Are there other financial markets where a single entity is custodian, trading exchange, market maker, and Kyc/Aml all under on roof? It seems like a fundamental conflict of interest.
Crypto is not a financial market. It's a gambling den. Unregulated one. Scammers use financial sounding mumbo-jumbo to lure destitute suckers with promises of infinite riches. Same old game. Wash trading with make believe shitcoins in magic internet tokens keeps the line going up so DCAing idiots keep providing exit liquidity to OGs to unload their magic tokens.
You are conflating many low cap nonsense coins with actually revolutionary and valued ones.
Gambling returns an expected -2% to -10% by design.
If you pick virtually any 5 year interval for Ethereum or Bitcoin, you see >100% growth. In the current crash, they are up 128% and 187% respectively.
Fiat currencies are not "gambling" even though they fluctuate in relative value and even mimic the -2% to -10% expected return of gambling far more appropriately than major cryptos.
Stock shares are an investment because the stock market is a positive sum game in the long run. Yes there are risks but the returns produced by the market are due to actual value being generated in the form of goods and services.
Investing in Bitcoin is like investing in shares of a company that produces nothing, and which only is able to fund its continued operations by continuing to issue and sell more shares once every ten minutes. Investing in a real compay that worked that way would be considered crazy, but somehow it’s supposed to be different because it’s decentralized. The financial implications are the same though; it’s a negative sum game instead of a positive sum game.
That’s why it’s more like gambling than an investment. The amount of money that comes back out is always going to be less than the amount that goes in, in the end.
You can gamble with anything, to include things that aren't worthless like food, housing, stocks, etc. You can also invest in them. But you can't invest in worthless things.
Is the day trader in your example trading their own money?
Because most traders aren't. They are bank and fund employees with KPIs, risk management oversight, massive support functions and very expensive computer programs.
Retail investors that are day trading on the other side of those professionals are absolutely gamblers though.
The difference is that many consumers used crypto as a gambling tool. More so than in those other classes
The precise definition of gambling varies by jurisdiction, but ultimately the thrill of prizewinning and dangers of addiction/financial loss were enjoyed by large numbers of crypto buyers [1].
I personally bet on Ethereum the same way I bet on sports teams whose players I enjoy watching.
[1] Admittedly my evidence is mostly anecdotal, but it seems like everyone knows somebody who used crypto like this
I think it’s fair to call that behaviour gambling too.
Options and derivatives that create or extract artificial volatility out of economic prices are gambling tools in the hands of most consumers.
The underlying source of randomness for a gambling instrument doesn’t really matter as long as it’s statistically well behaved. The physical uncertainty of a roulette wheel, the economic uncertainty of the business cycle and the athletic uncertainty of a sports match all do the job.
"some coins reported >0% returns" is weak I agree.
Fortunately my point was that the main 2 "report >100% returns for every single 'player' who waited 5 years."
using your gambling definition, I would say that "chance" to return a prize is not accurate as it is a "virtual if not outright certainty" historically speaking.
For every player who bought coins and put them in a cold wallet and sat on them? Because otherwise the chances are pretty high that they got scammed, lost their coins in an exchange collapse, lost access to them, or, you know, traded them like every other person who deals with coins who didn't die or lose their wallet keys or forgot about it.
I am not going to educate you on what gambling is, or what is the purpose of money. You made me laugh by calling some magic tokens revolutionary. Yes a revolutionary new way of duping poor people of their money.
I remember when I didn’t know anything about crypto and I believed ppl like you proclaiming this kind of stuff. But i was curious so i looked at the “mumbo-jumbo” myself and turns out it’s actually just technical stuff and not even that difficult.
I feel ppl like you act in very bad faith, but you also claim crypto isn’t even financial infrastructure, so perhaps you’re just clueless.
> But i was curious so i looked at the “mumbo-jumbo” myself and turns out it’s actually just technical stuff and not even that difficult.
I don't see how this refutes anything above. Just because it is technical doesn't mean it isn't a gambling den and that it isn't being used to fleece suckers.
I think that question relies on looking at how any infrastructure that gets mentioned also supports the people gambling. And then it relies on "revolutionizes" to be a greater improvement than an arbitrary metric.
Reason I point that out is there are somethings I like, that I don't find comparable to other services and just convenient, not necessarily revolutionary.
For example, give me a cloud platform that has the same pricing structure for developers. The pricing structure is that I only pay once application deployment, and then get unlimited reads at any amount of bandwidth for free, and all my users pay to update my variables and database, instead of me. That's not the case with GCP, Azure, AWS and anything non-blockchain that I've looked at. I like that development environment. I like that the users are willing to pay and have an insatiable demand of doing so. I don't care that the same application could work at orders of magnitude greater throughput on other cloud systems when the users now have to be found and then go through a 12-step funnel to be convinced to use credit card rails. So that observation is going to continue attractive developers and their whole networks.
I enjoy the instant collateralized lending. That's revolutionary in the sense that the speed is light years better.
I enjoy the price discovery that allows for the instant collateralized lending.
I enjoy the free and standardized API access that allows for the price discovery.
I enjoy being able to chain actions across distinct services. Especially consequential financial actions, but also not necessarily.
I enjoy being able to simulate the state of the entire economy, to see what affects what. Since you can branch off of a blockheight and prod locally.
I like that there's enough people there for any of this to matter. I'm not someone that needs the "revolutionizes" and "a billion users" goal posts. I think its right for people to be disillusioned by crypto enthusiast's ideological claims. Its still financial services, merely because there are finances to service. The same as how the non-crypto financial services industry works (the largest industry on the planet). It doesn't have to have utility to you, it just needs to reduce friction for the people that are already there, and there are lots now.
This doesn’t require the decentralization or chains, just the same development environment and distributed use of it amongst many organizations. But without the speculation component and confidence in the system, that won’t happen, in the mean time this exists and its fine.
Yes, it is worth it. Crypto doesn't aim to solve what you just described about every market. Crypto has the same distributions seen in other markets and economies.
Crypto just lets you watch it in real time. The efficacy of its transparency selling point is actually at the crux of criticisms.
Whether its simple noticing there’s a big market for collectibles, but pretending crypto’s version of collectibles are uniquely speculative problems.
Or seeing that the cryptocurrencies have wealth consolidated in the hands of a few, as if that undermines something about an infinitely divisible asset, while the criticism is describing state currencies.
We can see the phishing attacks and hacks globally, compared to not being able to see and quantify that outside of crypto, we choose not to make an international headline every time someone falls for a scam outside of crypto.
The top 1% of the USA which you linked about is over 1.3million people. As opposed to fewer than a few thousand? And bitcoins can't don't inflate, so... those 2000 addresses (probably only 50 to 100 people, at most) own most of the bitcoins, forever. I don't think you realize how big of a deal that is.
its an infinitely divisible asset, and nodes can debate tail emissions all they want without any input from old holders. and it also depends on what you care about, what do you care about that makes you care about that? something about bitcoin being a universal reserve asset or something? because that has nothing to do with anything I care about.
Sure. Convince yourself that that an infinitely worse system is an improvement on a system that is already terrible. Either you are entrenched due to sunk cost fallacy, libertarian brain-rot, or you are naive. I hope the lesson you end up learning doesn't cost too much in the end.
There is nothing technical about the biggest "stable coins" not being able to produce a single audit of their financials. The only thing they were able to show were "attestations" of USD in a bank account and even that was done by some shady accounting firms.
Not sure why you were downvoted for what seems like an honest question.
Stable coins and other tokens which are not native blockchain assets are referred to as cryptocurrencies (shiba inu is one such example of this which is not a stablecoin).
Cryptocurrencies like Bitcoin, Ethereum, Solana, Avalanche, and a bunch more are also the native token of their blockchain. In other words, they're the primary mechanism for rewarding participants in the blockchain at the node/consensus level for their efforts, and they're also the currency used for getting transactions included into blocks on their blockchains (for paying the transaction fee, also called "gas" on many chains).
Blockchains which have the capability of running user-submitted code are said to have "smart contracts", bits of code which execute when certain conditions are met during a transaction. Most chains with smart contract functionality also include standards for deploying what are referred to as "tokens" which are essentially smart contracts which provide a conforming interface for interacting with the token and tracking the balances of users on that blockchain.
While all tokens provide the same basic interface, they can also have custom code which affects the behaviour. In the case of most stablecoins (the centralized ones), that means privileged parties who can do things like mint new tokens, or blocklist addresses from being able to transact those tokens.
USDC for example, operates by allowing users to create an account with the issuer (Circle), deposit USD, and then have Circle "mint" new USDC tokens to your address. They also let users go the other way and redeem their USDC. However, not everyone who wants to hold USDC needs to mint it; they can also buy it on a centralized or decentralized exchange (decentralized exchanges also being governed by specialized smart contracts of various types).
There are also "algorithmic stablecoins" which, in theory, don't have privileged issuers, and use various protocols to attempt to "peg" the price to the price of some stable asset / USD (these are complicated, have many different methods of operation, and are not really proven to be completely resilient at this point). UST/LUNA was the big one that exploded about a year ago, vaporizing several billion dollars over the course of a few days.
So, "stablecoins" are a cryptocurrency, but not a native blockchain asset (unless there's a chain that primarily accounts in a stablecoin which I'm not aware of), and the primary stablecoins people hear about are also not decentralized.
Most of these people we are talking to online do not deal with code and logic. They rely on others to spoon feed them information, like little babies, but with fancy suits on. Many of them are very accustomed to the existing system working very favorably for them. They cannot comprehend how corrupt and dishonest it is, as it provides for their every want and material need. There is a lot of effort going in to discrediting crypto because it is the first genuine threat to the status quo. That sort of fundamental purification of the underlying mechanisms attacks the heart of a vast, powerful, and unimaginably corrupt piece of society.
