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There are lots of crypto skeptics on HN (and we ourselves were disappointed with crypto's payments utility for much of the past decade), so it might be interesting to share what changed our mind over the past couple of years: we started to notice a lot of real-world businesses finding utility in stablecoins. For example, Bridge (a stablecoin orchestration platform that Stripe acquired) is used by SpaceX for managing money in long-tail markets. Another big customer, DolarApp, is providing banking services to customers in Latin America. We're currently adding stablecoin functionality to the Stripe dashboard, and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging.

Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.

It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

Bitcoin (and possibly a few others) is one of the few uses of blockchain that actually makes sense. The blockchain serves the currency, and the currency serves the blockchain. The blockchain exists to provide consensus without needing to trust any off-chain entity, but the blockchain relies on computing infrastructure that has real-world costs. The scarcity of Bitcoin (the currency) and arguably-fictitious reward for participation in mining is the incentive for people in the real world to contribute resources required for the blockchain to function.

Any real-world value given to Bitcoin is secondary and only a result of the fact that (1) mining infrastructure has a cost, and (2) people who understand the system have realized that, unlike fiat, stablecoins, or 1000 other crypto products, Bitcoin has no reliance on trusted, off-chain entities who could manipulate it.

You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank, but while you're at it, remind them that they don't have to take days to process a transaction - they could process transactions as fast as (actually faster than) a blockchain. But I imagine most banks would point to regulation as a reason for the delays, and they might be right.

So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

> a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

Stablecoin is not a technology. It's an excuse. An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use. Similar to how Airbnb is not a technology but an excuse to do what hotels do without hotel's license.

So it makes no sense to compare it to database, a technology.

Will this excuse work? Banking is a heavily regulated field so it's less likely than Airbnb, but it's ultimately up to lawmakers.

Large banks like JPMorgan Chase are also looking into launching their own stablecoins, just because it has less regulation than normal banking. In fact Jamie Dimon himself says so. The idea is really simple: creating stablecoin deposit accounts for customers allows banks to skip existing customer protections that are normally afforded to traditional deposit accounts.

Stablecoins will end subject to just as much regulation as a normal bank, maybe even more.

JPMorgan Chase, BofA, and their ilk have R&D budgets large enough to have already launched a dozen stablecoins by now. They haven't, not because they can't (on a technical level) but because they don't actually see the value to it (on a business level). They're simply paying lip service to crypto because it pumps up share value, the same way every business was bragging about their AI investments just a few months ago.

I certainly hope you are right! It depends on how deep the trump admin 2 rot will go.

Banks are already using stable coins internally (case in point https://en.wikipedia.org/wiki/JPM_Coin) it just hasn’t been made available externally yet.

Clicking just a few links down on that article shows that JPM Coin is a Blockchain in branding only. It's backed by a centralized (in trust principals if not in compute) ledger and used for transactions between mutually-trusting parties.

Is Uber subject to taxi regulations yet?

Outside of the U.S., Uber is subject to taxi regulations in most of the places it operates.

In the U.S., it is subject to a new set of regulations governing "rideshares" that are similar to the regulations governing taxis. The primary differences are that medallions aren't required for rideshare vehicles, nor are rideshare drivers required to know anything about the location in which they're driving.

Objectively speaking, the taxi drivers and companies that are still alive today provide better service than their rideshare counterparts. I can tell a taxi driver "the Z building" at the airport and they'll know what it is, where it is, and how to get there. Most rideshare drivers need to look it up, and they'll be damned if they actually follow the google directions to get there without getting lost on the way.

I’m pretty sure most rideshare services are forcing drivers to use their own map software. They aren’t using google, at least directly, and they are using routes recommended by the ride sharing companies themselves. Just replace them with AI already, Waymo was really good when I tried it in SF. Not technically ride share anymore though, I bet we see robo taxis eventually regulated like taxis when they eventually take over the market.

Yes. Just look at London - where it’s private hire, not taxi, but still very regulated.

And basically sucks.

yes in many many many countries.

> Large banks like JPMorgan Chase are also looking into launching their own stablecoins, just because it has less regulation than normal banking.

That always works out great.

Can't wait for the next explosion, followed by government bailout, followed by some portion of all our wealth vaporizing, all to the benefit of a small number of people.

Yes — similarly I work in cryptocurrency and constantly try to tell people that credit cards are unbeatable for payments because of the consumer protections. Chargebacks are an insanely consumer friendly feature. Nobody ever wants to engage in that conversation.

Venmo is essentially a stable coin

Other way around. Stablecoins are essentially Venmo for crime. They get zero benefit from a blockchain. They are centralized, trusted and permissioned. Circle can freeze the USDC in your self-custody wallet at any time and you’re on your own bud. This whole thing is antithetical to crypto’s core ethos.

You could replicate USDC with a website where you log in with a password and move money between numbered accounts and they don’t run any AML/KYC checks on you. If you did that it would be super illegal. In fact someone did exactly this, it was called Liberty Reserve and everyone went to prison.

But because it’s got the magic of the blockchain laws don’t apply.

Good. AML/KYC laws are a huge abuse of state power.

Serious question: What is the practical alternative? What do you think will happen if we reduce/remove AML/KYC requirements?

The alternative is the freedom to make any financial transaction without the government being involved.

If your concern is effective taxation, there are plenty of methods that worked historically while preserving financial privacy like property taxes.

The biggest reason for KYC and regulations are anti money laundering and corruption.

By making non KYC transactions easier, above becomes much easier and crime, fraud, scams and corruption significantly more profitable.

Is there any report or research showing that KYC actually helped reducing corruption?

Making everyone jump through hoops, at great expense, because the proceeds of crime are being laundered seems like the wrong way to approach stopping crime. I'd argue that bitcoin is in some ways more traceable, as all wallets are public.

Problem with KYC and AML is that if you listen to the regulators, there is no end to it, the requirements only increase. I was once asked to provide 20 years of banking receipts for a small savings account that my grandmother had opened for me when I was 5. In the EU at least, it's common for banks to block transfers between countries, even if the transaction is well-documented. The most infuriating thing is that there's no real proof that AML works. It's just excellent at false positives, ending in account freezes for innocent people.

Stablecoins' success is also a reaction to the ever-increasing friction created by overreaching regulation. If you have a supplier in China, and need to buy some in-demand goods, you can sign the contract and send the money now, whereas with the classic banking system, you'd have to wait for two weeks to clear everything. This alone is brilliant and should be welcomed for its usefulness.

Stablecoins are banks. What you’re describing has been the foundation of the banking system since medieval times.

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

What is interesting with stablecoins is that they are on the blockchain, which acts as a decentralized, uncensorable ledger which doesn't require you to tell a bank clerk what is written inside your wedding ring to be allowed to buy a second hand BMW in Poland.

Indeed. Blockchains are for breaking the law.

I think it would be wholly better, in democracies, if we changed laws we didn’t like than tried to create technology to evade them.

The law says that banks need to do AML/KYC, a blockchain is not a bank, it's decentralized. Besides, being able to break a law can be good, when such laws have little to do with crime prevention, and more about feeding an industrial complex that earns from those frictions. And buying a car is not illegal as far as I know.

The main proponent that dictates the regulations, the FATF, is a shady, unregulated body that is used for political and economical repression.

> a blockchain is not a bank, it's decentralized

Not all blockchains are decentralized, it depends on the consensus mechanism

but if you buy a BMW in Poland on a stablecoin chain, everybody will know.

Only if they happen to know the connection between you and the seller's wallet addresses and your respective identities.

Almost all the crypto I have is from p2p or freelancing. Very few could connect my identity and my wallets.

Maybe, but at least no one will block the payment.

Pretty sure they didn’t that’s why we brought in anti money-laundering laws.

it's not about taxes, it's about fighting illegal activity. Terrorist financing, drug dealing, human trafficking etc - do you really think it's a good idea to let those actors exchange payments freely?

What's next, random searches at road checkpoints? Do you really want to let those actors use roads freely?

Do you the police should have zero power to set up checkpoints, or search cars even with a warrant?

Checkpoints, no. Searches with a warrant, yes.

Yes, I think everyone should be able to exchange payments freely.

Drugs should be legal, so that's not a problem. Terrorism and human trafficking are more complicated topics, but basically I think they should be attacked more directly, not financially.

Great opinion.

Great rebuttal!

The government has existed for hundreds of years before these sophisticated mechanisms of surveilling the money system and the people were introduced. And it will continue to exist should they be removed.

You know everything was shit hundreds of years ago right, the wildcat banking system collapsed into miserable failure and the bearer instruments were eliminated because of the risk of train robberies.

Good news! They’re back!

> Stablecoins are essentially Venmo for crime

What is your source for stablecoins being "for crime"? I've seen many individuals from countries all over the world utilize stablecoins in ways legal for their jurisdiction.

> The devastating impact of these scams is evident in the staggering losses reported globally. In 2024 alone, cryptocurrency investment fraud, largely driven by pig butchering schemes, caused over $5.8 billion in reported losses in the U.S. The anonymity and cross-border nature of cryptocurrency transactions have historically made these scams incredibly challenging to investigate and prosecute, allowing criminal syndicates to operate with relative impunity.

https://blockchain.bakermckenzie.com/2025/07/01/the-225-mill...

It’s slower, riskier, with less protection and usually more expensive than a classical financial transaction. So it self selects for criminals.

I don't think that logic checks out. It being "slower, riskier, with less protection and usually more expensive" are not properties that self selects for criminals.

Stablecoins typically being self-custodial, easier to transfer in large amounts, and internationally accessible seem like it would support criminals, but with stablecoins, funds can be frozen just like bank deposits can.

This is emphasized in the article you linked:

> The investigation began in late 2023 when Tether, the issuer of the USDT stablecoin, proactively froze 39 wallet addresses containing $225 million in stolen USDT after detecting suspicious activity. This immediate action was critical in preventing further dispersion of the illicit funds. Paolo Ardoino, CEO of Tether, was quoted as saying, “Tether’s work with the Department of Justice underscores our commitment to transparency, proactive engagement with law enforcement, and the protection of users across the digital asset ecosystem.”

And the number you quoted is for cryptocurrency at large, not stablecoins. I imagine the number looks a lot different when we filter for that subset of usecases. For the large amounts used in stories like this, banks would be a better indicator for comparison[1][2]. Venmo, Cashapp, and Zelle have had their fair share of scandals as well[3].

[1] https://en.wikipedia.org/wiki/Wachovia#Latin_drug_cartel_mon...

[2] https://www.reuters.com/business/finance/td-bank-appoints-co...

[3] https://www.freep.com/story/money/personal-finance/susan-tom...

Tether has been reluctant in many cases to freeze addresses reported to it. At least historically it would not do so if the coins didn’t belong to its direct customers (mostly the large exchanges), rather than individuals who got them from their customers and did crime.

https://archive.ph/6nvkc

The other major issue is it’s easy to get the stablecoins, move them around, cash them out, and by the time Tether freezes them the criminals have already been paid (in dollars, which is what they want really).

Even criminals don't want the insane volatility of vanilla crypto, and there's an unfounded sentiment that Tether doesn't freeze value in people's wallets (they actually freeze more than anyone else, and good luck resolving it in Salvadoran court if they even have jurisdiction).

Yes classical finance has had scandals because they're obligated to prevent these things, and in general, they have responded to court judgements by upping their internal controls. Crypto is built specifically not to have either internal controls or the ability to institute them in a meaningful way. It's the fundamental premise. One system is designed to stop this activity but fails sometimes, the other is designed to allow this activity by anarchocapitalist libertarian ethos and offers roughly zero recourse for those caught up incorrectly.

This argument is tantamount to "well, a plane crashed, so obviously the FAA doesn't provide any value, and we should just stop regulating aircraft entirely and yolo it." Same with drugs, well, a side-effect happened, let's just scrap the FDA and legalize the grey market Chinese sackloads of $5 peptides. While we're at it, we should let Walgreens sell em, why not.

If you think what the classical institutions are doing is wrong, you shouldn't say well, just let 'em lol, you should be arguing for stricter penalties and more control. If you think it's right, well, I don't know what to say.

Pepperidge Farm remembers when nobody in their right mind would just give all their money to unregulated offshore banks in the Caribbean. Remind me why that was again?

The comparison is wrong. FDA is not there to confiscate anyone's money by locking down their accounts. FDA regulation is applied to companies. KYC is the US shit which applies to anyone, anywhere in the world outside the US, having the priority above local laws.

It must end.

stablecoins are not for crime actually, it's like the bank of the criminals. for crime you would want to mix your stablecoins to btc or xmr, probably the latter.

You are correct but with Venmo or PayPal there’s a middleman charging fees who can lock your funds. A decentralised PayPal is appealing.

Just to be clear, Tether and Circle also have complete control over their respective stablecoins if they so choose. They have the exact same power to reverse, freeze and block any transaction or balance just as PayPal and Venmo do.

Can you elaborate?

The mechanics are sort of different. It’s on a blockchain so a true “reverse” is not possible.

But the smart contracts they write look up a blacklist, which only they control. They can block, unblock or burn tokens.

To “reverse” something they could burn those tokens, and then just issue more and send the new ones to the original address.

So yeah it’s like PayPal or whatever. Except with blockchain thrown in so they can say the rules don’t apply to them.

PayPal also has their own stablecoin, PyUSD https://www.paypalobjects.com/devdoc/community/PYUSD-Solana-...

That middleman can be compelled by the government to return your funds. A foreigner who empties your wallet on a decentralized PayPal cannot.

Not really.

The “solution” for decentralisation - proof of work - makes the system a lot more expensive (think: higher fees) than a centralised database.

What fees?

An implicit fee by not paying you any interest for money held in Venmo.

Also notice there's no option to automatically transfer received money into your real checking account. They are banking on you forgetting your money is there and they are earning the interest but not passing it to you.

For this reason I prefer receiving money via Zelle but pay with Venmo.

As if you make any real return holding money in a bank account.

What? How so? If by "stablecoin" you just mean "any USD-denominated balance maintained by a third party in a ledger" then every bank balance is a "stablecoin".

Yep. And the White House will let them now.

Do we have a term for this phenomenon yet? Airbnb is a great example. Uber is another. Regulatory loopholes are the way that these companies actually make money, but they call it "technology" and everyone kind of shrugs.

Airbnb was a bit more then a regulatory loophole, it at least started out as a new way for private homeowners to monetize one of their greatest asset. So it was much more an unused potential that was being tapped in.

The regulation that came after has in my personal experience privatized airbnb and now it's hard to find a private renter, when I started using it that was the standard.

Once Airbnb became systemically harmful, regulation followed.

Nobody cares about small tech companies breaking the law for a few users.

Everyone cares about {insert bad outcome from mass regulatory avoidance}.

(Also, of the 3 airbnb founders, one has delusions of being the next Steve Jobs and turning it into an everything app (Chesky), another now works for DOGE (Gebbia), and the last is sucking up to Chinese government data requests (Blecharczyk)... so, yeah, not exactly the sort of folks that should be trusted with light regulation)

I know many many friends who were able to survive an expensive city because of it. Cities that are largely messed up due to the governments stupid games with taxes and interest

I think we might have different definitions of things if "survive" and "because of airbnb" can coexist in the same sentence.

I wonder if those places would be more affordable if there weren't airbnbs.

One term for it is "Regulatory Arbitrage".

This has been my favorite SV euphemism for years.

In my circles we have been calling it unregulated free market capitalism, or laissez faire capitalism.

More examples include Uber to bypass taxi regulation, and generative AI to bypass copyright regulation (as well as consumer protection regulation in both cases as well as labor protections).

How does a user use AI to bypass copyright?

By training models on unauthorized work and allow users to request them back.

https://news.ycombinator.com/item?id=43573156

I need to clarify, parent asked how does a user use AI to bypass copyright. But I answered how an AI company uses AI to bypass copyright.

I am under no illusion that if a user of AI requests an image of Indiana Jones and uses it in their art, the rights holders will issue a takedown an would succeed. The AI company that owns the model that generated the model will however not face any consequences, and have therefor successfully have bypassed copyright protections.

What we're talking about is a much more specific phenomenon than "unregulated free market capitalism". In fact, in an unregulated market, there would be no regulatory arbitrage opportunities, by definition (e.g. Uber would have no reason to exist since taxis would already be unregulated).

The idea of the argument (or more accurately the joke) is that Uber is unregulated free market capitalism. It is what happens to the taxi market if they would lift all regulations. Uber’s whole “innovation” was to find a way to be unregulated while most of their competitors were still regulated.

[flagged]

That term has a very specific meaning and I wish people stopped using it to mean "big tech doing something bad"

Well, doesn't that specific meaning apply here? I mean, the lack of protection for end-users is at first compensated by investment money (low prices and huge effort on support). Once network effect is reached, the unregulated nature of the platform shows, end-users are wronged, only providers profit from the lack of regulation ...

Or maybe I don't understand the meaning of enshittification?

It means something very different from your definition.

No. The whole point of enshittification is that it is an intentional process, a bait-and-switch. You get a cool free service, you become dependent on it, and then they start monetizing it and limiting it.

My understanding is it is more tied to crafting UX that maximizes profit. Many cases involve both enshittification and regulatory arbitrage (as a peer comment so eloquently put it)

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

Yes I know, which is why I looked up the Wikipedia definition to make sure I was using it correctly.

Stripe provides a trusted service to its users, has a great reputation, then implements changes that will degrade that service by avoiding regulations designed to protect the consumer.

Adding blockchain is enshittification.

Personally, I think US banking needs something an Uber or AirBnB style shake-up to get their act in order.

It's awful how behind the times the US is when it comes to banking. 2 - 3 days to get money from one account to another is beyond embarrassing in the modern day. It took the US something like 15 years to get chip-and-pin.

Banks are still these monolithic entities that don't care to innovate or listen to customers because "what are you going to do, go to one of the other 4 monoliths that are all in cahoots with each other"

Other countries managed to regulate their banks to innovate just fine without blockchain technology, though. It doesn’t always need a startup to disrupt something by flipping the finger to lawmakers. Sometimes humble regulation is enough. Take SEPA as an example: I can transfer money free of charge to any European bank account, in a few seconds.

To be fair, European Central Bank also wants to introduce its own official Euro-backed "stablecoin" (https://en.wikipedia.org/wiki/Digital_euro), mostly because they are scared of the posibility that Dollar-backed stablecoins could make Euros less relevant in the future (https://www.politico.eu/article/lagardes-euro-moment-busted-...).

US banks literally collapsed the world financial system in 2008. You don't deserve humble regulation after that. They got, and they deserved, the Dodd-Frank Act, which has now been significantly rolled back.

> Sometimes humble regulation is enough. Take SEPA as an example: I can transfer money free of charge to any European bank account, in a few seconds.

SEPA was a success but it was only a first step to modernise the banking system. The following regulations/directives like PSD2 failed in my opinion.

The ECB also had one of those CBDC built much earlier than people have been told. They already had something quite advanced around 2020, with a optimist launch date in 2022 I believe.

It obviously failed miserably and I read a few weeks ago that they are "exploring Ethereum and Solana for digital euro launch".

I would be curious what happened exactly but my guess is the banks just said "NO WAY".

SEPA allows this in theory; in practice, for amounts >10k€, most banks will require you to provide proofs for the transaction due to the maximalist AML laws in the EU.

My bank requires me to download a PDF on their website, print it, fill it out by hand, scan it, and then send it by mail. After a few days, someone will decide to allow it (or not). If it is refused, I don't get any reason why and have to call the client service for clues.

working in the field: Would you please share name or BIC of this institute?

Unfortunately, given my post history it would be easy to identify me, all I can say is that it was a French bank.

> The ECB also had one of those CBDC built much earlier than people have been told. They already had something quite advanced around 2020, with a optimist launch date in 2022 I believe.

> It obviously failed miserably

They had a CBDC but hid it from everyone... but then somehow it failed miserably. If it wasn't released, how? They even had it before they decided to have it (2021). This seems just like a load of bullshit.

When they saw Bitcoin and Ethereum they obviously understood a great disruption was coming and acted on it. SWIFT too.

A Central Bank do not share everything they consider/plan with the public. It is not really hidden or secret, but they also do not make a press release about it.

Also if they are fundamentally gonna transform our banking system they better start early because a lot of things can go wrong. I estimate the time to build such a system is about 10 years if everything goes well.

I do not know exactly what went wrong, my guess is the banks pushed back as much as they could because most of them would have been made irrelevant under that model. Now they are talking about Ethereum and Solana because they understood they have to fight against the Dollar in this arena.

Small money is fine. Any big transaction will get flagged and potentially delayed.

I don't know about you, but I'd rather use a system that allows me to do what I want with my funds without anyone else controlling it.

> I don't know about you, but I'd rather use a system that allows me to do what I want with my funds without anyone else controlling it.

How do we know that this unusual transaction is you doing what you want and not someone else controlling and defrauding you?

A small well-understood amount of friction that significantly reduces everyone's risk is not an attempt to control your funds.

Old systems with arbitrary delays based on twentieth century processes should be replaced, but not everything needs immediate infinite speed to be valuable.

> How do we know that this unusual transaction is you doing what you want and not someone else controlling and defrauding you?

That's what they'd like you to believe, but fact of the matter is that you're still not protected. For example, at my last company, the finance department was phished into changing a bank account number and transferred $50k to another account. Bank just shrugged.

Did they get the 50K back?

Not to my knowledge.

Do you want to live in a world where everyone else can do whatever they want with their funds without anyone else controlling it, though? Seems pretty optimistic for anyone to think they'd do well in that world.

I want to live in a world where responsible, law abiding citizens can use their money however they choose.

In the US, we already have credit scores, a system meant to reflect some sort of trustworthiness. Right now, it mostly determines your interest rates and access to capital. But why not extend that trust to granting people more freedom in how they use their funds?

If I want a large loan from my bank, I’m forced to provide endless paperwork and deal with people, despite having a great credit score. In DeFi, I just post collateral and instantly borrow against it. No gatekeepers, no conversations.

These limitations become even more obvious if you’re a nomad or frequent traveler. Suddenly you’re not just facing your local government, you’re up against borders and layers of extra regulation.

This sentence:

> Why not extend that trust to granting people more freedom in how they use their funds?

followed immediately by:

> If I want a large loan from my bank

with absolutely zero irony is very funny.

I don't understand the humor. Please explain.

“Post the collateral”

I’m fairly sure if you want a bank loan and are prepared to lodge cash in the bank to secure it they won’t need too much paperwork.

Usually people getting loans don’t have the funds in cash already. Defi is nothing like that its currency speculation at best.

If you want to buy a house and you need a loan, it is a deep investigation into your bank finances.

If I have the money for a down payment, and I want to buy a house, I don't need someone poking around at my finances, even if I have nothing to hide.

> Usually people getting loans don’t have the funds in cash already.

