Coin News

The Supreme Court announced on June 28, 2018, that it will not reconsider the conviction or life sentence of Ross Ulbricht, the alleged mastermind behind the darknet site Silk Road. At press time, no reason has been provided for the Court’s decision.

Ulbricht was first arrested in October 2013 at the Glen Park Branch Library in San Francisco. During his trial, prosecutors stated that, at the time, he was speaking online with an undercover FBI agent while running the site through an open laptop under the name “Dread Pirate Roberts.” Among the evidence collected from Ulbricht’s computer were chat logs, journal entries and spreadsheets pertaining to Silk Road financial data between the years 2011 and 2013.

Ulbricht’s defense team insisted that he was not the man prosecutors were looking for. They argued that Ulbricht had created Silk Road as an “economic experiment,” but that he handed the website off to another person when it became “too chaotic.” They claimed the real Dread Pirate Roberts was still out there and that Ulbricht was simply a “fall guy.”

The jury remained unconvinced by these remarks. Ulbricht was found guilty on counts of trafficking drugs on the internet, running a criminal enterprise, narcotics-trafficking conspiracy, computer hacking and money laundering, and was sentenced to life in prison. Ulbricht’s legal team later filed an appeal of the sentence, which was formally denied in 2017.

Ulbricht attempted to bring his case before the Supreme Court last December, alleging that his fourth and sixth amendment rights had been violated. Ulbricht said that during the investigation and his sentencing, law enforcement agents had collected internet traffic information without warrants, and that the judge presiding over the case had imposed an “unreasonable sentence” due to reports that Ulbricht had tried to hire a hitman — a crime for which he was never convicted or charged with.

Ulbricht’s attempts to bring his case to the Supreme Court had been met with support from several organizations including the Gun Owners of America, the National Lawyers Guild and the Reason Foundation.

Upon hearing the recent case Carpenter v. United States — which involved location data stored and obtained by cell phone providers — the Supreme Court ruled that the fourth amendment does offer individuals “legitimate expectation of privacy” over their personal data, even if they voluntarily provide it to third parties. The ruling convinced many of Ulbricht’s supporters that the Court would be willing to at least consider his side of the story, though it appears these hopes have been dashed, and Ulbricht’s life sentence will stand.

On June 14, 2018, the Securities and Exchange Commission (SEC) director of corporate finance made waves in the cryptocurrency space when he commented at Yahoo Finance’s All Market Summit: Crypto that ether is not a security. The statement carries weight.

His words led to a flurry of speculation about the potential implications of what this means for Ethereum as well as the larger cryptocurrency ecosystem with regards to development and regulation.

It should be noted that the shifting status of regulatory terms can be confusing and contrary to the logic of programming languages that cryptocurrencies use. As a result, Adam B. Levine dedicated much of Episode #371 of his show, Let’s Talk Bitcoin, to clearing up misconceptions about the SEC’s stance. To do this, he invited lawyer and programmer Stephen Palley for an in-depth interview.

Discretion in the Legal World

Levine began by reading an abridged version of the SEC director’s speech, or as he dubbed it, “When Howey Met Gary.” Next, Levine spoke with Palley to hammer out what the speech is stating. In the speech, Director William Henman recalled the 1946 Supreme Court ruling of SEC v.s. W.J. Howey Co., which first laid out the terms for what defines an asset, such as land purchases or services contracts, to be a government regulated by the Securities Act.

Under this act, the form of the contract itself is of less importance than the actual economic substance of these transactions. This means that any number of assets can still qualify as securities as long as they fulfill certain qualifications.

Qualifications include:

• Assets being specifically promoted by a group with a controlling interest in daily operations;
  
• Assets being purchased by consumers under some reasonable expectation of profit; and
  
• Assets wherein there is significant asymmetry of information between the promoters and purchasers of an asset.
  

Securities regulations primarily exist to ensure a third party, namely a regulatory entity, is well-informed enough to judge if there is a reasonable guarantee of a safe investment, without compromising trade secrets that promoter firms do not want made public.

Furthermore, Henman stated that the decentralization offered by cryptocurrency models such as ether prevent a single promoter entity from actually gaining significant leverage in information or control that consumers would need protection from. This means certain applications of cryptocurrencies can be sold as securities, but the format itself does not require this level of regulation.

A Legal Perspective

Palley, a practicing lawyer of 20 years, explained some of the concerns that have made this possible ruling particularly sticky for the world of cryptocurrencies. Palley claimed that specific types of legal contracts are similar to executable programmable code, yet legal verdicts operate in a sufficiently more complex way. Legal verdicts require contextual considerations that must be made of the technical form as well as the economic realities of various interactions. This ambiguity is often understood by programmers that, legally, the most uncharitable interpretation of a ruling will be applied unilaterally.

