That said, this move -- if enacted into law -- will be an incredibly foolish act on the Indian government's part and will act as a catalyst in driving away the next generation of bright young Indian innovators and engineers from the country.
> will act as a catalyst in driving away the next generation of bright young Indian innovators and engineers from the country.
Somehow I doubt there's much of an intersection between "the next generation of bright young Indian innovators and engineers" and crypto miners who care enough or run an operation large enough to justify leaving the country over this.
Banning crypto is just the tip of the iceberg. The administration in power currently has massively damaged the confidence of international investors as well as the citizens in India by taking extremely heavy-handed top-down and often ill-planned decisions. See 2016 demonetization, 2020 national lockdown and the 2021 farm protests.
Also the country is veering towards authoritarianism rapidly, and this bitcoin ban is just a mere symptom of a much much larger problem that lies ahead for India.
I was talking about the 'brain drain' in that context.
I'd be interested to learn more about capital flows documented in the blockchain. Can wallets be traced to countries? Can we get an idea what the flows are into and out of India? My sense is that a lot of the interest in Bitcoin, globally, is driven by preparation for capital flight.
I have asked this previously, asking again, believing bitcoin will become digital gold is believing -
* US will let go of the petrodollar / reserve currency status.
* China will allow a democratic process to control their currency / economy.
* Other developing countries like India will give up the ability to control inflation etc of their own economy.
Do you sincerely believe these are possible ?
Also, if most of mining & hardware required for it is controlled by China and we are buying this digital gold via real currency, isn't a significant global wealth transfer happening to China ?
I don't know if India's decision is right or wrong, we do have a history of taking incredibly stupid "shooting oneself in the foot" decisions, but questions above do bother me.
I don't think that's quite a fair comparison. The US Dollar and Gold coexist just fine. A new store of wealth doesn't threaten the US's economic dominance. Though this is colored by my own opinion that Bitcoin is not and will never be broadly adopted as a means of exchange, but rather only as a store of wealth.
As others have probably already mentioned, Bitcoin's transaction costs are very high and transaction time is quite slow compared to most other transactions. One major exception to this is international transfer of small amounts, though I don't think that's enough to threaten government backed currencies.
Do you think the Roman Catholic Church will give up the Geocentric status of the Bible? Like it or not, political power structures have no ability to impose their preference on rebellious reality.
Governments lost the war against information, cryptography, and money. The most charitable interpretation one can have for tyranny is that if you're going to talk about the tanks in Tienanmen, it's more costly to do it privately.
> Governments lost the war against ... cryptography
I don't think so. The vast majority of people communicating around the world today are doing so through backdoored platforms like Whatsapp or WeChat, and running backdoored operating systems or backdoored processors. Sure, there is a tiny population of cypherpunks who might really have good opsec, but at this point it is no longer a government's "war" against anything: the war is won and some ultra-low-level unrest doesn't change that fact.
While I agree that one shouldn't trust WhatsApp and I don't use it, I don't think it is fair to simply label it as backdoored without further proof. It uses Signals encryption after all, despite its drawbacks (i.e. single-client only or multi-client with a rather bad setup).
By default WhatsApp backs up everything to Google Drive in plaintext. You might turn that feature off, but the vast majority of a person's contacts likely won't.
The only reason why the RCC has "given up" the geocentric status of the bible is that it has lost political power over the centuries, and newer more powerful political entities have ascended in its place.
Political power very much has the ability to impose its preference on "reality". That is exactly why it exists.
won't governments be FOR blockchain tech... i mean, they can track all transactions and TAX them. There are so many unmonitored transactions that companies get away with.
Agreed, but the suggestion that bitcoin is somehow controlled democratically is wrong. Central banks are controlled democratically, more or less. Bitcoin isn't controlled by anyone, it's ungovernable. And no one wants an ungovernable currency (unless you subscribe to some crackpot economic theory).
> I have asked this previously, asking again, believing bitcoin will become digital gold is believing - * US will let go of the petrodollar / reserve currency status. * China will allow a democratic process to control their currency / economy. * Other developing countries like India will give up the ability to control inflation etc of their own economy.
> Do you sincerely believe these are possible ?
"Possible" isn't the word I'd use, but "inevtiable". How long do we think that, for example, the petrodollar will last? 1,000 years? 500? 100? Shorter?
The real question is whether the adults and patriots within the state apparatus will see the writing on the wall and conclude that a better way forward for humanity is due.
I was thinking that India wants to be the new China in tech and manufacturing, this path would not get them there. Capital control would be history soon. Fiscal barriers may not allow innovation to blossom.
At the moment we have real gold and the petrodollar etc. So why does a belief that bitcoin will become digital gold imply a belief that the US will let go of the petrodollar?
Party officials can be very nationalistis, communism forever, death to Taiwan. But their family is in western country and 60% of their assets are out of communist shithole their call home.
In 1933, Roosevelt banned holding gold and silver. In 1934, the Gold Reserve Act allowed the government to set a fixed price for gold and buy out all domestic gold holdings for cash. This remained in effect until 1961 when the laws were relaxed. Then in 1971, the US jumped off the gold standard. Prior to that point, gold was the global reserve currency.
BTC is far less widely owned and far less legitimate than gold was in the 1930s (it actually was the global reserve currency then). The political friction is low for heavy regulation or an outright ban across even developed markets.
My bet is that the green argument will be the first attempt to neuter BTC.
Disclaimer: BTC neutral. I own a small amount, and treat it like an option on a speculative asset.
>My bet is that the green argument will be the first attempt to neuter BTC.
Seeing a lot of seemingly inorganic noise on this. At the same time in the US, we are running a power grid like a country that inherited it from its imperialist colonizers from the distant past with no inherent capability to improve or even sustain it. 650K miles of transmission lines are oversubscribed and there are less than a dozen regional substations that act as an aggregate single-point-of-failure for the entire country. Texas was the canary in the coal mine.
