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Of course banks can do it better with the traditional technologies. They operate in a centralized, trusted and regulated environment. Their consensus algorithm

Of course banks can do it better with the traditional technologies. They operate in a centralized, trusted and regulated environment. Their consensus algorithm is "settling disputes in courts". And still, it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer. The blockchain technologies will disrupt the banks themselves, because they are the intermediaries in this industry. I can receive the equivalent of $1 mil in BTC from oversea in less than 10 minutes and the sender pays fractions of a dollar in fees. The banks will be in a tough position the more people accept payments for their services and products in BTC. We're not there yet, of course, but who knows where we'll be in 5-10-20 years.

collyw 9y ago
Whats to stop a new bank springing up and allowing transfers a lot faster and cheaper using traditional methods?
- kerkeslager 9y ago
  What's stopping them is a simple question: who are you transferring the money to? A lot of banks allow customers to do instant transfers between customers of that bank, but for this to be a killer feature, you have to have enough customers that this is significant. In NYC, Chase is almost there--they have enough of a share of NYC that it's worth asking if the person you're transferring to has Chase so you can use their instant transfer system. But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly--it doesn't give you a competitive advantage, while processing slowly allows you to collect interest on the money while it's in transit.
  - bpicolo 9y ago
    > But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly But they're doing exactly this now with Zelle.
    - kerkeslager 9y ago
      Interesting, I hadn't heard of them and I don't know enough about their business model to comment.
    - xur17 9y ago
      Zelle sounds great, and I really want it to work, but my experiences with it so far have been really frustrating. 3 separate experiences: 1. My friend was sending me $750, and had to structure it as 4 separate payments each 24 hours apart due to some sending limit that either Zelle or his bank imposes. 2. I sent my brother money, and for whatever reason he had trouble accepting the transfer, so I had to resend it a week later when it failed. 3. Someone sent money to me, and it was my first time using Zelle, so I had to login to my bank after clicking a link in a text. But after logging in, nothing happened... It didn't tell me where the funds went, and they weren't in my account. 3 days later they magically showed up. I think the transaction was pending??
  - stephen_g 9y ago
    Do you really have to ask? Is it a separate system or something? In Australia, you must pay using the normal way (which is pretty much always free), and if it’s the same bank it’s processed instantly and if it’s not it’s processed generally overnight. Pretty much everybody’s moving to a new real-time payments platform in the next few months too, so it should just always be instant for domestic transfers.
  - zjaffee 9y ago
    well, to transfer money between banks requires the use of the ACH system (or a wire transfer), but looking at how ACH works https://www.nacha.org/ach-network https://www.nacha.org/ach-network it essentially requires that your money get processed by what is essentially the federal reserve's mainframe computers. Given that these machines only process transactions during government business hours, such a delay is reasonable.
namdnay 9y ago
> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer Only if you use a wire transfer. Payment by credit card is instant and costs about 1% for the merchant and maybe another 1% in change fees if there is a currency conversion needed.
- DINKDINK 9y ago
  >Payment by credit card is instant Hardly. Chargebacks on credit cards can occur up to 3 months after payment. Good for customers who need that dispute feature but bad for others because those costs are socialized onto merchants and other consumers.
  - bduerst 9y ago
    Chargebacks are a feature for settling disputes, not a bug. Payment is still instant unless there is a dispute.
    - DINKDINK 9y ago
      >Payment is still instant unless there is a dispute If that was the case a merchant could withdraw cash immediately after someone paid them with a credit card. Which patently isn't the case. So no, Payment cards are not instant.
      - bduerst 9y ago
        The payment happens and confirms instantly. Withdrawal of funds from the payment processor is not the payment, because payments are not limited by 'time to cash liquidity'.
        nrhk 9y ago
        Right and is there a problem with making our world more liquid?
JumpCrisscross 9y ago
> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer U.S. dollar Fedwires are “immediate, final, and irrevocable“ [1] regardless of from where they are initiated. If your EU bank takes 5 business days to swap between the world’s two most liquid currencies, you have a uniquely shitty bank. [1] https://www.federalreserve.gov/paymentsystems/fedfunds_about.htm https://www.federalreserve.gov/paymentsystems/fedfunds_about...
- mr_spothawk 9y ago
  > In 2008, approximately 7,300 participants made Fedwire funds transfers. The Fedwire Funds Service is generally used to make large-value, time-critical payments. seems like maybe the crux of this discussion is that, all of the sudden the features of banking have been automated. that’s definitely not the same as “the features of banks, regulation, etc...” have been automated. But certainly, we can see that the Fedwire is not a consumer product, where BTC clearly is
  - JumpCrisscross 9y ago
    > In 2008, approximately 7,300 participants made Fedwire funds transfers To be a Fedwire participant you have to be a Federal Reserve member, i.e. a bank. Consumers arrange Fedwires through their banks. When I send a wire, I'm not a Fedwire participant--my bank is. If you have a U.S. dollar bank account, you have access to the international Fedwire system.
- saosebastiao 9y ago
  Fedwire is only usable by banks that have a working relationship with the Federal Reserve, which will only be large international banks with a US presence. With most international transfers you're stuck with SWIFT, which is complete garbage. Hopefully replaced by Ripple entirely ASAP.
2RTZZSro 9y ago
>And still, it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer. Transferwise

collyw 9y ago

Whats to stop a new bank springing up and allowing transfers a lot faster and cheaper using traditional methods?

