It seems CipherTrace provides security/compliance/etc services similar to that of a traditional bank but for cryptocurrency? Will cryptocurrency effectively end up becoming just another currency/security traded and managed by giant companies rather than flourishing as the decentralized cowboy-esque financial system advocated for by crypto enthusiasts? Even those crypto users who choose to forego services offered by companies such as CipherTrace will still be effected by big companies attempting to regulate and control crypto in various ways, so I'm wondering what the sentiment is in the crypto community regarding this acquisition.
CipherTrace provides KYC/AML and related services for companies and governments who need and want it.
Here's the thing: transactions on the blockchain are anonymous but they're not private. If you're going to do things out in the open, someone's going to watch what you're doing. That doesn't necessarily result in regulation, though it may. It may doesn't necessarily result in incumbents squashing competition, though it may. CipherTrace builds tools, and how they're used is a political question, not a technical one.
Disclosure: I know the CipherTrace folks and did a tiny bit of contracting for them between jobs.
Accurate for BTC, although it's worth noting there are some privacy coins with blockchains that currently have very limited susceptibility to chain analysis, and thus as far as we can tell are private.
1) Bemoan how people with all the money abuse their surfeit of capital.
2) Create a new currency, and give it to new people.
3) Create a way for the currency to be converted to standard money.
4) Watch as the newly wealthy become the people complained about in (1) and the link created in (3) enables the old wealthy to abuse their capital advantage on the new system.
>Bitcoin has a landed wealth aristocracy just like land ownership has.
You're thinking of PoS. If you hold 1 bitcoin now, you'll still only have bitcoin 100 years from now. On the other hand, with land and PoS, you'll have the land/coin and the rent you were able to extract.
>It's not based on merit.
How is it not meritocratic? Literally anyone could mine. This is as opposed to getting land, which typically requires you to be politically connected, or buying it from someone who was politically connected.
In the same way first ever land ownership is definitely not meritocratic. (See violence over land or enclosure acts stealing land from the commons)
We need universal basic income to distribute wealth. Any new currency suffers from the landed wealth problem where a group of people is designated the aristocracy through landed wealth. That is, it's not democratic, universal or voted.
>In the same way first ever land ownership is definitely not meritocratic
Seems like moving the goalposts? Obviously any sort of property rights isn't "meritocratic", but at the very least you can get your hands on fresh bitcoins without being friend with whoever staged a coup.
Literally anyone... if they live in a country with the supply chains for asics/gpus in place... if they can afford the hardware and cost of electricity...
PoW works to a certain scale, when we can mine on laptops and the number of users is low it is a great system. but at this point it is clearly operated by large organisations, and using an absurdly unnecessary amount of energy for the job.
pos uses less energy, runs on cheaper hardware that is easy to manufacture and acquire (solar powered raspberry pis), easier to hide participation from governments, and you can mint gasless nfts and sell them to start earning tokens, so you dont have massive hardware costs up front. you can draw pictures and start receiving crypto, then use that as your stake in a validating pool. cheaper and easier for people to participate, less resource drain so better capital efficiency, harder to censor.
there are names for this sequence of statements, in logic, in rhetoric, but I will offer the seasonal ML machine-learning version: underfitting the data
> Will cryptocurrency effectively end up becoming just another currency/security traded and managed by giant companies
Yes, that is exactly their goal. The only way Visa and MC continue to make money with crypto is centralizing and regulating it to death so no one else can enter the field, just like with payment cards today.
That's what I'm thinking too. Why would Visa invest anything in crypto if they don't think they can reasonably control and benefit off it? Risk assessment is at the very core of Visa's company and I cannot imagine they would invest in something that has unreasonable risk. Crypto is risky and difficult to predict, which makes me think they have a plan to minimize risk by controlling crypto thru means well known to them and traditional banks.
I'm afraid you are totally correct. Involving Mastercard and Visa will allow them to put in place a similar fees structure they use for card payments for cryptocurrencies so that they don't miss out on making money with a fee system.
Why do you think they 'embraced' cryptocurrencies all of a sudden and Visa making Coinbase and many others exchanges principle partners to allow them to convert crypto into fiat currency?
As a bitcoin fan, I think that's missing the point.
Bitcoin is about ending US monetary hegemony over the world. That dominance allows the US to grossly abuse its own citizens (future generations in particular) and people around the world (e.g. borrowing and throwing away trillions of dollars on unjust foreign wars).
Bitcoin is about hard money. It's about eliminating the Fed, but it's not about ending banking middlemen like Visa. Those will always exist, but they are "small fry."
I think that was definitely the initial intention of bitcoin when it was launched. Perhaps not specifically to fight off USA influences, but definitely to end government control over the monetary system, be it the dollar, the yen or the euro.
However, I don't think that goal has been relevant for a few years now. Bitcoin has turned into an uncontrolled speculation adventure for people with more money than sense or access to cheap electricity. Just the transaction costs alone make it infeasible to use Bitcoin to order pizza. External payment networks related to but not affiliated with Bitcoin have spun up to battle these transaction costs, but Bitcoin itself is nothing like it was way back when.
