Banks are slow in large part because of systems built to support the AML/KYC controls and fraud prevention. (Think about your wire transfer getting screened etc). New banks do this more efficiently but this is still the bottleneck.
A bank doing stablecoins will still need to implement these controls.
Stablecoins only really work because they are outside the system.
Curious what exactly differs between EU and USA to make American transfers so inefficient time-wise. In the Eurozone SEPA instant transfers are settled in seconds (usually under 10 seconds, with max 20 seconds allowed), and AML/KYC regulations are quite strong.
EU directives have forced banks to modernize at a pace that wouldn't have been possible if we just let the free market decide. There are downsides to the heavy regulatory framework, for instance the unhealthy consolidation and size of systemic banks. But we enjoy pretty advanced banking services and arguably the most flourishing fintech ecosystem by worldwide standards, mostly thanks to EU technocrats.
The EU is also looking into creating a digital euro ("eurocoin", so to speak). The basic idea being to break the power and thus risk of systemic banks.
You'd have an account at the ECB that you can keep your digital euros in and exchange to and for liquid euros. You'd get the ECB interest rate.
Then if banks want to convince you to hold your eurocoin on their wallet / exchange / stake it, they'd have to offer better features and better interest than the ECB.
Sadly banks are in full swing trying to torpedo the proposal with lobbying, to the point where there's a lot of noise about the ECB only being allowed to be a facilitator and not allowed to be actual competition to the bank, and instead it's banks that should get the sole right to hold digital euro accounts.
> But we enjoy pretty advanced banking services and arguably the most flourishing fintech ecosystem by worldwide standards
Interestingly enough the US does have very modern financial institutions: credit unions. An American woman I met in Vietnam and traveled together with for a bit had a Charles Schwab account that had more features, more free overseas withdrawals and a nicer mobile app than my Dutch bank. It was almost on par with Revolut / N26 / Bunq.
> Interestingly enough the US does have very modern financial institutions: credit unions. An American woman I met in Vietnam and traveled together with for a bit had a Charles Schwab account that had more features, more free overseas withdrawals and a nicer mobile app than my Dutch bank.
Charles Schwab is the 12th largest bank in the US by assets.
I do agree that credit unions can be great, however, the experience between them is wildly inconsistent. Some have apps that barely work, and some have decent apps that are a bit dated and clunky. The big banks generally have the best UX/support/etc.
> The EU is also looking into creating a digital euro
It's weird to call it a "digital euro" because the euro is already digitized by traditional banks! At an existing traditional bank, your balance is already a discrete number. Money can be sent and received electronically on communications networks without using physical media like coins and bills and cheques.
> EU directives have forced banks to modernize at a pace that wouldn't have been possible if we just let the free market decide
1) Is that automatically good? Damn those capitalists and their slow and steady approach to major changes, I suppose. Wouldn't want to proceed too thoughtfully.
2) The free market in banking looks pretty much exactly like the crypto ecosystem. As people often put it, speedrunning banking history. The only thing slowing the financial institutions down is the regulation (which is pretty much the pro-regulation argument of "if we don't regulate it they'll do a bunch of stupid things too quickly").
There isn't something of a free market in banking but the limitations are extreme enough that it is more of a heavily mixed to centralised one. Interest rates are managed by a central committee and banks provide any colour of service you like as long as it is black. Typically heavy KYC regulations to link the system to law enforcement and state intelligence systems. There is enough freedom to keep the fees fair and a bit of flexibility in what the money gets invested in which is pretty good. But for transaction speed I'd actually be a little surprised if the banks were allowed to control their own settlement timelines; I assume going to quickly would start running in to KYC-style compliance problems.
> 1) Is that automatically good? Damn those capitalists and their slow and steady approach to major changes, I suppose. Wouldn't want to proceed too thoughtfully.
Considering how long it’s taken even the most progressive regulations to be enacted, it’s arguable that we’ve done anything but proceed without thoughtfulness towards how these changes affect the other 99% of the population.
We sure do spend a lot of time letting the wealthiest folks skim those points off the top without spending any more than they are required to by regulations, though.
The US has almost 4,500 banks and about the same number of credit unions. They're subject to federal and state regulation. That's a lot of complexity to manage.
However, there's FedNow immediate transfers, Zelle (consortium of banks) immediate transfers, same day ach (several batches daily), same day fed wire transfers within banking hours, and that's just the faster options.
Decentralized systemd are slow to act and slow to change, which is why all of the faster banking initiatives tend to involve a centralized element.
Zelle is a frontend to ACH with some creative accounting until the actual transfer clears.
Right. FedNow really is "now", which makes the fraud problem worse. FedNow is currently handling about a half-billion dollars a day, which is not much for that industry.
The US has much more corruption so banks have been able to bribe politicians into not requiring they provide low cost services that would mean their executives have smaller boats.
Same in Mexico. I just did a bank transfer that took longer than usual. It took around 10 minutes instead of 10 seconds. It was unusual for me.
You really don't want one typo costing your entire bank account as a consumer. Settlement delays permit easy rollback.
Exactly. A 'stablecoin' that is regulation-compliant is undistinguishable from a bank.
Well, if you're big enough to be TBTF, then you can lever up stablecoin risk because you know you'll be bailed out after they let the little guys tank.
This is nothing more than a trope to absolve government of its responsibility for worsening people's lives. The government imposes massive fines on huge banks, when they are found to have inadvertently banked criminals. And by criminals I don't mean people who were convicted of a crime. Just people a regulatory agency alleged — at some point in time after the bank serviced them — are criminals.
So what banks do is become increasingly paranoid about who they will they bank, meaning anyone who falls into the "high risk" category, is extrajudicially punished through systemically high risks of being debanked. In this way, the state can punish certain groups without due process.
Except that you can do FX and global transfers much more quickly and easily.
Nah, most banks globally have a mechanism to send and receive USD. That's sufficient for all use-cases.
> mechanism
The mechanism often involves correspondent banks, and is generally pretty expensive ($25-$65).
For scale, we’re talking about transfer fees measured in cents with stablecoins.
All of the cost is tied to compliance. A Swift message costs pennies, it's the due diligence behind it that banks charge for. Stablecoins will not change the compliance requirements
Has anyone ever provided an argument against this?
I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
> > All of the cost is tied to compliance. A Swift message costs pennies, it's the due diligence behind it that banks charge for. Stablecoins will not change the compliance requirements.
> I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
Taking the statement literally as-is: Yes, a strictly > 0 amount of overhead is required to perform said compliance activities.
But the overhead similarly can *never* be 100% of the money being transferred over. And right now, the transfer costs have only ever been shown to grow, and never shrink in isolation. They only shrink when a new competitor comes in to provide said service, which has rarely ever happened because of said regulations that progressively saddle them with more requirements.
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> I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
Interpreting this emotionally:
You're leaving out the implicitly-made conclusion that most pro-crypto people will make: That the current banking system *has* to be accepted as-is, useless systems & fee-draining & all that jazz, *and* that they should just take it.
