>Let’s walk through a couple theoretical scenarios where a subset of malicious validators wants to censor transactions, say those originating in FATF-blacklisted countries.
Hang on a second. Just to be clear about this example, this example is walking through how Ethereum has been designed specifically to allow North Korea to transact Ethereum, and more than that, prevent anyone who dissents. Like, I mean ok, I get the ideological position in theory of saying "Hey, we're going to design this network so that you can't prevent any transactions." But it's quite different to go "The motivating example of why we would want to do this is so that we can help Iran and North Korea money launder in a direct attack against our own government's laws".
Here's my counter-example to the scenarios the author puts forward. You stake 32 eth to become a validator node and start signing off transactions from North Korea. Other people choose not to do that because... well. Your stake slowly goes up and they slowly bleed Eth. Then the US government smash down your door and throw you in federal prison because you're actively working to help North Korea.
You should understand that this is a very USA centred opinion. There’s a whole big world of different cultures and politics, and it is possible to believe there are other approaches where we reject violence and authority.
It’s the usual “you’re helping drug dealers/terrorists/North Korea, but what about the children?!” state simping that ignores the violence of the existing systems, and ignores the billions of people in the world who aren’t any of the above and are also benefiting from our attempts to design systems that respect liberty.
I think we absolutely should build infrastructure that allows people within oppressive regimes options with which they can resist, escape, coordinate. For example, we shouldn’t accept that Iranian devs get booted off GitHub.
I absolutely agree we should build infrastructure that allows people within oppressive regimes options with which they can resist, escape and co-ordinate.
Which is why this infrastructure, which is clearly designed to empower those regimes, is bad. Are North Koreans using crypto-currencies? Maybe, it doesn't seem like it. Is the North Korean regime using crypto-currencies? Absolutely, we repeatedly see the North Korean regime stealing, laundering and transferring crypto.
You're advocating for a theoretical possibility of helping dissidents to defend the actual reality which is that crypto is a tool of oppressive regimes.
I really don't get what the argument is here? NK and others also use Tor, Signal (Protocol), and more. Are they all bad? And why always use the most extreme examples like NK and China?
If US citizens could empathize with people not only from NK, but also from places like Turkey, where the value of our currency has been demolished under the current authoritarian government (and, IMO, they aren't far away from putting limits on buying USD), I think we would have healthier discussions. Now, I can — and am — moving out of the country, but not everyone can. Thinking otherwise is privileged and ignorant thinking.
Of course ETH is not flawless, and if I were in a middle-class family in the US, I would love to have these deep philosophical discussions about if Ethereum is really really decentralized, but the fact remains that cryptocurrencies DO solve real problems, and they DO help more people than they hurt, just like any technology. If this weren't the case, humans would have stoped innovating a long time ago.
You can only be sure in hindsight which solution is comparatively or net good. Not all hard work done by smart and nice people turns out to be worthwhile. There are always trade-offs and cryptoassets bring them too. You have good reasons to be worried about centralization, but concerns that this technology empowers crime and totalitarianism, just in a different way, are valid too.
See, burning coal is bad for the environment under many angles. But it fed the energy to the industrial revolution, with immense improvements to everyone's quality of life (from running water to advanced medical care). Now it's time to retire it, but it won't be realistic to go from muscle power to nuclear and solar power directly.
Same thing with crypto currency. It's like a steam engine from 1800: large, dirty and inefficient as it is, it already solves real problems.
Now, moving from proof of work to proof of stake is a huge step, like moving from firewood boiler to a turbine. Maybe not a complete perfection yet, but a huge jump in efficiency.
That's not true though. Crypto currencies do not solve any real problems in any meaningful sense. The problems it solves are all either problems that were created by crypto itself, due to the insistence on using that particular network architecture (which isn't even good), or are better solved in other ways. Moving to proof of stake fixes one of the fatal flaws in the scheme: the energy usage. All of the other fatal flaws still remain: The inability to do anything about fraud, the disastrous security of smart contracts, the ponzi-like economics, the inherent unfairness of mining/staking, the practical lack of decentralization and vulnerability to 67% attacks, the lack of any kind of legal structure around anything whatsoever, and not to mention that the technology is actively enabling new kinds of crimes like ransomware and evading sanctions on a grand scale...
It's patently obvious that the "tradeoff" for most people is that you get to gamble on the price of a highly speculative asset in exchange for enabling massive amounts of crime. I don't like that tradeoff. As a society, we can collectively decide not to make it.
Why. Imagine that I lawfully own something valuable which is located in Russia: say, a moderate-size business, or a piece of realty. I want to stop dealing with them, sell the assets, and take away the funds.
My two options are: (1) Fly there, sell stuff, and bring a suitcase of cash. (1) Sell stuff remotely and transfer the payment over Bitcoin. I suspect that the second option is more economical even with the proof-of-work electricity-guzzling proof-of-work BTC network, because two transatlantic flights are even worse.
