Users seamlessly buy crypto with USD and spend it.
Merchants seamlessly convert crypto back to USD and cash it out.
So what is the point of crypto again other than giving Stripe (and similar centralized providers) a needless cut?
Merchants seamlessly convert crypto back to USD and cash it out.
So what is the point of crypto again other than giving Stripe (and similar centralized providers) a needless cut?
https://reclaimthenet.org/dick-masterson-new-project-2-maste...
This is a potential way around these behaviors. but I assume it will eventually be blocked by visa and MasterCard simply by threatening to blacklist stripe as a payment processor.
let's say a verboten but legal business embeds this widget on their website. a user then uses their visa credit card to exchange for cryptocurrency and make a purchase. I believe Visa would argue that stripe is laundering money through cryptocurrencies to get around high risk payment processing.
Visa could demand all cryptocurrency addresses associated with stripes embedded widget and compare that against known blacklisted destination addresses. It would do so under the guise of preventing terrorism, child exploitation, and money laundering.
stripe is huge so rather than immediately cutting them off as is what happened to new project 2, I believe they would give stripe an ultimatum of sorts to remove the functionality, or demand stripe prevent transactions to any of the vague/subjective categories of businesses deemed high risk.
The latter would likely be impossible because a high risk business could generate a new address easily which would only later be blacklisted and associated with the business landing stripe in breach of the agreement.
> It would do so under the guise of preventing terrorism, child exploitation, and money laundering.
It doesn't really care about these things all that much.
I don't think this would realistically happen. But I doubt visa would be pleased about being a crypto on ramp.
Most "high risk" credit card businesses (read: porn) are high risk due to charge-backs. Something Something about telling your wife you didn't actually pay for that...
If you use crypto to buy porn... no chargebacks to the business, so the business isn't risky.
The big risk becomes stolen credit cards, where StolenCC->Crypto becomes a perfect avenue to steal from Stripe/CC Company. You move the crypto, then let the CC owner charge-back stripe or the CC company for the funds. The thief gets to keep the crypto, the victim gets their money back, but the big corps have to eat the cost.
That last bit (who loses) is why this project might die. Visa isn't really focusing on catching terrorism or whatever, they're trying to avoid chargebacks due to fraudulent behavior.
You may not like the logic, but the reason it was so easy for V and MA to cut porn is because the insane amount of porn chargebacks ("yeah I didn't make that purchase, it's fraud").
Crypto is just a wasteful overcomplicated bad solution that's worse than wire transfers, so I agree, let's work on visa-like payments on different rails with no fraud protections (so that way consumers can choose when they pay for that protection, rather than you and me subsidizing people who regret buying porn).
I've done many wire transfers and many crypto transfers and the one consistent thing I've found is the crypto transfers are both cheaper and faster. If I could do crypto transfers with old school stable currency (not some cheesy stablecoin hoodwinker in the Bahamas) it'd be the holy grail.
Don't fall into the trap of "current centralized system has problems, current decentralized system is different (in your opinion better), therefore decentralized is better"
Centralized payments will always be faster/cheaper than decentralized, just from a first-principles architecture standpoint, so we should be working on making those better (cynically, we are, they just get less attention because retail investors can't speculate on those technologies as easily)
If you simply refuse to acknowledge that crypto might be cheaper and/or faster than available traditional finance options for some particular transactions, not in the theoretical but in the real-word options present, then I simply yield that you must live in an alternate reality than many people. One thing I really hate is losing money and losing time, and the very narrow circumstances where I have used crypto to buy goods (legal goods) I sure as hell wasn't going through the pain in the ass of dealing with crypto for ideological reasons.
Where did I call anything better?
>If you simply refuse to acknowledge that crypto might be cheaper and/or faster than available traditional finance options for some particular transactions, not in the theoretical but in the real-word options present, then I simply yield that you must live in an alternate reality than many people.
Uhh, ok what transactions are currently cheaper using crypto? Don't you dare say Forex because you're wrong if you do.
Then what are the ones you think could be cheaper and why?
> ... You can argue that they need to be made faster (I agree)
Luckily that's already well under way. We should have RTP and FedNow next year.
> ...rather than you and me subsidizing people who regret buying porn
Good news! We're not, and at least in recent history we never were! :) Merchant acquirers charge high-risk merchants significantly more to cover chargeback risk. That risk isn't meaningfully transferred to your Costco run. While a Costco may pay 1-2% in interchange, your average adult video business may pay 10-12%. Sometimes more.
So a few things.
