[HN Gopher] Cryptocurrency off-ramps, and the shift towards cent...
___________________________________________________________________
Cryptocurrency off-ramps, and the shift towards centralization
Author : HelenePhisher
Score : 151 points
Date : 2022-02-13 15:31 UTC (7 hours ago)
(HTM) web link (blog.mollywhite.net)
(TXT) w3m dump (blog.mollywhite.net)
| bonestamp2 wrote:
| > someday, goods and services will be exchanged for
| cryptocurrency rather than traditional money
|
| I mean, I've seen that happening at an increasing rate since 2013
| (the first time I bought a drink at a bar with crypto). Today,
| there are several monthly services that I pay for with crypto.
| It's not for everyone of course, but there is a virtual world
| where crypto is the preferred or only currency. Over time, that
| world and the real world will converge.
|
| We can already see that starting to happen with China's national
| crypto currency. As more exchanges support that currency, it will
| bring this convergence full circle, at least for part of the
| world. The rest will follow in time.
| miracle2k wrote:
| It is true that exchanges are a pressure point, and that
| anonymised transactions are a compliance risk-factor. While the
| article is notably lacking evidence for the claim that we are
| "now" seeing this "increasingly", assuming it is not yet the
| case, it may well be an increasing problem going forward.
|
| Ultimately, this a civic matter; as much as we want to ensure we
| have the right to encrypt our communications, to not disclose our
| passwords to police even when being prosecuted for a crime, as
| activists commonly insist on, so should we fight to maintain our
| existing rights to financial privacy.
| ClumsyPilot wrote:
| But we also have to keep the lid on fraid, mafia, tax evasion,
| organised crime, blood money, etc.
|
| To me the point of blockchain is to democratise access to
| financial technology. To other's, it's to create a currency
| that cannot be manipulated by central bank politics. Only to
| some people it's about privacy - i woupd be quite happy with a
| totally open and public financial system if it applies to all
| people equally.
| [deleted]
| Andrew_nenakhov wrote:
| > But we also have to keep the lid on fraid
|
| No we don't. The dangers from allowing use of
| cryptocurrencies by criminals are far less than dangers to
| freedoms from corrupt totalitarian governments. When
| government can easily shut down your finances, you need some
| kind of way to defy it.
|
| And if you think that _your_ government will _never_ do such
| thing, think again, harder. Citizens must have a leverage
| against abuse. With shrinking use of cash, cryptocurrencies
| allow people to evade a chokehold that can instantly smother
| them.
| sobkas wrote:
| > And if you think that your government will never do such
| thing, think again, harder. Citizens must have a leverage
| against abuse. With shrinking use of cash, cryptocurrencies
| allow people to evade a chokehold that can instantly
| smother them.
|
| Blockchain won't save you from visit from a man with 5$
| wrench, if you know what I mean.
|
| Blockchain might keep your transactions pseudonymous, but
| when government already knows you, there is little you can
| do to keep yourself out of its reach.
| Zak wrote:
| We've seen examples of financial denial of service from
| governments in situations where they're unable or
| unwilling to hire thugs or apply criminal laws. I'll
| offer two:
|
| Wikileaks is the easy one here. While it may have some
| problems, I suspect most of the HN audience believes it
| should exist. The US government has successfully
| pressured payment providers to deny service to Wikileaks
| in the past, which has the potential to become an
| existential threat.
|
| Cannabis businesses in the US are another example.
| Cannabis is legal under state law in a significant
| fraction of states (a majority for medical purposes), but
| illegal under federal law. The federal government is
| mostly unwilling to enforce the federal criminal law
| against businesses that are complying with state law, but
| it's quite willing to prohibit banks from providing
| service to cannabis businesses.
| woah wrote:
| This is a logical fallacy. This is like arguing that
| because the government could hypothetically put you under
| 24/7 physical observation and listen to your every
| conversation by being in the same room and looking over
| your shoulder, ever using encryption technology is
| useless.
| giaour wrote:
| If your threat model includes Stas-like pervasive
| surveillance and a real possibility of interrogation
| under torture, then GP is right, traditional encryption
| technology will be of limited benefit.
| jacoblambda wrote:
| > Blockchain won't save you from visit from a man with 5$
| wrench, if you know what I mean.
|
| This is accurate however the following isn't necessarily
| accurate:
|
| > Blockchain might keep your transactions pseudonymous,
| but when government already knows you, there is little
| you can do to keep yourself out of its reach.
|
| There are plenty of solid privacy chains based on well
| understood cryptography. On top of that it is becoming
| increasingly easy/viable for existing networks to
| integrate privacy preserving Tx into their networks. Ex:
| Litecoin (a long standing Bitcoin software fork)
| integrating privacy preserving Tx via the MimbleWimble
| protocol and Extension Blocks (together referred to as
| the MWEB hard fork).
|
| Developments like the introduction of MWEB show that even
| if the government knows you or your Tx today, all you
| have to do is make an MWEB (or equivalent) transaction
| and all of a sudden that chain of visibility goes dark.
|
| Additionally while it may be possible for the government
| or any organisation to forcibly extract access or
| knowledge from you with force, we as a society should not
| be content with making that easy. Prior to the
| introduction of the internet and digital society,
| organisations had to spend far more effort to collect far
| less (and far less reliable) information. We should be
| making every push to set that pre-digital information era
| as a baseline or absolute minimum for privacy standards.
| fsflover wrote:
| > Blockchain won't save you from visit from a man with 5$
| wrench, if you know what I mean.
|
| There is a large middle-ground between a government
| respecting your ownership and a one stealing your funds
| using a wrench.
| toomuchtodo wrote:
| I'm fine with weak financial privacy and strong KYC/AML
| regulations. A lot of garbage humans out there that these
| tools are necessary to police with.
| howinteresting wrote:
| What that means in practice is that rich people have
| financial privacy and poor people don't. Personally I
| think it should be the opposite: poor people should have
| privacy and rich people shouldn't.
|
| If you're in favor of e2ee messaging but not e2ee
| financial privacy, you're saying that you don't want
| people to do anything _material_ with the e2ee messaging.
| toomuchtodo wrote:
| Highly dependent on your government and the electorate.
| Elect shitty people, get shitty government and policy.
| Technology will save you from neither.
| howinteresting wrote:
| In what jurisdiction do rich people not have access to
| webs of shell companies to hide their transactions
| through?
| toomuchtodo wrote:
| I don't disagree. How does crypto solve that? It doesn't.
| It's just as harmful. Perfection doesn't exist, only the
| continual efforts towards an ideal.
|
| Edit: (HN throttling), reply to below comment.
|
| I agree that there are niche use cases where crypto is
| bridging a gap for the disenfranchised (sex workers in
| this example) until policy catches up, but that it's
| unsustainable to extrapolate that out as a call for wide
| adoption of crypto by the masses.
| howinteresting wrote:
| Crypto (not Bitcoin or Ethereum, Zcash) gives everyone
| the same privacy rich people enjoy, leveling the playing
| field.
|
| I think crypto has a bunch of other problems, but I
| consider (for example) sex workers being able to transact
| online an unalloyed good.
