Futurism

Ethereum Could Challenge Credit Card Companies In “A Couple of Years”

Ethereum Could Challenge Credit Card Companies In “A Couple of Years”

In Brief

Ethereum co-founder Vitalik Buterin believes the blockchain-based platform has the potential to rival financial institutions like Visa in scale. Before it can, however, it needs to increase the speed with which it can process transactions.

Taking on Financial Institutions

Ethereum co-founder Vitalik Buterin is optimistic about the future of his blockchain platform, sharing his predictions during a talk with AngelList founder Naval Ravikant at TechCrunch’s Disrupt SF 2017 event on September 18.

Despite the growing popularity of Ethereum and other technologies like it, a large majority of people still don’t know what blockchain is or what it does. However, once the technology does reach the mainstream, Buterin believes it will be able to take business away from major credit card companies. He sees this shift potentially taking place in the next “couple of years.”

Before Ethereum can compete with the likes of Visa and MasterCard, though, the platform will need to speed up. “Bitcoin is processing a bit less than 3 transactions per second,” Buterin explained to Ravikant. “Ethereum is doing five a second. Uber gives 12 rides a second. It will take a couple of years for the blockchain to replace Visa.”

According to Business Insider, the co-founder said he expects to see low-security financial prototypes revealed within the next year, which may signal the beginning of Ethereum’s ability to disrupt mainstream finance. That said, a few more years will be needed before their effectiveness can be proven.

From Finance to Cloud Computing

Buterin’s thoughts on the capabilities of blockchain extend beyond finance and into the world of cloud computing. While he believes Ethereum has a solid chance at changing the financial world, Buterin is less optimistic about its effect on cloud services, such as Amazon Web Services (AWS).

Those services are often used by private companies to host proprietary content (think Netflix’s data), and convincing them of the security of Ethereum’s decentralized network could be difficult. “In general, there’s always going to be this large set of applications where decentralized approaches don’t work that well,” Buterin said.

Expect Ethereum to continue to be embraced by other corporations, however. In the last two months alone, a Russian airline used Ethereum to issue tickets, and Microsoft released their own Ethereum-based protocol. The platform may not impact every aspect of society, but it’s certainly checking quite a few off the list.

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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True, Bitcoin May Become Corrupt. But Banks Already Are.

True, Bitcoin May Become Corrupt. But Banks Already Are.

In Brief

JP Morgan CEO James Dimon recently leveled several criticisms at bitcoin, calling the cryptocurrency a “fraud.” His and other big banks, however, are regularly fined for corruption, discrimination, and other legal infractions.

Too Big to Fail

The financial crisis of the late 2000s had the potential to cripple the nation. Big banks played a major role in that economic disaster, and many ended up paying fines for facilitating the conditions that lead up to the crash in 2008.

So, when big banking executives start calling cryptocurrencies corrupt schemes, the accusations raise a few eyebrows.

Last week, JP Morgan CEO James Dimon leveled several criticisms at the original cryptocurrency, bitcoin, calling it a “fraud,” saying it’s “just not a real thing,” and claiming that “eventually it will be closed.” While Dimon is not the first to criticize crypto, his assertions are particularly noteworthy given his own company’s past transgressions.

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Image credit: Zach Copley/Flickr

Not only has JP Morgan been fined billions of dollars for their role in the financial crisis, they have also been fined for a slew of other corrupt and illegal practices both before and since. The bank seems particularly susceptible to fines arising from discrimination based on sex and race, the manipulation of key interest rates, and corrupt hiring practices.

JP Morgan isn’t the only bank to do wrong, either. According to Business Insider, between 2012 and 2016, the world’s top 20 banks were hit with nearly $354 billion in misconduct charges. That was an increase of nearly a third compared to the previous five years.

In the United States, this issue is of increasing concern as the current administration is working to undermine (and perhaps even completely repeal) the consumer protections of the Dodd-Frank financial regulation law — an act that established a host of new governmental agencies in response to the financial crisis of 2008. These agencies are tasked with overseeing a number of aspects of the act and, by extension, various aspects of the banking system.

Looking to the Blockchain

Banks rely on centralization and the aggregation of power and authority, which makes their abuse of power all the more alarming. Conversely, cryptocurrencies like bitcoin and ether are decentralized, meaning that the authority and power doesn’t reside in the hands of one executive (or bank). This decentralization has led some economists to believe that bitcoin and ether could be appropriate solutions to some of the problems inherent in our current financial system.

