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Comment by BiteCode_dev | Hacker News Reader

I assume it has been debated again and again, but since I don't know the answer I'm going to ask:

We often complain people hold cryptocurrencies instead of using them as money. Isn't this change going to make this worse ?

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Ethereum isn't supposed to be money (though it can be), it's fuel you use for doing other things. Do people use less oil because it's deflationary and gets consumed when used? No, because it's useful now.

The most likely end game for Ethereum is being a replacement for all backend financial systems. Instead of having to hire teams of people to verify things or integrate various legacy systems together, everyone can build on one neutral platform and pay a little ETH as the fee for using it.

The most likely "end game" is not replacing all backend financial systems.

Banks would never switch to a system that makes all transactions publicly traceable, and they shouldn't.

The industry has investigated blockchains for many years, since distributed consensus for transactions is a problem they actually have. They might run their own private chains. But it won't be ETH.

They never said anything about Banks.

Conceptually, a service provider utilizing Ethereum could create or aggregate on-chain services and package them in a similar format to what a bank is today with very little overhead.

Conceptually, yes. In reality, no major bank would ever do it.

It is already happening. ANZ, one of Australia’s top 4 banks released a Stablecoin on Ethereum earlier this year.

https://www.afr.com/companies/financial-services/anz-the-fir...

Lots of companies released blockchains and coins. It's called FOMO, or "Metoo-ism". Interpreting this (or IBM's blockchain) as signs of a significant market shift is a triumph of hope over realism.

I heard exactly the same said about AWS in 2009, now almost every major bank uses it. Once something is shown to be more efficient those banks are going to have to adopt it or justify their inneficiency to their shareholders.

It won't be public and it won't be distributed - it would quickly revert to some form of centralized piece, hopefully one at each bank, but will probably end up with one huge central point. They will still call it blockchain to attract gen z to work there, but behind the scenes it will work just as badly as the current mess. It's in the bank's/banking industry's blood and regulations to centralize. Whatever gets thrown their way will get locked down and centralized. I can just imagine the huge audit systems that will spring up to audit the blockchain (where ideally you wouldn't need to audit it to begin with, just look at it cause all the same info is in front of all parties, unmodified). Nightmare fuel actually. Better just to start from scratch (new banks, new core banking software, different kinds of audits and regulations).

There is something called zk rollups on Ethereum, and some use zero knowledge to make transactions private.

Like Aztec Protocol, which is used by zk.money.

It’s also the same technology used by Tornado Cash, which was sanctioned recently.

Curious how many banks you've worked for. I've worked for a couple.

And they pride themselves on differentiating themselves in the market by offering specialised products and services.

Not sure why a bank would deliberately want to turn themselves into the equivalent of a reseller.

Do those banks use AWS now? Did they fight it with many justifications of why bare metal is better and cheaper and more efficient before finally realising it's holding them back? Because that's what happened in every company I worked in and that same thing is going to happen to every company working in finance.

In a capitalistic world efficiency comes before pride or your shareholders replace you.

The only problem with this analogy is that “cloud” was able to quickly produce numerous examples of material cost savings. You’re right insomuch as the banks were all over it as soon as the business case was proven. But there’s nothing comparable in the crypto space.

Who is using crypto to deliver mainstream financial products (banking, insurance, credit cards, loans, mortgages) at lower cost?

AWS came out in 2007 and most companies barely started exploring it until at least 5 years later. All of the same arguments I heard about AWS back then I hear about Ethereum right now (it's more expensive, bare metal is more flexible, we have to recode things in the AWS way) but people have selective memories and think things that are obvious now were always obvious.

Most banks in Australia are working on crypto related products, Visa is too. Eventually once a few have a network together, especially internationally, the snowball accelerates because of Metcalfs law and soon it's more costly to not integrate.

The way I think of it is "if we had everything running on crypto rails, would companies want to switch back to what they have now" and the answer is obviously no, so it's just a matter of time until it happens.

It’s really non-obvious to me that there is any advantage of crypto that makes its use inevitable in financial products. Those Australian banks - are they crypto-related products in the sense that they appeal to crypto people (maybe a way to buy or trade crypto?), or are they actually more efficient versions of mainstream products? The idea that banks will inevitably adopt crypto because their crypto-using competitors will be more cost-efficient seems implausible to me. I just don’t see the mechanism for crypto being a cheaper way of doing things.

Wait, so this cryptocurrency was never supposed to be... ...a currency?

In this case, the crypto-not-currency community really needs to work on branding.

The merge won’t affect gas fees, which makes Eth unsuitable for small purchases when the network is busy. Apparently Eth will do other work in future to fix that though.

not just work in the future, work is being done right now! https://www.eip4844.com/

Stablecoins are mostly what people use for payments. ETH is what's staked on the beacon chain.

I never use stable coins for payment, and I don't know anybody who does despite being in crypto since btc was at $8. I do pay stuff in BTc and get paid in BTC once in a while and see people in my bubble do the same. We use stable coins to limit taxe exposure, mainly.

It's true eth has never been a mean of exchange for any of us and more a platform for smart contract (my friends at kryll.io use it for that).

The majority who trade crypto use stablecoins for payment all the time. It's the default on most exchanges, and for a lot of the biggest pairs on DEXs.

You are talking about trading, I am talking about anything but trading.

If you are talking about payments of non-crypto products, I was exploring the hiring for small jobs subs on reddit yesterday and the two main accepted means of payment I saw seemed to be PayPal and stablecoins.

ETH as cryptocurrency mainnet still has the same high gas fee when it was PoW. Some layer 2 solutions will have the utility to use their token as cryptocurrency because low gas fees.

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