> Crypto-as-money is still young. We have a lot to do. Do you remember Napster? Tether is kinda like Napster – it's taking off, people love it, it's a little sketchy, and it's probably not the design that will last. We don't want to make the equivalent of Kazaa – another blip in the history that ultimately doesn't ultimately work out. The challenge is to build a platform that's as robust as BitTorrent and as great to use as Spotify and Netflix.
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.
> 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.
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.
The internet also created new classes of crime. It doesn't mean we're worse off for liberalizing access to telecommunicatiom.
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.
> 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.
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".
One example is that obscenity laws stopped being enforced in some states as authorities gave up on trying to stop internet pornography.
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.
totally agree.. once my account on Revolut was blocked, without explaining why, and was kept locked for 6-7 months. during these months they asked all sorts of documents, and then they closed the account and the rest of the money which was on that account were sent to some strangers :) and again, without any explanations. now, copies of my documents are sitting somewhere on their servers waiting to be hacked and distributed to criminals, who will use them to pass through KYC :)
I had a similar experience as a false positive for fraud, it was enormously frustrating and time consuming to clear my name, often having to be very adversarial and threaten legal action to the companies, before they finally cleared me for what turned out to be a mistake on their end.
Yeah, getting your details hacked is the scariest part. With these documents, criminals can breeze through any other KYC in an instant, pretending to be you.
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).
Don't you know the SV aristocracy are above the law?
We can debate the law, we should, not following a law is also a choice.
But disrupting laws as an ideology is eroding our ability to engage in meaningful social exchanges. The pipe dream that technology can absolve humanity from unavoidable need for trust and faith is perhaps improving our material situation in the short term. But human psychology is not easily augmented by technology. Deep down, to face the uncertainties and the inevitable lack of full knowledge of reality, we strive for the safety of faith and trust.
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.
It's worse than that: every reservoir of trust represents a resource that fraudsters can profit from destroying, like a rainforest. It's an opportunity to make money for themselves while gradually wearing down the rest of society and making it worse for everyone else. Just as the deliberate destruction of trust in politics leads to people storming the Capitol.
When it removes the peg to the dollar, how it's supposed to be stabilized? "bunch of random collateral" isn't quite convincing. How are people going to trust that the collateral, like tokenized bonds, are actually valuable? I'm not going to trust such a system. Money based on trust is dead.
The only purpose of this currency is to enrich those who invented it.
> 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?
Precisely. Provide stability in exchange of absorbing the risks from the underlying assets. It's what every bank could do, even without fractional reserve.
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.
It's always a pleasure though! :) I certainly learn a lot from y'all.
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.
To back you up somewhat with a personal anecdote... I've been working in the blockchain World for about 8 years across crypto and enterprise blockchain as an engineer, researcher and more recently a product manager, and and have come to the conclusion that there are not really very many practical applications for crypto or enterprise blockchain.
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...
What's your view on stuff like Sia and Filecoin? I agree with you about the lack of actual use for stuff like Bitcoin etc but the storage cost aspect of those two is interesting for sure.
> I remain unconvinced about it's practical real-world applications.
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.
if that's only for 10k libertarian tribes, then I guess it does a good job. Unfortunately the nice hardware and electricity grid actually needs a society to build and maintain. And these are much more people thank 10k libertarians.
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?!
> Unfortunately the nice hardware and electricity grid actually needs a society to build and maintain.
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.
The first airplanes had a clear commercial advantage over other methods of transport: speed.
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?
> The first airplanes had a clear commercial advantage over other methods of transport: speed.
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.
All of these things except "without intermediaries" are already solved with intermediaries. Intermediaries are desirable: they solve problems so that the end users don't have to do it. It's fundamental to programming, in fact: you don't handwrite machine code, you use a language with libraries that gets interpreted or compiled to run on an operating system that provides lots of useful facilities and abstractions so that you don't have to care whether the machine is connected via a 3Com 905b or a Lucent Orinoco, and the same code that worked over those obsolete interfaces still works over a 10gig fiber NIC.
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."
> intermediaries allow people to fix mistakes. And people make mistakes all the time.
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.
It’s not fair to write off all criticisms of the blockchain as privilege. The issue isn’t privilege. The issue is that folks who don’t have access to financial services deserve access to financial services and blockchain doesn’t get them that. It gets them a “ruined fresco” [1] of that. A crap approximation if you squint, but if you zoom in all the details are wrong.
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.
> It’s not fair to write off all criticisms of the blockchain as privilege.
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.
> 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.
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]
> system does not scale to any transaction quantity larger than that of a single Costco or a large flea market.
