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Comment by rvz | Hacker News Reader

The pro-crypto folks have created the delusion that 'crypto will replace all modern finance' and they will quickly realise that regulations will wipe out the majority of tokens and projects unable to comply with them; and a remaining few of them existing and surviving.

It also means the anti-crypto folks will also realise that destroying 'all of them' is another delusion that activists like the free software foundation for example who's mission is still to remove all non-free software in existence. After 37 years, its still here and it is co-existing with some open-source software.

The undeniable fact is that regulations will be put in place for crypto and only a surviving useful few will continue to co-exist with the current system which both the anti-crypto folks and pro-crypto maximalists will be disappointed in achieving their utopian ideals.

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> they will quickly realise that regulations will wipe out the majority of tokens and projects unable to comply with them

might this be part of the DYOR reasoning? some gut-level reaction that “unless we encourage every individual user to take responsibility, then most of those users will welcome 3rd party (govt/bureaucratic) regulators”?

i don’t know that this is wholly delusional, either — i think it’s just a difficult culture to preserve during massive growth. but look at any mid/large crypto project and they usually show off their audits. audits which they willingly paid for because enough users care about it that demonstrating your system is hardened actually has positive ROI. it happens enough that distinct auditors each have their own reputation (oh, X audited notable project Y => their audit on new project Z probably means something). this whole auditing system is in some very real sense a form of “self-regulation” — but the whole thing is predicated on DYOR.

>The undeniable fact is that regulations will be put in place for crypto

why is this so undeniable? I would think well-implemented cryptocurrencies would be fairly regulation resistant

Because you have to convert the crypto into fiat to procure goods and services and the state will just control the border.

There will be cases in which a weak state economy can become bitcoinized the same way some have become dolarizesld, but for strong states it is easy to make the border between the currencies as tight as they want it.

>Because you have to convert the crypto into fiat to procure goods and services

You do? What is the purpose of cryptocurrency if you are just going to convert back into cash the moment you use it? I think the end goal for cryptocurrency is to create a circular, P2P economy[0][1]

Seems pretty difficult to regulate only some cryptocurrencies if it's already possible to anonymously and trustlessly swap between them[2]

[0] https://monerica.com/

[1] https://localmonero.co/

[2] https://unstoppableswap.net/

At some point, you ll need to pay taxes. in the money of choice of your current governing body.

Right, that's the point. Unless you're stuck in some shithole country like El Salvador, there's no purpose to cryptocurrency.

Easy: if congress bans all crypto tomorrow, you can trivially check which websites accept crypto, and then send them a letter to not do that.

If they don’t comply, you tell the registrar/host/ISP to shut them down, then they don’t have a website anymore.

The point is that at some point real people, subject to laws and regulations, will have to touch the thing you’re buying. If you’re buying a sandwich, it doesn’t matter the guy making the sandwich accepts crypto if the government can put them in jail for doing so.

Would these regulations prevent something like offshore merchants selling goods, perhaps gold bars or something, for crypto and converting into fiat?

well it already happens with cash, so no

> into fiat to procure goods and services and the state will just control the border.

Regurgitated “fiat” meme.

Counter-example 1: buying services over the internet. What fiat and where is the relevant border?

Counter-example 2: go overseas and use services. What fiat and where is the relevant border?

Arguments about fiat and borders are often silly. However, a jurisdiction can make crypto illegal or risky.

By border I meant the point in which you have to convert the bitcoin to obtain something. The moment when you have to buy local currency to pay taxes, utility bills, food, fuel, clothes, pay toll taxes on the roads etc ...

A government can make it arbitrarily hard or illegal to do that.

What exactly is "over the internet" and "overseas"? Aren't those real world countries, with real world legislation, where real world offerers of services can be jailed for using crypto? Or your entire argument is based that there will always be some exotic country (like El Salvador tried and apparently failed) will have a better view on crypto and also offer all services you might need?

How would a technical implementation detail block legislation?

The point is not the legislation. The point is enforcement.

You can write and pass whatever law you want. If it can not be enforced, it does not exist.

If our government can catch money launderers because they’re running empty washing machines or selling unused tickets to shows, it’s hard to think of anything useful crypto can do that couldn’t be meaningfully regulated away.

The government takes billions of dollars from people every year without due process, using civil forfeiture laws:

https://ij.org/press-release/new-report-finds-civil-forfeitu...

But there's no evidence it stops much real money laundering:

https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...

