10 ms·

Veteran Wall Street enforcers are landing new roles in virtual currencies

136 points by chollida1 9y ago

DeeperSea 9y ago
Centralized solutions are currently much faster, but they may not be in the future. Also, other coins (that offer spare computing power) or commercial enterprises could act as a power nodes (sub-centralized solutions) in a decentralized network, to speed it up for a fee when needed. Decentralized peer2peer content delivery is currently owned by centralized players, like Akamai. I see no reason why it could not work when it is owned by its users. https://cryptonewstrends.com/ https://cryptonewstrends.com/ Because the software has to operate in a trustless environment, a lot of attention has to be spend in making these systems more secure. Security through obfuscation is not a fall-back anymore. If we had known that LastFM stored password hashes as unsalted MD5, would we have trusted it with our accounts? We will have fuzzing tools and static program analysis to help automate checking the security of a contract. Forks can be dealt with in a decentralized manner: voting power being assigned by a provable amount of tokens you own. You can run an entire election in this manner, cryptographically voiding any "vote rigging" argument. You may have so much freedom as to shoot yourself in the foot. Therefore, Cryptocurrency banks may provide support for payment solutions, insurance, lending, for people who don't want to store all their money under their flammable mattress.
vthallam 9y ago
I mean it's hot and a growing field with exchanges skimming off money 24*7 in billions, so no wonder the ex-govt talent would be willing to work. Crypto Exchanges and companies are making some real money, so the goal now is to make it more legitimate and prepare to lobby the regulators and government.
0xCMP 9y ago
I remember reading in a Michael Lewis book (Big Short maybe?) that Wall Street hires from the SEC and Rating Agencies in-order to know the in's and out's better as well as get better treatment. Hence the implication in the book that those who stay behind at the SEC and Rating Agencies are not wanted by the banks. Seems like they're copying from those who came before them.
- maxxxxx 9y ago
  That means working at the SEC is an auditioning process for big money bank jobs. Talk about conflict of interest.
  - natrius 9y ago
    This happens everywhere regulation exists. That doesn't make regulation inherently bad, but before you can come to reasonable conclusions about how to change things, you have to come to terms with the spontaneous order your changes will result in. You can't abolish self-interest.
  - marnett 9y ago
    This is statement is unfortunately true for every regulatory agency in the U.S. government. - CFPB -> all consumer corporations - FCC -> tech - FTC -> corporations spanning many industries - SEC -> finance - FDA -> big-pharma - USDA -> big-agra ...on and on and on...
    - forapurpose 9y ago
      > - CFPB -> all consumer corporations CFPB is very new; is there really evidence of revolving door hiring going on there?
      - marnett 9y ago
        I was more so pointing out who would be interested in which agencies for influence. They are young and invigorated. We'll have to see how they recover from their big loss on the CFPB Arbitration Rule after the joint resolution from last fall.
      - adrianratnapala 9y ago
        It isn't (always) about some sinister revolving door. It's just that the people who enforce regulations and the people who manage compliance at regulated entities are experts in the same field even when they are not the same people. Both sides can be doing their jobs entirely honestly, but still they will co-evolve in ways that make the system convenient for existing players.
chollida1 9y ago
Makes sense. I've stated this a few times, but one of Microsoft's biggest misteps in the 90's, and there weren't that many, was its absolute lack of any political lobbying. There are alot of very politically connected people who pointed out that if Microsoft had of "played the game" that the chances of their anti trust trial actually happening would have been alot less. Google and Facebook learned this lesson well and now spend on lobbying at a rate that would make wall street blush and is on par with the heaviest lobbyist out there. it wouldn't be too much of a stretch to say that the new tech elite are the real Washington insiders. Just look at what Uber and AirBnb spend on lobbing. Given this, it makes sense that if you were in a new industry with the rules being created all around you, you'd want to control the narrative as much as possible. I'd argue that Silicon Valley now dominates even wall street in terms of buying political influence in the US nowadays. To bring an example back to my Canadian roots, The Toronto Maple Leafs hired the man who wrote the NHL's Collective Bargining Agreement with the players to better have an advantage when writing player contracts.
- samsonradu 9y ago
  > I'd argue that Silicon Valley now dominates even wall street in terms of buying political influence in the US nowadays. This opinion doesn't seem to be shared around here. See this thread from yesterday: https://news.ycombinator.com/item?id=16466064 https://news.ycombinator.com/item?id=16466064
- danharaj 9y ago
  Silicon Valley's political influence might be a large splash but finance is the pond itself.
  - yellowstuff 9y ago
    The Wall Street bailout probably saved the financial system, ultimately made the government money, but was incredibly unpopular. The bailout of GM lost money, helped some politically connected groups, and was mostly popular and uncontroversial. Jobs are political capital, and neither finance nor tech have that many, so they make it up with cash.
pkamb 9y ago
