For something on an about page, this copy draws some extremely frank comparisons.
> If users all have to go through a KYC process, this significantly limits the viability of the token to permit free movement of money across borders.
KYC processes are, essentially, the law. Governments go out of their way to do this to cut down on financial crime. Regardless of whether you believe these laws are useful or just, I find it difficult to believe they'll have any success trying to work around these laws. Governments (in general) do not like it when folks try to create loopholes: I wouldn't bet on a project whose stated goal was to avoid complying with the law.
They do not apply to all financial interactions. Fortunately they have not yet passed KYC laws that apply to many types of peer-to-peer financial activity, as the ones in force were designed for an era where electronic transactions were only intermediated by large trusted third parties, and largely exempt direct p2p transactions.
So this sudden opportunity to legally engage in financial interactions without the encumberance of 40 years of accumulated AML/KYC laws that has arrived with the emergence of decentralized finance offers the opportunity to reverse the trend toward governments, at the behest of international organizations like the FATF, increasingly resorting to the warrantless dragnet surveillance of finance approach to combating crime, i.e. Total Information Awareness applied to private financial interactions.
Similar to how the internet forced governments to back off on censorship laws, cryptocurrency has the potential to force the political class to rethink current financial crime laws and liberalize people's access to money. It has the potential to lead to criminal laws being limited to those that respect traditional due process and privacy rights, and the principles of freedom of association and presumption of innocence that free societies depend on.
Or it has the potential to force the political class to rethink current financial crime laws, and tighten up P2P loopholes cryptoenthusiasts are exploiting to make their product more attractive to ransomware developers, to the detriment of everyone else who just wants to avoid photocopying their passport every time they send money to their friends. I wonder which is more likely.
To do this the currency needs to win in a battle against every government without being blocked or made illegal. It doesn't matter what you think about KYC laws: trying to subvert them means taking on governments, and that is almost never a winning strategy. Especially when your strategy is "build a technical system that outfoxes the government by strong-arming them into my way of thinking".
Did they? Governments regularly censor stuff on the internet all over the world.
Meanwhile, the real criminals pass through KYC with stolen ID.
Trying to eliminate it will push a massive amount of humans to reactionary action.
And when humans can't get safety out of trust, they get it using force and control.
The art is to balance these, not to imagine you can eliminate it.
BTW: I'm far from being religious. My idea of faith is more abstract than the religious one.
The only purpose of this currency is to enrich those who invented it.
As is tradition in crypto. It's kind of implicit.
[edit] I mean, think about this rationally. You're creating a new token, that doesn't have revenue, a business model, or any way of generating income. And yet it is "100% asset backed, and funded by top Silicon Valley investors."
Those investors aren't in it for their health. They don't care about decentralization and trustless whatever. They want to make an ROI.
How can you make an honest ROI if you don't have income?
Can someone just bring that out so we can have a crypto currency that is actually useful as a currency?
- Dollarization, that is an already relatively common phenomenon (Zimbabwe, Argentina...) with controversial effects. Definitely not a silver bullet for hyperinflation.
- A payment system, that requires to work tightly on UI/UX, on cultural preferences, to adapt to local infrastructure... Exactly the reason M-pesa succeeded where many silicon valley startup failed.
And then, there are the technology choices, the stability mechanism, the regulatory aspects ...
From their Ethics page. Should go over well with regulators.
I understand your point from a practical perspective, but I think it's important to point out how far the situation of needing to worry about how regulators will react to decentralization technology is from the ideals of democracy.
It's nothing fancy its like an SDR for cryptocurrencies[0]
For context, Leverage Research was this pseudo-science psychology woo/cultish org made by people related to the rationalist movement. See: https://www.lesswrong.com/posts/8j4zirwfhWhT8nwsc/a-critique... for some background.
My personal expectation is that the existing frontrunners, Bitcoin and Ethereum, will stabilize in price as the percentage of retail speculators decreases and the percentage of institutional investors + users increase.
Consider the following scenario: your index (let's call it BTCEMA) tracks BTC at $30k but BTC does a crypto thing and drops $5k in a day, so it's now below the index. A lot of traders would sell your BTCEMA tokens to buy more real BTC expecting a recovery or get into stable coins expecting a further drop. At any rate, the exchange price of BTCEMA would drop due to sell pressure.
