CEO of a top Bitcoin exchange warns: crackdown on cryptocurrencies may be coming
cnbc.com
cnbc.com
Wait until you hear about cash.
More seriously (and hopefully less reductionist) i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures. I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.
Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.
Knowing the US has soured on cryptocurrencies doesn't make me any less interested in them, it just makes me less interested in holding them/working in the space on US soil. I'd be surprised if i were alone in this sentiment, and in spite of its negative reception on HN, the tech space around cryptocurrencies is quite literally growing as we speak.
I find this argument a little weird, because I think we can all agree that bubbles and fad tech isn't really great for society as a whole. If you believe cryptocurrencies aren't a fad and actually provide useful benefits to real people (which does not include "we built a company that does crypto stuff and made a bunch of money"), then ok, fair opinion, but I don't share that view. To me it just looks like a big house of cards built on something that is fundamentally not that useful or valuable, but is propped up mainly by speculation. Building a company on top of it that is sold for $400M is great for the founders and investors in that company, but doesn't mean that crypto itself is useful for society.
I apply this to other things, too... there are ton of lucrative, successful businesses built on top of and around internet advertising, but I think that entire ecosystem is a huge net negative for society.
Ethereum is certainly more interesting than Bitcoin but the use cases so far seem to be more speculation.
I mean, we've had a decades of cryptocurrency and just one actual application has arisen - crime. Money laundering, tax evasion, purchasing illegal items, and that sort of thing.
When it comes down to it, cryptocurrencies say that people trust some obscure algorithm that almost none of them could evaluate over society and governments.
It's a bad sign.
Gold has a purpose. Central banks may pretend that gold serves no purpose in a modern economy, but they still hold on to trillions in gold. I hope eventually they'll get around to holding a crypto currency like Bitcoin. They're just upset they don't have a head start in accumulating a reserve.
It's all pretty clear in the settlement Tether signed [1]. Particular note are #17, #20, #36, #43-46
[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
This may be a relatively lawless environment, but as for its current atmosphere, blame the world's central banks, not the crypto builders who are mostly as disgusted by the current situation as sidelined observers.
Decentralized networks have the potential to resolve many of the issues we techies love to complain about. Only a tiny percentage of that $2 trillion is allocated to teams actually working on solving these issues (Binance and Coinbase definitely aren't a part of it), so please try to reserve your judgment when you see developments coming out of crypto. Most of it is under-developed, over-hyped, and just an extension of the tech-bubble ponzi, but some of it will actually change the world. In the same way Tesla is actually positive to society overall and we shouldn't shun their cars just because the company's stock is a meme used in zero-sum-game gambling.
I continue to hear this yet I never get a _single_ convincing example from DeFi advocates.
It might be a negative for society now (I assume you are referring to the shady nature of using it as an alt currency), but it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.
It solves multiple problems at the same time. Content creators can get paid by design, tech is open an transparent and scalable. It's unlike anything we've seen before.
Exactly the same as it looks today. Because nothing has changed in the last 15 years either (Bitcoin was released in 2006).
> it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.
How does cryptocurrency help with any of that?
> tech is open an transparent and scalable.
Citation needed.
My prediction is that some useful inventions will be adopted by regular people ok with regular old reputation based trust. And then some actual useful things will happen.
I was reading a report from my country's central bank experiment with e-money. A PoC token thing with a one time use rule enforced by a trusted network of intermediaries. They expressed some discomfort with this being a scalability issue and also not allowing offline transactions in case of infrastructure issues.
Ironically I found myself thinking that this could be solved by a digital equivalent of cheques.
BTC is over 10 years now, and the most powerful monetary authority in the world is now afraid of it. How is this slipping by people's minds?
The btc maniacs are winning.
But I'm not American and have no problem with a nanny state doing the right for society (crypto libertarians really, really hate society I have noticed).
I've got news for you:
BTC: 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency's blockchain control 95%[0]
ETH: Just 376 People Found to Own a Third of All Ether Cryptocurrency[1]
[0] - https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-w...
[1] - https://www.bloomberg.com/news/articles/2019-05-15/just-376-...
Which brings me to the other point: currencies are governed at both ends; at issuance and at use. If you use a crypto that’s not approved, the government can simply arrest you for using one of its competitors. The treasury could likely do this without even needing to issue new laws, just new guidance. Governance is the reason for the existence of the US Treasury and Federal Reserve. It’s a core feature of any currency and the government isn’t going to abandon that lever of hard power. They’re only going to do a cryptocurrency that gives them more power, not less.
All of the stakeholders you list have a vested interest in not being disintermediated. They’re also deeply embedded in policy creation. I can’t help but notice the way crypto evangelists speak of crypto is the way leftists speak of Marx: in very vague terms outlining a utopian vision of a new economic paradigm that is frustrated by the sticky realities of the momentum of money and power. The reality of Marxism is different from the utopia, as would be the realities of central bank crypto (hint: it’s gonna be authoritarian af).
Most white collar crime is obvious and where the bodies are buried is largely known.
There’s simply no political will to do anything about it.
Crypto becoming mainstream isn’t going to change indifferent minds.
Physical reality is a thing. Burying our heads in ephemeral concepts is distraction, not change.
You still have that stuff with crypto, just crypto exchanges not stock exchanges.
>What do I need a bank for?
Banks do two main things - taking savings and lend that out as mortgages. Crypto has been no good at part two.
Basically most financial services would still exist if in modified form.
I'm always bothered by this arguement because most of the same people in government who want to see a crackdown on Bitcoin also seem to want cash to be eliminated.
I've been asked to do consulting on one of these digital cash replacement projects. The requirements included all the stuff you'd expect, like strict ID requirements for every account, and the ability to freeze funds at will. But they also wanted things like the contents of receipts getting uploaded to government servers, to allow real-time tracking of not only who was paying who, but what the funds were supposed to be for. My contact wouldn't tell me what government it was supposed to be for. But they did admit it was a dictatorship. Obviously, this would have been a very effective tool for cracking down on dissent.