Palley gave an example by comparing the factors which make ether not a security while conceivably making ripple qualify as a security. Evidence for this is that the original developers of Ethereum have largely distanced themselves from the project so that they do not form a distinct entity still invested in the profit and daily operations of this platform. Ripple, on the other hand, is still one entity. Ethereum also held back a much smaller percent of ether tokens for their developers while Ripple held onto enough tokens to retain a controlling interest. For these reasons, there are easily observed asymmetries in the Ripple platform that could well classify its assets as securities.

The Future of Crypto-Based Tort Action

Palley went on to ruminate on the implications that recent lawsuits against Tezos might have on future civil suits against cryptocurrency developers. Using his inside experience as a practicing lawyer working in the cryptocurrency space, Palley stated that many civil class-action suits are unable to find plaintiffs even in the event of potentially dubious actions for the simple reason that no one wants to sue a firm that is continuing to make them money. After all, tort actions of this nature typically take place as an attempt to jump on potential violations to regain lost investment money through damages if the investments themselves are no longer profitable.

Palley claimed that the lawsuits against Tezos fall under this category. He stated that Tezos has conducted its own business with enough good faith that the plaintiffs allege that the business model itself is somehow improper, rather than Tezos specifically engaging in improper decisions at the micro-level. Under this trend, Palley speculated that the most significant factor in uncharitable interpretations of cryptocurrency-related laws will take place under market contracts for the space as a whole.

On June 14, 2018, the Securities and Exchange Commission (SEC) director of corporate finance made waves in the cryptocurrency space when he commented at Yahoo Finance’s All Market Summit: Crypto that ether is not a security. The statement carries weight.

His words led to a flurry of speculation about the potential implications of what this means for Ethereum as well as the larger cryptocurrency ecosystem with regards to development and regulation.

It should be noted that the shifting status of regulatory terms can be confusing and contrary to the logic of programming languages that cryptocurrencies use. As a result, Adam B. Levine dedicated much of Episode #371 of his show, Let’s Talk Bitcoin, to clearing up misconceptions about the SEC’s stance. To do this, he invited lawyer and programmer Stephen Palley for an in-depth interview.

Discretion in the Legal World

Levine began by reading an abridged version of the SEC director’s speech, or as he dubbed it, “When Howey Met Gary.” Next, Levine spoke with Palley to hammer out what the speech is stating. In the speech, Director William Henman recalled the 1946 Supreme Court ruling of SEC v.s. W.J. Howey Co., which first laid out the terms for what defines an asset, such as land purchases or services contracts, to be a government regulated by the Securities Act.

Under this act, the form of the contract itself is of less importance than the actual economic substance of these transactions. This means that any number of assets can still qualify as securities as long as they fulfill certain qualifications.

Qualifications include:

• Assets being specifically promoted by a group with a controlling interest in daily operations;
  
• Assets being purchased by consumers under some reasonable expectation of profit; and
  
• Assets wherein there is significant asymmetry of information between the promoters and purchasers of an asset.
  

Securities regulations primarily exist to ensure a third party, namely a regulatory entity, is well-informed enough to judge if there is a reasonable guarantee of a safe investment, without compromising trade secrets that promoter firms do not want made public.

Furthermore, Henman stated that the decentralization offered by cryptocurrency models such as ether prevent a single promoter entity from actually gaining significant leverage in information or control that consumers would need protection from. This means certain applications of cryptocurrencies can be sold as securities, but the format itself does not require this level of regulation.

A Legal Perspective

Palley, a practicing lawyer of 20 years, explained some of the concerns that have made this possible ruling particularly sticky for the world of cryptocurrencies. Palley claimed that specific types of legal contracts are similar to executable programmable code, yet legal verdicts operate in a sufficiently more complex way. Legal verdicts require contextual considerations that must be made of the technical form as well as the economic realities of various interactions. This ambiguity is often understood by programmers that, legally, the most uncharitable interpretation of a ruling will be applied unilaterally.

Palley gave an example by comparing the factors which make ether not a security while conceivably making ripple qualify as a security. Evidence for this is that the original developers of Ethereum have largely distanced themselves from the project so that they do not form a distinct entity still invested in the profit and daily operations of this platform. Ripple, on the other hand, is still one entity. Ethereum also held back a much smaller percent of ether tokens for their developers while Ripple held onto enough tokens to retain a controlling interest. For these reasons, there are easily observed asymmetries in the Ripple platform that could well classify its assets as securities.

The Future of Crypto-Based Tort Action

Palley went on to ruminate on the implications that recent lawsuits against Tezos might have on future civil suits against cryptocurrency developers. Using his inside experience as a practicing lawyer working in the cryptocurrency space, Palley stated that many civil class-action suits are unable to find plaintiffs even in the event of potentially dubious actions for the simple reason that no one wants to sue a firm that is continuing to make them money. After all, tort actions of this nature typically take place as an attempt to jump on potential violations to regain lost investment money through damages if the investments themselves are no longer profitable.