Let the talkers talk. They are acting in bad faith by speaking as if knowing something when knowing the thing will 100% convert you to its side, unless you are a bad actor that profits off the corruption. There is a beautiful elegance to that. Since most people, I think, are "good," then naturally the conclusion is rightly just ignorance.
People who read the code and understand what the real deal looks like will profit. Fighting against math is always a losing battle.
Just because I have a different opinion than you don't mean I haven't done my research or don't know shit. For you crypto folks the only legitimate research is the one that concludes that it is a magical cure to every problem known to mankind. You guys keep harping about doing your own research but if someone does research and conclude that it's a decentralised ponzi, you dismiss it as bad research.
Then it’s a good thing we’re dealing with literally open source code implementing financial primitives deterministically; and not with mythological fictions.
> I feel ppl like you act in very bad faith, but you also claim crypto isn’t even financial infrastructure, so perhaps you’re just clueless.
You did not present any argument in your defense beyond "I looked at it, trust me br0", and then claimed the person you're responding to is acting in bad faith.
However, the Bayesian in me says that (from a simple search on, say, youtube or twitter), anyone who is extolling the virtues of crypto is highly likely to be selling me something worthless, and thus acting in bad faith. How do you expect people to reconcile these facts?
I mean, ignorance is worthless too. You’re still getting scammed by trusting the skeptics blindly, you just get scammed intellectually instead of financially.
> You did not present any argument in your defense beyond "I looked at it, trust me br0"
Neither did the other person.
> However, the Bayesian in me says that (from a simple search on, say, youtube or twitter), anyone who is extolling the virtues of crypto is highly likely to be selling me something worthless, and thus acting in bad faith. How do you expect people to reconcile these facts?
Wouldn't expect bagholders to know the difference.
However, if you read my comments carefully, you'll see that I described an experiment that anyone can repeat and reproduce to come to their own conclusion.
> An activity derived from anecdotes and confirmation bias is many things, but a useful experiment ain't among them.
Thankfully I'm not a bagholder whose sinking bags rely on shilling and pump and dumping 24/7 on online forums, otherwise I would never have developed observational/experimental skills.
Just as a helpful summary, this is the conversation we're having:
A: Crypto Twitter/YouTube is full of shills and scammers.
B: But that's just like, your opinion, man!
A: Actually no, anyone can experience it for themselves.
B: Ehh, that's still SUBJECTIVE EXPERIENCE. I only bow to OBJECTIVE TRUTH.
I mean, yes, that is quite literally just your opinion, man. Ain't nowhere else for this conversation to go, really. Would you like to try having a discussion with some semblance of good faith instead of insisting "everything I don't understand is a scam and my subjective experiences are objectively correct and perfectly reproducible because I say so"?
Ah, the classic "Few understand" attack of the buttcoin pumpers. I fear this may be hopeless, but for anyone else following this thread, I've worked at a DeFi startup during the now famed DeFi summer, and resigned soon after the company narrowly escaped the Terra Luna meltdown despite my repeated warnings.
So I understand the nature of this scam very well, probably better than the shiller above.
> Ah, the classic "Few understand" attack of the buttcoin pumpers.
You can actually demonstrate proper understanding of things rather than continue the same old tired "I can cherrypick a couple scammers therefore the literal entirety of a whole category of technology and financial instruments must be a scam" at your leisure.
> I've worked at a DeFi startup during the now famed DeFi summer, and resigned soon after the company narrowly escaped the Terra Luna meltdown despite my repeated warnings.
Good for you. That doesn't mean your experience is representative. Not sure how many times you have to be informed that anecdotes are fundamentally flawed evidence-wise before it starts to stick.
> probably better than the shiller above.
You can name the thing I'm allegedly "shilling" at your leisure.
In the meantime, anyone else following this thread can see full well that you have no substantial argument here other than "crypto bad, my anecdotes matter more than your anecdotes, anyone who disagrees with me is a bagholder shill". If you've got nothing else to add beyond the same bullshit folks have been parroting for more than a decade now, then I rest my case.
Crypto crowd suffers from confirmation bias and are a classic example of the Dunning–Kruger effect. Any research that doesn't conclude the greatness of crypto is not valid research.
Anti-crypto crowd suffers from confirmation bias and are a classic example of Dunning-Kruger effect. Any research that doesn't conclude the worthlessness of crypto is not valid research.
Providing liquidity by infinitely counterfeiting shares and routing them off exchange to prevent accurate price discovery is only “useful” to the cartel who sell options.
If you’re implying that somehow grandma is being done a disservice because her pension fund can’t make the trades they want when they want then YOU need to explain how “liquidity” benefits anyone that matters.
I didn't imply anything, I was asking for his reasoning since he didn't provide any.
And I'm not sure how to respond to anyone that buckets people into those that do and those that don't matter. Your argument doesn't seem to be made in good faith.
Such a weird attack and downvote just for asking for a clarification?
Many methods of foreign exchange are. Insurance can be.
If anything, it is equities that is unusual, because that market is designed to be accessible to retail investors, with significant consumer protections.
The ads market comes to mind here, but it is a pretty clear violation of securities law to have the broker and the exchange be the same company for financial products.
One company is the broker, the exchange, a major placement vendor, and the software vendor for algorithmic trading (which is a black box anyway). On top of that, in order to trade, you have to show them your books so they know everything about your business. And finally there is the extortion as well, don't advertise against your own name, oh sorry someone else is paying more.
The whole thing is engineered to extract every last ounce of margin from the advertisers. However due to the duopoly of the two colluding players (they carefully don't compete with each other) there is no choice.
It's frankly absurd the situation we have gotten into with online ads. It needs significant regulation.
Other market makers (Wintermute, Keyrock, B2C2, etc) work with all major CEXes, including Coinbase. This is the same for custodians like Anchorage Digital.
I feel like Coinbase would use this info to argue against being truly monopolistic of some or all of those markers.
I am definitely certain that Coinbase (specifically Paul Grewal, their head lawyer, and, previously, Alex Marx, former head of risk) have prepared for similar claims to be made. They have an extensive roadmap of expected legal challenges and their plans to ameliorate any damage done to their business model. I’m confident their goal is dismantle any claim that they have monopolistic control of a customer’s crypto once purchased.
What you're describing is a typical aspect of brokers. Market makers provide large standing buy and sell orders so that anyone who wants to buy/sell a security at ~market price can do so.
It's great for customers but not so great for "brokers". Securities exchanges in the US are not allowed to let retail customers trade directly and have to go through "brokers" (basically middlemen who take a cut on transactions).
The ability of a service provider, such as a broker, to set prices above production costs depends on the amount of competition in the market. The higher the competition, the thinner the margins are going to be. So, a monopolistic broker that doubles as exchange is absolutely not good for customers. In this scenario customers will be charged higher prices for brokerage services, compared to what they would be paying in a competitive market.
Why would adding middlemen lower prices? If it dit, why not require another layer? Brokers of brokers, etc. I think you can see that it doesn't make sense.
You're not adding an intermediary. The broker and the exchange do different jobs. Coinbase is an exchange and a brokerage firm. Under the current arrangement, Coinbase is providing its customers with both exchange and brokerage services, so Coinbase customers are paying for both. If Coinbase was providing exchange services to brokerage firms, and these brokerage firms were providing brokerage services to retail investors, these investors would still be paying for both services (directly or indirectly), but prices would be lower due to competition among brokerage firms.
I don't understand what you mean here. In what way do you consider Coinbase a brokerage? Users on Coinbase can trade directly on its exchange and pay trading fees. Restricting the exchange to only brokers would mean that the middlemen ("brokers") would now pay the trading fees and pass that cost onto their customers, plus some brokerage fee (which means a higher total fee for users). The broker-intermediated trades are necessarily more costly than the direct trades.
- custody of assets
- margin trading
- customer support
If the answer is yes, then Coinbase is providing typical brokerage services which could be provided instead by firms independent from the exchange. Do you not agree?
KYC/AML: the exchange wants your business so is more willing to drop their standards. In most markets most participants trade through brokers who also need to do these checks.
Market making: the exchange has an unprecedented insight into how it matches trades and the scope to front run other traders. Perhaps even introduce "oops" bugs that their MM then exploits.
Any large player can move markets albeit not like the Alameda scam. In Coinbase's case, listing a coin can be a big deal. However, I've tried to time those new listings and it doesn't seem to do too much re: value.
That's not what dark pools are at all, please educate yourself before saying something this inaccurate.
> custodian, trading exchange, market maker, and Kyc/Aml
Custodians are people who hold on to funds and securities. If a mutual fund buys a share of Apple, they don't hold the share themselves, it's held by a custodian bank like BNY.
> trading exchange
NYSE/NASDAQ/CBOE/etc are examples of exchanges, where they match up buy orders and sell orders, and nothing more. Dark pools are examples of exchanges, as they are a private place that match up buy/sell orders.
> market maker
Market makers are, as their name suggests, institutions that exist to make markets. What this often means is that they have the obligation to maintain both buy and sell orders on specific securities they signed up to make markets for at all times. Examples include Jane Street, Citadel, etc.
> kyc/aml
GP probably mistyped; kyc/aml are regulations that must be followed by financial firms interacting with their customers. Applies to basically everybody here.
A few more:
Clearinghouses: when you trade a security on an exchange, you mere commit to buying x for $y at $settlement date, typically 2 business days after the trade happens. This settlement happens at a clearinghouse, which guarantees both sides of the trade.
The objection from most regulators is that a crypto exchange typically acts as all of the above simultaneously. They are custodians, in that they hold the crypto, they typically make markets, they are obviously an exchange, they provide clearing and settlement services, all at once. Regulators don't like this, since there are conflicts of interest inherent in the roles and they should be separated out into different institutions.
No? Dark pools are not essentially a combination of market maker, custodian, exchange, etc. Just because they are not widely understood doesn't mean that you're completely wrong that dark pools are things that they're not.
You do know that the Dark in Dark Pool refers to the trades being secret, not the pools themselves? You can get a (partial) list of dark pool names from Wikipedia.
