Bitcoin Is ‘Anything but Useful’ Says Ex-Federal Reserve Chair Janet Yellen

Bitcoin is “anything but” a useful store of value, former U.S. Federal Reserve chair Janet Yellen stated in a speech Monday, Canadian financial news outlet Kitco reported Oct. 29.

Speaking during an interview at the 2018 Canada FinTech Forum in Montreal, Yellen – who rose to fame in the cryptocurrency community last year as the target of the now infamous ‘Buy Bitcoin’ session at a House Financial Services Committee meeting – doubled down on her previous criticism of the asset.

“It has long been thought that for something to be a useful currency, it needs to be a stable source of value, and bitcoin is anything but,” she claimed, continuing:

“It’s not used for a lot of transactions, it’s not a stable source of value, and it’s not an efficient means of processing payments. It’s very slow in handling payments. It has difficulty because of its very decentralized nature.”

Having been present during Yellen’s speech, Satoshi Portal CEO Francis Pouliot was among the first to denounce her words on social media, describing them as “The Official NPC [non-player character] guidelines to Bitcoin FUD, courtesy of the FED.”

At a press conference in December of last year, Yellen similarly called Bitcoin a “highly speculative asset” and “not a stable source of value.” She also noted that the Fed was not “seriously considering” the concept of a state-issued digital currency at that time.  

Yellen’s speech Monday echos not only her own previous comments on crypto, but also those made earlier this month by economist Nouriel Roubini, an outspoken cryptocurrency naysayer who foresees the entire ecosystem failing.

Commentators have taken Roubini to task over his comments, arguing his lack of understanding of decentralized cryptocurrency has led him, like Yellen, to draw false conclusions about its resilience.

“I can see a bubble when there is one – and to me, this entire space has been the mother and the father of all financial bubbles and now it’s [going to] burst,” he told Cointelegraph during an appearance at BlockShow Americas in August.

No, Bitcoin is Not Going to Melt the Planet

As Bitcoin adoption increases, a new study published Monday by Nature Climate Change warns that energy-demanding Bitcoin transactions would easily sling the global temperature past the 2-degree threshold set under the Paris Climate Agreement. But, is it true that Bitcoin is this energy inefficient that the mainstream media portrays?

While Bitcoin’s precipitous rise has been stunning, many are still ignorant of the Bitcoin phenomenon saying it is still too arduous, complex and even too libertarian. Add this to the border-less and global nature of Bitcoin, and we quickly have a regulatory concern that different governments are not willing to take a risk on. Initially, the very objective of Bitcoin was to create a better alternative to fiat and even if adoption is still low, that objective is still in line. And encouragingly, governments are beginning to embrace blockchain formulating new laws that classify Bitcoin as commodities, subject to taxation.

The Bitcoin Mining Energy Debate

But even in the face of increasing adoption, scientists are raising the alarm. Complementing this are trackers such as the Bitcoin Energy Consumption Index relaying estimates on the prodigious amount of energy required and raising awareness of “how unsustainable proof of work systems is”. The creators of these trackers go on to say it is not the amount of energy that the network uses but the realization that most of these mining rigs are powered by coal-fired generators from China.


Bitcoin Energy Consumption Statistics















According to BECI, each transaction requires 812 KWH translating to an annual demand of 73.12 TWH. This is around 404.89 KG of Carbon-dioxide per transaction that is pumped to the atmosphere edging the global temperature closer to the 2-percent threshold.

Researchers said greenhouse emissions from Bitcoin mining rigs was around 69 million metric tons in 2017. However, that was not enough to propel Bitcoin to the mainstream as it contributed a mere 0.033 percent of the world’s cashless transactions.

At this rate, scientists from the University of Hawaii at Manoa said it was enough to push global temperatures above pre-industrial levels assuming the same energy sources, which is mainly coal, were used.

Bitcoin Miners are Green Energy Promoters

Regardless, Bitcoin maximalists are desirous and working towards an ecosystem that is crypto powered insisting that it is better and will slowly eat up the $8.7 trillion of political money called fiat.

Supporters, such as Eric Masanet of the Northwestern University, insist that the recent study is “fundamentally flawed” laying out fact that the global energy is actually de-carbonizing and more efficient rigs are in the pipeline. Besides, he adds that it is hard to predict rates of adoption, future efficiencies and sources of energy of which the study bases its conclusion on.

