[HN Gopher] Publication of Cryptocurrency Enforcement Framework
___________________________________________________________________
Publication of Cryptocurrency Enforcement Framework
Author : AndrewBissell
Score : 149 points
Date : 2020-10-08 16:54 UTC (6 hours ago)
(HTM) web link (www.justice.gov)
(TXT) w3m dump (www.justice.gov)
| BTCOG wrote:
| Hi, federal agents and banksters.
| qertoip wrote:
| Good to see they at least recognized legitimate uses of
| cryptocurrencies.
| seibelj wrote:
| Hmm... a large contingent of people on HN claim blockchain is
| 100% worthless and no better than a centralized database. Then
| why is the Department of Justice saying:
|
| > _At the outset, it bears emphasizing that distributed ledger
| technology, upon which all cryptocurrencies build, raises
| breathtaking possibilities for human flourishing. These
| possibilities are rightly being explored around the globe, from
| within academia and industry, and from within government --
| including our own._
|
| So what is it - our government is full of confused people, or HN
| is?
| robertakarobin wrote:
| Why not both?
| williamtwild wrote:
| Looking at the current administration I can say with 100%
| certainty that the US government is lacking in just about
| every way possible right now.
| lawn wrote:
| Despite the hate on HN it should be obvious that
| cryptocurrencies aren't 100% worthless. For that there must be
| no valuable use case, but even the same people will also say
| there are illegal use cases, defeating their own point.
|
| (If you still want a legal use case then I suggest how
| WikiLeaks could still accept donations in Bitcoin when all
| other payment processors and banks blocked them.)
| anamexis wrote:
| I mean, when it comes to the potential of a given technology, I
| think I know who I'll generally trust between HN consensus and
| the United States Department of Justice.
| paulgb wrote:
| I haven't read the full report yet, but do they point out any
| examples?
|
| I think the main contention of many of us on HN is that
| blockchain _as a technology_ (as opposed to Bitcoin as a store
| of value) is proposed for a lot of things, but examples that
| wouldn 't be better served by a database are basically non-
| existent.
| zippoxer wrote:
| > examples that wouldn't be better served by a database are
| basically non-existent.
|
| If you say so, then here's a question for you.
|
| Using only non-blockchain databases, can you build an
| exchange that is.. 1) Owned by no one, or
| owned by a community to which anyone can join. 2)
| Unstoppable. Can't be shutdown even if you cold murder the
| entire team. 3) Can't be regulated (will never do
| KYC/AML). 4) Permission-less: anyone can trade
| and/or provide the liquidity. 5) Open-source with
| indisputable proof that it *always* runs *exactly* and *only*
| the code it shows on GitHub.
|
| In other words, can you build Uniswap [1] with MySQL?
|
| [1] https://app.uniswap.org
| paulgb wrote:
| What's the real world problem that this solves, and is it
| actually solving that problem for anyone today or is it
| hypothetical?
| qertoip wrote:
| Exactly the point.
| qertoip wrote:
| It is only politically correct to recognize blockchain / DLT
| potential when you need to bash cryptocurrencies.
|
| Meanwhile, the reverse is true: decentralized cryptocurrencies
| like Bitcoin or Monero have potential to change the World.
| While "enterprise blockchain technology" is just pure BS - the
| needlessly over-distributed and over-complicated database that
| is inherently centrally controlled.
| jl2718 wrote:
| This report is not about 'potential'. Happening status: is.
| heavyset_go wrote:
| I think it is just evidence that true believers exist, and some
| of them work in government.
| rsynnott wrote:
| The head of that government, an obese 74 year old with COVID,
| just declared himself to be "a perfect physical specimen" and
| "extremely young", so I think there's a decent case for the
| former.
|
| More seriously, if you've just spent the last year working on a
| policy document, you probably are not inclined to say "by the
| way, this is all nonsense, really"; makes _you_ look bad. This
| wouldn't be the first time a civil servant has praised
| something which turned out to be silly.
| vmception wrote:
| > In most circumstances, the Department does not liquidate seized
| or forfeited AECs (Anonymity Enhanced Cryptocurrencies), as doing
| so allows them to re-enter the stream of commerce for potential
| future criminal use.
|
| Moon Cannon for Monero!
|
| > Some AECs, however, offer features, such as public view keys,
| that potentially can facilitate the fulfillment of AML/CFT
| obligations, depending upon the implementation of such features.
|
| Nice, also a Moon Cannon for Monero!
|
| DOJ PAAAAMPPP!
| [deleted]
| kache_ wrote:
| No government enforcement will matter for cryptocurrency as long
| as confidential transactions schemes aren't broken.
| https://eprint.iacr.org/2015/1098.pdf
| lawn wrote:
| By the same logic then no government enforcement would matter
| if we're talking about coins and bills, because they too are
| untraceable.
| grantjpowell wrote:
| Ring signatures are cool tech, but it's important to point out
| ring signature plausible deniability promises only work _ _in
| the absence of outside (off chain) information_ _.
|
| When coupled with outside information (Cooperation with
| exchanges and other large holders, timing attacks of IP
| addresses, etc). The plausible deniability you get from ring
| signatures can be much lower in practice
|
| Edit: Here's a really good video with some of the core monero
| contributors on EAE attacks
| https://www.youtube.com/watch?v=iABIcsDJKyM
| Barrin92 wrote:
| Of course it does because everything that even remotely touches
| the non-shadow economy, starting a business, investing in
| publicly traded firms, interacting with everything that isn't
| crypto, paying taxes or anything that touches the rest of the
| world is subject to governance. You can invent a hundred new
| crypto technologies, if you want to actually do something
| useful with crypto other than betting on crypto exchanges or
| buying heroin online you'll need to have some sort of legal
| recognition.
| arcticbull wrote:
| And then good answers to questions like "so where did you say
| this money came from again?"
| Mc_Big_G wrote:
| _"The United States has been enormously successful blocking
| terrorists, rogue regimes, and their supporters from funding
| their activity using traditional currencies,"_
|
| Have they though? How much money has been proven to be laundered
| through the traditional banking systems, with the support of the
| banks. This argument against crypto currencies is equivalent to
| the pedo arguments about cryptography. It's simply BS.
