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Comment by hellow0rldz | Hacker News Reader

It doesn't matter. Making a wire payment or paying with a card is also surveilled and archived until the end of time.

BitCoin's major purpose is as a hedge to massive fiat printing.

No, they are recorded. The government needs a warrant after convincing a judge that there is probable cause that you have committed a crime before they can pull your bank records. When you use crypto, you're just broadcasting every transaction to the world, so they can just watch.

Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.

> The government needs a warrant after convincing a judge that there is probable cause that you have committed a crime before they can pull your bank records.

Unfortunately, transaction records like financial records are currently afforded a very low level of legal protection in the U.S., so the "warrant" and "probable cause" parts don't describe current practice. (That would be the case for a telephone wiretap, or a search of your home, but not for access to your financial records.)

https://en.wikipedia.org/wiki/Third-party_doctrine

One thing that I don't think the press ever managed to chase down -- following the Snowden revelations -- is the rumor that there was also a "bulk financial records program" which would have involved intelligence agencies and/or law enforcement getting access to search all bank transactions, without any individualized suspicion. (Recall that one thing Snowden revealed is that there was a bulk telephone records program, in which telephone metadata was turned over to the government in bulk, without individualized suspicion, which the government justified in part due to the third-party doctrine.)

In the government's view, the third-party doctrine means that it's never a fourth amendment violation if the government compels access to most kinds of transaction data in the possession of some kind of service provider or intermediary. (Some of those kinds of data may have higher levels of statutory protection but the government's position, as I understand it, has been that it's not an infringement of your fourth amendment rights even if those protections are circumvented or ignored.)

The Third Party Doctrine does not apply to Bank Records since the Right to Financial Privacy Act was enacted in 1978. Cops need a warrant to pull your bank records.

Thanks, I didn't know about that and I'll have to look at that some more.

(Technically the third party doctrine would still apply in any case, because this would be a statutory protection rather than a constitutional protection.)

Yeah, most times the Third Party Doctrine comes up these days afaik is with location tracking services.

EG, technically cops don't need a warrant or subpoena to ask Google where you were on a particular day. Though, in practice, they often still get one because they know that it's kinda unfair and judicial or statutory protections are probably coming soon and they don't want to jeopardize the prosecution should the law change during the investigation.

For example, the January 6 insurrectionists are largely being caught through location data obtained under warrant from Google. Do they technically need the warrant? No. And if they were investigating, like, shoplifters, they probably wouldn't have bothered to get one. But they don't want to let thousands of insurrectionists off the hook in case this is the case where the courts decide to flip.

"Presumably". In truth they are filtered and data mined on the spot.

A cross-country wire payment visits multiple jurisdictions already with the US getting first dibs via SWIFT.

My local IRS can also read them.

So they are effectively public for all major actors.

> Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.

And I'm saying its main purpose is not to avoid surveillance but at as an inflation hedge.

The fact that the governments also see in real time should count as a vote of no confidence.

    >>> The government needs a warrant after convincing a judge

In theory yes, after the Snowden papers do you really think the NSA didn't find a way to weasel around these restrictions?

Granted, it's not for your local drug dealer but for higher level surveillance.

> The government needs a warrant

not everywhere. In some places in Europe (e.g. Germany) the IRS is able to pull up your banking history without the bank having to notify you, and they can query a subset of the info (time of account opening, current deposit, personal info) without even notifying the bank.

AFAIK in Germany they can ask you to submit your banking history for tax purposes (for example they have doubts about your declaration), if you fail to submit it or refuse, they can go to the bank, but you are notified way before they go through the bank and if you comply with the request, they don't go to the bank at all.

Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.

quick googling would show that your knowledge on this is dated (laws changed in mid 2000). See linked article[1] (or many other articles like it - it was a huge topic at the time creating much outrage).

The bank will not be informed of the invasion of privacy (the excuse is so that banking customers don't have any negative impact when they realize customers get probed - it's probably more to avoid spooking the public about the frequency of how often this happens).

> Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.

you're mistaken. These are the organs which have automated access (in addition to the IRS):

  -  social services
  -  job center
  -  bailiff
  -  state attorney
  -  customs authorities

it's designed to put pressure on low income groups in society, while the HNWI's and corporate big fish can cloak themselves with an armor of impenetrable offshore tools[2].

[1] in German (just run through any translate service): https://www.vlh.de/wissen-service/steuer-nachrichten/kontena...

[2] https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...

Would a government need a warrant to pull records from an exchange to connect it to a real identity?

The usual way bitcoin payments are traceable are due to crypto-fiat exchanges requiring that information (AML & KYC regulations).

Wouldn't that make it effectively equivalent?

Only if they can't get you with public information. Suppose that your transactions reveal enough about you to allow the government to profile you, arrange a stake out (and thus get you in another way) or something like that. Or you could have left some trace in a direction which is not that much protected (like you bought something physical which has been delivered to you).

> BitCoin's major purpose is as a hedge to massive fiat printing

Do you know what else is a great inflation hedge? An index of stocks. Unlike BTC, the stocks also pay dividends, are backed by real economic activity, enjoy massively lower volatility, don't suffer from large fees, are never going to be banned, aren't tainted by endemic fraud and scam, and even produce a tiny bit of societal good. Stocks are objectively a better inflation hedge than BTC in just about every aspect, apart from not being a novel tech bro toy.

I like to think of it like this: am I going to give my money to a network of computers that will make heat and burn coal just to maintain a small global ledger, or will I give my money to an organization of people who will presumably try to build a better life for themselves and others, and maybe accidentally burn some funds along the way? I'm giving my money to people.

So you only participate in IPOs? Otherwise you probably buying your shares from a market maker, which runs computers that make heat and burn coal to take advantage of a small difference between buy and ask price.

Comparing apples vs container ships.

With bank ledgers, the computation energy is a minimized side effect that does not even show up as a rounding error in the financial reports of companies, and they do tens of thousands of transactions per second.

For cryptocurrencies, burning the energy is a key feature - 100% correlated to the proof of work and increasing by design. This achieves handfuls of transactions per second with energy burn exceeding that of nations.

Children's cartoons make better representations of the real world than that post.

In a 'normal' economy that would make sense. However, Central Banks have gotten involved in buying stocks and as such, stock values have been hugely inflated. Many companies that might have otherwise not succeeded in a 'normal' market might have been able to survive due to QE. Which is part of the reason why more and more investors try to find alternative investment opportunities like metals and crypto.

Caveat: some established crypto (not BTC) have lower transaction fees and entry requirements in some countries than the stock markets.

I can't help add a cynical comment: BTC is also backed by real economic activity, it's "just" the legality that makes it different.

BTC like fiat money is not backed by anything. Anyone claiming otherwise just show they haven't got a clue what "backed" means.

I'm confused. Isn't the US dollars something like a legally-backed "we-owe-you" of US goods and services? Why else do non-US residents value the USD? And why does EURUSD vary with relative economic output of the two countries?

I can issue fiat money myself. Here: "I owe you 5 CKD." What is the value of that? Zero. You don't know me, you have no reason to trust me, you cannot take my IOU to court and force my property to be seized. Your 5 CKD is worthless, in contrast to 5 USD.

> I'm confused. Isn't the US dollars something like a legally-backed "we-owe-you" of US goods and services?

Not at all. You can't take your dollars to the issuer (the Federal Reserve) and have them redeemed for goods and services. They are not redeemable, hence not "backed". Fiat simply means not backed.

> Why else do non-US residents value the USD?

Do you mean why they demand USD? For different reasons. One reason is to pay for goods and services imported from the US. Another reason is to use it as reserve currency.

> And why does EURUSD vary with relative economic output of the two countries?

It doesn't.

The value of fiat money is maintained by the issuer though. How does this happen? The Government demands payments of tax etc in this issued money. Means you need to have this funny money otherwise you go to jail. After a while we also get used to it as "an accepted means of exchange". But the value of course will quickly evaporate if the authority of the Government goes.

The ability to pay taxes with a currency is indeed one of the reasons people will demand that currency, but this doesn't mean its value is maintained by the government. History has shown repeatedly that a currency's value can collapse while people are still required to pay taxes with it.