There is so much misinformation on hacker news any time a topic is related to traditional finance , crypto or blockchain.
Dark Pools (ATS) are very much like exchanges except the quotes are not public. All ATS operators are required to record every trade to the consolidated tape in which everyone in this thread has access to if they want to pay for it.
The only reason Bitcoin and hence crypto actually worked is because the creator all but disappeared. This removes any and all conflict of interest for the rules of bitcoin. Unfortunately no other coin has this, and Satoshi can actually come back at any time.
Satoshi certainly did have a conflict of interest as he ended up hoarding 5% of all bitcoin. Other coins also had disappearing creators, including ones where the creators received no financial rewards whatsoever.
"U.S. SEC Chair Gary Gensler told lawmakers on Tuesday that he had "never seen a field that's so non-complying with laws".
Crypto firms say they need clarity about regulations, but Gensler has said that crypto markets "suffer from a lack of regulatory compliance, not a lack of regulatory clarity"."
Maybe calling it a "field" is being too generous. Crime is crime.
I’ve never seen a field with lower adoption than crypto despite billions in marketing.
The actual users on-chain is abysmal and frankly, embarrassing.
Current users onchain is in the thousands. Even when the market was raging, the biggest memecoin in the world could only manage about 1M+ wallets - probably about 80-100k real users.
NFT trading volume is down to under 6-7k active users.
At peak bull market, Tornado Cash, despite its notoriety, had about 125 daily transactions.
Arbitrum, an Ethereum scaling solution, gave out literally free money in the form of an airdrop (I got $15k worth). The airdrop went out to about 650k wallets - under 100k real users.
If crypto were to disappear tomorrow, it would affect a population no bigger than a small Indian town.
An absolute mess. No correlation between adoption and hype/valuation at all.
I agree with you on the overhype, but if roughly 16% of active addresses are real users, then active users within the past 24 hours would be around the population of the largest city in Indiana rather than a small town.
Total unique daily wallets for Tether (USDT) down to about 80k unique wallets. This is just unique addresses - doesn't filter out bots and users with multiple wallets. You can't go more mainstream than this coin.
The stats you're referencing appear to be ETH chain only. I'm not really into NFT's, but aren't they more popular on other chains/rollups because of gas cost?
I think the active users might be at least 3x your estimates, but I could be wrong. For example, tether's market cap is >$80b and only ~$30b of that is on ETH.
Yes, which means they are using a centralized third party instead of what's being extolled as the "decentralized, trustless" ecosystem. Maybe that's not as big of a feature as it is claimed to be?
As a reminder, this is what original comment was talking about:
> The actual users on-chain is abysmal and frankly, embarrassing.
Which isn't contradictory with most interaction being on a centralized platform.
I guess I just don't think that's a distinction worth making. The size of the ecosystem is what matters. The billions sitting in accounts denominated in that currency, and the daily total volume actually do matter, even if the trades are not mostly not happening on chain.
It matters if you want to draw a distinction between "payment processing system of the future" and "illegal casinos and gambling den", since these two should also be regulated somewhat differently. Evidence points to crypto being more akin to the second, and your comment also provides supporting evidence for that.
Maybe they want to regulate it because its biggest posterboy (SBF) ran the biggest ponzi since Madoff...
Or maybe because its second biggest posterboy (Do Kwon) ran the second biggest ponzi since Madoff...
Crypto fanboys will defend this trash so much that they've already forgiven and forgotten SBF and Do Kwon.
If this industry wasn't filled with scams siphoning off literally tens of billions in real cash, maybe the SEC wouldn't want to regulate it so strongly.
But aren't there people out there who actually want the SEC's protection? Offering protection to people who don't want it is a creative use of language.
IMO the discourse around crypto is typically poor because it's a shallow proxy to politics/philosophy/economics. But instead of having a meaningful discussion about any one of those topics we get this.
Let's agree crypto is an unregulated digital casino. Why do people care so passionately about code enforcement when it comes to securities? I could possibly see the moral hazard of gambling addiction but given the state of gambling commercials that ship has sailed.
It goes along the same vein as the SEC protecting non-accredited investors from fraud and risk. I appreciate what the SEC does but there's no way to opt-out of being protected? There's no waiver that can be signed to say "I'm totally going to lose my money and that's okay"? Losing money gambling on sports is good. Losing money gambling on private equity will not be tolerated in a civilized society.
Maybe two people can look at the same fence and feel opposite about it. What makes me feel caged could make someone else feel safe
Think of it this way, a system that is 0.01% of the actually useful financial system can still cause 90% of our scams/pollutions/grifts, mostly because of regulatory arbitrage. Doesn't seem that surprising to me.
It's like saying "the police spends most of their time on criminals even though they are a really small percentage of the population." Yes? That's how laws work.
Isn't that a... giant oxymoron? Binance is a centralized third party, BSC is a centralized chain run by Changpeng Zhao and his buddies, and in this thread we are talking about actual, on chain usage off of these centralized platforms.
If you're using an exchange whose founder can't even enter the United States and whose HQ is unknown, are you really that much better off than using a plain old bank?
I'm not ideologically opposed to crypto. I believe in its mission.
But this space needs to a very, very deep clean before it can be taken seriously.
While I agree with all of that, what's the adoption of gold? It's almost entirely stored in vaults as storage of value and never "used", not even looked at.
I still believe in crypto as a store of value and hence as a possible future global currency, but 10+ years later and it's still almost entirely speculation.
Recently, some big names (Saudi Arabia, Brazil, maybe China) are moving off the dollar and in search of a new global currency. Let us see.
Edit: Looks like about half is in the form of jewelry gold, which is a lot more than a little. I wonder how much of that jewelry is ever "used" or if it's stored in a vault as an asset. I hope it's able to be seen!
To be fair, gold has had atleast 1000 years to gain adoption as money by half the world. Crypto in comparison will probably reach that level of adoption after 30-50 years of existence.
Gold didn't reach its current adoption over 1000 years. It always had the current adoption rate. 1000 years ago, if someone gave you gold, you wouldn't wonder, "gee, should I keep this shiny yellow metal or throw it away?" - you would keep it.
We've found gold ornaments in pre-pottery neolithic sites dating back thousands of years. The % of people who want to own gold was near 100% even thousands of years ago.
If anything, gold adoption rate has declined in the modern fiat age, at least in western countries.
That’s rich coming from the guy who couldn’t even answer a basic yes/no question by Congress, “Is ethereum a commodity?”.
His congressional testimony was a joke. How that man still has the job of SEC chief is quite the mystery. Being CFO of Hillary Clinton’s 2016 campaign is probably a factor.
The reason he won't answer the question is because it's complicated.
On one hand, yes, Ethereum is obviously a security, it raised money from investors to make a thing, and investors expected to get rich off it.
On the other hand, Ethereum is currently regulated as a commodity by the CFTC.
If he says Ethereum is a security, then there's a political mess.
If he says Ethereum is a commodity, then it breaks down the SEC's case for all the crypto projects out there that's basically stock IPOs but with a thin crypto layer on top.
I would not impute his credentials, he was a partner at Goldman Sachs and was chair of CFTC under Obama. He was involved in crafting a great deal of policy after 08 around the new regulations for financial institutions. He's not stupid, he's clearly a better person for the job than most of the people here on HN.
In the press, he says that "actors are not complying" but not being able to answer the most simple question (there are others more complex) is *not* playing in SEC favour.
Comply with what? Ethereum is the most used "crypto"-currency and the ecosystem players like Coinbase (a YC company) are right by saying they *can't* comply... they don't know what they are supposed to do despite asking repeatedly for years.
Yes, it’s very bad, as if you’re a US company, how do you comply if one government agency tells you one thing, and another tells you the opposite. Rule of law fundamentally requires a shared understanding of the law.
That's not how regulation works with the SEC. The rules are broad and are specificly designed to not be strict so that they can be applied to new technologies and businesses.
You can say you don't like these rules or how they are applied but that's how they have been applied since their inception. This isn't new.
Sadly, the existing rules are clearly not being applied well to these "new" (10+ year old) technologies.
After, whatever decades of "the rules", new technologies have come along that have stumped "the rules". Now, the SEC has to deal with that. Instead of being an adult and having a good conversation, they are just kicking and screaming.
What's happening is that SEC is saying that you're breaking "the rules" (ie: Wells Notice to coinbase).
So, coinbase says... "ok, cool... what rules am i breaking?"
The response is: "lol, no I can't tell you that!"
So now Brian is in DC this week talking to regulators trying to get some clarity. He's posting all sorts of pictures of this on Twitter.
Comments like this and your second one below, seem so low brow and childish. Account from 2011 and 1400 karma... keep up the good work there.
Of course they can argue it, that's what is happening. They are going to sue the government. Why? Because the SEC refuses to even have a conversation about things. They've been trying, for years, to do so. This isn't some random small company, this is a public company that the SEC should be supporting with better answers than just refusing to even meet.
Worse off, along this same thread, Gensler doesn't even have basic answers to questions that he was prepared for.
You appear to be very confused about the role the SEC plays in the industry. They're not a friendly, supportive legal advice service, they're law enforcement.
In any case, even if the SEC did give out legal advice, I don't believe it would form any type of legal precedent. Nothing stops the next administration from taking a different view.
If you're a large public company knowingly entering into a regulated industry where your activities are considered by everyone to be a "a bit of a legally grey area", then litigation is the entire ball game. Do the thing, wait to get prosecuted, hope you win.
Alternatively, do some lobbying, get the law changed how you want, then do the activity. Been happening for centuries. Easy as pie.
The U. S. Securities and Exchange Commission (SEC) has a three-part mission: Protect investors. Maintain fair, orderly, and efficient markets. Facilitate capital formation.
The main purposes of these laws can be reduced to two common-sense notions:
Companies offering securities for sale to the public must tell the truth about their business, the securities they are selling, and the risks involved in investing in those securities.
Those who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly.
