13 ms·

In Fifty Days, Payments Innovation Will Stop In Silicon Valley

406 points by thinkcomp 15y ago

pilif 15y ago
Here in Europe, PayPal (which is acting like a bank) had to get a banking license (like any other bank). As far as I know they didn't go bankrupt yet, so it can't be a wholly bad thing. If I drive a vehicle that acts like a car, I need a drivers license. If I run a service that acts like a bank I need a banking license. I really don't see a problem here.
- tluyben2 15y ago
  They are talking innovation; sure Paypal can get licenses like that, but a startup can't. Most (by far) startups don't have 500k to lock away. And most don't have the money to pay the license fees. So yes, it's an issue as far as innovation of payment services goes; now suddenly you NEED to get millions in investment and that all doesn't go into the product but instead into government crap.
  - mattmanser 15y ago
    And most startups don't go into banking. Seriously, if you're going into that kind of business you should have that kind of money behind you.
    - dpatru 15y ago
      Why is banking (specifically money transfering) different than other kinds of business? Seems to me that money transfer is a particularly easy business for the market to regulate. A failed money transfer is a lot easier to spot than, say, a dangerously defective physical product.
      - mattmanser 15y ago
        A fraudulent one isn't though. You're also dealing with especially sensitive data, life ruining data if it gets into the wrong hands.
      - deleted 15y ago
        [deleted]
    - 18pfsmt 15y ago
      You realize Google Checkout is often lamented on HN because it doesn't operate in many European countries? It is exactly for these reasons. Much like copyright laws are abused for business protection, so are regulations. Certainly within the US it would be better to have a federal license framework in order to minimize friction.
      - mattmanser 15y ago
        What, that Google doesn't have money to put up bonds or buy the necessary expertise? I don't get your point. More likely it's Yet Another Google Product They Can't Be Bothered To Finish (TM).
        18pfsmt 15y ago
        It's not about having enough money, but whether it is financially worth it. It's an ROI calculation that involves navigating several regulating bodies with what appears to be minimal payback. It certainly isn't a technical limitation.
        tptacek 15y ago
        If money transfer isn't lucrative, it seems weird to blame regulations for the fact that Google isn't staying involved with it.
  - acabal 15y ago
    If your revolutionary banking startup can't dredge up $500k in the land where Color managed to get away with $41 million, then your banking startup probably isn't such a good idea to begin with.
- cabalamat 15y ago
  > I really don't see a problem here. I do: it prevents innovation. People should be allowed to run an unlicensed banking service, and customers should be allowed to accept the risks that go with it (by all means, require customers to sign a form saying they understand it's an unlicensed service and they could lose all their money.)
  - qntm 15y ago
    Well, losing all your customers' money is certainly an innovative way to run a bank.
- yock 15y ago
  > I really don't see a problem here. I tend to agree. Surety bonds have been effective for a long time to ensure completion of services in case of fraud or failure on the part of a contractor or service provider. States have been requiring surety bonds for many kinds of licensed professions for years, building contractors being a big one.
- lutorm 15y ago
  I'm not saying the idea is totally pointless, but the $500k needed regardless of the scale of the business seems a bit excessive. Maybe there should be a sliding scale, so that if your transaction volume is $10k, you need a bond for $10k, etc, up to a ceiling? That would at least make it possible to start out testing whether it works without dumping a huge amount of cash.
  - tptacek 15y ago
    It does scale with transaction volume, but the floor is $500k. But it's explicitly payable via a surety bond, which works like insurance; applicants with good credit history might pay just a few thousand dollars to get one. There is also a class of money transfer company ("A licensee that engages in receiving money for transmission") that only needs a $250k bond.
- handrake 15y ago
  I completely agree to this. PayPal somehow has been evading this problem for a decade but finally the government is stepping in to square away this mess. How many horror stories have we heard about PayPal locking up people's accounts for no good reasons?
- Goronmon 15y ago
  But does PayPal getting a license mean that their actions towards customers have to change? Or do they just have to pony up some dollar amount to continue screwing their customers in the same way they always have?
- scscsc 15y ago
  Here is the problem: PayPal was born in the US. Among other things, probably because it was easier for them to do business there. PayPal couldn't have been concieved in Europe.
robflynn 15y ago
How does this affect SaaS billing companies such as Chargify, Spreedly, Recurly, et. al. since they're merely passing along information to a gateway? I assume not at all, if I understand what I am reading. What about something like Stripe? It sounds like they may be affected? This does not sound particularly fun or exciting.
- thinkcomp 15y ago
  Credit and debit cards are issued by banks and banks are exempt from money transmission laws. This is why you see most startups gravitating toward niche markets that revolve around the existing infrastructure, but those niches are becoming awfully narrow. In contrast, I contend that the system itself is flawed and needs to be replaced.
  - robflynn 15y ago
    Ah, thank you for explaining that to me. I some how missed that from reading the link. Though, it was quite verbose and I am, admittedly, partially into a celebratory post-coding-session bottle of wine. I agree. The system most definitely appears to be flawed. Isn't Paypal forced to operate as a bank in Europe as opposed to the way they exist in the U.S.?
    - technotony 15y ago
      Yes, Paypal is a bank in Europe. They have a bank license in Luxemburg and have devised some pretty nifty technique's for porting that around the rest of the EU.
    - chokma 15y ago
      Yes, Paypal operates with a Luxembourg banking license in Europe (http://en.wikipedia.org/wiki/PayPal#Bank_status http://en.wikipedia.org/wiki/PayPal#Bank_status ). Note that banking in Europe is in part regulated by national law of the member states. To operate as a bank in Germany, you need not only 0,5-5 million € as starting capital (depending on the type of financial transactions you are getting into), but you also need two reliable* executive managers who have at least three years experience leading a bank of the intended size (or similar experience). Thus, the barrier to entry is rather high in Europe, too. But after that, if you get big enough, the tax payers will pay all your bills, like in the US. * no criminal record and no other facts known that would cast doubt on their trustworthiness.
stephenr 15y ago
They want companies that operate like banks, such as PayPal, to be licensed. I'm not sure I see the downside. PayPal has a shocking record of abusing it's customers, and it can only do so because it isn't bound by the same laws as banks are. Personally, I think if you rely on PayPal/etc for your business, you're asking to get financially raped.
- thinkcomp 15y ago
  If they wanted companies to be licensed they could just require a license. Instead they require a license and a bond worth millions of dollars in some cases, nominally to protect consumers. Yet if you have a million consumers in a state and a $1,000,000 bond, that means that if the company defaults, each consumer gets back a dollar. This doesn't sound like consumer protection to me. It sounds like an artificial barrier to entry. Also, PayPal has had licenses in all states that require them since its IPO, and clearly there's no connection between this issue and customer service.
