Autor Cointelegraph By Andrew Singer

Will intellectual property issues sidetrack NFT adoption?

Will intellectual property issues sidetrack NFT adoption?

Uverejnil používateľ | júl 18, 2022 |

The rapidly growing but loosely regulated nonfungible token (NFT) industry already touches many areas of human endeavor “from academia to entertainment to medicine, art, and beyond,” wrote recently two United States senators in a letter to the U.S. Patent and Trademark Office (USPTO) and the U.S. Copyright Office. The legislators were requesting a study to explain how this emerging technology fits into the world of intellectual property (IP) rights, including copyrights, trademarks and patents. It is an area that some say is marked by ambiguity and inconsistent application of the law, and sometimes indifference from the courts. “Many feel it is time for Congress to step in and provide the predictability needed for innovation to flourish,” Michael Young, partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, told Cointelegraph.The joint study that senators Patrick Leahy and Thom Tillis requested from the agencies, due June 2023, has as background a recent slew of high-profile lawsuits — Nike v. StockX, Hermès v. MetaBirkins and Miramax v. Quentin Tarantino — that raise some sticky questions about NFT creation, ownership and dissemination.In one case, an NFT was minted — without permission — featuring sneakers with a Nike Swoosh. In another, NFT-related digital images were created of Hermès’ Birkin handbags, covered in fur, not leather, but also unlicensed. In a third, a famed movie director created NFTs from a film he directed but didn’t own. A “wave of litigations has already begun for trademarks and copyrights, and courts are grappling with applying principles crafted long before the NFTs existed,” Anna Naydonov, partner and co-chair with Young of Finnegan’s Blockchain, NFTs, and Other Digital Assets industry group, told Cointelegraph. “The lack of clarity surrounding patent subject matter eligibility for software remains a top concern for NFTs and other crypto-based innovations in both the U.S. and abroad,” said Young. Much the same could be said about trademark and copyright issues, especially the secondary liability of marketplaces like OpenSea, as well as metaverse virtual worlds and similar platforms where copyright infringement can occur, added Naydonov.Still, not all agree that new legislation is needed. Some believe that government intervention in the U.S. and elsewhere would be not only superfluous but could stifle NFT adoption and innovation.Is current law sufficient?The real problem, as Gina Bibby, partner at Withers Bergman LLP, told Cointelegraph, could simply be “a lack of education about what NFT ownership really means.” A key thing that people seem to overlook is that: “Absent a contractual agreement — e.g., smart contract — that expressly includes intellectual property (IP) rights, purchasing an NFT does not convey any copyright, patent or trademark rights or even ownership interests in the physical world asset on which the NFT is based.”Are there, arguably, some false ideas out there about NFT ownership and puzzlement over who can do what? Recent: The regulatory implications of India’s crypto transactions tax“Yes,” Eric Goldman, associate dean for research and professor at Santa Clara University School of Law, told Cointelegraph. “In the offline world, the buyer of a painting or sculpture doesn’t automatically buy the associated copyrights.” That is unless the copyright is separately transferred, the artist or sculptor “can commercialize depictions of the art/sculpture and prevent the chattel owner from doing the same.” Even if the average consumer isn’t always aware of this, the U.S. Copyright Act expressly states:“Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied.”Goldman sees “a lot of erroneous claims” being made these days to the effect that “that owning one piece controls the other,” i.e., the NFT owner controls the IP or the IP owner controls the NFT. People often fail to recognize that, just as in the physical world, a piece of art and the item’s copyright are often owned by two different people, so too “an item of IP and its NFT can and often will be owned by two different people.” Growing pains of a new industry?But, every new technology brings with it novel questions, and maybe the current debate is just another example of technology moving faster than the law. Will regulators and lawmakers struggle to keep pace with changes?“It’s the opposite,” Joshua Fairfield, a professor of law at Washington and Lee University, told Cointelegraph. “The law is already in place and has been for hundreds of years. Property is one of the oldest disciplines of law. There is no reason at all that someone cannot own an NFT like we own cars, houses, stocks, or the money in our bank accounts — after all, each of those property interests is also an entry in a database of who owns what.”The problem here, Fairfield continued, is that intellectual property law grew to overshadow personal property interests online, telling Cointelegraph: “If I own a book, I own the copy, despite the fact that the book contains copyrighted material. But online, I don’t own an e-book because too many courts only recognize the intellectual property interest.”That is beginning to change now, however, as courts recognize that intangible assets like domain names or NFTs are no different from any other kind of personal property interest that we want to own, added Fairfield.In Goldman’s view, the problem here “is