blockchain and fintech, by Noelle Acheson

Blessed, glad April Fool’s Day!

I’ve bot doing some digging into the top-down treatment of blockchain research – ter other words, what various governments are doing to support development. It’s disconcerting, because – just judging from the headlines (I know, I know, facts and figures to go after) – the US and Europe are not dedicating almost spil many resources spil others (cough, China and Russia).

This article from Politico looks at Europe’s attitude towards another transformational technology: artificial intelligence. And the conclusion is alarming.

“With advanced picture recognition, gegevens analytics, prediction systems, military brain science and unmanned systems, devastating wars might be waged and won te a matter of minutes.”

That much wij knew. It’s when wij compare China’s treatment:

“In a three-year act project to develop AI, published by China’s Ministry of Industry and Information Technology te December 2018, Beijing laid out a purpose of being able to mass-produce neural-network processing chips by 2020. The country’s cloud computing companies are racing to deploy increasingly sophisticated services featuring machine learning and AI.”

“The EU’s strategy is organized around three concerns: the need to boost Europe’s AI capacity, ethical issues and social challenges. Unluckily, even the very first dimension quickly turns out to be about “European values” and the need to place “the human” at the center of AI… Te a 14-page document, only two pages are faithful to ways of boosting Europe’s AI capacity.”

… that things begin to get… alarming.

“In a passage perhaps aimed at responding to the Chinese gambit for AI supremacy, the Commission intends to argue — or so it is written ter the current draft — that the EU “can position itself spil a leader te the international reflection on AI.” Let others lead on AI. The EU will be able to reflect on it better than anyone else.”

Following on from the above and from what I mentioned ter the previous postbode – the enlargening use of technology spil a implement for power – this article from the Financial Times is potentially alarming.

“Data collated by Thomson Reuters from the World Intellectual Property Organisation (Wipo) database showcased that ter 2018, more than half of the 406 blockchain related patent applications were from China… China filed 225 of the blockchain patents last year and 59 ter 2016, followed by the US (91 te 2018 and 21 ter 2016) and Australia (13 last year and Nineteen te 2016). “

It’s kicking off to feel like Spring…

by Amanda McCavour, via Colossal

This chunk ter Reuters – “Wall Street rethinks blockchain projects spil euphoria meets reality” – is not only good journalism (getting stories that are both interesting and overlooked), but also a refreshing reminder that wij should be reporting about the cancellations and disappointments – they are, after all, more newsworthy thesis days than yet another pilot doing the same things spil before but better. But for some strange reason, the protagonists are much more anxious to talk about their importance, creativity and success than they are about their failures.

Media, on the entire, tends to concentrate on what innovators want us to know. Wij take the effortless option of relying on press releases and conference leads, and leave behind to follow-up on projects that didn’t toebijten and deadlines that weren’t met – it’s understandable, even, since few outlets have the resources to keep up with everything. It’s a pity, tho’, and I’m sure wij could do better.

And I am beginning to believe (zometeen than many) that, yes, blockchain is te the typical hype-cycle slump. Good. Eventually. Now is when it gets interesting.

A stunning display of post-crisis gegevens from the Wall Street Journal that shows that neoliberalism is not only still alive but doing very well, thank you…

“Analysts say the financial depressie highlighted the risk of concentration. But Ten years straks the trend of larger firms is still intact.”

More than intact, according to this graph:

“The financial sector is again becoming a fatter lump of the economy. That could translate to future risks for borrowers and consumers te another keerpunt.”

And it’s not that GDP has fallen… (It would be interesting to see a breakdown of finance vs insurance, and how much of that is shadow banking.)

“Regulations are tougher, but the regulators enforcing them often come from the industries they oversee.” Omg…

The display of graphical information te finance is getting better and better…

Via The Economist – click on the graph to go to the article, and check out the scrolling effects…

A “blockchain killer” ter the house? The press, who never knowingly misses an chance for schouwspel, is making much of the upcoming clash inbetween blockchains and EU regulators overheen the fresh gegevens rules (GDPR), due to activate just overheen a month from now.

On the one arm, the right of all EU citizens to insist that their gegevens is eliminated does mean that blockchains can no longer be immutable (te other words, they can no longer be blockchains).

But on the other mitt, most of the private blockchains that enterprises are building on are not actually blockchains – they’re distributed ledgers, and they can be mutable. Those that are building on cryptographic systems based on chains of blocks, yup, that might be more of an kwestie.

Which is a drawback, since there are compelling use cases for public ledgers, and the technological development going on behind the scenes will – if permitted to proceed – fuel further use cases and functionalities.

Albeit the work would most likely go ahead anyway. On the public, decentralized blockchains – they’re not “owned” by anyone. So just who is the European Union going to fine?

Apps that are run by a centralized organization might be lighter to target – but there’s not a loterijlot of clarity overheen control of the gegevens. Te a cloud server, for example, if the company that waterput the gegevens ter there doesn’t eliminate the information, Amazon or Microsoft could step ter to do so. Te a public, distributed database where no particular entity has control overheen what goes ter, who would the authorities insist take it out?

What’s more, switching geographical base is getting lighter, with other jurisdictions clamouring for the talent and investment. All a clampdown would achieve is an leegloop from Europe, and a missed chance to participate ter greater efficiencies and fresh collaborations.

This highlights the futility of the GDPR legislation, and how it forearms technological supremacy to other geographical areas of influence. It not only further entrenches the power of existing silos at the expense of smaller businesses (due to the considerable compliance costs, which the larger companies should have no problem absorbing), it also inhibits innovation te fresh gegevens structures that actually have the power to better distribute processes and utility (and I’m not just talking about blockchain).

