Embarrassed to say, this article was wrong. The journalist had found an unsigned proposed order, which was linked in the body, and misunderstood who wrote the document and its meaning. Apologies for posting it, was not aware it was factually incorrect.
This SEC action has nothing to do with Binance being a crypto exchange. It has to do with it being an exchange, a broker, an asset custodian, a market maker, and a trader for its own account, all at once, with no regulation. Sam Bankman-Fried was lobbying Congress to make that legal. That plan went nowhere. Binance just assumed they could get away doing all that.
Worse, the SEC has already found large transfers out of Binance into what seem to be Zhao's private accounts. That looks an awful lot like the FTX situation. Which is why this action was taken. That's what happened with just about every crypto exchange that went bust, all the way back to Mt. Gox. The insiders dipped into customer funds. The SEC is trying to stop the leak before the money disappears.
This is not a new crypto-related problem. Stockbrokers routinely go to jail for misuse of customer funds.
The coinbase one makes it much more clear that yes, in fact, just being a crypto exchange is the same as being an illegal unregistered securities exchange, and no, the SEC will not let you actually register as one (coinbase has tried).
> This is not a new crypto-related problem. Stockbrokers routinely go to jail for misuse of customer funds.
It being illegal to run ponzi schemes and sell unlicensed securities is not new, but it very much is a crypto problem. The fact that there are currently zero crypto exchanges that are licensed with the SEC, and the SEC's filing against coinbase, together make it clear that it is not legal to operate a crypto exchange in the US.
It is possible to legally operate a stock brokerage. It is not so for crypto. That's a notable difference.
The SEC certainly thinks gemini is running an illegal exchange, and said so quite clearly when charging them of that earlier this year: https://www.sec.gov/news/press-release/2023-7
The case has not been dropped, and I think pretty clearly states the SEC's opinion, which is quite consistent with what I said above. It is not legal to run a crypto exchange in the US (under current security laws I should add).
That case appears to be specific to Gemini Earn, a "staking" product where users would loan Gemini money and in exchange would get returns on that money through Gemini/Genesis's investment of those funds.
Under the Howey test (a security is "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party") this is pretty clearly an unregistered security IMO. Whereas e.g. using Gemini solely to exchange N USD for M BTC with the customer retaining ownership the whole time is probably not. So had the Winklevi stuck to being a traditional exchange, they could have avoided this specific issue.
Of course, the SEC seems to believe that many shitcoins are also securities ("Buy this token for a % share in our company! Totally not equity!" is... not a convincing argument). But that's not what the complaint you linked is actually about.
> That case appears to be specific to Gemini Earn, a "staking" product where users would loan Gemini money and in exchange would get returns on that money through Gemini/Genesis's investment of those funds.
Yes. You put money with them, they invest it, you get some return, maybe. That's unquestionably a security.
Note that there's real staking, as with Etherium validators, where you lock up some Etherium in exchange for a cut of the gas fees. You're still exposed to Etherium going down, but the risk to the principal is low. Then there's fake staking, where you lend someone assets which they then control and invest. That's not "staking", it's an investment deal. A bad deal, because it has a capped upside and an unlimited downside. Someone else thinks that they can get a higher return than you can, but you take the risk if they fail. See Terra/Luna, BlockFi, etc.
This is only true if you trade in crypto that is a security.
Notably, Bitcoin is not a security. But every stablecoin, or any other more complex system that is in some way related to something that exists in the real world is.
So you could run a Bitcoin exchange, but if you add any of the new, complex stuff you will end up getting shut down by SEC.
If Bitcoin looks like a security, acts like a security, trades like a security, is used by almost everyone as a security, then why are we pretending that it shouldn't be regulated like a security?
See my reply to your sibling comment. Bitcoin is not a security, because there is a legally well established definition of security and bitcoin does not meet it.
Security in the US is defined by the Howey test, and other jurisprudence. Bitcoin does not meet the definition any more than collectible trading cards do.
Any crypto that imply some kind of stake or ownership of something that exists outside of that instrument are securities. This includes all stablecoins, all defi, and probably plenty of other things I don't even know about. But pure currencies that are backed by nothing other than scarcity and other people's expectation about their value are not securities. They are either commodities or currencies. Which of the two they are is still unclear and will probably have to be litigated at some point, as this distinction has other tax and regulatory significance, but neither option gets SEC on your ass the way unregistered securities does.
This is in fact an argument against the usefulness of crypto/blockchains in general -- unlike some proponents claim, you really can't actually use tradable crypto to do anything interesting, like name resolution or whatever, because if you can freely buy and sell the tokens, as soon as you can do anything more interesting with them they probably become securities.
What the rational on stablecoins? The Howey test requires an expectation of profit which I think isn't even debatable there (also an "investment" which seems dubious, but at least debatable if you don't define an investment as also requiring an expectation of profit).
Not to suggest that I'm speaking in favor of them, due to bad security properties, I wouldn't... and not to say that they don't run afoul of non-SEC rules... I'm just not aware of the rationale that they're securities.
You can be regulated as a bank by New York State meanwhile also be running an unregistered securities exchange. That is in fact what Gemini is doing, as the SEC has said.
Hmmm. It is really good to know that this has nothing at all to do with crypto, and that it is just a coincidence that this Mt. Gox, FTX et al. are crypto companies. I am completely reassured. Thank you.
> Stockbrokers routinely go to jail for misuse of customer funds.
While some people might take reassurance in a comment like this, regarding the SEC and it's duty to the public, it's hard to look at the mortgage meltdown of 2008 and conclude that banking & investment in this country, and its overseers including Congress, is anything but corrupt to the core, and they are only going after "big crypto" because they're not going to let a bunch of amateurs get in on the action.
"Amateurs" here meaning people that didn't go to an Ivy League school and isn't part of the same clubs. They definitely are not small fish. That's the point. They made out like bandits (literally), and they're not part of the "club," therefore, they have to go.
After everything that's happened in this space, the number of "true believers" I'm seeing here is astounding to me.
After a decade of use the tech hasn't found many real world uses beyond gambling, drugs, confidence schemes, money laundering, tax evasion, and other financial criminality. This is 100% the community's fault, as they're the ones burning a lot of real world capital to build this stuff but have very little real value to show for it at the end of the day. I believe in creative destruction, this is just destructive destruction of capital.
Meanwhile the rest of the world is rapidly catching up. I have no trouble sending fiat money where I need to at the click of a button, with fraud and clawback protections in place. No chance of accidentally losing my savings, etc.
I don't understand how intelligent people can continue to believe this stuff is the future of finance. All signs point to this being a big nothingburger, crypto utopianism works great in theory but not in practice. The sooner this dream dies the better.
I guess it's something something human nature. I guess it's why we can't have nice things as a species. sigh
People from wealthy countries tend to reject the legitimacy of these uses because "my country is stable and could never have these problems", or "if buying food is illegal, you shouldn't buy food, you financial criminal", or "I have no trouble sending fiat money where I need to at the click of a button", but that doesn't mean everyone on the planet is in as fortunate a position as you. It's quite selfish to say a technology is useless unless it benefits you personally. I wish humanity as a species could rise above that level of selfishness. Crypto gets its value from being a system that continues working quietly and reliably in the background when other centralized systems falter or turn against their users. As long as it's still helping people, we should keep building it.
> As long as it's still helping people, we should keep building it.
What if it's hurting more people than it's helping? Just seems like a handwavy way to ignore the scams, fraud and collateral damage. We're talking billions.
If we want to spend capital to help people in other countries, there are better ways of doing so.
I do not believe for one second that the people from rich countries spending money in this space are doing it to help poor people in other countries. It's great spin though.
If it's hurting more than it's helping, then we should probably get rid of it. But you'd need to bring some data proving as much. The attention grabbing headlines that linger in your memory are a biased sub-sample.
For bitcoin specifically, a notable crypto skeptic Igor Makarov determined[1]:
> illegal transactions, scams and gambling together make up less than 3% of volume
To me, 3% is an acceptable level. It's a lower percentage than the black market in many countries even.
The reasons people contribute to crypto projects are as diverse as the reasons people contribute to open source in general. Some people want to get rich overnight, others contribute as part of their day job so they can go home at 5pm, and others are genuinely altruistic, though you may not believe it. It's reductive to paint everyone with the same broad brush.
> The attention grabbing headlines that linger in your memory are a biased sub-sample.
Agreed, repeated media narratives lead to bias (myself included) which stands in the way of reasoned argument. Data is good.
> illegal transactions, scams and gambling together make up less than 3% of volume
I've read that over 70% of trade on the unregulated exchanges are wash trades / fake volume. [1] Huge huge red flag to me, may not be technically illegal, but evidence like this runs counter to the "helping the poor and unbanked" narrative. Market manipulation usually hurts more people than it helps.
> It's reductive to paint everyone with the same broad brush.
Fair enough.
I still say there's a lot of smoke here, and a few clear major wildfires.
Today's takeaway for me is that there are a lot more of people here that are heavily invested in crypto space than I guessed. People with money invested that need to see the space succeed. Makes it hard if not impossible to have a reasoned discussion here. It's probably fruitless to continue to talk about crypto here.
> illegal transactions, scams and gambling together make up less than 3% of volume
> To me, 3% is an acceptable level. It's a lower percentage than the black market in many countries even.
Yeah, but that's because the vast majority of volume comes from speculation and wash trading lmao.
What do you think the ratio of speculation and illegal activity to legitimate use cases is? I'd be willing to be it's greater than 10:1, maybe even 100:1
You don't have to bet, the data is in the paper I linked. 75% of bitcoin volume is speculation. Meanwhile in the traditional economy, 95% of global financial activity is speculation (see below).
What level of speculation would you say is high enough to justify throwing away the remaining productive uses of an asset class?
---
In 2019, forex volume was $6.6T per day[1], or $1716T per year. In 2019, global GDP was $87.3T[2]. That's less than 5% economically meaningful activity.
The paper that you linked doesn't say that 75% of crypto activity is speculation, at least as far as I can tell. Are you referring to the line that says
>Starting from 2015, 75% of the real bitcoin volume has been linked to exchanges or exchange-like entities such as on-line wallets, OTC desks, and large institutional traders.
Because there is certainly plenty of speculation outside of those entities.
And for the traditional financial system, when you said "see below", are you referring to the ratio of forex volume to global GDP? Because those metrics are terrible proxies for "global financial activity" or "speculation"
I would recommend doing some reading on what GDP is, and how it's calculated. It's not the same thing as the total volume of transactions, or even in the same ballpark. The United States alone had more than $128T in just non-cash payments in 2021 (https://www.federalreserve.gov/paymentsystems/fr-payments-st...)
You should also understand that all forex activity is not speculation. I would think that global trade would fall under the bucket of "economically meaningful activity", no?
> Because there is certainly plenty of speculation outside of those entities.
Sure. And there's plenty of non-speculative activity outside of those entities as well. The paper explicitly looks at on-chain activity only.
> Because those metrics are terrible proxies for "global financial activity" or "speculation"
Maybe so. I put forward my sources, but there could be a better way of calculating it. My broader point was that speculation is the majority of activity, and I doubt that's any different whether you're talking about fiat, gold, oil, crypto, or any other widely used asset/asset class.
If you had to calculate that same statistic, what methodology would you use?
> You should also understand that all forex activity is not speculation. I would think that global trade would fall under the bucket of "economically meaningful activity", no?
In one sense it is meaningful, in another sense it's just a middleman market maker taking their cut, due to the inefficiency of humans having multiple currencies. Either way I don't see how the meaningfulness of trade changes once you introduce crypto.
Say I'm subscribed to a Australian musician's patreon. I send her USD, then a middleman sells that USD and gives her AUD. I also support a French musician. I send him BTC. He (or a middleman) sells that BTC for EUR. How can you say either of those situations is more or less economically meaningful?
> the data is in the paper I linked. 75% of bitcoin volume is speculation.
> Sure. And there's plenty of non-speculative activity outside of those entities as well. The paper explicitly looks at on-chain activity only.
You claimed that 75% of bitcoin volume was speculation. There is nothing in the paper to support this claim. I'm not arguing that there is 0 non-speculative activity, I'm saying that it is significantly less than 25%, and you're making up bogus statistics that aren't supported by your sources in the way that you say they are.
> Say I'm subscribed to a Australian musician's patreon. I send her USD, then a middleman sells that USD and gives her AUD. I also support a French musician. I send him BTC. He (or a middleman) sells that BTC for EUR. How can you say either of those situations is more or less economically meaningful?
Yes, these are both economically meaningful. This type of transaction is much more common in the fiat world than it is in the crypto world (where speculation and wash trading drive the majority of transactions).
Currency speculators make up a tiny portion of the real-world economy, while they make up the vast majority of the crypto economy.
> There is nothing in the paper to support this claim
The paper literally says, "75% of the real bitcoin volume has been linked to exchanges or exchange-like entities"
You may think the source isn't perfect, but at least I'm bringing some objective data to the conversation. If you disagree, please show me some data of your own instead of just repeating your preconceived bias (which I'm aware of already)
I repeat: If you had to calculate that same statistic, what methodology would you use?
> This type of transaction is much more common in the fiat world than it is in the crypto world
Source?
> where speculation and wash trading drive the majority of transactions
Source?
> Currency speculators make up a tiny portion of the real-world economy
Source?
> while they make up the vast majority of the crypto economy.
> The paper literally says, "75% of the real bitcoin volume has been linked to exchanges or exchange-like entities"
Which is an entirely different metric than the % of bitcoin volume that's speculation. If I link a paper that says "1% of squirrels are albino", and I claim that it says that 1% of bitcoin trading is speculative, then I'm not "bringing objective data to the conversation"... I'm just lying
My original comment was
What do you think the ratio of speculation and illegal activity to legitimate use cases is? I'd be willing to be it's greater than 10:1, maybe even 100:1
You responded by lying and trying to shut down any actual data-driven discussion
> You don't have to bet, the data is in the paper I linked. 75% of bitcoin volume is speculation.
And then you have the audacity to ask for a source on the claim that "currency speculators make up a tiny portion of the real-world economy"? How many people do you know who are participants in the real world economy (should be literally everyone you've ever met), and how many of them are FX speculators?