According to a report filed by economists at the Central Bank of Finland, the decentralized Bitcoin network, by its very nature, already effectively regulates itself: “There is no need to regulate it because, as a system, it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts.”

While the future of cryptocurrencies is uncertain, the accusations levied at them by banking executives may say more about the execs than the crypto — do these higher ups truly believe what they are saying or are they members of an unscrupulous industry that’s desperately afraid their era of (relatively) free reign over the economy is coming to an end?

As we consider the future of Bitcoin and other cryptocurrencies, the important thing to keep in mind is that while these systems could eventually become corrupt, many of the big banks critical of them already are.

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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Are Blockchain Tokens Really Nothing More Than “A Scheme?”

Are Blockchain Tokens Really Nothing More Than “A Scheme?”

Opportunity or Trap?

For seemingly every expert making bold claims that cryptocurrencies are the future of finance and are capable of “freeing humanity from tyranny,” there’s another expert decrying the rise of bitcoin and the like as nothing more than an unstable “bubble” built on hype and bound to pop.

Perhaps the strongest criticism levied at crypto companies, however, is that they’re massive scams — that they don’t deliver anything of material value and are intentionally designed to make money for those at the top by taking advantage of those at the bottom.

Case in point: “In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it,” Howard Marks, Co-Chairman of Oaktree Capital Group.

So, who is right? Is crypto a legitimate new type of finance system or a modern take on snake oil, one peddled by supposed tech revolutionaries instead of seedy profiteers? In order to answer this question, it is important to first understand how token launches (sometimes called “ICOs” or “Initial Coin Offerings”) work in relation to IPOs (Initial Public Offerings) — to understand how crypto startups are funded in comparison to other companies.

Understanding the Terms

When a private company decides it wants to start raising funds from the public, it has what’s known as an initial public offering (IPO). For a certain fee, interested investors can purchase shares in the company. Those shares make these investors, by law, part owners in the company and entitled to dividends if the company makes a profit.

The IPO process is typically facilitated by a team of experts — lawyers, accountants, underwriters, etc. — and it is overseen by the Securities and Exchange Commission (SEC), a non-partisan agency of the federal government with two primary objectives:

  • Ensure that the companies raising fund are telling potential investors the truth about their business, including any potential risks to investing
  • Ensure that the people facilitating the process, such as stockbrokers and exchanges, put investors’ interests first and treat them fairly and honestly

To meet these objectives, the SEC will require that a company register before their IPO, submit their financial statements to be audited, and meet a number of other requirements. In theory, the SEC acts as an unbiased third-party in the IPO process, ensuring that everything is aboveboard.

One very important point to note is that basically all brokerage firms require investors to meet some qualifications before they can participate in an IPO. Generally, you have to have a certain amount of money or a set number of transactions, which means that a vast majority of society is not able to participate.
This is the big difference between an IPO and the launch of a new blockchain token — token launches put the power, and the responsibility, in your hands.
Instead of venture funding, many blockchain startups have a token launch or an ICO. It is important to note that many individuals operating in the blockchain space, and other experts, prefer the term “token launch” instead of “ICO.” This is because some blockchain tokens/transactions do not qualify as “investment contracts,” meaning that they are not considered securities, and so the term ICO (given its similarity to IPO) may be confusing.

A Securities Law Framework for Blockchain Tokens” sums the problem with the term ICO, noting that tokens have many different applications and utilities:

There are many different types of blockchain tokens, each with varying characteristics and uses. Some blockchain tokens, like Bitcoin, function as a digital currency. Others can represent a right to tangible assets like gold or real estate. Blockchain tokens can also be used in new protocols and networks to create distributed applications…some tokens, depending on their features, may be subject to U.S. federal or state securities laws.

But, and this is the notable thing, not all tokens will have these features and be subject to security laws. With this in mind, for the purposes of clarity, we will be referring to the launch of a new blockchain token as “token launches.”

As Balaji Srinivasan, board partner at the venture capital firm Andreessen Horowitz, explained in an essay on Medium, the fundraising process that drives some token launches is a bit “like a Kickstarter on steroids.”

To raise funds through a token launch, a company will sell a certain percentage of the total amount of their crypto upfront. Purchasers of these crypto coins are not legally part owners in the company, and they don’t earn dividends if the company prospers. The success of their investment is based on the market value of the coin. In other words, as long as they can sell their cryptocurrency for a value higher than what they paid for it, they can make a profit.