| Andrew_nenakhov wrote:
| Any elected leader can suddenly become not replaceable
| via elections. Hitler, Putin, Chavez, Lukashenko were all
| elected once.
| lawn wrote:
| That's just because your government isn't currently
| categorizing you as a "garbage human".
| tylersmith wrote:
| This is why cryptocurrencies had to be decentralized and
| censorship resistant, so they can grow whether or not
| people are fine with it.
| juliette1 wrote:
| dabeeeenster wrote:
| The problem is that you don't currently have financial privacy,
| and that is what enables authorities, your government and your
| bank to ensure you are not laundering money for nasty people.
| NovemberWhiskey wrote:
| Which existing rights in particular do you mean? The real-
| currency world is completely filled with KYC, suspicious
| transaction reporting and so on.
| Waterluvian wrote:
| Even just having a lot of cash on you is enough for American
| police to legally steal it from you, roadside.
| NovemberWhiskey wrote:
| I mean, that's a problem, but it's not a privacy problem
| _per se_. Civil forfeiture is a much larger issue than
| police taking cash from people with unconvincing sourcing
| stories.
| Waterluvian wrote:
| True. Though to be clear, it's not that your story isn't
| convincing. It's that police felt like it, usually
| because you're a minority.
| skybrian wrote:
| As one data point, recently some alleged criminals were caught
| who seem to have had lots of trouble laundering money at scale?
| [1] But I don't know if they could have done a better job if
| they were more creative.
|
| [1] https://www.nbcnews.com/politics/justice-department/two-
| arre...
| jnwatson wrote:
| There doesn't seem to be any financial right to privacy.
|
| It isn't a right.
| f38zf5vdt wrote:
| It extends, arguably, from the "Right to Property".
|
| > (1) Everyone has the right to own property alone as well as
| in association with others. (2) No one shall be arbitrarily
| deprived of his or her property.
|
| This right has a history of controversy and various
| interpretations.
|
| https://en.wikipedia.org/wiki/Right_to_property
| rhn_mk1 wrote:
| How is a right to property related to a right to privacy?
| "Private property" is not using the same kind of "private"
| as "private communication".
| kelseyfrog wrote:
| Here is a poor construction from right to property to
| right to privacy.
|
| 1. Assume the right to private property.
|
| 2. Acknowledge that some property is not just a tangible
| object, but can include a configuration of objects. An
| existing example of configuration of objects as property
| is crypto currency as private property or database
| records reflecting you bank account as private property.
|
| 3. Acknowledge that property ownership represents the
| exclusivity of possession.
|
| 4. By 2 and 3 the ownership of intangible property is the
| exclusive possession of a configuration of objects.
|
| 5. Acknowledge that the configuration of objects is
| isomorphic to information
|
| 6. Acknowledge that communication is the transmission of
| information
|
| 7. By 4, 5, and 6, Private communications is the
| exclusive ownership of the transmission of information.
| f38zf5vdt wrote:
| If the inability to keep your property private harms your
| ability to possess or use that property now or in the
| future, the ability to possess private property is being
| infringed upon.
| saalweachter wrote:
| Within the context of the United States, you can always
| fall back to the Ninth Amendment:
|
| > The enumeration in the Constitution, of certain rights,
| shall not be construed to deny or disparage others
| retained by the people.
|
| (There was a concern around the Bill of Rights, that by
| specifically listing out some rights it would create the
| belief they were the _only_ rights; the Ninth Amendment
| was the compromise.)
| lawn wrote:
| > No one shall be subjected to arbitrary interference with
| his privacy, family, home or correspondence, nor to attacks
| upon his honour and reputation. Everyone has the right to the
| protection of the law against such interference or attacks.
|
| The Universal Declaration of Human Rights
|
| https://www.un.org/en/about-us/universal-declaration-of-
| huma...
|
| > Every child has the right to privacy. The law must protect
| children's privacy, family, home, communications and
| reputation (or good name) from any attack.
|
| Convention on the Rights of the Child: The children's version
|
| https://www.unicef.org/child-rights-convention/convention-
| te...
|
| > The right of the people to be secure in their persons,
| houses, papers, and effects, against unreasonable searches
| and seizures, shall not be violated, and no Warrants shall
| issue, but upon probable cause, supported by Oath or
| affirmation, and particularly describing the place to be
| searched, and the persons or things to be seized.
|
| The Fourth Amendment
|
| https://www.britannica.com/topic/Fourth-Amendment
| PeterisP wrote:
| There's different aspects of privacy - both examples you
| provide are perfectly compatible with a requirement to have
| all commercial interactions to be non-private.
| sobkas wrote:
| > Ultimately, this a civic matter; as much as we want to ensure
| we have the right to encrypt our communications, to not
| disclose our passwords to police even when being prosecuted for
| a crime, as activists commonly insist on, so should we fight to
| maintain our existing rights to financial privacy.
|
| But you know, you are not anonymous on Blockchain, you're only
| pseudonymous. If someone correlate your pseudonym with your
| real identity, they will know your entire financial history (on
| Blockchain).
| olalonde wrote:
| Not quite. You can discover one of the many addresses that
| are typically part of Bitcoin wallet. As for the history, you
| can't really tell much, especially if the person didn't re-
| use addresses which is the recommended mode of operation.
| e_y_ wrote:
| Thankfully the vast majority of the public are crypto
| security experts and would have no problem applying these
| best practices to protect themselves when crypto becomes an
| everyday medium of financial exchange. /s
| dataangel wrote:
| Not reusing addresses is the default in a lot of wallet
| software though. The user doesn't have to do anything
| special.
| jazzyjackson wrote:
| still there is a steep learning curve between "send money
| from my coinbase account" to "manage a self-custodial
| wallet without deleting all my money"
| headsoup wrote:
| I think additionally, the 'casual' user needs to
| understand Monero, Bitcoin, L2, Ethereum, etc just to
| make in informed choice of what to use, knowing which are
| best for privacy, convenience, security, etc.
|
| It appears there are solutions available to a lot of
| concerns, but they require substantial knowledge of the
| ecosystem to use them and getting it wrong is permanent.
| ziml77 wrote:
| How does that work? If I make a new wallet and get coins
| sent to 0xAAAA and then I buy something and send them from
| address 0xBBBB, how do the miners validating the
| transaction know that 0xBBBB has any coins available to
| send?
| jacoblambda wrote:
| Cryptocurrencies have one of essentially two different
| accounting models:
|
| The account model: These networks have accounts and
| balances. You make a tx sending tokens from one account
| to another. It looks like normal banking more or less.
|
| The UTxO model: These networks don't have accounts at
| all. Instead they have what are called "Unspent
| Transaction Outputs" or UTxO. Every transaction takes in
| a set of UTxO and outputs a set of UTxO. All the balances
| of assets in the inputs must sum up to the same values as
| the assets in the newly created UTxO and you can only
| ever spend a UTxO once. To spend a given UTxO some
| criteria must be met. The most often criteria is some
| signature that only validates with the public key of the
| private key being used to sign the Tx. This also can be
| generalised to other multi-signature schemes or even to
| supporting smart contracts (via policy ids and script
| refs/hashes).
