Bitcoin Itself Is Not Enough — AAX News & Insights
Following the suicide of a young Robinhood retail trader, in what appears to be the result of a tragic misunderstanding, an important debate has flared up with respect to the responsibilities that must be borne by exchanges and trading apps.
One headline on Coindesk reads that crypto exchanges ought to operate less like casinos and start prioritizing customers over profits instead. In the article, a good deal of criticism is also directed at Binance with the main argument being that if exchanges indiscriminately give users the option to trade with high leverage — irrespective of their experience, means, or level of sophistication — then it’s difficult to take them serious when they advocate for consumer protection.
This line of critique makes sense and may as well be applied to all CSR initiatives that carry a contradictory undertone (e.g. oil companies that profess their commitment to a greener future; fast food chains that combat obesity).
There is no denying that classic corporate interests can easily come into conflict with the common good and are sometimes served at the expense of higher principles like fairness and integrity. But to simply read every contradiction as hypocrisy is a missed opportunity for reflection in the community and skips an important conversation. To this effect, I’d like to raise two points.
1 — Technology is not the sole solution to our problems in society
If you have a phone, can you count on good communication? If you have a car, does it mean you’ll arrive at your destination? What If we decentralize finance, can we assume integrity?
In all cases, the answer must involve an element of conditionality with human behavior as the key variable. This is no different in the crypto space with respect to the goals we’ve set out to achieve.
Blockchain technology does indeed largely eliminate the need for trust in a third party to process and record transactions. However, as my colleague Michael Wong argued in a previous article, when we look at the wider ecosystem and consider coin issuers, exchanges, custody providers, payment gateways, or even media for that matter, it’s quite clear that a great deal of trust is still required. How could it be otherwise?
The creation of Bitcoin has dealt a blow to the traditional banking system, if only in the sense that it has prompted a growing number of people to envision something different. But it would be naive to assume that our space is somehow free from the greed, malintent, corruption, trickery, elitism and excess that we find in the banking world or anywhere else for that matter.
Technological innovation does not absolve us from addressing the frailties of human character, and so unless and until we improve human conduct, the problem of trust will not be solved.
In the Coindesk article, the idea that some exchanges are concerned with profits rather than consumer protection is almost presented as something of a revelation. But it’s not.
The mere fact that our industry has sprung from an attempt to counter perceived injustice, does not mean that we can somehow lay claim to being inherently just or altruistic. There is nothing to suggest that the crypto industry is imbued with higher sensibilities and moral fortitude. Until proven otherwise, we must assume that crypto businesses like our own are no different than any other: rich in the same contradictions and inconsistencies that we find everywhere.
Don’t get me wrong. I am actually positive about the potential of our industry, but if we want to offer a true alternative and really forge a pathway to freedom, privacy and prosperity, we need to go beyond techniques and code, and build better frameworks for action and accountability — on and off-chain.
2 — It’s about accounting, as much as it is about accountability
There is a tendency to envision Bitcoin as some sort of panacea for all of society’s ills — as if we can simply engineer or “hard fork” our way to paradise.
As an example: I recently stumbled upon an article citing Max Keiser, where he stated that Americans now fighting against institutional racism and police brutality shouldn’t protest, but instead purchase Bitcoin.
He argued that:
“Black America will never be equal to white America; they will never have justice in white America,” and “the only thing they can hope for is individual sovereignty, and the only way to get there is through savings in Bitcoin — (it’s) the best way to get there.”
I get the idea, but this statement is just another one of those uninspiring non-solutions.
It questions, perhaps rightfully, the efficacy of protesting as the primary vehicle for social change, but it mistakenly goes on to neglect the need for educational reform, community building, efforts at reconciliation, and proper procedures by which the elite can be held accountable.
Bitcoin is an impressive technology and it has given rise to a very powerful narrative against the status quo, but it is only a first step, and selling it as a magic patch for all types of issues in society does little to grow its credibility.
Whether it’s income inequality, corporate greed or some other disparity, deep change is going to require years, even generations, of systematic planning, action and reflection by all stakeholders.
In the crypto space it means beginning with the premise that despite its technological underpinnings, our industry is no different than any other segment of society, and that trust is something that needs to be earned and then guarded. This is not just about appeasing the regulator. It’s about addressing the need for systematic self-regulation, as a community, when it comes to where we invest, how we trade, how we operate business, and how we engage the wider public. And in the process, we should put risk checks in place and hold each other accountable. This is how we can build integrity into our markets and industry and in my view strengthen the investment thesis for Bitcoin.
About the author
Drawing from experience across human rights, fintech and the creative arts, Ben Caselin heads content and supports business strategy at AAX, the world’s first digital asset exchange to be powered by London Stock Exchange Group’s LSEG Technology. AAX.com
Originally published at https://blog.aax.com on June 26, 2020.
