Bits and stuff – February 25, 2018

This article in the Guardian scratched 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, in the end it comes down to the architecture. And blockchain architecture is in the hands of its builders.

Part of the confusion stems from the inherent and seemingly conflicting characteristics of bitcoin. An open, decentralized version sounds fair and full of opportunity – 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?

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Venezuela’s launch of the petro, its oil-backed cryptocurrency (based on ethereum or NEM, depending on the report you read), unleashed a wave of inaccurate and vague reporting that does neither the petro nor cryptocurrencies justice.

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

For example, it’s not a cryptocurrency – it’s a digital token distributed on a blockchain. Not the same thing. Nor is it Venezuela’s “answer to bitcoin” – nothing open or decentralized about this one.

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

Bloomberg did well, as usual, with an in-depth “Venezuela Is Jumping 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 Was Amateur 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.

In spite of the political underpinnings, The Hill offered a good headline: “Maduro’s crypto end run around US sanctions is a fool’s errand”. I enjoyed 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”… although when it turns out that by “farce” they are referring to cryptocurrencies in general (“there is no ‘there’ there”), any sentient reader would feel duped. That’s even before having to endure 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 new standard for grim humour.” (Alexandra Scaggs in the FT)

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Best thread of the week:

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And hats off to Amber, I love this:

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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 first step in figuring out how to regulate them is understanding what they are. EU regulators meet next week to continue discussions on crypto regulation.

Austria is looking more closely at cryptocurrency regulation. France has decided 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 body.

And in 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 continue for the rest of the year. It will be a slow process but with important results. The construction of the infrastructure that supports the innovation depends on which way the regulation goes.

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

  • CoinDesk: “Japan’s Exchanges Report 669 Cases of Suspected Crypto Money Laundering”
  • CoinTelegraph: “Japan: Only 0.16% Of 2017 Money Laundering Reports Came From Crypto Exchanges”

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

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I always loved the musical “West Side Story”, sad as it is… This 360º rendition of one of the numbers from the show 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 experience).

Via GoogleArts.

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