For first time a dedicated conversation on cryptocurrency in US congress | Hacker News Reader

For first time a dedicated conversation on cryptocurrency in US congress

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79 pointsCGBrian47 comments

The bit that I found interesting is when one of the witnesses (either Jay Clayton or Chris Giancarlo) mentioned that they tried to get their college-age kids to invest in stock market. Even gave them some cash to play around with but it just never caught on. Then Bitcoin exploded and they naturally gravitated to it. He could've taken this story into many directions, basically saying that the whole thing is madness because we have teenagers playing in this market. But he didn't. Instead it kind of sounded like he wanted everyone to embrace it... but still put regulations in place :)

I don't get the idea of "investing in cryptocurrencies". If they are ever to be used as currency they should be relatively stable and predictable. The current status of extreme deflation makes any serious use almost impossible.

You're investing in a future where they are used as currencies. If today you could buy USD for 10 cents, knowing that it'd be worth its value today, that'd be worthwhile. Now, lots of people don't think cryptos will ever achieve that kind of success, and they may be right. But that is the investment thesis nonetheless.

Except 10 cents of USD was worth more 50 years ago than now.

Because of the Fed, which is an organization many people don't want manipulating (devaluing) their currency. Monetary freedom is a big draw for many in the crypto community.

now it's whales and mining farms

But the draw is near fantasy levels of misunderstanding and delusion. Monetary policy is not that simple.

Sure, but one could argue that our sanctioned manipulation of fiat currency is similarly based on delusions of simplicity and/or understanding. We still don't seem able to reliably avoid recessions, and no one is predicting the market with any reproducible accuracy.

Perhaps such complex, chaotic systems may be better off sans regulation. Especially something like cryptocurrency, which does not have the same properties as paper fiat, although it is being treated as such.

I personally have less faith in institutions run by humans and bogged down by dated regulations than I do in an instantaneously fluctuating near free market. If you can't trust people to invest in currency because of complexity, what makes you think you can trust them to regulate your money, and make decisions that affect the value of your assets for you?

As much as I personally think cryptocurrencies will have a difficult time achieving currency status - this is pretty much what happened during the American Revolution. Congress issued bonds to pay soldiers and for goods for the Continental Army. Those who accepted the bonds as payment were, in a sense, betting that they would be worth something in the future.

Because at least Bitcoin has never really been a currency, it has been a (virtual) commodity with a (public) ledger attached.

Blasted thing from the outset emulated gold, thus attracting "survivalists" and other goldbugs from across the world.

And that is perhaps why Wall Street is moving in, because those companies are at their core built around siphoning the arbitrage on shuffling commodities around.

And with cryptocurrencies they have an ample supply of such commodities, until the earth boils from waste computing heat.

Perverse incentives to the Nth. The paperclip maximizers are already upon us, and they didn't come from the AI lab, they came from the trading floor.

This is blatant erasure. Bitcoin was perfectly fine as a currency for most of its existence, and for a long time captured almost all crypto volume

The mechanics of transactions worked for currency purposes, but the fundamental architecture of bitcoin has always been hostile to its use as money.

The fixed coin payouts per block, the halving every four years, and the eventual final and finite fixed supply, combined with arbitrary blocksize limits means bitcoin was always designed to hit its limits at 2014 transaction volume.

I traded btc back then for the novelty and bought stuff with it in physical and digital to say I did, but even then the architecture promoted hoarding over spending, and anyone using bitcoin as a currency then is likely lamenting the things they traded it for now which is just about rule 0 of how to make a dysfunctional money.

The crpytocurrency that is actually a currency is one that can use its design to promote its practicality as money - the goal should be no fees, instant signature ledgers that don't consume power on national scales, and an adaptive but predictable algorithm for money creation that can respond to the market to try to keep the currency stable - when transaction volume and coin turnover are high the currency is inflating so you want to reduce minting to try to curtail the effect. When money slows down and starts squatting in wallets you turn up printing to drive deflation.

