Infrastructure bill cryptocurrency surveillance provision is a privacy disaster

https://www.eff.org/deeplinks/2021/08/cryptocurrency-surveillance-provision-buried-infrastructure-bill-disaster-digital

by abecedarius • 5 years ago

426 340 5 years ago

1cvmask• 5 years ago

This is more than a privacy disaster. It is so far so vaguely worded (maybe deliberately?) that the government can target everyone in the ecosystem with penalties:

While the language is still evolving, the proposal would seek to expand the definition of “broker” under section 6045(c)(1) of the Internal Revenue Code of 1986 to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets” on behalf of another person. These newly defined brokers would be required to comply with IRS reporting requirements for brokers, including filing form 1099s with the IRS. That means they would have to collect user data, including users’ names and addresses.

The broad, confusing language leaves open a door for almost any entity within the cryptocurrency ecosystem to be considered a “broker”—including software developers and cryptocurrency startups that aren’t custodying or controlling assets on behalf of their users. It could even potentially implicate miners, those who confirm and verify blockchain transactions. The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users.

hkt3• 5 years ago

"forced to surveil their users"

Or as it is otherwise known, abide by the same KYC rules as banks.

I'd guess the vague wording is to allow regulators and the judiciary to respond flexibly to changing practices. It might be broad but it isn't poor lawmaking: it does exactly as it intends to. Even using brokerage as an analogy makes sense to respond to a system in which by design almost everyone of significance is a middleman of some kind.

Fundamentally this is what will allow bitcoin to thrive: this is part of the process of becoming legitimised. It isn't what the crypto-libertarians hoped for, but what they hoped for in the beginning was endless deflation, untaxable income and speculative gains. It wasn't good for anyone but them.

This is a step to something better, namely a new financial system in which upstarts are able to enter quickly and on technical merit alone. That is worth a lot, and won't happen without bitcoin entering the regulated mainstream.

KingOfCoders2• 5 years ago

It's basically the same with the GDPR, it talks more about principles than companies or technologies to be able to adapt to a fast changing field - which I appreciate as a citizen but as an implementor I prefer the checklists of PCIDSS which are not vague.

mattwilsonn888• 5 years ago

Bitcoin already is regulated - piling on as much regulation as possible isn't what's going to make it more main stream. This bill allows the request to treat miners as brokers, which is absurd considering that not all miners operate in the U.S. Any miner that does operate in the U.S. will hash locally and send verified blocks from international nodes, so it won't work anyways.

Upstarts are able to enter quickly based on technical merit alone RIGHT NOW. How does adding regulation simplify that for them? It doesn't - it makes it far more restrictive. You must be on crack to believe these provisions "help" crypto assets. This bill goes against the design philosophy of peer-to-peer transactions.

noduerme3• 5 years ago

How can anyone enter the market quickly with an app that takes crypto as payment, if you have to register as a broker and meet KYC standards? Suppose you want to sell character costumes or start a subscription podcast in crypto, rather than paying royalties to Apple or having payment processing through Visa. Are you going to demand ID verification from all your listeners? It basically makes it so onerous to a startup that no innovation can happen

RHSeeger7• 5 years ago

The fact that the government routinely threatens to "throw the book" at people, using various "vaguely worded" laws, to get them to plead guilty to crimes they may or may not have committed (without their time in court) is a prime reason why those laws are bad.

We believe you had drugs on you, even though we couldn't find them. We also see you play World of Warcraft and that you're used the in game auction house to sell your items for in game money to other players. If you don't please guilty to the drug charge, we're going to hit you with 1,000+ counts of of violations of the IBCSP (or whatever this law is called); you'd be looking at 1,000 years in prison and a 1,000,0000$ fine, minimum.

The US government _does_ things like that. And, as such (because they have shown they cannot be trusted to act in the spirit of the law), we need to limit what powers we give them. I find it astonishing that anyone doesn't realize this.

colechristensen3• 5 years ago

Is it really a privacy disaster? Blockchain is already a privacy disaster as all of your transactions are on a public ledger.

It just puts a nail in the coffin of the idea that blockchain is going to be some libertarian dream of freedom from regulation and a magic bullet for getting around rules. Of course this was coming.

christophilus• 5 years ago

responsible for and regularly providing any service effectuating transfers of digital assets

Do they define digital assets? Because my Google Doc is a digital asset. If I transfer it to a friend, is Google now a broker?

Communitivity2• 5 years ago

I would suspect that under the current proposed wording, yes. Facebook, Google, etc. all become brokers. This could be a means for the government to go after social platforms and get transparent vies on all the social media activities of U.S. citizens. It is scary.

pjc505• 5 years ago

This should be read along with https://news.ycombinator.com/item?id=28042185 "Wealthy Americans Targeted by U.S. in Panama Tax-Fraud Probe". The fundamental question is "should paying tax be optional for rich people?" Large parts of the crypto ecosystem believe that the answer should be "yes". The US government believes the answer should be "no".

dmichulke• 5 years ago

Large parts of the crypto ecosystem believe that the answer should be "yes"

Citation needed.

Also, why do you think crypto people think that rich people should pay no tax?

DennisP4• 5 years ago

Believe it or not it's possible to support tax enforcement, and still not want the core functions necessary for cryptocurrency to be made illegal.

fallingknife2• 5 years ago

Only if the government continues to insist on taxing income as a main source of income. The government could easily implement a sales tax and crypto would only be a small obstacle to enforcement. And as a bonus feature we could fire a bunch of bureaucrats too.

bgitarts2• 5 years ago

This legislation will not raise more tax revenue like it proposes. It will stifle the US crypto industry and push it into friendlier jurisdictions. Ultimately it could end up reducing tax revenue compared to not touching the crypto industry.

cheeseomlit• 5 years ago

Paying tax is and will always be optional for the rich. Crypto offers the middle class a chance to evade taxes as well, so lawmakers are of course far more adversarial to it than they are to the methods used by themselves and their corporate friends.

One cold hard look at https://usdebtclock.org/ is enough to convince me that paying taxes to the US government is not a moral imperative. Every penny I pay is going towards paying off a massive ever-expanding black hole of debt that is mathematically impossible to ever pay off, the government is going to spend the same amount regardless of the revenue it collects since the Fed just prints it all anyways. So what's the point in "paying your fair share" in such a system? You'd be a fool not to evade as much as you possibly can.

pembrook3• 5 years ago

regularly providing any service effectuating transfers of digital assets

I fail to see how this is a "privacy disaster." It looks like crypto brokers are going to be treated like all other brokerages.

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?

Bitcoin is basically digital gold, and just like with gold, when you chose to buy or sell it the convenient way (eg. through an ETF instead of actual physical gold), it gets reported to everybody.

You can always custody your own bitcoin and find partners to transact with directly and choose not to report it (like with physical gold), but, similar to physical gold, it will be extremely cumbersome, risky, and not worth your time to do so.

adolph• 5 years ago

Is it accurate to treat crypto facilities as equity brokers, or more like foreign currency exchanges? (Forex probably have their own reporting requirements, the question is about analogous service, not the reporting/privacy part.)

miracle2k2• 5 years ago

The argument is that software developers or miners should not be treated as brokers, the later being akin to ISPs. If you are not going to engage with this argument, why bother?

Communitivity2• 5 years ago

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?

Yes, I do. The IRS has slowly gathered power since 1913. Federal taxes were supposed to be short term and temporary, for war levies and such.

Furthermore, the tax code within the constitution controverts itself: "all Duties, Imposts and Excises shall be uniform throughout the United States" - I.8.1

zionic• 5 years ago

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government?

Yes. Do you not? They have no right to that information. Why do so many in the "hacker" culture simp for the authority structure?

BurningFrog• 5 years ago

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?

"Disaster" is a loaded word, but of course it would be a huge privacy improvement if they didn't!

bgitarts2• 5 years ago

Yes I call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government. Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099.

dcolkitt9• 5 years ago

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?