Your indicator has "broken peg" which is an ugly situation that threatens every artificial instrument in that space. The whole miracle mixture for algorithmical and asset-backed stable coins is to prevent such a situation to happen for a longer time. It's a bit too much to explain but they try to defend against this in different ways, e.g. reducing supply to hike price.
In your case, you'd need to buy BTCEMA from the market to prop up price for as long as it takes the moving average to digest the sudden price jump. You'd find yourself in the situation of the Bank of England trying to defend the Pound in 1992 and only making Soros rich instead.
Worldwide, historically, this approach seems to have a poor track record.
This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html
The fact that it is unregulated, and weakly subject to AML/KYC is a feature for me, not a problem. My money, my business, not the governments.
Their banking partner, Deltec, in the Bahamas is chaired by the man who created the Inspector Gadget TV series.
[edit] Tethers are chuck-e-cheese tokens that became so integral to the entire cryptocurrency market (90% of ETH inflow and 80% of BTC inflow are Tether, not dollars) that nobody can do anything other than pretend they're legitimate. Because if they're not - and they're not - then the whole thing falls down.
This seems like a very curious view of the world to me. Do you believe that people who buy houses and sell them at a profit 20 years later are dishonest?
On the other hand, any project that can be transparent about its reserves (whether though "smart contracts" or plain old armies of bean counters writing actual compliant reports to Uncle Sam) is welcome by my book. Anything that can take the influence and dominance from Tether in the crypto market should be brought to the table and considered for analysis.
> The only purpose of this currency is to enrich those who invented it.
Isn't that exactly what's happening with the existing relationship between governments, their central banks and the financial elites?
I'm not a fan of Reserve either, much less of this Silicon Valley idea of governance, but as long as they they make good on their deals and make their money by providing stability in exchange of absorbing risks, I don't see anything immoral or unethical about the fact that private individuals and organizations can go on to try to create an alternative to central banks.
A demo a couple years ago showed AZTEC being used to conduct privacy-protected DAI transactions for the first time:
https://twitter.com/avsa/status/1068536063470125056
Since then, AZTEC's privacy technology has become more efficient in terms of gas, and more effective at protecting privacy, going from protecting merely the privacy of amounts, to protecting the privacy of amounts transferred and sending/receiving addresses.
AZTEC is also developing a zk-Rollup, which increases Ethereum's maximum throughput from 15 tps to 3,000 tps, so that these private stablecoin transactions can be done at scale (though not 3,000 tps, since privacy comes with a computational and state storage overhead, but still much greater than 15 tps).
https://blog.makerdao.com/busting-makerdao-myths-seven-misco...
Asset “xUSD” - first and only untraceable private stablecoin in monero based blockchain developed by www.havenprotocol.org team. XUSD was started 07/2020 and soon in 02-03/2021 team also start next four assets - xEUR, xCNY, xGOLD and xSILVER. All in private haven protocol.
Zcash will be adding support for user defined assets. may be some one will create a stable coin based on Zcash using this.
Even if it were banned it would have little long-term impact. Literally impossible to stop decentralized swaps unless they also cripple BTC. it would be very powerful actually for people to realise how unstoppable it is.
As for which I think is more likely, I think it's liberalization of finance and the retreat of the surveillance state. The new DeFi system is so much more efficient than the traditional financial system and the restrictions it's straddled with, that economic value will flow to it, and economic interests will trump the institutional inertia of the up-to-now steadily advancing surveillance state.
And it's fortunate too. If not for the sudden splash of financial liberalization brought about by cryptocurrency, the frog in the pot would have slowly been boiled by the creeping centralization of finance that has occurred over the last 40 years.
The last 40 years has seen regulatory institutions increase the restrictions they impose, the staff they employ, and the budgets they oversee, while becoming increasingly intertwined with the corporate giants they are meant to regulate through campaign contributions, political lobbying and the revolving door that exists between them and the private sector.
That's maybe not the best example for making a pro-liberalization case, as pornography isn't exactly a public good, but it's what comes to mind as a clear case of the legal strategy employed by the state changing due to new technology.
Another thing with KYC is they are above all privacy laws, including GDPR. For example, services are not allowed to delete your private account details even if you close your account, for 5 years or more. Also, as an account holder, you are not allowed to know who your KYC details were shared with the government / law enforcement, and why. You are not even allowed to view the warrant (should there be one).