1) A credit card is a consumer loan and by nature, there's plenty of limits on the things you can buy with loans (both crypto and fiat), so you're at a dead end there (and if it weren't Visa, it would be the bank extending you the loan that would ban the porn payment).
2) Given that, you probably are referring to debit cards in this case. Ok that's more of a dumb utility so let's run with it. What Visa does for debit (I implore you to learn more about this!) is serve as a messenger intermediary between your checking account and the merchant's account (plus they make sure the issuer gets their cut of fees, more on that later). Ultimately, they help the banks settle their accounts via inter-bank accounts. Banks themselves can/should do this! The government should force them to do this! But that's then just faster wire transfers (look at Europe).
I mean I'm very happy to be wrong here, but you need to explain to me why Visa needs to be involved for a fraud-protection-free bank-to-bank transfer when everywhere else in the world just has that via wire transfers (which is just a fancy name for settling payments via inter-bank accounts)
>Luckily that's already well under way. We should have RTP and FedNow next year.
Yeah.
>Good news! We're not, and at least in recent history we never were! :) Merchant acquirers charge high-risk merchants significantly more to cover chargeback risk. That risk isn't meaningfully transferred to your Costco run. While a Costco may pay 1-2% in interchange, your average adult video business may pay 10-12%. Sometimes more.
Ok again so a few things.
1) You are citing the entire take rate on transactions but you're calling it the wrong thing. Interchange is the fee that's paid to the issuing bank; in the US this is, on average, 70% of the fee-rate you're citing (it is a rate set by Visa, but it is passed directly through to the issuing bank). Merchant Discount is the fee that the merchant acquirers get; in the US this is, on average, 15% of the fee-rate you're citing (but as you rightly point out, it can be anything since its a contract between a bank and a business for service). Network fees are the fees that Visa collects; in the US this is, on average, 15% of the fee-rate you're citing (Visa makes $30bn of revenue $10tn of transactions processed). Since it is acquirers who can choose to set their merchant discount at whatever they want, it is again a banking issue not a Visa issue (Visa doesn't even see the merchant discount)
2) Now that we understand who charges what to whom, you'll see that in fact, Visa does not charge a different rate for porn [1], they instead collect a pretty small fee on all transactions to support infrastructure that disproportionally serves porn users who regret buying porn. Sure sounds like a subsidy to me!
So yeah anyway, faster wires.
[1] https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...
I’m very clear that faster wires is not what I want, and neither is debit, although that’s fine too.
I want equal access for all merchants to VisaNet and its peers. Not because debit or faster wires wouldn’t meet needs but because they are not how people are choosing to pay. I’m being pragmatic.
To be clear I agree with basically everything else you’ve said in this thread.
Ok.
>neither is debit, although that’s fine too. I want equal access for all merchants to VisaNet and its peers.
This is such an odd thing for a payment professional to say. Are you under the impression that debit transactions don't run on Visanet?
>not because they are not how people are choosing to pay. I’m being pragmatic.
Again I implore you to look to Europe/Asia, where there are plenty of non-network cards that work just fine for essentially free domestic payments (and would you like to guess how those transactions are settled? You must know...) [1]
I think you're misunderstanding me. That's not what I was saying at all.
My argument is that payment networks, issuers and acquirers should not decide unilaterally what kinds of lawful merchants, customers and transactions they permit. I'm talking about various merchant acquirers not permitting lawful gun or drug sales, networks going after OnlyFans in 2021, and PayPal shutting down WikiLeaks' account back in 2010. [1,2]
I don't necessarily agree with what these people or businesses are doing personally but it is not my decision to make nor should it be that of any other private entity. If they are lawful, they should be permitted. If they aren't then the business owners/operators should be prosecuted - or at minimum there should be a legal proceeding that can be appealed by the target party when payments processing is suspended.
Somehow we hold domain name registrars to a higher standard than the aggregate of payments entities in this regard.
> Again I implore you to look to Europe/Asia, where there are plenty of non-network cards that work just fine for essentially free domestic payments (and would you like to guess how those transactions are settled?
That's not really the point.
My point is that these aggregated payments entities are the infrastructure of the modern economy. Giving a few private entity gatekeepers the ability to extrajudicially decide what is and is not permitted in the modern economy - without appeal or recourse - is undemocratic, and it's wrong.
While different options exist in different places, one should not be forced to seek them out to participate in the lawful economy. It's simply too important.
I am advocating for a modern, digital equivalent of '[valid] for all debts public and private.' We have granted these aggregate systems a de facto duopoly on commerce in the United States. They are quickly becoming or already are essential and so it's time we treat them from a legal and regulatory perspective more like what they are.