Frankly, I kinda suspect what was really going on was the company that reached out to me was pulling a scam on that dictatorship and had no real plan to actually deliver a working product. But it's still a good example of the panopticon that authoritarians want to replace cash with.
E.g. try to regularly move billions in cash and see how long it'll take before you're busted for not reporting that you're doing that.
A billion bucks weighs a fucktonne.
I'm pro cash, anti cryptocurrency, because the comparison is absolutely ridiculous there's no contradiction.
https://treasury.gov.au/policy-topics/economy/black-economy/...
I've carried $2k USD in just $20s in my pocket across international borders, and had it been in $100s that would be the limit. But if I want to transfer even one million dollars that 100 trips. Or 100 pockets if I ignore the law. I own cargo pants, but even they don't have 100 pockets. And a billion? That's a thousand people each with a hundred pockets full of cash.
What I was saying is that mere logistics makes it hard to move a billion in cash.
So there's a natural prevention of moving large amounts of cash. It's not impossible, but "making it hard" was done on purpose. So cryptocurrencies are not "clever" for "fixing a problem". They're actually removing the amelioration to the problem.
Which is another way of saying they want absolute control, which in this case is the absurd charade where "inflation" measures that they claim represent life on the ground exclude the essentials like education, healthcare, and housing.
"they [governments] will have to borrow money like everybody else borrows money, they can't just print their own money. They have to borrow money at an interest rate. And if governments don't behave fiscally then they are going to have to borrow at worse and worse rates. They can't just invent their own interest rates and currency, which manipulates how markets work...
We in the city of miami, we're forced to balance our budget, we actually have a surplus, about $150 million in surplus and we have some of the lowest tax rates in the history of the city."
Fortunately this incentivizes finding ways to circumvent that regime and point out how absurd it is.
The fact is while the debt has exploded, the total cost to service that debt has collapsed. The US is now paying less interest on its sovereign debt than before the COVID stimuli. Explain to me how it's stupid not to take advantage of this?
The reality is when you take on debt, the only thing that matters is what you choose to do with it. If you use it to generate economic activity - and hence revenue - that's a good investment. If you don't, that's a bad investment.
Now, you can "circumvent" this by investing your money like you're supposed to in literally anything.
(1) Increasing reserve rates for lending. This causes the circulating supply of currency to go down.
(2) Increasing interest rates for lending. This reduces the demand for borrowing, which is largely fractional reserve. This also causes the circulating supply of currency to go down.
(3) The Fed unwinding its balance sheet by selling bonds. They collect the cash and remove it from circulation. They can increase the circulating supply by buying bonds.
Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy.
The government doesn't print money per se, the government can borrow money by selling bonds. This just reallocates the existing money supply. The overwhelming majority of US government debt is held domestically by US persons. This doesn't change the money supply either, unless the Fed steps in.
Fiscal policy affects inflation. You're thinking of inflation as "the money supply / total of all $", but that's only one definition or part of inflation. Generally, you would also describe inflation as the price of things you buy going up or down (CPI). Say you ratchet up the effective tax rate to 90%. Everyone's going to have a whole lot less money to buy extra things. Some things with fixed raw input cost still wouldn't budge much. However now that people's monthly incomes have gone from $5000 -> $1000, you're going to see houses, education, Pelotons, and other extra income sinks, have their prices fall precipitously.
Even cryptocurrency projects like Brave browser's BAT has a max supply, so Brave will have to buy BAT back from the market (at the market rate) if it wants more.
His point is that a government is more fiscally responsible when it has maintain real reserves, where there is a risk of depletion. The federal reserve is a misnomer, since it doesn't have meaningful reserves (like gold). It just prints.
Spain did really well out of it's brutality in the New World - plundering the Inca and Aztec empires yielded a wealth of gold, and the big find in the salvage industry today is still "spanish gold" because just so much of it sank to the bottom of the ocean.
But now a question: did the Spanish economy boom from this influx of gold they had (through a substantial expenditure of resources), suddenly acquired?
The answer is: (https://en.wikipedia.org/wiki/Economic_history_of_Spain#Gold...) No.
Spain actually experienced massive inflation and then an economic crisis as the government suddenly found itself, bizarrely, bankrupt. Gold wasn't worth remotely what it was before, because gold is not actual productivity - the conquest of the new world was a conquest of gold, at the cost of real resources - food, men, timber, arms etc. But it didn't yield anything that was actually worth trading for other then just more gold. So prices skyrocketed, and suddenly the Spanish empire was raising taxes - despite in theory having "made money" because it couldn't afford to pay for its own upkeep.
What does this have to do with the concept of loans? Quite a lot. Because the exact same factors would apply to a government with a wealth of productivity which was forced to seek loans from a market: demand for currency drives the value of currency up, but the same thing happens - farmers, workers, everyone else winds up poorer because the value of their labor is being reduced relative to the value of currency. So currency holders get richer, but everyone else with bills and day to day living expenses are getting poorer.
Cryptocurrency wouldn't have this problem, since it has a hardcoded limit, unlike gold or USD.
So in such a scenario there are only two options: increase taxes on citizens for crypto they hold (while in the meantime being unable to pay for services upkeep - and thus probably inventing a form of fiat anyway to stay afloat), or devalue it's own currency to pay escalating loan rates to crypto holders to buy more crypto for those transactions in which people will not accept fiat.
Of course since taxes can only meaningfully be levied in the crypto-world on income, since you can control businesses to some extent but not holdings, the effect is the same: the compensation for your labor goes down, or you're fired (because the value of your output has gone down faster then wages), or most likely, you are inefficiently taxed at a much higher rate then is necessary to ensure the government is never stuck with the risk of a crypto shortfall which would suddenly put their ability to supply payment for services into almost immediate default.
