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Comment by geofft | Hacker News Reader

But the entire value proposition of cryptocurrency is how difficult it is to regulate via traditional law enforcement mechanisms.

Which can be used for good, of course - the standard example being things like "transferring money across immoral embargoes". But in this case, if the difference is regulation, then the question for ordinary folks who are not themselves trying to pull a scam is - would you rather work with dishonest con men who believe they will get in trouble with law enforcement if they actually con you, or with dishonest con men who believe they can get away with it?

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I think the underlying value prop is totally orthogonal to this thread. The fundamental value prop is that software can trustlessly, directly, and irreversibly make financial transactions, which certainly does enable regulatory arbitrage. I understand why other applications haven’t convinced most people, but that’s a different discussion.

“regulatory arbitrage” is a pretty hilarious way to spell “extremely profitable crime”

It's not a crime, that's the point. The regulation does not exist (yet)

Your value prop has to outweigh the potential negatives or there is no value prop. What OP is saying is that you can't have unregulated markets in this space the incentives to cheat are too great.

Sure, and I'm not making an argument against regulation. My point is that there is nothing inherent in cryptocurrency to create these forms of fraud except the lack of regulation, otherwise the same fraud would exist in traditional markets.

But that point doesn't support the message you're trying to say.

Suppose I were to say "Elbonia is a dangerous lawless country, where corruption abounds and you're not safe on the streets," and you were to respond by saying "There's nothing inherent to Elbonia to create those conditions except the lack of laws against corruption or mugging. And corruption and mugging happen in the US, too, and you'd see more of it if there weren't any laws against it. There's nothing about the Elbonians as a people that makes them more inclined to crime."

I would respond by saying "Thank you for proving my point that Elbonia is a dangerous place."

So in this hypothetical, Elbonia has no laws against corruption and mugging, and we truly believe the only thing missing is the laws? Then sure, that's a fair comparison. In that case one might think that Elbonia could be a great place to visit once a less lawless regime steps in.

What message do you think I'm trying to say? I'm certainly not claiming crypto is free of scams and self dealings.

I think he's trying to say that regulation will discourage conflicts of interest even if they don't entirely prevent it. The key point is that right now people are able to do things they couldn't in traditional markets that they can do in the crypto market and there are no penalties for it.

But your value add is that they are unregulated, right?

>trustlessly

In theory. In practice, it seems to have just moved the trust problem.

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