BTC and a lot of other chains are Level 1 (L1). Final settlement layers for transactions. To compare that to normal banking, your credit card is like an L5. Tons of things go on in-between your CC transactions before its actually settled even if it appears to be instant and final to the end user.
Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution.
The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life.
There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?
Spoken like someone who doesn't know the steps involved in opening a bank account (hint: many people can't), accepting online payments using a bank account (hint: hope you have deep pockets), using a bank for sending interbank/international payments (hint: might need to collect a page worth of information from your recipient. second hint: their bank might refuse to receive the payment), etc. Bonus steps: do all the above programmatically using an API (hint: you might have a billion-dollar startup in your hands).
Now do all the above using Bitcoin/lightning network. You'll be done in 15 mins.
That question is highly dependent on jurisdiction. The prevailing opinion right now is that Lightning nodes are not subject to KYC regulations in the US.
No, you are not supposed to. KYC is a legal requirement for money transmitters[0]. It does not apply to Bitcoin users.
[0] Money transmission is the act of receiving currency from one party and transferring it to another party. Basically, middlemen in a transaction (e.g. banks).
If you are processing financial transactions (including something of “value that substitutes for currency”) between other people at their direction, you are a money transmitter. The whole point of both Bitcoin is decentralizing this function from banks to a network of miners, and a similar thing is done in Lightning with its nodes.
That's correct. In the case of Bitcoin, the thing that most closely resembles a "money transmitter" are miners but FinCEN ruled that they are not[0]. A sensible decision because otherwise, Bitcoin would have effectively been banned from the United States (or Bitcoin miners, at least).
Ignoring the fact it isn't tax evasion - just because it's against the law, doesn't mean it's unethical. Further, obeying laws can be (and often is) unethical. Not everything is on the level of requiring people to turn in jews, but there's plenty of room to argue that companies that are ill-equipped to protect your personal data should not be allowed, much less required, to collect your identifying information.
> You can set up a stripe account to accept payments very easily.
Doesn't it require having a U.S. corporation? That's a few hundred dollars off the bat. It also requires you to provide evidence that you are within the types of businesses they authorize. I also suppose it requires having a bank account. Opening a business bank account does not take a few minutes and it can be close to impossible for certain categories of businesses. Multiply that by 10 if you are not a citizen/resident. I also don't believe Stripe allows sending money. Furthermore, receiving payments on Stripe effectively takes a week due to the waiting period. Finally, if Stripe decides to freeze or terminate your account, you are f'ed.
Stripe is not worldwide, but works pretty much everywhere in EU at least. You can open a company in Estonia in a couple hours (once you have a digital signature key, which they offer to everybody now, not just Estonian citizens [1]). Getting a bank account might be a bit trickier, but still doable (hint: Wise [2], while not a bank, might be an easier option).
That said, Bitcoin is still a whole lot easier to accept, and on the L1 level can't be blocked by anybody. Cryptocurrency is definitely the future, but traditional banking is trying to compete sometimes :-)
A business or business bank account isn’t needed, so it doesn’t matter. It’s the same with many payment providers. I linked to references for Stripe on this here: https://news.ycombinator.com/edit?id=32102762
PayPal etc don’t require any business stuff. Being a traditional bank is unimportant for getting paid for online stuff.
There’s a lot of ways to get access to something that qualifies as a bank account. For example, Cash App got big because it provides what a bank account does and qualifies as one, even if it is not a traditional bank at all.
Once multiple apps are available worldwide as well as multiple ways to have a bank account or a bank account equivalent, why would cryptocurrency be the future?
Multiple apps are already available for the majority of the population. The west, India, and China alone are close to half the world population.
Not sure about the U.S., but in at least in Russia and Estonia sole proprietorship is a form of business – in a sense that you have to register it, do annual reports (or more often), calculate taxes etc.