You've already lost all attempts to convince them with that rhetoric. By not putting in more clarifying statements, the gaps have been filled in with the negative implications that will turn them away from supporting your view.
It will be seen by pro-crypto people as own-side points scoring.
But crypto isn’t the only way to change the banking system.
In many cases you can now transfer money instantly and free across European countries. If there’s a will there’s a way.
Turning crypto into an acceptable banking system is probably just as hard, if not harder, than making the existing banking system better, faster and more user friendly.
We’ve been promised crypto would revolutionise payment for more than a decade now. In the same timespan I’ve seen my little country develop a common payment app shared by all banks which has made payment to shops and between people instant and super easy. We didn’t need crypto to make progress.
If banking regulations were relaxed to the point where crypto could be used more widely, traditional banks would also be able to innovate much more quickly without crypto.
In the end, I don’t find it entirely unlikely that banks may use a blockchain to do some of their international settlement. It’s a nice algorithm in the cases where you don’t want a single master arbiter. But it’ll probably be a fairly boring behind-the-scenes kind of thing.
well, they won't change the compliance costs, but those pennies for the swift message will turn into hundreds of dollars for the blockchain gas fee
you probably hold an antiquated notion of how much transaction costs are on blockchains nowadays. It would do good for you to update your priors on this one - you'd be surprised!
That tweet doesn't appear to explain anything about this at all. I take it the information is in the comments? I'm not able to view those.
i don't click on x links, but i bet one trump coin it talked about offchain without taking into account opening up to double spend.
Yes, but the mechanism involves multiple banks in a chain transferring money and messages between each other like it's 1559. So if a single bank in the chain demands more KYC or has an issue, it can take ages for the transaction to sync.
Except you can send payments with an http request
A bank could easily provide such an API without any need for a new coin.
Does that API support sending $50 to my unbanked aunt in Mexico?
I'm curious though, what would she do with that crypto once she had it?
Presumably she'd need to exchange it for cash since retail acceptance of crypto is pretty low, and the local exchange place that takes WhateverStablecoin and hands out cash is going to take some commission. And at that point it seems like we've just reinvented Western Union or Moneygram.
In your view is the advantage of the hypothetical stablecoin way of doing this that it exists outside of the money-transfer provider ecosystem until its actually exchanged?
Regulation-compliance is kind of a requirement for, well, everything, stablecoin or otherwise, so not really sure what the point is here...
Stablecoins don’t need to have proof of reserves or any other normal regulatory requirements banks have.
Circle has proof of reserves, fully regulated and I can use USDC like a regular ERC20, so I think they want the same.
Full attestation doesn't guarantee stable 1-to-1 valuation, even with all of those things USDC isn't equivalent to 1USD and treating it as if it were carries risk.
Definitely,but the Us dollar also carries risk so really there are no risk free assets.
I mean, in the absolute sense, sure, but the "risk" carried by USD is a categorically different, exponentially smaller thing than the "risk" associated with any stable coin. They're not really comparable.
I don’t think that’s true in this case. I would assume the bank issuing the coin has to know the identity of the people they sell it to. But once those people sell it on, it’s not their problem any more. Sure they could get an order to seize those coins (/wallet) and would have to obey. But I don’t think they’d be required to kyc everyone on the network. Just their immediate counterparties…
The idea is (as I understand it) that to get fiat (which is presumably the end-goal) you need KYC, so if each node which converts stablecoin-fiat then you have acceptable KYC. (I am not a regulator though, so who knows?)
Partly it's true, but also all banks in the world are fractional reserve / printing money from thin air from the loans they got from bigger banks.
If the big US banks are successful, they can have their own one huge fractional reserve that can be used by people around the world.
Not only this isn't how banks work, but also completely irrelevant to moving money.
Then whats your brief description of how banks create new money?
While the wording was imprecise, actually this is what banks are doing: Creating loans, based on the deposits of customers.
You wrote "from the loans they got from bigger banks" which makes little sense.
Private banks create money by extending credit, that's it. They worry later about reserve requirements, which in the case of USD or EUR are extremely low.
And I still don't understand how this relevant in any way to the topic.
I wasnt the OP :)
They are expanding credit, but they need customer funds on the central banking level to actually move away the money the created on their local core banking; thats the reason why banks needs customer funds: Without them, their central bank account would be empty and they couldnt transfer any money that they created. the question regarding minimum reserve is another angle and not relevant to the question of how money is technically created and then transfered.
EDIT: for sure, they can also acquire central bank money as a credit to make the payments transfer happen, but usually its more easier and convenient to use customer funds instead of borrowing from the central bank or on the interbank level
My bad. Sure it's easier and more convenient, and also it's cheaper. But not entirely necessary.
Sure, I know of a large corp-only/inudstrial bank, where the "customer funds" are just a bunch of some other mega-corps, each depositing 5-10 billion. (from a regulatory perspective, those are customer funds as well, even if its just 10 different parties)
I think what a lot of people are missing about stablecoins is that it's not just about clearing transactions faster than SWIFT. With stablecoins you get programable money without having to deal with the wild fluctuations of crypto.
A simple (and contrived) example: Let's say I want to send you $100 on Tuesday, but only on even-numbered hours. This is a trivially easy smart contract to write. Sure, you could do this with crypto, but if you want to protect yourself against price fluctuations it makes sense to use a stablecoin.
Sending $100 on Tuesday only on even-numbered hours is not a very likely use case for it.
Paying wages that are only valid for a month, are split into parts which can only buy specific foods and goods inside a geofenced zone and can't be tranfered to any other person are much more likely.
I said it was a contrived example! But people have really specific payment logic that doesn't seem to make much sense from the outside.
What you're describing can only be achieved by encoding specific logic into the coin's original contract, so you'd know what you're getting yourself into ahead of time. And this is tantamount to agreeing to be paid in a specific gift card with a really small payment network. No need to get crypto or stablecoins involved.
> so you'd know what you're getting yourself into ahead of time
That does not mean that you have the power to do anything about it.
You could do something about it in the same sense that you can opt to be paid in dollars instead of itunes gift cards of chuck e cheese tokens. If someone has the power to decide how they're paying you then they can screw you just as easily without crypto.
“Opt to be paid in..”
Seems like you haven’t had much time with the history of company towns and company stores.
I haven't, but it sounds like they can restrict their employees' spending just fine without crypto. Also, if they can exchange their Company Stablecoins for USD (as the legislation requires) then it makes it pretty hard to restrict their spending.
"you'd know what you're getting yourself into ahead of time"
Yeah. We would know. We DO know it now. It is being tested now, exactly like described by GenshoTikamura. I've wrote you a longer comment about that below.
Do you see people protesting? I don't. Lol, even here at HN, at the bastion of independent thinking or close enough, people aren't protesting. Most it seems aren't even aware about the scope of the features of such token system, and the implications to the daily life.
> A simple (and contrived) example
What about a simple but not contrived example (or if no good simple examples exist, a complex one)? Smart contracts are neat but I'm not sure there's any real benefit, especially for banks which likely don't need to do things without trusting each other.
