Lessons from bans – Uber and Bitcoin

Bans on Technology

The last two weeks have seen 2 major bans that affect global products. Uber, was banned in London, and Cryptocurrency exchanges and ICOs were banned in Mainland China. These two bans had one thing in common.

Wrong Usage

The wrong usage of a complex but highly efficient transactional and distributed computing system caused problems for all stakeholders concerned i.e. users, governments, service providers, intermediaries, economy etc.. In the case of Bitcoins and ICOs, there were lots of fraudulent schemes. In the case of Uber, the background checks of drivers weren’t good enough and had led to multiple crimes in a large city. These problems if left unchecked would lead to far more negative consequences for these institutions and for the governments that promise to protect citizens and their assets.

Response

Bitcoin – mostly represented by the Bitcoin Foundation, didn’t make a public all-out effort to negotiate the ban. However,  Ethereum had some representation in China, to possibly talk with authorities. In this void created by a national ban in China, has risen a new crypto-platform – that of NEO. NEO is called the Chinese Ethereum because of its functional similarity to Ethereum’s Turing Machine.

Whereas Uber, and its new CEO led an amazing response, firstly by apologizing to the Londoners (both the citizens and the administration). On one hand, they mentioned that as a company they would introspect about their behavior, while on the other hand, they would appeal the ban in the courts of London.

Mature Response vs. Immature Response

This response from a mature and level-headed management team demonstrates a few things: Firstly, centralization of authority and power, within the structure of a modern firm is a very effective at running a decentralized and distributed technical system. Secondly, it might be difficult to overturn a ban legally, however, as ecosystems mature and the good users of a system far outnumber the bad users, law would potentially side the good. The possibility of lifting the ban increases proportionally with the corrective actions taken by the affected firm.  With the crypto-ecosystem – where there is no clear governance structure, it will be difficult to find mature representation and convince existing institutions about the need to overturn a ban. A few questions arise:

*How can ICO’s who have very little structure of control return the money raised from people on some ICO exchange?

*Who will self-regulate and mandate reparations caused by these fraudulent ICOs?

*Ethereum as a protocol is developing, but will Ethereum support a reputation model to support only valid ICOs, now that ICOs are by far the most popular Ethereum application in the market.

If a  structure of control is absent, maybe an ecosystem driven way to moderate applications of the decentralized technology is needed. If moderation of applications, users and participants do not happen – then the whole ecosystem suffers.