I still cannot understand how crypto advocates genuinely think governments will roll over and let cryptocurrencies take away one of the primary powers of the state: minting and control of the flow, supply, and thus value of the currency. Ironically, to me, crypto seems to already assume the utopia it aims to usher in (namely, the one in which decentralized currencies are legal and valid).
Also the idea that we can bully or criticize governments into adopting crypto by calling the ones who don’t “tyrannical” is especially naive and hilarious to me. By virtue, the truly tyrannical do not care about being called such.
> let cryptocurrencies take away one of the primary powers of the state: minting and control of the flow, supply, and thus value of the currency
I think crypto proponents have exaggerated the threat that cryptocurrency poses to government controlled currencies. The narrative plays well to audiences that distrust institutions and want to be early adopters of a new cryptocurrency paradigm (in which they would be at the top of the wealth spectrum), but the reality is that cryptocurrencies are additive on top of existing currencies, not replacements.
In practice, average people in average countries (e.g. not Venezuela) benefit more from having centrally controlled currencies than they lose. Average people also benefit from having an established currency rather than being forced to switch to one that is majority controlled by a few early adopters. If you think wealth inequality is bad now, the wealth inequality in a hypothetical Bitcoin economy would be orders of magnitude worse.
The idea that one day Bitcoin will reign supreme and everyone will be forced to buy 0.0000001 Bitcoin to get any transactions done is attractive to someone who wants Bitcoin prices to go the moon, but the average person wants nothing of the sort.
The crypto world has moved way past bitcoin, that’s just what the media likes to talk about - there are stablecoins 1:1 tied to US dollar, what if you could use those, sidestepping the whole credit card/bank etc industry?
That’s of course still tied to the money policy controlled by Fed - the trend in the latest few months is coming up with a coin that is by design stable and therefore useful as a day-to-day currency, but the supply is controlled by a DAO.
The average person definitely doesn't want to use bitcoin, but they also do not want their savings & spending money to devalue.
Debt levels are quite high, so governments must either continue expanding the money supply or must increase interest rates and bankrupt a significant proportion of citizens. It's not an easy choice and throughout history most governments have chosen the devaluation path.
If you think wealth inequality is bad now, the wealth inequality in a hypothetical Bitcoin economy would be orders of magnitude worse.
Please explain, is this belief because wealthy people have front run Bitcoin by accumulating it early on?
As it stands now, fiat currency drives wealth inequality when the federal reserve injects trillions of dollars into the system. That money makes its way to store of value assets like stocks and real estate. Poorer people tend not to own those assets, but of course would one day like to. Since most of their net-worth is comprised of cash, they suffer the most when cash is devalued by printing. Every day that passes makes it more unlikely that they will ever own those safe haven assets, or they'll own proportionally even less.
In a Bitcoin economy, there is no flip of the switch, no button to be pressed that allows this to happen. In a hyperbitcoinization event, where all the world's wealth is transferred into Bitcoin, the earliest people are rewarded the most. But no further arbitrary devaluation of assets can occur. Monetary saving power is restored to people, not governments.
> I still cannot understand how crypto advocates genuinely think governments will roll over and let cryptocurrencies take away one of the primary powers of the state
They'll not rollover. But it'll happen in two ways: 1. They don't understand it (never underestimate the stupidity of politicians and regulators) and thus they'll either allow it or not know how to stop it; or 2. Crypto is widespread and the government has little control over on-off ramps. It doesn't help that crypto-currencies wreak havoc on their economy stability (which further makes them unable to control the population).
But if the people decide they want none of it, they can vote for a government that will put people in jail for using crypto in the open. I mean, some voted to leave the European Union, so why not that ?
That would be fun trying to see that happen in a public referendum. Crypto is people-friendly or at least gives the illusion of meritocracy and equality.
Otherwise, people could still trade on off-shore exchanges, and exchange secretly (drugs are still selling on the streets, aren't they?) on the streets.
One thing that this article only briefly skims over (Turkish lira’s dropping and issues in management at their central bank) are in their own way burying the lede.
