The Case for Banning Crypto
foreignaffairs.com
foreignaffairs.com
Theres more of a limit in your average crypto asset than any government bank.
> When assets have nothing behind them, no reliable financial accounting practices or valuation techniques exist to expose the fraudulent manipulation of those assets.
Again this may as well be a hidden hit piece against government fiat.
Oh no a large government cant push other peoples money around boo hoo
>Cryptocurrencies, particularly Bitcoin, have become the most common form of payment for the ransomware attacks increasingly targeting businesses and public services because it allows the nefarious actors behind these attacks to receive large amounts of money quickly and anonymously.
Yes, and theres still orders of magnitude more crime occurring with cash
>Blockchain-based finance is complex, automated, and highly interconnected, and it offers vast opportunities for creating leverage, because there is a virtually unlimited supply of assets to borrow against. These are the kind of fragilities that led to the last financial crisis, in 2008.
Surely this outs the author as pro crypto, the 2008 crisis lead to the development of crypto.
>Despite the industry’s claims, most of those who invested in cryptocurrency have lost money. Those already disillusioned with traditional finance are likely to become even more cynical after their cryptocurrency losses, and this cynicism may have further consequences.
Everyone already hates it, so no need for a ban then
I recently wrote an article about this and proposed what I think is a feasible starting point for the discussion.
Granted, in situations like FTX it would be ineffective but those situations are not the norm. For those regulation needs to happen.
Crypto is not bad, there is a global smear campaign by those who would be negatively impacted by a globally available payment system which is not controlled by the current cartel.
You can include myself in that group. I would rather have my government control the currency I use, than some random miners in whatever location across the planet.
So, yes: it is more efficient to not have to encrypt everything, and yes: it is more difficult to deal with spam when everything is encrypted, and yes: building a system that is decentralized is hard, and yes: anything you build that is decentralized can be built more easily and maybe even more "safely"--for even an actually-reasonable definition of "safe"--by some centralized entity, and yes: a fully decentralized and private communication platform would absolutely be used by at least some terrible actors to accomplish terrible things that might be made more difficult if that platform did not exist...
...but, no: just because something is more expensive or more difficult to pull off doesn't mean it isn't worth the cost, and no: just because some terrible actors use a platform that doesn't justify taking it away from all users, and no: just because previous attempts at something have failed it should be illegal to attempt to pursue the technology.
If you make an argument that implies a kind of centralized control over things being good because privacy (which this article claims cryptocurrency provides--and it can, just not using Bitcoin--so if you want to quibble about that you are actually arguing against the authors of the article, not me, as many of their points seem to rely on this privacy at least mostly working) is an inherently dangerous thing to offer people, and when I call my bank there 100% should be a person there looking at my billing history getting to judge me for the things I buy and the places I shop and what those things imply about my sexual orientation (maybe you see me going to a specific bar a lot) or the medical conditions I have (based on the medications I am buying or the clinics I visit)...
...well, I would then want you to look in a mirror and really ask yourself is that's the kind of person you want to be, as I am going to claim that privacy is a thing we need to be offering all users even if there are costs and to the extent to which the current banking system and financial system fails to operate if people are granted such privacy, that's on them, not on us. You can't sit around and claim that people should get to have end-to-end encrypted secure blinded "communication" with their physician and then simply refuse to blind all of the financial transactions that leak a lot of that same secret information.
It was a nice grift but it needs to stop. We are almost edging to 16+ years and there is no legitimate use case at all, except only the worst kind, (Speculation, Ransomware Enablement, Funding North Korea, etc..)
And before you mention the 3rd world needs crypto as a "usecase", India, Brazil and other countries have real time payment systems such as UPI, Pix, PayNow that work and are used in the hundreds of millions, almost infinitely way more than crypto is.
Crypto is a alleged 'solution' eternally searching for a problem.
Some recommended reading:
As long as the crypto exchanges collapses, Yes.
As long as we are building better alternatives that are actually in use such as UPI, Pix and the like, Yes.