|
| Ethereum really was the network to push the account model
| into the forefront and now most networks choose to
| implement this over the UTxO model due to the ease with
| which you can get good UX and dev experience. Bitcoin,
| Bitcoin forks (SW or chain forks), Monero, Cardano, Ergo,
| Nervos, IOTA 2.0, and a few others use the UTxO model or
| some extension of it (ex: EUTxO or the Cell Model). One
| of the big upsides of the UTxO model is that all state is
| kept local instead of global however this local state
| also adds a number of complexities that make the model
| unintuitive to many.
|
| ------
|
| So to answer your question: You'd create a Tx from your
| wallet. This Tx would consume some set of UTxO based on
| what you want to do and would then produce a number of
| UTxO going to any number of "accounts". In many UTxO
| networks, derivative keys are supported and you can give
| each person you want to receive money from a different
| derivative public key/address. If they were to send you
| money, it would go to your derivative address and it
| would be completely independent from all the rest of your
| UTxO until you do something on chain to tie them together
| (say by a delegation Tx in a PoS network, by merging
| UTxO, or by using UTxO from multiple derivative addresses
| in one Tx).
|
| As for how you'd that the UTxO is valid: Essentially it
| just needs to exist on chain and not already been spent
| somewhere else. Monero for example uses this to their
| advantage with the "sum to 0" rule to provide a zero
| knowledge non-interactive proof that a given Tx must be
| valid without knowing the contents, sender, or
| recipients.
| danlugo92 wrote:
| It's as if almost every crypto skeptic doesn't know how it
| actually works.
| jazzyjackson wrote:
| Call it a UX problem. I've used BTC here and there but
| I'm still not confident that I could keep my transactions
| silo'd, from a cursory look at the blockchain it seems
| obvious that you can "follow the money" from a de-
| anonymized transaction (Say, I pay you for a service in
| person, so you know a wallet address that belongs to me)
| to other wallet addresses and balances associated with
| me.
|
| I can't blame people for losing interest / calling
| bullshit on crypto before spending hours diving into the
| details of L2, derivative wallets and multi-sig etc etc,
| details that ameliorate the skepticism. Also these things
| change over time, so maybe Lightning was unconvincing 3
| years ago and skeptics just haven't given it a second
| look. (This is me, but I'm slowly being convinced that L2
| really does make this stuff practical, but for a long
| time the transaction-per-second and unrecoverability of
| lost keys made the whole field very uninteresting)
| lawn wrote:
| On some blockchains. Monero hides sender, receiver and amount
| by default.
| acdha wrote:
| Monero _attempts_ to hide those details. This is an
| extremely hard problem and it has not been extensively
| tested against adversaries with deep resources. For keeping
| your drinking buddy from knowing what else you've spent
| money, it probably works but I would be very hesitant to
| tell people it's effective against, say, KYC exchanges much
| less an adversary who can do analysis against both the
| entire blockchain and other internet activities.
| opportune wrote:
| If you've cracked Monero encryption or have a general
| deanonymization attack, you should submit a solution to
| the IRS' multi-year, $600k bounty.
|
| There have been a few instances of specific payment
| patterns causing de-anonymization (which just means
| payments are correlated and identified as not-spoof, due
| to the way the Monero blockchain works). But to be honest
| if you think Monero in general can be broken you probably
| don't know how it works well enough to make that
| statement.
| yifanl wrote:
| This is an aside, but is 600k a meaningful bounty
| compared to the potential payout of all that data?
|
| I suppose I wouldn't know how much that data is worth
| unless I do have a crack for it, so I guess the point is
| moot :P
| acdha wrote:
| I'm not saying I know it's broken. I'm saying it's a hard
| problem and given the stakes I would treat it like a new
| cryptographic construct where it takes the community many
| years attacking the entire system before people start
| making confident statements about it.
|
| One of the big concerns here is retroactivity: if you
| make decisions because you _think_ you're anonymous but
| that changes for any reason in the future (compromised
| exchanges, insecure clients, sophisticated new analysis
| techniques, etc.) you can't pull that history. That
| necessitates more caution than something where the stakes
| are lower if an attacker finds something clever to try.
| ziml77 wrote:
| This is exactly why I can't bring myself to put anything
| on any blockchain, no matter how anonymous it claims to
| be. I assume that someone will end up finding a flaw.
| When that happens, I may as well have been broadcasting
| everything without any security and privacy mechanisms at
| all. Not only can the person who's broken it see my
| history, anyone who knows the flaw can.
|
| I realize that things get leaked from centralized
| services, but there's a barrier to seeing that info. You
| put yourself at legal risk if you download one of those
| leaks and get caught. But there's no such risk with a
| public blockchain since the data was intended to be
| received by anyone who wants it.
| waffle_maniac wrote:
| Several years ago I bought some anti-malaria medication from an
| Indian pharmacy using Coinbase before my trip to India. I guess
| the address was on a FinCEN list because my account was
| immediately closed. Anyone know Brian Armstrong? I'd like to
| get my account reinstated as I'm not doing anything illegal and
| I'm not opposed to KYC. Not a terrorist AFAIK.
| olah_1 wrote:
| For off-ramps, can't you just put up a bunch of orders on
| something like Bisq? Slightly more work involved, but it is a
| totally decentralized way to do it.
| danuker wrote:
| If you get large amounts of money in short periods of time, you
| might receive calls from your bank's or government's anti-
| money-laundering office regardless.
| noman-land wrote:
| I have a controversial opinion. You don't need offramps.
| WJW wrote:
| Say you are a miner. How would you buy the electricity to run
| your mining rigs without fiat currencies?
| epgui wrote:
| Presumably the commenter is imagining that everyone would
| accept crypto as payment, including the energy company.
|
| This is not my opinion.
|
| My opinion is that no matter how many people and companies
| become excited about accepting and using crypto as a method
| of payment, all of them need to pay some form of tax at some
| point, and I'm not sure I see a reason why typical
| governments and / or central banks would be as enthusiastic
| about relinquishing their sovereignty on their own currency.
| I imagine that this tax will most likely need to be paid in
| the currency which is controlled by the government or its
| central bank, and this is where the off-ramp problem can no
| longer be avoided.
|
| I really cannot shake off the idea that cryptocurrency has
| just created high-tech casino chips that are not attached to
| any particular casino, and I'm not completely sure what
| problem this really solves in practice. At the end of the
| day, I stay away from crypto because I fully admit that I do
| not understand crypto: not from a technical perspective
| (which IMO is not that important), but from a macro-social
| perspective (which IMO is the most important).
| nathias wrote:
| yes, US has been doing regulatory capture to extract profits from
| crypto since 2016, it's horrible but the silver lining is that
| crypto was forced to innovate and produced the wonderful jungle
| of DeFi that currently exists and is used by many
| jqpabc123 wrote:
| Any financial system is built on on an element of trust.
|
| Crypto doesn't displace trust --- it misplaces it.
|
| Instead of trusting the _regulated_ banking system, you end up
| trusting _unregulated_ "exchanges" --- where fraud is not even
| illegal.
|
| Need an example of crypto-fraud? The most widespread example is
| Tether, USDT. The idea that USDT is backed by USD is a well known
| joke. No one really knows the full extent of this fraud but all
| indications are it is one of epic proportions.
