If you're trying to assess whether this is more propaganda, let me help:
> Trust is the biggest bottleneck in realizing transactions. It is the biggest bottleneck
in advancing the society. As a trust-less system, blockchain removes that bottleneck.
Indeed, apparently trust in transactional system is our biggest problem. And indeed, apparently, blockchains provide that trust.
here's me thinking its trust in social institutions which is our biggest problem, an issue made much worse by blockchain, which offers no systems of redress (perhaps the most significant benefit of institutions and trust).
Trust in transactions isn't an issue at all. When was the last time you threw down your Visa card and worried about ... anything? They offer redress via chargebacks. You trust Visa, Visa trusts the merchants. Something goes wrong, call your bank. Ezpz.
Now you may argue that you can't pay for your, uh, illegal or immoral material with a Visa card. That's a different matter. In my opinion, the government should recognize modern payments rails as critical infrastructure and require them to process all legal transactions without discrimination. A sort of payments net neutrality.
[edit] You may also argue that merchant fees are "too high" - yeah they're high in America. They're 0.3% in Europe, because again, that's a job for regulation. They don't get card transaction rewards (because that's where the overwhelming majority of interchange goes) but that's the trade-off they've chosen to make.
Replacing modern payment rails with magic beans that live in your computer solves literally nothing for the overwhelming majority of people, which indeed, is why the overwhelming majority of people never transact on-chain. They speculate on the sidelines from centralized, trusted exchanges. It's gambling on unregistered securities to most people.
Merchant fees are pretty high for most online and international payment systems. For example donating to an artist via Ko-Fi will result in 2-3.4% + $0.30 fees due to Stripe/PayPal payment processor.
IMHO the larger concern is that our current online payment rails and modes of value transfer & digital ownership are all inextricably linked with centralized, oligopolistic, and for-profit corporate entities (and, typically US-based and USD-dependent). A public, open source, decentralized, and peer-to-peer transactional system that spans the globe is a desirable goal, even if you do not feel the current blockchain-based solutions are sufficient or user-friendly enough.
SEPA transfers within the EURO area are basically free. TransferWise is dirt cheap.
Crypto might seem appealing because, yes, the traditional banking system is very bad (though not everywhere is it as bad as in the US), but in nearly all cases there is a better solution available (good old fintech) without the inefficiencies of crypto.
> SEPA transfers within the EURO area are basically free.
Not international; not a payment processor on any popular platform.
> TransferWise is dirt cheap.
Not really, when you compare it to low-fee crypto networks. If you sent 1.5 GBP to USD the fee is 0.35 GBP (23% of total), which makes it a poor choice for tips and small payments. Sending 15K GBP to USD carries a 61 GBP fee, or 150K GBP to USD carries a 563 GBP fee.
Compare with a low-fee network like Tezos or zkSync. My last Tezos transfer was a fixed fee of 0.000544 XTZ or $0.001 USD. zkSync currently has an approx fee of $0.11 per transfer (a cost which will likely be reduced in the coming months with EIP 4844). These fees are fixed, regardless of whether you are sending 0.1, 1, 10K, or 100K tokens to the beneficiary.
"low-fee" crypto networks are not a comparison because your goal is not to send "low-fee" cryptos, it's to transfer money. Transferring money requires a domestic transfer from your bank account to an exchange, purchasing on an exchange for a 1-2% fee, performing a "low-fee" transfer, selling on an exchange for a 1-2% fee, then performing a domestic transfer to a local bank account. Then adding these taxable events to your income taxes.
Sending money this way is almost certainly slower, more expensive, way more prone to failure and exposes you to tons of counter-party risk. Remember the guy who lost $400,000 trying to send himself money between the US and Canada using Quadriga and got caught without a seat in the game of musical chairs?
A better comparison would be a Wise Multi Currency Account [1]. You get a variety of worldwide bank account numbers. You can ACH into it for free (and SEPA, and EFT, and so on). There is no step two. Anyone in most world jurisdictions can open such an account. Anyone in much of the world can perform a free domestic transfer to send money into it no matter where you are. $0.00. This is what innovation looks like, IMO.
Places payment processors charge you a large fee are almost certainly to cover the risk associated with that transaction - the risk which is not covered when performing a crypto payment. Let alone all the new risks that enter the picture when performing a crypto payment. You're still on the hook for these risks personally, mind you, it's just an unaccounted for externality.
Dig into the business model of these payment processors and you'll quickly learn exactly why they charge what they do.
Unpopular opinion: we have middlemen because they add value.
