Trading volume has dropped significantly over the last 6 months. Large holders have been patient waiting for new money to enter the market. Eventually, when the only activity is a few automated traders and the exchange liquidity provider, large holders are faced with opportunity costs of investing in something else and the limited liquidity the market can absorb as they exit. It's a domino effect as they see each other wiping the liquidity off the books as they market sell. No one wants to be the last one holding the bag.
It seems like the bitcoin selloff coincided nicely with the general stock market selloff. I think someone wanted out of bitcoin after staring at a flat price line for 6 months.
Someone wants out and they know there's limited buy side liquidity. Once the primary market maker algos detect a big move, they get out of the way so they aren't overexposed long or short. Once they pull the liquidity it becomes a race to sell first.
Yup. Liquidity isn't something you need to care about if you trade something listed on an exchange, at reasonable volumes (neither very tiny nor enormous). If nobody else wants it the market makers will automatically take the other side of any trade at the listed buy/sell price, and keep the difference, that's their job.
But Bitcoin, BBS stocks, weird instruments that aren't listed anywhere, those you can only sell if you can find a buyer, if there is no buyer (or no buyer at the volume you care about) then the "price" doesn't mean anything at all.
The vast majority of cryptocurrency transactions are in Asia, meaning China, Singapore & Japan according to a sharespost webinar I tuned in to last week.
Getting money out of China has been a driver of cryptocurrencies in 2017 and early 2018, with little utility other than moving money around to invest in safer havens.
This reminds me of an anecdote from Liar's Poker where the writer talks about how not even the oil traders understood what caused the price of oil to move and so they'd just make up outlandish stories about the Saudis.
Jonathan Nelson, Managing Director HACK Fund discussed this on last week's sharespost webinar. The slides and replay should be up soon if you check their site. Discussion was titled 'State of Crypto Markets and Regulation: USA vs. the World – SharesPost Expert Series'
This is also the result of the federal governments of the world, the US in particular, choking off all the fiat<->crypto exchanges with their expanded and draconian know your customer laws.
As an anecdote, I didn't buy my monthly bitcoin purchase early this month because I've been (and still am) locked out of my ~5 year old coinbase account I use constantly because they are being required to require new forms of ID and I cannot supply it.
Even if the stupid speculation markets and their off chain antics didn't exist this would be a problem.
Even according to the IRS's own estimates, laws like Fatca would never pass a cost/benefit test. The implementation costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower. The established banks do not complain much about it because the high fixed cost of compliance disproportionally affects small firms, thereby protecting them from being disrupted by innovative startups.
So I know next to nothing about these regulations but what do you mean by "cost/benefit" exactly? Surely if these rules are meant to fight (directly or indirectly) organized crime then you can't just judge them on the amount of money saved? If you spend $10 millions to prevent $1 million to reach a terrorist organization, can't you consider it money well spent?
Exactly. If we want to do a true benefit calculation, we have to look at alternate futures.
One important future to avert is where organized crime is rampant. Even if we look at only the economic costs, one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. And that's ignoring people's preference for security and safety. As an entrepreneur, for example, I think it's great that I don't have to worry about paying for "protection" to keep from having my business burned down or my legs broken.
We also have to look at terrorism. KYC/AML work to keep cash out of the hands of terrorists. Terrorism is, moral and human cost aside, very expensive. The 9/11 incident alone sees estimates in the $2-3 trillion range for total economic costs.
So even if KYC/AML really does cost hundreds of billions, which I doubt, it's a bargain compared to the problems it's meant to prevent.
> One important future to avert is where organized crime is rampant... one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot.
You’re making two separate, tenuous extrapolations here. Can you justify them?
I probably can. Did you want to ask some specific question? Better, do you you have a way of calculating path-not-taken costs for rampant organized crime that you think might be more effective?
Are you asking me to do some sort of calculation? If so, could you spell out what and why?
The point of my original comment was to point out a couple of things we'd have to include in a cost/benefit analysis of KYC/AML regulation, not to actually do a proper analysis, which I would expect to run to hundreds of carefully researched pages.
Maybe I misread your comment. What did you mean by "Given the US's $20 trillion GDP, that's quite a lot"? What is "that" in this sentence referring to?
That "that" refers to the implied product of 16% times $20 trillion. It's meant to provide an order-of-magnitude notion of what rampant organized crime could cost an economy, so that people who had previously read "costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower" could more usefully think about what the benefits of crime reduction really are.
Let's try this again: What makes you believe that repealing KYC laws (which were introduced by the Patriot Act in the 2000s) would lead to the same conditions as Italy? And how is this consistent with the fact that the US didn’t lose 16% of its GDP to mafia activity before such laws were introduced?
Exactly. You have provided no reason at all to think that repealing KYC laws (which were introduced by the Patriot Act in the 2000s) would transform the US into Italy, which is frankly just silly.
It also flatly contradicts the fact that the US didn’t lose 16% of its GDP to mafia activity before KYC laws were introduced.
> Well I'm glad that after 4 comments, you've finally gotten to stating a point.
