There are lots of crypto skeptics on HN (and we ourselves were disappointed with crypto's payments utility for much of the past decade), so it might be interesting to share what changed our mind over the past couple of years: we started to notice a lot of real-world businesses finding utility in stablecoins. For example, Bridge (a stablecoin orchestration platform that Stripe acquired) is used by SpaceX for managing money in long-tail markets. Another big customer, DolarApp, is providing banking services to customers in Latin America. We're currently adding stablecoin functionality to the Stripe dashboard, and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging.
Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.
It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
Bitcoin (and possibly a few others) is one of the few uses of blockchain that actually makes sense. The blockchain serves the currency, and the currency serves the blockchain. The blockchain exists to provide consensus without needing to trust any off-chain entity, but the blockchain relies on computing infrastructure that has real-world costs. The scarcity of Bitcoin (the currency) and arguably-fictitious reward for participation in mining is the incentive for people in the real world to contribute resources required for the blockchain to function.
Any real-world value given to Bitcoin is secondary and only a result of the fact that (1) mining infrastructure has a cost, and (2) people who understand the system have realized that, unlike fiat, stablecoins, or 1000 other crypto products, Bitcoin has no reliance on trusted, off-chain entities who could manipulate it.
You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank, but while you're at it, remind them that they don't have to take days to process a transaction - they could process transactions as fast as (actually faster than) a blockchain. But I imagine most banks would point to regulation as a reason for the delays, and they might be right.
So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?
> a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
Stablecoin is not a technology. It's an excuse. An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use. Similar to how Airbnb is not a technology but an excuse to do what hotels do without hotel's license.
So it makes no sense to compare it to database, a technology.
Will this excuse work? Banking is a heavily regulated field so it's less likely than Airbnb, but it's ultimately up to lawmakers.
Large banks like JPMorgan Chase are also looking into launching their own stablecoins, just because it has less regulation than normal banking. In fact Jamie Dimon himself says so. The idea is really simple: creating stablecoin deposit accounts for customers allows banks to skip existing customer protections that are normally afforded to traditional deposit accounts.
Stablecoins will end subject to just as much regulation as a normal bank, maybe even more.
JPMorgan Chase, BofA, and their ilk have R&D budgets large enough to have already launched a dozen stablecoins by now. They haven't, not because they can't (on a technical level) but because they don't actually see the value to it (on a business level). They're simply paying lip service to crypto because it pumps up share value, the same way every business was bragging about their AI investments just a few months ago.
Banks are already using stable coins internally (case in point https://en.wikipedia.org/wiki/JPM_Coin) it just hasn’t been made available externally yet.
Clicking just a few links down on that article shows that JPM Coin is a Blockchain in branding only. It's backed by a centralized (in trust principals if not in compute) ledger and used for transactions between mutually-trusting parties.
Outside of the U.S., Uber is subject to taxi regulations in most of the places it operates.
In the U.S., it is subject to a new set of regulations governing "rideshares" that are similar to the regulations governing taxis. The primary differences are that medallions aren't required for rideshare vehicles, nor are rideshare drivers required to know anything about the location in which they're driving.
Objectively speaking, the taxi drivers and companies that are still alive today provide better service than their rideshare counterparts. I can tell a taxi driver "the Z building" at the airport and they'll know what it is, where it is, and how to get there. Most rideshare drivers need to look it up, and they'll be damned if they actually follow the google directions to get there without getting lost on the way.
I’m pretty sure most rideshare services are forcing drivers to use their own map software. They aren’t using google, at least directly, and they are using routes recommended by the ride sharing companies themselves. Just replace them with AI already, Waymo was really good when I tried it in SF. Not technically ride share anymore though, I bet we see robo taxis eventually regulated like taxis when they eventually take over the market.
> Large banks like JPMorgan Chase are also looking into launching their own stablecoins, just because it has less regulation than normal banking.
That always works out great.
Can't wait for the next explosion, followed by government bailout, followed by some portion of all our wealth vaporizing, all to the benefit of a small number of people.
Yes — similarly I work in cryptocurrency and constantly try to tell people that credit cards are unbeatable for payments because of the consumer protections. Chargebacks are an insanely consumer friendly feature. Nobody ever wants to engage in that conversation.
Other way around. Stablecoins are essentially Venmo for crime. They get zero benefit from a blockchain. They are centralized, trusted and permissioned. Circle can freeze the USDC in your self-custody wallet at any time and you’re on your own bud. This whole thing is antithetical to crypto’s core ethos.
You could replicate USDC with a website where you log in with a password and move money between numbered accounts and they don’t run any AML/KYC checks on you. If you did that it would be super illegal. In fact someone did exactly this, it was called Liberty Reserve and everyone went to prison.
But because it’s got the magic of the blockchain laws don’t apply.
Making everyone jump through hoops, at great expense, because the proceeds of crime are being laundered seems like the wrong way to approach stopping crime. I'd argue that bitcoin is in some ways more traceable, as all wallets are public.
Problem with KYC and AML is that if you listen to the regulators, there is no end to it, the requirements only increase. I was once asked to provide 20 years of banking receipts for a small savings account that my grandmother had opened for me when I was 5. In the EU at least, it's common for banks to block transfers between countries, even if the transaction is well-documented. The most infuriating thing is that there's no real proof that AML works. It's just excellent at false positives, ending in account freezes for innocent people.
Stablecoins' success is also a reaction to the ever-increasing friction created by overreaching regulation. If you have a supplier in China, and need to buy some in-demand goods, you can sign the contract and send the money now, whereas with the classic banking system, you'd have to wait for two weeks to clear everything. This alone is brilliant and should be welcomed for its usefulness.
What is interesting with stablecoins is that they are on the blockchain, which acts as a decentralized, uncensorable ledger which doesn't require you to tell a bank clerk what is written inside your wedding ring to be allowed to buy a second hand BMW in Poland.
The law says that banks need to do AML/KYC, a blockchain is not a bank, it's decentralized. Besides, being able to break a law can be good, when such laws have little to do with crime prevention, and more about feeding an industrial complex that earns from those frictions. And buying a car is not illegal as far as I know.
The main proponent that dictates the regulations, the FATF, is a shady, unregulated body that is used for political and economical repression.
it's not about taxes, it's about fighting illegal activity. Terrorist financing, drug dealing, human trafficking etc - do you really think it's a good idea to let those actors exchange payments freely?
Yes, I think everyone should be able to exchange payments freely.
Drugs should be legal, so that's not a problem. Terrorism and human trafficking are more complicated topics, but basically I think they should be attacked more directly, not financially.
The government has existed for hundreds of years before these sophisticated mechanisms of surveilling the money system and the people were introduced. And it will continue to exist should they be removed.
You know everything was shit hundreds of years ago right, the wildcat banking system collapsed into miserable failure and the bearer instruments were eliminated because of the risk of train robberies.
What is your source for stablecoins being "for crime"? I've seen many individuals from countries all over the world utilize stablecoins in ways legal for their jurisdiction.
> The devastating impact of these scams is evident in the staggering losses reported globally. In 2024 alone, cryptocurrency investment fraud, largely driven by pig butchering schemes, caused over $5.8 billion in reported losses in the U.S. The anonymity and cross-border nature of cryptocurrency transactions have historically made these scams incredibly challenging to investigate and prosecute, allowing criminal syndicates to operate with relative impunity.
I don't think that logic checks out. It being "slower, riskier, with less protection and usually more expensive" are not properties that self selects for criminals.
Stablecoins typically being self-custodial, easier to transfer in large amounts, and internationally accessible seem like it would support criminals, but with stablecoins, funds can be frozen just like bank deposits can.
This is emphasized in the article you linked:
> The investigation began in late 2023 when Tether, the issuer of the USDT stablecoin, proactively froze 39 wallet addresses containing $225 million in stolen USDT after detecting suspicious activity. This immediate action was critical in preventing further dispersion of the illicit funds. Paolo Ardoino, CEO of Tether, was quoted as saying, “Tether’s work with the Department of Justice underscores our commitment to transparency, proactive engagement with law enforcement, and the protection of users across the digital asset ecosystem.”
And the number you quoted is for cryptocurrency at large, not stablecoins. I imagine the number looks a lot different when we filter for that subset of usecases. For the large amounts used in stories like this, banks would be a better indicator for comparison[1][2]. Venmo, Cashapp, and Zelle have had their fair share of scandals as well[3].
Tether has been reluctant in many cases to freeze addresses reported to it. At least historically it would not do so if the coins didn’t belong to its direct customers (mostly the large exchanges), rather than individuals who got them from their customers and did crime.
The other major issue is it’s easy to get the stablecoins, move them around, cash them out, and by the time Tether freezes them the criminals have already been paid (in dollars, which is what they want really).
Even criminals don't want the insane volatility of vanilla crypto, and there's an unfounded sentiment that Tether doesn't freeze value in people's wallets (they actually freeze more than anyone else, and good luck resolving it in Salvadoran court if they even have jurisdiction).
Yes classical finance has had scandals because they're obligated to prevent these things, and in general, they have responded to court judgements by upping their internal controls. Crypto is built specifically not to have either internal controls or the ability to institute them in a meaningful way. It's the fundamental premise. One system is designed to stop this activity but fails sometimes, the other is designed to allow this activity by anarchocapitalist libertarian ethos and offers roughly zero recourse for those caught up incorrectly.
This argument is tantamount to "well, a plane crashed, so obviously the FAA doesn't provide any value, and we should just stop regulating aircraft entirely and yolo it." Same with drugs, well, a side-effect happened, let's just scrap the FDA and legalize the grey market Chinese sackloads of $5 peptides. While we're at it, we should let Walgreens sell em, why not.
If you think what the classical institutions are doing is wrong, you shouldn't say well, just let 'em lol, you should be arguing for stricter penalties and more control. If you think it's right, well, I don't know what to say.
Pepperidge Farm remembers when nobody in their right mind would just give all their money to unregulated offshore banks in the Caribbean. Remind me why that was again?
The comparison is wrong. FDA is not there to confiscate anyone's money by locking down their accounts. FDA regulation is applied to companies. KYC is the US shit which applies to anyone, anywhere in the world outside the US, having the priority above local laws.
stablecoins are not for crime actually, it's like the bank of the criminals.
for crime you would want to mix your stablecoins to btc or xmr, probably the latter.
Just to be clear, Tether and Circle also have complete control over their respective stablecoins if they so choose. They have the exact same power to reverse, freeze and block any transaction or balance just as PayPal and Venmo do.
An implicit fee by not paying you any interest for money held in Venmo.
Also notice there's no option to automatically transfer received money into your real checking account. They are banking on you forgetting your money is there and they are earning the interest but not passing it to you.
For this reason I prefer receiving money via Zelle but pay with Venmo.
What? How so? If by "stablecoin" you just mean "any USD-denominated balance maintained by a third party in a ledger" then every bank balance is a "stablecoin".
Do we have a term for this phenomenon yet? Airbnb is a great example. Uber is another. Regulatory loopholes are the way that these companies actually make money, but they call it "technology" and everyone kind of shrugs.
Airbnb was a bit more then a regulatory loophole, it at least started out as a new way for private homeowners to monetize one of their greatest asset. So it was much more an unused potential that was being tapped in.
The regulation that came after has in my personal experience privatized airbnb and now it's hard to find a private renter, when I started using it that was the standard.
Once Airbnb became systemically harmful, regulation followed.
Nobody cares about small tech companies breaking the law for a few users.
Everyone cares about {insert bad outcome from mass regulatory avoidance}.
(Also, of the 3 airbnb founders, one has delusions of being the next Steve Jobs and turning it into an everything app (Chesky), another now works for DOGE (Gebbia), and the last is sucking up to Chinese government data requests (Blecharczyk)... so, yeah, not exactly the sort of folks that should be trusted with light regulation)
I know many many friends who were able to survive an expensive city because of it. Cities that are largely messed up due to the governments stupid games with taxes and interest
In my circles we have been calling it unregulated free market capitalism, or laissez faire capitalism.
More examples include Uber to bypass taxi regulation, and generative AI to bypass copyright regulation (as well as consumer protection regulation in both cases as well as labor protections).
In unregulated free market capitalism, there would be no free supply of unlimited land for roads for Uber & car companies to arbitrage into profit - they would have to have bought land & built infra all of which would make using vehicles for one person completely uneconomical. This would be much better than the status quo - freight & transit would be relatively unaffected by having to pay for land since they they both very efficient.
Similarly, in unregulated free market capitalism, there would be no copyright to bypass.
I am not trying to argue that either of these area panaceas but I feel like we are often in denial about how much collectivism is involved in the things we don't like about capitalism.
The claim (or rather the joke) isn’t that Uber was operating in unregulated free market capitalism, but that Uber is unregulated free market capitalism. A more accurate (and a non-joke) way to describe this is to observe that Uber’s only innovation was to find a way to operate in an unregulated marked while all their competitors remained regulated.
eh.. so long as Uber (or any other privately owned & operated vehicle) is getting free land & pavement, they are effectively operating in a collectivized, regulated market.
Yes ofc, on one specific aspect of regulation - the total qty of cars allowed - they did an end-run. But regulating the total # of taxis was always just a way of trying to limit land consumption by cars, rendered ineffective by only applying to cars used as taxis instead of all cars, all vehicles. So yeah, they benefited from a titch less regulation, but land in cities is so valuable that to give it away for free dwarfs the value gained from skirting any other regulation, so IMO it's still largely a collective non-market endeavour, just organized for the benefit of ppl in cars, rather than the public at large.
What we're talking about is a much more specific phenomenon than "unregulated free market capitalism". In fact, in an unregulated market, there would be no regulatory arbitrage opportunities, by definition (e.g. Uber would have no reason to exist since taxis would already be unregulated).
The idea of the argument (or more accurately the joke) is that Uber is unregulated free market capitalism. It is what happens to the taxi market if they would lift all regulations. Uber’s whole “innovation” was to find a way to be unregulated while most of their competitors were still regulated.
I need to clarify, parent asked how does a user use AI to bypass copyright. But I answered how an AI company uses AI to bypass copyright.
I am under no illusion that if a user of AI requests an image of Indiana Jones and uses it in their art, the rights holders will issue a takedown an would succeed. The AI company that owns the model that generated the model will however not face any consequences, and have therefor successfully have bypassed copyright protections.
Well, doesn't that specific meaning apply here? I mean, the lack of protection for end-users is at first compensated by investment money (low prices and huge effort on support). Once network effect is reached, the unregulated nature of the platform shows, end-users are wronged, only providers profit from the lack of regulation ...
Or maybe I don't understand the meaning of enshittification?
No. The whole point of enshittification is that it is an intentional process, a bait-and-switch. You get a cool free service, you become dependent on it, and then they start monetizing it and limiting it.
My understanding is it is more tied to crafting UX that maximizes profit. Many cases involve both enshittification and regulatory arbitrage (as a peer comment so eloquently put it)
Yes I know, which is why I looked up the Wikipedia definition to make sure I was using it correctly.
Stripe provides a trusted service to its users, has a great reputation, then implements changes that will degrade that service by avoiding regulations designed to protect the consumer.
Personally, I think US banking needs something an Uber or AirBnB style shake-up to get their act in order.
It's awful how behind the times the US is when it comes to banking. 2 - 3 days to get money from one account to another is beyond embarrassing in the modern day. It took the US something like 15 years to get chip-and-pin.
Banks are still these monolithic entities that don't care to innovate or listen to customers because "what are you going to do, go to one of the other 4 monoliths that are all in cahoots with each other"
Other countries managed to regulate their banks to innovate just fine without blockchain technology, though. It doesn’t always need a startup to disrupt something by flipping the finger to lawmakers. Sometimes humble regulation is enough. Take SEPA as an example: I can transfer money free of charge to any European bank account, in a few seconds.
US banks literally collapsed the world financial system in 2008. You don't deserve humble regulation after that. They got, and they deserved, the Dodd-Frank Act, which has now been significantly rolled back.
> Sometimes humble regulation is enough. Take SEPA as an example: I can transfer money free of charge to any European bank account, in a few seconds.
SEPA was a success but it was only a first step to modernise the banking system. The following regulations/directives like PSD2 failed in my opinion.
The ECB also had one of those CBDC built much earlier than people have been told. They already had something quite advanced around 2020, with a optimist launch date in 2022 I believe.
It obviously failed miserably and I read a few weeks ago that they are "exploring Ethereum and Solana for digital euro launch".
I would be curious what happened exactly but my guess is the banks just said "NO WAY".
SEPA allows this in theory; in practice, for amounts >10k€, most banks will require you to provide proofs for the transaction due to the maximalist AML laws in the EU.
My bank requires me to download a PDF on their website, print it, fill it out by hand, scan it, and then send it by mail. After a few days, someone will decide to allow it (or not). If it is refused, I don't get any reason why and have to call the client service for clues.
> The ECB also had one of those CBDC built much earlier than people have been told. They already had something quite advanced around 2020, with a optimist launch date in 2022 I believe.
> It obviously failed miserably
They had a CBDC but hid it from everyone... but then somehow it failed miserably. If it wasn't released, how? They even had it before they decided to have it (2021). This seems just like a load of bullshit.
When they saw Bitcoin and Ethereum they obviously understood a great disruption was coming and acted on it. SWIFT too.
A Central Bank do not share everything they consider/plan with the public. It is not really hidden or secret, but they also do not make a press release about it.
Also if they are fundamentally gonna transform our banking system they better start early because a lot of things can go wrong. I estimate the time to build such a system is about 10 years if everything goes well.
I do not know exactly what went wrong, my guess is the banks pushed back as much as they could because most of them would have been made irrelevant under that model.
Now they are talking about Ethereum and Solana because they understood they have to fight against the Dollar in this arena.
> I don't know about you, but I'd rather use a system that allows me to do what I want with my funds without anyone else controlling it.
How do we know that this unusual transaction is you doing what you want and not someone else controlling and defrauding you?
A small well-understood amount of friction that significantly reduces everyone's risk is not an attempt to control your funds.
Old systems with arbitrary delays based on twentieth century processes should be replaced, but not everything needs immediate infinite speed to be valuable.
> How do we know that this unusual transaction is you doing what you want and not someone else controlling and defrauding you?
That's what they'd like you to believe, but fact of the matter is that you're still not protected. For example, at my last company, the finance department was phished into changing a bank account number and transferred $50k to another account. Bank just shrugged.
Do you want to live in a world where everyone else can do whatever they want with their funds without anyone else controlling it, though? Seems pretty optimistic for anyone to think they'd do well in that world.
I want to live in a world where responsible, law abiding citizens can use their money however they choose.
In the US, we already have credit scores, a system meant to reflect some sort of trustworthiness. Right now, it mostly determines your interest rates and access to capital. But why not extend that trust to granting people more freedom in how they use their funds?
If I want a large loan from my bank, I’m forced to provide endless paperwork and deal with people, despite having a great credit score. In DeFi, I just post collateral and instantly borrow against it. No gatekeepers, no conversations.
These limitations become even more obvious if you’re a nomad or frequent traveler. Suddenly you’re not just facing your local government, you’re up against borders and layers of extra regulation.
If you want to buy a house and you need a loan, it is a deep investigation into your bank finances.
If I have the money for a down payment, and I want to buy a house, I don't need someone poking around at my finances, even if I have nothing to hide.
> Usually people getting loans don’t have the funds in cash already.
Source? People get loans for all sorts of reasons. Loans are backed by some sort of collateral and if that isn't assets, it definitely involves having someone look at your records.
> Defi is nothing like that its currency speculation at best.
Wrong. DeFi itself has nothing to do with speculation. There is $57B locked up in AAVE on ethereum alone. It isn't a toy.
Neither Uber nor AirBnB got anyone’s “act in order”.
Uber just captured wealth via operating at a loss until competition was absorbed or destroyed.
AirBnB just helped further drive up the prices of single family homes and didn’t really have much effect on the hospitality industry at all - it caused a minor observable loss in profit which ultimately resulted in nothing.
Outside of maybe NYC, taxi service in the U.S. was totally unreliable before Uber/Lyft. It's not even a matter of price. It's so much easier to get a ride now in most of the country.
I don't think AirB&B really improved hotels, but it did organize and centralize the "vacation rental" market, making it easier to, for example, rent a beach cottage for the weekend.
Existing Taxi services did not improve - they were replaced by a lower quality, more expensive alternative with a lesser economic infusion to local economies.
Hotels and the hospitality industry did not improve at all.
None of those points refute me or support the argument I was contesting - that a “uber or airbnb of banking” would cause banks to “get their act in order”.
Banks have banded together to create Zelle for mostly instantaneous payments for individuals. As far as transactions between individuals, moving money quickly is a solved money. As for moving money from individuals to businesses, taking a long time gives customers more "float" and more time to earn interest, and it is a feature not a bug.
There are other issues to consider in the payments world. For example, I may not want my payment data to be used for marketing purposes[1] or have my payment processor block my steam purchases[2]. I'm skeptical that Stripe will deliver on those gaps though.
> 2 - 3 days to get money from one account to another is beyond embarrassing in the modern day
I've had next day ACH between all my various accounts for years now. Wires have also been a thing basically forever though most people need to pay to send and receive them. Same day ACH and FedNow are both out there too, though I've yet to see widespread implementation.
The activities you listed are not the main business of a bank. It's getting deposits and loaning them out with interest. In that regard, they are very successful and it's hard to see how Uber or AirBnB would do better given the disaster of microfinancing.
What other countries are you comparing to? I did a multi year assignment in Germany and holy fucking hell does their banking system suck. It took weeks for my checks to be deposited and reconciliation times were longer. Not defending the US here by my only non-US banking experience was atrocious.
The question is why did you use cheques? I don't know anyone who is not American who has used cheques in the last 20 years or so. I have not been living in Germany in a long time so I can't talk much about the banking system, but I have had transfers with German friends and family which never took more than maybe a day or 2 within Europe.
You take a bad example and compare it to another bad example. Germany is well known to be behind the curve like the US. It's the only western European country I still bring a healthy amount cash when I go there. Wouldn't be the first time I had to pay parking with cash in recent times. Every where else this is a non issue. It's rapidly changing though, but I don't like the common in use PIN terminals as they have no way of hiding the PIN entry.
Now I'm not generally a big defender of Germany, but the reason for much more prevalent use of cash is largely privacy in Germany. And I sort of agree that handing all monetary transactions to the mastercard/visa duopoly is a terrible idea.
We are essentially trading the convinience of a tap for increased prices and unelected gatekeepers that can (and will) easily push sectors out of business, because they don't like what they do.
Regarding the parking, I much rather would be able to pay with cash than the $2 parking plus 50 cents cc transaction fee that you have to pay in many places in NZ.
Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves? That's what makes banking tricky. When there are a surge of loan defaults across the banking system the money supply shrinks rapidly unless the government bails them out. Thus, the need for regulation.
One reason the U.S government has to like stablecoins is because Tether is one of the biggest buyers of U.S treasuries that they use to back their stablecoins.
> Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves?
In a manner of speaking. You need to trust that the issuers have the reserve they claim. There's no way around this, unless the asset in reserve is equally ethereal (i.e. another cryptocurrency).
Tether, for one, almost certainly doesn't have the reserves.
Correct, this is fundamentally the oracle problem. There is no link between the blockchain and the real world which is why only money-like instruments have been successful for whatever value of success this constitutes.
First of all, wut. Second, that's irrelevant because stable coins rely on fiat backing (ostensibly) so you're stacking a new problem on top of what you perceive to be a different problem. If you believed that to be a problem then stable coins give you that problem twice as hard. And a whole mess of new ones too, like zero recourse against the newly intermediated offshore issuers in low-or-zero regulation locales.
