CEO of a top Bitcoin exchange warns: crackdown on cryptocurrencies may be coming | Hacker News Reader

CEO of a top Bitcoin exchange warns: crackdown on cryptocurrencies may be coming

cnbc.com

232 pointsalexrustic493 comments

> U.S. Treasury Secretary Janet Yellen and other officials have warned about the use of cryptocurrencies for illicit transactions.

Wait until you hear about cash.

More seriously (and hopefully less reductionist) i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures. I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.

Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.

Knowing the US has soured on cryptocurrencies doesn't make me any less interested in them, it just makes me less interested in holding them/working in the space on US soil. I'd be surprised if i were alone in this sentiment, and in spite of its negative reception on HN, the tech space around cryptocurrencies is quite literally growing as we speak.

The people in power are balancing the business opportunities against their own loss of control over the issuance of currency and some financial market functionalities (with smart contracts, etc.). I think it's a given they will always choose their own power over the business opportunities of others.

> Wait until you hear about cash.

anecdote time: I once travelled to Vietnam for a vacation, people in vietnam prefer $100 bills because they're easier to use for hiding wealth, transporting cross border, and other slightly less than legal reasons. Additionally it's the preferred currency of criminals in the country too (so I heard). They will even pay higher exchange rates for ones in better condition or with more anti-counterfeiting features

So yeah, USD is used for a lot of crime globally.

EDIT: changed "anti-moneylaundering" to "anti-counterfeiting" by suggestion

"with more anti-laundering features" ? did you mean anti-counterfeiting? just checking...

I think so. Basically things to make it harder to fake them.

Changed original post

In Canada, organized crime holds on to the $1000 notes. They're the largest value banknote commonly used in the West in the last few decades. They were last issued in 1992 and then officially withdrawn in 2000 for concerns over moneylaundering. They're not legal tender anymore, but can be exchanged at the bank. There's about $1 billion in circulation, and that will likely remain true for a long time yet. They move in a closed loop in the drug trade, stuffed in briefcases and in safes of criminals who effectively act as banks settling debts. No one wants to cash them because of the risk of being traced, but because they can be cashed in theory, they retain full value. The €500 is slowly displacing them, in Canada and abroad.

I saw one as a child. Most Canadians have not, as far as I know. An acquaintance of a friend of my father's had several, and my father was interested in numismatics, so he traded one for $100s. The implications of the man who had some "pinkies" (called so for their colour) being a biker with a facial scar didn't click into place until I was much older.

CHF still has 1k banknote (and with negative interest rates this with a safe might be a better option than a bank account).

Hows that better than a bank account? You can hold CHF on a bank account as well and it keeps the same value as the note. (both lose value due to inflation)

Also dont forget insurance for banknotes in a safe.

> Hows that better than a bank account?

GP said it, negative interest rate, i.e. the bank charging you to hold on to your money when you have more than a certain amount (was it 100k or 25k CHF).

So if you put in 100k in the bank and wait a year, you'll be able to withdraw maybe 99.8k CHF. If you hoard 100x 1000 CHF notes, you'll still have 100k CHF. Sure in 1 year those 100k CHF will probably buy less Big Macs then the present, but the 200 CHF loss will mean even less Big Macs.

Its meaningless, if someone puts over 100k on a bank account where inflation eats it away they probably dont care about interest rates and its just a fraction of someone holdings that is deposited at super low risk/high availability. This only makes sense if you have way more and the rest is actually invested and grows. Storing you whole savings like that is rather stupid regardless of if you reach the limit and pay interest rates or not. and putting it as banknotes in a safe is similar stupid potentially even more stupid because there is real chance you physically lose it all.

Yes there are saner things to do with 100k, but GP was just comparing the 2 options, and you asked "Hows that better than a bank account?" and I answered...

Its clearly not better, its worse. You exchange possible interest rates with a rather incalculable risk of total loss or some absurd insurance fees which are likely to be higher. If putting paper in a safe would be better then someone (probably the bank itself) would offer that as a service. If they cant make it lucrative at scale you certainly cant either.

Sigh, you made me regret responding to your initial question.

FWIW commercial banks have had negative interest rates for a few years now.

https://www.truewealth.ch/en/blog/negative-interest-switzerl...

You completely ignore my point and instead provided a proof for what no one questioned.

The regret only grows. Now I'm torn between trying to explain the concept of imaginary scenarios where the scope is limited and crafting a statement with a hidden insult somewhere.

If this were a party conversation, imagine me walking away rolling my eyes and shaking my head...

Most people are not going to invest 100% of their savings in things like stock market (most people might be 60/40 or less).

Cash at a bank is the best you can do in terms of risk free asset (for people in CH it's the equivalent of a bond allocation in a portfolio, just with higher return).

In Uzbekistan, I saw a disproportionately large number of people with gold teeth. When I asked my host about it, he said that that was the older Soviet-era generation that would get gold teeth so that they could carry some useful wealth with them in case they had to flee their homes all of a sudden.

If the sum total of the wealth you are trying to hide is a in the thousands, you aren't who the government is concerned about. At least, not enough for policy changes. So, while cash is likely far more prevalently use in crime, you're talking about the huge long tail of low level drug dealers and smugglers, not the oligarchs and money launderers.

Deposited/electronic money tends to be necessary when you hit a million plus. At that point cash sucks and is super risky to hold.

fun fact, each bill is 1g. So $1M in 100s is 10KG (or 22LBs) . Plus the briefcase and hand cuffs if we're going movie style.

they prefer USD in parts in SE Asia because the local currency has experienced hyperinflation in the past. the problem is there is no easy way for them to exchange overly worn bills back to the Federal Reserve, so they have like rotting old falling-apart $1 bills that look like they're on the verge of disintegrating.

That doesn't stop cryptocoins from being the currency of choice for criminals that need completely anonymous digital transactions, which is why they are the standard for the online black market and for ransomware. It's hard to argue of the advantages of cryptocoins while in the same breathe arguing that cash is better for crime.

The bigger issue is that very few people want to hold onto cryptocoins if their goal is to spend the money. You can't really buy much directly with cryptocoins in comparison to cash which is universal. I can't use it at Walmart, I can't use it at McDonalds, I can't use it to buy a house, I can't use it damn near anywhere. The only way I can use it is through a scheme that converts it to cash first. No criminal wants to add that papertrail step to their operations.

> Wait until you hear about cash.

I'm always bothered by this arguement because most of the same people in government who want to see a crackdown on Bitcoin also seem to want cash to be eliminated.

I've been asked to do consulting on one of these digital cash replacement projects. The requirements included all the stuff you'd expect, like strict ID requirements for every account, and the ability to freeze funds at will. But they also wanted things like the contents of receipts getting uploaded to government servers, to allow real-time tracking of not only who was paying who, but what the funds were supposed to be for. My contact wouldn't tell me what government it was supposed to be for. But they did admit it was a dictatorship. Obviously, this would have been a very effective tool for cracking down on dissent.

Frankly, I kinda suspect what was really going on was the company that reached out to me was pulling a scam on that dictatorship and had no real plan to actually deliver a working product. But it's still a good example of the panopticon that authoritarians want to replace cash with.

Central bankers are often pro-cash but anti-bitcoin. They dont want competition.

> They dont want competition

Which is another way of saying they want absolute control, which in this case is the absurd charade where "inflation" measures that they claim represent life on the ground exclude the essentials like education, healthcare, and housing.

I liked the take from the Mayor of Miami (from a podcast about cryptocurrency):

"they [governments] will have to borrow money like everybody else borrows money, they can't just print their own money. They have to borrow money at an interest rate. And if governments don't behave fiscally then they are going to have to borrow at worse and worse rates. They can't just invent their own interest rates and currency, which manipulates how markets work...

We in the city of miami, we're forced to balance our budget, we actually have a surplus, about $150 million in surplus and we have some of the lowest tax rates in the history of the city."

There is a (seemingly growing) number of people that openly say that the budget doesn't matter. You just print and spend.

Fortunately this incentivizes finding ways to circumvent that regime and point out how absurd it is.

Yes, and that the only point of taxes is to reduce inflation, since the govt doesn't need taxes anyway since it can print money. Taxes don't even cover the cost of govt expenditures so it makes sense.

Broadly speaking the tools of monetary policy available to reduce inflation are:

(1) Increasing reserve rates for lending. This causes the circulating supply of currency to go down.

(2) Increasing interest rates for lending. This reduces the demand for borrowing, which is largely fractional reserve. This also causes the circulating supply of currency to go down.

(3) The Fed unwinding its balance sheet by selling bonds. They collect the cash and remove it from circulation. They can increase the circulating supply by buying bonds.

Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy.

The government doesn't print money per se, the government can borrow money by selling bonds. This just reallocates the existing money supply. The overwhelming majority of US government debt is held domestically by US persons. This doesn't change the money supply either, unless the Fed steps in.

> "Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy."

Fiscal policy affects inflation. You're thinking of inflation as "the money supply / total of all $", but that's only one definition or part of inflation. Generally, you would also describe inflation as the price of things you buy going up or down (CPI). Say you ratchet up the effective tax rate to 90%. Everyone's going to have a whole lot less money to buy extra things. Some things with fixed raw input cost still wouldn't budge much. However now that people's monthly incomes have gone from $5000 -> $1000, you're going to see houses, education, Pelotons, and other extra income sinks, have their prices fall precipitously.

The point of taxes is to create demand for the currency in the population. The government can then promise to pay people in its own currency so that it can provision itself with staff, goods and services.

It's only wrong if it doesn't work -- but it does. Economists aren't 100% sure why, but it does.

The fact is while the debt has exploded, the total cost to service that debt has collapsed. The US is now paying less interest on its sovereign debt than before the COVID stimuli. Explain to me how it's stupid not to take advantage of this?

The reality is when you take on debt, the only thing that matters is what you choose to do with it. If you use it to generate economic activity - and hence revenue - that's a good investment. If you don't, that's a bad investment.

Now, you can "circumvent" this by investing your money like you're supposed to in literally anything.

The cost of debt has dropped would be a more accurate description. Well... just because you can take out more loans does not mean you should. The issue is really how long you can refinance the debt for, or can you outgrow the debt, otherwise you’ll be forced to inflate it away. The cost of financing will not be this low forever and it’s still a few hundred billion of interest each year. Still, we should spend money on infrastructure and cool tech while we can.

> We in the city of miami, we're forced to balance our budget

This is true, but not without some moral hazard. Miami can keep building on land that will be swamp within the lifetime of the building because federal taxpayers and inflation are there to bail them out.

https://e360.yale.edu/features/as-miami-keeps-building-risin...

Why would a government with a sovereign currency ever have to borrow any sort of money? They can issue as much of their own currency as they want.

that's the point. if money is backed by something with a max-supply (like gold or some cryptocurrency) or if there were a law limiting the max money supply then eventually they will have exhausted their reserves if they aren't careful, and will need to borrow. The american dollar is not backed by anything but the "full faith and credit of the american govt"

Even cryptocurrency projects like Brave browser's BAT has a max supply, so Brave will have to buy BAT back from the market (at the market rate) if it wants more.

His point is that a government is more fiscally responsible when it has maintain real reserves, where there is a risk of depletion. The federal reserve is a misnomer, since it doesn't have meaningful reserves (like gold). It just prints.

So here's the thing...there was a long period of time where empires were on the gold standard. Spain during the early American colonial period was one such empire.

Spain did really well out of it's brutality in the New World - plundering the Inca and Aztec empires yielded a wealth of gold, and the big find in the salvage industry today is still "spanish gold" because just so much of it sank to the bottom of the ocean.

But now a question: did the Spanish economy boom from this influx of gold they had (through a substantial expenditure of resources), suddenly acquired?

The answer is: (https://en.wikipedia.org/wiki/Economic_history_of_Spain#Gold...) No.

Spain actually experienced massive inflation and then an economic crisis as the government suddenly found itself, bizarrely, bankrupt. Gold wasn't worth remotely what it was before, because gold is not actual productivity - the conquest of the new world was a conquest of gold, at the cost of real resources - food, men, timber, arms etc. But it didn't yield anything that was actually worth trading for other then just more gold. So prices skyrocketed, and suddenly the Spanish empire was raising taxes - despite in theory having "made money" because it couldn't afford to pay for its own upkeep.

What does this have to do with the concept of loans? Quite a lot. Because the exact same factors would apply to a government with a wealth of productivity which was forced to seek loans from a market: demand for currency drives the value of currency up, but the same thing happens - farmers, workers, everyone else winds up poorer because the value of their labor is being reduced relative to the value of currency. So currency holders get richer, but everyone else with bills and day to day living expenses are getting poorer.

yes, just because a nation is on a gold standard doesn't mean they can't have devaluation of currency, like when spain dumped a bunch of gold into the market from south america.

Cryptocurrency wouldn't have this problem, since it has a hardcoded limit, unlike gold or USD.

A government which has to "seek loans" for crypto by definition must be trading in something which is not crypto internally. Because a government can't directly trade it's own citizens productivity (hence taxes), and can't mint new crypto to repay such loans in response to productivity.

So in such a scenario there are only two options: increase taxes on citizens for crypto they hold (while in the meantime being unable to pay for services upkeep - and thus probably inventing a form of fiat anyway to stay afloat), or devalue it's own currency to pay escalating loan rates to crypto holders to buy more crypto for those transactions in which people will not accept fiat.

Of course since taxes can only meaningfully be levied in the crypto-world on income, since you can control businesses to some extent but not holdings, the effect is the same: the compensation for your labor goes down, or you're fired (because the value of your output has gone down faster then wages), or most likely, you are inefficiently taxed at a much higher rate then is necessary to ensure the government is never stuck with the risk of a crypto shortfall which would suddenly put their ability to supply payment for services into almost immediate default.

> most of the same people in government who want to see a crackdown on Bitcoin also seem to want cash to be eliminated

Can you provide a source for that? First I've heard of such an argument from government officials

It hasn't necessarily been out front-and-center in the mainstream media, but it's definitely something getting talked about in mainstream financial circles routinely. Here's a bit of a partisan source from a quick google search, but it's got a lot of links and citations you can follow up on and I believe it is basically correct in its facts, even if you disagree with the conclusions drawn from them: https://www.newswars.com/cashless-society-democrats-propose-...

It's up to the "trial balloon floated in Congress" point. The trial balloon has so far always been shot down, but it's really only a matter of time. If the government could just push a button and have access to literally every single transaction that occurs, they would certainly do it. They wouldn't even blink.

Also, I want to say, I'm just linking one example. You can follow up with search terms similar to the ones used in that article, and probably find even more mainstream sources discussing it. It's a topic in the air in financial circles.

Edit: Bit more searching, here you go with something much more mainstream, Forbes: https://www.forbes.com/sites/advisor/2020/10/22/the-pandemic...

And again, my main point here is that it is a topic of conversation, not making any particular claims about where we are currently.

Here is one prominent Bitcoin opponent arguing that people shouldn't have the right to exchange money in private:

https://twitter.com/smdiehl/status/1381152231836254211

If I was a politician and in charge, I'd ban both in a heartbeat. Even though banning "cash" would be practically impossible, because people would then just replace it with barter, or favors or bottle caps.

But if it were to come to that, I'd replace it with some sort of digital currency that is "private" but accessible to the government within rules and reason of course.

It's a ridiculous comparison, though.

E.g. try to regularly move billions in cash and see how long it'll take before you're busted for not reporting that you're doing that.

A billion bucks weighs a fucktonne.

I'm pro cash, anti cryptocurrency, because the comparison is absolutely ridiculous there's no contradiction.

The commissioner of the SEC doesn't find it all that ridiculous. She just commented on it yesterday actually.

[1] https://youtu.be/KfvMX8sJEy4?t=525

I don't see her disagreeing with what I said.

She noted that in general you target the criminal activity itself, not the currency used to fund it. But then she further noted that cash was just as big of a problem for them and harder for them to deal with. She said that crypto had the advantage that it at least left a trail, unlike cash. No one said criminal activity is easy. But it's not fair for you to conclude that therefore it's ridiculous because using cash is hard.

So she says cash is different, and agrees with me?

Cash payment limit of $10000AUD is proposed in Australia. $10000AUD weighs fuckall.

https://treasury.gov.au/policy-topics/economy/black-economy/...

I could also easily carry more than $10k across a border. It's illegal without reporting it (exact number varies). But that's one type of payment.

I've carried $2k USD in just $20s in my pocket across international borders, and had it been in $100s that would be the limit. But if I want to transfer even one million dollars that 100 trips. Or 100 pockets if I ignore the law. I own cargo pants, but even they don't have 100 pockets. And a billion? That's a thousand people each with a hundred pockets full of cash.

What I was saying is that mere logistics makes it hard to move a billion in cash.

So there's a natural prevention of moving large amounts of cash. It's not impossible, but "making it hard" was done on purpose. So cryptocurrencies are not "clever" for "fixing a problem". They're actually removing the amelioration to the problem.

You can't transfer a billion dollars worth of cash by sending an email with your private key.

If you have billions of dirty money to launder, you don't need to worry about cash, you just call your pals at HSBC [1][2].

1: https://www.icij.org/investigations/fincen-files/hsbc-moved-...

2: https://www.investopedia.com/stock-analysis/2013/investing-n...

If you have a billion dollars to hold, you don't want the volatility that could turn it into a hundred million, or ten billion in a few weeks, just because.

Also, holding a billion dollars in a form protected by a single private key is effectively putting a billion-dollar bounty on your own head.

Stable coins exist.