similar to the issues about domain name ownership we wrestled with a quarter-century ago.” A domain name can be a piece of personal property even if it’s not protected by trademarks, he said, predicting that “the non-IP rules developed to protect those domain name owners will help resolve NFT ownership disputes.”Bibby, for her part, doesn’t agree that intellectual property law has grown to overshadow personal property interests online. “When intellectual property laws are applied in a thoughtful and measured way, other interests including personal property interests are likely to be respected.”Confusion along these lines isn’t restricted to NFTs, of course. A decentralized autonomous organization (DAO), SpiceDAO, recently paid over $3 million at auction for the unpublished manuscript for the Dune film, intending to make an animated limited series about the book for a streaming service. We won the auction for €2.66M. Now our mission is to:1. Make the book public (to the extent permitted by law) 2. Produce an original animated limited series inspired by the book and sell it to a streaming service3. Support derivative projects from the community pic.twitter.com/g4QnF6YZBp— Spice DAO (@TheSpiceDAO) January 15, 2022Then it learned, too late, that in the U.S. and Europe, buying a manuscript of creative work does not grant the buyer its copyright too. SpiceDAO was ridiculed on Twitter, among other places, for its oversight. As Andrew Rossow, a technology attorney and Ohio law professor, told Cointelegraph in February:“The Spice DAO and Dune fiasco was a landmark in its own right that sends a very powerful message to everyone involved in the NFT space — creator or owner. The $3-million mistake that was made proved that intellectual property’s dominion in digital fine art is essential to its success and longevity.”Asked about needed clarifications, whether through laws or other means, Fairfield answered that people need to know the owner of an NFT owns the copy of the photograph or artwork, “just like we own a car or a painting or a book, and can sell it and capture its rise in value regardless of attempted restrictions hidden in license agreements.” “Right now, when people put millions of dollars into an NFT, they’re being told they don’t even own the right to capture the rise in value. That makes investment unsustainable,” he said. What is needed is “recognition that ownership of an NFT is an ordinary everyday ownership of personal property,” added Fairfield, further explaining:“It means NFTs pass to heirs after death. If an NFT is stolen, the owner can go to court to get it back. If an NFT is damaged or destroyed the owner can get its value from the person who did it. An owner knows that they will be able to capture the rise in value of the NFT if it turns out to be a good investment.”Rising fraud could prompt a crackdownSome believe that there are risks if governments get too aggressive with regulatory and legislative reforms in emerging technologies. “Government intervention into new technological arenas always creates a risk of misregulation that harms or hinders the development, especially when the technology is rapidly evolving or the government regulators don’t understand the technology,” noted Goldman. But, the status quo may not be sustainable here because at present, “NFTs are being used to perpetrate consumer fraud,” added Goldman. “When the fraud numbers are large enough, the government must intervene to protect consumers.”This, in turn, could lead to over-regulation. “Unfortunately, the fraudulent angles of NFTs have a real risk of overshadowing the activities of the legitimate NFT players. The legitimate players are potentially going to be hurt by government crackdowns even though they were doing the right thing all along,” Goldman said. Recent: Burdensome but not a threat: How new EU law can affect stablecoins“Such risks always exist, which is why intellectual property and marketing lawyers in this space hope that the U.S. Patent and Trademark Office, the U.S. Copyright Office, the Federal Trade Commission and/or legislators work closely with key industry stakeholders to understand the main legal challenges and the technology behind NFTs, and come up with workable solutions,” said Young. Naydonov added that “regulation and legislation without input from the industry could set the U.S. back as compared with other jurisdictions.” “People need to be educated”Bibby, however, sees no need for wholesale legal reform. What is required instead is “a discussion about what we currently know about NFT ownership,” she told Cointelegraph. People need to be educated and understand that a basic NFT purchase brings with it no copyright, trademark or patent rights — unless express language declares otherwise. She added:“Throughout modern history, laws have been tested by innovation and survived. The U.S. Constitution is a perfect example. The real need is to understand how existing intellectual property laws apply to recent innovations like virtual assets, including NFTs, virtual goods and the like.”Moreover, decisions in several pending court cases, including Nike v. StockX and Hermès v. MetaBirkins, will probably be sufficient to “resolve many of these outstanding questions,” Bibby told Cointelegraph.Meanwhile, the senators gave the USPTO and Copyright Office until June 9, 2023, to complete their study, but given the breathtaking speed at which NFTs and digital assets are being created and disseminated, the market itself might provide some answers before the agencies’ joint work ever sees the light of day.