The fact that we're not having the genuine discussion around improving the efficiency, cleanliness, and resiliency of our infrastructure lays the true capabilities of my country and the intentions of those in power bare: we are a declining power managed by corrupt and power mad psychopaths. Bitcoin is the least of our worries - it's actually a symptom of loss of faith in the system.
>The fact that we're not having the genuine discussion around improving the efficiency, cleanliness, and resiliency of our infrastructure lays the true capabilities of my country and the intentions of those in power bare: we are a declining power managed by corrupt and power mad psychopaths.
While I agree that we are managed by corrupt and power mad psychopaths, I'm not sure infrastructure spending (or lack thereof) should lay at their feet.
It is a symptom of our elections that infrastructure and other non-sexy spending takes a backseat to large, mega projects designed to funnel federal and state dollars to localities. Politicians do not set the rules, voters set the rules. And the rule is that stability and planning are less important than flash and PR.
And it's sad, and I'm convinced that this shortsightedness will cause people I know to die from something that could've been prevented (not coronavirus, like cancer or starvation or war).
I agree Bitcoin is the least of anyone's worries from an energy perspective. The politicians just need some excuse to take on cryptocurrency, and the green argument smells like the kind of thing they'd latch onto.
Yes, I understood and agree with your point. I'm adding that it's a distraction from a far more serious discussion and revealing in itself of deeper issues.
I came here to say what you just said so I am glad someone did it more eloquently. I find it interesting how many things recently were rationalized/pushed using environmentalism. I suppose it is a step forward from think of the children.
what is important to remember is that people who ignored the law made a huge return on holding their gold, and people who followed the law lost out
bans are a very strong advertisement for piling into the asset being banned. especially when holders of the asset in question are quite difficult to identify
another related point is that busting regulations is a great way to create great wealth. Dhirubhai Ambani created his first capital by smuggling. the Rothschilds did too – by busting Napoleon's sanctions
make your own conclusions about ways to behave in response to economic regulations ;)
He's being inflammatory by trying to imply that temporary pandemic restrictions are permanent laws banning those things. Everything isn't becoming illegal, society has just decided the lives of our at-risk citizens are more important than a temporary halt to social life.
Gross. "Society" hasn't decided this. A fringe cohort of bureaucrats, skilled at dressing up pseudoscientific police state tactics as public health, have rammed it through against the objection of the most accomplished experts on the topic.
And it's not to protect "our at risk citizens" but to protect our affluent citizens. Since all of the ostensible attenuation of horizontal interdiction depends on resources which poor people simply don't have, the acuity is spread is necessarily wealth-stratified in such a configuration.
And the consequences haven't been "a temporary halt to social life", but death, disease, and misery visited about marginalized and unhoused communities under the euphemistic guise of an "essential" working class.
In reasonable countries these businesses still get at least some compensation. That makes it a temporary restriction, the government would not be interested in paying it forever.
Unbelievable. Is it really worth boiling the oceans? It's critical that we move to text only internet that has a per site cap of 100kb. That would cut the energy usage by 99% with virtually no difference to the experience.
To put things in perspective, a single Bitcoin transaction (transaction, not block), consumes roughly as much energy as driving a Tesla Model 3 from Los Angeles to New York.
But do the trading apps actually transact? When I buy crypto in Robinhood, I really doubt that there is a dedicated transaction for me. Probably RH is buying batches of crypto and “distributes” their value equivalent to the buyers/sellers.
That's my understanding, too. On some (most?) exchanges, you're not really buying Bitcoin, you're buying a balance on that exchange - a right to withdraw or transact BTC at moment's notice.
Given the amount of shady practices, it wouldn't surprise me if some exchanges operated on fractional reserves, being vulnerable to bank runs, a practice that many BTC adherents decry the traditional banking sector for.
Hmm, where do you see that information? I admittedly am not reading the entire article, but this section seems to be in agreement with my original comment. In any case, I'm not sure why we should be excluding energy used for heating from the discussion.
> In 2014, world primary energy supply amounted to 155,481 terawatt-hour (TWh) or 13,541 million tonne of oil equivalent (Mtoe), while the world final energy consumption was 109,613 TWh or about 29.5% less than the total supply.[12] World final energy consumption includes products as lubricants, asphalt and petrochemicals which have chemical energy content but are not used as fuel. This non-energy use amounted to 9,723 TWh (836 Mtoe) in 2015.[13]
The article says a bill has been introduced in the legislature. That there might be a disagreement between members of the legislature and the ministry of finance seems entirely plausible to me.
There is a video online from the Finance Minister's talk with Rahul Kanwal in India Today Conclave 2021.
Her words were that they are preparing a note to thee Cabinet on it. The cabinet will then take a call and then propose it to the legislature as a bill.
It is still in early stages, but if Nirmala Sitharaman's words are any indication, they seem to be contemplating allowing crypto currencies to circulate in a regulated manner. Balajis mentioned that crypto could be treated as a foreign exchange currency. You can hold, for example, USD as an Indian resident, but it is not legal tender for exchange and is taxed (not sure about this) if you use it for the purpose of trading.
Germany also treats crypto as private money, not as an asset/investment to be paid capital gains on. I think this is a nice, legal alternative for crypto.
Untaxed, illegal transactions for large sums are a big problem in India (especially in Real Estate/property markets), so the govt. is trying to walk a fine line in regulating without killing the crypto market.
One interesting advantage of crypto to India would be that it will allow India to bypass USD and SWIFT , and whatever scheme China cooks up in the future. This will really dent the ability of the USA to abuse the Dollar's status as the reserve currency to stop printing tonnes of money and raking up public debt in the long term without facing inflationary consequences.
>>Untaxed, illegal transactions for large sums are a big problem in India (especially in Real Estate/property markets)
PAN cards are mandatory for registrations in Karnataka State for more than 15 years now. And everything is already digitised. The government knows who is buying what.
Real estate gets a lot of bad rep for no reason. This was the biggest revelation in the immediate after math of demonetisation, people were expecting the real estate market to crash totally, it just didn't happen. The assumption was it was all done on black cash and demonetisation would bring down the whole pyramid. The market barely moved. People realised the hard way contrary to what they believed most transactions were genuine.