What a strange website experience. The original headline, both on the article and HN, was "Crypto’s Hottest Hires Aren’t Millennials. They’re Banking Cops". I have no idea what the term "Banking Cops" means. I press `CMD-F` to find "cop" on the page. The first result is the instance in the headline. I press enter to find the next occurrence of "cop", the one in the story that will surely explain the title, and I'm immediately shown an all-black website with the headlines of the day: https://i.imgur.com/ttNHeDM.jpg https://i.imgur.com/ttNHeDM.jpg This is seemingly an entirely different website from the article I was just reading. The URL has changed from the HN-linked story URL to instead now read `https://www.bloomberg.com/crypto` https://www.bloomberg.com/crypto`. I still have no idea what a Banking Cop is, or why they are interested in Crypto.
- miobrien 9y ago
  IMO "banking cops" is just clickbait. Ah, the vicissitudes of prose: journalists trying to coin a phrase. But it's just confusing, as you point out. They're just talking about regulators and compliance officers. The former work at the SEC/FINRA, and the latter work in-house for banks, broker-dealers, and investment firms.
deleted 9y ago
[deleted]
CryptoPunk 9y ago
This is what fuels the revolving door. Regulations create a class of workers with previous experience in the regulatory and political system, that fetch an access premium. Another example of this is members of Congress who become lobbyists seeing an average increase of 1,500% in their salary upon the career change.
- bob_theslob646 9y ago
  It should not be allowed.
- nosuchthing 9y ago
  Safeguards are put in place because people are prone to malice, fraud, violence, and financial fuckups in the past. Mandate penalties if insiders are abusing their responsibilities and hold people accountable.
  - CryptoPunk 9y ago
    >>Safeguards are put in place because people are prone to malice, fraud, violence, and financial fuckups in the past. There's a difference between lawlessness and not having regulations that limit the range of contracts people are allowed to enter into. I'm not suggesting we should get rid of laws prohibiting violence, fraud, etc. I'm suggesting we should never violate the freedom to contract. >>Mandate penalties if insiders are abusing their responsibilities and hold people accountable. Yes we need to create a new regulatory agency that enforces these mandates. But then those who have worked in that agency will fetch a high price in the private sector. There is rampant exploitation of insider knowledge in Wall Street: https://www.economist.com/news/finance-and-economics/21736561-one-study-suggests-insiders-profited-even-global-financial-crisis-another https://www.economist.com/news/finance-and-economics/2173656... >>The paper examines conduct at 497 financial institutions between 2005 and 2011, paying particular attention to individuals who had previously worked in the federal government, in institutions including the Federal Reserve. In the two years prior to the TARP, these people’s trading gave no evidence of unusual insight. But in the nine months after the TARP was announced, they achieved particularly good results. The paper concludes that “politically connected insiders had a significant information advantage during the crisis and traded to exploit this advantage.” There is no practical way to police this. The only solution is to avoid measures that centralize control of the economy, chief among them government intervention in the market place.
deleted 9y ago
[deleted]
DINKDINK 9y ago
>The drumbeat of hires crescendoed in November when Ripple, [...] added Ben Lawsky to its board. He earned a tough reputation as New York’s top financial watchdog by pushing banks to scrutinize client transactions for illicit dealings. >[...]Lawsky’s jump to Ripple was particularly notable because he helped pioneer regulation of cryptocurrencies. He introduced the BitLicense, a requirement for digital currency companies that wanted to operate in New York. What a bunch of white washing. Imagine a parallel universe were the DMCA and the Online Copyright Infringement Liability Limitation Act made online service providers responsible for the content that their user's posted and being called a "pioneer". Lawsky rose the specter of unsubstantiated "terrorism" fears to create onerous, outdated, maladapted Bitcoin regulations. Shortly after that he quit his job as a regulator and then setup a firm to collect fees for helping "guide" firms through the regulations he just created. Corruption / rent seeking / anti-competative behavior. Bank lawyers even told Lawsky to shut bitcoin down[1] [1]https://twitter.com/MarcHochstein/status/922611866848804864 https://twitter.com/MarcHochstein/status/922611866848804864
- user5994461 9y ago
  Well, content providers are responsible for the content they distribute so that's not a good comparison.
  - psyc 9y ago
    They have certain limited responsibilities, but are on the whole not liable. In layman's terms, they're mostly not responsible, otherwise the RIAA could have bankrupted the whole internet years ago. http://technology.findlaw.com/modern-law-practice/understanding-the-legal-issues-for-social-networking-sites-and.html http://technology.findlaw.com/modern-law-practice/understand...
    - paulie_a 9y ago
      I think you over estimate the actual power of and financial backing of the riaa..Google/apple could just buy most of the members in cash and call it a day. they are a small dog with a big bark
melq 9y ago
Is anyone else bothered by the way media refers to these companies as 'cryptos'?
habosa 9y ago
Kind of funny that this "kill the banks, bring down the system" technology is being infiltrated by Wall Street lifers. Reminds me of this quote from a recent Matt Levine article: > [Andy] Noto is leaving Twitter to become CEO of Social Finance, the online lender whose mission just a couple of years ago was to "kill banks." Now it will be run by a former Goldman Sachs Group Inc. banker. The banks do not want to be killed, and they play a long game.
wpasc 9y ago
Meet the new boss, same as the old boss.