At the same time, it could spur research into fresh ways of treating online information, including the possibility of sovereign identity. Rather than just an interesting concept with potentially empowering consequences, fresh identity management could become an economic imperative.

The objective is becoming increasingly significant, given that Europe is falling behind. A think waterreservoir (with the aspirational name JEDI, for Snaak European Disruption Initiative) has called the region to task for being too slow and thinking too puny ter its technological development. Misguided initiatives that ineffectually value privacy overheen progress, and punitive tax measures that will have the netwerken effect of reducing collections, further entrench the disadvantage.

Spil latest headlines (North Korean hackers, Chinese takeovers and belligerent National Security Advisors, to name just a few) highlight, technology is an increasingly powerful contraption te the wedstrijd to economic (and military) supremacy. Barriers to development – however well-intentioned – could end up determining the winner. Even leaving aside military outcomes, economic growth for all becomes a matter of survival spil deepening inequality wiggles political establishments to their core.

So, it’s probable that GDPR will back down, and permit blockchain development – on both public and private ledgers – to proceed. That would be good news, on many levels. Wij have no way of knowing where the influence of research and pilots will be most felt, but wij can be certain that the progress will be felt ter areas well beyond the bounds of the crypto sector.

Rather than European gegevens privacy laws squishing blockchains, it may be that blockchains squish GDPR.

Rather than focusing on what to do about cryptocurrencies, the G20 (comprised of the world’s 20 largest economies) has determined to take a step back and very first determine what information they need. This is wise, and may lead to a deeper understanding of what cryptocurrencies are and where their influence may be felt. It is also going to buy them some time – and te the accelerated tempo of blockchainland, a loterijlot can toebijten te a brief period. So, a wait may be frustrating to some, but informative to all.

This is phat – it’s potentially a very first step towards a global treatment to cryptocurrency regulation, befitting a global phenomenon. It seems that legislators are waking up to the futility of playing whack-a-mole with the lubricious concept of decentralized, internet-based assets. And ter this climate of jurisdictional positioning (“We’re blockchain friendly! Domicile here!”), a samenhangend treatment will pave the way for the solid construction of a fresh payment spoorlijn and business structures.

The role of non-G20 economies is likely to become increasingly significant ter the development of cryptocurrency services. With smaller jurisdictions (Singapore, Switzerland, Malta) suggesting logistical and legislative support te exchange for capital flows, ecosystems and high-level immigration, rather than a blanket treatment wij may see a re-balancing of crypto influence.

By the time the G20 does begin to make concrete recommendations, the entrenchment of cryptocurrencies ter the world economy may be too big to walk back – ter which case, anything that seems like a clamp-down will be met with a flow towards non-G20 areas. Or, it may still be on the fringes, te which case concentrate will shift to fresh “threats” to financial stability.

While it does its background research, the group has pledged to apply the standards of the Financial Activity Task Force (FATF) – an intergovernmental assets formed to fight money laundering and terrorist financing – to cryptocurrencies. It’s not yet clear what this actually means – everyone wasgoed doing that anyway (investigating money laundering suspicions, confiscating illicit funds, etc.)

It’s interesting that Brazil (according to reports) has said that it will not regulate cryptocurrencies. This may be leaping the gun – and it’s nosey that Brazil feels that it has a better grip of the potential influence than its illustrious colleagues.

Jill Carlson highlighted an inherent weakness ter most ICO models: when the token price goes up, the project sells tokens to raise metselspecie and becomes less exposed to the token’s price. It will therefore benefit less from future price increases.

Also, if the price goes down, it may find itself buying tokens te the market to support the price – and so it’s exposure to future price slumps will be greater.

This is the opposite to sensible portfolio management principles – te unie holdings with standard “convexity”, for example, if rente rates fall, you will get larger and larger price increases. But if rente rates rise, your price falls will get smaller and smaller. The upside outweighs the downside. That is good.

“Short” convexity – what most tokens seem to imply – reduces upside and exacerbates downside. That is not good.

Favourite tweet of the week:

The Financial Times published an interesting take on the battle for crypto friendliness – and the particular risk that Switzerland runs of revisiting its hard-lost reputation spil being a toevluchthaven for “dirty” money…

What’s more, it turns out that all is not rosy for crypto startups ter the Valley – they still can’t interact with local banks, who distrust their earnings.

And, the capability to use bitcoin to pay for public services is “clearly a marketing gag”, according to a local councillor.

This headline, seen ter SoraNews:

The story itself contains so many gems that I indeed don’t know where to start.

Jon Evans ter TechCrunch points out that blockchain projects are not going to substitute existing systems any time soon. But if they offerande an appealing alternative, they can be viable, and grow organically.

“If things keep going spil they are, maybe you won’t everzwijn have to go through the Wall to get to the people on the other side. Maybe, eventually, they’ll come to you.”

So, enough with the overblown ambition and inflated egos – they harm the “brand”, which is an alternative way of processing information, appealing to a (for now) relatively limited subset of users. That’s very likely enough – and the scope for frustration is more limited.

The possibility of XRP futures is intriguing, but the CEO of LedgerX is right – a big barrier to institutional investors being interested te this is the possibility of market manipulation, with so much of the outstanding float ter the forearms of Ripple itself.

ETH futures sound like a more interesting bet. I wonder why we’re not hearing more about them.

With blockchain podium announcements this week from both Google and IBM, it might seem that the “standardisation” of distributed work is here. Not yet – it’s early days still. But the enlargening competition ter the “cloud blockchain” space will be interesting to see. Let’s assume that Amazon is.

