Zclassic
This is a great initiative as it is the first major fork of Zcash. Ethereum Classic shows that forks do have a future. Especially when the “real project” is hijacked by hypers and greedy devs.

Ethereum won’t scale like you’ve been told.
If you followed the Ethereum project over the last few years you might be familiar with the great amount of hype that comes with its community and founders. No matter if it’s app developers that claim to have a “Uber killer” or a presentation about “Decentralized Commercial Banking”… big claims are made as only the sky seems to be the limit.

Ethereum founder Vitalik Buterin gave a presentation called “The Mauve Revolution” where he talks about “tens of thousands of transactions per second” for Ethereum. If we dive some further into these claims it all comes down to the following:

Founder of Ethereum Vitalik Buterin claims he has found the ultimate solution to the problem of scalability haunting cryptocurrency networks. That will be made possible with lightning networks and sharding.

The current Bitcoin blockchain is limited to around 7 transactions per second and that number is around 15 for Ethereum. When talking about Ethereum, “transactions” aren’t the only thing that counts. Ethereum is a “decentralized computer” that runs contacts and transactions are only a small part of that. But even when we look at transactions only… the “tens of thousands of transactions per second” don’t add up. This is due to some limitation of “lightning networks”. Great that we have off-blockchain transactions but every coin in a “channel” will end up on the blockchain after all. Let’s say ALICE wants to give some Ether to BOB for a game. Why would they use a lightning network? It would only lock the Ether in some off-blockchain channel where Bob can’t do anything with it except for paying someone else. The same goes for the whole idea of a “decentralized computer” where you need Ether (gas) to run code. So all coins need to end up on the blockchain anyway. But even if we assume that 95% of all transactions take place off-blockchain? Would it match the “tens of thousands of transactions per second” for the system as a whole? The answer is no, let’s see why:

10.000 x 0.05 (5%) = 500 Tps which still take place on the blockchain.

And as we learned from Vitalik himself the current Ethereum implementation is only capable of doing 15 of them. So even with a very popular lightning network the Ethereum ecosystem goes up in smoke quite fast if the transaction volume goes up.

Time to look at the second part of the solution called “Sharding”. This idea comes close to a “multi-core” implementation on regular computer chips. Only in this case we work with a combination of several blockchains (sidechains) and EVMs (Ethereum Virtual Machines). In this article the following claim is made:

After the initial basic sharding (which will result in the implementation of Ethereum 2.0) Ethereum 3.0 will be developed — a blockchain system that will be capable of infinite sharding.

This one goes to eleven? Wrong! This one will have “infinite sharding”! That’s right: with enough EVM’s and sidechains Ethereum is capable of doing almost everything. Although this claim is again far from truth. Vitalik talks about a “main chain” to interact with several sidechains. Think of it like a Merkle tree-structure where the hashes of the lower blocks end up in the highest chain. This is completely different from your average Intel chip where calculations do happen in parallel. This is where the speed-improvement comes from. So can’t we run the EVMs in parallel then? No, this is extremely hard to sync as each sidechain has it’s own miners. 1 chain might have a valid block in 4 seconds while the other one takes up to 65 seconds. Just like the current network with only 1 blockchain:

Time delays will prevent Ethereum from infinite sharding.

And even if we could add 100 sidechains in parallel with a guaranteed blocktime we’re still in trouble with the 10K transactions per second. It means we have 100 Tps per chain (assuming even distribution). That’s far more than the 15 Tps which are possible at Ethereum’s current implementation. And notice that I’m talking about transactions here, not about calculations.

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Ethereum won’t scale like you’ve been told.
If you followed the Ethereum project over the last few years you might be familiar with the great amount of hype that comes with its community and founders. No matter if it’s app developers that claim to have a “Uber killer” or a presentation about “Decentralized Commercial Banking”… big claims are made as only the sky seems to be the limit.

Ethereum founder Vitalik Buterin gave a presentation called “The Mauve Revolution” where he talks about “tens of thousands of transactions per second” for Ethereum. If we dive some further into these claims it all comes down to the following:

Founder of Ethereum Vitalik Buterin claims he has found the ultimate solution to the problem of scalability haunting cryptocurrency networks. That will be made possible with lightning networks and sharding.

