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Oh hey look the consequences of a monetary system that isn't backed by a legal system (that is backed up by people with guns). The reason fiat money works is b

Oh hey look the consequences of a monetary system that isn't backed by a legal system (that is backed up by people with guns). The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence. Crypto doesn't have that. It has a lot of advantages (I use crypto myself) but it also has a big disadvantage, for now. When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.

simonebrunozzi 4y ago
loose -> lose
int_19h 4y ago
It doesn't have to be a legal system or a government in general. E.g. Rai stones are basically a public ledger system akin to a blockchain, but working through social convention. https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones One could argue that, in this case, the entire society is "people with guns". Which is fair enough, but, again, it's important to keep in mind that this concept does not intrinsically require anything equivalent to the modern state.
baxtr 4y ago
But wait! I thought decentralised is sooo much better??
- aliqot 4y ago
  Celsius is centralized. Was this comment sincere?
- quest88 4y ago
  It's centralized. Turns out people like centralized things because it's easier!
pazimzadeh 4y ago
Huh? If that was true then it would be services like AAVE or Uniswap which would be bankrupt, not the centralized finance Celsius. The idea that the traditional legal system prevents funny business with money is naive. 9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon https://www.youtube.com/watch?v=xU4GdHLUHwU https://www.youtube.com/watch?v=xU4GdHLUHwU The Pentagon’s $35 Trillion Accounting Black Hole https://www.yahoo.com/video/pentagon-35-trillion-accounting-black-231154593.html https://www.yahoo.com/video/pentagon-35-trillion-accounting-... https://www.bloomberg.com/news/articles/2020-01-22/pentagon-racks-up-35-trillion-in-accounting-changes-in-one-year https://www.bloomberg.com/news/articles/2020-01-22/pentagon-... Pentagon's Defense Logistics Agency loses track of $800m https://www.bbc.com/news/world-us-canada-42954050 https://www.bbc.com/news/world-us-canada-42954050
- jedberg 4y ago
  It doesn't prevent it, but it gives you recourse to make yourself whole again, and in a sense prevents a lot of funny business because people are afraid of getting caught and being put in jail.
  - pazimzadeh 4y ago
    Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance (especially once multi-sig wallets become common). If Celsius had been more all-in on crypto tech, they would have had FEWER problems. Also, I don't know any law that exempts crypto companies from being taken to court.
    - eropple 4y ago
      > How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public. > Also, I don't know any law that exempts crypto companies from being taken to court. ...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach. On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.
jankyxenon 4y ago
Aren't Bitcoin and Ethereum both pseudonymous? Once you know one of someone's transactions, don't you know them all?
- jedberg 4y ago
  Yes, and often you can trace that back to a single person, but not always.
- ericd 4y ago
  With BTC transactions via lightning, at least, there’s simply a periodic net settlement.
scifibestfi 4y ago
Fiat works until it doesn't. Whether that's inflation, corrupt government, or the long term debt cycle which we nearing the end of. Ray Dalio has a good video about what that means and how this has played out every time over the past 500 years: https://www.youtube.com/watch?v=xguam0TKMw8 https://www.youtube.com/watch?v=xguam0TKMw8
- arcticbull 4y ago
  This is the same thing that William DeVane has been saying shilling gold for Rosland Capital at 2am to Fox viewers for the last decade. I'm not worried. [1] Dalio is talking his book. [1] https://www.youtube.com/watch?v=VVcdvT09qr4 https://www.youtube.com/watch?v=VVcdvT09qr4
  - ericd 4y ago
    It’s his book because he believes it’s true, not because he’s trying to influence things. I’d highly recommend reading Big Debt Crises.
    - arcticbull 4y ago
      Sorry, when I said "talking his book" that's like a finance term for advocating for things that would benefit the positions you hold. > Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and the manager’s portfolio. [1] https://abnormalreturns.com/2010/02/18/everybody-talks-their-book-everybody https://abnormalreturns.com/2010/02/18/everybody-talks-their...
      - ericd 4y ago
        Sorry for the poor wording of my response, I knew what you meant. I meant that he’s invested the way he is because he believes in what he’s talking about in terms of macro trends. And then I confusingly recommended reading his printed book, which I’ve found very helpful in understanding what the central banks have been doing, and allowed me to be well positioned for this inflation well before it picked up to where it is now.