Recently due to the COVID remote work phenomenon the Real Estate market was expected to crash. That didn't happen either. People capable of buying properties never left Bangalore(Access to Schools, Career opportunities, hospitals etc reasons). The people who went back, are now returning.
That's a misreading of my comment. I was just pointing out the fact that the minister of finance expressed opposition to this does not make the story "fake news"
I think I did a poor job of stating my understanding of your comment.
I was pointing out that the proposal of a bill does not mean it will get passed nor that the majority of the legislature supports it. This is similar to how you were pointing out that the finance minister disagreeing with the bill doesn't mean the Indian government is fully against it.
The ruling party has all the necessary votes in the legislature to do whatever they want. There isn't much friction within the party about small potatoes issues like this.
These restrictions will be more common among developing countries. This is legitimate financial regulation and has nothing to do with bombastic statements by some media accusing the Indian govt of overreach
Most developing countries are at a high risk of capital flight by the rich and hence they regulate foreign exchange with Capital controls.
India already has a cap of USD 250k limit on capital flight by individuals.
Nowadays bitcoin is a common method to escape capital controls.
This law will prevent capital flight by the rich which they earned with the patronage of Indian citizens and escape reinvestment locally
The fact that it functions as an effective funnel for capital inflows is probably why the West keeps it legal.
If it was instead used to suck wealth out of the US it would be criminalized yesterday.
There was a mirrored double standard with tariffs. The US wanted them eliminated until China started reaching and surpassing technological parity at which point it couldn't put them up fast enough.
> suck wealth out of the US it would be criminalized yesterday.
until the USD is not the dominant reserve, USD themselves is considered wealth. You cannot suck wealth out of an infinite fountain.
So the time when the US gov't would institute such controls would be if China's dominance continues to grow, until chinese currency (whatever it may be - digital or fiat) is the new reserve. Because USD at that time would have become worthless.
I don't see the hypocrisy here? Were western countries ever against capital flight? This is more of a case of "x doesn't affect country, therefore it's not banned" which isn't really hypocrisy.
They actively use IMF as a tool and their own trade policies as avenues to force smaller countries to to remove or not implement capital controls although it's disadvantagious to those respective countries. US has policies in trade regulations that restricts/limits dollar clearing in countries that implement some capital restrictions. Ofcourse US has the right to their own trade policies but asking for countries to do this or that which are against their interests is called hypocrisy.
>but asking for countries to do this or that which are against their interests is called hypocrisy.
No it's not. The definition of "hypocrisy" from wiktionary:
> 1. The contrivance of a false appearance of virtue or goodness, while concealing real character or inclinations, especially with respect to religious and moral beliefs; hence in general sense, dissimulation, pretence, sham.
> 2. The claim or pretense of having beliefs, standards, qualities, behaviours, virtues, motivations, etc. which one does not really have. [from early 13th c.]
> 3. The practice of engaging in the same behaviour or activity for which one criticises another; moral self-contradiction whereby the behavior of one or more people belies their own claimed or implied possession of certain beliefs, standards or virtues.
hypocrisy requires some sort of contradiction between the actions of the entity, and the belief that it espouses. The US urging countries to have free trade, while also having free trade policies isn't hypocritical, even if free trade is against the other countries' interests. On the other hand, the US urging countries to have free trade, while simultaneously implementing anti-free trade policies themselves (eg. tariffs) would be hypocritical.
This law if intended for capital preservation is solely aimed at the middle class, the rich already have means of moving their money out. Panama papers and Swiss Bank fiascos proved that well.
India's iron handed squeeze of the middle class via insane policies is already causing a massive brain drain, the government seems either too stupid or willfully ignorant in recognizing the insidiousness of this issue.
It seems unlikely that talent is leaving because moving money out of the country is hard. Where would they move to? The simple explanation is income and quality of life is higher in richer countries. The vast majority of emigrants don't have entrepreneurial ambitions.
Bitcoin allows you to effectively arbitrage electricity price differences between the West and the developing world.
Which previously would require some kind of capital intense activity like Aluminium Smelting - which at least would promote development of local infrastructure, industrial capacity, and skills.
Bitcoin mining does none of that - local efforts to make electricity more affordable for local usage and business (ie. subsidies) are basically monetised.
In addition many countries like India have problems with illegal electricity usage. The shortage of GPUs and general computer chips (how much of TSMC output goes towards mining machines?) is also negatively impacting supply chains, particularly for countries at the very end of them.
Crypto mining is hugely disruptive and harmful to developing countries, and these bans are completely justified.
I understand that the US and other Western fiat currencies are being run into the ground to fund pension obligations - but you can just buy Apple or other blue-chip stocks if you want a long-term asset.
Additionally, in places where there's loads of green energy, crypto mining captures excess energy and discourages innovation in energy storage.
Rather than electricity prices being driven down by more green production and storage, there's this floor where it's better to just convert the energy into blockchain coin flips and heat.
> These restrictions will be more common among developing countries
If BTC ever becomes a threat, developed countries will not hesitate to make moves.
In 1934, the Gold Reserve Act prevented Americans from holding gold which was the global reserve currency at the time and universally considered hard money.
I have a feeling BTC will be a little easier to regulate.
> In 1934, the Gold Reserve Act prevented Americans from holding gold which was the global reserve currency at the time and universally considered hard money.
And to a very little success. People hoarding gold in US scored millions, at the expense of a average Joe gold buyer.
I believe the parallel is very relevant here. People buying bitcoin retail, and mining at gaming video cards are only a fodder for bigger fishes today.
I think its more likely to prevent capital flight by the middle classes than the rich. The rich always can and always will circumvent legislation anyway and dont need bitcoin
I really don't think these types of restrictions will succeed in western countries when you have people like Elon Musk and Jack Dorsey heavily involved.
If crypto only had the underground attention it had 5 years ago, maybe.
