Crypto Regulation: Frequently Asked Questions
How Are Payments with Bitcoin Different than Credit Cards?
Push or Pull? At the heart of the Bitcoin system is the idea of a transaction: at its simplest, this is a transfer of value from one Bitcoin user to another—in essence a credit transfer. Consider what this isn’t. This isn’t a direct debit. It isn’t a credit card authorization. Nor is it the creation of a […]
How Anonymous is Bitcoin?
Bitcoin is often described as a way to transact anonymously. But just how anonymous is it? Anonymity vs. privacy First off, it is useful to draw a basic distinction between anonymity and privacy in the context of financial transactions. We will call a transaction “anonymous” if no one knows who you are. We will call […]
Is Blockchain Different than Bitcoin?
To understand this question, it’d be helpful to first think about a much older revolution in payments technology. . . cash. Super-Cash! Cash has an obvious, yet extraordinary super-power. I can hand it to anybody near me and value will be transferred instantly, directly, peer-to-peer, person-to-person. Settlement, with finality, using central bank money. And nobody […]
Do you really need a blockchain for that?
Many different use cases have been proposed for blockchains, relating to financial assets, health records, identity management and supply chains. But when examined in the cold light of day, many of these applications do not need a blockchain at all, and could be implemented perfectly well using a regular relational database. By that I mean […]
How can blockchains improve the Internet of Things?
The blockchain and the Internet of Things (IoT) are two of the most transformative technologies in the world today. What happens when we put them together? To see some of the possibilities, let’s quickly review the fundamental nature of both innovations. A blockchain provides a shared and transparent ledger of certain kinds of events. In […]
How can blockchains improve the internet’s infrastructure?
Our lives are increasingly dependent on the internet. It’s hard to get any work done if the internet goes down. Yet the internet was designed more than 30 years ago and is showing signs of age. Recent attacks have exposed the ugly underbelly of the internet along with some flaws in the internet’s original design. […]
Are cryptocurrencies useful for remittances?
The United States-Mexico remittance corridor is one of the largest in the world. During 2018, Mexico received over $35 billion in migrant remittance inflows. Most of these remittances are sent by electronic wire transfers, which represent about 96% of all remittances. The complexity behind the execution of these transactions can create high costs for money […]
What does it mean to issue a token “on top of” Ethereum?
Even for those with an understanding of cryptocurrencies, Ethereum and other advanced open blockchain networks can be confusing, especially when people start talking about launching their new cryptocurrency or token on top of Ethereum. How can one valuable digital item “run” or “be launched” on top of another valuable digital item? This backgrounder will answer […]
Understanding Bitcoin’s energy use
Why does Bitcoin consume electricity? Does energy usage increase with the number of transactions? Can we compare Bitcoin’s energy usage to traditional payments technologies like credit cards? Are Bitcoin miners polluters? Will Bitcoin miners pollute more or less in the future? Will cryptocurrencies become more efficient over time? Bitcoin consumes a sizable amount of electricity. […]
Are Consumer Bitcoin Balances Especially Vulnerable to Hacking?
Bitcoin is a powerful, new, virtual currency spreading rapidly around the globe. Proponents of Bitcoin herald triumphantly that Bitcoin will be the “future of money” and will “revolutionize the way we transact online”. Meanwhile, many of the headlines we read describe something different: a highly volatile currency susceptible to major, high-profile losses. Because the world […]
Are there industry standards for securing cryptocurrencies?
Every industry has standards that help businesses keep their customers safe. Companies that store medical records follow HIPAA to keep their records secure. Companies that store credit card numbers follow PCI for the same reason. When it comes to cryptocurrencies like Bitcoin and Ethereum, the CCSS is the go-to standard for any system that stores […]
Why are there so many Bitcoin scams?
Bitcoin’s public narrative is that it represents a dramatic break with the past. Corporate supporters tout digital currency as a disruptive hotbed of innovation, while ideological advocates claim it will usher in a new age of financial freedom. Detractors argue that it is an unprecedented threat to law and order, and will lead to rampant […]
Why Are Startup Investors Interested in Bitcoin?
One Investor’s Take on Bitcoin Today Bitcoin is a mixed bag when it comes to investors. On one hand, from 2012 until today, there has been fast growing interest in Bitcoin companies. But that interest may have waned recently. At a recent conference where top tier investors were in attendance, a total of zero venture […]
Is Bitcoin’s Price Volatility a Problem for the Technology?
As the rise of bitcoin in mainstream consciousness has expanded, much attention has been given to its price volatility vis-à-vis government-issued (fiat) currencies. Skeptics have opined that this volatility will preclude bitcoin from ever replacing traditional fiat currencies given the fluctuating purchasing power inherent in the volatility, while regulators worry that this volatility poses a […]
How are Cryptocurrency Investments Different than Securities Investments?
The technology behind Bitcoin has led to a proliferation of new cryptocurrencies and, in turn, a proliferation of speculative investors purchasing those cryptocurrencies. Some of these investments share more similarities with an equity investment in a company than an investment in a traditional currency. Additionally, many of these new cryptocurrencies were initially distributed to early […]
How long does it take for a Bitcoin transaction to be confirmed?
Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made between “confirmed” and “unconfirmed” transactions. What is the difference? At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the […]