Tag Archives: Daniel Cawrey

“Blockchain University” Lays Out The New Narrative

If there was any doubt that “Blockchain” is the flavor of the month, it ended with the splashy announcement of “Blockchain University“.

Looking at the offering, it isn’t all that different from a zillion developer camps, except focused on blockchain instead of Android or iOS or whatever.

The kickoff gives us a good idea of what the narrative is for “the crypto 2.0 segment of the bitcoin community”.  As Daniel Cawrey reports, these guys say the blockchain ” can be used to build everything” and it “is really just not like anything that has happened before. The sky is literally the limit”.


It is somewhat amusing to see that, while most of the world has never heard of Bitcoin and are struggling to grok what it is for, the Chainistas “Bitcoin is over”, let’s get on to the blockchain!

Cryptocurrency Concepts For “The Remittance Problem”

A short note on cryptocurrency approaches to “The Remittance Problem”, which is one of the problems that crypto is supposed to be great for, but has yet to be seen.

One of the key problems is how to prevent a remittance system from becoming a money laundering channel. Existing laws have very strict controls on cross border transfers, and the conventional banking sector implements these “know your customer” laws.

So, if we want to use unaccountable cryptocurrency transfers in this role, what should be done? How can we make a remittance system that is safe for the target users (poor workers and families), and not overrun by mafias and cowboy financiers?

Coindesk juxtaposes two alternative approaches to this challenge, which gives us perspective.

Stan Higgins reports on recent developments from Ripple Labs, who are establishing a network of legal and reputable organizations, connected by their cryptocurrency enabled infrastructure. When you use Ripple, you know that they have vetted their partners, and the nodes of the net take responsibility for the legality and safety of their business

Right next to this item, Daniel Cawrey reports on “How HelloBit Plans to Become the Uber for Global Remittance”. With a deliberate reference to Uber, it is clear that HelloBit isn’t interested in conventional commercial “reputation”. It is an accurate analogy, however because their strategy is exactly Uber’s: offload liability to others.   HelloBit

“leaves the complications of the exchange business to local operators. “We’re just matching the two people for a transaction,” Goss said.”

That sentence may make sense to cryptoenthusiasts, but is it not really a correct interpretation of current money laundering laws?

Like Uber, HelloBit intends to compete on price, presumably intending to undercut Ripple as well as conventional services. Definitely a “disruptive” approach, if not particularly “innovative”.

It will be interesting to see how these play out.

Theoretically, they could end up converging to the same thing, since local institutions could support both HelloBit and Ripple. However, what will really matter is the customer interface and experience. So it all may be down to what the best mobile app is in a given area, and who can connect the people who want to connect.

Bitcoin Startups Break No New Ground

This story is settling in to a pretty boring drumbeat.  What is Bitcoin really useful for?  (Besides extra-legal commerce.)

There is a continuing rain of startups, touting their “innovative” ideas, which aren’t really new, and mostly are pretty similar to each other.  Considering that we have been doing the “money” thing for a long time, with a lot of intense interest, it’s not too surprising if Bitcoin is recapitulating rather than inventing these uses.

Case in point, startups announced at DEMO this week, reported by Daniel Cawrey in Coindesk.

These were:

  • Obsidian – financial engineering to stabilize BTC pricing
  • SmartContract – yet another executable contract thing, relies on external ‘oracle’ services and data streams such as GPS
  • Pavilion – escrow services, replaces current services from, say e-bay
  • HelloBit– cross border money movement, AKA remittances, AKA money laundering

The first is one of many, and is of little concern to ordinary users.  The second is one of many, none of which have demonstrated success, and all of which have deep, fundamental problems.  The third is one of many, and certainly is not needed by regular customers who already get this service from the conventional system. Merchants may like it, but customers won’t care.  The last is yet another stab at cross border transfers, though not aimed at the unbanked.  The business model described in the article almost certainly requires FINCEN compliance in the US, so it may be limited to Latin America for now.

Overall, nothing really new, not even new to Bitcoin.

It’s still the flavor of the month, but it’s getting stale fast.

And we’re all waiting for someone to actually build a successful company.

Cryptocurrency Language: What Does “Centralized” Mean?

In the world of cryptocurrency, everyone agrees that “centralization” is bad, if not “evil”.  Cryptocurrencies are “good” because they are “decentralized”.

But what does “centralized” mean in these arguments?

I have already pointed out that, regardless of whether the blockchain is a “decentralized” technology, actually using a cryptocurrency end-to-end involves much more, and a lot of that “more” is both “trusted” and “centralized”.

But the word “centralized” carries a lot more than purely technical meaning in cryptocurrency “discourse”.  For one thing, “centralized” is often used to denigrate efforts to apply legal regulations of any kind to cryptocurrencies.  In this sense, “centralized” means “someone can tell me what to do”.

The greatest mystery to me is that apparently the “fiat” of unelected bankers and such is evil, but the dictates of anonymous programmers are holy.  Who says there should be a limited supply of Bitcoin?  Nakamoto says.  But that isn’t “centralized” decision making.

Worse, there seems to be a very confusing rehetorical double standard when it comes to commercial interests.  While the dictates of giant companies that don’t support cryptocurrency are “bad” and “centralization”, the dictates of cryptocurrency companies are “good”, no matter how centralized.

As I noted earlier, in a kerfluffle about the policies of a (not especially large) private company, Robocoin was criticized for “centralization”.  (In this case, the beef was about proprietary systems and compliance with legal regulations, not really about network topology.)

