Roadblocks for Constantinople testing, regulatory insecurity in Britain, and who needs Twitter love when you’ve got DocuSign?
This is the maiden edition of the Daily Byte, a morning roundup of some of the most interesting stories in blockchain and cryptocurrency. Here’s what’s happening for October 15, 2018:
“Give Us Time to Think About It”; UK Regulators May Take Up to Two Years to Make Up Minds on Crypto
As cryptocurrency becomes more mainstream, the albatross of regulation grows heavier. Fueled by reports of hacking and malpractice, regulators across the world are rushing to ensure that their anti-money laundering/combating the financing of terrorism (AML/CFT) and taxation ducks are all in a row.
Most countries, that is. The United Kingdom – the country that brought us Brexit – may be dragging its feet on the regulation front. According to a recently released statement from London-based corporate law firm Reynolds Porter Chamberlain, the best-case scenario for regulation clarity in Britain – considering the complexity of the report before the House of Commons Treasury Committee (HM Treasury) and the committee’s history – is at least two years.
This is based in part on observations on the passage of regulations on home reversion plans. These minor regulatory changes took HM Treasury two and a half years to consider and pass. Considering that HM Treasury will also need to work on regulatory changes due to Brexit – the UK’s exit from the European Union – ascertaining an accurate timescale for crypto regulation in the UK may be impossible.
HM Treasury indicated that it would make crypto regulation a priority in its September 12 committee report. The proposal to regulate crypto was echoed by the European Parliament, in its recent parliament report, succinctly titled “Motion for a resolution on distributed ledger technologies and blockchains: building trust with disintermediation.”
Wirex Survey Results Show No Love for Bitcoin, Litecoin, Ethereum
As a rule, you should not quote Twitter polls or even admit you have taken one, but this one is interesting. The crypto wallet app Wirex conducted a Twitter-based survey to determine its followers’ preference in the major coins.
Wirex is sponsoring Max Meilleur to compete in the MoneyUSA 20/20 Payments Race from New York City to Las Vegas. In a Twitter poll, Wirex asked “We have a remarkable community in #TeamCrypto & we want your input every step of the way for the @paymentsrace! Our runner @maxmeilleur can only use crypto to get from NYC – Vegas. Which crypto should his first purchase be in? #BTC #LTC #XRP #ETH #cryptocommunity # cryptotwitter.”
The results overwhelmingly showed a preference for XRP (Ripple). Seventy-nine percent of the 4,595 voters – as of the writing of this article – chose Ripple, er, XRP. This is compared to 11 percent for industry heavyweight bitcoin, seven percent for indie darling Litecoin, and a measly three percent for Ethereum.
One way to interpret these results is in light of positive press coming from Ripple, including Binance’s recent endorsement of XRP, news of wallet integrations with XRP, and a Change.org petition to make XRP the official crypto of the 2020 Tokyo Olympics. Another way to think about this is that – of the four – XRP might be best-suited for daily transactions, as bitcoin is a store of value, Ethereum is meant to facilitate “smart contract” transactions, and Litecoin (despite the name) is cumbersome, with fewer avenues of use than XRP.
The third way to think about this, of course, is not to think about it. It is just a Twitter poll, after all.
Buterin Regrets Using Term “Smart Contracts” for Ethereum
Usually, when a creator has regrets about his/her products, it is along the lines of “Man, those acid-washed bellbottoms were a bad idea” or “Who would ever pay for a pet rock?”
Ethereum founder Vitalik Buterin has a different type of regret. Lamenting the use of the term “smart contract” as a legal term, he tweeted on Saturday, “To be clear, at this point I quite regret adopting the term ‘smart contracts’. I should have called them something more boring and technical, perhaps something like ‘persistent scripts’.” Or, you could call them executable distributed code contracts (EDCCs), like we do. Catchy, right?
EDCCs, as used by Ethereum, are persistent programs that are encoded into the Ethereum blockchain and run on the Ethereum Virtual Machine. Their purpose is to conduct a programmed transaction autonomously so that the enforcement, execution, and disposition of the transaction happens without third-party interference or consent. These programs effectively allow a blockchain to “do work” beyond storing value, which is a key component of the “Blockchain 2.0” technical specifications.
However, governments’ embrace of the tech has created an uncomfortable layer of government involvement for some. Examples, such as Tennessee’s official recognition of smart contracts as legally binding contracts for electronic transactions, can potentially have unintended consequences. With the DAO hack, if the illicit transfer of Ether had the weight of law behind it, for example, it would have made recovery efforts more complicated than they were.
To be fair, the term “smart contract” came from Nick Szabo, who pioneered the concept in 1994. He equated a smart contract to a vending machine or point-of-sale terminal in virtual space.
Another Joins the Fold: DocuSign to Join the Ethereum Blockchain
Per a recent press release, the electronic signature company DocuSign will utilize the Ethereum blockchain. Its chief product officer said:
“For customers that opt in, DocuSign will compute a one-way cryptographic hash fingerprint for every completed transaction, and write the value to the Ethereum blockchain — the most popular blockchain for smart contracts in our view. This hash acts as tamper-proof evidence for the transaction, and enables any completed document to be validated independently. And by using the Ethereum blockchain, that third party evidence for a transaction is accessible to anyone.”
DocuSign will offer its customers the option to have their signed documents written to the blockchain, where verification evidence can be reviewed in a neutral environment. For those delivering high-value or high-profile contracts, this feature will increase the safeguards involved and will improve transactional confidence.
This comes at a time that decentralized application activity on the Ethereum blockchain is at an all-time high.
“Consensus Issue” During Testing Presents Possible Roadblock for Ethereum Hard Fork
Finally, a possible “consensus issue” of the Constantinople Ethereum hard fork caused a testnet to be “not usable” over the weekend, per an October 13 tweet from Ethereum blockchain firm Infura.
This issue has led some to whisper that the hard fork will not be released this year. Per several developers, the hard fork became active at block 4,230,000 on the Ropsten testnet October 13. However, the implementation caused a “consensus issue on ropsten.”
On October 14, developer Afri Schoedon tweeted:
Constantinople will implement new changes to the Ethereum blockchain regarding code execution, data storage, block reward issuance, and other performance issues. Constantinople will not, however, switch Ethereum from proof of work to proof of stake.
Be fast, be clever, be wise. Most importantly, be here tomorrow for your Daily Byte.