Things cryptocurrency enthusiasts probably won't tell you
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The exchange executives were told not to try to leave China.
(Remember Big Vern? Paul Vernon, CEO of Cryptsy. Took the money and fled to Liaoning, China. Started a Bitcoin exchange in China. Wanted in the US. Might be a good time to push through diplomatic channels for the government of China to find and return him. The PBOC investigators may have found him by now.)
Why then, do the authorities in the US and China aggressively pursue those people who ("steal", "lose") the coins of their depositors?
Big Vern, Karpeles, Pirate@40, just to name a few.
Sure, these guys lost people's coins. But I was there back then. It was all wild west stuff. Buyer beware.
How can the government arrest someone for stealing an asset that doesn't really exist?
Would they arrest someone who stole water from my pool?
Edit: I don't know why I bother commenting here.
A downvote without counterpoint? What do you gain from that?
Grapple with my assertions with evidence. If you don't, it will just become even more of an echo chamber.
This is tax fraud.
> How can the government arrest someone for stealing an asset that doesn't really exist?
“Buyer beware” doesn’t exempt someone from fraud statutes. Honest services fraud is broadly defined in most jurisdictions to include any economic activity.
> Would they arrest someone who stole water from my pool?
Yes. At the very least, the perpetrator would have trespassed.
Disclaimer: I am not a lawyer. This is not legal nor tax advice. Don’t commit fraud.
Should I pay tax on that gold when I sell it for cash? Yes.
Will the police help you when you call them to report it? I highly, HIGHLY doubt it.
It's easy to put your head in the sand and just say "yeah that guy committed a crime", but in reality, enforcement is really a lot more nuanced than that.
So like forgive me if I think it's a waste of tax money for Bharara and the courts and the police to go after Big Vern, while the Equifax guys are not pre-emptively detained while a fine is calculated.
With honest-services and securities fraud, the police are generally there to document, not enforce. If someone stole your WoW gold and you sued, you'd almost certainly have a case. If I were your lawyer (I'm not a lawyer), I'd send a letter to the relevant tax authorities and attorneys general, as a point of leverage during settlement talks. (This is not uncommon in lawsuits--
TL; DR No, one does not always get caught. I won't say I've always been faithful to every city's open-carry alcohol laws. But when you break such laws (a) it's still breaking the law which (b) exposes you to more than just the government.
> So like forgive me if I think it's a waste of tax money for Bharara and the courts and the police to go after Big Vern, while the Equifax guys are not pre-emptively detained while a fine is calculated
You're forgiven for having an opinion? I still disagree. We know there was criminal conduct on behalf of Big Vern. Not yet Equifax. Though on a higher level I agree, since ordinary people were harmed by Equifax. My sympathies for people who lose money in Bitcoin fraud is less, though I think that's a function of familiarity with the system.
I will do more digging but I don't know if anyone has gone to the police for WoW gold theft. I'm not sure why WoW gold is treated differently from Bitcoin, which is apparently an honest to god bonafide US security in the eyes of the law.
Re: your point about not always getting caught, then it sounds like we have an unequal application of the law/enforcement problem. Which I suppose is the crux of my entire argument.
Why are we going after Big Vern when there are more pressing crimes to deeply investigate? I even used his exchange and I literally don't care. The coins were numbers to me, not dollars.
Re: Equifax, plenty of suspected criminals are detained for years before any criminality is proven. Just look at all the pre-trial detentions on Rikers Island in NYC.
You have young kids being accused of marijuana possession or etc, suspected trespassing, and then they don't go before a judge for many many months.
Whereas with Equifax, you basically have smoking gun stock trade proof and admissions of guilt.
It can therefore only be true that the reason an interrogation of these Equifax officials has not occured, is because the law/enforcement is being applied unequally.
This is a silly argument, it's not an either or situation, law enforcement can and should pursue all crimes. By your logic, why go after any financial crimes where there are still unsolved murder cases? Do you see how absurd you're being?
> The coins were numbers to me, not dollars.
