Cryptocurreny crime is way ahead of regulators and law enforcement
fnlondon.com
fnlondon.com
Crypto currencies are undoubtedly used for money laundering and hiding. Dollars are undoubtedly used for money laundering and hiding. Euros and gold and car washes are all undoubtedly used for money laundering.
The question is, does the fact that an asset is used in money laundering mean it should be outlawed. I think the answer is fairly transparently no. But this is seen as the easiest rhetorical tool in the event that someone is already looking for basis to argue for banning crypto currency. Think of the children! And Terrorism!
Imagine a new country came into existence except it held no physical land, it produced no physical goods, it built no physical infrastructure, it paid no welfare, it's just an internet country. Well this country's currency is just as usable for money laundering as every other currency assuming it freely floats but because it has no structural economy behind it, money laundering makes up a disproportionate portion of it's total use. Does that mean it was invented just to launder money?
The point is: of course a new internet currency is mostly used for money laundering. That's one easy thing to do with an internet currency and the other use cases are still developing.
In the end it doesn't matter though, I believe the ability of governments to censor cryptocurrencies is drastically less than they project.
They can turn off the on ramps but they also know that could cause a rush on those assets that they could never reverse. And as the drug war taught us, throwing endless resources at preventing the sale of a commodity for currency on black markets works much better in principle than it does in reality.And in a world of floating converting convertible currencies, if they don't all coordinate a ban at once in an effective manner it's going to fail spectacularly, because there's always another currency on ramp that's just a money transfer away.
The real problem is that they can interfere severely in the ability of ordinary people to use it for legitimate purposes while still not making the slightest dent in its use for criminal activity.
Because for ordinary people to use it, it would have to be accepted by e.g. Amazon, who is not going to break the law in order to accept it.
But in order to be used by criminals, it only has to be used by other criminals.
In the long run I think it's going to go where it's going to go and it doesn't matter
"In the long run we are all dead."
What may happen may happen but it would sure be nice if we didn't spend a half century just paying the costs and suffering generations of War on Drugs-style authoritarianism before we actually get around to having the benefits.
But I personally don't get too moralistic about this stuff. I believe cryptocurrency will stick around in the long run. What that path looks like is anyone's guess.
Roubini has heard Yellen and Lagarde loud and clear and is trying to score points- perhaps aiming for a regulatory job.
> "Does that mean it was invented just to launder money?"
Probably.
Yes the US dollar is used for more crime than crypto, but it’s also used for everything else.
Crypto will continue to get a bad press unless it can be seen as “a currency sometimes used for crime” rather than “a currency only used for crime.”
I don't think they can.
On what data are you basing this conclusion?
We don't need better regulation. We need, when financial firms muck up on a global scale, to replace the people who run those firms with different people. There is an easy way to do that, let them go broke.
The biggest problem in the room is that the regulators have bought in to the idea that some companies are "too big to fail". That is a stupid idea, fundamentally unfair, completely throwing out the best part of capitalism which is that recognised idiots aren't allowed to be in charge. That problem will certainly not be solved by giving the regulators more power.
BTC solved the problem of having concensus in a decentralised, distributed system without deferring to a dictator...
Finding a way to do that was an open problem for decades.
I used to think you had something intelligent to say about Bitcoin, but you've opened my eyes now.
I don't disagree that wasting an entire country's worth of electricity is a novel and unique way of solving the byzantine generals problem up to 7 transactions per second. I just don't think it should be used in the real world, certainly not as a currency.
I think it's worth separating my appreciation for Bitcoin in the strictest, most technical sense. I get it, it's neat, it's got that allure of being challenging and having many perceived potential use cases. It solved a legitimate hard problem. I think the tool is fascinating. I think the use cases though, just aren't.
Apologies to have disappointed, though!
https://www.rferl.org/a/bitcoin-blackouts-russian-cryptocurr...
[1] https://apnews.com/article/iran-media-social-media-bitcoin-c...
I've lived in the Eastern block, used to do homework at candle light so the regime could export goods under market price and earn hard currency. It's from the same playbook.
I don't really disagree, but he with gold makes the rules. Attempting to limit their power will result in a backlash. Yellen's testimony can be seen as that, but in truth, it is not a new stance. Crypto was merely tolerated until now.
It's not that simple. When the government let Lehmann Brothers fail, all hell broke loose. That is the fundamental difficulty of financial regulation, moral hazard: You have to convincingly say that you won't bail out anyone, and then when things go awry, you have to bail them out. And that makes regulation and monitoring imperative. Well understood and studied.