|
| The market cap of all crypto currencies combined is insignificant
| compared to the cap of fiat currencies used in illicit
| activities. There is little to no threat from crypto that we
| don't already have with fiat. The "threat" is a red herring.
| vmception wrote:
| The actual PDF is pretty well balanced.
|
| They talk about the legitimate use cases and various narratives
| of cryptocurrency proponents, some narratives of skeptics, as
| well as its actual potential and use and research by non-
| enforcement government agencies.
|
| The DOJ is an enforcement agency and will naturally talk more
| about how to disrupt evolving criminal enterprises.
|
| This document goes into depth on how various threats and
| illegal activities are modeling and disrupted.
| kube-system wrote:
| > How much money has been proven to be laundered through the
| traditional banking systems, with the support of the banks.
|
| Basically any news story you hear about money laundering
| involves traditional banking systems.
| mensetmanusman wrote:
| FBI only focuses on political terrorism, not economic terrorism
| from those at the top.
| SirensOfTitan wrote:
| Remember the FinCEN investigation from just a couple weeks ago:
| https://www.buzzfeednews.com/article/jasonleopold/fincen-fil...
|
| Governments don't care about the crime banks encourage and
| enable, as long as it's large enough. The US has failed to
| enforce incredible amounts of money laundering through
| traditional currencies. Whether that failure is the result of
| incompetence or something more sinister is the question.
|
| Outside of a cultural movement toward more anarchist, distributed
| power systems, I can't see anything good coming from the state
| dipping its heels into more data streams like this. It's largely
| obvious that the US government, for the foreseeable future, is
| largely dissonant from what's actually good for its public. Drugs
| are a fairly powerful anecdote illustrating that end: opiate
| producers (like most capitalist businesses) aren't punished for
| causing a nation-wide epidemic, while users of proportionally
| less harmful drugs like LSD, MDMA, or Marijuana are punished
| quite harshly.
| glennvtx wrote:
| The biggest promise of crypto is that it is immune to government
| censorship / control. It can free us from the hidden taxation of
| inflation, and government coercion.
|
| I for one don't want government to be able to regulate / control
| / trace transactions.
| heavyset_go wrote:
| > _The biggest promise of crypto is that it is immune to
| government censorship / control. It can free us from the hidden
| taxation of inflation, and government coercion._
|
| I don't buy it. Exchanges are centralized, and they will
| respond to court orders. Some networks can be centralized and
| are vulnerable to majority attacks.
| kd913 wrote:
| Yea I don't think that is worth the ridiculous amount of energy
| being consumed by crypto. Almost the equivalent of the entirety
| of Denmark.
| mkolodny wrote:
| There are promising alternatives to energy intensive proof-
| of-work crypto algorithms. Specifically proof-of-stake
| (Ethereum, etc)[0], and ledger-backed services[1].
|
| [0] https://blockgeeks.com/guides/ethereum-casper/ [1]
| https://pfrazee.github.io/blog/secure-ledgers-dont-
| require-p...
| kd913 wrote:
| There have been better coins, better protocols for years
| now, but the most popular cryptocurrency still remains to
| be bitcoin. Bitcoin alone has a terrible energy footprint.
|
| The environmental damage caused by all this nonsense is not
| worth it at all.
| ColanR wrote:
| > trace transactions
|
| Right now, the business of transaction tracing is booming.
| Rapzid wrote:
| I disagree. So much crime and corruption is uncovered through
| tracing financial transactions.. A world where a few mega power
| brokers who are untraceable, unaccountable, and untouchable by
| "the people" sounds super dystopian to me.
| SirensOfTitan wrote:
| Tons of crime flows through completely auditable sources:
| https://www.buzzfeednews.com/article/jasonleopold/fincen-
| fil...
|
| Right now, what's happening is a few mega power brokers are
| traceable, unaccountable, and untouchable by the people.
| Pretending that crypto somehow creates or enables crime when
| its sitting right under our noses (as our governments refuse
| to do anything about it), is frankly ridiculous.
| arcticbull wrote:
| - Bitcoin is auditable.
|
| - Traditional sources actually at least try and stop it
| from happening.
| lawn wrote:
| Banks are complicit and profit immensely from helping
| criminals launder huge amounts of money.
|
| They helped Mexican drug gangs launder $378 billions for
| example:
| https://www.theguardian.com/world/2011/apr/03/us-bank-
| mexico...
|
| And they just get slapped with a small fee, then continue
| with the same behavior.
| arcticbull wrote:
| Again, that's an argument for improving the existing
| system not throwing it out and letting anyone launder any
| amount of money they want to isnt it?
|
| - We agree money laundering is bad.
|
| - We agree that the existing system is attempting to
| solve the problem, but isn't always effective.
|
| - You're saying: throw it all out and let anyone launder
| anything they want.
|
| - I'm saying that's strictly worse. Let's shore up the
| existing system and try and take it on.
| lawn wrote:
| My point was that the existing system (the banks) aren't
| trying to solve the problem so it's almost completely
| ineffective.
|
| And the argument is that there comes a point when the
| drawbacks of trying to stop it becomes larger than the
| benefits we gain, and we should therefore do something
| else that gives us more benefits.
|
| You might argue that we're not there yet, which is fine,
| but others will argue that it's time to try something
| else.
| arcticbull wrote:
| > You might argue that we're not there yet, which is
| fine, but others will argue that it's time to try
| something else.
|
| But can we agree that trying "nothing" isn't better?
| lawn wrote:
| I might not be explaining myself clearly.
|
| By doing "nothing", we gain other things such as
| financial privacy for everyone and making digital
| payments available for everyone. These are not
| insignificant things and if they're more valuable than
| the inefficient anti-laundering attempts then doing
| "nothing" would indeed be better.
|
| Also we wouldn't truly be doing "nothing", we would only
| give up one traceability component and we can still chase
| crime in other ways, like requiring documents of where
| you got the money to buy this mansion.
| ethanwillis wrote:
| Traditional sources only try to stop it from happening if
| the scale is small enough.
|
| Basically traditional sources just incentivize organized
| crime that's less accountable to the justice system until
| they piss off the wrong people. Look at Deutsche bank.