Čítaj viac
Tether fortifies its reserves: Will it silence critics, mollify investors?

Tether fortifies its reserves: Will it silence critics, mollify investors?

Uverejnil používateľ | júl 11, 2022 |

There is an old Arabic proverb: “The dogs bark, but the caravan moves on.” It could summarize the journey to date of Tether (USDT), the world’s largest stablecoin. Tether has been embroiled in legal and financial wrangling through much of its short history. There have been lawsuits over alleged market manipulation, charges by the New York State attorney general that Tether lied about its reserves — costing the firm $18.5 million in fines in 2021 — and this year, questions voiced by United States Treasury Secretary Janet Yellen as to whether USDT could maintain its peg to the U.S. dollar. More recently, investment short sellers “have been ramping up their bets against Tether,” the Wall Street Journal reported on June 27. But, Tether has weathered all those storms and seems to keep moving on — like the proverbial caravan. On July 1, the company announced that it had dramatically reduced the amount of commercial paper in its reserves, which has been a sore point with critics for some time.Embracing U.S. Treasury reserves?Tether’s commercial paper reserves are expected to reach a new low of $3.5 billion by the end of July, down from $24.2 billion at the end of 2021. The company added that its “goal remains to bring the figure down to zero.” Many stablecoins like Tether are stand-ins for the U.S. dollar, and they are supposed to be backed 1:1 by liquid assets like cash and U.S. Treasury bills. But, historically, as much as half of USDT’s reserves were in commercial paper, which is generally seen as less secure and more illiquid than Treasuries. Hence, the potential significance of the commercial paper statement.It raises questions too. On the positive side, does it signal a new maturity on the part of Tether, embracing more of a leadership position in favor of “increased transparency for the stablecoin industry,” as the company declared in its announcement? Or is this rather just more distraction and obfuscation, as some believe, given that Tether continues to avoid a more intensive, intrusive and comprehensive audit, in favor of a more limited “attestation” with regard to the firm’s reserves? Is it telling, too, that Tether’s “independent accountant reports” are issued by a small Cayman Islands-based accounting firm rather than a Big Four audit group? Finally, what if the short sellers are right and there is less to Tether’s collateral than meets the eye? What would happen to the crypto and blockchain sector if USDT, like TerraUSD Classic (USTC) two months earlier, were to lose its peg to the United States dollar and collapse? Why commercial paper mattersHistorically, “The market’s concern about Tether’s commercial paper is that Tether would not disclose what paper they were holding,” Bruce Mizrach, professor of economics at Rutgers University, told Cointelegraph. There can be large variations in the creditworthiness of commercial paper. This may be more of an issue now because “some short sellers say they believe that most of Tether’s commercial-paper holdings are backed by debt-ridden Chinese property developers,” the Wall Street Journal reported, a charge that Tether has strenuously denied.For that reason, this latest announcement in which the company declared that “U.S. treasuries will now make up an even larger percentage of Tether’s reserves” than commercial paper and certificates of deposit share “could be reassuring to investors,” Mizrach said. In its accountant’s March 31 report “To the Board of Directors and Management of Tether Holdings Limited,” U.S. Treasury bill reserves were $39.2 billion, almost double the $20.1 billion from “commercial paper and certificates of deposit.”On the other hand, Tether’s stablecoin circulation could be trending downward as a result of the crypto sector’s continued slump. If that is the case, “there will be fewer Tether in circulation and therefore less reserves needed as a result of the decline in value and volume of Bitcoin and other crypto transactions,” Francine McKenna, faculty lecturer at the Wharton School and publisher of The Dig newsletter, told Cointelegraph. Is Tether really turning over a new leaf then? “Changes in the composition of reserves does nothing to change the modus operandi of Tether,” Martin Walker, director of banking and finance at the Center for Evidence-Based Management, told Cointelegraph. It remains an unregulated entity that is economically equivalent to a money market fund or a bank. “Regulators really should look to regulate economically equivalent activities on the same basis, whether crypto related or not.”Martin wasn’t particularly impressed by the Tether’s May 18 attestation, either, i.e., its Independent Accountant’s Report signed by MHA Cayman, a small firm based in the Cayman Islands, which noted: “We considered and obtained an understanding of internal controls relevant to the preparation of the CRR [Consolidated Reserves Report] in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of such internal controls. Accordingly, no such opinion is expressed.”Recent: A brief history of Bitcoin crashes and bear markets: 2009–2022Attestations of this sort, Martin said, are limited to checking the composition of reserves at a given moment in time — in the case, cataloging USDT’s reserves on March 31, 2022 — but “to get real assurance” an audit firm must be allowed to go deeper, examining the process by which reports are generated, said Martin. “The March statement from MHA Cayman explicitly said they had no opinion on the controls in place on generating reports,” a significant omission, he told Cointelegraph.Meanwhile, investors have been placing bets against Tether for the past year, and the pace has quickened since the May collapse