What your feels tell you has no bearing on the law; bitcoin is a commodity of value and like all commodities of value it's subject to law.
Law enforcement and governments don't have unlimited resources. Frivolous crimes should not be pursued as vigorously as crimes of violence and physical/financial/corporate victimhood.
Equifax executives are chilling in their house right now. Big Vern is wanted by the feds for loss of fictional assets. Come on, apply the law equally.
53% of prisoners are there for possession of marijuana. Surely you don't want your tax money spent on this victimless crime?
Well, it currently is being spent that way, while many murders go uninvestigated.
They're both commodities. People get away with not reporting WoW gold because the mean holder probably holds less than the mean holder of Bitcoin. As you observe, law enforcement resources are limited. That said, counting on flying under the radar is a horrible tax policy.
(It does not help that there is a (a) history of successful prosecutions surrounding Bitcoin, (b) a vocal group of Bitcoin enthusiasts arguing they aren't subject to tax and (c) a veritable black market around Bitcoin.)
> Equifax executives are chilling in their house right now. Big Vern is wanted by the feds for loss of fictional assets
Due process, my friend. The Equifax executives are being investigated; they have not yet been found guilty or even charged. One might argue they should be. But that's a discussion about what the law should be, not what it is. (That said, the insider trading charges look promising.)
As others have repeatedly mentioned, any delineation between "fictional" and "non-fictional" assets is itself a fiction. Arguing that something shouldn't be prosecuted because it isn't as illegal as murder is ridiculous. Better strategy: understand it's illegal, follow the law and organize to lobby to amend it.
Disclaimer: I am not a lawyer nor a certified accountant. This is not tax, accounting, legal or any other sort of advice.
You're using the word subjectively incorrectly; the word you seek is selectively.
Bitcoin assets are not fictional, they translate to real dollars, Big Vern stole tens of millions of dollars of other people's assets. You are minimizing this for some reason that you don't make clear.
Equifax didn't commit a crime, having lax security is not illegal, getting hacked is not illegal. They may be been unethical about not disclosing shit soon enough, but there's no obvious crime to charge anyone with, yet; that may change after an investigation. Big Vern however stole people's money, that's a clear crime.
>>This is tax fraud.
It is not; you only have a tax liability when you cash out, not when you hold, you could cash out and have a gain or have a loss and you need to reflect that on your income tax for that year.
It depends [1]. If you receive the Bitcoins for goods or services, they are taxed as income. If you hold them as capital assets, the IRS won't tax you for holding, though your state or local jurisdiction may. Either way, not reporting those holdings is tax fraud.
[1] https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Tax...
Disclaimer: I am not a lawyer nor a CPA. This is not legal nor tax advice.
Identity theft is a crime committed via Internet. It is lazily prosecuted.
Stock fraud ("securities" fraud) is a crime that is also vigorously prosecuted.
Bitcoin and alt coins, just like WoW gold, are not stocks. Therefore how can the state say Big Vern is committing securities fraud, and that we should spend millions of dollars attempting to "bring him to justice"?
EDIT:
Correct, I agree, but this occured in 2014 and would therefore be retroactive application of the law.
From what I remember, we were operating in a complete and total vacuum.
Big Vern's only mistake was being born a US citizen. If he was Russian, he would be a free man.
I don't really understand what contract there is to legally enforce. Say I send some bits to Big Vern's site. One day, the bits aren't there anymore. If it was a legally incorporated real bank, and my bits represented real dollars or Euros or etc, then I would be fuming pissed and would be suing.
But Big Vern did not run a site with any express guarantees, and I did not send him any legal tender. So we were effectively operating in a legal vacuum.
One time I left my car at a repair shop. All the cars they had in the lot were stolen. The police didn't arrest the shop owner for negligence. They just went and tried to find the thieves.
[0]: http://www.businessinsider.com/bitcoin-price-security-equity...
Not relevant, securities doesn't mean stocks. A security is basically any financial instrument of value, and crytpo's are most certainly securities and obviously always have been.