This isn't like that at all. This would be like the government requiring Microsoft to KYC every single user of Excel, because people use their software to manage money.

barnabee• 5 years ago

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?

Yes. Clearly.

My car doesn't keep an up to date record of my name and adress so it can report my position and speed to the authorities. Warrantless wiretapping is illegal in most (every?) form outside finance, and there's no justification for banks or investment firms being any different.

Governments have a right to make laws, they don't have a right to continuously monitor every citizen to enforce them.

matheusmoreira• 5 years ago

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government?

Yes.

heliodor• 5 years ago

If you're going to quote the article, please mark it as such.

shanebrunette2• 5 years ago

Founder of cryptotaxcalculator.io here. First of all I agree the proposed rules aren’t particularly well thought out. The thing is, the 1099 forms that the IRS gets from existing brokers don’t make any sense because as soon as you move funds between exchanges the broker can no longer accurately track the cost basis. Pre-crypto you generally wouldn’t have this problem. From a tax compliance perspective it is an absolute nightmare, and I am sure this is just an ill thought out attempt at trying to make their lives easier. Probably not the best way to go about it though. There is a lot to solve in this space.

dcolkitt9• 5 years ago

One of the underlying problems is that the capital gains tax code itself is designed for a world from a pre-financialized, pre-electronic world from the 1950s. The idea that someone might trade in and out of positions within milliseconds, possibly using complex derivatives or sophisticated leveraged is completely absent from the code. There's nothing in the code that addresses even how to treat trades that are done in the same day. Wash sale rules are literally non-determinable for high frequency traders. There's no guidance whatsoever on when and how derivatives are rolled against the a position in the underlying.

I run a HFT operation, and just computing my US tax returns required thousands of lines of code of custom software. And then to actually file it, I print off a PDF, thousands of pages long of each and every individual trade. Not a CSV, not a data file, literally a printout. As if some IRS accountant is going to manually go through millions of rows line by line with an adding machine.

freeone3000• 5 years ago

This is also true of stocks transferred between brokerages -- it's supposed to be transfered with. If it's not, there's a correction line on the 1099 with a space for accurate cost basis info, and you'd provide the original purchase receipt as an attachment. There might be issues in the space, but cost basis on a transferred equity isn't one of them.

Spooky23• 5 years ago

The most booming business in crypto is the new category of organized crime.

There are a lot of positive or interesting aspects to crypto, but the prevalence of tax evasion, money laundering and grifts of varying scale dominates the conversation. Regulation is inevitable.

throwaway0a5e• 5 years ago

It is so far so vaguely worded (maybe deliberately?) that the government can target everyone in the ecosystem with penalties:

That's the point. They reserve the power of arbitrary enforcement early on because they don't know what the stuff they won't like will look like. So then they'll go after anything they don't like and leave it up to the courts and the legislature to clean up the mess.

Rd6n6• 5 years ago

include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets”

Does that include PDFs, audio books, software, and photos? Web apps or plugins? “Asset” is monstrously vague.

Does Drivethrurpg have to worry about this?

meragrin_• 5 years ago

My first thought were in game assets.

knorker4• 5 years ago

So in short you're saying that yes actually everyone has to follow AML and KYC laws. You can't just wave a magic "it's math!" wand and pretend that laws don't apply to you.

Cryptocurrencies are not "clever" for avoiding laws.

woah• 5 years ago

Brokers have previously been parties that take custody of customer funds. This legislation potentially expands that to anyone who publishes code that users can use themselves to effect trades, for example, a startup that has deployed a smart contract.

The willful stupidity that a lot of posters on here need to engage in to get some crypto bashing points is amazing.

Ironically, this will not hurt crypto at all. It will only hurt US companies by driving them out. US residents will still be able to access and use smart contracts supplied by foreign startups unless the government makes crypto completely illegal.

randomswede• 5 years ago

As far as I can tell[1], any miner that does NOT verify the identities of the source and destination of a bitcoin transaction, and these happen to involve illegal transactions, are guilty of money laundering under Swedish (and probably most countries') law.

In that law, anyone who actively assists in the transference of valuable tokens need to ensure that they're not assisting in the transfer of value that originates from crime.

And since a miner has explicit choice of what transactions to include in the block, this means that they cannot hide behind a "common carrier"-like[2] exception.

[1] Nope, don't even pretend to be a lawyer in secret, and I may have missed some subtleties. [2] This is basically what protects the inter-bank transfer services, the banks themselves are on the hook for preventing money laundering transactions to get that far. But since anyone can place a transaction into the pool, this is not applicable.

LightG• 5 years ago

It's crypto-huntin' season

kybernetyk2• 5 years ago

regularly providing any service effectuating transfers of digital assets

so running your own bitcoin node lands you with one foot in jail

onelastjob2• 5 years ago

I agree that this provision is a disaster and will force a lot of cryptocurrency startups to incorporate outside of the US and also not offer their services to US customers. It's a real shame. The government should be able to get enough data for tax compliance just by making fiat on-ramps and off-ramps (aka exchanges) implement KYC (know your customer) rules.

BLKNSLVR2• 5 years ago

making fiat on-ramps and off-ramps (aka exchanges) implement KYC (know your customer) rules.

That's already the case for most exchanges, and they also log trades and provide these logs to both individuals and taxation entities for EoY tax reporting purposes. The "problem" is that once you've converted fiat into crypto, you can use decentralized exchanges, and trade back and forth ad infinitum with no traceability. This is a problem because every single trade (crypto to crypto) is considered a taxable event, and on a decentralized exchange or centralized exchange that doesn't do KYC, there are no tax-specific records and therefore such transactions are unlikely to be recorded.

Many people bemoan that it would be fairer and easier to just apply tax at the time crypto is converted into, and then out of, fiat. But a lot of profit can be earnt by the individual in between those on- and off-ramps, including the potential for profits to go, pardon the pun, into the ether, never to be seen again (by the government at least).

The crypto die-hards are also moving towards the lack of necessity to cash out to fiat, which would render the off-ramp taxation less effective. This may be why there's a specific focus on stable coins, as they eschew the need for converting back to fiat.

shanebrunette2• 5 years ago

I am the founder of CryptoTaxCalculator.io and I am not sure where the idea of non traceability on DEXs comes from. Aggregating the transaction history is absolutely possible, all we need is the public wallet address. The real black box is around certain international exchanges that don’t keep appropriate transaction records.

orwin• 5 years ago

will force a lot of cryptocurrency startups to incorporate outside of the US and also not offer their services to US customers

Sad for rug pullers, US are the primary market for FOMO altcoins.

jl271810• 5 years ago

The data is fully open already. They can’t be this stupid.

null0pointer• 5 years ago

This particular instance is a disaster, no doubt, but the real issue is the bundling of completely unrelated provisions into single bills. It's absurd.

Havoc• 5 years ago

Not only is it absurd it seems to be a core part of how these bill get negotiated cross party

parineum2• 5 years ago

This is a symptom of a symptom of a symptom.

Congress, essentially, only passes one bill a year now, the budget. That's the case because everything else requires 60 votes because of the filibuster rules. Filibuster rules were changed because Obama wanted the affordable care act. Standing in the way of that was the Tea Party, the group of Republicans that don't negotiate.

I'm going to both sides this one because we now have the counterpart to that on the left with the progressives.

There exists a segment of both parties that refuse to negotiate from their ideologies. This makes sure that neither party is capable of passing legislation unless they have a super majority not including that wing of the party.

The infrastructure bill is one of the very few things that can break this because the centrists of both parties do actually like it quite a bit, they just have to dog and pony hating each other before they get it done.

That and war. We can all agree on war.

mschuster912• 5 years ago

There exists a segment of both parties that refuse to negotiate from their ideologies. This makes sure that neither party is capable of passing legislation unless they have a super majority not including that wing of the party.

