Then bitcoin had its very first dip and it became unprofitable to mine bitcoins. When that happened he shuttered the website and kept everyone's bitcoins.
I knew of bitcoin early on due to this guy, but even then I had no interest and considered it bullshit. Then when I saw what this guy did it just solidified my opinion that it can't be trusted.
That's not to say that in theory there aren't uses for it, but it's 100% speculative and nothing else. People try to compare it to things like gold for protecting your money from inflation, but that's completely nonsensical.
If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold). a bitcoin has ZERO inherent value. It's not possible for the value of gold to go to zero, but it's absolutely possible for the value of a bitcoin to go to zero.
crypto will never go away, but it absolutely should.
> I knew of bitcoin early on due to this guy, but even then I had no interest and considered it bullshit. Then when I saw what this guy did it just solidified my opinion that it can't be trusted.
But isn't it instead an early lesson in "not your keys not your coin" maxim that Bitcoin advocates preach?
> If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold). a bitcoin has ZERO inherent value.
Yes, but: 1) it's very difficult to self-custody gold (it's bulky, needs a safe place for storage — and if you put it in a bank, you need to be able to trust that you can get it out again); 2) it's very difficult to transfer, especially cross borders, especially in large amounts; 3) it's very difficult to use as an actual money, whereas bitcoin could conceivably be used as such (especially with Lightning).
If you want to purchase gold to protect your money from inflation (which you probably shouldn’t) then you probably buy it through some insured exchange—maybe even through your bank—that will keep it for you, if you don’t trust any exchange, that is your problem. If you need to transfer your money, or use it, then you’re not protecting it against inflation anymore are you? So you will just use regular money for that.
Anyway, you shouldn’t buy gold to protect your money from inflation. Instead you probably should just risk an inflation and keep your money in a savings account, or buy secure government bonds for it, or something.
I keep seeing this phrase crop up throughout the past several days of cryptocurrency news, and something always rubbed me the wrong way about it, but I couldn't put my finger on it until today.
It's demanding a change in human nature to accommodate the system, rather than changing the system to accommodate human nature.
It's really not that different than the people who, 15 years ago, were saying, "Well, of course your accounts got hacked, because you didn't create a separate 27-character totally random password for every single account you need, like I do, and never store those passwords anywhere except your head!"
People don't want to deal with a hardware token every single time they want to do anything with their money...and the only reason they have to, with cryptocurrency, is because its proponents think an unregulated "decentralized" financial system where the only law is code is a good idea. (Of course, it was never going to stay unregulated forever. None of the aspects of cryptocurrency that rely on the government not paying attention can last more than another few years.)
>"Well, of course your accounts got hacked, because you didn't create a separate 27-character totally random password for every single account you need, like I do, and never store those passwords anywhere except your head!"
The keys can be recorded as a seed phrase. Typically this is a sequence of dictionary words. Look into it before you dismiss it so flippantly. Things have come a long way to make things easier for the user. There are also dedicated hardware wallet devices for key storage.
If you're not transacting or conducting business with cryptocurrency, why do you care so much? It is literally none of your business. Nobody is forcing you to pay taxes or finance wars with BTC.
And "dedicated hardware wallet devices" are exactly the kind of thing that I'm talking about here. There is no way those are going to be appealing to mainstream users; thus, if cryptocurrency were ever to genuinely enter the mainstream, the vast, vast majority of users would be keeping their crypto on exchanges.
Y'know, exactly the way the vast, vast majority of people keep their money in regular bank accounts. Which don't require this kind of rigamarole, and never result in regular people (ie, not the very wealthy) losing money, because it's all regulated and insured by the government.
(Yes, I know FDIC insurance has a limit. The limit is high enough that regular people will never even have to care that it exists.)
There are a few more reasonable options here.
1) Create or advocate for a cryptocurrency with reversible transactions and all of the regulatory features you desire. Let the market decide how large that niche is.
2) Loosen or advocate for loosening the existing regulations on traditional financial products so that they are competitive with some of the features of cryptocurrency. See also, Zelle. Another product HN seemed to hate.
Yesterday someone was arguing that Peter Thiel is a super villain. Another full page of comments was decrying one of PayPal's policies necessitated by regulations. People are generally unhappy with PayPal's fee structure, but they continue to use it. The fees and draconian policies are largely required to comply with regulations. Want more personable human support? That also costs money.
The argument for regulating cryptocurrency is basically an argument for creating a captured and gatekept ecosystem. Of course, I get it. "Think of the children", "Think of the helpless normies", same story. What we will get instead will be more PayPals.
As for scams and outright Ponizis, it is worth noting that those go on under the watchful eye of the regulatory state you love so well. Bernie Madoff was similarly connected and even served on regulatory boards. SBF, the disgraced FTX head had direct connections to the SEC and chairman Gary Gensler. SBF even testified, asking for more regulation.
I'm doubtful, but still hopeful for the possibility of a good faith discussion. Regulation is not a pancea against fraud. Instead it creates an atmosphere were connected insiders can create greater frauds. The FTX debacle is illustrative of this. Yet here we are hearing the same appeals for more regulation from would be saviors of normies. Posters who themselves do not use cryptocurrency and insist that it has no legitimate use.
