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How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

lawfareblog.com

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Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#41

Post by escape_goat »

dragontamer wrote: post #10
bko wrote: post #3

> All cryptocurrency assets, not just Bitcoin, are zero sum. So every dollar “made” in cryptocurrency was simply provided by someone else. Can't you say that about any other asset? If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. But that's not how we determine value. It's positive sum because the buyer attributes a value higher than he had paid for it, otherw…

> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. No transaction between rational individuals is ever zero-sum. If Bob values a house at $300,000 and Alice values the house at $300,000, the house will __never__ be sold. Because by the time transaction fees come about, Bob would have lost money in the transaction. In reality, Bob values the house at $250,000,…

I value HN for these moments in which someone lucidly debunks an abstraction and undoes the epistemic closure that it had performed. Attempting to articulate my thanks brought to my attention this general idea, that all abstractions are [perhaps I should say 'also'] epistemic closures, so thank you twice.

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#42

Post by tzumby »

I love Lawfare and listen to their podcast quite often, but the argument presented is so odd: 1) specifically calling for not introducing new legislation to deal with this and 2) trying to fit mining into a bucket of legislation designed to kill it. This is not in good faith at all.

Money laundering is despicable, specially when it happens at high level. And we have to admit that Bitcoin, ZCash, Ethereum (Tornado Cash) and other cryptocurrencies are facilitating that. But we're getting better at tracking that. After all, transactions are all public and once you can label one wallet address, you can perform all sorts of graph analysis and learn a lot. Contrast that with trying to subpoena banks to follow money trails.

The other aspect of this is that, like it or not, banks are not playing by the rules all the time. See HSBC laundering almost 1 billion for Mexican and Colombian cartels. See Austria’s Raiffeisen Bank enabling former Ukraine's president to steal money with offshore accounts (https://www.occrp.org/en/investigations/former-ukrainian-pre...)

We should absolutely deal with this, but the first place to start is the Bank -> Cryptocurrency (and vice versa) transfers, or as they call them, the fiat gateways. You still can't pay for stuff with cryptocurrencies so ultimately, whoever steals or launders using cryptocurrencies, will need to eventually convert back into fiat money.

Edit: correct typo in first paragraph

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#43

Post by kaliali »

Tycho wrote: post #18

It is possible to store short messages on the public Bitcoin blockchain. If somebody were to publish extremely sensitive official secrets on the blockchain, would the government be forced to attack the whole network?

The government wouldn't be able to attack the network if they wanted to and I guarantee they've already tried.

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#44

Post by DennisP »

runbathtime wrote: post #26

The reason why I believe mining isn't being labeled as money transmission is because the miners never take custody of any bitcoin, they collect/handle transactions themselves, but these transactions are p2p, the bitcoin do not go into the hands or control of a money transmitter. Where the author is correct is that the miners are the chosen ones for writing to the central ledger of bitcoin, but writing to a ledger inc…

Nobody human or corporation has custody of tokens deposited to Uniswap. It has no admin keys, just an autonomous script running on chain.

I guess you could try to go after the guy who wrote Uniswap's code but that has First Amendment issues according to US vs. Bernstein:

> the Ninth Circuit Court of Appeals ruled that software source code was speech protected by the First Amendment and that the government's regulations preventing its publication were unconstitutional.

https://en.wikipedia.org/wiki/Bernstein_v._United_States

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#45

Post by nostrademons »

klipt wrote: post #30
dragontamer wrote: post #10

Earlier quoted context omitted.

> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money. No transaction between rational individuals is ever zero-sum. If Bob values a house at $300,000 and Alice values the house at $300,000, the house will __never__ be sold. Because by the time transaction fees come about, Bob would have lost money in the transaction. In reality, Bob values the house at $250,000,…

How do you distinguish between true value creation and simple asset inflation? Low interest rates cause soaring asset prices, which can create an illusion of "value creation", but I don't see it actually increasing the value much.

Low interest rates actually do increase preferences (and hence value) for cash-generating assets. The competition (keeping the money in risk-free assets, usually expressed as T-bills) becomes less valuable, which means that other assets become relatively more valuable. There are a bunch of results from both behavioral economics and psychology that suggest humans can't actually determine absolute value, and can only determine relative value, comparing two alternatives against each other.

This also gets at the paradox behind a lot of our intuitive notions of "value creation". If a person buys high and sells low, taking a loss, they've lost value. Or have they? At the time they made the first transaction, they valued the new asset higher; at the time they made the second one, they valued it lower. As my therapist used to say, "The past and the future don't actually exist; there is only the present."

