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How? How do you 'crack down' on a currency that doesn't require any existing state or bank controlled apparatus to operate? Other than the exchange point, whic

How? How do you 'crack down' on a currency that doesn't require any existing state or bank controlled apparatus to operate? Other than the exchange point, which private exchanges for cash can circumvent, how do you crack down on what is essentially math conducted via computers that everyone has access to? Neither the article, nor the linked one from December say.

toomuchtodo 6y ago
You (government currency regulators) make it illegal to convert fiat to crypto, and then monitor crypto ledgers for that last bit of folks who still attempt to use crypto. When exchanges break the law, you ship the folks who own the exchange to jail [1]. Crypto folks think they're the former cartoon panel, when it's really the latter how nation state enforcement works [2]. Governments crack down on money laundering with fiat all. the. time. Playing with fiat amounts more than $10k at a time? That's a currency transaction report (CTR) [3]. Try to avoid the CTR? That's structuring [4], also illegal, and a suspicious activity report (SAR) [5] is filed. So, when the question is asked, "how do you crack down on crypto?", the answer is "with the monopoly of force governments possess." [1] https://www.google.com/search?q=crypto+exchange+jail https://www.google.com/search?q=crypto+exchange+jail [2] https://xkcd.com/538/ https://xkcd.com/538/ [3] https://en.wikipedia.org/wiki/Currency_transaction_report https://en.wikipedia.org/wiki/Currency_transaction_report [4] https://en.wikipedia.org/wiki/Structuring https://en.wikipedia.org/wiki/Structuring [5] https://en.wikipedia.org/wiki/Suspicious_activity_report https://en.wikipedia.org/wiki/Suspicious_activity_report
- tinus_hn 6y ago
  If only there were an international, barely regulated network that allows people in one country to interact with people in another.
  - deleted 6y ago
    [deleted]
  - kec 6y ago
    you can't reliably opt-out of laws in the place where you physically reside, especially where money is involved.
    - tinus_hn 6y ago
      You can’t reliably restrict what you can’t see
      - kec 6y ago
        At some point you need to convert your crypto gains back to fiat to actually use it, especially in the hypothetical case where crypto trade is banned locally. The IRS/FBI/etc are not going to arbitrarily constrain themselves when trying to go after folks who do this.
        NaturalPhallacy 6y ago
        >At some point you need to convert your crypto gains back to fiat to actually use it Except you don't. It's a currency. Just because it's hot right now and people are treating it like an investment doesn't change the fact that it's a currency itself. You don't need to convert it to anything. It was literally built to be a currency free from bank/government control. That was the whole point. The sole criterion for the viability of a currency is acceptance in trade. It doesn't require government, bank, or sign off by any authority. If people accept it in trade, it's a currency and it's viable. Just because other, older fiats are more mainstream currently doesn't change that fact one iota.
        yladiz 6y ago
        Okay, sure, let's consider it a currency for the sake of argument. I would posit that if I can't easily exchange my crypto into a form that I can use to pay taxes with, or buy groceries with, that it's a useless currency, and so people will be able to but won't want to accept it in a trade. Currencies aren't useful simply because they _can_ be traded, they're useful because they _can_ be trusted.
- puranjay 6y ago
  All this will do is compel companies to move to crypto friendly countries. China squeezed down on crypto. Chinese exchanges just moved their headquarters to Malta. When you start getting into DAOs and their legal status and everything starts becoming murky. Crypto has truly some of the most exciting developments taking place in the world today at the intersection of art, finance, law and economics. The quality of discussion on HN about crypto is woefully out of touch.
  - 1996 6y ago
