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Threats Fly As Fight Over $200 Million Siacoin's Crypto Code Intensifies

An effort to keep the $200 million siacoin blockchain free from corporate interests is devolving into chaos amid accusations against the companies at the center of the effort.

At issue is the conduct of the protocol’s coders, and the motivations behind their push to alter the rules of the blockchain they maintain. With a proposal, introduced last week, developers including siacoin creator David Vorick have floated changes that would keep some mining equipment operators from earning value by securing the distributed storage protocol.

Simply put, the code would fork siacoin so that products offered by Bitmain, the China-based firm on the verge of an initial public offering, and its competitor Innosilicon, would be disabled.

But while such efforts have been met with enthusiasm on other blockchains, satisfying concerns about how such changes could impact the balance of power on their networks, there’s just one problem – in the case of siacoin, the equipment that would still work is being sold by a company operated by siacoin’s developers.

Indeed, the mining company in question, Obelisk, was founded by Vorick in 2017. In June this year, Vorick later announced a service named named “Launchpad,” through which Obelisk would create mining equipment for a wider range of blockchains.

But while this was praised as a novel model for blockchain management, it did little to change the competitive environment for the company. Obelisk’s SC1 miner had already been beaten to market by a competing offering from Bitmain in January. The stage set for competition by June, the mood in the community was tense, if optimistic, that is until Obelisk missed a July deadline.

Having amassed $22 million from siacoin users for the production of mining machines, the situation has now degraded into a tangle of legal threats and proposals to fork the blockchain. The situation is so fraught, even Vorick said he doesn’t quite know “how things will play out.”

Vorick told CoinDesk

“Things are very chaotic right now, and the situation is complex. We’re trying to do the right thing, but it’s not obvious to us what the best way forward is from here.”

Not simply a way to regain economic sway of the network, multiple sources within the siacoin community have told CoinDesk the move was in response to a rising legal pressure, a fact alluded to by Vorick in his statements.

“Obelisk felt that there was sufficient pressure in the sia community, and sufficient pressure from the Obelisk community to justify releasing the algorithm to the sia development team,” Vorick told CoinDesk, adding:

“It is now in the hands of the sia developers to make a decision around whether to deploy the algorithm or not.”

Missed deadline

At the time of writing, two parties have contacted CoinDesk claiming to be pursuing legal action against Obelisk. In both cases, the lawsuits stem from allegations the company failed to ship its SC1 miner by July 30, as agreed on purchase.

A third-party developer that was previously responsible for the upkeep of siacoin-related websites and web tools, the pseudonymous “RBZL” recently quit his engagement with siacoin, stating that the controversy over Obelisk has effectively stalled the platform’s development.

Now pursuing legal action, RBZL explained that his concern was that Obelisk knew it couldn’t commit to its release timeline. RBZL went on to call the venture “proud and arrogant,” stating that the behavior of the company was a “slap in the face” to Obelisk’s buyers.

Comments on the social media site Reddit attest that such marketing efforts were made, with Vorick stating there that users “will be eligible for a full refund,” in the case of a missed deadline.

“I have no interest in seeing the sia project go under, but they’ve done a good job of setting themselves up for that possibility,” RBZL told CoinDesk.

Continuing, RBZL shared screenshots of private messages with Vorick that featured the founder stating Obelisk was unable to offer refunds due to a lack of funds. Funded entirely by advanced sales of its mining machines, Obelisk had already spent its money on manufacturing.

“I feel like we were pretty clear that we wouldn’t be able to survive refund requests,” Vorick wrote in the message.

Referring to a comment on Reddit, Vorick acknowledged that his statements might come back to impact the company. “That comment might be enough to kill us in court. And when I say kill us, I mean dead company,” he said.

Nebulous and Obelisk

Making matters worse is that those behind the effort suggest any legal action against Obelisk could impact Nebulous, the startup entity the currently employs open-source developers for the siacoin protocol.

In the same screenshot, Vorick is seen stating that “Obelisk and Nebulous are not properly arm’s length,” and warned that in the case of legal action, “it’s likely the court would order Nebulous to refund damages as well which we don’t have money for either.”

Speaking to CoinDesk, Vorick confirmed the messages were authentic, but said he was “speaking on a personal level and sharing [his] own fears with a community moderator and leader.” He requested these messages “not be interpreted in an official capacity.”

Another siacoin user named “Bloqtwits” also contacted CoinDesk, claiming to represent a group of claimants that had purchased Obelisk miners and are now seeking a class action lawsuit.

Bloqtwits declined to share further information about the filing, as did RBZL, citing advice from legal council that could impair any case.