Source? People get loans for all sorts of reasons. Loans are backed by some sort of collateral and if that isn't assets, it definitely involves having someone look at your records.

> Defi is nothing like that its currency speculation at best.

Wrong. DeFi itself has nothing to do with speculation. There is $57B locked up in AAVE on ethereum alone. It isn't a toy.

Neither Uber nor AirBnB got anyone’s “act in order”.

Uber just captured wealth via operating at a loss until competition was absorbed or destroyed.

AirBnB just helped further drive up the prices of single family homes and didn’t really have much effect on the hospitality industry at all - it caused a minor observable loss in profit which ultimately resulted in nothing.

Outside of maybe NYC, taxi service in the U.S. was totally unreliable before Uber/Lyft. It's not even a matter of price. It's so much easier to get a ride now in most of the country.

I don't think AirB&B really improved hotels, but it did organize and centralize the "vacation rental" market, making it easier to, for example, rent a beach cottage for the weekend.

Existing Taxi services did not improve - they were replaced by a lower quality, more expensive alternative with a lesser economic infusion to local economies.

Hotels and the hospitality industry did not improve at all.

None of those points refute me or support the argument I was contesting - that a “uber or airbnb of banking” would cause banks to “get their act in order”.

Banks have banded together to create Zelle for mostly instantaneous payments for individuals. As far as transactions between individuals, moving money quickly is a solved money. As for moving money from individuals to businesses, taking a long time gives customers more "float" and more time to earn interest, and it is a feature not a bug.

There are other issues to consider in the payments world. For example, I may not want my payment data to be used for marketing purposes[1] or have my payment processor block my steam purchases[2]. I'm skeptical that Stripe will deliver on those gaps though.

[1] https://www.gao.gov/blog/why-do-banks-share-your-financial-i...

[2] https://www.thegamer.com/paypal-not-accepting-most-currencie...

Banks banded together to create Zelle to offload most fraud risk onto individuals.

They used "mostly instantaneous payments" as the carrot to get those individuals to use the service.

Banks have near zero obligations around Zelle transaction fraud - if they do anything, it's often mostly as a goodwill gesture for a customer.

> 2 - 3 days to get money from one account to another is beyond embarrassing in the modern day

I've had next day ACH between all my various accounts for years now. Wires have also been a thing basically forever though most people need to pay to send and receive them. Same day ACH and FedNow are both out there too, though I've yet to see widespread implementation.

Try international transfers and get back to me

The activities you listed are not the main business of a bank. It's getting deposits and loaning them out with interest. In that regard, they are very successful and it's hard to see how Uber or AirBnB would do better given the disaster of microfinancing.

What other countries are you comparing to? I did a multi year assignment in Germany and holy fucking hell does their banking system suck. It took weeks for my checks to be deposited and reconciliation times were longer. Not defending the US here by my only non-US banking experience was atrocious.

The question is why did you use cheques? I don't know anyone who is not American who has used cheques in the last 20 years or so. I have not been living in Germany in a long time so I can't talk much about the banking system, but I have had transfers with German friends and family which never took more than maybe a day or 2 within Europe.

You take a bad example and compare it to another bad example. Germany is well known to be behind the curve like the US. It's the only western European country I still bring a healthy amount cash when I go there. Wouldn't be the first time I had to pay parking with cash in recent times. Every where else this is a non issue. It's rapidly changing though, but I don't like the common in use PIN terminals as they have no way of hiding the PIN entry.

Now I'm not generally a big defender of Germany, but the reason for much more prevalent use of cash is largely privacy in Germany. And I sort of agree that handing all monetary transactions to the mastercard/visa duopoly is a terrible idea.

We are essentially trading the convinience of a tap for increased prices and unelected gatekeepers that can (and will) easily push sectors out of business, because they don't like what they do.

Regarding the parking, I much rather would be able to pay with cash than the $2 parking plus 50 cents cc transaction fee that you have to pay in many places in NZ.

Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves? That's what makes banking tricky. When there are a surge of loan defaults across the banking system the money supply shrinks rapidly unless the government bails them out. Thus, the need for regulation.

One reason the U.S government has to like stablecoins is because Tether is one of the biggest buyers of U.S treasuries that they use to back their stablecoins.

> Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves?

In a manner of speaking. You need to trust that the issuers have the reserve they claim. There's no way around this, unless the asset in reserve is equally ethereal (i.e. another cryptocurrency).

Tether, for one, almost certainly doesn't have the reserves.

Correct, this is fundamentally the oracle problem. There is no link between the blockchain and the real world which is why only money-like instruments have been successful for whatever value of success this constitutes.

Is there a link for Fiat?

First of all, wut. Second, that's irrelevant because stable coins rely on fiat backing (ostensibly) so you're stacking a new problem on top of what you perceive to be a different problem. If you believed that to be a problem then stable coins give you that problem twice as hard. And a whole mess of new ones too, like zero recourse against the newly intermediated offshore issuers in low-or-zero regulation locales.

You would be surprised about tether though

They are now really backed. It might be they weren’t. Now they definitely are.

https://tether.to/en/transparency/?tab=usdt

All these years all this Fud and so far nobody demonstrated what you clam.

They are also the faster to block their stablecoin whenever there is a hack.

Madoff Ponzi scheme also ran for at least 20 years. And yeah around 1% of total USDT supply is blocked so yeah Tether can very well live on those blocked funds:

https://dune.com/phabc/usdt---banned-addresses

I don’t discuss the past. In 2017 it was tether the one that caused the bubble that put BTC at almost 20k, by issuing tokens backed by nothing

Now they generate more than 10B per year in profits. And they have been using that to collateralize their usdt

It’s clear they are now fully backed. Another question is whether they want to comply with regulations (they don’t comply with MiCA, I doubt USDC does either) but that’s another question

Hate it or love it, they aren’t going anywhere anymore

Have they ever passed a real audit? Not an attestation, not a pinky-swear from a no-name Caribbean bank?

Hey they didnt scam everyone just yet! This is proof it's very safe. </sarcasm>

That link contains audits, and proof of reserves. What are you talking about.

They got bad rep with zero proof

An "attestation report" is not an audit.

Tether claims accounting firms won't audit them, but that sounds like a convenient self-serving lie to me:

> In an interview with DL News, he said the Big Four accounting firms — Deloitte, PwC, EY, and KPMG — are afraid to work with Tether because they fear it will damage their reputations.

> “None of the Big Four companies will audit us,” Ardoino said. But he said securing one of them as Tether’s auditor is a “top priority.”

Is that credible to you?

[0] https://www.dlnews.com/articles/markets/tether-ceo-just-told...

Must admit it isn’t

Usdc is audited by Deloitte on a monthly basis.

It would be pretty stupid for Paolo to end up being naked, now that his business is printing money left and right.

To make it clear I am not pro tether, I am against visceral hate which was justified years ago but I feel it isn’t anymore. Tether gained my sympathy by freezing quite promptly funds from various hacks.

Circle on the contrary have failed every single time.

https://cryptobriefing.com/circle-lazarus-group-accusations/

Anyways this is totally unrelated

It will make for a good Netflix documentary once they get their audit

There is a grain of truth in what you say, but your conclusions are off.

Tether started as a way to pump the Bitcoin price, under the guise of better facilitating payments on crypto exchanges. They’d issue Tethers out of nowhere and use it to buy BTC and wash trade.

It was so successful it got to the level many people thought of it as “as good as dollars”.

This led to massive demand for it outside of Bitcoin pumpers - with criminals, sanctions evaders, money launderers of all kinds. Your granny needs to buy tethers to send money to the scammer she’s on the phone to.

So yes I do think they’ve probably moved away from issuing unbacked tethers. But only because they’ve found another niche which is also extremely suspect.

There is nothing to commend these guys. It’s a massive scam.

Not real audits by a major firm.

Just pinkie promises. David Gerard discussed a while back:

https://davidgerard.co.uk/blockchain/2021/03/30/tether-produ...

Garbage. An audit reviews a trail of origin. Tether got an attestation, that said no more, and no less than, "At this exact moment in time, the balance in this account is $X". You could take a short term loan for the majority of that and no-one would know.

You and I can't buy a house on a mere attestation of accounts - funnily enough, lenders want to see how we acquired that money. But these clowns can stand on stage at Davos and say "Yeah, we've banked over half a billion a day USD for the last two years, trust us, we don't need an audit". I know that comparing investment to revenue is not apples-to-apples, but to get an idea of what that incoming cash looks like? You're on the scale of Saudi Aramco. Samsung. Alphabet.

They kept firing their auditors. They had one done, and then refused to release it, saying "it was not of use to anyone because it was in Mandarin Chinese". What the actual fuck?

Their bad rep is their own fault.

"Tether and Bitfinex are completely independent and unrelated!" Oh yeah, why are the same two people who signed a loan contract on Tether's behalf ... the same two people who signed it on Bitfinex's behalf?

Or let's look at their bank, Deltec, who also made statements to "support" Tether... or specifically, let's look at some of the highlights from a fucking trainwreck of an interview their "Deputy CEO" gave to CNBC:

- was conducted from his gaming rig

- about Deltec's (and therefore Tether's) money movements being several times larger than all the banking in their country was due to people misunderstanding the country's two banking licenses, the names of which HE "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses where they operate?!?), and he "wasn't sure which [banking license] the bank has, but we might have both"

- oh yeah, said Deputy CEO's "resume": 33 years old, by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age of 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland (called Indepedance [sic] Weath [sic] Management) and uhh... Jacksonville, FL.

Once CNBC's viewers started ridiculing and questioning both Deltec Bank and Tether, said Deputy CEO was hastily removed from Deltec's "Leadership Team" page on their website. Once that was questioned, he was re-added...

... and then the entire bank website was replaced with a low-effort WordPress template. Their online banking was Javascript hard coded to refuse all login attempts.

"Sounds legit to me", say the crypto bros.

This is the company who have never produced a real audit despite years of saying they would?

If they are fully backed they’d get an audit. The fact they don’t should tell you all you need to know.

They do exactly this. Buying treasuries is a form of fractional reserve.

It's worth noting that no full-reserve bank has ever gotten a US banking license, even though many have tried.

Sure, you can! Just get Paolo to fire up the tether printer: https://cryptonews.net/news/altcoins/28875896/

In FIAT money lending is the act of money creation, rather than lending existing money held in account. I’m guessing that wouldn’t have a parallel with stablecoins because the technology won’t let you just make new money at will?

> In FIAT money lending is the act of money creation

That depend on how you view money. Lending does increase the volume of money in circulation, in that sense it creates money. But that view is too simple to be useful.

The regulators that regulate, and in particular control reserve ratios (complex calculations that banks have to make about the relationships between their various assets) and base interest rates are the real creators of money.

The side stepping of those regulators is interesting. The conventional view is that it will lead to the same sort of financial instability as existed before the gold standard was abolished and we (pretty much the entire western world) moved to modern banking and fiat currency.

A hundred years of quite stable money was quite an achievement.

> That depend on how you view money. Lending does increase the volume of money in circulation, in that sense it creates money. But that view is too simple to be useful.

Far from being too simple, it is the primary method of money creation in modern economies.

> The regulators that regulate, and in particular control reserve ratios (complex calculations that banks have to make about the relationships between their various assets) and base interest rates are the real creators of money.

Simply setting rates does not create money. It can influence it, but it is not the ultimate cause. Lending is. Reserve banks can and do lend, but commercial banks are responsible for the majority of money creation.

You are suffering frome the twin delusions of simplicity and certainty

Money is fiendish complex and cannot be counted with a one dimensional model

You are deceiving yourself that you understand

The underlying feature of FIAT money creation is debt. And debt is a very natural thing (existing before money) that will just manifest in the crypto system instead.

Not unless you lie about what money you have and just print them out of thin air.

Only a fool would think Tether have never had an audit done out of fear it would prove they’re fully backed.

Yes, you can absolutely do that with stablecoins. Why couldn't you?

How would the “out of thin air” value creation work in a blockchain ledger?

Pardon my very naive understanding of both subjects.

Person A deposits $100.

Person B borrows $100, all the coins move on the ledger.

The ledger could facilitate the transfer while the bank maintains an "IOU" for person A's $100. The bank would be betting that not everyone will come withdrawing at once, just like a regular bank.

Regulation is the only thing that can prevent this from being done with any sort of crypto. The same IOU-based business model as happened with cash, gold, etc, could very easily be implemented using the technology. If you don't like fractional reserve banking crypto isn't a magic bullet that makes it impossible, especially since the general public probably wouldn't be sophisticated enough to know how to stick to "true" crypto vs "IOU-based fractional crypto facades."

But generally regulatory regimes have decided that the productivity advancements offered by the investment-through-loans of major portions of deposits are worth the risks. I don't think the GENIUS act allows this, though, so there's one regard where stablecoins are more-regulated. I worry about the edge cases, though - seems like requiring stablecoins to be paid off preferentially incentives using them for deposits, which could harm circulation if the reserves or followed, or which could screw over non-stablecoin deposit-holders if an institution doesn't comply and then goes under.

(This is closer to how regular banking works than the naive "banks create money by incrementing a number in your account." After all, banks are generally either (a) expecting those loans to be spent or directly giving the money to third parties like car dealerships or home sellers - which is likely to physically move the money to other banks, institutions, or cash, not just recordings in their internal tables.)

As far as I understand, the backing assets aren't on-chain. I give tether $100, they create and issue me 100 USDT on-chain. But they can take my $100 and lend it out. Now whoever Tether loaned the $100 to has $100 and I have 100 USDT so $100 has been added to the money supply, just like with a normal bank.

It depends on the stablecoin mechanism.

Algorithmic stablecoins[1] don't have a one-for-one backing in real world assets so can in theory create new coins "from thin air". The amount they can do this depends on the exact algorithm and the backing assets, and the practicalities of unstable crypto pricing make this difficult in practice.

For example the well-known DAI stablecoin[2] is backed by a mix of crypto assets, but is overcollateralized to avoid problems when one of the backing assets drops in value. The is sort of the opposite of "creating money out of thin air"...

Non-algorithmic stablecoins can do it by being backed by "high quality loan assets", in which case the conventional, non-crypto credit creation mechanism applies.

[1] https://www.kraken.com/learn/algorithmic-stablecoins

[2] https://en.wikipedia.org/wiki/Dai_(cryptocurrency)

Dai might have been algorithmically backed but it’s now a flavor of usdc since it’s backed in its majority by usdc.

So far all algorithmically backed stablecoins have failed. Remember Terra Luna.

> So far all algorithmically backed stablecoins have failed. Remember Terra Luna.

So that's a sample size of 2, and from those 2, 1 has failed. Not exactly "all"

I gave you the most dramatic example. So far no undercollateralized, algorithmically backed $1 stablecoin has sustained a reliable peg at scale over multiple years.

Zero. Nada. There was always somebody somewhere exploiting it.

TerraUSD USN USDN Basic Cash

All failures so far, every time a death spiral.

FRAX started as algorithmic and had to move to over collateralization

Same with DAI

You really can’t call them like that once they become backed by USDC

Your bailey:

> all algorithmically backed stablecoins have failed

Your motte:

> no undercollateralized, algorithmically backed $1 stablecoin has sustained a reliable peg at scale over multiple years

theres no reason a bank couldn't take a stablecoin deposit and fractionally lend against it

thats effectively what already happens with their own internal ledgers anyways

There are defi loans for example. You take an asset like BTC and loan stablecoins against it.

The underlying asset can be rehypothecated, Celsius did this before going bust iirc.

Tether is also the underlying backer of crypto market cap, and has never done an audit of their assets. They've made loans to various crypto market participants.

In theory there are auto liquidation rules etc. In practice humans have not yet managed to create a financial system they can't make asset bubbles with

The same way it does in Excel.

You fire up Excel. Put some numbers in the boxes. Say those numbers are dollar bills you have under the bed.

Then you do SUM(A1:A10) to show your total funds. It has to be legit because Excel doesn’t lie right?

The reward function in the smart contract can be made to increase over time.

That’s not the same though. Banks literally make money out of thin air when they extend a loan (oversimplified of course). They can choose the time and place to do so without having to wait for “checkpoints”. They can even run themselves into the ground by creating too much money (if there is no reserve requirement).

Banks make bank-account-dollars (a form of IOU) but they can't make cash-dollars. When you withdraw, the bank has to give you cash-dollars from its pool and can't just print some. Only reason they're considered equivalent is... uh... because I said so? And they're legally allowed to denominate their bankdollars in dollars.

Anyone can print IOUs, but not everyone can legally call them dollars. That's the only advantage banks have over the rest of us.

Same on the blockchain but without the privilege of conflation. You can have a smart contract that has $100 of ether but trades in 200 shares valued at $10 each. But the blockchain systems prevent you from pretending that bank-ethers and cash-ethers are the same thing. You can label them the same but they're not the same and the system knows that. Even Wrapped ETH, a contract that literally just prints and destroys WETH 1-to-1 with the ETH it holds, i.e. a full-reserve zero-fee bank, isn't interchangeable with actual ETH.

They can all be modeled. Reserve requirements can be written in a similar way to flash loans.

Then bank runs or regulation seem inevitable.

> An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use.

Stablecoins are much more heavily regulated than banks, being required to have 100% reserves under the GENIUS act, unlike banks who generally only ever hold on to 10% of the money you deposit with them.

Using their infrastructure? Why?

Stablecoin issuers require much less regulations because their activity is auditable onchain. If they start misbehaving they get regulated by the free market - people will stop using the given stablecoin and move to a competition.

You think that the free market has regulated or audited Tether? I don't think so, that company is about as sketchy as it is possible to be, and yet it continues to dominate the stablecoin market.

the excuse is actually the other way around i think

banks are an excuse to have closed source ledgers that don't operate efficiently for internet capital markets

if they wanted to, they could open source their ledgers and let anyone make them faster, more interoperable, more programmable, etc.

stablecoins operate on infra that is more like linux for finance, anyone can contribute to blockchain rails and even run their own nodes

The issue with stablecoins is not just regulatory. They are fragile to market shocks.

How so? Stable coins issued under the GENIUS Act are fully reserved, unlike regular banks.

They’re backed by treasuries and subject to treasury market shocks (like the March 2020’s dash for cash). Large redemptions can see a feedback loop of redemption -> rushed selling -> treasury market stress -> redemption. Exactly the sort of scenario one might expect as the secular trend of the weakening dollar bubbles to the market’s surface.

Stablecoins hold a sizable portion of the treasury market - https://fintelegram.com/stablecoins-became-a-top-20-us-debt-...

Government granted licenses are the root of many, many ills.

They're also the solution to many. Like any tool, they can be used well or used poorly. It's not really sufficient to call out that they can be problematic, it needs to be down that they are problematic in this case and that an unregulated system wouldn't simply trade present downsides with larger ones that the regular holds at bay.

> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

Except they are frequently _not_. I dislike crypto on principle, but you can't look at the exorbitant transfer fees and latency that a lot of banks charge for common transactions (Visa/MasterCard are especially bad) and say that crypto has no potential.

Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.

The problem with banks pointing to banking regulation is that they helped shape the regulation - and they did so to protect their business, not to help consumers.

We know that central banks are great at monetary policy. We know that decentralized protocols remove a lot of the more parasitic traits of banks. Why not have a central bank currency that can be traded on the blockchain, especially since converting it to real money will still entail KYC?

> Why not have a central bank currency that can be traded on the blockchain, especially since converting it to real money will still entail KYC?

Because literally the only point is to avoid the existing banking system and you can do that with a postures database with much less cpu involved.

> Because literally the only point is to avoid the existing banking system and you can do that with a postures database with much less cpu involved.

Ethereum is actually very low resource intensive nowadays.

You can run a validator node on a RPI, a full sync node on a Intel N100 minipc with a big fast SSD and the "light clients" can probably run on something very small.

I have seen banks having to bring semi-trailers full of diesel generators to plug them to their mainframe because the current requirements were too high for the grid during big batch jobs.

I like crypto (I'm formerly in the industry), but that's not quite a fair comparison.

1. Running a validator is inexpensive in terms of compute, but there are 1,000,000 validators or something, which adds up to a lot of CPU usage. Of course, I think it's insanely awesome that you can run some code on Ethereum and it'll be replicated on 1,000,000 independently-operated machines, but it's not a very CPU-efficient strategy. 2. Banks doing those batch jobs probably had much higher TPS than ethereum.

> Banks doing those batch jobs probably had much higher TPS than ethereum.

Yes the platform running in most banks, usually built on what we call "mainframes", is still mind blowing and with incredible performance. Also just one of those CPU is about the price of a house...

Also the requirements I cited is for running an Ethereum mainnet "Layer 1" node. And most "TPS" happens on the layer 2s anyway.

So it is hard to compare technically. But one thing for sure is becoming an active participant in the Ethereum mainnet has a very low barrier. They got rid of the whole intensive "Proof of work" part about 5 years ago. For a full sync node the waste is more at the bandwidth and disk levels.

Just because they ditch the proof-of-work doesn’t make it efficient.

The blockchain structure, the validation mechanism etc are still a very inefficient way to do general compute or database type functions.

There's not that much CPU involved. Most of the stablecoins are on Ethereum, and I think the rest are on other proof-of-stake platforms, not Bitcoin.

Ethereum is able to process something like 150 transactions per second, using about 1,000,000 validator machines.

Postgres running on a single Raspberry Pi is something like 200 TPC-B read/write transactions per second.

Saying Ethereum “is not using very much CPU” is baffling to me. It is the state-of-the-art in this regard, and it uses something like six orders of magnitude more CPU than a normal database running a ledger workload?

First things first, I'm a crypto-sceptic - to put it in the mildest terms possible.

You're spot on with CPU usage. However: how would you design a RasPi-efficient, fault-tolerant, decentralised ledger with strict ordering and a transparency log?

Consider CAP. Existing banking systems choose partition tolerance (everyone does their own thing all the time basically), and eventual consistency via peering - which is why all settlements are delayed (in favour of fraud detection / mitigation), but you get huge transaction throughput, very high availability, and power efficiency. (Any existing inefficiencies can and should be optimised away, I guess we can blame complacency.)

The system works based on distributed (each bank) but centralised (customer->bank) authority, held up by regulations, capital, and identity verification.

Online authority works in practice - we collectively trust all the Googles, Apples, etc run our digital lives. Cryptocurrency enthusiasts trust the authors and contributors of the software, CPU/OS vendors, so it's not like we're anywhere near an absolute zero of authority.

Online identity verification objectively sucks, so that is out the window. I guess this could work by individual users delegating to a "host" node (which is what is already happening with managed wallets), and host nodes peering with each other based on mutual trust. Kinda like Mastodon, email, or even autonomous systems - the backbone of the Internet itself.

Just a brain dump.

Why does it have to be decentralised (by which I assume you mean permissionlesss to join as a validator?)

