The business of blockchains: Is it crypto spring yet? Who knows. But at MIT Technology Review, we're confident that blockchain technology is here for the long haul, no matter what the cryptocurrency markets say. After all, we're already 10 years into this story.
What will the next 10 years look like? We'll try to answer that question at our third-annual Business of Blockchain event, which takes place May 2nd at the MIT Media Lab. I'll be on stage at the conference, which we co-organized with MIT's Digital Currency Initiative. Here's a quick sample of the programming:
Get your ticket today, before they sell out! Hope to see you there.
What is a "digital token," anyway? Like it or not, the future of blockchain technology will be determined in part by the actions—or inaction—of policymakers. We've heard a lot about inaction lately, particularly on the part of the US Securities and Exchange Commission. Now, thanks to a cadre of crypto-friendly US Congress members, we finally see some action.
The newly introduced "Token Taxonomy Act" is a piece of bipartisan legislation that aims to carve out a new legal space for "digital tokens" that would make them exempt from the type of strict regulations that the SEC imposes on the markets for stocks and bonds. The legislation itself may turn out to be a meaningless, since Congress may never even consider it. But it has already inspired meaningful reflection within the cryptocurrency-focused legal community. The main takeaway? Crypto fans should be careful what they let policymakers define.
The new bill would deal with what many crypto enthusiasts see as outdated rules. At the moment, it's up to the SEC to decide whether a given token is a security. To do so, the agency draws upon decades-old securities laws. Some enthusiasts find this approach frustrating, and argue that the rise of cryptocurrencies has made it necessary for the SEC update these rules. Congress also has the authority to create new rules via legislation.
But to create a separate category for crypto-tokens, the Token Taxonomy Act proposes an official definition of "digital token." And if it passes, the definition might create even more confusion than there is today. Instead of relying on the SEC, "blockchain entrepreneurs and their lawyers can look forward to litigating, in a vacuum, the meaning of phrases like 'mathematically verifiable process,' 'consensus,'" and other language in the wordy definition, Gabriel Shapiro, a cryptocurrency-focused lawyer at DLx Law, told Decrypt.
Here's the problem: Even though blockchain technology is a decade old, many of the field's basic terms still don't have standard definitions. It will be hard to get clarity from policymakers until that changes—unless you want those policymakers to come up with the definitions for you.
China wants to kill its world-dominant cryptocurrency mining industry. This week, the National Development and Reform Commission (NDRC)—China's top economic planning agency—published an update to its list of industrial activities it has categorized as encouraged, restricted, or eliminated. Cryptocurrency mining, the resource-intensive process that most public blockchain networks use to record new transactions, was included among the industries to be eliminated immediately. The government supposedly sees it polluting and energy-wasting, according to the South China Morning Post.
Roughly half of the mining network for Bitcoin, the world's most popular cryptocurrency, is probably located in China, particularly in areas that have cheap hydropower during the rainy season. Chinese companies, particularly Bitmain, are also among the world's largest manufacturers of Bitcoin-mining hardware. If the ban is enacted, miners will have to find new sources of inexpensive electricity, and the average cost of Bitcoin mining might rise.
It might not be all bad for fans of Bitcoin, though: China's dominance of the mining scene has a centralizing effect, and Bitcoin critics have long pointed out that a crackdown by the government would be highly disruptive. The ban would force Bitcoin mining to "become more decentralized," Michael Zhong, an analyst at Beijing-based TokenInsight, told the SCMP.
The move is just one of a series of steps that China's government has taken to tighten its grip on the crypto industry. "I believe China simply wants to 'reboot' the crypto industry into one they have oversight on, the same approach they took with the internet," Jehan Chu, managing partner at blockchain investment firm Kenetic, told Reuters.
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Loose Change
Fill your pockets with these newsy tidbits.
- New York regulators have granted Bitstamp, Europe's largest digital asset exchange, a license to operate as a virtual currency company in the state. (Reuters)
- Meanwhile, the same regulators rejected the application of Seattle-based exchange Bittrex, citing concerns related to Bittrex's anti-money laundering procedures, among other things. (CoinDesk)
- For the next several months, "PewDiePie," the immensely popular but controversial YouTuber, will live-stream exclusively from a blockchain-based streaming platform called DLive. (Breaker)
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Blockstack, a startup trying build infrastructure for the so-called decentralized web, intends to raise $50 million using the SEC's relatively new rules for crowd investing. (CoinDesk) (More context: Forget sketchy ICOs: a new kind of crypto-fundraising aims to go legit)
- The International Chamber of Commerce, the world's largest business organization, has signed a deal with a Singapore-based blockchain startup to explore how the technology might help it promote responsible international trade. (Forbes)
- Coinbase has launched a Visa-branded debit card in the UK that lets users pay for things with their Bitcoin, Ethereum, or Litecoin. (CNBC)
