Serious question: Do you think no people have been harmed by crypto? My guess is by the end, 10s of thousands of people will have been seriously financially harmed.
Netflix has fallen more than Bitcoin has this year. Netflix has no or very little in the way of underlying physical assets to back up their valuation -- they do have intellectual property that may or may not be worth something, but is not an intrinsically scarce good like, say, real estate or even like iPhones.
So, serious question for people who argue that Bitcoin deserves a special class of regulation: what differentiates Bitcoin and Netflix here?
One big difference is that Netflix is subject to securities regulations and must file regular reports with the federal government providing important information about how they have been making their money, how they plan to make their money in the future, and any potential issues they see on the horizon with their business plan. Major investors are disclosed. Names of managers are disclosed. And every potential investor can read these reports; they are public. If they lie, investors can sue.
I don't think Bitcoin has anything like that - its ledger is public, yes. But the important part, where fiat currency is turned into Bitcoin or vice versa... that is opaque, for the most part. This is a very big difference, in my mind.
Investors can sue if Netflix lies, though importantly if what you're worried about is a collapse in the value of the security, um... bad news. Suing is not going to recover the value of the security.
I don't think that Netflix itself has a responsibility to report the flow of fiat currency into and out of Netflix, certainly not in a timely enough way to prevent people from being burned by the outflow of capital from it (as, indeed, has happened this year). The stock exchanges themselves provide visibility into that.
Right, but if I'm sitting in the chair as a regulator whose goal is to reduce the harm that financial products can cause to an average member of the general public while still allowing the market to work on its own as much as possible... I'm going to look at Netflix and think "well, we did what we could." Do you honestly think I should look at Bitcoin and think the same?
I mean? Maybe? Bitcoin has generated more wealth for more people than Netflix and lost less value from its peak? Seems like things are going okay?
You seem to be hinting that there's a natural limit to what we "can" do for any given security. I don't think that's true: it's just all tradeoffs. Could a regulator have tried to stem the losses people experienced from Netflix? I mean, sure. They could've halted trading on Netflix. They could've artificially bought up Netflix's stock.
I don't think they should have done all that. The costs would have been extreme. But if you're all in on, "we did what we could," then I think the ball's in your court to describe exactly where the limits of that doctrine lie.
40% of bitcoin holders are underwater, and the vast majority of that so-called wealth is held by like 5 people. And for what? being in the right anarcocapitalist forum in 2009? Nice.
People have definitely been harmed by crypto. I was pointing out that pyramid and ponzi schemes harm people by definition. There is no mathematical way for them to benefit a majority of participants. That doesn't necessarily hold for crypto.
How not? The problem with pyramid schemes, gambling, ponzi schemes, and cryptocurrencies is: they're zero-sum games (or worse). As you say, there is no mathematical way for most people to benefit from cryptocurrencies.
Cryptocurrencies are not zero-sum due to the ability to create money via lending. E.g. if I make a currency with 100 tokens, I can lend them to you for a year at a 10% interest rate. Even though there are only 100 coins in existence, I’ve created an asset worth 110 coins. This is how money gets created in a fiat system created money as well. See https://en.m.wikipedia.org/wiki/Money_creation
The reason money creation is valuable in fiat currencies is because those are circular economies: the person taking on debt is presumably producing something of value, and able to pay back the interest.
Crypto is not a circular economy. It's a speculative investment whose expected return is always negative.
How is taking a crypto loan and using it to produce something "of value" in the U.S. different than someone taking a USD loan and using it to produce something of value in Turkey?
Let me be more clear: the value in money creation is the loan itself. Money creation in USD does not make the USD more valuable. It makes the economic output of the economic system (GDP) more valuable.
The point remains: someone spending $USD to acquire $<Crypto> should expect to lose $USD when they invariably want to sell their tokens for $USD later. Casino chips are also a negative-sum game, even though a loan shark may loan you some for interest.
So, serious question for people who argue that Bitcoin deserves a special class of regulation: what differentiates Bitcoin and Netflix here?