• Bitcoin designed to replace traditional finance and gold mining.
• Court documents say Nakamoto aware of energy consumption issue.
• Time to divest for the benefit of future generations.

A court case currently underway in London, UK, has made several emails more widely known, that were purportedly written by the inventor of Bitcoin, Satoshi Nakamoto. In them, they considered the energy use of the Bitcoin network.

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Exploring BTC trends – is Bitcoin entering its industrial phase?

The legal case centers on Craig Wright’s claims that he is Nakamoto. The real identity of the inventor of the cryptocurrency is not known for certain, and Wright’s claims, if validated, will mean that he has a significant say in the future development of Bitcoin projects.

Published in Wired last week, Satoshi’s emails contained several comments about the network’s energy consumption.

“If [Bitcoin] did grow to consume significant energy, I think it would still be less wasteful than the labor and resources of intensive conventional banking activity it would replace,” Satoshi said in a message to Martii Malmi, one of the early developers of the technology.

Bitcoin’s energy use

The actual levels of power consumption by Bitcoin are uncertain: miners operate in a highly competitive market and so are not inclined to be particularly transparent as to the details of their operations.

Energy consumption comes largely from two activities in the Bitcoin network that consume electricity – throwing massive computational power at the process to ‘solve for coins,’ and the processing required to handle individual transactions when cryptocurrency changes hands.

A well-accepted metric by the Bitcoin industry on energy consumption is the Cambridge Bitcoin Electricity Consumption Index (CBECI), published by the University of Cambridge’s Judge Business School. The School revised its model in August of last year to take account of the changes in the underpinning technologies and hardware at the heart of the Bitcoin network since 2019. The update is, in part, a “response to evidence indicating a periodic overestimation of electricity consumption.”

“Pollution” by sheilaz413 is licensed under CC BY-NC-ND 2.0.

The figure representing the total energy consumption by the Bitcoin network was revised down by 9.8TWh (terawatt hours) for 2022 to 95.5TWh. That places the global system’s consumption alongside nation-states like Belgium and the Netherlands. The paper publishing the Index’s revision details also notes that, overall, the efficiency of Bitcoin mining has increased as hardware advances and refines (albeit now at a slower rate than in the currency’s hayday).

Bitcoin’s environmental impact

The environmental impact of Bitcoin operations is even more complex to estimate than their total energy consumption. Renewable energy is said to power a sizeable proportion of mining operations, with estimates varying [paywall] from around 40% to 75% of the total power consumption. Bitcoin mining operations tend to congregate where energy is plentiful from renewable sources, such as hydroelectric power. In these locations, like certain areas of the US, China, and Scandinavia, such hydroelectric power tends to be cheaper than fossil-derived alternatives.

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Blockchain-based cross-border payments – the Ripple effect

But environmental damage is said also to come from e-waste comprising of discarded mining rigs, which are superseded by faster, more efficient hardware in generational upgrades. Processing a single Bitcoin transaction is said to produce over 700 pounds of carbon, plus there are additional emissions from data center cooling systems and water usage, to name just a couple of other factors.

The two human activities that Bitcoin’s creator thought might be replaced by Bitcoin, conventional banking and gold mining, still create significantly more negative environmental effects than the entire Bitcoin apparatus, with conventional finance systems alone estimated to produce double the carbon emissions of Bitcoin.

But the slow rate at which Bitcoin transactions can be achieved effectively makes the currency unviable as an everyday means of exchange (there are other networks, such as Ethereum, which are capable of the type of scale required, and which do not use the power-intensive proof-of-work model to mine new coins).

The fact that Bitcoin exists in addition to the activities it was supposed to replace raises the question of its viability. Clearly, the technology cannot be uninvented, and attempts by governments to limit its use have been mostly unsuccessful, with most adopting the accept-and-tax approach to cyrptocurrencies. No governmental control over the Bitcoin was, it has to be said, part of its design remit.

But like renewable energy, which exists as a supplement to fossil-derived power, not as a replacement, Bitcoin and its ecological effects exist in addition to all the consequences of fiat finance.

Grist to the extinction mill

The Bitcoin network’s activities are said to consume the equivalent of around 2%-3% of the US’s annual power usage. Lowering power consumption worldwide, year-on-year, is the most important way to downgrade the status of environmental deterioration from an extinction event to merely a chance of survival for the generation that will live at the end of this century. (NB experiencing survival will still be deeply unpleasant.)

Given that Bitcoin’s purpose at present is just a different flavor of market speculation, and it will not replace conventional finance or gold mining, now might be the time to consider its net utility.

“Factory – Pollution” by plagal is licensed under CC BY-SA 2.0.

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• Crypto fund Hyperverse – run by a “fake human.”
• Actor who gave weight to the lie for the crypto fund seemingly innocent and baffled.
• The latest crypto fund collapse is an unfortunate echo of 2022 and 2023.

Investigations have discovered that the chief executive of collapsed crypto fund HyperVerse (formerly Hyperfund) does not actually exist. Introduced to investors in December 2021 with an exemplary list of “strong credentials” behind him, no one had any doubts about Mr. Stephen Reese Lewis. In fact, the company cited that these credentials were the driving force behind his recruitment. It didn’t take long for doubt to creep in among investors, though, and that led to various organizations looking into the mysterious figure – only to find no record of him anywhere.

Just a month after being introduced to the world as HyperVerse’s Chief executive officer, video messages of support were being posted online from high profile figures like Apple co-founder Steve Wozniak.

Crypto fund run by crypto-CEO?

Steven Reece Lewis was said to have been a graduate of the University of Leeds and held a master’s degree from Cambridge University. Both universities have stated that they have no record of anyone by that name on their rolls.

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Paranoia or precaution? Yet another SEC check into crypto

During the global launch of HyperVerse, potential investors were given a summary of Lewis’ career. Prior to joining the HyperTech group to lead HyperVerse, Mr. Lewis was believed to have held positions at Goldman Sachs, founded an IT startup, and successfully sold a web development company to Adobe. Absolutely none of this was true – because of course, he didn’t exist.

During The Guardian’s investigation, its journalists found no trace of Steven on the UK companies register, the US Securities and Exchange Commission, or Companies House. No trace of Mr. Lewis was discovered in Goldman Sachs’ records, and there is no mention in public SEC filings by Adobe of acquiring any company owned by Steven Recce Lewis.

The fact that Mr Lewis has been found not to exist comes as no surprise to many after a Guardian Australia investigation found thousands of individuals lost substantial amounts of money in the HyperVerse cryptocurrency scheme. The initiative was endorsed by Australian entrepreneur Sam Lee and Ryan Xu, his business partner, both of whom were co-founders of Blockchain Global, the now defunct Australian bitcoin company.

According to reports, Blockchain Global is in debt to the tune of $58m and both Lee and Xu have been referred to the Australian Securities and Investments Commission for allegedly breaching areas of the Corporations Act.

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Not so SafeMoon? CEO and CTO of crypto fund arrested for fraud

Steven Reece Lewis unmasked

Like an episode of Scooby-Doo, only significantly more bizarre, Steven Reece Lewis has been unmasked as Steve Harrison (Stevo), a British man living in Thailand. After being tracked down via social media and LinkedIn by US-based YouTuber, Jack Gamble, Mr Harrison came forward and confirmed that he was paid to act as chief executive of HyperVerse. He is believed to have been paid approximately $7,500, or 180,000 Thai baht over a period of nine months. Oh, and he allegedly got a free cashmere suit for his troubles, too. Because, clearly, there should be perks.

