Daily Bit #102: Current State of Regulations
By: Daily Bit
Tags: Bitcoin, Blockchain, Cryptocurrency, Crypto, Fintech

Bulls and Bears

Bear: To further elaborate on today’s Word on the Street, the crackdown on crypto crime continues.

The first story comes to you from India, where a police inspector and his friend were arrested for extortion. Among the amount extorted was 2,256 BTC and 11,000 LTC, which is the equivalent of over $25 million US dollars. While the felons were caught due to a complaint, the more impressive story just recently unfolded in Israel.

Introducting: Halim Gablit

Halim is a 33-year old palestinian who started a forum in 2008 to share stolen credit card information. After committing massive fraud, Halim transferred this money to Bitcoin, thinking that he could get away with it by consistently transferring the stolen funds between different accounts. However, the Israeli national cyber unit soon caught up to him and confiscated 1,071 BTC, which is about $8.5 million US dollars.

While the Israeli forces were riding his coattails since the beginnings of the fraud, Halim used Bitcoin because he thought it would make him fly under the radar and impossible to locate. Yet, the cyber unit succeeded. So, how’d they find Mr. Gablit?

Let’s Get Regulated

While it’s hard to say exactly how the Israeli government tracked down the perpetrator, it is likely that he used an exchange with certain protocols that prevent laundering and other illicit activities. To improve security and transparency, exchanges usually implement Know Your Customer (KYC) and Anti-Money Laundering (AML) systems. For instance, Bithumb, one of the largest South Korean exchanges has just now tweeted about the implementation of KYC and AML to do just that.

So remember folks, crime is bad mkay. One should avoid crime, cause the watchdogs of the world have their way of finding out the truth sooner or later.

Bear: The last notable person to criticize crypto got quite the scenic view from his workplace. That is the Warren Buffett incident where Genesis Mining, a cloud mining company as the name suggests, posted a billboard right in front of Warren Buffett’s office that read “Warren: you said you were wrong about Google and Amazon. Maybe you’re wrong about Bitcoin.”

While that was a particularly bold move and just a little bit amusing, a recent paper by renown Nobel Prize winner Robert Shiller shares the same view as jolly old Buffet. Do you remember Robert Shiller? Well, he’s the guy that predicted the real estate bubble and he thinks that Bitcoin is just another one waiting to pop.

So, what are his reasons? Shiller argues that the reinvention of money has long been a concept throughout history. Using the “father of socialism”, Robert Owens, as an example, Shiller gives us a history lesson. Owens attempted to create a currency based on labor notes, what he called “time money”. Another example comes from the Great Depression, where Columbia University proposed energy as a currency. As one would assume, both attempts failed.

Robert’s ultimate point here is that there is a revolutionary mentality behind crypto, just like there have been in the past in attempt to deviate from traditional monetary systems. But, according to him, this mentality is based on faith alone, which isn’t good enough.

Unfortunately, Shiller has an ironic last name. So let’s go over why he might be wrong about crypto:

There is a history of failing Fiat currencies. Take a look at the Venezuelan Bolivar as a more recent example.

Shiller fails to identify that the blockchain creates a system of trust, and thus, faith.

Blockchain protocols, such as on Ethereum, include the potential for decentralized applications, which far exceed the scope of just currency.

He also doesn’t seem to know how the blockchain works…

…It appears that we’re all starting to suspect that a lot of these noteworthy personnel that criticize crypto don’t really understand how it works.