I agree and I'm not saying to only pick one hedge.

Extraordinary. I will tell the people of Venezuela and Argentina to drop their savings in Bitcoin and get stocks. Such a great idea, they will see the benefits within the year.

What do you have against fiat printing?

I wouldn't have anything if I would receive any of it. But otherwise it seems to devalue the fiat I own so we have to come up to solutions to counterbalance that.

It apparently doesn’t, look at the inflation of japan and how much they’ve printed money and you will see that there are many more factors than impact inflation.

probably the potential of rampant inflation. When a government summons trillions of dollars into existence (like most governments have been doing throughout the pandemic) it dilutes the underlying value of every single unit of currency in circulation. Its not nearly as simple as "double the money supply == halve your current cash's value", but some amount of dilution and inflation are definitely happening. BTC is theoretically a good hedge against this as it is deflationary by design.

I learned the other day that this is not necessarily true, as long as the money printed creates value. Japan is an example: they have printed tons of money and haven’t had inflation.

I have read about that too and know that there is quite a big debate about inflation. I still think that modern economic systems are sufficiently complex that there is no one person or government on the planet smart enough to allocate printed money in a way that is always 100% efficient - some amount of dilution is absolutely going to occur when you just will a couple trillion dollars into existence and inject it into the economy. Hopefully the value is greater than the dilution, but its not always going to work that way - this is what a well balanced portfolio will counter.

One can argue money printing has really worked out for the US so far...

There is potential for hyperinflation, just like having a police force means there is a potential for extrajudicial killings and all sorts of nasty stuff. The thing is when was the last time a western country experienced hyperinflation? I think Germany in the 1930s. Hyperinflation is a made-up problem.

Who said anything about hyperinflation? Regular inflation occurs constantly (and by design) and must be compensated for. If you just leave your cash in a checking account and walk away for 10 years you will come back to radically less buying power than when you left it - the number might be the same, but the total money supply will have grown tremendously thus reducing that money's buying power. According to inflation estimates $1 USD in 1970 was equivalent to almost $7 USD in 2021 value. The point of an investment portfolio is to outpace this dilution so that your wealth grows and you are not diluted into ruin by the printing of new money. A balanced portfolio that has some percentage allocated to instruments that tend to hold a steady value or grow inversely to inflation are critical. BTC is shaping up to be a good choice to add alongside of gold and other precious metals which have historically been used for this purpose. It is short term VERY volatile, but long term it has consistently WAY outpaced inflation.

No. The point of an investment portfolio is not to outpace inflation. The point of investing (in general) is to trade an amount of present consumption for a greater amount of future consumption. This is true whether the inflation rate is positive, negative or zero. If you simply save and hedge against inflation (i.e. you invest in something that provides a real rate of return of zero), then it means you're trading an amount of present consumption for the same amount of future consumption. In other words, you lose because you're not getting compensated for delaying consumption. At any rate, neither gold nor BTC are considered good investments by people who know anything about economics and finance, since neither of these assets provide income, but of course feel free to invest your money in whatever you like.

And you as well mr all knowing sage of finance

Hyperinflation can happen in any society if the productive capability of the society goes to the shitters. Printing money does not trigger such a collapse though. So if anyone is scared of hyperinflation, look at how industries and services in the country do instead of at how the money supply change.

> The thing is when was the last time a western country experienced hyperinflation?

So it's alright because western countries aren't suffering any side effects?

> Hyperinflation is a made-up problem.

My country suffered hyperinflation multiple times. It was so bad we had to create new currencies with every iteration. I think the most recent episode happened in the 90s or so.

It inflates the money supply, reducing the value of the money we already have. Inflation is essentially a tax that gets constantly applied.

It devalues everyone's hard work, other than the ones who will benefit from it. Then people complain about the wealth gap.

In the United States, most people are in debt. When you're in debt inflation doesn't devalue your hard work... it devalues your debt.

For most people in the United States, some inflation would be objectively positive.

[0]: https://www.bankrate.com/personal-finance/debt/average-ameri...

It definitely devalues your hard work, it becomes very difficult to save. Some people don't want to go into debt because they don't engage in usurious transactions.