Steven Harrison has said he was “shocked” after learning HyperVerse highlighted his fake credentials to promote its scheme. For those who have lost substantial sums of money in the scheme, an amount estimated to be in the region of US$1.3 billion in 2022, Mr Harrison has said, “I am sorry for these people. Because they believed some idea with me at the forefront and believed in what I said, and God knows what these people have lost. And I do feel bad about this.”

He continued, “I just hope that there is some resolution. I know it’s hard to get the money back off these people or whatever, but I just hope there can be some justice served in all of this where they can get to the bottom of this.” Mr Harrison denies any involvement in the loss of money, stating that he had “certainly not pocketed” anything that was lost by investors.

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Decentralized computing – a killer crypto app opportunity?

Harrison said that a friend of a friend approached him with this offer from HyperVerse. With experience as a freelance television presenter, he admitted he was new to the industry and was open to work, seeing this as an opportunity to work as a corporate presenter.

“I was told I was acting out a role to represent the business, and many people do this,” Harrison said. Although he says he was initially suspicious because he had little experience with the crypto industry, he was reassured by his agent that everything about HyperVerse was legitimate.

Harrison has confirmed that all the claimed qualifications and work experience cited in his presentation were false, saying that he only has “GCSEs” and is “certainly not on that level.”

If a crypto fund is crashed by a non-existent CEO, do people really lose their money? Yes. Yes, they do.

Harrison may be in the clear for his involvement in this strange chapter of the crypto world, but a HyperVerse promoter, Rodney Burton, also known as “Bitcoin Rodney,” has been arrested and charged for fraud in the US. Sam Lee is believed to be hiding in Dubai, while Ryan Xu has not been seen in public since the crypto firm’s collapse.

Crypto Ponzi schemes are nothing new, but HyperVerse’s tale has been an extraordinary, almost unfathomable one. It is not the first, and it will certainly not be the last.

The post Crypto crisis: the “CEO” of collapsed crypto fund HyperVerse doesn’t exist! appeared first on TechHQ.

If you hit YouTube searching for the truth on Bitcoin and whether the cryptocurrency is harmful to the environment, the results paint a confusing picture. In the play queue, you’ll find no shortage of videos on the theme, which sounds like a good thing – until you look at the titles. First up, we have ‘Why BitCoin is so bad for the planet’ followed straight afterward by ‘Myth: Bitcoin is bad for the Environment’. And the list goes on, bit flipping between whether the world’s most famous cryptocurrency is going to save or kill us all.

Flooding the internet most recently were concerns not just about the energy consumption arising from the use of Bitcoin, but how much water is used to cool all of those hot-running miners (the computers used to validate additions to the blockchain). The trigger for the debate was a paper published in Cell Reports Sustainability, ‘Bitcoin’s growing water footprint’, which reported that a single Bitcoin transaction today could cost as much water as a backyard swimming pool.

A single #Bitcoin transaction today could cost as much water as a backyard swimming pool.

Read more in "Bitcoin's growing water footprint" now published in @CellRepSustain:
https://t.co/DwoFU6QmAz

Alex de Vries @Digiconomist pic.twitter.com/zRZuOm7A7n

— Cell Press (@CellPressNews) December 1, 2023

Naturally, cryptocurrency advocates were quick to debunk those claims, which doesn’t help anyone searching for the truth on Bitcoin and looking for a consensus on whether the cryptocurrency is harmful to the environment. So, how do we get to an answer?

Getting to the answer

At the heart of the issue is the amount of energy used by Bitcoin miners to validate additions to the blockchain. And, as a reminder, computers that are successful in completing this challenge (which involves finding leading zeros on a hash of the digital ledger) are rewarded with, currently, 6.25 Bitcoin.

However, baked into the protocol is a halving schedule that periodically drops that reward by 50%. Back in 2009, successful Bitcoin miners received 50 Bitcoin for their efforts, and three so-called halvings have taken place since then, with a fourth expected in the first half of this year. And this has a bearing on anyone searching for the truth on Bitcoin and whether the cryptocurrency is harmful to the environment.

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Exploring BTC trends – is Bitcoin entering its industrial phase?

Despite the disagreement between analysts online, there are still useful energy consumption figures to be found, which help to frame the problem. To find an answer, we need to know – at the very least – how much electricity a typical miner consumes. And one way to do that is to look at the stats for BITMAIN’s popular S19 model, which – depending on whether it’s air or liquid-cooled (no more noisy fans) – consumes between 3 and 5 kW at the wall.

Running just one of these machines (and large-scale Bitcoin farms could have thousands of them) 24 hours a day corresponds to 72 kWh of energy, at the low end of the scale. To put this in perspective, this is already more than double the energy consumption of an average US household. And Bitcoin enthusiasts have calculated that you’d need 14 solar panels (or more, if the weather is less favorable) to power such cryptocurrency mining equipment.

Miners looking to profit from their activities, rather than simply hoard Bitcoin, will have a keen interest in the price of electricity – and the cheaper, the better. Without a supply of cheap electricity, the economics of Bitcoin mining are not favorable – and that’s before the expected halving of rewards. Hence, miners will seek out areas with readily available, low-cost power such as hydroelectric sources.

High fossil fuel prices that push up electricity prices will mean that miners run at a loss. Searching for the truth on Bitcoin and whether the cryptocurrency is harmful to the environment then becomes a question of how long operators can sustain those losses. When clean energy becomes cheaper than fossil fuel-generated power, you can bet that miners will want to tap into that. Plus, profits could be dented in other ways.

Cryptocarbon

Organizations such as the International Monetary Fund are considering a corrective tax to address the issue of what they dub ‘cryptocarbon’. Their concern is based on a scenario where the value of Bitcoin, or other cryptocurrencies based around a proof-of-work consensus mechanism, rises significantly and brings about the use of large amounts of low-energy efficiency mining hardware.

Bitcoin mining has become a search for cheap energy – which includes sources of natural gas that have to be vented into the atmosphere for safety, but can be repurposed to power blockchain validation. According to operators, there are environmental savings that can be engineered by exploiting what’s termed ‘stranded energy’.

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BTC data centers: market forces and the drive for greater efficiency

Some Bitcoin farms have struck agreements with energy suppliers to shut down when there’s peak demand for electricity and power is required for more critical uses. Conversely, mining hardware can help to balance electricity grids that find themselves flooded with clean energy – for example, on sunny days, in the case of solar arrays, and on gusty ones, where power comes from wind turbines.

Operators of Bitcoin farms are keen to point out that their infrastructure is interruptible and can benefit energy firms as a buyer of last resort. In the middle of the night when there’s little demand, Bitcoin farms can purchase excess power that would otherwise be rejected at a loss to energy companies.

To be clear, cryptocurrencies that pitch millions of mining machines against each other to collect a single prize do waste energy in the name of securing the network. But it may not be the apocalypse that some suggest, as long as cheap clean energy can be found and market forces deter miners from hooking up their operations to generators fed with fossil fuels.

The post Searching for the truth on Bitcoin and swimming pools appeared first on TechHQ.