JustAnotherPat 9y ago
>Days before Omega One announced his hire, Chilton said he wished he had invested in Bitcoin and its major rivals years earlier -- back when he was warning people as a CFTC commissioner to be careful while calling for more regulation. Generally, the wild price fluctuations are “mellowing out,” he told CNBC on Jan. 11. Hilarious. Just for note, bitcoin (not even going to mention alts) was swinging 10% a day around January 11th and dropped to half its price in less than a month. I guess once you're on the bankroll of some of these places, you give up on trying to sound credible.
tw1010 9y ago
Could anyone explain to me a scenario where bitcoin and/or blockchain does not make a huge impact on the world within 5-10 years? There seems to be so much excitement and real action moving in its direction that I have a hard time imagining how exactly this would all just go nowhere.
- pjc50 9y ago
  It doesn't necessarily have to go somewhere good. Collapsing pyramid schemes caused a civil war in Albania. I suspect all the financial-instrument like coins will end up banned in the West, and one or two of the blockchain apps will survive. Maybe "filecoin". There will also be a lot of things called "blockchain" that are very unlike cryptocurrencies; the X509 PKI of the future.
  - atomical 9y ago
    Why Filecoin? It hasn't launched and it isn't even traded. There are several startups backed by ERC-20 tokens that have been building a product and will launch this year. One is even a YC startup, Request Network. Another, FunFair, has developed its own state channel technology because of an innovation gap with Ethereum.
- atomical 9y ago
  I can think of a few reasons why most blockchain technology won't take off. 1) Centralized solutions are cheaper. Consider Amazon vs. Filecoin. Amazon can buy hard drives in bulk and receive large discounts. They can pass those savings onto their customers. The Filecoin users providing storage to customers will have to 1) convince customers that their technology is safe 2) offer cheaper service. There isn't a trust issue with Amazon. So why would customers move to Filecoin? 2) Centralized solutions are much faster. Yes, there is a bunch of work being done now to allow for smaller transactions (lightning networks, plasma). There's no proof this is going to work. High level scaling solutions remain academic. 3) Development takes longer because the software has to operate in a trustless environment. Every update, no matter how minor, requires an independent security audit. There are quite a few examples of why security audits are not optional. 4) Because money is involved forks can be contentious. The default is to do nothing. A centralized solution with a board of directors and CEO can outpace a blockchain community in development speed and time to market. 5) If the private keys are lost or stolen the consumer is screwed. That makes blockchain technology incredibly risky. It's still safer to pay friends with Chase QuickPay. Banks also have insurance. How can a blockchain be insured? EDIT: Thought of one more. 6) Smart contracts are too rigid to replace the legal system. One option is to use an oracle as a source of information. However, using oracles to pull data from outside the blockchain means most of the logic is centralized.
glup 9y ago
Given that this is a thread on regulation of cryptocurrencies, can someone explain to me what is good (for countries, societies, the global economy, etc. and not individuals) about cryptocurrencies? I get that blockchains are useful for recordkeeping. But then I don't see what the appeal is of having a profusion of them co-exsiting as currencies. Am I missing something? Related question, can I think of the cryptocurrency market as analogous to the FOREX market, but that these currencies don't have attached countries?
- maayank 9y ago
  If you accept that Blockchain is useful for record keeping (and the innovation is that it's useful for trustless record keeping) then crypto currencies are useful as part of that ecosystem. Smart contracts for example - very useful to have crypto currencies that can be added to a contract or be given to a contract. Also, having a currency/credit is useful to manage economics (e.g. it costs "gas" credit to run smart contracts).
- elmar 9y ago
  Imagine that you want to hire a woman that is a blog writer on a radical Musulin country (where woman don't have the right to property) how you are going to pay for the services. Imagine that you want to hire a remote software developer from North Korea. Imagine that you want to send a donation to Wikileaks or similar organization that is banned from using the financial system. Imagine you are a Syrian war refugee that wants to cross borders without the fear of your wealth being confiscated. Imagine that you belong to a small ethnic minority and the government is confiscating your assets. Imagine that you live in rural Kenya and the nearest bank branch is 50km away.
  - m00n 9y ago
    And how does your Kenyan/North Korean/Syrian person buy gasoline/rice/paper with this asset? Meanwhile, drug cartels, first world millenials and financial investors are in possession of ~100% of this technology. They are shaping it to further their gains, scamming the naive, and undercutting legitimate sanctions and laws.
brwsr 9y ago
Always funny to see people in finance call crypto currencies "virtual currencies". Do they mean fiat currency is not virtual? Does it represent a real value or so? IMHO it's even worse, they keep increasing the maximum supply, devalue the worthless paper even more. But at least they have a chic word for it: Quantitive easing.
- isolli 9y ago
  Central banks increase the supply to keep inflation stable (at a first approximation). Monetary intervention (in the form of quantitative easing) was required to keep the economy from crashing once fiscal policy couldn't. If you think it devalued the dollar you're utterly wrong.