of TerraUSD, the algorithmic stablecoin, with more hedge funds joining the shorts, according to the Wall Street Journal. USDT briefly lost its peg to USD during the Terra fiasco, falling to $0.95 before fully recovering. Big Four Audit: An effective solution?Recently, John Reed Stark, an SEC lawyer for 18 years, suggested on Twitter that a “fast/effective/guaranteed way” way for Tether to quell short sellers would be to “Engage a Big 4 accounting firm to conduct an audit which finds a rock-solid balance sheet.” “It’s such an easy thing to solve,” Stark, president at John Reed Stark Consulting LLC and former chief of the SEC’s Office of Internet Enforcement, later explained to Cointelegraph. Moreover, it’s “laughable” that a company with Tether’s market capitalization — $66 billion on July 10, according to CoinMarketCap — is using a small audit firm in the Cayman Islands for its “attestation(s),” which by the way, are no substitute for an audit, in his view.A Big Four audit carries some weight with the SEC, and many larger companies “want to be audited by a Big Four firm,” because it makes their enterprise more attractive to investors and others. In the case of Tether’s reserves, “we don’t know what the assets are,” added Stark. One source suggested that a Big Four firm may not want to take on Tether as a client given its controversy and opaqueness, but “I think they would take the engagement,” commented Stark. But, if they did refuse, that in itself would be a red flag, a sign that “the company was really in trouble,” he said. McKenna doesn’t believe that a giant accounting group would make a meaningful difference now, however. “It really does not matter which firm signs the opinion since it is not an audit but a validation of information that is based on management representations.” The accounting firm is limited to the information that Tether is sharing with it, in other words — and it doesn’t really matter under such circumstances whether the accounting firm is small or large.Along these lines, a smaller accounting firm “could do a great job on a fuller scope audit if its partner had integrity and insists that no value is delivered by just checking a discrete balance against management’s reports on one day at the end of each quarter and then delivering that report 90 days later.” Kudos for surviving the drawdown?In its May 19 statement, Tether noted that it had “maintained its stability through multiple black swan events and highly volatile market conditions” and has “never once failed to honor a redemption request from any of its verified customers.” Shouldn’t the firm be praised for the resilience shown during the recent crypto market plunge and others before?“Tether has responded to the digital asset crisis by shrinking supply by over $15 billion,” said Mizrach. “They appear to be trying to make their collateral more liquid. Both are reasonable steps to take in a crisis.”McKenna, by contrast, can’t quite see lauding a firm for simply honoring its withdrawal requests. This is just “the minimum expected by customers who trust a broker to execute its trades, custody its assets on account and honor its requests to transfer funds on a timely basis,” she said. “You shouldn’t expect applause for not being exploitative, fraudulent, or not yet bankrupt.”Elsewhere, Tether has been losing ground to its closest competitor, USD Coin (USDC), and it was recently reported that USDC may be “on track to topple Tether USDT as the top stablecoin in 2022.” USDC’s market capitalization has increased by 8.27% since May, while USDT’s has plummeted more than 19%.It sometimes seems that all the powers that be are arrayed against Tether, yet the stablecoin remains popular in many parts of the world, including Asia, especially among those without bank accounts or access to USD. “I wonder what the average Lebanese or Nigerian who relies on Tether as a dollar instrument would think of these super-rich short sellers who are trying to destroy it for their own financial gain,” tweeted Alex Gladstein, chief strategy officer at the Human Rights Foundation.The company, for its part, appears to view itself as a responsible leader of the stablecoin movement. Its July 1 announcement carried the assertion that the company’s recent move “Solidifies Its Position As The Most Transparent Stablecoin” — though perhaps the firm is over-reaching here? Mizrach told Cointelegraph:“When Tether — or any other stablecoin — provides a CUSIP level detail of their collateral and domiciles the assets in an FDIC insured institution, they might be able to make this claim.” A Committee on Uniform Securities Identification Procedures (CUSIP) number is a unique identification number assigned to stocks and registered bonds, and CUSIPs would provide granular detail about the reserves backing the USDT’s stablecoin. Recent: NFTs become physical experiences as brands offer in-store mintingAsked if Tether has reformed itself, former SEC lawyer Stark said it is generally not good practice to take a company’s word alone on anything: “Trust but verify is the operative phrase here.” Or, as he put it on June 28, “Without a proper audit, everything else Tether’s CFO says is just noise.”“It always comes back to life”In the unfortunate event that Tether does implode — as some critics anticipate, but which is mere speculation at this point — what would that mean for the larger crypto and blockchain industry? According to Martin:“The collapse of Tether would have a pretty devastating effect, but the crypto industry is a bit like the villain in slasher movies. It always comes back to life in the sequel no matter how it gets destroyed.”“Tether is critical for maintaining any confidence in the cryptocurrency and blockchain sector,” said McKenna. “If Tether collapses, I would venture that it’s all over but the whining and lots of futile appeals to regulators and courts.”