moralestapia 4y ago
Why can't both exist though? Each with their own advantage/disadvantages, and you get to choose which one to use after considering the tradeoffs. Things I would use crypto for: * Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties. * Any transaction that I would like to keep my privacy on (and this does not mean illegal things, btw). Things I would never use crypto for: * Storing wealth. For me personally it's too much of a bet, we're always one right (or wrong) math proof away from all of this becoming dust. * Smart contracts. Anything that requires a contract between me and someone else, I'll keep using the tried and tested way of common law. I'd rather have my business backed by the Delaware Chancery Court (which has proven to be quite effective these past weeks) than by the code wrote by some random upwork contractor.
- mountainofdeath 4y ago
  This already exists though and is a technical solution to an economic problem. The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise. Crypto transfers for say USD->EUR via USD->BTC->EUR are just adding extra foreign exchange legs in the hope that the BTC holders on either end will give you a better deal.
  - moralestapia 4y ago
    >This already exists though and is a technical solution to an economic problem. Immediately followed by: >The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise. Huh? Is it solved or not? It's unclear to me where do you stand. de facto, moving ETH->ETH is faster and cheaper than using the standard forex infrastructure.
- dale_glass 4y ago
  Crypto is bad at money transfers. It's low capacity. That's why nobody is using BTC to pay for pizza anymore. It's also bad at privacy, since the architecture for most crypto systems relies on storing a permanent, non-modifiable public ledger. Your usage case doesn't really work because almost nobody cares about that. You'll find a few idealists interested in that, and a very few people that need to transact with some random person in Bangladesh. Pretty much everyone will just do a regular bank transfer or use Paypal. What got crypto to become popular is the "get rich quick" schemes, which not only don't require stability, but rely on instability and people attracted to the idea of exploiting it for profit.
bogomipz 4y ago
>"The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence." How many people were prosecuted for the 2008 financial crisis though? Neither did the "threat of violence" nor the legal system prevent or even deter those perpetrators.
- pazimzadeh 4y ago
  Exactly. The people who benefit the most from the current system are the already rich, who can afford to the legal fees and come up with creative defenses. Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system. This debate reminds me of the nature vs nurture debate in biology. It's a mirage. In reality, it's nature via nurture. Similarly, there is no inherent divide between government and crypto. One can extend the other.
  - CharlesW 4y ago
    > Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system. Are you sure? The WSJ says that 0.01% of all holders control 27% of Bitcoin, vs. the top 1% of households who control about a third of all U.S. wealth. https://www.wsj.com/articles/bitcoins-one-percent-controls-lions-share-of-the-cryptocurrencys-wealth-11639996204 https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
    - pazimzadeh 4y ago
      You're missing the point. The point is that the poorest Bitcoin wallet is as secure as the richest wallet. Whereas in legal-land, the more money you have, the better your lawyers (and whatnot) you can hire.
      - CharlesW 4y ago
tossl568 4y ago
You can't steal my Bitcoin if I don't deposit them with a custodian. This is like blaming gold itself if the owners of a gold bank run off with the gold.
- ramesh31 4y ago
  Relevant XKCD: https://xkcd.com/538/ https://xkcd.com/538/ At the end of the day, any power you think you may have is an illusion. It all comes down to who has the monopoly on violence.
- smachiz 4y ago
  Except that we have regulations for banks and brokerages for how they must operate, what sort of cash reserves they have, and how they must conduct audits. And they pay into an insurance program (FDIC/SIPC) to return money to depositors if they collapse.
- karamanolev 4y ago
  > You can't steal my Bitcoin if I don't deposit them with a custodian. Many people have lost their BTC and other coins to hacks, phishes, hardware failures, software failures and so on. So in the sense of the people from the general public, yes, I can steal your Bitcoin. > This is like blaming gold itself if the owners of a gold bank run off with the gold. You can keep it under the mattress and expose yourself to one kind of failure mode. You can also keep it with the bank with the clear expectation that the owners will not run off with the gold and also expect the state to go after the owners if they do. Which is not happening here.
  - tcgv 4y ago