The only reason for this - it would seem to me - is the ability to have nobody in control who can be subject to law enforcement.

If you need this kind of decentralisation blockchain, and all its inefficiency, is the only choice.

Societies should not require such things though. They need to have trustable institutions and intermediaries to function, in finance and many other areas.

> Societies should not require such things though. They need to have trustable institutions and intermediaries to function, in finance and many other areas.

...which is more or less the same conclusion that I've arrived at by the end.

Also the capacity is significantly higher with L2 included, and increasing rapidly.

With zkrollups and a decentralized sequencer, you basically pay no penalty vs. putting transactions on L1. So far I think the sequencers are centralized for all the major rollups, but there's still a guarantee that transactions will be valid and you can exit to L1.

Scaling is improving too. Rollups store compressed data on L1 and only need the full data available for a month or so. That temporary storage is cheaper but currently is still duplicated on all nodes. The next L1 upgrade (in November) will use data sampling, so each node can store a small random fraction of that data, with very low probability of any data being lost. It will also switch to a more efficient data storage structure for L1.

With these in place, they can gradually move into much larger L2 capacity, possibly into the millions per second. For the long term, there's also research on putting zk tech on L1, which could get even the L1 transactions up to 10,000/second.

there's 1,000,000 validators (defined as a public key), but you can run multiple validators per machine. Most estimates that crawl the p2p network to index nodes comes out at like ~20,000 machines

doesn't invalidate your point but it at least shaves off a few orders of magnitude

and a single PG node is not a fair comparison, we're talking 100% uptime global networks. Visa does about 70,000 transactions per second - how many servers do you think they run across their infra?

> Visa does about 70,000 transactions per second - how many servers do you think they run across their infra?

So uh, how do we scale etherum's 150tps to that?

ZK rollups which greatly compress data on chain without losing security guarantees, combined with temporary storage using data sampling so each node only has to store a small portion of it. The zk rollups are live and support significantly more than 150tps today, and the data sampling goes live in November. There's a lot more work to be done but that puts the major pieces in place.

But with multiple parties involved, who has the rights to read and write to the postgres instance? How do we make sure transactions were not forged? How do we know data at rest is not being tampered with?

Blockchain solves that. Newer blockchain protocols especially an L1 is much faster, easier on the environment, and provides all the immutability, transparency, and traceability benefits.

You know you can just use regular cryptography to validate data, right?

Also, you always have to trust someone, in this case Stripe.

Regarding L1 blockchains, how exactly do they solve the speed problem for a distributed global database that needs to be replicated everywhere for the security guarantees to actually work?

What do they forgo out of https://en.m.wikipedia.org/wiki/CAP_theorem ?

Pretty much always A. In systems like this, it's better to deny transactions than allow inconsistencies.

non-potatoe hardware and elbow grease in the software https://github.com/anza-xyz/agave

Is there a white paper for what would be a revolutionary discovery in the field of software?

We need to trust those running the system.

Societies cannot function without trusted intermediaries, in finance and many other things.

If we are in a democracy then the government regulates such organisations and should punish those who do not comply.

Blockchain doesn’t scale as a replacement so the point is moot.

> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.

All transactions must be derisked (there is a fallback if the transaction fails). This usually means backed with reserves, which also means they cannot be instant.

Now if you don't care for the risk management of a bank, sure, go ahead and do what you would like.

This isn’t even the reason, because the reserve status can be immediately verified across institutions and is often backed by a sovereign in some way in case of a run and payment systems can circuit break, etc. There are legacy reasons depending on the bank network such as business hours and batching and liquidity optimization, but these are increasingly less meaningful and systems like FedNow and others offer instant and final transfer.

The real and continuing reason for the delay is to give time for repudiation and assessment of fraud, money laundering, and other financial crimes risk. The risk of instant transfer is instant theft or otherwise absconding with money that shouldn’t be yours. In fact settlement delay makes reserve problems worse because you effectively “hold” money that could potentially not be properly secured during the hold and cause a default on a transaction that was otherwise taken out of balance and pending transfer. Instant clearing and settlement makes this unambiguous. But it also makes transactions as risky as a cash transaction - instant and irrevocable.

For some customers this is legitimately ok. But by and large most customers benefit from the delays more than they’re hurt by virtue of having a window to repudiate a transaction that is illegitimate. It’s just they don’t recognize that value until they need it. We all benefit from a system that disincentivizes criminality overall. It’s hard to recognize it because we exist day to day with that benefit and it’s hard to prove the negative, but there were times without the protections against financial crimes and financial oversight and they were NOT better times. They were objectively worse, so our ancestors built a set of guard rails to prevent the endemic badness around us.

It appears though as they die off, and as we become less attuned to history, we are very busy ripping apart the guard rails our ancestors very carefully and thoughtfully built into our societies like some junior engineer who assumes every line of code written before them was written by an idiot. Take the American CDC as a case in point - the modern public health system was a very hard won victory against endemic diseases by generations - and as the generation who established it expires, we rip their legacy to tatters.

> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.

I think everywhere but America has already figured this out.

Instant bank payments are pretty standard everywhere else, even third world countries.

The US banks just won’t do it across the board unless it is mandated like ACH. Many in the banking system feel comfortable with this FedNow rollout taking many years. It’s ridiculous.

https://en.wikipedia.org/wiki/FedNow does instant settlement in the US.

not between countries

Last time I paid for something across borders, transaction has completed in less than 10 seconds and I got both updated state in outgoing bank account, and at the receiver side.

doesn’t work for all countries, transfer limits, have to trust some custodian, etc. etc.

India's payment network is a good case study. The US is /not/, because US banks are lazy.

> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.

How long is settlement for you and what are the fees. Are you talking about banks for credit card payment processors A business needs a processor which will take fee and add some delay

> You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank

stablecoin issuers are for all intents and purposes banks.

they'll try very hard to stop anyone from calling them that, but in essence, they give you a note (a crypto coin, in this case) in exchange for a promise that they'll give you back the amount of fiat printed on the note. this is the primary purpose of a bank.

No, a bank is regulated and insured and we have a lot of experience handling banks that go insolvent or otherwise fail.

Stablecoins are three raccoons in a trenchcoat who pinky promise you can trust them.

this is exactly what I meant when I said

> they'll try very hard to stop anyone from calling them that

because they are banks at the core of what they do, but don't want to be regulated like banks.

no, second-layer-bank :-D

I think the most disruptive thing about stablecoins is the ability to opt-into your monetary system of choice.

It's hard for the average non-US person to opt-into the US financial system. Sure, they could hold dollars in banks, but local monetary policy can nix that privilege at anytime by imposing foreign exchange controls. It's happened before, in some of the largest economies in the world: China in 2015, India in 2013, Argentina in 2011.

The current way users solve this problem requires a lot of resources. That's why you usually only see rich people have Cayman accounts, Canadian real estate, and shell companies in Panama. Stablecoins on permissionless blockchains make this process 100x more accessible for the average person.

So yes, stablecoins currently let you circumvent regulation.

But regulation can be a prison where you can pay to be free.

So what happens when it costs nothing to get out of jail? What kind of strains do this place on economies that people escape, as well as the economies that people join?

I guess we'll have to wait and see.

> But regulation can be a prison where you can pay to be free.

As opposed to no regulation where you can't? I don't understand this sentiment at all.

Right now, the stability of your currency is mostly dictated by where you were born

My point is stablecoins give you choice to opt out of that. The only way to opt out before was very expensive

This is as wrong as everytime someone says "the benefit of Bitcoin is you can just walk all your assets across the border!"

It fundamentally misunderstands how foreign exchange works, or how government backed currency works.

You cannot "opt out" of the local currency: period. It is the only currency which can extinguish tax obligations. And even if it wasn't government backed, you can't trade in a currency no one wants in the first place.

This should be trivially obvious from the observation that how much water a gold bar in the desert buys you is going to be pretty highly variable.

Just because badly managed local currency is required for taxes doesn't mean that most people in that country _must want_ to hold it. Plenty of trivially obvious evidence to the contrary

I assume you've never experienced hyper-inflation? If you have, do you think it's fair that you were forced into a hyper-inflationary currency? And, if given the means to, do you think it's fair that people _should_ have the ability to choose?

That's not the point: the point is "how do you buy the coin in the first place?"

If you live in a place then you have to trade in whatever the local currency is. You didn't "opt in" to a particular stable coin: someone has to be willing to accept that specific coin as payment.

And they can't just exchange it to another: the exchange has to want to sell that coin in exchange for the coin you transact with.

And to interact locally with the government, you need someone who is willing to sell coins in exchange for the currency you don't want.

In practical alternate market economies, the only currency which trades tends to be USD and the exchange rate will be bad because it's a grey market. I would go further and posit that where crypto has any impact, it's people because it's a window into being able to hold USD.

Certainly the only question anyone asks about Tether is whether they actually have the USD to cover their position: no one wants a Yuan based see stable coin.

I think it's pretty easy to buy the coins, regardless of government intervention. Countries (ie China, Nigeria) have tried and failed to restrict access to cryptocurrencies. Whether you get good execution is a separate issue- my point is that stablecoins enable you to execute these trades in the first place.

Agree with the posit- stablecoins grew a lot during periods of strict monetary policy (ie capital outflow from China starting in 2015, hyperinflation in 2023).

Note my original post said disruptive, not good. Meant it in the truest sense of the word; both good and bad comes out of it.

you’ll note that many countries that impose capital controls have large informal economies. this is not a question of theory, there are many countries where millions of people do hold significant sums in dollars and other foreign currencies, regardless of whether they fulfill tax obligation. enough people do this and you also get the informal economy transacting in these currencies. you are “proving” the non-existence of something that in actuality is practiced by millions of people every single day.

And now western countries can also have ultra corrupt, opaque and controlled by a small oligarchy group currency system, just like some 3rd world countries. Yay, progress :)

If someone spends significant effort to gather documents proving that their family was forcibly relocated from Poland, they may be able to become a Polish resident and then spend a year or so doing paperwork, bringing all of the documents that are required according to the official web site for some task to the appropriate government office where they are then told that other documents are required, or that nobody in that office even knows what documents are required, and so on, and after that time they may achieve Polish citizenship. You know, in recognition of the fact that their family is in fact Polish. But during that year or so, they may have trouble using the banking system because of sanctions on Russia and because no Polish bank will serve them until they become Polish. So their employer may be on the lookout for alternative payment rails.

The person you are responding to is not arguing there is not a use case for crypto in cases like this.

They are arguing that stablecoins, specifically, require an off-chain entity that ultimately control them. And if you have an entity actually in control, why go through the trouble of blockchain? Then you can just have the controlling entity run a normal non-blockchain ledger.

I like the argument elsewhere in this thread that the actual reason is that it allows running a bank while pretending it’s not, bypassing regulation meant to protect depositors.

> But I imagine most banks would point to regulation as a reason for the delays

There is also good regulation e.g. the EU made it so banks process transactions within "10 seconds", including and especially cross-border transfers for SEPA countries (Single Euro Payments Area). https://www.europarl.europa.eu/news/en/press-room/20240202IP...

So banks willingly being slow with transfers is perhaps a question for your local policymaker to remind them they can do better.

And projects like Tempo are a good example of private sector forcing incumbents and government to move faster

> they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

International wire money transfer is far too difficult today. And after you've sent it, you still need to wait minutes (hours?) for the receiving end's bank to actually process the wire and move it into the recipient's account (correctly).

Then you need to nag the receiving party to check their account every few minutes so that they can inform you that they actually did receive it successfully. What if they're in a different timezone? 12 hours off?

Moving money on a blockchain is far simpler.

In eu we have sepa instant transfer

https://www.santandercib.com/insights/innovation/sepa-instan...

That becomes mandatory in October this year

I can transfer money from Europe to Brazil in seconds with Wise. I press the button and the money is nearly instantly available in the Brazilian account via PIX. The same in the reverse direction is possible but only if you have a more modern bank in Europe, eg. N26 or Revolut.

I was thinking more of gp's comment "and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging"

Wise isn't great for paying suppliers. Their business account limit for debit/credit is $2k, and for ACH is $50k. They have higher limits if you fund with wire, but then we're back at the starting problem again...

And still, you have no way of knowing that the receiving party actually got it. On a blockchain, the source-of-truth "database" is public.

My understanding is that Wise isn't a true international transfer. Wise has money already in a Brazilian account, and when they receive money in their European account then they send you money from their Brazilian account. If they don't have enough money in that Brazilian account then it can't be instant like it is today.

From my perspective, if it quacks like a duck...

and if wise bans you?

Not the full picture: Wise is that big that it has already lots of local accounts and/or correspondent banks; so basicly "you get the money from Wise" but from a "local payment way/scheme" (to which Wise is connected in the background through several layers)

This is a much more optimal solution than blockchain.

that we need one company to achieve such big scale that they literally are regulated in every single country and basically become monopolistic in terms of their influence?

a Blockchain based system can maintain similar effects but with a balance of power

think about it

No worries, if any DLT-system would become somewhere somehow relevant, any regulator will catch it sooner or later.

Though, its an issue for the company, as this allocates a lot of resources wrongly.

I get a push notification if a wire comes in.

And if I send one I’m carful the details are correct, but I’m not completely doomed if I typo the account number.

100% why am I going to use a permissionless blockchain….

To get coins fully controlled by circle.

On a chain with low fees controlled by Coinbase (base) for example.

In this case this new L1 won’t even be distributed by anyone initially too.

It all seems like a Ponzi scheme or small utility for international users. Otherwise I don’t know why you’d trust these centralized authorities.

What stops someone at circle deciding to issue more usdc without real dollar backing

> What stops someone at circle deciding to issue more usdc without real dollar backing

Well, the law now. The recent stablecoin legislation has a lot of new regulations.

If you mean what technically stops them, then nothing. But that's true of all the crimes I can think of, the law can only be enforced after the crime takes place.

My current best guess is that people are finding stablecoins valuable because they are effectively barer assets issued by an entity in another jurisdiction that has no requirement to surveil or control how those tokens are moved around between parties, and hence it allows you to skip a lot of the regulatory overhead you would normally have in dealing with a local bank. Of course this can be stopped by states eventually, but it helps when the jurisdiction of the issuing entity is allowing it.

Stablecoins are generally used:

- by USA government (indirectly) to re-dollarize the world without generating too much USA inflation, another IMF SDR mimicking China usage of foreign currencies to avoid hyperinflation;

- by many migrants in the I world to send money home, something in the III world could be converted to USD at a much cheaper rates and with much simplicity than classic banking/money transfer solutions;

- as a hedge against local currencies, considering dollar or some other currencies much more stable (see for instance the Argentina forcibly conversion overnight of USD accounts to ARS with enormous loss in 2002;

- as a decorrelated asset for DeFi trading on non-stablecoin cryptos (meaning market timing, buying BTC, ETH, SOL, ... when they dip, swapping then to some stablecoins when they top, waiting with the stablecoin for the next dip to buy).

In that regard the (unlikely) real existence of the collateral they claim is not much relevant: as long as most trade on stablecoins come from DeFi the Venezuelans, Bolivians, ... who choose them to bring USD home, the few company using them to pay B2B stakeholders in various countries are still happy anyway, as long as the stablecoin remain de-correlated to other crypto traders are happy anyway.

Tokenised stocks are more likely used to circumvent regulations since you can buy them swapping non-KYC coins against them avoiding capital gains taxes, at least partially.

The irony is that valid international transactions must be enforced with centralized rules, and thus a decentralized ledger like BitCoin can never operate in this space.

Contradictory requirements.

and yet millions of people do use crypto to do international transfer of dollar-denominated assets and don’t seem too concerned with whether it is valid or not when it is usable money in their pocket.

Stripe's a $90bn+ company because it builds & sells tools that make it easy for software engineers to programmatically move and manipulate money. This is a no brainer for them (regardless of how mainstream stablecoins/cryptocurrencies/blockchain eventually become)

Lots of things have a cost, and lots of things are difficult to manipulate. Bitcoin has value only because of speculation and the Greater Fool Theory. There's nothing fundamentally distinguishing BTC from any random shitcoin. Why is Bitcoin Cash worth so much less than vanilla Bitcoin?

It's very difficult for many folks to accept this, but the difficulty of producing something (mining) does not determine its economic value: https://en.wikipedia.org/wiki/Labor_theory_of_value

Yes but bitcoin is essentially useless as an unit of exchange because it’s extremely unstable and deflationary nature. The only “logical” thing to do with it is to HODL.

This is not really correct.

When a stablecoin is issued on a public chain then the issuer cannot secretly censor transactions and the activity of the issuer in general is auditable.

You also get access to all the magical DeFi stuff.

Other than this you, as a person, don't need to be aligned with the current political regime you live in to open a stablecoin "bank account". This on its own is a huge breakthrough.

The value of Bitcoin also depends on your ability to convert it to real world money, since contracts are denoted in real world money.

I'd argue the real value of money lies in contract enforcement. And I am talking about real world physical enforcement like police throwing you in jail. In financial engineering literature we don't really care about the real value of money, the only assumption needed is that contracts are enforced. If that is the case then you can hedge.

For example: You sign an employment contract where you get paid in USD. You also sign a rental and utility contracts in USD. If salary > housing cost, then you essentially have your housing needs hedged. You don't really care that USD has "real value". The value of USD lies in the fact that these contracts are enforced by the government.

The rarity of a currency is important in the sense that contracts don't make sense for all parties if the currency is too abundant. For example, if you can find USD laying on the street, then you would not work for USD. The rarity mechanism itself is not important.

"they don't have to take days to process a transaction" Unlike blockchains, banks are required to check the tx validity against fraud, money laundering, sanction lists, terrorist financing etc, must ensure funds could be returned if a mistake was made. They could not be processed on weekend or at night, because some transactions require manual review by human workers.

Have you looked into Ethena USDe?

It is completely decentralized and doesn't use a flawed algorithmic stablecoin mechanism like Terra-Luna but rather creates synthetic cash exposure by shorting perpetuals against collateral the same way a TradFi investment manager would manage their asset allocation exposure. The perps are traded on DEXs and I believe the BTC and ETH is held in on-chain vaults.

This is a solid model and I believe the leading decentralized stablecoin.

Things like USDT and USDC are essentially tokenized real-world dollars. Nothing inherently wrong with that, for example the Eurodollar market has existed for decades, but it does require oversight that collateral reserves are what they are and also means they are not truly decentralized as you point out.

I like USDe, but it's not completely decentralized. You still have to trust whoever's trading the basis like you have to trust Tether/Circle to trade treasuries.

USDe is definitely not decentralized lol.

It's a hedge fund with a dual structure

Hi, thanks for correcting me on that. It actually says right [here](https://docs.ethena.fi/solution-overview/risks/exchange-fail...) that they use CEXs to trade the derivative positions so I clearly didn't do my due diligence on this. I don't mind being wrong but I shouldn't have been spreading misinformation when I didn't know the details so I apologise for that.

I'm actually quite disappointed that this is how they implement the protocol because to me the main benefit of the hedged collateral model was that it was the one way to produce a truly decentralized stablecoin. Do you know of another project that implements the same mechanism fully on-chain and decentralized?

At first stable coins were to avoid taxes when selling and buying again by skipping the round trip to fiat.

But now, the use case Stripe is talking about is basically the equivalent of creating WoW Gold for companies, and bypassing state money entirely, but IRL.

This is a dangerous idea.

Big corps have become immensly powerful, but they are still kept in check by the state for 3 reasons: the monopoly on law, violence, and minting money.

Lobbying is taking care of the law.

And now they are coming for the money.

Crypto currencies were supposed to taken the power of currency from big actors and back to the people. It's going to take it from the state to companies.

Soon, they will effectively have more power than the state, and citizens will be screwed.

The only convincing explanation of the benefits of stablecoins I have seen is that it is a backdoor for implementing narrow banking, which libertarians love and economists and central bankers hate (as it would cut off credit to the economy).

A narrow bank is a bank that takes deposits but doesn't make loans, basically parks the cash at the central bank or into risk free instruments. So it provides you with payment facilities, very low interest rates, without the credit risk that comes with a large bank that has exposures to all sorts of risky businesses.

Everything else is either temporary benefits of arbitraging slow moving regulations (but KYC, consumer rights, money laundring regulations, etc are quickly catching up), or as you suggest, some non sense about a zero trust system (crypto / public ledger) that fundamentally relies on trusting a custodian (so you might as well use an oracle database and spend in licensing what you save in energy cost!).

Thank you for this explanation!

I had tried to describe this effect recently when Trump lowered bank reserve requirements, urging traditional banks to buy stablecoins with the extra funds this gives them.

My comment was that it increased risk (less reserves), without any potential upside in new economic activity. Basically all the money would flow to the govt in the form of treasuries the stablecoin issuers buy.

As opposed to the banks, you know, lending money to businesses.

Bravo! I don't think it can be put more plainly than that.

> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

They allow businesses to act like banks without obtaining a commercial banking license. Initially this circumvents regulation, but over time, it allows entities to outsource solutions for those pesky regulations (compliance, audit, etc.) to third parties.

> Implement something the banks just aren't willing to do themselves?

I think that's it. We're very unlikely to see international transactions between banks happen as easily and as quickly as they can with a stablecoin, even though it's technically possible.

I think part of what makes it easier is that with crypto there's "no take backs" since it's largely impossible. Banks have to worry about fraud constantly because they're somewhat liable.

Stablecoin issues are just waving their hands and saying “blockchain” to try to magic away that liability.

Otherwise they’re doing the exact same thing.

> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

Circumventing sanctions.

European Union forced all banks that offer instant-transfers to make them for free starting 26‘ if I remember correctly. That works rather well!

Bitcoin makes the least sense of any of these schemes. Proof of work is just proof of sota ASIC ownership, which is just proof of stake by another name. Why not just use POS like everyone else and avoid dumping the carbon? Bitcoin is going to be one of those things in the history books that will seem utterly incomprehensibly irresponsible to future generations.

Bitcoin makes a lot of sense, if you don't want central banks to print your monies and devalue it. If you don't care about that, then it doesn't make sense for you. But really, the 21M cap is about only point that matters about BTC, the other features have to be there but are secondary.

Nope, still no sense. There are plenty of crypto projects out there that are less centralized, don't dump entire countries worth of carbon into the air, and still manage to have the same logarithmic distribution that Bitcoin does.

BTC was a first draft that somehow metastisized into a literal meme virus that consumes a stupifying proportion of the world power supply.

It's idea cancer. The fact that it continues to exist is a sign of a faulty memetic immune system in our species.

Bitcoin makes a lot of sense if you’re a libertarian weirdo who thinks fiat currency is the worst thing ever.

It makes no sense in the real world.

The "real world" includes countries with double or even triple digit inflation, and if you live in such a country bitcoin absolutely makes sense.