In fact, I've never met anyone who wants to go into debt, and yet here we are in the real world where "The bottom half of Americans combined have a negative net worth,"

[0]: https://www.businessinsider.com/bottom-half-of-americans-neg...

In objective reality, setting aside philosophical objections to usury, since inflation devalues debt as well as savings it is a net benefit to the above mentioned Americans.

We wouldn't be having this discussion in the first place if people refused to engage in usury.

I know nothing of BTC but how would you stack it against gold, real estate, other traditional stores of value as a hedge against hyperinflation?

You want to own all of those if possible, but for normal working people bitcoin is easy way to convert fiat into a asset.

Given each bitcoin breaks down into 100 million sathosis you can always buy/sell parts of a bitcoin. Doing the same with other assets classes is harder or not even possible.

Fiat is money not backed by a commodity. What commodity was it again that backs Bitcoin?

Fiat means "by decree," I don't think it means anything about being backed by a commodity.

Dollars used to be backed by gold and it was still fiat money.

Bitcoin is backed by its own scarcity.

"Dollars used to be backed by gold and it was still fiat money." - This is just plain wrong.

Fiat money means exactly a government-issued currency not backed by a commodity such as gold.

https://www.investopedia.com/terms/f/fiatmoney.asp

I'm questioning Investopedia here.

Fiat is typically contrasted with commodity or representational currencies. The key element is that fiat has no intrinsic value. It's usually issued by a government, but need not be. The value comes from faith.

Bitcoin meets all the qualifications save government issuance. The bits themselves have no value. The currency's value is based on faith in both the underlying computations and in the existence of a market for trading bitcoin.

Wikipedia gives the definition "often by government regulation" (implying not necessarily) citing Goldberg, Dror (2005). "Famous Myths of "Fiat Money"". Journal of Money, Credit and Banking. 37 (5): 957–967. doi:10.1353/mcb.2005.0052. JSTOR 3839155. S2CID 54713138.

That definition is wrong. "by fiat" does not imply a commodity, it was just one of the many alternatives

By which definition Bitcoin is still not a "fiat" currency, since it is not government-issued.

Technically correct however ‘fiat’ usually means both legal tender and government-backed too

technically they didn't say that bitcoin wasn't fiat, but that it hedged against massive fiat printing, presumably referring to the fixed issuance schedule.

Why does a fixed issuance schedule give it value?

Just because something takes a while to produce does not give something value otherwise I’d be making a killing on my Etsy store

Also that fixed schedule will end soon.

the idea being that the schedule is known, and therefore, in comparison to something that can change and have large issuance, you can be confident that the particular cause of "because a whole bunch got printed unexpectedly" won't cause it to become devalued, as opposed to other options.

Doesn't mean that other things couldn't cause it to be devalued.

(and, of course, if the network consensus shifts in a way that changes the issuance rate... though perhaps it wouldn't really "be bitcoin" if that happened.)

It makes no difference if its a known schedule. A schedule still only matters if it has value to begin with.

What exactly does btc solve or bring to the table? People buy it “cause it goes up”. That won’t end well.

Feels like a bunch of people buying digits rocks.

It seems that you think I'm arguing in favor of BTC being successful in the long term. That's not what I'm doing. I'm explaining the idea of it being a hedge against the printing. I'm not advocating for buying it on that basis, or on any basis.

All I'm doing, is explaining as best I can, why someone might see it as a "hedge" against large amounts of money printing.

If it is valued by people at some time (it has a price that people are buying and selling it at, whether in exchange for some currency like USD or for pizzas), and the value for the USD (in the sense of "how many pizzas / market-basket-of-goods does it buy?") is going down as a result of the quantity of money being printed-and-introduced-into-the-economy being unexpectedly very large, if that sort of event isn't positively correlated (as in, in the probabilities that people assign to future outcomes) with the value (in the same sense of number of pizzas) of btc going down, that could be something people see as merit-worthy in it.

People conceivably could want to hold something which is both easily exchangable, and highly subdivisible, and which has such a property, .... provided that they didn't expect the number of pizzas it buys to rapidly decrease.

