6 ms·

This is great for driving adoption of cryptocurrencies! However, the unwanted side effect is also the growth of centralized currencies used as "cash you can tr

This is great for driving adoption of cryptocurrencies! However, the unwanted side effect is also the growth of centralized currencies used as "cash you can track" by governments. And we can be certain PayPal will know exactly where to steer their users...

raesene9 6y ago
unfortunately for most commercial transactions related to cryptocurrency (at scale) decentralization already seems largely dead. When you look at the aftermath of exchange hacks (e.g. the recent kucoin hack), and see how quickly funds are frozen by various other exchanges, you can see the direction of travel, especially when combined with the uptick of regulatory interest (e.g. BitMex) Edit: As this is attracting some downvotes, how about some citations. On Kucoin From(https://www.coindesk.com/kucoin-crypto-hack-laundering https://www.coindesk.com/kucoin-crypto-hack-laundering) "The hackers have largely failed to sell those tokens on closely guarded centralized exchanges which quickly flag and often block hacked funds." On BitMex from(https://www.coindesk.com/bitmex-accelerates-identity-verification-kyc https://www.coindesk.com/bitmex-accelerates-identity-verific...) "BitMEX Accelerates Mandatory ID Verification After Charges of Lax Anti-Money Laundering Controls"
- Sebb767 6y ago
  > and see how quickly funds are frozen by various other exchanges As long as this is a community decision, I don't see a problem. Centralization would need a central authority to decide which coins to freeze.
  - raesene9 6y ago
    It's not a community decision, it's a decision by private corporations (binance, coinbase et al) often driven by government regulation (e.g. KYC)
  - gruez 6y ago
    So if I accept bitcoin as payments, do I have to keep to up to date with all the blacklists that are out there? Otherwise I might end up accepting coins that are "blacklisted" and are worthless. Who is the authoritative source for these blacklists? Are merchants forced to subscribe to every blacklist out there, in fear that even some chance of accepting blacklisted coins is too much? We kind of see this in action in the fiat world, with payment providers freezing accounts that sent transactions with certain keywords.
- ckastner 6y ago
  > As this is attracting some downvotes, how about some citations Crypto is one of the few topics on HN that has an extremely aggressive following. The followers may not be that numerous, but they'll downvote (and fast, too) on an emotional basis, rather than a rational one, and will thus even downvote simple facts when they displease them. (not referring to my own posts on crypto, which are at least somewhat opiniated.)
  - ejanus 6y ago
    I believe that some of the people here are also holders of cryptocurrencies.
  - ulzeraj 6y ago
    So just like socialism. The other day I've politely questioned how price discovery would be possible on socialist economies and got downvoted to oblivion without a single argument. Yeah I'm expecting downvotes for this one also...
    - justaguyhere 6y ago
      I've also seen downvotes if I ever criticize landlords on HN, even when they are valid criticisms.
      - datameta 6y ago
        Not to disparage your point or the parent comment's but I think part of that is that HN operates to a much lesser degree like an echo chamber (as the majority of social network are wont to steer toward) so it might come as more of a surprise when someone disagrees. Of course I feel I should highlight the obvious fact that discourse is far more valuable than trying to quietly silence a differing opinion...
    - smolder 6y ago
      https://news.ycombinator.com/item?id=23987760 https://news.ycombinator.com/item?id=23987760 I don't know that this was politely questioned. I do think your tone had a factor in the downvotes.
- hjorthjort 6y ago
  There are always decentralized exchanges. I think eventually people will get used to the UX of handling their own keys and prefer it over keeping their coins in exchanges. Either that, or banks will start doing crypto custody and government will guarantee the assets. But I think that's less likely, I don't see banks inviting the risk of managing crypto keys.
  - raesene9 6y ago
    There are decentralized exchanges, the question is whether they'll see large scale adoption, particularly from less technical astute users. Also to be successful for the general public, they'll need fiat on and off ramps (at least in the short-->medium term). At the moment most of those go via the centralized exchanges...
    - hjorthjort 6y ago
      Sure, but all it takes is centralized one on-ramp that will take you, then you can transfer out of it. That's a big difference from having your funds in a particular exchange, where it may be seized. I agree with the UX problem. I think the decentralized exchanges will manage to scale, research is ongoing. And the UX of decentralized exchanges is not much worse than/different from using Coinbase or Kraken, for example. The big UX challenge is self-custody of keys.
    - whimsicalism 6y ago
      I'm hardly a crypto stan but it feels somewhat odd to see so many naysayers on decentralized exchanges right as they are picking up huge amounts of steam. KYC will be dead as soon as there is a liquid decentralized atomic swap for monero
      - Sargos 6y ago
        The Aztec L2 for Ethereum uses zkSNARKS for privacy and allows for execution which means a decentralized exchange can be made in a fully private environment. It just released but it's a very exciting protocol for those who like Monero.
- ethbr0 6y ago
  Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash? And that a private company who is hacked (and was previously the custodian of a customer's tokens) makes it more difficult to retrieve same through its machinery? Per your link, "Still, by Monday, Elliptic said that hackers had already flipped millions of stolen tokens for $7.5 million in ethereum (ETH) on decentralized exchanges (DEX) Kyber Network and Uniswap." So the "problem" is that companies are making decisions for themselves (admittedly, approaching the way Google and Apple can make decisions "for themselves"), and that people who were given control of assets are controlling them. Decentralization seems fine from a protocol perspective, these are just effects of human behavior.
  - mihaifm 6y ago
    > Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash? Yea that's correct. They track the coins as they flow from one address to another. It can be increasingly difficult once the funds are divided, but entirely possible with automation. It's worth noting that this is not possible with some privacy focused cryptocurrencies like Monero.
  - HenryBemis 6y ago
    It is like saying: "I robbed a bank ang got away with $1m, all in $20 bills. The bank has the numbers of the bills I stole. I can no longer use these notes as they will be flagged/raise an alarm if I try to deposit them in another bank." Absolutely plausible scenario. If one stole $1m from a bank, the value of those bill are no longer $1m. But if that someone can use mules, distribute the money across the city (assuming a big city), ask the mules to spend this on the same day, in various locations, then the value of that $1m will drop to $500k. The reason: mules need a cut, mediators need a cut, value of items purchased, etc. In that sense, I expect that those "decentralized exchanges" should have large fees, large spreads, etc, practically mimicking the cost of running a 'mules' network.
  - lawn 6y ago
    This is exactly the problem that Monero tries to solve. There you cannot trace transactions or "taint" them, so you don't have to worry that a drug dealer might pay you and you'll get your account locked.
- rossjudson 6y ago
  Cryptocurrencies are used when you want to hide, or speculatively profit from crime without doing crime. Large scale legitimate transactions don't need to hide, and actively don't want to (the books must balance).
gwbas1c 6y ago
> "cash you can track" Uhm, the blockchain is a ledger of all transactions. It's "cash you can track", and pseudoanonymous at best.
- exdsq 6y ago
  Not really... you can use mixers to obfuscate non-anonymous coins and there are privacy specific coins which allow for anonymous transactions
  - emptysongglass 6y ago
    People: commenter is correct. It's absurdly easy to anonymize txns on a blockchain, especially if you leverage cross-chains like Incognito.
  - Robotbeat 6y ago
    I mean, if you’re willing to risk big fines for money laundering... https://cointelegraph.com/news/us-financial-watchdog-fines-early-bitcoin-mixer-60m-for-money-laundering/amp https://cointelegraph.com/news/us-financial-watchdog-fines-e...
    - vmchale 6y ago
      That's the person running the tumbler, no? I think there were criminal charges too.
    - SilasX 6y ago
      From an informed comment on the recent discussion of that, the fine was from doing that while being a money transmitter i.e. also dealing in fiat currencies, not for the crypo mixer per se. https://news.ycombinator.com/item?id=24829562 https://news.ycombinator.com/item?id=24829562
      - andreareina 6y ago
        I read that comment as saying it doesn't require touching fiat. Bitcoin is a currency, so doing any sort of store-and-forward of it makes you a money transmitter. > For traditional Bitcoin mixers as in this case, someone receives money from users and then transmits money to many users. This is money transmission and requires registration with FinCEN and sometimes requires registration with states (though some states have exemptions for completely crypto to crypto transmission that doesn't touch USD or other fiat). Some states having exceptions for pure crypto transmission implies that most states don't.
mihaifm 6y ago
"not your keys not your coin" has been advocated for years on any discussion board, unfortunately it's falling on death ears. Typical users just like the convenience of centralized exchanges and "attractive" offers like this one.
- triclops200 6y ago
  While "death ears" sounds like a great metal band name, the correct expression is "deaf ears" :)
- javert 6y ago
  I think it's OK to use centralized services for small amounts of cryptocurrency, just like you would put a small amount of cash in your wallet. For large amounts, use cold wallets. Not your keys, not your coin.
  - qertoip 6y ago
    Privacy is a big reason to not use custodians even for small amounts.
    - javert 6y ago
      I don't view privacy as attainable with cryptocurrency anyway.
      - ric2b 6y ago
        It is with Monero.
- vmception 6y ago
  Oh it’s not, the people that take that most to heart just start running exchanges and services because they get a lot of coin and big keys
slickrick216 6y ago
All in chainlink
arminiusreturns 6y ago
In my almost a bitcoin millionare story, I abandoned bitcoin in the early days (cpu days!) because I saw this as the real issue at hand. It jaded me from the market and I haven't really got into it since, but monero and zcash seem to be the two that have the best privacy features. I think ethereum has been working on this more also.
tgv 6y ago
Yeah, crime just started paying better.
SoSoRoCoCo 6y ago
> This is great for driving adoption of cryptocurrencies! I don't follow cryptocurrency evolution on a regular basis -- in fact it's grown far beyond what I understood when I was BTC mining for fun a decade ago! I did some googling and see literally hundreds of them now. Is the goal CC enthusiasts to see a world with one main CC or a fragmented world of many, all exchanging at different rates?