136 points by chollida1 9y ago

Centralized solutions are currently much faster, but they may not be in the future. Also, other coins (that offer spare computing power) or commercial enterprises could act as a power nodes (sub-centralized solutions) in a decentralized network, to speed it up for a fee when needed. Decentralized peer2peer content delivery is currently owned by centralized players, like Akamai. I see no reason why it could not work when it is owned by its users. https://cryptonewstrends.com/ https://cryptonewstrends.com/ Because the software has to operate in a trustless environment, a lot of attention has to be spend in making these systems more secure. Security through obfuscation is not a fall-back anymore. If we had known that LastFM stored password hashes as unsalted MD5, would we have trusted it with our accounts? We will have fuzzing tools and static program analysis to help automate checking the security of a contract. Forks can be dealt with in a decentralized manner: voting power being assigned by a provable amount of tokens you own. You can run an entire election in this manner, cryptographically voiding any "vote rigging" argument. You may have so much freedom as to shoot yourself in the foot. Therefore, Cryptocurrency banks may provide support for payment solutions, insurance, lending, for people who don't want to store all their money under their flammable mattress.

vthallam 9y ago

I mean it's hot and a growing field with exchanges skimming off money 24*7 in billions, so no wonder the ex-govt talent would be willing to work. Crypto Exchanges and companies are making some real money, so the goal now is to make it more legitimate and prepare to lobby the regulators and government.

0xCMP 9y ago

I remember reading in a Michael Lewis book (Big Short maybe?) that Wall Street hires from the SEC and Rating Agencies in-order to know the in's and out's better as well as get better treatment. Hence the implication in the book that those who stay behind at the SEC and Rating Agencies are not wanted by the banks. Seems like they're copying from those who came before them.