I want to buy an event ticket from you, but we're strangers. So I write a contract that releases the money to you once you send the ticket, or vice versa.
The ticket would have to be on the chain and you could then see just how much TicketMaster was making and we can't have that.
Well, the good news is that you could also program event ticketing logic with a blockchain and build a TicketMaster competitor. But now we're venturing outside simple examples :)
Not sure why op didn't go with "$100 on the 1st of every month."
That's just "automatic bill pay" without a bank, etc.
I wanted to pick an example that is slightly more complicated than what existing banking software provides out of the box. But my point was that you can just write your own logic without relying on the bank or another third party.
You could also do this with any other kind of API a bank might expose? Why is crypto necessary here?
One thing is stronger guarantees for the receiver, who can verify that the smart contract will automatically transfer the funds. Another is interoperability. The receiver can write a contract to e.g. always donate half of that income to a charity as soon as it is received every two hours. Another is transparency and verifiability, anyone can check that the receiver is giving half this income to charity.
Not trying to get pulled into any arguments about whether cryptocurrency is good or bad, just some potential answers to your question.
crypto isn't necessary... it's just that no bank wants to take on the risk of exposing an api to the regular consumer.
Crypto doesn't require 3rd party permission to send money or verifying anyone's authenticity, real name, or legal compliance. So it's much easier to build APIs around. If you created banking APIs you'd need very extensive controls and monitoring for anti-money laundering and so on.
Sure, you could technically wire something together that does this, but maybe the other party wants a strong reassurance that the payment will actually go through. They don't want to rely on your server making the right API call.
E.g. Automatic bill pay to a VPN. Now you have very good anonymity.
If you’re making regular payments from a known wallet on a public ledger, where is the anonymity coming from?
A known pseudonym doesn't destroy anonymity?
It puts you one mistake or bit of misplaced trust away from permanent de-anonymization. In our example, you have to avoid ever using that wallet for anything else, scrupulously fund it using mixers, and hope that your VPN provider never does something which makes it possible to link your activity to that wallet.
This is not realistic for the average person.
I mean sure -- but right now there's no such thing as "realistic money anonymity for the average person."
In roughly the same way there's no such thing as "very good cybersecurity for the average person."
> I mean sure -- but right now there's no such thing as "realistic money anonymity for the average person."
I know HN skews hard for electronic payments but cash is still heavily used. One nice trait is that its weaknesses are highly intuitive: there’s no retroactive de-anonymization or tracking across unrelated transactions, and people are familiar with how physical objects are stolen.
In this scenario, imagine that “you” are in a different country or perhaps you don’t have a bank account. Or maybe you don’t want to pay $10+ or X% to receive funds.
This is not simple at all.
What happens if you don't have the money available? If you want to provide some guarantee, how would you do it without locking up N x $100 forever? What are even numbered hours - which timezone? What happens if your transaction doesn't get accepted within that timeslot? Etc. etc.
Okay, I'm simplifying a little bit. It wouldn't work exactly like that. You'd lock up $100 (or approve the contract to spend up to $100), specify the time I'm unix timestamps, and leave it up to the recipient to claim their money.
That's sort of besides the point though. I'm just saying that you have the ability to implement whatever ad hoc or arbitrarily complex payment logic you want without relying on a middleman.
This doesn’t feel like a good thing to me. I can imagine a lot of pretty abusive smart contracts.
How are you going to abuse sending other people money?
It's a pretty common scam already. "Sign this to receive airdrop". Haha, you just signed away all the money in your wallet. People are already losing lots of money this way and they're the ones who at least understood the concept a little bit.
Like what? It's just a streamlined and versatile way to escrow money.
US govt creates a list of companies eligible to receive social welfare money, and the smart contract money will only be exchanged with those companies. They can remove companies from the list at will, on a whim. They could also do this with all money if it’s something like FedCoin. They could do all kinds of interesting, dystopian things. I bet there’s a black mirror episode somewhere like this.
Sure, but we already have something similar to that in NY called SNAP. And honestly, it would probably be easier to keep doing that without getting the blockchain involved.
In any case, I don't think that's the sort of product that commercial banks are itching release when they launch their new stablecoins. I'm sure a lot of coins will have a deny list for AML/KYC reasons, but an allow list would be pretty cumbersome to maintain and probably turn off most users.
stablecoins don't protect you against price fluctuations. they don't even guarantee reliable mapping to their underlying currency.
Yeah, great innovation. Also allows for many amazing and useful features for us people, such as allowing these tokens to expire and disappear from your account, or programming specific tokens to be only transferable to specific accounts or for specific goods, or for example controlling all token accounts in every single country on earth from the central location. E.g. for example Trump (assuming a USA stabletoken) not only sends you to the Salvador death camp, but also blocks and confiscated all your tokens and blocks you from ever having a token account in the future, all with a single click from NY central bank. Or replace the same with any other country and central bank.
Amazing utopia awaits for us, can't wait to take part in that hell economy :)
Sure, but banks can lock your account without the blockchain, so you're not enabling any new dystopian behavior here. And if you're worried that they can restrict your transaction behavior, then don't hold that coin! Swap your money into a stablecoin that doesn't have spending allowlist logic encoded into the smart contract.
Not even close. I can have a legal USD account in some Veishnoria country and Trump has almost zero influence on it (yeah, there are clearing banks involved at the US side, but all in all the whole scheme is mostly in semi-independent blocks). At the same time I can have there an account in EUR, or any other currency. All legal, all according to the Veishnoria andd international law. But resilient and not dependent on the flavor-of-the-day madness in the USA.
But if it would be a token system, then ALL accounts in that token in ALL countries are fully under control of the USA central bank.
Also currently all dollars, or yen, or yuan, are fully fungible. You can spend any single dollar on anything you want and in reverse any sold good/service acan be bought with any dollar in existence, they are the same. Now tokens are not like that, they are non-fungible and can (and will) be limited in multiple ways. For example you can have 1000 tokens in your account, but out of them only 200 can be spend on the "bad" goods like alcohol or gambling or whatever (on political opposition support, on different religion donation etc.). Or for example you have 1000 but they have an expiration date and will go to 0 in one calendar year, so that you won't save them. The possibilities are endless.
In fact, all of that has been already tested in my Eastern Europe country (Ukraine). We had a pilot program of digital tokens. They required a separate account of course, they couldn't be converted o the regular digital money. Every tranche had an expiration date (for example first one was half a year, next one a year iirc). They could have been spent only on a specific list of goods defined by the government - in that pilot it was only approved entertainment like books, movies and also donations were allowed.
I'm personally horrified by this very real and very close future prospect. Like that's not even some abstract Matrix or Cyberpunk level horror. It is here, it is almost deployed. EU is talking all the time about it. It is mind boggling to me how regular people aren't protesting this shit. Don't you all see the implications?