Historically (re: recent history of Venezuela, Argentina, Zimbabwe ) crypto assets’ “clunkiness” and functional downside aside- get rapidly adopted when the centrally managed currency loses confidence of the people. This further threatens this “central bank managed currency” via accelerated wealth outflows, in this case of the Lira - and all other reasons mentioned smell like cover to me.
This ban is but a reaction and protective measure to slow down wealth transfer out of the governments reach of regular Turkish citizens. A closer look at the state of the Turkish central bank and drivers of monetary policy would likely also reduce your confidence that they know what they are doing and this is a broadly anti crypto move. As a result, this ban has nothing to do with thought through policy. It’s meant to limit outflows from the Lira as the Turkish economy sadly spins out of control.
The problem is that Erdogan doesn't let the central bank do its job. Back in 2018 Erdogan bascially took direct control over monetary policy which caused a loss in confidence.
It's extremely surprising because the Turkish economy was doing well until 2018. The only thing it was lacking was a properly set interest rate, which requires high central bank independence, the primary factor in low inflation.
It's considered property in the US. And the rights to own are protected by the constitution.
As long as western governments don't go on a crusade, cryptocurrencies will continue to thrive.
A bit of a shaky analogy I’ll admit in advance, but drugs are also considered property in the US and that very possession is a crime itself. Possessions viewed by the government as harmful will eventually be legislated away, as you say “a crusade.” But to assume that the US is just going to let crypto walk through and displace the dollar (the pillar of the modern economy - the IMF uses the dollar as its barometer) is just ludicrous. Either crypto will be outright banned or will be mutated through legislation into a centralized currency - the very thing it sought to solve.
> And the rights to own are protected by the constitution.
You don't have a constitutional right to own absolutely anything, though. If you buy grenades, for instance, the state will seize them and imprison you. Someone already mentioned Executive Order 6102, regarding gold.
I could buy a Tesla with Bitcoin, but what good is that if I have to pay capital gains tax for "selling" the Bitcoin even though I didn't actually sell it, I used it?
> what good is that if I have to pay capital gains tax
You would (almost) never pay cap gains on cash even if the law required it, because cash goes down in value over time. Everyone knows this, so no one holds cash, they buy stocks, bonds and realestate. When it comes time for the Tesla, they have to sell those assets, pay cap gains, then buy it, just like BTC. If you wanted to avoid cap gains, your only choice is to hold cash, in which case you would have less overall money at the end.
tl;dr: all appreciating assets are encumbered with cap gains, the only way to avoid it is to buy non-appreciating assets, which is worse
This is a compelling argument because what? The US government is incapable of passing new legislation to regulate/outlaw property? An interstate-trading crypto ban would be legal, as far as I can tell.
heroin is considered a property, too, i guess? i'm not in the US, so i'm not sure, but it at least used to not be a good thing to get caught owning heroin.
Bitcoins’ biggest strength is also its weakness: anonymity.
It only takes a few bad actors to do something nefarious for the US to ban it. After the ban Bitcoin might still continue to exist but it won’t be institutionalized and so it will loose it’s appeal.
Also, for people who think the US does not have the power to ban it, see this:
I dont think thats fair either. The transactions are public and the addrresses are public and addresses are basically just unique usernames. So you always know what address is behind a transaction, but ownership info is not always guaranteed.
Exactly. What many people who tout the idealogical benefits of crypto don't understand is that it's not a technology problem, it's a political problem that can't be solved by technology.
This with Turkey is a good example. If it's illegal for a business to accept crypto, there's nothing crypto can do about that. Turkish businesses need to comply or face fines and shut downs. What do you think will happen most likely?
So long as flagrant copyright violation also continues to exist online, bans pose minimal threat to cryptocurrency diffusion. This time is not different.
This argument seems strange to me. When you buy something don't you typically revive a physical good? It seems easier police that then the copying of various files.
If cyrpto is outlawed you aren't going to use it at Amazon or Walmart. It is also hard to see a commerce org of any size existing with out government permission.
This argument seems to assume people will only use cyrpto to buy other cyrptos. That is useless money. Money is used to buy goods and services.
How could you tell whether a physical good was paid with Bitcoin or not? Just purchase from another country.
In general there is no incentive for other governments to follow suit because those which don't institute bans would stand to profit more by taxing their miners.
