‘Rule of Trust’: The Power and Perils of China’s Social Credit Megaproject by Yu-Jie Chen, Ching-Fu Lin, Han-Wei Liu :: SSRN

AbstractEmerging as a comprehensive and aggressive governance scheme in China, the “Social Credit System” (SCS) seeks to promote the norms of “trust” in the Chinese society by rewarding behavior that is considered “trust-keeping” and punishing those considered “trust-breaking.” This Article closely examines the evolving SCS regime and corrects myths and misunderstandings popularized in the international media. We identify four key mechanisms of the SCS, i.e., information gathering, information sharing, labeling, and joint sanctions, and highlight their unique characteristics as well as normative implications. In our view, the new governance mode underlying the SCS — what we call the “rule of trust” — relies on the fuzzy notion of “trust” and wide-ranging arbitrary and disproportionate punishments. It derogates from the notion of “governing the country in accordance with the law” enshrined in China’s Constitution.This Article contributes to legal scholarship by offering a distinctive critique of the perils of China’s SCS in terms of the party-state’s tightening social control and human rights violations. Further, we critically assess how the Chinese government uses information and communication technologies to facilitate data-gathering and data-sharing in the SCS with few meaningful legal constraints. The unbounded and uncertain notion of “trust” and the unrestrained employment of technology are a dangerous combination in the context of governance. We conclude with a caution that with considerable sophistication, the Chinese government is preparing a much more sweeping version of SCS reinforced by artificial intelligence tools such as facial-recognition and predictive policing. Those developments will further empower the government to enhance surveillance and perpetuate authoritarianism.Keywords: Social Credit, information and communications technologies, governance, social control, human rightsSuggested Citation:

Source: ‘Rule of Trust’: The Power and Perils of China’s Social Credit Megaproject by Yu-Jie Chen, Ching-Fu Lin, Han-Wei Liu :: SSRN

Zorginstituut brengt wettelijke randvoorwaarden blockchain in de zorg in kaart | Nieuwsbericht | Zorginstituut Nederland

‘Blockchain kán een toegevoegde waarde in de zorg hebben, maar wees zorgvuldig’, dat is de overkoepelende conclusie van 2 onderzoeken die Zorginstituut Nederland heeft laten uitvoeren in een verkenning naar de mogelijkheden van het gebruik van blockchain in de zorg.

Source: Zorginstituut brengt wettelijke randvoorwaarden blockchain in de zorg in kaart | Nieuwsbericht | Zorginstituut Nederland

TILTing 2019 – exploring the journey of crypto-assets across the EU financial legal framework

At TILTing 2019 the Lab presented a study on the legal instruments that are, as of today, applicable to blockchain-based digital assets under European law, and the relative enforcement challenges. The broader question to be tackled is whether and how regulators deal with such challenges, and what are the interests at stake. http://ipkitten.blogspot.com/2019/05/tilting-perspectives-2019-report-2.html

Blockchain fees are broken. Here are 3 proposals to fix them.

When Satoshi Nakamoto designed the Bitcoin protocol, he had the insight to include the notion of transaction fees. These fees incentivized miners to include transactions into blocks. But initially, Bitcoin did not have, in any meaningful sense, a fee market.A large portion of early Bitcoin transactions were completely free up until 2013 (blue in the above chart). Wallet developers eventually hard-coded tiny fixed fees into their clients, thought of as donations to miners. At first these fees defaulted to 0.1 BTC, but they were driven down as the Bitcoin price rose.

Source: Blockchain fees are broken. Here are 3 proposals to fix them.

Control as Liability

Generally, unintended consequences of laws, discouraging entire categories of activity when one wanted to only surgically forbid a few specific things, are considered to be a bad thing. Here though, I would argue that the forced shift in developers’ mindsets, from “I want to control more things just in case” to “I want to control fewer things just in case”, also has many positive consequences. Voluntarily giving up control, and voluntarily taking steps to deprive oneself of the ability to do mischief, does not come naturally to many people, and while ideologically-driven decentralization-maximizing projects exist today, it’s not at all obvious at first glance that such services will continue to dominate as the industry mainstreams. What this trend in regulation does, however, is that it gives a big nudge in favor of those applications that are willing to take the centralization-minimizing, user-sovereignty-maximizing “can’t be evil” route.Hence, even though these regulatory changes are arguably not pro-freedom, at least if one is concerned with the freedom of application developers, and the transformation of the internet into a subject of political focus is bound to have many negative knock-on effects, the particular trend of control becoming a liability is in a strange way even more pro-cypherpunk (even if not intentionally!) than policies of maximizing total freedom for application developers would have been. Though the present-day regulatory landscape is very far from an optimal one from the point of view of almost anyone’s preferences, it has unintentionally dealt the movement for minimizing unneeded centralization and maximizing users’ control of their own assets, private keys and data a surprisingly strong hand to execute on its vision. And it would be highly beneficial to the movement to take advantage of it.

