Hacker News Reader

Comment by dchuk | Hacker News Reader

This is exactly the problem with all cryptocurrency currently. It’s a massive user experience issue, in the sense that users have to experience the technical bullshit of how the currencies work, completely missing the brilliant part of real money: it just works. I hand people money, they give me things. I swipe my credit card, I get things.

I can’t remember who aid it originally, but there’s a great test you can give to any statement or idea. Just immediately ask “who cares?” The best product demos I’ve ever seen answer who cares in each part of the pitch. The worst ones just rattle off mumbo jumbo forever.

View on HN

It has been a few years, and despite a few attempts, I still don't really understand bitcoin. Yes yes ledgers and proof of work and yada yada, but I still don't know what I would need to do to buy something with bitcoin right now.

As I understand I need to do something that's pretty much exactly like opening a bank account, but transactions take forever, they cost money, and the currency is not accepted by any business I use, unlike my free credit card.

I have 55€ in my wallet and everyone on this continent knows what to do with it.

It's simple: it is an abject failure as a currency. It is fairly successful as a security for the purpose of speculation. If you aren't a financial speculator, you really don't need to pay attention to it.

It's also fairly successful as a way to transfer money.

I am pretty lucky that I only have to transfer money to between 2 countries that have heavily linked banking systems (US -> Canada), but I am not entirely sure what Bitcoin would get me in terms of transferring money. The fees are quite small on Transferwise, and also, I have…I don’t know what you want to call it…accountability? Reversibility? Reliability? Whatever fee I have to pay, the fact I get a known third-party with a papertrail is peace of mind.

It’s great to live a in developed world during the peace time.

Sometimes you have to transfer money in and out of the country at war with it’s currency in free fall and capital controls in place. At times like that “normal” ways take about 30% of the sum as transactional overhead, while bitcoin doesn’t.

Sometimes “normal“ ways just don’t work normally. Sometimes your government is actively working against your ability to transfer your money for whatever reason — be it drug laws or capital controls or what not. Sometimes you enter account number into the “normal“ system and field just turns red for no reason at all. Sometimes you have your access to “normal“ system severely restricted because of your legal status and residency rights.

So yeah transferring money between Canada and US being resident of either of them and not doing anything funny — is not a use case for Bitcoin.

Does this hypothetical situation you describe exist anywhere outside of the hypothetical situation posited by a character in a Neal Stephenson novel?

Seriously in reality the specifics of any sort of wild situation like the one you describe matter. Which countries? Which currency? Which kind of illegal behavior?

And (I ask out of ignorance) in this scenario you describe why would whatever group managing whatever bitcoin exchange or whatever is being used remain virtuous and not charge a 30% markup themselves?

> Does this hypothetical situation you describe exist anywhere outside of the hypothetical situation posited by a character in a Neal Stephenson novel?

That indeed is a bunch of real situations that have happened to me in 2014-2015 and some of that is still a thing. Check your privileges, sweet summer child.

Like seriously — for the first 30 years of my life it was outright illegal to have a bank account in a foreign country in my name. Not enforceable in practice, except I can’t make wires between two.

So 2014, fucking Russia is being Russia again, USD wired from foreign clients goes in... and is sold for UAH at government mandated rate. I sit in a third country, withdraw it through ATM. Guess what? It is converted back to USD at a market rate. Of course you can still bring cash or btc in and sell it at market rate plus some margin, but not 30 damn percent.

Sometimes it’s less dramatic and web interface of your bank doesn’t have regexp for IBAN format of destination country. Ridiculous but have happened as well, so I have proxied IBAN that starts with GB instead of UA and that always works.

This exact situation is happening now in Argentina. If someone sends you USD, they get converted to pesos at a ridiculously low rate. That's why most freelancers use crypto as a way to get their earnings.

Fair. I don't know much about this world.

But, like, the classic "society could collapse" fear-and-doubt, doom-and-gloom, grab-the-gold-and-the-burner-laptop-and-the-ammo argument can be used for just about anything.

Heck, even when society actually is collapsing, the argument isn't actually that great an argument!

I'm not even arguing that cryptocurrency couldn't have value in the scenario you describe. Just that genuine, specific, examples are more compelling than generalized scenarios. Generally speaking ; )

For example, all of the more specific examples folks talk about below (Argentina, etc).

Plus the parent poster made fair points, based on my limited knowledge, about accountability issues with cryptocurrency. And trust. Especially for nontechnical folk, and even for technical folk. Even (especially!) when society is collapsing, there's always someone out to scam you ...

