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The bit that I found interesting is when one of the witnesses (either Jay Clayton or Chris Giancarlo) mentioned that they tried to get their college-age kids to

The bit that I found interesting is when one of the witnesses (either Jay Clayton or Chris Giancarlo) mentioned that they tried to get their college-age kids to invest in stock market. Even gave them some cash to play around with but it just never caught on. Then Bitcoin exploded and they naturally gravitated to it. He could've taken this story into many directions, basically saying that the whole thing is madness because we have teenagers playing in this market. But he didn't. Instead it kind of sounded like he wanted everyone to embrace it... but still put regulations in place :)

maxxxxx 9y ago
I don't get the idea of "investing in cryptocurrencies". If they are ever to be used as currency they should be relatively stable and predictable. The current status of extreme deflation makes any serious use almost impossible.
- darawk 9y ago
  You're investing in a future where they are used as currencies. If today you could buy USD for 10 cents, knowing that it'd be worth its value today, that'd be worthwhile. Now, lots of people don't think cryptos will ever achieve that kind of success, and they may be right. But that is the investment thesis nonetheless.
  - hartator 9y ago
    Except 10 cents of USD was worth more 50 years ago than now.
    - programmarchy 9y ago
      Because of the Fed, which is an organization many people don't want manipulating (devaluing) their currency. Monetary freedom is a big draw for many in the crypto community.
      - dajohnson89 9y ago
        now it's whales and mining farms
      - marnett 9y ago
        But the draw is near fantasy levels of misunderstanding and delusion. Monetary policy is not that simple.
        allthenews 9y ago
        Sure, but one could argue that our sanctioned manipulation of fiat currency is similarly based on delusions of simplicity and/or understanding. We still don't seem able to reliably avoid recessions, and no one is predicting the market with any reproducible accuracy. Perhaps such complex, chaotic systems may be better off sans regulation. Especially something like cryptocurrency, which does not have the same properties as paper fiat, although it is being treated as such. I personally have less faith in institutions run by humans and bogged down by dated regulations than I do in an instantaneously fluctuating near free market. If you can't trust people to invest in currency because of complexity, what makes you think you can trust them to regulate your money, and make decisions that affect the value of your assets for you?
  - jjxw 9y ago
    As much as I personally think cryptocurrencies will have a difficult time achieving currency status - this is pretty much what happened during the American Revolution. Congress issued bonds to pay soldiers and for goods for the Continental Army. Those who accepted the bonds as payment were, in a sense, betting that they would be worth something in the future.
- digi_owl 9y ago
  Because at least Bitcoin has never really been a currency, it has been a (virtual) commodity with a (public) ledger attached. Blasted thing from the outset emulated gold, thus attracting "survivalists" and other goldbugs from across the world. And that is perhaps why Wall Street is moving in, because those companies are at their core built around siphoning the arbitrage on shuffling commodities around. And with cryptocurrencies they have an ample supply of such commodities, until the earth boils from waste computing heat. Perverse incentives to the Nth. The paperclip maximizers are already upon us, and they didn't come from the AI lab, they came from the trading floor.
  - opportune 9y ago
    This is blatant erasure. Bitcoin was perfectly fine as a currency for most of its existence, and for a long time captured almost all crypto volume
    - zanny 9y ago
      The mechanics of transactions worked for currency purposes, but the fundamental architecture of bitcoin has always been hostile to its use as money. The fixed coin payouts per block, the halving every four years, and the eventual final and finite fixed supply, combined with arbitrary blocksize limits means bitcoin was always designed to hit its limits at 2014 transaction volume. I traded btc back then for the novelty and bought stuff with it in physical and digital to say I did, but even then the architecture promoted hoarding over spending, and anyone using bitcoin as a currency then is likely lamenting the things they traded it for now which is just about rule 0 of how to make a dysfunctional money. The crpytocurrency that is actually a currency is one that can use its design to promote its practicality as money - the goal should be no fees, instant signature ledgers that don't consume power on national scales, and an adaptive but predictable algorithm for money creation that can respond to the market to try to keep the currency stable - when transaction volume and coin turnover are high the currency is inflating so you want to reduce minting to try to curtail the effect. When money slows down and starts squatting in wallets you turn up printing to drive deflation. Anything else in my mind at this point is just a cash grab using the proven mechanisms of bitcoin and an out of control hype train to rob people.
- freejulian 9y ago
  Contrary to popular belief, deflation is good. Inflation benefits those with capital producing assets. For workers, inflation forces them to continuously fight for the same wage they had a year ago.