For myself I just wanted to run a few online games with payouts for players in cryptocurrency. Now players also want NFT character saves. I've never used a centralized exchange. I don't make big money in this niche. I do have fun. The community is happy. Nobody is crying about valuations. Actual users of cryptocurrency aren't saying, "There outta be a law!". None of my users are claiming, "If only there were a statist savior protecting us from this video game!" or, "This game would be so much better with barriers to entry for developers"
From that perspective, yes I do feel comfortable asking you and the rest of HN's passionate cryptocurrency haters to butt out. You could also go out and build a better alternative in the marketplace of ideas.
I'm not sure how you read my comment as elitist or utopian. All I'm asking here is that paternalists don't ruin it with saviorism, regulatory capture and gatekeeping.
>When something goes mainstream that gets lost.
Isn't this an elitist sentiment?
Our community has fun with people who aren't deep into tech at all. I started it with faucet rewards integrated into an io game. Anyone can install a wallet when transactions are free. Couldn't be further from what you're projecting.
Maybe not, but they have to regardless. Banks force this on users anyway (outside the USA). To pay for things I have to use either a chip card (token), or equivalent embedded in my phone (a token), or log in to e-banking using a chip card PIN pad (token) or my phone again, or auth an online CC tx with a phone app (token).
But no matter what I do the only way to move money around without invoking a hardware cryptographic token at some point, is use paper money and physical coins.
So this isn't really something new. Bitcoin was just ahead of the curve in this regard. Also, it's really hard for banks to reverse transactions outside of the USA. What makes bank money "safe" compared to crypto is simply that:
1. Governments will bail banks out because they're too big to fail. Of course you end up paying for it through inflation anyway.
2. Everything is KYCd/AMLd up the wazoo so even if money is drained from your account in the same way it could be for a cryptocurrency, the perps will find it much harder to evade capture.
None of that has any ethical or sociological consideration inbuilt. It's a simply observation of the system.
Anyway, yes, that means the system is bad. But this is an ethical and sociological consideration.
Slight nitpick, Total gold above the earth's surface is less than a cube with sides 25 metres each.
Copper is much more abundant, over 400x more copper than silver has been mined, but silver is almost as scarce as gold. It really seems like the price spread should be closer.
Then came the "Eternal September" where cryto went mainstream and many people started pitching this formerly niche project as a real investment vehicle. And people bought in thinking it was like any other investment. IMHO cyrpto itself isn't bad, it's all the people that pitched it like an old school investment vehicle.
There's always been an undercurrent of this stuff. The eternal September came years later, after big scams like Mt Gox had already long imploded.
But the wealthy and connected will most certainly have their own way of getting around the system. Whether that means moving their money into physical assets, or onto the market, I don't know. I don't think cash is going to go away, but I do see the government incentivizing regular people to solely use CBDC, and once you're on that system, you are a serf.
Well, if that happens I hope they implement negative interest rates on them because that would end the need for surveillance and political corruption within a decade.
The value of gold is protected by the fact that the majority of it's holdings (at least, according to this[1]) aren't used for speculation. Still, a good chunk of them are, which means there can be pretty huge swings and it's considered a poor investment.
Have tried to say the inherent value of a dollar is because it's backed by the U.S. military, but fundamentally, it's the same reason. Dollars aren't held as speculative assets. The poor returns from the dollar are one of the reasons why people push other investments. If currency does enter into speculative territory, bad things can (and do) happen. See Hot Money[2].
Anything, even if it has inherent value, can be extremely dangerous when there's a large number of speculators. Because no matter the value, speculation can drive the price much, much higher. And it's a snowballing effect - the more an asset rises, the more people want to buy it for speculative reasons, and the more people buy it the more it rises.
And then any inherent value (if it even exists) looses significance - you're in a game of chicken with the other investors, trying to both hold on as long as you can and get out before everyone else does. The winner gets the fortune, the loser is left holding the bag.
The thing is, almost everyone in the crypto space seems interested in speculation. It might be speculation + decentralized voting rights or speculation + digital ownership, but speculation is always at the heart of it. The idea that if you get in early you'll be able to cash out for a big profit. Of course a space almost entirely driven by speculation is going to be inherently dangerous and unstable, and the "opportunities" are the same type as those of a casino.
[1] https://en.wikipedia.org/wiki/Gold_holdings [2] https://en.wikipedia.org/wiki/Hot_money
But let me guess, if I press you on this I'm going to get banned in a week or so for such and such reason.
something something assume good faith?
Sure, but it always feels like the other person started it and did worse—so everybody always argues that.*
Let's assume you are right and the other person is wrong. Posting an unsubstantive snark is the worst way to respond. It poisons the atmosphere, evokes worse from others, and ultimately discredits your own position (which, if you're right, means you're discrediting the truth—and that hurts everyone**).
What you should do instead is one of the following:
(1) respectfully provide correct information, so we can all learn; or
(2) chalk it up to the internet being wrong about everything and just move on.
* https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
** https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
What's happened here is my assumption of good faith with a question got turned into a warning by the mod because they, themselves, did not assume good faith on my part.
So the question becomes, are those guidelines taken seriously by the moderators of this site or not?
If they are, then maybe admit to your error and lets all just move on.
Ironically, the sort of legalistic pleading you're resorting to is a sign of a lack of the good faith you're claiming. So is the style of your reply sequence: never admit or accept a thing, never address what the other person says, and simply bring up a new argument every time. These are troll tactics, whether you're using them that way intentionally or not (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...), and part of how we moderate HN is not to dance that way.