> The Federal Funding Accountability and Transparency Act of 2006 (S. 2590)[2] is an Act of Congress that requires the full disclosure to the public of all entities or organizations receiving federal funds beginning in fiscal year (FY) 2007. The website USAspending.gov opened in December 2007 as a result of the act
Sen. Obama's office is the origin of this bill; which was fronted by Sens Coburn and McCain, who had the clout.
https://usaspending.gov/ creates a mandatory database with budgetary line item metadata. Where money actually goes is something that is far more transparent and accountable with bitcoin and other public ledgers than any existing ledger covered by bank secrecy laws.
For context, in 2008-09, global financial systems were failing as a result of the American economy: housing bubble burst, HFT "flash crash" that we didn't have CAT or big data tools to determine the cause of, DDOS attacks and cyber security losses increasing YoY, credit default swaps had been rated as AAA securities (they sold bundled bad debt like it was worth something, and then wrote down losses), Enron energy speculation amidst rolling blackouts that were leaving hospitals in the dark, on gas generators, government investments in renewables had been paltry since the Carter administration had put solar panels on the roof of the White House before the whole oil price shock, and oil commodity speculation had driven the price of oil to like 2-4x the 2000 price (with resultant price effects on most CPI inflation/PPP basket goods); but electricity consumption was down in 2008 and renewables hadn't reached production volumes necessary to reach the competitive price point that renewables now present: cheaper than nonrenewables.
Who would have thought that the speculative price would continue to exceed the production cost. incentives or penalties?
Externalities per dollar returned per kWh is one way to assess the total costs of electricity production methods.
"Buy Gold" was the refrain of the day: TV commercials, signs out in front of piano stores (a somewhat-arbitrary commodity, sales of which are observed to be a leading indicator of economic health), signs on the road. And the message was "take your money out the market and put it in gold" which drives up the prices for chips and boards and medical equipment that rely upon that commodity as a material input. Gold is necessary for tropical spec components in high-humidity environments: gold hinges are prized, for example.
But, "look, there's water flowing from the chocolate fountain; so you can go ahead and go" and "you know you want to put it back in there, in that market" we're the appropriate messages given our revenue at the time.
"Grid computing" links to a number of distributed computing projects: https://en.wikipedia.org/wiki/Grid_computing#History
IIRC, there was a production metric-priced grid system developed around Seattle/Vancouver called "Gold" (?) that was built on Xen and is likely a precursor to metric-priced Cloud services like EC2 and S3 (which now simplify calculations for how much a 51% attack against a Proof of Work txpool with adaptive tx fees costs with n good participants in the game) which incentivize efficiency by penalizing expensive operations.
Code bloat was already a thing: how is everything getting slower when Moore's Law predicts the growth rate in transistor density? Are there sufficient incentives for code efficiency when there seem to be surplus compute resources just idly depreciating.
MySQL primary/secondary replication was considered a viable distributed database system, but securing replication depends upon cert exchange and (optionally), PKI, DNS, and IP tunnels of some sort. And then who has root, write to the journal and tables and indexes on the filesystem, UPDATE, and DELETE access in an inter-organizational distributed systems architecture with XML, Web Services, our very own ESB to scale separately from the database replication and off-site backups that nobody ever checks against the online data, and fragmented and varyingly-implemented industry standards that hopefully specify at least a sufficient key for the record that's unique across ledgers/systems/databases.
BitTorrent DHT magnet: links were extant.
Linden Dollars in Linden Lab's Second Life (there's a price floor on land, which is necessary to sell digital assets/goods/products/services) and accumulated avatar value in e.g. EverQuest and WarCraft (for which there were secondhand markets).
ACH was ACH: GPG-signed files over SFTP on the honor of the audited bank to not allow transfers that deposit money that doesn't exist.
There was no common struct for banking APIs (as apparently only e.g. Plaid, Quicken, and Mint solve for): ledger transactions have a fixed width text field that may contain multiple fields concatenated into one string, and there's no "payee URI" column in the QIF or CSV dumps of an account ledger.
To request more than e.g. the past 90 days of one's own checking account ledger, one was expected to parse tables out of per-month PDFs with e.g. PDFminer at $20 apiece, and then think up ones own natural key in order to merge and lookup records because (2008-01-01,3.99) and (2008-01-01,3.99,storename) are indistinct as a natural key (and when hashed). If you loan a your bank money (for them to now freely invest in the other side, since GLBA in 1999), wouldn't you think that the least they can do is give you `SELECT * WHERE account_id=?` as a free CSV without any datetime limitation in regards to what's offline and what's online.
"Audit the Fed", "Audit DoD" were being chanted by economically-aware citizens amidst severe correction and what was then the most severe recession since the Great Depression: the "Great Recession" it was called, and payouts to essential cronies (who hadn't saved wheat for the famine) were essential.