    > yes, I can steal your Bitcoin Let's fix that phrase: - yes, I can steal your Bitcoin keys And then go further and transfer the bitcoins Other than that, no, you CANNOT steal "my" bitcoins
    - karamanolev 4y ago
      Um, no, I don't think language works like that. Let's try to rephrase that with gold: "You CANNOT steal the gold under my mattress. You can steal my keys or break my door, walk in and then move the gold from my house to your car and drive off.". Don't you agree the above is equivalent to me stealing your gold?
TigeriusKirk 4y ago
This story is about a filing in the United States legal system, under which this entity works.
EVa5I7bHFq9mnYK 4y ago
The two are not mutually exclusive. Gold, for example, is not backed by people with guns. However a financial and legal system can be built on top of it, in fact it was build on top of it until 50 years ago.
- tlb 4y ago
  Sure it is. If someone steals your gold, you can call the people with guns to arrest them and get it back to you (often). It doesn't have to work 100% of the time to be an effective deterrent.
  - EVa5I7bHFq9mnYK 4y ago
    It's the same with coins. However fiat money must be protected by people with guns against forgery. With one exception: people in power are allowed to counterfeit it, thus robbing the common people, under protection of people with guns. Gold and Bitcoin are immune to both types of forgery.
    - smachiz 4y ago
      Gold is not, and has never been, immune to forgery. Science has made it harder, but still happens all the time. See: gold plating, gold alloys, etc.
      - notch656a 4y ago
        I'm not aware of any way to actually increase the total amount of real gold in/on the earth in any meaningful way in an ECONOMICAL matter (i.e. you have a net positive income from producing it). The government can make more REAL MONEY for far less than the value of the money.
        smachiz 4y ago
        That’s not forgery. That’s inflation. You only get a net positive income for producing gold if the price is higher than the cost of production.
conanbatt 4y ago
It's the exact opposite - this was done in the legal system, not in the defi one.
cronix 4y ago
> The reason fiat money works It also worked before the US went to a fiat currency in 1971 when Nixon took us off the gold standard. It also allowed for massive deficits because before they couldn't spend what they didn't physically have and now they can just print it without gold backing it.
- Bloedcoin 4y ago
  Which was necessary for the economic revolution. Balancing the money amount to the workforce.
fullsend 4y ago
The libertarian leaning, free market lovers on HN won’t entertain your slander. The book Debt really opened my eyes to a flow of logic demonstrating that in fact markets cannot exist without states (laws) and vice versa. That this idea of pure markets corrupted by governments is a complete fantasy invented whole cloth and worshipped by sycophants for centuries. Markets require contracts, which require laws and enforcement. That’s it.
- ramesh31 4y ago
  Hobbes layed this all out 300 years ago. But apparently “this time it’s different”.
- qudat 4y ago
  You aren’t actually arguing again the core argument: contracts, laws, and enforcement don’t require governments. Just because this is the dominant system today doesn’t necessarily mean it’s the only way.
noasaservice 4y ago
> That's why the whole system works -- because of the threat of violence. And that's what bothers me with the fetishization of "violence is not the answer". Violence is DEFINITELY an answer. It's what state entities do on a regular basis. Now, it's not wise to rely on violence regularly, when more peaceful methods exist and are more effective.
Yhippa 4y ago
> When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect. In my mind the advantage for a US Government-backed crypto is the violence you mentioned above and convenience/traceability. The loss of anonymity I'm sure is a feature to them, not a bug.
- thoughtful-p 4y ago
  It absolutely is. Anyone remember the Clipper Chip[1]? CBDC's are literally that but for finance. Being able to see who is sending money to whom is incredible valuable (even without the ability to manipulate that money, which is worth even more) - remember how much the US intelligence community values metadata. Sure, the US government has a large amount of insight into financial transactions now, but there's a difference between "a lot" and "literally all of it". People here seem quite comfortable with the idea of giving their own government the Clipper Chip for finance - are they so quick to forget the lessons of history? [1] https://en.wikipedia.org/wiki/Clipper_chip https://en.wikipedia.org/wiki/Clipper_chip
redox99 4y ago