• Data centers prioritize sustainability in materials and cooling.
• Bitcoin mining is a large consumer of Iceland’s renewables.
• As data demands increase, data center heat may be repurposed.

Part 3: Data centers

It would be easy for Iceland to overlook the true environmental impact of data centers, as they make up 5.3 percent of the country’s GDP. Powered by 100 percent renewable energy, the facilities already have a good reputation. When TechHQ visited Iceland in October, we explored two of the country’s data centers, run by atNorth and Borealis, to find out how their respective expansions were impacting the environment.

atNorth has three sites in Iceland but seven overall, with the others located in Finland, Sweden, and Denmark. It has ambitions to be the largest data center operator in the Nordics and boasts one of the lowest TCOs for co-location in the world. In total, atNorth has 126 MW of capacity and offers co-location service and ‘HPC as a service’. “If a customer is not willing to invest heavily into a big stack of HPC clusters, he can tap into us,” said Jóhann Þór Jónsson, the Director of Site Selection for atNorth. “If he wants to come and do rendering for 24 hours or 12 hours, he can come and tap into it and go back again.” Jónsson added that this is useful for the film and engineering industries, but atNorth also wants to attract hyperscaler customers like AWS and Google Cloud.

ICE03, a pristine white facility set between mountains in Akureyri, opened in the summer of 2023. Its current power capacity is 12 MW, but this will likely expand as the density of its racks increases. It boasts a power usage effectiveness (PUE) of less than 1.2 and is powered primarily by geothermal energy. It also takes some energy from the Kárahnjúkar Hydropower Plant in the east.

atNorth’s ICE03 (top), a pristine white facility set between some mountains in Akureyri, (bottom) only opened in the summer of this year. Its current power capacity is 12 MW, but this will likely expand as the density of its racks increases. Source: atNorth/TechHQ

Borealis manages three data centers in Iceland, with capacities of 10, 12, and 50 MW respectively. Its Blönduós facility, situated on a plain where wild horses roam, has a view of the mouth of the river Blanda. Blönduós is its smallest facility but has 10 MW of expandability. Powered by the Blanda hydropower station, it focuses on mission-critical systems like central banking and utilities that cannot be interrupted, as well as high-performance computing, AI, and disaster recovery solutions. The latter has seen increased interest from prospective and existing customers since the Russian invasion of Ukraine.

The environmental impact – cool or uncool?

Natural cooling means that Icelandic data centers use between 24 and 31 percent less energy than equivalent sites in the UK or USA, according to atNorth. However, both data center providers try to go beyond just leveraging Iceland’s ecological advantages to be environmentally friendly. István Végh-Sigurvinsson is the Sustainability Officer at Borealis and, at the Datacenter Forum, said it is his responsibility to choose vendors for hardware, cooling, and other electrical infrastructure “that are on the sustainability journey, at least” to maintain the company’s environmental standards.

The frame of atNorth’s ICE03 is built from ‘glulam’ timber instead of steel, as it is better for the environment, more fire resistant, and better absorbs seismic activity. The panels are made of steel but insulated with Icelandic rock wool, which is also fire-resistant. Having strong materials to protect the facilities is important on an island situated directly on the mid-Atlantic ridge with 33 active volcanic systems.

Jóhann Þór Jónsson, the Director of Site Selection, believes that atNorth will eventually transition to 100 percent direct liquid cooling. “The HPC, the AI, machine learning, it is growing at that pace,” he said. “The pace that the density is growing is so high.” Source: atNorth

“We have a lot to offer when it comes to data center security, even though we are a volcanic island,” said Mr Björn Brynjúlfsson, the CEO of Borealis. “We are just accustomed to them. We have frequent earthquakes, but they are small.” Reykjavik is the sixth-best market for political stability, fourth for sustainability, and fifth for power cost, according to the 2023 Global Data Center Market Comparison report. However, it is not one of the top 11 markets for low environmental risk, with Dublin, Madrid, and Oslo taking the top three spots.

During a presentation at Borealis’ ‘B52’ data center at Blönduós, Mr Brynjúlfsson presented a drone image of the facility and several wild horses grazing in the surrounding pastures. “We’re still sort of working in harmony with the environment,” he said, suggesting that the proximity of the animals exemplifies this. How the industry uses Iceland’s wild and powerful environment to market the country as a “natural” home for data centers has been criticized.

There are concerns about the discrepancy between the marketed image of Iceland’s suitability for data centers due to its natural elements, like cold climate and renewable energy, and the extent of the actual technological interventions required behind the scenes for efficient data center operations. The extensive development could have broader ecological impacts on the country’s wildlife which companies are less transparent about.

During a presentation at Borealis’ ‘B52’ data center at Blönduós, Mr Brynjúlfsson presented a drone image of the facility and several wild horses grazing in the surrounding pastures. Source: Borealis

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Home of sustainable computing: HPC in a cold climate with Borealis Data Center

While the impact data centers have on the local environment is unclear, Halldór Már Sæmundsson, the Chief Commercial Officer at Borealis, said that the data center is “essentially paving the way for business in the area.” He uses the example of how Borealis built a substation connecting Blönduós to the national power transmission system. “In the 25 years before Borealis came and started operations here, no new house was built and they were actually degrading in population,” he said. “Since then, they are starting to build apartments again, people are moving to the place, all industries are picking up.”

However, some reports suggest this positivity is not shared by all Icelandic communities. Some see the relationship between Icelandic data centers and their customers as one-directional, primarily benefiting the international clientele while potentially imposing burdens on local resources and environments. In 2015, investigative journalist Jón Bjarki Magnússon found that a 7.5 MW Advania server farm was disturbing neighbors with noise pollution and only employed five Icelanders. While this was eight years ago, and atNorth, for example, now has one hundred employees in total, questions persist about the scale of benefits for local inhabitants compared to the magnitude of resource consumption and potential environmental impact caused by DC facilities.

A church in Blönduós has been repurposed into a hotel room since tourists started visiting the town. The arrival of the Borealis B52 facility has helped boost the economy. Source: TechHQ

Data centers famously produce a lot of heat, and one of the most attractive elements of Iceland for hosting these facilities is the cold climate which allows for cheap and efficient cooling. Currently, both atNorth and Borealis implement direct air cooling (DAC), where cold outdoor air is allowed to flow indoors to bring down the temperature of units. Large doors around the outside of the pressurized rooms at atNorth allow the air to come in for the units to suck up. The units then blow warm air back into the room’s central area, which rises and flows out grates above the doors. There are cold air intakes on both sides of the facility which can be opened depending on which way the winds are blowing.

Borealis’ cooling system works similarly, with average highs of 55°F (12.7°C) during July in Blönduós and 23°F (-5°C) in the coldest winter months. The sides of the Borealis buildings are open, and cool air flows in through a filter. It then enters a mixing unit which combines it with internal hot air that has already been warmed by the equipment, allowing the temperature of the air blown into the room to be controlled. Direct air cooling requires very little energy and no water consumption, so it is an environmentally friendly option.

