EOS founding company Block.one starts another fundraising round

Posted: 17 July 2018 3:53 pm
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There are different ways to look at the news, depending on how you feel about EOS and conspiracies.

Block.one, the company that owns the controversial EOS cryptocurrency project, has started another fundraising round and brought in big name investors including Peter Thiel and Bitmain, Bloomberg reports.

Those involved have reportedly said that the fundraising round could be announced as early as this week.

The reports have been confirmed in a blog post from Block.one.

Why invest in Block.one?

The new fundraising round is raising eyebrows, and questions, among many.

The main question is what Block.one even needs the money for. It crowdfunded $4 billion in a recent ICO to develop EOS, and despite blowing through millions in multiple apparent attacks against its rivals, it's still extremely difficult to blow through billions of dollars that quickly.

This has some in the EOS community speculating that it's just a straightforward deal where Bitmain, Thiel and other investors are buying a position as a block producer, or possibly several block producer roles each, and getting an early seat at the table on a project they think has enough of a chance at succeeding to justify an investment.

"The EOSIO protocol is a great example of blockchain innovation. Its performance and scalability can meet the needs of demanding consumer applications and will pave the way for mainstream blockchain adoption," said Jihan Wu CEO of Bitmain.

The 21 block producers get to very profitably control the entire EOS network, with the permission of Block.one, so buying a position early and then marketing EOS might bring very high returns in the long run.

The smallest part of these returns might be the block-producer pay of approximately $10,000 per day, while the real value in being a block producer might come from being able to manipulate the EOS RAM markets, print EOS tokens on demand, hold user transactions hostage and otherwise exercise complete control over the network.

Block producers are technically an elected position, but it's a purely cosmetic democracy with Block.one holding enough tokens to control the outcome of any vote and able to threaten any disagreeable block producers with removal.

Even if it's not for the money, it might just represent a reasonable risk and return for those who want to diversify. Bitmain is currently wanting to move beyond mining alone, and it might simply make sense to hedge across different cryptocurrency projects.

The coinspiracy theory

Tinfoil hat enthusiasts might draw a few more lines between Bitmain (which currently controls 53% of bitcoin hashing power) and Peter Thiel, an outspoken believer in bitcoin's position as future digital gold, and EOS. The two coins have always been relatively closely related in a few different ways – for example, through Brock Pierce.

He was controversially given a seat on the board of the Bitcoin Foundation in 2014, resulting in about a dozen other people resigning in protest. He also co-founded Tether in the same year, sits on the board of Bitfinex and co-founded Noble Bank – which incidentally has Eugene Sullivan of the FSS law firm on its board of advisors – and is generally up to his eyeballs in the alleged Tether-based price manipulation of bitcoin. And then he was given a key role in EOS and Block.one, also against protests from within, until he resigned in March 2018.

Someone who's feeling conspiratorial might suggest that Block.one was keen to enjoy the same kind of price manipulation that bitcoin seems to have enjoyed.

And someone who's not feeling so conspiratorial might note that connections in cryptocurrency run deep, if not very far back. The space hasn't been around for that long and bitcoin is the tree from which all other coins sprouted. As such, seeing key bitcoin figures spread out to other coins might just be the nature of the space.

Either way, one might see these investments as either a sign that EOS holders backed the right horse or that they're about to get fleeced.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and NANO.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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