For arguments sake, if someone is in the scenario you describe, what are good initial resources for a nontechnical person? For instance, should I use something like a coinbase wallet?

https://www.reddit.com/r/BitcoinBeginners/comments/fdykz3/is...

Well, I haven’t really talked about collapse of society here. I guess it’s difficult to even define what it means precisely. I could imagine that Sarajevo siege and few years around 1991 in former USSR could qualify.

Then again people who I talked to in 2014, were still a bit in denial till the start of school year and only then left the area directly affected by war.

My point is simple — you take the ability to access banking system for granted, when it’s far from universal. It’s also not as unrestricted and interconnected as bitcoin or internet itself. Sometimes you have a bank and a card, but your ability to transact is restricted. It doesn’t always mean that you sit in the basement hiding from daily artillery strike or wandering post-nuclear desert on a cool bike.

For sure. And that makes sense.

I guess I was more pointing out that right now it seems highly scenario-specific whether or not cryptocurrency can help in the way you described.

Doesn't it depend on the amount of money you're dealing with, what you may or may not need to do with said money in the near-future, your own technical competence/facility, and perhaps even the current state of cryptocurrency itself?

The government doesn't have to collapse for BTC to be useful for this (indeed, if it did, it'd likely bring down the infrastructure that BTC runs on!).

You just need to be in a situation where the law prohibits, or somehow restricts or severely taxes, the money transfer itself, or the use of that money to procure something you need.

> Check your privileges, sweet summer child.

Please don't do this here. It is needlessly condescending and insulting..

It is, but maybe start telling op?

"Does this hypothetical situation you describe exist anywhere outside of the hypothetical situation posited by a character in a Neal Stephenson novel"

That's a legitimate question

I think they're arguing about tone, not accuracy.

Some people feel insulted when someone thinks that their real problems are imaginary, so a hostile reaction is understandable, I guess.

My bad. The comment I replied to was so tone-deaf, that I mistaken myself being on reddit.

Your 'real' situation contains fallacies. How is Russia involved in money transfers to Ukraine? UAH is hryvna. Ukraine has it's own currency since 1991. RUB is used in Russia.

Totally nothing happened in 2014 that involved Russia, da. Definitely not a war.

Argentina is literally in that situation now. The government charges a surplus 30% tax on any foreign currency purchase (cash, Netflix, anything outside the country), and only allows you to buy 200 usd a month legally. The inflation rate is over 50% there, Bitcoin is more stable than the Argentinian peso. Basically, the government has made it illegal for you to legally save money on a different currency than the Argentinian peso.

and yet, bitcoin use is still negligible.

How would you even know that? Most of the value in terms of pesos would be from a small number of wealthy people who have a very strong interest in secrecy, and are likely using VPNs and other means to shield their activities. My guess is that, for wealthy people who are somewhat tech savvy or know someone who is who they can trust, it's a very good option. Certainly better than sending relatives on a plane with $9k in USD cash to get it to a relative abroad for safe keeping.

Depends if we measure use by number of people moving, amount of currency moved, or something else.

Sounds like it's actually quite popular there now https://www.nasdaq.com/articles/economic-uncertainty-restric...

Never said it wasn’t, o just mentioned a case where it’s useful.

Fearing return to drachma, some Greeks use bitcoin to dodge capital controls https://www.reuters.com/article/uk-eurozone-greece-bitcoin/f...

WikiLeaks may have amassed more than $46 million in Bitcoin based on the number of coins held by its known wallet address. https://bitcoinist.com/wikileaks-has-received-more-than-46-m...

Yes, what you call hypothetical situation is my daily life. The country where I live, Argentina, frequently imposes heavy restrictions on buying and selling foreign currencies. There is a hard monthly limit of $200 per person per month and there are talks of reducing the limit even further.

Sometimes crypto is the only way of sending/receiving money from other countries reliably and cheaply.

Other countries are much worse, Venezuela for instance has destroyed the value of their money, so bad that people use it wallpaper.

I, for example, have friends that use Bitcoin to move money in and out of Zimbabwe.

A few years ago my company had to get US dollars out of Nigeria from the sale of the products we manufactured to pay the suppliers we have in other countries. Perfectly legitimate reason, but due to currency restrictions in Nigeria the finance guys had to use a scheme using a mix of crypto currencies (mostly bitcoin, I think, but not only). I don't know the cost of the transaction, but we barely covered it from the sales.