The sides of the Borealis buildings are open, and cool air flows in through a filter. It then enters a mixing unit which combines it with internal hot air that has already been warmed by the computers, allowing the temperature of the air blown into the room to be controlled. As the warm air is blown out of the mixer and circulates around the room, it heats up again, rises, and leaves through an exhaust or is returned to the mixing unit. Source: Borealis/TechHQ

Both facilities use another cooling technique: closed-loop direct liquid cooling. Hot water is cooled with outdoor air and pumped through ‘cold plates’ that sit directly on top of a component, be it a CPU, rack, or server. This is a more effective cooling method for high-density data centers as water is far more efficient at transferring heat than air and requires less ‘white space’. Mr Jónsson believes that atNorth will eventually transition to 100 percent direct liquid cooling. “The HPC, the AI, machine learning, it is growing at that pace,” he said. “The pace that the density is growing is so high.”

Mr Brynjúlfsson also said that he no longer sees “traditional racks of maybe two to three kW,” but, he surmised, this is a positive because, as rack density increases, it becomes easier to employ efficient cooling and use the heat for other purposes. In atNorth’s Swedish facility, SWE01 in Stockholm, the heat from the liquid coolant is captured and transferred to the district’s heating plant, ultimately providing a sustainable source of heat and hot water for local residents. Similar plans are in place for its newer facilities in Denmark and Norway. Borealis’ B52 currently offers both air and liquid cooling options depending on the workload required, but the company is also expecting to move towards the latter as demand for AI increases.

The atNorth units (pictured) currently use direct air cooling, but will likely transition to closed-loop liquid cooling as data demands increase. Source: atNorth

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The Northern Lights of Borealis Data Center = HPC Excellence

Direct liquid cooling of data centers with water in a cold climate like Iceland can be more environmentally friendly than direct air cooling. Water has a higher heat capacity than air, enabling more efficient heat transfer to the surrounding environment or dedicated cooling systems. Closed-loop cooling is also better than evaporative cooling, which removes gallons of water – a precious resource, despite its abundance – from the watershed.

However, direct liquid cooling with water requires the addition of a chemical coolant to stop it from freezing, and that could harm the environment if it leaked or was disposed of improperly. Furthermore, water cooling requires more sophisticated infrastructure and maintenance than air cooling, which can result in higher energy use. Direct air cooling doesn’t involve coolant, but it is less efficient. Therefore, it may require more power to maintain optimal temperatures inside the data center.

Crypto secrets

One of the most controversial aspects of Iceland’s data centers regarding their sustainability is actually who is using them. The country is a major destination for Bitcoin mining and has been since just after the cryptocurrency’s creation in 2009. Companies are tempted by the cheap renewable electricity and seemingly endless water supply, as the mining process involves concentrating lots of power, often in a small room, and producing enormous amounts of heat. Such power is necessary to verify cryptocurrency transactions and add them to the blockchain.

Bitcoin mining rigs inside the bitcoin factory ‘Genesis Farming’ near Reykjavik, Iceland, pictured in 2018. Source: AFP

Walking into the mining units at Borealis was an attack on the senses, the roars of the GPUs overwhelming, making the co-location racks seem like a single bumblebee in comparison. Einar Tómasson, the Head of Energy and Green Solutions at Business Iceland, said that Bitcoin miners “were important to build out the data center infrastructure” but added that the reliance on them has decreased as they tend to go out of business quickly.

The data center industry has faced criticism from conservationists who view cryptocurrency mining as wasteful of Iceland’s precious renewable resources, which should be saved for more essential services like electric cars. Petur Arason, the mayor of Blönduós where Borealis’ B52 facility is located, said: “Generally speaking, data mining has a bad reputation with our renewable energy. Some say it should not be used for data mining in Iceland in total.”

Although it is difficult to find legitimate and up-to-date figures on how much of the energy that data centers use currently goes towards cryptocurrency mining, in 2018, a report by KPMG stated that it was around 90 percent. Local experts have told the Wall Street Journal that keeping up with electricity demands fueled by the cryptocurrency industry will involve building more dams and power stations which disrupt the island’s delicate environment. But Landsvirkjun, the National Power Company of Iceland, has remarked that no power plants will be built solely to support mining activities. There are only limited plans to increase Iceland’s electricity supply with buildouts – the last geothermal station came online in 2017, and the permit for the latest hydropower plant was revoked in June.

Landsvirkjun’s head, Hörður Arnarson has said that, while melting glaciers due to global warming have boosted its hydropower generation, electricity sales were close to the maximum the company could handle. That said, the growing demand for cryptocurrency processing is still helping fuel the data center industry in Iceland, ultimately contributing to its economic growth. Any government pushback against the industry would be met with backlash from the electricity sector, which relies heavily on its top customers.

Iceland is good at diversifying its resources. As well as electricity, the geothermal power plants Hellisheiði and Nesjavellir provide more than half of the hot water used for district heating in the Reykjavík area. Drillings into geothermal fields in and around the capital are the other primary sources of hot water. Pictured: Geothermal field and geysers in the village of Varmaland, where farmers use the hot water to warm their greenhouses. Source: TechHQ

Heat of the moment

As well as electricity, the geothermal power plants Hellisheiði and Nesjavellir provide more than half of the hot water used for district heating in the Reykjavík area. Drillings into geothermal fields in and around the capital are the other primary sources of hot water, which is also used for swimming pools, snow melting, and, importantly, greenhouse cultivation. Iceland’s climate prevents the growth of many vegetables, so greenhouses reduce the need to import food.

But the geothermal reservoirs are not the only thing producing significant amounts of heat in Iceland; the data centers do, too. Some of them, like atNorth, sell their excess heat to energy companies that then distribute it to residents through the district heating plant. “There’s a long-standing know-how in Iceland on how to distribute heat over a long distance,” said Mr Jónsson.

A greenhouse in the village of Varmaland growing cucumbers. Source: TechHQ

However, data center heat has many other potential uses. It can warm fish, insect, and chicken farms or be used for algae cultivation. It can also dry fruits or timber and heat greenhouses for vegetable growth. ‘Hringvarmi’ is an ag-tech startup that wants to build biomes that channel heat from data centers and use it to grow vegetables. Dr Alexandra Leeper, the company’s co-founder, said at Datacenter Forum: “In Iceland, more than 80 percent of our fresh fruits and vegetables are imported because there simply isn’t warm enough, controlled environment[s] […] for food production. In one of our environment modules, it will be possible to produce more than 3,000 kg of strawberries every year – that has a domestic market value of more than €86,000 ($94,000) and a carbon dioxide saving of nine tons per year.”

She added that cryptocurrency mining facilities are actually the best candidates to connect to Hringvarmi biomes as they have a consistent output of waste heat. Dr Leeper and her co-founder Justine Vanhalst hope that, as well as reducing the carbon footprint associated with food in Iceland, food start-ups will be able to rent out space to test if their idea has legs before scaling up.

Iceland does genuinely seem like a promising location for a sustainable data center, at least at the moment. But why are the data centers still searching for new customers if that is the case? “I think people are not aware of who we are and what we’re doing.” Eva Gubjornsdottir, the deputy CEO and CFO of atNorth, said at the Datacenter Forum. Those who believe that latency will be an issue are not considering latency non-sensitive workloads, and those who are worried about the security and safety of Iceland don’t consider that most of the internet relies on the same submarine cables that connect the country’s data centers. What’s more, all the island’s 400,000 residents depend on the cables for their communications with the rest of the world, so the network’s security is an absolute priority.

While not everyone supports the expansion of the data center industry in Iceland, with valid concerns about the impact the increasing power demands will ultimately have on the environment, the more Icelandic businesses and services host their data locally, the better off the country will be in the eventuality of a communications cut-off. Indeed, the infrastructure is expensive to build, so it is important to support the local and foreign companies that make use of it.