For example DAI is pegged to one USD to make it as useful as possible but "The Reserve token will initially have a target value of $1.00, but is designed to go off of the peg from the US dollar in the long term.".
I'm sorry, but the institutions are in place today precisely because it is society that upholds them or tears them down. The gears may turn slowly when it comes to implementing change, but they very much are answerable to the public in democratic societies.
>>I'm sorry, but the institutions are in place today precisely because it is society that upholds them or tears them down.
That's one theory. Another is that the institutions that are in place are there because that was the best we could do with the technology of the time. Representative democracy combined with a market economy was as decentralized as we could go 200 years ago with the communication/coordination technology available at the time.
Another theory is that institutions are a trial and error process, and when they start to fail, people naturally form alternatives.
A reflexive anti-decentralization position by a party wielding regulatory power is reckless and not in the public interest.
And society holds up decentralized institutions just as much as it holds up state-based ones. The former could be argued to be an even more direct expression of society's will, as the maintainers of decentralized institutions are the users themselves, rather than delegates that form their own insitituonal interest groups.
Sounds like a near stable coin but 6% depreciation is still not stable.
It's like you take the housing part out of the housing bubble, and are left with the speculative aspect, the bubble.
This sounds incredibly fitting for a cryptocurrency.
That actually increases their credibility in my eyes. Someone with genuine, real-world-useful talent is involved in this?
The problem is that there are 25 billion USDT.
Further, let's say they have $10B. If all of those are the proceeds of money laundering (and let's face it, they probably are, after all, why would anyone give Tether money when they could give Circle money or Coinbase money) - then they'd all be forfeit anyways.
And even if that's not true, they're under no obligation to redeem Tether tokens. Ever. It's in the T&Cs.
Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all. [1]
Arcticbull was very clever to check the Bahamain government report. It's interesting to see how much money can be laundered and hidden, but $10bn starts to be noticeable.
https://twitter.com/SBF_Alameda/status/1349331577390579718?s...
Many of the other points are discussed in this rebuttle:
https://danheld.substack.com/p/dont-fear-tether
The more alternatives to Tether the better, so long as they compete towards realizing transparency where it matters.
In other words, I’ll be happy if bitcoin crashes from Tether (I believe it will, probably to well under $20,000) - that is nothing more than a huge buying opportunity.
This asymmetry in information alone should be reason to have them eliminated from the market as soon as possible.
But that has nothing to do with the long-term valuation of cryptocurrency. The part I object to, which is what many of the earlier comments are trying to say, is some version of “Tether & wash trading is bad, therefore bitcoin is nothing but hype / fake scams.”
Yeah, yeah, I get it. No one can really know the true price of BTC. It's all speculation. Nothing to back it up... what else do you have?
Understand this: there is a large number of people that will keep working with BTC (and crypto) regardless of price and current market conditions. There is a large number of people that don't care about the price. People will keep building things on crypto, regardless of price and it will become more and more of an alternative to existing financial/economical systems.
How can Tether have a daily trading volume of almost 100 bln on a supply of 'just' 24 bln? Seems rather obvious that the vast majority of crypto trades are done by HFT algos and not people (or worse, that the actual supply of Tether is much higher than the reported supply).
You can't deny that Tether is a very essential component in the crypto markets. It is also an unregulated, unaudited private entity operating outside western jurisdictions, with a long history of controversies: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
Hardly the group you'd want managing a global currency system.
Yes, I completely agree what Tether is doing is criminal and that they will likely be responsible for the next crash.
The question is: so what? The important thing about crypto is its anti-fragility. Every crash brought a correction that made the system more robust and less prone to be extinct.
It's not going to be crypto's first crash and it is certainly not going to be the last.
[0]: https://www.reddit.com/r/UniSwap/comments/l43yka/what_happen...
I've had my share of discussions with arcticbull, it's amazing how smart he can be when he wants and how clueless he makes himself to be when it comes to acknowledging the upside of crypto projects.
I should say, I freely acknowledge I don't have all the answers - clueless in some cases even, to borrow a turn of phrase. I find crypto fascinating, like many folks, from a technical perspective. I remain unconvinced about it's practical real-world applications.
