful completion of courses is rewarded with certificates on chain. Our @Save_The_Tweet bot is popular on Twitter. When used with one of the following hashtags - #please, #blockchain, #ThankYou, or #eternalize the tweet is saved through Eternal to multiple blockchains. A proof report is available for future reference. Other examples in use are DEN, our decentralized social media platform, and our console, where users can track their node rewards, view their TIME, and operate a business node.
Examples:

Transactions complete in a reasonable amount of time (seconds or minutes, not hours or days)
All transactions are immediately usable on chain by the system. A transaction begins the path to decentralization at the conclusion of a 5-second block when it gets distributed across 5 separate community run nodes. Full decentralization occurs within 10 minutes to 2 hours depending on which interchain (Bitcoin, Ethereum, or Ethereum Classic) the transaction hits first. Within approximately 2 hours, the combined hash power of all interchained blockchains secures the transaction.

Free to use for end users (no gas fees, or fixed/minimal fees that Reddit can pay on their behalf)
With transaction pricing as low as $0.0000025 per transaction, it may be considered reasonable for Reddit to cover transaction fees for users.
All of Reddit's Transactions on Blockchain (month)
Community points can be earned by users and distributed directly to their Reddit account in batch (as per Reddit minting plan), and allow users to withdraw rewards to their Ethereum wallet whenever they wish. Withdrawal fees can be paid by either user or Reddit. This model has been operating inside the Dragonchain system since 2018, and many security and financial compliance features can be optionally added. We feel that this capability greatly enhances user experience because it is seamless to a regular user without cryptocurrency experience, yet flexible to a tech savvy user. With regard to currency or token transactions, these would occur on the Reddit network, verified to BTC and ETH. These transactions would incur the $0.0000025 transaction fee. To estimate this fee we use the monthly active Reddit users statista with a 60% adoption rate and an estimated 10 transactions per month average resulting in an approximate $720 cost across the system. Reddit could feasibly incur all associated internal network charges (mining/minting, transfer, burn) as these are very low and controllable fees.
Reddit Internal Token Transaction Fees

Reddit Ethereum Token Transaction Fees
When we consider further the Ethereum fees that might be incurred, we have a few choices for a solution.
  1. Offload all Ethereum transaction fees (user withdrawals) to interested users as they wish to withdraw tokens for external use or sale.
  2. Cover Ethereum transaction fees by aggregating them on a timed schedule. Users would request withdrawal (from Reddit or individual subreddits), and they would be transacted on the Ethereum network every hour (or some other schedule).
  3. In a combination of the above, customers could cover aggregated fees.
  4. Integrate with alternate Ethereum roll up solutions or other proposals to aggregate minting and distribution transactions onto Ethereum.

Bonus Points

Users should be able to view their balances & transactions via a blockchain explorer-style interface
From interfaces for users who have no knowledge of blockchain technology to users who are well versed in blockchain terms such as those present in a typical block explorer, a system powered by Dragonchain has flexibility on how to provide balances and transaction data to users. Transactions can be made viewable in an Eternal Proof Report, which displays raw data along with TIME staking information and traceability all the way to Bitcoin, Ethereum, and every other Interchained network. The report shows fields such as transaction ID, timestamp, block ID, multiple verifications, and Interchain proof. See example here.
Node payouts within the Dragonchain console are listed in chronological order and can be further seen in either Dragons or USD. See example here.
In our social media platform, Dragon Den, users can see, in real-time, their NRG and MTR balances. See example here.
A new influencer app powered by Dragonchain, Raiinmaker, breaks down data into a user friendly interface that shows coin portfolio, redeemed rewards, and social scores per campaign. See example here.

Exiting is fast & simple
Withdrawing funds on Dragonchain’s console requires three clicks, however, withdrawal scenarios with more enhanced security features per Reddit’s discretion are obtainable.

Interoperability Compatibility with third party apps (wallets/contracts/etc) is necessary.
Proven interoperability at scale that surpasses the required specifications. Our entire platform consists of interoperable blockchains connected to each other and traditional systems. APIs are well documented. Third party permissions are possible with a simple smart contract without the end user being aware. No need to learn any specialized proprietary language. Any code base (not subsets) is usable within a Docker container. Interoperable with any blockchain or traditional APIs. We’ve witnessed relatively complex systems built by engineers with no blockchain or cryptocurrency experience. We’ve also demonstrated the creation of smart contracts within minutes built with BASH shell and Node.js. Please see our source code and API documentation.

Scaling solutions should be extensible and allow third parties to build on top of it Open source and extensible
APIs should be well documented and stable

Documentation should be clear and complete
For full documentation, explore our docs, SDK’s, Github repo’s, architecture documents, original Disney documentation, and other links or resources provided in this proposal.

Third-party permissionless integrations should be possible & straightforward Smart contracts are Docker based, can be written in any language, use full language (not subsets), and can therefore be integrated with any system including traditional system APIs. Simple is better. Learning an uncommon or proprietary language should not be necessary.
Advanced knowledge of mathematics, cryptography, or L2 scaling should not be required. Compatibility with common utilities & toolchains is expected.
Dragonchain business nodes and smart contracts leverage Docker to allow the use of literally any language or executable code. No proprietary language is necessary. We’ve witnessed relatively complex systems built by engineers with no blockchain or cryptocurrency experience. We’ve also demonstrated the creation of smart contracts within minutes built with BASH shell and Node.js.

Bonus

Bonus Points: Show us how it works. Do you have an idea for a cool new use case for Community Points? Build it!

TIME

Community points could be awarded to Reddit users based upon TIME too, whereas the longer someone is part of a subreddit, the more community points someone naturally gained, even if not actively commenting or sharing new posts. A daily login could be required for these community points to be credited. This grants awards to readers too and incentivizes readers to create an account on Reddit if they browse the website often. This concept could also be leveraged to provide some level of reputation based upon duration and consistency of contribution to a community subreddit.

Dragon Den

Dragonchain has already built a social media platform that harnesses community involvement. Dragon Den is a decentralized community built on the Dragonchain blockchain platform. Dragon Den is Dragonchain’s answer to fake news, trolling, and censorship. It incentivizes the creation and evaluation of quality content within communities. It could be described as being a shareholder of a subreddit or Reddit in its entirety. The more your subreddit is thriving, the more rewarding it will be. Den is currently in a public beta and in active development, though the real token economy is not live yet. There are different tokens for various purposes. Two tokens are Lair Ownership Rights (LOR) and Lair Ownership Tokens (LOT). LOT is a non-fungible token for ownership of a specific Lair. LOT will only be created and converted from LOR.
Energy (NRG) and Matter (MTR) work jointly. Your MTR determines how much NRG you receive in a 24-hour period. Providing quality content, or evaluating content will earn MTR.

Security. Users have full ownership & control of their points.
All community points awarded based upon any type of activity or gift, are secured and provable to all Interchain networks (currently BTC, ETH, ETC). Users are free to spend and withdraw their points as they please, depending on the features Reddit wants to bring into production.

Balances and transactions cannot be forged, manipulated, or blocked by Reddit or anyone else
Users can withdraw their balance to their ERC20 wallet, directly through Reddit. Reddit can cover the fees on their behalf, or the user covers this with a portion of their balance.

Users should own their points and be able to get on-chain ERC20 tokens without permission from anyone else
Through our console users can withdraw their ERC20 rewards. This can be achieved on Reddit too. Here is a walkthrough of our console, though this does not show the quick withdrawal functionality, a user can withdraw at any time. https://www.youtube.com/watch?v=aNlTMxnfVHw

Points should be recoverable to on-chain ERC20 tokens even if all third-parties involved go offline
If necessary, signed transactions from the Reddit system (e.g. Reddit + Subreddit) can be sent to the Ethereum smart contract for minting.

A public, third-party review attesting to the soundness of the design should be available
To our knowledge, at least two large corporations, including a top 3 accounting firm, have conducted positive reviews. These reviews have never been made public, as Dragonchain did not pay or contract for these studies to be released.

Bonus points
Public, third-party implementation review available or in progress
See above

Compatibility with HSMs & hardware wallets
For the purpose of this proposal, all tokenization would be on the Ethereum network using standard token contracts and as such, would be able to leverage all hardware wallet and Ethereum ecosystem services.

Other Considerations

Minting/distributing tokens is not performed by Reddit directly
This operation can be automated by smart contract on Ethereum. Subreddits can if desired have a role to play.

One off point burning, as well as recurring, non-interactive point burning (for subreddit memberships) should be possible and scalable
This is possible and scalable with interaction between Dragonchain Reddit system and Ethereum token contract(s).

Fully open-source solutions are strongly preferred
Dragonchain is fully open source (see section on Disney release after conclusion).

Conclusion

Whether it is today, or in the future, we would like to work together to bring secure flexibility to the highest standards. It is our hope to be considered by Ethereum, Reddit, and other integrative solutions so we may further discuss the possibilities of implementation. In our public demonstration, 256 million transactions were handled in our operational network on chain in 24 hours, for the low cost of $25K, which if run today would cost $625. Dragonchain’s interoperable foundation provides the atmosphere necessary to implement a frictionless community points system. Thank you for your consideration of our proposal. We look forward to working with the community to make something great!

Disney Releases Blockchain Platform as Open Source

The team at Disney created the Disney Private Blockchain Platform. The system was a hybrid interoperable blockchain platform for ledgering and smart contract development geared toward solving problems with blockchain adoption and usability. All objective evaluation would consider the team’s output a success. We released a list of use cases that we explored in some capacity at Disney, and our input on blockchain standardization as part of our participation in the W3C Blockchain Community Group.
https://lists.w3.org/Archives/Public/public-blockchain/2016May/0052.html

Open Source

In 2016, Roets proposed to release the platform as open source to spread the technology outside of Disney, as others within the W3C group were interested in the solutions that had been created inside of Disney.
Following a long process, step by step, the team met requirements for release. Among the requirements, the team had to:
  • Obtain VP support and approval for the release
  • Verify ownership of the software to be released
  • Verify that no proprietary content would be released
  • Convince the organization that there was a value to the open source community
  • Convince the organization that there was a value to Disney
  • Offer the plan for ongoing maintenance of the project outside of Disney
  • Itemize competing projects
  • Verify no conflict of interest
  • Preferred license
  • Change the project name to not use the name Disney, any Disney character, or any other associated IP - proposed Dragonchain - approved
  • Obtain legal approval
  • Approval from corporate, parks, and other business units
  • Approval from multiple Disney patent groups Copyright holder defined by Disney (Disney Connected and Advanced Technologies)
  • Trademark searches conducted for the selected name Dragonchain
  • Obtain IT security approval
  • Manual review of OSS components conducted
  • OWASP Dependency and Vulnerability Check Conducted
  • Obtain technical (software) approval
  • Offer management, process, and financial plans for the maintenance of the project.
  • Meet list of items to be addressed before release
  • Remove all Disney project references and scripts
  • Create a public distribution list for email communications
  • Remove Roets’ direct and internal contact information
  • Create public Slack channel and move from Disney slack channels
  • Create proper labels for issue tracking
  • Rename internal private Github repository
  • Add informative description to Github page
  • Expand README.md with more specific information
  • Add information beyond current “Blockchains are Magic”
  • Add getting started sections and info on cloning/forking the project
  • Add installation details
  • Add uninstall process
  • Add unit, functional, and integration test information
  • Detail how to contribute and get involved
  • Describe the git workflow that the project will use
  • Move to public, non-Disney git repository (Github or Bitbucket)
  • Obtain Disney Open Source Committee approval for release
On top of meeting the above criteria, as part of the process, the maintainer of the project had to receive the codebase on their own personal email and create accounts for maintenance (e.g. Github) with non-Disney accounts. Given the fact that the project spanned multiple business units, Roets was individually responsible for its ongoing maintenance. Because of this, he proposed in the open source application to create a non-profit organization to hold the IP and maintain the project. This was approved by Disney.
The Disney Open Source Committee approved the application known as OSSRELEASE-10, and the code was released on October 2, 2016. Disney decided to not issue a press release.
Original OSSRELASE-10 document

Dragonchain Foundation

The Dragonchain Foundation was created on January 17, 2017. https://den.social/l/Dragonchain/24130078352e485d96d2125082151cf0/dragonchain-and-disney/
submitted by j0j0r0 to ethereum [link] [comments]