Phew seldom have I heard such a wrong thing. Bitcoin makes absolutely no sense as an actual transacting day to day third world currency because A) it is completely incapable of scaling to the task due to the projects allergy to sensible development hobbling it to 20 year old technology B) because of A, the transaction fees are many times the weekly salary or even yearly salary of those target users.

Bitcoin was an interesting idea. 20 years ago. It's entirely without merit now, but it will take decades to fade into obscurity, pumping out carbon the whole time.

Current bitcoin fees are 17 cents. Not anywhere near weekly salary.

Regardless, they don't need to use bitcoin for their day to day transactions. Just somewhere to put their savings that won't be inflated away. USDC would make much more sense of course.

Half of the world's population lives on less than US$2.15 a day. You're right, nowhere near weekly salary. Just three transactions a day will only use up 25% of their earnings.

> Just somewhere to put their savings that won't be inflated away.

What fucking savings?

And uhh, what are they doing, then, just making periodic conversions to fiat that is, as you point out, "inflated away"?

You're trying to have it both ways, "crypto is immune to inflation problems, that's why it's important to a lot of the world", and then when someone points out transaction fees, "Oh, you wouldn't really use crypto daily, you'd still use that fiat with inflation problems, you'd just keep your "savings" in crypto".

It is laughable how much fervor goes into these kind of statements that have had little to no critical thinking applied.

Until a single tweet from Musk or Trump causes it to lose half its value.

Empirically speaking the Bitcoin price has always fully recovered within a year or two, while there's not a single instance of a highly inflationary fiat currency regaining its original value (which would entail significant deflation).

[dead]

Banks could offer instant settlement, in theory. But they don’t. Blockchains plus stablecoins do.

> remind them that they don't have to take days to process a transaction

And in a lot of places, they don’t. I haven’t had to wait days for a transaction for… more years than I can remember, in the UK or Australia.

> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

What open-source shared ledger would you suggest is a better fit?

postgres

>At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

This is missing the fundamental idea behind blockchain. You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent. Once you add those boom you have yourself another blockchain :-)

>So what are stablecoins really trying to do? Circumvent regulation?

No, stablecoins have less regulatory burden because of the public ledger removing the need for manual review and verification by various intermediaries. They are still compliant with regulation.

> You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent

Consensus between who? The stablecoin issuer, stripe in this case, is a single party, who are they coordinating with that requires a consensus algorithm?

How does centralized SQL replication do consensus, compared to a DLT?

Blockchain consensuses: Which is the next block, Which protocol version must what quorum upgrade to before a soft fork locks in, Whether a stake should be slashed, Leader/supernode election (handled by the UNL text file in git in rippled, which underpins R3, W3C Web Monetization micropayments, and W3C ILP Interledger protocol (which FedNow implements)),

When there are counterparties and then they might as well just off-site replicate the whole database or blockchain locally, and run indexes and queries at their expense.

And then there is a network of counterparties willing to grant liquidity to cover exchanges that cover multiple assets and chains, who want to limit their exposure by limiting the credit they extend to any one party in the network and account for an entire auditable transaction. (Interledger ILP Peering, Clearing, and Settlement)

Private blockchain or SQL replication scaling woes? And then implement mandatory keys in an append-only application.

This or something like Trillian?

From "PSA: SQLite WAL checksums fail silently and may lose data" https://news.ycombinator.com/item?id=44672902 :

> google/trillian adds Merkle hashes to table rows.

> sqlite-parquet-vtable would workaround broken WAL checksums.

> [...] [cr-sqlite implements CRDT, which is one of a number of newer ways to handle consensus in SQL database replication ]

> (How) Should merkle hashes be added to sqlite for consistency? How would merkle hashes in sqlite differ from WAL checksums?

I suspect this was downvoted in ignorance.

Do you understand how consensus matters with distributed databases and DLTs?

Do you understand the difference between WAL checksums and Merkle hashes?

If the WAL checksums are not sufficient, is the SQL database sufficient? Why are Merkle hashes not "bolted on" but native to blockchains?

How many integrity hashes should be bolted onto a SQL database for there to be replication with data integrity?

> It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

I think the unspoken part here here is that the lack of transparency is a feature for some users.

I'm generally a cynic on cryptocurrencies and I think they're kind of terrible for society in a lot of ways, so none of what follows should be taken as a positive opinion on cryptos. I'm just explaining how they work.

There will always be two competing interests with regards to currencies:

1. On the one hand, consumers make mistakes and get scammed, and want reversible transactions.

2. On the other hand, sellers don't want reversible transactions: if you sell a bike for currency and the transaction gets reversed, you don't get your time back even if you get the bike back in mint condition--and getting the product back at all isn't always possible, if the product was a tattoo, a class taught, or some intellectual property.

In traditional financial systems, anyone operating a financial system in a centralized way always gets bullied into reversing transactions. If you're the bank running it, you just screw over the seller most of the time because they are too small not to work with you and the customers you bring, and buy insurance for the rest of the time.

With stablecoins, so far, this hasn't happened. Sure, if you complained to Circle about getting scammed in USDC, in theory they could just un-issue your spent coins and issue you some new coins, but that would be in violation of their entire crypto ethos. Like fiat, the value of the currency is only based in belief in the issuing central entity, but unlike fiat, part of that belief in the issuing entity is built around them not reversing transactions.

Will that belief be enough to hold it, forever? I don't know, but I think it's definitely a stronger power than people believe it is, even if it's not literally the power of electricity being poured into hashing.

As a side note: not all stable coins are issued by a central entity. There are two other types of stable coins I'm aware of:

1. Collateralized: Examples: DAI, VAI, and I think MAO. Basically, anyone can borrow (mint) these currencies by storing other assets in the protocol. So for example you can deposit $1000 worth of Ethereum into the DAI protocol and that allows you to borrow some safe amount of DAI which is minted on demand, say 400DAI. If the value of your deposited Ethereum falls too close to $400, the protocol automatically sells the Ethereum to reclaim DAI which is then burned to keep the price of DAI from falling. But assuming your margins stay safe, you're able to repay your DAI at your leisure.

2. Algorithmic: Examples: TERRAUSD, IRON. These are paired with a second, unstable cryptocurrency (TERRA/LUNA, IRON/TITAN) which is used to stabilize the coin. If the price of the stablecoin rises above $1, you mint more and distribute it in some way, diluting the coin to bring its value back to $1. If the price of the stablecoin falls below $1, you mint more of the unstable coin and use it to buy back and burn the stable coin. In case it isn't obvious: this only works if the unstable coin has value for some other reason, and in both the example cases--it ultimately didn't and both coins came unpegged when the unstable coin crashed to 0. FRAX/FXS worked this way originally I think, but ultimately they've moved to a more collateralized model.

They are all mostly using crypto as a replacement/alternative to centuries old hawala/hundi system.

> centuries old hawala/hundi system

I’ve always wondered how disputes are handled under such systems.

People are rushing to do CDO-squared (collateralized debt obligation from 2006) type financial products using stable coins. And one company has already created an ETF product linked to an on-chain CDO-style debt product.

I think the financial industry has figured out a way to do an end run around all financial regulations written since the 1930s.

I think like vaccine mandates, we will all have to "relearn" why we wrote this regulations in the first place the hard way.

They are trying to give credibility to as value-less asset that’s historically been used for illegal activity, gambling, and predatory selling of said assets to people who don’t understand them.

Tether claiming they have the ability to back up their coins with USD lets crypto people claim their nonsense actually has value.

Of course the entire thing rides on the “trust me bro” guarantees offered by tether. They could erase a lot of the stink by going through an audit but for some reason they won’t.

> They could erase a lot of the stink by going through an audit but for some reason they won’t.

They're required to by the new stablecoin legislation [0] in a provision that almost looks specifically targeted at Tether. Not sure what the time frame for this is, or if there's actually any appetite to enforce the law if they dont produce a clean audit.

[0] you can read the full text of the law here, too long for HN: https://www.govinfo.gov/content/pkg/PLAW-119publ27/html/PLAW...

slower transaction processing is more profitable, because banks can profit from interest in the interim. It's not some law of nature that it can't be done faster.

Do bank transfers really still take days in the US?

>> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

yeah and this is great. I couldn't care less for banks protection.

Revolut blocked my account with 8k on it for 8 months, though their app said it will be max 2 weeks.

Customer support ignored me for 6 months until I said I am going to court.

So yeah fuck them. The is a case for banks but there is also a case for me keeping a chunk of my money in stable coins so its actually mine.

Edit: and to clarify I didn't do anything illegal, after I threatened them they completed their whatever they did and unlocked my funds that have been locked for 8 month.

And guess what - no consequences for them leaving me at that time without my safety net.

> The is a case for banks but there is also a case for me keeping a chunk of my money in stable coins so its actually mine.

Considering that stablecoin wallets can also be blocked what is the case for you keeping a chunk of your money in them?

[flagged]

You are missing what many are missing, which is that a centralized stablecoin like USDC on a public blockchain is already much more useful and powerful than a dollar in a bank account, and that will only 100x from here.

The reasons why are left as an exercise to the reader :)

No, they aren't.

But I suspect that if you had to construct an actual argument instead gesturing smugly at innuendo that your point would fall apart.

Please explain your "100x" stablecoin argument and if you feel like it, your asset ratio of items denominated in USD vs USDC.

>The reasons why are left as an exercise to the reader :)

Tell me you are full of shit without telling you are full of shit

Stablecoins are a necessary legal hack.

The US has regulated itself into a corner when it comes to AML/KYC. Those regulations ended up causing more problems than they solve, but they can't ever be undone. If something ever happens, like a terrorist attack funded by money laundering activity that the existing regulations could possibly have prevented, the blame will fall squarely on the shoulders of the politicians who decided to undo them.

It's much easier (and politically safer) to say that stablecoins are just a different asset class, and hence very different regulations should apply to them. This essentially lets politicians design a parallel, much more permissive financial regulatory system from scratch, with many lessons learned from the existing one. If something ever happens, it can always be blamed on "those pesky stablecoin issuers who keep prioritizing profits over the security of our nation."

From a purely technical perspective, any stablecoin could be replaced by a centralized database mapping public keys to balances, at much lower cost and with very little loss in functionality. That, however, would look too much like a bank from the regulatory side.

A lot of us are not really deep into the finance space. Maybe there's a good reason it's left unsaid, but the question I came away with after reading that page and this comment is, why are businesses finding crypto easier/faster/better? To me, it's not 100% clear exactly who Tempo is for and not for, and why blockchain is more suitable than traditional centralized database technology here.

And it sounds like this system targets global payments. Does that imply that some day users would be able to pay using Tempo? Where would we see Tempo?

Very genuinely curious.

Does that imply that some day users would be able to pay using Tempo?

I don't think that customers or businesses should see Tempo very much. In the success case, Tempo is a platform like SWIFT or ACH that others employ behind the scenes to orchestrate transactions. "Decentralized, internet-scale SWIFT" isn't exactly the right analogy (there are clearly lots of differences), but it's not totally wrong either.

Why are businesses finding crypto easier/faster/better?

Yeah, I think this is the natural follow-up question. The answer differs a bit based on the use-case, but there are a few common reasons:

* Instant on-chain transfers avoiding trapped liquidity. If you're transferring money from financial institution A to institution B, and the transfer takes a day, you're either slowed a day in taking the next step or you have to somehow cover that float. Depending on your movements and their predictability, that can require big buffers.

* Fees that are lower than cards. Card payments are instant, which is often valuable (and superior to many bank transfers), but card transactions are also expensive relative to stablecoins. (And while card authorization is instant, settlement is not.)

* Reliability. This sounds funny, but, when sending money between countries, there are many more manual processes involved at the associated financial institutions than one might think. Money is frequently just... lost, and humans are required to hunt for it. (We see this all the time at Stripe.) Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

* Fewer currency conversions. Wholesale FX for major currencies is very cheap, but minor currencies can have bigger spreads, and the actual fee incurred by a regular customer (e.g. with their bank) can be significant. Stablecoins often make it possible to skip conversions that would otherwise happen.

* Access to USD-based functionality. The US is the world's most sophisticated financial services market. Having a stablecoin means "having an on-chain asset", but it also typically means "having a USD asset", and a lot of major parts of the ecosystem (e.g. US equities and credit markets) primarily, or only, deal with US dollars.

Acknowledging the obvious, a reflexive answer frequently invoked here is "it's regulatory arbitrage", but I think this is some combination of misguided and incurious as an explanation. First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated. Secondly, it implicitly assumes that the only reason one would seek an alternative to the traditional ways of doing things is because someone is doing something illegitimate. I think this usually indicates a lack of understanding of the challenges, complexities, and costs associated with high-volume cross-border money movement. Indeed, and somewhat ironically given the claim, one of Bridge's large customers is the US government.

I think "regulatory arbitrage" still fits here, though maybe not in the sense people assume. The GENIUS Act and MiCA don't eliminate arbitrage. They codify it. Stablecoins are now regulated under frameworks that look very different from those governing banks, payment networks, or money market funds. That difference is the arbitrage.

And crucially, the reason to use crypto rails here is a legal one, not a technical one. There's no throughput, cost, or reliability advantage over existing centralized systems. Quite the opposite. What crypto offers is access to a regulatory regime designed through heavy industry lobbying, one that e.g. doesn't even require full 1:1 low-risk asset backing. That would never fly in traditional finance.

None of this implies illegitimacy. Regulatory arbitrage can be perfectly legal. But it does mean the uptake isn't about technological superiority. It's about governments creating a parallel rulebook after sustained lobbying pressure. That distinction seems important to keep in mind.

> existing centralized systems

Other comments speak to this - but I wouldn't describe SWIFT (the predominant cross-border payments rail for high-value transactions that you couldn't just throw at a fintech eg. Wise) as centralized.

It's a bunch of hops, across correspondent (but separate) banks, that slow payments down, make them expensive + inconsistently traceable + introduce a bunch of manual ops burden along the way across each of the banks in the chain.

I think of you as a direct person, so it's strange to hear you dismiss "stablecoins are regulatory arbitrage" as misguided or incurious. Maybe I am wrong about something.

Would you agree that "actual regulatory evasion" has been a top-three use case across the history of stablecoins? (That is: hackers, money launderers, sanctioned entities, and crypto exchanges do things with stablecoins expressly because doing them with dollars in banks would be illegal in an enforceable way.)

And, would you agree that GENIUS is a formalization of the low-regulation status quo of stablecoins? (That is: the bank system does KYC, AML, and reporting on both sides of every transaction; the stablecoin system generally only does that for onramps and offramps.)

This is not to say "regulatory arbitrage" is the only thing going on with stablecoins. Existing payment rails are imperfect and rent-seeking for reasons that don't have to do with the above. I'm just surprised you're describing the arb as such a non-issue.

> Instant on-chain transfers avoiding trapped liquidity. If you're transferring money from financial institution A to institution B, and the transfer takes a day, you're either slowed a day in taking the next step or you have to somehow cover that float.

These are slow by design - abuse/fraud. How does blockchain solve that issue?

> * Fees that are lower than cards. Card payments are instant, which is often valuable (and superior to many bank transfers), but card transactions are also expensive relative to stablecoins. (And while card authorization is instant, settlement is not.)

Once again - CCs are instant because the % fee pays for fraud and customer service. What is to stop centralized blockchains from incremently increasing fees to the level of CCs over time? ...nothing.

> Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

Once again - this is a feature not a bug. Things are slow because of bureaucracy AND abuse, not JUST bureaucracy. Crypto is only beneficial today because the actors using it are savvy. When the laggards join, we'll just fall back to the norm.

FWIW - the banking system in the US is awful and the experience to transfer money into other fiat is just as abysmal. However I think crypto's current idealism is a factor of the parties involved, not the technology itself. We're just reinventing finance...it's just this time with Silicon Valley in control instead of Manhattan.

At the very least, assuming you're correct the current slow infrastructure is by design, it seems good there are options.

A business can choose if they want

1. slow, pay for customer support and fraud protection

2. instant, lower cost, mistakes are irreversible

In these matters, I always try to keep in mind that technologies aren't themselves disruptive; customer choices are. It'll be interesting to see what customers choose in the years to come.

For sure, but do you care to address the fraud/abuse aspects?

FWIW - I personally would choose a quicker and cheaper transaction all day, every day, but if it came at the expense of losing my money, I'd have to think twice about it. You yourself said it best "crypto is punishing if you make a mistake".

"In these matters, I always try to keep in mind that technologies aren't themselves disruptive;"

That is NOT TRUE! Technologies that are disruptive are those that intrinsically possess features that present benefits that exceed the switching costs of existing technologies. Therefore they are inherently disruptive. The timeline of product adoption is decided by consumers yes. Which is actually preceded by (and accelerated by) visionary leaders who can figure out what the benefits of said technology are, where to best use it and then tell people about it (market the technology).

Here's a simple example: graphical user interface. Anyone who saw it early on at Xerox knew it was so obvious. But the timing of its mass appeal, adoption and who would produce the preferred interface was questionable.

This comment alone makes me incredibly skeptical about the way you think.

> technologies aren't themselves disruptive; customer choices are

Technologies are themselves disruptive, as their introduction can shape human behavior. Choice doesn't happen in a vacuum.

> Once again - this is a feature not a bug

Are you really "once again"ing Patrick Collison on the issue of how payments work?

I'm fully cognizant that pc understands how payments work, hence why I'm asking the question. What you can infer is this - there is either some I'm missing, or there is some ulterior motive here.

I don't know who pc is, and he mentioned speed as a benefit without addressing the fraud / abuse implications. It's pretty reasonable to flag the gap.

Patrick Collison, the CEO & co-founder of stripe. His profile mentions his personal website: http://patrickcollison.com.

This isn't a consumer payments system. Certainly there are use-cases where fraud and abuse aren't very relevant. A network of larger businesses could find value in expediting transactions but they are all long-term players and can't afford to defraud each other. The system could make it impossible to hide such activity, and recovery through the courts is always possible because there is an entity with assets involved in a business transaction.

> What is to stop centralized blockchains from incremently increasing fees to the level of CCs over time?

Then users will just go to a different chain that provides a better outcome.

> First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated.

Which misses the mark given the context, since the GENIUS provisions aren’t yet effective or enforceable, and Tether’s history shows that regulatory arbitrage does exist.

The question is, what from what you have said is *strictly* only possible by using a blockchain? If you are already going to build something completely new, what is preventing you from creating something that fixes all those problems and do not use any blockchain?

I'll attempt an answer:

Today, if you want to transact between businesses or retail (folks like you and I), you need to find a route between the two entities' banks. This route might take several hops, passing through some central banks, and some of these hops might be instant or might take days to actually settle. On top of that, you need to pay the service that helped you find a route (SWIFT) and potentially the nodes your transaction goes through. Bottomline, it can be slow and a lot of middle men are taxing you.

This is why you see services like (Transfer)Wise, that basically try to bank everywhere, and allow you to send money faster by taking a shorter route (kind of like a wormhole :D). But they have to add liquidity everywhere, which they have to rebalance constantly, and it's centralized (single point of failure). FWIW it's great because for a long time this is the best thing we had.

Now, let's take a look at the other side. Using stablecoin is a matter of just creating a wallet. The openness by default of blockchains make it really easy to integrate with a blockchain as an entity (just use the SDK, it's there by design). Furthermore, it's in many cases instant and cheap (unless you're transacting on a slow blockchain, but then that's your fault).

That being said, the elephant in the room is that one stablecoin (let's say USDC) is now present on many blockchains. So if you have USDC on chain A, and I have USDC on chain B, we're back to our "tradfi" world where we have to find a route between our two chains, which might take us over many bridges, which can be slow and costly. The alternative, like with Wise, is to use centralized players who have liquidity on many different chains and can move things around by just updating their internal (and centralized) database. It's tradfi all over again :D

I think the technology of blockchain is irrelevant.

If something can be accomplished on the blockchain, which requires N nodes, a business can probably replicate that same objective with less than N nodes because they don't have to pay the cost of verifying that nodes are acting honestly. This business is incentivized to be honest because otherwise they lose their business. Someone has to pay those costs for the N nodes on the blockchain - who will it be? Transactions seem cheap now because funding for these blockchains is often used to subsidize costs.

You mentioned ease of use, like the use of SDKs, but blockchain technology does not enable that. All blockchain can do is that if you ask it "hey i was told the state of the world was this. is it true?" and the blockchain will tell you yes or no. If you want to provide those kinds of guarantees to customers in a reliable way, all you need is cryptography, not blockchain.

The most important aspect of blockchain that is relevant here is that your counterparty half a world away and you both agree that you trust the state of this blockchain, and thus can transact on it.

For business running the same code on their 1 node instead of N is not a replacement, because their counterparty has no reason to trust whatever is running on that 1 node.

Your reasoning re: N nodes are expensive is also flawed. Executing a single payment transaction takes a fraction of a second of compute. Even if it is replicated 10,000X, it's still extremely cheap compute-wise. The low cost of transactions has nothing to do with subsidizing.

> For business running the same code on their 1 node instead of N is not a replacement, because their counterparty has no reason to trust whatever is running on that 1 node

I mean, why are you doing this kind of business with someone where you can't even trust that?

Aside from that, block chains only provide trust if they're meaningfully decentralized. These hyper specific b2b ones seem unlikely to pass that test. Exactly who all is running verifier nodes?

This is the main value of a blockchain. You can do business with someone you don't specifically trust without requiring a third party in the middle to mediate the financial transaction.

The only people that need to run a verifier node are those that don't trust the other verifier nodes to do it properly. It's opt in, most will not run one, but a business that has enough money at stake can if they want to.

Then the blockchain client software provides the framework for cryptographic assurance that the two copies of the ledger are in sync.

Businesses do lots of transactions without trusting anyone else's records. Then they do lots of slow, expensive mutual auditing.

You don't need verifiers. I interviewed at R3 (now Onyx) in JP Morgan and my take on the business was that it's more of a distributed ledger than a blockchain

Distributed to who?

I don't like Blockchains mostly but the technology of the Blockchain here is not irrelevant, it is a way to use peer to peer liquidity. That is there is no need for a central entity to have liquidity in many different circuits because you can trade with other coin holders directly in many different exchanges.

Sort of like banks use customer money to offer loans to avoid the need of centralised liquidity.

The Blockchain technology is important to allow different exchanges to interact with each other in ways that I suspect would be not super legal through a central entity.

Running a database does not require liquidity.

Running a database with no liquidity does not allow you to actually transfer funds.

When A sends money to B both have an expectation that B is able to access such money through normal monetary systems like: seeing their bank balance go up, withdraw it as cash, or transfer it again to C which will have a similar recursive set of expectations.

Unless your database is the de facto central banck for the currency A and B use you will have to convice B's monetary system to believe B now has more money. The simples and almost only way to do that is to pay the appropriate price in a currency they like.

