As an aside from our examination of ACID vs BASE software design. The recent allegations of insider trader style conflicts-of-interest and market affecting foreknowledge seem to be missing the whole point of the distributed database that is the blockchain. Thus, let’s take a moment to investigate and determine if this is an issue.
As an incredibly simplified explanation of the blockchain, we’re concerned with the distributed nature of the network. The blockchain works on the premise of cryptographically-difficult-to-produce-results that are relatively easy to verify. If I want to “mint” a new “coin,” I do a bunch of difficult math to add transactions to the blockchain in a way that makes it cryptographically verifiable. My reward for doing the math the fastest is a “coin” or series of coins. To prove that I actually did the math, which added those transactions to the blockchain, other nodes check my work. This is what ratifies the transactions on the network, and ratifies is the correct word because the network works on several nodes all voting that the math is valid. The distributed nature inherent in the blockchain, the fact that I can’t get a coin or execute any transaction on the network without submitting to the network overall, is what revolutionizes the economy.
This is why accusations of insider trading or any other market affecting foreknowledge or ability to affect change are moot given the transparent nature of the network. Sure, CoinBase and other exchanges and anyone involved in the growing crypto-currency industry should be transparent and tell their wallet addresses. Then we could watch their transactions. WE CAN WATCH THEIR TRANSACTIONS. I can’t emphasize this enough. The blockchain lays the entire economy bare for anyone willing to bring the processing power to analyze. Ultimately, it doesn’t matter what they tell us. They could lie through their teeth but we can follow the money. We can always follow the money. They can’t hide anything. Whether or not we can tie any activity in unacknowledged wallets to these interested parties doesn’t matter. If they make a move, in anyway, for any reason, we’ll notice, and we can move to counter.
Thus, there is no “insider trading”. The advantage of that foreknowledge is minimal as that activity will be noticed and chased. It forces the market place to produce actual value. It demands a certain authenticity in business. Just look at Litecoin founder Charles Lee. Ultimately, I would prefer if he hadn’t fully cashed out. That would mean he still had skin in the game. If he had made his personal wallet address public, the public could have watched his wallet activity. In a weird way, his wallet could be “The Dow” of Litecoin. As long as he holds his assets, he believes in the product. Now, whether or not you believe in him is up to you. However, it would be clear and authentic. However, again, it doesn’t matter what he tells us. We can watch the blockchain overall and follow the trends through the money transactions.
I never thought I would give hipsters credit for anything. However, their unrelenting pursuit of authenticity is the basis of economy on the blockchain. All the transactions are laid bare. Transaction fees minimize the benefit of “laundering” or distributing transactions in any attempt to obfuscate a trend because the overall trend is still noticeable: immediately noticeable. I don’t care if someone sells all their “coin” in one move to get out of the market or as millions of automated transactions in an attempt to hide things. It’s still happening, and I can see it. In real time. I can respond. With any automated algorithm, if I want. Which is where things get a little crazy. That’s an article for another day.