Backed by the issuing companies' heartful statements of best intent.

There are stable coins backed by crypto.

What does that mean? How does "crypto" guarantee that someone has the reserves necessary to back the stable coin in circulation? Whenever cryptocurrency interacts with the "real" world, you're trusting someone to verify that the real world state corresponds to the state recorded in the blockchain. I have yet to see a satisfactory solution for this. You're also trusting someone to verify that all this software is free from backdoors and bugs that could be used to commit fraud.

Backed by crypto means for every stablecoin worth 1 USD someone has locked away for example 1.5 USD in crypto.

Whoever locked the crypto away and created the stable coin needs to buy it back to unlock the crypto again. If the price of the stabelcoin would drop below 1 USD everyone who created them and sold them would make a profit buying it back lower. This essentially makes the coin stable.

I'm not going into further details as you can easily google how this technically works.

Also no one said there is no risk you have all kinds of risks including meteorite impact event. Backed stabelcoins simply reduces/decentralizes and shift the risk to code/market dynamics and other stuff rather than a single issuer of a coin. Nothing ever is without a risk.

BTW if finding a flaw in the code makes you rich that kinda a very good incentive for people to find flaws. We dont really have anything better than that in your "real world".

>Backed by crypto means for every stablecoin worth 1 USD someone has locked away for example 1.5 USD in crypto.

In order to do that, someone would need to match every USD coming from you with 0.5 USD from their own pocket.

kind, they dont lose that it just locked away. But yes it must be more than the value to be backed else it could become partially backed if the crypto price goes down to fast. It can be more of less than 150% backed is up to whoever writes the code. But 150% seems reasonable for a volatile assets.

You may think no one would do that but its actually a way to bet a price gains of your crypt. By locking away 150% you get 100% in stable coins to invest/spend without losing the volatility (possible gains) of your crypto. So if the price of you crypto goes up you get the whole profit on the locked 150% collateral even if you spend the stabel coin. ofc you need to buy back the stable coins to unlock you crypto but the buy back should always cost the same because its a stable coin.

Example with numbers:

You lock away 150 USD in ETH You get 100 USD in stable coin to spend Price of ETH goes up 100% (doubles) You can now buy 100 USD stabel coins and unlock 300 USD worth of ETH

This is interesting because you have 100 USD that you can use while you wait for the price to go up. You could buy ETH with it which also doubles in price so you have 200 USD worth of ETH You sell 100 USD worth of it to buy back the 100 USD stable coins

You now turned 150 USD worth of ETH into 400 USD worth of ETH even trough the price of ETH only doubled.

Ofc if the price drops your stable coin will be undercollateralized and someone else can "buy them" and re-collateralize which would make you lose the difference. In other words if you bet on rising prices and it goes down you have to top up to keep the 150% collateral if you cant top up someone else will and you get liquidated.

In the end is a zero sum game. Some lose others win but its a net gain because stable coins can can exist that are backed by crypto.

Liquidity, in a word.

The second largest is issued by a soon-to-be-public $100B company. I'm sure the backing assets will have to be disclosed to the public.

Yet you turn a blind eye to the government

I wish someone would try to cash out $1B Tether.

I never said all-in Tether. Also you cant "cash out" a billion dollar of anything. Its completely absurd, no one has a bank account with a billion dollar on it. It also make zero sense to ever do that. Its completely irrelevant if that is or isn't possible with coin XY if there is nothing you could move it into. The only reason someone would cash out a billion is if he wants to invest it into something. What could this possibly be that requires a instant investment of the whole billion? You guys need a reality check. No one ever buys something with 1 billion at once. There are multi-billion contracts but they aren't settled at once.

You could probably sell one billion in Tether over the course of a few month just fine. Simply stop selling if the price goes below 1 USD and use all large exchanges parallel. It has several billion fake volume so even if real volume is 100 times lower it should suck up an additional billion. Assuming real volume is 100 times lower and you sell over the course of 100 days you would only cause less then 1% of the volume.

Eh, when the Archegos fund leveraged at $100B collapsed a few weeks ago, many banks cashed out many billions. It made the news because they gave lots of leverage to a big gambler, not because that event in any macroeconomic sense mattered at all.

>banks

The entities where almost everyones non-physical assets is stored. Yes, they can indeed do things private person cant do.

Surprisingly, no one yet abducted and tortured Vitalik Buterin or other people known to have insane amount of crypto.

> Wait until you hear about cash.

Cash is extremely difficult to use in criminal enterprises, especially with the USD. Large amounts of cash are bulky due to $100 being the largest note. Massive amounts of cash is difficult to convert to/from other forms of assets due to CTR, SARs and fed surveillance.

Cash as a vehicle for facilitating criminal activity by now is largely fiction. Even diamonds are easier than cash.

Cash is perfect for small criminals. Practically useless for bigger criminals.

The cash argument is not a good take at all. When you travel with large amounts of cash people ask questions, you are obligated to declare it when crossing borders if it’s over certain amount(over 0,25BTC as USD will make you fill out declarations and it may be confiscated until you can prove that it is legitimately yours) depositing it to your bank account rings all kind of bells, the banks can refuse to work with you and can trigger law enforcement interest.

We can be cynical about it but actually number of banks paid fines in the billions of dollars and they take it seriously now. Some hard hit banks like BNP that got fined for $9B would even refuse to work with cash intensive businesses.

The criminals need to go through trouble of creating shell companies to launder or transfer money, cash is no good anymore.

> cash is no good anymore.

Crime is gone now? What else are they going to use?

Crypto is used by less than 1% of the world. All crime uses "cash" relatively speaking.

*a lot of it is "digital" cash but still.

That’s not my argument. Crime is not gone, tools are changing and the enforcers are trying to catch up.

Cash is now for petty criminals only. For anything beyond car level of money you need involvement of politicians or high end criminals.

They tend to use gold and fake bank transactions BTW.

Just today there is a trial of the Turkish bank Halk Bank that was allegedly caught laundering money for Iran. High ranking Turkish and Iranian politicians are involved, the funds in form of gold were transferred using private jets and laundered through Dubai. The defense of the person who run the gold operations includes Rudy Giuliani. The things are at that level now.

Start digging from here if you want to know more: https://en.m.wikipedia.org/wiki/Reza_Zarrab

Only about 10% of USD physically exists: https://www.quora.com/How-much-US-currency-physically-exists...

'M0' is cash. 'M1' are bytes in bank computers.

It's really not a big mental leap from USD that doesn't physically exist (which is 90% of USD) to crypto which doesn't physically exist.

>Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies.

What business opportunities have been created outside of the crypto space?

> i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures.

They may also leave themselves open to these currencies being manipulated by foreign mal-actors

Indeed, not an expert... but what is a state actor stopping form putting extraordinary resources (say NSA for instance) in mining and minting to gain an advantage? And how bad is that?

It wouldn't even need to be just mining. I'm assuming there have to be at least a few zero days present on the asics at large miners. Just mucking up the network enough to scare enough people to panic sell could cause massive chaos.

>What business opportunities have been created outside of the crypto space?

They're probably just talking about all the pickaxe selling. NFTs are possibly an answer if you assume good faith and not just speculation.

NFTs are not "outside of the crypto space".

> Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.

This is the broken window fallacy writ large. The small value cryptocurrencies provide over other digital transaction methods is overshadowed by the huge inefficiencies of how transactions are processed via PoW. The fact that there are companies that have made a fortune dealing with all these "broken windows" doesn't change the basic fact that cryptocurrency is probably the least energy efficient way to move money digitally.

PoS is replacing PoW at scale. It's time for new arguments.

When is it replacing PoW? I've heard this promise for years now. Time for new rebuttals.

Beacon chain is live with 100k validators. Merge is due late 2021 Sharding 12 months from now

> The small value cryptocurrencies provide over other digital transaction methods

I’m not aware of any other digital transaction methods that can send un-printable money besides cryptos.

I think devaluing currency to inflate stocks and fund wars is harmful, and cryptos are a valuable solution. Although, I think there’s better than PoW.

These are political problems. If you think that an additional form of currency will solve them, I have a bridge to sell you. Even if you convince the US government to switch to BTC (this is probably a harder political project than defunding the defence department), I'm sure they'll think of something if they need to fund a war or two. BTC would be a mere speed bump.

Yes, the US can still raise funds other ways. It would still be preferable if they were more transparent about it.

> Even if you convince the US government to switch to BTC

There's no need for that. It would be enough for some people to switch to BTC. I.e., not store their money or denominate their salaries in USD.

As things stand, most wealthy people already store their money in things other than USD that are somewhat less easy to manipulate, like stocks and commodities. It would be nice if this strategy were more accessible to people worldwide.

> I’m not aware of any other digital transaction methods that can send un-printable money besides cryptos.

That's because it's not a useful feature heh. Money is meant to be a medium of exchange and temporary store of value. To the extent it holds its value for the duration of your ownership of it, it's met its goal.

Sure, it's a fair argument that gold + paypal may be superior to bitcoin.

You can simplify this even more. Open an InteractiveBrokers margin account and request a debit card. Fund the account, purchase gold (futures, GLD, whatever) and spend on your IBKR debit card. This will pull from your margin. Your margin interest is ~1% and tax deductible. Settle up your account as you see fit.

I use IBKR margin, but didn't realize it was tax deductible!? Thanks for the tip!

Yes, you can use it to offset capital gains. Also, depending on your largesse, consider tax-aware borrowing. [1]

[1] https://csq.com/2018/04/geoffrey-berlin-private-wealth-tax-a...

I find this argument a little weird, because I think we can all agree that bubbles and fad tech isn't really great for society as a whole. If you believe cryptocurrencies aren't a fad and actually provide useful benefits to real people (which does not include "we built a company that does crypto stuff and made a bunch of money"), then ok, fair opinion, but I don't share that view. To me it just looks like a big house of cards built on something that is fundamentally not that useful or valuable, but is propped up mainly by speculation. Building a company on top of it that is sold for $400M is great for the founders and investors in that company, but doesn't mean that crypto itself is useful for society.

I apply this to other things, too... there are ton of lucrative, successful businesses built on top of and around internet advertising, but I think that entire ecosystem is a huge net negative for society.

Take crypto out of the equation, what are the implications of the fed issuing a programmable currency? Many financial services would become obsolete. What do I need a stock broker for? What do I need a bank for? You have Wall St and other sophisticated investors profiteering and competing against the general public, devaluing our purchasing power, making leveraged trades because they know the public will hold the bag. It's a system that exists to favor the few and it's time to disrupt the orgy.

Why are you asking this question here? While I agree with this idea, it has nothing to do with crypto.

Humanity already solved this problem: https://en.m.wikipedia.org/wiki/Tax

Most white collar crime is obvious and where the bodies are buried is largely known.

There’s simply no political will to do anything about it.

Crypto becoming mainstream isn’t going to change indifferent minds.

Physical reality is a thing. Burying our heads in ephemeral concepts is distraction, not change.

We need to fix how we select our representation.

Winner-take-all elections lead to weak control over who represents your interests. It's like being party to a lawsuit where one attorney represents all parties.

And you can't fire your attorney for four years.

In the single attorney situation, SELECTING the attorney would be the major struggle. And then that attorney has all the power. The parties would then have to lobby the attorney to win the case.

And that's why our elections have become such a struggle and why lobbyists can buy votes.

And that's why Wall street firms can call up their friends and get a multi-billion dollar bailout.

If the fed did a cryptocurrency, it would be backed by the full might of the US Government — and all the things that the government can do if it decides to print more money. This also includes military and police powers.

Which brings me to the other point: currencies are governed at both ends; at issuance and at use. If you use a crypto that’s not approved, the government can simply arrest you for using one of its competitors. The treasury could likely do this without even needing to issue new laws, just new guidance. Governance is the reason for the existence of the US Treasury and Federal Reserve. It’s a core feature of any currency and the government isn’t going to abandon that lever of hard power. They’re only going to do a cryptocurrency that gives them more power, not less.

All of the stakeholders you list have a vested interest in not being disintermediated. They’re also deeply embedded in policy creation. I can’t help but notice the way crypto evangelists speak of crypto is the way leftists speak of Marx: in very vague terms outlining a utopian vision of a new economic paradigm that is frustrated by the sticky realities of the momentum of money and power. The reality of Marxism is different from the utopia, as would be the realities of central bank crypto (hint: it’s gonna be authoritarian af).

I can see value in democratic nations agreeing to use a single global blockchain they've created, without an MLM-Ponzi structure redistributing wealth simply because of adoption/use (consensus by agreement, not through greed/financial gain).

Totally would never happen; it would require too many people to give up too much power. See also Brexit (the UK never fully integrated into the EU over this exact currency control issue).

I almost think the several countries that remain in the EU which choose to avoid or delay joining the Eurozone are better examples. While the UK evidently had other concerns with EU membership besides the Euro, even pro-EU governments seem to encounter opposition when it comes to the currency union.

https://en.wikipedia.org/wiki/Eurozone

I agree. That's why China is doing it.

wow, the DCEP is the big brother version of crypto currencies; https://www.inaa.org/how-does-chinas-dcep-currency-work/

"Instead of relying on forecasts and estimates, the data collected by DCEP payments will provide China’s central bank with a treasure chest of information that can be used to monitor economic trends, predict consumer behaviours and resolve issues before they would normally reveal themselves."

Do you know more about the DCEP? who is setting the rate? How do they support offline transactions? Do they have contracts?

US is not the only country in the world. There are many countries whose currency and government are much weaker to fight such an adoption.

Exactly. I think all of the people that say "Crypto doesnt solve any problems" just live in countries with strong institutions which dont have the problems crypto solves. Even in those places though crypto is useful as a hedge against institutional failure.

Exactly, money is a reflection of power.

The majority of economic activity is not "programmable"--if I order a ship load of steel from some country, how is that contract going to be enforceable/verifiable with cryptoeconomic techniques?

Economic != financial, which was the point of the parent I believe.

Finance is one of the largest sectors of the US economy, it is central to its role in leading the world economy.

Additionally, finance is what controls and directs the economy. It is the business of money itself, in both the public and private sector.

Banks play a central role to any economy. Digital currencies can be centralized and controlled in the same way as any state owned enterpeise.

The vast majority of finance deals with "real" assets--stocks of companies (arguably blockchainable, like the Topl thing that a sister comment mentioned), commodities (e.g. futures), logistics, etc etc

Not sure how that all can be trustlessly secured with blockchain technology

That's not programmable today, but may be in the future.

Presumably the shipment has a series of checkpoints, which add some amount of traceability. There's also the potential for insurance for blockchain contracts.

I only recently learned about oracles, but I suspect we're only getting started on unlocking the potential of blockchain.

If there are oracles making the progress at each checkpoint along the way available from the blockchain, and insurance contracts for potential disruptions at each stage, your contract can ensure payment on delivery, and the supplier can be insured against any disruptions.

Who operates those checkpoints? Isn't there going to be some sort of implicit trust there? Even if somehow you built a machine that executes instructions that is verified on the blockchain, how are you going to make sure that machine's firmware is secure?

edit: I think this is a valid thing to tackle potentially as a company, but right now it seems impossible.

Any discussion of programmable currencies is always going to run straight into the oracle problem. It is extremely hard to join on-chain to off-chain things without dragging in a party that is implicitly or explicitly trusted. And the moment you do that, the purpose of cryptocurrencies goes away, as a single database run by the trusted authority is several orders of magnitude more efficient and convenient.

A firm created at Rice University is actually trying to solve exactly that problem. [0]

[0] - https://statistics.rice.edu/news/student-founded-blockchain-...

And how exactly are they going to blockchain-ify the coporation's interactions with other normal corporations?

I don't follow it at enough of a detailed level other than to know the UN is using it as a proof of stake concept for the transactions, and then reimbursing the token holder in their local currency (caveat - I think this is correct, but again I'm not involved with them at any detailed level).

You may also want to see these for more info:

https://www.forbes.com/sites/darrynpollock/2020/02/27/blockc...

https://www.businesswire.com/news/home/20201203005110/en/Tra...

> It's a system that exists to favor the few and it's time to disrupt the orgy.

I've got news for you:

BTC: 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency's blockchain control 95%[0]

ETH: Just 376 People Found to Own a Third of All Ether Cryptocurrency[1]

[0] - https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-w...

[1] - https://www.bloomberg.com/news/articles/2019-05-15/just-376-...

Are you familiar with the concept of cold wallets held by exchanges? https://www.longhash.com/en/news/3257/A-New-Way-of-Measuring...

I am. What's your point?

If you don't think crypto, an anonymous unregulated security, is being manipulated by a small amount of people then I have a bridge to sell you.

I think that OP's point was likely that many of these wallets are actually cold wallets for exchanges and institutions, rather than individual whales. The article's definition of whales is pretty loose anyway: "individuals who hold their assets in digital wallets and not on an exchange".

>What do I need a stock broker for?

You still have that stuff with crypto, just crypto exchanges not stock exchanges.

>What do I need a bank for?

Banks do two main things - taking savings and lend that out as mortgages. Crypto has been no good at part two.

Basically most financial services would still exist if in modified form.

P2P loans already exist and are only becoming more competitive as the market grows. This (Bitcoin) will cause a complete disruption of the financial system given enough time.

Crypto is a better version of gold and a store of wealth that whose supply isn't at the whims of central banks.

Gold has a purpose. Central banks may pretend that gold serves no purpose in a modern economy, but they still hold on to trillions in gold. I hope eventually they'll get around to holding a crypto currency like Bitcoin. They're just upset they don't have a head start in accumulating a reserve.