You need to get over this notion that "new" things are somehow not subject to existing laws. Slapping a new name like bitcoin on a financial security doesn't suddenly make it not a security; the law is not so trivially circumvented, the law doesn't need to mention a thing by name for it to apply to said thing.
You can't retroactively apply the law. Well apparently the government acts like they can. But in my (biased) mind they shouldn't.
How about.. when a law is wrong? or if it's not just? or is changed, for this matter? since you think it's retroactively applied, which way or which one of 2 or more conflicting law are/is 'applied' retroactively?
There aren't a lot of crimes you can't excuse this way (by substituting various countries in place of Russia).
If these supposedly respectable banks managed to repeatedly do this (this is after the financial crisis btw) then it's anyone's guess what goes on in the Wild West that is Bitcoin exchanges. That said, the stupidity and lack of common sense in UK financial industry continues blows my mind.
[0] - https://www.moneymarketing.co.uk/why-the-fca-rewrote-the-rul...
Not to mention the richness of implying chinese exchanges are somehow uniquely bad! Exchange shenanigans on the english speaking web are a central part of the bitcoin story to this point.
There are still people putting money into MMM, which is a long-running scam with its own Wikipedia article.[1]
The binary option industry, run out of Ramat Gan in Israel, was a whole industry of bucket shops pretending to be brokers. It got so big it was 40% of Israel's financial sector. About 95% of binary option investors lose their entire investment. Turns out it's legal in Israel to scam non-Israelis. Once that came out, it became a political embarrassment.[2] “Binary options is causing anti-Semitism around the world.” - a member of the Knesset.
[1] https://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company) [2] https://www.timesofisrael.com/unhappy-with-bill-israels-coal...
Also, this quote:
> using cryptocurrency networks are cheaper to send money overseas than Western Union. No, it probably is not
Uhh, maybe not in some narrow cases (especially as pointed out in the source, for people that need to use cash agents or are unbankable), but for many people I know including myself, it is significantly cheaper to use bitcoin rather than Western Union (source: I receive my salary in bitcoin based on spot price tied to USD)
(disclaimer: co-founder of a blockchain project)
Who would enforce regulations? You would necessarily have to centralize things and hand over power to an authority. This would defeat the purpose of a dencentralized blockchain.
I have no real ideas what this would look like but I wonder if there are decentralised approaches to regulation that would work (community decides together who the bad actors are?)
a lot in theory
very little in practice
Are there any real decentralised systems out there that couldn't be controlled or overruled by a few well-placed individuals working together?
> Are there any real decentralised systems out there that couldn't be controlled or overruled by a few well-placed individuals working together?
The internet is probably a good example.
As for decentralisation 'goals', the difference is not clear. Decentralisation is the buzzword that the sector loves, but I haven't seen much in the way of progress towards it.
The problem is that crypto people seem overly keen on decentralising without thinking whether or not there is an actual advantage in doing so, or whether the advantages might outweigh the disadvantages. There is an unfortunate viewpoint that decentralisation is just always a "good thing".
Well, to put cryptocurrency in its historical context, the design-decision to make the architecture of the internet(/darpanet) decentralized was because of the very real and persistent possibility of global thermonuclear war. If you want your computer networks to stay up after NY, DC and SF have all been wiped off the map, decentralization is fairly key.
So I would say yeah, the world has changed, and decentralization is now always a good thing. It's not just "crypto people", it's "people"[0] carrying on in "software"[1] what is already a decades-old trend in computer networking.
[0,1] scare quotes because people and software are both scary
Two ways I'm aware of:
1) Require documentation ahead of time that will make prosecution harder after the fact. Without documentation scammers can just say "oops, we lost our client database" or "oops, we never recorded a document for that investor". You can still commit fraud while submitting heavy documentation, but it gets harder not to paint yourself into a lie.
2) Firewalls between parts of an ecosystem. Maybe it's problematic for and exchange to trade a security it itself issued. You make that illegal, and then colluding entities need to communicate across corporate boundaries, which is harder to keep hidden.