A report ter Nikkei Asia on North Korea’s cyber activities sheds light on the rash of attacks on cryptocurrency exchanges ter Asia, including the latest hack of Coincheck ter Japan. According to a defector, North Korea has a special unit dedicated to procuring foreign metselspecie for purchases relating to weapons programs. Ter this case, “foreign cash” includes cryptocurrencies.

“In May 2018, a ransomware virus swept 150 countries. Te South Korea, many cryptocurrency exchange operators have bot hacked, some have lost their digital coins. South Korean intelligence even suspects that North Korean hackers were behind the big heist from Japan’s Coincheck ter January.”

A fresh type of warfare.

The minimalist, attention-to-detail genius of Tanaka Tatsuya… Via Instagram.

Breathe, thought so.

The DTCC (the US post-trade giant) hosted a fintech symposium earlier this week, te which blockchain technology wasgoed one of the main points of discussion. According to CoinDesk’s report, the atmosphere – spil evidenced by the event’s keynotes and panels – could be described spil “reserved enthusiasm”, “hopeful realism”, or perhaps even “putting on a plucky face”.

Several of the speakers pointed out the complexity of the systems presently te place, the limitations of blockchain technology, the risk inherent ter public blockchains and the colossal task of getting regulators around the world to agree on a constructive way to protect users.

One intriguing detail exposed is that the unveiling of the DTCC’s fresh toneelpodium will be delayed. The original press release promised a launch te early 2018. CEO Michael Bodson let druppel te a LinkedIn postbode last December that it would be late 2018. Now it’s looking like it will be ter 2019, at least a year late. This is where the breathe comes ter, because it will most likely end up being even straks than that.

I wrote about the scope and advantages of the DTCC project a few months ago, but to recap: the decision to go with a blockchain-powered verhoging wasgoed based largely on the need for 1) transparency – where all participants could share the “golden copy”, the main database from which others draw their information, and Two) efficiency – reducing settlement times, and streamlining administration with wise contracts. The use-case makes sense.

But blockchain is complicated. Securities markets are complicated, particularly derivatives. And project programma is complicated, especially when you’re dealing with fresh territory and uncertain infrastructure.

The DTCC’s project is far from the only one that has suffered setbacks. Going through the slew of announced banking blockchain projects from the past year, the number of missed deadlines is breathtaking. Many projects begin out with high hopes and effusive press releases, only to get calmly shelved spil the obstacles prove to be expensive.

Often it’s because limitations of the technology are discovered spil building progresses. The technology is youthful, after all. The DTCC podium wasgoed originally to be based on ethereum (not even four years old), with Solidity spil the clever contract language. Yet the team soon discovered that the DTCC application needed something more sophisticated than Solidity would permit. While the stiff has not (to my skill) specified what the fresh solution would look like, it is an investor te Digital Asset Holdings, which has developed a fresh wise contract language.

Sometimes setbacks originate where regulation and applicability meet, an area fraught with uncertainty. Getting the authorities to sign off on something that hasn’t bot built yet is a challenge. Beyond that you also have the need to agree on regulatory reporting requirements.

Technology switches are utterly difficult, and delays are common. The risk is that the longer the delay, the more complicated the project gets spil extra requirements are inserted by regulators or stakeholders, and spil technology moves on. With delays come extra costs, and there may come a point when the switch is no longer a good business idea. The infamous upgrade of the London Stock Exchange system ter the 1980s accumulated a delay of overheen Ten years – ter the end, it wasgoed scrapped after burying overheen 70 million ( 140 million ter today’s money). Could the same thing toebijten here?

I hope not. The work being done is significant, and points to a fresh financial system that has the potential to solve current roadblocks and cost barriers. Wij can’t underestimate the skill contributed to the blockchain sector, even if the work finishes up being private (albeit the DTCC’s technology playmate Axoni has said that it plans to open source the project once ended).

The main lesson is to not get giddy with excitement overheen big pronouncements – they are far from a victory. They are, however, a validation of an idea, and a commitment to further the sector’s development. Wij also need to be able to take setbacks ter our stride, lower our expectations and not point to delays spil evidence that wij are now te the “disappointment” phase of the hype cycle. Even if the high-flyers end up pivoting, the amount of concentrate and progress te the sector shows that others will be willing to pick up the mantle and attempt a different, perhaps more modest treatment.

Given the strong amount of work still going on, and the constructive tone of high-level conversations – such spil those at the DTCC event – wij can take the delays spil breathing space, and lodge back to witness hard-won progress leisurely emerge. Better late than never.

It’s bot a staggering week for corporate “misbehaviour” – the fallout from the Theranos hubris, and the revelation that Cambridge Analytica knowingly used our social media information to manipulate us. The latter one is particularly appalling, and will very likely trigger a wave of calls for tighter regulation of the gegevens collectors.

It could also trigger a further shove (already underway ter Europe with GDPR and PSD2) for gegevens treating to be more see-through and, if possible, decentralized. Obviously blockchain technology has a potential role to play te that. But the more interesting facet is the broader conversation about who should own our gegevens. This is going to trigger a much fatter switch te how business is run than most of us realise.

Google’s decision to verbod ads for cryptocurrencies and token sales, taken on the high-heeled slippers of Facebook’s similar stir, is harsh, but good news for the sector. While the welvoeglijk ads get unjustly washed away with the scammy ones, the necessary cleansing of the garbage that bombarded anyone interested te the space will hopefully “reset” the sector’s reputation for innovation rather than fraud.

True, it may lower the income of sector media that displayed programmatic ads on their sites. But at least they will no longer find themselves inadvertently showcasing bad ads. That will give the sector another cleansing boost.

So, Twitter next?

