I wonder what will happen to any unwithdrawn user funds after those 12 months?
Localbitcoins has been around for a long time. I bet there are lots of wallets on there totally forgotten about with lots of bitcoins in. Quite a goldmine for someone...
If I remember correctly their website already had disclaimers not to keep money in their wallets long term because it's meant for temporary storage only, and they charged interest on any funds just sitting there to discourage people from doing it.
I'm surprised that they attribute the decline in their performance to the "crypto winter". It seems like the success of a business should not solely depend on market conditions, but also on their ability to maintain profitability even during market downturns. It raises concerns about the sustainability of their operations unless the market is bullish.
"Please list businesses whose success depends on frothy, bullish market conditions"
Most companies can be successful even in down markets. See basically all S&P 500 companies. Yes their stock price might be down and they may be laying people off to save money, but those are all legitimate and successful businesses by most measures.
Theoretically, localbitcoins should be very insensitive to the bitcoin markets, because for them it doesn't matter much what the price is -- they just facilitate transactions.
If transactions are still happening, regardless of the BTC price, there has to be a way to make money from facilitating them. And given that BTC has been running with full blocks for years, the transactions should be there.
Plus, it's existed for a long time, so at this point the service has been built. If business is slow then it can just coast on what already exists.
Of course it could indicate that nobody actually uses BTC that way anymore, and the current transactions are of a different nature than localbitcoins was made for.
LocalBitcoins stopped providing the "in-person" model years ago. Also it really wasn't a business for them as people don't need the escrow service for that. They became regulated, implementing all KYC and AML stuff and I guess that drove customers away to other venues. Binance P2P seems to be the most active these days. In-person trading has been replaced with Bitcoin ATM's I would guess.
Were people making significant transactions through localbitcoins?
Are there people trying to launder $100? Are there people using some online-marketplace if they're trying to launder $1000000 and meet random people to make that kind of transaction?
Don't be naive. LocalMonero / LocalBitcoin is prime way to launder cash for organized crime. A thousand dollar here, a thousand dollar there, then you have converted your money to crypto.
A thousand dollars here and there doesn't get you anywhere. And really, you'd have lots of risk -- if money laundering was the primary application, the police would surely join the fun, and if you're not meeting a cop, there's a good chance you're meeting a robber that knows you'll be arriving with lots of cash.
But the amounts really don't make sense. Organized crime is certainly not running around making $1000 deals all day with different people to somehow launder money by converting it into bitcoin and back ("I found this bitcoin on a sidewalk on the internet and I've exchanged it for cash, so now this cash is legal?").
You go on localbitcoins and trade your cash for bitcoin (fully legal) and then buy drugs from me via darkweb (fully anonymous).
I sell you the drugs on darkweb (fully anonymous) and then offload my bitcoin on localbitcoin for cash (fully legal). This removes a lot of risk for both parties
This is the original business model, but the authorities caught on pretty quickly and implemented all of those pesky KYC/AML requirements.
Not very anonymous unless you're really careful about it and never fail once. The localbitcoins person is linked to everyone they interacted with, and the transactions are public and timestamped. Unless you use a new address every time, your identity can be deduced fairly easily from your other activities.
The probable result is that the police nab the localbitcoins person, then pressure them to explain who they were doing business with, and go from there.
If anything it's worse than buying drugs in a dark alley because there's a permanent record of your activity.
A thousand dollars here and there is not how these guys launder money. That's not noteworthy at all to authorities. It would put like the whole population under the radar. Authorities start to check things out at the $10k range.
I am aware of some people who would trade a few thousand dollars on local bitcoins, and then, once trust was gained, they would then trade a few million dollars with the same person off localbitcoins. That avoids the fees, and leaves fewer records...
Some trading partners would also have a 10x or 100x multiplier - ie. 10% or 1% of a trade would be done on localbitcoins, and then the remaining 90% or 99% would be done offline later at the same exchange rate. The way the feedback/reputation system worked, you could still ding someones reputation if they didn't follow up with the offline part of the trade.
Check out Paxful. Last time I properly looked at it there was a huge amount of African "vendors" who would trade any giftcard imaginable for BTC. Giftcards being basically anonymous cash, I can't imagine how much criminal activity must be going on there.
The difference is that here in the giftcard industry, we want to stop that, because it's how scammers convert grandma's $500 in itunes giftcards into actual money, and that costs our companies money in fraudulent transactions and public goodwill. We've had customer support agents actively talk customers out of buying giftcards for scams.
> The difference is that here in the giftcard industry, we want to stop that,
Do you guys really? I mean "you guys" generally, not you personally.
It doesn't seem that way to me. If the gift card industry really wanted to curb this shit, it would be a simple matter to abolish all high-value denominations of gift card and forbid purchasing more than one a day. If Gran wants to buy a birthday gift for her grandhchild, a single $20 gift card should be more than sufficient to show her love. There is no reason to allow her to buy 10x $500 cards in one day. Only tiny fraction of the population could afford to be doing something like that legitimately, virtually all such sales are people being tricked by scammers, yet the high denomination gift cards still exist despite your industry's supposed care.
The shutdown announcement says the shutdown was caused by "challenges during the ongoing very cold crypto-winter". Wish we had more details about that. Did the ongoing winter reduce income to make the service unprofitable ?
What makes you say that? They are shutting down in a responsible and orderly fashion, so I'm willing to take it at face value that they just aren't profitable anymore.
That's likely also the case, but I would at the very least expect a crypto exchange company to keep all their reserves in crypto, which has now completely plummeted in value. Localbitcoins are a bit different than the typical exchange so their exposure is likely less, but if you look at Binance or Robinhood they're all gambling with their backing money like a drunk at the horse races.
Their volumes have been getting smaller and smaller throughout the years. Likely reason is that the service just isn't profitable any more. Their volumes are public: https://coin.dance/volume/localbitcoins
These days there are lots of services offering p2p trading, and big exchanges like Binance also have p2p trading services for multiple cryptocurrencies. I would guess that Binance p2p volume alone is likely many times of that from LocalBitcoins these days. Most players don't publish their volumes though.
This smells suspiciously like they are having legal issues. Sad to see them go, during a hard time a decade ago I exchanged some Bitcoin change I had through their platform to make rent. Easy, anonymous and straight to my UK bank account.
I haven't kept up with the KYC laws, but no doubt it is not possible to exchange Bitcoin as if it were cash anymore.
Thankfully the new digital pound currency will revive the (black) market for Bitcoin & co. in a scale not yet seen before.
FWIW LocalBitcoins has been virtually unused for a very long time by anyone wanting to do local crypto swaps. There are instead much better non-custodial services that still accomplish the same goals (locking/escrow, reputation, arbitration, etc.) without the same risks.
The official reason, "crypto-winter", seems like bullshit to me. LocalBitcoins started in 2012 when volume was way lower and price was under 100$. Seems more likely that they were pressured into shutting down.
Absolutely they were pressured. They could not be shut down legally through the courts. It is legal to buy and sell bitcoin. It is legal to provide a platform for people to meet up and do legal business. Basically it's Craigslist.
A small company will not survive a federal investigation even if they did nothing wrong. The lawyers fees involved will be in the 10's of millions before you can even get to the stage where a judge can rule on it.
You have obviously never been involved in litigation. Actually being in court is the tip of the iceberg. Just look at the xrp lawsuit. Been dragging on for years and still hasn't gone to court. Lawyers are billing by the hour the whole time.
Source? The average person unknowingly breaks at least three federal criminal laws every day. If you operate an international peer-to-peer Bitcoin exchange, that number is probably a lot higher. They might just have gotten an email from a 3 letter agency politely asking them to shutdown.
Their own expenses was probably way lower before, and as the platform gained popularity, so did their expenses. Once revenue started going down after the peak ~2017, probably their expenses were harder to reduce and so the platform was harder to keep running.
This chart shows they are doing 6M$ volume per week. This amounts to 3M$ annual revenue per year at 1% fee. That's a good chunk of money even if it looks tiny in comparison to Coinbase.
Selling assets pumps up the bottom line, but if that's your only source of income, you're better off just liquidating the company and cutting the losses
Looking at the downward trend in volumes, I suspect the profits come from the results of selling their bitcoins they have been holding in the balance sheet, the service itself is unprofitable.
Very weird and surprising to hear, the company had been making very nice profits for years[1]. Looks like they went from 59 -> 134 employees between 2020 and 2021. They started requiring KYC from everyone trading on the platform fairly recently, maybe it had bigger effects than they anticipated? I can see why people wouldn't be too keen on KYC in a platform for peer to peer trading.
My guess is all the companies dealing in crypto that aren't properly licensed and aren't well connected politically are going to be in legal trouble soon. Makes sense for them to quit while they're still up, the business model has no way of standing long term. Probably smarter to take their money and just buy Coinbase stock or something like that.
The fact that they introduced KYC speaks for itself, because what's the point of using localbitcoin when you need to go through KYC? The whole idea was that it's anonymous p2p trade. If they require KYC too, users might as well go to one of the proper exchanges and get a better deal. Plus all the other services like staking or NFT markets on top.
The original "meet in person" model was so good. All the bank transfers, paypal, etc. never made any sense.
Just a shout out to LocalBitcoins. When I was living in Argentina during the almost-hyperinflation of 2014 or so, I got all of my living cash in pesos and USD by selling BTC to local traders who I met on Localbitcoins.com. Usually I would meet them in a coffeeshop, have a coffee, wave my phone and transfer some BTC and they would hand me an envelope with $1000 USD and ARS$9000 that would cover my rent and food for the next month. The cost was +5% for the BTC-to-cash trade, but the exchange rate was "blue" meaning, at the time, one peso was officially worth $0.33 but the blue market had it trading at somewhere closer to $0.06... and trading for BTC got you the live blue rate. One kid I dealt with a lot had a wonderful business model. He was a math student at the university and opened an office buying and selling Bitcoin. When I asked him where he got all this USD cash which was almost impossible to find in Argentina, he explained:
People gave it to him. Argentines who got 20% of their paycheck in dollars, or who had dollars stuffed under their mattresses that they couldn't get out of the country. They paid him 5% to move it out.
He took their cash and sold it to people like me - expats, tourists - for BTC, and sent the BTC to his partner in Miami, who changed it out to USD and put it into American bank accounts for them. So he got 5% on either side of the trade.
This was the moment, around 2013 or so, when I really believed BTC would be a unit of exchange that would break the artificial currencies around the world and serve as a leveler that would allow anyone with skill to work anywhere and go anywhere; it would demolish the old sclerotic monetary regimes.
Then it got regulated [edit: all its endpoints got pwnd], and Localbitcoins has not for a long time shown any P2P meetups for unregistered, silent trading-for-cash. That was its original purpose, and it served very well at the time.
This is 2023, and you're misunderstanding the content of what I posted.
What I wrote has nothing to do with "buying bitcoins" at lower than market rates. It's about buying locally inflated / artificially deflated paper currency at world market prices using Bitcoin as the exchange currency.
Not 19k dollars, but the comparative value in Argentine pesos, which has a big spread between the official rate and the actually obtainable street rate.
> "He took their cash and sold it to people like me - expats, tourists - for BTC, and sent the BTC to his partner in Miami, who changed it out to USD and put it into American bank accounts for them."
And now assume that the cash in Argentina isn't coming out of mattresses but from criminal activities, and the people receiving USD in America are part of the same cartel. A 5% transaction fee on both sides of the Bitcoin trade is just 9.75% for the complete wash cycle — very low for textbook money laundering.
> And now assume that the cash in Argentina isn't coming out of mattresses but from criminal activities
Nah, it's very common for people to have savings in cash under a mattress. We had crises before where banks essentially kept people's savings and they never saw their money again. Trust is the banking system is non-existent.
I agree, just nitpicking: Usually is not the bank who keeps the money, but the government. In 2001 the "dollars in the bank" account were exchanged to a government bonds to be paid 10 or 20 years later. I don't remember the details because I had too few and I changed them immediately to pesos. (IIRC I used my pesos to buy stuff, but the transformation dollars-in-bank -> bonds -> pesos -> dollars-in-cash had a 20% or 30% hair cut.)
Ahh. please, maybe you can help clarify my comment further down. (search "20%")
In 2013-15 I never knew exactly how it worked for dollars in the bank or if it was dollars in hand... but a lot of people like government economists in Belgrano and Las Cañitas had a lot of actual $100 dollar bills...
