8 ms·

This will likely be controversial, but tech like bitcoin is a big step backwards from payment systems we currently have. All the rules and regulations were cre

This will likely be controversial, but tech like bitcoin is a big step backwards from payment systems we currently have. All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. Block chain money loses all of those protections to stop a bad actor from, say, a hacker draining your wallet with no recourse. So we find ourselves back to step one. I do think it's inevitable layers of regulations and rules will crop up, either from governments, or power holders requiring layers of smart contracts to respect transactions. It will just be a matter of time till the modern banking systems "port" themselves onto the chain.

beambot 5y ago
I'm always reminded of articles like this: > Holding U.S. Treasurys? Beware: Uncle Sam Can't Account For $21 Trillion https://www.forbes.com/sites/kotlikoff/2019/01/09/holding-u-s-treasuries-beware-uncle-sam-cant-account-for-21-trillion/?sh=4d2cc0aa7644 https://www.forbes.com/sites/kotlikoff/2019/01/09/holding-u-... > Fed Committed $7.77 Trillion To Rescue Banks [in 2008, previously undisclosed] https://www.npr.org/sections/thetwo-way/2011/11/28/142854391/report-fed-committed-7-77-trillion-to-rescue-banks#:~:text=Report%3A%20Fed%20Committed%20%247.77%20Trillion,%3A%20The%20Two%2DWay%20%3A%20NPR&text=Hourly%20News-,Report%3A%20Fed%20Committed%20%247.77%20Trillion%20To%20Rescue%20Banks%20%3A%20The%20Two,request%20was%20submitted%20by%20Bloomberg https://www.npr.org/sections/thetwo-way/2011/11/28/142854391.... You can argue whether this is a bug versus benefit... but transparency seems like a general win.
- serverholic 5y ago
  I forget the source but I once heard a quote that really resonated with me "corruption festers in the dark but tends to evaporate once it's brought to light". With that said, imagine a government where you can audit every transaction they make...
fidesomnes 5y ago
> All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. No, not how things happened at all. > bitcoin is a big step backwards from payment systems we currently have. Please share with the class the open PKI digital ledger that anyone can use with no permission "we" currently have.
anonporridge 5y ago
It's a mistake to think that the exciting thing about bitcoin is as a new kind of payment system for consumers. Instead, it's a rock solid foundation for a new global financial/monetary system in which every nation state, organization, and individual can participate without the permission of any privileged group. It's a neutral, digital money, like gold was a neutral, physical money. I fully expect that if it becomes a new money standard, we will in fact see higher layer payment networks (like Visa, Paypal, etc) that provide consumer protection services (for a fat fee) on top of the bitcoin network. Those people who don't want the responsibility of self custodying their money in a way that can't be recovered if they are robbed, can choose to bank with these services.
- xg15 5y ago
  > (for a fat fee) on top of the bitcoin network. Those people who don't want the responsibility of self custodying their money in a way that can't be recovered if they are robbed, can choose to bank with these services. Of course they have to be rich enough to be able to pay the fee.
- jstx1 5y ago
  I wouldn't call it neutral. It still has a development team made up of people who decide the direction of the technology. You don't like a decision and use a fork - now you're isolated from everyone else who is still transacting on the main chain. The validation of transactions is a red herring in these discussions - the real question of decentralisation is who is responsible for making decisions about the future of the tech and what happens when people disagree. In that respect Bitcoin is neither decentralised nor neutral. Same as Ethereum.
  - thebean11 5y ago
    Unlike the development teams at a software company, though, the development teams here do not have any special privileges over the software. They only have "control" for as long as their users continue choosing their forks. If a second "development team" sprung up and had more user support than the existing team, there is literally no advantage the current team has to control the software.
NikolaNovak 5y ago
