Infrastructure bill cryptocurrency surveillance provision is a privacy disaster
eff.org
eff.org
While the language is still evolving, the proposal would seek to expand the definition of “broker” under section 6045(c)(1) of the Internal Revenue Code of 1986 to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets” on behalf of another person. These newly defined brokers would be required to comply with IRS reporting requirements for brokers, including filing form 1099s with the IRS. That means they would have to collect user data, including users’ names and addresses.
The broad, confusing language leaves open a door for almost any entity within the cryptocurrency ecosystem to be considered a “broker”—including software developers and cryptocurrency startups that aren’t custodying or controlling assets on behalf of their users. It could even potentially implicate miners, those who confirm and verify blockchain transactions. The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users.
Or as it is otherwise known, abide by the same KYC rules as banks.
I'd guess the vague wording is to allow regulators and the judiciary to respond flexibly to changing practices. It might be broad but it isn't poor lawmaking: it does exactly as it intends to. Even using brokerage as an analogy makes sense to respond to a system in which by design almost everyone of significance is a middleman of some kind.
Fundamentally this is what will allow bitcoin to thrive: this is part of the process of becoming legitimised. It isn't what the crypto-libertarians hoped for, but what they hoped for in the beginning was endless deflation, untaxable income and speculative gains. It wasn't good for anyone but them.
This is a step to something better, namely a new financial system in which upstarts are able to enter quickly and on technical merit alone. That is worth a lot, and won't happen without bitcoin entering the regulated mainstream.
Upstarts are able to enter quickly based on technical merit alone RIGHT NOW. How does adding regulation simplify that for them? It doesn't - it makes it far more restrictive. You must be on crack to believe these provisions "help" crypto assets. This bill goes against the design philosophy of peer-to-peer transactions.
Yes: because that design philosophy is counter to that of consumer friendly, regulated markets. What will make bitcoin mass market is the ability of regular investors to get involved with the kind of safety net regulations require. The alternative being that bitcoin maintains its already shady reputation as something for money laundering and buying drugs (crack, perhaps?) online. Cleaning up that reputation and its causes is the job of regulation, and it will work.
This proposed regulation doesn't address the problems you evoke, and its an attack on fundamental human rights such as privacy.
[1] https://www.forbes.com/sites/haileylennon/2021/01/19/the-fal...
The regulatory system, and people who are ok with deferring to it in its existing incarnation (i.e. the revolving door between people within TBTF bailouts-every-day with "open" "market" operations banks [where these cash dollars inevitably end up] and the people who "look" after them system), are fine with this because slaps on the wrists and fines are considered the cost of doing business and there can't be anyway possible to live and exchange value without them being involved under the guise of "protection" or "else" racket.
Robin Hanson would probably call this phenomenon a form of "Elite Tax" on society. [0]
[0] https://www.overcomingbias.com/2021/08/how-high-our-elite-ta...
I don't think "design philosophy" will be enough, though. The points to make might be more like: is the regulation in normal finance fit for purpose? Should there be an electronic version of cash within some limits and could that be partly done with crypto (same discussion as with CBDC at the moment). Should there be a difference between an individual miner and an industrial one?
Failing financial systems can have huge social and policy implications so technical merit is but one consideration.
This is a trap I've seen many technical folks on HN fall into - they define "useful" along the lines of "beneficial", or "productive", or "worthwhile", rather than simply "is used". Think of casino tokens. They have no intrinsic value, and can only be used within very limited set of environments, so you could think of them as useless in the strict sense. But that doesn't stop large numbers of people using large numbers of them on a regular basis, and the operators make hundreds of billions a year from the people using them, so they are "useful" in the sense of "being used" to serve a strong human desire (just not to make the world a better place).
So, sure, cryptocurrency startups can innovate a new way of making money. But it doesn’t make them useful. One could argue it doesn’t even make them not harmful.
Those are huge valuable use cases. However it doesn’t follow that we should necessarily facilitate those uses.
(This question often leads to moving goalposts and quibbling over definitions of "useful innovations".)
To my thinking, provably fair casino games are a useful innovation that sprang from cryptocurrency. Decentralized poker is another. If you find the entire global gaming industry useless, then I guess those are also useless innovations. Again, that's a value judgment.
I don't think it's fair to conflate the people/businesses trying to profit from the crypto speculation craze, pyramid shemes or shitcoins, with e.g. businesses that want to accept crypto to avoid paying a % of their income to Visa. Yet that's what this law would do.
Very good point about the provably fair casino games. I didn’t even know they exist. However note that casinos are regulated too - you can’t eg serve minors.
> We believe you had drugs on you, even though we couldn't find them. We also see you play World of Warcraft and that you're used the in game auction house to sell your items for in game money to other players. If you don't please guilty to the drug charge, we're going to hit you with 1,000+ counts of of violations of the IBCSP (or whatever this law is called); you'd be looking at 1,000 years in prison and a 1,000,0000$ fine, minimum.
The US government _does_ things like that. And, as such (because they have shown they cannot be trusted to act in the spirit of the law), we need to limit what powers we give them. I find it astonishing that anyone doesn't realize this.
It just puts a nail in the coffin of the idea that blockchain is going to be some libertarian dream of freedom from regulation and a magic bullet for getting around rules. Of course this was coming.
Do they define digital assets? Because my Google Doc is a digital asset. If I transfer it to a friend, is Google now a broker?
Citation needed.
Also, why do you think crypto people think that rich people should pay no tax?
Anyone who believed governments of the world would sit by and say “oh, a technology that can greatly aid in tax evasion, we’ll just let this grow with zero input from laws” are fooling themselves.
If adopted, a cryptocurrency can perfectly serve an ecosystem as an exchange of value, without ever crossing the barrier to the mainstream monetary systems. I.e. a loaf of bread for a certain fraction of a Bitcoin.
Sure, most minor barter transactions are ignored as de minimus, but that does not make it legal (i.e., not tax evasion).
So paying your neighbor for a loaf of her home baked bread with a wad of coupons for the local store (or Satoshis) is probably ignored because she is not an official business, but if you do the same at the store, or she grows to anything beyond casual home cooking, the store and your neighbor will need to pay both sales tax and income tax - in fiat - on those transactions.
Same goes for us trading anything large, say we barter my car for your boat (or a bunch of BTC, gold, gift cards or whatever), we'll have to pay taxes on the transaction, in fiat. And we may have the additional pleasure of needing to get an appraisal too.
So the idea that crypto currency could never touch fiat was never anything more than a lovely figment of the internet imagination.
That's why bundling taxes in a few non-optional packages is so important. Otherwise people will try to selfishly evade paying for services they believe they don't need, and needlessly pry into public finances despite having no expertise in it.
Meanwhile, in the real world, without such wealth taxes, the problem is not' how do we accept all these donations and what do we do with the surpluses?'. The problem is that the wealthy spend enormous sums both capturing regulators to minimize tax, setting up legal structures to avoid tax (trusts, corps, etc.), and setting up outright illegal global tax evasion schemes.
What you propose does not even work on the scale of a condo building. That Miami building that collapsed couldn't even get agreement for years in time to expedite critical repairs, and it killed like half the residents.
Even myself, I'm proud to pay my taxes, understand that in every large complex endeavor or system there will be significant things that can be called out as 'waste', yet I also take advantage of every tax break my accountant recommends.
Enjoy your fantasies, and let us know when you are interested in joining the real world.
(It's an unfortunate feature of the weightlessness of modern money, crypto or otherwise, that proportionate privacy is now hard. In the old days, if you wanted to move a lot of money, especially internationally, you had to go to a lot of physical trouble: https://www.rte.ie/news/newslens/2019/1204/1096878-poland/ ; this was hard to hide and easy to intercept. Nowadays you could theoretically move billions with a brainwallet. The binance cold wallet is twice as much as the Polish wartime gold: https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
So we end up with a situation in which in order to track the large transactions a system is built which tracks all transactions.)
Mining is a core function. None of it works without that (or staking, which is equivalent). A miner is not able to know who you are, since the regulated exchanges are not reporting their KYC to all the miners. Making miners responsible for sending 1099s would effectively make it illegal to run public blockchains.
A very rough sketch of such a system:
- Any exchange that wishes to offer crypto services to US citizens must do KYC according to the existing regulations.
- Those exchanges make available each day a file with all the KYC-ed wallet adresses.
- Miners can theoretically choose which transactions to include and which to reject, but at the moment the main (only?) criterion is how much fees are attached to the transaction. You could mandate that they also do a lookup into the KYC data and only accept the transaction if the sending address is present in the list.