You jumped the gun and have caused more issues than you've avoided. Your warning was more about preparation to ban me than anything related to the actual conversation.
I get it. I understand. Just do it now if you're so inclined, it will save both our time.
Re the word 'troll': I can't blame you if you don't want to look through a bunch of old moderation comments, but the link I provided points to a thwack of explanations of how precisely we use that word. It doesn't have to do with impugning someone's intent (which we have no way of knowing); it has to do with the effects that certain kinds of posts tend to have on the threads (which we have plenty of ways of knowing, as they are externally observable). I'm not accusing you, by implication or otherwise, of anything more than making such a post. That's why I asked you not to do that!
What exactly did he do that was a "strawman"? Why are you so angry? It was an interesting comment thread, and then you are acting as if persecuted by the other commenter and HN moderators.
I asked if they understood my actual point because I was never denying that gold had speculation, but that when that speculation collapses gold still has value due to it's application in the physical world.
They obviously misunderstood me.
This is why I'm sympathetic to those who say its ponzi scheme, it only has value because of new resources continuing to be poured into it.
but I'm in the middle of getting warned and moderated by dang for daring to ask such a question!
>if we turned off all bitcoin miners today, bitcoin would go to zero instantly
isn't true. You couldn't trade them normally with the miners off but you could start mining up the day after - it only takes a couple of computers really.
So if we turn off all the bitcoin miners, it wouldn't be possible to transact. All you could do is look at it, like a read-only excel sheet.
"Well yea you could do that change to tank the value, but imagine if you just undid it huh???"
The point was without mining entirely, there is no value
Once established, the idea is that transaction fees are used and the distributed nature of the network causes a natural competition to be the most efficient so miners can charge the lowest fees while making a profit.
We're very close to this threshold now, given what is happening now and during the next few weeks I would not be surprised if BTC is going below that threshold.
I think it's time to stash a few bottles of champagne.
As it becomes unprofitable miners stop, and the difficulty drops so that it becomes cheaper to mine, until it reaches an equilibrium
The protocol adjusts every 2016 blocks, if it takes longer than two weeks (20160 minutes) to mine the 2016 blocks then the difficulty decreases, if it takes less than two weeks to mine 2016 blocks then the difficulty increases.
In contrast, only speculators would notice bitcoin going offline. They might laugh at the guys who told them they weren’t going to make it but that’d be it. Nothing would break, nobody would be in line ahead of them failing to buy something, etc.
That matters because bitcoin’s floor value is zero: as a very weak fiat currency, the only reason to use it is when you think it’ll be profitable and if that confidence drops miners will stop putting more hard money into the system.
You can be mad that people paid $$$ for Beanie Babies but that does mean that there value is nothing.
There's a big difference between something like a Beanie Baby, which has a base value of whatever someone will pay for a toy (you're not getting rich, but it's not zero), a company whose shares convey fractional ownership of assets and an ongoing revenue stream, and a very weak fiat currency like Bitcoin which has value only to the degree to which your buyer believes they will be able to resell it at a profit.
With a strong fiat currency like the US dollar, that belief is anchored by the size of the related economy and the millions of people who are guaranteed to use USD to pay taxes and other government fees, sell goods and services to the government or be paid by it, and the millions of business relationships specified in dollars. Yes, that could change over time but it's not something which happens quickly except in disaster scenarios where the value of any currency is moot and you wouldn't be running Bitcoin miners in any case.
"Mining" in bitcoin means two different things, creating new coins AND adding transactions to the ledger. If mining reward went to 0 (which will actually happen someday), and new coins stopped being created, miners would still be able get a profit from transaction fees, although it wouldn't be "mining" in the same sense as gold.
Mining is bad for other reasons--it's a huge waste of resources when bitcoin is worth a lot of money.
You talk about this like this is an easy action with profound consequences. It's like saying If everyone killed themselves, there would be no people. This is trivially true, but it's not going to happen.
>(as its worthless without continuous resources being pumped into it). All forms of transaction has some form of resources put into it. The quantity of resources is what is at issue here. Bitcoin does not need the massive quantity of resources it currently uses to operate. That is an artifact of the high value of Bitcoin coupled with the subsidy of the mining reward.
I'm not sure if the creator(s) of Bitcoin evaluated what kind of value a Bitcoin should have over time, The mining reward halving rate suggests that they were not expecting it to have a continual average rise above 20% per year (which makes sense because that would be insane). To date, however, it _has_ been averaging more than that, resulting in an increase in value of the mining reward relative to other currencies. Should the value drop or simply not increase for a extended period, the mining subsidy becomes less. Then only the most efficient miners can make money mining and the difficulty drops to a new equilibrium as the ones who can no longer make money drop out.
The price might go to zero, though. The price of oil, which is arguably more useful than gold, went negative a couple of years back. Having intrinsic value doesn't necessarily mean it is exchangeable, especially if it needs to be exchanged at a given moment in time.
Which could also be said about Bitcoin. I'm sure someone out there would find some kind of academic interest in looking at Bitcoins or enjoy collecting them. There might be almost no value in Bitcoin, but it would probably never erode completely.
Your scenario here is plot armor.
Sure, if we pretend that gold stops having ANY use outside of being pretty, then when it stops being considered pretty it's value will go to 0.
But the fact is, gold has a myriad of uses besides being pretty and those uses give it an inherent value.