Madoff Ponzi scheme also ran for at least 20 years. And yeah around 1% of total USDT supply is blocked so yeah Tether can very well live on those blocked funds:
I don’t discuss the past. In 2017 it was tether the one that caused the bubble that put BTC at almost 20k, by issuing tokens backed by nothing
Now they generate more than 10B per year in profits. And they have been using that to collateralize their usdt
It’s clear they are now fully backed. Another question is whether they want to comply with regulations (they don’t comply with MiCA, I doubt USDC does either) but that’s another question
Hate it or love it, they aren’t going anywhere anymore
Tether claims accounting firms won't audit them, but that sounds like a convenient self-serving lie to me:
> In an interview with DL News, he said the Big Four accounting firms — Deloitte, PwC, EY, and KPMG — are afraid to work with Tether because they fear it will damage their reputations.
> “None of the Big Four companies will audit us,” Ardoino said. But he said securing one of them as Tether’s auditor is a “top priority.”
It would be pretty stupid for Paolo to end up being naked, now that his business is printing money left and right.
To make it clear I am not pro tether, I am against visceral hate which was justified years ago but I feel it isn’t anymore. Tether gained my sympathy by freezing quite promptly funds from various hacks.
Circle on the contrary have failed every single time.
There is a grain of truth in what you say, but your conclusions are off.
Tether started as a way to pump the Bitcoin price, under the guise of better facilitating payments on crypto exchanges. They’d issue Tethers out of nowhere and use it to buy BTC and wash trade.
It was so successful it got to the level many people thought of it as “as good as dollars”.
This led to massive demand for it outside of Bitcoin pumpers - with criminals, sanctions evaders, money launderers of all kinds. Your granny needs to buy tethers to send money to the scammer she’s on the phone to.
So yes I do think they’ve probably moved away from issuing unbacked tethers. But only because they’ve found another niche which is also extremely suspect.
There is nothing to commend these guys. It’s a massive scam.
Garbage. An audit reviews a trail of origin. Tether got an attestation, that said no more, and no less than, "At this exact moment in time, the balance in this account is $X". You could take a short term loan for the majority of that and no-one would know.
You and I can't buy a house on a mere attestation of accounts - funnily enough, lenders want to see how we acquired that money. But these clowns can stand on stage at Davos and say "Yeah, we've banked over half a billion a day USD for the last two years, trust us, we don't need an audit". I know that comparing investment to revenue is not apples-to-apples, but to get an idea of what that incoming cash looks like? You're on the scale of Saudi Aramco. Samsung. Alphabet.
They kept firing their auditors. They had one done, and then refused to release it, saying "it was not of use to anyone because it was in Mandarin Chinese". What the actual fuck?
Their bad rep is their own fault.
"Tether and Bitfinex are completely independent and unrelated!" Oh yeah, why are the same two people who signed a loan contract on Tether's behalf ... the same two people who signed it on Bitfinex's behalf?
Or let's look at their bank, Deltec, who also made statements to "support" Tether... or specifically, let's look at some of the highlights from a fucking trainwreck of an interview their "Deputy CEO" gave to CNBC:
- was conducted from his gaming rig
- about Deltec's (and therefore Tether's) money movements being several times larger than all the banking in their country was due to people misunderstanding the country's two banking licenses, the names of which HE "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses where they operate?!?), and he "wasn't sure which [banking license] the bank has, but we might have both"
- oh yeah, said Deputy CEO's "resume": 33 years old, by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age of 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland (called Indepedance [sic] Weath [sic] Management) and uhh... Jacksonville, FL.
Once CNBC's viewers started ridiculing and questioning both Deltec Bank and Tether, said Deputy CEO was hastily removed from Deltec's "Leadership Team" page on their website. Once that was questioned, he was re-added...
... and then the entire bank website was replaced with a low-effort WordPress template. Their online banking was Javascript hard coded to refuse all login attempts.
In FIAT money lending is the act of money creation, rather than lending existing money held in account. I’m guessing that wouldn’t have a parallel with stablecoins because the technology won’t let you just make new money at will?
> In FIAT money lending is the act of money creation
That depend on how you view money. Lending does increase the volume of money in circulation, in that sense it creates money. But that view is too simple to be useful.
The regulators that regulate, and in particular control reserve ratios (complex calculations that banks have to make about the relationships between their various assets) and base interest rates are the real creators of money.
The side stepping of those regulators is interesting. The conventional view is that it will lead to the same sort of financial instability as existed before the gold standard was abolished and we (pretty much the entire western world) moved to modern banking and fiat currency.
A hundred years of quite stable money was quite an achievement.
> That depend on how you view money. Lending does increase the volume of money in circulation, in that sense it creates money. But that view is too simple to be useful.
Far from being too simple, it is the primary method of money creation in modern economies.
> The regulators that regulate, and in particular control reserve ratios (complex calculations that banks have to make about the relationships between their various assets) and base interest rates are the real creators of money.
Simply setting rates does not create money. It can influence it, but it is not the ultimate cause. Lending is. Reserve banks can and do lend, but commercial banks are responsible for the majority of money creation.
The underlying feature of FIAT money creation is debt. And debt is a very natural thing (existing before money) that will just manifest in the crypto system instead.
Person B borrows $100, all the coins move on the ledger.
The ledger could facilitate the transfer while the bank maintains an "IOU" for person A's $100. The bank would be betting that not everyone will come withdrawing at once, just like a regular bank.
Regulation is the only thing that can prevent this from being done with any sort of crypto. The same IOU-based business model as happened with cash, gold, etc, could very easily be implemented using the technology. If you don't like fractional reserve banking crypto isn't a magic bullet that makes it impossible, especially since the general public probably wouldn't be sophisticated enough to know how to stick to "true" crypto vs "IOU-based fractional crypto facades."
But generally regulatory regimes have decided that the productivity advancements offered by the investment-through-loans of major portions of deposits are worth the risks. I don't think the GENIUS act allows this, though, so there's one regard where stablecoins are more-regulated. I worry about the edge cases, though - seems like requiring stablecoins to be paid off preferentially incentives using them for deposits, which could harm circulation if the reserves or followed, or which could screw over non-stablecoin deposit-holders if an institution doesn't comply and then goes under.
(This is closer to how regular banking works than the naive "banks create money by incrementing a number in your account." After all, banks are generally either (a) expecting those loans to be spent or directly giving the money to third parties like car dealerships or home sellers - which is likely to physically move the money to other banks, institutions, or cash, not just recordings in their internal tables.)
As far as I understand, the backing assets aren't on-chain. I give tether $100, they create and issue me 100 USDT on-chain. But they can take my $100 and lend it out. Now whoever Tether loaned the $100 to has $100 and I have 100 USDT so $100 has been added to the money supply, just like with a normal bank.
Algorithmic stablecoins[1] don't have a one-for-one backing in real world assets so can in theory create new coins "from thin air". The amount they can do this depends on the exact algorithm and the backing assets, and the practicalities of unstable crypto pricing make this difficult in practice.
For example the well-known DAI stablecoin[2] is backed by a mix of crypto assets, but is overcollateralized to avoid problems when one of the backing assets drops in value. The is sort of the opposite of "creating money out of thin air"...
Non-algorithmic stablecoins can do it by being backed by "high quality loan assets", in which case the conventional, non-crypto credit creation mechanism applies.
I gave you the most dramatic example. So far no undercollateralized, algorithmically backed $1 stablecoin has sustained a reliable peg at scale over multiple years.
Zero. Nada. There was always somebody somewhere exploiting it.
TerraUSD
USN
USDN
Basic Cash
All failures so far, every time a death spiral.
FRAX started as algorithmic and had to move to over collateralization
Same with DAI
You really can’t call them like that once they become backed by USDC
There are defi loans for example. You take an asset like BTC and loan stablecoins against it.
The underlying asset can be rehypothecated, Celsius did this before going bust iirc.
Tether is also the underlying backer of crypto market cap, and has never done an audit of their assets. They've made loans to various crypto market participants.
In theory there are auto liquidation rules etc. In practice humans have not yet managed to create a financial system they can't make asset bubbles with
That’s not the same though. Banks literally make money out of thin air when they extend a loan (oversimplified of course). They can choose the time and place to do so without having to wait for “checkpoints”. They can even run themselves into the ground by creating too much money (if there is no reserve requirement).
Banks make bank-account-dollars (a form of IOU) but they can't make cash-dollars. When you withdraw, the bank has to give you cash-dollars from its pool and can't just print some. Only reason they're considered equivalent is... uh... because I said so? And they're legally allowed to denominate their bankdollars in dollars.
Anyone can print IOUs, but not everyone can legally call them dollars. That's the only advantage banks have over the rest of us.
Same on the blockchain but without the privilege of conflation. You can have a smart contract that has $100 of ether but trades in 200 shares valued at $10 each. But the blockchain systems prevent you from pretending that bank-ethers and cash-ethers are the same thing. You can label them the same but they're not the same and the system knows that. Even Wrapped ETH, a contract that literally just prints and destroys WETH 1-to-1 with the ETH it holds, i.e. a full-reserve zero-fee bank, isn't interchangeable with actual ETH.
> An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use.
Stablecoins are much more heavily regulated than banks, being required to have 100% reserves under the GENIUS act, unlike banks who generally only ever hold on to 10% of the money you deposit with them.
Stablecoin issuers require much less regulations because their activity is auditable onchain. If they start misbehaving they get regulated by the free market - people will stop using the given stablecoin and move to a competition.
You think that the free market has regulated or audited Tether? I don't think so, that company is about as sketchy as it is possible to be, and yet it continues to dominate the stablecoin market.
They’re backed by treasuries and subject to treasury market shocks (like the March 2020’s dash for cash). Large redemptions can see a feedback loop of redemption -> rushed selling -> treasury market stress -> redemption. Exactly the sort of scenario one might expect as the secular trend of the weakening dollar bubbles to the market’s surface.
They're also the solution to many. Like any tool, they can be used well or used poorly. It's not really sufficient to call out that they can be problematic, it needs to be down that they are problematic in this case and that an unregulated system wouldn't simply trade present downsides with larger ones that the regular holds at bay.
> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
Except they are frequently _not_. I dislike crypto on principle, but you can't look at the exorbitant transfer fees and latency that a lot of banks charge for common transactions (Visa/MasterCard are especially bad) and say that crypto has no potential.
Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.
The problem with banks pointing to banking regulation is that they helped shape the regulation - and they did so to protect their business, not to help consumers.
We know that central banks are great at monetary policy. We know that decentralized protocols remove a lot of the more parasitic traits of banks. Why not have a central bank currency that can be traded on the blockchain, especially since converting it to real money will still entail KYC?
> Because literally the only point is to avoid the existing banking system and you can do that with a postures database with much less cpu involved.
Ethereum is actually very low resource intensive nowadays.
You can run a validator node on a RPI, a full sync node on a Intel N100 minipc with a big fast SSD and the "light clients" can probably run on something very small.
I have seen banks having to bring semi-trailers full of diesel generators to plug them to their mainframe because the current requirements were too high for the grid during big batch jobs.
I like crypto (I'm formerly in the industry), but that's not quite a fair comparison.
1. Running a validator is inexpensive in terms of compute, but there are 1,000,000 validators or something, which adds up to a lot of CPU usage. Of course, I think it's insanely awesome that you can run some code on Ethereum and it'll be replicated on 1,000,000 independently-operated machines, but it's not a very CPU-efficient strategy.
2. Banks doing those batch jobs probably had much higher TPS than ethereum.
> Banks doing those batch jobs probably had much higher TPS than ethereum.
Yes the platform running in most banks, usually built on what we call "mainframes", is still mind blowing and with incredible performance. Also just one of those CPU is about the price of a house...
Also the requirements I cited is for running an Ethereum mainnet "Layer 1" node. And most "TPS" happens on the layer 2s anyway.
So it is hard to compare technically. But one thing for sure is becoming an active participant in the Ethereum mainnet has a very low barrier. They got rid of the whole intensive "Proof of work" part about 5 years ago.
For a full sync node the waste is more at the bandwidth and disk levels.
Ethereum is able to process something like 150 transactions per second, using about 1,000,000 validator machines.
Postgres running on a single Raspberry Pi is something like 200 TPC-B read/write transactions per second.
Saying Ethereum “is not using very much CPU” is baffling to me. It is the state-of-the-art in this regard, and it uses something like six orders of magnitude more CPU than a normal database running a ledger workload?
First things first, I'm a crypto-sceptic - to put it in the mildest terms possible.
You're spot on with CPU usage. However: how would you design a RasPi-efficient, fault-tolerant, decentralised ledger with strict ordering and a transparency log?
Consider CAP. Existing banking systems choose partition tolerance (everyone does their own thing all the time basically), and eventual consistency via peering - which is why all settlements are delayed (in favour of fraud detection / mitigation), but you get huge transaction throughput, very high availability, and power efficiency. (Any existing inefficiencies can and should be optimised away, I guess we can blame complacency.)
The system works based on distributed (each bank) but centralised (customer->bank) authority, held up by regulations, capital, and identity verification.
Online authority works in practice - we collectively trust all the Googles, Apples, etc run our digital lives. Cryptocurrency enthusiasts trust the authors and contributors of the software, CPU/OS vendors, so it's not like we're anywhere near an absolute zero of authority.
Online identity verification objectively sucks, so that is out the window. I guess this could work by individual users delegating to a "host" node (which is what is already happening with managed wallets), and host nodes peering with each other based on mutual trust. Kinda like Mastodon, email, or even autonomous systems - the backbone of the Internet itself.
Why does it have to be decentralised (by which I assume you mean permissionlesss to join as a validator?)
The only reason for this - it would seem to me - is the ability to have nobody in control who can be subject to law enforcement.
If you need this kind of decentralisation blockchain, and all its inefficiency, is the only choice.
Societies should not require such things though. They need to have trustable institutions and intermediaries to function, in finance and many other areas.
> Societies should not require such things though. They need to have trustable institutions and intermediaries to function, in finance and many other areas.
...which is more or less the same conclusion that I've arrived at by the end.
Also the capacity is significantly higher with L2 included, and increasing rapidly.
With zkrollups and a decentralized sequencer, you basically pay no penalty vs. putting transactions on L1. So far I think the sequencers are centralized for all the major rollups, but there's still a guarantee that transactions will be valid and you can exit to L1.
Scaling is improving too. Rollups store compressed data on L1 and only need the full data available for a month or so. That temporary storage is cheaper but currently is still duplicated on all nodes. The next L1 upgrade (in November) will use data sampling, so each node can store a small random fraction of that data, with very low probability of any data being lost. It will also switch to a more efficient data storage structure for L1.
With these in place, they can gradually move into much larger L2 capacity, possibly into the millions per second. For the long term, there's also research on putting zk tech on L1, which could get even the L1 transactions up to 10,000/second.
there's 1,000,000 validators (defined as a public key), but you can run multiple validators per machine. Most estimates that crawl the p2p network to index nodes comes out at like ~20,000 machines
doesn't invalidate your point but it at least shaves off a few orders of magnitude
and a single PG node is not a fair comparison, we're talking 100% uptime global networks. Visa does about 70,000 transactions per second - how many servers do you think they run across their infra?
ZK rollups which greatly compress data on chain without losing security guarantees, combined with temporary storage using data sampling so each node only has to store a small portion of it. The zk rollups are live and support significantly more than 150tps today, and the data sampling goes live in November. There's a lot more work to be done but that puts the major pieces in place.
But with multiple parties involved, who has the rights to read and write to the postgres instance? How do we make sure transactions were not forged? How do we know data at rest is not being tampered with?
Blockchain solves that. Newer blockchain protocols especially an L1 is much faster, easier on the environment, and provides all the immutability, transparency, and traceability benefits.
You know you can just use regular cryptography to validate data, right?
Also, you always have to trust someone, in this case Stripe.
Regarding L1 blockchains, how exactly do they solve the speed problem for a distributed global database that needs to be replicated everywhere for the security guarantees to actually work?
> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.
All transactions must be derisked (there is a fallback if the transaction fails). This usually means backed with reserves, which also means they cannot be instant.
Now if you don't care for the risk management of a bank, sure, go ahead and do what you would like.
This isn’t even the reason, because the reserve status can be immediately verified across institutions and is often backed by a sovereign in some way in case of a run and payment systems can circuit break, etc. There are legacy reasons depending on the bank network such as business hours and batching and liquidity optimization, but these are increasingly less meaningful and systems like FedNow and others offer instant and final transfer.
The real and continuing reason for the delay is to give time for repudiation and assessment of fraud, money laundering, and other financial crimes risk. The risk of instant transfer is instant theft or otherwise absconding with money that shouldn’t be yours. In fact settlement delay makes reserve problems worse because you effectively “hold” money that could potentially not be properly secured during the hold and cause a default on a transaction that was otherwise taken out of balance and pending transfer. Instant clearing and settlement makes this unambiguous. But it also makes transactions as risky as a cash transaction - instant and irrevocable.
For some customers this is legitimately ok. But by and large most customers benefit from the delays more than they’re hurt by virtue of having a window to repudiate a transaction that is illegitimate. It’s just they don’t recognize that value until they need it. We all benefit from a system that disincentivizes criminality overall. It’s hard to recognize it because we exist day to day with that benefit and it’s hard to prove the negative, but there were times without the protections against financial crimes and financial oversight and they were NOT better times. They were objectively worse, so our ancestors built a set of guard rails to prevent the endemic badness around us.
It appears though as they die off, and as we become less attuned to history, we are very busy ripping apart the guard rails our ancestors very carefully and thoughtfully built into our societies like some junior engineer who assumes every line of code written before them was written by an idiot. Take the American CDC as a case in point - the modern public health system was a very hard won victory against endemic diseases by generations - and as the generation who established it expires, we rip their legacy to tatters.
The US banks just won’t do it across the board unless it is mandated like ACH. Many in the banking system feel comfortable with this FedNow rollout taking many years. It’s ridiculous.
Last time I paid for something across borders, transaction has completed in less than 10 seconds and I got both updated state in outgoing bank account, and at the receiver side.
> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.
How long is settlement for you and what are the fees. Are you talking about banks for credit card payment processors
A business needs a processor which will take fee and add some delay
> You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank
stablecoin issuers are for all intents and purposes banks.
they'll try very hard to stop anyone from calling them that, but in essence, they give you a note (a crypto coin, in this case) in exchange for a promise that they'll give you back the amount of fiat printed on the note. this is the primary purpose of a bank.
I think the most disruptive thing about stablecoins is the ability to opt-into your monetary system of choice.
It's hard for the average non-US person to opt-into the US financial system. Sure, they could hold dollars in banks, but local monetary policy can nix that privilege at anytime by imposing foreign exchange controls. It's happened before, in some of the largest economies in the world: China in 2015, India in 2013, Argentina in 2011.
The current way users solve this problem requires a lot of resources. That's why you usually only see rich people have Cayman accounts, Canadian real estate, and shell companies in Panama. Stablecoins on permissionless blockchains make this process 100x more accessible for the average person.
So yes, stablecoins currently let you circumvent regulation.
But regulation can be a prison where you can pay to be free.
So what happens when it costs nothing to get out of jail? What kind of strains do this place on economies that people escape, as well as the economies that people join?
This is as wrong as everytime someone says "the benefit of Bitcoin is you can just walk all your assets across the border!"
It fundamentally misunderstands how foreign exchange works, or how government backed currency works.
You cannot "opt out" of the local currency: period. It is the only currency which can extinguish tax obligations. And even if it wasn't government backed, you can't trade in a currency no one wants in the first place.
This should be trivially obvious from the observation that how much water a gold bar in the desert buys you is going to be pretty highly variable.
Just because badly managed local currency is required for taxes doesn't mean that most people in that country _must want_ to hold it. Plenty of trivially obvious evidence to the contrary
I assume you've never experienced hyper-inflation? If you have, do you think it's fair that you were forced into a hyper-inflationary currency? And, if given the means to, do you think it's fair that people _should_ have the ability to choose?
That's not the point: the point is "how do you buy the coin in the first place?"
If you live in a place then you have to trade in whatever the local currency is. You didn't "opt in" to a particular stable coin: someone has to be willing to accept that specific coin as payment.
And they can't just exchange it to another: the exchange has to want to sell that coin in exchange for the coin you transact with.
And to interact locally with the government, you need someone who is willing to sell coins in exchange for the currency you don't want.
In practical alternate market economies, the only currency which trades tends to be USD and the exchange rate will be bad because it's a grey market. I would go further and posit that where crypto has any impact, it's people because it's a window into being able to hold USD.
Certainly the only question anyone asks about Tether is whether they actually have the USD to cover their position: no one wants a Yuan based see stable coin.
I think it's pretty easy to buy the coins, regardless of government intervention. Countries (ie China, Nigeria) have tried and failed to restrict access to cryptocurrencies. Whether you get good execution is a separate issue- my point is that stablecoins enable you to execute these trades in the first place.
Agree with the posit- stablecoins grew a lot during periods of strict monetary policy (ie capital outflow from China starting in 2015, hyperinflation in 2023).
Note my original post said disruptive, not good. Meant it in the truest sense of the word; both good and bad comes out of it.
you’ll note that many countries that impose capital controls have large informal economies. this is not a question of theory, there are many countries where millions of people do hold significant sums in dollars and other foreign currencies, regardless of whether they fulfill tax obligation. enough people do this and you also get the informal economy transacting in these currencies. you are “proving” the non-existence of something that in actuality is practiced by millions of people every single day.
And now western countries can also have ultra corrupt, opaque and controlled by a small oligarchy group currency system, just like some 3rd world countries. Yay, progress :)
If someone spends significant effort to gather documents proving that their family was forcibly relocated from Poland, they may be able to become a Polish resident and then spend a year or so doing paperwork, bringing all of the documents that are required according to the official web site for some task to the appropriate government office where they are then told that other documents are required, or that nobody in that office even knows what documents are required, and so on, and after that time they may achieve Polish citizenship. You know, in recognition of the fact that their family is in fact Polish. But during that year or so, they may have trouble using the banking system because of sanctions on Russia and because no Polish bank will serve them until they become Polish. So their employer may be on the lookout for alternative payment rails.
The person you are responding to is not arguing there is not a use case for crypto in cases like this.
They are arguing that stablecoins, specifically, require an off-chain entity that ultimately control them. And if you have an entity actually in control, why go through the trouble of blockchain? Then you can just have the controlling entity run a normal non-blockchain ledger.
I like the argument elsewhere in this thread that the actual reason is that it allows running a bank while pretending it’s not, bypassing regulation meant to protect depositors.
> But I imagine most banks would point to regulation as a reason for the delays
There is also good regulation e.g. the EU made it so banks process transactions within "10 seconds", including and especially cross-border transfers for SEPA countries (Single Euro Payments Area). https://www.europarl.europa.eu/news/en/press-room/20240202IP...
So banks willingly being slow with transfers is perhaps a question for your local policymaker to remind them they can do better.
> they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
International wire money transfer is far too difficult today. And after you've sent it, you still need to wait minutes (hours?) for the receiving end's bank to actually process the wire and move it into the recipient's account (correctly).
Then you need to nag the receiving party to check their account every few minutes so that they can inform you that they actually did receive it successfully. What if they're in a different timezone? 12 hours off?
I can transfer money from Europe to Brazil in seconds with Wise. I press the button and the money is nearly instantly available in the Brazilian account via PIX. The same in the reverse direction is possible but only if you have a more modern bank in Europe, eg. N26 or Revolut.
I was thinking more of gp's comment "and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging"
Wise isn't great for paying suppliers. Their business account limit for debit/credit is $2k, and for ACH is $50k. They have higher limits if you fund with wire, but then we're back at the starting problem again...
And still, you have no way of knowing that the receiving party actually got it. On a blockchain, the source-of-truth "database" is public.
My understanding is that Wise isn't a true international transfer. Wise has money already in a Brazilian account, and when they receive money in their European account then they send you money from their Brazilian account. If they don't have enough money in that Brazilian account then it can't be instant like it is today.
Not the full picture:
Wise is that big that it has already lots of local accounts and/or correspondent banks; so basicly "you get the money from Wise" but from a "local payment way/scheme" (to which Wise is connected in the background through several layers)
that we need one company to achieve such big scale that they literally are regulated in every single country and basically become monopolistic in terms of their influence?
a Blockchain based system can maintain similar effects but with a balance of power
> What stops someone at circle deciding to issue more usdc without real dollar backing
Well, the law now. The recent stablecoin legislation has a lot of new regulations.