(I lived in Cañitas twice and it's a great place to live if you make USD but I was nowhere near the wealth level of people who spent all day running horses and playing Polo)
I'm not sure what your argument is. Prevent people from circumventing ridiculous local monetary controls - artificial currency pegs at 10x the value of the currency - because any money they have might be "criminal"?
You could also just define criminality as having money, and dispense with the pretense of legality, as has been done so many times in Russia. This is the despotism that normally results where there is no outlet for capital.
Although it's true, after a certain number of years in some places, everyone does become a criminal if you treat them this way; that should be obvious.
You can't fix this with technology. If the government declares having money as illegal the only solution is to change the government. Otherwise these technical loopholes only help that government in the first place. Lack of laundering controls is how Russian dirty money create nice global lifestyle for Putin's henchmen and friends. If they were truly locked in, one would think twice before joining that gang.
> because any money they have might be "criminal"
Non-criminal money would be a minuscule percentage of the total because, the same way you use to change $500 for the lulz would be used in an organized way to move millions extracted with violence and theft by Russian government and other criminals.
Hmm. It seems to me that laws and technology have failed to stop that gang. I'm not sure that stopping evil oligarchs - when you cannot - is a good argument for preventing smaller people from saving their money.
> It seems to me that laws and technology have failed to stop that gang
Laws and sanctions actually hurt them. Law-immune technology is their enabler. If I could choose between a way to send money to my family in Russia the same way that sustains those criminals and not having that way but knowing that putin's gang is being starved of money, I'd choose the latter because the first option is a dead end.
> I'm not sure that stopping evil oligarchs - when you cannot - is a good argument for preventing smaller people from saving their money.
The theoretical benefit promised to the "smaller people" is far outweighed by the harm it does sustaining those dictatorships, both to the same smaller people and the world. A few honest hundred bucks here and there does not justify millions that prop the regime and kill more people.
Sorry if this is inconvenient truth but cryptocoins are helping that regime much more than they are helping people that have to endure it.
> The theoretical benefit promised to the "smaller people" is far outweighed by the harm it does sustaining those dictatorships
I have to disagree, as I am a small businessman and I have seen how liberating crypto was for people in small countries. Let me ask you this: What is worse for ordinary people: rich criminals stealing through Bitcoins? Or rich criminals running a country and banning your use of your own money?
If you think Putin or his catamites are surviving on BTC exchange, you're crazy. Berlin is still paying Euros for his fucking oil and gas.
The argument that free means of exchange should be wiped out because they are used by criminals, is the argument that has been used by criminals for hundreds of years to steal from everyone else.
> Berlin is still paying Euros for his fucking oil and gas.
Realize he is also vehemently losing tanks and people right now and supply of money is critical for this sort of fun. Then try to imagine being putin or one of his friends and spending those euros anywhere without the magic of crypto dark market. Good luck!
Those guys are not above any working way of financing their activities, especially now that the west is suddenly less easy to transact with, and they have perfectly crypto savvy people working for them.
For the record, the "zlato" in Bitzlato (one of the largest players at localbitcoins) is Russian for "gold", and the guy running it was Russian operating from China.
I'm sorry if it sounds dark and shatters your dreams of legally unencumbered entrepreneurship but it's just the way it is.
No, this is one way of laundering money, but it is the same as cash. If Bitcoin doesn't exist, you don't think they can carry Euros over the border to China in a truck? Next day those get spent at some Louis Vuitton store in Paris. The Ruble they're paying the soldiers with isn't being propped up with Bitcoin.
Did you just make an argument that crypto is useless, because we have cash?
Realize that the very things crypto is "solving" compared to cash is exactly why it is so attractive to this kind of laundering: scale.
You can run a business on cash. You can't launder millions in cash with elegant ease. You need to pay for figurative duffel bags, vehicles to transport them, countless drivers and handlers who tend to steal and leak information.
This is a strange narrative. Bitcoin was released in 2009. Putin's gang had no problem getting money before 2009. How do you think dictatorships have funded themselves throughout all of human history?
Apologies for saying it this way but this is a very naive take. How long did it take for the Vietnam to resolve in the 50s - 70s? How long did the Berlin Wall take to come down, or the Soviet Union to collapse? What about apartheid in South Africa? How long before Ukraine's population can live normally again?
"Change the government" is a process that even in the best cases takes decades to resolve. Children are born and grow to adulthood in these chaotic situations, and that's normally with outside pressure applied. No the tech won't resolve the core problem, but it will allow people to get bread and milk from within a hostile system until that core problem is resolved.
>> but it will allow people to get bread and milk from within a hostile system until that core problem is resolved
...my grandparents were naturalized citizens of Argentina and dealt with the same exact situations in the 1930s and 40s. The government got much, much worse before it got remotely better. Mostly due to the passions of people easily swayed by populists slogans about changing the government.
Do a thought experiment and understand that if there was crypto at that time to prop up the bad government it would never get better.
(And before you start, don't equate crypto with cash. Cash that scales without physical and geographical boundaries is not cash anymore, any lessons you can draw from cash being used throughout humanity's history won't apply.)
I'm not sure I get the point. You mean international crypto flowing in to prop up a bad government? There was plenty of crypto going into Ukraine during the Maidan revolution and since from Russia; unless you believe there was more coming from America, I don't see how the form of money transfer would be a decisive factor.
Many Argentines believe that in the 1940s it was Nazi gold transported by submarine that held up the Perón. Does that justify seizing gold from some family's safe deposit box halfway around the world?
> You mean international crypto flowing in to prop up a bad government?
No. I mean laundering. That's what started this subthread. Using dirty money to get clean money, goods and services where otherwise it would be difficult to do in a sneaky untraceable way.
I don't understand the analogy with Argentina and the point about crypto in Ukraine, feel free to explain, but only if it's not something orthogonal but an actual counter argument to me saying that whatever legitimate uses you see small people have for untraceable dark market of crypto dictators use it 1000x more perpetuating themselves and making the very same small people suffer more long term and corrupting the world.
Naive? Where did I say it'd be easy? I said that's the only way. These technical workarounds only prop up and help the bad government, which crypto fans vehemently ignore.
I'm not sure how citizens using crypto to buy bread and milk helps prop up bad governments? To be clear, in the kinds of governments I'm talking about here the people at the top are entirely and completely insulated from the day-to-day struggles of their population.
Most will have offshore accounts hidden in various shady or neutral jurisdictions that will ensure they live out the rest of their days without issue (see Zimbabwe, Nazi Germany, or recently Sri Lanka). They could even wipe out large swathes of their population completely and it would still do nothing to destabilise the government (again, see Soviet Union, Nazi Germany, Khmer Rouge, the list goes on)
> I'm not sure how citizens using crypto to buy bread and milk helps prop up bad governments?
I can tell you real people there aren't buying bread and milk with it.
But anyway, the same mechanism you imagine being used for buying bread and milk can be and probably is used to buy war drones.
Actually it's much easier to give cash in exchange for bread and milk than bother with crypto but it's much more difficult to get a large amount of cash from Russia to Iran intact than to send them some crypto
> If the government declares having money as illegal the only solution is to change the government.
I see people from developed nations talking about "changing the government" like we are one french revolution away from prosperity.
There are two problems with that:
- The people need to fight the military. It's not like it's the XIX century where you can face a army with some weapons and horses. Go fight a tank and some drones.
- More often than not, power vacuums are filled with an even more ruthless government that wants to exploit the same corrupt dynamics like the previous one, but for them and their cronies and not the previous government ones.
> And by pushing for crypto you are helping them obtain those tanks and drones. What now?
Governments have access to many more mechanisms of wealth transfer and commerce than any average person does. The only special thing about crypto is that it's also available to the general public.
> That's why democracy is important
And who is gonna enforce democracy? Remember, we are talking about a new governing body that came to power after kicking out the previous one. And governments "elected" that way tend to be less democratic that governments chosen by the standard process of democratic elections.
Kicking out a government resembles a coup scenario, and if the next government doesn't want to be democratic, you are SOL.
>The only special thing about crypto is that it's also available to the general public.
>And who is gonna enforce democracy?
This is the most important, sane comment I've heard all night. Far too many here are arguing for a police state. What's especially ugly is that they don't even realize they're arguing for one.
> Governments have access to many more mechanisms of wealth transfer and commerce than any average person does. The only special thing about crypto is that it's also available to the general public.
So what exactly other mechanisms do they have that are not sanctioned or radioactive? Duffel bags of cash, like another comment suggested? Please don't be ridiculous about a serious topic.
> Kicking out a government resembles a coup scenario, and if the next government doesn't want to be democratic, you are SOL.
Yes, that's a bit of a gamble. Perhaps another democratic country could help establish a democratic government (it worked in Ukraine) instead of doing the opposite of that and providing technology that enriches the authoritative one.
First we shouldn't underestimate the gravity of sanctions and mood. Pepsi was in USSR since 1971, now they are halting operations even though they are not sanctioned. Putin is just that radioactive
Second let's think where USSR got in the end. Current Russian government should go the same way but any way around sanctions helps it.
The French Revolution might not be the best example, but it did finally find itself a coherent set of human rights and managed to stop at a point that advantaged the majority of the poor, elevating them to the middle class. That itself is an extreme outlier in the history of revolutions.
>> Non-criminal money would be a minuscule percentage of the total because, the same way you use to change $500 for the lulz would be used in an organized way to move millions extracted with violence and theft by Russian government and other criminals.
I want to respond to this point because it is a key difference between the societies governed by oligarchy (extremely rich criminals, no middle class, 99% poor) versus those that still have a middle class. You are right that in Russia, $500 for lulz is nothing compared to the money flows of the criminals. It is commonly assumed by most Russians I know that the American and European world also operates on this principle, and that law enforcement here simply does what the money tells them to do. This is actually not true, at least not close to the extent that it is true in gangster-run countries. Law enforcement in America and Europe does what the middle class wants them to do. This means that they do interdict extremely wealthy criminals from time to time, and ultimately our society is not governed by them.
In any case, the largest flows of money in Europe and America are legitimate business flows; things like cocaine and prostitution, organized crime are miniscule compared to the profits of legal drug companies - whose owners are the American middle class shareholder, farmers in Kansas.
> whose owners are the American middle class shareholder, farmers in Kansas.
The top 10% of Americans own 90% of the shares. If by middle class you mean “above the labor class, below the ruling class”, then I … still dont agree because the 0.1% ruling class still own a disproportionately huge % of those shares!
Also farmers are disproportionately immigrant labor who have no wealth and own no shares. Bill Gates owns 7% of all USA farmland but I wouldn’t call him a farmer.
> Also farmers are disproportionately immigrant labor
Huh, this statement is so weird to me that it was a "lightbulb moment" about what words mean to different people online. I wonder how much misunderstanding this causes. I'm guessing your background is urban and coastal? I'd love it if you'd share, I'm genuinely curious.
I would never use the word "farmer" if I was talking about an immigrant laborer picking fruit or whatever. I'd call them migrant laborers or pickers or farm workers.
In the standard dialect of people in the 90% of America designated "flyover country", they'd would use the word "farmer" to mean the people who own and operate farms. Generally a middle-class, small-business-owner type person. Likely educated in some mixture of agriculture, business, finance, real estate. They're highly financially savvy, as they have to manage selling futures vs taking the spot price for their crops balanced against storage costs, land rental agreements, machinery leases or repairs, tax and crop insurance complexities, not to mention the science of how to optimize yield on their specific land.
Calling the laborers "farmers" is like calling an uber driver a tech worker, at least in the dialect of English I speak.
I’m from the northern midwest (Michigan/Ohio) and Texas.
We call people who do the farming “farmers” and the people who own the farms “farm owners”. We acknowledge that a lot of even the white families who live on the farm that they farm no longer own their farms. They’re still “farmers” to us even though they don’t own their farmland.
In Texas we also have “Ranch Owner” vs. “Ranchero”. One of them has bullshit stuck on the outside of their boots, the other has the bullshit inside their boots.
My wife has some Indian-American friends who invest in farmland and laugh at the idea that they have “white sharecroppers”. It would be weird to call them farmers, but not call their “white sharecroppers” farmers.
I think your statement "We call people who do the farming 'farmers'" is accurate to my usage as well, perhaps with then some nuance to what work is "farming".
I didn't mean to imply that land ownership was central. But maybe "operating the business of a farm" is farming/being a farmer, whereas "doing labor on a farm" is not.
