It's time to discuss banning cryptocurrency.

[CloudWatcher]

Bitcoin (et al) have been havens for speculators and criminals, and little else.

Given the massive risk, fraud, and unregulated nonsense that's going on, I'll assert it's time to seriously evaluate shutting them down.

Nicholas Weaver made no bones about it: he really, really dislikes cryptocurrencies.

Speaking at the Enigma security conference in Burlingame, California, last week, the researcher at UC Berkeley's International Computer Science Institute characterized bitcoin and its many follow-on digital currencies as energy-sucking leeches with no redeeming qualities. Their chief, if not only, function, he said, is to fund ransomware campaigns, online drug bazaars, and other criminal enterprises.

Meanwhile, Weaver said, there's no basis for the promises that cryptocurrencies' decentralized structure and blockchain basis will fundamentally transform commerce or economics. That means the sky-high valuations spawned by those false promises are completely unjustified. He also said investors' irrational exuberance just adds to the unviability of cryptocurrency.

More at Fire (and lots of it): Berkeley researcher on the only way to fix cryptocurrency

And this jaw-dropping story of $137 million basically disappearing because one person vanished (he died or absconded to India and faked his death):

A cryptocurrency exchange in Canada has lost control of at least $137 million of its customers’ assets following the sudden death of its founder, who was the only person known to have access to the offline wallet that stored the digital coins. British Columbia-based QuadrigaCX is unable to access most or all of another $53 million because it’s tied up in disputes with third parties.

The dramatic misstep was reported in a sworn affidavit that was obtained by CoinDesk. The affidavit was filed Thursday by Jennifer Robertson, widow of QuadrigaCX’s sole director and officer Gerry Cotten. Robertson testified that Cotten died of Crohn’s disease in India in December at the age of 30.
...
Robertson testified that Cotten stored the cold wallet on an encrypted laptop that only he could decrypt.

More at Digital exchange loses $137 million as founder takes passwords to the grave

Certainly fraud and mismanagement is nothing new, but that begs the cost/benefit question. Are cryptocurrencies worth trying to save?

Enough is enough. I for one am getting tired of extortion requests showing up daily in my inbox demanding payment in Bitcoin. If there was a good use for it, I'd write it off as a cost-of-doing-business. But ... there's no good reason for them!

Btw, my background: 45 years of Arpanet/Internet use and a masters in Computer Science. I'm not a Luddite just pissed at the technology.

[manor321]

1. No. It's a commodity. It would be like banning baseball cards because people trade them

And people can keep the private keys themselves. That means an exchange can't lose your money because you have complete control over it.

[CloudWatcher]

8. When funny money becomes real ...

I would think that without exchanges, cryptocurrencies would be pretty useless. At least until there's enough services being bought and sold to not need regular money anymore.

[Amishman]

35. Taking down the exchanges won't stop it, regulate and bring it mainstream

Decentralized exchanges and on chain swaps are already possible, just not widely adopted as they are a little less convenient.

It's a bit like torrent sites and music piracy, it is impossible to eliminate. The 'can't stop the signal meme' is absolutely true.

The correct course of action is to bring crypto mainstream but also regulate it.

[jberryhill]

2. Two questions

1. How would you propose to "ban cryptocurrencies"? The basic proposition, if I understand you, is that you would like to make it illegal for a group of people to do math.

2. Does the amount of fraud involving cryptocurrencies exceed the amount of fraud using traditional currencies? I mean, gee, you link a story about a $137 million loss involving cryptocurrencies. That's kind of small potatoes isn't it?

https://phys.org/news/2018-01-hsbc-million-forex-fraud-settlement.html

HSBC was one of six major US and European banks that were fined a total $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market.

That's billion - with a "b". No crypto involved. And that is hardly the only currency market manipulation scheme.

I've got no pony in this race, but I sincerely don't understand your post.

[kag]

12. I get your point about "under what power...?" but

Your second point is just plain old what-about-ism. So since there is so much fraud in regular currency, we should just put up with it in cryptocurrency rather than try to figure out a way to tamp it down?

I, too, am sick to death of all of the extortion emails--several every day, in lots of different languages and alphabets--demanding bitcoin.

[CloudWatcher]

18. Banning ... engr'ing detail.

While the devil is in the details, I think the details of how to enforce a ban are minor compared to the issue of whether or not to ban them (or "properly" regulate them ... whatever that means).

I think the exchanges are an obvious failure & weak-point that are under-regulated and could be simply banned. If you can't move regular money in/out of a cryptocurrency then it's no longer a very viable option. Unless you're in a very big company-store with a complete economy inside the currency of course.

[X_Digger]

3. Under what power do you propose to ban crypto?

I'm no fan, but I can't think of a power that the government has that would allow them to ban it.

[CloudWatcher]

6. It would likely require additional legislation.

I'm no lawyer, but I believe most governments typically have some control over currency and systems that are basically designed for illegal activities.

[X_Digger]

9. Legislation would have to cite some power.

That's what I'm after.

Because something is used in crime doesn't make it subject to legislation.

Governments control their own currency. They don't and as far as I can imagine, can't control what people barter with each other. I sell some wood turned items on etsy. If I wanted to take payment in the form of sticks of unsalted butter, molded into the shape of Barbara Streisand's chin, there's not a damned thing that the government can do about that.

[jberryhill]

13. Barbara Streisand might have a right of publicity claim

But otherwise you are bang on.

[TeamPooka]

27. Hey my Barbra Streisand butter chins are officially licensed products

[CloudWatcher]

14. Barter systems ...

Technically I believe that the IRS expects you to report "income" from bartering as well as income paid in currency. I know that election campaign funding is supposed to report "in kind" donations as well as cash contributions. And yeah, I doubt if very many people bother.

Regarding authority: when I pull out over $10k from my bank, they log it and report it to the Feds. I likely have the details wrong, but there are a lot of money-laundering rules in place when dealing with cash and bank transfers.

And I suspect that is broken with Bitcoin (et al). I don't understand how the governments of the world can pretend to try and enforce international money laundering laws when something like cryptocurrencies just go around the whole thing.

[X_Digger]

22. Governments have the power to control currency they issue.

The can control money laundering not because it's money, but because of the activity it hides.

Our government isn't all-powerful, regulating whatever they want, whenever they want or when enough people demand it. We, the governed, cede power to the government. You know, we, the people, establish governments to protect rights. The government has no power that we don't give them. And those powers are generally very specific.

Some doorknobs try to hang anything and everything on the interstate commerce clause, or 'promoting the general welfare', but overreaches like that are often struck down.

[brush]

19. The best way to get rid of them is to not put good money...

into the speculative ether of online currencies with easily absconded with wallet keys.

I'd rather go to Vegas where you can at least see your money disappear.

Banks at least guarantee deposits up to a certain amount.

[X_Digger]

23. Yup, educate people on how stupid it is, and they'll peter out, eventually.

Next to be seen on the 2030 version of buzzfeed's, "You were a kid in the teens if you remember these.."

[panader0]

4. "takes password to the grave"

Who sez you can't take it with you?

[CloudWatcher]

32. My bet is that the guy is alive and well.

The story of his dying from Crohn’s disease in India is pretty far-fetched. Not impossible, but I sure wouldn't bet on it.

[kag]

5. K&R

[Fresh_Start]

7. cryptocurrency is terrible for the environment

not to mention its links to illegal activities and fraud

[CloudWatcher]

10. Energy costs

There is some active debate on whether or not the ridiculous energy consumption of cryptocurrency is real or a blip. But yeah, I'm a little skeptical that it's worth the energy impact of all those bitcoin mining computers running full blast 24x7.

[Fresh_Start]

29. its not just mining costs though those are outrageous

its also transaction costs.

If we had plentiful pollution-free power, it would not be a concern.

[Amishman]

36. The energy costs are only because of bad design

There are two competing models of validation for crypto projects.

Proof of work, which involves massive computing power. The difficulty of the validation and the resources required to do it act as a safeguard against someone hijacking it. This is what Bitcoin does.

Proof of stake, which instead limits validators to those who hold a large amount of the crypto currency and put up part if their holdings as bond. Someone would need control of 51% of the coins to hijack, which would be essentially impossible and financially suicidal. This is much newer and used by up and coming projects like Eos and Tezos. It requires minimal energy, a validation mode can be run off a little raspberry PI.

Proof of work will probably die out, several major PoW chains are talking about changing over.