Čítaj viac
Does the Metaverse need blockchain to ensure widespread adoption?

Does the Metaverse need blockchain to ensure widespread adoption?

Uverejnil používateľ | júl 4, 2022 |

Many assume, too, that blockchain technology will play a key role in the Metaverse, along with other emerging technologies such as artificial intelligence (AI) and virtual reality (VR). But, is the use of blockchain really a foregone conclusion?Stanford University professor Jeremy Bailenson recently moderated a World Economic Forum panel with some of the world’s leading thinkers of the Metaverse and blockchain. “The first question posed to the panel was ‘Do we need the blockchain for the metaverse?’” Bailenson, founder of Stanford’s Virtual Human Interaction Lab, recounted to Cointelegraph. “The consensus was that the Metaverse could exist without blockchain.” As an example, Bailenson offered up metaverse pioneer Second Life, founded in 2003, which has 70 million current registered accounts and is adding another 350,000 new accounts each month to its online multimedia platform. Second Life has developed “a robust economy where digital assets are bought and sold,” said Bailenson. “The typical GDP of Second Life is about half a billion dollars each year. And, the world runs robustly without using the blockchain.”“Could the next iteration of the internet exist without blockchain technology?” asked Tonya Evans, professor at Penn State University’s Dickinson Law School. “Yes, it could,” she told Cointelegraph. After all, distributed decentralized ledgers and cryptographically-secured assets — including smart contracts — are only one part of Web3 technology, along with AI, 3D printing, VR, augmented reality, the Internet of Things (IoT) and others. Many are thrilled at the prospect of the Metaverse with its virtual worlds that can be used to play online games, but also to train surgeons on 3D organ models and enable students to visit recreated villages in ancient Greece astonishingly brought to life.Exclude it at your perilBut, omitting blockchain technology, while doable, could still be a mistake. “The Metaverse without blockchains would likely just advance the ball for Big Tech,” added Evans, and it would come at the expense of those same people left behind by Web2 — “the very people a truly decentralized web would empower.”Yonatan Raz-Fridman, founder and CEO of SuperSocial — which develops games for the Metaverse — agreed that blockchain technology is not absolutely necessary. “No, you don’t need blockchain to enable the Metaverse,” he told Cointelegraph. There is no a priori reason why avatars can’t be created in 3D and games played with closed platforms, like Second Life’s.But, Web3 is arguably a reaction against the FAMGA companies — Facebook, Apple, Microsoft, Google and Amazon — with their privately-owned platforms, and Raz-Fridman predicted that companies like Meta will have to compromise on the matter of interoperability if they expect to participate. This means allowing avatars to freely travel from one Metaverse project to another — along with all their digital clothes and jewelry. As NYU marketing professor Scott Galloway put it recently: “Why buy clothes if you can’t wear them out of the store? Why buy a Birkin bag if you can’t show it off in the Metaverse?” Consumers are now demanding a Web3/Metaverse more like that depicted in Neal Stephenson’s 1992 novel Snow Crash, added Raz-Fridman, “where everyone owns their digital assets and has the freedom to bring them with them as they move from one place to another.”An artist’s depiction of the Metaverse in Snow Crash. Source: Civort.Interestingly, novelist Stephenson himself is the co-founder of a recently launched metaverse project Lamina1, “that will use blockchain technology to build an ‘open metaverse’ — one that’s open-source and decentralized,” the Washington Post reported. All about people, places and thingsThe Metaverse is an elusive term — various parties define it differently. Most agree, though, that it involves immersive three-dimensional virtual worlds with lots of games and role-playing. Bailenson, for his part, finds it useful to break the Metaverse down into people, places and things. In each of these areas, he sees a potential role for blockchain technology.“People are avatars, the bodies we wear while immersed in the digital world,” he explained to Cointelegraph. Here, blockchain technology can provide the “crypto DNA” that “ensures a one-to-one mapping of person to avatar.” For example, it could be used to guarantee that an individual can’t inhabit ten avatars simultaneously or enable someone else to “take my own avatar for a joy ride.” Added Bailenson:“While an obvious application of blockchain will be to verify clothes and jewelry for an avatar, I have always thought the killer app here is documenting and verifying human animations.”Places, in Bailenson’s conception, are set areas in a grid of a virtual world. For the Metaverse to work, a world “needs to be persistent: it is there, even when you aren’t, and consistent: if you buy a plot of land one kilometer from Snoop Dog, it can’t move farther away based on an arbitrary remapping of the world.” Some platforms are already using blockchain technology to document these maps, he noted.Finally, the most obvious application of blockchain technology is in Bailenson’s realm of things, which includes three-dimensional models, two-dimensional images, sound files “or any digital asset that can be housed within a virtual world.” Blockchain technology can be used to verify transactions “without a centralized body overseeing the transaction” and also ensure “that items have unique value based on the supply — one can’t just make thousands of copies to counterfeit an asset.”A need for interoperability?As things stand now, major Metaverse players and/or contenders — including Sandbox, Decentraland and the FAMGA companies — “offer very little interchange between their web platforms and other platforms,” Lik-Hang Lee, assistant professor at the Korea Advanced Institute of Science and Technology, told Cointelegraph. This lack of interoperability, characteristic of Web2, is a shortcoming that needs to be addressed if the Metaverse is to reach its full potential. This includes, at a minimum, the following elements, according to Lee:Anyone should be able to build a virtual world that can link to the rest of the Metaverse;Any device or browser should be able to access the Metaverse provided it meets with certain predetermined specifications;Ownership of digital assets should be recorded and preserved across multiple servers and clients;A single avatar should be able to communicate with avatars on other servers;People should have the ability to produce, show, buy and sell their digital assets within the Metaverse.“In light of the growing number of metaverse initiatives that are incompatible with one another, it is more important than ever to build standardizing organisms,” Lee told Cointelegraph.Interoperability may not come easily, however. Meta, Google and others “will fight hard not to lose their dominance,” said Raz-Fridman. It may also take time for the public to understand just what is entailed in a user-owned internet, but when they do, “consumers will demand to be more in control.” FAMGA companies will have no choice at that point but to yield, at least somewhat, on interoperability. Raz-Fridman was asked why crypto people, in particular, seem to be so interested in the Metaverse. Is it because they think it will potentially boost cryptocurrency adoption? “If you look at it historically, there has always been a struggle over the narrative — different versions of what the world should look like,” he answered.At one extreme are the crypto maximalists who envision a decentralized, blockchain-based and open-source world where people own and control their data and digital assets. Raz-Fridman has sympathy for this position, but ultimately he doesn’t think it will prevail, overall, at least. Facebook, Google and others “own a large piece of economic activity over the internet, and they won’t be toppled overnight.” By the same token, the continuance of private, closed platforms isn’t realistic either. In the short-term, one might expect a sort of “clash of civilizations” between the two visions, continued Raz-Fridman, with an eventual middle ground emerging as consumers themselves decide the extent to which the Metaverse is decentralized. Meanwhile, as the Metaverse further evolves, Bailenson expects to see lots of gratuitous uses of blockchain technology “where the technology works, but is not essential.” As more time passes, though, “there will emerge a set of killer apps where blockchain is the only way to do the job right,” Bailenson told Cointelegraph. All in all, a Metaverse without blockchain is both thinkable and doable. But, “if the goal is the democratization of the Internet, not to mention accessibility, transparency, composability and platform interoperability,” Evans said, “then the Metaverse must include blockchain.”

