[HN Gopher] Former US SEC attorney: 'Get out of crypto platforms...
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Former US SEC attorney: 'Get out of crypto platforms now'
Author : legrande
Score : 198 points
Date : 2023-06-20 18:27 UTC (4 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| simmerup wrote:
| Good advice regardless. Every month we get more evidence that
| exchanges don't adequately protect their users interests.
| wolverine876 wrote:
| Did you need more evidence? It seemed clear from the start -
| these were not trustworthy businesses.
| pwndByDeath wrote:
| I'm waiting for Putin to put a BTC price for oil.
|
| BTC isn't optimal for small transactions, but it is useful for
| exchange among peers who have no trust in a 3rd party to fairly
| regulate trade (e.g. Sanctions)
|
| If two nations bypassed banks with a system like BTC, then we
| would see what the point of BTC is.
| eterm wrote:
| Finbold is not a reliable news source / site.
|
| Even r/cryptocurrency flags finbold as unreliable.
| capableweb wrote:
| Even? Like biased subreddits are the bastion of what's reliable
| or not
| eterm wrote:
| It's a news source which only posts (pro-) crypto news yet
| gets automatically flagged in the one place it should thrive
| because it is so unreliable.
|
| A moot point because the URL has been changed regardless.
| tedivm wrote:
| In this case they're pretty much just quoting the dude, with
| links back to his tweets.
| dang wrote:
| We've changed the URL to the original source, as the HN
| guidelines request. More at
| https://news.ycombinator.com/item?id=36408638
| waboremo wrote:
| Finbold's reliability doesn't matter much here since this is
| just a shell article about a tweet
| https://twitter.com/johnreedstark/status/1666780985189433347
| ramesh31 wrote:
| Turns out the answer to "How is this not a regulated security?"
| is "It is."
| officialchicken wrote:
| Turns out that he isn't attacking the mechanics or underlying
| offerings (security vs commodity) as you seem to imply.
|
| He does not like the lack of regulation around the
| (decentralized, unregulated) distribution and prefers the
| broker-dealers regulation and clearinghouse oversight.
| tlogan wrote:
| Why do you need crypto platforms? Isn't the whole point of crypto
| that you do need "platforms" to use it or store it?
| paxys wrote:
| If you don't hold your own keys privately and offline then you
| don't really own any crypto. At best you own a share in a dicey
| exchange that may go under at any time (due to regulation, fraud
| or whatever else).
| roarcher wrote:
| An exchange is basically a bank without the regulations and
| consumer protections of real banks. It also defeats the purpose
| of crypto. It's the worst of both worlds.
| charlieyu1 wrote:
| Still, exchanges exist because there is a large demand of
| customers converting between fiat and crypto, also probably
| reduce transcation fee and time to be low enough to allow
| trading derivative products. Not perfect but probably a
| necessary evil.
| paxys wrote:
| The demand for simply converting from fiat to crypto does
| exist, but is probably negligible compared to wanting to do
| the equivalent of investing or day trading.
| babypuncher wrote:
| And then they wonder why regular consumers aren't fleeing
| banks to start using crypto for everything.
|
| I've yet to see cryptocurrencies actually solve a problem
| that your everyday average person has when buying groceries
| or going out to eat.
|
| They just make things more difficult and confusing, and all
| these attempts to alleviate that just lead us straight to
| "banks, but worse".
| bulbosaur123 wrote:
| This is what most people got wrong. Crypto solves one
| problem and one problem only: censorship. Crypto is the
| only, single censorship resistant asset on the entire
| earth. You can't remove private key by force ($5 wrench is
| not an argument). You can confiscate land, stocks, freeze
| bank accounts, take gold. You can't extract a string of
| numbers which you aren't even sure is there in the first
| place. Not yet at least. Might not be the biggest threat in
| US, but in Asia right now that property is crucial.
| multjoy wrote:
| https://www.theguardian.com/technology/2021/jul/13/met-
| polic...
| misnome wrote:
| So, people have no problem - say - redeeming tokens that
| have been through Tornado? Or trouble redeeming bitcoins
| that have been through known, sanctioned wallets?
|
| How is "Everyone can see every transaction you have ever
| done" censorship-resistant, doesn't that mean you have to
| be extra careful about every single person or service you
| have ever transacted with?
|
| And, excluding the $5 wrench seems a really, really large
| oversight when it results in every single asset or piece
| of "money" you own being irretrievably, instantly stolen.
| bulbosaur123 wrote:
| > So, people have no problem - say - redeeming tokens
| that have been through Tornado? Or trouble redeeming
| bitcoins that have been through known, sanctioned
| wallets?
|
| Nothing prevents us agreeing to trade those bitcoins for
| cash or anything else.
|
| You are correct that some Bitcoins are "tainted", which
| is why it's not the absolute, most perfect
| cryptocurrency. But they are still censorship resistant.
| That was my point. They still can't be confiscated.
|
| And to further your argument, if you want to find the
| best crypto that is actually fungible - that would be
| Monero (all Moneros are the same, there are no "tainted"
| or "blacklisted" Moneros). However, because of that very
| fact it is banned on exchanges and blacklisted
| everywhere. It's just too good.
|
| Bitcoin is good enough to get popular yet at the same
| time shitty enough (traceable) not to get outright
| banned, that's why BTC is here to stay while better coins
| like Monero will perish.
|
| > How is "Everyone can see every transaction you have
| ever done" censorship-resistant, doesn't that mean you
| have to be extra careful about every single person or
| service you have ever transacted with?
|
| Just to reiterate. It's because not even the government
| can confiscate your Bitcoin (them beating you into
| telling your seed phrase means you still giving it up and
| let's not pretend there aren't 21st seeds and duress
| phrases just for this very reason).
|
| > And, excluding the $5 wrench seems a really, really
| large oversight when it results in every single asset or
| piece of "money" you own being irretrievably, instantly
| stolen.
|
| Again. Anyone with significant amount of crypto will not
| be public about it, will keep duress phrases, 21st seed
| words and extra wallets while giving up the minimum. In
| theory, with $5 wrench you could keep beating a totally
| innocent person hoping they give you a crypto wallet that
| doesn't even exist and if they gave you one, you could
| keep beating them until they give you the "other one" and
| the "third one", it just isn't a solid argument.
| adgjlsfhk1 wrote:
| > It's because not even the government can confiscate
| your Bitcoin.
|
| They can really easily do that though. A court can say
| "give us your keys or you are going to sit in jail until
| you do and we will record your conversations so if you
| tell the keys to someone else, we'll sell them"
| delecti wrote:
| That's the "$5 wrench" argument rephrased.
|
| It's not much in its favor, but a sufficiently motivated
| person can resist handing over cryptocurrency better than
| they can any other asset.
| ithinkso wrote:
| Or they can bury the gold and refuse to tell where...
| delecti wrote:
| But that gold isn't usable until retrieved.
| Cryptocurrency is (at least theoretically) just as usable
| while remaining unseizable.
| ysavir wrote:
| This exposes exactly why crypto is _not_ a solution: It's
| only a preferable alternative when the broader societal
| context is a strong net negative. In the current US,
| while financial censorship can happen, it doesn't happen
| often enough that the pains of using crypto as a primary
| currency are are outweighed by the benefits. And if the
| situation changes to a place where that's true, we've got
| some bigger problems. That is, in that situation, making
| an economy function smoothly isn't as important as
| removing the problematic censorship. Our GPUs could be
| put to much better work than bitcoin.
|
| This also doesn't account for a government being able to
| just outlaw cryptocurrencies. They may not be able to
| confiscate your bitcoin, but they sure can throw you in
| jail for trying to spend it at the grocery store. Or
| impact your ability to access the blockchain, etc.
| this_user wrote:
| > Crypto solves one problem and one problem only:
| censorship
|
| It doesn't even do that properly, because there is no
| guarantee of service given by the system. Miners could
| just decide that they don't like you very much and refuse
| to process your TX. Or they could conspire to blackmail
| you: "pay us or your tokens are useless". Sure, someone
| might be willing to process your TX, or you could try to
| do it yourself, but that might take a long time or it
| might fail altogether.
|
| Furthermore, as the Ethereum rollback has shown when the
| original "DAO" was hacked, the vast majority of crypto
| project have some sort of backdoor that can and will be
| used.
|
| The only thing crypto "solves" is oversight by
| governments, and the people who are interested in that
| the most are criminals or actors who have been sanctioned
| like North Korea or Russia. Somehow, I don't quite see
| the value in that.
| tromp wrote:
| > Miners could just decide that they don't like you very
| much and refuse to process your TX.
|
| Some miners perhaps. But others will like every tx that
| pays a decent transaction fee and these tend to
| eventually get your tx included.
| mrguyorama wrote:
| >The only thing crypto "solves" is oversight by
| governments
|
| Crypto only solves what it was designed to: A specific
| version of the byzantine generals problem. Turns out,
| nobody needed it solved.
