Comment by hkt | Hacker News Reader

Comment by hkt | Hacker News Reader

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"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.

The fact that the government routinely threatens to "throw the book" at people, using various "vaguely worded" laws, to get them to plead guilty to crimes they may or may not have committed (without their time in court) is a prime reason why those laws are bad.

> 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.

Bitcoin already is regulated - piling on as much regulation as possible isn't what's going to make it more main stream. This bill allows the request to treat miners as brokers, which is absurd considering that not all miners operate in the U.S. Any miner that does operate in the U.S. will hash locally and send verified blocks from international nodes, so it won't work anyways.

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.

> 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.

However, a far larger portion of illicit drug transactions are for cash dollars than for bitcoin; estimates are 2-5% illicit transactions globally in fiat currencies, and about 0.34% illicit in bitcoin in 2020 (a rate that's fallen significantly since 2019 as we see more mainstream early adoption if bitcoin [1].

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...

> However, a far larger portion of illicit drug transactions are for cash dollars than for bitcoin

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...

If the point is that in crypto 3rd party payment processing and money transfers (for example) should be regulated differently than in the other parts of the financial system, let's make it.

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.

How can anyone enter the market quickly with an app that takes crypto as payment, if you have to register as a broker and meet KYC standards? Suppose you want to sell character costumes or start a subscription podcast in crypto, rather than paying royalties to Apple or having payment processing through Visa. Are you going to demand ID verification from all your listeners? It basically makes it so onerous to a startup that no innovation can happen

Can you give example of a cryptocurrency startup which innovated anything useful?

> Can you give example of a cryptocurrency startup which innovated anything useful?

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).

As opposed to defining “useful” along the lines of “generating profit”.

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.

I would also prefer "useful", as in "capable of being put to use", to apply to uses with net positive outcomes for society - I was just trying to make the point that, unfortunately, many others don't.

Yes you are correct. Cryptocurrency at the moment is used for speculation, drug sales, scams, and evading financial regulation.

Those are huge valuable use cases. However it doesn’t follow that we should necessarily facilitate those uses.

It also doesn't follow that we should impose onerous restrictions on everything related to a technology just because some people misuse it. eg we don't require documentation of the source of footage from websites who show videos made by hobbyists who fly drones, even though 99% of global drone sales by the dollar are used by governments or terrorist groups to kill people. And we don't punish the hobbyist or the website that shows their videos, or the website that links to that. Down that road lies total information control and state terror.

But we do: if your business is weaponry, you’ll be pretty tightly controlled.

I hate to break this to you, but state terror is already perpetrated by western states against their own people and the world. Those drones are a good example. Then there is Guantanamo bay, the militarisation of police, disproportionate prison sentences.. the list goes on.

Brave.

(This question often leads to moving goalposts and quibbling over definitions of "useful innovations".)

I'm reticent to get into this because it involves value judgments about what's "useful". Are in-game skin purchases useful? Not really. Should we prevent then from being sold because they don't match your definition of usefulness?

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.

Of course the skins are useful: they provide entertainment. Unless you’re trying to exploit your customers; most countries don’t care, but eg China does have laws to prevent kids from being exploited by game companies.

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.

It's basically the same with the GDPR, it talks more about principles than companies or technologies to be able to adapt to a fast changing field - which I appreciate as a citizen but as an implementor I prefer the checklists of PCIDSS which are not vague.

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