Bitcoin Difficulty Einfach erklärt Blockchainwelt

I am very much looking forward to Bitcoin Core's next difficulty adjustment in 1.75 days. My prediction is that 1.) Bitcoin Cash's price will get pumped, 2.) hashrate will flock to it, 3.) Bitcoin Core's block time will go up markedly for 3+ weeks. 4.) Bitcoin Core price will drop.

Let's see how I do on this prediciton over the next week or so.
 
You can see the time left until Bitcoin Core's next difficulty adjustment here:
https://bitcoinwisdom.com/bitcoin/difficulty
 
Also, watch as the hashrate lines potentially cross:
http://fork.lol/pow/hashrateabs
submitted by BitcoinIsTehFuture to btc [link] [comments]

I am very much looking forward to Bitcoin Core's next difficulty adjustment in 1.75 days. My prediction is that 1.) Bitcoin Cash's price will get pumped, 2.) hashrate will flock to it, 3.) Bitcoin Core's block time will go up markedly for 3+ weeks. 4.) Bitcoin Core price will drop. /r/btc

I am very much looking forward to Bitcoin Core's next difficulty adjustment in 1.75 days. My prediction is that 1.) Bitcoin Cash's price will get pumped, 2.) hashrate will flock to it, 3.) Bitcoin Core's block time will go up markedly for 3+ weeks. 4.) Bitcoin Core price will drop. /btc submitted by BitcoinAllBot to BitcoinAll [link] [comments]

How EpiK Protocol “Saved the Miners” from Filecoin with the E2P Storage Model?

How EpiK Protocol “Saved the Miners” from Filecoin with the E2P Storage Model?

https://preview.redd.it/n5jzxozn27v51.png?width=2222&format=png&auto=webp&s=6cd6bd726582bbe2c595e1e467aeb3fc8aabe36f
On October 20, Eric Yao, Head of EpiK China, and Leo, Co-Founder & CTO of EpiK, visited Deep Chain Online Salon, and discussed “How EpiK saved the miners eliminated by Filecoin by launching E2P storage model”. ‘?” The following is a transcript of the sharing.
Sharing Session
Eric: Hello, everyone, I’m Eric, graduated from School of Information Science, Tsinghua University. My Master’s research was on data storage and big data computing, and I published a number of industry top conference papers.
Since 2013, I have invested in Bitcoin, Ethereum, Ripple, Dogcoin, EOS and other well-known blockchain projects, and have been settling in the chain circle as an early technology-based investor and industry observer with 2 years of blockchain experience. I am also a blockchain community initiator and technology evangelist
Leo: Hi, I’m Leo, I’m the CTO of EpiK. Before I got involved in founding EpiK, I spent 3 to 4 years working on blockchain, public chain, wallets, browsers, decentralized exchanges, task distribution platforms, smart contracts, etc., and I’ve made some great products. EpiK is an answer to the question we’ve been asking for years about how blockchain should be landed, and we hope that EpiK is fortunate enough to be an answer for you as well.
Q & A
Deep Chain Finance:
First of all, let me ask Eric, on October 15, Filecoin’s main website launched, which aroused everyone’s attention, but at the same time, the calls for fork within Filecoin never stopped. The EpiK protocol is one of them. What I want to know is, what kind of project is EpiK Protocol? For what reason did you choose to fork in the first place? What are the differences between the forked project and Filecoin itself?
Eric:
First of all, let me answer the first question, what kind of project is EpiK Protocol.
With the Fourth Industrial Revolution already upon us, comprehensive intelligence is one of the core goals of this stage, and the key to comprehensive intelligence is how to make machines understand what humans know and learn new knowledge based on what they already know. And the knowledge graph scale is a key step towards full intelligence.
In order to solve the many challenges of building large-scale knowledge graphs, the EpiK Protocol was born. EpiK Protocol is a decentralized, hyper-scale knowledge graph that organizes and incentivizes knowledge through decentralized storage technology, decentralized autonomous organizations, and generalized economic models. Members of the global community will expand the horizons of artificial intelligence into a smarter future by organizing all areas of human knowledge into a knowledge map that will be shared and continuously updated for the eternal knowledge vault of humanity
And then, for what reason was the fork chosen in the first place?
EpiK’s project founders are all senior blockchain industry practitioners and have been closely following the industry development and application scenarios, among which decentralized storage is a very fresh application scenario.
However, in the development process of Filecoin, the team found that due to some design mechanisms and historical reasons, the team found that Filecoin had some deviations from the original intention of the project at that time, such as the overly harsh penalty mechanism triggered by the threat to weaken security, and the emergence of the computing power competition leading to the emergence of computing power monopoly by large miners, thus monopolizing the packaging rights, which can be brushed with computing power by uploading useless data themselves.
The emergence of these problems will cause the data environment on Filecoin to get worse and worse, which will lead to the lack of real value of the data in the chain, high data redundancy, and the difficulty of commercializing the project to land.
After paying attention to the above problems, the project owner proposes to introduce multi-party roles and a decentralized collaboration platform DAO to ensure the high value of the data on the chain through a reasonable economic model and incentive mechanism, and store the high-value data: knowledge graph on the blockchain through decentralized storage, so that the lack of value of the data on the chain and the monopoly of large miners’ computing power can be solved to a large extent.
Finally, what differences exist between the forked project and Filecoin itself?
On the basis of the above-mentioned issues, EpiK’s design is very different from Filecoin, first of all, EpiK is more focused in terms of business model, and it faces a different market and track from the cloud storage market where Filecoin is located because decentralized storage has no advantage over professional centralized cloud storage in terms of storage cost and user experience.
EpiK focuses on building a decentralized knowledge graph, which reduces data redundancy and safeguards the value of data in the distributed storage chain while preventing the knowledge graph from being tampered with by a few people, thus making the commercialization of the entire project reasonable and feasible.
From the perspective of ecological construction, EpiK treats miners more friendly and solves the pain point of Filecoin to a large extent, firstly, it changes the storage collateral and commitment collateral of Filecoin to one-time collateral.
Miners participating in EpiK Protocol are only required to pledge 1000 EPK per miner, and only once before mining, not in each sector.
What is the concept of 1000 EPKs, you only need to participate in pre-mining for about 50 days to get this portion of the tokens used for pledging. The EPK pre-mining campaign is currently underway, and it runs from early September to December, with a daily release of 50,000 ERC-20 standard EPKs, and the pre-mining nodes whose applications are approved will divide these tokens according to the mining ratio of the day, and these tokens can be exchanged 1:1 directly after they are launched on the main network. This move will continue to expand the number of miners eligible to participate in EPK mining.
Secondly, EpiK has a more lenient penalty mechanism, which is different from Filecoin’s official consensus, storage and contract penalties, because the protocol can only be uploaded by field experts, which is the “Expert to Person” mode. Every miner needs to be backed up, which means that if one or more miners are offline in the network, it will not have much impact on the network, and the miner who fails to upload the proof of time and space in time due to being offline will only be forfeited by the authorities for the effective computing power of this sector, not forfeiting the pledged coins.
If the miner can re-submit the proof of time and space within 28 days, he will regain the power.
Unlike Filecoin’s 32GB sectors, EpiK’s encapsulated sectors are smaller, only 8M each, which will solve Filecoin’s sector space wastage problem to a great extent, and all miners have the opportunity to complete the fast encapsulation, which is very friendly to miners with small computing power.
The data and quality constraints will also ensure that the effective computing power gap between large and small miners will not be closed.
Finally, unlike Filecoin’s P2P data uploading model, EpiK changes the data uploading and maintenance to E2P uploading, that is, field experts upload and ensure the quality and value of the data on the chain, and at the same time introduce the game relationship between data storage roles and data generation roles through a rational economic model to ensure the stability of the whole system and the continuous high-quality output of the data on the chain.
Deep Chain Finance:
Eric, on the eve of Filecoin’s mainline launch, issues such as Filecoin’s pre-collateral have aroused a lot of controversy among the miners. In your opinion, what kind of impact will Filecoin bring to itself and the whole distributed storage ecosystem after it launches? Do you think that the current confusing FIL prices are reasonable and what should be the normal price of FIL?
Eric:
Filecoin mainnet has launched and many potential problems have been exposed, such as the aforementioned high pre-security problem, the storage resource waste and computing power monopoly caused by unreasonable sector encapsulation, and the harsh penalty mechanism, etc. These problems are quite serious, and will greatly affect the development of Filecoin ecology.
These problems are relatively serious, and will greatly affect the development of Filecoin ecology, here are two examples to illustrate. For example, the problem of big miners computing power monopoly, now after the big miners have monopolized computing power, there will be a very delicate state — — the miners save a file data with ordinary users. There is no way to verify this matter in the chain, whether what he saved is uploaded by himself or someone else. And after the big miners have monopolized computing power, there will be a very delicate state — — the miners will save a file data with ordinary users, there is no way to verify this matter in the chain, whether what he saved is uploaded by himself or someone else. Because I can fake another identity to upload data for myself, but that leads to the fact that for any miner I go to choose which data to save. I have only one goal, and that is to brush my computing power and how fast I can brush my computing power.
There is no difference between saving other people’s data and saving my own data in the matter of computing power. When I save someone else’s data, I don’t know that data. Somewhere in the world, the bandwidth quality between me and him may not be good enough.
The best option is to store my own local data, which makes sense, and that results in no one being able to store data on the chain at all. They only store their own data, because it’s the most economical for them, and the network has essentially no storage utility, no one is providing storage for the masses of retail users.
The harsh penalty mechanism will also severely deplete the miner’s profits, because DDOS attacks are actually a very common attack technique for the attacker, and for a big miner, he can get a very high profit in a short period of time if he attacks other customers, and this thing is a profitable thing for all big miners.
Now as far as the status quo is concerned, the vast majority of miners are actually not very well maintained, so they are not very well protected against these low-DDOS attacks. So the penalty regime is grim for them.
The contradiction between the unreasonable system and the demand will inevitably lead to the evolution of the system in a more reasonable direction, so there will be many forked projects that are more reasonable in terms of mechanism, thus attracting Filecoin miners and a diversion of storage power.
Since each project is in the field of decentralized storage track, the demand for miners is similar or even compatible with each other, so miners will tend to fork the projects with better economic benefits and business scenarios, so as to filter out the projects with real value on the ground.
For the chaotic FIL price, because FIL is also a project that has gone through several years, carrying too many expectations, so it can only be said that the current situation has its own reasons for existence. As for the reasonable price of FIL there is no way to make a prediction because in the long run, it is necessary to consider the commercialization of the project to land and the value of the actual chain of data. In other words, we need to keep observing whether Filecoin will become a game of computing power or a real value carrier.
Deep Chain Finance:
Leo, we just mentioned that the pre-collateral issue of Filecoin caused the dissatisfaction of miners, and after Filecoin launches on the main website, the second round of space race test coins were directly turned into real coins, and the official selling of FIL hit the market phenomenon, so many miners said they were betrayed. What I want to know is, EpiK’s main motto is “save the miners eliminated by Filecoin”, how to deal with the various problems of Filecoin, and how will EpiK achieve “save”?
Leo:
Originally Filecoin’s tacit approval of the computing power makeup behavior was to declare that the official directly chose to abandon the small miners. And this test coin turned real coin also hurt the interests of the loyal big miners in one cut, we do not know why these low-level problems, we can only regret.
EpiK didn’t do it to fork Filecoin, but because EpiK to build a shared knowledge graph ecology, had to integrate decentralized storage in, so the most hardcore Filecoin’s PoRep and PoSt decentralized verification technology was chosen. In order to ensure the quality of knowledge graph data, EpiK only allows community-voted field experts to upload data, so EpiK naturally prevents miners from making up computing power, and there is no reason for the data that has no value to take up such an expensive decentralized storage resource.
With the inability to make up computing power, the difference between big miners and small miners is minimal when the amount of knowledge graph data is small.
We can’t say that we can save the big miners, but we are definitely the optimal choice for the small miners who are currently in the market to be eliminated by Filecoin.
Deep Chain Finance:
Let me ask Eric: According to EpiK protocol, EpiK adopts the E2P model, which allows only experts in the field who are voted to upload their data. This is very different from Filecoin’s P2P model, which allows individuals to upload data as they wish. In your opinion, what are the advantages of the E2P model? If only voted experts can upload data, does that mean that the EpiK protocol is not available to everyone?
Eric:
First, let me explain the advantages of the E2P model over the P2P model.
There are five roles in the DAO ecosystem: miner, coin holder, field expert, bounty hunter and gateway. These five roles allocate the EPKs generated every day when the main network is launched.
The miner owns 75% of the EPKs, the field expert owns 9% of the EPKs, and the voting user shares 1% of the EPKs.
The other 15% of the EPK will fluctuate based on the daily traffic to the network, and the 15% is partly a game between the miner and the field expert.
The first describes the relationship between the two roles.
The first group of field experts are selected by the Foundation, who cover different areas of knowledge (a wide range of knowledge here, including not only serious subjects, but also home, food, travel, etc.) This group of field experts can recommend the next group of field experts, and the recommended experts only need to get 100,000 EPK votes to become field experts.
The field expert’s role is to submit high-quality data to the miner, who is responsible for encapsulating this data into blocks.
Network activity is judged by the amount of EPKs pledged by the entire network for daily traffic (1 EPK = 10 MB/day), with a higher percentage indicating higher data demand, which requires the miner to increase bandwidth quality.
If the data demand decreases, this requires field experts to provide higher quality data. This is similar to a library with more visitors needing more seats, i.e., paying the miner to upgrade the bandwidth.
When there are fewer visitors, more money is needed to buy better quality books to attract visitors, i.e., money for bounty hunters and field experts to generate more quality knowledge graph data. The game between miners and field experts is the most important game in the ecosystem, unlike the game between the authorities and big miners in the Filecoin ecosystem.
The game relationship between data producers and data storers and a more rational economic model will inevitably lead to an E2P model that generates stored on-chain data of much higher quality than the P2P model, and the quality of bandwidth for data access will be better than the P2P model, resulting in greater business value and better landing scenarios.
I will then answer the question of whether this means that the EpiK protocol will not be universally accessible to all.
The E2P model only qualifies the quality of the data generated and stored, not the roles in the ecosystem; on the contrary, with the introduction of the DAO model, the variety of roles introduced in the EpiK ecosystem (which includes the roles of ordinary people) is not limited. (Bounty hunters who can be competent in their tasks) gives roles and possibilities for how everyone can participate in the system in a more logical way.
For example, a miner with computing power can provide storage, a person with a certain domain knowledge can apply to become an expert (this includes history, technology, travel, comics, food, etc.), and a person willing to mark and correct data can become a bounty hunter.
The presence of various efficient support tools from the project owner will lower the barriers to entry for various roles, thus allowing different people to do their part in the system and together contribute to the ongoing generation of a high-quality decentralized knowledge graph.
Deep Chain Finance:
Leo, some time ago, EpiK released a white paper and an economy whitepaper, explaining the EpiK concept from the perspective of technology and economy model respectively. What I would like to ask is, what are the shortcomings of the current distributed storage projects, and how will EpiK protocol be improved?
Leo:
Distributed storage can easily be misunderstood as those of Ali’s OceanDB, but in the field of blockchain, we should focus on decentralized storage first.
There is a big problem with the decentralized storage on the market now, which is “why not eat meat porridge”.
How to understand it? Decentralized storage is cheaper than centralized storage because of its technical principle, and if it is, the centralized storage is too rubbish for comparison.
What incentive does the average user have to spend more money on decentralized storage to store data?
Is it safer?
Existence miners can shut down at any time on decentralized storage by no means save a share of security in Ariadne and Amazon each.
More private?
There’s no difference between encrypted presence on decentralized storage and encrypted presence on Amazon.
Faster?
The 10,000 gigabytes of bandwidth in decentralized storage simply doesn’t compare to the fiber in a centralized server room. This is the root problem of the business model, no one is using it, no one is buying it, so what’s the big vision.
The goal of EpiK is to guide all community participants in the co-construction and sharing of field knowledge graph data, which is the best way for robots to understand human knowledge, and the more knowledge graph data there is, the more knowledge a robot has, the more intelligent it is exponentially, i.e., EpiK uses decentralized storage technology. The value of exponentially growing data is captured with linearly growing hardware costs, and that’s where the buy-in for EPK comes in.
Organized data is worth a lot more than organized hard drives, and there is a demand for EPK when robots have the need for intelligence.
Deep Chain Finance:
Let me ask Leo, how many forked projects does Filecoin have so far, roughly? Do you think there will be more or less waves of fork after the mainnet launches? Have the requirements of the miners at large changed when it comes to participation?
Leo:
We don’t have specific statistics, now that the main network launches, we feel that forking projects will increase, there are so many restricted miners in the market that they need to be organized efficiently.
However, we currently see that most forked projects are simply modifying the parameters of Filecoin’s economy model, which is undesirable, and this level of modification can’t change the status quo of miners making up computing power, and the change to the market is just to make some of the big miners feel more comfortable digging up, which won’t help to promote the decentralized storage ecology to land.
We need more reasonable landing scenarios so that idle mining resources can be turned into effective productivity, pitching a 100x coin instead of committing to one Fomo sentiment after another.
Deep Chain Finance:
How far along is the EpiK Protocol project, Eric? What other big moves are coming in the near future?
Eric:
The development of the EpiK Protocol is divided into 5 major phases.
(a) Phase I testing of the network “Obelisk”.
Phase II Main Network 1.0 “Rosetta”.
Phase III Main Network 2.0 “Hammurabi”.
(a) The Phase IV Enrichment Knowledge Mapping Toolkit.
The fifth stage is to enrich the knowledge graph application ecology.
Currently in the first phase of testing network “Obelisk”, anyone can sign up to participate in the test network pre-mining test to obtain ERC20 EPK tokens, after the mainnet exchange on a one-to-one basis.
We have recently launched ERC20 EPK on Uniswap, you can buy and sell it freely on Uniswap or download our EpiK mobile wallet.
In addition, we will soon launch the EpiK Bounty platform, and welcome all community members to do tasks together to build the EpiK community. At the same time, we are also pushing forward the centralized exchange for token listing.
Users’ Questions
User 1:
Some KOLs said, Filecoin consumed its value in the next few years, so it will plunge, what do you think?
Eric:
First of all, the judgment of the market is to correspond to the cycle, not optimistic about the FIL first judgment to do is not optimistic about the economic model of the project, or not optimistic about the distributed storage track.
First of all, we are very confident in the distributed storage track and will certainly face a process of growth and decline, so as to make a choice for a better project.
Since the existing group of miners and the computing power already produced is fixed, and since EpiK miners and FIL miners are compatible, anytime miners will also make a choice for more promising and economically viable projects.
Filecoin consumes the value of the next few years this time, so it will plunge.
Regarding the market issues, the plunge is not a prediction, in the industry or to keep learning iteration and value judgment. Because up and down market sentiment is one aspect, there will be more very important factors. For example, the big washout in March this year, so it can only be said that it will slow down the development of the FIL community. But prices are indeed unpredictable.
User2:
Actually, in the end, if there are no applications and no one really uploads data, the market value will drop, so what are the landing applications of EpiK?
Leo: The best and most direct application of EpiK’s knowledge graph is the question and answer system, which can be an intelligent legal advisor, an intelligent medical advisor, an intelligent chef, an intelligent tour guide, an intelligent game strategy, and so on.
submitted by EpiK-Protocol to u/EpiK-Protocol [link] [comments]