In pursuit of secure and sustainable connectivity, Iceland’s data centers continue to explore innovative solutions, from harnessing excess heat to leveraging the country’s renewable energy advantage. As the industry seeks broader recognition and support, its ability to bolster both local services and global connectivity remains a vital cornerstone for Iceland’s technological future.

atNorth’s ‘ICE03’ data center in Akureyri. Source: atNorth

Read ‘Part 1: Demanding conditions’ here.

Read ‘Part 2: Energy and cables’ here.

The post How environmentally friendly are Iceland’s data centers? – Part 3 appeared first on TechHQ.

• Paypal stablecoin – does it live up to the name?
• The SEC has questions.
• But, as Paypal complies, is it just routine, or is there something more behind the probe?

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Not so SafeMoon? CEO and CTO of crypto fund arrested for fraud

The SEC is investigating the PayPal stablecoin. With no obvious violation on PayPal’s part (yet), we can only assume that the move is part of the ongoing scrutiny that Stablecoin is under by US regulators.

PayPal Holdings Inc. received a subpoena from the US Securities and Exchange Commission’s enforcement division in relation to its work on a dollar-linked stablecoin.

PayPal was asked to produce documents tied to the project and is cooperating with the probe, according to a regulatory filing on Thursday.

The stablecoin, PayPal USD (PYUSD), was unveiled in August. It’s pegged to the dollar and fully backed by US dollar deposits, short-term Treasuries and similar cash equivalents. Or so PayPal said at the time of its release.

Again, the investigation could mean that not everything’s above board.

The coin has a market capitalization of around $158 million, according to CoinGecko data.

What is stablecoin?

A stablecoin is a cryptocurrency that attempts to peg its market value to an external reference. As a medium of exchange, they’re more useful than volatile crypto. Stablecoins pursue price stability by maintaining reserve assets as collateral or through algorithmic formulas that are supposed to control supply.

U OK Hun?

A stablecoin can be thought of as a cryptocurrency for day-to-day transactions, as opposed to a means of asset accumulation.

Stablecoins have been under scrutinization for a while.

US regulators have two main concerns: if a stablecoin crashes, it could trigger fire sales of other assets as their backers try to maintain a peg. They also fear that if stablecoins prove their worth, they could undermine the power of central banks and more easily enable criminals to engage in money laundering.

The issue was a hot topic in Washington last year during the collapse of the once-popular token TerraUSD, an algorithmic stablecoin that sought to maintain a 1-to-1 peg to the US dollar through arbitrage incentives and trading mechanisms. PYUSD is different because it’s asset-backed.

Investigations are ongoing.

Lawmakers are wrangling over legislation that would set out new rules for the tokens, while SEC chair Gary Gensler has said stablecoins may be securities and therefore subject to the regulator’s strict investor-protection and disclosure rules.

Other problems for PayPal

Separately, PayPal said it received a civil investigative demand from the Consumer Financial Protection Bureau in October that focused on Regulation E, which governs electronic fund transfers.

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A king no more: the fall of Sam Bankman-Fried

PayPal said in the past that the agency had asked for information about how it treats customers who send a payment to the wrong person through its Venmo service.

Under Regulation E, if a hacker logs into an account and sends money, the customer is due a refund. Fraudsters have increasingly sought to use networks like PayPal to convince customers to send them money. In those cases, the customers aren’t necessarily due a refund.

The CFPB’s latest probe is focused on how the company investigates and resolves errors tied to its obligations under Regulation E, according to Thursday’s filing. The agency is also probing how Venmo presents transactions to customers’ linked bank accounts, the filing said.

Paypal power grab?

The post Paranoia or precaution? Yet another SEC check into crypto appeared first on TechHQ.

• SafeMoon CEO Johnny Karony and CTO Thomas Smith have been arrested.
• The executive team at SafeMoon withdrew more than $200m from the project.  
• Along with creator Kyle Nagy, who is still at large, the three execs face charges from both the DOJ and SEC.

READ NEXT

A king no more: the fall of Sam Bankman-Fried

Crypto and fraud have become so linked that the industry may never recover its image. In fact, the notion of crypto fraud now barely raises an analyst’s eyebrow.

In the same week that Sam Bankman-Fried was found guilty on all charges of fraud and money laundering over the FTX crypto-exchange bankruptcy, three top executives at another crypto firm have been accused of fraud and securities violations.

SafeMoon CEO John Karony and chief technology fficer Thomas Smith were arrested, and creator Kyle Nagy remains at large, according to the Department of Justice (DOJ).

The indictment was unsealed last week in Brooklyn, and charges all three executives with three criminal counts apiece.

Crypto fraud, conspiracy, money laundering…

Nagy, known as “Safemoon Dev,” 35; Karony, “CPT_HODL_T_MUN,” 27; and Smith, known as “papa,” 35, were all charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud and money laundering conspiracy.

An example given by the DOJ says Smith diverted crypto tokens to buy himself a Porsche 911.

“As alleged, the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles and real estate,” said Breon Peace, US Attorney for the Eastern District of New York.

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As well as facing criminal charges, the defendants were charged for securities violations by the Securities and Exchange Committee (SEC).

“Unregistered offerings lack the disclosures and accountability that the law demands, and they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich themselves at the expense of others,” said David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU).

The agency also accused all three of “perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security.”

SafeMoon was a meme coin that rolled out in March 2021 at the height of the previous bull market. Arguably, the very idea of a “meme coin” is just 21st century-speak for “fool’s gold,” but at one point, the crypto token valued at $8 billion, so equally arguably not.

New week, new crypto fraud…

The team promised investors that staked funds would be “locked” in a liquidity pool. According to court papers, SafeMoon also promised investors that the token’s features would “drive the price to stratospheric all-time highs” and “Safely to the Moon.”

According to the SEC, “large portions of the liquidity pool were never locked” and executives used funds to buy homes, travel and high-end cars. Investors say they suffered significant losses after learning the pool wasn’t locked.

In April 2021 Smith assured investors that he personally held no SFM (SafeMoon’s namesake crypto token) because he was a software engineer. He’s quoted saying as much in the indictment, and that “I don’t want to create a situation where my decisions as a CTO are affected by the monetary gain of those actions, and that’s why I’ve made that separation for myself.”

All three executives of SafeMoon denied personally holding any SFM, but repeatedly traded the tokens for their own benefit, generating millions in profits while masking proceeds through private, unhosted wallets and pseudonymous exchange accounts.

Crypto fraud after crypto fraud – how much would you be willing to invest?

BRO WE DID IT

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The team also allegedly used locked assets to make large purchases of SFM to prop up its price and manipulate the market.

The indictment quotes Smith as telling an unnamed co-conspirator as they discussed buying luxury vehicles following Smith’s sale of tokens traceable to the liquidity pool, “BRO WE DID IT.”

After the charges were announced, SafeMoon lost over half of its value.

SEC chair Gary Gensler said speculative excesses in cryptocurrency undermine investor trust in US capital markets. The agent in charge of Homeland Security Investigations in New York, Ivan Argelo, said that the actions of the group showed “insatiable greed.”