Given that Gensler can't even say whether or not ETH is a security, it seems questionable whether the SEC even has a role here in the discussion.
Can't is not the same thing as won't. None of us (not even Congress) are entitled to the SEC chair's opinion on anything. The job of ruling whether or not ETH is a security is one for the judiciary, not the executive.
All of this is moot anyway. We know the SEC is bringing a case against coinbase. If that case lists ETH, then we know that the SEC thinks it's a security! Congressional testimony is a weird thing to obsess about, but each to their own.
See the thing is the coinbase is lying to you. They know exactly what the problem is and so does anyone who is following this
They are selling unregistered securities.
They can argue that they are not selling securities, but that's what the wells notices is for. Things are playing out exactly as they should.
The fact that they are misleading the uninformed public is what I have a problem with, most people have no idea what the SEC does or how it works so this all seems foreign to them when it's actually perfectly normal.
That’s literally one of the main jobs of lawyers because there’s a shit ton of law that’s not clearly defined and based on obscure precedents or never been tried in a court.
Heck half of the court system from Appellate to the Supreme court is to figure out what is and isn’t legal. Most government agencies won’t tell you if something is legal or illegal because they don’t know unless there clear case law on the subject, in which case your attorney should know, and they’d spend all day guessing.
If Coinbase wants clarity then take it to court and run it up the flagpole.
My guess is he doesn't want to answer the yes/no question because this question is going to be the subject of a lawsuit, and his lawyers like most lawyers are in favor of not talking publicly about court cases outside the courtroom.
The answer to that question is a little like people arguing in court "it depends on what your definition of 'is' is." It seems like a simple question, but it's heavily loaded with both future implications and past precedents, and it can be very hard to answer questions like that unless you're prepared to back up your answer. He clearly hadn't done enough research to answer one way or the other.
> He clearly hadn't done enough research to answer one way or the other.
He definitely has, or at least he should have. When ETH switched to PoS things changed, but he hasn't officially updated his opinion on it and wasn't willing to go on record about it at this latest hearing.
You assume he hasn’t done research. Instead it could be his research found there to not be a clear “good” answer and the response was his way out of making a call at such a relatively early industry stage.
> Although, oddly, he's never done a crypto transaction.
As Matt Levine wrote on his newsletter, saying that the SEC must have traded crypto to regulate it is like saying the DEA should have used meth to regulate meth -- if you think the thing is bad, then obviously you should understand it, then ban it, without using it yourself.
Now, people can disagree whether the thing is bad, but it would be foolish to assume that the SEC doesn't know how cryptocurrency works. If you look at the career paths and previous work of most of the top bureaucrats at the SEC, you'll see that they were usually involved in a great deal of legislation or had prominent positions in industry doing real projects.
There is reason to believe that if he did own it directly that would be a conflict of interest. Here is a actual similar story without hyperbole since this actually happened.
'Imagine someone trying to bring a injunction against Liberty Reserve without owning any any stock in the company or having ever used their products'.
I think you may misunderstand the level or type of research that is involved in answering this question. It's mostly not about cryptocurrency: understanding that is the easy part of answering this question. The real research that needed to be done is on the law, and it is much more complicated and convoluted, and can result in unclear answers until someone gets sued and a court is forced to decide one way or the other.
I'm sure that they will write a nice, thorough opinion once they are done with their research. They are not going to be dropping that opinion to answer a surprise question (ie not something they knew was going to be asked) in a congressional hearing.
I am aware of what happened in the testimony. "In private beforehand" doesn't mean "by written request several weeks ahead of time." That would be the requirement to get an answer here.
> That’s rich coming from the guy who couldn’t even answer a basic yes/no question by Congress, “Is ethereum a commodity?”
Commodities aren't Gensler's job. It would be like someone asking him about the tax code. It's fair for him to say "I don't know." What he knows are securities.
Regardless of how you feel about crypto, if you're at all familiar with law you'd understand that we're simply in uncharted territory here; saying that crypto is super dirty and non-compliant is quite literally as inaccurate as saying that it's super clean and fully in-line. The law simply isn't there yet.
The law isn't there yet if you want crypto to work. But Gensler wants to kill crypto, and for that simply applying the existing rules fairly will do.
Crypto doesn't have an inherent right to have the laws rewritten to enable it, it needs to make the case for why that would be good for the public. So far it hasn't.
Crypto as in crypto-currencies is simply two (or multiple) peers exchanging information between them. They do not need a law to permit that, a case for the "good for the public", or anyone authorization for that matter.
The way the law works is often by banning based on intent and meaning and content. Exchanging information is too general: the law looks at what information, by whom, for what purpose.
Nearly every white collar crime fundamentally involves some sort of unauthorized communication. (Insider trading, for example, involves receiving information by virtue of a trusted position and then communication information to a broker which causes them to execute trades on your behalf). We can even get beyond white collar: hiring a hitman is obviously illegal even if it involves. communication.
I'm not saying (in this comment) crypto is necessarily bad. I am saying you need to defend it on the merits; it's just info so it's ok isn't how anything in society works.
You don't get to summarily declare crypto verboten and make crypto prove it's okay -- the burden is on crypto's detractors to show specifically why it's bad.
Gensler doesn't get to wave his hand and eliminate crypto. But he does get to bring lawsuits against crypto companies alleging they violate existing law. He will have the burden of proof in those lawsuits. If he wins them he may be able to effectively eliminate crypto through application of existing law.
Edit: I realize "you have to defend it on the merits" was poorly phrased. What I meant was that I predict judges will find crypto against existing law. So if you want it to be allowed you'll need to argue for new laws. But it was a very bad way to put it.
And that will be when things get really interesting; the entire point of crypto is to route around this.
I'm not saying this as particularly pro OR anti, but feels like there's a lot of heads in the sand on the fact that some of this stuff provably works VERY WELL, and its especially odd that even tech folks (who would be expected to understand it) appear to be so "luddite" on it.
> its especially odd that even tech folks (who would be expected to understand it) appear to be so "luddite" on it.
Have you considered the alternative hypothesis that these smart people are actually understanding the true nature of crypto very well, and you are stuck in a confirmation bias loop?
Whether the "tech" works is very different question than the social effect of it. A biochemist can be awed by the effectiveness of fentanyl while also maintaining that the average person should never be getting their hands on it.
I almost like your fentanyl comparison -- but where it fails to me is that your biochemists will have very specific ideas about what will happen.
To me, tech's war on crypto feels more like "the War on Drugs." It's fine to be against, but it's the extreme lack of interest in discussing detail (which if you were anti you'd need to get into to stop it) and they don't do that.
Let's say you wanted to attack crypto on principle? Great. First you'd need to ID and figure out their weak points. Bitcoin kills the environment so you attack there. Now, others don't - but a lot of the post ETH coins are centralized with a small number of founders, so you can get them there. Now, ETH is going to be harder because they've done a better job on decentralization...
ETC.
That little paragraph above is orders of magnitude more detailed than any actual attack I've seen. Which again- SUPER WEIRD for tech folks!
Your problem is thinking that the issue with crypto is primarily technological. It is not, it's mostly social.
Same reason why you don't see people arguing about the technical details of the slot machine in gambling regulation. However innovative the mechanism is, the ill is social and that's how it should be regulated. Or similarly, the regulation around alcohol are centered around limiting the social ills (like drunk drivers plowing into unsuspecting people). I am perfectly happy with crypto getting a similar regulation, with Coinbase getting similar terms, disclosure requirements, and responsibilities as the sports betting sites. What I am not ok with is Coinbase shilling tokens as "finance of the future" when it's really just the dumping ground of the latest of Anderssen Horowitzs' scam coins.
Very fair point. I guess the part of me that keeps wanting folks to consider is sort of analogous to perhaps guns or other kinds of weapons.
My strong belief is that SOMEONE is absolutely going to be using this stuff. It's going to be a thing, a big and very influential thing. Might as well get ahead of it and understand it and possibly use it for good?
The difference between regulating cars and regulating crack cocaine is that cars have actual, provable use cases. Even fentanyl has legitimate, real world use cases in anesthesia. And no, money laundering isn't a valid use case.
> And no, money laundering isn't a valid use case.
Working-class folks sending money to their families abroad without predatory middlemen like Western Union, on the other hand, is a valid use case. So is making/accepting payments without being subject to credit card processors playing morality police (or payment handlers like Paypal outright confiscating money from individuals/businesses they don't like).
Real question: have you ever sent money to a third world country? Because I have, both using traditional means and using crypto. And using Wise has been _so much_ easier (5 minutes and money goes from your bank account to their mobile banking account) than figuring out binance's bullshit, and finding a buyer at the other end for the sent cryptocurrency, especially after the "leveraged trading" aka gambling market imploded.
Sorry, your bullshit "but muh African finance!" would have probably worked for less world-aware folks. But not today.
I hope you really are a person deluded by crypto pumper propaganda rather than an intentionally evil pump-and-dumper, and in that case, please take the above anecdote as a real counterpoint to the hopium you've been fed by other pumpers.
> Real question: have you ever sent money to a third world country?
Yes.
> And using Wise has been _so much_ easier (5 minutes and money goes from your bank account to their mobile banking account) than figuring out binance's bullshit, and finding a buyer at the other end for the sent cryptocurrency, especially after the "leveraged trading" aka gambling market imploded.
And yet plenty of people figure it out nonetheless. Maybe they're better able to grasp the technology? Or perhaps simply more motivated to do so?
> Sorry, your bullshit "but muh African finance!" would have probably worked for less world-aware folks.
Sorry, your bullshit "but muh pump-and-dumpers" would have probably worked for less socioeconomically-aware folks.
I hope you really are a person deluded by the legacy financial system's propaganda rather than an intentionally evil beneficiary of said legacy financial system, and in that case, please recognize that anecdotes do not meaningfully refute even so much as others' anecdotes, let alone actual facts.
Yeah, bad example. I do know plenty of people (non-Americans sending money home from here) that are absolutely using crypto in this generally legit and intended way.