The deepest report: Bitmain's self-help history

The deepest report: Bitmain's self-help history
The original intention of this article is to let readers understand the causes and consequences of Bitmain internal fighting, but after writing it, I found that it is not so much internal fighting as it is a long history of self-help.
The story is very long. Let's adjust the timeline to the eve of December 17, 2018. That was one of Bitmain's most critical moments and the beginning of a series of subsequent stories.
1. Self-immolation In September 2018, Bitmain's financial department warned management that the company's cash flow has become very tight and operating costs must be reduced to allow the company to continue. The blockchain unicorn, which is valued at more than 15 billion U.S. dollars, is crippled in the run and struggling to break the corner.
In 2017, Bitmain made a profit of 1 billion US dollars In the first half of 2018, Bitmain made a profit of 1 billion US dollars Three rounds of financing, a total of 800 million US dollars Net assets should exceed 3 billion U.S. dollars In September 2018, Bitmain had tight cash flow and was on the verge of bankruptcy
A simple comparison, it is not difficult to see that Bitmain's ability to make money is incredible, and its ability to burn money is even more extreme.
How does Bitmain burn money? Do you pour cash into gasoline and burn it, or hire a lot of employees to stuff the banknotes one by one into the shredder? The actual situation is closer to the latter.
The following data can help readers quickly learn Bitmain's money burning skills.
At the beginning of 2018, the entire cryptocurrency market has entered a bear market, but Bitmain's monthly operating costs have been rising wildly. Operating costs have risen from 10 million US dollars at the beginning of the year to 50 million US dollars at the end of the year.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
Operating costs are just the tip of the iceberg. Excessive chip trial production can become a classic case of project management courses. Readers who pay attention to Cryptocurrency mining can easily find that Bitmain is still working hard to clear the inventory of Antminer S9 in 2019. As the co-CEO, Ketuan Zhan did not listen to the advice or even warnings of the Finance Department, insisting on the implementation of Excessive chip trial production, resulting in a large accumulation of inventory and tight capital turnover. Another CEO, Jihan Wu, once revealed that the loss of Excessive chip trial production to the company was approximately US$1.5 billion.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
The BM1393 chip incident is even more incredible. Chip expert Ketuan Zhan invested a lot of money on a failed chip, and finally failed again. From 2017 to 2018, Bitmain has failed Trial production of mining machine chips at least 4 times, including 16nm, 12nm and 10nm chips, of which 16nm Trial production failed twice, thus losing at least US$1.2 billion.
It is rumored that Bitmain still holds a billion U.S. dollars worth of cryptocurrency in a state of floating loss. In view of the rebound in the market in 2020, we will not comment temporarily, waiting for the correct answer from the cryptocurrency market. But the losses pointed out in the previous article are all irreversible.
2. Sole power
In September 2018, Bitmain's management realized the seriousness of the problem. It turned out that the company's money could be squandered. As a result, the management began to discuss self-help plans, and the most reasonable and effective way was obviously to lay off employees.
The probation period for newly hired employees at Bitmain is half a year, and the probationary salary is 100% of the official salary, there is no difference. Once layoffs are made, new employees who have not passed the probationary period will be the main layoff targets. The department managed by Ketuan Zhan will face large-scale layoffs. The layoff plan is strongly opposed by Ketuan Zhan. Bitmain can only temporarily abandon the layoffs and replace it with continuous reductions. For marketing and travel expenses, a budget committee was established to strictly approve every expenditure. At the same time, employee benefits, such as reimbursement of taxi expenses, breakfast supply, snacks and drinks, etc., have also been abolished, and even the tradition of giving employees 400 yuan worth of BTC/BCH every month has been stopped.
In the face of huge cash flow pressure, trivial savings is obviously of no avail. Soon, the management again discussed the layoff plan, and it has reached the point where it has to be laid off.
In December 2018, Jihan Wu began to organize all entrepreneurial veterans and business backbones to persuade Ketuan Zhan to agree to layoffs, but Ketuan Zhan still insisted not to layoffs. The persuasion process was very unsuccessful. After many meetings and intense debates, Bitmain executives were caught in a dilemma of wasting time with Ketuan Zhan.
In this process, the shortcomings of the dual CEO system began to appear, and the relationship between the two CEOs gradually deteriorated.
On the night of December 16th, Ketuan Zhan reconvened the management meeting, and more than 30 managements who were present were asked to hand over their mobile phones. At this time, Jihan Wu was on a business trip in Hong Kong and was busy with listing related work.
In the meeting, Ketuan Zhan's core content was three items:
(1) Bitmain cannot have two CEOs, only one CEO and must be Ketuan Zhan. Ketuan Zhan said that he met an old leader during a business trip. He hadn't seen each other for many years. The old leader suggested that the company can only have one CEO, and it must be him. Ketuan Zhan feels that this is a kind of fate, an opportunity given by God.
(2) Ketuan Zhan believes that the company's cash flow problems, the biggest responsibility is the inability of the financial department. To prove his point, Ketuan Zhan announced Bitmain's financial data at the meeting. In the evening, employees in Taiwan began to post messages on social media, saying that the company's capital chain was broken and the top management was split.
(3) If Ketuan Zhan is not supported, the option will be cancelled and the equity will be voided.
Hearing about this, Jihan Wu, who lives in Hong Kong, sent a WeChat message to the management who are attending the meeting.