maxxxxx 9y ago
That means working at the SEC is an auditioning process for big money bank jobs. Talk about conflict of interest.
- natrius 9y ago
  This happens everywhere regulation exists. That doesn't make regulation inherently bad, but before you can come to reasonable conclusions about how to change things, you have to come to terms with the spontaneous order your changes will result in. You can't abolish self-interest.
- marnett 9y ago
  This is statement is unfortunately true for every regulatory agency in the U.S. government. - CFPB -> all consumer corporations - FCC -> tech - FTC -> corporations spanning many industries - SEC -> finance - FDA -> big-pharma - USDA -> big-agra ...on and on and on...
  - forapurpose 9y ago
    > - CFPB -> all consumer corporations CFPB is very new; is there really evidence of revolving door hiring going on there?
    - marnett 9y ago
      I was more so pointing out who would be interested in which agencies for influence. They are young and invigorated. We'll have to see how they recover from their big loss on the CFPB Arbitration Rule after the joint resolution from last fall.
    - adrianratnapala 9y ago
      It isn't (always) about some sinister revolving door. It's just that the people who enforce regulations and the people who manage compliance at regulated entities are experts in the same field even when they are not the same people. Both sides can be doing their jobs entirely honestly, but still they will co-evolve in ways that make the system convenient for existing players.

chollida1 9y ago

Makes sense. I've stated this a few times, but one of Microsoft's biggest misteps in the 90's, and there weren't that many, was its absolute lack of any political lobbying. There are alot of very politically connected people who pointed out that if Microsoft had of "played the game" that the chances of their anti trust trial actually happening would have been alot less. Google and Facebook learned this lesson well and now spend on lobbying at a rate that would make wall street blush and is on par with the heaviest lobbyist out there. it wouldn't be too much of a stretch to say that the new tech elite are the real Washington insiders. Just look at what Uber and AirBnb spend on lobbing. Given this, it makes sense that if you were in a new industry with the rules being created all around you, you'd want to control the narrative as much as possible. I'd argue that Silicon Valley now dominates even wall street in terms of buying political influence in the US nowadays. To bring an example back to my Canadian roots, The Toronto Maple Leafs hired the man who wrote the NHL's Collective Bargining Agreement with the players to better have an advantage when writing player contracts.

samsonradu 9y ago
> I'd argue that Silicon Valley now dominates even wall street in terms of buying political influence in the US nowadays. This opinion doesn't seem to be shared around here. See this thread from yesterday: https://news.ycombinator.com/item?id=16466064 https://news.ycombinator.com/item?id=16466064
danharaj 9y ago
Silicon Valley's political influence might be a large splash but finance is the pond itself.
- yellowstuff 9y ago
  The Wall Street bailout probably saved the financial system, ultimately made the government money, but was incredibly unpopular. The bailout of GM lost money, helped some politically connected groups, and was mostly popular and uncontroversial. Jobs are political capital, and neither finance nor tech have that many, so they make it up with cash.

pkamb 9y ago

What a strange website experience. The original headline, both on the article and HN, was "Crypto’s Hottest Hires Aren’t Millennials. They’re Banking Cops". I have no idea what the term "Banking Cops" means. I press `CMD-F` to find "cop" on the page. The first result is the instance in the headline. I press enter to find the next occurrence of "cop", the one in the story that will surely explain the title, and I'm immediately shown an all-black website with the headlines of the day: https://i.imgur.com/ttNHeDM.jpg https://i.imgur.com/ttNHeDM.jpg This is seemingly an entirely different website from the article I was just reading. The URL has changed from the HN-linked story URL to instead now read `https://www.bloomberg.com/crypto` https://www.bloomberg.com/crypto`. I still have no idea what a Banking Cop is, or why they are interested in Crypto.

miobrien 9y ago
IMO "banking cops" is just clickbait. Ah, the vicissitudes of prose: journalists trying to coin a phrase. But it's just confusing, as you point out. They're just talking about regulators and compliance officers. The former work at the SEC/FINRA, and the latter work in-house for banks, broker-dealers, and investment firms.

deleted 9y ago

[deleted]

CryptoPunk 9y ago

This is what fuels the revolving door. Regulations create a class of workers with previous experience in the regulatory and political system, that fetch an access premium. Another example of this is members of Congress who become lobbyists seeing an average increase of 1,500% in their salary upon the career change.