  - pyre 15y ago
    Well, there is a (flawed) line of reasoning that says that if you can come up with $1M then you must be more trustworthy than someone that can't.
    - deleted 15y ago
      [deleted]
    - zackattack 15y ago
      I don't think it's that flawed. Would you elaborate?
      - pyre 15y ago
        Trustworthiness is not tied to money, the ability to make large sums of money, or the ability to convince others to loan you money/invest in you.
foobarbazetc 15y ago
Boohoo, cry PayPal a river. In most countries outside the US, PayPal is regulated like a bank. This means PayPal can't just lay claim to your money and never give it back to you.
- hessenwolf 15y ago
  They can, however, (and arguably should) put a hold on your account if they suspect fraud.
- rrc 15y ago
  Actually, I wouldn't be surprised if PayPal supported the law. Many regulations protect large, established players by raising the cost of entry for new market participants. PayPal can afford to post this bond, but many bootstrapped start-ups probably can't. This is just one of the ways regulation _can_ increase the price of products and services; they decrease competition, allowing established players to raise prices.
- SwellJoe 15y ago
  Boohoo, cry PayPal a river. I don't understand what this has to do with PayPal. PayPal is large enough to easily jump through whatever hoops are required to keep doing business. This is a problem for new companies, that would compete with PayPal.
daimyoyo 15y ago
So is paypal going to shut down after this goes into effect?
- robflynn 15y ago
  I don't think they'll go anywhere. I assume they can easily afford any cost involved. I wouldn't be surprised if they already have the licenses while existing as a non-bank.
  - deleted 15y ago
    [deleted]
waterlesscloud 15y ago
What does this mean for systems like Facebook Credits?
- technotony 15y ago
  Nothing. Facebook credits are not a money transfer system, it's whats known as a 'closed loop' system. If they opened it up so that anyone can take a payment with a facebook credit and receive dollars then they would start to fall under the money transfer arrangements and would require these restrictions. I don't think $500k is much of a barrier to them getting into this business however...
  - _delirium 15y ago
    Can't anyone build a Facebook app that takes payment in Facebook credits, and then cash out that payment into dollars?
    - deleted 15y ago
      [deleted]
vgurgov 15y ago
so what if my company uses paypal to process payments and send payouts to users? do i have to care about this stuff or its just paypal's headache now?
hristov 15y ago
In the interest of correctness I should point out that the half a million fee is not a fee but a bond. The state does not take it but it is kept in a trust for people that may be injured by the particular money transmission business that gets a license. Thus, if a money transmission business steals someone's money you can sue them and when you win you can take your money from the 500,000 bond so you are sure they will not run out on you. I am not sure whether it is a good law (I have not done enough research to figure that out), but I just wanted to clarify. The quora post made it look like the state was just greedy and taking all the money for themselves.
- thinkcomp 15y ago
  It can be a bond or a cash payment, but either way, the money is locked up and not available to use for operations, or gone.
  - chalst 15y ago
    It will feature on your balance sheet as an asset, though.
    - ataggart 15y ago
      Which, if true, only further demonstrates the nonsense that is modern accounting practice.
      - tptacek 15y ago
        Huh? Why? It's your money. If you wind down your business and settle all your outstanding transactions --- which, if you're honest, you should be able to do --- the state hands it right back to you. Not only that, but you get to collect the interest on the money. It's a bond, not a fee. Why wouldn't it be listed among your assets? It's part of the liquidation value of your business!
        AntiVigilante 15y ago
hessenwolf 15y ago
Can't I just live as a shareholder in silicon valley, basing my limited company and shill directors in Alabama, and leasing the limited company software produced by my other company in California? Requirements: 2 limited companies. Licensing agreement. Alabama-based Non-executive directors (cousin Ed and Chuck).
- tptacek 15y ago
  Then your other company in California have to post the bond. The software has nothing to do with it.
  - hessenwolf 15y ago
    The company in California produces software components. It is not involved in any financial transmissions whatsoever. That is my point.
    - tptacek 15y ago
      Then as long as you don't transfer money in California, you're fine. If you do, you need a license. Note the part of the law that refers to the travel costs incurred to get an inspector to whatever part of the country you domicile the business-end of your business in.
gokka 15y ago
Here goes one more reason to use Bitcoin, that's where the real innovation is.
- technotony 15y ago
  Bitcoin is operating in a legally very grey area, you can bet your bottom-dollar that as soon as they get real traction laws like this are going to come down on the ecosystem extremely fast.
  - dublinclontarf 15y ago
    Im quite sure most of what Bitcoin is used for is already illegal, but that doesn't mean anything. It's just being used for what people have always done, this is the government outlawing perfectly normal things. Thanks to bitcoin (and it's growing network of services that operate from cypherspace) we nolonger have to dance to the governments tune.
    - Groxx 15y ago
      I'm sure similar claims can be made for Linden dollars, which have been used for far more transactions over the years than Bitcoin has. Why single out Bitcoin? Because it's new?
      - gokka 15y ago
        Bitcoin is much more powerful then Linden dollars, Egold etc. because it allows transactions online, anonymously, and has no central authority. No other payment method has ever had all three of these characteristics.
        Groxx 15y ago
        No? I can create an anonymous Second Life character at any time, linked only to my account info (an email - Mailinator solves that). I can build something in-game and sell it, creating money with no person bound to it. Or be given money in-game for a real-world purchase, leaving me with money that still has no connection with me. There's barely a central authority, as there's nothing stopping you from passing money around in-game, which would be the major barrier to illegal trading. And what is there is rather impotent, as everything can be done just as anonymously as in Bitcoin - they can get your IP address, but only if they're watching, and that's far from an identification. Just go to a coffee shop. Bitcoin just makes it easier, and fault/attack-tolerant. It's been possible for quite a while. Though perhaps the most useful aspect to this is that transactions aren't revokable, where they are in nearly any other non-physical system.
dublinclontarf 15y ago
And so we have one more reason to use Bitcoin.
- lutorm 15y ago
  ... whose exchange rate against the dollar has gone up by a factor of 6 over the past weeks? If you had any debt nominated in Bitcoin, you'd be screwed.
  - endian 15y ago
    ...which is why you should define debts in terms of some weighted (USD, EUR, Gold, BTC, ...) currency basket and then pay in Bitcoin using its "exchange rate" at that time. One option: a volume-adjusted average of MtGox.com trades over the last K hours Another: use 0.001 of the amount to buy options to convert X Bitcoin into the agreed upon amount of (USD, ...). Market-making HFT bots will compete, making X the most fair amount. All this complexity could be handled by user-friendly software...