Overdraft was an error charged to the customer, who didn't build an inconsistent system (CAP theorem) that allows spending money that doesn't exist (at interest charged to the consumer/taxpayer).
"Catch Me If You Can" (2002) described the controls for bank fraud at the time. Why are fees so high?
"Office Space" (1999) described penny-shabing / salami-slicing attack: "fractions of a penny".
"Beverly Hills Ninja" (1997) detailed the story of the Great White Ninja and Tanley! (fistpalm)
"Swordfish" (1999) described a domestic disaster and bank transfers confirmable in seconds.
[1] https://www.propublica.org/article/banks-favorite-toothless-...
But in the USA in the last 50 years, politicians deficit spend every year. They deficit spend in all stages of bubbles. They deficit spend when there is already full employment. "Politician macroeconomics" is far more deficit spending than Keynes.
This includes Republicans. They just do it with tax cuts and increased defense spending to create deficit spending.
I’d call that hypocrisy though, not principled and appropriate Keynesianism. Remember for example the opposition to the Obama stimulus after the financial crisis, which promptly resulted in a stimulus package that was too small and needlessly slowed recovery, followed by Trump’s tax cut for corporations and the wealthy.
Keynes calls for anti cyclical spending, not indiscriminate one.
https://www.city-journal.org/html/trillion-dollar-bank-shake...
Government sponsored enteprises, which underwrite 50% of the entire US mortgage market, started massively increasing their subprime loan guarantees at the same time.
And then you have Federal Reserve mouthpiece, New York Times columnist Paul Krugman, advocating in this 2002 article that the Federal Reserve create a housing bubble:
https://www.nytimes.com/2002/08/02/opinion/dubya-s-double-di...
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
This revisionist account of the causes of the financial crisis is just these same powerful forces, who are receiving billions in kickbacks from all of this corruption, pinning the blame for the financial crisis on the mythical deregulation-bogeyman.
https://www.washingtonpost.com/business/what-caused-the-fina...
And for what it’s worth, that Krugman quote is out of context. Krugman is not calling for a housing bubble there, he is explaining Greenspan’s motivation in keeping rates so low for so long. Frankly, I find that disingenuous misrepresentation telling.
a) planting stories 8 years before the crisis, warning about the far-reaching effects of the Community Reinvestment Act
b) recruiting Democrat/Wall-Street/public-sector darling Krugman to plant a story in the NYT 6 years before the crisis, urging the Federal Reserve to "create a housing bubble" via low interest rates (which is exactly what the Fed did)
>>And for what it’s worth, that Krugman quote is out of context.
It seems pretty clear to me he is strongly endorsing a bubble in that quote, and that's when looked at in context too.
Krugman is a major believer in Keynes' demand-side economic theories.
Keynes argued that the government planting banknotes in the ground during a recession would be net-positive, because people expending resources to dig them up would create economic activity that would get money circulating:
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again… the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Krugman argued something similar, when arguing that an announcing a non-existent alien attack would be economically beneficial, for the same reasons Keynes gave:
https://business.time.com/2011/08/16/paul-krugman-an-alien-i...
When looked at in this context, it's obvious why he'd think a bubble during a recession would be a good policy.
But now of course the historical revisionism starts, and Krugman's clear endorsement of a bubble is reintepreted as prediction, so that the public-sector/Democrats' chief economic spokesman is not discredited.
A) I claimed that a major factor in the 2007/08 GFC was deregulation. You countered that it was too much regulation, specifically mandatory lending to disadvantaged communities. That theory, floated by a few AEI (American Enterprise Institute) people, has been called "The Big Lie" by Ritholz, and largely rejected, I think. [1]
B) > a group setting out to deceive the public
I don't know what group or conspiracy you are referring to.
C) I'll address your contention that Krugman called for a housing bubble in 2002. I think that is wrong, when you look at his writing in context. Krugman's argument was as follows:
a) Under normal circumstances, when the economy heats up too much (inflation), the Fed raises rates and cuts off the excesses. b) This causes a typical post-war slump. c) That slump can be fixed by the Fed by lowering rates, creating a snap-back of consumer and business spending. d) HOWEVER, the slump in 2001 was not a typical post-war slump: Lowering rates did not bring back business spending. e) Therefore, if the Fed wanted to fight the slump with monetary means, it "needed" to engineer a housing bubble (and basically replace the .com stock bubble with said housing bubble).
Krugman didn't endorse the bubble.
Here's Krugman in 2003 decrying the housing bubble, and also noting that the "banana-republic policies now being followed in Washington won't just drive up interest rates; they'll probably generate a full-blown fiscal crisis one of these years.":
https://www.nytimes.com/2003/06/20/opinion/still-blowing-bub...
