This is good for Crypto. Seriously. Because SBF is probably going to help the US make their case against Binance and that will flush out all the bad actors. Many coins will go to zero. The entire ecosystem will wither and die, but if Crypto survives it will be because there is some fundamental value to it besides digital beanie babies.
Illegal transactions and money laundering isn't going to disappear. A generation of engineers obsessed with crypto will not suddenly stop caring even if a bunch of coins go to zero. The potential prize (control of a global currency/commodity) at the cost of just writing a bunch of code is too potentially lucrative to make people stop trying.
Crypto was much more legitimate when it was used just for illegal transactions. But it was not the "not your wallet, not your coins" folk that made valuation skyrocket, it was these scams.
When speculators were pouring billions into the field, it wasn’t a surprise that a lot of engineers went after high pay checks and the chance of even greater returns on speculative vehicles. The easy money drying up is going to shrink their number a lot, however – especially since the traditional finance sector is building the things people actually use. The number of people using inappropriate architectures is going to plummet when there isn’t a personal financial incentive from their use.
I think most of these engineers are interested in the high compensation that the blockchain space has been able to offer so far. If high compensations disappear, I suspect engineers will switch too.
Bad actors will keep on existing as long as crypto is useful, which it will remain for the foreseeable future, specially considering the ever more restrictive personal banking regulations.
To take your bitcoin (or monero) they will actually have to show up to your door with weapons. This is much more expensive and prone to failure for the government or other authorities than simply freezing your assets on a bank.
Note: I am aware that they can blacklist bitcoins and trace them nearly perfect nowadays, which can make them somewhat useless even if you still own them. With Monero, this is made far more difficult.
So by that logic monero is a perfect laundering mechanism? If a criminal (ransomware/kidnapper/bloody kleptodictator) simply exchanges dirty money through monero then law enforcement can't prove anything to stop them, so they can create a comfortable life for themselves while continuing the crime right?
It would be, if it were to be widely accepted for things other than drugs or other illegal services. At current adoption levels, the liquidity is enough for some small scale illegal fund transfer or some drug trade, but not nearly enough for big money laundering operations (good luck cashing out $100M worth of monero without tanking the price).
If they can launder even a million dollars this way it seems like an example of conflict of interest between people who want less crime and people who the gov to not take their money.
Yes, I think the government absolutely will try and it's quite probable they will succeed. But why not offer human beings the _chance_ to flee tyranny with their livelihood?
Consider jews fleeing Nazi Germany. Should they have been allowed to escape with their assets? Would the world be a better place had they been able to?
How about we create better systems for refugees to gain access to safety and citizenship instead of consigning them to a rickety shadow financial system? Are you putting this much energy into, say, opposing border walls and supporting marginalized communities?
What about people suffering brownouts because their electricity is being stolen for mining, or people losing their shirts in ponzi schemes? What about the people and companies being extorted by ransomware? Do you say to the people who've been harmed by cryptoassets, "sorry, this is for the greater good, there are hypothetical refugees who may find this useful?"
The utilitarian slant is interesting. I can understand why some people think crypto is a net negative at the moment. The set of businesses adjacent to true, on-chain applications is rife with fraud. Thousands of people have died, maybe even millions have lost life savings.
But I ask you an analogous question: what do you say to the people suffering any crime that was aided by free, encrypted communications on the internet?
I'm not using this as a fool-proof argument that the utility of crypto is positive. I do not know the true answer. I think it's positive but I acknowledge it very well could be negative.
To me, blockchains enable the basic human right of having ultimate authority over your own assets. You can choose whether attempting to circumvent your government is worth it. In most cases, it's not. But I like giving all human beings that option.
The Internet is supplying those same people with obvious, immediate benefits. They're not being asked to endure hardship for a hypothetical benefit to hypothetical people. So to people who are victims of online fraud I would say, I'm sorry that happened, let's improve the Internet so that it doesn't happen again (eg by writing more secure software). To be clear I'm not a utilitarian per say, I just look at cryptoassets and say, yep, that's causing a bunch of harm, that's not good.