Capital controls are necessary to prevent complete failure of the financial system of developing countries due to hyperinflation where the rich can extract the maximum from the economy and runaway by investing in foreign economies. This is acceptable at a small scale but can cause serious issue if scaled up. The only countries that are safe from this are developed countries with reserved currencies like USD or are resource rich like Saudi Arabia
.
US doesn't need capital controls because their currency is treated as a reserve currency and the buffer to prevent hyperinflation is very high
Unfortunately most of the audience here has no experience with the situation you're correctly describing.
I find it both funny and a bit frustrating when people try to impose standards from wealthy developed countries on the developing world without further critical thought. Just because it's not a reasonable measure for your situation doesn't mean it's not a reasonable measure in a different one.
No. Audience here just skews heavily towards personal freedom of movement and that movement happens to include movement of money. Collective HN mind, if there is such a thing, abhors restrictions that it perceives could impact its freedom.
And frankly, personally, I do not really care what my ruling class thinks is best for me. I will figure it out on my own, thank you very much. I have seen the job done so far.
> Audience here just skews heavily towards personal freedom of movement
...and said audience coincidentally happens to mostly live in places that actually have that freedom of movement. On the other hand, I, my passport that can take me basically nowhere, and the awfulness of visa acquisition know very well that "freedom of movement" is already a joke. And I remain extremely sceptical of the opinions of people from countries that are not impacted by brain and capital drain (and which, in fact, benefit from it) on situations like this.
As someone who also lives in a country heavily affected by brain drain, I put in very high regard the freedoms enjoyed in those countries you choose to ignore, because it's the lack of them that causes the brain drain.
Skilled professionals and investors are reluctant to invest their time/money in a country that taxes the crap out of them without giving much back. Excessive protectionism and high costs of living punish the people that can move the country forward just to prevent stagnant industries from suffering an inevitable blow for a little longer.
“But if we remove the tourniquet the person will bleed out!”
....
Okay, you’re right. Perhaps we should ask instead, why do we need the tourniquet? What conditions were put in place that capital is attempting to leave?
Money goes where it’s safe and it can grow.
The Berlin Wall was the monetary equivalence of a capital control.
> “But if we remove the tourniquet the person will bleed out!”
This is an amazingly apt analogy, just not the one you think it is.
Sure, you can debate about how the person should/would never have been injured in the first place if everybody involved in the situation did everything right. But they are injured, right now, and they will die, right now, if they're not provided with first aid and further medical attention - and until the patient is stabilised, those lofty questions are useless pontifications.
Except it's not just one person at risk. It's millions and millions of people and their livelihood.
Leave a tourniquet on for far too long and you risk losing a limb. And a limbless person will have a much lower quality of life. Likewise with capital controls, it might serve to treat the problem now but it does nothing to tackle the causes and all you're doing in the end is consolidating power for an authoritarian government and crippling your economy for decades to come.
As I have already mentioned, a person that's bleeding out requires first aid [now] - which the use of a tourniquet is a part of - and further medical attention.
Emphasis on the further medical attention, because they will simply never be able to get it if first aid is not applied. This is the exact reason why first aid exists, even though it is often technically destructive (e.g. properly administering CPR runs quite a high risk of breaking the patient's ribs).
> And a limbless person will have a much lower quality of life
A person who has lost a limb is alive, and (I digress) the hand-wringing that abled people do over the quality of life of the disabled is a bit weird.
"I'm nowhere near a hospital yet but this tourniquet has been on for ages so let me take it off and continue freely bleeding out" is frankly a foolish decision for anybody to make.
Capital controls merely treat a symptom (flight of capital) instead of treating the disease (a faltering economy) and left on for any period of time only leads to further consolidation of power to the ruling class, at the expense of the rest of the populace.
But then how do we fund all these populist measures in our LARPing as a first world country making lavish expenditures to improve QoL? Do you hate people who can't afford XYZ?
This.
Anyone arguing for globalization should support free movement of goods, services and PEOPLE. Otherwise, one is just attempting to distort the system to their advantage.
Unless you are for free movement of people as well, you can't honestly argue for application of monetary policies of the developed economies to the developing economies.
> * To prevent a global race to the bottom on wages and working conditions.
This is pretty much like saying that abolishing the privileges of aristocracy and clergy would have reduced everybody status. It was only true from the point of view of someone holding a title.
Our current Western wealth and working condition are the result of centuries of colonialism and exploitation for the rest of the world which continues to this day. The only reason you could technically afford to buy clothing wear them once and then discard them is because they are effectively produced by slave labor somewhere out of sight.
The remnants of colonialism are still there in the form of the WTO, World Bank and IMF.
If capital controls benefitted ex colonies the IMF wouldn't threaten to withhold western investment from democratically elected governments if they didn't eliminate them.
>>Most developing countries are at a high risk of capital flight by the rich and hence they regulate foreign exchange with Capital controls. India already has a cap of USD 250k limit on capital flight by individuals.
Anybody who owns a legitimate business in India has no reason to do this.
The only people in India who could do this are bribe makers, and the ecosystem around that. And those people already have means to not just park that money some where(many times outside India), but also whiten it at will.
The bribe makers already park money in gold, lands(in the names of relatives). In cities lots of Ola/Uber cars are owned by bribe makers and then they get some one from native places and get them to drive it for a share in profit. You will be surprised how that money is invested. Building a hospital/hotel? Put a word out, people invest in as little as a hotel/hospital room in return for some rent. There are even stories of people buying Green Cards for their siblings, relatives etc.
This is illegal collection. The legalised corruption goes really really deep. There's reason most government housing colony plots are generally owned by people who are in civil services or in some way connected to them.
Coming to capital flight. There was recently a number of ponzi schemes in Bangalore, in the name of Islamic Sharia investments. A number of firms came down, and investor money in literally thousands of crores was laundered. A famous one was called the 'IMA Scam'. The owner has luxury palaces in UAE, and apparently has gold in underground warehouse vaults outside India. He was arrested but is out on bail for medical reasons :)
When people say there is some $250K limit on these things I burst out of laughter. $250k, which around 2 crores is likely a single day bribe collection of a sub registrar office in anywhere in Bangalore.
