Former US SEC attorney: 'Get out of crypto platforms now'
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1. The courts are more likely than not to rule that many crypto-assets -- but not all -- should be regulated as investments. It won't be fun for a lot of crypto traders.
2. Over time, the usual giant financial institutions are bound to become the dominant market makers in crypto-assets. In all likelihood, one of them will end up buying Coinbase. Those giant financial institutions already know how to comply with regulatory bureaucracies worldwide, efficiently, at scale. Rinky-dink exchanges lacking the machinery for large-scale efficient compliance will not be able to compete and go out of business.
3. Bitcoin, which the SEC considers a commodity (it's explicitly excluded from the lawsuits), is bound to become even more dominant in terms of market capitalization. The longer Bitcoin survives, the more it will get adopted and integrated into the world's financial fabric, e.g., as a store of value. If this sounds far-fetched, consider that many smart and smart-sounding people have predicted Bitcoin's demise, and so far their arguments have been proven wrong: https://99bitcoins.com/bitcoin-obituaries/ .
We sure live in interesting times!
Without any real way to convert back and forth into real money, what reassurance is there that the price even means anything when every single holder is incentivised to lie and transact with themselves just to keep the numbers up?
How can a global system capable of five transactions a second ever be integrated into “the world’s financial fabric”? Side-chains seem to just be a great way to centralise around more unknown entities who may or may not run off with your cash.
Not really. To date, Bitcoin has been used successfully only as an alternate store of value -- one which, like gold, doesn't depend on the financial credibility of a particular government or country. Bitcoin's continued existence depends only on the integrity of its distributed consensus algorithm, which so far has withstood all attempts at hacking it. The "alternate store of value" opportunity is not small. Gold alone has a current market capitalization of $12.9 trillion.[a]
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Let's see if Bitcoin is comparably volatile…
Oh, it's highest point was only 1920% higher than its lowest point. That's definitely the exact same as gold. /s
Also, that ignores that gold has been a store of value for millennia. It's almost synonymous with wealth. In a total financial collapse, if all modern technology dies, you can be sure gold will still have value. 99.9% of people have no idea what Bitcoin is besides funny computer money.
People who believe that it would be "easy" to trade gold for other goods have also clearly never tried - since the entire modern banking system came into existence on the basis of the sheer difficulty of directly trading gold for other goods. No one knows how to value gold, they don't know what it's worth other then a brick is probably a lot. If they could, then the fake jewellery scam wouldn't be as successful as it is[2].
[1] https://en.wikipedia.org/wiki/Price_revolution
[2] https://www.kiro7.com/news/local/just-say-no-walk-away-fake-...
Stores of value are things like stocks, bonds, treasuries, real estate... and yeah commodities like gold and bitcoin. People don't care so much about volatility if they're planning to park their value there for a long time.
https://en.m.wikipedia.org/wiki/Store_of_value#Money_as_a_st...
A good store of value is scarce, durable, transferable and divisible - and I think most people agree that you compromise scarcity to get price stability.
We don’t have to take anyone’s word on this though you can just look at what endowments and wealth funds hold to see what people believe are the best stores of value: https://www.nbim.no/en/the-fund/investments/#/
A double speed attack doesn’t need anything particularly dystopian to happen. It doesn’t even need to result in a large transaction just someone deciding to short BTC and briefly having the computing power to destroy it. Even just a creditable attempt that fails could completely undermine it.
The only way around that is to constantly spend more money on hashing power than any attacker, but that cost is effectively unbound. Trying to stop some random billionaire doing it for the lulz means sky high transaction fees forever. No problem for an actual currency in widespread use, but a serious issue for a hypothetical store of value which needs constant investment just to break even.
I've used this to purchase goods both online and in person seamlessly. Custodial solutions (trust another party to hold your funds, like a bank) are turnkey. Right now the truly non-custodial solutions (i.e., run your own lightning node) are definitely in the realm of hacker/tinkerer, but continue to improve in terms of accessibility.
You can tip people on the nostr protocol. stats are on zaplife.lol
you can tip musicians on wavlake
there's a Minecraft server called satlantis where it is used as a currency
there's a lot of plugins you can use to build your own lightning enabled apps on lnbits
the space is still young so a lot of software is beta, but there's plenty to play with
check out the plebdev course on udemy if you want to dive into lightning development
The one from Bloomberg comes to mind: "He tells me surfers sometimes ask if he’ll take Bitcoin. He’s taken it on a few occasions, but the dips in price burned him. “Now I tell them it’s $25 if they want to pay in Bitcoin,” he tells me. “You don’t know when it’s going to go down.” " [1].
That's also to say nothing of the leader of the nation potentially losing millions of public funds day-trading crypto on his phone, the Bitcoin Bonds that no one bought, or the IMF refusing to offer funding to the impoverished nation as a result of this callous fiscal policy.
[1]: https://www.bloomberg.com/news/features/2021-06-17/world-s-b...
Bernie Madoff pulled off one of the largest (literal Ponzi) scams and evidently stated that he started in the 1990s for a run of just over 15 years until being arrested in 2008, although some investigators thought that his fraudulent activities started as far back as the 1970s (!!).[1]
The Lindy effect[2] works until it doesn't. Taleb popularized the theory in pop-culture with his books, but the problem is that it's seemingly impossible to know when/if something will collapse/fail to the point that this "effect" doesn't seem all that useful as a predictive indicator.
Anyone who predicts Bitcoin's demise must explain precisely how and why its network would stop functioning.
Well, not entirely without precedent, since private ownership of gold was outlawed nationwide in the US during the Great Depression. It wasn't fully legalized until 1974.
https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#Wall_Str...
Yet this value is a small fraction of gold's trading price. How do you explain the current price of gold?
For gold, perhaps 20% of its value is its actual use and 80% is for the scarcity. For bitcoin it's 0% for actual use and 100% of the price is its scarcity.
When you look at it like this, the difference between gold and bitcoin is not nearly as dramatic.
And if anyone thinks BTC/ETH transactions are slow and expensive (me!), around here the gas fee on real estate transactions is ~5% with a 6-month processing time...
Real estate market is also heavily (heavily) regulated, to the point that buying and selling houses require so much paperwork that it's not really convenient for scammers.
It's also quite stable, loans are secured by mortgages on the properties, I'm not sure anyone would accept bitcoins for the same purpose.
which entails a lot of the aforementioned paperwork and checks and law abidings.
if bitcoin could provide the exact same level of security, it could be used as an asset, granted it failed as a currency.
the problem is it was designed precisely to not adhere to the standards everyone expects from "old-school" transactions, hence its main purpose is speculation, and it's barely good at that right now.
To paraphrase a quote attributed to Stalin - how many divisions does Satoshi have?
Meanwhile there are a large number of entities that have already entered into long-term contracts denominated in cryptocurrencies and any of them would pay you something for it when they need to satisfy their obligations.
That doesn't mean the value never changes, but that's also true of government-issued currencies. That's what inflation is.
gift cards are vouchers
You pay $30 to the store so that someone else can spend the $30 in that store.
It's a certificate, not a currency, not a store of value.
gift card
noun [ C ]
uk /ˈɡɪft ˌkɑːd/ us /ˈɡɪft ˌkɑːrd/
a card that can be exchanged in a shop or on a website for goods or services of the value that is printed on it
it is also entirely dependent on the same external factors of cash, vouchers and checks: inflation, exchange rates, etc.
because it's simply a certification that you can spend that amount of money, in that currency, in that shop and that's it.
Also: a Patek Philippe is buying power as well
everything that can be exhchanged for something else can be defined as "buying power"
but an American Express or a gallon of water in the desert are buying power too.
the definition is too broad to be useful.
I'd counter that protection of buying power over long periods is what really matters.
My CD collection had an enormous buying power in the 90s, now it's almost worthless.
I reckon one cannot rely on buying power of CD or DVD or VHS.
> often to the benefit of companies and nation states.
In this regards people, companies and nation states interests are usually aligned, i.e a stable currency that provides protection against wild fluctuations and retains its buying power and its usefulness.