Palley claimed that the lawsuits against Tezos fall under this category. He stated that Tezos has conducted its own business with enough good faith that the plaintiffs allege that the business model itself is somehow improper, rather than Tezos specifically engaging in improper decisions at the micro-level. Under this trend, Palley speculated that the most significant factor in uncharitable interpretations of cryptocurrency-related laws will take place under market contracts for the space as a whole.

This week, the U.S. Department of Justice and other law enforcement agencies banded together to bring down some bad actors on the dark web. EOS is undergoing some growing pains with the launch of its network, exposing the trials and tribulations of an all-too-centralized governance model.

It wasn’t all unsavory news, though. A new $300 million crypto fund was launched by Andreessen Horowitz to help grow the ecosystem, and Coinbase’s CEO started a cryptocurrency charity fund that already has $1 million to work with.

We witnessed some notable technological advancements this week as well with the announcement of the ERC-1155 token standard for Ethereum. The new standard will build on and enhance ERC-721’s functionality, the same standard used to tokenize non-fungible assets like CryptoKitties.

Featured stories by Jimmy Aki, Colin Harper, Erik Kuebler and Nick Marinoff.

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DOJ, U.S. Agencies Seize Over $12M Bitcoin in a Slew of Dark Web Busts

The U.S. Department of Justice, in cooperation with the Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Secret Service (USSS), the Postal Inspection Service (USPIS) and the Drug Enforcement Administration (DEA), have apprehended more than 35 dark web drugs and arms dealers in a nation-wide bust. In the nation’s first inter-agency crackdown on dark web operators, the sweep ended in the confiscation of military-grade weapons, drugs and drug manufacturing equipment, $3.6 million in hard cash and gold bars and over 2,000 bitcoin, valued at around $12 million.

Andreessen Horowitz Has Launched a $300M Crypto Fund

Financial firm Andreessen Horowitz has established a new $300 million crypto fund that is dedicated to investing in cryptocurrencies and other blockchain-related projects. Named a16z crypto, the new fund has the firm delving deeper into the cryptocurrency space to grow its existing portfolio, which includes digital currency exchange Coinbase. In a statement posted on the company's blog, general partner Chris Dixon states that the a16z crypto fund provides the firm with the flexibility to invest in any area of its choosing, from traditional equities to digital tokens. As a result, the firm will be able to invest in both companies and the tokens those companies create.

Enjin Coin CTO Creates ERC-1155, a New Token Standard for Ethereum

Co-founder and CTO of Enjin Coin Witek Radomski has developed the ERC-1155 token, a new standard for defining video game tokens on the Ethereum blockchain. Radomski was responsible for the development of the ERC-721 non-fungible token standard that was used in the development of CryptoKitties. The new protocol allows for an infinite number of both fungible and non-fungible items to be deployed through a single contract, a breakthrough that has ramifications for tokenized asset management for the gaming industry and beyond.

EOS Founder Wants to Scrap the Platform's Constitution, Start Anew

The long awaited EOS launch occurred earlier this month, but it has not been without its difficulties. Daniel Larmier, the founder and technical architect of EOS, has confirmed that he wants to scrap the platform’s current constitution and build a new one. Speaking on the EOSIO Gov Telegram Channel, Larmier revealed that he has doubts about the company’s current on-chain governance model and called the existing constitution “unwise.” While Larmier has a proposal to change the problems, those for the change would have to outnumber those against it by 10 percent. They would then have to hold this position for 30 consecutive days within a 120-day period, so even if Larmier does get his way, we’re not likely to see the emergence of a new constitution for a minimum of four months.

Coinbase CEO Brian Armstrong Launches Cryptocurrency Charity Fund

On June 27, 2018, Coinbase CEO Brian Armstrong announced his new cryptocurrency charity fund, GiveCrypto. Armstrong established the philanthropic venture to financially empower people with direct cryptocurrency distributions. The charity has already raised $1 million from prominent cryptocurrency community members, and it plans to raise $10 million by the end of 2018 and $1 billion over a two-year time frame. The nonprofit’s mission is to give 100 percent of its cryptocurrency contributions to impoverished people, an altruistic goal that simultaneously drives cryptocurrency’s real-world utility.

Technologist and Apple Inc. co-founder Steve Wozniak played contrarian at the NEX technology conference in late June, comparing the hype around blockchain to the fervor he witnessed just before the implosion of the dot-com bubble. Still, Wozniak stood by his unflinching loyalty for Bitcoin, even in the midst of the market’s 2018 downturn.

To be sure, Wozniak believes blockchain technology will serve as a cornerstone for business and industry in the future, calling it “decentralized and totally trustworthy.”

Nonetheless, early adopters “can burn themselves out by not being prepared to be stable in the long run,” Wozniak said. Comparing the growth of the blockchain industry to the dot-com mania of yesteryear, he said, “It was a bubble, and I feel that way about blockchain.”

