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/ .
>>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.
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.
> Anyone who predicts Bitcoin's demise must explain precisely how and why its network would stop functioning.
I've been saying for years that Bitcoin will go down like Second Life. Remember when there were news stories about Sony or whoever buys an island for X million dollars? And now... I mean it's still there (presumably), I don't think they've turned off the servers or anything, but no-one cares and it's obviously not a good investment (and that's with it being propped up by a few people who actually enjoy the game, which Bitcoin won't have).
The ability to actually buy stuff with Bitcoin is already past its peak (more places are removing Bitcoin payment options than adding them). It's less in the news than it was. There probably won't be a specific collapse moment (when Tether's reserves get exposed as fraudulent and they stop withdrawals I expect Bitcoin's price will crash, but it's crashed before and there are still true believers left over). I mean eventually the last miner will turn off their rig, but it will be irrelevant long before that happens.
Predicting the demise of something does not mean you are incorrect until the day it collapses.
People have criticised Oceangate’s approach to security for years. By your logic I could have turned around to all of them and said “you’re wrong”, up until a few days ago when the CEO got trapped inside a submarine to die. The people who said their safety approach was a ticking time bomb were right all along, it just took time to be proven out.
There's no right or wrong answer to this since failure predictions are logically flawed.
Doomsday cult leaders no longer insist the world will end on a specific day; they insist it will end imminently after a series of vague events. Your skeptics will die of old age before you can ever be proven wrong.
Well, no, failure predictions can either be based on evidence or they can be based on nothing. The doomsday cult is based on nothing, the submarine safety prediction is based on looking at which precautions the company is and is not taking.
I don't think I have been wrong? Like I said, the ability to actually buy stuff with Bitcoin is in decline. I'd change my mind if I saw evidence of increasing Bitcoin adoption in the real economy.
You’re missing the point entirely. Bitcoin will gain usability parity with the US dollar. And bitcoin is a better currency that anything mutable and controlled by governments. Bitcoin is a currency that is not subject to the whims of unpredictable central government financial policies. Bitcoin’s buying power fluctuates because we are still dealing with The Fed monetary policies. In time that will smooth itself out. Aside from violence (US military), what is the US dollar’s features that make it better than bitcoin in any way?
> Aside from violence (US military), what is the US dollar’s features that make it better than bitcoin in any way?
using USD doesn't make me look like a criminal or a scammer.
And it actually work and is useful for everything that isn't shady.
Oh, yeah, almost forgot: I can go to a bank and ask for a loan in USD that I can then use to buy a house, start a business, go on a trip, instead of risking of losing everything the day after. I can repay the loan in comfortable installments, at a predictable rate which won't bankrupt me because I have to acquire bitcoins that are deflationary, so basically in 20 years my debt will have nominally grown up, instead of losing real value, due to inflation, hence costing me less, and whose price is unpredictable.
> So long as there’s demand for contraband, there’s a utility for BTC
Drug money... while that was true at one point, you have to be the stupidest MF'er in this planet to deal with DNM tx with BTC at this point unless you have secure OPSEC (something most who operate DNM couldn't even do, see SR1/2).
The truth is BTC has more usecases than you are lining out, go look at Ukraine's Bitcoin address, that was what was using to fund early escape missions during the attacks of Russia when the central bank failed to operate and imposed liquidity collapse in the onset of the War. This was what led to the realization of United24, the official Ukrainian governments solution for continued fundraising (using not just BTC, but other alts too) for support in other critical needs--like invincibility centers that provide food/water/shelter in these war torn areas.
Want an even longer use case? Go look at Return Alive's BTC address going back a decade now, we as a community have been proving non-lethal aid to Ukraine since the Maidan Revolution in 2013 when the collapse of their currency and capital controls and rapid inflation took over.
Really I can go on, and while I don't deny our past (in fact I'm quite proud of our origins as a means to transfer value freely on the Internet) you are misled to believe it still operates much volume towards those ends these days because of the analytics and monitoring that is being done 24/7 by intelligence agencies and 3rd party affiliates for just this. Hell, I bet there are more scams/hacks by the North Korean cyber military than there is in drug money.
> Drug money... while that was true at one point, you have to be the stupidest MF'er in this planet to deal with DNM tx with BTC at this point unless you have secure OPSEC
Lots of stupid MFers out there. I know quite a few people who have mail ordered their drugs for 10 years using bitcoin. There’s lots of atms that cash in bitcoin out and have dubious identity checks. And there are still in person meetups to swap cash for bitcoin.
Not perfect, but easier than mailing cash or burner PayPal accounts.
This is also like the only use case for bitcoin in the developed world.
> I don't think I have been wrong? Like I said, the ability to actually buy stuff with Bitcoin is in decline. I'd change my mind if I saw evidence of increasing Bitcoin adoption in the real economy.
Based on what evidence exactly? Consider that an entire nation state has since adopted it as its national currency, along the USD in the last 3 years; that means it works in parallel with the USD. Not to mention that merchant adoption, while as you said may be in decline (citation needed), what you have instead is more and more commerce being dealt with on LN: as was always intended due to network bloat.
Listen, I get HN is entirely averse to BItcoin at this point (look at my post histpory, I prove it time and time again it's based on stuborness rather than fact), what I fail to understand is why you persist in this folly in thiking becasue it doesn't work for YOU, you assume no one else has any use for it.
Again, most here who work in tech are not c-level corps or founders so you don't understand very much about the narrow mechanics of day to day because you are not rewarded for doing so, and quite frankly are paid very well for your ignorance on these matters.
But try to understand that if even China has backed off with Hong Kong dealing with BTC, you have to come to terms with the fact that adoption in trackable and metric based analytics are out the window at this point. Exchanges are one way to track transaction volume and that has been as healthy (perhaps more so, I don't know I'm not a trader) than it was 5-6 years ago. I know this because I was there, helping scale this tech and giving it more usecases that even it's most ardent proponents couldn't see and used similar points of view as you are making now (hence USAF and it's MANY forks before that).
You are wrong, and the fact that you can't even admit that possibility is what makes your point even more invalid because you refuse to see a contrary POV.
You’re doing the ignorant a favor for no real gain. Bitcoin adoption will continue. Bitcoin’s progress remains unstoppable. No amount of downvotes can stop it. And the next giant leap in buying power will just make the anger and denial stronger here - a classic case of cognitive dissonance.
Meth/other drugs in general being purchasable via Bitcoin has value though. You and I might not find that useful or moral, but we shouldn’t pretend the drug market is a small or insignificant one either.
Right but if that's all it can be used for, it will eventually settle into a value below its equivalent dollar amount. That is, the amount of bitcoin you'll get for $100 will buy some fraction of the meth that $100 will buy. It will probably be close to 1:1 but that discount rate will be the only actually important question. The limited utility will function as a capital control, so it will be like Bahamian dollars.
> Right but if that's all it can be used for, it will eventually settle into a value below its equivalent dollar amount
That I agree with actually! Part of its utility in being used for drug purchases comes from the other uses for BTC meaning that theres liquidity. Without that, it's still useful for black market transcations, but less useful than it is today.
I've been saying for years that the sun will eventually turn into a red giant and consume the earth. But every day a same-sized yellow disk rises in the Eastern sky. At what point should I change my mind?
Ransomware will keep it going for quite some time after the last pump and dump fizzles out, but it only needs a price of ~$1000 or so to facilitate that.