| roarcher wrote:
| The volatility alone must be a dealbreaker for most people.
| Shockingly, the average consumer does not enjoy the
| rollercoaster thrill of having no idea how much buying
| power they'll have tomorrow.
| BasedAnon wrote:
| The increasing volatility of fiat is making this less of
| a problem.
| roarcher wrote:
| Maybe, but the world's major currencies have a long way
| to go before they're anywhere near Bitcoin levels of
| volatility. At the moment crypto is suitable for
| speculation and not much else. As a currency it's only
| superior in a couple of use cases, namely if a government
| has frozen your accounts or you're doing something
| illegal.
| BasedAnon wrote:
| I don't think it's a long way, maybe 10 years at most.
| fwungy wrote:
| There are $5T of foreign exchange transactions per day.
|
| Btc is already getting traction in the developing world as a
| reliable currency and that is likely to grow under de-
| dollarization.
|
| The entire crypto market is about $1T right now of which btc is
| about half.
|
| There is so much space for Btc to grow as an option for
| international settlement, it's already working and trusted as
| much or more than many sovereign currencies. As it becomes more
| trusted it will increase in price which will decrease its
| volatility.
|
| If Btc just takes a little slice of the FX market it's an easy
| 5-10x. I wouldn't bet everything on it, but it does seem rational
| to have a corner of your portfolio in it.
|
| The Feds and the bankers hate it because it's a direct threat to
| their business model. There's no room for a middle man to fugazi
| in btc.
| jayd16 wrote:
| Do you think crypto will remain dominant over a more
| traditional digital banking solution once established players
| recognize there's a market? If so, why?
| johngladtj wrote:
| The established players already know there's a market.
|
| The reasons they don't service it are regulatory, not
| technological, and so an unregulatable Option will eat their
| lunch.
| jbverschoor wrote:
| You obviously haven't dealt with banks in the eu lately.
| fwungy wrote:
| It doesn't need to be dominant. It's such a small sliver
| right now that it could go 10x and still not be anywhere near
| dominant.
|
| There are a lot of places where the government is not strong
| enough to maintain a reliable currency on its own. The USA
| was the global currency up till now because it was
| universally trusted, but that's changing. The people who have
| profited from the international dollar are maneuvering to
| keep their monopoly.
| themagician wrote:
| The crypto market was almost 3T two years ago. That's a 65%
| decline from ATH two year ago.
|
| And it has so much lower to go after Tether, Binance, and
| Coinbase collapse.
|
| Crypto eats itself. Bitcoin will never reach its true potential
| because _every_ centralized exchange is a scam.
| rossdavidh wrote:
| "The entire crypto market is about $1T right now of which btc
| is about half."
|
| How much of that do you think is Tether-related? If Tether were
| to, say, turn out to mostly own Chinese real estate bonds that
| are worthless (no idea if this is true, it's just one
| suggestion we've heard), and that portion of BTC volume which
| is related to Tether purchases goes away, how much impact do
| you think that would have on the price of BTC?
| fwungy wrote:
| Tether is a problem. It's one of the reasons I would not go
| all-in on btc, but it's not insurmountable. There are plenty
| of use cases that do not involve USDT.
| LexiMax wrote:
| > The Feds and the bankers hate it because it's a direct threat
| to their business model. There's no room for a middle man to
| fugazi in btc.
|
| Crypto has spawned their own classes of middle-men.
|
| At best, you have a changing of the guard - new boss, same as
| the old boss. At worst, you have traditional finance buying a
| stake in crypto and ending up in the exact dominant same spot
| they were before. And of course, all of these people have to do
| business on the terms of their host countries.
|
| Crypto does not herald a new set of rules, it merely aims to be
| a new mechanism by which value is transferred, which by most
| objective measures it's very bad at doing.
| everfree wrote:
| > At best, you have a changing of the guard - new boss, same
| as the old boss.
|
| At best you send some of it directly to someone else with no
| trusted middleman, which is impossible to do over the
| internet with any other kind of system.
|
| At worst you have a changing of the guard.
| fwungy wrote:
| Yes, but the blockchain can be publically audited, unlike the
| current regime.
| waynecochran wrote:
| With crypto trading platforms, the SEC lacks any sort of
| oversight and access -- and has scant ability to detect,
| investigate and deter fraudulent conduct. As a result, the crypto
| marketplace operates without much supervision
|
| Isn't that the main idea of a decentralized currency?
|
| No doubt this has/does/will harbor criminal activity, but it will
| also foster the ability to exchange goods and services without
| third parties. This has huge benefits when the third parties are
| rogue and overextend their surveillance. Freedom is what we
| should be after. This has a cost in terms of criminal activity --
| even to the extreme.
| paxys wrote:
| This entire conversation is about centralized exchanges.
| waynecochran wrote:
| Trying to force centralization onto something that was
| fundamentally designed to be decentralized.
| jrm4 wrote:
| EXACTLY.
|
| I think one of the oddest things is that I don't much see the
| following view, which is roughly mine:
|
| I'm generally pro the idea of crypto -- but more importantly,
| whether I love it or hate it, this particular fight was, or
| should have been, completely expected and anticipated. As in,
| this was the point of it; anyone into crypto should 100%
| welcome this battle, if you were paying attention to the idea?
| uLogMicheal wrote:
| I wonder if the SEC knows how to use a blockchain explorer?
| That claim is made false from a simple glance at one.
| alephnerd wrote:
| They do. The SEC pays competitively and there are a lot of
| crypto adept people who feel there is also a case for
| regulation in the space.
| uLogMicheal wrote:
| People need to justify the battle they are paid to fight so
| they find reasons to do so? I hope they realize at some
| point that they are playing for the wrong team. The
| increased surveillance they want means privileged access
| for few versus everyone needing to play under the same
| rules of transparency.
| misnome wrote:
| This seems to have circled back round to "It works as
| long as you trust everyone involved".
| myfirstacchere wrote:
| [dead]
| Hermitian909 wrote:
| Sure - and the question is - do we as a society want to allow
| that, do we think it's worth the tradeoffs? Five years ago I
| think the answer was still "wait and see", I think it's
| reasonable by now to say "actually, no, it's not worth it".
| alphanullmeric wrote:
| Allow what exactly? Consenting individuals to risk what they
| want to risk with each other?
| myfirstacchere wrote:
| [dead]
| mrguyorama wrote:
| Tainted economies have externalities. Did everyone just
| forget how the stock market crashed in the 1920s and fucked
| over LOTS of people who didn't touch it?
| waynecochran wrote:
| Not to argue, but it really strange how the things that my
| generation valued (e.g. individual freedom) are being
| overturned. The old axiom "Those who would give up essential
| Liberty, to purchase a little temporary Safety, deserve
| neither Liberty nor Safety." was a mantra in my younger days.
| jasonlotito wrote:
| Interestingly, the old axiom has a different meaning than
| what people think. It is a quotation that defends the
| authority of a legislature to govern in the interests of
| collective security [1].
|
| "He was writing about a tax dispute between the
| Pennsylvania General Assembly and the family of the Penns,
| the proprietary family of the Pennsylvania colony who ruled
| it from afar. And the legislature was trying to tax the
| Penn family lands to pay for frontier defense during the
| French and Indian War. And the Penn family kept instructing
| the governor to veto. Franklin felt that this was a great
| affront to the ability of the legislature to govern. And so
| he actually meant purchase a little temporary safety very
| literally. The Penn family was trying to give a lump sum of
| money in exchange for the General Assembly's acknowledging
| that it did not have the authority to tax it."[1]
|
| > it really strange how the things that my generation
| valued (e.g. individual freedom) are being overturned
|
| It's interesting for me as well. In the US, when I was
| younger, I always perceived "individual freedom" as a
| fundamental element of the right. It's only now as I get
| older that I see that's not really the case (at least, not
| anymore). That it seems as if the left has taken on that
| role of championing individual rights over that of the
| state.
|
| I think in the context of crypto, I think it's a fine
| balance of freedom versus regulation, which is why it's
| taken so long to get anywhere with it.
|
| Honestly, I think a large part of the reason it hasn't
| really been touched much is the feds ability to crack down
| on criminals despite using crypto. The belief that it's
| anonymous and untraceable makes it seem like at some level,
| it's easier to track people down. And in a circle of
| criminals, you only need to break the weakest link.
|
| 1. https://www.npr.org/2015/03/02/390245038/ben-franklins-
| famou...
| knodi123 wrote:
| and yet we gave up the liberty to allow citizens to own
| rocket launchers. we gave up the liberty to allow people to
| say "buy my elixir, it cures cancer".
|
| The proper answer is not "absolute unrestrained freedom",
| nor is it "absolute safety at all costs". We have to find a
| balance between the two- one that lets people live their
| lives in the way that they choose, but protects them from
| predators (or just grossly irresponsible actors).
|
| Just because the needle is moving, does not mean it's a
| corruption of some magical ideal. It's just a sign of
| shifting consensus.
