The Path of Least Resistance

in #hive-1679228 months ago

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Work smart not hard

The simplest answer tends to be the correct one in many circumstances. After all, why jump through a bunch of unnecessary hoops when the solution is staring us right in the face? Certainly this isn't always the case but there's a reason why these things tend to work out like they do. The usual suspects exist for a reason.

In particular we constantly see a lot of chatter as to crypto self-custody and the establishment banning it. Why do enthusiasts talk about this so often as if it's a thing that can actually happen? Ah well, because politicians are constantly hinting at it or downright saying the quiet thing out loud. However, the chance of something like this actually happening are quite slim, no matter what senator Warren has to say about it.

Just recently Coinbase took away ability to pay online from self-hosted wallets. Or at least that's how it's being reported by alarmists. Specifically: their crypto payment integration software called "Coinbase Commerce" basically forces users to transfer around BTC using IOU Bitcoin that exists on Coinbase rather than on-chain UTXOs.

So of course Bitcoiners are reporting on this as the end of all things and a blatant attack against the decentralized nature of crypto, sorry I mean "Bitcoin" not crypto, because as we all know Bitcoin and crypto are totally separate now according to maximalists. Clearly this is the end of self-custody and an attack on sovereignty.

Of course when we look at how it actually works it a lot more nuanced than all that. Brian Armstrong pops in to dispel the illusions being cast like shadows on the wall. Then again I don't find his explanation particularly compelling. They seem to be getting ready to process a lot of their throughput by way of their own EVM chain called... Base? Honestly I don't remember or care enough to check.

Then again it's very silly to claim that some proprietary nonsense created by Coinbase is the end-all be-all interface for all things crypto. These are open source permissionless protocols that anyone can interface with. If what Coinbase is creating doesn't cater to market demand then the market will quite simply use another product and all of this fussing about is completely moot.

We win all the lawsuits.

Name a big lawsuit that crypto has lost recently. We seem to be winning them all. Is there any reasons to suspect that the cumulative market cap going 10x is going to change that? That's simply 10x more lobbying power and 10x more ability to buy politicians. Not that I would ever engage in such an act or encourage others, but it simply will happen this way no matter what my personal feelings are.

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Banning self-custody is not possible.

Politicians hate this one simple trick. However, banning regulated vendors from accepting crypto is possible. That is quite simply the path of least resistance. It's also perfectly in line with the Coinbase decision to limit UTXOs from their interface. The KYC pathway is the most obvious bottleneck. Pushing consumer transactions with vendors to the gray or even black market is definitely the way to go to control the flow of liquidity.

In the current environment there is very little reason to try and speed-run this agenda. How many stores do you walk into that accept crypto directly for payment? Comically enough it seems as though there's a lot more adoption in developing nations when compared to the developed world.

I've never sat down to eat dinner and seen an option to pay by crypto. I've never walked into a store and seen "Bitcoin accepted". Maybe some of them do but it certainly isn't advertised. And why would it be? The demand simply isn't there.

If you want to spend your crypto in the states you just sell it for USD and transfer it into a traditional bank account. It's not hard and the fees are negligible. In fact I personally just pay for everything with a credit card and if I need to sell some crypto to pay it off so be it. I don't need to clutter the chain with 50 transactions when it could just be one a month to pay off a CC.

Hive as an L1 solution

Of course wrapping back around to what Brian Armstrong said Hive does seem to be one of the few layer ones that actually can just be used directly without having to outsource operations to the second layer. I guess that's the advantage of a data availably layer and outsourcing smart contracts to layer 2. That and the fact that our nodes actually have a financial incentive to exist, unlike every other POW chain and potentially even POS.

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Conclusion

Liquidity flows downhill in somewhat predictable patterns. Controlling that flow through obvious bottlenecks is essentially how all bankers consolidate their power. And make no mistake, centralized exchanges are nothing but fancy crypto banks. There's no reason to assume it will be any different this time around.

Regulating crypto from the bottom up is not a feat possible to achieve. Regulating by the top-down through already existing channels is clearly the path of least resistance. Luckily crypto has a way of busting out of confinement. It would be foolish to assume that this tech would just stand still as the walls closed in around it, but that's exactly what all the alarmists assume will happen during their doomsday speculation sessions. These are not serious people.

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I think you're spot on, I doubt crypto will stay still long enough for any meaningful legislation to do much but be a stumbling block. The folks making the regulations might be able to claim that they know how crypto works but they definitely don't seem to know how blockchain devs and crypto users in general work. If the majority of folks in this space were prone to not exploring new paths, we wouldn't be here.

It would be foolish to assume that this tech would just stand still as the walls closed in around it ;)

lol I totally forgot about this one

I was in a record store in Port Huron Michigan a couple of summers ago and the guy had a sticker on his front window that he accepts BTC and DOGE. I had a nice talk with him about it. Turns out he was able to buy his store off the bull run of 2017.

Yeah so a lot of the adoption we see is exactly like that.
Altruism based instead of business based.
Guy made money off crypto so he accepts crypto.
The decision had nothing to do with it being a good business move.
Won't see real adoption until that type of sentiment shifts.

Good point!

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I think people have been able to pay with crypto with many vendors through Debit cards such as the Binance one until they shut it down. I think CDC still has a card, but I dont use it anymore.

I am wondering what the next attack vector they will go for. The weak points seem to be an attack on miners and the network itself. I presume a fork of Bitcoin is in the medium-term future by the regulators. The wallets are just signing devices, so unless they will ban username and passwords, im not sure how that will do anything.

Yeah the attack on miners and whitelisting blocks is definitely a thing but a topic for a whole new post.
That being said I'm highly skeptical they can pull it off.
The closer they get to victory the more likely it is that the real Bitcoiners will stand up and delegate their hashpower to a node that refuses to obey the sanctions.

There's also a very strong chance that they push through laws at first that tighten the clamp, but then lose lawsuits later that force them to roll it back. Either that or they just get rolled back when the blue administration turns red.

yes, that makes a lot of sense, node wars could be the next big thing, luckily the banks are closed on weekends, so there could be a time advantage to be gained there.