And when you go to sell it, others' use of it is what sets the sell value, not your personal use of it. It doesn't matter that I'm not personally using it for conductivity if the person I'm selling it to is (or someone downstream of them is).
IOW, stop posting fiction.
I fail to see the purpose of this 'pilot amor'. There is no reason why gold would stop being useful beyond being pretty. This fiction you've come up with doesn't even make any sense and certainly has no relevance to the discussion.
However, that doesn't mean there is always a user available. When we saw the price of oil go negative there were still just as many uses for oil as there ever was, but for various reasons there weren't buyers in that moment. Gold is not immune to the same.
In case you are still confused, let me be clear: Price and value are not the same thing.
> IOW, stop posting fiction.
Sage advice.
I used the phrase 'inherent value' to describe what you're referring to as 'use value'. But of course someone decided they had to argue against it by arguing that the trade value between countries went negative at one point (which isn't all that surprising but has nothing to do with the original point).
arguably 'use value' is a better phrase, but given the surrounding explanations, the poster engaged in a clear strawman.
The point with oil is its extraction can't be stoped overnight, and thus has to be stored in case of excessive production, which has itself a cost.
Demand droped significantly when the lockdown occured ; storage facilities where saturated ; and oil was kept in oil tankers which are pretty expensive.
The negative price reflected the cost of storage.
There is no such issue with gold.
You can't use your regular intuition about commodity prices when talking about futures contracts. The negative price was a one-day event, and all it really represents is a higher-than-normal premium on the calendar spread.
See: https://www.marketwatch.com/story/oil-prices-went-negative-a...
A firearm is absolutely, 100% safe as long as no one ever interacts with it.
Because we are humans, in a society, and everything we do relies on human interactions, if Bitcoin (and crypto in general) cannot operate positively and effectively, except in theory, then it is the problem, regardless of the underlying reason.
I am not saying that is good.. I don't know. Tell me why it is bad. Thank you.
However, I don’t get how holding gold – which doesn’t generate dividends and therefore cannot benefit from compound interest – could be a good long term invest, compared to, say, an accumulating ETF.
No financial advice.
It's like saying that sausages are bad, and should go away from existence, because the dog ate them off the kitchen counter.
The real point is that if the value that isn't tied to its usefulness ever goes away, it still has value. bitcoins do not.
At which point I’d turn my miner off and wind the chain back to when I was rich on my private virtual island for one and live happily ever after.
It's just like gold. You give me your gold and I'll take it all right now, saving you from losing it incrementally or at a later date. Not your vault, not your bars. Theft-as-a-Service. /s
Gold has a special status because of how long we've mythologized it, but generally you'd be encouraged to invest/buy futures in things that impact your life and income directly. Your inputs and outputs.
If you produce food from fertilizer and power then those are your three important commodities. Gold isn't a great fit because you can't eat it, fertilize with it, or run a tractor on it. You have to do a gold-to-dollars transaction first which can waste a fair bit of the value.
If you forward packets and consume electricity to do so then holding gold also isn't economically relevant, but by trading proofs of work which were generated by burning electricity you track the value of your commodities and do so natively.
If we used HashCash (or similar) to solve the initial-contact problem then we'd be creating a secondary market in the proofs and they could be used as currency by a related ecosystem like hosting providers with little friction or risk.
Tulips didn't cause the problem, speculators (and scammers) did.
On the other hand, if it had been heavily regulated from the get-go, there would be tremendous pressure to bail it out now, so maybe it's for the best that it wasn't regulated by the government.
It would have been nice if there was a countervailing force to the billionaire-savior cults promoting it, but unfortunately our media environment promotes those ideas rather than combat them.
This isn’t true at all. The FTX collapse is more akin to something like Madoff’s Ponzi scheme, which was significantly larger and did not get a bailout.
The financial bailouts you’re comparing this to were mostly loans that were paid back with interest, which init equivalent to the government handing money over to compensate for someone’s fraud.
The idea behind the regulation would be to prevent these situations from becoming so large in the first place. FTX deliberately avoided locations with regulation so they could perpetuate their fraud. So, no, regulations in the US would not have impacted how FTX operated in the Bahamas nor would they have any interest in bailing out a foreign company.
Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t. You’re conflating two completely different topics and trying to pass them off as one in the same.
I agree that's the idea, but how do you identify a ponzi scheme via regulation before it is revealed as a ponzi scheme?
> Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t.
I didn't say cause. I said pressure. Yes, the auto industry received a big bailout in 2008 and the cruise industry during the pandemic. There were other pressures that made those happen, right or wrong.
That seems impossible given today's geopolitics. Crypto remittance at least works.
This may be true but the fact is there is no such agreement and therefore the friction remains. Crypto at least provides a universal low friction option to everyone with no need for disinterested political groups to spend precious time to take action.
Argentina thinks that was bad for some reason.
Again, many countries around the globe don't have a functional government capable of produce such legislation _tomorrow_.
It will either become just as slow as the accursèd centralized fiat currencies, or it will be outright banned.
Any regulatory hurdles that cryptocurrency allows you to avoid for now, it won't for long. It is not, and cannot be, a long-term solution.
That is because it is overwhelmingly used for standard non-shady stuff, like trading legal goods and services. Crypto can't make a similar claim.
> For example, illegal transactions, scams and gambling together make up less than 3% of volume.
