14 ms·

This is a quote from the Manchin letter: The Senate Homeland Security and Governmental Affairs Committee issued a report just this month stating, “There is wid

by minimax 13y ago

This is a quote from the Manchin letter: The Senate Homeland Security and Governmental Affairs Committee issued a report just this month stating, “There is widespread concern about the Bitcoin system’s possible impact on national currencies, its potential for criminal misuse, and the implications of its use for taxation.” This is the (slightly expanded) quote from that report† (which is actually kind of interesting -- it's a survey of bitcoin regulation (or lack thereof) in a bunch of different countries). There is widespread concern about the Bitcoin system’s possible impact on national currencies, its potential for criminal misuse, and the implications of its use for taxation. Overall, the findings of this report reveal that the debate over how to deal with this new virtual currency is still in its infancy. So, by omitting that sentence he totally misrepresents the position of the report authors. I generally think bitcoin is overhyped by most of its proponents, but this is a really silly response. †http://www.loc.gov/law/help/bitcoin-survey/2014-010233%20Compiled%20Report_.pdf http://www.loc.gov/law/help/bitcoin-survey/2014-010233%20Com...

JoeAltmaier 13y ago
The lack of regulation is worrying. That exchange that just flamed out is an example of what the entire financial system would be with no oversight.
- jamoes 13y ago
  Yes exactly. The exchange that just flamed out was incredibly poorly run, and deserved to go out of business. Now there is space in the market for more competent companies to take over the market share. I'd love to see the entire financial system operate under a meritocracy such as this.
  - Tloewald 13y ago
    > I'd love to see the entire financial system operate under a meritocracy such as this. You might think you would, but I suspect you would not.
    - benaiah 13y ago
      In other words, "I disagree with you." Could you add something to the discussion? A real argument, perhaps? Nobody called for a hand-raising of who was for or against economic regulation.
      - Tloewald 13y ago
        Actually, I'd say it's more snarky than "I disagree with you", it's "you haven't thought this through or you would disagree with you". If you like analogies, consider the difference between using an old, creaky, but battle-tested codebase that handles mission-critical tasks, and saying "we should just throw it all away, build a quick and dirty open source replacement, and let people fork the heck out of it". Old crufty code contains lots of horrible crap, but a lot of it is there because it's necessary. Replacing the financial system with some kind of anarchy -- meritocratic or not -- is going to have the same effect, and we can't afford for something as critical to everyone's wellbeing as the financial system turn into an unstable Darwinian mess. In any event, I was going to write an essay, but a one-liner was funnier.
  - loumf 13y ago
    Banks used to fail all of the time with depositors losing assets. This caused a lot of problems, so we enacted some regulation. Now banks still fail (several weekly, without much notice), but depositors have mandated insurance. Are you against that?
    - drcode 13y ago
      If depositors didn't have mandated insurance, they would pay more attention to the credit-worthiness of the bank they work with, and we might have avoided the 2008 debacle.
      - gknoy 13y ago
        It seems that the health of the bank is something which is actively obfuscated. Saying "buyer beware" is like telling people that they should be responsible to make sure that the cars they buy are safe enough, or to make sure that the restaurants they eat at have clean enough standards in the kitchens. That's the entire point of regulatory inspections: No one can afford to be attentive to that level of detail or be an expert in everything.
        drcode 13y ago
        I agree people cannot be attentive to everything. HOWEVER, people can be a lot more attentive now then they could ten years ago (for example, online reviews of cars/restaurants/etc) and in ten years they will be able to be even more attentive. If we do things that foster attentiveness, everyone will be better off.
        dragonwriter 13y ago
