Switzerland embraces digital currencies and crypto-entrepreneurs
economist.com
economist.com
The robust political system and wealthy quite egalitarian society is a nice environment to run your company in but is also the reason that the next step of the cryptocurrency revolution will not happen here.
Cryptocurrencies are still 100% hype & speculation; a solution in search of a problem. Unless it delivers some real-world applicability i'm not very happy about the reputational risk we expose our country too as i'm strictly in the camp of that it will all come crashing down in a big bang soon.
I owed a friend some money and I sent him BTC which arrived in a couple of hours with fees that were about 10% of what I pay using the banking system. Real-world applicability and a satisfied user.
Get yourself a bank which does SEPA properly.
Ease of transferring seems dubious as well, crypto can also be slow or quick.
But the issue is lack of competition
[1] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
It's the same with the EU law for mobile roaming data. It looks like laws made for the riches cosmopolitan against the poor that don't travel much in Europe
2) It's been a LONG time since we can transfer money really fast at a really low cost
Transferring money from many places in the world is not cheap or easy (think of third world countries) - but even in more developed countries it can take quite long and have heavy fees. Crypto enables people to be their own bank.
The one that worries me the most is environmental (power cost, gpu/asic manufaturing).
It also sucks for projects that actually needs to use computational time for real world problems like folding@home and seti@home.
And it sucks big time for PC gamers.
As the eco-system evolves hopefully the environmental impact would be reduced significantly.
I am worried about both things, in fact I touched on it in regards to manufacturing all this hardware to calculate virtual numbers that have absolutely no value in reality.
It does indeed suck it's turned into such an insane hype machine and get rich quick scheme - but it solved a real world problem that is going to become more and more acute. The war on cash is real, and having a digital cash to fight back with is necessary if you value freedom or privacy on any level.
Ask wikileaks how well relying on banking access went for them. And like it or not, plenty of grey and black markets exist.
Just because you don't understand it, it doesn't mean that it has no uses. Beyond criminal activities, crypto assets have tremendous uses. I have practically moved all my assets to the crypto world and it has saved me a lot of money on international transfers, bank fees and I'm getting better return on investment.
if i go to las vegas, put everything i own on red (because surely, red must be the future!) and win - have i made a great investment?
your other 'tremendous' use will disappear anyway in the traditional banking sector, as they did in Europe with SEPA (see comments below).
and don't forget that some of those fees buy you (legal) stability, low volatility and a system that's pretty robust in general. of course it could be leaner and faster but evolution is sometimes healthier than revolution if a lot is at stake (i.e. everyone's wealth)
I'm guessing you are referring to the end of Swiss banking secrecy here? [1]
I agree that this seems like a very successful marketing juggernaut so far with Zug. Do you or anyone else know why Ethereum ended up being based in Zug? Is Zug that much cheaper than Zurich which is only 30 minutes or so by train?
[1] https://www.swissinfo.ch/eng/business/tax-evasion_swiss-say-...
I have also heard that Zurich is quite favorable as well which is interesting because its also quite expensive.
Broadly speaking, yes.
> I have also heard that the reason for Zug's favorable tax rates is because it was once one of the poorer cantons comparatively speaking.
I don't know. Sorry!
> I have also heard that Zurich is quite favorable as well which is interesting because its also quite expensive.
I'm not sure - depends on whether you mean taxes for companies or private individuals. Also, certain tax brackets vary in the canton (almost village to village). Finally, it depends on your (or your company's) tax goals. Someone earning $30k/year will probably be better off in a Gemeinde/Canton which wouldn't be optimal at $300k/year.
For anyone not familiar with the story of Marc Rich and what became Glencore, it's pretty fascinating. It definitely helped put Zug on the map long before crypto-currencies. I had actually forgotten about all this.
See:
https://sites.utexas.edu/culturescontexts/2013/06/30/marc-ri...
and
https://www.economist.com/news/obituary/21580438-marc-rich-k...
Without any sarcasm: I saw them in use twice during the last 6 months in a very real use case, ie, hackers requesting a ransom (in the first case it was BTC, in the second it was Monero, which makes even more sense AFAIK).
typically one of us pays the bill with a credit card and the others send him crypto to settle. same with selling electronics to each other and paying rent.
Its their to enable - that's what technology is for.
With cryptocurrency's rise, it offers Switzerland a new way to continue their privacy bs. So, obviously they are going to embrace and enable.
Privacy is always BS until the lack of it bites you personally. Privacy (i.e. 4th amendment) is to Swiss what 2nd and 4th amendment is to conservative Americans: Our insurance against government overreach.