> We show that the vast majority of Bitcoin transactions between real entities are for trading and speculative purposes. Starting from 2015, 75% of the real bitcoin volume has been linked to exchanges or exchange-like entities such as on-line wallets, OTC desks, and large institutional traders.
So 75% of the transactions are just speculative trading, not transactions for goods or services, which is what is being discussed. Taking the paper's numbers at face value, as a percentage of non-speculative transactions, illicit transactions are 12%, which is quite high.
There are also papers which quantify the amount of illegal activity as high as 46% [1] in 2018.
Illicit activity is still probably the most durable use non-investment use-case for Bitcoin, and realistically will be the most enduring use case going forward.
1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645
But remember that "illicit" also includes sending donations to protestors in Canada when the government froze their bank accounts, or sending payments to dissident organizations that have been blacklisted and denied banking services, etc.
We can also say that the primary use case of signal is "illicit" communication -- that is, attempts to skirt eavesdropping by various government security organizations, and this is why Signal received funding from the U.S. government - it was a device to assist in coordinating anti-government protests in nations the US wanted to oppose. For the same reason, the U.S. Navy created and funded Tor.
So this is a two way street -- the ability to send payments and securely communicate even if your government doesn't want you to do that is great when they are used to support dissidents in nations you oppose, but not so great when they are used for similar purposes at home, or when they are used for organized crime. Just because a technology's primary use case is "Illicit" doesn't mean it's not a valuable or useful technology.
In 2019, forex volume was $6.6T per day [2], or $1716T per year. Meanwhile global GDP was only $87.5T [3]. In other words, almost 95% of global currency volume is speculation. Why would anyone use currencies that are mainly used for speculation?
Both the traditional and crypto economies are reflections of human behavior, but because crypto is more transparent, you can see it for yourself. And a lot of people don't like what they see. But it's not a new problem nor unique to new currencies or technologies.
[1]: https://www.investopedia.com/articles/markets/032916/how-big...
[2]: https://www.financemagnates.com/institutional-forex/executio...
[3]: https://www.statista.com/statistics/268750/global-gross-dome...
Much of that figure are payments for untaxed, but otherwise legal activities. On the other hand, crypto figures are straight up payments for illegal activities.
Much of that trading volume, speculative or not supports the international trade of real goods and services and hedges currency risk for large international companies [1]. The same cannot be said of Bitcoin, which does provide the same utility.
https://www.federalreserve.gov/econres/notes/feds-notes/the-...
I think that remains to be proven and I don't think it's anywhere near certain.
[1] And it's highly likely the CIA is still, in 2022, deeply tied in drug trafficking and drug money laundering.
Also I don't want to ban crypto. I want to crack down on these exchanges which encouraged everyone to gamble on crypto and lost a ton of people money.
Point in case: Russia. Government has been trying to block everything they don't like for some ten years now I think. Controlling all the uplinks from the country is just not feasible (although they're working on buying everything out I believe), so it was in fact easier for them to make all the ISPs install some blocking equipment themselves, which works pretty poorly.
Many times they were successful, but they couldn't shut Telegram down for example. When TLS ECH is finally adopted it's basically game over for them.
Even China cannot block Github, because it would harm their economy too much. Chinese developers need to access Github (PyPi, NPM), or they are not productive. The global software industry is built on the top of Western science that relies of on freedom of information. Thus, they need to let free information to flow against the authorianship will.
UPD: that said, I agree that the Chinese Firewall is about as far as you can shut off the Internet in a modern country (at least without turning into another North Korea).
In other words, could you elaborate?
That kind of shit gives the scams a legitimacy they can't buy otherwise.
Thank god we haven't gotten to crypto for kids yet, but crypto bonuses on credit cards is getting very close.
FTFY. Nothing about this is exclusive to governments.
I think people who are doing the telling actually don't have guns; but are sitting atop a made-up hierarchy.
While those companies are not operated as some sort of common carrier of transactions crypto is essential for a free global society.
Apparently Trump of all people actually tried to make it so[0], but Biden seems to have taken it down.
While I don't use it a lot anymore myself, I'm struggling to think of any service or product I use whose provider would not happily accept cash as payment. There are more than a couple of small restaurants here that only accept cash. My barber only accepts cash.
I like cryptocurrency as an open platform. I don't have a problem with the market clearing out the speculative mania. I do disagree with detractors who admit that they have no use for cryptocurrency demanding regulation. If you like regulated markets, stick to them. If you love the security of the petrodollar, good on you. Live and let live.
Can I just publish a few cryptogames without the obscene generalizations?
The worst part of this is that the entire FTX debacle comes on the heels of SBF demanding even more regulatory capture. Shades of Bernie Madoff. The insider connections to regulatory bodies and SEC board members. History repeats itself.
There's a bigger paradigm here that I believe few people understand and that I will desperate attempt to explain. I may be about to write a word salad, but here's hoping.
When the Internet was young, before e-commerce was a thing, it was a delightful space where you could publicly post your e-mail address and never worry about the repercussions. If you ran a server and a hacker gained access, it was on you to improve your security.
Eventually, commerce found the Internet and everything changed. Once money was involved, bad actors started to get involved. This is when we started to experience the delights of e-mail spam, a problem we never really fully solved. And something changed about how we handle those hackers. Now that money is involved, if a hacker gains access to your system, instead of being responsible for your own server you can just call the police. And wow, did they crack down on hackers in the early days. They were bad at catching them, but when they did the punishments were disproportionate. It made things safe enough for commerce to grow, but it didn't make us nor the Internet much "better" in the long run. Rather, it put us in a rut.