    - drivebyacct2 15y ago
      But then you're effectively pinning the value, or debt value of BitCoin on the USD. I think that is counter to the idea of Bitcoin.
  - jeffb 15y ago
    You wouldn't be screwed if your business operates in Bitcoins, and your customers pay you in Bitcoins. If you take out a loan for 100 Bitcoins, you will still owe 100 Bitcoins, regardless of the USD exchange rate. If you aren't dealing in USD, it doesn't matter how much value the USD loses. Similarly, if you had debt denominated in USD, it wouldn't matter how much value the Zimbabwe Dollar or Weimar Republic Mark lost in hyperinflation. Your debt burden would be the same amount of USD. It just depends on your frame of reference.
    - tzs 15y ago
      > You wouldn't be screwed if your business operates in Bitcoins, and your customers pay you in Bitcoins. At some point, you need actual money to do things like pay taxes. Last I checked, no government accepts Bitcoins for this.
wyuenho 15y ago
I wonder how BankSimple is doing now.
- kelnos 15y ago
  Probably just fine; I'm sure they had to apply for a regular banking license anyway, and banks are exempt from money-transmission regulations.
  - shimonamit 15y ago
    I'm not sure about that. From their website: However, BankSimple is not a "bank." We partner with chartered banks who provide FDIC-insured products, leaving us free to concentrate on designing the complete consumer banking experience, via the web and your smartphone. What implications this has on their regulatory requirements, whether banking or money transfering, would be interesting to discover.
    - gyardley 15y ago
      Yep, BankSimple doesn't have to apply for a regular banking license because they don't hold the actual deposits. (See SmartyPig for an example of a startup in the market that uses the same 'we don't hold the deposits' strategy.) Piggybacking off of someone else's banking license isn't trivial, but it beats the delays and capital requirements associated with starting a bank. Of course, they still have to deal with all the internal industry regulations in order to offer things like ATM cards that work across ATM networks. Those aren't regulatory requirements, but when you're dealing with VISA-size entities they might as well be.
xnerdr 15y ago
If you run a node on Bitcoin, aren't you technically a payment processor? I wouldn't be surprised if this is step 1 of a 3 step plan on Bitcoin takedown. Clever too I might add, so props to whoever came up with it.
Groxx 15y ago
>Oh, and if you want to do business nationwide, you'll need 43 more of those licenses from almost every state. Does this mean California is just another state in a long line of similar laws? Or is there something unique about California's situation in this aside from it containing Silicon Valley?
- bad_user 15y ago
  California is also the home of many tech-savvy people that buy stuff online ... if you can't get a license to operate in California and maybe New York, you may as well not exist.
jrockway 15y ago
Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas rather than potential downsides, so the government has stepped in to prevent the downsides from being too bad. In this case, the government is saying, "make any new innovative money transmission system you want, but keep $100,000 in an account so when you fuck up someone's paycheck, they can sue you and you can pay the damages you owe." Not too unreasonable. Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.
- potatolicious 15y ago
  I wouldn't go as far as to say all regulation stifles innovation. A completely unregulated market may very well stifle innovation also - i.e., when consumer trust of that market is so low as to discourage economic activity. That is a rather extreme case, though. I think the more relevant point is that all regulations have overhead - even ones that don't charge a $500K bond. This is something governments sometimes seem to forget. No matter how innocuous your regulation, every single one simply adds to the pile of overhead businesses must deal with, and every single regulation contributes towards preventing more businesses from competing in the market. The balance of regulation is a tough line to walk, to be sure.
  - dpatru 15y ago
    An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment. The difference between non-coercive (private) entities and government is that non-coercive entities adapt better. So, for example, if you're planning to transfer billions over many years with one bank, you'd want the bank to have all kinds of security. But if you just want a quick, cheap way to transfer 25 cents in a micro payment over the web, you probably don't care if the startup "bank" you use has a $500K bond.
braindead_in 15y ago
What does this mean for freelancing sites? Or for services like AdSense where credit accumulates in a user's account till it's withdrawn? Do they have to get a license too?
yoyar 15y ago
So, a new startup comes along, and things are going well. The have new, innovative ideas that satisfy the needs of consumers. They manage to get a few hundred thousand dollars from a VC so that they keep operating for another 6 months. This startup offers a service that is cheaper, safer, quicker and generally more efficient that what is currently available. All of a sudden they'll be breaking the law unless they hand over half a million to the government. They can't find the money. They're done. You never hear about it. Other new companies that might have added value in the marketplace come along, look at the regulatory hurdles, and don't even try. They might have provided a service that would be beneficial to the consumer and they might have hired a bunch of programmers once they had established themselves. The established companies already in the market would have had to lower prices and become more efficient to compete. Instead, the competition is crushed, you never hear about it, never know about it. This is what this law is designed to accomplish. Nothing to do with Paypal. Stop talking about Paypal. Many regulations serve the interests of politically well connected powerful oligopolies in this way. This is just one example. The reason put forward is always that this is some way of protecting you. That, if this regulation didn't exist, these companies wouldn't have to be responsible. In reality, it strengthens the hold on the marketplace of the oligopoly already in place and makes you more vulnerable to them. Keeping companies out of the marketplace stifles competition. This is not good for you, the consumer.
- daniel_solano 15y ago
  I generally agree. What most people often don't realise is that a lot of regulations that are allegedly in place to protect to consumer are actually there to prevent established interests. This is particularly true of licensing. The standards for licensing and the like are often co-opted by the industry/profession being licensed. As such, they use licensing to raise the barrier to entry, effectively limiting competition. One example that comes to mind is that the aestheticians in Texas at one point were fighting to require people that do threading to get a license. I believe said license would require thousands of dollars and hundreds of hours to obtain. Ultimately, there was absolutely nothing about threading the license at all. I am not sure if this law was ever passed, but it is merely on example of licensing works in practice to hurt competition, raise prices, and hurt the consumer.
- 15y ago
gyardley 15y ago
