It’s no surprise that the blockchain community is moving rapidly with new innovations on an almost weekly basis. What’s surprising is that U.S. regulators have so far declined to step in, while other countries move boldly ahead with their own blockchain initiatives.

There was both optimism over new uses for the distributed ledger and nervous speculation about looming regulatory fights in the air Friday at the Distributed 2018 conference in San Francisco. Speakers alternately enthused about the latest breakthroughs in one breath, while offering opinions about what the U.S. government might, could, will or refuse to consider with the next.

“This industry is moving way faster than regulators can keep up with,” said Matthew Roszak (pictured), co-founder of Bloq and founder of Tally Capital. “Most regulators don’t really understand this. This whole dynamic is not in our favor to get great regulations to build in our space.”

Countries roll out blockchain plans

Although there was concern over what U.S. government authorities may or may not do, there was also plenty of discussion around what countries such as Taipei, Luxembourg and Malta have already done to welcome blockchain technologies with open arms.

Earlier this month, government officials in Taipei said they plan to champion the country’s blockchain industry, which will include rules and regulations to allow innovation by financial technology developers and initiatives to help industries adopt the distributed ledger.

In Luxembourg, the government recently partnered with U.S. startup Cambridge Blockchain to integrate the distributed ledger in a countrywide initiative for digital identity solutions. And the Mediterranean nation of Malta has declared its intent to become “Blockchain Island” by opening its doors to cryptocurrencies and partnering with the British blockchain company Omnitude to improve public transit.

“I go around the world and talk to other governments and they’re moving 10 times quicker,” said Brian Forde, a senior lecturer at MIT and former adviser for mobile and data innovation at the White House Office of Science and Technology Policy. Forde pointed out during a conference panel discussion on Friday that the White House has still not filled the government’s chief technology officer or science adviser positions.

Congress debates future of money

The U.S. Congress is beginning to take an interest in the regulatory landscape for cryptocurrencies and blockchain, but what could develop from that is another question. Earlier this month, the House Agriculture Committee held hearings and solicited testimony on “The Future of Money.” The federal government views cryptocurrency as a tradable commodity, like soybeans and wheat, rather than a banking instrument.

Amber Baldet, the former blockchain program lead for JPMorgan Chase & Co., testified at the Congressional hearing and described her impressions on Friday for conference attendees. “Some people are more open-minded than others,” Baldet said. “It feels like people are really trying to understand.”

The House committee’s chairman is Rep. Michael Conaway, who made news of his own earlier this year when he ended a House Intelligence Committee investigation into Russian hacking of the 2016 presidential election. Conaway closed the hearing with the remark, “As long as the stupid criminals keep using bitcoin, it’ll be great.”

Lightning addresses blockchain scale

While Congress debates the merits of bitcoin, entrepreneurs continue to roll out new innovations in cryptocurrency and blockchain. One of the more significant developments in recent weeks has been the release of the Lightning Network.

Lightning is designed to address problems of scaling decentralized blockchains. Led by former Harvard lawyer Elizabeth Stark and backed by Twitter and Square founder Jack Dorsey, Lightning Labs has introduced a different payment structure that sits on top of the bitcoin blockchain.

Instead of waiting for a transaction to be verified by all of the nodes in the blockchain network, Lightning’s peer-to-peer solution eliminates block confirmation times and reduces cost to nearly zero. Lightning was released in March and has shown healthy use to date. The network grew from 7,000 opened channels to more than 10,000 in just the last month, according to numbers posted by a bitcoin tracking site on Saturday.

“How many have you found it easy to use bitcoin?” asked Stark during her appearance at Distributed on Friday. “I haven’t. Do not discount the power of this technology because it may seem crazy today, but I believe it is going to change the way we transact on the internet.”

Prediction platform introduced

Another major development in recent days has been the introduction of a new prediction market platform, built by Augur on the Ethereum blockchain using open-source software. Users can bet on just about anything they desire, from Donald J. Trump’s re-election chances to this year’s first hurricane landfall in the U.S.

For the moment, Augur’s user base is confined to Ethereum owners, part of the company’s cautious plan to grow slowly. Nevertheless, Augur announced via Twitter on July 18 that its first markets were successfully resolved and $20,000 in bets were paid out, mostly surrounding the recently-concluded World Cup.

“Augur is the most complex set of smart contracts that will ever be deployed,” said Augur co-founder Jeremy Gardner. “Anybody can create a market for anything.”

Nearly 10 years after the birth of bitcoin and the blockchain, the financial technology world still has the feel and flavor of the Wild West. Unregulated wagering and financial transactions that bypass even the blockchain’s nontraditional system are just the tip of the innovation iceberg.

The ultimate irony is that if the government ever does step in and create a regulatory framework for bitcoin and other cryptocurrencies, ensuing industry relief could send values skyrocketing. Arthur Hayes, co-founder and chief executive of the Bitcoin Mercantile Exchange or BitMEX, recently told an interviewer that “one positive regulatory decision” could propel the price of a bitcoin to $50,000 by the end of this year.

Meanwhile, Hayes and his colleagues keep pushing the protocol envelope a little farther, hoping to stay one step ahead of the sheriff. “A protocol, by its nature, cannot break the law,” said Hayes, during his presentation at the conference. “But there are always five [regulators] who can easily put us in jail for whatever they feel like.”

Photo: SiliconANGLE