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0 pointspc8mo ago0 comments

Does that imply that some day users would be able to pay using Tempo?

I don't think that customers or businesses should see Tempo very much. In the success case, Tempo is a platform like SWIFT or ACH that others employ behind the scenes to orchestrate transactions. "Decentralized, internet-scale SWIFT" isn't exactly the right analogy (there are clearly lots of differences), but it's not totally wrong either.

Why are businesses finding crypto easier/faster/better?

Yeah, I think this is the natural follow-up question. The answer differs a bit based on the use-case, but there are a few common reasons:

* Instant on-chain transfers avoiding trapped liquidity. If you're transferring money from financial institution A to institution B, and the transfer takes a day, you're either slowed a day in taking the next step or you have to somehow cover that float. Depending on your movements and their predictability, that can require big buffers.

* Fees that are lower than cards. Card payments are instant, which is often valuable (and superior to many bank transfers), but card transactions are also expensive relative to stablecoins. (And while card authorization is instant, settlement is not.)

* Reliability. This sounds funny, but, when sending money between countries, there are many more manual processes involved at the associated financial institutions than one might think. Money is frequently just... lost, and humans are required to hunt for it. (We see this all the time at Stripe.) Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

* Fewer currency conversions. Wholesale FX for major currencies is very cheap, but minor currencies can have bigger spreads, and the actual fee incurred by a regular customer (e.g. with their bank) can be significant. Stablecoins often make it possible to skip conversions that would otherwise happen.

* Access to USD-based functionality. The US is the world's most sophisticated financial services market. Having a stablecoin means "having an on-chain asset", but it also typically means "having a USD asset", and a lot of major parts of the ecosystem (e.g. US equities and credit markets) primarily, or only, deal with US dollars.

Acknowledging the obvious, a reflexive answer frequently invoked here is "it's regulatory arbitrage", but I think this is some combination of misguided and incurious as an explanation. First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated. Secondly, it implicitly assumes that the only reason one would seek an alternative to the traditional ways of doing things is because someone is doing something illegitimate. I think this usually indicates a lack of understanding of the challenges, complexities, and costs associated with high-volume cross-border money movement. Indeed, and somewhat ironically given the claim, one of Bridge's large customers is the US government.

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the_gastropod8mo ago

I think "regulatory arbitrage" still fits here, though maybe not in the sense people assume. The GENIUS Act and MiCA don't eliminate arbitrage. They codify it. Stablecoins are now regulated under frameworks that look very different from those governing banks, payment networks, or money market funds. That difference is the arbitrage.

And crucially, the reason to use crypto rails here is a legal one, not a technical one. There's no throughput, cost, or reliability advantage over existing centralized systems. Quite the opposite. What crypto offers is access to a regulatory regime designed through heavy industry lobbying, one that e.g. doesn't even require full 1:1 low-risk asset backing. That would never fly in traditional finance.

None of this implies illegitimacy. Regulatory arbitrage can be perfectly legal. But it does mean the uptake isn't about technological superiority. It's about governments creating a parallel rulebook after sustained lobbying pressure. That distinction seems important to keep in mind.

krrishd8mo ago

> existing centralized systems

Other comments speak to this - but I wouldn't describe SWIFT (the predominant cross-border payments rail for high-value transactions that you couldn't just throw at a fintech eg. Wise) as centralized.

It's a bunch of hops, across correspondent (but separate) banks, that slow payments down, make them expensive + inconsistently traceable + introduce a bunch of manual ops burden along the way across each of the banks in the chain.

shawndrost8mo ago

I think of you as a direct person, so it's strange to hear you dismiss "stablecoins are regulatory arbitrage" as misguided or incurious. Maybe I am wrong about something.

Would you agree that "actual regulatory evasion" has been a top-three use case across the history of stablecoins? (That is: hackers, money launderers, sanctioned entities, and crypto exchanges do things with stablecoins expressly because doing them with dollars in banks would be illegal in an enforceable way.)

And, would you agree that GENIUS is a formalization of the low-regulation status quo of stablecoins? (That is: the bank system does KYC, AML, and reporting on both sides of every transaction; the stablecoin system generally only does that for onramps and offramps.)

This is not to say "regulatory arbitrage" is the only thing going on with stablecoins. Existing payment rails are imperfect and rent-seeking for reasons that don't have to do with the above. I'm just surprised you're describing the arb as such a non-issue.

mbesto8mo ago

> Instant on-chain transfers avoiding trapped liquidity. If you're transferring money from financial institution A to institution B, and the transfer takes a day, you're either slowed a day in taking the next step or you have to somehow cover that float.

These are slow by design - abuse/fraud. How does blockchain solve that issue?

> * Fees that are lower than cards. Card payments are instant, which is often valuable (and superior to many bank transfers), but card transactions are also expensive relative to stablecoins. (And while card authorization is instant, settlement is not.)

Once again - CCs are instant because the % fee pays for fraud and customer service. What is to stop centralized blockchains from incremently increasing fees to the level of CCs over time? ...nothing.

> Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

Once again - this is a feature not a bug. Things are slow because of bureaucracy AND abuse, not JUST bureaucracy. Crypto is only beneficial today because the actors using it are savvy. When the laggards join, we'll just fall back to the norm.