Now compare that to crypto, where the entire marketing apparatus is built not upon its current value proposition but instead the idea that value will go up.
Why would I spend my time digging up data to quantify things are incredibly obvious from observation, when you're willing to lie and make up facts to support your narrative?
Of course not. If you disagree, at least try to present a coherent argument instead of just talking about squirrels. What entities do you think are missing from the list: exchanges or exchange-like entities such as on-line wallets, OTC desks, and large institutional traders
That might be overcounting even, since online wallets have nothing to do with speculation. So I'll correct myself: speculation is at most 75%, definitely a bit less.
> trying to shut down any actual data-driven discussion
I responded with exactly the data you asked for, just read it again :) If you need me to do the math for you:
> And then you have the audacity to ask for a source
Yes I do, since all data presented so far disagrees with your unsourced (though very strongly held) opinion.
Here's one example of how reality may be counterintuitive: High-frequency traders can make thousands of trades per second. How many people do you know who receive thousands of paychecks per second? From that alone it's plausible, obvious even, that forex speculation volume is substantially higher.
What's obvious to you isn't obvious to everyone else. That's why, in order to build a larger society, we need to set aside our biases and look at objective data in order to make informed decisions.
> Now compare that to crypto, where the entire marketing apparatus is built not upon its current value proposition but instead the idea that value will go up.
That doesn't sound too different from all modern investing. The stock market is also fueled by the illusion of the possibility infinite exponential growth. Bogleheads don't care about index funds' current value proposition. The grocery store won't accept your VTSAX as payment for a gallon of milk. You're just hoping that later you can sell your VTSAX to a greater fool.
Maybe the problem is you take everything the "marketing apparatus" says at face value? If one day you saw a TV advert for a pill that didn't work, would you also decide the entire medical industry is a scam?
> Why would I spend my time digging up data to quantify things are incredibly obvious from observation
Reality can be counterintuitive. It was once incredibly obvious that the earth was the center of the universe. Why should I spend my time digging up data when it's incredibly obvious from observation that the sun revolves around the earth?
HN is a place to engage with our curiosity, rise above anecdata, get out of our limited personal bubbles, and maybe even learn a thing or two along the way! Your immediate personal experience is not the objective reality for everyone on the planet. If you're just here to think with your emotions, ignore data, and rant about how much you hate change, you might feel more at home on Facebook or Twitter.
> when you're willing to lie and make up facts to support your narrative?
I'm sorry, I was under the impression that you at least had a basic understanding of cryptocurrencies and the drivers of transaction volume.
If you don't even understand that speculation can (and does) occur outside of on-exchange transactions, then I don't think this conversation is worth continuing.
I now understand that you probably weren't lying, you were just clueless about what you were talking about and actually thought that exchange volume is the only place where speculation occurs lmao.
In case it still isn't clear to you: on-exchange activity != total speculative activity. It isn't an upper threshold on total speculative activity. It has no concrete relationship with total speculative activity. Both on-exchange and off-exchange transactions can be speculative, or non-speculative. The metric you provided is not "exactly the data I asked for", it's a complete non-sequitur that betrays your ignorance on the underlying topic.
> That doesn't sound too different from all modern investing.
This is a valid comparison, you're on the right track here! Crypto ownership is very similar to modern investing, in that it's a speculative asset class, and not primarily being used for its function as a currency.
If you replaced the subject matter with something more mundane, this exchange would be hilarious. It almost reminds me of a Monty Python sketch.
1> Here's a paper that calculates the average lifespan of humans. The average lifespan is 75 years.
2> That's because the vast majority of humans eat junk food lmao. What do you think the lifespan of a human is? I'd be willing to be it's less than 10 years, maybe even 100 years
1> You don't have to bet, the data is in the paper. 75 years.
2> The paper only looks at the Americas, Eurasia, Africa, and mainland Australia. It doesn't even look at Tasmania. You're making up bogus statistics that aren't supported by your sources in the way that you say they are.
1> Maybe so. I put forward my sources, but there could be a better way of calculating it. If you had to calculate that same statistic, what methodology would you use?
2> One time I saw someone die from a heart attack when they were 45 years old, and 45 is way less than 75. Why would I spend my time digging up data to quantify things are incredibly obvious from observation, when you're willing to lie and make up facts to support your narrative?
1> Your personal observations are not universal objective reality. That's why data is important when running a society at scale. Why exactly do you believe the inclusion of data from Tasmania would significantly change the results? Do you have any sources for your wild claims?
2> I'm sorry, I was under the impression that you at least had a basic understanding of geography. If you don't even understand that humans live in Tasmania, then I don't think this conversation is worth continuing. When talking about the lifespan of humans on earth, the lifespan of humans in most countries on earth is a complete non-sequitur.
Anyway, if you don't understand why data is important when discussing policy, there's not much to be gained here. I hope you find truth if you're looking for it, and peace otherwise. Cheers.
What a ridiculous analogy. Add statistics to the pile of topics that you're overconfident yet completely naive about.
What you're describing is a scenario where you take a sample, and use its measure of central distribution to make inferences about SAME METRIC in the population. This is perfectly valid!
But the obvious flaw with your argument isn't "this paper says that 75% of X volume is speculation, but it's excluding some data", it's that the paper presents literally no claims or evidence about the % of volume that is speculation lmao.
You have been conflating 2 entirely unrelated metrics this whole time. I said this before, but I guess it needs repeating: the % of volume that happens on-exchange is not a proxy for the % of volume that is speculation. These are completely different things!
If you want an accurate analogy, this would be like if you said "this paper shows that the average human lifespan is 4 years", but what the paper actually said was that the Olympics are held every 4 years. It's a completely unrelated data point, irrelevant to the topic at hand, and you'd have to either be ignorant or intentionally deceitful to pretend that they are the same thing.
Just bush league stuff... and as I said earlier, if you can't grasp this concept then I don't know what you're doing on a crypto thread.
I actually do think that you have serious underlying confusion about the nature of what speculation even is, because you keep pretending like it's something which can be objectively measured by using on-chain data. Data is obviously a useful tool when it's available, but making up bullshit statistics to support your argument is malignant.
I should not have said speculation, the article makes it clear that 70% plus of unregulated exchange trades are wash trades.
Speculation (short selling etc) is a necessary part of a healthy financial system. Wash trades on the other hand are simply market manipulation.
GDP / production is what it's all about. The dollar is powerful in part because of US GDP. The financial sector exists to help put capital to work and extract more P (and to do so more efficiently). The financial sector cannot exist on it's own without meaningful production of value underneath it.
The crypto exchanges are different from forex in that forex facilitates people from other countries doing business with each other helping convert the value of one country's productive output into the value of the other countries productive output. Exchange rates rise and fall relative to GDP from the two countries.
I don't think comparing crypto exchange trading to forex makes sense, as that the crypto currencies don't have a meaningful connection to any nations GDP.
I think the point I'm trying to address here is that there is no P with cryptocurrencies. So the "crypto financial sector" seems more about price manipulation and gambling than it is helping facilitate trade between two economies.
Each of my links has examples of people exchanging goods and services in bitcoin for various reasons. Do you consider that productive economic activity (the "P")?
If you don't: why is it productive when I buy a car using dollars, but not productive when I buy a car using bitcoin?
If you do: why must a currency's worth be tied to one particular country's GDP? Why can't it instead be tied to the global production of everyone on earth, in any country, who has chosen to use that currency? I think it's actually a sign of strength when someone goes out of their way to adopt a global non-politcal currency, instead of succumbing to inertia and using the currency that was foisted on them by the geographical circumstances of their birth.
You're talking about billions of... dollars. Sounds to me like more scams exist because of fiat. Are you implying that scams don't exist with dollars, and it's the crypto alone which makes for fraud? Or is it that, if it's abused for corrupption and fraud, then it's hurting people so we should do away with it, like fiat?
Of course scams exist with dollars. Scams exist wherever people hold things of value that others want.
People want the USD. I'd argue that crypto is mainly a dollar/fiat scam, as getting their hands on fiat seems to be the point of it. "I'll trade you magic beans for those USD" isn't about the beans, its about the USD.
People are free to trade BTC on the blockchain no matter what the US government says. It's anonymously cashing out to dollars that seems to be their main goal, and the source of all the ecosystem's trouble and reputation problems.
It seem clear to me that almost all of the utility in the crypto space revolves around fraud and criminal behavior. There is little intrinsic "value" in a crypto token, it seems to be nothing more than an unit of account for a large extra-governmental online casino. It empowers and amplifies criminals who do more collective damage than the few "unbanked" that are helped.
And so my argument is that because of the above, crypto is not The Future of Finance by a long shot. And my original point was that there are a surprising number of people here that still believe it is in spite of the evidence.
> It seem clear to me that almost all of the utility in the crypto space revolves around fraud and criminal behavior.
You are along the right path. Now take it one step further - what if "fraud and criminal behavior" is against despotic regimes like Taliban or Putin or dictators around the world? See my examples here: https://news.ycombinator.com/item?id=32406095
People tend to reject it because it makes negative economic sense for a country with a powerful currency to allow the replacement of that currency, so they won’t.
This is a great comment, I’ve always thought that the huge blind spot of true believers is that if something looks good on paper, it does not automatically mean it will transfer into the real world.
Crypto currency would work terrific in a society with fixed rules, unchanging laws & regulations, and constant rule followers. In other words, this would be amazing in a society filled with robots. Humans are not that. Humans are error-prone, emotional, conscious, questioning, moral, and very special creatures.
No matter how strong your passwords are, how “offline” your crypto wallets be, or how hacker proof your crypto holdings are - this doesn’t matter! All someone has to do is break into your house, hold a gun to your head and say “transfer your entire bitcoin holdings right now or we kill you”. Just like that you lose your entire life savings with absolutely no recourse or chance to reverse anything. We are immediately faced with an undeniable human issue. A human is breaking the rules of society. A human is fraudulently taking something that is not theirs. A human is using the threat of physical violence in the real world. Not only is Crypto/blockchain technology not equipped to handle this situation, not being able to do anything about this situation is a fundamental feature of the ecosystem.
> Not only is Crypto/blockchain technology not equipped to handle this situation, not being able to do anything about this situation is a fundamental feature of the ecosystem.
Yeah, in it's pure form (no interop with fiat) it's the financial equivalent of anarchy. Rules/laws are impossible to enforce, no police or justice system to stop bad actors. It's lawlessness. This is a feature, not a bug.
(1) The sole reason Bitcoin exists is because all governments decide inflate the money supply by printing, and in doing so, they knowingly devalued the efforts and work of everyone who saved their money or relied on fixed income like a pension.
(2) Just this May the USA decided to add 1.5 trillions of inflation on top of the already high levels of inflation people are already experiencing. And I can guarantee that they will do this again and again, in good years and in bad years, both democrats and republicans equally (look at the record, not what they say).
(3) Bitcoin was explicitly created for these reasons, and it has _way_ over succeeded in its goal _financially_.
(4) The other complaints you have are the fault of the government, they have purposely let the space become lawless in the hope that it would diminish the space, or that it would die by itself, but the problem with this is (1), (2) and (3)
(2) not sure what you mean by 1.5 trillions of inflation, but your point seems to be that inflation is bad. I disagree. High inflation is for sure bad, but zero inflation is also bad. Capital needs to be put to work, inflation forces people with capital to use it (productively) or lose it.
(3) I don't agree that bitcoin has "way over succeeded", seems like an opinion and not a fact.
(4) It's not the fault of the US Government that Bitcoin is lawless. It was designed that way from the get go. The government can't stop people from sending and receiving bitcoin on the blockchain.
Why would anyone want to trade their ideologically pure bitcoin for those filthy fiat dollars they've been so desperate to escape from? Bitcoin maximalists say it's all about the bitcoin, but at the end of the day they want a pathway into the USD system.
I don't see any real arguments here on how this is the future of finance.
> After everything that's happened in this space, the number of "true believers" I'm seeing here is astounding to me.
I think part of that appearance is the rest of us have just kinda moved on from commenting on this space. We've been saying "this crap is dumb" for ten years, it's getting old at this point. Let the true believers play around in their litter box; I got other stuff to do :)
> I don't understand how intelligent people can continue to believe this stuff is the future of finance.
My experience is that all of the really intelligent people interested in crypto did leave after the ~2012 wave of excitement. At that time when you saw people give talks on crypto they were almost entirely technical with very little focus (or interest) on becoming rich. That was when the people involved tended to be technical idealists. I didn't buy that crypto was the future then, but I wanted to be wrong.
Fast forward to ~2017 during the next crypto boom and the conversation was around the non-technical people at technical companies getting excited. People did believe crypto was going to become the currency of the world, so there was still some idealism, but it was mainly about getting in to get rich. By this wave a good chunk of the idealists I knew were entirely disillusioned.
Then the 3rd wave which just happened to correlated with a massive injection of money in the market by the Fed. At this point it was just literally get-rich-quick dreamers with more dollars in their hands than sense. Nobody I know who has gotten in during this period even has a coherent vision of what the future looks like, they just have too much money and think crypto is the way to get insanely rich one day. It's also when people completely unrelated to tech started getting involves. People who don't even know how to use a wallet, and rely 100% on 3rd parties to manage all of it.
People are holding on to crypto for the same silly reasons that coworkers of mine keep all their vested stock in companies that have dropped 50%+ in value over the last year. It's because they earnest believe that the era of low interest, free money is the norm. They believe this current macro is just a blip, and if they just hodl a bit longer it everything will go back to "normal".
Isn't that almost always the logical consequence once you understand how Bitcoin works and you believe it can actually work as a safe haven investment?
Those who believe it can not work are most probably not invested. Those who believe it can work are most probably invested.
Hadn't considered this. I just figured there are a lot of people here that "believe" in crypto in theory but just don't happen to be playing in this space yet, instead watching from the sideline with interest. I was doing this for a long while (watching since 2011) but never spent a dime until I could be firmly convinced, which never happened.
You're suggesting that most/all of these pro-crypto commenters have real skin in the game. If so, then there are a lot more people here than I guessed with with disappoint in their future.
This is a pretty intelligent crowd, so the blind spot surprises me. Such is human nature.
