Cryptocurrency off-ramps, and the shift towards centralization(blog.mollywhite.net)
blog.mollywhite.net
Cryptocurrency off-ramps, and the shift towards centralization
https://blog.mollywhite.net/off-ramps/
21 comments
Several years ago I bought some anti-malaria medication from an Indian pharmacy using Coinbase before my trip to India. I guess the address was on a FinCEN list because my account was immediately closed. Anyone know Brian Armstrong? I'd like to get my account reinstated as I'm not doing anything illegal and I'm not opposed to KYC. Not a terrorist AFAIK.
> Ultimately, this a civic matter; as much as we want to ensure we have the right to encrypt our communications, to not disclose our passwords to police even when being prosecuted for a crime, as activists commonly insist on, so should we fight to maintain our existing rights to financial privacy.
But you know, you are not anonymous on Blockchain, you're only pseudonymous. If someone correlate your pseudonym with your real identity, they will know your entire financial history (on Blockchain).
But you know, you are not anonymous on Blockchain, you're only pseudonymous. If someone correlate your pseudonym with your real identity, they will know your entire financial history (on Blockchain).
On some blockchains. Monero hides sender, receiver and amount by default.
Monero _attempts_ to hide those details. This is an extremely hard problem and it has not been extensively tested against adversaries with deep resources. For keeping your drinking buddy from knowing what else you've spent money, it probably works but I would be very hesitant to tell people it's effective against, say, KYC exchanges much less an adversary who can do analysis against both the entire blockchain and other internet activities.
If you’ve cracked Monero encryption or have a general deanonymization attack, you should submit a solution to the IRS’ multi-year, $600k bounty.
There have been a few instances of specific payment patterns causing de-anonymization (which just means payments are correlated and identified as not-spoof, due to the way the Monero blockchain works). But to be honest if you think Monero in general can be broken you probably don’t know how it works well enough to make that statement.
There have been a few instances of specific payment patterns causing de-anonymization (which just means payments are correlated and identified as not-spoof, due to the way the Monero blockchain works). But to be honest if you think Monero in general can be broken you probably don’t know how it works well enough to make that statement.
I’m not saying I know it’s broken. I’m saying it’s a hard problem and given the stakes I would treat it like a new cryptographic construct where it takes the community many years attacking the entire system before people start making confident statements about it.
One of the big concerns here is retroactivity: if you make decisions because you _think_ you’re anonymous but that changes for any reason in the future (compromised exchanges, insecure clients, sophisticated new analysis techniques, etc.) you can’t pull that history. That necessitates more caution than something where the stakes are lower if an attacker finds something clever to try.
One of the big concerns here is retroactivity: if you make decisions because you _think_ you’re anonymous but that changes for any reason in the future (compromised exchanges, insecure clients, sophisticated new analysis techniques, etc.) you can’t pull that history. That necessitates more caution than something where the stakes are lower if an attacker finds something clever to try.
This is exactly why I can't bring myself to put anything on any blockchain, no matter how anonymous it claims to be. I assume that someone will end up finding a flaw. When that happens, I may as well have been broadcasting everything without any security and privacy mechanisms at all. Not only can the person who's broken it see my history, anyone who knows the flaw can.
I realize that things get leaked from centralized services, but there's a barrier to seeing that info. You put yourself at legal risk if you download one of those leaks and get caught. But there's no such risk with a public blockchain since the data was intended to be received by anyone who wants it.
I realize that things get leaked from centralized services, but there's a barrier to seeing that info. You put yourself at legal risk if you download one of those leaks and get caught. But there's no such risk with a public blockchain since the data was intended to be received by anyone who wants it.
Remember that every time you withdraw or deposit cash at a bank all serial numbers are logged to you. When you buy something with cash at a business and that cash is later deposited at a bank then a link is logged between you and the vendor. Banks happily sell this sort of information and report it to various government agencies. It is also why most bank/ATM robbers and amateur money launderers get caught.
Credit and Debit processors likewise directly log everything and sell it to marketing agencies to target you in detail.
If your reason to not use crypto-assets is that they are not private enough then you certainly should not use cash or credit cards either.
Credit and Debit processors likewise directly log everything and sell it to marketing agencies to target you in detail.
If your reason to not use crypto-assets is that they are not private enough then you certainly should not use cash or credit cards either.
The difference is that nobody is running around selling credit cards by saying they’re anonymous. Monero is much better than Bitcoin in that regard but it still requires a leap of faith to trust that a complicated tech stack is working.
Even if it’s true that banks log serial numbers pervasively - most public sources say the opposite, except for things like money given to robbers - the many businesses which accept cash do not. Again, not perfect but the threat model is much easier for most people to reason about.
Even if it’s true that banks log serial numbers pervasively - most public sources say the opposite, except for things like money given to robbers - the many businesses which accept cash do not. Again, not perfect but the threat model is much easier for most people to reason about.
Imagine one needs to make a life or death, but illegal, purchase like a life saving drug for someone unable to meet hospital prices.
You would trust cash from your bank before Monero because some public sources you read promises banks never log serials?
I do not know what public sources you have read but FWIIW my interactions with financial fraud investigators in private sector and multiple government agencies have convinced me cash transactions and those that make them can be logged in great detail for people of interest if nothing else.
While complex I would recommend Monero or tumbled Bitcoin for people that require high privacy over anything else today. It also avoids the major risks of having to meet in person to transact as with cash.
You would trust cash from your bank before Monero because some public sources you read promises banks never log serials?
I do not know what public sources you have read but FWIIW my interactions with financial fraud investigators in private sector and multiple government agencies have convinced me cash transactions and those that make them can be logged in great detail for people of interest if nothing else.
While complex I would recommend Monero or tumbled Bitcoin for people that require high privacy over anything else today. It also avoids the major risks of having to meet in person to transact as with cash.
> can be logged in great detail for people of interest if nothing else.
That’s the key part: this is very different than all activity being routinely logged. Most of us never need to worry about this and someone in a hypothetical situation like you describe is presumably not a person of interest until afterwards, where that public blockchain history is a risk for the rest of their life.
Similarly:
> It also avoids the major risks of having to meet in person to transact as with cash.
This wouldn’t matter in your hypothetical scenario where physical goods need to be exchanged.
Again, my point is that this comes down to the marketing push. Even if the system works as planned, the number of people who made other opsec mistakes is high enough that in practice cash is not less safe.
That’s the key part: this is very different than all activity being routinely logged. Most of us never need to worry about this and someone in a hypothetical situation like you describe is presumably not a person of interest until afterwards, where that public blockchain history is a risk for the rest of their life.
Similarly:
> It also avoids the major risks of having to meet in person to transact as with cash.
This wouldn’t matter in your hypothetical scenario where physical goods need to be exchanged.
Again, my point is that this comes down to the marketing push. Even if the system works as planned, the number of people who made other opsec mistakes is high enough that in practice cash is not less safe.
Please provide source RE cash serial number logging and corroboration because I haven’t seen anything like this
I would love to know how the serial numbers in a cash transaction are logged to me.
Dollars are not fungible, the problem is not that they are logged its that the potential exists at all.
They could be logged, but unlike blockchain currencies they aren't logged right now which means historical analysis is impossible. And logging isn't inherent to cash. The transaction chain would be broken by anyone who doesn't keep a log. On top of that, the scope of who can see the logs would be limited.
I guess the assumption here is that retailers and the like would be compelled to provide that info to the government, but I'd still prefer that over the info going to absolutely anyone who wants it (since "the government" is a subset of "anyone").
I guess the assumption here is that retailers and the like would be compelled to provide that info to the government, but I'd still prefer that over the info going to absolutely anyone who wants it (since "the government" is a subset of "anyone").
Have you seen whereisgeorge.com? Also it is worth bringing up that US banks do this regularly.
This is an aside, but is 600k a meaningful bounty compared to the potential payout of all that data?
I suppose I wouldn't know how much that data is worth unless I do have a crack for it, so I guess the point is moot :P
I suppose I wouldn't know how much that data is worth unless I do have a crack for it, so I guess the point is moot :P
Not quite. You can discover one of the many addresses that are typically part of Bitcoin wallet. As for the history, you can't really tell much, especially if the person didn't re-use addresses which is the recommended mode of operation.
Thankfully the vast majority of the public are crypto security experts and would have no problem applying these best practices to protect themselves when crypto becomes an everyday medium of financial exchange. /s
Not reusing addresses is the default in a lot of wallet software though. The user doesn't have to do anything special.
still there is a steep learning curve between "send money from my coinbase account" to "manage a self-custodial wallet without deleting all my money"
I think additionally, the 'casual' user needs to understand Monero, Bitcoin, L2, Ethereum, etc just to make in informed choice of what to use, knowing which are best for privacy, convenience, security, etc.
It appears there are solutions available to a lot of concerns, but they require substantial knowledge of the ecosystem to use them and getting it wrong is permanent.
It appears there are solutions available to a lot of concerns, but they require substantial knowledge of the ecosystem to use them and getting it wrong is permanent.
It's as if almost every crypto skeptic doesn't know how it actually works.
Call it a UX problem. I've used BTC here and there but I'm still not confident that I could keep my transactions silo'd, from a cursory look at the blockchain it seems obvious that you can "follow the money" from a de-anonymized transaction (Say, I pay you for a service in person, so you know a wallet address that belongs to me) to other wallet addresses and balances associated with me.
I can't blame people for losing interest / calling bullshit on crypto before spending hours diving into the details of L2, derivative wallets and multi-sig etc etc, details that ameliorate the skepticism. Also these things change over time, so maybe Lightning was unconvincing 3 years ago and skeptics just haven't given it a second look. (This is me, but I'm slowly being convinced that L2 really does make this stuff practical, but for a long time the transaction-per-second and unrecoverability of lost keys made the whole field very uninteresting)
I can't blame people for losing interest / calling bullshit on crypto before spending hours diving into the details of L2, derivative wallets and multi-sig etc etc, details that ameliorate the skepticism. Also these things change over time, so maybe Lightning was unconvincing 3 years ago and skeptics just haven't given it a second look. (This is me, but I'm slowly being convinced that L2 really does make this stuff practical, but for a long time the transaction-per-second and unrecoverability of lost keys made the whole field very uninteresting)
Lightning will bring lots of improvements, heck it's in Cashapp now and it works very well in there, they bet on it, and you won't?
How does that work? If I make a new wallet and get coins sent to 0xAAAA and then I buy something and send them from address 0xBBBB, how do the miners validating the transaction know that 0xBBBB has any coins available to send?
Cryptocurrencies have one of essentially two different accounting models:
The account model: These networks have accounts and balances. You make a tx sending tokens from one account to another. It looks like normal banking more or less.
The UTxO model: These networks don't have accounts at all. Instead they have what are called "Unspent Transaction Outputs" or UTxO. Every transaction takes in a set of UTxO and outputs a set of UTxO. All the balances of assets in the inputs must sum up to the same values as the assets in the newly created UTxO and you can only ever spend a UTxO once. To spend a given UTxO some criteria must be met. The most often criteria is some signature that only validates with the public key of the private key being used to sign the Tx. This also can be generalised to other multi-signature schemes or even to supporting smart contracts (via policy ids and script refs/hashes).
Ethereum really was the network to push the account model into the forefront and now most networks choose to implement this over the UTxO model due to the ease with which you can get good UX and dev experience. Bitcoin, Bitcoin forks (SW or chain forks), Monero, Cardano, Ergo, Nervos, IOTA 2.0, and a few others use the UTxO model or some extension of it (ex: EUTxO or the Cell Model). One of the big upsides of the UTxO model is that all state is kept local instead of global however this local state also adds a number of complexities that make the model unintuitive to many.
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So to answer your question: You'd create a Tx from your wallet. This Tx would consume some set of UTxO based on what you want to do and would then produce a number of UTxO going to any number of "accounts". In many UTxO networks, derivative keys are supported and you can give each person you want to receive money from a different derivative public key/address. If they were to send you money, it would go to your derivative address and it would be completely independent from all the rest of your UTxO until you do something on chain to tie them together (say by a delegation Tx in a PoS network, by merging UTxO, or by using UTxO from multiple derivative addresses in one Tx).
As for how you'd that the UTxO is valid: Essentially it just needs to exist on chain and not already been spent somewhere else. Monero for example uses this to their advantage with the "sum to 0" rule to provide a zero knowledge non-interactive proof that a given Tx must be valid without knowing the contents, sender, or recipients.
