The darker side of partnerships and exchange listings
Let me tell you a tale of the little altcoin that could, and how they stood up to the dragons in the crypto-sphere. This wasn’t even “a long time ago in a far away land”, this was mostly just last week. There’s also no pictures so I’ll try paint a picture for your imagination as best I can.
Before we begin our adventurous tale, let me go back a little further. The last 6 months have seen things go from bad to worse, and I want to be clear with the DigiByte community especially (Not to mention the crypto community at large) about what happens with these “partnerships”.
I’m going to call some people out in this (Would you really expect anything less from me) which may not make some people terribly happy with me. This needs to be said though, and I want the DigiByte community to have confidence both in me and in others in the Foundation. If this also means we have less tyre-kickers wasting our time trying to get us to shill their scams, it’ll save me and other Foundation members time too.
Exchanges take a cut, usually at both ends
They get away with it due to things like Tron and the multi billion dollar ICO. I’ve mentioned many times before that back in 2013 when I got into crypto, you almost always had to have working code on GitHub, or you were immediately shunned and the community would tear you to pieces. Exchanges usually ask for a “listing fee”. Some times they’ll tell you it’s in your coin / token “to provide liquidity”. Others are more up front and will just tell you they want it in BTC / ETH to a certain USD value.
This naturally doesn’t work for DigiByte, because we have nothing to give. We don’t have a gigantic slush fund, we don’t take 10% of all newly minted blocks, we don’t take transaction fees, we weren’t an ICO, so there’s nothing but some small (yet incredibly appreciated) donations from the community. Still, almosr every single exchange asks regardless, even when they approach us.
It’s hilarious, I’m not even kidding, some emails go like this:
“Hi sir, we would like to list DigiByte. Our exchange is unique because of X. If you want us to list you, please pay 25 ETH.”
I wish I was making that up, but that’s totally serious, we’ve seen introduction emails of that calibre.
If we approach them, often it’s the same story. “Please provide XYZ as a listing fee”. Again, great if you’re an ICO sitting on a billion dollars. Not so great if you’re a genuinely decentralized independent blockchain.
We’ve been asked for everything from USD$500, right the way up to a 9-figure sum. Yep, you read that right, we’ve been asked for more than our entire market cap in listing fees. I wish I was making that up!
Most end up listing DigiByte afterwards anyways, partially because we have some amazingly persuasive ninjas who work tirelessly behind the scenes to make this stuff happen. We don’t pay the listing fee (We can’t), but you can’t really blame Exchanges for asking. It’s basically easy money for them.
After that, Exchanges also make additional money on an ongoing basis through trades. Usually it’s 0.25 to 0.5% for a fee. That may not sound like much, but, if you’re selling USD$10,000 in BTC to buy Tron you lose out on $25. Imagine a few hundred thousand people trading daily, across several dozen coins for an average exchange. It’s a lot! I estimated for a while when Binance kept coming up in Dec / Jan, if Binance did the same volume as Bittrex, they’d make their $100K they wanted for a listing fee in under 24hrs.
What does this have to do with anything?
Well, I’m setting the stage for what’s about to follow.
You see, DigiByte Foundation was recently contacted by a company wanting to “partner” with us. They want to use DigiByte as part of their platform and the partnership would involve us developing support for DigiByte in addition to the already existing Bitcoin support.
This in itself is slightly odd, because we are a decentralized blockchain without any controlling body / company / organization. The DigiByte Foundation purely exists as a support mechanism. There’s nothing stopping people integrating with DigiByte for their app, exchange or other platform. In fact, I couldn’t stop the people integrating DigiByte if I tried (not that I want to of course, that would be counter productive).
I’ve written a document recently which helps Exchanges or companies for integrating with DigiByte. Anybody who has even a tiny amount of experience with Linux could setup a server, copy / paste around 10 lines from this guide, and they have their own clone of DigiExplorer.info running on their system. With it, they can then use to access specific APIs which make it easy to write products / platforms / websites / apps for.