This may work for smaller shops, but it's easy to catch larger companies doing this. Public ledger and this transaction involves knowing the buyers address.
Plus if a large enough website allowed you to pay with Bitcoin they could easily get shut down.
The start-up cost for a store are way higher then hosting a hard drive full of copy-righted files, so they couldn't be as elusive.
Your logic seemingly reduces to "Governments are too tyrannical to allow revolution against their tyrannical practices, therefore it's ridiculous to try."
China is controlling over 50% of the mining power for Bitcoin. Giving away control over currency to Bitcoin equals giving China control over currency. A 51% attack to rewrite blocks with new transactions doesn't even need to happen. The miners just have to not include certain transactions to inflict massive economic damage.
This is the case for all decentralized crypto currencies. If you don't know who's appending the chain and thus creating currency and/or including transactions, you cannot be sure it isn't your enemy.
This is FUD. There is competition between miners and even if some miners for whatever reason don't want to include certain transactions (and how would they even know which transactions they want to exclude?), other miners will, because there are transaction fees to be earned.
China is a one party communist state. When the party says that somebody has to do something in regards to national security, it gets done. Otherwise it's time for prison or death and somebody else does it anyways. That's has been China's MO since Mao. No mining incentive beats men with guns.
ok I’ll take your bait and it’s an easy answer the smart ones don’t. We aren’t even in the first battle of the coming war to wrestle currency back into private hands. My question for you would be why do you think governments even stand a chance? Try shutting down the internet, US SEC chairwoman admits will be very hard to stop without extreme technical measures. Please tell how are they going to stop cryptocurrency? With silly bans like Turkey’s? What a joke.
You seem to vastly, vastly underestimate the scope and powers of governments, specifically the US government. The internet - the symbol of free speech and a free world long before Bitcoin claimed to be - was a military and academic project for robustly securing the US communication infrastructure in case of nuclear attack. It benefited the US. How does crypto benefit the US? By taking away its ability to regulate its own currency? Seems like a lose to me. And the government does not like to lose.
The internet would be terrifyingly easy to shut down. Point blank. For the truly technical and nerdy, maybe we could return to a Usenet situation but for the overwhelming majority of people (and it is the size of the user base that gives the internet (and supposedly crypto) its power - network effects) all it would take is shutting down ISPs, which historically are extremely compliant with legal action. Just try torrenting something and you’ll quickly realize how little your ISP cares about the “free and open internet.”
Also, I don’t see how Turkey’s ban is “silly” in anyway. Crypto is banned there. That will deter the vast majority of people seeking to use it. The ones who manage to weasel around using arcane technical methods will find themselves in an empty room - what’s the use of owning crypto if no one accepts it?
> what’s the use of owning crypto if no one accepts it?
I mean, when your currency is being heavily devalued, putting your free cash into anything else is beneficial. The Turkish airbnb hosts I spoke with years ago had euro bank accounts, and immediately fx'ed into euro whenever they got paid. If bitcoin is too difficult to get then Turks will just go back to putting their money into euro.
Oh, and they can all still access bitcoin markets in a manner opaque to local government via a trl -> eur -> btc path, and if they need some local currency, via the reverse. Any Turks in Europe with contacts back in Turkey: you could probably make money facilitating this.
> I don’t see how Turkey’s ban is “silly” in anyway.
It's silly because it's unenforceable, and trying and failing to enforce unenforceable laws just makes you look weak. The storefront bitcoin brokers in Istanbul will have to shut down, but money is already digital and it's going to flee a sinking lira whether it's into crypto, foreign exchange, real estate, precious metals, art, or whatever.
If governments are so powerful, why would they ever feel the need to ban cryptocurrency? If they are not so powerful, how could they possibly succeed in banning them?
This is true: the internet could easily be shut down, at least in the US, by the federal government, and hopefully not anyone else. All they would have to do is go to each ASN, find the BGP instance, and physical shut that box off, or order ISPs do to it themself. The ISPs could run, but without talking to each other, there is effectively no "internet".
There are other things, like shutting off some exchange points/fiber optic network that would have a serious regional effect as well. It's all very possible to do.