And there is a root cause at the bottom of all this dysfunctionality: FPTP voting and gerrymandering that always converges into a two-party system with most districts being "solid red" or "solid blue", leaving only a handful of (highly contested) "swing states/districts" to squabble over.

legutierr• 5 years ago

Filibuster rules were changed because Obama wanted the affordable care act.

This is not true. No filibuster rules were changed to accommodate the ACA. You might be confused because prt of the ACA was passed under reconciliation, a long-existing exception to the filibuster rules that allows spending and taxation laws to be passed without requiring a supermajority to invoke cloture. Reconciliation has been part of the Senate rules since 1974.

https://en.wikipedia.org/wiki/Reconciliation_(United_States_...

IfOnlyYouKnew2• 5 years ago

It's a provision intended to raise the funds for infrastructure investments, so it is arguably connected to the bulk of the bill.

Besides, mixing different topics is the only way anything can every be done: If you have a single issue you're fighting over with someone, zero-sum style, the best possible advice is to included something unrelated in the discussion, hoping that your interests differ in such a way that you can make trades beneficial to both parties.

acjohnson55• 5 years ago

Welcome to modern American government. We've failed to create a system that allows for small, frequent changes to the law, so now we have giant ones.

sumtechguy• 5 years ago

To fix would take some interesting work.

My dumb idea is 'must fit on no more than 5 standard sheets of 8x11 piece of paper'. With exceptions to that needing a 75% majority.

My other dumb idea is about 4 people mostly control the vote. Majority/minority leader should be a rotating position. With the name drawn out of a hat.

phase5• 5 years ago

There is a newer more comprehensive one which is worse for privacy https://www.coindesk.com/new-crypto-bill-in-us-congress-is-t...

lvs• 5 years ago

This is unenforceable. Some of the relevant open source projects are being developed by contributors based outside the US who have no possibility of knowing whether the address receiving coins in a transaction is controlled by someone based in the US. It's not even possible within the design of bitcoin and related cryptocurrencies for developers to add such tracking provisions, since the generation of an address is algorithmic and can be done with pen and paper. If indeed the law is as the EFF describes it, it must have been written by someone with zero technical knowledge about cryptocurrency. This is not a viable regulatory approach. The implementation is not cognizable -- and therefore is not enforceable.

KingOfCoders2• 5 years ago

Then these open source developers should be careful to attend conferences in the US.

trasz7• 5 years ago

Except that US bullies other countries to persecute people who ignore US sanctions.

pavlov2• 5 years ago

The downsides listed are just cryptocurrency lobbyist talking points.

“Require new surveillance of everyday users of cryptocurrency;”

What everyday users? There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.

”Force software creators and others who do not custody cryptocurrency for their users to implement cumbersome surveillance systems or stop offering services in the United States;”

Not offering these services seems like a positive outcome.

”Create more honeypots of private information about cryptocurrency users that could attract malicious actors;”

Losing your money to malicious actors is a standard part of the crypto experience already. Endless scams and ransomware don’t seem to worry the author.

”Create more legal complexity to developing blockchain projects or verifying transactions in the United States—likely leading to more innovation moving overseas.”

Ah, blockchain innovation, which is somehow so vital to the shining future of mankind, yet has utterly failed to produce anything of technological or economic value with the billions already invested. Overseas sounds like a fine place to continue this pseudoinnovation charade.

colechristensen3• 5 years ago

has utterly failed to produce anything of technological or economic value with the billions already invested. Overseas sounds like a fine place to continue this pseudoinnovation charade.

One quiet place where blockchain makes sense is shared ledgers between large financial institutions, JPMorgan for example is working a lot on this. It's not about privacy or usurping the social order or whatever imaginative solution to all of society's problems that gets attached to so many other things... it's just a better API between institutions for transferring ownership between themselves, which is a frequent and often awkward (and ancient) tech.

With blockchain you don't need a third party, with big institutions "theft" doesn't make sense. If there is an error and a transaction needs to be reversed it's in everybody's interest to do so and expected to happen from time to time and likely a built in feature.

Simplifying way back end transactions between banks is pretty nice... for banks, but pretty uninteresting to most people because it's just about settling daily balances between institutions and the like which is really boring.

pavlov2• 5 years ago

This use case wouldn’t be affected in any way by the proposed legislation because banks already know their customers.

pjc505• 5 years ago

One quiet place where blockchain makes sense is shared ledgers between large financial institutions,

https://en.wikipedia.org/wiki/Payment_Services_Directive

Usually refusing to share information or API is a business choice. Besides, once you have a closed group, you just have signed transactions ("permissioned blockchain"), and can (must) ditch proof-of-waste. So it barely resembles what people normally think of as blockchain and starts to look more like signed git commits.

user-the-name2• 5 years ago

It's a worse API. In that situation, you have trusted parties. You don't need a blockchain, and the absolutely crippling tradeoffs it brings with it.

dannyw• 5 years ago

A vague, extraordinarily broad, and difficult to interpret statement is absolutely a disaster.

You might not like cryptocurrency, but this is akin to the infrastructure bill having a provision classifying anyone "responsible for and regularly providing any service effectuating encryption of information" as a munitions-dealer -- with wide downstream implications on (1) open source software, and libraries like OpenSSL, etc, and (2) vague enough to cover pretty much every webmaster who uses TLS certificates.

trasz7• 5 years ago

Developing Open Source software is not “services”, unless you have a customer paying for it.

asah2• 5 years ago

In case readers don't remember:

https://www.google.com/search?q=encryption+munitions+1990s

And of course the t-shirt:

https://www.google.com/search?q=perl+rsa+munitions+t+shirt

pydry2• 5 years ago

Disaster for whom? If the side effect of this ambiguity is a mass exodus from crypto who loses out apart from speculators and the black market?

I'd feel a lot more sympathetic if crypto uses cases didnt predominantly fall into those two camps (as is the case for cryptography).

the_real_sparky• 5 years ago

To be fair, proof of work crypto does impact electric infrastructure, although it’s difficult to pin that on the negative or positive side of neutral because the cheapest electric rates possible include provisions for demand response / shut offs. The biggest operations will generally be trying to negotiate the cheapest rate possible, but that’s not a given. Proof of work very much affects the generation side (generation costs for all customers, greenhouse gas emissions, etc) in the net negative though. The only exception to this would be on off-grid installations or installations on >100% renewable networks with complete demand response for the crypto and no other alternatives for exporting that power elsewhere. Even then it’s creating useless waste heat, but meh. For what it’s worth, I’ve owned Bitcoin and others in the past but now that I’ve had to deal with the impacts directly in my industry I’m definitely over my infatuation.

eingaeKaiy8ujie2• 5 years ago

You have no fucking idea what you are talking about.

herendin2• 5 years ago

IMO, you're probably right, but what you've written is even worse than the comment you're replying to. At least the OP tries to argue a point and offer some vague evidence. So please don't do this type of lazy driveby sniping here. Flagged.

dang• 5 years ago

Please don't break the site guidelines like this, no matter how ignorant someone is or you feel they are.

If you know more than someone else, that's great—please share some of what you know, so the rest of us can learn. If you don't want to do that, that's fine, but then please don't post.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

https://news.ycombinator.com/newsguidelines.html

trophycase2• 5 years ago

This won't age well

aww_dang7• 5 years ago

Have you considered the possibility that existing regulation is one of the barriers to use of cryptocurrencies?

Is it possible that there are uses for cryptocurrencies you have not iterated over in your comment?

If I suggest that sub-cent microtransactions are a use of cryptocurrency that I find useful and have implemented in a hobby project, I predict the response will be, "but that's not wildly popular, speculation and gambling are widespread!"

I don't accept that these widespread uses justify prohibition or over regulation. Even if we accept that these popular uses are worthy of prohibition, other developers should not be punished or unduly burdened because of the actions of the majority. This brings us back to the first point, if regulatory burdens are too high, individuals won't innovate.