Testing the Tide | Monthly FIRE Portfolio Update - June 2020

We would rather be ruined than changed.
-W H Auden, The Age of Anxiety
This is my forty-third portfolio update. I complete this update monthly to check my progress against my goal.
Portfolio goal
My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars).
This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent.
Portfolio summary
Vanguard Lifestrategy High Growth Fund – $726 306
Vanguard Lifestrategy Growth Fund – $42 118
Vanguard Lifestrategy Balanced Fund – $78 730
Vanguard Diversified Bonds Fund – $111 691
Vanguard Australian Shares ETF (VAS) – $201 745
Vanguard International Shares ETF (VGS) – $39 357
Betashares Australia 200 ETF (A200) – $231 269
Telstra shares (TLS) – $1 668
Insurance Australia Group shares (IAG) – $7 310
NIB Holdings shares (NHF) – $5 532
Gold ETF (GOLD.ASX) – $117 757
Secured physical gold – $18 913
Ratesetter (P2P lending) – $10 479
Bitcoin – $148 990
Raiz app (Aggressive portfolio) – $16 841
Spaceship Voyager app (Index portfolio) – $2 553
BrickX (P2P rental real estate) – $4 484
Total portfolio value: $1 765 743 (+$8 485 or 0.5%)
Asset allocation
Australian shares – 42.2% (2.8% under)
Global shares – 22.0%
Emerging markets shares – 2.3%
International small companies – 3.0%
Total international shares – 27.3% (2.7% under)
Total shares – 69.5% (5.5% under)
Total property securities – 0.3% (0.3% over)
Australian bonds – 4.7%
International bonds – 9.4%
Total bonds – 14.0% (1.0% under)
Gold – 7.7%
Bitcoin – 8.4%
Gold and alternatives – 16.2% (6.2% over)
Presented visually, below is a high-level view of the current asset allocation of the portfolio.
[Chart]
Comments
The overall portfolio increased slightly over the month. This has continued to move the portfolio beyond the lows seen in late March.
The modest portfolio growth of $8 000, or 0.5 per cent, maintains its value at around that achieved at the beginning of the year.
[Chart]
The limited growth this month largely reflects an increase in the value of my current equity holdings, in VAS and A200 and the Vanguard retail funds. This has outweighed a small decline in the value of Bitcoin and global shares. The value of the bond holdings also increased modestly, pushing them to their highest value since around early 2017.
[Chart]
There still appears to be an air of unreality around recent asset price increases and the broader economic context. Britain's Bank of England has on some indicators shown that the aftermath of the pandemic and lockdown represent the most challenging financial crisis in around 300 years. What is clear is that investor perceptions and fear around the coronavirus pandemic are a substantial ongoing force driving volatility in equity markets (pdf).
A somewhat optimistic view is provided here that the recovery could look more like the recovery from a natural disaster, rather than a traditional recession. Yet there are few certainties on offer. Negative oil prices, and effective offers by US equity investors to bail out Hertz creditors at no cost appear to be signs of a financial system under significant strains.
As this Reserve Bank article highlights, while some Australian households are well-placed to weather the storm ahead, the timing and severity of what lays ahead is an important unknown that will itself feed into changes in household wealth from here.
Investments this month have been exclusively in the Australian shares exchange-traded fund (VAS) using Selfwealth.* This has been to bring my actual asset allocation more closely in line with the target split between Australian and global shares.
A moving azimuth: falling spending continues
Monthly expenses on the credit card have continued their downward trajectory across the past month.
[Chart]
The rolling average of monthly credit card spending is now at its lowest point over the period of the journey. This is despite the end of lockdown, and a slow resumption of some more normal aspects of spending.
This has continued the brief period since April of the achievement of a notional and contingent kind of financial independence.
The below chart illustrates this temporary state, setting out the degree to which portfolio distributions cover estimated total expenses, measured month to month.
[Chart]
There are two sources of volatility underlying its movement. The first is the level of expenses, which can vary, and the second is the fact that it is based on financial year distributions, which are themselves volatile.
Importantly, the distributions over the last twelve months of this chart is only an estimate - and hence the next few weeks will affect the precision of this analysis across its last 12 observations.
Estimating 2019-20 financial year portfolio distributions
Since the beginning of the journey, this time of year usually has sense of waiting for events to unfold - in particular, finding out the level of half-year distributions to June.
These represent the bulk of distributions, usually averaging 60-65 per cent of total distributions received. They are an important and tangible signpost of progress on the financial independence journey.
This is no simple task, as distributions have varied in size considerably.
A part of this variation has been the important role of sometimes large and lumpy capital distributions - which have made up between 30 to 48 per cent of total distributions in recent years, and an average of around 15 per cent across the last two decades.
I have experimented with many different approaches, most of which have relied on averaging over multi-year periods to even out the 'peaks and troughs' of how market movements may have affected distributions. The main approaches have been:
Each of these have their particular simplifications, advantages and drawbacks.
Developing new navigation tools
Over the past month I have also developed more fully an alternate 'model' for estimating returns.
This simply derives a median value across a set of historical 'cents per unit' distribution data for June and December payouts for the Vanguard funds and exchange traded funds. These make up over 96 per cent of income producing portfolio assets.
In other words, this model essentially assumes that each Vanguard fund and ETF owned pays out the 'average' level of distributions this half-year, with the average being based on distribution records that typically go back between 5 to 10 years.
Mapping the distribution estimates
The chart below sets out the estimate produced by each approach for the June distributions that are to come.
[Chart]
Some observations on these findings can be made.
The lowest estimate is the 'adjusted GFC income' observation, which essentially assumes that the income for this period is as low as experienced by the equity and bond portfolio during the Global Financial Crisis. Just due to timing differences of the period observed, this seems to be a 'worst case' lower bound estimate, which I do not currently place significant weight on.
Similarly, at the highest end, the 'average distribution rate' approach simply assumes June distributions deliver a distribution equal to the median that the entire portfolio has delivered since 1999. With higher interest rates, and larger fixed income holdings across much of that time, this seems an objectively unlikely outcome.
Similarly, the delivery of exactly the income suggested by long-term averages measured across decades and even centuries would be a matter of chance, rather than the basis for rational expectations.
Central estimates of the line of position
This leaves the estimates towards the centre of the chart - estimates of between around $28 000 to $43 000 as representing the more likely range.
I attach less weight to the historical three-year average due to the high contribution of distributed capital gains over that period of growth, where at least across equities some capital losses are likely to be in greater presence.
My preferred central estimate is the model estimate (green) , as it is based in historical data directly from the investment vehicles rather than my own evolving portfolio. The data it is based on in some cases goes back to the Global Financial Crisis. This estimate is also quite close to the raw average of all the alternative approaches (red). It sits a little above the 'adjusted income' measure.
None of these estimates, it should be noted, contain any explicit adjustment for the earnings and dividend reductions or delays arising from COVID-19. They may, therefore represent a modest over-estimate for likely June distributions, to the extent that these effects are more negative than those experienced on average across the period of the underlying data.
These are difficult to estimate, but dividend reductions could easily be in the order of 20-30 per cent, plausibly lowering distributions to the $23 000 to $27 000 range. The recently announced forecast dividend for the Vanguard Australian Shares ETF (VAS) is, for example, the lowest in four years.
As seen from chart above, there is a wide band of estimates, which grow wider still should capital gains be unexpectedly distributed from the Vanguard retail funds. These have represented a source of considerable volatility. Given this, it may seem fruitless to seek to estimate these forthcoming distributions, compared to just waiting for them to arrive.
Yet this exercise helps by setting out reasoning and positions, before hindsight bias urgently arrives to inform me that I knew the right answer all along. It also potentially helps clearly 'reject' some models over time, if the predictions they make prove to be systematically incorrect.
Progress
Progress against the objective, and the additional measures I have reached is set out below.
Measure Portfolio All Assets
Portfolio objective – $2 180 000 (or $87 000 pa) 81.0% 109.4%
Credit card purchases – $71 000 pa 98.8% 133.5%
Total expenses – $89 000 pa 79.2% 106.9%
Summary
The current coronavirus conditions are affecting all aspects of the journey to financial independence - changing spending habits, leading to volatility in equity markets and sequencing risks, and perhaps dramatically altering the expected pattern of portfolio distributions.
Although history can provide some guidance, there is simply no definitive way to know whether any or all of these changes will be fundamental and permanent alterations, or simply data points on a post-natural disaster path to a different post-pandemic set of conditions. There is the temptation to fit past crises imperfectly into the modern picture, as this Of Dollars and Data post illustrates well.
Taking a longer 100 year view, this piece 'The Allegory of the Hawk and Serpent' is a reminder that our entire set of received truths about constructing a portfolio to survive for the long-term can be a product of a sample size of one - actual past history - and subject to recency bias.
This month has felt like one of quiet routines, muted events compared to the past few months, and waiting to understand more fully the shape of the new. Nonetheless, with each new investment, or week of lower expenditure than implied in my FI target, the nature of the journey is incrementally changing - beneath the surface.
Small milestones are being passed - such as over 40 per cent of my equity holdings being outside of the the Vanguard retail funds. Or these these retail funds - which once formed over 95 per cent of the portfolio - now making up less than half.
With a significant part of the financial independence journey being about repeated small actions producing outsized results with time, the issue of maintaining good routines while exploring beneficial changes is real.
Adding to the complexity is that embarking on the financial journey itself is likely to change who one is. This idea, of the difficulty or impossibility of knowing the preferences of a future self, is explored in a fascinating way in this Econtalk podcast episode with a philosophical thought experiment about vampires. It poses the question: perhaps we can never know ourselves at the destination? And yet, who would rationally choose ruin over any change?
The post, links and full charts can be seen here.
submitted by thefiexpl to fiaustralia [link] [comments]