This is true, but not without some moral hazard. Miami can keep building on land that will be swamp within the lifetime of the building because federal taxpayers and inflation are there to bail them out.
https://e360.yale.edu/features/as-miami-keeps-building-risin...
Can you provide a source for that? First I've heard of such an argument from government officials
But if it were to come to that, I'd replace it with some sort of digital currency that is "private" but accessible to the government within rules and reason of course.
It's up to the "trial balloon floated in Congress" point. The trial balloon has so far always been shot down, but it's really only a matter of time. If the government could just push a button and have access to literally every single transaction that occurs, they would certainly do it. They wouldn't even blink.
Also, I want to say, I'm just linking one example. You can follow up with search terms similar to the ones used in that article, and probably find even more mainstream sources discussing it. It's a topic in the air in financial circles.
Edit: Bit more searching, here you go with something much more mainstream, Forbes: https://www.forbes.com/sites/advisor/2020/10/22/the-pandemic...
And again, my main point here is that it is a topic of conversation, not making any particular claims about where we are currently.
anecdote time: I once travelled to Vietnam for a vacation, people in vietnam prefer $100 bills because they're easier to use for hiding wealth, transporting cross border, and other slightly less than legal reasons. Additionally it's the preferred currency of criminals in the country too (so I heard). They will even pay higher exchange rates for ones in better condition or with more anti-counterfeiting features
So yeah, USD is used for a lot of crime globally.
EDIT: changed "anti-moneylaundering" to "anti-counterfeiting" by suggestion
I saw one as a child. Most Canadians have not, as far as I know. An acquaintance of a friend of my father's had several, and my father was interested in numismatics, so he traded one for $100s. The implications of the man who had some "pinkies" (called so for their colour) being a biker with a facial scar didn't click into place until I was much older.
Also dont forget insurance for banknotes in a safe.
Deposited/electronic money tends to be necessary when you hit a million plus. At that point cash sucks and is super risky to hold.
Changed original post
The bigger issue is that very few people want to hold onto cryptocoins if their goal is to spend the money. You can't really buy much directly with cryptocoins in comparison to cash which is universal. I can't use it at Walmart, I can't use it at McDonalds, I can't use it to buy a house, I can't use it damn near anywhere. The only way I can use it is through a scheme that converts it to cash first. No criminal wants to add that papertrail step to their operations.
While the whole "illicit transaction" argument is bullshit, Yellen and other Treasury officials probably realize that cryptocurrencies like Bitcoin could pose an existential threat to the U.S. dollar and needs to be snuffed out early. Companies like Microstrategy and Tesla have already began using them as substitutes for U.S. treasuries. Together with the decline of oil dependency and the petrodollar, a day will come when the de facto currency is no longer the U.S. dollar and with it goes the world currency status. Yellen's department, the U.S. Treasury, would become a minor department and a shadow of its current self.
An apt analogy could be the U.S. government is like Nokia in the early days of the iPhone.
That said, a U.S. ban may actually unintentionally lead to greater adoption as it effectively means cryptocurrencies withstood and prevailed an attack by the world's foremost national power.
That's a big if.
For now the USA remains the world's richest and biggest unified market. Surviving a ban from said market is not a given for any product. In fact I imagine it's a death sentence for most global products.
When governments talk about banning crypto, what scares them isn't crypto; it's this ideology. And this ideology also makes crypto incredibly hard to ban. You can create all sorts of regulations but that will only harden the stance of crypto maxis because it will only prove them right.
They can harden their stance all they want, but breaking the crypto ecosystem is incredibly easy if governments really wanted to. All you have to do is ban companies from interacting with crypto currencies in any form, be it accepting, exchanging, holding, or producing them. That would immediately shut off the gateways between the crypto ecosystem and the real economy, which reduces crypto to P2P transactions in parking lots.
Because unless you have a one world government (hopefully, no one is a proponent of this), there will be at least some countries that will welcome you. And since the rewards will be large enough, market participants will even do illegal things to access it.
All it will eventually do is make your country less competitive until you have no recourse but to change the law. FOMO isn't just for people; it's for nations as well.
The rewards are minuscule. It's a niche industry with no potential of it ever not being niche unless is has mass adoption.
Bitcoin has a very, very short history of being a decent store of value and the US Government publicly saying they plan to break it would collapse the entire scheme.
Not sure that is true
> According to security firm Sophos, 51% of organizations it sampled globally found themselves the targets of ransomware attacks in 2019. The crooks succeeded in encrypting data in 73% of these attacks. Just over a quarter of these organizations paid the ransom, or their insurance companies forked over the cash.
https://m-cacm.acm.org/magazines/2021/4/251337-the-worsening...
It’s not only that but also all that “crypto is not technologically interesting and it’s just Ponzi scheme!”.
There are so many interesting and unique things there. You can mix cryptography, finance, etc. into endless amount of protocols.
Here is some interesting ideas in crypto: decentralized stable coin (dai), automatic market makers (uniswap), zero knowledge rollups, dns that you actually own and not rent, p2p prediction markets, automatic borrowing, algorithmic stable coins without peg and so on and so forth.
And there is always something new.
I think blockchain is essential building block of the future free web.(at least stuff like dns)
Oddly, HN is over all rather closed minded about cryptocurrencies/blockchain. I can understand being jaded at all the bitcoin maximalist out there that are frankly ignorant or even just being generally weary about the idea of such currencies... but it seems like the general sentiment is very negative in almost every thread with very minimal understanding of cryptocurrencies or frankly currencies in general.
Shame, tbh. I wish there was better discussion on the topic. Blockchain is very cool, even if you don't believe bitcoin is replacing your dollars ever.
But the ideas popping out from these fields are just so darn exciting. DeFi makes all these complex financial instruments that were previously the sole purview of big banks accessible to anyone.
