US SEC chair calls for crypto regulation US Securities and Exchange Commission (SEC) chairman Gary Gensler has described cryptocurrency as "rife with fraud, scams, and abuse in certain applications" and called for more government regulation to protect investors in the assets. Speaking at the Aspen Security Forum, an annual three-day conference in Aspen, Colorado, …
With China also clamping down, it's looking like the days of crypto currencies are numbered. As a replacement for state-controlled currencies they're a miserable failure. In fact the interest in them has exploded only because people see them as a way of potentially making more dollars / pounds / yuan / shillings, which kinda reinforces the perceived value of a state-backed currency. And they only became a vehicle for that because exchanges got set up making the conversion possible in the first place; we've never really been able to conduct trade using crypto currency.
Framed that way, crypto-currency speculation is entirely parasitic; you make a profit on a cryptocurrency because someone else has made a loss, not because you or (more importantly) anyone else has done any actual beneficial work. Other than to pay an electricity bill, or stolen someone else's, neither of which is beneficial; it's a waste of energy.
p.s. never bought or mined any myself.
you make a profit on a cryptocurrency because someone else has made a loss
Not quite: it's more that someone else will make a loss. Profit happens now where more people want to buy than sell so the price goes up and the total value of the currency grows. The people in the future left holding the currency when more people want to sell then buy will be the losers.
"Not quite: it's more that someone else will make a loss."
*This*.
*All* the suckers think they've made a profit, but such a thing is impossible without sucking in ever greater sucker money.
The smarter ones will be tracking the exchanges (or have an inside on dark exchanges) and know they need to bail before the rest, but even they overestimate their ability to beat the crowds in a flash sale.
Once a flash sale happens the buyers disappear, and perhaps were never really there, simply market manipulators pumping up buying demand with fake buy orders. The con money has already moved onto the next token.
I'm kinda surprised China allows that CNY/Crypto exchange to continue, after researching it, it screamed "wackadoodlestan front company" to me.
You and the Anonymous Coward are right, to an extent, with a caveat.
All currencies are only worth what people will pay for them. All currencies are speculative. My dollars are not worth the same in pounds today as they were yesterday or will be tomorrow. While they might be backed by the "full faith and credit" of the government, they can't be exchanged by the government for any real asset.
Cryptocurrencies are significantly more speculative than first world currencies but third world currencies can also suffer extreme volatility and can become worthless.
Cryptocurrencies are also more susceptible to outright fraud and, beyond fraud, they can be created on a whim like Dogecoin.
All that said, in the multinational economy, cryptocurrencies will probably persist. What that will mean for the value of any given 'coin' remains to be seen.
As for me, I have about 1% of my funds in a mix of crypto as a speculative investment. I do it through a US Trust that trades on an Over The Counter markets.
Agreed. Cryptocurrency is based on a fundamental error: that proof of labour is necessarily equivalent to proof of value.
What a cryptocurrency token essentially is, is film footage of you setting fire to a pile of money.
And the only people who are not going to lose out when, not if, the whole lot goes Tango Uniform, are the ones selling matches.
Cryptocurrency is based on a fundamental error: that proof of labour is necessarily equivalent to proof of value.
Are you sure? Because many see the disconnect between labour and value as a fundamental problem with our economy. People work their bottoms off and barely can get ends meet and then you have fat shareholders spending days by the pool counting dividends flowing into their accounts.
The elites problem with cryptocurrency is that they cannot access this wealth without putting up work and they can't stand the fact that some of the "pleb" could get rich on equal terms.
It works like this:
Mark meets Alice, looking somewhat glum.
Alice: "I asked my landlord, Bob, to repaint one of my rooms. Bob's abroad, so he promised to pay me £100 if I bought the paint and did the job myself, and sent him the receipt for the paint and this photograph of the completed job with the empty paint tins in shot as proof. But he won't be home with the money till next Thursday, and I'm left short until then."
Mark: "I'll give you £25 for that picture and receipt!"
Alice: "No way! I'm not that desperate. £75?"
Mark: "£50, and that's my final offer."
Alice: "Done!"
(Next Thursday)
Mark: "Hey, Bob! You know that ton you promised Alice if she painted her room herself? Well, I've got the receipt for the paint and a picture of the work here. She's made quite a good job of it, too!"