That’s the crux of it, really: Karoney, Smith and Nagy diverted tens of millions of investors dollars to buy luxuries and line their own pockets. At least Bankman-Fried, misguided as his actions were, was arguably trying to do good with the money he stole.

More crypto, more fraud, no honor among crypto-bros…

The post Not so SafeMoon? CEO and CTO of crypto fund arrested for fraud appeared first on TechHQ.

• Sam Bankman-Fried guilty of fraud and money laundering.
• The former FTX CEO presided over the collapse of the cryptocurrency exchange.
• Bankman-Fried could face decades in prison.

READ NEXT

FTX: Fraud or incompetence?

“Crypto king” no more, Sam Bankman-Fried has been found guilty of fraud and money laundering. Bankman-Fried rose to notoriety running one of the world’s largest cryptocurrency exchanges, FTX.

After a month-long trial and less than five hours of deliberation, the 31-year-old’s fall from grace was complete. His sentencing has been set for March 28th next year; he faces decades in prison.

Five of the charges on which Bankman-Fried was found guilty carry a maximum prison term of 20 years, with a five-year maximum on the other two charges.

That creates a potential maximum sentence of 110 years, and although it is unlikely the judge will actually impose that (realistically whole-life), term, Bankman-Fried is expected to face a sentence lasting decades.

FTX was once valued at $32bn, but when it went bankrupt in November last year, $8bn in customer funds (a full quarter of the company’s valuation) was missing. Bankman-Fried was arrested shortly afterwards.

Guilty, seven times over.

“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the king of crypto,” US attorney Damian Williams said in a statement after the verdict.

“This case has always been about lying, cheating and stealing, and we have no patience for it,” he added.

The jury found him guilty of lying to investors and lenders and stealing billions of dollars from FTX, helping to precipitate its collapse. He had been charged with seven counts of fraud and money laundering.

He pleaded not guilty to all charges, maintaining that he had acted in good faith, just made some mistakes.

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After the verdict, Bankman-Fried’s lawyer Mark Cohen said: “We respect the jury’s decision. But we are very disappointed with the result.

“Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” he added.

Despite his claims to innocence, three of Bankman-Fried’s former friends and colleagues, including his ex-girlfriend, pleaded guilty and agreed to testify against him in the hopes of reduced sentences.

Bankman-Fried’s ex-girlfriend Caroline Ellison testified against him.

The trial was closely watched because of its implications for the cryptocurrency industry, which has so far failed to recover from last year’s market turmoil. Bankman-Fried has been seen as a poster child for problems in the sector, which regulators in the US have described as “rife with criminality.”

With Congress unlikely to pass new rules for cryptocurrency trading anytime soon, former federal prosecutor Renato Mariotti said he expected US courts to continue to be the site of battles over the industry.

“I really think having specific crypto regulations in the United States would reduce the sort of crime that occurred in this particular case,” he said.

Who is Sam Bankman-Fried?

The son of prominent liberal academics (who reportedly had their heads in their hands during his sentencing), Bankman-Fried was a math whizz from just outside Silicon Valley. He graduated with a physics degree from MIT.

Straight out of college, he began donating half his salary to charity and embracing effective altruism – a movement that purports to take an evidence-based approach to charitable giving.

The king of crypto was known for rubbing shoulders with the elite – will any of them take his call now?

An author of a book about Bankman-Fried, Michael Lewis, told the BBC he believes the entrepreneur simply saw cryptocurrency as a means to make money to change the world.

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FTX collapse sparks wave of crypto-bankruptcies

In 2019, Bankman-Fried and former MIT classmate Gary Wang launched FTX. The exchange acted like an unregulated bank, allowing people to trade money for crypto-coins, such as Bitcoin, and store their funds for safekeeping.

At its peak, FTX executives said the platform was facilitating $10bn-$15bn trading every day.

Then, a bombshell investigation into FTX by Coindesk revealed that Bankman-Fried’s companies were in a risky financial position. Further reporting accused FTX of misusing customer funds.

Those reports led customers to withdraw billions of dollars, causing FTX to file for bankruptcy on November 11^th last year. The rest, as they say, is crypto-history.

Will crypto ever recover what reputation it had?

US Attorney Damian Williams says Bankman-Fried committed one of the biggest financial frauds in US history. The cynical (if usually accurate) world of social media is already wondering who Netflix will cast in the docudrama of Bankman-Fried’s downfall.

Commentators say it will take years for the cryptocurrency industry to rehabilitate its image, if it ever does. The volatility of crypto had long been regarded cynically by the public – disregarded as “Monopoly money” because of its infamous volatility.

Now, Sam Bankman-Fried will always be associated with the industry, reinforcing the narrative of a Wild West where consumers have no protection. Move over, Wolf of Wall Street – the King of Crypto is coming to a jail cell, and probably a movie screen, near you – soon.

Fraud and money laundering on an epic scale: the story of Sam Bankman-Fried.

The post A king no more: the fall of Sam Bankman-Fried appeared first on TechHQ.

This article has been contributed by Nathan Hew.

Digital payment methods are on the rise globally. In regions like the Asia Pacific (APAC), where e-commerce is booming and online sales are as popular as physical retail, more consumers prefer to use digital wallets — and the numbers show that this is true.

According to the Worldpay from FIS Global Payments Report 2023, digital wallets were the leading payment method globally, accounting for 49% of transaction value in e-commerce and 32% at the point of sale (POS) in 2022. Mobile wallets are projected to remain the leading payment method across e-commerce (54%) and POS (43%) in 2026, with fintechs, banks, neobanks, super apps, Big Tech, and device manufacturers competing as digital wallet providers.

While APAC remains an outlier with the overwhelming majority of wallet share, digital wallets are now Europe’s leading e-commerce payment method (having taken the lead in 2021) and North America (where wallets passed credit cards for leading status in 2022). Major global e-wallets like PayPal, Apple Pay, and Google Wallet have established a strong footprint in these countries as more consumers shop online. 

But to truly understand the significance of why digital wallets are becoming an increasingly popular payment method, let’s first dive deeper into the mechanics of a digital wallet. 

Coca-Cola deployed arguably the first solution that appears close to a digital wallet in 1997: two vending machines in Helsinki, Finland accepted payment by text message. (Source: Shutterstock)

Digital wallets: What is it and how do they work?

Digital wallets are applications designed to leverage the abilities of mobile devices to improve access to financial products and services. What sets them apart from traditional payment methods is that it eliminates the need for consumers to carry a physical wallet. Beyond this, digital wallets contain a consumer’s payment information for easy convenience to make multiple payments on the same device.

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It all started 25 years ago when 21-year-old entrepreneur Dan Kohn in Nashua, New Hampshire, sold a CD over the internet via credit card payment. Since then, technology has evolved. Now, digital wallets use a mobile device’s wireless capabilities like Bluetooth, Wi-Fi, and magnetic signals to transmit payment data securely from your device to a point of sale designed to read the data and connect via these signals.

Some of the most well-known wallets in the market include Apple Pay, Google Wallet, Samsung Pay, PayPal, Venmo, and AliPay — each containing unique features to help distinguish themselves from their competitors. Apple, for example, entered into a strategic partnership with Goldman Sachs to issue Apple credit cards and expand its Apple Pay services. 

As cryptocurrency has become part of a financial system, companies like Bitpay invented cards that let you pay with cryptocurrency. Digital wallets like Apple Pay and Google Pay allow consumers to add a Bitpay debit card. The Bitpay card converts cryptocurrency to dollars at the current market value, allowing the wallet to complete the transaction.