How long would Amazon last if they were cut off? Why do we give two private entities the ability to decide if Amazon can continue to exist?
[1] https://www.protocol.com/policy/onlyfans-visa-mastercard
[2] https://www.theguardian.com/media/2010/dec/04/paypal-shuts-d...
You may not like the logic, but the reason it was so easy for V and MA to cut porn is because the insane amount of porn chargebacks ("yeah I didn't make that purchase, it's fraud").
A system without fraud protections (i.e. wires) is a much more efficient solution than a farm full of GPUs in Austin.
The assumption here of efficiency by any metric is the wrong thinking for crypto. Energy/speed are being optimized for, but they are not the goals.
Wires don't have composability. Blockchains do.
https://ethereum.org/en/developers/docs/smart-contracts/comp...
The way you get around the utterly stupid rules set by them is not through more technology layers. It involves a bit more physical violence at MasterCard HQ, as it always happened when unjust rules were made.
Access to BUSD, USDC, (shudder) USDT, DAI, CUSD for folks across the globe is a good enough reason [0] (right now, the Stripe on-ramp is US-only, but that needn't be the case)? Stripe did bootstrap an alt global payments network in Stellar.org, but that hasn't worked as expected, it'd seem? Stripe is wise to participate in the stable-coin business, which is a way better bet.
MobileCoin, which is embed in every Signal installation, also has Stellar-like features but it isn't mainstream, just yet. Meta's Diem / Libre had similar grandoise visions for an alt payments network given its very global, commerce-hungry Instagram and WhatsApp userbases, but for some reason, they never got the legal side of things over the line.
So I don't think wire is necessarily a perfect substitute. There are different ways to get fucked and you have to decide which risk looks most palatable for each individual transaction. It's sort of a pick between a traditional finance system set up to fuck the little guy or the crypto landscape which is a fraud fest wild-west of living at your own peril.
I've done that a number of times this year, UK->Australia, in the six figure range. It went great, fees were low (in the range of 0.3%) and the transfers were usually complete in an hour or so. All of this was regulated and insured at every stage in both countries.
All of this is interesting, but the system also needs an easy way to get "into" and "out of" the system for those that don't want to hold crypto (or for those that are just coming to the game without any crypto). Instead of forcing them through a shady CEX like FTX, they can just buy tokens through this Stripe embed.
and unfortunately, we still have to rely on a company who can choose to deny you business for any reason they want (perhaps stripe doesn't like the addresses you are sending crypto to, for example).
This could be an actual use case for central bank digital currencies though I expect the result will be more fine-grained control and micromanagement rather than less.
1) Stripe builds out the current functionality as a beta for accepting crypto payments.
2) Stripe lowers fees and expands the merchant base.
3) Stripe begins offering stable-coins on credit. Stripe is now Visa, but with way lower fees.
Outside of the USA, credit card fees are low and capped. Outside of the USA, bank transfers are free and more or less instant.
All of these apparent drivers of cryptocurrency adoption are regulatory and marketplace failures inside America.
SEPA is fixed rate. Everything else is a percentage. Also, you don’t get any purchase protection from bank transfers, but of course the protection is paid for via fees.
On the other hand, it would be immediately visible why a cryptocurrency with both low volatility and no inflation would be very popular and you wouldn't even need to shill it to a greater fool.
[0] https://support.link.co/questions/where-can-i-purchase-crypt...
Only the on-ramp side needs to be in the US. The off-ramp user can just use their exchange.
Sorry "experiencing a temporary liquidity problem in the wake of FTX"? Or "suspending withdrawals temporarily"?
Even in the good times there's been no shortage of horror stories about exchanges not honouring withdrawals and ghosting customers, but now the exchange might not even be there next week. Your deposit might be considered part of bankruptcy proceedings and get rolled into general creditor compensation as part of a multi-year wind-up...
Personally, I think the risk is low enough for them to hold onto my assets for a few days/minutes (depending on method/direction) while transfers are completed.
People said the same about Quadriga, and FTX.
Therefore, this having a KYC probably narrows its use cases quite a bit. You won't be able to sell drugs, you won't be be able to collect ransomware payments.
It work only in the US, which means its not good for international payments. Unbanked people either don't have money or keep their funds outside of the governments reach for tax or legal reasons, therefore not good for them too.
What you can do? Maybe if you are so much and crypto and what to do transactions in crypto as an ideological performance, then this could be for you.
