What does it mean to trust someone? Usually, that person (or company, or technology) can take actions that share a bunch of characteristics: the action has a material impact on us, we cannot directly observe the action or judge its consequences relative to alternatives at least until later, and we have an expectation that the other will act in a way that is primarily to our benefit as opposed to their own. One way to tell that trust was involved in a relationship is when we discover that the ...

I have been skeptical about Turing complete on chain computation for a long time. Many early proponents took the position that there is no issue because a mechanism such as Ethereum’s gas limits how long a computation can run. They argued that this means computation will always eventually run out of gas and then stop. But the danger of a program not stopping is not the only thing to worry about in a completely open and interconnected computation system. The more pertinent issue is: what will ...

As has been widely reported, China has banned all ICOs. Given the torrid pace of ICOs in China, many of which appear to be downright scams, this should not come as a surprise. What will be interesting to see though is what comes next. Here are some key questions. First, is this a temporary ban only? Will China come out with a set of regulations that allow some ICOs to go forward? Given that China has allowed crypto currencies per se, I expect that they will come up with regulation and that th...

It appears that regulators are looking into ICOs, the Initial Coin Offerings by which many projects are raising financing at the moment. Regulators are rightly concerned with people losing money in speculative projects that fail to deliver or worse yet in outright scams. As regulators think about how to approach this area it will be important to keep a few things in mind: 1. Coins are sui generis. Coins are not equity, although they share some aspects of equity. Coins are not a pre-purchase, ...

Keeping this short because I am on family vacation but there have been two stories this past week that we should all take note off. First, there was the revelation that the NSA had installed spying software deeply in the firmware of hard drives. Then, details about the breach of SIM card maker Gemalto were published that show how GCHQ and NSA obtained encryption keys for cell phones. Yet we keep insisting that somehow these crypto wars can be won. That somehow we can build a “trusted” computi...

What does it mean to trust someone? Usually, that person (or company, or technology) can take actions that share a bunch of characteristics: the action has a material impact on us, we cannot directly observe the action or judge its consequences relative to alternatives at least until later, and we have an expectation that the other will act in a way that is primarily to our benefit as opposed to their own. One way to tell that trust was involved in a relationship is when we discover that the ...

I have been skeptical about Turing complete on chain computation for a long time. Many early proponents took the position that there is no issue because a mechanism such as Ethereum’s gas limits how long a computation can run. They argued that this means computation will always eventually run out of gas and then stop. But the danger of a program not stopping is not the only thing to worry about in a completely open and interconnected computation system. The more pertinent issue is: what will ...

As has been widely reported, China has banned all ICOs. Given the torrid pace of ICOs in China, many of which appear to be downright scams, this should not come as a surprise. What will be interesting to see though is what comes next. Here are some key questions. First, is this a temporary ban only? Will China come out with a set of regulations that allow some ICOs to go forward? Given that China has allowed crypto currencies per se, I expect that they will come up with regulation and that th...

It appears that regulators are looking into ICOs, the Initial Coin Offerings by which many projects are raising financing at the moment. Regulators are rightly concerned with people losing money in speculative projects that fail to deliver or worse yet in outright scams. As regulators think about how to approach this area it will be important to keep a few things in mind: 1. Coins are sui generis. Coins are not equity, although they share some aspects of equity. Coins are not a pre-purchase, ...

Keeping this short because I am on family vacation but there have been two stories this past week that we should all take note off. First, there was the revelation that the NSA had installed spying software deeply in the firmware of hard drives. Then, details about the breach of SIM card maker Gemalto were published that show how GCHQ and NSA obtained encryption keys for cell phones. Yet we keep insisting that somehow these crypto wars can be won. That somehow we can build a “trusted” computi...

During the initial growth of the Internet, the United States enacted a variety of Safe Harbors, such as the DMCA, that allowed new innovation to unfold. We now need a similar approach to crypto tokens in order to help build the blockchain infrastructure. Blockchains allow the creation of data stores and applications that have network effects but are not controlled by a central player. This helps address the key issue of centralization and monopoly like positions currently observed in the digi...

During the initial growth of the Internet, the United States enacted a variety of Safe Harbors, such as the DMCA, that allowed new innovation to unfold. We now need a similar approach to crypto tokens in order to help build the blockchain infrastructure. Blockchains allow the creation of data stores and applications that have network effects but are not controlled by a central player. This helps address the key issue of centralization and monopoly like positions currently observed in the digi...

Nouriel Roubini has done the crypto ecosystem a great service by pulling together pretty much all issues and criticisms in a single document. While he is prone to hyperbole (not unlike some people in crypto) and plays fast and loose with technical issues, everyone who cares about crypto should read the testimony in its entirety. Longterm success will require overcoming all of these objections. While I believe that is doable (at least in principle), it will not be easy and it will take a long ...

Nouriel Roubini has done the crypto ecosystem a great service by pulling together pretty much all issues and criticisms in a single document. While he is prone to hyperbole (not unlike some people in crypto) and plays fast and loose with technical issues, everyone who cares about crypto should read the testimony in its entirety. Longterm success will require overcoming all of these objections. While I believe that is doable (at least in principle), it will not be easy and it will take a long ...

The internet was around for about two decades before the arrival of the web supercharged its growth. The ease of using a web browser made broad consumer adoption possible. Mobile payments were around for at least a decade before they started to take off. Again the key factor to adoption was ease of use – this time in the form of wallets that are actually integrated with in-app payments and widely accepted at the point of sale such as Google and Apple Pay (in other parts of the world adoption ...

The internet was around for about two decades before the arrival of the web supercharged its growth. The ease of using a web browser made broad consumer adoption possible. Mobile payments were around for at least a decade before they started to take off. Again the key factor to adoption was ease of use – this time in the form of wallets that are actually integrated with in-app payments and widely accepted at the point of sale such as Google and Apple Pay (in other parts of the world adoption ...

One of the objections against crypto currencies has been their volatility. Bitcoin for instance just rose by about 60% over 2 days only to then fall by about 15% in a matter of hours. Steam just ended bitcoin support citing volatility. This has led a number of teams on the quest to create a so called stable coin: A coin that does not fluctuate in value. Now that raises some immediate questions. First, an easy question, relative to what is a stable coin stable? Other crypto currencies? The US ...

One of the objections against crypto currencies has been their volatility. Bitcoin for instance just rose by about 60% over 2 days only to then fall by about 15% in a matter of hours. Steam just ended bitcoin support citing volatility. This has led a number of teams on the quest to create a so called stable coin: A coin that does not fluctuate in value. Now that raises some immediate questions. First, an easy question, relative to what is a stable coin stable? Other crypto currencies? The US ...

This is a short follow up to my Friday post which argued for protest over more crypto and received a lot of critical comments. Based on these here are my replies to the key questions / objections: 1. The most common comment was – why not do both? Why not more crypto and protest? In fact won’t we need to crypto to protest? Doing both suggests that doubling down on crypto is a viable strategy. It is not – the more we invest in this now the more we expend resources on an unwinnable arms race (if...

This is a short follow up to my Friday post which argued for protest over more crypto and received a lot of critical comments. Based on these here are my replies to the key questions / objections: 1. The most common comment was – why not do both? Why not more crypto and protest? In fact won’t we need to crypto to protest? Doing both suggests that doubling down on crypto is a viable strategy. It is not – the more we invest in this now the more we expend resources on an unwinnable arms race (if...