Unless you are an enemy of the people, I don't see why someone should not like it.
It works the same way as lending the money directly to a person, gift cards are simply more convenient to handle and are safer than cash, but other than that it's just a gift in the form of cash, no matter how many intermediaries are between the sender and the receiver, the input and the output will always match exactly.
If, for example, I give my friend Alex $20 to buy something for his little daughter but Alex uses it to bet on a football match and loses it, Alex has to take some money from his pocket and then buy the gift with his own money. Which is not different than saying he spent his money on the bet and bought the gift with the money I gave him.
If otherwise Alex wins, he will still buy the gift, but he will also have increased the initial sum by an x% which he can keep (or maybe try his luck again)
Buying a gift card is the same process, the company holding the money at one point has to give back something of the same exact value, it doesn't matter what they do with the money in between, what matters to the sender and the receiver is that the amount printed on the card is fully available at the check out (which is just lik getting the amount in cash and then paying with that)
For that matter some government-issued currencies do that too.
I also would point out that very few if any people would point to gift cards as a durable store of value and new world currency.
No one is tethering their Rolex price to BTC. No one is tethering their home purchase budget to BTC.
Why? It's all tethered to your income, in dollars, and your savings presumably mostly in dollars as well.
Even "jug of water in the desert" is tethered more to dollars than BTC because what are you more likely to have in your pocket, and why?
Dollars are tethered to the government taxing us in dollars, so we get paid in dollars, and our government has nukes & aircraft carriers and such. Everything then gets tethered to it because thats what we get paid & save in.
BTC is tethered to nothing, and there is no natural value you can back into such that you can justify any price level of it.
Other than its usefulness as "untraceable" (what people think, but not what is true.. it is more like "unblockable") cash, and for money laundering/drugs.. it is a trading instrument for punters.
Whether you tether the purchase of a home to bitcoin or the US dollar is more a state of mind, tribalism, etc. Both the US dollar and bitcoin have no intrinsic value. They both derive value from a human belief system - I believe they have value and that others believe the same. They are both just networks in that sense.
> Even "jug of water in the desert" is tethered more to dollars than BTC because what are you more likely to have in your pocket, and why?
This is silly. But to add to the silliness - you could have bitcoin in your brain. Just memorize your words.
> Dollars are tethered to the government taxing us in dollars, so we get paid in dollars, and our government has nukes & aircraft carriers and such
Now THIS is truly different. The US dollar has violence on its side. I concede that bitcoin is a peaceful currency - at least thus far. Hopefully it stays that way.
> Other than its usefulness as "untraceable" (what people think, but not what is true.. it is more like "unblockable") cash, and for money laundering/drugs.. it is a trading instrument for punters.
This is political bias and parroting talking points of anti-bitcoiners. While your other points are thoughtful, this is not. Why not just call bitcoin a butthead?
so how do you explain dollarization of failed economies? Such as lebanon, or venezuela etc?
Surely, you're not saying that the US gov't somehow is exerting violence on another country to make the dollarization happen.
even the Iranian Rial is more reliable
Not surprisingly Iran and Russia are teaming up to create a new stablecoin and not adopting BTC, because using BTC right now is literally the best way to get caught (for example infringing sanctions).
The people that can afford to trust and use bitcoins for exchanges are the people who do not have to fear the surveillance of State actors/secret services/national agencies(NSA,FBI,Europol,China's central bank,...)/etc and that would be much better off using another FIAT currency (USD, EUR, etc.)
With dollars, all Americans need them. So do international companies that transact with Americans. If you think the US government will hold, then that belief will be true, it's only a question of the number of steps.
it depends on what the crisis is, and whether this same crisis also makes people believe that the US gov't will not hold.
Bitcoin appears to be the next phase of that manmade currency.
Some of the main ways currencies and commodities get there are value stability (sticking within a certain band with <100% annual swings), wide acceptance and utility. After 10 years of many techno-smart people trying to engineer cryptos to become that we are nowhere near any of these promises being fulfilled.
I don’t think regulation is a bad thing in crypto exchanges specifically. I think any rational crypto exchange would welcome it. Despite claims to the contrary compliant exchanges in many markets not aligned to big players start up all the time. That’s great, and I think a lot of crypto exchange operators have been hoping for a clear regulatory regime from regulators in the US. The current “you better comply with unwritten regulations or we sue you” regime is absurd.
If it fails, it's most likely because block subsidy will become negligible in a few decades and transaction fees alone won't always provide sufficient security against re-org attacks.
How can a prediction of what happens after 2050 (i.e. after a total of 10 halvings to make subsidy negligible) have been proven wrong "so far" ??
transaction fees were intended to keep miners active
I say this as someone very much opposed to the "deflationary" model, because I think it's bullshit that generates a "landed gentry" (thanks, spez) that can forever dominate the distribution of a currency. If you're going to make a currency, inflation of some degree is required to ensure fair(er) distribution over time.
I just think the idea that, when block rewards dissipate, miners will suddenly lose the ability to think more than one block into the future should be called for what it is: bad logic. It's also readily disproved by the most trivial glance at their history of long-term, forward-looking investment.
The claim is that BTC surely isn't fraud because the chain is public knowledge.
This is irrelevant, because the vast majority of data is bullshit.
The gold market has been manipulated to and fro, even with regulations.
The idea that BTC isn't manipulated to oblivion JUST BECAUSE there's a public ledger (missing 99.99% of the data) is naive.
Madoff also was not ultimately caught and his scheme ended because of the accounting fraud being revealed (i.e. the fraud was not that important). That happened later. He was caught because a market downturn resulted in him being unable to acquire new victims for the Ponzi scheme, which would have otherwise perpetuated it by taking new money in and using that to pay out existing investors.
Since Bitcoin depends on a functioning network it seems more likely than something physical like Beanie Babies or baseball cards to one day become effectively worthless.
That's a 162 contiguous years of financial records.
[1] https://www.gov.uk/government/news/repayment-of-26-billion-h...
If you live in America with this viewpoint, its pure doomerism.
Isn't there a value of Bitcoin that if it falls below all mining is unprofitable?
Are these incorrect assumptions?
Power is more complicated. By design, Bitcoin has one block created by one miner every 10 minutes on average. All other work by all other miners is discarded and unused. So no, only a single miner is required to sustain the network. But, there is a economic incentive to add miners to the network when the price goes up, because even though only one miner gets rewarded per block, that reward is worth quite a bit. Currently approximately $1M of bitcoin are mined per hour.
There is no specific value at which all mining is unprofitable because mining difficulty is dynamically adjusted to maintain a 10 minute block generation rate regardless of the number of miners.
And arguably, Madoff-style Ponzi schemes are more prevalent than ever.
The issue here is that the Bitcoin reward has to pay for the mining cost, but there is nothing preventing the Bitcoin price from dropping lower. So miners will either have to mine at a loss for (on average) a week until a difficulty adjustment, or turn off their equipment. Turning it off will make the wait even longer and the mining price per block will increase even more for the remaining miners - leading to more of them operating at a loss or shutting down which makes the problem even worse.
I've been saying for years that Bitcoin will go down like Second Life. Remember when there were news stories about Sony or whoever buys an island for X million dollars? And now... I mean it's still there (presumably), I don't think they've turned off the servers or anything, but no-one cares and it's obviously not a good investment (and that's with it being propped up by a few people who actually enjoy the game, which Bitcoin won't have).
The ability to actually buy stuff with Bitcoin is already past its peak (more places are removing Bitcoin payment options than adding them). It's less in the news than it was. There probably won't be a specific collapse moment (when Tether's reserves get exposed as fraudulent and they stop withdrawals I expect Bitcoin's price will crash, but it's crashed before and there are still true believers left over). I mean eventually the last miner will turn off their rig, but it will be irrelevant long before that happens.
Based on what evidence exactly? Consider that an entire nation state has since adopted it as its national currency, along the USD in the last 3 years; that means it works in parallel with the USD. Not to mention that merchant adoption, while as you said may be in decline (citation needed), what you have instead is more and more commerce being dealt with on LN: as was always intended due to network bloat.
