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Comment by thomasikzelf | Hacker News Reader

Crypto needs to solve a problem. I think cryptocurrencies should focus on making a cheap currency that people can actually use.

  requirements:
  - low transaction costs
  - low volatility
  - many places where you can pay with it
  - secure
  - privacy
  - no tax problems
  - fast transactions
  - handle fraud
  - scalable

If a crypto currency can solve above points by cutting out the middle man and making transactions virtually free instead of paying 1.29% + 0.25c per transaction that would be huge.

But that is a big if. Bitcoin fails at almost all of the above points. The only coin that comes close is Nano (I've got no investment in it). They solve fast, secure, scalable and cheap transactions, which I think are the main problems right now. Read their whitepaper, it is interesting. Whether they can solve the other problems remains to be seen.

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You're describing Visa. They've invented debit cards.

The only advantage to cryptocurrency is the concept of decentralized trust. A blockchain only has value in situations where no central authority can be trusted. If Nano solved every problem on your list the result would be what we already have, but with a distributed network of coin owners in control of it instead of credit card companies. That just doesn't seem like a very compelling benefit [0]

As the article says, I'm sure there are enthusiasts who are very interested in the technical problem of creating a global payment network. Unless they can do it for roughly half the cost of what we have now, it doesn't have a lot of practical value.

[0] I am aware that there are people who are locked out of financial systems because of corrupt governments, etc. But if 80%+ of the population can use the existing systems, they aren't going to go through the trouble of switching to a new currency for the sake of the 20% that can't. And even if they did, it wouldn't be long before the same corrupt governments found a way to lock certain people out of the new system

> Unless they can do it for roughly half the cost of what we have now, it doesn't have a lot of practical value. And there's nothing stopping Visa from implementing something similar.

I agree with this. And that is probably what will happen, but that wouldn't be a bad outcome. See it as one way to break a chain of middle man's.

Another (more likely) way to push down prices is with regulation. But to do this on a global scale is also very difficult.

Card payments are expensive for multiple reasons, the biggest one is that it involves multiple trusted peers that will refund your money if anything goes wrong.

And to be fair, EU regulations have very successfully brought these fees to about half of the typical market-driven price we see in other parts of the world. I'm not saying they cannot be decreased even further, and the EPI was created specifically for that, but you cannot deny the situation in Europe isn't too bad.

Providing one-way, immutable money transfers is inherently cheap. Even SEPA transfers, which are reversible in some cases, are incredibly cheap. As you listed yourself, if you need to handle fraud with low transaction costs, that instantly discards permissionless blockchains; you're essentially going back to a centralized, federated network of trusted peers.

I Agree that the situation in Europe is not too bad. Still I can see a situation where some cryptocurrency pushes transaction prices down for regular payments (maybe without handling fraud, because it is a smaller problem with smaller transactions?).

But none of the cryptocurrencies are there yet, and maybe it will never happen.

If you need marginally free payments, the mobile payment systems that exist in several countries are already doing a pretty good job. We could imagine some EU regulation push to mandate inter-operability [1] and no/low cost to small businesses.

I don't think big businesses can just disregard the cost of fraud and other payment incidents. On the other hand, subsidizing small businesses makes sense: for good or bad, there's an increasingly anti-cash movement in some European countries.

[1] https://empsa.org

looks like cash has solved (most) of this some time ago:

- V. costs nothing to exchange a bill

- V. link to a real economy so little volatility (except when the real economy implodes)

- V. accepted everywhere within a currency zone

- V. mostly secure (ofcourse theft is as old as humanity)

- V. private (only your counterparty knows about it)

- V. fully integrated into financial accounts / tax systems

- X. fast (local) transactions but remote remittances outside a currency zone a serious problem (expensive, slow)

- V. counterfeit tech very sophisticated

- V. you can print as much as you want

The major flaw of cash is actually linked more to the international system of currencies (which underlies many more socioeconomic problems)

Yes and of course regular online payments such as visa or ideal (cheap payments in the Netherlands) also solve that. Global payments and handling taxes could still be cheaper and easier though. I see crypto having a small chance of succeeding in doing this. This small chance of succeeding is a reason for me not to invest in it right now, but I don't think it is impossible.

Its very strange that a country like Kazakh can influence the value of bitcoin, just by its power supplies. https://cointelegraph.com/news/kazakh-government-resigns-shu...

With the possible exception of "privacy", that use case is already solved by bank transfers all over the world - in particular, check out India's UPI:

https://bam.kalzumeus.com/archive/bank-transfers-as-a-paymen...

Interesting blog! Bank transfers using the same bank are free here. Even the most used payment method used here in the Netherlands is pretty cheap (Ideal). But the question is if this can be scaled to a global scale. A lot of parties have to come to an agreement for that to happen.

It can also come in the form of something like paypal. Paypal could reduce their rates to almost zero. If everybody then uses paypal we achieved our goal. But for that to happen paypal needs to become a monopoly, and once it is it has no incentive for low prices.

Note: I meant privacy as in private for consumers. With bitcoin everybody can see all transactions. I (and most people) don't really care that the government can see your transactions for tax and anti-fraud purposes.

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