The rising popularity of digital wallets in Asia

Asia is “at the forefront” of innovation in digital payments, leading developments in areas like cross-border payments and central bank digital currencies, according to Yvonne Szeto, vice president at payment processor Worldpay, which FIS acquired. “It is also the region where digital wallets first took hold as the dominant payment method, and that dominance shows no signs of abating,” Szeto said.

Out of the factors that propel digital wallets to their current growth, three elements, in particular, stand out. A big talking point is that more people are using the Internet for the first time to engage with payment offerings. In Southeast Asia alone, more than 40 million people did just that in 2020, according to a study by Google, Singapore state investment company Temasek, and consultancy Bain. 

The numbers also show that digital wallets will encourage more e-commerce transactions. Data from Euromonitor suggests that Asia is set to account for 40% of an estimated US$13.3 trillion in global retail sales this year while making up 47% of US$2.9 trillion in e-commerce transactions and 65% of mobile commerce (worth US$1.6 trillion).

What does this mean? Mobile commerce is likely to grow eight times faster than brick-and-mortar retailing within APAC, translating into an additional annual spending of US$600 billion for the digital wallet economy in Asia by 2025.

It results in an efficient economy and transparency for governments, regulators, and financial institutions. Beyond this, the World Bank has shown that increased use of digital means of payment can help reduce the size and impact of the shadow economy. The growing use of cost-effective solutions, like QR codes and the adoption of uniform payment standards, will continue to allow digital wallets to lower costs for merchants while increasing electronic and trackable acceptance.

Both regions have a distinctive approach when it comes to adopting digital wallet. (Source: Chip Somodevilla/AFP)

Digital wallets in the East and West: What is the difference?

In the West, wallets designed and offered by Big Tech tap into existing payment behaviors, creating a digital interface for physical payment cards that don’t require downloading an app for payments on handheld devices — unlike the “super apps” that have emerged in China and elsewhere. 

Asia, on the other hand, lacks the existing banking and payment infrastructure. Coupled with the widespread use of cash, it propelled emerging payments businesses — like Grab, Gojek, and GCash — to start from scratch, using apps and QR code-based functions to drive scale and access. 

They approach this opportunity from a 360 standpoint, offering a range of services that cover areas such as e-commerce, entertainment, social services, facilitation of remittances, and even, in some cultures, delivery of seasonal good luck gifts known as “red packets“.

Chinese tourists walk past a QR code for Chinese digital wallets displayed on a street in Kathmandu. (Source: Prakash Matheme/AFP)

Pros and cons of using a digital wallet

Like with any technology, there are advantages and disadvantages to using digital wallets.

A digital wallet can:

• Limit exposure to financial and personal information: Similar to standard credit or debit cards, most digital wallets have some form of fraud protection or monitoring. Some digital wallets employ biometrics, such as fingerprint and facial recognition technology.
• Eliminates the need to carry a physical wallet and cards: While cash is king, the convenience offered by digital wallets complements today’s digital landscape. Plus, having fewer cards reduces the chances of losing those items. 
• Improve access to financial services: Consumers can use digital wallets without the need for a a bank account or credit card. It makes them a valuable tool for people living in poverty or remote areas with few traditional banking branches.

That said, digital wallets have their disadvantages. 

• Not all countries or regions embrace digital wallets: Take Japan, for example. While the country offers an abundant choice for digital payments, Japan still remains a cash-dependent economy, according to a source cited in the Asia-Pacific Mobile Payment Methods 2022 report by Research and Markets. Much of this is due to its vast ATM network and relatively higher credit card fees, making smaller merchants reluctant to accept cashless payments.
• Digital wallets are vulnerable to identity theft or fraud: According to a Kaspersky research titled “Mapping a secure path for the future of digital payments in APAC”, nearly all respondents in Southeast Asia (97%) were aware of at least one type of threat against e-payment platforms, while almost three in four (72%) have personally encountered at least one type of threat associated with this technology.

The post Digital wallets: Is cash still king across the globe? appeared first on TechHQ.

• Fan tokens are not guaranteed to have any intrinsic value.
• British MPs are accusing sports clubs of “exploiting fans” by selling them.
• The question comes down to perceived versus material value.

95% of non-fungible tokens (NFTs), often known in the sporting world as fan tokens, are useless, and mostly worthless. Don’t take our word for it – there’s science behind the pronouncement. But spending money on useless things is not, in and of itself, harmful. In the UK though, MPs are claiming that sports clubs  issue fan tokens risk damaging their reputations by “exploiting fans.”

The Culture, Media and Sport Committee of the UK’s parliament has made the pronouncement, throwing shade on the whole nature of fan tokens and other non-fungibles.

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There’s certainly advantage being taken, but that’s inehrent in the nature of fandom – the chance to own something special relating to the fandom, that’s ownable forever, is part of the thrill. So whether the fans know or care about the advantage being taken is a very ambiguous question – if the fan token has value to the fan who parts with money for it, how sorry should we feel for the fan?

New Financial Conduct Authority rules around crypto-investments mean firms must now display a warning telling people not to spend “unless you’re prepared to lose all the money you invest.”

Fan tokens – what’s the point?

Owning NFTs from a football club – digital fan tokens – can be thought of as certificates of ownership for virtual or physical assets, giving the fans who own them access to perks such as voting in fan polls or getting access to ticket ballots.

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Frequently described as ‘digital membership collectibles,’ fan tokens can be bought and sold on a market, although the value has dropped considerably since their peak a few years ago.

That’s why, as with traditional NFTs, trading the tokens comes with a risk to value which can vary widely, for better or for worse, for richer or for substantially poorer.

The recent announcement of a Socios (a fan token company) partnership with Tottenham Hotspur sparked backlash from groups that said fan interaction with the club shouldn’t cost money, pointing out the risks of losing money through buying cryptocurrency.

A warning on the Socios website.

Maybe the (arguably minor) material benefit of owning a digital fan token is what’s protected them against any criticism until now. NFTs had their moment in the sun during and just after the pandemic. Businesses and artists were encouraged to create their own tokensas NFT prices soared.

But the moment didn’t last long, and huge monetary losses thanks to fluctuating prices were met with little sympathy online.

This dude in the wework is in shambles over his NFT bags right now lol pic.twitter.com/zESbIUdH43

— Joshua (@joshqharris) May 10, 2022

Now, MPs say “Clubs are promoting volatile crypto-asset schemes to extract additional money from loyal supporters, often with promises of privileges and perks that fail to materialise.”

Conservative MP Dame Caroline Dinenage continued that “Fan token schemes must not be used as a substitute for meaningful engagement with supporters.”

The Committee report added that “the unique relationship between clubs and fans means that fan speculation on sport-based crypto-assets carries a real risk of financial harm to fans and reputational harm to clubs.”

A Socios spokesperson said “fan token holders received more than 24,000 matchday tickets and over 1,000 items of merchandise last season, and continue to engage with their club in a unique new way.”

Are fan tokens just a cash grab?

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It could also be seen as an easy cash grab. That’s what Kieran Maguire told the BBC large football clubs likely saw these crypto-assets as.

“A wave of optimism was created which underpinned and created speculative values for [them]. Then when people actually worked out exactly what the benefits were, they were pretty insignificant, and people started to look for an exit route,” Mr Maguire said.

