In Fifty Days, Payments Innovation Will Stop In Silicon Valley • Hacker News Board

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#141

Post by dpatru » Wed, May 11, 2011, 4:11 PM UTC

yequalsx wrote: post #112

dpatru wrote: post #70

Earlier quoted context omitted.

An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment. The difference between non-coercive (private) entities and government is that non-coercive entities adapt better. So, for example, if you'…

In your statement: "The difference between non-coercive (private) entities and government is that non-coercive entities adapt better." it's not clear if you are equating non-coercive with private entities. If so you are very much wrong. Private companies have killed, enslaved, tortured, kidnapped, etc. There are a tremendous amount of examples of private companies being coercive. As to ratings agencies, some spectacu…

> Private companies have killed, enslaved, tortured, kidnapped, etc. There are a tremendous amount of examples of private companies being coercive.

These are instances of private companies acting like governments. What characterizes private companies is that they do not use coercion (except of course when it's justified as in enforcing voluntary agreements and protecting property.)

So for example, the original post was about banking regulation. Private bank regulators could not force banks to operate according to their standards. Instead, they would rely on banks' cooperation. If a bank did not cooperate it would run the risk of being rated badly and shunned by customers relying on regulator's rating. In no case would a non-cooperating, non-conforming bank be subject to being "killed, enslaved, tortured, kidnapped, etc" by a private regulator. On the other hand, a bank which does not conform to government regulation is in danger of killed (dissolved) and its officers "enslaved, tortured, kidnapped, etc." (arrested and imprisoned.)

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#142

Post by tzs » Wed, May 11, 2011, 4:12 PM UTC

olalonde wrote: post #62

jrockway wrote: post #48

Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas…

No I don't think most regulations are good for society in aggregate, including building codes. What if we had software codes to make sure we write secure software, would that be a good or a bad thing? Take this payments law for example. Its intended objectives are admirable but I don't believe it will accomplish them nor benefit consumers in the long run. By artificially imposing a high barrier to entry (licensing fe…

> No I don't think most regulations are good for society in aggregate, including building codes.

Nearly every large earthquake proves you wrong on building codes. Compare deaths for a given magnitude quake in areas with strong building codes vs. areas with weak or no building codes.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#143

Post by jonknee » Wed, May 11, 2011, 4:12 PM UTC

olalonde wrote: post #109

jonknee wrote: post #104

Earlier quoted context omitted.

> All this law does is guarantee that from now on, only rich people are allowed to commit fraud. So you're fighting for the little guy to be able to commit fraud too? FWIW the rich guy is not just risking losing the bond, but also going to jail. That's the threat, the bond is just so customers can get paid.

> So you're fighting for the little guy to be able to commit fraud too? Absolutely. Given that this regulation doesn't help with fraud, why not at least encourage competition.

How does requiring a bond not help with fraud? Consumers who have been refunded from frauds with bond money certainly disagree with your statement.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#144

Post by jonknee » Wed, May 11, 2011, 4:21 PM UTC

yoyar wrote: post #52

So, a new startup comes along, and things are going well. The have new, innovative ideas that satisfy the needs of consumers. They manage to get a few hundred thousand dollars from a VC so that they keep operating for another 6 months. This startup offers a service that is cheaper, safer, quicker and generally more efficient that what is currently available. All of a sudden they'll be breaking the law unless they han…

> All of a sudden they'll be breaking the law unless they hand over half a million to the government.

Or put up a few coins for a surety bond. If you're a financial startup and your investors don't trust you enough to put up bond money, you should probably find a different niche (or investors).

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#145

Post by joezydeco » Wed, May 11, 2011, 4:22 PM UTC

sorbus wrote: post #96

joezydeco wrote: post #88

Earlier quoted context omitted.

I'm still new to the bitcoin thing but how can it be regulated?

With difficulty. The most likely way I can see is regulation of exchange markets (which could actually be beneficial to the markets, as a way of showing credibility).

True, but an exchange market could really pop up anywhere at any time and disappear just as quickly. People could liquidate through Craigslist if they really needed to. If the BTCs have enough distribution and momentum, it'll be around a long time.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#146

Post by tptacek » Wed, May 11, 2011, 4:23 PM UTC

hessenwolf wrote: post #117

Duff wrote: post #77

Earlier quoted context omitted.