For instance, if person A owns 100 acres of farm land, person B rents that land and makes the decisions about what to plant, when to plant, when to harvest, how to manage the transportation and sale of the product, etc and person C is hired by B to do some work on that farm, I'd probably only call person B a farmer.
Right, but what I am saying is that all the money laundering from oligarchs and drug lords is only a tiny fraction of the US economy. Enacting draconian controls on crypto or cash or any other harder-to-trace transaction, for the stated purpose of curtailing dark money, ends up being another form of taxation on the middle and lower classes. The ultra wealthy criminals will always find another way to launder their gains. Unpredictable side effects of removing cash include enormous housing bubbles caused by laundering through real estate, and stock bubbles... and these just serve as another transfer of wealth to the rich.
> money laundering from oligarchs and drug lords is only a tiny fraction of the US economy.
You can't have any way of knowing how much money in crypto is dark.
And of course economies of some of those dictatorships are smaller than some US companies, but if you are telling us that it doesn't matter if putin and friends can launder money through crypto to maintain power, kill more people and make us suffer while buying cozy life for themselves because that amount of money is not that large in the grand scale of US economy then good for you, I have nothing else to say.
They don't need bitcoin for that. Smuggling money into the US (the by far largest global destination for laundered money) via crypto requires the exact same amount of criminal effort (false identities, mules,..) as smuggling money through regular bank transfers, because nowadays all crypto exchanges that are allowed to interact with US banks must establish the identity of their customers same as a regular bank.
So that leaves P2P trades. Their volume can be estimated (in fact: upper bounded, by adding all trades on the block chain and subtracting those corresponding to trades on known centralized exchanges.) It's about $200B per year.
As for money laundering, the range of estimates of global volume per year is pretty wide, ranging from $20B to $5T. If you compare research from the 90s and today, you'll notice that the estimates have not changed, meaning: similar methodology applied to current data will yield estimates that are close to the estimates from the 1990s, adjusted for inflation.
If the low end estimates are true, then money laundering is not a serious problem and using it as pretext for destroying civil rights is a joke, so let's go with the UN's reasonably big estimate: $800 billion - $2 trillion.
In that case, even if *ALL* P2P bitcoin trades were criminal, they would still only amount to 10%-20% of global money laundering.
Finally: The total BTC market cap is ~$400B, half of that has not been traded since 2015. Given the risk affinity of career criminal and the inherent volatility of criminal enterprise and given the historical rise of BTC, don't you think at least 10% of mone launderers would keep at least 10% of their money laundering transactions as crypto instead of cashing all of it out into USD? But they wouldn't keep them on exchanges. Looking at the blockchain data, it's difficult to make that work *UNLESS* only a small amount (less than $100B) money laundering happens via crypto.
You're only covering laundering bitcoin into USD. There are money other avenues like buying sanctioned stuff with crypto direct. Convert blood euros to monero and go.
> all crypto exchanges that are allowed to interact with US banks must establish the identity of their customers same as a regular bank
And that is good of course that some countries do it, doesn't prevent all scenarios but it makes some difficult.
> P2P trades. Their volume can be estimated
How exactly do you measure what is what on crypto with mixers and anonymous currencies?
> a small amount (less than $100B) money laundering happens via crypto.
You mean via Bitcoin? You know there are other coins.
the conversion (between crypto and fiat) is the problem. you can't convert more than a couple hundred euros without KYC.
>How exactly do you measure what is what on crypto with mixers and anonymous currencies?
you add up all the transactions on the blockchain and subtract all the transactions connected to wallets of centralized exchanges.
>you mean via Bitcoin? You know there are other coins.
"god of the gaps."
tl;dr: you originally claimed there is nothing we can know (and that therefore we should assume without evidence that money laundering via crypto is a huge problem). but there are a few things we can know.
As someone who grew up in a country where hundreds of millions of $$$ were stolen from the people by the government officials, and than transported illegally out of the country - I can tell you you're very naive about how openly these high-level international crime deals are done. What they did was simply load the money in an airplane and fly them to a small, corrupted country (Cyprus in this case) where the banks and the local government were in the deal for a cut. No need for bitcoins or any other technology that leaves easy to follow traces. Just paid everyone a cut, probably someone in the West too, since country was under UN sanctions at the time. And money was never recovered, nor anyone got prosecuted for it, of course.
As a Russian I can tell you and everyone else drawing parallels with the past forget there were no sanctions at the scale as currently applied to putin and there were no crypto at the time.
If there were strict sanctions in place, they would not be able to fly to cyprus as you say. And if there was crypto, they would be far more efficient at doing what you describe because they don't even need to pay for the planes and a bunch of people to move cash (people who steal it and can leak the information).
And people called me naive in this thread. The real or faked naivety of crypto pushers is what knows no limits...
> They would however need to find people that can sell bitcoins to them.
I hope you don't think they'd go around writing "zdrastvuite zis is putin can you sell some bitcoins" with strong slavic accent :)
> Let's say a corrupt dictatorship wants to turn their $1T of criminal/stolen assets into BTC. How are they gonna do that?
Give somebody ruble in exchange for bitcoins. Maybe even have a handy russian in charge of a crypto exchange (that's probably what got localbitcoins shut down in the first place).
Remember how they made it impossible to store or withdraw lots of foreign currency? I bet it helps demand for ruble. Pegging ruble exchange rate probably helps too, remember how after rising to more than 100 rub somehow dollar is now worth 60 rub (only in Russia of course, good luck selling ruble anywhere else).
I think their argument was against naïveté, nothing more: it seems like Bitcoin served a useful and valuable purpose here, and that that purpose also likely facilitated international money laundering in a way that most people would normally be opposed to.
In other words: the medicine comes with side effects, and old-timey imagery of abuelitas trading their US bills for Bitcoin is probably less realistic (although more palatable) than the reality that the GP was likely a useful stooge in a criminal enterprise.
That's exactly it (and thank you for putting it better than I probably would have).
I don't want to be callous towards the abuelitas and students and remote-working developers and so forth. I understand that their local currency regime is unfair and having such limited access to the global system is frustrating.
I just don't think Bitcoin-type solutions are really solving anything because they start from an ideological free-for-all that works for maybe five minutes until the criminals take notice and rush in, and then it's a slow descent into a haphazardly patched system that ends up re-enacting the worst abandoned ideas of the old financial system along the way.
I'm all for a better designed system that takes this reality into account and doesn't pretend that libertarianism will surely work if only Everybody Does It Right This Time (the same cycle as with communism).
Even if you do manage to "change the government" in your country to prevent all financial crime and enable all legitimate business people to trade without graft or fear of criminals, I don't see how you can possibly accomplish doing that in some other country where things have been on the same cycle of graft and corruption for 150 years. Do you think that before Bitcoin, criminals had no access to the international banking system? My family's gold tooth fillings in a swiss bank vault would like a word.
You believe you smash graft by smashing the means, but you don't stop it. It's the same with Americans who think that by banning firearms, they'll stop criminals from shooting people. Quite the opposite is the result. Ban guns, and you end up with an unfree society and the criminals have all the weapons. Ban cash and ban crypto, and you end up with an unfree society in which the ruling class are the criminals, and they have all the levers to control and steal the wealth of individuals.
Look, I'm not making this up. Check out the litany of polities that restricted the movement of money (or the ownership of firearms) in the 20th Century. They can be ranked on this axis alone as a reasonable proxy for their degree of totalitarianism. Let's say from the outright banning of money under Pol Pot up to the Cultural Revolution under Mao, Stalin simply deporting millions of people who had any money at all...
And guns are just a sideshow. Money is the individual's only defense against the State, and against the state of nature that exists in the vacuum where the State does not exist.
Ransomware attacks, for example, are only viable thanks to cryptocurrencies.
I will also point out that limiting the movement of money, goods and people is not a characteristic of totalitarian regimes. Every single country has such restrictions.
of course. I don't understand these people talking about "criminal" money laundering. They don't know how normal Argentines save. Dollars > Miami. Even a guy who repairs my shoes in Buenos Aires, has a bank account in Florida.
You still have to launder the money, the IRS isn't going to be satisfied with "some guy from Miama wired it to me" when talking about regular sizable sums.
Recently, the Chinese/Mexican Cartel laundering operation had been operating at 1-2% fees [1]. This was new and historically you're right, but the amount of money wanting to leave China freed up cash to drive down fees.
I would be worried about posting a story like this when presumably some of what you are describing was against currency controls in argentina at the time?
Aren't you slightly worried that this message might come back to bite you if you ever get investigated for anything and someone goes through your social media history looking for any evidence of lawbreaking?
Not at all. At the time, I could have gone to Uruguay for the day, withdrawn $1000 USD from a local bank, and turned it into ARS$15000. Or I could have gotten ARS$3000 from withdrawing the same $1000 USD from a local ATM. Cristina Kirchner's money controls were absurd, and I was there the day Macri got elected and let the currency shoot up and obliterate everyone's ARS bank account. Everyone with any brains in Argentina owned USD and got it out of the country any way possible. I was the only person stupid enough to be bringing it in. What the fuck should I worry about.
I think that's the part why your story didn't make any sense to me. I am not questioning its truthfulness. Just, why?
Why even go thru the hassle of using bitcoins? You could just exchange it with the guy on the street for pesos. Not sure about ten years ago. Right now, you can even western union money to yourself at the blue rate. I am sure you can even just pay people in USD in many cases.
I'm not sure what the pay rate is now for Western Union, but the fees are high, and at the time I believe you only got the official rate in pesos. Moreover, I got a huge additional discount from my landlord for paying in actual USD as opposed to the same amount in blue rate pesos, because the pesos were hard to change and would be worth less the next month. I also ran a startup Bitcoin casino at the time, so I had access.
If the government enforce that for a few hundred dollars, all my friend would be in hail :) .
If you go to downtown to the Precedential Office ("Casa Rosada") and walk just half a mile you will meet like four or five arbolitos ("little tree") per block. They are a person standing in the street chanting "Dollar, reais, exchange". They have also Euros, and probably Uruguayans pesos, and other coins, or they will know where to ask. That's in plain sight, at noon, in a mayor commercial street, a few blocks away from the President.
And if you need to exchange more money outside the official market there are cuevas ("caverns") that are just slightly hidden offices. They are in the same area.
(Most are "honest" people working in a "alternative" market, but there are also shady one that can give you fake bills or call a thief.)
I did something similar until 2013. I purchased BTC abroad with credit card, and sold them on MercadoLibre at the local rate.
It was great until ML one day decided to ban selling crypto. It definitely kept me afloat for a few rough months, and allowed me to purchase my first laptop.
I once had a guy on the phone who wanted 10kUSD in crypto. He seemed pretty serious and real, but I didn't have the capital to make such huge kind of transactions.
I went to Argentina for a month in 2011 to visit a friend. As soon as I got there he was trying to exchange for my usd cash I brought and offered me more than I'd get at the currency exchange, he told me he didn't trust his own currency. I thought it was really odd until a couple years later when there was a lot of reporting on the fear of hyper inflation.
This is/was typical in Argentina. The reason is, in 2011 official prices and prices on controlled goods (like meat, bread, flour, water) was artificially pegged to $1 = ARS$3. But in reality the peso was much cheaper; this was a way to disburse the country's US Dollar reserve to the patrons of the ruling class. It had been done many times before at different currency pegs, while the government printed more money, each time resulting in hyperinflation. It's a form of theft from the working class who can't easily access foreign currency, siphoning the wealth to the rich who can do so.
In any event, Argentines prefer strongly to have dollars, to the point where in 2011-2014 or so you could rent an apartment for perhaps 50% the going rate if you paid in hundred dollar American bills (but only the new ones, with the big Franklin). These could simply not be obtained in Argentina anymore. Back in 2002 or so, you could get $100 bills out of an ATM (maximum $200 per day). But in 2011 you either had to be paid directly by the government at the official rate (i.e. triple your salary for 20% of your wages) or you could take a boat to Uruguay and pull out $500 a day. The third way was using Bitcoin and trading with local Argentines on Localbitcoins.com, who would give you the normal US dollar rate for the bitcoins you were selling.
I am a bit dense. How does hyperinflation, an artifical peg, and exchange restrictions allow USD currency reserves (presumably held by the government) to flow to those who has freely accessible USD exchange (the patron of the ruling class)?
What is the mechanism that would facilitate this?
