We should definitely build a technical system that stops payments to terrorists but allows payments to freedom fighters; that stops payments to rogue states but allows payments to states that stand up to bullying by tyrannical regional powers.
/s
Seriously I think these kinds of questions need un-asking rather than answering.
That’s equivalent to conceding that the concept cannot work and giving up. No matter your personal views on a particular issue, this is really just asking how to comply with legal obligations: governments don’t care if your system is broken by design and makes compliance hard, and that’ll deter most legitimate users.
In reality there is an ongoing battle over encryption where various governments try to ban it, people fight back, etc. I suspect that we will see the same thing play out over cryptocurrency.
In any case I don't see anyone on hacker news asking how we can design an encryption algorithm that prevents all and only the bad uses of encryption. It is generally understood to be a dumb question because good and bad are complicated enough that we cannot hope to formalize them right now, and ad-hoc attempts to make a technology only work for the good guys have been repeatedly shown to help the bad guys (e.g. backdoors etc)
Tor is a better comparison, especially with the reason why most people consider it highly risky to run an exit node.
In both cases there mere existence of the technology helps both good and bad parties to achieve their aims, that is all that matters.
Now, suppose that there’s a transaction chain which involves you – say said local dealer buying from one of the few other people using it — and how you’d prove that you weren’t a knowing participant in some sort of laundering scheme or deal. This is why tumblers aren’t likely to be used by most people and why running a Tor exit node is so risky: you have to worry about being charged with the worst thing done over the network and proving that you aren’t just trying to look like a naive user.
I think that the ZK (ZCash, AZTEC, etc) technology will solve this problem and we will be back to the case where the government wants to make the technology itself go away.
> Analysts estimate that underground economic transactions account for one-third (33%!) of the total economy in developing countries and slightly more than 10% of the total economy in developed countries. [0]
On the Bitcoin blockchain it may be around 19% (approximately USD $380bn in yearly transactions on Bitcoin [1], $72bn of which may be illegal [2])
So it's hard to say which "monetary system" is doing better in that regard. Of course, I would argue that cryptocurrencies are still in the experimental phase, trying to figure out where they are going and how.
[0] https://www.investopedia.com/articles/markets-economy/062216... [1] https://www.blockchain.com/charts/estimated-transaction-volu... [2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645
I'm not saying that's not a fine thing to want, but if that is what you want, then you don't want cryptocurrency. Cryptocurrency is purposefully antithetical to that goal.
Do you always log into every machine as root? Do you want everyone to have admin powers on HN and every other social media/chat/forum you use? Authorities exist for a reason.
Cash wasn't solving this either, yet lot of people prefer it to digital money owned by banks. And bitcoin is sometimes called digital cash, because it behaves like cash in that way. One could argue that it makes people more cautious on what they spend money on.
The fact that authority figures can't break it is a feature, for the kind of people who would want to use it in the first place (which should be all of us, but sadly is not yet).
Like I said, this is why it will stay irrelevant. Most people don't want to perform those actions, nor support those actions by using the systems that do. We're never, as a society, going to want to support money-laundering, terrorist-funding or price manipulation.
The rest of your points are as you say "currency" and usability problems, problems that a layer above will decide to solve or not. There is a lot of work being done on these points too, but Vitalik and the Ethereum 2.0 research teams are tackling a more low level set of issues.
Think of it like Visa, SWIFT, or the internet: those are also technical platforms that need to be engineered and thought about, often in abstraction of other issues like monetary policy and local regulations.
Many systems are built that way, where the underlying platform is kept "dumb", and requirements that need highly flexible enforcement (like the selective censorship/cancelation in your examples) are applied a level above, where humans are kept in the loop.
There aren't any protocol-level rules in TCP/IP that says network packets containing information about the Tiananmen square protests can't go from US to China, those rules are implemented in Chinese routers. Maybe if you had your say in the design of TCP/IP things would've been different, but this approach has so far proven wildly successful.
Hm, so the dollar won't reach wide adoption until we close Wells Fargo, HSBC, and other major banks that have been party to large-scale money laundering?
AML at its core is asking a bank to purposefully reduce their profit. Other than fines and morals, there’s no real incentive for them to give their all, and those don’t seem to bother most of the industry.
I can only imagine that with less controls and regulations they would behave even worse.