All valid concerns for the dystopian world we already live in, but crypto doesn't make any of this any more likely. You can make all the same arguments against existing bank accounts or credit cards. What's to stop Visa from spending more than $200 on "bad" products? At least stablecoins are managed by a smart contract, so you can see if that functionality even exists in the first place. If it doesn't then they can't add it in later. If it does, then you can swap you money for a stablecoin that doesn't have spending limits.
Also, there's nothing stopping foreign banks from issuing their own stablecoins. Owning a US bank-issued stablecoin is like having an account with that bank. If you have a problem with that, then you can swap your balance for a EUR-backed stablecoin issued by a European bank. Or better yet, you could sell it for real USD or EUR.
Visa is a tiny little middleman compared to a Federal Reserve, however crazy that may sound. Visa is a) only one of similar middleman, b) it has no power over bank accounts or any other entity holding USD, it's only involved during a transaction. In fact, I could probably survive without touching Visa/MC for a long time (and without touching their Chinese or other alternatives). I can for example wire money from bank acc to bank acc directly and people can self organize to do that at scale and not involve a proxy. It's just won't be as convenient, no cards, no card terminals etc. There are multiple proto alternatives too, for example BLIK in Poland. EU has pretty robust bank system.
All that text above is just underscore this - a future Fed owned token would be on a completely different level of control. Cross border control too.
Regarding alternative token systems - a) outside of maybe 2-5 tokens all others won't be adopted and die out (unless enforced in a totalitarian way), b) the survivors will share the same traits, copied from one to another, after all they will be controlled by the same orgs - central banks.
And finally - no, you won't be able to sell tokens to money. Only if the owner of all tokens (a central bank) will graciously allow it. For example in the pilot in my country it did not. Thinking logically - if token system is created to restrict freedoms and bring more control to the govt, why would that govt allow "exiting" this new system? Everyone who cares and all potential targets will sell this token and go back to using money. So of course any bridges will be either heavily restricted (for the inner circle, corrupt officials, oligarchs etc.) or won't be allowed at all from the start.
Again, not saying this is a totally crazy scenario, but you're describing a level of control that the US government can already exercise using the current banking system. Good luck using fedwire/swift without a bank. The difference is whether the rules are encoded in public infrastructure and are easy to see, or they're hidden within private systems and institutions.
Also, you can always write wrapper coins for other stable coins that don't have any spending restrictions. And yeah, issuers can play whack-a-mole and ban those contracts. But at that point we're talking about a coin that no one would even recognize as money any more. Why would anyone use it? If they're already on the blockchain it would be a pretty seamless switch to just use the native token.
And at the end of the day, if you can exchange your dystopian stablecoins for USD (as the legislation requires) then you can functionally spend your money with the same restrictions that are on your bank account anyhow.
> you're describing a level of control that the US government can already exercise using the current banking system
You’re handwaving this away. Just because something is theoretically possible, it doesn’t mean that it’s as likely to happen as something else that is order of magnitudes less complex (imposing the level of fine-grained control discussed in this thread on the existing system, versus building it in from the beginning in a new one). Friction and inertia matters in the context of preventing government overreach
> Why would anyone use it?
Because the government mandates it. Because the only employers that will hire you pay out wages in it. You can imagine many scenarios where individuals don’t have much of a choice. Which could be a reason for someone to want this idea to not catch on, lest the current system gets replaced by something worse. Cheerleaders and enthusiasts may take the opposite view
> if you can exchange your dystopian stablecoins for USD
Yes, if. And for how long?
I’m not saying a motivated totalitarian regime controlling all levers of powers could necessarily be prevented from implementing their dystopia anyway, but we also don’t have to expedite technology that would make it significantly easier for them
This is a very strange scenario you're describing where: a) the global economy has moved onto the blockchain; b) the government has repealed all the major points of the legislation that we were originally talking about; c) the government has also exhibited complete dictatorial control over the logic of the major stablecoins, and banned all of the functionality that makes them actually useful; d) people decide not to use the blockchain's native token to settle transactions for some reason.
Remember, issuers want people to use stablecoins because they get to invest the funds in treasuries and hold onto the interest. If everything is blacklisted then no one will want to use them and the issuer won't make any money.
And we can clearly see that some people are defending their utopia agressively by trying to fade your comment to gray
It's mindboggling really. And the most puzzling to me is that this forum has a large proportion of independent thinkers. Some care about privacy, some care about removing copyright (I disagree, but respect their position), some care about free access to information etc. How can these same free thinkers advocate for a single most oppressive authoritarian system we have ever seen? And a very real system currently in late stages of testing, soon to be worldwide, not some abstract future evil.
People who want independent currency, or maybe less dependent on the govt would get a currency absolutely under control of a small group of people in the govt. People who donate to privacy foundations or buy privacy tools would see that they simply aren't allowed to do that with their "money" (non-fungible tokens). People who want to pirate stuff or download some info would have DMCA strikes not on their neat little blog or youtube channel, they will have DMCA 2.0 strikes right on their bank account, because all that shit will be automated and centralized. Just imagine, downloading something and then getting all your accounts go to 0. Or maybe not to 0 but have a fine applied and subtracted from your token balance automatically, on the discretion of the megacorp across the ocean in a different country.
It is literally dystopia, no scare quotes, no ifs no maybes, it just is.
Just pointing out https://www.worldlibertyfinancial.com/ 60% owned by the trump family and also Steve Witkoff (special envoy to the middle east) just got funded $2B by the UAE. https://en.m.wikipedia.org/wiki/World_Liberty_Financial No conflict of interest here??? Who runs the justice department? Who is not supposed to receive gifts from foreign nationals
[Edit] corrected website URL.
This is a SCAM site.
The correct one is: https://www.worldlibertyfinancial.com/
I'm getting a phishing warning on that site but not on the one with properly spelled financial so I'm guessing the one you have is wrong
This is biblical end of days level stuff.
I presume you had the same impression during the Clinton Foundation influence peddling operation? Or the Burisma cash-for-access scandal?
No, it is not the corrupt money laundering that makes it biblical but the implications of Cryptocurrency backing the dollar and the complete ability to restrict your ability to buy or sell that makes it biblical.
This will get worse and worse if we continue to not protest it
We have had some let big protests in the US, and they haven't accomplished much. The two solutions that work are voting the bastards out, and armed revolution. You better hope voting works, because unfortunately armed revolution tends to end with even worse people taking power, which the "second amendment solution" folks somehow haven't realized.
May be looking at this the wrong way, but I thought the point of stablecoins (as compared to normal USD) is that the banking system is slow, expensive and cumbersome to transfer USD due for regulatory reasons and perhaps legacy tech reasons.
If so, what is the point of stablecoins if the banks themselves are running it? If regulations and technology are no longer an issue, can’t they just make USD transfers fast and easy? Why bother with a wrapper around USD?
> If so, what is the point of stablecoins if the banks themselves are running it? If regulations and technology are no longer an issue, can’t they just make USD transfers fast and easy? Why bother with a wrapper around USD?
