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Can’t understand why the fed wants to regulate tulip bulbs. What’s next a paper on beanie babies?

hocuspocus 4y ago
I see at least two huge reasons: - The Fed decides who can use US dollars and what you can do with them; stable coins provide ways to evade such mechanisms. - It wants to avoid spillover in case the cryptocurrency market collapses entirely. Shadow banking and eurodollars played a role during the 2008 crisis.
- ETH_start 4y ago
  >>Shadow banking and eurodollars played a role during the 2008 crisis. I would caution against trying to forestall financial crises through imposed centralization. The mundane benefit of a permissionless/dynamic financial system - which is to facilitate investments that produce economic returns - accrue daily, usually in imperceptible increments, while financial crises occur once every few years, with large and sudden drops in market values. The latter gets the attention, due to their suddenness, but the benefits of the former compound to enormous proportions, and go largely unseen, due to how gradual the process is.
chejazi 4y ago
From TFA, "Same Risk, Same Regulatory Outcome"
meowkit 4y ago
Did you even read the post? The conclusion: > Innovation has the potential to make financial services faster, cheaper, and more inclusive and to do so in ways that are native to the digital ecosystem. Enabling responsible innovation to flourish will require that the regulatory perimeter encompass the crypto financial system according to the principle of like risk, like regulatory outcome, and that novel risks associated with the new technologies be appropriately addressed. The Fed recognizes this is a new tech stack with potentially disruptive consequences. Reconcile that with this anachronistic tulip mania point of view you're parroting.
- scoopertrooper 4y ago
  Crypto may, one day, find utility as part of the financial system (outside of drug deals, sanctions evasion, money laundering, tax minimisation, greater-fool scams, and Ponzi schemes), but its recent volatility has been in no way related to that.
  - mistrial9 4y ago
    "one day" ?
    - Karunamon 4y ago
      It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
      - scoopertrooper 4y ago
        Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
        junofan 4y ago
        It’s being used to build an alternative financial system [1]. What sort of utility would you want an alternative financial system to provide to the current financial system? [1]: https://ethereum.org/en/defi/ https://ethereum.org/en/defi/
        Karunamon 4y ago
        Generally anytime anyone tries, it devolves into special pleading; basically saying that this or that isn't "real" utility. As if being able to transact with anyone else on the planet sans middlemen isn't enough utility on its own. I would instead ask people who make comments like the one that started this thread to substantiate their affirmative claims about how crypto is only used for these shady things. For some reason, no such evidence is ever forthcoming.
kwertyops 4y ago
I never understood this analogy, and now I’ve seen it enough to finally ask in good faith —- If tulips bulbs were of a limited supply, (relatively) infinitely divisible, (relatively) impossible to forge, and could be transferred anywhere in the world, in any amount, (relatively) instantaneously… Would it really be that crazy to imagine that they may have kept significantly more value? Or be used as a kind of currency? It seems like anything with those properties could be a good basis for a currency, whether it’s Beanie Babies or Pokémon cards (neither of which actually do have those properties), or cryptographically secure blocks of teleporting cheese.
- dogcomplex 4y ago
  "limited supply" True until another batch of cryptotulip bulbs is released under a new name with slightly different properties and it joins the cryptotulip ecosystem. Any one species of cryptotulip might be a limited supply, but on the whole it's a very inflationary ecosystem, with trust on which is the "true currency" extremely malleable and divided. Even the "original" BitTulip has as many haters expecting its inevitable dethroning as it has proponents. Even if the original Dutch tulips had somehow limited supply growth per species - say only selling neutered bulbs incapable of reproducing, while "miner" growers do the actual growing - you still have inflation from new sellers growing new species. Are people just supposed to arbitrarily say "Only orange Tulipa gesneriana tulips are a valid currency"? How does that consensus happen in a decentralized environment, when clearly it's not happening in this crypto bubble? Is the argument that the limited supply comes from limited farmland? (AKA limited miners to generate the underlying security?) If so, how does that scale past the point where farming/mining is taking a significant chunk of the world's energy/land and just maintaining the currency is costing more than it saves on efficient asset transfer of actually productive useful things (like say - growing more crops, or using GPUs for AI)? "Proof of Stake solves this!" you say? Well, now we're back to arbitrarily naming a tulip species as the only True Currency, with no physical resources backing it, and no particular reason people will stay loyal to it... (Granted, the current non-crypto alternative is a heavily-armed centralized tulip farm that can grow its supply as it sees fit, and use its military to stifle other growers and guarantee its continued dominance. It allows a few other varieties (CAD, GBP, Yen, etc) but makes sure those growers back their supplies with a large stock of USDtulips, making them subsidiary growers bound to rise and fall with the central farm.) Am I missing something?
dang 4y ago
Can you please not post flamebait to HN? Especially not flamebait that points to tedious, predictable, extremely repetitive flamewar topics like this one. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

I see at least two huge reasons: - The Fed decides who can use US dollars and what you can do with them; stable coins provide ways to evade such mechanisms. - It wants to avoid spillover in case the cryptocurrency market collapses entirely. Shadow banking and eurodollars played a role during the 2008 crisis.