Here's Krugman in 2005 decrying the housing bubble and "signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble":
https://www.nytimes.com/2005/05/27/opinion/running-out-of-bu...
Here's Krugman in 2006 decrying the housing bubble, predicting its end, and saying that "If anyone is to blame for the current situation, it’s Mr. Greenspan, who pooh-poohed warnings about an emerging bubble and did nothing to crack down on irresponsible lending."
https://www.nytimes.com/2006/10/30/opinion/30krugman.html
D) > Krugman is a major believer in Keynes' demand-side economic theories.
Yes, Krugman is Keynesian, of course, and argues for stimulus via fiscal policy (taxes and spending) and monetary policy (rates and money supply), when and as appropriate.
And yes, if the economy is stalled because of lack of demand, and monetary policy is ineffective because the zero lower bound, then fiscal policy (spending) would be effective (thanks to the multiplier), even if the money is pumped into fairly inefficient ventures, as long as the money goes to people that spend it (rather than saving it). (So, tax cuts for the rich are not good.)
That is not to say that a Keynesian would advocate a less efficient over a more efficient stimulus; rather, Krugman was making the point that any stimulus (to people with high propensity to consume) is better than none.
[1] for example, https://www.washingtonpost.com/news/wonk/wp/2013/02/13/no-ma... or see https://en.wikipedia.org/wiki/Causes_of_the_United_States_ho... for an overview of the debate.
That Wikipedia page does not really make a case for any explanation.
There was a Congressional study on it that absolved regulations, but the government, cannot be expected to do an objective study to expose the failures of government. Their institutional interests are completely opposed to that. They are largely rent-seeking institutions whose interest is in propagating the idea that central economic planning is in the public interest, and lessening the government's intervention in the economy, via deregulation, is harmful.
To examine the Washington Post article you linked, which was written by Director of Progressive Thought, Mike Konczal:
>>"From 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50 percent to just under 30 percent of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10 percent to about 40 percent over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans."
That in no way disproves the arguement that the GSEs precipitated the crisis. If you look at the literature produced by the GSEs, they explain that their goal is to increase liquidity in so-called under-served markets, and thereby reduce the risk for private lenders to lend in that market.
See this 1999 article about how they started to expand their subprime lending:
https://www.nytimes.com/1999/09/30/business/fannie-mae-eases...
Note this:
>>''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
This kind of statement, and commitment to expanding the liquidity of the subprime mortgage market, from the CEO of the most powerful institution in the US residential housing market, will have a massive impact on market sentiment, and will cause the frenzy seen in the early 2000s.
>>Here's Krugman in 2003 decrying the housing bubble, and also noting that the "banana-republic policies now being followed in Washington won't just drive up interest rates; they'll probably generate a full-blown fiscal crisis one of these years.":
>>https://www.nytimes.com/2003/06/20/opinion/still-blowing-bub...
I don't see any mention of the housing bubble in this article. Can you point it out to me?
>>Here's Krugman in 2005 decrying the housing bubble and "signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble":
>>https://www.nytimes.com/2005/05/27/opinion/running-out-of-bu
This doesn't sound like criticism of the policy of creating a housing bubble. It sounds more like Krugman arguing that a new bubble would be needed to replace it:
"As Mr. McCulley predicted, interest rate cuts led to soaring home prices, which led in turn not just to a construction boom but to high consumer spending, because homeowners used mortgage refinancing to go deeper into debt. All of this created jobs to make up for those lost when the stock bubble burst.
Now the question is what can replace the housing bubble."
>>Here's Krugman in 2006 decrying the housing bubble
That only shows the instinct for revisionism that I mentioned earlier. In 2006 the dangers could be more clearly seen, and that's when Krugman is seen changing his tune about creating a bubble with low interest rates.
He repeatedly advocated low interest rates, and repeatedly said it would boost the housing market:
July 18, 2001
http://www.pkarchive.org/economy/ML071801.html
>>"KRUGMAN: I think frankly it's got to be -- business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).
>>DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she -- or I should say he and she, can they bring back this economy?
>>KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don't know"
August 8th 2001
http://www.pkarchive.org/economy/ML082201.html
>>"KRUGMAN: I'm a little depressed. You know, inventories, probably that's over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven't fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It's not a happy picture."
August 14, 2001
http://www.pkarchive.org/column/81401.html
>>"Consumers, who already have low savings and high debt, probably can't contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery.... But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates -- and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1.... Sooner or later, of course, investors will realize that 2001 isn't 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.
October 7, 2001
http://www.pkarchive.org/economy/ML071801.html
>>"Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.
