Today, we’re going to tackle the reason Arkham’s been the talk of the town lately – their new product dubbed the “Arkham Intelligence Exchange.” To keep things fair and balanced, I’ll start by giving you their own rundown of the platform. Then I’ll chime in with my take on what’s really happening. Our perspectives (yours and mine) are likely to differ somewhat, and that’s cool.

What is Arkham? Here is the answer from Arkham’s POV:

What is Arkham? Here is my POV:

Let me make one thing clear, I’m not out to vilify Arkham. I think the premise is intriguing and the concept is quite fascinating. I’m all for the free market making its choices, and I appreciate that I live in a place where innovators have the freedom to push boundaries. But, I do have serious concerns about where Arkham could end up.

Arkham touts itself as a platform focusing on public information about trading firms, market makers, exchanges, and institutional players, but it’s easy to see how the platform could quickly morph into something much more. There’s talk about using Arkham to expose scammers, which sounds great, but I worry these tools are too powerful for a community that can sometimes be reckless.

Arkham may have the best of intentions, but the platform is poised to become a breeding ground for novice internet detectives eager to misinterpret on-chain data and get rewarded for it. Miguel Morel, the head honcho at Arkham, assures us there are robust rules in place, protections against harmful behaviors, and rigorous reviews of bounty submissions. But is that really sufficient? I suppose privacy isn’t a privilege anymore.

Arkham aspires to be a beacon of truth, but I worry they’re heading in the exact opposite direction.

The Arkham Intelligence Exchange seems to be offering a service that could potentially allow scammers to amp up their scams with some strategic social and technical manipulation or deception. If a scammer wants to mislead the public or if some newbie user is after a quick buck, all they’d need to do is outsmart Arkham by setting up a doxed or private wallet. The potential downsides of a platform that incentivizes doxing are limitless.

If Miguel Morel were reading this newsletter, I suspect his response to my concerns, based on the hour-long conversation we had, would be something like, “all current financial platforms and interactions function on trust and incentives already exist in all systems.” But not to this degree. The Arkham Intelligence Exchange is a first in the financial world, aside from shady markets and unregulated corners of the web.

I get that innovation has to start somewhere, but this isn’t a baby step – it’s a huge leap into uncharted tech territory. Just think about the havoc that AI and deep fake tech could wreak on markets with Arkham’s help. I’d rather not even go there.

How can we be sure Arkham isn’t in cahoots with the government? How can we trust Arkham to handle data responsibly? How can we trust Arkham’s data to always be accurate? How can we trust Arkham not to dox innocent people? How can we trust Arkham not to manipulate the market? This list of concerns about the can of worms Arkham opens with its tech could go on forever. No one is prepared to handle this kind of power.

Miguel argues that Arkham will simply fold if they lose the market’s trust, and I believe there’s truth in that. But a whole lot of harm could be done before the platform is erased from existence. FTX is a case in point. FTX fell apart after billions of dollars had already been poured into the platform. Arkham may not be collecting money, but the trust it builds could cause significant harm if it suddenly collapses. Trust is as valuable as currency.

Having been on the receiving end of attacks using false and incomplete information, I can tell you it’s a horrible experience that I wouldn’t wish on anyone in this field. There will always be a premium attached to honest on-chain analysis, but I’m not convinced that Arkham has built the right tool to fulfill this need.

I sincerely wish the best for Arkham and Miguel and appreciate the frank conversations we’re having. I also want to give Miguel props for stepping into our Space and defending his beliefs. I really hope Arkham will be put to good use, but I can’t shake my doubts. Privacy is important, and I hope we can preserve it as a core aspect of our industry, rather than commoditizing it.