>>This law will prevent capital flight by the rich which they earned with the patronage of Indian citizens and escape reinvestment locally
'The Rich' don't even get their money to India. The big businesses, including the big IT services firms, only get as much money to India as much as they need to run operations here. This is why every time the dollar gets stronger IT services firms get richer. So do the investors. Most of the business is run on rented campuses, and apart from the core businesses you contract most of your work to local companies. So it's not like the big businesses hoard a lot of money in INR.
Nobody is actually that stupid to legally bring their billions into a country from which they can only take $250K back.
Lastly the only reason I see, and I don't think its malice. But I think it's 'new tech phobia'. The established order of society doesn't like disruptive stuff. That's pretty much it. In 1980s there was once a Bharat Bandh called in India when Rajiv Gandhi introduced computers.
>Anybody who owns a legitimate business in India has no reason to do this.
Really? So none of the rich folks in India send their kids to college in the US or Europe? None of them own homes or boats or cars in those countries? They have no reason AT ALL to extract capital from India besides bribes?
While I won't even begin to try to claim India doesn't have a ton of issues socially, trying to claim anyone moving capital elsewhere made the money illegally seems like more than a bit of a stretch.
But your comment made no mention of scale. You said anyone moving money was participating in illegal activities. Now you're just trying to move the goal posts.
If you're going to make definitive statements like:
>Anybody who owns a legitimate business in India has no reason to do this.
>The only people in India who could do this are bribe makers, and the ecosystem around that
Then you better be prepared to back them up or apologize for making broad statements that you have no intention of standing behind.
these kind of government overreach is one of the reasons why capital(regardless of its size) has an insensitive to leave those countries, it's just that expenses to leave are more or less fixed, so its easier for rich people to afford it
"Even China, which has banned mining and trading, does not penalise possession."
I wasn't aware that China had banned mining. Whenever mining crypto is brought up, often people say that most miners are in China using hydroelectric power.
Not sure why you bring up authoritarianism with that argument. It's the same everywhere, authoritarian or not. Or are you saying that having a authoritarian system automatically leads to more "everyday things" getting illegal?
As someone who lived there for more than 10 years. There are a lot of "grey areas" in China, much more than in other countries. Many things are considered illegal but still tolerated.
I actually like this feeling and most expats do as well but I believe this way the government almost always have control over individuals. If they want to find something to arrest you, they will find something.
I'm going to guess here, but I think because in such a system anything is allowed till you don't bother the government. And if you think about it, unless you are part of a group disliked by government, most things you want to do doesn't bother the government. It's actually easy to live a "normal" life, because most people don't belong to a group disliked by the government.
We like the feeling because often, even if it's not explicitly said, there is a hidden way to obtain what you want.
In Europe, if an administration/company tell you no, there is often no negotiation, no way to get what you want.
In China, often, if you master social tricks, you will be able to obtain it.
(Not the op) in such environments where the government doesn't usually care about you, you have more freedoms in practice but they are not guaranteed [1]. In the west you have more freedoms that are guaranteed, but I would say less freedoms in practice as government loves telling you what you can't do all the time. It's a mixed bag either way. People have different preferences.
[1] You could say it's not a freedom unless it's guaranteed. That view is not universal. Freedom in practice trumps freedom on paper for a lot of people.
Such is life everywhere, although some places have it more than others. European countries have small amount of grey areas if you compare with South America for example
Yes. Governments that maintain their authority by oppression (as opposed to obtaining a mandate from their population) have a strong incentive to create an environment in which its easy to imprison people for things. This is quite basic stuff and I had thought it was widely understood.
Authoritarianism is defined by a lack of political pluralism, i.e. multiple parties, political mobilization and free voting. Nothing of this is part of everday things.
no, authoritarianism is defined by authority taken by the political option in charge, paternalism, fearmongering etc. being the common pretenses of expanding this authority
The trading ban is honestly good for India, crypto so far doesn't generate any profits, only losses. Any individual profit must come at the expense of someone else's losses + mining on top ensures it's a giant loss-making ponzi. Early adopters are overwhelmingly Westerners, Indians buying in now would create a net transfer wealth from India, and India can't afford it. Stated differently, crypto has a negative expected value - it destroys wealth.
Once that changes and (some) crypto starts to generate genuine profits reversing the ban would make sense, but until then, let Westerners with more money than they know what to do with play ponzi games with each other. In the West even losing everything is an inconvenience in the grand scheme of things - there's ample food, jobs and welfare. Being poor in India can mean you actually starve to death [1]
Regulating the Indian economy is like squeezing a water balloon - whichever direction you squeeze from, you only make some other part fatter. If this ban went into effect, average people might comply and divest from crypto, but wealthy opportunists will always find a way to subvert government regulation through bribery and political connections.
Look at demonetization - people with large amounts of illicit funds would bribe bank managers to create thousands of new accounts in their name, to overcome the reporting/exchange limits. The aam aadmi (Hindi for common man) ended up with the short end of the stick, as the cash supply dwindled and people had to spend hours waiting at the ATM.
In many cases I would agree with you, but I encourage you to read about demonetization in India, as that is a good example of how regulation produced a worse outcome because of the unique forces at play within the country.
The people that hold assets and resources have things their way and face less consequences than those that don't. Always was the case, always will be..
This is certainly true in every country, but especially so in India. It doesn't matter how rich you are in America, you can't get away with serious crimes like murder (especially if there are witnesses).
In 1999, the son of a powerful Indian politician publicly murdered a bartender in cold blood with many witnesses. He was only convicted in 2006 after a massive media uproar, and was released from prison last summer.
I can't think of an example of someone in America who bought their way out of a murder they committed in a crowded nightclub with many witnesses. I don't mean to minimize your valid point about wealthy people buying their way out of trouble, but the magnitude of this problem is far greater in India.
I am not sure that the mention to China is accurate, see [0].
