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We have normalized the treatment of the financial and payments systems as things that exist primarily to perform law enforcement surveillance functions. It's the same dynamic that leads to debanking of small accounts - payments firms exist on thin margins and the potential fines for inadvertently servicing a bad actor are stratospheric, so it's entirely logical to play it safe by refusing to service anyone whose profile looks even the slightest bit risky.
Debanking small accounts isn't something that I'd heard of before. But debanking "undesirables" is certainly a problem.
Over here (Belgium) we have legalized prostitution, but it's very hard for sex workers to open a bank account. There's some legislation that forces banks to offer them a basic bank account (at a steep fee) if they can prove that they've been rejected by N banks. Which is a start, I suppose.
Banks have basically become an extension of law enforcement, tax collectors, anti-terrorist operations, and morality police. Which is ironic, given how many banks brazenly break laws on the regular, how absolutely depraved parties with bankers are, etc. They're hardly paragons of virtue. Yet they get to gatekeep "virtue".
I agree; but if we're bank-bashing I'd like it to be comprehensive:
What with all the attention they have to put into cooperating with the authoritarians they also aren't particularly good at their theoretical purpose, which is pooling people's money and investing it productively. We're watching an ongoing capital crisis in the West where we've been out-invested by nominal communists; it is absurd. The banking system has sticky fingers all over that mess. Then they get political protection through financial crisises where they should be taken out by bankruptcy but the powers that be prioritise having reliable people in what is effectively law enforcement rather then putting good capital managers in charge.
So, y'know. Upside is the banks do a great job of shutting down sex workers and political activism. 10/10 mark for reporting what everyone is doing to law enforcement. Downside is that turns out to be a big distraction from all the wealth creation banking can enable.
Banks are doing a relatively bad job of capital management, but they're also doing less and less of it.
Investment funds of all sorts manage the world's money. Your retail bank might originate mortgages, but it almost certainly sells them on.
The Fed doesn't want to see an overnight switch to narrow banking, where banks sell you checking accounts and money transmission services and never make decisions about investing the deposits. It has declined to approve banks that would do that. But it seems OK with presiding over a managed decline of banking into that state.
Retail banks actually don’t ‘pool people’s money and invest it’, and for good reason. Investment banks are different from regular retail banks for a reason (which is that that creates way too much risk to deposits for everyday banking).
The main business of banking is actually leveraging the capital of their owners (shareholders) to lend. Deposits are not the main game, and are there for two reasons - firstly that lending produces deposits, so banks may as well be able to hold deposits just for that reason, but also because deposit inflows create the liquidity banks need to lever up their capital. This is the real reason why banks pay interest on deposits - to encourage people to transfer money in and not transfer as much out. Actually just having the deposits sitting there doesn’t do much for the bank, so the bank more wants you to transfer money in to increase your balance and not just hold it.
The Glass-Steagall Act, enacted in 1933, was partially repealed in 1999 by the Gramm-Leach-Bliley Act (GLBA). Specifically, the GLBA repealed sections 20 and 32 of the Glass-Steagall Act, which had prohibited affiliations and interlocks between commercial and investment banks. This allowed financial institutions to engage in both commercial and investment banking activities, which was seen as a step towards universal banking.
We might be talking past each other, but this part:
> Retail banks actually don’t ‘pool people’s money and invest it’
However, the phrase "invest it" makes it sounds like they are gambling the money on speculative investments! There are very strict rules about what securities (classes and ratings) are allowed as investments.
>Retail banks actually don’t ‘pool people’s money and invest it’,
>deposit inflows create the liquidity banks need to lever up their capital
Aren't these basically the same thing? There's complicated capital structure around how much tier 1 capital banks have to hold, and what deposits have to be backed by, but at the end of the day banks are taking money from depositors and investors, and using it to buy assets. More importantly if you deposit a dollar, that's not sitting around in a vault somewhere, it's used to buy treasuries or whatever. Most people would characterize that as "pool people’s money and invest it".
It seems like a reasonable objection, AFAIK the argument would boil down equivalently to money being a unit of measurement therefore the language is wrong - it is a bit like saying "pool people's meters" - meters are a unit of measurement as opposed to a thing. Can't pool meters, can pool meters of cloth. Especially since we don't hold the amount of wealth measured by a unit of currency steady it doesn't make sense to talk about "pooling money".
In this case though I said banking system, not retail banking system and I think the fairest reading given the ambiguity is just to treat it as "pool people's wealth" and shift to talking about the real economy.
Fiat money is a token of exchange backed up by the need for everyone in an economy to pay taxes using those tokens.
The idea it’s a measurement is appealing but incomplete, you can’t exchange abstract gallons or other measurements in the abstract only in terms of a measurement of something.
> you can’t exchange abstract gallons or other measurements in the abstract only in terms of a measurement of something.
I have an implement for doing exactly that on my desk - a cup. The people who made the cup don't know what I'm going to be filling it with but they have a very good idea of what volume it'll take up. I could go to the pub with friends and ask for a glass of something but I don't mind what. The point of a unit of measurement is it enables abstract handling of quantities. Otherwise we may as well have a unique system of measurement per thing.
And if you want a monetary example, there is barter. I can exchange $50 of work directly for $50 of food, abstracting out the money. That wouldn't be possible if the token itself were the important thing, because it isn't present anywhere in the example.
> Fiat money is a token of exchange backed up by the need for everyone in an economy to pay taxes using those tokens.
Obviously there is more than one type of money if you feel a need to add a prefix to explain what type of money you are discussing. The other types aren't backed up by a need for everyone to pay taxes, money can exist independently of a taxation system. Then it is called non-fiat money. You're focusing on the non-monetary aspects of the system, which is cool and all but missing the forest for the trees.
> I could go to the pub with friends and ask for a glass of something but ai don’t mind what
You’d very much mind you got a cup of bull sperm or diarrhea. That request is actually excluding the vast majority of possible liquids.
> if you feel the need to add a prefix
There’s only two types of money, fiat and barter.
If I’m exchanging a promissory note that I can exchange for 1 barrel of wheat or 1lb of gold or whatever that’s barter through an abstraction. If you’re using stamped gold coins people are just bartering precious metals of a known purity thus the need to weigh the coins not just count them.
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> We're watching an ongoing capital crisis in the West where we've been out-invested by nominal communists
If I still had a fortune file, this would go in it!
> We're watching an ongoing capital crisis in the West where we've been out-invested by nominal communists; it is absurd.
I personally would lay far more of the blame at the feet of the slow-but-steady disassembly of a proper tax code which has rendered our Government all but unable to function from a fiscal perspective since the Reagan years. I'm curious if you would feel the banks are more responsible, and if so, how?
Everything I've read on the subject over the years pretty squarely lays it at the austerity movements that have utterly crippled most western countries but none more thoroughly than the United States, where the notion seemingly of spending any public money on anything no matter how needed that isn't Defense spending is Communist, alongside of course the general (and consequential of that) transfer of wealth from the working class to the extremely wealthy who dodge more taxes than ever before, perhaps in all of history of the practice of collecting taxes.
It's the whole system. The whole system is rotten to the core. All the individual rotting bits are symptoms of the fact the whole system is rotting.
> I personally would lay far more of the blame at the feet of the slow-but-steady disassembly of a proper tax code which has rendered our Government all but unable to function from a fiscal perspective since the Reagan years.
Federal Receipts as a Percent of GDP:
https://fred.stlouisfed.org/series/FYFRGDA188S
There is not any kind of material long-term discontinuity initiated in the Reagan years. It has been approximately flat since the end of WWII, which implies a growth in real government revenue per capita consistent with the growth in real GDP per capita.
This chart is only federal receipts, not state; the total of the two in the US is ~30%. Countries that have taxpayer-funded healthcare systems have a higher total on paper because the cost of the healthcare system is then in the accounting as government revenue rather than private insurance premiums, not because they're doing significantly more non-healthcare government spending. In reality the US government spends more on non-healthcare government expenditures than most other countries because it runs such large deficits.
> Everything I've read on the subject over the years pretty squarely lays it at the austerity movements that have utterly crippled most western countries but none more thoroughly than the United States, where the notion seemingly of spending any public money on anything no matter how needed that isn't Defense spending is Communist
What's really going on here is that the government is already extracting approximately the amount of money from the economy that maximizes medium-term government revenue given the trade off between revenue extraction and GDP growth.
But the government is thoroughly captured by lobbyists, so every dollar the government spends on something that actually benefits the population is a dollar that isn't going to a well-connected government contractor or a union that wants a wasteful boondoggle and can shift enough votes for a representative in a vulnerable district that the party will sell out the general public to secure that seat, or to vote buying from retirees that has now reached the point that US Government spending on retirement benefits consumes more than half of all federal receipts and goes disproportionately to affluent retirees.
Which makes it hard to pass useful programs because you have to fight the incumbents for the money.
> alongside of course the general (and consequential of that) transfer of wealth from the working class to the extremely wealthy who dodge more taxes than ever before, perhaps in all of history of the practice of collecting taxes.
This is also a mischaracterization of the change that happened during the Reagan years.
If you look at nominal tax rates, on paper they went down under Reagan, but then you look at federal receipts and in 1979 they were 17.6% of GDP whereas in 1989 they were... 17.6% of GDP. As opposed to today, where over the last five years it has been in the range of 16% to 18.8%. Or the 1960s and 70s where it was in the range of, well, ~16% to ~18% of GDP. It really hasn't materially changed at all.
What changed under Reagan is that prior to that, tax avoidance was much easier. People were deducting everything. When they lowered the nominal tax rates, they also closed so many loopholes that the effect of the rate reduction on government revenue was zero. Which is to say, the amount of tax dodging is much lower now than it was historically.
If the entire picture was so dark nobody would have used banks for anything, all across history. The banks were created by those having the means to open banks, not by charities, so it should be obvious that they will serve primarily their masters. You could make a similar argument for crypto: it does help some people to send money to the back of Africa, but is mostly enabling scams. My point is, the more there's money involved the darker the picture. If only we cared enough to make it better, but it's all boiling the frog.
Dictatorships (which is what communism always amounts to in the real world) are always good at big visible projects. they fail because things not on the dictators 'radar' don't get anyones attention as there is no reward for small projects that keep the world running until the dictator notices the lack. If the dictator doesn't notice the lack you have to be really good at marketing yourself if you do them otherwise you will be 'purged' for wasted effort when you do them.