I stated my point quite clearly at the very beginning of this thread. Did you miss it?
> Unfortunately, your point is shallow and dismissive, rather than engaging substantively.
In what way is requesting evidence for an implausible extrapolation "shallow and dismissive"?
> If you're saying it seems silly to you, an anonymous rando, I can live with that.
Is "anonymous rando" supposed to be an insult of some sort? Is it relevant to the topic in some way, or just a plain ad hominem?
> try asking succinctly and with at least a modicum of respect
I did. You should do likewise.
> Because people generally have better things to do than spoon-feed anonymous jerks.
The only one being a jerk here is you, my friend. Take a deep breath and re-read the thread. And no, requesting evidence rather than accepting your assumptions at face value isn't "spoon-feeding". Frankly, your response (or lack thereof) gives the impression that you've been backed into a corner and have resorted to name-calling and "spoon-feeding" accusations to try to save face.
> Is "anonymous rando" supposed to be an insult of some sort? Is it relevant to the topic in some way, or just a plain ad hominem?
It's not about the quality of your point. It's about who's worth my time. This is the internet, where I can be in contact with most of the planet. As I explained long ago in my bio here, anonymous people with bad attitudes get less leeway from me. If you want conversation, you have to be worth it.
In addition, when you introduce words like "silly" and "implausible", you are either a) asserting you have a technology that allows you to objectively measure those qualities in discussions, or b) asserting that you have some expertise which makes you a more qualified judge than the person you are talking to. Presuming for a moment that it's the latter case, you're the one who has introduced yourself as the arbiter of all that's right and true. It's within bounds for me to point out that from my perspective you demonstrate no qualities that would make you the expert you are acting like.
You are of course welcome to have any impressions of me you like. Again, the feelings of anonymous randos are not high on my list of concerns. Less so, of course, for the ones who start out a discussion with the assumption I'm a fool.
He meant cost bebefit to organizations to implement it. Take HSBC for example, one of largest China/HK bank. They waited until Fatca kicks in, then realized it will be too complicated and expensive to implement, so what do they do? Within 45 days they kick out all us-citizen based accounts off their grid. All gone. Thats how foreign banks “comply” with Fatca. Arguably some politicians say it was actually mean to work this way so us citizens behave nice and just keep their freaking money in us banks. I know of 3 friends who had to sold their hong kong based business because noone there would open them banking account anymore so here it is american politicans screwing over american citizens having business on a foreign land.
FATCA is about making non-US financial institutions report to the IRS et al about holdings of US citizens abroad. Worrying about terrorist cells in foreign countries made up of U.S. citizens is absurd.
FATCA is the stick used to dissuade tax evasion by US citizens. If people think they can evade taxes successfully, they will. Whether this impacts Bitcoin or other crypto is inconsequential.
FATCA has nothing to do with KYC / AML provisions.
It involves, simplified, reporting requirements of US account holders by foreign banks to the US authorities. It's main purpose is to avoid tax dodging by US persons.
I'm not arguing that it's a great law, since it's not. For example: it can make it extremely hard for US persons living abroad to open a bank account because foreign banks just don't want to bother with those onnerous reporting requirements.
It has nothing, whatsoever, to do with KYC / AML provisions, which are very rightfully imposed on financial instituions. And yes, I work for one.
It's a fine line. The guidelines ask you to eschew snark.
We don't have any problem with satire and sarcasm as such, but on a large public forum like HN, with everything a mile wide and an inch deep, they are nearly always associated with really low-quality discussion.
> What REALLY gives currency it's value, LOL? As long as other people just blindly accept the currency it's totally fine!
Confidence. If enough people think rice bags or pressed and aged tea is money, then it is. At least you can eat rice and drink tea, bank notes or crypto hashes not so much.
>If enough people think rice bags or pressed and aged tea is money, then it is.
No, commodity money typically has a variety of practical functions and its function in an exchange system is born out of necessity. Not arbitrarily because people want to start doing accounting that way. I don't understand why people repeat this. It's not clever or insightful, and worse it's definitely not correct. It's gravely concerning that presumably basically educated people tout this line without a second thought when it comes to cryptocurrency.
Cryptocurrency finds its value purely out of someone hoping someone else will be left holding the bag, not because it's useful.
I bet you also can’t stand people who oppose mass surveillance. Those ignorant people! Don’t they understand the government is just trying to prevent crime?
Financial privacy, especially from the state, is the ultimate form of privacy.
There's a reason we have had bank secrecy [0] a long time before anything like the modern Internet-based privacy movements, with their much more expanded definitions, came along. Heck, some countries based a whole lot of their appeal on the strength of said bank secrecy laws, like Switzerland.
Unfortunately bank secrecy is quite over even in Switzerland. They constantly get pressured by the EU to share data regarding EU citizens' accounts. The hunt for taxes is ongoing, under the pretense of preventing money laundering. Yet something in excess of 200bn euros was laundered through the Estonian branch of Danske Bank.