I wasgoed te Stockholm this week for a post-trade conference, talking about the potential influence of cryptocurrencies on hedge funds. (More on that to go after). Since I had some time before my flight back huis on Friday, I took myself off to the Photography Museum, where they had an exhibition of Christian Tagliavini’s surreal and nostalgic work. The work that went into composition and the technology produce works of whimsy and nostalgia, almost like rennaissance paintings.

If you find yourself ter Stockholm, I wholeheartedly recommend a visit. Charming and hypnotic. And, the cafe on the top floor has breathtaking views.

Did you see John Oliver’s bitcoin scene? Clever and incongruously deep, spil usual. Spil CoinDesk points out, however, his attempt to draw a parallel inbetween bitcoin and Beanie Babies shows that he still has some way to go te understanding the economics behind the largest cryptocurrency.

TechCrunch published an excellent verhandeling by Jon Evans on why social media seems like such a toxic environment.

“Of course the Internet wasgoed always utter of awful. Poopers have bot trolling since at least 1993…. The Intransigent Asshole Theory holds that the only thing that’s switched is that more ass-holes are online and they’ve had more time to find each other and agglomerate into a zuigeling of noxious movement.”

This point seems, ter retrospect, startlingly evident:

“Adopting [Taleb’s] argument slightly, if only 3% of the online population indeed wants the online world to be horrible, ultimately they can force it to be, because the other 97% can — spil empirical evidence shows — live with a world ter which the Internet is often basically a cesspool, whereas those 3% evidently cannot live with a world ter which it is not.”

Te other words, wij tolerate the trolls, so they end up winning.

3% of people are truly terrible, but if wij are reasonably compliant with their awfulness, that’s enough to ruin the world for the surplus of us. History shows that wij have bot more than adequately compliant.”

They excitement around the blockchain-based tally of votes te the Sierra Leone election is bewildering. Sure, it shows that votes can be registered on a blockchain network. But wij already knew that.

If I understand correctly, the votes have to be by hand registered. Te other words, someone from the company treating the software – Agora – takes the vote and inputs it into the toneelpodium. How is that not centralized? How is that not vulnerable to manipulation? What, gravely, is the point?

Ah, I hear you say, this toneelpodium is see-through – anyone can see the votes. This will go a long way towards restoring trust. Why? Suspicion is a hard thing to get rid of – and openly exposing potential points of failure (those inputting the gegevens) isn’t going to do it.

Chic from the question of how do wij assure the integrity of the gegevens handlers, how is manipulation through identity fraud avoided?

What’s more, it’s a permissioned blockchain. A centralized, permissioned blockchain. Why not just use a distributed database?

Another question, how will electronic voting platforms – of any sort – overcome the notoriously poor connectivity te the region?

True, it’s a commence – and if, spil they say they intend to, the developers work on removing middlemen by permitting citizens to vote directly on the verhoging, with biometric gegevens, then that will be a potentially more worthwhile system. But to get everyone biometrically identified will be a massive undertaking, and there doesn’t seem to be the political appetite.

It could be the very first glimmer of an official reaction to the bold optie that wij so often hear from the bitcoin creed: “There’s no way you can regulate a global currency.”

Yes, there is. Well, sort of.

A global alliance of regulators is a step te the right direction. It combines the veneer of oversight with the threat of general disapproval and possibly sanctions of some sort. And it may produce useful guidelines for businesses that overeenkomst ter cryptocurrencies to go after.

Yet it is not exactly “global regulation”, and any alliance will have limited power at best. National pride and cultural differences – not to mention economic circumstances and geopolitical motives – could encourage some regulators to take a different path.

Then again, “standing alone” te either permissiveness or strictness is an unsustainable strategy – having risky projects flock to your jurisdiction, or ge projects flock from, would weaken economic growth and would eventually self-correct.

And this hints at a fresh trend ter legislation – let’s call it the “magnet” treatment. Wyoming’s state legislature has cleared a bill that would, among other things:

  • Approve the use of blockchain-based records for corporations, providing them legal validity – this opens the wegens to development around clever contracts and blockchain-based securities.
  • Exempt cryptocurrencies from money transmitter laws. This is interesting from a semantic point of view – so, cryptocurrencies aren’t money?
  • Exempt certain types of crypto assets from securities law. It’s unclear how this would work. The approval (or not) would work on a case-by-case ondergrond? That doesn’t sound efficient. But then again, enshrining the conditions for exemption would encourage work-arounds, such is our nature. This is also different from a semantic point of view – it emerges to be the very first attempt to “define” which tokens are securities and which are utilities. Making the distinction will be both sensible and utterly challenging – and will inadvertently channel development one way or another.

The challenge will lie with tokens that are both utility and security. Te other words, most tokens. The majority are useful for something (they are used ter a function), and holders hope that they will go up ter price.

I still think that wij need to accept that crypto-based tokens are a fresh type of asset, that will require fresh types of rules and oversight. We’re attempting to getraind a square peg into a round crevice.

A spectacular living graphic of the growth of the ICO market. https://t.co/HEdiUhjO4G

This one – “Bitmain Wants to Invest ter Blockchain-Powered ‘Central Banks’” – is also particularly intriguing, te that it makes us question the “standard” definition of a central bankgebouw. A business that controls the money supply of a cryptocurrency (or digital token, if you choose)? Yup, sounds like a central canap to mij – only not one with extra-governmental authority. Maybe wij need to find a fresh term for it.

No mattter how many times I see this photo, it still cracks mij up. pic.twitter.com/zp1sG19BKz

This article te WIRED broke my patience with innovation babble: the Vatican is hosting a hackathon.

On the surface, it looks fine – yay, more innovation!

Only, technology only goes so far. Yes, it’s usually a force for good, and has bot instrumental ter lifting hundreds of millions out of poverty overheen the past few decades.