Gold is shiny pebbles people are willing to pay money for. Crypto is spreadsheet cells people are willing to pay money for. Well, some amount of money -- mostly Tether though, which is likely in turn backed by the same crypto lol. It's really an open question just how much new real money is flowing into crypto.

It's all pretty clear in the settlement Tether signed [1]. Particular note are #17, #20, #36, #43-46

[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

I don't know what the point of your comment is.

There is a need to have a medium of exchange for trade. Barter has its limitations. For all of history, people have created new forms of money for exchange. The primary characteristics you would need is scarcity, clear ownership, transferability and fungibility. Gold serves this purpose, and Bitcoin even more so.

The fact that gold is a shiny pebble is not adding anything meaningful to the conversation.

If you owned all the gold, people would still want to buy gold. If you owned all the Bitcoin, nobody would want to buy Bitcoin. The only value stored is the network of people pumping it, and the only question is how long it’ll take them to move on to the next thing.

Neither gold nor bitcoin are particularly good for the purpose you are suggesting -- that's why gold was replaced with fiat currency. Because fiat currency was better. Bitcoin chasing after gold's position is unfortunate because of course, fiat is better than gold.

The characteristics you need for a medium of exchange are:

- fungibility.

- the ability to hold its value for exactly as long as you need to hold onto it. Any longer than that is a non-goal.

- stability/predictibility.

- the ability to adjust to shocks, and a changing population.

- low cost of transactibility.

Scarcity is a non-goal. Clear ownership is a non-goal except in as much as possession is 9/10th of the law.

Basically none of these apply to gold, and basically none of these apply to bitcoin. That's why nobody uses it as such.

The first use of gold as an exchange was 550 BC.

Our fiat money has been around since the 1970s with staggering blowups

Come back to me on 2500 years and we'll see who has the better track record.

Generally speaking we don't need to wait as long as the previous iteration existed to prove the new generation is successful.

For instance, I think it's fair to say e-mail is a success, even though the first postal system was established under Cryus the Great in 550 BCE in Persia. The first e-mail was sent in 1971. Are you saying we won't be able to declare victory on e-mail until the year 4492?

You are right! So I should invest in emails right? I'm sure emails will get more valuable as time goes on.

Well I hear "bitcoin is TCP/IP" and for some reason people are trying to buy that lol, so can't lose.

A useful currency is not one which increases in value.

Sure. I think people will be sending physical mail to each other longer than using pop3 smtp and imap

Obviously. However, that doesn't mean email isn't trivially an improvement lol. And it certainly doesn't mean we need to wait two thousand years to make that claim. C'mon now, that's patently ridiculous.

> The fact that gold is a shiny pebble is not adding anything meaningful to the conversation.

Not the parent's argument, but TECHNICALLY speaking Gold as a shiny pebble can be used for jewelry, wiring, etc. It TECHNICALLY has utility.

Bitcoin has no inherent utility. ETH (and derivatives) on the other hand can power a smart contract which actual real business value, but the fact that it has a currency associated to it is generally meaningless.

yay, now it's at the whims of connectivity to a global computer network and cheap energy (not only in the past, but also in the future).

Calling it a bubble is essentially an unfalsifiable statement, there's no way to really disprove it. Many would very much disagree that it is non useful, especially on a forward looking basis (the same way a money losing unicorn is still worth a billion dollars). At what point is it no longer a bubble?

How can you not see what the importance of this new infrastructure? I come here and read these comments and am just at a loss for words at this point. Forget Bitcoin and look at Ethereum. This tech is so powerful I am in some ways scared of it and you call it a fad. The gulf between our interpretations drops my jaw to the floor :)

Can you name some use cases that aren’t trading crypto derivatives or crypto debt?

Ethereum is certainly more interesting than Bitcoin but the use cases so far seem to be more speculation.

One use case:

Buying something without a credit card online.

Finally, I can purchase something without recourse in the event that I'm defrauded.

With Ethereum? That seems like one of the least interesting possible use cases.

* For one, Bitcoin can do this too (though not in many places)

* For two, you can’t do it in many places

* For three, you already can buy online with paypal, prepaid debit/credit, and other checkout solutions, for less fees. You can buy a prepaid credit card useable online in any convenience store for a low fee....

I don’t think this is what OP meant.

And you bought the crypto itself with magic?

With cash

You want to know how you get bitcoins without magic? Mining, trading, buyinc frik

Sovereign identity, DAOs, NFTs (not just the art stuff which atm is a little cringe but game items, land registries, deeds), stablecoins (usdc, dai, yes there is also wilder experimentation here).

I think people can quickly get dissuaded by some negatives like lack of scaling or environmental issues. These are real but are being solved. We really need communities like HN to engage because if proponents are right then the change will be vast and we are unprepared.

My personal favorite outcome is playing out right now. When a tech company is successful they capture near 100% of the value, despite leeching content off users. Ethereum based projects generally share rewards with the community of users that make the protocol/network successful. Applications are forkable, not just the code but the community, too. The community is in control.

And what are some example use cases you can do with those things, or that people are using them for? Genuinely asking. I see people very excited about things like DAOs, but most descriptions seem to be about inter crypto use cases.

With the early internet it was easy enough to see there were use cases like “instantly send a letter to someone across the world” or “order a book not stocked at your local store” or “go directly to Nintendo’s website and read their info”. I remember doing this last one as a kid in the library and was instantly taken with the internet.

What are some similar ELI5 use cases of the Ethereum chain and those names you mention? Other than intra crypto loans, derivatives etc

https://seekingalpha.com/news/3680926-binance-launches-trada...

Liquidity for things that don't normally have liquidity.

Example: like wrapped Bitcoin, you could create wrapped Wine. Say you've got $1 million in a wine cellar. Create a wrapped token which allows you to use it as collateral or provide it to a liquidity pool to generate revenue.

Now your wine is earning you interest. Something like this may already exist...

Same for Tesla stock above. Now that a TSLA token exists you could provide to a pool for interest since it doesn't pay a dividend.

Commodities and future contracts on them have been around for a while now.

On your wine cellar?

Goldman Sachs did it years ago.

https://www.businessinsider.com/goldman-accepted-fine-wine-a...

> Now that a TSLA token exists you could provide to a pool for interest since it doesn't pay a dividend.

Explain further. Why would you be able to have the benefits of owning wine or TSLS and also earn interest on it. That’s your cake and eating it too.

There must be a risk element to the liquidity pool. What risk exposure are you taking by depositing TSLA stock there that you can’t get through normal finance?

> Sovereign identity

Not a real problem. Any civilized country has solved identity already.

> DAOs

A solution in search of a problem

> NFTs

Speculative. Game items, land registries and deeds are a solved problem. If your jurisdiction/company hasn't solved them already with Postgres and hardcopy it's because it's not interested in solving it or it's not a real problem, just a minor annoyance.

> Not a real problem. Any civilized country has solved identity already.

Jesus Christ. So the only problems that matter are the ones in "civilized" countries? What does that even mean?

Perhaps it means that this is a known problem with known working solutions. Countries that haven't solved identity are ones that either don't want to or can't, generally due to a mix of corruption and poverty.

Perhaps I am simply suffering a tragic failure of imagination, but I fail to see how adding a blockchain changes things substantially.

Being able to identify people via blockchain either requires them to remember some esoteric passphrase or an ID card with the identifier on it which...solves absolutely nothing.

> Countries that haven't solved identity are ones that either don't want to or can't, generally due to a mix of corruption and poverty

It's not a known problem because each country has its own context. That's like saying US healthcare problem can be solved just by doing what nordic countries do.

I'm not arguing for blockchain.

Most of the problems solved are not at their first iteration of solution. There will be a next one for most of them as well. None can deny that the crypto field opens opportunities for the next iteration of solutions

I do deny that they open up any opportunities.

Even if they might do things better (which I don't see that happening; solutions are objectively slower and more cumbersome than centralized databases with audit logging), they appear to solve "problems" that aren't really problems.

There's a lot of things that classify as annoyances and inconveniences in the world. That doesn't mean that I'm willing to dump a boatload of cash to solve them.

Identity isn't currently a technological issue. Microtransactions aren't a technological issue solved by blockchains. Ledgers of most things in general don't have a trust issue that's solved by blockchains.

Technies being techies think that technology solves a lot of issues just by existing while completely discounting the issues of trust and control in institutions themselves.

Most blockchain problems are actually governance issues.

This happens every time I ask for use cases in these threads. It is always something just over the horizon.

The early internet immediately allowed people to do cool stuff that was explainable if someone had a moderately open mind. If wasn’t vaporware.

Thank you. This mirrors my experience to a T. It's always those same empty sets of phrases

"Just imagine all those possibilities."

"It may not be there yet, but the smartest minds are working together on it."

"How can you not see what the importance of this new infrastructure?"

"DAOs, NFTs, [insert new useless crypto tech of the day]"

If, just once, they could just provide a single real use case that would actually improve my life... I get it, crypto is great for buying drugs on the internet, money laundering, riding the hype train, speculative investment, and so on. But I just have never seen any real legitimate use case that would benefit from crypto.

Buying drugs sex and hitmen online wasn't cool enough for you? You sound like a dork

We've banned this account for repeatedly posting unsubstantive comments. Not what this site is for.

> land registries, deeds

I hope that will never happen. We really don't need anyone to end up in a situation where a key is lost and they can neither prove they own something nor sell it legally. Also, "transfer your home by mistake" scams. And have fun trying to figure out how to deal with dead owners.

The other aspect of these is that, unless we're also going to eliminate the possibilities of courts ruling on things, the reversibility features of land registries and deeds is a feature, not a bug.

Husband and wife divorce and the courts rule that the husband gets the deed to the house and the wife gets the Ferrari. Husband refuses to transfer the Ferrari's deed. Now what?

Unless you mean that the land registry continues to exist but uses a public blockchain as their database? In which case... why? If they did decide they wanted it all public, auditable, and in the open, they could just publish it as a signed text file every day and anyone who cared could mirror it.

Don't get me wrong, I think there's some really cool possibilities in the space, but lots of the things that get proposed are fundamentally subject to court orders. Unless we change the law so that judges can't say "I don't give a shit what the 'blockchain' says, A belongs to X and B belongs to Y, and anyone who won't play ball can sit in jail for contempt until they get on board," there won't be much point in keeping track of those assets on a blockchain.

Have you ever heard of OpenLaw? https://www.openlaw.io/

Court systems, even traditional ones, can interact with Ethereum. At the end of the day, Ethereum is just a ledger. We humans are the ones that enforce laws and social contracts, Ethereum just helps with the (automated) bookkeeping.

If you want bookkeeping where entries can be rewritten by designated parties, then why would you want ETH / distributed consensus? What does it give you in that case over the existing database with a public mirror?

Also laws change. What you signed in an ETH contract today may be completely different than what's legal / possible to enforce tomorrow.

Because you trade and automate assets through contract logic. The benefits of contract composability on Ethereum mean that the velocity of money increases because now assets can be manipulated by logic without an intermediary. So if someone wants to borrow your asset, you can deposit it into a contract and now can lend it out peer to peer, and have interest acrue on an ongoing basis. Assets can be more easily "put to work". This is exactly what banks do with your money actually, only with Ethereum it's easier so liquidity / velocity is greater with assets because they can easily move around. It needs to have decentralized consensus because otherwise it's not credibly neutral.

If a law changes and affects an on-chain asset, then that logic will need to be reflected on-chain, otherwise the involved parties won't come to agreement in the real world. There are ways to make contracts upgradeable on Ethereum while still preventing someone from stealing funds, like through a multi sig wallet, perhaps with lawyers holding some of those keys. It all depends on how it's structured, but the benefits of using Ethereum (or something like it) are clear.

You keep saying "asset" as though this means anything. Say my asset is a bulldozer.

How is an automated ethereum contract going to lend it out and ensure its return in good working order, or pursue damages if it is not?

Say my asset is actually just a lump sum of regular US dollars, which I would very much desire to be returned to me as US dollars plus interest so I can my US taxes with them at a later date. How is an ethereum contract going to actually ensure I get my US dollars back, or have resource to pursue them, seeing as how no mechanisms of US dollars are dependent on ethereum?

The asset won't be the bulldozer, but ownership of the bulldozer. How did the natives of the Yap islands know who owned which Rai stones? Through social contracts. The same would be the case for bulldozer ownerships on Ethereum. It's just a way for you to prove to other humans (or programs) that you own the bulldozer. If you sell the bulldozer in real life, then presumably the buyer would want the ownership. The difference here is where the ownership data lives, not necessarily who issues it.

There are stablecoins backed by USD reserves, like USDC. Again, the ethereum contract is only a ledger. The people responsible for giving you USD is going to be Gemini who control the supply of USDC. You having proof that you own USDC allows you to withdraw USD.

There are of course stablecoins that are not backed by USD, but rather backed by ETH directly and the USD peg is maintained through arbitrage, oracles and control systems implemented in the contracts.

> There are stablecoins backed by USD reserves, like USDC. Again, the ethereum contract is only a ledger. The people responsible for giving you USD is going to be Gemini who control the supply of USDC. You having proof that you own USDC allows you to withdraw USD.

This still depends on trust. The blockchain doesn’t verify the backing. And USDC’s attestation is rather late.

Well, yeah, it's a centralized stablecoin. The advantage is that it can be used in Ethereum contracts in DeFi. If you want a stablecoin with no trust assumptions (other than the protocol and governance), there's MakerDAO's DAI.

Except you keep talking about automation of assets but you haven't answered the question: how does the delivery, and return of the bulldozer work?

How does the delivery and return of my USD work?

At every junction the answer is "well you trust another party and..." - so why is ethereum needed in the process at all? All of this is just companies providing an API for a service (which generally they don't, now, because it's complicated to orchestrate such a thing).

Ethereum is not contributing anything useful here, because everything important is "trust this person" - at which point I'm really just "hiring a lawyer".

Your bulldozer would need to have a chip installed that can connect to Ethereum and read off who the current authorized operator is. The operator and the owner would have to have cards that contain keys that speak a protocol that the bulldozer understands. Once the loan time runs out, the bulldozer locks out the renter.

The GP is describing a system kind of like Zipcar - you go online, you enter payment, and Zipcar allows your card to operate a car for a period of time. So, you might say, so what, we already have a Zipcar, why replace it with the blockchain?

Because if Zipcar goes out of business, all the cards and hardware on Zipcar cars are defunct. If all the hardware talks to contracts on Ethereum, there's no Zipcar to go out of business - you buy the hardware once, but the operation of the system happens on Ethereum, not in Zipcars' SQL database.

If we're after velocity / speed of movement, why not just add APIs to existing services. Changes would be immediate and required setup would be so much simpler.

Why do I want my contracts publicly accessible on a blockchain? All else equal, I specifically don’t want that at all

You can use zero knowledge proofs if you really want to conceal the information in a contract, but still prove to the world that you've fulfilled that contract. If you're using public Ethereum, then presumably you want your contract to be public.

Short list:

- Pseudonymous Transactions - Multiple Accounts - International Transfers - Customization (smart contracts) - Micro Payments / Internet money - Privacy - Low entry (Phone, internet) - Peer 2 Peer and decentralized - Free Software - Programmable

- Pseudonymous Transactions / Privacy

- Multiple Accounts

- International Transfers

- Customization (smart contracts)

- Micro Payments / Internet money

- Low entry (Phone, internet)

- Peer 2 Peer and decentralized

- Free Software

> Pseudonymous Transactions / Privacy

Not really tech problems; you're bound to the limits of the law

> International Transfers

Not a tech problem; international trx are dropping in price as competition increases; tech doesn't change anything here.

> Micro Payments / Internet money

There is no way to scale the tech to the volume where it makes sense for microtransactions.

I'm not really seeing these as problems fundamentally limited by technology.

You can scale Ethereum by running computations off-chain and submitting batches of zero knowledge proofs on-chain. StarkWare https://starkware.co/ is the leading layer 2 for zk proofs. There are also other platforms that use other zero knowledge techniques to batch computation and sends proofs of that computation on-chain.

> - Micro Payments / Internet money

Isn't eth terrible at this? i have $12 USDT stuck on an eth address because i need to spent $30 worth of eth to send it. That's not even including the fee I'll incur when i have to send eth to the address to fund it..

Censorship-free distributed storage (using Ethereum & Filecoin)

I wouldn't rely on that one. As cool as Filecoin is, LE can query who has a given file and chase them and their ISP until they no longer advertise that file. Without secrecy you can't have a censorship-free solution.

The Ethereum smart contract can advertise the file in perpetuity by being memorialized on the blockchain in an irrevocable way

You'd have to embed the whole file in the blockchain for that. At that point Filecoin is not relevant. That's not censorship-free either - the use of Eth network can be banned too. And LE or govs see who to target too.

> You'd have to embed the whole file in the blockchain for that

No, you don't. The eth contact can control ownership of and permissions to the Filecoin files.

> Eth network can be banned too

Banning the entire network is different than granular censorship of individual files

> And LE or govs see who to target too.

Anonymity is also different from censorship.

You are talking about a lot of adjacencies and "what-abouts"... There are at least half a dozen projects in this vein at the moment, so I'll kindly leave the rest as an exercise to the reader

Eth can't really control filecoin file. Eth nodes are not serving the file. If you go after the nodes which do serve it and remove copies, eth won't have you.

Anonymity is different from censorship, but censorship is trivial in networks where you ask "who has this file" and everyone points at the actual nodes which store it, with public IP addresses.