I think at a macro level, the key point is that banks were initially unmotivated/uninterested in, and critical of crypto. The long-term effort behind stablecoins to become compliant and aligned with regulatory frameworks has now positioned them as useful infrastructure. Today, banks can simply adopt or acquire the benefits of a system they had no interest in building themselves. The current US administration clearly helps.
The point is absolute control of ALL accounts of some token and every single token in said accounts from a central location. And no, currently digital money are not even close in the level of control.
I'm sure they're excited to offer bank accounts that don't pay interest.
Network.
Sending USD from random bank from random country to another random bank from another random country is a network problem. While it’s solved by SEPA in EUR to EUR countries by pan european clearing and settlement systems, out in the big world it’s not as simple. Specially considering cross-border.
You have to somehow get the payment message across banks and decide on how to settle. It fundamentally a hard problem.
Stable cryptos put the message and settlement in the same system and it’s a global one (not just EU/wtv). The problem is then, which stable crypto? The moment the Fed has a USD crypto, our ECB has an Eur crypto, than that problem is solved. In the meanwhile, joining a big stable usd crypto might still provide you better remittance routes (and settlement) than sending messages over swift.
Tldr: stablecoins solve remittance routing “edge cases”, if the stablecoin is adopted enough
If Bank of America let anyone in the world easily open a checking account, this wouldn’t be a problem right? But they don’t do that, because of regulations and KYC etc.
Similarly, if BoA supported an Ethereum stablecoin but a random bank in Argentina supports a Solana stablecoin, it’s still going to be a pain to transfer money right?
I’m struggling to see how this is a blockchain issue rather than a regulatory + agreement on international standard issue.
What I have missed with stablecoins is that how they fix the final settlement. That is say you send money from USA to say Somalia or North Korea. Who in those countries will have dollars most likely to give out for the stablecoin?
Paper dollars are a common store of value in emerging markets. Trading digital dollars for paper dollars, is becoming as common as paper foreign exchange
There are already hawala / xawala money transfer services in Somalia that will exchange cryptocurrencies for physical dollars or local currency, or load value onto a local phone app. Does that answer your question? https://en.wikipedia.org/wiki/Hawala
The final settlement inside Somalia or North Korea isn't necessary because they can buy things from other countries where those people can do the settlement. Just like if you have US dollar bills in Somalia, they have value even if there is no nearby ATM you can find to deposit them.
In practice, everyone just has binance app and pays each other stablecoins within that platform
So your suggestion is that they build a new system that makes USD transfers faster. Isn't that what they're doing?
If they want, then they can make banks the only entities who can hold their stablecoin, and the whole thing would be invisible to everyone else.
If they allow other people to hold the stablecoin directly, then they could still have the invisible system with banks holding it, plus there'd be extra capabilities on top, like letting people use the coin in smart contracts.
I mean, to get negative but real.
The point is for banks to remain powerful in a world where cryptocurrency is at thing; in other words, to subvert the point of cryptocurrency.
I'm surprised not many people have pointed at this simpler explanation. It's not about providing a faster better service to the customers and citizens. It's about using their privileged position as the dominant players in the market and government, to secure their power and control by taking over a competing paradigm (cryptocurrency) that threaten their dominance. In the process they will neuter the concept to fit the existing power structure.
Yup. As someone who generally believes in a lot of cryptocurrency ideals while acknowledging the vast amounts of mess -- right now e.g. "widespread adoption of Bitcoin, an inferior technology, by banks and other established players" is the precise playbook to destroy what crypto ideally stands for.
Don't try to be reasonable, this is not how cults and pyramid schemes work in this world.
I’ve come to realize I was very wrong when I used to think crypto was a scam and therefore would never succeed.
My error was in believing being a scam had any correlation with whether or not something would be successful or not.
> the banking system is slow, expensive and cumbersome
I think you missed "profitable" from that list.
What I have understood that banking as in the money handling process is not that profitable. Keeping track of people account and allowing them to do transfers is not that great. Payment processing is better. But real money comes from gambling and offering gambling services... Also known as investing...
> But real money comes from gambling and offering gambling services... Also known as investing...
There's a huge gulf between a night at the poker tables, and buying into a little of MSFT's dividend, and it's really disengenuous to pretend they're the same.
Yes, in one scenario when you lose the money you move on. In the other, governments bail you out and you keep gambling.
The banking system can move billions in seconds. Velocity is only an issue for criminals and people trying to avoid taxes.
The people who are the thinkers in this space like to quack like libertarians and look back fondly at the gold standard. For better or for worse, they are driving US policy now. It’s one of the reasons why our government is setting the financial and economic system on fire and destabilizing the dollar.
If you want to provide fan service to the idiots keeping you in office, and get really really rich in this process, what do you do? Pivot to crypto as there isn’t enough gold to capitalize the world, and outsource the new version of the fed to private interests.
This is a way to stay relevant from the banks point of view in what whatever this new world turns into. They add value because there’s inherent trust in day JPMC, UBS or Barclays versus some random crypto bro company.
the point of crypto was “decentralization”, banks getting involved is not what they were initially meant for at all
And the point of Bitcoin was a means of transacting, yet people are just mining them and holding as an investment asset!
Once AI takes over and these digital currencies are “smart” and tightly integrated, we’re going to be living in a Black Mirror episode.
"can’t they just make USD transfers fast and easy?"
its cause regulation???, easy and fast to moving money its good until you got hack from state sponsored actor that you can't even do anything (ehm ehm north korea ehm)
in seriousness, people can get away with billions of dollar and "vanish" is wild world if you think about it.
UK regulations forced banks to create APIs for money transfers, and UK banks now have instant free transfers: https://en.wikipedia.org/wiki/Faster_Payments
USA is just bad at governing. Tries not to tell corporations what to do, so it ends up with toothless half-assed laws that do nothing except being a tool for regulatory capture.
The great trick with stablecoins is that you can take people's money, but you can then refuse to give it back. Much harder to do with real money.
It’s not much harder to do with real money. India, a country of 1.3 billion people, did it in 2016 with “demonetisation” of specific high value currency denominations. [1] Some people died because they couldn’t get their own money from the banks. One could say that these people didn’t get their money. Millions lost jobs and their livelihood because they couldn’t get their money.
Other countries have done somewhat similar things over the last century.
On the same topic, real currency can become or be made worthless due to hyperinflation (and even normal inflation).
[1]: https://en.m.wikipedia.org/wiki/2016_Indian_banknote_demonet...
Demonetization is not the same thing as stablecoins. Countries are allowed to withdraw certain bank note denominations and it's been done many times in the past.
In most countries where demonetization occurs, the central bank continues to accept demonetized currency for the foreseeable future, exchanging it for valid denominations at par.
The government of India came down hard on corruption and tax evasion, more politically motivated than anything. But then people voted for it and the majority supported the process. If they didn't, the government would have been discarded in the next election.