Reminds me of mortgage lead generation. If you want to take people's names and then pass them on to mortgage brokers, LowerMyBills style, you have to register as a mortgage broker in almost all fifty states. Requirements vary widely from state-to-state but included obnoxious things like high fees, local residency requirements, and annual written tests. The end result - mortgage lead generation didn't stop, but it became something that was difficult to legally bootstrap. You needed one hell of a GC, and he needed to have experience. Venture-backed companies had a big advantage in the space. As long as the rewards are high enough, I suspect the same will be true here. Nothing great, but not the apocalypse.
rbanffy 15y ago
You know... If you look like a bank, walk like a bank and quack like a bank, you should obey the same regulations banks do. Some laws exist to protect the establishment. Others exist to protect society from it. I am not sure where this one sits.
marknutter 15y ago
Who is John Galt?
- eropple 15y ago
  Some obnoxious bint beloved by people who clamor to be his oppressed, destitute underclass. (What's that? They all think that they'll be him? Statistics would like to have a word, folks.)
nextparadigms 15y ago
Can this affect Bitcoin, and if so, how?
hnsmurf 15y ago
Every company in Silicon Valley is actually a Delaware corp anyway..
- hnsmurf 15y ago
  I think it's a relevant distinction. Clearly the California company doesn't apply to all corporations in the world or even country. The point is there's likely a loophole that for an interstate or international software corporation will render the regulation toothless.
- r00fus 15y ago
  Every company doing business in California needs to have a license to operate here (and obey State laws). No easy loopholes here. Companies mainly choose Delaware because Delaware is efficient and well-known for processing of paperwork and legal matters.
rglover 15y ago
A bit of a red scare here. All the time I was reading I was led to assume that companies like PayPal and Square (imperative mechanisms for freelance these days) were to be affected, ultimately though, this was dismissed toward the end. I can understand the frustration here, but like a lot of people are saying, those are the rules. Also, for the FaceCash folks, if you intend to disrupt the financial industry in any fashion (in this case circumventing traditional forms of cash transfer) you should be ready for a significant amount of red tape and "fuck you."
- thinkcomp 15y ago
  We're ready for it, but that doesn't mean we have to take it.
adrianwaj 15y ago
What's the jurisdiction? Some freshly made illegal company can operate to California residents and be located outside of it (even the USA.) Are they going to block the website to California residents?
tzs 15y ago
His argument makes no sense. He says that 43 other states have such regulations, so that if you want to do business nationally you have to get licensed in each, at costs ranging from less than California's new cost to more than California's new cost. So what is the significance of California making it 44 states? I doubt a new payment system that only works in a handful of states has much of a chance, so if regulation kills payment innovation it would have have been killed long ago, when the majority of other states adopted regulation.
- JoshTriplett 15y ago
  The difference: if you start a business in California, you have to care about California law, and federal law, but not necessarily any other states' laws. Similarly, Internet businesses don't legally have to collect sales taxes for states other than their home state (and most don't make the mistake of putting their HQ in a state with sales taxes), though various states have attempted to (illegally) claim otherwise.
ChuckMcM 15y ago
While I agree with other commentators that the prose is a bit over the top, its an interesting move on the part of financial interests. (there was a great report in the Murky News that special interests are writing the laws [1]) Clearly financial transactions have provided a means for the state to both detect and to a lesser degree mitigate criminal activity. The phrase 'follow the money' works because such activities are at their heart economic in nature (trying to enrich the criminals) and understanding the path to that enrichment often allows law enforcement to disassemble the criminal enterprise behind it. That being said, I would not be the least bit surprised (although I did not read through any floor debate if there was any) if the people who voted for this law did so believing that they were addressing a great threat to society, which is the proliferation of payment processors which are not accountable to the state for tracking or even reporting their transactions in any form. That does cut into 'innovation' as thinkcomp points out but it doesn't preclude it. It changes the conversation from 'build it and see what works' to something more along the lines of a slow plod from idea to implementation while bringing legislators and law enforement along. The bad news is that criminals are motivated to stay ahead of 'the system's abilty to track their money, consumers need a value proposition and a trial period before they switch so adoption rates are probably (not data driven, just intuition here) lower. Perhaps the next innovation is a payment processing company that provides the regulatory shield for innovative sub companies. [1] http://www.mercurynews.com/politics-government/ci_15517816 http://www.mercurynews.com/politics-government/ci_15517816
- tptacek 15y ago
  Does contractor licensing and bonding cut down innovation in contracting? Aren't most contractors firms of less than 10 people? Are there not hundreds of them? How can you defend the argument that a yearly bond premium payment that is less than many companies pay for liability insurance is a serious drag on innovation?
  - ChuckMcM 15y ago
    Hmm, I'm curious how you equate building a contracting business is equivalent to building a new payments system? I agreed that the article's portrayal of the fees as extortionate was hyperbole but agreed that raising the barrier to entry would slow down the creation of new payment systems. If you accept that the rate of innovation is related, at least linearly, to the creation of new companies in a product space, then reducing the creation rate would necessarily reduce the rate of innovation. An alternative look at your question with contractors would be to ask "Has the licensing and bonding requirements cut down on innovation in contracting business models?" I don't know how to answer that question without first removing the licensing and bonding requirement and then observing the resulting market. It certainly mitigates crime in the contracting market to some extent by making it more difficult for a criminal to pass themselves off as a bonafide contractor. But the current state of affairs don't say about whether or not the contracting market would be more innovative without those restrictions.
truthtechnician 15y ago
Today I learned Hacker News is filled with libertarian ideologues. It's amazing that people who pride themselves in critical thinking and problem solving (hackers), can actually be so naive as to believe this nihilistic Ann Rand crap. HN is starting to look more like Reddit every day.
- evgen 15y ago
  HN has always had its share of libertarian partisans, some who were reasonably cogent and some who drank the Randian kool-aid and did not notice when it dissolved their brain. The difference is that on HN you will see a lot more pushback from people who are not going to let the second class of ideologues get a free pass on their BS (e.g. the responses to various "just let the market sort it out" tropes being dragged out by the usual suspects.) On Reddit the moderates would be downvoted into oblivion and this discussion would have turned into a libertarian circle-jerk within fifteen minutes.
AntiVigilante 15y ago
no bitcoins in CA

