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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

#61

Post by Diggsey »

tzumby wrote: post #52
Diggsey wrote: post #49

Earlier quoted context omitted.

> 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...

I explained why I think this is argued in bad faith: trying to frame mining in a law framework for the single purpose of killing it vs something like: "ok, this is bad, let's try to fix it. here's how we can fix it"

If the author believes it to be illegal, why should they care about "fixing it"?

Murderer:

You: Let's introduce a new law to make killing people with hammers illegal.

Author: We don't need to introduce a new law, murder is already a crime.

You: That's a bad faith argument, because it means we can't kill people with any kind of implement, not just hammers!

There are two ways you can argue this:

1) Either you believe that the crime should not be illegal.

2) Or you disagree that the act falls under the definition of this crime.

In neither case is the author acting in bad faith, they're just disagreeing with you. It sounds like you would argue (2) but in that case you should provide some reasoning for that.

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

#62

Post by dragonwriter »

CrazyStat wrote: post #33
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,…

>This is called the Bid-Ask spread, and its always, always, always non-zero. Stocks have bid-ask spreads of a penny, but Pokemon Cards, Houses, Lumber, etc. etc. all have a spread in reality. There's never one price for things, there's a buyer's price vs a seller's price, the bid and the ask. If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house…

> If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house example where the bid is higher than the ask), why can't it be zero?

It can be, and indeed the Micro 101 model is that in ideal conditions it will be for an infinitesimal slice of transactions that actually take place, as all potential transactions with a 0-or-higher bid-ask spread will occur, but that the average across the market of all voluntary transactions will always be positive.

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

#63

Post by 988747 »

tzumby wrote: post #54
haolez wrote: post #48

Earlier quoted context omitted.

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.

Here are a few reasons why I called it despicable: - Laundering money in poor countries directly hurt the citizens of those countries because the government doesn't collect the taxes it is entitled to - Most of the money to be laundered comes from illicit activities: drugs, prostitution, human trafficking. I don't have any citations here for proportions, sorry. Update: fix formatting

> Laundering money in poor countries directly hurt the citizens of those countries because the government doesn't collect the taxes it is entitled to

Minior nitpick: Poor countries typically have authoritarian, corrupt governments, so keeping money out of their hands is actually a good thing :)

But more to the point: the whole idea of money laundering is that criminals WANT and DO pay taxes on their illegal income by pretending it came from legal sources. If they just kept those money under the mattress they would never pay a penny of taxes, but they also wouldn't be able to actually spend the money. So, money laundering in poor countries actually increases the tax income of their governments.

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

#64

Post by dragonwriter »

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,…

> If Bob was willing to sell the house for $270,000 and Alice was willing to buy the house for $330,000, then there was at LEAST $60,000 of value created by the transaction.

Where each participants marginal utility function is represented by their name, and P is the actual transaction price, there is exactly Bob(P-$270k) + Alice($330k-P) value created.

Calling this “at least $60k value” is wrong, and even calling it “$60k value” ignores the fact that value of $ is no more constant across different market participants than any other item, and that the benefits accrue in particular places.

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

#65

Post by jfengel »

CrazyStat wrote: post #33
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,…

>This is called the Bid-Ask spread, and its always, always, always non-zero. Stocks have bid-ask spreads of a penny, but Pokemon Cards, Houses, Lumber, etc. etc. all have a spread in reality. There's never one price for things, there's a buyer's price vs a seller's price, the bid and the ask. If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house…

It can be exactly 0, but that's the exception, not the rule.

If you treated them as true real numbers, the odds of bid and ask being exactly identical are zero. In reality we round the prices to some minimum unit of currency (or rational fraction thereof), so it's not impossible for the difference to be precisely zero.

Nonetheless, it demonstrates why it's not zero sum in general. If it happens to sum to zero, it's by coincidence, not a fundamental truth of the market.

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

#66

Post by CrazyStat »

dragonwriter wrote: post #62
CrazyStat wrote: post #33

Earlier quoted context omitted.

>This is called the Bid-Ask spread, and its always, always, always non-zero. Stocks have bid-ask spreads of a penny, but Pokemon Cards, Houses, Lumber, etc. etc. all have a spread in reality. There's never one price for things, there's a buyer's price vs a seller's price, the bid and the ask. If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house…

> If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house example where the bid is higher than the ask), why can't it be zero? It can be, and indeed the Micro 101 model is that in ideal conditions it will be for an infinitesimal slice of transactions that actually take place, as all potential transactions with a 0-or-higher bid-ask spread will occu…

>as all potential transactions with a 0-or-higher bid-ask spread will occur,

bid-ask spread isn't a property of transactions, it's a property of markets. Transactions will occur when someone is willing to pay at least as much as a supplier is charging.

