US Justice Department Launches a National Cryptocurrency Enforcement Team
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You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future. The entire idea behind Bitcoin is money without banks or the baggage they bring.
Ironically, the harder the US and other countries push exchanges - to tax, to fight the endless wars on drugs and terrorism - the more likely it is that users will implement the behaviors that will obviate the need for exchanges in the first place.
So double ironically, the US cracking down on Bitcoin, is good for Bitcoin.
That's not fair. Crypto Exchanges being regulated does not affect how Bitcoin works. I cannot do bank transactions without using the bank. But you'll still be able to do Bitcoin transactions without exchanges, even if they get banned.
Exactly. But a ban seems highly unlikely. Instead, exchanges are more likely to be regulated and subverted to the point of being useless. You're right, Bitcoin would continue on its merry way because exchanges are peripheral to using Bitcoin past a point.
If that transition never happens, Bitcoin will have failed.
the 'entire idea' is a monetary system that isn't controlled by a central party, doesn't have an inflationary supply and thus can't be rigged for cantillon insiders; banks existed before both of these things and the basic function of lending money and returning interest on savings is not objected to by this worldview
There's even value in not taking deposits, but just loaning out founder/investor's capital. Although maybe that's just a weird deposit.
I'm not sure how to make deposits useful without lending out some of them, though. I guess just money is less likely to be stolen in a bank than under your pillow, but probably not in a cryptobank.
Consider the case of islamic banking, for example. You could think that lending money without charging interest is completely bonkers and it’s impossible to make a business that way. However, by thinking out-the-box you can get an arrangement which is favorable to all involved parties.
A dear friend of mine delved into cryptocurrencies specifically to buy drugs, and he gets them shipped through the US postal service all the time. He regularly abuses ketamine and LSD in large doses and has done serious harm to his health with them.
It's deeply depressing to me what has happened to this dream of internet currencies, and I hope that the US justice department can clean this garbage up.
https://www.bostonglobe.com/2021/10/06/opinion/everyone-want...
This exists without anyone ordering their drugs in the darknet. Not sure why crypto is called out for drug problems.
Are we suggesting removing cash because it’s used to buy drugs? No.
In raw numbers? Sure. Everyone uses fiat and nobody uses cryptocurrenices.
If you compare percentage of transactions, though, cryptocurrencies are almost all illegal transactions.
Rookie mistake comparing raw numbers and not percentages.
Citation needed.
If your next argument is, “Not every Bitcoin transaction is for illegal purposes but every illegal transaction uses Bitcoin”, the same could be said of cash.
As far as the rest of it, obviously the blockchain fails quickly for day-to-day currency uses, and that's blatantly obvious. So it's a store of wealth, maybe a tax dodge, but hardly all that 'revolutionary'.
It decimated communities of color and set them back economically and socially, increasing the competitive advantage of "the right kind of people".
I think the point is our system tends to target the disadvantaged.
Most of the SEC's actions around cryptocurrency have been in this fashion not in protecting the investors from real scam projects. Coinbase, Telegram, Ripple: none of these companies fits the definition of a scam yet the SEC had a field day going after them in public, at least in two of these three cases after these companies had been privately assured by the SEC they were good to launch.
That's all you really need to know about the intent. They see an area where they have little influence, and as "the government" see the need to inject themselves where they aren't wanted. Vipers and leeches, them.
God forbid individuals get in on the tax dodging action!
Also, businesses dodge taxes with crypto? Not impossible, but never heard of that.
I suspect the same will be true of crypto – if you want to be entirely above-board and legit (and want to acquire fiat money), you’ll need to go through a centralized layer with KYC and regulation and consumer protection.
But, like the internet, the decentralized nature of cryptocurrencies means you’ll always have the option to circumvent these controls. If you want to acquire fiat, any such circumvention may be legally precarious, but if you don’t depend on the centralized layer then there’s nothing anyone can do to stop you from transacting with a consenting counterparty.
Basically: let them regulate the space. It will be good for consumer confidence, since 99% of people willingly accept regulation in exchange for protection from FDIC, CFPB, etc.
The centralized layer will benefit those people by mitigating the risk of total wallet compromise (your bank can reverse erroneous charges, and many say that any crypto “bank” needs the same ability to compete). If you want to opt-out of that, you can do so, but at your own risk (financial and potentially legal).
I think there will be other ways to build "consumer confidence" without relying upon promises from easily corruptible centralized entities who have routinely engaged in moral hazards at scale for the benefit for a few actors above and beyond other actors.
If those centralized entities declare those who try to mitigate against the financial risks in a decentralized fashion for those who do not willingly enter into such risks as illegal, "opt-out" is legally untenable and I will expect increasingly more conflict going forward.
I talked with a guy yesterday about how to build out the on chain swaps market and the current challenges with doing so, who worked for some of these deeply regulated mega banks trading interest rate derivatives for 13 years, and something tells me that these folks (you know, the grunts on the ground who are intimately familiar with how modern money really works and how it can fail on a day to day basis) are going to run circles around around career regulator <-> industry revolving door (and ultimately self serving like anyone else) bureaucrats in dealing with this conflict…
Its always been a game of confidence. Some people see it and are inspired to put those building blocks in place, others just assume a system is fundamentally flawed and act shocked that it continues to grow and gain confidence.
From a financial perspective, I see no advantage in adopting Bitcoin.