Perhaps they're confusing the whole China with one of its regions, Inner Mongolia? [1]
Edit: by the way, it seems to me that this is the key part in the article:
> The measure is in line with a January government agenda that called for banning private virtual currencies such as bitcoin while building a framework for an official digital currency.
I'd read this as India trying to pave the way for a huge adoption of its local digital currency, and therefore banning other crypto might be seen (by govt officials) as the way to go.
On one hand I can understand and relate why a government would implement such a ban. On the other I am really curious in which legal frame you can justify “doing math calculations on your computer is illegal” without destroying personal freedom and liberty. Bitcoin is a real curveball
This is straw manning my point. Calculating hash functions is literally doing calculations on my computer and no it’s not cooking drugs and has nothing to do with drugs.
How is it a straw man? It seems an apt analogy given your critique of the ban: it does not matter the implementation details, if society deems some behavior against the public good, then there will likely be an intervention if the enforcement of such seems feasible.
It does not matter whether it's just some math or signals on a computer - torrenting CP is just "doing some math" on your computer, but it is similarly banned.
You could calculate hash functions with pen and paper as well. It may be somewhat slow but once you get the hang of it you could calculate a couple hashes a week.
Should we ban pen and paper problem solving? Who is to decide which numbers and operators are public good? Is math in its entirety blasphemous?
Although comparing pen and paper calculations with the greedy wasteful world of bitcoin mining is ridiculous, I think it’s less ridiculous then associating anything you don’t agree with drugs or any other boogieman argument.
Law and ethics are not as clear cut as you are trying to portray. Nature and ecology are precious but so are Personal freedoms. They were not given to society, they were earned with blood and tears and they’re equally precious.
You could transmit and decompress child pornography in hand inked, hand computed base 64 as well, and even though I don't think there's been such a case, I'm sure the courts already know what types of distribution and computation of information is illegal.
Unless this is some suggestion that banning CP is a slippery slope as well, there's clear precedent for banning certain things that computers can do which doesn't cause the entirety of mathematics to become heretical.
Both perhaps, I won't try to pretend I know what the Indian legislature is thinking, but the collective harm it might be doing was not the question the root comment had asked - it framed that computation in-itself needed a moral justification to be deemed illegal, which is much more broad than the narrow task of mining bitcoin and would include math operations on computers that are currently illegal, such as distributing child pornography.
The commentator then called a critique of that lens a "strawman", despite CP and many other computations (see other comments in the thread) already being illegal.
Everything you do digitally can be reduced down to "doing calculations" and some of those things are already illegal (and with good reason). There might be some good arguments in Bitcoin's defence but this isn't one of them.
Not saying that’s good, but that’s already done since a while with encryption key (https://en.wikipedia.org/wiki/Illegal_number) and encryption systems (the US restricts export of cryptography). A legal system doesn’t care that much about all the technical details when they can deal with the abstraction directly.
This will get you nowhere. Already, Monero successfully employs general CPU-s for its PoW. Bitcoin could switch to another PoW algorithm if critically necessary. Decentralized cryptocurrencies are beautiful hydras.
This will be an interesting case study in what happens when a government goes head on against cryptocurrencies. This will lead to some interesting innovation in the space. There are too many cryptocurrency users and believers in India at this point.
We will see some interesting P2P exchange platforms where anonymity becomes paramount.
To "propose", as said by a "senior government official". So basically this is a great way to crash the market a bit, buy the dip, and then nothing will ever come of it. Just like the first few times they did this. Clever. The media will, of course, report it, the market will, of course, crash, and these government officials will make some nice money.
Imagine the day we have to explain to the next generation that they live in a climate hellscape because the world decided to burn fossil fuels to collect digital beanie babies, instead of saving the world.
That's two people very angry at crypto energy consumption I see in the same week.
I find the emotion quite surprising.. I don't see the same amount toward other forms of pollution. Consumerism is also a bit absurd these days and global trade is a large producer of CO2 too.
Now I find the crypto world a bit absurd and surely if they could kill the energy requirements then good.. but climate change is certainly not a consequence of btc miners.
The difference is that proof-of-work is intentional waste of energy, rather than incidental.
Take your favorite evil mega-corporation: If you can offer them a way to perform the same task using half the energy, they'd immediately jump at the opportunity.
Bitcoin miners, on the other hand, would just... mine twice as fast, consuming exactly the same energy as before.
>Take your favorite evil mega-corporation: If you can offer them a way to perform the same task using half the energy, they'd immediately jump at the opportunity.
> Bitcoin miners, on the other hand, would just... mine twice as fast, consuming exactly the same energy as before.
Both situations are the same, in your first example the mega-corp would just use the increased efficiency to produce more and sell more of whatever they sell, as long as there was demand for it.
Pretty much any energy use has externalities though.
I agree that in a democracy we all have a say in what we allow or not, but let's stop with this constant narrative that killing cryptocurrencies would significantly help with stopping climate change, it would barely make a difference, there are much more important things to focus on if that's really your goal.
Very true, mining is nowhere near the top of any list of climate concerns.
But I feel like addressing it as a problem now rather than a few years down the road might be a good idea. Socially and politically normalizing the idea of intentionally wasting energy in exchange for financial gain seems like the wrong signal.
not every issue can be democratically decided. I am a proponent of market forces - price into energy all externalities, and let those who find the cost worth the result decide.
There are many things to like and not like about crypto and this is a biggie. The Bitcoin energy impact is huge compared to it's real-world utility, which plainly, is zero as other systems exist that can do the same things more efficiently. Any crypto enthusiast should dump bitcoin for any proof of stake coin. It has the brand recognition, but it cannot possibly last.
How much energy does watching porn consume? Playing video games? Watching a movie? Browsing Facebook? Using a ski chair? Visiting an amusement park? Going in vacation? Cooking your favorite type of food? Making ice cream? Driving to your friends? Listening to music? Concerts? Having a party? Banking? Casinos?