https://preview.redd.it/zkj2d44tqid51.jpg?width=1080&format=pjpg&auto=webp&s=9251c1f7308e155d7911d5969e71091a5ad5e14a
On the afternoon of December 17, 2018, Jihan Wu returned to Beijing to negotiate with Ketuan Zhan all night, and finally reached a consensus in the early morning. Bitmain co-founder Yuesheng Ge announced the results of the negotiations. Jihan Wu and Ketuan Zhan ceased to serve as CEOs, and Haichao Wang served as CEO. Jihan Wu voluntarily backed down and Ketuan Zhan served as chairman.
The "12.17 Incident" had a very bad impact on Bitmain, especially the disclosure of Bitmain's financial status, which caused vendors to start dunning. The loan that had just been negotiated with the Bank of Beijing was cancelled the next day. Jihan Wu's resignation as CEO caused an uproar in the industry, and it became a hot topic among Cryptocurrency mining, blockchain practitioners, and investor communities. The media focused their interpretation on Bitmain's series of incidents, and generally looked down upon its ongoing Hong Kong IPO, believing that the high-level changes had already signaled the failure of the IPO in advance.
On Christmas December 24, 2018, Bitmain finally began to implement the layoff plan. This long-delayed “correct decision” was achieved after a stalemate for nearly three months. The AI ​​teams in Beijing, Singapore, Taiwan, and Shanghai have laid off more than 50% of their employees. The Israeli R&D center was closed and Shenzhen New Species Technology Co., Ltd., which had been acquired for only ten months, was dissolved, and all employees were laid off. Copernicus, Bitmain's top blockchain development team, was not spared and was wiped out in this layoff. Copernicus and some of the laid-off employees joined the new company Matrixport co-founded by Jihan Wu and Yuesheng Ge, headquartered in Singapore.
3. Past events when starting a business
After the "12.17 Incident", Jihan Wu gradually faded out of Bitmain's management affairs and turned his attention to the IPO and new company. And this is one of Jihan Wu's major mistakes, he began to let Ketuan Zhan manage Bitmain alone.
In fact, as early as 2013, Jihan Wu planted hidden dangers.
Jihan Wu, an investment banker, was the earliest translator of the Bitcoin white paper. He began to get involved in the cryptocurrency mining industry in 2012. The disappearance of Kaomao and Nangua Zhang's ticket skipping led Jihan Wu to decide to develop his own chip.
In 2013, Jihan Wu established his own mining machine company. Together with Yuesheng Ge, who was only 20 years old, he found Ketuan Zhan, an integrated circuit designer of the Chinese Academy of Sciences, to create the protagonist of this article, and later the digital Cryptocurrency mining giant, Bitmain.
Jihan Wu promised Ketuan Zhan that every time a mining machine chip was successfully developed, he would give some shares to the Ketuan Zhan team. At that time, the company founded by Ketuan Zhan was on the eve of falling apart. In order to regroup the team, Ketuan Zhan promised to share half of his shares with the team members. Unfortunately, this is just a bad check. With the rapid development of Bitmain and higher and higher valuations, the expanding Ketuan Zhan almost monopolized all the shares.
Like many startups, Bitmain encountered many difficulties in its early days, and many jobs had to be done by the boss. For example, in the chip design and production process in the second half of 2013, Bitmain was caught in a dilemma of insufficient funds. Jihan Wu personally raised funds and met with TSMC’s sales to persuade TSMC to accept the production needs of a start-up company. Jihan Wu also participated in the selection of the thermodynamic parameters of the heat sink in the Antminer S1.
In 2014, Jihan Wu discovered that this company was independently operated by Ketuan Zhan, which had huge problems. Forcing Jihan Wu to continue to participate in company management.
At that time, Bitmain's mining machine chips had just achieved a certain lead in the standard design process. Jihan Wu believes that the next step must be to develop full customization technology, but Ketuan Zhan plans to invest resources in the research of mobile payment chips.
Ketuan Zhan met a mysterious person from the Party Central Security Bureau who claimed to be able to manipulate the Party Central Committee’s decision-making process for the next generation of mobile payment cryptography standards, but this direction is likely to lead to the fact that Bitmain has just gained the lead in the mining machine market. Regained.
Jihan Wu said that as a graduate of the School of Economics, with a little memory of his high school stage and the knowledge reserve of a computer technology amateur, he retrieves various materials and papers every day, learns theories related to full customization, and goes to Ketuan Zhan conducts persuasion work there.
Fortunately, in the direction of full customization technology, Ketuan Zhan finally listened to Jihan Wu's opinion. Bitmain quickly integrated the technical experts from the United States and Russia introduced by Jihan Wu, which greatly improved the design level of chips and complete machines.
In 2015, Jihan Wu suggested that Ketuan Zhan consider the direction of artificial intelligence. But Ketuan Zhan is not here, he prefers the CPU direction. After staying asleep at night, coupled with in-depth analysis by the Bitmain investment team, Ketuan Zhan finally agreed with this direction. It is a pity that after the Tianshi Chen brothers made major breakthroughs in theory and practice, Bitmain officially invested in the relevant direction, and it was still a step behind.
In the two years from 2016 to 2017, Bitmain's business performance has achieved rapid development, becoming a unique super unicorn in the blockchain industry. According to Froth & Sullivan, in 2017, Bitmain Technology Holdings was the second largest fabless chip design company in China and the tenth largest fabless chip design company in the world, and the fourth largest fabless ASIC chip design company in the world, accounting for 74.5% of global cryptocurrency market share.
However, the huge crisis has long been buried in the early days of entrepreneurship.
Ketuan Zhan's decision on major directions revealed his weakness of extremely lack of business understanding. But every mistake he made was blocked by the company's core employees. His overconfidence in his management ability led to the gradual intensification of conflicts, and the management differences between the two founders became more serious.
4.The giant gets lost
The contradiction between the two broke out on December 17, 2018. Ketuan Zhan used extreme means to force the management to compromise with him by canceling the option, so as to achieve the goal of sole control of the company. Jihan Wu returned to Beijing from Hong Kong overnight and negotiated with Ketuan Zhan all night. In the end, the two resigned as CEO. Jihan Wu retired. Ketuan Zhan has the exclusive rights of chairman in exchange for the implementation of the layoff plan.
Jihan Wu's voluntary retreat has intensified Ketuan Zhan's management to do whatever he wants.
A Bitmain employee commented on Ketuan Zhan's management skills, summed up in two letters-SM.
After becoming the sole helm of the company, Ketuan Zhan quickly "rectified" the department in charge of Jihan Wu as the chairman of the board. He guided the sales of mining machines at the dinner, and pointed out that the sales performance is not due to the sales staff. Ability is strong, but the company provides opportunities. Take two sales leaders as examples, saying that if the company hadn't given the opportunity, they would still be losers. In addition, Ketuan Zhan also instructed the sales staff on how to toast and imparted the wine table culture and experience.
After the meal, Ketuan Zhan came to the conclusion that the quality of Bitmain sales staff was too poor, and Huawei’s blood needs to be injected to drive the company’s progress. Soon, the marketing and sales director from Huawei officially took over Bitmain, opening the era of brand premium for Antminer.
In order to further understand and guide the sales work, Ketuan Zhan asked to meet the customers with the sales staff. During the negotiation process, Ketuan Zhan had a heated discussion with customers on the issue of Chinese and Western medicine, and had also forced the sales staff to be able to ship 10,000 machines due to insufficient production capacity.
Although the requirements for sales personnel are strict, Ketuan Zhan has provided a lot of convenience for "Mainland Ark". In addition to selling mining machines at a more favorable price, Bitmain's mining machines are also hosted in Ming Wang at a higher price than the market price. Mine. It is reported that both Ketuan Zhan and Ming Wang are shareholders of Ark.
The new sales strategy of Huawei's executives has also brought very obvious changes to Bitmain. The self-righteous brand premium reduces the price-performance ratio of Antminer, causing competing products to eat away at Bitmain's market share. Later, Bitmain found that the strategy was wrong and started to cut prices, and found that the mining machine market was saturated and the purchase demand of miners had decreased.
More dangerous than the sales strategy is that the technical advantages of Antminer are being chased by competing products, and even overtaken. At the same time, the two mining pools under Bitmain also lost their first and second positions. The AI ​​business, which Jihan Wu placed high hopes and Ketuan Zhan personally supervised, became a laughing stock in the industry. Not only did it fail to make a profit, it almost brought down Bitmain.
Blindly introducing senior executives from Huawei to occupy important positions completely destroys the company's internal cultural foundation. The bureaucracy within Bitmain began to corrode from high-level employees to ordinary employees. Ketuan Zhan is not aware of this. He is still keen on recruiting Huawei employees, imitating Huawei's organizational structure and strategy, letting HR do sales and R&D personnel to do HR.
The organizational structure adjustment in October 2019 was the fuse for Ketuan Zhan to completely anger Bitmain management. This time, Ketuan Zhan completely marginalized Bitmain’s veteran employees, and suddenly promoted some of the “airborne soldiers” who had just joined the company to the position of person in charge, which caused the former person in charge to report to the new employees. The two managers who were originally equal The hierarchy becomes the subordinate relationship, the operation and development of different business lines are merged into a large department, the upward reporting process becomes more cumbersome, and the relationship between employees becomes delicate.
5. Headwind
On October 29, 2019, Jihan Wu urgently held a staff meeting. Prior to this, the legal representative of Beijing Bitmain has been changed to Jihan Wu, including the parent companies Hong Kong Bitmain and Cayman Bitmain. Jihan Wu stood in the lobby of Building 25, B1, announcing that Ketuan Zhan has been relieved of all duties. Any employee in the Bitmain Group shall no longer execute Ketuan Zhan’s instructions and participate in any meetings convened by Ketuan Zhan. If there is any violation, the company will demotion and expel the company based on the severity of the circumstances. If losses are caused to the company, the company will be held accountable.
Jihan Wu's speech is very long, which can be summarized as follows:
(1) Ketuan Zhan has been relieved of all duties. Also expelled from the original Huawei company HR Zhi Wang introduced by Ketuan Zhan at the end of 2018. Zhi Wang’s reputation on Bitmain was extremely poor and was ridiculed by employees as "nine thousand years" (In ancient China, the emperor was called "ten thousand years old", and the prince was "eight thousand years old." However, in the Ming Dynasty, there was an eunuch who caused harm to the country and the people. He called himself "nine thousand years old", meaning that he was only A little lower than the emperor's level).
(2) Ketuan Zhan's ability to control the company's option incentive plan has disappeared, and it is no longer possible to cancel employees' options at will.
(3) The organizational structure adjustment plan led by Ketuan Zhan was suspended.
(4) We are optimistic about the future of AI business, but the premise is that the main business can continue to make profits in order to support the company's continued investment in AI business.
In the speech, Jihan Wu also told employees the whole story of the "12.17 Incident" and bluntly said that the company is not in good condition. If no measures are taken, Bitmain is likely to go bankrupt in three quarters and he must come back to save the company.
At this time, Ketuan Zhan, who was on a business trip in Shenzhen, finally experienced the situation of Jihan Wu in the "12.17 Incident".
After the official return, Jihan Wu began to clearly point out the company's various problems in operation and management, and went deep into each business line to understand the situation. In the mining machine sales department meeting, employees spoke enthusiastically, reflecting on the difficulties and opinions encountered in the work, the marketing and sales director from Huawei asked with a surprised look, "Why didn't these issues be reported to me before?", and soon , The director was interviewed and "voluntarily resigned."
On November 2, 2019, Jihan Wu announced a salary increase for all employees. Bitmain’s last salary increase dates back to 2018. In principle, Bitmain has two salary increases every year.
On November 7, 2019, Ketuan Zhan spoke on social media for the first time, describing his hardship in starting a business, and condemning Jihan Wu for “stabbing a knife in the back”. At the end of the article, he also set himself a KPI for 2020, that is, the mining machine market share will reach 90%, and the AI ​​business will earn 1 billion.
But Ketuan Zhan's majestic plan did not make Bitmain employees feel emotional, but ridiculed him instead. Employees exposed that he insulted employees, advocated Chinese medicine, believed in Buddhism, drank in meetings, practiced Qigong...
However, there is less than half a year before the halving of Bitcoin production, and the cryptocurrency market shows no signs of recovery, which makes Bitmain management very anxious.
On January 6, 2020, Bitmain ushered in another round of layoffs, with a layoff ratio of about 1/3. This time the layoffs have caused many employees who have just increased their salaries to feel very grieved. On the one hand, they were looking forward to Jihan Wu's return. On the other hand, the compensation for this layoff was less than 18 years.
Ketuan Zhan, who has been unable to enter the Bitmain office area, once again spoke on social media and firmly opposed to layoffs. We do not need to lay off staff and we cannot commit suicide.
During the Spring Festival, Covid-19 broke out. Mainland China has begun to extend the Spring Festival holiday and advocate working from home. Under the chain reaction caused by Covid-19, most companies have chosen to cut salaries or even lay off employees. In the first two months of 2020, China's exports fell by 17%, U.S. stocks were broken four times in a row, Bitcoin plunged 40% in 24 hours on March 12, 2020, and crude oil futures fell by 300% on April 20, 2020...
Obviously, Jihan Wu can't predict, but this layoff seems to be the right decision again. In addition, from January to April 2020, Bitmain's revenue exceeded US$400 million amid the spread of Covid-19 and the collapse of the financial market.
6. Fight to the death
When Jihan Wu tried to get the company back on track, Ketuan Zhan was not helpless. On April 28, 2020, Ketuan Zhan finally rolled back the legal representative of Beijing Bitmain to before October 28, 2019 by repeatedly submitting administrative reconsiderations, and restored his status as a legal representative.
On the morning of May 8, 2020, a piece of news about Bitmain quickly appeared on the real-time hot search rankings, and even dominated the headlines of the day. At window 52 on the second floor of the Haidian District Government Affairs Center, when Ketuan Zhan, the legal person of Beijing Bitmain Company, was receiving the business license, a group of unidentified people snatched the business license from the industrial and commercial administrative staff. A source at the scene said that the number of unidentified people in the group was about 60 people, of which Luyao Liu was directing at the scene.
This is a skillful piece of news. It first leads readers to think that Ketuan Zhan is a victim, using 60 people to grab business licenses as the focus. The masses accused Jihan Wu of lawlessness, but ignored whether the government affairs center could have 60 personnel. As for Hong Kong Bitmain to have the right to appoint a representative to obtain a business license, this is a deeper level of thinking.
The follow-up report restored the real situation at the scene. Only more than ten people were present, and both sides were equipped with security personnel. Bitmain employees also broke the news in the circle of friends, claiming that Ketuan Zhan's bodyguard had injured Bitmain's authorized person, and said in a threatening tone, "Be careful!"
However, the subsequent plot reversal did not have much effect. Jihan Wu's reputation has been greatly affected. From a bloody soldier who rescued the company in trouble to a lawless criminal, it can be said to be a world of war. do not.
Ketuan Zhan, who succeeded in the first battle, began to counterattack Bitmain continuously. On the afternoon of June 3, 2020, Ketuan Zhan led a team to pry open the back door of the Beijing Bitmain office and formally occupied the deserted Beijing headquarters.
On June 4, 2020, Ketuan Zhan called on Bitmain employees to resume work and promised to expand the company's market value to more than US$50 billion within three to five years. After that, Ketuan Zhan began to contact employees by phone, trying to acquire the options in the hands of employees at a valuation of 4 billion US dollars.
Subsequently, Ketuan Zhan recalled Huawei's executives and issued a series of personnel appointments and removals. As of June 9, 2020, Ketuan Zhan has successively eliminated CFO Luyao Liu, and Wenguang Wang, the head of the mining center. Luyao Liu is responsible for controlling Bitmain's IPO plan. He also appointed Yanwu Ma as the HR director, Gang Ren as the head of the mining center, Yonggang Sun as the head of the supply chain, Ling Gu as the financial director, and Bin Zhu as the head of the mining machine business department. Bin Zhu is the senior executive of Huawei who was interviewed and left as mentioned in the previous article. During his tenure, he reduced Antminer’s 90% market share to 50%, and received a large number of complaints from miners. Internal employees once speculated that he might be Compete against the spies sent by the company.
In addition to recalling senior executives of Huawei, Ketuan Zhan also urged employees to return to work. They can receive a bonus of 10,000 yuan when they return to work on the same day, which is only half the next day. Ketuan Zhan showed a very kind side. Every time the elevator door is opened, Ketuan Zhan's hot gaze can be met, shaking hands, taking photos, and receiving money. As there is no personnel information, Ketuan Zhan does not know whether the person receiving the money is a Bitmain employee, and these people did not resume work the next day.
The effect of gentleness was not good, Ketuan Zhan began to force employees to return to work. Seeing that there are still very few respondents, Ketuan Zhan threatened employees through SMS, phone calls, EMS, emails and other harassment, issued multiple threats such as termination of contract, suspension of payment of social insurance, suspension of wages, and even used personal information saved by employees to form a group of employees. Domicile threats, requiring employees to perform "work handover", trying to force employees to return work computers, etc.
On June 10, 2020, the media revealed that Ketuan Zhan had controlled Bitmain's Shenzhen factory and prohibited employees from delivering normal shipments to paid customers, which caused difficulties in the operation of the Bitmain mining machine department.
On June 13, 2020, Hong Kong Bitmain, the parent company of Beijing Bitmain, issued a statement accusing Ketuan Zhan of signing a "Sales Agency Agreement" with the Ark Data Technology Co., Ltd. in which it holds shares, in an attempt to embezzle Beijing Bit's assets.
On June 17, 2020, the media revealed that Ketuan Zhan started selling 14,000 T17+ series mining machines at low prices.
On June 20, 2020, Hong Kong Bitmain officially suspended the supply of chips to the Shenzhen factory.
On July 13, 2020, in the "A Letter to All My colleagues in the Shenzhen Factory" released by Bitmain in Hong Kong, more details were added on the series of Ketuan Zhan's actions in June.
The legal person Feng Zhou of the Shenzhen plant is related to Ketuan Zhan. After being relieved of Ketuan Zhan's post, Jihan Wu flew to Shenzhen to have a long talk with Feng Zhou. Jihan Wu believes that Feng Zhou is the right person to manage the factory and help the company overcome difficulties, and decides to leave Feng Zhou to continue to manage the factory.
This wrong decision staged a story of a farmer and a snake. When Ketuan Zhan began to counterattack Bitmain, Feng Zhou was also quickly instigated and began to assist Ketuan Zhan in seizing customer machines and transferring 17,000 T17 mining machines in the warehouse. Hainan Continental Ark Data Technology Co., Ltd., which is held by Ketuan Zhan, sold them at a low price.
In order to protect the interests of customers, Jihan Wu had to make a compromise and paid the payment for some goods to a bank account controlled by Ketuan Zhan in exchange for delivery. However, after the other party received a payment of 109 million, the delivery stopped. On July 8, 2020, 5600 mining machines have been overdue.
At the same time, the factory defaulted on suppliers’ accounts payable as much as 200 million yuan. Bank acceptance bills issued by the factory, exceeding 36 million yuan, will expire on July 17, and more than 34 million yuan will expire on July 23. It is understood that Ketuan Zhan, after receiving the bank's dunning call, made it clear that he would not repay the loan, which would destroy the company and the entire group's credit in financial institutions.
7、 This is not the end
So far, the power struggle between the founders of Bitmain has been more than half a year. The office building already occupied by Ketuan Zhan is still empty, and most employees choose to work from home. Some chip developers returned to the office with the acquiescence of Jihan Wu and continued to maintain research and development to reduce the impact of infighting on technological iteration and competitiveness.
This giant ship that once stood on top of the supercomputer chip is crashing into the iceberg due to the madness of the former helm. Ketuan Zhan's madness and Jihan Wu's compromise made mistakes again and again. Bitmain tried to save himself many times, but was unable to get out of the black hole.
If the time goes back to that day in 2013, would Jihan Wu and Yuesheng Ge still choose to dial Ketuan Zhan?
submitted by paulcheung1990 to Bitcoincash [link] [comments]

BitcoinBCH.com accidentally publishes on-chain proof that they fake BCHs adoption metrics. Post to r/btc gets deleted and OP is now permanently banned.

Everybody who has posted this on btc has been banned according to modlog. Total of 9 users so far. Don't post this on btc or you will get banned. If you get banned comment on this thread or PM me.

May 2020:

According to btc modlogs, mc-78 has been banned because he questioned the April report with this comment.

According to btc modlogs, BCH4TW has been banned because he questioned the April report with this comment.

March 2020:

According to btc modlogs, bch4god has been banned because he questioned the February report with this comment.

According to btc modlogs, ISeeGregPeople has been banned because he linked to this thread in his comment.

February 2020:

According to btc modlogs, whene-is-satoshi has been banned because he linked to this thread in his comment.

January 2020:

According to btc modlogs, cryptokittykiller's post has been removed for linking to this thread.

According to btc modlogs, bashcalf has now been banned for linking to this thread.

According to btc modlogs, EnterLayer2 has now been banned for this post pointing out that this thread has reached 1000 upvotes.

This article was posted by bitcoinsatellite on btc here. Once it reached frontpage it got deleted and OP was banned from btc and bitcoincash as a result.