bob_theslob646 9y ago
It should not be allowed.
nosuchthing 9y ago
Safeguards are put in place because people are prone to malice, fraud, violence, and financial fuckups in the past. Mandate penalties if insiders are abusing their responsibilities and hold people accountable.
- CryptoPunk 9y ago
  >>Safeguards are put in place because people are prone to malice, fraud, violence, and financial fuckups in the past. There's a difference between lawlessness and not having regulations that limit the range of contracts people are allowed to enter into. I'm not suggesting we should get rid of laws prohibiting violence, fraud, etc. I'm suggesting we should never violate the freedom to contract. >>Mandate penalties if insiders are abusing their responsibilities and hold people accountable. Yes we need to create a new regulatory agency that enforces these mandates. But then those who have worked in that agency will fetch a high price in the private sector. There is rampant exploitation of insider knowledge in Wall Street: https://www.economist.com/news/finance-and-economics/21736561-one-study-suggests-insiders-profited-even-global-financial-crisis-another https://www.economist.com/news/finance-and-economics/2173656... >>The paper examines conduct at 497 financial institutions between 2005 and 2011, paying particular attention to individuals who had previously worked in the federal government, in institutions including the Federal Reserve. In the two years prior to the TARP, these people’s trading gave no evidence of unusual insight. But in the nine months after the TARP was announced, they achieved particularly good results. The paper concludes that “politically connected insiders had a significant information advantage during the crisis and traded to exploit this advantage.” There is no practical way to police this. The only solution is to avoid measures that centralize control of the economy, chief among them government intervention in the market place.

deleted 9y ago

[deleted]

DINKDINK 9y ago

>The drumbeat of hires crescendoed in November when Ripple, [...] added Ben Lawsky to its board. He earned a tough reputation as New York’s top financial watchdog by pushing banks to scrutinize client transactions for illicit dealings. >[...]Lawsky’s jump to Ripple was particularly notable because he helped pioneer regulation of cryptocurrencies. He introduced the BitLicense, a requirement for digital currency companies that wanted to operate in New York. What a bunch of white washing. Imagine a parallel universe were the DMCA and the Online Copyright Infringement Liability Limitation Act made online service providers responsible for the content that their user's posted and being called a "pioneer". Lawsky rose the specter of unsubstantiated "terrorism" fears to create onerous, outdated, maladapted Bitcoin regulations. Shortly after that he quit his job as a regulator and then setup a firm to collect fees for helping "guide" firms through the regulations he just created. Corruption / rent seeking / anti-competative behavior. Bank lawyers even told Lawsky to shut bitcoin down[1] [1]https://twitter.com/MarcHochstein/status/922611866848804864 https://twitter.com/MarcHochstein/status/922611866848804864

user5994461 9y ago
Well, content providers are responsible for the content they distribute so that's not a good comparison.
- psyc 9y ago
  They have certain limited responsibilities, but are on the whole not liable. In layman's terms, they're mostly not responsible, otherwise the RIAA could have bankrupted the whole internet years ago. http://technology.findlaw.com/modern-law-practice/understanding-the-legal-issues-for-social-networking-sites-and.html http://technology.findlaw.com/modern-law-practice/understand...
  - paulie_a 9y ago
    I think you over estimate the actual power of and financial backing of the riaa..Google/apple could just buy most of the members in cash and call it a day. they are a small dog with a big bark

melq 9y ago

Is anyone else bothered by the way media refers to these companies as 'cryptos'?

habosa 9y ago

Kind of funny that this "kill the banks, bring down the system" technology is being infiltrated by Wall Street lifers. Reminds me of this quote from a recent Matt Levine article: > [Andy] Noto is leaving Twitter to become CEO of Social Finance, the online lender whose mission just a couple of years ago was to "kill banks." Now it will be run by a former Goldman Sachs Group Inc. banker. The banks do not want to be killed, and they play a long game.

wpasc 9y ago

Meet the new boss, same as the old boss.