| arcticbull wrote:
| Isn't it better to at least _try_ and stop it instead of
| throwing in the towel? Can we agree that if something is
| bad, someone trying to stop it is better than not trying
| to stop it at all?
| madamelic wrote:
| The idea that 'power players' can avoid prosecution by using
| cryptocurrency is absolutely untrue.
|
| Once you grow that large, you get a lot of attention and
| suddenly it is economical to track you down, even if you are
| using 'untraceable' currency like Monero.
|
| When you are a 'small' player, buying or selling small
| quantities of cannabis, it isn't worth the time to trace your
| transactions. The Justice Department is targeting everything,
| not just big-time criminals.
|
| This seems like a prelude to a burdensome requirement for
| platforms to make it easier to execute warrants for crimes
| using cryptocurrency, which will sweep up everyone.
| pas wrote:
| This already happens (in the EU), just read this:
| https://newrepublic.com/article/159252/vampire-ship
| chunky1994 wrote:
| No, the biggest promise of crypto is that you don't need to
| trust a third party (wether, govt., bank or your neighbour) to
| verify a transaction between two parties as valid and that
| somebody didn't just give you counterfeit digital coins (i.e it
| solves the double spending problem). That's pretty much it.
|
| Everything else in a crypto economy is built on top of that as
| an analogous structure to regular _physical currency /digital
| currency verified by a third party_ (i.e fiat) economy.
|
| Not needing a third party to verify the authenticity of digital
| transactions does not automatically make you immune to
| regulation.
|
| In very specific situations (i.e failed states undergoing civil
| war), if you lose the trust in your entire govt. you can now
| reliably still trade digital currency without it necessarily
| being backed by a third party, however _everyone_ you are
| transacting with must buy into three things: 1) This new
| digital currency is now the dominant currency. 2) Everyone
| trades goods and services based off of this new currency 3)
| People outside your country respect that everyone inside the
| country values this at some specific value and honours trade in
| that currency.
|
| It is extremely unlikely you can convince anybody outside a
| country of (3) without some intervening international body, so
| the "crypto economy" replacing currency to fight an
| authoritarian regime is practically never going to happen.
|
| With regards to the article. Ultimately, if you trust your
| government to in general protect you, this is a good thing. If
| you don't trust your govt. to do so, this framework is a bad
| thing.
| idolaspecus wrote:
| > It is extremely unlikely you can convince anybody outside a
| country of (3) without some intervening international body,
| so the "crypto economy" replacing currency to fight an
| authoritarian regime is practically never going to happen.
|
| Could anti-authoritarian outsiders use (3) to effectively
| support anti-authoritarian insiders?
| chunky1994 wrote:
| Not sure why this question is being downvoted, but
| possibly. However this is fraught with various
| complications and is a discussion around failed state
| govts.' regime enforcement, internal citizenries' access to
| external organizations and various other ways in which
| other economic actors interact with these, a very complex
| separate discussion on its own and it requires one too many
| assumptions for me to be comfortable providing any
| intelligent opinion on without starting from a common base
| of assumptions.
| judge2020 wrote:
| The "people" in (3) refers less to the working class than
| it does to people in power that control and contribute to
| large percentages (>0.5%) of a country's GDP/wealth (unless
| nearly all of the working class within a country recognizes
| it).
| [deleted]
| lawn wrote:
| Another benefit with cryptocurrencies is that nobody's
| allowed to control the supply, so you escape the inflation
| heavy fiat money we use today.
| raesene9 wrote:
| Apart of course for Stablecoins (e.g. Tether) where they
| can print as much as they want, whenever they want. And as
| long as the exchanges go along with it, their value per
| coin stays the same.
|
| The biggest of all of these (tether) has a daily
| transaction volume often higher than BTC itself, has never
| had an outside audit, has admitted to not being 1:1 backed
| and is currently under investigation by the NYAG.
|
| They've also expanded supply by ~$12 billion this year.
| arcticbull wrote:
| The supply is controlled solely by a group of random, un-
| elected, un-accountable to anyone, GitHub contributors. If
| the Bitcoin Dev Team wanted, they could up the number of
| coins. Arbitrarily. Without recourse. What are you going to
| do, fork it?
|
| Further, the massive, overwhelming breakage due to the
| user-hostile nature of cryptocurrencies has led to
| staggering deflation. 20% is gone already [1].
|
| Finally, the worst part is that the Bitcoin wealth
| distribution is worse than any banana republic; 0.00088% of
| addresses control 17.5% of all coins. 4.11% of addresses
| control 96.53% of coins. [2] Unless you're a whale, you're
| fighting for scraps today, and the next generation of
| market participants will be basically serfs. Deflation and
| breakage exaggerate this problem.
|
| If you thought letting them eat cake was bad...
|
| [1] https://www.investopedia.com/news/20-all-btc-lost-
| unrecovera...
|
| [2] https://howmuch.net/articles/bitcoin-wealth-
| distribution
| lawn wrote:
| The Bitcoin Dev Team could certainly write code that gave
| them 100 million coins, but it will be difficult to
| convince the miners, exchanges, payment processors,
| wallet developers and the rest of the community to run
| it.
|
| And this is exactly what happened early in Monero's
| history, where the lead developer got ejected from the
| community:
| https://monero.stackexchange.com/questions/1011/monero-
| incep...
|
| And this is also what's happening now in Bitcoin Cash,
| where the developers of ABC (up until now the client
| almost everyone used) wants to assign themselves 8% of
| the rewards from a mined block. And the the rest of the
| community are rejecting it heavily.
|
| So yes, the community would fork it.
| wickoff wrote:
| > What are you going to do, fork it?
|
| Yes. Miners with huge operations whose profitability
| depends on people's trust in bitcoin are going to refuse
| to deploy the new software.
| irln wrote:
| If the "Dev Team" upped the number of coins it would be a
| fork, none of the existing nodes would accept it.
| Acrobatic_Road wrote:
| It's not impossible to change Bitcoin's supply, but
| there's zero chance the Bitcoin developers would get away
| with it. They can make whatever changes to the protocol
| they wish, but they can't force anyone to adopt those
| changes.
