7 ms·

You can build the visa / Mastercard layer with “human judgement” on top.

acdha 4y ago
Why bother paying more for a slow database if you’re not going to rely on the one feature which can’t be done faster, cheaper, and more reliably than the current financial system?
- serverholic 4y ago
  Because it gives people options and increases competition in the financial system. It is much easier to create a VISA alternative when the ledger and transaction processing are taken care of.
  - acdha 4y ago
    Everything gives people options: the question of whether those options actually increase competition comes down to what a particular option does better than the alternatives. For example, if I'm not in the business of selling blockchain services I don't care about Visa's backend infrastructure. I care about things like how much overhead I'm paying on each transaction, how hard it is for my customers to use, how quickly transactions go through (especially in retail settings – I don't want someone blocking the line while they wait for a miner to approve a block), and the cost / risk of fraud. Currently, it's by far easier for everyone to use Visa: most people have access to that system, services are widely available for businesses of all sizes, etc. The primary drawbacks are transaction costs and businesses being on the hook for most fraudulent transactions. Switching to Ethereum would make things slower, but that could improve. Since it's not tied to a hard currency, however, there's a much bigger problem cost management: I know exactly how much a Visa transaction will cost but gas fees are unpredictable and volatile, and the exchange rates for ETH vary both independently and more than most currencies. Similarly, there's a real appeal to not automatically being on the hook for a disputed transaction but that's significantly undercut if you have to worry about being one mistake away from irrecoverably losing everything in your account and so far customers have not been jumping to take on more personal risk either. The big question here is also what competitive businesses do in response: for example, if at some point in the future Ethereum actually became cost-competitive what happens when Visa simply lowers their transaction fees until that's no longer the case again? They have a lot of margin to do that and the merchants don't need to change anything about how they do business. Similarly, Ethereum is nowhere near the speed of a traditional credit card transaction but even if it hit that speed it'd be playing catch-up with Apple/Google Pay – businesses care a lot about things like that since it's often highly visible to customers and can affect things like retail lines, so the question is whether that can be improved faster than companies like Apple/Google, Stripe, Square, etc. can improve their services.
    - serverholic 4y ago
      I think most of those problems are being worked on and have a very real chance of being solved. Right now, on layer 2, you can transact for a $0.01 fee no matter the size of the transaction. I’m not a Visa expert but from what I understand they take a percentage of the transaction. Visa could lower their fees but I see that as a win-win. They faced competition and either way consumers win. Granted if Eth exploded in popularity the fees would go up potentially 10x. However there are upgrades on the way to lower fees even further. Namely danksharding (excuse the silly name). Things like UX, and fraudulent transactions are much harder. However UX can get better and there are actually things we can do about fraudulent transactions. A Visa competitor could build their own smart wallet where the financial institution has keys to the wallet as well as users. This would allow them to administer the wallet for the user similarly to current bank accounts. A competitors could also create their own layer 2 which would only confirm transactions on the main ethereum network after X amount of time. This would allow the company to revert fraudulent transactions within that time window.
