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Comment by gumby | Hacker News Reader

I'm a bit concerned about starting a flame war, but I barely follow any cryptocurrency news at all. So I am curious: would there actually be any negative macro consequence if this were to happen?

I know, at the micro level some people would lose their money, but does bitcoin (or any cryptocurrency) have any practical, legitimate use with visible impact on the global economy (or even the national eonomy of any country with major footprint)? And I'd be sad for some of those people. but would it have any impact that I would notice? My money is in broad, boring index funds.

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Depends on your definition of "legitimate", but Iran uses cryptocurrency to tax oil tankers going through the Strait of Hormuz. There is certainly some practical impact. https://finance.yahoo.com/markets/crypto/articles/iran-turns...

Interesting use case. Not formally legitimate but even the US would prefer it not be stopped as even small exports exert a large impact on the price of oil.

But a good example of a macro impact on the global economy.

> but does bitcoin (or any cryptocurrency) have any practical, legitimate use with visible impact on the global economy (or even the national eonomy of any country with major footprint)?

I've read anecdotes on HN that it's used quite a bit for remittances to some countries with unstable currencies, but my understanding is that nearly all of these users are immediately converting it to the local currency, so the only money at risk would be that which is in active transit. It would definitely be unfortunate to lose any money being transferred, but remittance recipients don't tend to have any savings at all, so I don't think that it would have any broader economic effects (in the context of this specific example).

It could also potentially mess with electricity prices in some areas, since Bitcoin mining uses quite a bit of power, but I suspect that some AI datacenter would step in and buy up all the excess power, so this probably wouldn't be much of an issue either.

(And I don't know enough to comment about how this could affect other sectors of the economy)

> I've read anecdotes on HN that it's used quite a bit for remittances to some countries with unstable currencies

I can confirm that this aspect is absolutely massive and often underestimated by those living in the West.

It's happening all over Africa, Middle East and LATAM, since stablecoin transactions are cheaper and require no access to financial infrastructure that could be locally unavailable, but as you mentioned it's only used as an intermediate link before converting to local currency.

Interesting!

I just looked up the world bank’s estimates which say remittances are around $850B (including direct co-party islamic cash transfers, illegal in many countries). The amount using crypto is about $26B, so about 3%, hardly material at a macro scale (might be a big deal for a small country) so losing this would not be noticeable to the global economy.

You could delete a small country from existence and it wouldn't affect the global economy much, not the best measure of impact imo.

As I mentioned, I’m sorry for the misguided and nitwits who lose their money too. Not the grifters though.

And I’m from a small country and I have no illusion that many people would care much if Australia were leveled and all the people killed by a series of bad earthquakes. There would be sad headlines for a few weeks and then something else would get everyone’s attention. That’s why I was asking about anything at the global scale. Someone replied with the Hormuz Strait, and while small, it does have an enormous global impact. But that was the only such answer I got.

(BTW geologically that’s pretty much impossible to happen to Australia - -it’s just an example).

There are two layers of value on chains that are not bitcoin. There is the native currency and then various forms of tokens that can be transacted. Tokens are things like NFT's or Stablecoins. In order to trade tokens you need to pay gas in the native currency of the chain. For example, ETH on the Ethereum network.

Large financial institutions are already doing work using stablecoins. In order to turn stablecoins back into fiat, you have to take them back to the issuer for exchange. Countries with unstable currencies can hold USD by purchasing stablecoins. And financial institutions can do settlement between each other using stablecoins.

Federal reserve (Kansas) says in ‘25 these transactions were about $390B (there are qild estimates of $35T but these seem to be typos or deliberate misreadings of a prediction for 2035 from a crypto enthusiast). At forex scale or the scale of global GDP, 400B is invisible.

It could grow, of course, though the use case appears to be weak and unstable countries, which are by definition distant participants of global exchange, and unlikely to have any visible effect on the overall macro economy.

I don't disagree, but there is a lot of hesitancy at financial institutions right now because the regulations are all over the place. I think what we are seeing now are MVP use cases that people are willing to try before regulations are finalized. There are some very large (macro-level) use cases possible, but the regulations have to allow for that.

BTW:

> And financial institutions can do settlement between each other using stablecoins.

Why would they bother though? How would they gain over the status quo?

The status quo rails in the U.S. are ACH or Fedwire. These are slow and require you to get connected to the rail in some way (directly or indirectly). And they have fees.

There is also same-day ACH and the new FedNow. Which are faster, but still require some kind of connectivity and have fees.

The cost of stablecoin settlement is mostly the gas fees of the chosen chain. There are various optimizations possible such as private chains and off-chain ledgers (no gas) and some single on-chain settlement to minimize gas fees. Note that these type of stablecoins are closed-loop and are not publicly available.

As I said in my other post, these institutional stablecoins are mostly just MVP use cases until regulations are finalized. Depending on the final regulations, there are quite a few other possibilities.

Source, I work for a large financial institution and run a team that launched a stablecoin this year.

Well... Elliptic curve cryptography is also used in many other systems and connections, so yes, we would all notice if a mathematical trick broke it.

Very much so! Though I was looking at the use case of the OP.

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