Which requires liquidity.

As an example if you wanted to install a bitcoin ATM with withdrawl* in a train station (or anywhere else) you would need liquidity in whatever currency the user want to withdraw.

* I suppose you could withdrawn bitcoin by giving out fresh wallets with the sum or by simply transfering it.

Why should a database need to transfer funds? Bitcoin doesn’t transfer funds, it’s just a shared ledger of what funds have been transferred. Lots of banks use Oracle to record fund transfers, but Oracle doesn’t transfer any funds.

Is this just for dilution of responsibility? If a central company is responsible for these transactions, then they are responsible for the transactions, which means there are all kinds of legal constraints and repercussions. But if it's a blockchain, then all of the nodes in the network are responsible.

So in this case, "this business is incentivized to be honest" might be the precise "problem" this is meant to solve.

Or further, that you need to interact with a business at all. Visa does a good job intermediating many classes of payment. But I am limited in what kind of applications I can build on top of that (tied directly into the payment)

This makes sense as long as

> This business is incentivized to be honest because otherwise they lose their business

is true. And it might be true if you assume perfect competition, low barriers to entry, no egregious regulations, no regulatory capture, no bundling to force decisions regardless of 'honesty' (or 'fairness'), etc.

So in a perfect world, maybe. But I think the niche in all the imperfections.

You are missing the "trust" element of a blockchain. A blockchain essentially allows you to run a distributed database where the different actors don't trust one another. Tradfi is built on trust of entities (can I trust this bank? Can I trust this central bank? Etc.)

Yes, that trust is the fundamental difference. However, that trust costs money in the form of needing more nodes.

You usually can trust your bank, as long as you trust your government. Regulations make it difficult for banks to misbehave.

That being said, not trusting your government (which I can believe is a valid stance in some countries) is probably the only valid use case for blockchain IMO.

I would say it cost less money, running a bank is a massive cost, entire cities like London, New York, and HK are built around the banking world.

> Criptography

You mean criptography and trust right?

If I'm bank of america, and i publicize a public key, and then everytime everyone does a transaction, i sign a receipt using my public key such that my customers can prove that transaction happened, then that would be the cryptography.

if bank of america does something malicious, i can prove in court very trivially through those signed receipts that they did so.

So I don't need to trust bank of america - i just need to trust the courts to charge financial institutions that provably are breaking the law.

> If something can be accomplished on the blockchain, which requires N nodes, a business can probably replicate that same objective with less than N nodes because they don't have to pay the cost of verifying that nodes are acting honestly. This business is incentivized to be honest because otherwise they lose their business.

This is missing something important, which we can see by considering one of the major problems merchants want to solve right now.

The credit card companies charge them ~3% and then give ~1% back to the customer, implying that there is a ~2% net gain to be had by cutting out the middle man. So why hasn't this happened? Because the alternative with the lower fees is ACH, but customers are less willing to give out their bank account number than their credit card number to a random small business.

This is the easy case for some centralized service to fix it, right? Have some large trustworthy company take the customer's bank account info and transfer the money to the merchant for a very small processing fee. But this is the part where your assumption falls through. Once the merchant has signed up for this, the payment processor is the only one with the customer's payment info. In other words, it's hard to switch, and then the payment processor can charge higher fees (eroding the benefit) and the high switching costs also cause the market to consolidate. And because you're tied to a single payment processor, when their fraud AI has a false positive they can erase your business overnight by locking you out and not answering the phone.

Now suppose you don't have a centralized system. Instead, the customer acquires a store of value (Bitcoin, stablecoin, something else) however they want. Customer A can get it from Coinbase, Customer B can get it from Stripe, Customer C can get it by selling something on eBay and accepting it as payment, and the merchant doesn't have to do business with any of these third parties to accept payments from customers who do, because they all support the same transfer medium.

Now you have a competitive market. Currently a new payment processor has to earn the trust of a large enough percentage of the general public for merchants to be willing to use them; a new exchange would only need the trust of enough people to be doing enough business to cover their costs, a far lower threshold. If a merchant wants to switch payment processors or has a dispute with one of them, their own customers wouldn't have to do anything different because the means customers use to convert dollars to tokens is independent of the means merchants use to convert tokens to dollars.

> Someone has to pay those costs for the N nodes on the blockchain - who will it be?

That's the boring question. The interesting question is, can you have a blockchain with lower fees than payment processors currently have? And the answer appears to be yes, e.g. the transaction fee for Bitcoin Cash is around a penny.

My point is that blockchain is just a technology - nothing about the technology itself makes the concept of transferring money cheaper. I agree that it is another competitive avenue for transactions, but if it became a threat to payment processors, my theory is that they could lower their costs more than blockchains potentially can. This is because the software and infrastructure needed to build something that assigns numbers to accounts and allows transfers is obviously going to be cheaper off the blockchain.

If trust is an issue, the bank can provide cryptographically signed receipts that show they've confirmed the entire lineage of your account, in the same way a blockchain does, but they would be the only verifier. The question becomes about how the cost of the additional trust from the blockchain relates to the incentive of doing honest business. I imagine that trust cost is pretty high.

> can you have a blockchain with lower fees than payment processors currently have? And the answer appears to be yes

The transaction fee is not the only thing being paid. They are also getting mining rewards. If a blockchain has mining rewards, maybe in the form of Bitcoin Cash, then that will dilute the entire pool of Bitcoin Cash.

> They are also getting mining rewards. If a blockchain has mining rewards, maybe in the form of Bitcoin Cash, then that will dilute the entire pool of Bitcoin Cash.

How is this any different than the Fed or the fractional reserve banking system creating new US dollars?

> nothing about the technology itself makes the concept of transferring money cheaper.

Nothing except for the thing that matters: If you have something fungible instead of something with high switching costs, it makes fees go down.

> if it became a threat to payment processors, my theory is that they could lower their costs more than blockchains potentially can.

And that's why blockchains are useful! To exert the pressure needed to make that happen.

It doesn't matter if the centralized system can have lower costs unless it actually does, and for that you need the competitor to exist as a viable threat.

> How is this any different than the Fed or the fractional reserve banking system creating new US dollars?

The miners get the fees. The fed does not keep the dollars they make. They also adjust the rates to avoid things like recessions.

> Nothing except for the thing that matters: If you have something fungible instead of something with high switching costs, it makes fees go down.

The US dollar is considered fungible... Help me understand how any of this is specific to blockchain technology and not included in non-blockchain technology. Have you worked with this tech before? Also, what about things like venmo and zelle? zero fees, super fast.

> And that's why blockchains are useful! To exert the pressure needed to make that happen.

I'm not saying they are not useful. I am saying the technology behind them is irrelevant to the costs.

> The miners get the fees. The fed does not keep the dollars they make.

Somebody gets the money. Banks and government contractors get the money. It's not clear how that's any better than miners getting it, and either way it's creating new money that dilutes the value of your existing money.

> They also adjust the rates to avoid things like recessions.

There is nothing stopping the government from setting up a fractional reserve banking system denominated in a cryptocurrency. It works the same as it does in dollars. Alice borrows from the bank, pays the money to Bob and now the bank credits Bob's account and balances its books through the money that Alice owes the bank. If Bob wants to withdraw the money as physical cash or cryptocurrency in a non-custodial wallet then the bank either has enough reserves to do that or can sell the loan and use the proceeds to pay Bob. But if that doesn't happen -- which is more common -- then the balance credited to Bob's account only ever exists in the bank's computer and the bank has effectively created new money in that denomination.

> The US dollar is considered fungible... Help me understand how any of this is specific to blockchain technology and not included in non-blockchain technology.

US dollars as bills in your pocket, sure, but it's hard to transfer those over the internet without involving a middle man.

> Also, what about things like venmo and zelle? zero fees, super fast.

Venmo isn't a protocol, it's a company. It isn't free for businesses and they can still shut down your operations without recourse.

Zelle is a protocol, but it's designed for transferring money between individuals, not making purchases from a business or setting up autopay. What we need is a protocol that is designed to do those things, but the banks fight attempts to create it because they want to keep getting the 3% from credit cards.

> I'm not saying they are not useful. I am saying the technology behind them is irrelevant to the costs.

Suppose that something with the transaction fees of Bitcoin Cash was more widely used and therefore a viable way for small businesses to accept payments from ordinary customers. Which existing non-cryptocurrency service is a viable means to do the same thing for the same or lower fees? A real one, not a hypothetical cost structure that nobody actually offers.

So why can a traditional bank not solve this?

In Europe you can wire money across borders for free, you just need to know the account number. Arrives in seconds at 0 cost.

I feel like a lot of the fintech in the US is purely a result of a lack of regulation.

For the example of Argentina, the real reason that business is using crypto is because their currency is unreliable. It might be a good fit there but trading in dollars would've fixed that too.

I’m as cynical about crypto as any sane person but I think you’re hand-waving away the challenges of international business. How can you transact in dollars if you’re a business in Argentina? As you say, if you’re operating in Europe, this is a solved problem, but lots of businesses are operating across borders that don’t have the same payment options. Banks could solve this problem but they haven’t and this is what non-banks have come up with. I’m sure if SEPA was global this wouldn’t be necessary, but it isn’t.

I'm trying to point out that most US people are unaware that days for selling a transaction should be outrageous, yet it's the norm.

And a wire, which is as close to sepa as I think you can get, costs 10s of $ each time.

Basically, the international business problem is real. The Argentina case is mostly lack of a domestic stable currency though. These are legit use cases, fast and cheap transactions aren't.

Fast and cheap transactions are legit use cases.

If you actually offered those US businesses with instant, verifiable transfers that cost nearly nothing, do you actually think they wouldn't move to that?

SEPA also works easily because it's single currency for a single unified economic zone. If currency change was involved then you'd likely be back to routing through central banks or currency change banks and such.

> As of 2025, there were 41 members in SEPA,[2][3] consisting of the 27 member states of the European Union, the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), the United Kingdom, as well as five EU candidate countries.[4][5][3] Some microstates participate in the technical schemes: Andorra,[6] Monaco, San Marino, and Vatican City.[4] As of 2025, Albania, Moldova, Montenegro, North Macedonia and Serbia are the five countries negotiating to join the EU that are included in SEPA.[2]

- https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

I don't know if I'd call that a "unified economic zone" without some qualifications.

Few of SEPA members have autonomous regions which are them selves not members of SEPA, I do wonder if making transactions between the autonomous region and the rest of the country, as well as to a different SEPA member is any harder. For example I can’t imagine it would be difficult to make a transaction between Thorshavn in the Faroe Islands and Hirtshals in Denmark proper, or to Oslo or Reykjavík for that matter. But a transaction between North Nicosia to Nicosia in Northern Cyprus and Cyprus respectively may be a different matter.

Here's a fun timeline to walk through how it developed and why it's been, while not trivial, implemented with a kind of structural uniformity to keep the problem space contained.

https://www.europeanpaymentscouncil.eu/about-sepa/sepa-timel...

It wouldn't surprise me if SEPA was running a BFT consensus protocol under the hood to ensure security

Australia too has instant and fee free transfers, so American staples like venmo just simply don’t exist here. People just send money to and from each other’s banks directly instantly and for free. So why would we need another service?

Crypto here would similarly make very little sense.

It's not about the domestic use case - that is solved by regulation in stable economies. Try paying someone in Pakistan from Australia. Business is global now.

I seem to have no issue purchasing goods online from stores operated in other countries.

You do so at the pleasure and convenience of duopoly of credit card payment processors (Visa and MasterCard).

And occasionally, they will withdraw that service for arbitrary and capricious reasons

https://news.ycombinator.com/item?id=44685011

Crypto stablecoins running on blockchain rails provide an alternative to that network.

I believe the duopoly is bad, but the solution to that is market regulation, not crypto.

As an aside, if banks in other countries also worked like this because we as a global society regulated them better then people in those countries could enjoy similar rewards.

> It might be a good fit there but trading in dollars would've fixed that too.

You are underestimating how toxic the Argentinian government was.

We did do that with capital controls, the problem is that it was illegal, and the Argentinian IRS is very active trying to tear you a new one. Argentina has long become a bimonetary economy, dealing with ARS for everyday transactions, but saving in USD and pricing assets in USD (real state for example).

To give an example where this would have helped, my parents in Argentina needed to send money to my brother in Europe. The government had made that illegal with capital controls, so I had to transfer him money through wise from a 3rd country and when at some point later I visited they gave me the cash.

People underestimate how annoying and distopic governments can be if given the chance.

That is because the EU acts as a coordinating authority, if you wanted to transfer money from Greece to Iran it would be a different issue.

I suspect that banks cannot solve this because it would be illegal for them to do so.

If many banks could send and receive money from across the world money laundering would become way way easier (in this sense the lack of privacy in many blockchains can be seen as a strength) and it is how offshore fiscal paradises work

>in Europe you can wire money across borders for free

do you mean "electronic funds transfer"? because "wiring" is an old school thing that uses Telex machines and and gets processed by people and I would doubt it carries no fee. (It's probably been modernised so that people handle virtual slips of paper, but it very much carries the feel of an "order on a slip of paper" type of transaction and is far from instantaneous.)

I'm genuinely asking, I only know about the US systems where electronic funds transfer is known as ACH which is an automated clearing house, and wiring is called wiring. From the US, I can wire to European banks. I can't ACH.

I don’t think more than a handful of Europeans have ever heard of wiring the way you describe. Everyone over here has a bank account with a debit card and is used to transferring money to someone using their international bank account number; PayPal is in use for convenience, but not really necessary actually. People have credit cards for travelling abroad or online purchases, but that’s about it.

not more than a large handful of Americans have heard of it either, till they become "established" so to speak. It's for moving large amounts of money, and for ordinary people that would only be like when you buy a house, you wire the money to escrow. Europe has the same wire system, it's international.

I used the term wire because it most closely resembles a sepa transaction. You put in the receiver's details and hit send

I think the argentinian case was mentioned for marketing purposes. You can trade using the USD dollar which at the end of the day is probably what your client/provider is using anyway.

Since April, yes, before that you had very hard capital controls since 2019, and also during the 2011-2014 period. For people there, it's not marketing, it's an actual solution to government interference.

The status quo of cross-border, bank-to-bank money movement today is actually somewhat decentralized:

- SWIFT is really just a messaging protocol between a distributed, decentralized set of global banks that are all passing messages/money between each other. Your SWIFT wire might pass through an arbitrary number of correspondent banks, sort of like a flight route with multiple stops, until it reaches its destination.

- Consequently: money moves slowly (up to 5 days), is expensive to move (variable fees assessed either to the payor or payee, by every bank in the chain), and there is an indeterminate amount of manual ops burden, multiplied by every bank in the chain.

- As another commenter points out - services like Wise really just use massive amounts of liquidity spread out globally to try to minimize the number of true, bank-to-bank cross-border settlements required to get low-value payments from A -> B internationally.

Ironically, I think the great accomplishment of stablecoins is its "centralizing" of cross-border money movement into a single ledger -- reducing it to a "book transfer" of sorts -- where getting all the world's money to pass through a single ledger would otherwise be a very difficult (probably intractable) challenge _if it were not for_ the permissionless-ness + global neutrality of the blockchain that is tasked with doing so.

(I wrote about this in a slightly longer post here: https://text-incubation.com/The+great+irony+of+stablecoin)

Simple ans. Crypto provides regulatory arbitrage. The steps and process to do the same in Fiat is riddled with regulation and hurddles. the same on crypto side is easy to do as of now. that is it.

I sold a blog in early 2021. The seller offered to pay via wire transfer or via Bitcoin.

I chose wire transfer. Which meant going to my bank, getting approval to get paid, fill out two forms, and making three total trips.

I now have contractors in Nigeria and Philippines who want to get paid in USDT. It's instant and there is a thriving local scene of P2P sellers for instant liquidity.

> why are businesses finding crypto easier/faster/better?

One way to see it is today the EVM ended up being the solution to a lot of other problems.

The banks are dying, their core banking is dying after 50+ years of service. There hasn't been any real investment since 2008, only minimal maintenance and cost cutting. Also generations of incompetent people at every levels created a situation with no escape.

Also things like SWIFT became very irrelevant in practice. I can assure banks did not really used it for a while.

When Ethereum and its EVM appeared 10 years ago a lot of people saw an opportunity to build a better "programmable money" platform but nobody really succeeded. At the same time Ethereum did not fail, improve and still secure the assets and run the smart contracts deployed in 2015. More than enough to convince the people on a sinking ship to jump on that boat.

My guess is the the EVM is becoming something similar to UNIX: a loose standard almost everybody will build on. Maybe not the best but something good and flexible to jump and we need to move forward.

Also the dollar urgently needed a new outlet so its on.

So it is not really about "crypto" it is more about the EVM as a platform.

In the case of Argentina, and similarly for my country, access to USD is fraught and often involves off-market transactions.

So transactions are difficult because they are illegal, and blockchain helps to facilitate crime?

Are there other uses? Surely a large and legitimate operation like Stripe and the companies they mention in the blog post would have found additional use cases?

> Surely a large and legitimate operation like Stripe and the companies they mention in the blog post would have found additional use cases?

You are literally in a thread whose top post is the Stripe founder describing use cases.

I don't think he does...? He says companies have found utility but doesn't say what that utility is.

The sentences that follow “found utility” say what that utility is:

> For example, Bridge (a stablecoin orchestration platform that Stripe acquired) is used by SpaceX for managing money in long-tail markets. Another big customer, DolarApp, is providing banking services to customers in Latin America.

> So transactions are difficult because they are illegal, and blockchain helps to facilitate crime?

Let's say I make drinking water illegal, would you still do it? Sure you would, you need it to live, laws be damned.

In Argentina it was a similar situation, financially speaking, but with USD, as Argentina had like 1000% accumulated inflation since 2019, so basically the ARS melted in your hands, and the USD/Euros/crypto where your only safe havens.

So yes, the government made the transactions illegal, but the alternative was becoming poor (we ended up the previous government with around 55% poverty).

I'm certainly not going to moralize against breaking the law, just curious why an American company would (apparently) build a business off of facilitating it.

American companies of all sizes do that a lot; its profitable, and even if it is eventually punished, the punishment is almost never sufficient to deter pursuing the profits.

They aren’t breaking any American laws

>why are businesses finding crypto easier/faster/better?

From the example given from Argentina, it bypasses capital controls, which until recently, made accessing foreign currency very hard/expensive/illegal. Argentina had a huge crypto boom because of them.

All of the other comments are missing the point: using blockchain technology is a means to bypass regulation. That's it. That's always been the point of cryptocurrency.

Incorrect; it's to bypass the middlemen that create the links of trust between two parties exchanging money. That was the point of Bitcoin from the start.

(The many other crypto coins since then are mostly BS freud.)

In this case, Stripe is adding themselves as a middleman.

Whether or not it was the point of Bitcoin from the start, "removing the middlemen" is bullshit because you still need exchanges, wallet providers, people running nodes, etc. Cryptocurrency in practice just transfers power from traditional middlemen to new technically-advantaged middlemen.

The middleman that bitcoin is cleaved from is banks (that have control over all balances and transactions), and payment processors (same controls). Previously these were required unless you handed physical cash to someone. Now electronic transactions are free of those controls and the associated risk. Exchanges are not bitcoin, you can transact freely without them. Wallet providers are not bitcoin, they are 100% optional. Nodes don't act as middlemen, they are fabric.

And people could just do all their business in cash to avoid banks. But that's not practical just like avoiding exchanges and not using wallet providers is impractical.

Normal people cannot function in a cryptocurrency ecosystem without these new tech middlemen. This is exactly what I mean when I say _in practice_. Average people are still left to the whims of cryptocurrency corporations that are worse than banks because they're unregulated, much greedier, and much less risk averse.

> middleman that bitcoin is cleaved from is banks (that have control over all balances and transactions), and payment processors (same controls)

Miners now replace this since there is a network fee required to transact.

I'm not sure what the current state of affair is, but ETH gas fees were egregious last time I transacted ETH.

> you still need exchanges, wallet providers, people running nodes, etc

you don't need exchanges or wallet providers, or any other intermediary, to exchange Bitcoin -- those add layers of convenience (conversion, storage), but they do _not_ strengthen the web of trust and do not provide the same function as intermediary banks and clearing houses do

yes, you do need people running nodes, but they're not intermediate layers, and you can run a node yourself to benefit from the system (though in practice it's no longer profitable due to bitcoin farms)

If the banking system was compromised from war, Bitcoin still functions without them

Because during war you're guaranteed to have electricity and internet for Bitcoin to function

I'm not sure there's much of a distinction; the reason there are so many middlemen is regulatory.

yeah bad regulations must be bypassed.

There is a case for banks that hold your hand as if you are 90yo and there must be a case for banking where I know what I do and I take responsibility for my actions.

If i send my coins to the wrong address its on me. But if I want to send 10k to someone - no one should ask me to wait 3 days, to do 100 verifications if I am not being forced or scammed.

I'd want that protection for my mom, sure.

But I want to remove all that crap for me. I don't have time and energy for it

Let's check how people use credit cards and buy-now-pay-layer schemes (Klarna & co) responsibly in America.

It clearly demonstrates that people do not have the capacity to make critical judgments and have to be somewhat protected from themselves.

That's als what regulations are for.

there should be a pathway where we can opt out of being protected from ourselves and crypto is it.

Yes, it should be opt-in, but this is not one of them since it's opt-out by default.

You say tomato I say removing the levers of power from world governments who have proven time and time again that they can't help but pull them to help themselves

The frequency with which people involved in cryptocurrency "pull the levers themselves" has far outpaced government manipulation of currency.

Has it? You're not really providing much evidence of that. If it so far outpaces, it should be easy to give several examples.

https://en.wikipedia.org/wiki/Sam_Bankman-Fried https://cointelegraph.com/news/bitget-lawyer-letters-account... https://bitnewsbot.com/us-judge-unfreezes-57-6m-usdc-tied-to... https://ambcrypto.com/avalanche-based-protocol-reportedly-ru... https://cointelegraph.com/news/polymarket-trump-ukraine-bet-... https://x.com/BinanceWallet/status/1904352541615554611 https://x.com/JMilei/status/1890606683291779195

I could pretty much go on forever…

Not a single one of these examples is trustless, decentralized crypto. Of course people are going to steal your money if you don't own your keys and put faith in protocols that are not permissionless. That's the problem with people who paint 'crypto' with one giant brush. It's like saying 'websites' will steal your money. Statistically it's probably true, but anyone with 2 brain cells to rub together isn't giving money to realbankwebsite.ru/chasebank

Ok, so at the very least we can both agree that what stripe is doing here is sketchy, since it’s not permissionless at all.

The second question is, once you take away anything that’s not permissionless, what’s left in crypto?

