One thinks about crypto as a clownworld only until one had to work with or inside the real financial system.
Techincally, it is in no way better than crypto. The only difference is that in real financial system there is a strong legal cover for all the technical and security fuckups. Like, stealing from bank by exploiting their 10-years old Windows XP ATM connected to the internet is 10-years-in-jail offence, while stealing crypto may be hard or impossible to prosecute in many jurisdictions.
> while stealing crypto may be hard or impossible to prosecute in many jurisdictions.
This is one of the inherent contradictions of crypto. If the ultimate goal of crypto is to create a financial system that is free of government control, then that system must also be free of the justice system because that's the government too.
Asking people whose salaries are paid for with tax dollars to help you recover stolen crypto while simultaneously trying to avoid taxes and government oversight is so ironic.
It's not really a contradiction. People who want financial system free of government control and people who want government to prosecute for crypto crimes are mostly different people.
The latter usually care about 100% APR on dollar and other scammy promises, and not about any real crypto benefits. When they get burned, they want government to step in and regulate.
The former don't care much that system allows to scam people (the "it's your fault if you were scammed" attitude), they care more that it's free from regulations.
> People who want financial system free of government control and people who want government to prosecute for crypto crimes are mostly different people.
Are they? I'm not so sure.
Could you elaborate? The whole selling point of cryptocurrencies seems to be to start from scratch, without those pesky KYC/AML and tax laws.
Traditional banking is not a natural law. It's man-made.
The benefits cryptocurrencies have over traditional banking seem to all come either directly or indirectly from the extent to which they do not have the man-made rules and laws.
Basically: It is hard to send money from A to B because of laws.
The set of people who like cryptocurrency is not small. The number of anarchists is vanishingly small. People want anarchism (complete freedom) and unregulated cryptocurrency until someone else uses that anarchism against them, and then they want regulation, post-facto.
It's not different people. It's the same people at different times; the times they're affected and the times they're not.
> Could you elaborate? The whole selling point of cryptocurrencies seems to be to start from scratch, without those pesky KYC/AML and tax laws.
> The set of people who like cryptocurrency is not small.
There are two sets of people who like cryptocurrency. First ones like crypto because of better yields than traditional bank accounts or investments. But they want to live in a miracle pinky unicorn world where they can have better yields risk-free by having government protections. Other than better yields, they're completely fine with traditional banking system.
Second ones like crypto because it allows for easy money transfer from A to B. These people don't care much about yields, they cannot transfer money via traditional ways for various reasons, and they want governments to stay away from crypto as long as possible.
> It's not different people. It's the same people at different times; the times they're affected and the times they're not.
That's your assumptions about some people. Sure, from my side it's also only assumptions and personal anecdata, but most of the guys I know that use crypto for something useful wants government to stay away from it as far as possible, despite all the scams around. Some of them lost money on FTX, and that didn't change their position.
I see what you mean. I guess in my mind "people who like cryptocurrency" like it for reasons other than its bigger-fool value proposition.
Yes, I agree that there are many many people out there who don't care one bit for e.g. bitcoin itself, but would be perfectly happy buying a regulated ETF that tracked the price of bitcoin.
I implicitly did not count these people as "liking cryptocurrencies". What they like is money, in particular fiat money.
> These people don't care much about yields, they cannot transfer money via traditional ways for various reasons, and they want governments to stay away from crypto as long as possible.
These are the people I was referring to, who want "no regulation" when they want to do something fine, but "full regulation" if and when they get screwed.
They want insurance only when things go poorly, and see insurance as a waste of money the days when they don't have accidents.
Sure. Plenty of financial regulation is newer. Crashes and frauds just in the last 100 years have created lots of new laws.
But the thing is people want fast and anonymous payments, but don't acknowledge that traditional banking isn't doing that so well (especially in the US) because of laws people want even more.
E.g. given the choice of easier international payment or fighting mob money laundering, people will say the latter.
Well, they'll say both, but cryptocurrencies only even try to do the former. (Failing, because it's anything but easy for almost everyone)
As for your HTTPS analogy: mass surveillance is less law enforcement and more spy agency shit.
Even for messaging, the messages are rarely the harm. For money the moving of money is the harm.
Being free of government control doesn't imply lawlessness. I wouldn't want the government to control jeans manufacturing, but if someone steals your jeans, that's still a crime. There are laws against theft, and crypto and jeans are just different kinds of property.
> I wouldn't want the government to control jeans manufacturing
Of course you do. You want asbestos to be banned in the clothes you buy. You want labelling of material to not be lies. You want child labour banned. You want slavery banned. You want trademark protection. You want the factory to not dump toxic waste in the nearby river.
