India seeks to block most cryptocurrencies in new bill, government says
reuters.comThe discussions around crypto here kind of proves that you cannot use popular opinion in HN to predict the future. People were very negative (and still are) about crypto. Market cap kept proving them wrong year after year and we are here with around $2.6 Trillion and yet people here still think crypto is going to die.
It's interesting because in startups, you learn from the first day that you should listen to customers and follow the demand. The demand is very high and some people were puzzled how other people where depositing money in "shady" exchanges. Yet, that's a perfect example of "demand" that needs instruments to be satisfied.
Reality check: Most of the world suffers from hyper-inflation at worst and inflation at best. Not everyone lives in the USA/Europe and has access to good banking and investment options. Not everyone cares about their governments like in a developed first-world country.
Crypto is here to stay and it is going to play a significant role in global finance. Somebody here should read what the bureaucrats at the IMF thinks, or look at the roads in New Delhi. Gov. blocking crypto, yeah, right.
Inflation isn't bad. Most of the world doesn't suffer from hyper-inflation. Decentralized finance doesn't provide a tremendous benefit over a trusted third party. High volatility and high transaction cost makes it a poor choice for a currency. Most of the worlds economy already runs on digital transactions without the need for crypto. There are plenty of reasons why crypto doesn't make sense and it is perfectly rational to distance your financial market from crypto.
Inflation is bad. Hyperinflation is worse. Reported CPI does not reflect actual inflation. One just needs to look at asset prices, stock prices, etc to see what is happening. You and everyone else is being robbed, every day, and it gets worse...
I strongly suggest you look into why people would want "censorship resistant, decentralized, non-state, peer to peer currencies". The existing financial system doesn't make sense. Stores of value outside the reach of the state is highly desirable. The ability to transmit value, trustlessly, anywhere on the planet via a communication channel is a breakthrough technology.
Who wants inflating, dirty, war promoting, state based fiat, when they can have deflating, clean, peace promoting, non-state based cryptocurrency?
Actually a low and predictable rate of inflation is good for the economy.
https://www.bankofcanada.ca/2020/08/understanding-inflation/
What else would you expect a bank with an inflation mandate to say?
"sorry we are criminals, but it's for the best"?
You could try to pick a source that's at least not entirely biased.
Inflation is a pressure to spend, people with something to sell enjoy this benefit, everything in moderation.
I'll take inflation over wild volatility any day
I want a stable currency that is easy and cheap to transact. All that other stuff is just idealism.
Do you have any investments in bonds?
Yes
This is not financial advice, but get out of bonds. They are bleeding value. The coupon is not even meeting inflation. Its a bad asset. I feel very sorry for folks that are relying on this for income, retirees, etc.
The next thing you read about will be the $100T in the bond market trying to find exits to something that has any kind of return to outpace inflation.
Maybe that will be Bitcoin, an asset that has grown >100% per year for the last 10 years.
Over the past 3 years, my corporate bonds have outpaced inflation and only saw a 5% drop in price when the stock market crashed. Pretty good if you ask me. Society isn't going to abandon the idea of loaning people money to speculate in bitcoin any time soon. There is just no economic intuition to believe that bitcoin will continue to increase other than speculation.
Tell that to the retiree living on a fixed sum for life.
Of course inflation is bad you should see what $100 over 10 years at 2% inflation is.
Now try it for 6%+.
It’s the reverse compounding for savings people should strive for.
Who did you learn your basic economics from?
To your example, imagine what would happen if every retiree hoarded their money under their mattress instead of allowing capital to be reinvested. Inflation is an incentive to keep money moving. Generally, we can't keep prices at a perfect equilibrium with economic growth & deflation is much more dangerous than inflation (think about holding debt and expectation of capital returns). Also, social security in the US adjusts for inflation so a retiree will see more money as time goes on.
Deflation is good, you want prices to fall. See electronics for a quick counter example.
If everyone stashed money in mattresses (as if), then all the banks would be forced to start enticing would be depositors with “store your money with us we will pay N% interest!”. This would bring out the savings from mattresses to be used.
Social Security is just one form of retiree income, to which I’ll tell you because they are the ones that pay and the gov dictates the “official” CPI, they are heavily incentivized to downplay inflation.
For an example of this, see how many times they have changed the CPI formula. Just recently the FED put out a tweet essentially saying:
“ Thanksgiving dinner serving of poultry costs $1.42. A soybean-based dinner serving with the same amount of calories costs 66 cents and provides almost twice as much protein”
This tells you how they think and how they fudge with the numbers.
Last but most importantly, not any single group of humans or much less gov bureaucrats can set and perfectly dictate a market. Its too complicated. Every time they or someone meddles, they make it worse.
> If everyone stashed money in mattresses (as if), then all the banks would be forced to start enticing would be depositors with “store your money with us we will pay N% interest!”. This would bring out the savings from mattresses to be used.
No, banks would not be forced to do that. First, banks don't need deposits and some big banks - investment banks - refuse to even accept deposits. Banks make money by borrowing from money markets at one rate and then lending at a higher rate. Their value is credit analysis and credit intermediation.
E.g. if you are a household, then you would like to borrow for a mortgage. Well, the Smith Family does not have access to the bond markets. But Big Bank does. Big Bank makes loans to thousands of families like the Smith family, it does all the credit analysis checking their work history, etc, and then it either sells bonds to raise the money for the mortgages, keeping the mortgage on its own books, or it packages up the mortgages and sells them off as mortgage backed securities.
It is the fact that you can't borrow from the money markets but banks can that explain the existence and profitability of banks, as they sit between you and the capital markets. If you kept your money under a mattress, the banks would still sit between you and the capital markets. If everyone emptied their bank accounts overnight, the bank would need to sell some assets for reserves, and then buy paper money with the reserves, and then give you the paper money. The Central Bank would then purchase assets creating enough replacement reserves and the system would continue as before, just with a lot of money stuffed in mattresses. In fact this isn't even theoretical, as there is a lot of drug money in the form of cash hiding in Latin America. It's not in mattresses but it has left the U.S. economy and no one cares as we just print more.
Whether or not banks want to get into the deposit game is a function of whether they think the deposit fees and customer relationships created will be of sufficient value to offset the costs of providing those services. For many banks, getting depositors establishes a relationship in which you will turn to that bank when you need a loan, etc.
Moreover the interest charged to banks is not subject to manipulation by households that refuse to deposit their money in banks, first because banks don't lend deposits, but second because the bank's cost of funding is determined by the Central Bank's overnight interest rate plus a premium for the credit-worthiness of the bank itself. Whether the bank does or does not provide deposit services is irrelevant. Deposit services are purely sales channels and fee generation channels.
Why should someone not producing receive income, unless their money is producing value for them?
marketcaps in crypto mean nothing. The universe is full of wash sales, there is not 2.6T of liquidity, a ton of volume is insanely leveraged and amplified through defi pools, and looking at a transaction volume adjusted view of the world, like 99.9% of transactions are valueless gambling OR money laundering. Lets see what happens after the run on tether happens, then we can talk about what the crypto world looks like.
A more accurate statement would be that volume means nothing.