The problem is of course that not every place is as democratic (i.e. ruled by the people as a whole) and low in crime, therefore privacy creates unwanted side effects in form of illegitimate uses. What exactly is illegitimate is up for discussion though - e.g. I consider tax hiding as simply a symptom of governments failing to create stringent market places where taxes flow automatically and fairly. As long as you don't have a world- (solar system?) wide government with total control, you'll never eliminate the availability of tax havens, they just get shifted around - currently the easiest place to hide is probably Delaware.
I see cryptocurrency as a nice opportunity to introduce a much more stringent monetary system where it's trivial to trace back the origin of money and track whether it has been earned in a legitimate way, including the deduction of taxes. People will still have the same options in general:
(a) store it in a personal offline wallet - somewhat dangerous due to potential loss and/or forgetting access codes
(b) give access codes to a trusted bank who will have an interest in tracing whether everything is in order (due to regulations)
(c) store it somewhere off-shore, risking fraud
What crypto enables is basically a clean separation of (b) and (c), which would make life easier for Swiss banks in the current landscape, i.e. allow them to once again deal freely with foreign nationals, especially Americans.
I don't expect people who have not lived or experienced what people like me in the developing countries have to go through because of the Swiss privacy bs. Though I do expect them to hem and haw when stuff like Panama papers are revealed.
Additionally, it seems you don't really understand how cryptocurrency work. Bitcoin is pseudo-anonymous and hence, it allows stuff like this:
> I see cryptocurrency as a nice opportunity to introduce a much more stringent monetary system where it's trivial to trace back the origin of money and track whether it has been earned in a legitimate way, including the deduction of taxes.
True anonymity which you want from the 4th Amendment, happens in cryptocurrencies like Monero. Those are resistant to blockchain analysis and you can't trace it back to origin.
Ah, that's utter BS. Not one of the advocates of banking privacy is demanding similar privacy for wage statements. Oh no, if your income comes mainly from wages, you obviously can't be trusted like people whose income comes from investments!
Reference to: The constitution of no authority by Lysander Spooner, and, The law by F.Bastiat
Perhaps a successful militia requires significant financial and logistical backing from nation states, in addition to being well trained.
The military cannot occupy the entire space of the US so maintaining order of a tyrannical government would require a low ratio of military guards to citizens. With even 50% of the citizens potentially armed and willing to fight back, it's an untenable position for the government.
A militia could fight just as effectively as the Taliban against the government and be several orders of magnitude larger. The US military is good at eliminating identified enemies, but it's pretty terrible at nation building and that's even in its strongest state.
Every colonised and now forgotten group of people had what they thought was a genuine well trained militia, for all the good it did them.
If citizens of any country get to make a claim about the effectiveness of an armed citizenry, then it is the Americans.
Those militants are not ragtag. They all receive state sponsorship in the form of finances, hardware, training and logistics.
Your analysis also ignores the reality of asymmetric warfare, in particular the asymmetry of the value placed on the lives of the combatants on the different sides.
Terrorist organizations are far more willing to sacrifice their combatants than the US is, and they have a pool of people who share this outlook to recruit from, which is why they persist.
In the event of an internal armed conflict within a developed country, all sides are likely to value the lives of their fighters similarly.
Do you really believe that the 20,000 to 60,000 estimated [1] militia members in the US is what is defending you agains government overreach? There are more than 1.2 million people in the US army (with a $600 billion budget) and 120,000 federal police officers [2].
Another point to consider: democracies outside the US, that don't have 'well-trained militia of free people', seem to be doing just fine. In a number of metrics that you can consider as a proxy for government overreach the US is actually doing much worse than average: number of people shot by the police, number of people imprisoned, number of (innocent) people executed.
[1] https://en.wikipedia.org/wiki/Militia_organizations_in_the_U... [2] https://en.wikipedia.org/wiki/Law_enforcement_in_the_United_...
(+) well, a lot of people, even if it's no longer every man of relevant age
There was NO income tax on individuals up until WW1 ever in the US. Through a slow process that takes years to change the Federal government has crept into our lives taking more money and control. It is extremely worrysome to me that other young people my age want more government control and not less.
https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
I think the critique is that the privacy is being used as a mechanism for breaking the law, by hiding illegally gotten gains.
Swiss banks will routinely refuse to honour legal requests for information from international law enforcement, e.g from 3rd world countries investigating their own corrupt politicians.
