Civic to Spend $43 Million In Tokens In Aggressive User Expansion

Like all crypto projects, Civic, the pioneering blockchain-powered identity startup, needs people, lots of people, using its platform.

And, according to Civic founder Vinny Lingham, while the technology is all in place for the system to work, it’s this network of users that the company is still struggling to achieve. In an effort to spur this adoption, Civic announced Wednesday that it will be paying for all identity checks for users and business partners from now until the end of the year.

Well, at least, $43 million worth.

All told, Civic is allocating 333 million of its total 1 billion supply of CVC tokens, a third of which it sold for $33 million in an initial coin offering (ICO) in June 2017. The tokens will be transferred to Civic to pay for the cost of the identity checks, serving to bootstrap growth and stress-test the protocol.

“We basically said we’re going to reserve a third of the tokens to drive network effects,” Lingham told CoinDesk.

For Civic, every new user that’s had his or her identity verified on the platform makes it a little more attractive for the next company looking for an identity solution. In this way, Civic is creating incentives for more people to join.

Lingham has been thinking about the challenge of reaching critical mass since before his company conducted an ICO in 2017.

He told CoinDesk:

“Paypal got it right with the whole $10 free if you invite a friend and it nearly bankrupted the company. They managed to crack the chicken and egg problem doing it that way.”

Fortunately for Lingham, in the new world of crypto, it’s possible for a company to create their own money supply as long as the market sees future potential. So, Civic – being the only entity, currently, that provides the know-your-customer (KYC) verification within the system – will be paying itself in CVC tokens for the service.

Why now?

Civic has built up a lot of partners, companies and entrepreneurs that need to verify a user’s identity, the most well-known of which is Annheiser-Busch.

The two companies verified the identities of users at CoinDesk’s Consensus 2018 in New York City to distribute Budweiser beers from a vending machine to attendees of legal drinking age.

It also has a lot of partners in the crypto space, including ShapeShift, Hilo, 0x and the Chamber of Digital Commerce, according to its partners page, and it’s been able to enlist a lot of ICO projects who need to run KYC before selling tokens.

“We’re at the point now where the product is actually – we’ve tested it,” said Lingham. “A hundred companies have signed up to use Civic. It’s working.”

But it’s hoping that more will consider joining this year on the promise of saving a little money onboarding their customers.

And they’re preparing for that influx by investing in the future of the business.

For instance, the company also recently acquired the URL “identity.com,” the place that will eventually serve as the meeting place between companies that need KYC services and the ones that provide them. That part of the protocol hasn’t been rolled out yet, though.

Once Civic knows that its system is working with high volume, they will open up the platform to other verifiers.

When gone, sir?

So, how many identity verifications can $43 million pay for? The general average cost for identity verification is $2, Lingham said, but there’s a wide spread.

“We’re offering this for all our services, including the accredited investor test, which is like $60,” Lingham said.

So on its face, it could be feasible for the supply to max out before the year’s end. If in theory, the company ran out of all 333 million tokens before New Year’s Day, the promotion would stop early. Lingham argues, though, there’s really almost no chance this will happen.

“We don’t expect to use all the tokens in the next couple of months,” he said.

That’s because he argued, all those CVC transactions would register to the network as demand for the product. Then increased demand would drive up the price of the token, so each additional verification should cost slightly less in CVC terms.

While Lingham thinks the promotion will succeed in enticing more users, he expects to end the year with lots of tokens left in the reserve. If it came anywhere close to running out, though, the blockchain’s ability to handle all those transactions would present more of an issue.

“The bigger problem would be ethereum. It would make CryptoKitties look like a walk in the park,” Lingham said.

On Identity.com, “it’s literally just the verification you’re being charged for,” Lingham explained. Whereas, “the central identity vendors of the world, the credit bureaus, etc, they resell your information at a profit,” he argued.

If a new entrant comes into the space and offers consumers a different deal and it catches on, that’s something that could ripple out.

As Lingham put it:

“The number of big multibillion companies in this space right now, if we start putting margin pressure on them, we disrupt the whole industry.”

Fingerprint on keyboard image via Pexels (Creative Commons license)

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.



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Platform to Allow Users to Spend Metal-Based Crypto Using a Debit Card

A new monetary system is aiming to overcome the “severe price volatility” which has made cryptocurrencies unappealing to use as tender — creating two primary digital currencies which are based on gold and silver.

Kinesis says these currencies — known as KAU and KAG — are based one-to one on allocated physical gold and silver. This means that the full, direct title to the bullion backing these coins is held by the person who owns the cryptocurrency. These coins can be loaded on to a debit card and instantly converted into fiat for payments to merchants who accept Visa and Mastercard, and the company says users will also be able to withdraw funds from cash machines.

In explaining its rationale for using gold and silver as the basis for a digital currency, Kinesis described these assets as “two of the greatest stable and definable stores of value for trade and investment.”

A proprietary blockchain network has been developed for Kinesis’s monetary system, which is forked off the Stellar blockchain — and the team behind the platform says its users stand to benefit from “very high” transaction speeds and customizable fees.

