Bitcoin Magazine reviewed the Billfodl Multishard, a two-of-three stainless steel recovery seed storage device that allows you to split your seed into three shards, ensuring that, even if someone finds one part of your phrase, they won’t be able to steal your funds.

Each shard allows you to store up to 16 words of your seed phrase, and each unit tells you which 16 out of the 24 total words to load up. Shard One houses words 1 to 16, Shard Two houses words 9 to 24 and Shard 3 houses words 1 to 8 and 17 to 24. Once this process is complete, you will have effectively backed up each seed word twice. 

As mentioned in the video review, you can also choose to use just eight slots per shard and fill the rest up with random letters to achieve a three-of-three setup, which would ensure maximum security. Billfodl worked with an industry expert, Dave Bitcoin, the head of Wallet Recovery Services. Dave Bitcoin determined that, if utilizing 1,000,000 modern GPUs, it would take approximately 4 million years (not to mention the roughly $65 trillion it would cost to purchase and run 1 million modern GPUs, even assuming a low electricity cost of $0.02 per kilowatt hour). 

In terms of use and design, the sleek and sharp feel of the individual shards feels comfortable in your hands. However, the individual letters that need to be inserted into the shards come in a punch-out style container that can’t be sealed properly once it’s opened. So, be sure to set up the three shards in one attempt so that you won’t have to store any of the letters in a cumbersome matter. 

Overall, the Billfodl Multishard is an incredibly sturdy and secure device that, if properly set up, can allow any Bitcoiner to sleep safe at night knowing that their recovery seed phrase is safe and properly stored.

This post Video: Reviewing the Billfodl Multishard first appeared on Bitcoin Magazine and is written by Michael Taiberg.

In this video review, Bitcoin Magazine tests the Cryptotag Zeus, a 100-percent titanium, recovery seed storage device. 

The Zeus allows users to make a virtually indestructible, seed-phrase backup plaque in less than five minutes. Essentially, they engrave a series of numbers that correspond to a 12- or 24-word seed phrase provided by their hardware or software wallet onto a titanium surface. 

How Do You Use It? 

When a user sets up a bitcoin wallet, a set of 12 or 24 words is provided, known as a recovery seed, for the user to write down in a safe place in case they lose access to their wallet. 

Unlike the earlier version of the Cryptotag, which required you to hammer in each letter of each word in your seed phrase, the Zeus uses a list of numbers that correspond to the BIP 39 open-source list of seed words. Inscribing these numbers into the titanium plate is easier than writing out full words.

Each of the 2,048 words included in BIP 39 corresponds to a four-digit number, per Cryptotag’s system for the Zeus. For example, the word “abandon” corresponds with the number 0001. Once the words are converted into their corresponding numbers, a center punch tool is used to punch in each digit into the titanium Zeus plate.

Cryptotag provides a sheet of paper to write down the conversion numbers for your 12 or 24 unique words so that you can have the numbers ready to go before you need to punch them in. It also provides a set of matches with the Zeus, so you can burn this sheet once the information is embedded into the plate and reduce another point of failure. 

Once your numbers have been punched into the two, 6 mm-thick titanium plates, the setup of the Cryptotag Zeus is complete. 

Looks and Design

The Zeus comes in a really neatly packaged, small, white box that you’ll see in the review video above. The messaging on the outside — “This is for the HODLers” — makes you feel like an individual, while also part of a much bigger movement. The branding of the entire product is minimalistic, which is nice and translates well to set up for the Zeus. 

As a seed-phrase storage device, the Zeus is an ideal choice for a Bitcoin beginner or expert who has only one hardware wallet. 

The Zeus is available for $99 USD on Cryptotag’s website. 

This is an editorial hardware review by Bitcoin Magazine. All opinions expressed are the writer’s own without express approval or input from the manufacturer.

This post Video Review: Cryptotag Zeus first appeared on Bitcoin Magazine and is written by Michael Taiberg.

In our “>latest video review, Bitcoin Magazine reviewed Coinkite’s Coldcard Mk3 bitcoin hardware wallet, evaluating it with a handful of important criteria, including coin control, UTXO selection, Lightning support and more.