| dang wrote:
| Url changed from https://finbold.com/former-us-sec-attorney-get-
| out-of-crypto..., which points to this.
|
| Submitters: " _Please submit the original source. If a post
| reports on something found on another site, submit the latter._ "
| - https://news.ycombinator.com/newsguidelines.html
| cinntaile wrote:
| This is irrelevant for the thread at hand but I submitted
| something recently from the original source. The problem was
| that it's a banned domain on HN.
| yazaddaruvala wrote:
| I'm not pro crypto exchanges, but does the SEC really live up to
| this guy's promises?
|
| > SEC registration establishes critical requirements that protect
| investors from individual risk and protect capital markets from
| global systemic risk. The requirements also make U.S. markets
| among the safest, most robust, most vibrant and most desirable
| marketplaces in the world.
|
| Does he mean the requirements that continue to allow dark
| pools[0]?
|
| or the ones that allow arbitrage (theft?) through low-latency
| order flow[1], prior to high-latency trade execution?
|
| [0] https://en.wikipedia.org/wiki/Dark_pool
|
| [1] https://en.wikipedia.org/wiki/Payment_for_order_flow
| rossdavidh wrote:
| One of the most valuable things that has come out of the
| cryptocurrency industry, is a better understanding of just how
| much worse our fiat currency regulatory environment could be.
| It's, by all means, not all that we might wish for. It's way
| better than crypto.
| Eisenstein wrote:
| > The requirements also make U.S. markets among the safest,
| most robust, most vibrant and most desirable marketplaces in
| the world.
|
| ...
|
| > Does he mean the requirements that continue to allow dark
| pools[0]?
|
| > or the ones that allow arbitrage (theft?) through low-latency
| order flow[1], prior to high-latency trade execution?
|
| Which markets don't have those?
| jfghi wrote:
| To me this reads as an off topic whataboutism. Perhaps [0] and
| [1] deserve their own articles, but neither detract from the
| overall point of what the tweet is saying and provide any
| demonstration as to why crypto platforms should continue
| breaking the law.
| erredois wrote:
| Don't forget about SPACs that are no better than a lot of
| shitcoins.
| rurp wrote:
| I wouldn't say that this is a counterpoint to the SEC side.
| The SEC dislikes SPACs almost as much as crypto and has
| (slowly) been taking steps to limit them.
| BasedAnon wrote:
| that's cool and all but look man i'm just not selling idk how
| else to tell you man it's just i'm not selling hahahaha
| paul_grisham wrote:
| Glowies SEETHING
| softbt wrote:
| The comments are so funny, made my day
| uLogMicheal wrote:
| John Reed Stark is their expert?
| https://twitter.com/JohnReedStark/status/1670457201943511040
|
| "The only killer app for crypto that seems tangible is its
| excellent use to orchestrate global crimes."
|
| The bias is abundant, it's well known this guy hates crypto.
| wolverine876 wrote:
| Negative comments don't indicate bias. There are many
| alternative explanations. If I say 'Charles Manson murdered
| several people', that doesn't indicate bias. If I say it's
| raining, that's not bias against the weather.
| uLogMicheal wrote:
| Hopefully you can see the absolutist nature of his comment
| and come to the realization that crime is a universal aspect
| of money, so of course any form of money would be a
| facilitator of it.
| wolverine876 wrote:
| > crime is a universal aspect of money, so of course any
| form of money would be a facilitator of it.
|
| That's irrelevant. The question is whether crypto in
| particular facilitates crime, and it does. All airplanes
| facilitate passenger death, but some are far more dangerous
| than others. If I'm considering boarding a plane, don't
| tell me 'well, any plane might crash' - I don't care, I
| care about this plane, this pilot, etc.
| evandale wrote:
| Cash has been used for facilitating crime since currency
| was invented and it will always be far easier to commit
| crimes with cash than with anything else and that will
| never change until humans find a better way to fund
| crime.
|
| Bitcoin may be an attempt to make funding crime easier
| but it hasn't been very successful. USD is still king for
| funding any criminal endeavors.
| uLogMicheal wrote:
| Here's a data driven view:
| https://blog.chainalysis.com/reports/2023-crypto-crime-
| repor...
|
| also many linked sources here:
| https://www.cato.org/blog/overstating-crypto-crime-wont-
| lead...
|
| crypto = crime narrative is provably false but how many
| search or care for the truth?
| lispisok wrote:
| Crypto has been around over a decade now and transactions for
| illegal goods and services is the only use for it that ever got
| traction.
| yourabstraction wrote:
| The killer app is financial freedom. If people chose to use
| that to commit crimes then that only proves they are criminals.
| Any sufficiently powerful tool can be used for good or evil.
| jacobwilliamroy wrote:
| Other than crime the only other use-case I've seen for crypto
| is for getting money into Russia because the sanctions mean my
| English teacher friend in Vladivostok can't use normal banks to
| accept payments for the online distance teaching thing he does.
| But I could oversimplify this to "bypassing international
| sanctions" which might be a crime? Crypto mainly seems to be
| useful to people who can't or won't use normal banks, and those
| people are mostly criminals. People in Russia prefer bitcoin
| over rubles (even before the sanctions) but that's more an
| indictment of the ruble than an endorsement of bitcoin.
|
| What am I missing here? What are the cool things bitcoin does
| that something like visa cannot? I've read Satoshi's paper and
| Vitalik Buterin's book. I want crypto to work, and I'm really
| searching hard for a problem crypto solves for which we don't
| already have a better solution.
| BasedAnon wrote:
| >Other than crime the only other use-case I've seen for
| crypto is for getting money into Russia
|
| Violating sanctions is a crime. Given the trend we've seen
| people should start getting used to being considered
| criminals.
|
| >What am I missing here? What are the cool things bitcoin
| does that something like visa cannot?
|
| It's easier to send Bitcoin to people without doxing myself
| than a visa transfer.
| jacobwilliamroy wrote:
| I've heard that crypto transactions can be more secure but
| I've also heard that securing information on the blockchain
| is basically impossible because it is a publicly available
| ledger. How does bitcoin opsec work exactly?
| multjoy wrote:
| It's anonymous, not private.
| BasedAnon wrote:
| You just send it through a mixer beforehand. Also
| securing information is possible on the blockchain,
| Monero does it.
| fivre wrote:
| opinions on the merits aren't necessarily important in
| assessing the behavior of a regulatory agency
|
| crypto can hypothetically be every bit a brilliant new wheel
| paradigm as the marketers would suggest (it isn't, but
| whatever) and that won't stop entities with legal authority to
| eviscerate all current corporate entities associated with it
| from doing so (they are).
|
| ya'll wanna believe that binance and coinbase can fight the
| massive legal assault on their business practices and come out
| on top simply by virtue of the nobility of the crypto ideal, go
| right ahead
| _jab wrote:
| I mean, is he wrong? Genuinely the only other application I've
| seen which seems plausible is for use in places like Venezuela
| where the official currency is worthless.
| wongarsu wrote:
| Well, you just said that's he's wrong. One "killer
| application" is that it's a "stable" store of value. Not
| perfectly stable, it can quickly fall by a factor of about 2,
| and if you buy in the worst bubble it might fall to a fourth
| of its value. That's decidedly less stable than Western
| currencies, but it's more stable than some others. And for
| many people Bitcoin is more accessible than the foreign
| exchange market. It also tends to rise in value over
| sufficiently long time scales.
|
| The other use is providing online payments to people who
| aren't in the banking system. The banking system requires
| trust, and shuts untrustworthy people out - both at the level
| of individuals and entire regions. Bitcoin eliminates the
| need for trust (on the monetary layer) and can thus reach
| more people.
|
| Both are great applications. They are largely irrelevant in
| the West because only a tiny fraction of us experience those
| problems, but that doesn't mean they don't exist elsewhere.
| misnome wrote:
| So, it's stable as long as you understand it is unstable,
| and helps people without access to banking but with a
| stable, constant internet connection and perfect
| operational security, access none of the benefits of having
| a bank account.
|
| Oh, and it's actually neither of those but if you wish
| _reaaaaly_ hard and ignore all the practical problems, it
| might be, someday.
| wongarsu wrote:
| In absolute terms it's not stable, in relative terms it
| can be. If you gave me the choice between storing my
| money in Bitcoin or Turkish Lira I would choose Bitcoin
| every time. If I have the option to use USD instead the
| answer is different.
|
| > helps people without access to banking but with a
| stable, constant internet connection and perfect
| operational security
|
| You don't need constant internet connection unless you
| are mining or want to verify a payment right now. And
| mobile internet and smartphones are surprisingly
| prevalent in the third world (and among homeless in the
| first world).
| Eisenstein wrote:
| So, you need a worker and I offer to day labor for you.
| At the end of the day, how do I get paid in bitcoin?
| yourabstraction wrote:
| But it's still a store of value. No store of value is
| perfect, USD will lose value over time to inflation,
| stock indices are subject to volatility, gold is subject
| to theft and volatility, other foreign currencies are
| subject to government corruption and hyper inflation,
| fine art is subject to fraud and damage, etc.