You'll call this a marginal problem. I'll say that marginal problems are still real, and need solutions.
Or just trade it for some other asset or currency that isn't crypto? Why are those your only two options? I don't understand how you jumped from "I need to trade something" to "my only option is cash or crypto". Those dots don't line up.
The sanctions will also be blocking the legal crypto exchanges from dealing with them as well. So that isn't going to work either. You might respond that you'll just use an illegal crypto exchange, but from that perspective it's not the crypto helping you. It's the illegal exchange, which doesn't actually need crypto to function.
Edit: Also, there's a bit more to unpack here. The transfers from Russia are only a problem with RUB. If you can transfer another currency to them into an offshore bank account then it's not a problem. And I hope you don't transact in RUB anyway, that likely means selling the business back to Putin's war regime, unless you physically go over there and use the proceeds to help the anti-war movement.
"Bad tool is used by bad guys so don't support it" doesn't imply "any tool used by bad guys is bad." It's perfectly valid to think that different tech has different value based on specific pros and cons.
Right, but this presupposes that the particular tool in question is a "bad tool", and the basis of that presupposition elsewhere in this thread is very strongly implied to be "tool is used by bad guys therefore it's bad unless I specifically benefit from it".
Eh, that wasn’t my read. More that it seems to be exclusively used by bad people.
The lack of people manually verifying the _nature_ of a transaction and not just that someone claimed a transaction occurred means everything you’re doing is, well, pointless. It is (highly optimistically) a libertarian political movement that is deeply misinformed about how free markets and trust actually work.
Cryptocurrency has zero effective solutions for this. If you were to send your money to anyone claiming to be a NK citizen, you still have to personally verify entire transaction occurs, or you’ll get grifted. It’s useless. You’re being grifted. You’re making it worse by continuing to defend it and at some point you’re culpable for not admitting this despite it coming up on literally every hacker news post about cryptocurrency.
> More that it seems to be exclusively used by bad people.
So I'm a bad person, then? Are the migrant workers sending money back to their families bad people? Are the refugees using it to bring their life savings with them bad people? Are the people currently subject to those bad regimes and unable to escape bad people?
At best, the belief that "it seems to be exclusively used by bad people" is blatantly ignorant of reality. At worst, it's saying the quiet part out loud: that as far as the legacy financial system (and the supporters thereof) is concerned, these people are just as "bad" (read: worth shunning from the benefits of said system), with the only difference being that said system is able to exploit them and their labor while it pretends they don't exist.
> Cryptocurrency has zero effective solutions for this.
Because there's no problem to be solved in the first place. There are many issues with cryptocurrency, but "wah nation-states can't arbitrarily censor transactions wah" ain't one of 'em.
I never said that. I said it was my read of the parent comment. Further, it’s a comment about perceptions (“seems”), not a deliberate statement of fact.
It’s more like saying “I can’t recommend this to anyone because the legitimate use cases (if there are any) dont offset the potential for abuse (particularly in societies with an existing, trusted banking infrastructure).
> I never said that. I said it was my read of the parent comment.
Fair enough. Regardless...
> It’s more like saying “I can’t recommend this to anyone because the legitimate use cases (if there are any) dont offset the potential for abuse (particularly in societies with an existing, trusted banking infrastructure).
And in saying that, one betrays either a severe ignorance of reality or a vested interest in the continued marginalization of the very people to whom that "existing, trusted banking infrastructure" currently does more harm than good. There are legitimate use cases and they vastly offset any abuse (potential or otherwise), even in (ostensibly) "developed" economies like here in the US.
Not to mention that said "existing, trusted banking infrastructure" conflates its definition of "abuse" with "whatever the current local regime deems illegal"; as one of many examples, it seems rather plausible (if not probable) for anti-abortion states to start seizing assets from the bank accounts of women who solicit the services of abortion clinics - something which any cryptocurrency worth its salt is explicitly designed to prevent. And don't get me started on the can of worms overturning Roe v. Wade just opened; GSRMs, contraceptive customers/vendors, and other folks previously enjoying that implied right to privacy are now suddenly much more vulnerable to the same economic exile that sex workers and drug users/suppliers have already long faced. Talk about "potential for abuse"!
Ah, and now “I’m a bad person?” for not jumping on your bandwagon which promises so much but delivers so little.
If you really think cryptocurrency can help with abortion access - stfu and get to work, no need to virtue signal when you have a working system.
In the meantime, things like Biden’s recent executive action to enable purchase of birth control across state lines is far more likely to actually be helpful.
You have to at least realize that the defenses you’re making are the same ones that a jaded libertarian might make and have very little to do with the actual tech, which is too complicated to usefully describe anyway. This paired with the underlying belief-oriented nature of cryptocurrency (e.g. “it has value because we all agree it does”) makes it effectively a neo-libertarian political movement, using self-rolled (objectively worse) “patreon” as its backer.