Appearance and Feel

As the second version of Coinkite’s hardware wallet, the Mk3 feels almost identical to the earlier model. It features the same full-sized numeric keypad that you would find on a calculator, which, when applied to a bitcoin wallet, feels very convenient in contrast to clicking the same two buttons to confirm actions (often found on other hardware wallets). A notable design feature of the Coldcard Mk3 is the clear plastic casing that highlights the inner workings of the device. This, in my opinion, gives it a really unique, cypherpunk-esque feel. 

Security and Usage

The Coldcard can be used by itself without the need to connect to a computer. This means that you can use the Mk3 in an air gapped fashion, which can be a huge plus in the eyes of a security-driven bitcoin user. This is possible thanks to the microSD slot built into the side of the wallet — you can pass along transaction (and other) information to and from a computer by simply putting the chip into the computer and then back into the wallet. 

In terms of security, the Mk3 uses Microchip’s ATECC608A to store the critical master secret: the 24-word seed phrase for your BIP 32/BIP 39 wallet. 

“This little chip is very powerful,” Coldcard states on its website. “Communication is controlled by complex challenges and SHA-256 responses which prevent replay and eavesdropping. The secure element enforces cryptographically, that the attacker must know the PIN to access the secrets. An attacker cannot brute-force combinations or replay a previous login sequence.”

One of the most important features of the Coldcard is that it is based on BIP 174, which is a proposal in Bitcoin that allows for interoperation between bitcoin hardware wallets by introducing a binary file format that all hardware wallets can use. BIP 174 support also means that you can use the Coldcard with Bitcoin Core, Electrum Wallet, Wasabi or any software that supports BIP 174. 

This is one of my favorite features about the Coldcard, because it provides users with the freedom to choose how they want to use their bitcoin wallet. In October 2019, Coinkite also released a software update that allows users to view receive addresses on the screen of the Coldcard or save to an SD card in a simple text format. 

Another neat security feature of the Coldcard is its “duress wallet,” which can be thought of as a decoy wallet with a separate amount of funds for use in the event of an attempted bitcoin heist. The wallet allows you to set up a “duress PIN code,” which is an alternative PIN that displays an entirely separate wallet that a user can pretend is their real one. Ideally, this wallet should have a small amount of bitcoin on it, enough to make it plausible that this is indeed all of the bitcoin they have. Also, because Coldcard supports BIP 39 passphrases, users can create an unlimited supply of distraction wallets.

Overall, the Coldcard Mk3 is a solid bitcoin wallet for any user, be they beginner or expert. Using the Coldcard allows a user to feel like they are interacting with bitcoin transactions in a very hands-on manner, which is a credit to its tech-y outer appearance, 128 by 64 pixel OLED screen that shows you all of the critical details of your transaction and the full-sized keypad that is accompanied by a solid “click” with every press. 

Bitcoin Magazine is an official affiliate partner of Coldcard, so the Coldcard is available for sale online at store.b.tc. This is an editorial hardware review by Bitcoin Magazine. All opinions expressed are the writer’s own without express approval or input from the manufacturer.

This post Video Review: Coldcard Mk3 first appeared on Bitcoin Magazine and is written by Michael Taiberg.

Bitcoin Magazine reviewed the Ledger Nano X, the latest cryptocurrency hardware wallet offered by the company Ledger. Watch the video above and read the accompanying article below to learn more about the product’s specs and how to set it up.

The Ledger Nano X supports over 1,000 different coins, including all ERC-20 tokens. Some of the top supported cryptocurrencies include:

• Bitcoin (BTC)
• Bitcoin Cash (BCH)
• Bitcoin Gold (BTG)
• Ethereum (ETH)
• Ethereum Classic (ETC)
• Stellar (XLM)
• Ripple (XRP)
• Litecoin (LTC)
• Zcash (ZEX)
• Dash (DASH)

The Nano X comes in a neatly-designed package that includes the hardware wallet itself, recovery seed papers, a USB-C cable and a couple of neat stickers. A distinguishable difference from its predecessor are the two buttons located on the outside of the device, similar to a smartphone’s volume buttons, that are now embedded into the device in a way that makes them blend right in. 