        > HOWEVER, people can be a lot more attentive now then they could ten years ago (for example, online reviews of cars/restaurants/etc) Its a good thing online reviews are reliable sources of information with transparent provenance that neither the company itself nor its competitors spend substantial efforts loading with false-flag propaganda. Or, at least, that's a good thing in whatever alternate universe it is true in.
  - hnnewguy 13y ago
    >I'd love to see the entire financial system operate under a meritocracy such as this. It does. Banks fail every day. Hundreds of banks since 2008. Oh, I'll bet you're talking about the TBTF banks, that were kept afloat with some interesting finance to prevent the global system from collapsing. I laugh every time someone says they should have all failed. I don't think people realize who, exactly, loses when banks go out of business. Hint: It isn't Jamie Dimon or Lloyd Blankfein (though they would temporarily lose their jobs). It's everyone who owns shares in the bank, everyone who owns bonds of the bank, everyone who works at the bank, everyone who banks at the bank (yes, FDIC covers some, but that itself is a bailout), pension funds, pensioners, insurance users, and on and on. These aren't some rich "banksters", they're your friends and neighbors.
  - anigbrowl 13y ago
    The implicit corollaries to this are a) that anyone who wasn't capable of recognizing the exchange as poorly run (eg anyone who isn't a programmer and can't see past the friendly corporate graphics on the landing page) deserves to lose whatever funds they were stupid enough to trust to that institution, and b) if the (alleged) 6% of all extant BTC that went missing turns up in hands of some unknown actor later, well that's nobody's business.
    - Crito 13y ago
      > "anyone who wasn't capable of recognizing the exchange as poorly run (eg anyone who isn't a programmer and can't see past the friendly corporate graphics on the landing page)" I don't think that being a programmer was necessary to be wary of MtGox. MtGox was being called out in strong terms as long as 3 years ago on HN and bitcoin forums (https://news.ycombinator.com/item?id=2676263 https://news.ycombinator.com/item?id=2676263). This sort of knowledge certainly should have found it's way to "non-programmers" at least in the past year. Trusting MtGox during the past year wasn't a matter of not being a programmer. It was a matter of being an idiot. Do idiots deserve to lose their money? No. I agree with the rest of your comment.
  - pdkl95 13y ago
    So you're saying that Bitcoin is so volatile and risky that only a fool use it? Noted, thanks for the warning.
- gnaritas 13y ago
  > That exchange that just flamed out is an example of what the entire financial system would be with no oversight. The market is actually recovering quite well from that incident, so what exactly is so worrying? A bad business failed; that's what's supposed to happen.
  - eli 13y ago
    Hmm. If I were a customer of Mt Gox and lost money, I don't think I would agree that it's an example of a market working as intended.
    - gnaritas 13y ago
      So? Businesses fail, whether you like it or not, that is how markets are supposed to function. It is clearly an example of a functional market. That doesn't mean people aren't defrauded, there's no such thing as a market without crime.
    - BlackDeath3 13y ago
      And if I were a career criminal, I'd probably have a pretty low opinion of the justice system (actual problems with said justice system aside). My point? It's hard to be reasonable about things when you're coming at them from a certain perspective. Just as a criminal sentenced to life without parole probably thinks that the courts trying him are corrupt, people who lost a lot of money on MtGox probably think that the entire economic system and Bitcoin market is broken. Are they correct? It's possible, but they're not in the most rational frame-of-mind right now, are they?
    - aetherson 13y ago
      Well, what if you were the investor in a start-up, which failed, and you lost your invested money? Would you consider that the market working as intended? What if you loaned someone some money, and they failed and got bankruptcy, meaning you lost your loan. Is that the market working as intended? We've created this kind of weird deal with banks, where you loan people money at super-low rates, but in return you're insulated from the normal consequences of failure, and have a ton of flexibility in terms of when you can demand repayment of your loan -- to the point where most people don't probably consider their bank balances a loan. I'm not here to say that this is a good or a bad thing. Mt. Gox was more like a normal loan or almost every other financial instrument in the world, and less like a bank. It seems hard to suggest that it's uniquely bad for Mt. Gox to act like almost every other financial instrument in the world -- as long as expectations are aligned that it's not the curious anomaly known as a "bank."