(Also, I think I disagree with everything you have said in the thread so far. But, this is a serious question. I don't follow this argument at all.)
Let's say the open market price is 10 pesos to one dollar, and the official rate is 3 pesos to one dollar. You want to buy $10 of stuff that's priced internationally, such as gasoline. How much does it cost?
At the official rate, that's 30 pesos. But in practice you can't get the official rate, because of the currency controls. You have to pay 100 pesos. So people who can access the official rate get to be comparatively wealthy.
Conversely, tourists come in not knowing this, or foreign businesses which can't access the grey market, and are fleeced for their dollars at a fraction of their worth.
I'm happy to disagree in an intelligent conversation! This is a very bright question, and something that truly baffled me at first. But as is often the case when people enrich themselves, there's an unexpectedly dumb, blunt underlying mechanism which existed in Argentina.
In addition to what the sibling posted, it's a little known fact that government workers (a huge sector in Argentina, where everything from bureaucrats to police to postal workers are underpaid and in oversupply) had the option under Kirchner to take 20% of their monthly salary in USD, in cash, drawn directly from the currency reserve. And this was paid at the official peg meaning it was worth roughly 5x as much as the pesos it was substituting were actually worth. This scheme was purely a way of ensuring loyalty to the regime among the public sector, and it virtually bankrupted the country. This is why USD was under every mattress and enough was in circulation to be used in every major transaction. At the same time, most daily things had to be bought with pesos, so those dollars flowed to street money changers where they were exchanged for 5x their official value. Thence some small amount of those bills went on to foreigners like me, and my Bitcoin was off to Miami... most of it remains buried on ranches in the pampa.
I sort of hinted at this in an earlier post but didn't elaborate. I'm glad you asked such an insightful question. This really is the missing part of the puzzle.
The general idea is correct, but I want to clarify a few points.
> government workers had the option under Kirchner to take 20% of their monthly salary in USD
It was more complicated. Something like (salary - minimun_official_salay)/some_number, but 20% is a good approximation for a middle class salary. Note that poor people didn't get the dollars with discount! And rich people had more sophisticated ways to save their money.
It was not only for government workers. Anyone with a declared salary could buy them, but many private workers had undeclared salary to avoid paying taxes.
> And this was paid at the official peg meaning it was worth roughly 5x as much as the pesos it was substituting were actually worth.
> This scheme was purely a way of ensuring loyalty to the regime among the public sector, and it virtually bankrupted the country.
In my opinion it was mostly to keep middle class people in big cities not so angry, so they don't go out to the street to protest. (I.E. Not to buy loyalty forever, just to build temporal complacence.)
I don't think this bankrupted the country. We also had a huge discount in natural gas and electricity (we paid like half of the price) and there was a lot of corruption and weird gubernamental contracts. I think the "20% in cheap dollars was a small part of the problem.
> This is why USD was under every mattress and enough was in circulation to be used in every major transaction.
Homes, cars and other very expensive stuff is bought here using dollars, but it started like 40 of 50 years before, perhaps more.
> most of it remains buried on ranches in the pampa.
I don't expect big farmers to have siphoned most of that money, but we would have to wait 50 years to have a good understanding of how money flow during that time.
And ver big players invested in subsidiaries abroad, that is better than having stored dollars.
Disclaimer: I bought my "20%" of cheap dollars and when I bought a bigger home I used them to pay the difference between the mortgage and the price of the new home.
I travelled to Argentina around this time and, plane ticket aside, I used Bitcoins for everything. I bought BTC from localbitcoins, travelled there, paid for my stay and some meals in BTC (there was a website that showed restaurants and cafes that accepted it) and exchanged BTC for ARS for the rest of expenses from someone whom I met via localbitcoins there (could be you!).
This was peak crypto actually. It was useful, peer-to-peer, actually allowed people to opt out of the monetary system, it felt like a community, there was this sense of excitement.
Then all the crypto ICO pump and dumpers with frog avatars came and it was over.
BTC had always been a means of avoiding regulations, and that's fine imo, because let's be frank... US regulations are on par with the CCP in execution with stupid rules like double taxation and mandated rules for foreign banks not in their jurisdiction.
But they control the loud speakers and have much stronger global enforcement, ie they are the biggest gangsters around so they set the rules.
The double taxation thing really is a bitch. Not to mention, giving up one's US citizenship triggers the equivalent of an estate tax as if you died.
Still, it's a democracy and some people voted for those things; it also doesn't explicitly force people to stop speaking their native language or abandon their religion, or throw people in prison for waving a sign in the street. So I keep my US passport and pay my taxes.
The US is one of the few countries in the world where people do collectively have power to make drastic and enduring changes to the system without needing to start a cycle of violence to accomplish their aims.
>where people do collectively have power to make drastic and enduring changes to the system without needing to start a cycle of violence to accomplish their aims.
Tell that to me again after the financial system, immense legal corruption and healthcare has been fixed. These are all problems known for decades beyond some people's lifespans and consecutive presidents haven't been able to fix it...hell many go again their election promises with lame duck excuses.
If I had to compare both shitty superpowers, China would be "can't change the party but you can change the policy", while the US would be "you can change the party, but not the policy"
Both are dystopian in their own ways, difference being China is an obvert dystopia, while the US is covert one drugging their populace to numb discontent etc.
I don't want to get into some kind of political debate that could be determined to be a "flame" thing - I'm on probation over here. But don't you think the Affordable Care Act (aka Obamacare) was a pretty major stick in the eye of the insurance-industrial-complex? Sure, it's nothing remotely approaching the kind of social medicine available in France or New Zealand, but it was provably the result of large numbers of people voting for change against the prevailing moneyed structure that was in place. Policy doesn't necessarily swing 180º with every new administration; that's probably for the best. Isn't this an example of policy being shifted democratically?
I hesitate to get into the pull-out from Afghanistan or the judicial decision to rescind Roe v Wade; those are both things I strongly, vociferously disagree with. But they're both examples of public pressure changing policy (for better or worse) through the application of democratic processes available to all citizens.
> it also doesn't explicitly force people to stop speaking their native language or abandon their religion, or throw people in prison for waving a sign in the street
I don't mean to get all edgy, and not to detract from your general point, but please don't forget that the U.S. supports (and has even installed) foreign regimes that do these (and worse) things - albeit to people in other countries.
You're dead on right. There's no excuse for those travesties. The primary difference is that our voters wouldn't accept those kinds of abuses in our own country. Yes, too many voters are willing to turn a blind eye to exporting those policies, but at least those who are aware of them are both able to agitate against them and, occasionally, able to stop them. There is no fundamental difference between Guantanamo and Russian or Chinese camps set up to torture Muslims. We do, however, still have the right to investigate and to protest; I believe this has limited the scale to one concentration camp as opposed to dozens or hundreds. The same applies to our foreign policy. And there are times where it makes sense to back the less-immediately-dangerous of two dictators, or even the one not aligned with our adversaries. Even in those cases, there's been an almost ridiculously naive American will to try to get them to accept free and fair elections, such as in Iraq. I don't think there's any other empire in history that would allow, let alone sanction such a thing, with the exception of the British who were also primarily interested in divesting themselves from their imperial holdings.
On the foreign stage, America does and has backed horrendous dictators and fascists. As does and has every other empire in history. There is, though, a certain underlying theory in American politics - both right and left - that is disgusted with the notion of engagement in foreign wars and doesn't have the will to occupy foreign territory. This is what you would hope for as a natural result of a functioning democracy where people had a short tolerance for the personal deprivations inflicted by a state bent on imperial expansion.
No, it ain't Switzerland. I wish it were. But speaking with Syrian refugees and Lebanese and Tibetan dissidents and South Vietnamese and Cubans I've known in my life, I've kind of come to the conclusion that international relations are a jungle where most states are predators and most individuals are prey. America does at least give lip service to the notion that individuals shouldn't be preyed upon, and tries to export that meme.
If you'd like my long term view.. crypto does have value. I've said this since 2009 or so. Its value is the difference of its transaction fees versus middle parties like credit card companies, plus whatever local currency restrictions are in place which it can circumvent. Take that total and divide it by the number of Bitcoins in the world, that's the maximum logical non-hyped potential value of Bitcoin. It's only worth what it's valuable for as a means of exchange. Its relative value happens to be much more under extreme local circumstances which crop up in various parts of the world. But I do think it serves an otherwise ignored niche.
Yeah my early thoughts around crypto were that it's so nice to have another floor on how expensive it is to transfer value between two parties. Other than ETH L1 transfers are generally sub 10 cents
That was totally the original value, I thought.
That and being able to take it for blackjack and poker without trusting the holding to LibertyCoin or some shady bullshit outfit like that.
The acceptance of bitcoin payments at the grassroots level is still happening. With the Lightning Network, it's quite viable these days. I've been following https://btcmap.org/map off and on, and new merchants and sites seem to be slowly popping up. Interestingly, there seem to be tourist hotspots in some countries where Bitcoin is more widely accepted. It would be a fun idea to visit these places and try to pay for everything with bitcoin only.
It wasn't just ICO pump and dumpers that got rid of this utility.
The people coordinating Bitcoin made an explicit technical decision to focus on it being a store-of-value, which made it too expensive to use as a means-of-exchange.
Smaller transactions like the ones you described became too slow and expensive to be viable anymore, because of these decisions.
This concern is way overblown. Over the past month the average transaction fee has hovered around a dollar, at level at which it's entirely reasonable to perform international money changing as the people you replied to were doing.
If you transact on Lightning network, it's much cheaper still.
I don't think you're accurately disputing what I said.
Bitcoin went through a period when transaction fees were very high, and wait times were unreasonably long. During this period, they essentially lost all their users who were using Bitcoin for retail-type transactions: moving money across borders, sending payments to friends and family, making small illicit purchases, paying sex workers, etc.
Some they lost to Monero and other altcoins. Some went back to traditional finance. Some went to new non-crypto fintech. Those people did not come back to Bitcoin (they may have held some, but no longer use it for transactions).
The lower prices now reflect not only that some of the issues were resolved, but also the vastly reduced demand. Today, the vast majority of flows are related to speculation, or the use of Bitcoin in other parts of the crypto economy.
> which made it too expensive to use as a means-of-exchange.
But wouldn't this have happened over time anyway as transaction size and network volume increased? The exponential increases in electricity usage to mine BTC would have to be paid for somehow?
Not at all. For example Ethereum and Monero etc have floating blocksizes that will adjust due to market demand. The fee market can get pricey for a while, but it quickly adapts to new volume. In the early days Satoshi begrudgingly put in a 1mb block size limit to prevent DOS, and later through some underhanded political BS, that limit was basically made permanent.
Also you seem to think that network usage is related to some way to electricity usage. Even today, a single person with a laptop could be the only miner, and the network would still run just fine.
The current block reward on Bitcoin is 900 coins per day, so the upper bound on electricity usage is however much power 900 BTC will get you. That number gets cut in half every 4 years, so generally, the max electricity expenditure is actually going down, except that the price of BTC is currently going up faster than the rewards are going down.
Energy usage is directly correlated to price, not utility. There is a loose connection between utility and price, but since utility got capped in 2015 or so, the price has continued to go up, so that connection is pretty tenuous.
There is this weird assumption that Bitcoin was "managed" or that political forces were at work. It was simply a war between some developers and others.
Not to you specifically, but in this thread: I find it troubling, this new reflex of ascribing to dark conspiracies what are banal historical facts.
The growth of the blocksize was inevitable once it took off; now we have lots of shitcoins, and a few that are stores of value and some that are means of exchange. Lots of hucksters showed up, but no one planned anything. (And looking at the state of things now, it clearly shows).
Unless they were actually at "war" shooting guns and killing people, groups of people using non-violent means to achieve an end is politics. One of Carl von Clausewitz most famous quotes is "Der Krieg ist eine bloße Fortsetzung der Politik mit anderen Mitteln" or "War is merely the continuation of politics by other means".
A conspiracy is just a group of people working towards a goal and keeping most of their actions secret, i.e. many groups.
There's politics implicit in any situation where one person can stand to gain over others. The instinct to call it a conspiracy may come from the strong beliefs some have that Bitcoin was 'neutral' and designed to not be dominated by a small number of parties.
Mining for rewards is not the only way mining can occur. It can also occur from fees. And since the total number of bitcoins is capped, it will soon only happen via fees.
The amount of fees is unlimited, and the total possible energy usage is currently unlimited and will remain unlimited, and scales with use.