    > The quality of discussion on HN about crypto is woefully out of touch. Given most of the comments I read, I'd say HN is aging out - like facebook median age > snapchat > tiktok Now I wonder what the replacement is - it must already exist! We just don't know about it yet.
- bruiseralmighty 6y ago
  I find the whole line of reasoning in the xkcd comic quite amusing when it comes from crypto 'shorters'. Admittedly, I am on the 'long' side when it comes to crypto and decentralization. Suppose your government actually had to act this way in order to crack down on cryptocurrencies. Every prison would have its own Guantanamo bay for torturing private keys out of cryptocurrency users. And this is is portrayed as some kind of win or gotcha in the comic. The non-violent offenders glutting the prison system would sky rocket as judges have to hold people in contempt indefinitely for not giving up private keys(this has already begun happening in the US). "Well you forgot to account for all the knees our liberal democracy would be willing to break!" If that's what it takes then you've already lost. This is the private fantasy of a lot of individuals long on crypto and the broader decentralized trust-less ecosystem. Because the implied threat of force is often a much stronger form of social control than the actual use of force itself; which is expensive, unpopular, and broadly illegal in developed countries. The ideology of this decentralized ecosystem mocks the myth of the benevolent nation-state prosecuting 'criminals' on behalf of its 'citizens'. A nation-state with the power and will to exist in such an ecosystem would be the most cruel and invasive authoritarian regime in human history. Any reasonable person can conclude that it ought not to exist. So I say let the money laundering commence. Or people will leave. Or they wont be allowed to.
rawtxapp 6y ago
You block on/off ramps and lose a lot of important information on these transactions, the people involved and tax revenue, seems like a losing proposition, but definitely doable. You can't stop people from running a software on their computer short of shutting down the whole internet, even then, there are satellites with the blockchain data now, so it'd be really hard.
- iudqnolq 6y ago
  Satellites are the easiest thing to ban. Sure, the govt has the tech to jam/shoot them down, but they're also almost certainly associated with a real person with a real bank account and a real door they can knock on/down depending on their cooperation.
  - rawtxapp 6y ago
    Sure, I guess my point is there will always be some kind of functional messaging in place. If people can communicate any message, they will be able to communicate the blockchain data. Satellites, p2p networks, ham radio, but again, I don't think we'll ever see a global internet shutdown just to shutdown BTC.
    - iudqnolq 6y ago
      I disagree. Take the war on drugs. They can't get rid of them, but they can make everybody sad. And that's the real world, which is harder to intercept.
nrmitchi 6y ago
> Other than the exchange point, which private exchanges for cash can circumvent "private exchanges for cash" (that really would have to happen in person) will never, ever, replace the scale at which an online exchange that can deposit money straight to a bank account will. The goal of a "crackdown" is never to eliminate something 100% (because as you noted, that is impossible).
BitwiseFool 6y ago
Consider that the government doesn't need to attack cryptocurrencies at the source because they already have full control over their own citizenry. There are plenty of things the government could do to coerce citizen compliance. Yes, "illicit" activity will still happen but if the goal was to harshly crackdown on things like Bitcoin they will have succeeded.
Consultant32452 6y ago
Taxes. They make a sacrificial lamb out of a few high profile tax dodgers. All the power structure has to do is convince norms that crypto is scary/dangerous/tax risk and they will have done their work. I think someone else made the torrent analogy. The crackdowns on torrenting were quite successful. They scared the public with some messaging, made a big noise about canceling regular people's internet service, etc. Torrenting has ben kept as a niche instead of mainstream. That's all the power structure needs, it doesn't have to completely kill crypto.