|
| Yet the exchanges maintain the $1 peg for USDT.
| alexb_ wrote:
| The day that tether, and all of the other "stablecoins" die, is
| going to be absolutely brutal. Makes me glad to not be a crypto
| speculator. This is the type of stuff that they write books,
| movies, and papers about.
| recuter wrote:
| What if, listen, guys hear me out, what if things just stay
| in this limbo forever? If banks are too big to fail, why not
| crypto? I say HODL ;)
| alexb_ wrote:
| The term "too big to fail" means "gonna get bailed out by
| the govt". This does not apply to any decentralized system.
| zinekeller wrote:
| Definitely this is the major difference. Most governments
| will just say to everyone (especially the government of
| El Salvador) "we warned you!" and probably do nothing,
| unless that ther are powerful people that can convince
| otherwise.
| i_am_proteus wrote:
| I'm inclined to agree, but if enough individual members
| of major governments are "bought in" to crypto currencies
| such that their own personal wealth would be at risk,
| things might be different.
|
| Not the case today, but things shift over time.
| NovemberWhiskey wrote:
| Anyone who thinks banks are still too big to fail hasn't
| seen the effort that the US Government has spent forcing
| them to create recovery and resolution plans.
| maipen wrote:
| >The day that tether, and all of the other "stablecoins" die.
| Typical hn comment, miss crypto opportunities and so decides
| to fantasize about everyone losing money so you feel better
| with yourself. FIY, there are many stablecoins out there that
| use different ways to keep the peg and others that are simply
| more trusted and secure. A good way to find out what is
| actualy going on, is to look a Uniswap info (which is the
| most honest data out there) and you will see that people have
| elected USDC and DAI as their stablecoins of choice. A
| reminder, cryptocurrencies are usualy based on consensus,
| everyone knows tether is parcialy backed after some of their
| funds were siezed by the gov. DAI has held its peg even when
| ethereum tanked, usdc has been transparent. Both have nothing
| to do with tether. No cryptocurrency will not die, not all
| stablecoins will die (some probably will) and no santa is not
| real either.
| qnsi wrote:
| Tether is a known scam though, so your speculations that
| someone is angry because he missed "bigger fool" scam early
| is unfounded.
| [deleted]
| jqpabc123 wrote:
| The exchanges are deeply implicated in the Tether fiasco.
|
| They will most likely just collude and attempt a simultaneous
| "rug pull" on the entire crypto market once the SEC announces
| plans to audit "stablecoins".
|
| Trillions in "crypto wealth" will just evaporate into the
| electronic ether from whence it came
| hotpotamus wrote:
| When you have to shorten the phrase "getting the rug pulled
| out from under you" because it's such a common occurrence,
| your financial system might have a problem.
| lamontcg wrote:
| The SEC won't do anything with teeth until crypto and
| Tether are already collapsing.
|
| No government auditor took out Madoff, nobody wanted to
| touch it, because he was so popular and his clients were
| influential, and anyone investigating him would be sticking
| their neck out. That's the kind of risk that if you don't
| get it perfectly right destroys career and even if you're
| right you may get blamed and destroyed anyway for pressing
| the button.
|
| Much easier politically to mop up after it all collapses.
|
| Same thing here since if the SEC pops Tether then now
| you'll trigger automatic lawsuits from Tesla investors, and
| there's too many billionaires that are still true believers
| who have enormous influence over the government and will
| cause them to be overly cautious.
| gitfan86 wrote:
| Except it is fake money, they can print as much of it as
| they want and the exchanges can let them buy other crypto
| with that fake money. It is possible that on some exchanges
| Tether will never crash, it will just become impossible to
| redeem Tether for USD. People stuck holding tether and
| people stuck holding tether propped up crypto will have no
| way to redeem for real money.
| everfree wrote:
| Why would stablecoins other than Tether die?
| acdha wrote:
| Depends on what they're tied to and how leveraged they are:
| anything backed on some other cryptocurrency will likely
| have a massive crunch if Bitcoin staggers, and if the
| largest "stable coin" turns out to be as fraudulent as it
| looks everyone is going to get hit by both a wave of people
| cashing out into USD/EUR/etc. and a ton of demands to prove
| that their collateral is as solid as claimed, which the
| first trend will make a lot harder.
| jqpabc123 wrote:
| More then half of all crypto trades involve Tether --- it
| pervades the entire crypto market.
|
| Anything that is not _truthfully_ fully backed by assets
| outside of crypto land will almost certainly be affected.
| romeros wrote:
| there is a lot of mistrust regarding Tether. People kind of
| prefer to switch over to BUSD, USDC, GUSD which are backed
| 1:1 with real USD.
|
| Tether is just a temp variable for trading.
|
| But, if Tether goes down it will be bad news but not enough
| to destroy the whole market. USDC is gaining ground pretty
| rapidly.
| jqpabc123 wrote:
| _Each month, we publish attestation reports by Grant
| Thornton regarding the reserve balances backing USDC._
|
| The key item here is "attestation report". What does this
| mean?
|
| It means those issuing the report have no reason to doubt
| what they are being told/given. They haven't actually
| verified/audited anything.
|
| Tether paid someone to issue some of these as well.
| alexb_ wrote:
| What proof is there exactly that USDC is different?
| benreesman wrote:
| Random audits by E&Y.
| hiq wrote:
| According to your link below (https://www.centre.io/usdc-
| transparency) these are not audits, but attestations.
| Tether has plenty of these as well.
| jqpabc123 wrote:
| Reference? Show one random audit by E&Y.
| benreesman wrote:
| My mistake, it's Grant Thornton:
| https://blog.coinbase.com/fact-check-usd-coin-is-the-
| largest....
|
| Now I'm no CoinBase apologist, they're accused of stuff
| that would make Dutsche blush, but USDC is a completely
| different animal than Tether. I won't take payment
| someone's share of dinner in USDT or ETH for that matter,
| I will happily hold USDC for short periods of time.
| alexb_ wrote:
| Did the 2008 subprime mortgage crisis completely go out
| of the consciousness of everyone? Private companies doing
| "audits" on securities that they have an incentive to say
| are better than they actually are is not going to give
| anything worth a damn. If it's not a government audit, I
| don't buy it.
| benreesman wrote:
| I don't think any part of the financial system,
| conventional or crypto is immune from shady dealings.
|
| But everyone who didn't just fall off a truck knows
| Tether is capitalized at _maybe_ 30%, and there's a lot
| of mediocre commercial paper in the assets it does hold.
|
| USDC and Tether are completely different asset classes.
|
| USDT is casino chips you have to buy to play the low-cap
| alt-coin slot machine. USDC has a de facto address within
| reach of the FBI.
| epgui wrote:
| From what (little) I understand of money markets, if Tether
| were to "die" (or even just "get sick" haha) at the scale
| it's at today, it would probably have a profound impact on
| even my portfolio, which doesn't even have any direct crypto
| or crypto-adjacent exposure. I'm not sure what assets would
| be safe from repercussions.
| cletus wrote:
| Stablecoins are going to be another hard lesson for many,
| many people and yet another example of crypto failing to
| learn the lessons that built the financial system Crypto
| Andys seem to despise.