ETH_start 4y ago
>>Shadow banking and eurodollars played a role during the 2008 crisis. I would caution against trying to forestall financial crises through imposed centralization. The mundane benefit of a permissionless/dynamic financial system - which is to facilitate investments that produce economic returns - accrue daily, usually in imperceptible increments, while financial crises occur once every few years, with large and sudden drops in market values. The latter gets the attention, due to their suddenness, but the benefits of the former compound to enormous proportions, and go largely unseen, due to how gradual the process is.

chejazi 4y ago

From TFA, "Same Risk, Same Regulatory Outcome"

meowkit 4y ago

Did you even read the post? The conclusion: > Innovation has the potential to make financial services faster, cheaper, and more inclusive and to do so in ways that are native to the digital ecosystem. Enabling responsible innovation to flourish will require that the regulatory perimeter encompass the crypto financial system according to the principle of like risk, like regulatory outcome, and that novel risks associated with the new technologies be appropriately addressed. The Fed recognizes this is a new tech stack with potentially disruptive consequences. Reconcile that with this anachronistic tulip mania point of view you're parroting.

scoopertrooper 4y ago
Crypto may, one day, find utility as part of the financial system (outside of drug deals, sanctions evasion, money laundering, tax minimisation, greater-fool scams, and Ponzi schemes), but its recent volatility has been in no way related to that.
- mistrial9 4y ago
  "one day" ?
  - Karunamon 4y ago
    It's an HN thread on crypto. Mindless, non-substantive, thought/discussion-terminating cliché comments such as that one are sadly par for the course.
    - scoopertrooper 4y ago
      Quite a few allegations there. It seems like the simplest way to settle this discussion would be to point out a few practical applications of crypto that provide real utility to the finance system.
      - junofan 4y ago
        It’s being used to build an alternative financial system [1]. What sort of utility would you want an alternative financial system to provide to the current financial system? [1]: https://ethereum.org/en/defi/ https://ethereum.org/en/defi/
      - Karunamon 4y ago
        Generally anytime anyone tries, it devolves into special pleading; basically saying that this or that isn't "real" utility. As if being able to transact with anyone else on the planet sans middlemen isn't enough utility on its own. I would instead ask people who make comments like the one that started this thread to substantiate their affirmative claims about how crypto is only used for these shady things. For some reason, no such evidence is ever forthcoming.

kwertyops 4y ago

I never understood this analogy, and now I’ve seen it enough to finally ask in good faith —- If tulips bulbs were of a limited supply, (relatively) infinitely divisible, (relatively) impossible to forge, and could be transferred anywhere in the world, in any amount, (relatively) instantaneously… Would it really be that crazy to imagine that they may have kept significantly more value? Or be used as a kind of currency? It seems like anything with those properties could be a good basis for a currency, whether it’s Beanie Babies or Pokémon cards (neither of which actually do have those properties), or cryptographically secure blocks of teleporting cheese.

dogcomplex 4y ago
"limited supply" True until another batch of cryptotulip bulbs is released under a new name with slightly different properties and it joins the cryptotulip ecosystem. Any one species of cryptotulip might be a limited supply, but on the whole it's a very inflationary ecosystem, with trust on which is the "true currency" extremely malleable and divided. Even the "original" BitTulip has as many haters expecting its inevitable dethroning as it has proponents. Even if the original Dutch tulips had somehow limited supply growth per species - say only selling neutered bulbs incapable of reproducing, while "miner" growers do the actual growing - you still have inflation from new sellers growing new species. Are people just supposed to arbitrarily say "Only orange Tulipa gesneriana tulips are a valid currency"? How does that consensus happen in a decentralized environment, when clearly it's not happening in this crypto bubble? Is the argument that the limited supply comes from limited farmland? (AKA limited miners to generate the underlying security?) If so, how does that scale past the point where farming/mining is taking a significant chunk of the world's energy/land and just maintaining the currency is costing more than it saves on efficient asset transfer of actually productive useful things (like say - growing more crops, or using GPUs for AI)? "Proof of Stake solves this!" you say? Well, now we're back to arbitrarily naming a tulip species as the only True Currency, with no physical resources backing it, and no particular reason people will stay loyal to it... (Granted, the current non-crypto alternative is a heavily-armed centralized tulip farm that can grow its supply as it sees fit, and use its military to stifle other growers and guarantee its continued dominance. It allows a few other varieties (CAD, GBP, Yen, etc) but makes sure those growers back their supplies with a large stock of USDtulips, making them subsidiary growers bound to rise and fall with the central farm.) Am I missing something?

dang 4y ago

Can you please not post flamebait to HN? Especially not flamebait that points to tedious, predictable, extremely repetitive flamewar topics like this one. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html