Disclaimer: I am not and have never been affiliated with any of the mentioned parties in a private or professional matter.
Presumably in an attempt to smear a local competitor, Hayden Otto inadvertently publishes irrefutable on-chain proof that he excluded non-BCH retail revenue to shape the "BCH #1 in Australia" narrative.
  • Scroll down to "Proof of exclusion" if you are tired of the drama recap.
  • Scroll down to "TLDR" if you want a summary.

Recap

In September 2019, BitcoinBCH.com started publishing so called monthly "reports" about crypto retail payments in Australia. They claimed that ~90% of Australia's crypto retail revenue is processed via their own HULA system and that ~92% of all crypto retail revenue happens in BCH.
They are aggregating two data sources to come up with this claim.
One is TravelByBit (TBB) who publishes their PoS transactions (BTC, LN, ETH, BNB, DASH, BCH) live on a ticker.
The other source is HULA, a newly introduced POS system (BCH only) and direct competitor to TBB run by BitcoinBCH.com - the same company who created the report. Despite being on-chain their transactions are private, not published and not verifiable by third parties outside BitcoinBCH.com
Two things stood out in the "reports", noted by multiple users (including vocal BCH proponents):
  • The non-BCH parts must have tx excluded and the report neglects to mention it (the total in their TBB analysis does not match what is reported on the TBB website.)
  • The BCH part has outliers included (e.g. BCH city conference in September with 35x the daily average)
The TBB website loads the historic tx data in the browser but hides transactions older than 7 days from being displayed, i.e. you can access more than 7 days worth of data if you understand JavaScript and can read the source code (source).

Hayden Otto's reaction

In direct response to me publishing these findings on btc, Hayden Otto - an employee at BitcoinBCH.com and the author of the report who also happens to be a moderator of /BitcoinCash - banned me immediately from said sub (source).
In subsequent discussion (which repeated for every monthly "report" which was flawed in the same ways as described above), Hayden responded using the same tactics:
"No data was removed"
"The guy is straight out lying. There is guaranteed no missing tx as the data was collected directly from the source." (source)
"Only data I considered non-retail was removed"
"I also had these data points and went through them to remove non-retail transactions, on both TravelbyBit and HULA." (source)
He admits to have removed non-BCH tx by "Game Ranger" because he considers them non-retail (source). He also implies they might be involved in money laundering and that TBB might fail their AML obligations in processing Game Ranger's transactions (source).
The report does not mention any data being excluded at all and he still fails to explain why several businesses that are clearly retail (e.g. restaurants, cafes, markets) had tx excluded (source).
"You are too late to prove I altered the data"
"[...] I recorded [the data] manually from https://travelbybit.com/stats/ over the month of September. The website only shows transactions from the last 7 days and then they disappear. No way for anyone to access stats beyond that." (source)
Fortunately you can, if you can read the website's source code. But you need to know a bit of JavaScript to verify it yourself, so not an ideal method to easily prove the claim of data exclusion to the public. But it laters turns out Hayden himself has found an easier way to achieve the same.
"The report can't be wrong because it has been audited."
In response to criticism about the flawed methodology in generating the September report, BitcoinBCH.com hired an accountant from a regional Bitcoin BCH startup to "audit" the October report. This is remarkable, because not only did their reported TBB totals still not match those from the TBB site - their result was mathematically impossible. How so? No subset of TBB transaction in that month sums up to the total they reported. So even if they excluded retail transactions at will, they still must have messed up the sum (source). Why didn't their auditor notice their mistake? She said she "conducted a review based on the TravelByBit data provided to her", i.e. the data acquisition and selection process was explicitly excluded from the audit (source).
"You are a 'pathetic liar', a 'desperate toll', an 'astroturf account' and 'a total dumb ass' and are 'pulling numbers out of your ass!'"
Since he has already banned me from the sub he moderates, he started to resort to ad hominems (source, source, source, source).

Proof of exclusion

I published raw data as extracted from the TBB site after each report for comparison. Hayden responded that I made those numbers up and that I was pulling numbers out of my ass.
Since he was under the impression that
"The website only shows transactions from the last 7 days and then they disappear. No way for anyone to access stats beyond that." (source)
he felt confident to claim that I would be
unable to provide a source for the [missing] data and/or prove that that data was not already included in the report. (source)
Luckily for us Hayden Otto seems to dislike his competitor TravelByBit so much that he attempted to reframe Bitcoin's RBF feature as a vulnerability specific to TBB PoS system (source).
While doublespending a merchant using the TBB PoS he wanted to prove that the merchant successfully registered the purchase as complete and thus exposed that the PoS sales history of TBB's merchants are available to the public (source), in his own words:
"You can literally access it from a public URL in the Web browser. There is no login or anything required, just type in the name of the merchant." (source)
As of yet it is unclear if this is intentional by TBB or if Hayden Ottos followed the rules of responsible disclosure before publishing this kind of data leak.
As it happens, those sale histories do not only include the merchant and time of purchases, they even include the address the funds were sent to (in case of on-chain payments).
This gives us an easy method to prove that the purchases from the TBB website missing in the reports belong to a specific retail business and actually happened - something that is impossible to prove for the alleged HULA txs.
In order to make it easier for you to verify it yourself, we'll focus on a single day in the dataset, September 17th, 2019 as an example:
  • Hayden Otto's report claims 20 tx and $713.00 in total for that day (source)
  • The TBB website listed 40 tx and a total of $1032.90 (daily summary)
  • Pick a merchant, e.g. "The Stand Desserts"
  • Use Hayden's "trick" to access that merchants public sale history at https://www.livingroomofsatoshi.com/merchanthistory/thestanddesserts, sort by date to find the 17th Sep 2019 and look for a transaction at 20:58 for $28. This proves that a purchase of said amount is associated with this specific retail business.
  • Paste the associated crypto on-chain address 17MrHiRcKzCyuKPtvtn7iZhAZxydX8raU9 in a blockchain explorer of your choice, e.g like this. This proves that a transfer of funds has actually happened.
I let software aggregate the TBB statistics with the public sale histories and you'll find at the bottom of this post a table with the on-chain addresses conveniently linked to blockchain explorers for our example date.
The total of all 40 tx is $1032.90 instead of the $713.00 reported by Hayden. 17 tx of those have a corresponding on-chain address and thus have undeniable proof of $758.10. Of the remaining 23, 22 are on Lightning and one had no merchant history available.
This is just for a single day, here is a comparison for the whole month.
Description Total
TBB Total $10,502
TBB wo. Game Ranger $5,407
TBB according to Hayden $3,737

What now?

The usual shills will respond in a predictive manner: The data must be fake even though its proof is on-chain, I would need to provide more data but HULA can be trusted without any proof, if you include outliers BCH comes out ahead, yada, yada.
But this is not important. I am not here to convince them and this post doesn't aim to.
The tx numbers we are talking about are less than 0.005% of Bitcoin's global volume. If you can increase adoption in your area by 100% by just buying 2 coffees more per day you get a rough idea about how irrelevant the numbers are in comparison.
What is relevant though and what this post aims to highlight is that BitcoinBCH.com and the media outlets around news.bitcoin.com flooding you with the BCH #1 narrative are playing dirty. They feel justified because they feel that Bitcoin/Core/Blockstream is playing dirty as well. I am not here to judge that but you as a reader of this sub should be aware that this is happening and that you are the target.
When BitcoinBCH.com excludes $1,000 Bitcoin tx because of high value but includes $15,000 BCH tx because they are made by "professionals", you should be sceptical.
When BitcoinBCH.com excludes game developers, travel businesses or craftsmen accepting Bitcoin because they don't have a physical store but include a lawyer practice accepting BCH, you should be sceptical.
When BitcoinBCH.com excludes restaurants, bars and supermarkets accepting Bitcoin and when pressed reiterate that they excluded non-retail businesses without ever explaning why a restaurant shouldn't be considered reatil, you should be sceptical.
When BitcoinBCH.com claims the reports have been audited but omit that the data acquisition was not part of the audit, you should be sceptical.
I expect that BitcoinBCH.com will stop removing transactions from TBB for their reports now that it has been shown that their exclusion can be provably uncovered. I also expect that HULA's BCH numbers will rise accordingly to maintain a similar difference.
Hayden Otto assumed that nobody could cross-check the TBB data. He was wrong. Nobody will be able to disprove his claims when HULA's BCH numbers rise as he continues to refuse their release. You should treat his claims accordingly.
As usual, do your own research and draw your own conclusion. Sorry for the long read.

TLDR

  • BitcoinBCH.com claimed no transactions were removed from the TBB dataset in their BCH #1 reports and that is impossible to prove the opposite.
  • Hayden Otto's reveals in a double spend attempt that a TBB merchant's sale history can be accessed publicly including the merchant's on-chain addresses.
  • (For example,) this table shows 40 tx listed on the TBB site on Sep 17th, including their on-chain addresses where applicable. The BitcoinBCH.com report lists only 20 tx for the same day.
  • (Most days and every months so far has had BTC transactions excluded.)
  • (For September, TBB lists $10,502 yet the report only claims $3,737.
No. Date Merchant Asset Address Amount Total
1 17 Sep 19 09:28 LTD Espresso Lightning Unable to find merchant history. 4.50 4.50
2 17 Sep 19 09:40 LTD Espresso Binance Coin Unable to find merchant history. 4.50 9.00
3 17 Sep 19 13:22 Josh's IGA Murray Bridge West Ether 0x40fd53aa...b6de43c531 4.60 13.60
4 17 Sep 19 13:23 Nom Nom Korean Eatery Lightning lnbc107727...zkcqvvgklf 16.00 29.60
5 17 Sep 19 13:24 Nom Nom Korean Eatery Lightning lnbc100994...mkspwddgqw 15.00 44.60
6 17 Sep 19 14:02 Nom Nom Korean Eatery Binance Coin bnb1w5mwu9...552thl4ru5 30.00 74.60
7 17 Sep 19 15:19 Dollars and Sense (Fortitude Valley) Lightning lnbc134780...93cpanyxfg 2.00 76.60
8 17 Sep 19 15:34 Steph's Cafe Binance Coin bnb124hcjy...ss3pz9y3r8 57.50 134.10
9 17 Sep 19 19:37 The Stand Desserts Binance Coin bnb13f58s9...qqc7fxln7s 18.00 152.10
10 17 Sep 19 19:59 The Stand Desserts Lightning lnbc575880...48cpl0z06q 8.50 160.60
11 17 Sep 19 20:00 The Stand Desserts Lightning lnbc575770...t8spzjflym 8.50 169.10
12 17 Sep 19 20:13 The Stand Desserts Lightning lnbc202980...lgqp5ha8f4 3.00 172.10
13 17 Sep 19 20:21 The Stand Desserts Lightning lnbc577010...decq7r4p05 8.50 180.60
14 17 Sep 19 20:24 Fat Dumpling Lightning lnbc217145...9dsqpjjr6g 32.10 212.70
15 17 Sep 19 20:31 The Stand Desserts Lightning lnbc574530...wvcpp3pcen 8.50 221.20
16 17 Sep 19 20:33 The Stand Desserts Lightning lnbc540660...rpqpzgk8z0 8.00 229.20
17 17 Sep 19 20:37 The Stand Desserts Lightning lnbc128468...r8cqq50p5c 19.00 248.20
18 17 Sep 19 20:39 The Stand Desserts Lightning lnbc135220...cngp2zq6q4 2.00 250.20
19 17 Sep 19 20:45 The Stand Desserts Lightning lnbc574570...atcqg738p8 8.50 258.70
20 17 Sep 19 20:51 Fat Dumpling Lightning lnbc414190...8hcpg79h9a 61.20 319.90
21 17 Sep 19 20:53 The Stand Desserts Lightning lnbc135350...krqqp3cz8z 2.00 321.90
22 17 Sep 19 20:58 The Stand Desserts Bitcoin 17MrHiRcKz...ZxydX8raU9 28.00 349.90
23 17 Sep 19 21:02 The Stand Desserts Bitcoin 1Hwy8hCBff...iEh5fBsCWK 10.00 359.90
24 17 Sep 19 21:03 The Stand Desserts Lightning lnbc743810...dvqqnuunjq 11.00 370.90
25 17 Sep 19 21:04 The Stand Desserts Lightning lnbc114952...2vqpclm87p 17.00 387.90
26 17 Sep 19 21:10 The Stand Desserts Lightning lnbc169160...lpqqqt574c 2.50 390.40
27 17 Sep 19 21:11 The Stand Desserts Lightning lnbc575150...40qq9yuqmy 8.50 398.90
28 17 Sep 19 21:13 The Stand Desserts Lightning lnbc947370...qjcp3unr33 14.00 412.90
29 17 Sep 19 21:15 The Stand Desserts Binance Coin bnb1tc2vva...xppes5t7d0 16.00 428.90
30 17 Sep 19 21:16 Giardinetto Binance Coin bnb1auyep2...w64p6a6dlk 350.00 778.90
31 17 Sep 19 21:25 The Stand Desserts BCH 3H2iJaKNXH...5sxPk3t2tV 7.00 785.90
32 17 Sep 19 21:39 The Stand Desserts Binance Coin bnb17r7x3e...avaxwumc58 8.00 793.90
33 17 Sep 19 21:47 The Stand Desserts BCH 32kuPYT1tc...uFQwgsA5ku 18.00 811.90
34 17 Sep 19 21:52 The Stand Desserts BCH 3ELPvxtCSy...4QzvfVJsNZ 36.00 847.90
35 17 Sep 19 21:56 The Stand Desserts Lightning lnbc677740...acsp04sjeg 10.00 857.90
36 17 Sep 19 22:04 The Stand Desserts BCH 38b4wHg9cg...9L2WXC2BSK 54.00 911.90
37 17 Sep 19 22:16 The Stand Desserts Binance Coin bnb14lylhs...x6wz7kjzp5 18.00 929.90
38 17 Sep 19 22:21 The Stand Desserts BCH 3L8SK3Hr7u...F3htdSPxfL 90.00 1019.90
39 17 Sep 19 22:30 The Stand Desserts Binance Coin bnb19w6tle...774uknv57t 5.00 1024.90
40 17 Sep 19 22:48 The Stand Desserts BCH 3Qag8c4UYg...9EYuWzGjhs 8.00 1032.90
submitted by YeOldDoc to CryptoCurrency [link] [comments]