The Ledger Nano X stands out from other hardware wallets in the space mostly due to its Bluetooth connectivity feature. This capability, when paired with the Ledger Live app (available for iOS and Android), allows a user to access the funds on their hardware wallet directly from their mobile phone. It should come as no surprise though that, when using the Bluetooth feature, the Nano X has a little bit of lag. It’s not a big deal, but it does mean that a user might have to wait two to five seconds to perform a wallet action using Bluetooth.

Set Up and Use of the Nano X

Setting up the Nano X was no more complex than setting up any other hardware wallet. Following the instructions provided in the box, a user simply needs to safely write down their seed phrase and connect their wallet to the Ledger Live app, available for mobile and desktop users, and the setup is complete. 

Often when connecting the Nano X to the Ledger Live mobile app, it took a couple of attempts for the app to pair with the wallet. The app requires you to reconnect and approve the Nano X each time you want to execute an action, which felt a little cumbersome after using the wallet for an extended period of time. This didn’t appear to be the case for any particular security reason, so it may be addressed by Ledger and improved.

In order to support bitcoin on the device, you have to add a Bitcoin account on the device itself along with installing the Bitcoin application within the Ledger Live app. Once both of these things are done, it’s relatively easy to control the device going forward. 

The Nano X is available through BTC Inc’s online store, an official affiliate partner of Ledger.

This is an editorial hardware review by Bitcoin Magazine. All opinions expressed are the writer’s own without express approval or input from the manufacturer.

This post Video Review: Ledger Nano X first appeared on Bitcoin Magazine and is written by Michael Taiberg.

About two months ago, Lightning Labs released Lightning Loop, a service that allows users to fill or empty Lightning channels without closing them, thus reducing on-chain fees. The service, developed by Lightning Labs developers Alex Bosworth and Bryan Vu, was created to help users manage their liquidity.

The Loop service, says Bosworth, is helpful for managing liquidity because “it sidesteps the liquidity problem for Lightning, which is that you can’t do flow rebalancing. If you run out of channel capacity in one direction, there’s no possibility that you can get more in a totally self contained, only-Lightning world. You need to go outside in order to rebalance.”

So, the natural step for users to mitigate this problem today is to perform a swap, which occurs on-chain and thus requires a transaction fee — and transaction fees on the Bitcoin blockchain can be quite substantial. With the alpha version of Loop available to the public, Bosworth and Lightning Labs had to think about how to make managing liquidity as efficient as possible.

Making Liquidity More Efficient

To address this issue, Bosworth developed a concept called “Hyperloop” as a next step toward solving this problem. Hyperloop is a concept that aggregates swaps so that individual transactions don’t occur on-chain with individualized signatures and outputs. Hyperloop batches inputs together using a method called signature aggregation.

“With signature aggregation, if you can manage to get a bunch of people all together to sign cooperatively, you can take the normal signature cost of moving funds on-chain from however many parties there are on-chain to one signature. I don’t think there’s any limitation to that.”

While this saves costs, one of the requirements is cooperation between many parties over a short period of time, which can be more challenging than it sounds.

Coordinating a Hyperloop Transaction

The Hyperloop concept mediates coordination between so many parties by essentially creating a limited-time, multiparty channel for all parties to join. So, in practice, if there were a lot of users who needed inbound liquidity, a “Loop Out” event would be created using Lightning Loop.

Lightning Loop also acts as a coordinator for these multiparty events, which solves the problem of dealing with malicious actors who might join these events with the intent to mess them up. And it does all of this in a noncustodial fashion.

While Hyperloop offers significant savings for batching the input side of multiple transactions, another big advantage of Hyperloop is savings on output scripts. “The output script, at a minimal level, is only 30 bytes,” says Bosworth. “A normal, on-chain swap is around 300 bytes. So, Hyperloop offers at least 10 times’ savings here.”

Hyperloop also allows for aggregation off-chain as well. For example, if a user has two channels, both 0.1 BTC, and wants to change the balance so that both 0.1 BTC are on the same side, they could ] accomplished this today with two swaps, resulting in two on-chain transactions. This issue of funds sitting on two separate channels can be solved through a proposal called Atomic Multipath Payments (AMPs). Without getting too technical, AMPs essentially allow a user to receive multiple transactions as if they were one, reducing the on-chain cost of sending multiple transactions to the same party.