toomuchtodo 6y ago

You (government currency regulators) make it illegal to convert fiat to crypto, and then monitor crypto ledgers for that last bit of folks who still attempt to use crypto. When exchanges break the law, you ship the folks who own the exchange to jail [1]. Crypto folks think they're the former cartoon panel, when it's really the latter how nation state enforcement works [2]. Governments crack down on money laundering with fiat all. the. time. Playing with fiat amounts more than $10k at a time? That's a currency transaction report (CTR) [3]. Try to avoid the CTR? That's structuring [4], also illegal, and a suspicious activity report (SAR) [5] is filed. So, when the question is asked, "how do you crack down on crypto?", the answer is "with the monopoly of force governments possess." [1] https://www.google.com/search?q=crypto+exchange+jail https://www.google.com/search?q=crypto+exchange+jail [2] https://xkcd.com/538/ https://xkcd.com/538/ [3] https://en.wikipedia.org/wiki/Currency_transaction_report https://en.wikipedia.org/wiki/Currency_transaction_report [4] https://en.wikipedia.org/wiki/Structuring https://en.wikipedia.org/wiki/Structuring [5] https://en.wikipedia.org/wiki/Suspicious_activity_report https://en.wikipedia.org/wiki/Suspicious_activity_report

tinus_hn 6y ago
If only there were an international, barely regulated network that allows people in one country to interact with people in another.
- deleted 6y ago
  [deleted]
- kec 6y ago
  you can't reliably opt-out of laws in the place where you physically reside, especially where money is involved.
  - tinus_hn 6y ago
    You can’t reliably restrict what you can’t see
    - kec 6y ago
      At some point you need to convert your crypto gains back to fiat to actually use it, especially in the hypothetical case where crypto trade is banned locally. The IRS/FBI/etc are not going to arbitrarily constrain themselves when trying to go after folks who do this.
      - NaturalPhallacy 6y ago
        >At some point you need to convert your crypto gains back to fiat to actually use it Except you don't. It's a currency. Just because it's hot right now and people are treating it like an investment doesn't change the fact that it's a currency itself. You don't need to convert it to anything. It was literally built to be a currency free from bank/government control. That was the whole point. The sole criterion for the viability of a currency is acceptance in trade. It doesn't require government, bank, or sign off by any authority. If people accept it in trade, it's a currency and it's viable. Just because other, older fiats are more mainstream currently doesn't change that fact one iota.
        yladiz 6y ago
        Okay, sure, let's consider it a currency for the sake of argument. I would posit that if I can't easily exchange my crypto into a form that I can use to pay taxes with, or buy groceries with, that it's a useless currency, and so people will be able to but won't want to accept it in a trade. Currencies aren't useful simply because they _can_ be traded, they're useful because they _can_ be trusted.
puranjay 6y ago
All this will do is compel companies to move to crypto friendly countries. China squeezed down on crypto. Chinese exchanges just moved their headquarters to Malta. When you start getting into DAOs and their legal status and everything starts becoming murky. Crypto has truly some of the most exciting developments taking place in the world today at the intersection of art, finance, law and economics. The quality of discussion on HN about crypto is woefully out of touch.
- 1996 6y ago
  > The quality of discussion on HN about crypto is woefully out of touch. Given most of the comments I read, I'd say HN is aging out - like facebook median age > snapchat > tiktok Now I wonder what the replacement is - it must already exist! We just don't know about it yet.
bruiseralmighty 6y ago
I find the whole line of reasoning in the xkcd comic quite amusing when it comes from crypto 'shorters'. Admittedly, I am on the 'long' side when it comes to crypto and decentralization. Suppose your government actually had to act this way in order to crack down on cryptocurrencies. Every prison would have its own Guantanamo bay for torturing private keys out of cryptocurrency users. And this is is portrayed as some kind of win or gotcha in the comic. The non-violent offenders glutting the prison system would sky rocket as judges have to hold people in contempt indefinitely for not giving up private keys(this has already begun happening in the US). "Well you forgot to account for all the knees our liberal democracy would be willing to break!" If that's what it takes then you've already lost. This is the private fantasy of a lot of individuals long on crypto and the broader decentralized trust-less ecosystem. Because the implied threat of force is often a much stronger form of social control than the actual use of force itself; which is expensive, unpopular, and broadly illegal in developed countries. The ideology of this decentralized ecosystem mocks the myth of the benevolent nation-state prosecuting 'criminals' on behalf of its 'citizens'. A nation-state with the power and will to exist in such an ecosystem would be the most cruel and invasive authoritarian regime in human history. Any reasonable person can conclude that it ought not to exist. So I say let the money laundering commence. Or people will leave. Or they wont be allowed to.

rawtxapp 6y ago

You block on/off ramps and lose a lot of important information on these transactions, the people involved and tax revenue, seems like a losing proposition, but definitely doable. You can't stop people from running a software on their computer short of shutting down the whole internet, even then, there are satellites with the blockchain data now, so it'd be really hard.

iudqnolq 6y ago
Satellites are the easiest thing to ban. Sure, the govt has the tech to jam/shoot them down, but they're also almost certainly associated with a real person with a real bank account and a real door they can knock on/down depending on their cooperation.
- rawtxapp 6y ago
  Sure, I guess my point is there will always be some kind of functional messaging in place. If people can communicate any message, they will be able to communicate the blockchain data. Satellites, p2p networks, ham radio, but again, I don't think we'll ever see a global internet shutdown just to shutdown BTC.
  - iudqnolq 6y ago
    I disagree. Take the war on drugs. They can't get rid of them, but they can make everybody sad. And that's the real world, which is harder to intercept.

nrmitchi 6y ago

> Other than the exchange point, which private exchanges for cash can circumvent "private exchanges for cash" (that really would have to happen in person) will never, ever, replace the scale at which an online exchange that can deposit money straight to a bank account will. The goal of a "crackdown" is never to eliminate something 100% (because as you noted, that is impossible).

BitwiseFool 6y ago

Consider that the government doesn't need to attack cryptocurrencies at the source because they already have full control over their own citizenry. There are plenty of things the government could do to coerce citizen compliance. Yes, "illicit" activity will still happen but if the goal was to harshly crackdown on things like Bitcoin they will have succeeded.

Consultant32452 6y ago

Taxes. They make a sacrificial lamb out of a few high profile tax dodgers. All the power structure has to do is convince norms that crypto is scary/dangerous/tax risk and they will have done their work. I think someone else made the torrent analogy. The crackdowns on torrenting were quite successful. They scared the public with some messaging, made a big noise about canceling regular people's internet service, etc. Torrenting has ben kept as a niche instead of mainstream. That's all the power structure needs, it doesn't have to completely kill crypto.