In Russia, it is a bit easier than running an LLC, so many entrepreneurs choose to start as an SP. In Estonia I've seen zero sole proprietors – the burden is the same, but LLC taxes are more favourable (0% income tax until you pay out dividiends) and limited liability (which you don't get as an SP).
I've done some research (which in this case is a fancy way of saying “opened up Wikipedia” [1]) and looks like in the U.S. you can just run a sole proprietorship without filing anything. Neat!
This is confusing. Are people legally allowed to get a lot of income from Bitcoin without a SP or more in these countries? Will Stripe automatically deny people without a sole proprietorship in these countries? What happens if people are able to get on Stripe without an SP in these countries? I assume no one is going to jail over this.
I don’t expect you to know the answers to these questions, but the focus was on the difference between Bitcoin and Stripe/PayPal, etc. The thing I replied to specifically said there was an onus of several hundred dollars which I was disputing as well and which is not correct for the US.
> Are people legally allowed to get a lot of income
In Russia, they aren't if it's systematic [1] (and if you get caught, which is usually not a concern for many unregistered one-man businesses). Stripe isn't available in Russia but most local payment gateways check your paperwork thoroughly, so if you're not a registered SP, card payments are mostly off the limits and the main payment method is card to card transfer there. (There's a few options, but those aren't widely popular because who cares)
I don't really have any experience with SPs in Estonia, but I think it's pretty similar. Let me try and sign up for Stripe and see what happens :-)
Update: I've just signed up as a “sole proprietor” and charged myself 1 EUR. I've only had to fill in my name and home address. Not even I had to submit any documents, perhaps because I already have an LLC registered with Stripe. Still not sure if it's legal, but from the technical standpoint yeah, you probably can use Stripe without any paperwork here in Europe.
That creates opprotunities for other Level 1 chains. Solana for example charges $0.00025 per transaction (however this is still denominated in the SOL currency so it will fluctuate). Hedera network is $0.0001 per transaction and is fixed in USD.
They have other problems. Solana's entire supply is said to be 5% of the current world population. I'll let you do the math on the rich/poor inequality this entails.
Each problem that's dismissed out of hand by crypto proponents is compounded by the endless streams of bigger and worse problems.
I'm very confused by both of your points. The supply of a cryptocurrency is equal to a person? A crypto token is not a person so I'm guessing you missed a few words there?
How is building a competing chain to more efficiently solve a problem (high transaction fees) in a competitive market in any way "dismissing" that problem? That seems the exact opposite of dismissing a problem.
Do those new solutions come with new problems? Sure, that's true of any technology. Dynamo-based databases solved high availability and network partitionability of data but come with several trade-offs. That doesn't mean you shouldn't use Cassandra for anything.
That said, Solana is not the hill I'm willing to die on and it's hot garbage. Hedera seems good though.
Same. Lightning gets around them by bunching a bunch of transactions into one bitcoin transaction. Which is exactly what people have been doing with card processing for ages now.
And of course there other payment systems around the world that don't rely on card transactions.
And don't forget that the entire lightning thing is dependent on banks aka nodes with large sums of money to provide liquidity in the system.
Visa and MC could be L5 networks for Bitcoin, why not? Lightning is lower level and more decentralized, but it doesn't solve issues like dispute arbitration which credit cards do.
Settlement is among the least interesting problems that Visa and Mastercard solve for merchants and customers.
Yes, being able to settle across currencies pretty efficiently is nice, but the real value is just what you mention: Dispute arbitration and managing liability in case of fraud.
The incentive structure of Lightning to me seems to heavily incentivize the formation of a few centralized nodes affiliated with wallet providers – a structure which would forfeit many, if not all, of these properties.
Imagine a world where the web is controlled by a single entity, say Facebook. They get to decide who is allowed to create a website. They get to decide how much it cost. If they're not happy with the site's content, they can take it offline. Do you believe that would be a better world to live in?
- trustless: I trust the companies I use, it works
That's because there's usually no alternative. But when there's a trustless alternative, you may find that it is less risky or costly. Many people chose e2e encrypted messengers because they don't trust a third party with their private messages.