406 points by thinkcomp 15y ago

pilif 15y ago

Here in Europe, PayPal (which is acting like a bank) had to get a banking license (like any other bank). As far as I know they didn't go bankrupt yet, so it can't be a wholly bad thing. If I drive a vehicle that acts like a car, I need a drivers license. If I run a service that acts like a bank I need a banking license. I really don't see a problem here.

tluyben2 15y ago
They are talking innovation; sure Paypal can get licenses like that, but a startup can't. Most (by far) startups don't have 500k to lock away. And most don't have the money to pay the license fees. So yes, it's an issue as far as innovation of payment services goes; now suddenly you NEED to get millions in investment and that all doesn't go into the product but instead into government crap.
- mattmanser 15y ago
  And most startups don't go into banking. Seriously, if you're going into that kind of business you should have that kind of money behind you.
  - dpatru 15y ago
    Why is banking (specifically money transfering) different than other kinds of business? Seems to me that money transfer is a particularly easy business for the market to regulate. A failed money transfer is a lot easier to spot than, say, a dangerously defective physical product.
    - mattmanser 15y ago
      A fraudulent one isn't though. You're also dealing with especially sensitive data, life ruining data if it gets into the wrong hands.
    - deleted 15y ago
      [deleted]
  - 18pfsmt 15y ago
    You realize Google Checkout is often lamented on HN because it doesn't operate in many European countries? It is exactly for these reasons. Much like copyright laws are abused for business protection, so are regulations. Certainly within the US it would be better to have a federal license framework in order to minimize friction.
    - mattmanser 15y ago
      What, that Google doesn't have money to put up bonds or buy the necessary expertise? I don't get your point. More likely it's Yet Another Google Product They Can't Be Bothered To Finish (TM).
      - 18pfsmt 15y ago
        It's not about having enough money, but whether it is financially worth it. It's an ROI calculation that involves navigating several regulating bodies with what appears to be minimal payback. It certainly isn't a technical limitation.
        tptacek 15y ago
        If money transfer isn't lucrative, it seems weird to blame regulations for the fact that Google isn't staying involved with it.
- acabal 15y ago
  If your revolutionary banking startup can't dredge up $500k in the land where Color managed to get away with $41 million, then your banking startup probably isn't such a good idea to begin with.
cabalamat 15y ago
> I really don't see a problem here. I do: it prevents innovation. People should be allowed to run an unlicensed banking service, and customers should be allowed to accept the risks that go with it (by all means, require customers to sign a form saying they understand it's an unlicensed service and they could lose all their money.)
- qntm 15y ago
  Well, losing all your customers' money is certainly an innovative way to run a bank.
yock 15y ago
> I really don't see a problem here. I tend to agree. Surety bonds have been effective for a long time to ensure completion of services in case of fraud or failure on the part of a contractor or service provider. States have been requiring surety bonds for many kinds of licensed professions for years, building contractors being a big one.
lutorm 15y ago
I'm not saying the idea is totally pointless, but the $500k needed regardless of the scale of the business seems a bit excessive. Maybe there should be a sliding scale, so that if your transaction volume is $10k, you need a bond for $10k, etc, up to a ceiling? That would at least make it possible to start out testing whether it works without dumping a huge amount of cash.
- tptacek 15y ago
  It does scale with transaction volume, but the floor is $500k. But it's explicitly payable via a surety bond, which works like insurance; applicants with good credit history might pay just a few thousand dollars to get one. There is also a class of money transfer company ("A licensee that engages in receiving money for transmission") that only needs a $250k bond.
handrake 15y ago
I completely agree to this. PayPal somehow has been evading this problem for a decade but finally the government is stepping in to square away this mess. How many horror stories have we heard about PayPal locking up people's accounts for no good reasons?
Goronmon 15y ago
But does PayPal getting a license mean that their actions towards customers have to change? Or do they just have to pony up some dollar amount to continue screwing their customers in the same way they always have?
scscsc 15y ago
Here is the problem: PayPal was born in the US. Among other things, probably because it was easier for them to do business there. PayPal couldn't have been concieved in Europe.

robflynn 15y ago

How does this affect SaaS billing companies such as Chargify, Spreedly, Recurly, et. al. since they're merely passing along information to a gateway? I assume not at all, if I understand what I am reading. What about something like Stripe? It sounds like they may be affected? This does not sound particularly fun or exciting.

thinkcomp 15y ago
Credit and debit cards are issued by banks and banks are exempt from money transmission laws. This is why you see most startups gravitating toward niche markets that revolve around the existing infrastructure, but those niches are becoming awfully narrow. In contrast, I contend that the system itself is flawed and needs to be replaced.
- robflynn 15y ago
  Ah, thank you for explaining that to me. I some how missed that from reading the link. Though, it was quite verbose and I am, admittedly, partially into a celebratory post-coding-session bottle of wine. I agree. The system most definitely appears to be flawed. Isn't Paypal forced to operate as a bank in Europe as opposed to the way they exist in the U.S.?
  - technotony 15y ago
    Yes, Paypal is a bank in Europe. They have a bank license in Luxemburg and have devised some pretty nifty technique's for porting that around the rest of the EU.
  - chokma 15y ago
    Yes, Paypal operates with a Luxembourg banking license in Europe (http://en.wikipedia.org/wiki/PayPal#Bank_status http://en.wikipedia.org/wiki/PayPal#Bank_status ). Note that banking in Europe is in part regulated by national law of the member states. To operate as a bank in Germany, you need not only 0,5-5 million € as starting capital (depending on the type of financial transactions you are getting into), but you also need two reliable* executive managers who have at least three years experience leading a bank of the intended size (or similar experience). Thus, the barrier to entry is rather high in Europe, too. But after that, if you get big enough, the tax payers will pay all your bills, like in the US. * no criminal record and no other facts known that would cast doubt on their trustworthiness.

stephenr 15y ago

They want companies that operate like banks, such as PayPal, to be licensed. I'm not sure I see the downside. PayPal has a shocking record of abusing it's customers, and it can only do so because it isn't bound by the same laws as banks are. Personally, I think if you rely on PayPal/etc for your business, you're asking to get financially raped.

