Home Crypto Currency Farhad and Mike’s Week in Tech: Cuckoo for Cryptocurrency

Farhad and Mike’s Week in Tech: Cuckoo for Cryptocurrency

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This week, Coinbase, one of the largest Bitcoin exchanges, added Bitcoin Cash to its service. And that’s when things went crazy. The price of Bitcoin Cash surged to three times its original price. Coinbase had to halt trading, cancel some trades, and now it’s in the process of investigating what happened — in particular, to look for evidence of insider trading.

You’ve been tweeting about this all day, so I know you have some thoughts.

Mike: I have to admit, I’ve kind of gone cuckoo for cryptocurrency. It’s just so weird, lawless and interesting! If you’d have told 14-year-old me that I’d be into esoteric new forms of digital finance in my 30s, I’d have called both you and my future self a huge nerd. And a time traveler, I guess.

So, a few things. First, the Coinbase thing is interesting because the evidence of the company accepting Cash appeared a few days before on Reddit, which gave some folks a heads up and the decision to invest in Cash ahead of the debut.

Why does that matter? Glad you asked! Well, as I noted last week, any currency that Coinbase decides to accept on its platform typically immediately goes up in price, because it’s one of the most popular exchanges and growing quickly among American newcomers. And, as we saw last night, that’s exactly what happened. Anyone who had the luck, foresight and inside information to trade on that detail probably made a lot of money.

But is insider trading illegal? If we’re talking about the securities world of exchanges like the Nasdaq and N.Y.S.E., then yes, it is very much illegal. Don’t do it. But as many of our friends on Twitter pointed out to me, it’s not illegal to trade commodities on inside information, though perhaps it is unethical! And right now, we’re not even fully sure whether Bitcoin is classified as a security or a commodity. What a world.

Farhad: What’s striking to me about this space is how lawless and reckless it is. There’s a feeling like in the 1990s dot-com era — that anyone can make it rich, that it’s a brand new space and anything is possible. It’ll probably end up in tears for a lot of people, but there’s also undeniable excitement.

Mike: I 100 percent agree. What’s fascinating are the corollaries in other areas of tech, like with Uber, for instance. Often the argument is, “What we’re doing is not illegal because a framework of laws addressing what we do doesn’t even exist.” Though to be honest, I’m not sure that argument will always hold up in court.

Uber’s problems

Farhad: Speaking of Uber, I had expected that Uber’s future would brighten after they brought on a new chief executive, but things seem as grim as ever for the company. Europe’s highest court just ruled that Uber is in fact a transportation business and not a tech platform that simply connects riders and drivers.

This is obvious to anyone who uses it — everyone thinks of Uber as a taxi — but the ruling has a practical effect: it means that Uber cannot use nonprofessional drivers and has to comply with other taxi rules across Europe. And it could affect how other “gig economy” companies — firms that, like Uber, rely on contractors to service other customers — operate.

Is this a big deal for Uber?

Mike: Like any wonderfully nuanced beat reporter, I’ll say “yes and no.”

Yes, it’s a big deal insofar as it limits a certain type of growth for Uber in Europe, namely the company’s peer-to-peer model, UberX. That basically lets anyone with a working car sign up for Uber, flooding the market with an enormous supply of cars and growing the business immensely. It’s been a boon for Uber in the United States, and the company has hoped to spread that abroad as well.

That said, some of Uber’s most successful markets are those in which the company is tightly regulated and treated essentially like a taxi service. In New York, for example, Uber is required to only use drivers who are registered with the Taxi and Limousine Commission — that is, cab and private drivers — unlike most of the other cities in the United States. And yet, New York is still a huge market for Uber, where they do quite a bit of business.

So does it cripple the business? No, and there are other cities Uber can try to push its UberX option. But it is a bit of a rain on Uber’s money parade.

What’s worse for Uber, in my mind, was that letter from a former Uber employee detailing a history of espionage and corporate counterintelligence inside of Uber for years. It’s tough to come back from being seen like your ride-hailing company is full of Jason Bourne wannabes.

Although to be fair, Jason Bourne is pretty cool. Do you think I could be like him some day?

Farhad: Ha-ha, no.

Anyway, it’s a short week. The holidays are upon us. Can we just stop talking now?

Mike: Yeah, I can hear the Tex-Mex calling my name. Peace!

Farhad Manjoo writes a weekly technology column called State of the Art. Mike Isaac covers Facebook, Uber and Twitter. You can follow them on Twitter at @fmanjoo and @MikeIsaac. The newsletter will be off next week for the holidays, and will return in the new year.

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