Usually its just the corrupt dictators uncles 2nd nephew rerouting all the funds so basic maintenance cant be done. New projects are always "planned", there are enormous models, cgi movies of cities on endless loops and thats it. Oh at 6:00 clock the septic truck arrives.
It is a myth that dictatorships are good at big projects. Just consider the history of atomic bomb. If not the access to the spied US blueprints Soviet Union would be much delayed with own version. Then it took China about 10 years before they could test the atomic bomb even after receiving initially a significant help from Soviet Union.
Or consider sending a man to the Moon. Soviet Union eventually abandoned own efforts and was able to create a rocket with similar capabilities as Saturn V only in 1986.
Or consider that the best semiconductor production process comes from a Taiwanese company followed by South Corea and US. China is still not able to catch up despite all the efforts.
Or consider high speed trains. It was Japan and Europe that developed comprehensive network first, not China. And Soviet Union and later Russia never came close to implementing anything like that.
I never said that non-dictators cannot do big projects. I said that dictators tend to do them as well as anyone else. Big projects don't always go well for anyone, you can find plenty of big projects that fail in the US. Dictators can lose interest just as much as anyone else.
The point is dictators fail most often by ignoring things they consider small and not letting someone else take care of it.
There are counter examples, too.
The space race first astronaut (cosmonaut) was Yuri Gagarin, and Laika. Stating the space race was lost by Soviet Union is myopic at best. The Soviet Union defaulted due to being unable to compete, the costly Afghan War, and the inefficient system. But nowadays, how relevant are NASA and BMW ?
The liquidators of Chernobyl [1], to name another example. Another feat is winning the Great War. Shenzhen is also one of a kind. Where is the West's Shenzhen? China's equivalent of F-35 (J-10) shot down two Dassault Rafale a couple of days ago.
Far fetched in West? We got corruption, too. We got Boeing, and Trump.
As for train system, Russia's main transportation is via train and it is robust, but slow. That happens when your country is such a vast amount of land, without solid (direct) sea connections.
But in general, it is a myth, albeit a different one. It is part of the myth (façade) of the strongmen.
Chernobyl was a direct consequence of a dictatorship in the first place. A reactor with positive reactivity would never be designed unless ordered from top. And handling the consequences in the first hours Soviet style made things inherently worse.
As for other counter examples I do not claim that democracy is inherently better. Rather that for big projects at least it is not worse than a dictatorship.
Have you considered that (a) communism != dictatorship, while there have been many capitalist dictatorships, often U.S. sponsored and (b) succeeding in big projects is a lot easier when you're rich, which surviving ww2 unscathed and exploiting the world will make you?
It is a one direction relation: communism requires a dictatorship, but dictators often are not communist.
Every fascist regime is capitalist. Think about it. Fascism is capitalism in crisis.
Capitalism is a straw man invented by communists to mean whatever they want to tear down.
Fascism is not capitalism - fascists don't even think in economic terms except how it helps them.
I'm a classical liberal. Something like capitalism derives from liberalism, but it is derived from freedom of the individual, and not a value in itself.
Capitalism specifically means: an economy oriented around private ownership of the means of production. There is a world of implication from that simple statement.
Fascism is what happens when workers get too "uppity" and the upper classes decide it's better to let a strong man reign in the lower class via a combination of spectacular appeals, mythology, militarism, crackdowns, and external expansion. Working conditions in Nazi germany were terrible because they destroyed labor unions. Fascism to a great extent is operationalized anti-communism.
Communists like myself also value the freedom of the individual, but we value the freedom of all individuals and want to make it real, not a thing you just say and then shit on a homeless person or abuse an employee.
" fail because things not on the dictators 'radar' don't get anyone's attention"
Funny, because in the US right now, if something isn't on this one particular person's radar, then its is ignored. So by this reasoning, the US is a dictatorship right now.
How would they know someone is a sex worker? Surely any database of such is not publicly accessible, even by banks?
I've heard that in Uruguay, where marijuana is legalized, it's very hard for a legal dealer to have access to financial services.
Same in states where weed has been legalized in the USA due to it technically still being illegal because of Federal statutes
Top 1% vs bottom 1%. Amazing what one day in the shoes of another could teach a person.
Well, hopefully.
> Over here
Belgium. Edited the post to make that clearer, thanks for pointing that out.
I thought EU has a civil right to a basic bank account. (Please correct me if wrong.) Literally, if you are a convicted violent criminal, they cannot deny you for basic bank account (after released from jail). If sex work is legal and these rejections are actually happening (this is the Internet after all), I cannot believe that a Belgian law firm has not taken the case on pro-bono to sue a bunch of national banks that refuse to open accounts for sex workers. Again, if the rejections were true, it would be easy to build a case. Sure, you might be rejected at lower court levels, but then you can climb (after many years) to the European Court of Justice. I am sure they will agree: These legal sex workers have the civil right to bank in any EU jurisdiction where they are a legal resident.
I just Googled for: sex workers denied bank accounts in belgium
And found this: https://www.coe.int/en/web/commissioner/blog/2024/-/asset_pu...
> Since summer 2023, a new law has extended labour rights also to sex worker employees, including rules around working hours and payment, the right to refuse clients and the mandatory availability of emergency buttons in every room. The new law also decriminalises third parties, who will no longer be penalised for opening a bank account for sex workers or renting out accommodation, and it allows sex workers to advertise their services.
"legalized prostitution"
If legal, then why do banks have a problem offering an account. No risk of a bad actor, because it is legal.
It would be like a small business or contractor.
Probably because it's one of those industries where legalizing it still attracts a large enough black market (human trafficking is a huge thing) that it's easier to just blanket ban it than try to separate the legal from the illegal
> Banks have basically become an extension of law enforcement, tax collectors, anti-terrorist operations, and morality police. Which is ironic
Not ironic at all. This is the design.
These companies aren't public utilities, no one would complain about a US bank not doing money exchange business with entities in the Ukraine or Belarus, why would that be different for US companies offering donations over the Internet? The fact is that all platforms that facilitate cross-border money transfers between two parties without clear services or good being exchanged are used for all kinds of money laundering, and governments try to contain that for good reasons. In the end they probably don't care much about the revenue they make in these countries as it's probably negligible. Again, their good right to do so, I don't see any issue with this at all.
The article claims that funds were held after being donated. That certainly goes way beyond "not choosing to do business". The claims were refuted by BuyMeACoffee, which changes things.
But if I, as a donator, donate money to someone using your service, and you then don't give that money to its intended recipient, you've effectively defrauded me. Had you said in advance "I can't do that, because you're trying to give me money to $foo which I don't support", then that is your right as a business.
What's wrong with a US bank sending money to Ukraine? Sure, they might ask for an explanation, but I doubt they will reject. Example: You need to send money to a family member (immediate or extended), or want to donate directly to the national treasury (yes, you can do this), or another war-related non-profit. These are all legit. There is probably more risk in money transfers to Bulgaria or Romania, due to online scammers. Belarus is a wholly different matter. They are one step away from Russia-level sanctions, due to aiding Russia during the invasion of Ukraine.
The occupied parts of Ukraine are under sanctions and presumably banks are concerned they can't differentiate the precise destination in country. Safer to just blanket deny everything.
> What's wrong with [...] You need to send money to a family member (immediate or extended),
I tend to agree, but the same applies if one family member is in Belarus or Russia, and the other one is in the USA.
I.e. just because it's morally ok, it doesn't mean that it's without risk (if you lie about the purpose) and that the banks will facilitate it.
OTOH, before EO2022, I know that transfers between Russia and countries in Europe were sometimes still happening. Disappointintly (but it's not very surprising), sending small money to family would usually be impossible, but if you had to transfer substantial amounts of money, and you could prove that it was from e.g. sale of a home, that could still happen.
On one hand, that makes sense: the bigger the amount, the more it makes economic sense to allow extra time and effort to check that all the i are dotted and all the t ate crossed.
But OTOH, the people with lots of housing property are sometimes precisely using housing to launder the provenance, and they are also not necessarily the honest workers whose family end up split across borders.
> no one would complain about a US bank not doing money exchange business with entities in the Ukraine or Belarus
Frankly, it's none of my state's damn business who I exchange money with. Their beef with other states is their problem—why are they dragging us through their bullshit?
If they want to collect taxes on it, at least that has the veneer of doing their job properly, and I'm happy to pay it.
if someone, for example, exchanges funds with a foreign nation to evade sanctions while they illegally occupy another, it really is their state's business.
Only because the state asserts their existence with violence. We certainly have little-to-no say in how the states in which we live behave, but we're all subject to their whims.
Personally, I have little patience for the pretense that the geopolitical theatre we're all subjected to reflects the people who live in the states represented in such theatre. Baudrillard had it right all along.
Of course, people would complain about a bank not doing money exchanges with Ukraine or Belarus. Moreover, payment system providers, money transfer systems, and banks are to some extent public utilities, especially when there are no viable alternatives. They are essential for business.
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The alternate is crypto. That will service anyone for ANY reason.
Well, that and cash.
Btw, crypto (like bitcoin) is only an alternative because of convention.
The complete history of bitcoins is globally trackable, and people could all decide that they'll pay more for bitcoins that came from Satoshi's initial hoard, or that they'll refuse to accept bitcoins that were ever seized by the FBI.
(Yes, there are mixers. But you'd just refuse to accept any bitcoin that took part in the mixer transaction, if any FBI coins were in there.)
Europe is clamping down on cash, with in some countries placing caps on cash transactions as low as €1000.
https://en.econostrum.info/europe-restricts-cash-paymentss-n...
https://www.europe-consommateurs.eu/en/shopping-internet/cas...
In the US, cash purchases became a lot less common during the pandemic for obvious reasons, and it never really bounced back. Businesses were hardly ever credit-card-only before, now it's not that uncommon, and cash-only ones are way less common than before. Maybe related, several areas raised their sales tax beyond 10%.
We also can't have >500EUR in our homes
You are allowed to travel abroad with under 10 000 euros without declaring it. As far as I know we do not have the same problem with asset forfeit laws like the US. There are no laws limiting how much cash you can have at home and while travelling. Though if you hoard millions in gold that is discovered in a police raid I think your main concern will be why the raid happend.
In the EU, laws differ by country, so I wouldn't categorically declare that it's legal everywhere to have any amount of cash at home or traveling. From incidental local news reports here in the Netherlands, I suspect that if I were found during routine checks to be traveling with multiple-10k cash in my backpack or in my car, it would be seized and be treated as illicit until I prove otherwise.
Source?
say what?