Bob: "Who the f**k is Alice?"
"It works like this:..."
By far the best condensation of the myriad problems associated with cryptomania I've encountered. Upvoted accordingly.
It's not that immutable, distributed, publically accessible ledgers might not be a solution to some problem(s). Although I can't actually think of such a problem. It's that exchange of value is already handled better and far more simply by existing mechanisms.
"Because many see the disconnect between labour and value as a fundamental problem with our economy."
You can believe that the disconnect between labour and value is a problem without automatically having to believe that all labour necessarily has value. Breaking large rocks into small rocks with a teaspoon requires a lot more labour than doing it with a sledgehammer. This does not mean that teaspoon-broken small rocks have more value to a small-rock buyer than sledgehammer-broken ones.
Ultimately, you're arguing an economic tautology - 'why did you spend so much effort making this? Because it has value. But why does it have value? Because I spent so much effort making it...."
Except that labour cost isn't a function of the utility of the blockchain; it's purely a function of the price of the token. For example, bitcoin's labour effort (measured in hashrate) has increased by a factor of 10^15 since the first block 12.6 years ago, but its utility (in terms of the number of transactions it can process) hasn't increased significantly.
Cryptocurrency is based on a fundamental error: that proof of labour is necessarily equivalent to proof of value.
Proof-of-work is not a necessary feature of cryptocurrencies. (Nor is a public, distributed ledger, which another commentator mentioned.)
I'm not a fan of cryptocurrencies, but if we're going to critique them in the abstract, we ought to define them properly.
Really it's more like the wildcat-banking era than the Wild West. The Wild West wasn't all that wild, economically.
>> What I'm not neutral about: Investor protection.
Is he as keen on protecting those who invest in other things? Some examples of which are:
- trading cards
- stamps
- comic books
- antique furniture
- cars
- art
- jewelry
- vintage toys
- books
- spoons
- etc
If he's truly serious, he will insist that anything that may possess value and can be exchanged or traded should be under the benevolent watch, scrutiny, and regulation of the SEC.
Agreed. Art is a fine example of something that (mostly) doesn't have any intrinsic value and trades on either perceived value or investment potential (or the Greater Fool approach, depending on which way you want to look at it).
I'm happy enough to pay money for artwork that I would like to see in my loungeroom, but I don't really need the art market regulated to protect me, apart from the usual commercial misrepresentation/fraud protections of course.
So, what is it about cryptocurrencies that require regulation, above all the other things that Draco lists? Or tulip bulbs perhaps?
The problem with barter that lead to the creations of coins and thereby currency was that it was cumbersome to use, and even items of the same kind may not have the same real value. There is a reason money was created thousands of years ago.
Rich people may trade paintings, but even them too don't use them as a currency. It could be some kind of investment, but not all investment are securities. Even real estates are not securities.
Sure, you could pay a house with a Van Gogh, but it does not make it a currency, so there's really no need to regulate that. After all, while you can't usually not accept a currency for a transaction, you are free to refuse to be paid in a different way.
Anything can be a currency.
A sophomorism. Currencies are distinguished in part by their use of fungible tokens. Works of art and other collectables are by definition not fungible; that's what makes them collectable.
Bitcoins are securities. Equity-backed stablecoins (which, from the article, it apepars Gensler referred to specifically) are securities. NFTs are not. Paintings and trading cards are not.
When some countries decided to ditch the US dollar as a currency for trading oil, the US almost lost consciousness out of anger.
They invaded a country here, started a coup there, assassinated this and that.
But now that the drug cartels are moving away from US dollar, the US is shaking and having hallucinations.
There is no country to invade and the trade is completely decentralised with no single point of failure it's essentially a whack-a-mole.
-rife with fraud, scams, and abuse.
Sounds like the day to day life of the average exchange listed corporate.
The US and EU will regulate crypto because it crosses borders and allows ordinary people to 'print money', which they want to retain a monopoly upon.
The reality is that crypto is not such a wild west - note the recent recoveries of large amounts of crypto by law enforcement in the UK and US.
Crypto profits are already baked into the tax system. Forget to pay those taxes and you will get a knock on the door and be asked to justify your assets. The idea of 'innocent until proven guilty' was cast aside some time ago.
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