Unlike the IPO process, token launches are unregulated. Companies aren’t required to adhere to a path set forth by the SEC or any other government agency, which means there is no third party ensuring that either side is telling the truth or meeting any certain requirements.

Token launches do tend to follow a certain format, however, and it starts with the company’s founders writing a white paper providing details on their startup. This paper can be any length or format, but it will usually include the company’s strategy and goals, as well as their plans for funding (the amount of money they hope to raise, the per-token cost, the duration of their token launch, etc.). Ideally, these white papers should provide a comprehensive business plan for interested parties.

If the company does not meet their minimum funding goals, the money is returned to the would-be supporters and the token launch is considered unsuccessful.

Risks vs. Rewards

According to one crypto investment expert (who agreed to speak on the condition of anonymity), the token launch process can benefit both investors and innovators looking to get their projects off the ground.

“Token launches allow the broadest amount of participation we have seen yet,” they explained. “They’re a pure way to go from a creator of an idea directly to investors without a large number of middlemen. They allow investors to get in at an earlier level than an IPO. They allow anyone anywhere in the word to easily participate with very low minimum investments.”

In this respect, token launches are all about total participation and democratizing power. Instead of just a few wealthy participants, anyone can participate in a token launch or even host their own token launch, allowing individuals in impoverished areas (or who are faced with other economic or social barriers) to participate in the global economy.

“Crypto is complicated, exciting, and the future.”

Unfortunately, token launches also carry with them several inherent risks due to their unregulated nature.

“With token launches, people are able to raise large amounts of money with very little evidence they can deliver,” the expert noted. This is mostly a matter of supply and demand. Crypto has the potential to deliver high returns, so investors are eager to jump into the market. Unfortunately, the supply of crypto projects isn’t yet enough to meet this demand, which leads to investors who are more willing to take greater risks on companies with less evidence they can deliver on their claims.

“Investors are also willing to accept a longer lag between when they give their money to a token launch and when [the company] builds a product — another example of moving further out the risk spectrum,” they continued. “This dynamic lends itself well to a Ponzi scheme, where a company does a token launch, promises a product in six months, builds nothing, and then uses the money raised to market and execute another token launch two months later.”

Investors in OneCoin know the dangers of investing in crypto startups all too well. Founded by Bulgarian national Rjua Ignatova, the company raised more than $350 million before Ignatova and nearly two dozen of OneCoin’s promoters were arrested for running a fraudulent business.

This, of course, is important to note: Just because token launches are not regulated does not mean that they are held to no standards and are free to do whatever they like. Those who act with malicious intent can still be held accountable, though this is admittedly a long and painstaking process.

After the arrest, Deputy Commissioner of Police (Crime) Tushar Doshi told The Indian Express, “It is clear that this is a Ponzi scheme,” but that fact obviously wasn’t clear to the thousands of investors who put money into the operation. How were they supposed to know where OneCoin landed on legitimate-to-scam spectrum of business models before putting money into it?

The Point: Don’t Invest Blindly

In the end, the expert consensus indicates that, although some cryptocurrencies and token launches are nothing more than schemes, there are a great many projects that are genuine and can (and have) delivered.

Indeed, some major financial institutions are already developing their own cryptocurrencies to ensure that they’re not left behind if the economy does undergo this major transition, and even JP Morgan is looking into ways to incorporate blockchain into their operations.

Furthermore, more than a billion people worldwide don’t have a way to identify themselves, and they can’t open bank accounts and participate in the traditional economy as a result. A cryptocurrency like bitcoin has no such barrier to entry.

With this in mind, according to experts, the best way for investors to ensure they don’t fall victim to the crypto scheme is to do their due diligence. This is the big difference between an IPO and the launch of a new blockchain token — token launches put the power, and the responsibility, in your hands.

So, how do you safeguard yourself?

“Investing in token launches is a really hard business,” the expert asserted. “I’d say the most important things are knowing the team and their business plan. If the team has a history of hopping from one project to the next, they’re probably going to hop on your project. If they can’t explain their business plan in a way that makes sense to you, they probably don’t understand well what they are doing.”

Following this advice could have prevented OneCoin’s many investors from falling victim to the scam, as it raised many red flags online long before arrests were made.

As The Cointelegraph pointed out, Ignatova’s qualification were inconsistent between her resume, personal websites, and OneCoin’s website, and several of the company’s directors had been linked to scam operations in the past. When combined with several other eyebrow-raising factors — the promise of huge returns, constantly moving goal posts, and a refusal to accept payment in crypto — the illegitimacy of the operation seems obvious in hindsight.