I visited India during that whole mess and one of the first things I saw after I left the airport in Hyderabad was massive lines of people waiting at every single ATM (that still had cash anyway). Trying to change out USD was literally impossible unless you were willing to accept large notes - which were themselves pretty much useless. Good luck getting a street vendor to accept a ₹2000 bill.
most "real" money are just digital now adays
I think people don't know how hard to moving actual real money in terms of millions to billions
Looking at Citi, it's not hard at all, they regularly fatfinger sums like that left and right [0][1].
[0] https://edition.cnn.com/2025/02/28/investing/citigroup-bank-...
[1] https://www.straitstimes.com/business/banking/citigroup-acci...
I really wish someone would make a stablecoin not pegged to some currency but to a basket of goods. A CPI-coin, if you will. How would that work? Maybe similar to the programmatic way DAI works, by collateralizing other assets in a way that make DAI some desired price.
How cool would it be to have a decentralized coin that has zero percent inflation.
Problems with pegs are that someone has to take other side. And that side is often losing one. You peg something to current amount of goods, but you have to be able to stand behind that whatever happens to value of those goods... The value drops, you made profit, the value massively increase. Now everyone is wanting to redeem and you need to be good on promise or whole thing collapses...
"zero-percent inflation" relative to some particular basket of goods. If efficiencies and demand change to make that basket relatively less expensive than other things you care about (like land), you'll expect positive inflation in real terms. Negative inflation is possible the other way (e.g., if other baskets of goods wind up being more amenable to automation and the demand curve isn't too inelastic).
On a long enough time scale, this is bitcoin, with an additional NGU (number go up) characteristic which will persist until it achieves saturating global adoption
Bitcoin is the purest form of fiat currency valued solely based on social consensus, which is why it’s so volatile. Anchoring something based on real-world commodities would be bad for speculators but much more likely to see real-world adoption.
Bitcoin is pegged to the cost of electricity and is already a decentralized coin with zero percent inflation.
If the GENIUS Act becomes the law, we're in for a FUBAR situation when a stablecoin issuer ends up insolvent. Even more concerning, if a bank custodian for a stablecoin issuer's reserves ends up insolvent, the claims of the stablecoin investors will come ahead of the bank depositors. That's right. Crypto comes ahead of ma-and-pa.
https://www.creditslips.org/creditslips/2025/05/the-genius-a...
I think this is why regulation is so important. As the GENIUS Act is written, all funds backing the coin need to be held in cash or Treasuries. And if they go bankrupt, coin holders would have a higher claim on that money than creditors. If stablecoins aren't regulated then what's to stop issuers from creating stablecoin products without those protections?
Hacker news / YC mostly missed the boat on crypto. The comments here are ignorant and misinformed. Lots of M&A happening now, none of which is lining YC pockets. Pretty amazing how the “smartest” people could be 100% wrong on crypto
What is the goal of this comment? Who was wrong? What were they wrong about? What percentage of crypto acquisitions involve Web3?
Coinbase was in the Summer 2012 batch. 13 years ago seems like a good sign that they weren’t as ignorant as you claim. There are currently 73 companies listed on YC as being crypto/Web3.
From your perspective, what are the most exciting or promising developments in crypto right now that others might be missing? I'm very interested to learn more.
Things like Monerium (programmable, regulated EU e-money), card integrations (pay with stables abstracted to current visa/MC), mobile wallets (only build a frontend for a fintech app, everything else is done by soemone else) is a pretty huge combo.
Especially with UX, the likes of https://www.privy.io/ is interesting, now we finally have "non-custodial" wallets with just a google-login. (check how it works, its pretty cool). This means any user for any web app can have a "bank accocunt"
Other stuff is zkEmail/zkTLS for verifiable data portability without exposing raw private data (huge for things like "vampire attacks"), and TEEs with fine-grained, 'OAuth 3.0'-style access control for private compute are compelling.
I would look at homomorphic encryption, zero knowledge tech (snarks / circuits)
All of the NFT infrastructure will be repurposed for tokenized bonds (Real World Assets or RWAs) and the size of defi and crypto network assets under management will skyrocket, and become deeply intertwined with tradfi
Privacy coins (like my username) are only going to get stronger and harder to kill
It will be much easier to raise funding for tiny startups, like you could back in the pennystock days and IPOing garage businesses. Formalized and strong names / credentials / legal remedies will enable far easier capital formation for risky companies
Bitcoin gradually replacing the USD as the global reserve currency is quite an exciting development
> Hacker news / YC mostly missed the boat on crypto.
I think the point is who won the bet with the current US administration. Also remember that Coinbase was part of YC.
Except they didn't as YC funded Coinbase.
But you are still correct that the majority of HN missed out on crypto and thus are allergic to it and now they are fans of anything "AI" despite not even knowing that "AGI" is a scam with the real intention of causing a 10% increase in global unemployment.
In fact, AI is more likely to be the cause of another financial crash than crypto, once we see mass layoffs accelerating.
I have seen banks doing this for about 10 years now. Some are at an advanced stage. They tried multiple things - third-party consortium chains, own coins, tokens etc. Now they are starting to realize that the banks need not jump on the bandwagon of public crypto or pegging to some chain. Collectively they can build their own self-sustaining chains.
This feels inevitable. Right now stables are dominated by Circle and Tether (depending whether you’re inside or outside the US), with a little PayPal, Sky and other orgs. USDT isn’t headquartered in the US, banks don’t want to assist paxos/coinbase (Circle) and if retail banks can now hold and stake tokens they’ll probably want their own stablecoin.
The question is whether the banks actually find uses for their own stablecoin, or if it just becomes another thing deployed into the crypto ecosystem.
"The question is whether the banks actually find uses for their own stablecoin"
if they start buying and Pumping bitcoin, it would be so funny
I've yet to understand the argument often made that we need a stablecoin to replace fiat for faster or safer transactions.
US banks already create money out of thin air and a vast majority of that money only exists in a database. If they want it faster they could just do that.
Because cryptobros desperately need a legitimate reason crypto is the future, and thus valuable, and definitely not a round of tulipmania.
The argument isn't only made by cryptobros though.
Banks seem to be pointing at the same need and I just don't see why. At best it gets around regulation if a stablecoin isn't treated the same as fiat. With either, though, a bank can already create and give out whatever they want and track it in a database (all be it a more standard db and not a blockchain or public ledger).
Banks are run by finance people with a profit incentive. They're susceptible to trends - see subprime lending and CDOs in 2008 where even the big boys who knew it was a bad idea eventually started doing it.
That still doesn't do it for me though.
Banks in the US are somewhere between a legally protected monopoly and a racket. They would only make more money if they can charge higher fees or convince the economy as a whole to make more or larger transactions.
If banks could do either of those with a stablecoin they could do it with USD, which again is effectively a stablecoin that lives in the banks' private databases.
A lot of people here rightfully questioning what's the use case of stablecoins. US dollars on a bank account essentially just represent a claim backed by a bunch of government debt - ie. US treasuries. But what if these treasuries became undesirable? Either because inflation runs very high or the creditworthiness of the issuer is questionable? what if - as a result - we have to build a financial system not based on government issued debt - but private (ie. corporate) debt? suddenly stablecoins become a lot more interesting.
