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One of my biggest fears of cryptocurrency is that the government adopts it and forces businesses and individuals to use it. Everything is taxed automatically an

One of my biggest fears of cryptocurrency is that the government adopts it and forces businesses and individuals to use it. Everything is taxed automatically and all the details are retained forever. Want to sell a bike on Craigslist? Now your income and sales tax are applied automatically. All of your purchase information is now centralized in the hands of the government forever.

6f8986c3 5y ago
Exactly. The whole "anonymous, decentralized, peer-to-peer" thing went out the window a long time ago. Now, Bitcoin is a digital yuan with an infinite history of every purchase made with it (the blockchain). No thanks. At this point, I'm starting to think the only viable alternative, from a medium-of-exchange perspective, is in commodity money -- metals and other materials that possess intrinsic value.
- dumbfoundded 5y ago
  There isn't really only a single viable or perfect system. Each monetary system has different tradeoffs. Commodities work well until liquidity becomes a problem and so governments print fiat commodity-backed currency. Eventually a situation arises and the government needs extra $$$ so they start to inflate the currency and eventually remove the backing once everyone is already using the fiat currency. Credit systems are great for liquidity but have cascading failures once a situation arises requires settling up.
- antonvs 5y ago
  > metals and other materials that possess intrinsic value. What role do you believe intrinsic value plays? Intrinsic value is useful if you're trying to "peg" a currency to some other measure of wealth. But that only works for relatively small markets. Currencies are a representation of wealth in a society. The wealth in a society is necessarily greater than that of any single asset. As such, the value of a currency based on an asset must be surplus to any supposed intrinsic value that asset has. This means intrinsic value serves no direct useful purpose for a currency - at best, it's a secondary consequence of some more important property, such as scarcity.
jonnycomputer 5y ago
Is crypto even necessary for that kind transaction monitoring? I don't think so. Most money is essentially electronic, bits flowing through the financial system. Even for exchanges on craigslist, unless you use cash. But that's such a minuscule part of the economy.
- dumbfoundded 5y ago
  Most money is electronic but also not easily accessible to the government. Transaction records from private companies usually require a warrant or a court order. A crypto-dollar would add a layer under that exposing all information directly to the government. No permission necessary. If you're talking pure financial volume, most of it doesn't concern individuals at all. I'm focused on the privacy rights angle where small cash transactions are absolutely crucial.
- smt88 5y ago
  That ignores cash transactions entirely. You can also cash a check, of course.
lvs 5y ago
Actually, this is probably the principal goal of anti-decentralized projects like China's digital yuan.
deleted 5y ago
[deleted]
yongjik 5y ago
Rest assured, I don't think even the most die-hard Keynesian statists are willing to build five thousand nuclear plants just so that they can track your bike sale. By its own nature, Bitcoin resists government takeover. /s
- blake1 5y ago
  Not sure what the scope of your sarcasm covers. But there is no such person as a “Keynesian statist” outside a crypto subreddit. Only a little part of Keynesianism involves the state, if you take a conventional definition of the theory. The only part that even involves the state isn’t all that controversial: people buying and selling is fine and self supporting, until the buyers don’t want to buy enough to support the sellers, which is the only time the government has to step in a buy stuff. So Keynesians don’t put the state first. And the people who do put the state first don’t like all that buying and selling on the open market. Really disjoint philosophies.
  - rsj_hn 5y ago
    I think you are underselling both modern Keynesian economists and the original writings of Keynes, and not really following these through to their logical conclusion. Specifically, Keynes argued for driving down the rate of interest to zero permanently -- he believed this could be done in a single generation: "On such assumptions I should guess that a properly run community equipped with modern technical resources, of which the population is not increasing rapidly, ought to be able to bring down the marginal efficiency of capital in equilibrium approximately to zero within a single generation; so that we should attain the conditions of a quasi-stationary community where change and progress would result only from changes in technique, taste, population and institutions, with the products of capital selling at a price proportioned to the labour, etc., embodied in them on just the same principles as govern the prices of consumption-goods into which capital-charges enter in an insignificant degree. If I am right in supposing it to be comparatively easy to make capital-goods so abundant that the marginal efficiency of capital is zero, this may be the most sensible way of gradually getting rid of many of the objectionable features of capitalism." - General Theory Chapter 17 If you really follow this thread to its logical conclusion, you see an incredible arrogance and desire for state control that is a lot more than just "stimulating the economy during a recession"
grappler 5y ago
You've made the case for the particular category of cryptocurrencies that encrypt transaction details ('privacy coins').
- endisneigh 5y ago
  I don't see how this could work in the long run. The blockchain is immutable and any encryption at some point in civilization will be broken. All transactions using weaker encryption will be retroactively also broken, no? In other words, to me, it seems like a public transparent blockchain is inevitable, whether you're using encryption or not.
  - grappler 5y ago
    Maybe. I'd assume that the encryption used will improve over time, and there will at least be a lag time between a transaction's creation and the day it is cracked, hopefully many years long. This is pretty much the assumption we make about our web browsing over https (albeit the preservation of those encrypted sessions isn't quite so explicit and overt).
- dumbfoundded 5y ago
  I'd wager a guess that if a crypto-dollar emerges it will be a Monero-like currency with an additional set of private read/write keys controlled by the some set of government agencies. The US government doesn't want everyone having the transaction data. Exclusive access is much valuable than a public ledger.
  - grappler 5y ago
    I think that battle is happening now. This is a good time to push for the kind of digital currencies we want, and against the ones we don't.
    - dumbfoundded 5y ago
      In terms of how we fight, I don't think any existing cryptocurrency community is providing any help. IMO, the way to help is to empower our democracy such that it represents the will of the common person. Getting people to vote and reversing decisions like Citizens United feels much more potent than any current or proposed protocol. A government is simply a corporation with a monopoly on the business of violence. Democracy is unique in that it's a corporation owned by the employees. Let's make it work for us instead of trying to beat or force its hand through tech. That won't work.
techdragon 5y ago
I wouldn’t mind being able to immediately send my tax to them for every purchase in exchange for not having to file tax returns since it was all tracked.
tylerrobinson 5y ago
The Economist published some great coverage about this a couple weeks ago, along with the intersection of players like Stripe and PayPal. Their overall conclusion is that governments have huge incentives to make their own central bank digital currencies (CBDCs). Currencies are a major lever of control that governments use to run their countries. In small countries, foreign currencies like the US dollar are already used widely for their stability and ease in foreign trade. Imagine if this becomes digital with zero friction, and you can see how a country could lose all demand for its currency. Larger countries face a similar dilemma with Bitcoin. If Bitcoin is frictionless and reliable, demand for the dollar could drop in favor of Bitcoin, and again, the US government loses a major source of power. Or worse, imagine the digital yuan becomes the new global standard for trade and storing value among China’s new friends. The Economist’s original coverage also discusses the privacy and tax implications (China already experimented with programmable money that “expired” at a certain time, to make sure it was used for stimulating the economy). They also talk about how CBDCs could end banks, because there would be no reason for a layer between the central bank and individuals, and the impact this would have on lending. Overall a fascinating topic, and I recommend reading their coverage as a high-level broad introduction to a lot of interesting topics.
droobles 5y ago
While a libertarian's nightmare, might make filing taxes a dream! All about perspective.