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.
You do need to separate medium of exchange from store of value. Real estate is useless as a currency while being the primary store of value for most people. Most of your objections also apply to real estate: can't know how much wheat a house is worth, houses are notoriously illiquid, price discovery is difficult and quite opaque, the sector is rife with misrepresentations. I wouldn't go so far as to say fraud, but where does "real estate agent" sit on those polls of "most trusted professions"? Houses aren't even fungible!
And if anyone thinks BTC/ETH transactions are slow and expensive (me!), around here the gas fee on real estate transactions is ~5% with a 6-month processing time...
You can live in a real estate investment or grow food on it or run a business in it. Bitcoin is a bunch of 1s and 0s that is same as a blank canvas hung in museum and is priced at $20M. It is essentially useless, but people believe it’s worth something, so it keeps holding value. Until one day, it doesn’t.
I'm not a bitcoin maximalist, but you have to acknowledge that in this day and age that your definition pretty much applies to USD as well. People believe it's worth something. And so it is.
USD holds value because the government says it does. The government holds authority because they have a monopoly on violence. Or, if your less pessimistic, it's because people believe in the government.
The people in Lebanon and Venezuela trust that the US government will continue to exist and that they will either meet with people who want to do business with it, or will meet people who assume they will meet people who will, etc. So they have value.
That's the only thing that gives Bitcoin value. So, in a crisis it can become false for some people, then spread to the people they know, etc.
With dollars, all Americans need them. So do international companies that transact with Americans. If you think the US government will hold, then that belief will be true, it's only a question of the number of steps.
can't edit anymore, the point is Iranian Rial is accepted by 90 million people in Iran, all the Iranian businesses and the Iranian government, there are much less bitcoin users, technically there are a lot more accounts, but that doesn't mean real people or real businesses.
Not surprisingly Iran and Russia are teaming up to create a new stablecoin and not adopting BTC, because using BTC right now is literally the best way to get caught (for example infringing sanctions).
The people that can afford to trust and use bitcoins for exchanges are the people who do not have to fear the surveillance of State actors/secret services/national agencies(NSA,FBI,Europol,China's central bank,...)/etc and that would be much better off using another FIAT currency (USD, EUR, etc.)
But then you have to explain why gift cards are worth something. The answer is, because someone will give you something for them.
Meanwhile there are a large number of entities that have already entered into long-term contracts denominated in cryptocurrencies and any of them would pay you something for it when they need to satisfy their obligations.
That doesn't mean the value never changes, but that's also true of government-issued currencies. That's what inflation is.
gift card
noun [ C ]
uk /ˈɡɪft ˌkɑːd/ us /ˈɡɪft ˌkɑːrd/
a card that can be exchanged in a shop or on a website for goods or services of the value that is printed on it
it's literally the same thing as cash, a check or a voucher.
it is also entirely dependent on the same external factors of cash, vouchers and checks: inflation, exchange rates, etc.
because it's simply a certification that you can spend that amount of money, in that currency, in that shop and that's it.
Also: a Patek Philippe is buying power as well
everything that can be exhchanged for something else can be defined as "buying power"
but an American Express or a gallon of water in the desert are buying power too.
I’d counter that buying power is the only metric that matters. All these abstractions of buying power may distract and distance you from this most important metric - often to the benefit of companies and nation states.
> I’d counter that buying power is the only metric that matters
I'd counter that protection of buying power over long periods is what really matters.
My CD collection had an enormous buying power in the 90s, now it's almost worthless.
I reckon one cannot rely on buying power of CD or DVD or VHS.
> often to the benefit of companies and nation states.
In this regards people, companies and nation states interests are usually aligned, i.e a stable currency that provides protection against wild fluctuations and retains its buying power and its usefulness.
Unless you are an enemy of the people, I don't see why someone should not like it.
Good points. Consider all the different investment instruments out there. Abstractions on top of abstractions on top of abstractions of buying power. Yes, a stable currency is desirable. But volatile abstractions are also beneficial to powerful entities.
an interest free loan, that's why it has "gift" in the name.
It works the same way as lending the money directly to a person, gift cards are simply more convenient to handle and are safer than cash, but other than that it's just a gift in the form of cash, no matter how many intermediaries are between the sender and the receiver, the input and the output will always match exactly.
If, for example, I give my friend Alex $20 to buy something for his little daughter but Alex uses it to bet on a football match and loses it, Alex has to take some money from his pocket and then buy the gift with his own money. Which is not different than saying he spent his money on the bet and bought the gift with the money I gave him.
If otherwise Alex wins, he will still buy the gift, but he will also have increased the initial sum by an x% which he can keep (or maybe try his luck again)
Buying a gift card is the same process, the company holding the money at one point has to give back something of the same exact value, it doesn't matter what they do with the money in between, what matters to the sender and the receiver is that the amount printed on the card is fully available at the check out (which is just lik getting the amount in cash and then paying with that)
Some of them do. Suppose the issuing company gets into some trouble and people fear they won't be able to make good, but then later they take care of it.
For that matter some government-issued currencies do that too.
when you say up and down you are referring to buying power. And yes, the buying power of a $20 grocery store gift card has gone way down the last few years. Consider how much milk and eggs you could buy in 2018 compared to today.
Totally agree. I only meant to illustrate that all abstractions of buying power fluctuate in their ability to secure basic needs - food, water, shelter, supplies.
And the "tethered to the dollar" part is important.
They are basically liquidity/risk discounted dollars, as are many of these examples of "buying power".
No one is tethering their Rolex price to BTC.
No one is tethering their home purchase budget to BTC.
Why?
It's all tethered to your income, in dollars, and your savings presumably mostly in dollars as well.
Even "jug of water in the desert" is tethered more to dollars than BTC because what are you more likely to have in your pocket, and why?
Dollars are tethered to the government taxing us in dollars, so we get paid in dollars, and our government has nukes & aircraft carriers and such.
Everything then gets tethered to it because thats what we get paid & save in.
BTC is tethered to nothing, and there is no natural value you can back into such that you can justify any price level of it.
Other than its usefulness as "untraceable" (what people think, but not what is true.. it is more like "unblockable") cash, and for money laundering/drugs.. it is a trading instrument for punters.
> No one is tethering their home purchase budget to BTC.
Whether you tether the purchase of a home to bitcoin or the US dollar is more a state of mind, tribalism, etc. Both the US dollar and bitcoin have no intrinsic value. They both derive value from a human belief system - I believe they have value and that others believe the same. They are both just networks in that sense.
> Even "jug of water in the desert" is tethered more to dollars than BTC because what are you more likely to have in your pocket, and why?
This is silly. But to add to the silliness - you could have bitcoin in your brain. Just memorize your words.
> Dollars are tethered to the government taxing us in dollars, so we get paid in dollars, and our government has nukes & aircraft carriers and such
Now THIS is truly different. The US dollar has violence on its side. I concede that bitcoin is a peaceful currency - at least thus far. Hopefully it stays that way.
> Other than its usefulness as "untraceable" (what people think, but not what is true.. it is more like "unblockable") cash, and for money laundering/drugs.. it is a trading instrument for punters.
This is political bias and parroting talking points of anti-bitcoiners. While your other points are thoughtful, this is not. Why not just call bitcoin a butthead?
