Jan 18, 2019
SocialPolis Coin: Decoding the project (part 5/7).
Trust and transparency problems in crypto world and how SocialPolis Coin enhances trustiness.
Trust Issues
Trust and transparency are two key attributes of Blockchain. On the one hand, trust is fundamental when it comes to economic, legal, and humanitarian transactions. It is about our sense on how dependable is the other party and how likely this side is to fulfil the deal. The nature of trust has evolved through the history but it is still a key component in human organization and social collaboration. Further, the transparency of Blockchain stems from the fact that the transactions of each public address are open to viewing. Nevertheless, despite the value of these two virtues, there are some issues detected within crypto industry. In this context, these issues will be analyzed and how SocialPolis Coin Project will enhance trust and transparency throughout its life-cycle will be further explained.
Blockchain is a public electronic ledger which can be openly shared among users and which creates an unchangeable record of their transactions. Further, each transaction or “block” is time-stamped and linked to the previous one. Updates on the ledger can be done after consensus between system’s users. Once data is recorded, it can be erased, edited, adjusted, or changed. Blockchain tech uses cryptography, a branch of mathematics, to “connect” the content of the new added block with that of the previous one. Thus, no separate entity could take control of the data within the Blockchain, ensuring hacking-proof attribute to it. In this context, technology has the capacity to solve data breach problems.
However, even the most protected Blockchains, are vulnerable to hacking. Due to its decentralized nature and the anonymity, Blockchain makes it hard for regulators to deal with and allows for potential security threats.
Major Blockchain trust breaches
The most significant and widely publicized hack involves Bitcoin. Back in 2010, a hacker manipulated a bug in Bitcoin’s software to generate a block that contained 92 billion bitcoin, which is 91,979,000,000 more bitcoin than the intended cap on bitcoin supply. The unknown attacker simply exploited Bitcoin by flooding the code to create an extremely large amount of Bitcoin[1].
During 2018, in Tokyo, one of the biggest attacks on Blockchain technology occurred with the so-named Coincheck hack. Japanese exchange Coincheck first confirmed the hack on January 26, 2018, confessing that more than $500 million worth of digital coins gad been stolen by hackers from the Japanese cryptocurrency exchange.
The Coinchech attack led to questions about the security capability of Blockchain and whether some additional measures are necessary. According to the Coincheck’s executives, the stolen coins were stored in a “hot” wallet that was connected to the internet. The usual practice for exchanges is to store tokens in “cold” storage — hardware wallets which are dedicated devices that offer an additional layer of security. According to representatives, the hackers were able to steal the private keys for the aforementioned hot wallet, enabling them to drain the coins.
The conclusion is that Blockchain does not operate in a vacuum and that advanced additional and updated measures are required in all cases.
Transparency Issues
Transparency is the “perceived quality of intentionally shared information from a sender”- Schnackenberg & Tomlinson.
It implies openness, communication and accountability, and “guides an organization’s decisions and policies on the disclosure of information to its employees and the public, or simply the intended recipient of the information” — Schnackenberg & Tomlinson.
Blockchain can be defined as an entire system rewired so that any kind of fraud of illicit activity relating to data is virtually impossible[2].
On November 8, 2018, the Blockchain Transparency Institute (BTI) published their second exchange rankings report and according to their numbers — wash trading persists as a profound problem as crypto exchanges seek to boost their perceived relevance in the lucrative sector of crypto.
According to the BTI:
“Many of these exchanges are preying on low market cap coins which are desperate for the recognition and the volume of a top 10 or 25 exchange. In many of the crypto projects we spoke with, this also involves supplying the exchange with a large amount of tokens which are then used to massively inflate volume numbers on CoinMarketCap, luring in prospective traders from other exchanges with much lower, but real volume.”[3]
Beyond the fact that most people engaged in the space accepting the reality that manipulation and outright fraud is commonplace, the BTI numbers highlight the pressing need for regulators to step in and apply enterprise level oversight to these digital asset marketplaces. For the industry to survive, and thrive, regulations must be applied in all jurisdictions. Industry insiders embrace this need as it will flush out the bad actors who clearly need to go.
How SocialPolis Coin Project enhances trust and transparency?
Blockchain Open Technologies is an innovation lab determined to disrupt Social Economy efficiency standards. SPL Coin is a very important Blockchain use-case and real-world case study which will generate future IP revenue streams. Building a professional Social Economy portfolio on the Blockchain, is the central component to attain SPL Coin’s goal of positively disrupting the Social Economy industry.
SocialPolis Coin Project team’s vision is to create radical transparency. The Social Economy Sector often lacks transparency. For instance, it is an often applied practice to keep important information or transactions prices undisclosed. Thus, costly disincentives are developed. Additionally, the motivated team of SocialPolis Coin is highly concerned when it comes to ensuring data integrity. As quality data is a scarce good in the Social and Solidarity Economy Sector — incomplete and incorrect data not only hinder accurate valuations but render them as well.
Lastly, The SPL Coin uses a reliable and completely secure environment within Ethereum. The reason is that the SPL Coin does not come to investigate another possible technological approach to the Blockchain, but to benefit from the functionality of Blockchain within the economic environment of the social economy. This fosters the conditions for an almost absolute stability in terms of the technological functioning of the SPL Coin. At the same time, its resources focus on the immediate and successful operation of its development as described in the real economy. SocialPolis Coin Project targets to exploit Blockchain technology to ensure trust, transparency, data integrity, and efficiency in the real economy.
[1] Natalia Kruse (2018). What the Cryptocurrency Hacks Means for the Security of Blockchain. https://www.bytebacklaw.com/2018/05/what-the-cryptocurrency-hacks-mean-for-the-security-of-blockchain/
[2] Sean Fitzjohn (2018). Blockchain: The Ultimate Solution For True Data Transparency? https://www.blocfest.asia/news/blockchain-the-solution-for-true-data-transparency/
[3] https://www.crowdfundinsider.com/2018/11/141074-report-wash-trading-lack-of-transparency-is-a-pressing-problem-for-crypto-exchanges-bogus-volume-is-rampant/