You are looking for some power to control cryto but still offer everything it currently does. It can't..
"How do we stop payments to international terrorists and rogue states".. Most of their wealth comes from cash/diamonds/oil/grain.. why would cryto be any different?
No currency ever achieved that.
You seem to be looking for fiat currency, that already exists.
The point of cryptocurrency is that not everyone wants fiat, some people place more of a priority on certain things and less on certain other things.
I've become very skeptical of the idea that technology can solve social problems, and unfortunately decades of futility propaganda by the existing order has convinced us that the political order we have now cannot be improved upon.
On the flip side this principle also makes me skeptical of cryptocurrency, which seems like a very expensive attempt to use technology to solve social problems.
Existing simple money systems work and are highly efficient. Corruption in those systems is a social problem.
2. You can't -- this is a cultural problem, not a technological one
3. There's no such thing as money laundering
4. Peer-to-peer, transparent finance infrastructure
5. User-money as a layer on top of cryptocurrency
This, on its face, is a pretty outrageous assertion.
I think if you throw a statement like this into the discussion I'm sure you don't mind if I demand that you prove it.
Maybe "Money laundering doesn't exist in a hypothetical world of private peer-to-peer transactions" is better? That's what I believe the crypto-folk are working towards.
I recognize the existence of laws again 'money laundering' in countries like the USA. I suppose a better way of framing what I think is that money laundering is an invented crime in order to further empower agents of a State to seize assets of those suspected of actual crimes. By 'invented' and 'actual' I'm appealing to a sense of legitimacy separate (or adjacent?) to said State's legal system.
This has yet to be proven, and as you say, there’s reasons why it has yet to land. I give this one vitaliks sideways smiley face.
> 2. You can't -- this is a cultural problem, not a technological one
Uh, one that doesn’t exist in the current financial system. I’m sure y’all will find a way. As I said, it’s a prerequisite.
> 3. There’s no such thing as money laundering.
Hilarious. I see someone never took compliance training at work. With that attitude I’d love to see you explain your position to a judge. Money laundering is literally financial transactions arranged in such a way as to conceal the original source of funds.
> 4. Buzzword soup.
> 5. More buzzword soup.
More buzzword soup that immediately falls down as once you use crypto as only a bulk transport instrument you’ve lost out on all its ostensible benefits. No transparency, no security, it’s no better than just using a wire transfer.
I though anonymity and legal safeharbour were founding principles of cryptocurrency? The original comment is correct that what we call money laundering is an artificial construct of power.
Is that sarcasm? How do you think criminal groups get funded? They use the financial system like anybody else. You should have a look into the history of HSBC, money laundering and financing drug cartels is one of their main specialty.
Maybe I'm in too deep but peer-to-peer is a buzzword? I mean person-to-person, without intermediaries. This seems useful and powerful to me (and my politics I suppose).
> 5. no transparency/security using crypto as bulk transport
I don't mean building a social layer on top, I mean building digital infrastructure on top, 'smart contracts' etc.
I still maintain hope for something like this but after watching the gradual but massive increase in the complexity of 'DeFi' (decentrialized finance) in the Ethereum community I don't know where to look and what to work on these days...
It's DAI, a stable currency based on derivatives, built on Ethereum and backed by ETH. It's not perfectly stable but it's done a reasonably good job keeping a value of one dollar, despite a 94% drop in the ETH price. Current DAI supply is $86 million.
Yeah, the hundreds of cryptocurrencies using it isn't enough.
POS has been a solved problem for years. RDD did it back in the beginning. XTZ is a current working POS chain.
An analogous for "Hard Problems for PC Work Processors [vs Pen and Paper]" would be:
1. How to record a single essay without the price a hundred reams of paper?
2. How to function when there is no electrical power whatsoever? And not contribute to rising technological inequality in developing countries.
3. How to allow governments to still do handwriting analysis on printed word docs to thwart bad actors, ransom note writers, etc?
4. How to stop international terrorists and rogue states from printing multiple pieces of propaganda to recruit?
5. How do we allow people a closer sense of connection to the writer of a word processed doc when handwriting is missing.
[bonus] how do we ensure jobs are not destroyed in the lumber industry? how do we ensure manufacturing of these so-called PCs to not contribute to environmental destruction / leeching of toxic chemicals if/when they become popular?