- censure resistance: OK, fringe case for most
"[...] Then they came for me—and there was no one left to speak for me."
It may be fringe but it's a massive issue for those who are censored. It's also not that uncommon. It is estimated that there are over 1 billion unbanked people worldwide. Also, try "PayPal horror stories" on Google.
- pseudonymous: why do I want anyone to be able to see my transaction history?
What parent meant is you can transact with people without knowing their real identity. I could send you a BTC tip on HN without knowing your name or address. Regarding your concern about privacy, no one can really determine your transaction history by looking at the blockchain. It's possible to do some guessing but all you really see are transactions going from opaque addresses to other opaque addresses with no attached identity information. Also, this can be further solved with CoinJoin[0].
> you may find that it is less risky or costly. Many people chose e2e encrypted messengers because they don't trust a third party with their private messages
Private messages are not money. Example: you ordered some goods and those arrived in bad shape. What's your recourse in the trustless world?
What do you mean by that? I don't see why there couldn't be a centralized service offering payment dispute arbitration on top of Bitcoin (this is what I meant by building "trustful" systems being built on top of trustless foundations).
> why there couldn't be a centralized service offering payment dispute arbitration on top of Bitcoin
What exactly does Bitcoin provide in this case?
> this is what I meant by building "trustful" systems being built on top of trustless foundations
So, a service that exists outside bitcoin, has a trust system built entirely outside bitcoin and only doing something with bitcoin because reasons... is "building trustful systems on top of trustless systems".
I don't think you know what "building on top" means.
There are many centralized services that do dispute arbitration on top of USD. Those systems are built entirely outside of USD. PayPal for example doesn't have an account at the Federal reserve nor does it handle physical cash. They are effectively "off-chain" payment systems for USD.
So I guess your question is, what are the advantages of BTC over a fiat currency like USD. The answer is two folds:
1) BTC has an open network (the Bitcoin blockchain) allowing users to exit payment systems for the purpose of self-custody or for interconnecting with other payment systems. There's no equivalent system with fiat. Self-custody of USD literally requires transporting and storing pieces of paper. You also can't directly transfer USD from PayPal to say, CashApp.
2) BTC has a predictable money supply. Fiat currency doesn't: money supply can be arbitrarily inflated.
In addition to the above, Bitcoin enables the creation of payment systems that are more tightly built on top of it, like the Lightning network, which preserves many of the properties of Bitcoin (e.g. trustless). You could also build a dispute arbitration system where the arbiter just needs to be semi-trusted (e.g. there are schemes that can cryptographically prevent the arbiter from stealing escrowed funds, etc.).
> So I guess your question is, what are the advantages of BTC over a fiat currency like USD.
No. The question is: what does the trustless blockchain offer when you still have to rely on a centralised trusted entity.
> BTC has a predictable money supply. Fiat currency doesn't: money supply can be arbitrarily inflated.
Which immediately means that whoever got in early and got the first initial supply is at great advantage compared to anyone who got in later. For example compared to any people born 20 years from now.
> You could also build a dispute
Could. Maybe. Should. Perhaps. That's all you can ever hear from crypto proponents.
I was asking about fiat because many of your criticisms equally apply to fiat.
> No. The question is: what does the trustless blockchain offer when you still have to rely on a centralised trusted entity.
I answered that multiple times already.
> Which immediately means that whoever got in early and got the first initial supply is at great advantage compared to anyone who got in later. For example compared to any people born 20 years from now.
That's, unfortunately, the case for almost anything of value.
> Could. Maybe. Should. Perhaps. That's all you can ever hear from crypto proponents.
I'm not sure I would consider myself a crypto proponent, I was trying my best to answer your questions as objectively as possible.
But it seems you are very emotionally invested in this for some reason... Did you have a bad experience with crypto?
> I was asking about fiat because many of your criticisms equally apply to fiat.
They... don't.