It’s Wozniak’s guess that the same pattern will repeat today. “If you look now you say all that internet stuff happened, we got it, it just took a while,” he told the tech conference audience.

Ultimately, Wozniak forecasts that blockchain technology will disrupt the social media sector. Facebook, which holds somewhat of a social media monopoly, is ripe for competition, and a blockchain-based platform could emerge as a key rival to challenge the status quo.

Wozniak also sees long-term potential in Ethereum and its currency, ether. In particular, Wozniak cited programmers’ ability to build out their own Ethereum-based projects, as well as development efforts from companies like Microsoft Corp. and J.P. Morgan to unearth the DApp platform’s full potential.

While Wozniak is putting blockchain on ice for now, saying it isn’t yet ready to live up to the hype with mainstream adoption, he held his ground on Bitcoin, something he once referred to as “digital gold.” Although the cryptocurrency lost more than half its value so far this year, he still referred to it as “just amazing.”

Wozniak purchased bitcoin at around the $700 mark and sold most of his holdings at the peak near $20,000.

The Maltese Parliament has voted into law three cryptocurrency and blockchain bills, making Malta one of the most desirable locations for setting up blockchain enterprises.

According to legislative records, the bills, which were introduced to the parliament by Parliamentary Secretary for Financial Services, Digital Economy and Innovation Silvio Schembri, were passed unanimously on Tuesday, June 26, 2018.

The bills-turned-law detail the regulation of ICOs and cryptocurrencies and the process for setting up crypto-based businesses in Malta. The news, which Schembri shared via a tweet, makes Malta the first country to enact such laws.

“Today, Maltese Parliament unanimously approved three bills on DLT/blockchain, a 1st in the World. Honored to have driven these bills," he said.

The three bills passed into law are "The Virtual Financial Assets Act," "The Malta Digital Innovation Authority Act," and "The Innovative Technology Arrangements and Services Act," respectively.

The Virtual Financial Assets Act (VFA)

The VFA will regulate initial coin offerings. The law requires new companies raising capital through ICOs to publish white papers that outline a detailed description for the entire project. Issuers are also expected to make their financial history public.

The Malta Digital Innovation Authority Act

This law formalizes regulatory procedures for the cryptocurrency and the blockchain industry. It also establishes the Malta Digital Innovation Authority (MDIA), which will serve as the regulatory body for the industry. The functions of the MDIA will be carried out by a Board of Governors, headed by a CEO. Local news outlet the Times of Malta confirmed the appointment of Stephen McCarthy as the first chief executive of the Malta Digital Innovation Authority.

Technology Arrangements and Services Bill

This law details the registration and certification of technology service providers and technology arrangements, and it focuses on the registration of exchanges in Malta. Industry insiders believe this bill was created to make Malta the destination of choice for cryptocurrency exchanges.

Malta, which, even before these laws, was known as a friendly hub for blockchain businesses, has already attracted some crypto heavyweights such as OKEx and Binance.

The new bills are expected to guide the government on how to embrace the technology and achieve its aim of becoming a hotspot for crypto and blockchain businesses.

The Bank of England has warned U.K. lenders to study cryptocurrencies before doing business in the space. In a letter sent out to the financial institutions in the country yesterday, the Bank of England Deputy Governor Sam Woods warned financial companies to take appropriate steps to protect themselves against "exposure to crypto-assets" which he believes are susceptible to "fraud and manipulation, as well as money-laundering and terrorist financing risks."

While acknowledging the benefits of the underlying distributed ledger, the deputy governor believes the high price volatility and relative illiquidity of cryptocurrencies are good enough reasons why financial institutions need to be careful when dealing with crypto assets.

The letter went on to explain the steps banks should take to lower any possible risk from trading in crypto assets. He lists hiring a PRA-approved "Senior (Insurance) Management Function (S(I)MF)" auditor to review and sign off on the "risk assessment framework," conservative incentives that discourage "excessive risk-taking" and aligning the bank's risk management approach with the uncertainties associated with cryptos.

Woods, who also doubles as the CEO of Prudential Regulation Authority (PRA), reminded financial institutions of their fiduciary responsibility under the PRA regulations.

While borrowing a leaf from the Bank of International Settlements (BIS) scathing report on bitcoin, the deputy governor advised the banks not to get ahead of themselves by considering cryptos as a form of money.

"Crypto-assets should not be considered as currency for prudential purposes," he said.

Classification of cryptocurrencies has been a problem in the U.K., as with most parts of the world. Earlier this year, the Bank of England Governor Mark Carney informed students of the failure of Bitcoin as a form of money as no one "uses it as a medium of exchange." Carney, who softened his tone some weeks after, advocated for regulating cryptocurrencies not banning “crypto-assets outright.” Authorities should "be careful not to stifle innovations which could in the future improve financial stability," he said.