The deepest report: Bitmain's self-help history

The deepest report: Bitmain's self-help history
The original intention of this article is to let readers understand the causes and consequences of Bitmain internal fighting, but after writing it, I found that it is not so much internal fighting as it is a long history of self-help.
The story is very long. Let's adjust the timeline to the eve of December 17, 2018. That was one of Bitmain's most critical moments and the beginning of a series of subsequent stories.
1. Self-immolation In September 2018, Bitmain's financial department warned management that the company's cash flow has become very tight and operating costs must be reduced to allow the company to continue. The blockchain unicorn, which is valued at more than 15 billion U.S. dollars, is crippled in the run and struggling to break the corner.
In 2017, Bitmain made a profit of 1 billion US dollars In the first half of 2018, Bitmain made a profit of 1 billion US dollars Three rounds of financing, a total of 800 million US dollars Net assets should exceed 3 billion U.S. dollars In September 2018, Bitmain had tight cash flow and was on the verge of bankruptcy
A simple comparison, it is not difficult to see that Bitmain's ability to make money is incredible, and its ability to burn money is even more extreme.
How does Bitmain burn money? Do you pour cash into gasoline and burn it, or hire a lot of employees to stuff the banknotes one by one into the shredder? The actual situation is closer to the latter.
The following data can help readers quickly learn Bitmain's money burning skills.
At the beginning of 2018, the entire cryptocurrency market has entered a bear market, but Bitmain's monthly operating costs have been rising wildly. Operating costs have risen from 10 million US dollars at the beginning of the year to 50 million US dollars at the end of the year.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
Operating costs are just the tip of the iceberg. Excessive chip trial production can become a classic case of project management courses. Readers who pay attention to Cryptocurrency mining can easily find that Bitmain is still working hard to clear the inventory of Antminer S9 in 2019. As the co-CEO, Ketuan Zhan did not listen to the advice or even warnings of the Finance Department, insisting on the implementation of Excessive chip trial production, resulting in a large accumulation of inventory and tight capital turnover. Another CEO, Jihan Wu, once revealed that the loss of Excessive chip trial production to the company was approximately US$1.5 billion.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
The BM1393 chip incident is even more incredible. Chip expert Ketuan Zhan invested a lot of money on a failed chip, and finally failed again. From 2017 to 2018, Bitmain has failed Trial production of mining machine chips at least 4 times, including 16nm, 12nm and 10nm chips, of which 16nm Trial production failed twice, thus losing at least US$1.2 billion.
It is rumored that Bitmain still holds a billion U.S. dollars worth of cryptocurrency in a state of floating loss. In view of the rebound in the market in 2020, we will not comment temporarily, waiting for the correct answer from the cryptocurrency market. But the losses pointed out in the previous article are all irreversible.
2. Sole power
In September 2018, Bitmain's management realized the seriousness of the problem. It turned out that the company's money could be squandered. As a result, the management began to discuss self-help plans, and the most reasonable and effective way was obviously to lay off employees.
The probation period for newly hired employees at Bitmain is half a year, and the probationary salary is 100% of the official salary, there is no difference. Once layoffs are made, new employees who have not passed the probationary period will be the main layoff targets. The department managed by Ketuan Zhan will face large-scale layoffs. The layoff plan is strongly opposed by Ketuan Zhan. Bitmain can only temporarily abandon the layoffs and replace it with continuous reductions. For marketing and travel expenses, a budget committee was established to strictly approve every expenditure. At the same time, employee benefits, such as reimbursement of taxi expenses, breakfast supply, snacks and drinks, etc., have also been abolished, and even the tradition of giving employees 400 yuan worth of BTC/BCH every month has been stopped.
In the face of huge cash flow pressure, trivial savings is obviously of no avail. Soon, the management again discussed the layoff plan, and it has reached the point where it has to be laid off.
In December 2018, Jihan Wu began to organize all entrepreneurial veterans and business backbones to persuade Ketuan Zhan to agree to layoffs, but Ketuan Zhan still insisted not to layoffs. The persuasion process was very unsuccessful. After many meetings and intense debates, Bitmain executives were caught in a dilemma of wasting time with Ketuan Zhan.
In this process, the shortcomings of the dual CEO system began to appear, and the relationship between the two CEOs gradually deteriorated.
On the night of December 16th, Ketuan Zhan reconvened the management meeting, and more than 30 managements who were present were asked to hand over their mobile phones. At this time, Jihan Wu was on a business trip in Hong Kong and was busy with listing related work.
In the meeting, Ketuan Zhan's core content was three items:
(1) Bitmain cannot have two CEOs, only one CEO and must be Ketuan Zhan. Ketuan Zhan said that he met an old leader during a business trip. He hadn't seen each other for many years. The old leader suggested that the company can only have one CEO, and it must be him. Ketuan Zhan feels that this is a kind of fate, an opportunity given by God.
(2) Ketuan Zhan believes that the company's cash flow problems, the biggest responsibility is the inability of the financial department. To prove his point, Ketuan Zhan announced Bitmain's financial data at the meeting. In the evening, employees in Taiwan began to post messages on social media, saying that the company's capital chain was broken and the top management was split.
(3) If Ketuan Zhan is not supported, the option will be cancelled and the equity will be voided.
Hearing about this, Jihan Wu, who lives in Hong Kong, sent a WeChat message to the management who are attending the meeting.