Furthermore, making the basis of this study shallow, is the is the assumption that Bitcoin would in the future act as a medium of exchange. Though novel and ideal, it is likely that Bitcoin will end up as an investment vehicle acting as a store of value.

Additionally, since Bitcoin is a global phenomenon, environmentalists shift away from the energy intensity drum beating to the realization that while Bitcoin mining is concentrated in China, there are other geographies like Iceland that make use of 100 percent renewables like geothermal and wind energy.

According to Katrina Kelly-Pitou, Strategy Manager at the University of Pittsburgh’s Center for Energy, energy production can increase without negatively impacting the environment. She adds that even if Bitcoin market cap is to increase hundred-folds, it would still be more energy efficient than traditional banking systems.

“Even if Bitcoin technology were to mature by more than 100 times its current market size, it would still equal only 2 percent of all energy consumption.”

Bitcoin and Blockchain Here to Stay

It’s increasingly becoming clear that Bitcoin is here to stay. Needless to say, Bitcoin is ingenious and potentially transformative, but at the same turn adopters cannot turn a blind eye to the negative effect of Bitcoin’s energy requirements. Considering that there is a direct relationship between adoption and energy demands, blockchain promoters and enthusiasts are always on the innovation front researching and implementing new energy efficient technologies.

After all, it is the miner’s responsibility to stay profitable even as energy requirements and fossil fuel prices sky rocket. In fact, the need of efficiency is so strong transportation costs are incurred as miners migrate from time to time to new jurisdictions with more favorable energy rates. This is why the miners are charting new territories, advocating for the need of green energy sources, and are not the axis of evil as the study implies.


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China Seeks Public Feedback on Draft DLT Regulations

The Cyberspace Administration of China (CAC) has announced that it will accept public feedback through Nov. 2 on draft rules it recently published to regulate blockchain projects, but the proposed legislation has already drawn a mixed response from distributed ledger technology (DLT) analysts.

Also Read: Bitstamp Confirms Acquisition by South Korean Company

Strict Rules for DLT Users

China Seeks Public Feedback on Draft DLT RegulationsThe CAC said it has designed the proposed rules to uphold national security and protect the interests of companies and the general public, while facilitating the development of the blockchain industry. The guidelines require real-name registration for all DLT users and obligate all blockchain companies in China to store user data for government inspection for periods of up to six months.

“Blockchain-based service providers should work with the authorities to carry out supervision and inspection, and provide the necessary data and technical assistance,” the CAC said in the document.

The regulator also wants blockchain-based service providers to register within 10 days of starting their businesses. Such companies will be expected to record the names and server addresses of their customers, and will face the possibility of suspension if they provide incorrect information to the authorities. Those that fail to rectify issues related to incorrect customer information within specified time frames may also have their licenses revoked.

In addition to the strict monitoring and reporting requirements it is proposing, the CAC said that it expects the DLT industry to develop its own standards and best practices. It has called for the “blockchain industry to strengthen self-regulation and set up industry standards, educate service providers, and promote the industry credit rating system.”

Mixed Reactions to Proposed Guidelines

China Seeks Public Feedback on Draft DLT RegulationsThe proposed regulations have received mixed reactions from analysts and representatives of China’s DLT sector. Yang Dong, vice president of Renmin University of China Law School, warned that the legislation could stifle innovation. “This will only bring undesirable obstacles and difficulties to entities’ innovation activities,” he said. “Blockchain technology should be neutral. The necessity of the draft policy should be doubted.”

Tamar Menteshashvili, a doctorate student and founder of the Shanghai Jiao Tong University Blockchain Hub, said that the proposed regulations are at odds with the government’s support for the blockchain industry. She also warned that the proposed rules could place additional financial burdens on blockchain startups, due to new procedures they might need to introduce to meet legal requirements.

“While the Chinese government has been very supportive of blockchain technology … the whole industry is under the strong supervision of the authorities and (is) as closely controlled as possible,” Menteshashvili said.

But Billy Chan, the chief executive officer of Dropchain, said the proposed guidelines should not be solely seen in a negative light. “It’s not fair to say the government is stifling blockchain,” Chan said. “Instead, they’re trying to hold people accountable.”

Do you think that the increasing regulation of cryptocurrencies and DLT is stifling innovation, or is it an inevitable consequence of mainstream adoption? Share your thoughts in the comments section below!