For crypto, other than censorship resistance - which most people don't actually care about because they are lucky enough not to need it - it doesn't really offer anything useful. Most crypto projects are Rube Goldberg machines whereby the operators of these companies are re-hashing all the same things our ancestors did with money. Of course they are doing well at the moment because it's morphed into a get rich quick scheme. If there was no easy money to be made there would be little interest in it, just like there was back in 2010 when I started looking at Bitcoin.
Enterprise blockchain struggles because there's no actual need for blockchain elements like chains of provenance and smart contracts if the participants are fully identified and already have business relationships. "Blockchain" is a direct substitute for trusted third parties and good legal agreements and should only ever be used in circumstances where all other options are exhausted because the technology comes with so many bad trade-offs. Doesn't scale, very complicated, difficult to manage upgrades and versions, customers find it hard to understand, etc...
When your idea of "real-world" is one where all people have access to stable, robust and functional institutions, it's no surprise that you don't see the necessity of alternatives.
Consider it a privilege. And I don't mean it in a derogatory way.
how? Money market funds have negative returns these days.
For instance, if we take your 0.2% blended rate estimate for what you can get for your capital, that's still a real yield of -1.8% accounting for inflation. Luckily that 2% inflation loss is born by your token holders, not you, however that creates a real incentive to exit the tokens once interest rates rise.
Let's say interest rates rise to 5% due to a financial recovery - back to where they were in 2010. Now, not only have your token holders lost 2% value for each year you've carried the T-bills, you have to discount the notes by 3.375% (vs the current market 1.625%) to liquidate them should your token holders decide to redeem and move into bonds themselves.
To liquidate them you have to pay the difference in coupon rates, so a mark to market loss of $172M. If we take your 0.2% blended rate as an offset, even over a 5 year window, that still represents a net loss of $122M.
Borrowing long and lending short works until it doesn't, then you can ask Mr. Neumann what happens.
Further, one of the Tether clowns has stated his defense for printing huge piles of Tether on a Saturday morning is that all of the major exchanges and OTC desks actually have accounts with Deltec and they're doing an intra-account transfer. [edit] it was Paolo.
Last, in their weird vlog post, someone at Deltec admitted they had a huge stake in Bitcoin, which more than likely represents the assets "backing" Tether. They printed tether, bought bitcoin with it, drove up the price, and used it to back their tokens.
You should be utterly and totally terrified of Tether and anyone who tells you otherwise is trying to sell you a bridge.
[edit] FWIW, I've heard rumors of them buying up small community banks in the US to force them to take on the relationship. You know, like money launderers do. That's the only way I could see them having a US routing number.
I wonder if Tether will hit $100bn before they go bang. I'm also reminded of how pyramid schemes took out the entire economy of Albania in the post-communism era ...
Nothing can be effectively priced in as long as you have an artificial and illegitimate source of liquidity pushing the price up. Such a market doesn't allow for rational pricing mechanisms to manifest.
If it were not for Tether, I'd be way holding way more non-stable crypto that I am now. Right now the only non-stable token that I am buying is BAT, and mostly because their projects has a clear/transparent way to see where their money is coming from.
Early adopters are maybe going to profit something because of the money they got from the ICO and some VC, but the economics don't add up.
"Scale" is not the point. Independence and resilience is.
Just because it still pops up and noone responds to it at all. How many transactions can bitcoin handle nowadays? And how much energy does it consume again for that?!
How much energy, money, human resources were spent already on research of, say, Fusion Energy? Has it produced anything close to being net-positive? Should we call it quits? Who gets to represent "society" to make such a call?
> How many transactions can bitcoin handle nowadays?
How many tons of cargo could the first airplanes carry?
Sorry for being flippant, but it gets tiring to get the same "argument" over and over and over again. Yeah, current implementation of the system is far from ideal. It needs work. It is being worked on. The fact that it is not it is the highest priority does not make undesirable. It just means that are other things that need to be worked on before we put more focus on these kind of optimizations.
High-value, low-mass packages were transported by airplanes by 1911; by 1918 the USPS had an official air-mail service. That's fifteen years from the Wright Brothers' flight, and only ten years after the first flight of a full mile's distance.
So airplanes were economically a net positive 15 years after their invention. Chaum's ecash, which I think is reasonably comparable to the Kitty Hawk flight, was 25 years ago.