There is no reason to move to corporate debt to back deposits. There is no US credit risk because the US can always print more dollars. Because the debt of other US companies is also denominated in US dollars, it is equally exposed to inflation as US government debt.
US treasuries becoming undesirable doesn't really have an effect on stablecoins, because (at least for USDC and I believe USDT) they hold short term treasuries that expire in a few months. The operator of the stablecoin can just hold the treasuries until they expire. Also if the operator of USDC can't pay out all claims right now, they will be in a few months so an oportunist market maker can buy USDC for 98 cents on the dollar and cash out 100 cents a few months later.
I'd say that the risk of the US defaulting on Treasuries is definitely higher than zero... but if that happens then we'd probably have bigger fish to fry than stablecoins.
Corporate control of and ownership of the means of exchange is basically inevitable it seems, and it will be an absolute dystopia.
It used to be the case that individual banks could issue currency. It was found that having government control this much better overall. It’s not perfect.
This reminds me of the way Scottish banks used to issue their own notes independently (they still issue them now but are required to have Bank of England notes of equivalent value in storage)
They were not legally currency (or legal tender) but acted as such. It if a bank was viewed to be in trouble its notes would start trading at a discount.
Effectively it was a free market for currency issuance. Which I guess this would be too?
Great timing! I’m sure they’ll really enjoy being targeted to be the next hop in the cat-and-mouse game of illicit substances and money laundering enterprises /s. LEOs are getting a lot more up to speed with these systems from what I’ve seen in the past couple years. Highly regulated industries like banking should have a really, really, really strong “use case” to get in other than FOMO in my opinion.
Sounds like a race to the bottom.
First, there's Tether > We're the only option in town. Then, there's Circle > We're more legit than Tether, we're based in the US. Now, there's the banks > We're more legit than Circle, we're banks!
Eventually, the Fed itself will start issuing stablecoins and out-legitimize everyone else.
When Coinbase and Circle formed the CENTRE Consortium back in 2018, they were extremely clear, at least internally, that they were trying to build what would become FedCoin. They hoped that, because USDC is already designed such that it can be completely controlled by its issuers (they can freeze any wallet at any time), by the time the Fed realized that CBDCs were inevitable, they would just adopt the existing "legitimate" leader rather than trying to roll their own.
> Eventually, the Fed itself will start issuing stablecoins and out-legitimize everyone else.
That would be a CBDC (Central Bank Digital Currency), which the current administration doesn’t seem to want. One advantage of such a CBDC would be that central banks of other countries could be persuaded to use them (for cross border payments and transfers), whereas a stable coin issued and managed by a group of banks would likely not have this advantage (not saying never though).
I fail to see what a CBDC and/or Fed sanctioned stablecoins would achieve for entities outside the US that need to transact in USD. It would essentially work the same as today under a new name?
The point of a CBDC is government control over an increased share of the money supply. Pretty irrelevant to USD balances held by other central banks.
The point of a stablecoin for an entity with an American banking license is... nothing?
> the Fed itself will start issuing stablecoins and out-legitimize everyone else
That's doubtful everyone else will be out-legitimized ... because ultimately the Fed will issue coins they can fully control (freeze, delete, etc. whenever they wish so). That doesn't make holding such money very valuable. A lot of people understanding this concern will favor USDT or similar privacy oriented coins and thus these coins will keep flourishing (however USDC could disappear for this very reason).
This, I it has been 17 years since the last big economic crash. I guess the Banks need to make quick $ and cause another crash.
Sounds like a race to the top. The issuer with the highest credibility also has the crypto with the highest credibility.
Knowing banks, this will take much longer than 4-5 years to architect. Then an additional 5 years to rollout.
This plan assumes the current mercurial administration stays their course on stablecoin to replace USD as reserve currency and future administrations also going along with it.
It’s a massive gamble that depends on many variables.
For now, it’s a PR move.
>This plan assumes the current mercurial administration stays their course on stablecoin to replace USD as reserve currency and future administrations also going along with it.
You are operating on the assumption that there will be fair election in 4 years and that Dems will retake the White House. Both of those are unlikely. Trump has almost killed democrarcy in 3 months. I'm sure he'll get the job done in another 3.75 years.
Would that not practically lead to a global financial system in the true sense? Basically SWIFT on steroids.
Or the universal "credits" seen in scifi?
Stablecoins, like all promised large reserves of liquid currency are an attractive nuisance for fraud and theft. Even pensions suffered from the same thing and got robbed by the mob first. Any stablecoin offer you are safer just assuming it is yet another fraud.
More centralization is good for bitcoin.
As well as less independence from The Banksters. In other words, it is the full reversal of the initial selling points that is good for bitcoin.
So much for Satoshi's cryptoanarchy.
If treasuries break all of this is going to unwind in a horrible way. Stable as opposed to what?
Can you explain what you mean? Treasuries will continue to rise until yields are in the double digits. That, to me, is a foregone conclusion. How does this affect crypto, though?
Why do you expect the treasuries to rise into the double digits? And over what timeframe?
Over at least the next 4 years due to increasing inflation and erosion of faith in the US Government to honor its debts. Basically, Trump.
All treasuries or specific maturities will have to offer double digit rates? And what do you expect to be the distribution of the buyers at the time long rates cross above 10%? Honestly curious.
I personally think that after Biden's COVID response the only way forward goes through eventual financial repression. We can kick that ball down the road for a bit more, but not forever. That said, I would love to hear counter-arguments.
What is the Biden Covid response you're referring to? The trillions of dollars that were printed during Covid were mostly done under Trump's term, and the delayed inflation during Biden's term were mostly due to this. Here's the Fed balance sheet for reference:
https://fred.stlouisfed.org/series/WALCL
As for treasuries, you have to realize that the primary risk for bond holders is inflationary risk. In fact, high inflation environments make this "risk free" investment very risky indeed. Tariffs will drive inflation. There is little doubt about that as retailers have directly stated that they will raise prices. This force alone will be enough to cause bond yields to rocket. Add on top of that the fact that Trump loves to absolve himself of debt and leave the lenders holding the bag and has even spoken about doing this with some government debt, and you have a recipe for treasuries being seen as utterly toxic. The government will have a very hard time raising money across all maturities, and will have to really sweeten the deal to entice lenders in the future.
look no further than the SLR changes that Bessent is hinting for next month -- they are already desperate for demand.
That's a little scary in this environment. Changing the Supplementary Leverage Ratio to make treasuries more enticing to banks could create a situation where the banks hold even more of their deposits in treasuries. If treasury yields then move up due to the aforementioned tariffs and doubts about the US honoring its debts, it would make those bonds held by the banks nearly worthless on the secondary market. At that point, all it takes is people pulling money out of savings en masse (which happens in an economic downturn) to create a collapse of the banking system. Banks would have to liquidate bonds at a massive discount on the secondary to honor withdrawals, which would further push up yields, at which point there would likely be contagion and panic, bank runs, and implosion.