Last year, the Bank of England partnered with Ripple to test an interledger system, and it has announced a revamp of its entire settlement system to accommodate distributed ledger technology.

The Bank of England has warned U.K. lenders to study cryptocurrencies before doing business in the space. In a letter sent out to the financial institutions in the country yesterday, the Bank of England Deputy Governor Sam Woods warned financial companies to take appropriate steps to protect themselves against "exposure to crypto-assets" which he believes are susceptible to "fraud and manipulation, as well as money-laundering and terrorist financing risks."

While acknowledging the benefits of the underlying distributed ledger, the deputy governor believes the high price volatility and relative illiquidity of cryptocurrencies are good enough reasons why financial institutions need to be careful when dealing with crypto assets.

The letter went on to explain the steps banks should take to lower any possible risk from trading in crypto assets. He lists hiring a PRA-approved "Senior (Insurance) Management Function (S(I)MF)" auditor to review and sign off on the "risk assessment framework," conservative incentives that discourage "excessive risk-taking" and aligning the bank's risk management approach with the uncertainties associated with cryptos.

Woods, who also doubles as the CEO of Prudential Regulation Authority (PRA), reminded financial institutions of their fiduciary responsibility under the PRA regulations.

While borrowing a leaf from the Bank of International Settlements (BIS) scathing report on bitcoin, the deputy governor advised the banks not to get ahead of themselves by considering cryptos as a form of money.

"Crypto-assets should not be considered as currency for prudential purposes," he said.

Classification of cryptocurrencies has been a problem in the U.K., as with most parts of the world. Earlier this year, the Bank of England Governor Mark Carney informed students of the failure of Bitcoin as a form of money as no one "uses it as a medium of exchange." Carney, who softened his tone some weeks after, advocated for regulating cryptocurrencies not banning “crypto-assets outright.” Authorities should "be careful not to stifle innovations which could in the future improve financial stability," he said.

Last year, the Bank of England partnered with Ripple to test an interledger system, and it has announced a revamp of its entire settlement system to accommodate distributed ledger technology.

Imagine an enhanced field of vision — one which allows us to seamlessly interact with others, through the use of our hands and without dependency on a screen.

This future has arrived — with unparalleled possibilities for advertising, training and collaboration — free of geographical barriers. Welcome to extended reality (XR), encompassing mixed reality (MR), augmented reality (AR), virtual reality (VR) and 3D technology. 

The projected market size — $209 billion by 2022 according to Statista — for AR and VR is massive. Trivver, a cutting-edge, programmatic advertising startup, is at the nexus of this XR world and traditional advertising. Trivver will employ blockchain technology for validating advertising, to ensure transparency, security and efficiency. In pursuing XR technology, Trivver joins the likes of Facebook, Google and Apple in pushing the boundaries of this new digital frontier.

Trivver uses 3D product placement of brand models to deliver advertising — in games, business, entertainment or sports XR environments. Trivver’s comprehensive XR advertising platform leverages its suite of patented technologies to deliver 3D branded objects across environments and platforms, enabling a single model to autoscale to fit seamlessly with multiple environments. With this technology, Trivver is poised to enable the adoption, commercialization and monetization of XR.

Trivver provides advertisers with the ability to engage with today’s rapidly growing XR user community. In particular, Trivver’s Smart Objects are intended to foster organic relationships between brands and consumers, leading to less digital ad friction. In addition, Smart Objects offer unprecedented capability to record view engagements with brands, including viewability and intent to purchase. 

The platform provides a set of tools for game developers, retailers, real estate and other XR content publishers. Trivver is using its Ethereum-based token, TRVR, to promote development of a library of Generic Smart Objects, the default 3D models that represent ad spots in the environment. As the library of Generic Smart Objects grows, it will become available to game developers for future development, as well as offer a way for XR developers and designers to become part of the Trivver ecosystem. 

The Genesis

Founded in 2011, Trivver is the brainchild of founder and CEO Joel LaMontagne. A serial entrepreneur with a background in computer science and mathematics, LaMontagne’s previous work includes the creation of a patented digital randomization engine that facilitates nonlinear experiences for online gaming, education and military training.

“The epiphany [that led to Trivver] came to me back in 2007 when I witnessed my twelve-year-old son play an online game and repeat the same level again and again to achieve a better score, because he learned the game’s pattern,” LaMontagne said.

He added that Trivver’s multi-patented technology enables advertisers to easily deploy, monitor and efficiently measure user actions across all devices inside AR/VR/MR/3D — really any XR environment. 

“Our ‘one and done’ IP allows a brand to create a single 3D Branded Object file and send it to many XR locations in just one click,” he said. 

Trivver’s 3D Branded Object files, or “branded smart objects,” are native to the environment they are placed in, creating nondisruptive advertisements that consumers actually enjoy interacting with. Trivver, LaMontagne added, also monitors and tracks metrics to provide brands with detailed consumer data.