Compare that with introduction of Bitcoin - which was money from the moment it was created. Because Bitcoin was about money since the beginning, it also attracted those bad actors from the beginning. However, the Bitcoin paradigm is different. Instead of being connected to the existing financial system, it's a self-contained Internet-native system where the responsibility of security is put (to some degree) in the user's hands. But we users are a bit lazy, especially after being hand-fed dumbed-down UX for decades. That makes us vulnerable because we trust instead of verify. But Bitcoin teaches us to learn, to understand, and hopefully to be more responsible.
I believe that Bitcoin and it's derivative technologies have created something akin to a bug zapper. It attracts bad actors like nothing ever has before. And the only viable retort is to improve technology and educate - the opposite of the traditional system where we give the state a monopoly on violence and then ask them to fix it for us.
If you look over the history of cryptocurrency, you'll see a history of rising and falling value and popularity tied to hacks, exploits, crimes, scams, etc. Often, the news declares the end of the entire enterprise. Yet, each time, the scene not only comes back - it comes back stronger.
What I see is greed and wealth attempting to exploit Bitcoin the way the traditional system gets exploited - but always failing in the long run. And with each failure, the wealth in play gets absorbed into Bitcoin. Meanwhile, we continue to harden and improve Bitcoin and the ecosystem around it. In my mind, it's like a worm that is slowly eating the world's wealth through an ongoing interaction with bad actors. I do not believe it can nor should be stopped.
So this idea that crypto is inherently a scam is the result of scammers being drawn to crypto. It's easy for the public to believe this. But Bitcoin and things like it are, in my opinion, the medicine we need to move through this and on to something else.
And you're absolutely right. Bad actors use crypto to go to war with each other; the winner is always crypto. This time, with the FTX scandal, it's gone to places as high as the US Democratic Party. And you would think, "so now they'll just ban it." But it was designed to resist that; furthermore, when you are in the midst of a power struggle, which every government is, crypto is a loaded gun to scramble for - a way to avoid getting freezed out or silenced. The resulting internal dissent has helped to make crypto bans ineffectual everywhere they've been tried, globally.
But that said, I feel something is fundamentally lacking in our education system that people were convinced to put money into this shithole because Matt Damon or Tom Brady or Giselle Bundchen said it was a good idea. I mean, I have sympathy but part of me is like "Stupid is as stupid does". When celebrities started hawking crypto, it was the definite equivalent of "shoe shine boy giving stock tips" to me.
If you live in a country with a highly functional banking system and no kleptocracy, Bitcoin is probably a bit puzzling unless you have family in Cuba. But it’s not puzzling at all for those of us who live somewhere in the middle of the broad spectrum between Switzerland and Somalia, because most places have a little kleptocracy. Argentina is a stable democracy, far from being “a failed state,”† but if you want to send US$500 abroad via non-Bitcoin means it’s basically impossible, and the only broadly available savings vehicle is real estate (“ahorrar en ladrillos”), which of course grossly inflates real-estate prices, with a substantial part of the capital city occupied by empty apartments someone bought “as an investment”. Historically, Argentines have saved by buying dollars, but that’s limited to US$200 a month now, and then only if you have a non-under-the-table job (about a third of total employment is under the table):
<https://www.ambito.com/finanzas/dolares/cronologia-del-cepo-...>
You can see that in September 02019 when this measure was imposed the price of a dollar was AR$63.50; now it’s AR$305. So whatever savings you had in pesos in 02019 have lost 79% of their value to peso devaluation. In fact, whatever savings you had in pesos a week ago have lost 4%.
I’ve been using Bitcoin to get paid for several years at this point where I live here in Argentina. It’s currently 14 years after Bitcoin’s invention, and some people think it’s regressing instead of progressing. Well, 14 years after the internet’s invention was 01983; not only couldn’t you get so much as a weather report online, much less IRC, but many of the early interesting experiments like NLS at SRI had shut down, and more and more places were disabling guest access to their hosts—you couldn’t run so much as a game of ADVENT without getting a username. And a password. Things were seriously regressing. The only people you could talk to on the internet were other people who really bought into the subculture.
In 02001 a lot of Argentines had saved dollars in their dollar-denominated, "government insured" bank accounts. This did not preserve their savings through the financial crisis that year; the cash-strapped government limited withdrawals to a trickle, then converted dollar deposits to pesos at a one-to-one rate, then released the exchange-rate peg, at which point peso went overnight from being worth US$1 to being worth US$0.25 before settling at about US$0.31 for the next few years. The US did something similar in 01933. There was no recourse for this scam.
You might think alternatives to banks like credit unions would protect their customers better, since the customers are the owners, but Credicoop depositors suffered the same two-thirds confiscation of savings as depositors in for-profit banks. And they pay the same 3% tax on bank transactions including checks. That’s more than a fast Bitcoin transaction fee of US$15 for transactions over US$500.
But we’re not a failed state. There are no gangs of bandits roving the streets in Argentine cities (though there are some pretty bad slums where you’ll get robbed if you wander in without knowing anybody). Courts, free public hospitals, and roads continue to function, though there are more potholes than a couple years ago. Argentine infant mortality is 10 per 1000 live births, down from almost 20 in the late 01990s and the same as the late 01980s in the US; life expectancy at birth is 77 years, worse than Switzerland’s 84, but the same as China and Hungary, and better than Saudi or Mexico. (Somalia is 54.)