It has improved communication, logistics and medicine, finance is becoming more inclusive thanks to mobile reach, and some of the wealth that has bot generated ter its name has trickled down to those that have yet to love its bliss.

But it only goes so far.

Most of the world’s current problems – such spil poverty, starvation, war – are not due to a lack of technology. They are down to more human problems of greed, concentration of power and bad governance. Poor climate is also a factor, one that is poised to become an increasingly significant one.

I’m not telling that technology can’t help with thesis. I am telling that there are few institutions te the world suited to dealing with the non-technology side. The Vatican is one of them. And whatever you may think about its politics, te most of the underprivileged areas it operates, it does good work (disclosure: I’m not Catholic).

Instead of a technology hackathon, what about a humanitarian one? Or one focused on soul-searching, resilience-building and the search for meaning? One that concentrates on instructing community building, helping your neighbours and respecting the youthful.

Encouraging innovation is good, spil is inviting creative people to pool ideas and work together for a hopeful cause. Sending a message that even institutions spil old and fusty spil the seat of the Roman Catholic church can be modern and hip is also positive. But it feels a bit like your grandad attempting to dance at the discotheek.

I worry about the doctrine that technology is a magic wand that can fix all ills – it can’t. And when the Vatican seems to give way to the same claptrap, wij have certainly passed into the field of a fresh religion.

To be fair, the organizers of the hackathon realise the limitations:

“’Wij don’t expect anyone to solve such difficult issues… but I hope wij can inspire both clerics and lay people to see this spil an innovative prototype for engaging the junior generation with the problems.’”

And the article manages to maintain a neutral tone, no petite feat given the potential of the subject matter:

“But spil society resumes to question whether technology is the problem or the solution, the participants of VHacks have a big task ahead of them.”

Speaking of which, here is an excellent article te Open Democracy on the difficulties of applying fresh technologies to humanitarian aid. It highlights three main pitfalls:

  • Short-termism: making contant transfers swifter and cheaper could be a saviour ter times of laagconjunctuur, but it does not address deeper, longer-term issues of inequality, corruption and limited access to trade (to name a few).
  • The scattershot treatment: many would-be applications aren’t clear what they are attempting to disrupt. The cost structure – which most applications seem to concentrate on – is not the sector’s main problem.
  • Local setting is complicated, and many aid programs have failed because of a lack of understanding of the nuances of culture. Can code do any better?

All blockchain projects should think deeper about thesis issues, which apply to regions that need aid and to sectors ripe for disruption.

Any future-facing article that has the word `will` te it should be deeply distrusted. For example ",How our lives *will* be revolutionised by X", or ",How X *will* switch the world spil wij know it",. The only plausible term to use ter futurism is `might` or `could`

A eloquent and uplifting ode to friendship:

What is it with Twitter and bitcoin?

CoinDesk published today a dissection of the latest flare-up of hostilities inbetween bitcoin’s different factions. It makes compelling reading, and exposes the ingewikkeld web of interests behind tweeters, promoters, bots and Twitter’s administration.

“…when it comes to cryptocurrency, it can be tricky to distinguish moderation from censorship.”

Yet underneath the brief fuses bubbles a stress that speaks to a deeper characteristic of cryptocurrencies: the complicated mess that is overeenstemming.

By that I mean agreement on issues both big and petite. When strongly held beliefs are challenged, history shows that humans tend to man the barricades. The weapons at our disposition thesis days are barbs and blocks, downvotes and unfollows. Wij dig trenches te the battlefields of social media, and fire away, with only our reputations and tempers to lose.

Most of us just observe, sometimes taking silent sides, sometimes just feeling grateful that wij don’t care that much, often oblivious to what the opbergmap is telling us.

Leaving aside the scams for now (we’ll get to them te a minute), the Twitter battles are a public example of the force of disagreement. While good-natured debate is often a feature of Twitter controversy, the distance from which spoken weapons can be fired empowers many to throw restraint and diplomacy out the window – especially with a subject like cryptocurrencies that speaks to utopian wishes and political hopes. And the intransigence of all sides is racking up the volume to such high levels that the Twitter administration is thinking about stepping ter.

You see the irony? A protocol that automates overeenstemming generates discord. A technology that is about not needing to trust your counterparty is rife with mistrust.

But that precisely is the beauty of bitcoin and its peers. It lays nude our human nature, and then shows us the solution. Or rather, it offers us a function, and then shows us how much wij need it. Very clever.

With bitcoin, wij don’t need to agree – the algorithm will figure out what the overeenstemming is, and implement that. Whether or not wij agree is irrelevant. If wij don’t like how the algorithm does that, wij can take the code and make a fresh version. Wij won’t have the ecosystem that the original one has, but the choice is ours: to pay the price of participating te a broader “society”, or to branch out on our own and forgo the support and access to a broader market. Blockchain technology makes sure that shouting and shadow attacks don’t impede progress or the working of the system.

So, what the Twitter crypto battles are truly showcasing is how useful blockchain technology can be. It gets around the barrier of “consensus paralysis” by removing the human component.

The vast number of crypto scams on Twitter holds a different irony: that a technology based on the automation of trust is attracting those that rely on trust to steal. Blockchain technology says “I don’t know who you are, but I don’t need to ter order to trade with you”. Scam artists say “trust that I am who I say I am and send mij xxx”. And that the two concepts can uneasily co-exist ter the same sector speaks to its sheer size and attraction.

Is Twitter a catalyst for the discord and the scams? No – if Twitter didn’t exist, the battles would be (and are) raged elsewhere – Reddit is aflame with flamy argument. I don’t use Facebook, but I imagine that that has its fair share of vitriol, also. And Twitter doesn’t affect human nature spil much spil it does display it.

