On Crowdsales and Their Deception
TL;DR: Boon claims that their “proof of confidence” implementation seeks decentralization of the distribution of tokens, but this is simply not the case. On top of this, the mechanic being “introduced” is not of original design nor name. In an almost comical fashion, the post in question has been deleted after our initial response shedding light on the situation.
EDIT: Approximately 3 to 4 hours after our initial response to Boon Coin’s post titled “Introducing Proof of Confidence”, we were alerted that the original link had been deleted. Thanks to the magic of the internet and naive ignorance of a supposed tech startup, it was trivial to archive the original post before deletion with archive.is
TL;DR: Boon claims that their “proof of confidence” implementation seeks decentralization of the distribution of tokens, but this is simply not the case. On top of this, the mechanic being “introduced” is not of original design nor name.
Enter 2009: The Bitcoin whitepaper is released and creates shockwaves throughout the internet. For the first time ever, humanity is allowed to financially emancipate itself from the shackles of centrally issued currency and debt slavery. However, this wasn’t enough. Even though Bitcoin made great strides in alleviating the issue of centrally issued currency, it couldn’t solve or prevent the most basic primal human evil: greed. Humans have a capacity for greed that is unparalleled — and not found in any other species on Earth. With this in mind, it is impossible to design an economic system that doesn’t facilitate human greed at one point or another — but that doesn’t mean we shouldn’t try.
With the introduction of Bitcoin came Proof of Work, which is primarily used to verify transactions on the blockchain, but also utilized as a distribution method for rewarding miners with new coins. PoW is an excellent method for securing distributed consensus but is not without it’s own faults, primarily exorbitant energy consumption and centralization of the production of miners themselves as the SHA-256 algorithm used for block verification is easily exploitable by ASICs. Although flawed in its implementation, Proof of Work was designed with good intentions — distributed consensus with rewards to incentivize verification of blocks propagating on the network.
Crowdsales, however, are inherently opposed to this philosophy of decentralization and financial empowerment. Crowdsales only seek to enrich the development teams of these projects, shifting the risk of their failure (or rarely, success) to the investors of the project. This is a broken system, primarily in that a chosen few stand to gain the most from capital extracted from participants in the crowdsale. Compared to PoW, in the context of distribution of coins, ICOs are extremely centralized, which causes projects that use crowdsales to be associated with negative behavior regardless of project merit.
On November 10th, we announced Proof of Confidence as our distribution method for Liquidaeon, a second-generation cryptoeconomic model powered by Ethereum and Time. In order to realize this vision of a truly decentralized cryptoeconomic model — a crowdsale or ICO simply wasn’t appropriate. We do not need millions of dollars in funds to build out our system — because most of it has already been built prior to branding ourselves. Compared to most projects in the Ethereum space we are working backwards in the sense that we are not asking for upfront payment, but rather distributing the tokens for free using opportunity cost imposed with a trustless smart contract. We as the developers of Liquidaeon only benefit if everyone else does, which drives us to deliver on our goals.
It has come to our attention that “Boon Coin” is touting “proof of confidence” as a new system of their original design — however, this is not the case. After some investigation it was revealed that they simply copied Quantstamp’s “Proof of Caring” bounty/referral system for the promotion of their (awesome) project for decentralized auditing of smart contracts.
On top of this, they claim to be introducing “proof of confidence” as a system to reduce centralization of assets.
“Proof of confidence solves the distribution issue that many projects experience. Often times, whales scoop up tokens the moment the token sale begins, leaving nothing for smaller participants. This causes a disparity in the token distribution and defeats decentralization.”
If this is true, why they are doing a crowdsale in the first place, and also why is only 50% of the supply being offered to the public? If a “disparity in the token distribution” is unwanted and decentralization is the goal, why use the most centralized distribution method available?
Surprisingly, Boon is offering private sales if you contact the CEO on Telegram.
This begs the question: is Boon’s “proof of confidence” implementation truly about decentralization or is it marketing jargon intentionally named to confuse non-technical users of cryptocurrency who are rapidly entering the space?
The fact that they either intentionally chose the name “proof of confidence” or didn’t do a simple Google search to see that the name was in use two weeks prior to their “introduction” is extremely alarming. Especially considering the fact that they are asking for $20 million in funding from the public.
Originally published at medium.com on December 12, 2017. This response was updated and reposted to reflect the current situation.