If you mean what technically stops them, then nothing. But that's true of all the crimes I can think of, the law can only be enforced after the crime takes place.
My current best guess is that people are finding stablecoins valuable because they are effectively barer assets issued by an entity in another jurisdiction that has no requirement to surveil or control how those tokens are moved around between parties, and hence it allows you to skip a lot of the regulatory overhead you would normally have in dealing with a local bank. Of course this can be stopped by states eventually, but it helps when the jurisdiction of the issuing entity is allowing it.
- by USA government (indirectly) to re-dollarize the world without generating too much USA inflation, another IMF SDR mimicking China usage of foreign currencies to avoid hyperinflation;
- by many migrants in the I world to send money home, something in the III world could be converted to USD at a much cheaper rates and with much simplicity than classic banking/money transfer solutions;
- as a hedge against local currencies, considering dollar or some other currencies much more stable (see for instance the Argentina forcibly conversion overnight of USD accounts to ARS with enormous loss in 2002;
- as a decorrelated asset for DeFi trading on non-stablecoin cryptos (meaning market timing, buying BTC, ETH, SOL, ... when they dip, swapping then to some stablecoins when they top, waiting with the stablecoin for the next dip to buy).
In that regard the (unlikely) real existence of the collateral they claim is not much relevant: as long as most trade on stablecoins come from DeFi the Venezuelans, Bolivians, ... who choose them to bring USD home, the few company using them to pay B2B stakeholders in various countries are still happy anyway, as long as the stablecoin remain de-correlated to other crypto traders are happy anyway.
Tokenised stocks are more likely used to circumvent regulations since you can buy them swapping non-KYC coins against them avoiding capital gains taxes, at least partially.
The irony is that valid international transactions must be enforced with centralized rules, and thus a decentralized ledger like BitCoin can never operate in this space.
and yet millions of people do use crypto to do international transfer of dollar-denominated assets and don’t seem too concerned with whether it is valid or not when it is usable money in their pocket.
Stripe's a $90bn+ company because it builds & sells tools that make it easy for software engineers to programmatically move and manipulate money. This is a no brainer for them (regardless of how mainstream stablecoins/cryptocurrencies/blockchain eventually become)
Lots of things have a cost, and lots of things are difficult to manipulate. Bitcoin has value only because of speculation and the Greater Fool Theory. There's nothing fundamentally distinguishing BTC from any random shitcoin. Why is Bitcoin Cash worth so much less than vanilla Bitcoin?
Yes but bitcoin is essentially useless as an unit of exchange because it’s extremely unstable and deflationary nature. The only “logical” thing to do with it is to HODL.
The value of Bitcoin also depends on your ability to convert it to real world money, since contracts are denoted in real world money.
I'd argue the real value of money lies in contract enforcement. And I am talking about real world physical enforcement like police throwing you in jail. In financial engineering literature we don't really care about the real value of money, the only assumption needed is that contracts are enforced. If that is the case then you can hedge.
For example: You sign an employment contract where you get paid in USD. You also sign a rental and utility contracts in USD. If salary > housing cost, then you essentially have your housing needs hedged. You don't really care that USD has "real value". The value of USD lies in the fact that these contracts are enforced by the government.
The rarity of a currency is important in the sense that contracts don't make sense for all parties if the currency is too abundant. For example, if you can find USD laying on the street, then you would not work for USD. The rarity mechanism itself is not important.
When a stablecoin is issued on a public chain then the issuer cannot secretly censor transactions and the activity of the issuer in general is auditable.
You also get access to all the magical DeFi stuff.
Other than this you, as a person, don't need to be aligned with the current political regime you live in to open a stablecoin "bank account". This on its own is a huge breakthrough.
"they don't have to take days to process a transaction"
Unlike blockchains, banks are required to check the tx validity against fraud, money laundering, sanction lists, terrorist financing etc, must ensure funds could be returned if a mistake was made. They could not be processed on weekend or at night, because some transactions require manual review by human workers.
It is completely decentralized and doesn't use a flawed algorithmic stablecoin mechanism like Terra-Luna but rather creates synthetic cash exposure by shorting perpetuals against collateral the same way a TradFi investment manager would manage their asset allocation exposure. The perps are traded on DEXs and I believe the BTC and ETH is held in on-chain vaults.
This is a solid model and I believe the leading decentralized stablecoin.
Things like USDT and USDC are essentially tokenized real-world dollars. Nothing inherently wrong with that, for example the Eurodollar market has existed for decades, but it does require oversight that collateral reserves are what they are and also means they are not truly decentralized as you point out.
I like USDe, but it's not completely decentralized. You still have to trust whoever's trading the basis like you have to trust Tether/Circle to trade treasuries.
Hi, thanks for correcting me on that. It actually says right [here](https://docs.ethena.fi/solution-overview/risks/exchange-fail...) that they use CEXs to trade the derivative positions so I clearly didn't do my due diligence on this. I don't mind being wrong but I shouldn't have been spreading misinformation when I didn't know the details so I apologise for that.
I'm actually quite disappointed that this is how they implement the protocol because to me the main benefit of the hedged collateral model was that it was the one way to produce a truly decentralized stablecoin. Do you know of another project that implements the same mechanism fully on-chain and decentralized?
At first stable coins were to avoid taxes when selling and buying again by skipping the round trip to fiat.
But now, the use case Stripe is talking about is basically the equivalent of creating WoW Gold for companies, and bypassing state money entirely, but IRL.
This is a dangerous idea.
Big corps have become immensly powerful, but they are still kept in check by the state for 3 reasons: the monopoly on law, violence, and minting money.
Lobbying is taking care of the law.
And now they are coming for the money.
Crypto currencies were supposed to taken the power of currency from big actors and back to the people. It's going to take it from the state to companies.
Soon, they will effectively have more power than the state, and citizens will be screwed.
The only convincing explanation of the benefits of stablecoins I have seen is that it is a backdoor for implementing narrow banking, which libertarians love and economists and central bankers hate (as it would cut off credit to the economy).
A narrow bank is a bank that takes deposits but doesn't make loans, basically parks the cash at the central bank or into risk free instruments. So it provides you with payment facilities, very low interest rates, without the credit risk that comes with a large bank that has exposures to all sorts of risky businesses.
Everything else is either temporary benefits of arbitraging slow moving regulations (but KYC, consumer rights, money laundring regulations, etc are quickly catching up), or as you suggest, some non sense about a zero trust system (crypto / public ledger) that fundamentally relies on trusting a custodian (so you might as well use an oracle database and spend in licensing what you save in energy cost!).
I had tried to describe this effect recently when Trump lowered bank reserve requirements, urging traditional banks to buy stablecoins with the extra funds this gives them.
My comment was that it increased risk (less reserves), without any potential upside in new economic activity. Basically all the money would flow to the govt in the form of treasuries the stablecoin issuers buy.
As opposed to the banks, you know, lending money to businesses.
> Implement something the banks just aren't willing to do themselves?
I think that's it. We're very unlikely to see international transactions between banks happen as easily and as quickly as they can with a stablecoin, even though it's technically possible.
I think part of what makes it easier is that with crypto there's "no take backs" since it's largely impossible. Banks have to worry about fraud constantly because they're somewhat liable.
Bravo! I don't think it can be put more plainly than that.
> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?
They allow businesses to act like banks without obtaining a commercial banking license. Initially this circumvents regulation, but over time, it allows entities to outsource solutions for those pesky regulations (compliance, audit, etc.) to third parties.
Bitcoin makes the least sense of any of these schemes. Proof of work is just proof of sota ASIC ownership, which is just proof of stake by another name. Why not just use POS like everyone else and avoid dumping the carbon? Bitcoin is going to be one of those things in the history books that will seem utterly incomprehensibly irresponsible to future generations.
Bitcoin makes a lot of sense, if you don't want central banks to print your monies and devalue it. If you don't care about that, then it doesn't make sense for you. But really, the 21M cap is about only point that matters about BTC, the other features have to be there but are secondary.
Nope, still no sense. There are plenty of crypto projects out there that are less centralized, don't dump entire countries worth of carbon into the air, and still manage to have the same logarithmic distribution that Bitcoin does.
BTC was a first draft that somehow metastisized into a literal meme virus that consumes a stupifying proportion of the world power supply.
It's idea cancer. The fact that it continues to exist is a sign of a faulty memetic immune system in our species.
Phew seldom have I heard such a wrong thing. Bitcoin makes absolutely no sense as an actual transacting day to day third world currency because A) it is completely incapable of scaling to the task due to the projects allergy to sensible development hobbling it to 20 year old technology B) because of A, the transaction fees are many times the weekly salary or even yearly salary of those target users.
Bitcoin was an interesting idea. 20 years ago. It's entirely without merit now, but it will take decades to fade into obscurity, pumping out carbon the whole time.
Current bitcoin fees are 17 cents. Not anywhere near weekly salary.
Regardless, they don't need to use bitcoin for their day to day transactions. Just somewhere to put their savings that won't be inflated away. USDC would make much more sense of course.
Half of the world's population lives on less than US$2.15 a day. You're right, nowhere near weekly salary. Just three transactions a day will only use up 25% of their earnings.
> Just somewhere to put their savings that won't be inflated away.
What fucking savings?
And uhh, what are they doing, then, just making periodic conversions to fiat that is, as you point out, "inflated away"?
You're trying to have it both ways, "crypto is immune to inflation problems, that's why it's important to a lot of the world", and then when someone points out transaction fees, "Oh, you wouldn't really use crypto daily, you'd still use that fiat with inflation problems, you'd just keep your "savings" in crypto".
It is laughable how much fervor goes into these kind of statements that have had little to no critical thinking applied.
Empirically speaking the Bitcoin price has always fully recovered within a year or two, while there's not a single instance of a highly inflationary fiat currency regaining its original value (which would entail significant deflation).
>At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
This is missing the fundamental idea behind blockchain. You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent. Once you add those boom you have yourself another blockchain :-)
>So what are stablecoins really trying to do? Circumvent regulation?
No, stablecoins have less regulatory burden because of the public ledger removing the need for manual review and verification by various intermediaries. They are still compliant with regulation.
> You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent
Consensus between who? The stablecoin issuer, stripe in this case, is a single party, who are they coordinating with that requires a consensus algorithm?
How does centralized SQL replication do consensus, compared to a DLT?
Blockchain consensuses: Which is the next block, Which protocol version must what quorum upgrade to before a soft fork locks in, Whether a stake should be slashed, Leader/supernode election (handled by the UNL text file in git in rippled, which underpins R3, W3C Web Monetization micropayments, and W3C ILP Interledger protocol (which FedNow implements)),
When there are counterparties and then they might as well just off-site replicate the whole database or blockchain locally, and run indexes and queries at their expense.
And then there is a network of counterparties willing to grant liquidity to cover exchanges that cover multiple assets and chains, who want to limit their exposure by limiting the credit they extend to any one party in the network and account for an entire auditable transaction. (Interledger ILP Peering, Clearing, and Settlement)
Private blockchain or SQL replication scaling woes? And then implement mandatory keys in an append-only application.
> It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
I think the unspoken part here here is that the lack of transparency is a feature for some users.
I'm generally a cynic on cryptocurrencies and I think they're kind of terrible for society in a lot of ways, so none of what follows should be taken as a positive opinion on cryptos. I'm just explaining how they work.
There will always be two competing interests with regards to currencies:
1. On the one hand, consumers make mistakes and get scammed, and want reversible transactions.
2. On the other hand, sellers don't want reversible transactions: if you sell a bike for currency and the transaction gets reversed, you don't get your time back even if you get the bike back in mint condition--and getting the product back at all isn't always possible, if the product was a tattoo, a class taught, or some intellectual property.
In traditional financial systems, anyone operating a financial system in a centralized way always gets bullied into reversing transactions. If you're the bank running it, you just screw over the seller most of the time because they are too small not to work with you and the customers you bring, and buy insurance for the rest of the time.
With stablecoins, so far, this hasn't happened. Sure, if you complained to Circle about getting scammed in USDC, in theory they could just un-issue your spent coins and issue you some new coins, but that would be in violation of their entire crypto ethos. Like fiat, the value of the currency is only based in belief in the issuing central entity, but unlike fiat, part of that belief in the issuing entity is built around them not reversing transactions.
Will that belief be enough to hold it, forever? I don't know, but I think it's definitely a stronger power than people believe it is, even if it's not literally the power of electricity being poured into hashing.
As a side note: not all stable coins are issued by a central entity. There are two other types of stable coins I'm aware of:
1. Collateralized: Examples: DAI, VAI, and I think MAO. Basically, anyone can borrow (mint) these currencies by storing other assets in the protocol. So for example you can deposit $1000 worth of Ethereum into the DAI protocol and that allows you to borrow some safe amount of DAI which is minted on demand, say 400DAI. If the value of your deposited Ethereum falls too close to $400, the protocol automatically sells the Ethereum to reclaim DAI which is then burned to keep the price of DAI from falling. But assuming your margins stay safe, you're able to repay your DAI at your leisure.
2. Algorithmic: Examples: TERRAUSD, IRON. These are paired with a second, unstable cryptocurrency (TERRA/LUNA, IRON/TITAN) which is used to stabilize the coin. If the price of the stablecoin rises above $1, you mint more and distribute it in some way, diluting the coin to bring its value back to $1. If the price of the stablecoin falls below $1, you mint more of the unstable coin and use it to buy back and burn the stable coin. In case it isn't obvious: this only works if the unstable coin has value for some other reason, and in both the example cases--it ultimately didn't and both coins came unpegged when the unstable coin crashed to 0. FRAX/FXS worked this way originally I think, but ultimately they've moved to a more collateralized model.
People are rushing to do CDO-squared (collateralized debt obligation from 2006) type financial products using stable coins. And one company has already created an ETF product linked to an on-chain CDO-style debt product.
I think the financial industry has figured out a way to do an end run around all financial regulations written since the 1930s.
I think like vaccine mandates, we will all have to "relearn" why we wrote this regulations in the first place the hard way.
slower transaction processing is more profitable, because banks can profit from interest in the interim. It's not some law of nature that it can't be done faster.
>> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?
yeah and this is great.
I couldn't care less for banks protection.
Revolut blocked my account with 8k on it for 8 months, though their app said it will be max 2 weeks.
Customer support ignored me for 6 months until I said I am going to court.
So yeah fuck them. The is a case for banks but there is also a case for me keeping a chunk of my money in stable coins so its actually mine.
Edit: and to clarify I didn't do anything illegal, after I threatened them they completed their whatever they did and unlocked my funds that have been locked for 8 month.
And guess what - no consequences for them leaving me at that time without my safety net.
They are trying to give credibility to as value-less asset that’s historically been used for illegal activity, gambling, and predatory selling of said assets to people who don’t understand them.
Tether claiming they have the ability to back up their coins with USD lets crypto people claim their nonsense actually has value.
Of course the entire thing rides on the “trust me bro” guarantees offered by tether. They could erase a lot of the stink by going through an audit but for some reason they won’t.
> They could erase a lot of the stink by going through an audit but for some reason they won’t.
They're required to by the new stablecoin legislation [0] in a provision that almost looks specifically targeted at Tether. Not sure what the time frame for this is, or if there's actually any appetite to enforce the law if they dont produce a clean audit.
You are missing what many are missing, which is that a centralized stablecoin like USDC on a public blockchain is already much more useful and powerful than a dollar in a bank account, and that will only 100x from here.
The reasons why are left as an exercise to the reader :)
The US has regulated itself into a corner when it comes to AML/KYC. Those regulations ended up causing more problems than they solve, but they can't ever be undone. If something ever happens, like a terrorist attack funded by money laundering activity that the existing regulations could possibly have prevented, the blame will fall squarely on the shoulders of the politicians who decided to undo them.
It's much easier (and politically safer) to say that stablecoins are just a different asset class, and hence very different regulations should apply to them. This essentially lets politicians design a parallel, much more permissive financial regulatory system from scratch, with many lessons learned from the existing one. If something ever happens, it can always be blamed on "those pesky stablecoin issuers who keep prioritizing profits over the security of our nation."
From a purely technical perspective, any stablecoin could be replaced by a centralized database mapping public keys to balances, at much lower cost and with very little loss in functionality. That, however, would look too much like a bank from the regulatory side.
A lot of us are not really deep into the finance space. Maybe there's a good reason it's left unsaid, but the question I came away with after reading that page and this comment is, why are businesses finding crypto easier/faster/better? To me, it's not 100% clear exactly who Tempo is for and not for, and why blockchain is more suitable than traditional centralized database technology here.
And it sounds like this system targets global payments. Does that imply that some day users would be able to pay using Tempo? Where would we see Tempo?
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.
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.
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.
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.
> 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.
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.
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".
"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.
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.
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.
> 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.
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?
Today, if you want to transact between businesses or retail (folks like you and I), you need to find a route between the two entities' banks. This route might take several hops, passing through some central banks, and some of these hops might be instant or might take days to actually settle. On top of that, you need to pay the service that helped you find a route (SWIFT) and potentially the nodes your transaction goes through. Bottomline, it can be slow and a lot of middle men are taxing you.
This is why you see services like (Transfer)Wise, that basically try to bank everywhere, and allow you to send money faster by taking a shorter route (kind of like a wormhole :D). But they have to add liquidity everywhere, which they have to rebalance constantly, and it's centralized (single point of failure). FWIW it's great because for a long time this is the best thing we had.
Now, let's take a look at the other side. Using stablecoin is a matter of just creating a wallet. The openness by default of blockchains make it really easy to integrate with a blockchain as an entity (just use the SDK, it's there by design). Furthermore, it's in many cases instant and cheap (unless you're transacting on a slow blockchain, but then that's your fault).
That being said, the elephant in the room is that one stablecoin (let's say USDC) is now present on many blockchains. So if you have USDC on chain A, and I have USDC on chain B, we're back to our "tradfi" world where we have to find a route between our two chains, which might take us over many bridges, which can be slow and costly. The alternative, like with Wise, is to use centralized players who have liquidity on many different chains and can move things around by just updating their internal (and centralized) database. It's tradfi all over again :D
I think the technology of blockchain is irrelevant.
If something can be accomplished on the blockchain, which requires N nodes, a business can probably replicate that same objective with less than N nodes because they don't have to pay the cost of verifying that nodes are acting honestly. This business is incentivized to be honest because otherwise they lose their business. Someone has to pay those costs for the N nodes on the blockchain - who will it be? Transactions seem cheap now because funding for these blockchains is often used to subsidize costs.
You mentioned ease of use, like the use of SDKs, but blockchain technology does not enable that. All blockchain can do is that if you ask it "hey i was told the state of the world was this. is it true?" and the blockchain will tell you yes or no. If you want to provide those kinds of guarantees to customers in a reliable way, all you need is cryptography, not blockchain.
The most important aspect of blockchain that is relevant here is that your counterparty half a world away and you both agree that you trust the state of this blockchain, and thus can transact on it.
For business running the same code on their 1 node instead of N is not a replacement, because their counterparty has no reason to trust whatever is running on that 1 node.
Your reasoning re: N nodes are expensive is also flawed. Executing a single payment transaction takes a fraction of a second of compute. Even if it is replicated 10,000X, it's still extremely cheap compute-wise. The low cost of transactions has nothing to do with subsidizing.
> For business running the same code on their 1 node instead of N is not a replacement, because their counterparty has no reason to trust whatever is running on that 1 node
I mean, why are you doing this kind of business with someone where you can't even trust that?
Aside from that, block chains only provide trust if they're meaningfully decentralized. These hyper specific b2b ones seem unlikely to pass that test. Exactly who all is running verifier nodes?
This is the main value of a blockchain. You can do business with someone you don't specifically trust without requiring a third party in the middle to mediate the financial transaction.
The only people that need to run a verifier node are those that don't trust the other verifier nodes to do it properly. It's opt in, most will not run one, but a business that has enough money at stake can if they want to.
Then the blockchain client software provides the framework for cryptographic assurance that the two copies of the ledger are in sync.
You don't need verifiers. I interviewed at R3 (now Onyx) in JP Morgan and my take on the business was that it's more of a distributed ledger than a blockchain
I don't like Blockchains mostly but the technology of the Blockchain here is not irrelevant, it is a way to use peer to peer liquidity. That is there is no need for a central entity to have liquidity in many different circuits because you can trade with other coin holders directly in many different exchanges.
Sort of like banks use customer money to offer loans to avoid the need of centralised liquidity.
The Blockchain technology is important to allow different exchanges to interact with each other in ways that I suspect would be not super legal through a central entity.
Running a database with no liquidity does not allow you to actually transfer funds.
When A sends money to B both have an expectation that B is able to access such money through normal monetary systems like: seeing their bank balance go up, withdraw it as cash, or transfer it again to C which will have a similar recursive set of expectations.
Unless your database is the de facto central banck for the currency A and B use you will have to convice B's monetary system to believe B now has more money. The simples and almost only way to do that is to pay the appropriate price in a currency they like.
Which requires liquidity.
As an example if you wanted to install a bitcoin ATM with withdrawl* in a train station (or anywhere else) you would need liquidity in whatever currency the user want to withdraw.
* I suppose you could withdrawn bitcoin by giving out fresh wallets with the sum or by simply transfering it.
Why should a database need to transfer funds? Bitcoin doesn’t transfer funds, it’s just a shared ledger of what funds have been transferred. Lots of banks use Oracle to record fund transfers, but Oracle doesn’t transfer any funds.
> Lots of banks use Oracle to record fund transfers, but Oracle doesn’t transfer any funds.
because it is the banks that do the transfer, so they need to have liquidity
> Bitcoin doesn’t transfer funds, it’s just a shared ledger of what funds have been transferred.
the bitcoin blockchain act as a single bank in terms of transfering between bitcoin wallets, there is no need for central liquidity because it is all "internal".
A perfect example is arbitrage between bitcoin exchanges, to my undestanding many exchanges do internal transactions off-chain and only interact with the public blockchains for deposits/withdrawals. If a user wanted to exchange bitcoin for ether and then withdraw the sum the exchange would need to have liquidity in ether for the withdrawal.
Is this just for dilution of responsibility? If a central company is responsible for these transactions, then they are responsible for the transactions, which means there are all kinds of legal constraints and repercussions. But if it's a blockchain, then all of the nodes in the network are responsible.
So in this case, "this business is incentivized to be honest" might be the precise "problem" this is meant to solve.
Or further, that you need to interact with a business at all. Visa does a good job intermediating many classes of payment. But I am limited in what kind of applications I can build on top of that (tied directly into the payment)
> This business is incentivized to be honest because otherwise they lose their business
is true. And it might be true if you assume perfect competition, low barriers to entry, no egregious regulations, no regulatory capture, no bundling to force decisions regardless of 'honesty' (or 'fairness'), etc.
So in a perfect world, maybe. But I think the niche in all the imperfections.
You are missing the "trust" element of a blockchain. A blockchain essentially allows you to run a distributed database where the different actors don't trust one another. Tradfi is built on trust of entities (can I trust this bank? Can I trust this central bank? Etc.)
Yes, that trust is the fundamental difference. However, that trust costs money in the form of needing more nodes.
You usually can trust your bank, as long as you trust your government. Regulations make it difficult for banks to misbehave.
That being said, not trusting your government (which I can believe is a valid stance in some countries) is probably the only valid use case for blockchain IMO.
If I'm bank of america, and i publicize a public key, and then everytime everyone does a transaction, i sign a receipt using my public key such that my customers can prove that transaction happened, then that would be the cryptography.
if bank of america does something malicious, i can prove in court very trivially through those signed receipts that they did so.
So I don't need to trust bank of america - i just need to trust the courts to charge financial institutions that provably are breaking the law.
> If something can be accomplished on the blockchain, which requires N nodes, a business can probably replicate that same objective with less than N nodes because they don't have to pay the cost of verifying that nodes are acting honestly. This business is incentivized to be honest because otherwise they lose their business.
This is missing something important, which we can see by considering one of the major problems merchants want to solve right now.
