I've said it before, I'll say it again: Crypto currency is about tearing down the old rules and institutions of banking and finding out one failure at a time why each rule and institution exists.
Nothing has really changed at all. Innovation seems more about inventing a way to do an old thing that feels new enough to avoid legal scrutiny until a company gets large enough and the public angry enough that laws create regulatory capture.
I'm not sure if I am reading your comment correctly.
Regulatory capture doesn't sound like a desirable thing, and wouldn't do the desired regulating. What did/do you believe the definition is?
It's not a desirable thing for the public - plenty desirable for industry...
It worked out pretty well with Ajit Patel and the FCC... Or the CRTC and it's board members and adhoc meetings in bars/pubs with the telecom industry.
The stock market, oil/gas, telecommunications are all examples of industries that started as innovative with no regulation. Once established, they were regulated. The stock market got consumer protections. Oil/gas faced environment & safety regulations. Telecommunications face many regulations around zoning and providing rural and not always profitable access. In return, this regulation raised the startup costs so significantly that only the pre-existing large companies could adapt and new entrants effectively ceased to exist.
It's a bit of a tradeoff. As consumers, we get some benefits and the company gets their existence & rent guaranteed indefinitely. The same will happen with digital advertising and the gig economy. The public is already getting tired of the wild west and calling for regulation. This regulation will be twisted and controlled by the companies it impacts to secure their future.
You have misunderstood regulatory capture. Regulatory capture occurs when the regulator puts the interests of those in the industry ahead of consumers.
> In return, this regulation raised the startup costs so significantly that only the pre-existing large companies could adapt and new entrants effectively ceased to exist.
This isn't regulatory capture. Regulatory capture is things like making laws that it is only possible for incumbents to be licensed to do specific jobs.
For industries emerging from the innovation stage to the regulatory capture state, usually the first regulations increase the startup cost to some extremely high level that only the incumbents can support. Only in the advanced stages to governments grant monopolies to specific companies.
That's a very specific term with a specific meaning.
And if I might say so, for a tech forum, there seems to be a remarkable number of luddites who sit mighty high on their horses as they sing the praises of Chesterton's fence while simultaneously baying over the stagnation of housing, transportation, and their flavor-of-the-week, dead-on-arrival revolution, etc.
Should we never have used GPS because a good map won't lead you into a desert? Should we stop using phones because a one-to-one conversation may end up as dead an art as Latin is a language? Not everything that was done before was done for the right reason. Not now or even then. They were done mainly because there was no other given choice or someone on a high chair said so and signed his name on a piece of paper declaring it as law.
I'd say it's beneficial that those regulations have been circumvented even if I don't necessarily cheer on the particular actors who do the circumventing or what they do afterwards. Innovation is about finding novel ways to get from A to B as speedily, efficiently, and effectively as possible. And if regulations create a roadblock to it, all the more reason to invent around them. After all, there wouldn't a modern desktop if it wasn't for Compaq engineers reverse-engineering and reimplementing IBM's BIOS.
The theme appears to be that innovation brings many benefits and great risks. I would advise appreciation of nuance and thoughtfulness. As we become a Kardashev Type I civilization, we could carefully consider the way we organize our society and the existential risks we create for ourselves. For the first time in our history, we have the ability to pretty much completely annihilate ourselves and we're only creating more ways to do it. Maybe some caution is due.
(1) https://daily.jstor.org/an-affordable-radio-brought-nazi-pro....
What is that supposed to be? It’s not a known concept. If you think it means something you should define it.
As a lawyer, it’s perfectly legal to circumvent a law by designing around it. Crypto does that perfectly. So does everybody else. Heck, the whole open source movement does it.
If instead you are saying that it’s good to find loopholes in laws that violate the spirit of the law, but not the letter of the law … well, you just explained why smart contracts are stupid and will never work.
Edit: by your definition, this “hack” was just innovation designed around the “law” of the smart contracts ;)
Weirdly, online advertising is in some cases more restricted than traditional broadcasting. I've never seen a movie pause half-way through so someone can go "By the way, Microsoft paid us $5,000,000 to feature this extremely close-up shot of a Surface with the branding visible", but that's a legal requirement for YouTube videos containing sponsored content.
Regulation S needs to be extended to all crypto trading. [1]
[1] https://www.dorsey.com/~/media/files/newsresources/publicati...
What I'm advocating is that all crypto trading by US persons be at SEC/CFTC/etc regulated exchanges.
Offshore appears to be where the chaos happens, see: Binance.
Bitcoin is not is a security. Neither is Etherium. I'm not an expert on this area but I don't believe the SEC has the power to regulate them, unless they stray into naughty territory.
New Initial Coin Offerings are something that it can evaluate and deem a security, requiring proper SEC listing as a security; but the existing established digital currencies are not securities and do not require trading through brokers just like trading cash (or exchanging one currency for another) does not require brokers.
The SEC hasn't declared them currencies but neither are they securities. They are assets that you can trade with anyone. That's my best understanding of the SEC's current stance.
Future ICOs could also being avoid classified as securities if the avoided matching the rules that the SEC uses to evaluate whether an offering is a security. There's a checklist of criteria, including whether the asset is being advertised as something that people can buy and expect to make money on.