> Ah, and now “I’m a bad person?” for not jumping on your bandwagon which promises so much but delivers so little.
I mean, if you're opposed to cryptocurrencies even after it's been shown to you both how they currently benefit marginalized groups and how they can potentially benefit yet more marginalized groups, then that does indeed say something about the quality of your character. I wouldn't go so far as to write you off as a "bad person", but I would hope that you reflect on whether one's desire to continue the marginalization of said groups on the basis of "North Korea bad" might preclude one being a "good person".
> If you really think cryptocurrency can help with abortion access - stfu and get to work
If I was qualified to administer abortions, then I absolutely would.
> In the meantime, things like Biden’s recent executive action to enable purchase of birth control across state lines is far more likely to actually be helpful.
Sure, until the same Supreme Court that was willing to overturn Roe v. Wade decides it's willing to invalidate such an EO.
> You have to at least realize that the defenses you’re making are the same ones that a jaded libertarian might make
Well I would hope so, being a jaded libertarian and all ;)
Transparent systems in which transactions are screened do not trust their people.
North Korea would never allow their people access to a truly private cryptocurrency (which Monero does better). It would become easier to funnel money internally and create opposing factions.
This discussion is no different than a discussion about just rulers. If the person in charge of a monetary system has good intentions, or is informed by a democracy with collectively good intentions, it is better for them to dictate who can have access and who cannot.
Crypto forces those on the network to trust in the free decisions of the collective. If you think more people would transact with a large criminal psychopathic state like North Korea than they would with people who oppose North Korea, that is a collective choice. In a truly decentralized system, where everyone had access (which is not the case, and complicates things), the real, in practice will of the people comes out.
It’s an appealing idea and what attracts so many bright minds to crypto. People voting with their money for their interests or the interests of the group. Love it. But that’s not how this dynamical system plays out. It would perhaps stand a chance if players could make transaction decisions based on information about the other party but that just isn’t the case in practise. Bad actors have had no issue obscuring sources if they need to (as is clear by NK state successfully using stolen crypto). But let’s say they could make truly informed decisions, that would put them at a competitive disadvantage to those who just trade with anyone regardless of potential harm. So you have a system of oligarchic growth of bastards - the biggest bastards get bigger. We of course have a similar problem in fiat, but with a currency backed by government, you have a chance to place sanctions or seize funds of actors harming the group.
Organisation of systems of humans is _hard_. We’ve been trying many different systems of governance for thousands of years. There are appealing ideas, many experiments but no easy answer. Does currency decoupled from local governance work better or worse for the interests of humanity? The answer is not obvious and we should be careful saying we have clarity. It’s worth the experiment. I’m curious to know the result and watching the evidence carefully but my reading is results don’t support the suggestion that crypto is a force for good overall. It’s not even clear crypto stays trust-less and decentralised in any practical sense once it begins to collapse into more efficient structures of big players (coinbase and friends)
Well said, agree with all of that. I have hope for systems that allow for the easy, anonymous (to outside observers, at least) build up of networks for the kind of information exchange you rightly claim to be the most important aspect of creating good systems in practice.
It doesn’t solve that information bottleneck problem, but I think the more efficient structures that lead to transactional bottlenecks and are necessary in things like Bitcoin are technical problems that can and I think have been worked out in currencies like Monero. Monero has quite successfully resisted the same pulls to centralization that Bitcoin and Ethereum have succumbed to for the sake of efficiency. It is smaller, but still quite large.
That does not necessarily mean it is good, and while I’m optimistic, I understand where the caution comes from. At the very least it’s extremely interesting, both from a technical perspective and a social/political perspective.
At the end of the day I am more and more convinced that all of this money and power stuff is downstream of relationships, culture, and ability to communicate and cooperate across differences. That’s what’s really important, and can be either encouraged or discouraged to move in a direction that helps the most people with all kinds of different tools, of which money is just one, and which could happen all kinds of different ways in different systems.
I wish it were easier to know what helps and what doesn’t so we wouldn’t risk making things worse. But I think the only way to know is to experiment.
>but I think the more efficient structures that lead to transactional bottlenecks and are necessary in things like Bitcoin are technical problems that can and I think have been worked out in currencies like Monero
That might be true, but the structure doesn't appear to have any technical considerations behind it. Following this comment:
>At the end of the day I am more and more convinced that all of this money and power stuff is downstream of relationships, culture, and ability to communicate and cooperate across differences.
If you ask me, the conclusion to this is that Monero has not actually "resisted" centralization, what it's actually done is become centralized around a group of criminals who all refuse to snitch on each other, and use the token as a means to do that. The key part is that "refuse to snitch on each other" comes before everything else including all the blockchain nonsense. These people are the only group who have any reason to bother using this token. Attacking the Monero network itself is orthogonal to what is typically done to break up these groups.
