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Every few decades, libertarians need to be reminded why regulations exist. Time passes, and people forget why the SEC, FTC, FDA, FDIC, OSHA, child labor laws, e

Every few decades, libertarians need to be reminded why regulations exist. Time passes, and people forget why the SEC, FTC, FDA, FDIC, OSHA, child labor laws, et al were even created. Cryptocurrencies created a completely anarchic monetary system, which people have used to layer investment systems on top of. Naturally, low hanging fruit scams and cons have arisen, and some form of governing structure will eventually be imposed, if not by actual governments, then by the community. Then more sophisticated abuses and negative externalities will arise, and ever more sophisticated regulations will be imposed by the community to thwart them. In the end you may end up with something very much looking like a government, where people with connections and leverage in the governing structures get to decide the evolution of the rules, where a few players with disproportionate wealth or hashing power, help elect those people to committee positions. And once again, people will be looking to create systems to escape the defacto control and cronyism imposed on the system. I guess what I'm saying is, nature abhors a vacuum, and given human nature, most systems will evolve to thwart the worse tendencies of the worst people, opening opportunities for others to capture power. So in the end, rather than seek to bring down our democratically elected government monetary systems via technology, we should seek to evolve them with ideas from technology. Because booting out fiat currency and rebooting with crypto really just forces a painful relearning of all of the lessons we've learned in the last century of modern finance.