>>In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package"
Dec 28, 2001
http://www.pkarchive.org/column/122801.html
>>"The good news about the U.S. economy is that it fell into recession, but it didn't fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed's dramatic interest rate cuts helped keep housing strong even as business investment plunged."
Even in late 2004, after he had already stated that low interest rates could create a housing bubble, he was advocating to keep interest rates low:
http://www.pkarchive.org/column/081004.html
>>Oh, and on a nonpolitical note: even before Friday's grim report on jobs, I was puzzled by Mr. Greenspan's eagerness to start raising interest rates. Now I don't understand his policy at all.
And going back to the quote from the original article, which you claimed I provided out of context, let's look at it in more detail and with more context, including the follow-up paragraph:
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging."
So he writes that Greenspan "still thinks he can pull that off". The "that" is the creation of the housing bubble, mentioned in the preceding paragraph.
In the sentence that follows that, Krugman expresses pessimism about the prospect of Greenspan being able to pull "that" off: "But the Fed chairman's crystal ball has been cloudy lately".
What this is saying is that since the Fed's predictions had been off recently, it calls into question whether the Fed's belief that it can pull "that" off is credible.
So the only pessimistic sentiment Krugman expresses in this article is about Greenspan's ability to fuel a housing bubble using low interest rates.
Not only did he suggest in this article that lowering interest rates could create a housing bubble that would fight the recession, but on repeated occasions from 2001 to 2004, he advocated that the Fed lower interest rates.
The context is absolutely damning for your defense of Krugman.
>>And yes, if the economy is stalled because of lack of demand, and monetary policy is ineffective because the zero lower bound, then fiscal policy (spending) would be effective (thanks to the multiplier), even if the money is pumped into fairly inefficient ventures, as long as the money goes to people that spend it (rather than saving it). (So, tax cuts for the rich are not good.)
If an economy is suffering a recession, it's only proximally due to "lack of demand". The lack of demand is a necessary property of the process of recovery. The fundamental cause of a recession is a readjustment that has to play itself out, as failing/over-leveraged industries are divested from, new opportunities are identified, and as prices adjust downward in reaction to the contraction in the money supply as loan volumes decline.
Creating more unproductive economic activity distracts from this readjustment process. It's harmful central economic planning that misallocates economic resources, and thereby disrupts the process of capital formation.
[0] https://cafehayek.com/2013/09/ritholtz-and-the-big-lie.html
[1] https://mercatus.org/sites/default/files/publication/RUSS-fi...
According to this story, 50% of people getting the first-time home buyers tax credit in 2008 weren't entitled to it.
The IRS itself estimates that over 50 percent of the individuals claiming the first-time credit will not be complying with that requirement to supply proof that they actually purchased a home.
https://www.npr.org/templates/story/story.php?storyId=126010...
Of course, NPR simply says these people were "confused."
There absolutely was, it's just been a LONG time since actual progressive policy had any traction in the US, and quite frankly it's sad how many people are eager to throw away their own best interests.
https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...
Not that I fully agree with them.
Because overwhelmingly it does each and every day.
[edit] This bias comes down to the same issue as folks in infrastructure roles have in the tech world demonstrating their impact. How do you demonstrate impact avoiding SEVs when, if you're successful, the SEV never happened? It's very hard to count the number of things that don't happen.
Interesting problem.
Just thinking about this particular issue, maybe some options are:
1) counting time and then expressing success as the longest period of time during which the bad events didn't happen,
2) letting it happen initially to have a base "bad rate", then taking action to bring that rate down, and continuously make an effort to keep the occurring rate down
People preventing accidents at industrial sites have good experience doing this.
Consider gun related crimes in Australia before gun buy backs ("bad rate") and gun related crimes in post. You would have a solid number of averted deaths and injuries.
Now let's wait for thoughtful opinions from US users regarding the topic of gun regulation :)
The problem is the "bias" runs in both directions.
If you pass a bunch of laws after 9/11 and then another 9/11 does not happen, does that mean you actually need all of those laws, or that it's all overreach and bear-repelling rocks and all you really needed was to tell the passengers on planes to resist hijackers?
In other words, it's not bias, it's uncertainty.
Like, it's always pitched as a positive that a transaction is irrevocable. If I put some money in a smart contract, it behaves exactly as specified in the smart contract. If I decide to invest in some overly complicated ICO (for which I can fully read the programmatic contract before I invest), and I lose money, and then I say "I am a poor unsophisticated investor who was taken advantage of, I want my money back," doesn't that fundamentally imperil the value proposition of having a smart, programmatic contract? Now only most of the contract is on the blockchain and there's also some hidden caselaw - and "mostly deterministic" means nondeterministic.
That is - shouldn't people who believe in cryptocurrency be saying this is fine and good and working as intended, and not a problem to "fix"?