I've seen writers try to resolve the paradox by introducing the idea of "time preferences" or "future selves". You, right now, are not the same person you will be in the future. You can express compassion for your future self by taking action - like delaying gratification, investing in personal development, or saving money - that benefits your future self. The degree to which people preference their future self over their present self is culturally dependent, which is why certain ethnic groups and social classes tend to amass large amounts of wealth while others are perpetually living on the edge of subsistence. The rate of interest is a quantitative measure of how much people preference their future self over their present.

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#46

Post by woah »

The premise of this article is that cryptocurrency must be stopped because it is used in ransomware. Never mind that “ransomware” is now the new “terrorism”, a catch all boogeyman to excuse civil liberties violations. Let’s look at how he proposes to stop cryptocurrency.

By making mining illegal, maybe mining can be stopped in the US and in Europe. But it will continue in many other places, and the network will absolutely still function. Maybe the value of crypto will drop, but this doesn’t matter at all for its use in payment. It obvious to anyone that the course of action he is recommending will not have the effect he says it will.

To anticipate this author’s next article- I’m guessing that he will propose making buying and transacting in crypto illegal for US persons. This would also make the value of crypto drop, and might actually also stop a few companies from paying a ransom. But soon enough, overseas “security consultants” would pop up, who could unlock your files for a very hefty fee (really just hiring a non-us person to buy and send the crypto ransom). No simple prohibitions or attacks on crypto would actually stop this.

But this does point to the actual way to stop ransomware, without the ridiculous and unworkable overreaches that this author is flogging: Make paying ransoms illegal.

This would neatly solve the problem by stopping any ransoms from being paid. The fact that the author contorts himself into mental pretzels to avoid stating the obvious legal solution to ransomware shows how little he actually cares about ransomware, and how much he is just grinding an anti-crypto axe. It’s surprising that UC Berkeley allows him to put their name on such obviously facetious and ill-considered articles.

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#47

Post by roblabla »

woah wrote: post #46

The premise of this article is that cryptocurrency must be stopped because it is used in ransomware. Never mind that “ransomware” is now the new “terrorism”, a catch all boogeyman to excuse civil liberties violations. Let’s look at how he proposes to stop cryptocurrency. By making mining illegal, maybe mining can be stopped in the US and in Europe. But it will continue in many other places, and the network will absol…

If paying a ransom is made illegal, there's a very good chance victims will pay the ransom, and try very hard to hide the attack from the authorities to the best of their abilities. Punishing the victim rarely has the intended result either...

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#48

Post by haolez »

tzumby wrote: post #42

I love Lawfare and listen to their podcast quite often, but the argument presented is so odd: 1) specifically calling for not introducing new legislation to deal with this and 2) trying to fit mining into a bucket of legislation designed to kill it. This is not in good faith at all. Money laundering is despicable, specially when it happens at high level. And we have to admit that Bitcoin, ZCash, Ethereum (Tornado Cas…

Money laundering is "despicable"? That's quite a strong sentiment for a white collar crime which basically states that money not tracked by the government is illegal.

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#49

Post by Diggsey »

tzumby wrote: post #42

I love Lawfare and listen to their podcast quite often, but the argument presented is so odd: 1) specifically calling for not introducing new legislation to deal with this and 2) trying to fit mining into a bucket of legislation designed to kill it. This is not in good faith at all. Money laundering is despicable, specially when it happens at high level. And we have to admit that Bitcoin, ZCash, Ethereum (Tornado Cas…

> This is not in good faith at all.

What do you mean? The article is arguing that crypto-currencies (as they are run today) are illegal under existing laws, therefore we don't need new laws.

Regardless of whether this is true or not, how is this a "bad faith" argument?

It sounds like you just didn't like the conclusion but couldn't find anything actually wrong with the logic...

Re: How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission

#50

Post by sklearncowboy »

cainxinth wrote: post #40
aww_dang wrote: post #12

Earlier quoted context omitted.

Much of cryptocurrency's value comes from the lack of regulation. People are not satisfied with the existing solutions, thus the need for innovation. BTC emerged after the US destroyed LibertyReserve and eGold. Government could eliminate the some of the needs for cryptocurrencies by removing regulatory barriers to transact. As an example, compliance costs prohibit PayPal from efficiently processing 25 cent arcade or…

> People are not satisfied with the existing solutions, thus the need for innovation. IMHO, that describes maybe a tenth (maybe) of crypto buyers. Everyone else is just speculating on volatile new assets that are gaining value rapidly.

Exactly. The irony to me is no one really wants price discovery in order for volatility to be reduced so that crypto can actually function as money. Function as money in the sense of signing a year long apartment lease for x amount of BTC a month. Not just paying in USD after a conversion.

That is almost the last thing people want.

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