An Indian Expat in a Caucasian Country

Indian. The identity conjures multiple images: an astronaut taking international space station trips for Nasa; a computer programmer heading the world’s biggest technology company; a doctor discovering the cure for life-threatening viruses; a construction site worker helping to develop the tallest building in an oil-rich nation; or a musician earning accolades for his supreme work around the globe.
A stereotyped rapist, a lapsed youth, an unmannered snob, an ugly ramification of patriarchy, an insecure face with no self-respect and utmost jealousy. A misguided person who lives by the law of disloyalty. Then there is the image of an individual being denied entry into a club after someone of his color and race misbehaved with a woman the other night.
Some embarrassing moments later, I’m thrown out like garbage despite holding the entry passes for the club. I seek explanation but am given a diplomatic answer: “there is no space for more people in the club.” I see the other people walk by into the same property a few moments later, all fatter than me. I wonder what I possibly did to be not fit into a space that could easily fit a Tyrannosaurus Rex.
I come back to an empty apartment (cleaner than it should be), takes out the last bit of that offbeat wine I had secured for a “special day.” Nothing stops me to dwell into solitude as I go out to my balcony, staring at the full moon, and play a song the language of which I don’t understand.
I am an Indian.
I could say I fit into any of the images: I could be opening doors for women and speaking with them respectfully whenever I am being spoken to. I could also be a loud snob who believes every “white girl” is willing to sleep with a stranger-me, specifically when I mistreat her in every possible way a woman must not want.
I attempt to understand the situation while sipping the last bit of that foreign wine, staring at a full moon, and crying dry tears off my widely opened eyes. I must have done something wrong – perhaps, by wearing an identity that matches depraved and civil all at the same time.
I am extremely controlled between my legs and ears. I’m often told by my friends and colleagues that I am well-behaved, and even the slight tan on my skin makes me look like the Lawrence of Arabia. I am polite under the right kind of situation, and my manners slip away slightly when I speak passionately about filmmaking, dinosaurs, and bitcoin. I live in a country in which a senior woman calls me her son, a younger male looks at me for mentorship, an adolescent girl who lets me near her without feeling threatened, and a friend – of the opposite sex, again – who gives me the best hugs of my life.
I am an Indian.
But I am trouble bomb, anyway – at least to the person who denies me the fundamental right to Heineken. I realize he is worried about what I might do rather than giving me a pass. Somebody tells me that the gatekeeper fears women will not enter the club upon noticing “people like me.” Those women must have a reason, I think. And despite the fact it doesn’t concern me, it certainly does.
I start believing that I live in a world of stereotypes: a system which remembers a person for the wrongs that have been done by his lookalikes. This world takes comfort in categorizing individuals like me into a phenomenon, without the slightest idea about my parameters as an individual. I have become a predictable threat because of these definitions of me.
I encounter these difficulties when I’m asked about the behavior of the people that incidentally holds the same identity as me. People wonder why they misbehave with the women of the country which invited them as guests. They question why they disturb a crowd of moviegoers by being loud during showtime. And why the heck they steal onions from pubs? I mean, seriously?
The difficulty does not end there. A caucasian sex worker approaches me as if I am standing in a dark room with a radium tattoo on my face saying ‘HIT ME.’ I tell her politely about my disinterest in such arrangements. She asks me not to feel shy and reminds me that people of my race and nationality do the same.
“But I don’t,” I respectfully respond to her.
“Why,” she asks.
“I just don’t,” I tell her, “I’m not that kind of a person.”
She gives me a strange look as if I just told her about her recently-developed hernia. Then, the next sex worker approaches me the other day. And it keeps going during those peaceful walks.
I imagine situations such as these would eventually drive me away from exploring a quiet life outside the home. It will also keep my intellectual levels undernourished, my motivations down, and my ability to assist my hosts in growing their economy flat.
I have friends and family to remember this new home by, these individuals who accept me for the civility I wear on my soul. But sometimes, even for a girl-friend who is taking a platonic walk with me, she is already a sex worker to her people. Why? Because she is walking with me.
To those who are my lookalikes in this new land, I am incredibly disappointed if you misrepresent your identity. It’s not about a man denying me entry into the club; the situation is far worse than you think. You have time to mend your behavior, and for a change, contribute socially and financially to grow the country that has been your host for years.
Otherwise, either we all are good Indians or we all are the worst. We could be innovators, social workers, businessmen, students, or just travelers aware of what we represent. We are a walking identity of at least 80% of those 1.25 billion people, who do not deserve shame and disrespect.
I am an Indian, and I want to be proud of it. If you think the same, join me. If you don’t, then may the law take care of you.
submitted by bitlitguy to racism [link] [comments]

Warning: Blockchain difficulty adjustment affecting price movements

Below are notable difficulty adjustments when hash rate fell and block times become slower for Bitcoin.
  1. 26 Mar 2020 [difficulty adjustment -15.95%, avg block time 11min 54secs]. On the 28th price crashed from $6674 to $6138 ( -8%).
  2. 8 Nov 2019 [difficulty adjustment -7.1%, avg block time 10min 46secs]. On the same day price crashed from $9234 to $8783 ( -4.88%).
  3. The next big adjustment was around Nov to Dec 2018 and there were 3 big adjustments with high block times.

Current situation:
We are 1 day 10 hours from the next difficulty adjustment. Projected difficulty adjustment is -5.61% (https://fork.lol/pow/retarget), which could indicate a small dip. However, take note that the date of last adjustment was the 5th and the 3rd halving was on the 11th, between the 5th to the 11th there was increased hashrate from miners trying to mine the final week of 12.5btc that offset the really slow block times after the halving. Therefore it will be the next difficulty adjustment after the one on the 20th that will completely reflect the slower block times after the halving. Currently the median block time taken on the 17th was around 14min (-28.5% difficulty adjustment).
For people who do not understand blockchain, basically with the Bitcoin 3rd halving, mining profitability fell for a lot of miners and they probably turned off their miners therefore the blockchain mining time became considerably slower which is reflected with slow transaction speed and higher fees as seen currently. Bitcoin sellers moving their BTC from wallet to an exchange are faced with slow transaction speed and therefore the sell pressure of BTC fell considerably which will attribute to the current price increase. There is a correlation between sell pressure and blockchain congestion (the size of the correlation is undetermined).
There is going to be a race. A race between BTC price hiking high enough to attract more miners to reduce avg block times versus the closing window of roughly 2 weeks before the next difficulty adjustment. If the price does not jump high enough, the next difficulty adjustment in the first week of June could signal a huge dip.
I am not an expert. I just did some research on the above and wanted to share with fellow Bitcoin compatriots so that we can tread with caution and not lose our shirts. I do not plan to short BTC but I will exit my BTC positions if I expect double digit negative difficulty adjustment in early June.
Please visit the original post here https://www.reddit.com/Bitcoin/comments/gm23pe/warning_blockchain_difficulty_adjustment/
There are pictures in the original post as well as 2nd halving evidence with pics. I could not post pics here. If possible please upvote the original post, a lot of people downvote it. Not sure why people downvote it, maybe veterans attempting to hide information from newcomers to fleece them of their shirt.

Update 1:>! As of writing, I have opened a small short position on Bitcoin. Stop loss around 10k, estimated take profit around 8500. The reason is because the difficulty adjustment in the next 20 hours, even though is just -5% roughly is still significant. I direct you to look into all the difficulty adjustments in the last 2 years and you will know how rare it is. The ones I caught were all listed at the very top of the post. Since it is my first time shorting BTC, I take this as a learning opportunity so that I will have some experience to face the bigger difficulty adjustment in the first week of June. Analysis into execution, even in failure I am happy.!<
Update 2: The difficulty adjustment (DA) happened roughly 6 hours ago and the sell pressure from -6% DA did not seem to be affecting the market much. However, please take a look now at the estimation for the next DA.
On https://bitcoin.clarkmoody.com/dashboard/ it is estimated to be -25%.
On https://fork.lol/pow/retarget estimated to be -18%.
On https://www.blockchain.com/charts/median-confirmation-time the median block time for the last day was 16.8min.
My original proposition that the true DA of the halving can only be realized in the next DA stands and that it will be considerable. The increased sell pressure from that DA will be highly significant. That is why there is a race by current miners to get the BTC price up high enough to attract more miners to not have the DA drop too much.
Update 3: Current BTC price at $9100 ( ~39 hours after DA). Then again BTC could have dropped from all sorts of reason. However the coincidence with the DA and with all the past DA is just too high to simply shrug off as irrelevant. Anyways past result cannot predict future ones, stay safe with the trading. Will no longer check on this post.
References:
Difficulty adjustment dates taken from https://btc.com/stats/diff
Bitcoin graph history for price movement taken from coinmarketcap.
Median confirmation time (block time) taken from https://www.blockchain.com/charts/median-confirmation-time

Credits to people who assisted the analysis:
kairepaire for pointing out faster block times between 5th-11th.
babies_eater for https://fork.lol/pow/retarget
moes_tavern_wifi for https://bitcoin.clarkmoody.com/dashboard/
Pantamis for https://diff.cryptothis.com/
submitted by theforwardbrain to BitcoinMarkets [link] [comments]

The deepest report: Bitmain's self-help history

The deepest report: Bitmain's self-help history
The original intention of this article is to let readers understand the causes and consequences of Bitmain internal fighting, but after writing it, I found that it is not so much internal fighting as it is a long history of self-help.
The story is very long. Let's adjust the timeline to the eve of December 17, 2018. That was one of Bitmain's most critical moments and the beginning of a series of subsequent stories.
1. Self-immolation In September 2018, Bitmain's financial department warned management that the company's cash flow has become very tight and operating costs must be reduced to allow the company to continue. The blockchain unicorn, which is valued at more than 15 billion U.S. dollars, is crippled in the run and struggling to break the corner.
In 2017, Bitmain made a profit of 1 billion US dollars In the first half of 2018, Bitmain made a profit of 1 billion US dollars Three rounds of financing, a total of 800 million US dollars Net assets should exceed 3 billion U.S. dollars In September 2018, Bitmain had tight cash flow and was on the verge of bankruptcy
A simple comparison, it is not difficult to see that Bitmain's ability to make money is incredible, and its ability to burn money is even more extreme.
How does Bitmain burn money? Do you pour cash into gasoline and burn it, or hire a lot of employees to stuff the banknotes one by one into the shredder? The actual situation is closer to the latter.
The following data can help readers quickly learn Bitmain's money burning skills.
At the beginning of 2018, the entire cryptocurrency market has entered a bear market, but Bitmain's monthly operating costs have been rising wildly. Operating costs have risen from 10 million US dollars at the beginning of the year to 50 million US dollars at the end of the year.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
Operating costs are just the tip of the iceberg. Excessive chip trial production can become a classic case of project management courses. Readers who pay attention to Cryptocurrency mining can easily find that Bitmain is still working hard to clear the inventory of Antminer S9 in 2019. As the co-CEO, Ketuan Zhan did not listen to the advice or even warnings of the Finance Department, insisting on the implementation of Excessive chip trial production, resulting in a large accumulation of inventory and tight capital turnover. Another CEO, Jihan Wu, once revealed that the loss of Excessive chip trial production to the company was approximately US$1.5 billion.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
The BM1393 chip incident is even more incredible. Chip expert Ketuan Zhan invested a lot of money on a failed chip, and finally failed again. From 2017 to 2018, Bitmain has failed Trial production of mining machine chips at least 4 times, including 16nm, 12nm and 10nm chips, of which 16nm Trial production failed twice, thus losing at least US$1.2 billion.
It is rumored that Bitmain still holds a billion U.S. dollars worth of cryptocurrency in a state of floating loss. In view of the rebound in the market in 2020, we will not comment temporarily, waiting for the correct answer from the cryptocurrency market. But the losses pointed out in the previous article are all irreversible.
2. Sole power
In September 2018, Bitmain's management realized the seriousness of the problem. It turned out that the company's money could be squandered. As a result, the management began to discuss self-help plans, and the most reasonable and effective way was obviously to lay off employees.
The probation period for newly hired employees at Bitmain is half a year, and the probationary salary is 100% of the official salary, there is no difference. Once layoffs are made, new employees who have not passed the probationary period will be the main layoff targets. The department managed by Ketuan Zhan will face large-scale layoffs. The layoff plan is strongly opposed by Ketuan Zhan. Bitmain can only temporarily abandon the layoffs and replace it with continuous reductions. For marketing and travel expenses, a budget committee was established to strictly approve every expenditure. At the same time, employee benefits, such as reimbursement of taxi expenses, breakfast supply, snacks and drinks, etc., have also been abolished, and even the tradition of giving employees 400 yuan worth of BTC/BCH every month has been stopped.
In the face of huge cash flow pressure, trivial savings is obviously of no avail. Soon, the management again discussed the layoff plan, and it has reached the point where it has to be laid off.
In December 2018, Jihan Wu began to organize all entrepreneurial veterans and business backbones to persuade Ketuan Zhan to agree to layoffs, but Ketuan Zhan still insisted not to layoffs. The persuasion process was very unsuccessful. After many meetings and intense debates, Bitmain executives were caught in a dilemma of wasting time with Ketuan Zhan.
In this process, the shortcomings of the dual CEO system began to appear, and the relationship between the two CEOs gradually deteriorated.
On the night of December 16th, Ketuan Zhan reconvened the management meeting, and more than 30 managements who were present were asked to hand over their mobile phones. At this time, Jihan Wu was on a business trip in Hong Kong and was busy with listing related work.
In the meeting, Ketuan Zhan's core content was three items:
(1) Bitmain cannot have two CEOs, only one CEO and must be Ketuan Zhan. Ketuan Zhan said that he met an old leader during a business trip. He hadn't seen each other for many years. The old leader suggested that the company can only have one CEO, and it must be him. Ketuan Zhan feels that this is a kind of fate, an opportunity given by God.
(2) Ketuan Zhan believes that the company's cash flow problems, the biggest responsibility is the inability of the financial department. To prove his point, Ketuan Zhan announced Bitmain's financial data at the meeting. In the evening, employees in Taiwan began to post messages on social media, saying that the company's capital chain was broken and the top management was split.
(3) If Ketuan Zhan is not supported, the option will be cancelled and the equity will be voided.
Hearing about this, Jihan Wu, who lives in Hong Kong, sent a WeChat message to the management who are attending the meeting.