It's not a blind spot, it's very on brand for a VC message board to have a lot of "greed is good" philosophy people who think that making money by mild trickery is perfectly moral, and that there's nothing wrong with getting people to buy into your fancy MLM so you can extract some wealth from the system.
The only value crypto has to the vast majority of people is to exit back into fiat, and doing that is only profitable if the trade value is higher than when you bought in, and that requires new money keep entering the system to be on the other side of your exit trade.
>hasn't found many real world uses beyond gambling, drugs, confidence schemes, money laundering, tax evasion, and other financial criminality
Lots of people believe the war on drugs is a stupid, counter-productive endeavour, and indeed empirically there's no evidence of its success. The value on crypto is absolutely in that it gives common people a means to "fight back" against the power of the state and it's never-ending quest to control their private lives.
Most "financial criminality" in practice works out to "anyone doing anything the US government disagrees with", and not everyone believes the US has the right to police how the rest of the world spends its money. Nobody sanctioned the US when it killed hundreds of thousands of civilians in Iraq; do you think that's a fair system?
> Lots of people believe the war on drugs is a stupid
Agree 100%. I must emphasize that the war on drugs is a political problem.
> The value on crypto is absolutely in that it gives common people a means to "fight back" against the power of the state and it's never-ending quest to control their private lives.
Cryptocurrency claims to offer a solution to political problems, but the political problems it creates are worse than the problems it claims to solve: Its very hard to conduct commerce when the value of your money fluctuates widely; and (for drugs) there's no regulations guaranteeing the quality of the product.
I voted to legalize pot 8 years ago, and now I can go to a store and I have plenty of safe products to choose from. I wish I could do the same for psychedelics; and I'm rather sure that the opiate epidemic would be easier to contain if recreational opiates were also guarantied quality.
Cryptocurrency (and drug markets hidden on Tor) aren't going to solve what really is a political problem.
> The value on crypto is absolutely in that it gives common people a means to "fight back" against the power of the state and it's never-ending quest to control their private lives.
The cost of that bit of freedom being that it funnels all of their meager savings to the top of the pyramid, making a few very wealthy people even more so.
SVB execs knew the risks of having too many long term low interest securities. The Fed repeatedly warned SVB about it's problems. SVB ignored internal recommendations until it was too late.
If this was a systemic "fiat dollar" problem then many more banks would be failing.
Also, the "fiat dollar" system includes parts like "the justice system" that will attempt to resolve conflicts between independent parties in a fair way, and oversight system that attempts to push the value, use, and attributes of the fiat system in certain directions, which can be influenced by the democratic system, which isn't perfect but definitely exists, and includes the police system which ostensibly is there to protect your rights over any dollars you own, and a government system to offer you perks for taking part in the fiat dollar system (such as roads and other shit taxes pay for) and an economic system that assures you the availability of pretty much anything you want to trade for that fiat.
Cryptocoin enthusiasts seem to look at all that, look at how it all isn't perfect, see how that imperfection allowed a big bad event (2008) to happen, and completely throw the baby out with the bathwater. They ignore how the imperfections in the system were intentional, based on misguided and purposefully inaccurate economic theory, that was broadly popular and pushed by the broad political system because of that popularity (literally democracy), and that it can be fixed.
Instead, they want to replace it with a supposedly deflationary system (because gold bugs are still apparently taken seriously in their philosophies), where there is no such thing as property RIGHTS, because you only "have" what you physically control. This is considered a desirable property in fact. Then, this system is also DESIGNED, intentionally so, to profit a select few who already had significant resources. The system, by design, accrues more benefits to those who already have power or resources.
Then they try to tell you that this system somehow benefits you, the normal person.
so apply that same standard to "crypto". where you blame the executives at a poorly run companies instead of the sector or asset class they happen to cater to. and the customers for putting up with it.
mismanaged companies that make the headlines coexist with organizations that function well and make zero headlines "even" in the crypto space. the quotes because it shouldn't be surprising but its odd that this persistently low signal level of discourse is what's prevalent on this otherwise analytical community.
Crypto, Aliens, Science, and Equality are the topics that you really should’t look at discussions for here unless you know what you are getting yourself into, or just want to watch the burning dumpster fire. At least with Crypto it is relatively easy to spot the weird grudges or patently self-interested reasons for continuing to argue for a failed system.
I’m sure when this use case fails there will be another new use case that can be used as the Single Thing that crypto was made and defined for, you always need to find more sources of Greater Fools..
standards within the crypto ecosystem follow a proposal and ratification process that takes years, this is a highly active area and highly collaborative
there are people that have the exact same information as you that said "I'll contribute" instead of "I'll find reasons to reinforce my disdain"
those standards get ratified and the crypto ecosystem begins catering to additional industries and additional people
I mean, this isn't much different than the true believers in the liberating value of cash. And, at large, if you meet someone carrying 100s of thousands in cash with them, you have met a criminal. :D
Just like if you have a small vendor that takes cash only, they are probably tax avoiding. Buying drugs? Heck, even legal drugs for some states require cash.
I'm also still highly amused at just how inappropriate blockchain techs are for crime. It is literally recorded basically forever.
> I don't understand how intelligent people can continue to believe this stuff is the future of finance.
I think you're overestimating average intelligence, and/or how well intelligence translates to common sense. Some of the craziest people I've ever met were absolutely brilliant. Still crazy.
Having internet money that is cross border, instant, efficient and censorship resistant is difficult to build, so it takes time, but it's incredibly valuable as it removes a lot of frictions.
> After a decade of use the tech hasn't found many real world uses
The use case was found over a decade ago: "A Peer-to-Peer Electronic Cash System"[0]. I don't know why HN commenters seem to think we are supposed to come up with other use cases.
To answer your question plainly: because Bitcoin addressed the value question by just letting it float, meaning that its value and the stability of that value are directly tied to its uses that drive demand (as with all currencies). This also led to the ecosystem being dominated by speculation, giving exchanges outsized importance - and simplistically implemented exchanges are a great setup for exit scams.
Contrast with say Hashcash where anybody can make more for a fixed amount of computation, so there would be little point in speculating on Hashcash tokens.
One also has to wonder how much Bitcoin's asymptotically limited supply directly caused the blooming of thousands of shitcoins [0] to satisfy the demand for monetary units. If newcomers could have just straightforwardly minted their own like Hashcash, would there have been as much of an incentive to go create competing currencies?
(I'm not some Hashcash maximalist or something. It's just an example of a system with a different paradigm of monetary creation, regardless of its other flaws)
[0] (not that Bitcoin itself isn't a shitcoin, being non-fungible and all)
> the number of "true believers" I'm seeing here is astounding to me.
Because maybe when you see crypto, you see scams (SBF, Terra, etc). When we see crypto, we see legit decentralized asset like Bitcoin or massively successful open source project like Ethereum.
> After a decade of use the tech hasn't found many real world uses
Or maybe, there are legit uses but you are ignorant because of your bubble? I compiled some examples here long time back: https://news.ycombinator.com/item?id=32406095 (and this has only grown since)
> money laundering, tax evasion, and other financial criminality
That just depends on your pov ("freedom fighter vs terrorist"). If someone is trying to protect their wealth from Venezuela, Putin, Taliban or other despotic regimes, that is still "money laundering" in those regimes' eyes. See my examples above.
> I have no trouble sending fiat money where I need to at the click of a button
My colleague begs to disagree. He can send fiat USD to his native country but official exchange rate is suppressed and he loses a lot of value through fiat channels.
> I don't understand how intelligent people can continue to believe this stuff is the future of finance.
I don't think this will supplant finance as much as augment it. Also, maybe you haven't yet had real conversations with intelligent people who believe in crypto?
> it's something something human nature
Yup. Wanting to escape oppressive regimes with your wealth. Or freedom to protest your government's tyranny (imagine the uproar if Trump had frozen assets of all the BLM protestors in the summer of 2020. Now see what happened when Canadian goverment froze the assets of truckers).
Sorry I just had to. I think crypto as an investable asset class is finished. SEC is sending a very clear signal here. It’s entirely the community’s fault for failing to properly manage this space. They actually earned public’s trust (sometime during the pandemic). And then they threw it all away for a few bucks.
There's also group 3: people who don't give a damn about crypto's actual use cases but see the line go up and think they can make a quick buck by buying at the right time.
I'd wager that group 3 is much larger than groups 1 and 2.
Which is why crypto stuff goes down with a huge bang, while alternative Reddits decay and die in obscurity - in crypto case, group 3 is funding the new shitty crypto "products", while in alt Reddit case, group 3 is funding Reddit itself.
You know what, this narrative is funny, because 99.999% of the time in which "crypto" is used to evade taxes, it's the kind of taxes that would need to be paid because of capital gains on the crypto assets because their value increased. But most of the time, they are unrealized gains, which means that tax evasion didn't actually happen. But anyway, let's now think of the cases where the person sold the crypto back to fiat: how easy is to evade taxes at that moment? Not very, because most exchanges report trades to authorities.
And anyway, the fact that their crypto balance increased is due ultimately to politicians doing QE! So they tax us in a hidden-way via money-printing, and after the scarce assets increase in value because of this, they want to tax us again.
The big problem comes when they want to use their crypto horde to buy real world stuff.
Want to buy a house? Now you need to convert your crypto into fiat and a deed transfer. People will start asking where your funds are coming from. This is where you tend to get caught.
> People will start asking where your funds are coming from.
This is a weird statement.
If it's a cash offer, it's a seller's job to determine if you have the money, not if you paid taxes on it.
If it's a mortgage down payment, then the bank is more interested in if your assets are going to disappear (e.g. are they actually a loan from a third party?). I've never had a mortgage bank inquire about my tax situation.
If you're talking about IRS audits... then yes, they might be curious how you purchased a giant asset without any declared income. But that's similar to any unreported income situation.
>> People will start asking where your funds are coming from.
>This is a weird statement.
Not in the UK. Here there's a legal obligation on the conveyancing practitioner - which you have to use - to confirm the source of funds for the purchase. They "will ask questions about your salary, request bank statements and ask you to give details of any family inheritances"[1].
> If it's a cash offer, it's a seller's job to determine if you have the money, not if you paid taxes on it.
Yes, but your bank and the bank of the seller both have strict KYC/AML rules to respect. And the seller probably doesn't want to accept a pile of bills that requires laundering.
It's certainly more morally complex than just scamming somebody. Money is property. People generally agree that once you earn your money, it belongs to you. Is the government automatically entitled to part of it? The Boston Tea Party, the Women's Tax Resistance League, and Gandhi's Salt March are a few examples where people said no.
Usually in this context the "evaders" will refer to it as tax resistance or tax protest. It is a form of civil disobedience. The government being disobeyed, of course, is unlikely to see it that way, and in a modern context, would call it evasion. https://en.m.wikipedia.org/wiki/Tax_resistance
The Indian example is especially poignant because refusing to pay salt taxes was one of their key strategies for achieving independence from the British, and they managed to do it without firing a shot. So yeah I'd say refusing to pay the salt tax was a big win morally and probably saved a lot of lives.
What the best examples typically have in common is that the government in question didn't possess the consent of the governed. In the case of the British WTRL the refrain was "No vote, no tax." If the government won't let women vote then what right does it have to tax them? Women weren't able to indicate consent (or lack thereof) via the political process, and they were ultimately successful in their argument that this taxation without representation was unjust. Incidentally this line of thinking was expanded upon decades later across the pond in the US, which ultimately decided via the 26th amendment that it was immoral to draft men into the army when they were still too young to vote, and lowered the voting age to 18.
> Is the government automatically entitled to part of it? The Boston Tea Party, the Women's Tax Resistance League, and Gandhi's Salt March are a few examples where people said no.
Your argument doesn't make sense. The example you cite are examples of protest against unjust taxation not that "the government is not entitled" to any of my crypto. As you yourself elaborate in the following paragraphs. Are you seriously suggesting parallels between the crypto bros and Gandhi in that they are both participating in civil disobedience? Oh. Please.
And SBF is just a modern day MLK because both are referred to by TLAs!
I think it makes perfect sense in its immediate context, my parent asked a question about the morality of tax evasion, I gave some examples where there was wide consensus that people not paying their taxes was moral, but it still would have been referred to as evasion. Other people were bringing up examples of tradesmen and stuff, not just crypto. I will leave it to the federal government to render the final verdict on SBF but he ain't got shit on Gandhi, that's for sure.
Your examples of tax protest were by people who didn't really want to be a part of the government they weren't paying taxes to, or felt they weren't being treated properly as a class.
This doesn't seem to want crypto or finance exchanges. Thistle people just want the benefits of the government without paying for it.
The subject of tax evasion comes up and invariably some flathead has the gall to point at folks that actually work for a living. Like they aren't a rounding error compared to corporate interests and oligarchs in this context.
Tax evasion is people stealing from you, just in an indirect way. Just because some people already steal from us doesn't mean it's OK for other (richer) people to steal even more from us.
You may believe there's a better way for the government to tax us, but that's not how the system works currently.
Crypto being used for tax evasion is a good reason for it to be regulated out of existence.
Crypto scales a lot better than cash, and allows for considerably larger amounts of fraud, and not just locally, but also internationally.
I also think that businesses avoiding tax by not reporting cash are putting themselves into an unfair position against businesses that are legally operating, and I'd have a preference that businesses doing this should be shut down. If you're running a thin margin business and your competitor is able to price themselves better by committing tax fraud, then you need to also commit tax fraud to compete, and that's a race to the bottom that's not good for anyone.
But a system that takes the concept of ledgers, and makes it tied to pseudonymous addresses instead of persons, is distributed across the world, resilient to tampering, and which gives its users control over their money, and which has been in use for 15 years is
1. “Not innovative”, and
2. That in the span of 30,000 years that 15 years is enough time to really tell if this is something that will survive or if it’s just a dumb idea that will die out.
I think that Bitcoin is a wonderful system, and I think that more people should take time to study Bitcoin in detail. Do not let the crypto bros and the people that only care about measuring Bitcoin in dollars distract you from the real point of Bitcoin.
> But a system that takes the concept of ledgers, and makes it tied to pseudonymous addresses instead of persons, is distributed across the world, resilient to tampering (...) is 1. “Not innovative”
Well, it is innovative, in the same sense a jet engine is. What you don't do with jet engines is using them to keep static structures in the air indefinitely. You use steel beams or concrete for that.
