In recent regulatory news, Spain’s Central bank has issued a report favoring the development of a central bank-issued digital currency (CBDC), the president of Taiwan’s central bank has advocated caution regarding CBDCs, the Blockchain Research Institute has published a summary of recent roundtable discussions calling for great regulatory clarity, and a Russian court has a warned a publishing company for breaching advertising legislation with an ad pertaining to cryptocurrencies.
Spanish Central Bank Report Favors Central Bank-Issued Digital Currency
Spain’s central bank, Banco de Espana, recently published a report that seeks to consider the potential impacts that cryptocurrency and distributed ledger technology may have upon the Spanish economy.
The report advocates that the introduction of a central bank-issued digital currency would allow Banco de Espana to more efficiently implement monetary policy, stating: “An argument that could be considered at the time of assessing the introduction of CBDC is related to the improvement in the conduction of monetary policy through a better control in the market returns that savers and borrowers have to face. Also, the possibility of eliminating the restrictions associated with the zero level of the interest rate is theoretically attractive, especially in an environment of low interest rates such as the current one.”
Taiwan Central Bank President Advocates Caution Regarding CBDCs
By contrast, the president of Taiwan’s central bank, Yang Jinlong, recently advocated that financial institutions adopt a cautious approach regarding the central bank-issued digital currency.
During the Finance Technology Ecology Summit, Mr. Jinlong stated: “The financial authorities should be cautious about issuing central bank digital currency (CBDC). We will continue to pay attention to this issue, as well as the development of virtual currency, which may also drive out the debating topic of whether the central bank should issue CBDC. At present, the international consensus towards CBDC is that the general CBDC to the general public should be treated with cautious because of the complexity of issues involved, including the technology, security, policies, and user privacy protection issues.”
DLT Think Tank Advocates for Clarity Regarding Cryptocurrency and Blockchain Regulation
Major distributed ledger technology (DLT) think tank, the Blockchain Research Institute, has published a report calling for increased regulatory clarity regarding DLT and cryptocurrencies.
The report, the “2018 Blockchain Regulation Roundtable,” drew upon discussions involving “executives from blockchain start-ups,” “senior representatives of various global banking and securities regulators,” “senior non-regulatory government officials,” “business leaders from various established industries that are experimenting with blockchain in their business models and practices,” and “lawyers, accountants, investment bankers, and other key industry professionals.”
The report emphasized four “core issues” pertaining to regulations that it calls to be addressed: “The lack of regulatory clarity, the obsolescence of statutes and regulations, the lack of a mechanism for meaningful dialogue between regulators and other stakeholders, and the lack of dialogue between financial service providers and blockchain entrepreneurs.”
The report makes six key recommendations, advocating that the roundtable participants “form a multistakeholder action committee, prepare all stakeholders and the public for self-sovereign identities and pass legislation to recognize digital identities as valid, institute a national regulator with oversight of the nascent industry rather than allow individual agencies to create their own regulations piecemeal, agree on distinctions among cryptoassets and regulate accordingly, discourage discrimination against blockchain entrepreneurs and support start-ups in the space, and encourage the formation of special interest groups to move governance issues forward across applications and domains.”
Russian Court Warns Publisher for Breaching Advertising Laws With Crypto Ad
The Eleventh Arbitration Court of Appeal in Moscow has warned a publishing company after one of its newspapers published cryptocurrency-related advertising deemed to be in violation of Russian laws.
The dispute involved Unity NK – the company producing the newspaper Unity Nizhnekamsk, The Office of the Federal Antimonopoly Service (OFAS) for Tatarstan, and the Volga-Vyatka Central Administration of the Central Bank of Russia. The case arose following the discovery of an advertisement in Unity Nizhnekamsk for “Invest[ment] in cryptocurrencies: Bitcoin, Ethereum, Zcash” and the “Creation and setting up mining farms” by employees of Russia’s central bank – which then appealed to the Office of the Federal Antimonopoly Service due to concerns that Unity NK had violated advertising legislation.
The Tatarstan OFAS determined that “From the meaning of the content of the above advertising it follows that Blumchen Richard Timurovich [the owner the phone number provided in the advertisement] provided financial services, and not consulting,” and as such, Unity NK should be brought to administrative responsibility due to the ad’s failure to detail the name of the individual offering to provide financial services, as is mandated by Russian advertising legislation.