I'd be interested in hearing a logically consistent argument for why bad guys hiding illegally gotten gains is a legitimate reason for opposing banking privacy, but bad guys using encrypted communication platforms for planning crimes isn't a legitimate reason to oppose communications privacy.
In both cares, the information would of course only be available to the government who will only ever use it for Legitimate Good(tm).
- Large parts of our financial sector have never truly figured out how to make money doing honest services for honest customers. As traditional revenue sources (stealing from Nazi victims, hiding dictators' money, assisting in income tax fraud, LIBOR rate fraud) have gradually dried up, the prospect of a new, extremely shady, financial sector is irresistible to bankers and their political allies.
- The lack of imagination in honest banking is going along with chasing the tail end of trends, especially US trends. The large Swiss banks were always happy to provide the dumb money, e.g. in the 2008 crash.
So small wonder that a figure like Johann Gevers will find Swiss bankers and politicians eager to cozy up to him.
[1] https://www.eda.admin.ch/eda/en/home/foreign-policy/financia...
Edit: typo
If (and that's a big if) cryptocurrency ecosystems get large enough to attract significant institutional money / wealth management you can be sure that all participants will be held accountable in terms of KYC / AML / Regularization etc.
If any of the startups here think differently they will be in for a rude awakening.
How is that Switzerland issue or responsibility? They can't judge people for what they do overseas.
He doesn't see people being willing, en masse, to convert the currency they receive (in a paycheck, for example) into another currency unless absolutely necessary. This is a chicken-egg problem if you want crypto widely adopted, where you need the vendors to adopt crypto but it'll likely have to be the government or company first that distributes it to citizens/employees.
He specifically mentioned Switzerland as a great country to explore a system like this (think Anti-Venezuela lol); if they were to found/back a decentralized currency, it could quickly reach mass adoption and we could actually function in society on crypto. I'm interested to see whether Switzerland could go that far with their approach.
The incentives that could be provided to make it worthy for a country like Switzerland to found/back a currency which they don't ultimately control are unclear, but nonetheless an idealistic concept.
Huh? They could switch too. I don't see the advantage.
Also, block chain is the perfect tool for governments to track their citizens' spendings.
a strong financial incentive for the young, working
generation to switch to a new currency, thereby devaluing
all the nominal savings of the old, retired generation.
First, who is producing the new supply? How is the new supply being produced? Hopefully by them, and not a 3rd party that exploits the production and sale of this new medium...
The reason proof of work coins have no inherent value, is because there's zero economic demand except from speculators. Coins are generated though software which has a measurable cost, and why would a vendor or nation state expose their real world assets to be traded for a database token produced though this software method?
You can't just tell all the kids to start using seashells or cryptocoins for their money because it would have to equate or surpass the abilities of normal cash.. for both client and vendor.
If anything, one can imagine a nation state issuing a protocol tied to their centralized treasury but that's not too different than using a debit card.
b) thereby devaluing all the nominal savings of the old, retired generation
In reality it won't work like that (A -> B). In this world you most likely will devalue net worth of 99% of people (poor) and prop up net worth of 1% of people (rich) simply because they OWN actual assets - whole factories and industries, mines, planes, ships, hotels, etc. everything that is bigger than a phone and more useful than a house. This move (if hypothetically it ever happened) will create even bigger disparity and faster than now, in years instead of decades.
If anything the biggest problem is understanding how to use cryptocurrencies in the first place. For mass adoption that's where we need to see innovation most (and of course scalability, which is directly tied to mass adoption).
I don't see the government adopting/not adopting a cryptocurrency affect adoption in a major way on its own. People who don't understand how to use cryptocurrency still wouldn't use it unless it was forced upon them somehow, like their employer saying their salary will be exclusively offered as cryptocurrency from the next month forward. But that could cause all sorts of issues.
For speculation and investment, not for anything currency-like, though.
Assuming you implemented a POW blockchain-based, decentralized (anyone can download and run a node), virtual currency, this would remove control over the supply and generation of the currency from the Swiss National Bank (fiscal and monetary policy experts) and give it to...Chinese cryptocurrency miners + whatever group of developers Switzerland decides to put in charge of maintaining and upgrading the swiss blockchain?
What your friend is referring to is actually an idealized economic concept, the "Stablecoin" - one that is pegged to the exact right basket of goods, services, and semi-finished industrial products that it experiences little to no inflation/deflation and can be counted on as a store of value.
All countries are or should be trying to create a Stablecoin relative to their own economies - allowing private citizens to assume their $5,000 USD will be able to buy roughly the same amount of goods and services in, say 6 months.