|
| So as a store of value Bitcoin actually has a good track
| record and is trending towards lower volatility as
| adoption grows.
|
| People really need to stop thinking in absolute terms
| regarding value storage. It's analogous to energy
| storage. Batteries leak energy over time, but we don't
| sit around yelling about how they are not stores of
| energy.
| jrm4 wrote:
| You're overdramatizing.
|
| Maybe not a lot, but people literally do use it for this
| purpose everyday. You can't just wave that away, given
| that it is working to some extent now.
| uLogMicheal wrote:
| Yep, the only use cases for decentralized, programmable
| monetary systems are criminal. /s
| 2OEH8eoCRo0 wrote:
| He didn't say that, he said it's the _killer app_. It 's
| the only value add over traditional finance.
| thatguy0900 wrote:
| Well you don't seem to have any other examples of things
| that can't be done with fiat
| mr_woozy wrote:
| [dead]
| uLogMicheal wrote:
| You comment this as many major central banks are
| conducting trial / rollout plans for CBDC. I prefer the
| decentralized side of cryptocurrency where the rules,
| censorship, and supply is transparent and limited.
| FormerBandmate wrote:
| Banks work fine now for payments. The only real advantage
| of crypto over CBDC is that you can more easily sell
| drugs and guns. No one is losing their bank account for
| donating to Donald Trump
| uLogMicheal wrote:
| https://www.npr.org/2023/06/12/1181675580/epstein-jane-
| doe-1...
|
| This was done in USD. Maybe crime wouldn't be whitelist
| only on a transparent blockchain and that is what is
| feared? Money is the root of most activity in this world,
| criminal or good. Transparent transactions bring all
| crime into the spotlight and for some that is
| problematic.
| bruce511 wrote:
| You are not alone. There are lots of folk who have your
| opinion. You are of course free to have it.
|
| That doesn't change the fact that the only killer app is
| criminal activity. Of course you -can- do non-criminal
| things with it, but frankly as a currency it's terrible.
| It's way too volatile, and transactions are both too
| expensive and too slow.
|
| I get the goals - decentralisation, limited money supply
| (which in theory is supposed to limit inflation, but
| doesn't) and so on. Unfortunately the volatility dwarfs
| any inflation hedging etc. It's also super-risky right
| now, so I recommend holding your own coins. Not your keys
| not your money.
|
| Sure it's different. Sure it's idealistic. But it's also,
| well, a terrible currency.
|
| Which means mostly it serves as a nice way to do criminal
| transactions.
| surgical_fire wrote:
| This, but without the "/s"
| xwdv wrote:
| Technically, since the Venezuelan government doesn't want
| people laundering money with crypto, most people there are
| likely committing crimes and tax evasion with it.
| uLogMicheal wrote:
| Or trying to escape inflation/corruption? Please look
| into how the government there has brutally mismanaged
| their currency. People are suffering there because of
| monetary policy, empathy is a good practice.
| api wrote:
| He's not entirely correct. Crime is a major application but
| by far the largest use case for crypto is "investing"
| (gambling) in crypto.
| vaxintar wrote:
| For some people crypto is the only way to keep their wealth
| away from the hands of faulty and corrupt governments.
| tyre wrote:
| Given that almost all of that is violates securities laws,
| this still fits.
| Semaphor wrote:
| I don't know, I'm relatively certain securities laws do
| not affect me.
| uLogMicheal wrote:
| US securities law effects all US citizens. In current
| state, they act as a moat for the most profitable
| investments in society. People claim that securities laws
| are there to prevent grandmas from getting scammed, but
| grandmas (and many others) still get scammed on the
| daily. I would rather them lose $5,000 from investing
| into a high profit potential startup that could 1000x,
| instead of a call center in a distant country. US
| securities laws are geared to give the privileged private
| knowledge and prevent the poor from getting wealthy in
| their current state.
| dismalpedigree wrote:
| Like being famous for being famous!
| uLogMicheal wrote:
| The number one facilitator of crime/gambling is USD, might
| want to check your facts.
| misnome wrote:
| On the topic of checking facts, is gambling/crime the
| number one use of USD, which is the equivalent statement?
| vore wrote:
| You are intentionally reversing the direction of the
| claim to be disingenuous here. By your logic, the number
| one facilitator of crime/gambling is also breathing air
| and drinking water, might want to check your facts.
| HDThoreaun wrote:
| non-sequitor. The question is what bitcoins use is, not
| how crimes are most often facilitated.
| bluescrn wrote:
| Other uses include local crimes and national crimes. They
| don't have to be global...
|
| Oh, and gambling/speculating of course.
| FormerBandmate wrote:
| There's nothing wrong with gambling, and it could
| eventually become a currency that could replace the dollar.
| It won't, but it could
| favorited wrote:
| When I put a dollar in a vending machine, I don't want to
| wait an hour for the soda to come out the bottom.
| Hermitian909 wrote:
| Do we expect experts to not have informed opinions? You may
| _disagree_ with his conclusions but I believe we want expert
| witnesses to tell us what they think. As a former crypto-
| optimist I think this is a totally reasonable conclusion to
| make about crypto given a _decade_ of evidence.
| meepmorp wrote:
| > The bias is abundant, it's well known this guy hates crypto.
|
| Does that make him wrong? Or somehow not a reliable commentator
| on the thinking at the SEC (which is what the actual article is
| about), given his having worked there? Bias could be an issue
| if he were speaking about crypto per se, but this is about the
| SEC.
| mr_woozy wrote:
| [dead]
| [deleted]
| p_j_w wrote:
| Should we only listen to people who love Crypto?
| nipponese wrote:
| The question is not, "Does this guy hate/understand crypto?"
|
| The question is, "Is this guy right about centralized platform
| regulation causing industry-wide collapse?"
| voz_ wrote:
| This isn't bias, its truth. Sometimes, when one is entrenched,
| it is difficult to see the difference.
| zhvihti wrote:
| It's strange to me how people keep comparing cryptocurrencies to
| equity, but don't compare them to their closest counterpart -
| fiat currencies.
|
| Are fiat currencies treated like securities? No. Are there "best
| execution requirements" when I exchange my USD for EUR. No. Did
| somebody have to register the Brazilian Real with the SEC for it
| to be exchangeable in the US? No.
| vladd wrote:
| People cannot create fiat currencies out of thin air. When done
| it's a crime (currency forgery).
| carlosjobim wrote:
| It's a crime if you or I do it. It's a blessing of
| quantitative easing when the rulers - our lords and saviors -
| do it.
| pixl97 wrote:
| Yea, turns out the rule of law works rather well, and when
| it doesn't work well nothing is going to stop the henchmen
| from beating you to death with a hammer anyway. What makes
| a government a government is their monopoly on violence,
| what makes a good government good is only having to
| minimally exercise their monopoly.
| carlosjobim wrote:
| Yes, it works well for transferring enormous amounts of
| wealth into a few hands. As seen ever since the
| introduction of fiat money, for thousands of years of
| history.
| wolverine876 wrote:
| The essential point is that they are not ruler or lords or
| saviors. We hired them to work for us, and democracies turn
| out to work better than any other form of government in
| history (and it's not close).
|
| We are the rulers, lords, and the only hope for our own
| salvation. You'd better get to work.
| carlosjobim wrote:
| I didn't hire or vote for any central banker, and neither
| did you. We were born into the fiat system, the rules
| already written and specifically made to exploit us.
|
| And I completely agree with your second paragraph.
| misnome wrote:
| Vs the very poor peasants of the people who run the mining
| companies or control the software? Haven't you just swapped
| one set of sovereigns for another?
| carlosjobim wrote:
| Except that anybody can mine, just like anybody could
| mine gold or trap squirrels. To make fiat currency
| emissions you need to be born into the right family.
| Marsymars wrote:
| That doesn't sound right. e.g.
| https://en.wikipedia.org/wiki/Canadian_Tire_money
| alephnerd wrote:
| Have you ever been to a Canadian Tires?
|
| CTM is used the same way you'd use Airline Miles or Credit
| Card Points.
| Marsymars wrote:
| Yes, I'm familiar with how it's used. And its usage seems
| pretty clearly at odds with "People cannot create fiat
| currencies out of thin air without it being a crime". (I
| could have used any number of other examples - WoW gold,
| Disney Dollars, etc.)
| mrkeen wrote:
| That's precisely what fiat currencies are. Currencies which
| can be created out of thin air. That's what 'fiat' means -
| "Let there be".
|
| Fiat currencies are 'fiat' in stark comparison to wealth
| which can't be created out of thin air, e.g. gold or
| cryptographically-protected numbers.
| alephnerd wrote:
| Fiat currencies are backed by the issuing government, who in
| turn follows globally agreed upon regulations.
|
| This is why a cryptoCURRENCY is treated as a security.