As a species we use energy to meet our goals. Those goals may be situated anywhere in our hierarchy of needs. Some are essential, some could be considered trivial. But they are all important for their consumers.
Bitcoin is now considered by some important for our future finance system. While not everybody agrees, this may be more important than countless other ways we use energy, for much more trivial reasons.
Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
Bitcoin is considered by nearly zero of anyone of any actual note to be important to our future finance system.
1. It has not succeeded in becoming a valid currency as it is a technology attempting to solve a social problem.
2. It is held as digital gold with rapidly changing value
3. It is literally nonsensical as a future currency system due to the limits of mining as it couldnt possibly keep up with daily money use unless you had way more mining activity that would cause it to cost far more than existing systems to do transactions
Here is the thing: All of the things you mentioned have a path to efficiency, Bitcoin itself does not. Eth, maybe! BTC, no. Here is the other thing: At a global scale, m Bitcoin would use more energy than everything you just described combined globaly. It's a climate-bankrupt technology solution looking for a problem it is not equipped to solve. Crypto in some form may work, but this will never work.
> use more energy than everything you just described combined globaly
Pretty sure you're orders of magnitude wrong about that.
Also there are very specific, actionable and already growing things on the roadmap to sustainability:
- Green energy/proper carbon taxing of energy production
- Lowering of block reward to stabilize the transaction fee and find the proper price, with relation to how many miners we really need vs how much people are willing to pay for transactions.
- L2 solutions making bitcoin a payment network and not only a store of value. Like Lightning network which works today, as we speak, is stable, and is still only going to get better and better because it's very early in the lifecycle of that technology.
> Bitcoin is considered by nearly zero of anyone of any actual note to be important to our future finance system.
How can you even be honest with yourself with that line, when it nowadays rarely goes 3 weeks between each consecutive All-Time-High? What is your theory behind that?
This is the worst counter argument I've read on HN yet. Bar none.
You seriously want to equate all these numerous example of entertainment, joy and satisfaction with some useless crypto "currency" that literally doesn't do anything and could be replaced by hundreds of other crypto currencies? Seriously?
> useless crypto "currency" that literally doesn't do anything
You are very disconnected from reality of millions of people. Can you not try to see that? Can you not respect their opinion and their values? Do you just consider your opinion of Bitcoin the valid and truthful one?
How exactly is that different from someone who hates porn and calls it "useless time waster that doesn't do anything"?
Yes, this is such a disingenuous argument when people say PoW incentivises to use more electricity. It doesn't care about electricity, at best.
Also the specific Bitcoin model even incentivises to use less electricity, because for each additional miner that is connected simulateneously, you actually get less paid per GH/(and thus kW), so at a certain point you would just not get paid anything for your electricity.
I think the point that the energy needed for mining is artificialy by design hihg/inefficient. As I understand some other coins are much more efficient.
Which is an entirely subjective position. You could argue that porn is not only useless, but also harmful. This is the same logical question for any use of anything.
I don't know if you have noticed, but people actually make use of Bitcoin as well. Just because there are some speculators doesn't mean that there aren't millions of people using BTC and sending transactions every day. Also the fact that USD/Visa is much bigger right now, doesn't either mean that there aren't millions of people who use crypto.
This is a very important question. But shouldn't we be asking this of every company and every consumer of all electricity everywhere? What does it have to do with mining. This has to do with electricity production, its regulation and proper taxing.
I have a hard time believing that they pay an appropriate price on any scale. Mining is highly portable and miners will locate their stuff to wherever they get the lowest rate. I would not be surprised if the electricity that miners are running on is government subsidized.
The worst thing is that it’s not even “the world deciding”, so far the Bitcoin community has been quite small. Just a small group of hyper enthusiasts seem to be enough to create disastrous effects.
You can have a very small (in relative numbers) community deciding for the rest of the world that dedicating all our energy to making them rich is the future and so far we don’t seem to be able to say “no”.
Proof of Work has been a horrible poisoned gift to the world.
> The problem is that intentional carbon emissions (as opposed to incidental ones) have not even been a thing in the past.
What about Bitcoin makes it more intentional than any other industry? The product is proof of work, not energy wasted. That's why miners keep making their machines more efficient at producing proof of work instead of simply building larger power supplies and electric heaters.
There's also nothing in Bitcoin that makes it favor fossil fuels over green energy.
Better yet, imagine explaining to them how a couple politicians used to control money supply based on their whims and how the gov kept bailing out endless speculation losses on wall st.
> Bitcoin doesn't. We can ban bitcoin tomorrow, and not a single person will be seriously inconvenienced, other than speculators.
Sure, let's also ban all motor racing, tourism, recreational shopping, etc. It's a big waste of resources and it'll only inconvenience the people that care about those things, but they can still live their lives so it's fine.
Your phone is highly specialized and efficient. Coin mining is a noise parade and heat monstrosity that grows up to the limit of how much power it can draw at affordable rates.
I have run billion dollar datacenters. They are dwarfed by small mining operations in their heat production and power consumption.
I don't understand how what you said is in disagreement with my claims. Yes, miners try to use their machines as much as possible, like any other business, but they still try to it as efficiently as they can.
Undervolting chips to increase efficiency is quite common, for example.
And my phone is not very specialized at all, when compared to a mining ASIC.
That’s because you stop at the first level instead of exploring the effects of 2nd, 3rd, nth order. Or you do not understand the business side of miners.
Miners make money by generating hashes. The more computing power the more hashing power you have. The value of expected rewards determines how much you will be willing to spend on the mining operation. Let’s say you have a gain of 10% efficiency, meaning you spend 10% less on your expenses while winning the same number of rewards. So what is your incentive? Is it to stay like this and be happy that you saved some energy? Of course not, you will spend these extra 10% to gain more rewards. And now your competition also has to up their game.
By design, the higher Bitcoin price is, the more energy is worth spending on Proof of Work. More efficient hardware doesn’t change that fact. It’s by design not sustainable.
If a factory increases efficiency by 10% it will simply produce more of whatever it makes as long as there's demand for it. And then other factories have to up their game.