Images courtesy of Shutterstock

At there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

Ethereum (ETH) Price Analysis – October 30


Ethereum (ETH) Price Analysis – October 30


Ethereum, ETHUSD, Cryptocurrencies, chartEthereum Chart by TradingView

Ethereum Price Medium-term Trend: Bearish

Supply zones: $400, $450, $500

Demand zones: $150, $100, $50

ETH remains in a bearish trend in its medium-term outlook. The bears had a nice ride to the demand area at $195.00 – as predicted in yesterday’s analysis. After breaking out from the bearish pennant with a long-tailed bearish candle, increased bearish momentum led to a lower low at $195.10. The bulls gradually staged a comeback with ETHUSD closing as a bullish hammer at $196.50. The bullish 4-hour opening candle at $196.90 sustained the momentum with ETHUSD up at $198.00 in the supply area earlier today.

The bulls’ efforts still have the price within the 23.6 fib level, a trend continuation zone, which is a pullback. This is to validate the downtrend continuation, and also serve as a market correction.

Price is below the two EMAs which suggest bearish pressure and the stochastic oscillator is in the oversold region at 17% and it signal yet undefined.

The bears may stage a comeback at 23.6 or 38.2 fib levels and drop ETHUSD to $190.00 in the demand area in the medium-term.

Ethereum Price Short-term Trend: Bearish

Ethereum, ETHUSD, Cryptocurrencies, chartEthereum Chart by TradingView

ETH is in a bearish trend in its short-term outlook. The strong bearish pressure broke $203.00 in the lower demand area of yesterday’s range and pushed the price further down to $195.16 in the demand area but closes with a bullish engulfing candle at $196.07 an indication of the bulls return. ETHUSD was up at $198.68 earlier today.

The current pullback may push ETHUSD to the critical supply area as shown in the chart before the bears possibly stage a strong comeback.

The price is above the 10-EMA but below 50-EMA an indication that the bears’ are still within the market. The stochastic oscillator is in the overbought region at 80% and its signal pointing up – an indication of bullish retracement necessary for the market correction before downtrend continuation.




The views and opinions expressed here do not reflect that of and do not constitute financial advice. Always do your own research

U.S. Man Faces up to 5 Years in Prison for ‘Unlicensed’ Bitcoin Sales via LocalBitcoins

A U.S. citizen has pled guilty before a federal court to operating an “unlicensed money transmitting business” via, according to a Department of Justice (DoJ) press release published Oct. 29.

The man, Jacob Burrell Campos, has reportedly admitted to “selling hundreds of thousands of dollars” in Bitcoin (BTC) “to over 1,000 customers” in the U.S. between Jan. 2015-April 2016, thus deemed to effectively be operating what the DoJ characterizes as an unregistered “Bitcoin exchange.”

Availing himself of the popular peer-to-peer platform, Burrell reportedly failed to register his business activities with the U.S. Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury, and to apply due diligence (such as anti-money-laundering (AML) measures) on the sources of his clients’ funds.

According to the release, after advertising on LocalBitcoins, Burrell negotiated his Bitcoin sales at a commission of 5 percent above the prevailing rate, “often” using encrypted email or SMS apps to communicate with clients. He is reported to have accepted payment either cash in hand, through ATMs, or through MoneyGram.

Burrell further admitted that his account on an unnamed “U.S.-based, regulated” crypto exchange had been closed after coming under scrutiny for “suspicious” transactions. He then turned to a Hong Kong-based platform, through which he is said to have purchased $3.29 million worth in Bitcoin between March 2015-April 2017 in “hundreds” of individual transactions.

The press release lastly outlines that Burrell has admitted that he exchanged his U.S. fiat currency, which he stored in Mexico, with a San Diego-based precious metals dealer, Joseph Castillo. The latter has reportedly pleaded guilty to making a false declaration on his federal tax returns, for which he awaits sentencing Dec. 13.

Burrell and unnamed “others” are said to have daily imported over $1 million between late 2016 and early this year, in amounts just below the $10, 000 threshold at which the money would have to be declared.

Burrell will be sentenced Feb. 11 2019, facing a maximum sentence of five years behind bars. He has agreed to forfeit over $800,000 to the U.S. in his plea agreement.

The press release cites U.S. attorney Adam Braverman as saying that:

“Unlicensed money transmitting businesses, especially those operating at or near the border, pose a serious threat to the integrity of the US banking system, and provide an ‘open door’ for criminals to utilize such businesses to launder the proceeds of their illicit activities.”

As reported this June, an L.A.-based trader, who acted under the pseudonym “Bitcoin Maven,” was prosecuted for running an unregistered multi-million dollar Bitcoin-fiat money transmitting business, also via a listing.