I heard there was a similar problem in Egypt, no idea if and how it was solved.

Iraq, Afghanistan, Pakistan, Syria, Libya, Iran, Kosovo, Venezuela, El Salvador: these are all places where war and strife and economic turmoil and the Wests' sanctions have led a significant number of their citizens to use Bitcoin - and other cryptocurrencies - to manage their lives and feed themselves, and their families.

It beggars belief that someone would so callously call the situation in these countries 'hypothetical'. Please, inform yourself about the war and strife that is occurring outside your own bubble. Its very important that we in the West stop ignoring the plight of the people our military industrial complex is targeting with their weapons.

Bitcoin has held things together in many such places.

Also: Russia.

> Please, inform yourself about the war and strife that is occurring outside your own bubble.

User adamsea is informing himself, that's why he's asking a question here.

Yeah, I didn't see the questioning as "is there really war someplace right now?" but rather "is there really a place where you (or your grandparents) can get bread and milk for bitcoins when normal money collapsed?"

We were specifically talking about BTC as a way to transfer money, as opposed to being used as money itself. I can't think of any place where you'd buy bread with BTC, but there are a few where you might be receiving BTC transfers, cashing them out locally, and using that money. A hawala based on blockchain rather than pure trust, so to speak.

You can buy anything, from anyone, with bitcoin. All it takes is two bitcoin users.

Just because people are starving behind economic blockades and sanctions and mafia hell, doesn't mean they don't RTFM.

(Oh, and you can use BTC on the street, all over the world.)

> You can buy anything, from anyone, with bitcoin. All it takes is two bitcoin users.

Bitcoin users are a tiny, tiny percentage of "anyone".

> You can buy anything, from anyone, with bitcoin. All it takes is two bitcoin users.

Shouldn't we amend that statement to be "You can use bitcoin to buy anything which is being sold by some other bitcoin user?" ;)

Which sure, is potentially anything/anyone, but will obviously vary on circumstances.

Some time ago I had a bunch of Chinese yuan on a Chinese account that I wanted to transfer to Europe. I couldn't do a wire transfer, and I couldn't bring them as cash since my German bank didn't want them. I could either pull 500 € a day via ATM (with large fees), or just send it via Bitcoin.

Why couldn't you do a wire transfer?

Before 2009, export of RMB was completely prohibited. Afterwards, some restrictions were lifted, but AIUI they do not apply to J. Random Laowai.

Nowadays, can people even have bank accounts in their names in China without Chinese ID ?

Fiat financial systems are full of most arbitrary restrictions. My anecdote: I once wanted to deposit money, came to a bank, gave them a bank card,

They: What is this?

Me: Money.

They: No, bring money.

I don't know if "reliable" is a good word for the legacy banking system. The banks in Cyprus for example siezed money from peoples accounts only a few years ago... its much harder for banks to seize bitcoin that you self-custody. Many wealthy people and now companies are beginning to view bitcoin as a safe haven asset because of its decentralized security model and censorship/seizure resistant properties.

https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...

Argentina did exactly that on 2001. Life savings stolen forever. To this day, most people save their dollars in their houses because no one trust banks in the long term.

It sounds like A) you don't deal with very much money B) you don't travel much outside the first world.

Bitcoin was the backstop that saved my ass when I went to SE Asia and none of my first-class Australian or US bank cards would let me get cash.

And until recently, a highly successful way to _launder_ it.

Some other cryptocurrencies designed around anonymity are still very effective for that purpose. The only weaknesses are at the spots where the funds enter and exit the "laundry". (Converting to/from fiat or a less anonymous cryptocurrency.)

Why did it stop being that?

Because more secure cryptos, e.g. Monero, have picked up pace.

However "transfer money" is a market need, and there are a number of companies that are doing that. I had to switch after I ran the costs of the service vs transaction fees of bitcoin. It's not much, but it adds up.

> it is an abject failure as a currency.

In the US perhaps. In at least one other country however...

https://www.bbc.com/news/business-47553048

https://www.somagnews.com/bitcoin-becomes-the-dominant-curre...

The second article makes a pretty strong claim but does not seem to have any proof other than "Venezuela uses crypto a lot", doesn't it?

