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Binance SAFU Proved Itself: Shouldn’t Other Exchanges Follow Its Footsteps?

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Binance SAFU Proved Itself: Shouldn't Other Exchanges Follow Its Footsteps?
Source: Pixabay

At this point in 2019, there are many signs that the crypto markets are starting to mature. However, there is one issue that continues to plague the industry – exchange hacks. Crypto intelligence firm Ciphertrace estimates that $356 million was stolen from exchanges in the first quarter of 2019 alone.

The recent breach of Binance, where hackers made off with 7,000 BTC, stands out for a couple of reasons. Firstly, this was the only instance where hackers managed to breach this particular exchange. Before this, the world’s biggest exchange was renowned for having remained secure against thieves ever since it started trading in 2017.

Secondly, aside from a short closure, Binance was able to refund its users, re-open its doors and continue on almost as if nothing had happened. This is thanks to the exchange’s policy of having its own insurance fund, which it calls Secure Asset Fund for Users, or SAFU, in place to protect against losses in the event of a hack.

What Happened with the Binance Hack?

On May 7, CEO Changpeng Zhao [CZ] announced via his Twitter account that the exchange was undergoing unscheduled server maintenance. A few hours later, it was confirmed that the exchange had been breached. API keys and 2-factor authentication [2FA] codes were stolen through a combination of phishing and viral attacks. Hackers had swiped around $40m worth of BTC, amounting to 2% of the total exchange holdings.

The same day that the attack took place, CZ published a post on the company blog to explain the breach and the steps that the company intended to take. The blog post stated that the company would be conducting a thorough security review which would take around a week. The exchange had suspended all deposits and withdrawals, although trading could continue. Most critically for users, the blog post confirmed that the SAFU would cover the losses for all affected users.

Binance continued to post openly about the progress of these matters over the next few days. CZ also plowed ahead with a scheduled AMA on Twitter despite that he knew it would be challenging.

Overall, the way that the company handled a potentially very damaging incident turned it around completely.

The existence of the SAFU fund already provided a safety net to users, but by itself, an insurance fund doesn’t create trust. It’s the culture of transparency and the way that the company maintained open channels of communication with the crypto community that helped it quickly bounce back from the hack.

Lessons to be Learned

For the broader crypto community, there are some critical takeaways from this incident. This is particularly apparent when we contrast the Binance approach with the handling of other exchange incidents that have happened this year, such as QuadrigaCX or Cryptopia.

In both cases, the teams behind these exchanges quickly slid into obscurity. Now, the only communication with affected users comes from the various accounting and liquidation firms handling the fallout.

Firstly, when we all know that exchange hacks are all too common, all centralized exchanges should maintain a healthy backup fund to cover losses. Pretty much all exchanges take trading fees from their users. Therefore, there is no reason all these funds should be directed into profits-or even profit sharing-when users stand to lose out if the exchange is breached.

Secondly, the open and transparent communication style should become the norm and not the exception. Users place trust in exchanges to handle their funds. CZ and Binance have set the bar for how to demonstrate to users that this trust isn’t misplaced.

The lack of progress in both of these areas is central to why the crypto sector still hasn’t shaken off its “wild west” image. The industry has made significant developments in reducing the incidences of scam ICOs, working with regulators, and attracting institutional investment. With exchanges playing such a prominent role in the space, it’s time for them to step up too.

Perhaps it’s time for the crypto community to start demonstrating its power and demand that centralized exchanges protect users from losses. There’s a reason why Binance is the biggest, and users will vote with their feet if they know where their money and their trust is best placed.

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Guest Post

Vid App Lets Users and Influencers Monetize Personal Videos

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Vid App Lets Users and Influencers Monetize Personal Videos
Source: Twitter

We’re visual creatures. That’s why we’re captivated by films and shows that have great storytelling. According to reports from Insivia and Cisco, mobile video consumption doubles every year, and by 2021, videos will comprise 82% of internet traffic.

One venture believes it’s possible to make money from our personal video collection through tokenized rewards.

According to Jag Singh, CEO, and co-founder of the Los Angeles, California, based startup:

Vid is a social app that empowers users to create beautiful videos, control their data, and monetize their memories. We use artificial intelligence [AI] to generate memories from a user’s video feed. These are then organized into an interactive calendar. The resulting video journal can be edited with a patented editing tool before users publish their captured memory.”

Privacy and Protecting Data

Publishing personal journals on public platforms is tricky. But Singh says Vid places a premium on privacy.

“We use zero-knowledge encryption as well as blockchain tech to give users complete control of their data. It also gives them opportunities to monetize their videos with brands—without interference from us or anyone else.”

Bad data practices [e.g. Experian hack] and harvesting user data without consent [e.g. Facebook] have led to regulatory actions such as GDPR [“General Data Protection Regulation”]. Vid’s solution is to encrypt data and let people select what data to make available. Moreover, the app lets users connect directly with brands that might be interested in their video journals or creative talent.

Singh added:

“Users who opt-in to generate video memories in conjunction with an advertiser will receive 100% of the advertising revenue,” whose app can be found at. “No cut is taken by Vid or any third-party ad marketplace.”

So what are the implications of a 24/7 connected world?

People now view one billion hours of YouTube videos each day. There are several large platforms that are capitalizing on viewing trends. With this massive shift, influencers and brands have much to gain: Audiences retain 95% of a message when delivered in video format compared to just 10% when reading in the text, according to Insivia.

Opportunity for Users and Influencers

Vid’s CEO launched the venture in December 2016. He says the app is a unique opportunity to offer a superior, privacy-protected social experience to a massive crowd.

According to Singh:

“We launched a test version in early 2018 and added more than 30,000 users within a month. We were trending up the social media application rankings before taking the app offline again for further development. No marketing dollars were spent on the test launch. It was purely organic.”

The firm has boarded more than 50 top Influencers across social channels to support the app’s public release. The Influencers have more than 250 million followers, and they know they can increase their revenue from brands by using Vid. The app has a swipe-up ad model where ad revenue flows directly to the Influencers.

The app’s target audience is younger generations [Millennials and Generation Z] since they prefer short-form video content.

The Process

“We poured more than $1.5 million of our own funds into product development and have been working on the platform since the end of 2016, we have filed seven patents for the technology underpinning our platform.”

The team consists of Jag and Josh Singh, and now includes computer scientists, engineers, financial experts, marketers, and business development professionals. Maciej Dziedziela, another co-founder, is Chief Technology Officer. He has a background working in major enterprise firms.

Before Vid, Jag and Josh launched and exited a company that grew to nearly $30 million in annual revenue over four years.

Singh also detailed about:

“Contrary to the pump-and-dump ICO and IEO models of most cryptocurrency and blockchain platforms, we have opted for a five-year rollout of the Vid native token. The details of our tokenomics can be found in our whitepaper, which is accessible from our main website.”

The Vid token pre-sale is scheduled for launch on June 14, 2019, and will conclude on August 9. There is no soft cap, and the presale hard cap is $60 million. There will be no airdrops. Smart contracts are audited by Certik.

For further details contact here.

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