People have different perception of "regulations" as a concept (as opposed to myriad different good, bad & ugly implementations). To some, "regulation" is a bad, 4-letter word. It's somebody else, some strange entity, infringing upon my freedoms. "Let us make our own decisions and use our own judgment and experience, and this will work better!". The naive view of "regulation" as a concept, to which I subscribe, is collective memory. Something bad happened, and we said "Well let's not do THAT again". Hence regulation against pyramid schemes in many countries; sure you can say "let me make my own mistakes", but that's basically what happened: pyramid schemes were allowed, we made a mistake, and said "well that sucks". A lot of financial rules, that may be inconvenient, go back to edge cases and bad actors and real-life scenarios. NOW... bureaucracy absolutely has a life of its own, and there are a lot of bad regulations, but the way I see it, from a high enough perspective, any fresh, naive system (whatever technology underlies it) will either: a) Actually and seriously not have any regulations ever, which means we'll all keep repeating same mistakes and have issue with same edge cases / bad actors forever; it'll be a wild wild west and some people will have high risk appetites and some won't. or b) will eventually have regulations making it same as old system but with different technology.
DSMan195276 5y ago
I somewhat agree, and I think it's largely already happening. For the most part I think it's unlikely anybody who's not somewhat tech savvy would ever move their coins off of a service/exchange like CoinBase, and such an exchange already provides some of those guarantees and could easily provide more. All the benefits and drawbacks of bitcoin pretty much go away if you never actually use any "physical" bitcoins and just go through an exchange. That said I have my doubts about it ever actually getting all that big for everyday use, everybody is always going to need dollars so I don't think there's all that much of a reason for big banks and payment systems to "switch".
dogman144 5y ago
> All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. It's a bit more nuanced than that. Current KYC/AML regs that you're referring to in banking, and are being applied to crypto, actually come from the Patriot Act, Title III. Why this is relevant: KYC/AML have stuck around as a perceived common-sense thing to do, and your comment is good example though. However, that evaluation deserves some inspection with the knowledge that it comes out of the Patriot Act. The Patriot Act is known for some historically challenging overreach and various parts of it have been overruled, repealed, deemed unconstitutional, and generally disliked by all aspects of the political spectrum. That's not to say that a few good things came out of it - perhaps KYC/AML is an example. But, I think specifically because of the Patriot Act ties, it's a bit of a misnomer to call KYC/AML as a sort of bland, unambiguously good thing that's just always been around. The Patriot Act is very much "not that," was passed in a fairly turbulent time in US history, and has not aged well. As current KYC/AML came out of that time period and law, perhaps it should be shaded by that.
fleddr 5y ago
Contrary to the mainstream narrative on Bitcoin, it's not purposefully designed to bypass regulation, depending on which type of regulation we're talking about. Bitcoin's power lies in its controlled supply that is absolute and guaranteed. As such, you can argue that Bitcoin is regulated in its monetary policy (by verifiable software), whilst the traditional system isn't. The entire reason Bitcoin now has a trillion dollar market cap is the unstable traditional system where savings have a negative return. This is the step forward, not backwards. At least to those believing in Bitcoin. You gain protection against central debasement and you gain a brand new ability: Bitcoin is unconfiscatable. You're right that crypto custody is harder than a traditional bank account, although it doesn't have to be. People can chose between die-hard self custody (cold wallet), hot wallets, and soon there will be more fool-proof mainstream options, I believe Twitter is working on one.
- yokem55 5y ago
  > Bitcoin's power lies in its controlled supply that is absolute and guaranteed. Bitcoin's supply limit is only as guaranteed as the community consensus around what the supply limit should be. Now that consensus is unlikely to change, but there is no magic or law of physics that makes it so. It's just (a strong) community consensus.
  - fleddr 5y ago
    Technically, you're right, but the word "just" strongly undersells the strength of this consensus compared to fiat currencies, which has none at all.
- lottin 5y ago
  The supply of bitcoins can be inflated in the same way that the supply of dollars is inflated, namely by fractional reserve banking. In fact the amount of dollars created by the federal reserve is a small proportion of the total dollars in circulation. The other thing is that the quantity of money, which is one of the key variables influencing the price level, does not remain constant even if the supply of money does, because of trade imbalances. For example, any trade deficit is necessarily offset by an outflow of money, thus reducing the quantity of money in the economy. Therefore if you think that the adoption of bitcoin as currency would prevent your cash balances from losing value in any way, shape or form you're completely wrong.