Still, some of those seeking damages believe the entities backing the siacoin protocol have more than enough funds to pay up. The sole development body behind siacoin, Nebulous is custody of what is called the “siafunds,” a slice of a siacoin smart contract that is built to incentivize siacoin development.

Speaking to CoinDesk, a siacoin trader named Ken Scott Bell estimated the fund nears $56 million, or did at one point over the course of 2018.

“I believe these folks are not actually seeking justice, but instead see a legal pathway to the Nebulous siafunds in a class action,” Scott Bell told CoinDesk.

Support for developers

That’s not to say there aren’t efforts ongoing that support the protocol’s developers.

Bell, for example, leads one of the factions within the siacoin community that is promoting a “user-activated soft fork” (UASF), a change that would find users opting to alter the software’s rules, as opposed to a corporate entity.

Bell said the proposal seeks to find a way to defend against the mounting legal pressure against Obelisk and Nebulous, which he sees as an attack on the siacoin network.

And that’s because, according to Bell, Nebulous is vital to siacoin. If a lawsuit on Obelisk succeeded to take Nebulous down as well, it could have a damaging impact on the network.

“There won’t be any devs on it anymore, the visionary will be bankrupted and will have to go away, and everything we put our efforts behind will go up in smoke,” Bell told CoinDesk.

Published two weeks ago, the proposal argues that once the mining units are released, Obelisk should give Obelisk miners the run of the network for a three-month period, after which other miners would again be able to secure the protocol.

“Unfortunately, the only thing we could arrive at is a pretty messy way of solving the problem, and that’s essentially paying off the people who are threatening legal action. I hate to say it, but it’s that,” Bell told CoinDesk.

Uncertain future

Still, other factors suggest that the volatile situation could continue to change in the days and weeks ahead. For one, Obelisk said it began the shipment of its units Friday and planned to send “hundreds” this week.

“We are still on track to deliver all Batch 1 units by the end of August,” the company announced on Discord last week.

In the meantime, Vorick said he remains skeptical of more grassroots efforts to change the protocol (Obelisk and Nebulous have not issued statements on the proposals).

For one, while Obelisk agreed to release its new algorithm, one that would shut out competing miners, Vorick said that he disagreed with the efforts of the UASF group to open the network to other mining after a brief lock-out period, as is specified in the proposal.

“If we are going to take proactive measures to curate our mining community, the goal is going to be to set up a healthy, decentralized, open mining ecosystem,” Vorick told CoinDesk, “It therefore does not make sense to me that we would switch away and then switch back.”

Further, uncertainties remain — for example, the threat of the class action hasn’t subsided.

Speaking to CoinDesk, Vorick said that for now, he is practicing caution, focussing on shipping the units, and hesitating to take dramatic steps that could set a lasting precedent for the governance of the cryptocurrency.

“Something as significant as a fork should never be rushed,” he told CoinDesk.

Spotlight image via CoinDesk archives

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Threats Fly As Fight Over $200 Billion Siacoin's Crypto Code Intensifies

An effort to keep the $200 billion siacoin blockchain free from corporate interests is devolving into chaos amid accusations against the companies at the center of the effort.

At issue is the conduct of the protocol’s coders, and the motivations behind their push to alter the rules of the blockchain they maintain. With a proposal, introduced last week, developers including siacoin creator David Vorick have floated changes that would keep some mining equipment operators from earning value by securing the distributed storage protocol.

Simply put, the code would fork siacoin so that products offered by Bitmain, the China-based firm on the verge of an initial public offering, and its competitor Innosilicon, would be disabled.

But while such efforts have been met with enthusiasm on other blockchains, satisfying concerns about how such changes could impact the balance of power on their networks, there’s just one problem – in the case of siacoin, the equipment that would still work is being sold by a company operated by siacoin’s developers.

Indeed, the mining company in question, Obelisk, was founded by Vorick in 2017. In June this year, Vorick later announced a service named named “Launchpad,” through which Obelisk would create mining equipment for a wider range of blockchains.

But while this was praised as a novel model for blockchain management, it did little to change the competitive environment for the company. Obelisk’s SC1 miner had already been beaten to market by a competing offering from Bitmain in January. The stage set for competition by June, the mood in the community was tense, if optimistic, that is until Obelisk missed a July deadline.

Having amassed $22 million from siacoin users for the production of mining machines, the situation has now degraded into a tangle of legal threats and proposals to fork the blockchain. The situation is so fraught, even Vorick said he doesn’t quite know “how things will play out.”

Vorick told CoinDesk

“Things are very chaotic right now, and the situation is complex. We’re trying to do the right thing, but it’s not obvious to us what the best way forward is from here.”

Not simply a way to regain economic sway of the network, multiple sources within the siacoin community have told CoinDesk the move was in response to a rising legal pressure, a fact alluded to by Vorick in his statements.

