Passionate Defense of SDC / Particl

Posted Under: Articles
3 years ago

This article was originally left as a comment on the Satoshi’s SDC home page but we decided to give it even a more prominent space, free of charge, given its apparent sincere attempt to defend the deal in question.


I’ve been a Shadowcash holder for some time and have converted my SDCs to PARTs. I feel like I should clarify a couple of things you mentioned here as most of this piece is actually inaccurate then people could make up their mind in a more accurate fashion.

I’d like to first address the “botched project” statement. As a privacy platform, Umbra did very well as a wallet (HTML5-based), filled with interesting GUI features that made it very easy to use most of the features Shadowcoin offered. I would absolutely disagree that is a botched wallet and I used to use it everyday for staking and barely ever encountered any bug. Considering ShadowProject was basically a hobby project with little to no funding (except from community donations which were quite low), what they’ve accomplished is actually quite remarkable. In fact, they developed one of the best wallet in crypto (which has been copied a lot by other projects, that is a mark of success in open-source projects), a fully-functioning alternative version of the BitMessage protocol to create a perfectly anonymous P2P chat system (actually more secure than Signal, for example), as well as complete their anonymous and decentralized marketplace (it was never released, but is mostly ready in CLI form for when Particl launches). Other less known achievements include integrating ring signature to the bitcoin protocol, creating a neat dual-token blockchain (kind of behaves like a side-chain), first proof-of-stake mobile wallet (that was taken down after they released their HTML5-based wallet, Umbra), and etc. Again, considering all of this was done voluntarily by people with no funding, no physical meetings, and a small team of volunteers that came and disappeared as they came, this is pretty impressive. As for the ninja-mine accusation in the linked old FUD article, it is mostly that, FUD. There is no way to say with confidence that “ALL the coins are in the hands of the devs, their investors, and maybe a handful of early miners”. The dev team has been known to have little funding through the two years it developed. The insta-mine was from a mining farm and it cannot be associated with the team in any way, even if that were true. So this is a baseless assumption at best. Also, this whole argument is contradicted by the fact that for most of its life, SDC was valued at a few cents, and that for paying for anything would have severely emptied their alleged pockets.

As for the statement on “trusting investors being screwed over”, I fail to see the argument, in all honesty. ALL SDC holders are being offered a 1:1 conversion rate, meaning you get just as many PARTs as you had SDCs. For those looking to increase their holdings, the team has proposed a “bonus rate” which you can fund. Basically, this bonus is paid for in BTC and allow you to get a discounted amount of PARTs proportionally to how much BTC you send. These BTCs act as a donation to the team, allowing them to pay devs full time, expand the team with more devs, PR guys, advisors, legal firms, third-party code audits, university grants and etc. They also used these BTCs to setup a Swiss Foundation which is basically going to be their legal body. A lot of people have compared this to an ICO, which, in some way, can be compared to even though it is technically not an ICO. In the end, a project that wants to be sustainable long-term needs funds. Developers cannot be expected to work for free forever and keep delivering great features.

For this to be possible, they had to either hard-fork the chain or start anew with a completely new blockchain. They have explained in great details the reasons they have chosen to start anew, please visit their AMA here:

  • and more precisely this answer:

One of the concerns is also that it effectively creates a 15%-25% haircut to all holders (since the supply is increased to account for the BTC bonuses). While it may look like a loss of value short-term, this is actually a great thing for all the stuff I’ve mentioned above. Personally, I would rather get a 15% haircut and have a team that is funded, works full-time and gets advised by PR and legal firms, and has its code audited by third-parties rather than to keep the current supply but with a team that codes here and there on their free time and is generally not well organized because of lack of financial interests. Don’t forget also that 80% of all unclaimed PARTs (SDCs that will not be converted into PARTs because they are either lost or the owner is dead, incarcerated, etc) are redistributed to ALL swappers. Depending on the amount of unswapped SDCs, and combined with the 15% bonus, this could totally offset the haircut.

Note that one of the reason they had to change the name of the project and start a new chain was that no PR/legal firm wanted to associate themselves with the project and they were highly advised to do so if they wanted to be as safe as possible. As for the price tank, if you zoom out the charts back to a month or so ago, the price is pretty much the same. It is pretty clear that three situations led to this insane pump.