Crypto tech as cash alternative is pretty much jet engine as a steel tower alternative.
Beer has been a thing for ~5,000 years but we've only had beer hats for the last 28. Our society could benefit from extensive investment into ongoing research and development of beer hat related industries, as we clearly haven't had enough time to determine if they're bullshit novelty garments.
The difference between cash and crypto is like the difference between building a room on top of a tall tower, vs. strapping a few jet engines to it and pointing them downwards. Both methods solve the same problem - but one does it mostly passively, while the other one wastes absurd amount of energy simulating the same thing you normally get for free.
So the point is that a large amount of people think that banning cash would be completely absurd and therefore this isn't just some issue that is relegated to obscure crypto fans.
A friend of mine got hooked on something really bad. We could all see his health deteriorate month by month. He's probably dead right now. Even his parents don't know where he is. He's son will grow up without a father.
I never met his dealer, but I'm sure the dealer saw the decay and did nothing.
The fact that the dealer saw the decay and did nothing is related to the drug's illegality. If the drug were available in a dispensary where you had to go out in public and get your drug, there would be more opportunities for intervention. We already make it illegal to serve alcohol to someone visibly drunk. You can't apply rules like that when the transactions are occurring in the dark.
Is this a joke? There isn't a gas station in this country that will refuse to sell booze to a homeless broken down and busted up alcoholic that begs for change right in front of the gas station. Except of course, the gas stations that legally aren't allowed to sell booze to anybody in the first place.
Dealers have no morals. Even the law that bartenders aren't allowed to serve drunk people is an absolute farce. Walk into any bar in this country and you'll find drunk people being served alcohol.
Yes, that’s the crypto use case. Make a ledger a billion times less efficient than an ordinary ledger, so that you can circumvent regulations (until the regulator catches up).
That pretty much falls in the same category as #1—content micropayments are a niche use case that primarily interests people who are ideologically opposed to advertising. I count myself in that group, but it's not a large enough group to drive an entire currency. Illegal activity is.
Micropayments have been around since the 90’s, and never taken off. At any rate, a centralised version would likely be cheaper, more efficient, easier to use, with more functionality and better customer service.
You mean like Paypal etc and how they can just ban you and take your money? + Many countries can't access to "centralised version" by default. Imagine internet being country restricted and centralized so they can just choose which country/people can access it. That would be horrible
I don’t know if a centralized payment service that’s usable for that and trustworthy, do you? Most of the services that I know of charge a fixed fee that’s ~7x higher than that, in addition to ~3%.
Imagine paying to upvote content as a consumer. I can see this being popular with brands that are already paying for engagement, but that’s just going to result in the same media landscape we’re already in.
Crypto boosters need to transactionalize absolutely everything and anything because every transaction, by design, incurs a tax to the miner/validator/magic oracle machine owner. Since you become that person by buying lots of physical hardware with real money, or buying lots of <token> with real money, it by design is someone who already has a lot.
Crypto is people who see the tax that credit card networks are on all transactions, but their problem with it isn't that it's wealth redistribution from those with bad credit to those with good credit, but rather that they aren't the ones collecting the tax.
How is that group different than group 1, "People who don't like banks or the government's monetary policy, and ideologically believe they have to own their own wallets."?
The banking industry makes 25 times more profit than all other industries around the world combined. It has no competition and abuses this fact. Isn't it interesting how little awareness this issue has?
Banking and financial services is about 1/4 of world GDP and insurance is about 1/12th of world GDP. Anything making 25x "than all other industries around the world combined" would be ~96% of the economy.
Yes, GP might have misremembered 25%. To be clear: that is still way too high in my view. (That credit cards in less regulated economies like the US charge more than 2% is obscene.)
However, the badly needed disruption will come (hopefully) from good old (centralised) FinTech (such as Wise), not from the crypto bros.
An industry, by definition, can't have competition. The soft drinks industry also has no competition - if you want soft drinks, you have to buy from them.
Competition happens inside an industry. And there is fierce competition between banks, much more so than in many other modern industries (e.g. there is much more competition than in tech).
As someone who is interested in banking innovations, there is hardly any real competition worth its name. Just more and more consolidation into bigger banks.
A friend of mine that works with crypto gaming companies frequently expresses frustration that every game they see is gambling, slightly disguised gambling, or terrible.
Steam but where you actually own, and so can resell, your game licenses. And where other supply-side companies can take over providing the game-download-delivery logistics if the original company providing that service goes belly-up.
Or: Pokemon, but you can trade the pokemon outside the game itself; and the game can prove that your competitive mon were authentically caught and raised, rather than hacked in, because it records all the actions you took to train it.
Most obviously: in any MMO with an in-game currency you can and are encouraged to buy with real-world money (e.g. EVE Online), just tokenize the darn thing, so that people playing can easily cash back out of the game when they don't feel like playing any more.
> Steam but where you actually own, and so can resell, your game licenses.
This is already possible and always has been. The reason steam and the game studios haven’t implemented it is because it wasn’t in their interest to do so, not because they didn’t have the technology to.
Exactly this, and in fact as seen with CSGO skins / keys, steam had tradable skins which meet all the definitions of an "NFT" without blockchain.
They've been winding it back best they can ever since because having a tradable USD proxy (keys) led to money laundering and under-age gambling websites where people used "keys" as a proxy for dollars so eventually they had to make the keys non-tradable.
The cat was out the bag and too late to make the skins themselves non-tradable, but it's worth noting that other companies haven't tended to follow suit in having their skins fully marketplace enabled.
There just isn't the incentive for one, why would a company want people to be able to resell skins when they can just sell a fresh new copy at full price.
No, it wouldn't have been possible. Because nobody (read: secondary-market game collectors) is willing to be on the other side of that deal and actually value these transferrable game licenses to the degree that they value physical games. Because, in turn, the hypothetical little by-fiat "federation" of companies willing to honor it could just decide to renege on the deal at any time and stop honoring it. (Which would probably include shutting down the database that remembers who owns what!)
The point of putting a blockchain in the middle is that the immutability of the smart contract underlying the tokenized asset guarantees that you still own the thing even if the person who sold it to you disagrees, and the person running the show backs them up†. Which is not true in the by-fiat system.
To put that in terms of non-digital assets: a country that issues a fiat currency, can declare at any point that some asset token they've issued is "no longer legal tender." Canada did it with pennies a while back. But they can't declare by fiat that a commodity has no value. Commodity values can be manipulated (see: oil prices), but they can't simply "make it go away" by withdrawing their backing from it. A commodity has inherent value, whether or not it's backed.
(How would that work, in this case? You'd need 1. IP ownership [or at least sub-licensable use] rights sold to a legal trust, 2. where that legal trust's beneficiary is a DAO; 3. where that DAO declares in its immutable articles of incorporation that non-fungible tokens issued by smart contract X represent transferrable sub-licenses of its acquired IP license; and where 4. smart contract X is immutable.)
If you've got all four of those properties satisfied, then what you've created is less like a fiat currency, and more like a commodity. The IP owner cannot revoke selling a sub-licenseable IP license to the DAO, any more than you can revoke selling your house to someone. The DAO has no path to change the rule by which it allocates IP rights through the token. And the token itself can't be tampered with to change who owns it. The only place you could affect this system would be at the level of getting the government that issued the original IP license, to declare it void. (But why would they do that? The US government didn't do it for Tolkien's dumb sale of sub-licenseable IP-rights to LOTR in the 1970s, and that was pretty much the case where you'd expect big-Hollywood lobbying to win out over the public good.)
---
† Yes, technically, you can also create this guarantee just using the regular legal system, without involving blockchains — you'd issue individual IP licensing "deed" contracts to each primary-market buyer, such that they can prove they own the rights; and players could then resell these "deeds" to each-other with a notarized and registered document of sale, similar to land title transfer, so that you can prove that a given "deed" is legitimately acquired rather than stolen or forged. But that's extremely impractical — the costs of the overhead of the transfer process far outweigh the costs of the goods being transferred! In this sense, a blockchain is just a way to make this process scale for lower-value items, by making the whole "notarized transfer-of-sale ledger" into just some (digitally-signed) bits, such that people can transfer each-other IP rights — and other low-value "deedable" things — from an app on their phone, at the cost of maybe a dollar for "notarization and registration" by the chain's validators.
Even if there was a blockchain, Steam still has to decide to honor it, because they’re the ones who physically decide whether you get to play the game, or not. Nothing prevents them from choosing not to honor transfers that appear on the blockchain after a particular date, thus effectively switching back to a centralized database system.
> Steam but where you actually own, and so can resell, your game licenses.
Where’s the need for crypto in this business model?
> Pokemon, but you can trade the pokemon outside the game itself; and the game can prove that your competitive mon were authentically caught and raised,
So… cheating protection? Every notable multiplayer game in the world already does hat.
> so that people playing can easily cash back out of the game
Sounds a lot like a cinema where you can resell your ticket after the show is over – why would any content creator do that?
> > Steam but where you actually own, and so can resell, your game licenses.
> Where’s the need for crypto in this business model?
Crypto advocates misinterpret this as a technological failing or gap. It's actually an issue that could be solved purely in existing technology, but no one wants to because lock-in is desirable to everyone but the consumer. The market will never decide on its own to offer this solution.
> Crypto advocates misinterpret this as a technological failing or gap.
This is usually the problem with any crypto idea. They fail to distinguish between people problems and technology problems. Ticketmaster ain’t charging hidden bullshit fees because their database somehow forces them to.
Any way of making real money out of game mechanics (selling Pokémon, cashing out in-game currency) instantly turns your game into (a) gambling (assuming you have any kind of randomness at all, which virtually all games do), and (b) a Mecca for bots, scammers, gold farmers etc. Someone losing their account is no longer losing just some in-game items, they are losing real money, which gets the police involved real quick.
Diablo 3 actually did this exact thing at launch with the real money auction house. Shockingly, they didn't need crypto to do so! But it also didn't make them too many friends, and they had to pull it down a year or two later.
D2R trading is alive and well, the failure of D3 is more about it being a poor game, poor itemisation, every build was the same, nothing is worth farming except gold.
None of these things have been impossible in a fiat economy. Nothing about the crypto economy makes these easier, more profitable, or desirable for private companies to implement.
Nintendo at no point WANTS their players to be able to use their pokemon in something that you didn't have to buy from Nintendo. This isn't complicated to understand.
There is no desire from IP holders, from investors, from developers, from anyone involved, to allow you to export your Keanu Reeves skin from Fortnite into whatever else. Why do that when they can just make you buy it again? Why would anyone forgo that literal free money when the vast majority of video game players seem perfectly willing to spend 10s of real dollars on a simple, half assed texture made by an intern in a few days. It's been a literal gold mine.
You can have conventional good multiplayer games with resources that are tokens on the blockchain. That way you can leverage the existing smart contract ecosystem for free. Ppl can create futures, auctions, binary options, arbitrarily complex contracts depending on ingame data that you make available on the blockchain.... without you being responsible for it.
When i was in Ukraine before the war an ATM ate my debit card. Being stranded in a foreign country without an ATM card is pretty difficult. I thought that as soon as I walk into that Russian-owned Alpha Bank I would get my ATM card back. It actually took 4 days of daily visits and arguing with them in English and sometimes even in Spanish, where they asked me to write a letter to Kiev in Ukrainian, and wait a month for a decision. After that experience I was afraid to insert my ATM card into any bank machine over there. Instead I started buying Bitcoin on Coinbase and selling it at the local Bitcoin outfit for Hryvna and USD, to pay my rent.
That's cool. One day my debit card refused to work. I walked out of the supermarket into the bank that literally shared the parking lot, they told me it had been possibly compromised so they killed it so I wouldn't lose any money. They then printed me a brand new debit card right then and there, and I walked back into the store and bought my stuff.
What I'm saying is that what you experienced is not a technology problem, and nothing about cryptocurrency inherently fixes that problem. I could absolutely create a cryptocurrency that puts you through mountains of bullshit and bureaucracy anytime you want to make an account or wallet.
> It works well for sending money across the world
What is “well” here?
Using Wise or similar almost always ends up cheaper and faster when you factor in the need to go to/from fiat, and the chances that you’ll fat-finger the transfer and lose your money, get difficult questions from your bank, or that Wise will collapse with your balance are much reduced as compared to using crypto for this.
If you’re trying to evade capital controls, however immoral you may consider them, well that’s something different.
The network? No idea, but I suspect low. The exchanges that the vast majority of humans will need to use to convert to and from fiat? I think it's easier to count the ones that haven't collapsed tbh
Exactly. For example there is this with Stellar [0] which is certainly a use case for sending money across the world into crypto wallets, same day, near instant and very low fees.
But most HNers here are not begging for donations, or suffering from starvation or are currently at war (Ukraine) or not experiencing hyperinflation (Argentina) and are not the ones who experienced their bank accounts getting locked after protesting against their government (Canada).
But never-mind. But a clear pattern I’ve seen on HN is that they only care as long as it directly affects them. (For example, look at the herd reaction about the Bob Lee situation in San Francisco [1])
Since they are not experiencing all of the above and are comfortably sitting in their chairs browsing on this site on their computers, why would they care about crypto use-cases since it doesn’t affect their luxuries, yet?
This kind of 'you only care if it affects you' argument is so disingenuous it makes my eyes bleed. You only care about crypto because you invested in it. Please tell me how much volunteer work you have put in for food relief or refugee causes then tell me how much money you have put into crypto and then let's see if you can claim the moral high ground.
> This kind of 'you only care if it affects you' argument is so disingenuous it makes my eyes bleed.
No it isn't as it is true on this site and the truth hurts and bleeds your eyes doesn't it? Obviously people like you can't stand it due to your highly emotional reaction.
> You only care about crypto because you invested in it.
Please.
Speculating on a stablecoin which the Stellar and Moneygram use case is for sending stable currencies for worldwide payments cheaply and instantly is hardly useful as an 'investment'.
> Please tell me how much volunteer work you have put in for food relief or refugee causes then tell me how much money you have put into crypto and then let's see if you can claim the moral high ground.