This week I read about a very closed system, now called “Mirror”, which basically is trying to replicate all the “virtues” of Wall Street for Bitcoiners.

Now, most of us consider the big banks and even bigger hedge funds to be both centralized and more or less evil.  So how can this Mirror not be OK in Bitcoinland?  I dunno.


Cawley on Bitcoin Businesses

Daniel Cawley writes at Coindesk yet another article about “new businesses” enabled by Bitcoin.  I have commented on earlier discussions of this topic several times.

In this installment, “6 Types of Businesses Bitcoin Will Enable for the First Time“, the biggest news is that the list of “new” ideas hasn’t changed.  We are getting a clearer idea of the near term uses for Bitcoin and blockchains (not that much has been implemented yet).

To be fair, this list is a list of proposed business models, as opposed to use cases or applications.

The list is:

  1. Record-keeping – in a very general sense.  (Finally, recognition that the blockchain is basically a replacement for a database or other store.)
  2. Asset distribution – lightweight securitization of anything, but especially digital assets.  (Actually a variation of #1.)
  3. Wallet technologies – business opportunity to provide decent user software. Very challenging to provide strong security combined with convenience, usable by your grandparents.
  4. Smart contracts – on everyone’s list, probably a superset of #2 above.  Many interesting challenges here.  (ChainPhishing, anyone? BlockVirus?)
  5. Mining – I.e., business opportunities in mining.
  6. Bitcoin support – business opportunities promoting business opportunities….

Overall, this list overlaps with previous lists, and is kind of small bore.  Scarcely disruptive or revolutionary, not even that innovative.  (Take something that uses a database on the Internet.  Substitute a blockchain for that database.  Ta da!  New product.)

However, it is actually good to see these comparatively sensible and reasonable ideas put forward.  Less about reinventing money, more about making a reasonable living.  Good.

Notes On The Splitting Of The Bitcoin Community

Just a quick note on the ongoing fragmentation of “the Bitcoin narrative”, which honestly isn’t a single story anymore.

Perusing Coindesk this week we see the same technology presented in very, very different cultural sagas.

Greenpeace (at least in the US) is going to accept donations in Bitcoin.  In a report in Coindesk, the emphasis is on “independence”, and actually talks as much about their non-corporate payment system as about cryptocurrency per se.

All is light and good, right.

Well we also see the run up to the trial of Ross Ulbricht, accused of operating the infamous Silk Road online market. The charges include various serious crimes involving money laundering, drugs, and arms dealing.  He denies all charges.

Coindesk documents a very strong segment of the Bitcoin community in a “survey”, asking the completely unbiased question, “a number of prominent names in the bitcoin space about whether they think Ulbricht would be widely viewed as a bitcoin martyr or the ultimate cryptocurrency villain if found guilty“.

The answers from this carefully selected group are uniformly fire-breathing, and all think he is a hero and martyr.  Whether you agree with the extremist ideology passed off as fact (and obviously I don’t), the point is that I’m pretty sure that people like Greenpeace and United Way have no interest at all in being part of any community that considers drug trafficing to be ‘peaceful’ commerce.

For that matter, honest companies and banks don’t want to be associated with such a “community”.  (Coindesk has a report about a big VC who claims banks are “worried” about Bitcoin–he’s right, but its not necessarily because they are afraid of virtual money, its as much because they don’t want to have to operate like the mafia.)

Clearly, anyone who is talking about “the Bitcoin community” as if it is a single, monolithic group or culture is just not correct.

This isn’t terribly surprising:  the technology is flexible and designed to be decentralized, so lots of people can use it however they want.  And they can incorporate it in their own stories, for better or worse.

More Sober Assesment of Bitcoin From Coindesk

Daniel Cawrey asks “What Real-World Problems Can Bitcoin Actually Solve Right Now?”  As you’d guess from the title, “today, bitcoin arguably has few compelling arguments for consumers who aren’t early adopters.”  I strongly agree. (It is interesting to find these analyses, not just by Cawrey in Coindesk, amid the enthusiastic tub thumping about cryptocurrencies.)

First of all, even relatively knowlegable people don’t understand Bitcoin or what it might be used for–nor do we really understand currency.  What we understand is how to live our lives and get stuff done.  This usually involves being able to get what we need and want via reasonably predictable and fair processes.  Details of accounting are interesting only to nerds.

Second, just as Eskimos are said to have 100 words for “snow”, Americans (and others) must surely have 100,000 words for “money”.  This is a very, very well developed technology. Did we need yet one more way to buy pizza? Not really.

Anything you can imagine doing with Bitcoin can be done with existing technologies one way or another, and probably several ways in competition.  The ecological niche is not empty, there is an apex forest flourishing there.

Third, and Crawley didn’t really talk about this point, existing technologies have gigantic, energetic, and well funded industries behind them. Not only is Bitcoin invading an occupied niche, the niche is occupied by savage and dangerous predators.

For example, the recent release of Apple’s payment scheme is just as nice for the average Joe as any Bitcoin or other cryptocurrency scheme (except for the fact that Apple is inserting itself between you and everything you do business with).  If Bitcoin threatens Apple’s profits, Apple could well try to crush the upstart technology.

Obviously, if Apple or other systems work for you, you don’t really need Bitcoin, even it if might be slightly better or a tiny bit cheaper.  At least not now.