Comment by napoleond | Hacker News Reader

Comment by napoleond | Hacker News Reader

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> I'd much rather go directly through my bank (quickly and without fees) than route through another currency just for the hell of it

I'd rather do that too, but it's unlikely to ever happen; not for international transfers between any country. There is a tangible economic cost (trust, through all the financial institutions involved in each country, and the work required in meeting the regulatory requirements that protect that trust, and in fact the work required in creating and maintaining those regulations) to transferring cash internationally under the current paradigm which has been solved more efficiently in the Bitcoin network.

I agree with you that Bitcoin is far from perfect, but I think calling it a cottage industry is extremely short-sighted. I think what's more likely to happen is that, long-term, banks will either converge around using a blockchain-based mechanism of some sort to transfer funds or the Bitcoin economy will come of age outside of the existing financial industry, at least as the transport layer for fiat exchange.

> which has been solved more efficiently in the Bitcoin network.

Except bitcoin hasn't solved the problems with international transfers. Bitcoin's just ignored them. There's a huge difference, and I don't think ignorance is sustainable at scale.

> There is a tangible economic cost

I actually lose a couple hundred usd a month right now. So, I really do sympathize.

> I think what's more likely to happen is that, long-term, banks will either converge around using a blockchain-based mechanism of some sort to transfer funds

Maybe. That would be fine with me. I'm not really sure I understand why banks would do that vs. just using social processes, since those processes still need to exist in order the address the problems with international transfers and have been around a lot longer than bitcoin.

> I think calling it a cottage industry is extremely short-sighted.

I mean cottage industry in the most literal sense of the term, and was referring to the present and historical situation. And I think that's fair -- very few people are employed full-time doing BTC-related work, and I don't imagine the profit margins are insanely high (or even non-red in some cases).

> Except bitcoin hasn't solved the problems with international transfers. Bitcoin's just ignored them.

Very odd statement. Bitcoin (and related cryptocurrencies) is the only way any two peers on the planet can transfer funds electronically without a trusted third party. That's a fundamental shift from what was possible before. It solves the biggest part of the problem; what's left is reputation systems to facilitate transactions between people who don't know each other personally and enabling technologies that make the whole thing more accessible to "normal" people. (Nobody is ignoring those problems, either, FWIW, but they aren't Bitcoin's to solve.)

> I'm not really sure I understand why banks would do that vs. just using social processes, since those processes still need to exist

Maybe that's where we're talking past each other. Those processes don't need to exist with Bitcoin anymore. With Bitcoin, Bob's tiny credit union in Albuquerque can transfer $100 to Alice's credit union in Thailand for free. The credit unions don't need to negotiate with anyone or depend on anyone except for each other. In fact, the credit unions don't even need to factor into the equation at all; they just provide a convenient interface for consumers to access the system (and potentially a hedge for fraud, etc). It is enormously more economically efficient than the current model. It's the difference between express post and email. (Right, leaky analogy, I get it. It's a paradigm shift, is what I'm trying to say.)

> Maybe that's where we're talking past each other.

I think we are :-)

I was referring to legal regulation and oversight, which is there for very good reasons and is the primary reason most banks/cus have someone whose job includes handling international wires. But also, talking with someone who really understands the legal and financial landscape before firing a few grand off to another country is enormously helpful (but not worth the $60 per xfer!).

I agree there's fat that could be trimmed, as well as just unnecessary charges for the sake of making money off of market position. But for me, the best case scenario is getting rid of that without the extra intermediary. But really, I suppose if the crypto currency is mostly used for bank-to-bank, I don't much care about the back end as long as it works and it's cheap.

edit: I'm not sure what got touched, random bits needed improving.

> I think we are :-)

In fact, I think we agree more than we disagree :)

> I agree there's fat that could be trimmed

Wikipedia has a primer on bank transfers (it sounds like you are already quite familiar with them, but for the sake of reference) here: http://en.wikipedia.org/wiki/Wire_transfer#Process

Bitcoin basically replaces steps 2-4. A bank just needs to get the Bitcoin address of the receiving bank in a reliable manner (ie. instead of IBAN/BIC) and then the transaction can be made and verified. The regulations are still important, because they hold each end accountable (so if Bob's bank can prove that they sent the money to Alice's bank, which they can, then the regulations make sure Alice gets her money) but right now there are a whole lot of unnecessary regulations for the middle part (steps 2-4 on the Wikipedia page). More importantly, using Bitcoin greatly reduces the number of international regulations and agreements that are required, and those are probably the fattest of all.

So yeah, I would love to see Bitcoin replacing SWIFT/Fedwire etc, but I doubt it will ever replace banks (although it might make it easier for smaller banks to compete). Realistically Bitcoin will probably need to replace credit cards before it can replace SWIFT, though, and we're still a ways off. (You may be interested in this article, if you haven't seen it yet: https://stripe.com/blog/bitcoin-the-stripe-perspective)

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