| 0x457 wrote:
| That's not exactly true, though. Only coins that are backed
| by something are treated as securities: ICOs, stablecoins and
| similar. ETH for example is not a security by any definition
| used in the US. This is why bitcoin specifically not included
| in those lawsuits.
| adventured wrote:
| You invented and answered your own false premise. You set it up
| by proclaiming fiat the closest counterpart, and then
| proclaimed that fiat isn't treated like a security. You're the
| one saying it's closest to fiat, not the regulators. The
| regulators consider it to be more like an asset class and not
| fiat money like USD. They have been very clear about that.
|
| > Did somebody have to register the Brazilian Real with the SEC
| for it to be exchangeable in the US? No.
|
| There is in fact a considerable regulatory system in place as
| it pertains to exchanging currency, currency laws, and so on.
| zhvihti wrote:
| My premise is that I don't agree with the regulator :) Of
| course a regulator is there to regulate so their incentive is
| to find things to regulate.
|
| > The regulators consider it to be more like an asset class
|
| Being an asset is also applicable in my opinion. But assets
| and securities are not the same, and this is what's changing
| - regulators switching the categorization from assets (which
| was implicitly and somewhat explicitly the state until now)
| to securities.
| mtlmtlmtlmtl wrote:
| So your premise is the thing you're arguing for? That's a
| circular argument.
| burnished wrote:
| Woof, lots of emotional and nigh incoherent responses to a pretty
| thoughtful little statement.
|
| Doesn't inspire confidence when the average response seems to
| boil down to a form of religious fervor.
|
| Which is too bad, seems like it would have been the perfect place
| for a thorough rebuttal.
| EA-3167 wrote:
| I think there's a lot of sunk cost in those comments, along
| with a lot of frustrated ideology. For people who thought they
| had finally gotten a way to bring their ideology into the real
| world, or imagined all sorts of riches, the state of crypto and
| the burgeoning regulatory environment may be too much to
| emotionally process and accept.
|
| As for why there isn't much in the way of thorough rebuttals, I
| suspect anyone trying to formulate one would pretty rapidly run
| into the wall of reality not agreeing with their existing
| stance.
| Joeboy wrote:
| "Get out of crypto trading platforms" is entirely aligned
| with the "idealogical" crypto people, isn't it? "Not your
| keys, not your coins" and that.
| ethanbond wrote:
| Maybe the _truly_ ideological (an-cap types), sure, but
| many of the "most ideological" are just religiously greedy
| and want the best of all worlds.
|
| Regulated exchanges and coins in cold storage you can't do
| much with is the worst of both worlds for those people.
| apercu wrote:
| One side says "Bitcoin good!"
|
| I assume they all still hold bitcoin or dream of doing so.
|
| One side says "Bitcoin bad!"
|
| I assume they don't hold bitcoin.
|
| I think the idea is sexy, and it definitely harkens back to the
| earlier hacker/counterculture days of the interwebs.
|
| But I guess I will just sit on the sidelines. I don't even
| lament selling bitcoin at $300 any more. :)
| skyyler wrote:
| I sold a bunch of BTC for $1 and bought a car with it. I used
| to regret that, the most expensive Ford Escort ever
| purchased.
|
| But now I feel like I dodged a bullet, I could have been one
| of those zealots that spent all day every day thinking about
| crypto, and I'm very glad I'm not.
| quotz wrote:
| Zealot or not, it sucks to miss out on having a few dozen
| millions. My cofounder also sold very early and he refrains
| from talking about it
| pixelpoet wrote:
| Here's a decent rebuttal from Bloomberg:
| https://news.ycombinator.com/item?id=36411751
| Animats wrote:
| The Twitter replies are worse.
|
| The original poster makes the key point - the institutions
| running crypto are unregulated and are doing unverifiable
| things with customer assets and trades. That rarely ends well.
| Most of the scams are classic ones. Most of them are in this
| book from 1841.[1] They've been done before, for other kinds of
| investments. If you know about John Law's bank, and the
| Mississippi Bubble, and the South Seas bubble, and tulipomania,
| and the original Charles Ponzi, you'll recognize all those
| scams in the crypto industry.
|
| They come back whenever regulation is weak.
|
| - FTX was a bucket shop - a broker not really doing trades,
| just stealing the customer money.
|
| - NFTs were tulipomania - hype and enthusiasm with no value
| behind the asset.
|
| - Axie Infinity was a Ponzi scheme - early adopters paid off
| with deposits of later adopters, until the supply of suckers
| ran out.
|
| If you know the list of standard financial scams, you can
| easily slot most crypto schemes into a standard category.
|
| [1]
| https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
| [deleted]
| cs702 wrote:
| Three highly speculative predictions:
|
| 1. The courts are more likely than not to rule that many crypto-
| assets -- but not all -- should be regulated as investments. It
| won't be fun for a lot of crypto traders.
|
| 2. Over time, the usual giant financial institutions are bound to
| become the dominant market makers in crypto-assets. In all
| likelihood, one of them will end up buying Coinbase. Those giant
| financial institutions already know how to comply with regulatory
| bureaucracies worldwide, efficiently, at scale. Rinky-dink
| exchanges lacking the machinery for large-scale efficient
| compliance will not be able to compete and go out of business.
|
| 3. Bitcoin, which the SEC considers a commodity (it's explicitly
| excluded from the lawsuits), is bound to become even more
| dominant in terms of market capitalization. The longer Bitcoin
| survives, the more it will get adopted and integrated into the
| world's financial fabric, e.g., as a store of value. If this
| sounds far-fetched, consider that many smart and smart-sounding
| people have predicted Bitcoin's demise, and so far their
| arguments have been proven _wrong_ :
| https://99bitcoins.com/bitcoin-obituaries/ .
|
| We sure live in interesting times!
| codegeek wrote:
| "The longer Bitcoin survives, the more it will get adopted and
| integrated into the world's financial fabric,"
|
| How long do we need to give Bitcoin a chance to gain mainstream
| adoption as its been 15 years already ? So far I don't see much
| real use except speculation, extortions, get rich quick scams
| and websites where you want to be anonymous. For the most part.
| icedchai wrote:
| They follow it on CNBC and have for a while. It's as
| mainstream as any stock.
| jfengel wrote:
| It's mainstream for trading. It's not mainstream for
| conducting transactions.
| clymbidia wrote:
| [dead]
| PragmaticPulp wrote:
| > The longer Bitcoin survives, the more it will get adopted and
| integrated into the world's financial fabric, e.g., as a store
| of value. If this sounds far-fetched, consider that many smart
| and smart-sounding people have predicted Bitcoin's demise, and
| so far their arguments have been proven wrong:
|
| You're arguing that because Bitcoin hasn't met its demise, it
| will therefore be widely adopted as a "store of value"?
|
| As if there are only two possible outcomes: Complete failure or
| complete dominance as a store of value. This is where your
| argument doesn't make any sense.
|
| I suspect we'll discover that all of these altcoins and weird
| financial instruments didn't actually detract from Bitcoin at
| all. Rather, they contributed to its rise by juicing demand and
| pumping huge amounts of leverage and pseudo-liquidity into the
| cryptocurrency ecosystem.
|
| If crypto becomes boring, I don't think the natural conclusion
| is that adoption will increase.
| cs702 wrote:
| The longer Bitcoin's network continues to function, the more
| people will become aware of its resiliency. Governments may
| topple; banks may fail; exchanges may go bust; Bitcoin keeps
| on ticking. Difficult-to-forge assets that can survive the
| failures of governments, banks, exchanges, etc. tend to gain
| adoption as stores of value. There aren't a lot of assets
| like that. Gold is one. Bitcoin appears to be one too.
| misnome wrote:
| 3 - The "value" is higher, but can you actually do more with it
| now than you could five years ago? Hasn't the entire community
| given up on buying things such that they know pretend that was
| never the goal?
|
| Without any real way to convert back and forth into real money,
| what reassurance is there that the price even means anything
| when every single holder is incentivised to lie and transact
| with themselves just to keep the numbers up?
|
| How can a global system capable of five transactions a second
| ever be integrated into "the world's financial fabric"? Side-
| chains seem to just be a great way to centralise around more
| unknown entities who may or may not run off with your cash.
| cs702 wrote:
| _> ...can you actually do more with it [I assume you mean
| Bitcoin] now than you could five years ago?_
|
| Not really. To date, Bitcoin has been used successfully only
| as _an alternate store of value_ -- one which, like gold,
| doesn 't depend on the financial credibility of a particular
| government or country. Bitcoin's continued existence depends
| only on the integrity of its distributed consensus algorithm,
| which so far has withstood all attempts at hacking it. The
| "alternate store of value" opportunity is not small. Gold
| alone has a current market capitalization of $12.9
| trillion.[a]
|
| ---
|
| [a] https://companiesmarketcap.com/gold/marketcap/
| HDThoreaun wrote:
| Bitcoin is a horrible store of value. It's incredibly
| volatile.