|
| And yes, a lot of Bitcoin has been carelessly lost, but
| these are mostly old cases before Bitcoin had any
| exchange value. You've probably read about people
| throwing away hard drives with 1000s of mined bitcoins
| that ended up being worth millions a few years later.
| Hindsight is 20-20.
|
| It should also be pointed out that a sizable chunk of
| Bitcoin is essentially frozen in Satoshi's wallets.
| Whether to count them into the supply is debatable. Same
| for Hal Finney.
| judge2020 wrote:
| How would less regulation lead to less inflation?
| arcticbull wrote:
| Bitcoin is massively deflationary.
| chunky1994 wrote:
| This is governed by which specific cryptocurrency's
| monetary policy you're talking about. For example
| ethereum's supply is decided by a committee with people
| from different groups [1], while bitcoin's is basically
| fixed incremental supply that's built into the protocol (as
| of writing this comment).
|
| [1] https://docs.ethhub.io/ethereum-basics/monetary-policy/
| arcticbull wrote:
| Counter-points, since it's worth sharing the whole picture.
|
| (1) The ability for the government to censor transactions to
| terrorists, rogue states and oppressive governments is a good
| thing. Evidenced not least by the fact Bitcoin was likely
| created by an international narcotics and arms trafficking
| racist bond villain who at one point tried to keep Rhodesian
| farmland in the hands of the whites and nearly started a
| cocaine plantation in Somalia [0, 3]
|
| (2a) Inflation isn't some magical evil conspiracy, money is an
| intentionally lossy store of value. Inflation incentivizes
| investment and allocation of capital towards the most
| productive enterprises. This is intentional. Inflation doesn't
| affect people who own assets, including real estate and
| equities, so long as wages keep pace with inflation. They have.
|
| (2b) Deflation is bad, as it decreases the velocity of money
| and economic productivity. Why would you spend money today when
| it would be worth more tomorrow? Hundreds of BTC are lost every
| few days due to the user-hostile nature of cryptocurrencies.
|
| (2c) Deflation also concentrates wealth with existing holders,
| hurting the next generation of market participants, and
| entrenching the current BTC wealth distribution. This is worse
| than _any_ banana republic. Unless you 're one of the whales,
| you're a peasant fighting scraps, and your kids will
| practically be serfs.
|
| (3) I want my currency to be subject to "government coercion"
| when the courts say so. If you don't trust your government or
| the courts, the "coercion" of the government is literally the
| least of your problems.
|
| (4) I for one do want the government to be able too regulate,
| control and trace transactions. Which is something they can
| easily and explicitly do with a shared public ledger.
|
| (5a) Massive waste, each proof-of-waste BTC transaction
| produces 100g of e-waste and consumes as much electricity as it
| takes to drive a Tesla from SF to NY. [1] All to operate a
| network that you could replace with a _single DynamoDB table_
| and likely one man on a stationary bike powering it.
|
| (5b) At market rates for electricity alone a crypto transaction
| costs about $80, which is socialized across the block reward.
| When this stops, people will have to pay the whole cost of a
| transaction, which in turn they will not do, which will shut
| down miners, which will kill the security aspects of the
| network.
|
| [0] https://www.wired.com/story/was-bitcoin-created-by-this-
| inte...
|
| [1] https://digiconomist.net/bitcoin-energy-consumption
|
| [3] https://en.wikipedia.org/wiki/Paul_Le_Roux
| glasss wrote:
| Obviously the energy waste and general inefficiencies of
| bitcoin / current crypto implementations are valid points,
| but I have some thoughts on some other points here:
|
| > The ability for the government to censor transactions to
| terrorists, rogue states and oppressive governments is a good
| thing.
|
| While that statement is true, I think it's important to keep
| in mind the context of how current "terrorists, rogue states
| and oppressive governments" are using fiat currencies.
| Governments do currently have the ability to censor those
| transactions, yet they are still operating.
|
| > Inflation doesn't affect people who own assets, including
| real estate and equities, so long as wages keep pace with
| inflation. They have.
|
| I don't know how valid the statement of "they have" is here.
| At least in the United States, real wages have not [0].
| Besides, to my knowledge there is no rule in cryptocurrencies
| that says inflation does not or can not exist, so I don't
| think this is a counterpoint to the benefits of
| cryptocurrencies.
|
| > I want my currency to be subject to "government coercion"
| when the courts say so.
|
| This is a personal desire of yours.
|
| > I for one do want the government to be able too regulate,
| control and trace transactions.
|
| While this is also a personal desire of yours, I think I will
| also reference my first point of how governments are not
| doing a very good job of this today with fiat currencies.
|
| Overall I think its obvious there are downsides to the
| current use and implementations of cryptocurrencies, but I
| think the value of them not being tied to any central agency
| is the key ideal and make them worthwhile.
|
| [0] - https://www.pewresearch.org/fact-tank/2018/08/07/for-
| most-us...
| tromp wrote:
| > there is no rule in cryptocurrencies that says inflation
| does not or can not exist
|
| Some have constant emission, like 1 per second forever.
| fgonzag wrote:
| The more I think about inflation, the more I disagree with
| its basic premise. Inflation is the main cause of the "grow
| or die" mentality and the many sustainability issues that
| come with it. You can not afford to have a steady business
| that isn't growing, because inflation will slowly eat away
| your margins until you are operating at a loss. Especially
| since the reported inflation (under 5% in most developed
| countries) is far from the actual value seen by most
| businesses (between salary increases, rent increases, supply
| increases). It takes less than 15 years for a non growing
| healthy business to go bankrupt.
|
| Inflation is also the main cause of quality decline seen in
| absolutely everything. When you can not raise prices as fast
| as your costs are increasing, the only viable option is to
| lower quality. This inevitably happens every where and is
| pretty much an accepted fact of life. It's not that companies
| want to give you a crappier product or service, it's that
| they have to.
|
| I'm a huge skeptic of all crypto currencies in their current
| forms, but the deflationary part was one of the ideas that I
| really liked (not that any government would ever go for a
| deflationary policy)
| notahacker wrote:
| > When you can not raise prices as fast as your costs are
| increasing, the only viable option is to lower quality.
|
| If you can't raise prices as fast as your costs are rising,
| it's a signal the market prefers reduced quality to higher
| prices for your product.
