Turkey Bans Cryptocurrency Payments
bloomberg.com
bloomberg.com
Also the idea that we can bully or criticize governments into adopting crypto by calling the ones who don’t “tyrannical” is especially naive and hilarious to me. By virtue, the truly tyrannical do not care about being called such.
Slowing the spread of a virus and dictating what people can trade with is an apples to orange comparison. This is not a good rebuttal.
You don't have a constitutional right to own absolutely anything, though. If you buy grenades, for instance, the state will seize them and imprison you. Someone already mentioned Executive Order 6102, regarding gold.
I could buy a Tesla with Bitcoin, but what good is that if I have to pay capital gains tax for "selling" the Bitcoin even though I didn't actually sell it, I used it?
You would (almost) never pay cap gains on cash even if the law required it, because cash goes down in value over time. Everyone knows this, so no one holds cash, they buy stocks, bonds and realestate. When it comes time for the Tesla, they have to sell those assets, pay cap gains, then buy it, just like BTC. If you wanted to avoid cap gains, your only choice is to hold cash, in which case you would have less overall money at the end.
tl;dr: all appreciating assets are encumbered with cap gains, the only way to avoid it is to buy non-appreciating assets, which is worse
I don't see that happening anymore. There's too many startups with too many smart people working in the space and a LOT more people (including the legislatures) invested in Crypto.
But, if you believe otherwise as a capital market participant, buying and holding Bitcoin is a fine play to back such a belief.
History suggests that won't last forever, but it probably won't be COIN shareholders or activist hedge funds that forces a regime change as big as that.
I expect stronger condemnation towards "anonymous" cryptocurrencies (Monero, Zcash et al) and making onboarding/offboarding for them more difficult, but that's about it.
That your savings' purchase power depends on Chinese electricity plant operating hours doesn't feel weird to you ? I prefer when it evolves slowly with the national debt :D
The internet would be terrifyingly easy to shut down. Point blank. For the truly technical and nerdy, maybe we could return to a Usenet situation but for the overwhelming majority of people (and it is the size of the user base that gives the internet (and supposedly crypto) its power - network effects) all it would take is shutting down ISPs, which historically are extremely compliant with legal action. Just try torrenting something and you’ll quickly realize how little your ISP cares about the “free and open internet.”
Also, I don’t see how Turkey’s ban is “silly” in anyway. Crypto is banned there. That will deter the vast majority of people seeking to use it. The ones who manage to weasel around using arcane technical methods will find themselves in an empty room - what’s the use of owning crypto if no one accepts it?
There are other things, like shutting off some exchange points/fiber optic network that would have a serious regional effect as well. It's all very possible to do.
I mean, when your currency is being heavily devalued, putting your free cash into anything else is beneficial. The Turkish airbnb hosts I spoke with years ago had euro bank accounts, and immediately fx'ed into euro whenever they got paid. If bitcoin is too difficult to get then Turks will just go back to putting their money into euro.
Oh, and they can all still access bitcoin markets in a manner opaque to local government via a trl -> eur -> btc path, and if they need some local currency, via the reverse. Any Turks in Europe with contacts back in Turkey: you could probably make money facilitating this.
> I don’t see how Turkey’s ban is “silly” in anyway.
It's silly because it's unenforceable, and trying and failing to enforce unenforceable laws just makes you look weak. The storefront bitcoin brokers in Istanbul will have to shut down, but money is already digital and it's going to flee a sinking lira whether it's into crypto, foreign exchange, real estate, precious metals, art, or whatever.
If governments are so powerful, why would they ever feel the need to ban cryptocurrency? If they are not so powerful, how could they possibly succeed in banning them?
The government could roll over your tiny little hovel with tanks and jets, and you won't be able to do a thing about it.
https://www.coindesk.com/russias-darknet-criminals-have-a-no...
It will be impossible to regulate on and off globally. Yes banning mainstream access will drop demand and access to crypto currencies temporarily but long run the government currencies are in a losing battle. Improved scaling solutions, micropayments, and privacy upgrades are all coming soon. Bitcoin already processes more reliably and with greater transactions than Fedwire.
See, you seem to think what is required is a 100% shut off. If the US government could kill 70% of access within its borders tomorrow, the technology would not have a bright future.
>Bitcoin already processes more reliably and with greater transactions than Fedwire.