This isn't crypto. You didn't own any crypto. Some company owned your crypto. The whole point of crypto is that you can own it (ie you and only you have your keys). We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless. If you give away your crypto to some centralized entity and "trust them" that they'll keep your stuff and not steal it, then you don't get the point of crypto and you're using it wrong. Yes, I know holding your own keys is hard. There are a lot of things that can be done to improve the UX. And even then, I don't think crypto needs to be easy enough for your grandma to use it, because I don't think crypto needs to replace TradFi for every transaction.
- itake 4y ago
  > The whole point of crypto is that you can own it (ie you and only you have your keys). I've also heard stories where people were locked out of exchanges during crashes, preventing liquidation, because exchanges stopped or delayed deposits during high volume trading. Its super cool that you can keep your own crypto, but if you can't trade that crypto, whats the point?
  - tazard 4y ago
    I think you missed the whole point. Celsius, centralized exchanges, etc, you don't actually own the crypto. You have an account on a site. If you want to own your crypto and also trade between currencies, your better off using something like Uniswap
    - smoldesu 4y ago
      I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it. You don't even get to know what wallet it's in, and if Coinbase decides to go sideways, they can snatch up your money with no legal consequence. You're right that part of the problem is the US failing to regulate them, but there's nothing to regulate. A public ledger does not a currency make. Your parents will never have a custodial wallet. The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
yieldcrv 4y ago
that copypasta you found has nothing to do with the asset involved….. it is not likely what Celsius did was legal (or consequence free via the legal system) , so that has nothing to do with the matter that their company held crypto assets adding clearer fiduciary duties to company’s that hold crypto assets is entirely possible and so also has nothing to do with crypto
- jedberg 4y ago
  Not sure why you're calling it copy pasta given that I wrote it. But it does have to do with crypto, because the company involved was holding crypto like a bank, but aren't regulated like a bank because it was crypto.
  - yieldcrv 4y ago
    I'm calling it copypasta because your response wasn't specifically about Celsius, it was looking for a reason to write your pre-existing beliefs about the entire asset class in a place where it wasn't relevant. A lot of people do this, but one of the bigger problems is that it lets poorly run companies get a free pass on bad business practices. "Our unscrupulous behavior won't matter because people will conflate it with crypto. They won't apply scrutiny to us, they'll just try to reduce access"
s_ting765 4y ago
Not sure the supporters of the Freedom Convoy over in Canada would agree with your strong faith in the legal safety of fiat money.
deleted 4y ago
[deleted]
dclowd9901 4y ago
That big disadvantage isn’t just “people with guns”. It’s the value of an entire stable society. The reason the USD has reigned supreme for so long is because the US has been a relatively peaceful and stable country for so long. Their fiat value are 1:1. Crypto, unless it receives the backing of a country (that is, the US decides to switch to bitcoin for some reason), will _never_ have actual value.
matheusmoreira 4y ago
It's not a monetary system problem, it's a banking problem. The cryptocurrencies themselves are fine. The problem is people keep reinventing traditional banking on top of them. Everything started to go wrong as soon as exchanges showed up. All of the drawbacks of centralized banking with none of the regulatory benefits. This isn't decentralized cryptocurrency, this is sending coins to some centralized corporation and expecting that everything will be fine.
notch656a 4y ago
The problem is the people in the government with guns tend to work against the people (or at least certain people, last time I interacted with one of them they were serving me an absurd perjurious warrant). I trust the crypto-anarchists with guns far more than the fiat-authoritarians with guns.
- jjtheblunt 4y ago
  Is your sample size small, though : 1 legal system with guns compared to 0 anarchists with guns?
analog31 4y ago
As an aside, I always point out that countries with no functioning government still have violence and the threat of violence. The earliest writings I've found that use this terminology talk about a "monopoly" on violence, and I think the distinction is important. Also, I think that such a monopoly is not self sustaining but depends to a considerable effect on maintaining its own legitimacy by acting with restraint.
miked85 4y ago
There is no anonymity aspect, except (maybe?) with some coins.
midwesternskyz 4y ago
> That's why the whole [fiat] system works -- because of the threat of violence. > Crypto doesn't have that ... for now. Subtle! The word violence has many euphemisms, but you are using the word violence here as a euphemism for the power of the state to enforce its laws. You can argue about the laws themselves (as we all do) but to not enforce the law is anarchy.

