Welcome to the CoinDesk Weekly Review 7th February 2014 – a regular look at the hottest, most controversial and thought-provoking events in the world of digital currency through the eyes of skepticism and wonder.
Your host … John Law.
Apple makes fans close wallets
There is nothing like a holy war to get the pulse going, and there’s no holy war as satisfying to watch as one where the two combatants are virtually identical.
Take Apple versus Android. More virtual blood has been spilled online by mouth-frothing, crazy-eyed barbarians over this little tiff than the great Mac versus Windows global conflict.
Both parties sally onto the field under shiny, tiny standards, claiming that their particular little lump of glowing metal and plastic is infinitely superior to the other – even though most sane people would have an easier time telling Coke from Pepsi.
They do the same job, access the same Internet, make the same phone calls, take the same pictures. It boils down, in the end, to philosophy. iPhone is posh and pretty and expensive; Android is more downmarket, slightly rougher at the edges but is a cheaper date. Apple is snooty. Android has a whiff of romantic uncertainty.
And the iPhone’s parents certainly don’t want it to go out with anything as sleazy as bitcoin. In a move that can only be described as unexpected if you’ve never had to deal with the company, Apple has slammed the door on Blockchain, the last remaining bitcoin wallet in the App Store (Google, on the other hand, lets Android stay out all night and skip school with the currency).
While this is entirely in keeping with Apple’s general principle of not allowing anything remotely controversial on the App Store unless it makes Apple enough money – and most certainly shutting down anything that looks as if it may affect Apple’s own revenue – it also comes with another Apple standard: the company refuses to say why it’s doing this. “While you’re living under this roof you follow my rules young lady,” is as far as it goes.
That wouldn’t matter so much, except that bitcoin is achingly cool with the hip kids; the venture capitalists; a growing body of the chattering – well, typing – classes; and thought leaders, in the unlovely vocab of marketing. They’re your shock troops in any war of popular opinion, the breakaway battalions that spot the high ground first and lead the poor bloody infantry to a new tactical position.
If you don’t keep some discipline here and outfit your First Regiment of Blog with cutting-edge ideas to fight with, they can defect en masse, sometimes taking their own weapons with them.
Google’s Android has always lacked the ‘pure shiny’ to really distract Apple’s lead boosters, but on the other hand – self-steering cars! Reality-augmenting glasses! Maps that work! It adds up. Apple, on the other hand, has “you can’t use bitcoin, because I say so” to put on the pile of autocratic decisions passim.
Apple has lost the mass market to Android, but it still has that high ground where the gold mines are. But only because Apple is cool – and that’s only because lots of smart people think it has the best toys. That’s no good if Mummy keeps taking them away. It’s especially annoying if Mummy won’t say why: a poor return on what can be a very large investment in the brand.
By itself, right now, banning bitcoin while not saying why won’t hurt Apple too much. This time next year, the field of battle may look very different.
Don’t think Google doesn’t know this. The chances of the company warming even more towards cybercurrency have just gone up another notch. There’s nothing as entertaining as a good war.
Over the counter doesn’t mean underhand
John Law is something of an old anarchist at heart, and is on record as repeatedly saying that bitcoin and its ilk are going to do their best work when they become generally usable by the masses.
As an investment vehicle – well, that’s up to you. But as a way of moving money around that provides a counterbalance to the power of the existing financial and state mechanisms? Good stuff. Bitcoin makes our life easier, cheaper and freer, and will encourage them to clean their own acts up. Profoundly democratic.
So you might think he’d be cheered up by the announcement that you can now buy bitcoins for cash at 28,000 UK shops.
This is via a service called ZipZap, that links its retail payment system to various bitcoin exchanges: you register with the exchange, ask ZipZap to create a document with various codes on it, print the thing out, take it to a local shop where they scan it in and take your cash. Minutes later – there’s BTC in your wallet, no bank accounts required.
Try as he might, though, John Law remains ambivalent. The process is remarkably complicated – anything that requires computer printers is at least partially inspired by Beelzebub – although when CoinDesk’s managing editor tried it out for herself she found it curiously exciting.
One of the main points in favour of the idea is that it allows the ‘unbanked’ – the estimated 1.5 million adults in the UK who don’t have current accounts – to get stuck into bitcoin and, indeed, that’s a great benefit of cybercurrencies in general. But how many of those people have printers?
The real thing that probably sinks it as a game-changer, though, is the necessity to register at the exchanges with your ID. This is promoted by the regulators as a guard against money laundering: at the same time, though, we are warned against spreading our ID too freely over the Internet – and again, there’s little doubt that the unbanked will also be the group most uneasy, or unable, to manage their identity to governmental satisfaction.
It’s not as if the government seems too concerned about money laundering in other situations – it’s only reluctantly tackling a long-term problem with fixed-odds gambling machines, which are widely used in poorer areas to clean up tons of cash generated by underhand means. That’s different, of course, as the taxman gets his cut from such activities and the owners of the gambling industry are well-connected.
In any case, decent criminals know how to have decent criminal IDs. Like filtering the Internet to block naughtiness, this is the sort of restriction that doesn’t delay the expert against which it is nominally aimed but does mess up the average honest layman.
There is no easy answer, but there is a better compromise, which is to remove regulatory ID requirement for transactions up to a more useful amount. The gambling machines allow £100 stakes, for example, so why can’t someone waltz into a corner shop and buy £100 of bitcoin for cash?
At what point do the benefits of more liberal regulation get outweighed by abuse? This is the sort of calculation that can only be sorted out through the sort of decent, transparent discussion with proper numbers that politicians seem curiously reluctant to have.
Do you know what the Chancellor or the Home Secretary actually thinks about bitcoin? How that position was arrived at? Of course you don’t. But then, profound democracy is always a bit of a gamble.
More blessed to give than get a receipt
There’s another side to bitcoin anonymity: what do you do if you suspect you’ve received payment in stolen coin? This dilemma is troubling Dmitry Murashchik, director of Bitcoin100 which he runs to encourage other charities to start accepting bitcoin – if they do, he sends them some bitcoin.
He thinks that the 130 BTC he received when various exchanges were hacked was probably nicked – but he can’t prove it. This troubles him, but what to do?
In general, when charities receive stolen money and its source is known – as with hooky credit cards – then they return it at their own expense. Morally correct, and legally required. Can’t do that with bitcoin.
There are ways around this impasse, but nothing that always works. Murashchik asks that donors let him know when they make a donation, even if they don’t reveal their identity, but that doesn’t help in the case when a donation is completely unclaimed.
It’s a genuine moral quandary, of the sort bitcoin is delightfully prone to throw up. John Law applauds Murashchik for his principles of transparency, which is the best approach to moral quandaries yet invented.
When you genuinely don’t know what to do, show your workings. In the end, the usual fudge will ensue: charities will want to take bitcoin but will agree with the regulators a set of conditions under which it’ll be accepted, and what they’ll do about it otherwise.
Perhaps a central fund paid for out of dodgy donations, for making good thefts that do come to light, membership of which will give the charities legal protection from other action.
By being open about the discussions and considerations behind their thinking – a theme, Law realises, which links all three of his favourite stories this week – then it’s far easier to reach a consensus. No law, moral or state, can ever be effective without that sort of consensus – and with it, law is manageable and humane.
It’s the hundred little discussions like this one around the edge of cybercurrencies which are the real grease that eases the idea into general acceptance. John Law enjoys each and every one of them just as much as the fireworks and the big numbers.
This is where real history is made, and if you’re not enjoying being part of real history as you dig into bitcoin, you’re in the wrong game.