Also the higher the price of the product the factory produces, the more it is worth spending extra resources producing it.
And of course this isn't limited to factories, it's true for businesses in general.
What is special about mining is that energy is just about the only resource it uses, so it's more obvious, while a factory might be bottle-necked by other resources like floor space and a software company might be bottle-necked by how many programmers it can hire/manage. Miners are similarly limited by how much mining hardware they have or are capable of managing.
Absolutely. But I just want to remind the group that not all crypto relies on mining! And not all crypto is about chasing fads like NFTs. I believe the world (some parts more than others) will need a decentralized means of exchange in the future. I personally am betting on Nano, but others are also promising.
I think dang has also talked about how "controversial" comment sections in posts causes them to be deranked more quickly, and with this having as many comments as points within an hour, it certainly seems like it'd meet the criteria.
"Instead, the bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied, said the official, who asked not to be named as the contents of the bill are not public. " - Its better to wait for an official statement than these speculative journalism
The Indian government is quite a bit more powerful than Nigeria, unfortunately. They are very efficient in enforcing laws that impede on citizens' liberties.
For example, the government will simply disallow any crypto exchanges from converting between ₹ and any crypto currencies. That will deter 99% of the potential users from ever trying it out.
Just wish they would get on with a complete ban or whatever instead of sending rumours in news every couple of months. What competent government takes this long to do something that they already have declared multiple times through news channels?
It's almost like they are just setting up honeypots in the interim for later on surprise raids.
It seems like competent government would put a crypto-ban as part of the climate accord.
If you look at this from bullish bitcoin perspective, the large energy use is good for the climate as it will make people invest more in cheap renewable and this innovation will spread around. I find this argument to be tenuous at at best, but lets say it's true. It doesn't matter, what matters is that people view as an environmental problem and there is a perfect avenue to globally ban PoW, and even ban any crypto that use PoW, in a way the most people will go along with and view as helping them and not squashing the people's financial liberation or whatever we are calling it this week.
Some countries may not go along with this, I think Pakistan and some others, but if enough large countries(It's easy to see China, EU, USA, all jumping on board) say we are not doing this BTC will be pushed to the fringes and easy to be manipulated by state governments.
At least this is what I would do if I were a government official who was actually worried about crypto challenging the governments power, but must governments do not seem too worried about it.
I might have missed it, but the article doesn't really seem to touch on the why of this. I get that they're thinking about launching their own digital currency, and might just want to be rid of potential competitors, but is there any other potential reason for it?
I recall back in the 90s there was a huge influx of "Indian" gold into the "West". It was identifiable from it's high purity and almost orange color, it was being carried out as jewelry and converted into real estate for the most part.
My point being, as long as there is a will to move wealth, the holders will find a way around any restrictions imposed by the state and infact restrictions usually create whole industries based on Enforcement of, and Evasion of state imposed restrictions.
> I get that they're thinking about launching their own digital currency, and might just want to be rid of potential competitors
A state wanting to continue to control currency, taxation etc seems like a fairly predictable and compelling reason though. It would be interesting if that's not the reason, but I don't think that we need to search hard for one.
> the article doesn't really seem to touch on the why of this
Turning this around, why _would_ a country want to allow people to make anonymous(ish) large digital transactions? This is the same government that outlawed some bank notes in recent memory.
"Top Indian officials have called cryptocurrency a “Ponzi scheme”," probably has something to do with it. CNBC as well says "The measure is in line with a January government agenda that called for banning private virtual currencies such as bitcoin while building a framework for an official digital currency." [1]
However, I can foresee electricity rationing (not in India but here in EU) after mismanaged transition to renewables. Both rolling blackouts and spot prices are unpopular...so what else is left when there's not enough baseload?
I warned about this a few weeks ago, and people were skeptical. But sadly “in retrospect it is inevitable”. Where is the flaw?
https://news.ycombinator.com/item?id=26220992
Let me refine my prediction to describe the transition period. Bitcoin will actually deepen inequality in the world, by robbing the third world countries of electricity first, and no one in first world countries will care. The politicians of the third world countries would be paid off similarly to how Nestle or CocaCola buys up lakes and pollutes them. And privately owned infrastructure and lakes will fall even faster.
so AI, VR, autonomous driving are all solvable problems and worthwhile pursuits while sustainable Bitcoin mining via harvesting thermal energy isn't? oh okay.
This is so sad. The opposite of what I'd hoped would happen... that the third world's failing currencies would make people there get into crypto first and end up benefiting them the most. Instead, the whole of crypto seems to be a 1st world number go up phenomenon.
I'll still be pushing Bitcoin Cash as a solution to people in countries that don't ban crypto.
I don't think our currency qualifies as a "failing currency". The ₹ is quite strong, the people's trust in the government is quite high, and there is no need for citizens to run to other currencies.
As an example, the government outlawed all the cash in the country in 2016, with 4 hours' notice. This basically rendered 1 billion people helpless. But people still voted the for same government back in 2019, with an even greater majority.
Finally, some sense.
Bitcoin is ridiculous and encourages global warming. Basically fueling global destruction with greed.
Governments needs to issue their own crypto currencies backed by central banks and make it illegal to privately issue coins. There are many cases in history printing money by groups against the states and it usually ends badly.
Meat and cars contribute to climate change but also provide solutions some of the biggest problems that humanity has had historically - food and transportation. Bitcoin doesn't have the same upsides.
Good luck. Hopefully when BTC use is unchanged in the face of the ban people will see it's true power as a tool the current ruling class can't control so easily.
I have no problem with this. Currencies are not trivial things. I'm fine with bitcoin staying underground. The only way for anybody to trust a currency is to have a government regulate it.
Authorizing crypto exchangers without tight regulations opens the door to money laundering:
Here's the link to the post made earlier: https://news.ycombinator.com/item?id=26460907
That said, this move -- if enacted into law -- will be an incredibly foolish act on the Indian government's part and will act as a catalyst in driving away the next generation of bright young Indian innovators and engineers from the country.