The bid-ask spread is how much less the highest bidder is willing to pay than the lowest seller is asking. It's a measure of how far apart buyers and sellers are from making a transaction, at a moment of time in a market.

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

#67

Post by matthewdgreen »

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…

>And we have to admit that Bitcoin, ZCash, Ethereum (Tornado Cash) and other cryptocurrencies are facilitating 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 mainstream banking system has built up an infrastructure of laws and procedures designed to guarantee transaction and identity confidentiality (e.g., laws alone: RFPA, GLBA, FCRA, GDPR and many more.) These privacy protections aren't some quaint byproduct of another era, they're requirements for any working financial system. You can't have your private banking data oozing out all over the world: this is terrible for business and fundamentally unsafe for users. It's unsustainable in the cryptocurrency sphere as well, but crypto is mostly a toy that nobody uses for real applications so these weaknesses aren't a killer -- yet.

The traditional banking system squares the need for privacy and desire for AML by placing confidential banking data into closed systems which share it with law enforcement upon presentation of a subpeona. Most cryptocurrencies deal with it by, basically, YOLO. But none of that is sustainable.

Worse, it hurts the good guys and hides the bad ones. Traceable blockchains put you into a regime where the clever launderers will find ways to obfuscate their transactions, and everyone else ends up with an unusable system that dumps their business secrets into the hands of any competitor who can write a check to a tracing company.

(Full disclosure: Zcash scientist here. But we created the tech for a reason, and fear of a broken 'panopticon' banking system was a big part of that.)

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

#68

Post by dragonwriter »

CrazyStat wrote: post #66
dragonwriter wrote: post #62

Earlier quoted context omitted.

> If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house example where the bid is higher than the ask), why can't it be zero? It can be, and indeed the Micro 101 model is that in ideal conditions it will be for an infinitesimal slice of transactions that actually take place, as all potential transactions with a 0-or-higher bid-ask spread will occu…

>as all potential transactions with a 0-or-higher bid-ask spread will occur, bid-ask spread isn't a property of transactions, it's a property of markets. Transactions will occur when someone is willing to pay at least as much as a supplier is charging. The bid-ask spread is how much less the highest bidder is willing to pay than the lowest seller is asking. It's a measure of how far apart buyers and sellers are from…

> bid-ask spread isn't a property of transactions, it's a property of markets

The upthread poste by dragontamer which introduced it seemed to ascribe it specifically to particular transactions, and I responded to what waa described in that post, viewing terminological minutiae as less interesting than the concept being discussed for which there seemed adequate clarity in context.

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

#69

Post by effie »

jjk166 wrote: post #39

Bitcoin is legally an asset. Processing the transfer of bitcoin is legally no different from processing the exchange of baseball cards. Transferring $100 worth of baseball cards might be a money transmission, but transferring a signed Barry Bonds card regardless of its value is not. Likewise, sending $100 dollars in the form of bitcoin might be money transmission, but sending 0.03 BTC regardless of the dollar value i…

> To subject miners to FinCEN rules, the US would have to recognize bitcoin (and any other cryptocurrency one wanted to so regulate) as a legal currency.

Isn't this just a detail, consistent with author's call for action? To him, participating in the bitcoin network means facilitating money transfers. If the gov. decides to adopt this viewpoint, calling bitcoin a foreign currency won't be difficult.

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

#70

Post by dnautics »

CrazyStat wrote: post #33
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,…

>This is called the Bid-Ask spread, and its always, always, always non-zero. Stocks have bid-ask spreads of a penny, but Pokemon Cards, Houses, Lumber, etc. etc. all have a spread in reality. There's never one price for things, there's a buyer's price vs a seller's price, the bid and the ask. If a bid-ask spread can be positive (as in a stock where the bid is lower than the ask) and can be negative (as in your house…

even if the bid-ask spread is zero, the fact that someone put a bid at that price implies they value the item more than that at most that exact amount of money, and if someone put a ask at that price, that implies they value at least that much money more than that item, so it is STILL a non-zero trade.

Note that the bid-ask spread is a LOWER BOUND ESTIMATE on the amount of utility created by a trade, which is almost always nonzero.

Of course values are subjective, so you could press the "issue bid" or "issue ask" button and a fraction of a second later have your values shift, and then have the automated system execute trades... But I would say... that's life. Maybe don't click certain buttons if your preference schedule is so flighty?

Also, sure, someone could have a (metaphorical) gun to your head when you place the bid, which introduces external factors which could violate the platonic ideal that these trades must create positive value.

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