Japan Warns Binance Exchange Over Licensing
Japan’s top financial regulator has issued a warning to cryptocurrency exchange Binance.
In a statement published by the Financial Services Agency on Friday, the agency confirmed Thursday’s news that suggested Binance was about to be warned by the financial watchdog given its lack of registration with the regulator.
Yet the statement does not entail whether the regulator is weighing criminal charges, as indicated in the previous report from Nikkei. The exchange told Bloomberg earlier this year that it was working with Japanese regulators to secure a license.
Responding to the FSA statement, Zhao Changpeng, Binance’s CEO, confirmed receipt of the warning letter and stated the firm’s legal team is in dialogue with the agency.
Founded in summer 2017 and based in Hong Kong, Binance has emerged as one of world’s largest cryptocurrency exchanges by trade volume in the past six months. According to data from Alexa, the firm currently sees roughly 9 percent of its traffic visit from Japan.
The FSA has warned other overseas firms about offering services to Japanese citizens in the past.
As previously reported by CoinDesk, the agency issued multiple warnings last month to a Macau-based cryptocurrency firm that provided bitcoin purchases and initial coin offering services to Japanese investors. The firm pulled out of the country following the warnings.
Yen image via CoinDesk’s archive
Written by CoinDesk.com
Warning: The Blockchain Could Rot Your Brain
Advancements in technology may be transformational. However we cannot forget that they also create adjunct problems.
For instance, social media addiction is a serious issue, the Internet spawned the need for instant gratification, and artificial intelligence has many of us worried about technological unemployment.
Unfortunately, blockchain is no exception. And yet, everybody wants a piece of the pie, and people are already pouring their life savings into cryptocurrency investments. Should we take a step back and reconsider?
Proponents everywhere tout that blockchain will make the world more productive. I’ve even made the argument that blockchain will force auditors and accountants out of glorified administrative work so they can produce more value for society.
Whether it’s in banking, logistics, or advertising, on the surface, it may seem logical that any technological change will create “productivity gains.” But before we convince ourselves that blockchain will be a time saver, consider the Solow Paradox.
Also known as the Productivity Paradox, this is the observation that “… as more investment is made in information technology, worker productivity may go down instead of up.”
I’ve witnessed the Solow Paradox in action while working in different offices alongside C-Suite executives and other consultants. I’ve seen working professionals barely able to work an Excel spreadsheet, let alone utilize the countless Excel formulas that could have made their work output more productive and efficient.
While some will argue that the technical incompetencies I describe above are the result of poor training and weak hiring practices. Shouldn’t the concern of the Solow Paradox be seriously considered if blockchain technologies are destined to have a stake in all industries?
It’s certainly possible that the misunderstanding of technology may very well add hours to our workdays, rather than subtract them.
So before we get excited and confident about so-called productivity gains, due care and strategic planning should be top of mind to ensure that workers and organizations are adequately prepared for the next shift in the technological revolution.
If new technologies are thrown at workers without adequate understanding of and training on the tools at hand, this may cause further declines in productivity, elevated stress levels in the workplace (and stress leads to health problems), and ultimately risk creating even more work.
The slump in smarts
Blockchain allows for the validation of transactions through an automatically verified, tamper-resistant system. This causes many to dream of the days where middlemen (and their fees) will be gone, and when tasks like verification and audit will be obsolete. All data recorded in a blockchain will be trustworthy since transactions cannot be altered.
Sounds utopian – and yet, reliance on technology has been shown to negatively impact human performance. The Google Effect (not committing facts to memory because we know everything is on Google) is alive and rampant. In fact, recent studies show that 90% of people suffer from this digital amnesia.
So as we move toward trusting everything recorded in a blockchain, let’s consider what might happen to society’s ability to be healthily skeptical and to critically think for ourselves outside of a blockchain.
For instance, I still know many finance professionals who are quick to pull out the calculator function on their phones rather than crunching the numbers in their heads. Is it really because it’s more convenient, or have they simply lost the ability to do the math?
While some studies show that society is at risk of become less intelligent with its increasing reliance on technology, these studies should simply be a red flag. Maintenance of brain health and increasing use of brain power is necessary as our species collectively continue to solve problems around the world.
Scientific American puts it perfectly: “As we are freed from the necessity of remembering facts, we may be able as individuals to use our newly available mental resources for ambitious undertakings.”
So how do we guarantee this is the direction we are heading in with blockchain? Instead of relying on blockchain technology as the “be all end all,” we could consider blockchain as a type of backup validation tool to leverage our current systems rather than a complete replacement.
To ensure our critical thinking skills remain top-notch, let’s also retain the skill set to perform transactions ourselves despite technologies that can automate tasks for us (like calculators). Technology should support us, not replace us.
Shift in skill sets
I started my career in auditing so I tend to have a pretty skeptical mindset. Whenever I read a metric or statistic, I’m quick to validate the source. Transactions within a blockchain network inherently create trust, but I think the automated “trustworthiness” of these transactions will negatively impact social skills and human behavior.