Most of the world is worse off than Argentina, although not necessarily in such a statistically transparent fashion. About one fourth of the people in the world are unbanked, 51% here in Argentina, 70% in El Salvador; even advanced countries like Russia, Hungary, and Uruguay have roughly a quarter of the population unbanked:
<https://www.gfmag.com/global-data/economic-data/worlds-most-...>
And if your family lives in a country like Iran or Venezuela subject to US sanctions, and you live in the US? Good luck sending them an ACH, instant or otherwise!‡ It’s well known that Bitcoin is very popular in Venezuela, which kind of is a failed state, so one of the Venezuelan governments is trying to tax Bitcoin remittances at 15%.
Bitcoin handles a few billion dollars per year in such remittances. A few billion dollars a year might seem like a trivial amount of money to someone in a rich country, but in poor countries, it’s enough to keep several million people alive.
Even in the US, it’s common for the police to confiscate large amounts of paper currency just because they can (“civil forfeiture”); US bank accounts are probably fine for US$100K but probably somewhat risky for US$10M if the bank thinks you don’t seem like the kind of person who ought to have it. US$10M in US$100 bills fits in a box you can wheel around on a dolly, but Bitcoin is a lot more practical. (And of course US$10M in dollar bills loses about US$200k per year to inflation.)
Transaction fees are usually high enough that you wouldn’t want to use Bitcoin to pay for a can of Red Bull or even a restaurant dinner. But it’s extremely practical as an alternative to Western Union or US$100 bills or gold; even when transaction fees are high, they're low compared to the black-market spread.
So, Bitcoin doesn’t have to be a cypherpunk utopia to be a big improvement on the status quo ante. For those of you living in stable countries where your worries are things like “instant and extremely low-fee ACHs” and “decentralized utopia”, this may be very confusing, but try to remember that most of the world lives in places with much more pressing concerns, concerns that Bitcoin helps a lot with. And you may live there too, soon—the loyal subjects of Kaiser Wilhelm in 01913 certainly didn’t expect that in 15 years they’d be in the middle of a hyperinflation episode that remains legendary a century later.
I think that, by providing workarounds to the people who need them, cryptocurrencies probably not only ameliorate the most immediate and pressing concerns of poor parts of the population like Venezuelan immigrants and MS-13 victims, but probably also adjust the power balance in a more liberal and democratic direction. This will improve the chance of those concerns being ameliorated by public policy over the next decades as well. But it’s hard to tell what will really happen.
Of course, when saving money or making a living becomes illegal, I guess they count as "buying illegal shit". But that doesn't make them bad.
The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what’s happened in the US over the last 50 years, in fact, only more so.
However, at this point I think the modern welfare state is already doing a good enough job of destroying itself without any significant help from cryptocurrencies—as evidence, I can point to Maduro, Macri, Bolsonaro, Trump, and Brexit, and metonymically to the social changes they betoken. So at this point I’m more worried about cushioning the collapse than preventing it.
____
† We’ve remained democratic since 01983, electing presidents from three different political parties (UCR, PJ, and PRO), and there’s no serious insurgency. It’s the economy and government policy that are ruinously unstable, to a point that seems satirical to anyone accustomed to the US, but is lamentably common worldwide. Rich people sometimes say they don’t know of legitimate uses of Bitcoin outside of “failed states”.
‡ Family remittances are specifically exempted from the US sanctions on Iran, but good luck finding a US bank that’s willing and able to take that risk: <https://www.wiggin.com/wp-content/uploads/2019/09/26580_advi...>
Totally. And it's not just about "stable countries".
People in Cyprus (except the russians, who were warned a few days before and had the time to move their funds) saw the money on their bank account used to do bank bail-ins. Probably a test to see how the population would react when the same would happen EU wise (as bank bail-ins are now, by law, mandatory in the EU for failing banks).
People in Spain were incentivized by the banks to put their savings into products yelding x% then the banks defaulted on the principal. That one's even more vicious than the Cyprus case.
The FED and ECB printed trillions for years and year... But we're to believe that saving confiscated through inflations are due to only to supply chain issue and to the war that started in Ukraine. Yeah. Sell me a bridge too please.
So far people in Spain and Cyprus who had put their money in BTC are still winning. Those who got their money confiscated by bail in and by bank-sold shady investments not so much.
We'll see.
The answer that I have experienced is that it is being sold to the poorly informed local speculator, who have banked their hopes and dreams of getting rich someday to buying Bitcoin. In that way, Bitcoin is actually stripping wealth from the global poor and draining it back to the wealthy ones.
Another important use case that I didn't mention is leaving the country to live somewhere better. Suppose you've saved up money in, to use examples I know something about, Argentina or Venezuela, and you've managed to do it in a form that doesn't evaporate due to inflation: US$100 bills, emeralds, gold, real estate. Now you want to move to Spain, Uruguay, or Mexico. Getting those savings safely out of the country with you is going to be very challenging indeed; Argentine customs has dogs that are trained to sniff out dollar bills, for example. (And of course in the case of real estate it's impossible.)
Again, maybe this is an example of "buying illegal shit": you aren't supposed to be able to escape these places with your life savings, because otherwise how can kleptocracy keep klepting? But obviously (at least to me) being able to take your savings with you makes the world a better place, even if it's illegal.
