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How about real time cross border remittance and settlement? Current fiat approaches require large illiquid reserves, are slow, and not very scalable. It’s also

by lojack 7y ago

How about real time cross border remittance and settlement? Current fiat approaches require large illiquid reserves, are slow, and not very scalable. It’s also useful for transmitting money long distances when banks won’t do business and you want to avoid a paper trail (drugs). Fiat is perfectly fine for in person transactions, but not when distance is involved. You may or may not morally agree with it, but this is a proven use case.

arcticbull 7y ago
> How about real time cross border remittance and settlement? Current fiat approaches require large illiquid reserves, are slow, and not very scalable. It's bad for that, we've been through this. To send money you have to pay ~1% to an exchange in your home country, wait a few days for it to clear exposing yourself to huge forex risk, pay a $1 transaction fee give or take, then pay ~1% to an exchange in your destination country netting you 3-5 days latency, 2% fee plus $1 plus 10 minutes and incalculable forex risk. And the risk your exchange will literally just steal your money a la Quadriga. Or getting it confiscated en route like the $825M taken from Bitfinex by various government entities for laundering money. There are a lot of solutions to this problem ranging from a credit card to buy things, TransferWise (0.85% fee give or take) to Interactive Brokers ($20 per million fee, or 0.002%) to Norbert's Gambit (free) to a wire transfer if you have to settle instantly. Or even just opening an HSBC account in both countries and moving the money instantly online via web banking. Then there's Square Cash and Venmo for free domestic transfers, the free/instant domestic RTP network in the US, the free/instant SEPA network in Europe and the often free/instant Interac e-Transfer network in Canada. > ...and not very scalable. According to the Bank for International Settlements triennial report of 2016, the foreign exchange market cap averaged $5.1 trillion per day. That's $1,861.5 trillion dollars per year. Forgive me for thinking that means the scaling issue is pretty much solved. It's probably the single most liquid market in the history of the world. > It’s also useful for transmitting money long distances when banks won’t do business and you want to avoid a paper trail (drugs). I did say a legal use case. One that neither violates laws nor sanctions. Worse, Bitcoin leaves you with a paper trail. You'd have to use Zcash or Monero. > Fiat is perfectly fine for in person transactions, but not when distance is involved. You may or may not morally agree with it, but this is a proven use case. It is, though, because you can use your Visa card to send money instantly to anywhere in the world that isn't sanctioned.
- chrisco255 7y ago
  Visa is NOT instant. VISA transactions take up to 48 hours to clear. And in some cases the credit card processor can and will hold funds for even longer than that.
  - arcticbull 7y ago
    Some do, but some like Square will pay you out next business day free of charge or instantly for a small surcharge. To your point they’re floating that during settlement. It’s instant in the sense that the transaction is approved instantly and the settlement is a formality.
    - chrisco255 7y ago
      Settlement is not a formality. Money still has to change hands behind the scenes in various bank accounts. The only thing that's instant is the check for available funds. The actual transfer of money still occurs via ACH.
      - arcticbull 7y ago
        Within the US, ACH is being superseded by RTP realtime payments. SEPA is realtime in Europe. It's a formality from the perspective of the customer because the payment 'happens' immediately, and the merchant gets paid out within 24 hours, sooner if they really need it. Is this really a problem?
        chrisco255 7y ago
        It looks like RTP has not been rolled out everywhere yet and that there are some issues: https://www.forbes.com/sites/tomgroenfeldt/2019/01/22/the-clearing-house-gets-going-with-real-time-payments/#2c12738d6650 https://www.forbes.com/sites/tomgroenfeldt/2019/01/22/the-cl... But still, definitely a promising improvement over ACH. It is a practical problem that the merchant has to wait 24-48 hrs for funds. It's a cash flow problem. It slows down the speed at which that cash can be used to purchase other goods or services. For example, a made-to-order business has to wait for funds to clear from a customer (or front the capital) before they can turn around and order goods to produce the product a customer is purchasing. Which slows down delivery. And that effect is amplified across the whole supply chain.

by lojack 7y ago

arcticbull 7y ago

> How about real time cross border remittance and settlement? Current fiat approaches require large illiquid reserves, are slow, and not very scalable. It's bad for that, we've been through this. To send money you have to pay ~1% to an exchange in your home country, wait a few days for it to clear exposing yourself to huge forex risk, pay a $1 transaction fee give or take, then pay ~1% to an exchange in your destination country netting you 3-5 days latency, 2% fee plus $1 plus 10 minutes and incalculable forex risk. And the risk your exchange will literally just steal your money a la Quadriga. Or getting it confiscated en route like the $825M taken from Bitfinex by various government entities for laundering money. There are a lot of solutions to this problem ranging from a credit card to buy things, TransferWise (0.85% fee give or take) to Interactive Brokers ($20 per million fee, or 0.002%) to Norbert's Gambit (free) to a wire transfer if you have to settle instantly. Or even just opening an HSBC account in both countries and moving the money instantly online via web banking. Then there's Square Cash and Venmo for free domestic transfers, the free/instant domestic RTP network in the US, the free/instant SEPA network in Europe and the often free/instant Interac e-Transfer network in Canada. > ...and not very scalable. According to the Bank for International Settlements triennial report of 2016, the foreign exchange market cap averaged $5.1 trillion per day. That's $1,861.5 trillion dollars per year. Forgive me for thinking that means the scaling issue is pretty much solved. It's probably the single most liquid market in the history of the world. > It’s also useful for transmitting money long distances when banks won’t do business and you want to avoid a paper trail (drugs). I did say a legal use case. One that neither violates laws nor sanctions. Worse, Bitcoin leaves you with a paper trail. You'd have to use Zcash or Monero. > Fiat is perfectly fine for in person transactions, but not when distance is involved. You may or may not morally agree with it, but this is a proven use case. It is, though, because you can use your Visa card to send money instantly to anywhere in the world that isn't sanctioned.

chrisco255 7y ago
Visa is NOT instant. VISA transactions take up to 48 hours to clear. And in some cases the credit card processor can and will hold funds for even longer than that.
- arcticbull 7y ago
  Some do, but some like Square will pay you out next business day free of charge or instantly for a small surcharge. To your point they’re floating that during settlement. It’s instant in the sense that the transaction is approved instantly and the settlement is a formality.
  - chrisco255 7y ago
    Settlement is not a formality. Money still has to change hands behind the scenes in various bank accounts. The only thing that's instant is the check for available funds. The actual transfer of money still occurs via ACH.
    - arcticbull 7y ago
      Within the US, ACH is being superseded by RTP realtime payments. SEPA is realtime in Europe. It's a formality from the perspective of the customer because the payment 'happens' immediately, and the merchant gets paid out within 24 hours, sooner if they really need it. Is this really a problem?
      - chrisco255 7y ago
        It looks like RTP has not been rolled out everywhere yet and that there are some issues: https://www.forbes.com/sites/tomgroenfeldt/2019/01/22/the-clearing-house-gets-going-with-real-time-payments/#2c12738d6650 https://www.forbes.com/sites/tomgroenfeldt/2019/01/22/the-cl... But still, definitely a promising improvement over ACH. It is a practical problem that the merchant has to wait 24-48 hrs for funds. It's a cash flow problem. It slows down the speed at which that cash can be used to purchase other goods or services. For example, a made-to-order business has to wait for funds to clear from a customer (or front the capital) before they can turn around and order goods to produce the product a customer is purchasing. Which slows down delivery. And that effect is amplified across the whole supply chain.