According to Bosworth, there are two ways to approach AMPs. “Ideally it will be something that we allow with improved signatures like Schnorr, but we also have another way we can do it in the short term called ‘base AMPs,’ and this works really well with Loop.”

As such, base AMPs will be used in Hyperloop as well.

How AMPs Will Benefit Hyperloop

AMPs will benefit individual users who have many open channels. For example, if a user has 100 channels, Hyperloop can be split up between all those channels and wait for all those payments to come through before the swap is executed.

This offers a significant cost savings to another concept called “splicing,” which allows for an on-chain payment (resulting in an on-chain fee) out of a channel without requiring that the channel itself be closed. In this specific use case, a base AMP makes a lot more sense.

Upcoming developments in Bitcoin are a big consideration for all of this tech. Specifically, MuSig, a new multisignature standard that serves as a building block for technologies like Taproot, is the key to achieving these huge savings. Once Schnorr and Taproot are implemented into Bitcoin, MuSig, according to Bosworth, will be helpful in providing a protocol for safe signature aggregation.

As well, it is worth noting that Lighting Labs has also been working on signature aggregation for ECDSA, in case MuSig takes longer to implement than expected.

This post Hyperloop: A New Concept by Lightning Aiming to Solve Liquidity Problems first appeared on Bitcoin Magazine and is written by Michael Taiberg.

A Medium post published by Spencer Bogart, a general partner at Blockchain Capital, compares data collected from a set of surveys from October 2017 and April 2019 containing identical questions (plus a few new ones). The results, compiled from an online survey taken by 2,029 American adults, reveal that Bitcoin has been growing in the eyes of the public, despite its shrinking price.

Overall, the results show that more people have heard about Bitcoin now than during the middle of the last hype cycle, when the October 2017 survey was administered. The more recent one from this April, Bogart points out, shows that not only are more people aware of the digital currency, but “familiarity, perception, conviction, propensity to purchase and ownership [of Bitcoin] all increased/improved significantly.”

A significant takeaway from the comparison of the two surveys shows that Bitcoin is a demographic-wide trend that has always been led by younger people. The survey data suggests this is true in all but one category: awareness. “Regardless of age, the vast majority of the American population has heard of Bitcoin,” writes Bogart.

This is not too surprising as Bitcoin has never left the scope of mainstream media since its historic rise to almost $20,000.

Despite the nearly 75 percent drop in price since the peak of the bull market, 27 percent of all people surveyed said that they are likely to purchase bitcoin soon, as opposed to only 19 percent back in 2017.

More notable, however, were the responses collected when asked what they would rather own $1,000 worth of today. Of the people surveyed, 21 percent said they would prefer bitcoin to government bonds, 17 percent said they would prefer it to stocks,14 percent said they would prefer it to real estate, and 12 percent said they would prefer bitcoin to gold.

Millennials Lead Bitcoin Adoption

Among the notable differences shown from the data comparison is the percentage of people between 18 and 34 who are “at least somewhat familiar” with Bitcoin in April 2019 compared to October 2017— almost 50 percent more people are familiar with it. In fact, this group of people is three times more likely to be familiar with Bitcoin as those who are over 65.

Younger people, as the data suggests, have the most positive view of Bitcoin as well. Specifically, 59 percent of people between 18 and 34 “strongly or somewhat agree that Bitcoin is a positive innovation in financial technology” in 2019, which is 11 percent more than in October 2017. This makes practical sense when considering that millennials are the demographic most familiar with the digital world, which includes peer-to-peer networks like BitTorrent and Napster.

This trend could perhaps be attributed to millennials vividly experiencing the 2008 financial crisis and being exposed to the potential risks of central banking and poor financial management — which, coupled with their familiarity with the internet, could be why it is easier for this demographic to grasp the concept of Bitcoin before people who were around before the advent of the internet.

Of course, the numbers should support such a thesis, and it appears that they do. According to the April 2019 survey, while 9 percent of the overall population owns some bitcoin, 16 percent of those aged 18–34 are bitcoin owners.