Čítaj viac
Uganda’s gold discovery: What it could mean for crypto

Uganda’s gold discovery: What it could mean for crypto

Uverejnil používateľ | jún 24, 2022 |

These are fraught times for the cryptocurrency and blockchain sector, so it isn’t surprising that industry proponents might seize upon any promising news to help charge flagging markets. A Reuters report out of Uganda last week about a massive gold ore discovery supplied just this kind of fuel.What does the state of gold mining in Africa have to do with the price of global Bitcoin (BTC)? Quite a bit, potentially.Bitcoin has periodically laid claim to being digital gold largely on the strength of its strict 21 million supply limit, which makes it non-inflationary and a good store of value — in theory. Gold, of course, is the store of value par excellence, with a limited supply and a solid track record that goes back millennia.But, if Uganda is sitting on 31 million metric tons of gold ore, as the government declared, might not that substantially boost the world’s gold supply? That in turn could lower the price of gold — and make it a less secure “store of value” generally. Gold’s loss could be the cryptocurrency’s gain.Some drew encouragement from this notion. Microstrategies CEO Michael Saylor, for instance, posted a video on Twitter about the Ugandan discovery of “huge gold deposits” which might net 320,158 metric tons of refined gold “valued at $12.8 trillion.” As Saylor noted on June 17: “#Gold is plentiful. #Bitcoin is scarce,” further telling CNBC:“Every commodity in the world has looked good in a hyperinflationary environment, but the dirty secret is you can make more oil, you can make more silver, you can make more gold […] Bitcoin’s the only thing that looks like a commodity that is scarce and capped.”But, perhaps there is less here than meets the eye. The 320,158 metric tons of refined gold that the Ugandan mining ministry spokesman said could be produced from the new deposits in the country’s northeastern corner would far exceed the 200,000 metric tons in above-ground gold that exist in the entire world today. One gold mining trade publication went so far as to suggest the Ugandan government may have been confusing metric tons with ounces in its projections. Recent: How blockchain can open up energy markets: EU DLT expert explainsThe World Gold Council was asked for comment about the Uganda discovery and the plausibility of its numbers. The Council doesn’t typically comment on media reports of gold discoveries, a spokesperson told Cointelgraph, but added:“In the absence of formal ore reserve/resource declarations, we would not expect these ‘discoveries’ to contribute materially to mine supply in the foreseeable future.”But, to the larger issue, Saylor may have a point. The fact is that more gold can always be mined, whether in Uganda or somewhere else, especially with advances in surveying and mining technologies, including aerial exploration. And, if so, doesn’t this make Bitcoin, with its strict 21 million BTC limit, look non-inflationary by comparison — and a potentially better store of value?Garrick Hileman, head of research at Blockchain.com, told Cointelegraph:“The Ugandan find underscores why the approximately 200 million holders of Bitcoin believe that ‘digital gold’ — Bitcoin — is superior to actual gold in terms of its scarcity and reliability as a store of value in the decades to come.”As was the case with other major gold discoveries in history, like the 19th century South African gold rush, the introduction of this much new gold — or even just growing awareness of the Ugandan find — “could have significant negative price implications for gold over the coming years,” Hileman said. Not all agree with this assessment, however. “People label Bitcoin as ‘digital gold’ because it was considered a hedging asset, especially against the stock market. This has not been true at least for the last three years,” Eshwar Venugopal, assistant professor in the department of finance at the University of Central Florida, told Cointelegraph. The increasing participation of institutional investors means BTC is now more correlated with risky assets like equities, whereas a store-of-value instrument should be uncorrelated with the stock market. Added Venugopal:“When institutional investors enter such markets, their usual trading stop-loss limits apply and assets in their portfolio and by extension the market become positively correlated with each other. The fact that Bitcoin is bought and sold just like any other risky asset undermines the ‘digital gold’ tag given to it.”In point of fact, “it is clear that the majority of investors do not see Bitcoin as digital gold yet,” Ferdinando Ametrano, founder and CEO of CheckSig — and a founder of the Digital Gold Institute — told Cointelegraph. Rwenzori mountains in Uganda.Meanwhile, Bitcoin is not governed by any entity or a third party and hence is subject to price swings purely based on how the market prices it, Vijay Ayyar, vice president of corporate development and International at Luno, told Cointelegraph. This means that it probably has to go through a significant maturation before it ever becomes “digital gold.” As Ayyar further explained: “Any new monetary asset undergoes a process of monetization through which it becomes more widely regarded as a store of value as a first step. This process could take another 5–10 years even. Gold has been around for thousands of years. Hence, while Bitcoin has all the properties of potentially replacing gold, this may still take some time.” The Bitcoin network has been in operation for a little more than 10 years and market penetration is still less than 1% globally, Ayyer added — though others believe global adoption rates are higher. In any event, “Bitcoin penetration needs to get higher levels as a first step.”Are the numbers plausible?As mentioned, the numbers put out by the Ugandan mining ministry drew some skepticism. Generally speaking, gold has survived as a store of value over the millennia because it is durable, scarce and difficult to mine. A great deal of gold ore is required to produce a single gram of refined gold.Typically, a high-quality underground gold mine will yield 8 to 10 grams of refined gold per metric ton of gold ore, according to the World Gold Council, while a marginal quality mine generates 4 to 6 grams per metric ton. If one settles on a rough average of 7 grams of refined gold per metric ton of gold ore, this means Uganda’s mines will generate about 217 metric ton of refined gold, a far cry from the 320,158 metric tons of refined gold that Solomon Muyita, spokesperson from Uganda’s Ministry of Energy and Mineral Development, told Reuters could be produced by the country’s new discovery. The addition of 217 metric tons would raise the world’s stock of “above-ground” refined gold by only about one-tenth of one percent. All this has only an indirect bearing on the Bitcoin “digital gold” question, which Venugopal, among others, acknowledges is a difficult one. As with fiat currencies, “Bitcoin’s value comes from adoption and users’ faith in the system,” he said. Before Bitcoin can be a store of value, it requires a user base comparable to that of a large fiat currency, in his view, adding:“I see Bitcoin becoming a risk asset but not as a ubiquitous store of value because it is volatile, highly inefficient to mint and challenges sovereignty.” In fact, Venugopal views Bitcoin more “as an experiment to show what is possible and spur innovation.” It has accomplished this, but he expects a more “efficient” cryptocurrency to eventually emerge and supplant it, or perhaps a central bank digital currency. Ayyer agrees that BTC’s recent price volatility hasn’t brought it any closer to achieving “digital gold” status. “Bitcoin has never existed under circumstances we’re currently witnessing and hence this is definitely a test for the asset class as a whole.” Recent: Crisis in crypto lending shines light on industry vulnerabilitiesElsewhere, Hileman is more optimistic. Technologically, Bitcoin simply offers more than a commodity like gold can ever deliver in the long run as an SoV. “Algorithmically deterministic supply schedules such as Bitcoin’s hold a big predictability edge over gold.” And predictability is critical for “taming” exchange rate volatility, which must be subdued “for something to evolve from serving as a ‘store of value’ to actual ‘money,’” Hileman said. And, while relatively few people view Bitcoin as a store of value today, things need not remain that way. “At the burst of the dot-com bubble, Amazon lost 90% of its value because most investors did not understand how pervasive e-commerce would become,” commented Ametrano. Blockchain technology may be similarly under-appreciated today, he added, referencing economist Paul Krugman’s 1998 prediction that the internet would prove less relevant than the fax machine. Sometimes intelligent people simply don’t know.