Of course, as previously mentioned and as evidenced by cryptocurrencies like bitcoin and ether, not every crypto will be a scam, and some can deliver remarkable returns. Over the course of eight years, bitcoin has increased in value from eight-hundredths of a cent to more than $4,000 per coin. Ether has seen its own value surge over the last year, and Ethereum is now the blockchain technology of choice for some of the world’s biggest tech and finance companies, including Microsoft, JP Morgan, and Intel.

No doubt anyone who bought in when either of those cryptos was in its infancy now thinks the gamble was worth it. As our expert explained, “Crypto is complicated, exciting, and the future,” so as long as investors understand that token launches, by their very nature, are riskier than traditional investments, investing in them can be a potentially rewarding — and highly profitable — experience.


This interview has been slightly edited for clarity and brevity. The term ICO has been changed to “token launch” throughout. 

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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The U.S. is No Longer the World’s Largest Bitcoin Market

The U.S. is No Longer the World’s Largest Bitcoin Market

In Brief

Japan now accounts for roughly half of the global bitcoin exchange market. The country’s share surged over the weekend in response to new Chinese legislation that forces the nation’s crypto exchanges to halt operations over the next several weeks.

Japan has risen above the U.S. in the worldwide rankings for the largest bitcoin exchange market. The country now accounts for roughly 48 percent of the global market share, reaching a high of 51 percent over the weekend.

This is thanks in no small part to the Chinese government’s recent rulings on the cryptocurrency. The nation first issued a ban on initial coin offerings (ICOs) and then requested that exchanges and trading platforms cease operations by the end of September, granting an extension until October 30 for OKCoin and Huobi.

Those deadlines are still weeks away, but traders aren’t waiting around. Many that were previously operating in China have taking their activity to Japan, causing the spike in the nation’s market share — and reducing China’s from 15 percent to less than seven percent in just three days.

It remains to be seen whether Japan’s current position will hold or is a fleeting surge. One Chinese official has claimed that the country’s ban on ICOs is a temporary measure, but the country’s position in the cryptocurrency market might be forever changed if the current situation drags on too long.

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.



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You Can Now Trade “Tokenized” U.S. Dollars on the Ethereum Network

You Can Now Trade “Tokenized” U.S. Dollars on the Ethereum Network

In Brief

Tokenized currency provider Tether and community information hub Ethfinex have announced a partnership that brings new tokenized US dollars to the Ethereum platform. The move is expected to make cryptocurrencies safer, more secure, and easier to use.

Dollars to Tokens

Token currency provider Tether is bringing tokenized USD to Ethereum, the second largest cryptocurrency after Bitcoin. This means that users can turn their regular currency into tokens, which makes using it on the exchange simpler and more predictable.

Tether, in partnership with the Ethereum trading and information community hub Ethfinex, announced the launch of ERC20 Tether tokens on September 11th, allowing tokenized USD to be exchanged on the Ethereum network, and hopefully eliminating the delays people often experienced when dealing with businesses and banks.

“The number of tokens and assets being tokenized on top of the Ethereum platform is growing rapidly, with many proving disruptive to traditional business models,” said Project Lead at Ethfinex Will Harborne. “By enabling all ERC20 compatible applications and protocols to integrate tokenized USD, we expect to see enhanced efficiency and further stability on the Ethereum network.”

After depositing their US dollars, Tether users will see their money converted into a digital currency known as “Tether,” symbolized as “₮.” Each Tether will have a name and symbol attached that represents the asset, which can then be traded or transferred as an aforementioned ERC20 token. In the future, currencies like euros and yen will also be supported.

Following the announcement, TokenCard revealed it will also begin supporting Tether, allowing users to use their tokenized currency just as they would use traditional money with a Token debit card.

Changes to Society

Cryptocurrencies are often seen to be troublesome or too unpredictable to rely on, but Tether and Ethereum’s new endeavor seeks to change that. Ethfinex stated a key part of this new partnership meant developing currencies that could easily be used in everyday scenarios, such as paying bills or salaries.

Click to View Full Infographic

“We believe this development will not only open up the world of cryptocurrencies to more mainstream consumers, but also set the standard, and encourage other companies to be more innovative and accessible in their product and service offering at this pivotal time for money and payments,” said Tether co-founder Craig Sellars.