After initially considering fining Unity NK 50,000 rubles (approximately $738 USD), the court chose just to warn the company instead. “The court of first instance reasonably considered that the application of a fine of 50,000 rubles will be unjustifiably punitive, not corresponding to the gravity of the offense and the degree of guilt of the person brought to justice,” the judge stated. “The warning meets the general constitutional principles of punishment justice, its individualization, proportionality to the constitutionally established goals and protected legitimate interests, and is sufficient to implement the preventive nature of administrative liability measures.”
What is your opinion on central bank-issued digital currencies? Join the discussion in the comments section below!
Images courtesy of Wikipedia, Pixabay
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Over the past few years, the buzzwords “Blockchain Technology” have been tied to literally every industry under the sun. Cryptocurrencies had a wild year in 2017 and it seems during that time distributed ledger technology has made it all the way to the ‘Blockchain 5.0’ era, but there’s a big problem — No one reporting on these projects has tried these networks.
Blockchain 5.0 & DLTs: The Ultimate Snake Oil
Back in 2009, a network was launched which produced the digital currency bitcoin and no one moved a muscle. These days cryptocurrencies are a hell of a lot more popular than those days but there are some people who have this idea that the technology “behind” digital currencies represents the real innovation. You’ve heard it time and time again, that ‘Blockchain Technology’ will revolutionize the world and every industry will be touched by this remarkable software. Supposedly, blockchains will transform finance, the clothing industry, movies, music, food, healthcare, and basically the entire supply chain, one block at a time.
Blockchain Immutability Is a Fallacy
There’s just one glaring issue for these distributed ledger projects that hope to change the world — No one uses these networks and some probably don’t even exist. But what’s worse is they also fraudulently claim they can solve an age-old computer system problem that cannot be solved — immutability.
Blockchain projects that claim immutability, which is a large representation of nearly every blockchain out there today, are misleading and these systems can never be 100% immutable. The well-known bitcoin evangelist, Chris DeRose, explained two years ago that “blockchain immutability is a perpetual motion claim.”
“While many have been caught up in the hype behind immutability, most of these claims will at best regress to the basic signing mechanisms that have been in place for decades, with little to differentiate their systems from incumbent message passing solutions,” DeRose explains.
On paper, immutability sounds nice, it seems to be a dubious proposition that some magically benevolent server will show up to perform this service. And certainly, blockchain will not make that benevolence any easier than it is with incumbent HTTP systems.
Most of Today’s Blockchain Technology Projects and Bankchains Are Merely Client-Server Network Databases, Word Salad Press Releases, and Pure Vaporware
Then there are distributed ledger technology (DLT) projects created by the very banks who once mocked bitcoin. There have been so many of these private blockchain projects announcing that they have the next great blockchain that will wipe public blockchains off the map. Yet none of them have been revolutionary so far, and no one from the general public seems to be using these DLT solutions, unless it’s a ‘trial run’ wrapped up in fancy-wording wrapping paper and sent to publications like Forbes, and Bloomberg. Do they criticize a blockchain system they have never tried? — No, usually they write up a nice little article that makes these blockchain projects look good, even though the journalist never tried the system, or let alone seen it in action.
This Tuesday, the blockchain firm R3 released its ‘Corda Blockchain’ platform after initially making a big fuss on how Corda technology was not a ‘blockchain.’ R3 website visitors will see that the company clearly calls Corda a blockchain and according to the company, over 39 firms are testing this enterprise software. But what makes Corda so revolutionary? Or any of these bankchain projects, for that matter, who set up a bunch of privatized nodes that can relay and time stamp transactions. All we have is their word, no third party reviews, just a press release and decentralized word salad.
The fact is a very large portion of these blockchain projects are overhyped press releases that exemplify the true meaning of vaporware. Can we trust a group of incumbents that say on paper they’ve created some revolutionary blockchain? Just because it’s Visa? At least with Bitcoin and Ethereum (public chains) people can differentiate between something that works, something that is shit, and something that is vapor. With the bankchains and blockchain technology hype, it’s all based on words stemming from the horse’s mouth, and what they choose to tell you.
