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Comment by baddox | Hacker News Reader

That's an interesting way to put it. You're basically saying that Bitcoin will be regulated, either because the regulations will be good for society (in which case society will advocate for them) or bad for society (in which case society may not advocate for them, but those with political power will).

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I think the (2) has an unnecessarily biased phrasing. The capacity to deal with regulation, whether that regulation is good, bad, or otherwise at the macro level, is just one of the many economics of scale that can be harnessed by large companies. Because of (1), regulation is inevitable, and once you have almost any regulation at all, a competitive benefit accrues to larger companies, who can consolidate the regulatory compliance function in a way smaller companies cannot.

This is a perspective that is often overlooked on HN, understandably, but the fact is that startups are in many ways extremely inefficient businesses. Most business functions, from accounting to training to regulatory compliance, simply don't scale down very well, for reasons that have nothing to do with politics.

It is not just that large companies are more efficient at dealing with regulation; Large companies actively lobby for regulation as a way of protecting themselves from (smaller) potential competitors.

It may be that regulation for the public good is inevitable and desirable, but one cannot assume a priori than any particular regulation exists for that reason.

I don't think, on the net, large companies lobby for regulation more than they lobby against regulation.

Appeal to authority and all that, but..

"the pressure on the legislature to license an occupation rarely comes from the members of the public . . . On the contrary, the pressure invariably comes from the occupation itself."

Milton Friedman

"…as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefits."

George Stigler

In my opinion, the synthesis of the two points is that society shouldn't advocate for regulation (no. 1) precisely because of the inevitability of regulatory capture (no. 2). Of course, people can disagree over which point is really more inevitable. I think no. 2 is more inevitable, so it would be wiser to resist no. 1.

large businesses thrive on being able to manipulate regulation to their benefit.

that's what "Large Companies Thrive On Regulation" hints at.

Yep, pretty much.

Bitcoin will be regulated because the power of the state demands it, and aside from the state's vast power, the regulators actually have the reasonable argument that while they may corrupt, venal and malicious at times, giving their power to completely random-ass anonymous people wouldn't be an improvement.

IE, The power of unregulated bitcoin is not "power to the people" but power to Silkroad founder and from there one would guess the Zetas and so-forth.

Makes sense.

In the end it's about choice. Would you rather trust the Zetas or Uncle Sam?

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