Comment by Nursie | Hacker News Reader

Comment by Nursie | Hacker News Reader

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I'm not sure I understand what this is a response to.

The assertion was that banning things is counterproductive, just look how much it failed for alcohol/drugs/gambling.

My counterpoint is that these things are desirable in themselves, cryptocurrency isn't really.

Your comeback is that it gets used for some of these things like drugs and gambling - yes, it does, that's a fine point. I agree

My response is that OK great, but cryptocurrency is a means there, not an end. And then you've said something about enforcement and intentions. Perhaps I should have expanded on my last post. What I meant is if cryptocurrency is harder to get, I don't think we'll see the exact same demand phenomenon as we would with those others things, even though cryptocurrency is used to pay for them right now, because cryptocurrency is not the object of desire itself.

Make drugs illegal, people still want drugs, so they go to the black market, which thrives, criminals make bank etc. They take risks to get the drugs.

Make gambling illegal, people still want to gamble, so they go to the gambling black market, which thrives, criminals make bank etc. They take risks to gamble.

Make cryptocurrency illegal, people still want ... drugs and gambling, so they either go to the crypto black market or maybe they find another way to pay for the drugs and gambling? They take risks to get drugs or gamble, not specifically for the crypto.

So I don't think this is wrong -

> A buyer's intentions after the purchase of an illicit item have zero relevance to the evasion of law enforcement during the purchase itself.

However I also don't think it really addresses the point that I was making, that while I agree prohibition has a history of not doing what it's supposed to, in the case of cryptocurrency I don't think it's safe to assume the same historical pattern would play out, because (for most people who aren't ideologically wed to it) cryptocurrency is second-order desirable, rather than the object of desire itself.

I understand your point more fully now, and agree that my second reply was somewhat orthogonal to it.

Crypto is a huge risk minimizer for buying illicit goods. Unless you make the punishment for purchasing cryptocurrencies severe (on par with buying/possession of the goods in question) you won't remove the motivation for using them as an intermediate means of exchange. If you do make the punishment sufficiently severe, you'll be sending people to jail for the exchange of the equivalent of digitally encrypted beanie babies. Have you thought through the implications of that? For whom is that solution easy?

Cryptocurrencies are a second-order desirable in the same way that meeting in private, instead of public, is. Would you support criminalizing private meetings and encrypted communications to the same end?

> Unless you make the punishment for purchasing cryptocurrencies severe (on par with buying/possession of the goods in question) you won't remove the motivation for using them as an intermediate means of exchange.

See I don't necessarily agree with you there, it all depends what you're trying to achieve. I think in the context of the discussion - an article which says that cryptocurrency is being seen as bullshit by democrats - you just have to make it difficult for normal people to participate in order to kill the current industry, and you can do that by regulating banks rather than individuals. You could make it illegal to market these things, illegal for exchanges to operate and for banks to send money to them, and you'd strangle the majority of it.

Yes, you're right that there would probably be a residual demand for it illicit purchases, gambling, that sort of stuff, but the mainstreaming of it as an investment/speculation vehicle would likely be crushed.

If I can't buy cryptocurrency by credit card or bank transfer then I'm probably not going to try and invest my pension in it, or invest in a high-yield staking account at Celsius, or just buy some BTC at an exchange to speculate on price rises, firstly because my bank would throw up obstacles and secondly because it would be difficult to rehabilitate any gains into the system. Yes, I might want some to buy drugs, but the pseudo-financial industry that's sprung up around this stuff (the FTXs, the 3ACs, the Celsius, Coinbase) wouldn't be able to operate in that sort of environment, and the number of people who are in it to make a buck would be considerably reduced.

So -

> Cryptocurrencies are a second-order desirable in the same way that meeting in private, instead of public, is.

Yes, for transactions where that's important, I can see it still being desirable, until/unless some other means to do this comes along, and you're right, that would likely be a comparatively resilient demand.

But for the current speculative mania, and the large-scale fraud it enables? Less so.

(Frankly if I have to take cash down a back alley to get some bitcoin to buy weed ... I may as well just buy the weed there!)

We are in agreement on the crypto split between illicit and mainstream activities, and your points are well supported by the history of monero/XMR--it can't be bought with card or bank transfer on any of the major exchanges, and has been insulated from the volatility and inflation of the more mainstream coins. So in a sense the outcome you're describing has already come to pass, in a small section of the market.

Where we disagree is the criminalization of cryptocurrency transactions to achieve that end. Owning, buying, and selling monero isn't illegal; regulations of some type (I am not aware of the exact structure) have prevented it from being touched by institutional players, but the risk of a private citizen getting caught in some sort of spike trap designed to eliminate reckless speculation and fraud on an institutional level is zero.

I agree 100% that there's a major bubble in cryptocurrency, the popping of which will happen in manner that is novel and unknown, but "make it illegal" means cops and guns, full stop. I (and I suspect many of the people who replied to you) see that option as a last resort, and totally inappropriate in the case of free exchange of innocuous assets between private individuals.

You’re actually the only person that replied to me :)

I think you can make something illegal for the banking industry to connect to, without too much in the way of cops and guns.

shrug

Either way, it’s fascinating to watch!

This does make sense that cryptocurrency doesn't necessarily have any intrinsic value, but I also feel like there's going to be a bit of a "Bart Simpson" effect. If you tell people exactly what they _can't_ do, you are going to induce serious demand in many people who are going to attempt to do exactly what you told them they can't do, just for the sake of it. Which could then drive up value, and attract more people, etc... owning banned things is very attractive to a lot of people.

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