And we're barely scratching the surface with NFTs and DAOs.
Which projects are working on this? That sounds awesome
Not sure what it means to "censor" currency, but if they consider governments' economic stewardship to be foolhardy, why would they consider the wisdom of miners, programmers or the crypto's regulating body to be superior?
What's left is the question of legality, anonymity lets users skirt the government's laws, which has value to basically criminals.
And dissidents and marginalized communities and activists and anyone living in an oppressive state.
Are you really trying to argue that anonymity is only valuable to criminals?
You're cargo culting.
They're still a solution in search of a problem, backed by tech people who think they understand what they are trying to replace.
Once you understand the fence you can tear it down, but cryptonerds really really don't understand law (they think smart contracts solve a problem) or economics.
Ironically people who actually work as blockchain devs are very chill about it.
We can be cynical about it but actually number of banks paid fines in the billions of dollars and they take it seriously now. Some hard hit banks like BNP that got fined for $9B would even refuse to work with cash intensive businesses.
The criminals need to go through trouble of creating shell companies to launder or transfer money, cash is no good anymore.
Crime is gone now? What else are they going to use?
Crypto is used by less than 1% of the world. All crime uses "cash" relatively speaking.
*a lot of it is "digital" cash but still.
Cash is now for petty criminals only. For anything beyond car level of money you need involvement of politicians or high end criminals.
They tend to use gold and fake bank transactions BTW.
Just today there is a trial of the Turkish bank Halk Bank that was allegedly caught laundering money for Iran. High ranking Turkish and Iranian politicians are involved, the funds in form of gold were transferred using private jets and laundered through Dubai. The defense of the person who run the gold operations includes Rudy Giuliani. The things are at that level now.
Start digging from here if you want to know more: https://en.m.wikipedia.org/wiki/Reza_Zarrab
'M0' is cash. 'M1' are bytes in bank computers.
It's really not a big mental leap from USD that doesn't physically exist (which is 90% of USD) to crypto which doesn't physically exist.
This is why Europe eliminated the 500 euro note, and the US doesn't produce bills larger than 100 dollars. The thought is these are largely used be criminals.
Similarly Modi's demonetisation which the intent was to remove black money from the economy. All bills of 500 and 1000 rupee were to become worthless if not exchanged by a certain date.
So they've heard about it.
This is the broken window fallacy writ large. The small value cryptocurrencies provide over other digital transaction methods is overshadowed by the huge inefficiencies of how transactions are processed via PoW. The fact that there are companies that have made a fortune dealing with all these "broken windows" doesn't change the basic fact that cryptocurrency is probably the least energy efficient way to move money digitally.
I’m not aware of any other digital transaction methods that can send un-printable money besides cryptos.
I think devaluing currency to inflate stocks and fund wars is harmful, and cryptos are a valuable solution. Although, I think there’s better than PoW.
That's because it's not a useful feature heh. Money is meant to be a medium of exchange and temporary store of value. To the extent it holds its value for the duration of your ownership of it, it's met its goal.
> Even if you convince the US government to switch to BTC
There's no need for that. It would be enough for some people to switch to BTC. I.e., not store their money or denominate their salaries in USD.
As things stand, most wealthy people already store their money in things other than USD that are somewhat less easy to manipulate, like stocks and commodities. It would be nice if this strategy were more accessible to people worldwide.
Oh we have don't worry. The proportion of cash used for illicit activities is much much lower than the proportion of crypto used for illicit activities. Especially once you remove speculation volume (which cash doesn't have). Then there's the whole new kind of crime it created - ransomware.
Plenty of work was done to ensure tracability of cash. Take large amounts in or out of the country? Form. Withdraw or deposit large amounts? Form. Act suspicious? Form. Structuring? Prison.
You can't really compare a system designed to circumvent regulations regarding transactibility to a system designed to provide as much oversight as is practical. They're not even in the same ballpark.
Cash is extremely difficult to use in criminal enterprises, especially with the USD. Large amounts of cash are bulky due to $100 being the largest note. Massive amounts of cash is difficult to convert to/from other forms of assets due to CTR, SARs and fed surveillance.
Cash as a vehicle for facilitating criminal activity by now is largely fiction. Even diamonds are easier than cash.
Bitcoin main use (regardless of what it was designed for) is for laundering money.
Also it's not a currency, but an asset - as it is designed to appreciate due to how mining works.
http://gm1-miwebvarnish.newscyclecloud.com/opinion/20201218/...
This seems weird -- compared to traveling by air amtrak has approx 0 security, no TSA equivalent, bag scan, etc(unless you check maybe).
If a country was running on a crypto coin which had a major hack, it could collapse the whole countries economy.
1: https://www.icij.org/investigations/fincen-files/hsbc-moved-...
2: https://www.investopedia.com/stock-analysis/2013/investing-n...
Also, holding a billion dollars in a form protected by a single private key is effectively putting a billion-dollar bounty on your own head.
This is a very under-appreciated point. US persons (citizens and companies) assume the US banking system for granted. Many countries (even some developed ones) do not have a developed banking sector and by consequence it is harder/expensive to make transactions, access to capital is limited and access to markets can be restricted which limits opportunity.
Crypto-currencies requires significant expertise, much more than the current banking system. Countries who will attract these companies and knowledge will have lots of sway in the international economy in the future.
I strongly dispute that claim.
After a decade of effort, tens of billions of dollars invested, and thousands of crypto startups, we still don't have a single successful business other than those selling crypto services. (To be fair, Brave looks like it might make a run for it. We'll have to wait and see.)
Pointing to the fact that some people arre making a lot of money does not validate a business model or a social good.
Even in the most vile and egregious scams, there are always some people making a lot of money.
I don't think you should group Binance with Coinbase. Binance is mostly unregulated, literally on the run, refusing to admit where it is headquartered[0], possibly because it avoiding paying taxes.