The account model: These networks have accounts and balances. You make a tx sending tokens from one account to another. It looks like normal banking more or less.
The UTxO model: These networks don't have accounts at all. Instead they have what are called "Unspent Transaction Outputs" or UTxO. Every transaction takes in a set of UTxO and outputs a set of UTxO. All the balances of assets in the inputs must sum up to the same values as the assets in the newly created UTxO and you can only ever spend a UTxO once. To spend a given UTxO some criteria must be met. The most often criteria is some signature that only validates with the public key of the private key being used to sign the Tx. This also can be generalised to other multi-signature schemes or even to supporting smart contracts (via policy ids and script refs/hashes).
Ethereum really was the network to push the account model into the forefront and now most networks choose to implement this over the UTxO model due to the ease with which you can get good UX and dev experience. Bitcoin, Bitcoin forks (SW or chain forks), Monero, Cardano, Ergo, Nervos, IOTA 2.0, and a few others use the UTxO model or some extension of it (ex: EUTxO or the Cell Model). One of the big upsides of the UTxO model is that all state is kept local instead of global however this local state also adds a number of complexities that make the model unintuitive to many.
------
So to answer your question: You'd create a Tx from your wallet. This Tx would consume some set of UTxO based on what you want to do and would then produce a number of UTxO going to any number of "accounts". In many UTxO networks, derivative keys are supported and you can give each person you want to receive money from a different derivative public key/address. If they were to send you money, it would go to your derivative address and it would be completely independent from all the rest of your UTxO until you do something on chain to tie them together (say by a delegation Tx in a PoS network, by merging UTxO, or by using UTxO from multiple derivative addresses in one Tx).
As for how you'd that the UTxO is valid: Essentially it just needs to exist on chain and not already been spent somewhere else. Monero for example uses this to their advantage with the "sum to 0" rule to provide a zero knowledge non-interactive proof that a given Tx must be valid without knowing the contents, sender, or recipients.
Which existing rights in particular do you mean? The real-currency world is completely filled with KYC, suspicious transaction reporting and so on.
Even just having a lot of cash on you is enough for American police to legally steal it from you, roadside.
I mean, that's a problem, but it's not a privacy problem per se. Civil forfeiture is a much larger issue than police taking cash from people with unconvincing sourcing stories.
True. Though to be clear, it’s not that your story isn’t convincing. It’s that police felt like it, usually because you’re a minority.
But we also have to keep the lid on fraid, mafia, tax evasion, organised crime, blood money, etc.
To me the point of blockchain is to democratise access to financial technology. To other's, it's to create a currency that cannot be manipulated by central bank politics. Only to some people it's about privacy - i woupd be quite happy with a totally open and public financial system if it applies to all people equally.
To me the point of blockchain is to democratise access to financial technology. To other's, it's to create a currency that cannot be manipulated by central bank politics. Only to some people it's about privacy - i woupd be quite happy with a totally open and public financial system if it applies to all people equally.
> But we also have to keep the lid on fraid
No we don't. The dangers from allowing use of cryptocurrencies by criminals are far less than dangers to freedoms from corrupt totalitarian governments. When government can easily shut down your finances, you need some kind of way to defy it.
And if you think that your government will never do such thing, think again, harder. Citizens must have a leverage against abuse. With shrinking use of cash, cryptocurrencies allow people to evade a chokehold that can instantly smother them.
No we don't. The dangers from allowing use of cryptocurrencies by criminals are far less than dangers to freedoms from corrupt totalitarian governments. When government can easily shut down your finances, you need some kind of way to defy it.
And if you think that your government will never do such thing, think again, harder. Citizens must have a leverage against abuse. With shrinking use of cash, cryptocurrencies allow people to evade a chokehold that can instantly smother them.
> And if you think that your government will never do such thing, think again, harder. Citizens must have a leverage against abuse. With shrinking use of cash, cryptocurrencies allow people to evade a chokehold that can instantly smother them.
Blockchain won't save you from visit from a man with 5$ wrench, if you know what I mean.
Blockchain might keep your transactions pseudonymous, but when government already knows you, there is little you can do to keep yourself out of its reach.
Blockchain won't save you from visit from a man with 5$ wrench, if you know what I mean.
Blockchain might keep your transactions pseudonymous, but when government already knows you, there is little you can do to keep yourself out of its reach.
> Blockchain won't save you from visit from a man with 5$ wrench, if you know what I mean.
This is accurate however the following isn't necessarily accurate:
> Blockchain might keep your transactions pseudonymous, but when government already knows you, there is little you can do to keep yourself out of its reach.
There are plenty of solid privacy chains based on well understood cryptography. On top of that it is becoming increasingly easy/viable for existing networks to integrate privacy preserving Tx into their networks. Ex: Litecoin (a long standing Bitcoin software fork) integrating privacy preserving Tx via the MimbleWimble protocol and Extension Blocks (together referred to as the MWEB hard fork).
Developments like the introduction of MWEB show that even if the government knows you or your Tx today, all you have to do is make an MWEB (or equivalent) transaction and all of a sudden that chain of visibility goes dark.
Additionally while it may be possible for the government or any organisation to forcibly extract access or knowledge from you with force, we as a society should not be content with making that easy. Prior to the introduction of the internet and digital society, organisations had to spend far more effort to collect far less (and far less reliable) information. We should be making every push to set that pre-digital information era as a baseline or absolute minimum for privacy standards.
This is accurate however the following isn't necessarily accurate:
> Blockchain might keep your transactions pseudonymous, but when government already knows you, there is little you can do to keep yourself out of its reach.
There are plenty of solid privacy chains based on well understood cryptography. On top of that it is becoming increasingly easy/viable for existing networks to integrate privacy preserving Tx into their networks. Ex: Litecoin (a long standing Bitcoin software fork) integrating privacy preserving Tx via the MimbleWimble protocol and Extension Blocks (together referred to as the MWEB hard fork).
Developments like the introduction of MWEB show that even if the government knows you or your Tx today, all you have to do is make an MWEB (or equivalent) transaction and all of a sudden that chain of visibility goes dark.
Additionally while it may be possible for the government or any organisation to forcibly extract access or knowledge from you with force, we as a society should not be content with making that easy. Prior to the introduction of the internet and digital society, organisations had to spend far more effort to collect far less (and far less reliable) information. We should be making every push to set that pre-digital information era as a baseline or absolute minimum for privacy standards.
We've seen examples of financial denial of service from governments in situations where they're unable or unwilling to hire thugs or apply criminal laws. I'll offer two:
Wikileaks is the easy one here. While it may have some problems, I suspect most of the HN audience believes it should exist. The US government has successfully pressured payment providers to deny service to Wikileaks in the past, which has the potential to become an existential threat.
Cannabis businesses in the US are another example. Cannabis is legal under state law in a significant fraction of states (a majority for medical purposes), but illegal under federal law. The federal government is mostly unwilling to enforce the federal criminal law against businesses that are complying with state law, but it's quite willing to prohibit banks from providing service to cannabis businesses.
Wikileaks is the easy one here. While it may have some problems, I suspect most of the HN audience believes it should exist. The US government has successfully pressured payment providers to deny service to Wikileaks in the past, which has the potential to become an existential threat.
Cannabis businesses in the US are another example. Cannabis is legal under state law in a significant fraction of states (a majority for medical purposes), but illegal under federal law. The federal government is mostly unwilling to enforce the federal criminal law against businesses that are complying with state law, but it's quite willing to prohibit banks from providing service to cannabis businesses.
This is a logical fallacy. This is like arguing that because the government could hypothetically put you under 24/7 physical observation and listen to your every conversation by being in the same room and looking over your shoulder, ever using encryption technology is useless.
If your threat model includes Stas-like pervasive surveillance and a real possibility of interrogation under torture, then GP is right, traditional encryption technology will be of limited benefit.
> Blockchain won't save you from visit from a man with 5$ wrench, if you know what I mean.
There is a large middle-ground between a government respecting your ownership and a one stealing your funds using a wrench.
There is a large middle-ground between a government respecting your ownership and a one stealing your funds using a wrench.
Wow. I know this comment is old at this point, but this is an incredibly dangerous point of view.
Corruption is crime. Our ability to have a non-corrupt government depends in large part on the ability of our legal system to track the movement of money and detect corrruption. If you want to create an unstoppable superhighway to absolute government corruption, untraceable currency with perfect privacy is a wonderful way to do it.
People think privacy means "they'll never know I had that porn subscription or bought those legal recreational drugs." But the reality is more likely "they'll never know I took that bribe to deny that permit to that company's competitor."
Corruption is crime. Our ability to have a non-corrupt government depends in large part on the ability of our legal system to track the movement of money and detect corrruption. If you want to create an unstoppable superhighway to absolute government corruption, untraceable currency with perfect privacy is a wonderful way to do it.
People think privacy means "they'll never know I had that porn subscription or bought those legal recreational drugs." But the reality is more likely "they'll never know I took that bribe to deny that permit to that company's competitor."
I’m fine with weak financial privacy and strong KYC/AML regulations. A lot of garbage humans out there that these tools are necessary to police with.
That's just because your government isn't currently categorizing you as a "garbage human".
What that means in practice is that rich people have financial privacy and poor people don't. Personally I think it should be the opposite: poor people should have privacy and rich people shouldn't.
If you're in favor of e2ee messaging but not e2ee financial privacy, you're saying that you don't want people to do anything material with the e2ee messaging.
If you're in favor of e2ee messaging but not e2ee financial privacy, you're saying that you don't want people to do anything material with the e2ee messaging.
Highly dependent on your government and the electorate. Elect shitty people, get shitty government and policy. Technology will save you from neither.
In what jurisdiction do rich people not have access to webs of shell companies to hide their transactions through?
I don’t disagree. How does crypto solve that? It doesn’t. It’s just as harmful. Perfection doesn’t exist, only the continual efforts towards an ideal.
Edit: (HN throttling), reply to below comment.
I agree that there are niche use cases where crypto is bridging a gap for the disenfranchised (sex workers in this example) until policy catches up, but that it’s unsustainable to extrapolate that out as a call for wide adoption of crypto by the masses.
Edit: (HN throttling), reply to below comment.
I agree that there are niche use cases where crypto is bridging a gap for the disenfranchised (sex workers in this example) until policy catches up, but that it’s unsustainable to extrapolate that out as a call for wide adoption of crypto by the masses.
Crypto (not Bitcoin or Ethereum, Zcash) gives everyone the same privacy rich people enjoy, leveling the playing field.
I think crypto has a bunch of other problems, but I consider (for example) sex workers being able to transact online an unalloyed good.
I think crypto has a bunch of other problems, but I consider (for example) sex workers being able to transact online an unalloyed good.
Any elected leader can suddenly become not replaceable via elections. Hitler, Putin, Chavez, Lukashenko were all elected once.
This is why cryptocurrencies had to be decentralized and censorship resistant, so they can grow whether or not people are fine with it.
"The dangers from allowing use of cryptocurrencies by criminals are far less"
I think you have never come across real organised crime, we had a family friend murdered by one.
Think mexican drug cartels and the amount of damage they cause. Ofcourse they operated just fine before crypto existed.
I think you have never come across real organised crime, we had a family friend murdered by one.
Think mexican drug cartels and the amount of damage they cause. Ofcourse they operated just fine before crypto existed.
From what I know about organised crime, they operated before the invention of cryptocurrencies, and will operate even if cryptocurrencies will cease to exist.
Speaking of your family friend. Among my and my wife's extended families there are many victims of political purges. Deported, confiscated property, murdered, tortured, jailed for decades. State is a far more dangerous adversary then even the most violent criminal organisation .
Speaking of your family friend. Among my and my wife's extended families there are many victims of political purges. Deported, confiscated property, murdered, tortured, jailed for decades. State is a far more dangerous adversary then even the most violent criminal organisation .
[deleted]
The problem is that you don't currently have financial privacy, and that is what enables authorities, your government and your bank to ensure you are not laundering money for nasty people.
As one data point, recently some alleged criminals were caught who seem to have had lots of trouble laundering money at scale? [1] But I don't know if they could have done a better job if they were more creative.
[1] https://www.nbcnews.com/politics/justice-department/two-arre...
[1] https://www.nbcnews.com/politics/justice-department/two-arre...