> I answered that multiple times already.
You haven't. All you're saying "o let's have this centralised trusted entity that does something with blockchain because blockchain".
> That's, unfortunately, the case for almost anything of value.
If bitcoin is a currency as you would have us believe, then this is not what a currency should be.
> But it seems you are very emotionally invested in this for some reason...
Ah yes. There are only a few ways crypto discussions go: problems are dismissed out of hand and/or "have you had bad experience with crypto" (often in the form "you're just sad that you didn't get in on it early").
I didn't dismiss anything out of hand, I replied to all your questions as objectively as possible, but you just pretend that I didn't. I also would not have you believe anything, I am not trying to sell you anything here. I just answered your questions because I believed they were genuine questions. I am now starting to question that...
My question to you: what is your alternative? USD has many of the problems you mentioned and more. Transactions happen "off-chain", monetary inflation largely benefits the wealthy, etc.
Pretending you’re not a crypto proponent is funny while trying to imply the other person isn’t genuine.
They already said fiat doesn’t have close to the same issues as crypto. The monetary inflation benefits to the wealthy are nowhere near the same for Bitcoin or any crypto. It’s a fraction of how bad Bitcoin is. They also basically said that multiple times too.
They have answered the rest too. Being on chain isn’t an issue for fiat because they aren’t trying to be on chain. They aren’t trying to shoehorn in blockchain.
Now they have turned to acting like you aren’t genuine in their next reply, haha. When they actually tried to pull a “I don’t know if I’m a crypto proponent”
> The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
> Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.
Right, which is why we have regulations on reserve requirements for banks, as well as things like FDIC insurance that guarantees your money in a bank account.
>The root problem with conventional currency is all the trust that's required to make it work.
Surely this is a joke? Most currencies enjoy a high degree of trust until they collapse due to structural reasons that have nothing to do with trust whatsoever.
The euro zone and the dollar show that there is practically no shortage of trust whatsoever.
Seriously, this dude is supposed to liberate us from the evils of money?
How did it come to this? The root problem with currency is the zero lower bound of interest and liquidity preference which both combined result in permanently positive interest rates. When you refuse to pay interest, the economy stagnates and it can result in mass unemployment. This has nothing to do with trust. The Bitcoin economy is plagued with mass unemployment. The insanity of unemployment is a consequence of the insanity of non neutral money.
Alternatively, you can pay interest, however this means you must perpetually borrow more money, e.g. Keynesian fiscal stimulus, notice that the insanity originates in money itself, not in the political response, the political response must be at least as insane as the money system, no less and it collapses. Now, there is a third way, QE aka not bothering to ask people whether they want to lend their money out, however, due to liquidity preference, the additionally created money will stagnate somewhere, meaning you can't ever stop QE. Again, in this case the insanity is a structural property of the currency, the monetary intervention has to be as insane as the money system and no less.
The apparent untrustworthiness of politicians is the result of the insanity of money, not the other way around. If money worked properly, you wouldn't need politicians to mess with it, you wouldn't even consider trust to be the problem because the amount needed would be so miniscule as to never matter in the grand scheme of things.
It is really strange to me, that people notice a constant problem with money and yet they still come up with the same conclusion "you're holding it wrong", what if it is impossible to hold it properly? What if permanent money is irreparably broken and forces its own debasement and all the other problems?
What's your definition of L2 that include centralised entities?
There is no central authority in LN. There may be "hubs" which are more or less important, but that's not centralisation because there are several of them, it can also work without them, and also they can't steal your money.
Would you say that email is centralised because there area few big server (Gmail, Microsoft)? But even if it may more convenient to use one of the big server, you still have the choice not to use them.
With LN you can have a private channel with your friend and do unlimited number of transactions with (literally!) 0 fees. Thanks to recent developments it's also much easier (and cheaper) to then swap those BTC to onchain - sometimes even cheaper than a comparable single onchain BTC transactions.
Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution.
The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life.
There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?