NFTs!

Maybe that might make you question your assumptions?

I mean, we've had a decades of cryptocurrency and just one actual application has arisen - crime. Money laundering, tax evasion, purchasing illegal items, and that sort of thing.

When it comes down to it, cryptocurrencies say that people trust some obscure algorithm that almost none of them could evaluate over society and governments.

It's a bad sign.

Cryptocurrency/web3 is at its core just technology. Fundamentally, the technology is still not that far advanced from the early Bitcoin days, but the little that is currently implemented successfully allows for ponzis and gambling. Cryptocurrencies currently trade for over $2 trillion, most of that value may indeed be a net negative for society, but that doesn't say anything about the core technology in itself. If cryptocurrency didn't exist, people would be trading tulip bulbs or pumping stocks like TSLA to $700B (oh wait...).

This may be a relatively lawless environment, but as for its current atmosphere, blame the world's central banks, not the crypto builders who are mostly as disgusted by the current situation as sidelined observers.

Decentralized networks have the potential to resolve many of the issues we techies love to complain about. Only a tiny percentage of that $2 trillion is allocated to teams actually working on solving these issues (Binance and Coinbase definitely aren't a part of it), so please try to reserve your judgment when you see developments coming out of crypto. Most of it is under-developed, over-hyped, and just an extension of the tech-bubble ponzi, but some of it will actually change the world. In the same way Tesla is actually positive to society overall and we shouldn't shun their cars just because the company's stock is a meme used in zero-sum-game gambling.

> Decentralized networks have the potential to resolve many of the issues we techies love to complain about.

I continue to hear this yet I never get a _single_ convincing example from DeFi advocates.

Just take Uniswap for example. Now imagine that every asset on the planet could be represented by a fungible or non-fungible token. You can put a Uniswap plugin into any browser and you now have a universal way to swap between any assets you want, 24/7. You could buy real estate, bonds, gold, stocks, currencies, all from your browser.

Now obviously this is not quite a a reality today. Most things exchanged on Uniswap are crypto tokens, but there are a lot of synthetic assets today, like mTSLA (which is a synthetic share of TSLA) and many more. So now I can hold stocks in my Metamask account today. Sure, it's only price exposure, it's not like TSLA has dividends anyway.

And then there's the oracle problem when it comes to real world assets, but this is solvable with existing legal systems, and soon, crypto legal systems like OpenLaw.

So yeah, Uniswap is my go to example of the power of DeFi.

> You could buy real estate, bonds, gold, stocks, currencies, all from your browser.

I'm not sure what world you live in where the biggest problem with buying a six-figure investment instruments is that _I can't do it from my browser_.

There's about a thousand things more important in my mind when it comes to investing. For a day trader this might be a problem. For decades-long instruments it isn't.

All the things you mention have issues that go beyond a browser. You could log on to a real estate page and buy a house and that's technically possible, and digital token doesn't do a damn to improve the experience.

I am a thousand times more likely to run into legal permits issues, KYC and anti-money laundering forms, getting stuck reading contractual obligations that certain assets require, etc.

That's easy for you to say, but there's plenty of people on this planet that don't have access to any financial markets. Now with a smartphone, browser and internet connection, they can buy exposure to US equities without a brokerage from any country.

But it's so much more than that. Have a little imagination. Digital assets could very well be the dominant forms of assets in the future, so easy access to markets to trade these is important.

You just disagree that this has importance, but the market says otherwise, since people are very interested in using Uniswap, and volume will only grow from here. It's undeniable that this is a usecase, and I remember only a couple of years ago that HN would say that Ethereum is completely useless, and yet here we are.

> Now with a smartphone, browser and internet connection, they can buy exposure to US equities without a brokerage from any country.

1. While this is technically become realer and realer every day, it's becoming less and less logistically due to regulation.

2. Eventually people will realize that the frictionless experience of crypto is also its greatest security risk[0]. Why do you think the Winklevoss twins store their wallet backup codes in...you guessed it...BANKS! ha.[1]

The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.

[0] - https://gist.github.com/chitchcock/1281611

[1] - https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...

Community-governed vs. advertiser-dictated networks. Free markets. It's a wide topic, I'm surprised you can't find a single usecase you would use or think makes sense.

If it can help you imagine some, take the decentralized primitives: a money/value transfer network, a reputation network, a content delivery network.

Starting from those, many currently gimped online services could be replicated in a way that incentivizes behaviors which benefit users, more than the platform owner. Local economies that currently function only through local, unscalable networks of trust could be brought online.

Of course, if you believe everything is better done in a way that can be regulated by a central entity, then crypto as it stands won't do anything for you (although public ledgers do make investigations easier). Core to crypto is a belief that P2P networks are superior to centrally managed ones.

> Core to crypto is a belief that P2P networks are superior to centrally managed ones.

This. And maybe also that "automatic" processing (enabled by maths) is more efficient and solid than human beings, especially when it relates to trust.

Any "anti-cryptocurrencies" stance has IMHO to state why cryptocurrencies affect him/her author, or anybody else. Stating that it is useless is just an opinion. Many things are judged "useless" by many, let's for example take "billiard": there is AFAIK no solid and widely accepted "anti-billiard" stance. If there is no harm, there is no reason to ban.

The statement that P2P networks are superior to centrally managed ones stands far from reality. There is a certain class of problems where this is true. But like in most computer science problems, distributed systems have a ton of flaws and inneficiencies.

Moreover, trust isn't something mediated by computers. Trust is a question of human societies. Algorithmic trust is not arbiter of trust any more than the thousands of electronic trust schemes, which get gamed at some point or another and where human intervention is necessary for course correction given a measure of authority.

Computer systems aren't outside of human law or common principles of human trust or institutions. BTC and all those other networks are just as if not more vulnerable to being gamed as any other system.

> The statement that P2P networks are superior to centrally managed ones stands far from reality. There is a certain class of problems where this is true.

Yes, indeed. That's enough to be useful, they don't need to be better at everything.

> Moreover, trust isn't something mediated by computers. Trust is a question of human societies. Algorithmic trust is not arbiter of trust any more than the thousands of electronic trust schemes, which get gamed at some point or another and where human intervention is necessary for course correction given a measure of authority.

Yes, and P2P/F2F systems allow more human input in networks. Individuals are free to decide with whom to interact or not. This is more humane than letting a blackbox ML model be the arbiter of truth, decide who is a fraudster and should have their account frozen (Paypal), decide who should be silenced (Twitter), ...

> BTC and all those other networks are just as if not more vulnerable to being gamed as any other system.

Great, there's a $1 trillion bounty for when you decide to start gaming BTC.

Seems like the Theta token is the example that you seems to look for. Cancel culture is a recurring subject recently on HN, between Twitch which that will shutdown channels that infringed outsides of their platform and Youtube which demonetize so many kind of content... This solve both.

Totally get your point here, however the counter that always gets me is the rate of quantitative easing in the US/UK. Not sure on accuracy of this but I've seen figures(cityam website) saying around 18% of all US dollars were created in 2020. There's a good argument that it's safer financially to put money into crypto. Personally I feel quite unsettled with both traditional finance and crypto at the moment.

Blockchain tech is a next generation internet still in its early days. I don't think it will go away. What do you think these networks will look like in 20 years?

It might be a negative for society now (I assume you are referring to the shady nature of using it as an alt currency), but it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.

It solves multiple problems at the same time. Content creators can get paid by design, tech is open an transparent and scalable. It's unlike anything we've seen before.

> What do you think these networks will look like in 20 years?

Exactly the same as it looks today. Because nothing has changed in the last 15 years either (Bitcoin was released in 2006).

> it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.

How does cryptocurrency help with any of that?

> tech is open an transparent and scalable.

Citation needed.

Just as an example, have you heard of smart contracts? There's a cambrian explosion happening now among networks, everybody tweaks something to be different from others. I suggest you to take a look around, there's a shocking diversity.

> How does cryptocurrency help with any of that?

How can a globally spanning Turing complete computer help? I don't know, but we will see attempts.

> Citation needed.

Haha, I always forget we are at academic level of discussions :)

But for fun's sake, go to https://coinmarketcap.com/ click a random currency and click source code / read the whitepaper.

Smart contracts deployed to the networks are also open to be inspected, here, take a look: https://etherscan.io/address/0x00c83aecc790e8a4453e5dd3b0b4b...

> Just as an example, have you heard of smart contracts?

Yes. They seem to be a solution looking for a problem. What problems can you imagine smart contracts solving?

> How can a globally spanning Turing complete computer help? I don't know, but we will see attempts.

So the answer is "nobody has thought of a single way this helps, after 10 years of thinking about it".

> But for fun's sake, go to https://coinmarketcap.com/ click a random currency and click source code / read the whitepaper.

OK The first one I clicked was Qtum: https://coinmarketcap.com/currencies/qtum/ . The whitepaper link goes to a 404.

The second one I clicked was VeChain. https://coinmarketcap.com/currencies/vechain/ . It has no link to source code or a whitepaper.

The third one I clicked was Dash, which thankfully had a whitepaper. Let's check it out: https://github.com/dashpay/dash/wiki/Whitepaper

> Currently the Dash network has ~4,800 active masternodes [8]. By requiring 1,000DASH collateral to become an active masternode, we create a system in which no one can control the entire network of masternodes. For example, if someone wanted to control 50% of the masternode network, they would have to buy 4,800,000 DASH from the open market. This would raise the price substantially and it would become impossible to acquire the needed DASH.

Oh my god

> Bad actors could also run masternodes, but not provide any of the quality service that is required of the rest of the network. To reduce the possibility of people using the system to their advantage nodes must ping the rest of the network to ensure they remain active.

Oh my goddddd

Nobody making this has any clue about distributed systems, do they

Outstanding example of murdered by words.

So it's possible to find bad examples, I get it.

What problems smart contact solve?

With my brief experience, they compute the state of a transaction in which everybody agrees. Why is that cool? You don't need an authority to tell who is right.

> Bitcoin was released in 2006

It wasnt. It was released 9 January 2009

> What do you think these networks will look like in 20 years?

My prediction is that some useful inventions will be adopted by regular people ok with regular old reputation based trust. And then some actual useful things will happen.

I was reading a report from my country's central bank experiment with e-money. A PoC token thing with a one time use rule enforced by a trusted network of intermediaries. They expressed some discomfort with this being a scalability issue and also not allowing offline transactions in case of infrastructure issues.

Ironically I found myself thinking that this could be solved by a digital equivalent of cheques.

I admire that controversial opinion, but would you really be comfortable with a federal authority telling you which software on your computer is "great for society as a whole" and which is a fad?

Oh I totally would if it were fucking up my country's attempts to meet the Paris climate accord.

But I'm not American and have no problem with a nanny state doing the right for society (crypto libertarians really, really hate society I have noticed).

How is crypto not useful? Is money useful?

Since when does the head of the fed need to crackdown on bubbles?

BTC is over 10 years now, and the most powerful monetary authority in the world is now afraid of it. How is this slipping by people's minds?

The btc maniacs are winning.

I don't ever see most nations willingly giving up monetary policy by ceding to cryptocurrencies. This is especially true for China and the US. They can however adopt their own version, where they remain the authority and would operate the nodes responsible for handling transactions. This would allow many of the advantages of cryptocurrencies while still allowing a country to control not only the money supply but also be able to audit money and (even in the cases of fraud and theft) return money to its rightful owners. You could even have a system where you can freely convert between the digital version and the physical cash version.

I believe that is exact where the value of bitcoin is: because any nations will not giving up their own currency. Bitcoin is anti-establishment. Of course, the real test will only happen when some country start banning bitcoin. No one knows what's going to happen.

It will only prove Bitoin holders right.

lol, it will prove them broke. The overwhelming majority of people own bitcoin because number go up. Banning it will make number not go up. This will cause them to divest. Substantially nobody is in it for the ancap utopia espoused by $20 transaction fees and 30 minute long confirmation times.

Yeah literally that has been my argument too. And I'm invested in this... because number go up.

Ok, so govs ban exchanges and you have your stuff in cold storage. You have to buy/sell p2p? Are people gonna do that just to have this magical deflationary currency? Possibly... but idk.

Ever wondered why so many crypto projects come from China and Russia and former Soviet states?

Because people who live there know what oppressive governments can do and how unreliable fiat is. I don't think people in the developed world understand it because they haven't really faced oppressive governments.

Are you sure it’s not because that’s where scams and cyber attacks against the west come from?

Yessir, it's surely because of that and not because of the complete state collapse a lot of these people witnessed first hand.

Are you sure it's not because that's where cyber attacks come from? Because you do know that trading cryptos is illegal in China. Do you have any data to back up your assertion?

Lol like average people there are invested in Crypto?

I'd say it's because it's kind of the "wild west" and they can do scammy stuff and not get hit by the government like in the US or europe.

In US, BTC had a use such as on Silkroad for drugs and other stuff; in China, at least from what I understand, it has a use of transferring assets out of the country.

If you talk about China specifically, the average people wouldn't consider governments 'oppressive', the approval rate for government is actually quite high.

If that happens and people don't get mad, it will be truly, truly sad.

Most people here are pro ownership. If you think everyone should own their data (they should), why wouldn't you think that everyone should also own their money?

Crypto might be a 'scam', but at least I get to own the risks. Giving up ownership means that my money is just used by bankers to invest in their own scams, and when they screw up, bail them out again.

You can't be pro data ownership and anti money ownership.

Well that’s easy to say when everything’s is going your way haha, as soon as bitconnect and gox and quadriga hit the fan the first thing people did was yell “help! Police!! Why didn’t anyone stop this?!” That’s exactly what’s going to happen with tether.

And I would still be fine with it because, again, my money, my risk.

You have a chance to disrupt an ageing, slow legacy industry - banking - and most people here are rooting for the dinosaurs. Amazing!

This isn't different from what we have now with central banking except you threw blockchain in for some reason. What value does that add?

The biggest advantage, from the government's perspective, is tighter control over the money supply and over transactions. A blockchain with a centralized authority is able to do unique things like forcibly remove money from someone's address and freeze an address from sending/receiving, all near-instantly. Hard to track and freeze money when it's a bag of cash in a criminal organization's possession.

I am sorry but that’s a very weak argument about cash being involved in illicit transactions. As it stands right now cash is still TANGIBLE. If you want to launder cash you still need to be physically present. Crypto not so much.

I will leave you with this: the reason why crypto will inevitably fail is because no one and no country will be willing to go to war to defend it. As for USD? There’s the single greatest military power assembled by mankind backing all US interests.

Let me introduce you to the wonderful world of Hawala: https://en.wikipedia.org/wiki/Hawala

The idea that cash can't be laundered because it is tangible is laughable.

I am not contesting that cash isn’t laundered. I am simply pointing out that whenever someone brings up crypto being utilized for money laundering the first argument is almost always “well cash is also used for money laundering” which is pretty weak. If you knew what people can do to launder money in shitcoins and bitcoins you would not make that argument. There’s a reason why Macau is no longer needed to get money out of China. And there’s a reason why gold is no longer used to move drug cartel money in the past two years.

> There’s a reason why Macau is no longer needed to get money out of China

Why would letting people circumvent the laws of an oppressive state to move their assets to safer havens be a bad thing? If anything, this describes a bull case for Bitcoin - "use BTC to bypass your oppressive government!"

Unless we are pro oppressive governments here (which, by the comments, seems like a lot of people here are)...

Crypto maximalists - and I know a LOT of them - are drawn to crypto because of ideology, not just the money. The idea that a person should own his/her own assets, be able to share and use them whenever they want, and be free from government censorship and foolhardy economic stewardship is incredibly powerful.

When governments talk about banning crypto, what scares them isn't crypto; it's this ideology. And this ideology also makes crypto incredibly hard to ban. You can create all sorts of regulations but that will only harden the stance of crypto maxis because it will only prove them right.

Why is this post so downvoted? It seems that antigovernment sentiment is not popular here

It’s not only that but also all that “crypto is not technologically interesting and it’s just Ponzi scheme!”.

There are so many interesting and unique things there. You can mix cryptography, finance, etc. into endless amount of protocols.

Here is some interesting ideas in crypto: decentralized stable coin (dai), automatic market makers (uniswap), zero knowledge rollups, dns that you actually own and not rent, p2p prediction markets, automatic borrowing, algorithmic stable coins without peg and so on and so forth.

And there is always something new.

I think blockchain is essential building block of the future free web.(at least stuff like dns)

> Why is this post so downvoted?

Oddly, HN is over all rather closed minded about cryptocurrencies/blockchain. I can understand being jaded at all the bitcoin maximalist out there that are frankly ignorant or even just being generally weary about the idea of such currencies... but it seems like the general sentiment is very negative in almost every thread with very minimal understanding of cryptocurrencies or frankly currencies in general.

Shame, tbh. I wish there was better discussion on the topic. Blockchain is very cool, even if you don't believe bitcoin is replacing your dollars ever.

At this point, I don't even care about Bitcoin anymore. It serves no purpose. I don't even care about cryptocurrencies as such.

But the ideas popping out from these fields are just so darn exciting. DeFi makes all these complex financial instruments that were previously the sole purview of big banks accessible to anyone.

And we're barely scratching the surface with NFTs and DAOs.

I think it's exciting too, but I'm also a little weary of making these complex financial instruments more prevalent. I see more of a downside to the increase in these instruments overall. Still fascinating to watch unfold though.

I see the downside as well, but all the same, I'd be happy if I can own the rewards and the risk. If I go broke because of experimenting with this stuff, I'll be okay with it - it's my money, my mistakes.