  - ISL 9y ago
    Inflation encourages reinvestment. That's why those who wish to remain invest in companies rather than currency and precious metals. In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power. In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power.
    - freejulian 9y ago
      > Inflation encourages reinvestment. Inflation encourages malinvestment. There's always a motivation to invest and earn money from selecting profitable ventures. Inflation forces people to be less selective. > In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power. This is only true if you ignore taxation. The government is perfectly free to tax people's wealth if they feel hoarding has become problematic. >In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power. Nonsense. People with money always find a way to escape inflation. Take a look at real estate.
    - theseatoms 9y ago
      > In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power. Carry this thought experiment a few steps further. What will people buy every day, despite this currency appreciation effect?
  - banderman 9y ago
    Deflation decreases the velocity of currency (less incentive to spend due to rising value), which is bad for the economy (less activity, so fewer job opportunities, leading to even less activity).
- deevolution 9y ago
  Some of the cryptocurrencies have a hard cap which makes them deflationary, other cryptocurrencies don't have a hard cap, which makes them inflationary and more similar to fiat. The deflationary cryptos will probably be seen as an asset to invest in while the inflationary cryptos will most probably be the coins which are used in day to day transactions.
- txsh 9y ago
  The US dollar isn't "stable" and "predictable".
JustAnotherPat 9y ago
Compound interest and 5% yearly returns are boring. Technical analysis is too complicated for kids. "WHEN MOON??" is much more relatable. Go to the crypto subreddits and look at all the people who laugh at stocks, saying market returns are basically worthless.
- to_bpr 9y ago
  I wonder if this is due to young people feeling like the status of previous generations (house, cars, kids, vacations, etc.) seem so much further out of reach than ever?
  - ryandrake 9y ago
    That and the trend that the avenues frequently cited as ways to achieve this status (hard work, education, dump your money into the stocks and pray) are increasingly being exposed as obvious bullshit.
    - JustAnotherPat 9y ago
      > dump your money into the stocks and pray) are increasingly being exposed as obvious bullshit. I'm not exactly sure how stocks have been exposed as bullshit given they've produced above average returns, especially for young people who have gotten in after 2008.
      - frgtpsswrdlame 9y ago
        Because they all remember 2008? The depression had a lasting influence on the people who lived through it, they hoarded, kept money under their beds, stuff like that because they knew what it was like when the banks failed. The great recession is obviously much milder but it did expose to many young people that stocks aren't as safe as they think.
        joshuahedlund 9y ago
        For me the takeaway has been the exact opposite. I was skittish about putting retirement money into the stock market circa 2010 cuz I saw ten years of no net gains and feared that was a new normal. But I was doubly wrong - I hadn't factored in dividends, and a few years later stocks were double their pre-2008 peak. The bottom ended up being a rare chance (for the still-employed majority) to quadruple those upcoming returns. Even now, another 50%-bottom from peak would be double the previous bottom. The fundamentals behind the expectations of capitalistic returns seem less shaken than ever.
vkou 9y ago
It boggles my mind that this was cited as a positive anecdote. If you believe in markets and capitalism, then it makes perfect sense to consider children investing into the returns of capitalism (By, say, buying an index fund) to be a good thing. You expect the economy to grow, you know that the economic system encourages wealth to flow to investors, you want everyone to be an investor, all is well in the world, let's have a drink and move on. With cryptocurrencies, though, its all pump and dumps and spirit advice animals, and 'everyone decided that these baseball cards are worth a lot of money, so let's trade them around' while the Tether Printing press is going full swing. Capitalism insists that we'll all be better off if money is invested into businesses. It, or its proxy effects has given us automobiles, iPhones, and has funded and built millions of profitable businesses that solve trillions of dollars of user needs. What exactly has the crypto mania built? You believe that cryptocurrencies will build worthwhile businesses? Why did Bitcoin grow 10000% over the last 18 months, then? Why is IOTA worth 6 billion dollars? It's as if a bunch of people looked at Wall Street, and said: "Gee, wouldn't it be amazing to make as much money as they do, but without the side effect of financing the economy that gave us airplanes and automobiles and cellphones and the McRib. What is the social ROI on the money and electricity wasted on the crypto-bubble? People argue that once all externalities are accounted for, it is negative for capitalism, but at least we can all point to a Prius, or a 767, or a grocery store, or a 300-unit condo in Seattle, and say: "Well, it played an important role in building that."