It seems like more and more likely that Binance is just a mechanism for CZ to exit via a massive BNB pump and dump.
[0]https://www.coindesk.com/binance-doesnt-have-a-headquarters-...
I would absolutely dispute this. Personally I think the vast majority of this is just rampant speculation, and bubbles are not business opportunities.
Well, unless if you're selling the equivalent of shovels.
What business opportunities have been created outside of the crypto space?
> i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures.
They may also leave themselves open to these currencies being manipulated by foreign mal-actors
They're probably just talking about all the pickaxe selling. NFTs are possibly an answer if you assume good faith and not just speculation.
I've seen the estimation that 40% of all bitcoin transactions are related to drugs. Hydra (russian dark web drug store) is still the biggest receiver of bitcoin transactions. I don't think that cash is anywhere close.
Cash sucks for illicit transactions, because laundering it is a pain in the ass.
A crypto ecosystem without strong KYC is much easier to use for illicit transactions. A crypto ecosystem with strong KYC... Probably isn't.
Tell me when 95+% of cash transactions don't serve any good purpose like it currently is with cryptocurrencies (speculation, waste of energy, malware ransoms, money laundering, hiding wealth / tax evasion, other illicit use)
What if I told you the Treasury Secretary doesn't think your book keeping system in the same as legal tender?
I will leave you with this: the reason why crypto will inevitably fail is because no one and no country will be willing to go to war to defend it. As for USD? There’s the single greatest military power assembled by mankind backing all US interests.
The idea that cash can't be laundered because it is tangible is laughable.
Why would letting people circumvent the laws of an oppressive state to move their assets to safer havens be a bad thing? If anything, this describes a bull case for Bitcoin - "use BTC to bypass your oppressive government!"
Unless we are pro oppressive governments here (which, by the comments, seems like a lot of people here are)...
This has already had varying levels of success with the Chief Legal Officer of Coinbase being the acting chair of the OCC and telling banks it was okay to custody crypto and settle transactions on cryptocurrency networks instead of just SWIFT, ACH, FedWire
There are some at the SEC, and the new SEC chair was pro-crypto when he was previously the chair of CFTC
Cabinet level positions and the Federal Reserve and Treasury would be ideal
If this is important to you, you don't have to be just a passive holder or entrepreneur. Use your platform to assume power. Make the world as comfortable for your generation as older generations did for themselves.
I'd perhaps quibble a bit to say US financial regulatory agencies can't be captured in the fashion of traditional regulators (where the "revolving door" is awful). This is because they were "captured from the beginning", operated specifically for the benefit of large financial firm from the very start. The Federal Reserve isn't even a traditional agency but public, private partnership ("has a 'unique structure that is both public and private'). EPA theoretically protects "the environment" a thing outside markets. Financial regulators protect markets. Protecting markets is completely compatible with protecting the profits of the largest players in the markets. So it seems logical regulators will remain "objective" in their assessments.
Enforcement divisions have sole heads who can make unilateral decisions that the commissioners never review.
Commissioners and Chairs can make make rulings favorable or ignore making unfavorable rulings, they can do anything they want regardless of what happens during the comment periods.
The CFTC, OCC, CFPB all have single head directors. The SEC has up to 5, and the FRB is the most decentralized but its Board of Governor's head is the primary sole signal to the international market on this entire planet regardless of how much they actually do behind the scenes. The Treasury doesn't have to be adversarial either, no matter how much it wants us to tie our national identity and ego to its currency, not all Treasuries or Central Banks have this concern.
Right now, crypto related topics are either ignored or adversarial. Crypto related topics can be collaborative or simply favorable.
Capture in this context (and all contexts of regulatory capture) just mean that someone joins for a certain purpose, does all of the other tasks correctly and with high competence, but also makes sure their single issue is protected.
I'd just point out that at the end of the day, broad power of social institutions are going to trump the overt lines of command.
Capture in this context (and all contexts of regulatory capture) just mean that someone joins for a certain purpose, does all of the other tasks correctly and with high competence, but also makes sure their single issue is protected.
Well, Regulatory capture can have a lot of meanings I suppose. One really pernicious phenomena is when things that don't have institutional power on their own ("the environment", "average people's health", overall cyber-security of the country, etc) get shunted aside for particular institutional interests (chemical companies, IoT sellers/consumers etc). This is the umbrella where "regulatory capture" lets these externalities run wild. Now, if you want to use "regulatory capture" as more akin the general phenomena known as "getting a seat at the table", know yourself out. The point is that seats of that allow some special consideration, yes, but you can't carve up existing institutions the EPA can carve up restrictions on pesticides. I wish it was the opposite, obviously but there you are.
1: https://seekingalpha.com/news/3679495-square-fidelity-coinba...
Let's see how this one does.
I would say it is slightly more than moderately successful.
The SEC still hasn't approved a digital commodity trust yet ("bitcoin ETF") but enough wealthy people are involved now that have created surrogates that it isn't as important.
Maybe some college kid in the late 2020s will make some Netflix conspiracy documentary about the "revolving door in crypto", I would call that success.
If stocks & crypto were less appealing, perhaps we would all experience higher velocity of money & inflation since demand would turn to "real assets".
Extrapolating any competence from policy makers on this is a bit too fantastic of a conclusion at this point in time. Cryptocurrency just does not have an adversarial relationship with the US government, and the musings of some policy makers that create existential threats just are not the opinion of an amorphous entity (which also doesn't exist). The longer the rest of us are familiar with the technology, the more likely the gradient shifts to a less and less probability of adversarial relationship with the US government.
Make the world as comfortable to the early adopters
If you ever thought this was going to be about a multi-decade long organic merchant adoption story, you were gullible af.
