I do think there is at least one problem that crypto currencies solve better than the status-quo: sending money internationally.
It has less regulation than the official channels. Can have better privacy. Can be cheaper. Can be faster. Compared to Western Union, international wire transfers and the likes, sending money home for foreign workers (remittance), seems to be much better with Stellar, or other low-fee crypto currencies.
Maybe one more problem that it solves: I bought some crypto early on as a hedge against global politics going to shit (US, Russia or China going into proxy wars) or economics taking a dive (and governments/central banks deciding to devaluate, ...).
I totally agree with you on NFT's though. And I don't like the speculation/gambling aspect of crypto currencies.
The reason it's "better" for international transfers is because it has decided to ditch all legal and financial safeguards that have been introduced, often with good reason, in regular banking. From a technical standpoint, crypto adds nothing to the process that a centralized system can't provide cheaper, faster and safer.
Additionally, a hedge is only as good as its performance in case of a worst-case scenario. If the stock market takes a dive or war breaks out, crypto will dive just as hard - same as it had done in the past.
During the Cyprus financial crisis, on 25 March 2013, bank account balances over €100K were seized. BTC surged 87% that day, and 700% that month. [0,1,3]
When Greece was freezing / slowing bank withdrawals during its financial crisis in 2015, BTC price climbed.
IIRC BTC also jumped when Russia was getting involved in Ukraine in 2014.
It's not a perfect hedge, but I do believe bitcoin could be valuable if the world/governments go (partly) to shit.
Thing is, your quality judgement is questionable by society as a whole.
Less regulation -> more crime.
Better privacy -> more crime.
Cheaper -> more unstable currency markets.
Faster -> more unstable currency markets.
There is a balance to be found, but at the moment most cryptocurrencies are a nightmare from the perspective of people who value stability and order in social arrangements. And none of the current players seem particularly interested in finding that balance, because they know very well that most of their customers are interested in keeping it wild.
In democratic societies, in theory and largely in practice, crime is what society as a whole decided is a crime.
Bitcoin is indeed permissionless, which means you can use it for things society might find nefarious: tax evasion, drug trade, uncontrolled arms trade, human trafficking, money laundering, etc etc. You might not value that, but society as a whole does.
I see you're using the word "can" a lot to cover up the fact that it is not actually doing those things.
And less regulation means more crime - the only reason the ransomware epidemic exists is cryptocurrency. Remittance is also not actually cheaper with cryptocurrency if you actually count all the fees, but most likely more expensive than Western Union.
Cryptocurrency delivers none of what it promises. It only delivers crime and ecological destruction.
I'm just careful not to make any absolute statements. I'm not a crypto advocate.
I also tried not to pass judgement. I understand that less regulation leads to more crime (and I think we are seeing evidence of that). What I'm trying to say is that this solves a problem for people who want less regulation.
With respect to simplicity and fees; If I want to send money to a family member in Botswana, I can do that in about a minute with something like Stellar. The transaction fees are negligible (<1 cent). Converting to fiat to actually use it, does carry some fees (roughly 2 x 0.1% on Binance). I couldn't get an exact quote from Western Union, but I remember it being a lot more expensive and a lot more hassle (granted, it's been over a decade since I last used them)
I was thinking about trading commission to convert XLM to EUR. Those are 0.1%. Withdrawing via SEPA was €1.0~1.5, but I see that's suspended now. If you were transferring €1000~1500, that would have been 0.1%.
> It has less regulation than the official channels.
If the way it "solves the problem" is by not following the regulations that everybody else has to follow, I don't know if it's actually solving a problem so much as cheating the system.
>I bought some crypto early on as a hedge against global politics going to shit (US, Russia or China going into proxy wars) or economics taking a dive (and governments/central banks deciding to devaluate, ...).
Genuinely asking as a newbie to this kind of thing, what's the advantage of using crypto over assets more traditionally used for this purpose such as gold?
Crypto is something you can "physically control" like gold (through being the only person who knows the key). Unlike gold it can't be physically stolen or confiscated. It can be easily authenticated (no counterfeiting). Unlike land or shares, or other paper assets it can't be transferred without the owner's consent. You can be 100% sure you actually do hold the asset.