Have you tried Blockchain 5.0 yet? I sure haven’t.
What do you think about the blockchain hype? Let us know what you think about this project in the comment section below.
This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
Images via Shutterstock, Pixabay, a CCN Headline, and the Corda website.
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IOTA Foundation Head, Lewis Freiberg, attempted to explain alleged scalability and transaction issues at the project. The world’s number 9 cryptocurrency by market capitalization is under some pressure to clarify why its answer to traditional blockchain technology, the Tangle, is increasingly having to deal with spammers who create parasite chains or ‘Side Tangles.’
IOTA’s Tangle Seems to Have Transaction Issues
What’s up with the Tangle? is a recent post by Lewis Freiberg, Head of Ecosystem at IOTA Foundation. The former psychology major’s explanation is part counseling, essentially teaching enthusiasts how to emotionally view the project’s success and issues, and part technical analysis.
Describing the essay’s title as “a common question,” Mr. Freiberg stresses how such queries “about the state of the Tangle usually stem from the way it is represented in a visualiser or due to a high/low confirmation rate.” To reassure those presumably worried or alarmed, he notes whenever “these questions are asked in the community, we are asking them ourselves. We are all as intrigued as everyone, if not we’d be doing something else. These events present learning opportunities for those working on IRI and other aspects of the network.”
He was hired by the Foundation a year ago this Fall. The IOTA Foundation itself is described as “not-for-profit foundation with the mission is to support the development and standardization of new open-source distributed ledger technologies (DLT).” His role is to “ educate governments, corporates and the public about the research & development activities within the Foundation while also working with ecosystems and IOTA’s community of developers to promote co-innovation around IOTA’s open-source technologies.”
The Tangle is IOTA’s answer, of sorts, to what project participants believe are problems with traditional blockchain technology. Tangle is, essentially, a directed graph data structure underneath IOTA. In one variation of this scheme, transactions choose two earlier on the network to approve. Transaction C, then, would approve transactions B and C, chronologically. Each new, unapproved transaction chooses two previous at random.
Adoption Versus Transactions Per Second
Mr. Freiberg believes questioners are too focused upon transactions per second (TPS), as opposed to adoption by new users and confirmed transaction per second (CTPS) metrics. This is due to “Our desire to see the Tangle ‘outperform’ other networks,” he urges, leading “us to spam the mainnet in order to push the TPS as high as it can go. Without fail this results in ‘Wow, the tangle is flying today,’ and then ‘Why did the TPS suddenly drop’ after someone turns off a spammer.” For him, “Even though adoption cannot be measured with one simple metric, it is nonetheless a much more important metric that one must gauge when considering whether or not the tangle ‘works.’”
CTPS on the Tangle are much lower than TPSs. Intuitively, most believe both should be parallel, at about par, when compared to one another. Mr. Freiberg refers to this intuition as a “misunderstanding.” He details, “When someone starts sending bad transactions which outweigh the honest transactions by 5x the confirmation rate will drop to 20%. In reality the confirmation rate didn’t drop, the amount of invalid or poorly referenced TXs just increased. The honest throughput of the network remained the same.”
Candidly, the Ecosystem Head reveals “this post was brought about by the recent occurrence of a ‘Side Tangle’ appearing in visualisers.” Side Tangles, which he describes as “a well-known phenomenon since the Tangle white paper,” are parasite chains: spammers select unconfirmed transactions that “only reference themselves,” resulting in “a tangle of transactions being built up that is distinct from the main tangle.” Enthusiastically, he insists the Tangle “is performing as theorized” in its original design.
“The protocol has been designed to be resilient to funny things happening,” he warns, and when “someone started spamming transactions with a low likelihood of confirmation,” the metrics “took a nosedive. To speculate, reasons could include: attempts at price manipulation, testing network response to different things, or just to get attention.” Whatever the actual case, there is a lot of money now riding on the IOTA project, including a very recent announcement the it was picked as part of a 30 million euro consortium to develop smart cities in seven urban environments. Only “constant learning and incremental improvement can push the IOTA project forward,” Mr. Freiberg concludes.
What are your thoughts on Tangle? Let us know in the comments section below.
Images via Pixabay, IOTA Foundation.
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