Electroneum *Update*

This was originally written last week. Since then, I have found new information.

I'm fairly new to this environment, so I don't want to shit on a coin with my first post, but....

Electroneum seems like a dud. I don't think it's a scam coin. From the outset, it does have a purpose on the internet. Moreso, if they can corner the market. I just don't see that happening.

Electroneum looks as if it's been cobbled together by people who have no idea about cryptography, let alone computer science. How do I put this- there are people who are more interested in owning a business in an industry (especially one with a huge market potential), but aren't as interested in understanding the industry. That can work for certain markets. It doesn't take much to start a website, or a blog (see this one), you can hire an app developer and launch an idea, etc.

However, crypto currency is a new industry that seeks to replace or integrate into the current financial industry. There are ton of issues regarding security, scalability, speed, centralization, etc. Not to mention the social aspects like trust, privacy, legality, legitimacy...

My point is the industry needs to start being more serious. It's possible for cryptos to eat the world, but the world has to trust it first. There are plenty of speculators but no one wants to seriously invest in the technology. Electroneum gives off the veneer of seriousness. They have the words and the look, but I don't know what's underneath.

I couldn't find a white paper, grey paper, red paper, any paper on their site that explains what the hell is going on behind the scenes. Is it proof of work, proof of stake, or something new? Is it a fork from another coin? What algorithms are needed to mine? It uses CPUMiner so I assume that's all of them. What is the company's road map? Then I found a press release from icobench.com that linked to their whitepaper overview. It looks like it's a bytecoin fork and they really plan to take on the gaming market in general. Also they have some memory bound proof of work algorithm. Cool.

I haven't even gotten to the hack yet. After raising millions with an ICO, some users complained about having their accounts stolen. In the same press release they state their offline wallets are 100% secure. Anyone with a passing knowledge of tech, understands that NOTHING is 100% secure. That's a lie from the jump. Now, their position is that they were not hacked. Users signed up with hacked email accounts and that's how hackers gained access. Also, they have said that no Electroneum was transferred and mining and wallets will remained shut down until they get everything sorted.

It's painfully obvious that this coin is designed to be marketed to the general public. It's mostly gloss. I get it. Most people's eyes glaze over when you start talking about the blockchain. But given the complexities of the industry, it seems that you're cheating the public by keeping this information hidden. Also, this roll out is a bit embarrassing. Can they recover?

It might be worth the investment if you can get a few thousand coins for less than $50. Might. As of now, I'll miss this boat. Although, I wish them and their investors the best.

UPDATE:

I finally managed to find their technical whitepaper. I don't know how I overlooked it, but I guess I did. It's linked in their overview white paper. However, there are still no direct links on their website.

They have moved their coin from Bytecoin to its cousin Monero. This means they have access to Monero's ring signature blockchain. For electroneum, they take multiple public addresses and scramble them together. This means your signature is mixed with 7 different people. While they can trace the transaction back to the ring signature, they don't know for sure which one of the 8 people associated with it actually sent the currency.

Your transactions are connected to a "one time key" which is a combination of the receiver's address and some random data. Each transaction will produce a new unique key. Even if you send coins to the same person, each transaction as a unique key.

Electroneum talks about how it prevents double spending. Each person has a key image. According to them, that key image is "computationally impossible" to recreate. Each user will keep a copy of the key image to check for duplicates. If it exists, then that user and their ring signature is rejected.

They argue that by creating a unique key for each transaction, this will effectively make a tree with multiple nodes and no cycles. So in the simplest case, I have only two users. These users can create two different ring signatures. Each ring signature will generate a unique key when money is sent. In this case, you have 1/2 chance of guess correctly. Once that increases to three users, you'll have 6 different ring signatures. If they are all send transactions to each other, it becomes much more difficult to guess who the transaction belongs to.

Also, if you want to mine electroneum, you're better off using a PC. While you can mine coins with your, given the constraints of a mobile processor, system will have to be controlled. Mobile mining is not decentralized. They will give you a minimum amount to mine with your phone. However, they get to decide the maximum amount. From reading the white paper it looks as if mobile miners will face hard caps in how much they can earn. However, they do have 21 billion coins available. This should provide a decent amount of liquidity.