I sort of agree with you that this runs counter to decentralization. But the decentralization community has yet to implement voluntary versions of these things. Where's the crypto SEC that I can opt into which maintains strict reporting and audit requirements tied to the issuer's financial stake? Until we have credible versions of that I don't see how we can say we don't need the SEC.
How can you tell if it's westerners investing for the future or Chinese miners trying to get liquidity through any means possible?
Why would you want that? Why not just receive USD, and buy BTC each month if you like the price?
I'll take my safe and free direct deposit. I actually had a case where a bank teller gave me the wrong state's routing number because she thought my account should be based in the one she lived and not the one that was set up. My entire month's pay went to the wrong account and I freaked out when i figured out what happened. I went to a chase bank and explained the problem, they found the money in the other account and were able to send it into mine.
Screw up the bitcoin address in any one of those transactions and your money is permanently gone.
with the difference that internet worked exactly as planned from the beginning, had a clear goal and solved a real problem.
And beyond that, when the internet first became a real thing outside of researchers, it required pretty intimate knowledge of the technology to properly connect to it and get it to work. Remember that operating systems use to not include a TCP/IP stack for instance. It would be a long complicated process to get your computer to actually connect to the internet... but now, in 2017, for the most part all you do is say "connect to <accesspoint> with password XXXX" and it magically works. Right now I think this is parallel to blockchains. It takes a lot of technical knowledge to really use smart contracts and blockchain tech right now, but I imagine a future where it is no more difficult than logging into your bank account, or writing an Excel macro.
Yes, it did
Cryptocurrencies are not working right now, not even as intended by their authors
Accredited investor is defined as either of $1m assets exclusive of positive home equity or income north of $200k for two years ($300k if you need to include a sompouse) and reasonable expectation of the same.
I sympathize with the general complaint but as this is a thing that many HNers will confront at some point I thought I'd correct the record.
Bernie Madoff lost tens of billions of dollars of investors’ money [1] in a clear fraud. This is terrible, but nobody ended up destitute [2]. The systemic risk was contained.
Contrast that with the savings and loan crisis [3]. This lost retail investors’ money. People ended up destitute. That, and lots of retail investors (i.e. non-accredited investors) doing zero diligence allowing the problem to metastasise, turned a prosecution problem into a political problem. When masses are turned on the street, nobody cares that they should have done their diligence. They become a political problem.
The government's rationale for regulating retail investors more strictly than accredited investors is that a laissez-faire attitude towards the former's activity has, historically, resulted in massive fraud that then creates political problems. I believe there is a middle ground between our total-ban regulations and Bitcoin's laissez faire. Finding that, however, will require both sides understand why we have the regulations we do.
[1] https://en.m.wikipedia.org/wiki/Madoff_investment_scandal
[2] https://www.bostonglobe.com/business/2013/12/11/five-years-a...
[3] https://en.m.wikipedia.org/wiki/Savings_and_loan_crisis
Disclaimer: I am not a lawyer. This is not legal nor securities advice. Follow securities laws.
Weren't the institutions FDIC insured? The wiki page you cited mentions some institutions receiving FDIC insurance. In that case, how did the victims end up destitute?
Do you think it’s possible to square the desires to make startup investing accessible to retail investors and to prevent fraud? If so, how?
I'm not familiar enough with LTC to say if this will continue for the future, but thats the standard argument in favor.
(Anyone with a passing familiarity w/ CCs would know this, but still, it feels like statements that are so blatantly counterfactual should probably be noted.)
The on-chain atomic swap (no Lightning Network involved yet) was executed using Decred technology ( https://github.com/decred/atomicswap ) and was preceded by a DCR-LTC swap ( https://blog.decred.org/2017/09/20/On-Chain-Atomic-Swaps/ ).
(De)credit where credit is due. ;-)
In particular, as coauthor of the lightning spec, I assure you that we're all working on bitcoin. Litecoin happened because it was trivial; interestingly, we've deferred Bitcoin mainnet because it's likely to attract real users, who'll risk real money.