The primary use of Bitcoin that I encounter in my daily life is in ransom requests. If I want to make a legal million dollar payment, it's easier and safer to have the bank do it than to use cryptocoins. If I want to make a $20 payment, it's much easier and safer to use a credit card than cryptocoins. While I quote these extremes, everything [legal] in between is also easier and safer than cryptocurrency.
If the "things that need to be worked on before" don't include any of these cases, what do they include?
And blockchain enables people to send value without intermediaries around the world in less than a few minutes.
Key point: without intermediaries. Any comparison with existing banking systems is moot.
> If the "things that need to be worked on before" don't include any of these cases, what do they include?
- How to get the systems safer to use, so that people can reduce their dependence on existing banking/financial structure.
- How to create other use-cases beyond transmitting value: to create credit systems (along with credit ratings, insurance instruments), to eliminate notaries and have blockchain be also used as a record of private property, deeds, etc.
- How to find a better point in the trade-off decentralization/permissionless/operational cost x centralization/permissioned/economies of scale. That is what Layer-2 solutions are about.
- How to develop and architect applications that make use of this technology without destroying value.
Do you need more?
In particular, intermediaries allow people to fix mistakes. And people make mistakes all the time.
People like banking; it's individual banks that they hate. Better regulation fixes that. Unregulated transactions are terrible: the entire history of finance proves that people will lie, cheat and defraud each other if given half a chance.
Financial safety comes from the ability of a trustable third party to adjudicate and correct mistakes and disputes.
If you want to compile a credit rating, you need an accurate history of transactions. Blockchains don't give you accurate histories, they give you timestamped signed logs of entries that are really really difficult to amend. "This landlord reported that I was late on rent but I've never lived in that state" is a complaint that a credit agency must accept and evaluate.
Eliminating notaries: the purpose of a notary is not just to say "this event happened at this time" but to say "I witnessed this event happening at this time". A blockchain can't do that. You need to trust the notary as well as the notary's log, and random people adding entries doesn't make them trustable.
Record of private property and deeds: you literally want a single authoritative database here, where every write operation is done by a trusted person.
Each of these cases is not "we need a blockchain" but "it's good to have a signed, difficult-to-forge journal that can be inspected and verified".
Your last point is basically "we don't know what cryptocurrencies are good for."
If intermediaries are optional, they are great. The problem is when they are required, or when they are corrupt, or simply inefficient.
Everything else you are writing shows the same privileged worldview that I see in those who hold strong anti-crypto ideas. You don't know how it is to not have reliable and robust institutions, so you don't understand why so many people want to work on a solution that disrupts them.
> Each of these cases is not "we need a blockchain" but "it's good to have a signed, difficult-to-forge journal that can be inspected and verified".
Yes, blockchain is not the end. It's the tool to have a "signed, difficult-to-forge journal that can be inspected and verified". But until you don't understand the importance of being able to do that without intermediaries, we will be talking past one another.
Intermediaries are a massive optimization and solve a ton of problems. Pushing a world without them onto these disadvantaged folks, in a very real way, locks them into a second tier moving forward.
[1] https://nypost.com/wp-content/uploads/sites/2/2016/03/2-phot...
Not all of them. Just the ones that compares the current implementation with some untenable ideal or with the status quo in the developing countries. Saying "I can send one million dollars or 20 dollars easily to anyone without blockchain" is no different than a "Let them have cake" to someone in Argentina who would like to work as a freelancer with European customers. Saying "blockchain is never going to compete with Visa" is a big fuck you to the small business owner in Rio who needs some rotating capital to their shop and the bank is offering "competitive rates" of 2%/month.
> Pushing a world without them onto these disadvantaged folks.
It has very little to do with "disadvantaged folks" or "not having access to financial services". It has more to do with enabling whatever-you-can-call "middle class" to be able to protect their wealth and to do their business without being harassed by corrupt government officials, or having their savings inflated away by government that can not/will not manage their finances and even to enable them to make business with foreign entities without getting ripped off by abusive/unfair taxes.
> Intermediaries are a massive optimization and solve a ton of problems.
No argument there. But again, the problem is when people don't have intermediaries they can rely on. If you show me any non-blockchain alternative where people are free to choose if they want intermediaries or not, then I will gladly support it.