Market cap absolutely does. It's meaningful that of the 18.8mil btc out there, no one is willing to part with one for less than $56k.
Even the Tether concern is somewhat outdated. It now makes up only 4.5% of btc & eth's combined market cap. The mkt cap of btc and eth fluctuates about that much every few days, is it enough to really matter?
Even at 1/4 of that, it's $650bn. That's a tons of value.
> like 99.9% of transactions are valueless gambling OR money laundering.
You need to prove that. GBTC and CME options volumes/open value are in the billions. I don't think people are laundering money through these instruments.
You don't need to launder money through GBTC to get exposure to the assets that money launderers use (BTC) to launder money and reap the upside of a growth market in cryptocurrency based moneylaundering. its a smart play tbh, but the 99% off chain economic benefit from crypto today is money laundering, evading KYC protocols, tax evasion, ransomware related transfers.
> 99% off chain economic benefit from crypto today is money laundering, evading KYC protocols, tax evasion, ransomware related transfers
You still need to prove that though.
No, you need to prove the off chain economic use cases. The well known use cases are all illicit.
> Most of the world suffers from hyper-inflation at worst and inflation at best. Not everyone lives in the USA/Europe and has access to good banking and investment options.
Real question - you mention earlier to "follow the demand". Is there evidence that demand for crypto is coming from countries with unstable banking?
Yes. Page 7 in the document.
https://think.ing.com/uploads/reports/IIS_New_Tech_Cryptocur...
The more unstable the country, or higher inflation - the higher penetration.
I'm surprised people still ask these questions. It this not painfully obvious?
Your referenced figure is an "index of positive attitudes" towards cryptocurrencies, not an actual measure of adoption such as amount held or trading volume.
The only thing that matters is mindshare and if the opinion is positive or negative.
Read the rest of the report. The details you want also exist, but you'll have to pay for that education, only so much you get for free.
Hi, I live in Delhi. New Delhi is one of 11 districts in Delhi.
Not sure if you meant "look at the roads in New Delhi" in a "derogatory" sense, but I'd just like to say that the roads in New Delhi are some of the best roads here.
>>Not sure if you meant "look at the roads in New Delhi" in a "derogatory" sense
I live in Bangalore(Roads here are darn horrible) not Delhi, but instead of looking at this in an "derogatory sense", in all honesty what the person is actually right.
In the overwhelming number of issues facing India- Literacy rates, hunger, infrastructure, social crises, is crypto the biggest issue facing India?
> in all honesty what the person is actually right
I agree. I was just nitpicking; that roads in New Delhi are actually pretty good. You should look at the roads in rest of the Delhi. The district that I live in (North East) has infrastructure in such stark contrast to New Delhi that it doesn't even feel like the same city tbh.
> is crypto the biggest issue facing India?
It absolutely isn't.
But somebody begs to differ: https://www.livemint.com/news/india/pm-modi-has-a-warning-fo...
An interesting angle that seems overlooked in articles about India and China "banning" cryptocurrencies is that these efforts are often linked to a desire to create centralized digital currencies.
e.g. from this article: "India is also looking to make a framework for the official digital currency that will be issued by the Reserve Bank of India."
It's 100% about CBDC's. CBDC's are the endgame for tyranny, really. We should be doing absolutely everything we can to fight this.
How are CBDCs the "endgame for tyranny" in a way that (presumably) fiat currencies or cryptocurrencies aren't? Seems a bit hyperbolic, but maybe you have good reasons to be so alarmed.
Not hyperbolic at all. CBDCs are a permissioned private ledger controlled by the central bank. The central bank controls what addresses are allowed to transact and have access to every transaction. If they dont like what you are spending your money on you are no longer allowed to transact. If they think you have too much money they can just take it.
How is that in any way different than today's bank accounts, besides removing a largely useless intermediary ( a retail bank)?
Because the majority of people looking at the topic correlate the introduction of any sort of central bank digital currency with the introduction of efforts to curb the use of physical cash. India in particular had a recent change in their legal tender ( https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis... ) which has made some people concerned about these sorts of moves. If you’re willing to suddenly (from the perspective of those aggrieved by the changes ) declare a significant percentage, over 75%, of the banknotes in circulation as soon to be defunct and basically “turn over” your entire currency over like a compost pile in under a year, people get understandably concerned you might just declare cash illegal entirely as the government has established itself as willing to do dramatic things.
Because it allows them to enforce policies on where and how you spend your money. In an authoritarian regime this can be abused pretty badly.
Existing traditional bank accounts can absolutely be frozen or seized. Not sure what CBDCs can do that is harsher than that.
It's different like this:
"Citizen, too much meat eating this week. Your CBDC non-cash is now suspended until you lose 10 pounds"
As far as I'm aware CBDCs are a largely theoretical concept right now, do you have any links to an implementation such as you're describing? No videos please, I don't watch them.
A cursory google search on your part would have easily turned up web pages like these from the central bank of Canada:
https://www.bankofcanada.ca/2020/02/contingency-planning-cen...
https://www.bankofcanada.ca/research/digital-currencies-and-...
Yes, I'm aware that they're an area of research in many countries, I was talking about actual projects that represent the "endgame of tyranny" as described above. The paper you've linked to talks about privacy and universal accessibility as core goals and I'm not sure whereabouts in this overview the tyranny is outlined - I'm sure you've read it and can point it out?
The issue is with accessibility, and raised by people who inherently mistrust the state, as the state can sort of cancel your participation in society if they so wish by revoking whatever authentication (digital ID) it has issued you to enable accessibility in the first place.
Now, why the state would do that, or why anyone would inherently mistrust the state, are open to discussion.
You can't ban someone from owning or using cash. But you can do so with a CBDC.
You can also dictate how the funds in a CBDC wallet are spent. There was a proposal that CBDC wallets could be issued stimulus funds that expire unless they are spent within a certain time frame. This is to prevent people from just putting the check into a savings account.
CBDC are just a huge/national bank. It's a dream come true for the Marxists.
As far as I'm aware CBDCs are a largely theoretical concept right now, do you have any links to an implementation such as you're describing?
Do you have evidence that "a desire to create centralized digital currencies" has anything to do with "banning cryptocurrencies"? Because lots of countries have expressed interest in CBDCs and most of them aren't talking about banning anything. Indeed, it's often central banks talking about CDBCs, which aren't even in the position of banning anything.
Seems to me that CDBCs are just the new topic for conspiracies about how cryptocurrencies are being held back by the Powers That Be.
The two are often juxtaposed in the coverage of crypto bans, I don't know if they're also juxtaposed in the political intentions.
Ie creating something that could be useful as an actual currency?
I find it amusing the baked in assumption of your post that currencies can only be real if they are backed by a state. I think that is... No necessarily true. Just because something held up for a long time does not mean there is some essential reason why things can't be another way.
That holds true of a lot of human innovations. People could not imagine automobiles or flying or computers, but that did not make them impossible.
> People could not imagine automobiles or flying or computers, but that did not make them impossible.
People imagined versions of those things for a long time before they were practical. People have imagined other types of currency as well, and non-state backed currencies aren't even novel given plenty of examples have and do exist.