I have no idea what this is supposed to mean seeing as it has no empirical content, but it's beside the point. You can't do shit with Bitcoin. USD is the reserve currency of the world. That's what matters right now, not what you consider to be technologically superior.
This is far different from battles such as PGP's export as a munition [1], which at least had freedom of speech protections as the argument for challenging the US government's position and regulation.
[1] https://en.wikipedia.org/wiki/Export_of_cryptography_from_th...
The difference is that Bitcoin now has billionaires and multinational companies that have it on their books. Money talks, and government officials in democracies are unlikely to make a move that will rock their donors too much.
In general there is no incentive for other governments to follow suit because those which don't institute bans would stand to profit more by taxing their miners.
This is the case for all decentralized crypto currencies. If you don't know who's appending the chain and thus creating currency and/or including transactions, you cannot be sure it isn't your enemy.
I think crypto proponents have exaggerated the threat that cryptocurrency poses to government controlled currencies. The narrative plays well to audiences that distrust institutions and want to be early adopters of a new cryptocurrency paradigm (in which they would be at the top of the wealth spectrum), but the reality is that cryptocurrencies are additive on top of existing currencies, not replacements.
In practice, average people in average countries (e.g. not Venezuela) benefit more from having centrally controlled currencies than they lose. Average people also benefit from having an established currency rather than being forced to switch to one that is majority controlled by a few early adopters. If you think wealth inequality is bad now, the wealth inequality in a hypothetical Bitcoin economy would be orders of magnitude worse.
The idea that one day Bitcoin will reign supreme and everyone will be forced to buy 0.0000001 Bitcoin to get any transactions done is attractive to someone who wants Bitcoin prices to go the moon, but the average person wants nothing of the sort.
Debt levels are quite high, so governments must either continue expanding the money supply or must increase interest rates and bankrupt a significant proportion of citizens. It's not an easy choice and throughout history most governments have chosen the devaluation path.
Please explain, is this belief because wealthy people have front run Bitcoin by accumulating it early on?
As it stands now, fiat currency drives wealth inequality when the federal reserve injects trillions of dollars into the system. That money makes its way to store of value assets like stocks and real estate. Poorer people tend not to own those assets, but of course would one day like to. Since most of their net-worth is comprised of cash, they suffer the most when cash is devalued by printing. Every day that passes makes it more unlikely that they will ever own those safe haven assets, or they'll own proportionally even less.
In a Bitcoin economy, there is no flip of the switch, no button to be pressed that allows this to happen. In a hyperbitcoinization event, where all the world's wealth is transferred into Bitcoin, the earliest people are rewarded the most. But no further arbitrary devaluation of assets can occur. Monetary saving power is restored to people, not governments.
That’s of course still tied to the money policy controlled by Fed - the trend in the latest few months is coming up with a coin that is by design stable and therefore useful as a day-to-day currency, but the supply is controlled by a DAO.
This with Turkey is a good example. If it's illegal for a business to accept crypto, there's nothing crypto can do about that. Turkish businesses need to comply or face fines and shut downs. What do you think will happen most likely?
First-world governments that are relatively constrained in what they are allowed to do to their citizens may be unable to ban Bitcoin even if they wanted to.
It only takes a few bad actors to do something nefarious for the US to ban it. After the ban Bitcoin might still continue to exist but it won’t be institutionalized and so it will loose it’s appeal.
Also, for people who think the US does not have the power to ban it, see this:
https://en.m.wikipedia.org/wiki/Gold_Reserve_Act#Litigation_...
By anonymous I meant if the user takes reasonable precautions then it’s very very hard for law enforcement to know who that user is.
The transaction log is public but who is actually behind those transactions is not.
They'll not rollover. But it'll happen in two ways: 1. They don't understand it (never underestimate the stupidity of politicians and regulators) and thus they'll either allow it or not know how to stop it; or 2. Crypto is widespread and the government has little control over on-off ramps. It doesn't help that crypto-currencies wreak havoc on their economy stability (which further makes them unable to control the population).
Otherwise, people could still trade on off-shore exchanges, and exchange secretly (drugs are still selling on the streets, aren't they?) on the streets.
Historically (re: recent history of Venezuela, Argentina, Zimbabwe ) crypto assets’ “clunkiness” and functional downside aside- get rapidly adopted when the centrally managed currency loses confidence of the people. This further threatens this “central bank managed currency” via accelerated wealth outflows, in this case of the Lira - and all other reasons mentioned smell like cover to me.