There doesn’t seem to be any financial right to privacy.
It isn’t a right.
It isn’t a right.
> No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.
The Universal Declaration of Human Rights
https://www.un.org/en/about-us/universal-declaration-of-huma...
> Every child has the right to privacy. The law must protect children’s privacy, family, home, communications and reputation (or good name) from any attack.
Convention on the Rights of the Child: The children’s version
https://www.unicef.org/child-rights-convention/convention-te...
> The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
The Fourth Amendment
https://www.britannica.com/topic/Fourth-Amendment
The Universal Declaration of Human Rights
https://www.un.org/en/about-us/universal-declaration-of-huma...
> Every child has the right to privacy. The law must protect children’s privacy, family, home, communications and reputation (or good name) from any attack.
Convention on the Rights of the Child: The children’s version
https://www.unicef.org/child-rights-convention/convention-te...
> The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
The Fourth Amendment
https://www.britannica.com/topic/Fourth-Amendment
There's different aspects of privacy - both examples you provide are perfectly compatible with a requirement to have all commercial interactions to be non-private.
It extends, arguably, from the "Right to Property".
> (1) Everyone has the right to own property alone as well as in association with others. (2) No one shall be arbitrarily deprived of his or her property.
This right has a history of controversy and various interpretations.
https://en.wikipedia.org/wiki/Right_to_property
> (1) Everyone has the right to own property alone as well as in association with others. (2) No one shall be arbitrarily deprived of his or her property.
This right has a history of controversy and various interpretations.
https://en.wikipedia.org/wiki/Right_to_property
How is a right to property related to a right to privacy? "Private property" is not using the same kind of "private" as "private communication".
Here is a poor construction from right to property to right to privacy.
1. Assume the right to private property.
2. Acknowledge that some property is not just a tangible object, but can include a configuration of objects. An existing example of configuration of objects as property is crypto currency as private property or database records reflecting you bank account as private property.
3. Acknowledge that property ownership represents the exclusivity of possession.
4. By 2 and 3 the ownership of intangible property is the exclusive possession of a configuration of objects.
5. Acknowledge that the configuration of objects is isomorphic to information
6. Acknowledge that communication is the transmission of information
7. By 4, 5, and 6, Private communications is the exclusive ownership of the transmission of information.
1. Assume the right to private property.
2. Acknowledge that some property is not just a tangible object, but can include a configuration of objects. An existing example of configuration of objects as property is crypto currency as private property or database records reflecting you bank account as private property.
3. Acknowledge that property ownership represents the exclusivity of possession.
4. By 2 and 3 the ownership of intangible property is the exclusive possession of a configuration of objects.
5. Acknowledge that the configuration of objects is isomorphic to information
6. Acknowledge that communication is the transmission of information
7. By 4, 5, and 6, Private communications is the exclusive ownership of the transmission of information.
I see the reasoning, but the flaw here is already in #2:
> Acknowledge that some property is not just a tangible object, but can include a configuration of objects.
While there is a configuration that constitutes:
> database records reflecting you bank account as private property.
it's in the owner's interest that those records are as widespread as possible, lest someone challenges the ownership of the property they describe. If they are widespread, they are not exclusive, and therefore are not owned (even if there might be a right to demand the existence and accuracy of the records).
> Acknowledge that some property is not just a tangible object, but can include a configuration of objects.
While there is a configuration that constitutes:
> database records reflecting you bank account as private property.
it's in the owner's interest that those records are as widespread as possible, lest someone challenges the ownership of the property they describe. If they are widespread, they are not exclusive, and therefore are not owned (even if there might be a right to demand the existence and accuracy of the records).
We're definitely thinking about things differently. For example, Disney owns Frozen by way of copyright. However there exists many copies of Frozen on blu-ray and those copies are held by many different people. Disney's ownership of the content places limits on what people can do with those copies: not show it to large groups, not make additional copies, etc.
The bank doesn't hold a copy of your house, it holds a description of your assets (including contracts like money). And it's absurd to say that if something is your property, then also its descriptions are your property.
That doesn't add up even assuming that pure ideas can be property at all.
That doesn't add up even assuming that pure ideas can be property at all.
That's why people get worked up about the Eiffel Tower at night.
That comes from copyright, though. Copyright is arguably something different than property rights, and is a very recent invention. That's why no one blamed scribes for copying books.
You could make a case for private communication extending from copyright, but that's not what the parent claimed.
You could make a case for private communication extending from copyright, but that's not what the parent claimed.
Within the context of the United States, you can always fall back to the Ninth Amendment:
> The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
(There was a concern around the Bill of Rights, that by specifically listing out some rights it would create the belief they were the only rights; the Ninth Amendment was the compromise.)
> The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
(There was a concern around the Bill of Rights, that by specifically listing out some rights it would create the belief they were the only rights; the Ninth Amendment was the compromise.)
One thing not noted here, and that I'd love to see some numerate analysis on, is the fact that the KYC requirements among the major exchanges have effectively bifurcated crypto assets. There is "clean" BTC and "dirty" BTC now. One is clearly worth more than another by dint of its greater flexibility (i.e. if you're offered 3 clean ETH or whatever for your Pondering Lemur NFT, or 5 dirty ETH that you can't convert via Coinbase, which offer do you pick? It seems to me that many people might prefer the former).
Yet... no one anywhere is trying to track that price discrepancy? This seems like it would be an important bit of data!
Yet... no one anywhere is trying to track that price discrepancy? This seems like it would be an important bit of data!
It's a little trickier with Ethereum's account model. On Bitcoin each address has a list of inputs (and outputs, if spent), but on Ethereum it's just accounts with balances. If ETH goes into a contract that holds funds from a lot of sources, then the ETH that comes back out is just from that contract. If you wanted to assign it some particular previous source you'd need to come up with some arbitrary method like FIFO or LIFO.
The only thing that changes there are the nouns, though. A "contract" is just an owner, and there are clean contracts (KYC exchanges) and dirty contracts (mixers, anonymous gateways, KidnappingRansomDAO, whatever). You can track your eth back to clean (meaning KYC compliant) sources or you can't.
Ok let me give a specific example.
The weth ("wrapped eth") contract accepts eth and returns a token. Lots of different people deposit eth in the weth contract. Later, they can call the withdraw function, and the weth contract will decrement their balance and send them some eth. This is a legitimate contract that exists so people can use eth in contracts that only support tokens. Lots of people use it for legitimate purposes. All the eth in the contract is held in a single bucket; when eth is deposited then the amount is just added to the contract's account balance.
A criminal deposits some eth and get some weth. You receive weth by some other means, and turn that in to get some eth. Did you get the criminal's eth? Or did you get the eth of one of the upstanding citizens using the contract?
The weth ("wrapped eth") contract accepts eth and returns a token. Lots of different people deposit eth in the weth contract. Later, they can call the withdraw function, and the weth contract will decrement their balance and send them some eth. This is a legitimate contract that exists so people can use eth in contracts that only support tokens. Lots of people use it for legitimate purposes. All the eth in the contract is held in a single bucket; when eth is deposited then the amount is just added to the contract's account balance.
A criminal deposits some eth and get some weth. You receive weth by some other means, and turn that in to get some eth. Did you get the criminal's eth? Or did you get the eth of one of the upstanding citizens using the contract?
I'm not an expert, but my understanding is that this is incorrect. WETH is generated by a contract that conforms to reasonable KYC regulations, which is why Coinbase et. al. will accept it and exchange it for you.
Here is the weth contract code: https://etherscan.io/address/0xc02aaa39b223fe8d0a0e5c4f27ead...
And here is an auto-generated interface for it: https://etherscan.io/token/0xc02aaa39b223fe8d0a0e5c4f27ead90...
You can see that the code is very short and simple, and there are no special admin functions at all, nothing implementing the sort of whitelisting required to allow KYC. (The Approve function is a standard token function, used by token holders to permit contracts to spend out of their account, up to a specified amount.)
It was very cheap for someone to build and deploy this, and to use it you only pay gas fees. If there were someone checking KYC for every new user, then they would have to charge user fees, and there'd probably be delays getting started. Someone else would deploy the simple version and people would use that instead.
And here is an auto-generated interface for it: https://etherscan.io/token/0xc02aaa39b223fe8d0a0e5c4f27ead90...
You can see that the code is very short and simple, and there are no special admin functions at all, nothing implementing the sort of whitelisting required to allow KYC. (The Approve function is a standard token function, used by token holders to permit contracts to spend out of their account, up to a specified amount.)
It was very cheap for someone to build and deploy this, and to use it you only pay gas fees. If there were someone checking KYC for every new user, then they would have to charge user fees, and there'd probably be delays getting started. Someone else would deploy the simple version and people would use that instead.
It looks to me like the resulting tokens are identifiable and traceable, no? So if you exchange ETH for WETH for BTC or whatever, it's possible to get back to the original source and see if it was clean or not. The WETH makes the analysis a little harder but it doesn't change the fact that the money/tokens/coins/whatever remain traceable.
Please think through this particular scenario:
> A criminal deposits some eth and get some weth. You receive weth by some other means, and turn that in to get some eth. Did you get the criminal's eth? Or did you get the eth of one of the upstanding citizens using the contract?
There's no definite answer to that question. I really can't explain it any better than that, so please give that scenario some thought. If, in the process, you come up with technical questions about exactly how the contract works, I can answer them.
> A criminal deposits some eth and get some weth. You receive weth by some other means, and turn that in to get some eth. Did you get the criminal's eth? Or did you get the eth of one of the upstanding citizens using the contract?
There's no definite answer to that question. I really can't explain it any better than that, so please give that scenario some thought. If, in the process, you come up with technical questions about exactly how the contract works, I can answer them.
I think you're interpreting the point too narrowly? It's true that the "eth" gets mixed, but the identity of the owner gets tracked because the tokens have lifetimes too. If I buy a Walmart gift certificate and then use it to buy a Switch game, Walmart doesn't know the exact dollars that were used to buy the game, but they know it was me. Same principle.
Broadly: if what you think is true is true, then WETH is a trivial evasion of money laundering statutes, in a way that no one has figured out how to exploit. People are smarter than that. Please don't use this to launder, assuming it's anonymous, you'll end up in jail.
Broadly: if what you think is true is true, then WETH is a trivial evasion of money laundering statutes, in a way that no one has figured out how to exploit. People are smarter than that. Please don't use this to launder, assuming it's anonymous, you'll end up in jail.
I have no reason to launder money, and agree that the government can and probably does know the identities behind most addresses.
I was responding to your specific point above, that some ETH would be "dirty" and some "clean," and potentially have different values. Because of this sort of inadvertent mixing due to ETH being account-based and fungible, this is not really a possibility.
Dollars of course are the same way: account-based, fungible, all worth the same.
I was responding to your specific point above, that some ETH would be "dirty" and some "clean," and potentially have different values. Because of this sort of inadvertent mixing due to ETH being account-based and fungible, this is not really a possibility.
Dollars of course are the same way: account-based, fungible, all worth the same.
> no one anywhere is trying to track that price discrepancy
Let me just ask everyone what they got after laundering their dirty ETH. I am sure they will answer truthfully.
Let me just ask everyone what they got after laundering their dirty ETH. I am sure they will answer truthfully.
I didn't say it was easy. But a black market is still a market, and has prices. People talk with some level of precision about market prices for kalashnikovs and heroin, why not for "mixed BTC"? My surprise is that no one is talking about this.
Unless I'm misunderstanding, IME the exchange rate always stays the same, there's just more built-in cost to account for things like trading for XMR and back out. This is generally how it goes for IRL cash as well. It's common for things to be cheaper in XMR as well, given that part of the equation has already been accounted for.
It's getting increasingly easier to buy assets like real estate with stablecoins.
Barring further regulations I think the peak financial repression era has already passed. The worst time was probably 2018 - local peak in crypto interest bringing in heat, but no dexes with any liquidity. Since then it's only getting better - now anyone can hold millions of dollars anonymously and transfer them to anyone in the world, dexes are so liquid there are no reasons to use spot cexes except to cash out, several debit card solutions that can be loaded with crypto and stablecoins. Laundering money from crypto is the easiest it was since probably 2013 when no one cared at all - manufacture fake profits on tokens/nft held in clean wallets.
Without new laws, the situation is only getting better. Exchanges already demand very heavy kyc/aml, so the only thing that would reverse the trend would be making anonymous defi a crime for the users. I think it's unlikely at this point.
