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Comment by wyc | Hacker News Reader

Right now, I like anything that helps normalize the white-hot hype of cryptocurrencies. There's some real utility in this technology, and we won't get to see it until companies are forced to make sustainable business cases and serve real customers.

However,

> A website set up by the Chinese central bank warned that cryptocurrencies are "increasingly used as a tool in criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising".

That sounds a bit like lip service...are they really just protecting investors and citizens, or is it because the assets are much harder to seize? Recently, there has been a large crackdown on foreign real estate purchases[0].

What other incentives does the party have for this policy?

[0] https://www.forbes.com/sites/ellensheng/2017/07/31/chinese-o...

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The sustainable business case is permissionless nature of Bitcoin. Everything else comes down to it. This talk of blockchain technology being somewhat of a new wonderful invention that's supposed to magically make companies more profitable...? Not so.

The reason why Bitcoin exists is because governments want control over money. Bitcoin gives people freedom. Period. Everything else is noise.

> governments want control over money

Of course. And for a good reason. People utter this line as if governments wanting control over money was somehow bad.

Money, within all human societies that exist or existed, is pretty much synonymous with power. It is the tool that allows an individual to incent, compel and coordinate other people to do what said individual wants. With $1 you can make someone cook you a hot dog. With $1K you can get someone to give you pretty advanced tech. With $1M you literally make other people build you a house.

State by its design is supposed to have monopoly on ultimate power. Since money is synonymous with power, the state needs to control money in order to fulfill its function (and to secure its ability to fulfill that function). So it's obvious that the state may not be happy about technologies that prevent them from controlling the money. It's threatening the state's ability to enforce rules. And despite the popular dystopian rhetoric, state being able to enforce rules is almost always a good thing for the society.

You think it's for good reason. Many people think it's for bad reason. Those people invented and developed Bitcoin. Now the people who think state has no business messing with money and private lives of people have an actual tool upon their hands.

I will say those people are wrong, and they're only able to think that because they live in stable societies under rule of law, and have time to criticize somewhat abstract issues like this.

Now don't get me wrong - I'm not saying the present balance of power between individual and the state is perfectly placed. But thinking about ditching states altogether is, presently, a pretty dumb idea, that only signals a lack of awareness of how the society works.

In fact, the opposite is true. Most of the people who are open to Bitcoin live in third-world countries (including myself) and have a natural distrust for government.

Also, saying some people "are wrong" is not an argument.

> Most of the people who are open to Bitcoin live in third-world countries (including myself) and have a natural distrust for government.

That's an interesting claim. Is there a good Bitcoin use by country breakdown? Because my impression was, that with the notable exception of Brazil, Bitcoin is still mostly the techie-westerners thing.

> Also, saying some people "are wrong" is not an argument.

That's not an argument, just my current belief. It might be wrong.

> Is there a good Bitcoin use by country breakdown?

No, because you can't effectively track wallets/usage. However, you can, for example, look at Google Trends: https://trends.google.com/trends/explore?date=today%205-y&q=...

I would point out that I don't think anyone is saying that bitcoin and other altcoins should become the only, or even the main currencies in use.

> You think it's for good reason. Many people think it's for bad reason.

In reality, you are both right. There are both 'good' reasons and 'bad' reasons why the state wants control over monetary supply and flow. I feel that as electronic currency transactions has gained ground over cash, the 'bad' reasons have become stronger and more important.

The question really is to if degree that bitcoin undermines the good reasons for state monetary control balances with the degree that it undermines the bad reasons. I suspect that as electronic transfers become increasingly ubiquitous, we will see the importance of bitcoin in maintaining personal freedom increase.

The state by definition has monopoly on violence, not power in general.

You don't want a state with total centralized power over the economy because you end up with places like North Korea or the USSR with uncompetitive industry and shortages.

Violence is the most direct way to apply power, but not the only one. "Monopoly on violence" sounds cute, but it's not the precise and only thing the state is supposed to have. What good is a state so disconnected from money that it can't even fund its violence-applying apparatus?

Also: control over money doesn't imply control over markets. As evidenced by pretty much all western countries.

I didn't say the state doesn't have other forms of power, only that they don't (and shouldn't) have a monopoly on it.

Anyways, Bitcoin doesn't seem like much of a threat to the kind of power developed countries have over their currencies. The USD isn't going anywhere and nobody is using cryptos for day to day purchases or servicing debt so the fed will remain firmly in control of the money supply and interest rates.

It is much more of a threat as a method of capital flight to undeveloped countries (eg. China) who like robbing their citizens through inflation, currency manipulation, and capital controls.

I think that's a great thing.

I strongly dislike that definition of the state.

Such a state as described in the pithy phrase has never actually existed. Even the very strongest states have violence that the state was powerless to stop. That objection can only be resolved by reducing the strength of the term "monopoly" to something more like plurality control, but then it does apply to power in general.

Simply put, if some other coalition has more general power than the state, then it has the option to become the de-facto state. There are lots of terms for this, depending on the party with the power: from revolt and coup to occupation to ineffective government.

There's a discussion to be had about how to best allocate that plurality control to minimize abuse, and physical force is likely a component of such an allocation. It's far from clear, however, that an allocation of only physical force is viable even if it is desirable.

This is so wrong that I don't know where to start.

First of all, people tend to forget that government is not made of angels. It is made of humans, who are susceptible to the same flaws as the rest of us: greed, hunger for power, etc. Therefore we should try to limit the power government has over us to only basic necessities.