6f8986c3 5y ago

Exactly. The whole "anonymous, decentralized, peer-to-peer" thing went out the window a long time ago. Now, Bitcoin is a digital yuan with an infinite history of every purchase made with it (the blockchain). No thanks. At this point, I'm starting to think the only viable alternative, from a medium-of-exchange perspective, is in commodity money -- metals and other materials that possess intrinsic value.

dumbfoundded 5y ago
There isn't really only a single viable or perfect system. Each monetary system has different tradeoffs. Commodities work well until liquidity becomes a problem and so governments print fiat commodity-backed currency. Eventually a situation arises and the government needs extra $$$ so they start to inflate the currency and eventually remove the backing once everyone is already using the fiat currency. Credit systems are great for liquidity but have cascading failures once a situation arises requires settling up.
antonvs 5y ago
> metals and other materials that possess intrinsic value. What role do you believe intrinsic value plays? Intrinsic value is useful if you're trying to "peg" a currency to some other measure of wealth. But that only works for relatively small markets. Currencies are a representation of wealth in a society. The wealth in a society is necessarily greater than that of any single asset. As such, the value of a currency based on an asset must be surplus to any supposed intrinsic value that asset has. This means intrinsic value serves no direct useful purpose for a currency - at best, it's a secondary consequence of some more important property, such as scarcity.

jonnycomputer 5y ago

Is crypto even necessary for that kind transaction monitoring? I don't think so. Most money is essentially electronic, bits flowing through the financial system. Even for exchanges on craigslist, unless you use cash. But that's such a minuscule part of the economy.

dumbfoundded 5y ago
Most money is electronic but also not easily accessible to the government. Transaction records from private companies usually require a warrant or a court order. A crypto-dollar would add a layer under that exposing all information directly to the government. No permission necessary. If you're talking pure financial volume, most of it doesn't concern individuals at all. I'm focused on the privacy rights angle where small cash transactions are absolutely crucial.
smt88 5y ago
That ignores cash transactions entirely. You can also cash a check, of course.

lvs 5y ago

Actually, this is probably the principal goal of anti-decentralized projects like China's digital yuan.

