Name: Balancing The Ledger: Facebook, ICO Ad Banning, and Child Pornography on the Blockchain
Uploaded: 2018-03-29
Duration: 8 min 59 s
Description: The latest in fintech, crypto and blockchain news.

[MUSIC PLAYING] Welcome to Balancing the Ledger, where we hash out the latest news as it relates to cryptocurrencies, blockchain, fintech and beyond. I'm Robert Hackett. I'm Jen Wieczner. And today we're joined by Andrew Nusca, who is our L.A. bureau chief at Fortune, also our digital editor. Thanks for having me, guys. Let's start off by talking about Facebook. Everybody is bashing Facebook right now. They're under a lot of heat, a lot of pressure from customers and from regulators. What's going on? There have been a series of reports at this point about this company called Cambridge Analytica. And it's a very technical situation. But in essence, it involves data going through Facebook's network, and whether or not it should have been used for nefarious purposes, I suppose you could say. And it's really a bad look for the company, because the company has kind of been very insistent that it didn't have a problem. And now it clearly has a major problem. And one of the great things about blockchain that people are hyping up, they say, oh, this is an opportunity for people to take control of their data again. Jen, do you see an opportunity for blockchain to kind of pose an alternative to Facebook? Absolutely. Yeah. There's a number of companies that are saying now, well, if you could only keep control of your data with blockchain technology, then this is a way that you wouldn't have to give it over to companies like Facebook, which are centralized entities, which is exactly what blockchain was invented for to get around-- blockchain being a decentralized ledger, where you could potentially keep your own records and not have to entrust it to some of these companies that have proven time and time again that they cannot be trusted with your data. But that's kind of a difficult thing here, to get a bunch of users on board with a new technology. We're all on Facebook. Our parents are there. They've got-- The world is on Facebook. They've got billions of users. Yeah. I don't even know what Mark Zuckerberg's mission statement is at this point. It's probably something related to damage control. But it seems like it's going to be difficult to get people to move on to some kind of blockchain-based alternative. I think right now there's definitely a groundswell of people who want something else. I'm sure you've both seen folks saying, I'm going to delete Facebook or get off of it or stop using it, or some-- Elon Musk, we've seen. The WhatsApp founder, Brian Acton. That's right. That's right. And there's something there. I don't know if it's actually going to happen. But there's something there. But here's the problem. That's kind of at odds with Facebook's varied business model. Facebook is, whether they say it or not, a media company. And setting aside the fake news problem and the content idea, they're a media company in the sense that they sell against advertising. They're selling our content against advertising. And if we keep our data, then they can't easily target. It restricts their ability to do all of the things that make them money. Why would they do this? Well, there are some companies actually that are now trying to do just that. They're targeting the advertising space. For example, there's a blockchain company called Shopin, that's working with companies like Facebook, but mostly for retailers, where you would actually keep control of your own data. So you wouldn't have to stop shopping or using the companies that you like, but at the same time, you would be able to take control of your data, whereas also giving it to those companies so they could do their targeting. It just-- they would not actually own your data and then be able to give it away freely. So I think there's potential value in that. Yeah. That could work. I mean, I think that the thing that's very clear is not so much that we don't have control over our data, because Facebook does make a lot of that possible, it's just impossible to find, but that we don't know what data is out there, and what-- we don't feel like we have a good sense of it. That seems to be the bigger problem to me. Based on advertising, let's segue into some big news in the cryptocurrency world, which is all of these big publishing platforms are banning cryptocurrency ads. It actually started with Facebook earlier this year, Alphabet followed suit. And now this week we have Twitter jumping on board and saying no to initial coin offering ads. Jen, why should they get rid of these advertisements? Well, I think it's a long time coming. I mean, we've actually seen not just questionable ads where they're marketing ICOs that may be illegal and other products and trying to take advantage of consumers. But often, they're actually phishing scams, which we've seen, where they're actually doing spoofs, making it look like these are ads for products that consumers are actually searching for in the cryptocurrency space, that then turn out to be malicious sites that suck up their data and take their money. So this is not just a problem with spam. It's actually a problem with scams and consumers getting taken advantage of. Yeah. That's a great point. Lots