Yes, this is the key dimension of the "currency" front. But bitcoin "advocates" (a term I'll use for diplomatic purposes) say that within a context that implies that is somehow a low bar to clear or just a consquence of the monopoly of force or somehow morally questionable. But becoming something people trust (or at least have some amount of confidence in multiple dimensions in) is one of the most difficult things for any new asset class or medium of exchange.
Some of the main ways currencies and commodities get there are value stability (sticking within a certain band with <100% annual swings), wide acceptance and utility. After 10 years of many techno-smart people trying to engineer cryptos to become that we are nowhere near any of these promises being fulfilled.
In general yes, but with the difference that the dollar (or other "real" currencies) are encoded in law to have a value with the whole state backing it.
Yes that is one small dimension of why the dollar is valuable. But a far bigger part is the fact that using dollars enters you into the US financial (and by extension legal) systems which has been far more stable, reliable and predictable than other systems over the last century. For a point of reference consider Switzerland, whose currency is a minor reserve currency and whose banking and legal systems are globally appreciated, despite the fact that they have no power projection and a tiny population in comparison to their financial markets. The Swiss central bank has even deviated from their usual stable policy since 2008 and yet still they see inflows.
I guess the difference is that you can live in a house. For the majority of people that's the real value.
Real estate market is also heavily (heavily) regulated, to the point that buying and selling houses require so much paperwork that it's not really convenient for scammers.
It's also quite stable, loans are secured by mortgages on the properties, I'm not sure anyone would accept bitcoins for the same purpose.
You sort of tipped around the main difference:
Real estate is illiquid and intransparent sure, but it is a non-fungible productive asset, you can get people to pay you rents because they need precisely your building. There are no comparable income streams for bitcoin (outside of Ponzi "yield farming") so it is illiquid without any of the benefits of traditional illiquid assets.
which entails a lot of the aforementioned paperwork and checks and law abidings.
if bitcoin could provide the exact same level of security, it could be used as an asset, granted it failed as a currency.
the problem is it was designed precisely to not adhere to the standards everyone expects from "old-school" transactions, hence its main purpose is speculation, and it's barely good at that right now.
I don’t think any of this is accurate. My house is a store of value but not easily traded for goods and services, but can be sold for local currency to facilitate that exchange. There are many crypto exchanges with conversion to many currencies, including fiat currencies, but also between other crypto currencies. This is how price discovery is accomplished. If it were illiquid as you claim then there would be a ton of arbitrage opportunity in the inefficiencies and mispricings of crypto currencies. However in recent times prices are fairly rational across exchanges and conversion to fiat. The fraud claims you have seen overblown, FTX not withstanding. But I’d note that all financial markets are rife with fraud, hence the regulation.
I don’t think regulation is a bad thing in crypto exchanges specifically. I think any rational crypto exchange would welcome it. Despite claims to the contrary compliant exchanges in many markets not aligned to big players start up all the time. That’s great, and I think a lot of crypto exchange operators have been hoping for a clear regulatory regime from regulators in the US. The current “you better comply with unwritten regulations or we sue you” regime is absurd.
Gold has intrinsic value as a commodity though. It's scarce, has industrial uses, and has aesthetic value to a lot of people. Bitcoin doesn't have that. Bitcoin has value entirely because people think it has value. As an inflation hedge it fuckin sucks because it follows the market. When the fed increased rates, bitcoin crashed. As a store of value, it's too volatile to really work well for that and small mistakes can leave you with nothing. As a currency, the transactions per second is way way too low to be useful.
Gold, like stocks and real estate, trades at some multiple of book (with metals this ratio is generally between 0 and 1, with stocks it's generally greater than 1). In fact, looking at the P/B ratio is often one of the first things someone does when evaluating an investment. That ratio for bitcoin is infinite which is why it's not an "investment" in the usual sense of the word.
That ratio is a somewhat arbitrary thing. Who says it's a good measure?
For gold, perhaps 20% of its value is its actual use and 80% is for the scarcity. For bitcoin it's 0% for actual use and 100% of the price is its scarcity.
When you look at it like this, the difference between gold and bitcoin is not nearly as dramatic.
This is a very valid point. However, the gold:<random currency> markets have been extremely liquid and somewhat transparent for the past thousand years. In the dark ages there was no way for someone to move the *global* gold:wheat chart by 50% just by executing shadowy trades at a single marketplace. Of course this is because medieval markets lacked a great deal of information synchronization, but it was also because medieval markets were actually decentralized.
I'm not sure what point you think you're making here, because this is in fact entirely correct for gold and why gold isn't some magic "better money" alternative.
Unrelated to the killing, tying you medium of exchange to a physical commodity was ill-suited to a time where the global productivity growth was double-digits for 50 years. Limiting the growth of your exchange medium to the rate at which a commodity can be extracted is almost as bad as going full command economy.
Well, the problem is you can easily trade gold for cash because it is socially acceptable to do so. If Bitcoin became outlawed, it would be very hard to exchange Bitcoin for cash, since it has no extrinsic value outside of being a financial asset (as compared to, for example, barrels of crude oil). That being said, I doubt Bitcoin will be outlawed in the West, and generally agree that it will be around for the long term.
> That being said, I doubt Bitcoin will be outlawed in the West, and generally agree that it will be around for the long term.
Well, not entirely without precedent, since private ownership of gold was outlawed nationwide in the US during the Great Depression. It wasn't fully legalized until 1974.
Wait till you hear that the first chairman of the SEC was a notorious market manipulator who was hired by his friend FDR to prevent anyone else from doing the things that made him rich. He also happened to be JFK's dad.
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.
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.
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.
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.
The British government has completed repayments on historically held debt which dates back to the 18th century[1] as recently as 2015 (they were related to the South Sea Bubble).
That's a 162 contiguous years of financial records.
Well, I think what you’re talking about is perception of risk. The perception of the risk that it goes to 0 is probably decreasing over time. But the expectation of future gains based on past performance is also decreasing over time. Most of the investors I feel are worth listening to see this and conclude two things: it’s here to stay but probably can’t go much higher without the broad market also going higher.
Power is more complicated. By design, Bitcoin has one block created by one miner every 10 minutes on average. All other work by all other miners is discarded and unused. So no, only a single miner is required to sustain the network. But, there is a economic incentive to add miners to the network when the price goes up, because even though only one miner gets rewarded per block, that reward is worth quite a bit. Currently approximately $1M of bitcoin are mined per hour.
There is no specific value at which all mining is unprofitable because mining difficulty is dynamically adjusted to maintain a 10 minute block generation rate regardless of the number of miners.
I mean, maybe, but if you pick an arbitrary currency, weighted by "market cap", btc has an extremely long way to go before being an unusually long lived one.
Someone with your mindset was probably saying something similar while living in Argentina in the 1920s, when it was among the top 10 wealthiest countries on the planet.
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...
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.
Tell that to people who lost their entire life savings when their fiat currency hyper-inflated to zero value (Hungary, Zimbabwe, Yugoslavia, Germany, Argentina)
Its network could stop functioning simply because it would no longer be profitable to mine it. Sure - a few hardcore believers would continue mining at a loss, but I doubt that they'd have enough computing power to secure the network properly.
No, the difficulty is updated every 2016 blocks. This should be once every two weeks, but if the worldwide hash power halves it'll of course take four weeks until it can update. The difficulty adjustment is capped to +300% / -75%.
