Of everyone I follow it seems it’s only a16z still believes in crypto.
Tell me.
a) BTC-BTC Transfer: Only BTC transfer fee. Beats TransferWise by a large Margin.
b) BTC-USD: Depends on many variables, including if the receiving country taxes BTC to fiat. Considering how expensive transferwise is, it's probably a wash.
Speed depends on if GP literally meant Cash. If so, BTC is obviously far faster and easier as you still need to get you cash into your bank account. Otherwise… Transferwise takes a few hours, BTC 10-20 minutes I think?
Privacy: The Banks and TW know who sent how much to whom. With BTC everyone knows that A sent X to B, but not necessarily who A and B are. As this transaction is public forever, I'd probably prefer TW from a privacy perspective, this of course changes with something like Monero.
[1] https://promotions.newegg.com/nepro/16-6277/index.html
Further, since you've got to foot the transaction fee (~$1.50) instead of the merchant and the merchant has already padded their prices for a 3% credit card fee, you're getting royally screwed. I pay with my 2% cash back credit card, get all sorts of warranties and protections, and you pay 3% + $1.50 and get nothing but losing your ability to file your taxes with TurboTax because they dont support crypto on Form 8949.
I was simply trying to show that your original statement was hyperbole, as there are clearly notable retailers that do.
Also as a consumer, I don't see why your point about intermediaries is relevant (barring the marginal price difference between them). If you are planning on purchasing something from a business you don't really care if they are using Intuit or Square to process credit cards transactions, just that they accept credit cards for payments.
COGS: $10.00, retail after CC markup: $10.30. I get a 2% rebate, so I paid $10.09, and for that $0.09 I get a one-month interest free loan, chargeback abilities and numerous warranties.
COGS: $10.00, retail after CC markup: $10.30. You have to buy the $10.30 from an exchange for $10.51 (assuming 2% fee). You then pay another $1.26 for the BTC transaction and get back nothing, for a total of $12.07. That means your total fees paid are 23X the total fees I paid. No chargebacks, no warranties, no loan, 23X higher fees. Then, you have to report your cost basis to the IRS and can't do your taxes easily. That makes your payment method inferior for any normal, legal purchase. That's one of the reasons buyers don't want it. Sellers don't want it because it exposes them to enormous FOREX risk.
Yes, it's hyperbolic, however the fraction of businesses accepting BTC is already practically zero and falling, it's not unfair to round it to zero. Otherwise we would just be happy with Overstock.com gift cards as a medium of foreign exchange. After a 2% cash back rebate on a credit card their cost is negative.
COGS: $10.00, retail after CC markup: $10.03. In Germany I would get a 0% rebate, so I would pay $10.03, and for that $0.03 I would get a one-month interest free loan, chargeback abilities and numerous warranties.
COGS: $10.00, retail after CC markup: $10.03. You have to buy the $10.03 from an exchange for $10.07 (assuming 0.4% fee). You then pay another $1.26 for the BTC transaction and get back nothing, for a total of $11.33. That means your total fees paid are 44X the total fees I paid. No chargebacks, no warranties, no loan, 44X higher fees. In Germany no tax liability is incurred AFAIK when using it as currency. That makes your payment method inferior for any normal, legal purchase. That's one of the reasons buyers don't want it. Sellers don't want it because it exposes them to enormous FOREX risk.
Companies that offer crypto discounts are unicorns. Why would they? It's more expensive and more risky to offer it. The only reason I can think of to offer a crypto discount is if you're not reporting to tax authorities like cash-only restaurants. Your one counter-example is by no means representative, and in Germany, you're even worse off than in the US in the average case, by double.
How? Risky? When the customer has literally zero way of doing a chargeback? And most businesses instantly transfer the received amount to cash, so there is no wallet complication.
> Sellers don't want it because it exposes them to enormous FOREX risk.
No, because the time they actually hold crypto is measured in seconds to fractions of them.
A streamer I watch allows you to donate with crypto and buy food for people. The Paypal way gives you less resulting money to buy food for people with because of tx fees. Crypto for them is safer and cheaper.
> In Germany no tax liability is incurred AFAIK when using it as currency.