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.
(1) IMO your point about scale is asinine. If it doesn't scale, it can only help a small number of people so the net welfare increase is negligible. Might as well not exist if it can't scale. I'm not saying to everyone, I'm saying to more than a single Costco. As I said, Layer 2 doesn't count because you can just as easily set up a fiat bank as an exchange, and with far less regulation in exchanges you take on way more risk. Fine, whatever, we won't see eye to eye on that.
(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) substitute "people" for a "clusters of people with insular trust". Most of these people can not setup an account, but some of them can. They collectively managed their internal accounting and only need to go to the blockchain when a settlement with someone from the outgroup needs to be done. What is so hard to understand about this?
(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?
> (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?
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!
> 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.
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!
> (1) substitute "people" for a "clusters of people with insular trust". Most of these people can not setup an account, but some of them can. They collectively managed their internal accounting and only need to go to the blockchain when a settlement with someone from the outgroup needs to be done. What is so hard to understand about this?
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 ;).
The backing assets appear to be other stablecoins. I wonder what kind of interest they can make that 1) isnt incredibly risky, and 2) is legal in the US where they are based.
Buy US treasuries? Those rates are still positive (0.09% - 1.66%). Since the capital is essentially free even if you get a blended rate of return of say 0.2% that is still real money. As an example USDC has $5.1 billion dollars in outstanding tokens issued that's $10 million a year at 0.2% just to sit on it.
Sort of; that has a risk you haven't accounted for: borrowing long-term and lending short-term (or rather, no fixed term). This is the same kind of risk that absolutely savaged WeWork.
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.
> How can you make an honest ROI if you don't have income?
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?
If you're an institutional investor in real estate, you can use real estate to generate a nice steady income, via rental. People who aren't parking capital or laundering money tend not to invest in houses to keep them empty.
I think the OP meant speculative. Most jobs create value, some don't. Some people just have a hard time digesting and wrapping their heads around making money without creating actual value.
Indeed - in isolation home price increase tends to match inflation (as in, no real dollar returns). In areas where it goes up, it tends to be due to external influences such as city councils preventing new development.
On one hand, yes, you are right. This "it's turtles all the way down" approach regarding valuation of tokenized assets is a huge source of systemic risk and those that want to be able to get greenbacks will be better off by using centralized stable tokens (like Circle's USDC or STASIS' EURS)
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.
Remove the unconstrained supply of Mickey Mouse money (Tether) and eliminate wash trading, and you will watch Bitcoin descend into the abyss rather quickly.
Personally, I see these issues purely as “buy the dip” investment opportunities. For many speculative investors, the crazy volatility from factors like these is what makes crypto attractive. I see a deeply undervalued long-term value proposition for cryptocurrency, where the big risks for today involve the minefield of manipulation issues that have to be survived to get to the other side where the assets appreciate hugely due to a true valuation mechanism, no longer wanton speculation.
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.
There is a huge moral issue here. You have a company that is manipulating the market like crazy convincing people to put more and more of their savings in crypto, all of it to be taken away.
This asymmetry in information alone should be reason to have them eliminated from the market as soon as possible.
Totally agree. Getting rid of Tether and holding them responsible sounds great.
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.
Speculation? You can look at the raw market data right here and see several things that should make any critically minded person go 'hmmm': https://coinmarketcap.com/currencies/tether/
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.
You do know what you are saying may be new to a few naive or ignorant newcomers, but that is already priced in by any reasonable person involved in the space, right? [0]
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.
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.
You are right, my term was not correct. What perhaps I would say is that those are aware of the issue are already putting Tether in their risk calculations and their exposures.
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.
The web page for this project refers to Altman as the President of YC, but that's a role he hasn't had for quite some time; how up-to-date is this website?
Well, you don't have to have a standalone coin to get the features you desire. For example the AZTEC Network, which is a privacy protocol, can be used with any Ethereum-based ERC20 token, including algorithmic stablecoins like DAI, and soon Reserve.
A demo a couple years ago showed AZTEC being used to conduct privacy-protected DAI transactions for the first time:
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).
You are wrong. We have one which is what he want !!!
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.
Monero exists in a global market. There are many many exchanges all over the world. On top of that, Monero can be trivially exchanged for other cryptocurrencies without the use of custodial/permissioned exchanges. The cryptocurrency genie is out of its bottle.
Pure propaganda with no evidence. Major exchanges like Kraken are still trading it even in USA.
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.
Mister, we have “xUSD” !!! It is first and only private untraceable stablecoin math backed on $XHV blockchain which is fork of $XMR.