There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.
Not offering these services seems like a positive outcome.
has utterly failed to produce anything of technological or economic value

This reads as, "Prohibit everything I personally dislike or can't fully appreciate"

Overseas sounds like a fine place to continue this...

"If you don't like it leave the USA", this ignores the chilling effects the US's regulations have around the globe.

davidcbc2• 5 years ago

Have you considered the possibility that existing regulation is one of the barriers to use of cryptocurrencies?

Cryptocurrency has been largely unregulated since its inception and it's almost exclusively used for speculation and criminal activity. The barrier to use of cryptocurrency is that it provides nothing of value outside of those use cases, not regulation.

zeofig• 5 years ago

Another fantastically ignorant pontification on crypto, right here on Hacker News. Whether you like crypto or not (or whether you know anything about it or not), little of what you said is relevant to the point of the article in question.

MelonTree2• 5 years ago

Ah, blockchain innovation, which is somehow so vital to the shining future of mankind, yet has utterly failed to produce anything of technological or economic value with the billions already invested.

Cryptocurrencies have allowed me to feed my family back home in Lebanon, in a way that would simply not be possible with out it. I'm not sure if you don't think this happens on a daily basis, or is not of economic value.

whitepaint• 5 years ago

What everyday users? There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.

...

https://compound.finance/

https://pooltogether.com/

https://polymarket.com/

https://app.uniswap.org/

https://rarible.com/

https://axieinfinity.com/

...

Anyone who has access to the internet can use the above (and it's just few examples, more on https://ethereum.org/) without any arbitrary restrictions set by any governments.

How can you look at these things and not be in awe?

And how on earth can somebody be so confident about something yet know so little about it?

nprz9• 5 years ago

Because the original commenter is not arguing in good faith. There are countless examples of crypto and bitcoin helping civilians escape tyrannical states, conveniently non were mentioned.

enlyth2• 5 years ago

The websites you all listed are just vehicles for further speculation and gambling.

Gaining interest on cryptocurrencies by providing liquidity so other people can speculate on cryptocurrencies, prediction markets (literally gambling on cryptocurrencies), NFTs (speculating on infungible cryptocurrency tokens), and some virtual game where you can further speculate on NFTs with a touch of gamification.

Nothing seems to tie into any real world usefulness, everything ties back into itself where the core is always 'will the value of my internet coins go up'.

The only single useful thing cryptocurrencies can do is you can buy drugs from the darkweb, semi-anonymously, or maybe completely if you use something like Monero.

notJim2• 5 years ago

Most of these things are either likely to be fads (NFTs) or just ways to fuel the speculation and ponzi schemes (compound and uniswap.) Theoretically lending could be used for doing things in the real world I guess, but it seems like once the money is in crypto, it just sloshes around creating more crypto. The betting market is an interesting one, I hadn't seen that. IMO DAOs and DeFi are interesting, but I haven't seen it have a big effect outside of crypto yet.

nprz9• 5 years ago

Bitcoin is a technology that improves individual freedoms. No institution can prevent you from holding or transferring bitcoin. When you buy a bitcoin you can remain confident there will never be more than 21 million btc minted, btc will never become diluted.

Claiming the BTC protocol is without utility is completely disingenuous.

goatmeal2• 5 years ago

a big chunk of the population believes that the government should have a total monopoly over the issuance of currency and they should be able to control every aspect of how it gets accounted for and who should facilitate transactions, in order to prevent crime. these people have a complete disregard for individuals who are treated unfairly by the financial system. when some people are shut out of their access to banking and payment processing despite not doing anything illegal, and when others are unable to do business due to too much administrative overhead imposed by financial regulation, their suffering is excusable because crime is being prevented.

acdha2• 5 years ago

Bitcoin is a technology that improves individual freedoms. No institution can prevent you from holding or transferring bitcoin.

This is a common sales pitch but it's relying on the listener not thinking about the problem. Any government can prevent you from using Bitcoin by blocking your transactions: every transaction requires a network exchange and the same infrastructure which is used for things like the Great Firewall can trivially stop that as well.

More importantly, however, that's a hypothetical situation for most people here. The realistic threats to think about stem from the difference between you being able to _make_ a transaction and not have any consequences for doing so. Bitcoin requires you to publish a full log of your transactions for your government to see — if you don't report transactions, skip paying taxes, or conduct a transfer with someone on a blacklist, they can use the public ledger as a signed confession.

Every transaction you make can be used to deanonymize you, and that sharply limits the use of Bitcoin because there's no demand for random numbers — only real things you can do with them, which require physical presences which governments control. If your goal is to transfer money and flee the country, never coming back and writing off any friends or family left behind, Bitcoin might help. If your usage is anything else, you're just counting down until you or someone you interact with has their data compromised.

Now, maybe you've also heard the marketing claims about mixers. Think about that a bit more carefully and you'll also realize the problems which make those unsafe in practice: beyond the expense, you're trusting the mixer operator not to be compromised, simply having any transaction linked to one is evidence that you're doing something illegal, and you have to worry about other users of the service using it for crimes which are serious enough to get more investigation than you personally are worth and proving that you were not knowingly helping those people.

If you were running the secret police somewhere, one of the best things you could do would be set up Bitcoin exchange and mixer services and promote them in your country so you'd have people giving you signed evidence of things you probably weren't even aware of.

yjftsjthsd-h• 5 years ago

What everyday users? There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.

I literally know someone who pays their rent with zcash. It is possible to use it as, y'know, currency.

Andrew_nenakhov• 5 years ago

What everyday users? There’s nothing you can do with this stuff except speculate, gamble and build obfuscated Ponzis.

Lie. I can receive payments from my foreign customers in a matter of 30 minutes instead of many days via traditional banking services or Draconian fees line PayPal. I can also safely donate to anti-Putin opposition.

dbsmith83• 5 years ago

Ah, blockchain innovation, which is somehow so vital to the shining future of mankind, yet has utterly failed to produce anything of technological or economic value

Do you know what economic value means? If there was no economic value, then it wouldn't be used.

Your comment sounds like one that will be hilarious in the not-so-distant future. It's analogous to the whole trope "X technology is useless" or "People will never need more than X amount of memory" type of thing.

jasiek• 5 years ago

This is how you deal with an existential threat to USD.

trophycase2• 5 years ago

What? USD is already the dominant stablecoin. The US should be jumping for joy that they will remain the universal fiat even through the blockchain age.

When Uniswap removed a bunch of coins from their front end, guess what they removed? sAUD, sEUR... but not sUSD. Very interesting don't you think?

cinquemb2• 5 years ago

When Uniswap removed a bunch of coins from their front end

I invite everyone to clone/fork (i've removed the google analytics stuff and emptied the black lists and made uniswap-info use the hashrouter):

https://github.com/cinquemb/uniswap-info/ (deployed at https://cinquemb.github.io/uniswap-info)

and

https://github.com/cinquemb/uniswap-interface (deployed at https://cinquemb.github.io/uniswap-interface)

To deploy yourselves you can (on gh, you can also run it locally):

yarn install

yarn build

mkdir dist

cd dist/

cp -R ../build/* .

git add -A

git commit -m "GH pages"

git push -f git@github.com:[your account]/uniswap-info.git master:gh-pages

telxos• 5 years ago

3. Tether

7. USD Coin

10. Binance USD

Crypto seems rather reliant on USD. The crypto narratives are always so flimsy.

elevenoh• 5 years ago

Projects bringing USD's value - namely globally credible & low-volatility price denomination - into crypto doesn't mean crypto is 'reliant on' USD.