https://preview.redd.it/zkj2d44tqid51.jpg?width=1080&format=pjpg&auto=webp&s=9251c1f7308e155d7911d5969e71091a5ad5e14a
On the afternoon of December 17, 2018, Jihan Wu returned to Beijing to negotiate with Ketuan Zhan all night, and finally reached a consensus in the early morning. Bitmain co-founder Yuesheng Ge announced the results of the negotiations. Jihan Wu and Ketuan Zhan ceased to serve as CEOs, and Haichao Wang served as CEO. Jihan Wu voluntarily backed down and Ketuan Zhan served as chairman.
The "12.17 Incident" had a very bad impact on Bitmain, especially the disclosure of Bitmain's financial status, which caused vendors to start dunning. The loan that had just been negotiated with the Bank of Beijing was cancelled the next day. Jihan Wu's resignation as CEO caused an uproar in the industry, and it became a hot topic among Cryptocurrency mining, blockchain practitioners, and investor communities. The media focused their interpretation on Bitmain's series of incidents, and generally looked down upon its ongoing Hong Kong IPO, believing that the high-level changes had already signaled the failure of the IPO in advance.
On Christmas December 24, 2018, Bitmain finally began to implement the layoff plan. This long-delayed “correct decision” was achieved after a stalemate for nearly three months. The AI ​​teams in Beijing, Singapore, Taiwan, and Shanghai have laid off more than 50% of their employees. The Israeli R&D center was closed and Shenzhen New Species Technology Co., Ltd., which had been acquired for only ten months, was dissolved, and all employees were laid off. Copernicus, Bitmain's top blockchain development team, was not spared and was wiped out in this layoff. Copernicus and some of the laid-off employees joined the new company Matrixport co-founded by Jihan Wu and Yuesheng Ge, headquartered in Singapore.
3. Past events when starting a business
After the "12.17 Incident", Jihan Wu gradually faded out of Bitmain's management affairs and turned his attention to the IPO and new company. And this is one of Jihan Wu's major mistakes, he began to let Ketuan Zhan manage Bitmain alone.
In fact, as early as 2013, Jihan Wu planted hidden dangers.
Jihan Wu, an investment banker, was the earliest translator of the Bitcoin white paper. He began to get involved in the cryptocurrency mining industry in 2012. The disappearance of Kaomao and Nangua Zhang's ticket skipping led Jihan Wu to decide to develop his own chip.
In 2013, Jihan Wu established his own mining machine company. Together with Yuesheng Ge, who was only 20 years old, he found Ketuan Zhan, an integrated circuit designer of the Chinese Academy of Sciences, to create the protagonist of this article, and later the digital Cryptocurrency mining giant, Bitmain.
Jihan Wu promised Ketuan Zhan that every time a mining machine chip was successfully developed, he would give some shares to the Ketuan Zhan team. At that time, the company founded by Ketuan Zhan was on the eve of falling apart. In order to regroup the team, Ketuan Zhan promised to share half of his shares with the team members. Unfortunately, this is just a bad check. With the rapid development of Bitmain and higher and higher valuations, the expanding Ketuan Zhan almost monopolized all the shares.
Like many startups, Bitmain encountered many difficulties in its early days, and many jobs had to be done by the boss. For example, in the chip design and production process in the second half of 2013, Bitmain was caught in a dilemma of insufficient funds. Jihan Wu personally raised funds and met with TSMC’s sales to persuade TSMC to accept the production needs of a start-up company. Jihan Wu also participated in the selection of the thermodynamic parameters of the heat sink in the Antminer S1.
In 2014, Jihan Wu discovered that this company was independently operated by Ketuan Zhan, which had huge problems. Forcing Jihan Wu to continue to participate in company management.
At that time, Bitmain's mining machine chips had just achieved a certain lead in the standard design process. Jihan Wu believes that the next step must be to develop full customization technology, but Ketuan Zhan plans to invest resources in the research of mobile payment chips.
Ketuan Zhan met a mysterious person from the Party Central Security Bureau who claimed to be able to manipulate the Party Central Committee’s decision-making process for the next generation of mobile payment cryptography standards, but this direction is likely to lead to the fact that Bitmain has just gained the lead in the mining machine market. Regained.
Jihan Wu said that as a graduate of the School of Economics, with a little memory of his high school stage and the knowledge reserve of a computer technology amateur, he retrieves various materials and papers every day, learns theories related to full customization, and goes to Ketuan Zhan conducts persuasion work there.
Fortunately, in the direction of full customization technology, Ketuan Zhan finally listened to Jihan Wu's opinion. Bitmain quickly integrated the technical experts from the United States and Russia introduced by Jihan Wu, which greatly improved the design level of chips and complete machines.
In 2015, Jihan Wu suggested that Ketuan Zhan consider the direction of artificial intelligence. But Ketuan Zhan is not here, he prefers the CPU direction. After staying asleep at night, coupled with in-depth analysis by the Bitmain investment team, Ketuan Zhan finally agreed with this direction. It is a pity that after the Tianshi Chen brothers made major breakthroughs in theory and practice, Bitmain officially invested in the relevant direction, and it was still a step behind.
In the two years from 2016 to 2017, Bitmain's business performance has achieved rapid development, becoming a unique super unicorn in the blockchain industry. According to Froth & Sullivan, in 2017, Bitmain Technology Holdings was the second largest fabless chip design company in China and the tenth largest fabless chip design company in the world, and the fourth largest fabless ASIC chip design company in the world, accounting for 74.5% of global cryptocurrency market share.
However, the huge crisis has long been buried in the early days of entrepreneurship.
Ketuan Zhan's decision on major directions revealed his weakness of extremely lack of business understanding. But every mistake he made was blocked by the company's core employees. His overconfidence in his management ability led to the gradual intensification of conflicts, and the management differences between the two founders became more serious.
4.The giant gets lost
The contradiction between the two broke out on December 17, 2018. Ketuan Zhan used extreme means to force the management to compromise with him by canceling the option, so as to achieve the goal of sole control of the company. Jihan Wu returned to Beijing from Hong Kong overnight and negotiated with Ketuan Zhan all night. In the end, the two resigned as CEO. Jihan Wu retired. Ketuan Zhan has the exclusive rights of chairman in exchange for the implementation of the layoff plan.
Jihan Wu's voluntary retreat has intensified Ketuan Zhan's management to do whatever he wants.
A Bitmain employee commented on Ketuan Zhan's management skills, summed up in two letters-SM.
After becoming the sole helm of the company, Ketuan Zhan quickly "rectified" the department in charge of Jihan Wu as the chairman of the board. He guided the sales of mining machines at the dinner, and pointed out that the sales performance is not due to the sales staff. Ability is strong, but the company provides opportunities. Take two sales leaders as examples, saying that if the company hadn't given the opportunity, they would still be losers. In addition, Ketuan Zhan also instructed the sales staff on how to toast and imparted the wine table culture and experience.
After the meal, Ketuan Zhan came to the conclusion that the quality of Bitmain sales staff was too poor, and Huawei’s blood needs to be injected to drive the company’s progress. Soon, the marketing and sales director from Huawei officially took over Bitmain, opening the era of brand premium for Antminer.
In order to further understand and guide the sales work, Ketuan Zhan asked to meet the customers with the sales staff. During the negotiation process, Ketuan Zhan had a heated discussion with customers on the issue of Chinese and Western medicine, and had also forced the sales staff to be able to ship 10,000 machines due to insufficient production capacity.
Although the requirements for sales personnel are strict, Ketuan Zhan has provided a lot of convenience for "Mainland Ark". In addition to selling mining machines at a more favorable price, Bitmain's mining machines are also hosted in Ming Wang at a higher price than the market price. Mine. It is reported that both Ketuan Zhan and Ming Wang are shareholders of Ark.
The new sales strategy of Huawei's executives has also brought very obvious changes to Bitmain. The self-righteous brand premium reduces the price-performance ratio of Antminer, causing competing products to eat away at Bitmain's market share. Later, Bitmain found that the strategy was wrong and started to cut prices, and found that the mining machine market was saturated and the purchase demand of miners had decreased.
More dangerous than the sales strategy is that the technical advantages of Antminer are being chased by competing products, and even overtaken. At the same time, the two mining pools under Bitmain also lost their first and second positions. The AI ​​business, which Jihan Wu placed high hopes and Ketuan Zhan personally supervised, became a laughing stock in the industry. Not only did it fail to make a profit, it almost brought down Bitmain.
Blindly introducing senior executives from Huawei to occupy important positions completely destroys the company's internal cultural foundation. The bureaucracy within Bitmain began to corrode from high-level employees to ordinary employees. Ketuan Zhan is not aware of this. He is still keen on recruiting Huawei employees, imitating Huawei's organizational structure and strategy, letting HR do sales and R&D personnel to do HR.
The organizational structure adjustment in October 2019 was the fuse for Ketuan Zhan to completely anger Bitmain management. This time, Ketuan Zhan completely marginalized Bitmain’s veteran employees, and suddenly promoted some of the “airborne soldiers” who had just joined the company to the position of person in charge, which caused the former person in charge to report to the new employees. The two managers who were originally equal The hierarchy becomes the subordinate relationship, the operation and development of different business lines are merged into a large department, the upward reporting process becomes more cumbersome, and the relationship between employees becomes delicate.
5. Headwind
On October 29, 2019, Jihan Wu urgently held a staff meeting. Prior to this, the legal representative of Beijing Bitmain has been changed to Jihan Wu, including the parent companies Hong Kong Bitmain and Cayman Bitmain. Jihan Wu stood in the lobby of Building 25, B1, announcing that Ketuan Zhan has been relieved of all duties. Any employee in the Bitmain Group shall no longer execute Ketuan Zhan’s instructions and participate in any meetings convened by Ketuan Zhan. If there is any violation, the company will demotion and expel the company based on the severity of the circumstances. If losses are caused to the company, the company will be held accountable.
Jihan Wu's speech is very long, which can be summarized as follows:
(1) Ketuan Zhan has been relieved of all duties. Also expelled from the original Huawei company HR Zhi Wang introduced by Ketuan Zhan at the end of 2018. Zhi Wang’s reputation on Bitmain was extremely poor and was ridiculed by employees as "nine thousand years" (In ancient China, the emperor was called "ten thousand years old", and the prince was "eight thousand years old." However, in the Ming Dynasty, there was an eunuch who caused harm to the country and the people. He called himself "nine thousand years old", meaning that he was only A little lower than the emperor's level).
(2) Ketuan Zhan's ability to control the company's option incentive plan has disappeared, and it is no longer possible to cancel employees' options at will.
(3) The organizational structure adjustment plan led by Ketuan Zhan was suspended.
(4) We are optimistic about the future of AI business, but the premise is that the main business can continue to make profits in order to support the company's continued investment in AI business.
In the speech, Jihan Wu also told employees the whole story of the "12.17 Incident" and bluntly said that the company is not in good condition. If no measures are taken, Bitmain is likely to go bankrupt in three quarters and he must come back to save the company.
At this time, Ketuan Zhan, who was on a business trip in Shenzhen, finally experienced the situation of Jihan Wu in the "12.17 Incident".
After the official return, Jihan Wu began to clearly point out the company's various problems in operation and management, and went deep into each business line to understand the situation. In the mining machine sales department meeting, employees spoke enthusiastically, reflecting on the difficulties and opinions encountered in the work, the marketing and sales director from Huawei asked with a surprised look, "Why didn't these issues be reported to me before?", and soon , The director was interviewed and "voluntarily resigned."
On November 2, 2019, Jihan Wu announced a salary increase for all employees. Bitmain’s last salary increase dates back to 2018. In principle, Bitmain has two salary increases every year.
On November 7, 2019, Ketuan Zhan spoke on social media for the first time, describing his hardship in starting a business, and condemning Jihan Wu for “stabbing a knife in the back”. At the end of the article, he also set himself a KPI for 2020, that is, the mining machine market share will reach 90%, and the AI ​​business will earn 1 billion.
But Ketuan Zhan's majestic plan did not make Bitmain employees feel emotional, but ridiculed him instead. Employees exposed that he insulted employees, advocated Chinese medicine, believed in Buddhism, drank in meetings, practiced Qigong...
However, there is less than half a year before the halving of Bitcoin production, and the cryptocurrency market shows no signs of recovery, which makes Bitmain management very anxious.
On January 6, 2020, Bitmain ushered in another round of layoffs, with a layoff ratio of about 1/3. This time the layoffs have caused many employees who have just increased their salaries to feel very grieved. On the one hand, they were looking forward to Jihan Wu's return. On the other hand, the compensation for this layoff was less than 18 years.
Ketuan Zhan, who has been unable to enter the Bitmain office area, once again spoke on social media and firmly opposed to layoffs. We do not need to lay off staff and we cannot commit suicide.
During the Spring Festival, Covid-19 broke out. Mainland China has begun to extend the Spring Festival holiday and advocate working from home. Under the chain reaction caused by Covid-19, most companies have chosen to cut salaries or even lay off employees. In the first two months of 2020, China's exports fell by 17%, U.S. stocks were broken four times in a row, Bitcoin plunged 40% in 24 hours on March 12, 2020, and crude oil futures fell by 300% on April 20, 2020...
Obviously, Jihan Wu can't predict, but this layoff seems to be the right decision again. In addition, from January to April 2020, Bitmain's revenue exceeded US$400 million amid the spread of Covid-19 and the collapse of the financial market.
6. Fight to the death
When Jihan Wu tried to get the company back on track, Ketuan Zhan was not helpless. On April 28, 2020, Ketuan Zhan finally rolled back the legal representative of Beijing Bitmain to before October 28, 2019 by repeatedly submitting administrative reconsiderations, and restored his status as a legal representative.
On the morning of May 8, 2020, a piece of news about Bitmain quickly appeared on the real-time hot search rankings, and even dominated the headlines of the day. At window 52 on the second floor of the Haidian District Government Affairs Center, when Ketuan Zhan, the legal person of Beijing Bitmain Company, was receiving the business license, a group of unidentified people snatched the business license from the industrial and commercial administrative staff. A source at the scene said that the number of unidentified people in the group was about 60 people, of which Luyao Liu was directing at the scene.
This is a skillful piece of news. It first leads readers to think that Ketuan Zhan is a victim, using 60 people to grab business licenses as the focus. The masses accused Jihan Wu of lawlessness, but ignored whether the government affairs center could have 60 personnel. As for Hong Kong Bitmain to have the right to appoint a representative to obtain a business license, this is a deeper level of thinking.
The follow-up report restored the real situation at the scene. Only more than ten people were present, and both sides were equipped with security personnel. Bitmain employees also broke the news in the circle of friends, claiming that Ketuan Zhan's bodyguard had injured Bitmain's authorized person, and said in a threatening tone, "Be careful!"
However, the subsequent plot reversal did not have much effect. Jihan Wu's reputation has been greatly affected. From a bloody soldier who rescued the company in trouble to a lawless criminal, it can be said to be a world of war. do not.
Ketuan Zhan, who succeeded in the first battle, began to counterattack Bitmain continuously. On the afternoon of June 3, 2020, Ketuan Zhan led a team to pry open the back door of the Beijing Bitmain office and formally occupied the deserted Beijing headquarters.
On June 4, 2020, Ketuan Zhan called on Bitmain employees to resume work and promised to expand the company's market value to more than US$50 billion within three to five years. After that, Ketuan Zhan began to contact employees by phone, trying to acquire the options in the hands of employees at a valuation of 4 billion US dollars.
Subsequently, Ketuan Zhan recalled Huawei's executives and issued a series of personnel appointments and removals. As of June 9, 2020, Ketuan Zhan has successively eliminated CFO Luyao Liu, and Wenguang Wang, the head of the mining center. Luyao Liu is responsible for controlling Bitmain's IPO plan. He also appointed Yanwu Ma as the HR director, Gang Ren as the head of the mining center, Yonggang Sun as the head of the supply chain, Ling Gu as the financial director, and Bin Zhu as the head of the mining machine business department. Bin Zhu is the senior executive of Huawei who was interviewed and left as mentioned in the previous article. During his tenure, he reduced Antminer’s 90% market share to 50%, and received a large number of complaints from miners. Internal employees once speculated that he might be Compete against the spies sent by the company.
In addition to recalling senior executives of Huawei, Ketuan Zhan also urged employees to return to work. They can receive a bonus of 10,000 yuan when they return to work on the same day, which is only half the next day. Ketuan Zhan showed a very kind side. Every time the elevator door is opened, Ketuan Zhan's hot gaze can be met, shaking hands, taking photos, and receiving money. As there is no personnel information, Ketuan Zhan does not know whether the person receiving the money is a Bitmain employee, and these people did not resume work the next day.
The effect of gentleness was not good, Ketuan Zhan began to force employees to return to work. Seeing that there are still very few respondents, Ketuan Zhan threatened employees through SMS, phone calls, EMS, emails and other harassment, issued multiple threats such as termination of contract, suspension of payment of social insurance, suspension of wages, and even used personal information saved by employees to form a group of employees. Domicile threats, requiring employees to perform "work handover", trying to force employees to return work computers, etc.
On June 10, 2020, the media revealed that Ketuan Zhan had controlled Bitmain's Shenzhen factory and prohibited employees from delivering normal shipments to paid customers, which caused difficulties in the operation of the Bitmain mining machine department.
On June 13, 2020, Hong Kong Bitmain, the parent company of Beijing Bitmain, issued a statement accusing Ketuan Zhan of signing a "Sales Agency Agreement" with the Ark Data Technology Co., Ltd. in which it holds shares, in an attempt to embezzle Beijing Bit's assets.
On June 17, 2020, the media revealed that Ketuan Zhan started selling 14,000 T17+ series mining machines at low prices.
On June 20, 2020, Hong Kong Bitmain officially suspended the supply of chips to the Shenzhen factory.
On July 13, 2020, in the "A Letter to All My colleagues in the Shenzhen Factory" released by Bitmain in Hong Kong, more details were added on the series of Ketuan Zhan's actions in June.
The legal person Feng Zhou of the Shenzhen plant is related to Ketuan Zhan. After being relieved of Ketuan Zhan's post, Jihan Wu flew to Shenzhen to have a long talk with Feng Zhou. Jihan Wu believes that Feng Zhou is the right person to manage the factory and help the company overcome difficulties, and decides to leave Feng Zhou to continue to manage the factory.
This wrong decision staged a story of a farmer and a snake. When Ketuan Zhan began to counterattack Bitmain, Feng Zhou was also quickly instigated and began to assist Ketuan Zhan in seizing customer machines and transferring 17,000 T17 mining machines in the warehouse. Hainan Continental Ark Data Technology Co., Ltd., which is held by Ketuan Zhan, sold them at a low price.
In order to protect the interests of customers, Jihan Wu had to make a compromise and paid the payment for some goods to a bank account controlled by Ketuan Zhan in exchange for delivery. However, after the other party received a payment of 109 million, the delivery stopped. On July 8, 2020, 5600 mining machines have been overdue.
At the same time, the factory defaulted on suppliers’ accounts payable as much as 200 million yuan. Bank acceptance bills issued by the factory, exceeding 36 million yuan, will expire on July 17, and more than 34 million yuan will expire on July 23. It is understood that Ketuan Zhan, after receiving the bank's dunning call, made it clear that he would not repay the loan, which would destroy the company and the entire group's credit in financial institutions.
7、 This is not the end
So far, the power struggle between the founders of Bitmain has been more than half a year. The office building already occupied by Ketuan Zhan is still empty, and most employees choose to work from home. Some chip developers returned to the office with the acquiescence of Jihan Wu and continued to maintain research and development to reduce the impact of infighting on technological iteration and competitiveness.
This giant ship that once stood on top of the supercomputer chip is crashing into the iceberg due to the madness of the former helm. Ketuan Zhan's madness and Jihan Wu's compromise made mistakes again and again. Bitmain tried to save himself many times, but was unable to get out of the black hole.
If the time goes back to that day in 2013, would Jihan Wu and Yuesheng Ge still choose to dial Ketuan Zhan?
submitted by paulcheung1990 to Bitcoincash [link] [comments]