That said, the interesting question this raises is, what happens when disagreements happen over those smart contracts? It seems like inevitably lawsuits and regulations will arrive, potentially removing the upside of using smart contracts.
This leaves me asking a couple questions. One, is the culture around “no reversable transactions!” a kind of defense mechanism against introducing legal overhead which could harm the value prop of crypto. Two, should legal overhead arrive, could the smart contracts still provide some value compared to old solutions?
Yes, because possession is 9/10ths of the law, and so a smart contract's automatic assignment of possession, according to its terms, will in most cases be legally decisive.
Smart contracts are contracts, because you agree to their automatically enforced terms when you sign them. The “legal overhead” is when the terms as written don’t match what you actually agreed on, for example there was a mistake. The only reason you don’t currently believe there is legal overhead is that nobody has done anything interesting enough to want to litigate the rules that would pretty obviously apply. Maybe they have already!
From Wikipedia:
Although the principle is an oversimplification, it can be restated as: "In a property dispute (whether real or personal), in the absence of clear and compelling testimony or documentation to the contrary, the person in actual, custodial possession of the property is presumed to be the rightful owner. The rightful owner shall have their possession returned to them; if taken or used. The shirt or blouse you are currently wearing is presumed to be yours, unless someone can prove that it is not."[2]
Beyond the presumption of being the rightful owner that stems from having possession, is the barrier to legal action that often prevents ligitation in the event of a contract dispute. In such cases, the party in possession will likely maintain it. These barriers could be multiplied in multi-jurisdictional cases involving pseudonymous parties, as is often the case with FOSS projects, and other internet community endeavors.
Edit: to be clear, people don’t shy away from prosecuting a valid contract claim simply because the other party currently possesses the item in question. “The other party has my stuff” is on the contrary very motivating to a lot of potential litigants. It is not a “barrier”.
>>Fortunately contracts cases literally all have that evidence, because being owed something under a contract IS a better right than possession, and lack of evidence of possession is never the problem.
I see, that makes sense. I think in many cases though, the smart contract will be the dominant contract, and a traditional contract will be poorly drafted, or costs of litigating will discourage contract participants from doing so. Which again is why I predict smart contracts will continue to have value in the face of the potentially conflicting jurisdiction of traditional contract law.
>>your point about multi-jurisdiction FOSS arrangements would be better if you identified conflict of laws and other jurisdictional issues as preventing people making claims at all
Yes that is what I mean: I think it can be reasonably assumed that there would often be more factors, relating to conflicts of laws and the additional complexity of dealing with multiple legal processes, preventing or discouraging people from making legal claims when the arrangement is multi-jurisdictional. There are yet more when participants to an arrangement are pseudonymous, and the arrangement is not bound by a strong traditional contract.
>>It is merely coincidental that the people who currently have it retain it, it is not an instance of the possession dominating phenomenon.
Fair point. My point I guess is that if the traditional legal system fails to be useful, then being in possession of an asset will often be advantageous, and therefore smart contracts which assign possession will often be impactful.
In conclusion, I see your point, that when there is a traditional contract in place, and when a party to it does make a legal claim relating to it, possession will not impact the judgment of the court. My initial comment implies otherwise.
The risk is that when the next recession comes along, there will be a net outflow from Tether, and just what assets are behind Tether will be revealed.
Unless you're a crook, there's no reason to keep funds in Tether. There's zero upside, and a significant downside.
“95% of btc volume is fake” weve known about asian exchange wash trading for the better part of the decade, its why their volume is excluded in aggregates. Theres still undeniable substantial real volume on the top 10 exchanges by users. Coinbase is not committing investor fraud as a fiduciary by reporting false numbers.
Taken with the above statement, >99.999% of all US dollar trade volume is fake. I guess USD must be a joke currency.
But politicians have friends & famility working at DB and HSBC - so they'd rather show teeth and get votes by attacking the newcomers.
Who cares if there's less illegal activity there? At least they won't have to fear retaliation by cartels!
It's not some magical fairy sauce that solves any problem even remotely adjacent to money.
Crime is still illegal, the blockchain is public and visible to everyone, it's easy to deanonymize now. So what, an express train to prison?
If you have a shoe store in Azerbaijan and one month you have a bank that allows you to accept payments, and then the next month your accounts are frozen, and then the next month it costs 60% to accept payments, your business has been stripped out from under you because you don't have reliable banking infrastructure. But when all you've ever known is reliable infrastructure and a bank which reliably holds your money its easy to lose this point.
The bitcoin block chain is never going to freeze your funds. The bitcoin block chain has changing transaction costs but they not susceptible to wild swings in cost by administrative decree. These points sound attractive when you don't have access to good banking infrastructure. None of these things have anything to do with crime of any sort.