I can tell that people like you complaining have about it here isn't a solution to helping the refugees such as the ones in Ukraine for example or any of the help they need or anything close to a solution, whilst others are providing a solution today. [0]
So this is indeed a great crypto use case that you yourself realise that it works.
Paying for porn, avoiding your bank randomly freezing your accounts (happened to a friend of mine, heuristics are only right most of the time), sending money to other countries and donating to peaceful protests.
Unfortunately it hasn't been a priority for the community and the focus has always been on getting rich, instead of working for infrastructure and adoption.
I know for a fact that normal people use crypto in Venezuela, albeit through apps and Binance. Their currency is crap and USD was outlawed for a while. I got the info first hand recently when a Venezuelan dev colleague visited my country.
Bitcoin has outperformed 97% of all S&P 500 companies in 2023. Bitcoin was also the best performing asset of the decade. https://imgur.com/a/7SB3MtL
FINES BY SEC: Merrill Lynch – $100 million Fine in 2002, Goldman Sachs- $550 million 2010, Eli Lilly & Co. – $1.42 billion 2009, UBS AG – $1.5 billion in 2012, Abbott Laboratories – $1.6 billion in 2012, Siemens $1.9 billion in 2008, HSBC Holdings – $1.9 billion in 2003, Pfizer – $2.3 billion in 2009, Bank of America – $3.6 billion in 2009, JP Morgan Chase – $13 billion in 2013
Did the SEC send a clear message? Are these company's dead? lol.. Are the industries they are in dead?
Bitcoin only "outperforms" year-to-date because it massively dropped last year. You could make that table tell the opposite story by adjusting some date ranges.
It's like saying tulips outperformed every other assets for a few years in the 1600s.
(Nevermind, ignore me, consider this a crank comment.)
What risk do you think the market has been handsomely compensating Bitcoin investors for over the last year?
Genuine question, I don't know the answer, but if the market were pricing in the risk of Bitcoin suddenly going to zero through regulatory action, it might make sense that the price goes up a lot as old investors compensate new investors to exit while the music slows.
I feel like people smarter about finance than me who were paying close attention to Bitcoin might gather clues about this hypothesis from watching the order book consistently, so yeah, genuinely asking.
> if the market were pricing in the risk of Bitcoin suddenly going to zero through regulatory action, it might make sense that the price goes up a lot as old investors compensate new investors to exit while the music slows.
It wasn't a few bucks IMO. Probably 90% of the value came from scams. If the community had been clean since the beginning the whole "industry" would be a small fraction of the current size.
Bitcoin would solve this, if it was actually used (or fit to be used) as intended - people keeping their own wallets and making on-chain transaction.
However, because it is so poorly designed, almost nobody does that, and instead store their crypto in exchanges. Which have all the downsides of banks (they can hold your money hostage) but none of the upsides (security and regulation).
* Early adopters disproportionately end up in control of majority of coins (currently 0.03% of wallets own 59% of all bitcoins)
* Proof-of-work is wasteful
* Chain is very inefficient
* Loss of coins with loss of wallet means, for one, that inheriting the coins is not possible unless special precautions are taken which undo a lot of the security
* Other libertarian nonsense that shows very naive understanding of economics that I can't think of at the moment
I would not say it is correct to call BTC deflationary. It is simply not inflationary after the final halving. Since USD is highly inflationary then BTC is "deflationary" w.r.t $1, but the supply of BTC does not shrink.
You could argue about people losing their private keys being deflationary, but that's still different from blockchains like Ethereum whose currency is literally burned in small amounts during block creations (and therefore has the chance to be truly deflationary at times).
It’ll be interesting if this kickstarter another crypto bull-run like the chinese mining ban did. It might show some people that the world doesn’t revolve around the US and that it’s institutions are not that infallible.
How do I get some Bitcoin? I can't afford to mine it anymore. What if I want to buy some more? Or sell some of what I have? What can I spend Bitcoin on? What does Bitcoin solve for me?
There are bitcoin-only exchanges, e.g. Bitaroo.
There are also P2P exchanges that don't hold user's funds, like LN2bot (this one is very handy because it supports Lightning, so fees are ridiculously low, and trades very fast for not being a SPOT exchange).
> I can't afford to mine it anymore.
Right, it's a professional industry now; hobbyists can still do it, but at a loss.
> What if I want to buy some more? Or sell some of what I have?
See the aforementioned exchanges above, in my first answer.
> What can I spend Bitcoin on?
Anything, really. For example you can buy flights & book hotels with travala.com. Or buy things in Amazon with a discount thanks to purse.io .
> What does Bitcoin solve for me?
Not being affected by events like SVB closures (or worse: smaller banks that may not be bailed out[1]); not being affected by QE in the medium-long term (e.g. put your savings in it and forget about for 4 years[2]).
[2] Try to find 2 points in the historic data of a BTCUSD chart, which differ by 4 years, the oldest point is never higher value than the newest point.
It's peer to peer, but not trustless. There's a moment in the transaction at which one party can default. So they need a reputation and dispute resolution system.[1]
You'd think there would be trustless decentralized exchanges by now.
Ones have been proposed.[2] Some even exist. It's possible to have a truly trustless exchange where orders are smart contracts on a blockchain, transactions are atomic swaps, and at no moment does a third party have custody of anything. This is called an "on-chain order book". It's rarely seen, because it's slow, lacks liquidity providers, and is subject to front-running. Also, nobody makes a billion dollars running one. Most so-called "decentralized exchanges" turn out not to be totally trustless inside.
There’s a neat paper showing that you can have trustless decentralised exchanges only for on-chain assets, ie exchanging one crypto for another. Real world assets (including fiat) cannot be securely bought on blockchains.
Irrationality, Extortion, or Trusted Third-parties: Why it is Impossible to Buy and Sell Physical Goods Securely on the Blockchain
Sorry but, do you know exactly what trustless means?
This concept applies to custody, not to fiat-to-crypto exchanges. Because a fiat-to-crypto exchange is an on/off ramp into/outside crypto. And as fiat cannot be held in a trustless way, the most "trustless" way to make a swap without the exchange holding the fiat amount is by using an escrow system. If the escrow system can only be moved to party A or party B during a trade-dispute, then it's the most trustless thing you can get, my friend.
PS: Your 2nd link seems to suggest that you're saying "DEXes are better than p2p exchanges!", well, DEXes don't have fiat-to-crypto pairs, only crypto-to-crypto. Nice try.
I was going to write the same post. All you need is escrow and no, escrow is not as dangerous as cryptoexchanges holding onto fiat deposits because you don't give them your money ahead of time, you only give them exactly how much you want to transfer for any given transaction down to the cent. If they screw you over, they will lose their payment service provider license and go out of business.
I had a similar experience. I brought a gold bar to Jumbo and tried to buy a croissant, and the cashier just looked at me funny and asked for my card. That's when I realized gold is worthless
> not being affected by QE in the medium-long term (e.g. put your savings in it and forget about for 4 years[2]
Sure, why care about the possibility that cashing out early might mean you lose half your money? Trust instead in the long long long history of BTC as a stable currency.
> Trust instead in the long long long history of BTC as a stable currency.
You perceive it as unstable because you're using USD as a unit-of-account. As a thought exercise, if you were using BTC as the unit of account, what you would perceive unstable is the US dollar. And what you would see is that the USD value would be trending down against BTC, especially if you choose a time-frame equal or higher than 4 years.
So yeah mate, nothing to see here, keep holding your cash.
As a thought experiment, if I use BTC as the unit of account, then the prices of all the stuff I want to buy denominated in Bitcoin vary wildly from month to month.
And if I choose a time frame of, say, 25 months or 19 months instead of 4 years, my savings lost more than half their purchasing power, which is far worse than anything QE has done to cash over equivalent time frames (ironically over a timescale which has been exceptionally bad for cash and exceptionally favourable to a notional "safe asset" alternative)
With Bitcoin you have to think in terms of the exchange rate. To the extent that you can buy things in it most of that would be based off a dollar conversion. I doubt you can buy much denominated in Bitcoins at a stable price.
No, you will perceive each and every other currency in the world fluctuating against BTC pretty much in sync. Which suggests it's the BTC volatility that is the invariant in the system.
Why does everyone always compare BTC to USD when it comes to "holding". That's not the only alternative! You're not supposed to hold large amounts of USD over long time periods. It loses value by design. You're supposed to put excess money to more productive uses, e.g. invest it.
No one ever suggests using some S&P500 ETF shares as money even though it also trends up vs the USD. Just like BTC it's also more volatile than money. Unlike BTC it represents something real though.
That's not the point. You can cherry pick stocks that have outperformed the S&P500 too.
The point is that USD isn't for holding. It's for spending. BTC is more like a stock or asset than money. Money isn't supposed to be volatile and it's not supposed to appreciate in value.
The discussion was about perceiving bitcoin as stable or not. I brought up BTCUSD contrast, but I can bring BTCSP5 instead (with the same point), without your concerns about USD not being "holdable".
>As a thought exercise, if you were using BTC as the unit of account, what you would perceive unstable is the US dollar.
No, you would literally have to negotiate prices every single day. The vast majority of currencies have less volatility than Bitcoin. People don't think the dollar is unstable in the euro area.
It's never been a legitimate asset class, it's always been a speculative token, but it hasn't stopped billions being pumped into it by gullible "investors". The only thing that's going to stop the flow of funds is a massive price correction......maybe.
Bitcoin also loves this. Lots of people will use the coming fall to make money shorting this. Then eventually as BTC stabilises they will make money going long as well.
In short a lot of BTC doomers will celebrate, and BTC mooners will celebrate as well. Except for different reasons.
Useful? It's gambling, gambling on whatever system is backing the currency, like the bitcoim blockchain or usefulness of anonymity by monero, USD pegged currencies beinf used to avoid needing dollars for international trade,etc.... or maybe people just like to gamble sometimes. No one accused blackjack of being useful to society.
But why? I feel like for some reason you think betting on the price of orange juice or oil is more legitimate and less scammy. It's a speculative derivative of a virtual commodity/system.
I think you outlined it right there. Orange juice and oil are actual things. People drink orange juice and burn oil in their cars. "It's a speculative derivative of a virtual commodity/system." Yep
If Bernie Madoff had been responsible for the vast majority of dollar trading in the world, then people might make those comments when he was shut down.
How much of crypto is collectively going through FTX, Binance, and Coinbase? If they are really shut down, especially in a way where it's clear their business model will not be tolerated in the USA (so no one will take their place), how much will that pull down on the whole ecosystem?
there are so many really cool sites from the past that i cant recall what they were but i recall the experience, like that one with the gallaxy cluster of all music genres and how each were related, and each node played an sample for that genre...
I know, right. I asked the SEC to create regulation for my system of using a ledger I created to keep track of numbers that people use to trade for dollars and then back again and then make more of those numbers and trade them for other kinds of numbers and money and then back again and they won't do it. When they asked me what the hell it is I just turn around and ask 'but how do I comply?' and they stonewall me. I don't understand it.
But I would also want to see derivatives die. Like what it even mean to "invest" in QQQ or VIX? This is just gambling (unless you have market inside knowledge).
QQQ, like most ETFs, isn't a derivative. You get a share that represents a basket of all of the NASDAQ-100 companies. This tracks the price of the components through creation/redemption mechanism. Authorized participants are able to create QQQ by sending a share of the constituent companies to the trust, and they're able to redeem QQQ for the shares in the trust. In this way participants are able to arbitrage the spread between QQQ and the components and keep the price tracking extremely, extremely closely. It also pays a 0.61% dividend because when the component in the trust pay a dividend it's distributed to QQQ shareholders - the ones who actually own the shares of the companies in the trust.
I would argue index investing is far less gambling than stock picking because you're betting on the overall direction of a market segment, in this case tech, as opposed to a specific tech stock. Stock investing, in aggregate, can be viewed as a positive-sum game - the value of your holdings tends to appreciate through the contributions of non-investor participants (company customers buying products -> increase in intrinsic value of the company).
VIX on the other hand is a very exotic product, and it's not an investment - it's a hedge, if you can call it that. VIX is a mean-reverting index that spikes up when volatility goes up and drops back down over time, the notional value of which is based on the premium of calls and puts on the S&P 500 over the coming 30 days. It's the derivative of a derivative - a 2nd derivative, if you will. Note that, importantly, you cannot buy a "VIX," there's no such thing. You can buy cash-settled VIX futures where people speculate on the index value on a certain date, and you can buy cash-settled European-style calls or puts (i.e. they cannot be exercised except at expiration, vs American options which can be exercised any time on or before expiration). You can also buy ETFs like VXX and UVXY that use futures and cash positions to attempt to track the index.
QQQ and VIX are very different things.
[edit] When I say VIX futures aren't an investment, check this out lol. Set the graph in [1] to Max duration. Since 2018 it's lost 96.5% of its value. Heck it's lost just shy of 50% of its value since January 1st. They just continuously reverse-split so the numbers aren't silly.
Ah, nice, another classic product. I quite enjoy deep-diving on this stuff. I looked them up, they hold a bunch of QQQ index swaps. I'll have to research them some more later, may follow up if I learn something interesting :) I just happened to know how QQQ and the VIX worked off hand.
Either you're hedging, you're taking risk and getting paid for it, you're market-making, you're arbitraging, or you're purely speculating/gambling. The first and second are genuinely useful, the third and fourth are necessary to grease the wheels, and the fifth is at least relatively harmless (no-one's taking a rake, so it's better than betting on the horse racing or whatever).
Derivatives let you trade things other than price and are important in hedging against certain types of risk. I don’t think the point is to invest in them so I agree it seems like gambling for most people.
Why is it bonkers though? In a complete free market, everybody does whatever they want and as a result you get the best deal on your insurance premium.
Not inherently, when the numbers get big - strange things happen. It's not unreasonable that there would be insurance of insurance - it's also not unreasonable that there would be market traded contracts for the insurance of insurance. Provided that all parties can maintain their obligations under the contract... which may be a dubious/untested claim.
They're a lot cheaper than buying the actual stock, because there's every chance they'll expire worthless- and when you're hedging, you think they will probably expire worthless, too.