And you say "well, of course I want that, but not... I dunno..." and give some hypothetical. Well, the same with cryptocurrency. If you think you want to get rid of all financial regulation, including AML/KYC, then I don't think you've thought about the issue for more than a fleeting moment.
I literally said the laws should apply to all kinds of property equally - yet you think I "want to get rid of all financial regulation"? I hope you enjoyed building that strawman and then tearing it down
You're putting words in my mouth. I never used the word "regulated" at all. I said "controlled" - meaning the government should not be the sole entity allowed to own and operate a factory that produces jeans. (I hope that's not the contentious point here.) I believe jeans manufacturing should be regulated by the government, but not controlled by the government. And even if the government gives up control, it does not give up its ability to regulate.
Do you agree that, even though the government does not itself manufacture a pair of jeans using taxpayer money, the government can still prosecute theft of those jeans? If so, it should not be a stretch to understand that even though the government does not issue a certain private sector money, it can still prosecute theft of that private sector money.
So in this analogy the government should regulate cryptocurrency mining (production), import, export, domestic transfer, exchange, disposal, loans, etc…?
In other words, you're saying that cryptocurrencies should be treated as goods, not monetary instruments?
I'll give you the benefit of the doubt and say that's not quite what you mean. It sounds like you (and I've heard this from other pro-cryptocurrency advocates) want to carve out a new type of asset, basically with the exact purpose to avoid all existing legislation.
This common argument says that it's just like money, but should not be regulated as currency. It's actually much more like a commodity, but should not be regulated like one. It can act as a security, but should definitely not be regulated like one.
Commodities are subject to sales tax/VAT at delivery. Cryptocurrency's delivery is instant, or never. That's not clever avoidance, that's just trying to eat your cake and have it too.
> It sounds like you want to carve out a new type of asset
That's not what I'm saying either. Crypto is just mundane property (like jeans), and property already has plenty of legislation around it. Existing laws work just fine. For example, capital gains applies equally as much to jeans as crypto (if for some reason your jeans appreciated 100x in value and you sold them).
The original comment I replied to claimed crypto should be entirely free of the justice system - THAT would actually be a new legal classification. Afaik the government has never before exempted any kind of property from theft laws. I only posted to point out that inconsistency.
The word property encompasses more than just what sales tax laws apply to, no? For example, I'd consider an old-school physical stock certificate a kind of property, and subject to theft laws but not sales tax.
As far as classifying it more specifically, I don't have strong opinions. Gensler says BTC is a commodity and ETH is a security--that sounds fine to me, ship it. I'll let the regulators regulate.
I'm just pushing back against this idea that private sector money must exist outside of the law and outside of the justice system—because the anarchy approach is clearly absurd.
> The word property encompasses more than just what sales tax laws apply to, no? For example, I'd consider an old-school physical stock certificate a kind of property, and subject to theft laws but not sales tax.
Sure, but then you're either saying that cryptocurrencies are securities (not commodities), and to be regulated as such, or you want to harmonize laws on commodities and securities.
So your analogy with jeans is not very clear to me. Cryptocurrency (a security?) is just like jeans (a commodity)?
> I'm just pushing back against this idea that private sector money must exist outside of the law and outside of the justice system—because the anarchy approach is clearly absurd.
I entirely agree with this. But like I said cryptocurrencies try to play a language game to avoid being classified as anything that's currently regulated, in order to be as unregulated as possible.
E.g. the reason people use bitcoin instead of western union to send money (to the extent that they do) boils down to the laws that exist to prevent, investigate, and "reverse" crimes. The laws were written such that they can be enforced by the (needed) middleman. Bitcoin doesn't (for this transaction) require a middleman, so the law, the implementation of the intention, doesn't fit well.
But people who call this "savings" are ignoring why the law exists. There was never an intention to punish or burden western union. It was an intention to safeguard (or track, or whatever) the movement of money.
…or commodities, or securities, or whatever a given cryptocurrency should be classified as.
I agree that theft is theft. But movement of financial instruments and commodities is also already covered by the law.
In some countries your primary home is exempt from capital gains (or taxed lower than capital gains). But that doesn't mean that you can take your physical stock certificates, stack them in the form of a shed, sell it, and thus avoid capital gains. Yet this is basically what cryptocurrencies try to do, all while saying that they're "more efficient". It's not, it's just word games.
You're pushing the jeans analogy a little further than I intended. Every analogy has its limits.