All this to say...the Swiss have already created a Stablecoin for their economy...the franc. There is no reason to break up and decentralize an organization that is competently managing a currency. It only makes sense in cases (such as Venezuela) where the central authority is doing a terrible job of managing their currency, and is nowhere near achieving "Stablecoin" status. Or for markets where there is no accepted "Stablecoin" because they are illegal/no enforcement mechanism to honor the transaction (e.g. you can't bring a lawsuit in a US court against a drug dealer if he takes your USD and sells you bad drugs).
Decentralizing control by definition gives power to all of the nodes in the network, requiring their buy-in to conduct any type of "monetary policy" by changing the source code and rolling out an upgraded application.
Any changes that could increase the hash rate, increase the max number of tokens, "destroy" transactions, rollback to a certain state, etc. would require miner cooperation. Whereas right now central banks can just "create" liquidity by tweaking monetary policy without needing the banks and populace to approve and agree to these changes.
The downside is that you cannot control the monetary policy of your of own country. You cannot pump money according to the economic situation. Look at the eurozone, for example, Germany wants to increase rates -hence increase the value of Euro- whereas Greece is still struggling. Leaving your currency to somebody else’s decisions may not be a good idea.
Some reading: - https://www.economist.com/blogs/economist-explains/2015/01/e... - https://www.reuters.com/article/us-swiss-franc-shock/three-y...
Cryptocurrencies serve many specialized needs, particularly in global transfers, but they have little use in day to day, local transactions.
Anything that can be traded for value can be considered a currency, so you could theoretically trade equities with other people for goods and services. But usually, that is much less practical than exchanging local fiat currency.
Same goes for virtual currencies. Instead, you'll perhaps use virtual currencies as an intermediate currency for simplified financial transfers, or perhaps for storing some of your investments, or for utility reasons (such as tokens which are the utility fee tokens for some exchanges), or perhaps as a form of startup investment (as with ICOs).
I do wonder if the effectiveness of bitcoin as a transfer currency was any motivation behind the recent improvement in EU bank to bank transfers. What previously took one or maybe two business days for SEPA transfers has recently been improved to be near instant (so I've read; I haven't paid attention lately). Maybe the banks felt pressure to keep up?
Meanwhile, US banking customers are still passing handwritten pieces of paper around. Once US customers get verified accounts with some of the cryptocurrency money exchangers, quick USD->bitcoin->bitcoin->USD transfers are nice and fast and relatively inexpensive (with the recent dramatic drop in bitcoin mining fees).
Bitcoin fees, for example, are based partly on the amount of data in the transaction. It's not really a percent of amount sent factor. Whether you send 100 BTC (which is a lot of money) or 0.001 BTC, you'll pay about the same fee assuming the same number of input and output addresses.
Also, while bitcoin fees had gotten quite high toward the end of 2017 and early 2018, lately they have reset back down to a very low level. I routinely send batch payments from a dozen input addresses to some output addresses with a value total of a few thousand dollars, paying less than $1 in fees.
And anyway, you can't send people money to their credit card.
UPDATE: It appears bitcoin fees are back on the rise..., 10x what they were a day ago.
A real merchant example: Steam had to stop accepting bitcoins because:
- transactions took too long o complete
- (main reson) fees were unpredictable and sometimes higher than the cost if the game
But credit card companies have made it so easy for users to press one button to chargeback that some less than ethical consumers do this on a regular basis and get away with it.
Another thing to keep in mind is that if you operate a business and accept bitcoin as one form of payment, nobody can cut off your means to accept payment. If the kind of product or service you provide is something banks don't want to touch (even though they are legal), then you're left with few options unless you consider cryptocurrency payments. Even if you get a credit card merchant agreement, the ccard companies will routinely shut you down until you have a conversation with them, reminding them that their senior risk department has already verified you multiple times. Trust me, that gets old.
2. All of the perceived problems have known and working solutions. BTW, fraudulent merchants are arguably a bigger problem than fraudulent consumers.
3. If I consider cryptocurrency solutions, I will:
- run into slow non-efficient transactions that can be ground to a halt by a simple cat-breeding game.
- run into unpredictable exorbitant fees that can easily be higher than the price if the product I sell.
- “nonreversible transactions” is bullshit, as there have already been cases of transactions being reversed for hacked wallets.
At point 3, you seem to be strawmanning ETH for BTC, where it seems the user you're replying to is referring to BTC.