- I could even see the SEC or some other central body (perhaps one per country) maintaining such a list, exchanges submit their lists and miner can download it. This is already done in several other sectors of the economy.
And why would you do this? The KYC you're making public is already available to the government, and the on-chain transactions are already public.
Progressive taxation benefits society at large.
... claim the poor and the people who make their money off capital gains.
Who gets to decide what "good for society" means in context of taxation is possibly the most political question out there. It is not at all obvious that making the most productive people pay most of the burden gets to the best outcome.
the opposite arrow is not necessarily true, but one wonders if there isn't a 'baby with the bathwater' effect with progressive taxation.
As a software dev that can be a hard pill to swallow.
It is one philosophy that there exists some line, some fuzzy DMZ that gets crossed between being merely "wealthy and more prosperous than others" and obscene. Colloquially that seems to be "billionaire" but I bet a lot of people on the farther-left would define is somewhere north of $10 million.
Especially in a country so far behind the rest of the developed world with regards to access to health-care and housing for so many millions of people.
Though, of course, you then need even more reporting than we already have, but it would have the upside of no longer disincentivizing work like the current system does, and rewarding savings over spending too.
And from the perspective of someone who actually works in tax: the "FairTax" simply pushes all the complexity to everyday transactions, instead of minimizing it to periodic transactions occurring 1-2 times a month (with reporting once a year). It would hugely disincentive paying for actual things, and artificially incentivize (untaxed) services over (heavily taxed) goods.
Moreover, the "FairTax" rate would be 30% or more on all purchases. Not only would the FairTax would obscenely regressive in effect, but a tax rate that large would push a substantial portion of the economy underground!
There's so much wrong with "FairTax" that it should be called "Ridiculous Tax."
While I agree with much of your post, current taxes on income (featuring reduced taxes on capital income, exclusion of most income from gifts/inheritances, and supplemental taxes on labor income [“payroll tax”]) absolutely disincentivize working for income if you have choices of how to get income. Now, lots of people don't have choices and are stuck with work, but that doesn't mean there is no disincentive effect.
(Of course, “treat income as income” makes this much fairer than the status quo, much less the laughably misnamed “FairTax”.)
(Note: payroll taxes such as FICA, etc., actually phase out pretty quickly after $100k in earnings, so they're regressive in nature. There is the high-wage supplemental tax, but this is offset by the cap on income subject to SSI tax, so workers earnings more than $140k actually pay less in payroll tax.)
That being said, I agree that capital gains should be treated as regular income (as it was historically, pre-Reagan) and that income received via gift/inheritance should not receive a FMV cost basis.
I think the people who argue for higher taxes on wealthier brackets also argue for capital gains to be taxed at a similar/equal rate to income.
The actual effect is that you need to actually have a huge wealth disparity between partners' earnings for the so-called marriage penalty to kick-in. Fox News notwithstanding, the overwhelming majority of married couples will not see a marriage penalty.
Even if you did not mean to suggest FairTax and you mean something very different, your proposal still ends up being significantly more complicated than an income tax, since now taxpayers must track all purchases made over the year rather than the relatively limited sources of income they have. Your proposal would increase the compliance burden on buyers, sellers, and the government.
By not tracking purchases individually, and only inferring the total amount of money spent by subtracting savings from income, you can also apply brackets to purchases, and thus avoid the regressive nature of a "simple" flat sales tax.
Not to mention there are many efficiencies that come with this system which would likely cause prices to even out over time near their current levels or just slightly higher.
Savings: unknown (held in cryptocurrency, private)
Tax: divide by zero error
Besides, doesn't the US already have sales taxes? Or are they state-only? I'm starting to favor a tax on real estate and/or land value, since that's physically impossible to hide.
State. City. County. Sub-divisions of same that are special sales tax districts and have extra sales tax applied. Not every instance of those entities applies a sales tax, but any could and many do. Basically everything except federal. The sales tax where I am, in a "red" state, is about 11% (we actually have a really high effective all-inclusive tax rate in this state, for how entirely shitty government services and infrastructure are)
> I'm starting to favor a tax on real estate and/or land value, since that's physically impossible to hide.
The challenge with that is the system for assigning value—everything else about it is easy. We already have something close to what you'd need in the US because real estate property taxes are common. That system's not perfect but it may still be good-enough, despite its flaws. It seems to work kinda OK. That might change if that became a more important revenue source, and for more levels of government, though.
There will always be a black market, but eventually that money has to flow back into the regular economy (food, housing, etc...) and will be taxed.
And nothing of value will be lost
One cold hard look at https://usdebtclock.org/ is enough to convince me that paying taxes to the US government is not a moral imperative. Every penny I pay is going towards paying off a massive ever-expanding black hole of debt that is mathematically impossible to ever pay off, the government is going to spend the same amount regardless of the revenue it collects since the Fed just prints it all anyways. So what's the point in "paying your fair share" in such a system? You'd be a fool not to evade as much as you possibly can.
There are definitely bad tactics and real loopholes, but this isn't the main problem. The real problems are more subtle and they require trade-offs.
These problems won't be solved as long as the tax code remains as complex as it is.
Massive tax regulation is a surprisingly recent invention.[1]
[1] https://www.politifact.com/factchecks/2017/oct/17/roy-blunt/...
EDIT: the parent author's very strongly worded statement isn't true. I'm trying to add clarity to a vague statement, not wage an ideological battle.
I fail to see how this is a "privacy disaster." It looks like crypto brokers are going to be treated like all other brokerages.
Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?
Bitcoin is basically digital gold, and just like with gold, when you chose to buy or sell it the convenient way (eg. through an ETF instead of actual physical gold), it gets reported to everybody.
You can always custody your own bitcoin and find partners to transact with directly and choose not to report it (like with physical gold), but, similar to physical gold, it will be extremely cumbersome, risky, and not worth your time to do so.
https://greentradertax.com/a-case-for-retail-forex-traders-u...
Sure, if you bend over backwards and squint through one eye, you can contort yourself into the bad faith interpretation that developers will be treated as brokers--given they can engage in "transfers."
But just because some entity can be considered to exist on the same "continuum" as crypto brokers, doesn't mean there isn't a clear division between them: https://rationalwiki.org/wiki/Continuum_fallacy
One could also contort themselves into the assertion that convenience stores engage in transfers with "digital assets" (shifting credit via digitally created loans provided by Visa).
Maybe I should publish an article saying this legislation will require 7-Eleven to report to the government every time you buy a twinkie? That'll really get some clicks!
> the proposal would seek to expand the definition of “broker” under section 6045(c)(1) of the Internal Revenue Code of 1986 to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets”
Then this appears to be false
> something that isn't actually in the legislation
Because "digital asset" is extremely broad and can easily be seen to cover things like video game inventory items.
Is there a specific and detailed definition of "video asset" in the legislation?
I believe digital asset is a defined term in this legislation, though the quote doesn’t show any capitalisation.
These definitions are critical and updates to modify a definition without modifying the text can still have dramatic affect.
Practically, the Secretary and the courts will decide what this means.
If you’re using in-game tokens to represent value and maintain a ledger, then sure, that could count. Which is good. why should it be possible to sidestep this law by creating a coin that is liquid and fungible and has etfs that track it but just happens to be used for in game purchases? That would be a silly and absurd loophole.
If your in game currency is one-way, ie can’t be converted back to USD or any other assets, then it’s by (legal) definition not representation of value.
Because if I make a game where items drop, and players can transfer items between each other, but not convert any of it to real world money... then making the system, or possibly every single player, be responsible for reporting all activity and participants to the government is... to be blunt, bat-shit crazy?
Beyond that, it depends, but the answer definitely isn’t “no”. That’s true even today, btw: game companies can’t knowingly allow money laundering through their in game currency, for example, and gambling laws almost always apply if you can cash out and the game contains any type of chance component (eg loot boxes).
Basically, if your game is setup in a way that could be trivially used for transferring real world assets between players, even existing regulations probably already apply. This is one of many reasons most games only support one way transactions — you can move money into the game but not back out (at least without breaking tos)
“X but in a video game” is almost always actually really X when it comes to money and other assets that can flow into and out of the game easily. A VR Wells Fargo branch is still a bank.
That's a pretty far cry from needing to report "user data, including users’ names and addresses" for every in game transfer of digital assets. (As noted in another message, it's still unclear to me if that's what the bill is requiring).
> Value sometimes expresses the inherent usefulness of an object and sometimes the power of purchasing other goods with it. The first is called value in use, the latter value in exchange. Value in use is the utility of an object in satisfying, directly or indirectly, the needs or desires of human beings. Value in exchange is the amount of commodities, commonly represented by money, for which a thing can be exchanged in an open market. This concept is usually referred to as market value.