If that would be stopped, crypto would be pointless. We already have real (regulated) money. But with crypto you can online pay your drug dealer.
To your implication- what's legal and what's right are orthogonal concerns. Individuals decide which to follow based on their own principles.
Not sure why you think technology is outside the context of our society. This stuff isn't built by elves.
You're not solving the actual problem by going out and convincing society you're right (and you are, the Portuguese model shows that full decriminalization and even legalization lead to much better outcomes and no material increase in usage).
You're convincing people to deploy magic bean producing power wasters that just happen to let you buy drugs. It doesn't help mitigate or undo the harm foisted upon the millions in US prisons who got there because they wanted drugs. It doesn't help bring about the downfall of the cartels. If anything, it props those things up.
> Writing code collaboratively and convincing thousands of people to run nodes replicating your slow database is a social act -- I'd even call it a political act.
Yes, in and of itself it is.
The social act is deploying a slow database, which in turn provides technological workarounds to the actual social issues (like drug policy) that should be tackled head-on.
Our democracy is purposely designed to allow such checks and balances through mechanisms like the fifth amendment. It is an important part of what makes our democracy strong and prevents lawmakers from throwing people in prison at their whim.
While I don't believe this myself, I could see a logically consistent case for supporting the development of ciphers and banning something like TrueCrypt. It's not about the technology, it's about how you choose to use it.
Let's look at these for cash, which has some level of mass adoption.
> 2. How do we stop payments to international terrorists and rogue states.
Both of these are amply funded today, so between cash and banking system, this isn't really a thing. Whatever form does work, isn't hampering adoption.
> 3. How do we stop money laundering.
(a) This is an invented problem. Just because it's propagandized in compliance training doesn't make it real, and it's unfortunate banks are having to spend time and money obliging local governments so politicians can pretend they're having an effect. (b) Neither cash nor banking system succeed at stopping it today, yet both enjoy mass adoption.
> 4. How do we stop price manipulation by fraudulent actors.
Mass adoption? See pink sheets versus mainstream stocks. Chicken and egg problem, granted.
> 5. How do we allow people who lost access to their money by negligence, fraud, theft, act of god or otherwise, access to their money again.
A friend once tossed a $100 bill from her birthday into the wood stove with birthday wrapping paper. There was no expectation this form of currency could recover access by negligence, fraud, theft, acts of god, or otherwise, yet she was thrilled to mass-adopt that $100 until it turned into ash.
> You know, the “currency” problems and not the “crypto” problems.
It doesn't seem as though these are real problems for the adopters of currency. It seems as though they're problems for authorities who wish their jobs were easier.
A friend once tossed a $100 bill from her birthday into
the wood stove with birthday wrapping paper. There was no
expectation this form of currency could recover access by
negligence, fraud, theft, acts of god, or otherwise, yet
she was thrilled to mass-adopt that $100 until it turned
into ash.
Put that together with the fact that it is far and away easier to lose your cryptocoin holdings than it is to lose cash or money in your bank account and a cryptocoin is in most ways a step backward for consumers. They benefits they tout (Easier to send money to someone else, Proof against government meddling) sound good but the second is why it's a step backward for most people and the first is hampered by the combination long transaction times and the volatility of the coins value.
Is it possible that these will all get remedied? Sure. But until you remedy them most people shouldn't be using a cryptocoin unless they can afford to lose what they put in there.
Not with cash or gold. Yet we consider them money.
And yeah, if someone steals your cash or your gold, you can sue them and obtain a restorative court judgement. With your magic beans you just blame the victim and shrug suggesting they should have been more careful, aka "SFYL."
1. How do we stop using more power than Switzerland to process 4 transactions per second (lol)
2. How do we stop payments to international terrorists and rogue states.
3. How do we stop money laundering.
4. How do we stop price manipulation by fraudulent actors.
5. How do we allow people who lost access to their money by negligence, fraud, theft, act of god or otherwise, access to their money again.
[bonus] how do we generate the right quantity of new cryptocurrency so that the pace of money growth matches that of economic and population growth so as not to disproportionately reward early comers just for “being early”?
You know, the “currency” problems and not the “crypto” problems. These are the actual hard problems of cryptocurrency and until solved it will never, and I mean never, reach mass adoption, making the questions from the article totally irrelevant.