
Could the US Dollar Be Crypto's Killer App? - benmdi
https://www.buildblockchain.tech/newsletter/issues/no-90-could-the-us-dollar-be-cryptos-killer-app
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0x8BADF00D
The killer app was supposed to be DAOs, ICOs, and decentralized finance/web
3.0. Instead we got another asset bubble. This is why we can’t have nice
things.

~~~
HashThis
Back in the day of dial-up modems, people dreams of watching TV over the
internet. Didn't work well with dial-up. As infrastructure spread, it happened
(NetFlix).

Crypto going mainstream will happen. It will happen when debit cards to crypto
accounts will pay merchants, and the merchants receive USD. AND when the rates
are tiny.

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luxuryballs
Increasing the number of people using the dollar is at least a clear goal
considering how often we inject it into countries and governments around the
world. In 2020 you don’t conquer with guns, you conquer by economic
dependence.

~~~
hef19898
To be fair, it always was a combination of both. Economic depndence is much
safer so.

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coinward
Arent stable coins just an appeal to central banks expansionary policy?
Bitcoin was created as an alternative set of values and seems like cryptos
killer app to me

~~~
Retric
Bitcoin was created to solve micro transactions.
[https://bitcoin.org/bitcoin.pdf](https://bitcoin.org/bitcoin.pdf)

 _The cost of mediation increases transaction costs, limiting the minimum
practical transaction size and cutting off the possibility for small casual
transactions, and there is a broader cost in the loss of ability to make non-
reversible payments for non- reversible services._

It’s the community that pivoted to something else.

PS: Two different non reversible transactions sets up the two generals problem
which bitcoin does not solve.
[https://en.wikipedia.org/wiki/Two_Generals%27_Problem](https://en.wikipedia.org/wiki/Two_Generals%27_Problem)

~~~
3fe9a03ccd14ca5
The average bitcoin transaction cost was over $1.50 last month, and it can
only handle a maximum of about 7 transactions a second. Why would bitcoin be
good for small transaction?

[https://ycharts.com/indicators/bitcoin_average_transaction_f...](https://ycharts.com/indicators/bitcoin_average_transaction_fee)

~~~
Retric
The theory was bitcoin would have low overhead as the only limit was machine
time which should be cheap. However, an artificial transaction limit was
created which creates artificial scarcity and thus high transaction fees.

In theory a miner wants to have the highest number of profitable transactions
possible, but we ended up with collusion to drive up prices and thus miner
proffits.

~~~
3fe9a03ccd14ca5
I don’t think the 7 transactions per second is artificial. In fact, I think
it’s the _technical_ maximum.

[https://en.m.wikipedia.org/wiki/Bitcoin_scalability_problem](https://en.m.wikipedia.org/wiki/Bitcoin_scalability_problem)

~~~
fidelramos
1 MB was an arbitrary value chosen by Satoshi Nakamoto to fight off spam in
2010, in no way it's a technical limit on the Bitcoin network, it's completely
artificial.

------
solotronics
I have been wondering why the US doesn't make a trial crypto dollar. If it
doesn't work out what is the cost? Relatively nothing. If it does work out? it
would strengthen the USD position as the global settlements layer and give the
US control over a new monetary domain.

For examples of this see LIBOR/"Eurodollar"

~~~
ashtonkem
Why? What extra functionality does creating a cryptocurrency enable?

~~~
lukifer
It's often forgotten that the only real benefit of blockchains is that they
are distributed; one can implement all the same functionality using
centralized databases.

What I find really surprising is that the government hasn't created a set of
standardized APIs for financial transactions, flowing through traditional
web/cloud/mobile tech. From a tax collection/enforcement perspective, it would
seem to be in their interest to make "smart money" with convenient P2P digital
transactions. Given the transparent corruption between Washington and banking
institutions, I wonder if they don't want to risk being disinter-mediated, or
if no politicians have even tried to pursue such a thing (the closest being
Warren's plans to add banking services to USPS, which I think is a great
idea).