> In that connection, a senior employee from the correspondent bank in question assessed that out of ten non-resident customers from the Estonian branch, the correspondent bank would be comfortable only with servicing one given the customers’ characteristics. The employee also warned Danske Bank against Moldovan customers and customers transferring money to Moldova.
Criminal organizations just mule the cash to a friendly bank. Then things proceed accordingly and the correspondent banks will blindly play along for years.
The end goal of these things are not what is sold in PR-speak. It is about expanding the surveillance state for TIA purposes.
There is a reason they renamed this the "Terrorism Information Awareness" center and then "shut it down". But, of course, other agencies just quietly use the software instead with some superficial changes.
If you think any of these ever really get "shut down" because overreach or the like...yeah. They don't. They just re-named, classified, and better hidden in some intelligence agency's toolbox.
AML is bad because it makes a crime out of something which isn’t actually bad. Yes, criminals are bad people who do bad things and they should be caught & punished. But KYC/AML are about making it easier to find criminals by their behaviour, not about crime directly. They violate the right to privacy, among other things, but most people don't care because — by definition — most people are normal: they don't carry $10,000 across state lines; they don't pay cash for everything; they have state-issued identification. They don't care if abnormal people who aren't criminals are inconvenience or oppressed by KYC/AML laws.
You conveniently left out the second clause of the sentence: it’s not good; it’s neutral.
There are three moral valences: good, neutral & evil. ‘Money laundering’ is neither good nor evil, but simply neutral. The things it attempts to hide may be evil, but it itself has no moral value.
That is my whole point: criminalising it makes a crime out of something which is neither good nor evil.
My sense is that KYC hurts individuals who value their privacy and maybe catches some mid-level crooks. The big criminals bypass it without much difficulty. The recent case of Dankse Bank confirmed my opinions about this. Here's a forbes piece: https://www.forbes.com/sites/francescoppola/2018/09/30/the-b...
That’s ridiculous. Identity proofing is required for securities trading, banking, airline travel, car rental, etc etc. Those industries seem to be doing just fine. To say that KYC/AML is the main force behind the bitcoin sell-off is an outlandish leap that ignores literally every other flaw of bitcoin as an “investment” - and there are many.
Ignoring the debate about whether these regulations are a good or a bad thing, don't you think that the fact that "the federal governments of the world" (not sure what you meant exactly by that) are capable of chocking exchanges and harming cryptocurrencies in the process prove that the dream of a decentralized, unregulated currency is out of reach?
Even though the bitcoin network itself is censorship-resistant clearly you're having issues at the interface with the real world. Doesn't that negate a lot of what made CC attractive in the first place?
Not necessarily. It only shows that CCs have not gained enough traction as currencies to deliver on that dream.
The theory is that you wouldn't really need crypto-fiat exchanges because opportunities to earn and spend cryptocurrency directly would turn up everywhere, and eventually crypto would just crowd out fiat because it's all-around better.
Well, turns out nobody really cares about censorship-resistance nearly as much as about getting rich without doing anything for it.
First they ignore you. Then they ridicule you. And then they attack you and want to burn you...
To a certain extent it is up to us to chose what the "real world" will be, and preferring cryptocurrencies over existing objects seems consistent with many contemporary trends and aspirations (decentralized, auditable...).
If it makes you feel any better I have been cut off from my CB account since around the time I opened it, because your ID (for password recovery) seemingly has to be issued by the country you live in. (And their customer support is non-existant). My bad for being unwilling to become a UK citizen for a few steak dinners worth of bitcoin I guess!
I was fighting with them over the same issue for several months in order to get access to GDAX. I finally gave up and used competitors services. I sent pictures (via their webcam tool) of drivers license, passport and green card, and they wouldn't accept any of them. Emails to support detailing my situation were always answered with useless canned responses. I like the simplicity of Coinbase, but their authentication procedure fails when dealing with people who reside outside their country of origin.
Where’s the line ? E.g. If someone asked me for a certified copy of my birth certificate, because of circumstances it would be an enormous slog. Expensive and time consuming.
Does that count as can’t? How expensive does it have to be before it’s reasonable to call it “can’t”?
I think the bar is lower than the semantics of the word imply. Can’t can mean “theoretically can’t”, but also “it’s unreasonable to do”.
Not if it has to be issued in the country of residence, like mkohlmyr reported. For me that would be basically unachievable. Well, I could retake a driving test here, I guess. That’s quite a bar to clear, if you ask me.
I find it difficult to believe that a local identification card is a high bar to clear.
If you live in a country, surely you have some legal status there, which implies some sort of identification, no? How long would I be able to live in London without needing a local ID card?
Welcome to the EU. You know that “freedom of movement” that everyone keeps talking about re Brexit? That’s what this is. I can live here without any limitations.
But actually getting ID, that’s not an EU matter, that’s national. So it’s bound to the UK. Here, after 5 years living here you get to apply for official residency status. 10 years; nationality. But regardless of that you can live here (until Brexit).
So, yes. I’m not making this up. I’m not trying to prove a point out of spite. This is my life, and that of every EU migrant here, that I know.
None of which could be a CB user, if that requirement is enforced.