Conceptually, in game items certainly have a an "inherent usefulness", in that they make the game more enjoyable for the person (or person's character) that possesses the item. This value is transferred between players regardless of whether or not the game provides a way to convert it to real money. For all practical purposes, it is impossible for any game that supports trading assets between characters to completely prevent interactions of the form "if you give me this item, I will give you some amount of real world money".
It seems that any in game assets meet the legal definition of value (that I understand from that page). This would mean that any transfer of said assets between characters would need to be reported on.
I'm open to clarification/correction, with a clear statement that my understanding of this is extremely limited. But it seems like the above is accurate. And seems to fall into the previously mentioned "bat-shit crazy" bucket, if true.
[1] Value https://legal-dictionary.thefreedictionary.com/Value
(Digital) representation of value means something more specific in the context of securities law. Something that has intrinsic value but cannot be used as a medium of exchange, unit of account, or store of value is unlikely to be regulated as a security.
There's the thing though. The minute you get to the point where the law is ambiguous, you start seeing law enforcement using it as leverage to get what the want. If the bar is "can they convince a judge that this should count", then they an use it to screw someone over.
I'm in favor of strong limitations on the powers granted to government officials, because there ARE bad apples; and giving the good apples power means the bad apples can decide to ruin someone's life because they can.
But thank you. I very much appreciate you taking the time to put forth your thoughts / knowledge on the subject.
Regulations are rarely explicitly legislated because legislative bodies don't have the time or expertise to maintain the specifics of regulations. Of course, you always want there to be appropriate scoping, but some division of responsibility between the executive and legislative branches is necessary.
I think a good middle-ground here is the updated language from Wyden et al.. I'm not sure how much leverage they have, though -- (D)s won't defect over this issue and it's unclear whether people like Toomey could be brought on board. And if it's not going to flip votes, then changing the language isn't really worth the lift. I would guess the best way to get this change adapted would be to pressure Toomey to vote on infra but insist on this change -- a single additional (R) in the Senate would make this language change over night. But, again, I kind of doubt Toomey considers this a wedge issue.
> If the bar is "can they convince a judge that this should count", then they an use it to screw someone over. I'm in favor of strong limitations on the powers granted to government officials, because there ARE bad apples; and giving the good apples power means the bad apples can decide to ruin someone's life because they can.
It's not just a judge or a single official. The Secretary will create rules through the regular rule-making process. And then those rules might be challenged in court.
>>Law professors and lawyers instinctively shy away from considering the problem of law’s violence. Every law is violent. We try not to think about this, but we should. On the first day of law school, I tell my Contracts students never to argue for invoking the power of law except in a cause for which they are willing to kill. They are suitably astonished, and often annoyed. But I point out that even a breach of contract requires a judicial remedy; and if the breacher will not pay damages, the sheriff will sequester his house and goods; and if he resists the forced sale of his property, the sheriff might have to shoot him.
>>This is by no means an argument against having laws.
>>It is an argument for a degree of humility as we choose which of the many things we may not like to make illegal.
Pardon me for having a legal education and knowing that prosecutors are often more than willing to bend over backwards and squint through one eye.
If it's possible for a prosecutor to argue it, they will eventually argue it, and most of the time the courts won't push back.
They only need the thinnest veneer of legality in order to abuse their power.
You mean that squinting and bending that DAs often do to get some ridiculous plea bargain from some innocent schmuck?
Yes, I do. The IRS has slowly gathered power since 1913. Federal taxes were supposed to be short term and temporary, for war levies and such.
Furthermore, the tax code within the constitution controverts itself: "all Duties, Imposts and Excises shall be uniform throughout the United States" - I.8.1
It results in yet another area where "laws are for little people."
Yes. Do you not? They have no right to that information. Why do so many in the "hacker" culture simp for the authority structure?
Pretty sure I get to call myself a hacker in any sense of that word.
I’m a fan of KYC and paying taxes precisely because I’m a hacker and can immediately see how easy it is to hack civil society without those things.
Also, this isn’t a forum for hackers in any definition of the word. It’s a public discussion forum run by and often for the benefit of a powerful and rich VC firm with substantial investments in alt fin tech speculation. are you sure you’re not the one simping?
(Personally, I think the wording has to be tightened. My only stance is crypto should be on-par with other banking laws. No special treatment. Crypto should (hopefully) succeed but shouldn't become a refuge for money laundering, facilitation of crimes and other less than desirable activities. It could lead to long term harm for the ecosystem than adding KYC and making it mainstream.)
If you don't believe that the government should be allowed to attempt to tackle money laundering, that such crime is simply to be shielded at all cost from being reduced, then that's another.
So the question is "what do you want?".
And the cryptocurrency community has been completely unable to present anything that isn't literal anarchy or feudalism. And guess what, nobody will be able to sell anarchy or feudalism to the general public, or even outside a very very small community.
This other comment said it better: https://news.ycombinator.com/item?id=28047145
"Disaster" is a loaded word, but of course it would be a huge privacy improvement if they didn't!
This isn't like that at all. This would be like the government requiring Microsoft to KYC every single user of Excel, because people use their software to manage money.
This is like saying "The Internet is for porn" because that's your only exposure to it. Yes, it's the most common early use - but it's very far from the only use.
If you couple things badly, you can end up with more responsibilities than you want
The central premise of these projects is that humans make terrible decisions, markets make good decisions, so let's replace humans with markets whenever possible. Right now, some exec at Google determines how many ads you see on the Internet. The premise of Brave & BAT is that you decide whether you want to see ads on the Internet, you get compensated for viewing them, and if enough people decide the ads are not worth their time, they'll turn them off and drive the price of BAT up enough that people do want to view them.
Right now, some exec at Amazon decides how much you pay for S3. The premise of FileCoin & IPFS is that lots of ordinary home users have spare hard drive space, and they should be able to be compensated for renting out that space to projects that need lots of distributed storage. The market price of FileCoin is that which equilibrates demand for storage with supply.
S3 is centralized.
This is not an apples to apples comparison.
Compensation is what is driving the decentralized ecosystem (including payments, file storage, among the other things mentioned in this thread).
Yes. Clearly.
My car doesn't keep an up to date record of my name and adress so it can report my position and speed to the authorities. Warrantless wiretapping is illegal in most (every?) form outside finance, and there's no justification for banks or investment firms being any different.
Governments have a right to make laws, they don't have a right to continuously monitor every citizen to enforce them.
Yes.
I run a HFT operation, and just computing my US tax returns required thousands of lines of code of custom software. And then to actually file it, I print off a PDF, thousands of pages long of each and every individual trade. Not a CSV, not a data file, literally a printout. As if some IRS accountant is going to manually go through millions of rows line by line with an adding machine.
Of course, the IRS cannot and will not check every transaction. But I do wonder if they actually verify some subset of the reported transactions, or would this only happen in an audit?
There are a lot of positive or interesting aspects to crypto, but the prevalence of tax evasion, money laundering and grifts of varying scale dominates the conversation. Regulation is inevitable.
That's the point. They reserve the power of arbitrary enforcement early on because they don't know what the stuff they won't like will look like. So then they'll go after anything they don't like and leave it up to the courts and the legislature to clean up the mess.
Does that include PDFs, audio books, software, and photos? Web apps or plugins? “Asset” is monstrously vague.
Does Drivethrurpg have to worry about this?
Cryptocurrencies are not "clever" for avoiding laws.
The willful stupidity that a lot of posters on here need to engage in to get some crypto bashing points is amazing.
Ironically, this will not hurt crypto at all. It will only hurt US companies by driving them out. US residents will still be able to access and use smart contracts supplied by foreign startups unless the government makes crypto completely illegal.
In that law, anyone who actively assists in the transference of valuable tokens need to ensure that they're not assisting in the transfer of value that originates from crime.
And since a miner has explicit choice of what transactions to include in the block, this means that they cannot hide behind a "common carrier"-like[2] exception.
[1] Nope, don't even pretend to be a lawyer in secret, and I may have missed some subtleties. [2] This is basically what protects the inter-bank transfer services, the banks themselves are on the hook for preventing money laundering transactions to get that far. But since anyone can place a transaction into the pool, this is not applicable.
so running your own bitcoin node lands you with one foot in jail
“Require new surveillance of everyday users of cryptocurrency;”
What everyday users? There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.
”Force software creators and others who do not custody cryptocurrency for their users to implement cumbersome surveillance systems or stop offering services in the United States;”
Not offering these services seems like a positive outcome.
”Create more honeypots of private information about cryptocurrency users that could attract malicious actors;”
Losing your money to malicious actors is a standard part of the crypto experience already. Endless scams and ransomware don’t seem to worry the author.
