^^^ for your user class, probably true. But for others, it is deeply needed. The two mainstream use cases I see are transferring money where a fiat bank was too problematic (fees, limits, audits, etc) and purchasing items with the perception of anonymity (e.g. an incognito subscription with a coingate payment option alongside Visa). It is nice to know there is a way to digitally pay for things without major payment processors running analytics on my spending.
And in providing foreign aid, crypto has helped us reliably transfer funds without corrupt intervention. Culture ebs and flows, but in this case core user needs are being met by the tech.
They might not need it if it didn't already exist, but since it does they might need to embrace it / adapt to it... also, taken at face value, some players such as Visa [0] claim it would aid with cross border transactions. "Helpful" could also apply to the users, not necessarily to the current providers they have been forced to deal with. For example, deposit instiutions that allow for USDC deposits while paying out much better interest rates, and even allow USDC to be used to pay for debit care payments are "useful" as hell to me, if not the bank I pulled my money out of (to deposit in various crypto custodians like Celsius and Crypto.com for yield).
I'm not arguing that crypto is necessary. I'm telling you that I can use it to settle a transaction in the US right now in minutes that currently takes days to settle through bank transfer. I'm glad to hear that instant bank transfers are coming and I'll use that tech happily when / if it arrives.
If you look at another perspective though, of people whose economies are collapsing, or people living under authoritarian regimes, it serves a need.
Or in a broader sense: "De-regulated money transfer of any kind" -- for which the costs and risks of a cryptocurrency transaction are an acceptable tradeoff.
But for vanilla payments -- apparently they aren't (and never will be).
A technology doesn't need to revolutionize the world in order to be good. The bitcoin white paper itself says that fiat electronic payments work well enough for most transactions.
In my case crypto helps me receive money internationally, in a country where it's a huge pain in the ass otherwise. Just because you don't have a use case does not mean something has no use cases.
And for people often saying it's a solution in search of a problem : that's why we need cryptocurrencies. At least, the ones that could be used as actual currencies.
It would be so much better if I could click a payment link that opens an external wallet software like "mailto:" links, verify the amount it proposes to transfer, and click "send" to send the money at the prefilled address instead of allowing someone to take it.
I really hope that one day, we'll tell our grandkids about that time where we were giving secret codes on the internet and anyone having them could take money on our account as they wish, and those kids will think we're delirious.
Crypto has allowed citizens to circumvent oppressive and corrupt government financial abuse, as well as provided much cheaper, faster, more reliable and convenient means of transferring small - yet, life-changing - amounts of money cross-border.
An example of the latter:
A worker in one country sending half of her weekly paycheck back to her family overseas has two options presently: days of waiting (which means no food on the table for those days), uncertainty it will arrive at all (starvation, stress and pressure toward crime), and exorbitant fees taking anywhere from 15% - 50% of what she sends (shamelessly robbing the most vulnerable). By using the correct crypto alternatives, she can send the full amount, at a cost of fractions of a percent, and know with certainty if it has arrived - in seconds.
There is a reason crypto adoption is huge in poor and oppressed countries such as Venezuela, parts of Mexico etc.
There are other benefits, but this should be enough. Nothing else has been able to, nor likely could be able to have such an impact in any short space of time in these areas, and not without possessing many of precisely the same core principles shared by most crypto projects.
This doesn't mean crypto is perfect or doesn't have problems. And it doesn't mean we should ignore those problems.
But it does mean that the endlessly served-up misinformation that crypto "has no benefits", works toward harming less-fortunate people who've suffered more than anyone should have to.
Many are, and in the early days this statement was mostly true, but today there are many legitimate uses for cryptocurrency. In Latin America for instance it is becoming increasingly common to use cryptocurrency for remittance payments, because it is way more efficient than international bank transfers with no questions asked to boot. I expect this trend will eventually start wider adoption by the broader merchant community here, as more people are coming into contact with cryptocurrency in this fashion.