Transaction costs did become a huge drag on the system and a drain on wealth [edit: what I mean is, at some point they overwhelmed the initial value of cutting out the middleman in other types of digital currency transfers], although I don't think this was a conscious or coordinated decision; it was a result of the inherent limit in block size / mining capacity. Basically, "Satoshi" never imagined so many people would be trying to trade so frequently... so perhaps this focus on storage of value was in a sense baked in unwittingly. I was for BCH becoming the "main" branch. Honestly, though, I don't think making it easier or harder or more or less expensive to trade had any impact on whether or not con artists used it to con people.
Satoshi explicitly was making bitcoin as a medium of exchange, as described in his paper, but apparently couldn't do the math to realize that his system would never manage more than a few hundred transactions a day. That's a pretty massive oversight IMO, and evidence that satoshi is just a normal dude, not some prophet or messiah.
The decision to not expand block size limits was 100% coordinated by a huge amount of chinese mining capacity because the ingress routes to their networks of miners would not have handled the higher throughput, and like six dudes who controlled 80% of the miners sat up on a stage together and talked about it. How is that not coordinated? Bitcoin had every chance to improve it's ability to be a currency, but guess what, the oligarchs who controlled all the mining thought it would give them less money to go that route, so they stopped it. It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people"
Satoshi as far as I know never indicated he meant bitcoin to be an ultimate solution and not an incremental stepping stone. It seems weird to expect some anonymous guy to create a perfect end-all and be a failure if he merely ended up with something with some merits that can be improved on.
Satoshi did the math just fine, and later I repeated his calculations with more detail. There were no inherent problems with scaling Bitcoin up beyond the question of how to pay for mining post-inflation subsidy, which could be solved with assurance contracts.
> It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people"
That's proof of stake. Mining isn't about how much wealth you control but about how much hardware.
That's not entirely true. When I was mining in Vietnam, we were not rich. We just picked a country where power was cheap and it was close to China so that we could get hardware into the country more easily and inexpensively. The Vietnam govt wasn't using the excess power and they were happy to have someone filling their datacenter spaces.
My (admittedly, limited) understanding is that standard fiat currencies are stores of value, media of exchange, and units of account. Being a store of value doesn't mean it needs to appreciate in value, just that it doesn't depreciate to nothing over reasonable timescales.
From what I've seen, the main problem with Bitcoin specifically as a currency is that it makes a terrible unit of account: its volatility compared to regular currencies means that no one's going to denominate any prices in BTC.
That's right, a volatile currency is bad for businesses, because the revenue from sales will likely exceed by a lot or fall well below the cost of sales, increasing the likelihood of bankruptcy.
Something I've been wondering about with regard to CBDCs; if you're in a Western country with low inflation and good banks there seems like little point. But what if it were an explicit goal to make a CBDC usable in other countries? Export US price stability to Argentina.
> if you're in a Western country with low inflation and good banks there seems like little point.
Not at all. Some EU countries aside, most western countries do not have a good inter-bank payment system and are still dependent on Mastercard, Visa and Paypal to handle merchant transaction settlements.
Local currency cash is the only thing a state has control over. As use of cash declines, it becomes important to have a centrally-administered digital cash alternative, just like paper cash.
> Local currency cash is the only thing a state has control over.
The state has control over its banks. You can't generally get a Mastercard or Visa card that isn't issued by a bank doing business in your jurisdiction.
How tightly the state holds the reins of the bank depends, but usually they're among the most regulated of the nominally private institutions we have.
Cash usually doesn't carry any fees, whereas electronic transactions incur large enough fees to make small transactions burdensome for small businesses. Payments are an important enough area IMO for countries to implement interoperable standards, rather than wait for the private sector, all competing among themselves, to offer one.
It's call "Dollarization". We called it "Convertibility". In Brazil it was the "Real Plan". It has tried in many other countries. Each one is slightly different, so if you have a lot of popcorn you can try to read each one and understand the differences https://en.wikipedia.org/wiki/Currency_substitution
The main problem is that the government has a deficit of 5%. All the solutions to fix the deficit are unpopular, so they prefer to keep emitting money. (Now they are trying a few unpopular fixes, but not too much, just to keep the inflation not too high.)
If you switch to 100% external currency, after a few month the government will have no money.
They can pay you a part of the salary of $1000 with the external currency, after a few months they will have to pay $900 in external currency and $100 in IOU. Later pay $800 in external currency and $200 in IOU. ... [1] The problem is that people will be unhappy with the increase of IOU.
So it's easier to pay the full $1000 in IOU, and ensure that you can exchange the $1000 IOU to $1000 in external currency. OK, now it's $999 of external currency. Never mind, $998. What about $997? ...
[1] Actually, we tried something like it too! In the 1990 each province had a local money and they paid the local employees a part in the national money and a part in the local money, or perhaps all in the local money. Initially it was fine, but after some months you got a haircut of 30% if you need to send money to another province or buy fuel or some other items not produced localy.
This is indeed another nail in the coffin for what we thought Bitcoin was back then. It's really sad how few people seem to understand that Bitcoin was meant to be a replacement for the private banking system. The first system in the world that offered both instant/digital payments without any trusted third party involvement. Many of us understood how important that was back then. Now Bitcoin is synonymous with "investment" and cryptobros who never even dream to question the private banking system they use every day.
If BTC had a relatively stable price and low inflation then it could challenge the private banking system. But its volatility is only attractive to gamblers and speculators. It's the opposite of a good currency.
BTC, by design, is non-inflationary. That's kinda the point. In fact it would be deflationary in practice (which does concern some people). There's nothing inherently volatile about it.
I was there around the same time, I remember selling dollars on Florida street in BA and hearing the news about bitcoin on the street. Thanks for bringing back that memory :)
I bought my first bitcoins using local bitcoins many many years ago, must’ve been around a decade at this point.
A guy showed up to a location with a duffel bag and a handgun. I put some money into a bag and gave him a public key. We sat there for about 20 minutes and chitchatted while we waited for the BTC to arrive in my wallet.
All you kids with your fancy exchanges and dexes these days!
Yeah, but I don’t want to be in a situation where “mutually assured destruction” is even a thing. I live in a country where I could get a license and get a gun, I’ve never felt the need to as it’s continually safer year after year. If I meet someone here who feels the need to arm themselves for safety in public, I am assuming that person is a little unhinged and that getting involved with them has the potential for trouble.
This may be locale-specific though, it could be a totally normal thing to walk around with a gun elsewhere.
We all live in a Hobbesian state of nature. Most people are vaguely aware of this but only really get it if they find themselves in a terrible moment when they realize that no one else and no system is coming to save them.
Where I live, I wouldn't be surprised if I walked past a handful of people with a gun in their waistband at the grocery store. Or a couple at the gas station. You don't even need a permit to do so here. And I have yet to end up in the middle of a shootout. Probably because the risk is too high for criminals as the barrier to entry for defending yourself is essentially zero, except for the price of a gun and ammo.
The nice thing about that is it has a "herd immunity" effect. If many people carry around you, but the criminals don't know which person that is, they're likely to refrain from picking on anybody directly. You don't even have to carry yourself to benefit from it.
The only crime that happens often in this city, despite that, is parked & vacant cars getting smashed into and robbed. Because it only happens when nobody's looking.
Yeah, I think it’s location-specific, maybe where you are wearing a gun at (say) the local shop is a totally normal thing, but here it would be really fucking weird and possibly even a cause to be worried
If you wanna go off-piste it’s totally fine! This is an interesting topic, in my opinion, and it’s not like there’s any bad blood or conflict. Just people in different places with different norms and experiences.
There are definitely no firearms at most if not all banks in Canada, aside from the Brinks truck drivers for the ten minutes they’re refilling an ATM. In fact, thinking about it, I’ve never seen a security guard stationed at a bank.
Good times. I never had the experience of being the one showing up with the cash, which would put a whole other level of paranoid fuck on the situation, but I was aware of people posted at the doors to keep an eye on me when I received it. Once you've done it once or twice with the same trader it gets easier...
Same here, except it was a doctor! He said just make an appointment on my website like a patient would. So I sat there in the waiting room for a while, entered and then did the transaction. He said during his student years he was basically "printing bitcoins". As one of the first in the game he must have had a fuckton.
I mined two blocks (100 btc) when I was a student. It took a month on my PC (CPU mining). It was fun. Few months later I found out that I could actually sell them and immediately did so for $15 and thought that it was a great deal.
Now I wish I would write down the blocks I mined. Just for history.
This could be part of the Bitzlato crackdown [0]. Localbitcoins was referenced as one of the top counterparties.
*...Similarly, Bitzlato’s top three sending
counterparties, by total amount of BTC sent between May 2018 and September 2022 were (1) Hydra; (2) Local Bitcoins, a VASP based/incorporated in Finland; and
(3) “TheFiniko.”*
Was this site ever compromised? I used to flip BTC on here back in 2013 when coinbase would front me up to 20BTC before my ACH even settled.
I had a repeat customer who got his bitcoin stolen and thought I did it. I tried to explain the blockchain to him and how I clearly sent it but it wasn't getting through to him. He sent me a few death threats but never heard from him after that.
Another guy bought around 20BTC from me cause he was convinced someone in Florida was gonna sell him bitcoin miners which were really tough to get at the time. I told him it was probably a scam and he should fly out instead of blindly sending the money first. He didn't listen and about 30min after we met he called me back and said the guy wasn't answering the phone anymore.
I concluded pretty early on that bitcoin was not a viable currency.
People need to understand transactions are irreversable. They can't seem to wrap their mind around that and it's not a prerequisite to using crypto. You can be as glib as you want but there's many reasons bitcoin has still failed to be useful as a day-to-day transactional currency; that being one.
Glib response to a glib comment. And there are many reasons bitcoin has still failed to die despite failing (in your opinion) to be useful as a day-to-day transactional currency; the fact that transactions are irreversible being one.
Completely tangential, but it's been a long time since I've heard the word "glib" and thought we were referring to GLib or glibc. I was incredibly confused for a bit. New word to add to my vocabulary arsenal though.
Hah, memories. I bought my one and only bitcoin from some dude in Munich via localbitcoins back in ~2013. Two weeks later I got a phone call from some Munich police officer asking whether I too was a bank theft victim of that guy. I could explain a bit about what actually happened (police had no idea about bitcoin at the time). It turned out that some money had been stolen via online banking from Spanish bank accounts, and presumably laundered by turning it into bitcoin via my localbitcoins contact.
I tried to log into my old account, it seemed they locked it 2 years ago in some new KYC/AML logic, and I never bothered to fix that. I was an OG from 2014-ish. Ah well.
Even in a developed country (UK), the KYC is so **ing annoying to use on most websites I have tried. Several times I have wasted an hour waving my passport in front of some poorly implemented image recognition page that failed to capture a photo and I just gave up. Would love if there was a flourishing ecosystem of local transfers without KYC. I wouldn't even mind if banks started providing physical KYC services. Maybe there is an opportunity for a company that focuses on providing KYC as a service such that you can just point each crypto exchange/custodian to that.
Just did KYC for the Gemini app on my phone walking the corridors between the gym and the sauna at my local leisure centre. How are you having so much trouble?
It was a nightmare on Coinbase back in the day. I signed up with "Joe Sixpack" but my ID card had my full name "Joe Andrew Thomas Sixpack" - KYC check fails.
Same here. They require real mail (ISP, water, gas bill) with the identical name on it as on my ID. That does not happen, no one sends me bills with my full name, just first and last.
Not sure, from memory one issue is my passport is from a different country than where I live. Several sites just could no handle this. Or maybe I just have a weird face :)
264 comments
[ 1.5 ms ] story [ 262 ms ] threadLocalbitcoins has been around for a long time. I bet there are lots of wallets on there totally forgotten about with lots of bitcoins in. Quite a goldmine for someone...
They are literally announcing they are shutting down which should raise concerns about the sustainability of their operations one would think.
—edit—
I can’t resist… Jesus Fuck, dude, it’s in the title!
Please list businesses whose success do not depend on market conditions.
"Please list businesses whose success depends on frothy, bullish market conditions"
Most companies can be successful even in down markets. See basically all S&P 500 companies. Yes their stock price might be down and they may be laying people off to save money, but those are all legitimate and successful businesses by most measures.
If transactions are still happening, regardless of the BTC price, there has to be a way to make money from facilitating them. And given that BTC has been running with full blocks for years, the transactions should be there.