They're not just exchanging information they're exchanging something that, by their very own account, has financial value. We as society figured out long ago through hard real life lessons that there must be sophisticated rules and regulations around financial transactions or else enormous negative consequences and human suffering follow.
Introducing your own currency and printing your own notes is legal and has a long history in the US and elsewhere. One famous example is the Ithica Hours.
Not necessarily; a reasonable argument is "it's just another commodity that can change in value." Someone can introduce Pokemon cards and they can change value just fine.
except with cryptocurrency the added exploitation of a broader social custom (privacy) shrouds "you" in a thin veil of decentralized deniability, removing all sense of accountability.
I get what you want but that's NOT HOW LAW WORKS or should work.
You don't get to declare something is bad first without reasoning your way through it through a tested system like law. That's more or less anti Constitutional / American etc.
For example, suppose a drug cartel invents a new formula. The DEA gets to ban it under existing law.
I'm not saying that's analogous. I'm merely providing a counterexample for your idea that the government always has to create custom laws whenever something new happens.
> For example, suppose a drug cartel invents a new formula. The DEA gets to ban it under existing law.
The cartels exist in the first place specifically because the DEA exists and keeps knee-jerk banning things without bothering to demonstrate actual harm.
Unregistered securities are legal, you just can't sell them to the public. That is one possible outcome for crypto tokens - you could still own Ethereum, and one individual privately selling some to another individual would be legal, but companies like Coinbase wouldn't be allowed to sell it to the public.
No, if you want to sell some crypto to a friend of your, that's fine. I don't know why localbitcoins shut down, but it's perfectly consistent for "facilitating transactions at scale" to be illegal while "doing a single peer to peer transaction" is legal.
That's how unregistered securities work, right? I am allowed to buy half of your small business, even though it isn't registered with the SEC. That doesn't mean you're allowed to sell stock in your small business and advertise that on the internet.
Great, now prove crypto is a security. They haven't done this yet. I'm sure some fall under that definition, but some of the big boys, especially ETH, are at least ARGUABLY not, and the SEC simply hasn't done enough homework yet.
Some things are “uncharted” but others are simply illegal, like selling unregistered securities. The supposed confusion on this point is a pretense to help the legal defense whenever regulators get around to enforcing the law.
And again, why is crypto a security? There are a lot that clearly do fall under it, but many of the big guys don't. I don't believe you can summarily call Ethereum a security without more homework.
That's where Gensler failed. He may not be wrong, but he needs to show his work.
> I don't believe you can summarily call Ethereum a security without more homework.
Ethereum voluntarily changed its definition since the last time SEC gave it "not a security" status.
> That's where Gensler failed. He may not be wrong, but he needs to show his work.
I am sure he would be very happy to show his work to the court. Thus the Wells notice to Coinbase and the lawsuit against Bittrex. He is just not required to show his homework to Coinbase, much to the dismay of crypto shillers.
Just because some cryptocurrencies are obvious securities, especially the ICO ones, doesn't mean there aren't tulip like cryptocurrencies.
Cryptocurrencies are inherently non monolithic in design.
We're not. Gensler certainly doesn't think so. With a few exceptions, the overwhelming majority of crypto are securities. In most instances, they are indistinguishable from equity.
Just because some people believe in the promise of blockchain technologies doesn't change the nature of the things that you ultimately store on said chains.
Yes, the head of the Commodities Futures Trading Commission has a clear incentive to call things commodities. Unfortunately, he's not the one who gets to say whether they're securities.
The head of the Securities and Exchange Commission has a clear incentive to call things securities.
He doesn't "get to say" whether things are securities either. He can claim they're securities but he has to prove cases in court, which isn't turning out to be that easy even for XRP.
Ultimately, Congress decides the rules, and not everyone in Congress thinks the SEC is doing a good job here.
Again, "Crypto is securities" is an interesting proposition, but there are legal tests and crypto doesn't always "pass" all of them. I'm not saying he's definitely wrong, I am saying that there's not enough "homework" out there to prove he's right and he (et al) need to do better about putting up or shutting up.
Gensler doesn't need to prove _all_ crypto is definitely 100% unregistered security, just that some of the ones sold by Coinbase is. How certain are you in the claim that none of the cryptocurrencies peddled by Coinbase is not legally a security?
I think you've just made a point in favor of crypto, and certainly against Gensler, who pretty much made an argument in favor of banning "bananas" entirely.
1. Genseler cannot say whether ETH is a security or a commodity as such statements could have adverse conssequences for the Commission in currrent/future litigation, e.g., SEC v Ripple Labs.
2. Even if the SEC were to issue guidance that a certain type of crypto operation is exempt from regulation, instead of proceeding on a case-by-case basis, it lacks the resources to carry out the requisite enforcement against all the crypto operations that are not exempt. From what I have read and heard, the likely reason why Genseler will not go after Bitcoin is because he believes the SEC lacks the resources. BTC has too much of a foothold.
IMO, Genseler's SEC is taking on the amount of enforcement it believes it can successfully manage, maybe more. Time will tell. IMO, just because some crypto operations manage to evade SEC enforcement does not mean crypto is a legal grey area. It means the SEC has a limited enforcement budget and is pursuing actions that it believes have the best chances of success.
There is an extraordinary amount of fraud on the internet. One can argue that lack of enforcement against crypto operations is because "the law has not caught up", but perhaps the more likely explanation is that the authorities have not caught up.
> It means the SEC has a limited enforcement budget and is pursuing actions that it believes have the best chances of success.
I’d have expected enforcement to practically print money due to fines. (That one of the deliberate design aspects of fines would be that they would cover all the agency’s investigations, successful and unsuccessful.) Is this not the case?
"Over at the SEC, a spokesperson said the agency can allocate civil penalties to one of three places: the general fund at the U.S. Treasury, the Treasury's Investor Protection Fund (which is used to help fund awards granted to whistleblowers), or another separate fund used to repay harmed investors."
According to this, fines are not allocated to the Commission to finance further enforcement activity except that funding awards to whistleblowers might lead to more enforcement actions. Keyword: might
"What Does the SEC Do With Money It Collects From Fines?
This will depend on the nature of the penalty. If investors or others were harmed financially due to a transgression, the penalties collected will be used to recover those losses and make those investors whole. Until the passage of the Sarbanes-Oxley Act of 2002, all penalties the SEC obtained were paid to the United States Treasury.
Section 308 of the Sarbanes-Oxley Act, the so-called "Fair Funds provision," permits the SEC to request that certain penalties be added to any disgorgement fund established as part of an SEC enforcement action to return money to shareholders, investors, whistleblowers, or other victims of the defendant's securities law violations."
HN commenters seem to pay particular attention to Matt Levine's ramblings. Here he is dispelling the myth:
"It is not literally the case that the US Securities and Exchange Commission is a for-profit business whose goal is to maximize its revenue, and whose most important source of revenue is fining financial services companies for their misdeeds. But that is sometimes a tempting way to think about things."
The Securities Act and the Exchange Act give the SEC broad latitude in regulating securities. The fundamental question is: is Bitcoin a security? The situation now is a bit like if the SEC tomorrow said Harry Potter books were securities, would bookstores suddenly become unlicensed securities exchanges?
Basically all of crypto passes Howey test for securities:
--- start quite ---
an instrument qualifies as an "investment contract" for the purposes of the Securities Act: "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party."
I agree. All of crypto passes the Howey test for securities.
Bitcoin doesn't match that definition though. Who or what entity is the 'promoter' or 'third party' for Bitcoin? There's no registered entity, no (legitimate) foundation, no company, no CEO, no board, no chair. It's just a protocol.
Bermuda is nothing like these places. Bermuda is the third largest insurance market in the world, with pretty much every Fortune 2000 company having insurance that comes through here.
The ultimate court (though technically a different body) contains the same people as the UK's Supreme Court, the legal system is accountable to London (through a UK appointed, UK career civil servant called the Governor) as are the police. The laws and taxes are all made and raised locally. There is a high level of infrastructure, safe etc. and best of all (unlike SF) I've never seen anyone defecating in the streets.
Why does everyone incorporate in Delaware? Stable, predictable law, commonly used and understood by others in the industry, and — I say the following as a top tier cryptohater — somewhere the regulatory authorities aren’t out to get you as part of their personal or populist vendettas.
I would be interested why hackernews is so strong against cryptocurrencies. I am not sure but I assume most readers are from the US where the benefits are limited. Personally, for some time already I'm supporting a friend in Colombia financially and last year I switched to sending him Bitcoin. It's so much easier, cheaper and faster for both of us.
It doesn’t offer advantages for most people in the United States and we’ve had decades of people making claims which were highly fanciful if not fraudulent, with the hucksters behind them refusing to engage intellectually with anyone who points out the flaws in their business plans. The field has tried rebranding a few times (“web3”, NFTs, etc.) to shed that reputation but most people simply burnt out on the topic since promoters weren’t making competitive services.
That doesn’t mean that there are no problems with the status quo - for example, PayPal and western Union have many critics - but rather that the blockchain companies would have been much better off building things which were competitive rather than relying on MLM marketing. International remittances are so bad that even Bitcoin is better but there aren’t many cases like that and “slower, costs more, riskier, harder to use” is not generally a compelling sales pitch.
I just fear that if people here remain hostile, it could give regulators the support they need to get rid of it. I don't care whether the technology becomes big or not, and I don't think it's suitable for business models. However, I do think that since 2008, the banking system has changed for the worse. People are now suspected of committing a crime if a transaction looks odd. Sometimes, I receive emails from my bank asking about the source of money I've received. This is a huge invasion of privacy, and many people may not have documentation about such transactions anymore. It's unfair to be treated like a criminal when you haven't done anything wrong. I believe that Bitcoin provides great relief from this situation. The community can be inconvenient at times, but I don't think that matters much.
> I believe that Bitcoin provides great relief from this situation.