| scottiebarnes wrote:
| Increase timeline to account for scaled adoption and
| project volatility for those variables.
| cs702 wrote:
| Gold is pretty volatile too. Its price has gone up and
| down between 5x and 10x a few times in just the past
| century: https://www.macrotrends.net/1333/historical-
| gold-prices-100-... -- no one sane would call it stable.
| And yet, despite its volatility, gold has been used as a
| store of value for _millennia_.
| mminer237 wrote:
| In the last 5 fives, gold's highest price was 60% higher
| than its lowest point. That is indeed pretty volatile.
|
| Let's see if Bitcoin is comparably volatile...
|
| Oh, it's highest point was only 1920% higher than its
| lowest point. That's definitely the exact same as gold.
| /s
|
| Also, that ignores that gold has been a store of value
| for millennia. It's almost synonymous with wealth. In a
| total financial collapse, if all modern technology dies,
| you can be sure gold will still have value. 99.9% of
| people have no idea what Bitcoin is besides funny
| computer money.
| mrguyorama wrote:
| Even if people WANTED bitcoin in a total financial
| collapse, what scenario collapses all normal fiat
| currencies and doesn't touch a system that requires cheap
| power and niche hardware and internet connections?
| this_user wrote:
| That is exactly why most people no longer use gold as a
| store of value and are instead using currencies that are
| much more less volatile. Meanwhile, Bitcoin alone has an
| annual volatility that is about an order of magnitude
| larger than gold's, and it's even worse in every other
| crypto token. None of these things come even close to
| qualifying for being a store of value.
| carleverett wrote:
| I think you're confusing store of value with medium of
| exchange... most people don't really store value in
| currencies long term - usually they just keep enough to
| pay near term bills.
|
| Stores of value are things like stocks, bonds,
| treasuries, real estate... and yeah commodities like gold
| and bitcoin. People don't care so much about volatility
| if they're planning to park their value there for a long
| time.
| fwungy wrote:
| In many places Btc is one of the safest ways to store
| value. The scenarios it could collapse under are dark.
| It's biggest enemy is soveriegn currency issuers and
| banks. They would need to attack it such that holders
| lose faith in it en masse and collapse it. The successful
| attack they need to make is dystopian in nature. It would
| require a global digital identity that was attached to
| all internet access and an alternative (CBDC) crypto that
| they forced everyone to use.
| Retric wrote:
| Nowhere is BTC the safest way to store value, it's got
| far to many risks in normal use to be particularly safe.
|
| A double speed attack doesn't need anything particularly
| dystopian to happen. It doesn't even need to result in a
| large transaction just someone deciding to short BTC and
| briefly having the computing power to destroy it. Even
| just a creditable attempt that fails could completely
| undermine it.
| fwungy wrote:
| A double spend attack requires a specific unsafe action
| by the receiving end of the transaction. As long as the
| receiver does not accept an unconfirmed transaction they
| cannot be a victim to it.
| JumpinJack_Cash wrote:
| > > as a store of value
|
| Bitcoin failed as a store of value, it's up some 20,000% since
| 2010 and basically infinty since the day of its first trade
| (back when the first bitcoin was traded for some trivial amount
| of electricity)
|
| Store of value is a very specific term
| thworp wrote:
| Oh please, again with the "store of value" BS. I made an effort
| to look at the _actual_ volume of bitcoin being traded in and
| out of the system (aka actual entries and exits, not just
| fraud-prone exchange swaps) in 2020 and I concluded that it 's
| probably worse than most scam penny stocks in terms of
| liquidity. It's really hard to find any kind of reliable data
| though, but in the absence of that I had to conclude it was
| just a gigantic scam.
| otoburb wrote:
| >> _If this sounds far-fetched, consider that many smart and
| smart-sounding people have predicted Bitcoin 's demise, and so
| far all have been utterly wrong_
|
| Bernie Madoff pulled off one of the largest (literal Ponzi)
| scams and evidently stated that he started in the 1990s for a
| run of just over 15 years until being arrested in 2008,
| although some investigators thought that his fraudulent
| activities started as far back as the 1970s (!!).[1]
|
| The Lindy effect[2] works until it doesn't. Taleb popularized
| the theory in pop-culture with his books, but the problem is
| that it's seemingly impossible to know when/if something will
| collapse/fail to the point that this "effect" doesn't seem all
| that useful as a predictive indicator.
|
| [1] https://en.wikipedia.org/wiki/Madoff_investment_scandal
|
| [2] https://en.wikipedia.org/wiki/Lindy_effect
| ttobbaybbob wrote:
| bernie == bernard fwiw
| medellin wrote:
| The year is 2023 and we still have people arguing this. Can
| you at least try to be creative with your critique of bitcoin
| instead of this lame one?
| cs702 wrote:
| The comparison to Madoff is not apt. Madoff hid losses by
| committing accounting fraud, whereas every single transaction
| in the Bitcoin network is visible to everyone and, moreover,
| cryptographically verifiable by everyone. As long as the
| distributed consensus algorithm continues to function,
| Bitcoin will continue to exist. Period. (Government
| regulations cannot kill it; they can only drive it
| underground, as with gold.)
|
| Anyone who predicts Bitcoin's demise _must_ explain
| _precisely how and why_ its network would stop functioning.
| onlyrealcuzzo wrote:
| Except ~99.99% of BTC transactions happen in exchanges off
| chain and aren't visible to anyone, and have a history of
| being fraudulent at many exchanges that have failed through
| the years...
| cs702 wrote:
| That's true for gold too: Most gold transactions happen
| in exchanges. But the fact that there are successful
| intermediaries in the gold market is not an argument
| against gold's viability as a store of value. Ditto for
| Bitcoin.
| eli wrote:
| I don't think gold is a good investment vehicle nor means
| of exchanging value either.
| onlyrealcuzzo wrote:
| This is whataboutism.
|
| The claim is that BTC surely isn't fraud because the
| chain is public knowledge.
|
| This is irrelevant, because the vast majority of data is
| bullshit.
|
| The gold market has been manipulated to and fro, even
| with regulations.
|
| The idea that BTC isn't manipulated to oblivion JUST
| BECAUSE there's a public ledger (missing 99.99% of the
| data) is naive.
| thworp wrote:
| No, this is an absolutely ass-backwards argument. To be a
| currency or a store of value or money (read: to be of any
| use) it has to be _exchangeable for goods and services_.
| Now we can see _transactions_ on the blockchain but we have
| no idea what that transaction was for. *Nobody* can tell
| you what a bitcoins worth of wheat is without resorting to
| exchange rates of bitcoin to actual currencies. But because
| the entire exchange ecosystem is so illiquid,
| intransparent, unaudited and rife with fraud there is no
| way to know how many bushels of wheat you could get for
| something like 13 BTC.
| youreincorrect wrote:
| When people talk about Bitcoin's potential demise, they are
| referring to its price and perceived value, not whether it
| will cease to exist necessarily.
|
| Madoff also was not ultimately caught and his scheme ended
| because of the accounting fraud being revealed (i.e. the
| fraud was not that important). That happened later. He was
| caught because a market downturn resulted in him being
| unable to acquire new victims for the Ponzi scheme, which
| would have otherwise perpetuated it by taking new money in
| and using that to pay out existing investors.
| cs702 wrote:
| The longer Bitcoin's network continues to function, more
| and more people will become aware of its _resiliency_.
| Governments may topple; banks may fail; exchanges may go
| bust; Bitcoin keeps on ticking. As long as the network
| continues to function, Bitcoin will have a price.
| juve1996 wrote:
| The US government has been around for quite some time.
| The British pound, longer. It will take hundreds of years
| to compare to that level of resiliency.
| eli wrote:
| It's possible that more people are aware of Bitcoin than
| 18 months ago, but I doubt many think it's more
| resilient.
|
| Since Bitcoin depends on a functioning network it seems
| more likely than something physical like Beanie Babies or
| baseball cards to one day become effectively worthless.
| [deleted]
| tromp wrote:
| > why its network would stop functioning
|
| If it fails, it's most likely because block subsidy will
| become negligible in a few decades and transaction fees
| alone won't always provide sufficient security against re-
| org attacks.
| cs702 wrote:
| Maybe. Others have made that argument before. So far,
| it's been proven wrong. The rewards are already pretty
| small, and things are still working. Maybe it could
| happen after block rewards go to zero? I don't know. But
| we'll find out if you're right over the next six years!
| tromp wrote:
| > So far, it's been proven wrong.
|
| How can a prediction of what happens after 2050 (i.e.
| after a total of 10 halvings to make subsidy negligible)
| have been proven wrong "so far" ??
| kiicia wrote:
| there is set amount of bitcoins to mint
|
| transaction fees were intended to keep miners active
| [deleted]
| rcme wrote:
| The issue I have with the argument is that you can apply it
| to anything. The fact that Bernie Madoff pulled off a ponzi
| scheme for years and the fact that "The Lindy effect works
| until it doesn't" isn't a specific critique of Bitcoin.