From start to finish, it’ll take you all of about 60 seconds to do this, and get the “integration” with DigiByte ready. I’ll make a video demonstrating this one day, it really is that simple. Because we use the same core wallet calls as the Bitcoin Core Wallet, it’s basically just changing a few variables from Bitcoin to DigiByte, and who doesn’t already support Bitcoin? Everybody supports Bitcoin, so everybody can pretty easily support DigiByte!
Note: We don’t have an Electrum wallet, so that’s about the only limitation there.
Now back to the fun, we were asked to ”partner”with a company. Fine, no problems. We let them know that we’ll ask the DigiByte developers if they’re interested in taking up this project. We ask this company to simply tell us what they think is involved, what they want from us, how much work they think it’ll be. Once we’ve got that info, we’ll ask the developers if they’re interested.
Why? Well, because we can’t force developers to do anything they don’t want to do, when they’re donating their time freely, so it makes sense the developers are happy to take the project on, and whatever reimbursement would probably go to them in its entirety.
Progressing as things do, a bit of back and forth, and the offer of our developers being paid in a token from this company comes up. A little odd, though not too out of the ordinary. The problem is this is pre-ICO, so the tokens may turn out to be worthless or they may turn out to be worth millions, we just don’t know. A suggestion is tabled that if somebody is going to hire our devs, that the devs get paid in DigiByte. Seems reasonable.
Naturally, this company is keen to get things “moving”, so they show us a tweet suggestion. Apparently they are “keen to gauge the response of the community” and want to “secure DigiByte in first position, with a tweet”. Strange the sudden urgency to sell us on an ‘exclusive partnership’, a few mental alarm bells start to sound based on the tone of the messages.
We suggest that if they’re going to do the integration, they can tweet it out to their followers, we’ll simply re-tweet it. Alternatively we’re still waiting to know what it is that they want from us, as of yet we’ve not had any concrete discussion. This all happens while I’m asleep in the middle of the night, being from New Zealand most exciting things happen in the morning like that.
So they table a suggestion that makes it sound like DigiByte has an announcement… except, we don’t?
More mental alarm bells are ringing right about now. Seems very strange for a 3rd party company to be suggesting an announcement on our behalf? Usually you would say something like “We’re pleased to announce we’re integrating DigiByte into our Platform”, rather than “DigiByte are announcing they’re going to build on X Platform, oh yeah that happens to be our platform”.
Our ambassadors again doing the right thing suggest that’s probably not appropriate, if this company is making an announcement, that they should announce what they’re doing. Makes sense right, seems logical?
Cool, so they confirm they’re going to update their suggested tweet and let us review it. Perfect, the alarm bells quieten down a little.
Half an hour later, an announcement is made by this company, with the original suggestion of theirs. Call me crazy but I’m sure that’s not what was discussed?
Now keep in mind that we donate our time to the DigiByte Foundation, so there are times when we haven’t given it our 100% attention. Sometimes we’ll fire up Telegram and there will be several hundred, bordering on thousands of messages to read, which we simply don’t have time to keep abreast of. Seeing the latest message come through from this company sharing the tweet, one of the team understandably presumes the sent message must have been reviewed and given the all-clear by both parties, it gets shared it in our Telegram Marketing / Main DigiByte channels etc.
OK so this company jumped the gun a little, and used the announcement they said they wouldn’t. Worse things have happened, right? Could well be an honest mistake, it’s not the end of the world.
I wake up a few hours later. As mentioned there’s a TON of messages in Telegram, I recall it was a record that night with over 900 waiting for me to read. People often pull me personally in to chats that I can’t keep up with / respond to, so I see a message from several hours prior in this “partnership” channel, and ask how they’re wanting to integrate with DigiByte, and how they’re integrating with Bitcoin currently. I’m promised some answers from their devs, all good, and I disappear still totally unaware of what’s actually going on.
Questions crop up about the crypto climate, any issues this company forsees, and they’ve got some decent answers.
Then they push us again to send a tweet out. I’m still unaware at this stage that they’ve “announced” something on DigiByte’s behalf so ask for more details and lay it on pretty thick at this stage.