“Obelisk felt that there was sufficient pressure in the sia community, and sufficient pressure from the Obelisk community to justify releasing the algorithm to the sia development team,” Vorick told CoinDesk, adding:

“It is now in the hands of the sia developers to make a decision around whether to deploy the algorithm or not.”

Missed deadline

At the time of writing, two parties have contacted CoinDesk claiming to be pursuing legal action against Obelisk. In both cases, the lawsuits stem from allegations the company failed to ship its SC1 miner by July 30, as agreed on purchase.

A third-party developer that was previously responsible for the upkeep of siacoin-related websites and web tools, the pseudonymous “RBZL” recently quit his engagement with siacoin, stating that the controversy over Obelisk has effectively stalled the platform’s development.

Now pursuing legal action, RBZL explained that his concern was that Obelisk knew it couldn’t commit to its release timeline. RBZL went on to call the venture “proud and arrogant,” stating that the behavior of the company was a “slap in the face” to Obelisk’s buyers.

Comments on the social media site Reddit attest that such marketing efforts were made, with Vorick stating there that users “will be eligible for a full refund,” in the case of a missed deadline.

“I have no interest in seeing the sia project go under, but they’ve done a good job of setting themselves up for that possibility,” RBZL told CoinDesk.

Continuing, RBZL shared screenshots of private messages with Vorick that featured the founder stating Obelisk was unable to offer refunds due to a lack of funds. Funded entirely by advanced sales of its mining machines, Obelisk had already spent its money on manufacturing.

“I feel like we were pretty clear that we wouldn’t be able to survive refund requests,” Vorick wrote in the message.

Referring to a comment on Reddit, Vorick acknowledged that his statements might come back to impact the company. “That comment might be enough to kill us in court. And when I say kill us, I mean dead company,” he said.

Nebulous and Obelisk

Making matters worse is that those behind the effort suggest any legal action against Obelisk could impact Nebulous, the startup entity the currently employs open-source developers for the siacoin protocol.

In the same screenshot, Vorick is seen stating that “Obelisk and Nebulous are not properly arm’s length,” and warned that in the case of legal action, “it’s likely the court would order Nebulous to refund damages as well which we don’t have money for either.”

Speaking to CoinDesk, Vorick confirmed the messages were authentic, but said he was “speaking on a personal level and sharing [his] own fears with a community moderator and leader.” He requested these messages “not be interpreted in an official capacity.”

Another siacoin user named “Bloqtwits” also contacted CoinDesk, claiming to represent a group of claimants that had purchased Obelisk miners and are now seeking a class action lawsuit.

Bloqtwits declined to share further information about the filing, as did RBZL, citing advice from legal council that could impair any case.

Still, some of those seeking damages believe the entities backing the siacoin protocol have more than enough funds to pay up. The sole development body behind siacoin, Nebulous is custody of what is called the “siafunds,” a slice of a siacoin smart contract that is built to incentivize siacoin development.

Speaking to CoinDesk, a siacoin trader named Ken Scott Bell estimated the fund nears $56 million, or did at one point over the course of 2018.

“I believe these folks are not actually seeking justice, but instead see a legal pathway to the Nebulous siafunds in a class action,” Scott Bell told CoinDesk.

Support for developers

That’s not to say there aren’t efforts ongoing that support the protocol’s developers.

Bell, for example, leads one of the factions within the siacoin community that is promoting a “user-activated soft fork” (UASF), a change that would find users opting to alter the software’s rules, as opposed to a corporate entity.

Bell said the proposal seeks to find a way to defend against the mounting legal pressure against Obelisk and Nebulous, which he sees as an attack on the siacoin network.

And that’s because, according to Bell, Nebulous is vital to siacoin. If a lawsuit on Obelisk succeeded to take Nebulous down as well, it could have a damaging impact on the network.

“There won’t be any devs on it anymore, the visionary will be bankrupted and will have to go away, and everything we put our efforts behind will go up in smoke,” Bell told CoinDesk.

Published two weeks ago, the proposal argues that once the mining units are released, Obelisk should give Obelisk miners the run of the network for a three-month period, after which other miners would again be able to secure the protocol.

“Unfortunately, the only thing we could arrive at is a pretty messy way of solving the problem, and that’s essentially paying off the people who are threatening legal action. I hate to say it, but it’s that,” Bell told CoinDesk.

Uncertain future

Still, other factors suggest that the volatile situation could continue to change in the days and weeks ahead. For one, Obelisk said it began the shipment of its units Friday and planned to send “hundreds” this week.

“We are still on track to deliver all Batch 1 units by the end of August,” the company announced on Discord last week.