This is true -- the hardcore capitalist would argue that the plaster industry has been hamstrung by the quaint requirements from building code to use wood, steel and concrete in construction. There's a give an take here... the government has a perceived duty to protect the citizenry against bad actors, that that introduces a bias against sudden change aka "innovation". "Innovation" isn't always good -- just like to s…

I think stifles competition is more concerning than stifling innovation per se.

The money-moving startup that can't cough up $25k to post a bond isn't scaring PayPal or Western Union.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#147

Post by tptacek » Wed, May 11, 2011, 4:27 PM UTC

dpatru wrote: post #141

yequalsx wrote: post #112

Earlier quoted context omitted.

In your statement: "The difference between non-coercive (private) entities and government is that non-coercive entities adapt better." it's not clear if you are equating non-coercive with private entities. If so you are very much wrong. Private companies have killed, enslaved, tortured, kidnapped, etc. There are a tremendous amount of examples of private companies being coercive. As to ratings agencies, some spectacu…

> Private companies have killed, enslaved, tortured, kidnapped, etc. There are a tremendous amount of examples of private companies being coercive. These are instances of private companies acting like governments. What characterizes private companies is that they do not use coercion (except of course when it's justified as in enforcing voluntary agreements and protecting property.) So for example, the original post w…

I like the argument that says that when things are good, they are acting like private companies, but when they're bad, they're acting like governments; ergo, private companies good, governments bad.

Can we officially acknowledge that this part of the thread --- which is notionally about bonding requirements for money transfer companies, but is now discussing torture --- has officially gone off the rails?

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#148

Post by tzs » Wed, May 11, 2011, 4:27 PM UTC

jeffb wrote: post #120

lutorm wrote: post #73

Earlier quoted context omitted.

... whose exchange rate against the dollar has gone up by a factor of 6 over the past weeks? If you had any debt nominated in Bitcoin, you'd be screwed.

You wouldn't be screwed if your business operates in Bitcoins, and your customers pay you in Bitcoins. If you take out a loan for 100 Bitcoins, you will still owe 100 Bitcoins, regardless of the USD exchange rate. If you aren't dealing in USD, it doesn't matter how much value the USD loses. Similarly, if you had debt denominated in USD, it wouldn't matter how much value the Zimbabwe Dollar or Weimar Republic Mark los…

> You wouldn't be screwed if your business operates in Bitcoins, and your customers pay you in Bitcoins.

At some point, you need actual money to do things like pay taxes. Last I checked, no government accepts Bitcoins for this.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#149

Post by olalonde » Wed, May 11, 2011, 4:28 PM UTC

tptacek wrote: post #140

olalonde wrote: post #138

Earlier quoted context omitted.

I have nothing against private insurance. I have something against laws which make it mandatory. I think people should be free to decide for themselves what risk they are willing to take. For instance, the choice to do business with a relatively unknown payment service which offers low transaction fees or great customer support, at the risk of losing money.

I have a hard time getting too worked up about the prospect of squelching the money transfer company that can't afford 1/10th of 1 FTE to post a bond. That same company can't afford to secure their software (software security for a money transfer application is almost certainly more expensive than the cost of a 500k surety bond). Meanwhile, if you're against basically all licensing and bonding, you're naturally going…

I agree with you on most points.

I wouldn't do business with a payment company that can't afford a 500k expense. Requiring insurance for moving furniture is also important to me, I wouldn't let a company move my furniture without them offering a solid warranty.

What I question though is whose role it is to impose those requirements, the government or the customer? I believe it should be the customer's role.

> Personally, I think that if we're going to require bonds to move furniture, it seems sane to require a bond to move cash.

It is sane, but why not let companies choose whether or not they want to get licensed and let customers choose whether or not they want to take the risk of doing business with an unlicensed company. Note that I do not object laws that deal with misrepresentation, lying, breach of contract, etc.

Anyways, as you said, it's more a question of principle than anything particular about this specific regulation.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#150

Post by tptacek » Wed, May 11, 2011, 4:31 PM UTC

18pfsmt wrote: post #111

mattmanser wrote: post #91

Earlier quoted context omitted.

What, that Google doesn't have money to put up bonds or buy the necessary expertise? I don't get your point. More likely it's Yet Another Google Product They Can't Be Bothered To Finish (TM).

It's not about having enough money, but whether it is financially worth it. It's an ROI calculation that involves navigating several regulating bodies with what appears to be minimal payback. It certainly isn't a technical limitation.

If money transfer isn't lucrative, it seems weird to blame regulations for the fact that Google isn't staying involved with it.