| otoburb wrote:
| Exactly my point. The Lindy effect probably shouldn't be
| used as an argument for either side of this debate (or any,
| for that matter). But that's a specific (partial) statement
| that I saw in the parent comment.
| cs702 wrote:
| Ah, I see what you mean now. I agree with you on the
| Lindy effect.
|
| What I meant is that the _arguments_ used by many past
| predictions of Bitcoin 's demise have been proven wrong.
| Anyone making new predictions of Bitcoin's demise _must_
| explain _precisely how and why_ its distributed network
| would fail. Sorry if that wasn 't clear in my comment
| above!
| dimgl wrote:
| I think it's unlikely that, as a technology, Bitcoin will
| ever go away due to its decentralized nature. I think
| what most people refer to when they say "Bitcoin will
| fail" is a price drop so significant it makes the coin
| worthless (99% drop). This may also never happen, and the
| reality will likely be somewhere in between.
| majormajor wrote:
| Why should a prediction of demise (for whatever meaning
| of "demise" we care to choose, but we can start with the
| one you first mentioned, market capitalization) be
| required to be more precisely detailed about how and why
| than a prediction of thriving?
|
| Someone could say "Many past novel currencies and
| securities have failed; any prediction of Bitcoin's
| success must explain precisely how and why it will still
| have worth in 50 years." To me this seems like the same
| argument you're making - belief that a trend will
| continue until proven otherwise - but I don't find either
| of them very convincing.
|
| I think any argument either way should have more details
| than "it's worked so far!" or "it'll eventually fall over
| like Madoff!" but you seem to only be pushing the burden
| of proof in one direction.
| lamontcg wrote:
| > Anyone making new predictions of Bitcoin's demise must
| explain precisely how and why its distributed network
| would fail.
|
| A systemic banking panic.
|
| Everyone becomes worried about being able to extract
| money/value from the crypto ecosystem as a whole due to
| the failure of some exceptionally large entity (Coinbase
| or Binance or Tether failing).
|
| They all run for the exits at the same time trying to
| cash whatever crypto they can into currency. With no sort
| of backstop, no FDIC, no government intervention, no
| failsafes, etc there's nothing to stop it from all
| unwinding to effectively zero in a panic. And panics
| aren't concerned about market efficiencies or intrinsic
| value or network effects or anything other than the
| ability to flee into some other unaffected liquid asset.
| The contagion would spread throughout the network with
| people trying to take any exit they could find until that
| exit was shut down.
|
| Given that the crypto ecosystem in general doesn't
| believe in government regulations to prevent panics it is
| nearly certain that one will happen, which will bring
| crypto to a very sudden halt. The probability over time
| reaches 100%, but it will likely take some kind of
| precipitous drop from a sufficient height that no
| individual Billionaire will be willing to step in and buy
| it all up cheap (previously crypto has likely been "small
| enough" that a billion here and there was able to stop
| the crash in e.g. 2018).
|
| It is impossible to predict when it will happen since it
| requires knowing how much systemic cash is available for
| withdrawals and how much can be raised, and the timing of
| financial entities failing, and the appetite for risk of
| anyone with deep enough pockets to try to bail it out.
|
| And Bitcoin has never really been tested by a recession
| that would cause it any kind of problems. The V-shaped
| pandemic recession was cushioned by a lot of injected
| liquidity in the markets and people switched to greed
| almost right away after the first bit of panic waned. It
| has never been stress tested by something like 2001 or
| 2008 in the broader economy.
| bb88 wrote:
| Systemic banking panic. Or systemic crypto panic. But
| there could be lots of causes for it.
|
| Mining made illegal by locales, states, or countries --
| because of energy pricing.
|
| BTC transfers made illegal through law or made
| undesirable in some way (say KYC but with like actual
| teeth)
|
| And then there's the long shot chance that a nation-state
| (China perhaps) figures how to program their quantum
| computers to break BTC algorithms, snatching away value,
| before investors even realize what even happened.
|
| For the record, I don't think it would happen. But also I
| didn't think that AI would be a thing in my lifetime.
| lamontcg wrote:
| Most of those concerns though are covered by "failure of
| an entity" -- which could be inherent through bad
| business practices, or it could be regulatory.
|
| A quantum computer breakthrough that destroys BTC does
| really fundamentally cause BTC to fail as an algorithm,
| which is a bit higher level.
|
| I don't think that is likely, and we don't really have
| AGI, although LLMs are great for certain kinds of queries
| and polishing language or doing boilerplate coding.
| onlyrealcuzzo wrote:
| The Lindy Effect is meant to describe things like buildings
| and cities, that generally you don't have an outside risk
| to consider that the whole time they might've been a fraud
| or illegal.
|
| We don't really need to worry that The Great Pyramids have
| been a hologram all this time. We don't need to worry that
| the US is going to make The Great Pyramids illegal (I mean,
| anything can happen, but it's a much smaller chance than w/
| Crypto).
| username332211 wrote:
| It's not seemingly impossible, it's scientifically proven
| that the general public can't know when the price of Bitcoin
| will collapse. And it has nothing to do with the general
| public being stupid and any of that bullshit.
|
| It's called the efficient market hypothesis.
|
| If it was known that the price of Bitcoin will collapse on
| the 7th of June 2025, every owner would have sold their
| Bitcoins on the 6th of June. But then the price would
| collapse on the 6th, not on the 7th. But of course, the
| definite knowledge the price will collapse on the 6th would
| mean the price would collapse on the 5th and so forth.
|
| Hence why accurate, definite and widely believed predictions
| are impossible.
| winstonprivacy wrote:
| Markets are not efficient much of the time. And Bitcoin
| even less so.
|
| Source; I make a living exploiting market inefficiencies.
| mensetmanusman wrote:
| You are what makes the market slightly more efficient.
| solveit wrote:
| His point stands though. The general public can't know
| exactly when Bitcoin will collapse, because if they
| could, it already would have collapsed.
| mrguyorama wrote:
| His point is built on a theory with as much scientific
| rigor as Freud's penis envy work.
|
| If economics was a functioning field of scientific study,
| The list of top 100 richest people would all be
| economists withholding scientific findings for their own
| gain, not a bunch of rich kids swinging their money dicks
| around.
| solveit wrote:
| I wrote a long response but realized I don't want to
| enter a discussion with someone being as exceptionally
| uncharitable you are.
| LexiMax wrote:
| "A strange game. The only winning move is not to play."
| nico wrote:
| Just saw it for the first time last night
|
| It was so cool, especially after reading ready player one
| and discovering that one of my favorite Sega games as a
| kid was Galaga, but didn't know the name until I saw it
| in an arcade a few weeks ago
|
| 80s movies about smart kids are awesome
| mrguyorama wrote:
| The efficient market "Hypothesis" (is it even testable?)
| presupposes a rational market, doesn't it? Real life
| markets are not rational, by definition. Humans are not
| rational actors.
| derbOac wrote:
| Bitcoin is puzzling to me, in that a commodity usually has some
| value outside of a trading market per se. That is, it is
| usually consumable in some abstract sense. I'm not sure what
| you would "do" with Bitcoin other than as some form of
| currency.
|
| In this regard, ETH always seemed a bit more on track, in the
| sense that there have been attempts to use the ETH blockchain
| from the beginning for the purposes of computation, other than
| "just" as a currency.
|
| I'm not disputing what you're saying about the SEC position
| regarding Bitcoin, it just seems to highlight for me something
| a bit off about the SEC position, even if it is favorable in
| certain ways toward Bitcoin. I come away from all of this
| feeling a little like neither the SEC nor the crypto community
| at large are quite being honest or accurate about what's going
| on with crypto or how it should be regulated.
| lostmsu wrote:
| My inner conspiracy theorist would say that given the crypto
| market situation and state of ETH and Bitcoin as platforms
| SEC actions indicate that Bitcoin might have something in its
| design that US government wants vs ETH.
| anaganisk wrote:
| Market dominance?
| jfengel wrote:
| In theory, you could think of bitcoin as electricity that has
| already been consumed. To replace it, you would have to burn
| more electricity. The bitcoin concept is to manifest that
| burned electricity as a tradeable value.
|
| That is the sense in which it's commodity-like. It's the
| underlying electricity which is consumed.
|
| It's far from clear that this is really valid, but that's the
| sense of it.
| pazimzadeh wrote:
| > I am 100% objective, independent and neutral
|
| Show, don't tell
| rohith2506 wrote:
| I am absolutely baffled by how much negative criticism the whole
| blockchain industry gets here and I would like to understand the
| reasoning behind it. Most of the arguments fall into these
| following buckets concluding to "IT MUST DIE"
|
| 1. The whole crypto is a get rich quick scheme with predatory
| practices everywhere. It's a wild wild west with no sort of
| regulations. Well, guess what, regulated industry is no different
| either. If people wants to commit crime, they will commit crime.