This post A New Report Shows People Are Warming Up to Bitcoin first appeared on Bitcoin Magazine and is written by Michael Taiberg.

At the Bitcoin Association of Hong Kong’s Lightning Hack Day on March 31, 2019, Bitcoin developer Felix Weis presented a successful demonstration of his Lightning-enabled plugin for a Bitcoin ATM.

Weis, who identifies himself on Twitter as a “bitcoin traveler and freelance developer,” demonstrated a Lightning-driven withdrawal using a 20 Hong Kong dollar (HKD) bill and a mobile bitcoin wallet on his cell phone.

The software plugin was built in Java over the course of the hackathon weekend.

How Does It Work?

During the demonstration, Weis’s ATM — for which he designed the Lightning-enabled software but not the physical machine — offered the option to receive bitcoin either on-chain (requiring a roughly 10-minute confirmation time) and then prompted Weis to scan his Lightning invoice. During the demonstration, Weis pointed out that the maximum withdrawal limit is 20 HKD, roughly $2.55 USD or 0.00061893 BTC. Leo Weese, who organized the hackathon, was able to make a similar withdrawal.

Most Bitcoin ATMs that exist today do not execute as quickly as Weis’s modified one did in the video, not because they don’t utilize Lightning but because they often require some form of know-your-customer (KYC) compliance that delays the process by requiring users to visit a website and provide their personal information as they would on a custodial exchange.

A Different Kind of Bitcoin ATM

A Lightning-enabled Bitcoin ATM as demonstrated by Weis could provide several key advantages over its predecessors. With the average Bitcoin ATM, customers looking to withdraw a typical amount of bitcoin will need to wait at least a few minutes before receiving it, over which the value of the withdrawn amount might fluctuate slightly.

While this may not significantly affect a customer’s purchasing power, a Lightning-enabled Bitcoin ATM offers a significant advantage in this department due to its near-instantaneous payment delivery. Lightning enables bitcoin micropayments and, coupled with the rapid speed of a Lighting transaction, a Lightning-enabled ATM allows for satoshi-level invoice precision. In other words, customers can withdraw a precise amount as close to the fiat conversion rate as possible and receive it in essentially real time.

As Weis told Bitcoin Magazine, one “major benefit of the Lightning Network” integration on Bitcoin ATMs would be instant withdrawals on two-way machines. This contrasts with on-chain transactions which “can take from minutes to hours if the customer (unknowingly) chose a low mining fee.”

Still, there are a few speed bumps in the way of bringing Lightning to every Bitcoin ATM. Weis told Bitcoin Magazine that, in order for this to be implemented in other ATMs, ATM operators will have to run their own Lightning nodes and make sure they have enough in- and outbound liquidity. In addition, he said that the current software does not accommodate instantaneous withdrawals but that he hopes to code this functionality “very soon.”

Weis said that his plugin is compatible with any General Bytes Bitcoin ATM in Hong Kong, a hardware and software company that produces Bitcoin-related products.

This post Bitcoin Dev Demos the First Lightning-Enabled Bitcoin ATM first appeared on Bitcoin Magazine and is written by Michael Taiberg.

The Bitcoin bull and bear market cycles are a pattern that produces significant developments — when the market is cold, people tend to focus on building the next wave of groundbreaking technology. One of the most interesting things emerging from this particular bear market has been a concept known as “decentralized finance,” manifested primarily by services that allow you to earn interest or borrow against your cryptocurrency holdings.

What Is DeFi?

Decentralized finance, or “DeFi” for short, is an umbrella concept describing any financial services that are built on top of public blockchains like Bitcoin and Ethereum. It also encompasses all ICO activity, which, at present, mostly takes place on Ethereum.

Stablecoins like Tether and Gemini dollar, which are essentially just IOUs for fiat sitting in reserves, do not qualify as DeFi projects by their inherent nature. Maker, on the other hand, includes both a collateralized lending system and stablecoin (DAI) that are both decentralized — making it more of a fit under the DeFi umbrella.

Several systems have emerged that also offer DeFi lending services like Dharma Lever, Compound and Celsius Network. Other services, like dYdX and Nuo, allow you to short, hedge or margin trade. Prediction markets are also an emerging decentralized financial service, with Augur being the most relevant example. Consistent among all of these services, and all that decentralized finance has to offer, is that it requires no third party, bank or clearing house, and often is entirely permissionless.