Andrew_nenakhov 5y ago
> a big step backwards from payment systems we currently have. Just yesterday lawmaking initiative in Russia proposed to give police and FSB an ability of pre-judicial freeze of all assets belonging to a person, including all personal accounts and all accounts of all linked businesses. Good luck living in our increasingly cashless society where corrupt police officers can suffocate you with a single press of a button.
- fleddr 5y ago
  Indeed. From our first world perspective, we don't understand the humanitarian life raft that crypto can be. Lebanon is currently facing extremely high inflation whilst at the same time, governments close banks. Imagine that, your life savings being decimated whilst you're locked out of accessing it. With a proper setup, crypto could be a solution. Access to it can't be realistically blocked and it is unconfiscatable. Furthermore, it can be used by those that are unbanked, all it takes is a smartphone. Another story is from a guy whom recently fled from Venezuela to Colombia, and blogged about his experience. On his journey, he was shaken down by police officers, local tribes, traffickers, basically everybody. Here too crypto could have played a humanitarian role.
  - warkdarrior 5y ago
    > Another story is from a guy whom recently fled from Venezuela to Colombia, and blogged about his experience. On his journey, he was shaken down by police officers, local tribes, traffickers, basically everybody. > Here too crypto could have played a humanitarian role. How would crypto help if the police officer says "we'll keep you locked up until you make a payment to this address"?
    - Andrew_nenakhov 5y ago
      The police officer will have to know you have money. Bitcoin is anonymous, so tracking down people with money is hard. Also, he'll have to find you first, which is much harder than just input your tax number and press 'block' button.
    - 5y ago
k__ 5y ago
I think, the excact opposite could be the case. An transparent open source platform with a globally decentralized payment mechanism at protocol level could be the one reason blockchains could win, despite everything else of them being "just worse AWS".
CryptoPunk 5y ago
>>All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. The rules and regulations were not created because they are in the public interest. They are there because control over an industry is profitable and appeals to the superficial analyses of an emotional and manipulable public. Look at Elizabeth Warren saying cryptocurrency is dangerous because it's controlled by "shadowy super coders", when all blockchain code is open source, and developed in the open on Github, for maximum transparency, while regulatory bodies, legislative offices and traditional corporate bureaucracies are completely opaque to the public. I mean no one in Congress has even fully read the trillion dollar plus infrastructure bill. New worrying provisions are being discovered in it every day. This is a bill that Warren had no scruples about voting for. And she has the audacity to call smart contracts "shadowy". It's demagogues like Warren who bring regulatory restrictions, that transfer massive amounts of power to centralized bureaucracies, into force. It's not sound informed analysis. Their intervention leads to massive wealth inequality. Look at the impact of SEC involvement in token sales. Ethereum, Cardano, Cosmos, PolkaDot, Tron, EOS and Tezos all had their initial token sale before the SEC's involvement in 2017, and consequently have majority public/community ownership of their tokens: https://i.ibb.co/qCjJWJb/FAK6ao-HVc-AAg-V-i.jpg https://i.ibb.co/qCjJWJb/FAK6ao-HVc-AAg-V-i.jpg The rest of the platforms in the graphic, like Flow, Solana and Avalanche, had their initial token sale occur after SEC involvement, and the majority of their tokens are consequently owned by insiders, who got to monopolize the initial token sale and thus enjoy 1,000X+ gains. This amounts to an obscene exacerbation of wealth inequality in the crypto space, due to SEC enforcement of securities regulations. Look at the AML industry for an example of a sector that has grown to spend hundreds of billions dollars year, and impose trillions of dollars in costs in the form of financial exclusion and friction, with no evidence that it has had any effectiveness, and continues to grow unabated due to the institutional inerta that is sustained by the special interests that profit from it: https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1725366 https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...