> Yes, there are mixers. But you'd just refuse to accept any bitcoin that took part in the mixer transaction, if any FBI coins were in there.
Intentional mixers aren't even the half of it. You have large exchange operators that use a single wallet. They file KYC paperwork with governments, but that's not in the blockchain. From the perspective of the blockchain their whole exchange is one big mixer. A billion dollars goes in, a hundred was tainted, a billion dollars comes back out. The only information to trace which $100 that went in is the $100 that came back out isn't in the blockchain, it's in the exchange's private accounting database.
But if you propose to taint every coin that has ever passed through a major exchange, that's pretty much all of them.
How would you even price it? Have special markets based on coin origin?
You can't send cash digitally, hence crypto.
I'd like to introduce you to Monero, which isn't globally trackable and also properly fungible so you can't refuse mixed transactions (since all transactions are protected).
Apparently "Liberty Reserve" was a (now defunct) digital cash service. As in you'd mail them cash and they'd add it to your account, and you could withdraw and they'd mail it back, minus a fee. And you could log in and transfer it.
Apparently it powered online drug marketplaces before Bitcoin existed.
You're not wrong. But Liberty Reserve was able to be shut down because it was centralized. Banking regulators in various western countries leaned on the Costa Rican authorities to shut it down.
Try doing that with crypto. Who are you going to arrest?
> Who are you going to arrest?
Every on- and off-ramp provider. EU legislation has basically created a database of real person to wallet mappings (for some subset of wallets). You can't take money from a wallet if you don't know who it belongs to (if you're an exchange anyways). The checks are a bit soft (ie. self attestation and stuff), but the public ledger part of crypto makes tracking far-far easier than with traditional banks.
The end game for this is that people in the West (and whoever they can pressure) won't be able to buy crypto to buy drugs or sell it when selling drugs, making it useless on a big scale.
> Every on- and off-ramp provider.
This is essentially the purpose of localmonero and similar offerings. Trading cash for Monero in a p2p manner is going to be extraordinarily difficult to halt.
The transaction is traced and and eventualy it goes to someone with a real bank accont and the tainted money is refused.
Assuming you mean the cash itself, tracing dollars isn't common with other kinds of small-scale illegal transactions like drugs and firearm sales.
Why do you believe it would suddenly make peer2peer cash to cryptocurrency exchanges unviable?
And if you meant tracing the Monero itself, I suggest you read up on how Monero works—and how it differs from BTC—first.
First, the chain only sees the monero side of the transaction, not the fiat side, of which it's likely that no records exist at all after a short while. It looks identical to a payment for a good or service and it also looks identical to a transfer between two of the same person's wallets.
Second, Monero is still thought to be untraceable. In fact regulated entities are banned from exchanging it in the EU precisely because they can't trace it. (Zcash is also banned under the same law, but is considered technically inferior because not all transactions are private.)
Third, what do you even mean? Do you mean they'll go back to the last time those coins passed through a regulated on-ramp, and prosecute that person? For what? Buying cryptocurrency, then buying a legal product with cryptocurrency, is not illegal, and even if the product was illegal, the government most likely couldn't prove that. Also, the on-ramp was probably in a different jurisdiction. Perhaps for something like "acting as an unlicensed money transmitter" which is a thing they have done against users of cryptocurrencies. If they prosecute that in large quantities, will it fly?
Or do you mean they'll wait until someone takes the crypto to a regulated off-ramp, and then prosecute that person? For what - undeclared income? As far as I know, trading one cryptocurrency for another is a non-taxable currency exchange, at least in some EU countries, so they can't get you for that. And what if they declared it? Again, they might try "acting as an unlicensed money transmitter" of course. What if it never gets to a regulated off-ramp and just circulates peer-to-peer forever? It's more likely tyou think, since remember, regulated off-ramps are strictly banned.
Didn't they already shut down localmonero?
If law enforcement started arresting larger actors (traders, managers of exchanges, etc) and continued working their way down the list, it wouldn’t take long to have a chilling effect on crypto.
The difference is that with actual cash you give cash directly to someone. With "Liberty Reserve" you introduced a third-party that did this for you. These things aren't the same.
With crypto you don't hand over your coins to a third-party for safe keeping, you instead send coins directly to one another, just like with cash.
This is a major reason (maybe the major reason) crypto keeps going up. Many people want money to avoid government oversight - for reasons both benign (e.g. avoiding having money confiscated arbitrarily) and nefarious (everything from tax avoidance to funding crime and war).
Not long ago we lived in a world where currency from anywhere other than the nation you were in (or maybe somewhere close by) was impractical to use on a daily basis. Things have changed now and the government's use of money as a tool to keep control of citizens is loosening. For better and worse.
What percent of Bitcoin transactions are money laundering or other crime related? It must be astonishing.
FT Alphaville has a good article about it: "How much does cryptocrime pay?": https://www.ft.com/content/f40b7ac7-bb50-4712-aa7f-5219c2b18... (free sign-up)
To quote:
2025 Chainalysis Crypto Crime Report ... The authors have so far tracked over $40bn of crypto transfers to illicit addresses made in 2024, though they reckon the final total will be north of $51bn.
That seems like a pretty insignificant number? World GDP is more than $100T. $50B is one half of one tenth of one percent, and even that is a significant over-counting because it's a measurement of revenue rather than profit and is counting all transactions to a given address regardless of their nature and potentially double-counting them.
Some drug dealer is making $20,000/year selling drugs, but the drugs are sold for $50,000 because they had to spend $30,000 on grow lamps and electricity and rent in order to produce them. The same drug dealer also uses the same wallet to sell ordinary lawful gift cards for cryptocurrency and they only make $5000 from that but it's against revenue of $200,000 because the markup on gift cards is small.
For that they're attributing $250,000 of "crypto transfers to illicit addresses" to this person but there was only actually $20,000 of unlawful gain. Overstating the problem to demonize the target.
This seems like a big number, until you compare it to the regular economy:
"The estimated amount of money laundered annually worldwide is between 2% and 5% of global GDP, that is, something between US$ 800 billion and US$ 2 trillion."
source: https://www.unodc.org/lpo-brazil/en/frontpage/2013/10/29-uno...
so much less than cash. whats your point?
100%, since use of bitcoin is money laundering by definition.
Crypto isn’t an alternative to a bank. Not any crypto I’ve seen at least.
The primary purpose of a bank is to issue debt. That’s why they were created. A bank has to be able to “print” money to issue debt. This isn’t a flaw as some crypto fans like to think, it’s a very important feature. Debt issued by banks replaced the informal promise-based debt people used before we had banks. You didn’t need money on hand, or to borrow some coins from some rich dude, to get help building a barn. You got help from people in the village in exchange for some other goods or service you’d provide them in the future. Bank issued debt with “printed” money is the replacement to that, and it only works if money can be created on demand.
Crypto can’t “print” money on demand, by design. So it can’t replace banks.
One of the things banks do is to issue loans. That's fine.
Another thing banks do is, Alice is in New York and wants to pay Bob who is in Miami, or Kyiv, so instead of getting on a plane with a sack full of Benjamins she tells the bank to send money to Bob. Cryptocurrency is clearly an alternative way of doing this, with the advantage that then there is no middleman to refuse the transaction when the bank is being leaned on by a despot.
Bitcoin can't, but defi can. An entity can issue a ERC-whatever token that acts as a bond, minted in exchange for whichever other token (e.g. ETH), and redeemable for that plus interest at their discretion (e.g. you could create a redeem queue). The bonds can be traded in secondary markets immediately upon creation - no need to file for listing (you need to create a swap pool and seed it with a little of each asset though).
An important difference is that your new token can't ever be confused with base money. In banks, we have base money, and we have bank money, and we pretend they're the same thing because banks are pretty reliable (not 100% but pretty). In crypto, the system won't let you lie like that. (Though you can create another new currency backed by a mix of currencies - this is what DAI does.)
Another important difference is trust. I can easily issue bonds in the real world and then just run off with the money and not repay them. If I try, a lot of heavily armed men will hunt me down. That doesn't really happen in crypto, and as things are now it can't happen, because if you make your identity and location known and issue crypto bonds, the same armed men will hunt you down for issuing crypto bonds instead of ordinary bonds, which is a crime itself (see what happened to Kik/Kin). So you'd have to stake something else to make people trust you.
I've always found it ironic how crypto basically make it not necessary to trust, but nobody trusts it.
> The primary purpose of a bank is to issue debt. That’s why they were created
Yes
> A bank has to be able to “print” money to issue debt
Absolutely not, especially not in the context which you just said ("that's why they were created"). When the banking industry started in various Italian city states, money was state issued and backed by precious metals, and banks didn't create any new money supply. They gave loans, invested, kept deposits, etc. but without touching the money supply, which was managed by sovereigns and sovereign states.
A lot of people misunderstand what creating money means in the context of fractional reserve banking. Banks "create money" every time they make a loan backed by a deposit. They're not literally creating new money. This is how it works:
- Alice deposits $100 into the bank. The bank owes Alice $100.
- Bob wants a loan. The bank offers him a loan of $50, backed by the $100 from Alice. The bank owes Alice $100. Bob owes the bank $50.
- Bob withdraws the $50 to spend on coke and hookers. The bank uses $50 of the money deposited by Alice to give to Bob. Bob has $50. Alice still has $100 balance.
The bank has just created $50. Everyone is happy unless Alice (and everyone else) wants to withdraw their money and they aren't able to get it back from Bob. That's a bank run.
All money in the bank is created by the bank. When you deposit $100 of physical cash (money) into the bank, the bank creates a $100 bank deposit (also money) and holds $100 of physical cash (money) in its vault. There is now $200 of money.
The bank may buy a government bond with it. In that case there's $100 of physical cash (money) that the government has, a $100 government bond (also money) that the bank has, and a $100 bank deposit (also money) that you have. There is now $300 in total.
Stacking money on top of money is fundamental to the economy. Normally (and enforceably in cryptocurrency systems) the different layers may not be confused, nor may different assets at the same stacking level. But it benefits whoever is creating the higher layers when you confuse them with the lower layers. When people widely bank deposits with base money, this benefits the banks because now the money they print becomes almost as good as base money. When people widely confuse government bonds with base money, this benefits the treasury because now the money they print becomes almost as good as base money. If people were to widely confuse Apple stock with base money, it would benefit Apple and its existing investors.
(Base money doesn't have to be gold by the way. It's anything that's issued without underlying value and widely accepted as a store of value. Fed notes serve as base money just fine. They have about as much actual real-world value as gold bars, which is none.)