To elaborate/explain on this point for those less familiar: those three cryptocurrencies actually are based on real technical innovation, and have developer communities producing more technical innovation. There are many other cryptocurrencies that have zero technical innovation (or completely nonsense innovation) and are merely clones of previous cryptocurrencies with some identifiers tweaked, made purely so investors can pump and dump.
The article in part 5 ("The decline of Maximalism") seems to be criticizing the idea that people would prefer some cryptocurrencies to others, which is completely ridiculous. There are real differences / issues with many.
To strengthen my argument, you wouldn't expect every startup on the Internet to develop their own Apache server, HTTP protocol, and all the other technical innovations that allow for their business to exist, would you?
Maybe I should drop the word "technical": There are many projects out there with no real innovation whatsoever that were created only to facilitate pump-and-dumps rather than to enable some kind of innovation.
It's the only kind that matters; all other innovation should be built on top of those using the technically innovative base as a building block. Launching "new" coins that are merely clones are simply going to lead to failure. Bitcoin is not like Apache, you can't just grab its code and use it and think you've got what bitcoin has. Bitcoin is not its code, Bitcoin is its network, Bitcoin is like Facebook, network effects dominate, and you must use actual Bitcoin, not just launch a Bitcoin clone, to benefit from it.
I don't want them making their own Apache server in the exact same way I don't want them making their own coin. They should use an existing standardized setup. A smart contract can be useful. A "coin in support of X charitable effort, come mine today" is pretty much nonsense.
Ethereum is actually technically inferior as a platform for tokens, but it has a fantastic community which is very much into tokens, so that's why it is much bigger than what you see on other platforms (BitShares, Nxt, Omni, Counterparty, WAVES...)
You can see applications built on it -- decentralized exchanges, prediction markets, derivates/derivative markets, gambling sites and so on.
It's kinda ridiculous to demand "actively utilize today", although some apps are in active use, but they are pretty niche.
At this point we talk about what _can_ be built, not what _was_ built.
As for 'tangible value', tangibility is very subjective. There are still people who claim that Bitcoin has no tangible value, but I bet if you were living in a country with an unstable banking system, ridiculous capital controls and high crime rate, you'd see Bitcoin's value
There's been a recent example of someone running a Ponzi using BTC, but that's not an example of a currency being a Ponzi, which is a thing more specific than "scam."
Actually, Zane Tackett, Director of Community & Product Development at Bitfinex, has provided information, including the complete list of Bitcoin addresses where the stolen funds went: http://blog.zorinaq.com/bitfinex-hack-2016/
I think that Satoshi's main thoughts at the moment would be bemusement about how the cryptocurrency mania seen today so well illustrates human behavior.
I won't judge, but just state it's different from yourself: who apparently thinks egoism or profit-seeking is bad or undesired.
Is there much actual crime being facilitated by Bitcoin? I mean apart from the "things that are illegal now but they're going to be legal in a few years because one country started a misguided effort that everyone else blindly followed" crime.
How about all the ransomware(s?) that spread globally and affect businesses, hospitals, etc.?
> The empirical data and stories above do not mean that investors should stop trading all cryptocurrencies or pass on investing in blockchain-related products and services.
> To the contrary, the goal of this article is to elevate awareness that this industry lacks even the most basic safeguards and independent voices that would typically act as a counterbalance against bad actors. In this FOMO atmosphere investors need to be on full alert of the inherent risks of a less than transparent market with less than accurate information from companies and even news specialists.
> Cryptocurrencies aren’t inherently good or bad. In a single block, they can be used as a means to reward an entity for securing transactions and also a payment for holding data hostage.
And most, if not all, of his complaints revolve around bitcoin's design of being untethered from judicial systems or purview. No one has figured out, even theoretically, how to have our cake and eat it too. It seems pretty clear that his wish is a fundamental contradiction and one must choose between the two.
The 'bad' actors he talked about can all be investigated in the same way a bank heist or computer hack can be, and if successful, the perpetraters punished (as have some of them).
