It's widely accepted the concept of a decentralized cryptographic ledger, better known as Blockchain technology which supports cryptocurrencies such as Bitcoin, have suffered from regulatory issues since inception.
In this sense, there have been many rumours which fed anxiety preventing developers and investors from adoption, but what exactly are the reasons causing this?
THE PROBLEM OF LICENSING
The open source licenses used by major public blockchains like Ethereum and Bitcoin enable collaborative and decentralized development, encourage adoption, and allow the community to discuss the project in an open, public forum where anyone can contribute if they're so inclined.
However, such open, warrant-less licenses are quite different from traditional proprietary software more commonly used in financial applications.
The complexity is so great that the no warranty, use “as is”, open source licenses for Ethereum were one of the primary reasons IBM decided to drop it and license their own solution - hyper ledger. Although distributed as open source under the Apache license, the project is managed by a select governance of IBM selected members. Meaning the development is still somewhat centralised to their needs.
The conclusion of IBM seems to have obvious repercussions. If open source, no warranty licenses used by leading blockchains are too complex to negotiate, major players will tend to create their own ecosystems through less expensive technologies and licenses. We can observe evidence of this institutional trend within IBM's Hyperledger Fabric. They have the benefits of anyone contributing to the code, although final say is steered by a select group. Meaning they still have final control in the product rather than an open project so to speak.
Although most of the internet is powered by GNU/GPL/Apache or MIT licensed software that's source code is distributed free of charge and open for anyone to modify, it has been an asset rather than the hindrance to a plethora of software that comprises the internet we use today. From Linux and FreeBSD operating systems such as Debian, Ubuntu and CentOS to Web servers such as Apache, Nginx, Lighttpd. Even peer to peer software inspiring Bitcoin like BitTorrent, would arguably not exist if it wasn't for this open source methodology. If these were projects that had preferred to be controlled by a select group of delegates, they may not be an internet as we know it now.
THE PROBLEM OF INFRASTRUCTURE
According to Jason Bloomberg, contributor of Forbes:
“We need to make cryptocurrency as we know it illegal.”
His question stems from the fact that is decentralized and not permissioned, the reputation of the infrastructure of Blockchains is unquestioned and this is a weak link in the lawful use of technology.
That is, if anyone can sign up as a node or start mining, how can we ensure that criminals do not? Although to the same extent, one can argue we also obviously cannot ensure criminals do not use firearms, drive vehicles intoxicated and dangerously or purchase goods online with a fraudulent Visa or MasterCard.
The key point here is that criminals already attempt to leverage the tech and are largely unsuccessful. As pointed out by the Subcommittee of the US Congress on Terrorism and Illicit Finance, their conclusion outlined terrorist groups had little success in funding terrorism through Blockchain as an official pronouncement. Citing difficulties in technological aptitude and everyday use, defaulting to using convenient, untraceable, cold hard cash instead.
It's observed that the American report severely decrease the relevance of the issue of infrastructure. Also, the issue of licensing is mitigated when we keep in mind that while much of the Blockchain ecosystem is built on these licenses, little fanfare is made in respect of such costs.
After all, pick any large website or public software service - Youtube, Facebook, Twitter, and Google all run on MIT/GNU licensed warranty free, totally open source software under the hood. In the cases of Google, Twitter and Facebook have contributed thousands of hours of work to the world of open source technology being used and developed further by an active community or students, hobbyists and professionals.
Projects such as Bootstrap, React, OAuth, Google APIs and Android are just a few notable mentions. The system is clearly working, it's been working, and is being used as the lifeblood of an entire industry for years now.
Knowing this, it makes a clear case indeed of what the likely "problems" of Blockchain are that deserve correction according to the establishment. That being - public, non-permission and decentralized Blockchains.
The obvious knee-jerk “reactions” would be non-regulation, nor access to greater liquidity markets of current crypto ecosystems. To attempt to throttle growth, by refusing to play ball.
The “solution” calls for a "multilateral effort" of countries to establish criteria for regulation, and large conglomerates joining forces in their proprietary closed source systems that enable the creation of wasteful bureaucracy by a handful of large banks of reputation, immutable, perennial, private, permission and of course centralized. Taking the power away from the participants and putting it in the hands of few.
All based on an invisible threat to which is a complete fabrication and serves only a few in control to continue perpetrating.
PUTTING PERSPECTIVE AT TEST
Finally, in order to illustrate this scenario we present a statement freely discoursed from Yoon Suk-Heun, governor of FSS, made during the opening ceremony of a fiscal conference held in Seoul on September 6th with the participation of 15 officials countries.
“The main objective of the country is to improve transparency in transactions to prevent illegal activities. It is necessary for international coordination, including the sharing of information between countries in preparation for the risk of money laundering that may arise as new financial products or services emerge.”
As we know all fiat accessible exchanges run KYC (Know your customer) and Anti-money laundering efforts, checking ID cards and doing facial scans. This is by far more than cash systems currently include and shows that Blockchain technology is actually a springboard into a more secure and accountable society.
The innovative twist with cryptocurrency is that secure layer does not require us to lose the individual power of peer-to-peer finance. This means that no single central body such as a fiat currency's central bank is actually required to operate and continue facilitating the network. This can all be done completely automatically at code levels like a server that's operating inside Googles data centre populating your searches and emails. These services are programmed to operate and simply perform their job.
In an effectively operating crypto society, the requirement for a government currency is limited and potentially obsolete lacking dependency. Furthermore, the transparency of spending (for example on budget and expenses) is now increased. This means genuine accountability of Government public spending is attainable.
Society has endured years upon years of scandals within the public service governing bodies of the world. Many abusing their position to write off second homes, luxury extravagances, and all kinds of questionable items. Could this behaviour withstand the scrutiny of a public blockchain? Probably not, and there in lies the rub.
Blockchain-based technologies empower the citizen in such a manner that financial governance is taken into their own hands. No matter how it gets spun, it's a hard pill to swallow for some. There's no need for a central bank in a crypto economy.
Naysayers can claim it will be used for illegal activities and a threat to society. They will never accept the benefactor it can be until it rolls over the old paradigm like a freight train heading to the next station, demanded by the public to which it serves.