Bitcoin Turns Ten: A Blast To The Past

Just shy of 10 years ago, on October 31st, 2008, Satoshi Nakamoto, the pseudonymous creator of the now-world-renowned Bitcoin project, sat down to release a technical paper on what is arguably the most important innovation in human history.

Bitcoin Origins

As you may (or may not remember), this paper, titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” highlighted the world’s first decentralized network and a viable form of digital cash that was seemingly poised to usurp the powers that be — the government and centralized institutions.

Initially, Nakamoto’s paper was slow to garner traction, occasionally seeing a few clicks from subscribers of, a lesser-known cryptography mailing list that was frequented by innovators, digital anarchists, and zany internet goers who likely had two too many beers. In spite of only seeing fleeting flashes of interest at the start, Nakamoto, who claimed to be a Japan-based coder, pushed ahead, launching Bitcoin v0.1 via Sourceforge on January 9th, 2009.

In the Bitcoin Network’s first block, commonly referred to as the near-deified “Genesis Block,” Nakamoto, making his hate for banks public, embedded the following comment:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

While this could’ve been any old headline snagged from one of the internet’s thousands of RSS feeds, the fact that Nakamoto chose a story that clearly outlined the state of the traditional banking system at the time indicates that he had a penchant to hate banks.

As the first block was processed and the first coinbase transaction was issued, it was apparent that Satoshi was all by his lonesome, as his node, the world’s first full Bitcoin node, sat alone and in the dark. However, this changed when computer scientist Hal Finney overtly expressed interest in the decentralized system, becoming the first user to ever receive a BTC transaction, and from Satoshi himself, no less.

Still, despite the fact that the Bitcoin Network was as decentralized (and appealing) as systems come, with a (near) set-in-stone 10-minute block time and a fixed distribution curve, for a majority of the system’s infant months, Satoshi and Finney were left alone to twiddle their thumbs… Or in this case, to twitch their fingers over a keyboard in a bid to better the Bitcoin Network.

In a testament to the ghost town that was Bitcoin in 2009, Nakamoto, who is believed to have been Hal Finney by some, mined an estimated one million BTC, which have presumably been lost in the ether.

However, as the brainchild of Nakamoto turned one, the pseudonymous coder’s involvement in the project waned, like a candle reaching the end of its wick. And eventually, due to an unexplained series of circumstances, in classic Satoshi style, the Bitcoin founder disappeared, quickly handing pertinent keys and data over to Gavin Andresen, along with a handful of other early crypto adopters, to foster the project further.

Following that fateful day in 2010, Bitcoin wasn’t one man’s creation any longer, but rather, an innovation backed by a countless number of diehard decentralists and those with visions of a new world — one revolutionized by decentralized systems.

The Bitcoin Pizza, Mt.Gox, Silk Road

On May 22nd, 2010, the world saw one Laszlo Hanyecz issue the world’s first real-item BTC transaction, sending 10,000 BTC (~$40 at the time) to a Bitcoin Forum user named Jercos in exchange for two Dominos pizzas. While this occurrence may seem silly and something that should be swept under the rug, since Laszlo took the first bite of his 10,000 BTC pizza, nothing has been the same — hence the creation of “Bitcoin Pizza Day.”

While Laszlo’s transaction was a crypto-to-fiat transaction in essence, at the time, there were few legitimate, accessible, and easy-to-use platforms that openly supported fiat, which hampered the adoption and maturation of Bitcoin and the earliest semblance of altcoins.

Programmer Jed McCaleb aimed to solve this problem, turning Magic: The Gathering Online eXchange (Mt.Gox), which he owned, into the Bitcoin exchange that some loved, and others loved to hate. Eight months after launching Mt.Gox on July 18th, 2010, McCaleb, who has since done stints at the Stellar and Ripple projects, sold Mt.Gox to French developer Mark Karpeles, who was situated in Japan at the time.

As the now-infamous story goes, Mt.Gox saw its first tussle with hackers in mid-June 2011, when a malicious attacker forced the nominal price of BTC to move to $0.01 on the exchange. Although this breach was evidently dangerous and exposed flaws in the platform’s operational security systems, interested consumers continued to flock to Mt.Gox. By 2013, the Japan-based platform had garnered an average of 70% of the world’s daily BTC volume, indicating that McCaleb’s move to pawn off Mt.Gox to Karpeles may have backfired.