I disagree. Bitcoin started the same way on the darknet. That does not mean it had no greater value, as we now see.
The actual people using Monero are unknown. That’s the point. To say it is centralized behind a group of criminals is incorrect. It has been extensively used to get money into places like Venezuela where the state is hostile, and for all kinds of positive services where people simply value privacy. See http://monerica.com
The fact that criminals also use Monero is a feature, not a bug, and proves that it works in the most hostile environments. The fact that it enforces the fourth amendment is a good thing, and it forces law enforcement to target criminals specifically rather than enabling blanket surveillance.
Anyone who wants tools to prevent the state from abusing power has ample reason to use Monero, and given the way politics has been infringing on banking rights in Canada, that is bound to be a growing number.
Regardless of what you think of the Canadian protestors, the real question is what do you think of the right to privacy and our ability to ensure our rights in the USA, given our constitution. If we do not trust people to transact privately then lets just repeal the fourth amendment and be honest about what rights we do and don’t have.
I happen to believe the right to privacy is fundamental and that to remove it is to create a panopticon. I believe law enforcement has ample means to go after crime without violating financial privacy, and believe it is equally if not more important to prevent abuse of law enforcement powers given the tendency for corruption, political use, and lack of effectiveness that has plagued all of human history.
Yep. Trust is a feature, not a bug. So that the 'legitimate and righteous' blockade of North Korea by the Angloamerican establishment could turn on its domestic dissent whenever needed. As we saw during the Occupy protests in 2011.
To really help ordinary people in oppressed countries, the first step is to implement policies such that they only affect those who should be affected.
If you do that, cryptocurrency benefits become moot: a Russian freelancer working overseas can legally TransferWise money to help her mom, but a Putin-connected oligarch can't wire money to help the regime.
For many reasons, it's difficult: e.g., how do you verify that your Russian user does not in fact work for Gazprom? Much safer to implement a total ban on anyone connecting from a Russian IP or using a Russian bank, explicitly sanctioned or not.
However, blanket financial anonymity at scale is not an acceptable workaround. Making it simpler for kleptocrats in charge to finance questionable activities and launder money obtained through thievery and violence, it introduces more problems than it solves, and in fact props up the regime.
>>If you do that, cryptocurrency benefits become moot: a Russian freelancer working overseas can legally TransferWise money to help her mom, but a Putin-connected oligarch can't wire money to help the regime
There are plenty of nationalities which are banned from TransferWise:
Maybe you misunderstood me. This year Russians got de facto banned from many services, cannot use paid features of Github (Copilot or sponsoring projects), are blocked by freelancer marketplaces, etc. I am not risking using TransferWise to transfer money home (to a non-sanctioned individual's account in a non-sanctioned bank) out of fear of losing my account forever. This is because Western companies interpret sanctions wider than strictly required to err on the side of caution due to the aforementioned reasons.
>>However, blanket financial anonymity at scale is not an acceptable workaround
Blanket financial anonymity is the only way to prevent circumstances like today's, where entire nationalities are locked out of the global financial system, and power becomes more concentrated over time.
It's not the answer, you may have missed the other part of what I wrote.
Implementing this anonymity to allow regular guys help their families in Russia, who are now dealing with 4x price hike on basic goods, will help kleptocrats (the very guys causing that hike in the first place) finance their wars and further entrench themselves in power. Don't you see how this ultimately hurts those it ostensibly aims to help?
Regular guys will send home hundreds of USD, kleptocrats will launder billions.
Financial anonymity at scale exacerbates these asymmetries by helping those with the most money/power the most. Thinking otherwise is hoping they are clueless and don't employ teams of savvy people specifically to figure out various financing workarounds.
Those with the most power can legalize everything they do. The monopoly on violence wielded by the government tends to concentrate power. Mass-surveillance of financial transactions, or conversely, lack of private money, extends the reach of the government, and with it, the ability of the most powerful to extract resources from the general population.
Those in the centers of power don't need to launder money. They write the laws, so their income is not illicit.
> Those in the centers of power don't need to launder money.
Oh yes they do. Read about all the ways dictators and their friends wash ill-gained riches in the West to buy real estate, enjoy lavish lifestyle, finance activities that undermine democracies and further their own agenda, etc. Sanctions exist for a reason.
You can't have anonymity without enabling crime and laundering. In a digital world where you need less to be physically present to profit from a crime, I want law enforcement to be able to seize criminal's funds.
If you think your government abuses that power try electing a different one, if you are in a democracy you can. If you want lawless anarchy I'm not with you, we had something like that in Russia in the 90s and it's not fun.
It's only the dictators of banana republics, which by definition are not great power states, which need to engage in that kind of corruption, and only because they don't wield government power within the largest economies, where they would prefer to park their wealth due to their centrality and stability.