Barring further regulations I think the peak financial repression era has already passed. The worst time was probably 2018 - local peak in crypto interest bringing in heat, but no dexes with any liquidity. Since then it's only getting better - now anyone can hold millions of dollars anonymously and transfer them to anyone in the world, dexes are so liquid there are no reasons to use spot cexes except to cash out, several debit card solutions that can be loaded with crypto and stablecoins. Laundering money from crypto is the easiest it was since probably 2013 when no one cared at all - manufacture fake profits on tokens/nft held in clean wallets.
Without new laws, the situation is only getting better. Exchanges already demand very heavy kyc/aml, so the only thing that would reverse the trend would be making anonymous defi a crime for the users. I think it's unlikely at this point.
> someday, goods and services will be exchanged for cryptocurrency rather than traditional money
I mean, I've seen that happening at an increasing rate since 2013 (the first time I bought a drink at a bar with crypto). Today, there are several monthly services that I pay for with crypto. It's not for everyone of course, but there is a virtual world where crypto is the preferred or only currency. Over time, that world and the real world will converge.
We can already see that starting to happen with China's national crypto currency. As more exchanges support that currency, it will bring this convergence full circle, at least for part of the world. The rest will follow in time.
I mean, I've seen that happening at an increasing rate since 2013 (the first time I bought a drink at a bar with crypto). Today, there are several monthly services that I pay for with crypto. It's not for everyone of course, but there is a virtual world where crypto is the preferred or only currency. Over time, that world and the real world will converge.
We can already see that starting to happen with China's national crypto currency. As more exchanges support that currency, it will bring this convergence full circle, at least for part of the world. The rest will follow in time.
> there is a virtual world where crypto is the preferred or only currency
There sure is.
There sure is.
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For off-ramps, can't you just put up a bunch of orders on something like Bisq? Slightly more work involved, but it is a totally decentralized way to do it.
If you get large amounts of money in short periods of time, you might receive calls from your bank's or government's anti-money-laundering office regardless.
Any financial system is built on on an element of trust.
Crypto doesn't displace trust --- it misplaces it.
Instead of trusting the regulated banking system, you end up trusting unregulated "exchanges" --- where fraud is not even illegal.
Need an example of crypto-fraud? The most widespread example is Tether, USDT. The idea that USDT is backed by USD is a well known joke. No one really knows the full extent of this fraud but all indications are it is one of epic proportions.
Yet the exchanges maintain the $1 peg for USDT.
Crypto doesn't displace trust --- it misplaces it.
Instead of trusting the regulated banking system, you end up trusting unregulated "exchanges" --- where fraud is not even illegal.
Need an example of crypto-fraud? The most widespread example is Tether, USDT. The idea that USDT is backed by USD is a well known joke. No one really knows the full extent of this fraud but all indications are it is one of epic proportions.
Yet the exchanges maintain the $1 peg for USDT.
The day that tether, and all of the other "stablecoins" die, is going to be absolutely brutal. Makes me glad to not be a crypto speculator. This is the type of stuff that they write books, movies, and papers about.
I've noticed so many ads on Crypto "investing" recently, that makes me think we might be in the last stage of this bubble. I've had a discussion with a family member and their friend, and they were talking to me about investing in crypto, and how XRP is backed by gold, and how they have cold storage with their phone to hold their "assets" in case the Internet is taked down, and how the stock market will crash and big companies will disappear (like Google, Amazon, etc). And I'm like what the heck.. If the Internet is taken down, why do you even need to have your crypto on cold storage, it's just bits.. you've got bigger problems at that time. But nope, they're adamant crypto is the future, even if they have bo idea how it works. Fascinating, and terrifying when thigs go South.
About a year ago, I saw a handyman with a big sign on his truck about investing in crypto --- with his help of course.
This I took as a sign that the end is near.
This I took as a sign that the end is near.
It's worth noting that if the internet splits up into large pieces, the blockchain splits, and the coins will suddenly lose a lot of their value. That's because there's no telling which fork of the blockchain wins when there's a merge later. Double-spending galore!
> there's no telling which fork of the blockchain wins
That's the point of proof of work: longest chain wins.
Yes in a netsplit you can spend on both chains, but you would need access to both chains to do so. And you don't even ever have to merge them again, there could just be AmericanBTC and RussianBTC from here on out.
That's the point of proof of work: longest chain wins.
Yes in a netsplit you can spend on both chains, but you would need access to both chains to do so. And you don't even ever have to merge them again, there could just be AmericanBTC and RussianBTC from here on out.
The problem with keeping them separate is that there's no singular "you" who decides; there's no telling what will happen, causing an inherent uncertainty.
When taxi drivers give out investment advice...
The exchanges are deeply implicated in the Tether fiasco.
They will most likely just collude and attempt a simultaneous "rug pull" on the entire crypto market once the SEC announces plans to audit "stablecoins".
Trillions in "crypto wealth" will just evaporate into the electronic ether from whence it came
They will most likely just collude and attempt a simultaneous "rug pull" on the entire crypto market once the SEC announces plans to audit "stablecoins".
Trillions in "crypto wealth" will just evaporate into the electronic ether from whence it came
The SEC won't do anything with teeth until crypto and Tether are already collapsing.
No government auditor took out Madoff, nobody wanted to touch it, because he was so popular and his clients were influential, and anyone investigating him would be sticking their neck out. That's the kind of risk that if you don't get it perfectly right destroys career and even if you're right you may get blamed and destroyed anyway for pressing the button.
Much easier politically to mop up after it all collapses.
Same thing here since if the SEC pops Tether then now you'll trigger automatic lawsuits from Tesla investors, and there's too many billionaires that are still true believers who have enormous influence over the government and will cause them to be overly cautious.
No government auditor took out Madoff, nobody wanted to touch it, because he was so popular and his clients were influential, and anyone investigating him would be sticking their neck out. That's the kind of risk that if you don't get it perfectly right destroys career and even if you're right you may get blamed and destroyed anyway for pressing the button.
Much easier politically to mop up after it all collapses.
Same thing here since if the SEC pops Tether then now you'll trigger automatic lawsuits from Tesla investors, and there's too many billionaires that are still true believers who have enormous influence over the government and will cause them to be overly cautious.
When you have to shorten the phrase "getting the rug pulled out from under you" because it's such a common occurrence, your financial system might have a problem.
Pink sheets and movie Wolf of Wall Street, seen either?
Except it is fake money, they can print as much of it as they want and the exchanges can let them buy other crypto with that fake money. It is possible that on some exchanges Tether will never crash, it will just become impossible to redeem Tether for USD. People stuck holding tether and people stuck holding tether propped up crypto will have no way to redeem for real money.
Now hear me out... What if we offset the money printing with money printing?
Jay Powell?
Stablecoins are going to be another hard lesson for many, many people and yet another example of crypto failing to learn the lessons that built the financial system Crypto Andys seem to despise.
This has been tried. We've tried pegging currencies. We had the Bretton-Woods system. We've had currencies that were partially or fully backed by hard assets (most notably gold). For the record, since this seems to come up so often, the US dollar was never 100% backed by gold. Not once. Ever. Fiat currencies exist for a reason. Central banks and managing money supplies exist for a reason.
Ultimately a stablecoin is a form of price control between two assets. And just like any other price control, its ability to maintain that peg only go so far as how much money someone has to fight against the market forces driving those prices apart.
This has been tried. We've tried pegging currencies. We had the Bretton-Woods system. We've had currencies that were partially or fully backed by hard assets (most notably gold). For the record, since this seems to come up so often, the US dollar was never 100% backed by gold. Not once. Ever. Fiat currencies exist for a reason. Central banks and managing money supplies exist for a reason.
Ultimately a stablecoin is a form of price control between two assets. And just like any other price control, its ability to maintain that peg only go so far as how much money someone has to fight against the market forces driving those prices apart.
What if, listen, guys hear me out, what if things just stay in this limbo forever? If banks are too big to fail, why not crypto? I say HODL ;)
The term "too big to fail" means "gonna get bailed out by the govt". This does not apply to any decentralized system.
I'm inclined to agree, but if enough individual members of major governments are "bought in" to crypto currencies such that their own personal wealth would be at risk, things might be different.
Not the case today, but things shift over time.
Not the case today, but things shift over time.
That would be the ultimate irony. Cryptocurrencies getting bailed out by governments.
Them not crushing Tether right now is exactly what you are describing.
I believe many are invested, and the fix is in.
Definitely this is the major difference. Most governments will just say to everyone (especially the government of El Salvador) "we warned you!" and probably do nothing, unless that ther are powerful people that can convince otherwise.
Anyone who thinks banks are still too big to fail hasn't seen the effort that the US Government has spent forcing them to create recovery and resolution plans.
Banks are utilities at this point. They’re forced to hold massive reserves of highly liquid assets and have been regulated out of most risky business lines.
From what (little) I understand of money markets, if Tether were to "die" (or even just "get sick" haha) at the scale it's at today, it would probably have a profound impact on even my portfolio, which doesn't even have any direct crypto or crypto-adjacent exposure. I'm not sure what assets would be safe from repercussions.
Why would stablecoins other than Tether die?
Depends on what they're tied to and how leveraged they are: anything backed on some other cryptocurrency will likely have a massive crunch if Bitcoin staggers, and if the largest “stable coin” turns out to be as fraudulent as it looks everyone is going to get hit by both a wave of people cashing out into USD/EUR/etc. and a ton of demands to prove that their collateral is as solid as claimed, which the first trend will make a lot harder.
More then half of all crypto trades involve Tether --- it pervades the entire crypto market.
Anything that is not truthfully fully backed by assets outside of crypto land will almost certainly be affected.
Anything that is not truthfully fully backed by assets outside of crypto land will almost certainly be affected.
there is a lot of mistrust regarding Tether. People kind of prefer to switch over to BUSD, USDC, GUSD which are backed 1:1 with real USD.
Tether is just a temp variable for trading.
But, if Tether goes down it will be bad news but not enough to destroy the whole market. USDC is gaining ground pretty rapidly.
Tether is just a temp variable for trading.
But, if Tether goes down it will be bad news but not enough to destroy the whole market. USDC is gaining ground pretty rapidly.
Each month, we publish attestation reports by Grant Thornton regarding the reserve balances backing USDC.
The key item here is "attestation report". What does this mean?
It means those issuing the report have no reason to doubt what they are being told/given. They haven't actually verified/audited anything.
Tether paid someone to issue some of these as well.
The key item here is "attestation report". What does this mean?
It means those issuing the report have no reason to doubt what they are being told/given. They haven't actually verified/audited anything.
Tether paid someone to issue some of these as well.
What proof is there exactly that USDC is different?
Random audits by E&Y.
Did the 2008 subprime mortgage crisis completely go out of the consciousness of everyone? Private companies doing "audits" on securities that they have an incentive to say are better than they actually are is not going to give anything worth a damn. If it's not a government audit, I don't buy it.
I don’t think any part of the financial system, conventional or crypto is immune from shady dealings.
But everyone who didn’t just fall off a truck knows Tether is capitalized at maybe 30%, and there’s a lot of mediocre commercial paper in the assets it does hold.
USDC and Tether are completely different asset classes.
USDT is casino chips you have to buy to play the low-cap alt-coin slot machine. USDC has a de facto address within reach of the FBI.
But everyone who didn’t just fall off a truck knows Tether is capitalized at maybe 30%, and there’s a lot of mediocre commercial paper in the assets it does hold.
USDC and Tether are completely different asset classes.
USDT is casino chips you have to buy to play the low-cap alt-coin slot machine. USDC has a de facto address within reach of the FBI.
"USDC has a de facto address within reach of the FBI."
What does this mean?
What does this mean?
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That Coinbase, the US company, can be held accountable for USDC, and falls within the reach of the FBI.
If USDT fails and goes to 0, people will lose their money, and probably no government will be able to go after the creators of USDT (Bitfinex?) and their "collateral".
If USDC fails, the US government can actually make Coinbase responsible. And that's a public company with a 51B USD market cap. As a holder of USDC, you could reasonably expect to see some money back.
If USDT fails and goes to 0, people will lose their money, and probably no government will be able to go after the creators of USDT (Bitfinex?) and their "collateral".
If USDC fails, the US government can actually make Coinbase responsible. And that's a public company with a 51B USD market cap. As a holder of USDC, you could reasonably expect to see some money back.