Listen, I get HN is entirely averse to BItcoin at this point (look at my post histpory, I prove it time and time again it's based on stuborness rather than fact), what I fail to understand is why you persist in this folly in thiking becasue it doesn't work for YOU, you assume no one else has any use for it.
Again, most here who work in tech are not c-level corps or founders so you don't understand very much about the narrow mechanics of day to day because you are not rewarded for doing so, and quite frankly are paid very well for your ignorance on these matters.
But try to understand that if even China has backed off with Hong Kong dealing with BTC, you have to come to terms with the fact that adoption in trackable and metric based analytics are out the window at this point. Exchanges are one way to track transaction volume and that has been as healthy (perhaps more so, I don't know I'm not a trader) than it was 5-6 years ago. I know this because I was there, helping scale this tech and giving it more usecases that even it's most ardent proponents couldn't see and used similar points of view as you are making now (hence USAF and it's MANY forks before that).
You are wrong, and the fact that you can't even admit that possibility is what makes your point even more invalid because you refuse to see a contrary POV.
People have criticised Oceangate’s approach to security for years. By your logic I could have turned around to all of them and said “you’re wrong”, up until a few days ago when the CEO got trapped inside a submarine to die. The people who said their safety approach was a ticking time bomb were right all along, it just took time to be proven out.
Doomsday cult leaders no longer insist the world will end on a specific day; they insist it will end imminently after a series of vague events. Your skeptics will die of old age before you can ever be proven wrong.
That I agree with actually! Part of its utility in being used for drug purchases comes from the other uses for BTC meaning that theres liquidity. Without that, it's still useful for black market transcations, but less useful than it is today.
Roughly speaking, the folks "living" in Second Life are part of a strong online community, and don't much care about the "investment".
The sociology and economics of Bitcoin are very, very different from Second Life.
>Anyone who predicts Bitcoin's demise must explain precisely how and why its network would stop functioning.
This can be done pretty easily, once enough countries ban and condemn it for its contribution to the climate crisis and to crime. There's no need to catch every transaction, just to ban it enough to shrink the mining pool. Once the active network has shrunk enough, the transparent permissionless structure ensures we can ran the obvious attacks on it.
Since it's now underground and these actors aren't the nicest of people, coordinating the forks to resist the attacks will be difficult and costly. People give up after each attack, which makes running another attack easier and so on. Eventually maintaining the network as is won't be worth it to anyone.
Only a small number of people can participate in new block chain entries, assuming demand is high.
These happen every ten minutes, and well under a hundred thousand transactions are allowed.
Get in line to spend your money; it may be years.
This would never work!
It’s pretty easy to hide wash trading in the ledger to manipulate the price of bitcoin to artificial levels.
Just because transactions are public doesn’t mean that there isn’t associated data hidden (eg, identities, if dead wallets are really dead, etc etc).
Bitcoin may be great, but to say it must succeed because it’s transparent doesn’t address the risk that there is no basis for value and it’s only purpose is speculation and tricking a greater fool to keep the price up.
No, they don’t. There are a variety of scenarios that do not require the government to eliminate the ecosystem.
For starters, they could make if very, very difficult to use for large capital purchases (houses, cars, etc.)
They could impose fines on businesses for accepting crypto — or specific types of crypto — as payment for goods and services.
Can they completely eliminate your ability to trade a bitcoin with your friend? No, of course not, any more than the federal government retrieved every ounce of gold back when that was illegal. But they can make it so painful to use that most people simply won’t.
What I meant is that the arguments used by many past predictions of Bitcoin's demise have been proven wrong. Anyone making new predictions of Bitcoin's demise must explain precisely how and why its distributed network would fail. Sorry if that wasn't clear in my comment above!
Someone could say "Many past novel currencies and securities have failed; any prediction of Bitcoin's success must explain precisely how and why it will still have worth in 50 years." To me this seems like the same argument you're making - belief that a trend will continue until proven otherwise - but I don't find either of them very convincing.
I think any argument either way should have more details than "it's worked so far!" or "it'll eventually fall over like Madoff!" but you seem to only be pushing the burden of proof in one direction.
Barring a reasonable, coherent, and factually-supported explanation for why an existing trend might not continue, the existing trend continuing tends to be a reasonable default prediction.
A systemic banking panic.
Everyone becomes worried about being able to extract money/value from the crypto ecosystem as a whole due to the failure of some exceptionally large entity (Coinbase or Binance or Tether failing).
They all run for the exits at the same time trying to cash whatever crypto they can into currency. With no sort of backstop, no FDIC, no government intervention, no failsafes, etc there's nothing to stop it from all unwinding to effectively zero in a panic. And panics aren't concerned about market efficiencies or intrinsic value or network effects or anything other than the ability to flee into some other unaffected liquid asset. The contagion would spread throughout the network with people trying to take any exit they could find until that exit was shut down.
Given that the crypto ecosystem in general doesn't believe in government regulations to prevent panics it is nearly certain that one will happen, which will bring crypto to a very sudden halt. The probability over time reaches 100%, but it will likely take some kind of precipitous drop from a sufficient height that no individual Billionaire will be willing to step in and buy it all up cheap (previously crypto has likely been "small enough" that a billion here and there was able to stop the crash in e.g. 2018).
It is impossible to predict when it will happen since it requires knowing how much systemic cash is available for withdrawals and how much can be raised, and the timing of financial entities failing, and the appetite for risk of anyone with deep enough pockets to try to bail it out.
And Bitcoin has never really been tested by a recession that would cause it any kind of problems. The V-shaped pandemic recession was cushioned by a lot of injected liquidity in the markets and people switched to greed almost right away after the first bit of panic waned. It has never been stress tested by something like 2001 or 2008 in the broader economy.
Mining made illegal by locales, states, or countries -- because of energy pricing.
BTC transfers made illegal through law or made undesirable in some way (say KYC but with like actual teeth)
And then there's the long shot chance that a nation-state (China perhaps) figures how to program their quantum computers to break BTC algorithms, snatching away value, before investors even realize what even happened.
For the record, I don't think it would happen. But also I didn't think that AI would be a thing in my lifetime.
A quantum computer breakthrough that destroys BTC does really fundamentally cause BTC to fail as an algorithm, which is a bit higher level.
I don't think that is likely, and we don't really have AGI, although LLMs are great for certain kinds of queries and polishing language or doing boilerplate coding.
I've read that various cryptocurrencies (including Bitcoin) are/have worked on quantum-proof verification algorithms. Not sure what it entails, but people are working on it.
Some of those "everyone" are people who live in countries with both currency controls (so they can basically only buy their national currency, or cryptocurrencies), and a horribly inflating national currency. Even a non-exchangeable-for-fiat Bitcoin is better in their eyes than the only other alternative they have. No one wants to spend 100 trillion Zimbabwean dollars on a loaf of bread.
In the more stable world you'd need the failure/shutdown of exchanges approximately simultaneous with the strengthening of those national currencies. It might happen, but it'll be a while.
I'm anti-crypto, I just don't see it happening in the near term.
A minority of people flooding to the exits can easily remove all the liquid cash from the system and cause it to collapse. There's probably no more than around ten billion in cash at any one time supporting a nominally trillion dollar financial system. A 1% stampede for the exit can produce a crash by draining that liquidity to zero.
And when the dust settles it will all have been a transfer of wealth from the poor to the rich.
We don't really need to worry that The Great Pyramids have been a hologram all this time. We don't need to worry that the US is going to make The Great Pyramids illegal (I mean, anything can happen, but it's a much smaller chance than w/ Crypto).
It's called the efficient market hypothesis.
If it was known that the price of Bitcoin will collapse on the 7th of June 2025, every owner would have sold their Bitcoins on the 6th of June. But then the price would collapse on the 6th, not on the 7th. But of course, the definite knowledge the price will collapse on the 6th would mean the price would collapse on the 5th and so forth.
Hence why accurate, definite and widely believed predictions are impossible.
Source; I make a living exploiting market inefficiencies.