You seem to vastly overestimate the power of your government and you are very naive to believe it will have the effect Turkey’s government wants. Turkish bazaars are neat places and the population has decades of experience dealing with an inflationary trash fiat currency, Bitcoin demand in Turkey will increase not decrease. Check back with me in 8 weeks.
"hello sir it seems you are using a banned currency for doing business in these fine lands, you have the right to remain silent, anything you say can...."
But unless it is globally everywhere, which it won’t. it will eventually fail. If you study the history of money, which I have, basically eventually the “better” money wins. This is the case for the last 5000+ years of human history across many civilizations. What we have is the emergency of “better” money. Fiat has huge advantages if a nation needs to wage war, among many other features, but those features have lost utility over what new cryptocurrency can offer. Governments will obviously fight back soon, but I believe will lose completely in the long run.
Probably but it's rare in history people are so crazy about a slower, more expensive, less fluid, more static currency and call it progress...
That your savings' purchase power depends on Chinese electricity plant operating hours doesn't feel weird to you ? I prefer when it evolves slowly with the national debt :D
Perhaps, but "eventually in the long run" does not imply anything about Turkey succeeding or failing with this particular ban. The long run might be several centuries, in which a lot of things could happen that would make any of the current cryptocurrencies completely irrelevant.
They would regulate the on and off ramps, obviously. What use is there for cryptocurrency that can’t be converted into USD? Some, currently, but I would bet that killing the off ramps would severely damage the viability of crypto.
It will be impossible to regulate on and off globally. Yes banning mainstream access will drop demand and access to crypto currencies temporarily but long run the government currencies are in a losing battle. Improved scaling solutions, micropayments, and privacy upgrades are all coming soon. Bitcoin already processes more reliably and with greater transactions than Fedwire.
>It will be impossible to regulate on and off globally.
See, you seem to think what is required is a 100% shut off. If the US government could kill 70% of access within its borders tomorrow, the technology would not have a bright future.
>Bitcoin already processes more reliably and with greater transactions than Fedwire.
I have no idea what this is supposed to mean seeing as it has no empirical content, but it's beside the point. You can't do shit with Bitcoin. USD is the reserve currency of the world. That's what matters right now, not what you consider to be technologically superior.
That’s actually exactly the point. Tanks and jets are pretty useless to extract private keys. They were great and confiscating gold or nations or oil fields. Fiat currency is tightly linked to war. Your immediate reaction shows that. But your tanks and jets are garbage and your governments should stop spending resources on them, they won’t help in anyway trying to confiscate crypto currency.
My point was that there's nothing stopping the government (or anyone with guns really) from seizing your crypto assets. With fiat currency, it's a given circumstance. With crypto, it's a false selling point. Not to mention how laughable it is how much centralized crypto has become over the past decade.
The largest and most sophisticated holders of crypto assets would be using multi signature wallets with a protocol between multiple private and secure participants. How does a gun allow you to seize private keys? We are back to they can threaten to kill you? But there is a problem, if they do they lose the keys also. Guns and weapons are massively less effective against crypto assets in comparison to traditional assets. If one owns a factory and doesn’t pay taxes, those guns work very well in comparison.
They are legal, for now. Once crypto becomes big enough to actually affect the changes it seeks to, we will see legislation shooting it down. Turkey is just one of the first examples.
The cat's out of the bag now. Cryptocurrencies will kept being used in tyrannical regimes even if under wraps, and governments will try to rein in to keep them under "control" in the rest of the world, but they're very much here to stay.
I expect stronger condemnation towards "anonymous" cryptocurrencies (Monero, Zcash et al) and making onboarding/offboarding for them more difficult, but that's about it.
You're saying the US legislation will directly attack the multiple $100Billion+ public traded companies in the crypto space? (Assumption is that Coinbase won't be the last company in crypto to go public).
I don't see that happening anymore. There's too many startups with too many smart people working in the space and a LOT more people (including the legislatures) invested in Crypto.
The current US administration nuked Canada's Keystone XL pipeline investment ($8 billion) with the stroke of a pen (due to climate emergency concerns). There is less crypto value intertwined in public securities than that (roughly $4 billion), ignoring Coinbase's valuation (which, if crypto is outlawed, I'm unsure the government would place much value in maintaining; there’s a reason executive insiders cashed out significant portions of their equity holdings at listing).