I feel it's also a pretty decent store of value. Now some people will probably want to tell me that it's a bad store of value, since the value can fluctuate quite a bit on a day-to-day basis. Sure that true, but in the long run I am confident the value will only go up, whereas many fiat currencies will only go down, especially now due to QE (basically printing money) that's happening in Eurozone, the US, and many other regions [0][1] in the world as well.

So in my view, it's pretty nice as an alternative to holding gold. Gold can be nice as well of course, but it's difficult to transport. If you keep gold in your home, at some point someone might break into your home and steal your gold. You could pay some company to store your gold, but perhaps in times of crises a government might step in and claim some of your gold.

Crypto currencies can be easily held in a digital wallet or people can even just memorise the keys to their wallet in their brain. It's hard for governments to control crypto currencies and I'm sure some of the wealthiest people in the world now keep a certain small percentage of their wealth in cryptos as well as a hedge against fiat currencies, stock market crashes, etc...

---

[0]: https://news.bitcoin.com/venezuela-bitcoin-use-hyperinflatio...

[1]: https://www.financemagnates.com/cryptocurrency/the-impact-of...

>As I understand I need to do something that's pretty much exactly like opening a bank account

Not really. If I want a bank account I need to fill out a page of paperwork requiring my name, address, social security number, citizenship information, income, occupation, date of birth, scans of various pieces of ID and/or other documents. Compare this to bitcoin where you only need to install an app, and new identities can be generated on-demand. It's true that trying to buy/sell bitcoins via an exchange will subject you to AML requirements, but in-person transactions won't.

>transactions take forever, they cost money [...] unlike my free credit card.

The cost and time it takes is mostly a function of how much demand is there for blockchain space. During periods of high transaction volume, you'll either have to pay high fees or wait a long time. You can see in this chart https://jochen-hoenicke.de/queue/#0,30d that there are periods of very high transaction fees (the yellow peaks correspond to a $3 fee for a typical transaction), but also periods with low transaction fees (the parts with blue troughs correspond to a $0.12 fee for a typical transaction). People in a hurry pay more and people who can wait pay less. It's a classic microeconomics.

Credit cards aren't free either. The cost (around 2-3% in the US) is borne by the merchant. Cash has fees for handling, transportation, and storage. "Free" bank transfers (eg. vemo, SEPA) are typically restricted to consumers, are often part of a bigger banking package, which have fees or minimum balance requirements.

> It's true that trying to buy/sell bitcoins via an exchange will subject you to AML requirements, but in-person transactions won't.

Nobody does bitcoin transactions in person, at least not in America and not anyone I know. I have several bitcoins and the only way to use them is through an exchange like coinbase, who require the same identity documents that a bank does.

You could argue “but you just have to find vendors who accept bitcoin!” But with 3 bitcoin I won’t find enough vendors to spend it on.

>Nobody does bitcoin transactions in person, at least not in America and not anyone I know.

https://localbitcoins.com/

>You could argue “but you just have to find vendors who accept bitcoin!” But with 3 bitcoin I won’t find enough vendors to spend it on.

There are also bitcoin-for-gift-card stores, which vastly expands your vendor options.

How is buying gift cards not just a more restrictive way of converting your Bitcoin to the currency on the gift card?

It is, but the restrictiveness of mostly mitigated because you can either 1) buy gift cards to stores you visit on a regular basis (eg. nearby supermarket) 2) buy gift cards only after you've decided what to buy. It's also adventurous compared to converting to cash directly because there's usually a discount on the gift card (compared to having to pay a fee for cash), and that AML regulations are laxer.

And Overstock accepts BTC and isnt famous for over-working and under-paying their employees.

localbitcoins has KYC now

Tor project does. Coinbase is not the only way to use bitcoin.

> Credit cards aren't free either. The cost (around 2-3% in the US) is borne by the merchant.

In EU, regulation caps interchange fees at 0.2% of the transaction value for debit cards and at 0.3% for credit cards.

> "Free" bank transfers (eg. vemo, SEPA) are typically restricted to consumers, are often part of a bigger banking package, which have fees or minimum balance requirement

A bank that i use has free SEPA transfers, no montly fees and negligible minimum balance reqirements, both for consumer and business accounts.

The parent commenter is European, so they have probably a lots better experience with banking than you might have in the US.

> I still don't know what I would need to do to buy something with bitcoin right now.

but I think you do. You find a seller who is willing to accept the currency you're using, and you use whatever interface to the bitcoin network you've chosen to do "send x money to y identifier". No different to a regular EFT.