They don't have to be backed by a state, however, it's quite obvious that "permissionless", "uncensorable" and "truly anonymous" are features that won't be accepted by states for a legitimate currency (just as they aren't really tolerated for cash, driving all kinds of restrictions and controls of non-tiny amounts of cash), so it's quite plausible that in the long run the legal businesses and law-abiding citizens will be allowed to interact only with payment mechanisms that have disabled those features in some way; so if any given cryptocurrency unavoidably has those features, then people will be prohibited to touch it, limiting their usage only to criminal purposes.
It would definitely have a lot more buy-in from banks if it were centrally sanctioned but I'm not sure if the functionality would be much different from a stablecoin on an efficient L2. I would personally rather have banks integrate with e.g. USDC on zkSync but I suspect that the lack of control is what makes that scenario undesirable for governments.
This is about the 12th time that India has "banned" cryptocurrencies. Don't believe it...
Crypto industry must not be contributing enough to politicians, like they seem to do in the US.
They need to sponsor more sports teams
That's an interesting idea!
And yet, the uniformed masses seize upon the news every time as proof that crypto is doomed.
Well, they can try, but even with centralized exchanges, a VPN will do. And then there are decentralized protocols.
Once you have some of your money in cryptocurrency there's no real way for anyone to stop you from moving your money around however you like. The only points that can be controlled are interfaces with banks.
If it's illegal to exchange goods or official currency for cryptocurrency in the nation you are in, the usefulness of cryptocurrency is going to be considerably constrained. This depends on how thorough or draconian the state is but a lot of people just shy away from illegal activity without enforcement being that strong. After all, if buy a tangible good, I want legal title to it and having engaged in an illegal transaction to get the stuff makes that less certain.
This is an important point - I think a lot of us tech people like to think "no it only exists on the internet the govt can't touch it! It's like international waters!", but then you have countries that can completely restrict or shut down the internet. As long as the infrastructure exists in the real world and is controlled by a govt, then the "imaginary online stuff" is still ultimately under their control. Even in "the matrix" someone was still running all those computers and could turn them off if they wanted.
Countries can just ask you to prove how you earned income, and jail you if your proof is unsatisfactory to them.
India banning cryptocoins doesn't mean that people will automatically be jailed for mining on day one. It just means that anyone using cryptocoin to avoid paying Indian taxes can end up jailed when their expenditure exceeds their provable income, or when their documented income is traceable to cryptocoin, or etc.
The United States IRS doesn't have to make cryptocoins illegal to convert into currency; they just have to demand that you pay taxes, and have you jailed for tax evasion if you fail to do so. They don't actually care if you earn income through selling cryptocoins for currency, as long as you report the income earned without attempting to evade an honest assessment of value, and as long as you pay your taxes on that income earned.
At least concerning the tax issue, the US government doesn't even need to do that. If they squeeze the credit card and banks as they've done for the adult industry and marijuana industry, we will see the entire market deflate. The only reason crypto is okay in the West is because an offramp into fiat is provided. Once that offramp gets closed, it's game over and we are back to 2010 in terms of crypto value.
The US has instead taken the view through various upcoming 2022 IRS procedural rules that — as long as there's a complete paper trail documenting who the origin of, and who is responsible for paying taxes for, the cryptocoin when it is converted into currency — then there is no harm in offramps that collect tax ID information and report it appropriately.
Their focus on requiring "origin of and taxation of" attestation may impact the perceived value of cryptocoins when traded for currency, but they don't seem to much care if people want to generate hashes and sell them to each other, just as long as it's not used to launder money or avoid taxes.
It is of significant debate whether the perceived value of cryptocoins is in part due to its value for both laundering money and avoiding taxes, but that's distinct from whether the perceived value is in part due to the ability to sell cryptocoins for currency.
Eventually efficient systems will implement zero knowledge proofs. Not necessarily because of "privacy", but because of the efficiency gains of such a system. Privacy is just a bi-product of this information theory reality.
The efficiency gains of these systems are irrelevant. Governments of the world want monetary control, and they cast that desire in the form of laws like "know your customer" or "anti-money laundering." These laws are antithetical to what you're talking about. If the government requires legitimate institutions to implement these forms of laws then to engage in actual society (i.e. - school, groceries, business, rent, banking, and most importantly taxes) then the existence of zero knowledge proofs and their implementation are irrelevant. At some point you come back to the inescapable problem with crypto: the real economy is based on trust and an immutable digital blockchain is, at best, a gloss on this system.
Many chains, L1's, defi products, etc., have already expressed their eagerness to comply and implement KYC and other regulatory controls.
My warning is that the open-source Pandora's box of zk proofs is necessary, technically feasible, and inevitable. ZK proofs are coming, and there will be systems built on top of them. Our governments and societies need to be ready for this reality.
You're missing the point. It doesn't matter what the technology can do. There is a system that currently exists, and that system will protect itself through regulation. Cryptocurrencies will come within the fold or they will be outlawed. It is irrelevant what is technologically feasible. Governments and state actors don't exist in stasis, any advance in technology will be met with an appropriate response even if that response is "banks are not allowed to accept any funds that have any connection to X cryptocurrency." If that doesn't work, the response will be "banks are not allowed to accept any funds without perfect knowledge of the two parties transacting and where the cash is coming from." What bank would possibly risk going against the government? Even the well-known money laundering banks balk in the face of government scrutiny. What company would possibly risk losing their relationship with their bank?
Cryptocurrency fanatics think that they can digitally outcompete physical reality. They cannot. The governments of the world are the Borg - you will be assimilated.
>Cryptocurrency fanatics
I am a person with nuanced thoughts and opinions, unique and diverse from the rest of the world.
>cryptocurrency
Let's not confuse zk proofs with cryptocurrency. Powerful, non-cryptocurrency systems that use zk proofs are coming. Alone their power is something we must reconcile, even before combined with distributed, autonomous systems.
And that's my point. ZK proofs are astoundingly powerful. Our societies and governments should be getting ready to deal with them.
>protect itself through regulation
Yes, this is a tool of the state. But it's just that, a tool. People have tools too.
The assertion of absolute state control is contrary to the state loosing the Crypto Wars (https://en.wikipedia.org/wiki/Crypto_Wars). The Crypto Wars were one of the first examples establishing the limits of state power in the face of the Internet. This is before other global projects like BitTorrent or Gnutella.
The world is wide and I suspect the future is going to be weird.
The problem with this sort of reasoning is that it conflates an e.mail or a downloaded movie (or a bag of cocaine) with a cryptocurrency or token. E.mails/movies/dope etc are all basically consumer goods. Read the e.mail, wipe it. Put the coke up your nose, watch the movie.
It only has to go as far as the person you are sending it to, and it's journey is finished, and it's value is realised. Crypto is entirely different in that it has no value unless you can sell it on to another person. That final step is it's weak point.
PGP had no economic value when published in defiance of the State Department. Why publish PGP when the personal incentives seemed to far out way the consequences? Phil Zimmerman still lives overseas.
That's my point. You can ignore economics entirely and zk proofs are still going to radically transform our societies and IT systems, long before considering their impact to the cryptocurrency industry.
