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I'll attempt an answer: Today, if you want to transact between businesses or retail (folks like you and I), you need to find a route between the two entities'

by baby 1y ago

I'll attempt an answer: Today, if you want to transact between businesses or retail (folks like you and I), you need to find a route between the two entities' banks. This route might take several hops, passing through some central banks, and some of these hops might be instant or might take days to actually settle. On top of that, you need to pay the service that helped you find a route (SWIFT) and potentially the nodes your transaction goes through. Bottomline, it can be slow and a lot of middle men are taxing you. This is why you see services like (Transfer)Wise, that basically try to bank everywhere, and allow you to send money faster by taking a shorter route (kind of like a wormhole :D). But they have to add liquidity everywhere, which they have to rebalance constantly, and it's centralized (single point of failure). FWIW it's great because for a long time this is the best thing we had. Now, let's take a look at the other side. Using stablecoin is a matter of just creating a wallet. The openness by default of blockchains make it really easy to integrate with a blockchain as an entity (just use the SDK, it's there by design). Furthermore, it's in many cases instant and cheap (unless you're transacting on a slow blockchain, but then that's your fault). That being said, the elephant in the room is that one stablecoin (let's say USDC) is now present on many blockchains. So if you have USDC on chain A, and I have USDC on chain B, we're back to our "tradfi" world where we have to find a route between our two chains, which might take us over many bridges, which can be slow and costly. The alternative, like with Wise, is to use centralized players who have liquidity on many different chains and can move things around by just updating their internal (and centralized) database. It's tradfi all over again :D

hvb2 1y ago
So why can a traditional bank not solve this? In Europe you can wire money across borders for free, you just need to know the account number. Arrives in seconds at 0 cost. I feel like a lot of the fintech in the US is purely a result of a lack of regulation. For the example of Argentina, the real reason that business is using crypto is because their currency is unreliable. It might be a good fit there but trading in dollars would've fixed that too.
- abxyz 1y ago
  I’m as cynical about crypto as any sane person but I think you’re hand-waving away the challenges of international business. How can you transact in dollars if you’re a business in Argentina? As you say, if you’re operating in Europe, this is a solved problem, but lots of businesses are operating across borders that don’t have the same payment options. Banks could solve this problem but they haven’t and this is what non-banks have come up with. I’m sure if SEPA was global this wouldn’t be necessary, but it isn’t.
  - hvb2 1y ago
    I'm trying to point out that most US people are unaware that days for selling a transaction should be outrageous, yet it's the norm. And a wire, which is as close to sepa as I think you can get, costs 10s of $ each time. Basically, the international business problem is real. The Argentina case is mostly lack of a domestic stable currency though. These are legit use cases, fast and cheap transactions aren't.
    - mattlutze 1y ago
      Fast and cheap transactions are legit use cases. If you actually offered those US businesses with instant, verifiable transfers that cost nearly nothing, do you actually think they wouldn't move to that?
  - mattlutze 1y ago
    SEPA also works easily because it's single currency for a single unified economic zone. If currency change was involved then you'd likely be back to routing through central banks or currency change banks and such.
    - Y_Y 1y ago
      > As of 2025, there were 41 members in SEPA,[2][3] consisting of the 27 member states of the European Union, the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), the United Kingdom, as well as five EU candidate countries.[4][5][3] Some microstates participate in the technical schemes: Andorra,[6] Monaco, San Marino, and Vatican City.[4] As of 2025, Albania, Moldova, Montenegro, North Macedonia and Serbia are the five countries negotiating to join the EU that are included in SEPA.[2] - https://en.wikipedia.org/wiki/Single_Euro_Payments_Area https://en.wikipedia.org/wiki/Single_Euro_Payments_Area I don't know if I'd call that a "unified economic zone" without some qualifications.
siddthesquid 1y ago
I think the technology of blockchain is irrelevant. If something can be accomplished on the blockchain, which requires N nodes, a business can probably replicate that same objective with less than N nodes because they don't have to pay the cost of verifying that nodes are acting honestly. This business is incentivized to be honest because otherwise they lose their business. Someone has to pay those costs for the N nodes on the blockchain - who will it be? Transactions seem cheap now because funding for these blockchains is often used to subsidize costs. You mentioned ease of use, like the use of SDKs, but blockchain technology does not enable that. All blockchain can do is that if you ask it "hey i was told the state of the world was this. is it true?" and the blockchain will tell you yes or no. If you want to provide those kinds of guarantees to customers in a reliable way, all you need is cryptography, not blockchain.
- InsideOutSanta 1y ago
  Is this just for dilution of responsibility? If a central company is responsible for these transactions, then they are responsible for the transactions, which means there are all kinds of legal constraints and repercussions. But if it's a blockchain, then all of the nodes in the network are responsible. So in this case, "this business is incentivized to be honest" might be the precise "problem" this is meant to solve.
  - jacobr1 1y ago
    Or further, that you need to interact with a business at all. Visa does a good job intermediating many classes of payment. But I am limited in what kind of applications I can build on top of that (tied directly into the payment)
- afiori 1y ago
  I don't like Blockchains mostly but the technology of the Blockchain here is not irrelevant, it is a way to use peer to peer liquidity. That is there is no need for a central entity to have liquidity in many different circuits because you can trade with other coin holders directly in many different exchanges. Sort of like banks use customer money to offer loans to avoid the need of centralised liquidity. The Blockchain technology is important to allow different exchanges to interact with each other in ways that I suspect would be not super legal through a central entity.
deleted 1y ago
[deleted]