As long as we as a society reject the crypto pyramid schemes and stop allowing more people to join it and in turn losing their life savings completely, Yes.
As long as long as crypto dies and withers out of interest, then YES.
We have tried private money before in the US and other countries and it completely failed.
You mention 'first world narratives' I don't see India complaining about payment issues or surveillance. See for yourself:
https://www.nytimes.com/2023/03/01/business/india-digital-pa...
Not a single mention of crypto, decentralisation, web3 or any useless crypto technobabble at all. Just damn well engineered real time payments that 300M+ people are using in the real world.
https://navendu.me/posts/upi-vs-crypto/
This is where the future is headed, not crypto.
Also the comment about private money is not true. There was a free banking regime in Scotland in the 1700s and 1800s. See [1] and [2] for some discussion. I've read a reasonable amount on the subject and economists typically agree it was a successful regime.
[0] https://www.ledgerinsights.com/payment-rail-npci-indian-bloc...
[1] https://iea.org.uk/blog/free-banking-was-robust-and-effectiv...
[2] https://menghublog.wordpress.com/2012/06/08/on-the-success-o...
Well, sure, your business interests will win if you ban competition.
If crypto is useless, it will die organically. If crypto is useful, it will thrive.
Why does the government always need to ban new things? If FTX wasn't a "crypto" scam it would have been some other type of scam.
When TikTok gets shitty, people will stop using that too.
This is supposed to be what makes capitalism strong, and instead we have authoritarians trying to disrupt any threatening innovation.
What is crypto's innovation that hasn't been done before?
Why should we use something more complicated, archaic, full of speculation, scams and a system that is engaged in a destructive mining process that requires burning up the planet to solve useless puzzles, which is even worse than the current system?
The reality is that people everywhere deserve privacy. It might should be telling that the country I most associate with your authoritarian take on this matter is the very country you (correctly) hold in such contempt: North Korea.
Imagine going up to someone and saying 'Can you send me money through TornadoCash or Zcash?', they might think you're a criminal or something, oh wait.
North Korea is a big customer of crypto, so the glove fits there, in evading sanctions.
No legitimate usecase.
I mean, I realize people have weird connotations associated with this phrase--and maybe it should be put out of its misery (but I will remind you that you're the one that started us down using this terminology, not me: I only talked about the "first world" because YOU--not ME--decided to start talking about the "third world", when you decided to pre-attack a strawman) but India is considered the "third world", not the "first world". I can't tell if I struck a nerve there, but I meant "the Western Bloc".
https://www.nationsonline.org/oneworld/third_world_countries...
Regardless, UPI doesn't offer privacy, as like... that just isn't within the scope of the design criteria for authoritarians such as yourself. On the other side of that particular divide, those of us disagree with the surveillance state, that makes all of this tech you are enamored with a non-starter: I want decentralized and private money--something at least as, if not MORE, private than paper cash--because I actually believe us non-terrorists deserve privacy despite the clear existence of terrorists.
https://scroll.in/article/1045536/are-your-upi-payments-farm...
> On February 22, while returning from his morning run, Kiran Jonnalagadda, a technologist, went to buy a coffee from a cafe in Indiranagar in Bengaluru. When the cashier asked him for his phone number while billing, Jonnalagadda refused. However, after making the payment, he was surprised that he got a message on his number from the merchant’s bank, thanking him for making the payment.
Yeah: I fundamentally don't believe that anyone--including my bank--should know who I am making payments with. I don't want anyone--including my bank--to be able to discern things about my sexual orientation or my medical conditions based on where and when I make payments. I continue to believe that everyone, everywhere, should have the right to such privacy, and that a world with a CBDC--or where all payments are made via cards and digital mechanisms such as your beloved UPI--fundamentally undermines that right.
> Several privacy experts have pointed out that this data sharing is part of UPI’s architecture, which is premised on collecting huge amounts of data from users and sharing it with multiple participants involved in a particular transaction. Being data-centric is one of the reasons, they say, UPI can sustain without any fees, as opposed to other digital payments, such as card transactions, which cost money.