Another way to see it is that physical $100 has $300 of value.
But eventually, Alice wants her money back, the bank cashes in the bond, the government repays the cash.
So part of that value is the value of trust as a function of time. Trust in the bank, trust in the government, trust that they'll pay back their debts on a defined schedule. Plus interest.
What's even more funny is that in modern times the required asset to debit ratio is only 10%.
So in your example, the bank can lend $1000 to Bob, backed by Alice's $100.
Which is not necessarily a good thing.
But not necessarily a bad thing either.
If everything else fails, I know I can still have two things to pay with: cash and crypto.
This is a strange viewpoint considering that crypto is 100% reliant on some of the most complicated and high-maintenance infrastructure ever built by man: the internet.
If "everything else fails" the internet has failed, and crypto will be worthless. Gold will probably still have some value, unless shit really hits the fan.
We’re talking about different “everything else fails” scenarios. Basically, I’m concerned about my bank accounts being frozen (happened with my Revolut account for example).
The solution for that is to have redundancy via multiple bank accounts, ideally in multiple countries.
Then nothing short of planning a serious terrorist act can get you kicked out of all accounts.
Ah, yes, the classic 3-2-1 method: three accounts in two different countries, one of them being an offshore. Yeah, I’m doing all that (not the offshore part... at least not yet).
Is that really the case? Per https://www.bitsaboutmoney.com/archive/money-laundering-and-... you can be pretty much completely debanked for only a couple of SARs/STRs, and it doesn't seem particularly hard to have one filed against you.
Are you a resident of multiple countries?
Gold being the ultimate. Cash can be diluted and crypto has unlimited supply (via alt coins). Gold is backed by physics and minted in neutron stars!
Strictly speaking, directed energy is the ultimate. Both crypto and gold are both just embodiments of energy, gold being the physical embodiment (via mining and refinement) and crypto being the virtual embodiment.
Not really. Gold has no more energy than carbon per gram. E=MC^2. And total energy is unavailable. Carbon had more available chemical energy. (Why we can burn coal not gold).
Bitcoin doesn't store any energy.
Bitcoin is like a F1 car going around a track forever, with your name scribbled on it.
Both gold and bitcoin are a variant of "proof of wasted energy" or more euphemistically "proof of work". Why that makes it valuable is beyond me, but it isn't really a new thing considering the historic value of gold being much more than its utility as a material.
The 'value' in them is that they demonstrate that energy is currently so cheap and abundant to Us that we can waste it frivolously.
It's a sort-of flex, showing off, a demonstration of (energy) wealth. Humanities's peacock feathers.
Maybe I didn't explain it well, gold and bitcoin are the 'memory' of used energy, they are not energy sources themselves.
I think of them as representations of the idea that energy is (currently) so abundant and cheap that we can waste it on mining things like gold and crypto, a fundamentally ridiculous concept in terms of real actual human needs.
Once that stops being the case (when fossil fuel starts running out globally), the whole thing - cash, gold, crypto, stocks, bonds, property - everything falls apart.
Bitcoin isn’t valuable because of used energy. The energy here is just a way to limit the rate Bitcoin is produced, and to help prevent double spending.
Bitcoin is valuable because people accept that it’s valuable, same as with cash, gold, crypto, stocks, bonds, property. The price of an apple is $2 is because I offered it to you for $2 and you bought it.
Almost. Bitcoin energy use is a way to have a decentralised trust less network. If bitcoin was free to mine the most money would go to the most nodes. It would be proof of DDOS in a sense and would probably seize up pretty quick.
Gold is a bit different. You could stop mining it today entirely and you could still have a gold currency. Stop mining bitcoin and it all effectively disappears!
The people appreciate the value exactly because of used energy (entropy), if you want to rewrite Bitcoin history you are going to spend no less then it has boon spent. The limit of producing of bitcoins is not related to energy.
Yeah. I mean, people value the utility of it: it can be used to transfer value over the Internet, and you can’t steal it by changing values in the DB. PoW is just a means to an end here. I think we largely agree on that.
You could make eimrineCoin that's an exact clone of bitcoin, but it'd be extremely unlikely to reach a fraction of BTC's market cap, because others won't consider it valuable although it's mined with energy.
Gold has unlimited supply too (via alt metals, e.g., steel)
Periodic table enters the chat :). Touche tho.
A currency has to be accepted in order to perform its role.
Good luck buying groceries or paying the mortgage with Crypto.
Which is why I have a couple bank accounts. If these banks decide they don’t want to work with me anymore (happened a couple times already), or if they decide they don’t want to send money to, say, a particular country (hint hint), I’ll have crypto as a last resort.
(You conveniently left out “cash” from your reply. Cash. I’ll buy groceries with cash, if I can’t use my card.)
There are some stores that do accept BTC, but it is not widespread. It is mostly coffee shops though, not grocery stores.
And it varies from country to country. (In any case, I wouldn’t use BTC for everyday purchases – it’s too volatile, and transfers are too expensive. As long as we’re stuck with fiat-based economy, stablecoins are the way to go, IMO.)
there is invariably a vantage point at which non-fiat payments are accepted. this may be crypto, given that there is still infrastructure available for it to operate, but that's unlikely imo.
I already can't buy things I want with Mastercard and Visa
It's like a kitchen knife. Can be good or bad.
Correct in principle but not all that insightful because it's something almost universally true. "Fentanyl! Ads! Widespread surveillance! Can be good or bad".
You have to look at the reality. Crypto has been used overwhelmingly for scams and crime.
> Crypto has been used overwhelmingly for scams and crime.
So has regular currency.
The overwhelming use of regular currency is crime? Where?
Wherever any consumer-level illegal drug transaction has happened, which is everywhere.
The overwhelming use of fiat in my town does not consist of buying and selling street pharmaceuticals.
There are transactions happening all the time in regular cash for weapons, drugs etc. Large banks have been found to be knowingly processing funds from terrorists, drugs dealers and have got fines. If you anti-war, you would also include the wars that are financed partly by the ability to print money.
These transactions while not the majority of transactions I would wager is far larger in terms of dollar value that the whole crypto ecosystem.
The reality is that criminals will find loop holes in a system and they will exploit it if it is worth exploiting. Many of the checks done in banks now impede transactions. I was buying a car (private seller) and I couldn't transfer the cash without going through a fraud check, even though I had signed the transaction with a card reader in the app. It turned a 30 minutes of test driving the vehicle and checking docs into 3 hours of wrangling on the phone. BTW I am not the only person having these problems with banks in the UK.
As for what crime we are referring to as well in this scenario needs clarifying as well. I suspect that most of crypto transactions are through darknet drug markets. These markets reduce the risk of violence to basically zero when purchasing drugs. While I am not one of these people that is pro-legalising all drugs, the reality is that people are going to buying them.
Given that Coinbase is crypto, and Coinbase was just added to the S&P500, and Coinbase has KYC, that's true only for a subset of crypto users.
The future of legitimate activity is that it will be performed on the same platforms designed to protect criminal activity, because it will be treated as criminal, despite not being so.
If BuyMeACoffee was run like a dark web drug marketplace, it could support every country.
This is one of my favourite word shifts. Back in the '70s this would have been quite the claim of sexual debauchery. I still chuckle at it.
I think at this point it would be preferable for the government to take over the payment infrastructure directly. This is often seen as dystopian, but it's a dystopia that has already come to pass for the most part. If we made it official, at least the rules for what can be blocked or refused or frozen would be out in the open.
No they wouldn't, just like the rules of who can be deported and for what aren't in the open, but often arbitrary.
Also, 100% dystopia is still worse than a "most part" one
Numerous countries are debating the creation of a digital currency:
EU: https://www.ecb.europa.eu/euro/digital_euro/html/index.en.ht...
I mean the current US govt is doing all sorts of awful things in the open, so I'm not sure this will be an improvement.
I no longer believe that "sunlight is the best disinfectant", and haven't for a long time now.
The best disinfectant doesn't kill everything. Nobody's ever managed to assemble a government that doesn't do awful things out in the open.
One of my complaints about the Trump era is people are correctly identifying a bunch of problems with how the US government operates but for some reason they're only a problem when Trump does them instead of being a more general concern even if other people are involved.
Eg, Trump is almost certainly spying on his political opponents. Using infrastructure built by Bush/Obama/Trump/Biden that everyone who took notice at the time pointed out would be used by people to spy on political opponents. This isn't a Trump problem. It is people assuming the government is always on their side despite copious quantities of evidence otherwise and regular elections.
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Government certainly is NOT the best disinfectant.
I suspect people wouldn’t actually like the alternative. An alternative world where it’s relatively easy to get an MTL, or consequences for AML aren’t huge, looks a lot like crypto. Imagine banks and money processors doing rugpulls or going bust.
This is why I've been a hardcore crypto evangelist since before it was briefly fashionable and then wildly unfashionable. My opinion has not changed.
It’s the ‘greedy coward’ leadership model - tends to work pretty well for most businesses, until it does’t. usually all at once.
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Well, I'm glad that this kind of thing got in the spotlight.
This stuff is very common for "second-class" countries. It's happening all the time with all kinds of services. Most of them just don't want to be bothered (spend resources on) with figuring out how to work with those countries. I guess the payment systems provide convenient frameworks for them via which they do money related stuff. If there's no easy way to reproduce something in several unfortunate countries that was super easy to achieve in developed countries, then it's not worth it. The profits there are not gonna meet the expectations in relation to the spendings.
So while these are really shitty situations for people from those countries, these decisions are dictated by the market. And I don't think this is gonna change.
But one of the great points in the article is that services should be very clear, up to date and explicit about their policies.
Why hasn't crypto jumped in to the rescue? Sounds like a textbook case of "code is law"
The problem is the same. It still costs money to support crypto payments via taxes, payment fees, customer support etc that it's not worth to collect crypto from these countries. It's much more lucrative to just target US markets
I used to see the occasional crypto donation link, and you can still find several websites for companies offering to facilitate that, but I haven't seen one of those links in a long while.
Because no one wants to use a currency that is tightly (and correctly) associated with child porn and North Korean scammers.
Isn't there quite a demand in "the West" to send money to Ukraine, meaning that they will be quickly replaced (and by a company that might later become their direct competitor).
And is been nearly a year since the events described in the blog : HAS a new company popped up ?
Well. There's always a demand in all the disadvantaged places. Not only Ukraine.
As for the supply, money will always find a way. Crypto, shady banks etc.