This is patently untrue. When I buy something with cryptocurrency, its not because I don't trust the merchant or am doing something illegal, its because I care about my privacy and dont want a huge list of my financial transactions available to visa/mastercard/paypal/the government, and I don't want to schlep to the gas station to buy a prepaid debit card with cash, which is the only other way to maintain a semblance of financial privacy if you want to buy things online.
Privacy is a lot like other civil liberties, it feels ideological and airy-fairy until you need it and don't have it.
Take for example web hosting. I could have paid for the website that we used to lambast the Minneapolis police department and argue that they should not have access to the toys they want using a credit card, but then the Minneapolis police could send a sternly worded letter to the webhost and learn where I live. Which is a reasonable consern if you know anything at all about the Minneapois police department. So I pay for webshosting with cryptocurrency.
That's a real clear cut example of why financial privacy matters, but that same concern extends to pretty much every thing you do online. Cardinal Richelieu has the right of it when he said "If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him", and recall that The US government kills people based on metadata. Its easy to dismiss me buying a box of candy as not important enough to worry about, but its the entire history of every financial transaction you make that paints a very accurate and very useful picture of who you are what you get up to that is of great interest to people who can do you real harm.
for physical products… it looks like Newegg still supports Bitcoin. overwhelmingly, the more tech-adjacent the product, the easier it is to find vendors that accept cryptocurrency.
If you invest in gold, you won't be able to even gamble with it. In fact, you won't even have any gold at all. You'll have a certificate from someone claiming that someone else has your gold stashed somewhere.
You trust random people on the street?
This comment falls apart because your premise here is wrong. All trading parties (and the individuals that make them up) do NOT trust each other without shared history.
Crypto as a base layer recognizes this - the base layer is supposed to be trustless with game theoretic rules to keep the system functional and secure.
Layers on top of crypto can have all the rules and functionality you desire. That includes KYC, that includes reversing transactions, that includes wallet recovery through social multi sig mechanisms.
All the time, no transaction is possible without trust. The crypto enables one sided trust, i.e. the payee doesn't have to trust anyone but the payer needs to trust that will receive whatever is promised.
You pay your ransom with hope that the attackers will unlock your files, the attacker doesn't have to hope.
When you build traditional system over crypto, you don't use crypto. Like exchanges basically being unregulated banks that might just disappear with your money. Your money is now gone because you wasn't using crypto, you were using an illegal service and you were paying with crypto and that's what crypto is good for.
I'm no crypto fan but this is a strange question. Yes, generally people trust each other on the street. If I were walking and someone dropped something, I would (at least attempt to) hand it back to them. Same as if I visit a new store, I generally trust the cashier or storeowner not to take my money and run.
Really? When you're paying at the supermarket, you have no trust that the cashier won't just run away with your cash? When you pay someone in the market, you don't trust that they will give you your bags after counting the cash?
I've seen this with lots of crypto enthusiasts, where they seem to live in a parallel dimension where people only comply with basic social norms under fear of loss or violence. The reality is of course the opposite: most people trust random merchants (especially in person) not to screw them over much more than they trust the police to get their money back if they are screwed over.
Unless you are thinking about a hypothetical future where you can directly use cryptocurrencies to pay your rent and buy your groceries.
Yes but they don't apply to using crypto for cross border payments, which is what the poster was referring to.
It is costly...(expensive)
It is not for micro-transactions...
You can get kicked out like Russia... (So, as a government, you cannot rely on it)
As a government, you don't have a right to vote in decision making or government in SWIFT system. (not inclusive)
To change it, at least one competing system is required to put the pressure the current system. It will not change from the inside.
- they establish local accounts everywhere
- a transfer is you send money locally to their account, and then they send money from another local account to your destination
- they take some (small) mark-up over the actual rates
- they aggregate the many smallish transactions to exchange with optimal rates and fees for themselves, and probably do a bunch of stuff around mitigating risk of having too much float in a particular currency
It's a model that impressed me when I used it, relatively simple conceptually but solved a big pain point. Not sure that crypto adds much other than offloading risk (of exchange rate fluctuations) onto the person doing the transfer - I quite like that wise essentially bears that risk
So yes, it does indeed fix it.
Voting that you can trust
Governance and managing Roles publicly
Currencies with own monetary policy
Contests and fair judging
Fundraising
Escrow
Voting is already trustworthy in most countries and organisations.
Governance has been a thing for literally millennia without crypto.
Currencies... I mean sheesh, do I need to list every real-world, huge-scale, widely used example of how all of this is already happening and has been since like the dawn of history!?
They said exactly this about the Internet… why do you need it? See all the well established solutions at the time: