Trigger warning No matter where you stand on guns, the attempt by several U.S. states to silence publication of blueprints for 3-D printed weapons should be concerning to the cryptocurrency community. |
TOP TRENDS ON COINDESK
Eye on the SEC
After last week’s rejection of the Winklevoss brothers' proposed bitcoin ETF, the U.S. Securities and Exchange Commision has been in the spotlight, especially after one of the Commissioners, Hester Peirce, dissented from the decision and stood up for financial innovation.
Peirce has earned the nickname "crypto mom," and legions of new Twitter followers, even though her view of cryptocurrencies is far from an endorsement: "I'm not taking a view whether bitcoin is going to succeed or fail," she told CoinDesk in an interview. "I'm excited by the fact that people are thinking of new ways to do things."
Separately came revelations that a “heated” discussion of the issue of cryptocurrencies once took place between the Commission’s chairman, Jay Clayton, and an unidentified attorney.
Eric Werner, the associate director of enforcement for the SEC's Fort Worth regional office who witnessed the discussion, recalled being "taken aback, honestly, about how much thought he [Clayton] had given to this space and the issues surrounding that."
No word, unfortunately, on the specific issues Clayton and the mystery lawyer disagreed on, or which side the chairman took.
Down in the regulatory trenches, the SEC subpoenaed Long Blockchain, the company formerly known as Long Island Iced Tea, which saw its stock surge last year after pivoting from beverages to blockchain.
The company was delisted from the Nasdaq earlier this year, after warning investors that the SEC believed the firm "made a series of public statements designed to mislead investors and to take advantage of general investor interest in bitcoin and blockchain technology."
In other words, the agency apparently suspects Long Blockchain's been selling investors some weak tea.
Altcoin watch
This week saw some notable developments for ambitious new crypto projects and older altcoins.
One of the latter, the Stellar network's lumens (XLM), came off a successful month, having gained 40 percent in price in July. Interest in the project was stimulated by the teams seeking to launch ICOs on the Stellar blockchain, including social messenger Kik.
Also, Stellar developers' support for a lightning network-style scaling solution was a positive factor. Finally, Coinbase recently announced it's considering an XLM listing, which gave the token a 13 percent boost.
Meanwhile, a little-known cryptocurrency project known as Spectre is aiming to create a fully anonymous coin. Further, it claims it can do this with proof-of-stake validation, solving a privacy problem faced by such systems.
A more prominent crypto, the splinter currency known as bitcoin cash (BCH), just turned a year old and now boasts a robust developers' community. BCH's larger block size (it’s 32 MB now, orders of magnitude bigger than the bitcoin block size limit that led to the secession) made possible the creation of apps such as social media platforms on top of its blockchain.
Now the idea of ICOs on bitcoin cash is on the table, as the mining giant Bitmain has released a proposal for adding a token mechanism to the blockchain. ICOs on top of bitcoin cash? That's practically trolling the bitcoin maximalists.
Finally, Neo's co-founder Erik Zhang proposed a new economic model for the upcoming 3.0 version of the project's software.
In the new model, neo's GAS tokens would be sent to a pool and then distributed over time exclusively to token holders who partake in voting for consensus nodes (via another type of token, NEO). But this would remove the technical barrier that requires NEO to be indivisible, and some investors aren't happy with that.
|
⭐ CoinDesk Weekly Sponsor ⭐  The Oxford Blockchain Strategy programme is developed for business leaders, innovators, and future thinkers with an interest in blockchain. This programme gives you a fundamental understanding of blockchain, and its implications and effects on your business strategy. (Insert link) Visit the programme page to learn more. |
QUOTE OF THE WEEK "Blockchain technology is overhyped and pushed for applications where it is not useful. If you don't need a distributed ledger with no trusted parties, you don't need a blockchain."
|
Marc Hochstein is the managing editor of CoinDesk. The views expressed here are his own, so please don't blame his colleagues.
While it may seem only tangentially related to cryptocurrency, the fight in the U.S. over publication of software for 3-D printed firearms bears close watching by the whole blockchain community.
The word "publication" should give you a hint why, as the case highlights freedom-of-speech issues that may resurface in future attempts by governments to regulate crypto and distributed networks.
More broadly, the groundswell of media hysteria and political grandstanding around this issue is a reminder of the type of resistance any game-changing technology is bound to meet.
Stepping back, this week a federal judge issued a temporary restraining order (TRO) against Defense Distributed, a company founded by the provocateur and crypto-anarchist Cody Wilson. The order barred the Austin, Texas-based firm from posting computer-aided design (CAD) files online for weapons that can be manufactured at home with a 3-D printer or a computer numerical control (CNC) milling machine.
Wilson had recently celebrated victory in a long-running fight with the federal government, which settled with his company and agreed to let it distribute the technical information, throwing in the towel on claims that doing so would violate munitions export rules.
This capitulation prompted gasps of outrage from the likes of Senator Chuck Schumer of New York. Shortly thereafter, attorneys general from eight states and the District of Columbia sued to stop the settlement, claiming it violated administrative procedure law and states' rights under the 10th Amendment to the Constitution.
In response to that suit, the judge issued the TRO, which Defense Distributed abided by, refraining from posting the files. However, they are still available all over the internet.
Is code speech?
Wilson is a familiar figure in the crypto world, in part because of his work on Darkwallet, a privacy-enhancing bitcoin wallet, and also for his campaign to dismantle the Bitcoin Foundation during that organization’s heyday.
But the relevance of Defense Distributed's current struggle to the blockchain world goes deeper than that coincidence.