Anything else in my mind at this point is just a cash grab using the proven mechanisms of bitcoin and an out of control hype train to rob people.

The more i read and discuss money, the more i loath the terminology of "good" and "bad" money.

This in that the supposed "good" money is money that incentivize hoarding, while "bad" money supposedly incentivize spending.

The use of good and bad is loaded to put it mildly, and plant a bias in the reader.

Contrary to popular belief, deflation is good. Inflation benefits those with capital producing assets. For workers, inflation forces them to continuously fight for the same wage they had a year ago.

Inflation encourages reinvestment. That's why those who wish to remain invest in companies rather than currency and precious metals.

In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power.

In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power.

> Inflation encourages reinvestment.

Inflation encourages malinvestment. There's always a motivation to invest and earn money from selecting profitable ventures. Inflation forces people to be less selective.

> In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power.

This is only true if you ignore taxation. The government is perfectly free to tax people's wealth if they feel hoarding has become problematic.

>In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power.

Nonsense. People with money always find a way to escape inflation. Take a look at real estate.

> In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power.

Carry this thought experiment a few steps further. What will people buy every day, despite this currency appreciation effect?

Deflation decreases the velocity of currency (less incentive to spend due to rising value), which is bad for the economy (less activity, so fewer job opportunities, leading to even less activity).

> Deflation decreases the velocity of currency (less incentive to spend due to rising value), which is bad for the economy (less activity, so fewer job opportunities, leading to even less activity).

I think you meant to say significant deflation is bad. But so is significant inflation. Deflation is actual good in many ways -- worker's wages are worth more, their savings are worth more, and consumption is reduced (whereas inflation can encourage wasteful consumption).

The US is in desperate need of deflation today. Productivity has decoupled from wages -- deflation would make those wages worth more to narrow the gap. Houses have become unaffordable -- impossible to even save a down payment -- deflation will make young people's savings valuable enough to afford that down payment.

Inflation is the snake oil sold to us to benefit the elite at the expense of everyone else.

Some of the cryptocurrencies have a hard cap which makes them deflationary, other cryptocurrencies don't have a hard cap, which makes them inflationary and more similar to fiat. The deflationary cryptos will probably be seen as an asset to invest in while the inflationary cryptos will most probably be the coins which are used in day to day transactions.

The US dollar isn't "stable" and "predictable".

Compound interest and 5% yearly returns are boring. Technical analysis is too complicated for kids. "WHEN MOON??" is much more relatable.

Go to the crypto subreddits and look at all the people who laugh at stocks, saying market returns are basically worthless.

I wonder if this is due to young people feeling like the status of previous generations (house, cars, kids, vacations, etc.) seem so much further out of reach than ever?

That and the trend that the avenues frequently cited as ways to achieve this status (hard work, education, dump your money into the stocks and pray) are increasingly being exposed as obvious bullshit.

> dump your money into the stocks and pray) are increasingly being exposed as obvious bullshit.

I'm not exactly sure how stocks have been exposed as bullshit given they've produced above average returns, especially for young people who have gotten in after 2008.

Because they all remember 2008? The depression had a lasting influence on the people who lived through it, they hoarded, kept money under their beds, stuff like that because they knew what it was like when the banks failed. The great recession is obviously much milder but it did expose to many young people that stocks aren't as safe as they think.

For me the takeaway has been the exact opposite. I was skittish about putting retirement money into the stock market circa 2010 cuz I saw ten years of no net gains and feared that was a new normal. But I was doubly wrong - I hadn't factored in dividends, and a few years later stocks were double their pre-2008 peak. The bottom ended up being a rare chance (for the still-employed majority) to quadruple those upcoming returns. Even now, another 50%-bottom from peak would be double the previous bottom. The fundamentals behind the expectations of capitalistic returns seem less shaken than ever.

There is more and more pressure to signal fame & success...

It's a big act that needs constant reinforcement via social media.