This exact dynamic is what caused the 2023 banking crisis and the collapse of SVB.
https://en.wikipedia.org/wiki/2023_United_States_banking_cri...
This administration keeps making the absolute worst possible choices, so none of this surprises me.
First, my apologies for answering your "because Trump" with "because Biden". It was a knee-jerk reaction to politicization of an argument that IMO has nothing to do with politics. If I had to pick "because something" I would say "because Iraq war / G.W. Bush" which started this fiscal debt spiral.
That said, I do not immediately agree with either of your points here. On changing the SLR, to the best of my knowledge it gives the bank an option, not places a requirement on them.
On the SVB collapse: that was a bank run, plain and simple. That particular one was caused by jumpy clients (startups) that reacted to the mark-to-market correction due to the raised rates. The bank's chief risk officer probably screwed up pretty badly, but bank runs can happen to ANY bank, large or small. If enough Citibank, BoA or Chase clients decided to move money out those large banks would be in the same boat (i.e., unable to fulfil those request, or insolvent).
The reason most banks are mostly safe from bank runs most of the time is that small clients believe they will be bailed out by the FDIC (which does not have enough money to bail everyone) and large companies believe they will be bailed out directly by the gov't, printing money as needed to save systemically important banks. But smaller banks do get insolvent regularly, with over 500 since my "because Bush" point of 2001. Nothing special.
The only way out I think is via financial repression, holding rates below inflation, partially inflating gov't debts and partially wiping out savers (and pensions that do not adjust for inflation and a ton of other things) and maybe partially growing the economy out of it. This is a long process, IMO likely to play out over the next 10 years or more and will be painful for those caught in front of this wreck. But it has nothing to do with <insert your evil president or party>" now. My 2c.
Did you use an LLM to write this?
No, not at all. It's pretty crazy that people are paranoid everything is from LLMs. The truth is I went to Catholic school where they drilled grammar and sentence structure and it stuck with me. Now I get accused of being an AI. Cute.
Also, FWIW, I honestly don't think my reply seemed that LLM-like. There's no em-dashes. There's no bullet points. Despite my best intentions, there are probably also grammatical mistakes. Perhaps I should stop using proper capitalization like you to remove all doubt!
It felt like an LLM only because it summarized so much subtext. Sorry!
I also went to Catholic school.
Isn't this what Ripple/XRP is intended for? I always wondered why the banks wouldn't just create and own their own network instead of relying on a 3rd party like that.
That's what SWIFT is. It doesn't settle which is in the banks interest (since they settle the transfers).
Yes, for the settlement, sure. But I was referring to this:
"Banks see an opportunity for stablecoins to speed up more routine transactions, such as cross-border payments that can take days in the traditional payments system."
There is no settlement in Swift itself as it’s not network. Swift is messaging only. Bank settlements would happen later through networks like SEPA or Fedwire.
Ripple provides both messaging and settlement with XRP
but if bank moving to certain network, its not is just make it a "new swift" system??
Gas fees would skyrocket and expensive again
Stablecoins are money-makers now that interest rates are nonzero. With zero interest rates, there was no place safe to put the money, and many early stablecoins were scams. Now, they're profitable to run honestly.
Trump has his own stablecoin, USD1.[1]
But how much does it cost to get in and out? That's the question. FedNow charges US$0.045 per transaction.
Actually, its looking like nearly every late comer to the stablecoin game outside of Tether is not able to actually make profit on their interest gains.
They need to find business cases elsewhere.
First they ignore you
Then they laugh at you
Then they fight you
Then you winWhat is the point?
- Banks should have controls over money that are impossible with crypto. It is absolutely vital for any state to control their own currency and the banks need methods to accomplish that.
- Why would banks need a decentralized ledger at all? It makes literally no sense to have banks maintain such a ledger. Banks do not need to solve the double spending problem and you can build a digital currency without a block chain. Not as a theoretical, but right now basically all my banking happens digitally, what is the actual technical point of introducing a block chain to that?
Regarding you second point, the funny thing about this space is that most stablecoins don't even try or pretend to be decentralized.
This news reads like big banks and other major traditional finance players are building a database because FedNow doesn't cut it somehow?
The decentralization is my steel man of the idea. If you don't have to worry about the double spending problem, choosing a block chain instead of a normal database is just absurd.
Good luck with that given Lutnick is in this admin and has financial ties to Tether.
Violating the separation of banking from speculative investment never hurt anyone /s
Same God damn story, over and over, but with the inevitable bailout. Heads I win, tails you lose.
You thought banks laundered money to druglords and dictators, before? just wait until they have their own currency.
yes,that, and something else has got there attention in the apearance of a new demographic, who remember bieng in a bank once as a child with a parent, do have online banking, that is only used to cash out random deposits from all over, live in upscale areas, debit/credit purchases limited to essentials, and can be heard laughing about how quaint money and banks are in almost any hipster coffee shop anywhere. relevance, and the future proofing of that likely that a significant number of bank employies have the bulk of there portfolio.....elsewhere
How far we've come from HN shouting blockchain has no usecase
What exactly are blockchains being used for in the real world?
Specific to this story: most of the world has instant payments without using blockchains or stablecoins, it’s only the U.S. where the banking system somehow hasn’t realised they can do instant payments using traditional banking technology.
Anyone posting that they’re skeptical about the use cases for blockchains on HN 10 years ago will have the same skepticism now. Nothing has changed.
Stablecoins are widely used for international remittance, and for gaining exposure to the USD in countries with weak currencies.
>Banks see an opportunity for stablecoins to speed up more routine transactions, such as cross-border payments that can take days in the traditional payments system
Nothing that crypto is needed for
Blockchain (shared tamper-evident ledgers) has many, many use cases.
Cryptocurrency has just one.
Ask the U.S. how important it is to be the world's default currency before you go ignoring the value of getting that one thing right.
Can you name a concrete example?
I do not count money, as crypt is technically inferior to non-blockchain based digital currencies.
A permissioned stablecoin run by big tradfi players is by definition not a blockchain.
This is great news. Stablecoins issued by banks are much better digital cash than CBDCs (central bank digital currency). EU is currently trying very hard to implement their own CBDC, and stablecoins will directly compete with it. A CBDC is basically a stablecoin issued by a central bank. The problem is that this digital cash would compete with currency in private bank accounts, and ultimately bank accounts wouldn't be needed any more. I think every bank must start issuing their own stablecoins if they wish to stay in business.
Private banks issuing their own stablecoins will make the banking system little bit closer to the free banking system [0], when banks used to issue their own banknotes i.e. paper currency. This is better, because every stablecoin could have their own risk profile which is associated with the issuing bank, which would lower the overall systemic risk.
On the other hand, a CBDC would be a move in the direction of single-tier banks [1], which centralizes all money issuance to a single bank.
[0] https://en.wikipedia.org/wiki/Free_banking
[1] https://en.wikipedia.org/wiki/Single-tier_banking_system