A "person" can't sell a naked option, this can only be done by bigger companies with a margin account, and will be margin-called when the price approaches the strike price.
The point is, should call options used for hedging regulated as insurance?
Margin accounts aren't that exclusive. I opened a margin account just because but I've never dipped into it. It's just a tool and if you know how to use it, good for you.
Aren't there more legitimate use for some of these for hedging? I don't know any specific examples, but I'm sure I've heard of situations where people use these because they want to invest in something quite specific, but remove the upside or downside of general market movement.
Regardless, I'm inclined to agree the main point is probably gambling and insider trading.
My gut instinct is to agree. I also feel the same about the fossil fuel industry for the most part.
I am curious which one of those two death wishes would lead to more negative economic impact in the short term.
Based on my ignorant googling of relative values, I think erasing the fossil fuel industry would be much less devastating to investors in general, correct?
Erasing the fossil fuel industry over night would have the unfortunate effect of grinding the rest of the economy to a halt. You can't just look at it in isolation. Unless you had something like worldwide nationalization in mind. I suppose then it might be possible to transport other goods while still eliminating the speculation on and profiteering of the fossil fuel industry.
I do think that for both industries a multi-decade phase out would give people plenty of time to change their investment portfolios. This would do less economic damage in the short term. That’s a good thing.
In the case of fossil fuels, we still need to go all-in on alternatives for two functions: air travel and sea travel. We can do that in the time scale of 2 to 3 decades imho.
But look up synthetic derivatives as part of the global economy. It is crazy. Such a huge piece of the economy. So crazy that it makes me have crazy thoughts like maybe let it be, with a Tobin tax of sorts assigned to novel anti-poverty solution attempts.
However, no new wells sounds like a great lever to pull.
Forget CO2 for a moment, just the economic flourishi of all those very smart people released from oil exploration duties would be very interesting.
Yes, fossil fuels created the amazing world that we live in, but they are obsolete on this planet. We have alternatives now.
When I look at what oil companies have engineered, I am truly in awe. Sub-sea well heads are nuts! Rigs are gonzo engineering / operations in the coolest ways! Those people should be working on asteroid mining, or civilization scale geothermal, or 2-story-house-sized PV panel laying robots roaming the deserts. They could pull it off, and it is already 2023 ffs.
I'm pretty anti-crypto, but tested the water with Voyager USDC because of the absurd APY. Took my money and ran when Celsius hinted at having issues, luckily.
Funnily enough there was some amount, less than a dollar IIRC, left in Voyager when they folded. I received an email telling me it was being taken over by...Binance. Never bothered to login and even check it.
The USP of cryptocurrency is the ability to self-custody. If you sent your money to a company like Voyager, instead of controlling your keys yourself, you missed the point.
Let’s be real, a large fraction of all interest in crypto is as a financial asset. The financial transaction / storage side is relatively uninteresting to people because the existing financial system generally works really well for them in terms of risks, fees, uptime etc.
Which isn’t to say the existing financial system works well for everybody all the time, but in practice crypto just isn’t showing real benefits to offset its many downsides.
One thing crypto does having going for it is the lack of moralising payment processors. I'm really baffled that sex workers and other groups who provide legal services that payment processors don't like aren't embracing crypto. Seems like a perfect environment for it and the on and off-ramps today are far better than what existed back in 2016.
Most customers weren't willing to enter their CC information online in the late 90s and early 00s. It took horny trailblazers to get us to where we are today, to the overall benefit of e-commerce. Comparatively, putting CC info in to Coinbase and putting an address to withdraw the crypto in is far safer than what horny people did back then.
It varied by country, but in general CC had risk mitigation built into them in the late 90’s and early 00s limiting their risks vastly below what most people sending money to Coinbase take on. US: https://www.law.cornell.edu/uscode/text/15/1643
This goes beyond the question of legal risks and statutory limits, CC’s are debt which means someones money isn’t tied up during a dispute.
The expansion of e-commerce was parallel and had little relation to 'horny trailblazers'. The CC issue was solved by services like PayPal that intermediated CC data, better internet security and better CC dispute resolution. I know people who still hesitate before leaving CC information but would not hesitate if there's Paypal (or similar).
If Bitcoin transactions involved giving your private key to every entity you wanted to transact with (like how credit card numbers work), then this would be a problem.
I don't think that really solves the problem... for instance, you can get your money back if the vendor does not render the product or service promised (with some restrictions of course). With Bitcoin, you're on your own.
With something like Ethereum, you can build refunds into your payment model as long as you and the merchant agree on a set of trusted 3rd parties who can handle any disputes. You can choose different trusted mediators for each transaction and can decide the rules (ex: how many of them are needed to decide that a refund has to happen).
You can also choose not to trust any 3rd party. If I'm buying an on-chain digital item, I probably don't need to support disputes, but if I'm buying something off-chain and don't trust the merchant, I might want that protection.
You are right in practice. But it sounds an awful lot bit like the old "I have nothing to hide" argument against encryption, too?
Many payment processors do restrict the business they want to deal with beyond what the letter of the law requires. (And that is their prerogative as a private business!)
Does it? It sounds like they have a credit card with fraud protection and they already understand how it works, and don't want to have to fiddle with some newfangled financial product that doesn't offer those protections and seems vaguely shady, to me.
Many states in the US have legalised buying and selling of marijuana. Many payment processors don't want to touch this, on neither the buying nor selling side.
You might declare marijuana vaguely shady, but as far as I can tell, it's a legitimate product that consenting adults might want to trade in.
How many people do you see choosing to use Bitcoin rather than cash at marijuana dispensaries? I'm puzzled at how this is a rebuttal of "people don't want to use Bitcoin unless they absolutely need to" argument. If the issue is that taking credit cards is inconvenient for the seller, I don't think buyers generally see that as their problem so long as someone else is willing to accept them.
I don't live anywhere with marijuana dispensaries.
Yes, if you buy in person, then cash works. I was more thinking of buying online. And also where a marijuana business would keep their money.
(For the latter, bitcoin isn't very useful, because suppliers won't accept it. But neither is the legacy banking system always willing to serve businesses in weird niches.)
Which government would come after them? There are lots of different governments around the world, with different views and different laws.
> How is refusing to serve legal sex workers different?
As far as I can tell, in the US discrimination is forbidden against certain protected groups / along certain protected differences only. But you are free to discriminate on all other grounds. Eg a restaurant can legally discriminate against people who don't wear a tie.
In the British rules, sexual orientation is explicitly mentioned, but your trade ain't. So as far as I can tell, it's illegal in the UK to discriminate against gays but legal to discriminate against sex workers.
(However, a government might come after you, if you do something they don't like, even if it's perfectly legal. Eg the government could just 'randomly' decide to audit your taxes all the time, or 'randomly' apply other regulations and rules more strictly.)
I understand and am sort of aware of the laws. It seems however very hypocritical to discriminate base upon profession. IANAL but I suspect that if for example airline will not let passenger to board a plane citing that they work "shitty low paying job" as a reason said airline might get in trouble anyways.
I think the Soviet Union, Nazi Germany, Iran since the Islamic Revolution etc went for a less legalistic and more moralistic approach.
(Of course, you should still evaluate these policies on their own merit, instead of tarring them guilty by association. To give a counter-example: Nazi Germany was one of the first places to put anti-animal cruelty laws on the books and officials were very concerned about the dangers of smoking. Two stances that are widely popular today, and rightly so.)
Other than the data outlier of the US basically no nation considers hate speech to be free speech. The US has plenty of asinine speech restrictions too that no one seems to find a 1st amendment problem with, like broadcasting a recent marvel film on my own personal website.
Who’s requiring them? Nobody in the US if that’s where they’re operating. The issue is that that content is so off-putting to the average person that it kills the platform. Nobody is hanging around a site full of hate speech unless that’s specifically what they’re looking for.
It does not appear to be justified to make claims about what's true of "the majority of sex workers online". This is not an area where reliable numbers exist.
> I'm really baffled that sex workers and other groups who provide legal services that payment processors don't like aren't embracing crypto.
These people also need to pay their bills and not have their money stolen or otherwise disappear in the “fraud all the way down” world of crypto. Cash solves most of these problems, as well as basic intermediate layers like LLCs.
Cash is not reasonable for internet-based transactions. Payment processors like Stripe and Braintree are better, but they have moralising terms of service and will drop you the moment they find out what you're doing, and good luck getting your money out of that. Banks will frequently give you a hard time or not work with you if you're a sex worker so bank transfers are much more difficult and probably more info than you're willing to give to Johns. OnlyFans bans a lot of (legal) fetish content because of pressure applied by their payment processors, and they take a fat cut (20%) of what you're making on top it.
In an industry where getting fucked by payment processors regularly is part of the business, I think there is obvious appeal to pseudonymous transactions for both buyer and seller. Again, off-ramps are far better in 2023. I can deposit crypto and get cash in my bank account in a working day or two.
…and yet these systems all still outcompete crypto for the use cases you cite. We must therefore discern that the risk of getting fucked by payment processors is less than getting fucked by the crypto ecosystem.
It sounds like you don't work in the adult industry and don't have empathy for how difficult it is do deal with payment processors deciding you can't get paid anymore.
This is a common problem in these discussions. The HN crowd tends to have better access to payment infrastructure and reliable income from their industry. Not everyone has those benefits and many people are punished by our existing system for doing completely legal work that some see as immoral.
No, it sounds like the exact opposite of this: People who have no connection with the reality of a class of people they don’t understand or care about but want to use as puppets to prove a point.
It’s the people saying “Sex workers should just use crypto, it will solve all their problems!” who are lacking empathy, and not the people listing very plausible reasons why “Magic solution X” doesn’t make any problems go away.
> The financial transaction / storage side is relatively uninteresting to people because the existing financial system generally works really well for them in terms of risks, fees, uptime etc.
In sane countries that is, yes. And that's where most of the global wealth is, too.
However, there are places where you need to worry a lot more about the government arbitrarily seizing your funds, or the banks just 'misplacing' them.
(I specifically write 'arbitrarily' above, because sane countries also typically want a cut of your income and/or wealth, but they write laws and regulations _beforehand_ that you can read to figure out how much you'll owe in taxes. Of course, some people also use crypto and other tricks to avoid paying taxes.)
As a compromise, let’s ban cryptocurrency exchanges in all “sane” jurisdictions, because the downsides outweighs the upsides. That seems to be where things are heading already.
These companies will be free to operate everywhere else.
Different jurisdictions generally have their own lawmakers (mostly democratically elected in 'sane' places), and they can decide what they want or don't want to ban.
I'm not really in favour of bans here, because just as no one forces you to enter a casino, no one forces you to trade on a cryptocurrency exchange (or hold any cryptocurrencies at all). Matt Levine's Money Stuff reported a lot on people losing money in crypto over the last two years, and was always amazed that the media couldn't really find those sob stories where orphans and widows lost their life savings. It was always some guys who admitted that they gambled and lost.
However, if eg American elected officials, or their appointed proxies at the SEC, want to ban certain things, who am I to judge?
Here in Singapore the authorities are a lot more crypto friendly, which works for me.
(I don't hold any cryptocurrencies. My investments are all in the most boring index fund available.
My position on weird financial assets is the same as for drugs: I don't think cryptocurrencies are a good investment for most people (on the grounds of insufficient diversification, if nothing else), but I don't see any reason to ban consenting adults from them. By default, let people make their own choices.)
Yea funny story:
My bank won't allow me to buy crypto with my credit card. BUT I am allowed to gamble online with my credit card, those they let through :D
We have casinos here. Our government is an interesting mix between laissez-faire and paternalistic with a strong Puritan streak. (I don't think it's actually of Puritan origin, but a parallel evolution from Chinese culture? Would be interesting to look into the origins.)
The result is that foreigners can enter the casinos willy-nilly, and lose all their money as they please. But as a local you have to pay an entry levy of 150 Singapore dollars, just to remove any illusion that you might be come out ahead when you visit.
You can also tell that government that they should ban you from entry completely (if you know you have a gambling problem). Curiously enough, your relatively can also do that for (or rather, to) you.
And then you are still losing your money, because your supposedly secure hardware wallet had a backdoor all along. Or you are downloading a wallet app that is compromised. Or you are making any one of a million possible mistakes that can lose your everything you have in crypto.
At the end of the day, you need to keep your keys on an a dedicated air-gapped system where you have epoxied the USB ports and have ideally written the OS and all of the firmware (and the compiler) yourself. But then what's the point of a supposed currency of the future that is barely usable without paranoid security measures?
Bitcoin is a crypto nerd’s impractical fantasy of currency that became the ultimate speculative asset ever although it failed dramatically at being an actual currency. It’s traded almost exclusively on gray market exchanges right now, but this and the SEC Coinbase case are the government shifting it to regulated KYC exchanges. They will probably inevitably win, at least in dollar denominated trade
I'm fine with taking on that risk. I encrypt my laptop's hard drive and my backups. If I forget those passwords all my data is gone forever too. I'm willing to take that risk with my data and my money. If you aren't willing to take that risk, crypto might not be for you.
(These are the hard truths they won't tell you in the super bowl commercials)
> If you sent your money to a company like Voyager, instead of controlling your keys yourself, you missed the point.
so eschewing exchanges, you conduct all your commercial transactions directly in crypto straight from your crypto wallets? it's cool you can avoid all fiat like that, but doesn't it limit your purchasing options? Or have I missed another one of the points of crypto?
Most of my commercial transactions are still in fiat. I do use crypto when I can, and yes it's done straight from a local wallet. I use an android app called Cake Wallet and the private key stays locally on the device. I keep as much on my phone as I would paper cash in a leather wallet, under $100. The rest is on a hardware wallet.
I use an exchange occasionally, but I don't keep money parked there long-term like a bank. Deposit fiat, trade for crypto, withdraw crypto. I'm never exposed for more than an hour.
To a lot of people the USP of crypto is spending a few bucks for a chance of making money without leaving home or doing anything. It’s like scratch off tickets that you can buy online.
It's really not though. The point was to get rich and if you can get rich quicker in a custodial pump-and-dump than in a self-custodied decentralized boiler room... you might as well.