raesene9 6y ago

unfortunately for most commercial transactions related to cryptocurrency (at scale) decentralization already seems largely dead. When you look at the aftermath of exchange hacks (e.g. the recent kucoin hack), and see how quickly funds are frozen by various other exchanges, you can see the direction of travel, especially when combined with the uptick of regulatory interest (e.g. BitMex) Edit: As this is attracting some downvotes, how about some citations. On Kucoin From(https://www.coindesk.com/kucoin-crypto-hack-laundering https://www.coindesk.com/kucoin-crypto-hack-laundering) "The hackers have largely failed to sell those tokens on closely guarded centralized exchanges which quickly flag and often block hacked funds." On BitMex from(https://www.coindesk.com/bitmex-accelerates-identity-verification-kyc https://www.coindesk.com/bitmex-accelerates-identity-verific...) "BitMEX Accelerates Mandatory ID Verification After Charges of Lax Anti-Money Laundering Controls"

Sebb767 6y ago
> and see how quickly funds are frozen by various other exchanges As long as this is a community decision, I don't see a problem. Centralization would need a central authority to decide which coins to freeze.
- raesene9 6y ago
  It's not a community decision, it's a decision by private corporations (binance, coinbase et al) often driven by government regulation (e.g. KYC)
- gruez 6y ago
  So if I accept bitcoin as payments, do I have to keep to up to date with all the blacklists that are out there? Otherwise I might end up accepting coins that are "blacklisted" and are worthless. Who is the authoritative source for these blacklists? Are merchants forced to subscribe to every blacklist out there, in fear that even some chance of accepting blacklisted coins is too much? We kind of see this in action in the fiat world, with payment providers freezing accounts that sent transactions with certain keywords.
ckastner 6y ago
> As this is attracting some downvotes, how about some citations Crypto is one of the few topics on HN that has an extremely aggressive following. The followers may not be that numerous, but they'll downvote (and fast, too) on an emotional basis, rather than a rational one, and will thus even downvote simple facts when they displease them. (not referring to my own posts on crypto, which are at least somewhat opiniated.)
- ejanus 6y ago
  I believe that some of the people here are also holders of cryptocurrencies.
- ulzeraj 6y ago
  So just like socialism. The other day I've politely questioned how price discovery would be possible on socialist economies and got downvoted to oblivion without a single argument. Yeah I'm expecting downvotes for this one also...
  - justaguyhere 6y ago
    I've also seen downvotes if I ever criticize landlords on HN, even when they are valid criticisms.
    - datameta 6y ago
      Not to disparage your point or the parent comment's but I think part of that is that HN operates to a much lesser degree like an echo chamber (as the majority of social network are wont to steer toward) so it might come as more of a surprise when someone disagrees. Of course I feel I should highlight the obvious fact that discourse is far more valuable than trying to quietly silence a differing opinion...
  - smolder 6y ago
    https://news.ycombinator.com/item?id=23987760 https://news.ycombinator.com/item?id=23987760 I don't know that this was politely questioned. I do think your tone had a factor in the downvotes.
hjorthjort 6y ago
There are always decentralized exchanges. I think eventually people will get used to the UX of handling their own keys and prefer it over keeping their coins in exchanges. Either that, or banks will start doing crypto custody and government will guarantee the assets. But I think that's less likely, I don't see banks inviting the risk of managing crypto keys.