Čítaj viac
Crypto's uses and misuses: Binance-Reuters quarrel raises questions

Crypto's uses and misuses: Binance-Reuters quarrel raises questions

Uverejnil používateľ | jún 17, 2022 |

Crypto exchange Binance has courted controversy almost from its 2017 beginnings, and five years later, the dustups continue. On June 6, the United States Securities and Exchange Commission was reported to be investigating whether Binance Holdings broke U.S. securities rules in launching its digital tokens. Meanwhile, on the same day, Reuters published a scathing 4,700-word “special report” titled “How crypto giant Binance became a hub for hackers, fraudsters and drug traffickers.”Binance almost immediately retorted to Reuters with a blog post of its own, warning about “authors and pundits who cherry pick data, rely on conveniently unverifiable ‘leaks’ from regulators, and feed into the cult of crypto paranoia for fame or financial gain.” For good measure, it published “Our Email Exchange With Reuters” — an extensive list of questions that it had received from Reuters reporters Angus Berwick and Tom Wilson for their special report, along with responses from Binance spokesperson Patrick Hillman.All in all, the donnybrook between two heavyweights from different industries raised some questions not only about Binance — the crypto sector’s largest exchange — but also the global industry, including to what extent is money laundering a crypto sector problem and what does it mean if one of the industry’s top providers is in constant hot water with regulators and investigative journalists? Maybe Binance is being unfairly targeted, but if not, are all cryptocurrency and blockchain players tarred now by the actions of one renegade player? It’s worth recounting that after the report was published, other parties seized upon its findings. New York Times columnist Paul Krugman, for instance, asked in an opinion column what cryptocurrencies as a class were really good for:“OK, criminals seem to find crypto useful; a recent Reuters investigation found that over the past five years the crypto exchange Binance has laundered at least $2.35 billion in illicit funds. But where are the legitimate applications?”Does crypto have a money laundering problem?The $2.35 billion “stemming from hacks, investment frauds and illegal drug sales” from 2017 to 2021 that Reuters identified sounds like a lot of money — but is it really, at least in the context of a $1 trillion industry?Analytics firm Chainalysis looked at all crypto transactions in 2021 and found that only 0.15% involved illicit addresses “despite the raw value of illicit transaction volume reaching its highest level ever.” Moreover, the amount of money laundered globally in one year — not just in the crypto sector — is 2–5% of global GDP, somewhere between $800 billion and $2 trillion, according to the United Nations, which dwarfs cryptoverse activity.Still, maybe that’s not the point. “Let us not forget that, since the early days of Bitcoin, crypto, per se, has had the reputation of being an instrument for money laundering — and rightly so,” Markus Hammer, an attorney and principal at Hammer Execution consulting firm, told Cointelegraph. That is no longer the case. The industry has cleaned up its act remarkably well, in Hammer’s view, with Anti-Money Laundering (AML) measures arguably even more effective now than those in the traditional financial world. Nonetheless, there’s no getting around the fact that “the crypto reputation was a negative one in that sense from the beginning.”Perception matters, and in that regard, Binance hasn’t really helped on the regulatory front. The sometimes-stateless exchange was clearly not an “early adopter” in the compliance sphere, though Hammer wouldn’t go so far as to say Binance hurt the industry’s reputation in any lasting way. It attracted attention, yes, because of its misbehavior, but maybe also because of its size — regulators may have been looking for a big crypto exchange to make an example. Recent: Blockchain’s potential: How AI can change the decentralized ledgerRegarding money laundering, the crypto industry’s “numbers are not large,” Merav Ozair, fintech faculty member at Rutgers Business School, told Cointelegraph, “but we don’t want them to grow either.” Binance is the industry’s largest exchange, “and we want them to have better compliance.” It troubles her that Binance has been one of the last major crypto exchanges to embrace Know Your Customer (KYC) and AML regulations globally — as an industry leader they should be one of the first to set an example. Is Binance responsible for indirect deposits?Binance, for its part, denies it has a money-laundering problem. A pointed disagreement emerged in the published email exchange between Binance and the Reuters journalists on the actual nature of money laundering and the extent to which Binance was being blamed for indirect deposits.“Throughout the questions posed to Binance, Reuters has conflated direct and indirect exposure,” Binance complained to the Reuters journalists, offering up a hypothetical scenario that used a darknet drugs-selling website, Hydra, as an example: “A known Hydra vendor sells something on Hydra and receives 1 BTC to their wallet. They then send this BTC to someone else for any reason, not necessarily illicit. That person then transfers some of that BTC to someone else, who doesn’t know its history. This third person then deposits some of that to their Binance account. Binance now has indirect exposure to Hydra.”Binance contends that it has no KYC/AML responsibilities with regard to Hydra. It can’t control indirect deposits. “This is absolutely true,” Alireza Siadat, partner at law firm Annerton, told Cointelegraph. “The current KYC requirements require the obligated person to run a KYC and an identification when the user is opening an account.” The terms and conditions ask the user only to use the account for his own purposes and not on behalf of third persons. “But, the law is not asking to verify whether the person who opened the account is the same one using the account and doing the transaction.” Still, an exchange might do more, suggested Ozair. Illicit funds may come to an exchange indirectly, from Person A to Person B, C and D, and yes, the exchange is responsible for checking out Person D who is