”Create more legal complexity to developing blockchain projects or verifying transactions in the United States—likely leading to more innovation moving overseas.”
Ah, blockchain innovation, which is somehow so vital to the shining future of mankind, yet has utterly failed to produce anything of technological or economic value with the billions already invested. Overseas sounds like a fine place to continue this pseudoinnovation charade.
One quiet place where blockchain makes sense is shared ledgers between large financial institutions, JPMorgan for example is working a lot on this. It's not about privacy or usurping the social order or whatever imaginative solution to all of society's problems that gets attached to so many other things... it's just a better API between institutions for transferring ownership between themselves, which is a frequent and often awkward (and ancient) tech.
With blockchain you don't need a third party, with big institutions "theft" doesn't make sense. If there is an error and a transaction needs to be reversed it's in everybody's interest to do so and expected to happen from time to time and likely a built in feature.
Simplifying way back end transactions between banks is pretty nice... for banks, but pretty uninteresting to most people because it's just about settling daily balances between institutions and the like which is really boring.
https://en.wikipedia.org/wiki/Payment_Services_Directive
Usually refusing to share information or API is a business choice. Besides, once you have a closed group, you just have signed transactions ("permissioned blockchain"), and can (must) ditch proof-of-waste. So it barely resembles what people normally think of as blockchain and starts to look more like signed git commits.
When all parties are trusted there aren’t necessarily any crippling tradeoffs, you get mathematically provable ledgers with no need for a central trusted clearinghouse.
You might not like cryptocurrency, but this is akin to the infrastructure bill having a provision classifying anyone "responsible for and regularly providing any service effectuating encryption of information" as a munitions-dealer -- with wide downstream implications on (1) open source software, and libraries like OpenSSL, etc, and (2) vague enough to cover pretty much every webmaster who uses TLS certificates.
https://www.google.com/search?q=encryption+munitions+1990s
And of course the t-shirt:
I'd feel a lot more sympathetic if crypto uses cases didnt predominantly fall into those two camps (as is the case for cryptography).
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
It's really much simpler than people make it seem.
If you know more than someone else, that's great—please share some of what you know, so the rest of us can learn. If you don't want to do that, that's fine, but then please don't post.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
Is it possible that there are uses for cryptocurrencies you have not iterated over in your comment?
If I suggest that sub-cent microtransactions are a use of cryptocurrency that I find useful and have implemented in a hobby project, I predict the response will be, "but that's not wildly popular, speculation and gambling are widespread!"
I don't accept that these widespread uses justify prohibition or over regulation. Even if we accept that these popular uses are worthy of prohibition, other developers should not be punished or unduly burdened because of the actions of the majority. This brings us back to the first point, if regulatory burdens are too high, individuals won't innovate.
>There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.
>Not offering these services seems like a positive outcome.
>has utterly failed to produce anything of technological or economic value
This reads as, "Prohibit everything I personally dislike or can't fully appreciate"
>Overseas sounds like a fine place to continue this...
"If you don't like it leave the USA", this ignores the chilling effects the US's regulations have around the globe.
Cryptocurrency has been largely unregulated since its inception and it's almost exclusively used for speculation and criminal activity. The barrier to use of cryptocurrency is that it provides nothing of value outside of those use cases, not regulation.
If cryptocurrencies were not burdened by regulations, there wouldn't be the same informal market for person to person, cash to cryptocurrency transactions.
Cryptocurrencies have allowed me to feed my family back home in Lebanon, in a way that would simply not be possible with out it. I'm not sure if you don't think this happens on a daily basis, or is not of economic value.
...
...
Anyone who has access to the internet can use the above (and it's just few examples, more on https://ethereum.org/) without any arbitrary restrictions set by any governments.
How can you look at these things and not be in awe?
And how on earth can somebody be so confident about something yet know so little about it?
Gaining interest on cryptocurrencies by providing liquidity so other people can speculate on cryptocurrencies, prediction markets (literally gambling on cryptocurrencies), NFTs (speculating on infungible cryptocurrency tokens), and some virtual game where you can further speculate on NFTs with a touch of gamification.
Nothing seems to tie into any real world usefulness, everything ties back into itself where the core is always 'will the value of my internet coins go up'.
The only single useful thing cryptocurrencies can do is you can buy drugs from the darkweb, semi-anonymously, or maybe completely if you use something like Monero.
Also if you plan to buy a house, a bank can give you a mortgage over let's say 25 years where information about your identity, income and credit history is used as a risk assessment, and the loan is backed by the whole existing legal system where your home can be repossessed if you fall behind on payments. You can get a LTV ratio of even 95% in some cases.
How would this work in a decentralized way ever? On the other hand, if you already have, let's say 500k in the bank to buy the house outright, why would you involve cryptocurrency in the transaction. The counterparty is going to probably want to receive their money dollars in a bank somewhere, are you sure that a bank is not going to ask any questions when you do your magic conversions to dollars from crypto and try to send someone 500k?
This doesn't integrate into the real world well unless the other person selling wants to receive crypto already and is ready to take upon all the risks themselves that transferring, accepting and holding cryptocurrency entails. At that point you don't need to do the conversion magic anyway.
The reason for involving crypto in this scenario is so you don't have to sell your crypto assets. This will be more useful going forward as platforms allow users to use NFTs as collateral for example.
Claiming the BTC protocol is without utility is completely disingenuous.
This is a common sales pitch but it's relying on the listener not thinking about the problem. Any government can prevent you from using Bitcoin by blocking your transactions: every transaction requires a network exchange and the same infrastructure which is used for things like the Great Firewall can trivially stop that as well.
More importantly, however, that's a hypothetical situation for most people here. The realistic threats to think about stem from the difference between you being able to _make_ a transaction and not have any consequences for doing so. Bitcoin requires you to publish a full log of your transactions for your government to see — if you don't report transactions, skip paying taxes, or conduct a transfer with someone on a blacklist, they can use the public ledger as a signed confession.
Every transaction you make can be used to deanonymize you, and that sharply limits the use of Bitcoin because there's no demand for random numbers — only real things you can do with them, which require physical presences which governments control. If your goal is to transfer money and flee the country, never coming back and writing off any friends or family left behind, Bitcoin might help. If your usage is anything else, you're just counting down until you or someone you interact with has their data compromised.
Now, maybe you've also heard the marketing claims about mixers. Think about that a bit more carefully and you'll also realize the problems which make those unsafe in practice: beyond the expense, you're trusting the mixer operator not to be compromised, simply having any transaction linked to one is evidence that you're doing something illegal, and you have to worry about other users of the service using it for crimes which are serious enough to get more investigation than you personally are worth and proving that you were not knowingly helping those people.
If you were running the secret police somewhere, one of the best things you could do would be set up Bitcoin exchange and mixer services and promote them in your country so you'd have people giving you signed evidence of things you probably weren't even aware of.
I don't know how effective you think the great firewall is, but it's definitely not effective enough to "trivially stop" 500 bytes of banned data from being transferred.
For a repressive government, that means that most people will steer clear which makes it easier to filter since you don't have a large volume of innocent traffic complicating analysis and by creating a great mechanism to get people to install spyware by circulating news underground of a great client which is preconfigured to evade the filter.
If this is your threat model, cash is much safer.
you only need to be "on" to make transactions. In the case of sending transactions, you only need to broadcast the transaction itself (500 bytes), with no further traffic needed. The blockchain data is also broadcast via a satellite: https://www.blockstream.com/satellite/
>transferring non-trivial amounts of data
SPV clients require very little traffic, on the order of tens of kilobytes. Full nodes only need to download under 2MB worth every 10 minutes, or 3.33 KB/s. That's very easy to sneak under the radar if need be.
>Do you really think it's that hard to block port 8333 and a list of known hosts
good thing you can run bitcoin as a tor hidden service.
>If this is your threat model, cash is much safer.
Except you need to be in-person to make transactions.
I literally know someone who pays their rent with zcash. It is possible to use it as, y'know, currency.
Lie. I can receive payments from my foreign customers in a matter of 30 minutes instead of many days via traditional banking services or Draconian fees line PayPal. I can also safely donate to anti-Putin opposition.
Do you know what economic value means? If there was no economic value, then it wouldn't be used.
Your comment sounds like one that will be hilarious in the not-so-distant future. It's analogous to the whole trope "X technology is useless" or "People will never need more than X amount of memory" type of thing.