I think the established businesses which are common to EU and US people just don't want to deal with the government. It's easier for them to comply in a preventive way. Many immigrants in the EU face issues with banks (virtual and real) blocking or not willing to open accounts. Just to be safe.
I’ve been working many years in the banking and Fintech industry. These companies are driven by compliance before profit. Sometimes, compliance will order a country to be blocked because of the risk to service bad actors, and they can get this done bypassing every other department. This is also why it takes forever to get an account opened, the know you customer and know your business processes are long and tedious, use manual and semi automated process to establish a risk score and make a decision wether to service a customer or not. Most of the time, these processes are about ticking boxes and filing required documents to cover the institution. In the case of the article, servicing a zone at war, with a lot of parties under sanctions is a risk that either BuyMeACoffee and / or a few of their providers were not willing to take.
All people wanted was to give someone a coffee, not a fortune.
It’s not about the amounts unfortunately. Financial institutions look at who is the sender, the receiver and the recipient. If there’s a doubt to any of these 3 information, they block the transaction. And for Ukraine, they banned the whole country.
It’s perfect for money laundering. Deliver someone drugs and they pay by buying you coffee.
So is literally every e-commerce setup
The payment gateways are subject to the whims of govt. and the payment hosts are subject to the whims of the payment gateways and due to which they're often overzealous and come up arbitrary rules.
I've had YCombinator funded leading Payment Gateways in India asking me to remove links to Hacker News claiming it to be 'redirection' or thinking I'm some kind of "Hacker man" for having the text "Hacker".
I've had trouble enabling subscription payments because I'm a govt. registered self-proprietor and these Payment Gateways decided they will support subscription payments only for Companies.
In fact I've become so versed in hopping between different payment gateways that I'm now building a self-hosted FOSS payment host[1] with support for all major payment gateways so people can have better control over their payments.
So they’re disabling Wise/Payoneer because they can’t implement some optional features on top of it? Why not just gate the features based on the payout platform instead?
Or maybe that's simply their public-facing reason.
Too expensive to implement (in developer salary), and AI can't code it in five minutes and ship it yesterday?
They are a small company, yeah, but that also means they are extremely agile, and this feels like the kind of a feature that would take me (a single developer) maybe a couple days to implement.
I mean, if spending 16 hours to implement a future proofing feature is not acceptable, I don't know what is.
I signed up for BuyMeACoffee recently. I did some work for free that’s important for the industry I work in and a few people donated money to me. That was almost 2 weeks ago and I’m still waiting for them to review my account. The only support seems to be just an email address?
In regards to the fact they pulled out of countries that are hard to operate in, yeah it’s annoying but you know, can you blame them?
They also at one time blocked the author on Twitter.
what's up with that Jijo Sunny guy doing 10 min long videos from his car
Probably a long commute with nothing better to do. I'd do it in that situation, too.
A friend did some online usability/survey thing with a web development company just to get £20 or so.
They were told that the US payments company couldn't send the money to their primary email address as (for vanity reasons) they have a .by domain from Belorussia. (They are a UK citizen living in the UK)
From mid-2024.
I regard all FinTech-type companies as unreliable, after incredible (in the literal sense of the word) experiences with Revolut (seven years to get an account closed and the money in it returned, and that actually happened only after I made a GDPR request, and they got it done - seems its less work for them to close than meet the request) and Transferwise (who shortly after the UA war started, blocked donations to the UA State bank military support account - yes, really, if you didn't know).
By all means have an account with them, but never, ever, ever, rely on it, and plan on the basis that the next morning you wake up to find the account, and everything in it, has gone, and that customer support is a defensive shield the company uses to keep customers at arms length.
If you want almost no-cost currency conversion (2 USD minimum, but you have to convert like 100k USD I think it is to go above that), use Interactive Brokers LLC. They won't let you have an account purely for currency conversion, but as long as you do a few trades now and then, it seems fine.
After working in a couple unicorn FinTechs:
They're just like traditional companies, but with much less oversight, attention to regulation and transparency.
At the beginning there is plenty of support channels, but that's because of marketing and because there's investor money. But as soon as the money gets tight, people start suggesting dark patterns and everything becomes "you must contact us to do X".
Not only that but there is way less auditing, as technical auditors that deal with fintechs aren't really ready to deal with anything made after 1990. That's you, Deloitte.
Also regarding security, what I saw in practice was that everyone has access to absolutely everything and could do anything. Everyone but the lowest support people can transfer money from anywhere to everywhere, change passwords, view and edit personal information, collect private data. Customer personal data is sent around in Excel files in email like it's candy. There was SO MUCH logging that seeing suspicious employee activity was basically impossible without having a complaint from the customer itself and a thorough investigation (which rarely happened).
Also: AI and Data Science are mostly people running one or two queries per week in the production DB, exporting to CSV and calling it a day.
And I don't want to dox myself but: a popular German FinTech with "AI" in its name has way less automation than a 5 person startup. Every single operation is triggered manually and is super error prone. And such operations involve 20, 30 records, when there are 10 million in the database.
Recently there was allegedly a kerfuffle with a german Fintech bank banning hundreds of users because of suspicion that they had gang relations. Well guess why.
> a popular German FinTech with "AI" in its name has way less automation than a 5 person startup.
Maybe their Cobol programmers are too busy writing an all caps function for a month, instead of providing forms to their employees or customers with default values already configured to shorten each process's cycle.
> Transferwise (who shortly after the UA war started, blocked donations to the UA State bank military support account - yes, really, if you didn't know).
Oh wow. Well, at least donations to NGOs / individuals seem to work.
Agreed, IBKR are a nice bunch. I wouldn’t rely on them either, but it’s always better to have more options, in case everything else fails. And of course, when banks can block your accounts at any moment just because they don’t like your passport, crypto is king.
Of course who would ever doubt that
Ironically crypto is also what helps fund and survive (bypassing sanctions) the warmongers and dictatorships which make banks not like our passports
In the end poor peasants shouting "crypto is king" are the ones owned from both sides. They are used for profit by their local oppressors/gangs and by western cryptobros. The peasants transactions are the rounding error but they are the ones who allow to pretend it's "freedom"
I’m not sure if that’s the case. I mean, crypto is surely used for some transactions, but governments also just pay for stuff openly. EU is still paying Russia for gas, I believe?
> They are used for profit by their local oppressors/gangs and by western cryptobros.
For a razor-thin margin, maybe. It’s still the cheapest way to move money out from Russia, meaning it’s not used there to pay taxes (i.e. fund the war!) And the alternatives are using banks or money transfer systems, which I think are more likely to be pro-government than just a bunch of local guys that want to make some cash.
> For a razor-thin margin, maybe
facepalm. for the fake aura of legitimacy that keeps the whole charade going.
> but governments also just pay for stuff openly
they should stop doing it, but it doesn't change the fact thay the wins around sanctions for russian gov are incomparable with wins for regular people, and regular people suffer sanctions and all related stuff because of the gov in the tirst place
> Transferwise
what was the “incredible experience” with Transferwise?
> the next morning you wake up to find the account, and everything in it, has gone
they’re all protected by the FCA via the FSCS scheme: https://www.fscs.org.uk/what-we-cover/
> they’re all protected by the FCA via the FSCS scheme
Which would help if Revolut went insolvent, which is not the case here.
so what's the case?
I’m actually not sure:
> seven years to get an account closed and the money in it returned
Maybe OP can shed some light on why they wanted it closed. My bet is, it was frozen, and transfers blocked for some reason. Happened to my Revolut (LT) account, too, but I could transfer my money out at least.
Not frozen - nothing like that.
Both the email address and phone number I had with the account had gone.
It was impossible to recover the account.
It was also impossible to close the account - until I issued the GDPR request.
Up to 100k per bank account is secured by the European central bank though, so for most Europeans, the money cannot just simply disappear and you never get it back. And if you have over 100k per bank account, you probably should look for banks with better insurances anyway.
I would need to look into this again, but I am not sure this is actually true.
Something like the underlying account(s) used by the FinTech are secured in this way, but your account with the FinTech is not.
This is why Revolut for example have accounts which are something like "vaults", which are in fact accounts which are covered, because they are actual accounts, one per person, with a normal bank.
That sounds incredible, it needs to be checked, about to leave the house so can't right now.
Revolut/Wise etc. make it quite clear they are not "bank accounts", and therefore their accounts don't come with the normal protections associated with bank accounts. I think there is some form of regulatory protection, but it's much less than for banks.
Revolut is an actual bank if you’re in the EU! https://help.revolut.com/en-EE/help/accounts/what-does-uk-ba...
Edit: and apparently they’re now setting up a bank in the UK as well: https://help.revolut.com/help/more/legal-topics/is-revolut-a...
Wise is not, and it might be more difficult to get the money out if they are insolvent. For the customers in the EU, they’re a Payment Institution in Belgium: https://wise.com/help/articles/2932693/how-is-wise-regulated...
Perhaps surprisingly, PayPal is a bank too.
>If you want almost no-cost currency conversion (2 USD minimum, but you have to convert like 100k USD I think it is to go above that), use Interactive Brokers LLC. They won't let you have an account purely for currency conversion, but as long as you do a few trades now and then, it seems fine.
I wish I'd known this four years ago. I had US$2000 to send from US to Canada and the cheapest method (~$50) I found was, to my surprise, to send BTC within Coinbase (the recipient was another Coinbase user).
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> all FinTech-type companies as unreliable
Please allow me to disagree (not really but yes). In the same spirit that some (fin-tech) companies prefer to _not_ do business with certain industries (e.g. porn) or countries (e.g. North Korea) for a wide variety of reason, doesn't make them unreliable. Makes them exactly what they are.
I am not trying to equate "access to my money" with "my favourite soft-drink is discontinued" because they have a very different impact to one's life (paying rent/mortgage/bills money vs sugar). I do understand though (I was working in a dairy company many-many years ago), that "we pulled this product because it costs X and makes 2x while product Z makes 5x, so bye-bye". In the same spirit many companies have profit margin requirements and they won't keep 'a service offering' that makes 'just a little'.
With Transferwise, one day I logged in from a new IP address (in Western Europe) and that seemed to trigger a requirement for me to re-upload identity documents.
The web-pages to upload identity documents did not work; the process would get so far, then just stop working.
I contacted Support, Support were unable to grasp the situation, let alone help.
I had 30 days before the account would be terminated for not uploading documents.
A couple of days before that happened, I tried again, and now upload worked.
