This kind of can be Why Experts Are Calling Kodak’s completely new Bitcoin Scheme A Scam

The annual Consumer Electronics Show (CES) can be a showcase of invention. Each year, giant corporations by around the globe flock to Las Vegas to breathlessly debut their latest technologies: a huggable robot, a passenger drone, an Internet-connected toilet.

The exhibition can also be one of reinvention, where a company taking its final breaths makes a last ditch attempt to save its business by hitching itself to the latest tech trend.

On Tuesday, the Eastman Kodak Company, established in 1888, did just which, unveiling a series of partnerships to associate its venerable brand with the wild completely new world of cryptocurrency. Kodak announced which the idea could be launching its own digital money, Kodak Coin, while one of its licensees was showing off a bitcoin mining device called the Kodak KashMiner, a specialized computer which’s used to earn bitcoin.

For a company which emerged by bankruptcy in 2013 in addition to had a market capitalization of around $135 million on Monday, the idea was a last gasp at being relevant — in addition to the idea worked. Kodak’s stock cost has nearly tripled since those announcements.

Critics, however, are already calling the idea a scam, taking advantage of a period when investor FOMO clouds the cryptocurrency industry. the idea’s a time when an iced tea company can add “blockchain” to its name in addition to more than double its market valuation, or an online file storage startup can raise $257 million by issuing its own virtual tokens.

“the idea’s an economy of easy money in addition to people with fancy buzzword salads can more or less find a way to earn which money,” said Saifedean Ammous a economics professor in addition to author of The Bitcoin Standard. “There can be a massive speculation bubble.”

Ammous in addition to others took specific issue with the Kodak-branded bitcoin miner which suggests potential investors could obtain a certain rate of return if bitcoin’s cost remained steady. CES brochures of the Kodak KashMiner said which customers who paid $3,400 upfront to rent the devices, could receive a payout of about $375 per month for the next two years if bitcoin averaged a cost of $14,000 in which time frame. The brochure noted which the licensing company could take in 50% of the cryptocurrency mined, while paying for insurance, maintenance, in addition to electricity (bitcoin mining can be extremely power hungry) while they are reportedly stored at Kodak’s Rochester, completely new York headquarters.

“Kodak has multiple plans from the blockchain industry,” said Halston Mikail, an executive at Spotlite America, whose company licensed Kodak’s name for the bitcoin mining device. “We have a team which’s well experienced,” he added, before noting which Spotlite does not make the device in addition to buys them by an unnamed Chinese supplier received a.

“the idea’s mind-bogglingly stupid.”

Ammous disputed which experience, saying which the project “could be laughed out the door by anyone who can be serious in bitcoin” in addition to which the idea “betrayed a serious lack of knowledge about bitcoin.”

The problem, he noted, was which the KashMiner proposal doesn’t take into account basic principles of the cryptocurrency. The bitcoin protocol will only Discharge a fixed amount of cryptocurrency per day. As more miners — computer programs which run complex calculations to earn bitcoin — are added in addition to compete with each various other, these computations become harder in addition to require more power. To expect computing speeds, known from the cryptocurrency world as “hash rates,” to remain steady “can be ridiculous,” said Nicholas Weaver, a lecturer at the University of California, Berkeley.

“Over the last 6 months as more people have started off to mine bitcoin, the hash rate has more than doubled, meaning you receive half as many bitcoins for the same amount of computing power,” Weaver said.

Its hard to understate just how brilliant This kind of scam can be on multiple levels.
a: ‘sell miner for cost, collect half t… https://t.co/gdUzhNtb2b

Nicholas Rangel, a Kodak spokesperson, refused to answer questions about the calculations which went into the marketing brochure, which featured an all-caps tagline “IN MATH WE TRUST.” He said which the company could make an official announcement about the program in two to three weeks in addition to also declined to say what company actually made the machines.

Ammous pointed to very similar looking bitcoin mining machines, like the Chinese-made Antminer S9, which can be bought on Amazon for around $6,000, in addition to then physically hosted at special mining facilities which charge for space in addition to electricity. (Given the noise in addition to energy consumed by the devices, the idea’s typically impractical to store them at home.) He said the notion which the company was keeping 50% of mining proceeds “absurd” given current industry rates, in addition to calculated which bitcoin could have to maintain an average cost of $28,000 to offset the expected increase in computing difficulty in addition to deliver the brochure’s suggested returns of $375 a month or $9000 over two years.

I work for a company which can be building a Bitcoin mining facility. I’ve spent countless hours building complex spread… https://t.co/BDLQMUpLUQ

“Kodak as a company can be a shell which has nothing to do with what the idea used to be,” said Weaver, noting which the company had moved away by the photography products which had made the idea an iconic American brand through most of the 20th century. In licensing its brand, for example, Kodak’s name can right now be found on Spotlite America-sold solar panels, energy systems, in addition to inverters.

the idea’s also on a completely new cryptocurency, Kodak Coin, which will be the basis of payment on a completely new image rights management platform called KodakOne. According to its announcement, KodakOne, which can be being developed in a partnership with WENN Digital, will use blockchain technology to “create an encrypted, digital ledger of rights ownership for photographers to register both completely new in addition to archive work which they can then license.”

“the idea’s mind-bogglingly stupid,” said Weaver. “Why could you need a dedicated cryptocurrency to pay for stock photos? I’m pretty sure most photographers want actual cold, hard money.”

“Companies from the real world don’t issue their own currencies for a reason,” said Ammous. “If you want to sell a Great, you use real money. Imagine if you had a separate currency for Kodak, Microsoft, Apple in addition to your super market.”

The concept may not even be a completely new one. On Wednesday, Ars Technica found documents which suggest the KodakOne platform in addition to associated digital money can be just a rebranding of a failed earlier project by WENN which licensed paparazzi photos.

Not sure which can be worse: watching Kodak, once an industry titan, resort to short term gimmick of launching a crypto… https://t.co/nXhOpFjTa9

Kodak’s shareholders did not seem to care. Following a monster rally on Tuesday, the company’s stock ended trading on Wednesday up more than 56% to $10.65 per share. In addition, shares in a Canadian company known as Global Blockchain Technologies Corp. experienced a similar jump of 51% on Wednesday, after the idea said the idea could invest $2 million into KodakCoin.

When asked if he thinks real people could invest from the Kodak-branded mining scheme of its initial coin offering, Weaver seemed resigned to the notion.

“I think they might find some suckers,” he said. “the idea’s just a global investor delusion right right now in addition to a lot of people are going to get genuinely hurt.”

Ryan Mac can be a senior technology reporter for BuzzFeed News in addition to can be based in San Francisco. He reports on the intersection of money, technology in addition to power.

Contact Ryan Mac at ryan.mac@buzzfeed.com.

Got a confidential tip? Submit the idea here.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

3 × four =