- Buying a physical good? You’re trusting the person manufacturing it, storing it, shipping it. If it comes to your door and it’s defective, they’ve already got your money, and it turns out your trustless system actually makes this impossible to resolve.

- Buying some skin for a game or something? Unless the game is also run in a decentralized fashion, they can just choose not to render that particular skin.

So, like, can you give me an example of a single transaction that is rendered trust-less because of cryptocurrency? It seems to me like whenever anyone actually tries to do anything useful with crypto, it ends up being what you would describe as an obvious scam.

You're doing strawman shotgun here. You're pasting a bunch of examples that basically fall into two categories and then asking me to defend them:

1) people who put their money into custodial 'banks' and then get it stolen

2) people rely on protocols whose consensus protocol is controlled by a small committee of appointed VIPs

None of which is germane to my original point. I'm simply saying that Im advocating for central banks not having the power to manipulate the currency supply at a whim And somehow you're forcing me into the position of spending an hour reading every trash crypto scam you can find. Not terribly interested in discussing how you can get ripped off with crypto or fiat cash.

> people rely on protocols whose consensus protocol is controlled by a small committee of appointed VIPs

Once again, this is what Stripe is doing here in this very announcement.

> Not a single one of these examples is trustless, decentralized crypto

You brought up trustless, so surely you can find an example. I didn’t pull that out of nowhere.

It's always funny to me how "we're decentralized ledgers running in lack of trust environments that don't need government regulation" always run to centralized trusted government institutions every time there's trouble.

It's a push to bring international financial systems up to date, there is no need to reinvent judiciary and executive institutions in this step.

> It's a push to bring international financial systems up to date

It's not a push in any sense of the word. And outside of the US quite a few of financial institutions are "up to date" in most of the areas that matter to people.

> there is no need to reinvent judiciary and executive institutions in this step.

Strange how "up to date" inevitably involves rediscovering all the reasons those exist in the first place and why the "outdated" institutions do the things they do.

> removing the levers of power from world governments

A lever of power is never removed unless the act itself can no longer be performed. All you can do is take someone's hand off the lever and hope that whoever grabs it next is better than the last hand that had it.

I find it very unlikely that wresting power away from government—which at least has some level of citizen participation—will end up with it in better hands. The most likely scenario is that some billionaire will end up owning it.

No, it's possible. Imagine, for example, that you are concerned about growing political control of the central bank in your country and you want to remove the ability of central banks to set an inflation rate for the currency you use. That's quite easily achieved if ownership of the currency system is distributed among all users of that currency.

> is distributed among all users of that currency.

Right. What you propose is that you take government's hand off the lever and a million users will all equally get to gently rest their pinky on it and distribute the power equally.

I have never seen anything in the history of the world or my understanding of sociology to indicate that such a power structure has any stability. If you give out power in a free-for-all, what tends to happen is:

1. All of the participants already have some unequal distribution of power going in.

2. Those who have more are able to use that to claim a little more of the new resource.

3. Once they do they, they are able to use the increased inequality to claim even more.

4. Go to 2.

The natural tendency is towards increasing inequality. It takes a ton of work to build and maintain structures that encourage any level of egalitarianism.

You're over abstracting a very simple thing. No user can, for example, change the inflationary rate of a decentralized cryptocurrency. It requires network consensus. The party making the change would need to control the vast majority of the consensus power, whether than is ASICs for pow or base currency for pos, at which point they have massive incentive to not do that on account of the loss of power destroying all their wealth would represent.

Non-fiat currency is the most egalitarian system possible.

> It requires network consensus.

No, it requires network control. Consensus among a large number of independent participants who agree on a change is one way to have that control.

But another way is to have a minority of participants that control a disproportionately large fraction of mining decide what to do.

The history of crypto shows that over time, miners tend to consolidate until eventually you have a small number of miners who significant leverage over the ledger. None of that should be surprising: economy of scale is economics 101 and certainly applies to miners who buy and run hardware in bulk.

> Non-fiat currency is the most egalitarian system possible.

Egalitarianism is a property of human behavior and social systems, not the hardware that humans may or may not be using as intended.

This is a very bad place to ask. Very anti-bitcoin crowd.

Well, I was just curious to hear it from the horse's mouth since they were answering questions in here. The answers are interesting, though I think they're answering a bit of a different question than I am personally asking.

Like, blockchain technology to power distributed ledgers for peer-to-peer payments is pretty interesting and I think I'd prefer it exists, consequences be damned. Stable coins don't really fit the same use cases though, and generally do have at least some reliance on a central party, so it raises the question whether the desired technical properties can't actually be achieved using traditional technology.

Unfortunately, the answers pretty clearly center around not what kind of technology is used to implement the ledger, but rather the choice to implement one versus using existing payment networks. I don't think this is done in bad faith, but rather is the result of very different perspectives.

I think the blockchain skeptics have a point: even if there is something especially technically advantageous about using the blockchain for this purpose that really couldn't be accomplished some other way, so far the only obvious incentive to do things this way appears to be regulatory differences in how the blockchain is regulated versus traditional ledgers.

Very tangential, but seeing major entities and even governments adopt blockchain technology has made me think a lot about potential consequences in the longer term. I really wonder what happens to the properties of various cryptocurrency networks when and if quantum computers scale big enough to start breaking our cryptographic systems. I guess CryptoNote is just toast.

  appears to be regulatory differences in how the blockchain is regulated versus traditional ledgers.

That turns into a downside very quickly for a lot of applications.

Indeed, we are witnessing many of them currently.

Hyper-inflation, censorship, corporate takeover of all interpersonal transactions, data harvesting, slow processing, fraud, offshore accounts, scams, laundering. The list feels almost endless.

Luckily we're talking about bitcoin right?

Well, for one thing, you keep mentioning Bitcoin when we're not even talking about Bitcoin, which is extremely weird. Bitcoin is not one of the two things. I hate to be this way but do you even realize what thread you are replying in? This isn't fiat currency versus Bitcoin. It's fiat currency (by proxy) using Blockchain-based ledger versus fiat currency using a traditional ledger...

Sure, I get your point. I don't really consider stablecoins or even most cryptocurrencies true crypto due to human control (which invalidates the value of crypto).

I've watched for over a decade how this forum utterly decimates any actual discussion of crypto (bitcoin) due to willful ignorance or blind naivety. So excuse my excitement when I get a chance to actually discuss its merits or disadvantages.

In this sense, I will agree that stablecoins are just a technological way of obscuring certain mechanisms in how fiat currency is distributed and is basically a derivative instrument that exists outside established regulatory framework (similar to how uber/airbnb operated for a decade until the govt caught up)

Why does it need to be achieved using traditional technology? Crypto works, and has attracted billions in liquidity for stable coins

It's left unsaid because the truth is that businesses are not finding crypto easier, faster, or better. In most cases, it's the exact opposite. But crypto excels at one thing: obfuscation.

A regular log or ledger file could accomplish the same thing as a blockchain for significantly less technical debt or ongoing expense.

And note that the best use cases Stripe could find for "real world" use cases were a company trying to complicate its FX cash management, and a cash transfer app with fees higher than most of their competitors.

> A regular log or ledger file could accomplish the same thing as a blockchain

It is kind of wild how a bunch of people hyping blockchains five years ago has resulted in a thermostatic reaction where a bunch of other people have decided that distributed computing is easy, actually, you just need a ledger file.

You do understand that a blockchain is just a hashed ledger? It's called "crypto" because they use cryptography principles to hash the ledger into multiple parts.

But it's still just a ledger.

With blockchain, you just get a ledger that's harder to use and dependent on external connectivity.

that's a very high quality question, in comparison to the others.

here is what you're missing, and is very easy to miss:

the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database. Than it is on a shared database with a bunch of signers. Than on any "web 2.0" cloud platform. the developers continue to bring their entire audiences with them, even though those audiences are quite small, they've grown in aggregate to be large enough.

in web3, of which EVM platforms dominate and are the most mature, there is a tiny payment for deploying your application once, and then it exists in perpetuity for free at unlimited levels of bandwidth. your users pay to update the state of your application, and in many cases you can earn from them doing that.

there is absolutely nothing in the cloud world that achieves the same thing at the same cost. the payment paradigms are entirely different, you have to pay for hosting, deployment, the thing that handles your deployment, additional workers to unbottleneck your continuous deployment, the bandwidth, bandwidth spikes, and get nickel and dimed on a ton of more things, or paying a premium to a service that handles all that for you.

additionally, the concept of "composability" is attractive in the web3 space, again spearheaded by standards on EVMs, the concept is that third party applications are automatically compatible with each other. there are infinite permutations of combinable operations one can do or enable amongst deployed applications. you can compose, or combine, applications in a far less cumbersome and less fragile way, than with REST and APIs of different people's apps in the web 2.0 world.

and on top of that, if one of those permutations becomes useful and you make it user friendly to do so, you can collect a toll for others doing that operation. this is just financial services, where "basis points" are collected by intermediaries.

a common application are forms of lending. initiating borrowing, trading the opportunity, and closing the loan within a split second, leveraging 3 - 10 financial services at once, is something that's better faster and cheaper than what has been possible outside of the blockchain space. the ability to do so is gatekept by the other financial industry and payment rails in ways that are no longer necessary to debate. now you can do these things with $3 in capital instead of needing $3 million dollars to pursue getting an API key from some old slow moving organization.

the compelling reason to create a new EVM are to change some basic parameters. block time, the size of contracts (the aforementioned operations) that can be deployed, and which standards are included into that chain, and of course the governance model - how are new standards deployed and how are transactions added. making stablecoins a first class citizen would need a new blockchain. how your governors/validators/nodes and RPCs function under load would need a new blockchain.

it is very attractive to developers that they can deploy applications "in the cloud" that have a very nominal cost, doesn't cost them to maintain even amongst spikes in bandwidth. they don't have to incorporate or do any formalities while having unlimited financial upside, solely because there is already hundred of billions of dollars in notional value sloshing around in that space to cater to already.

edit: I'd actually like to work with Stripe or other web3 organizations again on these kind of applications, now that I notice how boutique it still is to understand what's going on, email in bio

> the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database.

This is definitely a take, given how easy it is to write a program with security bugs using Solidity due to specific concerns like reentrancy that only exist due to the unique way smart contracts work. The inability to "undo" a fraudulent or mistaken transaction without requiring all validators to fork the chain also makes this a non-starter for many developers.

> your users pay to update the state of your application

Also a weird thing to call a "feature" for developers when this actively drives away potential users.

> Also a weird thing to call a "feature" for developers when this actively drives away potential users.

while being a funnel of 1 step for the users already in the ecosystem that find your application

the ecosystems turns the entire Web 2.0 marketing funnel industry on its head because the initial call to action is a payment. All of the mystery of converting to a paying customer is obsoleted in favor of unbridled commerce

this just points out another way its optimal for developers with ideas, when aiming for revenue in a web3 architected project for crypto natives. they have frictions, you solve them, they pay you. If you aren’t catering to crypto natives already, don’t launch a web3 application. the space is already big enough to ignore other potential users, and if you want that to be your cause to help the UX to grow the space, you can do that too.

> security bugs using Solidity

To your other point, I don't see 2016's smart contract coding problems as show stopping criticisms, because this is the lowest hanging fruit of experience for anyone learning solidity, all while standardization of open source methods has solved those building blocks just like in other languages. additionally, you can write an insecure application in the web 2.0 space as well.

There are enough and a growing number of developers that aren't afraid of deploying code on a blockchain. a lot has happened in the last ... decade? developer tooling has improved.

yes, the developer experience is better on a platform where you can write code (potentially with bugs) than a platform where you can’t write code or do anything programmatic at all.

The developer experience is irrelevant when it comes to handling money in volume.

Take the spacex example above. They are using a stablecoin to abstract away a bunch of illiquid and unstable foreign currencies. Getting rid of that huge pain of carrying 100 countries’ currencies via various banks is the value prop. The API could be cobol and it wouldn’t matter.

and yet, when you look at what comprises a stablecoin alongside the frictions unstable foreign countries have, you'll see why they occur on EVMs and not some other architecture

> The API could be cobol and it wouldn’t matter

you can probably get cobol to transpile to bytecode that EVMs can use. I get the point you're trying to make that excludes blockchains, but you don't make that point

If you thought I was trying to exclude blockchains, reread what I said because it wasn’t that.

I’m saying the API can be complete trash and whether it’s a blockchain or a traditional bank, the thing that will drive the decision is money.

>the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database.

The developer experience is completely irrelevant when millions of dollars a week are on the line.

The API doesn’t matter.

The problem with all that, is the fact it remains possible to create a protocol with N big institutions (governments and large tech companies, big non profit organizations and so forth) signing every block, to create a collaborative system that is perfectly suited for the same task. The system can make progresses as long a given fractions of the participants is available and so forth, there are a number of well known protocols to do so. This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost, controllable to a given extent -- no takeover possible, ...).

> The problem with all that, is the fact it remains possible to create a protocol with N big institutions [...] This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost)

That's more or less exactly what this is. Stripe is launching an EVM L1.

The Ethereum Virtual Machine part gives it a mature tech stack with experienced developers and auditors. Plus, well-tested smart contracts that have already processed billions of dollars on other chains can be deployed on Tempo.

The "Stripe L1" part will ensure that it's fast, simple, near zero cost.

I don’t get it yet.

If we skipped the whole blockchain part, wouldn’t it be faster, simpler, cheaper? What value does the whole blockchain, EVM, L1 offer? Don’t they fully control the network? Don’t they decide “everything” anyway?

I’d love to understand it, I’m not a hater, just a developer who don’t quite get this announcement.

They say it's permissionless.

That can mean different things.

It can mean anyone can use it without needing to sign up.

It can also mean anyone can host a node, i.e. become part of the network, without needing to ask anyone for permission.

The question is how far they went with that and why people wouldn't use another L1 that offers similar features without having Stripe looming over it.

good questions - and your questions are, or could be, actually rhetorical. Yes, they are the validator and thus they control the transactions. It could be as simple as having a Database at the end ... Well I can think of two things:

1- they start by owning all validators, maybe they expect to open validators to other entities at some point in the future. If these entities don't collude together, we could expect some sort of neutrality

2- Marketing - because crypto is coming at an ATH and why not getting some good marketing for free (or almost)

And people mentioning costs, this is not particularly relevant. L2s are extremely cheap by most standards, let alone by Stripe standards which charge horrendous fees.

My questions were not rhetorical. I’m actually interested in the space (fintech, web3, blockchain, etc), but in this space particularly, it’s hard to discern marketing gimmick from use cases where these technologies actually provide real value, so I’m being critical of these announcements while at the same time keeping an open mind.

There has been a huge amount of tooling and programs written for EVM that you instantly have access to

> signing every block, to create a collaborative system that is perfectly suited for the same task.

Indeed you can! We even have a name for that! Its called a blockchain.

> This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost, controllable to a given extent -- no takeover possible, ...).

Blockchains can do all of these things.

Perhaps you are thinking of "bitcoin", instead of "blockchains"? Bitcoin, something that was created a whole 17 years ago, indeed has many drawbacks compared to modern blockchains.

No bizantine distributed agreement (work / stake), no blockchain. Otherwise we can name everything as everything.

There is no bright line difference between proof of stake and any other type of consensus, committee or voting body. Proof of work of course is very different.

The difference is enormous: in one case, you don't need any centralized N entities, just a big percentage of the network, whoever wants to participate, runs the protocol and there are no 50 institutions / companies that can block it without reaching the majority of work / stake. In the other case, you are delegating the consensus to a fixed amount of parties. Now, we against the crypto / blockchain shitstorm advertised the alternative of old-style federated consensus with N trusted organizations for years and years. And now, no: you can't say, this is a form of blockchain. You admit failure and acknowledge that classical consensus was good enough and even better in most cases.

> No bizantine distributed agreement (work / stake), no blockchain.

Actually yes there is a blockchain. The word you are looking for is "Federated Blockchain".

https://101blockchains.com/federated-blockchain/

> Otherwise we can name everything

No, because we literally have a word for this already. Federated Blockchain. It is a well known concept.

such modern blockchains as "classical consensus"

I wrote exactly a whitepaper about that, and ironically named it roughchain [1].

[1] https://docs.google.com/document/d/1L0Me9si4iMclOq8n-oG2yNQf...

There's always a comment in any HN blockchain thread where the commenter disproves the need for a blockchain by proposing just to use a blockchain instead.

M of N big institutions signing a thing doesn't really make it a blockchain

Your protocol has to use a consensus mechanism if you want to reliably make progress, and be able to recover if you make mistakes, this is exactly what a blockchain solves

That you _can_ solve it with a blockchain doesn't mean that you can _only_ solve it with a blockchain.

M valid signatures of N authorities is a consensus mechanism that just needs public keys. You don't need a blockchain if you're prepared to trust a set of authorities like stripe and their trusted partners.

It's just a very unreliable consensus mechanism. Why is this being held up as a benefit?

It's not a consensus mechanism in the rigorous sense, it's more similar to a reliable broadcast protocol (less powerful)

[dead]

Speaking as an argentinian, every time I hear about someone using crypto in that way its to avoid taxes, which seems legally murky/gray (if not directly illegal, but not currently prosecuted) to me.

> so it might be interesting to share what changed our mind over the past couple of years

I'm guessing the GENIUS Act had something to do with it too? Now that bank depositors have an incentive to hold bank-issued USD stablecoins given their priority in cases of bankruptcy[0], it seems likely there will be a lot more transactions with them as well

0. https://www.congress.gov/bill/119th-congress/senate-bill/158...

Can you explain some of the technical goals of your project and the overall model you're thinking about implementing?

You mentioned sub-cent tx fees, 100k tps, and what I presume to be atomic swaps for stablecoins. Are you thinking about something like $0.10 fees or something like $0.0001 fees? At $0.10 fees at 100ktps that end up representing $100/s in tx costs which is about $8.6M/day or $3B/year. Presumably you expect to make more per year on this project in the ideal case, so are you intending to allow the fees or TPS to "float" upward, or to restrict participation in the L1 to only trusted partners, or for the network operators to make money off the interest from holding the stablecoins' currencies in reserve? What if demand exceeds 100k tps?

Since this will be a corporate backed project how do you plan to handle sanctions and government currency controls, eg if Uncle Sam tells you to drop support for Iranian currency, how will that work?

Will there be account/transaction privacy built into the network through ring cryptography or zk proofs? I'm assuming no, but if your answer is yes and Uncle Sam takes issue with that, what is your plan?

Oops, my math was off. I meant $0.001/tx at 100ktps=$100/s=$8.6M/day=$3B/yr

You still have a lot of credibility to not be put into the number-go-up bracket and the social capital to overcome the political and power structures you had to face for two decades and know more about than most people by having built your company.

But as long as I don't see somewhat more transparent conversations with the people in your orbit like patio11, Matt Levine, Kyla etc, where you address how you'll actually tackle the non-technical challenges ahead, this GTM communication and site looks like every other 2019 JPM, HSBC etc "something blockchain" announcement and hard to get behind as something that might as well be really different this time, and not be killed/sidelined by vested interests. Including your own.

The fact that Stripe is doing it in 2025 should already be a strong signal. If they were just like the clueless trendmongers who ran crypto initiatives at large institutions in 2019, they'd have done it then instead of now, after the GENIUS act has been passed.

Stripe supported Bitcoin for a while as a payment method.. so..

I actually view that as a plus though, they have experience and have seen what works and what doesn't.

The stripe conference focused more than I would have liked on crypto.

I completely understand that there are markets and customers that can find real utility in it, but I wonder how many businesses will really ever benefit from stablecoins.

We're in higher education, and potentially our international clients could avoid hiccups with regulation, delays, compliance, and more using stablecoins, but it's really a guess. In the meantime, the pricing model of stripe seems to prioritize bigger and bigger clients.

That being said from Stripe's perspective stablecoins an easy bet to make. They win by building payment infrastructure within the traditional payment ecosystem and win by providing an alternative completely outside of it.

>is providing banking services to customers in Latin America.

Checks crypto watch, ah, it's Latin America time again.

“Argentinian bike importer”?

A little bit of trouble coming up with enough examples of anyone who wants or needs this, I think?

It's a good example though, a country whose currency is unreliable and where access to another more reliable currency is hard. That IS a use case

It may be good for the individual, but is it good for Argentina or LATAM as a whole?

I'm no economist, but wouldn't shifting transactions from their currency to another (USD/stablecoin) inherently destabilize their economy even more?

Hey Patrick,

When your algorithm freezes a legit business's funds, you hold them indefinitely and can invest them for your own profit. The only recourse you offer is mandatory arbitration with an arbitrator Stripe chooses.

How is that a fair system?

It’s a fair system for stripe!

> Who will run validator nodes?

"A diverse group of independent entities, including some of Tempo’s design partners, will run validator nodes initially before we transition to a permissionless model."

I think Zuck tried to do this. It was called Libra or Diem or I can't remember what it ended up being. Ultimately trust is what matters. In the end whether it was regulation or governments or anything else that killed it, it's only going to work if people can trust you. They trusted you with fiat payments, maybe they'll trust you with crypto. The thing to note, you'll win over the US centric crowd but it's unclear if it will translate truly across borders to Europe, Russia, China, etc. I'm guessing that doesn't matter but just remember what happened. Make sure to be honest about who's actually going to run the payment rails here.

Further to my point https://www.coindesk.com/policy/2025/09/07/stripe-s-tempo-bl...

Libra/Diem was told by regulators to not move forward with the project. They were very early days, and trying to "do it right" in which the administration said "not at all".

Similar also happened with Visa... check when they were publishing in-depth reports from their crypto arm and then suddenly stopped.

> crypto (via stablecoins) is easier/faster/better than the status quo ante.

It must be ignorance on my part or perhaps I’m just lucky with residency and clients, but I get paid through services like Wise frequently. Taxes are pretty reasonable and I receive the money instantly on my bank account from US, Europe or Latin America. I don’t really know much better it needs to get.

I can never understand what problem stablecoins are trying to solve.

Can you say more about the SpaceX use-case? Are they paying for rocket parts from some of their vendors using crypto?

https://techcrunch.com/2025/01/31/stablecoins-are-finding-pr...

Sounds like it's used for accepting payment from Starlink customers in numerous counties:

> The company [SpaceX] partnered with Bridge, a stablecoin payments platform, to accept payments in various currencies and instantly convert them into stablecoins for its global treasury.

Why can’t bridge just convert the money into USD? What’s the point of the stable coins step?

Once you buy the stablecoins, moving the money anywhere is an API call and a sub-1¢ transaction fee, rather than a cross-border wire transfer and a multi-day settlement process.

I still don’t know why there is the settlement process. If it was just a row in the database that this person has N dollars, why isn’t that enough?

That just sounds like "one clever trick" to not pay taxes, import duties, or follow laws.

Or can you explain how these bike importers are being hampered in fiat not by laws, but by technology?

