Comment by toomuchtodo | Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

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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

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.

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.

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".

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.

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.

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.

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.

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.

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