Coin Center, an advocacy group that works to protect open blockchain networks, has gained attention recently due to one of its own testimony before the U.S. Commodity and Futures Trading Commission (“CFTC”). The testimony, made by Peter Van Valkenburgh, was presented during congressional hearings involving cryptocurrencies. There, Congress heard testimony about regulatory bitcoin issues and ICOs.
Valkenburgh first addressed the preliminary question of “why do we have cryptocurrencies” and what is their purpose. He stated that “cryptocurrencies, en mass, take centralized services and they turn those services into peer-to-peer internet protocols.” He shared that the purpose of bitcoin, cryptocurrencies and open blockchain networks is to “inform the mechanisms and the designs of those mechanisms that power them.” With this type of technology, there is no need for an overarching company to run the show.
He then discussed how cryptocurrency and blockchain technology works and the highlights of a decentralized system. Then, he touched based on the difference between various blockchain networks, such as graph blockchains, open blockchains, permissioned blockchains, consensus mechanisms, and proof-of-work, versus proof-of-stake. Although this information seems quite rudimentary, it seems that Valkenburgh took the right approach by treating those at the hearing as if they had no knowledge in cryptocurrency and blockchain technology. Had Valkenburgh bypassed this basic information, he may have entered into a useless and ineffective discussion.
After providing the basic background information, Valkenburgh discussed issues that could arise in the event of a hard fork and that policymakers should have a plan in place when such events do occur. He also discussed what is known as the “money creation feature” concerning bitcoin, which involves block mining, mining hardware, and economic incentives that may be able to prevent the threat of a takeover. Further, he discussed the implications of mining, why it is important, and what could happen if all the miners went offline. Those who are interested in viewing the testimony can do so in the following video.