maxxxxx 9y ago

I don't get the idea of "investing in cryptocurrencies". If they are ever to be used as currency they should be relatively stable and predictable. The current status of extreme deflation makes any serious use almost impossible.

darawk 9y ago
You're investing in a future where they are used as currencies. If today you could buy USD for 10 cents, knowing that it'd be worth its value today, that'd be worthwhile. Now, lots of people don't think cryptos will ever achieve that kind of success, and they may be right. But that is the investment thesis nonetheless.
- hartator 9y ago
  Except 10 cents of USD was worth more 50 years ago than now.
  - programmarchy 9y ago
    Because of the Fed, which is an organization many people don't want manipulating (devaluing) their currency. Monetary freedom is a big draw for many in the crypto community.
    - dajohnson89 9y ago
      now it's whales and mining farms
    - marnett 9y ago
      But the draw is near fantasy levels of misunderstanding and delusion. Monetary policy is not that simple.
      - allthenews 9y ago
        Sure, but one could argue that our sanctioned manipulation of fiat currency is similarly based on delusions of simplicity and/or understanding. We still don't seem able to reliably avoid recessions, and no one is predicting the market with any reproducible accuracy. Perhaps such complex, chaotic systems may be better off sans regulation. Especially something like cryptocurrency, which does not have the same properties as paper fiat, although it is being treated as such. I personally have less faith in institutions run by humans and bogged down by dated regulations than I do in an instantaneously fluctuating near free market. If you can't trust people to invest in currency because of complexity, what makes you think you can trust them to regulate your money, and make decisions that affect the value of your assets for you?
- jjxw 9y ago
  As much as I personally think cryptocurrencies will have a difficult time achieving currency status - this is pretty much what happened during the American Revolution. Congress issued bonds to pay soldiers and for goods for the Continental Army. Those who accepted the bonds as payment were, in a sense, betting that they would be worth something in the future.
digi_owl 9y ago
Because at least Bitcoin has never really been a currency, it has been a (virtual) commodity with a (public) ledger attached. Blasted thing from the outset emulated gold, thus attracting "survivalists" and other goldbugs from across the world. And that is perhaps why Wall Street is moving in, because those companies are at their core built around siphoning the arbitrage on shuffling commodities around. And with cryptocurrencies they have an ample supply of such commodities, until the earth boils from waste computing heat. Perverse incentives to the Nth. The paperclip maximizers are already upon us, and they didn't come from the AI lab, they came from the trading floor.
- opportune 9y ago
  This is blatant erasure. Bitcoin was perfectly fine as a currency for most of its existence, and for a long time captured almost all crypto volume
  - zanny 9y ago
    The mechanics of transactions worked for currency purposes, but the fundamental architecture of bitcoin has always been hostile to its use as money. The fixed coin payouts per block, the halving every four years, and the eventual final and finite fixed supply, combined with arbitrary blocksize limits means bitcoin was always designed to hit its limits at 2014 transaction volume. I traded btc back then for the novelty and bought stuff with it in physical and digital to say I did, but even then the architecture promoted hoarding over spending, and anyone using bitcoin as a currency then is likely lamenting the things they traded it for now which is just about rule 0 of how to make a dysfunctional money. The crpytocurrency that is actually a currency is one that can use its design to promote its practicality as money - the goal should be no fees, instant signature ledgers that don't consume power on national scales, and an adaptive but predictable algorithm for money creation that can respond to the market to try to keep the currency stable - when transaction volume and coin turnover are high the currency is inflating so you want to reduce minting to try to curtail the effect. When money slows down and starts squatting in wallets you turn up printing to drive deflation. Anything else in my mind at this point is just a cash grab using the proven mechanisms of bitcoin and an out of control hype train to rob people.
freejulian 9y ago
Contrary to popular belief, deflation is good. Inflation benefits those with capital producing assets. For workers, inflation forces them to continuously fight for the same wage they had a year ago.
- ISL 9y ago
  Inflation encourages reinvestment. That's why those who wish to remain invest in companies rather than currency and precious metals. In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power. In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power.
  - freejulian 9y ago
    > Inflation encourages reinvestment. Inflation encourages malinvestment. There's always a motivation to invest and earn money from selecting profitable ventures. Inflation forces people to be less selective. > In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power. This is only true if you ignore taxation. The government is perfectly free to tax people's wealth if they feel hoarding has become problematic. >In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power. Nonsense. People with money always find a way to escape inflation. Take a look at real estate.
  - theseatoms 9y ago
    > In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power. Carry this thought experiment a few steps further. What will people buy every day, despite this currency appreciation effect?
- banderman 9y ago
  Deflation decreases the velocity of currency (less incentive to spend due to rising value), which is bad for the economy (less activity, so fewer job opportunities, leading to even less activity).
deevolution 9y ago
Some of the cryptocurrencies have a hard cap which makes them deflationary, other cryptocurrencies don't have a hard cap, which makes them inflationary and more similar to fiat. The deflationary cryptos will probably be seen as an asset to invest in while the inflationary cryptos will most probably be the coins which are used in day to day transactions.
txsh 9y ago
The US dollar isn't "stable" and "predictable".