You are wrong in a subtle way. Yes, if you are doing scaling, than adding hiding using zk is almost free. Problem is - you are hiding things from literally everyone. And while it works for payment systems like zcash, it is a problem for most of DeFi. For some protocols it is impossible (there is proof that you can't do it for AMMs, like uniswap). In general case implementing zk means you need to have a separate layer of information delivery that is capable of discerning parties that Need To Know from the rest.
> I think a lot of us tech people like to think "no it only exists on the internet the govt can't touch it! It's like international waters"
Do people really think that today? I did, when i was a teenager discovering the Internet, and then quickly realised how naive that is when my favourite torrent site got taken down, and when a public digital library website got taken down like a terrorist organisation with a SWAT team taking their servers.
Ah yes, the easy solution is just to ban all the exchanges. That'll do it! And then they'll just have to ban the peer-to-peer decentralized exchanges (dydx, sushiswap, uniswap, xrpl). That might be a little tricky though...
It's just like governments trying to ban torrenting and p2p file sharing. Look at how well THAT went.
This gets repeated a lot around here but is far from the truth. Drugs are still traded, and so are other "illegal" items. And trading drugs is quite risky comparing to trading crypto (especially fully decentralized).
> usefulness of cryptocurrency is going to be considerably constrained
Sure, but you are missing why 3rd worlds like China, India and Morocco are trying to restrict crypto. They are worried about capital outflows. It's not a surprise most of these countries already have rigid capital controls. People who have decided they want to "outflow" their capital are not really worried about government restrictions.
Yeah, people making these arguments haven't lived in developing countries with terrible, inconsistent, reactionary, arbitrarily applied laws. Where you have to "break the law" constantly in order to survive.
Sure but bitcoin's value would be a lot less if it was only being used to skirt the abuses of third world regimes - and when those same third world regimes make illegal.
Most people who buy bitcoin today in the first world do so because it's made money for people.
Sure, in third world countries and elsewhere, people skirt or break the law on a regular basis. But they still don't it for kicks and they don't do it for "right to cryptocurrency", they do it because it will get them something and making crypto illegal will mean it gets people less and people use it less, reducing demand and price (minus the manipulation bitcoin experiences but at some point that manipulation won't be manageable).
The goal of drugs is to do the drugs. They are consumer goods. You buy them, then consume them. Crypto has no value unless you can sell it on to someone else, and that's it's ONLY value. That is the glaring difference, and it's weakness.
This isn't true if your objective is just to protect wealth long-term. If bitcoin is "banned" in India (you can't exchange it for INR on an exchange), you can still "use" it in the sense that you can acquire it illegally or overseas and then hold onto it. Your liquidity is limited but this is a small downside long-term.
This isn't true if your objective is just to protect wealth long-term.
I said illegality constrains the usefulness of cryptocurrency. Long-term gains is one of the remaining hypothetical uses but other uses are limited. So your claim doesn't refute my point. With fewer practical uses, we might see bitcoin's long terms value decline but that's speculation.
Wealth storage is a practical use case. This is a weird thing to grasp, but it's actually perfectly reasonable (I.e. utilitarian and stable) for an asset to be "purely monetized", in the sense that it has no value whatsoever except from its capacity to store value.
That said, you're right that ability to actually spend bitcoin probably shows up in any PDE that accurately models its market dynamics. If 90% of countries on earth ban bitcoin, and those bans are well-enforced, bitcoin probably won't be very valuable.
Wealth storage is a practical use case.
It's one practical use case. Bitcoin's value rests on multiple use cases and eliminating other uses cases reduces demand for bitcoin. And that effect also reduces bitcoin use for wealth storage (but might not eliminate, sure).
That is why drugs and other illegal things are so cheap, right?
Drugs are actually very expensive relative to production costs because of the added risks. Marijuana, for example, is a very easy crop to grow. There isn't any reason it should cost more than any given spice per gram. However, since it was illegal, street vendors could charge significant markup because 'shoe-leather' cost is very high. Now that it's becoming legal, the gov is extracting the difference as taxes, keeping prices high for revenue.
I’m not sure what your point is? You’re kind of proving them right. I guess you’re trying to equate drugs with crypto, saying if it was criminalized it would spike in price, but that’s a false equivalency. Drugs provide a utility all on their own they depend on users speculating about them just to have value. If anything the inverse applies here, but for the same reason, a currency that the government doesn’t want you to use will have less value because you’ll only be able to exchange it with nefarious organizations who can pick and choose the price. Drugs are expensive because the risk of them being illegal is factored in and the suppliers can demand whatever they want.
I think they're expensive exactly for that reason - people have to factor in the risk that someone would be totally legally justified to come and take all their stuff tomorrow. Those are also actual products with a true value to people - not a currency
</sarcasm> <!-- apparently needed --!>
Wrong.
Could you please argue how it is wrong? The logic seems pretty simple to me. A currency has value as long as it is exchanged, if government restricts exchanges, the currency drops in value.
Hmm, I can take a stab at this and probably be wrong myself.
Money like everything is a market. There is a supply of money and a demand for money. If the demand remains constant but the supply is curtailed in some way I could see the value of the good exchanged going up. Now if you make the argument that this action would decrease the demand then yes the value should go down?
If you cannot use it for anything, and maybe it's illegal to even own it, why acquire it in the first place? It is demand that decreases. Supply that goes down simply to match lower demand does not necessarily outpace it and produce an overall price increase.
The difference between this and something like the 1920s alcohol black market in the US is exactly the point that people are raising when they talk about cryptocurrency lacking fundamental value. Alcohol has fundamental value (it is a drug with some effects that have proven to be valuable to many humans for thousands of years), but a currency does not have any value in isolation. People didn't stop wanting alcohol when it was banned, but they will stop wanting a currency if it is banned. It will not have a similar "constrained supply driving up the prices" effect to black market alcohol, because alcohol's demand never wavered but demand for cryptocurrencies will. It is not irrational to buy black market alcohol that you can drink or sell, but it is irrational to buy black market currency that you can neither drink nor sell.
This is all made generally moot if India is the only place to ban it, because they won't make a huge dent in the global market.
Why would you assume that the demand remains constant?
Demand for a cryptocurrency is set by some combination of (a) it's utility as a payment tool and (b) it's value as an investment vehicle.
Legal restrictions reduce it's utility as a payment tool, driving down demand. They also disallow a significant group of investors from using it for investment, both reducing demand, and temporarily increasing supply as many legitimate investors (especially institutions) would have to sell off their holdings before the law coming into force. There's no obvious mechanism how these restrictions would somehow curtail supply more than the demand.
>The only points that can be controlled are interfaces with banks.
That's... A big deal?
Yeah, well, basically they stop you from cashing out, which means your crypto-holdings are worth zero to you, whatever their market value.
It is a big deal if you're only speculating and need to cash out. But if you can buy goods and services informally in these currencies, or use tools like stablecoins to speculate on network, it's really nothing to worry about.
> Once you have some of your money in cryptocurrency
That is a pretty big condition. Most of the people who buy crypto wants to buy from some trustworthy site, and if that is stopped there will be effectively zero new crypto being brought inside the country. Also no one knows how much hassle will it be to convert it into money in bank, this is likely to stop almost all trades.