... you could reasonably expect to see some money back.
Maybe, maybe not. USDC is not legal tender. Coinbase could easily argue it is nothing but monopoly money with a value of $0USD.
Maybe, maybe not. USDC is not legal tender. Coinbase could easily argue it is nothing but monopoly money with a value of $0USD.
Bankruptcy proceedings start complicated with individuals and go straight up from there, so you're definitely right to point out that there are no guarantees.
But the point is that the USDT people are already some combination of accused/investigated-for/sanctioned-for misrepresenting the amount and quality of the collateral, seem to have very little to lose by doubling down and to many (most?) people look like a worse credit risk than CoinBase.
But the point is that the USDT people are already some combination of accused/investigated-for/sanctioned-for misrepresenting the amount and quality of the collateral, seem to have very little to lose by doubling down and to many (most?) people look like a worse credit risk than CoinBase.
According to your link below (https://www.centre.io/usdc-transparency) these are not audits, but attestations. Tether has plenty of these as well.
I’m not an accountant but Google seems to think those things are substantially similar: https://www.quora.com/What-is-the-difference-between-an-audi...
Not being an accountant I rely a lot on inside baseball, but I know some whales and I’ve never heard Tether described as credibly backed.
Not being an accountant I rely a lot on inside baseball, but I know some whales and I’ve never heard Tether described as credibly backed.
Not an accountant either, but from past threads they seem to be quite different: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
See in particular this comment from a user who claims to be a former auditor: https://news.ycombinator.com/item?id=27532670
See in particular this comment from a user who claims to be a former auditor: https://news.ycombinator.com/item?id=27532670
That comment was very enlightening and much better than anything on my first page of Google results.
Thank you for pointing me to it.
Thank you for pointing me to it.
Reference? Show one random audit by E&Y.
My mistake, it’s Grant Thornton: https://blog.coinbase.com/fact-check-usd-coin-is-the-largest....
Now I’m no CoinBase apologist, they’re accused of stuff that would make Dutsche blush, but USDC is a completely different animal than Tether. I won’t take payment someone’s share of dinner in USDT or ETH for that matter, I will happily hold USDC for short periods of time.
Now I’m no CoinBase apologist, they’re accused of stuff that would make Dutsche blush, but USDC is a completely different animal than Tether. I won’t take payment someone’s share of dinner in USDT or ETH for that matter, I will happily hold USDC for short periods of time.
So just to recap --- they're not random, they're not really audits and they're not done by E&Y.
Basically, you're just trusting Coinbase.
Basically, you're just trusting Coinbase.
I'd propose a different summary:
I'd rather trust a publicly-traded company in the United States which has serious accountants certifying the validity of their books and plenty of assets subject to seizure in the the same jurisdiction I live in than some guys who at least one state has already decided don't have the money.
I'm working on my HN etiquette but it's been a long week. If I act a like a fucking smartass, call me on it, and I'll return the favor. Don't be a smartass.
I'd rather trust a publicly-traded company in the United States which has serious accountants certifying the validity of their books and plenty of assets subject to seizure in the the same jurisdiction I live in than some guys who at least one state has already decided don't have the money.
I'm working on my HN etiquette but it's been a long week. If I act a like a fucking smartass, call me on it, and I'll return the favor. Don't be a smartass.
Don't be a smartass.
Agreed! But I'd propose refraining from just making stuff up off the top of your head that is demonstratedly wrong on every level. Don't be an idiot.
Agreed! But I'd propose refraining from just making stuff up off the top of your head that is demonstratedly wrong on every level. Don't be an idiot.
I'm going to posit that the burden is on the person carrying both an empty briefcase as far as new information/insight and the word "idiot" is also carrying the burden to issue a substantiative challenge to a thesis that is legible if not eloquent.
What part of "I'd much prefer to hold USDC than USDT personally because I think not all accountants are Arthur Anderson-level criminals" are you objecting to exactly?
Use your words.
What part of "I'd much prefer to hold USDC than USDT personally because I think not all accountants are Arthur Anderson-level criminals" are you objecting to exactly?
Use your words.
Joke's on me: `February 21, 2020`. I've got to stop doing this.
You'll hold USDC for short periods, but not ETH?
Because of volatility, or something else?
Because of volatility, or something else?
Yeah, I'm generally bullish on `ETH` long-term, but it's a vague sentiment not a tradable thesis.
The concrete reason is that I'm not (nor interested in being) a currency speculator, and so I do all my currency speculation in the form of being at least somewhat long the one currency I understand reasonably well, which is `USD`.
The concrete reason is that I'm not (nor interested in being) a currency speculator, and so I do all my currency speculation in the form of being at least somewhat long the one currency I understand reasonably well, which is `USD`.
>The day that tether, and all of the other "stablecoins" die.
Typical hn comment, miss crypto opportunities and so decides to fantasize about everyone losing money so you feel better with yourself.
FIY, there are many stablecoins out there that use different ways to keep the peg and others that are simply more trusted and secure.
A good way to find out what is actualy going on, is to look a Uniswap info (which is the most honest data out there) and you will see that people have elected USDC and DAI as their stablecoins of choice.
A reminder, cryptocurrencies are usualy based on consensus, everyone knows tether is parcialy backed after some of their funds were siezed by the gov.
DAI has held its peg even when ethereum tanked, usdc has been transparent. Both have nothing to do with tether.
No cryptocurrency will not die, not all stablecoins will die (some probably will) and no santa is not real either.
Tether is a known scam though, so your speculations that someone is angry because he missed "bigger fool" scam early is unfounded.
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Exchanges don't maintain the peg, buyers and sellers willing to transact at that exchange rate maintain the peg. Nothing stops you from submitting a buy order for 1.00 USDT paying 0.50 USD. There's just no guarantee there is a seller out there willing to take that deal.
Unless you think exchanges are somehow misrepresenting the trades occuring or the state of their order books, but I think this fraud would be difficult to maintain for this long on any exchange that actually supports withdrawal. If you have evidence of exchange manipulation I'd be interested to read it.
Unless you think exchanges are somehow misrepresenting the trades occuring or the state of their order books, but I think this fraud would be difficult to maintain for this long on any exchange that actually supports withdrawal. If you have evidence of exchange manipulation I'd be interested to read it.
Exchanges don't maintain the peg, buyers and sellers willing to transact at that exchange rate maintain the peg.
How did you verify this?
Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules?
I think this fraud would be difficult to maintain ...
I think it would be incredibly easy to maintain --- simply because no one ever audits their books. The crypto market is *unregulated*.
How did you verify this?
Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules?
I think this fraud would be difficult to maintain ...
I think it would be incredibly easy to maintain --- simply because no one ever audits their books. The crypto market is *unregulated*.
> How did you verify this?
Because mechanically this is how an exchange order book works. Go to any exchange to place a trade and you will see this.
> I think it would be incredibly easy to maintain --- simply because no one ever audits their books.
Publishing an order book and the resulting trades is the entire point of an exchange. The whole purpose is to provide a venue where buyers submit bids and sellers submit asks that are advertised to each other. When they happen to agree on price a trade automatically occur.
If I go on an exchange and I can see in the order book that there are only 1000 USDT available for $1.00, and the next 1000 USDT are only available for $1.01, and I submit a buy order for 2000, I will break the "peg." However, since the majority of market participants will disagree with me, they will almost certainly quickly submit new orders willing to sell USDT for $1.00 again and the "peg" will be restored.
The "peg" terminology comes from currency markets like USD <-> RMB where China sets the price by law and there is no order book price discovery at all.
This isn't to say it's impossible for exchanges to engage in shenanigans. They can generate wash sales at no cost. But if they see you're going to break the peg, so they magically insert 1000 more USDT available for $1.00, and they support withdrawals, they are going to have to give you that money in which case the exchange has just made itself as regular seller and can only keep it up for as long as it is willing to set money on fire. And before you suggest they have unlimited USDT and so don't care, remember it goes both directions. You could also be a seller of USDT looking to find a buyer paying you in USD. For the "peg" to function the price needs to stay the same both ways.
Because mechanically this is how an exchange order book works. Go to any exchange to place a trade and you will see this.
> I think it would be incredibly easy to maintain --- simply because no one ever audits their books.
Publishing an order book and the resulting trades is the entire point of an exchange. The whole purpose is to provide a venue where buyers submit bids and sellers submit asks that are advertised to each other. When they happen to agree on price a trade automatically occur.
If I go on an exchange and I can see in the order book that there are only 1000 USDT available for $1.00, and the next 1000 USDT are only available for $1.01, and I submit a buy order for 2000, I will break the "peg." However, since the majority of market participants will disagree with me, they will almost certainly quickly submit new orders willing to sell USDT for $1.00 again and the "peg" will be restored.
The "peg" terminology comes from currency markets like USD <-> RMB where China sets the price by law and there is no order book price discovery at all.
This isn't to say it's impossible for exchanges to engage in shenanigans. They can generate wash sales at no cost. But if they see you're going to break the peg, so they magically insert 1000 more USDT available for $1.00, and they support withdrawals, they are going to have to give you that money in which case the exchange has just made itself as regular seller and can only keep it up for as long as it is willing to set money on fire. And before you suggest they have unlimited USDT and so don't care, remember it goes both directions. You could also be a seller of USDT looking to find a buyer paying you in USD. For the "peg" to function the price needs to stay the same both ways.
Publishing an order book and the resulting trades is the entire point of an exchange.
And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this:
You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this.
You know what happens when you ass-u-me too much, right?
And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this:
Any offer to sell USDT for less than $1USD, the exchange itself buys it under whatever name they choose and then immediately lists it for sale at --- you guessed it $1USD.
Any order to sell USDT for more than $1USD just sits there unexecuted until a suitable idiot is found or the order is cancelled.
Meanwhile, any offer to buy/sell USDT at $1USD gets executed almost immediately.
You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this.
You know what happens when you ass-u-me too much, right?
What you described isn't even manipulation, it's exactly equivalent to the exchange keeping a big limit buy order on the book at all times. If the exchange decides to take the other side of your trade, and they offer you a better price then you asked for, great! Your costs were reduced. Do they let you withdraw? If yes then they have no more ability to "manipulate" via this mechanism than anyone else. They are paying for it with their finite funds. It's no different than anyone else putting big orders at 1$. The exchange could discount their own fees, but that's just a disadvantage for other traders, not anything guaranteed to keep a price.
There's no trust or blind faith here, just knowledge of how order books and exchanges actually work.
There's no trust or blind faith here, just knowledge of how order books and exchanges actually work.
They are paying for it with their finite funds.
Not true! In crypto land, they have unlimited funds --- just mint more Tethers --- which they have done repeatedly.
Not true! In crypto land, they have unlimited funds --- just mint more Tethers --- which they have done repeatedly.
> You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits.
As I mentioned in the other comment thread, Coinbase and Kraken trade USDT, are highly regulated under US law, and are audited regularly. Gemini is also highly regulated under US law and audited regularly, though they don't trade USDT. I don't know where you're getting this idea that most exchanges are unregulated and never audited, or that it even matters as long as the particular exchange you are using is regulated and audited.
It would be really hard for me to believe that both Coinbase and Kraken are colluding to trade USDT at a rate other than fair market value as determined by their order books.
As I mentioned in the other comment thread, Coinbase and Kraken trade USDT, are highly regulated under US law, and are audited regularly. Gemini is also highly regulated under US law and audited regularly, though they don't trade USDT. I don't know where you're getting this idea that most exchanges are unregulated and never audited, or that it even matters as long as the particular exchange you are using is regulated and audited.
It would be really hard for me to believe that both Coinbase and Kraken are colluding to trade USDT at a rate other than fair market value as determined by their order books.
... both Coinbase and Kraken are colluding to trade USDT at a rate other than fair market value
They may not be a party to any collusion. They may simply be powerless to prevent or affect it in any material way.
As the crypto market stands, the largest exchange in the world has access to unlimited crypto funds simply by minting more Tethers. At the same time, their trading volume alone gives them significant price influence over these same Tethers.
If they collude with enough other exchanges to control a substantial majority of the Tether market volume, any outlier exchanges (like Coinbase and Kraken) would just be along for the ride.
They may not be a party to any collusion. They may simply be powerless to prevent or affect it in any material way.
As the crypto market stands, the largest exchange in the world has access to unlimited crypto funds simply by minting more Tethers. At the same time, their trading volume alone gives them significant price influence over these same Tethers.