|
| This has been tried. We've tried pegging currencies. We had
| the Bretton-Woods system. We've had currencies that were
| partially or fully backed by hard assets (most notably gold).
| For the record, since this seems to come up so often, the US
| dollar was _never_ 100% backed by gold. Not once. Ever. Fiat
| currencies exist for a reason. Central banks and managing
| money supplies exist for a reason.
|
| Ultimately a stablecoin is a form of price control between
| two assets. And just like any other price control, its
| ability to maintain that peg only go so far as how much money
| someone has to fight against the market forces driving those
| prices apart.
| dragosmocrii wrote:
| I've noticed so many ads on Crypto "investing" recently, that
| makes me think we might be in the last stage of this bubble.
| I've had a discussion with a family member and their friend,
| and they were talking to me about investing in crypto, and
| how XRP is backed by gold, and how they have cold storage
| with their phone to hold their "assets" in case the Internet
| is taked down, and how the stock market will crash and big
| companies will disappear (like Google, Amazon, etc). And I'm
| like what the heck.. If the Internet is taken down, why do
| you even need to have your crypto on cold storage, it's just
| bits.. you've got bigger problems at that time. But nope,
| they're adamant crypto is the future, even if they have bo
| idea how it works. Fascinating, and terrifying when thigs go
| South.
| alexb_ wrote:
| When taxi drivers give out investment advice...
| rhn_mk1 wrote:
| It's worth noting that if the internet splits up into large
| pieces, the blockchain splits, and the coins will suddenly
| lose a lot of their value. That's because there's no
| telling which fork of the blockchain wins when there's a
| merge later. Double-spending galore!
| jazzyjackson wrote:
| > there's no telling which fork of the blockchain wins
|
| That's the point of proof of work: longest chain wins.
|
| Yes in a netsplit you can spend on both chains, but you
| would need access to both chains to do so. And you don't
| even ever have to merge them again, there could just be
| AmericanBTC and RussianBTC from here on out.
| jqpabc123 wrote:
| About a year ago, I saw a handyman with a big sign on his
| truck about investing in crypto --- with his help of
| course.
|
| This I took as a sign that the end is near.
| everfree wrote:
| > fraud is not even illegal
|
| Just like all other non-bank fintech companies (like Paypal,
| Square, etc.), US crypto exchanges are regulated by FinCEN, the
| Bank Secrecy Act, and the Patriot Act, and are obviously
| legally liable if they try to commit fraud. Most other
| countries have similar money servicing legislation, and even if
| they didn't, fraud is still illegal in all but the least
| legally responsive jurisdictions. Committing fraud doesn't
| suddenly become legal just because your company is classed as a
| crypto exchange.
|
| Now, just like there will always be a poorly regulated bank
| somewhere in the world, there will always be a poorly regulated
| crypto exchange somewhere in the world.
|
| > Need an example of crypto-fraud? The most widespread example
| is Tether, USDT. The idea that USDT is backed by USD is a well
| known joke. No one really knows the full extent of this fraud
| but all indications are it is one of epic proportions. > > Yet
| the exchanges maintain the $1 peg for USDT.
|
| USDT is a Bitfinex product. If you believe that "the exchanges"
| other than Bitfinex are in on Tether, I'd like to hear your
| reasoning. Most likely, the USDT fraud will collapse at some
| point, and the rest of the exchanges besides Bitfinex, along
| with the rest of the crypto market, will go on business as
| usual after a short market scare.
| jqpabc123 wrote:
| _Committing fraud doesn 't suddenly become legal just because
| your company is classed as a crypto exchange._
|
| Yes, it does. Crypto isn't a regulated market. As long as the
| scam stays inside crypto land, it is totally legal. As far as
| the SEC and CFTC are concerned, you're playing a game with
| Monopoly money.
|
| Elon Musk can and has openly run crypto "pump and dump" scams
| that would be blatantly illegal in any _regulated_ market.
| The only response from the CFTC was a warning to consumers.
|
| https://www.cftc.gov/PressRoom/PressReleases/7697-18
|
| _If you believe that "the exchanges" other than Bitfinex are
| in on Tether, I'd like to hear your reasoning._
|
| The only way to maintain a firm 1 USD peg that everyone (even
| you) knows is a fraud is through collusion.
| everfree wrote:
| > Yes, it does. Crypto isn't a regulated market. As long as
| the scam stays inside crypto land, it is totally legal. As
| far as the SEC and CFTC are concerned, you're playing a
| game with Monopoly money.
|
| That's your opinion. I would be more interested in the
| opinion of a judge. If you can demonstrate that monopoly
| money has some kind of market value, and someone else
| steals it from you, then that's a crime. There is no legal
| precedent set that fraud is okay as long as it involves
| cryptocurrency.
|
| > Elon Musk can and has openly run crypto "pump and dump"
| scams that would be blatantly illegal in any regulated
| market. The only response from the CFTC was a warning to
| consumers.
|
| The CFTC is a mess, so just because they aren't
| successfully helping prosecute a specific case doesn't mean
| everything that was done was legal.
|
| > The only way to maintain a firm 1 USD peg that everyone
| (even you) knows is a fraud is through collusion.
|
| They don't maintain a firm peg. Tether trades on exchanges
| at market value, just like any other cryptocurrency.
|
| Also, I find your "even you" comment to be a strange
| personal attack. Are you trying to say that I'm stupid?
| dataangel wrote:
| Exchanges don't maintain the peg, buyers and sellers willing to
| transact at that exchange rate maintain the peg. Nothing stops
| you from submitting a buy order for 1.00 USDT paying 0.50 USD.
| There's just no guarantee there is a seller out there willing
| to take that deal.
|
| Unless you think exchanges are somehow misrepresenting the
| trades occuring or the state of their order books, but I think
| this fraud would be difficult to maintain for this long on any
| exchange that actually supports withdrawal. If you have
| evidence of exchange manipulation I'd be interested to read it.
| jqpabc123 wrote:
| _Exchanges don 't maintain the peg, buyers and sellers
| willing to transact at that exchange rate maintain the peg._
|
| How did you verify this?
|
| Has your favorite exchange ever been audited by the SEC to
| confirm it is actually playing by theses rules?
|
| _I think this fraud would be difficult to maintain ..._
|
| I think it would be incredibly easy to maintain --- simply
| because no one ever audits their books. The crypto market is
| *unregulated*.
| everfree wrote:
| > Has your favorite exchange ever been audited by the SEC
| to confirm it is actually playing by theses rules?
|
| Coinbase does not trade what are currently considered
| securities by law, so its trading operations are not
| subject to SEC oversight. However, Coinbase has gone
| through the SEC listing process for its common stock.
|
| https://www.sec.gov/Archives/edgar/data/1679788/00016282802
| 1...
|
| > I think it would be incredibly easy to maintain ---
| simply because no one ever audits their books.
|
| "We undergo regular financial and security audits by
| external firms. SOC 1 Type II, SOC 2 Type II."
| baby wrote:
| > Crypto doesn't displace trust --- it misplaces it
|
| That's a hardcore misunderstanding of the technology! It makes
| transparent what until now has been very opaque.
