Come and take it

Bitcoin can't be unilaterally seized. That's part of its value.

Our weekly opinion piece and overview View this email in your browser   November 12, 2017 From My Cold, Dead Hands Unlike money in the bank, cryptocurrency can't be unilaterally seized. That doesn't necessarily mean people can evade the long arm of the law, but it makes it slightly harder for governments to violate due process. That's something. Read more in the THE TAKEAWAY below.       TOP TRENDS ON COINDESK Sweet Relief After six months of debates that deteriorated into bickering that metastasized into trolling (and worse), a controversial change to the bitcoin software was called off less than two weeks before it was supposed to happen. The surprise announcement sparked a brief rally in the bitcoin price, to a new all-time high above $7,700 (it subsequently slid back down to sub-$7,000 territory), and left the community pondering what's next in the still-unresolved conversation about how to scale the network. For some, the answer remains second-layer solutions like the Lightning Network. Others, including startup executives who had supported the software, called Segwit2x, still see a need for on-chain scaling, except this time they're seriously looking at the possibilities on a different ledger: bitcoin cash, the splinter currency that broke off from the main bitcoin chain in August (and rallied over the weekend). While it may not be clear from this episode how best to sustainably increase bitcoin's capabilities, there is a clear overriding lesson in how not to decide on changes to the software: in closed-door meetings, with key stakeholders unconsulted. In their note Wednesday announcing the suspension of 2x, BitGo CEO Mike Belshe and his counterparts at five other companies claimed that when they signed the so-called New York Agreement in May, "the bitcoin community was in crisis." But even if scaling were as urgently needed as that word makes it out to be, this "crisis" could never be solved October 2008-style. Live and learn, onward and upward.             Frozen Funds Hundreds of ethereum users were unable to access their funds in multi-signature wallets developed by Parity Technologies after a pseudonymous developer discovered and "accidentally" triggered a vulnerability in the code.  Maybe more distressing, another hard fork of the ethereum blockchain would be necessary in order to unfreeze the funds, according to the Ethereum Foundation's security lead. However, unlike the creators of the DAO, who pushed hard for such a drastic measure after their smart contract experiment was taken for $50 million worth of ether last year, Parity is not advocating an immediate fork.  There is "plenty of time" to find a solution that would be "backed by major parts of the community," the startup's technical communications lead said. Such patience and restraint is notable considering that this time, the amount of cryptocurrency locked up is estimated to be more than $150 million. Sounds like the broader cryptocurrency ecosystem is learning from the bitter experiences of The DAO, and now 2x, about the importance of broad-based support for backwards-incompatible, systemwide changes. In the meantime, if it's any consolation to the users whose ether is frozen (including a number of token issuers), it appears no one else can get at it either. Your Show of Shows Unfortunately overshadowed by the subsequent 2x and Parity bombshells, some of the smartest minds on the planet gathered in San Francisco last weekend at the Scaling Bitcoin conference to talk about the future they are building. Our editor-in-chief Pete Rizzo brought CoinDesk readers the highlights: growing acceptance that there may not be one chain to rule them all; fear and loathing of ICOs, and the crowd they attract; and surprisingly little discussion of 2x, considering that at that point it was still expected to happen in mid-November. Perhaps the conference organizers had a premonition...  See all CoinDesk stories   ⭐ COINDESK SPONSOR ⭐ Replace All Your Passwords with a Single, Biometric Login Nuggets provides a single sign-on tool without tracking or selling your data. Users only have to update details, like a new payment card or home address, once – in Nuggets – rather than entering details into dozens of accounts. Join the revolution in payment, privacy and security today. Learn More   QUOTE OF THE WEEK   "Bitcoin wins." – Akin Fernandez, software developer and entrepreneur, on the cancellation of 2x   THE TAKEAWAY  Every once in a while, it's useful to revisit the core value propositions of cryptocurrencies. One of the most under-appreciated of these, at least outside of the technology's inner circles, is the fact that bitcoin and the like can give individuals a greater degree of autonomy in their financial lives. The reason it's under-appreciated, I suspect, is that like privacy, autonomy is one of those qualities no one cherishes – until it's gone. Stepping back, "be your own bank" is a favorite slogan of the early cryptocurrency adopters. This baffles bitcoin skeptics, and understandably so. Key management is a fussy business, nerve-racking and all too easy to screw