Early tech is early tech. We all know this. More people use the internet now that you don't have to dial-up and make your phone line busy for it.
Credit card fees are (typically) pushed to merchants, the actually settlement time takes far longer than the transaction time.
Let's say in 10 years, all of your issues are solved by a cryptocurrency -- would you like the option of having a non-state issued, hard to confiscate, tamper-resistant money?
"Ethereum Executes Blockchain Hard Fork to Return DAO Funds". If you tell me I'm strawmanning ETH for BTC (or whatever other bullshit three-letter acronym) I answer this: it does not matter. Something that happens in one, will happen in another. The precedent has been set, the path is clear.
> At point 3, you seem to be strawmanning ETH for BTC, where it seems the user you're replying to is referring to BTC.
Doesn't matter. Bitcoin is just as susceptible. And no, Lightning will not save it (for obvious reasons which are totally glossed over by the dreamy-eyed proponents).
> Early tech is early tech. We all know this.
Yes. We know this. Cryptocurrency proponents seem to remember this fact only after being confronted with reality.
See how this conversation played out:
- Day to day transactions are actually the most likely to be disrupted by crypto. The reason for this is crypto can trade with almost zero fees
- No, the fees are not zero. In fact, they are prohibitively high, and unpredictable
- Yes, but... but.. the transactions are non-reversible, and there's fraud protection
- There is at least one precedent of a cryptocurrency being hard forked to reverse transactions. Fraud is already being handled. etc. etc.
- Yes, but.. but... it's early tech!
Indeed. It's early tech with very few, if any, practical uses. With exorbitant unpredictable fees, extremely slow transactions, overall inefficiency etc. etc. etc. And yet for some reason it's hailed as the saviour of everyone and everybody now even though it offers a near-zero improvement on what we already have today.
Your conflation of ETH and BTC is disingenuous.
What were your thoughts on the iPhone when it came out?
This comes with its own scalability issues which are currently unsolved (and might well be unsolvable)
> also, if users are also miners they have an incentive to continue the BTC network for their own self benefit even if the fees were less.
This is equivalent to the users themselves paying fees, but much less secure, stable, and decentralized.
I think he meant in the short term, didnt he? In the long term, this is obviously wrong. For two reasons. 1) You dont get a craze like we are witnessing when people dont like the technology. At some point, you have to stop making things complicated: people want it, they are not afraid of it, they are damn excited about it. It's the new gold rush. 2) Cryptocurrencies, once mature, will offer a significant increase in banking quality, innovation and competition. Your current banking system and VISA are 19th-century in comparison of what's coming.
In short, we have: people-love-it + old-system. I call the result of that equation obvious on the long term.
1. Decentralized derivative adjusted assets. Basically you are holding a contract of 100 Units (instead of 100USD) that represent a decentralized smart contract which trades against other cryptos. Crypto goes up or down but your contract holds a stable value.
2. Automatic search for gateways and routing of transactions. The merchant just shows you the amount in the universal unit (ie: 35 Units) and a QR Code. You scan the QR code and the merchant is paid. The applications and blockchains figure out the rest and connects the different blockchains together.
Yes, blockchains are useful, cryptocurrency has its place, but if the current (ecological) trend continues, even fiat money will be worthless in many parts of the world in 20 years.
Please consider the environment before buying a $3000 mining rig with expected profits of $100/month.
We can even set aside the fact that renewable sources of electricity can be and are used to mine cryptocurrency (e.g. the vast bitcoin mines co-located with Chinese hydro dams). The real problem with this argument is it represents the same fallacy you see with "violent video games are driving kids to be more violent"
Even if it were true, it tackles the social problem in question backwards. Instead of asking "do video games make kids more violent" we should be asking "what are the main drivers of violence in our society?"
Climate change is caused by fossil-fuel power generation, trucking, personal automobiles, greenhouse gas emitting industry, and agriculture. It's not caused by bitcoin, even if bitcoin mining contributes to it in some minuscule way by comparison to the real drivers.
People have also hypothesized that energy used in mining cryptocurrency will tend to be cleaner since mining operations can be located close to cheap/renewable electricity.
Comparisons like yours feel like they're designed to inflate the scale of a problem.
Consider that bitcoin mining (or hashing for science) is a much more efficient way to make heat than simply converting energy into heat for the sake of heat.
The Netherlands will let an American come start a business with only (about) 5,000 € and a bit of paperwork, plus another 1,400 in fees. NL isn't making a great effort to attract blockchain businesses, but they do benefit from the generally calm EU regulatory approach to the new technologies.