| ravenstine wrote:
| _[EDIT: I wrote a somewhat long comment that really wasn 't
| directly related to the article, so I chose to remove it.]_
| [deleted]
| cuteboy19 wrote:
| The original intent was "peer to peer digital cash". When that
| failed we got "decentralised digital gold". I can only wonder
| what the next iteration will be
| redisman wrote:
| "Web3"
| danlugo92 wrote:
| > "decentralised digital gold"
|
| You're saying like that is not a huge deal. Central banks
| will hold Bitcoin in the future, it's inevitable.
| WJW wrote:
| Even if we accept the thesis that central banks are
| interested in holding crypto as part of their reserves, is
| there any reason that it would be bitcoin? It is the
| largest cryptocurrency right now, but the space is also
| famously volatile so it might not be the largest in a few
| years.
|
| (Btw, I doubt a country would want to hold something as
| volatile as bitcoin since the whole point of national
| currency reserves is to be a stable source of value.
| Bitcoin is basically the opposite of that)
| danlugo92 wrote:
| > reason that it would be bitcoin?
|
| It's the only one immune to Russia/USA/China
| intervention.
|
| > I doubt a country would want to hold something as
| volatile as bitcoin
|
| Research why it's so volatile.
| WJW wrote:
| Bitcoin does not have a single defining feature that
| would make it more resilient to dedicated government
| intervention than any other crypto. The only thing that
| makes bitcoin "special" in the crypto world is that it's
| currently the biggest and most well known, but both of
| those factors could easily change in a year or ten.
|
| As for the ever-popular "research more" response,
| everything I ever read about it is that the whole thing
| is so incredibly volatile mostly because of the massive
| (over)use of leverage by speculators. In any case, even
| if there would be a valid reason for the volatility that
| still makes it unsuitable as a reserve currency. The
| whole point of a reserve currency is to be stable and
| bitcoin is anything but.
| Projectiboga wrote:
| I like this recent South Park clip
|
| https://youtu.be/N8f-BQFo7lw
| skybrian wrote:
| How much do people trading on exchanges need to worry about
| counterparties giving them tainted crypto and ending up in a
| situation like this?
| devoutsalsa wrote:
| It's not clear to me, but I'd guess that one who uses
| centralized exchanges would do well to focus on sites that use
| KYC. I'm sure not everyone would agree with that, but we still
| live in a world where one needs to convert crypto to fiat
| currency at some point, and centralized exchanges are the best
| way I know of to do that. Avoiding shady projects seems wise.
| NovemberWhiskey wrote:
| With an exchange, your counterparty _is_ the exchange.
| bonestamp2 wrote:
| It depends on the exchange. Some are peer to peer and some
| trade from their hot wallet.
| ycombobreaker wrote:
| Is that really true? On traditional exchanges, the exchange
| itself is a mostly neutral party, a technology-and-
| marketplace provider. If a clearing member becomes insolvent,
| the other clearing members have agreements in place to "pitch
| in" together to keep the whole system functional.
|
| (Edit: to be clear, this isn't a rosy situation: it's usually
| a adjacent to fraud, so the SEC, CFTC, etc. pursue criminal
| charges; and other clearing members tend to sue the bankrupt
| one, letting the courts figure it out.)
| NovemberWhiskey wrote:
| The cryptocurrency "exchanges" are not structured similarly
| to the stock market. There's no separation of broker,
| matching venue and central counterparty clearing service.
| gostsamo wrote:
| If the platform has verified you, it has verified everybody
| else there. So, the question is how reputable is the exchange.
| [deleted]
| simonw wrote:
| Evidently it's something you should keep an eye out for. I find
| the fact that Bitcoin isn't actually a fungible token - that
| there are "corrupt" Bitcoins out there that need to be avoided
| - pretty fascinating.
| jacobra2 wrote:
| Agreed it is interesting. The US dollar has a similar
| dynamic. The degree to which a currency is fungible should
| incorporate its corruptability.
| [deleted]
| mouzogu wrote:
| > cash out
|
| you're not supposed to do that!
| alexb_ wrote:
| Don't kid yourself. Bitcoin does not have any place as a real
| currency (at least for legal purchases) - it is solely a
| speculative asset. People buy cryptocurrencies in hopes it will
| become worth more USD, or to buy drugs.
| danuker wrote:
| Bitcoin's blockchain is not scalable, but there is Lightning,
| which can give Bitcoin more "currency" traits.
| alexb_ wrote:
| That has literally nothing to do with what I'm saying.
| Nobody except for weird techno-idealists actually value
| crypto in any terms other than it's equivalency to actual
| money.
| danuker wrote:
| Given its higher and higher long-term prices, it seems
| more and more people value it.
|
| What are you saying? It is not widely used enough for
| day-to-day transactions?
| danlugo92 wrote:
| The cat is out of the bag, pandora's box is open, thank
| God with a capital G Bitcoin us unbannable.
|
| The separation of money and state will bring us better
| stability, less war, eliminate people like Chavez and
| Putin from the world, etc etc etc.
| dataangel wrote:
| How will separation of money and state eliminate people
| like Putin?
| kevinak wrote:
| Maybe not eliminate them, but they won't be able to use
| the money printer as they please, effectively funding
| things like forever wars.
| alexb_ wrote:
| ...do you understand how money works, you can't just "use
| the money printer" to fund wars what are you talking
| about
| danuker wrote:
| How does a country fund wars?
|
| Through issuing bonds, and then inflating the money
| supply so as to dilute the amount to pay back.
| jazzyjackson wrote:
| Sorry, are you asserting that there's one correct theory
| for "how money works" ?
|
| Where does money come from according to you?
| davidmurdoch wrote:
| I've paid with Bitcoin for many legal tangible things that I
| would have otherwise paid for with a credit card if the
| Bitcoin option wasn't so much cheaper (10-15% discounts
| usually).
| mey wrote:
| Within the last year? Directly with Bitcoin or with a L2
| network?
| ravenstine wrote:
| What do you think _currency_ is? Of course it 's a currency.
| If people have the misguided view that Bitcoin is a bank or
| that they should earn a profit by trading it, that's on them.
| USD isn't much different other than that it's backed by
| military and economic might; at the end of the day it's
| numbers, like Bitcoin, without a decentralized blockchain.
| brightstep wrote:
| The quality of being exchangeable for goods doesn't make it
| a currency. Even if it were a currency, it would be a very
| bad one without many of the properties required for sound
| monetary policy.
| kevinak wrote:
| You can use it as an everyday currency in El Salvador. Here's
| an example from three months ago:
| https://youtu.be/6IAc1G8xaDs?t=62
| NicoJuicy wrote:
| There are major issues with this implementation:
|
| - goes down with AWS
|
| - uses mongodb
|
| - money disappeared
|
| - people don't understand it and don't use it
|
| - fees are subsidized
|
| - ...
|
| It's ultimately only used for 5 % of the international
| transfers AND more expensive currency to currency wise.
|
| ( I have a more complete write-up with links somewhere in
| my comments, if you want them)
|
| Edit: here https://news.ycombinator.com/item?id=30091410
| kevinak wrote:
| How does this refute the argument that you can use it,
| for legal purchases, in El Salvador?