csomar 9y ago
I think it is about timing. Myspace didn't work out but Facebook did. Apple couldn't push its product until later. The reason people keep going back to 0 is that the current system is not the most efficient one. The process will repeat until it hits the right time. At that time it'll gain momentum and thwart the current system.
- indigochill 9y ago
  I'm not sure MySpace's chief sin was timing. Plenty of people used it. However, I seem to remember that people could easily modify the style of their profile page and so you had garish glittery bright-colored pages all over the place. Facebook came along then and gave users absolutely no control over the style of their page, keeping things clean and standardized.
  - skgoa 9y ago
    FB's chief avenue to success was that they turned the chicken-and-egg problem of social networks (they are only helpful when lots of people your know are on the same network) into a shining example of the strength of the network effect. They did so by limiting signups to a single campus at first. Then they grew by expanding to specific campuses only. They made it so that facebook became the network for the students on each of those campuses to be on, yet kept the allure up by being exclusive. By the time they opened up to the wider public, the brand was super strong and entrenched. Also, facebook had a huge amount of money to throw at marketing. That shouldn't be forgotten. They essentially bought success by spending that money, when lots of other social networks never were able to do so.
agumonkey 9y ago
Same with Uber. IMO rebooting attracts people because regulation free allows for wild (easy, quick) gains, so lots of people will jump on the "opportunity" until the real cost reveal themselves at which point they will realize the losses. It's a bit physical, this crowd needed a way to unleash their energy and the official market was outside of their reach, providing another petri dish so to speak allowed for the reaction to occur, but it's unsustainable and transient. I think that America was the same in the 17th. Also the movie industry moved away from the East coast to the wild west to free themselves of regulations; only to create their own decades later.
solo1717 9y ago
There is a vast difference between emergent, organic, "in market" regulations and protections (voluntarily agreed upon reciprocal protection type schemes ala escrows, insurance, etc) and government financial and behavioural regulations enforced at gunpoint and threat of violence. Libertarians, rightly in my view, argue that Governments only have the moral right to enforce, with their monopoly on force, the non aggression principle. Maybe insider trading is bad, and the best exchanges would have internal arbiters who economically punish insider trading, but having a centralised government enforce that with threats to life, limb, and liberty is unjust.
apatters 9y ago
The notion that cryptocurrencies would displace fiat in our lifetimes was always a red herring. This is the real impact they will have in the long run: the technology will greatly expand the set of people and organizations who can issue a currency. Fiat will have a lot of competition that it didn't have before. Competition is bad for incumbents, but good for the rest of us. So the libertarian dream will probably still be realized, just in a more measured manner than some frenzied speculators and early adopters would have you believe (which shouldn't come as a surprise at all).
- skywhopper 9y ago
  Competition isn’t an inevitable good. While it’s a very powerful tool in certain markets, in others it carries more risk than benefits. Currency is not really a realm that is lacking in competition anyway. The main competitive drive in the cryptocurrency world appears to be tax and banking law evasion, and now scamming naive investors. Harder to do those things with Euros and Rupees.
viridian 9y ago
I'm a registered Libertarian (lol) who isn't against reigning in ICOs. My chief concern is regulation creep from problems that do exist, to problems that may exist in the future, but aren't really a current concern. I find targeting the latter gives a government a whole lot of elbow room to extract wealth, via things like trade license fees, ICO officiation fees, a requirement that a coin some some property that creates a weak binding with a given fiat currency, etc. It is worth noting though, that ICOs are primarily a problem because there are a lot of hungry investors looking to 100x their returns, and don't have the tech background required to dissect a whitepaper. Protecting the gullible and uninformed from the manipulative is one of hardest tasks of any society, and the fight is never ending.
- prklmn 9y ago
  your point about needing a tech background to invest is like saying that one should have a finance background to invest in an IPO. I disagree.
  - Cthulhu_ 9y ago
    It's very much a thing over in Europe though, the new MiFID II directive is a thing intended to protect investors - one implementation that (online) investment banking sites have to offer now is things like a basic test, that is, you need to prove you have half a clue what you're doing.
  - MarkMMullin 9y ago
    Having a tech background does allow you to better understand what is going on and how it might provide value - conversely, a finance background is probably a good thing to have if you're looking at the IPO for a B2B financial services company
- fouc 9y ago
  Having full understanding of a whitepaper doesn't give you protection from bad code and other scams does it?
jesusthatsgreat 9y ago
I don't think anyone disputes the fact that whales control markets. I don't think we can have it any other way... free markets will never be fair / equal for all unless you have a communist system in play. What crypto does to finance is eliminate more middle men than ever before and bring more transparency than ever before. The majority of people would consider that a good thing. It doesn't mean the poor get wealthier or the rich get poorer, it just means things are more transparent, which creates a more level playing field. Billions of dollars can't just go 'missing' like it can in the traditional fiat system for a variety of reasons - mainly because we're relying on humans to (a) be honest and (b) remember to manually file paperwork. Crypto brings its own set of problems but like any form of technology, it will evolve over time so long as there are advantages to using it. And so long as it evolves, there'll always be new opportunities along with new casualties.
- CPLX 9y ago
  > more transparency than ever before So we have more transparency with these completely opaque ICO situations where the company name and country of operation isn't even clear? Versus the highly regulated filing requirements and GAAP independent audit requirements of a public company? Huh?
mythrwy 9y ago
Great points and I fully agree. The difference with cryptocurrencies, and the part I find particularly exciting, is this time the structure is independent of nation states. Conceptually this is a big leap forward. I do agree with "meet the new boss, same as the old boss", that is likely the scenario. But even incremental improvements in objective rule of law have improved the human condition, and if cryptocurrencies can improve this in the financial realm that is a good thing. Also not to imply that the whole space isn't rife with scams and foolish ideas at the moment, nor to imply nation states aren't going to plant a boot firmly on the head of the entire program as that well could happen. Because at the end of the day it sits on a platform that is ultimately controlled by nation states.
wils1245 9y ago
I don't see how a decentralized cryptocurrency could possibly regulate itself efficiently. How would you go about banning even the most basic manipulations? Take wash trading. How can you possibly ban wash trading? To do this you need to verify that identity of seller X != identity of seller Y. Even dismissing currencies that actively prohibit this verification (Monero), how do you possibly accomplish this in a decentralized currency? Even without the identities issue, who is looking at bitcoin governance and thinking that deciding protocol changes with a decentralized electoral system is going to produce anything but gamesmanship and paralysis. Promising newcomer coins Abc will have the same issues once there's real money at stake. And yes. Manipulation exist in the traditional monetary system. However, regulations raise the cost of manipulation to prohibitively high levels for most people. And yes, congress is dysfunctional. But underneath the chaos we have a set of fairly well established rules, and changing those rules didn't require forking the currency. The problems with our economic system are political, not technological. What crypto brings to money is superfluous technology and even worse politics than we already have.
splintercell 9y ago
> Every few decades, libertarians need to be reminded why regulations exist. No more than repeat offenders remind you of why Gulags exist. In your mind the hypothetical libertarian just doesn't want any regulation because he forgets that regulations have any good impact. It's simply tone deaf. > In the end you may end up with something very much looking like a government, where people with connections and leverage in the governing structures get to decide the evolution of the rules, where a few players with disproportionate wealth or hashing power, help elect those people to committee positions. And once again, people will be looking to create systems to escape the defacto control and cronyism imposed on the system. There are 'good governments' and 'bad governments'. The rich and powerful try to game the system in both of them but there are much more effective in bad govts than in good govts. So the question is, what separates a society which ends up with good governments (for example western societies) than societies which end up with bad governments (pretty much all the non-western societies). This is precisely where the argument breaks down. According to libertarians, there is a reason X (whatever that might be) which separates good from bad governments. According to libertarians, that reason is 'economic freedom', the places where good govt exists, there is economic freedom, and places with bad government lacks economic freedom (even dictatorship like Singapore, UAE, or ex-dictatorships like S Korea are far better off than their non-economic free counterparts). You may disagree what the cause 'X' is (according to alt-right that cause X is genetic-cultural environment, as places with good govt tend to be white westerners and places with bad govt tend to be non-white non-westerners). But a plain denial of differences between good govts and bad govts is insane.