Second of all, historically, human societies functioned quite well with multiple competing currencies on the same area, some of them private, some state-governed. It might have been pain in the ass if some customers wanted to pay in French coins and others in Belgian ones, but that pain was eased by the fact that they were made of gold or silver, so to compare their worth it was enough to compare weight.

Lastly, control of currency allows goverment to increase it's spending beyond reasonable levels with debt. Which of course happens at the expense of citizens. This is the sole reason government enforces it's monopoly on currency.

Cryptocurrencies are unique oportunity to take control over the currency from governments and put it back in people's hands, exactly how God intended it to be :) We shouldn't give up that control to easily.

In the end money is just a commodity, same as bread, so we should let the market decide which currency to use, without any monopolies, state-owned or other.

I agree with the points you made, and yet still I don't think this invalidates the notion that a state needs some level of control over money in order to function.

>> Therefore we should try to limit the power government has over us to only basic necessities.

A stable monetary climate is one of those that I am very happy to delegate.

>> In the end money is just a commodity, same as bread,

No, it's not, it's a method of exchange and follows different rules.

> In the end money is just a commodity, same as bread, so we should let the market decide which currency to use, without any monopolies, state-owned or other.

Is there some reason to believe that markets can exist without government intervention of some kind? At a minimum someone needs to ensure that the participants in the market are not killing each other. Even in prison economies there are de facto "governments" (inmates with power in the prison hierarchy) that keep the "market" orderly and decide the rules.

In the absence of government, trade tends to be limited to occasional encounters between groups of people and too infrequent for any kind of market to form as an emergent phenomenon. In the absence of government, an encounter between strangers can quickly turn into a deadly fight, and an offer to trade may just as easily be a pretext for killing someone to steal their possessions. Markets can only exist when the worst outcome of a bad deal is getting swindled.

With decentralized systems, the goal is to be in a state where participating outweighs the benefits of usurping. Where it makes more sense to play the game correctly.

The system creates trust.

Whether we can achieve this goal through cryptography and game theory remains to be seen.

Just wondering - when is it not a good thing for the state to be able to enforce their rules, then? You said "almost always." Specifically referring to money since the topic of conversation is Bitcoin.

I was thinking about the cases when the rules are needlessly oppressive. Governments aren't perfect. But they're better than the state of nature.

So what would be an example of an economic rule that's needlessly oppressive?

I started with an assertion that money, in practice, is synonymous to power. I wasn't thinking about just economic rules.

But to pick something in big part economical, I'd say the war on drugs can be an example of a rule that's widely considered stupid, needlessly oppressive, and bad both economically and morally.

I'm not an anarchist, but I do think that the everyday person (especially in third-world countries) could use an escape hatch from the global economy, and it just so happens that Bitcoin fills that role perfectly.

Governments will always be able to tax people and they can tax them in whatever currency they want. This requires people to use their currency. So I don't think that Bitcoin poses any real threat to the powers that be except in harsh circumstances like Venezuela. In some situations, Bitcoin and other cryptos can actually help the government gain power, like in Palestine's situation.

Why conflate the fuzzy "ability to enforce [law]" with specific centralized economic levers? Your comment seems to be saying the former relies on the latter.

>State by its design is supposed to have monopoly on ultimate power. Since money is synonymous with power, the state needs to control money in order to fulfill its function (and to secure its ability to fulfill that function).

Good. It is about time citizens controlled the gov't.

I think all governments hate the crypto part of the currencies. You can't tax what you can't track. You can't manipulate what you don't have.

I personally fall a little to the left of currencies. I think these monetary systems are far right Libertarian's dream seeds. I do realize I am probably wrong but this is how they make me feel.

That's a good point about taxes. I wonder how the tax structures of the future will evolve if cryptocurrencies reach full swing. It could be reasonable to expect elaborate tariff systems that skim off the channels bridging wet and dry worlds[0]. With what we have today, there is already slightly less to tax[1], and with the ideas of today, there could be even less. You can't siphon tax if it's not in the contract code.

[0] https://unenumerated.blogspot.com/2006/11/wet-code-and-dry.h...

[1] http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/

> You can't tax what you can't track.

Most cryptocurrencies are actually quite trackable. Significantly more trackable than fiat currencies. There are notable exceptions like Monero and currencies specifically meant to protect privacy, but the vast majority are quite public.

I'd say they're only more easily tracked than cash. It doesn't get much easier to track than a bank or credit card account. And of course cash has its own problems (namely, it's difficult or even illegal to get and transport in large quantities while maintaining some anonymity).

At some point, you want to buy something with your money. The minute you do, tax authorities in your country can detect the discrepancy between your stated income and your lifestyle.

Over the past couple of years, China has lost around a trillion dollars in foreign reserves (a 4 trillion dollar cash pile earned from exporting all those made in china goods) to capital flight. Whenever a Chinese citizen or business takes yuan and exchanges them for a foreign asset, China's fx cash pile is diminished. If china's "savings account" is bled dry, it would have to choice but to devalue and print its currency to handled some of it local fiscal issues.

To prevent "rocking the boat" with a currency devaluation before the Communist Party Meeting this fall, China has locked down it's capital account by blocking foreign company acquisitions, repatriation by multinational corporations (think blocking Apple's yuan accounts from withdrawals to USD), Toronto real estate purchases, etc.

Bitcoin was an unregulated and popular means of capital flight. It was just a matter of time before they cracked down on it as well.

That strikes me as an odd opinion. It sounds like you're saying that you appreciate an artificial decrease in cryptocurrencies' value or hype because you think there are other things artificially increasing it.

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