DeFi and Bitcoin

Bitcoin itself, at the most basic level, may be considered the original decentralized finance project. People who use Bitcoin are already acting as their own banks (as long as they control their own private keys) and can permissionlessly exchange value with whomever they want, anywhere. While this the simplest form of decentralized finance, it may also be the most powerful. Bitcoin users are able to open up “bank accounts,” or new wallets, in seconds. They can securely store their wealth in a value that is protected by mathematics from random inflation and can spend this value however they want.

The question of whether or not more sophisticated, decentralized financial services will migrate to Bitcoin is not a matter of if, but when. Over time, Bitcoin sidechains may be able to provide services similar to what we are seeing on Ethereum. Today, however, Ethereum is much better designed to handle DeFi services due to its complex smart contract capabilities.

Nonetheless, new projects are already being envisioned on Bitcoin, like Bitcoin Hivemind. According to the website, Hivemind is a “Peer-to-Peer Oracle Protocol which absorbs accurate data into a blockchain so that Bitcoin users can speculate in Prediction Markets.”

Why Is DeFi Growing?

Decentralized finance is becoming popular for several key reasons, which are all parallel to the ethos of Bitcoin itself. There are no banks on which people need to rely, no trust is needed to interact with the other party, access is available 24/7 and settlements are relatively fast.

And the numbers speak for themselves. As of March 2019, the amount of value locked in DeFi projects stands at $338 million, according to Delphi Digital’s thematic overview of DeFi. The research firm’s overview showcases the popular DeFi services, which they categorize by “DEXs,” “Lending and Borrowing” protocols and “Derivatives, Margin Trading, & Prediction Markets.”

Delphi also cited potential benefits of DeFi as being permissionless, censorship resistant, immutable, programmable and offering minimal counterparty risk. An important note, however, is that the report did not address the potential systematic risks of decentralized finance. Rather, it cited only near-term concerns, which touch on the notion that decentralized finance results in “non-existent links to physical/traditional assets” as well as “limited on-chain throughput” and “limited product/market fit.”

This post What Is DeFi and Where Does It Leave Bitcoin? first appeared on Bitcoin Magazine and is written by Michael Taiberg.

The Chicago Board Options Exchange (Cboe) announced that it will not list upcoming Cboe Bitcoin (“XBT”) futures contracts for trading in March 2019.

The Cboe Futures Exchange said that the company is “assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading,” stating that it has no intention to list additional contracts for trading relating to the cryptocurrency.

Though it is not confirmed, the reason behind Cboe’s futures closing might be due to its underperformance in comparison to CME’s futures contracts.

“The Cboe contracts weren’t delivering a lot of volumes anyway. The dominant player on Wall Street remains the CME Group, whose Bitcoin futures remain in play,” Mati Greenspan, senior market analyst at eToro, told Bitcoin Magazine.

The Chicago Board Options Exchange first listed its Bitcoin futures on December 10, 2017, preceding the listing of the Chicago Mercantile Exchange’s futures on December 17 of the same year. The two contracts went live shortly before the price of bitcoin began to dip from its all-time high of over $19,000.

After listing its Bitcoin futures, Cboe filed multipletimes with the U.S. Securities and Exchange Commission (SEC) for the approval of several Bitcoin ETFs, none of which have been approved.

Critics of the Cboe futures, which were cash-settled contracts (no physical delivery of bitcoin), claimed that the financial activity that these types of contracts created had a negative impact on Bitcoin because they did not involve the movement and transfer of physical bitcoins on-chain, therefore suppressing its price.

“They are both cash settled, meaning that two players trade against each other based on the price, and the loser forks over USD to the winner, so bitcoin is never moved by this market,” said Greenspan

This post Cboe Will Not Relist Bitcoin Futures Contracts for March first appeared on Bitcoin Magazine and is written by Michael Taiberg.

On March 9–10, 2019, the Massachusetts Institute of Technology hosted a two-day event, the MIT Bitcoin Expo 2019. Put together by the student-organized MIT Bitcoin Club, the conference welcomed more than just Bitcoin voices from every corner of the industry. One of those voices was that of U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce.