The issue here is that the Bitcoin reward has to pay for the mining cost, but there is nothing preventing the Bitcoin price from dropping lower. So miners will either have to mine at a loss for (on average) a week until a difficulty adjustment, or turn off their equipment. Turning it off will make the wait even longer and the mining price per block will increase even more for the remaining miners - leading to more of them operating at a loss or shutting down which makes the problem even worse.
If the difficulty is too low then the network becomes vulnerable to a 51% attack. If it's too high then it becomes less profitable to mine and transaction processing speed slows down. So it has to be high enough to prevent attacks, but low enough for mining to be profitable.
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.
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!
The "transaction fees won't protect against reorgs" argument assumes that miners count the value of future block rewards at 0. This is poor logic that models mining as a single game of the prisoner's dilemma. Modeling it as a repeated game arrives at the opposite conclusion: that most miners will cooperate to some degree, because the future value of their rewards depends on it.
I say this as someone very much opposed to the "deflationary" model, because I think it's bullshit that generates a "landed gentry" (thanks, spez) that can forever dominate the distribution of a currency. If you're going to make a currency, inflation of some degree is required to ensure fair(er) distribution over time.
I just think the idea that, when block rewards dissipate, miners will suddenly lose the ability to think more than one block into the future should be called for what it is: bad logic. It's also readily disproved by the most trivial glance at their history of long-term, forward-looking investment.
> whereas every single transaction in the Bitcoin network is visible to everyone and, moreover, cryptographically verifiable by everyone.
It’s pretty easy to hide wash trading in the ledger to manipulate the price of bitcoin to artificial levels.
Just because transactions are public doesn’t mean that there isn’t associated data hidden (eg, identities, if dead wallets are really dead, etc etc).
Bitcoin may be great, but to say it must succeed because it’s transparent doesn’t address the risk that there is no basis for value and it’s only purpose is speculation and tricking a greater fool to keep the price up.
>(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.
This can be done pretty easily, once enough countries ban and condemn it for its contribution to the climate crisis and to crime. There's no need to catch every transaction, just to ban it enough to shrink the mining pool. Once the active network has shrunk enough, the transparent permissionless structure ensures we can ran the obvious attacks on it.
Since it's now underground and these actors aren't the nicest of people, coordinating the forks to resist the attacks will be difficult and costly. People give up after each attack, which makes running another attack easier and so on. Eventually maintaining the network as is won't be worth it to anyone.
> Anyone who predicts Bitcoin's demise must explain precisely how and why its network would stop functioning.
No, they don’t. There are a variety of scenarios that do not require the government to eliminate the ecosystem.
For starters, they could make if very, very difficult to use for large capital purchases (houses, cars, etc.)
They could impose fines on businesses for accepting crypto — or specific types of crypto — as payment for goods and services.
Can they completely eliminate your ability to trade a bitcoin with your friend? No, of course not, any more than the federal government retrieved every ounce of gold back when that was illegal. But they can make it so painful to use that most people simply won’t.
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.
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).
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.
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!
> 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.
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.
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.
You don't need a "nation-state", any old sovereign state will do fine.
I've read that various cryptocurrencies (including Bitcoin) are/have worked on quantum-proof verification algorithms. Not sure what it entails, but people are working on it.
> Everyone becomes worried about being able to extract money/value from the crypto ecosystem as a whole due
Some of those "everyone" are people who live in countries with both currency controls (so they can basically only buy their national currency, or cryptocurrencies), and a horribly inflating national currency. Even a non-exchangeable-for-fiat Bitcoin is better in their eyes than the only other alternative they have. No one wants to spend 100 trillion Zimbabwean dollars on a loaf of bread.
In the more stable world you'd need the failure/shutdown of exchanges approximately simultaneous with the strengthening of those national currencies. It might happen, but it'll be a while.
I'm anti-crypto, I just don't see it happening in the near term.
> Some of those "everyone" are people who live in countries with both currency controls
A minority of people flooding to the exits can easily remove all the liquid cash from the system and cause it to collapse. There's probably no more than around ten billion in cash at any one time supporting a nominally trillion dollar financial system. A 1% stampede for the exit can produce a crash by draining that liquidity to zero.
And when the dust settles it will all have been a transfer of wealth from the poor to the rich.
If you actually are using it as a currency, you don't need it to have any liquidity (with respect to exchanging it for another currency). You just need the person you're dealing with to prefer it to the alternative.
That would just re-price Bitcoin. The price could crash, a lot, but that won't necessarily reduce adoption. I know I've got a lot of $0.01 limit orders that'll have me hoovering up Bitcoin if it ever reaches that price.
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.
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.
> 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.
Barring a reasonable, coherent, and factually-supported explanation for why an existing trend might not continue, the existing trend continuing tends to be a reasonable default prediction.
There's no promises of future gains or profits made explicitly by the protocol, nor is there any central party pushing/benefiting from its adoption. There are plenty of other crypto coins you could accurately label as Ponzis. It's unfortunate that bad actors have tarnished the Bitcoin name...
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.
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.
I remember being annoyed on the 2nd day of Econ class when the prof mentioned that empirically we know human preference graphs can be cyclic but we have to pretend that's not true for any micro to work at all.
"Wrong" isn't a boolean. There is a vast spectrum of wrong, and Newtonian physics is so unwrong that you can go to the moon with it. Economics is so wrong it has never worked.
There's not a scale at which acyclic preferences is a good approximation of what actually happens, so that's not really a good comparison. But even given that, structural engineers use nonlinear models that are more complicated than Newtonian physics, whereas economists say "math is too difficult so we'll use a simplifying but false set of assumptions"
There are a lot of examples where the assumptions, especially this one, of microeconomics hold. Profit-maximizing corporations don't have cyclic desires. In many cases, people don't have cyclic desires (e.g. in the flavor of the soda they want). Microeconomics starts with those, much as becoming a structural engineer requires understanding the basics of Newtonian physics.
They get into more complicated math in more advanced courses, but they don't start there. All of engineering, science, etc, is "the math at a deeper level is too complex, here's a simplifying but false set of assumptions". And then a subset of people who learn about that care about cases when the assumptions break down and studies the next level.
Right, but Newtonian physics can fairly accurately predict gross body mechanics whereas economics can't even predict the large-scale wage or price level. They'll simultaneously model the income effect and the replacement effect of taxes and then shrug and say "of course we can't say in advance which one will dominate".
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
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.
I think it's pretty clear that most crypto currencies a Ponzi schemes.
But... There's enough demand for an international unregulated currency that I think it'll be around for awhile. There are plenty of people that tolerate its flaws. (Specifically, the volatile value.)
I personally think once the scammers and "true believers" move on, Bitcoin will stay around until some other international "unregulated" internet money comes around.
Parent: Anti-crypto (the majority here), up to the point on comparing Bitcoin (which might be a bubble, that's not the point here) to a Ponzi (that it is not: Supply is fixed, there is no new deposits paying previous depositors).
There's no such thing as "payout" in free markets—someone buys your thing for money (sometimes less money than you paid for it, sometimes more money than you paid for it). So, while it might be a speculative bubble (like Beanie Babies, or Tulips, or whatever), it's certainly not a Ponzi. Also, the bigger fool theory (which is what you're conflating it with) is also not a Ponzi.
This might be confusing, because many other crypto products are very Ponzi-like. For example, Voyager literally paid new "stakers/depositors" (a.k.a. investors) with old "stakers'/depositors'" (a.k.a. investors') money to reach the insane return rates they were advertising.
