Upper Deck Versus Bitcoin — Distributed Counsel 21

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The Coinstar/Bitcoin Announcement and a Remembrance of Grass and Snow 

When I was young there were two dependable ways to get money: lawns and change.   Mowing lawns was a right of passage for a kid in suburban Detroit. You got $5 per lawn, irrespective of the size, and you cut them once a week.  I hated edging but I needed the money. I needed Lemonheads, Reese’s peanut butter cups, and, most of all, Upper Deck baseball cards.  So I would drag the Toro out of the garage and wheel it around the block on my route. The neighbors usually had their own mower but I liked to use mine. I knew how to empty it, and it cut the grass at the perfect length.  

In truth I loved the job.  I loved the smell of the grass mixed with gas from the motor.  I loved pulling the starter cord. I loved checking the oil level with the dipstick, and the rainbow it made on the metal in the sun.  When the Toro wouldn’t start, my dad would come out and tell me either “the mixture is too rich” or “the engine is flooded.” I’d nod in the way that you are supposed to nod when you’re one of two men discussing a motor, even though I didn’t really know what he meant.  Usually I just had to wait. 

When I got home, cash in hand, I’d run up the stairs and lock the fives away in my small green metallic safe.  The safe held only one other thing in those days, my other great and sacred possession: a Rickey Henderson rookie card. 

It got it for Christmas in 1988 (not this actual one). Each month I would check Beckett, a magazine which published card prices in the same sense that a used car dealership published car prices. The truth is I couldn’t have sold Rickey for any price and that card is still in that house somewhere. I’d put Rickey back in the safe with my new fives and lock it.  Then I’d head downstairs for dinner. If I was lucky, we had BBQ chicken and corn.  Those summer dinners, after the long work outside, are still the best food I’ve ever eaten.

The winter counterpoint to the summer lawn in Detroit is, of course, the snow-covered driveway.   In my early years, a large snowfall was a full employment guarantee for anyone with a shovel. There were lots of elderly folks around my neighborhood and they were just happy to be able to get to their cars.  You could get $10 for a driveway in 1991. Big money. And so every snowfall of any consequence, a hardy pre-teen proletariat would come streaming out into the neighborhood, shovels in hand, vacuumed by awaiting profit.

Then came the trucks.  They had four wheel drive, salt in the back, and large bulldozer blades on the front.  They poached our driveways like ravenous beasts from the deep. The trucks could do a driveway in a few minutes, and salt it.  They had a marketing strategy (leaflets), and made response time guarantees. I just had a shovel. We lost the driveways like the famous phrase goes: gradually then all at once.  By ‘93, they were gone.

That left change.  I didn’t get much pocket money when I was growing up, but if I could find it, it was mine.  And there was change everywhere. We had deep, easily removable cushions on our couch. We had jars near the door that pennies and dimes and quarters trickled into, and two drawers in the kitchen that always seemed to have something.  My sister and I would forage around and combine what we found. There were no Coinstar machines then. You had to roll the change into paper containers so that a bank would take it.  Nickels were blue. Pennies were red. Quarters were green and a full roll meant ten dollars. Stacking the rolls felt good. Their smooth cylindrical weight felt how money should. We would pile them into a pyramid on the floor under the rapt supervision of our dog, a Golden Retriever named Bellamy, then divide them, then pile them again. But the addition to my account at the bank seemed abstract.  I liked to get the cash right away and horde it in my metal box with the Rickey Henderson card. Being a kid is a cash business, at least it was back then, so I would have loved a Coinstar machine.

Coinstar has announced that they will support Bitcoin (minus their exorbitant fee of course), and I think this is a genuinely interesting experiment.  I would love to see the data on selection of Bitcoin versus cash (or gift cards) by age group. This sort of initiative–converting loose change to Satoshis–has the potential to introduce Bitcoin to vast new audiences.  It is a great idea, and I hope it is priced fairly. But I wonder if anything has changed. Would a 12 year old now prefer Bitcoin to cash? Is holding Bitcoin “cool” in any sense? You’ll have a hard time spending it. And if kids now are like I was then, saving for the long haul is a sucker bet in the face of the obvious value of a pack of Upper Deck baseball cards.   I guess we will find out.