Ugh. I mean, this is so much worse than I even thought this was going to be... and you seriously want this? You want the entire world to turn into the full-on dystopian version of surveillance capitalism, with every transaction being data-mined and where we are perpetually the product instead of the true consumer? This is just horrible, and if the occasional grift that comes with crypto is the price we have to pay to avoid this kind of authoritarian viewpoint, then I'm going to have to side with crypto.
> The amount of data shared on the digital spending habits of consumers is significantly more in UPI as compared to traditional forms of digital transactions. “In a card payment system, such as credit cards, there are fewer parties,” Lakshmanan explained. “Further, the data stored is not identifiable, since it stores credit card numbers, that too in a redacted fashion.”
The trade off for privacy is for growth and usage, just like WhatsApp. Eventually both will have privacy features built in down the line so this will be a solved problem, just like now that WA has E2E encryption, I see the same for UPI.
Crypto had 16 years to reach the amount of people that UPI has reached and what does it have to show for it? You talk about privacy whereas the majority of cryptocurrencies are not privacy friendly and even if a tiny minority are, the exchanges have (rightly) banned them and require KYC to trade them, making this 'privacy coin theater' pointless.
Either way, the third world have technologically superior payment systems than the US, at least in a few months when FedNow comes around, which is yet another reason not to use crypto.
> Kiran Jonnalagadda, a technologist...
Of course it's always the 'technologists', I am afraid 1 person is not a good sample size, but to entertain this anecdote:
You have heard of a disposable / prepaid SIM card right?, you can get one down the road and you're ready to go with UPI again.
So what is your proposed solution? All I can see with crypto is a complete Rube-Goldberg contraption of a system that is good at losing people's money. If your solution is another privacy pump and dump shitcoin, that isn't going to fly with the lawmakers and regulators, they will simply not allow this to happen and brand it as an unregistered security.
Call me authoritarian all you want, but we have things called laws, regulations, taxes that crypto is great at evading.
This is the same argument people use to defend attempting to ban secure end-to-end encrypted communication technologies--that clearly people don't really care so let's just take that away from them "because terrorism or whatever"--so color me unimpressed. The reality is that people everywhere deserve privacy, and all of your authoritarian reasons for taking that away from them are going to have a very high wall to climb to justify taking away that right.
> You have heard of a disposable / prepaid SIM card right?, you can get one down the road and you're ready to go with UPI again.
I am going to say this in no uncertain terms: zero-knowledge proof crypto payment protocols have a MUCH better user experience (and a MUCH higher success rate!) than requiring every single person--as, remember: I maintain that every person everywhere deserves privacy... this is a right that we should be ensuring for the people of our democratic state, and should be table stakes for innovations in payment technology--to maintain piles of burner phones (which isn't even all that easy to do, btw) while carefully managing the opsec inherent to having multiple pseudonymous identities.
> Call me authoritarian all you want, but we have things called laws, regulations, taxes that crypto is great at evading.
Great: as long as you continue to hold authoritarian viewpoints, I certainly intend to continue calling a spade a spade.
> This is the same argument people use to defend attempting to ban secure end-to-end encrypted communication technologies.
Going with the same muh privacy and security spiel isn't going to cut it with regulators. As I said before most 'cryptocurrencies' aren't even private. I would even go as far as to say privacy coins are closer to being a honeypot and actively being traced e.g. Monero Viewkeys.
I too want privacy in certain contexts such as travelling by plane, but we both know privacy is a trade off for convenience. The best you can do is limit your exposure.
Are plane operators authoritarian?
> I am going to say this in no uncertain terms: zero-knowledge proof crypto payment protocols have a MUCH better user experience (and a MUCH higher success rate!)
Citation Needed. 300M+ people using UPI disagree with you.
And you really think crypto is the answer to this? I am afraid you are in a dire need of a reality check as regulators will go through crypto with a fine tooth comb and not allow this.
To think that crypto would be allowed to continue to run rampant on and off the exchange ramps DEX or CEX is delusional.
You can call a spade a space all day, and have your poker analogies (so much for crypto speculation) but in the law, the house (the regulators) always wins.