But, if you believe otherwise as a capital market participant, buying and holding Bitcoin is a fine play to back such a belief.
The US Navy has 11 aircraft carrier groups protecting the USD status as the world's reserve currency.
History suggests that won't last forever, but it probably won't be COIN shareholders or activist hedge funds that forces a regime change as big as that.
They will not roll over, but they will lose anyway. Fighting technological change is like pissing straight into the wind. We've seen it happen multiple times already, even in our lifetime.
As a technologist, I'm sure this is an enjoyable mental model to hold (tech speaking to and overriding traditional power), but let's look at Edward Snowden's situation for example. He's persona non grata with no recourse (albeit for violating the law with, arguably, moral and ethical intentions), and there is nothing preventing the same happening to those who deeply believe in crypto and attempting to subvert government regulation by using it for the transfer of money or value.
This is far different from battles such as PGP's export as a munition [1], which at least had freedom of speech protections as the argument for challenging the US government's position and regulation.
> there is nothing preventing the same happening to those who deeply believe in crypto
The difference is that Bitcoin now has billionaires and multinational companies that have it on their books. Money talks, and government officials in democracies are unlikely to make a move that will rock their donors too much.
Bitcoin is inherently censorship-resistant and unaffected by borders, so banning in any given country will have minimal effect on its usefulness as a savings mechanism unless it’s banned ~everywhere and regulatory arbitrage becomes too inefficient.
First-world governments that are relatively constrained in what they are allowed to do to their citizens may be unable to ban Bitcoin even if they wanted to.
this is one of the best use cases for crypto -- as a popular disciplining measure against governments that devalue their currency. see venezuela, nigeria, argentina... my sympathies are solely with the ordinary people who would otherwise watch their savings evaporate.
I'm concerned about the model of people in poor counties dabbling in speculation in a system with irreversible transactions protections ... seems like it just as easily could go horribly wrong.
I wonder if some bitcoin whales are fronts for oil companies that are buying up bitcoin as a way of increasing demand for electricity and thus maintain demand for fossil fuel power generation. Renewable energy is getting cheaper over time, which would tend to drive out fossil fuel electrical generation, so if demand is dramatically increased due to crypto currency mining then demand for fossil fuel plants to stay operating will be maintained.
My first reaction to this was "most crypto mining is done on hydro power because it's cheaper," but then I remembered that demand for power is currently outpacing the growing supply of renewable energy, so many this theory isn't all that crazy.
In any case, given that I have yet to see a single non-criminal, non-speculation use for crypto at any real scale, I find ideas that would normally sound a lot like conspiracy theories much more plausible.
I love the concept of Bitcoin but I can't help but notice that its effects on the world seem to be more negative than positive. Wasting power, supporting immoral enterprises, malware mining attacks, and the decimation of the GPU market. Like yay eff the government but I want to be able to buy a damn graphics card.
> The Turkish central bank banned the use of cryptocurrencies as a form of payment from April 30, saying the level of anonymity behind the digital tokens brings the risk of “non-recoverable” losses.
> A lack of regulation, supervision mechanisms or central regulatory authority, combined with the potential for criminal activity and the high volatility of their market value, mean digital tokens entail “significant risks,” the central bank said in a statement on its website.
How is this different from any other raw material that one can use to purchase goods?
If a store allow it, one can buy goods in gold, silver, chairs, or Magic: The Gathering cards, which come with all the same problems.
How do they plan on enforcing this? Unless their enforcement strategy is “force international companies to do cryptocurrency business in other countries.”
> [the regulations] prohibit companies that handle payments and electronic fund transfers from processing transactions involving cryptocurrency platforms [...]
> [the chief executive] officer of BtcTurk, one of Turkey’s largest cryptocurrency platforms in terms of number of clients [said] “This mainly targets electronic payment systems.”
Capability does not confer legality. Why would crypto force a government’s hand? They’re the ones with the laws and the monopoly on force.
Consider what would happen if you sent fiat to a group recognized as a supporter of terrorism. You can do so, but it is not legal.
