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Comment by perpetualcrayon | Hacker News Reader

Not saying the alternative (fiat) is a substantially better alternative, but this is what happens when markets aren't regulated.

My prediction: There are going to be a lot of naive poor folks who are going to become poorer, maybe even dirt poor, and some very savvy wealthy people who are going to be even more wealthy when this is all said and done.

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A better prediction: There's going to be a bunch of random movement that causes random fluctuations in holdings of various people.

Yes, but there are also large players clearly manipulating the markets on the various exchanges, unhindered by regulations. It is definitely more than just random movement.

Imo they can only sell and buy, is that manipulation?

Also publish blog articles and tweets and such about it. That is manipulation. There's also option-style trading on some platforms, plenty of people have been short BTC and gotten squeezed recently, however.

If these people did the same things (quote stuffing and layering in general, spoofing, etc) on the regular stock exchange, the SEC would have them arrested. It is illegal to do the things on the regular stock exchange that some of these people are doing on the cryptocurrency exchanges. As someone that's been involved in Ethereum and Bitcoin (bot) trading on various exchanges for at least a couple of years now, I am tracking several groups or individuals ("players") that do this kind of thing all day, every day. I personally don't have a problem with it, but don't think for a second that this would be legal on the regular stock exchange.

> the SEC would have them arrested

No they wouldn't. I worked as an equities trader for years. Saying something is illegal is meaningless if people do it anyway and the enforcement body has little to no power to stop it. Spoofing is rampant in the equities market regardless of its legality. Watching GDAX for the last week, there is definitively less spoofing in the ETH/USD market than in the equities markets as a whole.

You mean like this? http://www.marketwatch.com/story/two-traders-arrested-over-a...

We could list the one case prosecuted each year if you'd like, but that won't make it any more significant. I was at a small firm with 50 traders. I guarantee there were a handful that were spoofing. The NYSE alone is worth $25 trillion. Bitcoin altogether is worth $55b. One or two arrests every year isn't "regulation", nor is it even a minor deterent. The SEC is far and away one of the weakest regulatory bodies in the US.

I provided an example showing that your assertion is wrong. They do have the enforcement power to arrest people for the things I mention.

You gave an example, I gave you 10% of my trading floor. You can say what you want about rules and regulations, but if people don't PRACTICALLY enforce them, the rules are irrelevant. The SEC just needs a poster child every now and then. I'm sure you looked and saw how many arrests there have actually been. I'm curious, how many people doing it would make you believe that arrest is statistically insignificant? Regardless of an example, there are also large players clearly manipulating the markets on the various exchanges, unhindered by regulations applies to both.

lol, not all markets are perfect or random.

Never implied it. Only that BTC is that way for 99.9999% of evaluators.

People have been making these predictions since 2011. You have no way of knowing your prediction is any better then the thousands of other failed predictions.

The more that I think about banks the more I realize they are no longer relevant. Why do I need to pay a "bank" to keep my money that is simply stored as a digital record? Seems absurd once you stop and think about it.

Not absurd at all. Consider all the cases when someone steals your money from your computer or from the exchange. Or when people send ethereum by typing in the address and losing money. Someone did this with five figures of USD worth. And that's just those that we hear about.

Theory is nice but practice is even nicer.

Cryptocurrencies are for when we want to be responsible for our selves. I don't think either extreme (banks vs crypto) works for all cases. I just want the choice.

I always understood that Bitcoin have appealed to the Ayn Rand followers. But what Ayn Rand have advocated for is selfishness and not a society. You can dress that as "be responsible for our selves" but in this case, much as with a lot of cases, spreading out the cost of building and operating a secure system across many people have proven to work much better than individuals doing the same.

To provide a concrete example, I use Bitcoin where I don't trust a provider to not charge me again in the future.

Some banks give you some tools to protect against this case like generating debit card numbers with an exact balance on it. But Bitcoin generalizes over the case.

Your comment is the sort of all-or-nothing mentality that I don't understand. I look at banking institutions vs cryptocurrencies as different options just like credit cards vs cash: I want to be able to choose, and I don't want to be limited to one single solution.

It's kinda of like the decision between an iPad vs a techie's laptop. I think the most common cases (e.g. my parents' needs) are best served by an iPad or a banking institution, but it's dangerous when someone begins telling me that I don't need such a powerful laptop.

All too often I see cryptocurrencies dismissed with the condescending implication that nobody is capable of evaluating the trade-offs.

I would love to not have to use a bank.

The primary purpose of banks in our society is not storing money, but lending it out.

And creating it in a regulated way (this is very important for controlling the money supply and thus the economy).

Of course. But then why am I paying bank fees for a checking account? And savings accounts don't even pay enough interest to cover inflation.