Plus, it's existed for a long time, so at this point the service has been built. If business is slow then it can just coast on what already exists.
Of course it could indicate that nobody actually uses BTC that way anymore, and the current transactions are of a different nature than localbitcoins was made for.
Are there people trying to launder $100? Are there people using some online-marketplace if they're trying to launder $1000000 and meet random people to make that kind of transaction?
But the amounts really don't make sense. Organized crime is certainly not running around making $1000 deals all day with different people to somehow launder money by converting it into bitcoin and back ("I found this bitcoin on a sidewalk on the internet and I've exchanged it for cash, so now this cash is legal?").
You have cash. You want drugs.
You go on localbitcoins and trade your cash for bitcoin (fully legal) and then buy drugs from me via darkweb (fully anonymous).
I sell you the drugs on darkweb (fully anonymous) and then offload my bitcoin on localbitcoin for cash (fully legal). This removes a lot of risk for both parties
This is the original business model, but the authorities caught on pretty quickly and implemented all of those pesky KYC/AML requirements.
The probable result is that the police nab the localbitcoins person, then pressure them to explain who they were doing business with, and go from there.
If anything it's worse than buying drugs in a dark alley because there's a permanent record of your activity.
Some trading partners would also have a 10x or 100x multiplier - ie. 10% or 1% of a trade would be done on localbitcoins, and then the remaining 90% or 99% would be done offline later at the same exchange rate. The way the feedback/reputation system worked, you could still ding someones reputation if they didn't follow up with the offline part of the trade.
The owners also keep going on about saving Africa https://paxful.com/assets/images/about/bwb.jpg?v=1675941877
Do you guys really? I mean "you guys" generally, not you personally.
It doesn't seem that way to me. If the gift card industry really wanted to curb this shit, it would be a simple matter to abolish all high-value denominations of gift card and forbid purchasing more than one a day. If Gran wants to buy a birthday gift for her grandhchild, a single $20 gift card should be more than sufficient to show her love. There is no reason to allow her to buy 10x $500 cards in one day. Only tiny fraction of the population could afford to be doing something like that legitimately, virtually all such sales are people being tricked by scammers, yet the high denomination gift cards still exist despite your industry's supposed care.
These days there are lots of services offering p2p trading, and big exchanges like Binance also have p2p trading services for multiple cryptocurrencies. I would guess that Binance p2p volume alone is likely many times of that from LocalBitcoins these days. Most players don't publish their volumes though.
I haven't kept up with the KYC laws, but no doubt it is not possible to exchange Bitcoin as if it were cash anymore.
Thankfully the new digital pound currency will revive the (black) market for Bitcoin & co. in a scale not yet seen before.
I can't really see what the reason could be except legal.
https://hodlhodl.com
https://www.peachbitcoin.com
There might be more, which I'm not aware of.
Kraken is not what I would call a small company either.
And what does this have to do with kraken?
https://coin.dance/volume/localbitcoins
I don’t know if it’s because people are not using bitcoin anymore or if there’s something else now, I haven’t really used bitcoin in ages.
This is all publicly available since the company behind it, is based in Finland
My gusss is: If they take a cut in crypto and that crypto increases in value, that increase wouldn't be turnover but it would be profit?
1: https://vainu.io/company/localbitcoins-oy-taloustiedot-ja-li...
The fact that they introduced KYC speaks for itself, because what's the point of using localbitcoin when you need to go through KYC? The whole idea was that it's anonymous p2p trade. If they require KYC too, users might as well go to one of the proper exchanges and get a better deal. Plus all the other services like staking or NFT markets on top.
The original "meet in person" model was so good. All the bank transfers, paypal, etc. never made any sense.
Just a shout out to LocalBitcoins. When I was living in Argentina during the almost-hyperinflation of 2014 or so, I got all of my living cash in pesos and USD by selling BTC to local traders who I met on Localbitcoins.com. Usually I would meet them in a coffeeshop, have a coffee, wave my phone and transfer some BTC and they would hand me an envelope with $1000 USD and ARS$9000 that would cover my rent and food for the next month. The cost was +5% for the BTC-to-cash trade, but the exchange rate was "blue" meaning, at the time, one peso was officially worth $0.33 but the blue market had it trading at somewhere closer to $0.06... and trading for BTC got you the live blue rate. One kid I dealt with a lot had a wonderful business model. He was a math student at the university and opened an office buying and selling Bitcoin. When I asked him where he got all this USD cash which was almost impossible to find in Argentina, he explained:
People gave it to him. Argentines who got 20% of their paycheck in dollars, or who had dollars stuffed under their mattresses that they couldn't get out of the country. They paid him 5% to move it out.
He took their cash and sold it to people like me - expats, tourists - for BTC, and sent the BTC to his partner in Miami, who changed it out to USD and put it into American bank accounts for them. So he got 5% on either side of the trade.
This was the moment, around 2013 or so, when I really believed BTC would be a unit of exchange that would break the artificial currencies around the world and serve as a leveler that would allow anyone with skill to work anywhere and go anywhere; it would demolish the old sclerotic monetary regimes.
Then it got regulated [edit: all its endpoints got pwnd], and Localbitcoins has not for a long time shown any P2P meetups for unregistered, silent trading-for-cash. That was its original purpose, and it served very well at the time.
In loving memory.
Which sounds a bit too good to be true.
Could it be because it is Bitcoins collected from crime or ransomware, or just illegally exchanged ?
Otherwise, why would someone sell Bitcoins cheaper if you pay them cash ?
What I wrote has nothing to do with "buying bitcoins" at lower than market rates. It's about buying locally inflated / artificially deflated paper currency at world market prices using Bitcoin as the exchange currency.
And now assume that the cash in Argentina isn't coming out of mattresses but from criminal activities, and the people receiving USD in America are part of the same cartel. A 5% transaction fee on both sides of the Bitcoin trade is just 9.75% for the complete wash cycle — very low for textbook money laundering.
It just maybe didn't come from cartels and drug trade.
Nah, it's very common for people to have savings in cash under a mattress. We had crises before where banks essentially kept people's savings and they never saw their money again. Trust is the banking system is non-existent.
(I lived in Cañitas twice and it's a great place to live if you make USD but I was nowhere near the wealth level of people who spent all day running horses and playing Polo)
Happy to add more details.
You could also just define criminality as having money, and dispense with the pretense of legality, as has been done so many times in Russia. This is the despotism that normally results where there is no outlet for capital.
Although it's true, after a certain number of years in some places, everyone does become a criminal if you treat them this way; that should be obvious.
> because any money they have might be "criminal"
Non-criminal money would be a minuscule percentage of the total because, the same way you use to change $500 for the lulz would be used in an organized way to move millions extracted with violence and theft by Russian government and other criminals.
Laws and sanctions actually hurt them. Law-immune technology is their enabler. If I could choose between a way to send money to my family in Russia the same way that sustains those criminals and not having that way but knowing that putin's gang is being starved of money, I'd choose the latter because the first option is a dead end.
> I'm not sure that stopping evil oligarchs - when you cannot - is a good argument for preventing smaller people from saving their money.
The theoretical benefit promised to the "smaller people" is far outweighed by the harm it does sustaining those dictatorships, both to the same smaller people and the world. A few honest hundred bucks here and there does not justify millions that prop the regime and kill more people.
Sorry if this is inconvenient truth but cryptocoins are helping that regime much more than they are helping people that have to endure it.
I have to disagree, as I am a small businessman and I have seen how liberating crypto was for people in small countries. Let me ask you this: What is worse for ordinary people: rich criminals stealing through Bitcoins? Or rich criminals running a country and banning your use of your own money?
If you think Putin or his catamites are surviving on BTC exchange, you're crazy. Berlin is still paying Euros for his fucking oil and gas.
The argument that free means of exchange should be wiped out because they are used by criminals, is the argument that has been used by criminals for hundreds of years to steal from everyone else.
Realize he is also vehemently losing tanks and people right now and supply of money is critical for this sort of fun. Then try to imagine being putin or one of his friends and spending those euros anywhere without the magic of crypto dark market. Good luck!
Those guys are not above any working way of financing their activities, especially now that the west is suddenly less easy to transact with, and they have perfectly crypto savvy people working for them.
For the record, the "zlato" in Bitzlato (one of the largest players at localbitcoins) is Russian for "gold", and the guy running it was Russian operating from China.
I'm sorry if it sounds dark and shatters your dreams of legally unencumbered entrepreneurship but it's just the way it is.
Realize that the very things crypto is "solving" compared to cash is exactly why it is so attractive to this kind of laundering: scale.
You can run a business on cash. You can't launder millions in cash with elegant ease. You need to pay for figurative duffel bags, vehicles to transport them, countless drivers and handlers who tend to steal and leak information.
"Change the government" is a process that even in the best cases takes decades to resolve. Children are born and grow to adulthood in these chaotic situations, and that's normally with outside pressure applied. No the tech won't resolve the core problem, but it will allow people to get bread and milk from within a hostile system until that core problem is resolved.
...my grandparents were naturalized citizens of Argentina and dealt with the same exact situations in the 1930s and 40s. The government got much, much worse before it got remotely better. Mostly due to the passions of people easily swayed by populists slogans about changing the government.
(And before you start, don't equate crypto with cash. Cash that scales without physical and geographical boundaries is not cash anymore, any lessons you can draw from cash being used throughout humanity's history won't apply.)
Many Argentines believe that in the 1940s it was Nazi gold transported by submarine that held up the Perón. Does that justify seizing gold from some family's safe deposit box halfway around the world?
No. I mean laundering. That's what started this subthread. Using dirty money to get clean money, goods and services where otherwise it would be difficult to do in a sneaky untraceable way.
I don't understand the analogy with Argentina and the point about crypto in Ukraine, feel free to explain, but only if it's not something orthogonal but an actual counter argument to me saying that whatever legitimate uses you see small people have for untraceable dark market of crypto dictators use it 1000x more perpetuating themselves and making the very same small people suffer more long term and corrupting the world.
Most will have offshore accounts hidden in various shady or neutral jurisdictions that will ensure they live out the rest of their days without issue (see Zimbabwe, Nazi Germany, or recently Sri Lanka). They could even wipe out large swathes of their population completely and it would still do nothing to destabilise the government (again, see Soviet Union, Nazi Germany, Khmer Rouge, the list goes on)
I can tell you real people there aren't buying bread and milk with it.
But anyway, the same mechanism you imagine being used for buying bread and milk can be and probably is used to buy war drones.
Actually it's much easier to give cash in exchange for bread and milk than bother with crypto but it's much more difficult to get a large amount of cash from Russia to Iran intact than to send them some crypto
I see people from developed nations talking about "changing the government" like we are one french revolution away from prosperity.
There are two problems with that:
- The people need to fight the military. It's not like it's the XIX century where you can face a army with some weapons and horses. Go fight a tank and some drones.
- More often than not, power vacuums are filled with an even more ruthless government that wants to exploit the same corrupt dynamics like the previous one, but for them and their cronies and not the previous government ones.
And by pushing for crypto you are helping them obtain those tanks and drones. What now?
> More often than not, power vacuums are filled with an even more ruthless government
That's why democracy is important
Governments have access to many more mechanisms of wealth transfer and commerce than any average person does. The only special thing about crypto is that it's also available to the general public.
> That's why democracy is important
And who is gonna enforce democracy? Remember, we are talking about a new governing body that came to power after kicking out the previous one. And governments "elected" that way tend to be less democratic that governments chosen by the standard process of democratic elections.
Kicking out a government resembles a coup scenario, and if the next government doesn't want to be democratic, you are SOL.
>And who is gonna enforce democracy?
This is the most important, sane comment I've heard all night. Far too many here are arguing for a police state. What's especially ugly is that they don't even realize they're arguing for one.
So what exactly other mechanisms do they have that are not sanctioned or radioactive? Duffel bags of cash, like another comment suggested? Please don't be ridiculous about a serious topic.
> Kicking out a government resembles a coup scenario, and if the next government doesn't want to be democratic, you are SOL.
Yes, that's a bit of a gamble. Perhaps another democratic country could help establish a democratic government (it worked in Ukraine) instead of doing the opposite of that and providing technology that enriches the authoritative one.
how did they do it before 2010? how did e.g. the soviet union do it?
Second let's think where USSR got in the end. Current Russian government should go the same way but any way around sanctions helps it.