Our narcissism has reached a fever pitch while the traditional methods of success no longer support the aspirational narrative.

It's no longer work hard, goto college, get a house and family..

Everyone needs to be a motivational / spiritual / business guru with a million followers, "passive income" and a schedule of traveling the world to exotic locales.

That lifestyle is also required now, not in 50 years, so fake it till you make it and bring on the debt / Airbnb / Lyft "sidehustle".

CryptoCurrency is the only lottery ticket left that provides any appearance of hope of covering people's bets and supports the current narratives of unbounded wealth with little to no work.

I was that young once. Even back then, the stock market was "obviously" worthless. If I have a hundred bucks, what the fuck good is having a hundred and five bucks in a year? I needed tens of thousands of dollars in order to fell like my life had changed.

So I ignored the stock market, and gravitated to poker. Same shit, different day. Chasing big returns because they're the only kind that would've moved the needle.

I don't think it's that bad or good, just natural, even in a more exuberant-feeling time. Everyone in parallel comments is talking about "it's because they don't think they can get a 9-to-5 and a house like their parents" as if having a steady job and being like your parents was ever an aspirational goal. Parents are boring! Nine to five is boring! Actors, athletes, rock stars, billionaires - that's the real goal. This wasn't created by social media, it wasn't created by 2008, it goes back decades at least.

Picture yourself being 15-20 years old. There are basically zero non-lottery-ticket opportunities available to you to make serious money. Your opportunities to exercise full-on adult agency are still fairly limited. * Your immediate employment opportunities are things like fast food and pizza delivery * You won't have a college degree for years even if you think you'd graduate into a middle-class type of job * Even if you doubled down on your schoolwork, you won't generally be separated that much from the rest of your class. And grades aren't directly translatable into money and popularity, anyway.

It takes money to make money, and you don't have money. Looking for moonshots is a somewhat rational action in that situation - it's the only one with any chance of producing the desired outcome.

Why is every comment containing humor downvoted on Hackernews? (Mine has no humor, mind you!)

I suspect it's an effort to keep the signal to noise ratio high. In reference to April Fool's gags on HN, 'dang commented a while back:

> "A word about humorlessness, since it's bound to come up. People who complain about HN's humorlessness have a point, but not because we're against humor. We like laughing as much as anyone. It's because empirically, a culture of humor means a flood of lame humor, and HN's goal is to optimize for signal/noise ratio. As with any optimization, there are inevitably tradeoffs."

https://news.ycombinator.com/item?id=7506793

I think the parent comment has more value than just humor, but feel like it's being punished for not being serious enough.

It boggles my mind that this was cited as a positive anecdote.

If you believe in markets and capitalism, then it makes perfect sense to consider children investing into the returns of capitalism (By, say, buying an index fund) to be a good thing. You expect the economy to grow, you know that the economic system encourages wealth to flow to investors, you want everyone to be an investor, all is well in the world, let's have a drink and move on.

With cryptocurrencies, though, its all pump and dumps and spirit advice animals, and 'everyone decided that these baseball cards are worth a lot of money, so let's trade them around' while the Tether Printing press is going full swing.

Capitalism insists that we'll all be better off if money is invested into businesses. It, or its proxy effects has given us automobiles, iPhones, and has funded and built millions of profitable businesses that solve trillions of dollars of user needs.

What exactly has the crypto mania built? You believe that cryptocurrencies will build worthwhile businesses? Why did Bitcoin grow 10000% over the last 18 months, then? Why is IOTA worth 6 billion dollars? It's as if a bunch of people looked at Wall Street, and said: "Gee, wouldn't it be amazing to make as much money as they do, but without the side effect of financing the economy that gave us airplanes and automobiles and cellphones and the McRib.

What is the social ROI on the money and electricity wasted on the crypto-bubble? People argue that once all externalities are accounted for, it is negative for capitalism, but at least we can all point to a Prius, or a 767, or a grocery store, or a 300-unit condo in Seattle, and say: "Well, it played an important role in building that."