I don't think Bitcoin will ever reach its potential as the initial activists thought it had. However, it has cleared the way for other cryptocurrencies to step up and replace it as a payment system for common people.
Not really. The idea is to cut all middlemen and controlling entities.
Quote from Satoshi:
"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.
It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.
"
"The root problem with conventional currency is all the trust that's required to make it work.
The statement implies a lack of understanding of what currency is.
Currency is inherently a social construct, and there is no 'avoiding it' because that's 'what it is'.
We could try to avoid it by having for example very 'hard money'. We could just use Gold to back all currency.
This wouldn't work in normal conditions, almost assuredly leading to deflationary spirals, but given that a total lack of monetary policy, and a 100% chance of a 'Black Swan' event, which happen every 10 years or so ... the first crisis would wipe out the economy.
The 2008 crisis and COVID would have knocked all the dominos down. (Yes, there are good arguments that there would have been less risk in 2008 with better currency, but the conditions still remain).
Of course, on the other end of the spectrum - you have 'abuse of monetary policy' which is bad, which is what Crypto would like to get rid of, but I'm afraid there's very little opportunity there.
"It's time we had the same thing for money."
No - this is a missatribution of the problem. For the same reason that BTC very quickly stopped being a currency and became 'kind of a store of value' (really just speculation), you can see the issue is not 'trust'. As people begin to speculate and as it increases in value, businesses cannot use it as a currency, and, people are likely to hoard it.
So if we want a 'better currency' what we need is a 'better monetary policy'.
Unfortunately, that part is fairly entrenched.
Because currency is so intertwined with the nature of the economy, it's hard to separate.
Alternatively - you could develop an 'easily tradable asset' that is backed by other assets, like property, but that would still require centralization.
Or you could start your own economy, and use a kind of Seigneurage and export the currency, allow other nations to use it, but again, requires trust.
BTC was a nice experiment but it's not going to work for reasons that are fairly predictable and obvious to people on the finance side of the fence.
The top marginal tax rate in the US dropped from 90% in 1963 to 30% in 1983. The bottom tax rate was 0% in the 1970s and it's now 10%. A compression of 70%. [2] The estate tax went from 80% to 30% by 2010 [4], and is now roughly speaking eliminated (the exemption is now almost $12M) [3]. The minimum wage went from an inflation-adjusted $12 to today's $7.25 [5]. This all while the tools of social mobility (education, health care) were allowed to run way in excess of inflation in the US. Way in excess.
[edit] Union participation went from 25% in the 1970s to 10% today and the wage growth is almost perfectly inversely proportional to union participation. [6] Check out the wage distribution on page 12.
None of this is monetary policy, it's 100% social policy. That's why inequality started to really accelerate. If you decide that the rich should keep 7X more of their take home pay, yeah, they get richer. If you decide the rich should be able to pass on their estates to their kids tax-free, their kids get richer. If you make education harder to obtain, the already-rich have a leg up. If you make healthcare impossible to obtain, the already-rich don't die.
If you want to reduce inequality advocate for unions, advocate for inflation-adjusted minimum wage, pegged at a notional $15/hr and kill the tipped minimum wage of $2.13/hr. Advocate for socialized medicine. Advocate for free college. Advocate for all the shit that Europeans have. Advocate for more meaningful progressive taxation, increasing the top end and bringing the bottom end below zero. Bring back a 90% estate tax. Bring in mandatory sick leave and 6 months of paid mat/pat leave!
Check out the Europe vs. US graph on Page 6 [1]. Europe is also centrally banked, and also exited the gold standard by 1973.
Correlation != causation.
Your cause is noble but you're tilting at wrong windmills Quixote! :) None of this changes under hard money!
This is the outcome of 50 years of ultra-conservative social policies.
Because if you look at Europe, they left the gold standard at the same time and had totally different outcomes. If leaving the gold standard was the sole/principal, inescapable cause then Europe would track the US in this regard over the same time period. It does not. I provided you a link to an EC report on the matter as [1]. It's good reading!
No, because there were other variables with the banking crises that occurred in the gold era (which, incidentally, was nonetheless the greatest era of economic growth in human history).
You cannot simply extrapolate directly from that era to today in the way you are trying to. The situation is different.
Anyway, why do you want to defend dishonest money that funds generational theft and international unjust war? Like, the banking crises of the gold era are MUCH better than the massive evils perpetrated by the modern US federal government. Why are you defending that? What solution do you propose to ending US money hegemony over the world? Or do you support that? I mean, are you like, F those children in the middle east, let's send more of our boys to be cannon fodder, etc.? Do you LIKE letting the big banks steal the country's wealth?
> What solution do you propose to ending US money hegemony over the world?