      - acdha 4y ago
        Sure, anything is potentially possible but notice how often you had to describe things in uncertain future terms. If you are running a business, that sounds like “call me back when you can do this” — and in particular, consider that while Ethereum-based companies are spending large amounts of effort working around the architectural drawbacks of using a blockchain, everyone else is working on user-visible features.
        serverholic 4y ago
        Sure, by all means wait until these features are ready. They’re not as uncertain as I made it sound though. Smart wallets already exist and layer 2’s exist where users can submit proof of fraud. Danksharding isn't going to take 8 years like proof of stake. The biggest issue I see is building trust, which takes a lot of time. A smart wallet is great but it’s going to take years before the community trusts the builder of the wallet. With that said, I do think crypto has a chance of offering things that the current financial institutions will find very difficult to compete with. I’d love to see Visa reduce their fees to a flat $0.01 per transaction but that that would massively reduce their profits. Also, with a standardized financial API it opens the door to more competition in other areas. For example, a fairer and more transparent alternative to credit scores. Current credit score providers rely on the fact that their system is opaque. Competing with a transparent credit score would be very difficult. The reason I’m so interested in crypto is the possibility of taking away power from these large institutions.
- junofan 4y ago
  It’s pretty clear to anyone under 40 working in finance that there’s room for improvement.
  - acdha 4y ago
    Also those over 40, but that still doesn’t mean everything advertised as the solution is actually the right answer. This is especially true when the sales pitch is “buy now, you’ll make a killing!” but all of the real problems get a response along the lines of “we’re working on that but it was harder than we thought”.
Salgat 4y ago
That defeats the point. People keep forgetting that the single innovative aspect of cryptocurrencies was the invention of a way to do completely anonymous and trustless transactions. That's it. The second you wrap that in a layer that eliminates that, you're better off just skipping the blockchain altogether since it's an otherwise extremely awful performing persistence.
- miohtama 4y ago
  Here is another thread from HackerNews today: ”Stripe nuked my business” https://news.ycombinator.com/item?id=32854528 https://news.ycombinator.com/item?id=32854528 Visa/MasterCard is never going to be a solution for everyone, everywhere, even if it is a solution for a particular Orignal Poster.
  - Salgat 4y ago
    You talk like cryptocurrencies are a valid alternative, even though they have a terrible UX that makes their adoption in the real world near non-existent. Hell, losing or getting your private keys stolen could also nuke your business. Yes, every option comes with its issues, and so far cryptocurrency's issues far exceed other options for businesses.
  - lmm 4y ago
    It will be a solution for everyone running a legal business (i.e. one that doesn't impose significant negative externalities on others). Making life harder for criminals is a feature not a bug.
  - remram 4y ago
    As a business you'd have to pay taxes, deal with customer support, accept multiple currencies, etc, so even when accepting cryptocurrency payments it's likely you would use a payment processor. Those payment processors would probably be just as reliable as the fiat ones... (hell they'll probably be the same companies) Remember, Stripe is not known to be reliable, just convenient. People will go for the convenience with cryptocurrency as well, there is no reason to believe otherwise.
- 4y ago