I made no claim. I asked whats the difference and got a pedantic explanation of what a ponzi scheme technically is, like anyone whose been in one of these threads hasn't already heard that same pedantic explanation. Who cares? It really doesn't matter if its a ponzi scheme or a pyramid scheme or some other scheme. What is transparently obvious is there is nothing there there and eventually the music stops and leaves the bigger fools holding the bag.
Something collapsing isn’t an example of the Lindy effect not working. It literally predicts when things will collapse. It’s just a life expectancy for things with a power law distribution.
A healthy 20-year-old can fall over dead from a brain aneurysm. Doesn’t mean actuarial tables aren’t useful.
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.
> ...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]
Partially disagree: the Lightning Network [1] facilitates almost instantaneous micro and small transactions which can later settle in aggregate to the Bitcoin base layer.
I've used this to purchase goods both online and in person seamlessly. Custodial solutions (trust another party to hold your funds, like a bank) are turnkey. Right now the truly non-custodial solutions (i.e., run your own lightning node) are definitely in the realm of hacker/tinkerer, but continue to improve in terms of accessibility.
I pay for flights&hotels in travala.com using lightning. I also refill my phone credit or buy gift cards (e.g. for Uber and whatnot) on BitRefill.com. And I buy cheap stuff in Amazon thanks to Purse.io
Can you? I've read a few articles from journalists who went there only to find that vendors refused their payments, or asked for Visa instead.
The one from Bloomberg comes to mind: "He tells me surfers sometimes ask if he’ll take Bitcoin. He’s taken it on a few occasions, but the dips in price burned him. “Now I tell them it’s $25 if they want to pay in Bitcoin,” he tells me. “You don’t know when it’s going to go down.” " [1].
That's also to say nothing of the leader of the nation potentially losing millions of public funds day-trading crypto on his phone, the Bitcoin Bonds that no one bought, or the IMF refusing to offer funding to the impoverished nation as a result of this callous fiscal policy.
Ah yes, the lightning network will save bitcoin. How many years will we hear the same song and dance before we can finally conclude this is a pipe dream?
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.
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.
"Most people no longer use gold as a store of value" may be true wherever you are, but not universally. The Times of India, for example, estimates than Indian households hold gold estimated at about 40% of annual GDP, and half of all households have purchased gold in the last two years.
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.
I’m not saying fiat currency doesn’t store value… just that, of the functions of money, it’s better as a medium of exchange + unit of account where you care way more about price stability and liquidity.
A good store of value is scarce, durable, transferable and divisible - and I think most people agree that you compromise scarcity to get price stability.
We don’t have to take anyone’s word on this though you can just look at what endowments and wealth funds hold to see what people believe are the best stores of value: https://www.nbim.no/en/the-fund/investments/#/
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.
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?
Gold has a perception of wealth but history makes clear what it actually is. For example, the hordes of gold the Spanish plundered from the Americas directly contributed to the bankruptcy of the monarchy.[1] Because they hadn't actually seized/mined "wealth" - they'd simply inflated their currency away without any commensurate expansion in productivity.
People who believe that it would be "easy" to trade gold for other goods have also clearly never tried - since the entire modern banking system came into existence on the basis of the sheer difficulty of directly trading gold for other goods. No one knows how to value gold, they don't know what it's worth other then a brick is probably a lot. If they could, then the fake jewellery scam wouldn't be as successful as it is[2].
Even better, the influx of gold from the New World was preceded by the period called the Great Bullion Famine where Europe-wide shortages of silver and gold led to long periods of deflation across the continent!
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.
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.
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.
Even confirmed transactions aren't safe. The blockchain can be retroactively edited by anyone with enough hashing power: the only thing they need to do is to generate a longer alternative chain than the current public one.
There’s also plenty of fun things you can do like exclude some particular exchange from being able to commit to the blockchain. As in sorry Coinbase your transactions are no longer welcome and there’s effectively no way for them to directly fight back.
The only way around that is to constantly spend more money on hashing power than any attacker, but that cost is effectively unbound. Trying to stop some random billionaire doing it for the lulz means sky high transaction fees forever. No problem for an actual currency in widespread use, but a serious issue for a hypothetical store of value which needs constant investment just to break even.
"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.
> How long do we need to give Bitcoin a chance to gain mainstream adoption as its been 15 years already?
"We" don't need to give it a chance. Time is giving it a chance, every new day, indefinitely. For all I know, it could take decades, not years, for Bitcoin to gain as much credibility as, say, gold, which has been around since the advent of ancient human civilizations. I don't know. Maybe it will happen much faster, like everything else online?
> 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.
The biggest use of Bitcoin today is as an alternate store of value, by a large mass of "HODLers" who, as their name suggests, will hold on to it for dear life.
Bitcoin is not the main asset used for speculation, extortion, scams, ransoms, drug deals, etc., today. The main asset used for illegal activities today, worldwide, is the US dollar. It's not a coincidence that the briefcase full of $100 bills is a prop in so many movies/TV series depicting illegal shenanigans. I suspect that more money is stolen in USD via hacked bank accounts, hacked credit cards, hacked online accounts, hacked SIMs, etc. than in BTC via difficult-and-dangerous-to-execute online ransoms.
A presence on CNBC is very obviously not the "mainstream adoption" that was meant. Adoption as in, I can spend this token in legitimate and common means, not just to buy a battery operated car for a short while or on small subset of non-nefarious online market places.
> 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.
> We sure live in interesting times!
I'm not really sure it's that interesting, or new at least. Since ancient times people have valued things as a store of value that have have been valued by other people as a store of value for a long time. Some of the best material examples are gold, silver, natural gemstones and works of art. These things are overpriced by orders of magnitude compared to their material economic value.
Bitcoin just takes it to the extreme in having negative objective physical value, i.e., in being immaterial and physically completely worthless, while taking up resources to even exist as a concept or meme.
So sure, it very well might be here to stay as a store of value for a long time. If history is any guide on these matters, it will be a store of value (and a profitable area of speculation) for the rich and big powerful institutions while the enduring and persistent meme in the heads of the common people keeps its value alive.
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.
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.
No intrinsic use. No mass. No degradation. Transports at the speed of light. Perfectly scarce and not debaseable.
All other commodities exist at various vectors outside of this null point. They have various usefulness in and of themselves. They have mass and volume. They degrade at different rates. They take a lot of time and energy to transport. They aren't perfectly scarce and some are absurdly abundant.
Humans have overloaded various commodities throughout history with the memetic concept of "moneyness". Mostly gold and other precious metals because they have properties close to the null point that we find most important (primarily scarcity and close to zero degradation). We hoard these non null commodities because we came to collective consensus to imbue them as the database of our debt to each other, otherwise known as money. However, this had the negative effect of tying up otherwise useful commodities that we might have been able to put to productive work. This money also had the negative effect of being difficult to transport, store securely, and fractionalize.
Then came government backed, faith based currency. It's a near null point commodity and we really like that when choosing something to imbue our collective moneyness concept in. No intrinsic use. Low mass (paper) to no mass (digital). Limited degradation (paper with replacement service) to no degradation (digital). Easy transport (paper with high denominations) to light speed transport (digital). However, it's scarcity is highly questionable. To quote Satoshi, "The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."
Bitcoin is the null commodity because it solved the final piece of the puzzle that we tried to solve with fiat currencies. Eliminating trust in central authorities and perfect scarcity.