Meantime, the premise of bitcoin and the possibility of blockchain expose the underlying convictions and prejudices… and point to a way to minimize their influence on operations and progress.

So, let the Twitter wars rage (but zekering the scams). Cryptocurrency doesn’t “belong” to any one faction. And spil Twitter users, wij can choose who wij go after, who wij listen to and who wij overlook. There will never be a human-based overeenstemming. But spil the sector is displaying us, at an operating level, there doesn’t need to be.

Leda Glyptis wrote a lump te BankingTech that called out all those that talk about a national cryptocurrency. Hier quarrel isn’t with the concept of national currencies based on distributed ledgers. It’s with those who insist that they are cryptocurrencies, when “crypto” is all about decentralization, community and independence.

Pedantic, perhaps, but she’s right ter that semantics matters. If wij label everything “crypto”, then wij fail to see the true nature of the potential, and wij misunderstand the implications of national versions.

A similar peeve of mine is when businesses call their application “blockchain” when it’s truly a distributed ledger. Not the same thing. But, hey, “blockchain” is sexier.

Enough of the mashing of vocabulary just to get a good soundbite.

pic by Kilian Schonberger, via Colossal

It’s not because I work for them, but gravely, CoinDesk had the most measured and least sensationalist headline on the SEC probe, and that makes mij proud: “SEC ICO Probe Underway, But Stories Conflict on Size of Sweep”

Compare that to:

“Subpoenas Signal S.E.C. Crackdown on Initial Coin Offerings” – Fresh York Times

“SEC eyes crackdown on cryptocurrencies” – Computerworld

“The SEC Is Sending Subpoenas ter Expanded ICO Crackdown” – Fortune

“SEC cracks down on cryptocurrency shenanigans, report says” – CNET (I love that the word “shenanigans” is used te a headline! Toegevoegd points for that.)

And the list goes on and on… Here’s what most irritates mij: there’s no evidence that this is part of a “crackdown”. The SEC has issued subpoenas to gather information. Sure, some spanks on the wrist and most likely even fines will go after, but by no means for all. And the initiative is ter line with their declaration months ago that they would be “keeping an eye” on the nascent sector. Issuing subpoenas and gathering information is an significant step ter understanding what’s going on – why are wij not celebrating that the SEC is taking a “tell mij more” treatment?

Some other reputable sources also showcased restraint te their headlines:

TechCrunch – “The SEC is reportedly investigating a number of ICOs” – TechCrunch

“Cryptocurrency Firms Targeted te SEC Probe” – WSJ

… but let’s face it, boring te comparison.

According to a report ter TechCrunch, Uber’s co-founder Garrett Kamp is creating a fresh cryptocurrency that can be used around the world for daily transactions. Te other words, “better than bitcoin”. Hunh.

Let’s see how it’s better than bitcoin:

  • It’s not open to everyone – knots need to be “verified” (another way of telling “selected”). No chance of manipulation there. Who does the verifying?
  • 50% of the initial 1 trillion ECO coins will be given away to anyone who signs up. Akin to “helicopter money”, ter which an authority mitts out funds to kick-start spending te a region (assuming that it generates economic activity and growth, which will te turn create more money), this could effectively bootstrap acceptance – but would merchants go through the hassle of installing the necessary systems
  • It won’t use the proof of work overeenstemming protocol that bitcoin relies on. Instead it is opting for an as-yet-unnamed alternative that consumes less energy.

On the plus side, it’s thinking about the user practice from the outset, supposedly launching with a elementary web and app.

And it does have a good chance of getting a strong ecosystem going, given the founder’s credentials (he’s presently founder of accelerator/venture fund Expa) and the involvement of universities (who evidently will be running the knots).

Will it be better than, say, litecoin or ethereum? Does the market need another pretender to the cryptocurrency throne? Who will end up actually using this?

An article by Multicoin Capital’s Kyle Samani produces a bunch of “a-ha!” moments. Such spil:

“Running a computation on Ethereum is on the order of 100,000,000x more expensive than running the same computation on Amazon Web Services (AWS).”

Kyle goes on two explain why blockchains can’t have it all:

“The scalability trilemma posits that blockchains ter which every knot processes every computation and ter which every knot comes to overeenstemming about the order of those computations can have two of three properties: safety, scalability, and decentralization of block production.”

So, either safety and decentralization (bitcoin), safety and scalability (Cardano, EOS), or scalabiity and decentralisation.

Spil the Meatloaf song said, two out of three ain’t bad.

Anyone who doesn`t express skepticism about blockchain technology is likely to be a kwakzalver. But anybody who dismisses it without studying it, or turns down to give it a chance, is being closed. I recommend being neither of thesis

The last time bitcoin transaction volume wasgoed this low, the price wasgoed around $500…

Also, a year ago, bitcoin’s market capitalization wasgoed about 85 procent of the total sector. It’s now around 40 procent.

A loterijlot else has switched since then, too, so…

Anyway, interesting observations from Bloomberg.

Some CoinDesk stories indeed worth reading:

US Regional Banks Start to Cite Crypto spil Business Risk – large and puny banks look at the risk more than the chance – but then again, they have to spell out all sorts of risks, it’s part of their job – it does not mean that they’re particularly worried.

Stupid headlines of the week:

The Washington Postbode: “Bitcoin, stir overheen. There’s a fresh cryptocurrency te town: The petro.”

The article does go on to explain how the petro is not at all like bitcoin – so, a gimmicky headline that will either mislead or annoy? I do not see the point.