I wish. You have to hold for 1 year, then whatever you do is tax-free. Before that, anything you do (incl. trading) counts for your income tax.
And FWIW, a) I don't buy anything with BTC, if anything I'd pay with ETH, Nano or any of the alts that have fast and cheap TXs but I'd buy things with a CC anyway because I find it too be simpler. b) Where I work the best tx fee we can get for CC Payment for 10€ is 0.395€
Re: the streamer, I don't think you're doing the math right. With a 0.4% + $1.26 transaction fee, PayPal's 3% would break even at ~$45. Whether they buyer or the seller pay the fee is irrelevant, the fee is paid. Either the buyer asks for more or the seller sends less, the net is the same. The difference here is fixed vs. percentage fee payment which reaches a break-even point pretty high up there for most purchases.
I based my tax treatment implications on this article: https://www.bna.com/germany-reaffirms-crypto-n73014476891/ ("But when the digital currency is used as a means of payment, or when it’s exchanged or sold, it will be exempt from Germany’s 19 percent VAT.") but I guess the capital gains still need to be paid?
The alts have even more risk due to their even more wild fluctuations and dreadful past performance.
BTC to BTC :I can do it.
Non of the fancy services allow me to send money from Mexico to the UK.
It is crypto or paying for SWIFT, Western Union or similar. With very high costs.
BTC is a nightmare. You have to find an exchange in Mexico (which won't run away with your money a la Quadriga) and they'll take 1-2% and sit on the transfer for a few days. Then you have to transfer from there to another exchange in the UK paying a BTC exchange fee, then cash out in the UK, they'll take another 1-2%. In the week the exchanges have been camping on your money if you ever see it again, the forex risk is astronomical as it regularly swings +/- 20% weekly. Then due to the inevitable change in value of BTC during the week your transfer takes, you now have reporting obligations to your local tax authorities in BOTH Mexico AND the UK. This may require hiring an accountant to resolve which adds yet another mess of fees.
Pay a service 2-2.5% and be done with it or:
1-2% fee to Exchange 1 + a few days FOREX risk + the current BTC fee of $1.26 + 1-2% fee to exchange 2 + the risk anyone in the chain is going to ruin you because they're totally unregulated fly-by-night operations then learn the nuances of both Mexican and UK tax law in regards to capital gains.
This is a common crypto shill talking point. It's been thoroughly disproven that crypto is better for international remittences than existing solutions. It's a solved problem.
I tried both of them and I can't (I am living in Mexico). I don't understand why you think BTC is a nightmare. For me, living in Mexico, and dealing with MXN and GBP (my brother is in Northen Ireland) it has worked wonders.
You are assuming that Bitcoin exchanges in Mexico are unregulated, when they are VERY regulated. You are making negative assumptions for every Crypto step while making positive assumptions for every step in your scenario. I does not make sense.
And why wouldn't I make negative assumptions of crypto [1], [2], [3], [4]. There's a scammer at every single level and being intentionally resistant to censorship, control and authority makes that impossible to stop. It's designed to support scams.
Remember the man who lost $420,000USD while attempting to use Quadriga to exchange USD for CAD when moving to Canada using exactly the approach you're describing? [0] It's like asking me why I've got negative associations with the "Titanic II." Something about what happened to the first Titanic.
Last, based on my research, it appears Mexican crypto exchanges aren't regulated yet, and that regulators are about to shut them all down [5]. "Because cryptocurrencies are such complicated technologies, the argument goes, average citizens can’t understand how they work and should not, therefore, be allowed to buy them." I'm 100% with your regulators.
[0] https://www.bloomberg.com/news/articles/2019-02-09/software-...
[1] https://www.theglobeandmail.com/business/article-gerald-cott...
[2] https://www.chepicap.com/en/news/4366/roubini-on-tether-it-s...
[3] https://www.theverge.com/2018/3/22/17151430/bankruptcy-mt-go...
[4] https://www.forbes.com/sites/cbovaird/2019/03/22/95-of-repor...
[5] https://coincenter.org/entry/new-regulation-would-effectivel...