csomar 9y ago

I think it is about timing. Myspace didn't work out but Facebook did. Apple couldn't push its product until later. The reason people keep going back to 0 is that the current system is not the most efficient one. The process will repeat until it hits the right time. At that time it'll gain momentum and thwart the current system.

indigochill 9y ago
I'm not sure MySpace's chief sin was timing. Plenty of people used it. However, I seem to remember that people could easily modify the style of their profile page and so you had garish glittery bright-colored pages all over the place. Facebook came along then and gave users absolutely no control over the style of their page, keeping things clean and standardized.
- skgoa 9y ago
  FB's chief avenue to success was that they turned the chicken-and-egg problem of social networks (they are only helpful when lots of people your know are on the same network) into a shining example of the strength of the network effect. They did so by limiting signups to a single campus at first. Then they grew by expanding to specific campuses only. They made it so that facebook became the network for the students on each of those campuses to be on, yet kept the allure up by being exclusive. By the time they opened up to the wider public, the brand was super strong and entrenched. Also, facebook had a huge amount of money to throw at marketing. That shouldn't be forgotten. They essentially bought success by spending that money, when lots of other social networks never were able to do so.

agumonkey 9y ago

Same with Uber. IMO rebooting attracts people because regulation free allows for wild (easy, quick) gains, so lots of people will jump on the "opportunity" until the real cost reveal themselves at which point they will realize the losses. It's a bit physical, this crowd needed a way to unleash their energy and the official market was outside of their reach, providing another petri dish so to speak allowed for the reaction to occur, but it's unsustainable and transient. I think that America was the same in the 17th. Also the movie industry moved away from the East coast to the wild west to free themselves of regulations; only to create their own decades later.

solo1717 9y ago

There is a vast difference between emergent, organic, "in market" regulations and protections (voluntarily agreed upon reciprocal protection type schemes ala escrows, insurance, etc) and government financial and behavioural regulations enforced at gunpoint and threat of violence. Libertarians, rightly in my view, argue that Governments only have the moral right to enforce, with their monopoly on force, the non aggression principle. Maybe insider trading is bad, and the best exchanges would have internal arbiters who economically punish insider trading, but having a centralised government enforce that with threats to life, limb, and liberty is unjust.

apatters 9y ago

The notion that cryptocurrencies would displace fiat in our lifetimes was always a red herring. This is the real impact they will have in the long run: the technology will greatly expand the set of people and organizations who can issue a currency. Fiat will have a lot of competition that it didn't have before. Competition is bad for incumbents, but good for the rest of us. So the libertarian dream will probably still be realized, just in a more measured manner than some frenzied speculators and early adopters would have you believe (which shouldn't come as a surprise at all).

skywhopper 9y ago
Competition isn’t an inevitable good. While it’s a very powerful tool in certain markets, in others it carries more risk than benefits. Currency is not really a realm that is lacking in competition anyway. The main competitive drive in the cryptocurrency world appears to be tax and banking law evasion, and now scamming naive investors. Harder to do those things with Euros and Rupees.

viridian 9y ago

I'm a registered Libertarian (lol) who isn't against reigning in ICOs. My chief concern is regulation creep from problems that do exist, to problems that may exist in the future, but aren't really a current concern. I find targeting the latter gives a government a whole lot of elbow room to extract wealth, via things like trade license fees, ICO officiation fees, a requirement that a coin some some property that creates a weak binding with a given fiat currency, etc. It is worth noting though, that ICOs are primarily a problem because there are a lot of hungry investors looking to 100x their returns, and don't have the tech background required to dissect a whitepaper. Protecting the gullible and uninformed from the manipulative is one of hardest tasks of any society, and the fight is never ending.