And from Investopedia, who seem to be attempting to pivot towards becoming a cryptocurrency news webpagina: “Montana Will Build $251 Million Cryptocurrency Mining Farm”

No, Montana is not building a cryptocurrency mining far. A private company called Power Block Coin LLC is thinking about building such a farm ter Montana. Very different. Implying that a state is behind this is misleading and irresponsible. Evidently this will be the 2nd large mining farm te Montana. That part is interesting – it speaks to the enlargening decentralization of mining power spil China is commencing to liquidate mining perks.

The Daily Express: “Bitcoin WARNING: EU Commission says crypto is NOT currency ahead of imminent crackdown”

No imminent crackdown threatened – the EU is discussing regulation, but they’re a long way from any actual activity, and there’s no indication that it will be a “crackdown”, or that any stir will be bad for the market (legitimacy, people!). And, what’s with the shrieking capitals te headlines?

From Ondergrondse: “Bitcoin on the up spil ‘SegWit takeoff’ causes cryptocurrency price rebound”

It’s not clear that SegWit had anything to do with the price stir. SegWit adoption is good news, but Coinbase and Core’s rollout wasgoed expected and most likely priced te. A few days zometeen the SEC ICO probe wasgoed blamed for a slump ter the bitcoin price – again, that makes little sense. And anyway, a Bloomberg article commented on how strong the price wasgoed ter spite of the SEC news. Te other words, nobody indeed knows why prices go up and down (other than the relative weight of buyers vs. sellers).

This is sooooo cool. Amazing, almost addictive animation. Click away.

Solace, by Nexus Interactive Medicus

“Governments derive their just powers from the consent of the governed. You have neither solicited strafgevangenis received ours. Wij did not invite you. You do not know us, strafgevangenis do you know our world. Cyberspace does not lie within your borders.”

John Perry Barlow’s strong words echoed through the caverns of youthful minds high on the possibility of borderless connection. They spoke to the eternal desire for a better world, and dangled the tasty promise of empowerment.

The honeymoon wasgoed epistel. Wij ended up finding out that, yes, the internet can be regulated. Yes, it can be centralised. And yes, the hierarchy that wij hoped it would overthrow is still te control, just with different faces.

Wij heard similar anthems when bitcoin emerged. “Bitcoin will switch everything”. “The end of the oppressive domination of bankers”. “Bitcoin is the currency of resistance”. And so on.

Will the same thing toebijten?

It already is. Bitcoin’s disruptive potential is getting channelled into a structure remarkably similar to the pre-existing one. Exchanges are becoming more and more like banks, storing our bitcoins, lending them out and collecting information. A handful are accumulating enhancing amounts of clout, becoming the fresh “financial giants”. The promised independence and anonymity is being subsumed by, yes, the regulators, who insist on user identification. On- and off-ramps – recognizing that, on the entire, they need official permission to exist – are obeying.

While this is disappointing to those of us to fell ter love with the concept because it demonstrated us a peek of a fresh structure for society (which of course would solve all of our current problems), it is not a bad thing.

To see why, let’s go back to Barlow:

“Your legal concepts of property, expression, identity, movement, and setting do not apply to us. They are all based on matter, and there is no matter here.”

With affection and respect, this is one of many instances ter the declaration which is factually incorrect. The internet runs on wires and knots and packet switchers – “matter”. There is slew of matter here. Just spil your mind needs your assets to carry it around, internet – and free exchange of information – relies on the physical world to make it work. Ideas may be lubricious, but their flow can be influenced.

And anyway, regulation has never bot based exclusively on “matter”.

Wij have seen that rules can divert the original intention of free communication (ter both the “free beer” and “no limits” sense). Some areas can restrict what is accessed. Others enact policies that give bandwidth preference to more powerful websites. And a growing cohort of regulators is insisting on rigorous controls overheen the gegevens that websites can collect. The next step is to influence business models.

Wait, how is this a good thing?

I’m not telling that limitations are good. They can stifle innovation and communication, holding back the progress of ideas. They can also lead to onmiddellijk oppression.

But, rules also protect us. And te so doing, they relieve us of the need to spend most of our energy worrying about defence, providing us freedom to pursue life, liberty and happiness.

How much regulation is ideal? That is the eternal political debate – and I doubt there is a “right” response to that question. Most societies, communities and organisations fight with the balance inbetween not enough and too much centralised control. Most individuals, too (myself included) – poke away at someone’s individual ordner of their “natural rights”, and you uncover a nest of confusion and contradiction.

What is a good thing is the awakening – at “mainstream level” – of constructive questions around governance and freedom. This could lead to a broader acceptance that the answers are not clear cut.

How far should regulatory reach extend? How much power do wij have to fight back? What price are wij willing to pay? What do wij want, and where will wij compromise? What works?

While bitcoin wasgoed created to circumvent the influence of the centralised financial system, it is leisurely being absorbed… perhaps not by the establishment, but by one that looks like it. And with banks increasingly sniffing around and tentatively dipping their corporate toes te disruptive waters, the fresh bitcoin finance world and the pre-existing one may end up merging.

The end of the libertarian fantasy? Very likely.

And that may end up being bitcoin’s fattest victory. When even blue-chip representatives of the “old order” give it a veneer of respectability, it moves closer to mainstream recognition. When growth and enlargened scrutiny of fresh participants bring a welcome degree of professionalism to the services that are necessary for its use, it comes closer to realising its initial ambition of being a “world currency”.

Just not spil a borderless substitute for fiat currencies. Again, that’s not a bad thing. Compromise is not conceding to the enemy. It’s a step forward, from which the battle against oppression and inequality can proceed to be fought.

Spil wij have seen with gunpowder, radio flaps and the internet, a powerful technology infrequently finishes up being used for its initial intention. Bitcoin is already heading the same way.