As Mt.Gox continued to gain traction, Ross Ulbricht, the alleged founder of the online BTC-centric Silk Road marketplace, was implicated in cases of money laundering, computer hacking, conspiracy to traffic narcotics, “and attempted murder.” Ulbricht, who has been dubbed a hero by many in the cypherpunk community, was sentenced to a life without parole in prison, with this being one of the first times that the U.S. government had gone all-out against crypto, shutting down Silk Road’s illicit good market in the process.

As Silk Road collapsed, Mt.Gox exchange remained at the top of the leaderboards, so to speak. However, In February 2014, the exchange suffered a ground-breaking hack, reportedly losing upwards of 750,000 BTC. This hack, which saw Mt.Gox lose over $473 million worth of BTC (at past valuations) and the subsequent shutdown of Mt.Gox catalyzed the creation of a Japanese court case, which still rages on to this day. Along with sparking a heated legal debate, with “Mt.Gox, where’s our money?” becoming the war cry of hack victims, the story of Mt.Gox became one of the first crypto-related stories to garner traction in the mainstream media realm, leading many consumers to permanently disassociate their lives with Bitcoin and cryptocurrencies.

However, it wasn’t all doom and gloom in the crypto markets, as during the multi-year course of aforementioned two events, the nascent crypto ecosystem continued to mature at an unbridled pace. For one, in early 2011, as Mt.Gox was starting to stand on its own two feet, Wikileaks, a non-for-profit leaked/secret information source, revealed that it would add support for BTC following an embargo from payment providers, who didn’t want to associate themselves with the illicit leaking of confidential information.

Although this is only one out of the hundreds of examples of real-world adoption (, NewEgg, Steam, Microsoft, and many others also joined the fray), this specific case highlights Bitcoin’s role as an uncensorable, cross-border, and efficient method of payment, which is exactly what Satoshi envisioned in his original paper.

The Lull And Subsequent Boom

Likely due to the aforementioned Mt.Gox and Silk Road debacles and/or classic market cycles, the crypto industry quieted down in 2015 and 2016, with BTC undergoing a relative lull, with prices often resembling traditional equity markets at some point during that two year period.

However, while volatility declined and speculative interest exited the market, the industry’s fundamentals continued to boom, with Bitcoin and other crypto assets gaining recognition as a form of online payment, while also seeing positive regulatory news rush in en-masse.

In March 2016, solidifying the legitimacy of cryptocurrencies, Japan’s Cabinet formally recognized virtual currencies as something similar to physical money, pushing the nation forward in its acceptance of cryptocurrency and blockchain technology. Following this regulatory win, other nations followed suit, but like Bitcoin’s most infant years, Japan remained a home of innovation for this promising technology.

Eventually, 2017 rolled around, and as you likely remember, it was quite a year to behold, especially in the context of the crypto market and Bitcoin specifically. Throughout 2017, Bitcoin and crypto assets garnered a colossal amount of consumer traction, with “Bitcoin” becoming one of Google’s most searched terms, if not the most searched term on the America-based web search giant. In 2017, discussion regarding alternative vehicles for Bitcoin investment began, resulting in plans to launch ETFs, futures contracts, and similar products that were all centered around crypto assets. While the Winklevoss Twins’ ETF application fell through, in late-2017, as BTC neared its peak at $20,000, the U.S. Commodities Futures Trading Commission (CFTC) gave the CME and CBOE Global Markets the green light to launch a cash-settled Bitcoin futures contract, which sparked claims that institutions were poised to come rushing into this market.

However, since then, the value of crypto assets have seen a sharp sell-off, as many have claimed that this market reached a point where it was well over-bought. Due to crypto’s most recent collapse, per 99Bitcoins’ “Bitcoin Obituaries” page, industry onlookers have claimed that this nascent innovation has died upwards of 315 times, likely due to a multitude of qualms. But now, as seen by the monumental rise of interest from retail, merchant, and institutional participants, this industry isn’t ready to go kaput… far from in fact. But more on that in the next edition of “Bitcoin Turns Ten”.

Part 2 tomorrow: Bitcoin Turns Ten: Today And What's Next?
Featured Image from Shutterstock

Coinbase Raises $300 Million in New Funding Round to ‘Accelerate’ Cryptocurrency Adoption


Major U.S. crypto exchange and wallet provider Coinbase has raised $300 million in a fresh funding round that brings its post-money valuation to $8 billion, according to an official blog post published today, Oct. 30.