How are you supposed to turn the coins into FIAT where it's actually usable?
At that point, you cannot move your money around however you like, you can only move the tokens around on the blockchain.
Gift cards and p2p exchange for fiat using a dex or another service. As long as there is money to be made, the Indian crypto black market will thrive and grow.
Who exactly will be making money? Bitcoin is already extremely illiquid, regulation like this will make it even more illiquid. What a ludicrous take.
>Who exactly will be making money?
The holders obviously.
Bitcoin allows any Indian with a cellphone to easily exploit global arbitrage opportunities (BTC/INR and */INR to /) , bypass capital controls, and save money in a medium that the Indian government cannot debase. At least a few million people (especially the international traveler class) will find these characteristics extremely valuable whatever the status of local regulation.
Forgive me for being skeptical, but I’ve never seen Bitcoin used as a medium of exchange. You could argue it’s a store of value, but that’s also contentious. In the last year, it’s back to its original price. So much for being an inflation hedge.
>In the last year, it’s back to its original price.
Ignoring the 6,000,000x return over the last 12 years to make a point about it being flat in the short term? Not a great counter attempt.
So meeting strangers at a cafe.
Worst case is to buy some physical goods and sell it. A bit cumbersome, but not impossible.
In this case, no legitimate seller would be allowed to sell you physical goods for cryptocurrencies - you'd have to buy some physical goods abroad and then import them or the money (India does not have free movement of capital across the border).
Just checking possibilities here. Let's say you want to buy my house and I want to sell it to you. We are in India. You transfer crypto to my wallet then I, in return, donate my house to you. Would this donation work on the legal papers today? I suspect that in Brazil, where I live today, it would.
Sure, a black market is possible - I explicitly mentioned legitimate sellers.
But why would you want to sell a house this way instead for a permitted means of payment? Even if your scheme is unlikely to be detected, if does add a nontrivial risk of getting detected (or getting intentionally exposed, or blackmailed to get exposed) and get very unpleasant consequences for that, and given the extra difficulties of enforcing the deal, you would likely expect a significant extra markup above "normal price" to sell the house this way. Furthermore, if this is criminalized, then even offering or requesting this as an option carries some risk.
Also, I'm not informed of Indian law, but in most western countries this "donation of house" would definitely incur a significant tax and possibly trigger a tax audit/money laundering investigation. Combined with the risk markup, that would meant that laundering cryptocurrencies would be somewhat expensive. Not impossible, of course, money gets laundered - but it would mean that you would actually have to follow all the inconveniences, risks and costs of a money laundering process if you'd want to handle cryptocurrency, and that would discourage many people from doing so.
> But why would you want to sell a house this way instead for a permitted means of payment?
I can think of a few reasons. The buyer offers you a large premium, you know people who can help you offload the currency, you have no interest in keeping your capital in a controlled environment, maybe you're selling your house because you're leaving a country and taking bitcoin or whatever is the easiest way to take your capital with you.
Two major issues with this;
1) I'm not familiar with tax laws in India (or Brazil) but in many places this would trigger gift taxes, imposing a large financial overhead to this transaction.
2) The regulatory bodies monitoring for illegal transactions will see right through this one.
> You transfer crypto to my wallet then I, in return, donate my house to you.
How would that work? Can't you just not donate the house, after they have given you their crypto?
Exchange your cryptos in a juridiction abroad where it's allowed (e.g. Singapore), and spend those savings. Problem solved. No ?
How do you exchange your cryptos? You would need an account at a Singaporean bank. Then spend your savings in Singapore, and go back to India empty handed?
Well obviously there's going to be a level of trust seeing as recourse is narrower, just like any black market transaction. Maybe even some possibility of extralegal recourse. But people can and therefore will do it.
Not really, nobody buys a house in the black market.
In India the vast majority of property transfers are off book.
I thought so. Some commentators here are a bit dislocated from regional realities.
How are you supposed to trust the person who you are buying goods from will deliver once they receive the payment. As they will anyways be illegaly selling the goods for crypto there will be even more mistrust. If you do payment after delivery then the other side needs to be trusted.
Maybe doing your research before buying something online same as with cash payments is a good idea. I'd pick a vendor who accepts crypto besides fiat, I assure you there are lots of them.
The point is that there might be no public info. If you can research using public info, then government could research too of the places which delivers goods for crypto and could order one for themselves and track the package through courier.
You are taking this too seriously. Do you really think that the Indian government will start investigating every incoming package to the country if the webshop it originated from accepts crypto? In a country if 1.3B+ people?
Not every but once the webshop becomes big that you can find lot of info on the internet about them then I think yes.
If you are willing to break the law and risk being caught, sure, there is no way to actually stop from transacting using decentralized protocols. But there are plenty of other ways for the government to find out whether or not you are using crypto. Your bank will definitely keep tabs on your fiat transactions and continue to report KYC/AML information. Current KYC/AML is actually pretty good at detecting anomalies in cashflow and spending. Sure, you can lie about all this stuff but you might just be digging yourself into a hole.
The interfaces have almost been reduced to a couple of options: A single mobile wallet, or P2P.
A ban would force the wallet's company to stop allowing its use on crypto exchanges.
not just banks, but everywhere you can spend it in country. fine you can move money between virtual accounts and buy NFTs all day, but government can control whether local business are allowed to accept your crypto as payment, so you’ll need to liquidate crypto into local currency - which kind of sucks to do if the banks aren’t there to help.
This hasnt been a problem forvseveral years. There are different options:
- buy international prepaid cards for legal dervices (bitrefill)
- use p2p local crypto exchanges: localcrypto, localmonero (in some countries this can be 100% anonymous by using the "withdraw from atm with 1 time code" bank services)
- Exchange to alternate "tokens" that are legal (anyone remembers Linden dollars to BTC market around 2010?)
- Exchange locally via sneakernet.
>buy international prepaid cards for legal dervices (bitrefill)
within the country, you'd be committing a crime acquiring stuff using crypto. The cards are international but you're committing the act locally.
>use p2p local crypto exchanges: localcrypto, localmonero (in some countries this can be 100% anonymous by using the "withdraw from atm with 1 time code" bank services)
Will all be banned and illegal services. If it touches a bank you'll likely get extra charges on top for money laundering or similar.
>Exchange to alternate "tokens" that are legal
That will be tracked by the government if legal, or illegal if not tracked.
>Exchange locally via sneakernet
"exchange on black market"
None of these things are solutions.
Your point boils down to "but it will be illegal." The point you're responding to that you missed was "it doesn't matter if it is illegal, people will do it." All of those are just examples of ways to avoid getting caught. They're not solutions to it being illegal, they're solutions to getting caught.
I think there’s a distinction between “people will do it even tho its illegal” and “illegality prevents mass adoption” - the government still achieves its goals if the only opportunities to transact with crypto are mired in legal risk.
"Mass adoption" is a buzzword that means "a lot of people use it." In it's purest form it means everyone uses it, but that's not absolutely necessary to consider it widely used.