"Winning this fight could prove crucial for bitcoin and other crypto projects," Peter Todd, the perspicacious cryptography consultant, tweeted after the states intervened. "If you can't post technical blueprints to guns, banning technical blueprints to crypto too doesn't seem farfetched."
Indeed, beyond the arcane procedural questions in the states' lawsuit, the fight arguably boils down to whether software is speech.
“Both cryptocurrency protocol software and AutoCAD files may be protected speech under the 1st Amendment,” said Peter Van Valkenburgh, the director of research at blockchain industry advocacy group Coin Center in Washington, D.C.
"Thus, in either case a law that attempted to censor or put prior-approval/prior restraint upon the speakers of that speech would likely be found unconstitutional."
However, the free-speech argument for code is not always a slam dunk in court, according to Aaron Wright, an associate clinical professor of law and director of the Blockchain Project at Benjamin N. Cardozo School of Law at Yeshiva University.
“There’s a notion in the crypto community that software is unimpeachably protected by the First Amendment. That’s simply not the case,” Wright said. “If someone develops and implements software that runs afoul of U.S. law, they could face liability.”
In their book "Blockchain and the Law: The Rule of Code," Wright and co-author Primavera De Filippi note that courts in the U.S. have already denied First Amendment protections for one kind of software because it "had no purpose other than facilitating illegal gambling."
Looking ahead, they add: "If governments choose to regulate blockchain developers, some code may be protected by the First Amendment, while other code may not. For instance, decentralized e-commerce marketplaces used for the exchange of everyday items, but also potentially unlawful products ... could receive First Amendment protection ... because they facilitate both lawful and unlawful acts. Conversely, decentralized prediction markets and exchanges that facilitate the trading of binary options would likely be deemed to violate existing laws like the Commodities Exchange Act." Moral panics
Legal questions aside, disruptive technologies, both in the world of atoms and in the world of bits, run the risk of attracting a frightened and angry mob.
To Andrew Glidden, the head of legal research for Blockchain@BerkeleyLaw, a student club at the University of California Berkeley's law school, the hoopla over 3-D printed guns resembles the "moral panics we face about 'evil internet money.'"
He points out that home manufacture of firearms has long been legal in the U.S. (provided they are not transferred to another person and are not fully plastic), and as mentioned, information about how to build the weapons is already in the public domain.
Compounding the silliness of the present controversy, Glidden went on, is the way some have conflated two different technologies Defense Distributed is involved in, thereby overstating the risks.
Defense Distributed's 3-D printed plastic pistol, known as the Liberator, is inexpensive to produce, and potentially undetectable (if the maker ignores the CYA instructions to add a small block of steel) but "largely useless," less capable than a black powder musket and liable to explode in the user's hand.
On the other hand, the company's CNC-milled, metal firearms are "functional, but expensive and detectable," Glidden noted. "The moral panic is premised on taking the Most Evil characteristics of each."
Hence the similarity to the FUD you hear from time to time about bitcoin facilitating a terrorist attack.
“In either case, there's a lawful activity, with a hypothetical (but not particularly warranted) possibility for abuse that drives the public to panic,” Glidden said.
None of this is to say these technologies are endangered. They are, after all, decentralized, and as observed in the Defense Distributed case, enjoining one actor hasn't prevented the flow of information.
The prohibitionists almost certainly can't stop innovation or adoption of either blockchains or home manufacturing altogether. But they might slow it down in some places and cause collateral damage.
At a minimum, they're a nuisance. Be on guard. — Marc Hochstein |
Beyond CoinDesk...
WHAT OTHERS ARE SAYING
BLOOMBERG: On the news wire's government blog, analyst Chris Cornillie describes the latest experiments by the U.S. federal government to employ blockchain technology "in ways that fundamentally transform the institution of government."
These include enchancing health care, monitoring government employees, supply chains for the Pentagon and more — almost 80 use cases various agencies have contemplated. FORTUNE: The creation of Bakkt, the regulated marketplace for bitcoin announced Friday by the New York Stock Exchange's parent company Intercontinental Exchange (ICE), is a large step toward universal adoption of the leading cryptocurrency, Fortune's Shawn Tully writes. Bakkt aims to make bitcoin a secure investment for traditional financial institutions and encourage them to offer bitcoin mutual funds, pension funds, and ETFs, "as highly regulated, mainstream investments." After this becomes real, bitcoin will be on a fast lane to becoming a universal payment method, replacing credit cards, the thinking goes.
However, there might be an issue with this approach: unlike the early bitcoin advocates, ICE's Jeff Sprecher and Kelly Loeffler believe that a global digital currency needs a strong central infrastructure. Also, they are going to keep the main bulk of transactions at Bakkt off-chain.
MEDIUM: The always-thoughtful Taylor Pearson offers several reasons for cryptocurrencies' volatility: absence of an agreed-upon valuation methodology; programmatically determined supply; capital concentration and disproportionate influence of "whales"; lack of liquidity and the shallowness of the markets; and the overwhelming interconnectivity of the modern finance.
WHAT WE'VE BEEN UP TO Tune in tomorrow (Monday, August 6) at 11:00 a.m. ET to our webinar on crypto assets and social signals. Yoni Assia, the CEO of eToro, and bitcoin investing expert Tuur Demeester will share their insights. Register for free right here.
Send feedback on this newsletter to marc@coindesk.com. Thanks as always for reading! We'll see you here next week... |
|
| | | | | | | | |
No comments:
Post a Comment