Aside from cryptocurrencies, blockchains are also changing the world in a number of ways, continuing to show that it can be used for much more than just currency. So far, it has been used to change the way we vote, improve air travel, and may soon impact the entertainment industry. If companies like Tether, Ethfinex, and Ethereum get their way, the way we think and use money could soon be changed forever.

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JPMorgan CEO Says That Bitcoin Is a “Fraud”

JPMorgan CEO Says That Bitcoin Is a “Fraud”

In Brief

JPMorgan Chase CEO James Dimon issued some harsh criticism of bitcoin at a financial conference this week, describing the cryptocurrency as a “fraud” and comparing it to tulip mania. However, even his own company is investigating the blockchain technology supporting this new type of currency.

The New Tulip Bulb?

Bitcoin is a “fraud,” according James Dimon, the chief executive officer of JPMorgan Chase — the largest of the “big four” American banks.
Dimon made this assertion during the Delivering Alpha conference in New York City on Tuesday, and he went on to state that the cryptocurrency is “just not a real thing” and that “eventually it will be closed.”

In an appearance at another event earlier in the day, Dimon compared bitcoin to “tulip mania.” This phrase is something of a shorthand for an economic bubble, a situation where an asset’s price is far higher than its intrinsic value. It originates from a period of time during the Dutch golden age in the 1600s when tulip bulbs prices briefly swelled incredibly high before crashing dramatically.

Dimon said that bitcoin investors are taking a big risk because the cryptocurrency doesn’t have legal support. He went on to state that he would immediately fire any JPMorgan trader who was trading bitcoin, explaining, “It’s against our rules, and they are stupid.”

Banks and Bitcoin

Banks like JPMorgan have a vested interest in keeping bitcoin at bay. If “the flippening” comes to pass — a point at which cryptocurrency overtakes traditional money in terms of usage — banks are going to have to scramble to find their place in the new economic landscape.

Some major financial institutions are already developing their own cryptocurrencies to ensure that they’re not left behind if the economy does undergo this major transition, and even JP Morgan is looking into ways to incorporate blockchain — the technology behind bitcoin and other cryptocurrencies — into their operations.

Furthermore, cryptocurrencies and tulips aren’t particularly comparable as the former offers tangible utility. More than a billion people worldwide don’t have a way to identify themselves, and they can’t open bank accounts and participate in the traditional economy as a result. A cryptocurrency like bitcoin has no such barrier to entry.

While Dimon is clearly skeptical of cryptocurrencies, they are inarguably on the rise right now, and many other experts are predicting further growth. Still, no one knows for sure whether they will be the future of finance.

Because cryptocurrencies aren’t backed by governments, they do carry additional risks, and bitcoin prices could drop just as quickly as they have risen. Alternatively, widespread adoption of crypto could prompt government involvement — signs that this might be about to happen in the U.S. and elsewhere have already emerged. For now, all we can do is wait to see where this upward trend in crypto leads.

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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Economists Assert There Is No Need to Regulate Bitcoin

Economists Assert There Is No Need to Regulate Bitcoin

In Brief

A report written by researchers from the Bank of Finland has concluded that Bitcoin is “revolutionary.” They suggest that Bitcoin cannot be regulated.

Bitcoin Revolution

In what is sure to be a well needed shot in the arm for Bitcoin after a tumultuous few weeks in the cryptocurrency market, economists at the central bank of Finland have released a paper that calls Bitcoin’s economic system “revolutionary.” With the currency operating on a blockchain, the researchers contend that a degree of protection exists to make the system safe from those who wish to manipulate it. The group finds that:

Bitcoin is a monopoly run by a protocol, not by a managing organization. Familiar monopolies are run by managing organizations with discretion to determine and then change prices, offerings and rules. Monopolies are often regulated to prevent or at least mitigate their abuse of power.

The researcher go even further to say that Bitcoin cannot be regulated. “There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts.”

It must be noted that the views expressed in this paper do not represent the official stance of the Bank of Finland.

Image source: Wikimedia Commons

Growing Crypto-Community

Other nations have been joining in on embracing Bitcoin and cryptocurrency. A few weeks ago, Vietnam announced that it will begin the process to legally recognize cryptocurrency by the end of 2018, then adding framework to tax it by 2019. While, not official, this research points that Finland may be headed in a similar direction.

Other nongovernmental experts are also lining up to support cryptocurrencies. Some are even suggesting that crypto could become a valuable supplement for pensions, bringing retirement back to the realm of reality for future seniors.