There's nothing in the bitcoin whitepaper about getting rich quick. If that's your goal, go ahead and send your money to FTX, Luna, Voyager, or Binance. But that's not my goal. I'm here so I can have self-sovereignty of my money.
the entire concept of money is a social construct. It's a culture wide bluff that we all agree to never call. "self-sovereignty" is antithetical to the idea of money.
It's also notable how much technological infrastructure is required to make this "self-sovereign" money possible - from specialized ASICs to constant internet connectivity. Gold is a much more self-sovereign store of value than any cryptocurrency.
Why does that matter? I'm pretty sure Bitcoin couldn't go back to CPU/GPU mining without killing the transaction rate or spiking the transaction cost. Using your self-sovereign money successfully (and at its current value) requires specialized ASICs to continue to be available.
> I'm here so I can have self-sovereignty of my money.
Except you aren't really. You will always be beholden to one entity or another, in bitcoin the 51% who need to clear your transactions. You just decide to not trust in the current financial apparatus and instead bet on the new.
Betting on something where there is no single interest that can decide to screw you is fundamentally different than trusting something where one entity is in control. In a more principled world, I'd like to think the latter would never exist and people would be willing to go to great lengths to avoid or even protest against its existence.
> There's nothing in the bitcoin whitepaper about getting rich quick.
Sure there is. The capped supply is intended to cause deflation and enrich early adopters if/when Bitcoin goes mainstream. To argue otherwise is to claim that the author of the whitepaper was ignorant of how a currency with limited supply would behave. And if that's true, it's more damning of Bitcoin than the "get rich quick" stuff.
Binance has basically been the JP Morgan of crypto firms. When these crypto companies die, often due (at least in part) to some attack from Binance, Binance will swoop in and buy them up cheap.
Don't forget the first buyer of Voyager was FTX... I rolled my eyes then bc I didn't trust SBF, and then when Binance came in after that I let out an audible sigh.
I know, it was something obscene and obviously marketed toward the greedy. Something like 90-120% of the official inflation rate at the time. How could that even be possible?
Possibly unfair, but this is like trying to discuss religion with believers.
"
Oh no, THAT specific thing is silly. OUR things are completely different."
Similarly whatever you do or showcase or discuss, "Oh that is not REAL Crypto. Our Crypto is different!"
It's a massive whack a mole. Meanwhile there are what, ten thousand plus different tokens tracked on coin market cap?
Edit : 25k, apparently lol. It's been a few days since I last checked :-)
Why do so many of the comments here and journalists assert that crypto and exchanges are the same thing?
Doesn't keeping coin in an exchange (as opposed to in a wallet, locally) sort of violate the ideology of crypto? Wasn't this shit invented to circumvent the banks?
I don't get it, using something meant to circumvent the banks, just to invest it in a less regulated form of a bank
Isn't to say I have a problem with crypto, but the one camp of people who shill these exchanges and the other that is saying crypto = exchanges = ponzi scheme are both wrong
I can't find the original source, but a while ago I read a really compelling article (linked from here) which explained why centralization is inevitable. I think it's relevant here, because if centralization is inevitable then it's reasonable to treat crypto as interchangeable with the exchanges.
Essentially, the thesis was that a decentralized protocol can never evolve and adapt as quickly as a centralized platform, because the protocol has to reach consensus with all stakeholders before it can change. This leaves a gap between user expectations and the protocol's capabilities, which platforms are happy to fill. They extend the protocol with bespoke and proprietary features, these features draw users, and users come to depend on these extensions. Thus, lock in.
You can see this with email and Gmail, with the web and Facebook et al. NFTs had OpenSea, and crypto in general has the exchanges. You can't separate crypto from the exchanges because the existence of crypto necessarily implies exchanges.
> This might suggest that decentralization itself is not actually of immediate practical or pressing importance to the majority of people downstream, that the only amount of decentralization people want is the minimum amount required for something to exist
Seems to me like building a centralized system on top of a decentralized one, similar to my earlier example of building a bank on top of something designed to circumvent the bank
General rule seems to be greed v laziness -> centralization
It's an interesting point, but I think you've stretched it a little thin. Taking one of your examples, I don't think anyone would ever say "it's reasonable to treat the web as interchangeable with Facebook". Sure, for some people Facebook is all they use the web for - but that's definitely not true for everyone. And the web doesn't depend on Facebook existing either. When Facebook dies, the web will be just fine.
Certainly Facebook alone, but that's why I included the "et al". For most of the world, "the internet" is interchangeable with "the few big platforms I regularly use". It's not technically accurate, but I don't begrudge them the usage because that is their internet.
In your analogy, "Facebook et al" seems equivalent to "Binance et al". And OP asked about journalists too. Imagine if CNBC ran an article titled "Facebook fined for privacy violations - is this the end of the internet?" We'd all have a field day. I don't begrudge your grandma for not knowing the difference. But a journalist or HN commenter is expected to know. I wish we held crypto discourse to that same standard of being at least minimally informed.
That's a reasonable counterexample. I'd say that probably happened because the primary use case for BitTorrent is piracy (I know there are other use cases, but that's the main one), so there was never a space for a legit business to form. Crypto had speculation, which was less obviously illegal than downloading pirated TV shows and provided a great revenue stream to boot.
> Why do so many of the comments here and journalists assert that crypto and exchanges are the same thing?
Exchanges are what make crpyto usable, to the extent it is.
> Doesn’t keeping coin in an exchange (as opposed to in a wallet, locally) sort of violate the ideology of crypto?
Maybe, so what? “Exchanges as a venue for, um, exchange” and “keeping coin in an exchange” aren’t the same thing (except to the extent that exchanges make it difficult to move coin off the exchange, which AFAIK usually isn’t an issue for crypto so much as it is sometimes is for fiat.)
> Wasn’t this shit invented to circumvent the banks?
That’s been part of the marketing, sure, and not just banks but the financial services industry more generally. But, as it turns out, you need a lot of those services for anything money-like to be usable, especially when its not the primary currency of the economy you are trying to operate in. A lot of the marketing of cryptocurrency is…not particularly realistic. (Of course, a lot of it is done by the people running the crypto-community versions of financial services, so…)
Without the exchanges, buying and selling for 'real' currency would be next to impossible.
Without access to 'real' money, the get rich quick crowd (and probably a lot of the scam crowd, and probably a lot of the dark market crowd) move on. With them gone... there's probably not very much left of a cryptocurrency user base.
Seems like there's two ways of looking at exchanges: using it to buy/sell, then immediately transferring to a personal wallet. Or using it as some kind of investment. I'm criticizing the latter
Wrt to the get rich quick crowd, things were fine before they showed up. They should go somewhere
I think if you remove the latter there won't be many people left playing with cryptocurrency. Which would be fine from my perspective (a lot fewer people being ripped off in what appears to basically be a huge unregulated casino). And it sounds like from yours too.
10 years ago I used to hold the concept of 'accredited investor' in disdain. It's largely just creating a giant paywall (or at least wealthwall) preventing lower income individuals from accessing some of the most potentially lucrative ventures. But yeah, the past ten years of seeing people decide to go buy BTC on news of "BTC reaches record high! It's going to to the Moon!" and then decide to go sell it on news of "BTC is crashing! This is the end!", and then [loudly] complain about losing money, or even that it's all a scam, has really made me change my mind and, in part, my worldview.
I think the thing is that a ton of people are using crypto as speculative investments and an exchange facilitates that, especially once it layers leverage and derivatives on top.
The Bitcoin p2p interface is quite excellent. Literally all you need to do is download a wallet, the overwhelming majority of which are open source, and then generate an ID which is also done with the press of a button. And that's it. Give that ID to somebody and they can send money to you which will momentarily show up in your account. Vice versa, for sending to somebody else.
In a world where people were using nothing but some sort of a peer-to-peer currency this system would be unbelievably amazing. The reason exchanges exist is because fiat currencies still exist, and so there's a lot of demand for exchanging between peer-to-peer currencies and fiat currencies.
The article title is incorrect, this restraining order has been requested by the SEC, not granted yet.
Its a bit confusing because the submitted order is a proposal of how a order could be given by a judge, but is still full of important blank information like the name of the judge, the date, etc.
"Later on Tuesday, a filing from the United States District Court for the District Of Columbia showed that the court had agreed to grant the SEC’s demands."
As tedunangst says below, this is common and doesn't mean the judge agreed with you.
It just makes it procedurally easy for the judge to agree with you. The judge might not sign it at all. Might edit it and then sign it. Might write their own version that says something else. Etc.
for those who dont want to click through, its full of stuff like this:
"IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the
Defendants show cause, if any, before the Honorable __________ of this Court, at __ o’clock
_.m., on the __ day of ____, 2023, in Courtroom _____, United States Courthouse"
First time court tourists are often surprised that you can write your own order for the judge to sign, and it sure sounds official, but it's missing the magic signature that makes it go.
I’m a long term skeptic (but opportunistic trader of BTC) - this level of extreme pessimism on HN has historically preceded rallies. Of course, this time can be different.
You should probably wait until you see how much damage the Feds can actually do to Binance and crypto prices. If they could actually damage Binance enough that it fails that would substantially damage crypto prices. Remains to be seen if they're going to do something toothless again or if they're actually not fucking around this time.
I'm honestly curious, at first glance this looks that could potentially affect cryptocurrencies in a sizable way downwards. I checked CoinMarketCap and it seems that the trend is comparatively stable. Can someone explain this? Please do take into account that I'm not very well versed with cryptocurrencies and I usually need an explainer in several financial concepts.
Some people overestimate the influence of the US. Maybe because the US has quite an influence over Japan and Europe. You need to realize the US is not the world and the world doesn’t care what the US institutions think or do.
The US is not (anymore?) the center of the world attention. In a way, it's just that more countries "open their eyes" on the impact the US has on many countries. For instance, the US is an "ally" of France, but does a lot of damage to the French economy, on purpose.
1) The US isn’t the entire world, and crypto is a very global thing since it’s essentially borderless finance (outside of exchanges anyway)
2) Crypto cannot be killed due to its decentralized nature and every attempt makes it more clear how anti-fragile it is. You cut off one head in the US, two more will spring up in other countries.
Your assumption could come to pass. It's not a certainty. Keep in mind that these squabbles center around ownership, custody and handling - not seeking to destroy, or to cast the assets themselves as 'bad' per se.
There was a crypto critic on Bill Maher a couple months ago and he was asked essentially that question. IIRC He suggested that there's a lot of cryptocurrency out there that is essentially not sellable - it's been stolen, stuck in dead exchanges, etc. And then there are state actors that are likely helping to prop it up.
You should look elsewhere (even google) for advice or to understand cryptocurrencies. Avoid at all costs this site (extremely uninformed negativity) and YouTube (extremely uninformed shillers).
The SEC action is actually a signal of weakness in USD. This was precipitated somewhat with the pandemic, and more so after there were financial sanctions leveled against Russia.
The reason why currency has relative strength or weakness comes from the idea of a "national balance sheet": if your nation's assets exceed its liabilities, your local currency is gaining buying power, because it can take on additional debt from other countries and therefore, when we measure it in terms of "how much a unit of currency can purchase", we are getting them at a relative discount. You don't necessarily want the currency to be strong if your economy is based on exporting, but as a net importer, the US has assumed the role of strength for some time, and a large part of its system is to "export the dollar" as the international settlement currency.
So, with the pandemic, we got a round of fiscal stimulus, inflating the currency. Not necessarily insurmountable by itself. But then Russia invaded Ukraine and the US decided to punish the action with sanctions. That prevents Russia from doing some business, but it also has a blowback to it: if the usage of USD is becoming more restricted, it becomes less appealing as a settlement currency. Many smaller countries have peeled away to alternatives, with a handful even opting to hold BTC. Therefore, dollar strength is under serious threat now. The recent bank implosions have added to that uncertainty: there is a real question, often discussed in the crypto space now, of whether USD is going to survive intact.
Under Gary Gensler's administration, the MO of the SEC has been to swing around a billy club and drum up a bunch of charges against exchanges. The charges aren't very sound in nature: they don't adhere to a consistent framework, and don't suggest cooperation with exchanges like Coinbase that have taken pains to ask for regulatory clarity.
The rationale for why that's happening now is obvious: if the overriding concern is protecting the dollar, the SEC has to burn any possible lifeboats to maintain control of its own currency.
But...if you're doing that, that's the "then they fight you" part of the story. There are several countries where an informal crypto sector has taken hold to handle payments and remittance precisely because it bypasses financial controls. In many cases, people will still prefer settlement in USD, but they can hold a stablecoin if needed.
There is a fate in which USD pulls through without falling into an inflationary spiral, but it requires the economy to do extremely well(with a mix of labor mobilization and technological improvements) so that the balance sheet is fixed and faith is restored. The market reaction in this case suggests that people don't think the US is in control of its money, and they expect the action to be toothless - and they have a point, since if an exchange goes down, they can continue holding in self-custody and wait for the market to provide alternatives.
The SEC was meeting with SBF and failed to protect US citizens who sent money to FTX. So far Binance hasn't pulled a ponzi scam (they existed before Alameda/FTX and have never stolen anyone's money).
So basically the SEC failed to protect people from that ponzi scammer boy SBF was, but they're going after the like of Binance and Coinbase, who, so far, never stole a cent from anyone?
How do you know Binance hasn't stolen anyone's money? Is there a reputable auditor's statement to that effect? Seems very unlikely when Binance pretends they're not even headquartered in any jurisdiction. Nobody has any idea about Binance's actual money flows and where customer funds have actually ended up.
We don't. But by the same token, these are just allegations so far.
It is interesting however, the SEC purportedly has tons of evidence of wrongdoing at these exchanges but completely missed FTX which was a massive fraud. Color me skeptical, it's almost like they are saving face for missing FTX. FTX was even regulated to some extent -- I remember you were able to buy tokenized versions of US stocks on there.
> How do you know Binance hasn't stolen anyone's money?
In America you are presumed innocent until proven guilty. Therefore, under our legal system, Binance.US is presumed to not have stolen anyone's money until the SEC passes the burden of proving guilt beyond a reasonable doubt.
That's what everyone thought about FTX too. "Why wouldn't they be legit, they're hanging out with members of Congress and obviously making a lot of money."