IfOnlyYouKnew2• 5 years ago

Ha! I hadn't seen this particular paranoia-mixed-with-delusions-of-grandiosity for a while. In the first year or so of Bitcoin, the community was absolutely obsessed with the idea that "the Fed's" will come for them, to protect the mighty dollar. They were also certain they could withstand such efforts, since their fancy tech operated outside the reaches of the law.

They were wrong on both counts: "the establishment" didn't react with aggressive attempts to shut them down, but really just some mild interest mixed with a bit of amusement.

Only when, after a decade+, it had been proven beyond any doubt that the technology isn't useful for anything anyone cares about, and when it became more salient that the energy usage and the scale of fraud were growing out of control did they start pushing back. And with every single startup in the sector operating within the confines of law and the existing financial markets, there is absolutely no doubt that the law can regulate and/or shut down the industry within any reasonable meaning of the term.

jl271810• 5 years ago

Yeah, they can but they won’t. They’ll institutionalize everything you hate so much about the crypto markets today, and force you to invest in it by destroying your savings account, your house, and your 401k. Centralized fake crypto is the next big population-level banking scam.

AndyMcConachie• 5 years ago

I'm tired of having to care about digital currencies and I really don't care if the people working with them get treated unfairly. It's a solution in search of a problem and I'm tired of people who otherwise don't know shit about technology constantly asking me about it.

Digital currencies have solved none of our social problems, and will never solve any of our social problems. Instead they're just a giant distraction, or worse a not so clever means of facilitating sophmoric scams on the ignorant.

ivan_gammel• 5 years ago

I would add to this that they created more problems than solved. Negative environmental impact, criminal activities, robbery of unqualified investors — all that for a few geeks to have a false feeling of privacy.

CryptoPunk6• 5 years ago

How could you not care if people are treated unfairly? This is not a good baseline value that we can all share. Are we all going to hope that other people, who disagree with us on some social or business issue, are treated unfairly? Is politics going to be relegated to a forum to wage a never-ending battle against each other?

How about live and let live?

aww_dang7• 5 years ago

Apparently for many here, subjective interpretations of "social good" trump the basic premises of voluntary interactions and natural law. Contrast those views with decentralized and non-violent valuations provided by voluntary consumption.

asah2• 5 years ago

Yeah me too. And deep neural nets. And quantum computing. And 4k TV. And smart phones. And drones. Cause nuthin but trouble. Give me my horse and buggy !

Seriously, it's both pointless to play Luddite (in general) and there's plenty of legit and exciting applications for crypto, from wildly faster and easier capital allocation to sophisticated artistic rights contracts replacing junky and expensive legal contracts.

infinitezest• 5 years ago

I think this is a pretty reductionist argument. Just like the other technologies that you mentioned crypto has some good applications. But it really comes down to a cost-benefit analysis. Easier said than done, sure, but I'm not at all convinced by the "oh well I guess you think ALL tech is bad then" argument.

mypastself• 5 years ago

Even if you think they’re criminals, why wouldn’t you want them to get treated fairly? What other types of crimes do you think deserve unfair treatment?

jl271810• 5 years ago

What are some of the social problems that the SWIFT network solves?

eingaeKaiy8ujie2• 5 years ago

Why do we allow some clueless, incompetent old dicks to make laws like this? Governments are too powerful. This system has to change. The role of a government has to be reduced to a minimum.

Hopefully we'll get there in the next 200-300 years.

chrisan2• 5 years ago

because more people vote for them

CryptoPunk6• 5 years ago

Another problem is making "digital asset" the object of the regulatory restriction, which is so vague that it could include not only anything on the blockchain, but plenty of non-monetary digital items outside the blockchain too.

It should specify digital currencies, because that is the only type of digital asset for which you find comparable regulations in the financial sector.

jl271810• 5 years ago

Then they’d have to define it as currency and they can’t tax purchases made with currency.

maccolgan• 5 years ago

classifying it as an currency rather than an asset is akin to IRS committing suicide

lobochrome2• 5 years ago

Not talking about the specific implementation but the question is: Privacy for whom?

Do we need the „innovation“ of untraceable money?

For instance, we decided to get rid of untraceable cell phone numbers (at least in Germany you can’t get a cell without ID) and - nothing changed for the worse, but arguably some things changed for the better.

Why would we introduce that for money/payment flows?

CryptoPunk6• 5 years ago

>Do we need the „innovation“ of untraceable money?

Yes. We need untraceable money. Controlling how people use money is tantamount to controlling all of their economic interactions. Surveilling how people use their money means becoming privy to their most intimate interactions. This is mass-surveillance, of everything (because money touches everything), being snuck through the backdoor.

With the transition from physical to digital currencies, we've created surveillance systems the likes of which the world has never seen. The information collection being done on the population is being done by a tiny proportion of the population, and disproportionately benefiting the political elite. Hyper-centralization exacerbates income and power disparities, and I would bet any money it leads to a more fragile social order.

https://twitter.com/SpencerKSchiff/status/125276128577685913...

>In the last 20 years of available data, real median household income of Washington, D.C.’s residents has increased by 66.11%. For the entire country, the 20-yr increase is only 5.23%. This trend of widening disparity has accelerated dramatically since the Great Recession’s onset.

We need the more distributed configuration of power that historically existed, and that can only happen if the privacy that is characteristic of physical currencies is imparted upon digital currencies.

pjc505• 5 years ago

Untraceable money is far more likely to lead to centralization of power, because it allows the already wealthy to act unaccountably.

>In the last 20 years of available data, real median household income of Washington, D.C.’s residents has increased by 66.11%. For the entire country, the 20-yr increase is only 5.23%.

With untraceable money you'd never know this. Or you'd have to limit yourself to "declared income", which would be effectively voluntary.

lobochrome2• 5 years ago

Has money ever been untraceable? Cash certainly was traceable starting with certain volume. Closest was maybe art and collectibles during Shoa!?

A more fragile social order then we have today?!

shapefrog• 5 years ago

Since when was a public ledger of financial transactions anything but a privacy disaster?

chrisan2• 5 years ago

how do I tie this public ledger to an individual?

counternotions• 5 years ago

Here’s an example of sleuthing the public ledger to uncover some high profile scammers: https://www.youtube.com/watch?v=3Xw9rWmTQfc&feature=youtu.be

rvz• 5 years ago

It's like they want to push everyone to use privacy coins at this point.

Even if this passes succeeds, it helps the privacy coins anyway. Just wait until the BTC maximalists realise that BTC is traceable and not private.

oliwarner• 5 years ago

Isn't this just an attempt to bring crypto in line with existing money-laundering rules? Don't $10k+ money movements already trigger IRS notifications?

I know that's a bit whatabouttery but if we want to legitimise blockchain payments, we have to do more to kick organised crime and tax evaders out. Pretending that absolute privacy is always best is a criminal wet dream.

Waves goodbye to his karma

davidcbc2• 5 years ago

The vast majority of cryptocurrency advocates are speculators that don't want to legitimize blockchain payments, they only want the number to go up. Criminal activity has been shown over and over to be the only "legitimate" use case of cryptocurrency, so if you eliminate that the number might go down.

jl271810• 5 years ago

I’m sure you are speaking for yourself here with such authority.

bob33212• 5 years ago

I don't know why the crypto people expected anything else. They though that the government would just say:

"Well since you have this cool new anonymous database technology we will just let you make billions of dollars and not tax it"

Even more ridiculous is that 3rd world countries with sketchy governments are going to let their citizens move their money in and out of crypto.

jl271810• 5 years ago

Not a lot of people are actually making money. That would require conversion back to fiat. Nor are they buying goods and services. Basically they’re just getting taxed on worthless trades between fake assets.

The price goes up when money comes in. It goes down when money goes out. It’s up because people are losing money, not gaining it. This is tautological.

yawaworht19783• 5 years ago

A very good point was mentioned here, the miners. Is it possible to ID miners? Are they subject to kyc and taxes? I mean , they are generating revenue and distributing/creating assets. Upon mining, how long is the mined coin anonymous?

dylkil5• 5 years ago

Anyone can buy an asic and turn it on to start mining. The mined coin stays anon as long as the miner has good opsec.

yawaworht19783• 5 years ago

Can he simply convert it to cash via local Bitcoin?

