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Ivo Georgiev: Regulating Things Prematurely out of Fear Usually Leads to Nothing but Blocking Human Progress

In order to gather opinions on the regulations of innovative technologies, has initiated a series of interviews with the key specialists behind blockchain-projects; those who make the industry tick.

This time Krzysztof Shyak of asked Ivo Georgiev, co-founder of AdEx, an experienced software engineer versed in cryptography and cryptocurrencies, several questions about the current state and the possible future of regulations in blockchain industry, AI, and other innovations. Different countries choose different approaches to blockchain regulation. However there is a trend of imposing restrictions and control measures. What do you think about the necessity of regulations in this new industry and the possible consequences of excessive/insufficient regulation?

Ivo Georgiev: As the question says, it’s a matter of “excessive” and “insufficient”. It’s very difficult to strike the right balance between those two extremes, but I think that we’ve already seen encouraging signs — such as positive statements on cryptocurrencies from the US — that things are headed to the right direction. There is also a number of blockchain-friendly countries, such as Estonia or Switzerland, so things are definitely looking up and regulation should not be something we should be afraid of.

In general, I believe that regulation should be limited to stopping fraud and scams, which is currently rampant. Luckily, we’ve seen US regulators, namely SEC, showing that stopping fraud is their main priority and they intend to do so without harming innovation or technological progress. Along with the popularization of ICO’s as a way to attract funding for product development, several types of token, such as app token or security token, were formed and “established” within the niche. Which type do you consider optimal in legal terms, in what conditions, why? Which type is favorable for a potential holder?

Ivo Georgiev: Obviously, utility tokens are the ones that legally are the cleanest. As a holder, I would most likely look at the project vision and implementation in general and whether the token model makes sense for it. Each token model has benefits for certain cases, and is unsuitable for other cases — so I have no specific preference. What countries would have been a good example of regulation of blockchain, artificial intelligence, and other innovative technologies.

Ivo Georgiev: Estonia, Switzerland and even the US! Estonia plans issuing its own token, Switzerland plans to issue its own cryptocurrency, and the SEC is generally showing that it’s pro-innovation. That should say enough. Some blockchain projects store users’ personal information, such as medical records, documents, etc. What solution do you see for the conflict between immutability of the information stored in a blockchain ledger and the “right to be forgotten” — the right of a person to have their personal data deleted from public access? How will the blockchain technologies legislation develop with such a contradiction?

Ivo Georgiev: We have to keep in mind that censorship resistance is not new to the blockchain. We’ve had p2p systems such as IPFS and BitTorrent for a long time now. Once something is out in a p2p system and referenced by a cryptographic hash, it will remain available. The blockchain is different in that it gives enough people (miners) an incentive to keep a copy of the data in a way that ensures that this data will be permanently available.

The truth is, considering this technology is available and will be available, no one can stop that. I hardly see a way a legislation can enforce anything over technology in this particular case. Should the humanity think about AI and other important technologies regulation before there is an actual necessity? Why?

Ivo Georgiev: I think it’s very difficult to regulate something before it’s entered mass adoption, first because you don’t know the exact problems with it yet, and second of all, because you will be impeding innovation. Regulation’s role for me is to avoid undoubtedly harmful practices, and unfortunately in most cases we don’t know what these practices are before they actually occur. Regulating things prematurely out of fear usually leads to nothing but blocking human progress. What do you think about employing AI in state government? What are the “pros” and “cons” of such an approach?

Ivo Georgiev: I am very much in favour of automating processes, so I like this idea.

But with the current government structure adopted around the world, I believe AI won’t solve fundamental problems. AI is a tool employed by humanity just like any other. It’s still controlled by humans, programmed by humans. So things like fraud, corruption and human error cannot be magically solved through AI. How would you regulate decentralized autonomous organizations (DAO), considering that such an entity doesn’t have a single ruling or geographical location?

Ivo Georgiev: Sue the blockchain? As I already mentioned, some technologies are so groundbreaking that it would be very difficult or near impossible to regulate them. Is it possible to build an entirely decentralized state on political, administrative, and economical levels?

Ivo Georgiev: Yes, of course. There is no reason why something like that cannot be partially or fully decentralized with technologies like Ethereum. Cloning technologies development may soon bring up significant ethical and legal questions. How to treat human “copies”? Will they have similar rights as the “original” individuals and be equal members of the humanity? Should governments regulate the production of said organisms?

Ivo Georgiev: This is a very hypothetical question at this stage, but if you are able to clone a person by making a 1:1 copy, why shouldn’t it have the same rights? How would you regulate driverless cars? Who should be responsible in case of an accident?

Ivo Georgiev: The market conditions and the self-regulation of the free market ensure that driverless car makers are extremely responsible. Since at this moment in time this is a new technology and everyone is scrutinizing it, one misstep/bug could lead to nobody buying that car anymore.

That being said, I believe the regulation on driverless cars should be reasonable enough to allow innovation and allow enough players enter the market. I believe that driverless cars will reduce accidents dramatically, and this is something that regulators have to keep in mind. Will the technological progress entail greater government involvement into its citizens personal lives?

Ivo Georgiev: It goes two ways. Technological progress gives better tools for the government to get involved into personal lives, but it gives better tools to people to protect themselves from privacy invasions.

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