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BTC and a lot of other chains are Level 1 (L1). Final settlement layers for transactions. To compare that to normal banking, your credit card is like an L5. Ton

BTC and a lot of other chains are Level 1 (L1). Final settlement layers for transactions. To compare that to normal banking, your credit card is like an L5. Tons of things go on in-between your CC transactions before its actually settled even if it appears to be instant and final to the end user. Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution. The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life. There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?

bearjaws 4y ago
That just sounds like banking with extra steps.
- olalonde 4y ago
  Spoken like someone who doesn't know the steps involved in opening a bank account (hint: many people can't), accepting online payments using a bank account (hint: hope you have deep pockets), using a bank for sending interbank/international payments (hint: might need to collect a page worth of information from your recipient. second hint: their bank might refuse to receive the payment), etc. Bonus steps: do all the above programmatically using an API (hint: you might have a billion-dollar startup in your hands). Now do all the above using Bitcoin/lightning network. You'll be done in 15 mins.
  - bytelines 4y ago
    Would lightning network approach comply with KYC laws?
    - deleted 4y ago
      [deleted]
    - olalonde 4y ago
      That question is highly dependent on jurisdiction. The prevailing opinion right now is that Lightning nodes are not subject to KYC regulations in the US.
      - bytelines 4y ago
        What is to prevent the network from facilitating money laundering and purchase of illegal goods?
  - jayd16 4y ago
    You know you're still supposed to collect all the same info for a BTC transaction, right? Just because it's easy doesn't mean it's not tax evasion.
    - olalonde 4y ago
      No, you are not supposed to. KYC is a legal requirement for money transmitters[0]. It does not apply to Bitcoin users. [0] Money transmission is the act of receiving currency from one party and transferring it to another party. Basically, middlemen in a transaction (e.g. banks).
      - dragonwriter 4y ago
        If you are processing financial transactions (including something of “value that substitutes for currency”) between other people at their direction, you are a money transmitter. The whole point of both Bitcoin is decentralizing this function from banks to a network of miners, and a similar thing is done in Lightning with its nodes.
        olalonde 4y ago
        That's correct. In the case of Bitcoin, the thing that most closely resembles a "money transmitter" are miners but FinCEN ruled that they are not[0]. A sensible decision because otherwise, Bitcoin would have effectively been banned from the United States (or Bitcoin miners, at least). [0] https://www.coindesk.com/policy/2014/01/31/fincen-declares-bitcoin-miners-investors-arent-money-transmitters/ https://www.coindesk.com/policy/2014/01/31/fincen-declares-b...
    - toolz 4y ago
      Ignoring the fact it isn't tax evasion - just because it's against the law, doesn't mean it's unethical. Further, obeying laws can be (and often is) unethical. Not everything is on the level of requiring people to turn in jews, but there's plenty of room to argue that companies that are ill-equipped to protect your personal data should not be allowed, much less required, to collect your identifying information.
  - cortesoft 4y ago
    You can set up a stripe account to accept payments very easily. You can buy a prepaid Visa with cash in just a few minutes.
    - olalonde 4y ago