1- Everybody knew the news was coming
2- Price was highly manipulated by a single whale (600BTC buy wall than was instantly pulled and various pumping schemes)
3- Speculators were diversifying away from BTC (BTC dominance index went from 86% to as low as 61% in that same time-frame)

Considering this is a swap to a new blockchain and that the Parts will be locked until the new chain launches, it scared speculators who are looking for quicker profits away, understandably so. There were also a lot of people who panic sold before they were expecting the price to keep shooting up but instead were met with a news that didn’t mean this short-term. I wouldn’t say the investors thought it was a clusterfuck, after all, more than 60% of all SDCs in circulation are already converted and most conversions took the bonus as well. Speculators didn’t like the news for short-term gains, but that is okay. Speculators don’t equal long-term investors.

As for Umbra dying, in a sense it is true, but all token holders are given the same amount of tokens (and more) on the new chain. Umbra was effectively their “prototype”, as Particl doesn’t start from scratch, starting where Umbra left. It will have a very similar look, the same anon features as Umbra + a shitload of new stuff, including lightning network, segregated witness, the new bitcoin codebase (most alts are running on 5 year old codebases), sidechain, various integrated DSNs, a market and a couple of undisclosed features. It will even have integrated in-wallet fiat gateways with well known partners at some point and work with all currencies on Shapeshift. What’s not to like, really?

The article you linked is a really old pro-Monero FUD article and its main concerns were already refuted by Umbra’s platform achievements so it is pretty outdated and irrelevant. Monero has a long history of FUDing Shadowcash so this isn’t surprising, and the end of their article confirms it is basically Monero shills. The “flashy marketing” accusation really is baseless, as Shadowcash had very little PR going on for them as they had almost no funds. The article stating that SDC focused on marketing more than development is plain lies. Anyone can look at what SDC team has done tech wise and compare it with the almost absent amount of PR they had going and it is pretty evident that this baseless accusation is a fallacy.

Other wrong points from this article:

  • Main cryptographer is NOT anonymous and hasn’t been for quite some time. Most of the team members have come up and stepped out of the shadow
  • They are going to get their protocol peer-reviewed by third-party firms and through university grants
  • The marketing accusation is bollocks, as I mentioned.
  • The ninja-mine with ALL the coins being in the hands of insider is baseless accusation with no proof. You can go back to SDC ANN bitcointalk thread and you will clearly see the devs ended the proof-of-work period early because they panicked when an unknown mining farm came and raked in most of the coins. They didn’t want the coin distribution to be centralized. This is all on record.
  • The accusation of them pump and dumping Cloackcoin is, again, baseless accusation with ABSOLUTELY NO proof given to his argument

If this were a scam, why would all the team that used to be mostly anonymous come forward and reveal their identity? They didn’t want to do it before because ShadowCash was deemed the next SilkRoad. Of course they would want to remain anonymous, and of course no legitimate firm would associate with such a reputation.

In conclusion, this “research” on ShadowCash to determine whether it is a scam or not is pretty bad, no offense meant of course. Linking to a clearly outdated Monero FUD article to make up for about 50% of your argument is just plain lazy and misinformed. I assume this is not intentional on your end, but you may want to revisit some of your argument.

If you disagree with some of my points, please comment and we’ll talk about it. Just trying to shed some light…

Click to Read and Post Comments Total Comments: 2
  • Robert La Quey

    I have met face to face with all of the core members of the SDC/Particl team: financial backers, the lead developer Ryno, marketeers. As fate would have it was a chance encounter at a resort where they were holding their meeting. I was present as an outsider during many of their meetings which took place during a period of several days in the Philippines where I live. I can vouch for the hard work that went into this transition. Were mistakes made. Of course, try to do a transition this complex with out mistakes and you will fail. My perception is that these are honest guys working very hard to do the real right thing. Final disclosure: I am not nor do I plan to accept any money from the Particl group, nor from its backers. Robert La Quey aka Santa

  • departed

    I don’t have a dog in this fight and can’t speak to any of the other shadowy allegations. I am a simple retail investor who participated in the conversion to avoid taking a loss on my SDC. There is a large unexplained discrepancy between the number of PART displayed on my dashboard and those that were sent to my genesis wallet. The support team straight up ghosted me and ignored my last 3 emails to [email protected] requesting clarification or a resolution. I don’t know if there was a simple explanation, but I do they have flat out ignored multiple emails which leads me to make my own assumptions. Is Poloneix really the company you want to emulate in this space guys? If you are thinking of backing the project, based on my own experience, I would strongly encourage you email them *BEFORE* you have any problems to see if you get a helpful response, or a response at all.

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