If this is about providing banking infrastructure to countries that don't have it, the fees are not acceptable, and so Bitcoin is not a solution. If this is about evading taxes when running a business, I suspect having your business shut down is still in the cards.
Depends on what they are selling.
Is it a stick of bubble gum? Ok probably not bitcoin.
Is it a house? Yeah, I think theyll manage the fee.
Is it somewhere in the middle?im confident theyll figure it out case by case and distribute costs as necessary and possible.
Still none of this has anything to do with crime and everything to do with serving the underbanked.
The issue isn’t that they don’t have access to banking it’s that they don’t have any money to put into the account. That's a social issue not an infrastructure issue.
This option never existed before.
Maybe some big exchanges like Coinbase follow the US laws closely but mostly crypto is like the old days where most people in the world can do what they want. Its in no way like these big global banks.
Also, I agree with the OP, I feel HSBC is a criminal organization because there is so many ethically questionable actions taken by this org[1] and even after getting caught and being fined for aiding criminals they still repeated it. [2]
[1]https://en.wikipedia.org/wiki/HSBC#Controversies
[2]https://www.icij.org/investigations/fincen-files/hsbc-moved-...
A few that just involve the improper handling or oversight in conducting money laundering operations that came out this past year, which, because of the pandemic and politics, have seen fewer IG reports than usual:
https://oig.justice.gov/reports/audit-drug-enforcement-admin...
https://www.oig.dhs.gov/sites/default/files/assets/2020-09/O...
This is an old article though, and BitMex has been indicted for the very things mentioned in this article.
NDF (Non deliverable forwards) in traditional FX are levered like crazy.
Most regulators get crypto now... Its all about KYC (know your client) and custodianship.
And let us not; in this age of ecological collapse, forget the emissions impact of cryptocurrencies.
In fact, I wouldn't be surprised if crypto was actually way more efficient energy-wise than the centralized institutions that are needed to support the current system.
A lower bound on Bitcoin mining emissions was 20 million tons in 2018. [2]
Of course there are more than one bank, banks perform a lot of functions that crypto doesn't, etc.
[1] https://about.bankofamerica.com/assets/pdf/Bank-of-America-2... [2] http://ceepr.mit.edu/files/papers/2018-018.pdf
It appears he is now resorting to producing a dishonest and inflammatory appeal to the political and regulatory class, to intervene with heavy handed restrictions that would all but make any peer-to-peer use of cryptocurrency illegal, in order to make his predictions of Bitcoin's failure come true.
I hope that the top-down controlled regulatory apparatus that he supports and which impedes commerce, and exacerbates income inequality and financial exclusion, fails, and his entire political philosophy is made obsolete by cryptocurrency becoming ubiquitous.
Piss off the wrong people and they will spend resources until they find you. Like the Silk Road guy, Ross Ulbricht.
On the other hand the operator of Dream Market is still free, after operating his site for almost 7(!) years.
> The connection was made by linking the username "altoid", used during Silk Road's early days to announce the website, and a forum post in which Ulbricht, posting under the nickname "altoid", asked for programming help and gave his email address, which contained his full name.
It's really hard to live a digital life for a decade and not once accidentally break opsec between your public and private lives.
He even used his own photo on the fake IDs for SR server rentals!
I think the fact that (most?) DNM operators keep getting away with it is great evidence that nation states don't have very good visibility into the Tor network.
Also, Navalny was about the opposite of trying to hide. He was trying to be found.
I’m sure that comes as a disappointment to the FSB given that they do it so blatantly to send a message that they can get you anywhere without repercussion.
Regulators are slowly catching up, but as you see from Tether, still have a long way to go.
1. The scale of wrongdoing in the crypto world is insignificant compared to in traditional systems.
2. Some of what is deemed "criminal" in crypto systems is only criminal because it bypasses traditional controls.
In the first case, small investors and taxpayers have been on the losing end of many financial disasters which were not of their own making. But as evidenced by the multiple bailouts in the US, those negligent or intentionally malfeasant rarely suffer the consequences of their actions; on the contrary, they often profit from it.
To be sure, there are plenty of really lame scams in the crypto world - either outright frauds or ponzi schemes. And the losses to customers and clients is significant. However, if the losses in traditional system failures and thefts were calculated, we would be much better served by focusing on the traditional system problems.
In the second case, some of the criminal crypto activities (such as the transparent lotteries and ponzis operating in the Ethereum network) are arguably less risky than legal gambling or equities and futures trading. Small investors in traditional markets get cheated in invisible ways that would not be possible on a system with blockchain-published smart contracts. (That's not to imply that many people can truly grasp exactly how a given smart contract works, edge cases and all - but at least it is visible.)