You identified the exact problems. It's not that bitcoin transfers are some weird foreign concept, it's that they take forever, have high fees and aren't accepted universally.

The major users of bitcoin as an actual currency rather than a speculative vehicle are places that can't use the more convenient forms of currency. Guaranteed they'd rather use USD if they could.

> You find a seller who is willing to accept the currency you're using

Well that's a non-starter. If I wanted to buy a beer with bitcoin right now, I'd probably end up drinking tap water.

Same deal if you tried to pay for a beer in the US using vietnamese dong.

However if you wanted to purchase "illegal" drugs online you'd be hard pressed to find anyone who will accept your USD.

The problem as I see it that it is nothing like opening a bank account... You don’t need to understand the banking system to use a bank account. Meanwhile normal people without a serious networking/distributed systems background will not really grasp what they are doing when using bitcoin and have to resort to googling steps and following them blindly. The fact that ETH gas prices are going through the roof because of Defi would be a huge leak in the abstraction for something like a bank.

> You don’t need to understand the banking system to use a bank account.

Same for Bitcoin, you install a wallet app and use it. It's actually much easier than opening a bank account.

> Meanwhile normal people without a serious networking/distributed systems background will not really grasp what they are doing

They won't grasp what they're doing on their bank account without a serious economic/financial/law background either.

Offtopic -

I saw Bitcoin project on GitHub's artic code vault[1] and advertised heavily. But I couldn't find libbitorrent on it besides it being hosted on GitHub as well. Is this because the project owner hasn't enabled it or is there some other reason behind it?

[1]https://archiveprogram.github.com/

You don't REALLY need something like a bank account (exchange account) except to convert to/from the currency. You only need an electronic wallet. The transactions are where it gets really weird though.

That said, unfortunately, short of a large nation state, or collection of banks also allowing exchange/transactions, I don't think it will ever take off. Even then, transaction times as you mention are not fast, and often are controlled by a limited number of organizations.

What the technology does offer, is a means for multiple parties that don't trust each other to proceed with a transaction. This is often where "smart contracts" come into play, and also why banks are considering a cryptocurrency system(s) for inter-bank exchanges.

In the end, those that win will largely be the incumbents imho.

I setup bitcoin on a few machines really early on... and had a couple coins... but I had no way to "use" them and it was just costing electricity at the time... I deleted it all and didn't look back until they cleared $20k a coin. Kind of wish I at least saved a zip file of the wallets somewhere. Though if I'd kept mining, may have been worth something.

Most people have no use for most currencies. I, for example, have no use for the Argentine peso.

That doesn't make it useless for someone else, who might for example live in Argentina.

The day you want to hire someone who wants their payment in Bitcoin for some reason, that's when you'll have use for it.

The Argentine peso is also useless to people living in Argentina.

Sad but true.

PGP suffered from a similar problem.

> pretty much exactly like opening a bank account

You don't have to go anywhere, you don't have to provide any kind of ID or documentation, you don't have to wait around for a free salesperson.

> but transactions take forever

Bitcoin transactions are instantaneous. Look up "settlement cycle" if you want to make a direct comparison. Bitcoin final settlement usually takes about an hour, compared to anywhere from several days to several months for traditional payment. Credit card settlement is usually 60-90 days.

> they cost money

It costs less than a dollar to move ~any amount of money anywhere in the world with ~1hr settlement. A credit card usually costs something like $0.25 + 3%.

> the currency is not accepted by any business I use... I have 55€ in my wallet and everyone on this continent knows what to do with it.

I have AU$80 in my wallet and I'm pretty sure no one on your continent would take it.

In fact, last time I traveled to SE Asia none of my debit cards worked for cash withdrawal and the only way I was able to get cash was with a Bitcoin ATM. So it worked very well for me!

Communities can create value. The Bitcoin community believes Bitcoin has value, so it does. It has unique tokenomics with a limited 21m supply and is backed by math and cryptography. That's all there is to understand. Look into the history of money. Crypto just allows communities to have value. Soon you will see many communities online creating governance tokens, something like "reddit coins" but better, and you will be able to sell them for another coin like DAI or USDC.

You can already purchase Reddit MOONS from the r/cryptocurrency subreddit here: http://xmoon.exchange/

> Crypto just allows communities to have value.

So do stamps, coins, Star Wars figurines in original packaging, baseball cards, yada yada.

At least you can look at those other things while you possess them.

