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> Using cash, for example. We are literally back to what I said a few comments ago: > And in the cases of unbanked areas that exchange needs to be physical an

> Using cash, for example. We are literally back to what I said a few comments ago: > And in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash. It doesn't need to be the same exchange, but both those exchanges would still have the same issues as a traditional exchange, right? So again: Why would a physical bitcoin exchange be easier to operate than a physical traditional exchange? If your reason is laws then I'm guessing you'd also need to explain why widespread bitcoin usage wouldn't be subject to those laws too.

hnfong 4y ago
I'm not a believer in crypto by any means, but I think there's some fundamental differences between physical money, conventional currency, and bitcoins. - physical money (eg. precious metals, physical cash) is hard to transfer, so that's out. - conventional currency requires recognition from a legal system; anyone can open an illicit "exchange" claiming to trade foreign currencies, and record a bunch of numbers in a spreadsheet, in the same way I can claim to have paid you US$100000 through this HN comment. But nobody takes it seriously unless the transfer is recognized as legitimate by some legal body. And if local laws prohibit or severely limit the operation of such exchanges, it just cannot exist. - Bitcoin's legitimacy is not based on recognition by legal systems, but rather a common, mutual recognition of a blockchain protocol. As long as there's just one shady dealer who accepts bitcoins in exchange for physical money (gold, precious goods, physical local currency), then this is an "exchange". It's not an exchange in the usual sense, but it doesn't really matter. The crucial point is that the "protocol" if you will of conventional (non-physical) currency depends on some sort of legal system recognizing the currency. We're talking about wire transfers, cheques, etc., not paper money (which in this context is considered physical). The reason I can instruct my bank to transfer money from my bank account to your bank account is because of a bunch of legal rules and processes that ensure that it happens properly. If either party is in a place where such transactions are prohibited by the law, it is fundamentally impossible to do such a transfer because such transfers require recognition by the legal system. Your confusion might stem from mixing up two concepts -- (A). the general duty to follow the law, and (B). the fact that conventional currencies depend on the law to operate. The GP's friend might be breaking the law no matter what kind of currency they are using, this is consideration (A). This is the same. But Bitcoin doesn't have problem (B).
- SahAssar 4y ago
  The consideration of B still comes in when the bitcoin needs to be exchanged for actual goods or services though, where the payment (at least in 99.99% of cases) needs to be in traditional currencies. So bitcoin has not really removed a problem, bitcoin has just moved it. My argument is at least somewhat under the assumption that the trades/exchanges need to be legal to be mainstream. If you assume only illegal trades then of course it easier to postulate a system that works since it does not need to consider how it would work internationally or within a state. I don't think I'm confused (but then again confused people usually think they are not), but I do think that modifying the traditional system is far more reasonable and doable than moving to the alternative crypto/blockchain system. Considering all the money and manpower thrown behind crypto I'd say it's not unreasonable to think that a better system building on the traditional finance system could be built.
  - hnfong 4y ago
    The point is, as it didn't seem to get across in my previous comment, is that Bitcoin doesn't suffer (as much) from consideration B because any shady dealer can act as an "exchange", whereas traditional non-physical finance requires a chain of somewhat reputable institutions to be the middle person. You can't "fix" traditional finance system if the government of one party makes it illegal to do trades (unless you're thinking about plotting a revolution in another country).

hnfong 4y ago

I'm not a believer in crypto by any means, but I think there's some fundamental differences between physical money, conventional currency, and bitcoins. - physical money (eg. precious metals, physical cash) is hard to transfer, so that's out. - conventional currency requires recognition from a legal system; anyone can open an illicit "exchange" claiming to trade foreign currencies, and record a bunch of numbers in a spreadsheet, in the same way I can claim to have paid you US$100000 through this HN comment. But nobody takes it seriously unless the transfer is recognized as legitimate by some legal body. And if local laws prohibit or severely limit the operation of such exchanges, it just cannot exist. - Bitcoin's legitimacy is not based on recognition by legal systems, but rather a common, mutual recognition of a blockchain protocol. As long as there's just one shady dealer who accepts bitcoins in exchange for physical money (gold, precious goods, physical local currency), then this is an "exchange". It's not an exchange in the usual sense, but it doesn't really matter. The crucial point is that the "protocol" if you will of conventional (non-physical) currency depends on some sort of legal system recognizing the currency. We're talking about wire transfers, cheques, etc., not paper money (which in this context is considered physical). The reason I can instruct my bank to transfer money from my bank account to your bank account is because of a bunch of legal rules and processes that ensure that it happens properly. If either party is in a place where such transactions are prohibited by the law, it is fundamentally impossible to do such a transfer because such transfers require recognition by the legal system. Your confusion might stem from mixing up two concepts -- (A). the general duty to follow the law, and (B). the fact that conventional currencies depend on the law to operate. The GP's friend might be breaking the law no matter what kind of currency they are using, this is consideration (A). This is the same. But Bitcoin doesn't have problem (B).

SahAssar 4y ago
The consideration of B still comes in when the bitcoin needs to be exchanged for actual goods or services though, where the payment (at least in 99.99% of cases) needs to be in traditional currencies. So bitcoin has not really removed a problem, bitcoin has just moved it. My argument is at least somewhat under the assumption that the trades/exchanges need to be legal to be mainstream. If you assume only illegal trades then of course it easier to postulate a system that works since it does not need to consider how it would work internationally or within a state. I don't think I'm confused (but then again confused people usually think they are not), but I do think that modifying the traditional system is far more reasonable and doable than moving to the alternative crypto/blockchain system. Considering all the money and manpower thrown behind crypto I'd say it's not unreasonable to think that a better system building on the traditional finance system could be built.
- hnfong 4y ago
  The point is, as it didn't seem to get across in my previous comment, is that Bitcoin doesn't suffer (as much) from consideration B because any shady dealer can act as an "exchange", whereas traditional non-physical finance requires a chain of somewhat reputable institutions to be the middle person. You can't "fix" traditional finance system if the government of one party makes it illegal to do trades (unless you're thinking about plotting a revolution in another country).