|
| Deflation certainly isn't going to help you there,
| especially since it means consumers will expect you to
| actually _drop_ your prices, with some even deferring
| purchases whilst waiting, and you 'll struggle to borrow
| money when lenders reason that [i] you'll make _less_
| revenue next year and [ii] they don 't need to risk lending
| money for it to be worth more than last year; they can just
| bury it in the ground...
| arcticbull wrote:
| Further to your point, deflation means you drop your
| prices separate to what your customers "want." Rather,
| customers are willing to pay less day over day as they
| require an incentive to spend their money over its risk-
| free return under their mattresses.
| majormajor wrote:
| If all your costs are inflating, why wouldn't you also be
| inflating your prices in line?
|
| This seems to be what happens in restaurants or groceries
| or other things where we go "wow, you used to get a coke
| for fifty cents!"
|
| A business that can't pass that cost on seems to have more
| fundamental "loss of relative demand compared to the past"
| issues that would squeeze it dry even without inflation. In
| that world, your costs would be static but customers would
| be willing to pay less over time, so you'd die.
| fgonzag wrote:
| Market dynamics.
|
| The cost to produce goods rises much more rapidly than
| what you can actually sell your product for. People would
| simply stop buying if you increased prices 12-13% every
| year (which is what is typical for me in the restaurant
| industry in Mexico)
|
| New entries usually start with a lower quality product by
| default, so you usually have to keep prices and drop
| quality if you don't want to be priced out (or move into
| a far more upscale and finicky market).
| glasss wrote:
| My company (not an owner) is a services based company
| with yearly agreements. We bake in price increases
| annually with inflation.
|
| If you are not a business running on fixed agreements,
| you have the right to increase your prices whenever to
| accommodate your costs. If your idea is that consumers
| will just go somewhere cheaper, then it works upstream
| too - you have the option to source your products / goods
| from somewhere cheaper as well.
|
| If there is no cheaper alternative for you, then there
| must be no cheaper alternative for your consumers, unless
| you aren't operating your business in an efficient
| manner. In which case the market will either force you
| to, or you will lose your business.
| arcticbull wrote:
| > Inflation is also the main cause of quality decline seen
| in absolutely everything.
|
| _Optimization_ is the main cause of quality decline.
| Inflation has nothing to do with this. Inflation is neutral
| as it raises all prices equally.
| rjldev wrote:
| > Inflation incentivises investment and allocation of capital
| towards the most productive enterprises
|
| This would be true with deflation, assuming returns from
| investing outpace the returns from doing nothing. Inflation
| incentivises investing for returns that do better than the
| loss from inflation. It would incentivise investments that
| have a negative return, so long as that return is greater
| than the inflation rate.
|
| > Why would you spend money today when it would be worth more
| tomorrow
|
| Because owning a good today is worth more to you than having
| the same good in the future. Eg it's better to have the
| iPhone 11 today than it is tomorrow, as you have it for an
| extra day. Additionally there's many things you can't put off
| into the future like paying for food, water etc.
|
| [edit for typos, sorry, phone posting]
| sneak wrote:
| > _The ability for the government to censor transactions to
| terrorists, rogue states and oppressive governments is a good
| thing._
|
| Disagree, due to the fact that the government being able to
| censor transactions of the government's choosing means that
| the government is able to censor transactions of the
| government's choosing. That's not a good thing.
|
| > _I want my currency to be subject to "government coercion"
| when the courts say so._
|
| I would agree with this if and only if the protections of the
| law were equally applied, and all people had equal access to
| due process. Presently, both of those things are entirely
| untrue in most large, developed countries, despite being
| aspirational/stated goals.
|
| The legal system can and does entirely fail people on a
| regular basis, and should not have the ultimate veto power
| over every type of private property, as has been the case
| historically.
|
| > _I for one do want the government to be able too regulate,
| control and trace transactions._
|
| Many of us feel that freedom of association and freedom of
| trade with those associations are inherent natural rights,
| and such regulation or control over them is an illegitimate
| infringement upon them, regardless of however many
| democratically-elected representatives say they're not.
|
| Ultimately the state's authority to do such things
| ("regulate, control") is based on the application of
| violence, or the threat of same. Violence cannot solve math
| problems, ergo, cryptocurrencies are a fundamental threat to
| the authority and existence of the state.
|
| Honestly, I'm completely surprised that they've allowed them
| to get as big as they have without banning them outright.
| arcticbull wrote:
| > Violence cannot solve math problems, ergo,
| cryptocurrencies are a fundamental threat to the authority
| and existence of the state.
|
| This is the biggest, most obvious misconception about
| cryptocurrencies.
|
| Violence can solve any math problem. With a rubber hose,
| your coins are theirs. In prison, crypto won't help you.
| [1]
|
| [1] https://www.independent.co.uk/life-style/gadgets-and-
| tech/ne...
| sneak wrote:
| Multisignature transactions are a thing. This isn't your
| grandfather's symmetric key crypto.
| arcticbull wrote:
| Is there a hose shortage?
|
| Seriously, you're underestimating a motivated
| government's ability to use violence to either prevent
| transactions (by taking some of the multisig parties out)
| or to coerce a transaction (by applying multiple hoses to
| multiple people).
|
| Say they capture your family. Would you not make a
| transaction to save your family? If you didn't they'd
| just take you out. Heck, a motivated government might
| just take you out after anyways! See how your "coins" are
| no longer your biggest problem under an authoritarian
| regime?
|
| In the face of the KGB, you wouldn't be saying "but your
| violence can't solve this math problem" for very long.
| Not without that tongue. How many fingernails does a man
| need anyways? Trust me, that math problem's getting
| solved. With hoses. Real fast.
|
| This is one of those conceptual exercises that falls
| right over.
| sneak wrote:
| It seems that you and I are talking at cross purposes.
| Modern technology makes new circumstances where it can be
| made impossible for a single person, or even _all_ of the
| people in one or more major jurisdictions, to be able to
| effect a transaction, acting alone or in concert.
|
| Hardware security systems also permit such things, in
| more limited circumstances.
|
| The state's capacity for violence is finite, and is
| scoped by their legal and physical jurisdictions. There
| is no state, as yet, that can wield unlimited violence
| throughout the same scope as the uncensored internet.