Peirce sat down with Gary Gensler, ex-chairman of the Commodity Futures Trading Commission, senior lecturer at the MIT Sloan School of Management and senior advisor to the director of the MIT Media Lab, to discuss the progress of the SEC’s efforts to regulate the cryptocurrency industry. Notably, Gensler and Peirce launched into a discussion on what regulators can do better to protect investors from fraud and malicious actors.

Before the debate began, both Gensler and Peirce expressed their appreciation for the emerging technology. “It’s a new way to have tamper resistant data amongst the consensus of multiple parties,” Gensler said. “My research is mostly around the business of blockchain technology and … trying to find where are the real use cases where traditional data structures don’t work as well.”

Peirce expressed her own support for the space in relation to the SEC’s ongoing efforts to properly regulate it. “We have rules on the books that we have to enforce, but on the other hand, we don’t want to stop people from doing things that are going to make society a better place to live, that are going to make people’s lives easier, and enable people to interact in ways that they have not been able to in the past.”

Later in the presentation, the two veteran regulators went on to discuss what the government can do to protect investors by possibly regulatinged cryptocurrency exchanges.

Gensler believes that “exchanges are the gateway to get good public policy, particularly around AML laws, but also around investor protection.” He continued, “In essence, that there’s not a manipulated market with frontrunning and manipulation with the order books and the like.”

The discourse was ongoing, and the most significant takeaway was that regulators like Peirce and the SEC acknowledge that, again, perhaps the current system of rules don’t apply perfectly. How could securities-based regulations be placed on all cryptocurrencies, even those that are officially defined as not securities?

The SEC, according to Peirce, is working on what may be an alternative set of rules for exchanges that do not violate the rules of listing unregistered securities. Bitcoin, which is not a security, falls neatly into this alternative rule set. And, though it is currently unclear what the exact precedents will be, Peirce’s thoughts around the subject at MIT’s latest Bitcoin Expo were nothing short of encouraging for Bitcoin’s regulatory future.

“People regulate each other in their interactions with one another, and that’s sort of the whole purpose of the Bitcoin idea … that it would be this community that would be able to regulate itself. So as problems arise, people in the community are thinking about how to deal with those problems.

“I think these markets could regulate themselves if we lived in a world that allowed that,” Peirce added.

Peirce has made similar remarks about the SEC’s awareness of the Bitcoin community’s tendency to self-regulate in the past.

Gensler and Peirce also discussed the topic of initial coin offerings (ICOs) and what is being done to provide clarity to people participating in the once-booming phase. Peirce went on to explain that the SEC has already provided some clarity for investors who want to create a company, raise funds from investors and then distribute returns based on the company’s performance. For these individuals, the existing securities rules will apply to their tokens.

There are, however, the countless number of tokens that claim to be used as a utility on the network they belong to, but originate through an ICO in which they accept funds from investors in exchange for these tokens. There are still a plethora of unanswered questions around these.

“That’s where we need to do a better job,” Peirce said, “in providing guidance in how does it change from one thing to another.” Eventually, she said, the SEC wants to remove the big gray cloud hanging over these project’s heads.

Overall, the uplifting theme of the entire discussion could be summarized by an exchange between Peirce and a member of the audience, addressing the current system that discourages equal opportunity in retail participation.

The audience member asked, “It may be hubristic, but many of us are not independently wealthy and we still believe we can make good investment decisions, and right now we’re excluded from participating. How can we move the accredited investor laws away from wealth thresholds and toward something that’s far more reasonable and accessible to mainstream investors?”

“Our accredited investors rules … I personally think those rules are not consistent with what this country is about,” Peirce admitted, “which is about people taking opportunities, taking their talents and intelligence and applying it to make their lives better. We’ve put this artificial barrier in place so that people can’t do that.”

As far as whether or not these opinions will translate into legislature, time will tell. The entire MIT Bitcoin Expo 2019 livestream recording can be viewed here.

This post MIT Bitcoin: Legislators Discuss Regulation, Potential of Blockchain Tech first appeared on Bitcoin Magazine and is written by Michael Taiberg.