#68: A bad day for decentralization

Guess and check

Chain Letter Blockchains, cryptocurrencies, and why they matter 07.10: Guess and check Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies.  Bancor’s breach, and the difficulty with “decentralization.” The decentralized crypto-token exchange service, which raised $153 million in a high-profile ICO last June, suffered a “security breach” yesterday that allowed hackers to steal around $13.5 million worth of currency. According to a statement posted on Twitter, the company was able to “freeze” the stolen tokens once it recognized the theft. Perhaps that’s a useful mechanism, but if the company can unilaterally freeze tokens, is the service actually decentralized? Crypto Twitter doesn’t think so, and is making light of the situation. But it’s a serious question, and here are a  couple more: At what point is it dishonest to use the word “decentralized” in marketing claims? And what does “decentralized” actually mean, from a consumer protection standpoint? (+ “Centralized cryptocurrency exchanges can be sketchy places. The solution? A blockchain, of course”) The UK is letting blockchains play in its fintech sandbox. For the first time, the UK’s Financial Conduct Authority is allowing blockchain startups to participate in a program designed to give innovative financial technology companies a place to experiment. Under a temporary authorization from the FCA, the companies can test new products with real customers without fear of accidentally running afoul of regulators. The agency says it works with each one to “build in appropriate consumer safeguards.” Policymakers are often criticized for being slow to react to technological change, but it’s hard to update laws without knowing what the new tech’s impact will be. Setting aside a controlled environment for small scale experimentation could be a good solution. Indeed, the UK’s innovative sandbox model has been copied by a few other countries—US lawmakers recently called for something like it too. If it works for blockchain startups, it could expand further still. A lawsuit blames YouTube for luring victims into a cryptocurrency scam. The class action suit claims that Google’s video platform allowed affiliates of Bitconnect, a cryptocurrency lending platform, to publish over 70,000 hours of unedited content meant to attract investors. YouTube allowed Bitconnect to reach hundreds of thousands of people even though it was aware that Bitconnect was a scam, David Silver, founder of the firm bringing the suit, told CoinDesk (the suit alleges YouTube “failed as a gatekeeper to protect its users”). Whatever you think of the argument, discussions of censorship take on a uniquely intense flavor in cryptocurrency circles, so this could be an interesting one to watch unfold. The innovators at the heart of the next wave of the digital revolution are at EmTech.    EmTech is your opportunity to discover future trends and to understand the technologies that will drive the new global economy. Secure your ticket today! Loose Change Fill your pockets with these newsy tidbits. • Andreessen Horowitz’s new crypto fund’s first investment goes to Oasis Labs, which is designing a “privacy preserving” smart contract platform. (TechCrunch) • More than half of all startups that have raised money through ICOs have died within four months of their token sales. (Bloomberg) • Augur, a prediction market that runs on Ethereum, has finally launched after spending two years in beta. (CoinDesk) • Cryptography researcher Matt Blaze just sold the domain crypto.com, which he registered in 1993, for lots of money. (The Verge) • Coinbase has fallen to 40th most-downloaded finance app after hitting the top spot in December. (Quartz) The Money Quote “Once it becomes significant they  will use the hammer.”   —Nobel Prize-winning economist Joseph Stiglitz, arguing that governments haven't cracked down on Bitcoin only because it's still relatively small. (Financial News) We hope you enjoyed today's tour of what's new in the world of blockchains and cryptocurrencies. Send us some feedback, or follow me @mike_orcutt. Know someone who might enjoy reading Chain Letter? Was this forwarded to you, and you'd like to see more? Discover the emerging tech that will change the world. Attend EmTech 2018 September 11-14, MIT Media Lab Cambridge, MA View this in a browser You received this newsletter because you subscribed with the email address: contacto1745.send-mail@blogger.com edit preferences   |   unsubscribe   |   follow us      MIT Technology Review One Main Street Cambridge, MA 02142