There are plenty of things in ubiquitous use that are illegal in some places, or even most places. Alcohol is ubiquitous, guns are everywhere, gambling, cocaine and marijuana come to mind, people modify their cars beyond legality quite often. Lots of people do illegal financial activity as well, most people transact under the table when the opportunity arises. You can have a scenario where cryptocurrencies are widely used even in places that ban them but are so ubiquitous that enforcement is untenable.
Every option looks risky, people will not use it widely.
Enforcement doesn't have to be perfect to curtail major usage.
Banks can block accounts of centralized exchanges (and have done so in the past when govt asked them to). And once conversion from and to fiat money is disabled, there's very little value left in cryptocurrency.
Unless you want to spend the money abroad.
If they make owning crypto a crime it becomes just a matter of showing that you used it then they put you in a concrete box for a while.
Honest question I constantly think about and have never been able to answer about the future of cryptocurrency development: Why/when would a government ever want less control over the primary means used to transact within its borders?
This is one of the, if not the most, important levers it has to wield power. Governments have fought wars and enslaved entire continents to protect and increase the value of their means of account. Even recently, think of how hard the US works to maintain the dollar as the only currency that can be used international oil transactions aka the petrodollar.
Ultimately, cryptocurrency is a technological attempt to solve the problem of a fundamental lack of trust in our traditional institutions. After all, its powered by a set of de-centralized, trustless protocols. If you use crypto as an inflation hedge, that means you don't trust your government to not de-value your labor via printing tons of new currency. If you use it to carry out transactions, it means at least a small part of you has doubts that our that our current, centralized payment processing institutions won't unilaterally roll those transactions back or eliminate them outright in the future. Ditto for property rights and NFTs (and all the other use cases that guarantee a transaction is recorded by distributing it on chain).
Allowing crypto-currencies to supersede local currencies would not only put governments at the mercy of the mob (or perhaps a small number of whales and exchanges) for determining the value of their citizen's output, it would be an existential admission of their failure. Other than governments that have already failed at administering a currency like El Salvador, why would any self-respecting government with a functioning currency admit defeat like this?
Agreed. As long as people make some quick profits, they will blindly support anything, even fight governments - even if that thing makes it easy for criminals to launder money.
It is going to be an interesting battle. I got my popcorn and enough fiat currency to survive whichever way this goes. In the worst case my plan is https://xkcd.com/538/
How are they going to be doing that? China seems to be banning all crypto every year.
Quite successfully, it would seem.
The article seems a little misguided. The news was "private cryptos", not all cryptos.
Would this would apply to a coin that a company would issue outside of the controls of a regulatory body vs. bitcoin, which is decentralized?
but the layer 1 cryptos are all moving towards private
even bitcoin’s taproot amendment that just got passed and implemented does this to a limited extent
More of a reason for Polygon to go succeed with their zk plans.
Would you mind to elaborate?
In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true, without conveying any information apart from the fact that the statement is indeed true.
You can build untraceable anonymous cryptocurrencies using these algorithms.
Ah, thanks.
But I wanted to know about what Polygons ZK plans are and why GP hopes they succeed.
It is their plan to become a true L2 and not a centralized sidechain.
If they are centralized, then a ban from India wipes out polygon is my thought.
Looking at "India's first crypto Unicorn" you wouldn't know that government is planning to block anything.
First they ignore you... then they laugh at you... then they _fight_ you....
and then you lose :)
Easiest way would be to block exchanges. Though one could go to another country and withdraw and convert the money, the more countries that block exchanges, the more targeted one could be towards the remainder for money transfers.
Wouldn’t that just lead to a black market? Especially in a country that loves its informal economy like India?
It's not as easy to participate in the informal economy as it used to be. Everything from one's bank to one's mobile number and govt id are linked. If you want to deposit funds in an exchange, you'll need some form of KYC--barring which your bank debit/credit card is linked anyway.
The banks, even before the ban (which has yet to come), were keeping track of customers making payments to exchanges. In some cases, they customers a letter, erroneously citing an central bank order banning cryptocurrencies that had later been struck down by the Supreme Court. Despite no regulation, they've been denying services to exchange, preventing their cards or UPI payment addresses being used to transact either. Most mobile wallets followed suit.
The only option that remained then was P2P. I should caveat that I'm not sure I fully understand how that works in this case, though.
The issue is there's no real anonymous way to pay someone besides cash, unless you already had a crypto account with a wallet that had been filled. So an informal economy will need a safe way of turning physical cash into crypto and vice versa, in a regulatory environment where it may be banned to transact cryptocurrencies.
Crypto adoption is a gradual curve where people will only slowly start putting their savings or investment funds into a crypto account.
Banks and payment processors have been our de facto shadow government for years now.
They cut off Wikileaks, the pirate bay, various kink/porn sites, and any entity they don't like really. Usually all it takes is a warning from them to completely shutdown an entity, or worse, force them to obey. Coinbase voluntarily doesn't deal in Monero for this reason for example.
Would turning cash into crypto outside of the banking system not be considered money laundering?
Depends on what they classify it as. The preview of the bill said "private coins" would be prohibited. On what grounds, they did not say.
There was a call to treat NFTs as securities. If something like that is done, then any illicit trade of securities would be considered illegal, if not money laundering.
Only money acquired through illegal means can be considered laundered.
If transacting in certain cryptocurrencies is prohibited, then any money traded for these cryptocurrencies is quite literally acquired through illegal means.
If the money was earned from legal activity, I don't think a conversion to crypto is technically money laundering either.
Perhaps the profit from holding cryptocurrencies could be considered laundered once converted back to INR since the profit itself was illegally earned.
If bitcoin is illegal, the only reason to engage in a black market transaction to obtain would be if it gave you access to material thing you could not otherwise get - unless there active hyper-inflation going on, no one would want to illegally obtain bitcoin just so they could turn around and buy some good they'd be able to obtain with normal, legal transaction.
All it takes is a decent return for savers since the INR is a terrible store of value. The massive gold black market in India is a clue that Bitcoin isnt going anywhere.
This just speeds up the rise of Dexes. How do you block an exchange like Bisq in India?
Majority of the people who gamble on crypto are doing so only to make a quick buck. They neither know nor care about the ideology, decentralization, removing intermediaries and other such lofty goals of crypto. Most people are in it because they either saw someone making a lot of money or read about it in the media and they also want a piece of it.
It's speculation, plain and simple. If not ban, government needs to regulate it like it regulates other speculative markets.
As for the libertarian goals of removing the central authority - that's not happening.
Don't tell the Indian government where Polygon chain / MATIC came from.
So did the "China bans cryptocurrency" FUD wear off or something?
If I'm not mistaken, the bitcoin price has been unaffected by this news - how does that work?
Bitcoin has crashed on the largest Indian exchange WazirX by 25%.
Load ze India FUD ...
let's make a cricket DAO
Crypto is increasingly looking like a Ponzi scheme to me. I know this is going to be an unpopular opinion on HN but it's no less true.
The fact is that blockchain solves a problem for almost nobody. The primary use seems to be to avoid real or threatened government intervention. These uses are largely illegal, by definition (eg bypassing capital controls in China). Now you can argue the morality of such laws but that's irrelevant.
