Tron has announced that it will “collaborate” with the Japanese government to discourage the creation and promotion of gambling games usable in that country. In a statement, the Tron Foundation (which refers to itself simply as Tron throughout) discouraged the creation of gambling games by Japanese developers, and suggested that developers of other gambling games “block users with Japanese IP addresses.”
The extent to which the Tron Foundation might collaborate with Japan’s government to block or otherwise discourage the use of gambling games on the network isn’t detailed, and the announcement doesn’t explicitly state that the Tron Foundation itself will block Japanese users from certain activities. The technical method for identifying IP addresses isn’t spelled out either, but the announcement suggests blocking IP addresses by region is straightforward. Determining the IP address of a bitcoin or Ethereum user is possible but complex, and is considered malicious.
Even sans details, the announcement is more than a little ironic for a platform that has aggressively leveraged the censorship-resistant nature of blockchain technology to promote itself. Tron was initially pitched as a media platform that would solve the purported problem of censorship on platforms like YouTube, and the Foundation now grandly claims that it is “building the infrastructure of a truly decentralized internet.” Tron has also recently acquired BitTorrent, a company whose protocol allows decentralized and truly uncensorable content distribution over the internet. Tron has even trumpeted itself as more decentralized than bitcoin and Ethereum, which, if true, would make its promise to help suppress gambling dApps in Japan meaningless, since it would mean no single body has the power to interfere with any activity on the network.
The announcement is more than a little ironic for a platform that has aggressively leveraged the censorship-resistant nature of blockchain technology to promote itself.
This raises the question: Why would Tron make this announcement at all, if it undermines so much of its own hype? One possibility is that founder Justin Sun or the Tron Foundation have been threatened with regulatory or legal action for enabling gambling, and the announcement is an attempt to mollify Japanese authorities.
That there would even be a vulnerability to government pressure provides some ammunition to claims that TRON itself is not truly decentralized. And if blocking IP addresses by region is possible on the Tron network, it’s worrisome from an adoption and growth standpoint. The key appeal of a blockchain like bitcoin is that no central entity can alter balances or restrict access to a user’s funds, giving governments or other entities no single pressure point for enacting their agenda. If any government is able to force changes to the Tron network through the Tron Foundation, users in many jurisdictions will have to consider the possibility that they, too, might lose access to network tools, or even funds, at any time.
This could be particularly thorny for BitTorrent users: Tron leveraged its BitTorrent acquisition into a $7 million sale for its BTT Token, which will be used to optimize BitTorrent downloads. If the Tron Foundation is capable of ‘discouraging’ illegal uses of the Tron network in specific jurisdictions, you can bet many governments will want help ‘discouraging’ piracy over the BitTorrent network.
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No surprise, then, that the Tron Foundation statement was released on Saturday U.S. time—an ideal time to make announcements you’d prefer no one paid much attention to.
If anything, Tron here is inviting MORE government control than pre-blockchain solutions. Despite superficially strict laws against gambling, Japan’s omnipresent Pachinko parlors reportedly generate 30 times more annual revenue than Las Vegas. They’re able to operate through a thinly-veiled fiction: winnings are first redeemed for ‘prizes’ such as toys or cosmetics, which can then be ‘sold’ for cash to nominally unrelated businesses. No uncensorable blockchain required.
Betting on Tron appears to make up the vast majority of the network’s claimed transaction volume.
Pachinko’s early growth was also thanks to control by the yakuza, or Japanese mafia, which for decades following World War II had a cozy relationship with the Japanese government. That has changed somewhat recently, helping open the door to legalized casino gambling. In other words, Tron is now promising to help the Japanese government block an online activity that is both widespread in practice and increasingly legal offline.
It’s also noteworthy that gambling appears to make up the vast majority of the Tron network’s claimed transaction volume. At least for a time, the biggest source of gambling volume was a simple dice game called Tronbet, which in early March recorded more than $40 million in volume in a single week. Tron’s transaction volume has been central to founder Justin Sun’s frequent claims of superiority over the Ethereum blockchain, from which much of Tron’s foundational code was copied.