I'll cite Hanlon's Razor: Never attribute to malice what can be explained by incompetence. I think this is simply the result of what happens when we decide our government should be run by a bunch of octogenarian lawyers, most of whom's tech knowledge ends at their ability to reset their WiFi router. Is it really that surprising that Biden, Schumer, Portman, McConnell, Yellen, Pelosi, etc. have no understanding about how crypto works? They were all born before the charge card was even invented.
How much evidence is there of major institutions acting maliciously in the cryptocurrency space, and the scale of the impact?
I'm sure there's likely quite a bit of market manipulation from some people or entities who hold a lot of cryptocurrency assets, but as much as I despise finance and financial institutions (of pretty much any kind), I also want to know who to hate even more, if applicable.
(Not asking in a rhetorical or contrarian or skeptical way; genuinely trying to understand who's accused of what and why. And excluding Tether, since we all know the accusations, there, and the comment seems to be directed at major US financial institutions that were huge long before Bitcoin was created, if I understand correctly.)
An example for someone in the US is that they buy crypto on Coinbase, and then they withdraw that crypto to a hardware wallet that they have control of. They leave their crypto on their hardware wallet for a few years and then transfer all or maybe only some portion of it to a different exchange, say, Kraken, and sell it there. How do the exchanges file a 1099 for that?
Maybe while the crypto was on the individual's hardware wallet, they also used some of it to purchase some goods or services. How is that tracked except on the individual's tax return?
I'm for regulation because I think it means the crypto space will mature and more people will feel it is safe to get involved. I also don't think people should use crypto for avoiding taxes (I do think that is overblown in the media considering that most blockchains are literally a public ledger, and all the government needs are some crypto experts and they can look at current as well as previous years of transactions, so folks shouldn't be doing anything shady).
I do also think that laws should adapt to new technological innovations. The only issue is that there isn't a critical mass yet that this technology is here to stay. The analogy is like fitting a square peg into a round hole. That's what the government is trying to do by over regulating crypto with regulations from the 20th century.
I actually would love if crypto exchanges could somehow give 1099s. That would extremely simplify the crypto tax reporting process, which right now can be very complicated, but I just don't see how it would work unless individuals only bought crypto on an exchange, left it on that exchange, and only sold whatever they bought on that exchange.
The IRS has issued "John Doe" summons to Coinbase in 2016 [1] and Kraken in 2021 [2]. They also already gave warnings to 10,000 US tax payers, in 2019, that they thought did not pay their fair share of crypto taxes [3]. They are working with plenty of information already.
Anyone who chooses to omit capital gains from crypto may also see consequences in the future. Most blockchains are immutable public ledgers. The auditing of this technology will only get more advanced over time.
To your point about depositing, how does the exchange know the original price that the crypto deposited was purchased at, when it could’ve been purchased elsewhere (including a different centralized exchange like Coinbase, Kraken, KuCoin or Binance, or a decentralized exchange like Uniswap), or perhaps it was mined, or perhaps it was from a fork of another coin (with the current US tax laws, the cost basis is zero from a fork). It’s not as simple as you are making it sound when the source of the crypto is unknown.
How would formal verification actually work for a single exchange to calculate cost basis, i.e. the gain or loss, considering all these different cases? The people making these laws do not actually know in practice how these things would be enforced by the exchanges. They are trying to fit old securities laws into a new technology. Just saying that's it's too complicated is not the right answer. I think laws should be adjusted to accommodate for new innovations. I also think people should pay their taxes and crypto should not be used as a method of tax avoidance.
[1] https://www.justice.gov/opa/pr/court-authorizes-service-john...
[2] https://www.justice.gov/opa/pr/court-authorizes-service-john...
[3] https://www.cnbc.com/2019/07/26/irs-is-warning-thousands-of-...
I see this repeated a lot and I'm still not entirely clear why people feel this way. Most major markets in the world have futures/borrow mechanisms, and one of the key reasons is that it allows shorting.
Short selling is a critical element to any healthy market, and we've seen time and time again that markets without well functioning short selling are far more vulnerable than those with (i.e. real estate).
For instance, let's presume that crypto takes off, and business start accepting crypto for contractual obligations. If my future costs are in fiat, but future revenues are in crypto, I have a big mismatch with a very risky asset. A futures market (or shorting) allows me to hedge that risk out and protect myself against future volatility. I can lock in my fiat today, to ensure that I can cover my future costs. Without such a mechanism, I might not be able to risk a collapse in crypto markets.
Mature features (like borrows/futures) in crypto markets should aid in adoption.
So the introduction of this intermediation creates value possibility for large firms away from individuals.
Just because they don't doesn't mean they can't.
The issue with shorting is that you have theoretically unlimited downside which means greater risk and familiarity with concepts like margining. That is often outside the grasp of the average retail investor.
That's already the case for most exchanges, and they also log trades and provide these logs to both individuals and taxation entities for EoY tax reporting purposes. The "problem" is that once you've converted fiat into crypto, you can use decentralized exchanges, and trade back and forth ad infinitum with no traceability. This is a problem because every single trade (crypto to crypto) is considered a taxable event, and on a decentralized exchange or centralized exchange that doesn't do KYC, there are no tax-specific records and therefore such transactions are unlikely to be recorded.
Many people bemoan that it would be fairer and easier to just apply tax at the time crypto is converted into, and then out of, fiat. But a lot of profit can be earnt by the individual in between those on- and off-ramps, including the potential for profits to go, pardon the pun, into the ether, never to be seen again (by the government at least).
The crypto die-hards are also moving towards the lack of necessity to cash out to fiat, which would render the off-ramp taxation less effective. This may be why there's a specific focus on stable coins, as they eschew the need for converting back to fiat.
Australian exchanges, as far as I've gathered, proactively send transaction details to the tax office, or are compelled to do so upon tax office request.
When it comes to public wallet addresses, it becomes up to the individual to voluntarily declare their ownership - such is my understanding.
I will defer to your knowledge and / or expertise if you disagree with my understanding, you need to know this stuff inside out - congrats on founding, and here's to a big future for crypto, you're well placed.
Theoretically you could claim that you were paying some other person, but then you'd have to explain what you paid for. And if you ever cash out your crypto to fiat, you'll have a lot more explaining to do.
Privacy technologies would obscure the on-chain transactions but still not help with the basic problem.
Sad for rug pullers, US are the primary market for FOMO altcoins.
Congress, essentially, only passes one bill a year now, the budget. That's the case because everything else requires 60 votes because of the filibuster rules. Filibuster rules were changed because Obama wanted the affordable care act. Standing in the way of that was the Tea Party, the group of Republicans that don't negotiate.
I'm going to both sides this one because we now have the counterpart to that on the left with the progressives.
There exists a segment of both parties that refuse to negotiate from their ideologies. This makes sure that neither party is capable of passing legislation unless they have a super majority not including that wing of the party.
The infrastructure bill is one of the very few things that can break this because the centrists of both parties do actually like it quite a bit, they just have to dog and pony hating each other before they get it done.
That and war. We can all agree on war.
And there is a root cause at the bottom of all this dysfunctionality: FPTP voting and gerrymandering that always converges into a two-party system with most districts being "solid red" or "solid blue", leaving only a handful of (highly contested) "swing states/districts" to squabble over.
In the democratic party on the other hand, there is a range of ideologies. It's not the left party, its the centrist to the left party. Joe Manchin is no progressive but he wears the D. This is especially apparent in California state and local politics, where the majority of politicians are democrats but you don't see progress in actual progressive initiatives, like housing or transport or homeless services and mental health treatment initiatives. Most of the democrats in California state and local offices really aren't that progressive, and pander to a base with socially progressive but economically conservative tenancies (the classic NIMBY). For example, it's widely popular to publicly speak out against racism, but if you attempt to do something about it like change the racist zoning ordinances that are still pervasive in your city, you will probably destroy your political career in the process and see yourself replaced by a DINO.
In Europe, over the last decades our equivalents to the Democrats (mostly, Social Democrat parties) and Republicans (Christian Democrat/centrist parties) shrank in percentages and the political field widened. These days, you have in most countries everything on the spectrum: communist/tankies, democratic socialists, social democrats, christian democrat/centrists, free-market liberals, center-right, nationalist/far-right and (in some countries) outright fascist/neo-Nazi parties for the "mainstream" political orientation plus a host of special-issue parties - most notably Greens which have become mainstream in itself, national ethnic minority/indigenous representation parties, Pirate Parties, pan-european liberals, local voter associations/"Freie Wähler".
And all of these are to some degree viable, with voters flocking to whomever they want to support. Of course, coalition forming can be tedious (cough Netherlands, Israel), but it is actual representative democracy at work!