It's like saying 'people who use dollars aren't going to tell you how the Federal Reserve invents millions or billions of dollars of currency out of thin air every year.' No, they won't, but as of now we consider that a feature not a bug (not all do, but most mainstream do). Even though it means the dollar you 'buy' today will be worth slightly less tomorrow.
Things like porn, sex toys, gambling in many jurisdictions, selling expensive items like gold bars or cash online, selling cross-border to sketchy areas like Nigeria or Romania, etc.
Traditional reversible payment methods are very expensive or unavailable for these applications because the chargeback rates are off the charts.
So as a consumer I finally have the opportunity to buy an expensive item over the Internet, get swindled by an unscrupulous seller sending me an empty box (if anything), and have absolutely no recourse? Is that the value proposition here?
However, reputation systems seem to work alright, as evidenced by silk road where you really had no recourse but orders did come through.
You could also use an escrow service.
I'm sure there's been a lot of analysis done with regards to the actual amount of fraud on Silk Road (and it's various incarnations and similar services), right?
There's no way that criminals with even lower oversight behave better.
The idea that you could have an environment where you lack the fraud protections you have in other environments leads to lower fraud rates is absurd, and would require a lot of evidence to demonstrate. An appeal to reputation systems doesn't cut it.
There are no bigger criminals with lower oversight than anonymous drug sellers on silk road, and yet most people did get their orders. That was my point.
> The idea that you could have an environment where you lack the fraud protections you have in other environments leads to lower fraud rates is absurd
It's not absurd at all. For example, if you are a legitimate gold seller and you accept credit cards orders with shipping addresses in Romania you will get destroyed by fraud from buyers.
An alternate system where payments are made in Bitcoin results in zero buyer fraud and a reputation system a la Silk Road (plus the ability to sue the non-anonymous seller in court) can reduce the potential for seller fraud to a point where it's worth taking the risk to save X% on the price of your gold.
https://hackernoon.com/meet-spoofy-how-a-single-entity-domin...
I'd love to hear a good argument why these things are a "bad thing" besides just the argument that "it's wrong to lie". I don't really have a strong opinion either way and could probably be swayed- Any takers?
Spoofing is bad for a lot of reasons. It's bad for retail investors who buy(sell) into a position when it's been spoofed high(low) believing the order book is real. It's bad for market makers who must widen their spread and/or add less liquidity since information in the order book isn't real. It's bad when a spoofed price wrongly activates a bunch of stop orders. It's bad when somebody exits a position wrongly believing that a different party has an informational advantage over them. It's just blatant market manipulation that benefits only the spoofers.
If a company released false earnings reports or somebody released fake information about a company to change the price, people would be up in arms, you would never hear anybody making your argument. I don't see how manipulating an order book is that different. The book is a fundamental part of how companies are valued since it's how people speculate on future value, act on informational advantages, hedge, and it's how that information itself is disseminated).
Maybe the bitcoin markets are different enough from equities that the effects of spoofing aren't that bad (already super volatile, no outside information other than price speculation, no latency arbitrage). But I would need to see some really strong arguments to that effect to convince me of that.
Or are they Cryptsy points on the exchange?
To take one example, his claim that historically Coinbase has kept traction stats close to the vest is completely false. He says that the only accurate user numbers come from a filing in the IRS lawsuit. The IRS lawsuit was initially filed in November 2016 and has been ongoing. Coinbase has published user stats on their about page[0] since November of 2014 two full years before the IRS took Coinbase to court, you can go look in the wayback archive. So the claim that the lawsuit provides the only glimpse at the number of Coinbase users is categorically false.
As mentioned, our CEO, Arthur Hayes, wrote on Chinese exchanges running their customers' deposits in local bonds & stocks back in 2015 [1]. It's worth a read. We at BitMEX have brought a full-time writer into our employ just to bring more of these stories to the fore and help create the facts-first, inquisitive atmosphere crypto desperately needs. [2]
1. https://blog.bitmex.com/crypto-trader-digest-nov-30/#shadow-...