|
| Also this doesn't really apply unless you use the
| custodial wallet. McDonalds isn't, and you don't have to
| either. If you self custody you'll be fine.
| NicoJuicy wrote:
| > How does this refute the argument that you can use it,
| for legal purchases, in El Salvador?
|
| That i wouldn't want to use it if i lived there. It has
| no benefits, only disadvantages.
| hiq wrote:
| The comment you're answering to is pointing out that this
| is unsustainable in its current implementation in El
| Salvador (and implicitly unlikely to last), meaning that
| this example does not refute that
|
| > Bitcoin does not have any place as a real currency
| fullshark wrote:
| So it has a proven use case, that will never go away: illegal
| purchases.
| gjvc wrote:
| It has a proven use case as a result of what?
| tomjakubowski wrote:
| What's the size of that market, and what portion of
| participants bother to try covering up their transactions
| on the blockchain between exchanging with a real currency
| and buying/selling the drugs (or nuclear weapons, or hitman
| contracts, etc.)?
| fullshark wrote:
| I don't know! I'm not a huge crypto fan at all, but say 5
| years ago there was this belief among crypto bears that
| it would be a forgotten memory in 50 years, I just don't
| see that happening. Illegal monetary transactions are a
| huge use case for Crypto, and i'm not naive enough to
| think crime will be a distant memory in 50 years.
|
| Now does that mean you should buy bitcoin cause your
| savings will 10, 100, 1000x? Not necessarily, it could be
| replaced, and also go sideways or down but I'd be
| surprised at this point if there's no crypto-economy in
| 50 years.
| olah_1 wrote:
| You can pretty much live off of bitcoin tbh. Or at least you
| can spend it in a lot of places.
|
| - https://www.bitrefill.com/
|
| - https://foldapp.com/
|
| - https://crypto.com/cards
| BugsJustFindMe wrote:
| > _You can pretty much live off of bitcoin tbh. Or at least
| you can spend it in a lot of places._
|
| > _-https://www.bitrefill.com/_
|
| Buying gift cards is the same as cashing out but worse in
| every way. Pre-converting to a limited-use intermediate
| currency and then spending that intermediate currency isn't
| the same as spending bitcoin.
|
| > _-https://crypto.com/cards_
|
| I notice that their "stake" requirements are listed in USD,
| not CRO, and that this runs through both Visa and
| Metropolitan Commercial Bank to do centralized back-end
| conversions into and out of their bespoke coin. It sounds a
| lot like the blockchain aspect adds literally nothing to
| the equation and is just there to ride the buzzword FOMO
| zeitgeist.
|
| > _-https://foldapp.com/_
|
| Same as ^ but with a different centralized backend bank and
| a different bespoke coin that adds literally nothing to the
| equation.
| simonh wrote:
| Only within certain extremely constrained limitations, but
| it's an insignificant use of the system overall.
| pl0x wrote:
| Crypto has always been about centralization. It's how the VCs
| make their x10000 return.
| cletus wrote:
| It's amazing to watch in real time Crypto Andys learn all the
| hard lessons that went into making the financial system they seem
| to despise.
|
| The common denominator in the examples in the article is that the
| crypto system at some point has to at some point interface with
| the Real World and that's where it all falls apart.
|
| There's an example of a woman whose bank won't process the
| transaction. Just because it's crypto doesn't mean you can escape
| KYC/AML laws.
|
| Another example was the person whose crypto was tainted by going
| through the same service used to launder ill-gotten gains, which
| even assumes their story is true (eg their Bitcoins may well have
| been ill-gotten).
|
| NFTs are the same. I could buy an artwork but something outside
| of that system is required to show it's "authentic". I mean I
| could save the same image to my hard drive (possibly modifying a
| pixel) and then create a new NFT and what's really to distinguish
| it from the original? If there is no original NFT, how will a
| potential buye revaluate the artist actually issued the token?
|
| I've yet to see an actual problem crypto solves other than
| avoiding laws. It's the biggest solution looking for a problem
| I've ever seen.
| ReactiveJelly wrote:
| You don't even have to change one pixel. NFTs don't enforce
| uniqueness or copyright laws or anything.
|
| You can 'mint' the same image or hash or URL as new NFTs,
| forever.
|
| They're taking the old confidence scam of "This is the original
| copy of something that other people are gonna want! (with no
| intrinsic value)" and tech-washing it to claim that the
| blockchain enforces originality. It doesn't, it's still all up
| to humans to say "This is the oldest copy of all the copies."
|
| People keep saying "But it might be good for concert tickets!"
| I'm sick of hearing that. Don't carry water for a scam based on
| some what-aboutism that hasn't even been implemented. Concert
| tickets are working fine and TicketMaster would be dead if
| someone didn't like the way they did things. The venue still
| has to honor the ticket, so NFTs are still a middle-man, just
| dumber.
| vmception wrote:
| Basically people need to launder their legitimately
| earned/acquired crypto just so financial institutions don't flag
| it.
| capableweb wrote:
| Not sure how you understanding "laundering" but legitimately
| earned cryptocurrencies does not need laundering in any sense,
| just a explanation about where it comes from, like when you
| receive any other large amount of money to your bank account.
| This has happened to me (the bank approached me asking where it
| comes from) both when "selling" large amount of startup
| stocks/options and when receiving money from selling
| legitimately earned cryptocurrencies on a exchange (the
| cryptocurrency exchange approached me asking where it comes
| from).
| vmception wrote:
| This article is about the explanation being sufficient but
| the bank deciding the prior owner had illegitimate earnings
| due to the prior use of a mixer so flagged it anyway.
|
| So the way around that would be to further obfuscate and
| layer.
| WJW wrote:
| Do you think the exchanges will throw up their hands and go
| "oh well tricked us you clever bastard, you go free now"? I
| think it is much more likely that, if they can't determine
| the origin of coins because it has been obfuscated so much,
| they will just block it just to be sure. Making crypto an
| unacceptable KYC/AML risk will not convince the banks to
| allow it anyway; that's just not how banks work.
| vmception wrote:
| I do think that, yes, I know what technology they use to
| assign thresholds to transactions for flagging or
| freedom.
| WJW wrote:
| I agree that at the moment it's probably not all that
| sophisticated, but with the incredible trackability of
| most crypto I don't hold much hope that there won't be
| mandatory blacklisting of "dirty" coins. I could easily
| see a couple of SAAS providers providing "AML compliance
| as a service" for various blockchains.
| nootropicat wrote:
| It's getting increasingly easier to buy assets like real estate
| with stablecoins.
|
| Barring further regulations I think the peak financial repression
| era has already passed. The worst time was probably 2018 - local
| peak in crypto interest bringing in heat, but no dexes with any
| liquidity. Since then it's only getting better - now anyone can
| hold millions of dollars anonymously and transfer them to anyone
| in the world, dexes are so liquid there are no reasons to use
| spot cexes except to cash out, several debit card solutions that
| can be loaded with crypto and stablecoins. Laundering money from
| crypto is the easiest it was since probably 2013 when no one
| cared at all - manufacture fake profits on tokens/nft held in
| clean wallets.