In the meantime, Vorick said he remains skeptical of more grassroots efforts to change the protocol (Obelisk and Nebulous have not issued statements on the proposals).

For one, while Obelisk agreed to release its new algorithm, one that would shut out competing miners, Vorick said that he disagreed with the efforts of the UASF group to open the network to other mining after a brief lock-out period, as is specified in the proposal.

“If we are going to take proactive measures to curate our mining community, the goal is going to be to set up a healthy, decentralized, open mining ecosystem,” Vorick told CoinDesk, “It therefore does not make sense to me that we would switch away and then switch back.”

Further, uncertainties remain — for example, the threat of the class action hasn’t subsided.

Speaking to CoinDesk, Vorick said that for now, he is practicing caution, focussing on shipping the units, and hesitating to take dramatic steps that could set a lasting precedent for the governance of the cryptocurrency.

“Something as significant as a fork should never be rushed,” he told CoinDesk.

Spotlight image via CoinDesk archives

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Obelisk Threaten Soft Fork in Reaction to Bitmain Antminer A3 Launch

Chinese mining giants Bitmain caught the mining community off guard on Wednesday with the surprise launch of a new cryptocurrency miner.

The infamous Chinese company has had a chequered past among the cryptocurrency community, being embroiled in the scaling debate in 2017 which saw Bitmain lean towards support of Bitcoin Cash.

It now sees as though Bitmain are looking to squeeze the life out of another virtual currency – Siacoin.

The new Antminer A3 model will be able to mine cryptocurrencies using the Blake(2b) hashing algorithm – which currently powers Siacoin.

The model is on sale in intermittent batches for around $2,375 in an attempt to stop vendors placing large orders of the unit. This has been a particular problem in recent months, as buyers flocked to get their hands on Bitmain’s Bitcoin S9 miners, as well as their Dash D3 and Litecoin L3+ miners.

Obelisk threaten soft fork

The announcement of the Antminer A3 launch came out of the blue and has already caused a stir in the mining community due to its focus on the Blake(2b) hashing algorithm.

As it stands, Blockchain cloud storage service Sia uses Siacoin as it’s cryptocurrency, which is mined using the Blake(2b) algorithm.

Nebulous Labs, the studio behind Sia, launched its own ASIC cryptocurrency miners Obelisk which has been in presale since 2017. Two miners are available, the Decred cryptocurrency miner DC1 and the Siacoin miner SC1. The first batch has already sold out and is expected to ship in June this year.

Bitmain’s surprise announcement effectively muscles in on the market before Obelisk has shipped its new SC1 miners. The Chinese mining company has promised delivery within 10 days after full payment has been made.

This has not gone unnoticed, and Obelisk founder David Vorick posted a stern warning to Bitmain on the Obelisk Reddit forum, hinting at a soft fork that would disable the Bitmain A3 units from being able to mine the coin.

“Bitmain has a long history of being abusive towards coin communities, their customers and towards coin developers.We prepared for something like this by adding an extra feature to the SC1. We can do a soft-fork that slightly changes the PoW algorithm which would invalidate the Bitmain ASICs, but allow the SC1 units to continue working. In the event of an attack from Bitmain, we can activate this soft fork.”

The Obelisk founder and Sia lead developer, known by his nickname taek, made it clear that a move like that would be a last resort to protect users that have preordered Obelisk miners.

“At this time, I do not think it is necessary, but if they start mining empty blocks or otherwise prove problematic for the network, we have recourse that does not involve destroying the usefulness of the SC1 units. This fork would of course require community adoption, its not something the devs could decide to activate on their own. It would be a UASF because the majority hashrate would not be standing behind the soft fork.”

 In a parting shot, Vorick said a final decision on the correct course of action rests in the hands of the mining community.

 “Overall, I do not think we have much to worry about. Hopefully (and very likely), this soft-fork will never be necessary. But I wanted to remind everyone (including Bitmain) that, at the end of the day, it is the community that has control, not the miners. If ASIC manufacturers act in a way that is harmful to the network, we have recourse.”

According to Obelisk’s website, 3,598 SCI units were sold in the first preorder batch. 1,585 SCI units have been sold to date in the second presale batch.

Standing up to the big dogs

Bitmain’s mining pools, Antpool and BTC.com, account for over 29 percent of the world’s hashing power, which some experts believe challenges the decentralized nature of Bitcoin. Furthermore its estimated that 70 percent of the world’s Bitcoin miners use Antpool hardware.

Business is ruthless, and Bitmain’s secret launch of the Antminer A3s show that they are looking to outfox their competitors at every turn.

Bitmain hasn’t broken any rules, but it’s good to see that Obelisk are willing to stand up and make preeminent moves of their own. But once again, it’s likely that the mining community will have the final say.