Comment by rimbo789 15 hours ago
Crypto was a huge mistake. It should have been rigorously regulated right out of the gate to the point of being unusable for anyone. I have yet to see a use case that doesn’t amount to buying drugs or defrauding rubes.
Cryptocurrency also empowers kleptocrats, dictators and warmongers to bypass sanctions and international banking controls, making it more likely that politically and economically oppressive states will thrive and persist for longer. The benefit to the individual is marginal compared to the benefits to actors that might limit that individual's other freedoms. Also, foreign exchange controls aren't the only form of taxation and there's nothing stopping governments from increasing taxation on something else to make up the difference.
Most arguments for cryptocurrency are just as weak as this one.
Kleptocrats, dictators and warmongers have been around for way longer than crypto. If sanctions worked, the likes of Kim family or Iran's ayatollahs would have fallen in the 90s or 2000s.
Crypto allows my family members to bypass arbitrary restrictions set by one such kleptocrat right now so the benefit is very much more than marginal.
They had to transfer gold, US dollars or other physical assets to finance their operations before which made them significantly more vulnerable and restricted. Sending crypto to your family is a temporary solution to the problem of the kleptocracy economically handicapping their capacity to generate and retain wealth. Crypto enables the kleptocrat to transfer the wealth they steal from their country internationally with a significantly lower transactional cost and at significantly higher volume.
By sending your family money, as crypto or US dollars, you have to assume some percentage of that money is going to end up in the kleptocrat's pocket. If the funds are eventually settled through official exchanges in the country, its very likely that the government gets a cut of the exchange transactions. If its being settled by unofficial exchanges like street exchange vendors, those individuals probably pay some bribe or tax to operate that eventually makes its way back to the kleptocrat. Additionally you are offering the kleptocrat increased liquidity by operating with crypto. Assume the kleptocrat is the largest buyer of cryptocurrencies in their country.
Let's not assume foreign exchange controls are always bad. Not saying they are not ... in some cases
Unfortunately to governments and law enforcements that looks identical to organised crime and terrorists sending money.
All three of those countries have restrictions/regulations on converting crypto currencies into local currencies - doesn't crypto just move the the problem to converting it to local currency?
When it comes to receiving USD, EUR etc these countries do not tend to have restrictions, as the point of forex restrictions is to keep capital in the country. Hence, these countries are usually quite lax about KYC/AML stuff because they want hard currency inflows, wherever it's sourced from. The utility of crypto comes in when
1. You want to convert the "hard" currency into the local currency
2. You want to convert the local currency back to the hard currency
3. You want to send hard currency back
Often there are official rates set by the central bank in these countries, and then there are black market rates. Banks etc will convert hard currency to local currency only using the official rates, which tends to be a lot lower than the black market rate, so you get shafted by that in the first instance. Then, when you want to convert the local currency back, banks won't sell it to you because the government does not let them sell hard currency to the general population. Finally, sending hard currency abroad is usually de facto (and sometimes also de jure) banned so your money can't leave the country once it's in. And as a last resort if you say screw you I will withdraw e.g. USD notes and take a flight, banks will refuse to give cash hard currency.
Obviously crypto lets you sidestep all that as nothing can prevent you from sending USDT from your wallet.
Legit from whose perspective though? Around an authoritarian government maybe widely viewed as reasonable/justified, but doesn't sound legitimate to those governments
To some particular psychopath out there, I’m sure murder seems fine.
> is one quite legit use case.
While it is useful for this case, it is not 'legit', in that its purpose is to by-pass (break even) laws of the country with the capital controls. In that sense, money laundering is also a legit use-case.
Buying drugs doesn’t have to be an illegitimate use case. Depends on the person, the drugs, the safety of the marketplace, etc.
> I have yet to see a use case that doesn’t amount to buying drugs or defrauding rubes
Russian here. My forgotten Bitcoin stash saved my ass multiple times by providing a way to transfer money to a friend abroad who then paid for my western expenses (hosting, VPNs etc.) using his Visa / MC cards.
Also, a lot of programmers who emigrated from Russia to countries such as Georgia in 2022 were using USDT as a way to receive their salaries.
Today's society cannot protect people that are easily influenced. Social media has brought remote fraudsters right into your aunt/uncles inbox. Some people are going to get fleeced unless their money is put into something that only dispenses PEZ amounts at a time. This increases if dementia occurs.
Who should regulate it? Due to its nature it is inherently extremely hard to regulate.
The technology is hard to regulate, but the exchanges where the overwhelming majority of fiat-crypto trades happen are regular old businesses which can be regulated or sanctioned just like anything else. Blockchain magic wouldn't stop the feds from seizing Coinbase's assets and hauling Brian Armstrong off to prison if they wanted to.
Yes, the fiat input and output are the only points that can be controlled, but even then they can only be controlled by the local governments. And as you can see all of them are late to the party.
There is lots of porn that credit card companies and proccessors don't want to touch. Plenty of kink sites have had problems with them, porn sites have blanket restrictions on keywords like hypnosis and shadow ban certain kinds of legal content in order to not get hamstrung by financial restrictions.