I think it’s worth us confirming the details first, what’s needed from us by you etc first before we go telling people. Although other blockchains might be OK with announcing announcements of announcements, we prefer to wait until we’ve got all our ducks in a row… so we’re just wanting to make sure everything is above board. Please don’t take this as a lack of enthusiasm from us, far from it, but I’m sure you can understand why we want to vet things out 😊
Seems like a reasonable request from me, they seem to agree, and are fine with us doing more due diligence and asking more questions.
Additional details start to come to light throughout the day, I find out about the supposedly confirmed partnership, but so far we’re missing details:
- What are DigiByte supposed to do for the development and how long it will take?
- What else is wanted from us in addition to developer-time?
- Why are they now wanting to go back to paying us in an ICO-token and not in DigiByte like they’d previously agreed?
- Why is there such a big rush to get this out the door, when previously in the day everything was fine?
- Why are we finding out now about this exclusive ‘partnership’ also being with other blockchains such as Reddcoin and Bitshares?
- Still haven’t had any solid details about how they’re going to get past any of the issues that similar companies have had in their industry in the past
Again, reasonable questions that we should get some answers to before we “partner” with anybody.
Then that evening, things turn sour, quickly!
All of a sudden we’re not going to be needing to do any development work. Cool, sounds good, but we’re still not too sure why you’re wanting to pay us if we’re not doing any development work? Red flags go off in my mind.
I wasn’t born yesterday, I know exactly what that is. If you don’t need us for development then there’s only one other reason you’d be wanting to give DigiByte money.
So we keep asking them about what’s needed from us, why they need us if there’s no “development”, why they’re back to trying to pay the developers in their token and not DGB, and basically going over the list above.
Then the company turns pretty hostile, pretty quickly.
Answers become short, terse. They re-share previous messages that haven’t answered any questions over the next 18 hours. They understand that they can integrate directly with DigiByte without requiring our developers, and again confirm they have most of the integration done.
They skirt around our question about what we need to do again and again.
Those alarm bells are going off everywhere in my mind at this stage.
The story changes as we press them for the technical / development details, they can’t seem to produce any.
Now they don’t want us to help with development, they want an indication of community enthusiasm.
Again, I know where this is going, this isn’t the first time we’ve seen these shenanigans and I’m sure it won’t be the last. We know what to look for.
Still, our ambassadors keep pressing. We need some details if we’re going to “partner”, we’re not doing this based on a whim. We have our users best interests at heart here! They even stated themselves they were fine with us doing our due diligence, but just “not too much” it would seem.
The story changes further, now they want a confirmation our community will be using their product. I tell them we can’t make our users do anything, we’re a decentralized blockchain and don’t have any control over that sort of thing.
More prodding, time for a point blank question:
you simply want the DigiByte foundation to officially endorse and market your platform to our community in exchange for adding DigiByte to your platform?
Yep, that’s what they wanted. We’re not a development partner, we’re not here for help with any coding. They don’t want to pay our developers to integrate anything. What they want to do is pay bribe to get us to shill their product for them.
We knew it all along.
Nonetheless, we entertain the notion of testing out their platform, it apparently works. We’re waiting for more details on that, but at present I don’t believe it will amount to anything.
We’ve found what they’re really after, they want us to market for them to our user-base and they’re trying to pay us off without it looking like they’re doing-so.
Then, the icing on the cake:
Oh really now? Is that a threat? Why would you say something like that?
I’m pretty sure after writing up all of this, and reviewing everything further, I have no issues with how these DigiByte ambassadors conducted themselves.
I would also suggest that the likes of Reddcoin and BitShares have thoroughly investigated what they’re getting themselves into. Not just the team behind the coins, but also the community themselves.
I’ve seen many projects come and go over the last 4 years. I’ve seen many people try and re-try the same failed platforms. I’ve seen people make a lot of money in crypto, but to be honest I’m more concerned with those who’ve lost out. Nobody wants to see another Bitconnect, and with the shake-out that we can see already happening in the industry, it makes sense to stay on your guard.
Always be wary, especially if somebody is going to “give you something for nothing”. This is why all those tweets you see “Send 0.2 BTC and we’ll send you back 2 BTC” are laughable, but people still fall for them. Some people need to be warned.
Consider this my warning to the public too, be careful out there!