- drcode 13y ago
  That's funny... When Lehman Bros went down, the US economy went to hell. When MtGox went down, the bitcoin price returned to its previous level within a couple days. Clearly we need more oversight of bitcoin.
  - vonmoltke 13y ago
    The assets lost in MtGox were a rounding error for Lehman.
    - Crito 13y ago
      In terms of USD, or in terms of market cap?
    - benaiah 13y ago
      Yes, but as a proportion of the relevant market, they were far greater, which actually strengthens the point.
      - vonmoltke 13y ago
        No it doesn't. The relevant market is trivial compared to the size of the global financial system. The entire Bitcoin market could evaporate today and cause barely a ripple. Lehman had significant assets in the fiat currency of the largest economy in the world, a fiat currency that also forms significant portions of the cash reserves of other major economies. This is to say nothing of the interconnected investments and chain reactions this caused, since it wasn't just about the amount of money lost but whose money.
        benaiah 13y ago
        Yes, everything you say is correct (AFAIK), but it's not what I was talking about. The thesis of my comment was this: the collapse of MtGox involved a larger proportion of the bitcoin market than the proportion of the dollar market involved in the collapse of Lehman. Ergo, the collapse of MtGox is more significant to Bitcoin than the collapse of Lehman was to the dollar.
- VMG 13y ago
  > The lack of regulation is worrying. What lack of regulation? MtGox existed because it is nearly impossible to open an exchange in the US. Almost every other country is more Bitcoin-friendly in terms of regulation than the US. Or are you talking about regulating the source code and running instances of the Bitcoin client?
  - guscost 13y ago
    Perhaps the very existence of a currency that cannot be regulated is worrying?
    - Crito 13y ago
      In what sense do you consider bitcoin to be a currency that "cannot be" regulated? Do you mean that it cannot be regulated because there isn't an effective way for governments to exert control over how much of it is produced? I don't see that as being particularly worrying. No more so than foreign currencies are worrying... does Iceland worry that they cannot control the production of Argentine pesos? Do you mean in the sense that businesses that use it cannot be regulated? Because that is obviously false. Of course businesses which use bitcoin can be regulated. Why couldn't they be? As VMG points out, the regulation of bitcoin businesses is not hypothetical; they are regulated. Do you mean in the sense that bitcoins cannot be taxed? Because that is also obviously false. Here is how the IRS could tax bitcoin: "Attention American taxpayers: report your bitcoin shit, or we will nail you for tax evasion and send your ass to jail." How the hell do you think they tax all-cash businesses? Bitcoin does not fundamentally change the game like many people seem to think it does.
      - guscost 13y ago
        In the first sense. Does the US worry that it can't directly control the production of renminbi? Absolutely.
        Crito 13y ago
        Maybe they should not. I see absolutely no reason why you would find it worrying that they cannot. That's basically just being worried by the sovereignty of other nations; worried that you can't boss other people around... what a perverted concern. If bitcoin is only worrying to the extent that foreign currencies are worrying, then I don't see what the big deal is. They cope with the existence of what, 179 foreign currencies right now (minus a few pegged to the dollar, but whatever)? They can learn to cope with 180.
minimax 13y ago
Here is another good quote from the Manchin letter: Several other countries, including the European Union, have issued warnings... It's like they didn't even proofread it. I'm not a Europe expert but I'm pretty sure the European Union isn't a country.

