Opinion | The problem with the viral growth of cryptocurrency


In the world of cryptocurrency there are two categories of intermediate institutions. The first category contains the exchanges in which users purchase, sell and store their virtual currency. These exchanges include Coinbase, which the Attorney General of New York claimed relationship traded on its platform, and Monte now bankrupt. Gox exchange, which in 2014 lost more than 700,000 Bitcoin of its users to hackers. The second category is made up of people and companies that create and sell their cryptocurrency, using the initial coin offerings. This year, two founders of a virtual currency named Centra were arrested and charged with "conspiracy to commit fraud on securities, fraud on securities, conspiracy to commit telegraph fraud and telematic fraud". In May, the Wall Street Journal found that hundreds of initial coin offerings were "using deceptive or even fraudulent tactics to attract investors".

More recently, social networks like Facebook have promised to connect everyone in the world and offer users a platform to talk freely. As we have seen, they have not made things free; they opened us to manipulation from anyone, anywhere. There's a feeling I get when I log in to Facebook and I'm assaulted by clickbait news, overly intrusive advertising and an incomprehensible inability to configure my feed to show me updates from friends who came here on Facebook to read . "Free" is not the word for this. Facebook has become less free than a normal conversation in real life, not in spite of the possibility of connecting to anyone, but because of it.

We saw something similar in the peer-to-peer loan, where people could take the savings from a person who needed to invest and transfer it to another person who needed to borrow. The system should have made the economy fairer by removing arbitrary and inefficient bankers. Instead of following its promise, peer-to-peer loans in China have led to a lot of money lost for ordinary city savers, creating an unstable financial sector.

In software engineering, we have a sentence for this: "This is not a bug, it's a feature." The established systems (such as customs, regulations or software) are as they are, for many reasons, some of which are now forgotten. Sometimes we do not know all the reasons why a system needs restrictions or limitations until we discover a way to create new systems without them and to discover (for better or for worse) what happens without such constraints. Cryptocurrency, peer-to-peer lending and anonymity and pseudonymy in communication are all impressive businesses. They are also all excellent in showing us the value of a company that requires a stable identity, the government support of a currency and the supervision of its financial systems.

The first commercial transaction of Bitcoin was in 2010; by the end of 2017 it had reached a value of over $ 100 billion. Facebook has grown to a billion users in about the same time. The word "viral" is often used to describe such an exponential growth, but the viruses grow exponentially for a reason, and it has nothing to do with an advantage for the host. If a new technology grows exponentially, it should make us cautious, not excited.

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