5 ms·

Ahh, yes, regulation. Like when big exchanges lobby the government, then monopolize the market and do whatever the hell they want while charging high fees? Grea

by snitko 13y ago

Ahh, yes, regulation. Like when big exchanges lobby the government, then monopolize the market and do whatever the hell they want while charging high fees? Great idea. What you want is an independent audit, not regulation.

api 13y ago
Politics is often about finding bad solutions to worse problems.
- alexeisadeski3 13y ago
  Politics is often about making bad problems worse.
- snitko 13y ago
  No. This should never be an excuse for finding a better solution because people would not want to look for it and because it is extremely difficult to undo a regulation put in place. You're saying regulation would work better than an independent audit? How so? Show me the mechanism.
  - ceejayoz 13y ago
    Who's going to pay for an independent audit without regulation requiring it? They're clearly not doing it on their own currently.
    - snitko 13y ago
      I personally would be very much willing to pay for an audit of an exchange before I make the choice of which exchange to use. As many other Bitcoin traders. Who else do you think?
      - tveita 13y ago
        If I may ask, which exchange are you currently using, and what did your audit show?
        snitko 13y ago
        There were no companies offering Bitcoin exchanges audit because the industry is very young. Expect those companies to appear (unless regulators start messing up with exchanges). If they don't appear, it means there's not enough demand. If there's no demand for audit and government is still trying to regulate the industry, it means they're wasting taxpayers money on something taxpayers don't want.
- jessaustin 13y ago
  The only problem politics ever addresses is "how may I steal more from other people?"
  - api 13y ago
    So the tragedy of the commons, obscure forms of financial fraud, bank runs, and the marketing of addictive substances are examples of non-problems?
deleted 13y ago
[deleted]
ceejayoz 13y ago
> What you want is an independent audit, not regulation. Maybe even some regulation requiring such a thing?
- jjoonathan 13y ago
  Wasn't that what led to the mortgage crisis? Banks got to choose the "independent" auditors they used, so the market of auditors selected for those who overvalued the assets. When it became clear that the "independent" valuations were unreliable, the system collapsed at massive cost to the global economy. Competition isn't a magic bullet. It amplifies perverse incentives just as easily as it amplifies legitimate incentives.
- baddox 13y ago
  Maybe consumer demand requiring such a thing. Would you rather do "Bitcoin banking" with an institution that submits to third-party audits, or one that doesn't?
rtpg 13y ago
Hey, at least when there's a bank run I (well not me, since I have no money in US banks) will see my federally insured $20k or whatever, even in the case of collapse.
- snitko 13y ago
  The problem here is that regulation is not voluntary. So, for example, if I don't trust this exchange - fine, maybe I will only go to government approved exchanges. But then another fella may feel he trusts this unapproved exchange. It's his choice, why should I care? Why should I be forcing my concerns upon him through government, in the form of regulation? Because, of course, if regulation exists for exchanges, this other exchange wouldn't be operating and this other fella wouldn't actually have a choice. So it's important to remember - insurance and audit are great things. But combine them with government policing and force and you have a regulation, which only leads to restricting the choices consumers have.
  - rtpg 13y ago
    Because in the real world there's a huge amount of information asymmetry. Because most consumers are not informed (not because they don't put the effort but sinmply because they can't just look at the bank's books and decide whether they're well off), this asymmetry greatly affects a consumers decision to choose "correctly": it's not really a free market. Obviously it depends on the regulations, but a lot of regulations are about making sure that there's at least a minimum bound in the "quality" of products offered, because of the asymmetry at play here. If there is none, we can end up with "bad" products(that don't seem bad because we're uninformed) crowding out "good" ones, and having the entire market be worse off. The 2007 crisis was a perfect example of asymmetry causing markets to crash: obviously there's the whole aspect of consumers being mislead on their mortgages, but there's the even greater aspects of banks misleading each other! Because of the opacity of the market of derivatives (nobody knew just how invested everyone was in on certain obligations) no bank could make informed decisions on what to do with their positions. If we don't restrict some choices in the short term, then we can end up with no choices in the long term. In areas of extremely high uncertainty, regulation (notably concerning transparency) is necessary to make the market freer (in the actual definition, not from the common usage of free=no regulation).
btgeekboy 13y ago
Regulation gets me neat little things like, say, the FDIC.
michaelt 13y ago
If you have much trust in independent audits, I guess you've never taken part in one! Auditors generally have no incentive to rock the boat, and might have a disincentive in the form of losing future business. And even if they're really thorough, most auditors are only in for a few days or weeks and don't have time to go through things anything like as thoroughly as people who work on them full time. And even if they're really thorough and have the time to go through everything with a fine-toothed comb, insider threats can be undetectable, like if the guy preparing the cold storage wallet to put in the safety deposit box makes himself a copy. The only audit of an exchange worth a damn is the audit undertaken by reputable insurers who will guarantee my entire deposit.

