Hacker News Reader

Comment by lmm | Hacker News Reader

What proportion of bitcoin use do you think is legitimate purchases versus crime? I suspect it's a long way on the wrong side of Blackstone's ratio.

View on HN

Specifically for bitcoin- my hunch is one of the main drivers of its valuation is Chinese-owned capital trying to find its way outside of mainland China, as the ability of the average middle-class or wealthier Chinese person to have assets outside of state oversight is highly constrained.

I do think that coins with more reasonable transaction fees are actually used as normal, boring currency a lot more than crypto-naysayers think.

I also think the rampant speculation going on over coins like Doge is nuts, but it's worthwhile keeping in mind that if you're just using crypto as an exchange of value, with the purchase of the coin and its use at the same time, it doesn't really matter what the spot price is.

> my hunch is one of the main drivers of its valuation is Chinese-owned capital trying to find its way outside of mainland China, as the ability of the average middle-class or wealthier Chinese person to have assets outside of state oversight is highly constrained.

Where by constrained you mean it's a crime, right? Obviously you can argue that in this specific instance making it easier for criminals to evade law enforcement is a morally good thing, but cryptocurrency does the same thing for any profitable crime in any country, which is why I see it as such a negative thing overall.

>Where by constrained you mean it's a crime, right?

Not in the way you mean it, no. Otherwise industrial-scale bitcoin miners, situated near power plants, wouldn't be able to operate in the open at all, yet they do. Without making any moral judgement one way or the other, China works differently than is generally understood by the West.

I don't want to downplay criminal use of crypto- its use in cryptolocker-type malware is a real problem, for example.

I do think it is important to recognise that criminals already use existing monetary systems quite well, and that fully-public blockchains have an audit trail that investigators could only dream of compared to plain cash.

> Not in the way you mean it, no. Otherwise industrial-scale bitcoin miners, situated near power plants, wouldn't be able to operate in the open at all, yet they do. Without making any moral judgement one way or the other, China works differently than is generally understood by the West.

Well, the western understanding is that it's a corrupt country where the powerful and well-connected can openly flout the law for some time - until they misread a shift in power dynamics and it becomes convenient to prosecute them. I'm sure that's not the only paradigm through which these things can be understood, but it doesn't seem inaccurate either.

> I do think it is important to recognise that criminals already use existing monetary systems quite well, and that fully-public blockchains have an audit trail that investigators could only dream of compared to plain cash.

Well it's not like cash is particularly clean - if someone wants to pay or be paid in cash only, I would see that as a sign that things were probably not entirely on the level. Presumably criminals continue to use cash in parallel only use cryptocurrencies where they gain an advantage from doing so - but there are plenty of cases where cryptocurrency does offer big advantages for crime (and all of the reasons people give for using cryptocurrency - sending money internationally, avoiding reporting requirements - seem like crime-friendly things). Even the traceability you mention seems to be seen as more of a bug than a feature by crypto advocates.

This notion that bitcoin is great for crimes has been thoroughly debunked in a variety of studies over the last few years. There's more crime committed using the US dollar (on a percentage basis even) than using bitcoin and the Bitcoin network's transparent nature coupled with the advance in on-chain analytics makes this easy to explain.

Citation? That sounds thoroughly implausible - consider how much flack HSBC gets for having dared to transfer money between the US and Mexico, something that bitcoin allows and encourages people to do all the time with no approval steps at all.

HSBC got flack just for transferring money between US and Mexico? I'm willing to bet there's more to it than that... so I think it fair that you should also provide a citation.

The clients they transferred it for turned out to be murderous drug cartels. But as far as I can see HSBC actually followed all the rules at the time; much has been made of the fact that they lowered the level of controls applied to those transfers for commercial reasons, but the law required them to judge the appropriate level within a particular range, and the level they applied afterwards was still within the legal range for Mexico. Yet whenever they come up on HN you'll hear people talking like they were killing people.

(They reached a settlement where they paid money and made an apology statement rather than going to court, as would most entities in their position).

That interpretation directly contradicts Mexican authorities:

> the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores – CNBV) which, across more than 20 volumes and some 10,000 pages, established how HSBC Mexico’s top management committed serious mistakes, such as:

> - Deliberately failing to report suspicious transactions.

> - Permitting the exponential growth of bulk dollar shipments on armored trucks bound for the US.

> - Deliberately delaying the issuance of client reports with unusual and suspicious transactions.

> - Maintaining business relationships, until the last possible moment, with people, businesses and currency exchange houses used by drug traffickers to acquire aircraft.

HSBC may not have been killing people themselves, but they unquestionably facilitated and profited from it. I'm a little surprised that someone would downplay their involvement given its scope TBH.

https://insightcrime.org/news/analysis/hsbc-dirty-money-whit...

That's exactly the kind of take I'm talking about. All you've written is phrased to make it sound as negative as possible, but very little sounds like actual illegality. Permitting exponential growth and maintaining business relationships: what business wouldn't want to do that? Deliberately not reporting or delaying reports: sounds bad, but actually these reports are judgement calls, there can be legitimate differences of opinion. The violations of internal policy in your link sound like the same sort of thing: they're written to sound as though closing more suspicious accounts is always good and less is always bad, but actually suspicion is not proof, there can be genuine disagreement, and there's an equal and opposite story about people's accounts being closed for no good reason. 10,000 pages sounds like a lot, but it's to hide the lack of a smoking gun; all there is is a bunch of judgement calls that with the full benefit of hindsight we say were unreasonable because they lead to bad outcomes.

And compare this to Bitcoin where there is no judgement call, no KYC at all, anyone can move money anywhere. I suppose it's harder to gather 10,000 pages about how poor the judgement calls were in hindsight when no-one's making those judgements, but I would hope that HN of all places would look past the sound and fury and pay attention to the actual outcomes.

Reply on news.ycombinator.com