[Fresh_Start]

39. thank you for the information

I can see how proof of stake would reduce those computation requirements

[JCMach1]

26. Currency is used exponentially more often for illegal activities and fraud

But don't worry, governments and Big Banks want to get rid of cash anyway...

https://www.theguardian.com/commentisfree/2018/jul/19/cashless-society-con-big-finance-banks-closing-atms

[Fresh_Start]

31. of course currency is used exponentially more for illegal activities and fraud

because there is exponentially more currency then cryptocurrency.

We have been moving to a cashless society for more than 30 years....and the internet and cellphones have certainly accelerated the change. I think its even possible to have a chip inserted under your skin so you don't even need to bother with cellphones.

But I'm appalled by that idea

[JCMach1]

41. Cryptocurrency is completely traceable transactionwise... cash, not

Criminals will always find a way... However, the money laundering, criminal angle has been largely promoted by banks and those opposed to Bitcoin.

If Bitcoin weren't there there would still be multiple new avenues/channels for fraud given the new technologies.

However, we really do need to resist the move to cashlessness... It opens massive new avenues for government and corporate repression.

Imagine cashless economy tied to something like China's social credit monstrosity... https://techcrunch.com/2019/01/28/china-social-credit/

[Initech]

11. Well the wrong people are getting rich off it.

That's never a good thing, right?

[CloudWatcher]

16. Huh?

I have no problem with people getting rich. I am a lot more like the nerd that disappeared with the bitcoins than a Wall Street banker, so I guess I'm missing your point.

[Initech]

17. I don't have a problem with people getting rich either.

But the kind of people who are getting rich off bitcoin are the kind of people who you wouldn't trust with 10 cents, let alone $10 billion dollars.

Martin Shkreli is a perfect example of what I am talking about here.

[CloudWatcher]

20. True enough.

It was pretty scary when I started having friends (who were moderately poor) ask me if they should dump their life savings into Bitcoin, since it was so clearly a great investment!

[Initech]

28. When it's $20K one day and $7k the next, you know it's a sound investment!

I think in the John Oliver segment last year he talked about a guy who became a millionaire overnight investing in bitcoin and the next day he lost everything and then some. Plus it can be very easily stolen. Not exactly a sound investment.

[fescuerescue]

15. Good luck with that.

We should ban drugs at the same time.

[CloudWatcher]

21. lol

Most drugs have some beneficial use, and I'm all for legalizing heroin for terminally ill patients who want it. But I'm still waiting for any good excuse to use a cryptocurrency.

[fescuerescue]

34. Things don't need a good reason to exist

Sometimes they just do.

Banning crypto would be extremely difficult. Heck, it's arguably not even based in the US anymore as electricity costs have driven it to low cost/free energy providers in others countries. Sure there are lots of users of it here, but the mining, which generates coins and facilitates transactions occurs offshore (except for a handful of hobbiest)

I think crypto is far far more likely to embraced by government with a government sanctioned version of it, than it is to be banned.

Crypto is unforgeable and a permanent immutable, unforgeable record of every single transaction that has ever occurred is available and public. That's a feature that every government on Earth would love to have as a feature for it's cash.

[Polybius]

24. Hell no

Leave those of us alone who choose to buy and invest in it.

[CloudWatcher]

30. Tracking ...

Give me a way to track down the owner of a Bitcoin wallet and I wouldn't care. But I'm getting daily extortion demands of bitcoins and it's pretty hard to just ignore that the entire infrastructure appears designed for such abuse.

[7wo7rees]

25. Audit the Fed

HODL

[CloudWatcher]

33. Audit the Fed, audit the DoD, maybe enforce the existing campaign funding laws ...

But do something to get Bitcoin extortion demands out of my email!

Oh, and stay off my lawn! (I don't have one, but it feels good to say it anyway.)

[Adrahil]

37. Fools and their money.....NT

[MineralMan]

38. My response is simply not to have anything to do with cryptocurrency.

The people I work with were contacted about possibly doing some work for a company. That company proposed compensating us with a brand-new cryptocurrency they were launching. Unanimously, we all said, "Uh, no thanks...we never work for nothing."

[FakeNoose]

40. Anybody who "invests" in crypto would have better chances in Vegas

And we all know the story of Las Vegas - the house always wins. While I agree with your premise that cryptocurrency should be banned, we don't have the legal mechanism to do that in the US.

The banning happens when smart wealthy people realize they don't want to have anything to do with it.