I don't, it's the least-worst option. The US hegemonic order is better than a Russian hegemonic order, which is in turn better than a PRC hegemonic order. But make no mistake, the currency alone isn't the reason for US hegemony.
> Or do you support that? I mean, are you like, F those children in the middle east, let's send more of our boys to be cannon fodder, etc.?
Hey remember that there World War? That was fought on hard money. Napoleonic Wars? Hard money. Boer War? Hard money. Basically any war in any history book covering pre-mid-century 1900s was fought on hard money. All of colonialism happened on hard money. There will always be sufficient lending resources available to fight a war. That's not a function of monetary policy that's a function of social policy - a matter for congress, not the Fed.
> Do you LIKE letting the big banks steal the country's wealth?
Surely you have some citation. Retail banks serve the Fed in that they expand and contract the money supply via lending. They make very little actual profit for their role. Return on assets on deposit for major US retail banks is roughly 1% annually. That's their fee for managing the money supply on behalf of the federal reserve, which exists at the whim of congress.
Wars like Vietnam, Iraq and Afghanistan could not be financed or prosecuted under a hard money regime.
The wars you name as examples were "real" wars, i.e. they required real sacrifices of the nations involved, political buy-in, and were financially limited in a way that modern US fakewars are not.
(Aside: Of course, our fakewars do require limited sacrifices---of our young "grunts" that are recruited from high schools and haven't received a good enough education to know that signing up for Iraq makes you a sacrificial victim, not a war hero; and that sacrificing yourself in the Middle East hurts our country and is anti-patriotic, rather than the reverse.)
> Surely you have some citation
The rich are getting richer by buying assets (like equities, US homes en masse turning us into a nation of renters, farmland, etc.) while borrowing for nearly nothing. The Fed is what allows the rich to borrow at near zero interest. It isn't literally the banks as corporate institutions that are getting rich; I was referring to "banking" in a more general sense.
If you're serious in asking for a citation, you'll know that in modern scientific and semi-scientific literature works in such a way that there are dozens of "citations" for any position anyone wants to take. "Citations" are not the way to go. Understanding fundamentals is what is needed. That's why we have these conversations. The answer does not lie "in the literature."
> Wars like Vietnam, Iraq and Afghanistan could not be financed or prosecuted under a hard money regime.
And yet World War 1 could? C'mon now. There is no reason to think that lending would be impossible under hard money. That's how wars are financed now lol.
> The rich are getting richer by buying assets.
Yes, this is social policy not monetary policy and can be addressed easily with a wealth tax. It's a question of appetite not means.
Citizens of Britain were destroyed financially by WW1, and the British Empire fell apart. Afghanistan lasted far longer and had no real sacrifice of current citizens, other than debt which will be paid by debasement.
The benefit of hard money is citizens actually feel the pain of taxation. With forever wars financed by fiat money, we can funnel freshly printed cash into the meat grinder forever.
> Citizens of Britain were destroyed financially by WW1, and the British Empire fell apart.
They were destroyed financially because they were destroyed physically. There are a lot of reasons the British empire fell apart, including losing Hong Kong to the Japanese showing the world they were no longer able to protect their territorial posessions. Pinning this on hard money is really difficult IMO but if it was actually hard money, that sounds like a great reason not to adopt it? Empire collapse sounds bad...
> Afghanistan lasted far longer and had no real sacrifice of current citizens, other than debt which will be paid by debasement.
What makes you think lending won't be possible in a hard money environment? Afghanistan was expensive but not that expensive. US GDP is 21T. Afganistan cost $100B/yr, or 0.47% of GDP. America can fight forever-wars because of its largesse, not its ability to create debt. That's just accounting.
You can't make a $21T GDP country feel $0.1T/yr. That's a rounding error in appropriations. The Defense budget alone is $700B/yr.
> With forever wars financed by fiat money, we can funnel freshly printed cash into the meat grinder forever.
This is social policy not monetary policy. Japan has a soft monetary system, struggles constantly with deflation and has no army.
The populace is easier convinced to fund a war if it is in defense immediate or perceived imminent threat to sovereignty of their territory. Vietnam and Iraq wars were no such threat. Afghanistan arguably so only to the extent of suppressing the forces responsible for the Twin Towers attack. For instance, I'm quite sure America would have defended any attack on American soil in WWII under any conceivable currency scheme.
Taxation is an explicit act that is visible on your paycheck; something you sign on at the end of the year. Debasement is more subtle and the common man who has little in his bank account may not even consider the effect, thus rationally would be more likely to go along with a war based on implicit debasement rather than explicit taxation.
>This is social policy not monetary policy. Japan has a soft monetary system, struggles constantly with deflation and has no army.
War is a social and monetary policy in a fiat currency nation; including a tacit approval for debasement to pay for that which cannot or will not be paid via other means.