beambot 5y ago

I'm always reminded of articles like this: > Holding U.S. Treasurys? Beware: Uncle Sam Can't Account For $21 Trillion https://www.forbes.com/sites/kotlikoff/2019/01/09/holding-u-s-treasuries-beware-uncle-sam-cant-account-for-21-trillion/?sh=4d2cc0aa7644 https://www.forbes.com/sites/kotlikoff/2019/01/09/holding-u-... > Fed Committed $7.77 Trillion To Rescue Banks [in 2008, previously undisclosed] https://www.npr.org/sections/thetwo-way/2011/11/28/142854391/report-fed-committed-7-77-trillion-to-rescue-banks#:~:text=Report%3A%20Fed%20Committed%20%247.77%20Trillion,%3A%20The%20Two%2DWay%20%3A%20NPR&text=Hourly%20News-,Report%3A%20Fed%20Committed%20%247.77%20Trillion%20To%20Rescue%20Banks%20%3A%20The%20Two,request%20was%20submitted%20by%20Bloomberg https://www.npr.org/sections/thetwo-way/2011/11/28/142854391.... You can argue whether this is a bug versus benefit... but transparency seems like a general win.

serverholic 5y ago
I forget the source but I once heard a quote that really resonated with me "corruption festers in the dark but tends to evaporate once it's brought to light". With that said, imagine a government where you can audit every transaction they make...

fidesomnes 5y ago

> All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. No, not how things happened at all. > bitcoin is a big step backwards from payment systems we currently have. Please share with the class the open PKI digital ledger that anyone can use with no permission "we" currently have.

anonporridge 5y ago

It's a mistake to think that the exciting thing about bitcoin is as a new kind of payment system for consumers. Instead, it's a rock solid foundation for a new global financial/monetary system in which every nation state, organization, and individual can participate without the permission of any privileged group. It's a neutral, digital money, like gold was a neutral, physical money. I fully expect that if it becomes a new money standard, we will in fact see higher layer payment networks (like Visa, Paypal, etc) that provide consumer protection services (for a fat fee) on top of the bitcoin network. Those people who don't want the responsibility of self custodying their money in a way that can't be recovered if they are robbed, can choose to bank with these services.

xg15 5y ago
> (for a fat fee) on top of the bitcoin network. Those people who don't want the responsibility of self custodying their money in a way that can't be recovered if they are robbed, can choose to bank with these services. Of course they have to be rich enough to be able to pay the fee.
jstx1 5y ago
I wouldn't call it neutral. It still has a development team made up of people who decide the direction of the technology. You don't like a decision and use a fork - now you're isolated from everyone else who is still transacting on the main chain. The validation of transactions is a red herring in these discussions - the real question of decentralisation is who is responsible for making decisions about the future of the tech and what happens when people disagree. In that respect Bitcoin is neither decentralised nor neutral. Same as Ethereum.
- thebean11 5y ago
  Unlike the development teams at a software company, though, the development teams here do not have any special privileges over the software. They only have "control" for as long as their users continue choosing their forks. If a second "development team" sprung up and had more user support than the existing team, there is literally no advantage the current team has to control the software.

