News has come in this morning that Baidu has banned bitcoin advertising on its website which handles almost all of China’s search inquiries.
The action follows the tragic death of Wei Zexi, a college student with cancer who sought treatment from a hospital found through an online advertisement. Zexi stated in a post before his death that Baidu had mislead him to seek treatment from a hospital that had advertised a treatment researched in collaboration with Stanford. This turned out to be untrue, sending the Chinese internet on fire and bringing to surface seemingly long-held allegations of Baidu profiting from selling forums to medical profiteers and charlatans.
The storm reached the highest levels. China’s Cyberspace Administration launched an investigation and within just a week had ordered Baidu to “revamp the way it handles advertising results in online searches,” according to the Wall Street Journal. Among many measures, WSJ states:
“Baidu will set up a one billion yuan ($154 million) fund to compensate users who suffer verifiable economic harm as a result of fraudulent information found in paid results.”
The president of China himself, Xi Jinping, seemingly commented on the matter, stating:
“Web entrepreneurs should not regard clicks as their only goal. Online shop owners should not sell counterfeit or substandard products. Social media organizers should not spread rumors. Search engines should not arrange the information sequence only based on how much they pay.”
Bitcoin has now been caught by the fallout with Baidu apparently not allowing any Bitcoin related advertising. It is not clear why bitcoin has been singled out or whether it is under regulator’s orders or due to Baidu deciding it is more economically profitable to not risk bitcoin related scam adverts as they have to compensate users.
Although this may be an over-reaction, we can expect stricter rules in the near future with Baidu most probably working to minimize any liability and delegate responsibility to regulators.
An established, reputable and regulated company, therefore, would probably be allowed to advertise, but China lacks any bitcoin regulation, so banning financial institutions from dealing with bitcoin back in 2013, leading Baidu at the time to stop accepting bitcoin payments. On the other hand, the Chinese government is very positive towards blockchain innovations, raising an important wider question: why the discrepancy?
A Question of Reputation
This discrepancy extends beyond China with the wider public, as reflected by the mainstream media, showing a very different attitude towards bitcoin on one hand and blockchain and ethereum on the other.
Although some argue the root cause is an attempt by the state to maintain monopoly on the issuing of currency, from a logical standpoint, there is no reason why the state would do so if the alternative is of great benefit to the economic well-being of their nation leading to higher popularity and, in western countries, more votes.
The state would have to argue with Hayek, a Nobel Prize winner for his theory of money which CCN.com will cover in an editorial shortly as well as Friedman and Greenspan who strongly argued for private issued currency as money must be under the judgment of the free market if trade and productivity, is to flourish. Moreover, these principles find the support of at least Republicans in USA and Conservatives in UK, and after the failures of Keynesianism since 2008 they might find the support of the vast majority.
With such strong political allies and principles founded based on the insights of one of the greatest, if not the greatest economist of the 20th century, I personally highly doubt the reputation is based on bitcoin being a non-state issued currency.
It is far more likely the general public looks in disgust as doctors have to deal with locked hospital computers by ransomware hackers instead of looking after patients, including children.
It would be understandable if there was a debate or discussion on what to do about such ransomware, although the end conclusion may be that nothing can be done, but even opening such debate in the bitcoin community would lead to personal attacks and accusations of being some government agent or banker infiltrator.
What is Bitcoin’s Primary Use?
In bitcoin’s public forums, everyone openly and proudly talks about bitcoin having a niche in “censorship resistance” – whatever that means in practice considering exchanges are centralized entry/exit points – and how bitcoin is useless for mainstream commerce and far inferior to credit cards or PayPal which apparently provide all you need.
I believe this is the reason why Satoshi Nakamoto left as can clearly be seen by his posts. Reading through, one can see that at the beginning the focus was on the technology with a strong focus on usability and an openness to laws and regulation, but the community slowly changed, coming to a head when many started calling for Wikipedia to accept Bitcoin. Nakamoto intervened and pleaded with everyone, but for nothing as PC World wrote that historical article which, if we take Nakamoto’s words at face value (and we have no reason to do otherwise) directly led to him leaving with his last comment showing resigned disappointment:
It would have been nice to get this attention in any other context.
He published what bitcoin code he was working on in a final release and left, never to be heard again.
With the bitcoin community unwilling to even discuss what measures can be taken to minimize or deter acts that almost everyone agrees are wrong – such as theft or ransom – and with some, including Bitcoin Core developers, stating that bitcoin is not for mainstream use, there is little we can say to Baidu or the wider public regarding its actions except to make it very clear that Bitcoin is sui jeneris and has no relation whatever to Ethereum or the blockchain.
Ethereum is Fundamentally Different
The bitcoin community and the ethereum community are like night and day in almost all ways. The speed and breadth of development in Ethereum is incredible with all projects I have spoken to showing an acute desire to minimize in all ways any potential abuse, especially by criminals who commit acts we all agree are absolutely wrong.
Ethereum’s community has no problem whatever complying with regulation with some projects, such as Digix, including AML/KYC at the project’s protocol level. And, as we saw last month, they do not think the rights of thieves or other criminals are above those of honest men, fully rejecting any argument that in any way excuses or supports criminal behavior and willing to take drastic measures to protect property.
Baidu, therefore, and the regulators, the media, and the wider public, ought to consider bitcoin and ethereum on a different categorical basis, treat them differently and have different rules, or rules for one but not for the other because the two share nothing in common and even the code, according to Vitalik Buterin, has almost nothing in common.
Nonetheless, it is sad to see Baidu has placed bitcoin in the same category as irreputable hospitals, but that they have done so shows a clear reputational problem for bitcoin which the community needs to address. Otherwise, it will start slowly losing the support of even its passionate followers, the majority of whom are honest and hard-working people, interested in the potentials of this technology for ordinary men primarily, not criminals.
Of course, every technology has downsides. Cars, for example, have killed many, but, on the other hand, we don’t allow 14-year-olds to drive, we punish individuals who drive while drunk, we have speed limits, and so on.
Accidents do nonetheless still happen, but bitcoin is unwilling to even discuss ransomware or what can be done. After the theft of half a billion in 2014 and $70 million just a few weeks ago, bitcoin’s community has had as good as zero discussions about how to prevent theft, how to secure coins, how to make key management easier. There is no focus whatever on mainstream use.
It is not just a downside, therefore, it’s a willful choice which leaves us speechless when companies such as Baidu take certain actions towards bitcoin, because, what can we say?
Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.com.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:50 PM