JustAnotherPat 9y ago

Compound interest and 5% yearly returns are boring. Technical analysis is too complicated for kids. "WHEN MOON??" is much more relatable. Go to the crypto subreddits and look at all the people who laugh at stocks, saying market returns are basically worthless.

to_bpr 9y ago
I wonder if this is due to young people feeling like the status of previous generations (house, cars, kids, vacations, etc.) seem so much further out of reach than ever?
- ryandrake 9y ago
  That and the trend that the avenues frequently cited as ways to achieve this status (hard work, education, dump your money into the stocks and pray) are increasingly being exposed as obvious bullshit.
  - JustAnotherPat 9y ago
    > dump your money into the stocks and pray) are increasingly being exposed as obvious bullshit. I'm not exactly sure how stocks have been exposed as bullshit given they've produced above average returns, especially for young people who have gotten in after 2008.
    - frgtpsswrdlame 9y ago
      Because they all remember 2008? The depression had a lasting influence on the people who lived through it, they hoarded, kept money under their beds, stuff like that because they knew what it was like when the banks failed. The great recession is obviously much milder but it did expose to many young people that stocks aren't as safe as they think.
      - joshuahedlund 9y ago
        For me the takeaway has been the exact opposite. I was skittish about putting retirement money into the stock market circa 2010 cuz I saw ten years of no net gains and feared that was a new normal. But I was doubly wrong - I hadn't factored in dividends, and a few years later stocks were double their pre-2008 peak. The bottom ended up being a rare chance (for the still-employed majority) to quadruple those upcoming returns. Even now, another 50%-bottom from peak would be double the previous bottom. The fundamentals behind the expectations of capitalistic returns seem less shaken than ever.

vkou 9y ago

It boggles my mind that this was cited as a positive anecdote. If you believe in markets and capitalism, then it makes perfect sense to consider children investing into the returns of capitalism (By, say, buying an index fund) to be a good thing. You expect the economy to grow, you know that the economic system encourages wealth to flow to investors, you want everyone to be an investor, all is well in the world, let's have a drink and move on. With cryptocurrencies, though, its all pump and dumps and spirit advice animals, and 'everyone decided that these baseball cards are worth a lot of money, so let's trade them around' while the Tether Printing press is going full swing. Capitalism insists that we'll all be better off if money is invested into businesses. It, or its proxy effects has given us automobiles, iPhones, and has funded and built millions of profitable businesses that solve trillions of dollars of user needs. What exactly has the crypto mania built? You believe that cryptocurrencies will build worthwhile businesses? Why did Bitcoin grow 10000% over the last 18 months, then? Why is IOTA worth 6 billion dollars? It's as if a bunch of people looked at Wall Street, and said: "Gee, wouldn't it be amazing to make as much money as they do, but without the side effect of financing the economy that gave us airplanes and automobiles and cellphones and the McRib. What is the social ROI on the money and electricity wasted on the crypto-bubble? People argue that once all externalities are accounted for, it is negative for capitalism, but at least we can all point to a Prius, or a 767, or a grocery store, or a 300-unit condo in Seattle, and say: "Well, it played an important role in building that."