You can transact billions of dollars across the globe securely with a minimal transaction fee via Bitcoin. Don't see how that's possible with Star Wars cards. Guess some people prefer government fiat currency with unlimited supply. I'd rather store my wealth in something that was launched more fairly for all and deflationary, even if it is high risk. The future for blockchain tech is bright, a lot has happened during the past bear market and the DeFi giant is looming. https://defipulse.com

Its bottom up, those in a "first world" bubble dont notice its effects. Its already a revolution, banking the unbanked and those at the bottom of the dollar\euro tottem pole. Africa for example:

https://www.reuters.com/article/us-crypto-currencies-africa-...

Adoption will establish itself in Africa, S.America, Asia first.. and then it will compete head on with traditional western banking services.

The biggest problem that I have with crypto is it's insane power usage. As soon as we have a commonly available crypto currency that's secure, doesn't use 'proof of work', is efficient and stable, I'm in. Until then I can't take it seriously. Crypto is the digital equivalent of driving a hummer.

TBH, I don't think that's a bad thing at the current moment - the tools and base layers (most notably ETH scalability) are not in a position to handle a huge influx of mainstream users with expectations that things Just Work.

There's great progress being made, but we'll not get there during 2020.

Interestingly, Bram Cohen, the inventor of BitTorrent (v1) is currently working on a cryptocurrency called Chia that is trying to solve all of these problems. Obviously exercise scepticism with all things cryptocurrency, but I'm pretty optimistic about it.

As far as I'm aware many crypto exchanges also act as wallets and have smartphone apps that feature QR scanning for transfers / payments.

The largely obviates the need for any domain knowledge.

So at this point you're really no longer using the core feature of any blockchain based currency but make changes in some SQL row in a central database that maybe later results in changes made to some blockchain on your behalf. Why even bother at this point? Might as well trade gift cards or airline miles.

UX has been a main focus of Bitcoin ever since Lightning made scaling possible. Checkout out the Strike app for seamless bitcoin (lightning) payments https://strike.zaphq.io/

Who cares? Anyone who feels like their purchasing power isn't where it should be is either underpaid, or a victim of central banks diluting their dollars with printing.

Meanwhile 3 shady guys in the non-extradition offshore are printing 100 million dollars per months of their toilet paper tokens, inflating price of every other token, the only auditing firm dropped them immediately after looking at their dealings, and that is praised as a modern money way. Revolutionary even.

> victim of central banks diluting their dollars with printing.

So, nobody in the EU or North America, then.

It's true that there hasn't been much inflation in CPI, but there's no doubt that all the printed money has inflated asset prices.

Well, I think diluting is actually a pretty good word to describe what is happening. It's not really inflation. It's more about rising inequality. Money arrives on the stock market but it doesn't arrive in the job market. The result is an increasingly growing imbalance. Publicly traded companies and their owners greatly benefit meanwhile everyone else is being left behind.

Right, this is surely more disastrous than everyone holding onto their bitcoin because it will be “worth more” in a year by design. /s

In Germany, house prices have doubled the last 10 years.

In the US, stocks are 187.8% market cap to GDP.

But please, tell us more about how there's no inflation.

Perhaps a better threat scenario would have been "victim of banks confiscating their deposits", which is a much more realistic risk for people in the EU:

https://www.cbc.ca/news/business/cyprus-bank-account-tax-put...

(Also, the grandparent post perhaps should have given some context to the statement "Lightning made scaling possible", such as the fact that Bitcoin originally supported 32 MB blocks of transactions, before being "temporarily" limited to 1 MB. Alternative blockchains have managed without this artificial restriction, and without relying on complicated second-layer "solutions" like Lightning.)

The probability of a bank run is null when compared to the probability of a BTC provider tanking/getting hacked/actually being a fraudulent criminal scheme.

Banks in Cyprus got recapitalized with some amount of Russian money during the 2011-2013 Eurozone crisis, or at least that's the commonly known narrative. It was basically a convenience crackdown on a fiscal paradise within the EU. If you read the last line of the article you have linked it says:

European leaders wanted to limit the size of the rescue loans — which are backed by European taxpayers — to €10 billion. Leaders were also reluctant to bail out Russian depositors whose funds may be the result of tax evasion, crime or money laundering.

Additionally, there are sanctions in place since the 2014 Crimean crisis.

https://www.themoscowtimes.com/2019/01/10/cyprus-no-longer-m...

Reply on news.ycombinator.com