LaMontagne said that Trivver’s patented technology allows both large and small developers the ability to “become a part of our network and monetize their published content.” The Trivver ad network, he said, provides advertisers the ability to connect with smaller content providers seamlessly.

The “Virtual” Road Map Ahead 

The public sale of TRVR commenced on June 15.

All available TRVR will be issued during the one-time distribution period with no additional issuance after the close of the campaign. The total number of TRVR to be issued will be calculated at the end of the distribution period.

“Our desire is to become the standard in XR advertising,” LaMontagne said. “We want to enable developers in the XR Space — both large and small — to fund themselves through advertising, to encourage the improvement of technology that enhances people’s lives and to make product placement in XR space as relevant and interesting to users as possible.” 

Note: Trading and investing in digital assets is speculative and can be high risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

Last year, growing problems of Bitcoin mining centralization came to light with the controversy of an AsicBoost scandal. As a largely centralized hash rate began to threaten the software’s magical property, concerns were raised that incentives at the crux of Bitcoin’s game theory had broken away.

Now, the power of miners, harnessed by economic incentives, escaped accountability by attacking Bitcoin’s SHA 2 hashcash and exploiting it. This further gained advantage through vulnerability in the network’s interface with the old world of industrial infrastructure and patents.

In facing the increasing power of hardware manufacturers, the idea emerged to make changes in proof of work to fix incentives. Some see such moves to be dangerous, as it could devastate the security of the network and create a contentious hard fork. Others are more pessimistic about ASIC-resistant algorithms, due to the flexibility of hardware engineers and manufacturers’ ability to control hardware production. This challenge that cannot simply be solved technically brings us a unique opportunity to explore this innovation and discover the technology’s elegant design.

Money as a Technology of Cooperation

The invention of Bitcoin arrived through the accumulative efforts of many minds. Before Satoshi Nakamoto shared the vision of peer-to-peer digital cash in the white paper, there were pioneers who stepped into this uncharted territory. Nick Szabo, a legal scholar and cryptographer, with his creation of bit gold inspired this breakthrough of computer science.

In the paper Shelling Out, the Origins of Money, published in 2002, Szabo traveled into the ancient past to trace precursors of money used by our ancestors. By gaining the insight of evolutionary biologist Richard Dawkins who saw money as a “formal token of delayed reciprocal altruism,” Szabo recognized the role of money in providing humans’ unique evolutionary advantage. Describing it as a “technology of cooperation,” he noted how early forms of money, such as the shells of clams, solved the problem of the risk of cheating in the exchange of favor, where reciprocity wouldn’t be made simultaneously.

Now, in this digital age and with the birth of Bitcoin, this tool for cooperation is replicated online. Satoshi, through engaging computer machines to work on mathematical puzzles of computation, found a way to check man’s selfishness that takes advantage of others’ good will. Bitcoin’s consensus algorithm enforces sets of rules across a network, by aligning incentives of all players and encouraging each to overcome selfish tendencies that prevent cooperation with a careful balance of risk and reward.

Puzzle of Altruism

The genius of Bitcoin’s protocol was developed on this understanding of the origin of money that is deeply tied to evolutionary forces within mankind. At the core of this technology lies knowledge of human nature informed by evolutionary biology. Dawkins, who authored the influential book, “The Selfish Gene” renewed the theory of evolution by putting genes rather than individuals at the center. With the term “the selfish gene,” he explained how “a gene that didn’t look after its own interests would not survive.” With this gene’s-eye view of life, Dawkins appeared to have solved part of the riddle of human nature. Yet, he stumbled upon another when he recognized acts of kindness in nature. Altruism has been one of the greatest puzzles for many biologists.

Dawkins asked, “How can selfish genes support kindness?” Charles Darwin’s theory of natural selection offered no incentive for organisms to help others. Dawkins went on, “If genes are striving selfishly to make more copies of themselves, how can a gene achieve this selfish objective by making their bearers act altruistically?” He contemplated how, in the Darwinian struggle for existence, kindness toward others seemed to counter this programming.

Partial explanations were provided in the idea of kin selection. Inclusive fitness theory argues the reason for such behavior is due to a sharing of large percentages of genes among close relatives. Another is the idea of reciprocal altruism used to explain costly cooperation between non-relatives, with a tit-for-tat strategy of “you scratch my back and I scratch yours.” Here, altruism is widely considered by biologists to be part of a survival game for genes, and nature has shown that the genes that return favor are more likely to survive. Yet, Dawkins pondered that, when it comes to humans, there seems to be something more that goes beyond what these theories can explain, for helping occurs even among those who are not close relatives and is given to complete strangers who don’t return favors.

Paradox of Human Nature

In recent years, examples of altruistic acts emerged on the internet with the waves of whistleblowers. From WikiLeaks founder Julian Assange to Chelsea Manning and Edward Snowden, we have seen individuals that acted on behalf of the public good at expense of their own well-being. These individuals demonstrated extraordinary courage, even risking their lives to protect not only the welfare of their nations, but all of humanity.

