Daily Update — November 6, 2018

November 6, 2018

Market Snapshot

Total Market Cap: $216,135,472,588
24 Hour Volume $15,064,850,812
BTC Dominance: 51.7%
BTC-O: $6,363.62
BTC-H: $6,480.59
BTC-L: $6,363.62
BTC-C: $6,419.66

Blockchain Tax Tracking in Thailand

Don’t worry. This isn’t about tracking capital gains taxes on your blockchain-based assets. According to the Bangkok Post, Thailand’s Revenue Department, the Thai equivalent of America’s IRS, is planning to use a blockchain-based system to track tax payments. Director-General, Nitithanprapas Ekniti also stated that a “digital tax collection system based on modern technologies is one of the government’s top priorities.”

Thailand has been one of the world’s driving forces when it comes to blockchain. In addition to recent crypto-friendly regulations, the Thai government has also performed blockchain pilots in various industries like agriculture, copyright, and finance. With all this mind, this news about Thailand using blockchain, smart contracts, and machine learning to track tax payments isn’t too surprising. I think the potential surprise here is the possibility of a cryptocurrency backed by the Thai baht.

Ekniti specifically a mentioned designing a “digital tax collection system” as a major priority. This statement suggests the Thai government is interested in building a system that is more sophisticated than just a blockchain-based tracking system, and the word “collection” invokes thoughts of money or value changing hands between the taxpayer and tax collector. Even with Thailand’s positive outlook on cryptocurrencies, I don’t see them giving Bitcoin legal tender status, which is a requirement for an asset that can be used to settle tax debts. Opinions aside, what I do see happening in the not so distant future is a state-backed “bahtcoin”.

Clarifying ICX’s 20% Inflation Rate

I woke up this morning to a hilarious Reddit thread titled ICON (ICX) delegates have the power to mint new ICX every year “that does not exceed 20%” (page 30 of whitepaper). Why is this hilarious? Because it was created by a Substratum moderator in response to my recent criticisms about the rogue token minting function in Substratum’s smart contract. In case you’re out of the loop, here’s a condensed version of the story.

Substratum’s smart contract has a mintToken() function. You can see it for yourself on Line 136. Substratum’s original pre-ICO whitepaper does not mention this function anywhere. Following a successful ICO, Substratum swapped out the original whitepaper with a new one that states the minting function will be used if the network runs out of SUB to fuel the network. To this day, I still do not fully understand what that even means. In June, Binance publicly announced this flaw, presumably during a routine audit of listed assets.

After review, Substratum (SUB) is the only token listed on Binance with the potential owner-permission issue. We verified the blockchain and confirmed this exploit has not been used. Through our communication, the Substratum team has acknowledged the issue and provided plans to fix it.

Following this statement from Binance, Substratum CEO Justin Tabb announced the team had decided to remove the minting function and would make changes to Substratum’s smart contract “next week”. Yeah, that never happened “next week,” and ironically we didn’t hear anything about the smart contract until today’s video update.

That’s the story. This whole time, my criticism has been focused on Substratum’s terrible (as usual) PR skills. My point was simple. Anyone with half a brain can understand why an unnecessary mintToken() function is a huge security flaw. Furthermore, Substratum is a project that’s known for performing “token burns” by creating a wallet, promising to delete the private key, and sending tokens to that wallet. They’re just excruciatingly incompetent when it comes to maintaining good optics about the economic activity of the SUB token. It doesn’t matter what anyone’s opinion about this is because it’s objectively true no matter how you look at it.

Well, the Substratum community moderators decided to take this into their own hands by spreading FUD about ICON. Before I continue, I just want to state I have no affiliation with ICON. I am a supportive community member and I hold some ICX in my long-term portfolio. That’s it. I do not work for ICON, so creating baseless ICON FUD to spite me is a completely wasted effort. In fact, the thought of two grown men, one of whom are balding, are taking precious time out of their lives to type unintelligent statements just to spite me, puts a huge smile on my face.

Their argument revolved around three main points.

  1. ICON’s potential 20% inflation rate is stated in the whitepaper.
  2. Four consecutive years of 20% inflation will double the supply of ICX.
  3. If Substratum’s potential minting is bad, ICON’s inflation is terrible.

Here are my counter-arguments.

  1. Exactly. Substratum’s minting function was not disclosed in the original whitepaper. Furthermore, my criticisms about Substratum’s minting function has nothing to do with its presence in the whitepaper, but with how poorly the whole situation was handled by Justin Tabb starting in June 2018.
  2. The exact inflation rate will be agreed upon via consensus. Delegates on the ICON network are incentivized to agree on an inflation rate that will keep the ICX economy stable and healthy without devaluing their own staked tokens too much. If 20% inflation really happens, it would mean the ICON network is doing really, really, really well. In reality, 20% will likely never happen. Furthermore, ICX supply is hard-capped at 800,460,000 ICX, and inflation is calculated with the circulating supply — currently 473,406,688 ICX. Thus, a 100% supply increase is literally impossible because it would put the circulating supply at 946,813,376 ICX, which is 18% greater than the total supply.(1)
  3. ICON’s inflation is baked in at the protocol level and acts as an incentivization structure for community members to hold financial stakes in the network. When money is on the line, users are motivated to act in the best interest of the network. Bitcoin and Ethereum, the world’s leading cryptocurrencies, have been constantly inflating since their respective genesis blocks. In the case of Ethereum, there is no known total supply. Lastly, ICON’s protocol-level inflation for PoS incentivization cannot be compared with Substratum’s unnecessary mintToken() function that is exclusively controlled by the creator of the smart contract, an entity that cannot be undelegated through community consensus.

If you’re looking for your daily dose of moronic desperation, I highly recommend reading through the entire Reddit thread. Here’s the link again.

  1. ^ This information is incorrect, and I have addressed the mistakes in this post Apologies for the misunderstanding.


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