Those at the top of the political order within the centers global economic power have no need to engage something as crude as money laundering, or at least not the kind that depends on clandestine exchanges of briefcases filled with cash. Everything is reported and ostensibly legal.
>>You can't have anonymity without enabling crime and laundering.
You can very much combat crime without warrantless mass-surveillance of private financial transactions. Real crime leaves huge numbers of evidence trails that can be followed. Private electronic cash can also be utilized by law enforcement to incentivize informants to come forward anonymously.
Warrantless mass-surveillance enables tyranny. It enables the kind of systemic repression that can harm billions of people.
It is not in any sense a USA-centered opinion. Look at the list of countries and supra-national organizations which have comprehensive sanctions in place against North Korea: which include not only the US, but Japan, the European Union, Australia and Taiwan.
You can adopt whatever degree of moral relativism suits your purpose, but there's basically not a lot of people anywhere in the world who are looking at what's happening in North Korea and saying "looks good to me".
To be fair though, those are all Western-aligned countries dependent on US force. They'll typically go along with whatever the US says. They're not exactly vassal states but close enough.
NK is just another tiny country caught in a proxy war between imperialists.
Look at China, which I think is bigger (or nearly so) than all those countries combined, and they don't have nearly as big a problem with NK as we do.
I'm not saying NK is a model country, but the US has a long history of demonizing random small countries to suit its purposes, from Afghanistan to Iraq to NK to Vietnam to much of Central/South America. That we use our military and propaganda to coerce our allies doesn't mean we automatically get the moral high ground. It just means we're the biggest bully.
"They're not exactly vassal states but close enough."
This is a comical overstatement. If you followed the ins and out of international relations you'd know this is far from true. The health of those relationships (and any security arrangements included) is constantly debated up and down, and there are periodic crises of various magnitudes that kick up conversation of security arrangements ending.
If you think those countries are not acting in their own carefully-measured self interest and just show up blank faced to support the US... you have a very uninformed notion of the reality.
"they don't have nearly as big a problem with NK as we do."
You're really shooting from the hip. China has enormous problems with North Korea, which it primarily solves by appeasing them and working with them because it's easier than fighting them. As long as North Koreas spends most of it's energy being an active and passionate combatant against democracy and human rights, that suits China just fine.
"That we use our military and propaganda to coerce our allies doesn't mean we automatically get the moral high ground."
Every political regime tries to play these narrative and influence games. And every political regime will gravitate towards what works for it. It's an absurdly myopic American delusion to think that America is pulling all the strings among a world of puppets. That's not serious stuff.
But what you are failing to consider is that there are regimes willing to be far more horrific than whatever failures you see in American behavior. Criticizing America's faults is good. When you end up at "shrug is North Korea worse?" then you've ended up lost.
That's not entirely true. America has forever been a bully. It's more like a crybaby.
CAATSA act states that if you don't like anything of country X sanction them and force others to do the same. This makes every other country as a puppet of America.
>To be fair though, those are all Western-aligned countries dependent on US force.
They're not, but whatever ...
There is also the matter of nine United Nations Security Council resolutions calling for sanctions, of twenty one total resolutions relating to non-proliferation; and a UN Commission of Inquiry report on human rights that found, amongst other things that:
"systematic, widespread and gross human rights violations have been and are being committed by the Democratic People’s Republic of Korea. In many instances, the violations found entailed crimes against humanity based on State policies"
"there is an almost complete denial of the right to freedom of thought, conscience and religion, as well as of the rights to freedom of opinion, expression, information and association"
"police and security forces of the Democratic People’s Republic of Korea systematically employ violence and punishments that amount to gross human rights violations in order to create a climate of fear that pre-empts any challenge to the current system of government and to the ideology underpinning it. The institutions and officials involved are not held accountable. Impunity reigns"
Of all the hills to die on, the one that involves takes a moral relativist position on the badness of the North Korean regime is one of the oddest ones.
Eh, no. Helping North Korea to bypass international agreements won't help us to "reject violence and authority." What authority are you talking about here specifically, what are you trying to reject?
Throwing an existing system out of the window without offering anything in return is madness. Cryptocurrency won't replace all the financial and government systems that have been developed internationally for years.
How can you help Iranian/Russian people that genuinely would like to reject and escape their current government, without helping that very same government to finance itself?
One could argue that the current way to stop nuclear proliferation is "peer to peer"—after all, the peers of would-be nuclear nations are other nations!
"During the campaign, conventional weapons such as explosives, incendiary bombs, and napalm destroyed nearly all of the country's cities and towns, including an estimated 85 percent of its buildings"
No idea why they have bad infrastructure and hate the west
They rebuilt a lot of that in the decade after the war with extensive aid from Russia and China. Their economy was actually doing better than South Korea's up until maybe the '70s or even '80s (it depends on what metrics you are looking at).
