Comment by acdha | Hacker News Reader

Comment by acdha | Hacker News Reader

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> A user can purchase $1000 of DAI and send this to another person in the world within 30-60 seconds, without the beneficiary needing to set up a USD bank account or disclose private data to a third party.

Your “refutation” is leaving out some key details:

1. You do in fact have to deal with legal requirements - it’s a requirement for converting into useful money and tax evasion has serious consequences in most of the world.

2. Replacing Western Union has some appeals but it’s not enough to justify the returns which blockchain salespeople have been claiming, especially when the established player can cut margins easily and blockchain users need a fairly large just to compensate for currency conversion and increased risk.

The Ponzi claims aren’t because someone is claiming that they can beat PayPal’s overhead by 2% — it’s from all of the people claiming double or triple digit returns which are obviously unsustainable, and hand waving questions away claiming that you should just buy now before the price goes up.

> And when you own stock, you cannot do much except hodl and sell

My dividend income suggests you might be leaving something out here too.

20% returns as you see in Terra is probably ponzi-like, but ETH protocol is not promising free yield for doing nothing, or doubling or tripling your investments.

> You do in fact have to deal with legal requirements - it’s a requirement for converting into useful money and tax evasion has serious consequences in most of the world.

I never said otherwise. Buyer can purchase the DAI on a KYC exchange that is regulated by their government. The beneficiary can report taxes on income and capital gains as they do with other assets.

> Replacing Western Union has some appeals but it’s not enough to justify the returns which blockchain salespeople have been claiming, especially when the established player can cut margins easily and blockchain users need a fairly large just to compensate for currency conversion and increased risk.

This is now a subjective argument about what you feel is better or more valuable. To some people, reducing commission for global transfers to 0%, with 30-60s finality and better privacy features is all desirable and valuable.

> My dividend income suggests you might be leaving something out here too.

Not very compelling when you compare dividend income over the last 5 or 10 year period between crypto and stocks. The point is that just having an asset that generates yield based on speculative investments is not that useful, and it’s the sort of zero-sum game that everybody is mocking Terra and crypto for.

> 20% returns as you see in Terra is probably ponzi-like, but ETH protocol is not promising free yield for doing nothing, or doubling or tripling your investments.

The protocol isn't promising anything. The people promoting it are, however.

> > You do in fact have to deal with legal requirements - it’s a requirement for converting into useful money and tax evasion has serious consequences in most of the world.

> I never said otherwise. Buyer can purchase the DAI on a KYC exchange that is regulated by their government. The beneficiary can report taxes on income and capital gains as they do with other assets.

Here's what you said: “without the beneficiary needing to set up a USD bank account or disclose private data to a third party.” How is that true if you're not breaking KYC?

> > Replacing Western Union has some appeals but it’s not enough to justify the returns which blockchain salespeople have been claiming, especially when the established player can cut margins easily and blockchain users need a fairly large just to compensate for currency conversion and increased risk.

> This is now a subjective argument about what you feel is better or more valuable. To some people, reducing commission for global transfers to 0%, with 30-60s finality and better privacy features is all desirable and valuable.

It's an economic fact, not a subjective argument. If you're just cutting out a middleman, you're not going to be able to make a greater return than the middleman is currently taking. You could argue that this will unlock some kind of previous unviable economic activity which will dramatically increase volume, but that's a separate argument and needs some data supporting the idea that it's probable at a level which would provide the promised returns.

> reducing commission for global transfers to 0%,

You surely meant 0% plus the transaction and currency conversion fees on both ends, right?

> The protocol isn't promising anything. The people promoting it are, however.

Anchor's whitepaper and protocol promises ridiculous yield on USD pegged assets, and it is the basis for the entire Terra/Luna crash.[1] Nobody designing the ETH protocol is claiming that it provides USD pegged yield or will double or triple your investment. The closest thing written into the protocol is a return on the native ETH token for block producers - miners or stakers - receiving block rewards from the protocol and tips from user transactions.

Ignore the laser eye Michael Saylor's of the world who make ridiculous claims about these protocols that are unsubstantiated - try to look at the protocol design and spec.

> Here's what you said: “without the beneficiary needing to set up a USD bank account or disclose private data to a third party.” How is that true if you're not breaking KYC?

The sender sets up an account, the receiver only needs a 24 word seed phrase to receive the tokens. Maybe the receiver will need to declare this as a gift or income depending on context and their country's tax laws, sharing details with their government, but they are not having to share details to PayPal or another private company that would typically facilitate an international transaction like this.

> You surely meant 0% plus the transaction and currency conversion fees on both ends, right?

Depending on the use case, there may not be a fiat exchange. Another user might be happy to receive 1000 DAI, in which case there is no centralized exchange needed.

The transaction fees can be minimal through L2 - in cents - and are different than commissions and take-rates of processors like Western Union or PayPal. In ETH, most of the fee is burned, reducing total supply and providing value to the entire network. Another part of the fee is a tip to the block producers, which in a permissionless system can be any entity with enough capital at stake. Finally the fee is a fixed amount, not a percentage of total value being sent. Transaction fees are not perfect - a fee-free permissionless network is not possible - but some will find it preferable and more fairly distributed worldwide compared to how private payment processors currently extract rent.

[1] https://www.anchorprotocol.com/docs/anchor-v1.1.pdf

You keep missing important points of ops argument. maybe on purpose?

e.g. You claimed receivers would not need to 'disclose private data to a third party' but as op pointed out the receiver cannot get the DAI into the normal financial system without KYC.

Only if they need to exchange to fiat, as I said previously.

> Depending on the use case, there may not be a fiat exchange. Another user might be happy to receive 1000 DAI, in which case there is no centralized exchange needed.

It’s true though, if you want to use the traditional financial system you are basically stuck uploading your photo ID to a private company’s website and hoping they won’t leak it. In many cases users are forced into this - paying taxes. We can only hope this won’t always be the case.

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