Or, we could just ban crypto exchanges in the USA (and allied nations), watch prices tank 95%, and all of the fab capacity which is now going towards Bitcoin and Ethereum mining could be restored to proper productive use (alongside a big reduction in energy expenditure and ransomware).
I think the biggest pitfall in your plan is thinking that prices would respond by falling, let alone by 95%.
There’s a long history of countries imposing capital controls. And it’s rarely favorable to the home country’s exchange rate. What you are proposing is basically just capital controls towards the crypto economy.
Yes it will make it harder for new buyers to bid up the price of Bitcoin. But it almost certainly will induce current holders to hoard any Bitcoin they own, thus reducing supply and putting upward pressure on the price. Without a liquid market, miners are likely to hoard their rewards, creating even more Bitcoin scarcity.
It also may create panic buying before the law comes in effect, or by people in foreign jurisdiction fearing the export of the policy.
It can also just as likely create panic selling as speculators look to shed an asset that's dead in the water. Remember when Robinhood banned GME shares from being purchased, and the share price cratered as speculators tried to rinse their hands of the asset?
Maybe a better strategy is to discourage crypto through fiscal policy: Imagine 90% capital gains tax on crypto profits, no credits for capital losses on crypto, 10% crypto wealth tax. Put those taxes to use fighting climate change.
At 90% taxation why wouldn’t wealthy crypto holders just leave the tax jurisdiction?
Like, it’s not a bunch of gold bricks or a briefcase full of paper money...It’s not controlled by a bank who can deny your transfer. Anyone can take all of their crypto anywhere on Earth, and can do so instantaneously and virtually anywhere with an Internet connection.
If it was the US tax jurisdiction that someone is trying to leave, then that person would need to give up their US citizenship, not create any suspicion that they are leaving due to tax reasons, and also pay taxes as if they have sold off everything they own.
Argentina has implemented many of these "solutions" trying to keep the dollar under control. The result is prices keep going up, local currency keeps going down and there's an entire parallel market to avoid the taxes. I expect the same to happen to Bitcoin if that is implemented.
How do you define one? What attributes does a pyramid scheme have?
One could easily ask what's a currency that's backed by nothing, is inflated to oblivion continuously robbing marginalized peoples' life savings, is often used for illegal drug/weapons/sex-trafficking/and worse crimes, is involved in a good percentage of the world's pollution, and that may soon be worth very little?
What percentage of merchants accept cryptocurrency and what percentage of merchants accept cash? "Fiat currency" may not have inherent value in the same way as gold or pork bellies, but stable currencies (e.g. Euro, US dollar) are backed by governments which have incentives to be good stewards of their responsibility and if those currencies collapsed, I don't think the world would be in a state where cryptocurrency would retain any value.
The problem is that we did make rich people the global arbiter of what people value, by giving them more units which can be used to value things.
This is a fundamentally undemocratic system. Ten billionaires have way more ability to decide on something's value than ten people making minimum wage.
(This is also the fallacy in "If you don't like it, why not short it and make money instead of complaining?" I don't like it, and I know my short positions aren't going to influence the market as much as some rich guy's much larger long positions.)
This is a nonsensical take on how value is determined. It's not analogous to voting (or making political decisions in general) -- it's incoherent to call it "undemocratic".
The overwhelming majority of valuation / price discovery does not take place in a coordinated or intentional manner. People buy what they want or need and in aggregate this determines price. Billionaires in aggregate are a minor portion of transactions that take place -- they can participate in larger transactions than most people but can't just will any market configuration into existence. They can create localized distortions, but if they're doing something unsustainable then they won't stay billionaires long and it will end up a blip.
However, I suspect your position may be a cryptic way of saying "There are some human activities / endeavors that I don't like and it's easy to blame the rich people invested in that / making their money off that." This would not support your point. It takes more than just some rich people to create and sustain an industry.
> They can create localized distortions, but if they're doing something unsustainable then they won't stay billionaires long and it will end up a blip.
My point is precisely that this assumption is not true.
A more precise way to say that you're "doing something unsustainable" is that you're persistently overvaluing something. But how is it determined that you're overvaluing something? The rest of the market assigns it a lower value than what you assign.
If you and your billionaire buddies just decide to value something highly, then simply because you have money already, you can do that, and you can influence enough of the market to make sure that you're not overvaluing it relative to the market, and thus, it is sustainable.
The more money you have, the more leverage you have to pull off this trick. Sometimes it works, sometimes it doesn't, but the average person on a minimum-wage strategy cannot even attempt it.
People don't solely buy what they want or need. They also buy, in very large quantities, things that they expect to be able to resell later. Sometimes this happens at small scale (think toilet paper or gasoline, or even think houses); sometimes this happens at large scale (think commodities markets or mergers and acquisitions). These sorts of secondary markets have a huge influence on price discovery.