The deepest report: Bitmain's self-help history

The deepest report: Bitmain's self-help history
The original intention of this article is to let readers understand the causes and consequences of Bitmain internal fighting, but after writing it, I found that it is not so much internal fighting as it is a long history of self-help.
The story is very long. Let's adjust the timeline to the eve of December 17, 2018. That was one of Bitmain's most critical moments and the beginning of a series of subsequent stories.
1. Self-immolation In September 2018, Bitmain's financial department warned management that the company's cash flow has become very tight and operating costs must be reduced to allow the company to continue. The blockchain unicorn, which is valued at more than 15 billion U.S. dollars, is crippled in the run and struggling to break the corner.
In 2017, Bitmain made a profit of 1 billion US dollars In the first half of 2018, Bitmain made a profit of 1 billion US dollars Three rounds of financing, a total of 800 million US dollars Net assets should exceed 3 billion U.S. dollars In September 2018, Bitmain had tight cash flow and was on the verge of bankruptcy
A simple comparison, it is not difficult to see that Bitmain's ability to make money is incredible, and its ability to burn money is even more extreme.
How does Bitmain burn money? Do you pour cash into gasoline and burn it, or hire a lot of employees to stuff the banknotes one by one into the shredder? The actual situation is closer to the latter.
The following data can help readers quickly learn Bitmain's money burning skills.
At the beginning of 2018, the entire cryptocurrency market has entered a bear market, but Bitmain's monthly operating costs have been rising wildly. Operating costs have risen from 10 million US dollars at the beginning of the year to 50 million US dollars at the end of the year.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
Operating costs are just the tip of the iceberg. Excessive chip trial production can become a classic case of project management courses. Readers who pay attention to Cryptocurrency mining can easily find that Bitmain is still working hard to clear the inventory of Antminer S9 in 2019. As the co-CEO, Ketuan Zhan did not listen to the advice or even warnings of the Finance Department, insisting on the implementation of Excessive chip trial production, resulting in a large accumulation of inventory and tight capital turnover. Another CEO, Jihan Wu, once revealed that the loss of Excessive chip trial production to the company was approximately US$1.5 billion.
Large-scale expansion of the R&D team is one of the main reasons. The HR who once worked at Bitmain revealed that the company once hired more than 50 employees a day and nearly 500 employees a month. Even so, it was criticized for its slow recruitment speed. The cash consumption in this area is approximately $250 million.
The BM1393 chip incident is even more incredible. Chip expert Ketuan Zhan invested a lot of money on a failed chip, and finally failed again. From 2017 to 2018, Bitmain has failed Trial production of mining machine chips at least 4 times, including 16nm, 12nm and 10nm chips, of which 16nm Trial production failed twice, thus losing at least US$1.2 billion.
It is rumored that Bitmain still holds a billion U.S. dollars worth of cryptocurrency in a state of floating loss. In view of the rebound in the market in 2020, we will not comment temporarily, waiting for the correct answer from the cryptocurrency market. But the losses pointed out in the previous article are all irreversible.
2. Sole power
In September 2018, Bitmain's management realized the seriousness of the problem. It turned out that the company's money could be squandered. As a result, the management began to discuss self-help plans, and the most reasonable and effective way was obviously to lay off employees.
The probation period for newly hired employees at Bitmain is half a year, and the probationary salary is 100% of the official salary, there is no difference. Once layoffs are made, new employees who have not passed the probationary period will be the main layoff targets. The department managed by Ketuan Zhan will face large-scale layoffs. The layoff plan is strongly opposed by Ketuan Zhan. Bitmain can only temporarily abandon the layoffs and replace it with continuous reductions. For marketing and travel expenses, a budget committee was established to strictly approve every expenditure. At the same time, employee benefits, such as reimbursement of taxi expenses, breakfast supply, snacks and drinks, etc., have also been abolished, and even the tradition of giving employees 400 yuan worth of BTC/BCH every month has been stopped.
In the face of huge cash flow pressure, trivial savings is obviously of no avail. Soon, the management again discussed the layoff plan, and it has reached the point where it has to be laid off.
In December 2018, Jihan Wu began to organize all entrepreneurial veterans and business backbones to persuade Ketuan Zhan to agree to layoffs, but Ketuan Zhan still insisted not to layoffs. The persuasion process was very unsuccessful. After many meetings and intense debates, Bitmain executives were caught in a dilemma of wasting time with Ketuan Zhan.
In this process, the shortcomings of the dual CEO system began to appear, and the relationship between the two CEOs gradually deteriorated.
On the night of December 16th, Ketuan Zhan reconvened the management meeting, and more than 30 managements who were present were asked to hand over their mobile phones. At this time, Jihan Wu was on a business trip in Hong Kong and was busy with listing related work.
In the meeting, Ketuan Zhan's core content was three items:
(1) Bitmain cannot have two CEOs, only one CEO and must be Ketuan Zhan. Ketuan Zhan said that he met an old leader during a business trip. He hadn't seen each other for many years. The old leader suggested that the company can only have one CEO, and it must be him. Ketuan Zhan feels that this is a kind of fate, an opportunity given by God.
(2) Ketuan Zhan believes that the company's cash flow problems, the biggest responsibility is the inability of the financial department. To prove his point, Ketuan Zhan announced Bitmain's financial data at the meeting. In the evening, employees in Taiwan began to post messages on social media, saying that the company's capital chain was broken and the top management was split.
(3) If Ketuan Zhan is not supported, the option will be cancelled and the equity will be voided.
Hearing about this, Jihan Wu, who lives in Hong Kong, sent a WeChat message to the management who are attending the meeting.

