
Why Bitcoin has to succeed - jstanley
http://incoherency.co.uk/blog/stories/bitcoin-must-succeed.html
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jondubois
I think it's definitely a trend with governments that they invent laws and
regulations which harm people under the pretext that they're actually designed
to protect them.

Other examples are the laws around investing. In some countries like the US,
you are not allowed to invest your own money in a startup unless you are an
accredited investor... To become an accredited investor, you basically have to
be rich; there is an income and assets test and you have to meet the minimum
requirements. It's basically a scheme to make sure that only the rich get
richer by making sure that the most promising investments stay out of reach of
regular people... Regular people are forced to invest in low risk, low-return
stocks and bonds - Thus keeping them where they are financially. The
government is actively funnelling all the investment capital from regular
people into mega-corporations which keep them enslaved.

The US government claims that it is to protect people from losing their money
on risky deals... But if that were really the case, surely you'd think that
the government would also be kind enough to ban gambling! Surely that's
riskier.

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jellicle
To extent that there are a few minimal laws protecting individual investors in
the U.S., they exist because scam artists try to steal everyone's money.

That rule - which you or someone else has ranted about before - vastly
increases the returns for individuals. Yes, they get pushed to big companies
and "safer" investments. But they also get scammed less often. Overall it's a
big win for individuals.

Consumer protections: a force for enormous good in the world.

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Jabanga
>vastly increases the returns for individuals. Yes, they get pushed to big
companies and "safer" investments. But they also get scammed less often.
Overall it's a big win for individuals.

Returns are a function of efficiency. By excluding 99% of the economy from
direct access to capital markets, enormous friction is created, and investors
are forced to pay far more economic rent to big companies. Both of these have
undoubtedly resulted in investors enjoying lower returns.

Scams are indeed a problem, but the solution to scams is to deter them, by
punishing those found guilty of carrying them out.

What society shouldn't do is make it illegal to engage in some class of
mutually voluntary economic interactions without approval from a third party,
in the name of preempting scams, and keeping people safe from their own
mistakes.

Such laws violate some basic principles of liberal democracy and create
economic inefficiencies, and unfortunately, they have become steadily more
common over the last 100 years.

Trying to make massively complex industries like finance, healthcare and food
processing safe, through a set of bureaucratic rules, is a case of trying to
centrally plan the economy using cookie cutter solutions that cannot possibly
account for all possible configurations. It will necessarily stifle innovation
and create opportunities for rent-seeking, like in the creation of the $6
million barrier to direct access to the public capital markets that are IPO
restrictions, that enrich large financial intermediaries.

If these proscriptive laws were repealed tomorrow, there would definitely be
an uptick in scams. But the market is an evolutionary institution that has the
right incentives and feedback loops to evolve toward better configurations
that avoid inefficiencies like fraud.

And we have evidence for this in the cryptocurrency world, where reputation
and consumer knowledge rapidly transformed the industry to make it harder for
scammers.

For about three years there were rampant hacks of major Bitcoin exchanges, and
fraud where people lost thousands of bitcoin to web wallets that gained their
confidence and then pulled exit scams.

Eventually bitcoin users wised up, and the industry responded by producing
high quality services. In the exchange market, this meant credible exchanges
with reputable parties backing them, and that used security best practices,
became available, and became the first choice of users, while in wallets, both
bitcoin users and bitcoin information portals became more discriminating in
the wallets they put their confidence in, and became much more cautious about
web wallets that acted as custodians for customer funds.

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jondubois
You absolutely nailed that argument. If someone reads it and is not convinced,
they're not thinking straight.

Cryptocurrencies are a symptom of people's intense distrust of governments and
the corporations which lobby them. People are voting with their money. It's
not the most efficient solution, but it's a desperately needed one.

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Jabanga
Feedback like this is much appreciated. The logic I'm presenting seems
compelling to me, but I can only be confident of that when I get outside
confirmation.

And I agree: if traditional financial businesses and activities, that rely on
trusted intermediaries, weren't so heavily restricted by governments,
significantly fewer people would need to pay the high decentralization premium
and use cryptocurrency.

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Fej
So let's put our weight behind an incredibly wasteful platform that eats up
ungodly amounts of electricity for very little gain?

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TheLilHipster
Not sure where your logic is coming from. Mining bitcoin is a free market in
its purest form.

This comes with a side of geopolitical challenges sure, but that's not an
issue the technology itself is responsible for solving.