The right to have authority over your financial assets is just not that interesting to me. I'm largely ambivalent about people's right to hold private property (capital), if anything I oppose it. I care more about people's rights to hold personal property, like their home and the other tools they need to survive, but crypto cannot do anything to protect that because you can't put it into the blockchain.
I'm not a big lover of state power, but I have no interest in supporting the wealthy in thwarting state power. My view is that that is how cryptoassets after used in practice; as speculative assets, which is largely a shell game that transfers more wealth to the wealthy, and as a means to evade taxes, capital controls, and law enforcement.
I believe the main place we differ is that you seem to think these are necessary evils and that crypto will change for the better, and I'm pretty sure this is crypto is telling us what it is about and what it is for, and that we should listen & believe it. I think building a better society requires changing social relations by confronting them and discussing them, not by somehow transcending then through technology. Cryptoassets propose to "solve" trust by abstracting away humans and relationships, but that's just the wrong direction; trust is formed by speaking to and connecting directly with each other, not through math. In the same way locks may keep people honest but don't really stop dishonest people who are determined to gain entry.
>> "But why fight against something that offers hope for the misfortunate?"
I mean, context. That's what the Nazis rose to power on: giving hope to a people that felt robbed after WWI. Just because a person or a technology offers hope doesn't mean it can deliver.
Imagine thinking people actually want self-custody. Look around, people want centralization. The fringes who constantly parrot “not your wallet, not your coins” will forever be in the minority as mom and pop don’t trust themselves to any kind of cold storage.
Crypto-obsessed will forever live in this fantasy world.
> Billions of dollars worth of assets are stored on blockchains.
There is no mathematical proof that they will be worth billions of dollars tomorrow. I mean, I would wager if the original Satoshi wallets wake up and start selling Bitcoin this time tomorrow the total market cap can be counted in millions.
Sure, maybe mathematically there will never be more than X tokens, but no one cares about that. Everyone at the end of the day cares about what they can trade one token for. Otherwise, it's worth less than monopoly money or Chuck-E-Cheese tokens.
>People have successfully avoided fraud, theft, and the tyrannical seizure of their assets by arbitrary decisions of arbitrary government officials.
Tomorrow morning, the US government announces that any US citizen in possession of cryptocurrency is committing a crime. Using it in a transaction is an even bigger crime.
What happens to the value of crypto?
Your faux-decentralized currency is valuable only inasmuch as it can be used. It is just as much at the mercy of 'arbitrary decisions of arbitrary government 'officials'.
How do you think any of these companies and protocols even exist? They sure as hell don't have enough regulatory clarity to be confident they can operate as US entities right now. Vast majority of true defi protocols were funded by companies formed outside the US because the country has essentially criminalized it by refusing to put into law what you need to do to be compliant.
In the absence of regulation, fraud is a comparative advantage. We can point to specific instances of fraud as moral failings. But fundamentally, if people are incentivized towards fraud, then there will only be fraud.
If you flush these particular bad actors, others will simply take their place
New bad actors will replace the old ones, this has all happened before, this will all happen again. Replace SBF with Mark Karpeles and the discourse is exactly the same, except at least back then the critics didn't have a legacy of fraud to point to.
It actually might be regulation that kills crypto because once you take out the high risk, you take out the high reward as well, and people are only in crypto for the high rewards
First because it seems that everything needs to be flushed out. FTX was highly regarded. Binance is the largest exchange. What shouldn’t be flushed by that logic? Bitcoin? Maybe Ethereum?
It also makes a weirdly naive distinction, between the « good actors », people who are selflessly coding and building things for the good of humanity (and who also don’t exist), and the « bad actors », who are there for hidden motives.
Why is crypto the only place where people make this distinction? We don’t make it for banks, or coffee shops, or car makers, with fantasmatic and ephemeral « good actors» (where nobody agrees on which they are) and bad self-interested bad actors.
And secondly because it doesn’t work like that. Bad things don’t get flushed until the good remains. Newer bad things come and replace them, on and on, until things get regulated.
