Remembering the life of a cypherpunk luminary: The crypto community is mourning the passing of Timothy C. May, research scientist at Intel turned vocal proponent of cryptography and privacy in the late 1980s, 1990s, and early 2000s. May, who contemplated the implications of digital cash long before Bitcoin arrived, penned the influential Crypto Anarchist Manifesto in 1988, and became a founding member of the influential Cypherpunks mailing list in 1992.
May wasn't too excited about how the era of cryptocurrency has turned out so far, though. A few months ago, he assessed the situation in a long piece for CoinDesk. "What I see is losses of hundred of millions in some programming screw-ups, thefts, frauds, initial coin offerings (ICOs) based on flaky ideas, flaky programming and too few talented people to pull off ambitious plans." Still, he wrote, "The story is far from over."
When crypto goes sovereign: Thanks to new payment technologies, including cryptocurrencies, "money itself is changing," according to IMF head Christine Lagarde. Does the state have an obligation to issue cash? Should it issue a digital form if physical cash goes away? The only central bank that has answered that question definitively so far is Sweden's: it is now developing an e-krona. But Sweden is not alone. According to a recent report from the International Monetary Fund, at least 15 central banks have seriously considered launching a digital currency.
Governments have a number of reasons, besides diminishing cash usage, for showing interest in digital currencies. Some think the technology could help reach the hundreds of millions of people around the world without a bank account or access to modern financial services. Most believe managing digital cash would be a lot cheaper for central banks than managing the physical kind. The Marshall Islands has yet another rationale (or two). Officials in the South Pacific nation, which has a population of around 50,000, thought it could use cryptocurrency to become its own bank. The idea was that with its own crypto-token, the country, whose currency is the US dollar, would no longer need to beg banks to stay in the country and serve as a vital link to the global financial system. That, and officials saw an opportunity to raise a bunch of cash quickly through what would essentially be an ICO.
When the Marshallese recently passed legislation authorizing the new crypto-token, called the SOV (short for sovereign), however, it was met with immediate backlash from the US government and the international banking community, which cited concerns about terrorists and money launderers using the token. First Hawaiian, the only bank with branches throughout the islands, threatened to leave. According to Bloomberg, Marshallese officials have told critics of the SOV that they won't be so fearful once they've seen its built-in controls against money-laundering. But the new era of national digital currencies is off to a rocky start either way.
Don't blame crypto winter for the crash of this "algorithmic central bank." It might seem easy to blame plunging coin prices for the fall of Basis, a stablecoin project that shut down last week. That wouldn't be quite right, though. It's never been clear that Basis and other technically complex stablecoins (as opposed to those that are collateralized by fiat money or other cryptocurrencies) would actually work, not just for technical reasons but also legal ones. As the founders explained last week: "Unfortunately, having to apply US securities regulation to the system had a serious negative impact on our ability to launch Basis." D'oh!
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Loose Change
Fill your pockets with these newsy tidbits.
- Overstock.com's forthcoming crypto-token exchange, tZERO, plans to develop a token backed backed by cobalt. (CoinDesk)
- One of crypto's biggest hedge funds has warned that 25% of the ICO projects it invested in may be in violation of US securities laws. (Bloomberg)
- Opera, the world's fifth most-used web browser, has released a new version for Android that includes a cryptocurrency wallet and a feature meant to make it easier to interact with Ethereum-based applications. (TechCrunch)
- Dfinity, the blockchain-based "Internet Computer" project that raised $190 million in VC, has delayed its launch. (The Block)
- Mick Mulvaney, the new chief-of-staff for Donald Trump, is a big fan of Bitcoin. (Breaker)
- Participation by institutional investors in Bitcoin trading "appears to be fading," according to analysis by JPMorgan Chase. (Bloomberg)
- ICYMI: Ethereum thinks it can change the world. It's running out of time to prove it. (TR)