How? We were taught to be skeptical about certain things growing up (e.g. always count your change), and depending on where you lived, you were probably taught early to trust certain organizations like the bank and the government. Now as adults, we inherently trust that our technology is reliable (when was the last time your phone alarm let you down?).
My concern is the impact of a future blockchain-driven trust economy on social cues. Will people still trust transactions outside of a blockchain network? Will blockchain become the primary validation method of all data? Will society become more or less trusting in general? Will a transaction or agreement made outside of a blockchain be legitimate?
If we do eventually rely on blockchain to validate and manage tasks and transactions, I foresee the decline of underrated skill sets and important social behaviors. With the loss of middlemen (think brokers, agencies, auditors), our mediary, negotiation, and project management skills might also deteriorate. With this in mind, now is a crucial time to start planning for this and figure out ways to mitigate it.
After all, we know from experience that new technologies dissolve existing problems, but will also create new ones in passing. Let’s prepare accordingly this time.
Brain MRI image via Shutterstock
Written by CoinDesk.com
What Does the Dow Jones Toppling Mean for Cryptocurrencies?
There were heavy losses in US markets on Thursday after President Trump announced the implementation of significant new tariffs on China as early as next weeks.
These tariffs will amount to approximately $50 billion on a yearly basis for Chinse exports. There is widespread fear that China will retaliate and financial market across the world will be plunged into further turmoil.
The Dow Jones was down 724.42 points for the day, which represents a 2.93% decrease. Analyst expect there to be further decreases before the weekend. Some are even going so far as to say this could represent the beginning of a reversal of the multi-year bull trend responsible for the record highs of the past few months.
The question on a lot of people’s minds is wether or not the falling Dow Jones present an opportunity for cryptocurrencies.
Why is this trade war such a big deal?
While President Trump has been threatening the introduction of trade tariffs for some time, they have finally become a reality. He wants to create a more protectionist economy whereby home-grown businesses can reap the benefits of this change in policy.
China has been one of his main targets since taking office, as he blames them for causing significant damage to US manufacturers and employment. There is no doubting that China will not take this move lightly.
How could this trade war be good for cryptocurrencies?
While tariffs may appear to be a good idea on paper as they should protect the economy, in reality, it generally only ends up benefitting a small segment of the economy, with the rest of it suffering.
The US Dollar will weaken as a result of this approach and it may open up a move for more institutions to conduct transactions using cryptocurrencies.
Rather than having to deal with a weakening US Dollar, people may turn to using cryptocurrencies for their transactions and to store their wealth.
Bitcoin, for example, has been dubbed “digital gold” and it is at volatile times that investors put their money in more conservative investments such as that of gold. Gold will usually retain its value as the financial markets worsen.
Cryptocurrencies may also be used to get around the trade restrictions that are in place. This means that significant fees and penalties can be avoided (albeit illegally) and transactions can go on as normal.
If the use of crypto becomes common practice, many institutions will realize the many benefits associated with this approach and may not return to fiat currencies when volatility in those markets has stabilized.
An event like this trade war could be the catalyst for a more significant and widespread adoption of cryptocurrencies as a medium of exchange.
How might this not work out for cryptocurrencies?
In the world of finance, there are never any guarantees. There has been a massive bull market in the traditional financial word for many years now, with money being awash for institutional investors to spend as they please.
Many had the spare capital to invest in somewhat riskier investments, such as that of cryptocurrencies. However, if this trade war triggers a sustained bear market, this could lead to investments drying up in the crypto sector, dragging it into a bear market with the rest of the economy.
In a previous article, I myself theorized that that as financial market fears increase, the price of bitcoin decreases and vice versa. So far, I’ve been right.
Whatever happens, this will be fascinating to watch to see how the crypto markets react to sustained levels of turbulence in traditional financial markets as the United States and China battle it out in a trade war.
Written by CoinDesk.com
Coinbase In Talks to Buy Bitcoin Startup Earn.com
Coinbase may be on the verge of its biggest acquisition yet.
According to sources close to the situation, the San Francisco startup, which has raised more than $225 million in venture funding, is in talks to purchase Earn.com, which rebranded late last year from 21.co with the launch of its eponymous paid messaging platform.
One source with knowledge of the talks said Earn could be selling for more than $30 million, with the figure representing a low estimate of the terms discussed. (Earn.com has raised more than $120 million over multiple funding rounds since it was founded in 2013).
Still, Earn.com is said to be in talks with multiple parties about a potential acquisition, with one source indicating that the suitors were all “household names” in the industry.
While no deal has yet been struck, the news follows the March announcement that Coinbase had hired Emilie Choi, the former head of mergers and acquisition at LinkedIn, as its vice president of corporate and business development.
Earn.com CEO Balaji Srinivasan would potentially join Coinbase under the terms of the deal.
Coinbase did not respond to requests for comment at press time.