https://preview.redd.it/c5cxea2lqid51.jpg?width=1080&format=pjpg&auto=webp&s=3d6a0388408f6b8abe10648e5e4b7a3a5434c821
On the afternoon of December 17, 2018, Jihan Wu returned to Beijing to negotiate with Ketuan Zhan all night, and finally reached a consensus in the early morning. Bitmain co-founder Yuesheng Ge announced the results of the negotiations. Jihan Wu and Ketuan Zhan ceased to serve as CEOs, and Haichao Wang served as CEO. Jihan Wu voluntarily backed down and Ketuan Zhan served as chairman.
The "12.17 Incident" had a very bad impact on Bitmain, especially the disclosure of Bitmain's financial status, which caused vendors to start dunning. The loan that had just been negotiated with the Bank of Beijing was cancelled the next day. Jihan Wu's resignation as CEO caused an uproar in the industry, and it became a hot topic among Cryptocurrency mining, blockchain practitioners, and investor communities. The media focused their interpretation on Bitmain's series of incidents, and generally looked down upon its ongoing Hong Kong IPO, believing that the high-level changes had already signaled the failure of the IPO in advance.
On Christmas December 24, 2018, Bitmain finally began to implement the layoff plan. This long-delayed “correct decision” was achieved after a stalemate for nearly three months. The AI ​​teams in Beijing, Singapore, Taiwan, and Shanghai have laid off more than 50% of their employees. The Israeli R&D center was closed and Shenzhen New Species Technology Co., Ltd., which had been acquired for only ten months, was dissolved, and all employees were laid off. Copernicus, Bitmain's top blockchain development team, was not spared and was wiped out in this layoff. Copernicus and some of the laid-off employees joined the new company Matrixport co-founded by Jihan Wu and Yuesheng Ge, headquartered in Singapore.
3. Past events when starting a business
After the "12.17 Incident", Jihan Wu gradually faded out of Bitmain's management affairs and turned his attention to the IPO and new company. And this is one of Jihan Wu's major mistakes, he began to let Ketuan Zhan manage Bitmain alone.
In fact, as early as 2013, Jihan Wu planted hidden dangers.
Jihan Wu, an investment banker, was the earliest translator of the Bitcoin white paper. He began to get involved in the cryptocurrency mining industry in 2012. The disappearance of Kaomao and Nangua Zhang's ticket skipping led Jihan Wu to decide to develop his own chip.
In 2013, Jihan Wu established his own mining machine company. Together with Yuesheng Ge, who was only 20 years old, he found Ketuan Zhan, an integrated circuit designer of the Chinese Academy of Sciences, to create the protagonist of this article, and later the digital Cryptocurrency mining giant, Bitmain.
Jihan Wu promised Ketuan Zhan that every time a mining machine chip was successfully developed, he would give some shares to the Ketuan Zhan team. At that time, the company founded by Ketuan Zhan was on the eve of falling apart. In order to regroup the team, Ketuan Zhan promised to share half of his shares with the team members. Unfortunately, this is just a bad check. With the rapid development of Bitmain and higher and higher valuations, the expanding Ketuan Zhan almost monopolized all the shares.
Like many startups, Bitmain encountered many difficulties in its early days, and many jobs had to be done by the boss. For example, in the chip design and production process in the second half of 2013, Bitmain was caught in a dilemma of insufficient funds. Jihan Wu personally raised funds and met with TSMC’s sales to persuade TSMC to accept the production needs of a start-up company. Jihan Wu also participated in the selection of the thermodynamic parameters of the heat sink in the Antminer S1.
In 2014, Jihan Wu discovered that this company was independently operated by Ketuan Zhan, which had huge problems. Forcing Jihan Wu to continue to participate in company management.
At that time, Bitmain's mining machine chips had just achieved a certain lead in the standard design process. Jihan Wu believes that the next step must be to develop full customization technology, but Ketuan Zhan plans to invest resources in the research of mobile payment chips.
Ketuan Zhan met a mysterious person from the Party Central Security Bureau who claimed to be able to manipulate the Party Central Committee’s decision-making process for the next generation of mobile payment cryptography standards, but this direction is likely to lead to the fact that Bitmain has just gained the lead in the mining machine market. Regained.
Jihan Wu said that as a graduate of the School of Economics, with a little memory of his high school stage and the knowledge reserve of a computer technology amateur, he retrieves various materials and papers every day, learns theories related to full customization, and goes to Ketuan Zhan conducts persuasion work there.
Fortunately, in the direction of full customization technology, Ketuan Zhan finally listened to Jihan Wu's opinion. Bitmain quickly integrated the technical experts from the United States and Russia introduced by Jihan Wu, which greatly improved the design level of chips and complete machines.
In 2015, Jihan Wu suggested that Ketuan Zhan consider the direction of artificial intelligence. But Ketuan Zhan is not here, he prefers the CPU direction. After staying asleep at night, coupled with in-depth analysis by the Bitmain investment team, Ketuan Zhan finally agreed with this direction. It is a pity that after the Tianshi Chen brothers made major breakthroughs in theory and practice, Bitmain officially invested in the relevant direction, and it was still a step behind.
In the two years from 2016 to 2017, Bitmain's business performance has achieved rapid development, becoming a unique super unicorn in the blockchain industry. According to Froth & Sullivan, in 2017, Bitmain Technology Holdings was the second largest fabless chip design company in China and the tenth largest fabless chip design company in the world, and the fourth largest fabless ASIC chip design company in the world, accounting for 74.5% of global cryptocurrency market share.
However, the huge crisis has long been buried in the early days of entrepreneurship.
Ketuan Zhan's decision on major directions revealed his weakness of extremely lack of business understanding. But every mistake he made was blocked by the company's core employees. His overconfidence in his management ability led to the gradual intensification of conflicts, and the management differences between the two founders became more serious.
4.The giant gets lost
The contradiction between the two broke out on December 17, 2018. Ketuan Zhan used extreme means to force the management to compromise with him by canceling the option, so as to achieve the goal of sole control of the company. Jihan Wu returned to Beijing from Hong Kong overnight and negotiated with Ketuan Zhan all night. In the end, the two resigned as CEO. Jihan Wu retired. Ketuan Zhan has the exclusive rights of chairman in exchange for the implementation of the layoff plan.
Jihan Wu's voluntary retreat has intensified Ketuan Zhan's management to do whatever he wants.
A Bitmain employee commented on Ketuan Zhan's management skills, summed up in two letters-SM.
After becoming the sole helm of the company, Ketuan Zhan quickly "rectified" the department in charge of Jihan Wu as the chairman of the board. He guided the sales of mining machines at the dinner, and pointed out that the sales performance is not due to the sales staff. Ability is strong, but the company provides opportunities. Take two sales leaders as examples, saying that if the company hadn't given the opportunity, they would still be losers. In addition, Ketuan Zhan also instructed the sales staff on how to toast and imparted the wine table culture and experience.
After the meal, Ketuan Zhan came to the conclusion that the quality of Bitmain sales staff was too poor, and Huawei’s blood needs to be injected to drive the company’s progress. Soon, the marketing and sales director from Huawei officially took over Bitmain, opening the era of brand premium for Antminer.
In order to further understand and guide the sales work, Ketuan Zhan asked to meet the customers with the sales staff. During the negotiation process, Ketuan Zhan had a heated discussion with customers on the issue of Chinese and Western medicine, and had also forced the sales staff to be able to ship 10,000 machines due to insufficient production capacity.
Although the requirements for sales personnel are strict, Ketuan Zhan has provided a lot of convenience for "Mainland Ark". In addition to selling mining machines at a more favorable price, Bitmain's mining machines are also hosted in Ming Wang at a higher price than the market price. Mine. It is reported that both Ketuan Zhan and Ming Wang are shareholders of Ark.
The new sales strategy of Huawei's executives has also brought very obvious changes to Bitmain. The self-righteous brand premium reduces the price-performance ratio of Antminer, causing competing products to eat away at Bitmain's market share. Later, Bitmain found that the strategy was wrong and started to cut prices, and found that the mining machine market was saturated and the purchase demand of miners had decreased.
More dangerous than the sales strategy is that the technical advantages of Antminer are being chased by competing products, and even overtaken. At the same time, the two mining pools under Bitmain also lost their first and second positions. The AI ​​business, which Jihan Wu placed high hopes and Ketuan Zhan personally supervised, became a laughing stock in the industry. Not only did it fail to make a profit, it almost brought down Bitmain.
Blindly introducing senior executives from Huawei to occupy important positions completely destroys the company's internal cultural foundation. The bureaucracy within Bitmain began to corrode from high-level employees to ordinary employees. Ketuan Zhan is not aware of this. He is still keen on recruiting Huawei employees, imitating Huawei's organizational structure and strategy, letting HR do sales and R&D personnel to do HR.
The organizational structure adjustment in October 2019 was the fuse for Ketuan Zhan to completely anger Bitmain management. This time, Ketuan Zhan completely marginalized Bitmain’s veteran employees, and suddenly promoted some of the “airborne soldiers” who had just joined the company to the position of person in charge, which caused the former person in charge to report to the new employees. The two managers who were originally equal The hierarchy becomes the subordinate relationship, the operation and development of different business lines are merged into a large department, the upward reporting process becomes more cumbersome, and the relationship between employees becomes delicate.
5. Headwind
On October 29, 2019, Jihan Wu urgently held a staff meeting. Prior to this, the legal representative of Beijing Bitmain has been changed to Jihan Wu, including the parent companies Hong Kong Bitmain and Cayman Bitmain. Jihan Wu stood in the lobby of Building 25, B1, announcing that Ketuan Zhan has been relieved of all duties. Any employee in the Bitmain Group shall no longer execute Ketuan Zhan’s instructions and participate in any meetings convened by Ketuan Zhan. If there is any violation, the company will demotion and expel the company based on the severity of the circumstances. If losses are caused to the company, the company will be held accountable.
Jihan Wu's speech is very long, which can be summarized as follows:
(1) Ketuan Zhan has been relieved of all duties. Also expelled from the original Huawei company HR Zhi Wang introduced by Ketuan Zhan at the end of 2018. Zhi Wang’s reputation on Bitmain was extremely poor and was ridiculed by employees as "nine thousand years" (In ancient China, the emperor was called "ten thousand years old", and the prince was "eight thousand years old." However, in the Ming Dynasty, there was an eunuch who caused harm to the country and the people. He called himself "nine thousand years old", meaning that he was only A little lower than the emperor's level).
(2) Ketuan Zhan's ability to control the company's option incentive plan has disappeared, and it is no longer possible to cancel employees' options at will.
(3) The organizational structure adjustment plan led by Ketuan Zhan was suspended.
(4) We are optimistic about the future of AI business, but the premise is that the main business can continue to make profits in order to support the company's continued investment in AI business.
In the speech, Jihan Wu also told employees the whole story of the "12.17 Incident" and bluntly said that the company is not in good condition. If no measures are taken, Bitmain is likely to go bankrupt in three quarters and he must come back to save the company.
At this time, Ketuan Zhan, who was on a business trip in Shenzhen, finally experienced the situation of Jihan Wu in the "12.17 Incident".
After the official return, Jihan Wu began to clearly point out the company's various problems in operation and management, and went deep into each business line to understand the situation. In the mining machine sales department meeting, employees spoke enthusiastically, reflecting on the difficulties and opinions encountered in the work, the marketing and sales director from Huawei asked with a surprised look, "Why didn't these issues be reported to me before?", and soon , The director was interviewed and "voluntarily resigned."
On November 2, 2019, Jihan Wu announced a salary increase for all employees. Bitmain’s last salary increase dates back to 2018. In principle, Bitmain has two salary increases every year.
On November 7, 2019, Ketuan Zhan spoke on social media for the first time, describing his hardship in starting a business, and condemning Jihan Wu for “stabbing a knife in the back”. At the end of the article, he also set himself a KPI for 2020, that is, the mining machine market share will reach 90%, and the AI ​​business will earn 1 billion.
But Ketuan Zhan's majestic plan did not make Bitmain employees feel emotional, but ridiculed him instead. Employees exposed that he insulted employees, advocated Chinese medicine, believed in Buddhism, drank in meetings, practiced Qigong...
However, there is less than half a year before the halving of Bitcoin production, and the cryptocurrency market shows no signs of recovery, which makes Bitmain management very anxious.
On January 6, 2020, Bitmain ushered in another round of layoffs, with a layoff ratio of about 1/3. This time the layoffs have caused many employees who have just increased their salaries to feel very grieved. On the one hand, they were looking forward to Jihan Wu's return. On the other hand, the compensation for this layoff was less than 18 years.
Ketuan Zhan, who has been unable to enter the Bitmain office area, once again spoke on social media and firmly opposed to layoffs. We do not need to lay off staff and we cannot commit suicide.
During the Spring Festival, Covid-19 broke out. Mainland China has begun to extend the Spring Festival holiday and advocate working from home. Under the chain reaction caused by Covid-19, most companies have chosen to cut salaries or even lay off employees. In the first two months of 2020, China's exports fell by 17%, U.S. stocks were broken four times in a row, Bitcoin plunged 40% in 24 hours on March 12, 2020, and crude oil futures fell by 300% on April 20, 2020...
Obviously, Jihan Wu can't predict, but this layoff seems to be the right decision again. In addition, from January to April 2020, Bitmain's revenue exceeded US$400 million amid the spread of Covid-19 and the collapse of the financial market.
6. Fight to the death
When Jihan Wu tried to get the company back on track, Ketuan Zhan was not helpless. On April 28, 2020, Ketuan Zhan finally rolled back the legal representative of Beijing Bitmain to before October 28, 2019 by repeatedly submitting administrative reconsiderations, and restored his status as a legal representative.
On the morning of May 8, 2020, a piece of news about Bitmain quickly appeared on the real-time hot search rankings, and even dominated the headlines of the day. At window 52 on the second floor of the Haidian District Government Affairs Center, when Ketuan Zhan, the legal person of Beijing Bitmain Company, was receiving the business license, a group of unidentified people snatched the business license from the industrial and commercial administrative staff. A source at the scene said that the number of unidentified people in the group was about 60 people, of which Luyao Liu was directing at the scene.
This is a skillful piece of news. It first leads readers to think that Ketuan Zhan is a victim, using 60 people to grab business licenses as the focus. The masses accused Jihan Wu of lawlessness, but ignored whether the government affairs center could have 60 personnel. As for Hong Kong Bitmain to have the right to appoint a representative to obtain a business license, this is a deeper level of thinking.
The follow-up report restored the real situation at the scene. Only more than ten people were present, and both sides were equipped with security personnel. Bitmain employees also broke the news in the circle of friends, claiming that Ketuan Zhan's bodyguard had injured Bitmain's authorized person, and said in a threatening tone, "Be careful!"
However, the subsequent plot reversal did not have much effect. Jihan Wu's reputation has been greatly affected. From a bloody soldier who rescued the company in trouble to a lawless criminal, it can be said to be a world of war. do not.
Ketuan Zhan, who succeeded in the first battle, began to counterattack Bitmain continuously. On the afternoon of June 3, 2020, Ketuan Zhan led a team to pry open the back door of the Beijing Bitmain office and formally occupied the deserted Beijing headquarters.
On June 4, 2020, Ketuan Zhan called on Bitmain employees to resume work and promised to expand the company's market value to more than US$50 billion within three to five years. After that, Ketuan Zhan began to contact employees by phone, trying to acquire the options in the hands of employees at a valuation of 4 billion US dollars.
Subsequently, Ketuan Zhan recalled Huawei's executives and issued a series of personnel appointments and removals. As of June 9, 2020, Ketuan Zhan has successively eliminated CFO Luyao Liu, and Wenguang Wang, the head of the mining center. Luyao Liu is responsible for controlling Bitmain's IPO plan. He also appointed Yanwu Ma as the HR director, Gang Ren as the head of the mining center, Yonggang Sun as the head of the supply chain, Ling Gu as the financial director, and Bin Zhu as the head of the mining machine business department. Bin Zhu is the senior executive of Huawei who was interviewed and left as mentioned in the previous article. During his tenure, he reduced Antminer’s 90% market share to 50%, and received a large number of complaints from miners. Internal employees once speculated that he might be Compete against the spies sent by the company.
In addition to recalling senior executives of Huawei, Ketuan Zhan also urged employees to return to work. They can receive a bonus of 10,000 yuan when they return to work on the same day, which is only half the next day. Ketuan Zhan showed a very kind side. Every time the elevator door is opened, Ketuan Zhan's hot gaze can be met, shaking hands, taking photos, and receiving money. As there is no personnel information, Ketuan Zhan does not know whether the person receiving the money is a Bitmain employee, and these people did not resume work the next day.
The effect of gentleness was not good, Ketuan Zhan began to force employees to return to work. Seeing that there are still very few respondents, Ketuan Zhan threatened employees through SMS, phone calls, EMS, emails and other harassment, issued multiple threats such as termination of contract, suspension of payment of social insurance, suspension of wages, and even used personal information saved by employees to form a group of employees. Domicile threats, requiring employees to perform "work handover", trying to force employees to return work computers, etc.
On June 10, 2020, the media revealed that Ketuan Zhan had controlled Bitmain's Shenzhen factory and prohibited employees from delivering normal shipments to paid customers, which caused difficulties in the operation of the Bitmain mining machine department.
On June 13, 2020, Hong Kong Bitmain, the parent company of Beijing Bitmain, issued a statement accusing Ketuan Zhan of signing a "Sales Agency Agreement" with the Ark Data Technology Co., Ltd. in which it holds shares, in an attempt to embezzle Beijing Bit's assets.
On June 17, 2020, the media revealed that Ketuan Zhan started selling 14,000 T17+ series mining machines at low prices.
On June 20, 2020, Hong Kong Bitmain officially suspended the supply of chips to the Shenzhen factory.
On July 13, 2020, in the "A Letter to All My colleagues in the Shenzhen Factory" released by Bitmain in Hong Kong, more details were added on the series of Ketuan Zhan's actions in June.
The legal person Feng Zhou of the Shenzhen plant is related to Ketuan Zhan. After being relieved of Ketuan Zhan's post, Jihan Wu flew to Shenzhen to have a long talk with Feng Zhou. Jihan Wu believes that Feng Zhou is the right person to manage the factory and help the company overcome difficulties, and decides to leave Feng Zhou to continue to manage the factory.
This wrong decision staged a story of a farmer and a snake. When Ketuan Zhan began to counterattack Bitmain, Feng Zhou was also quickly instigated and began to assist Ketuan Zhan in seizing customer machines and transferring 17,000 T17 mining machines in the warehouse. Hainan Continental Ark Data Technology Co., Ltd., which is held by Ketuan Zhan, sold them at a low price.
In order to protect the interests of customers, Jihan Wu had to make a compromise and paid the payment for some goods to a bank account controlled by Ketuan Zhan in exchange for delivery. However, after the other party received a payment of 109 million, the delivery stopped. On July 8, 2020, 5600 mining machines have been overdue.
At the same time, the factory defaulted on suppliers’ accounts payable as much as 200 million yuan. Bank acceptance bills issued by the factory, exceeding 36 million yuan, will expire on July 17, and more than 34 million yuan will expire on July 23. It is understood that Ketuan Zhan, after receiving the bank's dunning call, made it clear that he would not repay the loan, which would destroy the company and the entire group's credit in financial institutions.
7、 This is not the end
So far, the power struggle between the founders of Bitmain has been more than half a year. The office building already occupied by Ketuan Zhan is still empty, and most employees choose to work from home. Some chip developers returned to the office with the acquiescence of Jihan Wu and continued to maintain research and development to reduce the impact of infighting on technological iteration and competitiveness.
This giant ship that once stood on top of the supercomputer chip is crashing into the iceberg due to the madness of the former helm. Ketuan Zhan's madness and Jihan Wu's compromise made mistakes again and again. Bitmain tried to save himself many times, but was unable to get out of the black hole.
If the time goes back to that day in 2013, would Jihan Wu and Yuesheng Ge still choose to dial Ketuan Zhan?
submitted by paulcheung1990 to Bitcoin [link] [comments]