by baby 1y ago

hvb2 1y ago

So why can a traditional bank not solve this? In Europe you can wire money across borders for free, you just need to know the account number. Arrives in seconds at 0 cost. I feel like a lot of the fintech in the US is purely a result of a lack of regulation. For the example of Argentina, the real reason that business is using crypto is because their currency is unreliable. It might be a good fit there but trading in dollars would've fixed that too.

abxyz 1y ago
I’m as cynical about crypto as any sane person but I think you’re hand-waving away the challenges of international business. How can you transact in dollars if you’re a business in Argentina? As you say, if you’re operating in Europe, this is a solved problem, but lots of businesses are operating across borders that don’t have the same payment options. Banks could solve this problem but they haven’t and this is what non-banks have come up with. I’m sure if SEPA was global this wouldn’t be necessary, but it isn’t.
- hvb2 1y ago
  I'm trying to point out that most US people are unaware that days for selling a transaction should be outrageous, yet it's the norm. And a wire, which is as close to sepa as I think you can get, costs 10s of $ each time. Basically, the international business problem is real. The Argentina case is mostly lack of a domestic stable currency though. These are legit use cases, fast and cheap transactions aren't.
  - mattlutze 1y ago
    Fast and cheap transactions are legit use cases. If you actually offered those US businesses with instant, verifiable transfers that cost nearly nothing, do you actually think they wouldn't move to that?
- mattlutze 1y ago
  SEPA also works easily because it's single currency for a single unified economic zone. If currency change was involved then you'd likely be back to routing through central banks or currency change banks and such.
  - Y_Y 1y ago
    > As of 2025, there were 41 members in SEPA,[2][3] consisting of the 27 member states of the European Union, the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), the United Kingdom, as well as five EU candidate countries.[4][5][3] Some microstates participate in the technical schemes: Andorra,[6] Monaco, San Marino, and Vatican City.[4] As of 2025, Albania, Moldova, Montenegro, North Macedonia and Serbia are the five countries negotiating to join the EU that are included in SEPA.[2] - https://en.wikipedia.org/wiki/Single_Euro_Payments_Area https://en.wikipedia.org/wiki/Single_Euro_Payments_Area I don't know if I'd call that a "unified economic zone" without some qualifications.

siddthesquid 1y ago

I think the technology of blockchain is irrelevant. If something can be accomplished on the blockchain, which requires N nodes, a business can probably replicate that same objective with less than N nodes because they don't have to pay the cost of verifying that nodes are acting honestly. This business is incentivized to be honest because otherwise they lose their business. Someone has to pay those costs for the N nodes on the blockchain - who will it be? Transactions seem cheap now because funding for these blockchains is often used to subsidize costs. You mentioned ease of use, like the use of SDKs, but blockchain technology does not enable that. All blockchain can do is that if you ask it "hey i was told the state of the world was this. is it true?" and the blockchain will tell you yes or no. If you want to provide those kinds of guarantees to customers in a reliable way, all you need is cryptography, not blockchain.

InsideOutSanta 1y ago
Is this just for dilution of responsibility? If a central company is responsible for these transactions, then they are responsible for the transactions, which means there are all kinds of legal constraints and repercussions. But if it's a blockchain, then all of the nodes in the network are responsible. So in this case, "this business is incentivized to be honest" might be the precise "problem" this is meant to solve.
- jacobr1 1y ago
  Or further, that you need to interact with a business at all. Visa does a good job intermediating many classes of payment. But I am limited in what kind of applications I can build on top of that (tied directly into the payment)
afiori 1y ago
I don't like Blockchains mostly but the technology of the Blockchain here is not irrelevant, it is a way to use peer to peer liquidity. That is there is no need for a central entity to have liquidity in many different circuits because you can trade with other coin holders directly in many different exchanges. Sort of like banks use customer money to offer loans to avoid the need of centralised liquidity. The Blockchain technology is important to allow different exchanges to interact with each other in ways that I suspect would be not super legal through a central entity.

deleted 1y ago

[deleted]