If they collude with enough other exchanges to control a substantial majority of the Tether market volume, any outlier exchanges (like Coinbase and Kraken) would just be along for the ride.
> Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules?
Coinbase does not trade what are currently considered securities by law, so its trading operations are not subject to SEC oversight. However, Coinbase has gone through the SEC listing process for its common stock.
https://www.sec.gov/Archives/edgar/data/1679788/000162828021...
> I think it would be incredibly easy to maintain --- simply because no one ever audits their books.
"We undergo regular financial and security audits by external firms. SOC 1 Type II, SOC 2 Type II."
Coinbase does not trade what are currently considered securities by law, so its trading operations are not subject to SEC oversight. However, Coinbase has gone through the SEC listing process for its common stock.
https://www.sec.gov/Archives/edgar/data/1679788/000162828021...
> I think it would be incredibly easy to maintain --- simply because no one ever audits their books.
"We undergo regular financial and security audits by external firms. SOC 1 Type II, SOC 2 Type II."
Coinbase is the exception --- not the rule. They also fully comply with KYC so there is no pretense of anonymity with Coinbase.
If the majority are colluding to game the price of USDT, Coinbase will be forced to either go along or not trade in Tether. And since Tether is used in more than half of all crypto trades, refusing the Tether fraud would place them at a serious disadvantage.
If the majority are colluding to game the price of USDT, Coinbase will be forced to either go along or not trade in Tether. And since Tether is used in more than half of all crypto trades, refusing the Tether fraud would place them at a serious disadvantage.
Is Kraken another exception? They also trade USDT and comply with KYC, and they undergo semiannual third party audits.
Possibly.
As I tried to explain above, with control of a majority of the Tether trading volume, *you* could pretty much set the price any way you want. Anyone else who wants to participate and trade would have little choice but to follow your lead.
In addition, let's assume you have access to unlimited funds (by simply minting more Tethers) and *you* would have everything you need in place to control the "market price" and commit Tether fraud on a massive scale.
In other words, *you* would be just like the current crypto marketplace.
As I tried to explain above, with control of a majority of the Tether trading volume, *you* could pretty much set the price any way you want. Anyone else who wants to participate and trade would have little choice but to follow your lead.
In addition, let's assume you have access to unlimited funds (by simply minting more Tethers) and *you* would have everything you need in place to control the "market price" and commit Tether fraud on a massive scale.
In other words, *you* would be just like the current crypto marketplace.
> Anyone else who wants to participate and trade would have little choice but to follow your lead.
Honest exchanges could let individuals trade it among themselves using an order book at no particular price, which is what they do. I wouldn't call that following a lead.
Honest exchanges could let individuals trade it among themselves using an order book at no particular price, which is what they do. I wouldn't call that following a lead.
Honest exchanges wouldn't be minting what they're marketing.
The NYSE can't fabricate stocks they are a market maker for. Not legally anyway.
The NYSE can't fabricate stocks they are a market maker for. Not legally anyway.
> fraud is not even illegal
Just like all other non-bank fintech companies (like Paypal, Square, etc.), US crypto exchanges are regulated by FinCEN, the Bank Secrecy Act, and the Patriot Act, and are obviously legally liable if they try to commit fraud. Most other countries have similar money servicing legislation, and even if they didn't, fraud is still illegal in all but the least legally responsive jurisdictions. Committing fraud doesn't suddenly become legal just because your company is classed as a crypto exchange.
Now, just like there will always be a poorly regulated bank somewhere in the world, there will always be a poorly regulated crypto exchange somewhere in the world.
> Need an example of crypto-fraud? The most widespread example is Tether, USDT. The idea that USDT is backed by USD is a well known joke. No one really knows the full extent of this fraud but all indications are it is one of epic proportions. > > Yet the exchanges maintain the $1 peg for USDT.
USDT is a Bitfinex product. If you believe that "the exchanges" other than Bitfinex are in on Tether, I'd like to hear your reasoning. Most likely, the USDT fraud will collapse at some point, and the rest of the exchanges besides Bitfinex, along with the rest of the crypto market, will go on business as usual after a short market scare.
Just like all other non-bank fintech companies (like Paypal, Square, etc.), US crypto exchanges are regulated by FinCEN, the Bank Secrecy Act, and the Patriot Act, and are obviously legally liable if they try to commit fraud. Most other countries have similar money servicing legislation, and even if they didn't, fraud is still illegal in all but the least legally responsive jurisdictions. Committing fraud doesn't suddenly become legal just because your company is classed as a crypto exchange.
Now, just like there will always be a poorly regulated bank somewhere in the world, there will always be a poorly regulated crypto exchange somewhere in the world.
> Need an example of crypto-fraud? The most widespread example is Tether, USDT. The idea that USDT is backed by USD is a well known joke. No one really knows the full extent of this fraud but all indications are it is one of epic proportions. > > Yet the exchanges maintain the $1 peg for USDT.
USDT is a Bitfinex product. If you believe that "the exchanges" other than Bitfinex are in on Tether, I'd like to hear your reasoning. Most likely, the USDT fraud will collapse at some point, and the rest of the exchanges besides Bitfinex, along with the rest of the crypto market, will go on business as usual after a short market scare.
Committing fraud doesn't suddenly become legal just because your company is classed as a crypto exchange.
Yes, it does. Crypto isn't a regulated market. As long as the scam stays inside crypto land, it is totally legal. As far as the SEC and CFTC are concerned, you're playing a game with Monopoly money.
Elon Musk can and has openly run crypto "pump and dump" scams that would be blatantly illegal in any regulated market. The only response from the CFTC was a warning to consumers.
https://www.cftc.gov/PressRoom/PressReleases/7697-18
If you believe that "the exchanges" other than Bitfinex are in on Tether, I'd like to hear your reasoning.
The only way to maintain a firm 1 USD peg that everyone (even you) knows is a fraud is through collusion.
Yes, it does. Crypto isn't a regulated market. As long as the scam stays inside crypto land, it is totally legal. As far as the SEC and CFTC are concerned, you're playing a game with Monopoly money.
Elon Musk can and has openly run crypto "pump and dump" scams that would be blatantly illegal in any regulated market. The only response from the CFTC was a warning to consumers.
https://www.cftc.gov/PressRoom/PressReleases/7697-18
If you believe that "the exchanges" other than Bitfinex are in on Tether, I'd like to hear your reasoning.
The only way to maintain a firm 1 USD peg that everyone (even you) knows is a fraud is through collusion.
> Yes, it does. Crypto isn't a regulated market. As long as the scam stays inside crypto land, it is totally legal. As far as the SEC and CFTC are concerned, you're playing a game with Monopoly money.
That's your opinion. I would be more interested in the opinion of a judge. If you can demonstrate that monopoly money has some kind of market value, and someone else steals it from you, then that's a crime. There is no legal precedent set that fraud is okay as long as it involves cryptocurrency.
> Elon Musk can and has openly run crypto "pump and dump" scams that would be blatantly illegal in any regulated market. The only response from the CFTC was a warning to consumers.
The CFTC is a mess, so just because they aren't successfully helping prosecute a specific case doesn't mean everything that was done was legal.
> The only way to maintain a firm 1 USD peg that everyone (even you) knows is a fraud is through collusion.
They don't maintain a firm peg. Tether trades on exchanges at market value, just like any other cryptocurrency.
Also, I find your "even you" comment to be a strange personal attack. Are you trying to say that I'm stupid?
That's your opinion. I would be more interested in the opinion of a judge. If you can demonstrate that monopoly money has some kind of market value, and someone else steals it from you, then that's a crime. There is no legal precedent set that fraud is okay as long as it involves cryptocurrency.
> Elon Musk can and has openly run crypto "pump and dump" scams that would be blatantly illegal in any regulated market. The only response from the CFTC was a warning to consumers.
The CFTC is a mess, so just because they aren't successfully helping prosecute a specific case doesn't mean everything that was done was legal.
> The only way to maintain a firm 1 USD peg that everyone (even you) knows is a fraud is through collusion.
They don't maintain a firm peg. Tether trades on exchanges at market value, just like any other cryptocurrency.
Also, I find your "even you" comment to be a strange personal attack. Are you trying to say that I'm stupid?
That's your opinion.
The fact that crypto is unregulated is not just my opinion --- and I think you know that --- or at least you should.
They don't maintain a firm peg. Tether trades on exchanges at market value, just like any other cryptocurrency.
Pure speculation and misplaced trust on your part. The truth is you really have no way to *know* what the exchanges do to set the "market value" of USDT.
Are you trying to say that I'm stupid?
No, I'm referring to the fact that you called Tether a fraud --- "the USDT fraud will collapse at some point" --- your words, not mine.
The fact that crypto is unregulated is not just my opinion --- and I think you know that --- or at least you should.
They don't maintain a firm peg. Tether trades on exchanges at market value, just like any other cryptocurrency.
Pure speculation and misplaced trust on your part. The truth is you really have no way to *know* what the exchanges do to set the "market value" of USDT.
Are you trying to say that I'm stupid?
No, I'm referring to the fact that you called Tether a fraud --- "the USDT fraud will collapse at some point" --- your words, not mine.
> Crypto doesn't displace trust --- it misplaces it
That’s a hardcore misunderstanding of the technology! It makes transparent what until now has been very opaque.
That’s a hardcore misunderstanding of the technology! It makes transparent what until now has been very opaque.
Technology is just a tool. Traditional banks have lots of technology too. The point being that technology is no more trustworthy than those using, controlling and manipulating it --- aka, the gate keepers.
As an example, what does your crypto "technology" say about Tether? Is it fully backed or blatant fraud? Please show the technology that provides a definitive "transparent" answer.
As an example, what does your crypto "technology" say about Tether? Is it fully backed or blatant fraud? Please show the technology that provides a definitive "transparent" answer.
How much do people trading on exchanges need to worry about counterparties giving them tainted crypto and ending up in a situation like this?
Evidently it's something you should keep an eye out for. I find the fact that Bitcoin isn't actually a fungible token - that there are "corrupt" Bitcoins out there that need to be avoided - pretty fascinating.
Agreed it is interesting. The US dollar has a similar dynamic. The degree to which a currency is fungible should incorporate its corruptability.
With an exchange, your counterparty is the exchange.
Is that really true? On traditional exchanges, the exchange itself is a mostly neutral party, a technology-and-marketplace provider. If a clearing member becomes insolvent, the other clearing members have agreements in place to "pitch in" together to keep the whole system functional.
(Edit: to be clear, this isn't a rosy situation: it's usually a adjacent to fraud, so the SEC, CFTC, etc. pursue criminal charges; and other clearing members tend to sue the bankrupt one, letting the courts figure it out.)
(Edit: to be clear, this isn't a rosy situation: it's usually a adjacent to fraud, so the SEC, CFTC, etc. pursue criminal charges; and other clearing members tend to sue the bankrupt one, letting the courts figure it out.)
The cryptocurrency "exchanges" are not structured similarly to the stock market. There's no separation of broker, matching venue and central counterparty clearing service.
It depends on the exchange. Some are peer to peer and some trade from their hot wallet.
How does a peer-to-peer exchange work? They match you with someone and then you find some way to do a swap, potentially cross-chain?
It’s not clear to me, but I’d guess that one who uses centralized exchanges would do well to focus on sites that use KYC. I’m sure not everyone would agree with that, but we still live in a world where one needs to convert crypto to fiat currency at some point, and centralized exchanges are the best way I know of to do that. Avoiding shady projects seems wise.
If the platform has verified you, it has verified everybody else there. So, the question is how reputable is the exchange.
[deleted]
I like this recent South Park clip
https://youtu.be/N8f-BQFo7lw
https://youtu.be/N8f-BQFo7lw
This is a valid criticism and part of why privacy-by-default MUST become the new norm for major cryptos if they’re going to thrive.
A lot of people don’t understand that when you deposit to say, Coinbase, they are looking at the COMPLETE history of your wallet back to genesis. If there’s anything they don’t like your funds are toast.
A lot of people don’t understand that when you deposit to say, Coinbase, they are looking at the COMPLETE history of your wallet back to genesis. If there’s anything they don’t like your funds are toast.
Just to be clear, though: this means that you view the evasion of existing AML statutes as a precondition for crypto "thriving". It's the same problem. Coinbase isn't doing this to be evil or centralized or controlling, they're literally just following the law.