What remains to be seen is if Turkey is an outlier, or the start. Monetary and currency policy is power, and crypto's value store is fragile, teetering on the whims of nation states.
Seems like a bad idea unless they offer some other peer to peer alternative for digital payments. This is clearly something that people want. I can imagine they will be reversing this decision at some point.
They aren't doing it for 'the people' obviously. Once you gravitate towards an autocracy it matters a whole lot less why you do things, or who it is supposed to be for.
On the other hand, banning things in the digital realm is rather difficult. Unless you go completely offline in practical terms, there is no real way to stop this type of communication.
>On the other hand, banning things in the digital realm is rather difficult. Unless you go completely offline in practical terms, there is no real way to stop this type of communication.
Alternately all of the transaction history is public and recorded. Once you catch someone you will be able to trace all or their activity semi automatically, and you only need to make a few big examples to teach people what is more risky -turkish jail for financial crimes or not using crypto.
The us or China could crash the value of these crypto currencies in a single act. It's a very fragile system.
You would imagine this is what people want. I'd generally think people want to leave in free, secular, uncorrupt societies. Turns out that's not always the case.
Order is often way above freedom, securalism and corruption. You first want your daughter not to be raped each time she goes out and THEN, maybe, make sure politicians don't take kickbacks from public tenders.
And it's not easy to go out of the loop corrupt dictatorship -> poor population -> corrupt police -> easy crime -> order needed -> corrupt dictatorship supported
It doesn't change how the world works in regards to crypto. I don't like my government does that give me the legal right to do financial crimes? Will my righteousness help me in court?
In todays world countrys can't just regulate there own economy. That time us gone. Already before Corona every country printet a lot of money. Now every counrty prints money really like nuts.
I think this is a naive take. Crypto currency is a token of exchange. Of course it can be regulated just like everything else. All you need to do is make examples of people who get caught.
The fundamental problem is that Erdogan has no clue about economics. He is envious of US and EU countries because they have both low interest rates and low inflation. Interest rates can be controlled directly by politicians, so he thinks that by controlling one variable the other one will follow. He got it exactly backwards, interest rates are primarily determined by the market and the central bank is trying to follow the market rate, which theoretically is unknowable but usually inflation + some is good enough. This is why central bank independence is considered the primary predictor of low inflation, because the central bank can actually do its job.
You have to look at the total investment rate and the total savings rate. Over the long term they should not drift apart and for low inflation you want the savings rate to exceed the investment rate. When people decide to cut back on consumption .i.e. they want to save, they will save regardless of what savings vehicle they end up choosing. The real interest rate (interest rate minus inflation) is way too low for the Lira. A bank account with Lira deposits is simply an extremely bad savings vehicle. People just stop saving, or they put their savings elsewhere, mostly USD, EUR and sometimes Bitcoin. Banning foreign or cryptocurrencies doesn't really do anything, it's akin to pointing a gun at someone and saying they should put their money into a bank account anyway.
Ok, lets assume a perfect savings vehicle called SV exists (0% yield and 0% volatility). We can benchmark the yield of currencies against this savings vehicle. For the sake of the argument assume that Lira has 10% inflation and 0% interest then it will have -10% yield. Picking SV will grant you 0% yield, which is 10% more than the Lira.
If you raise the interest rate to 10% then the Lira will have 0% yield. It will be equivalent to SV but SV is considered more trustworthy. SV has effectively set a lower bound for interest rates. Any lower and people will just run away from the Lira. Therefore the interest rate must be higher than inflation and this premium depends on how confident "savers" are. You are basically pricing in the default rate.
Let's apply this to a different market. The US (corporate) savings rate is so high that negative interest rates are necessary, the problem is that treasury bonds put an effective 0% interest lower bound. Interest simply cannot shrink lower than that because lower interest rates will simply lead to purchases of treasury bonds. The answer in this case is to raise inflation instead because it acts as negative yield on excess savings. The easiest way is to simply print money and hand it out to those who plan to spend it, the increased spending will drive unemployment down. Another solution is to just increase the investment rate so that excess savings are being soaked up and interest rates will rise naturally.
https://news.ycombinator.com/item?id=26831162