|
| Without new laws, the situation is only getting better. Exchanges
| already demand very heavy kyc/aml, so the only thing that would
| reverse the trend would be making anonymous defi a crime for the
| users. I think it's unlikely at this point.
| ta-crypto wrote:
| ojr wrote:
| Bitcoin has found product market fit with the correct privacy
| needed for regulators to be happy with it. A few examples of
| bitcoin privacy shortcomings, doesn't mean the system isn't
| wildly successful. One of the best electric car company in the
| world, Tesla, holds $2 billion worth of bitcoin today. A lot of
| bitcoin is bad and centralized and whatever narratives are
| missing the big picture.
| VHRanger wrote:
| "regulators to be happy with it"
|
| What world do you live in?
|
| All regulators are increasing regulation and oversight on
| crypto, whether it's the western world, China or Russia.
|
| The only ones happy with it seem to be El Salvador and some
| crypto lobbyists
| ClumsyPilot wrote:
| "One of the best electric car company in the world, Tesla,
| holds $2 billion worth of bitcoin today."
|
| I don't think that's what bitcoin is for, it's a bit like
| saying a speaker is great because is makes a great footrest
| fastball wrote:
| What is Bitcoin for then?
| kibwen wrote:
| Gambling. Unless you're rich, in which case you have
| license to use the word "speculation".
| nikanj wrote:
| And crime. Don't forget crime
| fastball wrote:
| That wouldn't really seem to jive with GC's point then,
| as Tesla also seems to be using Bitcoin for gambling.
| JonathanBeuys wrote:
| No word about the lightning network?
|
| The receiver of a LN transaction does not know anything about the
| sent coins.
|
| Are any exchanges accepting payments via the LN? I so, the issue
| is solved, no?
| lawn wrote:
| The privacy of LN is constantly overstated.
| colesantiago wrote:
| Lightning network is not Bitcoin and not decentralised.
| jazzyjackson wrote:
| I would say a lightning channel is centralized, but seeing
| that there are many channels, surely the network is not.
|
| And the magic internet points are bitcoin-equivelants,
| settled in bitcoin, seems pretty bitcoiny to me.
| kevinak wrote:
| A bunch of them are and more are working on it. Here are some
| non custodial crypto to crypto ones:
| https://wiki.ion.radar.tech/tutorials/lightning-exchanges
|
| And here are some traditional ones:
| https://github.com/theDavidCoen/LightningExchanges
| zionic wrote:
| This is a valid criticism and part of why privacy-by-default MUST
| become the new norm for major cryptos if they're going to thrive.
|
| A lot of people don't understand that when you deposit to say,
| Coinbase, they are looking at the COMPLETE history of your wallet
| back to genesis. If there's anything they don't like your funds
| are toast.
| axiosgunnar wrote:
| What does being toast mean? Do they confiscate your deposit and
| give nothing in return?
| hamiltonians wrote:
| they can close your account and limit to only withdrawls
| ajross wrote:
| Just to be clear, though: this means that you view the evasion
| of existing AML statutes as a precondition for crypto
| "thriving". It's the same problem. Coinbase isn't doing this to
| be evil or centralized or controlling, they're literally just
| following the law.
|
| Now, I'm sure there's a place for a reasoned discussion about
| the breadth of laundering regulation and how it might be
| improved. But your position seems to be an absolutist one (that
| AML simply can't be allowed in crypto), and it's not clear to
| me if you realize that.
| javert wrote:
| > Coinbase isn't doing this to be evil or centralized or
| controlling, they're literally just following the law.
|
| Nah, they're definitely in the business of regulatory
| capture. But they have to be. If they don't capture the
| regulators, someone else will.
| hamiltonians wrote:
| wouldn,t this lead to lots of false positives
| rdbell wrote:
| It can lead to false positives. Only the government is
| allowed to sell tainted coins. Very convenient rule for law
| enforcement agencies.
| odonnellryan wrote:
| You can't have it both ways. If you want an exchange where you
| can buy crypto with USD these exchanges need to protect
| themselves from fraud.
| gitfan86 wrote:
| This is the problem with crypto. People want all of the
| positives of removing centralization AND they want the
| positives of centralizing those same things.
|
| They want "Distributed Code is Law" AND "Openseas validates
| NFTs"
| jacoblambda wrote:
| You can kind of have both but it's an outright hard
| problem.
|
| If you have a functional governance system, you can
| implement some form of vetocratic de-listing mechanism. It
| doesn't have to stop the de-listed item from trading but it
| is a mechanism for a community to collectively decide what
| is and what isn't a scam/forgery/theft/etc. This same
| system generalises to a central source of trust for a given
| network, service, or protocol where the control is
| decentralised.
|
| Now this falls back to the first condition which is to have
| a functional governance system. Any failure in the
| governance system is now a failure in your system for
| deriving trust.
|
| Can it be done? Yes. Has it been done properly yet or even
| really been done at all? No not really.
|
| This isn't to say that it's impossible but we aren't there
| yet by any stretch of the imagination.
| ajross wrote:
| One thing not noted here, and that I'd love to see some numerate
| analysis on, is the fact that the KYC requirements among the
| major exchanges have effectively bifurcated crypto assets. There
| is "clean" BTC and "dirty" BTC now. One is clearly worth more
| than another by dint of its greater flexibility (i.e. if you're
| offered 3 clean ETH or whatever for your Pondering Lemur NFT, or
| 5 dirty ETH that you can't convert via Coinbase, which offer do
| you pick? It seems to me that many people might prefer the
| former).
|
| Yet... no one anywhere is trying to track that price discrepancy?
| This seems like it would be an important bit of data!
| danuker wrote:
| > no one anywhere is trying to track that price discrepancy
|
| Let me just ask everyone what they got after laundering their
| dirty ETH. I am sure they will answer truthfully.
| ajross wrote:
| I didn't say it was easy. But a black market is still a
| market, and has prices. People talk with some level of
| precision about market prices for kalashnikovs and heroin,
| why not for "mixed BTC"? My surprise is that no one is
| talking about this.
| capeterson wrote:
| Unless I'm misunderstanding, IME the exchange rate always
| stays the same, there's just more built-in cost to account
| for things like trading for XMR and back out. This is
| generally how it goes for IRL cash as well. It's common for
| things to be cheaper in XMR as well, given that part of the
| equation has already been accounted for.
| DennisP wrote:
| It's a little trickier with Ethereum's account model. On
| Bitcoin each address has a list of inputs (and outputs, if
| spent), but on Ethereum it's just accounts with balances. If
| ETH goes into a contract that holds funds from a lot of
| sources, then the ETH that comes back out is just from that
| contract. If you wanted to assign it some particular previous
| source you'd need to come up with some arbitrary method like
| FIFO or LIFO.
| ajross wrote:
| The only thing that changes there are the nouns, though. A
| "contract" is just an owner, and there are clean contracts
| (KYC exchanges) and dirty contracts (mixers, anonymous
| gateways, KidnappingRansomDAO, whatever). You can track your
| eth back to clean (meaning KYC compliant) sources or you
| can't.
| 0xbadcafebee wrote:
| It sounds like buying cryptocurrency might be risky.
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