I have been noodling on this for a bit and this is just trying to get some thoughts out:
The base fundamental use case is this: We (humanity) need a digital native currency. If I can web / email / interact with pretty much any human on the planet, over a commonly owned and shared infrastructure using openly developed protocols and software, why can't I send / receive money from them too?
Pretty much every other use case I have heard is a subset of this
- my government stops me from doing X
(X being reasonable from our nice Western point of view like
avoiding currency controls, or unreasonable like buying heroin from the supplier)
- I am unbanked (similar to government stops me ...)
- Why should the world pay a Visa tax?
1. there is a difference between "permissioned" and "permissionless" crypto. Roughly speaking permissioned crypto is where some trusted third party (Bank of England, ECB, the Fed) gets involved in creating the crypto-currency and being the validation point to prevent double spending.
The double spending thing is the issue - it is the core of what makes all this difficult. If A spends with B and tries to double spend with C you need some public ledger that says A has already spent with B so C is out of luck. The easy way is A and B post the transaction on the Fed's website and the Fed just takes whoever comes in first. The hard way is to say we don't trust the Fed and have a clever way of agreeing what posts are "true" - blockchain, mining etc etc.
2. Ok - so we now just invent a working permissioned crypto-dollar. Surely this is all good? Well maybe - the basic use case is really important - we want to spend money as easily as sending email - but :
a. Deposits are a big thing. if I can hold crypto-dollars on my phone and send them to Jeff Bezos with no marginal cost or intermediary then why do I have a bank account? Why deposit my salary into my bank? And if I do not deposit my salary into my bank then the wikipedia article on fractional reserve banking goes all funny.
If deposits go out the window, all sorts of second and third order consequences hit.
- If no deposits, then no lending via the banks. and so no monetary supply expansion. Monetary supply expansion in fact needs to be explicit at the permissioned base.
- we could try having banks produce their own currency "under" the Fed but the history of that is total disaster
(it's worth nothing that the history of bitcoin is roughly a fast forwarding of 200+ years of bank failures and fraud that lead to the current state of regulation. Crypto is a wild west that needs a marshal.)
- Yes we can "trick" everyone into holding their currency in a wallet that routes through a bank account, but most banks will fuck that up in the initial implementation and even so people are stupid, especially for bank accounts that charge - and will simply leave quickly .
These sort of consequences of a working crypto-currency were what was being talked about in 2009/10/11 - the downfall of fiat currency etc. Before lots of people found that the number just go up - and speculation (and money laundering / currency control avoidance) became the basis of bitcoin.
People in developed countries take online payments for granted. Let me give you another perspective from a third world country.
Where I live, the international payments are restricted. Most of the neobanks/payment only issue payment cards for EEA or USA and Canada. There are a few options like Dukascopy Bank, but the fees are expensive especially for micro transaction. So cryptocurrency (not all though) does have some utility for people like us.
That being said, I do agree that crypto ecosystem is filled with grifters and scammers and only a select few cryptocurrencies are actually useful.
That's fine, you don't have to use it. A lot of people do prefer to use it for payments and receive payments in it though. They don't want a middle-man bank and would rather their transactions were trustlessly sent and received.
At it's core cryptocurrency is a way to bypass banks if one was so inclined. Specifically currencies like Monero allow a person to send and receive payments completely anonymously, hence its increased usage on darknet markets.
This is off topic, but this actually does seem like one of the few areas where crypto could make a difference. Why hasn't there been a good implementation of an onlyfans style platform that lets someone transfer funds direct from a linked coinbase account or something instead of depending on a Mastercard/Visa for payment processing?
None of those things require crypto. They are essentially solved problems.
The UK banking system has had chip&pin for 20+ years, has had (Europe-wide?) instant payments for at least a decade.
Banking numbers in the UK are push not pull, you cannot take someone else's money just because you have their bank number. *
Payments require CVV (and have done for almost 30 years) and often additional 2fa verification through an app for larger payments. "Card not present" transactions are particular guarded against.
