Comment by AnthonyMouse | Hacker News Reader

Comment by AnthonyMouse | Hacker News Reader

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> But it hasn't solved the issue of having the vast majority of merchants accepting crypto, the issue of crypto price volatility (or associated risk of stable coins), or the friction/unreliability of turning cash into crypto.

The price volatility seems like a red herring. If you're using it as a currency then you're not holding it for significant periods of time and the entire point is to make it an automated process, so you're buying some cryptocurrency for cash and then immediately spending it. How much volatility do you really expect in the timespan of a fraction of a second?

Meanwhile the conversion shouldn't be a hard problem. You have a service that allows you to buy cryptocurrency with a credit card or bank transfer and then an app that uses that service to buy cryptocurrency and transfer it to a merchant that accepts cryptocurrency, and then any merchants being unfairly targeted by the payment networks can do that. And the cash to cryptocurrency service can be operated by a different party than the app so the former can't be assaulted for having the wrong customers and the later isn't directly interacting with the payment networks.

I suspect the real problem is this: The chargeback process for credit cards isn't compatible with anything where the merchant is delivering fungible goods to the customer that they can't feasibly recover if the customer was using a stolen card or issues a fraudulent chargeback, and cryptocurrency is one such thing. So then the service that allows you to buy cryptocurrency with a a credit card gets screwed, because customers issue a chargeback to them or use stolen cards on their service even though they actually provided the cryptocurrency as promised.

Which is a huge existing problem with the payments system. The payment networks dump the cost of fraud onto innocent merchants and then lose the incentive actually prevent it even though they're the only ones in a position to do it, e.g. by issuing chip cards that could be read by any ordinary PC/phone via open standards and therefore enable "card present" transactions to happen over the internet.

And then if you expect cryptocurrency to solve that problem, it can't do that on the side of the transaction where the cryptocurrency is the thing you're buying.

> The price volatility seems like a red herring. If you're using it as a currency then you're not holding it for significant periods of time and the entire point is to make it an automated process, so you're buying some cryptocurrency for cash and then immediately spending it. How much volatility do you really expect in the timespan of a fraction of a second?

Maybe I don't understand how people use bitcoin but I wouldn't call your description that of a currency but more like a payment processor.

I want a currency, e.g. USD to be stable enough that I can comparison shop in it, quote prices to customers in it, and hold some as "cash or cash equivalents" on my balance sheet without undue risk from price fluctuation.

USD achieves this, BTC doesn't, which is assume is why people are using the get-in-get-out model being mentioned here of only holding it for as short as possible.

You shouldn't be using any currency as a long-term store of value. Even if you want to be denominated in USD and minimize risk, the interest rate on cash in a mattress is zero and the interest rate on US treasuries is non-zero.

Meanwhile the historical purpose of holding cash as "spending money" (i.e. liquid assets) is from a time before computers could allow you to keep it as actual investments until the instant you do actually want to spend it.

As for using it for pricing, things are typically priced in USD because it's the world reserve currency, or in the dominant local currency in a given country. That doesn't mean that other currencies aren't currencies. Shops in many countries will often accept both local currency and USD even if prices are only listed in one of those, and so what? Anybody can look up the current exchange rate in real time on the internet. Why is it a problem to list prices in USD and then accept that amount of cryptocurrency (or Euros or Yen) at the current exchange rate?

Because if it worked better then we’d be doing it already. But no amount of cryptobro podcasts are going to fix the shortcomings of digital currencies. And everyone knows this.

My dollar will be worth a dollar tomorrow and will sit in my wallet. My crypto currency is worthless on most of the planet. Do you take payments in LoL skins or vbucks?

> My dollar will be worth a dollar tomorrow and will sit in my wallet. My crypto currency is worthless on most of the planet.

Then why are there so many places you can exchange a Bitcoin for thousands of dollars?

Many places? Lets see, chase bank has 5k locations in the US. I have 3 locations near me, and if I wanted to use something like on online bank like Betterment, I can go 30-40 locations immediately near me and they will cover the transaction fees...

The closest bitcoin ATM is 20 miles away from me in another town at a sketchy gas station. Let me just hop over and grab 3k out of it and get robbed.

>The price volatility seems like a red herring. If you're using it as a currency then you're not holding it for significant periods of time and the entire point is to make it an automated process, so you're buying some cryptocurrency for cash and then immediately spending it. How much volatility do you really expect in the timespan of a fraction of a second?

Steam used to accept Bitcoin, but they shut it down because volatility in combination with long transaction processing times lead to a payment shortfall, requiring you to send more money. In times of high transaction fees this meant that you would have to pay $20 in transaction fees to cover a $2 shortfall and if you didn't, steam would have refunded the bitcoin and deducted the transaction cost anyway. It was an incredibly poor experience so they shut it down.

http://steamcommunity.com/games/593110/announcements/detail/...

> If you're using it as a currency then you're not holding it for significant periods of time and the entire point is to make it an automated process, so you're buying some cryptocurrency for cash and then immediately spending it. How much volatility do you really expect in the timespan of a fraction of a second?

That is the point of me mentioning that points 2 and 3 are linked. If you are only immediately purchasing crypto and then using it for a purchase, your middleman risk has moved from the payment processor to the crypto exchange. Every purchase you make now relies on whether or not you can make the exchange at the moment. Which is point 3.

The alternative is you make larger exchanges of money, which means you need to deal with volatility: point 2.

If the price of crypto was stable (at least about as much as any major currency), you could exchange much of it in bulk, and delays in exchanging it back into cash would be less of an issue. Even less of an issue if more merchants accepted crypto: point 1.

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