As everything in designing systems, there is no solution free of trade-offs. Forcing people to depend on institutions and to accept centralization is a clear trade-off between performance and robustness. Too much optimizing and not focus on robustness brings you to a system that is so inflexible that becomes dangerous. It works well until it doesn't. When it fails, it fails spectacularly.
Again, that's not the point I'm making.
Yes, perfect shouldn't be the enemy of good, but utterly insufficient shouldn't be the enemy of good either.
Yes, some people are helped. No, substantially any more people cannot be helped because - and while you disregarded this criticism earlier - the system simply cannot and does not scale to any transaction quantity larger than that of a single Costco or a large flea market.
btw, if someone's charging you 2% per month for a loan, that's likely because lending to you is incredibly risky. If someone's offering you a loan for less than that, they're in danger.
> It has more to do with enabling whatever-you-can-call "middle class" to be able to protect their wealth and to do their business without being harassed by corrupt government officials, or having their savings inflated away by government that can not/will not manage their finances and even to enable them to make business with foreign entities without getting ripped off by abusive/unfair taxes.
Blockchain doesn't stop any of that. It's not a way to protect your wealth if the value drops 40% in a month. In this month. That's not protection, that's juggling buzzsaws. In no small part because the same thing that allows it to be used in these rogue jurisdictions allows scammers and criminals to manipulate the ever loving crap out of it - I mean, Tether, for example, but that's just the latest example. It's impossible to actually price because you can't see through the murk.
I've said this before, and I stand by it: if you have a government that cannot manage a currency, you have bigger problems than your currency. Once you sort out the government, the currency is no longer a problem. And even if you use crypto you are still subject to those same taxes. But strictly worse because you have to pay them in local units, but store your value in a wildly fluctuating store of value.
I also reject the idea that "just do financial crime" is a solution to really any problem you may have.
> If you show me any non-blockchain alternative where people are free to choose if they want intermediaries or not, then I will gladly support it.
Good news!
Can the entrepreneur in Rio or the freelancer in Argentina who wants to do business with Europeans not use TransferWise or open a TransferWise Borderless account in seconds? [1] It allows them to hold any of 55 currencies and send them to 70 countries - at mid-market rates, plus a small fee - including Brazil, Argentina, the US, Canada and Europe. Their rates are incredibly competitive.
If you're upper-middle-class there's always HSBC Premier which will get you local bank accounts in 80 countries, with one-click transfers between them in Global View. [2]
IT DOESN'T HAVE TO! That is why I am ignoring it.
Systems that enable trustless transactions do not need to be Universal to be useful. Even if blockchains did only one transaction per minute, they would be useful - it's just that we would have to make accept a bigger trade-off in regards on what must go off-chain.
Understand this: blockchains are only needed as the settlement layer between parties that do not trust each other. This means that is not every transaction that needs to happen on-chain. If you trust a part of the group that you do business with, you don't need blockchain, you don't need layer-2, you don't need even a fucking bank account. For peers that do trust each other, transactions can be registered even on a A5 notepad or a excel spreadsheet if you want to get fancy. For local markets, paper IOUs are absolutely fine.
When you say "does not work at scale", your implied reasoning is "it does not work at every scale". You are thinking that the technology is only usable if it is universal and satisfies all scales: from the hyper-local to the municipal, provincial, national, global.
Your mistake is to think that a system is good if it is universal and all-encompassing. That truth is that Universality is not a requirement. Blockchain enthusiasts/developers are all accepting the limitations of the current technology and how fully-trustless transactions are too costly to be usable at anything but the national/global dimensions. The work is then to figure out ways to (1)increase the current limits so that more trustless transactions can happen in the lower levels and (2) know when (and how much!) trust inherit to the lower levels can be introduced to the higher ones as a way to make the system more performant.
The more progress is made in these areas, the better it will be for the overall system and the less it will be required for people to rely on trusted parties.
Let me repeat: systems that enable trustless transactions do not need to be universal to be useful.
---------------------------------------------
Now, a separate section to highlight what I mean about your ignorance based on a privileged position:
> if someone's charging you 2% per month for a loan, that's likely because lending to you is incredibly risky
No. That is simply not true. Banks in Brazil are notoriously known for having one of the largest spreads between what they get from the SELIC (the Central Bank's rate) and the average rates for retail. Retail banks have profitability rates that were unmatched by any other country. Until a few years ago, they were offering "co-signed loans" of ~1%/month to pensioners and public servants. Absolute zero risk, and these were touted as low rates to increase credit in Brazil.
