90% agree with this , with the little caveat that law and regulation always are a couple of steps behind huge innovations. Unfortunately sometimes companies think this gives them freedom to break current laws and regulations.

Your thought experiment reminded me a little of the Kurzgesagt video on how to debunk an internet conspiracy in seconds: https://www.youtube.com/watch?v=Hug0rfFC_L8

That's happening because crypto 'value' doesn't exist in a vaccuum, immune to the vagaries of the tradFi markets. When shit hits the fan, credibility matters. That's why traders park cash in government bonds when a market sell-off happens; a government bond essentially guarantees you get your money back quickly when you're ready to go back into the markets.

The recent moves by the administration have been so incompetent as to tank the bond market as well, thereby leaving few safe harbors. And no harbor is less safe than crypto.

By now everyone who stands to gain from (ab)using crypto is probably already convinced. Almost everyone else heard so much about scams and illegal activities around crypto that they find it too risky. So the current admin is preaching to a small choir, to the angst of the large one.

What I like is that every time there's a hack, or someone loses money over crypto either due to some illegal action or just unintended consequence of using it, you have a few more people demanding more regulation and state intervention. If only crypto regulation was scoped exclusively to when they need it after being swindled out of it.

As recommended by the President of the United States.

You're saying the same thing

> So far, to execute illegal transactions and using the lack of regulations to exploit the financially illiterate.

And get rich quick scams. And fraud.

https://en.m.wikipedia.org/wiki/Darknet_market

Hat tip for that indictment document. Here is the official press release (parent page to your doc?) from the Dept of Justice: https://www.justice.gov/usao-edny/pr/canadian-national-charg...

Yes, I cite that in another comment. The article calls it theft, well specifically they say "stole" but that implies theft.

I disagree simply on the principle that nobody has any choice in whether or not to participate. Calling it a social contract just sounds too… soft? for what it really is.

No. Definitely not.

Smart contracts are supposed to eliminate a huge swath of disputes, so often people don’t need courts at all. People can put business rules in place that aren’t violated - and not just for contracts.

For example bidders at Christie’s and Sotheby’s sometimes don’t have the money but the houses can’t make a big scandal. They try to hold another auction and sell it to someone else as if the guy sold it.

In crypto it would be trivial to endure bidders have put up the money. You can refund the lowest bidder below N winners. You can also ensure payouts happen at agreed-upon rates. You can prove escrow. And stuff like that.

Imagine a bunch of donors or investors seeing how their money is spent because it is on the blockchain. Or imagine a community having roles and knowing that each role was granted properly.

In web2 anyone who can get into the database can modify any records and then you hope court cases and chilling effects will undo the damage retroactively.

Smart contracts give you a lot of financial automation and guarantees that regular courts do not. Furthermore, any litigation or arbitration in court is very expensive. If you can use smart contracts to simultaneously increase the complexity and sophistication of your transactions while also reducing the number of times you need to go to court, you've created value.

And, a lot of crypto projects do pair their smart contracts with regular contracts, or at the very least with ToS

For those unfamiliar, see "The Cypherpunk Manifesto"

   We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money. 

Or "The Crypto Anarchist Manifesto"

  Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other.

I agree with:

> the point of crypto is more abstract than any of that

It has to do with operating in spite of somebody who would otherwise tamper with your information. It's about durability in the face of sophisticated adversaries.

I was trying to get at the point of crytocurrency. The accounting system can handle anything at all, so why bother with the coins? We've had coins for thousands of years, they're the most boring app imaginable. Why bother maintaining artificial scarcities when we could be addressing real ones?

But at the end of the day, if nobody provides hardware for it to run on, then, we can't have that accounting system. And those people have to pay their electric bills, and for the hardware they're using, and for that they need something money-shaped. The point of cryptocurrency is to be that money-shaped thing. We need it to interface with the traditional finance system until we can replace that system with something better.

his point was correct

A list of ways people can trust each other (e.g. to be a skilled plumber, or to be a fair mediator, to be a real human, to not let their key get compromised, and many other things). I call these colors.

Also there's a directed graph where the nodes are users. Edges on this graph indicate that this user trusts that user, the edges are colored to indicate which type of trust it is.