The credit card companies charge them ~3% and then give ~1% back to the customer, implying that there is a ~2% net gain to be had by cutting out the middle man. So why hasn't this happened? Because the alternative with the lower fees is ACH, but customers are less willing to give out their bank account number than their credit card number to a random small business.
This is the easy case for some centralized service to fix it, right? Have some large trustworthy company take the customer's bank account info and transfer the money to the merchant for a very small processing fee. But this is the part where your assumption falls through. Once the merchant has signed up for this, the payment processor is the only one with the customer's payment info. In other words, it's hard to switch, and then the payment processor can charge higher fees (eroding the benefit) and the high switching costs also cause the market to consolidate. And because you're tied to a single payment processor, when their fraud AI has a false positive they can erase your business overnight by locking you out and not answering the phone.
Now suppose you don't have a centralized system. Instead, the customer acquires a store of value (Bitcoin, stablecoin, something else) however they want. Customer A can get it from Coinbase, Customer B can get it from Stripe, Customer C can get it by selling something on eBay and accepting it as payment, and the merchant doesn't have to do business with any of these third parties to accept payments from customers who do, because they all support the same transfer medium.
Now you have a competitive market. Currently a new payment processor has to earn the trust of a large enough percentage of the general public for merchants to be willing to use them; a new exchange would only need the trust of enough people to be doing enough business to cover their costs, a far lower threshold. If a merchant wants to switch payment processors or has a dispute with one of them, their own customers wouldn't have to do anything different because the means customers use to convert dollars to tokens is independent of the means merchants use to convert tokens to dollars.
> Someone has to pay those costs for the N nodes on the blockchain - who will it be?
That's the boring question. The interesting question is, can you have a blockchain with lower fees than payment processors currently have? And the answer appears to be yes, e.g. the transaction fee for Bitcoin Cash is around a penny.
My point is that blockchain is just a technology - nothing about the technology itself makes the concept of transferring money cheaper. I agree that it is another competitive avenue for transactions, but if it became a threat to payment processors, my theory is that they could lower their costs more than blockchains potentially can. This is because the software and infrastructure needed to build something that assigns numbers to accounts and allows transfers is obviously going to be cheaper off the blockchain.
If trust is an issue, the bank can provide cryptographically signed receipts that show they've confirmed the entire lineage of your account, in the same way a blockchain does, but they would be the only verifier. The question becomes about how the cost of the additional trust from the blockchain relates to the incentive of doing honest business. I imagine that trust cost is pretty high.
> can you have a blockchain with lower fees than payment processors currently have? And the answer appears to be yes
The transaction fee is not the only thing being paid. They are also getting mining rewards. If a blockchain has mining rewards, maybe in the form of Bitcoin Cash, then that will dilute the entire pool of Bitcoin Cash.
> They are also getting mining rewards. If a blockchain has mining rewards, maybe in the form of Bitcoin Cash, then that will dilute the entire pool of Bitcoin Cash.
How is this any different than the Fed or the fractional reserve banking system creating new US dollars?
> nothing about the technology itself makes the concept of transferring money cheaper.
Nothing except for the thing that matters: If you have something fungible instead of something with high switching costs, it makes fees go down.
> if it became a threat to payment processors, my theory is that they could lower their costs more than blockchains potentially can.
And that's why blockchains are useful! To exert the pressure needed to make that happen.
It doesn't matter if the centralized system can have lower costs unless it actually does, and for that you need the competitor to exist as a viable threat.
> How is this any different than the Fed or the fractional reserve banking system creating new US dollars?
The miners get the fees. The fed does not keep the dollars they make. They also adjust the rates to avoid things like recessions.
> Nothing except for the thing that matters: If you have something fungible instead of something with high switching costs, it makes fees go down.
The US dollar is considered fungible... Help me understand how any of this is specific to blockchain technology and not included in non-blockchain technology. Have you worked with this tech before? Also, what about things like venmo and zelle? zero fees, super fast.
> And that's why blockchains are useful! To exert the pressure needed to make that happen.
I'm not saying they are not useful. I am saying the technology behind them is irrelevant to the costs.
> The miners get the fees. The fed does not keep the dollars they make.
Somebody gets the money. Banks and government contractors get the money. It's not clear how that's any better than miners getting it, and either way it's creating new money that dilutes the value of your existing money.
> They also adjust the rates to avoid things like recessions.
There is nothing stopping the government from setting up a fractional reserve banking system denominated in a cryptocurrency. It works the same as it does in dollars. Alice borrows from the bank, pays the money to Bob and now the bank credits Bob's account and balances its books through the money that Alice owes the bank. If Bob wants to withdraw the money as physical cash or cryptocurrency in a non-custodial wallet then the bank either has enough reserves to do that or can sell the loan and use the proceeds to pay Bob. But if that doesn't happen -- which is more common -- then the balance credited to Bob's account only ever exists in the bank's computer and the bank has effectively created new money in that denomination.
> The US dollar is considered fungible... Help me understand how any of this is specific to blockchain technology and not included in non-blockchain technology.
US dollars as bills in your pocket, sure, but it's hard to transfer those over the internet without involving a middle man.
> Also, what about things like venmo and zelle? zero fees, super fast.
Venmo isn't a protocol, it's a company. It isn't free for businesses and they can still shut down your operations without recourse.
Zelle is a protocol, but it's designed for transferring money between individuals, not making purchases from a business or setting up autopay. What we need is a protocol that is designed to do those things, but the banks fight attempts to create it because they want to keep getting the 3% from credit cards.
> I'm not saying they are not useful. I am saying the technology behind them is irrelevant to the costs.
Suppose that something with the transaction fees of Bitcoin Cash was more widely used and therefore a viable way for small businesses to accept payments from ordinary customers. Which existing non-cryptocurrency service is a viable means to do the same thing for the same or lower fees? A real one, not a hypothetical cost structure that nobody actually offers.
In Europe you can wire money across borders for free, you just need to know the account number. Arrives in seconds at 0 cost.
I feel like a lot of the fintech in the US is purely a result of a lack of regulation.
For the example of Argentina, the real reason that business is using crypto is because their currency is unreliable. It might be a good fit there but trading in dollars would've fixed that too.
I’m as cynical about crypto as any sane person but I think you’re hand-waving away the challenges of international business. How can you transact in dollars if you’re a business in Argentina? As you say, if you’re operating in Europe, this is a solved problem, but lots of businesses are operating across borders that don’t have the same payment options. Banks could solve this problem but they haven’t and this is what non-banks have come up with. I’m sure if SEPA was global this wouldn’t be necessary, but it isn’t.
I'm trying to point out that most US people are unaware that days for selling a transaction should be outrageous, yet it's the norm.
And a wire, which is as close to sepa as I think you can get, costs 10s of $ each time.
Basically, the international business problem is real. The Argentina case is mostly lack of a domestic stable currency though. These are legit use cases, fast and cheap transactions aren't.
If you actually offered those US businesses with instant, verifiable transfers that cost nearly nothing, do you actually think they wouldn't move to that?
SEPA also works easily because it's single currency for a single unified economic zone. If currency change was involved then you'd likely be back to routing through central banks or currency change banks and such.
> As of 2025, there were 41 members in SEPA,[2][3] consisting of the 27 member states of the European Union, the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), the United Kingdom, as well as five EU candidate countries.[4][5][3] Some microstates participate in the technical schemes: Andorra,[6] Monaco, San Marino, and Vatican City.[4] As of 2025, Albania, Moldova, Montenegro, North Macedonia and Serbia are the five countries negotiating to join the EU that are included in SEPA.[2]
Few of SEPA members have autonomous regions which are them selves not members of SEPA, I do wonder if making transactions between the autonomous region and the rest of the country, as well as to a different SEPA member is any harder. For example I can’t imagine it would be difficult to make a transaction between Thorshavn in the Faroe Islands and Hirtshals in Denmark proper, or to Oslo or Reykjavík for that matter. But a transaction between North Nicosia to Nicosia in Northern Cyprus and Cyprus respectively may be a different matter.
Here's a fun timeline to walk through how it developed and why it's been, while not trivial, implemented with a kind of structural uniformity to keep the problem space contained.
Australia too has instant and fee free transfers, so American staples like venmo just simply don’t exist here. People just send money to and from each other’s banks directly instantly and for free. So why would we need another service?
Crypto here would similarly make very little sense.
It's not about the domestic use case - that is solved by regulation in stable economies. Try paying someone in Pakistan from Australia. Business is global now.
As an aside, if banks in other countries also worked like this because we as a global society regulated them better then people in those countries could enjoy similar rewards.
> It might be a good fit there but trading in dollars would've fixed that too.
You are underestimating how toxic the Argentinian government was.
We did do that with capital controls, the problem is that it was illegal, and the Argentinian IRS is very active trying to tear you a new one. Argentina has long become a bimonetary economy, dealing with ARS for everyday transactions, but saving in USD and pricing assets in USD (real state for example).
To give an example where this would have helped, my parents in Argentina needed to send money to my brother in Europe. The government had made that illegal with capital controls, so I had to transfer him money through wise from a 3rd country and when at some point later I visited they gave me the cash.
People underestimate how annoying and distopic governments can be if given the chance.
That is because the EU acts as a coordinating authority, if you wanted to transfer money from Greece to Iran it would be a different issue.
I suspect that banks cannot solve this because it would be illegal for them to do so.
If many banks could send and receive money from across the world money laundering would become way way easier (in this sense the lack of privacy in many blockchains can be seen as a strength) and it is how offshore fiscal paradises work
>in Europe you can wire money across borders for free
do you mean "electronic funds transfer"? because "wiring" is an old school thing that uses Telex machines and and gets processed by people and I would doubt it carries no fee. (It's probably been modernised so that people handle virtual slips of paper, but it very much carries the feel of an "order on a slip of paper" type of transaction and is far from instantaneous.)
I'm genuinely asking, I only know about the US systems where electronic funds transfer is known as ACH which is an automated clearing house, and wiring is called wiring. From the US, I can wire to European banks. I can't ACH.
I don’t think more than a handful of Europeans have ever heard of wiring the way you describe. Everyone over here has a bank account with a debit card and is used to transferring money to someone using their international bank account number; PayPal is in use for convenience, but not really necessary actually. People have credit cards for travelling abroad or online purchases, but that’s about it.
not more than a large handful of Americans have heard of it either, till they become "established" so to speak. It's for moving large amounts of money, and for ordinary people that would only be like when you buy a house, you wire the money to escrow. Europe has the same wire system, it's international.
I think the argentinian case was mentioned for marketing purposes. You can trade using the USD dollar which at the end of the day is probably what your client/provider is using anyway.
Since April, yes, before that you had very hard capital controls since 2019, and also during the 2011-2014 period.
For people there, it's not marketing, it's an actual solution to government interference.
The status quo of cross-border, bank-to-bank money movement today is actually somewhat decentralized:
- SWIFT is really just a messaging protocol between a distributed, decentralized set of global banks that are all passing messages/money between each other. Your SWIFT wire might pass through an arbitrary number of correspondent banks, sort of like a flight route with multiple stops, until it reaches its destination.
- Consequently: money moves slowly (up to 5 days), is expensive to move (variable fees assessed either to the payor or payee, by every bank in the chain), and there is an indeterminate amount of manual ops burden, multiplied by every bank in the chain.
- As another commenter points out - services like Wise really just use massive amounts of liquidity spread out globally to try to minimize the number of true, bank-to-bank cross-border settlements required to get low-value payments from A -> B internationally.
Ironically, I think the great accomplishment of stablecoins is its "centralizing" of cross-border money movement into a single ledger -- reducing it to a "book transfer" of sorts -- where getting all the world's money to pass through a single ledger would otherwise be a very difficult (probably intractable) challenge _if it were not for_ the permissionless-ness + global neutrality of the blockchain that is tasked with doing so.
Simple ans. Crypto provides regulatory arbitrage.
The steps and process to do the same in Fiat is riddled with regulation and hurddles. the same on crypto side is easy to do as of now. that is it.
I sold a blog in early 2021. The seller offered to pay via wire transfer or via Bitcoin.
I chose wire transfer. Which meant going to my bank, getting approval to get paid, fill out two forms, and making three total trips.
I now have contractors in Nigeria and Philippines who want to get paid in USDT. It's instant and there is a thriving local scene of P2P sellers for instant liquidity.
> why are businesses finding crypto easier/faster/better?
One way to see it is today the EVM ended up being the solution to a lot of other problems.
The banks are dying, their core banking is dying after 50+ years of service. There hasn't been any real investment since 2008, only minimal maintenance and cost cutting. Also generations of incompetent people at every levels created a situation with no escape.
Also things like SWIFT became very irrelevant in practice. I can assure banks did not really used it for a while.
When Ethereum and its EVM appeared 10 years ago a lot of people saw an opportunity to build a better "programmable money" platform but nobody really succeeded.
At the same time Ethereum did not fail, improve and still secure the assets and run the smart contracts deployed in 2015. More than enough to convince the people on a sinking ship to jump on that boat.
My guess is the the EVM is becoming something similar to UNIX: a loose standard almost everybody will build on. Maybe not the best but something good and flexible to jump and we need to move forward.
Also the dollar urgently needed a new outlet so its on.
So it is not really about "crypto" it is more about the EVM as a platform.
So transactions are difficult because they are illegal, and blockchain helps to facilitate crime?
Are there other uses? Surely a large and legitimate operation like Stripe and the companies they mention in the blog post would have found additional use cases?
The sentences that follow “found utility” say what that utility is:
> For example, Bridge (a stablecoin orchestration platform that Stripe acquired) is used by SpaceX for managing money in long-tail markets. Another big customer, DolarApp, is providing banking services to customers in Latin America.
> So transactions are difficult because they are illegal, and blockchain helps to facilitate crime?
Let's say I make drinking water illegal, would you still do it? Sure you would, you need it to live, laws be damned.
In Argentina it was a similar situation, financially speaking, but with USD, as Argentina had like 1000% accumulated inflation since 2019, so basically the ARS melted in your hands, and the USD/Euros/crypto where your only safe havens.
So yes, the government made the transactions illegal, but the alternative was becoming poor (we ended up the previous government with around 55% poverty).
I'm certainly not going to moralize against breaking the law, just curious why an American company would (apparently) build a business off of facilitating it.
American companies of all sizes do that a lot; its profitable, and even if it is eventually punished, the punishment is almost never sufficient to deter pursuing the profits.
>why are businesses finding crypto easier/faster/better?
From the example given from Argentina, it bypasses capital controls, which until recently, made accessing foreign currency very hard/expensive/illegal. Argentina had a huge crypto boom because of them.
All of the other comments are missing the point: using blockchain technology is a means to bypass regulation. That's it. That's always been the point of cryptocurrency.
Incorrect; it's to bypass the middlemen that create the links of trust between two parties exchanging money. That was the point of Bitcoin from the start.
(The many other crypto coins since then are mostly BS freud.)
In this case, Stripe is adding themselves as a middleman.
Whether or not it was the point of Bitcoin from the start, "removing the middlemen" is bullshit because you still need exchanges, wallet providers, people running nodes, etc. Cryptocurrency in practice just transfers power from traditional middlemen to new technically-advantaged middlemen.
The middleman that bitcoin is cleaved from is banks (that have control over all balances and transactions), and payment processors (same controls). Previously these were required unless you handed physical cash to someone. Now electronic transactions are free of those controls and the associated risk. Exchanges are not bitcoin, you can transact freely without them. Wallet providers are not bitcoin, they are 100% optional. Nodes don't act as middlemen, they are fabric.
And people could just do all their business in cash to avoid banks. But that's not practical just like avoiding exchanges and not using wallet providers is impractical.
Normal people cannot function in a cryptocurrency ecosystem without these new tech middlemen. This is exactly what I mean when I say _in practice_. Average people are still left to the whims of cryptocurrency corporations that are worse than banks because they're unregulated, much greedier, and much less risk averse.
> you still need exchanges, wallet providers, people running nodes, etc
you don't need exchanges or wallet providers, or any other intermediary, to exchange Bitcoin -- those add layers of convenience (conversion, storage), but they do _not_ strengthen the web of trust and do not provide the same function as intermediary banks and clearing houses do
yes, you do need people running nodes, but they're not intermediate layers, and you can run a node yourself to benefit from the system (though in practice it's no longer profitable due to bitcoin farms)
There is a case for banks that hold your hand as if you are 90yo and there must be a case for banking where I know what I do and I take responsibility for my actions.
If i send my coins to the wrong address its on me. But if I want to send 10k to someone - no one should ask me to wait 3 days, to do 100 verifications if I am not being forced or scammed.
I'd want that protection for my mom, sure.
But I want to remove all that crap for me. I don't have time and energy for it
You say tomato I say removing the levers of power from world governments who have proven time and time again that they can't help but pull them to help themselves
Not a single one of these examples is trustless, decentralized crypto. Of course people are going to steal your money if you don't own your keys and put faith in protocols that are not permissionless. That's the problem with people who paint 'crypto' with one giant brush. It's like saying 'websites' will steal your money. Statistically it's probably true, but anyone with 2 brain cells to rub together isn't giving money to realbankwebsite.ru/chasebank
Ok, so at the very least we can both agree that what stripe is doing here is sketchy, since it’s not permissionless at all.
The second question is, once you take away anything that’s not permissionless, what’s left in crypto?
- Buying a physical good? You’re trusting the person manufacturing it, storing it, shipping it. If it comes to your door and it’s defective, they’ve already got your money, and it turns out your trustless system actually makes this impossible to resolve.
- Buying some skin for a game or something? Unless the game is also run in a decentralized fashion, they can just choose not to render that particular skin.
So, like, can you give me an example of a single transaction that is rendered trust-less because of cryptocurrency? It seems to me like whenever anyone actually tries to do anything useful with crypto, it ends up being what you would describe as an obvious scam.
You're doing strawman shotgun here. You're pasting a bunch of examples that basically fall into two categories and then asking me to defend them:
1) people who put their money into custodial 'banks' and then get it stolen
2) people rely on protocols whose consensus protocol is controlled by a small committee of appointed VIPs
None of which is germane to my original point. I'm simply saying that Im advocating for central banks not having the power to manipulate the currency supply at a whim And somehow you're forcing me into the position of spending an hour reading every trash crypto scam you can find. Not terribly interested in discussing how you can get ripped off with crypto or fiat cash.
It's always funny to me how "we're decentralized ledgers running in lack of trust environments that don't need government regulation" always run to centralized trusted government institutions every time there's trouble.
> It's a push to bring international financial systems up to date
It's not a push in any sense of the word. And outside of the US quite a few of financial institutions are "up to date" in most of the areas that matter to people.
> there is no need to reinvent judiciary and executive institutions in this step.
Strange how "up to date" inevitably involves rediscovering all the reasons those exist in the first place and why the "outdated" institutions do the things they do.
> removing the levers of power from world governments
A lever of power is never removed unless the act itself can no longer be performed. All you can do is take someone's hand off the lever and hope that whoever grabs it next is better than the last hand that had it.
I find it very unlikely that wresting power away from government—which at least has some level of citizen participation—will end up with it in better hands. The most likely scenario is that some billionaire will end up owning it.
No, it's possible. Imagine, for example, that you are concerned about growing political control of the central bank in your country and you want to remove the ability of central banks to set an inflation rate for the currency you use. That's quite easily achieved if ownership of the currency system is distributed among all users of that currency.
> is distributed among all users of that currency.
Right. What you propose is that you take government's hand off the lever and a million users will all equally get to gently rest their pinky on it and distribute the power equally.
I have never seen anything in the history of the world or my understanding of sociology to indicate that such a power structure has any stability. If you give out power in a free-for-all, what tends to happen is:
1. All of the participants already have some unequal distribution of power going in.
2. Those who have more are able to use that to claim a little more of the new resource.
3. Once they do they, they are able to use the increased inequality to claim even more.
4. Go to 2.
The natural tendency is towards increasing inequality. It takes a ton of work to build and maintain structures that encourage any level of egalitarianism.
You're over abstracting a very simple thing. No user can, for example, change the inflationary rate of a decentralized cryptocurrency. It requires network consensus. The party making the change would need to control the vast majority of the consensus power, whether than is ASICs for pow or base currency for pos, at which point they have massive incentive to not do that on account of the loss of power destroying all their wealth would represent.
Non-fiat currency is the most egalitarian system possible.
No, it requires network control. Consensus among a large number of independent participants who agree on a change is one way to have that control.
But another way is to have a minority of participants that control a disproportionately large fraction of mining decide what to do.
The history of crypto shows that over time, miners tend to consolidate until eventually you have a small number of miners who significant leverage over the ledger. None of that should be surprising: economy of scale is economics 101 and certainly applies to miners who buy and run hardware in bulk.
> Non-fiat currency is the most egalitarian system possible.
Egalitarianism is a property of human behavior and social systems, not the hardware that humans may or may not be using as intended.
Well, I was just curious to hear it from the horse's mouth since they were answering questions in here. The answers are interesting, though I think they're answering a bit of a different question than I am personally asking.
Like, blockchain technology to power distributed ledgers for peer-to-peer payments is pretty interesting and I think I'd prefer it exists, consequences be damned. Stable coins don't really fit the same use cases though, and generally do have at least some reliance on a central party, so it raises the question whether the desired technical properties can't actually be achieved using traditional technology.
Unfortunately, the answers pretty clearly center around not what kind of technology is used to implement the ledger, but rather the choice to implement one versus using existing payment networks. I don't think this is done in bad faith, but rather is the result of very different perspectives.
I think the blockchain skeptics have a point: even if there is something especially technically advantageous about using the blockchain for this purpose that really couldn't be accomplished some other way, so far the only obvious incentive to do things this way appears to be regulatory differences in how the blockchain is regulated versus traditional ledgers.
Very tangential, but seeing major entities and even governments adopt blockchain technology has made me think a lot about potential consequences in the longer term. I really wonder what happens to the properties of various cryptocurrency networks when and if quantum computers scale big enough to start breaking our cryptographic systems. I guess CryptoNote is just toast.
appears to be regulatory differences in how the blockchain is regulated versus traditional ledgers.
One is governed by humans/banks, the other by unalterable mathematical precision. If you truly don't see the value I don't know what else could be said.
Hyper-inflation, censorship, corporate takeover of all interpersonal transactions, data harvesting, slow processing, fraud, offshore accounts, scams, laundering. The list feels almost endless.
Well, for one thing, you keep mentioning Bitcoin when we're not even talking about Bitcoin, which is extremely weird. Bitcoin is not one of the two things. I hate to be this way but do you even realize what thread you are replying in? This isn't fiat currency versus Bitcoin. It's fiat currency (by proxy) using Blockchain-based ledger versus fiat currency using a traditional ledger...
Sure, I get your point. I don't really consider stablecoins or even most cryptocurrencies true crypto due to human control (which invalidates the value of crypto).
I've watched for over a decade how this forum utterly decimates any actual discussion of crypto (bitcoin) due to willful ignorance or blind naivety. So excuse my excitement when I get a chance to actually discuss its merits or disadvantages.
In this sense, I will agree that stablecoins are just a technological way of obscuring certain mechanisms in how fiat currency is distributed and is basically a derivative instrument that exists outside established regulatory framework (similar to how uber/airbnb operated for a decade until the govt caught up)
Because ego. Takes a lot of self-actualization to recognize you might be living in a weaponized system that devours anything that doesn't participate (financial markets fed by unlimited supply).
It's left unsaid because the truth is that businesses are not finding crypto easier, faster, or better. In most cases, it's the exact opposite. But crypto excels at one thing: obfuscation.
A regular log or ledger file could accomplish the same thing as a blockchain for significantly less technical debt or ongoing expense.
And note that the best use cases Stripe could find for "real world" use cases were a company trying to complicate its FX cash management, and a cash transfer app with fees higher than most of their competitors.
> A regular log or ledger file could accomplish the same thing as a blockchain
It is kind of wild how a bunch of people hyping blockchains five years ago has resulted in a thermostatic reaction where a bunch of other people have decided that distributed computing is easy, actually, you just need a ledger file.