actually opening the new account — and not A, B and C. But, it should still keep its antennae attuned when dealing with person D. Is that person coming from a suspicious region or an IP address known to be associated with bad actors? Is a crypto mixer potentially involved? “There are ways to understand,” said Ozair. The privacy coin conundrumA sizable slice of the considerable email exchange between Binance and Reuters was devoted to a single cryptocurrency, Monero (XMR), a so-called privacy coin that Binance has supported on its exchange since 2017. It’s the view of many law enforcement agencies that the almost-total anonymity offered by Monero and other privacy coins makes them useful for money laundering, and for that reason some countries have banned them and other crypto exchanges won’t support them. Monero can’t be traded on Coinbase or Gemini, for example.Reuters, for its part, scoured darknet forums for evidence that these fears were justified and found that “over 20 users wrote about buying Monero on Binance to purchase illegal drugs,” according to its report. And, it included one user who wrote that “XMR is essential to anyone buying drugs on the Dark web.” A diagram of ring signatures used in privacy coins like Monero. Source: StackExchangeReuters asked Binance a half-dozen written questions mentioning Monero specifically. Binance chose not to answer most of these specifically, but did reply more generally that “There are many legitimate reasons why users require privacy — for example when NGOs and opposition groups in authoritarian regimes are denied safe access to funds.” It also added elsewhere that it, Binance, stood “against anyone who uses crypto, blockchain technology, or cash to buy or sell illegal drugs.”The privacy question is one that crypto exchanges continue to struggle with. According to Ozair, there’s always a fine line between maintaining privacy and enabling illicit transactions, “and the ecosystem is working hard to account for it,” while Hammer noted in passing that “the continued acceptance of Binance to accept privacy coins like Monero speaks for itself.” It should be emphasized that the Reuters’s XMR findings were anecdotal, not definitive proof of wrongdoing. Incremental improvement?Elsewhere, some see evidence that Binance is finally getting serious about compliance. “Over the past 8 months, Binance has increased its efforts to become AML compliant on a global level,” Siadat told Cointelegrph. “In France, Binance just recently successfully registered as a digital assets service provider.” This is an AML registration, also known as virtual asset service provider registration, he explained, where an applicant must demonstrate full transparency with regard to its corporate structure and thorough compliance with AML requirements. “Binance is also currently aiming to become fully regulated in Germany,” added Siadat, who believes the exchange deliberately chose jurisdictions with strong regulatory environments like France and Germany “to demonstrate to the global regulators that it is prepared to comply with FATF recommendations and global AML rules.”It has been adding staff too. In August 2021, it hired former United States Treasury criminal investigator Greg Monahan as its global money laundering reporting officer, while in May, it brought on Joshua Eaton, a former California federal prosecutor, as its first deputy general counsel. Hammer noted that the company’s problem might be more fundamental, though: Its platform and business model, as originally devised, were meant to bypass the incumbent finance industry. “They overlooked, though, that their platform was still clearly centralized, providing fiat-ramps inter alia.” These fiat ramps meant that regulatory oversight was bound to come “sooner or later.” Changing such infrastructure, business model and corporate culture in a short period of time will be very difficult to do, he said, “even with deep pockets” and the hiring of a team of experts.Where are the rightful use cases?What about economist Krugman’s larger question with regard to cryptocurrencies? “Where are the legitimate applications?” Is it fair to ask such a question a dozen or so years after Bitcoin’s appearance?“I cannot understand why some respected economists make sweeping and misleading statements about the lack of legitimate applications of cryptocurrencies,” Carol Alexander, professor of finance at the University of Sussex, told Cointelegraph. After all:“Ether is essential for the functioning of Ethereum, as DOT is to Polkadot and SOL is to Solana, etc. These layer-1 blockchains already underpin the proper functioning of our internet and without them, vast swathes of the global economy would simply collapse.”“Nonfungible tokens are also here to stay,” she added, and many will serve useful public purposes. “Recording ownership of real assets like paintings and music as smart contracts on public blockchains actually prevents fraud and allows artists to get proper royalties. Smart contracts also stop black markets for concert and sports tickets completely, and the token economy allows start-ups to have better access to crowdfunding now than ever before.”Recent: Regulations and exchange delistings put future of private cryptocurrencies in doubtCritics like Krugman “do not understand the logic behind the distributed ledger technology and blockchain,” tools that provide trust and full transparency if used correctly, said Siadat, adding: “In fact, the Financial Action Task Force recommended using DLT for digital identities and then using digital Identities for KYC purposes. Once a digital identity is verified by the blockchain, institutions may use/leverage existing KYC information without running their own KYC.”Meanwhile, Bitcoin (BTC) remains a “highly effective P2P payment system, which grants payment services to the unbanked population,” added Hammer, a sentiment that Ozair shared. “We need to go back to the roots, where it started,” said Ozair, referring to Satoshi Nakamoto’s original white paper that heralded in the crypto age. What Satoshi was proposing was just a digital payments network — “a system run by people for people.” Perhaps that should serve as a touchpoint now.

Čítaj viac

Získaj BONUS 8 € v Bitcoinoch

nakup bitcoin z karty

Registrácia Binance

Burza Binance

Aktuálne kurzy