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Thursday, March 29, 2018

The Cosa Nostra of cryptocurrency?

This profile of the founder of the cryptocurrency exchange Binance is jaw-dropping. Binance is a totally new kind of startup: according to the article, it isn't officially based in any country, and it doesn't even have a bank account!

I'm skeptical. How do they pay for server time? Does this only mean that there's no publicly announced bank account?

At any rate, if this claim isn't entirely true yet, it will be possible soon. When you exist purely in the cryptocurrency realm, the barriers to entry are way lower. I think that might be one of the more profound long term effects of cryptocurrencies. It might even mean that governments lower regulatory barriers to forming businesses, to hold onto tax profits from complying businesses that might otherwise choose to form entirely out of encrypted bytes in the cloud.

Which raises the question: who will be the Stripe/Braintree of cryptocurrencies? It's theoretically feasible today to set up a company in a single day that offers some SaaS, charges using cryptocurrencies, and pays for its server time using traditional currency. But those last two are still somewhat headaches, and ground the company in some jurisdiction, given the need to convert.

And what does this mean for money-laundering? At some point only foolish criminals will demand their palms be greased with legal tender. The smartest criminals will do their racketeering in cryptocurrency land itself--removing any need to launder it.

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