You do understand that a blockchain is just a hashed ledger? It's called "crypto" because they use cryptography principles to hash the ledger into multiple parts.
But it's still just a ledger.
With blockchain, you just get a ledger that's harder to use and dependent on external connectivity.
that's a very high quality question, in comparison to the others.
here is what you're missing, and is very easy to miss:
the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database. Than it is on a shared database with a bunch of signers. Than on any "web 2.0" cloud platform. the developers continue to bring their entire audiences with them, even though those audiences are quite small, they've grown in aggregate to be large enough.
in web3, of which EVM platforms dominate and are the most mature, there is a tiny payment for deploying your application once, and then it exists in perpetuity for free at unlimited levels of bandwidth. your users pay to update the state of your application, and in many cases you can earn from them doing that.
there is absolutely nothing in the cloud world that achieves the same thing at the same cost. the payment paradigms are entirely different, you have to pay for hosting, deployment, the thing that handles your deployment, additional workers to unbottleneck your continuous deployment, the bandwidth, bandwidth spikes, and get nickel and dimed on a ton of more things, or paying a premium to a service that handles all that for you.
additionally, the concept of "composability" is attractive in the web3 space, again spearheaded by standards on EVMs, the concept is that third party applications are automatically compatible with each other. there are infinite permutations of combinable operations one can do or enable amongst deployed applications. you can compose, or combine, applications in a far less cumbersome and less fragile way, than with REST and APIs of different people's apps in the web 2.0 world.
and on top of that, if one of those permutations becomes useful and you make it user friendly to do so, you can collect a toll for others doing that operation. this is just financial services, where "basis points" are collected by intermediaries.
a common application are forms of lending. initiating borrowing, trading the opportunity, and closing the loan within a split second, leveraging 3 - 10 financial services at once, is something that's better faster and cheaper than what has been possible outside of the blockchain space. the ability to do so is gatekept by the other financial industry and payment rails in ways that are no longer necessary to debate. now you can do these things with $3 in capital instead of needing $3 million dollars to pursue getting an API key from some old slow moving organization.
the compelling reason to create a new EVM are to change some basic parameters. block time, the size of contracts (the aforementioned operations) that can be deployed, and which standards are included into that chain, and of course the governance model - how are new standards deployed and how are transactions added. making stablecoins a first class citizen would need a new blockchain. how your governors/validators/nodes and RPCs function under load would need a new blockchain.
it is very attractive to developers that they can deploy applications "in the cloud" that have a very nominal cost, doesn't cost them to maintain even amongst spikes in bandwidth. they don't have to incorporate or do any formalities while having unlimited financial upside, solely because there is already hundred of billions of dollars in notional value sloshing around in that space to cater to already.
edit: I'd actually like to work with Stripe or other web3 organizations again on these kind of applications, now that I notice how boutique it still is to understand what's going on, email in bio
> the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database.
This is definitely a take, given how easy it is to write a program with security bugs using Solidity due to specific concerns like reentrancy that only exist due to the unique way smart contracts work. The inability to "undo" a fraudulent or mistaken transaction without requiring all validators to fork the chain also makes this a non-starter for many developers.
> your users pay to update the state of your application
Also a weird thing to call a "feature" for developers when this actively drives away potential users.
> Also a weird thing to call a "feature" for developers when this actively drives away potential users.
while being a funnel of 1 step for the users already in the ecosystem that find your application
the ecosystems turns the entire Web 2.0 marketing funnel industry on its head because the initial call to action is a payment. All of the mystery of converting to a paying customer is obsoleted in favor of unbridled commerce
this just points out another way its optimal for developers with ideas, when aiming for revenue in a web3 architected project for crypto natives. they have frictions, you solve them, they pay you. If you aren’t catering to crypto natives already, don’t launch a web3 application. the space is already big enough to ignore other potential users, and if you want that to be your cause to help the UX to grow the space, you can do that too.
> security bugs using Solidity
To your other point, I don't see 2016's smart contract coding problems as show stopping criticisms, because this is the lowest hanging fruit of experience for anyone learning solidity, all while standardization of open source methods has solved those building blocks just like in other languages. additionally, you can write an insecure application in the web 2.0 space as well.
There are enough and a growing number of developers that aren't afraid of deploying code on a blockchain. a lot has happened in the last ... decade? developer tooling has improved.
yes, the developer experience is better on a platform where you can write code (potentially with bugs) than a platform where you can’t write code or do anything programmatic at all.
The developer experience is irrelevant when it comes to handling money in volume.
Take the spacex example above. They are using a stablecoin to abstract away a bunch of illiquid and unstable foreign currencies. Getting rid of that huge pain of carrying 100 countries’ currencies via various banks is the value prop. The API could be cobol and it wouldn’t matter.
and yet, when you look at what comprises a stablecoin alongside the frictions unstable foreign countries have, you'll see why they occur on EVMs and not some other architecture
> The API could be cobol and it wouldn’t matter
you can probably get cobol to transpile to bytecode that EVMs can use. I get the point you're trying to make that excludes blockchains, but you don't make that point
The problem with all that, is the fact it remains possible to create a protocol with N big institutions (governments and large tech companies, big non profit organizations and so forth) signing every block, to create a collaborative system that is perfectly suited for the same task. The system can make progresses as long a given fractions of the participants is available and so forth, there are a number of well known protocols to do so. This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost, controllable to a given extent -- no takeover possible, ...).
> The problem with all that, is the fact it remains possible to create a protocol with N big institutions [...] This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost)
That's more or less exactly what this is. Stripe is launching an EVM L1.
The Ethereum Virtual Machine part gives it a mature tech stack with experienced developers and auditors. Plus, well-tested smart contracts that have already processed billions of dollars on other chains can be deployed on Tempo.
The "Stripe L1" part will ensure that it's fast, simple, near zero cost.
If we skipped the whole blockchain part, wouldn’t it be faster, simpler, cheaper? What value does the whole blockchain, EVM, L1 offer? Don’t they fully control the network? Don’t they decide “everything” anyway?
I’d love to understand it, I’m not a hater, just a developer who don’t quite get this announcement.
good questions - and your questions are, or could be, actually rhetorical. Yes, they are the validator and thus they control the transactions. It could be as simple as having a Database at the end ... Well I can think of two things:
1- they start by owning all validators, maybe they expect to open validators to other entities at some point in the future. If these entities don't collude together, we could expect some sort of neutrality
2- Marketing - because crypto is coming at an ATH and why not getting some good marketing for free (or almost)
And people mentioning costs, this is not particularly relevant. L2s are extremely cheap by most standards, let alone by Stripe standards which charge horrendous fees.
My questions were not rhetorical. I’m actually interested in the space (fintech, web3, blockchain, etc), but in this space particularly, it’s hard to discern marketing gimmick from use cases where these technologies actually provide real value, so I’m being critical of these announcements while at the same time keeping an open mind.
> signing every block, to create a collaborative system that is perfectly suited for the same task.
Indeed you can! We even have a name for that! Its called a blockchain.
> This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost, controllable to a given extent -- no takeover possible, ...).
Blockchains can do all of these things.
Perhaps you are thinking of "bitcoin", instead of "blockchains"? Bitcoin, something that was created a whole 17 years ago, indeed has many drawbacks compared to modern blockchains.
There is no bright line difference between proof of stake and any other type of consensus, committee or voting body. Proof of work of course is very different.
The difference is enormous: in one case, you don't need any centralized N entities, just a big percentage of the network, whoever wants to participate, runs the protocol and there are no 50 institutions / companies that can block it without reaching the majority of work / stake. In the other case, you are delegating the consensus to a fixed amount of parties. Now, we against the crypto / blockchain shitstorm advertised the alternative of old-style federated consensus with N trusted organizations for years and years. And now, no: you can't say, this is a form of blockchain. You admit failure and acknowledge that classical consensus was good enough and even better in most cases.
There's always a comment in any HN blockchain thread where the commenter disproves the need for a blockchain by proposing just to use a blockchain instead.
Your protocol has to use a consensus mechanism if you want to reliably make progress, and be able to recover if you make mistakes, this is exactly what a blockchain solves
That you _can_ solve it with a blockchain doesn't mean that you can _only_ solve it with a blockchain.
M valid signatures of N authorities is a consensus mechanism that just needs public keys. You don't need a blockchain if you're prepared to trust a set of authorities like stripe and their trusted partners.
Speaking as an argentinian, every time I hear about someone using crypto in that way its to avoid taxes, which seems legally murky/gray (if not directly illegal, but not currently prosecuted) to me.
> so it might be interesting to share what changed our mind over the past couple of years
I'm guessing the GENIUS Act had something to do with it too? Now that bank depositors have an incentive to hold bank-issued USD stablecoins given their priority in cases of bankruptcy[0], it seems likely there will be a lot more transactions with them as well
Can you explain some of the technical goals of your project and the overall model you're thinking about implementing?
You mentioned sub-cent tx fees, 100k tps, and what I presume to be atomic swaps for stablecoins. Are you thinking about something like $0.10 fees or something like $0.0001 fees? At $0.10 fees at 100ktps that end up representing $100/s in tx costs which is about $8.6M/day or $3B/year. Presumably you expect to make more per year on this project in the ideal case, so are you intending to allow the fees or TPS to "float" upward, or to restrict participation in the L1 to only trusted partners, or for the network operators to make money off the interest from holding the stablecoins' currencies in reserve? What if demand exceeds 100k tps?
Since this will be a corporate backed project how do you plan to handle sanctions and government currency controls, eg if Uncle Sam tells you to drop support for Iranian currency, how will that work?
Will there be account/transaction privacy built into the network through ring cryptography or zk proofs? I'm assuming no, but if your answer is yes and Uncle Sam takes issue with that, what is your plan?
You still have a lot of credibility to not be put into the number-go-up bracket and the social capital to overcome the political and power structures you had to face for two decades and know more about than most people by having built your company.
But as long as I don't see somewhat more transparent conversations with the people in your orbit like patio11, Matt Levine, Kyla etc, where you address how you'll actually tackle the non-technical challenges ahead, this GTM communication and site looks like every other 2019 JPM, HSBC etc "something blockchain" announcement and hard to get behind as something that might as well be really different this time, and not be killed/sidelined by vested interests. Including your own.
The fact that Stripe is doing it in 2025 should already be a strong signal. If they were just like the clueless trendmongers who ran crypto initiatives at large institutions in 2019, they'd have done it then instead of now, after the GENIUS act has been passed.
The stripe conference focused more than I would have liked on crypto.
I completely understand that there are markets and customers that can find real utility in it, but I wonder how many businesses will really ever benefit from stablecoins.
We're in higher education, and potentially our international clients could avoid hiccups with regulation, delays, compliance, and more using stablecoins, but it's really a guess. In the meantime, the pricing model of stripe seems to prioritize bigger and bigger clients.
That being said from Stripe's perspective stablecoins an easy bet to make. They win by building payment infrastructure within the traditional payment ecosystem and win by providing an alternative completely outside of it.
When your algorithm freezes a legit business's funds, you hold them indefinitely and can invest them for your own profit. The only recourse you offer is mandatory arbitration with an arbitrator Stripe chooses.
"A diverse group of independent entities, including some of Tempo’s design partners, will run validator nodes initially before we transition to a permissionless model."
I think Zuck tried to do this. It was called Libra or Diem or I can't remember what it ended up being. Ultimately trust is what matters. In the end whether it was regulation or governments or anything else that killed it, it's only going to work if people can trust you. They trusted you with fiat payments, maybe they'll trust you with crypto. The thing to note, you'll win over the US centric crowd but it's unclear if it will translate truly across borders to Europe, Russia, China, etc. I'm guessing that doesn't matter but just remember what happened. Make sure to be honest about who's actually going to run the payment rails here.
Libra/Diem was told by regulators to not move forward with the project. They were very early days, and trying to "do it right" in which the administration said "not at all".
Similar also happened with Visa... check when they were publishing in-depth reports from their crypto arm and then suddenly stopped.
Sounds like it's used for accepting payment from Starlink customers in numerous counties:
> The company [SpaceX] partnered with Bridge, a stablecoin payments platform, to accept payments in various currencies and instantly convert them into stablecoins for its global treasury.
Once you buy the stablecoins, moving the money anywhere is an API call and a sub-1¢ transaction fee, rather than a cross-border wire transfer and a multi-day settlement process.
> crypto (via stablecoins) is easier/faster/better than the status quo ante.
It must be ignorance on my part or perhaps I’m just lucky with residency and clients, but I get paid through services like Wise frequently. Taxes are pretty reasonable and I receive the money instantly on my bank account from US, Europe or Latin America. I don’t really know much better it needs to get.
I can never understand what problem stablecoins are trying to solve.
As an extreme skeptic of crypto in general, the uses for stablecoins seem obvious as long as they’re transparently backed or used only for short term transactions before going back into fiat.
Even just paying a foreign contractor is a pain in the ass sometimes so if a bunch of banks and financial service providers around the world manage to make international transfer easier via the coins, that’s great. Not everyone cares about the inconvenience of KYC or reversibility of transactions sent internationally. These usecases feel more like shortcutting the complexity of transactions across state lines rather than the regulations we’ve learned about the hard way in a hundred years. Obstacles rather than safeguards.
As someone who actually worked on some crypto project (nanotimestamp) and also has got paid in crypto. I usually just convert it into stablecoins / gold coins for a short term (1 year max) where since I am still a minor, I don't have a bank account and so I mean, the end goal is to get my stablecoins out of the chain into real money not vice versa.
I had written something like this, just with a clickbaity title but its basically that I hate everything in crypto except stablecoins which I really like. Like there is paxgold which has gold and I genuinely like the fact that I think that we might be able to pay in gold or etc. stuff, I also like USDC too.
What? It's not hard to transfer payments to any foreign country with a functioning banking system. The hard part is actually figuring out the legal rules around taxation and employment and contracts that are between two dissimilar legal systems.
This doesn't really help that.
KYC isn't an 'inconvenience' it's a legal requirement that you (or your employee) can go to jail over if you do not comply with.
What about the tax implications of every transaction being a taxable event?
Are you tracking all of this for tax purposes? These transactions all have to be reported to the IRS even for stable coins. This is the biggest thing making crypto payments a non-starter. What's the story here from the end-user's perspective?
I as an individual have no interest in stacking stable coins if when I spend them to businesses, I have to meticulously track each transaction and report it. Whatever you're doing for businesses doesn't seem like it would solve this problem for individuals, if you're even solving it for businesses themselves that is.
> We're currently adding stablecoin functionality to the Stripe dashboard, and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging.
Using crypto to dodge currency controls?
Of course I agree that currency controls are bad. But, if the use case for crypto keeps being fostering illegal transactions then it doesn’t solve anything a functioning economy needs.
>Then as the country’s economy develops the need for these illegal services disappear, or quickly gets you in trouble.
This is not necessarily the case given how large the online illegal drugs market is in pretty much every developed country. Just because weed was legalised, it doesn't mean all other narcotics will be legalised in future too.
Which given the busts of Silkroad etc. and countries changing the laws allowing them to search mail making delivery more perilous, has again withdrawn to a physical hands on market.
Or do you suggest to send some stable coins when meeting the local dealer?!?!
Omg, imagine if you were a foreign country and an US state-backed company decided you're collecting too much taxes, and helped your citizens evade that (for a fee of course)
Dude the USA runs the whole Euro Dollar system. The idea the USA really really "controls" it's own currency is a bit of a pipe-dream at this point. We might as well go for full global control.
Ah. I think currency controls might have been a new term for you. Or I should have said ”capital controls” to be aligned with wiki. [1]
Currency controls is what for example Argentine has been doing with set exchange rates and limits on conversion while mandating that all local businesses must be done in their currency.
It is not about controlling the currency, it is about creating hinders for capital movements in and out of countries.
To add some context: our clients in LatAm use DolarApp to spend internationally with a card at the best rates, send and receive cross-border transfers (not just remittances, but also payroll), and to keep their savings pegged to the dollar. Stablecoins let us deliver a much better user experience and significantly lower fees — in some countries, up to 10x better than incumbents.
That said, most of our users don’t care about the underlying infrastructure. They care about the benefits. It’s similar to how someone using a bank card at an ATM doesn’t know (or care) that the system might be running on COBOL.
We see it as our job as product people to absorb that complexity so our users get the benefits without having to deal with the complex mechanics behind them. That’s what we believe is helping unlock a platform shift.
Why did this need blockchain? Why could you not use a central private e-money system w/ a good API? It sounds like you think they don't really care about the implementation?
> Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.
One sign of a technology becoming mature is when it stops needing to be the main character. It starts to make room for what it does, not what it is.
When thefacebook launched, it wasn't a PHP-based social network; it was a social network for college students.
Blockchain has been the main character for a very long time and it's really encouraging to see a product launch like this. Congrats to everyone involved in making this product a reality.
> Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.
I still don’t quite understand the point of using crypto then - there’s no advantage in it theoretically being decentalizable since practically it is not. It might as well be an implementation detail.
Or are there decentral aspects to how it works? Does it ease auditing? Is it the improved ease of financial/regulatory engineering?
That Stripe is involved is probably the best endorsement of Stripe being involved in crypto. Banking in South America is something crypto skeptics have heard for many years now. I was involved in a project that combined crypto with mesh networking. The launch was going to take place in South America. Why? Because university students in Brazil are desperate for a little bit of side hustle money, and incentives could cross borders easily using crypto. This was backed by first tier VC that had a number of crypto investments, including fundamental crypto technologies, alongside other more mundane things. Nobody involved in the project had any intention of creating a bunch of poor student bag holders. Nevertheless, the combination of mesh networking and crypto based incentivization wasn't enough to even turn it into the next Helium (they still around?)
SpaceX using crypto? Are any of their customers seriously going to pay using crypto? Are they gonna pay any of their bills using crypto? I'm not trying to piss in your Cheerios. But making real world use cases not die of uselessness is going to be a challenge.
$0.045 per credit transfer
$0.01 per request for payment message
$1.00 per liquidity management transfer
Nice work if you can get it.
BTW, it is crypto. So the promise that none of these businesses are using crypto because it's crypto or for any speculative benefit is a provisional promise at best. Hyrum's Law argues an opposite future.
Which L1 do you mean? I don't see any fee amounts on Tempo's page. Most stablecoin transactions are on Ethereum and the fees are neither percentages nor fixed dollar amounts. They just have congestion pricing, so it depends on how expensive your transaction is to run and how much traffic there is.
i read this move as "we were skeptics like anyone with a brain, but also now trump allowed stable coins to offer pyramid like incentives and only a fool wouldn't jump on that easy money."
Can you expand on "easier" and "faster" in easier/faster/better. I understand "better" in terms of transparency, shared standards for integration, and various other properties.
I can less immediately expand "easier" and "faster".
Easier: on chain VMs are far from simple or easy, recovery from mistakes is far more complex. Some other aspects such as the implicit common standard might reduce some amount of need for "green field agreement", and the implicit openness of the protocols avoid some of the traps of "here's a rest api, go", but is this the focus? When you look at a wide variety of the big ticket items in everything that needs doing, is the total set easier? Are there surprises there?
Faster: similar to above, this claim is surprising. There's a lot of by-design overhead to a cryptographic ledger system. Lots of things that can be done to make it wider, to reduce latency and increase throughput, but at a fundamental level core operations such as transaction creation require a lot more processing going into a ledger than into a traditional database, even one at scale. Maybe faster here isn't about system faster, but time to product delivery? If so is that common standards? Are there surprises here too, what were they?
Edit: I see elsewhere in the thread you provide some answers in a slightly different framing. A potentially unfair paraphrase and summary seems to be that this enabled integrations to bypass expensive incumbents and comparatively poor traditional infrastructure. If that's a reasonable approximation my question is this: what if you dropped good sized chunks of the blockchain part that is the main system bottleneck, but kept the rest of the properties (shared micro computation model, shared transaction model, common API standard and protocol, eradication of foot dragging incumbents etc).?
Easier: I can earn or spend real money 24/7 without anyone’s permission, at any age, in any location.
Faster: Payments settle lightning fast compared to ACH/Wires, permanently and internationally.
Better: I don’t need anyone’s approval to be “banked” and I don’t have to operate in fear of clawbacks. Programs are the ultimate unbanked, and that’s the “agentic economy” that is emerging.
No third party: Almost certainly as a user there are still third parties involved, this isn't (AFAICS and based on other discussions) a user facing chain (edit: correction, they do say the chain is public, but here I really mean user facing value: you aren't minting stablecoins, you have to get them from somewhere). At "envisioned" transaction rates you would in practice not be syncing the chain and interacting with it yourself in any meaningful way.
Settlement: chain settlement is different from financial settlement. Between clearing ends there will still need to be sufficient demonstration of KYC, exchange of some form of actual holdings and so on. Typically the attraction of /to stablecoins is that they're used to perform transactions ahead of movement of actualizable value in target currencies. A possible alternative model is that all invested parties sink actual value into a global sink fund backing the stablecoin that is sufficiently protected to ensure that it does not devalue. In practice organizations almost certainly aren't going to part with wealth on those volumes and will operate secondary private exchange markets and settlement in bulk to escape concerns of short term loss, leverage, inflation and many other dynamics.
I'm a crypto disappoin-ic. Seems like humans simply cannot un-shackle themselves from central control no matter how low the bar. The second crypto got steam the scammers, criminals and con artists were on it so fast fly's would be embarrassed by their shameless dive into feces.
Long term I'm still more optimistic on crypto than AI. I think part of the problem with crypto is it needs to be around longer than some government money to prove to people it has staying power. Only then will financial people start doing things like recommend a small crypto stash for your retirement just in case. The average person is not going to make the necessary critical mass move into crypto without some sort permission saying its ok and not going to risk all their money or jail time.
If the only two examples that are presented are "SpaceX" and "Latin America" can we not dismiss any further importance on the conflict-of-interest aspect alone? A completely failed experiment, and a company that can create millions simply by tweeting- who buys this?
This is exactly how you bootstrap payment rails to compete with Visa/MC. Merchants would do anything to reduce the 2-3% they’re bleeding to the card schemes.
Everyone focuses on consumer adoption, but merchants push payment methods customers don’t love all the time - ACH transfers, store cards, cash discounts. If stablecoins can cut interchange from 2-3% to near zero, merchants will drive adoption through discounts and incentives.
Gas stations where card fees destroy margins, high-volume retailers - get a few major players offering meaningful stablecoin discounts and suddenly consumers have a reason to figure out the wallets.
"Long tail markets" here means small countries with currencies you don't have any particular interest in holding. Starlink sells access in Benin and South Sudan, for example, that's the long tail.
> Private blockchains are completely uninteresting. (By this, I mean systems that use the blockchain data structure but don’t have the above three elements.) In general, they have some external limitation on who can interact with the blockchain and its features. These are not anything new; they’re distributed append-only data structures with a list of individuals authorized to add to it. Consensus protocols have been studied in distributed systems for more than 60 years. Append-only data structures have been similarly well covered. They’re blockchains in name only, and—as far as I can tell—the only reason to operate one is to ride on the blockchain hype.
In particular, using the term "blockchain"/"crypto" to talk about something more centralized / permissioned than e.g. Bitcoin is missing the point: these systems already existed before.
So what do you mean by "crypto" exactly? Distributed systems? I don't think you'll find many distributed systems skeptics on HN.
My biggest reason to be a crypto believer right now is stablecoins, international payments, and agentic AI.
It's inevitable that agentic AI will handle a lot of workload online eventually. We can't expect these agents to work on existing payment rails, what with their fees and slow settlement and international payment hurdles.
AI agents that can pay each other when necessary - even tiny fractional amounts - will be a massive use case.
I would imagine that eventually you'd want to gate some data. Like you want your AI agent to get the lastest financial data from Bloomberg and Bloomberg charges you $0.01 per query
We're starting to seek access to our services using the x402 protocol. It's practical for micro-payments and can facilitate subscriptions and most importantly, completely under the control of the end user. See https://x402.org
Makes sense. Stablecoins in the new regulatory landscape offer significant efficiency gains in the provisioning of lots of innovative financial services (and also typical ones).