Lots of people went broke in 2008 because of their bankers' mistakes.

It strikes at the heart of ownership and responsibility and I can't understand why HN isn't bullish about it. Everyone here loves the idea of owning their data and their hardware and their software but somehow, their money should be owned by...bankers? So they can invest it in junk and crash the market?

Doesn't make sense to me.

> dns that you actually own and not rent

Which projects are working on this? That sounds awesome

> You can create all sorts of regulations but that will only harden the stance of crypto maxis because it will only prove them right.

They can harden their stance all they want, but breaking the crypto ecosystem is incredibly easy if governments really wanted to. All you have to do is ban companies from interacting with crypto currencies in any form, be it accepting, exchanging, holding, or producing them. That would immediately shut off the gateways between the crypto ecosystem and the real economy, which reduces crypto to P2P transactions in parking lots.

History has shown that when the potential rewards are large enough, the players will literally move jurisdictions to tap into the rewards. All that happens is forgone tax revenues for nations.

Because unless you have a one world government (hopefully, no one is a proponent of this), there will be at least some countries that will welcome you. And since the rewards will be large enough, market participants will even do illegal things to access it.

All it will eventually do is make your country less competitive until you have no recourse but to change the law. FOMO isn't just for people; it's for nations as well.

International sanctions are a thing, _especially_ in the world of banking.

The rewards are minuscule. It's a niche industry with no potential of it ever not being niche unless is has mass adoption.

I mean, companies are barely interacting with crypto right now, very few businesses use it for trade, but it keeps going up so i dont see how that works. US based onramps are useful only to americans, and i m sure people will seek ways to convert their dollars elsewhere, like they did for years before coinbase or other us based exchanges existed

> companies are barely interacting with crypto right now

Not sure that is true

> According to security firm Sophos, 51% of organizations it sampled globally found themselves the targets of ransomware attacks in 2019. The crooks succeeded in encrypting data in 73% of these attacks. Just over a quarter of these organizations paid the ransom, or their insurance companies forked over the cash.

https://m-cacm.acm.org/magazines/2021/4/251337-the-worsening...

All they'd really have to do is announce that they were going to build enough computing power to initiate a 51 percent attack on bitcoin. I imagine the NSA is already there but it would be a nice cash injection for Intel or whatever.

Bitcoin has a very, very short history of being a decent store of value and the US Government publicly saying they plan to break it would collapse the entire scheme.

It’d have to be a very prolonged 51% attack. Other nation states would likely join in, and it’s not like the USG can stop millions of people around the world from mining. Even if they succeeded in driving the price of most coins to zero, it’d be a Pyrrhic victory with USG looking like giant, insecure assholes spending a huge amount of resources just to destroy something that democratized money and banking. Months later, a new white paper would come out that finds a way to disadvantage state actors and viola, the game of whack-a-mole begins anew. People want out of dollars because the US economy is mismanaged, and that demand isn’t going away.

This is a silly proposal, bitcoin could just switch to a new PoW algo within days if not hours if someone did that.

Bitcoin can die tomorrow and crypto would still remain a $1T industry

What you described as the ideals of crypto maximalists largely applies to fiat currency. Individuals "own" their own USD, are able to share and use as they please within the bounds of legality.

Not sure what it means to "censor" currency, but if they consider governments' economic stewardship to be foolhardy, why would they consider the wisdom of miners, programmers or the crypto's regulating body to be superior?

What's left is the question of legality, anonymity lets users skirt the government's laws, which has value to basically criminals.

> anonymity lets users skirt the government's laws, which has value to basically criminals

And dissidents and marginalized communities and activists and anyone living in an oppressive state.

Are you really trying to argue that anonymity is only valuable to criminals?

What value does crypto provide to those groups you mentioned, that cash cannot provide? If the answer is, it allows them to break laws then yes by definition they are criminals. You can argue that some of these laws are unjust, sure but that's tangential to the question. The value of crypto by volume is largely for speculative bets and criminal activities.

Governments that are democratically elected aren't scared of anything but losing their job if they don't get re-elected. When a government starts to defend it's own existence against people's will, it becomes fascism. And by the way, this ideology you are talking about is called liberalism. The idea that money could and should be provided by open market rather than a central government is not some crazy idea. It's just wasn't possible before bitcoin.

USG knows how to deal with cash - you can't take any decent amount over the border or even on trains without being questioned.

Bitcoin main use (regardless of what it was designed for) is for laundering money.

Also it's not a currency, but an asset - as it is designed to appreciate due to how mining works.

even on trains? amtrak specifically questions people about cash?

This seems weird -- compared to traveling by air amtrak has approx 0 security, no TSA equivalent, bag scan, etc(unless you check maybe).

They check cargo holds and do random bag checks - as of the mid 2000s due to the "war on terrah" but maybe that went out of fashion in the past decade. Large denomination bills are designed to be easily scanned externally since they contain metal strips in the bill design.

Large amounts of cash, and not even all that large ($10k) have been considered evidence of crime and confiscated by the cops in the US. The laws that enable this have been slowly dying off, but it still happens. No other evidence of a crime is necessary nor do the people need to be convicted of anything, the cops just take the money because it might be used to commit a crime.

http://gm1-miwebvarnish.newscyclecloud.com/opinion/20201218/...

> Wait until you hear about cash.

Oh we have don't worry. The proportion of cash used for illicit activities is much much lower than the proportion of crypto used for illicit activities. Especially once you remove speculation volume (which cash doesn't have). Then there's the whole new kind of crime it created - ransomware.

Plenty of work was done to ensure tracability of cash. Take large amounts in or out of the country? Form. Withdraw or deposit large amounts? Form. Act suspicious? Form. Structuring? Prison.

You can't really compare a system designed to circumvent regulations regarding transactibility to a system designed to provide as much oversight as is practical. They're not even in the same ballpark.

>Wait until you hear about cash.

What if I told you the Treasury Secretary doesn't think your book keeping system in the same as legal tender?

>Binance and Coinbase are large, successful companies

I don't think you should group Binance with Coinbase. Binance is mostly unregulated, literally on the run, refusing to admit where it is headquartered[0], possibly because it avoiding paying taxes.

It seems like more and more likely that Binance is just a mechanism for CZ to exit via a massive BNB pump and dump.

[0]https://www.coindesk.com/binance-doesnt-have-a-headquarters-...

> Wait until you hear about cash.

This is why Europe eliminated the 500 euro note, and the US doesn't produce bills larger than 100 dollars. The thought is these are largely used be criminals.

Similarly Modi's demonetisation which the intent was to remove black money from the economy. All bills of 500 and 1000 rupee were to become worthless if not exchanged by a certain date.

So they've heard about it.

Beany babies spawned a lot of successful business, but you absolutely cannot from derive that they were fit for purpose, or in any way useful.

You're cargo culting.

They're still a solution in search of a problem, backed by tech people who think they understand what they are trying to replace.

Once you understand the fence you can tear it down, but cryptonerds really really don't understand law (they think smart contracts solve a problem) or economics.

Could you pay federal taxes in beanie babies? I think not

I don't know if that was meant to be sarcasm, or some sort of slam dunk argument, or what?

There are few things more annoying than hearing a crypto cultist talk about economics. It’s like a plumber lecturing me about database architecture based on their Excel experience.

Ironically people who actually work as blockchain devs are very chill about it.

12 year old beanie babies with one of the most accessible financial assets in the world with returns of over 60.000x

You missed the whole point there, bud.

> I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.

This is a very under-appreciated point. US persons (citizens and companies) assume the US banking system for granted. Many countries (even some developed ones) do not have a developed banking sector and by consequence it is harder/expensive to make transactions, access to capital is limited and access to markets can be restricted which limits opportunity.

Crypto-currencies requires significant expertise, much more than the current banking system. Countries who will attract these companies and knowledge will have lots of sway in the international economy in the future.

> Wait until you hear about cash.

Cash sucks for illicit transactions, because laundering it is a pain in the ass.

A crypto ecosystem without strong KYC is much easier to use for illicit transactions. A crypto ecosystem with strong KYC... Probably isn't.

> Wait until you hear about cash.

I've seen the estimation that 40% of all bitcoin transactions are related to drugs. Hydra (russian dark web drug store) is still the biggest receiver of bitcoin transactions. I don't think that cash is anywhere close.

>Wait until you hear about cash.

Tell me when 95+% of cash transactions don't serve any good purpose like it currently is with cryptocurrencies (speculation, waste of energy, malware ransoms, money laundering, hiding wealth / tax evasion, other illicit use)

My main problem with crypto is I like the rule of law. If someone steals my bitcoin it's gone. Normal bank transactions have (imperfect) protections. There is a reason the world switched from storing cash, or gold, under a mattress.

If a country was running on a crypto coin which had a major hack, it could collapse the whole countries economy.

The possibility of cryptocurrencies being banned in the U.S. is probably greater than what many people realize, especially those current holders. At least an attempted ban not unlike what happened in India.

While the whole "illicit transaction" argument is bullshit, Yellen and other Treasury officials probably realize that cryptocurrencies like Bitcoin could pose an existential threat to the U.S. dollar and needs to be snuffed out early. Companies like Microstrategy and Tesla have already began using them as substitutes for U.S. treasuries. Together with the decline of oil dependency and the petrodollar, a day will come when the de facto currency is no longer the U.S. dollar and with it goes the world currency status. Yellen's department, the U.S. Treasury, would become a minor department and a shadow of its current self.

An apt analogy could be the U.S. government is like Nokia in the early days of the iPhone.

That said, a U.S. ban may actually unintentionally lead to greater adoption as it effectively means cryptocurrencies withstood and prevailed an attack by the world's foremost national power.

> it effectively means cryptocurrencies withstood and prevailed an attack by the world's foremost national power

That's a big if.

For now the USA remains the world's richest and biggest unified market. Surviving a ban from said market is not a given for any product. In fact I imagine it's a death sentence for most global products.

> Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created

I strongly dispute that claim.

After a decade of effort, tens of billions of dollars invested, and thousands of crypto startups, we still don't have a single successful business other than those selling crypto services. (To be fair, Brave looks like it might make a run for it. We'll have to wait and see.)

Pointing to the fact that some people arre making a lot of money does not validate a business model or a social good.

Even in the most vile and egregious scams, there are always some people making a lot of money.

Funny thing is...this is why China is exploring their own digital currency. Every transaction is tracked.

I would absolutely dispute this. Personally I think the vast majority of this is just rampant speculation, and bubbles are not business opportunities.

Well, unless if you're selling the equivalent of shovels.

Don’t worry; they’re getting rid of cash too. I don’t understand the crackdown though. Crypto is a dream for tracing criminals. Even the privacy coins.

Capture US regulatory agencies while you can.

This has already had varying levels of success with the Chief Legal Officer of Coinbase being the acting chair of the OCC and telling banks it was okay to custody crypto and settle transactions on cryptocurrency networks instead of just SWIFT, ACH, FedWire

There are some at the SEC, and the new SEC chair was pro-crypto when he was previously the chair of CFTC

Cabinet level positions and the Federal Reserve and Treasury would be ideal

If this is important to you, you don't have to be just a passive holder or entrepreneur. Use your platform to assume power. Make the world as comfortable for your generation as older generations did for themselves.

Crypto exchange owner was 2nd biggest donor to Biden campaign https://nymag.com/intelligencer/2021/02/sam-bankman-fried-bi...

Great, yeah a lot of crypto builders thrive in power vacuums. So the Trump administration was convenient for the 2017 bubble, as a debilitated SEC was necessary for the token launches that made issuers millions (and billions). And a paralyzed Congress was necessary to get non-establishment people confirmed who will last many administrations. All of that lost its utility by 2020 as the outcomes were mostly solidified and favorable.

I would say it is slightly more than moderately successful.

The SEC still hasn't approved a digital commodity trust yet ("bitcoin ETF") but enough wealthy people are involved now that have created surrogates that it isn't as important.

Maybe some college kid in the late 2020s will make some Netflix conspiracy documentary about the "revolving door in crypto", I would call that success.

There is also an interesting argument about crypto being a convenient drain for excess liquidity in the system (injected by the stimulus), which is why it's not being regulated too heavily.

If stocks & crypto were less appealing, perhaps we would all experience higher velocity of money & inflation since demand would turn to "real assets".

> which is why

Extrapolating any competence from policy makers on this is a bit too fantastic of a conclusion at this point in time. Cryptocurrency just does not have an adversarial relationship with the US government, and the musings of some policy makers that create existential threats just are not the opinion of an amorphous entity (which also doesn't exist). The longer the rest of us are familiar with the technology, the more likely the gradient shifts to a less and less probability of adversarial relationship with the US government.

Square, Fidelity and Coinbase joined together to start lobbying group [1].

1: https://seekingalpha.com/news/3679495-square-fidelity-coinba...

The existing crypto lobbying groups were able to get bi-partisan support and co-sponsors for their bills but couldn't get Congress to focus enough to pass things. They got Wyoming and some western states to pass favorable state-level laws though.

Let's see how this one does.

Capture US regulatory agencies while you can.

I'd perhaps quibble a bit to say US financial regulatory agencies can't be captured in the fashion of traditional regulators (where the "revolving door" is awful). This is because they were "captured from the beginning", operated specifically for the benefit of large financial firm from the very start. The Federal Reserve isn't even a traditional agency but public, private partnership ("has a 'unique structure that is both public and private'). EPA theoretically protects "the environment" a thing outside markets. Financial regulators protect markets. Protecting markets is completely compatible with protecting the profits of the largest players in the markets. So it seems logical regulators will remain "objective" in their assessments.

https://en.wikipedia.org/wiki/Federal_Reserve

I'd say they can.

Enforcement divisions have sole heads who can make unilateral decisions that the commissioners never review.

Commissioners and Chairs can make make rulings favorable or ignore making unfavorable rulings, they can do anything they want regardless of what happens during the comment periods.

The CFTC, OCC, CFPB all have single head directors. The SEC has up to 5, and the FRB is the most decentralized but its Board of Governor's head is the primary sole signal to the international market on this entire planet regardless of how much they actually do behind the scenes. The Treasury doesn't have to be adversarial either, no matter how much it wants us to tie our national identity and ego to its currency, not all Treasuries or Central Banks have this concern.

Right now, crypto related topics are either ignored or adversarial. Crypto related topics can be collaborative or simply favorable.

Capture in this context (and all contexts of regulatory capture) just mean that someone joins for a certain purpose, does all of the other tasks correctly and with high competence, but also makes sure their single issue is protected.

Enforcement divisions have sole heads who can make unilateral decisions that the commissioners never review.

I'd just point out that at the end of the day, broad power of social institutions are going to trump the overt lines of command.

Well, Regulatory capture can have a lot of meanings I suppose. One really pernicious phenomena is when things that don't have institutional power on their own ("the environment", "average people's health", overall cyber-security of the country, etc) get shunted aside for particular institutional interests (chemical companies, IoT sellers/consumers etc). This is the umbrella where "regulatory capture" lets these externalities run wild. Now, if you want to use "regulatory capture" as more akin the general phenomena known as "getting a seat at the table", know yourself out. The point is that seats of that allow some special consideration, yes, but you can't carve up existing institutions the EPA can carve up restrictions on pesticides. I wish it was the opposite, obviously but there you are.

This all sounds incredibly nefarious

Every other industry in the country being an instruction manual.

If you ever thought this was going to be about a multi-decade long organic merchant adoption story, you were gullible af.

"Make the world as comfortable for your generation as older generations did for themselves."

Make the world as comfortable to the early adopters

"Make the world as comfortable for your generation as older generations did for themselves."

Make the world as comfortable for the early adopters [weighted from latest to earliest, so long as you're not left holding the bag] as the older generation had [before regulatory capture via industrial complexes and automation pooled more and more money to fewer and fewer]; FTFY.

speculation drives innovation.

Just as a fun hypothetical to think about... an effective way to crack down on cryptocurrencies would be to do it under the table. Don't make any official policy about crypto other than recommending that US citizens don't invest in it. Attack the crypto ecosystem the way they attacked Iranian centrifuges. The damage is done by the CIA and NSA, not the SEC and FBI.

The goal is not to make it impossible to use crypto but to make it so untrustworthy that nobody wants to touch it. Host mirrors of popular software wallets with hidden malware. Add backdoors to some hardware wallets at the factory. Create trojans that sit quietly and harmlessly until you try to deposit your coins at an exchange, at which point, unbeknownst to you, your compromised browser is displaying the CIA's bitcoin address instead of the exchange's as the place to send your coins. Make smart contracts with increasingly clever obfuscated time bomb backdoors. And it all comes with easy plausible deniability, since any of these tricks could just as well be regular old crypto thieves, highly motivated by the massive "bug bounty" on any exploit, including social engineering, that lets them steal coins.

Of course, the backlash if this was ever found out would be immense. It would basically be the US government operating a cybercrime organization. Many of the victims would likely be US citizens speculating in crypto. It wouldn't be worth it unless the powers that be decided crypto is THAT dangerous to the status quo.

What's to say CIA and others aren't already operating all sorts of crypto infrastructure? I absolutely guarantee they are. The people who run the financial system are a different group and would not necessarily be aware of what the three-letter agencies are doing.

So just... like... what scammers are currently doing?

Yep, just with a stuxnet level of sophistication.

They could throw a ton of money into mining, raise the difficulty to some absurd number, then cut it. Rinse and repeat.