Make the world as comfortable for the early adopters [weighted from latest to earliest, so long as you're not left holding the bag] as the older generation had [before regulatory capture via industrial complexes and automation pooled more and more money to fewer and fewer]; FTFY.
The goal is not to make it impossible to use crypto but to make it so untrustworthy that nobody wants to touch it. Host mirrors of popular software wallets with hidden malware. Add backdoors to some hardware wallets at the factory. Create trojans that sit quietly and harmlessly until you try to deposit your coins at an exchange, at which point, unbeknownst to you, your compromised browser is displaying the CIA's bitcoin address instead of the exchange's as the place to send your coins. Make smart contracts with increasingly clever obfuscated time bomb backdoors. And it all comes with easy plausible deniability, since any of these tricks could just as well be regular old crypto thieves, highly motivated by the massive "bug bounty" on any exploit, including social engineering, that lets them steal coins.
Of course, the backlash if this was ever found out would be immense. It would basically be the US government operating a cybercrime organization. Many of the victims would likely be US citizens speculating in crypto. It wouldn't be worth it unless the powers that be decided crypto is THAT dangerous to the status quo.
[0] https://en.bitcoin.it/wiki/Common_Vulnerabilities_and_Exposu...
Obviously I am neither an economist nor a political theorist.
The purpose of the gun, it has seemed to me, is to get around the fact that fiat currencies have neither of the above properties, but that both can be enforced to some degree.
It is also inevitable, as any country that decides to ban it will eventually be forced to bring it back as soon as a rival starts using it.
Seems like some good fodder for a Mr. Robot-esque show or novel.
A) 95% of the discussions and focus on the strict monetary value of the Bitcoin as an investment and financial gains.
B) 5% are related to ideological concepts of a decentralized monetary system and how that's a very good thing.
I fail to see the real value for humanity in general for this, not to mention the environmental impacts of the energy consumption of the bitcoin mining operations.
I am open to reading other points of view.
C) failing to see value for humanity due privilege of having access to modern and stable finance (pick your own percentage)
Now, with major publically traded companies buying up other crypto-currencies, seemingly speculating on their rise in value, we may have a problem that compels some government agency to step in and ensure these organizations are truly acting in shareholder's best interests.
It's not a far stretch to see these events ushering in new crypto regulations.
[1] https://tradetheday.com/crypto-analysis/dogecoin-elon-musk-p...
Elon's said "Bitcoin is almost as much bs as fiat money" - so he likely doesn't see that as end up. Because of this I could see Tesla selling $1 billion worth of EVs via Bitcoin, waiting for that to reach $10-$20 billion+ in value - and then slowly selling off say $4 billion worth to prevent a price crash - and then dumping $10B+ all at once as an experiment.
Which reinforces my point - actions like this, by today's Tycoons and ultra-wealthy, will usher in a new age of crypto regulations since it is indeed the little guy being hurt by all this.
[1] https://markets.businessinsider.com/currencies/news/elon-mus...
My own piracy would go down another 50% if I had access to free/paid services like in USA. Then there’s the time I couldn’t play a movie I rented on my TV through Apple because I guess it didn’t like my old TV’s HDMI interface...
Online poker never went away but it also didn't take that much to cripple the market to a point it couldn't come back from.
It also somewhat caused all the scams and shady practices to see the light of day.
[1] https://www.justice.gov/opa/pr/global-disruption-three-terro...
In addition here is a real business (gpu.land) going only crypto as it provides better options:
“I’m reaching out to let you know that as of today we'll no longer be taking cards for top up, and instead we'll be taking crypto payments.
The problem is fraud. A lot of people try to use stolen cards to mine on GPU.LAND, despite all the defenses and pledges not to do it. When chargebacks come through, we're on the hook, and to date that meant losing 30% of our revenue.”
In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc.
Wait, wouldn't everyone who has your wallet id know what you spend your money on if you use crypto? It is a public ledger. I mean, you could go through the effort of trying to hide it by using various wallets, but that only adds plausible deniability.
If someone at your work or bank decide to track the BTC they give you, I'm pretty sure they will start picking up on spending patterns.
How would anyone at work know your block chain wallet hash? It’s a cryptographically generated hash not linked to any personal ID. People can see that money is moving around to different address and if law enforcement or mortgage advisor requested the exchange account details they could see you deposited this money in this address and then it moved to this address etc, but it’s not trivial to identify who owns any of those address once it’s left the exchange wallet.
If I was dealing with work people and trying to isolate them from other transactions, I’d just generate a separate wallet address for them which is trivial.
Write only data structures themselves are not new and not that valuable on their own.
But the interesting thing is the decentralized, trustless structures it enables. And just pinning that on blockchain sounds bad.
This whole things is still early and it is the basis of _a lot_ of speculation. But I see this whole ecosystem enabling a whole new class of self-governing communities, websites and structures, some good, some bad.
Likewise, I'd suggest that pinning the problems you suggest are solved with "decentralized, trustless structures" - ignores the fact of reality, the physical world and real trust networks, centralized organizations, that reflect the state of society; Bitcoin et al may be a bridge but attempting to circumvent and ignore the positives of institutions is a bad idea.
I mean, maybe? I did try to qualify with "some good, some bad", and I am certain some are bad, I'm not some idealist trying to sell you something. It just _does_ enable the possibility of circumventing institutions, and it will keep doing so, no stopping it, IMO.
> Give me a blockchain that isn't inherently structured like MLM-Ponzi schemes
Depending on your definition of "MLM-Ponzi schemes", it could be that the whole of human society might fall under it. Besides, I did mention I am not too fond of the "blockchain" name and think cryptocurrency is much more apt.
The software itself they can treat is as malware - blackhole IPs and shutdown any hosts involved.
If they were to kill the offramps, the ecosystem would move on websites on Tor or I2P that would work P2P, they can use high privacy coins such as Monero or zcash. Or people will trade it in person using escrow systems. It's not like the first BTC trasactions had the privilege of nice exchanges. The possibilities are there. Just the incentives are not yet present.