simonebrunozzi 4y ago

loose -> lose

int_19h 4y ago

It doesn't have to be a legal system or a government in general. E.g. Rai stones are basically a public ledger system akin to a blockchain, but working through social convention. https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones One could argue that, in this case, the entire society is "people with guns". Which is fair enough, but, again, it's important to keep in mind that this concept does not intrinsically require anything equivalent to the modern state.

baxtr 4y ago

But wait! I thought decentralised is sooo much better??

aliqot 4y ago
Celsius is centralized. Was this comment sincere?
quest88 4y ago
It's centralized. Turns out people like centralized things because it's easier!

pazimzadeh 4y ago

Huh? If that was true then it would be services like AAVE or Uniswap which would be bankrupt, not the centralized finance Celsius. The idea that the traditional legal system prevents funny business with money is naive. 9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon https://www.youtube.com/watch?v=xU4GdHLUHwU https://www.youtube.com/watch?v=xU4GdHLUHwU The Pentagon’s $35 Trillion Accounting Black Hole https://www.yahoo.com/video/pentagon-35-trillion-accounting-black-231154593.html https://www.yahoo.com/video/pentagon-35-trillion-accounting-... https://www.bloomberg.com/news/articles/2020-01-22/pentagon-racks-up-35-trillion-in-accounting-changes-in-one-year https://www.bloomberg.com/news/articles/2020-01-22/pentagon-... Pentagon's Defense Logistics Agency loses track of $800m https://www.bbc.com/news/world-us-canada-42954050 https://www.bbc.com/news/world-us-canada-42954050

jedberg 4y ago
It doesn't prevent it, but it gives you recourse to make yourself whole again, and in a sense prevents a lot of funny business because people are afraid of getting caught and being put in jail.
- pazimzadeh 4y ago
  Crypto is like the invention of ink that cannot be erased. How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance (especially once multi-sig wallets become common). If Celsius had been more all-in on crypto tech, they would have had FEWER problems. Also, I don't know any law that exempts crypto companies from being taken to court.
  - eropple 4y ago
    > How that technology would weaken trust and accountability is beyond me. It's literally perfect for finance Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public. > Also, I don't know any law that exempts crypto companies from being taken to court. ...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach. On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.

jankyxenon 4y ago

Aren't Bitcoin and Ethereum both pseudonymous? Once you know one of someone's transactions, don't you know them all?

jedberg 4y ago
Yes, and often you can trace that back to a single person, but not always.
ericd 4y ago
With BTC transactions via lightning, at least, there’s simply a periodic net settlement.

scifibestfi 4y ago

Fiat works until it doesn't. Whether that's inflation, corrupt government, or the long term debt cycle which we nearing the end of. Ray Dalio has a good video about what that means and how this has played out every time over the past 500 years: https://www.youtube.com/watch?v=xguam0TKMw8 https://www.youtube.com/watch?v=xguam0TKMw8

arcticbull 4y ago
This is the same thing that William DeVane has been saying shilling gold for Rosland Capital at 2am to Fox viewers for the last decade. I'm not worried. [1] Dalio is talking his book. [1] https://www.youtube.com/watch?v=VVcdvT09qr4 https://www.youtube.com/watch?v=VVcdvT09qr4
- ericd 4y ago
  It’s his book because he believes it’s true, not because he’s trying to influence things. I’d highly recommend reading Big Debt Crises.
  - arcticbull 4y ago
    Sorry, when I said "talking his book" that's like a finance term for advocating for things that would benefit the positions you hold. > Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and the manager’s portfolio. [1] https://abnormalreturns.com/2010/02/18/everybody-talks-their-book-everybody https://abnormalreturns.com/2010/02/18/everybody-talks-their...
    - ericd 4y ago
      Sorry for the poor wording of my response, I knew what you meant. I meant that he’s invested the way he is because he believes in what he’s talking about in terms of macro trends. And then I confusingly recommended reading his printed book, which I’ve found very helpful in understanding what the central banks have been doing, and allowed me to be well positioned for this inflation well before it picked up to where it is now.