Where it started going seriously off the rails was in the '80s when they adopted a policy of radical self-sufficiency. Unfortunately they can't really be self-sufficient, at least at their current population levels, because the climate and geography limit the amount of arable land and limit how much can be grown on it. They get winds from Siberia bringing bitter cold and heavy snow, making it so they can usually only get one crop per year (compare to two crops per year which is possible in much of South Korea).
So they remained heavily dependent on Russia and China. When the Soviet Union broke up they lost most of their Russian aid, and that really hurt. They never really recovered from that, and their infrastructure suffered as part of the general poor economic conditions.
But that still makes them 20 years behind the times. And then:
"Russian accusations of indiscriminate attacks on civilian targets did not register with the Americans at all. But for the North Koreans, living in fear of B-29 attacks for nearly three years, including the possibility of atomic bombs, the American air war left a deep and lasting impression. The DPRK government never forgot the lesson of North Korea's vulnerability to American air attack, and for half a century after the Armistice continued to strengthen anti-aircraft defenses, build underground installations, and eventually develop nuclear weapons to ensure that North Korea would not find itself in such a position again. ... The war against the United States, more than any other single factor, gave North Koreans a collective sense of anxiety and fear of outside threats that would continue long after the war's end"
What is a US-centric idea is the thought of helping North Korea because their are an enemy of the United States. If your primary concern is breaking US hegemony then that is a US-centric viewpoint.
So are all the people calling for peer-to-peer electronic cash to be banned and the status quo, of a centralized global financial system which cuts off entire countries, to remain in place:
> You should understand that this is a very USA centred opinion.
Hmm. IMHO libertarianism (which is at the core of the crypto movement) is much more striking as a USA-centric belief system than “KYC / AML is desirable”. In fact, most developed countries seem to have anti money laundering regulations.
Your “what about the children?” is a straw man whereas “you’re helping North Korea” is a fact. See the exponential growth of the ransomware market when cryptocurrencies took of.
We all universally agree that we should build infra that helps people within oppressed regimes. The disagreement is that not only crypto fails to do so meaningfully, it empowers those oppressive regimes by providing them with ways to circumvent trade restrictions.
> There’s a whole big world of different cultures and politics, and it is possible to believe there are other approaches where we reject violence and authority.
The post you're replying to was discussing sanctions, not violence.
That is a nutshell is a variant of the Byzantine generals problem.
Without a central authority that governs difficult decisions like censorship of nodes NK could launder their crime money through ETH validator nodes.
On the other hand of the spectrum you have the Solana/Solend farce where the Solend team just "voted" to take over the wallet of their main customer.
It is still a long way.
> Then the US government smash down your door and throw you in federal prison because you're actively working to help North Korea.
Not a real issue because transactions are not associated with IPs. There's basically no way to know the country of a sender or recipient. Also, it was ruled that virtual currency miners are not subject to AML regulations[0].
Not related to miners but to the best of my knowledge, every transaction is broadcasted to the network from an IP address. Therefore the IP can be traced back or hidden with TOR or proxies.
Receiving cryptocurrency is by default anonymous because it requires no public action on the part of the receiver.
Except, checking a transaction tx or wallet balance on blockchain.info could flag the IP checking that balance.
> Not related to miners but to the best of my knowledge, every transaction is broadcasted to the network from an IP address.
Right, but even if you banned North Korea IPs, you'd still get their transactions through the transaction relay mechanism (other peers outside North Korea relaying their transactions).
It's an arguably poor example in an article by "foobar," not a motivating example from Ethereum's white paper, design documents, a senior researcher, or anything official at all. Ethereum was not designed specifically to allow North Korean transactions.
Reasonably good censorship resistance in general is a design goal shared with pretty much all decentralized blockchains. Without that, complaints about proof-of-stake being oligarchic rule would have a lot more legitimacy.
HN is so crypto-phobic it’s almost impossible to have a comment section without bad-faith arguments like this.
It’s a censorship-resistant technology, of course that applies to both good and bad guys. You know that, yet here you are making this absurd argument and the top-voted post.
Yes, if you actively and knowing break the law, you might get punished for it. Not sure what's new here? If you don't want to connect to North Korea, block connections coming from North Korea, it's like one or two commands of iptables.
The sanctions go a little bit further than that though. Financial institutions are not merely blocked from accepting transactions from the IP region of North Korea, but actually from doing business with a whole list of companies and individuals with ties to NK. To comply with the sanctions regulation you would need to have a lookup service listing the owner of every wallet and for every transaction you validate, check if any of the wallets involved belongs to a sanctioned company or individual.
I don't think "but I didn't know that it was a NK wallet!" is going to hold up in court either. There are laws regulating the minimum Know-Your-Customer a money transmitting company needs to perform and when the regulators come knocking you need to be able to show your procedures for that and how they lead to compliance with the law.
