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Governments Worry That Cryptocurrencies Could Be the ‘Next Swiss Bank Account’
- dmitrygr 9y agoUnlikely, since (1) the current top few cryptocurrencies are not anonymous, merely pseudonymous; and (2) they are not stable enough to reliably stash a few dozen million USD and expect to get them out a decade later on a day's notice.
- keketi 9y agoBetter ban them just to be sure.
- tehlike 9y agoMonero is considered one of the top.
- cgb223 9y agoZCash is up there as well
- blueprint 9y agoZcash is most certainly not private. Just one recent aspect of that: https://www.reddit.com/r/CryptoCurrency/comments/7hnw08/turns_out_that_315_of_the_handful_of_zcash/ https://www.reddit.com/r/CryptoCurrency/comments/7hnw08/turn...
- tehlike 9y agoZcash needs to fix 1. Trusted setup issue and 2. Make it possible to debug money supply. Otherwise, zksnarks has very good potential overall.
- dmitrygr 9y agoYes, one may adjust the N in "current top N" to include anything. In reality it is just BTC and ETH.
- blueprint 9y agoExcept that people who actually understand cryptocurrencies tend to think Eth is largely hooey and definitely dangerous and that it won't be around for long. At least not in its current form. By the way, the same people tend to think Monero is in the top 2. But you can change the definition of "top" or "quality" to include anything. But in reality I'm sure most people don't actually care. :)
- aqme28 9y agoWhy is ETH hooey? I haven't heard that before.
- CryptoPunk 9y agoThat's nonsense, to the point of being blatant misinformation. Ethereum processes more transactions than all other cryptocurrencies combined. It has 30X more developers working on it than the next most active platform. The market cap of crypto-assets issued on top of it (ERC20 tokens) grew from $2.8 billion to $60 billion over the last 7 months, with Ethereum's market share for the crypo-asset market growing from 73% to 93% over that period.
- kang 9y agoOne may adjust the 'centralised' in "decentralised" to include anything. In reality it is just BTC.
- tehlike 9y agoLet me rephrase: monero is the top privacy currency. End of story, until another stronger coin comes in. When i say top, i dont care about marketcaps. Any coin is just couple hundred million tethers away from being the top coin. Bitcoin is overhyped and not useful for anything at the moment, and far from its original purpose. IF you knew anything about monero, you'd see why it is actually more useful and true to crypto-currency spirit than others.
- kneel 9y agoI think one of the major misconceptions about cryptocurrencies is that people will want to turn their coins back into fiat. There are billions being invested into cryptocurrencies in a grassroots manner. This didn't happen because people love fiat. Their speculating on a future where fiat is a minority currency.
- AznHisoka 9y agoI know a few people who put a huge stash into crypto because they don’t want their spouses to know about their money when they get married.
- ridgeguy 9y agoThis is another attempt at security by obscurity. Like others, it doesn't work. Open source (this time in the form of full disclosure and a prenup agreement) is the way to go.
- cryptoz 9y agoWhy are they marrying someone who they don't trust? That sounds like an awful state of affairs and likely those marriages will not last. Don't most wedding vows include a line about being honest? Yikes to those marriages.
- AznHisoka 9y agoYes and no. emotionally, its a bad idea. Rationally, it probably isnt an awful idea to hedge against a marriage not working out
- cryptoz 9y ago> Rationally, it probably isnt an awful idea to hedge against a marriage not working out That doesn't make sense. Rationally, hiding that money in secret is a reason that the marriage won't work out. Hide that money, tell lies, be a scheming and awful person, and there will be a self-fulfilling prophesy of that marriage not working out.
- kang 9y agoGovernments worry that those 'Swiss Bank Accounts' aren't exclusive anymore.
- alex_young 9y agoIsn't the real risk that cryptocurrency becomes the new laundry service? Buy FOOCOIN, spend FOOCOIN on asset, don't report to the IRS, repeat. Other direction: Sell asset for FOOCOIN, buy $ with FOOCOIN, don't report to the IRS, repeat.
- debt 9y agoLocalBitcoins seems to a pretty good laundry service. Nothing's impossible but I can't figure out for the life of me how exactly anyone including governments could de-anonymize LocalBitcoins.