(Something that I forgot to mention when you were talking about how Visanet has low rates in Europe: Direct debit cards - zero risk! - charge ~1.9% of the transaction value. Some of them charge a little bit less, but put a sizeable monthly rate on top of it.)
> Transferwise
Right, tell that to an Argentinean and see his face of horror when he needs to find out if he is going to receive the official, the blue or the black rate. Tell that to a Brazilian and they will tell you that if you want to go through Transferwise a 6% fee will be added to the invoice, to make up for the "finance operation tax" that occurs on any credit, currency swap or insurance policy transaction.
> Once you sort out the government, the currency is no longer a problem.
One could argue that not even the developed world has "sorted out the government", and you think that Latin America is going to be able to do it? Do you think that continent-sized countries like Brazil or Turkey, with so many different people and different views and conflicting points will be able to "sort it out" through a political system that is set up in a way to not let anyone prosper unless it is submitted to the corrupt elites? Haven't you learned anything from the events of the last 20-30 years?
Why do you think that people should spend their lives trying to fix a so-horribly complex broken system, when they get sidestep the whole problem by disrupting it and searching for a more localized approach?
Sir, you have absolutely no idea what you are talking about. Or worse, you DO and you are actively defending it. Maybe that is the problem. Maybe you are so comfortable in your golden cage that you think it would be silly to work to be free and to be able to fly at will.
(2) Debit interchange in Europe is capped at 0.2% and has been since 2015 [1]
(3) Let's walk through my proposal. Step 1: Sign up for TransferWise Borderless Account. Step 2: Receive EUR. There is no fee, and there is no step 3. If you don't trust your local currency why wouldn't you just hold EUR or USD or CAD or NZD? They're actually stable and don't drop 40% in a month.
Let's walk through your proposal. Step 1: Convince someone in Europe to sign up for an exchange, verify their identities and whatnot. Make a SEPA transfer into the exchange, pay 1-2%. Wait 1-2 days. Buy a crypto. Transfer the crypto to you. Pay a fee. $15 for BTC right now. Step 4: Convert at whatever rate to your local currency, pay 1-2%. Deposit it into a bank anyways since nobody uses crypto. All the while taking on huge counterparty risk, a large bid-ask spread and exchange rate shift risk. Step 5: Commit tax fraud by not reporting your transaction. That sounds like (2+6=8% to 4+6=10%) to me for the Brazilian in your situation.
If that's flying free, I'm ok on the ground.
How could you possibly believe the latter is better than the former?
[1] https://www.adyen.com/blog/all-you-need-to-know-about-the-eu...
(2) Yes. IN EUROPE. I talked about Brazil. How many times is it going to take for you to understand that having good market competition in one place means absolute jack shit in another?
(3) You can not hold CAD or NZD or USD or EUR on a bank from Brazil. You have to convert it and there is a 6% fee for it. This is on top of the exchange rate fee from transfer wise.
The alternative I am proposing, however, is to receive crypto, sell it to BRL at the exchange (often at a better price than the USD equivalent, because there are people willing to pay the premium) and withdraw it free of charge.
In this case, crypto is giving me the choice of intermediary: a crypto exchange that I know will give better rates and faster transaction times. I could go further and convert the crypto to a stablecoin like USDC, EURS or DAI at the exchange and hold it there. I can use the exchange (if I trust it) as my informal bank which can hold crypto currency that is paired to something stronger than BRL or ARS. Worst case, I don't trust it so I withdraw local curency, but rest assured that it will be a good deal because crypto exchanges will work with rates closet to the market and not what the Central Bank is willing to pay me.
You keep arguing with unrealistic hypotheticals when you could actually ask people outside of your bubble and they will tell you the thousand different ways where the status quo is worse. Do you really think everyone is these places are so stupid?
Obviously? Usually however, there's a reason why the fee is what it is. Have you dug into it? For instance in the US interchange is high because the vast majority of it goes towards rewards programs and loan origination costs. I'll be the first to admit don't know how that maps in Brazil.