Given two users, they can compare graphs to decide if they both trust (transitively) any other users in some set of colors. Also, if cycles appear, then that cycle is a community of experts and they can follow the graph in reverse to find out which other users consider them experts.

It's sort of like how we have representatives in congress, except instead of being one layer deep with millions of people being represented by one, it can be as nested as needed to ensure that the experts are not overloaded (since many of us are somewhere in the middle, we distribute the load by playing both roles--depending on who we're dealing with). It also differs from typical representative democracy because you can express trust in somebody's diplomacy and simultaneously avoid trusting their understanding of economics (or whatever other colors you care to).

Ideally it would be a system in which the most trusted and capable people for any job are easy to find and easy to support, and in which we focus on becoming skilled and trustworthy rather than on the ownership of scarce things.

Human societies already work like this, they have for a million years or so, but it stops working well when the cognitive burden of walking all of these trust graphs becomes too much to bear, then things get authoritarian. We now have the technology to scale it better, but the implicit non-specialized authorities are still in charge.

A couple of applications for this that could work in the near term:

1. If you have a dispute, you can use the data find a mediator who is trusted by you and the other party. And not just trusted, but trusted in the relevant way. This is a step towards a better court system, better because the arbiter is explicitly trusted by the complainants and because the arbiter is an expert in the color of the complaint.

This would solve the well-somebody-needs-to-be-able-to-undo-the-transaction problem without invoking a bank and without leaving it unsolved. The transaction arbitrator would be determined by the trust settings of the parties to the transaction. There's a lot more consent and specificity in that than in what we're doing.

2. If you find a dubious claim, you can see who signed it and check for a trust path between you and that person. 1,000,000 fake amazon reviews mean nothing through that lens, since you don't trust them. But two or three reviews signed by people that you explicitly trust (perhaps transitively) would mean a great deal. This gives us a way to ignore scammers and malicious AI's and creates a space in which being trustworthy is an asset (contrast this to the world we've built which is more about commanding the most attention).

I'm not saying I have it right, but such things are worth trying in general, and "crypto" isa much better medium for them than bureaucracy (although I'm more excited about CRDT's than blockchains, because I think partition tolerance is more important than consistency).

You could contribute to a goal that they care about, or give them something they need, or help find somebody who will. Or you can promise to do so in the future.

Using "value" as a medium is problematic because we increasingly don't value the same things. It worked ok back when food took so much effort to grow that securing it represented a significant portion of our mindshare. Then money was reliably a proxy for our shared agreement that food was good.

But now that it's so much easier to make the necessities that we agree on, we spend more time perusing contradictory outcomes. Which is more valuable, if my endeavor succeeds and yours fails, or visa versa? Whose agenda am I furthering when I decide to value a dollar? It's hard to participate in because I can never figure out whether I'm hurting or helping.

Better would to let people be explicit about what they want so that we can the things that have consensus and work towards those. As it is we're letting the ownership of scarce abstractions determine what gets done, which is just bonkers. It was once the best we could do with only the laws of physics at hand to enforce the rules (re: the scarcity of gold), but now we can do better.

How is that theory going for the bagholders of the graveyard of dead coins and rugpulls?

The purest survivor bias in a while, and even some of the few survivors are in freefall, e.g. Litecoin.

That game is called Hot potato.

Cash is a fiat currency issued by the government you are running to for restitution. I’m not sure GP understands what fiat currency means.

Now do gold.

It's different in means, but not in intent. Sure, extortion, blackmail and robbery all differ from theft, but are illegal all the same

Moreover they're designed to be contracts with the explicit intention of enabling trustless exchange without third party oversight, under the belief that the code can replace a legal system

unlike actual contracts, which are written with the expectation that disputes may occur and be resolved by arbitrators and a legal system (who will probably rule that a poorly drafted clause 2b doesn't in fact grant you the right to take all the other customers' money)

The fact that they deserve to be bankrupt doesn't mean the person responsible for their state of bankruptcy is innocent.

It's like building a home on a land which has no system of law because you like anarchy, and then complaining when a fellow anarchist steals your stuff.

If you can't distinguish "not what I intended" from "not what I wanted" then there is probably no reasoning with you. Luckily for the rest of us, making this distinction is a pre-requisite for becoming a judge or lawyer.