Saturday, March 14, 2020

Buffett’s Dinner Date Clashes With Devotees of Steemit Website

Controversial Chinese cryptocurrency entrepreneur Justin Sun, who paid $4.57 million for acharity dinner with Warren Buffett, is facing a revolt over a niche company he recently purchased.

In the past few weeks, the 29-year-old Sun has been called “a dictator” and worse on Twitter and in more than1,500 comments. A boycott of the blogging company Sun acquired is in full swing, and a number of its employees have resigned. Two of the world’s largest crypto exchanges are distancing themselves from Sun. That has the crypto sphere debating the growing role of exchanges, and whether some types of digital ledgers called blockchains are secure enough.

It all blew up after Sun bought Steemit Inc., one of the world’s most popular blockchain-based blogging sites. Since being launched four years ago, Steemit has held a large stake of Steem Power, a digital coin used in voting on issues such as software upgrades for the underlying blockchain called Steem. According to an informal agreement, Steemit was not to vote with its so-called ninja stake, Steem’s community claims. After Sun acquired Steemit, community-elected leaders in charge of the network temporarily froze the ninja stake via a software update to make sure Sun honors the provision.

In response, Sun embarked on an intervention not seen before in the crypto world. He contacted two of the world’s largest exchanges, Binance and Huobi (whose representatives attended his Buffett meeting in January), and told them that Steem was being attacked by hackers. On March 2, the exchanges, plus Poloniex, which is partly owned by Sun, used their customers’ Steem Power coins to help reverse the software change that froze up the ninja stake.

“I’m mixed on this,” said Ryan Selkis, chief executive officer of crypto researcher Messsari. “On the one hand, it’s unclear to me that the Steem community had the right to strip rights away from another token holder simply because they didn’t like the Tron-Steem transaction. On the other, it looks like Tron exercised the nuclear option” instead of talking with the community, he said.

Following an outcry from Steem Power owners, two of the exchanges quickly reversed their decisions anddistanced themselves from Sun, who they say misrepresented what was happening.

“We thought it was just another hard fork upgrade, and just went along with it,” Changpeng Zhao, CEO of Binance, said in an email. “Later, we found out the community was split behind it, we reversed our operation. We always respect the users.” Huobi soon followed suit.

“Huobi’s goal was not to interfere with the governance of a blockchain,” said Huobi spokesperson Mark Lee. Problem is, Steem Power functions in such a way, it could take months for the users that parked the coins on these exchanges to retrieve their funds.

The possibility of exchanges playing god is making many crypto enthusiasts cringe. Bitcoin took off because it’s not controlled by any central party. But as cryptocurrency users began parking their funds on exchanges, those entities turned into centralized superpowers.

A number of other blockchains including EOS, Aelf, Lisk, Wax, BitShares and Ark are built in a similar way to Steem, allowing someone with a large swath of coins to influence decision making. And they could also potentially be affected by exchanges in a similar way.

Sun continues negotiating with the Steem community.

“My idea here is deescalation and increased communication,” Sun said during a Steem town hall, which about 80 people dialed into on March 6.

Winning the Steem community back may prove tough, however. One key member, Luke Stokes, said in a recent podcast that he isn’t sure he’d want to play ball with Sun.

“We are having serious discussions within the community,” he said. “Do we want to create a brand new chain with a brand new token and then have it listed? As far as the Steam community, it’s never been more united.”

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