JustAnotherPat 9y ago

>Days before Omega One announced his hire, Chilton said he wished he had invested in Bitcoin and its major rivals years earlier -- back when he was warning people as a CFTC commissioner to be careful while calling for more regulation. Generally, the wild price fluctuations are “mellowing out,” he told CNBC on Jan. 11. Hilarious. Just for note, bitcoin (not even going to mention alts) was swinging 10% a day around January 11th and dropped to half its price in less than a month. I guess once you're on the bankroll of some of these places, you give up on trying to sound credible.

tw1010 9y ago

Could anyone explain to me a scenario where bitcoin and/or blockchain does not make a huge impact on the world within 5-10 years? There seems to be so much excitement and real action moving in its direction that I have a hard time imagining how exactly this would all just go nowhere.

pjc50 9y ago
It doesn't necessarily have to go somewhere good. Collapsing pyramid schemes caused a civil war in Albania. I suspect all the financial-instrument like coins will end up banned in the West, and one or two of the blockchain apps will survive. Maybe "filecoin". There will also be a lot of things called "blockchain" that are very unlike cryptocurrencies; the X509 PKI of the future.
- atomical 9y ago
  Why Filecoin? It hasn't launched and it isn't even traded. There are several startups backed by ERC-20 tokens that have been building a product and will launch this year. One is even a YC startup, Request Network. Another, FunFair, has developed its own state channel technology because of an innovation gap with Ethereum.
atomical 9y ago
I can think of a few reasons why most blockchain technology won't take off. 1) Centralized solutions are cheaper. Consider Amazon vs. Filecoin. Amazon can buy hard drives in bulk and receive large discounts. They can pass those savings onto their customers. The Filecoin users providing storage to customers will have to 1) convince customers that their technology is safe 2) offer cheaper service. There isn't a trust issue with Amazon. So why would customers move to Filecoin? 2) Centralized solutions are much faster. Yes, there is a bunch of work being done now to allow for smaller transactions (lightning networks, plasma). There's no proof this is going to work. High level scaling solutions remain academic. 3) Development takes longer because the software has to operate in a trustless environment. Every update, no matter how minor, requires an independent security audit. There are quite a few examples of why security audits are not optional. 4) Because money is involved forks can be contentious. The default is to do nothing. A centralized solution with a board of directors and CEO can outpace a blockchain community in development speed and time to market. 5) If the private keys are lost or stolen the consumer is screwed. That makes blockchain technology incredibly risky. It's still safer to pay friends with Chase QuickPay. Banks also have insurance. How can a blockchain be insured? EDIT: Thought of one more. 6) Smart contracts are too rigid to replace the legal system. One option is to use an oracle as a source of information. However, using oracles to pull data from outside the blockchain means most of the logic is centralized.

glup 9y ago

Given that this is a thread on regulation of cryptocurrencies, can someone explain to me what is good (for countries, societies, the global economy, etc. and not individuals) about cryptocurrencies? I get that blockchains are useful for recordkeeping. But then I don't see what the appeal is of having a profusion of them co-exsiting as currencies. Am I missing something? Related question, can I think of the cryptocurrency market as analogous to the FOREX market, but that these currencies don't have attached countries?

maayank 9y ago
If you accept that Blockchain is useful for record keeping (and the innovation is that it's useful for trustless record keeping) then crypto currencies are useful as part of that ecosystem. Smart contracts for example - very useful to have crypto currencies that can be added to a contract or be given to a contract. Also, having a currency/credit is useful to manage economics (e.g. it costs "gas" credit to run smart contracts).
elmar 9y ago
Imagine that you want to hire a woman that is a blog writer on a radical Musulin country (where woman don't have the right to property) how you are going to pay for the services. Imagine that you want to hire a remote software developer from North Korea. Imagine that you want to send a donation to Wikileaks or similar organization that is banned from using the financial system. Imagine you are a Syrian war refugee that wants to cross borders without the fear of your wealth being confiscated. Imagine that you belong to a small ethnic minority and the government is confiscating your assets. Imagine that you live in rural Kenya and the nearest bank branch is 50km away.
- m00n 9y ago
  And how does your Kenyan/North Korean/Syrian person buy gasoline/rice/paper with this asset? Meanwhile, drug cartels, first world millenials and financial investors are in possession of ~100% of this technology. They are shaping it to further their gains, scamming the naive, and undercutting legitimate sanctions and laws.

brwsr 9y ago

Always funny to see people in finance call crypto currencies "virtual currencies". Do they mean fiat currency is not virtual? Does it represent a real value or so? IMHO it's even worse, they keep increasing the maximum supply, devalue the worthless paper even more. But at least they have a chic word for it: Quantitive easing.

isolli 9y ago
Central banks increase the supply to keep inflation stable (at a first approximation). Monetary intervention (in the form of quantitative easing) was required to keep the economy from crashing once fiscal policy couldn't. If you think it devalued the dollar you're utterly wrong.