Now, I'm sure there's a place for a reasoned discussion about the breadth of laundering regulation and how it might be improved. But your position seems to be an absolutist one (that AML simply can't be allowed in crypto), and it's not clear to me if you realize that.
Now, I'm sure there's a place for a reasoned discussion about the breadth of laundering regulation and how it might be improved. But your position seems to be an absolutist one (that AML simply can't be allowed in crypto), and it's not clear to me if you realize that.
> Coinbase isn't doing this to be evil or centralized or controlling, they're literally just following the law.
Nah, they're definitely in the business of regulatory capture. But they have to be. If they don't capture the regulators, someone else will.
Nah, they're definitely in the business of regulatory capture. But they have to be. If they don't capture the regulators, someone else will.
You can't have it both ways. If you want an exchange where you can buy crypto with USD these exchanges need to protect themselves from fraud.
This is the problem with crypto. People want all of the positives of removing centralization AND they want the positives of centralizing those same things.
They want "Distributed Code is Law" AND "Openseas validates NFTs"
They want "Distributed Code is Law" AND "Openseas validates NFTs"
You can kind of have both but it's an outright hard problem.
If you have a functional governance system, you can implement some form of vetocratic de-listing mechanism. It doesn't have to stop the de-listed item from trading but it is a mechanism for a community to collectively decide what is and what isn't a scam/forgery/theft/etc. This same system generalises to a central source of trust for a given network, service, or protocol where the control is decentralised.
Now this falls back to the first condition which is to have a functional governance system. Any failure in the governance system is now a failure in your system for deriving trust.
Can it be done? Yes. Has it been done properly yet or even really been done at all? No not really.
This isn't to say that it's impossible but we aren't there yet by any stretch of the imagination.
If you have a functional governance system, you can implement some form of vetocratic de-listing mechanism. It doesn't have to stop the de-listed item from trading but it is a mechanism for a community to collectively decide what is and what isn't a scam/forgery/theft/etc. This same system generalises to a central source of trust for a given network, service, or protocol where the control is decentralised.
Now this falls back to the first condition which is to have a functional governance system. Any failure in the governance system is now a failure in your system for deriving trust.
Can it be done? Yes. Has it been done properly yet or even really been done at all? No not really.
This isn't to say that it's impossible but we aren't there yet by any stretch of the imagination.
For that problem it could work, but it would never work for the problem that exchanges face where people get their credit cards stolen, or a government seizes some user's BTC, etc.. and the exchange gets hit with big chargebacks and other fees.
What does being toast mean? Do they confiscate your deposit and give nothing in return?
they can close your account and limit to only withdrawls
wouldn,t this lead to lots of false positives
It can lead to false positives. Only the government is allowed to sell tainted coins. Very convenient rule for law enforcement agencies.
[deleted]
No word about the lightning network?
The receiver of a LN transaction does not know anything about the sent coins.
Are any exchanges accepting payments via the LN? I so, the issue is solved, no?
The receiver of a LN transaction does not know anything about the sent coins.
Are any exchanges accepting payments via the LN? I so, the issue is solved, no?
Lightning network is not Bitcoin and not decentralised.
I would say a lightning channel is centralized, but seeing that there are many channels, surely the network is not.
And the magic internet points are bitcoin-equivelants, settled in bitcoin, seems pretty bitcoiny to me.
And the magic internet points are bitcoin-equivelants, settled in bitcoin, seems pretty bitcoiny to me.
A bunch of them are and more are working on it. Here are some non custodial crypto to crypto ones: https://wiki.ion.radar.tech/tutorials/lightning-exchanges
And here are some traditional ones: https://github.com/theDavidCoen/LightningExchanges
And here are some traditional ones: https://github.com/theDavidCoen/LightningExchanges
The privacy of LN is constantly overstated.
It sounds like buying cryptocurrency might be risky.
Crypto has always been about centralization. It's how the VCs make their x10000 return.
yes, US has been doing regulatory capture to extract profits from crypto since 2016, it's horrible but the silver lining is that crypto was forced to innovate and produced the wonderful jungle of DeFi that currently exists and is used by many
> cash out
you're not supposed to do that!
you're not supposed to do that!
Don't kid yourself. Bitcoin does not have any place as a real currency (at least for legal purchases) - it is solely a speculative asset. People buy cryptocurrencies in hopes it will become worth more USD, or to buy drugs.
I've paid with Bitcoin for many legal tangible things that I would have otherwise paid for with a credit card if the Bitcoin option wasn't so much cheaper (10-15% discounts usually).
Within the last year? Directly with Bitcoin or with a L2 network?
So it has a proven use case, that will never go away: illegal purchases.
What's the size of that market, and what portion of participants bother to try covering up their transactions on the blockchain between exchanging with a real currency and buying/selling the drugs (or nuclear weapons, or hitman contracts, etc.)?
I don't know! I'm not a huge crypto fan at all, but say 5 years ago there was this belief among crypto bears that it would be a forgotten memory in 50 years, I just don't see that happening. Illegal monetary transactions are a huge use case for Crypto, and i'm not naive enough to think crime will be a distant memory in 50 years.
Now does that mean you should buy bitcoin cause your savings will 10, 100, 1000x? Not necessarily, it could be replaced, and also go sideways or down but I'd be surprised at this point if there's no crypto-economy in 50 years.
Now does that mean you should buy bitcoin cause your savings will 10, 100, 1000x? Not necessarily, it could be replaced, and also go sideways or down but I'd be surprised at this point if there's no crypto-economy in 50 years.
It has a proven use case as a result of what?
You can use it as an everyday currency in El Salvador. Here's an example from three months ago: https://youtu.be/6IAc1G8xaDs?t=62
There are major issues with this implementation:
- goes down with AWS
- uses mongodb
- money disappeared
- people don't understand it and don't use it
- fees are subsidized
- ...
It's ultimately only used for 5 % of the international transfers AND more expensive currency to currency wise.
( I have a more complete write-up with links somewhere in my comments, if you want them)
Edit: here https://news.ycombinator.com/item?id=30091410
- goes down with AWS
- uses mongodb
- money disappeared
- people don't understand it and don't use it
- fees are subsidized
- ...
It's ultimately only used for 5 % of the international transfers AND more expensive currency to currency wise.
( I have a more complete write-up with links somewhere in my comments, if you want them)
Edit: here https://news.ycombinator.com/item?id=30091410
How does this refute the argument that you can use it, for legal purchases, in El Salvador?
Also this doesn’t really apply unless you use the custodial wallet. McDonalds isn’t, and you don’t have to either. If you self custody you’ll be fine.
Also this doesn’t really apply unless you use the custodial wallet. McDonalds isn’t, and you don’t have to either. If you self custody you’ll be fine.
> How does this refute the argument that you can use it, for legal purchases, in El Salvador?
That i wouldn't want to use it if i lived there. It has no benefits, only disadvantages.
That i wouldn't want to use it if i lived there. It has no benefits, only disadvantages.
The comment you're answering to is pointing out that this is unsustainable in its current implementation in El Salvador (and implicitly unlikely to last), meaning that this example does not refute that
> Bitcoin does not have any place as a real currency
> Bitcoin does not have any place as a real currency
You can pretty much live off of bitcoin tbh. Or at least you can spend it in a lot of places.
- https://www.bitrefill.com/
- https://foldapp.com/
- https://crypto.com/cards
- https://www.bitrefill.com/
- https://foldapp.com/
- https://crypto.com/cards
> You can pretty much live off of bitcoin tbh. Or at least you can spend it in a lot of places.
> - https://www.bitrefill.com/
Buying gift cards is the same as cashing out but worse in every way. Pre-converting to a limited-use intermediate currency and then spending that intermediate currency isn't the same as spending bitcoin.
> - https://crypto.com/cards
I notice that their "stake" requirements are listed in USD, not CRO, and that this runs through both Visa and Metropolitan Commercial Bank to do centralized back-end conversions into and out of their bespoke coin. It sounds a lot like the blockchain aspect adds literally nothing to the equation and is just there to ride the buzzword FOMO zeitgeist.
> - https://foldapp.com/
Same as ^ but with a different centralized backend bank and a different bespoke coin that adds literally nothing to the equation.
> - https://www.bitrefill.com/
Buying gift cards is the same as cashing out but worse in every way. Pre-converting to a limited-use intermediate currency and then spending that intermediate currency isn't the same as spending bitcoin.
> - https://crypto.com/cards
I notice that their "stake" requirements are listed in USD, not CRO, and that this runs through both Visa and Metropolitan Commercial Bank to do centralized back-end conversions into and out of their bespoke coin. It sounds a lot like the blockchain aspect adds literally nothing to the equation and is just there to ride the buzzword FOMO zeitgeist.
> - https://foldapp.com/
Same as ^ but with a different centralized backend bank and a different bespoke coin that adds literally nothing to the equation.
Only within certain extremely constrained limitations, but it’s an insignificant use of the system overall.
Bitcoin's blockchain is not scalable, but there is Lightning, which can give Bitcoin more "currency" traits.
That has literally nothing to do with what I'm saying. Nobody except for weird techno-idealists actually value crypto in any terms other than it's equivalency to actual money.
Given its higher and higher long-term prices, it seems more and more people value it.
What are you saying? It is not widely used enough for day-to-day transactions?
What are you saying? It is not widely used enough for day-to-day transactions?
The cat is out of the bag, pandora's box is open, thank God with a capital G Bitcoin us unbannable.
The separation of money and state will bring us better stability, less war, eliminate people like Chavez and Putin from the world, etc etc etc.
The separation of money and state will bring us better stability, less war, eliminate people like Chavez and Putin from the world, etc etc etc.
How will separation of money and state eliminate people like Putin?
Maybe not eliminate them, but they won’t be able to use the money printer as they please, effectively funding things like forever wars.
...do you understand how money works, you can't just "use the money printer" to fund wars what are you talking about
Sorry, are you asserting that there's one correct theory for "how money works" ?
Where does money come from according to you?
Where does money come from according to you?
How does a country fund wars?
Through issuing bonds, and then inflating the money supply so as to dilute the amount to pay back.
Through issuing bonds, and then inflating the money supply so as to dilute the amount to pay back.
What do you think currency is? Of course it's a currency. If people have the misguided view that Bitcoin is a bank or that they should earn a profit by trading it, that's on them. USD isn't much different other than that it's backed by military and economic might; at the end of the day it's numbers, like Bitcoin, without a decentralized blockchain.
The quality of being exchangeable for goods doesn't make it a currency. Even if it were a currency, it would be a very bad one without many of the properties required for sound monetary policy.
Basically people need to launder their legitimately earned/acquired crypto just so financial institutions don't flag it.
Not sure how you understanding "laundering" but legitimately earned cryptocurrencies does not need laundering in any sense, just a explanation about where it comes from, like when you receive any other large amount of money to your bank account. This has happened to me (the bank approached me asking where it comes from) both when "selling" large amount of startup stocks/options and when receiving money from selling legitimately earned cryptocurrencies on a exchange (the cryptocurrency exchange approached me asking where it comes from).
This article is about the explanation being sufficient but the bank deciding the prior owner had illegitimate earnings due to the prior use of a mixer so flagged it anyway.
So the way around that would be to further obfuscate and layer.
So the way around that would be to further obfuscate and layer.
Do you think the exchanges will throw up their hands and go "oh well tricked us you clever bastard, you go free now"? I think it is much more likely that, if they can't determine the origin of coins because it has been obfuscated so much, they will just block it just to be sure. Making crypto an unacceptable KYC/AML risk will not convince the banks to allow it anyway; that's just not how banks work.
I do think that, yes, I know what technology they use to assign thresholds to transactions for flagging or freedom.
I agree that at the moment it's probably not all that sophisticated, but with the incredible trackability of most crypto I don't hold much hope that there won't be mandatory blacklisting of "dirty" coins. I could easily see a couple of SAAS providers providing "AML compliance as a service" for various blockchains.
I have a controversial opinion. You don't need offramps.
Say you are a miner. How would you buy the electricity to run your mining rigs without fiat currencies?
Presumably the commenter is imagining that everyone would accept crypto as payment, including the energy company.
This is not my opinion.