- PeterisP 9y agoIt's nontrivial to launder, say, $100k in LocalBitcoins. The IRS doesn't care if you deanonymize tiny amounts (say, a few thousand dollars) but de-anonymizing LocalBitcoins for large operations can be easily done in the classic manner with sting operations since doing it regularly in large amounts generally is a crime even if the money is legitimately obtained. Since the major traders in LocalBitcoin inevitably are violating money laundering laws if they don't report the large cash transactions, you should expect that they can be pressured to cooperate and report on their customers in exchange for immunity or reduced penalties.
- Vadoff 9y agohttps://www.coindesk.com/9-years-localbitcoins-trader-sentenced-latest-money-transmission-case/ https://www.coindesk.com/9-years-localbitcoins-trader-senten...
- PeterisP 9y agoIf you by large assets with FOOCOIN, the same rules apply for asset seller as if you paid in cash, i.e. they must report the transaction to authorities if it's above a certain amount (wasn't it $10k in USA?). So either you're limited to small amounts, or you have to buy the assets under the table with the usual laundering problems.
- 9y ago
- chrischen 9y agoFunny how that's what they're worrying about rather than the rampant penny-coins and essentially unregulated securities. Even if you don't invest in an ICO directly, investing in Eth or Bitcoin is essentially funding those ICOs and allowing otherwise unqualified investors to speculate on the ecosystem.
- adamnemecek 9y agoSo what? Why can the govt profit from gambling but not me? Why can casinos? So what it’s unregulated, dont play if you don’t want to lose.
- joeblow9999 9y agoMost people believe you shouldn't have the right to take a risk they wouldn't take themselves. This is pretty much basis of the majority of laws on the books to be honest.
- the_gastropod 9y agoSomething something privatize the earnings socialize the losses. A good part of government's job is to limit risk so that those most at risk don't suffer. Speed limits exist to limit risk. Drug laws exist to limit risk. Bank regulations exist to limit risk. SEC laws exist to limit risk. In a system with safety nets (unemployment laws, bankruptcy laws, welfare, food stamps, subsidized housing programs, etc), there must be some limits to prevent abuse of these programs from undue risk.
- joeblow9999 9y agoThank you for agreeing with me and providing supporting examples.
- wlesieutre 9y agoThe government can worry about two things at once
- joeblow9999 9y ago"“We don’t think this ecosystem can grow without regulation,” Beck said." Uhhh its already grown by leaps and bounds. Control for the sake of control. That's all they want.
- Feniks 9y agoGovernments don't like black markets, untraceable transactions and people hiding their assets. You may not agree with it but there IS a rationale behind this.
- wslh 9y agoThat's true but governments can only add friction to digital assets (e.g. eliminate exchanges) but cannot destroy them. Also, I think at least now they have some ideas about the volume of black markets. Even with blockchains like Monero you have an idea of usage.
- root_axis 9y agoOf course governments could destroy them, just force ISPs to leverage deep pack inspection to systematically cripple nodes in the network.
- CryptoPunk 9y agoGovernments are not going to be able to stop this from happening without massively invasive laws against what software people can run on their computers, public access to encrypted communication and private exchange. Governments will hopefully be forward thinking about this and accept the changes that technology brings. Ultimately it's government's responsibility to accommodate social and technological trends, not vice versa. Some of the worst chapters in human history came about when political authorities tried to resist the tide of change, like President Franklin Pierce who pushed back against the abolitionist movement pre-Civil-War by approving the expansion of slavery westward, and thus setting the stage for the war to come. In recent decades Western governments have been reasonably enlightened when it comes to technological change, as in the case of abandoning export control laws barring wide dissemination of strong cryptography in the 1990s, and the institution of safe harbor laws, both of which facilitated the growth of the internet. I hope they carry that philosophy toward cryptocurrency.
- TeMPOraL 9y ago> Governments are not going to be able to stop this from happening without massively invasive laws against what software people can run on their computers, public access to encrypted communication and private exchange. Hopefully they'll be able to stop this and other problems with emission taxes.