Every time I look at this, the "clever trick" is actually law evasion / law avoidance, to borrow a tax term.

It's about as "clever" as lying to the IRS to save money on taxes. That was never a loophole.

As an extreme skeptic of crypto in general, the uses for stablecoins seem obvious as long as they’re transparently backed or used only for short term transactions before going back into fiat.

Even just paying a foreign contractor is a pain in the ass sometimes so if a bunch of banks and financial service providers around the world manage to make international transfer easier via the coins, that’s great. Not everyone cares about the inconvenience of KYC or reversibility of transactions sent internationally. These usecases feel more like shortcutting the complexity of transactions across state lines rather than the regulations we’ve learned about the hard way in a hundred years. Obstacles rather than safeguards.

That's exactly the same take as mine.

As someone who actually worked on some crypto project (nanotimestamp) and also has got paid in crypto. I usually just convert it into stablecoins / gold coins for a short term (1 year max) where since I am still a minor, I don't have a bank account and so I mean, the end goal is to get my stablecoins out of the chain into real money not vice versa.

I had written something like this, just with a clickbaity title but its basically that I hate everything in crypto except stablecoins which I really like. Like there is paxgold which has gold and I genuinely like the fact that I think that we might be able to pay in gold or etc. stuff, I also like USDC too.

Here's my article: https://justforhn.mataroa.blog/blog/most-crypto-is-doomed-to...

What? It's not hard to transfer payments to any foreign country with a functioning banking system. The hard part is actually figuring out the legal rules around taxation and employment and contracts that are between two dissimilar legal systems.

This doesn't really help that.

KYC isn't an 'inconvenience' it's a legal requirement that you (or your employee) can go to jail over if you do not comply with.

What about the tax implications of every transaction being a taxable event?

Are you tracking all of this for tax purposes? These transactions all have to be reported to the IRS even for stable coins. This is the biggest thing making crypto payments a non-starter. What's the story here from the end-user's perspective?

I as an individual have no interest in stacking stable coins if when I spend them to businesses, I have to meticulously track each transaction and report it. Whatever you're doing for businesses doesn't seem like it would solve this problem for individuals, if you're even solving it for businesses themselves that is.

Why do you need a blockchain for this? What benefit does it bring here?

Stripe can siphon some of that delicious crypto revenue.

You have basically said "there is a real problem here" and "stablecoins are better than what there was before".

Did you look at a non crypto/stablecoin solution to perhaps find something even better for legitimate businesses (and perhaps worse for crooks)?

Fernando from DolarApp here.

To add some context: our clients in LatAm use DolarApp to spend internationally with a card at the best rates, send and receive cross-border transfers (not just remittances, but also payroll), and to keep their savings pegged to the dollar. Stablecoins let us deliver a much better user experience and significantly lower fees — in some countries, up to 10x better than incumbents.

That said, most of our users don’t care about the underlying infrastructure. They care about the benefits. It’s similar to how someone using a bank card at an ATM doesn’t know (or care) that the system might be running on COBOL.

We see it as our job as product people to absorb that complexity so our users get the benefits without having to deal with the complex mechanics behind them. That’s what we believe is helping unlock a platform shift.

Why did this need blockchain? Why could you not use a central private e-money system w/ a good API? It sounds like you think they don't really care about the implementation?

> We're currently adding stablecoin functionality to the Stripe dashboard, and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging.

Using crypto to dodge currency controls?

Of course I agree that currency controls are bad. But, if the use case for crypto keeps being fostering illegal transactions then it doesn’t solve anything a functioning economy needs.

Omg, imagine if you were a foreign country and an US state-backed company decided you're collecting too much taxes, and helped your citizens evade that (for a fee of course)

>But, if the use case for crypto keeps being fostering illegal transactions then it doesn’t solve anything a functioning economy needs.

In many countries what the economy needs to function well includes things that are illegal.

Which means it will only ever be a tiny niche market since the amounts are irrelevant when the service is needed.

Then as the country’s economy develops the need for these illegal services disappear, or quickly gets you in trouble.

>Then as the country’s economy develops the need for these illegal services disappear, or quickly gets you in trouble.

This is not necessarily the case given how large the online illegal drugs market is in pretty much every developed country. Just because weed was legalised, it doesn't mean all other narcotics will be legalised in future too.

Which given the busts of Silkroad etc. and countries changing the laws allowing them to search mail making delivery more perilous, has again withdrawn to a physical hands on market.

Or do you suggest to send some stable coins when meeting the local dealer?!?!

Dude the USA runs the whole Euro Dollar system. The idea the USA really really "controls" it's own currency is a bit of a pipe-dream at this point. We might as well go for full global control.

Ah. I think currency controls might have been a new term for you. Or I should have said ”capital controls” to be aligned with wiki. [1]

Currency controls is what for example Argentine has been doing with set exchange rates and limits on conversion while mandating that all local businesses must be done in their currency.

It is not about controlling the currency, it is about creating hinders for capital movements in and out of countries.

[2]: https://en.wikipedia.org/wiki/Capital_control

> Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.

I still don’t quite understand the point of using crypto then - there’s no advantage in it theoretically being decentalizable since practically it is not. It might as well be an implementation detail.

Or are there decentral aspects to how it works? Does it ease auditing? Is it the improved ease of financial/regulatory engineering?

> Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.

One sign of a technology becoming mature is when it stops needing to be the main character. It starts to make room for what it does, not what it is.

When thefacebook launched, it wasn't a PHP-based social network; it was a social network for college students.

Blockchain has been the main character for a very long time and it's really encouraging to see a product launch like this. Congrats to everyone involved in making this product a reality.

Ledger technology has a lot of uses, use cases are what usually get left behind after the hype has died down a bit.

Such as? Always happy to read clear and direct responses.

That Stripe is involved is probably the best endorsement of Stripe being involved in crypto. Banking in South America is something crypto skeptics have heard for many years now. I was involved in a project that combined crypto with mesh networking. The launch was going to take place in South America. Why? Because university students in Brazil are desperate for a little bit of side hustle money, and incentives could cross borders easily using crypto. This was backed by first tier VC that had a number of crypto investments, including fundamental crypto technologies, alongside other more mundane things. Nobody involved in the project had any intention of creating a bunch of poor student bag holders. Nevertheless, the combination of mesh networking and crypto based incentivization wasn't enough to even turn it into the next Helium (they still around?)

SpaceX using crypto? Are any of their customers seriously going to pay using crypto? Are they gonna pay any of their bills using crypto? I'm not trying to piss in your Cheerios. But making real world use cases not die of uselessness is going to be a challenge.

i read this move as "we were skeptics like anyone with a brain, but also now trump allowed stable coins to offer pyramid like incentives and only a fool wouldn't jump on that easy money."

https://www.wired.com/story/genius-act-loophole-stablecoins-...

Compare and contrast L1 to FedNow.

  1.5%

  $0.045 per credit transfer
  $0.01 per request for payment message
  $1.00 per liquidity management transfer

BTW, it is crypto. So the promise that none of these businesses are using crypto because it's crypto or for any speculative benefit is a provisional promise at best. Hyrum's Law argues an opposite future.

FedNow is limited to domestic US transactions

Which L1 do you mean? I don't see any fee amounts on Tempo's page. Most stablecoin transactions are on Ethereum and the fees are neither percentages nor fixed dollar amounts. They just have congestion pricing, so it depends on how expensive your transaction is to run and how much traffic there is.

  We charge 1.5% of the transaction amount (in USD).

That is Stripe's fee. If you use the blockchain directly instead of through Stripe, you don't pay that.

Hyrum's Law states that developers will depend on all observable traits and behaviors of an interface, even if they are not defined in the contract.

- It rang a bell but I had to look it up, figured I'd share to save others the trouble.

Can you expand on "easier" and "faster" in easier/faster/better. I understand "better" in terms of transparency, shared standards for integration, and various other properties.

I can less immediately expand "easier" and "faster".

Easier: on chain VMs are far from simple or easy, recovery from mistakes is far more complex. Some other aspects such as the implicit common standard might reduce some amount of need for "green field agreement", and the implicit openness of the protocols avoid some of the traps of "here's a rest api, go", but is this the focus? When you look at a wide variety of the big ticket items in everything that needs doing, is the total set easier? Are there surprises there?

Faster: similar to above, this claim is surprising. There's a lot of by-design overhead to a cryptographic ledger system. Lots of things that can be done to make it wider, to reduce latency and increase throughput, but at a fundamental level core operations such as transaction creation require a lot more processing going into a ledger than into a traditional database, even one at scale. Maybe faster here isn't about system faster, but time to product delivery? If so is that common standards? Are there surprises here too, what were they?

Edit: I see elsewhere in the thread you provide some answers in a slightly different framing. A potentially unfair paraphrase and summary seems to be that this enabled integrations to bypass expensive incumbents and comparatively poor traditional infrastructure. If that's a reasonable approximation my question is this: what if you dropped good sized chunks of the blockchain part that is the main system bottleneck, but kept the rest of the properties (shared micro computation model, shared transaction model, common API standard and protocol, eradication of foot dragging incumbents etc).?

Easier: I can earn or spend real money 24/7 without anyone’s permission, at any age, in any location.

Faster: Payments settle lightning fast compared to ACH/Wires, permanently and internationally.

Better: I don’t need anyone’s approval to be “banked” and I don’t have to operate in fear of clawbacks. Programs are the ultimate unbanked, and that’s the “agentic economy” that is emerging.

Please forgive my pushback but:

No third party: Almost certainly as a user there are still third parties involved, this isn't (AFAICS and based on other discussions) a user facing chain (edit: correction, they do say the chain is public, but here I really mean user facing value: you aren't minting stablecoins, you have to get them from somewhere). At "envisioned" transaction rates you would in practice not be syncing the chain and interacting with it yourself in any meaningful way.

Settlement: chain settlement is different from financial settlement. Between clearing ends there will still need to be sufficient demonstration of KYC, exchange of some form of actual holdings and so on. Typically the attraction of /to stablecoins is that they're used to perform transactions ahead of movement of actualizable value in target currencies. A possible alternative model is that all invested parties sink actual value into a global sink fund backing the stablecoin that is sufficiently protected to ensure that it does not devalue. In practice organizations almost certainly aren't going to part with wealth on those volumes and will operate secondary private exchange markets and settlement in bulk to escape concerns of short term loss, leverage, inflation and many other dynamics.

I'm a crypto disappoin-ic. Seems like humans simply cannot un-shackle themselves from central control no matter how low the bar. The second crypto got steam the scammers, criminals and con artists were on it so fast fly's would be embarrassed by their shameless dive into feces.

Long term I'm still more optimistic on crypto than AI. I think part of the problem with crypto is it needs to be around longer than some government money to prove to people it has staying power. Only then will financial people start doing things like recommend a small crypto stash for your retirement just in case. The average person is not going to make the necessary critical mass move into crypto without some sort permission saying its ok and not going to risk all their money or jail time.

If the only two examples that are presented are "SpaceX" and "Latin America" can we not dismiss any further importance on the conflict-of-interest aspect alone? A completely failed experiment, and a company that can create millions simply by tweeting- who buys this?

This is exactly how you bootstrap payment rails to compete with Visa/MC. Merchants would do anything to reduce the 2-3% they’re bleeding to the card schemes. Everyone focuses on consumer adoption, but merchants push payment methods customers don’t love all the time - ACH transfers, store cards, cash discounts. If stablecoins can cut interchange from 2-3% to near zero, merchants will drive adoption through discounts and incentives. Gas stations where card fees destroy margins, high-volume retailers - get a few major players offering meaningful stablecoin discounts and suddenly consumers have a reason to figure out the wallets.

Quoting https://www.schneier.com/blog/archives/2019/02/blockchain_an...:

> Private blockchains are completely uninteresting. (By this, I mean systems that use the blockchain data structure but don’t have the above three elements.) In general, they have some external limitation on who can interact with the blockchain and its features. These are not anything new; they’re distributed append-only data structures with a list of individuals authorized to add to it. Consensus protocols have been studied in distributed systems for more than 60 years. Append-only data structures have been similarly well covered. They’re blockchains in name only, and—as far as I can tell—the only reason to operate one is to ride on the blockchain hype.

In particular, using the term "blockchain"/"crypto" to talk about something more centralized / permissioned than e.g. Bitcoin is missing the point: these systems already existed before.

So what do you mean by "crypto" exactly? Distributed systems? I don't think you'll find many distributed systems skeptics on HN.

> For example, Bridge (a stablecoin orchestration platform that Stripe acquired) is used by SpaceX for managing money in long-tail markets

Do they use it to arbitrate NFTs? (need more jargon)

Because SpaceX is definitely something that screams "finance" to me.

Yeah, I’d like clarification on what SpaceX is doing, ‘managing money in long tail markets’ is essentially meaningless.

"Long tail markets" here means small countries with currencies you don't have any particular interest in holding. Starlink sells access in Benin and South Sudan, for example, that's the long tail.

“Avoiding forex risk” is only three words, I hate corporate communications. Why can’t people just say what they mean, sigh.

My biggest reason to be a crypto believer right now is stablecoins, international payments, and agentic AI.

It's inevitable that agentic AI will handle a lot of workload online eventually. We can't expect these agents to work on existing payment rails, what with their fees and slow settlement and international payment hurdles.

AI agents that can pay each other when necessary - even tiny fractional amounts - will be a massive use case.

That can pay each other? For what? Genuinely curious.

I would imagine that eventually you'd want to gate some data. Like you want your AI agent to get the lastest financial data from Bloomberg and Bloomberg charges you $0.01 per query

If it's EVM compatible it's irrelevant that it's focus is on stable coins.

People can build their own smart contracts and speculate.

Isn’t the advantage of Stablecoins just that you can avoid regulation when it comes to payments, especially across borders?

Otherwise why not just use normal digital payments? I fail to see why a blockchain is needed to log the transactions.

We're starting to seek access to our services using the x402 protocol. It's practical for micro-payments and can facilitate subscriptions and most importantly, completely under the control of the end user. See https://x402.org

> For example, Bridge (a stablecoin orchestration platform that Stripe acquired) is used by SpaceX for managing money in long-tail markets.

I genuinely do not understand this example. What is spacex actually doing? And why do they even have money in “long tail markets” at all?

I don’t know anything about this specific case but it is common for manufacturers to have currency needs in long tail markets to facilitate payments to subsidiaries, vendors and employees in all the places they do business.

Makes sense. Stablecoins in the new regulatory landscape offer significant efficiency gains in the provisioning of lots of innovative financial services (and also typical ones).

Does Stripe have a perspective on the unique systemic risks that stablecoin exposure might end up having in the new regulatory landscape?

Because they are legally barred to doing the same thing in USD. Which is exactly what’s going to happen to this once enough people actually use it.

Many skeptics assume that stablecoins are just about regulatory arbitrage.

That's part of it, but:

1. Progress often depends on evolving obsolete regulation.

Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc) and yet in the early years they had to work around taxi regs.

2. Blockchains are a fundamentally more robust way to run a ledger.

If any of you have ever written software touching tradfi custody you'll know about "reconciliation"--start of every business day, you get a dump of files in your FTP server in various proprietary formats. You parse the transactions and they don't add up. The Recon team hand-corrects and recategorizes edge cases so that the balance deltas match transaction totals and everything ties out.

This type of absurd duct tape is ubiquitous, and it's a major reason why trad rails have multi-day settlement times and even longer for international. Inflates team size and cost required to run a product. SWIFT is a messaging system -- bankers use it to essentially text each other about wires to figure out issue resolution. Some lower-level trad payments regulations are written assuming that this level of manual oversight is required to prevent ledgering errors and ensure sound accounting.

Stablecoins run on transparent, precise ledgers with machine consensus. This doesn't solve everything, but there are large categories of issues that can occur in trad payments that do not exist onchain.

3. Control is liability.

Some important regulations actually encourage blockchain-based payments. For example, money transmitter law places significant requirements on custodial money transmitters (you take money from Alice, with a promise to give it to Bob) that do not apply to noncustodial channels (you give Alice a mechanism to send directly to Bob).

I wonder if some of the non-robustness of the tradfi system is a feature, not a bug. If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen rather than a beautifully efficient, irreversible machine consensus. The bottlenecks and intermediaries create friction, sure, but that isn't per se bad.

My hang-up with crypto is that it solves the ledger-keeping part of running a financial system, but it isn't clear that's actually the hard part! Preventing and remediating fraud, money laundering, etc. are, and crypto makes those issues worse, not better.

> If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen

This is a nice lens for looking at when stablecoins make sense.

If you're an American using your Chase account to buy coffee at Starbucks, the permissioned, heuristically fraud-checked, slow-settling tradfi system is well optimized for you.

If you are an importer buying $3m worth of bulk coffee from Kenya, you would much rather have an instant 1:1 USD transfer on beautifully efficient machine consensus.

In many countries in the world, the banking system is extractive and unreliable. The "confused employee" is not there to help you. The two weeks of money in transit is no benefit, just a source of additional counterparty risk, cost, and delay.

An immutable and transparent ledger is not for everything but it is a useful primitive.

> Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc)

Uber rides ARE taxis.

The innovation of Uber wasn't done by Uber it was done by everyone having a GPS enabled always connected phone and computing device in their hand at all times.

Uber isn't just taxis - if a bunch of taxi companies just got together and developed a taxi ordering app that looks just like Uber, it still won't be Uber.

Uber is a whole bunch of things combined:

- very intuitive taxi ordering UX (for riders) and dispatching UX (for drivers).

- circumventing regulation so there are no more artificial limits on taxi supply in a given city.

- enabling gig economy: because you can use your own personal vehicle, you can work anytime you want for however long you want. You don't need to lease a taxi for an entire week or an entire month. You can choose to work for 4 hours on a weekend only during surge times if you wanted to. So it allows supply to be elastic to meet demand while also offering flexible work arrangements for part-time drivers.

The situation has changed. The US is now leaning pro-crypto and they're also for sale.

Is the US leaning pro-crypto or the current administration in power? My guess is that it's like saying the US is leaning towards tariffs, which may or may not be stable.

It's clearly the current administration, seeing as how they profited immensely by offering their own personal shitcoins. I don't think public sentiment has changed much.

You can be assured that future administrations will not be turning off anyone's money spigot, now that the door is open it's impossible to close.

Hmm, I think plenty of administrations (or rather, legislative bodies, if we actually want to get back to the Constitution) have acted in a way that made it less profitable for businesses to operate, so I think it's very possible to close.

Cryptocurrency regulation isn't a cause that most people are passionate about in either direction, so reeling it back in won't afford politicians any popular support. All it can do is create rich enemies who spend lots of money to attack political threats. There's simply no incentive to crack down on it.

No incentive? Besides a ton of fraud and regulation skirting? Not all crypto breaks laws but a lot does

I think he's talking about foreign governments control on monetary policy, which is essential for managing the economy. Even a poorly run government will insist on retaining control over monetary policy and it provides a necessary forced coordination mechanism for allowing the economy to recover given that it's a prisoner's dilemma otherwise, with every individual preferring to opt out of taking a loss.

This end-run around foreign government monetary control has been touted by Stripe executives as one of the main selling points for USD stablecoins but I don't see how foreign governments don't clamp down on this is in the same ways the clamp down on other uses of USD in the country; most monetary transfers have some physical presence or touchpoints the government can control.

More importantly the US itself is eventually going to come to the conclusion that it does not want people holding US dollars for similar reasons: it also loses control over monetary policy, with excessive inflows un-intuitively leading either to unemployment or excessive debt (c.f. Michael Pettis)

That said, it's possible stablecoin networks succeed for other reasons, particularly having a widely-accepted "API" that is developed at the pace of modern technology companies instead of laggard banks.

The US used to have a policy against dollarizing other countries but I think that's gone now.

Other countries have controls on currency movements inside and outside their borders.

Blockchains (due to constantly changing validators, nodes, etc.) are much harder to shut down than some dedicated service. I think the current administration understands that loose stablecoin regulation further cements US dollar hegemony, curtails other countries attempts to deprive their citizens of payment and savings alternatives and creates more demand for US treasuries (because that's where stablecoin reserves end up). It's a win-win for the US government and bad for governments with a track record of poor fiscal and monetary policy.

Not if the blockchain is developed and administered by a single company!

You don’t need to shut down the actual blockchain network participants to kill it for your citizens.

In practice this isn't true; very few services (in terms of $ spent/earned) are purely virtual and have no physical presence in the country.

To be honest, a nitpick that i have in this comment is that there are other stablecoins aside from us dollar but most people don't seem to use it.

There are gold tokens which I genuinely feel like it can be the best thing ever. Because bitcoin is "digital gold", lmao.... I laugh a lot on this statement nowadays because we genuinely have trustworthy way of having "digital gold" and we don't use that as much as there is hype about bitcoin...

But yes currently, it might benefit the us govt. overall

Which Tempo will just ignore.

And yet USDC has a sanctions mechanisms built in.

If by "pro-crypto" you mean the current president and his wife both did crypto-scams on his first day of presidency, then yeah. Other than that, I wouldn't base anything off of a Trump promise.

What is the benefit over cash?

I’ve heard stable coins are beneficial for the owners of the coin because it’s basically an interest free loan to the token owner.

Why new blockchain? There are already several of them that provide constant low fees and scaling to ~100k tps on L1.

Lazy vibe check, building a stable coin is way easier than running settlement or a clearing house.

So I get it I guess!

Edit: I’m only joking a little bit

> so it might be interesting to share what changed our mind

One can look at Stripe's list of investors...

Patrick, congratulations on launching Tempo. If there was a company where it actually made sense to build and use a blockchain it would be Stripe.

The website is a bit painful to read but I thought it provided good general information for potential partners.

As as a dev, my questions are why did your team decide to build a new L1 chain instead of an Ethereum L2 and why did you all stick with the EVM architecture instead of looking at something like the MoveVM?

Patrick, the problems you describe (speed, cost, cross-border friction) already have solutions. SEPA Instant, FedNow, PIX, and providers like Wise move money in seconds, at negligible cost, inside regulated systems. Tempo doesn’t solve payments; it sidesteps oversight.

By shifting flows onto a private stablecoin ledger, Stripe isn’t fixing inefficiency; it’s making it easier to route money in ways regulators and tax authorities can’t easily monitor. That’s not innovation, it’s the oldest trick in the crypto playbook: pretend you’re improving payments, when what you’re really selling is a way around the rules.

did you write your comment?

A “stable” coin is as much a “crypto” as is a fast turtle fast.

Does Stripe plan to offer its own variety of coins in future?

So what should I "buy" to invest in this vision? Eth?

That's the fun part, You don't have to "buy" anything to invest in this vision.

You just can't "invest" in this vision just as you can't "invest" into treasuries, I mean you could but they don't give 100x the returns.