> "low-fee" crypto networks are not a comparison because your goal is not to send "low-fee" cryptos, it's to transfer money.
we are both talking about sending 'value' across the globe, e.g. Ko-Fi-style tips, international payments, charitable donations, Kickstarter-like crowdfunding, etc.
for example, as an artist I am selling digital + physical media and accept fiat and crypto as a form of payment. I know many others in a similar situation, including nonprofit organizations that accept crypto.
obviously not everybody accepts crypto and it is highly localized; but any merchant or online platform that decides to accept XTZ as a form of payment can already do so to mitigate the 2-5% payment processing fees that I mentioned earlier.
Ok but it's not value if you can't spend it on things. In order to spend it on things you have to convert it to something that can be spent. So it's disingenuous to exclude that conversion step from your calculus.
> ... but any merchant or online platform that decides to accept XTZ as a form of payment can already do so to mitigate the 2-5% payment processing fees that I mentioned earlier.
But of course they won't because they can't spend it on things, like the inputs to the goods they sell (be that physical, rent or mortgage). They'll need to convert it, and that conversion fee will be something you pay by marking up the cost of goods.
I already am spending it on things e.g. art, donations, and peer-to-peer international payments. The number of services accepting crypto can continue to grow without transfers reaching the 2-5% processor fees I mentioned earlier.
And since you can't exchange Tezos for goods and services, you need to send it to an exchange, sell it for 1-2%, deal with foreign exchange changes over the time you held it, counter-party risk on the exchange, then perform a domestic transfer into your bank account, and add the transaction to your income taxes.
not really. I just checked a CEX - to exchange 1,000 XTZ into 2,268K GBP and have it directly deposited into fiat account, the fee is 3.76 GBP, i.e. 0.17% rather than 1-2%.
you also seem to be taking the opinion that all crypto must eventually be exchanged to fiat. obviously it is wise to exchange enough to fiat for taxes, monthly expenses, and to have a balanced portfolio. but some users may choose to keep some in crypto, for example to stake, continue paying for other crypto-localized goods and services, or exchange into a stablecoin in order to have self-custody of a USD-pegged asset.
fwiw, if more merchants did accept crypto and taxes were payable in crypto (as it is becoming the case in some very specific jurisdictions around the world), there would be less need to exchange to fiat via a CEX.
> not really. I just checked a CEX - to exchange 1,000 XTZ into 2,268K GBP and have it directly deposited into fiat account, the fee is 3.76 GBP, i.e. 0.17% rather than 1-2%.
Cool. So the same as a debit card payment in Europe, which is capped at 0.2%. It's also way more expensive than a Faster Payments UK transaction. In exchange you take on huge counter-party risk, and massive forex risk. This doesn't sound better, in fact, it sounds a lot worse.
> fwiw, if more merchants did accept crypto and taxes were payable in crypto (as it is becoming the case in some very specific jurisdictions around the world), there would be less need to exchange to fiat via a CEX.
Taxes are only 'payable' everywhere on earth for crypto in the sense that some governments offer a gateways that exchange it to fiat. Like Pay1040 does for credit card tax payments in the US. That doesn't make 'taxes payable in credit card.' The issue isn't payable it's denominated in.
You keep mentioning localized EU/UK bank transfer fees when my original post that triggered this discussion is referring to international payment processor APIs (Stripe, PayPal) and the web that builds on top of them (Ko-Fi, Etsy, Bandcamp, Kickstarter, Patreon, Shopify).
If you read the whitepaper it flags (first paragraph) that the problem with payment systems that rely on trusted third parties like Visa is not that they don't work but that these parties are compelled to mediate.
You may not mind yourself -- Visa is useful -- but adding this kind of closure isn't cost-free (look at Wikileaks) and the fundamental innovation in how to do this without introducing any trusted third parties is a big deal.
With that said, I agree most of the new POS variants and DAGs are sneaking closure back in amd pretending it is OK because the resulting systems look and feel like Bitcoin.
> You may not mind yourself -- Visa is useful -- but adding this kind of closure isn't cost-free (look at Wikileaks) and the fundamental innovation in how to do this without introducing any trusted third parties is a big deal.
A Bitcoin transaction costs a few hundred dollars once you price in both the direct transaction fees and the socialized fees (block reward). I'll stick with Visa.
note: Of course Bitcoin still has trusted third parties - just lots of them.
I'd like to point out that the majority of people on Earth don't transact digitally at all, because those systems we trust don't allow them on. I'd also like to point out that trusting a system of accounting is a moot point when that system is built on a flawed monetary system where unelected officials can debase the unit of account with a press of a button. The significant asset inflation we've seen in real estate, stocks, bitcoin, gold, etc, is all due to that.
