More Bitcoin Regulation Is Inevitable
dealbook.nytimes.com
dealbook.nytimes.com
> To protect consumers who want to use Bitcoin for legitimate transactions, the government may adopt reporting requirements on virtual currency exchanges so that there is a public repository of information about prices. Although the government cannot control the value of a virtual currency, it can make the currency more transparent to users so that they are not defrauded.
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Ehhh, really? In one paragraph they point out the price history of Coinbase, and then in the next paragraph they say "the government outta do it".
And yeah-- the government is technically unable to control the prices of virtual currencies but government also _should not_ be in the business of controlling prices anyway. That leads to a distortion of market prices and a bad deal for one side or the other.
1. Correct amount of bitcoins were withdrawn from source bitcoin wallet.
2. Correct amount of bitcoins were deposited into target wallet.
3. Both target and source wallets are valid.
4. Etc.
AFAIK, bitcoin is currency and FX market is in generally way less regulated compared to securities market. Thus any regulation introduced would be targeting money transfers between individuals, rather than exchanges[1].
[1] We probably should regulate exchanges, as of right now it is super simple for exchanges to make profit on their customers. Consider following strategy, whenever bitcoin order comes in that moves market exchange would execute small order in same direction before customer order, reverse order as soon as larger order moved market. Instant profit.
Everything that you mention that needs to be "regulated" is already regulated by the bitcoin protocol itself. In fact, the whole point is to replace regulation with strong cryptographic proof.
First part of the post is indeed a joke, I am pretty sure comments on FX markets and strategy that exchanges could use to game the customers are accurate.
This is out of date. FinCen issued vague guidance months ago suggesting miners might be regulated, but recently clarified that they are not.
http://www.coindesk.com/fincen-bitcoin-miners-investors-mone...
That statement is incredibly ignorant. Regardless of what any government decides to do, people will always be able to conduct unregulated transactions. The subject at hand is the regulation of money transmitters, such as exchanges.
In principle, zerocoin could be added to bitcoin, but the bitcoin devs aren't up for it yet. Zerocash is so different it pretty much has to be an altchain.
I'm not so sure. I think some regulation to catch tax cheats is inevitable. Whether that's desirable or not depends on one's political point of view.
1. Consumer Behavior Requires It
2. Large Companies Thrive On Regulation
To point one, if you have anything that is making people a lot of money one way or another, there will be scams and fraud. Once there are scams and fraud, the government gets involved and has to clean up the mess. Then laws are made to stop the problems from happening in the first place. Eventually you need business licenses, certification, etc. to transact business because too many people got ripped off.
To point two, regulation and rules actually end up favoring the entrenched companies. Usually regulation creates barriers that reduce competition. For example, to trade securities, sell insurance, or sell real estate you need to get a license. To get a license you need to take exams and pay money to be certified. Most people won't go through that effort and so the larger companies make a lot of money from the lack of competition.
Rules and regulations might be annoying, but they are a sign of maturity and growth in many cases so it's not all bad.
My favorite example of mandatory entrenchment are the Series 6/7 exams for finance. I think the exams make perfect sense for licensure - but you aren't allowed to take the exam unless you are currently employed by a licensed broker. It's a legally enforced old boy's club.
This is a perspective that is often overlooked on HN, understandably, but the fact is that startups are in many ways extremely inefficient businesses. Most business functions, from accounting to training to regulatory compliance, simply don't scale down very well, for reasons that have nothing to do with politics.
It may be that regulation for the public good is inevitable and desirable, but one cannot assume a priori than any particular regulation exists for that reason.
"the pressure on the legislature to license an occupation rarely comes from the members of the public . . . On the contrary, the pressure invariably comes from the occupation itself."
Milton Friedman
"…as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefits."
George Stigler
that's what "Large Companies Thrive On Regulation" hints at.
IE, The power of unregulated bitcoin is not "power to the people" but power to Silkroad founder and from there one would guess the Zetas and so-forth.
In the end it's about choice. Would you rather trust the Zetas or Uncle Sam?
I don't think scams are going away any time soon and there's dear little you can do other than to protect yourself with common sense.
Deregulation starting in the Clinton era?
These are real sentiments that I heard from real people who while they were wrong (and I felt they were wrong at the time) aren't completely stupid.
SAP consultants make a lot of money but they aren't necessarily regulated by the Federal Government.
What makes finance something that "needs regulation" and an important target for regulation, is that it doesn't just make money but literally defines "what money is". From tulips to penny stocks and Madoff, the dangers of "unbounded finance" are clear.
But one should note the state, by its control what we believe is currency, plays in many ways the same game as the Ponzi-schemers, with the relative limit that it's trying to keep things going a bit longer.
Either way, it's reasonable to say that this magic will be wrested back (if they ever lose it), by those already maintaining an existing monopoly on force and violence (in where you say this monopoly is Hobsian or La-Fimilia-Zeta-ian).
That's like saying we will never achieve flight, because all we have is cars, and anything car-like can't fly.
You could, for instance, say "use of an unregistered wallet is a crime", but it would be very difficult within the protocol to prevent bitcoins from flowing to unregistered wallets.
Normally, you would see "real journalists" try to balance the views, and insert opposite views and quotes in their articles. But not here, it seems.
Even if this were not the case, the more regulation added to bitcoins, the more people move to alternative crypto currencies. I don't see people seeking to regulate litecoin, dogecoin, coinye, etc.
People aren't calling for the regulation of other cryptocurrencies mostly because they don't have the same kind of usage and economy surrounding them that bitcoin has. If people start trading coinye in the same way and it reaches similar volumes as bitcoin, you'll see the same sort of talk. It just makes more sense to treat cryptocurrencies the same under the law, unless there is something about a particular one that made it most different than all the other current variations.
Like when my parents refer to all videogames as "Nintendo".