All my bank accounts only have money for daily expenses and maybe a little more just in case of emergency. If it's gone, I'll be upset, but not the end of the world. Most of my actual savings are in DeGiro, which AFAIK is okay for EU customers. Correct me if I'm wrong though.
Sounds okay-ish? But as they say, don’t put all your eggs in one basket.
Which is why you also buy a house :D
Lets be honest - the amount of fraud coming from UA makes it unwelcome for payment processors.
As long as UA authorities keep ignoring this problem, the situation will get worse.
Baltic states report a horrendous amount of phone scam coming from UA, no surprise Wise just does not want to deal with claims.
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“20% and subject to changes” yikes what a way to say “you’re losing territory and you’re not in the news enough for us to bother”. That’s probably one country that needs the help from a place like that.
Am I the only one who thinks BuyMeACoffee's defense always mentions keep paying to "Ukrainians", but not "Ukraine", potentially meaning the Ukrainians outside Ukraine, not in?
The way i support content creators is by signing up for services through their sponsor/referral links.
Tip for content creators: Please use services like https://UseCode.net to host all your sponsor/referral codes in one place, as this will be very helpful for users.
Remember all could not afford to pay a zillion content creators out there
> The money is still “there”, so probably no lawyer can say BMaC has “stolen them”—you just can’t neither receive “your” money nor, at least, give them back to those who sent them.
Lawyering aside, really now? If someone holds money that should be mine with no way for me to get it out and me never getting a way to get it out, it’s not different to me no longer having that money. If the entire purpose of them having that money was for me to be able to get it out, it really feels a lot like theft.
It’s no different than you having money on your PayPal account, it getting suspended for some dumb reason and them just taking your money.
I have used Wise in the past to send money to some gaming friends abroad with weird banks, I really hope that it or some other option that supports as many countries as possible remains available.
I hate to sound like one of those “crypto bros” but I’ve also used BTC in the past for similar use cases and it’s refreshing, you just need to have an exchange available in a given country and also not store too much money in crypto due to the high volatility, unless that’s what you’re going for.
Not to badmouth some need for regulation or whatever is actually going on behind the scenes (assuming a charitable interpretation of whatever it is), but not being able to support a content creator or send pizza money to an acquaintance or whatever for reasons like that seems... dumb. Plus, a "proper" way to handle discontinuing the support for entire regions would be something along the lines of:
1. public announcement and timeline for upcoming changes
2. "Here's how you transfer out all of your money off of the platform before the change: ..." (with regular reminders)
3. "Here's how you migrate your follower base to another platform that supports your region: ..." (maybe a collab of some sort, at least offering each patron the ability to register on the new platform if they want to keep supporting the person)Does Bitcoin work for tiny amounts (eg $5)? Last time I looked (years ago) it cost like $25 do do any BTC transaction at all.
Bitcoin has had periods of high network load in the past but as of late the fees have stayed relatively low. Currently the cost for a single transaction usually falls between $0.1-0.4.
It depends on the wallet but it is possible now. There is a layer 2 protocol called lightning. People are sending people sats all day over Nostr.
Speaking of Stripe, when will they support 3d secure or however it's called this year?
The card I mostly use for online impulses purchases is from a semi paranoid bank that turns down non 3d secure transactions by default. Sometimes they call you for confirmation.
Needless to say, that means no impulse purchases from Stripe using merchants. And no buying coffees for anyone.
Guess it's cheaper for me in the long run...
Stripe supports 3D Secure, it sounds like your bank isn't invoking it properly for it to trigger on the Stripe end.
Heh, I skimmed through the docs. It looks like it's extra work on the merchant's end to enable it.
So someone like BackerKit just didn't bother catering to EU customers.
Plus I saw a chapter about "reducing friction" in the Stripe docs. Via such honest practices as charging automatically after a free trial if the customer has a credit card on file? This has been discussed on HN recently wrt to i-forget-what-service.
I suppose not requiring the extra 3d secure step is also "reducing friction".
The "d" in 3d means "domain", so three domains: the merchant, the card issuing bank, and the card scheme(s). The first two have to opt-in to the process for it to be enabled, and most (all?) card issuing banks already have so it's down to the merchant.
Not all merchants will opt-in to 3d Secure as they might see a greater loss in revenue due to the friction it creates versus the risk. They might be taking payments in a low risk sector and use other fraud checking factors, or it might not make sense for them - examples where you end up having to produce the same card in person anyway so "card not present" fraud doesn't factor in so much.
Some merchants don't opt-in as it would lose them millions of dollars of payments an hour due to the friction: Amazon for example.
I worked on the 3d Secure (and, formally, "Verified by Visa") integration at my previous job, and for a long time I was thinking I should write a blog post on what a complete mess of a protocol and implementation it [still] is. Haven't ever gotten around to that though.
> on what a complete mess of a protocol and implementation it [still] is
Banks are banks :)
> so it's down to the merchant
... or down to the implementation team that may not even have mentioned it to the merchant if said merchant is in an area used to insecure credit card payments ...
Opting out is still customer hostile if you ask me.
> Opting out is still customer hostile if you ask me.
That's debatable - I really dislike my own card issuer's implementation as they will ring me, rather than prompt for a OTP, which is a long process and not always convenient. Other card issuers have other implementations. That's one of the, er, issues with the protocol - a lack of consistency. There are many other problems with it.
I'm using this with a credit card, and that already has strong consumer protections if fraud should happen. I, as the consumer, do not get to opt-out of this poorly implemented protocol.
Merchants are sold the protocol with the argument that it reduces chargebacks, i.e. reduces their costs, not that it is good for their consumers. If I (or someone else) makes a payment with my card, and it passes the 3d Secure process, then the chargeback option is a liability that it taken by the issuing bank - and they shift that liability further by passing it on to the card holder: "This transaction when through 3d Secure, your charge back option for it is revoked".
That's hostile to the customer.
Like I said, I have a tonne of material for a blog post. I just need to be bothered to write it.
Chargebacks are extra work for the consumer too you know.
If we're philosophising, wouldn't it be better to have a honest system where the user authorizes all charges and the merchant doesn't get to auto renew subscriptions without user input just because they feel like it?
> Chargebacks are extra work for the consumer too you know.
It's not about work it's about the burden of cost due to fraud not being passed on to a consumer such that it could put them in financial difficulty. Chargebacks are there to protect the consumer and not the merchant - The 3d Secure "liability shift" (they literally call it this in the spec) flips that arrangement. Merchants are compelled to reduce their chargeback levels as they have to pay for each chargeback case, and should it become frequent their ability to process payments will be revoked.
Just turn on 3d Secure and your merchant chargeback costs reduce significantly. Nice? Not for the consumer. But I repeat myself.
> If we're philosophising, wouldn't it be better to have a honest system where the user authorizes all charges and the merchant doesn't get to auto renew subscriptions without user input just because they feel like it?
Merchants probably should notify their users with subscriptions, sure - I got one a couple of months ago from F1TV that my subscription will renew and maybe I don't want that subscription any more, or perhaps I want to change the level of my subscription. Other merchants won't be as nice, and dark patterns will creep in. Some companies have business models built on these recurring subscriptions.
I can't recall the rules around these, but I can recall that there are (were, we're going back 12 years here) systems in place to reduce issues for recurring payments. Even when a cardholder's details are updated, including replacement of a card and its PAN[1]. Any subscriptions would be retained to avoid interruption to the consumer's subscription, which might be critical for them (the consumer).
> Any subscriptions would be retained to avoid interruption to the consumer's subscription, which might be critical for them (the consumer).
Sorry, that's complete and utter bullshit. Even if you think you're defending the customer's position, everything you said is in the vendor's favour. It "reduces friction" but only when it's in their interest.
> Sorry, that's complete and utter bullshit.
I'm saying that's how it is, not how it should be.
Please write that blog post if you can! It's such an interesting part of the industry imo but there's basically ~ public documentation or discussions about it.
3DSecure is ... weird. It doesn't always trigger. It depends on some measure of "risk" (however the hell that's determined). E.g. my payments to pizza place never invoke 3D Secure because I order from them so damned often.
I would be happier if this were configurable by the user, because I too would be happier if all my online payments required my second factor.
> my payments to pizza place never invoke 3D Secure because I order from them so damned often
Yeah, my regular payments invoke 3d secure only ... randomly. I'm talking about new places (new to my card) here.
Think Stripe already support this out of the box https://docs.stripe.com/payments/3d-secure. I think this is also a legal (maybe not legal but financial regulator or whatever there called) requirement in the UK so most if not all payments use it?
The EU requires 2FA because of the PSD2 directive. In practice, that means that 3D Secure is needed for a huge proportion of card payments in the EU. Stripe definitely supports it, they wouldn’t be able to compete in the EU otherwise.
Last time it was BackerKit and there was no trace of 3d secure...
Maybe it's BackerKit's choice. I don't know.
Does a Stripe implementer have to do extra effort to have 3d secure?
One of the main issues with the margin business model (Profit of 5% of a payment for example) is that fraud is leveraged. This means that when you lose 100% of a transaction due to a chargeback or fraud loss, it takes you 20 non-fraud loss transactions to make up for it. The fraud leverage is a huge issue for platforms like this, and in certain countries half the transactions can be fraudsters.
How is this relevant?
Donation/small payment situation for small artists/content creators is abysmal. You're forced to one of the following:
1. Offer multiple choices for payment => people need to sift through to find what works for them and give up after first fail.
2. Use a payment [processor] aggregator => unreliable (as with this case) and takes a cut (sometimes chained).
3. Use crypto only => the only thing that works reliably, but severely cuts your audience to those comfortable with it.
[2024]
"we are sorry that we don’t care" is wonderfully succinct corporate double-speak/sarcasm
The did it silently because they know what they are doing and wanted to get by without the natural consequences of their actions. I’m now going to silently never tip another “cup of coffee” through their services, hopefully others will follow.
Unfortunately it is the people who contribute for free that gets fucked up by that, unless they have other means for you to donate.
I believe everyone starts a thing with ambition: "I will fix the world".
They get fixed instead!
Unfortunately, "things" begin nicely until it gains major attention. Then it loses most of the nice things.
Is there a startup idea here? Do what buymeacoffee won't do and forget about regulations (that's what Uber does yeah?)
If you are interested in building this, I have product and engineering experience
Someone will use your service to "donate" to a drug dealer, or to buy shady sexual material, or to sponsor some religious nutter somewhere or other. And you'll be held liable.
There is a reason why the system is as shit as it is.