moralestapia 4y ago

Why can't both exist though? Each with their own advantage/disadvantages, and you get to choose which one to use after considering the tradeoffs. Things I would use crypto for: * Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties. * Any transaction that I would like to keep my privacy on (and this does not mean illegal things, btw). Things I would never use crypto for: * Storing wealth. For me personally it's too much of a bet, we're always one right (or wrong) math proof away from all of this becoming dust. * Smart contracts. Anything that requires a contract between me and someone else, I'll keep using the tried and tested way of common law. I'd rather have my business backed by the Delaware Chancery Court (which has proven to be quite effective these past weeks) than by the code wrote by some random upwork contractor.

mountainofdeath 4y ago
This already exists though and is a technical solution to an economic problem. The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise. Crypto transfers for say USD->EUR via USD->BTC->EUR are just adding extra foreign exchange legs in the hope that the BTC holders on either end will give you a better deal.
- moralestapia 4y ago
  >This already exists though and is a technical solution to an economic problem. Immediately followed by: >The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise. Huh? Is it solved or not? It's unclear to me where do you stand. de facto, moving ETH->ETH is faster and cheaper than using the standard forex infrastructure.
dale_glass 4y ago
Crypto is bad at money transfers. It's low capacity. That's why nobody is using BTC to pay for pizza anymore. It's also bad at privacy, since the architecture for most crypto systems relies on storing a permanent, non-modifiable public ledger. Your usage case doesn't really work because almost nobody cares about that. You'll find a few idealists interested in that, and a very few people that need to transact with some random person in Bangladesh. Pretty much everyone will just do a regular bank transfer or use Paypal. What got crypto to become popular is the "get rich quick" schemes, which not only don't require stability, but rely on instability and people attracted to the idea of exploiting it for profit.

bogomipz 4y ago

>"The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence." How many people were prosecuted for the 2008 financial crisis though? Neither did the "threat of violence" nor the legal system prevent or even deter those perpetrators.

pazimzadeh 4y ago
Exactly. The people who benefit the most from the current system are the already rich, who can afford to the legal fees and come up with creative defenses. Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system. This debate reminds me of the nature vs nurture debate in biology. It's a mirage. In reality, it's nature via nurture. Similarly, there is no inherent divide between government and crypto. One can extend the other.
- CharlesW 4y ago
  > Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system. Are you sure? The WSJ says that 0.01% of all holders control 27% of Bitcoin, vs. the top 1% of households who control about a third of all U.S. wealth. https://www.wsj.com/articles/bitcoins-one-percent-controls-lions-share-of-the-cryptocurrencys-wealth-11639996204 https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
  - pazimzadeh 4y ago
    You're missing the point. The point is that the poorest Bitcoin wallet is as secure as the richest wallet. Whereas in legal-land, the more money you have, the better your lawyers (and whatnot) you can hire.
    - CharlesW 4y ago

tossl568 4y ago

You can't steal my Bitcoin if I don't deposit them with a custodian. This is like blaming gold itself if the owners of a gold bank run off with the gold.

ramesh31 4y ago
Relevant XKCD: https://xkcd.com/538/ https://xkcd.com/538/ At the end of the day, any power you think you may have is an illusion. It all comes down to who has the monopoly on violence.
smachiz 4y ago
Except that we have regulations for banks and brokerages for how they must operate, what sort of cash reserves they have, and how they must conduct audits. And they pay into an insurance program (FDIC/SIPC) to return money to depositors if they collapse.
karamanolev 4y ago
> You can't steal my Bitcoin if I don't deposit them with a custodian. Many people have lost their BTC and other coins to hacks, phishes, hardware failures, software failures and so on. So in the sense of the people from the general public, yes, I can steal your Bitcoin. > This is like blaming gold itself if the owners of a gold bank run off with the gold. You can keep it under the mattress and expose yourself to one kind of failure mode. You can also keep it with the bank with the clear expectation that the owners will not run off with the gold and also expect the state to go after the owners if they do. Which is not happening here.
- tcgv 4y ago
  > yes, I can steal your Bitcoin Let's fix that phrase: - yes, I can steal your Bitcoin keys And then go further and transfer the bitcoins Other than that, no, you CANNOT steal "my" bitcoins
  - karamanolev 4y ago
    Um, no, I don't think language works like that. Let's try to rephrase that with gold: "You CANNOT steal the gold under my mattress. You can steal my keys or break my door, walk in and then move the gold from my house to your car and drive off.". Don't you agree the above is equivalent to me stealing your gold?