I skimmed through and I don't see anything that promises a lot of returns and THAT'S A GOOD THING. Just like how things like (okay, I was thinking of some universally loved non ipo company and I thought of silksong which is going to get released, so team cherry!!) So if you want to invest into team cherry, the best you can do right now is maybe buy the game but that isn't investing I think its in the similar manner and its a good thing since it prevents frauds and false returns advertising

There is (usually) no free lunch. Nothing that can give 100x returns anyway, there is insane competition on things like on beating the market consistenly even with 1% is really hard and only very few companies do and even then, their past record doesn't indicate the future remains the same. Tldr: I am that salesman of index funds. also diversify, s&p have a huge concentration on AI stocks and so please diversify into world stocks or maybe even more into non american stocks since american markets are heavily focused on AI and I doubt that it will play out since the markets do feel like they are in a bubble right now

Appreciate the input.

Definitely not ETH since Tempo replaces Ethereum.

:thumbs-up

> and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging.

I'm not surprised, capital controls come and go there, and when they come, they stay for several years.

"Another big customer, DolarApp, is providing banking services to customers in Latin America."

https://www.linkedin.com/posts/jasonmikula_fintech-partner-a...

When this bank employee expressed skepticism of "DolarApp" he was faced retaliation:

https://ia800508.us.archive.org/28/items/gov.uscourts.flmd.4...

"10. In and around the spring of 2023, Mr. Ibrahim became uncomfortable with certain practices and activities in which the Bank began to become involved. These included practices that, in Mr. Ibrahims opinion, jeopardized the Banks compliance with anti-money laundering laws, federal safety and soundness requirements for depository institutions, and compliance with specific OCC regulations and requirements that were particularly imperative due to the fact that the Bank was already considered a Troubled Institution

14. Mr. Ibrahim further objected to Axioms initiation of new business programs, without first obtaining non-objection letters from the OCC and without review by the Banks internal New Product Risk Committee, as required by written policies. One such project, DolarApp, was of particular concern to Mr. Ibrahim as it entailed cross-border movement of funds, which triggered significant concerns as to whether the Banks BSA/AML controls are sufficient, among other things.

15. But when Ibrahim raised these concerns with the CEO, Ross Breunig, he told Ibrahim to the effect that he did not want to hear it and shut down the conversation.

18. Almost immediately after Mr. Ibrahim objected to these practices, Axiom and Mr. Breunig began a pattern of retaliation. After the April 2023 leadership meeting where Mr. Ibrahim raised concerns relating to CSI and the DolarApp, Mr. Breunig began canceling Executive Board of Director meetings that Mr. Ibrahim attended.

19. Following a leadership meeting in May 2023, where again Mr. Ibrahim raised concerns about CSI, DolarApp and the overdraft positions, Mr. Ibrahim began receiving email cancellations to multiple committees and Board meetings.

20. Upon inquiry, Mr. Ibrahim learned the meetings were not being canceled, but rather he was being uninvited without explanation. Mr. Breunigs hostility with Mr. Ibrahim also became noticeably apparent during this time."

Of course Stripe, Inc. is neither a Troubled Bank nor an untroubled one

Anyway, it sounds like DolarApp could be useful for evading anti-money laundering and bank secrecy laws

"Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit."

That's only one of the many reasons people might be skeptical of crypto. See above

"They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante."

How much of this "real world financial activity" is not criminally culpable

100% no doubt

when will stripe go public?

They don’t have to go public if they don’t want to. Being a private company is totally fine.

Speaking as a shareholder: It would be kinda swell if they went public though.

“The way out of interchange”

"Trump isn't pursuing financial crimes on blockchains, so we're cashing in as quickly as possible"

So Elon Musk and Nayib Bukele. Two solid reasons.

I don't think SpaceX is that great of a data point

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Probably his history manipulating crypto markets specifically

Presumably because of his issues with the pre-DOGE SEC

I mean, I'd like more details on "managing money in long-tail markets" and why it's best done with stablecoins rather than... money.

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Invest in echi coin and then we can talk about your coin! ;)

Crypto plus doing business with Musk? Not sure you'll win many hearts and minds

You could achieve the same things with a proof-of-authority ledger instead of a "stable" coin

Here's the play. It's very simple, and it's quite good.

Stripe processes a LOT of money. The customers that get that money need to move it around. Often to banks. Stripe makes no money on that.

Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc).

Stablecoin providers make money on their float -- selling stablecoins means you get free deposits, and risk-free rates are presently around 4%. For every $1M in stablecoins your customers hold, you can make $40k/year. Stablecoin providers like Circle pay about half of that back out to partners that sell the tokens.

Stripe is huge, and well-trusted by customers for handling payments. By adoption stablecoin infrastructure to control financial flows into stablecoins, they can amass huge amounts of stablecoin sales.

If even ~3% of their transaction volume gets held in Stablecoins, and they make 1% a year on that, it's about $1B a year in bottom line.

~$10e9 (daily avg vol) * 365 * 3% (converted to stablecoins) * 1% (net income) = ~$1B

> Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc).

For avoiding regulation.

My online bank doesn’t support international wire transfers. I had to wire money to a local bank then go to the branch in person, twice, to wire money to my own brother in Europe. He then had to schedule an appointment with his own bank, go in person, and justify why he received such a big transfer, mind you, it was 8k…

So yeah, it’s not about regulation. If crypto can help streamline all this, it’s a net positive

I wired approximately that much money internationally years ago with Wise (then known as TransferWise). Wasn't a hassle at all, didn't require any rigamarole, and importantly, didn't require crypto. What's the problem with using Wise?

It may differ depending on countries, but I tried sending $8k USD to Malaysia and it took some time. Can't remember if it was weeks or days but point being it wasn't as instant as crypto can be.

Also, I think you're neglecting to point out the rigmarole involved with making a Wise account — connecting your bank accounts etc. And the recipient might also need a Wise account for instant transfers (but I believe Wise becomes a custodian for your funds in that case).

Crypto wallets can be generated by the click of a button. I think I taught my mom how to make a crypto wallet at some point. She didn't understand how to keep her crypto safe, which is its own issue, but wallet creation is easy.

I'm far from a crypto maximalist, but nigh-instant transfers with very little fee is a very attractive benefit of crypto.

Creating a crypto wallet to receive is just the first step though. If your mom needs her local currency then the same as with wise she needs to create an account on some form of exchange or pay an extortionate rate to use a crypto ATM.

If she doesn't need that then wise without a linked account or PayPal or etc is the exact same outcome without the crypto wallet security risk.

That's a fair point, but creating an account on an exchange isn't too bothersome.

I personally use a Ledger device for my crypto. It was super easy to set up (though I wouldn't advise it to my mom, because she tends to misplace things). I linked my crypto wallet to my bank account fairly easily. So we can still get nigh-instant crypto transfers and fast selling of crypto into local currency (Speaking from US here, I think it usually just takes up to one business day). It's still faster than bank-to-bank transfer for large sums, which again, can take weeks for whatever reason they decide.

> wise without a linked account or PayPal or etc is the exact same outcome

PayPal without a linked account is actually pretty terrible. I did a Google search of PayPal frozen funds and this was the first result.

https://www.reddit.com/r/smallbusiness/comments/1kq14uk/payp...

Wise may have similar issues, I haven't really dealt with them outside of the occasional transfer, but I never let money sit in my wise account.

If you have custody of your own crypto wallet (IE not coinbase), no one can freeze your funds.

Again, I have my qualms with crypto, but the existing shitty state of ways to transfer money makes crypto very attractive. I have trouble even transferring money between my wife and my joint bank account and my personal account (held at two different institutions).

So your setup process is the same as wise or PayPal. You still had to do the process so crypto is best case harder since you also had to setup and manage a wallet unless you're just using the exchange one.

Go look at the subreddit of any of the major exchanges and they all regularly have stories of locked funds. Given the scales it would be far more likely there.

That's not a natural state of banking though that's a issue with your country. I have accounts at 4 different banks in Australia and regularly transfer funds between them without issue(I think my cap for instant transfer is around $5k though above that is usually only a few hours). Canada had a similar system(interac payments).

> Go look at the subreddit of any of the major exchanges and they all regularly have stories of locked funds. Given the scales it would be far more likely there.

Yeah that's why I wouldn't suggest anyone keeping a lot of funds on an exchange, and having custody of your own wallet. "Harder" is irrelevant (and relative) because a one-time setup in order to send money instantly — something that I need to reiterate that if our country's banking systems allowed us to do, I wouldn't look twice at crypto — is worth it.

> That's not a natural state of banking though that's a issue with your country.

Yeah I think that's my point though. If my country ("the great US of A") prevents me from easily moving money from me to me, and I've also had nothing but trouble trying to manage joint finances with my wife because of the difficulty of transferring money, then yeah I don't wanna play that game. In countries where bank transfers are instant then yeah, crypto doesn't make sense.

> What's the problem with using Wise?

On march 16th 2022 I sent $500 to my cousin in the USA, the transaction was completed on may 2nd 2022 after 9 back and forth emails with support. The first email on march 16th was asking me to confirm some information which I did same day, the other 8 back and forth emails was me asking when was my transaction going to be completed... at that time I had been an active wise user for 3 years...

I'm a Wise user. Transfers are mostly fine for currencies they support. The transfer is usually pretty fast. I tried paying for a guided Hike in Tbilisi, Georgia a few years ago, and the transfer took almost a week, so it's slow in some cases. For currencies Wise doesn't support, you need to look at other options, such as Western Union or crypto.

What's the problem with using crypto?

Everything you mentioned that you and your brother had to do is because of regulation?

No it's not.

The limitations you're describing are only in place because the countries that are subject to these bank limitations present significant issues (money laundering, terrorism, etc).

Using Wise within Europe, also between non-Euro currencies/countries takes less than 4-8 hours most of the time.

_Your_ transaction wasn't about regulation.

What is the breakdown of transaction volumes?

screw regulation when a bank transfer isn't instant and the bank can do all kinds of checks and hold your money hostage for days or weeks.

In EU, regulations are heavy and the result is I can send money instantly for free. That’s actually what the regulations are for. To protect free trade from bad actors.

Protection and control are indistinguishable. And secondly what if the State is a bad actor?

"Protecting" free trade from "bad actors" is just an extension of the state to control what "free trade" is from what it considers "bad actors".

Bad behavior does exist, but current technology far exceeds the capacity of bureaucracy to implement free trade, protection from bad actors, and most importantly Trust. The state itself becoming a bad actor is an increasing risk, which technology helps to hedge against.

I think it's important to remember that the Government IS PEOPLE. How are the people in Government any different from "normal" people.

They're not.

And so the people in government will be just as misguided, corrupt, fallible as any other organization of people. Technology helps us hedge against those failures.

> And secondly what if the State is a bad actor?

That's ad hominem. You can make that argument for any player (stripe, any intermediary, the customer etc).

Personally I trust the state (at least mine) more than any corporation. But that's just me.

Depends. For the Founders of the US, it was a base assumption that the state was a bad actor. It's usually a good bet (i.e., it pays off more times than not), IMHO.

The world is much bigger than the US, and those of us on the outside don't worship your founders.

And fair enough. Nevertheless, it's not an ad hominem to attribute to the state a characteristic which has been observed in every form of government. Barring the newest (though COVID response ["lockdown" and similar] provided an example for most), no state has ever avoided tyranny in the long-term. It must necessarily be so, if only because man is fallible and power corrupts.

The founders of the USA believed the counter to tyranny was to keep government weak, so that when even the slightest hint of restriction on life, liberty, or property crept in it could be stomped out by the people. The Founding Fathers too were fallible and built a form of government which could not long guarantee those desirable characteristics. I argue the USA is a bad actor in many regards, and I trust it not. That said, it's the best of a bad lot, IMO.

> It's usually a good bet (i.e., it pays off more times than not), IMHO.

If that was actually true, why do you put up with The State? Why do you not overthrow it? Seriously: if the state/government is bad why do you even have it?

Is the (municipal) State being a bad actor when it paves roads and runs water-sewage? Is the (state/provincial) State a bad actor when it runs schools? Is the (federal) State being a bad actor when it protects waters with Coast Guard and Navy and enviornmental regulation, when it inspects food, funds science and medicine?

It seems to me you get what you expect: the (e.g.) Nordics expect government to be a good actor and try to live up to those expectations; (some?) Americans expect government to be a bad actor and try to dismantle it… creating a self-fulfilling prophecy. Perhaps if more Americans expected and fought for / 'demanded' better government they would get it.

Governments are overthrown regularly (I count 13 such cases just in the 2010s). Mine hasn't yet made it to the point where such actions are needed --- if and when it does, you may judge me by my actions.

As for why we have government: the alternatives are unstable and devolve into government, or are weak easily brought to the submission of other states (those powers having a natural incentive in land, people [historically: slaves], and other natural resources to invade weak or disorganized neighbors).

Re. your other points, if we can have those discussions we're likely not in the grips of tyranny. Tyranny has a way of making you accept the potholes and the fact you don't have water 5/7 days (beats dying in a labor camp, and you probably don't have fuel for your car anyway).

Since you asked, though: Paving and water/sewage are not inherently tyrannical. Acquiring the right of way may be. Schools are not inherently tyrannical, but may be used subversively to produce a populace willing to be governed under tyranny. Protecting territorial waters it not inherently tyrannical, but military might can certainly be used in a tyrannical manner. Inspection of food and funding of science and medicine are not inherently tyrannical, but the taxation required for that funding may be, as could be e.g., requiring the use of the output of that funded medicinal research.

In summary, I'm saying that every government must be watched carefully by its citizens lest it devolve into tyranny. By assuming this trend (demonstrated time and again through history) to be indicative of future risk, I am prepared for that eventuality. By continued vigilance, I implicitly fight for the opposite. By continued discourse, I demand the same of my peers (and they of me, mitigating my own tyrannical traits).

Personally, I wouldn't trade my government (imperfect though it may be) for a 50% nominal tax rate and sub-arctic climate. That said, it's no surprise to me that the Kingdom of Norway, a parliamentary monarchy with 4% the land area and less than half the population density vs. USA, populated by 80% ethnic Norwegians, would have a very different form of and perspective on government than the third largest country (by land mass), de-facto world hegemon, a federated republic populated by 360 million children of colonists and immigrants. Horses for courses.

> Personally I trust the state (at least mine) more than any corporation.

I trust the state in aggregate no more than the least-trusted corporation, because corporations are, as creatures of law rather than nature, manifestations and exercises of state power.

The State = People. The government are People. They are both as fallible as people are fallible. It's not magic.

Technology helps to mitigate the fallibility of people.

This is a ridiculous fallacy, one that gets people killed. Many a failed revolution, ill-fated coup or catastrophic invasion began by assuming the state was just people. The Battle of Stalingrad, the Vietnam War, the Soviet-Afghan War, the Gulf War. The state is a giant apparatus that doesn't know right from wrong, it just responds in the way it's supposed to like a sheepish animal. It happens in Congress, in the CCP Politburo, pretty much anywhere. The inhuman indifference of the state is a feature of modern legislation we call Rule of Law.

Technology is similarly indifferent, and it's common that cryptocurrency is deliberately designed to exacerbate the fallibility of people. Unpegged stablecoins, shit memecoins, rugpull tokens... that's what I would call "consumer fraud" in a functioning economy. Or "gambling" at the very least.

There is no solution, everything is bad, but this new thing yah it's worse than everything before it. So we must keep the horrible old bad thing while impotently critiquing it.

It seems that this is a quintessential argument that's often made and is, plainly speaking, entirely stupid.

What do you think "people" means? "People" means an organization of humans.

How that organization structures itself produces various different kinds of results.

Religious organizations, political organizations, corporations, etc. are all People, but the results are very very different from organization to organization.

Why? Because of incentive structures.

The Enlightenment "indifference of the state" can actually then be extended to the "indifference of organizations".

Cryptocurrencies/the internet are no different in that sense as it is a new organizing principle for groups of people.

But what it is deliberately designed to do actually is to facilitate transactions.

What you're actually interested in is Fascism/Authoritarianism, where the state takes a paternalistic stance to protect the poor and stupid, the "masses", from the freedom to transact among themselves.

What actually needs to be prevented is the monopolistic and excessive accumulation that concentrates transactionary powers.

Limiting transactions is then the real authoritarianism, whether that is from a government or through the accumulation of wealth to a small segment of the population.

The issue simply that there is an asymmetry where certain people should have greater powers than others because they are verifiably better, but how much better and to what extent can such persons actually accumulate that power is a difficult question.

That's where the organizations of various kinds come in. They accumulate for themselves so as to protect the individual through the collective. This is the feature of any organization but again it ends up in the same situation. Organization can accumulate excessive powers and limit the freedoms of others, just as an individual can.

This dynamic is the problem. How to resolve? Can it be resolved? Who actually knows.

Cryptocurrencies, really the internet and computer technologies as such, are just another instance where we're re-evaluating the values and re-organizing ourselves around those principles. It'll address some of the old problems, it'll create new ones, but it's not any different than any other previous technological revolution.

The country I live in is democratic.

I can elect representatives and I have a direct vote multiple times a year to shape national policy.

The banks and corporations are not. I trust them purely based on their reputation and trust in following the rules that we have put in place.

If the state is a bad actor good luck with using cryptocurrencies to avoid that. You will be retrospectively controlled if necessary.

The state as a bad actor is controlled by democracy, not technology.

Aside from that, in payments the bad actors you need to actually worry about are malicious vendors and customers and hackers stealing your details and your money. None of which Cryptocurrencies make better, mostly they make that worse, because they were designed as digital cash.

> In EU, regulations are heavy and the result is I can send money instantly for free.

I can assure the cost of those regulations is enormous for the banks. They were forced to make the SEPA transfers free but you ended up paying for it everywhere else.

you guys are talking about free SEPA transfers, but I just checked a couple of banks in Hungary, Austria and Germany, and I don't see this.

N26 has free SEPA transfers in Germany I believe.

the original claim was that somehow the EU regulation enabled free, instant transfers. the claimant didn't specify but obviously talked about SEPA transfers, however, they aren't free or instant across Europe by a large margin.

yeah, I checked a couple countries and I don't see this instant transfer for free. certainly not for every EU country.

and then let's not even talk about the instantly part, that is just simply not true.

Try sending money to a supplier in Iran or Russia and tell me how helpful those EU regulations are.

Why would they need to send money to a supplier in a country that couldn't ship goods to them anyways?

Or try to buy something from Hamas, or send money to a cocaine supplier from Colombia.

Don’t get suppliers in Iran or Russia. Easy.

It’s not a bug, it’s a feature.

Just don't trade. Easy. We're actually supporting free trade by restricting free trade. Because when the government controls what you trade that's what free trade actually is.

What an amazingly blatant example of Orwellianism.

What happens when you get caught for trading using cryptocurrency, with countries that your home country has made trade illegal with?

I was just pointing out how funny the blatant doublespeak was in that comment.

What if your home country has made trade illegal? Well guess what your home country does not support free trade.

It supports limited trade, which is a perfectly fine position.

I wonder why...

check out the revolut sub on Reddit and you'll see random people getting a ridiculous amount of KYC for even a couple hundred or low thousands of euro.

"I want to avoid sanctions illegally"

no, this has nothing to do with anything illegal.

I should be able to transact with anyone, anywhere in the world, near instantly with little or no fees.

This isn't some radical, cyberpunk extremist, this is just pure trade. We have technology to facilitate this but we've been held back for decades by greed and legislation.

I would like to restrict you, yes you personally, from transacting with criminals… because that makes them more powerful and me less safe.

I’m sorry that your fellow humans don’t want you shitting up the place, but don’t blame the bog standard norms of civilisation on some sort of government conspiracy.

I once wanted to send money to someone with an extremely common Arabic name, think "John Smith" in Arabic. My bank took issue with this and wanted a copy of their ID etc. One can speculate about why they wanted this, but ultimately I think it shows that the regulations are racist.

Obviously not true, as explained by other replies.

But if it was true, then so what?

i'm still unclear what the crypto really adds to this play. stripe customers need to move their money around, and they need a trusted source to hold money. stripe could just do that. why add crypto into the mix?

The GENIUS act enables tech companies to become reserve holders -- buy US Treasuries with customers' money. Stripe offers a "transactional ecosystem" to the customer in stablecoins, the customer gives USD to Stripe in exchange for stablecoins, Stripe buys short-term Treasuries and makes a shitload of money on interest.

Part of the very high level play is the US Govt seeks to diversify away from depending on nation states for borrowing, and to promote tech companies to the status of reserve holders.

This doesn't add much to the consumer however. I think in fact we are looking at a "fragmented currency" future where you hold like 36 different stablecoins in your wallet because certain platforms accept certain stablecoins. The GENIUS act doesn't offer strict guarantees for getting out of a stablecoin into USD, so I predict dark patterns and "incentives" to make it hard to get out of a stablecoin.

That only makes sense if Stripe issues their own stablecoins? If they let their customers hold USDC on the Tempo chain, then any revenue from holding short-term treasuries goes to Circle. Are you suggesting Stripe would force Circle to share some of their revenue with them or they launch their own stablecoin to compete with USDC?

Good point. In the scenario I described, I'm assuming Stripe will launch their own stablecoin. I tend to think all major tech companies are incentivized to launch stablecoins and give you discounts and perks when you transact using their stablecoin in their own ecosystem. The more of their stablecoin they issue out, the more money they make on interest.

Stripe already has their own stablecoin: https://www.bridge.xyz/news/usdb

So then by using this product you are de facto buying short term US debt lowering the debt costs in a way? Is that what you are describing? And Stripe makes money on that short term carry.

Still doesn't answer why you would need any crypto here. Why can't the USD transferred to stripe just be a record in an SQL database saying customer X has N USD in the account, and transferring that around could be done instantly at zero cost by changing an sql row.

There are all sorts of protections around who can be a custodian of someone’s money (for good reason)

However there are use cases like running a marketplace, where the platform would like to be able to direct the flow, maybe hold things temporarily in case there are multiple transactions or to split a transaction up between different clients, before paying it out daily or weekly as a lump sum. Often it’s just to avoid fees, because the marketplace operator charges their fees in a different way (like a flat monthly invoice) and they want to assist with money logic as a service, but not be the custodian of the money.

Even just knowing that money has moved at all can be useful, without any ability to touch it, and it’s difficult to get permissions from conservative financial institutions, whereas permissionless ledgers make it easy.

Crypto can help add that nuance. It’s still your money, but you can give a third party the ability to do some things to assist you, without giving the ability to transfer it all to themself and run away with it.

So, we're just going to pretend those regulations don't exist for cryptocurrencies too?

That sounds like banking or payment processing. Albeit with later Paypal has proven that you do not always need to return funds, but still there is regulatory history on that...

Stable coins are new enough and have not catastrophically crashed yet so there is less oversight.