NikolaNovak 5y ago

People have different perception of "regulations" as a concept (as opposed to myriad different good, bad & ugly implementations). To some, "regulation" is a bad, 4-letter word. It's somebody else, some strange entity, infringing upon my freedoms. "Let us make our own decisions and use our own judgment and experience, and this will work better!". The naive view of "regulation" as a concept, to which I subscribe, is collective memory. Something bad happened, and we said "Well let's not do THAT again". Hence regulation against pyramid schemes in many countries; sure you can say "let me make my own mistakes", but that's basically what happened: pyramid schemes were allowed, we made a mistake, and said "well that sucks". A lot of financial rules, that may be inconvenient, go back to edge cases and bad actors and real-life scenarios. NOW... bureaucracy absolutely has a life of its own, and there are a lot of bad regulations, but the way I see it, from a high enough perspective, any fresh, naive system (whatever technology underlies it) will either: a) Actually and seriously not have any regulations ever, which means we'll all keep repeating same mistakes and have issue with same edge cases / bad actors forever; it'll be a wild wild west and some people will have high risk appetites and some won't. or b) will eventually have regulations making it same as old system but with different technology.

DSMan195276 5y ago

I somewhat agree, and I think it's largely already happening. For the most part I think it's unlikely anybody who's not somewhat tech savvy would ever move their coins off of a service/exchange like CoinBase, and such an exchange already provides some of those guarantees and could easily provide more. All the benefits and drawbacks of bitcoin pretty much go away if you never actually use any "physical" bitcoins and just go through an exchange. That said I have my doubts about it ever actually getting all that big for everyday use, everybody is always going to need dollars so I don't think there's all that much of a reason for big banks and payment systems to "switch".

dogman144 5y ago

> All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. It's a bit more nuanced than that. Current KYC/AML regs that you're referring to in banking, and are being applied to crypto, actually come from the Patriot Act, Title III. Why this is relevant: KYC/AML have stuck around as a perceived common-sense thing to do, and your comment is good example though. However, that evaluation deserves some inspection with the knowledge that it comes out of the Patriot Act. The Patriot Act is known for some historically challenging overreach and various parts of it have been overruled, repealed, deemed unconstitutional, and generally disliked by all aspects of the political spectrum. That's not to say that a few good things came out of it - perhaps KYC/AML is an example. But, I think specifically because of the Patriot Act ties, it's a bit of a misnomer to call KYC/AML as a sort of bland, unambiguously good thing that's just always been around. The Patriot Act is very much "not that," was passed in a fairly turbulent time in US history, and has not aged well. As current KYC/AML came out of that time period and law, perhaps it should be shaded by that.

fleddr 5y ago

Contrary to the mainstream narrative on Bitcoin, it's not purposefully designed to bypass regulation, depending on which type of regulation we're talking about. Bitcoin's power lies in its controlled supply that is absolute and guaranteed. As such, you can argue that Bitcoin is regulated in its monetary policy (by verifiable software), whilst the traditional system isn't. The entire reason Bitcoin now has a trillion dollar market cap is the unstable traditional system where savings have a negative return. This is the step forward, not backwards. At least to those believing in Bitcoin. You gain protection against central debasement and you gain a brand new ability: Bitcoin is unconfiscatable. You're right that crypto custody is harder than a traditional bank account, although it doesn't have to be. People can chose between die-hard self custody (cold wallet), hot wallets, and soon there will be more fool-proof mainstream options, I believe Twitter is working on one.

yokem55 5y ago
> Bitcoin's power lies in its controlled supply that is absolute and guaranteed. Bitcoin's supply limit is only as guaranteed as the community consensus around what the supply limit should be. Now that consensus is unlikely to change, but there is no magic or law of physics that makes it so. It's just (a strong) community consensus.
- fleddr 5y ago
  Technically, you're right, but the word "just" strongly undersells the strength of this consensus compared to fiat currencies, which has none at all.
lottin 5y ago
The supply of bitcoins can be inflated in the same way that the supply of dollars is inflated, namely by fractional reserve banking. In fact the amount of dollars created by the federal reserve is a small proportion of the total dollars in circulation. The other thing is that the quantity of money, which is one of the key variables influencing the price level, does not remain constant even if the supply of money does, because of trade imbalances. For example, any trade deficit is necessarily offset by an outflow of money, thus reducing the quantity of money in the economy. Therefore if you think that the adoption of bitcoin as currency would prevent your cash balances from losing value in any way, shape or form you're completely wrong.