According to NYT, Binance was moving billions into accounts held in Seychelles, Lithuania and Kazakhstan etc. via two banks that failed earlier this year in patterns that resemble money laundering[0]. If Binance was laundering its funds through two banks that just went through liquidation, you can bet that auditors figured that out pretty quick.
The article alleges that at least one of the offshore companies was commingling customer funds, which Binance denies. I'm no finance guy, but that seems like a pretty easy allegation to back up if they've been deep into one of Binance's intermediary banks (which they have).
The SEC has turned around 3 months after these banks collapsed and launched significant legal action against Binance and Coinbase, which says that what they found was serious enough to move really quickly against these guys. No idea what they found, but I have feeling we're all gonna be reading about it pretty soon.
Binance has not only been more honest than FTX but also more honest than Coinbase.
But this is HN and the people here are smart but lack the intellectual courage and honesty to challenge their beliefs, so they'll believe in things like "SEC trying to save the common investor" despite obvious examples like 2008, FTX, etc.
They apply the same reasoning to war for example, they'll never talk about how comparable the US aggression on Iraq is to the Russian aggression on Ukraine, and will call you a Russian sympathiser if you point this out.
This is expected and completely natural, humans will always find reasons why their actions are good and general just ways to explain their behavior, I think there are experiments that even show it on the biological level when they cut off the right from the left hemisphere.
The SEC's attack on Binance and CB has been part of a multi year attack on cryptocurrencies, everyone here will criticize crypto really hard but never the fact the fed printed huge amounts of USD, causing inflation not only for US citizens but for every country that relies on the US for food and other imports (that are done in USD, so for example country X's reserve in USD is worth less now, and US exporters raise their prices, etc.)
The people here will go to extreme lengths of mental gymnastics to say that the inflation wasn't caused at all by money printing but by covid disrupting the supply chain and by the Russian war.
I mean yeah, because there is money around to repatriate.
In the SBF case by the time anyone realizes what was happening the money was "gone."
Trying to reply why it will be that easy in this case perhaps.
N.B. they were just granted an order; they need now to enforce it. That's a different "craziness."
I take it as the SEC recognizing that they screwed up in watching FTX and now they're correcting. SBF was a golden boy the month before everything collapsed—it would be a mistake for anyone to assume that either Binance or Coinbase is above board just because they have a good reputation right now.
The SEC is sending a message that the days of crypto exchanges being largely unregulated are over, and they're probably doing that because of how badly they screwed up with FTX, not in spite of it.
> So basically the SEC failed to protect people from that ponzi scammer boy SBF was, but they're going after the like of Binance and Coinbase, who, so far, never stole a cent from anyone?
Agreed. SEC should have given enough time to these two so that they could fleece people of their money, then declare themselves bankrupt and then have law enforcement go to other countries and have the culprits extradicted back. Finally have everyone shouting "SEC colluded with these culprits".
I don't understand this rush to stop this from happening.
I mean, if you ignore the countless reddit threads about not being able to access funds because the moment you try, they spring more and more requirements on people, or just plain ghost depositors..... even if you ignore that, what coinbase is doing seems to go heavily against rules that govern exchanges and the securities they exchange.
And Binance appears to be on the hook for various forms of fraud.
Maybe they did never steal a cent from anyone, but there are more crimes than theft on the books.
Speaking as someone who doesn't have any skin in the game.
Just because to the best of our knowledge, Binance is fully solvent and can make all US depositors whole, doesn't mean that they won't declare bankruptcy imminently. That's a condition that could change at any time, as has been well demonstrated.
I have a feeling Binance would also look a lot more like a ponzi scheme under subpoena with their asset values gone to zero, no?
There are dozens of crypto exchanges, and most of the major ones have not become insolvent. FTX and MtGox are the only major ones to become insolvent and lose user funds. The top ones like Kraken and Coinbase and Binance have been operating without issue for many years.
> So basically the SEC failed to protect people from that ponzi scammer boy SBF was
FTX was headquartered in the Bahamas for a reason. The SEC doesn't have jurisdiction over the Bahamas. It also takes time to build a case, which is difficult when FTX exploded and then collapsed so quickly.
Binance.US and Coinbase both operate in the US, under the SEC's jurisdiction.
Or they walked like a duck and quacked like a duck but still said they were a turtle... I think this will all be very interesting when it's all said and done.
Gary Gensler yesterday argued on live television that digital currency already exists and therefore there's no reason for crypto to exist. Moreover, in the House hearing some months back he said that it's not crypto that will change the world, but AI. I don't have any kind of facts for this but my believe is that the Biden admin feels that crypto currencies devalue the US Dollar and therefore considers them threatening. So they're going after them. If that true, this might be a big opportunity for other countries and regions in the world to get ahead of the US. Also, I feel the US has anyway too much influence in the world. So I see this as a positive for the world as a whole.
Coinbase and Binance acted/acts very differently. Binance basically throw their hands in the air saying "well, whatever, it's illegal so whatever we do is illegal, so lets just do whatever" while Coinbase been acting as they are trying to follow the law as much as they could, while still operating an exchange.
Not saying one is more illegal/legal than the other, but they certainly acted differently.
I don't think it's possible to make money like a traditional bank or brokerage with cryptocurrency, none of it is sticky and the users can go around you. Thus the "security but not a security" get rich quick FOMO schemes.
Coinbase acts like this because it was founded from day one to serve the US market, and everything that it has done has been to invest millions of dollars a year into complying with US law. Coinbase has only in the past couple months, started expanding internationally so they don't die immediately in case the US regulatory system decides to cannibalize them.
Binance acts like this because complying with US law is ridiculously expensive. Binance cares most about serving the remaining 95% of humanity that does not live in the US. Maybe seven years or so ago they really started shifting things around so their US services are expendable, and could be jettisoned at any moment if US regulators start biting.
Both are entirely reasonable strategies, and it's why I, as a US citizen, moved everything I had in Binanace away 7 or so years ago, and only ever do anything custodial with Coinbase. Back in the before times, I had accounts across multiple global exchanges so I could run arbitrage bots etc, but now it's basically Coinbase or nothing when it comes to custodial exchanges.
That’s the strategy they explicitly chose. Probably because of the founder’s preference or vision. They wanted to position themselves as the legal crypto exchange which is a great differentiation in that market.
Coinbase is american based by ex WallStreet people, I'm pretty sure this is all coordinated to help Coinbase lead the digital USD revolution, fishy buisiness as usual..
For the casual bystander with crypto parked in Coinbase vaults, and maybe some eth staked - what's the consensus among those more knowledgeable? Move assets now or just stay the course?
It doesn't look like anyone is going to outright lose assets - but perhaps not the able to withdraw for some period of time?
Self-custody is the way to go. Send your assets to a private key you control. Not your keys, not your coin. I sleep like a baby no matter what sketchy exchange is in the news any given week.
Yes, but for regular people, like myself, being responsible for those keys is a pretty sizable burden. I didn't speculate on crypto because I hated centralized banking...
At the end of the day, figuring out whether new crypto companies are trustworthy might be as much of a burden as figuring out how to handle the keys yourself.
If you really don't want to self-custody, probably the next safest option is to skip all the new crypto companies and instead use one of the traditional finance companies that's starting to branch into crypto (like Fidelity)
The problem with that is you can't get overnight rich by buying a coin and holding it in an offline wallet anymore.
You either need to be day trading off the wild fluctuations in different coins prices, which requires working through an exchange, or you need to be "investing" in various scams and hoping to get your money back out before the rugpull.
Similarly, you conveniently ignoring the past 20+ months of high profile crypto investigations, shutdowns, arrests, lawsuits and seizures to pretend there's a sudden conspiracy.
> "Have fun staying poor, nocoiner" is probably one reason you see such vocal dislike.
I literally can't name a single time I've ever, ever seen that sentiment expressed on HN. And the irony... but at least the nocoiners have at least stopped insisting that everyone in crypto is an idiot that doesn't know what they're doing. (aka, projecting). At least outwardly anyway, from what I can tell.
I love that my OG comment is flagged. Really just says everything, it wasn't even remotely combatative. Just add it to the list of things you can't really talk about on HN. Bitcoin suxors amiright?!
I've actually thought about this myself, and have come to a couple of somewhat opposing conclusions:
* Crypto is uniquely capitalist and to some extent uniquely exploitative technology. Given how minimally used it appears to be for actually worthwhile things and how many people are getting rugpulled, just how much damage is actually being done, I can see why there are so many people who consider it to occupy its own separate tier of capitalist exploitation.
* As a tech worker, I hate thinking about how what I do is itself exploitative and capitalist, and the crypto ecosystem and community makes me feel better about it because at least I'm not that bad. I assume a lot of folks would never admit to feeling this way, but probably do on some level.
Your second point is interesting. One thing about crypto is it’s generally opt-in, whereas e.g. your local plumber didn’t have much of a say in buying thousands of dollars a month of Google ads to stay afloat.
Binance, a centralized exchange like FTX, requires your trust in order to hold your assets. Hacker News will hate this — but this is why decentralized exchanges like Uniswap exist. Uniswap already does more volume that most centralized exchanges, all without every taking custody of assets.
Unironically, crypto fixes this, by allowing for self-custody and trustless exchange using verifiable programs (like Uniswap).
FYI Binance Australia had their banking removed from 1 June. Screws are tightning globally.
Assuming coinbase gets taken down too, do Americans have any options left to convert their crypto to fiat? Or do they need to perform offshore transactions?
Just convert whatever you want to Bitcoin and Ethereum first in a decentralized exchange like any AMM, and then sell the Bitcoin or Ethereum on a fiat route. Assuming you even want fiat, but when you do you can.
The solution to this problem is:
- ban centralized exchanges
- enforce stable coins to have their own coin-to-fiat exchange
- allow only decentralized exchanges that can operate only if they implement some interoperability standards like dex-to-dex bridges
- allow coins on decentralized exchanges only if they implement interoperability standards like blockchain-to-blockchain bridges
Now everybody can safely swap and transfer coins on whatever dex. If they want to cash out, swap again for usdt, then go to usdt official exchange and get your $.
Last time the SEC did this:
“I was told by the banks that if I did not agree to settle with the SEC, that they would, the banks would, cease providing working capital and Tesla would go bankrupt immediately” Elon Musk @ TED in Vancouver
Also from TuongVy Le(@TuongvyLe12), former Chief Counsel at SEC:
"Let’s be clear: the @SECGov complaint doesn’t mention this, but there is currently NO way for a platform like @coinbase to register as a securities exchange, broker, or clearing agent. That’s why they’ve been begging
@SECGov for YEARS to give them a path to compliance.
Instead of working constructively with U.S. market participants to come up with a working model, and knowing that Congress is actively considering legislation to do the same, SEC sues. No allegations of fraud, just accusing @coinbase of failing to do the impossible."
You mean the guy who's actively not cooperating and whose former coworkers (and girlfriend) have begun to cooperate with the government against him? That's the guy who had something to do with helping the SEC bring charges against Binance?
Cryptocurrencies like bitcoin are globally decentralized. Individual countries may make laws against them as they like but if say the US bans bitcoin trading you can always trade them somewhere else. Binance.com still goes on, it's Binance US where they are freezing the assets.
There’s a fairly straightforward way to stay out of SEC jurisdiction: Don’t sell to US retail investors (including “not selling to US customers, but wink wink have you ever heard of VPNs?”).
Gary Gensler isn't targeting individual crypto users. He isn't even targeting Bitcoin; these suits are related to other coins that fall under ordinary, existing securities regulations. This is just routine civil law enforcement of the sort that occurs in every industry; if crypto is an exception, it's only because companies in that space have an unusual tendency to break the law.
Yeah, so punish SBF for that specific instance of fraud. No need for a “securities and exchange commission” to decide how they feel about numbers in a ledger.
The SEC should exist to help investors know what they’re buying, and should essentially be publishing due diligence reports and assisting in fraud cases. The idea that they get to essentially legislate via administrative fiat, with no input from congress, and certainly no input from American voters is absolutely an absurd overstep.
The SEC does answer to Congress. Are you saying that they should go get congressional approval before each and every enforcement action? If so, nothing would ever happen because Congress gets nothing done. They’ve suspended voting for the rest of the week due to infighting within the majority party.
Back to Binance, regulators are alleging that Binance commingled customer funds in offshore accounts, according to NYT. One pattern that seems to emerge consistently is that the anti-regulatory and anti-banking sentiment among these companies leads them to be careless and disorganized about their business operations, we saw it with FTX.
A lot of those accounting control and financial rules exist to prevent things like fraud and tax evasion, and it’s no surprise to see companies that try to get around the rules committing fraud and tax evasion.
This has zero to do with “numbers in a ledger” and everything to do with “you’re taking in billions in customer funds, and it’s our job to ensure that you’re not going to fail in a way that harms the markets.”
I couldn't find anything in that article that points to the veracity of that claim except from Binance itself. How reliable is that? And if it's true why are they only coming out with it now, instead of before all of these went down?
Please don't cross into personal attack or call names on HN. If another comment is wrong, it's good to explain how it is wrong, in a neutral way that we all can learn from. Also fine to just chalk it up to the internet being wrong and not reply.
Lots of things are scams in crypto, but Binance is not one of them. The allegations that they misappropriated user funds in any material way are absurd. They didn't. They have never had any serious problems meeting redemptions or withdrawals in any of their products, and despite this lawsuit dropping and the asset freeze being granted by the court, still aren't. If they were insolvent, withdrawals would have been frozen a long time ago.
This is a political stunt. Nothing more. Some helpful context:
Gensler is a man who's overtures to work for Binance were spurned. He came into power at the SEC, and then he went after them, literally since the day he entered office. They were originally going to drop this case right when FTX blew up, but they knew how bad the optics of that would be, so they waited. This isn't someone impartial, looking out for investors. This is someone spiteful, looking out for himself.
If he wanted to protect people, he'd have done this when the market was hot. That's when investors need protection. That's when a good regulator acts - when a market is overexcited and people are being exploited. Who, exactly, is being protected now? From what?
They are still processing withdrawals as smoothly as ever, despite the lawsuits and judgment. Their tokens are trading at parity. They have seen huge outflows, and haven't faltered in the slightest.