> Do what buymeacoffee won't do and forget about regulations (that's what Uber does yeah?)
My guess is buymeacoffee isn't the problem, but their payment provider. They maybe can't justify the resources to switch providers and so its easier/cheaper to just drop those countries.
If you can find a payment provider that will service a "buymeacoffee-like" business in the open countries, then I'd be interested.
I think the problem is the jurisdiction.
Many of Telegram payment-related services use https://smart-glocal.com/, which is registered in Hong Kong (with a UK company handling EEA operations). They don’t say it on the website, but I believe they do work with Ukrainian (and apparently even Russian) citizens and can handle payouts there. (Note, however, that Smart Glocal is owned by a pro-Kremlin guy from Russia: https://en.zona.media/article/2022/08/08/premiumdonate-trl)
The problem is how to not become just like every other large company, once you grow from being a startup and become a large company.
The solution is not to become a large company :-) Start small, stay lean and just focus on the problem.
I would gladly join! Love the fintech space and open to slightly “shady” stuff like this.
would you want to just start building or apply for ycombinator summer batch
Wow, that’s a nice thought – I’d give it a try, sure!
Wanna chat about it for a bit? hn@ale.sh or https://cal.com/notpushkin/45m
Whats your take on why they did this? My guess is their payment provider forced them to it. and so the solution is what? support crypto?
For Payoneer, I’m not sure but they’ve wanted to deprecate it a long time ago (and I think Wise was supposed to replace it). From how clunky Payoneer was the last time I used it, I think the API must be pretty horrible, so no wonder BMAC wants to get rid of it.
For Wise, it could be that, but also they’ve been putting out a ton of features lately, which aren’t supported by Wise. Not idea why they didn’t add a bunch of if statements.
The solution is... uh, not sure? Crypto might work for payouts, but it’s too complicated for most users. For the donation page itself, we definitely need to accept cards somehow. There are payment providers that can accept cards and payout to these countries, so I think it should be possible: https://news.ycombinator.com/item?id=44002850
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Dumb question but I don't expect any service to support all countries, so what makes BuyMeACoffee different? My service (which also involves money) only supports one country in the world.
The dropping part.
It's not "fair", but people get pissed when you can compare before/after. And to a reason, it means some users relying on that support are now left SOL, when they could have made different choices if the service couldn't handle them from the start.
I have the feeling that most companies that are conducting businesses in both USA in EU are operating illegally anyway. It looks to me like US cloud act and EU GDPR and Data acts are making this incompatible and there is no way to offer a service to both area without breaking any law.
The way this is supposed to work is that you have a subsidiary in the EU that follows the laws in the EU and a subsidiary in the US that follows the laws in the US and then the US subsidiary isn't in the EU or vice versa, so there is no conflict because each entity is only subject to one set of laws or the other.
But now we have governments opprobriously trying to impose laws on entities outside of their jurisdiction.
would creating a smart contract other parties use to pay eachother fall under financial regulation?
It's fascinating that neither the article nor the comments here include a single mention of "stablecoins" which seems like the obvious solution to this problem.
If BuyMeACoffee is actually just trying to comply with sanctions, that still applies even if they're facilitating payments via cryptocurrency. If the reason why they're sticking to just Stripe really is in part fraud prevention, well, I... Do I really need to comment more? I badly wish cryptocurrency was the savior for a deeply broken ecosystem of payment processors but it simply isn't, it's not easy to use, it's very easy to lose money, transactions can be slow and expensive. It could be/could have been great for the sadly growing segment of payments involving legal, consensual transactions between parties that are pushed away by traditional payment processors, but so far it isn't/hasn't been and I don't think it will be. Maybe some day.
(I do realize you are specifically speaking of stablecoins but as far as I know they struggle from all of the typical problems you'd expect, just with a less volatile value.)
I believe OP was referring to a P2P crypto situation, rather than the BuyMeACoffee platform adopting stablecoin support.
So I'd send crypto to your address, then you'd trade it for cash with your local exchange/dealer etc.
These are all valid points. Perhaps I'm being naive but I'm still optimistic that a lot of this can be solved downstream from regulatory clarity.
Yeah, not as easy to cash out as you make it out to be.
Still easier than cashing out from a platform that doesn't support your country at all.
That's fair, but it's probably an improvement in regions blocked by more traditional financial services. In many of those regions, people may not even want to cash out to local currencies as holding a digital dollar is often more stable.
That requires a rather unusual confluence of events.
Almost everywhere there needs to be a on AND off ramp, or only the most diehard hobbiest or desperate economic actor will consider it. This stuff is just too new, and there is too small an ecosystem for all but a small handful of coins for them to actually act as a useful exchange medium.
Genuinely curious, what alternative solutions do you see to the underlying problem highlighted in OP's post?
The ones they usually use right now - holding physical USD, bartering, physical gold, real estate, etc. depending on the use case and degree of wealth.
Local currency does still get used, it’s unavoidable, and causes losses. There is no perfect solution.
One economy which fits the description is India - check out the boxes of cash hah! [https://www.livemint.com/Politics/eGzzHAcOe5VePoyCd7n0EN/Inc...], and [https://timesofindia.indiatimes.com/city/mumbai/mumbai-raid-...].
(FYI, a cr or crore == 10 million, a lakh == 100k. Even at current exchange rates, that is a lot of money anywhere, and an absolutely massive fortune in India).
But there is an element of this in ALL economies, including the US. It’s a matter of scale/ratios, not a yes/no thing.
- Stablecoin as an output requires BuyMeACoffe to implement KYC
- Stablecoin as input adds a lot of friction on the donor with KYC again
Crypto is just massive overhead for everyone in its current state
Yeah, but the only reason for this overhead is the Government, of course.
They are in theory but in practice they have risks. Tether is probably unbacked and could be relying on BTC for collateral. You could get BTC downside with zero upside.
Just use BTC if anything.
not everyone knows how to send stablecoins and many creators get their donations from older people and other less crypto aware groups. Many people don't know how to send money internetionally
What I find fascinating is that crypto bros keep coming back with "technically its solved by crypto" and never looking at the non-technical sides of why a business/solution exists.
BuyMeACountry
Minus the tree
It’s a reminder that financial inclusion isn’t just about tech – it’s about creating systems that can handle the messy reality of real-world transactions. It’s disappointing that a platform like BuyMeACoffee, which is supposed to empower creators globally, is now cutting off entire regions.
Using a crypto wallet for donations is always a convenient alternative.
until someone runs their funds through TornadoCash and dusts your wallet, thus putting it on many sanctioned lists and making it impossible to offloads funds into fiat by legal means.
I still don't understand how anyone expects "sanctioned lists" to actually work. The same logic applies to the wallet of the exchange you might use if you were using an intermediary. A sender doesn't need the recipient's permission to transfer funds and wallet addresses containing funds are all public.
If $0.0001 in tainted funds can taint a wallet containing a billion dollars then everything will end up tainted immediately, whether a result of trolls or just funds being transferred by ordinary users in jurisdictions that don't enforce the same sanctions. But if nothing is tainted because everything is then the sanctions are meaningless because someone with sanctioned funds would just deposit them at a major exchange in a foreign jurisdiction and then withdraw them again as untainted funds.
But it's pretty hard to actually spend that crypto without going through a traditional fiat account which is subject to the same restrictions.
"The money is still “there”, so probably no lawyer can say BMaC has “stolen them”—you just can’t neither receive “your” money nor, at least, give them back to those who sent them."
This reminds me of something. Russian foreign reserves, perhaps? The irony.
Potentially unpopular opinion but ultimately it's a private service and they decided to disable payout methods which negatively affects Ukrainian users for the sake of integrating new changes/avoiding legal risk. They don't have to support all countries. I feel sorry for the users though, especially I imagine by asking supporters to move to another platform will result in some of them dropping which is the result of platform lock in..
Sure, it's a private service and they can do whatever they want, but why block Ukraine? I spent an inordinate amount of time and resources over years blocking Americans from the casino I ran, so I can somewhat sympathize with the point of view that one wants to avoid legal issues. But the only reason I spent the energy to do that was that I needed to be on the right side of the law, personally, if I ever found myself physically back in the US. The only reason I blocked certain other countries (like Myanmar and Iran) was on moral principle because I didn't want to potentially help launder money to revolting dictatorships. I did not, for instance, research or give two fucks about online gambling laws in Malaysia, or a dozen other countries I'd never step foot in where I had players from. I certainly wouldn't have cut off a country that was under siege and partially eaten by a nasty dictatorship. If I were running it now, I'd have probably set up filters to block anyone conceivably in Russian territory, and that would be that. If one guy can do it against an onslaught of thousands of Americans trying to fake their IP addresses daily, I'm sure a good sized company can handle blocking Russian money laundering through a tip jar.
They haven’t “blocked Ukraine”. They had three payment processors, they cut two of them, and the remaining payout option is Stripe, which didn’t support Ukraine before the other processors were cut either.
>but why block Ukraine?
Ukraine is on the one hand a fairly small market, on the other hand a very corrupt totalitarian country, where a huge part of the "donations" will be bribery, money laundering, fraud, buying illegal goods.
So, probably, the company simply decided that it was easier to abandon this market rather than to solve the potential problems.
>moral principle because I didn't want to potentially help launder money to revolting dictatorships.
It is quite applicable to Ukraine as well.
People are literally being grabbed off the street and sent to die in storm troop units. Massive corruption, the main method of protection of which is that those who fight against it (or all their male relatives) are simply sent to die.
But I think it's more about the legal problems created by a small, toxic market than about high moral standards.
No shit. Have you ever been to Ukraine? And by what metrics do you judge corruption and “totalitarianism”?
Briberies, illegal goods, sheesh…
You are right, they probably don't have to, or that would be basis for legal action.
Customers should also be allowed to expose shady stuff done by such private services, warning other people.
Right, just that from the article I get the vibe that the author makes the case Ukraine got blocked while it's the result of dropping a payment provider, not policy that singles out Ukraine
No. I closed down a commercial service I ran and took 6 months to do it in order to give people a reasonable chance to move elsewhere. I didn't have to, but I felt it was the moral thing to do. Maybe morals are out of fashion.
When reading the title, in your head bold "silently" rather than "dropped support".
Of course, now imagine the reaction on hackernews if this had concerned the US or Israel. Now explain to me how this is different?
> Potentially unpopular opinion but ultimately it's a private service and they decided to disable payout methods which negatively affects Ukrainian users for the sake of integrating new changes/avoiding legal risk.