I want to respond to this point because it is a key difference between the societies governed by oligarchy (extremely rich criminals, no middle class, 99% poor) versus those that still have a middle class. You are right that in Russia, $500 for lulz is nothing compared to the money flows of the criminals. It is commonly assumed by most Russians I know that the American and European world also operates on this principle, and that law enforcement here simply does what the money tells them to do. This is actually not true, at least not close to the extent that it is true in gangster-run countries. Law enforcement in America and Europe does what the middle class wants them to do. This means that they do interdict extremely wealthy criminals from time to time, and ultimately our society is not governed by them.
In any case, the largest flows of money in Europe and America are legitimate business flows; things like cocaine and prostitution, organized crime are miniscule compared to the profits of legal drug companies - whose owners are the American middle class shareholder, farmers in Kansas.
The top 10% of Americans own 90% of the shares. If by middle class you mean “above the labor class, below the ruling class”, then I … still dont agree because the 0.1% ruling class still own a disproportionately huge % of those shares!
Also farmers are disproportionately immigrant labor who have no wealth and own no shares. Bill Gates owns 7% of all USA farmland but I wouldn’t call him a farmer.
Huh, this statement is so weird to me that it was a "lightbulb moment" about what words mean to different people online. I wonder how much misunderstanding this causes. I'm guessing your background is urban and coastal? I'd love it if you'd share, I'm genuinely curious.
I would never use the word "farmer" if I was talking about an immigrant laborer picking fruit or whatever. I'd call them migrant laborers or pickers or farm workers.
In the standard dialect of people in the 90% of America designated "flyover country", they'd would use the word "farmer" to mean the people who own and operate farms. Generally a middle-class, small-business-owner type person. Likely educated in some mixture of agriculture, business, finance, real estate. They're highly financially savvy, as they have to manage selling futures vs taking the spot price for their crops balanced against storage costs, land rental agreements, machinery leases or repairs, tax and crop insurance complexities, not to mention the science of how to optimize yield on their specific land.
Calling the laborers "farmers" is like calling an uber driver a tech worker, at least in the dialect of English I speak.
We call people who do the farming “farmers” and the people who own the farms “farm owners”. We acknowledge that a lot of even the white families who live on the farm that they farm no longer own their farms. They’re still “farmers” to us even though they don’t own their farmland.
In Texas we also have “Ranch Owner” vs. “Ranchero”. One of them has bullshit stuck on the outside of their boots, the other has the bullshit inside their boots.
My wife has some Indian-American friends who invest in farmland and laugh at the idea that they have “white sharecroppers”. It would be weird to call them farmers, but not call their “white sharecroppers” farmers.
I didn't mean to imply that land ownership was central. But maybe "operating the business of a farm" is farming/being a farmer, whereas "doing labor on a farm" is not.
For instance, if person A owns 100 acres of farm land, person B rents that land and makes the decisions about what to plant, when to plant, when to harvest, how to manage the transportation and sale of the product, etc and person C is hired by B to do some work on that farm, I'd probably only call person B a farmer.
You can't have any way of knowing how much money in crypto is dark.
And of course economies of some of those dictatorships are smaller than some US companies, but if you are telling us that it doesn't matter if putin and friends can launder money through crypto to maintain power, kill more people and make us suffer while buying cozy life for themselves because that amount of money is not that large in the grand scale of US economy then good for you, I have nothing else to say.
They don't need bitcoin for that. Smuggling money into the US (the by far largest global destination for laundered money) via crypto requires the exact same amount of criminal effort (false identities, mules,..) as smuggling money through regular bank transfers, because nowadays all crypto exchanges that are allowed to interact with US banks must establish the identity of their customers same as a regular bank.
So that leaves P2P trades. Their volume can be estimated (in fact: upper bounded, by adding all trades on the block chain and subtracting those corresponding to trades on known centralized exchanges.) It's about $200B per year.
As for money laundering, the range of estimates of global volume per year is pretty wide, ranging from $20B to $5T. If you compare research from the 90s and today, you'll notice that the estimates have not changed, meaning: similar methodology applied to current data will yield estimates that are close to the estimates from the 1990s, adjusted for inflation.
If the low end estimates are true, then money laundering is not a serious problem and using it as pretext for destroying civil rights is a joke, so let's go with the UN's reasonably big estimate: $800 billion - $2 trillion.
In that case, even if *ALL* P2P bitcoin trades were criminal, they would still only amount to 10%-20% of global money laundering.
Finally: The total BTC market cap is ~$400B, half of that has not been traded since 2015. Given the risk affinity of career criminal and the inherent volatility of criminal enterprise and given the historical rise of BTC, don't you think at least 10% of mone launderers would keep at least 10% of their money laundering transactions as crypto instead of cashing all of it out into USD? But they wouldn't keep them on exchanges. Looking at the blockchain data, it's difficult to make that work *UNLESS* only a small amount (less than $100B) money laundering happens via crypto.
> all crypto exchanges that are allowed to interact with US banks must establish the identity of their customers same as a regular bank
And that is good of course that some countries do it, doesn't prevent all scenarios but it makes some difficult.
> P2P trades. Their volume can be estimated
How exactly do you measure what is what on crypto with mixers and anonymous currencies?
> a small amount (less than $100B) money laundering happens via crypto.
You mean via Bitcoin? You know there are other coins.
>How exactly do you measure what is what on crypto with mixers and anonymous currencies?
you add up all the transactions on the blockchain and subtract all the transactions connected to wallets of centralized exchanges.
>you mean via Bitcoin? You know there are other coins.
"god of the gaps."
tl;dr: you originally claimed there is nothing we can know (and that therefore we should assume without evidence that money laundering via crypto is a huge problem). but there are a few things we can know.
How do you figure which transactions are connected to wallets of centralized exchange with mixers and anonymous currencies?
> UN
Does UN have a crypto savvy anti laundering force to produce accurate estimates or they just pull numbers out of their backside?
If there were strict sanctions in place, they would not be able to fly to cyprus as you say. And if there was crypto, they would be far more efficient at doing what you describe because they don't even need to pay for the planes and a bunch of people to move cash (people who steal it and can leak the information).
And people called me naive in this thread. The real or faked naivety of crypto pushers is what knows no limits...
They would however need to find people that can sell bitcoins to them.
Let's say a corrupt dictatorship wants to turn their $1T of criminal/stolen assets into BTC. How are they gonna do that?
I hope you don't think they'd go around writing "zdrastvuite zis is putin can you sell some bitcoins" with strong slavic accent :)
> Let's say a corrupt dictatorship wants to turn their $1T of criminal/stolen assets into BTC. How are they gonna do that?
Give somebody ruble in exchange for bitcoins. Maybe even have a handy russian in charge of a crypto exchange (that's probably what got localbitcoins shut down in the first place).
Remember how they made it impossible to store or withdraw lots of foreign currency? I bet it helps demand for ruble. Pegging ruble exchange rate probably helps too, remember how after rising to more than 100 rub somehow dollar is now worth 60 rub (only in Russia of course, good luck selling ruble anywhere else).
In other words: the medicine comes with side effects, and old-timey imagery of abuelitas trading their US bills for Bitcoin is probably less realistic (although more palatable) than the reality that the GP was likely a useful stooge in a criminal enterprise.
I don't want to be callous towards the abuelitas and students and remote-working developers and so forth. I understand that their local currency regime is unfair and having such limited access to the global system is frustrating.
I just don't think Bitcoin-type solutions are really solving anything because they start from an ideological free-for-all that works for maybe five minutes until the criminals take notice and rush in, and then it's a slow descent into a haphazardly patched system that ends up re-enacting the worst abandoned ideas of the old financial system along the way.
I'm all for a better designed system that takes this reality into account and doesn't pretend that libertarianism will surely work if only Everybody Does It Right This Time (the same cycle as with communism).
You believe you smash graft by smashing the means, but you don't stop it. It's the same with Americans who think that by banning firearms, they'll stop criminals from shooting people. Quite the opposite is the result. Ban guns, and you end up with an unfree society and the criminals have all the weapons. Ban cash and ban crypto, and you end up with an unfree society in which the ruling class are the criminals, and they have all the levers to control and steal the wealth of individuals.
Look, I'm not making this up. Check out the litany of polities that restricted the movement of money (or the ownership of firearms) in the 20th Century. They can be ranked on this axis alone as a reasonable proxy for their degree of totalitarianism. Let's say from the outright banning of money under Pol Pot up to the Cultural Revolution under Mao, Stalin simply deporting millions of people who had any money at all...
And guns are just a sideshow. Money is the individual's only defense against the State, and against the state of nature that exists in the vacuum where the State does not exist.
I will also point out that limiting the movement of money, goods and people is not a characteristic of totalitarian regimes. Every single country has such restrictions.
but their suffering is a sacrifice you are willing to make for the good of our blessed tax authorities.
Assumption is the mother of all fuck-ups.
Yeah, criminal activities like wanting to work for a company that isn't in Argentina a without 80% tax on your salary
Money laundering is moral
1 - https://www.propublica.org/article/china-cartels-xizhi-li-mo...
Aren't you slightly worried that this message might come back to bite you if you ever get investigated for anything and someone goes through your social media history looking for any evidence of lawbreaking?
Why even go thru the hassle of using bitcoins? You could just exchange it with the guy on the street for pesos. Not sure about ten years ago. Right now, you can even western union money to yourself at the blue rate. I am sure you can even just pay people in USD in many cases.
If you go to downtown to the Precedential Office ("Casa Rosada") and walk just half a mile you will meet like four or five arbolitos ("little tree") per block. They are a person standing in the street chanting "Dollar, reais, exchange". They have also Euros, and probably Uruguayans pesos, and other coins, or they will know where to ask. That's in plain sight, at noon, in a mayor commercial street, a few blocks away from the President.
And if you need to exchange more money outside the official market there are cuevas ("caverns") that are just slightly hidden offices. They are in the same area.
(Most are "honest" people working in a "alternative" market, but there are also shady one that can give you fake bills or call a thief.)
It was great until ML one day decided to ban selling crypto. It definitely kept me afloat for a few rough months, and allowed me to purchase my first laptop.
I once had a guy on the phone who wanted 10kUSD in crypto. He seemed pretty serious and real, but I didn't have the capital to make such huge kind of transactions.
In any event, Argentines prefer strongly to have dollars, to the point where in 2011-2014 or so you could rent an apartment for perhaps 50% the going rate if you paid in hundred dollar American bills (but only the new ones, with the big Franklin). These could simply not be obtained in Argentina anymore. Back in 2002 or so, you could get $100 bills out of an ATM (maximum $200 per day). But in 2011 you either had to be paid directly by the government at the official rate (i.e. triple your salary for 20% of your wages) or you could take a boat to Uruguay and pull out $500 a day. The third way was using Bitcoin and trading with local Argentines on Localbitcoins.com, who would give you the normal US dollar rate for the bitcoins you were selling.
What is the mechanism that would facilitate this?
(Also, I think I disagree with everything you have said in the thread so far. But, this is a serious question. I don't follow this argument at all.)
At the official rate, that's 30 pesos. But in practice you can't get the official rate, because of the currency controls. You have to pay 100 pesos. So people who can access the official rate get to be comparatively wealthy.
Conversely, tourists come in not knowing this, or foreign businesses which can't access the grey market, and are fleeced for their dollars at a fraction of their worth.
In addition to what the sibling posted, it's a little known fact that government workers (a huge sector in Argentina, where everything from bureaucrats to police to postal workers are underpaid and in oversupply) had the option under Kirchner to take 20% of their monthly salary in USD, in cash, drawn directly from the currency reserve. And this was paid at the official peg meaning it was worth roughly 5x as much as the pesos it was substituting were actually worth. This scheme was purely a way of ensuring loyalty to the regime among the public sector, and it virtually bankrupted the country. This is why USD was under every mattress and enough was in circulation to be used in every major transaction. At the same time, most daily things had to be bought with pesos, so those dollars flowed to street money changers where they were exchanged for 5x their official value. Thence some small amount of those bills went on to foreigners like me, and my Bitcoin was off to Miami... most of it remains buried on ranches in the pampa.
I sort of hinted at this in an earlier post but didn't elaborate. I'm glad you asked such an insightful question. This really is the missing part of the puzzle.
> government workers had the option under Kirchner to take 20% of their monthly salary in USD
It was more complicated. Something like (salary - minimun_official_salay)/some_number, but 20% is a good approximation for a middle class salary. Note that poor people didn't get the dollars with discount! And rich people had more sophisticated ways to save their money.