up. Some digital currency doubters say it's simply beyond the skill set of the average consumer. There's a whiff of paternalism in that claim, though. After all, people still cook for themselves (an activity that involves knives, fire and sometimes animal bacteria!) and drive their own cars (for now); how much harder can it really be to make up a random string of words and keep it a secret? Then again, why would anyone want to bother with paper wallets or mnemonic recovery phrases when they can just store their money at a bank, a business that specializes in safekeeping? Here in the U.S., your balance is insured up $250,000 by the FDIC in the event the institution fails. You might even earn some paltry rate of interest on your money, along with peace of mind unimaginable at a bitcoin exchange. From this perspective, being your own bank looks like way more trouble than it's worth.  But let's zoom out the lens a bit. Consider the slow but steady erosion of due process and property rights in the Land of the Free through policies such as civil asset forfeiture (in which law enforcement can seize assets from citizens suspected of committing a crime, whether or not they have been convicted or even charged). Next, consider the lack of constitutional protections to begin with in many other countries. Finally, layer on top of these unpleasant realities the worldwide gradual phasing out of physical cash, which at least you can put in your socks.    All of a sudden, those trusted, regulated financial institutions start to look like potential back doors. In this light, the mere option of being your own bank, for at least a portion of your wealth, starts to sound a little bit more appealing.  Inb4 the strawmen: I am not claiming that cryptocurrency users are "above the law." An individual who refuses to give up his private keys under court order can still be thrown in jail. The point is that the government has to throw that person in jail, or perhaps beat him with the proverbial rubber hose, to get him to comply. It can't unilaterally seize his funds.    In this way, cryptocurrency claws back a modicum of power for the individual. The historical significance of this innovation – self-sovereign money – was explained beautifully in a blog post by Nathan Cook, a bitcoin user in Tel Aviv, first published two years ago: "An owner of Bitcoin no longer has the problem faced by the owner of any other transferable asset: 'will my property rights be respected?' Holders of Bitcoin own it in virtue of material facts independent of their social relations. The world may turn its back on Bitcoin, yea, its value may fall to fractions of a cent, but those who own it, will own it regardless." Just to be clear: this is hardly a reason to empty your checking account or 401(k) and put it all down on crypto (another strawman I encounter frequently on social media). But it's a damn good reason to be thankful bitcoin exists in the world. – Marc Hochstein MORE BACKGROUND:   Ross Ulbricht Drops Claim to Millions Raised in Silk Road Bitcoin Auctions Forfeit Your Bitcoin? Congressional Bill Draws Fire Over Border Check Rules Boom in Drug Dealer Digital Currency Use Sparks Worries Among US Officials A Town in Illinois Just Announced It's Holding a Bitcoin Sale Share Tweet Beyond CoinDesk... OTHERS ARE TALKING ABOUT "In the middle of his presentation, a gray-haired senior partner stood up, yelled 'PONZI SCHEME!' and stormed out." Wired examines how cryptocurrency may be changing the nature of VC investing. CBC/Radio Canada finds that it's hard to spend bitcoins, in part because their value fluctuates. Welcome to 2013, eh? This Bloomberg story is more in line with the zeitgeist: "'Buy Bitcoin' Overtakes 'Buy Gold' as Online Search Phrase" Another Bloomberg article looks at DLT solutions for food industry supply chains – but that would make for one boring, click-repellent title, so instead the headline talks about tomatoes. The Economist surveys ICO regulation.  UPCOMING EVENTS (see more in our full listing) November 13: Blockspot Conference 2017, Lisbon, Portugal November 14: Blockchain for Wall Street, New York November 14: Digital Commodities Summit, London November 14-15: Innovationsforum Blockchain Kongress, Hamburg, Germany November 22: Blockchain Summit-Crypto Valley, Zug, Switzerland WHAT WE'VE BEEN UP TO Consensus: Invest is only a couple of weeks away. We have over 650 attendees registered for the Nov 28 event at the Marriott Marquis in New York. And next week, we'll be announcing our amazing title sponsors. Stay tuned. Got suggestions on how to make this newsletter better? Want to write an opinion piece for CoinDesk? Just feel like trolling our managing editor? Email marc@coindesk.com, or tweet @MarcHochstein. And follow us @CoinDesk.  Until next week... Copyright © 2017 CoinDesk, All rights reserved. You're receiving this email because you subscribed for updates on our website. Our mailing address is: CoinDesk 636 Avenue of the Americas New York City, NY 10011 Add us to your address book Want to change how you receive these emails? You can update your preferences or unsubscribe from this list Received this from a friend? Subscribe here.