Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | The central bank for central banks wants to get beyond the cryptocurrency “hype.” The Bank of International Settlements has turned a critical eye toward Bitcoin and similar systems, in particular the “fragility” and “poor efficiency” of the decentralized way they process transactions. A new article (PDF) concludes that the technology is “a poor substitute for the solid institutional backing of money.”
Maintaining trust in systems that work like Bitcoin requires that every network participant download and verify every transaction, a cumbersome and energy-intensive process which. the authors say, renders cryptocurrency “inadequate” as an everyday form of payment. They write that if Bitcoin were used to process all of the digital transactions in a large economy like the US, China, or Europe, “the associated communication volumes could bring the internet to a halt.”
Some of the shortcomings “might be addressed by novel protocols and other advances,” but others, the authors argue, seem inherent to decentralized systems. “Ultimately, this points to the lack of an adequate institutional arrangement at the national level as the fundamental shortcoming.” It’s not surprising that the central bank for central banks would see it that way. But it should also probably go without saying by now that cryptocurrency enthusiasts see the lack of institutional arrangement as a feature, not a bug.
(See also: “Governments are testing their own cryptocurrencies”) | | New York might be opening up for crypto business. BitLicense, New York state’s licensing regime for cryptocurrency businesses, has been “an absolute failure,” said Erik Voorhees, CEO of the popular cryptocurrency exchange ShapeShift, at last month’s Consensus conference in New York City. Voorhees and others on a panel of “BitLicense refugees” who had decided to take their companies out of the state lamented the fact that only four companies had secured licenses in the three years since the policy was adopted. Less than a month later, though, the number is up to seven, and payment app Square is the latest to receive the state’s blessing. Square’s approval comes just a few days after Xapo, a company that stores its customers’ crypto-assets in highly-secure vaults located around the world, secured its own BitLicense. And New York’s department of financial services may not be done: Fortune reported last month that several more companies expect to get licenses soon. Perhaps it was premature to declare the regulations a failure? | | Loose Change Fill your pockets with these newsy tidbits. | | | The CIA neither confirms nor denies that it has documents in its possession related to Satoshi Nakamoto. (Motherboard) | | | | South Korea’s central bank says issuing a digital currency could pose a “moral hazard” by risking the destabilization of the economy. (CoinDesk) | | | | Cryptokitties may be going bust. (Fortune) | | | | The nonprofit Freedom of the Press Foundation now accepts donations in Bitcoin, Bitcoin Cash, Ether, Litecoin, and Zcash. (The Verge) | | | | A Japanese village of 1,500 people is planning an ICO. (CoinDesk) | | | The Money Quote
“They fucked with the wrong nerds, is my take.”
—Kathleen Breitman, cofounder of Tezos. Breitman founded the yet-to-launch Tezos with her husband Arthur, and the project raised $232 million last year via an ICO. Then a rift began to form between the Breitmans and the Swiss foundation they had hired to manage the project’s development, and, as Wired has documented, all hell started breaking loose.
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