All modern democracies are representative. People themselves don't decide about things, their representatives do. This is the price we are willing to pay to get effective governance.
Sure, but not all representative systems are democracies. A king may represent his subjects (in foreign policy and war, for instance, and even sometimes in rituals) and generally has way more leverage to be effective at however he chooses to govern than a president or prime minister does, but it's not a democracy.
One of the usual goals of a democracy is equal representation ("one person, one vote"). You can transfer your representation to someone else - either directly, in the sense of proxy voting, or indirectly, in the sense of voting for a representative - but you don't give it up permanently. When elections next happen (and if elections don't regularly happen, it's not a democracy), you get your vote back and can freely choose what to do with it, again. If your representative isn't doing what you want, you can choose another one.
That's not true of the system of money. Even if it were theoretically been true at some point, once you transfer money to someone else, the associated power of that money stays with them or whoever they choose to transfer it to. If you bought Windows 95 for $209.95 a quarter century ago, that fraction of your ability to "vote" on how society values things left you a quarter century ago, after spending it exactly once on valuing Windows 95, and it probably never returned to you (unless you became a Microsoft employee or supplier).
So, someone who makes something that is (rightly or wrongly) highly valued thereby accumulates the ability to value things in the future, and have disproportionate influence on what is then going to be highly valued. This process repeats continuously and has repeated for centuries.
Democracy does not mean "one person, one vote" -- that's tyranny of the majority, and gameable in an open system with procreation, immigration/emigration, and even murder. Democracy means "rule by the people" which is far more nuanced.
More simply, the US Constitution was not approved by "one person, one vote", not even with a dozen caveats and asterisks.
The problem is the representative frequently don't represent the interests of their people, they represent the interests of whoever will donate more money to let them keep winning elections.
Stock markets help allocate resources to the companies that will make good use of it. We can't say something similar about crypto until speculation stops being 99.9% of the use case and it starts being used for something more practical. We may get to that point, but that's still not a certainty.
In many cases, shareholders are represented by a board of directors, to whom the CEO is beholden. Also, executives often see much of their compensation via equity in some form.
Maybe not ban, but heavy regulation and taxation sounds good to me. Too much of our economy is based around ensuring high numbers for the DJIA and Nasdaq, which is not healthy for society.
And watch decentralised exchanges that are even less efficient replace them. There's as much chance of successfully banning crypto as there is of successfully banning drugs (in a big part because of how useful crypto is for online drug transactions).
The US could simply ban US banks and financial institutions from doing business with crypto, and from doing business with any foreign entity that does business with crypto. That would make it mostly unusable except as just another aspect of the criminal underworld shadow banking systems. That's based on the current state of crypto though. If it becomes a common medium of exchange with many people having some or all if their transactions denominated in crypto, that option kind of goes off the table.
That's precisely what I'm thinking. Of course Iran, as a country with an economy of its own, can still function internally, and there's a black market, but there are also risks to that. Crypto certainly couldn't hit mainstream transactional usage under those conditions, and there would be safer places to keep your money legally & avoid the risk of having your assets frozen.
The window is closing rapidly on this option though. The more it becomes just another financial asset class with trillions in market cap, the harder that option becomes. However, if a country like the US ever decides it's a real threat to it's sovereign monetary policy, it could take that option anyway and simply bail out those impacted financially.
I think the most likely scenario is simply that it becomes regulated like any other part of the financial system. Heck thinks like CTR's SAR requirements. It will be difficult to ever get Bitcoin or others to their dream of decentralized currency unbound by governments when governments can make regulations controlling it's usage. The average business owner isn't going to risk their business and jail time trying to work outside those regulations.
"Despite ordinances against organ sales, this practice persists, with studies estimating that anywhere from 5% to 42% of transplanted organs are illicitly purchased."
It's wild how many people on a tech forum don't understand the next major innovation of the Internet. Crypto is up there with Netscape and smartphones.
People said similar things with: AI, torrents, VR/AR, quantum computers, memristors, drones, chatbots, distributed social media, Internet of things, self-driving cars, robots, dapps.
Some of these technologies managed to produced something useful. On the other hand, I cannot use crypto to anything but speculation.
The real answer, I think, is not to ban the nebulous idea of "cryptocurrency" but to ban (or highly tax) proof-of-work coins or similar schemes where the network requires a large amount of some physical resource to maintain its function.
That will spur innovation on approaches that don't have that requirement.
There’s already rapid innovation in this direction without government innovation being necessary. Ethereum is switching to proof-of-stake by the end of the year, and partially because of that is already 50% of the way to passing Bitcoin by market cap.