Cyrptos have wildly failed as a "currency". Even so-called "stablecoins" just peg themselves directly or indirectly to fiat currencies so they're really just adding another point-of-failure. We should be calling them "cryptoassets" not "cryptocurrencies".
As for escaping government seizures and the like, try telling that to Ross Ulbricht [1]. This year, China started to crack down on crypto mining [2].
The "security" of crypto is a myth. They can and have forked and have well-known weaknesses (eg 51% attack). I can't help but think of this [3] wrt security.
Proof-of-work wastes a ton of energy for basically nothing and, just like China, countries will increasingly clamp down on this, especially as voters increasingly face rising energy costs.
Proof-of-stake is basically a fantasy of how we'll solve PoW problems with a lot of hand-waving. It having not happened yet is pretty good evidence of this being a fantasy.
All it really takes is for action by the US and/or EU to say something like "financial institutions who trade in cryptos lose access to the banking system" and the market implodes. Sure the government can't stop you adding more transactions to the blockchain but for what? If no one can take your "currency" what value does it have?
Weirdly, crypto has seen the resurgence of gold bugs who have long held an irrational hatred for fiat currencies, completely with false claims in some cases (eg the US dollar was never 100% backed by gold, ever).
Things like reversible transactions and the ability to print money are actually a feature not a negative as they're often portrayed.
And even if you get past all this, you want users to securely manage a wallet when failure to do so means they could be irreversibly be robbed of their balance?
Governments are slow to react and they tend to only react to things that become viewed as a threat. Crypto is so niche it's not a threat. But that doesn't mean the US government couldn't fatally wound the crypto market tomorrow if it chose to.
[1]: https://en.wikipedia.org/wiki/Ross_Ulbricht
[2]: https://www.nytimes.com/2021/09/24/business/china-cryptocurr....
This is really a popular opinion on HN. It is kind of self evident too.
Defi, NFT, Crypto all have Ponzi features. The people who win are early investors and the ones who lose are those who are late to the game. So, we invent "new" schemes like NFT, Defi etc.
There is no product. Nobody uses Defi to "borrow". 99.999% of the people want to put their crypto in and magically get some crazy XY.ABC% APR on their crypto. Everything runs on greater fool theory.
When the bear market hits there will be a lot of bag holders wondering why the hell they paid $10k on a monkey pic with sunglasses and a cigar.
During the euphoria phase people act like they are misunderstood geniuses and people who rightly call this a ponzi scam are those who don't get "it"!
>Nobody uses Defi to "borrow".
I mostly "use" crypto to keep USDC in DeFi sites like Aave for ~3-10% APY and some on Gemini for a FDIC insured 8% APY. This money primarily gets lent out for other people margin trading, but you don't really need to take on any of that risk for yourself.
The rest of your post is a very standard HN response to crypto, to the point where I'm not even sure if you wrote it or copied it.
I just want to respond to this:
>Proof-of-stake is basically a fantasy of how we'll solve PoW problems with a lot of hand-waving. It having not happened yet is pretty good evidence of this being a fantasy.
PoS is bog standard for new chains. Every "up and coming" chain is essentially a clone of Ethereum with some scalability improvements and proof-of-stake for consensus. See: Harmony, Luna, Avalanche, &c
Unpopular? What you've written is a summary of the orthodoxy on HN.
When people say it’s an “unpopular opinion” it’s really a dog whistle for supporters to come out and agree.
>Proof-of-stake is basically a fantasy [...] hand-waving. It having not happened yet is pretty good evidence of this being a fantasy.
This couldn't be further from reality. Blackcoin (2014), Peercoin, Decred, etc...
Eth 2.0 is running, right now, with billions in value. The whole of Eth is planned to move to 100% PoS quarter 1 of 2022.
> The whole of Eth is planned to move to 100% PoS Quarter 1 of 2022
I have heard this so so many times. ETH moving to PoS fully in X months. I'll believe it when it happens.
And I'm glad they plan on making it happen cause there way too many things harming the environment already. A major cryptocurrency reducing their environmental impact is welcomed.
If you follow the Ethereum core developers on Twitter you can track the progress. Current status is (1) people have locked ~$30-40B worth of Ethereum into the proof of stake chain, money which can't be retrieved until the merge (2) the Ethereum team has a merged testnet running on which all the different client developer teams are participating. They're just hunting for edge case bugs now, too much money at stake to have anything go wrong with the merge.
This is a part of crypto I do not fully grasp. How much power do the developers vs the miners have over the direction of the project?
What happens if the devs go crazy and decide to eg. Ban transactions smaller than $1M worth of coins in code.
Someone made the point the other day that miners might not fancy this PoS change because they’re heavily invested in equipment.
The miners have the actual power, but want to avoid a situation where they are directly fighting against Buterin and the developers, because that would cause a crisis and tank the value of ETH and hence their income going forward. A hard fork in this situation (developers update protocol with POS, miners keep using existing version) would start with the miners having the biggest chain by far, but the new POS chain would be followed by a large part of non-miners immediately, and grow from there over time, eventually becoming the largest chain.
So miners have to make a cost-benefit analysis as to how much control they can exercise while not causing a hard fork as well as what the consequences of causing a hard fork would be. Likely right now they're using accrued coins to prime their stake in PoS rather than directly working against it - delay helps them here.
Miners already put up a fuss over some of preparatory changes for PoS and definitely don't like having to give up mining. They're free to run a parallel Ethereum chain of their own (which has already happened, most prominently with Ethereum Classic - $ETC). Everyone will have parallel balances on both chains from the point of departure. The cultural weight is with the developers however and all of the popular apps will use the proof of stake chain instead of whatever forks emerge from grumpy miners.
But doesn’t this power dynamic - the fact that there is a miners committee somehow talking to a devs committee -beat the purpose of decentralization (no single decision-maker)?
Won’t this become politicized eventually and we’ll end up with a Central Bank-like structure? Imagine some elected dev going on CNBC to tell us they need to mint more coins.
You still need to make decisions in a decentralized system, I don't really see what alternative you're imagining that's even more decentralized than "start a parallel chain if you dislike it, let people vote with their feet". You can't really start a parallel USD to see if people like your monetary policy better.
And, obviously, this is political. Miners make a lot of money off the status quo, devs want to reduce the energy/environmental impact of their chain. Proof of stake takes away a moat that miners have built around their operation (now anyone with 32eth can be a validator). There's no way out of that conflict of interests without some degree of politics.
Miners have some power in PoW chains. If a chain wants to move to PoS, miners have zero power. Ethereum's "The Merge" plan is a great example. EIP-1559 was meant to reduce miners' profits, and miners was not happy about the prospect. They've attempted to organize to demonstrate that they also have something to say in the discussion. Buterin has come out with a blogpost detailing how the chain can move to PoS way sooner than initially planned. Plan involves ways of making sure that miners can't do nothing to prevent the transition.
This is no different from PHP, Python, C++, Linux, etc.
There are many checks and balances to all successful open-source projects.
And when that fails you can always fork it.
Avalanche is using the Avalanche consensus ( https://docs.avax.network/learn/platform-overview/avalanche-... ) and is decentrally processing a huge volume of transactions in a scalable and fast fashion.