This is not true. No filibuster rules were changed to accommodate the ACA. You might be confused because prt of the ACA was passed under reconciliation, a long-existing exception to the filibuster rules that allows spending and taxation laws to be passed without requiring a supermajority to invoke cloture. Reconciliation has been part of the Senate rules since 1974.
https://en.wikipedia.org/wiki/Reconciliation_(United_States_...
Besides, mixing different topics is the only way anything can every be done: If you have a single issue you're fighting over with someone, zero-sum style, the best possible advice is to included something unrelated in the discussion, hoping that your interests differ in such a way that you can make trades beneficial to both parties.
My dumb idea is 'must fit on no more than 5 standard sheets of 8x11 piece of paper'. With exceptions to that needing a 75% majority.
My other dumb idea is about 4 people mostly control the vote. Majority/minority leader should be a rotating position. With the name drawn out of a hat.
Overall, I've been cautiously optimistic on how a regulatory situation like this would go, once it actually launched, after hearing politicians like Sen Warner/Wyden talk about tech the last few years. However, I suppose the industry should have seen this coming after the recent Sen Warren "shadowy coders" comment about bitcoin core, and similar pushes from the UST across two admins.
The crux:
> “responsible for and regularly providing any service effectuating transfers of digital assets”
KYC for all these entities, which almost sounds like it could include home routers, is technically impossible. Similarly to banning exports of a math proof (the crypto wars). USBs also enable transfer of digital assets. So do printers, if you go full cold wallet. Will USBs, home routers, and printers that I buy on amazon require my KYC/AML?
I say that not to highlight how nonsensical this law is, but to highlight that this won't be enforceable. If they do try to enforce it, I bet it will be as an umbrella authorization to go after the miners, and.... we'll see what happens to crypto, as that's a dangerous threat to hashpower. If crypto survives a situation like that though in the short term, my sense is the regulation would drop away in the mid term, similar to the encryption regs in the 90s.
This is almost exactly how the individual health insurance mandate worked in the ACA. Ten years later, it's never been enforced a single time. It just gets waived, year after year.
That is incorrect; it was in place and the shared responsibility penalty applied on taxes if the mandate was not adhered to from when it became effective in 2014 through 2018, but not after that because it was repealed by the Tax Cut and Jobs Act. It was never “waived”.
Of course not. Those are products not services.
Let's break down the statement in detail:
> digital assets
This is something I'd expect to be defined in the definitions section of the act. Even if it's not, the most reasonable interpretation is going to be something along the lines of any digital product whose ownership can be traded for material value gain, which would include cryptocurrencies, NFTs, and possibly MMO virtual currencies. There's definitely a lot of gray area in defining digital assets, but pretending that word documents and the like are digital assets is intentionally misreading the law.
> effectuating transfers
The plain definition of "effectuate" is "to bring about" or some other variation that specifically implies a causal link. To effectuate something requires that the agent itself is causing it to happen. Mere incidental participation wouldn't be sufficient. If I tell someone to take $1000 out of my ATM in cash and send it to somebody else in the mail, the person who is following my instructions is effectuating the transaction; the post office is not.
> providing any service
As mentioned above, we are specifically restricting this only to entities that are providing services, not products. So people whose roles are limited to providing products (such as software developers) are not affected by this rule.
> responsible for and regularly providing
And said services have to be provided on more than a one-off basis. So even the example I gave earlier of ordering someone to move money around wouldn't qualify; the person basically has to be willing to do this on an ongoing purpose, essentially as their business model, for this provision to kick in.
In other words, the people who are affected by this are going to be those who are offering banking-like services for digital assets (e.g., cryptocurrencies, NFTs, WoW gold). Pedestrian things like routers and USBs are completely unaffected. The assertion of a sibling comment that software developers are potentially at risk is equally asinine. The people who are affected are the cryptocurrency exchanges, probably services like cryptocurrency tumblers, possibly miners or companies that operate MMOs.
Will my (hypothetical) .eth domain be considered a digital asset?
If you can classify software development as providing a product and not a service then miners can certainly make the same argument regarding the data they produce. More easily, in fact, since they have no particular business relationship with the entities blindly submitting transactions to the network. Software developers are routinely involved in maintenance and support contracts, or producing new software to spec, which is more of a service than a product.
The exchanges will be covered, of course, but they're so buried in onerous KYC/AML requirements already that they may not notice any difference.
I don't see any scientific or technological application that could benefit humanity and would be developed from blockchain technology.
I tried very hard to figure out uses for the hash machines once the cryptocurrencies will disappear, but sadly I could think of none. All of this silicon, these PCBs, will just be junk.
Precedents: the war on drugs, crusades against porn, alcohol prohibition, the war on terror, mandatory minimum sentencing, etc.
It's a lynch mob mentality writ large and allows reckless legislators and police to gallop right over all kinds of civil boundaries that very much exist for a reason.
A much narrower set of solutions could address your concerns: a tax on proof of work mining, a ban on the sale of hardware whose sole purpose is cryptocurrency mining, or a ban on domestic exchanges converting money to/from cryptocurrencies that use high-resource proof of work mechanisms.
I see no reason to ban proof of stake or other consensus mechanism cryptocurrencies, and stepping up enforcement of existing KYC/AML regulations would help fight money laundering.
I also must point out that real estate, sham art auctions, sham investments and businesses, and numerous other mechanisms collectively account for the vast bulk of all money laundering. Cryptocurrency is a niche player. It's also a niche player in the street drug market where the vast majority of transactions use physical cash.
As far as bubbles and speculative manias go... it's legal for an adult to buy a lotto ticket (that is run by the state!) or go to a casino (permitted and regulated by the state). This is no worse. I might support raising taxes on short term speculative sorts of financial games, but those would also need to be applied to high frequency trading and speculative games run by hedge funds in conventional markets. Those are much larger than anything in crypto.
I say all this as a mostly cryptocurrency skeptic.
Cannot make generalities of course, but still.
Not all PoW is hash based. Some, like Cuckatoo Cycle [1], are based on writing and reading random bits within hundreds of MB of memory, and ASICs for such PoW are dominated by SRAM, which can in principle be repurposed.
As they are less compute-intensive, the benefit is more likely.
Just because you or I don't see the use case doesn't mean something should be illegal or that we should go to war with it.
We've made this mistake before (prohibition, the war on drugs). If people want to waste their time/money on X, that's on them.
Cool, but there are plenty of financial, economic, and political applications of blockchain that will benefit humanity. Just because you don't understand the use case doesn't mean it doesn't have one.
It's that the current use cases can be either replaced by preexisting less compute-intensive tech, or that the usage is just meaningless (gambling-like speculation, failed attempt at anonymity, tax avoidance, etc).
However my comment is as well a call to everybody to think about it!
I know I'm not very brilliant, so if anybody can do a favor to the world and find out something interesting, I'd be extremely happy :)
The fact that you've binned all the usage into the "meaningless" category means you don't understand the use case at all. It's an alternative to the current hegemonic global financial system centrally controlled by the USA. You might think it's useless but plenty of people disagree and are using it in a meaningful way.
You put on a facade of humility and objectivity but your bias against cryptocurrency is pretty blatant.
Can you call this biased?
And what you call financial hegemony is only the corollary of the commercial interconnection between world's countries, and the fact that the USA manage the biggest lender bank ever (the IMF).
That would still be the same using a BTC-based IMF.
PS: There would be no BTC-based IMF, just like there's no gold-based IMF. That's literally the whole point of Bitcoin - decentralized finance with no need for an International Monetary Fund regulating its monetary policy.
What I honestly don't know is if there exist useful algorithms making usage of all these hashes produced by BTC-mining machines.
It's a very precise challenge. And it could change the face of the industry. I'm for real.
For example, any possible usage in mathematics? Or maybe in physics, by switching in a different space to perform the calculations? I'm just throwing ideas.
Figure a world where you cannot use these machines for BTC anymore, because "regulations". Then, what do you do with them? Throw them? What a waste!
Now you understand my point?
It's been hugely beneficial for science from a theoretical and academic POV. Just like space exploration has no obvious benefits but fertilizes the field of engineering with new technology, cryptocurrency is currently doing the same to Computer Science.
And E-waste is a huge problem in general, it's not specific to bitcoin. Online gaming with powerful GPUs has zero benefit to society and also generates lots of useless energy consumption and e-waste. Why don't we brick all of the playstations instead of a whole financial ecosystem?
Assuming you work in tech, you must be aware how similar attitudes existed (within tech, as well) about what the internet itself would provide.
How are you so certain that:
A) you understand all the possible directions a new, network-effect driven tech could take in its applications
B) none of them add value to humanity
C) there are no parallels in your statement to "well horses work fine, why do I need cars."