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.
That is a sunk cost without value. Actual commodities can be redeemed for something valuable, for example you can eat an orange. You can't turn the BTC back into electricity or anything else of tangible value.
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.
> 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/ .
I have not seen a single of use Bitcoin within 50km of me _and_ online outside of uses in degenerate countries and trading them for the sole purpose of trading them.
This feels like flat-earth theory, which will never go away, but their "science" if you call it that, is so flawed that they can't be used for anything outside of small terrestrial physics.
Similarly, Bitcoin itself will never go away. But there is no way the average folk will be able to wield them given how many times they have been scammed out of their fortune.
And? I am not advocating for gold either. Gold hinges on the fact that its yellow and nice to look at or whatever. It is entirely feasible for the world to be possessed by zeitgeist such that gold or anything yellow doesn't mean particularly much. This could happen, for example, if gold and diamonds can be manufactured artificially. What then?
Wait... Is it not that within our current understanding of physics gold can only be manufactured artificially from an already heavier metal? (which are already more expensive than gold I think).
I don't know the details but, basically, it's not because we can manufacture synthetic diamonds that we'll one day be able to manufacture non-radioactive synthetic gold.
The value of gold is related to the amount of labor necessary to produce it as a commodity. Contrast with aluminum and iron -- because they are relatively plentiful, they take significantly less labor to produce as commodities.
OTOH there's a big and growing problem with gold exchanges, too, who often don't actually have possession of the metal they notionally sell. It's estimated total gold "holdings" by investors exceed the world gold supply by about 50%.
2. Err, I can't see any big banks or other entities touching COIN, and the CRIMINAL proceedings that it will likely be embroiled in with a 10-ft pole!
3. Maybe BTC will come to 'dominate' the 'crypto' space, but that space will be a smaller and smaller part of the US (and global) economy. Although it never got very big to start with. BTC is used for approximately 0.0% of US transactions right now (rounded to nearest decimal place).
> 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.
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.
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)
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.
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 — basic logic be damned.
Regulated exchanges and coins in cold storage you can’t do much with is the worst of both worlds for those people.
The “not your keys set” is fine, most of them got their BTC at $1 and if BTC falls to $3 they still tripled initial investment.
The people who got in later don’t understand “owning” a bitcoin on an exchange and having the key in your possession are VERY different. Those people are idiots.
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.
This is like regretting not playing the lottery after they publish the numbers as you now know the winning numbers, post facto.
You make decisions with the information you have. No one had any way of predicting Bitcoin pricing (or the cheap money trend that juiced its price & crypto companies funding rounds).
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.
John points out how any custodial institution gets to operate if they are not trading securities, but any other asset, while using this mere observation to bolster an alarmist view about custodial institutions that trade crypto, as if there is something unique about crypto exchanges, without considering that all spot markets currently can function in the absence of any regulatory framework.
John then amplifies the (unresolved) SEC stance about why the SEC is the most accurate regulatory authority to enact this crusade of getting exchanges into [SEC] compliance or nonexistence. In theory there are also some crypto assets that can be traded on a custodial spot exchange without SEC involvement, such as a Bitcoin-only exchange, alongside…. which other cryptos? Nobody knows but the SEC says its clear!
John hides behind the idea that its the beginning of a broader enforcement gauntlet, while talking exclusively about the SEC enforcement and not any other possibility.
The crux of his alarm is that there is no survivability path, which is also not an absolute. Even in a world where all crypto exchanges must be registered securities exchanges only trading registered crypto securities, the incumbent crypto native operators can participate in that, and establishment investment banking players are already positioning themselves to participate in that world. So custodial crypto exchanges dont go away in any of those scenarios, they just get bigger and more robust for even larger establishment beholden pools of capital.
I find it funny that the guy wrote a long, seemingly thoughtful post. Then, he responds to all the top replies with memes and maybe a phrase. The pro-crypto people there also seem to be talking past his statement, trying to convince him of the utility of crypto rather than the SEC's justification for regulation.
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).
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.
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.
> 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.
First: I guess you guys are talking about mining pools, not miners.
Second: so long as there's one single mining pool that is not colluding, then any censorship attempt is going to be moot. You would need to have, not just 51% of mining-pool collusion, you need 100%!
Third: even if you had 100% collusion, this "problem" is actually being solved with technology, it's called Stratum V2 protocol. Stay tuned.
Last but not least: I'm really surprised this level of ignorance still exists in the HN community wrt crypto. I guess we are still early.
What we are talking about is something that already happened: the DAO rollback. So, it’s impossible? I’m really not surprised this level of ignorance exists in crypto fandom.
If the DAO rollback had been a successful attempt at censorship (e.g. 100% collusion of miners), then there would have not been a chain-split, but there was one, and as a result of that, both ETC and ETH exist today.
Now, if you're suggesting one-off cases like this are the counter-argument for the censorship argument, I'll bring you the bad news: this has never happened on chains that are not shitcoins, e.g. bitcoin.
(And what I mean with that is that bitcoin has never hard-forked to attempt a censorship attack like it happened with the ETH community. BTC has only hard-forked in emergency situations to fix bugs.)
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.
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.
> 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.
> 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"
> 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"
So? If sums is high enough they STILL can't confiscate it. In some cases it is preferable to spend some time in jail versus giving up outrageous fortune. They still can't take it by force. Also, only a few countries with backward laws (like the United States of America) have laws that allow that. Something insane like what you propose would never be possible in a developed country with a solid judicial branch like Estonia, for example.
You can't travel overseas with billions of gold in your pocket. You can literally travel everywhere with billions in crypto saved inside your neural pathways. Crypto is better gold.
I feel like surely yours isn't a point made in good faith, because the point I'm trying to make is so simple.
If I've got $20 bill or a gold bar in my pocket, I can use it at the store if I can get to the store, but someone could easily confiscate it from me. If I have a $20 bill or gold bar buried in the woods behind my house, it can't be easily confiscated from me, but I can't use that at the store, even aside from whether I can access a store. If I have a cryptocurrency wallet, I can use it in the hypothetical cryptocurrency store if I can access it, and it also cannot be easily confiscated from me (assuming reasonable security measures).
The real criticism is "what cryptocurrency store?" and that's the real reason cryptocurrency isn't very useful. I'm not arguing that cryptocurrency is good or useful, I'm arguing very narrowly for one specific point: "owning cryptocurrency" is more like knowing something than it is like possessing something.
People still use it as a permisionless financial platform, which allows the delivery of novel consumer goods. Primarily gambling, speculation, and other forms of entertainment.
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.
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.
Completely agree with the general idea of your comment. Although there are non-custodial (decentralized/P2P) exchanges that, because they don't hold user's funds, would not fall into the category that you have described. E.g.:
* P2P exchanges: LNP2Pbot, hodlhodl, etc.
* Decentralized exchanges: FixedFloat, Uniswap, etc.
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.
The demand for simply converting from fiat to crypto to hold or spend it does exist, but is probably negligible compared to wanting to do the equivalent of investing or day trading.
Crypto has no value without the exchanges. You either have a worthless asset that's too esoteric to use or you have exchanges to make them worth something and all the scams and financial instability that comes from that.
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.
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?
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".
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.
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.
There has always been a tension between individual freedoms and societal good, it has not been clear cut for any generation in American history.