See www.havenprotocol.org
Haven Protocol’s xUSD is what your’re looking for. The potential for this one is huge. Just check havenprotocol.org or join the discord server. Very active community and really exciting stuff to come such other xAssets including gold, silver, euro and Chinese yuan, all with Monero tech. Twitter is @HavenXHV. Cheers.
There are many confusions mixed with stereotypical startup culture in the first video. A global stable currency is not :
- 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 ...
One hilarious thing about Tether is that it implicitly acknowledges that the dollar is the source of stability for unstable crypto, and that crypto needs to be "dollarised" to deal with its volatility.
"Furthermore, the Reserve network is, in a sense, a new kind of government. We are supplementing - and in some cases wholly replacing - the government function of money"
From their Ethics page. Should go over well with regulators.
Regulators work for us, and should be answerable to the people through their democratically elected representatives. Their job shouldn't be to protect and expand the control the state wields. It should be exclusively to further the public interest, whether that is through expanding state power, or relinquishing it to make way for new non-governmental mechanisms of socio-economic coordination.
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.
What proof do you have that decentralization technology furthers public interest?
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.
My point is regulators shouldn't be reflexively opposed to decentralization and the retreat of state power. Their agenda should be exclusvely to advance the public interest, and it's by no means established that centralization and state control is always and everywhere in the public interest.
>>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.
Guarantee they're breaking some rule for listing Sam and others on their website as "investors". If not, that's super dodgy that Coinbase Ventures allows their portfolio companies to do so.
If it's running on Ethereum then users will see $5-20 transaction fees and >20 second transaction times. That's not a great experience for first time users
> Initially we are developing on the Ethereum Network but ultimately we expect two-way bridges to enable complete interoperability of the Reserve token across all major smart contract platforms.
Yes, in principle it looks very similar to MakerDAO but I think some details are different.
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.".
The idea is very cool. The criticism against existing cryptocurrencies being too volatile is very valid. I can't help but wonder if this just contributes a "15th" stablecoin to the "14" competing stablecoin standards.
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.
I had this rather simple idea the other day: Why not create an artificial index over the last X days and trade that instead? No matter how crazy the price changes of a crypto coin are, the X day average will always be dampened because today's changes will only be 1/X of the change of the average.
Sounds like it would break down real fast if it just says "we track BTC avg over X days" and has no means to defend it.
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.
That's not a bad idea. Wrap Bitcoin 120 days moving average into a stablecoin. It could probably be done in a decentralized manner similar to MakerDAO/Dai.
I'd rather hold banks, regulators, and governments accountable so that I can safely and sensibly transfer funds rather than having to rely on bullshit nerd Ponzi schemes.
They're not actually accountable for their actions. History shows this. Fwiw though, I think that stablecoins are pretty much only good for trading pegs and an alternative to international remittances.
Please make your substantive points without calling names. Perhaps you don't owe "bullshit nerd Ponzi schemes" better, but you owe this community better if you're posting here, because that kind of downgrade causes threads to get significantly worse.
I'm surprised that being associated with Coinbase (of "we're NOT going to agree that black lives matter, so stop asking already" fame) and the giant scam
that is USDT is not regarded yet by these people as reputation damage.
A company wants to focus on their product or service instead of getting entangled into the clown festival of social justice politics, a topic that has nothing to do with said product or service.
The people calling ‘USDT’ a scam probably haven’t used it. For the past 5 years, Tether has been the most amazing way for me to transfer dollars across exchanges, or just to hold during market drawdowns.
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.
No, the people calling USDT a scam know that it's backed by nothing, and Tether has no obligation whatsoever to redeem them, ever (it's in their T&Cs).
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.
Why do you say $10B out of curiosity? The last hard numbers we had were when they issued ~2.5B, and had $800M siezed because they banked with a money launderer (CryptoCapital). If you look at the Bahamian government's report on domestic banks with USD on deposit, the total for all banks grew $1B last year while over $20B Tethers were issued.
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.
Tether is completely and utterly toxic to US banks. So much so that when they bought Noble bank in Puerto Rico, Noble was driven into bankruptcy because their US mainland correspondent bank cut them off instantly and absolutely nobody would touch the relationship. There was an entire saga with them trying to find a US correspondent bank, and getting shut down by each and every one, one at a time. I can say with total and complete confidence that there is no correspondent bank in the US. Remember, this is why they had to bank with money launderer CryptoCapital in the first place.
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.
Big Alveis dos Reis energy: if you print enough money you can just buy yourself a bank and make yourself legitimate!
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 ...
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.