As a user of both types of services, I don't see what bringing them to the blockchain would do for me.
Personally, I think the idea of the physical nation state is converting to a global credit score, where instead of transacting across borders, you are transacting across classes of businesses and people, and tarriff and tax policy will be enforced on a risk basis instead of a national border one. Instead of black market electronic transactions, the transaction is just taxed at a higher rate because of the relative social credit score of your counterparty, so your transaction with a non-KYC enrolled wallet would incurr a 100%+ excise liability on your tax reporting. It's the sort of totalitarian idea that is appealing to the sort of people you really need a popular revolt against to unseat, but worth considering what they think about to remove their element of surprise.
May or may not be repurposed: https://www.goodhealthpass.org & https://www.lfph.io/ & https://trustoverip.org/
There's been talk of a KYC requirement for all customers of US web hosting because cyber.
How do you 'crack down' on a currency that doesn't require any existing state or bank controlled apparatus to operate? Other than the exchange point, which private exchanges for cash can circumvent, how do you crack down on what is essentially math conducted via computers that everyone has access to?
Neither the article, nor the linked one from December say.
[1] https://www.google.com/search?q=crypto+exchange+jail
[3] https://en.wikipedia.org/wiki/Currency_transaction_report
[4] https://en.wikipedia.org/wiki/Structuring
[5] https://en.wikipedia.org/wiki/Suspicious_activity_report
When you start getting into DAOs and their legal status and everything starts becoming murky.
Crypto has truly some of the most exciting developments taking place in the world today at the intersection of art, finance, law and economics. The quality of discussion on HN about crypto is woefully out of touch.
Suppose your government actually had to act this way in order to crack down on cryptocurrencies. Every prison would have its own Guantanamo bay for torturing private keys out of cryptocurrency users. And this is is portrayed as some kind of win or gotcha in the comic. The non-violent offenders glutting the prison system would sky rocket as judges have to hold people in contempt indefinitely for not giving up private keys(this has already begun happening in the US).
"Well you forgot to account for all the knees our liberal democracy would be willing to break!"
If that's what it takes then you've already lost. This is the private fantasy of a lot of individuals long on crypto and the broader decentralized trust-less ecosystem. Because the implied threat of force is often a much stronger form of social control than the actual use of force itself; which is expensive, unpopular, and broadly illegal in developed countries.
The ideology of this decentralized ecosystem mocks the myth of the benevolent nation-state prosecuting 'criminals' on behalf of its 'citizens'. A nation-state with the power and will to exist in such an ecosystem would be the most cruel and invasive authoritarian regime in human history. Any reasonable person can conclude that it ought not to exist.
So I say let the money laundering commence. Or people will leave. Or they wont be allowed to.
"private exchanges for cash" (that really would have to happen in person) will never, ever, replace the scale at which an online exchange that can deposit money straight to a bank account will.
The goal of a "crackdown" is never to eliminate something 100% (because as you noted, that is impossible).
Right now it’s market mostly dedicated to get rich quick schemes. While it works great if you’re on top of the pyramid, it’s only hurting crypto case for the future.
We are at the tip of the iceberg and nothing has been more disappointing than seeing the traditional tech world's dismissal of crypto as "get rich schemes". The tech world is surprisingly as complacent now as the legacy dinosaurs it first helped destroy in the 1990s and 2000s.
An example of really cool smart contract usage is borrowing against your crypto, for example, this person/group was able to borrow roughly 340M$ [1], the best part, they didn't even had to provide their name or deal with any other human, all enabled by a smart contract that they can inspect and verify.
The automation smart contracts can bring about is scary.
NFTs are the equivalent of trading cards or video game lootboxes. They enable a form of conspicuous consumption whereby you conjure up value by slapping a digital signature on something and creating artificial scarcity.
From the perspective of the state none of these instruments improve supply chains, enhance military or state capacity, increase productivity or growth. NFTs basically enable the uber wealthy to sell original versions of their artworks or whatever, they have no impact on real world innovation or mass commodity production.
In the simplest form, they can be used to fractionalize ownership. Integrate these ownership records with existing infrastructure and you can suddenly transform ownership and royalties.
I'll give you an example.
I'm an amateur musician and every pro musician I know has harrowing tales of being shafted by record labels. They have no power to negotiate because they need the money. Most get paid cents on the dollar and record labels keep the bulk of royalties.
Imagine a situation where a musician can mint an album as an NFT and put it up for sale. 100 people can buy 1% each of it. This entitles them to 1% of the royalties earned from the album. Since all this data is on-chain, it's easy to verify.
Now suppose there's a music platform integrates NFTs. Every time a user plays a song, the platform verifies ownership records from the blockchain and distributes royalties to addresses that own the NFT.
Suddenly, you've completely decentralized and democratized ownership. You've bypassed gatekeepers. And you've given the chance to anyone, no matter where they are, to invest in - and get invested by - anyone.
How is this not revolutionary?
Blockchain has lots of potentially interesting use cases like NFT, but crypto currency is still not one of them. And by not cracking down on scams in cryptocurrency will only make any future adoption harder.
NFTs main value proposition is fractional ownership and assertion of ownership rights in a transparent manner.
Imagine owning 1% of a Drake song - and getting paid 1% of the royalties every time it plays on Spotify. Or creating a yield earning strategy that automatically moves money around based on fixed paramters without ever interacting with a banker or fund manager.
The whitepaper should make for an interesting read: https://solana.com/solana-whitepaper.pdf
Even 9/11 is estimated to have cost the attackers only about $400K.
What costs is setting up an full-sized army, like ISIS.
In any case, good news for binance, bad news for coinbase
Mindshare like cancerous greed? Nations turning their backs on crypto“currencies” turn their backs on multi-level marketing pyramid schemes. Good riddance.
