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In 1998, the SEC published a primer on “plain English writing” for public filers. The document was largely a response to the jargon and marketing fluff that began polluting IPO disclosure documents during the early internet boom.
Warren Buffett wrote the preface.
“For more than forty years, I’ve studied the documents that public companies file,” he said. “Too often, I’ve been unable to decipher just what is being said or, worse yet, had to conclude that nothing was being said.”
Possible explanations?
Perhaps the reader lacks sufficient technical knowledge. Perhaps the writer doesn’t know what he’s talking about. Perhaps an issuer is hand-waving to distract from a lack of substance. Or perhaps it’s simply that a well-intentioned author fails to communicate their message effectively to intelligent and interested readers.
The SEC’s primer offers advice I’d give myself. Present the big picture first. Think carefully about your audience. Cut words. Shorten sentences. Kill jargon. Relentlessly prune bullsh*t.
Twenty years later, there is plenty of interest and intellectual horsepower flocking to the new “internet of value.” And the same old communications problem is rearing its ugly head.
Substitute “white papers” for “annual reports,” and “token sale” for “IPO” if you’d like. But the only substitute for “plain english writing” remains “plain english writing.”
A communications upgrade would protect consumers by helping them truly understand what they’re buying. It would help create fairer and more efficient markets that level the information playing field for all crypto investors. And it would preserve the industry’s ability to facilitate capital formation around open-source networks.
If those three goals sound familiar, they should.
They’re in the SEC’s mission statement.
-TBI
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I Like Pictures
ICYMI, there were some beautiful upgrades to my favorite free data resource, OnChainFx. Github commit activity, and night mode, baby.
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TBI’s Compression Algorithm
Business Insider reports crypto projects are being “intentionally” opaque with roadmaps. BI engaged ICORating to study the progress and communications of the top 50 token projects from early 2017, and found that most haven’t publicly revealed how they are spending funds, and 13 had taken down the white papers and product roadmaps that had been published prior to their sales. Only 1 in 5 currently have full working products.
Bloomberg’s Matt Levine says (gasp) reading Edgar filings improves fund performance. In one that’s near and dear to our hearts, Levine shares a paper from Rice University researchers that shows hedge funds that download filings from Edgar have 1.5% higher “abnormal” returns than funds that skip Edgar, a large and statistically meaningful difference. So, what, 150% for the crypto equivalent?
German investors Elad Verbin and Al Esmail say we overestimate crypto markets’ efficiency. The problem? We’ve taken “a principle that was designed to incentivize algorithms to play by the rules, and applied it to people” who do not always act rationally or make optimal financial decisions. We’ve underestimated behavioral economics — herd mentalities, poor decision heuristics (“XRP is cheap!”), outright laziness, etc. — and that needs to change. Bitcoin’s game theory was relatively simple and noncontroversial. As long as 51% of mining capacity remains honest (or lazy), the system works. Its incentive scheme is fully automated. With other systems, the layers of complexity and subjectivity are many, so the incentive scheme is harder to design. Perhaps token issuers need public policy experts to complement their scientists.
Behavioral Crypto-Economics: The challenge and promise of blockchain incentive design
Coinbase announces ERC-20 support. General Manager Dan Romero told CoinDesk that once the regulatory environment gets less uncertain, “you will see Coinbase adding many new assets to our platform.” Within hours, the company also dropped a post announcing its plans support ERC-20 tokens. It will initially offer custody services for ERC-20, then seek to add Coinbase and GDAX support once it has assurances a given token does not constitute a security. Any new assets would also be added automatically to the company’s new market-cap weighted index.
Monero developers announced a “kill switch” to ward off ASIC miners like Bitmain. The Chinese mega-miner announced it had released new hardware, the Antminer X3, custom fit to mine XMR. The privacy coin’s core developers immediately countered that they would conduct an emergency hard fork to render the new equipment obsolete, part of planned semi-annual hard forks to ensure the network’s current CPU algorithm, Cryptonight, can remain effective. This follows a similar move from distributed file-storage project, siacoin, who announced similar countermeasures to what would amount to a hostile takeover of sorts from Bitmain. Some devs are skeptical it is possible to ward off ASICs without undermining network security via frequent consensus algorithm changes. For now, the community has chosen to fight.
Crypto Kill Switch: Monero Goes to War Against Miners - CoinDesk
Quick Bits (don’t read these, I read them for you):
Legal/Policy: The IRS warns people to pay taxes on tdheir crypto gainz. (Less than three weeks left to file!)…Tennessee backs the enforceability of legally binding smart contracts…Quebec is the latest region to bar new mining ops from building new capacity…ABC News reports on the popularity of bitcoin in the Ugandan capital…Twitter joins the rest of the social media giants in banning crypto ads.
Startup News: Huobi registered with FinCEN ahead of its US launch…ICO issuers sold just 43% of their token supplies to investors in February vs. 55% in November…Slush Pool mined the first ASIC Boost bitcoin block via a Halong Miner…P2P Marketplace Paxful claims to have reached $40mm in monthly bitcoin volume in Africa via its gift card integration…LitePay disappears, Charlie Lee is sorry “we got too excited about something that was too good to be true.”
Bigco Noise: CoinTelegraph reports Santander plans to use Ripple’s tech for mobile payments this spring “if no one beats us to it”…Chip manufacturer Nvidia says it must increase its GPU chip production due to intense crypto mining demands, even while analysts claim Bitmain has a new ETC miner…South Korea’s largest messenging app operator, Kakao, sets up a new blockchain subsidiary, but there will be no token…AliPay also rules out the possibility of an ICO (duh — they are banned in China).
People: Former Wedbush executive Sheri Kaiserman is raising $40mm for Maco.la, anew crypto investment advisory business….Peter Schiff accepts bitcoin cash… Students! A Student Loan Report survey of 1,000 students showed 20% of students were buying crypto with student loans…Circle hires Square’s head of finance and risk, Naeem Ishaq, as its new CFO…Pablo Escobar’s brother is releasing dietbitcoin. Yup.
More soon…
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.