"It's a private service so they can do what they want" is missing the issue. Every private service in the jurisdiction is under the same legal constraints, so if the law is creating the incentive for them to screw their users, that is a problem with the law. Because then they all have the same incentive and converge on the same behavior and the usual defense to customer abuse by private companies -- switching to a competitor -- isn't available as a remedy.
>nobody cares
I get the impression that those buttons don't exactly get many clicks anyway
Every three months I have to fill in a bunch of bs busywork paperwork for the bank due to having an independent contractor in the Ukraine so I can pay him.
Honestly, I feel the need to address the elephant in the room for this issue.
BuyMeACoffee seems to be a service based on an extremely flawed premise: that of exchanging money for nothing tangible in return. That is normally known as a "donation", but this is not charitable giving; this is more like tipping. But even tipping is customarily associated with receiving some kind of service in the first place. This is more like tossing $2 bills at a stripper in a dark room, but 3,000 miles away.
Now most of these buttons were traditionally labeled "Buy Me a Beer" and I found them oftentimes on the web pages of starving F/OSS authors. The hackers would definitely be seeking to monetize their free and open-source software by any means necessary. It certainly stood to reason that they deserved a beer (or a coffee) for fixing bugs or simply providing a nice app to me that does something I want. Fair's fair. [Let's not forget that alcohol and caffeine are drugs, though!]
But essentially, if BuyMeACoffee is a payment platform that's disconnected from any tangible product or service being received, it could be warped to any use at all. Can I buy you a coffee if you show me one boob please? Can I buy you a coffee if you unalive my boss? Oh look, a package of (ammunition|fentanyl|CSAM) has arrived on our doorstep, let me buy you ten kilos of coffee to celebrate this unrelated event?
So I think that typically for capitalism to work, we should be scrupulous about correlating goods and services received to the monetary transactions we make for them. Or we should establish a good way to at least correlate a "creator" of software or content with the in-kind payments of "coffees" that they'll receive for actually doing work. Because if this is not properly regulated, we really do end up supporting a lot of shady stuff.
Who knows if we're buying coffee for terrorist cells or a human trafficking ring. I really feel like coffee money can be better spent on legitimate businesses with aboveboard ways of making transactions for tangible things. Sorry if I am being a real stick-in-the-mud about this, but this seems to be the main issue for regulators and law enforcement, and we need to admit that it's not an ideal way to do business.
It's unclear how you believe the label attached to something to be useful.
Suppose there is an "artist" and you like their "art" and want to commission a piece. You send them money for "art", they email you some doodle or AI-generated image and simultaneously mail you some drugs.
Assigning the label "art" or "code" to the payment doesn't provide any information more than having no label whatsoever, because the label is a lie but the only way to prove the lie is to uncover what the transaction is actually for, which the existence of the fabricated label doesn't help you to do any more than having no label at all.
Establishing what a payment is actually for is not something the payments system is suited to do and attempting to use it for that causes only problems, because the honest users who put down something legitimate that makes the bank skittish are unjustly harmed, whereas the actual illicit users simply lie because there are several easy lies with no viable way to verify the contrary.
Yes, I agree that this may be beyond the scope of a mere "payments system".
"BuyMeACoffee" appears to be a Patreon-like platform for "artists and creators". I would say it is more than a payment platform, because it is a marketplace and a venue for people to do business.
Now we have plenty of marketplaces, such as eBay, or Etsy or Amazon. These marketplaces have strict requirements on what vendors and customers can do and how they can transact business. If you went on Amazon and purchased art+drugs, that would quickly be shut down. It's also Amazon's responsibility. Now they are brokering those payments from customer to vendor but they are more than a payment platform, because they are hosting both parties.
BMAC is not merely, blindly transacting payments like Visa or Mastercard. They're providing a venue for stuff to be put out there. If they are collecting payments from fans and disbursing it to creators and artists, then I say that they have a responsibility to ensure no illicit activity goes on and people are getting what they paid for.
"Getting what you paid for" is obviously an extremely subjective thing when we're talking about electronic art or media, and especially when customers can buy "memberships" or send "tips" because now we're just funnelling money to a personality influencer who is into crowd-pleasing. And the opportunities are vast for organized crime and nation-state threat actor sort of activities when you scale that up and go crossing international borders with your service, wouldn't you agree?
In meatspace, you're going to have a comedy club or a concert venue, an art gallery, you know, someplace that showcases artists and may sell their work, or enable them to work for money. And any such venue will necessarily have controls that protect the customers, and protect the artists, and if there is money changing hands for illicit purposes, the venue is on the hook for this. Because they're doing the matchmaking.
And there are mainstream marketplaces that are doing this, but to do it large-scale and internationally is going to run up against legal and regulatory hurdles and it's not as simple as turning a blind eye.
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Don't you pay more in transaction costs than the cost of a coffee? And then pay in environmental costs.
No, on-chain transaction fees aren't higher than the cost of a coffee. They're currently around $0.15 per transaction - cheaper than typical credit card processing fees. Plus, you could always build an off-chain transaction system with zero fees.
As for the environmental impact: individual Bitcoin transactions don’t directly increase energy usage. Miners consume electricity regardless of whether any given person transacts. And while mining is energy intensive, it doesn't have an environmental impact in itself.
I must have misremembered? Last time I looked (maybe 2 years ago) I thought actual bitcoin transactions took maybe an hour to confirm and cost a couple of dollars -- am I just short more marbles than I thought I was or has something changed with how they do transactions.
The context I was looking at related to storing data in the bitcoin ledger. I think I commented here, I'll have to look back and see.
It's a dynamic market so fees can vary depending on congestion, BTC price, etc. Expected time to first block confirmation is around 10 minutes assuming your fee is high enough to be included in the next block (when blocks are full, miners prioritize transactions with higher fee).
When you send a transaction, you get to pick what fee you'd like to use. For this kind of service, transaction speed isn't really important so you can get away with setting a low fee.
Here's a 0.15$ fee transaction that was mined just 6 minutes ago: https://mempool.space/tx/2e66ba1758e233ff1b2395c7db55f8327de...
By "off-chain", I meant something like BuyMeACoffee letting users top up a wallet via an on-chain deposit, and then handling tips internally (e.g., in a SQL database). That way, small payments don't each require a blockchain transaction.
Expected time to first block confirmation is always 10 minutes. If the last block was found 10 minutes ago, then the expected time to the next block is still 10 minutes. It is always 10 minutes until it is actually found, at which point it is still 10 minutes.
The only thing that can change value is if the global hash rate significantly changes. This is why we have the difficulty readjustment every 2016 blocks (give or take 2 weeks).
Oops, you're right, I forgot about that. Updated my comment.
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Bitcoin may not be the best example because it does have a lot of limitation and somewhat failed as a currency and instead turned into a speculative store of value. Block time on Bitcoin is ~10 min. For small purchases, you would probably be fine with 1 confirmation, but a 10 minute wait is terrible UX. There is lighting which is a layer on top of bitcoin which is much faster, but the UX is still a bit clunky.
But in general, I agree that cryptocurrencies could help the problem, but it still carries the compliance and AML risks unless you can outsource that to a 3rd party. What happens if you accept funds from an OFAC or other sanctioned account? Violating AML can come with huge fines and is generally just a massive headache. Cash doesn't have these issues as the evidence is generally impossible to track well. With nearly all cryptocurrencies, the entire ledger is open, so if you accidentally accepted payment from the wrong person, you could get royally screwed at some later time.
Bitcoin mining is currently at 52% renewable. This is a very significant number, since most other industries aren't nearly that renewable. Are you going to go for a plastic or paper car because steel foundries aren't producing steel on renewable power?
The key is emissions, not energy use. If I have a process that benefits mankind (a global, decentralized, permissionless hard money that doesn't suffer from politics or unelected officials) and I am using 100% renewable energy, then there is no environmental cost.
Bitcoin mining is very cutt-throat. It is a bleeding-edge, hyper-competitive business of reducing margins. Because I only needs an energy connection, some HVAC and internet connectivity, miners are very mobile and can move from place to place after setting up shop somewhere. This means that they seek the absolute lowest energy cost (the difference of paying 1c more per kWh can be essential) means that they are the energy consumer of last resort. Hydrodams and other renewables often produce at moments that demand is lower, and having a bitcoin miner nearby that is willing to gobble up all your excess production means your solar farm or hydrodam suddenly makes a profit at most times of the day.
It also means that investors are more willing to invest in renewable energy in places where formerly, building this infrastructure was impossible. There is a village in Malawi, Afrika where building a hydro dam was possible, but not financially sensible. None of the villagers had electric appliances, so building the dam meant running it would not be profitable for a very long time. Now, you can just add a set of bitcoin miners and run the dam at 100% capacity until people start installing freezers, televisions, etc. This benefits the investors, the villagers, and the bitcoin ecosystem.
Bitcoin's environmental costs is a highly politicized complex puzzle that is hardly as negative as the mainstream media and anyone that hasn't researched it claims it is. It bothers me to no end.
Bitcoin is a massive failure as a currency.
It's the largest non-government-issued currency in the world, and its money supply exceeds that of many fiat currencies[0]. But since "massive failure" is a subjective judgment, it's hard to argue with that.
No, it's the largest non-government-issued speculative asset. A currency can support far more than 7 transactions per second globally.
Late edit: If I wanted to use a centralized payment network, I'd just use euros. The centralized euro payment network is much better than the centralized bitcoin payment network.
Bitcoin can handle just as many transactions per second as fiat currencies when used over the same centralized payment networks (e.g., credit cards, PayPal, bank transfers). The key difference is that Bitcoin also provides a permissionless, decentralized settlement layer - something fiat currencies fundamentally lack. If you're comparing base layers directly, it's arguably 7 TPS (Bitcoin) vs. 0 TPS (fiat).
Ah yes, that'll solve all problems (https://www.web3isgoinggreat.com/).
Cynicism aside, I'd rather not receive compensation in a currency that's mainly used for speculation. And to exchange it back into a "meaningful" currency somewhat securely requires me to go through an exchange, which is usually again a company that can make up their own policies? Seems to me this is just making it more complicated and more resource intensive.
Another alternative to using an exchange is to actually spend the bitcoin on a good or service. There's quite a few places where you can use Bitcoin to buy things, like web hosting, socks, coffee, and more.
You don't necessarily need to go through an exchange. You can also do a P2P trade, use a crypto ATM or even spend it. But I understand it can be complicated and scary if you're not used to it.
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