I'm in the camp of people interested in cryptocurrencies due to their libertarian qualities and largely motivated by what I perceive to be repeated irresponsible behavior by governments in how they administer their currency (most recently notable in the years surrounding 2008 - just before Bitcoin was activated). In fact, I find it curious that the article did note even allude to the setting in which Bitcoin was born, as its roots go very much against regulation by governments.
The whole idea behind blockchains is distributed consensus. One of the greatest values behind bitcoin is its lack of centralization and a sort of distributed governance surrounding it (more so with some other cryptocurrencies, but bitcoin does have primitive mechanisms for users to vote towards such things as protocol evolution). It has some other advantages that government-operated currencies could make use of, such as being difficult to forge, but the real innovations are centered around the user not needing to trust third parties (govt included) to behave in the user's interest. If you embrace regulations to the extent that they exist in traditional currencies - if transactions/addresses are ever forced to be blacklisted (and thereby reversible), or funds made to be seizable by design, for example - then what value do cryptocurrencies provide that couldn't be replicated by a non-cryptographic/centrally operated digital currency, and why then _wouldn't_ they be superseded by something easier to use/control?
It seems to me that the lack of regulation is a large part of the value behind bitcoin. So when the article quotes:
> The cryptocurrency world is basically rediscovering a vast framework of securities and consumer protection laws that already exist; and now they know why they exist.
I'm skeptical. If consumers want regulation, they'd use the established currencies. Bitcoin exists to be unregulated.
----
On a less political note, this article was full of useful information and thoughts, so thanks to the author. I popped out of the cryptocurrency world in 2013 and fell back into it two months ago, and it's disappointingly difficult to find articles like this that actually have some depth to them. There's too much get-rich-quick hype and not enough interest in understanding the social or technical developments associated with cryptocurrencies most places I visit.
Can this framework be re-invented, perhaps on the blockchain, to be more efficient (less friction), more comprehensible, and machine checkable?
Once the exchanges are regulated like that it would be very difficult to launder money or avoid paying taxes on profits.
Regulation will become more difficult when these become mainstream.
That just basically supports the OP.
Every thread devolves to how to avoid taxes, kyc etc.
You can choose not to do that, and if you do, the IRS will assume the cost basis was $0.
I'm have been buying crypto for years, and I'm perfectly happy with that - it gives me the option for privacy, but at a cost.
This is all you need to know, end of article.
Of course, the tone of this article is "racket", "boiler room" etc. I call it price discovery, efficient, economic growth.
The article's only objectiveness is by saying that they don't have transparency and financial controls that the securities industry does. But makes no mistake in calling it controversial that one fund or one ICO is investing their proceeds in other ICOs, news flash this is how all economies work. But here it is controversial because "shareholders" don't know, except there are no shareholders, BUT WAIT THEY SHOULD BE SHAREHOLDERS as if these are equity securities!
It is hard to debate this article because each aspect has to be taken individually.
But this author consistently describes an aspect of cryptocurrency as controversial, while inadvertently describing how all capital markets work, but holding bitcoin at a different non-existent standard.
Bitcoin is an open, borderless distributed network with an economic and social system built on top of a data structure called a blockchain. The real innovation has very little to do with the 'blockchain' hype corporations are pushing.
- BTC or some other cryptocurrency as taking over local currencies in long term. There is such things as optimal currency region. Global single currency would not work well.
- Money as good long term store of value. That's hoarders dream, but it would be harmful for economy as a whole. It's the idea that you work hour in 2017, store the value as a money and take that hour out 2027 and it's value has retained value or increased while the work done in 2017 is less valuable than work done in 2027 due to productivity increases. This kind of imbalance leads to deflationary spiral.
Especially if doing the work includes using technology. Buying your computer, phone or car now and getting it 10 years from now would be ideal for the seller.
Holding money allows others to use their money to invest, so you actually facilitate productivity to increase.
This is "in general", since you allow more good and services to be available to be consumed by others.
edit: this animation explains this coordination between savers and investors: https://www.youtube.com/watch?v=YaxIPPMR3fI
That's not holding money in this context.