| arcticbull wrote:
| I guess I just don't see it.
|
| One man, can tell the KGB, to extract fingernails until
| the money moves or is no longer capable of moving.
|
| > There is no state, as yet, that can wield unlimited
| violence throughout the same scope as the uncensored
| internet.
|
| So a sufficiently motivated state censors the internet.
| EZPZ. Half the world's already doing it.
|
| Your problem _isn 't_ the money, your problem is a
| tyrannical government. It can and will do whatever it
| takes, and by virtue of being a large group of people vs.
| you and your, well, fingernails, no amount of math is
| going to resolve this situation in your favor. The only
| thing you can actually do to improve your situation is
| topple the government. And once you do that, you don't
| need crypto, do you?
| lxdesk wrote:
| It's a fantasy to think that authoritarian governments
| actually succeed at this. Every one of them ends up with
| an underground market despite tremendous repression. Even
| literal prisons have one. At best, such governments have
| flare-ups of the condition where they murder in great
| numbers for a time to send everyone into terror, but in
| time they tire of it and calm down. The market pops right
| back up like a weed.
|
| The analogy you should be looking at is the printing
| press, because it broadened the scope of such markets;
| what a person of higher literacy communicates is
| illegible to the lower. And such is true of a system of
| account that renders a larger scope of transactions
| illegible. The possession of great wealth itself is a
| concept that assumes a top-down vision of value; the
| phenomenon of being robbed for cryptocurrency is mostly
| reflective of the new being imitative of the old. But if
| they're all tokens, and anyone can make them - well,
| then, that means we increasingly don't have a man at the
| top. If the scrip you pay your police doesn't buy them
| anything at the market, they aren't going to be very
| motivated to take out fingernails for you.
| martinko wrote:
| Regarding 5a - Calculating energy spent per tx is misleading,
| as the energy spent to secure the btc network also benefits
| those merely holding the coin.
| arcticbull wrote:
| I disagree, as the marginal benefit to existing holders
| asymptotically approaches zero after a few blocks are
| processed, and can be safely disregarded.
| Judgmentality wrote:
| > (1) The ability for the government to censor transactions
| to terrorists, rogue states and oppressive governments is a
| good thing.
|
| This assumes you agree with the government on what
| constitutes a terrorist, a rogue state, or an oppressive
| government. Currently peaceful protesters in the US are being
| labeled terrorists because they are protesting the
| government.
|
| The assumption behind your premise is ultimately that you
| trust the government to "do the right thing" and I do not, so
| why would I want to give them more power over me?
| arcticbull wrote:
| > The assumption behind your premise is ultimately that you
| trust the government to "do the right thing" and I do not,
| so why would I want to give them more power over me?
|
| My assumption is that if the government is untrustworthy I
| have much bigger problems, like the fact they can jail and
| torture and kill me arbitrarily and without recourse.
| There's no amount of math that'll help me in prison, or
| when I'm dead. If you can't trust the government, the only
| thing that'll help is replacing that government. And when
| you do, you won't need crypto.
| Judgmentality wrote:
| I think we disagree on this one. Yes, there would be a
| much larger problem, but that doesn't mean you should
| make it easier for them to have more power.
|
| Let's take right now in the US for instance. I don't
| trust the US government, but I'm not so scared that I'm
| regularly fearing for my life. I guess it's possible I
| could wake up in Guantanamo tomorrow but that seems
| unlikely. That said, I am not interested in giving them
| any more power over me, and in fact interested in them
| having less.
|
| So as much as I would love for a real "fix" to the US
| government, which you describe as replacing it, that
| seems slightly extreme and unlikely at the moment. So the
| most realistic course of action is fighting them on their
| unnecessary grabs for power and surveillance over the
| populace while I still feel safe to do so.
|
| Just because there are bigger problems doesn't mean you
| should ignore the smaller problems, especially when those
| are much easier to address.
| qertoip wrote:
| (1) Are you sure you want Iranian, Russian, Venezuelan, and
| other 192 governments all be able to censor your
| transactions?
|
| Or maybe you only meant a single benevolent government to
| have this power? In that case I propose the Polish government
| to censor world transactions (simply because I am a Pole and
| a patriot). I trust you don't mind!
| vbezhenar wrote:
| But what if Polish government will abuse its position? I
| propose to add the Kazakh government to the council to
| balance things out a little bit.
| qertoip wrote:
| I am fine with Polish + Kazakh! The 2-of-2 would be
| required to censor any transaction. Thank you for
| enhancing my proposal.
| arcticbull wrote:
| Counter-proposal. Each country or trading bloc issues its
| own currency. Then, they use it internally, for domestic
| transactions. If they want to trade externally with other
| countries, they use a ledger system to record debts
| payable to each other domestically at an exchange rate
| determined by a multi-trillion dollar global exchange
| system, of supply and demand, based on how far 1 unit of
| currency will get you in one country vs another.
|
| We can call it: "exactly what we do right now"
|
| The only reason the US is able to sanction other
| countries is the scale of their economy. They influenced
| Europe to cut trading relationships with Iran, not
| through the US dollar, but through exerting political
| influence. The Europeans would rather trade with America
| than Iran, and America said they got to pick only one, so
| they complied.
|
| None of that changes under Bitcoin or any other currency,
| crypto or otherwise, in no small part because reporting
| requirements don't go away. Laws don't go away. Political
| influence doesn't go away. International relations don't
| go away.
|
| Do you really think that with cryptocurrency America
| would be unable to materially sanction Iran? Are you
| _sure_? The US Army is a pretty good army.
| qertoip wrote:
| You are right regarding international politics and state
| level sanctions. Of course Iran would still be officially
| sanctioned.
|
| It's just that individuals within the countries wouldn't
| care much because Bitcoin or Monero transactions always
| go through and are never reversed.
| arcticbull wrote:
| Ok, but how does that help them? Unless they're buying
| digital goods, all of their spending will be concentrated
| domestically. Without international trade (as nobody will
| do business with them for the aforementioned reasons) --
| it's not like DHL is going to airdrop in their Amazon
| Prime purchases. Their welfare does not improve through
| "irreversibility" (in quotes, because a hose is all it
| takes to reverse any crypto transaction). In general,
| irreversibility hurts their welfare through breakage.