In a similar tale of rise and fall, Formula 1 teams turned to NFTs as a way to engage fans and offer membership perks.

The Mercedes F1 team announced a series of NFTs in April 2022 with then-partner FTX – several months before several months before the exchange collapsed and its owner Sam Bankman-Fried was arrested.

Perhaps a little late to the game, the Culture, Media and Sport Committee also voiced concerns about the rise of crypto-assets in the arts, as Dame Caroline said “artists are at risk of seeing the fruits of their hard work pinched and promoted without permission.”

Via BBC News.

In August 2022, a British collector bought an NFT from Banksy’s website for £244k – which turned out to be fake. Again though… it’s a little bit satisfying to see someone spend that much on effectively nothing – the buyer doesn’t receive the actual artwork, or the copyright attached – and then get upset when they realize that what they’ve bought is, well, worthless.

Ultimately, the call from MPs is a key step in the landslide movement away from NFTs. There’s yet to be any material change as a result, but there may be soon – just a couple of years late.

The Committee also advised action against copyright infringement in the cryptocurrency market.

The post NFTs: a risk to sports fans? appeared first on TechHQ.

Millions of people use messaging apps such as Twitter (now X), WhatsApp, Signal, Threads, and others to communicate online. Many businesses too, rely on messaging apps for branding, product announcements, and keeping in touch with customers. Typically, none of these account holders have any say in how platforms develop, unless they’ve signed up to OpenChat, which has a different view on the governance of messaging apps.

We’ve become used to the model of tech giants offering free or low-cost services in return for the insights gained from customer data. But the creators of OpenChat, which runs on the Internet Computer – a decentralized platform for hosting computer code, data, and compute (see below) – offer their app as an open internet service.

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“This means there is no backing company tracking and selling your data,” explained Hamish Peebles, OpenChat co-founder and one of the Rust developers on the project, in an online introduction to OpenChat. “Instead, the service is owned and managed by the holders of the service’s governance tokens. And in our case, we will be distributing those tokens amongst the users.”

Changes to the open internet service are made via proposals, which are made public, and users who want to get involved in the decision-making process can vote on the proposed code or feature changes. Proposals that gain enough support are then adopted.

Also, to encourage others to get involved, contributions are rewarded with additional governance tokens.

“Nothing happens behind closed doors, everything happens out in the open, and everyone is welcome to get involved,” said Peebles, when introducing the project back in 2021. “And for those that just want to use [OpenChat] as a normal chat app, that’s fine too.”

How OpenChat on ICP works

The first step is to sign up – for example, by creating an Internet Computer identity. And users have the option to generate a passkey – a unique public/private key pair that is stored in the secure hardware chip present in smartphones and other messaging devices.

Messages carry an initial tick to indicate that they’ve been received by the OpenChat services and a second one appears when the correspondence has been read by the recipient. Users can add emojis to their messages and upload attachments.

Media files such as images and videos are rendered directly in the message panel, and other file types are badged as a downloadable attachment. The OpenChat team recently launched a communities feature and has a roadmap of technical updates advertised online.

Notifications and messages can be sent between browsers using peer-to-peer Web RTC connections that are brokered using the OpenChat service operating on the Internet Computer, according to co-founder Matt Grogan – another software engineer working on the project. And this enables extremely fast messaging – for example, when two users in a conversation are both online.

Search data is available on a user’s own chat canister secured on the Internet Computer. And this means that a user can query their entire chat history from any device.

Another feature of the service is the ability for users to send so-called Cycles to each other. “Cycles are similar to gas in Ethereum, and are used to pay for Internet Computer resources down to the CPU instruction and byte of memory,” Grogan explains.

The basic unit of Cycles is in trillions, and this is a good point in the story to answer the question – what is the Internet Computer?

What is the Internet Computer?

To borrow the words of Dominic Williams – Founder and Chief Scientist at DFINITY, the foundation responsible for building the federated computing resource – the purpose of the Internet Computer project is to ‘extend the internet and make it far more powerful’.

Rather than have services hosted by private firms in the cloud, the Internet Computer aspires to provide a worldwide compute platform. And Williams dubs the project ‘the third great innovation in blockchain’, with the first being the invention of Bitcoin in 2009 – conjuring up the notion of digital gold – followed by the second milestone of smart contracts on Ethereum in 2015.

A decade ago, Williams witnessed how blockchain could do much more than enabling cryptocurrencies, and could be used to host computer code (smart contracts), data, and – critically – computation. Internet Computer smart contracts can deliver user experience (UX) by processing HTTP commands, which sets the platform apart from other projects.

Also, recent developments mean that Internet Computer nodes can talk to Bitcoin nodes. “That enables smart contracts on the Internet Computer to directly process Bitcoin on the Bitcoin blockchain without the need for bridges,” said Williams earlier this year, recapping the project’s achievements so far. “The next step is to integrate with Ethereum.”

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The Internet Computer’s governance system is known as the network nervous system (NNS) and it provides the means for an adaptive blockchain, where protocol upgrades can be introduced without having to perform hard forking.

Williams points to other efficiency gains too. He believes that the Internet Computer’s crypto cloud can be more efficient than centralized tech in the end. The foundation has worked with Carbon Crowd on a ‘Proof of Green’ initiative. And it’s been reported that a single Google search is four times more energy intensive than a transaction on the Internet Computer.

OpenChat – one of a number of Internet Computer apps – is hosted across independent data centers running Internet Computer Protocol (ICP). And some believe that ICP could be a potential replacement for legacy IT stack, considering not just messaging applications, but other products too.

Software is reimagined as interoperable compute units known as canisters, which comprise a bundle of WebAssembly byte code and associated memory. Parallelizable, canisters run at web speed, and can be used to build various services from websites to enterprise systems and industrial platforms.

Developers write code in any language that compiles to WebAssembly, such as Rust, and then upload the resulting canisters to the Internet Computer through ICP. The architecture is said to eliminate cloud services, database servers, web servers, and the use of a content distribution network to speed up delivery.

Williams goes as far as to say that the approach even does away with firewalls as canisters run within a tamperproof environment. Supporting the system are node machines (arranged as subnets) that host the canisters, with everything permissioned by a so-called network nervous system.

Looking at the Carbon Crowd Internet Computer dashboard shows that the majority of nodes are hosted in Switzerland (DFINITY is headquartered in Zurich), with a total of 26 data centers and 66 nodes providers worldwide.

Internet Computer architecture explained by Dominic Williams.

In OpenChat, canisters are created when users register for the decentralized messaging service. They hold direct chats and list which groups a user belongs to. Cannisters also behave as individual user wallets by linking to a ledger account.

System security comes from the fact that the canister’s user is the only person with permission to instruct that canister, which also benefits voting rights. The one user, one canister approach also makes the system highly scalable and avoids having to shard users as the platform grows.

OpenChat was hugely successful earlier this year in raising ICP funds, with the Internet Computer community endorsing the project. And now it’s in the developers hands to live up to those expectations and deliver a decentralized messaging app to rival WhatsApp and other big names in chat services.

Practically, for the OpenChat team, that means ramping up from tens of thousands of daily active users to hundreds of times more and beyond.

The post OpenChat puts code updates to the vote thanks to Internet Computer appeared first on TechHQ.