~~~
ashtonkem
I think blockchain fans consistently overstate the utility of distributed
processing from the end users perspective. Any blockchain payment system I’ve
seen was strictly inferior to existing mechanisms.

I don’t really see why the govt. would need to create such a system; the
private banking and consumer finance space has been doing an acceptable job so
far.

~~~
lukifer
While I favor "distributed all the things" from a political/ideological
perspective, it indeed carries massive performance and utility tradeoffs,
compared to centralized solutions, and is very difficult to sell to end users
without a critical mass of adoption / network effects.

Moreover, as BTC mining consolidation demonstrates, it's certainly possible
that distributed systems tend to devolve to quasi-centralized systems with
extra steps (Exhibit B: GitHub massively dominating the "distributed" git
ecosystem).

> the private banking and consumer finance space has been doing an acceptable
> job so far

...really? Can I join you in your alternate universe? :) The fact that none of
the consumer payment systems (PayPal/Venmo/etc) interoperate with one another
is nothing short of embarrassing in 2020. Or the fact that ACH doesn't operate
on weekends or holidays, as though all transactions were still processed by
humans working M-F 9-5. And that's saying nothing of the missed opportunity
for smart money / smart contracts to be baked into USD itself.

We don't need blockchains to upgrade money; just government
mandates/incentives for standardized APIs to be implemented by banks and user-
facing applications.

~~~
ashtonkem
I’ve never really struggled to send money where necessary. The distributed
nature of solution creation has created a quasi monopoly around Venmo (see
what I did there?).

The unavailability of ACH on the weekends is less of a protocol problem and
more of a habitual problem; bank transfers used to require people doing work
by hand, and that habit remained.

I think smart contracts have proven themselves to be significantly less useful
than originally anticipated.

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SideburnsOfDoom
At guess, "No"

[https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...](https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines)

after reading the article ... still "No".

~~~
georgyo
Never heard of betteridge before, and was thinking the answer to headlines is
normally yes...

The Wikipedia article you link to states a study of ~3000 articles where the
most common answer is infact yes.

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tw04
No, it couldn't. Unless the rest of the western world is ready to roll the
dice on whether China and Russia want to expand their empires - they aren't
moving away from the dollar.

I have no doubt after the Trump administration they are all taking a long,
hard look at building up their military power to be self-sufficient, but those
timelines are measured in decades, not months. Anyone who thinks that moving
away from the dollar is a simple matter of currency is naive, delusional, or
both.

~~~
shadowgovt
The key point in the article is that crypto (not BTC, but stablecoins pegged
against dollar, euro, and/or yen values) offers a way for people who normally
have few ways to access dollars to get their hands on them. It's not about the
dollar-using world moving to crypto---it's about the citizens in world that
doesn't use a currency strong enough to print their way out of a market
implosion moving to the dollar _via_ crypto.

~~~
tw04
But they aren't getting their hands on dollars, they're getting their hands on
crypto claiming to be tied to the dollar. Tether did the same - until they
didn't. You can't be tied to the dollar without backing your coin with
dollars. You can't possibly back your coin with sufficient dollars without US
government approval. You aren't getting approval without following the same
regulations as any other bank, which is what made getting dollars difficult in
the first place.

Which means the only alternative is attempting to supersede the dollar by
pegging to it but not actually being backed by it. Which, again, will never
happen.

~~~
PKop
Exactly. Not sure how one could write this article without _mentioning_ the
risks of so-called stable coins. Quite simply, the huge existential risk is
that the currency peg isn't maintained, for all sorts of reasons relating to
trust, actual $ supply, regulation, centralization, politics, etc.

Simply proclaiming the stability of something doesn't guarantee it, or absolve
one of tackling all the same problems of currencies in general. Else, a nation
would simply call their own currencies "stable" and back them with $ reserves,
which they already try to do.

Also, it is extremely stupid to say that a real-asset backed "crypto" somehow
eliminates censorship. The "backing" is the only real item of value in this
equation, and getting ones hands on that asset is of course vulnerable to
censorship.