I honestly hope those usages exist. I really do. But now I don't think they do.
But, frankly, even for Internet itself everybody could see the benefit quite early.
Anyway, if you do find interesting uses that are not replaceable by simpler things, you would save a lot of garbage!! And thus would do a favor to the environment.
So yeah I hope I'm wrong.
This is not a new conflict. Democracy was an algorithmic victory until powerful people learned to subvert it. So too was religion, money, laws etc. This is how civilization advances. Cryptocurrency is a pure thing, an algorithmic method of storage, control and distribution of value, that came about because the old ways were failing.
Now the old powers are fighting back. It’s important to realize that this is the only reason that cryptocurrency has any speculative value at all.
If the treasury / federal reserve had seen bitcoin and adopted a protocol for algorithmic control of the money supply, and a safer wallet for dollar holders, then Bitcoin would have zero value, and the Silk Road would never have happened. If they had seen ethereum, and adopted smart contracts to replace the opaque banking and investment industry, then Ethereum would have zero value, and the iron finance rug pull would never have happened.
This is not about revenue; the treasury balance is overflowing. It’s not about keeping us safe; violent crime is nowhere on the agenda. It’s not consumer protection; the SEC refuses to ever go after the many VC-backed mega rug pulls pushed on retail investors as utility tokens. This is simply about power. They’re not afraid of scammers and criminals. They’re afraid of people like you shifting anger from the obvious canards to the bigger picture.
They’re not out to destroy cryptocurrency either. They want to control it so that they can keep siphoning money out out of people trying to mitigate the problems that their own monetary policy caused, just like 401k of the 90s. I say this to point out that you will not get what you want out of this. It will just become a bigger scam on everybody, established and protected by the full force of the law.
I wonder who it is exactly that you think is looking out for you in all of this.
That's a defensible position. But how does that justify the government going to "total war". There are plenty of things that have no scientific or technological application. Reality TV, social media, fashion, nightclubs, sports, bakeries, those stupid outfits people dress pets up in.
At what point did people stop saying "it's a free country"? So you don't like some thing and don't see much merit in it. At what point did people's knee-jerk response to that change from "not my cup of tea, but you do you, man" to "that thing is completely worthless, everyone who likes it must be an idiot, and therefore the government should abolish it"
As the usefulness is very doubtful but the energy consumption is utterly real, that is a net negative for the environment.
The electronic garbage, too, a huge problem.
Even if you believe in a policy response, wouldn't you agree that it'd be better specifically target proof-of-work blockchains rather than crypto in general? Ironically this bill may actually do the opposite. It places a much higher burden of DeFi and stablecoins, which are mostly Ethereum native. It will probably shift usage to large centralized exchanges, which generally favors PoW based Bitcoin.
But, in this case, even if the loss of a beautiful peace of engineering is always a pity (but it is not even lost, because the source code itself has no reason to be forbidden!), I don't see really what is the loss for the world.
As I said in another comment, if you use a VPN, you can access preexisting online banking like PayPal, and to it while escaping surveillance and censure from any dictatorship you live in.
So e.g. if you reimplement whatever usage you found for some Ethereum contracts, in a non-blockchain technology, then you can just access it through VPNs whenever that becomes necessary.
Bitcoin is helping humanity right now as I type. There are millions who live under authoritative regimes that do not have access to banking services. Bitcoin gives anybody with an internet connection the ability to hold, save, and transfer value. You are condemning something you do not understand. Bitcoin is a technology that improves human rights.
https://www.theguardian.com/technology/2021/jul/31/out-of-co...
I put it bluntly sorry, but to be more explicit:
because of its volatility, BTC is very difficult to adopt for real transactions.
Also, with a simple VPN, you access PayPal and you're good to go.
I'd argue that the real tech saving the world right now is the VPN.
Even to use BTC somehow you will need VPN, because those dictatorships will block the IPs.
Over $2.4bn in value transferred, but you're telling me no one is using it? Transfer in BTC and convert to a stable coin if you're worried about volatility. Also Nigeria's currency, the naira has a 12% inflation rate. I'm not sure holding BTC is more of a risk than a currency that's guaranteed to lose 12% of its value each year.
A VPN will not protect you if PayPal decides to freeze your account. It will also not hide any of your transactions from PayPal.
Most likely, those are scammers of other illegal activities and they hoard as much as possible of BTC without really caring how much exactly it amounts to.
Also Nigeria is not an oppressive regime.
Edited: ok it's oppressive. However it's still somehow a democracy (with all the constraints of an islamic democracy).
PayPal has competitors, so they will be more than happy to take you as a customer if PayPal banned you.
> Last October, Nigeria was rocked by the largest protests in decades, as many thousands marched against police brutality, and the infamous Sars police unit. The “EndSars” protests saw abuses by security forces, who beat demonstrators, and used water cannon and teargas on them. More than 50 protesters were killed, at least 12 of them shot dead at the Lekki tollgate in Lagos on 20 October
> The clampdown was financial too. Civil society organisations, protest groups and individuals in favour of the demonstrations who were raising funds to free protesters or supply demonstrators with first aid and food had their bank accounts suddenly suspended.
> Feminist Coalition, a collective of 13 young women founded during the demonstrations, came to national attention as they raised funds for protest groups and supported demonstration efforts. When the women’s accounts were also suspended, the group began taking bitcoin donations, eventually raising $150,000 for its fighting fund through cryptocurrency.
> Jack Dorsey, the founder of Twitter and a prominent advocate of cryptocurrencies, reshared the FemCo bitcoin donation page, further drawing the ire of Nigeria’s government, which last month suspended Twitter in Nigeria.
I edited my comment though to reflect that, yes they are oppressive as they do shadowy things with the police and kill people. There is probably a mix of maybe-unregrettable (killing dangerous religious extremists political opponents) and regrettable (killing anti-islam feminists) events.
Nigeria is an extremely violent society. Think Mexico.
So police violence, if regrettable, is pretty much a corollary.
Sorry but it does not seem weird to you, that among all the dictatorships on Earth, only the scammers' paradise Nigeria has adopted cryptocurrencies at a large scale? Why not Cuba?
About feminist activism: okay but then what about in other muslim countries, where the problem is similar? Why is it in Nigeria that the adoption is so big?
My point is that these citizen organizations could have just used VPN+PayPal very easily for their activism, but it's because BTC was already mainstream among the omnipresent scam businesses, that they had the idea to try.
It doesn't matter if you use VPN with your paypal account, you can still be locked out of your account and your funds frozen. This is not true of bitcoin. No one can freeze your bitcoin, no one can prevent transfer.
But most people depend on platforms to use BTC, so it's the same problem as with PayPal.
Also when I say PayPal, think "all PayPal-like services", including all the competitors.
In the cases where users were banned, PayPal did not prevent them from migrating their funds to others forms, so it's not really freezing.
Let's take China instead of Cuba because there are more data. In January 2021, Nigeria made 32% of BTC exchanges, whereas China only 7%. That shows you there is really some effect independent from the population size and from the nature of the political regime.
I understand that you feel uneasy to theoretically depend on these companies, even if in practice you encounter no real difficulty.
Your fear is unnecessary... unless you do things really frown upon. Even porn and sex services are successfully using some of the online services I quoted above.
For hitmen and substances I don't really know, but those are really frown upon.
When Uniswap removed a bunch of coins from their front end, guess what they removed? sAUD, sEUR... but not sUSD. Very interesting don't you think?
I invite everyone to clone/fork (i've removed the google analytics stuff and emptied the black lists and made uniswap-info use the hashrouter):
https://github.com/cinquemb/uniswap-info/ (deployed at https://cinquemb.github.io/uniswap-info)
and
https://github.com/cinquemb/uniswap-interface (deployed at https://cinquemb.github.io/uniswap-interface)
To deploy yourselves you can (on gh, you can also run it locally):
yarn install
yarn build
mkdir dist
cd dist/
cp -R ../build/* .
git add -A
git commit -m "GH pages"
git push -f git@github.com:[your account]/uniswap-info.git master:gh-pages
7. USD Coin
10. Binance USD
Crypto seems rather reliant on USD. The crypto narratives are always so flimsy.
They were wrong on both counts: "the establishment" didn't react with aggressive attempts to shut them down, but really just some mild interest mixed with a bit of amusement.
Only when, after a decade+, it had been proven beyond any doubt that the technology isn't useful for anything anyone cares about, and when it became more salient that the energy usage and the scale of fraud were growing out of control did they start pushing back. And with every single startup in the sector operating within the confines of law and the existing financial markets, there is absolutely no doubt that the law can regulate and/or shut down the industry within any reasonable meaning of the term.