In the past you have argued that illegal immigrants / criminals should not be aided with easier monetary tools for their trade. If that point follows, that could be extended to the criminals who authorized the latest Iraq War and last decade of the Afghanistan war as well. Fiat debasement is just one tool in the toolbox of the criminals in legislature and Federal Reserve. [*Note: personally I do not agree with your hypothesis that we should restrict the monetary tools of criminals. I think instead we should focus on the underlying crime itself.]
Of course, the rich already know all this, and seek to hold most of their wealth in assets and then hide any capital gains with any shell game they can.
> Taxation is an explicit act that is visible on your paycheck.
You don't have to tax in a hard money environment, you can borrow. That's how wars have been funded in the past. You sell bonds. There's no reason to think a bond market would disappear under a hard money environment is there? You a can borrow against Bitcoin today lol. With 125X leverage!
> Note: personally I do not agree with your hypothesis that we should restrict the monetary tools of criminals. I think instead we should focus on the underlying crime itself
Por que no los dos?
Restricting guns leads to less gun crime. Restricting financial tools leads to less financial crime. Restricting access to bomb-making equipment makes it harder to create bombs. I'm fine with all that.
Your argument is restricting financial tools lead to less crime, yet your example is that if war criminals don't fund via debasement they'll just fund via bonds. So which is it, restricting does or doesn't help stop crime?
The state is not a private entity and so what limits a private entity’s criminality need not have the same impact on the state. One can borrow with full faith and credit. These restrictions you have synthesized have no impact on the state. The state is the will of the people and only the voters can stop this activity. Remember when the state does it, it’s not really crime from the perspective of the state itself, just something you disagree with. This is why checks and balances exist and matter and also have nothing to do with monetary policy.
You've done plenty of hand wringing of red herrings about what the state is and isn't, but you've dodged the question. Does restriction of financial tools that are used to abet crime help reduce crime or not?
Unless you have a problem with the Nuremburg trials and you think the holocaust was just a gentleman's disagreement between the Jews and German government, I think you understand the government is capable of crime.
> The state is the will of the people
There's certainly an argument to be made here currency debasement is not necessarily the will of the people, unless you truly think the people of Zimbabwe or Venezuela wanted to see their already inflating bills lose value even faster as the government printed more to fund the wages and ill-gotten gains of corrupt bureaucrats.
> Does restriction of financial tools that are used to abet the intentional harming of innocent victims (which virtually everyone else but you refers to as a crime) help reduce the harming of those victims or not?
No it does not, because the state can simply borrow from its people. The state will not be limited in its ability to carry out these actions.
Only individuals who try and commit financial crimes will be materially impacted.
Again the question you keep dodging is what makes you think the government won't be able to borrow to fund its wars in exactly the same way it does now, and exactly the same way it did for hundreds of years under sound money?
> Which virtually everyone else but you refers to as a crime.
Uh, if they did it would be a crime. But you're gonna need to cite some sources! More than likely the international community is onboard because the target state violated international norms and they see this as the lesser of two evils, and therefore not a crime.
Don't project your morality here :) we're talking about a very difficult concept. There's no right or wrong here, no absolutes. Just minimization of harm. Nobody's flying this ship!
>No it does not, because the state can simply borrow from its people.
Thank you. Now that we've established that restricting financial tools does not stop the harming of innocent victims, it follows that a state such as El Salvador adopting bitcoin (or for instance, an allegedly untraceable currency such as monero) as legal tender as part of its monetary policy does not lead to increased harming of innocents. Those with desire to harm others, including those in government, could simply borrow or trade fiat from the other ilk who like to harm others.
You now understanding why restricting crypto doesn't prevent the underlying crimes (now a criminal just has to steal your identity or use one of the other gazillion illegal and legal ways to move funds) to transfer his funds abroad instead of using coinbase and a cellphone. Killing the legality of crypto stops the law abiding unbanked from having a very low cost means of international transfer.
You understand now that restricting access to fertilizer to prevent bombs is stupid, because now the common man who grows food can no longer provide the grain stock for the nation. Or restricting guns from the peaceful is asinine because it disarms the innocent against the criminal who can buy a gun readily on the black market virtually anywhere in the world or failing that 3d print a very reliable one for only a few hundred dollars including ammunition out of unrestricted materials even in Europe.
> But you're gonna need to cite some sources!
You're the first person who's ever actually demanded from me I cite the fact that the US has harmed innocents in war, but here you go![1]. That's just one bombing, there's plenty more acts such as as the My Lai massacre but I don't enjoy seeing more pictures of dead 2 year olds which you say is the "will of the people" since it was done by the government. Or perhaps we are a "failed" state?
>Don't project your morality here :)
Is it even a contentious subject that the bombing of innocents is wrong? What about the killing of nuns in El Salvador by US backed regime? Why do you think discussion of morality is off limits? If there is to be a government, is it not just that it at least be used to deal with the most gravest of brutal acts such as the killing of innocents?
Your entire follow up made no sense. You misunderstood and misrepresented everything I said either intentionally or unintentionally. This is in spite of my painstaking effort to explain it to you. Unfortunately you're either not arguing in good faith or incapable of continuing this discourse. Either way, cheers, and have a good night.