The current Bitcoin blockchain is limited to around 7 transactions per second and that number is around 15 for Ethereum. When talking about Ethereum, “transactions” aren’t the only thing that counts. Ethereum is a “decentralized computer” that runs contacts and transactions are only a small part of that. But even when we look at transactions only… the “tens of thousands of transactions per second” don’t add up. This is due to some limitation of “lightning networks”. Great that we have off-blockchain transactions but every coin in a “channel” will end up on the blockchain after all. Let’s say ALICE wants to give some Ether to BOB for a game. Why would they use a lightning network? It would only lock the Ether in some off-blockchain channel where Bob can’t do anything with it except for paying someone else. The same goes for the whole idea of a “decentralized computer” where you need Ether (gas) to run code. So all coins need to end up on the blockchain anyway. But even if we assume that 95% of all transactions take place off-blockchain? Would it match the “tens of thousands of transactions per second” for the system as a whole? The answer is no, let’s see why:

10.000 x 0.05 (5%) = 500 Tps which still take place on the blockchain.

And as we learned from Vitalik himself the current Ethereum implementation is only capable of doing 15 of them. So even with a very popular lightning network the Ethereum ecosystem goes up in smoke quite fast if the transaction volume goes up.

Time to look at the second part of the solution called “Sharding”. This idea comes close to a “multi-core” implementation on regular computer chips. Only in this case we work with a combination of several blockchains (sidechains) and EVMs (Ethereum Virtual Machines). In this article the following claim is made:

After the initial basic sharding (which will result in the implementation of Ethereum 2.0) Ethereum 3.0 will be developed — a blockchain system that will be capable of infinite sharding.

This one goes to eleven? Wrong! This one will have “infinite sharding”! That’s right: with enough EVM’s and sidechains Ethereum is capable of doing almost everything. Although this claim is again far from truth. Vitalik talks about a “main chain” to interact with several sidechains. Think of it like a Merkle tree-structure where the hashes of the lower blocks end up in the highest chain. This is completely different from your average Intel chip where calculations do happen in parallel. This is where the speed-improvement comes from. So can’t we run the EVMs in parallel then? No, this is extremely hard to sync as each sidechain has it’s own miners. 1 chain might have a valid block in 4 seconds while the other one takes up to 65 seconds. Just like the current network with only 1 blockchain:

Time delays will prevent Ethereum from infinite sharding.

And even if we could add 100 sidechains in parallel with a guaranteed blocktime we’re still in trouble with the 10K transactions per second. It means we have 100 Tps per chain (assuming even distribution). That’s far more than the 15 Tps which are possible at Ethereum’s current implementation. And notice that I’m talking about transactions here, not about calculations.

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Zcash crashes to $4700 USD

After being around for almost 24 hours, the over-hyped Zcash coin crashed 99.73% according to Poloniex. This doesn’t mean we have a penny-coin at the moment as prices are still around $4700 (over 6 BTC) per ZEC. Even people that follow this blog were surprised to see bizarre prices like the 2000 BTC per ZEC yesterday when trading started. It was an equivalent to around $2 million USD per coin. This was the “Tulip mania” (March 1637) all over again. Most people expect prices to go significantly down from here, but who knows the limit of the ZEC-madness?

The founders of Zcash don’t give that much about all the attention or some higher/lower marketcap. The hype worked and most people didn’t had a clue about the 20% “founder reward” in the first 4 years of mining. These details are parked several clicks away from their front page to make sure you don’t find them.

So how are the founders doing so far? Well, I got notified several times about the “slow mining start” so my calculations are probably all wrong! Yes, there is a “slow mining start” which added fuel to the hype and was on purpose. No doubt about it. Or what else could’ve been the reason to start with low rewards? Giving all miners a fair chance to get some coin? Just to see if this stuff actually works?? You can’t have it both ways. If you claim to have a world class team of developers and tested the mining process to the extreme there’s absolutely no reason to start with “slow mining”.

But let’s get back to the founders. So in the first 34 days around 125025 ZEC will be mined. The founders get 20% of that number which are 25000 coins. Not that bad at the current price of $4700 USD. It adds up to 117,5 million dollar. On the 3 million dollar investment that’s a 39 time return on investment (ROI) in several weeks. The funding page doesn’t even state the 3 million investment. It talks about 1 million dollar:

We have closed a $1M funding round with these investors. By acquiring a stake in the Zcash Company, they stand to benefit both from the Founders Reward as well as from the value of any other products that the Zcash Company may create.

Where does the 3 million number come from?? You need to read their blog as the funding page seems to be inaccurate. Continued Funding and Transparency
That’s the title of one of the blog posts. This is where we read about that $2 million in extra funding:

Today we’re announcing that this past summer we took in a new round of funding. Seventeen investors put in a total of $2 million dollars into the Zcash Electric Coin Company in exchange for equity in the company.