However, read back to your earlier post: "(Something that I forgot to mention when you were talking about how Visanet has low rates in Europe: Direct debit cards - zero risk! - charge ~1.9% of the transaction value. Some of them charge a little bit less, but put a sizeable monthly rate on top of it.)"
Did you say anything about the rate being 1.9% in Brazil? No, the only geography you referenced was Europe, which is why I followed up with the, you know, European rate. It sounds like you should just be advocating for a fee cap in BR right?
You really haven't explained why TransferWise is worse than your recommendation, and you keep avoiding the whole "breaking the law and exposing yourself to prison time" bit.
I keep saying, you can keep the foreign currency in your TWB account, and send it to other people later, just like you hold crypto in a wallet. Why bother with DAI and USDC when you can just you know hold USD in your TWB account? A borderless account is a bank account, that you, in Brazil, can open, and hold all all those currencies with banking details in most of those places. For free, I believe!
Frankly, why don't I think people use TransferWise? Obviously I don't think they're dumb. It's new, I don't think they know about it. Borderless launched in 2018 and I suspect Brazil wasn't it's first supported destination. Getting the word out takes time. Read about it and let me know what you think!
No, you're not listening. TransferWise Borderless is a bank account into which you can deposit and retain US dollars or Euros or CAD or NZD, and any other currency you want, even in Brazil. There's no 6% fee because there's no conversion. There's no exchange rate because there's no conversion. Unless you elect to. Read about it and then reply. It stays in the currency which you receive. It's a multi-currency online bank account.
They give you an account number and a routing number in the US, and in SEPA, and in the UK, and in Australia, and so on. You receive a domestic transfer. It shows up in your account in the foreign currency. And it stays in the foreign currency. Then you can send it elsewhere if you want. Or hold onto it.
Doesn't expanding TWB sound way better than crypto? It's nice and regulated, and insured too!
Great, now we are at the 10k libertarian tribes, which conveniently want to impose a great cost (energy-wise - and no, you didn't mention how this is set to improve) on society for their personal freedom. I understand that. Most often these libertarian interests align with criminal interests, I also understand that this is what happens with a bunch of sociopaths...
> (3) You can not hold CAD or NZD or USD or EUR on a bank from Brazil. You have to convert it and there is a 6% fee for it. This is on top of the exchange rate fee from transfer wise.
Can you just communicate with your libertarian tribes there, if you are not one of the persons actually allowed to communicate internationally ;).
> Doesn't expanding TWB sound way better than crypto?
whynotboth.jpg? Why do you want to deprive yourself and others of the option?
> It's nice and regulated.
And under the control and monitoring of a government that people do not trust. And that can be killed by the government if people start using extensively for their own benefit and starts hurting the government's bottom line.
Transferwise uses rates close to what the central bank/governments is paying, which is far from the actual market rate. Plus the whole 6% fee.
> "breaking the law and exposing yourself to prison time"
I was going to call out this as FUD, but actually it's just you showing how you haven't been exposed to different systems.
First, whatever you do at an exchange needs to be reported and legally you will declare the income whether coming from the sale of crypto or an international payment order.
Second, you are thinking as someone who deals with a functional and not-so-corrupt tax authority. Your logic does not apply in a Banana Republic. All of these complex tax systems are full of loopholes precisely to give a way to do business that resembles normalcy to a privileged few. The ones that represent the institutions are in the game. The "strict rules" and threat of jail time only applies for those that oppose the corruption or that break their own internal code.
There is a reason there is a quote that says "For my friends everything, for my enemies the law." which is attributed to a Peruvian politician.
Not on this thread, but yes, I did talk about work on Proof-of-Stake on Ethereum and the work on layer-2 projects.
If you are interested, take a look at Loopring or Raiden, both projects allow value transfers between people at near-zero costs. Loopring is a bit more centralized than Raiden but its UX is easier, Raiden still is complicated to setup but can scale linearly with the number of nodes in the network.
> Most often these libertarian interests align with criminal interests.
Get rid of the weasel-words and try again. What is your actual condemnation here?
For whatever it is you think it is a crime, ask yourself (a) if crypto is enabling criminal actions that would be otherwise prevented and (b) how much these activities would not exist if the institutions were actually working at the best interest of the people.
Money laundering, drug/gun/people trafficking already exist without crypto. It's not like criminals will become good citizens if we get rid of crypto. Black markets come to exist because of oppressive regimes, not despite them.