https://preview.redd.it/c5cxea2lqid51.jpg?width=1080&format=pjpg&auto=webp&s=3d6a0388408f6b8abe10648e5e4b7a3a5434c821
On the afternoon of December 17, 2018, Jihan Wu returned to Beijing to negotiate with Ketuan Zhan all night, and finally reached a consensus in the early morning. Bitmain co-founder Yuesheng Ge announced the results of the negotiations. Jihan Wu and Ketuan Zhan ceased to serve as CEOs, and Haichao Wang served as CEO. Jihan Wu voluntarily backed down and Ketuan Zhan served as chairman.
The "12.17 Incident" had a very bad impact on Bitmain, especially the disclosure of Bitmain's financial status, which caused vendors to start dunning. The loan that had just been negotiated with the Bank of Beijing was cancelled the next day. Jihan Wu's resignation as CEO caused an uproar in the industry, and it became a hot topic among Cryptocurrency mining, blockchain practitioners, and investor communities. The media focused their interpretation on Bitmain's series of incidents, and generally looked down upon its ongoing Hong Kong IPO, believing that the high-level changes had already signaled the failure of the IPO in advance.
On Christmas December 24, 2018, Bitmain finally began to implement the layoff plan. This long-delayed “correct decision” was achieved after a stalemate for nearly three months. The AI ​​teams in Beijing, Singapore, Taiwan, and Shanghai have laid off more than 50% of their employees. The Israeli R&D center was closed and Shenzhen New Species Technology Co., Ltd., which had been acquired for only ten months, was dissolved, and all employees were laid off. Copernicus, Bitmain's top blockchain development team, was not spared and was wiped out in this layoff. Copernicus and some of the laid-off employees joined the new company Matrixport co-founded by Jihan Wu and Yuesheng Ge, headquartered in Singapore.
3. Past events when starting a business
After the "12.17 Incident", Jihan Wu gradually faded out of Bitmain's management affairs and turned his attention to the IPO and new company. And this is one of Jihan Wu's major mistakes, he began to let Ketuan Zhan manage Bitmain alone.
In fact, as early as 2013, Jihan Wu planted hidden dangers.
Jihan Wu, an investment banker, was the earliest translator of the Bitcoin white paper. He began to get involved in the cryptocurrency mining industry in 2012. The disappearance of Kaomao and Nangua Zhang's ticket skipping led Jihan Wu to decide to develop his own chip.
In 2013, Jihan Wu established his own mining machine company. Together with Yuesheng Ge, who was only 20 years old, he found Ketuan Zhan, an integrated circuit designer of the Chinese Academy of Sciences, to create the protagonist of this article, and later the digital Cryptocurrency mining giant, Bitmain.
Jihan Wu promised Ketuan Zhan that every time a mining machine chip was successfully developed, he would give some shares to the Ketuan Zhan team. At that time, the company founded by Ketuan Zhan was on the eve of falling apart. In order to regroup the team, Ketuan Zhan promised to share half of his shares with the team members. Unfortunately, this is just a bad check. With the rapid development of Bitmain and higher and higher valuations, the expanding Ketuan Zhan almost monopolized all the shares.
Like many startups, Bitmain encountered many difficulties in its early days, and many jobs had to be done by the boss. For example, in the chip design and production process in the second half of 2013, Bitmain was caught in a dilemma of insufficient funds. Jihan Wu personally raised funds and met with TSMC’s sales to persuade TSMC to accept the production needs of a start-up company. Jihan Wu also participated in the selection of the thermodynamic parameters of the heat sink in the Antminer S1.
In 2014, Jihan Wu discovered that this company was independently operated by Ketuan Zhan, which had huge problems. Forcing Jihan Wu to continue to participate in company management.
At that time, Bitmain's mining machine chips had just achieved a certain lead in the standard design process. Jihan Wu believes that the next step must be to develop full customization technology, but Ketuan Zhan plans to invest resources in the research of mobile payment chips.
Ketuan Zhan met a mysterious person from the Party Central Security Bureau who claimed to be able to manipulate the Party Central Committee’s decision-making process for the next generation of mobile payment cryptography standards, but this direction is likely to lead to the fact that Bitmain has just gained the lead in the mining machine market. Regained.
Jihan Wu said that as a graduate of the School of Economics, with a little memory of his high school stage and the knowledge reserve of a computer technology amateur, he retrieves various materials and papers every day, learns theories related to full customization, and goes to Ketuan Zhan conducts persuasion work there.
Fortunately, in the direction of full customization technology, Ketuan Zhan finally listened to Jihan Wu's opinion. Bitmain quickly integrated the technical experts from the United States and Russia introduced by Jihan Wu, which greatly improved the design level of chips and complete machines.
In 2015, Jihan Wu suggested that Ketuan Zhan consider the direction of artificial intelligence. But Ketuan Zhan is not here, he prefers the CPU direction. After staying asleep at night, coupled with in-depth analysis by the Bitmain investment team, Ketuan Zhan finally agreed with this direction. It is a pity that after the Tianshi Chen brothers made major breakthroughs in theory and practice, Bitmain officially invested in the relevant direction, and it was still a step behind.
In the two years from 2016 to 2017, Bitmain's business performance has achieved rapid development, becoming a unique super unicorn in the blockchain industry. According to Froth & Sullivan, in 2017, Bitmain Technology Holdings was the second largest fabless chip design company in China and the tenth largest fabless chip design company in the world, and the fourth largest fabless ASIC chip design company in the world, accounting for 74.5% of global cryptocurrency market share.
However, the huge crisis has long been buried in the early days of entrepreneurship.
Ketuan Zhan's decision on major directions revealed his weakness of extremely lack of business understanding. But every mistake he made was blocked by the company's core employees. His overconfidence in his management ability led to the gradual intensification of conflicts, and the management differences between the two founders became more serious.
4.The giant gets lost
The contradiction between the two broke out on December 17, 2018. Ketuan Zhan used extreme means to force the management to compromise with him by canceling the option, so as to achieve the goal of sole control of the company. Jihan Wu returned to Beijing from Hong Kong overnight and negotiated with Ketuan Zhan all night. In the end, the two resigned as CEO. Jihan Wu retired. Ketuan Zhan has the exclusive rights of chairman in exchange for the implementation of the layoff plan.
Jihan Wu's voluntary retreat has intensified Ketuan Zhan's management to do whatever he wants.
A Bitmain employee commented on Ketuan Zhan's management skills, summed up in two letters-SM.
After becoming the sole helm of the company, Ketuan Zhan quickly "rectified" the department in charge of Jihan Wu as the chairman of the board. He guided the sales of mining machines at the dinner, and pointed out that the sales performance is not due to the sales staff. Ability is strong, but the company provides opportunities. Take two sales leaders as examples, saying that if the company hadn't given the opportunity, they would still be losers. In addition, Ketuan Zhan also instructed the sales staff on how to toast and imparted the wine table culture and experience.
After the meal, Ketuan Zhan came to the conclusion that the quality of Bitmain sales staff was too poor, and Huawei’s blood needs to be injected to drive the company’s progress. Soon, the marketing and sales director from Huawei officially took over Bitmain, opening the era of brand premium for Antminer.
In order to further understand and guide the sales work, Ketuan Zhan asked to meet the customers with the sales staff. During the negotiation process, Ketuan Zhan had a heated discussion with customers on the issue of Chinese and Western medicine, and had also forced the sales staff to be able to ship 10,000 machines due to insufficient production capacity.
Although the requirements for sales personnel are strict, Ketuan Zhan has provided a lot of convenience for "Mainland Ark". In addition to selling mining machines at a more favorable price, Bitmain's mining machines are also hosted in Ming Wang at a higher price than the market price. Mine. It is reported that both Ketuan Zhan and Ming Wang are shareholders of Ark.
The new sales strategy of Huawei's executives has also brought very obvious changes to Bitmain. The self-righteous brand premium reduces the price-performance ratio of Antminer, causing competing products to eat away at Bitmain's market share. Later, Bitmain found that the strategy was wrong and started to cut prices, and found that the mining machine market was saturated and the purchase demand of miners had decreased.
More dangerous than the sales strategy is that the technical advantages of Antminer are being chased by competing products, and even overtaken. At the same time, the two mining pools under Bitmain also lost their first and second positions. The AI ​​business, which Jihan Wu placed high hopes and Ketuan Zhan personally supervised, became a laughing stock in the industry. Not only did it fail to make a profit, it almost brought down Bitmain.
Blindly introducing senior executives from Huawei to occupy important positions completely destroys the company's internal cultural foundation. The bureaucracy within Bitmain began to corrode from high-level employees to ordinary employees. Ketuan Zhan is not aware of this. He is still keen on recruiting Huawei employees, imitating Huawei's organizational structure and strategy, letting HR do sales and R&D personnel to do HR.
The organizational structure adjustment in October 2019 was the fuse for Ketuan Zhan to completely anger Bitmain management. This time, Ketuan Zhan completely marginalized Bitmain’s veteran employees, and suddenly promoted some of the “airborne soldiers” who had just joined the company to the position of person in charge, which caused the former person in charge to report to the new employees. The two managers who were originally equal The hierarchy becomes the subordinate relationship, the operation and development of different business lines are merged into a large department, the upward reporting process becomes more cumbersome, and the relationship between employees becomes delicate.
5. Headwind
On October 29, 2019, Jihan Wu urgently held a staff meeting. Prior to this, the legal representative of Beijing Bitmain has been changed to Jihan Wu, including the parent companies Hong Kong Bitmain and Cayman Bitmain. Jihan Wu stood in the lobby of Building 25, B1, announcing that Ketuan Zhan has been relieved of all duties. Any employee in the Bitmain Group shall no longer execute Ketuan Zhan’s instructions and participate in any meetings convened by Ketuan Zhan. If there is any violation, the company will demotion and expel the company based on the severity of the circumstances. If losses are caused to the company, the company will be held accountable.
Jihan Wu's speech is very long, which can be summarized as follows:
(1) Ketuan Zhan has been relieved of all duties. Also expelled from the original Huawei company HR Zhi Wang introduced by Ketuan Zhan at the end of 2018. Zhi Wang’s reputation on Bitmain was extremely poor and was ridiculed by employees as "nine thousand years" (In ancient China, the emperor was called "ten thousand years old", and the prince was "eight thousand years old." However, in the Ming Dynasty, there was an eunuch who caused harm to the country and the people. He called himself "nine thousand years old", meaning that he was only A little lower than the emperor's level).
(2) Ketuan Zhan's ability to control the company's option incentive plan has disappeared, and it is no longer possible to cancel employees' options at will.
(3) The organizational structure adjustment plan led by Ketuan Zhan was suspended.
(4) We are optimistic about the future of AI business, but the premise is that the main business can continue to make profits in order to support the company's continued investment in AI business.
In the speech, Jihan Wu also told employees the whole story of the "12.17 Incident" and bluntly said that the company is not in good condition. If no measures are taken, Bitmain is likely to go bankrupt in three quarters and he must come back to save the company.
At this time, Ketuan Zhan, who was on a business trip in Shenzhen, finally experienced the situation of Jihan Wu in the "12.17 Incident".
After the official return, Jihan Wu began to clearly point out the company's various problems in operation and management, and went deep into each business line to understand the situation. In the mining machine sales department meeting, employees spoke enthusiastically, reflecting on the difficulties and opinions encountered in the work, the marketing and sales director from Huawei asked with a surprised look, "Why didn't these issues be reported to me before?", and soon , The director was interviewed and "voluntarily resigned."
On November 2, 2019, Jihan Wu announced a salary increase for all employees. Bitmain’s last salary increase dates back to 2018. In principle, Bitmain has two salary increases every year.
On November 7, 2019, Ketuan Zhan spoke on social media for the first time, describing his hardship in starting a business, and condemning Jihan Wu for “stabbing a knife in the back”. At the end of the article, he also set himself a KPI for 2020, that is, the mining machine market share will reach 90%, and the AI ​​business will earn 1 billion.
But Ketuan Zhan's majestic plan did not make Bitmain employees feel emotional, but ridiculed him instead. Employees exposed that he insulted employees, advocated Chinese medicine, believed in Buddhism, drank in meetings, practiced Qigong...
However, there is less than half a year before the halving of Bitcoin production, and the cryptocurrency market shows no signs of recovery, which makes Bitmain management very anxious.
On January 6, 2020, Bitmain ushered in another round of layoffs, with a layoff ratio of about 1/3. This time the layoffs have caused many employees who have just increased their salaries to feel very grieved. On the one hand, they were looking forward to Jihan Wu's return. On the other hand, the compensation for this layoff was less than 18 years.
Ketuan Zhan, who has been unable to enter the Bitmain office area, once again spoke on social media and firmly opposed to layoffs. We do not need to lay off staff and we cannot commit suicide.
During the Spring Festival, Covid-19 broke out. Mainland China has begun to extend the Spring Festival holiday and advocate working from home. Under the chain reaction caused by Covid-19, most companies have chosen to cut salaries or even lay off employees. In the first two months of 2020, China's exports fell by 17%, U.S. stocks were broken four times in a row, Bitcoin plunged 40% in 24 hours on March 12, 2020, and crude oil futures fell by 300% on April 20, 2020...
Obviously, Jihan Wu can't predict, but this layoff seems to be the right decision again. In addition, from January to April 2020, Bitmain's revenue exceeded US$400 million amid the spread of Covid-19 and the collapse of the financial market.
6. Fight to the death
When Jihan Wu tried to get the company back on track, Ketuan Zhan was not helpless. On April 28, 2020, Ketuan Zhan finally rolled back the legal representative of Beijing Bitmain to before October 28, 2019 by repeatedly submitting administrative reconsiderations, and restored his status as a legal representative.
On the morning of May 8, 2020, a piece of news about Bitmain quickly appeared on the real-time hot search rankings, and even dominated the headlines of the day. At window 52 on the second floor of the Haidian District Government Affairs Center, when Ketuan Zhan, the legal person of Beijing Bitmain Company, was receiving the business license, a group of unidentified people snatched the business license from the industrial and commercial administrative staff. A source at the scene said that the number of unidentified people in the group was about 60 people, of which Luyao Liu was directing at the scene.
This is a skillful piece of news. It first leads readers to think that Ketuan Zhan is a victim, using 60 people to grab business licenses as the focus. The masses accused Jihan Wu of lawlessness, but ignored whether the government affairs center could have 60 personnel. As for Hong Kong Bitmain to have the right to appoint a representative to obtain a business license, this is a deeper level of thinking.
The follow-up report restored the real situation at the scene. Only more than ten people were present, and both sides were equipped with security personnel. Bitmain employees also broke the news in the circle of friends, claiming that Ketuan Zhan's bodyguard had injured Bitmain's authorized person, and said in a threatening tone, "Be careful!"
However, the subsequent plot reversal did not have much effect. Jihan Wu's reputation has been greatly affected. From a bloody soldier who rescued the company in trouble to a lawless criminal, it can be said to be a world of war. do not.
Ketuan Zhan, who succeeded in the first battle, began to counterattack Bitmain continuously. On the afternoon of June 3, 2020, Ketuan Zhan led a team to pry open the back door of the Beijing Bitmain office and formally occupied the deserted Beijing headquarters.
On June 4, 2020, Ketuan Zhan called on Bitmain employees to resume work and promised to expand the company's market value to more than US$50 billion within three to five years. After that, Ketuan Zhan began to contact employees by phone, trying to acquire the options in the hands of employees at a valuation of 4 billion US dollars.
Subsequently, Ketuan Zhan recalled Huawei's executives and issued a series of personnel appointments and removals. As of June 9, 2020, Ketuan Zhan has successively eliminated CFO Luyao Liu, and Wenguang Wang, the head of the mining center. Luyao Liu is responsible for controlling Bitmain's IPO plan. He also appointed Yanwu Ma as the HR director, Gang Ren as the head of the mining center, Yonggang Sun as the head of the supply chain, Ling Gu as the financial director, and Bin Zhu as the head of the mining machine business department. Bin Zhu is the senior executive of Huawei who was interviewed and left as mentioned in the previous article. During his tenure, he reduced Antminer’s 90% market share to 50%, and received a large number of complaints from miners. Internal employees once speculated that he might be Compete against the spies sent by the company.
In addition to recalling senior executives of Huawei, Ketuan Zhan also urged employees to return to work. They can receive a bonus of 10,000 yuan when they return to work on the same day, which is only half the next day. Ketuan Zhan showed a very kind side. Every time the elevator door is opened, Ketuan Zhan's hot gaze can be met, shaking hands, taking photos, and receiving money. As there is no personnel information, Ketuan Zhan does not know whether the person receiving the money is a Bitmain employee, and these people did not resume work the next day.
The effect of gentleness was not good, Ketuan Zhan began to force employees to return to work. Seeing that there are still very few respondents, Ketuan Zhan threatened employees through SMS, phone calls, EMS, emails and other harassment, issued multiple threats such as termination of contract, suspension of payment of social insurance, suspension of wages, and even used personal information saved by employees to form a group of employees. Domicile threats, requiring employees to perform "work handover", trying to force employees to return work computers, etc.
On June 10, 2020, the media revealed that Ketuan Zhan had controlled Bitmain's Shenzhen factory and prohibited employees from delivering normal shipments to paid customers, which caused difficulties in the operation of the Bitmain mining machine department.
On June 13, 2020, Hong Kong Bitmain, the parent company of Beijing Bitmain, issued a statement accusing Ketuan Zhan of signing a "Sales Agency Agreement" with the Ark Data Technology Co., Ltd. in which it holds shares, in an attempt to embezzle Beijing Bit's assets.
On June 17, 2020, the media revealed that Ketuan Zhan started selling 14,000 T17+ series mining machines at low prices.
On June 20, 2020, Hong Kong Bitmain officially suspended the supply of chips to the Shenzhen factory.
On July 13, 2020, in the "A Letter to All My colleagues in the Shenzhen Factory" released by Bitmain in Hong Kong, more details were added on the series of Ketuan Zhan's actions in June.
The legal person Feng Zhou of the Shenzhen plant is related to Ketuan Zhan. After being relieved of Ketuan Zhan's post, Jihan Wu flew to Shenzhen to have a long talk with Feng Zhou. Jihan Wu believes that Feng Zhou is the right person to manage the factory and help the company overcome difficulties, and decides to leave Feng Zhou to continue to manage the factory.
This wrong decision staged a story of a farmer and a snake. When Ketuan Zhan began to counterattack Bitmain, Feng Zhou was also quickly instigated and began to assist Ketuan Zhan in seizing customer machines and transferring 17,000 T17 mining machines in the warehouse. Hainan Continental Ark Data Technology Co., Ltd., which is held by Ketuan Zhan, sold them at a low price.
In order to protect the interests of customers, Jihan Wu had to make a compromise and paid the payment for some goods to a bank account controlled by Ketuan Zhan in exchange for delivery. However, after the other party received a payment of 109 million, the delivery stopped. On July 8, 2020, 5600 mining machines have been overdue.
At the same time, the factory defaulted on suppliers’ accounts payable as much as 200 million yuan. Bank acceptance bills issued by the factory, exceeding 36 million yuan, will expire on July 17, and more than 34 million yuan will expire on July 23. It is understood that Ketuan Zhan, after receiving the bank's dunning call, made it clear that he would not repay the loan, which would destroy the company and the entire group's credit in financial institutions.
7、 This is not the end
So far, the power struggle between the founders of Bitmain has been more than half a year. The office building already occupied by Ketuan Zhan is still empty, and most employees choose to work from home. Some chip developers returned to the office with the acquiescence of Jihan Wu and continued to maintain research and development to reduce the impact of infighting on technological iteration and competitiveness.
This giant ship that once stood on top of the supercomputer chip is crashing into the iceberg due to the madness of the former helm. Ketuan Zhan's madness and Jihan Wu's compromise made mistakes again and again. Bitmain tried to save himself many times, but was unable to get out of the black hole.
If the time goes back to that day in 2013, would Jihan Wu and Yuesheng Ge still choose to dial Ketuan Zhan?
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How Bitcoin Mining Works

When you hear about bitcoin “mining,” you envisage coins being dug out of the ground. But bitcoin isn’t physical, so why do we call it mining?
Similar to gold mining, bitcoins exist in the protocol’s design just as the gold exists underground, but they haven’t been brought out into the light yet, just as the gold hasn’t yet been dug up.
The bitcoin protocol stipulates that a maximum of 21 million bitcoins will exist at some point. What miners do is bring them out into the light, a few at a time. Once miners finish mining all these coins, there won’t be more coins rolling out unless the bitcoin protocol changes to allow for a larger supply. Miners get paid in transaction fees for creating blocks of validated transactions and including them in the blockchain.
To understand how bitcoin mining works, let’s backtrack a little bit and talk about nodes. A node is a powerful computer that runs the bitcoin software and fully validates transactions and blocks. Since the bitcoin network is decentralized these nodes are collectively responsible for confirming pending transactions.
Anyone can run a node—you just download the free bitcoin software. The drawback is that it consumes energy and storage space – the network at time of writing takes hundreds of gigabytes of data. Nodes spread bitcoin transactions around the network. One node will send information to a few nodes that it knows, who will relay the information to nodes that they know, etc. That way, the pending transaction ends up getting around the whole network pretty quickly.
Some nodes are mining nodes,usually referred to as miners. These chunk outstanding transactions into blocks and add them to the blockchain. How do they do this? By solving a complex mathematical puzzle that is part of the bitcoin program, and including the answer in the block.
The puzzle that needs solving is to find a number that, when combined with the data in the block and passed through a hash function (which converts input data of any size into output data of a fixed length, produces a result that is within a certain range.
For trivia lovers, this number is called a “nonce”, which is an abbreviation of “number used once.” In the blockchain, the nonce is an integer between 0 and 4,294,967,296.
How do they find this number? By guessing at random. The hash function makes it impossible to predict what the output will be. So, miners guess the mystery number and apply the hash function to the combination of that guessed number and the data in the block. The resulting hash starts with a certain number of zeroes. There’s no way of knowing which number will work, because two consecutive integers will give wildly varying results. What’s more, there may be several nonces that produce the desired result, or there may be none. In that case, the miners keep trying but with a different block configuration.
The difficulty of the calculation (the required number of zeros at the beginning of the hash string) is adjusted frequently, so that it takes on average about 10 minutes to process a block.
Why 10 minutes? That is the amount of time that the bitcoin developers think is necessary for a steady and diminishing flow of new coins until the maximum number of 21 million is reached (expected some time in 2140).
The first miner to get a resulting hash within the desired range announces its victory to the rest of the network. All the other miners immediately stop work on that block and start trying to figure out the mystery number for the next one. As a reward for its work, the victorious miner gets some new bitcoin.
At the time of writing, the reward is 6.25 bitcoins per block, which is worth around $56,000 in June 2020.
However, it’s not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for that reward, and the more computing power you have and the more guessing calculations you can perform, the luckier you are.
Also, the costs of being a mining node are considerable, not only because of the powerful hardware needed, but also because of the large amounts of electricity consumed by these processors.
And, the number of bitcoins awarded as a reward for solving the puzzle will decrease. It’s 6.25 now, but it halves every four years or so (the next one is expected in 2024). The value of bitcoin relative to cost of electricity and hardware could go up over the next few years to partially compensate for this reduction, but it’s not certain.
If you’ve made it this far, then congratulations! There is still so much more to explain about the system, but at least now you have an idea of the broad outline of the genius of the programming and the concept. For the first time we have a system that allows for convenient digital transfers in a decentralized, trust-free and tamper-proof way.
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3 months later. How the profitability of mining changed after halving