thinkcomp 15y ago
If they wanted companies to be licensed they could just require a license. Instead they require a license and a bond worth millions of dollars in some cases, nominally to protect consumers. Yet if you have a million consumers in a state and a $1,000,000 bond, that means that if the company defaults, each consumer gets back a dollar. This doesn't sound like consumer protection to me. It sounds like an artificial barrier to entry. Also, PayPal has had licenses in all states that require them since its IPO, and clearly there's no connection between this issue and customer service.
- pyre 15y ago
  Well, there is a (flawed) line of reasoning that says that if you can come up with $1M then you must be more trustworthy than someone that can't.
  - deleted 15y ago
    [deleted]
  - zackattack 15y ago
    I don't think it's that flawed. Would you elaborate?
    - pyre 15y ago
      Trustworthiness is not tied to money, the ability to make large sums of money, or the ability to convince others to loan you money/invest in you.

foobarbazetc 15y ago

Boohoo, cry PayPal a river. In most countries outside the US, PayPal is regulated like a bank. This means PayPal can't just lay claim to your money and never give it back to you.

hessenwolf 15y ago
They can, however, (and arguably should) put a hold on your account if they suspect fraud.
rrc 15y ago
Actually, I wouldn't be surprised if PayPal supported the law. Many regulations protect large, established players by raising the cost of entry for new market participants. PayPal can afford to post this bond, but many bootstrapped start-ups probably can't. This is just one of the ways regulation _can_ increase the price of products and services; they decrease competition, allowing established players to raise prices.
SwellJoe 15y ago
Boohoo, cry PayPal a river. I don't understand what this has to do with PayPal. PayPal is large enough to easily jump through whatever hoops are required to keep doing business. This is a problem for new companies, that would compete with PayPal.

daimyoyo 15y ago

So is paypal going to shut down after this goes into effect?

robflynn 15y ago
I don't think they'll go anywhere. I assume they can easily afford any cost involved. I wouldn't be surprised if they already have the licenses while existing as a non-bank.
- deleted 15y ago
  [deleted]

waterlesscloud 15y ago

What does this mean for systems like Facebook Credits?

technotony 15y ago
Nothing. Facebook credits are not a money transfer system, it's whats known as a 'closed loop' system. If they opened it up so that anyone can take a payment with a facebook credit and receive dollars then they would start to fall under the money transfer arrangements and would require these restrictions. I don't think $500k is much of a barrier to them getting into this business however...
- _delirium 15y ago
  Can't anyone build a Facebook app that takes payment in Facebook credits, and then cash out that payment into dollars?
  - deleted 15y ago
    [deleted]

vgurgov 15y ago

so what if my company uses paypal to process payments and send payouts to users? do i have to care about this stuff or its just paypal's headache now?

hristov 15y ago

In the interest of correctness I should point out that the half a million fee is not a fee but a bond. The state does not take it but it is kept in a trust for people that may be injured by the particular money transmission business that gets a license. Thus, if a money transmission business steals someone's money you can sue them and when you win you can take your money from the 500,000 bond so you are sure they will not run out on you. I am not sure whether it is a good law (I have not done enough research to figure that out), but I just wanted to clarify. The quora post made it look like the state was just greedy and taking all the money for themselves.

thinkcomp 15y ago
It can be a bond or a cash payment, but either way, the money is locked up and not available to use for operations, or gone.
- chalst 15y ago
  It will feature on your balance sheet as an asset, though.
  - ataggart 15y ago
    Which, if true, only further demonstrates the nonsense that is modern accounting practice.
    - tptacek 15y ago
      Huh? Why? It's your money. If you wind down your business and settle all your outstanding transactions --- which, if you're honest, you should be able to do --- the state hands it right back to you. Not only that, but you get to collect the interest on the money. It's a bond, not a fee. Why wouldn't it be listed among your assets? It's part of the liquidation value of your business!
      - AntiVigilante 15y ago

hessenwolf 15y ago

Can't I just live as a shareholder in silicon valley, basing my limited company and shill directors in Alabama, and leasing the limited company software produced by my other company in California? Requirements: 2 limited companies. Licensing agreement. Alabama-based Non-executive directors (cousin Ed and Chuck).

tptacek 15y ago
Then your other company in California have to post the bond. The software has nothing to do with it.
- hessenwolf 15y ago
  The company in California produces software components. It is not involved in any financial transmissions whatsoever. That is my point.
  - tptacek 15y ago
    Then as long as you don't transfer money in California, you're fine. If you do, you need a license. Note the part of the law that refers to the travel costs incurred to get an inspector to whatever part of the country you domicile the business-end of your business in.

gokka 15y ago

Here goes one more reason to use Bitcoin, that's where the real innovation is.

technotony 15y ago
Bitcoin is operating in a legally very grey area, you can bet your bottom-dollar that as soon as they get real traction laws like this are going to come down on the ecosystem extremely fast.
- dublinclontarf 15y ago
  Im quite sure most of what Bitcoin is used for is already illegal, but that doesn't mean anything. It's just being used for what people have always done, this is the government outlawing perfectly normal things. Thanks to bitcoin (and it's growing network of services that operate from cypherspace) we nolonger have to dance to the governments tune.
  - Groxx 15y ago
    I'm sure similar claims can be made for Linden dollars, which have been used for far more transactions over the years than Bitcoin has. Why single out Bitcoin? Because it's new?
    - gokka 15y ago
      Bitcoin is much more powerful then Linden dollars, Egold etc. because it allows transactions online, anonymously, and has no central authority. No other payment method has ever had all three of these characteristics.
      - Groxx 15y ago
        No? I can create an anonymous Second Life character at any time, linked only to my account info (an email - Mailinator solves that). I can build something in-game and sell it, creating money with no person bound to it. Or be given money in-game for a real-world purchase, leaving me with money that still has no connection with me. There's barely a central authority, as there's nothing stopping you from passing money around in-game, which would be the major barrier to illegal trading. And what is there is rather impotent, as everything can be done just as anonymously as in Bitcoin - they can get your IP address, but only if they're watching, and that's far from an identification. Just go to a coffee shop. Bitcoin just makes it easier, and fault/attack-tolerant. It's been possible for quite a while. Though perhaps the most useful aspect to this is that transactions aren't revokable, where they are in nearly any other non-physical system.

dublinclontarf 15y ago

And so we have one more reason to use Bitcoin.