I'm not sure if you're aware, but "crypto" isn't some company that will be regulated. It's math being done on computer networks.
What you're proposing is making math illegal.
This has been tried before with encryption. It's not a winning argument.
If you are this threatened by a distributed ledger, maybe you need to rethink some of your beliefs.
Regulation in the crypto industry means that crypto tokens are securities, banning and wiping out crypto exchanges harbouring rampant fraud. Putting in place and protecting consumers from trying to pile their life savings into crypto pyramid schemes. Not treating crypto tokens as a currency which is the biggest issue.
Not banning cryptography.
Please don't intentionally misinterpret my argument to attack a strawman for your own liking.
> Regulation in the crypto industry means that crypto tokens are securities
So cryptography is fine, unless it's part of a network that you don't like, used to secure a ledger that you don't like.
If you don't like it, then those ledger entries magically become "securities" and all that entails.
Why can't you let people have their worthless internet tokens without the government getting involved?
For anyone who watched "cryptocurrencies" come online, this is beyond stupid.
What is the legitimate use case for this, that is better than current system?
Why does it need to solve billions of useless puzzles, incinerate the planet and waste gargantuan amounts of energy at the same time to secure it?
> Why can't you let people have their worthless internet tokens without the government getting involved?
Because when your uncle, aunt, sister or in-laws comes to you for money when they are in a financial loss after placing their life savings into an ICO, or a crypto token.
It indirectly becomes your problem. If the crypto industry cannot regulate itself to find a legitimate use case beyond rampant speculation, it needs to be regulated as it is out of control.
The FTX crash is just one of many reasons why you cannot lose $8BN of crypto funds without getting the government involved.
There are $12BN lost and counting which is documented below for your recommended reading.
Also, nice list of people who did cryptography wrong. I guess there's more innovation to do.
To be clear, I think there's a legitimate need for crypto regulation to ensure that businesses that claim to be custodians do in fact have all of the crypto. The fiat rails are a sensible place to do this. Incidentally, this clearly illustrates why crypto is property and not a security.
I'm assuming you're deliberately misreading 'cryptography' with 'cryptocurrencies' so I'm going along with the term cryptocurrencies as this is my original line of argument.
Please continue beating up your 'cryptography' strawman.
My argument still holds, crypto tokens are not a store of value nor can be used as real world currencies.
> Also, nice list of people who did cryptography wrong....
And where is your list?
You'll be glad to know that my list is growing, weakening your argument, making a case for banning crypto all the while turning these tokens into unregistered securities when hard regulation comes inevitably knocking.
I'm an American. I got into crypto completely by accident. I needed to quickly send a large amount of cash to a family member out-of-state. I couldn't wire the money due to transfer limits on my family member's account. My banker told me it would take up to a week for a personal check to clear. My bank charges $10 for a cashier's check. FedEx told me it would be $65 to overnight the check.
Someone suggested I try Bitcoin. I purchased the amount in Bitcoin on Binance for no fees. I sent the Bitcoin to my family member for a transaction fee <$3. They received the amount within an hour. Within another hour, they had converted back to fiat.
Bitcoin solved a problem for me, as an American. I'd be glad to learn of a cheaper, easier alternative.
We're supposed to accept arbitrary genders, stop eating meat, stop driving cars, stop using cash, etc. But oh, let's ban cryptocurrency, because we can't have diversity in anything that actually matters.
These people are in another galaxy from me. Every justification they give for everything, to me feels like a reason to do completely the opposite.
It's utterly insane.
Are those pressing issues in your daily life, or things that you hear and read about a lot?
The important thing it that you keep ignoring the chemical spills and inflation behind the curtain.
A ban redirects attention back towards the core functions of crypto, and can discourage it as a speculative instrument - but it doesn't make it stop existing until you remove the last node, and the cost of doing that is staggering. So it's a very safe assumption to guess that it's here to stay, whether in a public and visible role or in the shadows.
Hmm, this sounds familliar. What else can be created at no cost and without limit? Booms and busts... that also seems to ring a bell