It was so cool, especially after reading ready player one and discovering that one of my favorite Sega games as a kid was Galaga, but didn’t know the name until I saw it in an arcade a few weeks ago
80s movies about smart kids are awesome
If economics was a functioning field of scientific study, The list of top 100 richest people would all be economists withholding scientific findings for their own gain, not a bunch of rich kids swinging their money dicks around.
There are a lot of examples where the assumptions, especially this one, of microeconomics hold. Profit-maximizing corporations don't have cyclic desires. In many cases, people don't have cyclic desires (e.g. in the flavor of the soda they want). Microeconomics starts with those, much as becoming a structural engineer requires understanding the basics of Newtonian physics.
They get into more complicated math in more advanced courses, but they don't start there. All of engineering, science, etc, is "the math at a deeper level is too complex, here's a simplifying but false set of assumptions". And then a subset of people who learn about that care about cases when the assumptions break down and studies the next level.
GP: Bitcoiner, dooming everything else.
Parent: Anti-crypto (the majority here), up to the point on comparing Bitcoin (which might be a bubble, that's not the point here) to a Ponzi (that it is not: Supply is fixed, there is no new deposits paying previous depositors).
This might be confusing, because many other crypto products are very Ponzi-like. For example, Voyager literally paid new "stakers/depositors" (a.k.a. investors) with old "stakers'/depositors'" (a.k.a. investors') money to reach the insane return rates they were advertising.
Huh? Every time somebody buys a coin with fiat that's a new deposit paying a previous depositor.
A healthy 20-year-old can fall over dead from a brain aneurysm. Doesn’t mean actuarial tables aren’t useful.
In theory, it does win. In practice, few people have enough liquidity to keep up and even then, they need to know when to quit.
Few people have enough liquidity to keep up with bitcoin... what does that mean?
But... There's enough demand for an international unregulated currency that I think it'll be around for awhile. There are plenty of people that tolerate its flaws. (Specifically, the volatile value.)
I personally think once the scammers and "true believers" move on, Bitcoin will stay around until some other international "unregulated" internet money comes around.
Interesting! If I couldn't find reliable data, I'd have concluded that I didn't know.
In this regard, ETH always seemed a bit more on track, in the sense that there have been attempts to use the ETH blockchain from the beginning for the purposes of computation, other than "just" as a currency.
I'm not disputing what you're saying about the SEC position regarding Bitcoin, it just seems to highlight for me something a bit off about the SEC position, even if it is favorable in certain ways toward Bitcoin. I come away from all of this feeling a little like neither the SEC nor the crypto community at large are quite being honest or accurate about what's going on with crypto or how it should be regulated.
That is the sense in which it's commodity-like. It's the underlying electricity which is consumed.
It's far from clear that this is really valid, but that's the sense of it.
No intrinsic use. No mass. No degradation. Transports at the speed of light. Perfectly scarce and not debaseable.
All other commodities exist at various vectors outside of this null point. They have various usefulness in and of themselves. They have mass and volume. They degrade at different rates. They take a lot of time and energy to transport. They aren't perfectly scarce and some are absurdly abundant.
Humans have overloaded various commodities throughout history with the memetic concept of "moneyness". Mostly gold and other precious metals because they have properties close to the null point that we find most important (primarily scarcity and close to zero degradation). We hoard these non null commodities because we came to collective consensus to imbue them as the database of our debt to each other, otherwise known as money. However, this had the negative effect of tying up otherwise useful commodities that we might have been able to put to productive work. This money also had the negative effect of being difficult to transport, store securely, and fractionalize.
Then came government backed, faith based currency. It's a near null point commodity and we really like that when choosing something to imbue our collective moneyness concept in. No intrinsic use. Low mass (paper) to no mass (digital). Limited degradation (paper with replacement service) to no degradation (digital). Easy transport (paper with high denominations) to light speed transport (digital). However, it's scarcity is highly questionable. To quote Satoshi, "The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."
Bitcoin is the null commodity because it solved the final piece of the puzzle that we tried to solve with fiat currencies. Eliminating trust in central authorities and perfect scarcity.
Bitcoin failed as a store of value, it's up some 20,000% since 2010 and basically infinty since the day of its first trade (back when the first bitcoin was traded for some trivial amount of electricity)
Store of value is a very specific term
You're arguing that because Bitcoin hasn't met its demise, it will therefore be widely adopted as a "store of value"?
As if there are only two possible outcomes: Complete failure or complete dominance as a store of value. This is where your argument doesn't make any sense.
I suspect we'll discover that all of these altcoins and weird financial instruments didn't actually detract from Bitcoin at all. Rather, they contributed to its rise by juicing demand and pumping huge amounts of leverage and pseudo-liquidity into the cryptocurrency ecosystem.
If crypto becomes boring, I don't think the natural conclusion is that adoption will increase.
How long do we need to give Bitcoin a chance to gain mainstream adoption as its been 15 years already ? So far I don't see much real use except speculation, extortions, get rich quick scams and websites where you want to be anonymous. For the most part.
"We" don't need to give it a chance. Time is giving it a chance, every new day, indefinitely. For all I know, it could take decades, not years, for Bitcoin to gain as much credibility as, say, gold, which has been around since the advent of ancient human civilizations. I don't know. Maybe it will happen much faster, like everything else online?
> So far I don't see much real use except speculation, extortions, get rich quick scams and websites where you want to be anonymous. For the most part.
The biggest use of Bitcoin today is as an alternate store of value, by a large mass of "HODLers" who, as their name suggests, will hold on to it for dear life.
Bitcoin is not the main asset used for speculation, extortion, scams, ransoms, drug deals, etc., today. The main asset used for illegal activities today, worldwide, is the US dollar. It's not a coincidence that the briefcase full of $100 bills is a prop in so many movies/TV series depicting illegal shenanigans. I suspect that more money is stolen in USD via hacked bank accounts, hacked credit cards, hacked online accounts, hacked SIMs, etc. than in BTC via difficult-and-dangerous-to-execute online ransoms.
> We sure live in interesting times!
I'm not really sure it's that interesting, or new at least. Since ancient times people have valued things as a store of value that have have been valued by other people as a store of value for a long time. Some of the best material examples are gold, silver, natural gemstones and works of art. These things are overpriced by orders of magnitude compared to their material economic value.
Bitcoin just takes it to the extreme in having negative objective physical value, i.e., in being immaterial and physically completely worthless, while taking up resources to even exist as a concept or meme.
So sure, it very well might be here to stay as a store of value for a long time. If history is any guide on these matters, it will be a store of value (and a profitable area of speculation) for the rich and big powerful institutions while the enduring and persistent meme in the heads of the common people keeps its value alive.
Bitcoin is fundamentally a terrible store of value thanks to how fuckin volatile it is.
2. Err, I can't see any big banks or other entities touching COIN, and the CRIMINAL proceedings that it will likely be embroiled in with a 10-ft pole!
3. Maybe BTC will come to 'dominate' the 'crypto' space, but that space will be a smaller and smaller part of the US (and global) economy. Although it never got very big to start with. BTC is used for approximately 0.0% of US transactions right now (rounded to nearest decimal place).
Or do they mean conceptually it is, even if it’s a terribly volatile one?
I have not seen a single of use Bitcoin within 50km of me _and_ online outside of uses in degenerate countries and trading them for the sole purpose of trading them.
This feels like flat-earth theory, which will never go away, but their "science" if you call it that, is so flawed that they can't be used for anything outside of small terrestrial physics.
Similarly, Bitcoin itself will never go away. But there is no way the average folk will be able to wield them given how many times they have been scammed out of their fortune.
I don't know the details but, basically, it's not because we can manufacture synthetic diamonds that we'll one day be able to manufacture non-radioactive synthetic gold.
Either way, there's no foreseeable way either would ever be cost -effective
That's ok though. Playing with new paradigms is a young person's game.
Doesn't inspire confidence when the average response seems to boil down to a form of religious fervor.
Which is too bad, seems like it would have been the perfect place for a thorough rebuttal.
As for why there isn't much in the way of thorough rebuttals, I suspect anyone trying to formulate one would pretty rapidly run into the wall of reality not agreeing with their existing stance.