3 months later. How the profitability of mining changed after halving

3 months later. How the profitability of mining changed after halving
On May 11, the size of the Bitcoin mining reward fell by half. The next time it will be in 2024. What devices will be profitable by that time, and what to hope for owners of obsolete equipment.
In May 2020, a halving took place on the bitcoin network. The cryptocurrency mining reward has decreased from 12.5 to 6.25 BTC. This is a long-awaited event, which, according to the hopes of the crypto community, should lead to a strong increase in the value of the coin. For example, Anthony Pompliano, co-founder of investment company Morgan Creek Digital, predicted that the rate would rise to $100,000 by the end of 2021, primarily due to lower mining rewards.
So far, the bitcoin price hasn’t responded to the halving as much as expected. In mid-May, at the time of the reduction in the mining reward, the BTC rate was around $9,000. To date, the cryptocurrency has risen in price by 27%. This year’s high was set yesterday, August 18, at $12,400.
The hashrate of the cryptocurrency network showed a different dynamics. Its value fell immediately after the halving from 137.5 to 87 EH/s, according to bitinfocharts.com. Since mining bitcoins has become less profitable, some of the miners probably turned off their equipment. They could switch to mining other coins or completely abandon this activity due to its unprofitability.
Later, when the BTC rate began to rise, the amount of computing power in the coin’s network also began to increase. So, from late May to mid-August, the cryptocurrency hash rate increased from 87 to 130 EH/s. But over the past three days, the figure has dropped sharply by 20%, caused by floods in China. Torrential rains in Sichuan province caused power outages that interfered with the operation of mining farms.
Changes in hashrate and mining rewards have affected its difficulty. On May 11, at the time of the halving, this figure was at around 16.1 T. By the current moment, this value has increased to 16.9 T, in July rising to a maximum of 17.3 T.
The decline in the reward for mining cryptocurrency was partially offset by the increase in fees. Until May, a single BTC transfer cost the user an average of 50 cents. By the current moment, commissions have grown more than 10 times, to $5.5.
Mining profitability is now at around 0.114 THash/s. It fell sharply immediately after the halving from 0.16 to 0.08 THash/s. To date, the indicator has grown by 40%. This was due to the rise in BTC prices and higher fees.
Development Director at BitCluster Dmitry Shuvaev said that the profitability of the device for mining BTC s17–73Th/s is now about 8 thousand rubles per month (at an electricity price of 3.5 rubles per kWh). The payback period is about 15 months. Old devices, such as the Antminer S9, are now unprofitable to use, they do not bring profit. But this situation may change if the bitcoin rate rises to $15,000.
“We recommend our customers to buy the new generation S17 or S19 devices. It is these devices that will provide profitability until the next halving. Their break-even point is at $6,000 per bitcoin”, Shuvaev said.
In June, specialists from the research division of the BitMEX exchange announced that in the long term, 2–3 ASIC miner manufacturers will remain in the industry. Canaan’s Avalon devices were the first to hit the market in 2014. Three years later, in 2017, Bitmain took 75% of the market.
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Do Perpetual Options Exist?

Perpetual futures contracts are gaining a lot of interest from not only cryptocurrency enthusiasts but also traders and members of traditional finance. Since 2017 when perpetual futures contracts were first launched, the derivatives market has evolved introducing options, ETFs and index trading based on cryptocurrencies. We have also seen the big traditional finance players like CME, Cboe and ICE taking part in this innovative and attractive world of cryptocurrency derivatives trading.
With the growing popularity of cryptocurrency derivatives products, especially perpetual futures contracts together with options trending as well, some traders may wonder what Perpetual Options may look like.
As always, let's begin by understanding what options are.

WHAT ARE OPTIONS?

Options are financial derivatives instruments where the value comes from the underlying assets such as stocks or cryptocurrencies. The buyer of the option contract is offered the choice to buy or sell the underlying asset at a pre-specified price and date. In contrast to futures, options contract holders give the right but not the obligation to buy or sell the underlying asset at the agreed price and date.
Options are split into two types.
One of the main differences between futures and options is that to buy the option, traders must pay for the premium. In the case of options, the rights are measured and priced as a premium. Something to note is that the premium always varies and this premium is what makes the options trading market.
Another thing to keep in mind is that options have a strike price which is the price set at which a derivative contract can be bought or sold at the exercise date. For example, a call option for 1 BTC with a 30 day expiry and strike price of $10,000 means the buyer of this call option has the right to purchase 1 BTC at $10,000 in 30 days time. Furthermore, there are variations in options on when you can exercise this contract. The two main types are the American and European options.

DO PERPETUAL OPTIONS REALLY EXIST?

Well.. There can be two sides to this question. Theoretically, it definitely could exist and many academics in the financial space are continuing research and studies on this topic. On a practical note, no registered options exchanges whether traditional or crypto have perpetual options listed. If this market place does exist, it would be likely to occur in the OTC(Over-The-Counter) market.
The main reason this exotic financial instrument faces difficulty is the pricing of the premium. American options are often priced with the binomial or trinomial tree model where it predicts its possible outcomes depending on the different exercise prices. All these are assumed to have some sort of exercise price.
However, for perpetual options, as it comes from the word "perpetual", it may never be exercised, making it difficult to have a good pricing model that can take into consideration the different types of predictions. In previous research, the martingale models were often used however would be very difficult to bring to the practical options trading, especially bitcoin options.
To help your understanding, I will set an example. Let's say the current BTC price is US$10,000 and you decide to buy a perpetual call option for US$1,000 with exercise price of $10,000. If the price of bitcoin does not go over the break even price of US$11,000 for the next 10 years or even 100 years, there is no reason to exercise this right. Let's say after 200 years the bitcoin price finally reached US$11,500, then this means the seller of the call option must have the underlying asset readily available for however long it may be until the exercise date of this contract. It is unrealistic to measure this in a single premium, thus making it difficult to compose a market place for this trade.
This doesn't mean it is impossible for perpetual bitcoin options to be released. An innovative financial instrument that is tweaked from the theoretical perpetual options model may be created. While options are mostly used to hedge against the price rise or fall, the options market is currently not as liquid as the perpetual futures markets.
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DFINITY Research Report

DFINITY Research Report
Author: Gamals Ahmed, CoinEx Business Ambassador
ABSTRACT
The DFINITY blockchain computer provides a secure, performant and flexible consensus mechanism. At its core, DFINITY contains a decentralized randomness beacon, which acts as a verifiable random function (VRF) that produces a stream of outputs over time. The novel technique behind the beacon relies on the existence of a unique-deterministic, non-interactive, DKG-friendly threshold signatures scheme. The only known examples of such a scheme are pairing-based and derived from BLS.
The DFINITY blockchain is layered on top of the DFINITY beacon and uses the beacon as its source of randomness for leader selection and leader ranking. A “weight” is attributed to a chain based on the ranks of the leaders who propose the blocks in the chain, and that weight is used to select between competing chains. The DFINITY blockchain is layered on top of the DFINITY beacon and uses the beacon as its source of randomness for leader selection and leader ranking blockchain is further hardened by a notarization process which dramatically improves the time to finality and eliminates the nothing-at-stake and selfish mining attacks.
DFINITY consensus algorithm is made to scale through continuous quorum selections driven by the random beacon. In practice, DFINITY achieves block times of a few seconds and transaction finality after only two confirmations. The system gracefully handles temporary losses of network synchrony including network splits, while it is provably secure under synchrony.

1.INTRODUCTION

DFINITY is building a new kind of public decentralized cloud computing resource. The company’s platform uses blockchain technology which is aimed at building a new kind of public decentralized cloud computing resource with unlimited capacity, performance and algorithmic governance shared by the world, with the capability to power autonomous self-updating software systems, enabling organizations to design and deploy custom-tailored cloud computing projects, thereby reducing enterprise IT system costs by 90%.
DFINITY aims to explore new territory and prove that the blockchain opportunity is far broader and deeper than anyone has hitherto realized, unlocking the opportunity with powerful new crypto.
Although a standalone project, DFINITY is not maximalist minded and is a great supporter of Ethereum.
The DFINITY blockchain computer provides a secure, performant and flexible consensus mechanism. At its core, DFINITY contains a decentralized randomness beacon, which acts as a verifiable random function (VRF) that produces a stream of outputs over time. The novel technique behind the beacon relies on the existence of a unique-deterministic, non-interactive, DKG-friendly threshold signatures scheme. The only known examples of such a scheme are pairing-based and derived from BLS.
DFINITY’s consensus mechanism has four layers: notary (provides fast finality guarantees to clients and external observers), blockchain (builds a blockchain from validated transactions via the Probabilistic Slot Protocol driven by the random beacon), random beacon (provides the source of randomness for all higher layers like smart contract applications), and identity (provides a registry of all clients).
DFINITY’s consensus mechanism has four layers

Figure1: DFINITY’s consensus mechanism layers
1. Identity layer:
Active participants in the DFINITY Network are called clients. Where clients are registered with permanent identities under a pseudonym. Moreover, DFINITY supports open membership by providing a protocol for registering new clients by depositing a stake with an insurance period. This is the responsibility of the first layer.
2. Random Beacon layer:
Provides the source of randomness (VRF) for all higher layers including ap- plications (smart contracts). The random beacon in the second layer is an unbiasable, verifiable random function (VRF) that is produced jointly by registered clients. Each random output of the VRF is unpredictable by anyone until just before it becomes avail- able to everyone. This is a key technology of the DFINITY system, which relies on a threshold signature scheme with the properties of uniqueness and non-interactivity.

https://preview.redd.it/hkcf53ic05e51.jpg?width=441&format=pjpg&auto=webp&s=44d45c9602ee630705ce92902b8a8379201d8111
3. Blockchain layer:
The third layer deploys the “probabilistic slot protocol” (PSP). This protocol ranks the clients for each height of the chain, in an order that is derived determin- istically from the unbiased output of the random beacon for that height. A weight is then assigned to block proposals based on the proposer’s rank such that blocks from clients at the top of the list receive a higher weight. Forks are resolved by giving favor to the “heaviest” chain in terms of accumulated block weight — quite sim- ilar to how traditional proof-of-work consensus is based on the highest accumulated amount of work.
The first advantage of the PSP protocol is that the ranking is available instantaneously, which allows for a predictable, constant block time. The second advantage is that there is always a single highest-ranked client, which allows for a homogenous network bandwidth utilization. Instead, a race between clients would favor a usage in bursts.
4. Notarization layer:
Provides fast finality guarantees to clients and external observers. DFINITY deploys the novel technique of block notarization in its fourth layer to speed up finality. A notarization is a threshold signature under a block created jointly by registered clients. Only notarized blocks can be included in a chain. Of all RSA-based alternatives exist but suffer from an impracticality of setting up the thresh- old keys without a trusted dealer.
DFINITY achieves its high speed and short block times exactly because notarization is not full consensus.
DFINITY does not suffer from selfish mining attack or a problem nothing at stake because the authentication step is impossible for the opponent to build and maintain a series of linked and trusted blocks in secret.
DFINITY’s consensus is designed to operate on a network of millions of clients. To en- able scalability to this extent, the random beacon and notarization protocols are designed such as that they can be safely and efficiently delegated to a committee

1.1 OVERVIEW ABOUT DFINITY

DFINITY is a blockchain-based cloud-computing project that aims to develop an open, public network, referred to as the “internet computer,” to host the next generation of software and data. and it is a decentralized and non-proprietary network to run the next generation of mega-applications. It dubbed this public network “Cloud 3.0”.
DFINITY is a third generation virtual blockchain network that sets out to function as an “intelligent decentralised cloud,”¹ strongly focused on delivering a viable corporate cloud solution. The DFINITY project is overseen, supported and promoted by DFINITY Stiftung a not-for-profit foundation based in Zug, Switzerland.
DFINITY is a decentralized network design whose protocols generate a reliable “virtual blockchain computer” running on top of a peer-to-peer network upon which software can be installed and can operate in the tamperproof mode of smart contracts.
DFINITY introduces algorithmic governance in the form of a “Blockchain Nervous System” that can protect users from attacks and help restart broken systems, dynamically optimize network security and efficiency, upgrade the protocol and mitigate misuse of the platform, for example by those wishing to run illegal or immoral systems.
DFINITY is an Ethereum-compatible smart contract platform that is implementing some revolutionary ideas to address blockchain performance, scaling, and governance. Whereas
DFINITY could pose a credible threat to Ethereum’s extinction, the project is pursuing a coevolutionary strategy by contributing funding and effort to Ethereum projects and freely offering their technology to Ethereum for adoption. DFINITY has labeled itself Ethereum’s “crazy sister” to express it’s close genetic resemblance to Ethereum, differentiated by its obsession with performance and neuron-inspired governance model.
Dfinity raised $61 million from Andreesen Horowitz and Polychain Capital in a February 2018 funding round. At the time, Dfinity said it wanted to create an “internet computer” to cut the costs of running cloud-based business applications. A further $102 million funding round in August 2018 brought the project’s total funding to $195 million.
In May 2018, Dfinity announced plans to distribute around $35 million worth of Dfinity tokens in an airdrop. It was part of the company’s plan to create a “Cloud 3.0.” Because of regulatory concerns, none of the tokens went to US residents.
DFINITY be broadening and strengthening the EVM ecosystem by giving applications a choice of platforms with different characteristics. However, if DFINITY succeeds in delivering a fully EVM-compatible smart contract platform with higher transaction throughput, faster confirmation times, and governance mechanisms that can resolve public disputes without causing community splits, then it will represent a clearly superior choice for deploying new applications and, as its network effects grow, an attractive place to bring existing ones. Of course the challenge for DFINITY will be to deliver on these promises while meeting the security demands of a public chain with significant value at risk.

1.1.1 DFINITY FUTURE

  • DFINITY aims to explore new blockchain territory related to the original goals of the Ethereum project and is sometimes considered “Ethereum’s crazy sister.”
  • DFINITY is developing blockchain-based infrastructure to support a new style of the internet (akin to Ethereum’s “World Computer”), one in which the internet itself will support software applications and data rather than various cloud hosting providers.
  • The project suggests this reinvented software platform can simplify the development of new software systems, reduce the human capital needed to maintain and secure data, and preserve user data privacy.
  • Dfinity aims to reduce the costs of cloud services by creating a decentralized “internet computer” which may launch in 2020
  • Dfinity claims transactions on its network are finalized in 3–5 seconds, compared to 1 hour for Bitcoin and 10 minutes for Ethereum.

1.1.2 DFINITY’S VISION

DFINITY’s vision is its new internet infrastructure can support a wide variety of end-user and enterprise applications. Social media, messaging, search, storage, and peer-to-peer Internet interactions are all examples of functionalities that DFINITY plans to host atop its public Web 3.0 cloud-like computing resource. In order to provide the transaction and data capacity necessary to support this ambitious vision, DFINITY features a unique consensus model (dubbed Threshold Relay) and algorithmic governance via its Blockchain Nervous System (BNS) — sometimes also referred to as the Network Nervous System or NNS.