      > You can set up a stripe account to accept payments very easily. Doesn't it require having a U.S. corporation? That's a few hundred dollars off the bat. It also requires you to provide evidence that you are within the types of businesses they authorize. I also suppose it requires having a bank account. Opening a business bank account does not take a few minutes and it can be close to impossible for certain categories of businesses. Multiply that by 10 if you are not a citizen/resident. I also don't believe Stripe allows sending money. Furthermore, receiving payments on Stripe effectively takes a week due to the waiting period. Finally, if Stripe decides to freeze or terminate your account, you are f'ed.
      - notpushkin 4y ago
        Stripe is not worldwide, but works pretty much everywhere in EU at least. You can open a company in Estonia in a couple hours (once you have a digital signature key, which they offer to everybody now, not just Estonian citizens [1]). Getting a bank account might be a bit trickier, but still doable (hint: Wise [2], while not a bank, might be an easier option). That said, Bitcoin is still a whole lot easier to accept, and on the L1 level can't be blocked by anybody. Cryptocurrency is definitely the future, but traditional banking is trying to compete sometimes :-) [1]: https://e-resident.gov.ee/ https://e-resident.gov.ee/ [2]: https://wise.com/ https://wise.com/
        skinnymuch 4y ago
        A business or business bank account isn’t needed, so it doesn’t matter. It’s the same with many payment providers. I linked to references for Stripe on this here: https://news.ycombinator.com/edit?id=32102762 https://news.ycombinator.com/edit?id=32102762 PayPal etc don’t require any business stuff. Being a traditional bank is unimportant for getting paid for online stuff. There’s a lot of ways to get access to something that qualifies as a bank account. For example, Cash App got big because it provides what a bank account does and qualifies as one, even if it is not a traditional bank at all. Once multiple apps are available worldwide as well as multiple ways to have a bank account or a bank account equivalent, why would cryptocurrency be the future? Multiple apps are already available for the majority of the population. The west, India, and China alone are close to half the world population.
  - lxgr 4y ago
    You'll also reduce your potential (new) customer base by almost 100%. Trust can't be bootstrapped trustlessly.
TradingPlaces 4y ago
How is this better than Visa and MC?
- Centmo 4y ago
  The 1.5-3.5% credit card processing fee for starters. Also, you can't use a CC to send money peer-to-peer globally at near-zero cost.
  - dmitriid 4y ago
    > The 1.5-3.5% credit card processing fee for starters. Compared to... 1 dollar, no, 15 dollars, no, 5 dollars, no, 65 dollars, no, ... transaction fees for Bitcoin.
    - Centmo 4y ago
      How much are Lightning transaction fees?
      - hiq 4y ago
        More relevant: how much are Lightning transaction costs?
      - bubersson 4y ago
        Between 1 to 100 satoshi usually - so fractions of a cent. (1 BTC = 100 000 000 sats)
      - dmitriid 4y ago
        Same. Lightning gets around them by bunching a bunch of transactions into one bitcoin transaction. Which is exactly what people have been doing with card processing for ages now. And of course there other payment systems around the world that don't rely on card transactions. And don't forget that the entire lightning thing is dependent on banks aka nodes with large sums of money to provide liquidity in the system.
    - bytelines 4y ago
MuffinFlavored 4y ago
> To compare that to normal banking, your credit card is like an L5. Could you tell us what L1, L2, L3, L4 are in a credit card example?
- olalonde 4y ago
  It's an imperfect analogy but it might look something like this: L1: Central bank (implements monetary policy) L2: Member banks (have accounts at the central bank) L3: Non-member banks L4: Clearing house, SWIFT, etc. for interbank payments L5: Credit card networks