Andrew_nenakhov 5y ago

> a big step backwards from payment systems we currently have. Just yesterday lawmaking initiative in Russia proposed to give police and FSB an ability of pre-judicial freeze of all assets belonging to a person, including all personal accounts and all accounts of all linked businesses. Good luck living in our increasingly cashless society where corrupt police officers can suffocate you with a single press of a button.

fleddr 5y ago
Indeed. From our first world perspective, we don't understand the humanitarian life raft that crypto can be. Lebanon is currently facing extremely high inflation whilst at the same time, governments close banks. Imagine that, your life savings being decimated whilst you're locked out of accessing it. With a proper setup, crypto could be a solution. Access to it can't be realistically blocked and it is unconfiscatable. Furthermore, it can be used by those that are unbanked, all it takes is a smartphone. Another story is from a guy whom recently fled from Venezuela to Colombia, and blogged about his experience. On his journey, he was shaken down by police officers, local tribes, traffickers, basically everybody. Here too crypto could have played a humanitarian role.
- warkdarrior 5y ago
  > Another story is from a guy whom recently fled from Venezuela to Colombia, and blogged about his experience. On his journey, he was shaken down by police officers, local tribes, traffickers, basically everybody. > Here too crypto could have played a humanitarian role. How would crypto help if the police officer says "we'll keep you locked up until you make a payment to this address"?
  - Andrew_nenakhov 5y ago
    The police officer will have to know you have money. Bitcoin is anonymous, so tracking down people with money is hard. Also, he'll have to find you first, which is much harder than just input your tax number and press 'block' button.
  - 5y ago

k__ 5y ago

I think, the excact opposite could be the case. An transparent open source platform with a globally decentralized payment mechanism at protocol level could be the one reason blockchains could win, despite everything else of them being "just worse AWS".

CryptoPunk 5y ago

>>All the rules and regulations were created because someone was bad enough for people to agree on a rule to prevent something from happening again. The rules and regulations were not created because they are in the public interest. They are there because control over an industry is profitable and appeals to the superficial analyses of an emotional and manipulable public. Look at Elizabeth Warren saying cryptocurrency is dangerous because it's controlled by "shadowy super coders", when all blockchain code is open source, and developed in the open on Github, for maximum transparency, while regulatory bodies, legislative offices and traditional corporate bureaucracies are completely opaque to the public. I mean no one in Congress has even fully read the trillion dollar plus infrastructure bill. New worrying provisions are being discovered in it every day. This is a bill that Warren had no scruples about voting for. And she has the audacity to call smart contracts "shadowy". It's demagogues like Warren who bring regulatory restrictions, that transfer massive amounts of power to centralized bureaucracies, into force. It's not sound informed analysis. Their intervention leads to massive wealth inequality. Look at the impact of SEC involvement in token sales. Ethereum, Cardano, Cosmos, PolkaDot, Tron, EOS and Tezos all had their initial token sale before the SEC's involvement in 2017, and consequently have majority public/community ownership of their tokens: https://i.ibb.co/qCjJWJb/FAK6ao-HVc-AAg-V-i.jpg https://i.ibb.co/qCjJWJb/FAK6ao-HVc-AAg-V-i.jpg The rest of the platforms in the graphic, like Flow, Solana and Avalanche, had their initial token sale occur after SEC involvement, and the majority of their tokens are consequently owned by insiders, who got to monopolize the initial token sale and thus enjoy 1,000X+ gains. This amounts to an obscene exacerbation of wealth inequality in the crypto space, due to SEC enforcement of securities regulations. Look at the AML industry for an example of a sector that has grown to spend hundreds of billions dollars year, and impose trillions of dollars in costs in the form of financial exclusion and friction, with no evidence that it has had any effectiveness, and continues to grow unabated due to the institutional inerta that is sustained by the special interests that profit from it: https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1725366 https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...