I do wonder though, why there isn't simply a common financial instrument which pays out with the price of some market basket of goods at a designated time? It seems like such an instrument would serve much the same appeal.

Perhaps the issue is that, in order for people to be willing to issue such an asset, one would have to pay them a large amount to account for the risk that they are taking on?

There's also the issue that one would presumably have to keep actively buying more of such an instrument if one wanted to hold large portions of it over time.

> Feels like a bunch of people buying digits rocks.

I think it's more like digital beanie babies but to each their own :)

> soon

In the year 2140. And the end strengthens the point you're disputing.

History is on my side here. A currency that can’t be produced anymore doesn’t last long as a currency.

Energy. Also Math.

Math isn’t a commodity, and it’s not backed by energy as you can’t trade Bitcoins in to get energy back.

Right, it’s more like being backed by a derivative of energy; based on local power prices, seasonal variation and political climate. It’s a strange concept. Redefines “backed”. Backed means ‘security of value’ and this in bitcoin comes from mathematics of cryptography and energy in proof of work.

I've heard this before and tbh I think it's like issuing receipts for 1 (one) barrel of oil that has already been consumed. Like, yeah, someone spent effort making it, but what does that do for me?

From a mathematical crypto standpoint it's sorta good, but again what value has been created? It's not like the blockchain is now saving us time and effort in factorization that can be applied to real world problems that would otherwise need to be recalculated regularly, which is a pity.

Of course you can truthfully say fiat currencies are totally notional, but as a practical matter the value of a fiat currency reposes economic stability and security offered by whatever government issues it (which may or may not be valued by other people).

That’s not what “backed” means.

A backed currency means another entity is willing to guarantee they will trade the currency for something else. In the example of the gold standard, this means the government would exchange dollars for a certain fixed amount of gold. This meant that dollars could be worth more than gold, but theoretically wouldn’t fall below their fixed value in gold, because at that point people would trade them in for the gold.

You can’t just redefine backed to mean something that is expensive to produce. If something is expensive to produce it also doesn’t mean it has any intrinsic value.

(I’m also not arguing that modern fiat currencies are backed - in fact they are not backed by definition! I just get frustrated by all the fake economic mumbo-jumbo about Bitcoin).

This expands the definition of "backed by" into meaninglessness.

I used to be able to trade dollars for gold and vice versa, at a fixed price, guaranteed.

I can't trade bitcoin for 'math'. No-one is storing energy reserves in case there's a run on people converting bitcoin to energy. Bitcoin is not backed by anything.

You can't trade money to get time back but you probably sell your time pretty often.

Correct - But that doesn’t mean that money is backed by time, either.

You're arguing semantics, switching between a strict definition of "backed" and thinking of value as it suits you.

And if you want to be that picky, Bitcoin is backed by math and energy (or at least heat). You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.

> You're arguing semantics, switching between a strict definition of "backed" and thinking of value as it suits you.

Can you show me where I'm swapping? I don't think I am. It's not semantics anyway, its a fundamental definition of what a backed currency means! The value of my car isn't backed by all the petrol I have used in it, nor is bitcoin backed by the electricity used to produce it.

> You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.

This is not what backing means - at all. Backing doesn't mean "is expensive to make", it means its value "has a direct correspondence to the cost of another commodity".

So a few questions to test if it is backed:

* Is the price of bitcoin directly linked to the cost of electricity? (No - there is a relationship between bitcoin price and the amount of energy used for bitcoin mining, but I can't track electricity and use that to guess what the cost of a bitcoin is and visa-versa). Meanwhile, Tether IS backed by USD so I can use the historic value of tether in BTC to act as a proxy to understand how much BTC cost in USD.

* Have we seen the cost of bitcoin track global electricity prices? (No!)

* If abundant cheap energy is discovered tomorrow, does bitcoin become valueless? (I believe no, it maintains value!)

Almost all modern currencies aren't backed, nor do they need to be, so this is a weird hill to fight for.

Given how electricity has pretty much become synonymous with labor. I would say Bitcoin is backed by electricity given how Iran and Venezuela are doing oil/gas etc trade with bitcoin seems like you actually can get commodities out of it.

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