Ethereum launched as a network where you could perform functional operations more complex than Bitcoin, and was a bit before the SEC got its evaluation rules together (from what I understand), and so may have slipped under the radar; but it certainly wasn't a pump-and-dump scheme like many other ICOs have been.
> The SEC hasn't declared them currencies but neither are they securities.
They are commodities and fall under the purview of the CFTC, and are subject to their regulation.
> Ethereum launched as a network where you could perform functional operations more complex than Bitcoin, and was a bit before the SEC got its evaluation rules together (from what I understand), and so may have slipped under the radar; but it certainly wasn't a pump-and-dump scheme like many other ICOs have been.
Nope, they failed the Howey test which is the legal standard for determining whether something is a security. This was because they raised capital in their ICO. It was at the SECs discretion not to treat them as securities. Just because something isn't a pump-and-dump doesn't mean it's not a security. In fact, one would expect most securities not to be given it's kind of illegal. [1]
I know it is today considered a commodity, however, it was always a security as determined by the Howey test. The SEC elected not to treat it as one at its discretion.
[1] https://bitcoinist.com/secs-gary-gensler-crumbles-when-asked...
> On Thursday, June 14, 2018, the U.S. Securities and Exchange Commission’s (SEC) Director of Corporate Finance, William Hinman (Hinman), announced that the commission would not be treating Ether or Bitcoin as securities. The SEC’s announcement is in line with the recent comments of SEC Chairman, Jay Clayton, who recently noted the difference between cryptocurrencies and digital tokens, saying that cryptocurrencies as “replacements for sovereign currencies” were not securities, while digital assets revolving around a venture are often securities.
https://cassels.com/insights/sec-declares-bitcoin-and-ether-....
Maybe you meant to say that it just escaped being classified as a security, but as far as I can tell it's a commodity at present.
Indeed it is today considered a commodity. This is broadly what I was getting at, yes.
I encourage you to review the Howey test however as it is the framework ordinarily used for making this determination. [1]
But, it did greatly improve the quality and availability of the service. Maybe crypto helps push banks the same direction.
To save some comments; Yes, they do have the potentials to create their own closed-circle economic ecosystems, but for the retail banking services to work (eg overdrafts, mortgages etc) you will end-up with centralised players as these kind of services need to be backed by wealth (it's not a tech-issue).
- leveling the playing field with an open interface that anyone can build on top of
- allowing true ownership of assets
What is ownership and how is it true? This is philosophically on the deep end, as the evil powers can seize your wallet just as easily and you may have no (legal) recourse, https://xkcd.com/538/
Seriously if I own a traditional asset within the current legal system (e.g. stocks, bonds, real estate), "the system" can help me protect and enforce my ownership rights, if you're in good social standing. In crypto "the system" cannot help you as much.
However if you are in bad social standing, the system can seize the wallet or the stocks easily.
The uncertainty inherent in the universe we understand today and in all human endeavors is difficult to contend with in code.
In the main, contracts serve to reduce uncertainty and to attempt to manage uncertainty that can't or shouldn't be reduced. Of necessity, contract law has developed a myriad of principles and rules in service of this aim. However, these principles and rules are themselves predominantly characterized by uncertainty. See, for example, the implied covenant of good faith and fair dealing.[0]
Humility — and a corollary respect for our ancestors — is a defining characteristic of my own study of the law.
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* Banks
* Finance
* Insurance
* Building and fire codes
* Pharma
* Travel (airlines, trucks, and cars)
* Energy
https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery
At a lower level, mortgage wire fraud is a serious problem in real estate closings, and once it happens it's very difficult to get your money back:
So it was originally about the same scale as this one.
Ethereum has had lots of these hacks, due to bugs in the smart contracts provided.
You don't see these types of (protocol level) hacks in bitcoin, litecoin, or monero.
Blockchains don't need to be turing complete, for reasons like the contents of this article.
Code is law, bro. These aren't hacks or bugs. They are inert chunks of code that all play by. Even "bugs" in the execution engine are fair game when code is law...
The fine folks who carefully investigated the DAO smart contract and transferred lots of its value to their possession are just as entitled to that wealth as the people who possessed it in the first place. There was no hacking and no thievery. The smart contract was executing exactly as it was written. I argue the only people playing in bad faith were the makers of ethereum and the DAO, who rolled back the blockchain and stole the funds back into their hands.
Now this argument sounds silly, but I stand by it. Code is law is a horrible idea. But if you want to live in that world... all "bugs" are just as much of the "law" as the stuff that isn't a "bug".
Going to think about this while I walk. That is a tough argument to counter.
Still, last time they called it a bug and rolled back the chain.
Wait, what is crypto about again? I can’t figure it out.
It used to be about decentralized peer-to-peer money that is highly resistant to censorship.
Then that got blown to bit because satoshi didn’t possess enough foresight to realize that one day it will get owned by a handful of people who will leverage the artificial scarcity to conduct endless pump-and-dumps to enrich themselves at the expense of the poor.
How do you think Satoshi would have reacted to the current state of affairs? You think he would see this “cryptocurrency” space as the path to solving the problem of money and corruption in finance?
You can’t fix fundamental problems in modern economics by fixating on the properties of money which can be altered (presumably for the better) through technology?