I think this is a mistake: your country’s laws usually apply to everything, which means that Bitcoin either doesn’t change anything because you’re using a legal exchange or you’re technically in violation of the law and leaving a public record for prosecutors. We’re inclined to technical solutions here but the banking system is a political construct and there isn’t a good way to change it other than engaging with the political process.
This also provides the answer for perceived negativity. The bad reputation is due to providing poor, often illegal, services and the way to change that is to provide something useful which makes life better for someone. For example, PayPal is pretty unpopular but many people still use it because it’s a necessary evil (broad reach, available in most of the world, etc.). If some of the many billions of dollars spent on cryptocurrency companies had produced a useful payment system which was fast, easy to use, had reasonable fraud and privacy protections, etc. a lot of people would switch. Instead, we had 14 years of people shilling Bitcoin despite it providing none of those things because they knew it had only the value they could talk buyers into believing, and nobody at PayPal, etc. is staying up nights worried that they need to offer customers a better deal to keep them.
I understand it's better than traditional remittance services, but did you try (transfer)wise? I use it monthly and it's so good - fast/cheap/easy - that I haven't felt any draw to crypto.
Doesn't bitcoin's volatility affect your use case?
I actually used it in the past (when it was still called transfer wise) because of predictable FX rate transfers. However, I didn't think of it when we were looking for a better solution for this purpose. I guess, it would have worked as good as Bitcoin, you're right. In regards to volatility: It was not a problem so far as he usually sells some months of runway immediately and for the remaining part he waits until the rate is to his advantage. Sure, there is no guarantee that the price will increase but you have to consider that there is at least 15 percent inflation a year in Colombia. That makes COB/BTC price pairs more attractive than USD/BTC.
I had bitcoin to spend and Tiger Direct was the first "major" retailer to take it. As soon as that slashdot post appeared in January 2014 I moseyed on over to check it out and made a purchase, probably the same day the payment method was implemented.
Almost immediately after this the first cycle of widely-publicized scams/grifts/schemes started. And then the cycle never stopped.
The market became flooded with cryptobros and instead of being used for basically nothing it became a vehicle for fraud.
Rather than being a cryptographic curiosity it became a distasteful embarrassment so I did a cost-benefit analysis found that it wasn't for me.
I still have several BTC. I do not care. 1BTC could equal a quadrillion dollars and wouldn't care. I don't want a quadrillion dollars, I want my rose bushes to look magnificent this year.
Besides, I'm a "smart tech" person so I make enough money and have no desire to live the greasy crypto lifestyle.
Where did the $24,000 in value per BTC difference between when I last touched my wallet and today come from?
It came from schmucks pouring money into a system that, eventually, will run out of schmucks.
My moral compass is such that I would rather die penniless underneath a bridge after having spent a decade in squalor collecting cans and shitting in bushes than participate in a market like crypto.
I respect the principles but with all due respect I thibk you could do a lot of good by selling them and giving the money to charity. Most of the people buying crypto are speculators, let them fund charity.
No one on HN is suggesting that sending money to Boliva, Columbia, Venezuala via Western Union with local currencies is a great solution to your desire to send money to your friend. Most people would say what you re doing is totally reasonable.
We do suggest that 99%+ of crypto value is not being spent like that. Most of crypto valuations is built on a vague promise of some future useful use cases when the underlying technology is just a slow database with no root password.
As mentioned in a previous comment, I believe that crypto has limited utility as a business model, primarily serving as on- and off-ramps and for transaction fee handling.
Right, so you can understand that it seems like a scam when people are saying that investing in something with limited utility is going to be worth 100x what it is today in purchasing power.
Exactly. I'd be happy if the market cap of the entire ecosystem dropped 90% (though it would devalue my own holdings), because it would take the focus off the price. Although I'm sure it would just give more ammunition to the people who call it useless and currently criticize it based on its speculative nature.
I don't think it will drop that much anyway, maybe 60% at most from current prices
Aside: what I really want more than anything else is for bitcoin to just disappear from the whole conversation, because it's been demonstrated to be unsustainable, especially since most other blockchains can be sustained on 0.00001% as much energy.
HN hates crypto so they won't recognize it, but there is a massive brain drain and innovation drain leaving the USA right now. Cryptocurrencies are the future of money, whether you want to believe it or not. For the first time, humans can have money free from the whims of a government and the whirr of their money printer. That's a revolutionary idea.
This won't be stopped by any government, you can only put your country at a disadvantage by ignoring it or trying to impede it.
> This won't be stopped by any government, you can only put your country at a disadvantage by ignoring it or trying to impede it.
Countries have tried and were pretty successful? China banned it, and now it's pretty difficult to trade crypto in China. The US can pass legislation tomorrow saying no crypto no more, and it will be effectively banned from the US. How are you going to trade crypto when nobody wants to touch it?
If you don't comply, your bank will shut down your accounts, the people running the exchanges will get arrested, their websites will get seized, etc. The US financial system is pretty good at keeping track of where USD goes after all, it'll get pushed into the shadow financial sector where all the other crime lives, and that seems pretty much the end for all the new crypto projects.
They can make it hard to interface with the traditional fianqncial system but they really can’t stop crypto wallets from being used can they? I know this makes it useless for most people just wanting to clarify.
No one uses it. Its literally a few thousand people left on-chain.
The DAUs of OpenSea is down to a couple of thousand.
All that hype, all that money just to serve two thousand people…
Frankly, its also completely unusable. Gas cost shot up to $50/transaction on Eth mainnet because every idiot was buying memecoins named PEPE and CHAD. Even L2 solutions like Arbitrum were up to $2/transaction. ZkSync mainnet was $15-20/transaction.
And that’s when there are only a few thousand active users. Imagine what happens if millions actually do come onchain.
The “future of finance” is being held hostage by idiots trading shitcoins.
1. NFT platforms usage volume. OS is down below 5,000 users [0]
2. Arbitrum airdrop to 625k wallets. Most users have multiple wallets. I got airdrops on 3 different wallets. Some friends sybilled this to over 100 wallets. Actual unique wallets not more than 100k. Even free money can't entice people to use this. [1]
3. $PEPE total holders: 35,000. Exclude bots and multiple wallets and that's not more than 15k actual users. Hottest memecoin that shit up to $150M mcap in four days. [2]
4. USDT daily unique senders/receivers - under 80,000. This doesn't exclude bots, exchanges, smart contracts, and users with multiple wallets (I have 8 wallets). You also can't go more mainstream or "utility" than this coin. Real unique daily users are probably under 30k. [3]
Exchange users are immaterial. They're just traders and investors buying the next cycle of trash. Actual usage metrics are on-chain users.
This is being pitched as the next Visa but in reality, the network slows to a crawl even when it has to serve 10-20k real users. Meanwhile, Visa is able to serve literally hundreds of millions of users every month.
I am not interested in getting into the weeds, but honestly, the fact that you're pointing to actual memecoins like "$PEPE" and spurious DAU measurements, but still ceding a 10x of your original 1-2k users claim gives me very little confidence in you being a serious person.
This is such a quintessentially crypto huckster response, with all the usual blind spots in all the usual places. You've measured virtual dollars, while OP was measuring actual human users.
He didn't. Like he admitted, it's not possible to do so with any sort of accuracy using on chain data. There are over a billion Bitcoin addresses but this might overcount the number of users since wallets are typically composed of multiple addresses, or it could undercount due to the popularity of custodian service where multiple users share the same addresses.
The best we can do are surveys. According to this one[0], there are around 34 million Americans that have a cryptocurrency wallet. I suppose the world wide number of users is a lot higher.
Your link isn't showing up yet , but I can answer anyway with my own survey. I can account for over a hundred different crypto wallets, including a number of duplicates on the same chain, some of which have been active at one point or another over the past decade. At one point about 6 years ago it was close to a thousand. And in the circles I used to frequent (miners and pool ops - often the same entities), this was a middling number, not extraordinary at all.
The simple observation that one runs* into the same several dozen people over, and over, and over again at every crypto congregation whether online or in person, should be a strong indication that this is an extremely inbred space and the sock puppetry amplification from principal to agent is conservatively inflating usage metrics by a factor of 100 if not more.
* edit: okay this is somewhat dated information, maybe today it's a couple hundred instead of several dozen.
I'm in a few telegram groups with a bunch of large whales, including a few influencers you would know by name if you're active on Twitter.
One of these whales has a bot farm sybiling every protocol imaginable 24x7. Got an Arbitrum airdrop of over 1,000,000 tokens across more than 800 wallets.
I have about 10 addresses in my main Metamask account, and I have iirc 4-5 Metamask accounts, each with minimum 2-3 addresses.
> I can account for over a hundred different crypto wallets, including a number of duplicates on the same chain, some of which have been active at one point or another over the past decade.
Indeed, on-chain address data is more or less useless for counting users, I mentioned this in my comments. The survey I shared wasn't based on on-chain data.
On-chain data establishes a useful upper bound on active user count, but does not say the actual number. The upper bound is low enough to say that it's a few thousand users.
The upper bound would be over 1 billion for Bitcoin (1+ billion unique addresses)[0]. The number of daily active addresses is around 1 million[1]. And that doesn't account for second layer transactions. Where do you get the "few thousand" from?
I literally shared on chain data. That's actual users. Even if you assume that all 80k unique wallets that exchanged USDT yesterday were real users, that's just...80,000 users. Niche forums have more users than that.
Anyone who has ever created an account on a crypto exchange has a crypto address. I have accounts at Binance, WazirX, Kraken, Crypto.com, Gate.io, Mexc, ByBit, and probably 2-3 more exchanges I can't remember. That means I have 10+ addresses.
But that's not real users. Any money I've sent to exchanges is just for trading/investing. I'm not actually using the tech.
On-chain usage is the only real usage. The rest is just banking with more hurdles and scams.
People don't have to use something every day to be users.
I mostly just buy crypto once a month and every once in awhile make a purchase with it when it makes sense (usually either towards a new computer or some place I don't want getting my credit card info).
