Month: January 2018

The quick read: Blockchain, the large British cryptowallet, entered the U.S. market late last week. As of now, American customers can only sell bitcoin using Blockchain. Buying bitcoin will become an option in the future. Blockchain’s British customers can buy and sell bitcoin. (CNBC)

The key facts: Cryptowallets have had a rough go of it on the customer service front and Blockchain is trying to capitalize on the frustration.

Given that backdrop, Peter Smith, CEO of Blockchain, said it’s better to start with just offering a sell service as it helps to control the launch in the U.S. and make sure people have a good experience. “If we are prioritizing short-term gains, we would prioritize buy — that is what most people have done. But it’s really time to make sure we nail that experience,” Smith told CNBC in an interview ahead of the launch announcement. (CNBC)

The bottom line: Competition will eventually create a better customer experience for cryptocurrency customers. That better customer experience is critical for the long-term viability of the industry.

It usually takes the law several years to catch up to any new technology (if it catches up at all). The same will happen for blockchain technology, which is designed to challenge many of the normal business and legal paradigms. The folks at Above the Law have identified three key legal issues created by blockchain technology — data privacy, jurisdiction and dispute resolution and regulatory risk.

Cross border issues are at the heart of the data privacy and jurisdictional issues. Whose laws apply when a transaction crosses boundaries (which is one of the points of blockchain)? Will U.S. laws reign supreme or will EU laws dictate privacy rules. Whose laws will apply over a smart contract? Who gets jurisdiction?

And of course, nobody know what regulations surrounding cryptocurrencies and other blockchain issues will look like.

Smart take: Anytime you deal with technology that crosses borders easily and efficiently, legal challenges are sure to follow. Ideally, governments would get together to create policy and agreements addressing these issues. But given the current state of politics in the U.S. and the complete breakdown of multilateral negotiations between the U.S. and other nations, that meeting of the minds is quite unlikely.

The quick read: Virtual and mobile games are a big business. So it’s natural that game developers are turning to blockchain to create new business and game concepts. But the use of blockchain technology could create some legal problems by turning social gaming into online gambling. (Bloomberg Law)

The facts: The key argument is whether virtual coins, pets, swords or anything else used as a prize has value. If it doesn’t have value, then there is no risk of running afoul of gambling laws. If it does have value, the legal equation changes. The tricky thing about blockchain technology is it can create value by allowing markets to form where they previously couldn’t. So players can sell those virtual pets or coins they’ve been making/collecting.

With other games a sword may only exist within the four corners of the screen, but blockchain enables players to own and trade those items long after the game is gone, Ari Scharg, a partner at Edelson PC and co-chair of the Illinois Blockchain and Distributed Ledgers Task Force, told Bloomberg Law. “With blockchain the concept of ownership changes,” Scharg said. (Bloomberg Law)

The bottom line: Blockchain can be used to create all sorts of new business ideas and technological innovations. But in doing so, companies (and their executives) need to beware of unintended consequences — especially legal ones.

The quick read: It was a bad day at the office for cryptocurrencies Tuesday. Bitcoin fell more than 19 percent and traded for below $11,000 for the first time since December while Cboe bitcoin futures fell 20 percent, temporarily halting trading. (CNBC) Ethereum prices dropped by more than 20 percent as well while Ripple prices plunged by a third. (Reuters)

The key facts: Turmoil in South Korea and China are roiling the crypto markets. Concerns about a potential government crackdown on cryptocurrency trading in South Korea are ongoing. China added to the worries this week by signaling new actions against exchange-like services trading cryptocurrencies. (China made cryptocurrency exchanges illegal last year.)

China is escalating its clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter… The government plans to block domestic access to homegrown and offshore platforms that enable centralized trading, the people said, without being more specific about how policy makers define such platforms. (Bloomberg)

The bottom line: Bitcoin and other cryptocurrencies are not immune to market forces — including government actions. With more countries moving to scrutinize crypto markets, future disruptions are likely.

Quick read

So this is a bad look. The North American Bitcoin Conference isn’t accepting bitcoin payments for tickets anymore. The conference takes place in Miami next week. The basic problem is processing bitcoin payments in time to issue tickets is such a pain in the neck that bitcoin can’t really be used for last-minute transactions. (CNBC)

Key facts

The conference organizer, Moe Levin, earlier told Bitcoin.com that his company was working to get bitcoin cash or other digital assets with cheaper fees integrated into the ticketing system. He told the news site: “We wish this was easier, but no ticketing options exist which can handle large volumes of ticket sales, and transaction fees on the Bitcoin blockchain exceed $30 at certain times of the day.” (CNBC)

Bottom line

Bitcoin’s high transaction fees combined with very slow payment-processing times makes it difficult for merchants to rely on it — especially when they’re facing a time or resource crunch. It’s one of the weaknesses of bitcoin. If cryptocurrencies are going to thrive in the future, these problems need to be solved.