The more than 1000 validator nodes require a proof of stake.
Another thing is the more people will use crypto the more they will actually want it to be regulated. The more money there is more guarantees will holders want. And it will slowly turn into the same currencies we now have - centralized, regulated, traceable, stable. What an irony for crypto fans
Not unpopular. Programmers who can understand the underlying technology and look beyond the lofty ideological BS of blockchain will immediately know, this will not work in real world scenarios.
I tried to find any company who was using blockchain in any meaningful way. I couldn't find any. All I could find was promotional pieces mentioning what COULD BE DONE with blockchain or a trial that some big name company was CONSIDERING. No updates on the results of those trials or if anyone actually carried out the trial.
Proof-of-worrk blockchain is such a terrible, wasteful and bad concept that anyone who has ever worked with any database would know it's not even close o being useful.
How is fiat money not a ponzi scheme?
Tokens like Bitcoin, Eth, NFTs etc are the only thing one can own in the digital space.
So if a country makes the possession of cryptocurrencies illegal, it makes their people digitally possessionless.
This would cut them off from the next version of the web. Similar to how North Korea cuts of their people from the current web.
So far it seems no country that cuts of their people from the internet has been able to flourish.
All ownership (digital or not) is nothing but a social contract. The cryptocurrency (or normal currency) exists because enough people agree to recognise it.
You can buy and own a domain name. If trust in DNS is violated, we'll have much bigger problems.
Owning a token means you can perform certain actions on a distributed system. No social contract needed. You own the token by owning a secret key which gives you the power to move it.
It's like owning a key to a door. It gives you the power to lock and unlock the door. No social contract needed.
You can not own a domain. You can only pay a registrar to have them talk to a registry. You then are at the mercy of both. Use the HN search tool to read an endless amount of horror stories of people who lost domains and sometimes decades of work because of this.
The distributed network exists because we collectively agree to host the nodes, and because we put trust in that network, and in its supply chain (application, OS, hardware, electricity, clay, etc). Ownership is built on that trust - exactly the same as your ownership of a domain name is built on the trust in the registrar, ICANN, root name servers, and so on.
Suppose a hypothetical scenario, where a malicious actor sneaks in a bug into the node's code, that causes the requests signed by your key to be rejected, and the code gets deployed to the majority of the network. Your key/token becomes effectively worthless.
Suppose a (much less hypothetical) scenario, where a state decides to outlaw the technology, which puts node operators/users at a legal risk, disincentivizing the use of the network locally, and diminishing its value globally. You still "own" the token, but it's that much less useful.
There are different considerations, trade-offs, threat models, failure modes, horror stories, but nothing about ownership in a decentralised network is _fundamentally_ different - it's still built on trust.
A door-and-lock is a single-agent system and therefore isn't a good analogy. Money always needs social consensus. In a blockchain, you're relying on others agreeing on a certain history. That society can decide to disagree with you and consider a different history as truth. It has happened multiple times on Ethereum and Bitcoin both.
its not a door. It's a number on a blockchain. It has no inherent value and no inherent function. It's just a number on a blockchain.
Everything else is tulipmania.
If digital assets have no value, then you are probably fine with having your hn handle, your bank account and your phone number deleted?
The value of digital property is widely accepted for decades now.
What crypto adds is that you can hold the key to your property yourself. So others can not move or delete it against your will.
I don't care about hackernews handle at all. Bank account is not a blockchain number, nor is my phone number..
>The value of digital property is widely accepted for decades now.
You're conflating all digital 'property' with blockchain bullshit, and also pretending my bank account is a digital property.
>What crypto adds is that you can hold the key to your property yourself. So others can not move or delete it against your will.
Society need not support your want for crypto, especially where it harms society and reduces its ability to control financial regulation.
When you own property in real life the record of ownership is maintained by the city/state/country.
There's no reason why the ownership in digital space has to be on a decentralized blockchain, you can also record it centrally (as shown by trusted entities like VISA etc).
And the people of Turkey lost over 80% of their savings buying power because of this.When you own property in real life the record of ownership is maintained by the city/state/country.
Why is that a problem? I "possess" nothing in digital space but get much value from it and I posses various things in meat-space that I also get value from.
Moreover, I can spend my conventional money in digital space and get further use from. A "digital possess" seems a thing that doesn't improve the world in a good way.
In the 90s many people said the same thing about "being online" and "having email". Writing letters and meeting in person works just fine, they said.
Crypto makes so many things so much more efficient that not having access to it will be like not having access to the internet today.
Crypto makes so many things so much more efficient
Like what? I can currently pay for any legal physical or virtual good I can think of using a conventional credit card. Crypto might or might help privacy and might allow you to buy illegal things more easily. It's a hedge against inflation but a number of things have that quality.
The use of crypto seem inherently confined to keeping the state from doing things to people's money. States can be terrible but since crypto doesn't stop state from doing things to people's physical person, it's most often a protection of the rich from the state, which isn't something I'm particularly in favor of either.
I think there are a lot of "W3 revisionists" or people who are otherwise maybe too young to remember the mid-90s but from what I remember there were plenty of people who saw the potential of the internet. Twelve years after the web was laid out at CERN we had Google not to mention AOL, Ebay, Craigslist, etc..
I've been hearing the same story on crypto since 2011/2012 and it's become no more useful to the average person. The only thing that's changed is more people who know nothing about technology are raving about how its going to change the world so I should buy Bitcoin.
Yes. But the merchant hates it. Because it is expensive and they are not sure if they really will get their money.I can currently pay for any legal physical or virtual good I can think of using a conventional credit card.
> Crypto makes so many things so much more efficient
Crypto does the same things a database does, except in a much more expensive and inefficient fashion.
Efficiency and robustness usually do anticorrelate.
Bitcoin is not a token.
Google "native token of the bitcoin network".
You can seek to block cryptocurrencies but you can't block decentralised protocols.
P.S: I'm someone important at LongShort.Finance
> P.S: I'm someone important at LongShort.Finance
So I opened the site and it pretty much only asks me to connect to the wallet. No explanation of what it does, what it’s for etc. which are even standard in scam websites. They sure appears extremely scammy even though it might not be.
> P.S: I'm someone important at LongShort.Finance
What a peculiar addition to your comment.
I'm important, but my importance is fully decentralised. It means almost nothing :)
A good rule of thumb is that if someone says they are important, they are probably not important. The important people are the ones with nothing to prove to plebs like us.
> someone important
Everyone here is important.
no uh. not me
You know you could just post a Show HN if you wanted to promote your crypto thingy. No need to be so ridiculous about it.
People are pretty arrogant around here, but we're reaching the next phase of crypto: Government Competition. The current crypto ecosystem is probably allowed so the tech can flesh out organically, then the best bits and bobbles will be plucked for inclusion in official government-approved currency. What State wants to be the guinia pig for any of this stuff - your whole country could collapse. Let people figure it out and give them all the risk, the State can take over later.
Other coins will be considered exclusive pathways for money laundering and will be nerfed like bearer-bonds or precious metals are in the US.
There's no actual resource - violent or material - that backs any crypto. The only backing is it's novelty. Once the novelty is copied by the State, it will be rubbed out IMHO.