> You've done plenty of hand wringing of red herrings about what the state is and isn't, but you've dodged the question.
I really haven't done either of these things haha, I suspect you're not following.
> Unless you have a problem with the Nuremburg trials and you think the holocaust was just a gentleman's disagreement between the Jews and German government, I think you understand the government is capable of crime.
The question of whether a state can commit a crime is a difficult one because the state itself decides what is and is not a crime domestically. When you throw someone in a locked room, it's kidnapping, but when the state does it, it's an arrest. Abortion is legal in some states now, not in others. The same action committed in different places may or may not be a crime depending on which state you're physically located.
A crime in the legal sense is defined as "an action or omission that constitutes an offense that may be prosecuted by the state and is punishable by law."
With respect to the Holocaust some aspects were criminal and some were redefined not to be crimes in Germany by the Nazis. In a real way the fact a lot of it either wasn't a crime or wasn't prosecuted is the reason the war happened. To make it a crime, and to prosecute it.
When you go to that extreme, you usually land on "yeah, you and who's army?"
More on the notion of state crimes here. [1]
For a state to commit a crime, it's not as simple as you make it out to be, see Article 19 paragraph 2 of the ILC Draft Articles on State Responsibility. It has to be an internationally wrongful act, resulting from the breach of an International obligation which is essential for the protection of fundamental interests of the international community and also be recognized as a crime by that community as a whole.
Under that framework you can see why whether the Holocaust was a crime in Nazi Germany or not is more challenging to answer, whereas the international community decided that - under that framework - it was, and well, we had a war over it to make sure that international definition matched up with the domestic one.
So we circle back to...
> Does restriction of financial tools that are used to abet crime help reduce crime or not?
I think you'll find that overwhelmingly financial matters do not rise to the level of international crimes under the ILC Draft Articles on State Responsibility. This leaves it largely to the state to define.
Therefore, given that the state broadly decides in financial matters what is and is not criminal the state really isn't in a position to commit financial crimes at home - as they can simply change the law to define them as legal without running afoul of the aforementioned. Individuals can. And therefore, broadly speaking, no, the restriction of financial tools does not reduce the ability of a state to commit crimes. It does in fact prevent individuals from committing crimes as defined by said state.
You're asking for a simple answer to a very complex question.
> There's certainly an argument to be made here currency debasement is not necessarily the will of the people, unless you truly think the people of Zimbabwe or Venezuela wanted to see their already inflating bills lose value even faster as the government printed more to fund the wages and ill-gotten gains of corrupt bureaucrats.
Sure, and we call that a failed state. In a failed state, you have bigger problems than your currency (like violence, bloodshed and a devastated economy) - and once you resolve your governance issues, your currency will no longer be a problem.
I follow perfectly. If the state commits things other people call war crimes (such as blowing up innocent little Afghani kids), it isn't a crime. So your answer is that reducing the financial tools available to the state for harming innocents does not help reduce war crimes. You've simply defined crime in a way that avoids having to answer the question directly.
So lets rephrase the question:
Does restriction of financial tools that are used to abet the harming of innocent victims (which virtually everyone else but you refers to as a crime) help reduce the harming of those victims or not?
In a hard money/cryptocurrency environment, the BTC plutocrats would decide when to go to war, and with whom, since no lending or spending would be possible without their assent.
Whether that's a good thing or a bad thing depends on the character of the small number of people "hodling" the majority of the BTC. I expect it would be a catastrophe after a generation or two of inherited BTC wealth, with BTC "nobles" raising private armies attack each other and lord it over the population.
>In a hard money/cryptocurrency environment, the BTC plutocrats would decide when to go to war, and with whom, since no lending or spending would be possible without their assent.
Yes I recall the great Swiss Civil War of the 1990s, when the holders of the gold backed Francs fought for spoils of each canton. Perhaps our Polish friend can chime in on the horrors of the refugees he saw.
>no lending or spending would be possible without their assent
Lending and spending shouldn't be possible without the assent from those which the money comes. Involuntarily spending someone else's money is also known as theft.
You are indicting the greater system you think Bitcoin represents (which resembles sort of monarchy or feudalism). You ignore that this system has been overcome even with those transacting in hard currencies. This reads of fear mongering or some desire to emulate Nostradamus.
The greater system Bitcoin would represent, assuming wide future adoption, would be a plutocracy, which I stated in the earlier post. If early adopters maintain the anything close proportion of BTC they currently hold, they'd form a small wealthy overclass; and if the lending and spending necessary for society to function is controlled by them, they'd effectively control society. It wouldn't resemble Switzerland at all.
I wouldn't expect those plutocrats to get along in perpetuity, and if there's no way to expropriate their inheritances, they'd form a permanent class of (potential) warlords.
There's a 100% chance of some kind of crisis in our future.
The first crisis in a system with no monetary policy will knock everything down.