This presents an internal contradiction within humans: man is selfish and can be nasty, yet at the same time has a capacity for empathy and can act kindly to others. Dawkins found a way to embrace this paradox of human nature. He remarked how “selfish genes give rise to altruistic individuals” and asserted that the puzzle of altruism can be solved by using the concept of the selfish gene. He looked at altruism as the misfiring of selfish genes and explained how “we have a lust to be nice, even to total strangers, because niceness has been hardwired into us from the time we used to live in small groups of close kin and close acquaintances with whom it would pay to reciprocate favors.”

Civilization seems to have lost this paradox of human nature. Western construction of morality split an evolutionary force in nature into opposite tendencies. Humanity, in efforts to attain virtues that are considered positive, suppressed others that have been deemed negative and unworthy. Philosopher Jacob Needleman described how religious and moral doctrines of European cultures created a dualistic morality that “supports the radical separation of the good (however it is understood) and the evil (that which resists the good).” He noted such morality becomes “‘moralism’ when it imposes a sense of good and evil that diminishes the interconnectedness of life.”

Duality of human nature with selfishness on one hand and altruistic attributes like empathy on the other, created an internal conflict within man. This made people pit one side of human nature against the other. This one-sidedness of a human view in favor of certain characteristics over the other led to the failure of self-honesty, making it difficult for us to truly account for our deeds. Selfish parts of ourselves that are denied and condemned become dark. Efforts to eradicate this force made it more hostile and cunning. The extreme selfishness created through society’s refusal to accept human nature in its fullness has become destructive. It began to pose a threat to civilization itself.

The Value of Networked Individuals

In the last half of the 20th century, we have seen an increase in this schism of human nature. The tension of opposites that could no longer be contained, unleashed a cold war dividing the world into two competing power blocks. One sector was represented by the U.S. and Western European model of liberal democracies and the other was by Russian and Chinese communist states. Unresolved conflicts inside ourselves became ideological battles, creating a brutal competition for existence. In this grand struggle of power, Western capitalism promoted the value of the individual over the needs of the collective, while communism forced people to place the interests of a community over individuals.

Systems of governance based on political ideologies, incapable of holding the paradox of human nature, suppressed the dynamics of life. The centralized model of society, both in a form of capitalism and socialism, has subverted the force of evolution, by using money as an instrument of control to regulate aspects of human nature. The state’s oppression of self-interests of the majority led to the concentration of power in a few hands, fueling the corruption in the system. As ordinary people were held hostage by this political battle of governments, being kept in a loop of a death spiral, Satoshi found the perfect equation that could restore the paradox of human nature to end this war that is waged inside each person.

While the hierarchy of institutions divides human nature, breaking apart the value of individuality and the collective, decentralization unites them, creating a higher value of the networked individual. In Bitcoin’s open horizontal platform, what one does to oneself can be directly translated into what one does to others and vice versa. Everyone’s contribution enriches the whole network, while harmful behaviors bring loss for all. In this inclusive circle, contradiction between the logic of service to oneself and service to a group can now be reconciled. What an individual does out of one’s self-interests can become a communal act of giving because it benefits all in the network.

In this invention of free software, Satoshi liberated human nature that was bound up by intellectual property of the nation-state built on the archaic knowledge of man. Centralized systems of politics are inherently undemocratic. In this, the reform and progress of society often relies on the conscience of individuals who can demonstrate an extraordinary capacity to act altruistically as is seen by the example of whistleblowers. This requires a great sacrifice on the part of these individuals to take risks that are unsustainable.

Now, Bitcoin opens a new paradigm that is much more balanced. In this, one no longer has to sacrifice one’s needs in order to act altruistically and one does not have to give up aspirations for altruism in order to preserve self-interests. Upon economic incentives of selfishness, a spiral staircase of Bitcoin’s DNA can emerge. The incentive structure that is built upon a realistic assessment of humanity allows individuals to align themselves with their own self-interests. Through each taking risks voluntarily, the system increases the rewards for networked value.

Dormant Sleeping Codes

In the act of releasing a protocol pseudonymously online, the unknown creator of Bitcoin launched an open source development to build a new habitat for networked individuals. Responding to the good will of strangers, developers around the world came together to engage in a labor of love to work on Bitcoin. Those ambitious and adventurous ones among us all began investing precious resources to play the market. Greed of miners through the survival of the fittest mining markets have helped the network build a global level of security.

Now, in facing the threat of mining centralization, it might be tempting to jump into a quick tech fix of changing algorithms, trying to punish selfishness and combat our destructive potential within. But such solutions will likely just replicate the problem of the old system of control and possibly destroy the harmony of human nature that has been restored in the code.

