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This is absolutely correct. One other key point: Marc and his portfolio companies (among others) are deliberately evading regulations. Those regulations have re

This is absolutely correct. One other key point: Marc and his portfolio companies (among others) are deliberately evading regulations. Those regulations have real costs, which is why they are worth evading at all. Were companies like Coinbase to actually comply with U.S. law, they'd each have to spend $20 million on money transmission licenses and associated bonds (not including legal fees). These costs are not presently taken into account with a 1% fee structure. Disclaimer: My company is the plaintiff in an ongoing lawsuit about this. http://www.plainsite.org/flashlight/case.html?id=2434524 http://www.plainsite.org/flashlight/case.html?id=2434524

deleted 13y ago
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aqme28 13y ago
This is interesting and the first I've heard of this. Can you elaborate more?
mr_luc 13y ago
Huh. An 'unfair competition' lawsuit by someone with a nominally competing payment product ('FaceCash') ... After reading your CrunchBase profile, where I saw that you have your own competing product, and looking at the list of defendants in that lawsuit, may I just say that while I don't bear you any ill will (and in fact I wish you well), I don't hope that you win this. That doesn't mean much since I base that opinion on so little, but here's my thinking, in case it's useful to you in communicating to others: We need innovation in this space in the worst way possible. The VCs are showing up, and I'm nervous about their interaction with BitCoin. But however unsavory or unfair their motives or tactics, in the fight between traditional 'money transmitters' and bitcoin, the VCs find themselves on the side of the angels, fighting against premature regulation of a potentially world-changing technology. BitCoin is a completely new and different thing, and it provides a lot of capabilities to companies that use it that those companies would otherwise have to do themselves -- and that central banks have to do, as well. Sure, if BitCoin didn't exist, you'd have to do a lot of things yourself that the BitCoin network now makes trivial. But why should those companies be forced by law to pretend that BitCoin and its network don't exist? And don't have the properties that they have?
- thinkcomp 13y ago
  There's a lot of complexity here. Aside from the list of defendants, you may find some of the lawsuit filings of interest. And you may be surprised as to which companies are really for and against over-regulation of the payments space.
- wmf 13y ago
  I don't support thinkcomp's lawsuit for various reasons, but... Sure, if BitCoin didn't exist, you'd have to do a lot of things yourself that the BitCoin network now makes trivial. But why should those companies be forced by law to pretend that BitCoin and its network don't exist? And don't have the properties that they have? I don't think this is a good interpretation of the situation. Bitcoin does not natively provide anti money laundering which is one of the primary purposes of money transfer regulation. Bitcoin also doesn't provide consumer protections that many people want.
  - mr_luc 13y ago
    1. I think that there are anti-money-laundering regulations that don't require $20m in bonds, like the know-your-customer laws that many exchanges are complying with. 2. Many people want consumer protections, but they'd probably, if asked, 'want' it for cash as well. And in fact, they do have them -- customer service, anti-fraud laws and criminal prosecution, small claims court and lawsuits. Those protections are necessary to, essentially, protect the consumer from the money transmitter. But in this case, the Bitcoin network exists, and provides a novel invention of something that can, through the use of keys and such, be transferred every bit as irrevocably as handing cash from one person to another -- and provide an excellent, public 'paper trail', which can act as proof of purchase/payment, as well. So my point is, the world has changed, and it's very, very good that the old-world regulations aren't yet completely crushing that change. Cash++ springs into being, and companies are being formed to add a user-friendly skin on top of this amazing Cash++ network, but endangered existing players want to make the barrier to entry for any company that taps into Cash++ be the onerous, $20mm bonds required of traditional money transmitters.

deleted 13y ago

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aqme28 13y ago

This is interesting and the first I've heard of this. Can you elaborate more?

mr_luc 13y ago

Huh. An 'unfair competition' lawsuit by someone with a nominally competing payment product ('FaceCash') ... After reading your CrunchBase profile, where I saw that you have your own competing product, and looking at the list of defendants in that lawsuit, may I just say that while I don't bear you any ill will (and in fact I wish you well), I don't hope that you win this. That doesn't mean much since I base that opinion on so little, but here's my thinking, in case it's useful to you in communicating to others: We need innovation in this space in the worst way possible. The VCs are showing up, and I'm nervous about their interaction with BitCoin. But however unsavory or unfair their motives or tactics, in the fight between traditional 'money transmitters' and bitcoin, the VCs find themselves on the side of the angels, fighting against premature regulation of a potentially world-changing technology. BitCoin is a completely new and different thing, and it provides a lot of capabilities to companies that use it that those companies would otherwise have to do themselves -- and that central banks have to do, as well. Sure, if BitCoin didn't exist, you'd have to do a lot of things yourself that the BitCoin network now makes trivial. But why should those companies be forced by law to pretend that BitCoin and its network don't exist? And don't have the properties that they have?

thinkcomp 13y ago
There's a lot of complexity here. Aside from the list of defendants, you may find some of the lawsuit filings of interest. And you may be surprised as to which companies are really for and against over-regulation of the payments space.
wmf 13y ago
I don't support thinkcomp's lawsuit for various reasons, but... Sure, if BitCoin didn't exist, you'd have to do a lot of things yourself that the BitCoin network now makes trivial. But why should those companies be forced by law to pretend that BitCoin and its network don't exist? And don't have the properties that they have? I don't think this is a good interpretation of the situation. Bitcoin does not natively provide anti money laundering which is one of the primary purposes of money transfer regulation. Bitcoin also doesn't provide consumer protections that many people want.
- mr_luc 13y ago
  1. I think that there are anti-money-laundering regulations that don't require $20m in bonds, like the know-your-customer laws that many exchanges are complying with. 2. Many people want consumer protections, but they'd probably, if asked, 'want' it for cash as well. And in fact, they do have them -- customer service, anti-fraud laws and criminal prosecution, small claims court and lawsuits. Those protections are necessary to, essentially, protect the consumer from the money transmitter. But in this case, the Bitcoin network exists, and provides a novel invention of something that can, through the use of keys and such, be transferred every bit as irrevocably as handing cash from one person to another -- and provide an excellent, public 'paper trail', which can act as proof of purchase/payment, as well. So my point is, the world has changed, and it's very, very good that the old-world regulations aren't yet completely crushing that change. Cash++ springs into being, and companies are being formed to add a user-friendly skin on top of this amazing Cash++ network, but endangered existing players want to make the barrier to entry for any company that taps into Cash++ be the onerous, $20mm bonds required of traditional money transmitters.