Is it a security? A commodity? I don't know! But neither does the US government. The CFTC and SEC are fighting a turf war. The CFTC calls them commodities. The SEC calls (most of) them securities. The IRS has created a brand new category called "digital assets". Who is right? If the government can't tell you, I sure can't.
I can infer there must be some legal justification for the current treatment. Even if you think Coinbase is playing fast and loose with the law, the old school players like Fidelity also don't charge sales tax on bitcoin, and I guarantee you they're not going to risk their core business over crypto. I am curious now how their lawyers would answer some of your questions.
Anyways it's been an interesting conversation, thanks for sticking around after the thread died. You've given me some stuff to think about.
You're being silly, but I'll humor you. The world "control" has multiple meanings.
In the communist sense: the government should not control the means of production for jeans or crypto.
In the social welfare sense: the government should "control" whether people are allowed to steal others' jeans and crypto, and the government should "control" whether you can abuse children in connection with your jeans or crypto company.
You can play with the meaning of the word, but whatever meaning you choose, jeans and crypto shouldn't be treated any differently.
That conclusion doesn't necessarily follow. A significant portion of the economy functions with limited government intervention, as the government sucks at managing the economy. However, money is an exception in this regard, and many cryptocurrency advocates argue that it could be better managed outside of government control. This does not imply that a justice system is unnecessary; rather, it emphasizes diverse roles of government.
In other words, one can agree with certain roles for government (e.g. justice system) while not agreeing with others (e.g. managing money). I don't see the irony or the contradiction.
> A significant portion of the economy functions with limited government intervention, as the government sucks at managing the economy.
This just isn't true, government participation can be found throughout the entire US economy. Import and export controls, labor force participation and visas, a massive small business loan portfolio, R&D investments in things like clean technology (e.g. Tesla was initially funded by a government clean energy grant), on and on and on. The assertion that the government just lets the economy run itself is laughable.
> In other words, one can agree with certain roles for government (e.g. justice system) while not agreeing with others (e.g. managing money). I don't see the irony or the contradiction.
It's not a question of what the ideal role of government should be, the question hinges on the government's legitimacy and ability to do things like collect taxes (which is an important function of a government). Lots of participants in crypto believe that taxation is theft and that government is an inherently wasteful entity, all while continuing to enjoy the largely invisible benefits that government policy and enforcement provides them. This is the contradiction.
EDIT: The government is the only reason that FAANG and other tech companies aren't bringing in foreign software developers who will work for $15/hr en masse. You know that if they could, they 100% would.
There's a difference between a little intervention here and there, and government having a literal monopoly over something (e.g. money creation).
> Lots of participants in crypto believe that taxation is theft and that government is an inherently wasteful entity, all while continuing to enjoy the largely invisible benefits that government policy and enforcement provides them. This is the contradiction.
What you've described are anarchists. They are a small minority and certainly do not advocate for more government involvement. Most Bitcoin advocates simply think that Bitcoin is much needed competition to government money (fiat) while still believing in a government-run justice system.
> EDIT: The government is the only reason that FAANG and other tech companies aren't bringing in foreign software developers who will work for $15/hr en masse. You know that if they could, they 100% would.
If you really believe that, I can see why Bitcoin would make you nervous.
I think the contradiction is that if you don't allow the government access to the financial system then there is little it can do for you to get your money back or investigate financial crimes.
The still living members of the Silent Generation would disagree. They still don't trust banks and the banks have once again proven themselves to be untrustworthy.
> The still living members of the Silent Generation would disagree.
Never heard of them. They are incredibly effective at living up to their name.
> They still don't trust banks
Neither do I. I also don't trust my cell phone provider or the grocery store or the company that makes the web browser I use.
> the banks have once again proven themselves to be untrustworthy.
That's because they are. That's why we have a system of laws and regulations in place which kinda work at keeping them from screwing over most people, most of the time. But not always and not everyone. It is a work in progress.
My impression is that there is a lot more auditing going on in the conventional financial system. Not to say that it's not bad, but there are at least some (legit) outside eyeballs on your system.
My financial company has amazing enforcement around code quality, deployments strategies, separation of concerns, testing enforcement, escalation, approvals, backups, minimum security standards, vulnerability remediation and so much more. All of this is aimed at being able to keep compliant at scale. It's a large burden, but it's one you take when you hold people's money.
Techincally, it is in no way better than crypto. The only difference is that in real financial system there is a strong legal cover for all the technical and security fuckups. Like, stealing from bank by exploiting their 10-years old Windows XP ATM connected to the internet is 10-years-in-jail offence, while stealing crypto may be hard or impossible to prosecute in many jurisdictions.