1.2 DFINITY COMMUNITY

The DFINITY community brings people and organizations together to learn and collaborate on products that help steward the next-generation of internet software and services. The Internet Computer allows developers to take on the monopolization of the internet, and return the internet back to its free and open roots. We’re committed to connecting those who believe the same through our events, content, and discussions.

https://preview.redd.it/0zv64fzf05e51.png?width=637&format=png&auto=webp&s=e2b17365fae3c679a32431062d8e3c00a57673cf

1.3 DFINITY ROADMAP (TIMELINE) February 15, 2017

February 15, 2017
Ethereum based community seed round raises 4M Swiss francs (CHF)
The DFINITY Stiftung, a not-for-profit foundation entity based in Zug, Switzerland, raised the round. The foundation held $10M of assets as of April 2017.
February 8, 2018
Dfinity announces a $61M fundraising round led by Polychain Capital and Andreessen Horowitz
The round $61M round led by Polychain Capital and Andreessen Horowitz, along with an DFINITY Ecosystem Venture Fund which will be used to support projects developing on the DFINITY platform, and an Ethereum based raise in 2017 brings the total funding for the project over $100 million. This is the first cryptocurrency token that Andressen Horowitz has invested in, led by Chris Dixon.
August 2018
Dfinity raises a $102,000,000 venture round from Multicoin Capital, Village Global, Aspect Ventures, Andreessen Horowitz, Polychain Capital, Scalar Capital, Amino Capital and SV Angel.
January 23, 2020
Dfinity launches an open source platform aimed at the social networking giants

2.DFINITY TECHNOLOGY

Dfinity is building what it calls the internet computer, a decentralized technology spread across a network of independent data centers that allows software to run anywhere on the internet rather than in server farms that are increasingly controlled by large firms, such as Amazon Web Services or Google Cloud. This week Dfinity is releasing its software to third-party developers, who it hopes will start making the internet computer’s killer apps. It is planning a public release later this year.
At its core, the DFINITY consensus mechanism is a variation of the Proof of Stake (PoS) model, but offers an alternative to traditional Proof of Work (PoW) and delegated PoS (dPoS) networks. Threshold Relay intends to strike a balance between inefficiencies of decentralized PoW blockchains (generally characterized by slow block times) and the less robust game theory involved in vote delegation (as seen in dPoS blockchains). In DFINITY, a committee of “miners” is randomly selected to add a new block to the chain. An individual miner’s probability of being elected to the committee proposing and computing the next block (or blocks) is proportional to the number of dfinities the miner has staked on the network. Further, a “weight” is attributed to a DFINITY chain based on the ranks of the miners who propose blocks in the chain, and that weight is used to choose between competing chains (i.e. resolve chain forks).
A decentralized random beacon manages the random selection process of temporary block producers. This beacon is a Variable Random Function (VRF), which is a pseudo-random function that provides publicly verifiable proofs of its outputs’ correctness. A core component of the random beacon is the use of Boneh-Lynn-Shacham (BLS) signatures. By leveraging the BLS signature scheme, the DFINITY protocol ensures no actor in the network can determine the outcome of the next random assignment.
Dfinity is introducing a new standard, which it calls the internet computer protocol (ICP). These new rules let developers move software around the internet as well as data. All software needs computers to run on, but with ICP the computers could be anywhere. Instead of running on a dedicated server in Google Cloud, for example, the software would have no fixed physical address, moving between servers owned by independent data centers around the world. “Conceptually, it’s kind of running everywhere,” says Dfinity engineering manager Stanley Jones.
DFINITY also features a native programming language, called ActorScript (name may be subject to change), and a virtual machine for smart contract creation and execution. The new smart contract language is intended to simplify the management of application state for programmers via an orthogonal persistence environment (which means active programs are
not required to retrieve or save their state). All ActorScript contracts are eventually compiled down to WebAssembly instructions so the DFINITY virtual machine layer can execute the logic of applications running on the network. The advantage of using the WebAssembly standard is that all major browsers support it and a variety of programming languages can compile down to Wasm (not just ActorScript).
Dfinity is moving fast. Recently, Dfinity showed off a TikTok clone called CanCan. In January it demoed a LinkedIn-alike called LinkedUp. Neither app is being made public, but they make a convincing case that apps made for the internet computer can rival the real things.

2.1 DFINITY CORE APPLICATIONS

The DFINITY cloud has two core applications:
  1. Enabling the re-engineering of business: DFINITY ambitiously aims to facilitate the re-engineering of mass-market services (such as Web Search, Ridesharing Services, Messaging Services, Social Media, Supply Chain, etc) into open source businesses that leverage autonomous software and decentralised governance systems to operate and update themselves more efficiently.
  2. Enable the re-engineering of enterprise IT systems to reduce costs: DFINITY seeks to re-engineer enterprise IT systems to take advantage of the unique properties that blockchain computer networks provide.
At present, computation on blockchain-based computer networks is far more expensive than traditional, centralised solutions (Amazon Web Services, Microsoft Azure, Google Cloud Platform, etc). Despite increasing computational cost, DFINITY intends to lower net costs “by 90% or more” through reducing the human capital cost associated with sustaining and supporting these services.
Whilst conceptually similar to Ethereum, DFINITY employs original and new cryptography methods and protocols (crypto:3) at the network level, in concert with AI and network-fuelled systemic governance (Blockchain Nervous System — BNS) to facilitate Corporate adoption.
DFINITY recognises that different users value different properties and sees itself as more of a fully compatible extension of the Ethereum ecosystem rather than a competitor of the Ethereum network.
In the future, DFINITY hopes that much of their “new crypto might be used within the Ethereum network and are also working hard on shared technology components.”
As the DFINITY project develops over time, the DFINITY Stiftung foundation intends to steadily increase the BNS’ decision-making responsibilities over time, eventually resulting in the dissolution of its own involvement entirely, once the BNS is sufficiently sophisticated.
DFINITY consensus mechanism is a heavily optimized proof of stake (PoS) model. It places a strong emphasis on transaction finality through implementing a Threshold Relay technique in conjunction with the BLS signature scheme and a notarization method to address many of the problems associated with PoS consensus.

2.2 THRESHOLD RELAY

As a public cloud computing resource, DFINITY targets business applications by substantially reducing cloud computing costs for IT systems. They aim to achieve this with a highly scalable and powerful network with potentially unlimited capacity. The DFINITY platform is chalk full of innovative designs and features like their Blockchain Nervous System (BNS) for algorithmic governance.
One of the primary components of the platform is its novel Threshold Relay Consensus model from which randomness is produced, driving the other systems that the network depends on to operate effectively. The consensus system was first designed for a permissioned participation model but can be paired with any method of Sybil resistance for an open participation model.
“The Threshold Relay is the mechanism by which Dfinity randomly samples replicas into groups, sets the groups (committees) up for threshold operation, chooses the current committee, and relays from one committee to the next is called the threshold relay.”
Threshold Relay consists of four layers (As mentioned previously):
  1. Notary layer, which provides fast finality guarantees to clients and external observers and eliminates nothing-at-stake and selfish mining attacks, providing Sybil attack resistance.
  2. Blockchain layer that builds a blockchain from validated transactions via the Probabilistic Slot Protocol driven by the random beacon.
  3. Random beacon, which as previously covered, provides the source of randomness for all higher layers like the blockchain layer smart contract applications.
  4. Identity layer that provides a registry of all clients.

2.2.1 HOW DOES THRESHOLD RELAY WORK?

Threshold Relay produces an endogenous random beacon, and each new value defines random group(s) of clients that may independently try and form into a “threshold group”. The composition of each group is entirely random such that they can intersect and clients can be presented in multiple groups. In DFINITY, each group is comprised of 400 members. When a group is defined, the members attempt to set up a BLS threshold signature system using a distributed key generation protocol. If they are successful within some fixed number of blocks, they then register the public key (“identity”) created for their group on the global blockchain using a special transaction, such that it will become part of the set of active groups in a following “epoch”. The network begins at “genesis” with some number of predefined groups, one of which is nominated to create a signature on some default value. Such signatures are random values — if they were not then the group’s signatures on messages would be predictable and the threshold signature system insecure — and each random value produced thus is used to select a random successor group. This next group then signs the previous random value to produce a new random value and select another group, relaying between groups ad infinitum and producing a sequence of random values.
In a cryptographic threshold signature system a group can produce a signature on a message upon the cooperation of some minimum threshold of its members, which is set to 51% in the DFINITY network. To produce the threshold signature, group members sign the message
individually (here the preceding group’s threshold signature) creating individual “signature shares” that are then broadcast to other group members. The group threshold signature can be constructed upon combination of a sufficient threshold of signature shares. So for example, if the group size is 400, if the threshold is set at 201 any client that collects that many shares will be able to construct the group’s signature on the message. Other group members can validate each signature share, and any client using the group’s public key can validate the single group threshold signature produced by combining them. The magic of the BLS scheme is that it is “unique and deterministic” meaning that from whatever subset of group members the required number of signature shares are collected, the single threshold signature created is always the same and only a single correct value is possible.
Consequently, the sequence of random values produced is entirely deterministic and unmanipulable, and signatures generated by relaying between groups produces a Verifiable Random Function, or VRF. Although the sequence of random values is pre-determined given some set of participating groups, each new random value can only be produced upon the minimal agreement of a threshold of the current group. Conversely, in order for relaying to stall because a random number was not produced, the number of correct processes must be below the threshold. Thresholds are configured so that this is extremely unlikely. For example, if the group size is set to 400, and the threshold is 201, 200 or more of the processes must become faulty to prevent production. If there are 10,000 processes in the network, of which 3,000 are faulty, the probability this will occur is less than 10e-17.

2.3 DFINITY TOKEN

The DFINITY blockchain also supports a native token, called dfinities (DFN), which perform multiple roles within the network, including:
  1. Fuel for deploying and running smart contracts.
  2. Security deposits (i.e. staking) that enable participation in the BNS governance system.
  3. Security deposits that allow client software or private DFINITY cloud networks to connect to the public network.
Although dfinities will end up being assigned a value by the market, the DFINITY team does not intend for DFN to act as a currency. Instead, the project has envisioned PHI, a “next-generation” crypto-fiat scheme, to act as a stable medium of exchange within the DFINITY ecosystem.
Neuron operators can earn Dfinities by participating in network-wide votes, which could be concerning protocol upgrades, a new economic policy, etc. DFN rewards for participating in the governance system are proportional to the number of tokens staked inside a neuron.

2.4 SCALABILITY

DFINITY is constantly developing with a structure that separates consensus, validation, and storage into separate layers. The storage layer is divided into multiple strings, each of which is responsible for processing transactions that occur in the fragment state. The verification layer is responsible for combining hashes of all fragments in a Merkle-like structure that results in a global state fractionation that is stored in blocks in the top-level chain.

2.5 DFINITY CONSENSUS ALGORITHM

The single most important aspect of the user experience is certainly the time required before a transaction becomes final. This is not solved by a short block time alone — Dfinity’s team also had to reduce the number of confirmations required to a small constant. DFINITY moreover had to provide a provably secure proof-of-stake algorithm that scales to millions of active participants without compromising any bit on decentralization.
Dfinity soon realized that the key to scalability lay in having an unmanipulable source of randomness available. Hence they built a scalable decentralized random beacon, based on what they call the Threshold Relay technique, right into the foundation of the protocol. This strong foundation drives a scalable and fast consensus layer: On top of the beacon runs a blockchain which utilizes notarization by threshold groups to achieve near-instant finality. Details can be found in the overview paper that we are releasing today.
The roots of the DFINITY consensus mechanism date back to 2014 when thair Chief Scientist, Dominic Williams, started to look for more efficient ways to drive large consensus networks. Since then, much research has gone into the protocol and it took several iterations to reach its current design.
For any practical consensus system the difficulty lies in navigating the tight terrain that one is given between the boundaries imposed by theoretical impossibility-results and practical performance limitations.
The first key milestone was the novel Threshold Relay technique for decentralized, deterministic randomness, which is made possible by certain unique characteristics of the BLS signature system. The next breakthrough was the notarization technique, which allows DFINITY consensus to solve the traditional problems that come with proof-of-stake systems. Getting the security proofs sound was the final step before publication.
DFINITY consensus has made the proper trade-offs between the practical side (realistic threat models and security assumptions) and the theoretical side (provable security). Out came a flexible, tunable algorithm, which we expect will establish itself as the best performing proof-of-stake algorithm. In particular, having the built-in random beacon will prove to be indispensable when building out sharding and scalable validation techniques.

2.6 LINKEDUP

The startup has rather cheekily called this “an open version of LinkedIn,” the Microsoft-owned social network for professionals. Unlike LinkedIn, LinkedUp, which runs on any browser, is not owned or controlled by a corporate entity.
LinkedUp is built on Dfinity’s so-called Internet Computer, its name for the platform it is building to distribute the next generation of software and open internet services.
The software is hosted directly on the internet on a Switzerland-based independent data center, but in the concept of the Internet Computer, it could be hosted at your house or mine. The compute power to run the application LinkedUp, in this case — is coming not from Amazon AWS, Google Cloud or Microsoft Azure, but is instead based on the distributed architecture that Dfinity is building.
Specifically, Dfinity notes that when enterprises and developers run their web apps and enterprise systems on the Internet Computer, the content is decentralized across a minimum of four or a maximum of an unlimited number of nodes in Dfinity’s global network of independent data centers.
Dfinity is an open source for LinkedUp to developers for creating other types of open internet services on the architecture it has built.
“Open Social Network for Professional Profiles” suggests that on Dfinity model one can create “Open WhatsApp”, “Open eBay”, “Open Salesforce” or “Open Facebook”.
The tools include a Canister Software Developer Kit and a simple programming language called Motoko that is optimized for Dfinity’s Internet Computer.
“The Internet Computer is conceived as an alternative to the $3.8 trillion legacy IT stack, and empowers the next generation of developers to build a new breed of tamper-proof enterprise software systems and open internet services. We are democratizing software development,” Williams said. “The Bronze release of the Internet Computer provides developers and enterprises a glimpse into the infinite possibilities of building on the Internet Computer — which also reflects the strength of the Dfinity team we have built so far.”
Dfinity says its “Internet Computer Protocol” allows for a new type of software called autonomous software, which can guarantee permanent APIs that cannot be revoked. When all these open internet services (e.g. open versions of WhatsApp, Facebook, eBay, Salesforce, etc.) are combined with other open software and services it creates “mutual network effects” where everyone benefits.
On 1 November, DFINITY has released 13 new public versions of the SDK, to our second major milestone [at WEF Davos] of demoing a decentralized web app called LinkedUp on the Internet Computer. Subsequent milestones towards the public launch of the Internet Computer will involve:
  1. On boarding a global network of independent data centers.
  2. Fully tested economic system.
  3. Fully tested Network Nervous Systems for configuration and upgrades

2.7 WHAT IS MOTOKO?

Motoko is a new software language being developed by the DFINITY Foundation, with an accompanying SDK, that is designed to help the broadest possible audience of developers create reliable and maintainable websites, enterprise systems and internet services on the Internet Computer with ease. By developing the Motoko language, the DFINITY Foundation will ensure that a language that is highly optimized for the new environment is available. However, the Internet Computer can support any number of different software frameworks, and the DFINITY Foundation is also working on SDKs that support the Rust and C languages. Eventually, it is expected there will be many different SDKs that target the Internet Computer.
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