Hoarding money is keeping cash in your house or bitcoin in your purse. The money is separated from the economy.
Holding money normally means keeping it in the bank account or in cash like instruments. That's fine. Bank loans it to others who use it. You receive interest for contributing capital.
To get a view of it: what if I have chests full of gold, then before dying I take tons of them, burn and bury so no one else ever put their hands on it? Nobody is hurt. Nobody is getting less food than they would, nobody is getting less anything than they would, because even if I bury the money I have, I didn't bury any other of the goods and services that are available in the economy in any time.
Because money is just a resources "coordinator's" power. If I burn mine, I'm just letting go of that power and letting someone else do it instead.
Sure, saying I had all that money not stealing or anything of the sort implies ppl I'm involved with (in/directly) are so much better that I "was allowed to coordinate more"/"received a lot of money". But still, in the end, the economy is not hurt.
First article to point out 21.co. What is their product ??? Read on twitter - A guy asked MA a question for 100$ on 21.co platform, got "NO" as answer. 100$ for a NO...So a guy spent his hard earned 100$ on a question to a VC. VC made money, Donated that to charity to show off and gather "philanthropy" point in his smug circle, got tax savings maybe, his invested firm 21.co made money, 21.co vanity metric of donating to charity increased further.
Poor soul who asked question, got scammed.
Is that true? I thought even in the real world, market cap simply meant price_per_share * num_shares_in_circulation.
I am very excited by progress in Ethereum and see it as a model for a better way forward. Though I do not trust its maintainers and community to build a secure and reliable system. There have been far to many preventable losses due to their amateur efforts.
The future of crypto is exciting. The present currencies are the Diamond Rios and Creative Nomads of crytocurrency.
Downvote away.
Bitcoin...is an impractical, user-unfriendly first mover. Ethereum is the flawed second mover (ok, I'm discounting all the silly coins in between). I'm honestly not sure who the ultimate winner is. Unless the Bitcoin or Ethereum community fundamentally changes, it likely won't be them.
I'm very excited for the space. Just not for the current currencies.
https://blog.cyber.fund/huge-ethereum-mixer-6cf98680ee6c
Bitcoin was the crypto of choice due to the network effect, although for now it is probably better to skip ethereum and skip right into somthings like XMR and Zcash.
BTC is in practice a speculative security. Not a currency.
I think bitcoin is a flawed first mover. The winner (and future stable cryptocurrency) likely hasn't been invented yet.
But I imagine it's mathematic properties will allows for a sustainable transaction rate (i.e.: thousands per second), short (as in sub 2-3 second) final confirmation times, and the ability to execute Ethereum like smart contracts without major security flaws and naive language implementation choices.
Ethereum has plasma and raiden with touring complete smart contracts
Pick one and build on it - there is no need to rip out the underlying blockchain to achieve what you’re outlining - it exists today
You are making me laugh about your ignorance, sorry for my pedantry but... if my company in Argentina receives an international wire transfer from a customer in my HSBC account, it will be less money than if I receive the Bitcoins and exchange it via https://bitex.la/ , and deposit it to the same HSBC account. Both process follow all the tax regulations and are legal.
Cherry picking is fun.
Did you transfer money last week? If it had been bitcoin and had been at the wrong time, you would have received less than you asked for.
Bitcoin is a speculative security like product, not currency.
The power of the bank transfer is that you can predict what you will receive.
There is nothing inherent in bitcoin to differentiate it from other currencies that doesn’t allow the same derivative infrastructure to be built out and offered (it already is)
There are plenty of countries with volatile or straight out hyperflating currencies that still manage to trade with the world
Wall St and finance market is 8% of GDP - this is what they do
You have to hold bitcoin on the destination exchange and then buy and sell in the US and on the foreign exchange simultaneously. If you're worried about the price risk for the bitcoin you're holding, you can open a corresponding short position to hedge.
No, I can choose when I trade since I don't have any cashflow issue.