Source: Control as Liability

What a Bitcoin ‘Reorg’ Is and What Binance Has to Do With It – CoinDesk

“If you bribe 51 percent of the miners, they will change the ledger for you. [This] tells you just how little irreversibility there is in PoW coins,” tweeted Cornell University professor and researcher in blockchain consensus protocols Emin Gün Sirer.A 51% attack on the blockchain network is not a new attack vector for PoW blockchains. However, as highlighted by Gün Sirer, it’s also not really an attack vector. On very special instances, the majority of self-interested miners on PoW blockchains have voluntarily agreed to alter a transaction history to undo critical situations.While the situation isn’t entirely the same, in the past, blockchain networks have seen their histories altered in the wake of critical moments. This happened on the ethereum blockchain back in 2016 when over $60 million worth of coins were siphoned off from the now-defunct smart contract The DAO. It also happened on the vericoin blockchain back in 2014 after $8 million worth of coins were hacked.While controversial, both decisions were supported by the primary developer community who launched system-wide upgrades or hard forks to enable otherwise infeasible amendments to the blockchain transaction history.Yet those choices weren’t without their repercussions; the resulting ethereum fork resulted in two distinct chains, ethereum and ethereum classic, respectively.A resounding noStill, many in the bitcoin community took to social media to deride the idea as both infeasible as well against the philosophical underpinnings of the technology.In Binance’s particular case, prominent members of the bitcoin community point out that bitcoin being the world’s largest blockchain is a particularly unique case with a reputation to uphold.“Talk of forking or reorganizing the blockchain is close to heresy,” tweeted billionaire bitcoin investor Michael Novogratz. “When the ethereum community did it the project was like 5 months old. A baby. Bitcoin now has $100bn market cap and is a legitimate store of wealth.”It would also be unfair according to Adam Back – CEO of bitcoin development startup Blockstream – given that the latest Binance hack is nowhere near as severe as previous hacks suffered on the bitcoin blockchain.“A Bitcoin reorg is just not happening, and I doubt any Bitcoin industry, miners nor developers considered it either. Recall 2014 $473mil, 2016 bitfinex hack $72mil, 2019 binance $40mil etc. #NotHappening,” tweeted Back.

Source: What a Bitcoin ‘Reorg’ Is and What Binance Has to Do With It – CoinDesk

‘A Loan Shark Situation’: MakerDAO Is Leaving Crypto Borrowers With Rising Bills – CoinDesk

An ethereum protocol for programmatic lending, MakerDAO emerged as a clear market leader in part for its rock-bottom interest rates of 0.5 percent.But the code behind MakerDAO requires interest rates to do more than extract business from borrowers, it’s a technological necessity for keeping its DAI stablecoin worth $1.With interest rates rising to 19.5 percent, and DAI still worth below $1, some early borrowers are angry, feeling as though they were misled.Describing the project’s marketing tactics as akin to digital “loan sharks,” they argue their experience with decentralized finance has been worse than with traditional banking.

Source: ‘A Loan Shark Situation’: MakerDAO Is Leaving Crypto Borrowers With Rising Bills – CoinDesk

The Sharing Economy Was Always a Scam – OneZero

These days, it’s not a shared drill that’s redefining trust and supplanting institutional intermediaries; it’s the blockchain. Botsman now says that the blockchain is the next step in shifting trust from institutions to strangers. “Even though most people barely know what the blockchain is, a decade or so from now, it will be like the internet,” she writes. “We’ll wonder how society ever functioned without it.”

The ambitious promises all sound very familiar.

https://onezero.medium.com/the-sharing-economy-was-always-a-scam-68a9b36f3e4b

Facebook’s Cryptocurrency Might Work Like Loyalty Points | WIRED

https://www.wired.com/story/facebooks-cryptocurrency-might-work-like-loyalty-points/

If Facebook’s pivot from town square to private living room wasn’t laden with enough irony, here’s a new twist: Big business, it appears, has been invited to join us by the fireplace.
Gregory Barber covers cryptocurrency, blockchain, and artificial intelligence for WIRED.