Why bother paying more for a slow database if you’re not going to rely on the one feature which can’t be done faster, cheaper, and more reliably than the current financial system?

serverholic 4y ago
Because it gives people options and increases competition in the financial system. It is much easier to create a VISA alternative when the ledger and transaction processing are taken care of.
- acdha 4y ago
  Everything gives people options: the question of whether those options actually increase competition comes down to what a particular option does better than the alternatives. For example, if I'm not in the business of selling blockchain services I don't care about Visa's backend infrastructure. I care about things like how much overhead I'm paying on each transaction, how hard it is for my customers to use, how quickly transactions go through (especially in retail settings – I don't want someone blocking the line while they wait for a miner to approve a block), and the cost / risk of fraud. Currently, it's by far easier for everyone to use Visa: most people have access to that system, services are widely available for businesses of all sizes, etc. The primary drawbacks are transaction costs and businesses being on the hook for most fraudulent transactions. Switching to Ethereum would make things slower, but that could improve. Since it's not tied to a hard currency, however, there's a much bigger problem cost management: I know exactly how much a Visa transaction will cost but gas fees are unpredictable and volatile, and the exchange rates for ETH vary both independently and more than most currencies. Similarly, there's a real appeal to not automatically being on the hook for a disputed transaction but that's significantly undercut if you have to worry about being one mistake away from irrecoverably losing everything in your account and so far customers have not been jumping to take on more personal risk either. The big question here is also what competitive businesses do in response: for example, if at some point in the future Ethereum actually became cost-competitive what happens when Visa simply lowers their transaction fees until that's no longer the case again? They have a lot of margin to do that and the merchants don't need to change anything about how they do business. Similarly, Ethereum is nowhere near the speed of a traditional credit card transaction but even if it hit that speed it'd be playing catch-up with Apple/Google Pay – businesses care a lot about things like that since it's often highly visible to customers and can affect things like retail lines, so the question is whether that can be improved faster than companies like Apple/Google, Stripe, Square, etc. can improve their services.
  - serverholic 4y ago
    I think most of those problems are being worked on and have a very real chance of being solved. Right now, on layer 2, you can transact for a $0.01 fee no matter the size of the transaction. I’m not a Visa expert but from what I understand they take a percentage of the transaction. Visa could lower their fees but I see that as a win-win. They faced competition and either way consumers win. Granted if Eth exploded in popularity the fees would go up potentially 10x. However there are upgrades on the way to lower fees even further. Namely danksharding (excuse the silly name). Things like UX, and fraudulent transactions are much harder. However UX can get better and there are actually things we can do about fraudulent transactions. A Visa competitor could build their own smart wallet where the financial institution has keys to the wallet as well as users. This would allow them to administer the wallet for the user similarly to current bank accounts. A competitors could also create their own layer 2 which would only confirm transactions on the main ethereum network after X amount of time. This would allow the company to revert fraudulent transactions within that time window.
    - acdha 4y ago
      Sure, anything is potentially possible but notice how often you had to describe things in uncertain future terms. If you are running a business, that sounds like “call me back when you can do this” — and in particular, consider that while Ethereum-based companies are spending large amounts of effort working around the architectural drawbacks of using a blockchain, everyone else is working on user-visible features.
      - serverholic 4y ago
        Sure, by all means wait until these features are ready. They’re not as uncertain as I made it sound though. Smart wallets already exist and layer 2’s exist where users can submit proof of fraud. Danksharding isn't going to take 8 years like proof of stake. The biggest issue I see is building trust, which takes a lot of time. A smart wallet is great but it’s going to take years before the community trusts the builder of the wallet. With that said, I do think crypto has a chance of offering things that the current financial institutions will find very difficult to compete with. I’d love to see Visa reduce their fees to a flat $0.01 per transaction but that that would massively reduce their profits. Also, with a standardized financial API it opens the door to more competition in other areas. For example, a fairer and more transparent alternative to credit scores. Current credit score providers rely on the fact that their system is opaque. Competing with a transparent credit score would be very difficult. The reason I’m so interested in crypto is the possibility of taking away power from these large institutions.
junofan 4y ago
It’s pretty clear to anyone under 40 working in finance that there’s room for improvement.
- acdha 4y ago
  Also those over 40, but that still doesn’t mean everything advertised as the solution is actually the right answer. This is especially true when the sales pitch is “buy now, you’ll make a killing!” but all of the real problems get a response along the lines of “we’re working on that but it was harder than we thought”.

Salgat 4y ago

That defeats the point. People keep forgetting that the single innovative aspect of cryptocurrencies was the invention of a way to do completely anonymous and trustless transactions. That's it. The second you wrap that in a layer that eliminates that, you're better off just skipping the blockchain altogether since it's an otherwise extremely awful performing persistence.

miohtama 4y ago
Here is another thread from HackerNews today: ”Stripe nuked my business” https://news.ycombinator.com/item?id=32854528 https://news.ycombinator.com/item?id=32854528 Visa/MasterCard is never going to be a solution for everyone, everywhere, even if it is a solution for a particular Orignal Poster.
- Salgat 4y ago
  You talk like cryptocurrencies are a valid alternative, even though they have a terrible UX that makes their adoption in the real world near non-existent. Hell, losing or getting your private keys stolen could also nuke your business. Yes, every option comes with its issues, and so far cryptocurrency's issues far exceed other options for businesses.
- lmm 4y ago
  It will be a solution for everyone running a legal business (i.e. one that doesn't impose significant negative externalities on others). Making life harder for criminals is a feature not a bug.
- remram 4y ago
  As a business you'd have to pay taxes, deal with customer support, accept multiple currencies, etc, so even when accepting cryptocurrency payments it's likely you would use a payment processor. Those payment processors would probably be just as reliable as the fiat ones... (hell they'll probably be the same companies) Remember, Stripe is not known to be reliable, just convenient. People will go for the convenience with cryptocurrency as well, there is no reason to believe otherwise.
4y ago