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Comment by bzxcvbn | Hacker News Reader

If I wanted to own something that I could always redeem for $1, I would buy $1.

Similarly, if I wanted to pay someone a $1, I would give them a $1. Except I am trying to send some cash to my retired mother in Belarus for a month and a half. She is not under any sanctions, her bank is not sanctioned. Yet wire transfer stuck in some Fed's system (for the second time, first time i sent it, it was just returned 3 weeks later without explanation, and only now I know the real reason.)

Traditional money transferring companies all exited Belarus (PayPal, Western Union, etc.) Now we exploring ability to send some kind of crypto, either bitcoin or stablecoin, in Belarus as a last ditch effort to send over some $1s...

Stay safe

This was one of the original use cases of Crypto!

Have you looked at the Stellar Project? They've got a lot of remittance systems running on it that may suit you. Algorand is also a low-cost alternative, if you're looking to frequently send small amounts (assuming your mother has access to a fiat off-ramp like Binance).

Unfortunately, most (all?) international transfers are no-go for her. So we are looking for someone inside Belarus who can do a cash transaction or local bank transfer instead.

Sorry to hear, best of luck

There are plenty of times when I don't want to use FEDwire, SWIFT, VISA, you name it. Its all dollar centric.

I have plenty of clients that only want to use SEPA (europe and some european country colonies), because they're familiar with it and for some specifically because its not dollar centric. People fear the US will try to establish jurisdiction over them or inconvenience their ability to transact now or in the future, whether that is unfounded or not. (They're not legal experts, they just have chain letters forwarded around whatsapp)

I'm sure you only want to use things that are familiar as well and would scoff at any client trying to do commerce in a system that isn't common to you.

WISE (Transferwise) has extremely arbitrary limits, holdups, freezes, opaque issues, and a ridiculous terms of service if you've ever looked. Revolut is the same way.

Western Union is expensive, and cumbersome.

Paypal is a worse version of WISE, and is known for its international issues and patch work of countries it services. Let alone arbitrary freezes.

Crypto is fast, exposure to any crypto is as short or as long as you want (worth saying because its a common imagined issue people have with using crypto because they think it'll change value alot over the time period they need it. its a very simple understanding). And people can convert it to something more liquid in their local economy with their local offramps. For many years I've basically used crypto to circumvent using international wires, the same transaction becoming a domestic wire and therefore less room for error and less arbitrary scrutiny. There are probably zero statistics on this. Client overseas pays me, I wire to USD domestically same day.

Not always an option, depending on where you live.

Or if you need to evade taxes and other tyrannical measures. Yes, being sarcastic.

It's always an option if you have a meaningful amount of money.

you also need a bag and a plane/bus/etc ticket to give that heap of dollars to a desired seller. X bank dollar is not the same as USD, you can be locked out of your money quote easily. Plus all the other regular points if you want to buy or sell some crypto

I keep hearing this narrative

> you can be locked out of your money quote easily.

But I am curious, do you have examples that show that this is really the corner case I should be worried about?

Google examples, there are a lot of very much different cases, sometimes wild ones. As example, whole country of Russia was locked out of all non-RUB assets in their banks (at this moment restrictions are partially lifted), in Belarus you need 10+ work days to take at most 10K USD and 3K EUR out of bank per month.

In bith cases we talk about international sanctions. So you are saying that one of crypto's advantages is, basically, illegal finance. Nice.

> international sanctions

Not really, in these cases banks themselves decided to not give away "their" money

That is indeed one of the main "innovations" of cryptocurrencies: the circumvention of rules and regulations. (Reminds me of Uber.)

The problem is, when discussing international sanctions, that most of the finance is probably illegal. The US bans, say, economic activity in Iran. Iran bans economic activity in the US. Now all the finance in both economies is illegal.

Something being illegal doesn't really say what can and cannot be done. Or what is a good idea. Or what is moral. It is a vague signpost and really only matters as far as things can be enforced.

Yes: https://www.yahoo.com/news/canada-says-freeze-bank-accounts-...

Canada would essentially lock down financial system access for members of an unpopular demonstration.

Sanctions are literally "your money no longer exists". Or it does, but we refuse to allow you to transact with it. Financial access is a hugely powerful diplomatic/political tool.

Certainly you can find cases of government overreach if you look hard enough but they aren't common. The USD is backed by faith in the US Government, and it would be financial suicide for the wealthy to destroy that faith by just randomly locking people out of their bank accounts.

Meanwhile people get "locked out" or just lose their crypto far more regularly. Lost passwords, crashed drives, hacked online wallets, rug pulls, crashing values, fake "pegs", misplaced decimals during transactions, etc. 20% if bitcoin is forever inaccessible, and that percent will only go up, never down.

The "you can be locked out of your fiat" cohort are the climate deniers of the financial world "If the earth is warming why was there a record low temperature somewhere yesterday?". "Your fiat isn't safe - just look how those donations to the truckers in Canada were reversed!"

https://en.wikipedia.org/wiki/Convertibility_plan#Abandonmen...