In a stable, law-abiding society these advantages are a bit pointless, but enough people either see the future as unstable and lawless, or currently live in unstable and lawless places, that there is market demand for crypto as a store of value.
It depends on how limited the international payments are for your particular country.
Bank payment from Spain to Poland is cheaper than cryptocurrency; bank payment from Nigeria to Peru is likely to be more expensive than cryptocurrency; and a bank payment from USA to Iran is effectively impossible while cryptocurrency can work.
You're trolling, right? Everyone knows that there are generally no "actual numbers" available for this kind of transfers unless you're a BigCo or a private banking customer.
You'll send $1000 from your Nigerian bank to the Peruvian bank, $937.65 will arrive after a week+. Most likely nobody will be able to explain where the money went.
There are no useful facts to provide, outside of strictly regulated markets banks pull these fees out of their asses. The receiving bank might charge various mystery fees, so even if your bank is playing nice they won't be able to tell you how much will actually arrive.
It's just almost impossible to know the answer to the fee question beyond "probably a lot"
"Likely" because for the scenarios/markets where international payments work poorly there's no "actual numbers" in this situation, the pricing is highly dependent on circumstances, the specific institutions involved, the currencies involved (there may be multiple, and for some countries a currency conversion may be mandatory), the payment scheme involved (depending on the country/bank pair there likely will be multiple payment channels with different price/speed/reliability tradeoffs) and who is paying (which affects a lot the prices you may get). For such deals the sending institution will generally refuse to quote a fixed generic price, because the price will be different depending on all kinds of factors that, in some cases, will be revealed only after the payment is delivered or returned.
An bank payment from Nigeria to Peru might reasonably cost $20-$100, and I wouldn't be that surprised if in a particular situation it would come out to $10 or $300 (like, making a typo in some field of a non-validated foreign payment, or having an unclear tax situation on the goods for which the payment is held - that can easily cause e.g. a $100 extra unexpected processing fee for the payment). Also, you may get amount-proportional fees, and a 0.5% fee can potentially be huge for larger payments. On the other hand of the comparison there is also significant variability for the extra costs of the cryptocurrency payment - as the original question stated, including the cost and exchange rate variation of buying crypto for fiat in the sending country and selling crypto in the receiving country.
So it's likely but not certain that it's more expensive than an equivalent crypto payment + the to-crypto and from-crypto conversion, it depends on unknowable circumstances, and the variability and unpredictability of such fees is a big drawback on those types of international payments - unlike e.g. the intra-EU case where the fees would be predictable and low - perhaps zero, depending on your bank.
The volatility of cryptocurrency prices alone makes them a pretty bad fit for any transaction whose value needs to be agreed upon within reasonable limits.
For stuff like blackmail, where profit margins are high and payments are highly negotiable, the benefits of anonymity outweigh this drawback, but for most honest business, it matters to a recipient whether they get $100k or $75k.
> economics taking a dive
And your bet is that when society collapses, the power grid and the internet will keep operating to keep cryptocurrencies cranking on. Not sure that is a safe bet.
It's not a hedge against society collapsing. In that case nothing will help, perhaps owning land to farm your own food (if you can protect it).
The (tiny) investment I keep in crypto is a hedge when economies tank, or governments/central banks intervene. Eg, when bank withdrawals were frozen/slowed in Greece 2015, or when bank balances over 100K were seized in Cyprus 2013.
That's why a product like Quant Networks is going to survive the bubble which is surely on the horizon.
NFT's like offered by NBA Topshots (basically replacing physical collectibles in a digital form factor) have their appeal if your into collecting sports stuff). 20 pixel unicorns for 1 ETH? Not so much..
It has less regulation than the official channels. Can have better privacy. Can be cheaper. Can be faster. Compared to Western Union, international wire transfers and the likes, sending money home for foreign workers (remittance), seems to be much better with Stellar, or other low-fee crypto currencies.
Maybe one more problem that it solves: I bought some crypto early on as a hedge against global politics going to shit (US, Russia or China going into proxy wars) or economics taking a dive (and governments/central banks deciding to devaluate, ...).
I totally agree with you on NFT's though. And I don't like the speculation/gambling aspect of crypto currencies.