Decentralization

Binance Announces Decentralized Exchange, Bounty On Hacker

Submitted by Seth Goldfarb on Wed, 03/14/2018 - 17:15
03/14/2018
Binance Announces Decentralized Exchange, Bounty On Hacker

Binance, one of the world’s largest digital asset exchanges by trading volume, will be launching a decentralized exchange called Binance Chain. In their announcement, the company expressed their belief that the future will have a place for both centralized and decentralized exchanges and their intention to improve the trading experience for users of decentralized exchanged. Binance Coin (BNB), the native token on the Binance platform offering discounted trading fees, will be transferred to its own blockchain and incorporated for use on Binance Chain in addition to Binance.

The exchange also announced a bounty of $250,000 for information leading to the lawful arrest of the individual or individuals responsible for the hack that disrupted trading on March 7th. A phishing scheme allowed the hackers to collect login information from unsuspecting victims who saw their accounts drained to purchase VIA/BTC while other accounts created by the attackers sold pre-purchased VIA/BTC at the top of the market. Binance’s risk management system caught the irregular trades and temporarily closed withdrawals on the platform. Engineers then successfully managed to reverse the illicit trades, returning funds to users while keeping the funds pre-purchased by the hackers.

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A Conceptual Framework for the Regulation of Cryptocurrencies

Abstract
This Essay proposes a conceptual framework for the regulation of transactions involving cryptocurrencies. Cryptocurrencies offer tremendous opportunities for innovation and development but are also uniquely suited to facilitate illicit behavior. The regulatory framework suggested herein is intended to support (or at least not impair) cryptocurrencies’ innovative potential. At the same time, it aims to disrupt cryptocurrencies’ criminal utility. To achieve these purposes, this Essay proposes a regulatory framework that imposes costs on the characteristics of cryptocurrencies that make them especially useful for criminal behavior (in particular, anonymity) but does not impose costs on characteristics that are at the core of cryptocurrencies’ generative potential (in particular, the decentralization of value-transfer processes). Using a basic utility model of criminal behavior as a benchmark, this Essay explains how regulatory instruments can be so designed. One such regulatory instrument is proposed as an example — an elective anonymity tax on cryptocurrency transactions in which at least one party is not anonymous.

Decentralized Blockchain Technology and the Rise of Lex Cryptographia

Abstract
Just as decentralization communication systems lead to the creation of the Internet, today a new technology — the blockchain — has the potential to decentralize the way we store data and manage information, potentially leading to a reduced role for one of the most important regulatory actors in our society: the middleman. Blockchain technology enables the creation of decentralized currencies, self-executing digital contracts (smart contracts) and intelligent assets that can be controlled over the Internet (smart property). The blockchain also enables the development of new governance systems with more democratic or participatory decision-making, and decentralized (autonomous) organizations that can operate over a network of computers without any human intervention. These applications have led many to compare the blockchain to the Internet, with accompanying predictions that this technology will shift the balance of power away from centralized authorities in the field of communications, business, and even politics or law.In this Article, we explore the benefits and drawbacks of this emerging decentralized technology and argue that its widespread deployment will lead to expansion of a new subset of law, which we term Lex Cryptographia: rules administered through self-executing smart contracts and decentralized (autonomous) organizations. As blockchain technology becomes widely adopted, centralized authorities, such as governmental agencies and large multinational corporations, could lose the ability to control and shape the activities of disparate people through existing means. As a result, there will be an increasing need to focus on how to regulate blockchain technology and how to shape the creation and deployment of these emerging decentralized organizations in ways that have yet to be explored under current legal theory.