| Their transactions aren't guaranteed if the internet is
| censored, which in Iran, it is.
|
| The government already has total control over the
| domestic economy, and can coerce you through violence.
| What have you gained other than a dramatically less
| energy efficient economy?
| karmasimida wrote:
| > I for one don't want government to be able to regulate /
| control / trace transactions.
|
| If they can regulate it, they will. So crypto isn't the magic
| money that can skip governmental influence, and that problem
| will be cryto's own problem.
| r3trohack3r wrote:
| > I for one don't want government to be able to regulate /
| control / trace transactions.
|
| This is why I don't understand "darkweb" crypto marketplaces.
|
| When "doing crime", I'm really not interested in committing the
| transaction to a permanent public ledger.
| spurdoman77 wrote:
| Doing crimes involves making many risky actions which the
| criminal isnt really into. It might just be that making the
| crime using cryptocurrency might be seen less risky as doing
| it with some other tool.
| bdcravens wrote:
| Not really. The Bitcoin white paper focuses on financial
| institutions, never even mentioning the government.
| colinmhayes wrote:
| Inflation is a feature of macroeconomics, not a bug. Our
| economy truly would collapse without inflation, it's how you
| end up being Japan in the 90's. Luckily the people running the
| Fed are much smarter than you.
| slg wrote:
| >It can free us from the hidden taxation of inflation
|
| It doesn't free you from inflation, it simply abdicates control
| over inflation. Sometimes that works out well for who already
| have money and the value of the currency rises. Sometimes it
| works to the disadvantage of the people with money and the
| value of the currency decreases. Either way, stability and
| predictability of the value of a currency are much more
| important for the long term healthy of an economy and those are
| areas in which the worlds biggest fiat currencies generally
| come out ahead of cryptocurrencies.
| ckastner wrote:
| > _for one don 't want government to be able to regulate /
| control / trace transactions._
|
| This comes up every single time with cryptocurrencies.
|
| Generally speaking: _yes, you do_. Most of the regulations
| surrounding financial transactions are there to protect _you_ ,
| and other market participants.
|
| I wish crypto people had the chance to spend one day in a bank,
| working on regulatory issues. The vast majority of them are all
| about either protecting the clients, or the market, or society
| in general.
|
| Edit: to expand a bit, most of that regulation is there to
| ensure that a bank doesn't screw you, or to enforce
| transparency for you, or to ensure that illicit money doesn't
| enter the system (which is also in your interest), etc.
| dmantis wrote:
| In theory, you are right. In practise, govs are basically big
| robbery machines which are more interested in their own
| property and influence than me as a citizen (and as a human
| being in general).
|
| For example it can be VERY tricky in most countries to move
| all your wealth crossborderly without any intervention or tax
| (even you if have paid all taxes from your profits) from the
| gov. That's because even the most capitalistic countries
| don't truly respect private property concept and consider
| individual's property as their own.
|
| Crypto partially solves this. You can move equivalent of
| billions of USD through the border in a minute for negligible
| cost. However, it won't worth much if you still will be
| imprisoned for that. So, basically, potential anonymity and
| privacy researches in crypto as well as non-regulation are
| good things.
|
| Because even democratic countries show themselves as pretty
| barbarian ones, when there is something against their
| interests (Julian Assange is a good fresh example).
| spurdoman77 wrote:
| LOL, when I meet some people working for banks they usually
| complain about all the regulatory compliance they have to do
| and how pointless it is. Doesn't seem to me like working at a
| bank helps to see how necessary all that is.
| ckastner wrote:
| A lot of people complain about having to maintain secure
| passwords and other IT security measures, too, but that
| doesn't invalidate the measures.
|
| I'm first to agree that the regulatory burden on banks has
| gone too far, but all too often, people not seeing the
| point behind compliance frequently do so for the reasons as
| above (they don't understand it), and jump to conclusions.
|
| If your friends substantiated why they believe so, please
| do follow up.
| [deleted]
| naringas wrote:
| > illicit money
|
| there's something conceptually wrong about this.
|
| currency is supposed to be fungible. 'good money' and 'bad
| money' are incompatible with fungible currency.
| glasss wrote:
| Could you elaborate a bit more on this? I see your edit where
| you highlight that the bank doesn't screw you and you have
| more transparency, but to my knowledge the nature of a
| decentralized cryptocurrency should have that same effect.
| ckastner wrote:
| If it's completely decentralized, that might be the case.
| However, as far as I understand it, one usually trades
| crypto on exchanges, so you're back to trusting one
| counterparty.
|
| With regards to getting screwed, the history of exchanges
| getting "hacked" and all the crypto disappearing should
| speak for itself, and with regards to transparency, just
| look at Tether as an example of how you can avoid it.
|
| Sure, it happens with banks, too. I still have no clue how
| Wirecard managed to do what they did, without getting
| caught, in face of credidble reports of malfeasance. But in
| general, it has become much, much harder to wrong others,
| or to be reckless. And that is because of the regulation
| everyone keeps decrying, as if somehow _they_ were the
| subject of it.
| Geee wrote:
| That's a completely different matter. The operation of
| exchanges doesn't have anything to do with the operation
| of a cryptocurrency. You need exchanges only for trading,
| not for using a cryptocurrency.
| spurdoman77 wrote:
| "I still have no clue how Wirecard managed to do what
| they did"
|
| And you still seem to have a strong stance on how great
| the current regulatory scheme is.
| [deleted]
| ckastner wrote:
| My strong stance stems from two decades of being on the
| pointy end of that regulation. The government audits I
| was involved with were all by extremely capable people;
| top-notch investigators.
| raesene9 wrote:
| regulation (in the UK at least) means that in many cases,
| if someone steals money from my bank account, I get it
| back. Compare that with what's happened to many
| cryptocurrency exchanges where they have losses (e.g.
| quadriga) and the consumers who used them are largely out
| of the money.
|
| If the bank overcharges me, I have some form of redress
| (e.g. the PPI scandal).
|
| It's not perfect by any means, but for many consumers it's
| likely better than a world where, once the money's gone,
| it's gone.
| qertoip wrote:
| Exchanges are not cryptocurrency.
