Blockchain Success Doesn’t Depend On Regulations – Shone Anstey
Shone Anstey serves as executive chairman, president and co-founder of BIG Blockchain Intelligence Group Inc., responsible for originating the company’s core products, QLUE and BitRank.
He has been engaged with cryptocurrency since 2012, and acted as technology lead for an industrial bitcoin mining operation.
In Q4 2014, together with Marty Anstey, he founded the core technology concepts and nucleus which is now Blockchain Intelligence Group.
He submitted a Q&A to Block Tribune about current industry issues.
How can we bring cryptocurrencies up to the levels of security and usability that people expect of a modern currency?
The new generation of wallets are the shop window for cryptocurrencies. And so they determine people’s verdict on cryptocurrencies’ security and usability. To get a crypto wallet to offer the level of protection and usability that people are accustomed to getting from fiat currency, sound management of private keys, a trustless default-free transaction process, and a user-friendly interface are principal requirements. So, desktop wallets such as Jaxx, Atomic and Exodus appear to have a good combination of security and usability. The development of atomic swaps can bring the secure transaction environment of a decentralized exchange to the type of wallets that are straight-forward for people to use.
How can we address the challenges associated with virtual currencies like money laundering, terrorist financing, tax evasion, and fraud?
We can deal with those challenges by acting either individually in the common interest of the virtual currency space and by co-operating with regulators. Individuals within the Eco space have called out wrongdoers running fraudulent services. Intelligence companies such as ourselves at Blockchain Intelligence Group are building strong relations with law enforcement agencies, banks, and regulators. The learning process is mutual.
We were preparing for the worst during last year’s speculative boom as we anticipated increased malfeasance in the blockchain space. As for specific financial crimes like money laundering, terrorist financing, tax evasion and fraud, we have not seen as high instances because criminals are in fact very conservative… they stick to what works. They prefer totally anonymous and totally fungible currencies… two qualities that bitcoin patently does not have.
Having said this, we should add ransoming as a challenge that we need to face as it runs alongside blackmail and terrorism. On December 13 in Edmonton, Canada, a member of a gang that had attacked a branch of Scotiabank demanded a ransom denominated in bitcoin. This is an area where partnerships with law enforcement are essential.
What new financial laws and regulations we can expect in the next year?
The laws and regulations we can expect for 2019 are likely to be further developments on reforms made this year.
For the US, federal and state level laws will evolve to accommodate cryptocurrencies among their existing rulings about virtual currency in general. However, some states define cryptocurrency as money in order to make them comply with their money transmission laws. Meanwhile, at the federal level, the SEC continues to push for cryptocurrencies to be defined as securities so that they can treat ICOs and now STOs using the same channels they apply for their regulation of financial markets as a whole.
New York State Department of Financial Services went so far as to require cryptocurrency traders to purchase a license called the BitLicense in order to operate an exchange or wallet service. The license also requires them to submit KYC/AML information about their clients. We are not sure how much traction licensing will have in 2019 as take-up has been low and some exchanges and wallet services have preferred to exclude US customers so as to avoid getting embroiled in the US’s regulations.
This incongruity between national and local threatens to fuel continued inconsistency about how to define cryptocurrency into 2019. However, it can also create the impetus for regional regulation along similar lines to the Asian countries who have designed their regulations to balance protections for consumers with a light hand that allows innovation to flourish.
Does the success or failure of blockchain depend on regulation?
Not in the least. The success or failure lies in the responsiveness of the blockchain community to act in the interests of its users. This can involve guiding regulators and it is true that some regulatory decisions can impact on relationships between service providers and their users: the BitLicense issue is one such example. But it does boil down to the user’s own experience of being served properly and feeling safe in a world that is still very new and still under attacks from hackers and scammers.
Will energy-efficient mines win?
The more energy-efficient operations have been winning out this year. One interesting outcome of the falling fiat values of cryptocurrencies all through 2018 is that it has impacted much more on the large mining facilities who overreached themselves in such a way that it turned out to be costly. They purchased large facilities in remote locations that have since proven to become too expensive to service.
Conversely, the smaller mines that had either pooled their resources or retrofitted their existing plant had less of an environmental impact and are still in business. Mining operations are attracted by efficient conditions whenever they make decisions about locating their rigs: low energy costs, benign climate, stable political environment. The smaller mines have successfully assimilated with the locations they have adopted and so have had less of an impact on the natural environment.
Calculations about how much it costs to mine 1 BTC remains problematic, however. The variables are just too different across the mining ecosystem because of differing hardware, differing mining settings etc., and many mines do not disclose details about their energy consumption. If the Paris Agreement on Climate Change can stipulate specific hardware for cryptocurrency mining and require miners to state their expenditure, we might get firmer foundations for calculating cryptocurrency’s impact on climate change. But, until then, the question is going to continue to be mired in presumptuous estimates.