Does Stripe have a perspective on the unique systemic risks that stablecoin exposure might end up having in the new regulatory landscape?
I don’t know anything about this specific case but it is common for manufacturers to have currency needs in long tail markets to facilitate payments to subsidiaries, vendors and employees in all the places they do business.
Many skeptics assume that stablecoins are just about regulatory arbitrage.
That's part of it, but:
1. Progress often depends on evolving obsolete regulation.
Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc) and yet in the early years they had to work around taxi regs.
2. Blockchains are a fundamentally more robust way to run a ledger.
If any of you have ever written software touching tradfi custody you'll know about "reconciliation"--start of every business day, you get a dump of files in your FTP server in various proprietary formats. You parse the transactions and they don't add up. The Recon team hand-corrects and recategorizes edge cases so that the balance deltas match transaction totals and everything ties out.
This type of absurd duct tape is ubiquitous, and it's a major reason why trad rails have multi-day settlement times and even longer for international. Inflates team size and cost required to run a product. SWIFT is a messaging system -- bankers use it to essentially text each other about wires to figure out issue resolution. Some lower-level trad payments regulations are written assuming that this level of manual oversight is required to prevent ledgering errors and ensure sound accounting.
Stablecoins run on transparent, precise ledgers with machine consensus. This doesn't solve everything, but there are large categories of issues that can occur in trad payments that do not exist onchain.
3. Control is liability.
Some important regulations actually encourage blockchain-based payments. For example, money transmitter law places significant requirements on custodial money transmitters (you take money from Alice, with a promise to give it to Bob) that do not apply to noncustodial channels (you give Alice a mechanism to send directly to Bob).
I wonder if some of the non-robustness of the tradfi system is a feature, not a bug. If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen rather than a beautifully efficient, irreversible machine consensus. The bottlenecks and intermediaries create friction, sure, but that isn't per se bad.
My hang-up with crypto is that it solves the ledger-keeping part of running a financial system, but it isn't clear that's actually the hard part! Preventing and remediating fraud, money laundering, etc. are, and crypto makes those issues worse, not better.
> If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen
This is a nice lens for looking at when stablecoins make sense.
If you're an American using your Chase account to buy coffee at Starbucks, the permissioned, heuristically fraud-checked, slow-settling tradfi system is well optimized for you.
If you are an importer buying $3m worth of bulk coffee from Kenya, you would much rather have an instant 1:1 USD transfer on beautifully efficient machine consensus.
In many countries in the world, the banking system is extractive and unreliable. The "confused employee" is not there to help you. The two weeks of money in transit is no benefit, just a source of additional counterparty risk, cost, and delay.
An immutable and transparent ledger is not for everything but it is a useful primitive.
> Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc)
Uber rides ARE taxis.
The innovation of Uber wasn't done by Uber it was done by everyone having a GPS enabled always connected phone and computing device in their hand at all times.
Uber isn't just taxis - if a bunch of taxi companies just got together and developed a taxi ordering app that looks just like Uber, it still won't be Uber.
Uber is a whole bunch of things combined:
- very intuitive taxi ordering UX (for riders) and dispatching UX (for drivers).
- circumventing regulation so there are no more artificial limits on taxi supply in a given city.
- enabling gig economy: because you can use your own personal vehicle, you can work anytime you want for however long you want. You don't need to lease a taxi for an entire week or an entire month. You can choose to work for 4 hours on a weekend only during surge times if you wanted to. So it allows supply to be elastic to meet demand while also offering flexible work arrangements for part-time drivers.
Is the US leaning pro-crypto or the current administration in power? My guess is that it's like saying the US is leaning towards tariffs, which may or may not be stable.
It's clearly the current administration, seeing as how they profited immensely by offering their own personal shitcoins. I don't think public sentiment has changed much.
Hmm, I think plenty of administrations (or rather, legislative bodies, if we actually want to get back to the Constitution) have acted in a way that made it less profitable for businesses to operate, so I think it's very possible to close.
Cryptocurrency regulation isn't a cause that most people are passionate about in either direction, so reeling it back in won't afford politicians any popular support. All it can do is create rich enemies who spend lots of money to attack political threats. There's simply no incentive to crack down on it.
I think he's talking about foreign governments control on monetary policy, which is essential for managing the economy. Even a poorly run government will insist on retaining control over monetary policy and it provides a necessary forced coordination mechanism for allowing the economy to recover given that it's a prisoner's dilemma otherwise, with every individual preferring to opt out of taking a loss.
This end-run around foreign government monetary control has been touted by Stripe executives as one of the main selling points for USD stablecoins but I don't see how foreign governments don't clamp down on this is in the same ways the clamp down on other uses of USD in the country; most monetary transfers have some physical presence or touchpoints the government can control.
More importantly the US itself is eventually going to come to the conclusion that it does not want people holding US dollars for similar reasons: it also loses control over monetary policy, with excessive inflows un-intuitively leading either to unemployment or excessive debt (c.f. Michael Pettis)
That said, it's possible stablecoin networks succeed for other reasons, particularly having a widely-accepted "API" that is developed at the pace of modern technology companies instead of laggard banks.
Blockchains (due to constantly changing validators, nodes, etc.) are much harder to shut down than some dedicated service. I think the current administration understands that loose stablecoin regulation further cements US dollar hegemony, curtails other countries attempts to deprive their citizens of payment and savings alternatives and creates more demand for US treasuries (because that's where stablecoin reserves end up). It's a win-win for the US government and bad for governments with a track record of poor fiscal and monetary policy.
To be honest, a nitpick that i have in this comment is that there are other stablecoins aside from us dollar but most people don't seem to use it.
There are gold tokens which I genuinely feel like it can be the best thing ever. Because bitcoin is "digital gold", lmao.... I laugh a lot on this statement nowadays because we genuinely have trustworthy way of having "digital gold" and we don't use that as much as there is hype about bitcoin...
But yes currently, it might benefit the us govt. overall
If by "pro-crypto" you mean the current president and his wife both did crypto-scams on his first day of presidency, then yeah. Other than that, I wouldn't base anything off of a Trump promise.
Patrick, congratulations on launching Tempo. If there was a company where it actually made sense to build and use a blockchain it would be Stripe.
The website is a bit painful to read but I thought it provided good general information for potential partners.
As as a dev, my questions are why did your team decide to build a new L1 chain instead of an Ethereum L2 and why did you all stick with the EVM architecture instead of looking at something like the MoveVM?
Patrick, the problems you describe (speed, cost, cross-border friction) already have solutions. SEPA Instant, FedNow, PIX, and providers like Wise move money in seconds, at negligible cost, inside regulated systems. Tempo doesn’t solve payments; it sidesteps oversight.
By shifting flows onto a private stablecoin ledger, Stripe isn’t fixing inefficiency; it’s making it easier to route money in ways regulators and tax authorities can’t easily monitor. That’s not innovation, it’s the oldest trick in the crypto playbook: pretend you’re improving payments, when what you’re really selling is a way around the rules.
That's the fun part, You don't have to "buy" anything to invest in this vision.
You just can't "invest" in this vision just as you can't "invest" into treasuries, I mean you could but they don't give 100x the returns.
I skimmed through and I don't see anything that promises a lot of returns and THAT'S A GOOD THING. Just like how things like (okay, I was thinking of some universally loved non ipo company and I thought of silksong which is going to get released, so team cherry!!)
So if you want to invest into team cherry, the best you can do right now is maybe buy the game but that isn't investing
I think its in the similar manner and its a good thing since it prevents frauds and false returns advertising
There is (usually) no free lunch. Nothing that can give 100x returns anyway, there is insane competition on things like on beating the market consistenly even with 1% is really hard and only very few companies do and even then, their past record doesn't indicate the future remains the same.
Tldr: I am that salesman of index funds. also diversify, s&p have a huge concentration on AI stocks and so please diversify into world stocks or maybe even more into non american stocks since american markets are heavily focused on AI and I doubt that it will play out since the markets do feel like they are in a bubble right now
"10. In and around the spring of 2023, Mr. Ibrahim became uncomfortable with certain practices and activities in which the Bank began to become involved. These included practices that, in Mr. Ibrahims opinion, jeopardized the Banks compliance with anti-money laundering laws, federal safety and soundness requirements for depository institutions, and compliance with specific OCC regulations and requirements that were particularly imperative due to the fact that the Bank was already considered a Troubled Institution
14. Mr. Ibrahim further objected to Axioms initiation of new business programs, without first obtaining non-objection letters from the OCC and without review by the Banks internal New Product Risk Committee, as required by written policies. One such project, DolarApp, was of particular concern to Mr. Ibrahim as it entailed cross-border movement of funds, which triggered significant concerns as to whether the Banks BSA/AML controls are sufficient, among other things.
15. But when Ibrahim raised these concerns with the CEO, Ross Breunig, he told Ibrahim to the effect that he did not want to hear it and shut down the conversation.
18. Almost immediately after Mr. Ibrahim objected to these practices, Axiom and Mr. Breunig began a pattern of retaliation. After the April 2023 leadership meeting where Mr. Ibrahim raised concerns relating to CSI and the DolarApp, Mr. Breunig began canceling Executive Board of Director meetings that Mr. Ibrahim attended.
19. Following a leadership meeting in May 2023, where again Mr. Ibrahim raised concerns about CSI, DolarApp and the overdraft positions, Mr. Ibrahim began receiving email cancellations to multiple committees and Board meetings.
20. Upon inquiry, Mr. Ibrahim learned the meetings were not being canceled, but rather he was being uninvited without explanation. Mr. Breunigs hostility with Mr. Ibrahim also became noticeably apparent during this time."
Of course Stripe, Inc. is neither a Troubled Bank nor an untroubled one
Anyway, it sounds like DolarApp could be useful for evading anti-money laundering and bank secrecy laws
"Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit."
That's only one of the many reasons people might be skeptical of crypto. See above
"They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante."
How much of this "real world financial activity" is not criminally culpable
Stripe has a history of shutting down legit businesses and blocking payouts of their rightfully earned income, whilst also profiting off those frozen funds by investing it.
Stripe has a history of cutting off payments to businesses which are violating the TOS. Stripe's TOS is largely a result of rules in place by banks and credit card companies. If Stripe don't shut them off, they get shut off.
To the extent they've made errors, I'd like to see you do better. The scale is enormous, there are fraudsters coming at you left and right. It's not an easy game to play.
Two identical business models (software) should either both be supported or both be rejected. They are pretty clearly playing favourites with their VC funded friends.
Stripe is not at any risk of having services cut by payment processors. They can leverage an excellent case against them if so. It's time they and the others get together and dunk on Mastercard before they decide to eat the whole pie.
Have worked in payments for over 25 years. Yes it's complex. But with the charge rates and volume they absolutely can do better. And no my business not violate the ToS. It was considered high risk due to high value of transactions despite exceptional contracts, client signoff forms etc.
Then time for them to group up and change the game. Not going to make excuses for corps. It's their responsibility to push, not mine to apologize for them.
The game is working out well for them. Why would they want to change it? What's next? Lebron should push for rule changes that make it easier for short guys?
The difficulty of their situation (ie threading the needle on providing value while toeing the line from a reg and stakeholder standpoint) is good for them. They don't want it to change. This is 101 stuff in business.
Nope, I'm not a fraudster, or a porn guy or drug guy or whatever other things currently banned. I'm quite happy with the status quo here. As are most of society.
Deflecting.
You live in a society of powers. You're not an individual free of them and their consequences just because they didn't target you this time.
If you were truly comfortable you would have good reasons to support their decision other than "it wasn't me this time!".
Most of society is not happy with the status quo, why do you think they're so unhappy?
The number one justification for cryptocurrency in my book, even if it's less safe or convenient or even has small fees. Your business being subject to the whims of payment processors is ludicrous.
Even with this being the justification, they could just say they won't be working with the customer in the future, not literally steal their customer's already earned money.
All you're doing is moving the risk from the business to the consumer with crypto which is why it will never succeed. Consumers like all the things businesses hate about credit cards because they can get their money back if something goes wrong and when it comes to payments the customer decides who wins.
Well said. We've offered for many years to our customers to pay by CC, bank transfer or Bitcoin. Exactly 0 people wanted to pay by Bitcoin, while the other two options are at about 50/50.
I don't want to go into details here, but it is something very traditional and unexciting that all kinds of people buy. We offered Bitcoin payment just as prominent as other forms of payment, but nobody was interested.
How are you taking Bitcoin payments? Every time I'm forced to pay for something using crypto it ends up making me want to self-harm and I've been a dev for 40 years. When I have to try and talk friends and relatives through crypto payments it is insanely painful.
Just the other day I was buying an NFT and I realized I bought the currency on Ethereum instead of Polygon. Coinbase didn't differentiate. Imagine trying to explain all this shit to your grandma.
> All you're doing is moving the risk from the business to the consumer
No, most of the merchant's risk with credit cards is from the design of credit cards. You have to give your payment info to every merchant but if any one of them loses it then anyone who gets it can use it at any other merchant. Then some merchant you've never heard of has bad security, criminals get cards from there and use them to buy things from honest merchants and the honest merchants get chargebacks for having done nothing wrong.
Cryptocurrency does not have this problem because you don't have to give your private keys to everyone you pay and even if you fail to protect them yourself (something you, rather than someone else, is in control of), as long as you're not trying to use cryptocurrency as a store of value instead of a payment system, your losses are limited to the e.g. $20 you had in your wallet. Customers have no problem with systems that work like this, like cash.
Chargebacks are only an issue if the customer expects the merchant to be dishonest and the value of the purchase is large. If you pay $3 for something and get ripped off, the ability to do a chargeback isn't that relevant to your life and you're just not going to patronize them anymore.
The reason most customers don't use cryptocurrency is that the government made it high friction for ordinary people to buy it. "Why is this website I don't know asking for my social security number? I'm just trying to make a small purchase."
Presumably at the behest of the existing payments industry which wants to keep their vig.
Starting like that, writing that whole paragraph and you completely misread what I said. "No, merchants have risk with credit cards". That is literally what I said in the post you are replying too. Sloppy and rude.
>Cryptocurrency does not have this problem because you don't have to give your private keys to everyone you pay and even if you fail to protect them yourself
Credit card fraud isn't a problem for consumers because of chargebacks and insurance. If a criminal steals my card and racks up charges I am almost always getting my money back. All the risk is again on the merchants. Consumers like that balance. Trying to convince them to take on more risk just to benefit the merchants is not going to happen ever.
>Chargebacks are only an issue if the customer expects the merchant to be dishonest and the value of the purchase is large. If you pay $3 for something and get ripped off, the ability to do a chargeback isn't that relevant to your life and you're just not going to patronize them anymore.
This is also completely wrong. People do chargebacks all the time because of a poor outcome that has nothing to do with being dishonest. There are also cases like bankruptcy where a chargeback will get you your money back but if you paid in crypto you'd just be another creditor.
The reason most customers don't use cryptocurrencies is because they are stupid and pointless for payments. They make the process worse for consumers unless you're needing to hide your identity. Crypto is like mailing companies envelopes of cash. There is a reason no sane consumer does that anymore.
> "No, merchants have risk with credit cards". That is literally what I said in the post you are replying too. Sloppy and rude.
What you said was that it was moving the risk from the merchant to the consumer, but it isn't moving that risk, it's removing it because the consumer doesn't have to give every merchant something that enables that (very common) form of fraud to occur to begin with.
> Credit card fraud isn't a problem for consumers because of chargebacks and insurance.
It is though, because it raises costs, and therefore prices. This is indirect, but the merchant can make it direct by offering a better price for using a payment method that lowers their costs.
This is one of the reasons the credit card companies try to prohibit that price lowering to the extent that they can -- because they know that otherwise it would happen and be effective in reducing usage of their archaic fraud-prone system with high processing overhead.
> People do chargebacks all the time because of a poor outcome that has nothing to do with being dishonest.
This is called "chargeback fraud" and is dishonesty on the part of the customer. If you buy something which is accurately described and then don't like it, issuing a chargeback should be prevented.
> There are also cases like bankruptcy where a chargeback will get you your money back but if you paid in crypto you'd just be another creditor.
Which is another form of fraud by the customer, because in that circumstance you are a creditor. It's like going back to the store and taking the money you paid out of the till. You're not taking it back from the store, you're stealing it from their other creditors who are entitled to their proportionate share.
"Credit cards are good because they enable customers to commit fraud" seems more like an argument to make them go away.
> The reason most customers don't use cryptocurrencies is because they are stupid and pointless for payments.
They're a payment system you can't practically be denied the use of and isn't operated by an industry dedicated to capturing the government in order to keep you under surveillance and covertly extract a vig from everything you buy.
> They make the process worse for consumers unless you're needing to hide your identity.
What if you do want to hide your identity? It's certainly not a feature to the customer that credit card companies create a list of everything you buy and who you buy it from in the hands of a third party. Why should the customer want there be a third party keeping track of who buys politically sensitive literature or contraceptives or anything that reveals their realtime location?
> Crypto is like mailing companies envelopes of cash.
It's like paying for things in cash generally, which lots of people still do in various circumstances.
People don't typically mail cash because stamps are too expensive to use that for small purchases, there is a cap on claims if you use it for large purchases and the Post Office loses it, and mail is slow.
And even then, people will use it to pay for e.g. Mullvad.
>it's removing it because the consumer doesn't have to give every merchant something that enables that (very common) form of fraud to occur to begin with.
It doesn't remove anything. The consumer is accepting the risk that they pay for something and don't receive it. You are just shifting the risk it is still there.
>This is called "chargeback fraud" and is dishonesty on the part of the customer.
No it isn't. Chargebacks aren't only for fraud or dishonesty on the part of the retailer they are for any situation when you don't believe you received what you paid for.
>Which is another form of fraud by the customer, because in that circumstance you are a creditor.
No because again the bankrupt company hasn't provided the service they took money for. Taking back the money isn't fraud.
>They're a payment system you can't be denied the use of and isn't operated by an industry dedicated to capturing the government in order to covertly extract a vig from everything you buy.
So you can be denied the use of most crypto in practical terms by having you address blacklisted in which case no mainstream exchange will accept your coins.
>What if you do want to hide your identity?
Then use crypto, but that isn't a concern for very many legitimate transactions.
>it's like paying for things in cash generally
It's like paying in cash remotely, hence mailing money. Paying in cash in person is fine because you are right there to collect your goods or confront the thief standing in front of you.
You believe the reason people don't pay for things by mailing cash is because of the cost of postage? Besides being ridiculous maybe check the cost of a bitcoin transaction during modest volume events.
> It doesn't remove anything. The consumer is accepting the risk that they pay for something and don't receive it. You are just shifting the risk it is still there.
The risk the merchant is trying to avoid is actually removed, not shifted to anyone. The risk that the customer pays for something and doesn't receive it is irrelevant for many transactions, because the seller is trustworthy and allows easy returns, so the risk from them isn't any higher than the risk of the credit card company not crediting your payment or sticking you with a surprise fee.
It also isn't inherent to cryptocurrency. There is no reason you can't use escrow if you feel the need to. But you could avoid the cost of that escrow, implicitly built into credit card networks and non-optional there, when you don't feel you need it.
> Chargebacks aren't only for fraud or dishonesty on the part of the retailer they are for any situation when you don't believe you received what you paid for.
> No because again the bankrupt company hasn't provided the service they took money for. Taking back the money isn't fraud.
Taking back money from a company in bankruptcy is typically illegal (and unethical) because their other creditors also have a claim to the money, so you're really taking it from them rather than the company who owes it to you. This is why bankruptcy courts exist; to fairly allocate the bankrupt entity's assets. You're not allowed to skip the line.
> So you can be denied the use of most crypto in practical terms by having you address blacklisted in which case no mainstream exchange will accept your coins.
Anybody can trivially get a new address and transfer their coins to it without the use of an exchange. Blacklisting every address that has received coins from a blacklisted address doesn't work because you don't need someone's permission to send them coins, so it would grant anyone with a blacklisted address the power to blacklist anyone else. Also, a blockchain is global and countries that don't respect the blacklist would cause the number of affected addresses to constitute the entire network within a short period of time.
> Then use crypto, but that isn't a concern for very many legitimate transactions.
Isn't it? Why would I want the credit card companies to even know if I'm buying a toothbrush? Pervasive Monitoring Is an Attack:
> It's like paying in cash remotely, hence mailing money.
That's assuming you're using it remotely. If it wasn't made purposely inconvenient then you could use it to buy coffee or gas.
> Paying in cash in person is fine because you are right there to collect your goods or confront the thief standing in front of you.
People are perfectly willing to pay cash to someone who is bigger than them, or armed, so that can't really be it. Also, confronting them like a vigilante is hardly necessary when you know who they are and they're subject to legal process, which is the same over the internet.
And again this only seems to apply to someone you expect to rob you. Microsoft accepts cryptocurrency. You may not trust them at all, but if you pay them with it for a Windows license, what are you afraid will happen? Anything that couldn't also happen three months later after the chargeback window is closed?
> You believe the reason people don't pay for things by mailing cash is because of the cost of postage? Besides being ridiculous maybe check the cost of a bitcoin transaction during modest volume events.
If you're making a $2 transaction, spending $0.73 on postage and then waiting several days to be credited is ridiculous, not to mention most merchants don't accept it because it requires manual processing and presents an insider theft risk.
Bitcoin has high transaction costs because it's the oldest (and some of the ingroup likes it that way). There are several other cryptocurrencies where the transaction costs are trivial, it's not inherent to the technology.
> If you pay $3 for something and get ripped off, the ability to do a chargeback isn't that relevant to your life and you're just not going to patronize them anymore.
That's true. How about if you're paying $3000? Would you like to pay with Bitcoin or a credit card?
If I'm getting a percentage discount for using Bitcoin so the merchant can avoid the credit card fees and I trust the merchant (or the applicable legal system)? The first one.
Notice also that the argument I'm making isn't "you should never use a credit card", it's that cryptocurrency is sometimes better, and it wouldn't hurt if more places accepted it.
What people? Most ordinary people don't even contemplate cryptocurrency as something they'd use for ordinary transactions because the law inhibits anyone from making a seamless experience to use it that way and then people have no experience with that usage.
LOL. Being able to reverse transactions and freeze funds is a feature not a bug. With crypto you have no recourse when a criminal does criminal things or you make a mistake. Ransomware only started being a thing thanks to crypto, but governments could easily ban it (serious governments like US, China, Germany, that is)
Crypto is useless for anyone but criminals. If you can't use the real, state controlled financial system, then you also can't use the real, state controlled property rights system. Who cares about being able to prove you own some bits if you are not protected by the law when you buy any actual tangible goods with those bits, like a house or a car or a business?
Crypto is only useful when it's not needed (ie, you can use the state to enforce your physical property rights) and becomes useless once it's needed (you live in a corrupt or anarchist state that won't enforce your property rights over anything you can actually buy with the crypto)
Crypto is becoming a form of government blind-eye-turned corruption, for carrying out corrupt financial practices with less immediate oversight and more ways to overcomplicate the logistics. It will probably cause a financial crisis one day, like in 2008, for the exact same reason complex derivatives did.
I never take crypto jobs so my resume will stay clean when the house of cards falls down.
You are probably unaware of this, but most foreign countries also have governments that enforce laws. It's not just an American thing, believe it or not.
Instead you should advocate for payment network neutrality. Visa and MasterCard should be required by US law not to discriminate against transactions, and enforcement should move from the private sector to, well, law enforcement. Like with ACH/FedNow. That might actually get us somewhere productive.
Terrible idea on what basis? Why would it be bad to require all lawful transactions to be processed by an infrastructure provider?
Private toll roads don't get to discriminate against traffic. Internet providers don't get to discriminate against traffic. Why should payment network providers? Once you're big enough and important enough, you're quasi-state.
On the basis of allowing the people who built the companies to deal with customers they want to deal with, rather than be forced to deal with every type of scumbag on earth.
Toll roads change price based on type of vehicle and don't allow all types of vehicles. Discrimination.