Indeed, and this may already be ongoing. Programmers find a handful of vulnerabilities in core Bitcoin software every year [0], and there is no way for us to know if those bugs were planted intentionally. Some of these bugs caused the supply inflation to be wildly different than what is claimed (so much for "there can only less than 21mm coins"). We also don't know what bugs currently exist in the software that are or will be exploited. We also don't know if any of the core contributors and influencers in the project actually work for the CIA/NSA/PRC/etc.

[0] https://en.bitcoin.it/wiki/Common_Vulnerabilities_and_Exposu...

Like the NSA and Snowden, there would be backlash, but with little to no actual effect. Business continues as usual.

They could get a few supercomputers and sneak in illegal content into blockchain then everyone having a copy of it would be risking jail.

To me it's always seemed like money grows from the barrel of a gun. Detaching money from military power sounds wonderful but it makes no sense to me. It seems to defy the very basis of what money is. Tokens handed out by warlords. Only stretched out over such a long time that it isn't obvious any more.

Obviously I am neither an economist nor a political theorist.

I always figured that 'naturally arising' currencies, like gold and cigarettes, have two key properties: a) perceived inherent value (e.g., gold by long tradition and whose origins are lost to history, and cigarettes because people want their fix) and b) natural limitations on quantity (and counterfiting: gold has known density, and a fake cigarette is apparent as soon as you try and use it).

The purpose of the gun, it has seemed to me, is to get around the fact that fiat currencies have neither of the above properties, but that both can be enforced to some degree.

It's true but , bitcoin is a weapon, like the dollar is. Because BTC can't be physically destroyed, nukes become useless if the purpose is to destroy an economy / state. Raising an army with bitcoin is also impossible , because it s international and inherently impossible to inflate. In fact any state that wants to wage war in a crypto world is essentially fighting mathematics.

It is also inevitable, as any country that decides to ban it will eventually be forced to bring it back as soon as a rival starts using it.

While it would be nearly impossible to destroy all the servers maintaining the blockchain, it makes me wonder about the possibility of a sophisticated virus erasing it by means of an update cycle.

Seems like some good fodder for a Mr. Robot-esque show or novel.

Internet is a new thing, the old world might not satisfactorily explain the new one.

There seems to be 2 types of discussion about Bitcoin I've read so far:

A) 95% of the discussions and focus on the strict monetary value of the Bitcoin as an investment and financial gains.

B) 5% are related to ideological concepts of a decentralized monetary system and how that's a very good thing.

I fail to see the real value for humanity in general for this, not to mention the environmental impacts of the energy consumption of the bitcoin mining operations.

I am open to reading other points of view.

You forgot:

C) failing to see value for humanity due privilege of having access to modern and stable finance (pick your own percentage)

Aside from my original comment, can't say I've seen or read anything else about C)

People have been saying this for a decade, and several failed exchanges later plus a few attempts at banning US persons from using crypto, the crackdown has yet to really arrive.

Torrents or file sharing in general is maybe a good parallel. My impression of torrenting is that crackdowns have made file sharing a niche instead of mainstream activity. Of course it can't be 100% wiped out, but the general public is now wary of file sharing because the message is out there that it's risky.

I think Netflix/Spotify/YouTube and the like “hurt” piracy more than any legal manoeuvre.

My own piracy would go down another 50% if I had access to free/paid services like in USA. Then there’s the time I couldn’t play a movie I rented on my TV through Apple because I guess it didn’t like my old TV’s HDMI interface...

I think it has more to do with the fact that for 10-20$/month you can subscribe to Netflix/Spotify and not bother with torrent. That said, torrenting is still alive and well.

That's true for spotify but not for video streaming. The libraries are too siloed so you could end up shelling out quite a lot buying up accounts for these parallel services.

Yeah before it was like, you had to go to the store to spend $15-25 on a single new movie on DVD. Now there's a ton of stuff at your fingertips in 10 seconds for like 10-20 month. Makes it a lot less worth it for the average Joe.

I think online poker is a good example too.

Online poker never went away but it also didn't take that much to cripple the market to a point it couldn't come back from.

It also somewhat caused all the scams and shady practices to see the light of day.

Well, what has changed is we now have CEO's of publically traded companies openly and brazenly participating in crypto-currency pump-n-dump schemes[1] because they are currently unregulated markets.

Now, with major publically traded companies buying up other crypto-currencies, seemingly speculating on their rise in value, we may have a problem that compels some government agency to step in and ensure these organizations are truly acting in shareholder's best interests.

It's not a far stretch to see these events ushering in new crypto regulations.

[1] https://tradetheday.com/crypto-analysis/dogecoin-elon-musk-p...

Elon doesn't have to do anything for a pump and dump to occur - unless Tesla buying somehow becomes considered a pump action; if more gullible people or "amateur investors" buy into Bitcoin driving up the price because of whatever reasons, it's not Elon's responsibility to protect them - that is government and the SEC's role.

Elon's said "Bitcoin is almost as much bs as fiat money" - so he likely doesn't see that as end up. Because of this I could see Tesla selling $1 billion worth of EVs via Bitcoin, waiting for that to reach $10-$20 billion+ in value - and then slowly selling off say $4 billion worth to prevent a price crash - and then dumping $10B+ all at once as an experiment.

Perhaps you're right about Bitcoin, but Elon's messaging on Doge Coin was indisputably a Pump-n-Dump scheme. He even egged the SEC to investigate him[1].

Which reinforces my point - actions like this, by today's Tycoons and ultra-wealthy, will usher in a new age of crypto regulations since it is indeed the little guy being hurt by all this.

[1] https://markets.businessinsider.com/currencies/news/elon-mus...

This statement from the CEO of an exchange about the utility of cryptocurrency for crime reminds me of those old prohibition-era "warnings" on grape juice, that told you to avoid a very specific set of steps or else you would end up creating wine.

Is the timing of this statement a coincidence, or is it possibly a jab to take the wind out of the sails of another top exchange set to go public in two days?

Judging by the market's non-reaction to this, I'm going with the latter.

Coinbase's IPO isn't until Wednesday.

I'm talking about bitcoin prices

With all of the effort spend worldwide on money laundering, terrorist financing, and transfer of funds regulations. I find it very hard to believe that someone won't come after cryptocurrencies at some point. None of these regulations make any sense if you can just wire the money through crypto instead.

Do you really think that terror organizations like Isis use Bitcoin to buy weapons? No, they use goold old USD.

Not only do I think they do, I know they do [1].

[1] https://www.justice.gov/opa/pr/global-disruption-three-terro...

I think many underplay the real advantages of crypto assuming it’s all used for nefarious reasons, I use crypto quite frequently now, especially BCH (Bitcoin Cash), I can send this internationally for less than the cost PayPal changes for international payments. So why not use it, if the other person accepts it.

In addition here is a real business (gpu.land) going only crypto as it provides better options:

“I’m reaching out to let you know that as of today we'll no longer be taking cards for top up, and instead we'll be taking crypto payments.

The problem is fraud. A lot of people try to use stolen cards to mine on GPU.LAND, despite all the defenses and pledges not to do it. When chargebacks come through, we're on the hook, and to date that meant losing 30% of our revenue.”

In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc.

> In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc.

Wait, wouldn't everyone who has your wallet id know what you spend your money on if you use crypto? It is a public ledger. I mean, you could go through the effort of trying to hide it by using various wallets, but that only adds plausible deniability.

If someone at your work or bank decide to track the BTC they give you, I'm pretty sure they will start picking up on spending patterns.

I’m not a crypto expert, but I’ve researched this some myself and believe that’s all true. There are “privacy-coins” like Monero which obfuscate this, however afaict KYC laws make it impossible to use legally for commercial purposes.

I was more thinking along the lines of what’s this PayPal deposit to “furry art 4 u” (not my thing btw) or “Free Ross Ulbrict” with the mortgage advisor rather than anything requiring block chain analysis.

How would anyone at work know your block chain wallet hash? It’s a cryptographically generated hash not linked to any personal ID. People can see that money is moving around to different address and if law enforcement or mortgage advisor requested the exchange account details they could see you deposited this money in this address and then it moved to this address etc, but it’s not trivial to identify who owns any of those address once it’s left the exchange wallet.

If I was dealing with work people and trying to isolate them from other transactions, I’d just generate a separate wallet address for them which is trivial.

Tangentially related. Cryptocurrency is just a side effect of blockchain. Once blockchain technology matures and if one day we see blockchain to store files and blockchain to run cloud services, then will the US government censor it as well? If they will, how? It is practically impossible. You can upload anything there, including child porn, instructions on making bombs, videos that contain brainwashing propaganda for terrorist groups. You can run your server there, including servers for recruiting terrorists, etc.

When they realize, they will kill on/off-ramps into cash and make any transactions not legal.

The software itself they can treat is as malware - blackhole IPs and shutdown any hosts involved.

The value of crypto would decrease but never be completely gone. A whole pandora's box was opened and they can't put the genie back in the bottle no matter how hard they try.

If they were to kill the offramps, the ecosystem would move on websites on Tor or I2P that would work P2P, they can use high privacy coins such as Monero or zcash. Or people will trade it in person using escrow systems. It's not like the first BTC trasactions had the privilege of nice exchanges. The possibilities are there. Just the incentives are not yet present.

The point is, they can make it so fringe, that no legitimate person/company would touch it.

Local in-person exchanges for any significant amount are already under fire, it can be made even more so.

https://www.atmmarketplace.com/news/six-arrested-in-connecti...

https://www.justice.gov/usao-ma/pr/fitchburg-man-charged-mon...

https://www.justice.gov/usao-cdca/pr/ontario-man-agrees-plea...

https://www.justice.gov/usao-cdca/pr/bitcoin-maven-sentenced...

https://www.forbes.com/sites/billybambrough/2020/05/28/new-y...

https://duckduckgo.com/?q=bitcoin+arrested+money+laundering+...

My stance is: forget about this "blockchain" rhetoric thing. What was interesting for cryptocurrencies was the ability of producing scarce, unique, digital assets. That was groundbreaking. Then other cryptocurrencies expanded on that.

Write only data structures themselves are not new and not that valuable on their own.

But the interesting thing is the decentralized, trustless structures it enables. And just pinning that on blockchain sounds bad.

This whole things is still early and it is the basis of _a lot_ of speculation. But I see this whole ecosystem enabling a whole new class of self-governing communities, websites and structures, some good, some bad.

Give me a blockchain that isn't inherently structured like MLM-Ponzi schemes (and unbiased people who use it not claiming the contrary) and then we're talking.

Likewise, I'd suggest that pinning the problems you suggest are solved with "decentralized, trustless structures" - ignores the fact of reality, the physical world and real trust networks, centralized organizations, that reflect the state of society; Bitcoin et al may be a bridge but attempting to circumvent and ignore the positives of institutions is a bad idea.

> but attempting to circumvent and ignore the positives of institutions is a bad idea.

I mean, maybe? I did try to qualify with "some good, some bad", and I am certain some are bad, I'm not some idealist trying to sell you something. It just _does_ enable the possibility of circumventing institutions, and it will keep doing so, no stopping it, IMO.

> Give me a blockchain that isn't inherently structured like MLM-Ponzi schemes

Depending on your definition of "MLM-Ponzi schemes", it could be that the whole of human society might fall under it. Besides, I did mention I am not too fond of the "blockchain" name and think cryptocurrency is much more apt.

> if one day we see blockchain to store files and blockchain to run cloud services

As a user of both types of services, I don't see what bringing them to the blockchain would do for me.

Like, uncensored AWS? You are free to run your own Parler without getting booted from AWS?

Umm, how does block chain solve that? Someone, somewhere still has to physically host the server, and that someone is likely in a jurisdiction covered by some sort of government. Maybe I have an inadequate imagination, but I fail to see how blockchain would solve the problem of someone upset with the content physically unplugging the servers.

Sure, I could see a hosting company that had customers machines encrypted in a way where they were unable to determine what customer is tied to an asset or even who their customers are. However, if this hosting company had customers serving CP (as would surely happen with such a service) then if they were at all related to anywhere the US gov could possibly exert influence I would be willing to bet that the hosting company itself would be shut down at the least. Someone, somewhere physically needs to operate the servers, and some ISP/telco needs to provide interconnect. AWS isn't magical, they've just provided a much better UI over co-location, which has existed approximately forever in internet time.

Think of it this way-it is very strongly recommended that you don't run a TOR exit node from your home connection. Any amount of blockchain/crypto obfuscation doesn't do anything for the end operator of a service hosting objectionable content. And while I disagree with political censorship, I also don't doubt that a fully uncensored hosting service would end up >95% malware, exploitative porn, and the like.

Some discussion from knowledgeable people of what plausible "crackdown" rules would look like would be interesting. The article mentions an ID requirement for transactions above $3k.

Personally, I think the idea of the physical nation state is converting to a global credit score, where instead of transacting across borders, you are transacting across classes of businesses and people, and tarriff and tax policy will be enforced on a risk basis instead of a national border one. Instead of black market electronic transactions, the transaction is just taxed at a higher rate because of the relative social credit score of your counterparty, so your transaction with a non-KYC enrolled wallet would incurr a 100%+ excise liability on your tax reporting. It's the sort of totalitarian idea that is appealing to the sort of people you really need a popular revolt against to unseat, but worth considering what they think about to remove their element of surprise.

This is an interesting point of view, do you have any sources where I can read more about this?

See this comment from a larger thread on CBDCs: https://news.ycombinator.com/item?id=26205741

May or may not be repurposed: https://www.goodhealthpass.org & https://www.lfph.io/ & https://trustoverip.org/

There's been talk of a KYC requirement for all customers of US web hosting because cyber.

Having worked with more than one of those member companies in that foundation, the one thing I've learned about conspiracy theorists is that what they really lack is imagination and vision.

Identity is necessary but boring. US SSNs were used by third-parties far beyond the original purpose. Any identity system that achieves global scale can be used to anchor a risk score. Which systems do you consider good candidates for global digital identity and credit score? Cryptocurrency exchanges are using driver's license and utility company bills. The IaaS KYC EO basically says "record as much as possible", https://www.steptoeinternationalcomplianceblog.com/2021/02/u.... If we take inspiration from online advertisers, no formal "identity" is required, they can construct a profile from online signals, but there would zero legislative recourse for false positives.

Necessary for whom? Every single use case for assigned identity reduces to enforcement. It is not a consumer product people want, it's a tool to herd people. These companies and so-called foundations are just jockeying to become the next Hollerith.

Identity schemes don't need features or complexity as once you're subject to it, it can be a crappy yellow card or even an arm band you carry with you and present it when it is demanded. The rest is theatre.

I was going to say that identity is useful when replying to a comment on HN :) but you're right that the comment text could stand alone. The poster's identity is only needed for karma sorting and greylisting of comments.

How?

How do you 'crack down' on a currency that doesn't require any existing state or bank controlled apparatus to operate? Other than the exchange point, which private exchanges for cash can circumvent, how do you crack down on what is essentially math conducted via computers that everyone has access to?

Neither the article, nor the linked one from December say.

You (government currency regulators) make it illegal to convert fiat to crypto, and then monitor crypto ledgers for that last bit of folks who still attempt to use crypto. When exchanges break the law, you ship the folks who own the exchange to jail [1]. Crypto folks think they're the former cartoon panel, when it's really the latter how nation state enforcement works [2]. Governments crack down on money laundering with fiat all. the. time. Playing with fiat amounts more than $10k at a time? That's a currency transaction report (CTR) [3]. Try to avoid the CTR? That's structuring [4], also illegal, and a suspicious activity report (SAR) [5] is filed. So, when the question is asked, "how do you crack down on crypto?", the answer is "with the monopoly of force governments possess."

[1] https://www.google.com/search?q=crypto+exchange+jail

[2] https://xkcd.com/538/

[3] https://en.wikipedia.org/wiki/Currency_transaction_report

[4] https://en.wikipedia.org/wiki/Structuring

[5] https://en.wikipedia.org/wiki/Suspicious_activity_report

If only there were an international, barely regulated network that allows people in one country to interact with people in another.

you can't reliably opt-out of laws in the place where you physically reside, especially where money is involved.

You can’t reliably restrict what you can’t see

At some point you need to convert your crypto gains back to fiat to actually use it, especially in the hypothetical case where crypto trade is banned locally. The IRS/FBI/etc are not going to arbitrarily constrain themselves when trying to go after folks who do this.

>At some point you need to convert your crypto gains back to fiat to actually use it

Except you don't. It's a currency. Just because it's hot right now and people are treating it like an investment doesn't change the fact that it's a currency itself. You don't need to convert it to anything. It was literally built to be a currency free from bank/government control. That was the whole point.

The sole criterion for the viability of a currency is acceptance in trade. It doesn't require government, bank, or sign off by any authority. If people accept it in trade, it's a currency and it's viable. Just because other, older fiats are more mainstream currently doesn't change that fact one iota.

Okay, sure, let's consider it a currency for the sake of argument. I would posit that if I can't easily exchange my crypto into a form that I can use to pay taxes with, or buy groceries with, that it's a useless currency, and so people will be able to but won't want to accept it in a trade. Currencies aren't useful simply because they _can_ be traded, they're useful because they _can_ be trusted.

It is a currency. I've bought stuff with it. There's literally a BTC ATM in my local liquor store. There's a famous strip club(!) in Portland that accepts BTC. There many, many more examples: https://coinsutra.com/who-accepts-bitcoins/

>Currencies aren't useful simply because they _can_ be traded, they're useful because they _can_ be trusted.

If people trade them, it's because they already trust them.