by minimax 13y ago

JoeAltmaier 13y ago

The lack of regulation is worrying. That exchange that just flamed out is an example of what the entire financial system would be with no oversight.

jamoes 13y ago
Yes exactly. The exchange that just flamed out was incredibly poorly run, and deserved to go out of business. Now there is space in the market for more competent companies to take over the market share. I'd love to see the entire financial system operate under a meritocracy such as this.
- Tloewald 13y ago
  > I'd love to see the entire financial system operate under a meritocracy such as this. You might think you would, but I suspect you would not.
  - benaiah 13y ago
    In other words, "I disagree with you." Could you add something to the discussion? A real argument, perhaps? Nobody called for a hand-raising of who was for or against economic regulation.
    - Tloewald 13y ago
      Actually, I'd say it's more snarky than "I disagree with you", it's "you haven't thought this through or you would disagree with you". If you like analogies, consider the difference between using an old, creaky, but battle-tested codebase that handles mission-critical tasks, and saying "we should just throw it all away, build a quick and dirty open source replacement, and let people fork the heck out of it". Old crufty code contains lots of horrible crap, but a lot of it is there because it's necessary. Replacing the financial system with some kind of anarchy -- meritocratic or not -- is going to have the same effect, and we can't afford for something as critical to everyone's wellbeing as the financial system turn into an unstable Darwinian mess. In any event, I was going to write an essay, but a one-liner was funnier.
- loumf 13y ago
  Banks used to fail all of the time with depositors losing assets. This caused a lot of problems, so we enacted some regulation. Now banks still fail (several weekly, without much notice), but depositors have mandated insurance. Are you against that?
  - drcode 13y ago
    If depositors didn't have mandated insurance, they would pay more attention to the credit-worthiness of the bank they work with, and we might have avoided the 2008 debacle.
    - gknoy 13y ago
      It seems that the health of the bank is something which is actively obfuscated. Saying "buyer beware" is like telling people that they should be responsible to make sure that the cars they buy are safe enough, or to make sure that the restaurants they eat at have clean enough standards in the kitchens. That's the entire point of regulatory inspections: No one can afford to be attentive to that level of detail or be an expert in everything.
      - drcode 13y ago
        I agree people cannot be attentive to everything. HOWEVER, people can be a lot more attentive now then they could ten years ago (for example, online reviews of cars/restaurants/etc) and in ten years they will be able to be even more attentive. If we do things that foster attentiveness, everyone will be better off.
        dragonwriter 13y ago
        > HOWEVER, people can be a lot more attentive now then they could ten years ago (for example, online reviews of cars/restaurants/etc) Its a good thing online reviews are reliable sources of information with transparent provenance that neither the company itself nor its competitors spend substantial efforts loading with false-flag propaganda. Or, at least, that's a good thing in whatever alternate universe it is true in.
- hnnewguy 13y ago
  >I'd love to see the entire financial system operate under a meritocracy such as this. It does. Banks fail every day. Hundreds of banks since 2008. Oh, I'll bet you're talking about the TBTF banks, that were kept afloat with some interesting finance to prevent the global system from collapsing. I laugh every time someone says they should have all failed. I don't think people realize who, exactly, loses when banks go out of business. Hint: It isn't Jamie Dimon or Lloyd Blankfein (though they would temporarily lose their jobs). It's everyone who owns shares in the bank, everyone who owns bonds of the bank, everyone who works at the bank, everyone who banks at the bank (yes, FDIC covers some, but that itself is a bailout), pension funds, pensioners, insurance users, and on and on. These aren't some rich "banksters", they're your friends and neighbors.
- anigbrowl 13y ago
  The implicit corollaries to this are a) that anyone who wasn't capable of recognizing the exchange as poorly run (eg anyone who isn't a programmer and can't see past the friendly corporate graphics on the landing page) deserves to lose whatever funds they were stupid enough to trust to that institution, and b) if the (alleged) 6% of all extant BTC that went missing turns up in hands of some unknown actor later, well that's nobody's business.
  - Crito 13y ago
    > "anyone who wasn't capable of recognizing the exchange as poorly run (eg anyone who isn't a programmer and can't see past the friendly corporate graphics on the landing page)" I don't think that being a programmer was necessary to be wary of MtGox. MtGox was being called out in strong terms as long as 3 years ago on HN and bitcoin forums (https://news.ycombinator.com/item?id=2676263 https://news.ycombinator.com/item?id=2676263). This sort of knowledge certainly should have found it's way to "non-programmers" at least in the past year. Trusting MtGox during the past year wasn't a matter of not being a programmer. It was a matter of being an idiot. Do idiots deserve to lose their money? No. I agree with the rest of your comment.
- pdkl95 13y ago
  So you're saying that Bitcoin is so volatile and risky that only a fool use it? Noted, thanks for the warning.
gnaritas 13y ago
> That exchange that just flamed out is an example of what the entire financial system would be with no oversight. The market is actually recovering quite well from that incident, so what exactly is so worrying? A bad business failed; that's what's supposed to happen.
- eli 13y ago