In most jurisdictions internet providers absolutely discriminate on traffic to help resolve congestion, they are allowed to discriminate for VOIP under various circumstances. Discrimination.
Visa and Mastercard don't want a bunch of charge backs, some services are more prone to fraud than others, and they flat out don't want their brand associated with various things. Discrimination.
With few exceptions (race, gender etc etc), discrimination is a net good for the world. People should be allowed to decide who they want to do business with, socialize with etc.
Current-generation blockchain networks also don’t seek to do what “traditional finance” does. The usual list of things that crypto enthusiasts point to tends to be mostly comprised of things that consumers actually want. The entire premise is different. Apples and oranges.
For exactly what? Show the lowest cost provider in "traditional finance" and the cost using some blockchain for an end to end transaction that someone actually wants to do. What you are going to find is that the underlying cost structure for a few updates to a few relational dbs is about zero. The fees paid for some transactions having are a result of using the most convenient method possible. With a little bit of elbow grease you will find very cheap providers of everything in traditional finance, they'll just be a little more annoying to use.
ACH costs zero and some retailers accept it and more and more now with FedNow.
International remittance - atlantic money does $3 or something flat. By the time you get your cash into a crypto exchange and out, you are hosed for more than $3. If you can be bothered to open an account with someone like Interactive Brokers (yes, a traditional online stock brokerage) you can do it for about zero - you get wholesale FX prices and you can deposit/withdraw money from various accounts as long as you have all the paper work in place - annoying, but doable.
Again, a couple entries into relational databases, which is the true underlying cost structure of "traditional finance" is really hard to beat.
Then, go ahead and explain, in some detail end to end, with costs, how to do the things you brought up. You aren't going to beat the underlying cost structure.
> Stripe has a history of shutting down legit businesses and blocking payouts of their rightfully earned income, whilst also profiting off those frozen funds by investing it.
Almost every case I've seen, it's almost always because they were dabbling with NSFW, Cannabis, or another card-network-restricted category. And when you confront them about their story, they almost always respond with weasel wording: "It wasn't really NSFW, or it was only a little NSFW, or it's not my responsibility if my users use it for NSFW..."
It's also not like this is buried in the Terms of Service with ambiguous legalese. Stripe has a pretty beautifully-formatted page clearly saying what they are not OK with.
As someone that isn’t working in payment processing, it’s no surprise that you don’t get all of it.
Every single thing about these lists always reeks of ‘this has been put together reactively, over time, based on experience’. But it’s so cool and trendy and complain about this stuff on HN and similar, everyone just elects to forego critical thinking for a little bit.
I mean, OK, but by the time it's called VAT in their universe they're already treating you as 'overseas' and your total payment processor fee is pushing 10% because "not in the US" apparently carries a 100% surcharge
Also wondering this. I was planning on making the jump to LS soon but if Stripe will be offering MoR services then I'd rather stay within Stripe's stack.
I suspect (hope) Stripe Tax will soon offer a MoR service. I imagine this acquisition is mostly for their tax expertise & perhaps internal tools that do all the hard work behind the scenes.
There's a lot of online fraud. We invest a ton in Radar, our payment surfaces, etc., to keep this as invisible as possible to businesses. (We don't always succeed, of course. But, despite the growing sophistication of the fraudsters themselves, we do generally get better every year.)
The intuition here is that the rules that block when CVC/ZIP doesn’t match necessarily happen after the bank already decided the transaction was okay, because that’s when Stripe learns whether CVC/ZIP match what the bank had on file.
So if you block on a mismatch, you’re throwing away an approved charge every single time since the bank already decided that other signals say the transaction is okay. The bank can block it themselves if they think it’s suspicious (which from my understanding wouldn’t increment this metric).
Out of curiosity do you share the suspected fraud with law enforcement? At that amount there are probably too many to chase down so I’d think this is just an unprosecuted crime?
Generally the bank will file a Suspicious Activity Report (SAR) with FINCEN for egregious cases. I don’t think intermediaries like stripe have any direct responsibility in this respect but I could be wrong. The volumes are huge and few SARs actually are investigated or prosecuted.
Um, no. Banks file a lot of those. If it’s me using my dads credit card number then sure, not a SAR. But most of that activity is systematic: either backed by organized crime or a semi-professional fraudster. Those most definitely would get a SAR
Can you estimate what proportion of fraud is automated/bot/scripted versus manual human interaction? Do you rely much on botnet detection or IP reputation?
I assumed stripe founders had offline business experience before stripe :) Online maybe increase it a little more and make it more risky to the business because of "card not present". But hardly new to online.
There's also a lot of false positives if you verify too much on data brokers, as you just mentioned you do, instead of talking to the issuing institution on fears of chargeback and rate hikes.
I knew Kyle in college. He was extremely smart, kind, patient, and friendly. (He was a few years ahead of me; I was a random Irish freshman who had just shown up.) Looking back, he's one of the people who inspired me to get into startups. While we never ended up working together, it wasn't for lack of trying on my side -- everyone said he was phenomenal, and I tried hard to persuade him to join Stripe in the early days.
I have a company that makes terpene-infused hard candies (nothing illegal/gray area). When we started in 2016 we were soon kicked off of Stripe, because the candy was classified by them as a drug. I then learned about their strict views and how they also ban other legal products/services from using their service. That was very frustrating.
It's kind of you to say that, and people at Stripe certainly try very hard, but there's plenty that's broken or that we're trying to figure out at scale... I don't think those claims are true.
Hi pc, former employee here, from back in the day where meetings could be held in Alabama.
It's not that Stripe doesn't have broken things: I could have made a big list from back when I worked there, and I bet the list is still large. However, you are just underestimating how broken other companies are. I've worked at 10+ companies, some far bigger, and some far smaller than Stripe, and even the smallest ones had a higher percentage of broken things, and the brokenness is often in far more vital places. It's never going to happen, but you'd learn so much from joining me as a professional tourist, and going incognito as a random dev in another big company for 6 months.
But you are showing classic Stripe culture here: I remember a place where everyone was embarrassed about how bad they think their latest shipped email was, and how they have so much to do, while their typical coworkers is instead in awe of how good said shipped email was.
Pretty cool to see a CEO of a famous company here at HN. Especially a humble one with a learning mindset.
I think back in the day I heard you mention that you are a big history buff. I do have a history question for you.
Do you know of any existing public company who were able to fix their problems at scale that did not have to change their flagship product? It seems like new product line were a forcing function to fix broken things at scale. It's as if those who kept their flagship product who had scalability problems had to either use duct tape fixes or make really painful choices.
Blind reviews seem to corroborate this. Not the best feedback, but mostly good. I'd recommend going through this anonymous feedback from verified Stripe employees for tips on where to improve.
I genuinely don't know why there are fewer instances today, and the question at the bottom is literal rather than rhetorical. (I don't even know whether there are fewer instances today -- maybe they're just happening in less legible domains, or something.)
That said, I'm somewhat skeptical of the safety argument, which I often hear. For example, 60 workers were apparently killed during the construction of the World Trade Center[0] -- 4x more deaths than occurred during the construction of the Empire State Building. Nor is it a priori clear to me that safety and speed would necessarily be in opposition -- maybe better planning causes both more safety and more speed, for example. I'd certainly be interested in a more comprehensive investigation of this question.
I'm also somewhat doubtful of cost-of-labour explanations. Wouldn't it be rational for some organizations to pay a lot more to get people to work longer hours if that's all that's going on? (It would almost certainly be cheaper to do that than to have the project take twice as long in total.) And why did many of the instances enumerated on the page happen in relatively high cost (for the time) locations, like New York, DC, and San Francisco, rather than in cheaper places?
I do believe that state/military intervention clearly plays some role in a few, but there are certainly plenty of examples of remarkably slow military projects, and many of the projects on the page have nothing to do with the military. (Empire State Building, Golden Gate Bridge, Boeing 747, NYC Subway.)
So, I haven't found a satisfying explanation, and I'd be curious to read other analyses or diagnoses.
> I'm also somewhat doubtful of cost-of-labour explanations. Wouldn't it be rational for some organizations to pay a lot more to get people to work longer hours if that's all that's going on? (It would almost certainly be cheaper to do that than to have the project take twice as long in total.) And why did many of the instances enumerated on the page happen in relatively high cost (for the time) locations, like New York, DC, and San Francisco, rather than in cheaper places?
As far as I can tell, for a lot of transit projects in the US, at least, the capital isn't there up-front to just pay more to parallelize things. The money is being raised by a long-duration tax so it comes in incrementally.
And then there's a second closely related factor: do we have the production capacity to switch from a five-year-project-horizon to a one-year one even if we wanted to spend the money faster?
It seems like it feeds itself, when it comes to cities and infrastructure:
- huge early growth spurs a big demand, construction industry spins up around it (this, I think, answers the "why did stuff happen in high-cost areas" question - high demand is what causes high cost, so in an area where nobody is demanding infrastructure, there's gonna be a lot less reason to build it)
- a lot of stuff, once built, will last decades or longer, and would be extra-hard and expensive to replace. so once demand starts to be met, and growth starts to slow, the construction industry gets less and less business, so it shrinks
- this is a limiting factor on new projects, but they're also seen as less urgent than the initial stuff (road widening is less critical than creating a road where there was none, say), so the slower pace is accepted.
- red tape also starts to develop, since in a new-frontier situation there are fewer entrenched powers to create regulations to protect things (whether or not those regulations are net-beneficial!)
That's my current pet theory, anyway: It's not that we've deteriorated, it's more that priorities, effort, and industry have shifted. There are a LOT of other things that happen far faster now than they did 30 years ago in 1992, after all; and unbelievably faster than they did when the Empire State Building was constructed. Sometimes it's harder to repair a body than to make a new human in the first place, if you will ;)
Construction time is dominated by staging materials (shipping, delivery, and movement of those materials around on site and into place), and sync points. Houses will sit for weeks waiting on a chain of specialists to get time to finish some critical piece.
In larger projects, there are generally larger staging issues (less footprint to put materials relative to the amount and size of materials), and there are many more specialists involved (including inspectors), increasing the frequency and delays of sync points. The materials for large projects are also much larger now. The Empire State Building exterior was built of bricks, layer by layer. The exterior of most modern buildings are giant panes of glass, requiring cranes and such to move them into place.
I think examining the sync points and staging requirements could shed some light on why construction projects are taking so much longer nowadays.
My theory is it’s common law contracting systems combined with government and industry wanting to push time and cost risk down the chain of subcontractors as far as possible. This leads to a situation where market forces are aligned to generate epic amounts of bureaucracy and unwillingness to be flexible. ‘I can’t do that because this was supposed to be ready for me to start’ or a part that costs 3x more even though there’s an exact equivalent generic component from a different brand but the expensive one is in the specification and a contractor won’t suggest a substitution because then it’s thier design risk. As an architect I’m very cautious about specifying anything innovative, because when it goes wrong in my experience the suppliers always find a way to get out of any warranty promises and everyone tries to blame me to get my PI insurance to pay for it. I’ve been stung before by being too trusting of product manufacturer’s claims and this had poisoned the well for anyone coming after them with something new they want me to try out.
Yep. Until very recently, we weren't able to support businesses selling crypto. (The regulatory details are complex.) We're now rolling out support and this page is basically about that change.
To be honest, I thought your refusal was probably well justified considering the disproportionate levels of credit card fraud involved in anything to do with crypto. I'd love to see your end of year statistics now...
My personal observation. A large proportion of credit card payment were fraud, or flagged as such. It was such a huge number (% wise) that I (thought I) understood why stripe pulled the rug out. And in another project I observed a very large and sudden increase at attempted fraud right after elements of crypto were introduced (including attempts at impersonating me, and someone else involved).
But honestly, when it comes to the crypto world, I'm that guy who laughed at that other guy for buying bitcoin at 20 cents. There was a lesson there somewhere.
I mean that's different from the kind of fraud the parent post was talking about. If a user used their credit card to buy an NFT that quickly went to zero, that's not a fraudulent credit card transaction still - the user authorized that transaction. CC fraud would be if someone stole your credentials and bought something before the card was revoked.
There are always scams of different flavours around - that doesn't stop anyone from picking one or another. The appearance of easy money attracts those who seek easy money.
How would this bank even know stripe is accepting a new currency? Why would it matter. Money will flow into your account from stripe. Stripe is not a cryto service provider defined by banking regulations.
That's like saying a bank won't accept a transfer from another bank because that bank allows you to pay them in cryto.
> Stripe is not a cryto service provider defined by banking regulations.
But it's now a payment provider that allows businesses in the UK to engage in what surely must be considered high-risk crypto business by the bank (NFT marketplaces).
This is the sort of thing that gets businesses denied banking service.
> That's like saying a bank won't accept a transfer from another bank because that bank allows you to pay them in cryto.
Or a bank won't accept a transfer from your bank because your bank might be taking deposits from entities subject to strict sanctions, and the plausible deniability is very thin.
I think banks are working on that as we speak. Cold days in Cypress soon, etc. The reputation risk of "doing crypto" might be decreasing, but the legal risk of violating sanctions seems to be increasing.
Well, regulatory details have been complex for years and capable companies with smaller compliance/legal teams found a way to do it.
My sense is it's more about the window shifting enough that it's palatable enough for a Stripe product team to stake their professional rep on now. "If Twitter and Square are doing it..."
To an extent, I wonder what the impact of the SEC ruling for BlockFi (crypto exchange) did to clarify the regs for larger companies like Stripe.
I don’t think some of the claims in this comment are true or in good faith. (We obviously don’t control HN or YC or journalists. If or when my comments on HN are ever ranked highly, it’s because they’re upvoted. The internal claims about Stripe are also inconsistent with the data around things like retention. Etc.)
All of that said, I’d appreciate hearing from any founders who feel mistreated as part of an acquisition process. We make a fairly significant number of acquisitions and have never heard this directly before.
I'm sorry but no. Patrick, we met with you once, Gaybrick and Claire multiple times and opened up a data room to you all. I then emailed you (and the others) three followups over a couple weeks only to see them opened but never replied. Your team then sent targeted cold emails to multiple people on our team. I've validated this experience with multiple founders.
You also had Moritz and Sequoia renege on Finix's term sheet after they already had it signed and wired (I guess props to Sequoia for branding it as "giving it away")[1]. You've also had your team get diligence materials from Sequoia and nuke deals.
You've clearly crushed it in the business and developer brand space, hats off to you. You want feedback - I (and the broader founder community) just wish you stop the dance of pretending and just admit you all are sharks, and it works for you! Just own it.
But I will admit, the HN comment was a bit trolly and written in frustration. But you have to admit - you are documented as proofreading every one of PGs posts, are a huge LP in YC and are friends with a lot of people there. You can't believe that the conspiracy theories are purely in "bad faith"....
And yes - this is out of place in HN comments, I'm sorry. But sadly there aren't very many other options.
I genuinely have no idea what situation you’re talking about (not saying we didn’t screw up, though — I preemptively apologize assuming we did!), and a bunch of the narrow claims above aren’t true (we aren’t YC LPs, Sequoia made its own decisions without any suggestions from us on Finix, etc.), but I really would appreciate an email so I can figure out what happened.
From the TC article: "A spokesperson for Stripe who was asked whether Stripe and Sequoia discussed its investment in Finix at any point, also declined to comment."
Your comment about Finix seems deliberately crafted to convey you did not speak with Sequoia but at the same time not denying that you spoke (made decision without suggestions).
So to clarify, are you saying that Stripe did not speak with Sequoia about Finix?
Or that Sequoia "made their own decision", while they have spoken with Stripe about Finix?
Irrespective of whether you behaved badly or not (not for me to say, and unlikely to clearly emerge on a simple HN thread), I have always lauded your search for transparency here on HN.
Also, we I like to always keep in mind that sometimes resentment dominates the desire to share a certain story, and without knowing anything about the transaction referred above, I'd say it's quite clear that temp7536 has at least some resentment or envy over Stripe's success.
Final thought (not referring to Stripe nor Sequoia in particular): yes, most companies, and most VCs, are sharks. I was recently reminded of that twice, and probably lost large sums of money in the process (again: nothing to do with Stripe nor with Sequoia). I think it's a rule that have always applied to life, in general, and it won't stop being applied just because we have the internet.
I simply hope that things like the Panama Papers, Wikileaks, and such, will eventually bring more financial transparency to the world, and make it harder for these sharks to keep feasting on their prey.
> You also had Moritz and Sequoia renege on Finix's term sheet after they already had it signed and wired (I guess props to Sequoia for branding it as "giving it away")[1].
How is it reneging on a term sheet if they wire the money? That's fulfilling the terms of the term sheet (despite the fact that term sheets aren't binding), no?
When you’re in top position on a Stripe-related post, that has nothing to do with your karma score. It’s because dang has a pin button that he usually uses for himself, but very often is used for exactly the situation you describe when it comes to YC portfolio or celebrities showing up or something (without visual feedback of such a pin, as every single other website with the capability provides). It’s pretty obvious if you keep an eye out for it
This can undoubtedly be spun as “HN just trying to bring the right voice to the top of the discussion” but the alternative take is just as valid. It’s not bad faith feedback, it’s HN UX and practices confusing readers as usual
You got me curious to look at the data. pc has had the top comment in 41 threads since Sept 2007 (https://news.ycombinator.com/item?id=50377). Of those, one was pinned to the top: https://news.ycombinator.com/item?id=25073749. I vaguely recall that had to do with wanting to correct the misleading impression left by an inaccurate headline. All the other cases got there via the usual ranking algorithm. I guess you guys can decide whether 1/41 is moderator overreach or not.
We mostly use that mechanism for tedious moderation announcements ("All: please don't bash each other with clubs, even if you feel strongly about $topic") and for cases where project creators/authors show up belatedly in threads to discuss their work—those are extremely high-value comments that would otherwise get overlooked. Occasionally I use it if a thread is mostly aflame about some controversy and some commenter points out how the whole thing is inaccurate. We don't use it to systematically privilege high-karma users or YC founders relative to other users—that wouldn't be in the spirit of the site guidelines at all, and we take those pretty seriously.
> You got me curious to look at the data. pc has had the top comment in 41 threads since Sept 2007 (https://news.ycombinator.com/item?id=50377). Of those, one was pinned to the top: https://news.ycombinator.com/item?id=25073749. I vaguely recall that had to do with wanting to correct the misleading impression left by an inaccurate headline. All the other cases got there via the usual ranking algorithm.
> We mostly use that mechanism for tedious moderation announcements ("All: please don't bash each other with clubs, even if you feel strongly about $topic") and for cases where project creators/authors show up belatedly in threads to discuss their work—those are extremely high-value comments that would otherwise get overlooked. We don't use it to privilege high-karma users or YC founders relative to other users.
Do you have the denominator (with root-level comments) for the 41 top comments by any chance?
Thanks for the edit with added context. Any chance of an indicator that a comment is pinned so that people can transparently see when this is done? It's predictable that your moderation comments would be pinned, but even pinning a founder's comment to apparently contextualize a potentially misleading headline adds substantial mass to the claim that certain moderation actions might be done for the benefit of the company or companies involved in the thread.
Framed another way: if PC's context for the article was relevant, it would've achieved critical mass on its own. Helping it with a pin could be perceived as moving the needle for gain.
A simple "pin" icon (or emoji, or however you feel is best) may not resolve whether this is a "proper" use of moderation tools, but it will at least make it transparent when it happens, which adds credibility to the HN platform.
It objectively is fanning the flames. dang is clearly entrenched in the pro-YC side of the argument and is continuing conversation in that vein. Real moderation is just shutting down the flamewar. Like for instance they could have moved the story off the front page as quickly as they do for everything else.
Chances are these founders are just permanently behind their computers and have an alert set up for whenever someone mentions the company/domain on HN.
That allows you to get in first on an awful amount of threads.
It's common to assume the masses are dumb and hiding moderation can make people do the right thing without being influenced by it. For example I imagine if the pin icon was visible there would be comments about it on every story it'd be used in, which you may want to avoid to focus on the topics at hand. With that put I think transparency beats this and a transparent system is more trustworthy and better understood by the users. Just 2c but keep doing the good work.
> We make a fairly significant number of acquisitions and have never heard this directly before.
Isn't the comment about things you (purportedly) did personally? Have you "reached out about an acquisition, mined them for information playing along and then ghosted", or no? You clearly don't deny it but you object that you hadn't "heard" about bad things they claim... you did? For things you're the subject of, shouldn't it be easy to confirm or deny them just based on your own memory? It's not only a bizarre defense on its own, but it's an especially poor one when the claim is that you ghost people, and your reply is that they never tried to talk to you about it! Wouldn't it make more sense to just reject it and say you did not ghost people during acquisition talks, or fish for information under the guise of an acquisition, etc.?
Also:
> I don’t think some of the claims in this comment are true or in good faith.
"Some" leaves a lot to the reader's imagination. Which ones are the ones that are true?
I’m trying to not overstate my certainty. I have no idea what situation OP could be describing, and I have no recollection of anything along those lines, but I don’t want to definitively state that nothing like it happened over our decade of operation without knowing more about what’s actually being alleged.
We obviously never intentionally ghost companies, “mine them for information”, etc. The ecosystem is small and we wouldn’t be able to invest in and acquire companies if we didn’t have a reputation for good behavior. (And we’ve invested in dozens.) But maybe some communication got dropped in some particular case or something? I don’t know.
Ah okay thanks for clarifying. It's a strong anonymous accusation, so being clear about it on your end helps a lot. I imagine it'll be hard for anyone here to know what happened.
I don't know anything about anything and am one of the very few people here who never founded a $xB fintech, but this strikes me as weak:
> The ecosystem is small and we wouldn’t be able to invest in and acquire companies if we didn’t have a reputation for good behavior
If you're in a position of power (and money), people will return your calls, regardless of rumors. This is true in all fields, from recruiting to publishing to VC deals, etc.
This is also a line of defense used by serial abusers who always (always!) claim that because they have had successful consensual relationships, there can't be cases where they abused the other party.
> over our decade of operation
Also weak. "We've done so many things. Seen so many people. It's been a long time. I don't recall. Things were different back then."
- - -
That said -- weak defense is just that -- it doesn't mean offense.
The challenge I see with some phrases like "mined them" and "ghosted" is that they can be very subjective statements. The person on the receiving end may perceive the actions as such, whereas the person on the giving end may seem them differently.
I don't know what happened, just trying to point out that it is possible that a person felt slighted by certain actions and the person doing them may have no idea the other felt slighted and the person hasn't told them directly. But maybe they did, I don't know in this specific case.
But in that case he could just deny them and then mention that if it came across differently, he'd love for them to reach out. Not just skip to the second part!
Say if someone claims you stole their car (and the alternative could be that you borrowed it with someone else's permission, and they had no idea, so they felt it was stolen), would you reply with "I’d appreciate hearing from anyone who feels I stole their car", or would you first say "I never stole any car, please reach out to me if you know of any such incidents"? Wouldn't it be incredibly bizarre to ask them for a discussion session without first rejecting the premise?!
I think in the example of stealing a car is more binary: stole it or did not steal it. Maybe it could have been borrowed the car or something, but there would probably still be a more objective person in car event.
Whereas with ghosting, it could be not replying an email, could be not replying a text, could be some other thing the person missed and doesn't even know they missed. So it's hard to deny if the person isn't even aware they did it.
With mining, it could have been asking questions either live or in an email and not knowing the other person felt tricked into sharing more than they had wanted to.
I've taught a class called Emotional Self-Defense and one of the things I see the most is that the "attacker" often doesn't know they're attacking and the "victim" assumes it should be obvious the person is attacking.
What I'm saying is that he may not have any idea that his actions caused that much pain to the person. I had an ex girlfriend who said to me once, "and you don't respect my boundaries!" And I said what? And she said "yeah, 3 weeks ago when you were juggling the soccer ball and you kicked it to me, I said I didn't wanna play, and then a few minutes later you kicked it to me anyway." I was dumbstruck. I had no idea that she felt so angry/violated by me kicking the soccer ball with her the second time. If I had known, I almost certainly would have stopped. I just didn't receive the signal that strongly.
