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It has to be asked: if crypto is "worth nothing" then why should it be regulated?
by mikece 4y ago
It has to be asked: if crypto is "worth nothing" then why should it be regulated?
- outside1234 4y agoBecause it is being marketed as being worth something
- dsco 4y agoWho is doing that?
- arcticbull 4y agoMatt Damon, for one. Kim Kardashian and Floyd Maywether are being sued for shilling Ethereum Max (lol) [1] Quentin Tarantino for NFTs re Pulp Fiction. Jake Paul of course, with his Dink Doinks. Nick Carter, Ben Phillips, Soulja Boy and Lil Yachty re: Safemoon. Need I go on? [1] https://www.cnbc.com/2022/01/12/kim-kardashian-and-floyd-mayweather-sued-over-alleged-crypto-scam.html https://www.cnbc.com/2022/01/12/kim-kardashian-and-floyd-may...
- garg 4y agoAre only things with worth regulated? Pyramid and Ponzi schemes are worth nothing and are regulated.
- DANK_YACHT 4y agoAre they regulated or are they illegal? Such schemes have negative worth as they actively harm people.
- snarf21 4y agoSerious question: Do you think no people have been harmed by crypto? My guess is by the end, 10s of thousands of people will have been seriously financially harmed.
- DANK_YACHT 4y agoPeople have definitely been harmed by crypto. I was pointing out that pyramid and ponzi schemes harm people by definition. There is no mathematical way for them to benefit a majority of participants. That doesn't necessarily hold for crypto.
- the_gastropod 4y agoHow not? The problem with pyramid schemes, gambling, ponzi schemes, and cryptocurrencies is: they're zero-sum games (or worse). As you say, there is no mathematical way for most people to benefit from cryptocurrencies.
- DANK_YACHT 4y agoCryptocurrencies are not zero-sum due to the ability to create money via lending. E.g. if I make a currency with 100 tokens, I can lend them to you for a year at a 10% interest rate. Even though there are only 100 coins in existence, I’ve created an asset worth 110 coins. This is how money gets created in a fiat system created money as well. See https://en.m.wikipedia.org/wiki/Money_creation https://en.m.wikipedia.org/wiki/Money_creation
- the_gastropod 4y agoThe reason money creation is valuable in fiat currencies is because those are circular economies: the person taking on debt is presumably producing something of value, and able to pay back the interest. Crypto is not a circular economy. It's a speculative investment whose expected return is always negative.
- DANK_YACHT 4y agoHow is taking a crypto loan and using it to produce something "of value" in the U.S. different than someone taking a USD loan and using it to produce something of value in Turkey?
- supermatt 4y agoIf they operate in regulated markets, then the regulations thereof determine their legality. A ponzi scheme in itself isnt illegal (which is why there are so many crypto ponzi schemes) - it is when it is considered securities fraud that it becomes illegal. The thought is that by regulating cryptocurrencies (i.e. treating it as a similar asset class as stocks, commodities, etc), such "investments" would be subject to the same rules - whether it has any real inherent value or not is irrelevant.
- DANK_YACHT 4y agoPonzi and pyramid schemes are illegal in many jurisdictions. It's possible to be charged with securities or commodities fraud for security-based ponzi schemes, but there are laws against such schemes outside of the securities market. E.g. https://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/44/01731.htm https://www.azleg.gov/viewdocument/?docName=https://www.azle...
- supermatt 4y agoI didnt mention pyramid schemes specifically because there are (usually) other laws that deal wit those (as you have pointed out). They dont apply because the very definition requires the product to NOT be what you are purchasing. When it is the nature of the product that matters, it is the respective regulation that applies. Crypto has no regulation, hence the desire to treat it as another regulated asset class, so the existing laws apply to it.
- arcticbull 4y agoThe space relies on obfuscation in technical and financial complexity to lure in folks who don't know better. This dynamic is causing significant harm to individuals, and meaningful misallocation of capital within the economy. It's a bottle imp. [1] While it is fundamentally worthless, it relies on irrationality to create price in lieu. [1] https://en.wikipedia.org/wiki/The_Bottle_Imp https://en.wikipedia.org/wiki/The_Bottle_Imp
- rvz 4y agoSo what is your realistic alternative then? Make it all go away? Ban all of it, 100% guaranteed?
- arcticbull 4y agoMy solution is to ban the exchange of fiat for crypto.
- rvz 4y agoSo why wasn't these crypto exchanges who facilitate in the 'exchange of fiat for crypto' or these on-ramps banned along time ago then? We both know that banning all of them is not going to happen. Is that why instead of that, they are putting in AML, KYC, etc regulations and more for these crypto exchanges?
- deleted 4y ago[deleted]
- agentultra 4y agoAccording to https://web3isgoinggreat.com https://web3isgoinggreat.com we're at about $70M lost to fraud, scams, and hacks this month alone. It's not a full accounting but it's a small baseline. It's safe to assume it's probably larger. Governments and regulators are worried about it because when enough people invest their life savings in crypto, and it disappears, that's real capital that is gone from the existing banking system. Fractional reserve banking enables banks to use money they hold in deposits to fund large projects, loans, and invest (with plenty of regulation about how much money they must hold in reserve to ensure customers can always withdraw their funds). If enough people lose their shirts then it starts to have serious effects on an economy.
- yucky 4y ago>According to https://web3isgoinggreat.com https://web3isgoinggreat.com we're at about $70M lost to fraud, scams, and hacks this month alone. It's not a full accounting but it's a small baseline. It's safe to assume it's probably larger. How big is the fraud number for USD or Euros? Billions per month?
- agentultra 4y agoIs your argument that someone else is pulling off bigger frauds so this fraud should be overlooked?
- yucky 4y agoNo, my argument is that the ability to commit fraud with crypto is not in any way a legit criticism against it. There are actual criticism, fraud isn't one of them.
- agentultra 4y agoIn the context of the question, “why should we regulate this,” it’s a legitimate reason. Banking is regulated to prevent these sorts of things. Crypto is designed to enable them. They need to be regulated.