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The problem Hawala solves is turning currency at one end into spendable cash (probably denominated in a different currency) at the other end Crypto doesn't sol
by notahacker 5y ago
The problem Hawala solves is turning currency at one end into spendable cash (probably denominated in a different currency) at the other end
Crypto doesn't solve this (except in very limited circumstances where recipients can buy everything they need with crypto). It's just a layer in the middle, and as it's a layer which requires additional exchanges, it's not more efficient except where it provides a loophole in foreign exchange regulations or where parties with a vested interest in crypto have chosen to subsidise the exchange costs.
- int_19h 5y agoThe problem Hawala solves is e.g. sending money from USA to Iran (substitute any other two countries where legal barriers are in place). Which, yes, is a loophole in foreign exchange regulations. Whether you believe that it's a valid use case depends on whether you believe those foreign exchange regulations are justifiable. It can be argued both ways, but don't assume that everybody agrees with you on this.
- notahacker 5y agoHawala is just a system for eventually consistent settlement between money lenders; sometimes the transactions are entirely legal, sometimes possible legally via more expensive regulated entities, sometimes entirely illegal. Legal or illegal, crypto is still just a possible settlement layer in between parties that receive and dish out spendable cash, requiring the cash dealer to trust the stability of the token rather than his relationship with the counterparty