Tech forums have always been fairly anti-technology and dislike anything new until the rest of society fully adopts it.
X=guns Are guns causing more harm than good? Should we ban guns?
X=religion. Is religion causing more harm than good? Should we ban any form of religion?
X=social media. Is social media causing more harm than good? I heard Facebook consumes more power than the entire state of Argentina! Should we ban Facebook?
X=USD the dollar. 95% of criminal activity uses USD. 95%! It’s clear to me that if no dollar we could prevent a lot of criminal activity. Should we ban the USD?
X=VPNs Used to circumvent local laws!!! Are the causing more harm than good? Ban VPNs you say?
Guns have a propensity to do a lot of good, if they were sanely regulated they could easily do more good than harm.
>Is religion causing more harm than good?
Hard to say, religion does a lot of good. Keeping people scared of god is an incredibly strong motivator for many, and most of what religion prescribes is good. I wouldn't mind taxing religion, but it's unconstitutional.
>Is social media causing more harm than good?
I think the answer here is clearly no. Yes, social media causes harm, but it causes much more joy.
>The Dollar
I understand that you're joking here but the amount of good the dollar does so clearly surpasses the harm its illicit use cause that I don't find this very funny.
Anyway, no one is trying to ban cryptocurrency.
This is the problem with your view of crypto, you fail to see the good
Crypto transfers are slow? jesus, did tou ever do a wire? have you seen moving something take days? compared to that minutes is instant.
You’re gonna tell me about CC processing next. Hate to break it to you but when you’re paying with a CC you’re not actually paying. An auth happens but the real payment happens when the transaction is settled (days later). So: days vs minutes in BTC case. wow, crypto sooo slow.
Macro economic policy? Oh yeah. That is working really really well. The government working to protect you.
> no one is trying to ban crypto no one is trying to ban it yet. I’m giving it 5 years until it’s outright banned.
Also, if you cripple something to the point where it’s unusable it’s virtually the same as banning it.
No, of course not.
You’ll hear about net benefits to society (like those are easy to measure), about power consumption (like all if a sudden everyone is an arbiter of the market and decided: too much power), about how it’s a ponzi scheme (without understanding what a ponzi scheme is). All talking point of the anti-cryptocurrency agenda.
Curious to see how/if this changes in the next 5-10 years.
I know that's a bit whatabouttery but if we want to legitimise blockchain payments, we have to do more to kick organised crime and tax evaders out. Pretending that absolute privacy is always best is a criminal wet dream.
Waves goodbye to his karma
Digital currencies have solved none of our social problems, and will never solve any of our social problems. Instead they're just a giant distraction, or worse a not so clever means of facilitating sophmoric scams on the ignorant.
How about live and let live?
Imagine the democratic alternative, where the masses vote that watching the Kardashians is compulsory. Or that your own niche interests are prohibited.
/s
Seriously, it's both pointless to play Luddite (in general) and there's plenty of legit and exciting applications for crypto, from wildly faster and easier capital allocation to sophisticated artistic rights contracts replacing junky and expensive legal contracts.
It should specify digital currencies, because that is the only type of digital asset for which you find comparable regulations in the financial sector.
"Well since you have this cool new anonymous database technology we will just let you make billions of dollars and not tax it"
Even more ridiculous is that 3rd world countries with sketchy governments are going to let their citizens move their money in and out of crypto.
The price goes up when money comes in. It goes down when money goes out. It’s up because people are losing money, not gaining it. This is tautological.
Do we need the „innovation“ of untraceable money?
For instance, we decided to get rid of untraceable cell phone numbers (at least in Germany you can’t get a cell without ID) and - nothing changed for the worse, but arguably some things changed for the better.
Why would we introduce that for money/payment flows?
Yes. We need untraceable money. Controlling how people use money is tantamount to controlling all of their economic interactions. Surveilling how people use their money means becoming privy to their most intimate interactions. This is mass-surveillance, of everything (because money touches everything), being snuck through the backdoor.
With the transition from physical to digital currencies, we've created surveillance systems the likes of which the world has never seen. The information collection being done on the population is being done by a tiny proportion of the population, and disproportionately benefiting the political elite. Hyper-centralization exacerbates income and power disparities, and I would bet any money it leads to a more fragile social order.
https://twitter.com/SpencerKSchiff/status/125276128577685913...
>>In the last 20 years of available data, real median household income of Washington, D.C.’s residents has increased by 66.11%. For the entire country, the 20-yr increase is only 5.23%. This trend of widening disparity has accelerated dramatically since the Great Recession’s onset.
We need the more distributed configuration of power that historically existed, and that can only happen if the privacy that is characteristic of physical currencies is imparted upon digital currencies.
>>In the last 20 years of available data, real median household income of Washington, D.C.’s residents has increased by 66.11%. For the entire country, the 20-yr increase is only 5.23%.
With untraceable money you'd never know this. Or you'd have to limit yourself to "declared income", which would be effectively voluntary.
So I know you’re being sarcastic, but yes, for some things more freedom directly causes oppression.
I assert that letting power-hungry tax evaders get away with it is in that category.
More directly, if some villainous entrepreneur manages to protect his wealth from government confiscation, that is freedom. Confiscation under the threat of violence can hardly be construed as "freedom".
Consider the origins of freedom. Are freedoms granted by government? Where does it stem from? Who is entitled to the value you add to a marketplace? Is a market a zero sum game?
Hence my references to anarchy. All governments are the definers of legitimate force and to whom their local monopoly of it can be deputised.
> Are freedoms granted by government?
Yes.
> Where does it stem from?
Game theory, economics, and the occasional threat of other people doing violence against the stuff they (the powerful) like.
> Who is entitled to the value you add to a marketplace?
Nobody, including the creator of that value. The creators of value are only rewarded with it because a system vastly bigger than any single human has temporarily settled on a local equilibrium where that is the motivation.
Entitlements only exists with respect to legal frameworks and with enforcement mechanisms, not by themselves.
> Is a market a zero sum game?
They can be, they can also be negative or positive sum games. Messing with currencies is often a negative, because it creates opportunities to defect that otherwise don’t exist.
I own a flat. It’s collecting rent. If the economy goes up and all else is equal, I collect more rent (more money in the system for fixed supply); if home construction increases, I collect less (more supply for fixed money in the system). This income is entirely due to what the government in charge of the area decides to motivate, not how much I put into maintaining the place. Similarly: the profitability of Nissan in the UK is determined by what sort of trade deal the UK and the EU have; Facebook, GDPR-style and safe harbour laws; SpaceX, national security laws; Saudi Aramco, global oil policy; and so on.
None of us stands alone (assuming nobody here has a von Neumann probe), and tax evasion is Nash-defection.
You mean like the owners of all of the biggest companies in the world right now?
Or do you mean like that guy that did absolutely nothing except buy some dog coins and then tried to disappear to go live on a beach somewhere?
How do you keep the people collecting all of this information accountable? Information asymmetries that this kind of mass-surveillance creates ultimately leads to power disparities, and there is no way to police the information collectors to prevent them from profiting off of it.
Just look at the Snowden revelations. He speaks of LOVEINT, where agents would on intimate partners. It was a practice so common it had its own term coined for it. This is just the tip of the iceberg. We have no idea how this information is being used, and how it's contributing to all sorts of social, economic and political disparities.
And unlike the business world, where individuals begin to face diseconomies of scale as the size of their portolio of businesses/investments grows beyond their ability to actively manage them, and the number of investment targets that can absorb their wealth diminishes [1], growing concentrations of political power begets even more political power, as the state's monopoly on violence requires no sophistication to scale up.
>>With untraceable money you'd never know this. Or you'd have to limit yourself to "declared income", which would be effectively voluntary.
Untraceable money does not mean an income tax can't be collected. The act of earning income doesn't become untraceable by virtue of the government not being able to swoop in and monitor every transaction without a warrant. And frankly, if an income tax did require warrantless mass-surveillance of the population's financial interactions, to effectively collect, then it would be better to replace it with another form of taxation which didn't.
A more fragile social order then we have today?!
Another thing I wonder, is having an ASIC a guarantee to mine something? I mean new coins/partial coins, not transaction processing.
Most miners join pools. A single asic will never mine a block, so miners pool hashpower together and you get paid out your share of the hashpower.
A Public keychain
IS no the implied definition by itself not privacy based?
I just do not see how more tracking on public info somewhat gives us less privacy when we did not have privacy on public keychain in the first place!
Even if this passes succeeds, it helps the privacy coins anyway. Just wait until the BTC maximalists realise that BTC is traceable and not private.
Hopefully we'll get there in the next 200-300 years.