It was not only for government workers. Anyone with a declared salary could buy them, but many private workers had undeclared salary to avoid paying taxes.
> And this was paid at the official peg meaning it was worth roughly 5x as much as the pesos it was substituting were actually worth.
The difference was not x5, but only x1.5. Here is a random article found in Google https://www.ambito.com/economia/en-2014-dolar-oficial-subio-... (Autotransalation https://www-ambito-com.translate.goog/economia/en-2014-dolar... )(Oficial price: $8.565. Unofficial price: $13.80. And there are many intermediate variants. The article claims that a few months before, the maximum difference was x2, not x5.)
> This scheme was purely a way of ensuring loyalty to the regime among the public sector, and it virtually bankrupted the country.
In my opinion it was mostly to keep middle class people in big cities not so angry, so they don't go out to the street to protest. (I.E. Not to buy loyalty forever, just to build temporal complacence.)
I don't think this bankrupted the country. We also had a huge discount in natural gas and electricity (we paid like half of the price) and there was a lot of corruption and weird gubernamental contracts. I think the "20% in cheap dollars was a small part of the problem.
> This is why USD was under every mattress and enough was in circulation to be used in every major transaction.
Homes, cars and other very expensive stuff is bought here using dollars, but it started like 40 of 50 years before, perhaps more.
> most of it remains buried on ranches in the pampa.
I don't expect big farmers to have siphoned most of that money, but we would have to wait 50 years to have a good understanding of how money flow during that time.
I think most big farmesr don't like to keep cash because thief, and also don't thrust the banks. They save in silobolas https://es.wikipedia.org/wiki/Silo_bolsa (autotranslation https://es-m-wikipedia-org.translate.goog/wiki/Silo_bolsa?_x... ), that are a huge tube of plastic filled with the soy they harvest, and is keep in the field until they need the money and have to sell it.
And ver big players invested in subsidiaries abroad, that is better than having stored dollars.
Disclaimer: I bought my "20%" of cheap dollars and when I bought a bigger home I used them to pay the difference between the mortgage and the price of the new home.
This was peak crypto actually. It was useful, peer-to-peer, actually allowed people to opt out of the monetary system, it felt like a community, there was this sense of excitement.
Then all the crypto ICO pump and dumpers with frog avatars came and it was over.
If cryptocurrency doesn't survive being misused for stuff like that and gets dragged down because of it, then it deserves it.
But it seems to be ticking along even despite of that, just like the US Dollar, so the future seems unclear still.
But they control the loud speakers and have much stronger global enforcement, ie they are the biggest gangsters around so they set the rules.
Still, it's a democracy and some people voted for those things; it also doesn't explicitly force people to stop speaking their native language or abandon their religion, or throw people in prison for waving a sign in the street. So I keep my US passport and pay my taxes.
The US is one of the few countries in the world where people do collectively have power to make drastic and enduring changes to the system without needing to start a cycle of violence to accomplish their aims.
Tell that to me again after the financial system, immense legal corruption and healthcare has been fixed. These are all problems known for decades beyond some people's lifespans and consecutive presidents haven't been able to fix it...hell many go again their election promises with lame duck excuses.
If I had to compare both shitty superpowers, China would be "can't change the party but you can change the policy", while the US would be "you can change the party, but not the policy"
Both are dystopian in their own ways, difference being China is an obvert dystopia, while the US is covert one drugging their populace to numb discontent etc.
I hesitate to get into the pull-out from Afghanistan or the judicial decision to rescind Roe v Wade; those are both things I strongly, vociferously disagree with. But they're both examples of public pressure changing policy (for better or worse) through the application of democratic processes available to all citizens.
Cheering those minuscule changes are akin to praising the CCP for beingat open to change with them ending there zero-covid policy.
At the end of the day these policies are slow and usually ineffective - all of your examples included.
I don't mean to get all edgy, and not to detract from your general point, but please don't forget that the U.S. supports (and has even installed) foreign regimes that do these (and worse) things - albeit to people in other countries.
On the foreign stage, America does and has backed horrendous dictators and fascists. As does and has every other empire in history. There is, though, a certain underlying theory in American politics - both right and left - that is disgusted with the notion of engagement in foreign wars and doesn't have the will to occupy foreign territory. This is what you would hope for as a natural result of a functioning democracy where people had a short tolerance for the personal deprivations inflicted by a state bent on imperial expansion.
No, it ain't Switzerland. I wish it were. But speaking with Syrian refugees and Lebanese and Tibetan dissidents and South Vietnamese and Cubans I've known in my life, I've kind of come to the conclusion that international relations are a jungle where most states are predators and most individuals are prey. America does at least give lip service to the notion that individuals shouldn't be preyed upon, and tries to export that meme.
If you'd like my long term view.. crypto does have value. I've said this since 2009 or so. Its value is the difference of its transaction fees versus middle parties like credit card companies, plus whatever local currency restrictions are in place which it can circumvent. Take that total and divide it by the number of Bitcoins in the world, that's the maximum logical non-hyped potential value of Bitcoin. It's only worth what it's valuable for as a means of exchange. Its relative value happens to be much more under extreme local circumstances which crop up in various parts of the world. But I do think it serves an otherwise ignored niche.
All those ICO people came much later...
The people coordinating Bitcoin made an explicit technical decision to focus on it being a store-of-value, which made it too expensive to use as a means-of-exchange.
Smaller transactions like the ones you described became too slow and expensive to be viable anymore, because of these decisions.
If you transact on Lightning network, it's much cheaper still.
Anyway that just makes my point even stronger.
Bitcoin went through a period when transaction fees were very high, and wait times were unreasonably long. During this period, they essentially lost all their users who were using Bitcoin for retail-type transactions: moving money across borders, sending payments to friends and family, making small illicit purchases, paying sex workers, etc.
Some they lost to Monero and other altcoins. Some went back to traditional finance. Some went to new non-crypto fintech. Those people did not come back to Bitcoin (they may have held some, but no longer use it for transactions).
The lower prices now reflect not only that some of the issues were resolved, but also the vastly reduced demand. Today, the vast majority of flows are related to speculation, or the use of Bitcoin in other parts of the crypto economy.
But wouldn't this have happened over time anyway as transaction size and network volume increased? The exponential increases in electricity usage to mine BTC would have to be paid for somehow?
Also you seem to think that network usage is related to some way to electricity usage. Even today, a single person with a laptop could be the only miner, and the network would still run just fine.
The current block reward on Bitcoin is 900 coins per day, so the upper bound on electricity usage is however much power 900 BTC will get you. That number gets cut in half every 4 years, so generally, the max electricity expenditure is actually going down, except that the price of BTC is currently going up faster than the rewards are going down.
Energy usage is directly correlated to price, not utility. There is a loose connection between utility and price, but since utility got capped in 2015 or so, the price has continued to go up, so that connection is pretty tenuous.
There is this weird assumption that Bitcoin was "managed" or that political forces were at work. It was simply a war between some developers and others.
Not to you specifically, but in this thread: I find it troubling, this new reflex of ascribing to dark conspiracies what are banal historical facts.
The growth of the blocksize was inevitable once it took off; now we have lots of shitcoins, and a few that are stores of value and some that are means of exchange. Lots of hucksters showed up, but no one planned anything. (And looking at the state of things now, it clearly shows).
https://www.theguardian.com/technology/2015/aug/17/bitcoin-x...
never ascribe to conspiracy what can be ascribed to stupidity.
A conspiracy is just a group of people working towards a goal and keeping most of their actions secret, i.e. many groups.
The amount of fees is unlimited, and the total possible energy usage is currently unlimited and will remain unlimited, and scales with use.
The year 2140 isn't my definition of soon.
The decision to not expand block size limits was 100% coordinated by a huge amount of chinese mining capacity because the ingress routes to their networks of miners would not have handled the higher throughput, and like six dudes who controlled 80% of the miners sat up on a stage together and talked about it. How is that not coordinated? Bitcoin had every chance to improve it's ability to be a currency, but guess what, the oligarchs who controlled all the mining thought it would give them less money to go that route, so they stopped it. It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people"
> It's almost like a system that allows you directly more power based on how much wealth you personally control doesn't work "For the people"
That's proof of stake. Mining isn't about how much wealth you control but about how much hardware.
My (admittedly, limited) understanding is that standard fiat currencies are stores of value, media of exchange, and units of account. Being a store of value doesn't mean it needs to appreciate in value, just that it doesn't depreciate to nothing over reasonable timescales.
From what I've seen, the main problem with Bitcoin specifically as a currency is that it makes a terrible unit of account: its volatility compared to regular currencies means that no one's going to denominate any prices in BTC.
Not at all. Some EU countries aside, most western countries do not have a good inter-bank payment system and are still dependent on Mastercard, Visa and Paypal to handle merchant transaction settlements.
Local currency cash is the only thing a state has control over. As use of cash declines, it becomes important to have a centrally-administered digital cash alternative, just like paper cash.
The state has control over its banks. You can't generally get a Mastercard or Visa card that isn't issued by a bank doing business in your jurisdiction.
How tightly the state holds the reins of the bank depends, but usually they're among the most regulated of the nominally private institutions we have.
The main problem is that the government has a deficit of 5%. All the solutions to fix the deficit are unpopular, so they prefer to keep emitting money. (Now they are trying a few unpopular fixes, but not too much, just to keep the inflation not too high.)
If you switch to 100% external currency, after a few month the government will have no money.
They can pay you a part of the salary of $1000 with the external currency, after a few months they will have to pay $900 in external currency and $100 in IOU. Later pay $800 in external currency and $200 in IOU. ... [1] The problem is that people will be unhappy with the increase of IOU.
So it's easier to pay the full $1000 in IOU, and ensure that you can exchange the $1000 IOU to $1000 in external currency. OK, now it's $999 of external currency. Never mind, $998. What about $997? ...
[1] Actually, we tried something like it too! In the 1990 each province had a local money and they paid the local employees a part in the national money and a part in the local money, or perhaps all in the local money. Initially it was fine, but after some months you got a haircut of 30% if you need to send money to another province or buy fuel or some other items not produced localy.
A guy showed up to a location with a duffel bag and a handgun. I put some money into a bag and gave him a public key. We sat there for about 20 minutes and chitchatted while we waited for the BTC to arrive in my wallet.
All you kids with your fancy exchanges and dexes these days!
This may be locale-specific though, it could be a totally normal thing to walk around with a gun elsewhere.
The nice thing about that is it has a "herd immunity" effect. If many people carry around you, but the criminals don't know which person that is, they're likely to refrain from picking on anybody directly. You don't even have to carry yourself to benefit from it.
The only crime that happens often in this city, despite that, is parked & vacant cars getting smashed into and robbed. Because it only happens when nobody's looking.
I can't comment any further without going way off-topic from the article about LocalBitcoins.
https://www.westernstandard.news/news/bank-of-canada-was-sti...
Now I wish I would write down the blocks I mined. Just for history.
*...Similarly, Bitzlato’s top three sending counterparties, by total amount of BTC sent between May 2018 and September 2022 were (1) Hydra; (2) Local Bitcoins, a VASP based/incorporated in Finland; and (3) “TheFiniko.”*
[0] https://www.fincen.gov/sites/default/files/shared/Order_Bitz...
I had a repeat customer who got his bitcoin stolen and thought I did it. I tried to explain the blockchain to him and how I clearly sent it but it wasn't getting through to him. He sent me a few death threats but never heard from him after that.
Another guy bought around 20BTC from me cause he was convinced someone in Florida was gonna sell him bitcoin miners which were really tough to get at the time. I told him it was probably a scam and he should fly out instead of blindly sending the money first. He didn't listen and about 30min after we met he called me back and said the guy wasn't answering the phone anymore.
I concluded pretty early on that bitcoin was not a viable currency.
Another time someone busted in my home and stole all my money.
And another time I fell victim to a scam!
That's when I concluded that money is not a viable currency.
:facepalm:
Know Your Customers, Localbitcoins.
https://coin.dance/volume/localbitcoins
I tried to log into my old account, it seemed they locked it 2 years ago in some new KYC/AML logic, and I never bothered to fix that. I was an OG from 2014-ish. Ah well.
And does it even matter if the exchanges have switched to Monero anyways?
Agoradesk/localmonero.
No Coinbase for me.
Add so much friction to the process that people keep using state-issued currency.