The real question is whether courts will rule that POS validators are "money transmitters" in a legal sense. To me it's kinda obvious that they are, since without the action of the validators no money would get transmitted. No doubt there will be much water under the bridge before that gets settled though.
> The first ruling states that, to the extent a user creates or “mines” a
> convertible virtual currency solely for a user’s own purposes, the user
> is not a money transmitter under the BSA.
That seems to leave rather a lot of open space IMO. For example, does a POS validator create convertible virtual currency? Clearly. But is it solely for their own purposes? Do they become a money transmitter as soon as they sell their crypto? Also, only part of miner income is the block reward; there are transaction fees as well. Is a miner allowed to accept fees from sanctioned individuals for providing payment validation services?
2014 was forever ago in crypto terms of course, so I can imagine that the viewpoints of regulators have evolved together with the technology.
It probably seems unclear to you because you are not familiar with the industry and/or AML regulations. To answer your questions, cryptocurrency miners are not money transmitters, even if they sell their cryptocurrency and they can accept fees from any transactions.
Of course regulations can change, but in this case it seems unlikely unless the intention is to effectively "ban" cryptocurrency.
I didn't get the sense that WJW is unfamiliar with the industry. I read their comment as suggesting that the administrators who designed the existing regulations did so at a time when the widely understood definition of "miner" was a proof-of-work miner. If the same regulations were drafted today, would PoS validator nodes be considered functionally equivalent to PoW miner nodes? I hope not, since they aren't.
Regulations can and do change. Cryptocurrency fanatics are expanding their regulatory capture with various senators and state governments friendly to the 'movement.' I worry about the next crypto crash tanking the economy after this crypto crash.
What I'm saying here is that this system is designed to tax your staked ETH if you do that. So you have three choices: 1: Run a validator blocking NK transactions, safe in the knowledge it's probably legal, but your staked ETH is slowly going to taxed by the network costing you money. 2: Run a validator including the NK transactions, your staked ETH is safe, but you are violating your countries money laundering laws most likely. 3: Don't run a validator, now the only people running ETH validator nodes are those who work with North Korean money launderers, which doesn't seem like a particularly stable footing for Ethereum.
Ignorance of the law is not a valid defense. It might get you a lighter sentience, but don't count on that. You are expected to know all the laws that apply to all the activities you do.
This is no different than good ole Proof of Work (bitcoin, current eth, etc). A miner already decides what transactions to include in their block, and also their parent block.
Bitcoin has been working like this for 13 years. And your hypothetical situation hasn't happened.
I think what you're missing is that this is the entire point of cryptocurrencies. To be decentralized such that governments, banks, central authorities, cannot stop them. No laws, sanctions, rules, taxes, can force the crypto system to do anything.
Imho, they are inferior to real currencies at everything except for that.
Now, if you want to discuss whether that makes crypto a good or bad thing, oh, I'm with you, let's dive into that. But this article is discussing the implementation of such a system, not the frankly quite concerning ethics behind the existence of the system.
> Imho, they are inferior to real currencies at everything except for that.
Add to that list the transaction speeds for just about any PoS cryptocurrency. A new transaction is visible to others on the network within seconds, and is fully validated within a few minutes (as I just observed moving some Cardano around last night). That first metric is on-par with your average credit/debit transaction while the second blows it out of the water (credit/debit transactions can take multiple days to actually move out of a "pending" state). The only thing other than a PoS cryptocurrency that's even theoretically faster on both points would be a payment app like PayPal or Venmo, and that's only if you're maintaining a balance in those apps (otherwise they fall back on credit/debit or bank withdrawls anyway).
There are other possible superiorities or inferiorities which are indeed a matter of opinion (for example, IMO the inability to reverse a cryptocurrency transaction makes it superior to a credit/debit charge or wire transfer or payment app, and the "downsides" are better solvable with escrow anyway; as another example, IMO the ability to send arbitrarily-large-or-small amounts of cryptocurrency makes it superior to said alternatives), but transaction speeds are factual and readily observable.
The tradeoffs between centralized control and permissionless primitives are better explored elsewhere, but the dangerously high costs of depending on a fickle intermediary for all transactions should be clear to any informed observer.
Consider a Russian citizen unable to flee Putin's wartorn regime because all personal life savings and assets have been frozen.
Just as private communications make some tradeoffs for not acquiescing to the surveillance state, so permissionless value transfer makes tradeoffs.
This is very well put. If you believe the trade-offs of permissionless and private communications (as granted by cryptography) are worth-it and you don't think similar trade-offs to value transfer are worth-it (as granted by cryptocurrencies) you have to be able to explain how you are tracing the risk-reward in both cases to arrive at different conclusions. I'm not claiming it's not possible but certainly some very fine-tuning of the weights involved is necessary to reach different conclusions.