If crypto became the default (which I'd be fine with), I'd use it all the time. But there's enough fees converting from USD to crypto and then making a purchase on top of that, as well as hassle with taxes each year (since I do report crypto transactions on my taxes) that trying to use it for all transactions, currently, isn't worth it for me.
So on most days I wouldn't even show up in that 80,000 DAU (well, especially since I don't touch USDT at all, keep in mind there's quite a few coins out there, not everyone interacts with all, or even more than a few of them).
And yet I keep up with crypto news, read crypto forums, watch videos about crypto, on an almost daily basis. Personally, I'd consider myself a user of crypto, and find it to be a useful tool. But just like my drill or my hammer, I don't use it every single day, just when the situation calls for it.
I think we're in agreement here? On-chain data is more or less useless for counting actual users. That's why I was sharing survey data, which is the best approximation we can get.
For actual users using the tech, it's also difficult to know but we can see that the on-chain transaction volume is quite significant (multi billion dollar daily).
> On chain data is more or less useless for counting actual users.
I assume anyone who owns crypto but hasn't made any on-chain trasaction to not be a real user but just a speculator. Ergo, immaterial if you're talking about the viability of the network to scale.
I meant it was useless in the sense that we can't accurately determine the number of users from looking at on-chain data. As you've also explained in earlier comments, there is the issue of "multiple addresses - one user" and there is the issue of "single address - multiple users". If we ignore the latter issue, we can put an upper bound at ~1 billion users for Bitcoin due to the unique address count but that's just an upper bound, the actual number is lower but we can't know how much lower.
We're on the same page but we're looking at different metrics. I'm talking about daily usage which, even if you assume that every wallet is a unique user, is in the tens of thousands at most.
The entire point is that crypto adoption is abysmally low for a tech that almost every tech literate person in the world has heard about now, and that this tech falls apart even for this limited user base.
> I'm talking about daily usage which, even if you assume that every wallet is a unique user, is in the tens of thousands at most.
That's incorrect. The number of daily active addresses for Bitcoin is around 1 million[0].
> The entire point is that crypto adoption is abysmally low for a tech that almost every tech literate person in the world has heard about now, and that this tech falls apart even for this limited user base.
To me, that's super impressive given that many people on HN initially dismissed. I personally never thought it would grow beyond the initial group of cryptography/p2p nerds. I was super shocked when Bitcoin was mentioned on TV for the first time. Has any non-governmental money ever made it that far? I don't think so. It's come a long way, but I understand the numbers are a bit disappointing to those who were expecting Bitcoin to completely displace fiat. And in the end, it's a matter of perspective and there's no right or wrong answer.
No, this is the on-chain transaction data ("real usage"). The transactions you are referring to ("exchanging house money for more make believe money") is the exchange volume which does not appear on chain and is a lot higher ($18,000,000,000+ for Bitcoin yesterday).
I'm not sure why you say transaction volume peaked in 2018, it didn't. You can zoom out from the graph I linked to and chose the "All" timeframe. There's a lot of variance but 2018 wasn't the peak.
> The point remains that if the tech falls apart even with 10-20k real daily users, how does it ever scale to 10-20M daily users?
That graph is for the number of transaction, not transaction volume. Bitcoin has a max amount of transactions per block and blocks have been more or less saturated since a while so the number of transactions can't actually increase. It certainly doesn't look like it's decreasing. A lot of the transactions has been moving to second layer solutions as well, with on-chain becoming a sort of settlement layer.
I encourage you to find out the difference between "crypto" and Bitcoin
I think the Lightning Network has the potential to onboard millions of people today, and billions in the future. Check out how to run you're own node, be your own bank with Bitcoin and ignore the unscalable and scammy side "crypto" projects
You need to get the people on LN first, which requires an on-chain transaction. If we assume 10 tx/s (which is very generous) you need over 11 days just to onboard 10,000,000 people. Then if somebody did some funky business with the channel and it needs to get closed to save your funds (have fun monitoring all your channels by yourself or paying somebody else to do it), you need to wait for another on-chain transaction to get access to your funds again.
All of this assuming that the routing problem has been solved and the big hubs (I'd call them banks) are able to serve the transactions from their initial funding and don't have to wait to open channels with more funds.
LN is something that works well in a lab but collapses when used by more people than just a few nerds.
First off, props for admitting that LN could get 10 million users on board in 11 days, even with a conservative 10 tx/s estimate. If you look into channel factories, this could scale the potential users to 100 million users in less time than ChatGPT took, which is the most viral product of the past few decades. Is that not good enough for you?
About the whole routing problem and "big hubs" thing – remember, the LN is all about being decentralized. As more users and businesses join in, routing gets better and better, so you won't have to rely on any single big player. Plus, with the LN's atomic multipath payments (AMP), payments can take different paths, making it even easier to send Satoshis around the world. You can run your own node with a 10 year old Thinkpad you can buy on Ebay for $100.
Also anyone with Cash App can send Bitcoin over LN, today. I don't think you would call everyone with that app a nerd, would you? There are farmers, grandmothers and people in the developing world using Bitcoin to survive today, those aren't nerds to me.
Btw it's pretty funny calling other people nerds when you lurk on HN. If you haven't noticed, nerds have been running the world for a while now.
Bitcoin transactions aren't exactly exploding. And now that chain is also getting cluttered with trash jpegs (Ordinals).
I get the idea and appreciate it. But it's too cluttered with scammers, fraud, and plain money laundering to fulfill its original mission.
I would be happy if it goes down because if it does succeed in its mission, it pretty much means some truly awful human beings will have disproportionate power in our new financial system.
I'd rather not live in a world where Justin Sun owns a large % of my currency supply.
> Bitcoin transactions aren't exactly exploding. And now that chain is also getting cluttered with trash jpegs (Ordinals).
Pick one, it can't be empty and cluttered at the same time
> I would be happy if it goes down because if it does succeed in its mission, it pretty much means some truly awful human beings will have disproportionate power in our new financial system.
Typical HN cope
> I'd rather not live in a world where Justin Sun owns a large % of my currency supply.
It doesn't matter if he owned more than Satoshi, no individual has the power to change the rules of Bitcoin, that is what makes it so powerful
Remind me again what the original mission of Bitcoin was again? It's in the first few lines of the whitepaper if you forgot
You and I have very different dictionaries it seems
> They’ve exchanged their money for it.
A thousand people trading magical tokens they pretend cost trillions of dollars doesn't make it: a) worth trillions of dollars and b) any significant usage
I start a company: SquidSoft, LLC. I sell you equity: 0.000000001% of SquidSoft, LLC for $1. Bam, SquidSoft, LLC’s market cap is $1T even though only $1 has traded hands.
Cryptocurrency tech just plain sucks. After more than a decade this is pretty obvious to most everyone. It's not the future of money, not even close, and with LLMs siphoning all the fuel out of the crypto hype machine, most people don't even care anymore - cryptocurrency is a dead meme walking.
There's nothing revolutionary about it. Commodity money was the original form of money. Crypto-currency is an attempt to create digital commodity money, except that this is obviously impossible. Instead they have created a fiat currency (because it's created out of thin air) with a promise attached that they will only print a fixed amount of it.
> HN hates crypto so they won't recognize it, but there is a massive brain drain and innovation drain leaving the USA right now.
That’s the narrative the crypto influencers want you to believe, but it’s not true.
Web3 / crypto projects are having a huge difficulty recruiting, even in this market. Few people want to go work in crypto because the writing is on the wall.
Nothing new here, but from all these years of experience, the only practical applications for crypto that I've encountered have been attempts to extort money from me, to defraud me, or to simply speculate. Future of money?
The opportunities to borrow cryptocurrencies without collateral are nonexistent and this requires a bank license either way. I don't see the innovation.
If you want to look at the past of money, there is the Chiemgauer which is the most successful complementary currency in Germany and even that one only did 7 million € worth of actual consumer/business transactions in 2015 (there are no updated statistics but it is ongoing and growing).
People keep using the national currency because it reduces transaction costs.
I can understand why you would dismiss it if you haven't taken the time to really understand it, or just been fed a stream of anti-Bitcoin propaganda to fool you into thinking you're "informed" about it.
But it's going to be foundational technology to the future of the Internet, online commerce, energy, and the wider global economy.
Learn why, or miss one of the biggest opportunities in your life. Your loss if you choose to ignore it.
And apparently "Satoish" is going to become the most powerful person on earth because they hold ~5% of this deflationary "foundational" global currency/commodity/whatever it is.
That reason alone is why it will never happen.
I would work on saving for that ticket to Mars with Elon, there is more chance of starting a new crypto-bro society there than Bitcoin going to the moon on earth.
Satoshi only ever moved some Bitcoin a couple of times in the very beginning. Otherwise none of his confirmed Bitcoin has ever moved.
It's very likely that those funds are lost forever, but there's no way to ever confirm.
> I would work on saving for that ticket to Mars with Elon, there is more chance of starting a new crypto-bro society there than Bitcoin going to the moon on earth.
I am not missing anything in life by not participating in a decentralised ponzi. I definitely get your motivation to keep finding new idiots to bring their real money in the game so grifters can unload their magic tokens for real cash.
How much of that "real cash" is there right now? No one really knows.
How much of that "real cash" will there be in the future? No one knows.
What happens to the value of something when you can digitally create an infinite amount of it in a database at a central bank, controlled by a handful of bureaucrats?
Try to answer those questions with the smallest amount of intellectual honesty and I'll think you'll find the value of your "real cash" isn't based on very much.
Forget about Bitcoin and just answer those questions about fiat money.
You say Bitcoin is real money because it is limited in supply (artificially since it's essentially a variable defined in the code) so that makes it deflationary. Anything deflationary in nature can't be money. I won't explain basic economics to you. Go find out why. But then you act like Bitcoin is a security, a speculative asset because it's value will only go up in future (again thanks to limited supply).