Another thing I wonder, is having an ASIC a guarantee to mine something? I mean new coins/partial coins, not transaction processing.

user-the-name2• 5 years ago

Good! The sooner cryptocurrencies die, the better. The damage they are doing to society right now is immense, and it will only grow larger if they are not stopped.

henearkr15• 5 years ago

I usually side with the EFF, but here going at total war against cryptocurrencies seems right to me.

I don't see any scientific or technological application that could benefit humanity and would be developed from blockchain technology.

I tried very hard to figure out uses for the hash machines once the cryptocurrencies will disappear, but sadly I could think of none. All of this silicon, these PCBs, will just be junk.

api2• 5 years ago

It's precisely when people feel this way about things that large chunks of our civil liberties are forfeit.

Precedents: the war on drugs, crusades against porn, alcohol prohibition, the war on terror, mandatory minimum sentencing, etc.

It's a lynch mob mentality writ large and allows reckless legislators and police to gallop right over all kinds of civil boundaries that very much exist for a reason.

A much narrower set of solutions could address your concerns: a tax on proof of work mining, a ban on the sale of hardware whose sole purpose is cryptocurrency mining, or a ban on domestic exchanges converting money to/from cryptocurrencies that use high-resource proof of work mechanisms.

I see no reason to ban proof of stake or other consensus mechanism cryptocurrencies, and stepping up enforcement of existing KYC/AML regulations would help fight money laundering.

I also must point out that real estate, sham art auctions, sham investments and businesses, and numerous other mechanisms collectively account for the vast bulk of all money laundering. Cryptocurrency is a niche player. It's also a niche player in the street drug market where the vast majority of transactions use physical cash.

As far as bubbles and speculative manias go... it's legal for an adult to buy a lotto ticket (that is run by the state!) or go to a casino (permitted and regulated by the state). This is no worse. I might support raising taxes on short term speculative sorts of financial games, but those would also need to be applied to high frequency trading and speculative games run by hedge funds in conventional markets. Those are much larger than anything in crypto.

I say all this as a mostly cryptocurrency skeptic.

arrosenberg• 5 years ago

You can’t compare bitcoin to porn, gambling, drugs and alcohol. Bitcoin is the only one that doesn’t affect dopamine levels in the brain, and that virtually no one would seek out if it was suddenly illegal.

snarf21• 5 years ago

Agreed, there is zero use cases outside of currency and unfortunately, most of the currencies are little more than gambling, pump/dump and pyramid schemes. The cryptos always crow about it being so censorship resistant. I guess we'll see how resistant it really is.

tromp• 5 years ago

the hash machines

Not all PoW is hash based. Some, like Cuckatoo Cycle [1], are based on writing and reading random bits within hundreds of MB of memory, and ASICs for such PoW are dominated by SRAM, which can in principle be repurposed.

[1] https://github.com/tromp/cuckoo

henearkr15• 5 years ago

Also PoS. Those are the grey area where I don't have as much strong opinions anymore.

As they are less compute-intensive, the benefit is more likely.

LatteLazy• 5 years ago

I am sympathetic, I don't see much use for them. But...

Just because you or I don't see the use case doesn't mean something should be illegal or that we should go to war with it.

We've made this mistake before (prohibition, the war on drugs). If people want to waste their time/money on X, that's on them.

robot_no_4195• 5 years ago

"I don't see any scientific or technological application that could benefit humanity and would be developed from blockchain technology."

Cool, but there are plenty of financial, economic, and political applications of blockchain that will benefit humanity. Just because you don't understand the use case doesn't mean it doesn't have one.

henearkr15• 5 years ago

It's not that I don't understand the use case.

It's that the current use cases can be either replaced by preexisting less compute-intensive tech, or that the usage is just meaningless (gambling-like speculation, failed attempt at anonymity, tax avoidance, etc).

However my comment is as well a call to everybody to think about it!

I know I'm not very brilliant, so if anybody can do a favor to the world and find out something interesting, I'd be extremely happy :)

dogman1444• 5 years ago

I don't see any scientific or technological application that could benefit humanity and would be developed from blockchain technology.

Assuming you work in tech, you must be aware how similar attitudes existed (within tech, as well) about what the internet itself would provide.

How are you so certain that:

A) you understand all the possible directions a new, network-effect driven tech could take in its applications

B) none of them add value to humanity

C) there are no parallels in your statement to "well horses work fine, why do I need cars."

henearkr15• 5 years ago

As I said, I hoped I could think of some use for these hash machines. Same for the blockchain tech itself, i.e. some usage that would not be completely replaceable by some less compute-intensive tech.

I honestly hope those usages exist. I really do. But now I don't think they do.

But, frankly, even for Internet itself everybody could see the benefit quite early.

Anyway, if you do find interesting uses that are not replaceable by simpler things, you would save a lot of garbage!! And thus would do a favor to the environment.

So yeah I hope I'm wrong.

jl271810• 5 years ago

What you are observing is the ugly opportunism of this war, and it is a war, between systems that are controlled by powerful people, and systems that are controlled by algorithms.

This is not a new conflict. Democracy was an algorithmic victory until powerful people learned to subvert it. So too was religion, money, laws etc. This is how civilization advances. Cryptocurrency is a pure thing, an algorithmic method of storage, control and distribution of value, that came about because the old ways were failing.

Now the old powers are fighting back. It’s important to realize that this is the only reason that cryptocurrency has any speculative value at all.

If the treasury / federal reserve had seen bitcoin and adopted a protocol for algorithmic control of the money supply, and a safer wallet for dollar holders, then Bitcoin would have zero value, and the Silk Road would never have happened. If they had seen ethereum, and adopted smart contracts to replace the opaque banking and investment industry, then Ethereum would have zero value, and the iron finance rug pull would never have happened.

This is not about revenue; the treasury balance is overflowing. It’s not about keeping us safe; violent crime is nowhere on the agenda. It’s not consumer protection; the SEC refuses to ever go after the many VC-backed mega rug pulls pushed on retail investors as utility tokens. This is simply about power. They’re not afraid of scammers and criminals. They’re afraid of people like you shifting anger from the obvious canards to the bigger picture.

They’re not out to destroy cryptocurrency either. They want to control it so that they can keep siphoning money out out of people trying to mitigate the problems that their own monetary policy caused, just like 401k of the 90s. I say this to point out that you will not get what you want out of this. It will just become a bigger scam on everybody, established and protected by the full force of the law.

I wonder who it is exactly that you think is looking out for you in all of this.

dcolkitt9• 5 years ago

I don't see any scientific or technological application

That's a defensible position. But how does that justify the government going to "total war". There are plenty of things that have no scientific or technological application. Reality TV, social media, fashion, nightclubs, sports, bakeries, those stupid outfits people dress pets up in.

At what point did people stop saying "it's a free country"? So you don't like some thing and don't see much merit in it. At what point did people's knee-jerk response to that change from "not my cup of tea, but you do you, man" to "that thing is completely worthless, everyone who likes it must be an idiot, and therefore the government should abolish it"

henearkr15• 5 years ago

Well, you're right, my comment actually lacks of the spelling out of the negative part of this technology!!

As the usefulness is very doubtful but the energy consumption is utterly real, that is a net negative for the environment.

The electronic garbage, too, a huge problem.

nprz9• 5 years ago

I don't see any scientific or technological application that could benefit humanity and would be developed from blockchain technology.

Bitcoin is helping humanity right now as I type. There are millions who live under authoritative regimes that do not have access to banking services. Bitcoin gives anybody with an internet connection the ability to hold, save, and transfer value. You are condemning something you do not understand. Bitcoin is a technology that improves human rights.

https://www.theguardian.com/technology/2021/jul/31/out-of-co...

henearkr15• 5 years ago

(Bitcoin is no currency...)