That's why I said 'sole criterion'. Say you think fiat currencies, and the USD is a terrible and untrustworthy currency. The market doesn't care. It's viable because it's accepted. Acceptance in trade is all that matters.

Another example: Baby food is as good as cash to drug dealers. The implications of that are disquieting, but don't change the fact that it's true one bit.

When it comes to a currency, acceptance in trade trumps all. Nobody's feelings or long held beliefs matter in the slightest. The growing acceptance of crypto is why it's become seen as an investment, not the other way around.

The whole point of crypto is that you don't have to trust them. I swear the HN crowd is so dense it's like they're intentionally trolling.

I'm speaking in the hypothetical where crypto is regulated or banned. If you can't legally use it to trade where you physically reside you either need to convert to fiat overseas or buy your physical goods or services overseas. In either case the government isn't going to turn a blind eye "just because".

Currencies derive their value from government control. That's why BTC is an investment, not a currency.

Until and unless the IRS accepts tax payments in a cryptocurrency, they won't be used in the mainstream economy.

>Currencies derive their value from government control.

There are countless examples that prove this false. World of Warcraft gold, EVE Online ISK, BTC, Ethereum, Dogecoin, baby food, etc. There are literally jobs in developing countries where farming in game money is a job that pays their bills. Yet we both know that no government is in control of those currencies.

>Until and unless the IRS accepts tax payments in a cryptocurrency, they won't be used in the mainstream economy.

I'm surprised they don't already. They're already used in mainstream economy if you count buying things on amazon or Subway.

> There are literally jobs in developing countries where farming in game money is a job that pays their bills

Do they pay their bills in World of Warcraft Gold or local currency?

(That actually illustrates the distinction between tokens that might have value to speculators and currency quite nicely)

It's not speculation though. They literally sell one currency for another. That they have value is a given, or they wouldn't be able to exchange one the other. (notice how it doesn't matter which currency is which in that sentence?)

Acceptance defines value. No other factor trumps it.

That's exactly my point. They're mining a commodity, not a currency.

If that's what makes a currency a commodity, then USD is a commodity.

Nigeria banned banks from trading in crypto, killing off the fiat.

Nigerians just started making telegram and whatsapp groups, made codenames for different coins and traded them for cash or bank transfers.

Unless you decide to bank commerce and phones and the internet and talking to your neighbor and running a computer, you can't ban crypto.

What you're describing is laundering, so now you're committing two crimes. I wouldn't bet against the government taking an interest once values being exchanged are large enough.

What I'm describing is free trade.

This only protects you if the government is powerless or chooses not to target you. In the other cases, what happens is that banks and other businesses are required to report transactions and, since a blockchain helpfully gives the police a full signed transaction log, anyone who is arrested is going to in turn give the police leads on everyone they've ever exchanged money with.

In that world, using cryptocurrencies has a high risk factor: do you trust the other party to go to jail rather than identify you, or that they have personal security good enough to even be able to prevent that? Simply using an unapproved payment mechanism, much less one of the ones which tries to provide some anonymity (fewer will deliver in practice), will likely be seen as proof of intention to commit financial crimes and … I sincerely hope you can convince them that you aren't hiding something they haven't yet scared you into confessing.

This is not a recipe for a functioning economy. Technology can't fix social problems like that and the vast majority of people making claims otherwise won't personally be affected but are recklessly endangering anyone who makes the mistake of trusting them.

All this will do is compel companies to move to crypto friendly countries. China squeezed down on crypto. Chinese exchanges just moved their headquarters to Malta.

When you start getting into DAOs and their legal status and everything starts becoming murky.

Crypto has truly some of the most exciting developments taking place in the world today at the intersection of art, finance, law and economics. The quality of discussion on HN about crypto is woefully out of touch.

> The quality of discussion on HN about crypto is woefully out of touch.

Given most of the comments I read, I'd say HN is aging out - like facebook median age > snapchat > tiktok

Now I wonder what the replacement is - it must already exist! We just don't know about it yet.

I find the whole line of reasoning in the xkcd comic quite amusing when it comes from crypto 'shorters'. Admittedly, I am on the 'long' side when it comes to crypto and decentralization.

Suppose your government actually had to act this way in order to crack down on cryptocurrencies. Every prison would have its own Guantanamo bay for torturing private keys out of cryptocurrency users. And this is is portrayed as some kind of win or gotcha in the comic. The non-violent offenders glutting the prison system would sky rocket as judges have to hold people in contempt indefinitely for not giving up private keys(this has already begun happening in the US).

"Well you forgot to account for all the knees our liberal democracy would be willing to break!"

If that's what it takes then you've already lost. This is the private fantasy of a lot of individuals long on crypto and the broader decentralized trust-less ecosystem. Because the implied threat of force is often a much stronger form of social control than the actual use of force itself; which is expensive, unpopular, and broadly illegal in developed countries.

The ideology of this decentralized ecosystem mocks the myth of the benevolent nation-state prosecuting 'criminals' on behalf of its 'citizens'. A nation-state with the power and will to exist in such an ecosystem would be the most cruel and invasive authoritarian regime in human history. Any reasonable person can conclude that it ought not to exist.

So I say let the money laundering commence. Or people will leave. Or they wont be allowed to.

You block on/off ramps and lose a lot of important information on these transactions, the people involved and tax revenue, seems like a losing proposition, but definitely doable. You can't stop people from running a software on their computer short of shutting down the whole internet, even then, there are satellites with the blockchain data now, so it'd be really hard.

Satellites are the easiest thing to ban. Sure, the govt has the tech to jam/shoot them down, but they're also almost certainly associated with a real person with a real bank account and a real door they can knock on/down depending on their cooperation.

Sure, I guess my point is there will always be some kind of functional messaging in place.

If people can communicate any message, they will be able to communicate the blockchain data. Satellites, p2p networks, ham radio, but again, I don't think we'll ever see a global internet shutdown just to shutdown BTC.

I disagree. Take the war on drugs. They can't get rid of them, but they can make everybody sad. And that's the real world, which is harder to intercept.

> Other than the exchange point, which private exchanges for cash can circumvent

"private exchanges for cash" (that really would have to happen in person) will never, ever, replace the scale at which an online exchange that can deposit money straight to a bank account will.

The goal of a "crackdown" is never to eliminate something 100% (because as you noted, that is impossible).

Consider that the government doesn't need to attack cryptocurrencies at the source because they already have full control over their own citizenry. There are plenty of things the government could do to coerce citizen compliance. Yes, "illicit" activity will still happen but if the goal was to harshly crackdown on things like Bitcoin they will have succeeded.

Taxes. They make a sacrificial lamb out of a few high profile tax dodgers. All the power structure has to do is convince norms that crypto is scary/dangerous/tax risk and they will have done their work. I think someone else made the torrent analogy. The crackdowns on torrenting were quite successful. They scared the public with some messaging, made a big noise about canceling regular people's internet service, etc. Torrenting has ben kept as a niche instead of mainstream. That's all the power structure needs, it doesn't have to completely kill crypto.

Crackdown on current state of crypto can only help it in the long run, if you actually really believe it.

Right now it’s market mostly dedicated to get rich quick schemes. While it works great if you’re on top of the pyramid, it’s only hurting crypto case for the future.

DeFi has a legitimate use case and NFTs have an astonishing number of use cases. Smart Contracts are an incredible, incredible innovation.

We are at the tip of the iceberg and nothing has been more disappointing than seeing the traditional tech world's dismissal of crypto as "get rich schemes". The tech world is surprisingly as complacent now as the legacy dinosaurs it first helped destroy in the 1990s and 2000s.

I think it's somewhat similar to innovator's dilemma, a lot of current tech leaders were once the underdog and now are at the top, so they end up becoming complacent and non-innovators or slow innovators like the companies they replaced.

An example of really cool smart contract usage is borrowing against your crypto, for example, this person/group was able to borrow roughly 340M$ [1], the best part, they didn't even had to provide their name or deal with any other human, all enabled by a smart contract that they can inspect and verify.

1: https://defiexplore.com/cdp/8463

I find it incredible that someone can code up a strategy for deploying an investment vault, the community, which operates as a Decentralized Autonomous Organization (DAO), can decide to vote on it, and two days later, people can start investing money into it and earning interest - no middleman or manager involved. The investment vault will deploy the capital in different protocols based on the strategy outlined (and voted on by the DAO) automatically.

The automation smart contracts can bring about is scary.

To be honest this trend of borrowing against your crypto is specifically something that makes me very suspicious about the current state of the cryptocurrency world. If crypto crashes 30-50% again all these loans for which collateral is going to be sold would crash the whole market (or am I missing something?). Also it seems way too popular to borrow against crypto and then use that money to invest in crypto as well, creating significant leverage in the market, worsening the problem I mentioned before and inflating the price of crypto compared to its “true” value.

These are all over-collaterized, so you're usually borrowing up to 30% of your collaterals value, it's nowhere near the 2-20x leverage that you might get in traditional markets or leverage based exchanges.

I think it makes a lot of sense in the current bull market, it probably makes less sense in a bear market unless you're borrowing only up to like 5-10% of your collateral to actually spend on something you need.

The numbers I’ve seen range more from 40-60% (haven’t gotten involved with this though so not sure how accurate these are). That would cause lots of issues on a 40% pullback.

Traditional tech innovation was predicated on doing things more efficiently (sometimes orders of magnitude more efficiently) using new technology, thus disrupting incumbents. Blockchain reverses this completely by doing simple things, like changing numbers in a database, for orders of magnitude more computational (energy) cost. Until someone squares this circle I will continue to be skeptical.

Have you looked into newer consensus mechanisms that consume vastly less energy - like Proof of History - that blockchains like Solana use?

The whitepaper should make for an interesting read: https://solana.com/solana-whitepaper.pdf

DeFi main value proposition isn’t tech (that’s cool) but avoiding regulations.

Blockchain has lots of potentially interesting use cases like NFT, but crypto currency is still not one of them. And by not cracking down on scams in cryptocurrency will only make any future adoption harder.

DeFi's main value proposition is the automation of money.

NFTs main value proposition is fractional ownership and assertion of ownership rights in a transparent manner.

Imagine owning 1% of a Drake song - and getting paid 1% of the royalties every time it plays on Spotify. Or creating a yield earning strategy that automatically moves money around based on fixed paramters without ever interacting with a banker or fund manager.

> DeFi's main value proposition is the automation of money.

That's a potential value proposition of any currency which can be manipulated digitally. Whether it's distributed or not is an implementation detail.

Indeed, but the bar for "automating money" in traditional finance is extremely high due to not only legitimate regulatory reasons but also to large banks and institutions trying to preserve their power/dominance.

In DeFi anyone can automate money. For instance, for the past few months I've been building an experimental options exchange [1] in my free time, which would be impractical on traditional finance.

[1] https://docs.defioptions.org/

The reason we don't have fractional ownership of pop songs is because that's a bad idea, not because we can't figure out how to organize it.

David Bowie famously did securitize the rights to his songs for 10 years (1997-2007): https://www.investopedia.com/terms/b/bowie-bond.asp

Why would that be a bad idea? I don't know a single musician who says that record labels stealing 90% of their work is a good thing.

I'm not sure what NFTs have to do with record labels. Unless you're saying that the only reason we have record labels is because musicians can't otherwise keep track of who owns their work?

Seems like a stretch

Scott Galloway has an interesting take on this, predicting it's only a matter of time before some prestigious institutions and brands jump on the bandwagon:

https://nymag.com/intelligencer/2021/04/unified-monetary-the...

>NFTs have an astonishing number of use cases

NFTs are the equivalent of trading cards or video game lootboxes. They enable a form of conspicuous consumption whereby you conjure up value by slapping a digital signature on something and creating artificial scarcity.

From the perspective of the state none of these instruments improve supply chains, enhance military or state capacity, increase productivity or growth. NFTs basically enable the uber wealthy to sell original versions of their artworks or whatever, they have no impact on real world innovation or mass commodity production.

Art is only one use case. NFTs can represent land ownership, driving licenses etc.

sure but putting a license on the internet isn't that innovative. Our driers licenses are pretty good and pretty cheap, and we've proven land-ownership over generations pretty well. This is not world-changing stuff.

If you want radical innovation build some robots that make house construction 90% cheaper, whether the license for my house is printed on paper or a blockchain doesn't matter to anyone.

NFTs and virtually any crypto tool have no impact on the material world, and we very much still live in the world of atoms.

Putting a license on the internet isn't innovative. Putting a license that can be owned in fractions is.

Most deals in the real world are already fractionalized. If someone is building a new housing complex, he is likely going to raise funds from a bunch of investors, each of which will get a share of ownership based on their investment and negotiation skills. The only way to invest in these deals is if you know people and are in the right place at the right time. There are gatekeepers aplenty and you need big capital to get in.

If you were to tokenize the same new housing complex, anyone, anywhere can buy it up. Ownership records are transparent. There are no gatekeepers. And ownership is fully democratized. You might have $1 to your name but you can still claim to have ownership of this spanking new housing complex (even if its 0.0001%) - no intermediaries involved.

It opens up previously unavailable opportunities to anyone, not just the people with the connections and the big wallets.

NFTs can store any data. Currently, they're used for art but more and more crypto projects are deploying them for store different types of data on chain. You can tokenize anything and track it on chain - music, art, physical goods, real-world bonds.

In the simplest form, they can be used to fractionalize ownership. Integrate these ownership records with existing infrastructure and you can suddenly transform ownership and royalties.

I'll give you an example.

I'm an amateur musician and every pro musician I know has harrowing tales of being shafted by record labels. They have no power to negotiate because they need the money. Most get paid cents on the dollar and record labels keep the bulk of royalties.

Imagine a situation where a musician can mint an album as an NFT and put it up for sale. 100 people can buy 1% each of it. This entitles them to 1% of the royalties earned from the album. Since all this data is on-chain, it's easy to verify.

Now suppose there's a music platform integrates NFTs. Every time a user plays a song, the platform verifies ownership records from the blockchain and distributes royalties to addresses that own the NFT.

Suddenly, you've completely decentralized and democratized ownership. You've bypassed gatekeepers. And you've given the chance to anyone, no matter where they are, to invest in - and get invested by - anyone.

How is this not revolutionary?

I think this is pretty obvious and even mentioned this is a previous comment a few weeks ago. The US government has been saying that crypto is funding terrorism and money laundering. If you can’t read the writing on the wall then that’s your fault.

What terrorism? Since 9/11, there have been only two major Islamic terrorism incidents on US soil. The Boston Marathon bombing was by two brothers, and the San Bernardino shooting was a husband and wife team. Both were low-budget operations.

Even 9/11 is estimated to have cost the attackers only about $400K.

What costs is setting up an full-sized army, like ISIS.

People from the US and other countries are sending money abroad via crypto to fund terrorism outside the US

People from the US are sending crypto abroad to feed their families.

They are also funding terrorism.

People from the US and other countries are sending money abroad via cash to fund terrorism out the US

Yes, but with crypto it’s much easier and undetectable. With cash it’s much easier to trace because of global regulations.

Wikipedia lists a couple more Islamic terrorism incidents:

* Fort Hood shootings

* 2009 SUV attack at UNC

* 2015 Chattanooga shooting

The DC sniper attacks might also qualify as Islamic terrorism. The perpetrators were Islamic, and their goal was terrorism, but it's not clear that the terrorism was actually perpetrated to further Islamism.

Those are two lone nuts, plus two juveniles on a crime spree. None required significant funding or organization.

There will always be crazies. Although, crazies who can shop at a "Guns Galore" store cause more trouble than unarmed crazies.

2010 attempted car bombing in Times Square

This was expected, crypto is essentially a weapon against the dollar. However i m not sure if the world's economies will go along with it. Maybe europe (which usually drags itself behind the US) but i m not sure the rest of the world would want to begin the post-covid era with even more dependence on US.

In any case, good news for binance, bad news for coinbase

>I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.

Mindshare like cancerous greed? Nations turning their backs on crypto“currencies” turn their backs on multi-level marketing pyramid schemes. Good riddance.

“Strong currencies are not the solution to poor governance. Good governance and democracy makes a country and its currency strong. Not vice versa.” —halukakin, HackerNews, 2021 —https://news.ycombinator.com/item?id=26105680, https://www.cynicusrex.com/file/cryptocultscience.html.

Instead of killing it by banning it, I suspect they could kill it by buying it.

If the Fed wanted to "invest" in Bitcoin, it would kill it by soaking up liquidity and creating a liquidity-squeeze. Because the amount in circulation is fixed, it wouldn't have to buy all of the Bitcoin -- just enough to kill any utility. This is a downside of an asset with a fixed quantity.

Once the community discovered the liquidity-squeeze spike, it would lead to a run-to-the-exit with a price crash. The short-squeeze spike and crash would spread across alt-coins as well due to rush-in-rush-out and leverage across alt-coins.

Once liquidity is killed, liquidity-squeezed, and a crash happens, the FED / SEC could make it illegal citing volatility and losses of citizens.

The Fed would need to do this discretely and never disclose their purchases. If it became public, the community would probably choose to fork.

Can you elaborate on why a "liquidity-squeeze" is bad for bitcoin? It's subdivisible to 8 decimal places, so it's not like reducing the supply would make it harder to transact or anything.

The USG could kill it by using a 51 percent attack; the NSA must have rows upon rows of servers that could be repurposed for a week or two to destroy the market. Split the blockchain every couple of hours into several different versions, eventually there would be little chance to reconcile things.