I guess the founders forgot to update the funding page or they weren’t able to find it in the first place. Just like all the crypto enthusiasts that were left in the dark about the 20%. Let’s hope this inaccuracy doesn’t say anything about their programming skills. We don’t want another DAO debacle do we? Although it would’ve been fun if Ethereum was as anonymous as Zcash when that happened. Try to expose a hacker on a completely dark blockchain with completely dark contracts if you can! But don’t forget:

Zcash + Ethereum = ❤

So one day we might see the magic of true anonymity on Ethereum as well. But let’s get back to the total number of mined coins after 1 year. As all my numbers were completely off (slow mining silly!!) we still have a lot of blocks with 50 ZEC rewards. It’s around 2,38 million ZEC in 12 months. Which we add up to the 125K from the slow mining period. That´s a total of 2,5 million ZEC with a $11,7 billion marketcap (at current price). Allowing the sneaky 20% founders to grab 2.3 billion of that. But my numbers will turn out to completely off again as this thing will crash so far that several future traders will get margin calls. Don’t say you weren’t warned up front. And don’t feel sad for the founders as well. They probably filled their pockets anyway.

Coindesk writes hype story about Zcash, shares same investor…

Just as I thought the Zcash founders had played all the tricks to pump their coin, I got notified on Twitter about yet another trick in their book. Before I jump in the details have a close look at this very optimistic Coindesk article:

Investors Are Going Wild for a Digital Currency Called Zcash (And It’s Not Even Out Yet)- “Deafening. ”That’s how market analyst Arthur Hayes describes the enthusiasm ahead of the upcoming launch of a new digital currency called Zcash — and he’s not alone.

I will spare you more of this happy-hype-talk as some notes under the article tell us all we need to know:

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash

20% to Founders' Reward ? 

del

Zcash founders will make $858.916 per day without mining

In a previous post I outlined all the marketing/scamming tricks used by the Zcash founders to keep people in the dark. Today is launch-day and the futures indicate a $596 price tag per coin! What most people don’t know is that the founders will take 20% of all coins in the first four years of mining. And that’s without mining themselves! Feel free to check this part of their website to see what I’m talking about:

At first, 50 ZEC will be created every ten minutes. 80% of the newly created ZEC will go to the miners, and 20% ZEC to the founders. Every four years, the rate of ZEC being created will halve (again, just like in Bitcoin). After the first four years the ZEC created per ten minutes will drop to 25ⓩ, but after the first four years, 100% of it goes to the miners.

This text is literally from the Zcash website but you won’t find it on their frontpage. There’s no official Bitcointalk-page from the founders as well as it’s common to share details about pre-mining and rewards for devs/founders. Why are the devs/founders so silent about their rewards? Why is there no conversation about it on their forum? I made a screenshot of their forum so check it to see if you spot a topic about the 20% founder-reward. Here’s a link to their forum to see for yourself. But let’s look at the future price for ZEC again as there’s still no live trading. The price is 0.84 BTC at the moment. That’s $596,47 per ZEC. How does this play out for the founders? There will be 50 new coins every 10 minutes. That’s 300 per hour or 7200 per day. At the current price that’s $4.2 million in value every single day. The devs take 20% of that, without mining themselves.

The Zcash founders make $858.916,6 per day at the current price.

They have their total investment back in several days and from that moment they make an extreem amount of money after they did everything to hide these details from the rest of the planet. If prices stay at this level the ZEC marketcap will be reach $1,5 billion in 12 months. The founders own 20% of that which adds up to a number of $313,5 million. And that’s not even all as they get 20% of all mined coins in the first 4 years. That’s right, there’s a piece of code in the mining part of the software that forces all miners to “give” 20% of rewards to the founders. They don’t have to mine it themselves. Feel free to spread this article or ask the founders questions about the 20% on their forum, twitter or elsewhere. They won’t spread these details themselves as it would probably turn off a lot of excited tech people.

Zcash founders might make $60 million in first year.

If you really thought Zcash is all about some new cool coin you’re wrong. Tim Berners-Lee invented the World Wide Web and gave the technology away for free. No millions needed. Now fast forward to today…
In a few days Zcash will be the new hot thing in crypto. A close look at their website shows some interesting details:

Zcash’s monetary base will be the same as Bitcoin’s — 21 million Zcash currency units (ZEC, or ⓩ) will be mined over time. 10% of that reward will be distributed to the stakeholders in the Zcash Company — founders, investors, employees, and advisors. We call this the “Founders Reward”.