- CryptoPunk 9y agoWhatever the tax is, I hope it is on some kind of physical consumption of scarce resources, rather than on economic transactions that are inherently private and increasingly out of the bounds of any jurisdiction.
- TeMPOraL 9y agoYes. In my imagination, a widely deployed CO₂ tax would rise electricity prices just enough to wipe the profits off Bitcoin mining and make maintaining the blockchain that much less profitable for people, killing the currency outright. But then again, it might only delay the inevitable... (And to be clear - I don't mind innovations in finance, new kinds of money, new mechanisms of social consensus, etc. I only dislike systems with huge energy waste, especially one unsustainable in long-term, as such systems grow.)
- BatFastard 9y agoI can see only one reason why any government would ALLOW cryptocurrencies. While they could someday be used as a digital currency, right now they have very little positive value, and significant negative value. So the ONE reason I can see why government support them is for their own nefarious needs.
- miscreanity 9y agoBingo. Blockchain systems are ideal for tracking & control, even beyond credit cards and the like. Bitcoin is simply so much more accessible.
- BatFastard 9y agoBlockchain is amazing. Its use in cryptocurrencies is just the cat that got out of the bag...
- mrep 9y agoThe centralized use case (not run by arbitrary nodes) might have some use cases but the decentralized versions run on untrusted nodes which are all the craze are ridiculously uneconomical. Here is an article estimating Google (one of the most profitable software companies) hardware expenditure at 5 billion a quarter [0], or 20 billion a year. With their 20 billion in profit a year, a doubling of server costs would make one of the most profitable software companies uneconomical. Bitcoin and most other cryptocurrencies rely on everyone processing every computation which is insanely cost heavy which is why bitcoin processes a fraction of what visa does but costs the electricity of a small country. Google's server requirements would obviously be uneconomical with that architecture but can any architecture that relies on untrusted nodes to do the computation be economical when a company such as Google could not run on twice the infrastructure costs? And thats just one of the downsides with decentralized cryptocurrencies of which there are many. [0]: http://www.datacenterknowledge.com/archives/2014/07/23/from-112-servers-to-5b-spent-on-google-data-centers-per-quarter http://www.datacenterknowledge.com/archives/2014/07/23/from-...
- mvindahl 9y agoOver the years, a lot of governments have outlawed offshore online gambling. They mainly do so by proxy, by making it illegal for banks or credit card providers to transfer money to unapproved gambling operations. In addition, to offer an alternative, most governments allow some kind of gambling to run in the country, but these are regulated and taxed. I guess there are always ways to circumvent these government regulations and put your money in an online casino in Barbados or whereever but it takes a special kind of person to want to go through the hassle. In very much the same way, governments could choke the flow of real money in and out of cryptocurrencies if they wanted to. They are probably planning to do so but it hasn't been on the top of their priorities just yet, the crypto bubble being more of an annoying mosquito than a threat to the economic stability. A government crackdown won't mean that crypto currencies will go away but it will be obvious to everyone that they'll forever be RPG play money, and only a small amount of enthusiasts will want to hold them. Prices will adjust accordingly.
- Vadoff 9y agoA country can outlaw cryptocurrencies from their country, but the rest of the world won't simply follow suit. With countries like Japan or Korea embracing cryptocurrencies, it's unrealistic to think they'll become "RPG play money".
- mvindahl 9y agoI don't think any "real" countries have any interest in cryptos becoming a competitor to their respective national currency. That would be giving away control over the economy, and why would any government want to do that? Thus I think we'll see both South Korea and Japan taking an increasingly hostile stance towards cryptos alongside all other developed countries. I could imagine, on the other hand, freeloader countries like the Cayman Islands adding cryptos as a supported way of stashing away money. Thus, they could become a gateway between the legit economy and the crypto economy in the same way that they are already a gateway between the legit economy and money raked in by tax evaders, drug lords, and dictators. Thing is, the crypto part doesn't really add any value to their offering. And the real question with respect to Cayman Islands etc. is why we don't simply outlaw bank transfers back and forth from these places.
- jokoon 9y agoWell yeah, better start regulating them, and quickly. At least the exchanges. Crypto currencies are ideal if you want to launder money. Not to mention the volatility of it might keep doing damages.