“Strong currencies are not the solution to poor governance. Good governance and democracy makes a country and its currency strong. Not vice versa.” —halukakin, HackerNews, 2021 —https://news.ycombinator.com/item?id=26105680, https://www.cynicusrex.com/file/cryptocultscience.html.
If the Fed wanted to "invest" in Bitcoin, it would kill it by soaking up liquidity and creating a liquidity-squeeze. Because the amount in circulation is fixed, it wouldn't have to buy all of the Bitcoin -- just enough to kill any utility. This is a downside of an asset with a fixed quantity.
Once the community discovered the liquidity-squeeze spike, it would lead to a run-to-the-exit with a price crash. The short-squeeze spike and crash would spread across alt-coins as well due to rush-in-rush-out and leverage across alt-coins.
Once liquidity is killed, liquidity-squeezed, and a crash happens, the FED / SEC could make it illegal citing volatility and losses of citizens.
The Fed would need to do this discretely and never disclose their purchases. If it became public, the community would probably choose to fork.
A purchase of bitcoin by the govt would massively increase the prices. Transaction of value by the big players would become even easier. The high degree of divisibility would ensure that small players could still play. There would be no more liquidity issue than there is currently.
Also like others have said, the price is divisible to many decimal places, and with consensus could be updated to be further subdivided.
Not to mention of the geopolitical consequence.
No, this "have the NSA directly attack the compute " is not feasible and would only strengthen its position in the long term.
Their general purpose servers are nearly useless for mining bitcoin because their hashrates are orders of magnitude lower than the ASICs that professional miners use. If you want to 51% attack bitcoin you either need an absurd number of general purpose computers (possibly more than all CPUs/GPUs that exist on earth) or pour billions into making hardware that can only be used to mine.
Source? Some napkin math using the current bitcoin network hash rate[1] and the price/performance ratio of a yet-to-be-released bitcoin mining ASIC[2] suggests that you'd need $9.5B to take over the network.
[1] https://www.blockchain.com/charts/hash-rate
[1] https://shop.bitmain.com/product/detail?pid=0002021022419553...
https://github.com/trottier/original-bitcoin/blob/master/src...
Bitcoin has to make it much easier for 3 letter type agencies to follow money.
My current guess is that they are going to pressure all the other coins, and come to some collective agreement after some farcicle fact finding mission ala 1907 to agree there should be some sort of central bank controlled digital coin... which of course they will control, but will lack anonymity. BTC will crash then. (but again, maybe I'm not the best person to listen to on this topic!)
I expect the most effective attacks would go after control of mining capacity, either directly seizing it or taking it offline.
I dunno if a crackdown is even going to happen, but in case it does, what's the plan?
Bitcoin and ethereum are almost certainly safe, but I there are a few on the periphery that are harder to gauge. Decentralized exchange tokens like 0x and rep / augur seem like they could fall on the wrong side of the law too. Lastly, I'm not sure how much I would want to hold stable coins like maker / dai.
And that's just Coinbase, ignoring Robinhood, Cashapp, Gemini, GBTC and lots of other exchanges and custody which have very significant volumes as well.
Bullshit. It's being used to get around the fucking enormous 33% taxes levied on the middle class to support Democrat and Republican donor's lifestyles.
evil eyes look everywhere
blind to my Monero
I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit.
It just sounds better to use the illicit boogy man.
There are already existing controls on cash transactions. If you deposit cash in a bank account, you need to prove your identity and you're subject to anti-money laundering surveillance. Securely transporting and storing large amounts of physical cash, outside of a bank, is very difficult. I imagine that making or receiving large payments with physical cash is often impossible or would attract a lot of attention from authorities and perhaps even criminals.
> I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit.
Gold can play the same role, and has been banned in the past, but is unlikely to be banned again. The more likely story is that there are serious money laundering and terrorist financing risks posed by Bitcoin's intended purposes, and governments are trying to figure out how to get a hold on the national security / law and order situation without being to heavy handed.
I actually think the speculative issue is a bigger concern for the fed, then the legality. It's an commodity w/ very little utility, but a high degree of poorly regulated investing. In addition its used to funnel payments for illegal activity.
I see a lot of misconceptions about scams and pump and dump schemes carried over from the 2017 run, and complete neglect of the innovations created since.
If anyone wants a refresher, I'm always willing to chat. I will also write a primer to help get folks up to speed on what's the latest in crypto.
But just posting them instead of threatening would lead to better discussion overall.
I'm not a boomer, and I even own a decent position in BTC / ETH.
The most "mainstream" revolutionary idea in crypto right now is automated market makers (AMMs) like Uniswap. These essentially allow anyone to create a "pool" to trade between two assets and earn fees from it.
You can tokenize any asset, pair it with a liquid token (such as ETH or USDT) and offer it to anyone to trade while you earn fees. Or you can join an existing, popular pool (such as between wBTC-ETH) and earn fees on any trades that happen on it.
Essentially, anyone can:
- Create a decentralized exchange economy
- Participate in existing exchange economies with any amount of capital and earn fees from it
The latter part is important because that's been the purview of banks. Countless trades happen between currency pairs daily. Banks earn all the fees because they supply all the liquidity. You can't participate in that market even if you wanted to (or unless you had tens of billions in capital).
AMMs turn that around. You could have $1 worth of liquidity but you can still earn fees on it.
This is the first time in the history of finance that creating and participating in exchange economies has been so cheap and accessible. I think that alone is revolutionary. It makes previously inaccessible financial avenues available to the little guy
A bank can legally process a person who fails to come through on a loan. They can physically take stuff. A decentralized crypto network can't do anything to anybody. It can just take the marginal collateral and then the rest swallow the losses...
I feel like defi crypto types discount the power of the physical world.
I am certain they will at some point try, but fail miserably.