On Thursday, The Wall Street Journal reported new potential details about Facebook’s long-awaited cryptocurrency plans. The company is reportedly seeking dozens of business partners, including online merchants and financial firms, in an effort to extend the reach of its blockchain-based marketplace. Facebook’s would-be partners are being asked to pitch into an investment fund, valued at $1 billion or more, that would serve as backing for Facebook’s coin and mitigate the wild speculative swings that make cryptocurrencies like bitcoin hard to spend. The pitch, according to the Journal, involves offering merchants lower fees than credit cards.

Some were quick to note that this would reduce Facebook’s ability to make money from payments in the short term. But that may not matter much—if, in the end, Facebook’s crypto effort is really all about getting you to spend more time glued to Facebook.

Facebook appears to be already building out the plumbing to make its marketplace a reality. At its F8 developer conference this week, the word “blockchain” was notably absent. But even as Zuckerberg emphasized the company’s plan to reorganize your Facebook experience around intimate relationships, his update included plenty of ways money would be involved. “I believe that it should be as easy to send money to someone as it is to send a photo,” he said, alluding to “simple and secure payments” as a core feature of his privacy-forward vision. That apparently extends beyond the peer-to-peer payments available on Venmo and Facebook’s own Messenger app. In a series of keynotes, Facebook execs touted a litany of commerce-focused improvements: better checkout for Instagram’s digital mall, donation stickers, and a new tool for small business owners to list items on WhatsApp.

Indeed, WhatsApp appears to sit at the center of Facebook’s commerce efforts—at least to start. At F8, Facebook said WhatsApp Pay, currently on limited trial in India, would expand to additional, unnamed countries later this year. The platform isn’t blockchain-based (for now) and is designed for peer-to-peer payments. But with 80 percent of small businesses in India using WhatsApp to market their goods, some form of payments processing is a natural evolution. In December, Bloomberg reported that the first tests of the crypto coin may occur in India, initially as a way for workers to send money home from overseas.

An added twist from the Journal’s report is the possibility that the coin will be integrated into Facebook’s lucrative ads ecosystem. The scheme, reportedly still under debate within Facebook, would potentially work on both sides of the ads equation: Merchants could use the coins to pay for ads, and users would be rewarded in coins for viewing or interacting with them. That reflects a growing perception—seen recently in efforts like the Brave browser, which compensates users through a token for clicking on ads—that people should get paid for their attention, not simply help internet giants make money. For Facebook, it also presents a vision of how its ads and eyeballs-driven business could continue in the company’s supposedly privacy-first era. The idea is to keep Facebook’s coins—and therefore users—tightly enmeshed in the platform.
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“I don’t believe they’re doing anything that isn’t in the service of increasing interactions on their platforms,” says Joshua Gans, a professor at the University of Toronto. Sending money to businesses presents a challenge, he notes. Compared with friends and family, businesses are more likely to dump their Facebook coins at the end of the month in favor of real money. Gans is skeptical that Facebook would pay users for viewing ads—an immensely tricky system to create—unless it involved something like a rebate for buying a product through a Facebook advertisement. On the merchant side, encouraging businesses to pay for ads and services on Facebook with the coin could be one way of staunching the flow of money out of the system.

As the Journal notes, Facebook’s foray into blockchain could look a bit like a loyalty-points system—tokens that can be earned through and spent on Facebook services, or cashed out elsewhere though partner merchants. That’s not without precedent among technology companies: Uber, for example, has Uber Cash, which rewards users for purchases both in and out of Uber with app-specific money. Gans notes offerings like the Apple Card hold a similar purpose: It’s a service that, for all the talk of disrupting the credit card industry, is mostly a shiny, heavy way to buy more of Apple’s apps and products.

A Facebook spokesperson reiterated an earlier comment: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications.”

Facebook still faces many challenges, from sorting out how it will oversee the system to assuaging the privacy concerns of users to determining how to funnel money in and out of its currency—a process that, for other cryptocurrencies, is typically handled by exchanges. It also has to contend with the realities of the global economic system, which runs on euros and yen as well as dollars. Even if it backs the currency with a basket of currencies, as reported, it “can’t be stable with every currency in the world,” says Gans. “That’s not how the world works.” Hence the need to enlist financial partners to smooth transactions in and out of Facebook’s system.

Bottom line: It’s very unclear how this will work in practice. “There are a lot of moving parts. Facebook doesn’t always do what we expect,” says Gans.