If money laundering were effectively dealt with, that would stop almost all theft and organized crime, as laundering the proceeds of these crimes to spend them would be nearly impossible.

Obviously that will never happen.

I’m against civil forfeiture laws, I don’t think they are important in the fight against money laundering.

Anyway I’m not saying money laundering doesn’t happen, it does… and that’s probably the best case use case for crypto and one of the pillars of its value-add. People who don’t care about legality won’t care if crypto is regulated away either. I’m just demonstrating it’s not free to get away with these crimes. Plenty of people get nailed for money laundering every year.

There is a crypto subculture that thinks crypto is unbannable for a variety of reasons that fail the hit-them-with-a-wrench test.

With some level of plausible deniability, you pass the hit-them-with-a-wrench test because you can't just hit everyone with a wrench.

Not with that attitude you can't.

Do an internet search for UIGEA for a blueprint on how to do this in the US.

Xkcd of course had it right even back when "crypto" meant something else :)

https://xkcd.com/538/

Regulation and law indeed may not be able to beat crypto technologically. They don't need to. Humans are the weak squishy link in the chain. I don't need a supercomputer to crunch down your crypto, I need a warrant for your arrest or subpoena to ask for all your documents. I can outlaw your ability to operate without logs. Sure that would suck, but equally in crypto currency and normal world. Either exists as much at the mercy of the government, democratic or otherwise, to preserve the privacy, as much as the technological capability.

Unless we go completely anarchic (and I'm not personally looking forward to that), humans will remain squishy and laws will remain relevant.

Go ahead, unlock your hard drives then. Disable HTTPS, it makes no difference right? The government can just do evil maid attacks while you're asleep or rubber-hose whatever CA you're using anyways. While you're at it, why don't you leave the door to your house unlocked? The government can just kick it in whenever they want, no biggie, right?

Strong cryptography still remains a formidable barrier for law enforcement, regardless of what pessimists like munroe would have you think.

Munroe isn't a pessimist: he's a humorist.

well you know what they say about humor on the internet, poe's law and all.

I guess the joke is that security is presented as an all-or-nothing situation, when in reality security is just about disproportionally increasing the cost for attackers and decreasing the severity of their attacks.

>Go ahead, unlock your hard drives then. Disable HTTPS, it makes no difference right?

In what world is the Government your only threat?

It's a good question. I wonder this too.

But until we can make cryptography that is criminal-proof but not government-proof, and until the government can feasibly enforce its use, then I don't think it really matters.

It's hard to imagine any tool that only works against criminals but not against the government. Especially considering that there's a spectrum between criminal organizations and government organizations.

>It's hard to imagine any tool that only works against criminals but not against the government. Especially considering that there's a spectrum between criminal organizations and government organizations.

You are missing the point; the point of Randall's comic is that most, if not all, cryptographic methods fails under the threat of physical violence. For most of us in the western world, and certainly for most of us on this forum the most likely threat of someone using violence to extract cryptographic secrets from you would be the entity that claims a monopoly on it - the government (your local mugger is not going to request you install his CA root store).

Most criminals, and the majority of white collar criminals who would benefit the most from the world disabling HTTPS do not have the mechanism, infrastructure or capability to exact violence on me the same way the government can.

So your implication that "because cryptography is violence resistant, we should unlock our hard drives" is very naive.

I’m curious how you know it’s a formidable barrier. You sure they just don’t care about you? I’ve never tested this hypothesis, I assume everything I do online is basically “in the clear” for advanced nation states.

> I can outlaw your ability to operate without logs.

Even going full Nazi, how do you enforce a law that technically challenging without bankrupting the government or crippling the economy? And what time-frame does it take to phase in?

> how do you enforce a law that technically challenging without bankrupting the government or crippling the economy?

Drugs paid with cash are challenging. Crypto is not. Authoritarian states can do deep packet inspection and random phone/computer checks. Advanced states can just roll it into their AML frameworks, as well as track the purchase of mining equipment and their inputs. Both will offer whistleblower rewards.

There will still be people who use it. But it will fall out of the mainstream. More people are more enthusiastic about cocaine than about crypto, and your enjoyment from an ounce of cocaine isn’t dependent on others using it. For crypto, it is.

This. Also enforcement does not need to be 100% to spook others out of the game. This is the same reason so few people cheat on income taxes even though the audit rate of the IRS is abysmally low.

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