I put it bluntly sorry, but to be more explicit:

because of its volatility, BTC is very difficult to adopt for real transactions.

Also, with a simple VPN, you access PayPal and you're good to go.

I'd argue that the real tech saving the world right now is the VPN.

Even to use BTC somehow you will need VPN, because those dictatorships will block the IPs.

goatmeal2• 5 years ago

when I visit a church, they ask everyone for a little money so they can keep the lights on and do interesting things once in a while. nobody expects the church to KYC everyone who puts a dollar in the collection plate. why should that be any different if the meeting takes place on a website about something other than religion? I donate cryptocurrency to forums and microblogging services to help them keep the lights on. we should be treated the same even if we don't believe in god. the owner does not need to ask for permission from anybody or depend on an intermediary to accept the money and they do not need my information. if you don't see why this is of benefit to someone then I suggest you try to operate a forum and go through the trouble to make ends meet.

henearkr15• 5 years ago

(Almost) everybody do it with PayPal, Patreon, etc.

I understand that you feel uneasy to theoretically depend on these companies, even if in practice you encounter no real difficulty.

Your fear is unnecessary... unless you do things really frown upon. Even porn and sex services are successfully using some of the online services I quoted above.

For hitmen and substances I don't really know, but those are really frown upon.

asdff3• 5 years ago

Maybe they could sell the GPUs to gamers who are desperate for even 3 year old cards.

dylkil5• 5 years ago

Why is hacker news so salty about cryptocurrency

robot_no_4195• 5 years ago

Lots of tech nerds are upset that they understand technology but not finance and economics.

MelonTree2• 5 years ago

HN tends to be very skeptical in general. It's easy to sound intelligent with a well-reasoned negative opinion than it is with an optimistic one. I think with cryptocurrency in particular a lot of HN'ers have really just dug their heals in and don't want to admit they were wrong.

Sargos• 5 years ago

HN folks on the iPod: "No wireless. Less space than a Nomad. Lame."

Tech forums have always been fairly anti-technology and dislike anything new until the rest of society fully adopts it.

colinmhayes3• 5 years ago

Cryptocurrency is currently causing more harm to society than good. PoW is a large reason for that, but even PoS will have huge negative impacts as it is mostly used for speculating and illegal activity. It doesn't solve any problems other than ones that are better solved by VPNs.

rantwasp4• 5 years ago

Okay. Let’s play the: X is causing more harm to society than good.

X=guns Are guns causing more harm than good? Should we ban guns?

X=religion. Is religion causing more harm than good? Should we ban any form of religion?

X=social media. Is social media causing more harm than good? I heard Facebook consumes more power than the entire state of Argentina! Should we ban Facebook?

X=USD the dollar. 95% of criminal activity uses USD. 95%! It’s clear to me that if no dollar we could prevent a lot of criminal activity. Should we ban the USD?

X=VPNs Used to circumvent local laws!!! Are the causing more harm than good? Ban VPNs you say?

lawn• 5 years ago

So a VPN will allow me to send money anywhere I choose? To accept payments without the risk of a third party arbitrarily shutting me down? To send donations to WikiLeaks while the US government forces payment processors and banks to abandon them?

No, of course not.

rantwasp4• 5 years ago

I think it’s a classic example of myopically focusing on some aspects of a technology while missing the entire point.

You’ll hear about net benefits to society (like those are easy to measure), about power consumption (like all if a sudden everyone is an arbiter of the market and decided: too much power), about how it’s a ponzi scheme (without understanding what a ponzi scheme is). All talking point of the anti-cryptocurrency agenda.

Curious to see how/if this changes in the next 5-10 years.

grumblenum• 5 years ago

The allure of becoming a billionaire with almost no productive effort spent is the heart and soul of the pop-tech. Crypto that you have becomes more valuable only if more people decide they want it after you have your position. If you're "hodling" then you have an incentive to be a promoter.

fredgrott• 5 years ago

Let's see:

A Public keychain

IS no the implied definition by itself not privacy based?

I just do not see how more tracking on public info somewhat gives us less privacy when we did not have privacy on public keychain in the first place!

dogman1444• 5 years ago

If this passes, which I think it will in some form, I believe the main impact will be a long-ish period of doublespeak between policy language and ability to enforce, eventually resolving in the end of the policy. This sounds so similar to the crypto (encryption) wars in the 90's: a general sense, but not actual understanding of how <cryptocurrencies/consumer encryption> actually works, but a desire to regulate it because the new tech fundamentally upends current approaches to the privacy and freedom of access to <spending/communications> in a digital forum.

Overall, I've been cautiously optimistic on how a regulatory situation like this would go, once it actually launched, after hearing politicians like Sen Warner/Wyden talk about tech the last few years. However, I suppose the industry should have seen this coming after the recent Sen Warren "shadowy coders" comment about bitcoin core, and similar pushes from the UST across two admins.

The crux:

“responsible for and regularly providing any service effectuating transfers of digital assets”

KYC for all these entities, which almost sounds like it could include home routers, is technically impossible. Similarly to banning exports of a math proof (the crypto wars). USBs also enable transfer of digital assets. So do printers, if you go full cold wallet. Will USBs, home routers, and printers that I buy on amazon require my KYC/AML?

I say that not to highlight how nonsensical this law is, but to highlight that this won't be enforceable. If they do try to enforce it, I bet it will be as an umbrella authorization to go after the miners, and.... we'll see what happens to crypto, as that's a dangerous threat to hashpower. If crypto survives a situation like that though in the short term, my sense is the regulation would drop away in the mid term, similar to the encryption regs in the 90s.

GoblinSlayer• 5 years ago

It can be a justification for addition of backdoors. If backdoors don't help, it's okay, they can be used for other purposes.

dcolkitt9• 5 years ago

This is my sense as well. Congress will pass overly broad language, then the actual regulators who actually have to put in place will be like "what the fuck? how do we even conform to this?". Regulators will most likely issue exemptions year-after-year and basically say "we're not going to enforce this year, but next year you guys really better have your stuff in line"

This is almost exactly how the individual health insurance mandate worked in the ACA. Ten years later, it's never been enforced a single time. It just gets waived, year after year.

dragonwriter2• 5 years ago

This is almost exactly how the individual health insurance mandate worked in the ACA. Ten years later, it's never been enforced a single time. It just gets waived, year after year.

That is incorrect; it was in place and the shared responsibility penalty applied on taxes if the mandate was not adhered to from when it became effective in 2014 through 2018, but not after that because it was repealed by the Tax Cut and Jobs Act. It was never “waived”.

jcranmer• 5 years ago

Will USBs, home routers, and printers that I buy on amazon require my KYC/AML?

Of course not. Those are products not services.

Let's break down the statement in detail:

digital assets

This is something I'd expect to be defined in the definitions section of the act. Even if it's not, the most reasonable interpretation is going to be something along the lines of any digital product whose ownership can be traded for material value gain, which would include cryptocurrencies, NFTs, and possibly MMO virtual currencies. There's definitely a lot of gray area in defining digital assets, but pretending that word documents and the like are digital assets is intentionally misreading the law.

effectuating transfers

The plain definition of "effectuate" is "to bring about" or some other variation that specifically implies a causal link. To effectuate something requires that the agent itself is causing it to happen. Mere incidental participation wouldn't be sufficient. If I tell someone to take $1000 out of my ATM in cash and send it to somebody else in the mail, the person who is following my instructions is effectuating the transaction; the post office is not.

providing any service

As mentioned above, we are specifically restricting this only to entities that are providing services, not products. So people whose roles are limited to providing products (such as software developers) are not affected by this rule.

responsible for and regularly providing

And said services have to be provided on more than a one-off basis. So even the example I gave earlier of ordering someone to move money around wouldn't qualify; the person basically has to be willing to do this on an ongoing purpose, essentially as their business model, for this provision to kick in.