  Hmm. If I were a customer of Mt Gox and lost money, I don't think I would agree that it's an example of a market working as intended.
  - gnaritas 13y ago
    So? Businesses fail, whether you like it or not, that is how markets are supposed to function. It is clearly an example of a functional market. That doesn't mean people aren't defrauded, there's no such thing as a market without crime.
  - BlackDeath3 13y ago
    And if I were a career criminal, I'd probably have a pretty low opinion of the justice system (actual problems with said justice system aside). My point? It's hard to be reasonable about things when you're coming at them from a certain perspective. Just as a criminal sentenced to life without parole probably thinks that the courts trying him are corrupt, people who lost a lot of money on MtGox probably think that the entire economic system and Bitcoin market is broken. Are they correct? It's possible, but they're not in the most rational frame-of-mind right now, are they?
  - aetherson 13y ago
    Well, what if you were the investor in a start-up, which failed, and you lost your invested money? Would you consider that the market working as intended? What if you loaned someone some money, and they failed and got bankruptcy, meaning you lost your loan. Is that the market working as intended? We've created this kind of weird deal with banks, where you loan people money at super-low rates, but in return you're insulated from the normal consequences of failure, and have a ton of flexibility in terms of when you can demand repayment of your loan -- to the point where most people don't probably consider their bank balances a loan. I'm not here to say that this is a good or a bad thing. Mt. Gox was more like a normal loan or almost every other financial instrument in the world, and less like a bank. It seems hard to suggest that it's uniquely bad for Mt. Gox to act like almost every other financial instrument in the world -- as long as expectations are aligned that it's not the curious anomaly known as a "bank."
drcode 13y ago
That's funny... When Lehman Bros went down, the US economy went to hell. When MtGox went down, the bitcoin price returned to its previous level within a couple days. Clearly we need more oversight of bitcoin.
- vonmoltke 13y ago
  The assets lost in MtGox were a rounding error for Lehman.
  - Crito 13y ago
    In terms of USD, or in terms of market cap?
  - benaiah 13y ago
    Yes, but as a proportion of the relevant market, they were far greater, which actually strengthens the point.
    - vonmoltke 13y ago
      No it doesn't. The relevant market is trivial compared to the size of the global financial system. The entire Bitcoin market could evaporate today and cause barely a ripple. Lehman had significant assets in the fiat currency of the largest economy in the world, a fiat currency that also forms significant portions of the cash reserves of other major economies. This is to say nothing of the interconnected investments and chain reactions this caused, since it wasn't just about the amount of money lost but whose money.
      - benaiah 13y ago
        Yes, everything you say is correct (AFAIK), but it's not what I was talking about. The thesis of my comment was this: the collapse of MtGox involved a larger proportion of the bitcoin market than the proportion of the dollar market involved in the collapse of Lehman. Ergo, the collapse of MtGox is more significant to Bitcoin than the collapse of Lehman was to the dollar.
VMG 13y ago
> The lack of regulation is worrying. What lack of regulation? MtGox existed because it is nearly impossible to open an exchange in the US. Almost every other country is more Bitcoin-friendly in terms of regulation than the US. Or are you talking about regulating the source code and running instances of the Bitcoin client?
- guscost 13y ago
  Perhaps the very existence of a currency that cannot be regulated is worrying?
  - Crito 13y ago
    In what sense do you consider bitcoin to be a currency that "cannot be" regulated? Do you mean that it cannot be regulated because there isn't an effective way for governments to exert control over how much of it is produced? I don't see that as being particularly worrying. No more so than foreign currencies are worrying... does Iceland worry that they cannot control the production of Argentine pesos? Do you mean in the sense that businesses that use it cannot be regulated? Because that is obviously false. Of course businesses which use bitcoin can be regulated. Why couldn't they be? As VMG points out, the regulation of bitcoin businesses is not hypothetical; they are regulated. Do you mean in the sense that bitcoins cannot be taxed? Because that is also obviously false. Here is how the IRS could tax bitcoin: "Attention American taxpayers: report your bitcoin shit, or we will nail you for tax evasion and send your ass to jail." How the hell do you think they tax all-cash businesses? Bitcoin does not fundamentally change the game like many people seem to think it does.
    - guscost 13y ago
      In the first sense. Does the US worry that it can't directly control the production of renminbi? Absolutely.
      - Crito 13y ago
        Maybe they should not. I see absolutely no reason why you would find it worrying that they cannot. That's basically just being worried by the sovereignty of other nations; worried that you can't boss other people around... what a perverted concern. If bitcoin is only worrying to the extent that foreign currencies are worrying, then I don't see what the big deal is. They cope with the existence of what, 179 foreign currencies right now (minus a few pegged to the dollar, but whatever)? They can learn to cope with 180.

minimax 13y ago

Here is another good quote from the Manchin letter: Several other countries, including the European Union, have issued warnings... It's like they didn't even proofread it. I'm not a Europe expert but I'm pretty sure the European Union isn't a country.