But it's definitely not "stripping wealth from the global poor and draining it back to the wealthy ones". The "heavily regulated", "government insured", "government managed" world banking system is what does that.
Maybe fleeing the country like this sounds like an extremely marginal, unimportant use case to you, but if so, that's probably because you don't know anybody from Cuba, Ecuador, or Venezuela. Not only are significant percentages of those countries' populations already living abroad, but even larger percentages of the people living there today depend on family members living abroad.
I don't know anything about Bangladesh. I've never been there and I don't know anyone from there very well.
Edit to add: it seems like the relative ratio doesn't matter much for the scenarios you describe because it is much better than the swings in local currency compared to USD.
Also, because the US$ has itself lost about 10% of its value over that last year, the fall is even worse in real terms than in nominal terms, closer to 75%.
Over other periods of time, like the last two years or the last six months, this is not the case (that is, the peso has done worse than Bitcoin over those periods), and certainly anyone with savings in Bitcoin is hoping that a year from now it is at or near its current value, or even above it, rather than having fallen another 70% to US$4500. But it could. There is no guarantee, and my observation of periods of past Bitcoin volatility does not make me optimistic that scam artists will go away as a result.
There is no prospect that the peso will have equal or higher value a year from now; both the general dynamics of central-bank-controlled fiat currencies and the specific pathologies of Argentina militate strongly against it. The long-run expected value of the peso is zero — it's not a question of whether it will inflate over time, just how fast. Plausibly ruining the peso's usefulness as a unit of long-term account or a vehicle for savings is a worthwhile tradeoff for improving its usefulness as a medium of exchange; that opinion certainly has widespread acceptance among economists.
So clearly anyone who invests their savings in pesos will inherit the wind; it's possible that whoever invests their savings in Bitcoin will as well.
But maybe not.
Bitcoin is widely enough used to be a viable option. In Argentina, Tether is even more widely used. DAI and Rai aren't.
You think the "spooky scary government" is harmless? The US government has used its funds to kill over 20 million people since WWII without officially being at war. 90% of those killed in US drone strikes are bystanders.
Domestically, we see unrestrained corruption from nearly all of our elected officials leading to every outcome to its own citizens. Poisoned water supplies, missing disaster response, war. But as long as your bank account is insured, everything is cool?
Cryptocurrency was created for, and remains suitable for, valid uses that are not "drugs and other illegal stuff." But this is a new technology without guardrails. Bad actors are a problem. So is FUD from competition and disinformation like the parent.
This is a growing technology that requires a level of knowledge to safely use until it is mature enough for mass adoption.
Some anecdotal evidence to support what you're saying.
I work at a large health care company. When crypto and blockchain was getting popular, there was a huge push in the company to adopt blockchain and to a degree, crypto. I'm talking hour long presentations by blockchain companies, videos, and trainings. It was heralded as the dawning age of technology where people can be treated and pay in crypto, while at the same time, all their medical files being securely stored on the blockchain. They pushed it as the next step in 100% digitizing health care.
3 months later? It was dropped. Not just dropped, either. It was silenced throughout the entire company. The sharepoint sites promoting it internally were gone, the videos, presentations, and trainings were all scrubbed from the company sites and resources, like it never existed.
I started asking around and found out the executives found out about several exchanges going under and taking millions of people's money and how blockchain was more of a solution in search of a problem. That combination became too toxic for them to invest and be associated with.
Crypto will never fill that void.
It can and that's what it exactly does by keeping its value outside the reach of external influences such as military forces and economic decisions by a handful of people but only governed by its own mathematical law.
It's just that people don't understand the nature of crypto but only see it as a new risk asset class which is disappointing after its 13 years of existence and it's the only reason it's going up and down massively by people not having the fundamental belief of what it's actually about.
HashCash was invented to make spam expensive and save email.
> Everyone was yelling at people to hold. Don't spend it, it will go to the moon!
No, most of us "in the community" were having fun buying pizzas with it. The vast majority of the people involved early started for the features it unlocked, we didn't foresee being able to ride it to riches like this because nobody could picture our families using it or putting money into it. We thought it would remain a protocol-level thing.
> And sure it keeps your money away from the spooky scary government.
Horses for courses. I like having some "untraceable" internet money for buying things overseas, like servers, etc. If I wanted to have posters put up in Moscow I could find and pay someone in BTC but not from USD.
> But I prefer my government insured bank account using a government managed currency and recourse for any scams/hacks that might happen to me.
Generally, yes. Modulo inflation, "haircuts", forced confiscation, looking suspicious because you have too much money, etc.
A fool and his money…
Now it's that and a way to scam people of their life savings. I do hope it dies out, it should have been heavily regulated from the get go. Way too many people saw these high production commercials with their favorite celebrities they trust telling them to invest in crypto and lost everything.
It never had a real use outside of scamming people and buying illegal shit, no matter how hard others pushed to normalize crypto it never happened. And why would it? Everyone was yelling at people to hold. Don't spend it, it will go to the moon!
And sure it keeps your money away from the spooky scary government. But I prefer my government insured bank account using a government managed currency and recourse for any scams/hacks that might happen to me.
But I don't think it will ever die. Just like MLMS, pyramid schemes and other crap like that.
Also don't even get me started on these centralized exchanges where you don't even own your key and have to verify your identity (Which is how most users interacted with crypto). It's completely counter to the point of crypto.