As an example, 1933 is the origin of the Accredited Investor rule in the US which directly interferes with commerce between two consenting adults in order to reduce societal fraud and risk. You can find similar laws from any decade you care to mention.
Well said. There certainly has to be some oversight because there will be predators who take advantage of others. I am not even sure how to handle cryptocurrency, but I do know money runs this world and the powers that be do not want to let go of that power and nor have the inability to tax and control the flow of money. With that said, it is fairly obvious the core elements of freedom are not thought of in the same way as when I was young. For example, I never thought freedom of speech would be diminished as rapidly as it has.
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.
No, the question is do we as individuals think it is worth the trade offs. And so any answer here is irrelevant, because it only applies to the person answering the question.
Unfortunately for people who say no to it, it's the same as people who don't like fiat money or the gold standard or whatever: youre stuck with it whether you like it or not. I don't think this stuff is going away.
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?
Regulations mandate a surveillance module attached to the trading system to detect suspicious trading patterns, and I guess also check the stability of the overall market place. Regulators get visibility into a trading platform through these mechanisms.
Unregistered crypto-firms do not have to allow SEC access.
This thinking does not apply to decentralized exchanges, only CEXs.
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.
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
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").
> 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.
> 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?
> Blockchains are unnecessary in a world with trusted entities and functional legal frameworks.
This is such bullshit. In practice the banking system is a messed up piece of old crap.
Let me illustrate my point from my experience a few weeks ago: Had to transfer 20 euro's from my account to my sons account, same European bank. In fact, my sons account is also under my supervision. It was on a Saturday, so guess what: no transfers in the weekend! Had to wait until Monday for the money to go through. Yeah, if Monday was a Holiday, we had to wait until Tuesday.
Is that the efficiency your "trusted entities" can come up with? Don't get me started on "instant cross border transfers". If a well known bank can't handle 20 euro's from one account to another, then what do you expect cross-bank, cross-border does?
In contrast, look at the Nano cryptocurrency: 0 fees, sub second transfers, any amount, anywhere in the world.
Your theory of "trusted entities" all sounds nice, but in practice it's old bureaucratic bullshit. Thanks to blockchain the technology has a solution. Only now is still proper adoption.
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.
No. If people are seeding a file that you care about on bittorent today, there's really no mechanism to ensure that it will be available tomorrow besides seeding it yourself.
> 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.
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.
> 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).
For those that haven't looked at crypto lately and still think there are few uses, take a look at this: https://thevalueprop.io/
Cryptocurrency is a bad term, they actually make for terrible currencies, but many think they only have value when you can buy coffee with them because of the name.
What they are good at is making finance, ownership, and coordination, especially internationally, much more efficient. Which is far more niche and why the actual usage is rarely covered in mainstream media.
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?
I don't think it's clear that PFOF is bad for retail investors. Many people argue (see Analysis section of the article you posted, and also Matt Levine's writing about it on Money Stuff) that PFOF is actually a net good for retail investors, getting them both price improvement and lower commissions.
Also:
> In the United States, accepting PFOF is allowed only if no other exchange is quoting a better price on the National Market System. ... Transactions must be executed at the best execution, which could mean the best price available or the speediest execution available.
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.
> In Canada, PFOF is not allowed on Canadian listed securities,[5] so Canadian brokers charge commissions,[8] however, according to the current Canadian securities regulations, brokers can accept PFOF on non-Canadian listed securities.[9] It is also banned in the United Kingdom.[5][10] According to Euronext, European authorities have regulated payment for order flow, and the practice is allowed in a number of national jurisdictions across Europe.[11]
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.
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.
It doesn’t really matter to actual blockchains what the sec does or doesn’t do. It does matter to the centralized bandits like coinbase who tell people they are “buying crypto” when in fact they are buying a liability that may or may not be worth anything in bankruptcy court.
I’ve never held any crypto in a exchange since mt gox, and a new cohort has learned the same lesson from ftx and the fake “defi” platforms.
Sure, but it's still a tough scenario if the vast majority of people don't have a reliable way to convert fiat currency to or from cryptocurrencies (or to or from cryptocurrencies that regulators don't approve of). That would likely mean less liquidity, less broad appeal and application of applications using cryptocurrency, and potentially more stigma.
Less liquidity between the fiat and crypto ecosystem cuts both ways - it makes fiat less valuable since low liquidity creates a class of products and services that cannot be purchased with fiat. If people still want those services, they will barter for them instead using p2p platforms. Examples that already exist include - sending Amazon packages for crypto, providing free or discounted rent for crypto, food delivery services for crypto, etc. This creates a situation where more goods and services can be purchased with crypto than without it, meaning crypto is better money than fiat.
Liquidity between fiat and crypto privileges centralized insiders who have the connections to fit into regulators molds and thus leak compliance into the wider crypto ecosystem. Thankfully regulators are too dumb to understand this and are shutting down the main threat to crypto, which is coinbase and it’s kind.
I hadn't thought of it this way and appreciate hearing this argument. But I think you're too optimistic about the extent to which people have adopted cryptocurrencies for their own sake and actively prefer them to fiat.
What was interesting about cryptocurrency was the idea of holding your own private keys and conducting transactions directly on the blockchain. In that scenario, everyone is their own “exchange” (kinda) and the SEC might let it roll. Cryptocurrency exchanges really have almost nothing to do with actual cryptocurrency. They just use the terminology (and the hype) as levers to try and build an unregulated exchange. Centralized exchanges are regulated - so here comes that process.
Crypto can't pump without the exchanges because it's too inconvenient and risky to use for most people. It has value because of the exchanges bringing in retail pumping them.
Yes, this claim along with "I am 100% objective, independent and neutral" are bombastic and serve only to undermine his argument. He seems like a smart and reasonable person, and some of his other writing that I've just come across, e.g. https://www.linkedin.com/pulse/why-sec-regulation-enforcemen..., is free of that type of extravagance, so it's unclear why he would make the claim you cite. Perhaps just the "Twitter tends to lower the quality of all discourse" factor.
Why exclude Bitcoin in all of this? is it unlike other cryptos in it's 'unknown ICO'? What makes bitcoin a commodity, vs. Solana, Cardano and Polygon being securtys. Is it the distribution of tokens, method of ICO, tech stack?
Snowden showed us the US gov has complete worldwide monitoring, so there's no way they don't know who satoshi is/ was/ were... There's some unknown POI, with $56B and you don't think the CIA and FBI aren't extremely concerned about that person. People always pointed towards bitcoin as being used for 'Money laundering' but its the perfect honey-pot. It's not private, it's completely public and i can tell exactly where and how you interact with the chain. So many idiots think, 'bitcoin's private! let's launder money through it in a super stupid way that still hits all the KYC flags. Oh, your wallet uses tornado cash wash? all incoming and outcoming wallets are now flagged.
Why didn't the US ban Bitcoin out the gate?
It's not like they US doesn't have presidence here. They shut down and put in jail previous creators of 'internet money'.
China (Who also has world-wide monitoring) was also extremely fast in noticing it. in 2013 with a market cap of 1.3b, they banned it while the US was completely apathetic.
I used to be optimistic, but it's 2023 and the only non-ponzi use case of crypto are stablecoins. What people actually want is to easily trade and transfer US dollars.
Some tokens are pure ponzi schemes (like shib, btc) some are ownership in something that could have productive use (eth, some other smart contract platforms tokens). Yet that use isn't actually happening, so from a general pov it's all a ponzi. The most likely outcome is that nothing productive happens at all.