Bitcoin isn't a solution to trustless banking. Its a solution to trustless _central_ banking.
Ok, so hold all your assets in real estate, stocks, or gold and only convert it to fiat when you need to pay for something. I'm not sure what cryptocurrency adds here besides another (rather volatile) investment vehicle.
bit late, but: real estate and stocks (and most gold) isn't held sovereignly, but in vaults, managed by gatekeepers. I own some stocks though a platform that manages it for me. They can force me off their system at a moments notice. Real estate is managed by the government. They can also take it away.
The first counter-argument would be that we have laws and procedures that protect most people from such actions, which is mostly true. There are however a number of clear examples where either the government or society underwent rapid change which allowed for these assets to be seized (think: revolutions, exectutive order 6102, etc).
Bitcoin (not crypto -> bitcoin) solves this through offering you the option or sovereignly hold an asset outside the control of anyone who doesn't have the private keys.
Sure, the monetary system is flawed (in the sense that all systems are flawed and the current one seems to be doing particularly poorly _at the moment_) but we also had a trustless central banking system before called the Gold Standard and iirc that didn't work either? What is it about digital currencies that make this better than the Gold Standard?
Every vision of blockchain-centered future society that I have encountered so far in a nutshell implies that trust between fellow humans is inherently bad, and tries to eliminate it as much as possible.
I’ve met blockchain maximalists who passionately painted their vision of a future where you inherit some karma from your ancestors, increment or decrement it with every action you do in your life, and pass it on to your descendants.
They seem like smart and successful people, and their passion seems genuine. However, I feel like they have made some fundamentally incompatible assumption somewhere early in their thinking process. I can never understand how could anyone see removal of trust as a feature, and their vision intuitively strikes me as incredibly dystopian.
My personal take is that this all is an elaborate workaround for the fact that there are malicious actors (due to whatever reason, but mostly probably upbringing-related mental health issues and emotional/financial insecurities)—addressing that root cause will render such symptomatic treatments irrelevant; while enacting these treatments without addressing the root cause will result in much suffering.
"trust" as an issue between machines on a network is ideally solved in a trustless way.
The issue is that these tech-utopians havent understood that this is really a pun on the word "trust", and our social issues are in a sense, precisely the opposite.
Even the blockchain world needs blind trust in its inputs - oracles or humans. Any society is by definition formalized trust and a blockchain society is no exception, just moves the trust in some other corners. And anyway when I hear about the blockchain goal to remove the need for "unreliable trust" I remember the hawala money transfers which are the very embodiment of a system based on human trust, the complete antithesis to the blockchain premises AND which works just fine in the real life.
Definitely agreed. High-trust societies can be much more efficient than low-trust societies, as the cost of double-checking somebody else's work is paid at every level.
When blockchain is described as "trust-less", that is an accurate statement, but is placed on the wrong side of the pro/con chart. Blockchain doesn't provide a method by which to trust people. Blockchain dives headfirst into a low-trust society and keeps digging, paying the inefficiency cost the entire way.
To add more weight to this being propaganda divorced from the reality of the system, the abstract mentions a positive impact on the environment, which is a laughable claim.
It's funny. Cryptocurrency claims to solve the "trust" issue, but in fact does not.
While individual transactions are secure, many blockchain projects involve some level of trust and risk that is simply assumed to be zero because the project is happening on the blockchain. Examples abound, like Tether and their questionable reserves or SafeMoon and their vanishing[1] "locked" LP.
The existence of rug pulls is proof enough that blockchain doesn't solve any non-trivial trust issues. Otherwise, how could there be an entity that can break your trust and take your money?
Dunno much about advancing the society, but in the current state of things in the USofA finworld, trust really is a kind of a pain in the ass. Just to name a few things, KYC is intrusive and expensive (even Coinbase made me upload my documents). ACH, which is how a ton of money gets moved, requires 3-10 calendar days to settle, because lack of trust (same day ACH is either expensive or only available for credits). Chargebacks on credit cards (friendly fraud or legit complaints) are a huge problem for merchants who get kicked off of their billing system once it loses "trust" in them.
No idea if the "blockchain" solves all this though.
> Trust is the biggest bottleneck in realizing transactions. It is the biggest bottleneck in advancing the society. As a trust-less system, blockchain removes that bottleneck.
Indeed, apparently trust in transactional system is our biggest problem. And indeed, apparently, blockchains provide that trust.
here's me thinking its trust in social institutions which is our biggest problem, an issue made much worse by blockchain, which offers no systems of redress (perhaps the most significant benefit of institutions and trust).