kerkeslager 9y ago
What's stopping them is a simple question: who are you transferring the money to? A lot of banks allow customers to do instant transfers between customers of that bank, but for this to be a killer feature, you have to have enough customers that this is significant. In NYC, Chase is almost there--they have enough of a share of NYC that it's worth asking if the person you're transferring to has Chase so you can use their instant transfer system. But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly--it doesn't give you a competitive advantage, while processing slowly allows you to collect interest on the money while it's in transit.
- bpicolo 9y ago
  > But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly But they're doing exactly this now with Zelle.
  - kerkeslager 9y ago
    Interesting, I hadn't heard of them and I don't know enough about their business model to comment.
  - xur17 9y ago
    Zelle sounds great, and I really want it to work, but my experiences with it so far have been really frustrating. 3 separate experiences: 1. My friend was sending me $750, and had to structure it as 4 separate payments each 24 hours apart due to some sending limit that either Zelle or his bank imposes. 2. I sent my brother money, and for whatever reason he had trouble accepting the transfer, so I had to resend it a week later when it failed. 3. Someone sent money to me, and it was my first time using Zelle, so I had to login to my bank after clicking a link in a text. But after logging in, nothing happened... It didn't tell me where the funds went, and they weren't in my account. 3 days later they magically showed up. I think the transaction was pending??
- stephen_g 9y ago
  Do you really have to ask? Is it a separate system or something? In Australia, you must pay using the normal way (which is pretty much always free), and if it’s the same bank it’s processed instantly and if it’s not it’s processed generally overnight. Pretty much everybody’s moving to a new real-time payments platform in the next few months too, so it should just always be instant for domestic transfers.
- zjaffee 9y ago
  well, to transfer money between banks requires the use of the ACH system (or a wire transfer), but looking at how ACH works https://www.nacha.org/ach-network https://www.nacha.org/ach-network it essentially requires that your money get processed by what is essentially the federal reserve's mainframe computers. Given that these machines only process transactions during government business hours, such a delay is reasonable.

namdnay 9y ago

> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer Only if you use a wire transfer. Payment by credit card is instant and costs about 1% for the merchant and maybe another 1% in change fees if there is a currency conversion needed.

DINKDINK 9y ago
>Payment by credit card is instant Hardly. Chargebacks on credit cards can occur up to 3 months after payment. Good for customers who need that dispute feature but bad for others because those costs are socialized onto merchants and other consumers.
- bduerst 9y ago
  Chargebacks are a feature for settling disputes, not a bug. Payment is still instant unless there is a dispute.
  - DINKDINK 9y ago
    >Payment is still instant unless there is a dispute If that was the case a merchant could withdraw cash immediately after someone paid them with a credit card. Which patently isn't the case. So no, Payment cards are not instant.
    - bduerst 9y ago
      The payment happens and confirms instantly. Withdrawal of funds from the payment processor is not the payment, because payments are not limited by 'time to cash liquidity'.
      - nrhk 9y ago
        Right and is there a problem with making our world more liquid?

JumpCrisscross 9y ago

> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer U.S. dollar Fedwires are “immediate, final, and irrevocable“ [1] regardless of from where they are initiated. If your EU bank takes 5 business days to swap between the world’s two most liquid currencies, you have a uniquely shitty bank. [1] https://www.federalreserve.gov/paymentsystems/fedfunds_about.htm https://www.federalreserve.gov/paymentsystems/fedfunds_about...

mr_spothawk 9y ago
> In 2008, approximately 7,300 participants made Fedwire funds transfers. The Fedwire Funds Service is generally used to make large-value, time-critical payments. seems like maybe the crux of this discussion is that, all of the sudden the features of banking have been automated. that’s definitely not the same as “the features of banks, regulation, etc...” have been automated. But certainly, we can see that the Fedwire is not a consumer product, where BTC clearly is
- JumpCrisscross 9y ago
  > In 2008, approximately 7,300 participants made Fedwire funds transfers To be a Fedwire participant you have to be a Federal Reserve member, i.e. a bank. Consumers arrange Fedwires through their banks. When I send a wire, I'm not a Fedwire participant--my bank is. If you have a U.S. dollar bank account, you have access to the international Fedwire system.
saosebastiao 9y ago
Fedwire is only usable by banks that have a working relationship with the Federal Reserve, which will only be large international banks with a US presence. With most international transfers you're stuck with SWIFT, which is complete garbage. Hopefully replaced by Ripple entirely ASAP.

2RTZZSro 9y ago

>And still, it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer. Transferwise