It is actually very simple: A lot of these services do not provide services in Mexico. Really, the passive aggressive comment is not necessary.
I assume that you live in the UK or the USA. Usually what happens is that people that live there live in a "technological bubble" where all of those first-world services are available. But most of them do not have service in most of other countries.
I work in a B2B payment company and have had the opportunity to deal with these kind of issues. Believe me that cross-country payments is nowhere a solved problem. The blockchain technology definitely has something on it if used correctly.
Either way, another legitimate option for you to consider is an Interactive Brokers account which has great forex options (interbank rates) and Mexico is a supported country. They charge a commission of 0.2 basis points (0.2/100 of a percent) with a minimum of $2USD per order. There really are a lot of legitimate options that don't require cryptocurrency. People have been trading currencies for hundreds of years.
There's a great writeup on the way you can do it here: https://gfmasset.com/2018/09/better-than-transferwise-saving...
For interest you can even do USD-CAD exchanges with zero spread via Norbert's Gambit (https://medium.com/young-wild-and-cheap/the-norberts-gambit-...)
Both https://www.currenciesdirect.com/ and https://www.smartcurrencyexchange.com can do it.
SmartCurrencyExhcange: https://ibb.co/4RGXvbc also nope
They don't have MXN/Mexico, along with a lot of other currencies from Latin America, Africa and Asia
https://gfmasset.com/2018/09/better-than-transferwise-saving...
Example news site: https://yalls.org Example browser extension for great UX: https://github.com/wbobeirne/joule-extension
Or even nanopayments for single API calls, between the browser and a server or between servers.
Example pay-per-call web service / API: https://lightning.ws (disclaimer: my project, based on another project by me: https://github.com/philippgille/ln-paywall)
The mining and gas fees for BTC and ETH respectively are going to be higher than the cut a payment processor would take.
The one advantage that you might be alluding to is that bitcoins are divisible into satoshi’s, which are much more granular than cents.
And that's if you want really fast confirmations.
There's much more to it, many smart people have put a lot of thought into LN, so I recommend reading the whitepaper and other documentation about it.
And looking at how many people use a custodial Bitcoin wallet today (e.g. Coinbase), many will probably use custodial LN wallets as well, with only the wallet service requiring a channel. Not recommending this of course.
Also, my use case was regarding micropayments (e.g. for reading a news article) and nanopayments (e.g. for an API call). That's below $0.30. If you're now going to say that you could top up some balance (like $20) and just deduct a cent from that for every payment, that was exactly the other point of my use case: No accounts required, neither in the DB of the news or API service, nor in the DB of some payment processor that must keep your credit card data.
So it's not just about fees, it's also about privacy.
The reason we don't have micropayments isn't an accounting issue, fee-related or a technical issue -- or even a privacy issue -- it's a human biology issue. IMO hooking it up directly to a wallet without topping off isn't going to change that, especially since you still have to top off the BTC wallet regularly as you get paid in real currency. Boat-anchoring two things that are complex and people don't really want (crypto + micropayments) isn't going to make the two work all of a sudden.
The only way to really solve the news business model with something other than ads is a Netflix-for-news. I hope that Apple News becomes that because newspapers deserve to exist.
What is the alternative? Card? 2% + .3 fee. That's expensive. ACH? takes 5 days to be processed.
What is the fast, cheap digital alternative?
Works great if you're settling transferring between friends doesn't work for buying/selling goods[1], otherwise you get charged the same 3%. Also, the "free" transaction aspect is most likely a loss leader.
[1] https://help.venmo.com/hc/en-us/articles/217532097-Can-I-use...
Besides, talking worked well for thousands of years, what use would humanity have for the Internet? /s
The reality is that for the rest of the world bitcoin is missing the initial distribution problem. Nobody in Venezuela has bitcoin. How are they going to get it? If they can trade with other countries, they would just get USD and be better off. If not, then net, it's zero sum. That's really all there is to it. Even after that, it's like cash if cash had a $1.50 transaction fee for handing it to your buddy. Not exactly tenable in countries where thats basically a daily wage.
Edit: ...and LN transactions are essentially instantaneous and free. Also you can’t program cash without a middleman.