My opinion is that no matter how many people and companies become excited about accepting and using crypto as a method of payment, all of them need to pay some form of tax at some point, and I'm not sure I see a reason why typical governments and / or central banks would be as enthusiastic about relinquishing their sovereignty on their own currency. I imagine that this tax will most likely need to be paid in the currency which is controlled by the government or its central bank, and this is where the off-ramp problem can no longer be avoided.
I really cannot shake off the idea that cryptocurrency has just created high-tech casino chips that are not attached to any particular casino, and I'm not completely sure what problem this really solves in practice. At the end of the day, I stay away from crypto because I fully admit that I do not understand crypto: not from a technical perspective (which IMO is not that important), but from a macro-social perspective (which IMO is the most important).
This is not my opinion.
My opinion is that no matter how many people and companies become excited about accepting and using crypto as a method of payment, all of them need to pay some form of tax at some point, and I'm not sure I see a reason why typical governments and / or central banks would be as enthusiastic about relinquishing their sovereignty on their own currency. I imagine that this tax will most likely need to be paid in the currency which is controlled by the government or its central bank, and this is where the off-ramp problem can no longer be avoided.
I really cannot shake off the idea that cryptocurrency has just created high-tech casino chips that are not attached to any particular casino, and I'm not completely sure what problem this really solves in practice. At the end of the day, I stay away from crypto because I fully admit that I do not understand crypto: not from a technical perspective (which IMO is not that important), but from a macro-social perspective (which IMO is the most important).
It's amazing to watch in real time Crypto Andys learn all the hard lessons that went into making the financial system they seem to despise.
The common denominator in the examples in the article is that the crypto system at some point has to at some point interface with the Real World and that's where it all falls apart.
There's an example of a woman whose bank won't process the transaction. Just because it's crypto doesn't mean you can escape KYC/AML laws.
Another example was the person whose crypto was tainted by going through the same service used to launder ill-gotten gains, which even assumes their story is true (eg their Bitcoins may well have been ill-gotten).
NFTs are the same. I could buy an artwork but something outside of that system is required to show it's "authentic". I mean I could save the same image to my hard drive (possibly modifying a pixel) and then create a new NFT and what's really to distinguish it from the original? If there is no original NFT, how will a potential buye revaluate the artist actually issued the token?
I've yet to see an actual problem crypto solves other than avoiding laws. It's the biggest solution looking for a problem I've ever seen.
The common denominator in the examples in the article is that the crypto system at some point has to at some point interface with the Real World and that's where it all falls apart.
There's an example of a woman whose bank won't process the transaction. Just because it's crypto doesn't mean you can escape KYC/AML laws.
Another example was the person whose crypto was tainted by going through the same service used to launder ill-gotten gains, which even assumes their story is true (eg their Bitcoins may well have been ill-gotten).
NFTs are the same. I could buy an artwork but something outside of that system is required to show it's "authentic". I mean I could save the same image to my hard drive (possibly modifying a pixel) and then create a new NFT and what's really to distinguish it from the original? If there is no original NFT, how will a potential buye revaluate the artist actually issued the token?
I've yet to see an actual problem crypto solves other than avoiding laws. It's the biggest solution looking for a problem I've ever seen.
You don't even have to change one pixel. NFTs don't enforce uniqueness or copyright laws or anything.
You can 'mint' the same image or hash or URL as new NFTs, forever.
They're taking the old confidence scam of "This is the original copy of something that other people are gonna want! (with no intrinsic value)" and tech-washing it to claim that the blockchain enforces originality. It doesn't, it's still all up to humans to say "This is the oldest copy of all the copies."
People keep saying "But it might be good for concert tickets!" I'm sick of hearing that. Don't carry water for a scam based on some what-aboutism that hasn't even been implemented. Concert tickets are working fine and TicketMaster would be dead if someone didn't like the way they did things. The venue still has to honor the ticket, so NFTs are still a middle-man, just dumber.
You can 'mint' the same image or hash or URL as new NFTs, forever.
They're taking the old confidence scam of "This is the original copy of something that other people are gonna want! (with no intrinsic value)" and tech-washing it to claim that the blockchain enforces originality. It doesn't, it's still all up to humans to say "This is the oldest copy of all the copies."
People keep saying "But it might be good for concert tickets!" I'm sick of hearing that. Don't carry water for a scam based on some what-aboutism that hasn't even been implemented. Concert tickets are working fine and TicketMaster would be dead if someone didn't like the way they did things. The venue still has to honor the ticket, so NFTs are still a middle-man, just dumber.
[EDIT: I wrote a somewhat long comment that really wasn't directly related to the article, so I chose to remove it.]
The original intent was "peer to peer digital cash". When that failed we got "decentralised digital gold". I can only wonder what the next iteration will be
“Web3”
Which is...drumroll...where the payment endpoints will be for using the digital gold (coins that have won the race) for the P2P payments.
> "decentralised digital gold"
You're saying like that is not a huge deal. Central banks will hold Bitcoin in the future, it's inevitable.
You're saying like that is not a huge deal. Central banks will hold Bitcoin in the future, it's inevitable.
Even if we accept the thesis that central banks are interested in holding crypto as part of their reserves, is there any reason that it would be bitcoin? It is the largest cryptocurrency right now, but the space is also famously volatile so it might not be the largest in a few years.
(Btw, I doubt a country would want to hold something as volatile as bitcoin since the whole point of national currency reserves is to be a stable source of value. Bitcoin is basically the opposite of that)
(Btw, I doubt a country would want to hold something as volatile as bitcoin since the whole point of national currency reserves is to be a stable source of value. Bitcoin is basically the opposite of that)
> reason that it would be bitcoin?
It's the only one immune to Russia/USA/China intervention.
> I doubt a country would want to hold something as volatile as bitcoin
Research why it's so volatile.
It's the only one immune to Russia/USA/China intervention.
> I doubt a country would want to hold something as volatile as bitcoin
Research why it's so volatile.
Bitcoin does not have a single defining feature that would make it more resilient to dedicated government intervention than any other crypto. The only thing that makes bitcoin "special" in the crypto world is that it's currently the biggest and most well known, but both of those factors could easily change in a year or ten.
As for the ever-popular "research more" response, everything I ever read about it is that the whole thing is so incredibly volatile mostly because of the massive (over)use of leverage by speculators. In any case, even if there would be a valid reason for the volatility that still makes it unsuitable as a reserve currency. The whole point of a reserve currency is to be stable and bitcoin is anything but.
As for the ever-popular "research more" response, everything I ever read about it is that the whole thing is so incredibly volatile mostly because of the massive (over)use of leverage by speculators. In any case, even if there would be a valid reason for the volatility that still makes it unsuitable as a reserve currency. The whole point of a reserve currency is to be stable and bitcoin is anything but.
I agree with all of that, but I will add that for everyone who picked up some bitcoin as a hedge or gamble or whatever in its first ~10 (of 11) years of existence are sitting on a very nice reserve for now. Nothing is perfectly stable. Gold, land, even lumber? All have had their extreme roller coaster rides lately. And now the sacred USD is waning from inflation.
My only suggestion for those who seek stability is the typical one: diversify.
My only suggestion for those who seek stability is the typical one: diversify.
Sure it does.
Cold storage hold %
diversity of holders
Cold storage hold %
diversity of holders
> Bitcoin does not have a single defining feature that would make it more resilient to dedicated government intervention than any other crypto
It does have one: it's the only cryptocurrency where everyone's vote counts regardless of how much they have, even zero-balance wallets as long as they are online, they have an equal stake on the network as anyone else.
I will concede that when Ethereum has Proof of Stake, which would make it cheap in terms of electricity to run, and can distribute power in an equal manner, will be a big contender for Bitcoin as store of value, and even then as a currency but they gotta fix theyr chokehold problems.
This is why Ethereum is the 2nd biggest, because this is priced in.
Some people say PoS will centralize power, but who knows so everyone buy just in case they do it right.
Value goes up.
Because if they do it right, they could replace Bitcoin.
Bitcoin is the only one that gives you, today, equal voice just like anyone else.
> whole thing is so incredibly volatile mostly because of the massive (over)use of leverage by speculators.
Yes! Because cryptocurrencies has brought MILLIONS of people worldwide into trading.
Whereas they couldn't do anything like that before, Americans are lucky they get easy access to the US stock exchange, in most other countries trading is just not a profitable position.
Cryptocurrencies allowed these million of people to actually be traders in a sizeable market: Almost $1 trillion as of now, that's biggest than a lot of GDPs, for example Colombia's GDP is less than $271b, US's GDP is $21t for comparison.
You get a lot of newbies and beginner traders that use leverage and stuff like this happens.
Doesn't need to be centralized because it's totally transparent (with some caveats, will improve in the future).
> The whole point of a reserve currency is to be stable and bitcoin is anything but.
Some say when you look at its fundamentals (Market Cap, Volume) and its properties (non-printable, fixed cap) you can deduce it will not go down in the long-term, it will only go up.
Whether this is factually accurate I don't know, Economics is hard.
Unless they banned it, and they could, that's a whole other can of worms but it might push 1st world capital into the likes of Russia etc. El Salvador does its thing because it wants to attract this capital.
There's lots of people that LOVE saving in Bitcoin, even if you don't "get it", this is what some people like, they like saving in crypto, and that's a sizable market for buy/sell pairing (aka trading).
It does have one: it's the only cryptocurrency where everyone's vote counts regardless of how much they have, even zero-balance wallets as long as they are online, they have an equal stake on the network as anyone else.
I will concede that when Ethereum has Proof of Stake, which would make it cheap in terms of electricity to run, and can distribute power in an equal manner, will be a big contender for Bitcoin as store of value, and even then as a currency but they gotta fix theyr chokehold problems.
This is why Ethereum is the 2nd biggest, because this is priced in.
Some people say PoS will centralize power, but who knows so everyone buy just in case they do it right.
Value goes up.
Because if they do it right, they could replace Bitcoin.
Bitcoin is the only one that gives you, today, equal voice just like anyone else.
> whole thing is so incredibly volatile mostly because of the massive (over)use of leverage by speculators.
Yes! Because cryptocurrencies has brought MILLIONS of people worldwide into trading.
Whereas they couldn't do anything like that before, Americans are lucky they get easy access to the US stock exchange, in most other countries trading is just not a profitable position.
Cryptocurrencies allowed these million of people to actually be traders in a sizeable market: Almost $1 trillion as of now, that's biggest than a lot of GDPs, for example Colombia's GDP is less than $271b, US's GDP is $21t for comparison.
You get a lot of newbies and beginner traders that use leverage and stuff like this happens.
Doesn't need to be centralized because it's totally transparent (with some caveats, will improve in the future).
> The whole point of a reserve currency is to be stable and bitcoin is anything but.
Some say when you look at its fundamentals (Market Cap, Volume) and its properties (non-printable, fixed cap) you can deduce it will not go down in the long-term, it will only go up.
Whether this is factually accurate I don't know, Economics is hard.
Unless they banned it, and they could, that's a whole other can of worms but it might push 1st world capital into the likes of Russia etc. El Salvador does its thing because it wants to attract this capital.
There's lots of people that LOVE saving in Bitcoin, even if you don't "get it", this is what some people like, they like saving in crypto, and that's a sizable market for buy/sell pairing (aka trading).
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Bitcoin has found product market fit with the correct privacy needed for regulators to be happy with it. A few examples of bitcoin privacy shortcomings, doesn’t mean the system isn’t wildly successful. One of the best electric car company in the world, Tesla, holds $2 billion worth of bitcoin today. A lot of bitcoin is bad and centralized and whatever narratives are missing the big picture.
"One of the best electric car company in the world, Tesla, holds $2 billion worth of bitcoin today."
I don't think that's what bitcoin is for, it's a bit like saying a speaker is great because is makes a great footrest
I don't think that's what bitcoin is for, it's a bit like saying a speaker is great because is makes a great footrest
"regulators to be happy with it"
What world do you live in?
All regulators are increasing regulation and oversight on crypto, whether it's the western world, China or Russia.
The only ones happy with it seem to be El Salvador and some crypto lobbyists
What world do you live in?
All regulators are increasing regulation and oversight on crypto, whether it's the western world, China or Russia.
The only ones happy with it seem to be El Salvador and some crypto lobbyists
Ultimately, this a civic matter; as much as we want to ensure we have the right to encrypt our communications, to not disclose our passwords to police even when being prosecuted for a crime, as activists commonly insist on, so should we fight to maintain our existing rights to financial privacy.