bearjaws 4y ago

That just sounds like banking with extra steps.

olalonde 4y ago
Spoken like someone who doesn't know the steps involved in opening a bank account (hint: many people can't), accepting online payments using a bank account (hint: hope you have deep pockets), using a bank for sending interbank/international payments (hint: might need to collect a page worth of information from your recipient. second hint: their bank might refuse to receive the payment), etc. Bonus steps: do all the above programmatically using an API (hint: you might have a billion-dollar startup in your hands). Now do all the above using Bitcoin/lightning network. You'll be done in 15 mins.
- bytelines 4y ago
  Would lightning network approach comply with KYC laws?
  - deleted 4y ago
    [deleted]
  - olalonde 4y ago
    That question is highly dependent on jurisdiction. The prevailing opinion right now is that Lightning nodes are not subject to KYC regulations in the US.
    - bytelines 4y ago
      What is to prevent the network from facilitating money laundering and purchase of illegal goods?
- jayd16 4y ago
  You know you're still supposed to collect all the same info for a BTC transaction, right? Just because it's easy doesn't mean it's not tax evasion.
  - olalonde 4y ago
    No, you are not supposed to. KYC is a legal requirement for money transmitters[0]. It does not apply to Bitcoin users. [0] Money transmission is the act of receiving currency from one party and transferring it to another party. Basically, middlemen in a transaction (e.g. banks).
    - dragonwriter 4y ago
      If you are processing financial transactions (including something of “value that substitutes for currency”) between other people at their direction, you are a money transmitter. The whole point of both Bitcoin is decentralizing this function from banks to a network of miners, and a similar thing is done in Lightning with its nodes.
      - olalonde 4y ago
        That's correct. In the case of Bitcoin, the thing that most closely resembles a "money transmitter" are miners but FinCEN ruled that they are not[0]. A sensible decision because otherwise, Bitcoin would have effectively been banned from the United States (or Bitcoin miners, at least). [0] https://www.coindesk.com/policy/2014/01/31/fincen-declares-bitcoin-miners-investors-arent-money-transmitters/ https://www.coindesk.com/policy/2014/01/31/fincen-declares-b...
  - toolz 4y ago
    Ignoring the fact it isn't tax evasion - just because it's against the law, doesn't mean it's unethical. Further, obeying laws can be (and often is) unethical. Not everything is on the level of requiring people to turn in jews, but there's plenty of room to argue that companies that are ill-equipped to protect your personal data should not be allowed, much less required, to collect your identifying information.
- cortesoft 4y ago
  You can set up a stripe account to accept payments very easily. You can buy a prepaid Visa with cash in just a few minutes.
  - olalonde 4y ago
    > You can set up a stripe account to accept payments very easily. Doesn't it require having a U.S. corporation? That's a few hundred dollars off the bat. It also requires you to provide evidence that you are within the types of businesses they authorize. I also suppose it requires having a bank account. Opening a business bank account does not take a few minutes and it can be close to impossible for certain categories of businesses. Multiply that by 10 if you are not a citizen/resident. I also don't believe Stripe allows sending money. Furthermore, receiving payments on Stripe effectively takes a week due to the waiting period. Finally, if Stripe decides to freeze or terminate your account, you are f'ed.
    - notpushkin 4y ago
      Stripe is not worldwide, but works pretty much everywhere in EU at least. You can open a company in Estonia in a couple hours (once you have a digital signature key, which they offer to everybody now, not just Estonian citizens [1]). Getting a bank account might be a bit trickier, but still doable (hint: Wise [2], while not a bank, might be an easier option). That said, Bitcoin is still a whole lot easier to accept, and on the L1 level can't be blocked by anybody. Cryptocurrency is definitely the future, but traditional banking is trying to compete sometimes :-) [1]: https://e-resident.gov.ee/ https://e-resident.gov.ee/ [2]: https://wise.com/ https://wise.com/
      - skinnymuch 4y ago
        A business or business bank account isn’t needed, so it doesn’t matter. It’s the same with many payment providers. I linked to references for Stripe on this here: https://news.ycombinator.com/edit?id=32102762 https://news.ycombinator.com/edit?id=32102762 PayPal etc don’t require any business stuff. Being a traditional bank is unimportant for getting paid for online stuff. There’s a lot of ways to get access to something that qualifies as a bank account. For example, Cash App got big because it provides what a bank account does and qualifies as one, even if it is not a traditional bank at all. Once multiple apps are available worldwide as well as multiple ways to have a bank account or a bank account equivalent, why would cryptocurrency be the future? Multiple apps are already available for the majority of the population. The west, India, and China alone are close to half the world population.
- lxgr 4y ago
  You'll also reduce your potential (new) customer base by almost 100%. Trust can't be bootstrapped trustlessly.

TradingPlaces 4y ago

How is this better than Visa and MC?

Centmo 4y ago
The 1.5-3.5% credit card processing fee for starters. Also, you can't use a CC to send money peer-to-peer globally at near-zero cost.
- dmitriid 4y ago
  > The 1.5-3.5% credit card processing fee for starters. Compared to... 1 dollar, no, 15 dollars, no, 5 dollars, no, 65 dollars, no, ... transaction fees for Bitcoin.
  - Centmo 4y ago
    How much are Lightning transaction fees?
    - hiq 4y ago
      More relevant: how much are Lightning transaction costs?
    - bubersson 4y ago
      Between 1 to 100 satoshi usually - so fractions of a cent. (1 BTC = 100 000 000 sats)
    - dmitriid 4y ago
      Same. Lightning gets around them by bunching a bunch of transactions into one bitcoin transaction. Which is exactly what people have been doing with card processing for ages now. And of course there other payment systems around the world that don't rely on card transactions. And don't forget that the entire lightning thing is dependent on banks aka nodes with large sums of money to provide liquidity in the system.
  - bytelines 4y ago

MuffinFlavored 4y ago

> To compare that to normal banking, your credit card is like an L5. Could you tell us what L1, L2, L3, L4 are in a credit card example?

olalonde 4y ago
It's an imperfect analogy but it might look something like this: L1: Central bank (implements monetary policy) L2: Member banks (have accounts at the central bank) L3: Non-member banks L4: Clearing house, SWIFT, etc. for interbank payments L5: Credit card networks