Things cryptocurrency enthusiasts probably won't tell you • Hacker News Board

Re: Things cryptocurrency enthusiasts probably won't tell you

#101

Post by JumpCrisscross » Sat, Sep 23, 2017, 12:51 PM UTC

earlz wrote: post #22

I think that the cryptocurrency/blockchain space is the next big thing in the world on-par with the internet. But it still has a long way to go. In the late 90s you could say "X on the internet" and get tons of investment. Now it's the same but with "X on the blockchain". We are going through growing pains now, and there definitely needs to be some regulation introduced to curb the many scams. My personal hope though…

> why do I need to make $1M/year in order to prove to the US government that I'm worthy of investing into a startup

Bernie Madoff lost tens of billions of dollars of investors’ money [1] in a clear fraud. This is terrible, but nobody ended up destitute [2]. The systemic risk was contained.

Contrast that with the savings and loan crisis [3]. This lost retail investors’ money. People ended up destitute. That, and lots of retail investors (i.e. non-accredited investors) doing zero diligence allowing the problem to metastasise, turned a prosecution problem into a political problem. When masses are turned on the street, nobody cares that they should have done their diligence. They become a political problem.

The government's rationale for regulating retail investors more strictly than accredited investors is that a laissez-faire attitude towards the former's activity has, historically, resulted in massive fraud that then creates political problems. I believe there is a middle ground between our total-ban regulations and Bitcoin's laissez faire. Finding that, however, will require both sides understand why we have the regulations we do.

[1] https://en.m.wikipedia.org/wiki/Madoff_investment_scandal

[2] https://www.bostonglobe.com/business/2013/12/11/five-years-a...

[3] https://en.m.wikipedia.org/wiki/Savings_and_loan_crisis

Disclaimer: I am not a lawyer. This is not legal nor securities advice. Follow securities laws.

Re: Things cryptocurrency enthusiasts probably won't tell you

#102

Post by earlz » Sat, Sep 23, 2017, 1:01 PM UTC

walterstucco wrote: post #82

earlz wrote: post #22

I think that the cryptocurrency/blockchain space is the next big thing in the world on-par with the internet. But it still has a long way to go. In the late 90s you could say "X on the internet" and get tons of investment. Now it's the same but with "X on the blockchain". We are going through growing pains now, and there definitely needs to be some regulation introduced to curb the many scams. My personal hope though…

> I think that the cryptocurrency/blockchain space is the next big thing in the world on-par with the internet with the difference that internet worked exactly as planned from the beginning, had a clear goal and solved a real problem.

Did it though? Sure, the base protocol (TCP/IP) has mostly been unchanged up until IPv6, but the early implementations had plenty of bugs and limitations. And the goals solved were less clear back then as well, especially when BBS etc somewhat directly solved the problem of "get some data from another party without leaving your house" quite simply. Remember, there was once a time where there was no standardized image format on the internet. Hence, why Gopher was a contender to replace HTTP. It really took until the late 90s that most people realized how much it could be used for.. and it took until the late 2000s before most of those radical uses could be realized into something practical (ie, online shopping once seemed like a strange thing you'd only want for niche items... but now Amazon exists).

And beyond that, when the internet first became a real thing outside of researchers, it required pretty intimate knowledge of the technology to properly connect to it and get it to work. Remember that operating systems use to not include a TCP/IP stack for instance. It would be a long complicated process to get your computer to actually connect to the internet... but now, in 2017, for the most part all you do is say "connect to with password XXXX" and it magically works. Right now I think this is parallel to blockchains. It takes a lot of technical knowledge to really use smart contracts and blockchain tech right now, but I imagine a future where it is no more difficult than logging into your bank account, or writing an Excel macro.

Re: Things cryptocurrency enthusiasts probably won't tell you

#103

Post by Nokinside » Sat, Sep 23, 2017, 1:06 PM UTC

There are also some philosophical issues that add to the hype.

- BTC or some other cryptocurrency as taking over local currencies in long term. There is such things as optimal currency region. Global single currency would not work well.