Have you bothered to read the requirements for waving the bank fees? And if you are concerned with beating inflation, you are supposed to look into, at the very least, bonds or something similar.

Savings accounts are more suited for money you will need at any moment.

Of course I have. I need to keep $3000+ in my checking account. Either way I'm paying for the account either by lending them the $3000 or by a $15 a month fee. Either way I lose out especially since I don't think I'm getting any value from my bank. I'm planning on switching banks.

I have some money in other investments but I just think banks are a rip off.

You still need to keep your cryptocurrency private keys secured - a bank can provide that service, while also loaning out your capital and paying you back interest. Banks do more than just hoard capital.

Another advantage is government-insurance of savings.

The interest isn't enough to cover the costs of inflation.

That's the thing. You don't pay the bank, the bank pays you. Otherwise no one would have bothered.

except when you practically remove cash and introduce negative interest rates, like it's tried in few countries already (Sweden)

Not at all saying that it's not the kick in the pants the governments of the world need. In fact it's probably exactly what they need. I think it's absolutely insane that in today's world we can't freely exchange currency world wide without being charged exorbitant fees.

I think the first stable government that promises this to the world (probably at first via country to country agreements) is going to see their value spike (in relative terms). Not exactly sure where this would ultimately leave Bitcoin...

> I think it's absolutely insane that in today's world we can't freely exchange currency world wide without being charged exorbitant fees.

So true. Where I am now the best option for sending / receiving money to the US is either a 50$ wire transfer, or Western Union gouging you to death. Even Paypal is not available here, and the ATM fees add up. It definitely hurts the people of poorer countries immensely to have a middleman in between all international payments. I imagine the typical case is people sending money back home to family members.

A possible trajectory that might eventually meet your prediction is the "e-residency" of Estonia [0]. Estonia is busy creating a kind of "digital citizenship" program which is pretty clearly aimed at attracting innovators and startups. If you haven't looked into it, it's worth a few minutes of your time just as an interesting thing happening.

[0] https://e-resident.gov.ee

I don't understand what you are saying.

Governments don't charge money to change currency. That is done by private companies which charge a fee for it, in the same way blockchain exchanges charge a fee to trade between blockchain currencies.

I agree the currency exchange fees are higher than they should be, but... if you think that's a big need it isn't too hard to start a company to compete and lower the fees. That's what XE.com did for example.

I'm confused what you think a government should do?

I think there should be one world gov't, with one single currency, and a unified monetary policy. People who do arbitrage of currency are simply a less efficient version of a unified world currency anway.

If you aren't trolling, you could do with a little macroeconomics study before you rearchitect the world. It's not as intuitive as it seems.

You are probably right. Governments and financial institutions are separate entities. And the process of starting up a compliant financial institution to compete against entrenched interests is almost frictionless.

You cynicism and attacks on an easy target doesn't make your point any clearer.

The fact is plenty of companies have setup as currency exchanges.

The fact that you assume my comment was cynical proves I've made my point perfectly well.

I don't understand what you're suggesting would be different if it were regulated.

When you unbound the supply of a currency, it naturally inflates. Inflation being relative to the value derived from any given indicator. Speculation drives confidence drives speculation, forever.

That's the exact opposite of bitcoin. The supply is very clearly bounded to 21 million coins total, with a predefined distribution rate that can't be changed.

Not to belabor the obvious, but it is not the opposite. It's a case study, of the effect.

The number is not 21 million. It's currently 21*10^8 via fractional transactions and expandable (meaning practically and theoretically infinite).

Do you think that increasing the number of decimal places actually increases the supply?

If everyone started talking about cents instead of dollars that wouldn't mean there's 100x as much money... 1 cent would still be worth 1/100 of a dollar.

Likewise, if you started dividing down to 1/1000 of a dollar it wouldn't be inflation. Each 1/1000 of a dollar would still be worth 1/1000 of a dollar.

Edit: and if you suddenly replaced every dollar with 1000 newdollars, those newdollars are also worth 1/1000 of what they were before.

So, if I divide a pizza into 2e8 pieces I have more pizza than if I only split it in half?

Pizza has intrinsic properties, like physics that constrain it. You have more pizza pieces numerically, yes. I'm wondering why you think this is a compelling analogy.

When people say they expand the money supply it means diluting the existing holders. The actual unit of accounting doesn't really matter. Subdividing bitcoin units does not dilute existing holders.

    It's currently 21*10^8 via fractional transactions

First, if by fractional transactions you meant satoshis, the math is 21 * 10^14 (21 million bitcoins * 10^8 satoshis per bitcoin).

Second, there is no question that Bitcoin is deflationary in the long term. The fact that it can be split in smaller units doesn't change that at all.

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