The Series E equity financing round was reportedly led by investment firm Tiger Global Management, with participation from a host of backers well-known for their investments in the crypto space, such as Y Combinator Continuity, Wellington Management, Andreessen Horowitz, and Polychain, among others.

According to Coinbase, the funds will be used to “accelerate” the adoption of cryptocurrencies, with plans to build infrastructure to support regulated fiatcrypto trading globally, and to lay the foundations for the support of “thousands” of new cryptos in future.

The funding will also be invested in further developing Coinbase’s proprietary wallet and to create new “utility applications,” such as the platform’s recent move to launch a stablecoin, dubbed USDCoin (USDC), together with blockchain tech firm Circle.

Coinbase lastly highlights it intends to continue to ease institutional investor exposure to crypto: the firm made the bullish claim this May that improved infrastructure and diversified offerings could “unlock $10 billion of institutional investor money sitting on the sideline.”  To this end, today’s post points to plans to add features and new crypto assets to its existing custodian solution, which opened for business this July.

In mid-June, Coinbase’s Index Fund had opened to large-scale, U.S. resident “accredited” investors, for investments of between $250,000 and $20 million.

Today’s news confirms rumors that first surfaced in early October, which explicitly named Tiger Global as being likely to soon close a deal with the exchange. As reported at the time, Tiger Global Management is an investment firm founded in 2001 that invests globally in both private and public markets.

With talk of the then unconfirmed deal already suggesting a watershed $8 billion valuation, CEO of crypto merchant bank Galaxy Digital Mike Novogratz remarked:

“Here’s the poster child of the crypto space worth $8 billion — that’s a real company, and Tiger’s not a flake of an investor. These are smart, savvy guys.”

Privacy-Focused Startup StarkWare Nets $30 Million in Series A Funding Round

Privacy-focused cryptocurrency startup StarkWare has announced the successful closure of its Series A funding round made up of a who’s who of blockchain industry organizations such as Intel Capital, Sequoia, Atomico, DCVC, Wing, Consensys, Coinbase Ventures, Multicoin Capital, Collaborative Fund, Scalar Capital and Semantic Ventures. In an announcement published on its official blog on October 29, 2018, StarkWare revealed that it is also looking for new talent in Israel as it seeks to expand.

Why StarkWare Was Created

StarkWare was founded as a project intended to solve the problems inherent with the existing privacy coin framework zkSNARKs used by ZCash (ZEC). For developers interested in creating a framework for entirely private and anonymous transactions, zkSNARKs has one major failing, which while not easily exploitable could potentially compromise the integrity of the entire ZCash network and cause a loss of trust in it.

Founded in 2014, ZCash proposed to use cryptographic proof setups including zkSNARKs as a substitute for public on-chain display of transaction information a la bitcoin, which privacy enthusiasts see as inherently at odds with cryptocurrency’s principle of anonymity. zkSNARKs offers a solution to this problem that is zero-knowledge, providing no personal information to potential actors using compromised servers, and it is also universally applicable and highly scalable.

The only problem with this framework is that it requires a “trusted setup” whereby a master private key is used to create specific public parameters. In theory, once the master private key is used to do this, it should be destroyed, but in practise, it is possible that a key holder could refrain from doing this and secretly create new ZCash tokens. In other words, the zkSNARKs protocol includes a deadly flaw that potentially enables master private key holders to inflate the ZEC supply, which could lead to public loss of confidence in the cryptocurrency.

StarkWare solves this problem by eliminating the need for a trusted setup, which removes the need for a master private key to exist. The new framework, known as zkSTARK stands for “Zero Knowledge Scalable Transparent (“no trusted setup”) ARgument of Knowledge.”

StarkWare Investment Information

According to the announcement, the list of StarkWare Series A funding investors also includes Pantera, Floodgate, and Naval Ravikant who are existing investors in the StarkWare project, and some prominent researchers working on the project include Prof. Eli Ben-Sasson (Technion), Prof. Alessandro Chiesa (UC Berkeley), Uri Kolodny, and Michael Riabzev.

An excerpt from the announcement reads:

“We’ve assembled a world-class team of experts in zero-knowledge proof systems and engineering, to solve two of the main challenges in the blockchain space: privacy and scalability.”

The company also mentioned that following the funding round, Paradigm co-founder Matt Huang will join StarkWare’s board of directors. Since Huang and Fred Ehrsam of Coinbase founded paradigm, StarkWare has become the first investment led by the VC firm.

StarkWare further mentioned that it is currently accepting applications as it works on expanding its team in Israel.