- Money as good long term store of value. That's hoarders dream, but it would be harmful for economy as a whole. It's the idea that you work hour in 2017, store the value as a money and take that hour out 2027 and it's value has retained value or increased while the work done in 2017 is less valuable than work done in 2027 due to productivity increases. This kind of imbalance leads to deflationary spiral.

Re: Things cryptocurrency enthusiasts probably won't tell you

#104

Post by quuquuquu » Sat, Sep 23, 2017, 1:18 PM UTC

JumpCrisscross wrote: post #96

quuquuquu wrote: post #95

Earlier quoted context omitted.

Bitcoin and all of the other alt-coins are numbers on a screen. Few people pay taxes on them, and few places treat them as a real asset or fungible currency. Why then, do the authorities in the US and China aggressively pursue those people who ("steal", "lose") the coins of their depositors? Big Vern, Karpeles, Pirate@40, just to name a few. Sure, these guys lost people's coins. But I was there back then. It was all…

> Few people pay taxes on [their Bitcoin holdings] This is tax fraud. > How can the government arrest someone for stealing an asset that doesn't really exist? “Buyer beware” doesn’t exempt someone from fraud statutes. Honest services fraud is broadly defined in most jurisdictions to include any economic activity. > Would they arrest someone who stole water from my pool? Yes. At the very least, the perpetrator would h…

Have I committed fraud when I steal your World of Warcraft gold? Yes.

Should I pay tax on that gold when I sell it for cash? Yes.

Will the police help you when you call them to report it? I highly, HIGHLY doubt it.

It's easy to put your head in the sand and just say "yeah that guy committed a crime", but in reality, enforcement is really a lot more nuanced than that.

So like forgive me if I think it's a waste of tax money for Bharara and the courts and the police to go after Big Vern, while the Equifax guys are not pre-emptively detained while a fine is calculated.

Re: Things cryptocurrency enthusiasts probably won't tell you

#105

Post by JumpCrisscross » Sat, Sep 23, 2017, 1:35 PM UTC

quuquuquu wrote: post #104

JumpCrisscross wrote: post #96

Earlier quoted context omitted.

> Few people pay taxes on [their Bitcoin holdings] This is tax fraud. > How can the government arrest someone for stealing an asset that doesn't really exist? “Buyer beware” doesn’t exempt someone from fraud statutes. Honest services fraud is broadly defined in most jurisdictions to include any economic activity. > Would they arrest someone who stole water from my pool? Yes. At the very least, the perpetrator would h…

Have I committed fraud when I steal your World of Warcraft gold? Yes. Should I pay tax on that gold when I sell it for cash? Yes. Will the police help you when you call them to report it? I highly, HIGHLY doubt it. It's easy to put your head in the sand and just say "yeah that guy committed a crime", but in reality, enforcement is really a lot more nuanced than that. So like forgive me if I think it's a waste of tax…

> Will the police help you when you call them to report it? I highly, HIGHLY doubt it

With honest-services and securities fraud, the police are generally there to document, not enforce. If someone stole your WoW gold and you sued, you'd almost certainly have a case. If I were your lawyer (I'm not a lawyer), I'd send a letter to the relevant tax authorities and attorneys general, as a point of leverage during settlement talks. (This is not uncommon in lawsuits--

TL; DR No, one does not always get caught. I won't say I've always been faithful to every city's open-carry alcohol laws. But when you break such laws (a) it's still breaking the law which (b) exposes you to more than just the government.

> So like forgive me if I think it's a waste of tax money for Bharara and the courts and the police to go after Big Vern, while the Equifax guys are not pre-emptively detained while a fine is calculated

You're forgiven for having an opinion? I still disagree. We know there was criminal conduct on behalf of Big Vern. Not yet Equifax. Though on a higher level I agree, since ordinary people were harmed by Equifax. My sympathies for people who lose money in Bitcoin fraud is less, though I think that's a function of familiarity with the system.

Re: Things cryptocurrency enthusiasts probably won't tell you

#106

Post by kwelstr » Sat, Sep 23, 2017, 1:36 PM UTC

JumpCrisscross wrote: post #96

quuquuquu wrote: post #95

Earlier quoted context omitted.