Regulated exchanges and coins in cold storage you can’t do much with is the worst of both worlds for those people.
The people who got in later don’t understand “owning” a bitcoin on an exchange and having the key in your possession are VERY different. Those people are idiots.
I assume they all still hold bitcoin or dream of doing so.
One side says "Bitcoin bad!"
I assume they don't hold bitcoin.
I think the idea is sexy, and it definitely harkens back to the earlier hacker/counterculture days of the interwebs.
But I guess I will just sit on the sidelines. I don't even lament selling bitcoin at $300 any more. :)
But now I feel like I dodged a bullet, I could have been one of those zealots that spent all day every day thinking about crypto, and I'm very glad I'm not.
It does sting. But I had to get a car to get to work back then. So there's not much to be mad about.
You make decisions with the information you have. No one had any way of predicting Bitcoin pricing (or the cheap money trend that juiced its price & crypto companies funding rounds).
The original poster makes the key point - the institutions running crypto are unregulated and are doing unverifiable things with customer assets and trades. That rarely ends well. Most of the scams are classic ones. Most of them are in this book from 1841.[1] They've been done before, for other kinds of investments. If you know about John Law's bank, and the Mississippi Bubble, and the South Seas bubble, and tulipomania, and the original Charles Ponzi, you'll recognize all those scams in the crypto industry.
They come back whenever regulation is weak.
- FTX was a bucket shop - a broker not really doing trades, just stealing the customer money.
- NFTs were tulipomania - hype and enthusiasm with no value behind the asset.
- Axie Infinity was a Ponzi scheme - early adopters paid off with deposits of later adopters, until the supply of suckers ran out.
If you know the list of standard financial scams, you can easily slot most crypto schemes into a standard category.
[1] https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
John points out how any custodial institution gets to operate if they are not trading securities, but any other asset, while using this mere observation to bolster an alarmist view about custodial institutions that trade crypto, as if there is something unique about crypto exchanges, without considering that all spot markets currently can function in the absence of any regulatory framework.
John then amplifies the (unresolved) SEC stance about why the SEC is the most accurate regulatory authority to enact this crusade of getting exchanges into [SEC] compliance or nonexistence. In theory there are also some crypto assets that can be traded on a custodial spot exchange without SEC involvement, such as a Bitcoin-only exchange, alongside…. which other cryptos? Nobody knows but the SEC says its clear!
John hides behind the idea that its the beginning of a broader enforcement gauntlet, while talking exclusively about the SEC enforcement and not any other possibility.
The crux of his alarm is that there is no survivability path, which is also not an absolute. Even in a world where all crypto exchanges must be registered securities exchanges only trading registered crypto securities, the incumbent crypto native operators can participate in that, and establishment investment banking players are already positioning themselves to participate in that world. So custodial crypto exchanges dont go away in any of those scenarios, they just get bigger and more robust for even larger establishment beholden pools of capital.
I've yet to see cryptocurrencies actually solve a problem that your everyday average person has when buying groceries or going out to eat.
They just make things more difficult and confusing, and all these attempts to alleviate that just lead us straight to "banks, but worse".
How is “Everyone can see every transaction you have ever done” censorship-resistant, doesn’t that mean you have to be extra careful about every single person or service you have ever transacted with?
And, excluding the $5 wrench seems a really, really large oversight when it results in every single asset or piece of ”money” you own being irretrievably, instantly stolen.
Nothing prevents us agreeing to trade those bitcoins for cash or anything else.
You are correct that some Bitcoins are "tainted", which is why it's not the absolute, most perfect cryptocurrency. But they are still censorship resistant. That was my point. They still can't be confiscated.
And to further your argument, if you want to find the best crypto that is actually fungible - that would be Monero (all Moneros are the same, there are no "tainted" or "blacklisted" Moneros). However, because of that very fact it is banned on exchanges and blacklisted everywhere. It's just too good.
Bitcoin is good enough to get popular yet at the same time shitty enough (traceable) not to get outright banned, that's why BTC is here to stay while better coins like Monero will perish.
> How is “Everyone can see every transaction you have ever done” censorship-resistant, doesn’t that mean you have to be extra careful about every single person or service you have ever transacted with?
Just to reiterate. It's because not even the government can confiscate your Bitcoin (them beating you into telling your seed phrase means you still giving it up and let's not pretend there aren't 21st seeds and duress phrases just for this very reason).
> And, excluding the $5 wrench seems a really, really large oversight when it results in every single asset or piece of ”money” you own being irretrievably, instantly stolen.
Again. Anyone with significant amount of crypto will not be public about it, will keep duress phrases, 21st seed words and extra wallets while giving up the minimum. In theory, with $5 wrench you could keep beating a totally innocent person hoping they give you a crypto wallet that doesn't even exist and if they gave you one, you could keep beating them until they give you the "other one" and the "third one", it just isn't a solid argument.
They can really easily do that though. A court can say "give us your keys or you are going to sit in jail until you do and we will record your conversations so if you tell the keys to someone else, we'll sell them"
It's not much in its favor, but a sufficiently motivated person can resist handing over cryptocurrency better than they can any other asset.
If I've got $20 bill or a gold bar in my pocket, I can use it at the store if I can get to the store, but someone could easily confiscate it from me. If I have a $20 bill or gold bar buried in the woods behind my house, it can't be easily confiscated from me, but I can't use that at the store, even aside from whether I can access a store. If I have a cryptocurrency wallet, I can use it in the hypothetical cryptocurrency store if I can access it, and it also cannot be easily confiscated from me (assuming reasonable security measures).
The real criticism is "what cryptocurrency store?" and that's the real reason cryptocurrency isn't very useful. I'm not arguing that cryptocurrency is good or useful, I'm arguing very narrowly for one specific point: "owning cryptocurrency" is more like knowing something than it is like possessing something.
So? If sums is high enough they STILL can't confiscate it. In some cases it is preferable to spend some time in jail versus giving up outrageous fortune. They still can't take it by force. Also, only a few countries with backward laws (like the United States of America) have laws that allow that. Something insane like what you propose would never be possible in a developed country with a solid judicial branch like Estonia, for example.
This also doesn't account for a government being able to just outlaw cryptocurrencies. They may not be able to confiscate your bitcoin, but they sure can throw you in jail for trying to spend it at the grocery store. Or impact your ability to access the blockchain, etc.
It doesn't even do that properly, because there is no guarantee of service given by the system. Miners could just decide that they don't like you very much and refuse to process your TX. Or they could conspire to blackmail you: "pay us or your tokens are useless". Sure, someone might be willing to process your TX, or you could try to do it yourself, but that might take a long time or it might fail altogether.
Furthermore, as the Ethereum rollback has shown when the original "DAO" was hacked, the vast majority of crypto project have some sort of backdoor that can and will be used.
The only thing crypto "solves" is oversight by governments, and the people who are interested in that the most are criminals or actors who have been sanctioned like North Korea or Russia. Somehow, I don't quite see the value in that.
Some miners perhaps. But others will like every tx that pays a decent transaction fee and these tend to eventually get your tx included.
Second: so long as there's one single mining pool that is not colluding, then any censorship attempt is going to be moot. You would need to have, not just 51% of mining-pool collusion, you need 100%!
Third: even if you had 100% collusion, this "problem" is actually being solved with technology, it's called Stratum V2 protocol. Stay tuned.
Last but not least: I'm really surprised this level of ignorance still exists in the HN community wrt crypto. I guess we are still early.
Now, if you're suggesting one-off cases like this are the counter-argument for the censorship argument, I'll bring you the bad news: this has never happened on chains that are not shitcoins, e.g. bitcoin.
Crypto only solves what it was designed to: A specific version of the byzantine generals problem. Turns out, nobody needed it solved.
People still use it as a permisionless financial platform, which allows the delivery of novel consumer goods. Primarily gambling, speculation, and other forms of entertainment.
* P2P exchanges: LNP2Pbot, hodlhodl, etc.
* Decentralized exchanges: FixedFloat, Uniswap, etc.
