Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | Sorry, but plans for a “blockchain city” seem so 2017. The vibe during the day at Ethereum’s developers conference in Prague last Thursday and the atmosphere that night at a lavish launch party in the same city were as contrasting as, well, night and day. Or maybe like the blockchain scene in 2018 versus in 2017.
Last year, blockchains were going to save the world. This year, crashing coin prices have killed much of the exuberance that made “blockchain” one of 2017’s biggest buzzwords. Many of the conversations at Devcon reflected this: there was very little marketing going on (which I’ve been told was drastically different than 2017’s Devcon in Cancun), and there was lots of talk about how to address Ethereum’s shortcomings. The gathering had an air of humility. That’s why it was so jarring to go from the conference to the launch party, thrown by a mysterious company called Blockchains LLC, during which its CEO announced a plan to build “the world’s first smart city based on blockchain technology” in Nevada.
As I watched cryptocurrency millionaire and Blockchains LLC founder Jeffrey Berns awkwardly converse with a hologram of a young girl on stage, I felt like the bus that had shuttled me from Devcon to the party had also taken me back to the middle of 2017, when a glitzy crypto party and lofty talk of a blockchain city wouldn’t have felt so out of place.
It’s clearly not all smoke and mirrors. Berns seems committed to developing real blockchain innovations, particularly in the areas of cryptocurrency private key storage, identity, and energy trading. And his interest in supporting public blockchains seems genuine. But one of the big lessons of the past 18 months has been that blockchains are still a long way off from being good at much more than moving money around. And that’s why I find it hard to buy the notion that a blockchain-based smart city will be built any time soon. | | Do ICOs count as securities? The question isn’t as hot-button as it was earlier this year, when debates raged over whether certain crypto-tokens should be subject to burdensome rules imposed by the US Securities and Exchange Commission. But now the SEC has promised to clarify.
SEC chairman Jay Clayton told Congress in February that nearly every ICO he’d seen was a security, and during the spring rumors swirled that regulators were even preparing to call Ether, the second-most valuable crypto-token, a security. Some feared that such a move cause a major slowdown in investment and development in the crypto space. Complying with SEC securities rules, which are meant to promote transparency and protect investors against fraud, takes capital, and regulations can limit the pool of potential investors.
Ethereum seemed to dodge that bullet in June, however, when William Hinman, SEC’s director of Corporation Finance, said its network is “sufficiently decentralized” and that trading Ether today does not constitute securities trading. That may have clarified things for Ethereum, but it didn’t shed a light on much else. What does “sufficiently decentralized” mean? There are few agreed-upon ways to measure decentralization.
Now Hinman is back in the news, this time for pledging that his agency will publish a “plain English instrument” that people can use to determine whether or not their project is a securities offering. Unfortunately, the SEC hasn’t committed to a publication date. But in the meantime, Hinman advised developers with questions to consult FinHub, SEC’s new division that’s supposed to help financial technology startups navigate the regulatory landscape. | | Loose Change Fill your pockets with these newsy tidbits. | | | Bitcoin ATM company Coinsource is the 12th company to get a BitLicense, which lets crypto companies operate in New York, and the first ATM company to get clearance. (CoinDesk) | | | | The amount of energy needed to mine a dollar’s worth of Bitcoin is more than twice what’s required to mine the same value of copper, gold or platinum, according to new research. (The Guardian) | | | | Cryptokitties has raised $15 million more from investors, doubling its valuation since March. (Bloomberg) | | | | An impending scheduled hard fork of the Bitcoin Cash network has grown contentious as developers disagree about which technical upgrades are needed. (Finance Magnates) | | | | Coinbase has added support on its professional trading platform for the Basic Attention Token, created by the company behind Brave, the new open source browser that blocks ads and trackers. (CoinDesk) | | | The Money Quote “When he purchased $4 million in real estate, two Maseratis and two powerboats, we decided it was time to get to the bottom of it.” —Cameron Winklevoss to the The New York Times, explaining why he and his twin brother, Tyler, are suing Charlie Shrem, a fellow early Bitcoin entrepreneur and one-time business partner. The twins claim Shrem, who got out of prison in 2016 after pleading guilty in 2014 to to helping people buy Bitcoin explicitly to buy drugs online, stole 5000 Bitcoins from them in 2012. | | | |