Entire countries have had access to a currency completely pulled. Not just the US wants to use USD.

Plenty of people can lose access to their money, not just alleged domestic terrorists (and isn't alleged is a scary word?).

I'm certainly no expert on Argentina, but I'm talking about dollars backed by the US government, not pesos that the Argentine government was pretending were worth a dollar. I'm sure even when the hard peg was in effect it would have been impossible to actually convert the bulk of the pesos to dollars - I'm sure no foreign bank would cooperate. This was no different than some crypto coin pretending to be worth a dollar.

In Argentina and Uruguay, all the time, not a corner case.

"Corralito" is unfortunately a common use word.

https://en.wikipedia.org/wiki/Corralito

Or you can back your "stablecoin" with dollars. For each coin issued put a dollar in a vault. There is no other asset on earth pegged to the dollar, so it is impossible to back it with anything other than dollars.

Unfortunately, dollars aren't digitally native, or easily transportable. It requires gatekeepers to give permission, which often isn't processed in real time.

If you don't want gatekeepers I've got some bad news for you about stablecoins.

Nobody is gatekeeped from buying Dai, what bad news do you have?

For now, until they decide to "pause" the blockchain like Terra. Stablecoins are centralized and your ability to use them is entirely dependent on the central authority letting you.

> "pause" the blockchain

Good luck stopping Ethereum

> Stablecoins are centralized

Only some, like USDT, USDC.

Just google what DAI is and how it managed.

Can Ethereum Classic be stopped?

Neither can be stopped unless you control the miners, what do you mean?

It can be effectively stopped as long as you control 51% of its hashrate. Then you can just keep appending empty blocks to your longest chain...

Fine, there's one that's a DAO instead of a central authority, it's hard to keep track of all the different flavor of crypto scams. This one will collapse when a bug is found and someone gains full control instead.

you can't halt Ethereum, the only central authority is the dao

It's backed by volatile assets that can be wiped out in a flash crash and we all saw how well volatile asset backed securities work in 2008.

> volatile assets

It's backed by a multi-collateral set of assets. If they drop below the vault threshold for over-collateralization, they will be automatically auctioned off.

Auctioning causes price movement which can cascade. If markets were straightforward, economics would not be "tge Dismal Science".

Which is why the auctions are triggered while eth still has considerable room to fall and also why Dai is multi-collateralized.

What process is in place to guarantee (!) that the price of the collateral does not gap down below the value required to secure the peg? You realise that a stop loss order sell order triggered when an asset hits 100, say, turns into a market order and might be executed at basically any value.

There is no guarantee. We are talking about auctions so your discussion of different types of orders is irrelevant.

if it dips below $1.45 in collateral for $1, the auctions will be triggered and Dai collateral will shift to USDC & RWA. If the price slips 50% before the auction bots can bid (it is close to instantaneous, so it would have to be an extremely fast crash of more than 50% - which I'm not sure we've ever seen in eth/btc), then you are shit out of luck. This is a risk.

But it's not as big of a risk as the stupid reasons these other stablecoins have been failing.

Glad you see it: there is a risk.

Note that to go from 1.45 to 1 is a drop of 31%.

Dai is at 166% collateralization, so closer to 40%

From the article:

> Deus Finance reacted by halting the redemption process in order to try and stabilize the coin.

good thing smart contract can be checked before buying any amount of that coin. Also, DAI exists, which don't have such downside

So, UST was halted, DEI was halted, but DAI won't/can't be halted? Good to know.

UST, USDT/USDC, DAI all use widely different methodology to keep themselves stable

DAI highly depends on USDC, ETH and BTC. If there is a bank run on DAI, they have to sell their collateral which leads to price drop in BTC/ETH which will make the situation worse. USDC, their other collateral, is controlled by a US company and therefore to some extend by the US government.

>which often isn't processed in real time

Crypto transactions aren't processed in real time. Most networks can only handle, what, less than 10 transactions per second? Even when you start adding additional layers there is only so much you can do.

Realtime transactions with traditional currencies are a solved problem. The UK has had this for years in their banking system, the US will have it by the end of 2023 (FedNOW network).

If you wanted to trade some other crypto for USD without incurring taxation issues, you could get a "pegged" stablecoin and hold that without incurring any taxation since you haven't redeemed anything for money, and maybe trade it for other coins later on if you so chose.

There's function in the stablecoins in terms of crypto trading, but of course there's risk that your always pegged stablecoin isn't.

Sometimes you don't want to have large quantities in cash. So you store it in a bank. But sometimes you want it outside of the (possibly corrupted) legal system, or want to take money outside of the (corrupted) country. In that case, a stable cryptocurrency seems to do fine.

It's truly online without any government being able to confiscate it (if you play it smart).

It all depends on the use-case.

But what if you're trying to avoid tax?

The coin will compensate you by removing your wealth so you avoid tax by not having any.

Anyway: You will lose either by the tax agencies finding out (when you actually try to buy stuff) or this way.

Bonus if you do both

Cash

USDC

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