lutorm 15y ago
... whose exchange rate against the dollar has gone up by a factor of 6 over the past weeks? If you had any debt nominated in Bitcoin, you'd be screwed.
- endian 15y ago
  ...which is why you should define debts in terms of some weighted (USD, EUR, Gold, BTC, ...) currency basket and then pay in Bitcoin using its "exchange rate" at that time. One option: a volume-adjusted average of MtGox.com trades over the last K hours Another: use 0.001 of the amount to buy options to convert X Bitcoin into the agreed upon amount of (USD, ...). Market-making HFT bots will compete, making X the most fair amount. All this complexity could be handled by user-friendly software...
  - drivebyacct2 15y ago
    But then you're effectively pinning the value, or debt value of BitCoin on the USD. I think that is counter to the idea of Bitcoin.
- jeffb 15y ago
  You wouldn't be screwed if your business operates in Bitcoins, and your customers pay you in Bitcoins. If you take out a loan for 100 Bitcoins, you will still owe 100 Bitcoins, regardless of the USD exchange rate. If you aren't dealing in USD, it doesn't matter how much value the USD loses. Similarly, if you had debt denominated in USD, it wouldn't matter how much value the Zimbabwe Dollar or Weimar Republic Mark lost in hyperinflation. Your debt burden would be the same amount of USD. It just depends on your frame of reference.
  - tzs 15y ago
    > You wouldn't be screwed if your business operates in Bitcoins, and your customers pay you in Bitcoins. At some point, you need actual money to do things like pay taxes. Last I checked, no government accepts Bitcoins for this.

wyuenho 15y ago

I wonder how BankSimple is doing now.

kelnos 15y ago
Probably just fine; I'm sure they had to apply for a regular banking license anyway, and banks are exempt from money-transmission regulations.
- shimonamit 15y ago
  I'm not sure about that. From their website: However, BankSimple is not a "bank." We partner with chartered banks who provide FDIC-insured products, leaving us free to concentrate on designing the complete consumer banking experience, via the web and your smartphone. What implications this has on their regulatory requirements, whether banking or money transfering, would be interesting to discover.
  - gyardley 15y ago
    Yep, BankSimple doesn't have to apply for a regular banking license because they don't hold the actual deposits. (See SmartyPig for an example of a startup in the market that uses the same 'we don't hold the deposits' strategy.) Piggybacking off of someone else's banking license isn't trivial, but it beats the delays and capital requirements associated with starting a bank. Of course, they still have to deal with all the internal industry regulations in order to offer things like ATM cards that work across ATM networks. Those aren't regulatory requirements, but when you're dealing with VISA-size entities they might as well be.

xnerdr 15y ago

If you run a node on Bitcoin, aren't you technically a payment processor? I wouldn't be surprised if this is step 1 of a 3 step plan on Bitcoin takedown. Clever too I might add, so props to whoever came up with it.

Groxx 15y ago

>Oh, and if you want to do business nationwide, you'll need 43 more of those licenses from almost every state. Does this mean California is just another state in a long line of similar laws? Or is there something unique about California's situation in this aside from it containing Silicon Valley?

bad_user 15y ago
California is also the home of many tech-savvy people that buy stuff online ... if you can't get a license to operate in California and maybe New York, you may as well not exist.

jrockway 15y ago

Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas rather than potential downsides, so the government has stepped in to prevent the downsides from being too bad. In this case, the government is saying, "make any new innovative money transmission system you want, but keep $100,000 in an account so when you fuck up someone's paycheck, they can sue you and you can pay the damages you owe." Not too unreasonable. Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.

potatolicious 15y ago
I wouldn't go as far as to say all regulation stifles innovation. A completely unregulated market may very well stifle innovation also - i.e., when consumer trust of that market is so low as to discourage economic activity. That is a rather extreme case, though. I think the more relevant point is that all regulations have overhead - even ones that don't charge a $500K bond. This is something governments sometimes seem to forget. No matter how innocuous your regulation, every single one simply adds to the pile of overhead businesses must deal with, and every single regulation contributes towards preventing more businesses from competing in the market. The balance of regulation is a tough line to walk, to be sure.
- dpatru 15y ago
  An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment. The difference between non-coercive (private) entities and government is that non-coercive entities adapt better. So, for example, if you're planning to transfer billions over many years with one bank, you'd want the bank to have all kinds of security. But if you just want a quick, cheap way to transfer 25 cents in a micro payment over the web, you probably don't care if the startup "bank" you use has a $500K bond.

braindead_in 15y ago

What does this mean for freelancing sites? Or for services like AdSense where credit accumulates in a user's account till it's withdrawn? Do they have to get a license too?

yoyar 15y ago

So, a new startup comes along, and things are going well. The have new, innovative ideas that satisfy the needs of consumers. They manage to get a few hundred thousand dollars from a VC so that they keep operating for another 6 months. This startup offers a service that is cheaper, safer, quicker and generally more efficient that what is currently available. All of a sudden they'll be breaking the law unless they hand over half a million to the government. They can't find the money. They're done. You never hear about it. Other new companies that might have added value in the marketplace come along, look at the regulatory hurdles, and don't even try. They might have provided a service that would be beneficial to the consumer and they might have hired a bunch of programmers once they had established themselves. The established companies already in the market would have had to lower prices and become more efficient to compete. Instead, the competition is crushed, you never hear about it, never know about it. This is what this law is designed to accomplish. Nothing to do with Paypal. Stop talking about Paypal. Many regulations serve the interests of politically well connected powerful oligopolies in this way. This is just one example. The reason put forward is always that this is some way of protecting you. That, if this regulation didn't exist, these companies wouldn't have to be responsible. In reality, it strengthens the hold on the marketplace of the oligopoly already in place and makes you more vulnerable to them. Keeping companies out of the marketplace stifles competition. This is not good for you, the consumer.

daniel_solano 15y ago
I generally agree. What most people often don't realise is that a lot of regulations that are allegedly in place to protect to consumer are actually there to prevent established interests. This is particularly true of licensing. The standards for licensing and the like are often co-opted by the industry/profession being licensed. As such, they use licensing to raise the barrier to entry, effectively limiting competition. One example that comes to mind is that the aestheticians in Texas at one point were fighting to require people that do threading to get a license. I believe said license would require thousands of dollars and hundreds of hours to obtain. Ultimately, there was absolutely nothing about threading the license at all. I am not sure if this law was ever passed, but it is merely on example of licensing works in practice to hurt competition, raise prices, and hurt the consumer.
15y ago

gyardley 15y ago

Reminds me of mortgage lead generation. If you want to take people's names and then pass them on to mortgage brokers, LowerMyBills style, you have to register as a mortgage broker in almost all fifty states. Requirements vary widely from state-to-state but included obnoxious things like high fees, local residency requirements, and annual written tests. The end result - mortgage lead generation didn't stop, but it became something that was difficult to legally bootstrap. You needed one hell of a GC, and he needed to have experience. Venture-backed companies had a big advantage in the space. As long as the rewards are high enough, I suspect the same will be true here. Nothing great, but not the apocalypse.

rbanffy 15y ago

You know... If you look like a bank, walk like a bank and quack like a bank, you should obey the same regulations banks do. Some laws exist to protect the establishment. Others exist to protect society from it. I am not sure where this one sits.

marknutter 15y ago

Who is John Galt?

eropple 15y ago
Some obnoxious bint beloved by people who clamor to be his oppressed, destitute underclass. (What's that? They all think that they'll be him? Statistics would like to have a word, folks.)

nextparadigms 15y ago

Can this affect Bitcoin, and if so, how?

hnsmurf 15y ago

Every company in Silicon Valley is actually a Delaware corp anyway..

hnsmurf 15y ago
I think it's a relevant distinction. Clearly the California company doesn't apply to all corporations in the world or even country. The point is there's likely a loophole that for an interstate or international software corporation will render the regulation toothless.
r00fus 15y ago
Every company doing business in California needs to have a license to operate here (and obey State laws). No easy loopholes here. Companies mainly choose Delaware because Delaware is efficient and well-known for processing of paperwork and legal matters.

rglover 15y ago

A bit of a red scare here. All the time I was reading I was led to assume that companies like PayPal and Square (imperative mechanisms for freelance these days) were to be affected, ultimately though, this was dismissed toward the end. I can understand the frustration here, but like a lot of people are saying, those are the rules. Also, for the FaceCash folks, if you intend to disrupt the financial industry in any fashion (in this case circumventing traditional forms of cash transfer) you should be ready for a significant amount of red tape and "fuck you."

thinkcomp 15y ago
We're ready for it, but that doesn't mean we have to take it.

adrianwaj 15y ago

What's the jurisdiction? Some freshly made illegal company can operate to California residents and be located outside of it (even the USA.) Are they going to block the website to California residents?

tzs 15y ago

His argument makes no sense. He says that 43 other states have such regulations, so that if you want to do business nationally you have to get licensed in each, at costs ranging from less than California's new cost to more than California's new cost. So what is the significance of California making it 44 states? I doubt a new payment system that only works in a handful of states has much of a chance, so if regulation kills payment innovation it would have have been killed long ago, when the majority of other states adopted regulation.

JoshTriplett 15y ago
The difference: if you start a business in California, you have to care about California law, and federal law, but not necessarily any other states' laws. Similarly, Internet businesses don't legally have to collect sales taxes for states other than their home state (and most don't make the mistake of putting their HQ in a state with sales taxes), though various states have attempted to (illegally) claim otherwise.

ChuckMcM 15y ago

While I agree with other commentators that the prose is a bit over the top, its an interesting move on the part of financial interests. (there was a great report in the Murky News that special interests are writing the laws [1]) Clearly financial transactions have provided a means for the state to both detect and to a lesser degree mitigate criminal activity. The phrase 'follow the money' works because such activities are at their heart economic in nature (trying to enrich the criminals) and understanding the path to that enrichment often allows law enforcement to disassemble the criminal enterprise behind it. That being said, I would not be the least bit surprised (although I did not read through any floor debate if there was any) if the people who voted for this law did so believing that they were addressing a great threat to society, which is the proliferation of payment processors which are not accountable to the state for tracking or even reporting their transactions in any form. That does cut into 'innovation' as thinkcomp points out but it doesn't preclude it. It changes the conversation from 'build it and see what works' to something more along the lines of a slow plod from idea to implementation while bringing legislators and law enforement along. The bad news is that criminals are motivated to stay ahead of 'the system's abilty to track their money, consumers need a value proposition and a trial period before they switch so adoption rates are probably (not data driven, just intuition here) lower. Perhaps the next innovation is a payment processing company that provides the regulatory shield for innovative sub companies. [1] http://www.mercurynews.com/politics-government/ci_15517816 http://www.mercurynews.com/politics-government/ci_15517816

tptacek 15y ago
Does contractor licensing and bonding cut down innovation in contracting? Aren't most contractors firms of less than 10 people? Are there not hundreds of them? How can you defend the argument that a yearly bond premium payment that is less than many companies pay for liability insurance is a serious drag on innovation?
- ChuckMcM 15y ago
  Hmm, I'm curious how you equate building a contracting business is equivalent to building a new payments system? I agreed that the article's portrayal of the fees as extortionate was hyperbole but agreed that raising the barrier to entry would slow down the creation of new payment systems. If you accept that the rate of innovation is related, at least linearly, to the creation of new companies in a product space, then reducing the creation rate would necessarily reduce the rate of innovation. An alternative look at your question with contractors would be to ask "Has the licensing and bonding requirements cut down on innovation in contracting business models?" I don't know how to answer that question without first removing the licensing and bonding requirement and then observing the resulting market. It certainly mitigates crime in the contracting market to some extent by making it more difficult for a criminal to pass themselves off as a bonafide contractor. But the current state of affairs don't say about whether or not the contracting market would be more innovative without those restrictions.

truthtechnician 15y ago

Today I learned Hacker News is filled with libertarian ideologues. It's amazing that people who pride themselves in critical thinking and problem solving (hackers), can actually be so naive as to believe this nihilistic Ann Rand crap. HN is starting to look more like Reddit every day.

evgen 15y ago
HN has always had its share of libertarian partisans, some who were reasonably cogent and some who drank the Randian kool-aid and did not notice when it dissolved their brain. The difference is that on HN you will see a lot more pushback from people who are not going to let the second class of ideologues get a free pass on their BS (e.g. the responses to various "just let the market sort it out" tropes being dragged out by the usual suspects.) On Reddit the moderates would be downvoted into oblivion and this discussion would have turned into a libertarian circle-jerk within fifteen minutes.

AntiVigilante 15y ago

no bitcoins in CA