Real cash is something that you can buy real goods and services with. Something that I can pay my bills with. You guys have a problem with central governments seemingly creating money out of thin air because you think it devalues your money. Your whole concept of money is wrong. You confuse money (a medium of exchange/short term store of value) with security (long term storage of value).
You know what gives money any value even if it is printed out of thin air? Trust. I trust that I can exchange that money for food, for a house, for clothes, a movie ticket, anything that I want. Where does that trust come from? That trust comes from the stability of the government, the law and order systems, the ability of the sovereign to protect its land and people with those guns and tanks. What gives Bitcoin a value? Nothing. If I cannot find a bigger fool to sell my Bitcoin, it's worthless.
Bitcoin is neither money (deflationary), nor a security (no inherent utility). This is plain truth. Other than a handful of crypto suckers everyone understands it. Hope you get this simple truth one day.
> You say Bitcoin is real money because it is limited in supply
The limited supply just makes it better money.
> (artificially since it's essentially a variable defined in the code)
Sure, anyone is free to change the necessary variables. It's open source code. Good luck getting everyone else to run nodes that use the changed code. That's the point of distributed consensus. You can change the rules all you want, but other nodes in the existing network will ignore you, creating a separate network. This kind of thing has already been tested with various hardforks and the blocksize war.
> Anything deflationary in nature can't be money. I won't explain basic economics to you. Go find out why.
There's nothing to say money has to be inflationary, except the 'rules' and theories that people have made up, like MMT. The current system is built around inflationary money, but that doesn't mean it had to be that way. It's just one way to operate an economy.
> But then you act like Bitcoin is a security, a speculative asset because it's value will only go up in future (again thanks to limited supply).
Currencies are speculative assets. That's what forex markets are for. People trade them against each other. Bitcoin is no different. It can be money and a speculative asset.
Also, your definition of a security is unclear. As far as the SEC is concerned it doesn't apply to Bitcoin as Gary Gensler has stated numerous times.
> Real cash is something that you can buy real goods and services with. Something that I can pay my bills with.
You can pay for real goods and services with Bitcoin, albeit in a limited capacity at the moment, but we're only 14 years into this experiement (less for the Lightning Network), which is VERY early for a new form of money... adoption and trust will take time i.e. decades.
> You guys have a problem with central governments seemingly creating money out of thin air because you think it devalues your money.
It does devalue your money. This is a fact. You can't deny that.
You can argue the virtues of inflationary money all you want, you could argue there are legitimate uses for that that type of money, but it comes at the cost of devaluing people's savings in cash. This entrenches generational poverty.
> Your whole concept of money is wrong. You confuse money (a medium of exchange/short term store of value) with security (long term storage of value).
No, I understand those concepts well.
> You know what gives money any value even if it is printed out of thin air? Trust.
This is literally Bitcoin 101.
"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."
"Trust" is mentioned by Satoshi 13 times in his short whitepaper.
> I trust that I can exchange that money for food, for a house, for clothes, a movie ticket, anything that I want. Where does that trust come from? That trust comes from the stability of the government, the law and order systems, the ability of the sovereign to protect its land and people with those guns and tanks.
You talk as though you think money requires government to exist. Money has spontaneously emerged in various societies throughout human history that didn't require a top-down central authority to enforce its use, the best of which was gold for thousands of years. Governments minted coins from gold, but people only used it because they trusted the underlying asset as something that would hold its value, regardless of who was in power.
> What gives Bitcoin a value?
It's digital money with credible scarcity that's global, permissionless, neutral, and open to everyone to use.
> If I cannot find a bigger fool to sell my Bitcoin, it's worthless.
Not looking to sell my Bitcoin, only spend it. There's a difference.
> Bitcoin is neither money (deflationary)
False.
> nor a security (no inherent utility)
You have no idea what you're talking about.
> This is plain truth
I guess if you say so it must be true. I guess I'll just have to... trust you?
> Hope you get this simple truth one day.
I will be fine thanks. Hope you see the simple truth I've seen.
Sure, make sure you never spend your Bitcoins because it will be more in value tomorrow. If you can buy 1 pizza today, you will be able to buy 10 pizzas next year. If it can buy one house today, it will be able to buy a mansion 5 years down the line. Wow, what a wonderful world it will be where nobody spends on anything because their magical Bitcoins will be worth more in future. What an amazing economy it will be. Nobody will work, everyone will just sit home and watch their Bitcoins go to moon and dream about what all they can purchase with their Bitcoins in future.
What are you planning to buy when a BTC hits a million worthless USD?
Distribution of Bitcoin has been happening for 15 years, because you can't live inside of a Bitcoin, and people need to survive. You don't understand economics if you think people will never spend their savings, when the time is right. I know I have diversified into real estate as a result, and continue to stack sats when I can.
Just moved my last few bucks out, let’s hope it makes it. I was so bullish on crypto, anything with that much money and brilliance thrown at it must produce some fruit right? I guess not.
There's a relative handful of people for whom it has indeed produced fruit, several dozen to several hundred lifetimes worth. Centralize the profits, decentralize the losses. Nothing new here.
They’ve been given plenty of clarity: crypto is very clearly a security and they’ve repeatedly been told it is such. What they want is for new “clarity” in which they are magically no longer subject to the same financial regulations that every other security is.
I briefly worked for a crypto company. This is my personal observation.
The SEC regulates understood things. If you create something new, they’re not going to give guidance for it because they don’t have to give. They’re not in the business of helping people create new markets.
Historically, top-down control of economies hasn't worked out that well. The whole point of free markets is to let everyone decide on the directions they want to take.
That fully centralized command economies have had severe issues historically doesn't mean completely deregulated markets would fare better. I don't think anyone is seriously hoping for a comeback of privateers.
Arguing that one extreme is bad is not an argument for the other extreme, especially when every economy on Earth currently exists somewhere in between those two extremes rather than on either end (except maybe the DPRK if you squint really hard and tilt your head).
Incidentally the current scarecrow of unfree markets, the PRC, is doing economically pretty well and "top-down control" within large parts of the industries is pretty popular except we call it "vertical integration". But that's a tangent, I agree.
"Stagnation bad, disruption good" is 101 level analysis. The important question remains the direction. Disruption is movement. Movement is good if it takes you to a better place. But if you just move for movement's sake you might as well end up hurling everyone down a cliff. Letting go of all the reins is fun and exciting in a simulation, not so much in the real world where failure can mean death, suffering and permanent harm.
Uhh, the SEC said that bitcoin is not a security, but a currency. Like Euro or Yen. [1]
They also said that some cryptos on coinbase are securities, but when coinbase asked which ones, the SEC said „lol we won’t tell you but we will probably sue you soon for that“. [2]
> They also said that some cryptos on coinbase are securities, but when coinbase asked which ones, the SEC said „lol we won’t tell you but we will probably sue you soon for that“. [2]
Why is SEC supposed to do the job of Coinbase's lawyers? If I want to make a shitcoin tomorrow and ask the SEC for "regulatory clarity", are they required to respond to me? What if I programmatically create a new shitcoin every 30 seconds? Am I also allowed to cook up some substances and mail them to the DEA to get some "regulatory clarity"?
Coinbase does business in a legally unclear area, which is why its primary expense should be lawyers. You can't just skimp on that and expect government agencies to do your work for you. If you try that, good luck defending yourself in court.
> Why is SEC supposed to do the job of Coinbase's lawyers?
The current legal framework for determining whether something is a security or not is the Howey test [1]. And it looks like that Coinbase's listings pass the test? If they didn't, they would've been sued already.
Why try to redefine what makes up a security on the fly without telling anyone?
> Sued by who? The SEC? Who have told them that they intend to bring a legal action?
Yes! They initially reviewed CB's S-1, determined the model + products are legal, and allowed them to become a public company. CB's model hasn't changed since then, but now it's supposedly illegal without any change in legislation?
Good regulation happens in dialogue, like when CFDs and warrants were banned for retail. I don't think that's too much to ask for.
> Yes! They initially reviewed CB's S-1, determined the model + products are legal, and allowed them to become a public company. CB's model hasn't changed since then, but now it's supposedly illegal without any change in legislation?
That's not how this works. That's not how any of this works
Have you read the S1? It's a prospectus which details the general business model and strategy for Coinbase the company, to provide context around the registration of Coinbase stock as securities. It talks a lot about Bitcoin and Ethereum in general, but what it doesn't do is provide a list of every single product that Coinbase might sell at some point in the future for the SEC to vet and declare "legal". Selling unregistered securities is illegal regardless of whether you're a public company or not, I'm really not sure how this weird fixation on Coinbase's IPO filings is relevant.
In any case, if I set up as a pharmaceutical company, go public etc. and then suddenly start selling heroin to the general public, you can't ding the DEA/FDA/whoever for "allowing me to become a public company".
Looking on the Coinbase website, they currently offer 257 "tradable" assets. If the SEC thinks any one of these is a security, and they've not been registered (show me the S1 for, I don't know, "IoTex"), then they're going to bring an action.
> Good regulation happens in dialogue, like when CFDs and warrants were banned for retail. I don't think that's too much to ask for.
I've a lot of sympathy with this view, but the regulators are inherently a political organisation and you play the government you're dealt. If the SEC isn't interested in a dialogue (and they're not legally obliged to be), then you do the thing and wait to get sued. Or don't do the thing!
It may be useful to think of an example of a pharmaceutical company. For a pharma company that wants to go public, SEC checks to see whether they're cooking their books or lying to their investors in any form. It's FDA's job to make sure the drug they're selling doesn't make people's heads fall off.
Similarly, I would assume there are multiple teams within SEC, some for basic public disclosure/due diligence checking, and others for crypto regulations and enforcement. Just because one of the teams took longer to take action doesn't mean their entire lawsuit is invalid now.
I can say the same about literally every security apart from crypto. Heck, even money is just an useless paper that we put too much value on. Proving my point that anyone can be a cynic