Bitcoin and all of the other alt-coins are numbers on a screen. Few people pay taxes on them, and few places treat them as a real asset or fungible currency. Why then, do the authorities in the US and China aggressively pursue those people who ("steal", "lose") the coins of their depositors? Big Vern, Karpeles, Pirate@40, just to name a few. Sure, these guys lost people's coins. But I was there back then. It was all…

> Few people pay taxes on [their Bitcoin holdings] This is tax fraud. > How can the government arrest someone for stealing an asset that doesn't really exist? “Buyer beware” doesn’t exempt someone from fraud statutes. Honest services fraud is broadly defined in most jurisdictions to include any economic activity. > Would they arrest someone who stole water from my pool? Yes. At the very least, the perpetrator would h…

> Few people pay taxes on [their Bitcoin holdings]

>>This is tax fraud.

It is not; you only have a tax liability when you cash out, not when you hold, you could cash out and have a gain or have a loss and you need to reflect that on your income tax for that year.

Re: Things cryptocurrency enthusiasts probably won't tell you

#107

Post by kwelstr » Sat, Sep 23, 2017, 1:42 PM UTC

In my opinion, the regulators should focus on exchanges applying KYC and make the exchanges function the same a stock exchanges. If I buy a stock in the US through a brokerage house, they have my info and every year they send me a 1099 with my profit/loss for the year that I give my accountant to add to my income tax report.

Once the exchanges are regulated like that it would be very difficult to launder money or avoid paying taxes on profits.

Re: Things cryptocurrency enthusiasts probably won't tell you

#108

Post by JumpCrisscross » Sat, Sep 23, 2017, 1:45 PM UTC

kwelstr wrote: post #106

JumpCrisscross wrote: post #96

Earlier quoted context omitted.

> Few people pay taxes on [their Bitcoin holdings] This is tax fraud. > How can the government arrest someone for stealing an asset that doesn't really exist? “Buyer beware” doesn’t exempt someone from fraud statutes. Honest services fraud is broadly defined in most jurisdictions to include any economic activity. > Would they arrest someone who stole water from my pool? Yes. At the very least, the perpetrator would h…

> Few people pay taxes on [their Bitcoin holdings] >>This is tax fraud. It is not; you only have a tax liability when you cash out, not when you hold, you could cash out and have a gain or have a loss and you need to reflect that on your income tax for that year.

> It is not; you only have a tax liability when you cash out, not when you hold

It depends [1]. If you receive the Bitcoins for goods or services, they are taxed as income. If you hold them as capital assets, the IRS won't tax you for holding, though your state or local jurisdiction may. Either way, not reporting those holdings is tax fraud.

[1] https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Tax...

Disclaimer: I am not a lawyer nor a CPA. This is not legal nor tax advice.

Re: Things cryptocurrency enthusiasts probably won't tell you

#109

Post by trakout » Sat, Sep 23, 2017, 1:47 PM UTC

kwelstr wrote: post #107

In my opinion, the regulators should focus on exchanges applying KYC and make the exchanges function the same a stock exchanges. If I buy a stock in the US through a brokerage house, they have my info and every year they send me a 1099 with my profit/loss for the year that I give my accountant to add to my income tax report. Once the exchanges are regulated like that it would be very difficult to launder money or avo…

There is a focus on building decentralized exchanges at the moment.

Regulation will become more difficult when these become mainstream.

Re: Things cryptocurrency enthusiasts probably won't tell you

#110

Post by swfsql » Sat, Sep 23, 2017, 1:57 PM UTC

Nokinside wrote: post #103

There are also some philosophical issues that add to the hype. - BTC or some other cryptocurrency as taking over local currencies in long term. There is such things as optimal currency region. Global single currency would not work well. - Money as good long term store of value. That's hoarders dream, but it would be harmful for economy as a whole. It's the idea that you work hour in 2017, store the value as a money a…

work in 2027 is more valuable? so instead of just buying a coffe, you should pay it NOW and tell the seller you will back in 2027 to get it. They will love it!