The regularatory framework is such that the banks must absorb the cost of fraud, unless they can demonstrate the customer has been particular negligent. The average banking customer in the UK does not live in fear of "identity theft", and does not own "identity insurance" or similar protection packages, the legal framework provides protection.
Solving the problem for international transfers simply requires greater international cooperation, not a different technical solution. It is a particular shame of Brexit that the UK has lost it's ability to lead in this area, because Europe generally has had a similar transformation over the past 20 years.
Expanding that banking cooperation to bring in more trusted countries would further reduce the cost of international remittance.
Someone trying to sell a technical solution to a social problem ought to always be treated with extra skepticism.
* Some pedant will point out direct debits, but that is only available to trusted providers, and is backed up by the Direct Debit Guarentee, so the risk won't fall to the customer if things do go wrong.
In the cryptocurrency world, it's usually a feature to be unable to tell who you're sending money to, or even whether they exist, and this does not seem to have hindered adoption.
Absolutely correct. There are plenty of payment solutions like SEPA coming out in different markets, now. Money transfer is a known problem. These work brilliantly in contries that are not controlled by the most tyrannical and/or non-functional regimes, as long as you stay within the law. (Even China has such systems in Alipay and Wechat Pay)
So what crypto adds (beyond a hypothetical store of value) is the ability to keep your assets and transactins invisible (or nearly invisible) to the government.
No one is using crypto for payments yet because the infrastructure is still expensive and not a viable alternative.
There are plenty of use-cases where using crypto can be a better alternative for merchants (no risk of fraud and chargebacks) and consumers (micropayments where the cost of CC processing is higher than the cost of fraud, or purchases where the payee values privacy above all else - think "Ashley Madison" subscribers who'd rather not have their names on the site)
Cryptocurrencies do solve several issues, but some of them have become less important and others are, well, not so transparent for ordinary people. Do you remember when bank transfers using ebanking still took several days when you did them on a friday afternoon? For many banks this is actually still a thing. Yes there's Paypal and Venmo and god knows what these days, but good luck trying to send large amounts of money that way or sending anything abroad (maybe even to a less developed country). Which brings us to point nr 2: There are many people with lots of money who would prefer to send it not just faster and easily verifiable, but also away from the prying eyes of governments and banks with strict oversight. Bitcoin only works if you manage to get it anonymously (e.g by giving some dude cash and hoping he's not monitored by the NSA), but other Cryptos give you privacy for all transfers and still keep verifiability. Any drug dealer, money launderer or tax evader can easily sneak millions of dollars across continents in an instant. This used to be damn difficult when using hard currency or art or any other tangible asset. So yeah, there certainly are big problems that were solved - the question is: Did we really want them to be solved.
In most of the cases Scott cites the underlying thing being facilitated can be done via a normal financial system, some countries just don't have one that functions very well. So I don't see the benefits of crypto as much as I see the benefits of having a well functioning financial system. Crypto just outsources that from local regulators, banks, etc., to crypto developers. Might be a good tradeoff for those countries.
The personal example Scott gives of sending money to Russians is probably illegal and circumvents currency controls that the Russian government has deliberately put in place, so not really a demonstration for crypto as much as it is an example that people find these types of transactions useful for various reasons.
Your claim reeks of settled financial and maybe even first world comfort. It's really much more than 0.001% of people that could use something which doesn't require them to have access to an easy credit card, debit card or formal digital banking. There are millions of unbanked even in many highly developed nations and crypto or some middleman-free version of it could be a viable solution for many of them if it's user.friendliness could be improved a bit as well as wider knowledge of its usability.
it is like asking “Why Does PayPal Exist When We Have iBAN?” obviously some subset of the globe finds it more useful than iBAN transfers for their needs (like setting up an online shop).
And in providing foreign aid, crypto has helped us reliably transfer funds without corrupt intervention. Culture ebs and flows, but in this case core user needs are being met by the tech.
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