deleted 5y ago

[deleted]

yongjik 5y ago

Rest assured, I don't think even the most die-hard Keynesian statists are willing to build five thousand nuclear plants just so that they can track your bike sale. By its own nature, Bitcoin resists government takeover. /s

blake1 5y ago
Not sure what the scope of your sarcasm covers. But there is no such person as a “Keynesian statist” outside a crypto subreddit. Only a little part of Keynesianism involves the state, if you take a conventional definition of the theory. The only part that even involves the state isn’t all that controversial: people buying and selling is fine and self supporting, until the buyers don’t want to buy enough to support the sellers, which is the only time the government has to step in a buy stuff. So Keynesians don’t put the state first. And the people who do put the state first don’t like all that buying and selling on the open market. Really disjoint philosophies.
- rsj_hn 5y ago
  I think you are underselling both modern Keynesian economists and the original writings of Keynes, and not really following these through to their logical conclusion. Specifically, Keynes argued for driving down the rate of interest to zero permanently -- he believed this could be done in a single generation: "On such assumptions I should guess that a properly run community equipped with modern technical resources, of which the population is not increasing rapidly, ought to be able to bring down the marginal efficiency of capital in equilibrium approximately to zero within a single generation; so that we should attain the conditions of a quasi-stationary community where change and progress would result only from changes in technique, taste, population and institutions, with the products of capital selling at a price proportioned to the labour, etc., embodied in them on just the same principles as govern the prices of consumption-goods into which capital-charges enter in an insignificant degree. If I am right in supposing it to be comparatively easy to make capital-goods so abundant that the marginal efficiency of capital is zero, this may be the most sensible way of gradually getting rid of many of the objectionable features of capitalism." - General Theory Chapter 17 If you really follow this thread to its logical conclusion, you see an incredible arrogance and desire for state control that is a lot more than just "stimulating the economy during a recession"

grappler 5y ago

You've made the case for the particular category of cryptocurrencies that encrypt transaction details ('privacy coins').

endisneigh 5y ago
I don't see how this could work in the long run. The blockchain is immutable and any encryption at some point in civilization will be broken. All transactions using weaker encryption will be retroactively also broken, no? In other words, to me, it seems like a public transparent blockchain is inevitable, whether you're using encryption or not.
- grappler 5y ago
  Maybe. I'd assume that the encryption used will improve over time, and there will at least be a lag time between a transaction's creation and the day it is cracked, hopefully many years long. This is pretty much the assumption we make about our web browsing over https (albeit the preservation of those encrypted sessions isn't quite so explicit and overt).
dumbfoundded 5y ago
I'd wager a guess that if a crypto-dollar emerges it will be a Monero-like currency with an additional set of private read/write keys controlled by the some set of government agencies. The US government doesn't want everyone having the transaction data. Exclusive access is much valuable than a public ledger.
- grappler 5y ago
  I think that battle is happening now. This is a good time to push for the kind of digital currencies we want, and against the ones we don't.
  - dumbfoundded 5y ago
    In terms of how we fight, I don't think any existing cryptocurrency community is providing any help. IMO, the way to help is to empower our democracy such that it represents the will of the common person. Getting people to vote and reversing decisions like Citizens United feels much more potent than any current or proposed protocol. A government is simply a corporation with a monopoly on the business of violence. Democracy is unique in that it's a corporation owned by the employees. Let's make it work for us instead of trying to beat or force its hand through tech. That won't work.

techdragon 5y ago

I wouldn’t mind being able to immediately send my tax to them for every purchase in exchange for not having to file tax returns since it was all tracked.

tylerrobinson 5y ago

The Economist published some great coverage about this a couple weeks ago, along with the intersection of players like Stripe and PayPal. Their overall conclusion is that governments have huge incentives to make their own central bank digital currencies (CBDCs). Currencies are a major lever of control that governments use to run their countries. In small countries, foreign currencies like the US dollar are already used widely for their stability and ease in foreign trade. Imagine if this becomes digital with zero friction, and you can see how a country could lose all demand for its currency. Larger countries face a similar dilemma with Bitcoin. If Bitcoin is frictionless and reliable, demand for the dollar could drop in favor of Bitcoin, and again, the US government loses a major source of power. Or worse, imagine the digital yuan becomes the new global standard for trade and storing value among China’s new friends. The Economist’s original coverage also discusses the privacy and tax implications (China already experimented with programmable money that “expired” at a certain time, to make sure it was used for stimulating the economy). They also talk about how CBDCs could end banks, because there would be no reason for a layer between the central bank and individuals, and the impact this would have on lending. Overall a fascinating topic, and I recommend reading their coverage as a high-level broad introduction to a lot of interesting topics.

droobles 5y ago

While a libertarian's nightmare, might make filing taxes a dream! All about perspective.