Two Houses, Both Alike in Dignity

Coindesk published an interesting comparison between EU and US regulators.  The author surmises that the reluctance in Europe to lay down EU-wide cryptocurrency regulations is a product of Napoleonic traditions as well as general inertia and bureaucracy.  The SEC by contrast acts more quickly (or perhaps less slowly) because of the American (and English) common law tradition and the fact that it polices essentially a unitary securities environment.  The conclusion seems to be that this will continue, European regulators will sputter and the SEC will bring a raft of enforcement actions in the New Year.  I’m not sure I buy it, the sputtering or the raft. 

Ripple’s Market Valuation is Called into Question

Does the market value of a coin matter or is this just how we keep score for now?  Messari has published something of an expose on the valuation of Ripple and the twitterverse can speak of little else.  Forbes has picked it up.  This is one to watch but I’m not sure it will affect price.  ETC was 51% attacked and nothing happened.

France Fines Google

Major news on the GDPR front.  France’s regulator, the CNIL, has issued a fifty million Euro fine to Google.  The decision takes issue with Google’s consent procedures–in particular, whether the consents are sufficiently informed and explicit. Moreover, some of the information is allegedly incomplete–for example, the CNIL claims that it is not clear consent is the legal basis for ad personalization (see Article 14(1)(c)) and retention periods are not always provided with other information (see Article 14(2)(a)).  The CNIL also found the existing disclosures about purposes for processing and categories of data to be “too generic and vague,” while noting that “the processing operations are particularly massive and intrusive because of the number of services offered (about twenty), the amount and the nature of the data processed and combined.”  In other words, be succinct and accurate, but describe everything you do fully, completely and without ambiguity.  This seems hard if you’re Google.

The CNIL also takes issue with the way Google obtains consent for ad personalization, finding that the consent is invalid because it is not specific and unambiguous (see Article 4(11) (definition of “consent”)).  It is not specific because it allegedly relies on a blanket consent to Google’s policies and not unambiguous because the ad personalization configuration contains “pre-ticked” consent boxes.   

Google has announced it will appeal.

We can take away a few things from this:

  • Consent appears to be at the forefront of regulators’ minds, in particular the manner in which it is obtained. Bottom line: consent is hard. And the difficulty in obtaining it increases with the complexity of the offering.
  • Regulators are hunting the big trophy bucks.  Oftentimes, when confronted with new regulatory regimes or industries, enforcement authorities are tempted to find some “easy wins,” to develop the caselaw and to send a message to the market. This is a totally valid approach, a good example of which is the SEC’s approach to ICOs and the cryptocurrency space generally.  EU regulators, it appears, are going a different route by attacking perhaps the biggest and most well-resourced target of them all.
  • Personalized advertising will continue to be a target.  If you don’t believe me, here is a quote from Privacy International

“One of the key points in CNIL’s decision is the lack of transparency and valid consent for Ads personalisation. The exploitation of personal data in the Ad ecosystem, from Google to data brokers and AdTech companies is of serious concern to PI. The decision gives us confidence that our complaints against seven data broker and AdTech companies filed to CNIL, the Irish DPA and the UK ICO in November 2018, will prompt similar scrutiny and action against these lesser known companies which amass and exploit the personal data of millions of people.”

One last request: my friend and fellow-newsletter-sender Pavel, who authors the must-read “P.S. You Should Know,” frequently ends his posts by asking how he is doing, and what readers would like to see.  I’m stealing this idea. What do you like to read about? What do you hate? What would you like to see more of? Let me know however you want: email, comments, LinkedIn comments, tweets, voicemails (if you must), whatever.

As always, thank you for reading.

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