Bits and stuff – March 11, 2018

This is definitely my favourite story of the week: “CFTC’s Giancarlo: US and Foreign Regulators Teaming Up on Crypto”.

It could be the first glimmer of an official answer to the bold claim that we 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 in 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 deal in cryptocurrencies to follow.

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” in either permissiveness or strictness is an unsustainable strategy – having risky projects flock to your jurisdiction, or decent projects flock from, would weaken economic growth and would eventually self-correct.

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

  • Approve the use of blockchain-based records for corporations, giving them legal validity – this opens the door to development around smart 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 basis? 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 appears to be the first attempt to “define” which tokens are securities and which are utilities. Making the distinction will be both sensible and extremely challenging – and will inadvertently channel development one way or another.

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

I still think that we need to accept that crypto-based tokens are a new type of asset, that will require new types of rules and oversight. We’re trying to fit a square peg into a round hole.

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

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

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

Only, technology only goes so far. Yes, it’s usually a force for good, and has been instrumental in lifting hundreds of millions out of poverty over 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 been generated in its name has trickled down to those that have yet to enjoy its blessing.

But it only goes so far.

Most of the world’s current problems – such as 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 important one.

I’m not saying that technology can’t help with these. I am saying that there are few institutions in the world suited to dealing with the non-technology side. The Vatican is one of them. And whatever you may think about its politics, in 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 focuses on teaching community building, helping your neighbours and respecting the young.

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

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 succumb to the same claptrap, we have definitely passed into the realm of a new religion.

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

“‘We don’t expect anyone to solve such difficult issues… but I hope we can inspire both clerics and lay people to see this as an innovative model for engaging the younger generation with the problems.'”

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

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

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

  • Short-termism: making cash transfers faster and cheaper could be a saviour in times of crisis, but it does not address deeper, longer-term issues of inequality, corruption and limited access to trade (to name a few).
  • The scattershot approach: many would-be applications aren’t clear what they are trying to disrupt. The cost structure – which most applications seem to focus on – is not the sector’s main problem.
  • Local context 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 these issues, which apply to regions that need aid and to sectors ripe for disruption.

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A eloquent and uplifting ode to friendship:

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