With crypto trading platforms, the SEC lacks any sort of oversight and access — and has scant ability to detect, investigate and deter fraudulent conduct. As a result, the crypto marketplace operates without much supervision
No doubt this has/does/will harbor criminal activity, but it will also foster the ability to exchange goods and services without third parties. This has huge benefits when the third parties are rogue and overextend their surveillance. Freedom is what we should be after. This has a cost in terms of criminal activity -- even to the extreme.
"He was writing about a tax dispute between the Pennsylvania General Assembly and the family of the Penns, the proprietary family of the Pennsylvania colony who ruled it from afar. And the legislature was trying to tax the Penn family lands to pay for frontier defense during the French and Indian War. And the Penn family kept instructing the governor to veto. Franklin felt that this was a great affront to the ability of the legislature to govern. And so he actually meant purchase a little temporary safety very literally. The Penn family was trying to give a lump sum of money in exchange for the General Assembly's acknowledging that it did not have the authority to tax it."[1]
> it really strange how the things that my generation valued (e.g. individual freedom) are being overturned
It's interesting for me as well. In the US, when I was younger, I always perceived "individual freedom" as a fundamental element of the right. It's only now as I get older that I see that's not really the case (at least, not anymore). That it seems as if the left has taken on that role of championing individual rights over that of the state.
I think in the context of crypto, I think it's a fine balance of freedom versus regulation, which is why it's taken so long to get anywhere with it.
Honestly, I think a large part of the reason it hasn't really been touched much is the feds ability to crack down on criminals despite using crypto. The belief that it's anonymous and untraceable makes it seem like at some level, it's easier to track people down. And in a circle of criminals, you only need to break the weakest link.
1. https://www.npr.org/2015/03/02/390245038/ben-franklins-famou...
The proper answer is not "absolute unrestrained freedom", nor is it "absolute safety at all costs". We have to find a balance between the two- one that lets people live their lives in the way that they choose, but protects them from predators (or just grossly irresponsible actors).
Just because the needle is moving, does not mean it's a corruption of some magical ideal. It's just a sign of shifting consensus.
As an example, 1933 is the origin of the Accredited Investor rule in the US which directly interferes with commerce between two consenting adults in order to reduce societal fraud and risk. You can find similar laws from any decade you care to mention.
Unfortunately for people who say no to it, it's the same as people who don't like fiat money or the gold standard or whatever: youre stuck with it whether you like it or not. I don't think this stuff is going away.
I think one of the oddest things is that I don't much see the following view, which is roughly mine:
I'm generally pro the idea of crypto -- but more importantly, whether I love it or hate it, this particular fight was, or should have been, completely expected and anticipated. As in, this was the point of it; anyone into crypto should 100% welcome this battle, if you were paying attention to the idea?
Unregistered crypto-firms do not have to allow SEC access.
This thinking does not apply to decentralized exchanges, only CEXs.
1. The whole crypto is a get rich quick scheme with predatory practices everywhere. It's a wild wild west with no sort of regulations. Well, guess what, regulated industry is no different either. If people wants to commit crime, they will commit crime. The whole pyramid and MLM schemes have originated from traditional routes. it's nothing new. And regarding fraud, Did everyone actually forgot about Enron, Bernie Madoff and of course 2008 financial crisis where the almight SEC played a key role handing over billions and billions to these investment banks who knowingly committed fraud and pushed some of the pension funds into bankruptcy and pushed the whole world into recession. What's this fascination towards the old methods even though they repeatedly showed us that they are inadequate
2. I haven't seen a single use case of blockchain in the world yet. This is a valid critic and I do understand. Any decent distributed system engineer will understand that decentralisation is hard. consensus is hard. You know what was hard for almost 25 - 30 years and everyone's losing their shit right now and drinking the cool-aid? The good old AI. No one cared about neural networks until the compute caught upto speed.
Like it or not, we are entering a new phase in the technology where two things will definitely rise to prominence
1. Data is / will become the most essential commodity and I am terrified by the idea that few monopolies with their "don't be evil" facade will control them and become trillion dollar firms. We need to switch the model and reimagine how the internet should work. If anyone calls this paranoid,I am happy to place a bet that in ten years, if nothing is done, we will be living through orwellian future
2. A massive decoupling from US economy. I wonder what people call US economy if they call crypto pyramid scheme. Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy
When you think hard about 1&2 and come up with solutions, congratulations, you just reinvented the blockchain. If not, I am happy to hear how would you solve. In a nutshell, for god's sake , try to understand the reasoning and motivation behind why new ideas originate, gather a community and attract smart people to work on them
> A massive decoupling from US economy. I wonder what people call US economy if they call crypto pyramid scheme. Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy
US Treasuries would like a word (they are the safest financial asset in the world, "full faith and credit"). There is no safer capital market than the US. Sure, there will be some de-dollarization, but that won't fix a rapidly aging China, a "teetering near the cliff" Russia, a Central and South America that is slow steady state, etc. And Africa? Very young still but a hard sell for investing.
> Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy
Debt backed by future productivity, but also debt that can also always take a haircut during legal proceedings. Laws and courts > smart contracts, broadly speaking.
This is also an argument against end-to-end encryption and against federated protocols. The reality is that we, in fact, do not have and have never managed to maintain trusted entities and functional legal frameworks for much else... why do you think this is so different?
This is such bullshit. In practice the banking system is a messed up piece of old crap.
Let me illustrate my point from my experience a few weeks ago: Had to transfer 20 euro's from my account to my sons account, same European bank. In fact, my sons account is also under my supervision. It was on a Saturday, so guess what: no transfers in the weekend! Had to wait until Monday for the money to go through. Yeah, if Monday was a Holiday, we had to wait until Tuesday.
Is that the efficiency your "trusted entities" can come up with? Don't get me started on "instant cross border transfers". If a well known bank can't handle 20 euro's from one account to another, then what do you expect cross-bank, cross-border does?
In contrast, look at the Nano cryptocurrency: 0 fees, sub second transfers, any amount, anywhere in the world.
Your theory of "trusted entities" all sounds nice, but in practice it's old bureaucratic bullshit. Thanks to blockchain the technology has a solution. Only now is still proper adoption.
I can transfer euros from my bank to a bank in a different EU country within seconds at no cost around the clock all days of the year.
> I can transfer euros from my bank to a bank in a different EU country within seconds
Yeah, I want to see you try to send it to KBC. Good luck with that. I'm sure it won't be the only bank in Europe with that issue.
Secondly, I want to see you try it with >20k euro transfers.
Hmmm, it doesn't exactly sound like you are "absolutely baffled". You acknowledge that there are astoundingly few good use cases for blockchain.
Well, I've been thinking about it some, and I don't see how blockchain is even a solution to #1 in the first place, much less presumably the only solution. For data collection concerns, the most natural solution is of course to simply see that data is never collected in the first place, and this can happen via legal means (e.g., GDPR) or technological means (don't include unnecessary sensors).
I disagree, I think the systematic failures and fraud in the crypto industry is much more common than the regulated industry. Madoff is an outlier, not an expectation, and the majority of funds were retrieved. How's that looking for crypto?
As for 2008, my bet is that if crypto was being widely used for mortgage lending at that time, it would have been just as bad as banks. I don't see anything about crypto that would be making safer mortgage loan. In fact, what I see in crypto is very risky loans.
> 2. ... Use case..
I still don't see a convincing use case there.
> 1. Data ... essential commodity ... We need to switch the model and reimagine how the internet should work... bet that in ten years, if nothing is done, we will be living through orwellian future
I don't think banks/brokers are big controllers of data. I am more optimistic and would prefer to use Fidelity or Schwab than defi.
> 2. I wonder what people call US economy if they call crypto pyramid scheme.
I'm not really going to address this deeply, this is really a political view -- that I don't agree with. For decades folks have said the US will implode. When I look around, the US is where I want to put my investments.
But every defense is about how crypto will purchase this moral good of decentralization or freedom from the US economy, in some unclear and unspecified fashion.