Hard monetary policy is like nailing a board between the dock and the boat - it's great for stability ... until the tide goes out, or, a big wave comes.
That's why we use ropes, not boards.
Currencies can only exist within an economic zone and they're a useful tool wit price stability etc.. BTC provides none of that so it's not very useful.
It's a neat idea.
Also, the US definitely does not have 'Monetary Hegemony' in the world. Just an outside influence, that's waning a bit.
The 'Big Banks' are not stealing your wealth because of monetary policy, for the most part. They will steal your wealth just as well with BTC.
> Anyway, why do you want to defend dishonest money that funds generational theft and international unjust war? Like, the banking crises of the gold era are MUCH better than the massive evils perpetrated by the modern US federal government. Why are you defending that? What solution do you propose if not hard money?
Uh because it doesn't. That's tinfoil hat conspiracy talk.
> What solution do you propose if not hard money?
There really isn't anything wrong with fiat lol. You obtain it, you spend it on necessities, you invest the excess. Inflation is an incentive to productively allocate capital. The variable supply allows an expansion and contraction of the supply to retain stability.
You haven't intellectually engaged with anything I said, you've just called it a "conspiracy" and tried to laugh at it. That's says a lot.
You totally ignored the essential point of my post which is that many things have changed since the gold money era and you can't extrapolate directly from that era to this. In particular, we have instant communication and much better ways to verify institutional financials.
(I'm leaving the conversation now. I know you'll do your best to make it look like I'm wrong, but I'm going to ignore it.)
I actually responded to, I think, each of your points.
(1) I don't support ending US hegemony because it's the least worst option.
(2) US hegemony doesn't depend on the dollar.
(3) All major historical wars were fought on hard money so there's no reason to think reverting to hard money would somehow end war. In fact we live in roughly speaking the most peaceful time in recorded history.
(4) Fiat works fine.
(5) Variable supply is ideal because it creates stability and separates long-term store of value (volatile) from short-term store of value and medium of exchange (predictable).
(6) Inflation is useful because it incentives productive allocation of capital.
(7) Banks aren't stealing huge quantities of money from Americans, they make a 1% annualized return on assets on deposit, which is returned to bank shareholders. Money circulates.
(8) Honestly its up to you to explain what changed and why you think there would be a different outcome. Quantifiably.
I can, it's just not worth my time. Suffice to say macro policy is the reason the US didn't have decades of stagnation like japan did and it requires fiat currency. If you want to disagree with every economist you can go ahead and write a peer reviewed paper that I'd be happy to check out.
Monetary expansion and fiscal stimulus are exactly the policies that Japan has been doing. These policies have caused Japan's stagnation. Japan is a very good example why mainstream economists are wrong.
Stimulating a zombie economy will just keep it alive longer. Economy must be allowed to die and regenerate.
Hard money is money that is hard to produce. Such as gold, silver and bitcoin. The alternative is money that can be produced easily (soft money, easy money), like modern fiat currency or glass beads, which were used to buy slaves from Africa.
I don't agree with your interpretation of what this passage really means, i.e., what its message implies and what is essential vs. accidental.
The Fed is the ultimate "middleman."
Anyway, I do not think the philosophical underpinnings of bitcoin are reducible to Satoshi's words. Even if it were, that would not be interesting to talk about. I don't want to have a pedantic conversation like this.
There is a higher authority than Satoshi on what bitcoin is about, and that higher authority is the truth about what bitcoin is and is not good for. And that has been the case since day 1. Nobody who got involved in bitcoin early on professed any allegiance to Satoshi or "his" vision (or even worse, certain paragraphs in the whitepaper...). Bitcoiners' allegiance is to the best possible thing that bitcoin can be. Which means thinking primarily about root causes and fundamentals, not primarily about paying for coffee.
But can Bitcoin eliminate the Fed and have any meaningful impact on the US financial system if the big actors of such a system are steadily centralizing and controlling it? How would Bitcoin be able to change anything if its "enemies" are embracing it and applying traditional banking approaches to it? I can't help but wonder if crypto will be the victim of embrace-extend-extinquish schemes.
I'm not sure Visa is small fry. Regular people will want the easiest way to utilize crypto and if they can go through means familiar to them, they probably will. If companies like Visa end up having a hand in the majority of crypto transaction some day then crypto is effectively owned by the system it's trying to fight.
You mean giving out more BTC IOUs than they actually own BTC? Nothing does, but creating IOUs is not the same thing as printing actual currency/gold/BTC.
edit: And by "nothing", I mean there's no technical barrier. There are certainly legal barriers if they are lying about reserves and falsifying audits..
No, I mean crediting an account with an amount of bitcoins that came from nowhere. This is how commercial banks create money, and I don't see the reason why crypto exchanges can't do the same with bitcoin.
What do you mean by an "account"? They could not credit my BTC address with BTC they do not own, no. Obviously they could give me a login to a webpage showing I hold 10e99 BTC that I can't withdraw. They could do the same thing with gold bars and free Wendy's sandwiches. It's not the same thing as printing BTC, creating gold bars, or manufacturing actual sandwiches.
