Does Blockstack really have 1 million verified users?

7 min read

Blockstack PBC announced on January 29 the completion of its "Milestone II" which unlocked $ 6.8 million from its first coin offer 2017. The project claims to have one million verified users on board, a performance that some in the community did not believe. Cointelegraph has performed an analysis of blockchain data to see if this claim could be confirmed.

The importance of the milestone

The Blockstack initial coin offering (ICO) was implemented in November 2017 via the CoinList platform. It was notable because it was "SEC qualified", meaning that it had stricter reporting obligations to the regulators and implied that there was no risk of being prosecuted by the Securities and Exchange Commission. It was offered to both recognized and private investors.

The offer was also structured in results-based milestones that would unlock parts of the collected funds. There were two of these milestones, with the first requirement that the network mainnet be successfully launched by January 2019. To unlock the second milestone, the project had to reach a million verified users, a result that would be checked by an apparently independent advisor board.

In particular, Blockstack has committed to returning 80% of the funds locked by each milestone to investors if they were unable to deliver.

The core value proposition of Blockstack is to provide a verifiable identity that is protected by blockchain, which can be used by approved entities. This is used to create an ecosystem of apps that are authenticated with Blockstack ID.

Obviously, given this system, the presence of a million verified users could possibly be verified by analyzing Blockstack & # 39; s blockchain data. The definition used by the Advisory Board includes all possible verification methods, including through social media accounts or government issued IDs. These must be visible on the platform API.

What a verified account on the platform looks like – watch the Twitter icon. Source: Blockstack Explorer

Used method

Although Blockstack uses Bitcoin's OP_RETURN operation to store data on the blockchain, it is not immediately legible. Blockstack offers its own Bitcoin explorer that contains detailed information about all user names stored on the blockchain.

We have used penetration test tools to crawl through the entire history of Bitcoin blocks until May 25, 2018 – the date of the first operation recorded on Blockstack & # 39; s wallet used to assign names. We have only filtered the blocks that according to the API & # 39; name operations & # 39; which resulted in a list of 17,000 blocks.

This list was entered into another crawler that extracted 1.5-gigabyte block blocks, with crucial details about all name operations.

We have filtered this list to include only usernames, without additional data, such as the time of creation.

The blockchain has registered a total of 1,997,949 names, although this figure also contains duplicates of top-level domains (around 15,000).

Looking for a full confirmation of whether the users have been authenticated, we try to submit API requests for each user found using this method. However, the huge time it took to make 1.9 million requests, in addition to any server restrictions, meant that we had to limit ourselves to a sample of just 50,000 users.

Curious findings

Although the survey seems to confirm at least the number of users reported on the Blockstack home page, a deeper look shows some peculiar features of the usernames.

In particular, many user names have a prefix "fc-" or "bc-".

A look at some usernames on Blockstack. The list is arranged chronologically, not alphabetically.

In fact, there are 1,316,894 "fc" names and 325,356 names with "bc" in them. Searching for these names in the block explorer yields a "no results" page – which is clearly different from searching for a user who doesn't actually exist.

In view of these findings, it seems that only around 400,000 Blockstack users can be verified through the platform in one way or another. The API returns valid data for both "fc" and "bc" names, but after more than 2,000 probe requests, the software did not provide authentication information for one of these users – which led us to interrupt the search.

Of the 50,885 users we sampled out of the remaining 400,000, only 1,565 had reported a verification. This is a percentage of approximately 3% verified users.

In an application to the SEC in July 2019, Blockstack revealed its own figures:

"Of those 115,780 accounts, around 16,100 had provided" social proof "as proof of having a human user, such as a GitHub link or Twitter message link."

The number of verified accounts is 14% of the Blockstack users. This would still be far below the required 50% dictated by the total number of users.

Are the weird names the answer?

Blockstack used various initiatives at the end of 2019 to get users on board. One is the Blockchain.com airdrop, in force in October 2019. The company has reported having distributed Stacks tokens to more than 300,000 users – corresponding to the number of "bc" users. Each of those people was supposed to be verified by Blockchain, Inc. via a complete know your client (KYC) procedure.

In a telephone conversation with Cointelegraph, Blockstack PBC CEO Muneeb Ali explained that the blockchain does not contain any authentication information that would expose private user information, such as telephone numbers or government IDs.

He confirmed that the "bc" names are indeed the result of the airdrop from Blockchain, Inc. Regarding "fc" names, Ali did not want to disclose their origins, but he said they are part of a user acquisition strategy that "will announce the company in the coming weeks," stressing that they have all been verified.

Is Blockstack guilty of misconduct?

Ali commented on the debacle and believed it was a misunderstanding and said that "people have the impression that we claimed to have one million active users."

He explained that the milestone in 2017 was determined according to a very specific legal definition, whereby users had to be registered on the blockchain. However, it did not specify how they were to be verified – this was at the discretion of the company.

An SEC request shows that Blockstack Blockchain, Inc. has paid up to $ 3.85 million for the airdrop. Although they were paid, the KYC requirement ensures that all participants in the airdrop are real people – something that the social verification system does not guarantee.

Ali noted that the company has largely relinquished social verification precisely because it can easily be forged. He also revealed that the team is busy creating blockchain signature records for other types of verification.

Ali emphasized that the milestone was a self-imposed demand, which he described as proof of Blockstack's transparency.

Although there is some continuing uncertainty about the origin of the "fc" names – hopefully soon to be erased – Blockst could have easily created an army of fake social media accounts that would have passed a superficial blockchain test.

It would probably also have been cheaper than Blockchain, Inc. pay for an airdrop that it only cost a third of the way.

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Written by

Don Bradman

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