| The whole pyramid and MLM schemes have originated from
| traditional routes. it's nothing new. And regarding fraud, Did
| everyone actually forgot about Enron, Bernie Madoff and of course
| 2008 financial crisis where the almight SEC played a key role
| handing over billions and billions to these investment banks who
| knowingly committed fraud and pushed some of the pension funds
| into bankruptcy and pushed the whole world into recession. What's
| this fascination towards the old methods even though they
| repeatedly showed us that they are inadequate
|
| 2. I haven't seen a single use case of blockchain in the world
| yet. This is a valid critic and I do understand. Any decent
| distributed system engineer will understand that decentralisation
| is hard. consensus is hard. You know what was hard for almost 25
| - 30 years and everyone's losing their shit right now and
| drinking the cool-aid? The good old AI. No one cared about neural
| networks until the compute caught upto speed.
|
| Like it or not, we are entering a new phase in the technology
| where two things will definitely rise to prominence
|
| 1. Data is / will become the most essential commodity and I am
| terrified by the idea that few monopolies with their "don't be
| evil" facade will control them and become trillion dollar firms.
| We need to switch the model and reimagine how the internet should
| work. If anyone calls this paranoid,I am happy to place a bet
| that in ten years, if nothing is done, we will be living through
| orwellian future
|
| 2. A massive decoupling from US economy. I wonder what people
| call US economy if they call crypto pyramid scheme. Sitting on
| trillions and trillions of debt, printing money according to
| their will completely ignoring the effect of their childish
| actions on the global economy
|
| When you think hard about 1&2 and come up with solutions,
| congratulations, you just reinvented the blockchain. If not, I am
| happy to hear how would you solve. In a nutshell, for god's sake
| , try to understand the reasoning and motivation behind why new
| ideas originate, gather a community and attract smart people to
| work on them
| lbwtaylor wrote:
| > 1. ... Well, guess what, regulated industry is no different
| either.
|
| I disagree, I think the systematic failures and fraud in the
| crypto industry is much more common than the regulated
| industry. Madoff is an outlier, not an expectation, and the
| majority of funds were retrieved. How's that looking for
| crypto?
|
| As for 2008, my bet is that if crypto was being widely used for
| mortgage lending at that time, it would have been just as bad
| as banks. I don't see anything about crypto that would be
| making safer mortgage loan. In fact, what I see in crypto is
| very risky loans.
|
| > 2. ... Use case..
|
| I still don't see a convincing use case there.
|
| > 1. Data ... essential commodity ... We need to switch the
| model and reimagine how the internet should work... bet that in
| ten years, if nothing is done, we will be living through
| orwellian future
|
| I don't think banks/brokers are big controllers of data. I am
| more optimistic and would prefer to use Fidelity or Schwab than
| defi.
|
| > 2. I wonder what people call US economy if they call crypto
| pyramid scheme.
|
| I'm not really going to address this deeply, this is really a
| political view -- that I don't agree with. For decades folks
| have said the US will implode. When I look around, the US is
| where I want to put my investments.
| burnished wrote:
| Crypto solves a very specific problem; how to have a public
| ledger when none of the participants can trust each other and
| dishonest behavior is naturally incentivized.
|
| But every defense is about how crypto will purchase this moral
| good of decentralization or freedom from the US economy, in
| some unclear and unspecified fashion.
|
| There also seems to be an unresolve-able tension between the
| premise of an immutable ledger and human nature as seen through
| the various mechanisms to undo mistakes (ie regaining access to
| an account, reversing charges for a variety of reasona). That
| capability sort of requires trust and centralization.
| toomuchtodo wrote:
| Blockchains are unnecessary in a world with trusted entities
| and functional legal frameworks. In places that require a
| blockchain, you're still going to be at the whim of whomever
| has a monopoly on force. Sure, your key passphrase may be in
| your head. You'll end up getting beat with a rubber hose. It
| was never your crypto so long as someone has the guns (wrt "Not
| your keys, not your crypto").
|
| https://xkcd.com/538/
|
| > A massive decoupling from US economy. I wonder what people
| call US economy if they call crypto pyramid scheme. Sitting on
| trillions and trillions of debt, printing money according to
| their will completely ignoring the effect of their childish
| actions on the global economy
|
| US Treasuries would like a word (they are the safest financial
| asset in the world, "full faith and credit"). There is no safer
| capital market than the US. Sure, there will be some de-
| dollarization, but that won't fix a rapidly aging China, a
| "teetering near the cliff" Russia, a Central and South America
| that is slow steady state, etc. And Africa? Very young still
| but a hard sell for investing.
|
| > Sitting on trillions and trillions of debt, printing money
| according to their will completely ignoring the effect of their
| childish actions on the global economy
|
| Debt backed by future productivity, but also debt that can also
| always take a haircut during legal proceedings. Laws and courts
| > smart contracts, broadly speaking.
| saurik wrote:
| > Blockchains are unnecessary in a world with trusted
| entities and functional legal frameworks.
|
| This is also an argument against end-to-end encryption and
| against federated protocols. The reality is that we, in fact,
| do not have and have never managed to maintain trusted
| entities and functional legal frameworks for much else... why
| do you think this is so different?
| wilg wrote:
| It's worse, in many (most? all?) cases a legal backing is
| superior!
| jcranmer wrote:
| > When you think hard about 1&2 and come up with solutions,
| congratulations, you just reinvented the blockchain. If not, I
| am happy to hear how would you solve.
|
| Well, I've been thinking about it some, and I don't see how
| blockchain is even a solution to #1 in the first place, much
| less presumably the only solution. For data collection
| concerns, the most natural solution is of course to simply see
| that data is never collected in the first place, and this can
| happen via legal means (e.g., GDPR) or technological means
| (don't include unnecessary sensors).
| ttpphd wrote:
| "2. I haven't seen a single use case of blockchain in the world
| yet. This is a valid critic and I do understand."
|
| Hmmm, it doesn't exactly sound like you are "absolutely
| baffled". You acknowledge that there are astoundingly few good
| use cases for blockchain.
| jadbox wrote:
| Filecoin is probably one of the best examples of a
| decentralized storage rewarded via crypto. There's also
| several Defi lending platforms that have helped students
| paying off debt, although I don't know enough about which
| networks are the best there.
| waboremo wrote:
| There will never be a better representation of what's wrong with
| crypto platforms than this tweet[1] here demonstrating the sheer
| ignorance at every level (tech, finance, regulation, etc) from
| its biggest proponents. Also very hilarious.
|
| [1] https://twitter.com/Legendary_NFT/status/1667106949840748545
| krrishd wrote:
| Would be curious to see HN crypto critics mount their arguments
| against:
|
| 1. Physical cash / gold (ie. bearer instrument moneys that are
| non-trivial to seize or control at scale)
|
| 2. The digitization of the above, retaining the same "non-trivial
| to seize or control at scale" property in a digital medium
| lordfrito wrote:
| Ugh the comments here are just ridiculous. Armchair finance
| experts saying the rest of the world is just so wrong. Can't
| argue with true believers.
|
| I feel like we should consider whether crypto related posts
| should be allowed moving forward. It feels like all crypto
| discussions are devolving into flame wars.
|
| This site is usually much classier and intelligent than what I
| generally see in these threads.
| nkuttler wrote:
| Dunno, it seems like you started a thread with name calling.
| lordfrito wrote:
| Fair enough. Was trying to make a constructive point, but
| clearly my bias leaked through.
|
| Point is that it seems any discussion here is fruitless, just
| both sides digging in. I usually appreciate the discussions
| here. These are just frustrating.
|
| Sure I don't _have_ to click, but I still do.
|
| Anyhow my 2c.
| csomar wrote:
| This was posted in 8 June. With big name brokers in the US making
| a move into the crypto market today, is it fair to say this guy
| has no idea what he is talking about?
|
| + https://www.bloomberg.com/news/articles/2023-06-20/crypto-ex...
| adventured wrote:
| Not if the intention is to drive crypto into the ground first
| and destroy the initial sector players (eg Coinbase), so the
| establishment banking / finance system can recapture all of it
| in one swift regulatory move.
|
| It would then be ideal to be entirely out of crypto until the
| destruction is largely over, and the establishment gets its
| lock on the market.
|
| There were only ever two possibilities. They control & own it,
| or it doesn't get to exist legally. Everything else was naive
| fantasy and ignorance about how the world actually works and
| will always work (power, politics, guns).
| alephnerd wrote:
| EDX is non-custodial and open ONLY to institutional investors.
|
| The SEC's enforcement on Crypto Platforms is specifically aimed
| at separating the Broker Function from Exchanges.
| raydiatian wrote:
| People who defend crypto on Twitter make my skin crawl.
| [deleted]
| stainablesteel wrote:
| that list of concerns read like selling points to me
|
| i suppose its just a religious difference
| vore wrote:
| It's all well and good until you're unlucky enough to find
| yourself at the wrong end of it all.
| jbverschoor wrote:
| Meanwhile, https://edxmarkets.com/about/ just launched
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