And by leaving its original idealised constraints and taking on a form different from the original purpose, bitcoin underlines the freedom of ideas. Even core constituents have bot incapable to control the evolution of its acceptance and use. Is the establishment throttling it, or providing it life? A bit of both? And wasgoed that not inescapable?

Te that, John Perry Barlow wasgoed right:

“We cannot separate the air that gasps from the air upon which wings ritme.”

This article ter the Guardian scraped the surface of the complicated and confusing politics of cryptocurrencies, by pointing out that they can be harnessed by both extreme right-wing and left-wing tendencies.

I think its even more complicated than that. While the “alternative to the established system” can mean many things to many people, te the end it comes down to the architecture. And blockchain architecture is ter the forearms of its builders.

Part of the confusion stems from the inherent and seemingly conflicting characteristics of bitcoin. An open, decentralized version sounds fair and total of chance – until you realise that it also means operating outside of the government’s sphere of influence. And governments are (generally) there to ensure a (relatively) fair distribution.

The right generally wants less government interference, while the left tends to argue for more. So, which characteristic carries a greater political weight: being outside governments’ reach, or being open and distributive?

Venezuela’s launch of the petro, its oil-backed cryptocurrency (based on ethereum or NEM, depending on the report you read), extracted a wave of inaccurate and vague reporting that does neither the petro strafgevangenis cryptocurrencies justice.

Without doubt the launch wasgoed botched and the coin itself looks fundamentally flawed (ter that the fundamentals are absent). Even more distressing, however, is the number of reports that showcased a lack of understanding of either the petro or cryptocurrencies te general.

For example, it’s not a cryptocurrency – it’s a digital token distributed on a blockchain. Not the same thing. Strafgevangenis is it Venezuela’s “answer to bitcoin” – nothing open or decentralized about this one.

There are some exceptions, tho’. CoinDesk’s reporting wasgoed impartial and thorough (no favouritism of course, but 9 different takes on the story!). Spil well spil a synopsis of the launch itself, it reported on the public’s reaction, on the pressure on Venezuelan corporations to accept the petro spil payment, and on possible international repercussions.

Bloomberg did well, spil usual, with an in-depth “Venezuela Is Leaping Into the Crypto Craze” (BusinessWeek), and an excellent rant from Matt Levine titled “The Blockchain Won’t Save Venezuela”:

“It is simply a joke, a product for nobody. But if you add “on the blockchain!” then that somehow obscures all of the actual economics of the product.”

Here’s an attention-grabbing, tell-it-like-it-is headline, for an article with interesting and credible detail, from Motherboard: “Venezuela’s ‘Petro’ Launch Wasgoed Fledgling Hour”.

The FT predictably went from the sensible (“Venezuela launches presale of state-backed ‘petro’ cryptocurrency”) to the sublime (“Venezuela/petros: cryptobabble”) without batting an eyelash. The latter focused on the lack of available information – so much for radical transparency and enhanced trust.

Ter spite of the political underpinnings, The Hill suggested a good headline: “Maduro’s crypto end run around US sanctions is a loser’s errand”. I liked the reference to the amount of money poured into “even more harebrained initiatives than the petro”.

They then went and spoiled the good impression with what seemed, on the surface, to be a good headline: “Venezuela’s cryptocurrency is a farce”… albeit when it turns out that by “farce” they are referring to cryptocurrencies te general (“there is no ‘there’ there”), any sentient reader would feel duped. That’s even before having to bear the choppy structure of the article.

And on Maduro’s bold statement that next week he’s launching a cryptocurrency based on gold, the FT and Reuters had some things to say.

“In a standout year for news-item absurdity, this one may set a fresh standard for grim humour.” (Alexandra Scaggs te the FT)

Best thread of the week:

1/ A lotsbestemming of brainy people get excited about ETH because of all the superb developer talent around the project. ",Go after the developers", is an oft-cited reason to be optimistic for the future of Ethereum.

And hats off to Amber, I love this:

Omzetbelasting my official title isn’t “Blockchain Experienced,” it’s “Person Who Knows A Considerable Amount Of Stuff About Five+ Interrelated Disciplines That Kleintje Of Intersect Ter Novel Ways And Is Always Attempting To Learn More”

There is a ton of noise around regulation recently. Just from the past week, the UK Treasury is launching an official “enquiry” into cryptocurrencies – a sensible very first step te figuring out how to regulate them is understanding what they are. EU regulators meet next week to proceed discussions on crypto regulation.

Austria is looking more closely at cryptocurrency regulation. France has determined that it’s not crazy about the lack of oversight of cryptotrading. And Japan’s cryptocurrency industry is hoping to fend off stricter scrutiny by setting up a self-regulatory bod.

And ter the US, California, Wyoming, Georgia and Arizona all either passed or took steps towards passing blockchain-related laws or amendments. All that within the past week.

This trend – more regulators announcing “plans” if not actual rules – will proceed for the surplus of the year. It will be a slow process but with significant results. The construction of the infrastructure that supports the innovation depends on which way the regulation goes.

Here’s an example of what a shift ter perspective can do on reporting:

  • CoinDesk: “Japan’s Exchanges Report 669 Cases of Suspected Crypto Money Laundering”
  • CoinTelegraph: “Japan: Only 0.16% Of 2018 Money Laundering Reports Came From Crypto Exchanges”

The difference te neutrality that a little word can make. I’ll leave it at that.

I always loved the musical “West Side Story”, sad spil it is… This 360 rendition of one of the numbers from the vertoning at Carnegie Hall is captivating, if a bit choppy (and warning, too much spinning around with the mouse can make you dizzy, I speak from practice).

No comments

Leave a Reply

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

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>