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The Weekend Read: June 19

1. This Week in CBDC

I asked our Tim Grant for the R3 take on the Cad-coin news (see Canada experiments with digital dollar on blockchain), also know as Project Jasper:

mcdtv0@gmail.com

"Tremendous progress this week with our Canadian partners as we saw the first public outing (see FTWSJBloomberg) of our ongoing collaboration with the Bank of Canada, Payments Canada (the artist formerly known as the Canadian Payments Association), BMO, CIBC, RBC, Scotia and TD. Our shared goal is to understand the mechanics, limits and possibilities of distributed ledger technology in an experimental wholesale payment system environment. Very much a proof of concept, we are looking to explore a number of key questions related to access, cost, security and resiliency, collateral management and transparency.”

Bank of England's Mark Carney has a very well written speech that covers Fintech in general and calls out DLT specifically, full transcript here:

FinTech has the potential to affect monetary policy transmission, the safety and soundness of the firms we supervise, the resilience of the financial system, and the nature of shocks that it might face. It could also have profound implications for the Bank’s secondary objective, as supervisors, to facilitate effective competition between the firms we regulate. 

Mr. Fedcoin, JP Koning, is back with another post on the relative merits of central bank digital currency. The post is worth a read for its "so what" comparison with an unsexy system that just works: Fedwire.

2. DAO Danger

The big headline this week was the hack of TheDAO, the smart contract decentralized autonomous organization that recently raised over a billionty dollars in their initial crowdfunding raise. There have been lots of very good posts on this subject in the last few days; a non-exhaustive list includes posts by Vitalik, Emin Gun Sirer, Matt Levine, a few by Peter Vessenes, Ryan Shea.

The news is moving a bit too quickly for this post to stay current, but one non-tech lesson is clear: the massive capital raise and subsequent attention on TheDAO was too much, too soon. One could argue that the massive price run up in Q4 2013 was the worst thing that could have happened to Bitcoin at that point in the technology's (and community's) development/maturity cycle. It was like watching a young hoops prospect going pro too early.

For TheDAO, their rush to ‘market’ and the ridiculous sums that it garnered in the crowd funding did it no favors. Stephan Tual, Slock.it’s founder and one of TheDAO’s creators, had the audacity to claim that “the unthinkable happened” in his post-mortem blog post. Let that sink in. Unthinkable?! You created a $150m+ bounty in your v1 software that was running on an extremely complex and young platform. It would be unthinkable for it not to be attacked. Perhaps in retrospect the first crowd raise could have been a bit smaller than ~1/5th the float of Ethereum...

As a palate cleanser from all the above, please enjoy this mini-profile of Vitalik from earlier this week.

And Happy Fathers Day to all!