Also there are plenty of blackmarket goods that are heavily restricted and legally punished without good cause, and I do not believe just because something is "illegal" that it is automatically bad.
One of ours biggest customers is mainly used by Ukrainian refugees as easy way to pay abroad. USDC/USDT is simply cheaper and more available to them than regular USD.
You can buy drugs and defraud rubes with USD too.
Crypto has many different useful applications. One of the main ones: limited supply (I am aware not all crypto has a cap).
- repatriating and distributing cartel drug money
- paying/receiving bribes
- bypassing international sanctions to finance wars
There's a lot of uses for cryptocurrency and only a very small fraction are good for individuals.
WikiLeaks was persecuted. Their credit cards processing was turned OFF. Bitcoin saved them. There have been free speech social media sites BLOCKED by Stripe and all credit cards, and debanked. They switched to crypto. Marc Andressen on Joe Rogan personally knows many dozens of people personally debanked because they were persecured by the government & debanked. Not for drugs or fraud.
Money laundering is also a pretty large use case (https://www.justice.gov/usao-dc/pr/additional-12-defendants-...)
It prevents centralized entities being the gatekeepers to the modern financial world. The US maintaining their own digital version of cash would also work, but the government is slow, and does not want to compete against these centralized entities due to being advantaged as the government controls the currency itself.
Payment processors essentially get to dictate what is and is not allowed to be financially viable which is a very powerful form of control over culture.
What’s wrong with centralized entities? There should be financial gatekeepers. They are much better than whatever crime syndicates benefit from crypto
Crypto is just speed running the 19th century and making us re learn all the reasons why we made the pre crypto regulations.
>What’s wrong with centralized entities?
Because the CEO of one could read a false news article about your site and prohibit you from transacting with them anymore. Your existence is at the whims of a few people.
> It prevents centralized entities being the gatekeepers to the modern financial world.
In theory, but it doesn’t in practice. Most crypto transfers never make it to the blockchain, they happen entirely in SQL databases of exchanges.
Also, Tether has complete control over USDT and can block or reverse any payment or freeze any account it wants. No bank or payment processor in the world has such centralized control over the traditional financial system.
If anything, crypto is more centralized by comparison. Both in terms of payment processors as well as wealth distribution.
>In theory, but it doesn’t in practice.
In practice neither exchanges or Tether have made any attempts at refusing to allow payments to legal businesses as far as I'm aware. So in practice it does.
If you can be objective enough to consider that not everyone likes keeping fiat currency, it was an interesting alternative.
Bitcoin generally appreciated, where fiat had inflation.
While the transaction costs/speed have eliminated this, there was a few years of my life that I both sent money to friends and used a Bitcoin debit card.
If you don't like fiat there is always gold. If you really care about value, independent from the monetary system (post-apocalyptic safety), buy tools, grain, generators and oil, though many of these things are perishable and storage comes at a cost.
One must ask whether the Bitcoin valuation has raised 1000% because the fiat has inflated as much, or is it mostly driven by speculation. For reference point, the buying power of fiat currency has not changed dramatically during the same period.
> I have yet to see a use case that doesn’t amount to buying drugs
Society has been struggling for decades to overcome prohibition via political channels, and watching as multiple generations have been damaged by its impact on local economies, civil liberties, and the boon to criminal cartels.
Then, a mathematical solution arises which unambiguously undermines this regime, and somehow that's a bad thing?!
It's not a "mathematical" solution. The maths are cryptographic hashes and consensus protocols, means to some end - exchanging value.
You're proposing that it's a technological solution to a societal problem. These only last as long as a particular regulatory body / regime allows them to.
Mining. It has long been infeasible for anyone without prior capital and investment. Ban that - you can easily get a lead through the electricity bill - viola.
Private key custody. Even technologically-inclined individuals mess it up from time to time. Hence the proliferation of centralised services to keep the keys ("wallets") for you. Block the exchange. QED.
Let's regulate mathematics. No, it isn't enough...let's regulate physics itself. If we could just control when molecules are allowed to form, we could make it so mean molecules don't exist unless they're allowed to exist by our Council of Very Good People Who Have The Most Money. Since they have the most money, they know better than everyone else. /s
Did you know in some countries, a good loan for someone with perfect credit is 20% apr? Do you know in some countries police can confiscate all the money you have and never give it back? Have you ever heard of civil asset forfeiture? Did you know in some countries, just protesting can have your accounts frozen? Did you know in some countries, sending money can take over 3 days with no knowledge of what is happening to your money during that time? Did you know that Debit and Wire transfer often cost well over $20 to perform?
This list could go on for days. Only fools would speak about crypto so confidently without doing a minimal investigation into its utility.
> Only fools would speak about crypto so confidently without doing a minimal investigation into its utility.
Only fools would speak about a technological solution without understating the reality, that technology still leans on society, power structures, and ability to enforce laws.
Civil disobedience works as a means to shift the rules, the balance of power; you can't maintain it perpetually. P2P eventually shifted the attention of the recording industry to online distribution. People jumped to Netflix and iTunes, because they became more convenient, while providing good value for the money.
Sending money without government interference to relatives living in countries with strict foreign exchange controls (Argentina, Lebanon, Turkey...) is one quite legit use case.