It is easy to be critical of the wild fluctuations in price and the "pump and dump" nature of cryptocurrencies, however you only ever notice big governments and companies paying attention to the technology (the actual innovation) only after the price has rapidly risen.

yes because their citizens are dumping money into them, and they're unsure where that money is going.

The only issue is there's neither attention (in the sense that you mean) of "big governments and companies" nor "innovation".

Please see my sibling comment for early evidence of both.

To extend upon that:

Canada's recently begun to test implementation of tech on the Ethereum chain for a few different purposes.

The National Research Council is testing its use in a platform to aid in transparency of government funding:

https://www.nrc-cnrc.gc.ca/eng/stories/2018/blockchains.html

Prototype: https://nrc-cnrc.explorecatena.com/en

At the WEF in Davos, Canada (w/ the UK and Netherlands) announced join work with Accenture (/Microsoft) to create a digital ID system for travellers as a pilot project:

https://www.newswire.ca/news-releases/canada-to-test-advance...

(Similar to this project, I imagine): http://www.bbc.com/news/technology-40341511

Edit: Link to the below-mentioned WEF report: http://www3.weforum.org/docs/WEF_The_Known_Traveller_Digital...

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Excerpt from the press release:

The prototype and pilot result from two years of thorough cooperation between public and private sector partners in the World Economic Forum's Security in Travel Project. The Known Traveller: Unlocking the potential of digital identity for secure and seamless travel was published in consultation with Accenture, AccorHotels, Amadeus IT Group, AirAsia, Airports Council International (ACI), the Government of Canada, Google, Hilton Worldwide, International Air Transport Association (IATA), International Civil Aviation Organization (ICAO), International Criminal Police Organization (INTERPOL), the Kingdom of the Netherlands, Marriott International, NEC Corporation, SAP SE, Sedicii, UK National Crime Agency, US Department of Commerce, US Department of Homeland Security, Visa and World Travel and Tourism Council (WTTC).

George Church is using Crypto tech for a new company. You're going to be able to sell your genomic data to pharma companies[0].

Selling such data may seem like a terrible idea, except they're also using a second layer network (Enigma.co) for the data processing which maintains the secrecy of the underlying data.

That's a counter-example. I don't think George Church got FOMO! I agree with you generally.

[0] https://www.technologyreview.com/s/610221/this-new-company-w...

Seems to me that in the short term, as long as cryptocurrencies keep getting used to move money out of non-western countries (India and China amongst others), into western countries, there is no reason why western governments would want to hinder such activity. At the same time I wouldn't be surprised if China and India try to ban them, although with all the rampant corruption at all levels of government, that might prove very hard to enforce for both of them. With regards to Russia, I don't know what to think.

Am I wrong in thinking this?

As you mentioned, since money trickling out cannot be prevented after this invention, a better bet for India and China is to incubate home projects that can attract foreign money and hope it is more than spending. People who spend more than the value they create for humanity, are doomed in long-term.

where, exactly, do you think the miners for bitcoin are located?

Hint: China

And it's widely speculated that those Chinese miners exist only to convert yuan to offshore dollars/euros, which is contrary to Chinese government policy.

> move money out of non-western countries (India and China amongst others), into western countries

I lost you there. Isn’t it moving in all directions?

This was a very positive branch in the history and adoption of cryptocurrency. Here's the full testimony: https://www.youtube.com/watch?v=iWQmQ_0Ovxs

Regulation is good but only when it is done with an intention of making it available to the public in a risk-free manner and not trying to abandon it. Cryptocurrencies for the first time are making people realize the importance of financial freedom like never before. Governments are not scared because cryptos can be used for illegal purpose but because it is challenging the whole foundation of current global economics.

Its amazing to see crypto currencies in their infancy. It makes me wonder about when money itself was invented, surely there were pump and dump schemes then too?

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