In other words, the people who are affected by this are going to be those who are offering banking-like services for digital assets (e.g., cryptocurrencies, NFTs, WoW gold). Pedestrian things like routers and USBs are completely unaffected. The assertion of a sibling comment that software developers are potentially at risk is equally asinine. The people who are affected are the cryptocurrency exchanges, probably services like cryptocurrency tumblers, possibly miners or companies that operate MMOs.

dogman1444• 5 years ago

It sounds like you have a much better handle on the law’s terminology in application than the industry groups and legal /regulatory teams do, which is good.

donmcronald• 5 years ago

Things like ENS/HNS domains will be some of that grey area for assets IMO. Right now I think a normal domain is a bit of a grey area (asset vs expense), but at least there’s no reporting requirement for them.

Will my (hypothetical) .eth domain be considered a digital asset?

nybble414• 5 years ago

So people whose roles are limited to providing products (such as software developers) are not affected by this rule.

If you can classify software development as providing a product and not a service then miners can certainly make the same argument regarding the data they produce. More easily, in fact, since they have no particular business relationship with the entities blindly submitting transactions to the network. Software developers are routinely involved in maintenance and support contracts, or producing new software to spec, which is more of a service than a product.

The exchanges will be covered, of course, but they're so buried in onerous KYC/AML requirements already that they may not notice any difference.

shiado• 5 years ago

Anybody who has followed cryptocurrency in the last year knows that major US financial institutions and hedge funds have become heavily involved. The regulations coming are entirely to do with making the legal burdens of individual custody onerous enough that users place their coins on completely centralized exchanges to manage legal risk, all so these institutions have access to these coins for manipulation purposes like borrowing for shorting. The ONLY regulation you will see is on the average user so they can suck up coins like Daniel Plainview drinking your milkshake, NOT on market manipulation or trading habits of institutions which is the key driver of malicious activity and harm in the cryptocurrency space.

dcolkitt9• 5 years ago

I agree that the end effect will be largely what you suggest: aggregate activity in large institutions at the expense of smaller startups and decentralized protocols. But from talking to people in the space, it seems that most of the large exchanges and hedge funds are vigorously oppose to this law. Bryan Armstrong (the CEO of Coinbase) has repeatedly and publicly criticized the bill.

I'll cite Hanlon's Razor: Never attribute to malice what can be explained by incompetence. I think this is simply the result of what happens when we decide our government should be run by a bunch of octogenarian lawyers, most of whom's tech knowledge ends at their ability to reset their WiFi router. Is it really that surprising that Biden, Schumer, Portman, McConnell, Yellen, Pelosi, etc. have no understanding about how crypto works? They were all born before the charge card was even invented.

meowface• 5 years ago

NOT on market manipulation or trading habits of institutions which is the key driver of malicious activity and harm in the cryptocurrency space.

How much evidence is there of major institutions acting maliciously in the cryptocurrency space, and the scale of the impact?

I'm sure there's likely quite a bit of market manipulation from some people or entities who hold a lot of cryptocurrency assets, but as much as I despise finance and financial institutions (of pretty much any kind), I also want to know who to hate even more, if applicable.

(Not asking in a rhetorical or contrarian or skeptical way; genuinely trying to understand who's accused of what and why. And excluding Tether, since we all know the accusations, there, and the comment seems to be directed at major US financial institutions that were huge long before Bitcoin was created, if I understand correctly.)

ProjectArcturis2• 5 years ago

There's no need to invoke conspiracy theories about market manipulation. The Senate needed money for this bill, they saw that probably a lot of folks with crypto holdings are evading taxes, and they wrote this provision to make it easier to collect the taxes. It's poorly written, but the clear intent is for companies like Coinbase to have to file 1099s so the government knows who made how much every year, just like they do with conventional stock brokerages.

w4llstr33t3• 5 years ago

Crypto can be withdrawn from exchanges to a personal account that only that individual controls. This is unlike stocks, which sit in brokerages and could only be transferred to another brokerage (in kind transfer).

An example for someone in the US is that they buy crypto on Coinbase, and then they withdraw that crypto to a hardware wallet that they have control of. They leave their crypto on their hardware wallet for a few years and then transfer all or maybe only some portion of it to a different exchange, say, Kraken, and sell it there. How do the exchanges file a 1099 for that?

Maybe while the crypto was on the individual's hardware wallet, they also used some of it to purchase some goods or services. How is that tracked except on the individual's tax return?

I'm for regulation because I think it means the crypto space will mature and more people will feel it is safe to get involved. I also don't think people should use crypto for avoiding taxes (I do think that is overblown in the media considering that most blockchains are literally a public ledger, and all the government needs are some crypto experts and they can look at current as well as previous years of transactions, so folks shouldn't be doing anything shady).

I do also think that laws should adapt to new technological innovations. The only issue is that there isn't a critical mass yet that this technology is here to stay. The analogy is like fitting a square peg into a round hole. That's what the government is trying to do by over regulating crypto with regulations from the 20th century.

I actually would love if crypto exchanges could somehow give 1099s. That would extremely simplify the crypto tax reporting process, which right now can be very complicated, but I just don't see how it would work unless individuals only bought crypto on an exchange, left it on that exchange, and only sold whatever they bought on that exchange.

qeternity2• 5 years ago

for manipulation purposes like borrowing for shorting

I see this repeated a lot and I'm still not entirely clear why people feel this way. Most major markets in the world have futures/borrow mechanisms, and one of the key reasons is that it allows shorting.

Short selling is a critical element to any healthy market, and we've seen time and time again that markets without well functioning short selling are far more vulnerable than those with (i.e. real estate).

For instance, let's presume that crypto takes off, and business start accepting crypto for contractual obligations. If my future costs are in fiat, but future revenues are in crypto, I have a big mismatch with a very risky asset. A futures market (or shorting) allows me to hedge that risk out and protect myself against future volatility. I can lock in my fiat today, to ensure that I can cover my future costs. Without such a mechanism, I might not be able to risk a collapse in crypto markets.

Mature features (like borrows/futures) in crypto markets should aid in adoption.

prepend• 5 years ago

I think the issue isn’t that shorting and other functions exist, but that these aren’t carried out by most retail investors. So frequently financial firms will benefit on this functionality using the base accounts of their customers.

So the introduction of this intermediation creates value possibility for large firms away from individuals.

bacan• 5 years ago

Wait till you guys find out about the FACTA/CRS requirements.

bawana• 5 years ago

so is tax avoidance the real benefit in transacting with crypto?

jl271810• 5 years ago

I didn’t read the bill, but here is the summary: “We’re going to use violence against non-violence.”

therealbilly• 5 years ago

It's one thing for the US government to surveil people using dollars. Dollars are fiat currency issued by the United States. Generally speaking, governments have long controlled the manner in which citizens use fiat currency...for good or evil. Bitcoin is not issued by the US government. Bitcoin is not under US government control. Therefore, the government has no nexus or connection to Bitcoin. Meaning the government should not be able to put restrictions on something that they did not issue or control according to first principles. Obviously the government is attempting to overrun existing case law and establish a dubious level of control over Bitcoin. We should remember that governments control their citizens by many means, and that includes how they use fiat money.

exabrial• 5 years ago

Please call them out by name or it'll never be stopped. Your blind loyalty to your political party is how these disasters happen. (And for the record I'm taking both red and blue, as they were both responsible for the disasters like DMCA)

glennvtx• 5 years ago

The chief promise of this technology is to take back the power of money from the governments, a great advance in human rights. Regulation is antithetical to their initial purpose. There is simply no need for it, it is a power grab, to continue the status quo, nothing more.

Infrastructure bill cryptocurrency surveillance provision is a privacy disaster

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