There also seems to be an unresolve-able tension between the premise of an immutable ledger and human nature as seen through the various mechanisms to undo mistakes (ie regaining access to an account, reversing charges for a variety of reasona). That capability sort of requires trust and centralization.
This is survivorship bias, unless you own a Segway and a 3D TV
Cryptocurrency is a bad term, they actually make for terrible currencies, but many think they only have value when you can buy coffee with them because of the name.
What they are good at is making finance, ownership, and coordination, especially internationally, much more efficient. Which is far more niche and why the actual usage is rarely covered in mainstream media.
> SEC registration establishes critical requirements that protect investors from individual risk and protect capital markets from global systemic risk. The requirements also make U.S. markets among the safest, most robust, most vibrant and most desirable marketplaces in the world.
Does he mean the requirements that continue to allow dark pools[0]?
or the ones that allow arbitrage (theft?) through low-latency order flow[1], prior to high-latency trade execution?
...
> Does he mean the requirements that continue to allow dark pools[0]?
> or the ones that allow arbitrage (theft?) through low-latency order flow[1], prior to high-latency trade execution?
Which markets don't have those?
On the wiki page for PFOF
Also:
> In the United States, accepting PFOF is allowed only if no other exchange is quoting a better price on the National Market System. ... Transactions must be executed at the best execution, which could mean the best price available or the speediest execution available.
Why is that the order it happens in? Maybe, there is no fraud... but really?
I’ve never held any crypto in a exchange since mt gox, and a new cohort has learned the same lesson from ftx and the fake “defi” platforms.
Liquidity between fiat and crypto privileges centralized insiders who have the connections to fit into regulators molds and thus leak compliance into the wider crypto ecosystem. Thankfully regulators are too dumb to understand this and are shutting down the main threat to crypto, which is coinbase and it’s kind.
That is obvious horseshit.
Why exclude Bitcoin in all of this? is it unlike other cryptos in it's 'unknown ICO'? What makes bitcoin a commodity, vs. Solana, Cardano and Polygon being securtys. Is it the distribution of tokens, method of ICO, tech stack?
Snowden showed us the US gov has complete worldwide monitoring, so there's no way they don't know who satoshi is/ was/ were... There's some unknown POI, with $56B and you don't think the CIA and FBI aren't extremely concerned about that person. People always pointed towards bitcoin as being used for 'Money laundering' but its the perfect honey-pot. It's not private, it's completely public and i can tell exactly where and how you interact with the chain. So many idiots think, 'bitcoin's private! let's launder money through it in a super stupid way that still hits all the KYC flags. Oh, your wallet uses tornado cash wash? all incoming and outcoming wallets are now flagged.
Why didn't the US ban Bitcoin out the gate?
It's not like they US doesn't have presidence here. They shut down and put in jail previous creators of 'internet money'.
China (Who also has world-wide monitoring) was also extremely fast in noticing it. in 2013 with a market cap of 1.3b, they banned it while the US was completely apathetic.
BTC was created by the CIA. There, i said it.
Some tokens are pure ponzi schemes (like shib, btc) some are ownership in something that could have productive use (eth, some other smart contract platforms tokens). Yet that use isn't actually happening, so from a general pov it's all a ponzi. The most likely outcome is that nothing productive happens at all.
For an average buyer (esp. btc) mark-to-market returns are already underperforming stocks for years when looking even at previous ATH. So many people own some crypto there's no possible separate source of greater fools elsewhere - most current crypto owners will end up at a massive loss. The long-term underperformance compared to other assets will get even worse.
From the pure hype perspective, I think there's room for one last bubble. There's an army of bagholders (of every token) that will throw good money after bad when prices are sufficiently high again, giving up real wealth (again) in exchange for virtual tokens of either zero or much lower value. They still hold hope of at least going back to 0, or maybe even making money. After the next one, they won't. It will get really depressing.
Erm... https://youtu.be/-whuXHSL1Pg
Is it being implied, or threatened, that forthcoming actions will lead to the insolvency (and resultant loss of customer funds) of the worlds major crypto 'exchanges' ? Again, by what particular mechanism(s) is this to occur ?
I don't outright disbelieve it, but nor is this the first rodeo we've seen.
Show, don't tell
He does not like the lack of regulation around the (decentralized, unregulated) distribution and prefers the broker-dealers regulation and clearinghouse oversight.
feels good man.
Btc is already getting traction in the developing world as a reliable currency and that is likely to grow under de-dollarization.
The entire crypto market is about $1T right now of which btc is about half.
There is so much space for Btc to grow as an option for international settlement, it's already working and trusted as much or more than many sovereign currencies. As it becomes more trusted it will increase in price which will decrease its volatility.
If Btc just takes a little slice of the FX market it's an easy 5-10x. I wouldn't bet everything on it, but it does seem rational to have a corner of your portfolio in it.
The Feds and the bankers hate it because it's a direct threat to their business model. There's no room for a middle man to fugazi in btc.
The reasons they don't service it are regulatory, not technological, and so an unregulatable Option will eat their lunch.
There are a lot of places where the government is not strong enough to maintain a reliable currency on its own. The USA was the global currency up till now because it was universally trusted, but that's changing. The people who have profited from the international dollar are maneuvering to keep their monopoly.
Btc isn't just crypto, its the block chain too. So not only can you pay/collect, but it's publicly available and things like smart contracts are easily possible in an open environment.
So we can do things like say: send x btc to y address if weather.com reports it's 50 degrees in Des Moines on May 8th at 9am, or whatever, all sorts of settlement problems are solved with no middleman who can stop it.
And it has so much lower to go after Tether, Binance, and Coinbase collapse.
Crypto eats itself. Bitcoin will never reach its true potential because every centralized exchange is a scam.
How much of that do you think is Tether-related? If Tether were to, say, turn out to mostly own Chinese real estate bonds that are worthless (no idea if this is true, it's just one suggestion we've heard), and that portion of BTC volume which is related to Tether purchases goes away, how much impact do you think that would have on the price of BTC?
Crypto has spawned their own classes of middle-men.
At best, you have a changing of the guard - new boss, same as the old boss. At worst, you have traditional finance buying a stake in crypto and ending up in the exact dominant same spot they were before. And of course, all of these people have to do business on the terms of their host countries.
Crypto does not herald a new set of rules, it merely aims to be a new mechanism by which value is transferred, which by most objective measures it's very bad at doing.
At best you send some of it directly to someone else with no trusted middleman, which is impossible to do over the internet with any other kind of system.
At worst you have a changing of the guard.
This is impossible.
If you trade crypto, at some point that money has to become fiat for you to pay bills, pay taxes or cash out. If the currency _is_ crypto, you either have to transact on-chain where it is inefficient and slow by design, or off-chain, where you are trusting a middle-man by definition.
Either way, you are beholden to the currency controls of your country, and unlike you, they have the resources of a nation-state and can de-anonymize and use violence to force you to bend the knee.
Not slow or inefficient enough so as to be unusable.
> Either way, you are beholden to the currency controls of your country, and unlike you, they have the resources of a nation-state and can de-anonymize and use violence to force you to bend the knee.
Everything a person does is beholden to law. I don’t see how that’s really relevant.
What objective measures are you using? Over $3 Billion in value is transferred over the Bitcoin network every day. There has never been any downtime, nor has it ever been hacked, and fees are flat and transparent (just a few bucks to transfer unlimited value across the world).
1. It's not clear whether exchanges like Coinbase could technically comply with the rules for running a securities exchange, because the fine print of "what to do" doesn't fit well at all with the technical reality of "what does it mean to hold a cryptoasset" [1]
2. The SEC want token "creators" to register them as securities. Which they could do, but they would then be subject to SEC oversight, which is precisely what they're trying to avoid. ICOs are really a way of raising money from retail investors like a public company, without following any of the regulation around public companies.
So even if we solved 1., there might not be many tokens left to legally trade on a registered securities exchange.
[1] From a nonpartisan research organization: https://capmktsreg.org/wp-content/uploads/2023/06/CCMR-Crypt...
