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Comment by Animats | Hacker News Reader

The crypto world is running out of safe havens. China cracked down, and cut the power to large Bitcoin farms. In the US, the SEC and CFTC have been tightening up on crypto-related things that look like securities and things that look like exchanges. Israel kicked out the binary option crowd, which overlapped with the crypto crowd; they seem to have moved to Bulgaria. Now the EU.

The bigger countries are in general tightening up on tax havens; incorporating in the Cayman Islands or Vanatu raises more red flags now.

The Economist has an article this week, "What if Bitcoin went to zero?"[1] Cryptocurrencies haven't hit a recession yet, and we're getting close to one. Look at house prices. In a recession, things which depend on a net inflow of money collapse.

I don't expect Bitcoin to go to zero, but Tether could, easily. When stablecoins crash, they crash all the way.

[1] https://www.economist.com/finance-and-economics/2021/08/02/w...

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> The crypto world is running out of safe havens.

So just to be clear, your definition of "safe haven" is, what, total lawlessness with no governmental oversight?

Frankly, these moves make me think people are taking crypto seriously now, as we're finally treating it like real money or the banking sector and regulating it accordingly. If anything, it seems to me that should be a sign of success, not failure.

(and I should point out I own no crypto and I think blockchains are the biggest technical snake oil grift I've seen in the history of computing)

But since it provides no advantage over normal currency, except lack of regulation, regulating crypto removes the incentive to onboard on it anyway.

It's slower, it expensive to run, fees are very flexible, value depends only on speculation and electricity spending - it would be a success if crypto trends towards 0 and we can finally try to USE them, but again, it would most likely be suboptimal compared to a banknote.

Lack of regulation wasn’t ever even the primary advantage. That you don’t have to depend on a single payment handler is what makes crypto interesting.

I've come to realize that the current fiat scheme and the crypto scheme are both unethical in their own way. But it makes me sick to hear people talk about banning crypto without at least suggesting to dramatically reform the fiat system.

Crypto would not have existed in the first place if most people felt that the fiat system was fair.

People who don't acknowledge this at this stage are either totally blind or totally corrupt.

I was just thinking this. The more control that governments try to exert over their populations the more of a reaction there will be to avoid these controls. One might assume the more they regulate bitcoin that more difficult to regulate alternatives will become more popular.

Makes sense. People will always come up with some new innovative ways to get around regulations which harm them. Those new ways will never cease to defy our imaginations. Who could have imagined Bitcoin 20 years ago? The regulators are playing whack-a-mole.

Problems must be fixed at the root instead of endlessly trying to patch the symptoms. Most software developers are familiar with what happens when you try to fix bugs quickly with hacks instead of first trying to identify the root cause.

Binary options shouldn't be compared to Bitcoin. Bitcoin is a cryptocurrency and largely looks like a currency. You can buy it, own it, sell it and exchange it freely for other things. The same is mostly true for proper regulated options.

Binary options are more like a game on a slot machine. You put money in, wait a bit and see if you get money out. You can't own them or transfer them to anybody else. There isn't an open market for them, the counterparty is the broker (i.e. casino). The broker is usually barely regulated if at all, so they can (and do) freely scam people as they please.

> The crypto world is running out of safe havens. China cracked down, and cut the power to large Bitcoin farms. In the US, the SEC and CFTC have been tightening up on crypto-related things that look like securities and things that look like exchanges. Israel kicked out the binary option crowd, which overlapped with the crypto crowd; they seem to have moved to Bulgaria. Now the EU.

Which further proves the idea that cyberspace is independent of actual space is a lie, which renders any idea predicated on that as suspect.

There may be a brief periods where cyberspace is "more free," but it doesn't take long for the real-space authorities to notice and assert control (often in a way that's more complete than could ever be achieved in real-space).

Especially since crypto relies on two state monopolies: internet licensed providers and electricity providers.

I can cut a tree and trade it around in piece more easily than I can use the internet state-monitored access to ask someone to use the state-monitored energy grid to print me a bitcoin.

Crypto doesn't have to rely on large/detectable draws of electricity, as it can use Proof of Stake instead of Proof of Work.

As for internet access, with encryption, it's very hard if not impossible to discriminate on how people use the internet, so the state will have to either choose to ban people from using encryption, or live with crypto.

> As for internet access, with encryption, it's very hard if not impossible to discriminate on how people use the internet, so the state will have to either choose to ban people from using encryption, or live with crypto.

No. As long as "crypto" traffic is identifiable in any way, the state can ban it, encrypted or not. It's unnecessary for them to go through the trouble to decrypt it.

For instance:

1. VPN traffic can be fingerprinted, which is one of the methods the GFW uses to block them. I see no reason something similar can't be done for "crypto."

2. People need to get the software to participate in a "crypto" network. A state can target and taken down legitimate channels for getting that software, and backdoored versions can be distributed through replacement channels.

3. A state can setup nodes in a cypto network and then go after anyone in their jurisdiction who connects to them. Whatever "clever" trick you think you can do to avoid connecting to them (sort of only peering with people you personally know) can be easily defeated (e.g. "well I won't connect to any node in my home country" can be easily defeated by a state that rents VPS's in foreign countries).

>>As long as "crypto" traffic is identifiable in any way, the state can ban it, encrypted or not.

No, with encryption, it's possible to make crypto traffic completely indistinguishable from all other encrypted traffic.

>>1. VPN traffic can be fingerprinted, which is one of the methods the GFW uses to block them.

The state would indeed need to block both VPNs and TOR to make a dent in crypto traffic. The former would have huge negative economic repercussions. The latter, while not directly impactful on any significant economic sectors, would face major challenges from civil liberties advocates.

>>A state can setup nodes in a cypto network and then go after anyone in their jurisdiction who connects to them.

Crypto nodes that transmit their data through VPNs or TOR cannot be detected like this. In any case, I think it's highly unlikely that the people in any country with a strong democratic tradition would put up with their government doing what you describe. The government is not the master of society. It is the representative of the collective will, and the collective will be very unlikely to support such nakedly authoritarian measures.

But the aggregate value of crypto is comparable to the US currency in circulation: two trillion.

https://futurism.com/the-byte/cryptocurrency-worth-more-than...

Crypto has a muchlower velocity of trading than currency.

Crypto "market cap" is a complete fiction. Only the tiniest fraction of that value actually exists in any form.

As you say, crypto has a much lower velocity of trading than currency. That is the hint.

> Cryptocurrencies haven't hit a recession yet, and we're getting close to one.

We've been in a recession since Feb 2020...

Any currency not backed by a military is doomed to fail the moment anyone with actual power decides they've had enough of it.

Afaik shitcoins aren't even backed by the threat of violence (i.e. "fuck with us and we'll do bad shit").

They only work as long as actual organizations with actual armed forces let them be.

Most people forget how fickle their freedoms are, and overestimate their extent.

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