What do you think printing BTC means? They don't have an actual printing press that prints bitcoins. Instead they create a transaction that credits a BTC address but debits no addresses, thus creating new bitcoins out of thin air. On the bitcoin blockchain the number of bitcoins that can be created in this way is limited, but off-chain there is no such limit. A bitcoin exchange can credit an internal account with a number of bitcoins that it has created out of thin air, in exactly the same way that bitcoins are created on-chain, in effect increasing the total supply of bitcoins.
> They don't have an actual printing press that prints bitcoins. Instead they create a transaction that credits a BTC address but debits no addresses, thus creating new bitcoins out of thin air. On the bitcoin blockchain the number of bitcoins that can be created in this way is limited, but off-chain there is no such limit.
Crediting a Bitcoin address is an on-chain event, so I'm not sure what you mean. If the address was not credited on chain, my Bitcoin node will not reflect the new balance, so the credit simply did not happen from the perspective of any honest node on the network.
The transaction happens off-chain. If you struggle to understand this you need to look up "fractional reserve banking". As soon as crypto users flock to centralised payment platforms, fractional reserve banking becomes a possibility and the supply of bitcoins is no longer limited to 21 billion. In the real world, central bank money (which in the bitcoin world is the equivalent of on-chain bitcoins) represents only a small fraction of the money supply.
This is how they print bitcoins on-chain. Centralised payment platforms can do the same thing, except they would credit an internal account, instead of a BTC address. Hopefully now it's clear.
Got it, yeah that's clear. Centralized platforms can certainly credit accounts for BTC that don't exist, on a technical level. Will this happen in practice? Will it be legal? Will it be possible to transfer these fake BTC to other platforms? I don't think so.
In the case of USD, the answer is yes. Banks are incentivized to accept fractional reserve dollars from other banks, because in practice they are exactly the same. Why is that the case? Because the issuer of those dollars, the government, has specifically deemed it to be a legitimate practice. There's no risk in accepting fractional reserve dollars. Fractional reserve dollars can be withdrawn as cash, used to pay taxes, used to pay debts etc.
Let's think about Bitcoin now. Fractional reserve BTC cannot be used to pay on-chain transaction fees. It cannot be used on the lightnight network. It cannot be used to participate in smart contracts. Would Coinbase accept fractional reserve BTC from Gemini? There would be no way for Coinbase to redeem them for on chain BTC, without trusting Coinbase to fulfill it. There's no government that can print extra BTC to fulfill Gemini's debts..so it would be surprising if Coinbase accepted these IOUs from Gemini. The issue with fractional reserve BTC is that they are completely unportable. Usable within the issuers ecosystem, sure, but not beyond that.
The thing is that these fractional reserve BTC are indistinguishable from normal BTC. If you receive a payment to your BTC address, you have no way of telling whether these BTC have been created by an exchange. So, to answer your question, yes, Coinbase would accept fractional reserve BTC from Gemini, because they wouldn't know, they would just receive BTC. As long as Gemini has enough BTC reserves to remain solvent, nobody would notice that they have been creating BTC out of thin air.
Wait no, if you receive a payment to your actual Bitcoin address it’s real BTC..I thought we agreed payments to an address can only happen on chain, and on chain BTC cannot be inflated via fractional reserve?
Of course, it's real BTC. The exchange debits the internal account and then uses its BTC reserves to make a payment to the BTC address. The supply of BTC is the sum of BTC balances and this includes balances held in BTC addresses as well as balances held in exchange accounts, just like the supply of dollars includes cash and central bank reserves as well as USD balances held in bank accounts. BTC balances in exchange accounts can be spent just like BTC held in BTC addresses, and are therefore as "real" as BTC held in BTC addresses. To think otherwise is an exercise in wishful thinking on your part, or not really understanding how money works.
> To think otherwise is an exercise in wishful thinking on your part, or not really understanding how money works.
I think you are missing that, with USD, there's actually no distinction between a dollar and a dollar created by fractional reserve banking. They can be used for exactly the same things. With BTC, it's fundamentally impossible for that to be true.
You are comparing fractional reserve dollars generated by a bank to a fractional reserve BTC created by an exchange but it's not an apt analogy. The bank has a charter from the government to essentially create real dollars.
I'm certainly not claiming that it's impossible for a BTC exchange to be insolvent, but doing so is likely illegal and, although it may appear to, does not add net new BTC into the system. Fractional reserve banking adds net new dollars into the system which can be redeposited into a different bank (or the same bank) to once again generate new dollars. Won't work with Bitcoin.
Let's take existing exchanges and brokerages: Coinbase, Robinhood, and PayPal all keep full reserves or lie about it.