[1] https://twitter.com/Legendary_NFT/status/1667106949840748545
Btw ever wondered why in the year of our lord 2023 you can't trade stocks on the NASDAQ after 4pm EST, and why an ACH transfer takes 3 days to settle? I guess it's easier to piss away billions in lawyers and lobbyists to gatekeep the competition instead of R&D to improve your products.
Are fiat currencies treated like securities? No. Are there "best execution requirements" when I exchange my USD for EUR. No. Did somebody have to register the Brazilian Real with the SEC for it to be exchangeable in the US? No.
CTM is used the same way you'd use Airline Miles or Credit Card Points.
We are the rulers, lords, and the only hope for our own salvation. You'd better get to work.
And I completely agree with your second paragraph.
[0]https://www.newyorker.com/humor/daily-shouts/l-p-d-libertari...
Fiat currencies are 'fiat' in stark comparison to wealth which can't be created out of thin air, e.g. gold or cryptographically-protected numbers.
This is why a cryptoCURRENCY is treated as a security.
> Did somebody have to register the Brazilian Real with the SEC for it to be exchangeable in the US? No.
There is in fact a considerable regulatory system in place as it pertains to exchanging currency, currency laws, and so on.
> The regulators consider it to be more like an asset class
Being an asset is also applicable in my opinion. But assets and securities are not the same, and this is what's changing - regulators switching the categorization from assets (which was implicitly and somewhat explicitly the state until now) to securities.
i suppose its just a religious difference
1. Physical cash / gold (ie. bearer instrument moneys that are non-trivial to seize or control at scale)
2. The digitization of the above, retaining the same "non-trivial to seize or control at scale" property in a digital medium
None of what he is saying applies to me.
BTC isn't optimal for small transactions, but it is useful for exchange among peers who have no trust in a 3rd party to fairly regulate trade (e.g. Sanctions)
If two nations bypassed banks with a system like BTC, then we would see what the point of BTC is.
Plus, what point does BTC have to Russia? They can’t exchange it for Fiat and no one accepts it for anything of useful value. At best It’s just an extra step between them getting their Fiat currency. He could convince other nations to use BTC, but he would be better off convincing them to use the Ruble. Nation States don’t want un-sanctionable assets - they just don’t want to be victims of those sanctions.
Even if Putin did do any of that, it just proves the SECs point. The US Government does not want people transacting with sanctioned nations and individuals. They would rather make it illegal than lose the financial power they currently have. For better or worse, governments don’t want crime (or more specifically their definition of it) to be supported by their citizens. This is why the SEC (and soon, Congress too, I’m sure) won’t stop. The existence of Cryptocurrencies are antithetical to their own existences.
Submitters: "Please submit the original source. If a post reports on something found on another site, submit the latter." - https://news.ycombinator.com/newsguidelines.html
Even r/cryptocurrency flags finbold as unreliable.
A moot point because the URL has been changed regardless.
"The only killer app for crypto that seems tangible is its excellent use to orchestrate global crimes."
The bias is abundant, it's well known this guy hates crypto.
This was done in USD. Maybe crime wouldn't be whitelist only on a transparent blockchain and that is what is feared? Money is the root of most activity in this world, criminal or good. Transparent transactions bring all crime into the spotlight and for some that is problematic.
That doesn't change the fact that the only killer app is criminal activity. Of course you -can- do non-criminal things with it, but frankly as a currency it's terrible. It's way too volatile, and transactions are both too expensive and too slow.
I get the goals - decentralisation, limited money supply (which in theory is supposed to limit inflation, but doesn't) and so on. Unfortunately the volatility dwarfs any inflation hedging etc. It's also super-risky right now, so I recommend holding your own coins. Not your keys not your money.
Sure it's different. Sure it's idealistic. But it's also, well, a terrible currency.
Which means mostly it serves as a nice way to do criminal transactions.
Yes.
Oh, and gambling/speculating of course.
The other use is providing online payments to people who aren't in the banking system. The banking system requires trust, and shuts untrustworthy people out - both at the level of individuals and entire regions. Bitcoin eliminates the need for trust (on the monetary layer) and can thus reach more people.
Both are great applications. They are largely irrelevant in the West because only a tiny fraction of us experience those problems, but that doesn't mean they don't exist elsewhere.
Oh, and it’s actually neither of those but if you wish _reaaaaly_ hard and ignore all the practical problems, it might be, someday.
> helps people without access to banking but with a stable, constant internet connection and perfect operational security
You don't need constant internet connection unless you are mining or want to verify a payment right now. And mobile internet and smartphones are surprisingly prevalent in the third world (and among homeless in the first world).
Maybe not a lot, but people literally do use it for this purpose everyday. You can't just wave that away, given that it is working to some extent now.
So as a store of value Bitcoin actually has a good track record and is trending towards lower volatility as adoption grows.
People really need to stop thinking in absolute terms regarding value storage. It’s analogous to energy storage. Batteries leak energy over time, but we don’t sit around yelling about how they are not stores of energy.
Does that make him wrong? Or somehow not a reliable commentator on the thinking at the SEC (which is what the actual article is about), given his having worked there? Bias could be an issue if he were speaking about crypto per se, but this is about the SEC.
That's irrelevant. The question is whether crypto in particular facilitates crime, and it does. All airplanes facilitate passenger death, but some are far more dangerous than others. If I'm considering boarding a plane, don't tell me 'well, any plane might crash' - I don't care, I care about this plane, this pilot, etc.
Bitcoin may be an attempt to make funding crime easier but it hasn't been very successful. USD is still king for funding any criminal endeavors.
How is that relevant? Silver and papyrus were once popular too.
> it will always be far easier to commit crimes with cash than with anything else
It's not easy if I want to pay someone who isn't local to me, or whom I don't want to meet in person, or if I don't want to possess physical criminal assets.
> it will always be far easier to commit crimes with cash than with anything else and that will never change until humans find a better way to fund crime.
A bit circular?
evandale: Cash has been used for facilitating crime since currency was invented
wolverine876: How is that relevant?
The question obviously isn't whether crypto facilitates crime because USD facilitates crime better. If the ability to facilitate crime was a question of whether you should use a currency or not then we wouldn't be using USD anymore.
> It's not easy if I want to pay someone who isn't local to me, or whom I don't want to meet in person, or if I don't want to possess physical criminal assets.
No idea what you're trying to say here but it doesn't seem like you're arguing in good faith. Everybody will accept USD for any good or service anywhere in the world and USD is less traceable and more anonymous than bitcoin which defeats another "bitcoin is only used for crime" argument. No. It isn't only used for crime. It's actually a terrible thing to use for crime because of how traceable it is.
also many linked sources here: https://www.cato.org/blog/overstating-crypto-crime-wont-lead...
crypto = crime narrative is provably false but how many search or care for the truth?
What am I missing here? What are the cool things bitcoin does that something like visa cannot? I've read Satoshi's paper and Vitalik Buterin's book. I want crypto to work, and I'm really searching hard for a problem crypto solves for which we don't already have a better solution.
Violating sanctions is a crime. Given the trend we've seen people should start getting used to being considered criminals.
>What am I missing here? What are the cool things bitcoin does that something like visa cannot?
It's easier to send Bitcoin to people without doxing myself than a visa transfer.
crypto can hypothetically be every bit a brilliant new wheel paradigm as the marketers would suggest (it isn't, but whatever) and that won't stop entities with legal authority to eviscerate all current corporate entities associated with it from doing so (they are).
ya'll wanna believe that binance and coinbase can fight the massive legal assault on their business practices and come out on top simply by virtue of the nobility of the crypto ideal, go right ahead
The question is, "Is this guy right about centralized platform regulation causing industry-wide collapse?"
+ https://www.bloomberg.com/news/articles/2023-06-20/crypto-ex...
The SEC's enforcement on Crypto Platforms is specifically aimed at separating the Broker Function from Exchanges.
It would then be ideal to be entirely out of crypto until the destruction is largely over, and the establishment gets its lock on the market.
There were only ever two possibilities. They control & own it, or it doesn't get to exist legally. Everything else was naive fantasy and ignorance about how the world actually works and will always work (power, politics, guns).