TigeriusKirk 4y ago

This story is about a filing in the United States legal system, under which this entity works.

EVa5I7bHFq9mnYK 4y ago

The two are not mutually exclusive. Gold, for example, is not backed by people with guns. However a financial and legal system can be built on top of it, in fact it was build on top of it until 50 years ago.

tlb 4y ago
Sure it is. If someone steals your gold, you can call the people with guns to arrest them and get it back to you (often). It doesn't have to work 100% of the time to be an effective deterrent.
- EVa5I7bHFq9mnYK 4y ago
  It's the same with coins. However fiat money must be protected by people with guns against forgery. With one exception: people in power are allowed to counterfeit it, thus robbing the common people, under protection of people with guns. Gold and Bitcoin are immune to both types of forgery.
  - smachiz 4y ago
    Gold is not, and has never been, immune to forgery. Science has made it harder, but still happens all the time. See: gold plating, gold alloys, etc.
    - notch656a 4y ago
      I'm not aware of any way to actually increase the total amount of real gold in/on the earth in any meaningful way in an ECONOMICAL matter (i.e. you have a net positive income from producing it). The government can make more REAL MONEY for far less than the value of the money.
      - smachiz 4y ago
        That’s not forgery. That’s inflation. You only get a net positive income for producing gold if the price is higher than the cost of production.

conanbatt 4y ago

It's the exact opposite - this was done in the legal system, not in the defi one.

cronix 4y ago

> The reason fiat money works It also worked before the US went to a fiat currency in 1971 when Nixon took us off the gold standard. It also allowed for massive deficits because before they couldn't spend what they didn't physically have and now they can just print it without gold backing it.

Bloedcoin 4y ago
Which was necessary for the economic revolution. Balancing the money amount to the workforce.

fullsend 4y ago

The libertarian leaning, free market lovers on HN won’t entertain your slander. The book Debt really opened my eyes to a flow of logic demonstrating that in fact markets cannot exist without states (laws) and vice versa. That this idea of pure markets corrupted by governments is a complete fantasy invented whole cloth and worshipped by sycophants for centuries. Markets require contracts, which require laws and enforcement. That’s it.

ramesh31 4y ago
Hobbes layed this all out 300 years ago. But apparently “this time it’s different”.
qudat 4y ago
You aren’t actually arguing again the core argument: contracts, laws, and enforcement don’t require governments. Just because this is the dominant system today doesn’t necessarily mean it’s the only way.

noasaservice 4y ago

> That's why the whole system works -- because of the threat of violence. And that's what bothers me with the fetishization of "violence is not the answer". Violence is DEFINITELY an answer. It's what state entities do on a regular basis. Now, it's not wise to rely on violence regularly, when more peaceful methods exist and are more effective.

Yhippa 4y ago

> When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect. In my mind the advantage for a US Government-backed crypto is the violence you mentioned above and convenience/traceability. The loss of anonymity I'm sure is a feature to them, not a bug.

thoughtful-p 4y ago
It absolutely is. Anyone remember the Clipper Chip[1]? CBDC's are literally that but for finance. Being able to see who is sending money to whom is incredible valuable (even without the ability to manipulate that money, which is worth even more) - remember how much the US intelligence community values metadata. Sure, the US government has a large amount of insight into financial transactions now, but there's a difference between "a lot" and "literally all of it". People here seem quite comfortable with the idea of giving their own government the Clipper Chip for finance - are they so quick to forget the lessons of history? [1] https://en.wikipedia.org/wiki/Clipper_chip https://en.wikipedia.org/wiki/Clipper_chip

redox99 4y ago

This isn't crypto. You didn't own any crypto. Some company owned your crypto. The whole point of crypto is that you can own it (ie you and only you have your keys). We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless. If you give away your crypto to some centralized entity and "trust them" that they'll keep your stuff and not steal it, then you don't get the point of crypto and you're using it wrong. Yes, I know holding your own keys is hard. There are a lot of things that can be done to improve the UX. And even then, I don't think crypto needs to be easy enough for your grandma to use it, because I don't think crypto needs to replace TradFi for every transaction.

