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Comment by noddy1 | Hacker News Reader

I was a longtime ethereum sceptic, however I was guilty of being a cynical old curmudgeon; the type that poo-poo's anything and everything novel on the grounds that I'll be right 95% of time, ignoring the fact that I'll poo-poo everything that will ever change the world.

Bitcoin made currency decentralised and permissionless.

Ethereum has made capital raising and equity holding decentralised and permissionless. Sure, lots of people talk about SEC compliance, but in reality anyone can raise equity for anything now. You can issue a token to fund for a drugmarket if you wish, and pay dividends, and noone can stop you really. The market cap of ethereum is 22 billion.. is that to high or too low for the promise of permissionless securities?

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> Bitcoin made currency decentralised and permissionless.

This is a common misconception, that cryptocurrencies can somehow exist outside government control, and it makes me doubt some of the long term value of Bitcoin. A government can basically make anything it wants illegal, and once cryptocurrencies become large enough, there will be tons of additional regulations and control.

> A government can basically make anything it wants illegal, and once cryptocurrencies become large enough, there will be tons of additional regulations and control.

Only totalitarian states have this power in practice. In a democracy, where e.g. 75% of people use Bitcoin, the government can’t criminalize it — if it were able to, that government wouldn’t be democratically elected. A democratic government does not have an opinion separate from the people; indeed that’s the whole idea of democracy.

If only a small fraction of people are using Bitcoin, it will not pose a threat to government, and it will have no incentive to criminalize its use. Only when a large part of people are using Bitcoin can it pose a problem to government, and once we reach that point the opposition to make it illegal will be too great.

Even though democratic governments are supposed to be representative of the people, a government is still a separate entity from the people, meaning it has its own motivations and tendencies.

An example of this is the military-industrial complex (disproportionate spending linked to politics). Or the way marijuana has been illegal for the past 100 years (a false campaign under the guise of protecting people).

If Bitcoin is banned early enough to harm liquidity and adoption between itself and fiats, and a government approved cryptocurrency is introduced as a competitor, then I think Bitcoin could basically be killed in an economy.

It's along the lines of: internet plus sufficient crypto[1] makes speech free everywhere.

It seems theoretically true, but not in practice. While I have several hunches,[2] I admit I don't fully understand why it shakes out this way.

[1] Plus steg, to the extent you think that's a separate discipline.

[2] Like, we don't yet have good enough crypto[1], or it takes time, or most people don't care enough to participate in networks that enable others to speak freely, or authoritarian police forces let governments cheat at information security games (they don't actually have to prove anything to torture you), or some mix of all of those. I change my mind at least daily as to which of these is most important.

Drugs are illegal almost everywhere in the world and they are one of the largest consumer markets. Something similar happens to US dollars in Venezuela. So I don't know if making bitcoin illegal will really hurt its value in the long run.

Consumers demand drugs because they like the way it makes them feel, and they derive utility from that.

In a country where Bitcoin is banned, a consumer derives almost no utility from Bitcoin because they can no longer immediately exchange it for fiat currency or goods unless they leave their country. Thus the demand for bitcoin falls, and if less people use it, it becomes less valuable (network effects). That directly hurts its value in the long run.

If you were to imagine a world where Bitcoin is banned by all governments, then no one would desire to own it or trade it, and it has virtually no value.

Your conclusion doesn't follow your observation. It's one thing to say that the government can't stop something, and quite another to say the government can't hurt it. Who knows how much bigger the drug trade would be without anti-drug laws.

> Who knows how much bigger the drug trade would be without anti-drug laws.

In a few years we'll have a good idea based on marijuana in several US states. We will have to sift out the tourists though, because there do seem to be a lot of those. At least, here.

We could also look at alcohol prohibition for a historic example.

> Who knows how much bigger the drug trade would be without anti-drug laws.

Look at the legitimate drug companies for comparison.

Like downloading movies and mp3's?

...yes?

The friction of government control is partly what allows things like Netflix, Hulu, et al to survive. If there were no copyright, then you'd seen tools that were just as good thrive on various p2p backbones.

Instead, the pressure from law enforcement on developers, big libraries of content, indexers, etc keeps the experience of for pay sites better for most people, and so most people just pay whatever streaming website.

Sometimes law enforcement isn't about winning ever battle so much as tilting economic scales.

I understand that governements need to make these things illegal.

But my point was that even though it's illegal, they can't stop it. One of the game of thrones episodes was on torrent before it even aired.

A governement can make bitcoin illegal. But stop it? No way.

Why does SEC compliance exist? It's because people are born suckers.

Very few people need what Ethereum is offering, a lot of people want to be millionaires before they've done anything, and they're willing to lie, scam, and exaggerate to get that. Is not part of the lesson of 2008 is that if you build your economy on sand, it's gonna collapse?

But the government only gets around to regulating something after it's done it's damage.

Then lobbyists eventually get the regulations weakened enough for a round two.

At least with cryptocurrencies, no one should have the illusion that somehow the government will prevent a collapse or bail them out. Unless, of course, they are "too big to fail".

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