Comment by francescopnpn | Hacker News Reader

Comment by francescopnpn | Hacker News Reader

Empirically speaking there's already four verticals where blockchain is dominating (in terms of market share growth YoY):

1- Illegal goods [The deep web] 2- Fundraising (both good for individuals who previously could not act as angel investors and rip the xx,xxx% returns because of wealthy discrepancies and good for companies who do not need to drink 75 coffees with VCs) [Companies: Ethereum] 3- From fundraising thru blockchain-based assets came out a new speculative open 24/7 international market [Companies: Exchanges] 4- As an additional form to store of value (Like 1-digit % of your belongings). A blockchain-based asset it's divisible, easily transportable, encrypted and finite. Possibly it also serves an use like gold in the aerospace and electronic industry.

There's also one more vertical that will eventually be dominated by the blockchain: Micro Transactions. If a transaction costs 0.00001 cent, then you can easily buy data for 1 cent a piece. Something akin to IOTA (or a working version of IOTA itself) will inevitably be built with a trillion devices connected to the internet. Banks wont ever be able to process 0.00001 transactions.

> Banks wont ever be able to process 0.00001 transactions

Why not? Nobody processes at that quantum because no demand has been shown for the service. Blockchains are inherently less efficient than the databases modern financial systems run on. That tradeoff is core to the technology.

There's yet not enough devices connected to the internet wiling to share their data. There's a whole lot of companies that need to be created and things to happen (which might never do) for something like a data marketplace to exist. If that ever happens, any company that has the resources to make sense of additional -targeted- streams of data (as they already effectively do) should be able to turn a significant profit from the acquisition of said data. Either for product customization or advertising - or both.

For every transaction a bank processes there's obviously a fixed cost. Once you account for all the costs relative to them in a given year and divide that number with the number of transactions in that same year, I doubt, given the margins of a given transaction, that a bank can break even on 1 cents transactions. That's assuming that the tech the banks use as of now does not improve by magnitudes in a couple years.

> Once you account for all the costs relative to them in a given year and divide that number with the number of transactions in that same year, I doubt, given the margins of a given transaction, that a bank can break even on 1 cents transactions

This is a strange argument. Visa's costs, per transaction, are demonstrably lower than Bitcoin's. Specific banks and systems may be more or less efficient. But fundamentally, the trustlessness that is a blockchain's selling point comes at the cost--by definition in proof of work systems--of efficiency.

intermediaries fees are often more than operational expenses. In some industries, the fees might be significantly high especially when competition is low.

With blockchains it's mostly about operational expenses. Now, bitcoin transaction fee might be currently high but it is a problem of this blockchain implementation and not with blockchain per se.

>Banks wont ever be able to process 0.00001 transactions.

My bank is processing 0 cent transactions and IIRC in Q3 they're going to support SCT Instant, meaning the bank transfers will take under a minute within the SEPA area while still being 0 cent cost.

Well, that's interesting. I wasn't aware of that. I'll look into it. With that said, my theory is that unless most banks of the world adopt a similar technology within a reasonable timeframe (which is unlikely), a blockchain-solution will likely dominate.

If banks can't process 0.00001 transactions, then how in the world would cryptocurrencies be able to as cryptocurrencies are easily thousands of times less efficient than centralized servers?

That depends on the cryptocurrency. Stellar already processes 1 cent transactions.

https://lightning.network/

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