itake 4y ago
> The whole point of crypto is that you can own it (ie you and only you have your keys). I've also heard stories where people were locked out of exchanges during crashes, preventing liquidation, because exchanges stopped or delayed deposits during high volume trading. Its super cool that you can keep your own crypto, but if you can't trade that crypto, whats the point?
- tazard 4y ago
  I think you missed the whole point. Celsius, centralized exchanges, etc, you don't actually own the crypto. You have an account on a site. If you want to own your crypto and also trade between currencies, your better off using something like Uniswap
  - smoldesu 4y ago
    I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it. You don't even get to know what wallet it's in, and if Coinbase decides to go sideways, they can snatch up your money with no legal consequence. You're right that part of the problem is the US failing to regulate them, but there's nothing to regulate. A public ledger does not a currency make. Your parents will never have a custodial wallet. The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.

yieldcrv 4y ago

that copypasta you found has nothing to do with the asset involved….. it is not likely what Celsius did was legal (or consequence free via the legal system) , so that has nothing to do with the matter that their company held crypto assets adding clearer fiduciary duties to company’s that hold crypto assets is entirely possible and so also has nothing to do with crypto

jedberg 4y ago
Not sure why you're calling it copy pasta given that I wrote it. But it does have to do with crypto, because the company involved was holding crypto like a bank, but aren't regulated like a bank because it was crypto.
- yieldcrv 4y ago
  I'm calling it copypasta because your response wasn't specifically about Celsius, it was looking for a reason to write your pre-existing beliefs about the entire asset class in a place where it wasn't relevant. A lot of people do this, but one of the bigger problems is that it lets poorly run companies get a free pass on bad business practices. "Our unscrupulous behavior won't matter because people will conflate it with crypto. They won't apply scrutiny to us, they'll just try to reduce access"

s_ting765 4y ago

Not sure the supporters of the Freedom Convoy over in Canada would agree with your strong faith in the legal safety of fiat money.

deleted 4y ago

[deleted]

dclowd9901 4y ago

That big disadvantage isn’t just “people with guns”. It’s the value of an entire stable society. The reason the USD has reigned supreme for so long is because the US has been a relatively peaceful and stable country for so long. Their fiat value are 1:1. Crypto, unless it receives the backing of a country (that is, the US decides to switch to bitcoin for some reason), will _never_ have actual value.

matheusmoreira 4y ago

It's not a monetary system problem, it's a banking problem. The cryptocurrencies themselves are fine. The problem is people keep reinventing traditional banking on top of them. Everything started to go wrong as soon as exchanges showed up. All of the drawbacks of centralized banking with none of the regulatory benefits. This isn't decentralized cryptocurrency, this is sending coins to some centralized corporation and expecting that everything will be fine.

notch656a 4y ago

The problem is the people in the government with guns tend to work against the people (or at least certain people, last time I interacted with one of them they were serving me an absurd perjurious warrant). I trust the crypto-anarchists with guns far more than the fiat-authoritarians with guns.

jjtheblunt 4y ago
Is your sample size small, though : 1 legal system with guns compared to 0 anarchists with guns?

analog31 4y ago

As an aside, I always point out that countries with no functioning government still have violence and the threat of violence. The earliest writings I've found that use this terminology talk about a "monopoly" on violence, and I think the distinction is important. Also, I think that such a monopoly is not self sustaining but depends to a considerable effect on maintaining its own legitimacy by acting with restraint.

miked85 4y ago

There is no anonymity aspect, except (maybe?) with some coins.

midwesternskyz 4y ago

> That's why the whole [fiat] system works -- because of the threat of violence. > Crypto doesn't have that ... for now. Subtle! The word violence has many euphemisms, but you are using the word violence here as a euphemism for the power of the state to enforce its laws. You can argue about the laws themselves (as we all do) but to not enforce the law is anarchy.