Quant Network: Token valuation dynamics and fundamentals

Quant Network: Token valuation dynamics and fundamentals
This post intends to illustrate the dynamics and fundamentals related to the mechanics and use of the Quant Network Utility Token (QNT), in order to provide the community with greater clarity around what holding the token actually means.
This is a follow-up on two articles David W previously wrote about Quant Network’s prospects and potential, which you can find here:
For holders not intending to use Overledger for business reasons, the primary goal of holding the QNT token is to benefit from price appreciation. Some are happy to believe that speculation will take the QNT price to much higher levels if and when large-scale adoption/implementation news comes out, whilst others may actually prefer to assess the token’s utility and analyse how it would react to various scenarios to justify a price increase based on fundamentals. The latter is precisely what I aim to look into in this article.
On that note, I have noticed that many wish to see institutional investors getting involved in the crypto space for their purchase power, but the one thing they would bring and that is most needed in my opinion is fundamental analysis and valuation expectations based on facts. Indeed, equity investors can probably access 20 or 30 reports that are 15 pages long and updated on a quarterly basis about any blue chip stock they are invested in, but how many of such (professional) analyst reports can you consult for your favorite crypto coins? Let me have a guess: none. This is unfortunate, and it is a further reason to look into the situation in more details.
To be clear, this article is not about providing figures on the expected valuation of the token, but rather about providing the community with a deeper analysis to better understand its meaning and valuation context. This includes going through the (vast) differences between a Utility Token and a Company Share since I understand it is still blurry in some people’s mind. I will incorporate my thoughts and perspective on these matters, which should not be regarded as a single source of truth but rather as an attempt to “dig deeper”.
In order to share these thoughts with you in the most pertinent manner, I have actually entirely modelled the Quant Treasury function and analysed how the QNT token would react to various scenarios based on a number of different factors. That does not mean there is any universal truth to be told, but it did help in clarifying how things work (with my understanding of the current ruleset at least, which may also evolve over time). This is an important safety net: if the intensity of speculation in crypto markets was to go lower from here, what would happen to the token price? How would Quant Treasury help support it? If the market can feel comfortable with such situation and the underlying demand for the token, then it can feel comfortable to take it higher based on future growth expectations — and that’s how it should be.
Finally, to help shed light on different areas, I must confess that I will have to go through some technicalities on how this all works and what a Utility Token actually is. That is the price to pay to gain that further, necessary knowledge and be in a position to assess the situation more thoroughly — but I will make it as readable as I possibly can, so… if are you ready, let’s start!

A Utility Token vs. a Company Share: what is the difference?

It is probably fair to say that many people involved in the crypto space are unfamiliar with certain key financial terms or concepts, simply because finance is not necessarily everyone’s background (and that is absolutely fine!). In addition, Digital Assets bring some very novel concepts, which means that everyone has to adapt in any case.
Therefore, I suggest we start with a comparison of the characteristics underpinning the QNT Utility Token and a Quant Network Company Share (as you may know, the Company Shares are currently privately held by the Quant Network founders). I believe it is important to look at this comparison for two reasons:
  1. Most people are familiar with regular Company Shares because they have been traded for decades, and it is often asked how Utility Tokens compare.
  2. Quant Network have announced a plan to raise capital to grow their business further (in the September 2019 Forbes article which you can find here). Therefore, regardless of whether the Share Offering is made public or private, I presume the community will want to better understand how things compare and the different dynamics behind each instrument.
So where does the QNT Utility Token sit in Quant Network company and how does it compare to a Quant Network Company Share? This is how it looks:
https://preview.redd.it/zgidz8ed74y31.png?width=1698&format=png&auto=webp&s=54acd2def0713b67ac7c41dae6c9ab225e5639fa
What is on the right hand side of a balance sheet is the money a company has, and what is on the left hand side is how it uses it. Broadly speaking, the money the company has may come from the owners (Equity) or from the creditors (Debt). If I were to apply these concepts to an individual (you!), “Equity” is your net worth, “Debt” is your mortgage and other debt, and “Assets” is your house, car, savings, investments, crypto, etc.
As you can see, a Company Share and a Utility Token are found in different parts of the balance sheet — and that, in itself, is a major difference! They indeed serve two very different purposes:
  • Company Shares: they represent a share of a company’s ownership, meaning that you actually own [X]% of the company ([X]% = Number of shares you possess / Total number of shares) and hence [X]% of the company’s assets on the left hand side of the balance sheet.
  • Utility Tokens: they are keys to access a given platform (in our case, Quant Network’s Operating System: Overledger) and they can serve multiple purposes as defined by their Utility Document (in QNT’s case, the latest V0.3 version can be found here).
As a consequence, as a Company Shareholder, you are entitled to receive part or all of the profits generated by the company (as the case may arise) and you can also take part in the management decisions (indeed, with 0.00000001% of Apple shares, you have the corresponding right to vote to kick the CEO out if you want to!).
On the other hand, as a Utility Token holder, you have no such rights related to the company’s profits or management, BUT any usage of the platform has to go through the token you hold — and that has novel, interesting facets.

A Utility Token vs. a Company Share: what happens in practice?

Before we dig further, let’s now remind ourselves of the economic utilities of the QNT token (i.e. in addition to signing and encrypting transactions):
  1. Licences: a licence is mandatory for anyone who wishes to develop on the Overledger platform. Enterprises and Developers pay Quant Network in fiat money and Quant Treasury subsequently sets aside QNT tokens for the same amount (a diagram on how market purchases are performed can be found on the Overledger Treasury page here). The tokens are locked for 12 months, and the current understanding is that the amount of tokens locked is readjusted at each renewal date to the prevailing market price of QNT at the time (this information is not part of the Utility Token document as of now, but it was given in a previous Telegram AMA so I will assume it is correct pending further developments).
  2. Usage: this relates to the amount of Overledger read and write activity performed by clients on an ongoing basis, and also to the transfer of Digital Assets from one chain to another, and it follows a similar principle: fiat money is received by Quant Network, and subsequently converted in QNT tokens (these tokens are not locked, however).
  3. Gateways: information about Gateways has been released through the Overledger Network initiative (see dedicated website here), and we now know that the annual cost for running a Gateway will be 500 QNT whilst Gateway holders will receive a percentage of transaction fees going through their setup.
  4. Minimum holding amounts: the team has stated that there will be a minimum QNT holding amount put in place for every participant of the Overledger ecosystem, although the details have not been released yet.
That being said, it now becomes interesting to illustrate with indicative figures what actually happens as Licences, Usage and Gateways are paid for and Quant Network company operates. The following diagram may help in this respect:
Arbitrary figures from myself (i.e. no currency, no unit), based on an indicative 20% Net Income Ratio and a 40% Dividend yield
We have now two different perspectives:
  • On the right hand side, you see the simplified Profit & Loss account (“P&L”) which incorporates Total Revenues, from which costs and taxes are deducted, to give a Net Income for the company. A share of this Net Income may be distributed to Shareholders in the form of a Dividend, whilst the remainder is accounted as retained profits and goes back to the balance sheet as Equity to fund further growth for instance. Importantly, the Dividend (if any) is usually a portion of the Net Income so, using an indicative 40% Dividend yield policy, shareholders receive here for a given year 80 out of total company revenues of 1,000.
  • On the left hand side, you see the QNT requirements arising from the Overledger-related business activity which equal 700 here. Note that this is only a portion of the Total Revenues (1,000) you can see on the right hand side, as the team generates income from other sources as well (e.g. consultancy fees) — but I assume Overledger will represent the bulk of it since it is Quant Network’s flagship product and focus. In this case, the equivalent fiat amount of QNT tokens represents 700 (i.e. 100% of Overledger-related revenues) out of the company’s Total Revenues of 1,000. It is to be noted that excess reserves of QNT may be sold and generate additional revenues for the company, which would be outside of the Overledger Revenues mentioned above (i.e. they would fall in the “Other Revenues” category).
A way to summarise the situation from a very high level is: as a Company Shareholder you take a view on the company’s total profits whereas as a Utility Token holder you take a view on the company’s revenues (albeit Overledger-related).
It is however too early to reach any conclusion, so we now need to dig one level deeper again.

More considerations around Company Shares

As we discussed, with a Company Share, you possess a fraction of the company’s ownership and hence you have access to profits (and losses!). So how do typical Net Income results look in the technology industry? What sort of Dividend is usually paid? What sort of market valuations are subsequently achieved?
Let’s find out:
https://preview.redd.it/eua9sqlt74y31.png?width=2904&format=png&auto=webp&s=3500669942abf62a0ea1c983ab3cea40552c40d1
As you can see, the typical Net Income Ratio varies between around 10% and 20% in the technology/software industry (using the above illustrated peer group). The ratio illustrates the proportion of Net Income extracted from Revenues.
In addition, money is returned to Company Shareholders in the form of a Dividend (i.e. a portion of the Net Income) and in the form of Share repurchases (whereby the company uses its excess cash position to buy back shares from Shareholders and hence diminish the number of Shares available). A company may however prefer to not redistribute any of the profits, and retain them instead to fund further business growth — Alphabet (Google) is a good example in this respect.
Interestingly, as you can see on the far right of the table, the market capitalisations of these companies reflect high multiples of their Net Income as investors expect the companies to prosper in the future and generate larger profits. If you wished to explore these ideas further, I recommend also looking into the Return on Equity ratio which takes into account the amount of resources (i.e. Capital/Equity) put to work to generate the companies’ profits.
It is also to be noted that the number of Company Shares outstanding may vary over time. Indeed, aside from Share repurchases that diminish the number of Shares available to the market, additional Shares may be issued to raise additional funds from the market hence diluting the ownership of existing Shareholders.
Finally, (regular) Company Shares are structured in the same way across companies and industries, which brings a key benefit of having them easily comparable/benchmarkable against one another for investors. That is not the case for Utility Tokens, but they come with the benefit of having a lot more flexible use cases.