This ban is but a reaction and protective measure to slow down wealth transfer out of the governments reach of regular Turkish citizens. A closer look at the state of the Turkish central bank and drivers of monetary policy would likely also reduce your confidence that they know what they are doing and this is a broadly anti crypto move. As a result, this ban has nothing to do with thought through policy. It’s meant to limit outflows from the Lira as the Turkish economy sadly spins out of control.
It's extremely surprising because the Turkish economy was doing well until 2018. The only thing it was lacking was a properly set interest rate, which requires high central bank independence, the primary factor in low inflation.
CPI Turkey 2020 14.60 %
CPI Turkey 2019 11.84 %
CPI Turkey 2018 20.30 %
CPI Turkey 2017 11.92 %
CPI Turkey 2016 8.53 %
I mean, I hope they're getting control of it, but I certainly wouldn't want to be owning any Lira any time soon.
In any case, given that I have yet to see a single non-criminal, non-speculation use for crypto at any real scale, I find ideas that would normally sound a lot like conspiracy theories much more plausible.
> A lack of regulation, supervision mechanisms or central regulatory authority, combined with the potential for criminal activity and the high volatility of their market value, mean digital tokens entail “significant risks,” the central bank said in a statement on its website.
How is this different from any other raw material that one can use to purchase goods?
If a store allow it, one can buy goods in gold, silver, chairs, or Magic: The Gathering cards, which come with all the same problems.
> [the chief executive] officer of BtcTurk, one of Turkey’s largest cryptocurrency platforms in terms of number of clients [said] “This mainly targets electronic payment systems.”
Consider what would happen if you sent fiat to a group recognized as a supporter of terrorism. You can do so, but it is not legal.
What remains to be seen is if Turkey is an outlier, or the start. Monetary and currency policy is power, and crypto's value store is fragile, teetering on the whims of nation states.
On the other hand, banning things in the digital realm is rather difficult. Unless you go completely offline in practical terms, there is no real way to stop this type of communication.
Alternately all of the transaction history is public and recorded. Once you catch someone you will be able to trace all or their activity semi automatically, and you only need to make a few big examples to teach people what is more risky -turkish jail for financial crimes or not using crypto.
The us or China could crash the value of these crypto currencies in a single act. It's a very fragile system.
Unregulated crypto is a giant bubble that damages countries abilities to regulate their own economy.
Crypto isn't required for peer to peer electronic payments. That's not an argument for crypto it's an argument for e-transfer.
Also, PoW != Cryptocurrency.
And it's not easy to go out of the loop corrupt dictatorship -> poor population -> corrupt police -> easy crime -> order needed -> corrupt dictatorship supported
You have to look at the total investment rate and the total savings rate. Over the long term they should not drift apart and for low inflation you want the savings rate to exceed the investment rate. When people decide to cut back on consumption .i.e. they want to save, they will save regardless of what savings vehicle they end up choosing. The real interest rate (interest rate minus inflation) is way too low for the Lira. A bank account with Lira deposits is simply an extremely bad savings vehicle. People just stop saving, or they put their savings elsewhere, mostly USD, EUR and sometimes Bitcoin. Banning foreign or cryptocurrencies doesn't really do anything, it's akin to pointing a gun at someone and saying they should put their money into a bank account anyway.
Ok, lets assume a perfect savings vehicle called SV exists (0% yield and 0% volatility). We can benchmark the yield of currencies against this savings vehicle. For the sake of the argument assume that Lira has 10% inflation and 0% interest then it will have -10% yield. Picking SV will grant you 0% yield, which is 10% more than the Lira.
If you raise the interest rate to 10% then the Lira will have 0% yield. It will be equivalent to SV but SV is considered more trustworthy. SV has effectively set a lower bound for interest rates. Any lower and people will just run away from the Lira. Therefore the interest rate must be higher than inflation and this premium depends on how confident "savers" are. You are basically pricing in the default rate.
Let's apply this to a different market. The US (corporate) savings rate is so high that negative interest rates are necessary, the problem is that treasury bonds put an effective 0% interest lower bound. Interest simply cannot shrink lower than that because lower interest rates will simply lead to purchases of treasury bonds. The answer in this case is to raise inflation instead because it acts as negative yield on excess savings. The easiest way is to simply print money and hand it out to those who plan to spend it, the increased spending will drive unemployment down. Another solution is to just increase the investment rate so that excess savings are being soaked up and interest rates will rise naturally.