Yields for participation

Kinesis says that passive or active users in its ecosystem stand to gain a yield for their participation — and the company has split this into four distinct categories.

The first is known as the Minter Yield. When a user converts their fiat currency or physical bullion holdings into KAU and KAG coins — a transaction that can be completed on the platform’s Primary Market — they receive a five percent share of the transaction fees on the coins they create and use. Users also earn the same share when they make their first deposit into a Kinesis Wallet, and this is known as the Depositors’ Yield.

In a nod to passive participation, the Holder Yield enables owners of KAU or KAG coins to receive a 15 percent share of the transaction fees generated while they hold these currencies. Although this is calculated on a daily basis, the yield is credited to their wallet once per month. Users will also be incentivized to invite new customers to join the Kinesis platform, receiving a Recruiter Yield when someone has been successfully referred.

“An evolutionary step”

Kinesis’s founder, Tom Coughlin, is the chief executive of Allocated Bullion Exchange (ABX) — a company which says it aims to “connect and empower an international network of buyers and sellers by offering direct access to the wholesale bullion market.”

Much of the infrastructure that is going to be used for Kinesis — the technology used for minting silver and gold and storing it in physical vaults — already exists, and the company says it has been successfully used by ABX for a number of years.

Kinesis says it has four target markets in mind for its monetary system. The first is the precious metal market, where it is hoped that investors would become incentivized to use these assets if they had a yield attached to them. The company also hopes to appeal to the cryptocurrency market, and believes KAU and KAG coins could become a solid replacement for “questionably backed and non-yield-bearing coins.”

A presale for the Kinesis Velocity Token, an ERC-20 utility token, is taking place until Sept. 9, with an Initial Token Offering running from Sept. 10 to Nov. 11. The pre-ICO runs from Nov. 12 to Feb. 28, 2019, paving the way for the public Initial Coin Offering to commerce on 1 March 2019.

 

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.



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Stock Exchange Deutsche Börse to Spend $315 mln on New Tech, Including Blockchain

German securities marketplace and stock exchange Deutsche Börse will be spending 270 mln euro (around $315 mln) on new tech investments including blockchain, Finextra reported yesterday, May 30.

The spending plan, part of the company’s 2020 roadmap which will involve 350 job cuts, will also include big data analytics, cloud, computing, robotics, and artificial intelligence. Deutsche Börse, the ninth largest exchange in the world, notes that the plan also includes the creation of several hundred new jobs in these sectors in the future.

In regards to blockchain development, Deutsche Börse is looking into how the technology can “create new lines of business and corresponding profits.”

Theodor Weimer, CEO of Deutsche Börse AG, said in reference to the overall tech spending plan:

“Deutsche Börse is preparing itself for the future and for further growth in the best manner possible. We will be focusing even more consistently on the scalability of our business model and on enhancing our operational processes.”

In late March, Deutsche Börse reported that they would be releasing a blockchain-based securities lending platform in partnership with HQLAx on R3’s Corda blockchain platform. Later the firm added that they would not be working with crypto companies for the platform’s implementation due to Bitcoin’s (BTC) volatility.

However, just last week Deutsche Börse said that they were “deep at work” looking into cryptocurrency integration options.



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Bitcoin Gold Responds to Recent Double Spend Attack


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The development team behind Bitcoin Gold has released an update on last week’s 51 percent attack, which the attacker weaponized through a double spend attack to steal funds from cryptocurrency exchanges.

Published on Thursday, the update confirmed that the attacker had gained majority control of the network’s hashrate and used that control to reorganize the blockchain and reverse transactions.

In this case, the attacker made deposits at cryptocurrency exchanges, traded the coins for BTC or another coin, and then withdrew the funds. Next, the attacker used their dominant computing power to force the rest of the network to accept falsified blocks that reversed their initial deposits and caused these funds to vanish from exchange-controlled wallets.

As CCN reported, an address associated with the attacker had sent itself more than 380,000 BTG in a series of transactions consistent with double spending behavior. It’s not clear how many of these transactions resulted in successful thefts from exchanges. In theory, the attacker could have made off with more than $18 million worth of funds, but only if every transaction resulted in a successful theft (again, the attacker’s rate of success has not been verified).

The project’s developers blamed the attack in part on the fact that bitcoin gold’s mining algorithm — Equihash — is used by a number of other cryptocurrencies, rendering the pool of available hashpower much larger than the bitcoin gold network’s individual hashpower.

Bitcoin Gold had already planned to move to a new algorithm, a decision the community made after mining hardware manufacturer Bitmain announced that it was accepting preorders for the first Equihash ASIC miner, and the developers said that moving to this new algorithm will render the network “dramatically safer” from future 51 percent attacks.

They said that, particularly in the wake of the recent successful attack, they will deploy the new algorithm as quickly as possible:

“We’ve been working at an incredible pace the past days to put the plan and pieces together, and we expect to upgrade our mainnet approximately seven days after the necessary software is up and running on our testnet.”

“While it would be better to give all our partners more than seven days to test and deploy to avoid disruption, these attacks have already forced disruption on us all, so we feel it’s best to get the upgrade completed as soon as we possibly can,” they concluded.

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