| raesene9 wrote:
| From a financial exchange and price setting perspective,
| they are absolutely key to how the current cryptocurrency
| market works.
|
| if Binance, Kraken, Bitfinex, Coinbase et al shut down
| tomorrow, what do you think would happen to the price of
| BTC and the rest...
| dlubarov wrote:
| On the other hand, at least in the US, we don't have much
| protection when banks themselves take money from our
| accounts. E.g. back in 2009, banks made $37 billion from
| overdraft fees [1], thanks to shady practices like
| reordering transactions to maximize overdrafts. There was
| a class action suit about it, but it was a token victory,
| with very little money going back to the victims.
|
| This doesn't negate your point, but I would just argue
| that we pay a heavy price for our heavily regulated
| financial system, between bank fees, card processing
| fees, foreign transaction fees, trading fees, etc.
|
| [1] https://www.npr.org/2012/02/28/147573947/the-fight-
| over-over...
| bufferoverflow wrote:
| Screw your bank regulations, they are close to useless,
| besides maybe FDIC insurance.
|
| A few years ago I bought a computer on eBay, paid with direct
| bank transfer, to the same bank by coincidence. When I didn't
| get my PC, and eBay told me to fuck off, I asked the bank to
| reverse the transaction and/or to provide me with the true
| person's details (it looks like ebay seller gave me the
| correct bank account number, but fake name). The bank told me
| to file a police report. I did. Sent a copy to the bank. The
| bank told me to fuck off.
|
| End of story. sad_trombone.mp3
| mrlala wrote:
| >When I didn't get my PC, and eBay told me to fuck off
|
| I don't believe you for a second. eBay is like the most
| pro-buyer place in the universe. eBay would be able to
| reverse all of that no problem.
|
| So if you aren't just making this up- then you must not
| have done anything properly to try and resolve it.
| ulzeraj wrote:
| > Most of the regulations surrounding financial transactions
| are there to protect you.
|
| Sorry but that's not true at all. I have worked _more_ than a
| day on a bank environment and I can say that most regulations
| are weaponized by the US against their perceived enemies.
| Banks are dead scared of doing business with normal people
| from ostracized countries or activities and will not think
| twice before locking and banning normal people's accounts to
| not provoke the ire of the US and aligned powers.
| vkou wrote:
| The hidden taxation of inflation is a feature. It creates an
| incentive for people to invest, instead of, like dragons,
| uselessly sitting on a pile of money.
| qertoip wrote:
| The opposite is true: inflation takes away the hard earned
| value that could otherwise be invested.
| arcticbull wrote:
| No, lol, the opposite is not true.
|
| At an inflation rate of 2% per annum, if your wages keep
| pace with in inflation as they historically have, it's not
| stealing anything from anyone. You take the money as you
| receive it, and you invest it. It's a forcing function.
|
| You can invest it in something as simple as a savings
| account if you believe that's the right approach. Even in a
| savings account it's collateralizing loans. The only place
| your actual cash is at real risk from inflation is under
| your mattress. That's the point.
| smorephism wrote:
| Yes, that's the idea: the price of sitting on a dragon's
| hoard of cash that's not doing anything is that its value
| decreases over time, so you are incentivized to actually do
| something with it.
| megous wrote:
| Your economics are weird. Making a stupid analogy doesn't
| help it. There are no dragons, just individual people
| making decisions about how much to save and for what
| purpose, and when to spend it, based on their individual
| circumstances.
|
| Holding on to savings is neither positive nor negative,
| and should be a personal decision based on individual's
| circumstances (that's where the most detailed information
| are available about what's good for the individual), not
| something forced/influenced from the top by blunt whole
| market manipulation via forced depreciation of value of
| money, by some committee.
|
| All you've achieved by forced depreciation is forcing
| people to make needless risks, just to keep value of
| their savings, while they're trying to save up for
| something (like starting a business, or buying a flat, or
| safety of mind). Whole class of brokers, and traders, and
| lenders, who pray on this situation benefit, of course.
| [deleted]
| sthnblllII wrote:
| Consumers spend almost every dollar as soon as they get it.
| The ones hoarding capital are the banks. The fed can never
| seem to get interest rates low enough to get the banks to
| loan to businesses. So why do big banks get to keep the money
| the fed prints instead of the government, thereby lowering
| taxes and increasing consumer spending? Because then banks
| wouldn't get unlimited cheap capital and wouldnt be able to
| continue the leveraged buyout of American industry.
| Entrepreneurs would control the economy like they used to
| instead of financiers, and we cant have that now can we?
| notahacker wrote:
| > The ones hoarding capital are the banks...get to keep the
| money the fed prints instead of the government
|
| Banks lend _more_ dollars than they borrow from the Fed (or
| depositors). They don 't 'get to keep' money they borrow
| from the Fed, they repay it at the base interest rate.
| sthnblllII wrote:
| They spend it before the inflationary effect occurs, so
| yes, it is a transfer of wealth from holders of dollars
| to banks.
|
| The hoarding obviously isn't in cash, just look at their
| financial reports to know what they do with the money,
| and it largely isn't lending to businesses for expanding
| production. Since deregulation, much of the new money has
| gone to buying stocks. Not exactly helping the economy.
| As long as the stock market appreciates faster than the
| prime rate, it makes sense to borrow money from the fed
| to buy stocks. Especially if the fed is buying stocks
| too, keeping the market in perpetual inflation driven
| growth.
| gamblor956 wrote:
| Banks are not allowed to hoard capital, and financially
| speaking, keeping cash in reserve means they're not making
| money from it.
|
| Indeed, the regulations require the opposite of what you
| suggest: banks are are required to maintain a certain level
| of capital reserves to avoid collapse even though they
| would prefer to spend all of it on investments or making
| loans.
| [deleted]
| traeregan wrote:
| TL;DR An overview of how cryptocurrency works, how it is used for
| illicit purposes, many case studies of said purposes, and a
| reminder that ongoing enforcement will continue to broaden.
|
| There's not much new information here.
| rkagerer wrote:
| Does it talk much about DeFi?
| HenryKissinger wrote:
| Direct PDF link:
| https://www.justice.gov/ag/page/file/1326061/download
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