of the thought leaders in the cryptocurrency world, like Vitalik Buterin, the creator of Etherium. Somebody will tweet under him and say, hey, I'm giving away free ether. Send your address this way. But it's a scammer. It's somebody who's posing as him trying to dupe people into sending their own bitcoin that way, or ether. You don't want to take candy from a stranger. And you also don't want to take crypto. Exactly. Exactly. So this advertising thing, there have been ads following me around the web. I know this, like, crypto genius reveals the next bitcoin. Have you seen these? I haven't. Have you gotten these? I haven't. But you guys are further in, I suspect, than I am. You must have a better ad blocker than we do. Yeah. Seriously. Look, I step back on these a little bit, though. I cringe because it's like, OK, do we really want to get rid of the entire category-- alcohol, tobacco, firearms, and cryptocurrency? These are the things that plague our society? We certainly don't ban other kind of financial instrument ads. Well, speaking of banning, there's also now this issue where on the very blockchain itself could be some illegal material, such as child pornography, such that if you actually own a copy of the blockchain, which as many people do if you're mining it, if you're using it, you keep a copy of this on hard drive, that could be illegal. Yeah. So some researchers recently came out with a paper in a science journal. And they said that actually, yeah, it could be illegal to own a copy of the blockchain. The blockchain's very premise is to be distributed, owned by lots of different people out in the public. But you've got some nefarious actors who are embedding terrible things, like child abuse imagery inside of it. In my opinion, I think that the way that stuff is encoded in data, it's not like it's actually the image itself. So I think that there is-- you could parse that point. That's true. You'd have to actually make the decision to know it was child pornography and click on it in order to actually download the image. Otherwise, it's just encrypted material that's just on this blockchain, but you're not actually-- it's not actually visible to you. And you'd have to actually intentionally see it if you wanted it to, which is a different thing. Because I assume most people who are using the blockchain technology are not actually looking to see that type of material. And this might be an opportunity for the law to start catching up. Because I'm no legal expert here. But I recall that it's really around possession. So if it's merely possession, that's kind of a challenge in that circumstance that we're talking about here. And obviously, you wouldn't blame Verizon or AT&T or your internet service provider just because they have that kind of material passing through their tubes, their wires. Do we really want that, too? I agree, yeah, intent is a huge thing here, but the technology is just unprecedented. Let's take a turn and talk about a story that you recently wrote about-- Sure. --college students who are using their loans to buy cryptocurrencies. Oh, my gosh. Yeah. Tell us what's going on here. This is a silly little thing, but it's kind of amazing. Because I have college loans, and I couldn't fathom doing this. But this is before my time. There is a small study that was done-- not a large one, not a scientific one-- basically asking students if they had been using any of their student loan money of any kind to buy cryptocurrencies. Now, of course, you shouldn't be doing this to begin with, because your student loan money should be used for educational purposes by definition. It seems like that's part of the premise of taking a student loan out. Well, OK, Sure. If you have a crypto-- They're calling it living expenses or something? --class, yeah. Sure. I mean pizza, crypto-- Blockchain 101. --books, bitcoin. But what I don't-- what's amazing. So it was about one in five students were doing this in this very small study. Again, setting aside the moral, or it's certainly not a legal problem, it's kind of amazing the notion of taking something that is a very, very solid financial instrument, a student loan, and putting that money into vault. I mean, it's leverage. You're learning about leverage right there. And we also saw people buy mortgages with crypto, or they were taking out mortgages in order to buy cryptocurrency. Which just seems so safe. That's what you want to do with your home is invest in probably the most volatile thing you can invest in right now. It's a crazy thing. Obviously, somebody is going to come out ahead and say that they won. But so many people are going to come out behind, especially now with the way the market's going. I really hope that people are not doing this in earnest and putting their loans up for Bitcoin and whatever else. You just have to remember, you shouldn't ever invest more than you are willing to lose. People like Vitalik Buterin, everyone else who's expert on this. People know because they have lost everything. The thing about a loan, you've got to pay it back. Right. Right. Right. Well, that's all we have time for. Andrew, thank you for joining us. Thanks for having me. Signing off, I'm Robert Hackett. I'm Jen Wieczner. And we'll see you next time. [MUSIC PLAYING] 

The latest in fintech, crypto and blockchain news.