To be clear, this is not an analogy. I was describing the process by which commercial banks create money out of thin air. And the same exact process can be used by exchanges to create bitcoins out of thin air. There's nothing special about bitcoin that prevents this money-creation process from working. It works with any asset. It works with commodity-backed money as well. And you don't know that this isn't happening right now, because not all Bitcoin exchanges are audited. It might very well be the case that bitcoins are being created out of thin air right now by some exchanges, thus inflating the global supply of bitcoins. You have no way of telling. Also you don't know whether this is illegal. These exchanges could be in a jurisdiction where it is legal, and it would still affect the global supply of bitcoins.
This is a pretty smart purchase, with it MasterCard is getting a fairly mature technology stack (by cryptocurrency standards at least), an incredible amount of data (mostly attribution data relating to addresses and transactions), and a team that’s experienced with the industry (which there is a massive void in skilled workers for).
In this context, crypto = cryptocurrency, because MasterCard is a major fintech company. The context is obvious.
Don't die on the crypto != cryptocurrency hill. Its not worth it. Language is fluid and words represent concepts that change over time. We use contextual information to solidify the concepts.
There is nothing special about cryptography that owns the word. Cryptozoology and Cryptosporidium are also valid candidates for using the short form.
> Language is fluid and words represent concepts that change over time.
HN is largely a technical site so using the technically correct language is meaningful. Chemists often joke about that all foods are "organic" foods, but this is a deliberate joke about two technical terms for the word "organic". In both contexts using the correct is important.
Language of course evolves, but it always evolves with this tensions between changing use and consistent use. The argument that one should just lay down and let words mean anything is silly.
> We use contextual information to solidify the concepts.
In this context both meanings of the word "crypto" make perfect sense to me. It's quite possible (and imho more interesting) that MasterCard is interesting in having more advanced cryptographic capabilities as it is for MasterCard to expand its use of cryptocurrencies. I would read an article about the former and am not interested in the latter.
The issue is that cryptography and cryptocurrency overlap relevancy in the fintech space. Without specifying which, it’s ambiguous. I say this as an engineer on the security team of a major fintech company who also has a cryptocurrency arm.
It’s fine to call cryptocurrencies “crypto”. It’s less fine to be unnecessarily ambiguous and create confusion when either might be relevant. If not for this discussion, I had assumed the article would be about them acquiring an HSM vendor or someone else in the cryptography space.
Admittedly this is the original title. But it’s an ambiguous and confusing title.
They are tracing cryptographic hashes that represent transactions in cryptocurrencies, as thats how cryptocurrencies work.
Its the proper use of the word in one, two or even three contexts. If you're not interested in it, you'll find out from the subtitle or the first paragraph and move on.
> In this context, crypto = cryptocurrency, because MasterCard is a major fintech company. The context is obvious.
I, for one, was confused while taking the context into account (but having no idea what CipherTrace does): fintech companies, and especially those dealing with bank cards, are among the most common examples of encryption and authentication usage; I think it's even common to say "that's how your bank card transfers are secured" when explaining the usage of asymmetric cryptography to laypeople. Though the possibilities I've imagined were rather silly: e.g., some custom cryptographic hardware, for either efficiency or doing something fancy with quantum cryptography. Upon skimming the article, I'm not sure if the reality is much less silly, but the brief confusion happened either way.
I totally misread this and rolled my eyes about MasterCard getting into the cryptocurrency business.
It's to the point where we need to start labeling cryptography as such. Crypto now means cryptocurrency because the crypto folks like to shorten it in every conversation.
This is about Mastercard expanding their digital asset business. I don't think you misread anything. Not sure why you rolled your eyes, lots of liquidity and transaction activity there and Mastercard is a liquidity and transaction activity business.
I've grown used to thinking crypto = cryptocurrency. That's the nature of language.
A language (and its people) gets to vote for the use of a word based on the heuristic of popularity. It's something that has been going on for some time now.
That's unlikely. Before cryptocurrencies, "crypto" generally meant cryptography. The term "crypto" now refers to cryptocurrencies almost 100% of the time.
I didn't: "CipherTrace" definitely made me think this was cryptography related. Mastercard has some pretty large investments into cybersecurity because of their position on the global money market, so I thought this company would be about trying to break encryption or something similar.
I consider crypto to only refer to cryptocurrency in an informal, non-technical context, or in the middle of a paragraph talking about cryptocurrencies. On HN I kind of expect crypto to refer to cryptography with the amount of programming and computer science posts that get discussed here
Welp, looks like this is going to be another avenue by which a major corporation engages in mass surveillance capitalism. I'd rather my financial activity not be constantly monitored, profiled, and sold off for advertising or whatever other purposes.
This is why I hope that privacy coins catch on, but I'm unfortunately quit pessimistic that they will ever see mass adoption. If not for the lack of user will, then for the massive pushback we'll see from corporations and governments.
The friction in crypto adoption happens where crypto needs to be converted to fiat and vice versa.
The more goods and services can change hands without touching fiat - the faster the global evolution away from all kind of government and corp nonsense will happen.