For an average buyer (esp. btc) mark-to-market returns are already underperforming stocks for years when looking even at previous ATH. So many people own some crypto there's no possible separate source of greater fools elsewhere - most current crypto owners will end up at a massive loss. The long-term underperformance compared to other assets will get even worse.
From the pure hype perspective, I think there's room for one last bubble. There's an army of bagholders (of every token) that will throw good money after bad when prices are sufficiently high again, giving up real wealth (again) in exchange for virtual tokens of either zero or much lower value. They still hold hope of at least going back to 0, or maybe even making money. After the next one, they won't. It will get really depressing.
Curious: what exactly are the mechanics of this seeming dire prediction?
Is it being implied, or threatened, that forthcoming actions will lead to the insolvency (and resultant loss of customer funds) of the worlds major crypto 'exchanges' ? Again, by what particular mechanism(s) is this to occur ?
I don't outright disbelieve it, but nor is this the first rodeo we've seen.
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.
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.
> 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.
> 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 best you send some of it directly to someone else with no trusted middleman
This is impossible.
If you trade crypto, at some point that money has to become fiat for you to pay bills, pay taxes or cash out. If the currency _is_ crypto, you either have to transact on-chain where it is inefficient and slow by design, or off-chain, where you are trusting a middle-man by definition.
Either way, you are beholden to the currency controls of your country, and unlike you, they have the resources of a nation-state and can de-anonymize and use violence to force you to bend the knee.
> If the currency _is_ crypto, you either have to transact on-chain where it is inefficient and slow by design
Not slow or inefficient enough so as to be unusable.
> Either way, you are beholden to the currency controls of your country, and unlike you, they have the resources of a nation-state and can de-anonymize and use violence to force you to bend the knee.
Everything a person does is beholden to law. I don’t see how that’s really relevant.
> it merely aims to be a new mechanism by which value is transferred, which by most objective measures it's very bad at doing.
What objective measures are you using? Over $3 Billion in value is transferred over the Bitcoin network every day. There has never been any downtime, nor has it ever been hacked, and fees are flat and transparent (just a few bucks to transfer unlimited value across the world).
"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?
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.
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?
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.
So you're saying 10x the usage would stabilize the currency and also increase the value by 10x or was the 5-10x in the previous comment only about usage?
A 10x on price would mean a significant shift would be much more expensive, as whales would have to be much bigger to cause a substance movement.
Btc isn't just crypto, its the block chain too. So not only can you pay/collect, but it's publicly available and things like smart contracts are easily possible in an open environment.
So we can do things like say: send x btc to y address if weather.com reports it's 50 degrees in Des Moines on May 8th at 9am, or whatever, all sorts of settlement problems are solved with no middleman who can stop it.
If all that is true and SEC registration is so great for investors, why isn't any exchange satisfying that market demand and registering with the SEC? Seems like a no-brainer.
1. It's not clear whether exchanges like Coinbase could technically comply with the rules for running a securities exchange, because the fine print of "what to do" doesn't fit well at all with the technical reality of "what does it mean to hold a cryptoasset" [1]
2. The SEC want token "creators" to register them as securities. Which they could do, but they would then be subject to SEC oversight, which is precisely what they're trying to avoid. ICOs are really a way of raising money from retail investors like a public company, without following any of the regulation around public companies.
So even if we solved 1., there might not be many tokens left to legally trade on a registered securities exchange.
He's pointing out lack of regulation. That typically means more regulation is needed, and is likely on the way. Not that crypto platforms will be banned and die.
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.
This is hilarious. So crypto exchanges selling “securities” will be driven out of the US. Ok. US users will have to first buy “approved” cryptocurrencies like Bitcoin, transfer them to a non-US exchange or p2p exchange like Bisq and use a VPN to buy whatever they want.
The real winners here are these lawyers and apparatchiks who have never created anything of value in their entire life.
Correct. And if you personally don't see anything of value being created by cryptocurrencies, nobody is forcing you to invest or work in this field. It's the beauty of free markets when they're allowed to operate properly.
Btw ever wondered why in the year of our lord 2023 you can't trade stocks on the NASDAQ after 4pm EST, and why an ACH transfer takes 3 days to settle? I guess it's easier to piss away billions in lawyers and lobbyists to gatekeep the competition instead of R&D to improve your products.
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.
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.
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.
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.)
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.
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.
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.
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.
I did vote for my president, who hired the central bankers, and senators, who confirmed them. They also built the entire structure of the current fiat system over time.
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?
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.
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.
yes its all that, but people invest in crypto as they don't want to be regulated any more.
government control people using money, all these people are more worried about loosing this control , rather than securing financial security of people.
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.
A large economy would never do that because it devalues their own currency. He’s currently making people buy Rubles with Euros AND there’s no transaction fee. Europe might be working toward energy independence from Russia but that’s still a while away.
Plus, what point does BTC have to Russia? They can’t exchange it for Fiat and no one accepts it for anything of useful value. At best It’s just an extra step between them getting their Fiat currency. He could convince other nations to use BTC, but he would be better off convincing them to use the Ruble. Nation States don’t want un-sanctionable assets - they just don’t want to be victims of those sanctions.
Even if Putin did do any of that, it just proves the SECs point. The US Government does not want people transacting with sanctioned nations and individuals. They would rather make it illegal than lose the financial power they currently have. For better or worse, governments don’t want crime (or more specifically their definition of it) to be supported by their citizens. This is why the SEC (and soon, Congress too, I’m sure) won’t stop. The existence of Cryptocurrencies are antithetical to their own existences.
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.
Nop. I noticed r/cryptocurrency flags enormous amount of articles from many recognized websites. And this article is based on a quote from former SEC official.
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.
Just wondering what you think a "real world" finance expert looks like.
Venture capitalist? Fund manager? Nobel prize winner in economics?
Money is made up, a human social construct. A room of of the best experts can't tell you with any accuracy what will happen next, unless they're the central bank.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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.
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.
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
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.
> 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.
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.
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.
> 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.
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.
> Cash has been used for facilitating crime since currency was invented
How is that relevant? Silver and papyrus were once popular too.
> it will always be far easier to commit crimes with cash than with anything else
It's not easy if I want to pay someone who isn't local to me, or whom I don't want to meet in person, or if I don't want to possess physical criminal assets.
> 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.
wolverine876: The question is whether crypto in particular facilitates crime, and it does.
evandale: Cash has been used for facilitating crime since currency was invented
wolverine876: How is that relevant?
The question obviously isn't whether crypto facilitates crime because USD facilitates crime better. If the ability to facilitate crime was a question of whether you should use a currency or not then we wouldn't be using USD anymore.
> It's not easy if I want to pay someone who isn't local to me, or whom I don't want to meet in person, or if I don't want to possess physical criminal assets.
No idea what you're trying to say here but it doesn't seem like you're arguing in good faith. Everybody will accept USD for any good or service anywhere in the world and USD is less traceable and more anonymous than bitcoin which defeats another "bitcoin is only used for crime" argument. No. It isn't only used for crime. It's actually a terrible thing to use for crime because of how traceable it is.
I'm not sure how refuting a weak augment is a personal attack but I strongly encourage you to contact dang if you feel like I was disrespectful and he'll give me the talking to I deserve and possibly ban me. He's a really friendly moderator.
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
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.
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.
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?
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.
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?
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).
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!