So I'm saying that may be the case here, too. It's also hard sometimes to tell someone in power that what they're doing is hurting or angering oneself.
I don't think ghosting and mining is so vage in this contex. It means engage in acquisition talks without actual intent to acquire, but instead to gain information. If you are the person doing this you will very clearly know what you are doing. Viewing in this context the comment is quite correct it is an odd denial, it sounds a bit like PR speak to me.
I'm imagining if this had been a comment from a spurned romantic partner. "He cheated on me and took advantage of me," posted anonymously to a web forum. If I were the person being accused, and assuming I had been romantically involved with many people, I may have no idea who is accusing me or which specific instance they meant. Maybe I'm aware that I cheated on one person, but I may not even know if that is the person making the accusation? If I've only been romantically involved with one, then it may be quite obvious to me who it is and maybe even the specific incident to which they are referring.
However, I imagine Stripe has interacted with many many companies regarding these things, but maybe not.
I think I've just been in too many conflicts where the other person thinks I intentionally hurt them and I didn't see it that way, or conversely, I think I did something to hurt someone, apologize, and they are confused because they didn't feel hurt at all.
But in your example if you never cheated on a partner you could easily sy "I've never cheated on someone". So if you're saying stripe has had so many interactions with companies they don't know if they "cheated" in this specific case, that implies they had least cheated in some cases, because otherwise they could simply deny that they ever cheated.
Because the accusation was more specific than "I felt taken advantage of" it was they engage engage in acquisition talks with the intent to gather confidential information, not the intent to acquire.
I think most accusations of intent are extrapolations of actions, which one side makes and the other side may not see the same way.
> engage in acquisition talks with the intent to gather confidential information, not the intent to acquire.
Going back to the dating analogy, if I go on 5 dates with someone and then we don't go on any more dates, that person may assume I had no intention to pursue a long-term relationship with them and was just using them, maybe for sex or company or whatever. However, perhaps I was trying to determine whether I could make a long-term relationship work—maybe I initially didn't think it would work but only went on the next 4 dates because I really really wanted it to work.
All I'm saying is that people can glean different intentions from the same action and it can be really hard to know whether our actions have caused pain to people.
> that implies they had least cheated in some cases, because otherwise they could simply deny that they ever cheated.
Again, the tricky part is Stripe may _think_ they have cheated in one case but in that case, the other person may not have even seen it as cheating. Eg, maybe I'm in an exclusive relationship with someone and my ex comes into town and we get lunch. I feel tremendously guilty for doing it and confess and apologize to my current partner. And the my current partner looks confused and laughs saying they're grateful I went to hang out with my ex. A different partner could split the relationship with me immediately and say I'm evil for having that lunch.
To one side it may seem _obvious_ that a transgression was committed and to the other side, it may be _oblivious_.
I get what you're saying about it being blurry but I don't buy that it affects the ability to reject it. He can quire simply reject it and then explain it might be a misunderstanding or something. Or say it might have happened unintentionally. Or whatever. There are several options here, and refusing to deny the claims doesn't bolster his case.
And that's all kinda beside the point - note that the bad part isn't even the ghosting itself for us to quibble over, it's fishing for information under the guise of an acquisition, with or without ghosting. That should be far less blurry and easy to deny head-on, whatever you think of the ghosting.
One other story (I feel bad for blitzing with replies and in a weird order, I hope that's ok)...
I ran a workshop with abut 35 people in the audience. For about 15 mins, I had them sit quietly as I asked them "how do you feel when you think about this? How do you feel when you think about that?" And so on, and had them reply in their heads.
At the end of the session, I opened up group reflection. One woman shot her hand up and said "I feel like you manipulated us." And i asked if others felt this way, and maybe 5 others raised their hands and started talking about how my questions manipulated them. And then this other guy raised his hand and said how for the first time in months, these questions helped him stop thinking about politics and the chaos in the world and quieted his mind and thanked me. A few others agreed with a similar feeling.
So my one action caused (at least) two very different responses in the same group and I would likely have had no idea if they didn't tell me how they had received it.
I wouldn't say "I never ghosted you" if I don't remember the interaction, because perhaps I did? Why would I make that bold claim without having more info about which situation it is?
> And note that the bad part isn't even the ghosting to quibble over, it's fishing for information under the guise of an acquisition.
Even "fishing for information under the guise of an acquisition" could be anything from sending one email with 3 questions to five intense 2-hr interviews over 3 months. One person who feels very secretive and protective of their business knowledge (even some people in startups who don't even have companies yet but just ideas) can feel very violated by one email with one question, whereas other people may not believe they were being fished for info after 3 months of interviews.
> I wouldn't say "I never ghosted you" if I don't remember the interaction, because perhaps I did? Why would I make that bold claim without having more info about which situation it is?
This whole discussion is about intent, which you can (and honestly, must) address separately from how you imagine your actions might have been perceived. See below.
> Even "fishing for information under the guise of an acquisition" could be anything from sending one email with 3 questions to five intense 2-hr interviews over 3 months.
This is irrelevant, the question is about intent. You should not have a hard time making it crystal clear whether that was your intent or not, regardless of whether you spent 10 minutes on it or 10 days. The only reason you wouldn't be able to make your intents clear is if you're doing things so borderline deceptively that you honestly cannot tell if they're clearly ethical or not, in which case that fact would sufficiently speak for itself.
P.S. I see you're repeatedly leaving parallel replies, I don't know why you do that (can't you just edit your comment?) but they drown out mine and divert the conversation, so I'm not going to reply to them and have 3 parallel conversation tracks, sorry about that.
Ah, I think I had misunderstood what you were saying. I thought you were saying to deny the action: "I never ghosted you." But now I think what you actually meant was to deny the intention of the action: "I never intended to ghost you."
I would agree one could deny the intention first, yeah, I might actually do that. "I didn't meant to ghost you but perhaps that's what happened or how it landed for you. Maybe you think it should be obvious to me but I feel unclear, will you share more with me about it?"
*edit: I'm not trying to leave the parallel replies, I guess I'm more used to replying on Twitter where I just add another reply to my reply if I forgot something, instead of editing the previous reply, and HN was stopping me from replying to my own reply. So I'll try to edit here, I wasn't sure what the HN preferred way was to do this, so thank you for helping me adapt better.
You can certainly make "intended to" explicit, and it's obviously better to be clear, but it's unnecessary. Keep in mind the entire point and heart of the accusation is the malicious intent. The accusation is clearly not "you're a horrible person because my email fell off your inbox!!", but rather "you saw and yet deliberately ignored my emails because you were actually trying to gain information while pretending to want to acquire us".
As such, you rebutting with "I never ghosted you" would not be equivalent in any shape or form to "I reply to every single email in your inbox" (or whatever) for you to feel you might somehow be accidentally telling a falsehood if you happened to miss some email in your inbox. "I never ghosted you" in this context would be a direct rejection of the purported intent—i.e. the accusation you were purposefully ignoring someone's emails because you were actually trying to fish information out of them—because, absent the intent, that accusation wouldn't have been made to begin with. You can make the lack of intent explicit if you want, definitely, but it's already implicit in the accusation, and so would be in implied in the rejection of that accusation.
I think I just tend to err on the side of less certainty/conviction in how I speak. I'd probably say "I don't believe I ghosted you" or "I don't remember ghosting you" or "I'm pretty sure I didn't ghost you." And maybe that's me projecting the fear of it getting into a "you ghosted me" "I never ghosted you" "yes, you ghosted me!" back and forth.
Frankly, I'd love if someone were to extricate their accusation as you did, making it easier for me to parse the different actions and intentions. I really liked how you phrased it: "you saw and yet deliberately ignored my emails because you were actually trying to gain information while pretending to want to acquire us." I feel more confident in rebutting different parts of that—e.g., "I saw the emails and deliberately did not reply to them but not because we were pretending to acquire you, but actually we were in a legal process where we couldn't share more at the time" or something like that.
Sometimes if someone accuses me of something, I'll even try to ask for clarification on what they mean by ghosted, or I'll rephrase it as you did, to try to gain more clarity. Maybe it should be obvious to people what ghosted and fishing means, but I find clarifying can at least help me and the other person know if we agree what the definition is and what we both think happened.
*edit: @dataflow, I really appreciate you going back and forth with me on this. I think I learned a lot, about how I try to pull out the intention from the action, and how others may see intention and action intertwined. I'm gonna let my brain digest this as I sleep, if you want to continue, I'd be glad to pick it up in the morning :-) Thank you!
*edit2: ohhh and for helping me get better at using the edit feature and not creating parallel threads, I'm not sure if what I'm doing now is more helpful, but I at least believe I'm being more helpful :-D
The important thing to note here is the point isn't how you word your reply. Nobody is saying you have to word it like I did. You can be as crystal-mathematically-pedantically-clear as you want in your reply about intents vs. actions vs. perceptions vs. whatever, that's beside the point.
The point is that your reply would need to address the lack of ill intent no matter how you word it. I find "I never ghosted you" and "I never intended to ghost you" both adequate, and you can disagree on either of them, but that's not the point. The point is "I've never heard this directly before" would NOT be adequate. It comes across as a completely ridiculous reply that very obviously fails to deny what is clear to everyone to be the heart of the accusation: the ill intent. Which makes it hard to interpret an omission like that charitably.
I looked back at the original post to which pc replied and it seemed to have many accusations in it and I think pc did do what you're talking about, in a roundabout way by saying "I don’t think some of the claims in this comment are true or in good faith." I think, in a way, that's a counterattack on the other person's statements or intentions, yet kinda says he doesn't believe he had ill intent.
I agree he didn't directly refute the ill intent on the ghosting/mining accusations, yet, I think he tried to cover some of them in the following:
> (We obviously don’t control HN or YC or journalists. If or when my comments on HN are ever ranked highly, it’s because they’re upvoted. The internal claims about Stripe are also inconsistent with the data around things like retention. Etc.)
> "I've never heard this directly before" would NOT be adequate. It comes across as a completely ridiculous reply that very obviously fails to deny what is clear to everyone to be the heart of the accusation: the ill intent. Which makes it hard to interpret an omission like that charitably.
But what if he legitimately had never heard such an accusation before? What if no one had previously told him, "I think you ghosted me and I think you were mining me for info and pretending to acquire my company"?
> I think pc did do what you're talking about, in a roundabout way
Or in other words... he didn't. Roundaboutness is literally how PR departments spin things to look like the exact opposite of the truth. "I don't think some of your claims are true" is not something that defends you when there are very strong, pointed accusations against you.
>> "I've never heard this directly before" would NOT be adequate.
> But what if he legitimately had never heard such an accusation before?
So? The reply would be inadequate just the same. I'm not saying he can't say that, I'm saying he can't say that and then leave it at that.
Btw I'm honestly tired of this back-and-forth at this point, so this'll be my last reply, sorry about that.
That's OK, and I appreciate you saying that so that I know what to expect. I appreciated the back and forth nonetheless, hope you have a wonderful Tuesday~
Actually, if it were me, I wouldn't deny it first if I truly didn't know what I did. Perhaps I did do something that I feel guilty about doing but just am not currently aware of. I'd probably ask as he did to figure out how the person is feeling and what they think I did to contribute to that and then see whether I feel guilty about that or not. I may actually feel really bad, hard to know without knowing more specifics.
This is a valid point. I've observed or been involved in a number of acquisitions at various distances over many years. There are any number of reasons an acquisition might not go ahead and, of course, as the potential acquirer you obviously learn some things that are useful, but I've never known a situation where there has been a deliberate plan to simply mine for knowledge or whatever.
The reality is some acquisitions are opportunistic, some are strategic, and even the opportunistic ones often have a strategic element. For a strategic acquisition, if it doesn't go ahead (comes down to ROI isn't perceived as being as good as potential alternatives), the almost inevitable outcome will often be (i) a different acquisition is eventually made, or (ii) the acquiring company decides to make an investment in that area themselves.
One of the ways to avoid getting "screwed over" as an acquiree is to ensure you've done the work beforehand to maximise the chances of compatibility with the acquirer: things like compliance, data protection, having a poor grasp of your numbers and financials, and other mundane matters (or combinations of them) can easily trip up the process.
When an acquisition does fall through for almost any reason it's pretty natural for the potential acquirees to feel rather bruised by the process: they've wasted their time, they've been screwed over, etc. Often that won't be the case although, I've no doubt, there are instances where it will be.
(Btw, in case it's not obvious, I know nothing about the activities of Stripe or its founders, good or bad.)
I honestly do not see your participation in this thread as good faith. You apologized to the candidate in public—- good start, now do something of consequence in private. But any further involvement from you (especially trying to out the OP) is simply fanning the flamewar. Even HN moderation is helping fan the flames by adding stats and other commentary. This is why I find YC so utterly untrustworthy.
I'm sorry; that's bad. Can you email me with details so that we can investigate what happened? (patrick@stripe.com; others welcome to do so too.)
More than 10,000 people have interviewed at Stripe so far this year, so "several sigma bad" still happens to an unfortunate number of people. That said, we want those who interact with Stripe to come away having been treated professionally and respectfully, and our recruiting team cares about fixing our process failures. On behalf of Stripe, I apologize.
I’m not convinced this several sigma explanation applies:
- 35% of interviewers did the 20 min thing. Why haven’t you said you’re going to investigate this specific issue yet? You should have enough data to now go back to the team and find out if this is a real issue, rather than waiting for op’s email.
- this was a senior manager position and already in the offer stage. So you can’t compare that sample size to the top of the funnel.
Spot on. Patrick and Brian Armstrong are on PR damage control 101 and one of the multiple reasons I left this manipulative industry.
You caught Patrick on his false argument.
Patrick did not mention the number of Manager of Managers that interviewed at Stripe this year, did not address the "I will only need 20 minutes for this" culture and did not apologise for the ghosting.
The PR spin:
> professionally and respectfully, and our recruiting team cares about fixing our process failures
If Patrick is interested in fixing anything is up to him and he absolutely does not need an email from OP for this.
The fact Patrick is asking for OP to doxx Stripe’s hiring managers should tell you anything you need to know about how Patrick operates.
Publicly, Patrick cannot afford Stripe to begin to develop the slightest trace of a bad place to work and a bad reputation for such a niche recruiting position as engineering Manager of Managers at Stripe is damaging.
Patrick is asking OP to doxx the senior leader in the office OP applied to.
> His answer: "don't come. It's a mess and a revolving door of people"
hey danrocks, bear in mind if you discuss details of your experience with pc, you run the risk of outing the senior leader you consulted in step 10.
You may wish not to do this. As much as the feedback would probably help Stripe and possibly even yourself, given the post you've written, it sounds like it may put someone else's career on the line.
It sounds like it's a failure of coordination more than anything; a broken system not a person acting in a way that should lead to termination (unless they are unwilling to fix said system over time).
I think if they cared to look at their internal data they'd be able to figure out who he was without much trouble at all based on this thread and his recent post history here (named 'Dan', interviewed recently for manager-of-manager position, lives in ~~place~~, currently works for ~~someone~~).
Stripe recruiters were the worst I've dealth with in the past twelve months.
Extensive talk about a position. Then ghosted.
Then invited for an interview with the hiring manager, who then cancelled last minute. Invited to do an ad-hoc interview during one of my work meetings. Denied and asked for different time.
Ghosted.
Definitely dodged a bullet with these guys. Some companies think because they're growing they can do whatever.
I seriously doubt they're as bad as google recruiters. I had almost 3 job offers from them over a period of ~10 years, and I finally decided I will never interview there ever again.
Are you saying that you had 2 job offers and almost a third, or are you saying that on three separate occasions you almost got the offer but did not? Either way, what specifically did the recruiters do badly?
- lowball salary offer (~30% less of what I stated I wanted to even start interviewing for the job, and ~20% less of what I was making at my then-current job)
- confusing interview process (too many things to even list them here)
- lack of preparation for the interviewers (e.g. didn't read my resume, wasn't aware of who else interviewed me and on which topics, didn't ask me questions relevant to the position, etc)
You might look to improve y'all's process by looking at datatdog's interview process. I have never felt more appreciated and well treated than interviewing there.
1) they always give feedback
2) they have more generic positions, get you in the door to some small filter interviews, and then shop you around to find the right team for you, instead of the reverse approach where people shotgun resumes across your company trying to get in the door. The problem with the recruiter and multiple HMs I talked to at stripe is they didn't seem to care about getting people to work at stripe, only getting people to work in their org which didn't have open positions for X.
3) incredibly quick and responsive through the process. My recruiter at stripe did this!
Incredibly ironic comment - I interviewed at datadog for an engineering position and left feeling atrocious about it.
They gave me a large and complex take home assignment which I put a significant amount of time into, and which I felt I did a very excellent job with. They declined afterwards without a word. We didn't discuss it, no feedback was given. Just unmatched on the hiring platform we were using.
I am an experienced developer at a reasonably prominent company and I know I wrote the code well for that assignment. The fact that they would assign something so time consuming and then take no time to go over it at all and reject it so out of hand left me with a very very bad taste in my mouth.
Datadog gave me a take-home assignment, which I could have done sloppily in one day or done well in two days. They added "we respect your time, so don't spend more than 3 hours on it". Then they rejected my solution because I didn't guard for all kinds of invalid input that was never mentioned anywhere.
I had a funny experience with DataDog. I applied to a new grad position. Few months go by, and then I receive an email to schedule an onsite, well that seemed odd since I hadn't done any coding test, recruiter call or anything else. I scheduled an on-site and went there. I tried asking what the normal process is, and everyone just kept replying "you are on the last step". So I just ended up going through the interviews. Then couple days after received an email that someone had checked the paperwork and said that they had thought I was someone else lol
2 is such an obvious thing for a tech company to do. How can a candidate know the exact best team for them to apply to? This is the purpose of the recruiting team.
Even though I did not accept Datadogs offer, I can only confirm this - my interview experience at Datadog for a software engineer position was truly amazing. I could feel they care.
Can confirm, at least for France - the interviewing experience at Datadog was amazing. Everyone was very humane and very responsive. I accepted the offer.
Only some of this could be explained by "several sigma" of bad luck. The rest is either the candidate misunderstanding/distorting the process or a structural hiring problem.
I interview a lot of candidates. I just can't imagine to make a hiring decision for a dev, let alone a manager that manages other managers, based on 20 minute discussion.
I also hire a lot of people and I tend to agree with you. It’s hard to think that I misunderstood the process, however, when a start date was mentioned.
What size org do you manage? At some point your choice is to either talk to candidates for shorter times or delegate the entire decision to managers under you. While 20 min definitely isn't enough to fully evaluate a candidate it can be enough time to assess potential gaps you see based upon the feedback of the rest of your team. It can also be enough time to make an intro and make it clear to the candidate that someone very senior values their role.
Op said that only 35% of interviewers stated 20min so approx 2 out of 5? 3 long rounds and 2 short 20-30 min rounds should be plenty to get a decent hiring signal.
> I interview a lot of candidates. I just can't imagine to make a hiring decision for a dev, let alone a manager that manages other managers, based on 20 minute discussion.
But what if others in their 20 minute discussions with the candidate ask the questions you would have asked if you had spent longer interviewing them?
If the hiring decision is based on the feedback from all the interviewers I could see having many of those interviews be short interviews where the interviewer just concentrates on finding out one important input for the group decision working, provided that there are enough interviews to cover all the important things and if there has been some planning on the part of the company to coordinate who covers what in the 20 minute interviews.
I have no idea if Stripe does the necessary coordination to make that work, but the fact that several of the interviewers started out mentioning they would only need 20 minutes suggests that it was some sort of organized thing.
You are hiring somebody who will be managing managers meaning they will probably have responsibility for at least dozens if not hundreds or even thousands of people.
As a manager/leader of that organisation they will have an important role that can mean difference between those hundreds of people bringing huge value or huge loss to the company.
So your responsibility is to figure out how much time to spend with the candidate. You can choose anywhere between "just hire first person to apply" and "spend a year grooming an employee to see if they can do the job".
And you want to tell me that 20 minutes is the right answer here? That out of entire continuum of possible choices you say that the optimal return (performance of manager) on investment (cost of conducting interviews) lands at approximately 20 minutes -- less time than you take to have a lunch?
I get that he had couple of these sessions but still... it sounds like giving the job to a first person that looks the part.
What I'm suggesting is that maybe what matters is the total set of questions asked by all the interviewers. Does it really matter if one person asks questions for 2 hours as opposed to 6 people asking questions for 20 minutes each if the same questions are asked?
The former gives more flexibility to alter the questioning on the fly, such as to delve more deeply into some area than had been planned. The latter gets more people to spend time with the candidate.
A mix of this could be the best of both worlds. Have several short interviews mixed with some long ones. If one of the short ones turns up something that seems worth going in depth on that can be handled in one of the long interviews.
Describing your recruiting process as a random variable...wut? Does the hiring manager make decisions randomly? Someone calls up, the hiring manager gets out the lucky 8-ball, and it comes out "give a 29th percentile recruiting interview", and the manager just straps on the Biggles goggles to bomb the candidate. Why even say that to someone who is pissed off with your recruiting process? Just don't say anything.
As you say, it is very hard to attribute a bad recruiting process to something that is non-structural...no matter how many thousands of people you hire.
I think what GP is trying to say is that your hiring process is within your control (especially this far in the pipeline), so even the worst candidate experience should fall above some baseline. You don't get much sympathy if you say "that baseline turns out to be absolute gobshite at the first percentile, sorry."
The other reply explained this but imagine you bought a soda, and you drank it and it turned out to be rat piss. You call up the company: my soda was full of rat piss. Their reply: "Oh yes, we sell lots of sodas, you couldn't possibly understand how much soda we sell so rat piss soda is a seven sigma event...bye".
If you are in software, recruiting is your business. You have no other real assets. So categorising your hiring process as a random variable makes no sense. You should have processes in place that ensure non-randomness...again, is Coca-Cola out there selling tons of rat piss, and just saying: "Tough luck guys, this is a hard business"...no. If you don't have processes to ensure that outcomes in the core parts of your business are not random, you don't have a business (I used to work as an equity analyst, I have heard this kind of thing from CEOs over and over...I never recommended investing in such business, I have never seen a company that was run that way succeed).
People report even more clear cut events regarding food products than your example, even. You know, like rat parts. Sometimes they may be hoaxes or urban legends. Not necessarily all the time.
I've seen odd things first hand with processed food from the grocery store. I've bought sealed packages of food that were all dried out and stale. Or that looked fine but gave me...indigestion. The weirdest thing I've seen recently were some mints where some of them randomly were solid chocolate, no filling. Oh, and a frozen dessert had a sealed cardboard box, but the plastic covering inside was open.
How does that sort of variation happen? I'd imagine that the better your process is, and the less variation you have, the larger proportion of your failures will be "unknown unknowns" that are just weird.
I acknowledge the conclusion that the interview process is f-ed up could well be correct.
The most important part of an apology is, imo, sincerity. I think Patrick is chiming into this thread to perform damage control, not to sincerely apologize.
This, to me, is evident in the fact that OP interviewed for a specific, high level position, and named specific, repeated bad processes that go beyond Patrick's generic "We interview a lot of people so some people are going to have a bad time."
Patrick has more than enough information to start fixing things on a systemic level. Instead, he optimizes for the appearance of contrition without committing to fixing any of the specific problems mentioned.
"several sigma bad" is really still not OK. As a founder, you earn vastly vastly outsized compensation because you're supposed to be able to build an amazing team with an amazing funnel. You deal with payments and fraud, so you know that "several sigma bad" is not acceptable. Your employees and investors deserve a refund.
you're supposed to be able to build an amazing team with an amazing funnel.
I think it would be hard to scale a business to the size of Stripe without those things. It's fair to say that, no matter what else you might believe, pc has managed to do that. Ergo, by your own logic, he has earned his comp.
Importantly, none of these businesses are using crypto because it's crypto or for any speculative benefit. They're performing real-world financial activity, and they've found that crypto (via stablecoins) is easier/faster/better than the status quo ante.