- raesene9 6y ago
  There are decentralized exchanges, the question is whether they'll see large scale adoption, particularly from less technical astute users. Also to be successful for the general public, they'll need fiat on and off ramps (at least in the short-->medium term). At the moment most of those go via the centralized exchanges...
  - hjorthjort 6y ago
    Sure, but all it takes is centralized one on-ramp that will take you, then you can transfer out of it. That's a big difference from having your funds in a particular exchange, where it may be seized. I agree with the UX problem. I think the decentralized exchanges will manage to scale, research is ongoing. And the UX of decentralized exchanges is not much worse than/different from using Coinbase or Kraken, for example. The big UX challenge is self-custody of keys.
  - whimsicalism 6y ago
    I'm hardly a crypto stan but it feels somewhat odd to see so many naysayers on decentralized exchanges right as they are picking up huge amounts of steam. KYC will be dead as soon as there is a liquid decentralized atomic swap for monero
    - Sargos 6y ago
      The Aztec L2 for Ethereum uses zkSNARKS for privacy and allows for execution which means a decentralized exchange can be made in a fully private environment. It just released but it's a very exciting protocol for those who like Monero.
ethbr0 6y ago
Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash? And that a private company who is hacked (and was previously the custodian of a customer's tokens) makes it more difficult to retrieve same through its machinery? Per your link, "Still, by Monday, Elliptic said that hackers had already flipped millions of stolen tokens for $7.5 million in ethereum (ETH) on decentralized exchanges (DEX) Kyber Network and Uniswap." So the "problem" is that companies are making decisions for themselves (admittedly, approaching the way Google and Apple can make decisions "for themselves"), and that people who were given control of assets are controlling them. Decentralization seems fine from a protocol perspective, these are just effects of human behavior.
- mihaifm 6y ago
  > Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash? Yea that's correct. They track the coins as they flow from one address to another. It can be increasingly difficult once the funds are divided, but entirely possible with automation. It's worth noting that this is not possible with some privacy focused cryptocurrencies like Monero.
- HenryBemis 6y ago
  It is like saying: "I robbed a bank ang got away with $1m, all in $20 bills. The bank has the numbers of the bills I stole. I can no longer use these notes as they will be flagged/raise an alarm if I try to deposit them in another bank." Absolutely plausible scenario. If one stole $1m from a bank, the value of those bill are no longer $1m. But if that someone can use mules, distribute the money across the city (assuming a big city), ask the mules to spend this on the same day, in various locations, then the value of that $1m will drop to $500k. The reason: mules need a cut, mediators need a cut, value of items purchased, etc. In that sense, I expect that those "decentralized exchanges" should have large fees, large spreads, etc, practically mimicking the cost of running a 'mules' network.
- lawn 6y ago
  This is exactly the problem that Monero tries to solve. There you cannot trace transactions or "taint" them, so you don't have to worry that a drug dealer might pay you and you'll get your account locked.
rossjudson 6y ago
Cryptocurrencies are used when you want to hide, or speculatively profit from crime without doing crime. Large scale legitimate transactions don't need to hide, and actively don't want to (the books must balance).