by snitko 13y ago

api 13y ago

Politics is often about finding bad solutions to worse problems.

alexeisadeski3 13y ago
Politics is often about making bad problems worse.
snitko 13y ago
No. This should never be an excuse for finding a better solution because people would not want to look for it and because it is extremely difficult to undo a regulation put in place. You're saying regulation would work better than an independent audit? How so? Show me the mechanism.
- ceejayoz 13y ago
  Who's going to pay for an independent audit without regulation requiring it? They're clearly not doing it on their own currently.
  - snitko 13y ago
    I personally would be very much willing to pay for an audit of an exchange before I make the choice of which exchange to use. As many other Bitcoin traders. Who else do you think?
    - tveita 13y ago
      If I may ask, which exchange are you currently using, and what did your audit show?
      - snitko 13y ago
        There were no companies offering Bitcoin exchanges audit because the industry is very young. Expect those companies to appear (unless regulators start messing up with exchanges). If they don't appear, it means there's not enough demand. If there's no demand for audit and government is still trying to regulate the industry, it means they're wasting taxpayers money on something taxpayers don't want.
jessaustin 13y ago
The only problem politics ever addresses is "how may I steal more from other people?"
- api 13y ago
  So the tragedy of the commons, obscure forms of financial fraud, bank runs, and the marketing of addictive substances are examples of non-problems?

deleted 13y ago

[deleted]

ceejayoz 13y ago

> What you want is an independent audit, not regulation. Maybe even some regulation requiring such a thing?

jjoonathan 13y ago
Wasn't that what led to the mortgage crisis? Banks got to choose the "independent" auditors they used, so the market of auditors selected for those who overvalued the assets. When it became clear that the "independent" valuations were unreliable, the system collapsed at massive cost to the global economy. Competition isn't a magic bullet. It amplifies perverse incentives just as easily as it amplifies legitimate incentives.
baddox 13y ago
Maybe consumer demand requiring such a thing. Would you rather do "Bitcoin banking" with an institution that submits to third-party audits, or one that doesn't?

rtpg 13y ago

Hey, at least when there's a bank run I (well not me, since I have no money in US banks) will see my federally insured $20k or whatever, even in the case of collapse.

snitko 13y ago
The problem here is that regulation is not voluntary. So, for example, if I don't trust this exchange - fine, maybe I will only go to government approved exchanges. But then another fella may feel he trusts this unapproved exchange. It's his choice, why should I care? Why should I be forcing my concerns upon him through government, in the form of regulation? Because, of course, if regulation exists for exchanges, this other exchange wouldn't be operating and this other fella wouldn't actually have a choice. So it's important to remember - insurance and audit are great things. But combine them with government policing and force and you have a regulation, which only leads to restricting the choices consumers have.
- rtpg 13y ago
  Because in the real world there's a huge amount of information asymmetry. Because most consumers are not informed (not because they don't put the effort but sinmply because they can't just look at the bank's books and decide whether they're well off), this asymmetry greatly affects a consumers decision to choose "correctly": it's not really a free market. Obviously it depends on the regulations, but a lot of regulations are about making sure that there's at least a minimum bound in the "quality" of products offered, because of the asymmetry at play here. If there is none, we can end up with "bad" products(that don't seem bad because we're uninformed) crowding out "good" ones, and having the entire market be worse off. The 2007 crisis was a perfect example of asymmetry causing markets to crash: obviously there's the whole aspect of consumers being mislead on their mortgages, but there's the even greater aspects of banks misleading each other! Because of the opacity of the market of derivatives (nobody knew just how invested everyone was in on certain obligations) no bank could make informed decisions on what to do with their positions. If we don't restrict some choices in the short term, then we can end up with no choices in the long term. In areas of extremely high uncertainty, regulation (notably concerning transparency) is necessary to make the market freer (in the actual definition, not from the common usage of free=no regulation).

btgeekboy 13y ago

Regulation gets me neat little things like, say, the FDIC.

michaelt 13y ago

If you have much trust in independent audits, I guess you've never taken part in one! Auditors generally have no incentive to rock the boat, and might have a disincentive in the form of losing future business. And even if they're really thorough, most auditors are only in for a few days or weeks and don't have time to go through things anything like as thoroughly as people who work on them full time. And even if they're really thorough and have the time to go through everything with a fine-toothed comb, insider threats can be undetectable, like if the guy preparing the cold storage wallet to put in the safety deposit box makes himself a copy. The only audit of an exchange worth a damn is the audit undertaken by reputable insurers who will guarantee my entire deposit.