The average opinion (as in, the most oft-repeated or most popularly represented through upvotes) in HN maintains opposite conclusions. Which is an interesting observation.
It's been explained countless times. The world has come together and numerous societies have agreed to not give money to North Korea. There is no comparable discussion or agreements about restricting communications among individuals. It's asinine to ignore all of the history and turmoil of North Korea, just about as asinine as creating a crypto currency for the espress purpose of funding the Kim regime.
Hello, I read your twitter thread. While privacy is absolutely important, your reasoning is fundamentally flawed. In the context of financial transactions, we know from a ridiculous amount of history with banking regulations that it's not ordinary people who benefit from having complete privacy and anonymity in all matters. It's criminals and fraudsters who lie and misrepresent themselves to conceal the source of their funds and their activities. They'll gladly continue to use their privacy as a weapon to disguise themselves and further rob and steal. There is no other group that benefits as much from being able to transfer large amounts of money secretly. This can be verified over and over again, ask any traditional company that processes international remittances.
It doesn't really matter what kind of political activism you believe you're engaging in: the reality is, these nasties are the main people that benefit. They absolutely love what you're doing. Anyone involved in cryptocurrency, even tangentially, is complicit in this fraud because it's the only way these currencies have any significant value to begin with. And it will continue to happen for the indefinite future, because even with this new move ETH will still have no capital controls to prevent any of the massive market manipulation that happened over the last few years, that drove tons more fraud and ransomware and also resulted in the recent crash.
A system that tries to give privacy but does nothing to stop fraud is just creating worse problems under the false guise of helping people. I ask that you please stop working on these things and please stop promoting them until you can dial the whole thing back to rectify this situation. Any kind of "censorship resistance" without fraud prevention is not going to work. If enough people put their heads together they can solve this, but it will not happen with any of the supposed "privacy solutions" you mentioned. Yes, I'm aware the traditional finance system also has many of the same problems. It's not helping to recreate the exact same system but with even more layers of technical debt around it, which is essentially all you'll be able to do with any of the suggested tools.
The system you have built specifically and explicitly provides much less cover to the Russian citizens than it does to Putin's regime, who will gladly adopt it and then turn around and use the proceeds to further oppress, murder and destroy. It is a net loss for privacy.
When we have a system that could prevent transactions, you'd think the most common use case is to prevent criminals to transact dirty money. But the most common use case is most likely China freezing dissidents' assets and blocking all alternative ways for them to safely emigrate.
It's not about whether Ethereum is American, it's about whether Americans can use Ethereum, or in fact the citizen of any western democracy, they pretty much all have harsh sanctions against NK and Iran. The list of countries that sign up to the FATF list the author was talking about includes the whole of the G20 plus several other countries.
Not anymore, see lack of counter sanctions on oil buyers in India and China of Russian oil. (Even though oil buyers in China have significantly increased their purchase volume and Indian purchases of Russian oil have increased 3100%, not a typo, YoY)
Of course Washington doesn't want to give the Russian, Chinese, and Indian establishments common cause against the US.
The complexities and intricacies of geopolitics (which is both driven and impacted by history, culture, school of taught, incentives,.. etc) are literally like a DC Comic Movie in the minds of some people with United States being the superhero world police who will crush evil with a mighty army and restore democracy and peace throughout the world..
What happened to Dotcom is fairly normal in the case where someone in country X is doing something that violates similar laws in both country X and country Y, more of the damages are occurring in country Y than in country X, and X and Y have extradition treaties.
On the other hand, North Korea is the way it is because they've rejected our neo-liberal ideology. I think much like TOR did for Iraq this would actually move them away from China and closer to us.
EDIT (out of comment quota): I'd hope not but I'm not convinced they aren't. It sure seems to degenerate into that more often than not.
Nobody said it was necessary. Hell, it arguably doesn't count as a rejection of neo-liberal ideology in the first place (see also: Guantanamo Bay, Japanese internment camps, and border camps all previously or currently existing within the archetype for neoliberalism).
Convenient feature especially for countries that are heavily under sanction. Isn't the alleged creator of Ethereum Russian? His father is a Russian computer scientist?
Hang on a second. Just to be clear about this example, this example is walking through how Ethereum has been designed specifically to allow North Korea to transact Ethereum, and more than that, prevent anyone who dissents. Like, I mean ok, I get the ideological position in theory of saying "Hey, we're going to design this network so that you can't prevent any transactions." But it's quite different to go "The motivating example of why we would want to do this is so that we can help Iran and North Korea money launder in a direct attack against our own government's laws".
Here's my counter-example to the scenarios the author puts forward. You stake 32 eth to become a validator node and start signing off transactions from North Korea. Other people choose not to do that because... well. Your stake slowly goes up and they slowly bleed Eth. Then the US government smash down your door and throw you in federal prison because you're actively working to help North Korea.