Of course, how something looks on paper isn’t always how it works out in practice, especially when discussing systems as complex as structuring economies. However, Bitcoin is notable for the progress it has shown thus far. We will remain vigilant to how the cryptomarket grows and the blockchain platform evolves with it.

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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According to Chinese Official, China’s Ban on Initial Coin Offerings is Only Temporary

According to Chinese Official, China’s Ban on Initial Coin Offerings is Only Temporary

In Brief

According to a researcher at a Chinese government-supported research organization, China’s ban on initial coin offerings is temporary. The nation just needs time to develop and implement the appropriate regulations for the fundraising method.

A Temporary Situation

China may account for the lion’s share of bitcoin mining, but that doesn’t mean the nation is blindly in support of all things cryptocurrency-related. Last week, Chinese regulators announced a ban on initial coin offerings (ICOs), the method through which many blockchain-based startups raise funds, citing the potential for ICOs to be used for money laundering or the financing of terrorist organizations.

However, new details have emerged that reveal this ban may not be permanent.

Click to View Full Infographic

The source of these details is Hu Bing, a researcher at the Chinese government-supported Institute of Finance and Banking. During an interview with Chinese television network CCTV-13, Bing explained that last week’s “ban” isn’t actually a ban at all — ICOs have simply been “paused” while the government hashes out the appropriate regulations.

While they consider various policies for ICOs and those investing in them, the government will also consider the potential for an ICO licensing program. This would involve startups securing a license through the Chinese government prior to their ICO, which, in theory, would ensure only legitimate companies are able to use the method to raise funds.

Growing Pains

Knowing that the Chinese government intends for their “ban” on ICOs to be temporary should assuage the fears of those who were concerned it was a sign of trouble ahead for blockchain technology. In fact, this temporary pause is essentially a good omen — one of the world’s most powerful economies is putting in a significant amount of effort to ensure that a solid foundation for the technology is in place. That effort wouldn’t be necessary if they thought it was going to be a passing fad.

All new technologies go through growing pains. Some of those pains may be caused by the tech itself — even Google needed five years to figure out how to make augmented reality (AR) functional in their Glass device. Some may be a matter of figuring out how to best integrate a new technology into current society through laws and regulations — those are the kinds of challenges creators of autonomous driving systems, artificial intelligences, and gene editing are currently facing.

Blockchain is no different. The technology has already shown remarkable potential to change our world for the better, and as more people recognize this potential, more will want to invest in it. By putting policies in place that protect those investors from fraud, nations can ensure that blockchain lives up to its potential for good while minimizing the collateral damage caused by those looking to take advantage of enthusiastic supporters.

Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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Russia is Planning to Legalize Crypto, According to Finance Minister

Russia is Planning to Legalize Crypto, According to Finance Minister

In Brief

The Russian government is reportedly designing a legal framework that would facilitate the approved usage of cryptocurrencies. The proposed legislation is expected to be completed by the end of 2017.

Legalize It

The Russian government is working on a plan to introduce new laws pertaining to cryptocurrencies. Finance minister Anton Siluanov confirmed at the Moscow Financial Forum that new regulation is in the works, but he maintained that these changes will ultimately benefit those who have invested in the crypto market.

“The state understands indeed that crypto-currencies are real,” said Siluanov. “There is no sense in banning them, there is a need to regulate them.”

It’s expected that these regulations will be completely developed by the end of 2017. They’re likely to stipulate that anyone purchasing cryptocurrencies will need to be registered, and offer up a clear delineation of what the government deems acceptable in terms of how funds are bought and circulated.

Siluanov asserted that anyone currently buying cryptocurrency runs a greater risk because there’s no external oversight. He compared an ideal system to the protections offered when buying securities like treasury bonds.

Crypto Control

As cryptocurrency continues to grow in popularity, governments all over the world are attempting to lay down legislation before its seemingly imminent mainstream adoption. Australian authorities have been considering incorporating cryptocurrency, and in the U.S., a bill is expected to be submitted to Congress later this month.

However, it remains to be seen how Russia’s legislation will work in practice. China recently implemented a ban on initial coin offerings (ICOs) which prompted widespread unrest in the cryptocurrency community and potentially caused last week’s trend of double-digit drops.

Chinese authorities have claimed that the ban is temporary and merely a method of introducing the policies required for legal ICOs. But, as it now stands, countries like Russia and China have the potential to majorly affect the value of cryptocurrencies if and when they enforce new legislation. So, as investors closely track the progress of legal frameworks, it will be interesting to see how government involvement affects the future of cryptocurrencies.

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