>the NSA must have rows upon rows of servers that could be repurposed for a week or two to destroy the market

Their general purpose servers are nearly useless for mining bitcoin because their hashrates are orders of magnitude lower than the ASICs that professional miners use. If you want to 51% attack bitcoin you either need an absurd number of general purpose computers (possibly more than all CPUs/GPUs that exist on earth) or pour billions into making hardware that can only be used to mine.

$1B would be more than enough to design and manufacture all the necessary ASICs to cripple the network. They wouldn't even need to do a 51% attack to do so, e.g. selling coins at a complete loss would bleed the other miners white.

>$1B would be more than enough to design and manufacture all the necessary ASICs to cripple the network

Source? Some napkin math using the current bitcoin network hash rate[1] and the price/performance ratio of a yet-to-be-released bitcoin mining ASIC[2] suggests that you'd need $9.5B to take over the network.

[1] https://www.blockchain.com/charts/hash-rate

[1] https://shop.bitmain.com/product/detail?pid=0002021022419553...

I think specialized chips work too well for repurposing other computing capacity to work.

I expect the most effective attacks would go after control of mining capacity, either directly seizing it or taking it offline.

The NSA/CIA/etc. is precisely why this won't happen, for the same reason the same are launching no wide-scale attacks to take down Tor - the guys in suits doing questionable government things need anonymity too.

Hell, Satoshi Nakamoto probably is the NSA.

Bingo. I’ve always thought it was the NSA, CIA, or maybe UK or Israel but I doubt the latter two. Especially since Satoshi’s wallet is so large and hasn’t moved.

Bitcoin has to make it much easier for 3 letter type agencies to follow money.

Most darknet stuff uses monero and that is... tricky to follow.

Unfortunately it's almost definitely a smart nerd (using this as a compliment here) who passed away.

I don't think NSA would include a video poker game in the source code

https://github.com/trottier/original-bitcoin/blob/master/src...

I theorized back in 2009 that this is exactly what would happen, but instead of having NSA use it's server farms, it would be the central banks using third party cutouts to buy up chunks get to a collective 51 percent. Why I didn't predict that the obvious result would be a runaway market I still kick myself for, because at the time I rejected bitcoin for it's lack of privacy and just moved on...

My current guess is that they are going to pressure all the other coins, and come to some collective agreement after some farcicle fact finding mission ala 1907 to agree there should be some sort of central bank controlled digital coin... which of course they will control, but will lack anonymity. BTC will crash then. (but again, maybe I'm not the best person to listen to on this topic!)

But won't you also increase the mining activity if the price shoots up? I'd like to hear more detail on this "liquidity-squeeze" plan.

That wouldn't affect emission rates (at least in the long term), due to network difficulty adjustments.

Or make it illegal and have the NSA directly attack the compute used to secure it

Hah! :)) So naive. No way this is possible. Attacking compute used to secure it means attacking a whole lot of machines. And the people near those machines will patch them. An you need to attack 51% of them at the same time. Even if you manage to do a 2x spend, they will live with it and patch the stuff and people will still use it. Because what is a couple of 2x somewhere along the way compared to the rest of the blocks it secured?

Not to mention of the geopolitical consequence.

No, this "have the NSA directly attack the compute " is not feasible and would only strengthen its position in the long term.

If government agencies can hack into and disable secured nuclear facilities (this happened... yesterday), I dont see why it would be "impossible" to attack random Bitcoin mining facilities. When state level intelligence agencies are your adversary, I wouldn't assume you can "just patch it" either.

Oh, it's possible. You hack into, what? One? A couple? But it does not scale up like that. Do you really honestly think you can reach 51% like that? Besides, yes, you can just patch the vulnerabilities. Contrary to popular belief, vulns are not plentiful and are not cheap. Using one kind of burns it. So it would be a _very_ stupid usage of vulns.

Precisely the decentralized nature of BTC makes it impossible to shut it down exactly the same way you shut down a nuclear power plant.

And ok, you 51% the network. Then what? You can't create BTC's or change the rules of the game dramatically, without a fork. so the people on the original network are kind of... meh, at your attack. You could double spend but you need to own the coins you spend, so you shaft a couple of people. What then? I do not think that would kill it, there are cryptos that were 51%'ed (looking at ETH classic) and are still alive and chugging along.

That's assuming that they couldn't attack cooling infrastructure to fry the chips or the fabs making the asics. Also, enough chaos would surely have an impact on the price.

Only psychologically. The mining capacity is driven by the price not the other way around. The rest of the miners not hit would be ecstatic because now they get less competition. The difficulty would self-adjust eventually or new mining would get brought up.

The mined supply is very small compared to the circulating one. Besides, if you were to slow minting, it should drive the price up, not down. :)

This is nonsense. Bitcoin has not had much utility since 2015 when the repo was taken over by people who refused to increase the block capacity.

A purchase of bitcoin by the govt would massively increase the prices. Transaction of value by the big players would become even easier. The high degree of divisibility would ensure that small players could still play. There would be no more liquidity issue than there is currently.

You're claiming that an entity buying up a ton of Bitcoin would crash the price? Do you have any references? I'm not familiar with that economic phenomenon.

Also like others have said, the price is divisible to many decimal places, and with consensus could be updated to be further subdivided.

The FBI did once own a significant amount of Bitcoin after busting the Silk Road, but auctioned most of it off.

“Whatever you do,” cried Brer Crypto, “Don’t throw me into the briar short squeeze”

What a fantastic discussion this is. Someone needs to archive this for future reference once the whole thing has played out one way or another. I have a feeling we're at a massive inflection point, with two possible futures facing us. One, featuring incredible innovation focused on enhancing the human condition through collective endeavour, the other one in which climate change forces us back into a kind of pseudo primitive social state. It feels like crypto has the potential to do trigger the former, if we still have enough cheap energy of course. :)

So what happens if the fed cracks down and you have a ton of bitcoin? That goes to zero, right? is there going to be a withdrawal stampede?

I dunno if a crackdown is even going to happen, but in case it does, what's the plan?

It's already starting. I've heard that Nvidia developed a cutting edge computing audit system, that was developed to detect, in real time, that GPUs are being used for calculating simple hashing algorithms and sniffs out all computation. The next step is just government mandated cpu firmware, installed in all Intel and AMD CPUs that can detect when a computer tries to calculate a SHA hash, and immediately reports it to the fed. This leading edge tech is already being shared by Nvidia with the FBI. I've heard it's unhakable.

Almost certainly the heavily privacy themed cryptos will the first to go. Monero, dash, I'm looking at you.

Bitcoin and ethereum are almost certainly safe, but I there are a few on the periphery that are harder to gauge. Decentralized exchange tokens like 0x and rep / augur seem like they could fall on the wrong side of the law too. Lastly, I'm not sure how much I would want to hold stable coins like maker / dai.

You can argue that cash is also used for a lot of illegal activity and you would be correct, but that misses an important point, which is that cash has been with us since our country's founding and from a political point of view it would be nearly impossible to ban it, even if doing so would be a sensible policy. Cryptocurrency is still in the infant stages and banning it wouldn't entail nearly as much of a backlash.

I think you're underestimating how many people own/are into crypto. A quick look into Coinbase's S1 alone shows that tens of millions of people in US have accounts with them and they are custody-ing billions of $ of institutional coins.

And that's just Coinbase, ignoring Robinhood, Cashapp, Gemini, GBTC and lots of other exchanges and custody which have very significant volumes as well.

CEO of a top Bitcoin exchange wants prices to go down so they can pump some more.

Should have been done a long time ago. Literally every law enforcement investigation into organized crime requires blockchain analysis these days. I never met people who use crypto to buy actual day-to-day goods. Only hear about it from cybercrime and crypto-bro price gaugers.

The US banned plants and spend billions and billions to enforce it. Not sure why crypto would be any different? It can even be checked same way. "Sir, show me your phone." "What is this app? You are arrested for suspicion of crypto possession"

> use of bitcoin for money laundering, terrorist financing and other illegal activities.

Bullshit. It's being used to get around the fucking enormous 33% taxes levied on the middle class to support Democrat and Republican donor's lifestyles.

For anyone thinking to do this, it’s a terrible idea. Bitcoin has a public ledger that is around forever. It is much easier to trace than cash or offshore bank accounts.

Are you saying that the U.S. middle class starts at $163/326k of taxable income?

Let's hope.

Yeah, they say it every week.

Maybe don’t bail out bad actors like in 2008 and we gonna behave, promise.

Leviathan awakens

evil eyes look everywhere

blind to my Monero

I really want someone to ask Janet "do you have plans to ban Cash transactions because they are used for illicit activity?"

I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit.

It just sounds better to use the illicit boogy man.

Do you need to ban cash if you simply phase it out of existence? Turn up instant payments, and any notes turned in at banks and to the government get shredded. Look to China and Sweden [2] for foreshadowing of digital currencies and the eventual deprecation of physical notes.

[1] https://www.google.com/search?q=china+cashless

[2] https://www.google.com/search?q=sweden+cashless

> I really want someone to ask Janet "do you have plans to ban Cash transactions because they are used for illicit activity?"

There are already existing controls on cash transactions. If you deposit cash in a bank account, you need to prove your identity and you're subject to anti-money laundering surveillance. Securely transporting and storing large amounts of physical cash, outside of a bank, is very difficult. I imagine that making or receiving large payments with physical cash is often impossible or would attract a lot of attention from authorities and perhaps even criminals.

> I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit.

Gold can play the same role, and has been banned in the past, but is unlikely to be banned again. The more likely story is that there are serious money laundering and terrorist financing risks posed by Bitcoin's intended purposes, and governments are trying to figure out how to get a hold on the national security / law and order situation without being to heavy handed.

To flip this a bit, how much of bitcoin usage is non-speculative, and for legal purposes?

I actually think the speculative issue is a bigger concern for the fed, then the legality. It's an commodity w/ very little utility, but a high degree of poorly regulated investing. In addition its used to funnel payments for illegal activity.

HN is boomer central when it comes to crypto. Haven't had a single enlightening discussion about it here.

I see a lot of misconceptions about scams and pump and dump schemes carried over from the 2017 run, and complete neglect of the innovations created since.

If anyone wants a refresher, I'm always willing to chat. I will also write a primer to help get folks up to speed on what's the latest in crypto.

Yea no I've seen plenty of you folks talking about recent innovations in crypto and I'm just not persuaded that any of it is remotely useful other than maybe store of value and certainly speculation.

I'm not a boomer, and I even own a decent position in BTC / ETH.

I'll give you an example.

The most "mainstream" revolutionary idea in crypto right now is automated market makers (AMMs) like Uniswap. These essentially allow anyone to create a "pool" to trade between two assets and earn fees from it.

You can tokenize any asset, pair it with a liquid token (such as ETH or USDT) and offer it to anyone to trade while you earn fees. Or you can join an existing, popular pool (such as between wBTC-ETH) and earn fees on any trades that happen on it.

Essentially, anyone can:

- Create a decentralized exchange economy

- Participate in existing exchange economies with any amount of capital and earn fees from it

The latter part is important because that's been the purview of banks. Countless trades happen between currency pairs daily. Banks earn all the fees because they supply all the liquidity. You can't participate in that market even if you wanted to (or unless you had tens of billions in capital).

AMMs turn that around. You could have $1 worth of liquidity but you can still earn fees on it.

This is the first time in the history of finance that creating and participating in exchange economies has been so cheap and accessible. I think that alone is revolutionary. It makes previously inaccessible financial avenues available to the little guy

Yeah but what would the decentralized exchange be used for, other than other crypto?

A bank can legally process a person who fails to come through on a loan. They can physically take stuff. A decentralized crypto network can't do anything to anybody. It can just take the marginal collateral and then the rest swallow the losses...

I feel like defi crypto types discount the power of the physical world.

You can tokenize anything in concept- right now it's just crypto + small number of stocks. It's slowly building out a distributed version of Wall Street. That is the value-add, and it doesn't need to do anything more than that for it to be revolutionary.

Loans in defi are over-collateralized right now meaning there's very little risk for the lenders. This will likely change as distributed identity/credit scores are implemented.

A couple examples of what's to come: https://cointelegraph.com/news/defi-s-critical-missing-piece... https://medium.com/minaprotocol/snark-powered-defi-teller-bu...

Go ahead, post them. I think there are _some_ and I think crypto is really, bigger than most people give it credit. But there is a lot of crap and hype out there.

But just posting them instead of threatening would lead to better discussion overall.

How can I be notified when you post your primer? Keen to read it.

Don't shoot the messenger.

Bitcoin will never be regulated.

Would you bet on it?

Not OP, but I am. Tell me the bet conditions and the winning criteria. Would take that any day. I'm serious.

I am certain they will at some point try, but fail miserably.

It already is. You cant buy one without KYC. Unless you go to "dark" places where you may or may not get scammed. Unless you already have cryoto then ofc you can exchange it but most people need a fiat on-ramp.

Don't be silly, of course you can. It's inconvenient, but not impossible. ON/OFF ramps are the parts that they could regulate but the tighter they squeeze, the better the circumvention methods will be. I think HN really overestimates the ability of states to keep this under wraps and underestimate the ability of the ecosystem to adapt.

Name one place where you can buy BTC with fiat without KYC.

1) bisq 2) sign up to a kyc exchange. Exchange small amount. Contact someone who is willing to exchange outside of the platform, maybe someone with a high reputation.

3) Lose all your money - deserved for being this stupid.

The only reason someone sends you money back after you irreversible send money to them is if they are even more stupid than you.

That's what I don't understand. How could you possibly exchange crypto for fiat in a completely safe/foolproof way?

The person gives you fiat, you can say no. You send the person crypto first, they say no. Because it's not physical, there's no way to wrestle it from the person or whatever...

Escrow. First BTC I bought, circa 2013, I met with a guy and gave him physical money. He then released the escrow.

But how do you confirm that you are in ownership of the only private key? Since transactions take too long you can't just send it.

He doesn't give you the private key, they usually are held by the exchange, local bitcoins, par example.

You could do an escrow system where you send the btc to a wallet that you need 2 of 3 private keys in order to move the funds. You, the seller, and and escrow arbiter. The seller moved the funds to the wallet, you give him the money and then with his key and your key you move it to your wallet.

In case of conflict, the arbiter can step in and decide.

I am sure with eth you can do even _more_ clever things. Whomever says you can't do trustless transactions just shows lack of imagination.

Yeah but don't you need always need a centralized arbiter to guarantee the exchange? Not verifying the transaction, which of course is done decentralized.

You would need an arbiter, or some system to do the arbitrage, for sure, but it need not be a _centralized_ arbiter. If you kick the can down the road and enough across sufficiently many actors you could get a fair, or, well, at least, predictable, system.

Some sort of voting/staking consensus system might work quite well for this.

Might not sound like a lot, but, IMO, it is.

A DEX is perfectly possible in fact many of them exits. They however don't work with fiat directly because you need a digital fiat with some properties of crypto. So you cant use you bank notes or the number on you bank account unless your bank decided to issue a digital token.

There are other entities that do this for example gatehub issues IOUs for different currencies and tokens https://gatehub.net/legal/xrpl-addresses So you can own gatehub USD on the XRPLedger and exchange it on the DEX for gatehub BTC. The DEX isnt controlled by gatehub or anyone so its guaranteed fair and whoever sells you the gatehub BTC can not cheat you. However both the gatehub USD and the gatehub BTC are IOUs (debts) you can withdrawn form gatehub so you have to trust gatehub to actually own the "backing" and allow you to withdrawn. If you dont trust gatehub you may find another issuer. In theory your bank could be such an issuer and then you wound not need to trust any additional party.

Needless to say that no matter what, at the point where your fiat (from your bank) goes "in" or where fiat comes "out" (to your bank) you will need to identify yourself.

Thats completely useless. he would never escrow his BTC before getting the money. He could loose 100% while you loose nothing.

It was not useless and worked very well because you had an arbiter. If I did not give the money to him, Local Bitcoins would release the escrow back. Indeed, resolving a argument could get messy. But it worked well enough.

Then you have third party so its no longer trust less and/or decentralized. Both parties need to fully trust the third party. Also the third party need to arbitrary choose in case of a dispute as it has absolutely no way to know which party is lying. There is no way to verify a cash transaction happened.

This all just a acts as a negative incentive for scammers because cheating may or may not work and you likely are banned after the first dispute.

Yeah exactly what I've been saying, as devils advocate. How do you transact btc for something physical safely? There's no legal recourse after the fact. At least with a car-cash exchange there is.

You could stream money in both direction starting with very small amount then if the other side delivers you can speed up but keep it so low that if the other would stop he could only steal a tiny amount.

Here is an old tool that this this https://github.com/Kava-Labs/switch Not sure if this is still functional

BTC on its own obviously cant do this as Tx are slow and expensive.

Huobi, last I checked. localbitcoins, I think ? ( huh, such a blast from the past - they now have some sort of KYC but I think it's soft)

Huobi needs KYC. Localbitcoins is more like localscamers.

This is exactly why i love projects like MobileCoin and its integration in Signal. We are going to desperately need anonymous, secure and privacy focused payments very very soon. Signal needs to open up payments worldwide as soon as possible. The last problem to fix is making it all decentralized.

Everything crypto has KYC now days. I highly doubt you can get that mobilecoin in any relevant quantities without disclosing who you are.

Buy monero on some KYC, move it non-kyc and buy whatever.

Whats the point? As soon as you buy anything in the real world its connected to you, unless you want your lambo be gifted to someone else with no traceable connection to you. Fine you an buy anonymous gifts with crypto - awesome.

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