gwbas1c 6y ago

> "cash you can track" Uhm, the blockchain is a ledger of all transactions. It's "cash you can track", and pseudoanonymous at best.

exdsq 6y ago
Not really... you can use mixers to obfuscate non-anonymous coins and there are privacy specific coins which allow for anonymous transactions
- emptysongglass 6y ago
  People: commenter is correct. It's absurdly easy to anonymize txns on a blockchain, especially if you leverage cross-chains like Incognito.
- Robotbeat 6y ago
  I mean, if you’re willing to risk big fines for money laundering... https://cointelegraph.com/news/us-financial-watchdog-fines-early-bitcoin-mixer-60m-for-money-laundering/amp https://cointelegraph.com/news/us-financial-watchdog-fines-e...
  - vmchale 6y ago
    That's the person running the tumbler, no? I think there were criminal charges too.
  - SilasX 6y ago
    From an informed comment on the recent discussion of that, the fine was from doing that while being a money transmitter i.e. also dealing in fiat currencies, not for the crypo mixer per se. https://news.ycombinator.com/item?id=24829562 https://news.ycombinator.com/item?id=24829562
    - andreareina 6y ago
      I read that comment as saying it doesn't require touching fiat. Bitcoin is a currency, so doing any sort of store-and-forward of it makes you a money transmitter. > For traditional Bitcoin mixers as in this case, someone receives money from users and then transmits money to many users. This is money transmission and requires registration with FinCEN and sometimes requires registration with states (though some states have exemptions for completely crypto to crypto transmission that doesn't touch USD or other fiat). Some states having exceptions for pure crypto transmission implies that most states don't.

mihaifm 6y ago

"not your keys not your coin" has been advocated for years on any discussion board, unfortunately it's falling on death ears. Typical users just like the convenience of centralized exchanges and "attractive" offers like this one.

triclops200 6y ago
While "death ears" sounds like a great metal band name, the correct expression is "deaf ears" :)
javert 6y ago
I think it's OK to use centralized services for small amounts of cryptocurrency, just like you would put a small amount of cash in your wallet. For large amounts, use cold wallets. Not your keys, not your coin.
- qertoip 6y ago
  Privacy is a big reason to not use custodians even for small amounts.
  - javert 6y ago
    I don't view privacy as attainable with cryptocurrency anyway.
    - ric2b 6y ago
      It is with Monero.
vmception 6y ago
Oh it’s not, the people that take that most to heart just start running exchanges and services because they get a lot of coin and big keys

slickrick216 6y ago

All in chainlink

arminiusreturns 6y ago

In my almost a bitcoin millionare story, I abandoned bitcoin in the early days (cpu days!) because I saw this as the real issue at hand. It jaded me from the market and I haven't really got into it since, but monero and zcash seem to be the two that have the best privacy features. I think ethereum has been working on this more also.

tgv 6y ago

Yeah, crime just started paying better.

SoSoRoCoCo 6y ago

> This is great for driving adoption of cryptocurrencies! I don't follow cryptocurrency evolution on a regular basis -- in fact it's grown far beyond what I understood when I was BTC mining for fun a decade ago! I did some googling and see literally hundreds of them now. Is the goal CC enthusiasts to see a world with one main CC or a fragmented world of many, all exchanging at different rates?