More considerations around the QNT token

As discussed, the Utility Token model is quite novel and each token has unique functions designed for the system it is associated with. That does not make value assessment easy, since all Utility Tokens are different, and this is a further reason to have a detailed look into the QNT case.
https://preview.redd.it/b0xe0ogw74y31.png?width=1512&format=png&auto=webp&s=cece522cd7919125e199b012af41850df6d9e9fd
As a start, all assets that are used in a speculative way embed two components into their price:
A) one that represents what the asset is worth today, and
B) one that represents what it may be worth in the future.
Depending on whether the future looks bright or not, a price premium or a price discount may be attached to the asset price.
This is similar to what we just saw with Company Shares valuation multiples, and it is valid across markets. For instance, Microsoft generates around USD 21bn in annual Net Income these days, but the cost of acquiring it entirely is USD 1,094bn (!). This speculative effect is particularly visible in the crypto sector since valuation levels are usually high whilst usage/adoption levels are usually low for now.
So what about QNT? As mentioned, the QNT Utility model has novel, interesting facets. Since QNT is required to access and use the Overledger system, it is important to appreciate that Quant Network company has three means of action regarding the QNT token:
  1. MANAGING their QNT reserves on an ongoing basis (i.e. buying or selling tokens is not always automatic, they can allocate tokens from their own reserves depending on their liquidity position at any given time),
  2. BUYING/RECEIVING QNT from the market/clients on the back of business activity, and
  3. SELLING QNT when they deem their reserves sufficient and/or wish to sell tokens to cover for operational costs.
Broadly speaking, the above actions will vary depending on business performance, the QNT token price and the Quant Network company’s liquidity position.
We also have to appreciate how the QNT distribution will always look like, it can be broken down as follows:
https://preview.redd.it/f20h7hvz74y31.png?width=1106&format=png&auto=webp&s=f2f5b63272f5ed6e3f977ce08d7bae043851edd1
A) QNT tokens held by the QNT Community
B) QNT tokens held by Quant Network that are locked (i.e. those related to Licences)
C) QNT tokens held by Quant Network that are unlocked (i.e. those related to other usage, such as consumption fees and Gateways)
D) the minimum QNT amount held by all users of the platform (more information on this front soon)
So now that the situation is set, how would we assess Quant Network’s business activity effect on the QNT token?
STEP 1: We would need to define the range of minimum/maximum amounts of QNT which Quant Network would want to keep as liquid reserves (i.e. unlocked) on an ongoing basis. This affects key variables such as the proportion of market purchases vs. the use of their own reserves, and the amount of QNT sold back to the market. Also, interestingly, if Quant Network never wanted to keep less than, for instance, 1 million QNT tokens as liquid reserves, these 1 million tokens would have a similar effect on the market as the locked tokens because they would never be sold.
STEP 2: We would need to define the amount of revenues that are related to QNT. As we know, Overledger Licences, Usage and Gateways generate revenues converted into QNT (or in QNT directly). So the correlation is strong between revenues and QNT needs. Interestingly, the cost of a licence is probably relatively low today in order to facilitate adoption and testing, but it will surely increase over time. The same goes for usage fees, especially as we move from testing/pilot phases to mass implementation. The number of clients will also increase. The Community version of Overledger is also set to officially launch next year. More information on revenue potential can be found later in this article.
STEP 3: We would need to define an evolution of the QNT token price over time and see how things develop with regards to Quant Network’s net purchase/sale of tokens every month (i.e. tokens required - tokens sold = net purchased/sold tokens).
Once assumptions are made, what do we observe?
In an undistorted environment, there is a positive correlation between Quant Network’s QNT-related revenues and the market capitalisation they occupy (i.e. the Quant Network share of the token distribution multiplied by the QNT price). However, this correlation can get heavily twisted as the speculative market prices a premium to the QNT price (i.e. anticipating higher revenues). As we will see, a persistent discount is not really possible as Quant Treasury would mechanically have to step in with large market purchases, which would provide strong support to the QNT price.
In addition, volatility is to be added to the equation since QNT volatility is likely to be (much) higher than that of revenues which can create important year-on-year disparities. For instance, Quant Treasury may lock a lot of tokens at a low price one year, and be well in excess of required tokens the next year if the QNT token price has significantly increased (and vice versa). This is not an issue per se, but this would impact the amount of tokens bought/sold on an ongoing basis by Quant Treasury as reserves inflate/deflate.
If we put aside the distortions created by speculation on the QNT price, and the subsequent impact on the excess/deficiency of Quant Network token reserves (whose level is also pro-actively managed by the company, as previously discussed), the economic system works as follows:
High QNT price vs. Revenue levels: The value of reserves is inflated, fewer tokens need to be bought for the level of revenues generated, Quant Treasury provides low support to the QNT price, its share of the token distribution diminishes.
Low QNT price vs. Revenue levels: Reserves run out, a higher number of tokens needs to be bought for the level of revenues generated, Quant Treasury provides higher support to the QNT price, its share of the token distribution increases.
Summary table:
https://preview.redd.it/q7wgzpv384y31.png?width=2312&format=png&auto=webp&s=d8c0480cb34caf2e59615ec21ea220d81d79b153
The key here is that, whatever speculation on future revenue levels does to the token in the first place, if the QNT price was falling and reaching a level that does not reflect the prevailing revenue levels of Overledger at a given time, then Quant Treasury would require a larger amount of tokens to cover the business needs which would mean the depletion of their reserves, larger purchases from the market and strong support for the QNT price from here. This is the safety net we want to see, coming from usage! Indeed, in other words, if the QNT price went very high very quickly, Quant Treasury may not be seen buying much tokens since their reserves would be inflated BUT that fall back mechanics purely based on usage would be there to safeguard QNT holders from the QNT price falling below a certain level.
I would assume this makes sense for most, and you might now wonder why have I highlighted the bottom part about the token distribution in red? That is because there is an ongoing battle between the QNT community and Quant Treasury — and this is very interesting.
The ecosystem will show how big a share is the community willing to let Quant Network represent. The community actually sets the price for the purchases, and the token distribution fluctuates depending on the metrics we discussed. An equilibrium will be formed based on the confidence the market has in Quant Network’s future revenue generation. Moreover, the QNT community could perceive the token as a Store of Value and be happy to hold 80/90% of all tokens for instance, or it could perceive QNT as more dynamic or risky and be happy to only represent 60/70% of the distribution. Needless to say that, considering my previous articles on the potential of Overledger, I think we will tend more towards the former scenario. Indeed, if you wished to store wealth with a technology-agnostic, future proof, globally adopted, revenue-providing (through Gateways) Network of Networks on which most of the digitalised value is flowing through — wouldn’t you see QNT as an appealing value proposition?
In a nutshell, it all comes down to the Overledger revenue levels and the QNT holders’ resistence to buy pressure from Quant Treasury. Therefore, if you are confident in the Overledger revenue generation and wish to see the QNT token price go up, more than ever, do not sell your tokens!
What about the locked tokens? There will always be a certain amount of tokens that are entirely taken out of circulation, but Quant Network company will always keep additional unlocked tokens on top of that (those they receive and manage as buffer) and that means that locked tokens will always be a subset of what Quant Network possesses. I do not know whether fees will primarily be concentrated on the licencing side vs. the usage side, but if that were to be the case then it would be even better as a higher amount of tokens would be taken out of circulation for good.
Finally, as long as the company operates, the revenues will always represent a certain amount of money whereas this is not the case for profits which may not appear before years (e.g. during the first years, during an economic/business downturn, etc.). As an illustration, a company like Uber has seen vast increases in revenues since it launched but never made any profit! Therefore, the demand for the QNT token benefits from good resilience from that perspective.
Quant Network vs. QNT community — What proportion of the QNT distribution will each represent?

How much revenues can Overledger generate?

I suggest we start with the basis of what the Quant Network business is about: connecting networks together, building new-generation hyper-decentralised apps on top (called “mApps”), and creating network effects.
Network effects are best defined by Metcalfe’s law which states: “the effect of a telecommunications network is proportional to the square of the number of connected users of the system” (Source: Wikipedia). This is illustrated by the picture below, which demonstrates the increasing number of possible connections for each new user added to the network. This was also recently discussed in a YouTube podcast by QNT community members “Luke” and “Ghost of St. Miklos” which you can watch here.
Source: applicoinc.com
This means that, as Overledger continues to connect more and more DLTs of all types between themselves and also with legacy systems, the number of users (humans or machines) connected to this Network of Networks will grow substantially — and the number of possible connections between participants will in turn grow exponentially. This will increase the value of the network, and hence the level of fees associated with getting access to it. This forms the basis of expected, future revenue generation and especially in a context where Overledger remains unique as of today and embraced by many of the largest institutions in the world (see the detailed summary on the matter from community member “Seq” here).
On top of this network, multi-chain hyper-decentralised applications (‘mApps’) can be built — which are an upgrade to existing dApps that use only one chain at a time and hence only benefit from the user base and functionalities of the given chain. Overledger mApps can leverage on the users and abilities of all connected chains at the same time, horizontal scaling, the ability to write/move code in any language across chains as required, write smart contracts on blockchains that do not support them (e.g. Bitcoin), and provide easier connection to other systems. dApps have barely had any success so far, as discussed in my first article, but mApps could provide the market with the necessary tools to build applications that can complement or rival what can be found on the Apple or Google Play store.
Also, the flexibility of Overledger enables Quant Network to target a large number of industries and to connect them all together. A sample of use cases can be found in the following illustration:
https://preview.redd.it/th8edz5b84y31.png?width=2664&format=png&auto=webp&s=105dd4546f8f9ab2c66d1a5a8e9f669cef0e0614
It is to be noted that one of the use cases, namely the tokenisation of the entire world’s assets, represents a market worth hundreds of trillions of USD and that is not even including the huge amount of illiquid assets not currently traded on traditional Capital Markets which could benefit from the tokenisation process. More information on the topic can be found in my previous article fully focused on the potential of Overledger to capture value from the structural shift in the world’s assets and machine-related data/value transfers.
Finally, we can look at what well established companies with a similar technology profile have been able to achieve. Overledger is an Operating System for DLTs and legacy systems on top of which applications can be built. The comparison to Microsoft Windows and the suite of Microsoft Software running on top (e.g. Microsoft Office) is an obvious one from that perspective to gauge the longer term potential.
As you can see below, Microsoft’s flagship softwares such as Windows and Office each generate tens of billions of USD of revenues every year:
Source: Geekwire
We can also look at Oracle, the second largest Enterprise software company in the world:
Source: Statista
We can finally look at what the Apple store and the Google Play store generate, since the Quant Network “mApp store” for the community side of Overledger will look to replicate a similar business model with hyper-decentralised applications:
Source: Worldwide total revenue by app store, 2018 ($bn)
The above means total revenues of around USD 70bn in 2018 for the Apple store and Google Play store combined, and the market is getting bigger year-on-year! Also, again, these (indicative!) reference points for Overledger come in the context of the Community version of the system only, since the Enterprise version represents a separate set of verticals more comparable to the likes of Microsoft and Oracle which we just looked at.

Conclusion

I hope this article helped shed further light on the QNT token and how the various market and business parameters will influence its behavior over time, as the Quant Network business is expected to grow exponentially in the coming years.
In the recent Forbes interview, Quant Network’s CEO (Gilbert Verdian) stated : “Our potential to grow is uncapped as we change and transform industries by creating a secure layer between them at speed. Our vision is to build a mass version of what I call an internet of trust, where value can be securely transferred between global partners not relying on defunct internet security but rather that of blockchain.”.
This is highly encouraging with regards to business prospects and also in comparison to what other companies have been able to achieve since the Web as we know it today emerged (e.g. Microsoft, Google, Apple, etc.). The Internet is now entering a new phase, with DLT technology at its core, and Overledger is set to be at the forefront of this new paradigm which will surely offer a vast array of new opportunities across sectors.
I believe it is an exciting time for all of us to be part of the journey, as long as any financial commitment is made with a good sense of responsibility and understanding of what success comes down to. “Crypto” is still immature in many respects, and the emergence of a dedicated regulatory framework combined with the expected gradual, selective entrance of institutional money managers will hopefully help shed further light and protect retail token holders from the misunderstandings, misinformation and misconduct which too many have suffered from in the last years.
Thanks for your time and interest.
Appendix:
First article: “The reasons why Quant Network (QNT) will rise to the Top of the crypto sphere in the coming months”
Second article: “The potential of Quant Network’s technology to capture value from the structural shift in the World’s assets and machine-related data/value transfers”
October 2019 City AM interview of Gilbert Verdian (CEO): Click here
October 2019 Blockchain Brad interview of Gilbert Verdian (CEO): Click here
July 2019 Blockchain Brad interview of Gilbert Verdian (CEO): Click here
February 2019 Blockchain Brad interview of Gilbert Verdian (CEO): Click here
----
About the original author of the article:
My name is David and I spent years in the Investment Banking industry in London. I hold QNT tokens and the above views are based on my own thoughts and research only. I am not affiliated with the Quant Network team in any way. This is not investment advice, please do your own research and understand what you are buying before doing so. It is also my belief that more than 90% of all other crypto projects will fail because what matters is what is getting adopted; please do not put more money at risk than you can afford to lose.
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Noob's Guide To Bitcoin Mining - Super Easy & Simple - YouTube create multiplication table in visual basic  visual basic tutorial Show me the Money How to Generate Multiplication Table using While loop in Java How to send and receive bitcoins on Coins.ph?

Optimized C library for EC operations on curve secp256k1 - bitcoin-core/secp256k1 And this hard cap cannot be changed as it is part of Bitcoin’s core features and code. In other words, crypto inventor Satoshi Nakamoto set a monetary policy based on artificial scarcity at bitcoin’s inception that there would only ever be 21 million coins in total. Technical Explanation. One of the reasons was the need to keep the number of Satoshis within the limits of 64-bit double ... In the first Bitcoin Cash clients, wallets were simply collections of randomly generated private keys. This type of wallet is called a Type-0 nondeterministic wallet. For example, the Bitcoin Cash Core client pregenerates 100 random private keys when first started and generates more keys as needed, using each key only once. This type of wallet ... Cool free online multiplication games to help students learn the multiplication facts. Practice the times tables while having fun at Multiplication.com. This PR is effectively a preview, with the intention of switching to the released version before the Bitcoin Core 0.12 release. The past months libsecp256k1 has undergone very extensive testing and validation, though some of that work is still under review. This includes: Very high branch coverage (which required generating a trillion random test vectors and strip them down to the 32 which ...

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Noob's Guide To Bitcoin Mining - Super Easy & Simple - YouTube

How do I use while loops to create a multiplication table Multiplication Table With While Loop Program in c to Generate Multiplication Table using while loop... How to set up COIN.ph WALLET in Philippines and learn the privileges and function - Duration: 13:29. Bitcoin Tom 61,386 views In this video we will learn how to create multiplication table in Microsoft visual basic and also the implementation of list box IF YOU HAVE ANY SUGGESTION , QUERY , OR ERROR IN ANY PROGRAM OR YOU ... Published on May 12, 2020 How to upload units via bitcoin and an overview of our portfolio. This webinar is run by partners and the information is not official. Learn to multiply 1 through 10 with the multiplication table with this fun educational multiplication song for kids. Brought to you by Kids Learning Tube! Mu...

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