Perhaps a perceived design oversight of a proof-of-work function, with its lack of resistance against mining centralization is not a flaw that needs to be fixed. Rather, it can be seen as something that could enable the vital feature that needs to be activated at a critical phase in the development of this technology. The problem that now confronts this ecosystem urges us to find solutions that are already in the protocol. Crisis can stimulate and trigger resistance from a human organism. This awakens dormant sleeping codes: sovereign users who claim their role in the network as ones who ultimately give Bitcoin value.

The integrity of Bitcoin is ensured through decentralization. This decentralization that ensures Bitcoin’s defining feature of permissionless-ness and censorship resistance cannot just be guaranteed with proof of work through people simply depending on technology. In the summer of 2017, in the midst of the storm of the scaling debacle, cryptographer and inventor of Hashcash, Adam Back reminded:

cypherpunks write code, and sovereign individuals run code? that maybe levelling up soon

The design of Bitcoin’s unprecedented immutability built with the best security practice in computer science includes the pressure for decentralization that is to be applied from everywhere.

Activation of Sovereign Users

The new stream of self-interests began to emerge in the ecosystem during the block size battle in 2017. As the threat of a contentious hard fork grew, resistance was swiftly organized from the bottom up. From the #UASF movement to the #No2X protest, we have seen the awakening of sleeping giants. Samson Mow, chief strategy officer of Blockstream and CEO of game company Pixelmatic, instigated a new game of “Proof of Hat consensus” by distributing the UASF cap across the network. What arose was a vision of cypherpunks. It placed Bitcoin’s value proposition in features that could bring a larger implication in the functioning of democracy, such as an ability to circumvent financial blockades and governments’ seizures. This came to clash with the PayPal 2.0 vision of Bitcoin, with emphasis on its utilitarian and commercial value as cheaper, faster, on-chain transactions.

Under the radar, the activation of sovereign users has been slowly occurring. Some are stepping up to fulfill their role in this network, manifesting the blueprint of this technology. Teams behind Bitseed created Bitcoin full node devices to help users around the world attain secure access to the blockchain to run full nodes and enforce rules. Bisq, an open-source desktop application, has been working to bring a P2P-based solution to the problems of centralized exchanges in order to extend Bitcoin’s decentralization.

Now, the network is finding creative ways to tackle problems of mining centralization. With an aim to break the mining hardware monopoly and bring much needed competition, Bitcoin Core contributor BtcDrak began a mining project, setting up an ASIC chip manufacturing company. While some strongly oppose it, a new initiative for the Blockchain Defensive Patent License is put forward as a way to counteract the AsicBoost patent monopoly that blocks competition, without jeopardizing the pristine protocol. Opportunities for the use of renewable energy are emerging as a way to decentralize mining. The idea is to take the excess capacity from solar and hydro energy production and use them to mine bitcoin.

The darkness of the old world that has yet to be enlightened became tyrannical. As it begins to infiltrate this new P2P network, the call is given for a wider distribution of self-interests to strengthen Bitcoin’s noble architecture. Imagination of computer science inspires us all to align ourselves with incentives coded inside our own DNA and restore the balance of human nature. Each individual’s participation in the development of this technology helps Bitcoin maintain its mathematical precision. By laying the solid foundation upon the virtue of selfishness, blocks of cooperation can be built to further improve the workings of reciprocal altruism.

Facebook has reversed its blanket ban on cryptocurrency ads and will now allow pre-approved crypto businesses to advertise. However, ICOs and binary options will still be prohibited from the platform.

In a published blog post, Facebook Product Management Director Rob Leathern said the company has refined the policy and will now "allow ads that promote cryptocurrency and related content from pre-approved advertisers."

Facebook’s January ban on cryptocurrency ads stemmed from ICO scams and the lack of regulation in the space at the time. The company was heavily criticized for the broadness of its ban which it justified by saying it was “intentionally broad while we work to better detect deceptive and misleading advertising practices.”

Leathern explained why the social network was refining the ban six months after it went into effect. He said Facebook had "looked at the best way to refine this policy — to allow some ads while also working to ensure that they’re safe."

The refined policy from Facebook now requires crypto advertisers to apply to be listed on the platform, so Facebook will be able to scrutinize their eligibility by checking a host of details, including licensing and whether the company is publicly traded. Facebook believes this new policy is only a first step and the company says it will "listen to feedback" from advertisers as well as take time to continue studying the crypto space so it can be revised in due course.

While the reversal of the ban is good news for cryptocurrency firms, the move could give an insight into Facebook's ambition in the space. Earlier this year, the company launched an exploratory blockchain group to study the technology. Heading the group is David Marcus, who used to oversee Facebook Messenger and currently sits on the board of Coinbase.

The reversal comes at a time when rumors are circulating that Facebook may be looking to acquire Coinbase in a buyout, but nothing is concrete for now. If the rumors are substnatiated, Facebook's acquisition of Coinbase would likely give the industry a buff to its legitimacy.