I personally dislike the crypto world. In the very early days, it was a place of hope and possibility. But that was quickly buried by the waves of unethical people who were fixated on quick riches. And unfortunately, little of the potential or promises of cryptocurrencies have panned out. Meanwhile, at least in some places (Europe for example), financial transaction speed and associated costs have been reduced to well below what even crypto can offer. For example, I can move money from a Dutch account to a German account in one second, at no cost. There is no room for improvement there - ignoring the concept of anonymity of course... but that isn't really something crypto actually offers.
In the places where the banks themselves have not improved, new players have stepped in. Transferwise has saved me thousands per year for several years compared to international bank wires. Crypto can do that as well, but both endpoints then have to manage the fiat to crypto exchange.
To be fair to cryptocurrency in this regard, there has been intentional pressure from traditional financial systems to create laws that make it more difficult to exchange fiat and crypto, and that has greatly hindered some of the potential uses. Even that is evidence of how much more corrupt traditional systems are compared to cryptocurrencies.
Traditional financial systems can be abused[0] but they do bring us tremendous value for our societies.
I can see how people can make snide and cynical remarks about that, but you know it is true and making such remarks in this context are frankly dishonest in my view.
Because they distract from the fact that Bitcoin or any other crypto currency doesn't provide any tangible benefit to our societies. It benefits a few (lambo money) to the detriment of the many.
And let's not forget Bitcoin made the Silk Road and its successors possible.
And meanwhile, so many smart people are wasting their life on crypto currencies. And meanwhile, so much energy is wasted on this.
[0] I still don't understand why HFT is not illegal and there are many more things that are terrible, but this is not about Traditional financial systems right now.
I recommend expanding your understanding of the world beyond your coddled first-world perspective.
https://news.ycombinator.com/item?id=25797143
> I still don't understand why HFT is not illegal
Then I suggest you learn something about what liquidity, bid-ask spreads, arbitrage, and price discovery are, and how financial systems work in general.
That comment doesn't enumerate or even alludes to any tangible benefits of crypto currencies. (It's about the benefit of mesh networks during HK protests when internet was shut down, and the supposed resiliency of the "Bitcoin network").
> Then I suggest you learn something about what liquidity, bid-ask spreads, arbitrage, and price discovery are, and how financial systems work in general.
I'm pretty sure GP has heard of those.
Whether HFT provides any benefit in terms of liquidity and smaller spreads is by no means clear. HFT is certainly neither necessary nor even contributing to price discovery. I submit that the economy would work just fine with a price auction every minute (maybe with stochastic cut-off) for, say, 3 hours a day; and maybe even a bit better, because all the HFT guys would have to do something else, which would most likely be more productive.
Either:
1. You didn't actually read the comment.
2. You have no idea what ZeroNet or Blockstream are.
It is no crime to be ignorant of the topic, but it is totally irresponsible to have a loud and vociferous opinion on it while remaining in this state of ignorance.
In its discussion of physical and financial censorship (note the 2nd sentence), the comment also did (and I have to wonder how you "missed" this) refer to one of the best real-world illustrations of the value of cryptocurrencies: circumventing Venezuela's tyrannical regime and its destructive fiscal and monetary policies. That's my home country, and those are real lives. I'd love to hear you lecture me about how those people don't exist.
> and the supposed resiliency
Why "supposed"?
> I'm pretty sure GP has heard of those.
"Heard of"? Maybe. Understand? Clearly not.
> Whether HFT provides any benefit in terms of liquidity and smaller spreads is by no means clear.
It is. Bid-ask spreads are down to about 3 basis points from about 90 basis points 2 decades ago. Curbing HFT in the past—surprise, surprise—increased the spread. See also [0].
> HFT is certainly neither necessary nor even contributing to price discovery.
Well, you are certainly wrong [1], despite prefacing your false claim with "certainly". What does that tell us? Why are you prefacing false claims with "certainly"?
> I submit that the economy would work just fine with a price auction every minute (maybe with stochastic cut-off) for, say, 3 hours a day
Indeed the economy would "work just fine" with horse-drawn carriages and pigeon post. I commend you for your brilliant proposal. I recommend we implement this novel idea as soon as possible and see how it goes.
[0] https://www.forbes.com/sites/timworstall/2014/04/01/hft-real...
[1] https://www.cfainstitute.org/en/research/cfa-digest/2015/04/...
It always has to do with some third-world country in the shit.
Also funny: they often try to obfuscate and sling irrelevant jargon around.
To me, it feels like a multi level marketing scheme, where all these sites and sources and people just try to drive up the price.
Very good overview of cryptocurrencies, even some students have created cryptocurrencies.