Hacker News Reader

Comment by sneak | Hacker News Reader

This is going to be the rationale given for the heavy-handed cryptocurrency regulation they're going to bring down on all the exchanges that US persons can access.

Pretty soon all you'll be able to legally access as a USian is "Bitcoin!(tm)"[1] (like what PayPal is doing), not the actual uncut blockchain bitcoin that you can send and receive at will.

[1]: https://www.epsilontheory.com/in-praise-of-bitcoin/

View on HN

Personally, I don't see the problem. 1. Bitcoin drives up GPU costs. 2. Bitcoin makes it ridiculously easy to commit certain forms of crime. 3. And Bitcoin's energy footprint hurts the planet.

4. It snuffs those pesky troublemakers and brings them back in line through monetary inflation across generations.

Monetary inflation can also be a good thing as it reduces wealth inequality and income inequality.

It doesn't, quite the contrary. Poor and middle class people hold much more of their wealth as cash than rich people.

Only if the newly-created money is distributed, and doesn't just belong to the Federal Reserve.

As the system works now, the Federal Reserve prints the money and gets to spend it, and I can't imagine a more unequal income.

More like increases inequality [1][2]. If you're rich, you have access to rock-bottom interest rates which you can then invest. If you're an average citizen, you watch all asset values (real estate to start with) soar while your income stays relatively stable.

1: https://www.clasp.org/blog/how-inflation-reinforces-economic...

2: https://www.theatlantic.com/ideas/archive/2019/11/income-ine...

Bitcoin has been around for less than twenty years. Since then it has seen massive deflationary periods (when the relative value rises, like up until a month ago), and massive inflationary periods (when the value drops) In 2018 bitcoin had an "inflation" rate of roughly 500% (meaning that at the beginning of 2018 you could buy a basket of goods with an equivalent value of $13.5k USD, at the end of the year you had to spend 500% more bitcoin to get the exact same basket of goods. Meanwhile you only had to spend 2-3% more USD to get those same goods)

The fact that there aren't bitcoin loans is proof that it is not a viable store of value.

There is volatility for sure. But the same is true for any asset: stocks, bonds, real estate, even gold. Albeit not as much as a currency only around for 20 years, as you said.

As for loans, lots of exchanges let you trade with leverage, effectively trading on borrowed money.

Also, there exist institutionally backed Bitcoin options: https://www.cmegroup.com/trading/equity-index/us-index/bitco...

Putting an entire society under ubiquitous surveillance to catch a tiny minority of criminals isn't a good bargain. Fact is, though, that's not even why they do it.

Eventually you get to the point where you see that the information and ultimate large scale control permitted by the collection of that information is itself the end goal, and that it has nothing to do with detecting or preventing crime.

It's easier to trace Bitcoin than cash.

Which to me sounds like a better argument to NOT make it illegal. From the perspective of government that is.

They'll hold off on regulating Bitcoin until it starts being used to get dirty money out of America.

When that happens they will suddenly remember that its use value is strictly limited to illegal transactions and speculation.

Might be too late by that point tho.

Isn't that what happens when extortion gangs from Asia and Europe extort American businesses?

Already happening with 'unhosted' wallets being blocked or heavily scrutinized. My personal experience is as follows:

Sent over 20 transactions from US exchange -> US exchange and no problems.

Sent a single transaction from my unhosted software wallet -> US exchange, and got my account locked. Questioned on everything including my employer's information, had do re-do advanced KYC, source of funds etc. (The unhosted wallet was funded from an exchange which makes it stupid, and i didn't use any coinjoins or anything).

I wonder how exchanges know each other's addresses? Don't they tend to use a new address for every incoming and outgoing payment?

Do they have private API's to verify addresses?

They are fairly easy to pick out simply based on the way money flows in and out of the addresses. Also, they become known over time as customers share them then they are eventually labeled by companies (exchanges included) performing blockchain analytics. Many of the public blockchain explorers show labels for popular addresses. I've seen labels on big exchanges, Satoshi's coins, seized silk road coins, coins from hacks, etc.

Which exchange were you withdrawing from?

To be fair it was a regulated stable-coin issuer based in NY where i was redeeming stable-coins for USD, so the strictest of all AML was to be expected. I was just surprised the tech is already in place for a travel rule for crypto. If i would guess it would've been a company like chainanalysis aggregating the exchange data to enable this.

Will increase the utility of decentralized exchanges like Uniswap and DeFi in general. The more CEX gets regulated the less people will want / need to use them.

Yep, that's what people don't understand, you can ban centralized entities as much as you want, but you can't stop people from running arbitrary code on their devices which means it's impossible to shutdown a properly decentralized network.

If you can’t convert back to a national currency, nobody will care.

If you can use it as a currency some will care.

Yup, and its only a matter of time before a uncollateralized + decentralized stable coin takes over from USDT/USDC…

Reply on news.ycombinator.com