Notice how they talk about “10% of that reward”. The devil is in the details with this one. In the first 4 years the founders will take 20% of all coins mined. Yup that’s right, they’ll surf the hype and make most money in the beginning. So let’s see how this adds up:

At first, 50 ZEC will be created every ten minutes. 80% of the newly created ZEC will go to the miners, and 20% ZEC to the founders.

So, that’s 2.628.000 coins in the first year alone…… And the founders will take 20% of that? That’s 525.600 ZEC even while they sleep and do nothing. If this coin becomes hyped (like the team already tries to do) we might see a $300 million marketcap in year 1 quite easily. That’s $114.15 per ZEC on your favorite crypto exchange. And guess what? The founders own 20% of that. And the bigger the hype, the more they will make. Think about that when you plan on buying your ZEC at a “nice price”. This thing becomes even more funny when you look at their investment:

With the plan above, a dream team of investors stepped up to fund the Zcash Company, because they believe in our mission, and in the value of this technology for all kinds of people and industries. We have closed a $1M funding round with these investors.

These devs are even more dumb than I expected. They got $1 million while giving away 20% mining rewards in the first 4 years which could easily be worth 60 times that number. And they call their investor “a dream team” for being ripped off like that. Don’t be fooled, this is the biggest scam since Ethereum. A bunch of greedy people talk about “decentralization” and “community” while filling their pockets with “dumb” crypto money.

Don’t believe the hype

Zcash founders might make $60 million in first year.

If you really thought Zcash is all about some new cool coin you’re wrong. Tim Berners-Lee invented the World Wide Web and gave the technology away for free. No millions needed. Now fast forward to today…
In a few days Zcash will be the new hot thing in crypto. A close look at their website shows some interesting details:

Zcash’s monetary base will be the same as Bitcoin’s — 21 million Zcash currency units (ZEC, or ⓩ) will be mined over time. 10% of that reward will be distributed to the stakeholders in the Zcash Company — founders, investors, employees, and advisors. We call this the “Founders Reward”.

Notice how they talk about “10% of that reward”. The devil is in the details with this one. In the first 4 years the founders will take 20% of all coins mined. Yup that’s right, they’ll surf the hype and make most money in the beginning. So let’s see how this adds up:

At first, 50 ZEC will be created every ten minutes. 80% of the newly created ZEC will go to the miners, and 20% ZEC to the founders.

So, that’s 2.628.000 coins in the first year alone…… And the founders will take 20% of that? That’s 525.600 ZEC even while they sleep and do nothing. If this coin becomes hyped (like the team already tries to do) we might see a $300 million marketcap in year 1 quite easily. That’s $114.15 per ZEC on your favorite crypto exchange. And guess what? The founders own 20% of that. And the bigger the hype, the more they will make. Think about that when you plan on buying your ZEC at a “nice price”. This thing becomes even more funny when you look at their investment:

With the plan above, a dream team of investors stepped up to fund the Zcash Company, because they believe in our mission, and in the value of this technology for all kinds of people and industries. We have closed a $1M funding round with these investors.

These devs are even more dumb than I expected. They got $1 million while giving away 20% mining rewards in the first 4 years which could easily be worth 60 times that number. And they call their investor “a dream team” for being ripped off like that. Don’t be fooled, this is the biggest scam since Ethereum. A bunch of greedy people talk about “decentralization” and “community” while filling their pockets with “dumb” crypto money.

Don’t believe the hype

Watch out, Zcash is another scam

In a few days we’ll see the official launch of Zcash. It’s yet another alt-coin (ZEC) with new features. Think of Bitcoin but without public transactions. The maximum number of 21 millions coins isn’t chosen by accident. This project really wants to be the anonymous version of Bitcoin. But there’s a catch…

In a few days the network goes live and dozens of people will buy/sell coins on exchanges as this is “the new hot thing in crypto”. Well, it’s a free world isn’t it? And everybody should be free to launch and trade whatever they want. But Zcash uses the exact same tactics spotted at the launch of Ethereum. The idea is quite simple: while the the whole world is used to Apps and GUI’s you launch your project without one. That way a few nerds (including the founders/devs) have a big advantage over the rest. How big? Think of a small group of people (not even 100) that mine all the first blocks. Guess who’s making the market when trading goes live? Indeed, the few nerds that know how to compile this stuff while the rest is in the dark. Don’t be fooled with messages like: “Yes we are working on a Windows GUI” because it will take them years. Remember this Ethereum Mist video? Guess what, it still isn’t there. We do have a light version of Mist but it doesn’t even come close to the video. I guess the devs aren’t paid that much for their work….