Bridge of Trust

Cryptos Are Reaching a Crisis of Confidence

The crypto ICO craze is on. While I applaud the exciting innovation that is occurring in financial technology, bad actors are moving into the space and their action have the potential to set back the FinTech movement in dramatic fashion. The application of this technology is supposed to build confidence. Ethical practices are at the heart of establishing a “bridge of trust” strong enough to bear the load of a global financial monetary eco system. Unfortunately, the bad actors are threatening it all.

Arthur Brock authored an interesting article recently addressing this issue called Building Responsible Crytpocurrencies summed it up pretty well:

“Cause let’s tell the truth — cryptocurrencies just aren’t safe for everyday use by normal people and businesses yet.”

They are not safe for two reasons. First of all, second generation solutions using “smart contracts” are just now emerging. These have the capability to literally program in safe-guards for the token user. Second, the industry is early in the stages of self-regulation. There is a need to establish ethical standards and practices that will give those investing in ICOs a means to distinguish the good actors from the bad.

I have written before that unlike the New York and the U.S., London and the UK see FinTech as a means to establish themselves as the major player in the future monetary eco-system. As such, they are light on regulation, but also have taken steps to provide both crypto issuers and users guidance on how to enter this world ethically. Their London Token Raising Manifesto is just a first step by establishing these guidelines:

    1. Autonomy – ensure that those offered Tokens are informed of what they are and what they represent, why they are necessary, and have the information needed to determine the Token’s value to them, and are entering into such a relation freely:

      Openness

      Is everyone affected by the Tokens aware of the designers’ and promoters’ intended consequences?
    2. Beneficence – Tokens should serve a useful and necessary commercial or social purpose:

      Honesty

      Have we been truthful about actions or decisions with everyone involved, no material omissions, and told no lies or ‘half-truths’
    3. Non-maleficence – considered thinking has been done on how to reduce the risks and impact of a failure of the Tokens in whole or part, and to ensure self-sustainability after trading begins:

      Transparency

      Have we been clear and not misleading to any party?
    4. Justice – the social distribution of benefits and burdens are seen to be equitable by the parties engaging with Tokens:

      Fairness

      Have we made sure that Tokens will not result in any party being unknowingly disadvantaged or unfairly advantaged, and been fair in token distributions and use over time?

Notice the inclusion of several “Master Principles” in their manifesto. These truly are universally understood. They are why establishing and adhering to such principles will create an environment where the world that Mr. Brock envisions can become reality:

“Imagine a world where cryptocurrencies have risen to new levels of common usage and integrity. Where global and local economies are rooted in peered value networks with peered governance, far outside the spheres of mainstream politics and easy access to mutual capitalization.”

Yes. I can image that world. It is within our reach. However, we must all avoid the temptation to play the “get rich quick” game that the bad actors in the crypto world promise.  If we do, we give them legitimacy. They will destroy confidence in the world of financial technology, and along with it the promise of a better, more equitable and just monetary eco system for future generations.

The stakes are high and the game is on. Let’s play it well, and let’s play to win.

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