Nothing in that twitter account refutes that in Venezuela the minimum wage is $6.70USD per MONTH [3] so a single transaction fee is nearly a WEEK of wages. And that's up from $2.20 per MONTH so a single transaction fee was THREE WEEKS of wages.
LN transactions are "instantaneous and free" once you open a channel ($1.50) and lock in your balance, then close out your channel ($1.50). Again, two weeks wages.
Bitcoin is not a solution to the problems of Venezuela. Changing the government is. They're totally disconnected.
[1] https://bitcoinist.com/venezuela-now-requires-bitcoin-miners...
[2] https://www.newsbtc.com/2018/05/31/officials-in-venezuela-be...
[3] https://www.reuters.com/article/us-venezuela-politics-wage/v...
I pity someone who is so offended by a simple technology.
Look at Bitcoin's yearly lows, and tell me more people aren't finding it useful every year. Again, YOU mentioned the Venezuela example, and IT IS BEING USED THERE. I never claimed it would save that country, nor have I heard anyone else make that claim. Clearly some people there find it more useful than other alternatives to their hyperinflationary fiat currency.
Bitcoin doesn't care about Venezuela nor any other specific use case. It keeps existing because people keep running the software. You can deny this, but there's no point being exasperated over it. Just let it go and concentrate on whatever you do care about.
But don't go around claiming fiat currencies are the final solution when situations like Venezuela are happening right before our eyes.
Trading with other countries opens up many different options for storing value like fiat currencies backed by 'stable' governments like AUD, CAD, NZD, USD, EUR -- or assets like gold, equities, real estate, etc. Each of which would have stored value 5X better than BTC over the last 2 years. However, the real issue remains, you have to trade to obtain either these assets or BTC and nobody wants to trade anything for Venezuelan Bolivars because they in turn don't believe they'll get anything for them. That won't be solved until the government is replaced.
Until the government is replaced any BTC "solutions" for the Venezuelans are efforts to legitimize BTC and increase the value of the holdings of the "helpers," not to really solve the problems on the ground there. If they were trying to help, they'd just raise money for NGOs.
The evidence shows that it is much easier to censor a credit card payment, or bank transaction, than it is to censor a crypto transaction.
Adult content is one area that comes to mind. If you run a business in this area, on the internet, which is perfectly legal, you will quickly find that every major financial institution refuses to do business with you.
If you do business in one of these controversial areas, then you will quickly find that you are being charged extremely high costs and/or kicked off of their network.
Which is why I support solutions that undermine attempts by a couple monopolies to impose larger costs on legal, but controversial businesses.
That said, with $1.26 transaction fees + 1-2% to buy BTC vs. even 20% for a credit card in this high-risk MCC, the breakeven is ~$7, and while I'm not sure what adult content costs on a monthly basis, I'd imagine the fee difference isn't a whole lot.
It's also not an imposition, nobody is required to use credit cards. Adult content is largely and lucratively ad-supported. Some businesses choose to offer content on a subscription model like the NYT paywall, and some choose not to. I don't see anything inherently wrong with the status quo. The cost of doing business is being passed down. They accept credit cards because even at a 20% fee, it's in their interests to do so. If it wasn't they'd stop. Either way, they're recovering their fees from customers.
It is also not enough to censor a singular Blockchain. You'd have to get the hardware to attack all the chains, because then people would just move to the other ones.
This is still not impossible. That's why I used the words "censorship resistant". But it is certainly much more difficult than a phone call to 2 or 3 executives who control the major financial companies.
This is proven by the fact that censorship just isn't happening on most Blockchains. The actual state of the network proves that it is difficult, because it isn't happening.
You can talk all you want about theoretical attacks, but those attacks aren't happening, so it works. Whereas there are many examples of the "phone call to Visa" that are happening right now.
They aren't stopping any transactions, and have never done so, in the 10 years that crypto has been around.
This is in comparison to visa and mastercard which censor people all of the time.
So for whatever reason that those pools aren't censoring anything, and have never done so, but the major finance companies are censoring transactions, is the reason why crypto is valuable.
Okay. So where is the Venture Capital going, and where will the returns stem from?