prklmn 9y ago
your point about needing a tech background to invest is like saying that one should have a finance background to invest in an IPO. I disagree.
- Cthulhu_ 9y ago
  It's very much a thing over in Europe though, the new MiFID II directive is a thing intended to protect investors - one implementation that (online) investment banking sites have to offer now is things like a basic test, that is, you need to prove you have half a clue what you're doing.
- MarkMMullin 9y ago
  Having a tech background does allow you to better understand what is going on and how it might provide value - conversely, a finance background is probably a good thing to have if you're looking at the IPO for a B2B financial services company
fouc 9y ago
Having full understanding of a whitepaper doesn't give you protection from bad code and other scams does it?

jesusthatsgreat 9y ago

I don't think anyone disputes the fact that whales control markets. I don't think we can have it any other way... free markets will never be fair / equal for all unless you have a communist system in play. What crypto does to finance is eliminate more middle men than ever before and bring more transparency than ever before. The majority of people would consider that a good thing. It doesn't mean the poor get wealthier or the rich get poorer, it just means things are more transparent, which creates a more level playing field. Billions of dollars can't just go 'missing' like it can in the traditional fiat system for a variety of reasons - mainly because we're relying on humans to (a) be honest and (b) remember to manually file paperwork. Crypto brings its own set of problems but like any form of technology, it will evolve over time so long as there are advantages to using it. And so long as it evolves, there'll always be new opportunities along with new casualties.

CPLX 9y ago
> more transparency than ever before So we have more transparency with these completely opaque ICO situations where the company name and country of operation isn't even clear? Versus the highly regulated filing requirements and GAAP independent audit requirements of a public company? Huh?

mythrwy 9y ago

Great points and I fully agree. The difference with cryptocurrencies, and the part I find particularly exciting, is this time the structure is independent of nation states. Conceptually this is a big leap forward. I do agree with "meet the new boss, same as the old boss", that is likely the scenario. But even incremental improvements in objective rule of law have improved the human condition, and if cryptocurrencies can improve this in the financial realm that is a good thing. Also not to imply that the whole space isn't rife with scams and foolish ideas at the moment, nor to imply nation states aren't going to plant a boot firmly on the head of the entire program as that well could happen. Because at the end of the day it sits on a platform that is ultimately controlled by nation states.

wils1245 9y ago

I don't see how a decentralized cryptocurrency could possibly regulate itself efficiently. How would you go about banning even the most basic manipulations? Take wash trading. How can you possibly ban wash trading? To do this you need to verify that identity of seller X != identity of seller Y. Even dismissing currencies that actively prohibit this verification (Monero), how do you possibly accomplish this in a decentralized currency? Even without the identities issue, who is looking at bitcoin governance and thinking that deciding protocol changes with a decentralized electoral system is going to produce anything but gamesmanship and paralysis. Promising newcomer coins Abc will have the same issues once there's real money at stake. And yes. Manipulation exist in the traditional monetary system. However, regulations raise the cost of manipulation to prohibitively high levels for most people. And yes, congress is dysfunctional. But underneath the chaos we have a set of fairly well established rules, and changing those rules didn't require forking the currency. The problems with our economic system are political, not technological. What crypto brings to money is superfluous technology and even worse politics than we already have.

splintercell 9y ago

> Every few decades, libertarians need to be reminded why regulations exist. No more than repeat offenders remind you of why Gulags exist. In your mind the hypothetical libertarian just doesn't want any regulation because he forgets that regulations have any good impact. It's simply tone deaf. > In the end you may end up with something very much looking like a government, where people with connections and leverage in the governing structures get to decide the evolution of the rules, where a few players with disproportionate wealth or hashing power, help elect those people to committee positions. And once again, people will be looking to create systems to escape the defacto control and cronyism imposed on the system. There are 'good governments' and 'bad governments'. The rich and powerful try to game the system in both of them but there are much more effective in bad govts than in good govts. So the question is, what separates a society which ends up with good governments (for example western societies) than societies which end up with bad governments (pretty much all the non-western societies). This is precisely where the argument breaks down. According to libertarians, there is a reason X (whatever that might be) which separates good from bad governments. According to libertarians, that reason is 'economic freedom', the places where good govt exists, there is economic freedom, and places with bad government lacks economic freedom (even dictatorship like Singapore, UAE, or ex-dictatorships like S Korea are far better off than their non-economic free counterparts). You may disagree what the cause 'X' is (according to alt-right that cause X is genetic-cultural environment, as places with good govt tend to be white westerners and places with bad govt tend to be non-white non-westerners). But a plain denial of differences between good govts and bad govts is insane.