FWIW - the banking system in the US is awful and the experience to transfer money into other fiat is just as abysmal. However I think crypto's current idealism is a factor of the parties involved, not the technology itself. We're just reinventing finance...it's just this time with Silicon Valley in control instead of Manhattan.

alixanderwang8mo ago

At the very least, assuming you're correct the current slow infrastructure is by design, it seems good there are options.

A business can choose if they want

1. slow, pay for customer support and fraud protection

2. instant, lower cost, mistakes are irreversible

pcOP8mo ago

In these matters, I always try to keep in mind that technologies aren't themselves disruptive; customer choices are. It'll be interesting to see what customers choose in the years to come.

mbesto8mo ago

For sure, but do you care to address the fraud/abuse aspects?

FWIW - I personally would choose a quicker and cheaper transaction all day, every day, but if it came at the expense of losing my money, I'd have to think twice about it. You yourself said it best "crypto is punishing if you make a mistake".

utyop228mo ago

"In these matters, I always try to keep in mind that technologies aren't themselves disruptive;"

That is NOT TRUE! Technologies that are disruptive are those that intrinsically possess features that present benefits that exceed the switching costs of existing technologies. Therefore they are inherently disruptive. The timeline of product adoption is decided by consumers yes. Which is actually preceded by (and accelerated by) visionary leaders who can figure out what the benefits of said technology are, where to best use it and then tell people about it (market the technology).

Here's a simple example: graphical user interface. Anyone who saw it early on at Xerox knew it was so obvious. But the timing of its mass appeal, adoption and who would produce the preferred interface was questionable.

This comment alone makes me incredibly skeptical about the way you think.

md2248mo ago

> technologies aren't themselves disruptive; customer choices are

Technologies are themselves disruptive, as their introduction can shape human behavior. Choice doesn't happen in a vacuum.

dcposch8mo ago

> Once again - this is a feature not a bug

Are you really "once again"ing Patrick Collison on the issue of how payments work?

mbesto8mo ago

I'm fully cognizant that pc understands how payments work, hence why I'm asking the question. What you can infer is this - there is either some I'm missing, or there is some ulterior motive here.

sagarm8mo ago

I don't know who pc is, and he mentioned speed as a benefit without addressing the fraud / abuse implications. It's pretty reasonable to flag the gap.

1 more reply

jeremyjh8mo ago

This isn't a consumer payments system. Certainly there are use-cases where fraud and abuse aren't very relevant. A network of larger businesses could find value in expediting transactions but they are all long-term players and can't afford to defraud each other. The system could make it impossible to hide such activity, and recovery through the courts is always possible because there is an entity with assets involved in a business transaction.

jekrb8mo ago

> What is to stop centralized blockchains from incremently increasing fees to the level of CCs over time?

Then users will just go to a different chain that provides a better outcome.

lavezzi8mo ago

> First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated.

Which misses the mark given the context, since the GENIUS provisions aren’t yet effective or enforceable, and Tether’s history shows that regulatory arbitrage does exist.

mercenario8mo ago

The question is, what from what you have said is *strictly* only possible by using a blockchain? If you are already going to build something completely new, what is preventing you from creating something that fixes all those problems and do not use any blockchain?

j / k navigate · click thread line to collapse

0 comments

the_gastropod8mo ago

krrishd8mo ago

> existing centralized systems

shawndrost8mo ago

I think of you as a direct person, so it's strange to hear you dismiss "stablecoins are regulatory arbitrage" as misguided or incurious. Maybe I am wrong about something.

mbesto8mo ago

These are slow by design - abuse/fraud. How does blockchain solve that issue?

Once again - CCs are instant because the % fee pays for fraud and customer service. What is to stop centralized blockchains from incremently increasing fees to the level of CCs over time? ...nothing.

> Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

alixanderwang8mo ago

At the very least, assuming you're correct the current slow infrastructure is by design, it seems good there are options.

A business can choose if they want

1. slow, pay for customer support and fraud protection

2. instant, lower cost, mistakes are irreversible

pcOP8mo ago

In these matters, I always try to keep in mind that technologies aren't themselves disruptive; customer choices are. It'll be interesting to see what customers choose in the years to come.

mbesto8mo ago

For sure, but do you care to address the fraud/abuse aspects?

utyop228mo ago

"In these matters, I always try to keep in mind that technologies aren't themselves disruptive;"

This comment alone makes me incredibly skeptical about the way you think.

md2248mo ago

> technologies aren't themselves disruptive; customer choices are

Technologies are themselves disruptive, as their introduction can shape human behavior. Choice doesn't happen in a vacuum.

dcposch8mo ago

> Once again - this is a feature not a bug

Are you really "once again"ing Patrick Collison on the issue of how payments work?

mbesto8mo ago

I'm fully cognizant that pc understands how payments work, hence why I'm asking the question. What you can infer is this - there is either some I'm missing, or there is some ulterior motive here.

sagarm8mo ago

I don't know who pc is, and he mentioned speed as a benefit without addressing the fraud / abuse implications. It's pretty reasonable to flag the gap.

1 more reply

jeremyjh8mo ago

jekrb8mo ago

> What is to stop centralized blockchains from incremently increasing fees to the level of CCs over time?

Then users will just go to a different chain that provides a better outcome.

lavezzi8mo ago

> First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated.

Which misses the mark given the context, since the GENIUS provisions aren’t yet effective or enforceable, and Tether’s history shows that regulatory arbitrage does exist.

mercenario8mo ago

j / k navigate · click thread line to collapse