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The major benefit of the US Dollar is that you can do things with it. Between export controls, currency controls, laws on foreign ownership, etc, china can pay

The major benefit of the US Dollar is that you can do things with it. Between export controls, currency controls, laws on foreign ownership, etc, china can pay me all the RMB in the world. I still can’t do a whole lot with it.

parsimo2010 9mo ago
This is part of the same reason many people don't use Bitcoin- you can't actually do much with it because retailers don't accept it. But China is definitely thinking about how to fix that problem, and soon they will make it possible to pay directly in CNY in other countries. Once you can buy things with it, the CNY is attractive from a practical perspective. A lot of your stuff is already manufactured in China, once/if using CNY makes your purchase easier then it's going to gain ground on the USD. https://www.atlanticcouncil.org/blogs/econographics/what-to-watch-as-china-prepares-its-digital-yuan-for-prime-time/ https://www.atlanticcouncil.org/blogs/econographics/what-to-...
- mothballed 9mo ago
  Retailers don't accept crypto not because of the technology so much as the fact it is a capital gains event every time you transfer crypto, which means both the buyer and seller are now forced to keep a log of their gains/losses against the dollar everytime they buy a pack of gum. Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time (edit: stable coin doesn't help here -- you must still report gains on stable coins as it is still a $0 capital gain which is different than no capital gain). Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.
  - linkregister 9mo ago
    Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive exchange risk. However, we don't see capital gains nor exchange risk with stablecoins. I assume that network effects are insufficient to drive retail demand for stablecoin support.
    - buckle8017 9mo ago
      > Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive The IRS policy is irrelevant, the law always required payment of capital gains. It's consistently been the hardest thing about accepting Bitcoin for payment. Foreign currency payments are largely exempted.
    - jermaustin1 9mo ago
      The volatility of bitcoin is why there is capital gains on every trade, it has nothing to do with the IRS's new crypto policy. If a bitcoin rises or falls by a calculable amount between when you received it vs when you spent a portion of it, you have gains/losses. That has always been required by the IRS to be reported, whether that is a BTC or chicken feathers.
  - Sargos 9mo ago
    You do not need to report a $0 capital gain when using stablecoins. Sure crypto can seem like the wild West with CPAs having different opinions on what little official guidance is out there but that one is simply absurd.
    - mothballed 9mo ago
      CPA Miles Brooks claims you do[] You are required to report capital gains and losses from stablecoins on your tax return (though it’s likely that your gain will be close to 0). [] https://coinledger.io/blog/stablecoin-taxes https://coinledger.io/blog/stablecoin-taxes
- selectodude 9mo ago
  Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t buy a company (limitations on foreign ownership), can’t buy property (99-year lease that can be canceled on the whims of the government at any time), can’t buy Chinese debt (terrible yields, very small foreign market access, incredibly opaque laws and accounting), and nobody else in the world wants it so I have no choice but to sell it back to China in exchange for a real currency at whatever horseshit exchange rate they’ve concocted. It’s worthless money and I don’t see anything out of china that would cause that to change.
  - mullingitover 9mo ago
    > Can’t buy a company (limitations on foreign ownership) This is quickly going away[1]. [1] https://www.nortonrosefulbright.com/en/knowledge/publications/ac881831/china-eliminates-all-access-restrictions-to-foreign-investors-in-the-manufacturing-sector https://www.nortonrosefulbright.com/en/knowledge/publication...
  - jama211 9mo ago
    I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.
  - throw310822 9mo ago
    I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.
  - KaiserPro 9mo ago
    Thats a feature not a bug. The Chinese government spend a lot of money keeping the value of the RMB low.
    - irishcoffee 9mo ago
- kevinak 9mo ago
  Funnily enough you can use Bitcoin at most merchants that use a Square PoS device, which is like 25% of merchants in the US. It just takes time for folks to change their behaviors. And why would they, if they're getting X% cashback on all purchases using their credit cards?
  - slongfield 9mo ago
    The other thing about Bitcoin is that it's deflationary, which leads to people holding the currency rather than spending it, as predicted by Econ 101.
    - throwaway7644 9mo ago
      We've witness deflationary forces in computer hw for decades and no one is holding off their purchases. Time is scarce and it ultimately forces consumption because otherwise, what would you be saving for? Don't need Econ 101 to understand this basic reality.
      - XorNot 9mo ago
        Computer hardware actually does things - it is an economic value producer. Bitcoin is an economic value consumer just to hold it. It does nothing if you have it.
      - qwytw 9mo ago
        Well there is a difference between people not buying anything at all and being significantly less than they are now. Consumer goods and services is only the tip of the iceberg. How much do you think debt would cost and how easy would it be for businesses to get credit? Combining a deflationary currency with a growing (or at least non static) economy is bad a everyone who has a basic understanding of history prior to the 1930s can see that. Something like bitcoin would be even much worse than the gold standard.
        throwaway7644 9mo ago
- tayo42 9mo ago
  Don't we already pay in foreign currency? I do this online with foreign websites and credit cards.
fakedang 9mo ago
You can buy with RMB in a lot of countries outside the West, if they have integrated UnionPay or AliPay into their payment processors. But more importantly, you can buy a lot of stuff from the factory of the world. Which is why a lot of countries don't mind holding the RMB. Just not enough for it to become a reserve currency, and certainly no one wants it to become the petroyuan.
Beretta_Vexee 9mo ago
It's more of a payment processor issue than a device issue. If you are in a country or area with a large Chinese population, you can usually pay easily in RMB with Alipay. If you use Visa and Mastercard, you are subject to US regulations, sanctions, and embargoes. Many alternative payment processor exist, PIX in Brazil, UPI in India, etc. There are several systems in the EU: Wero, Bizum, BLIK It is urgent that Europeans coordinate to ensure the interoperability of these systems and reduce the influence of Visa and Mastercard. In the event of conflict, this will be the first service to be cut in order to disrupt European countries. The US already use it for coercing European politicians : https://www.courthousenews.com/eu-strongly-condemns-us-sanctions-against-five-europeans/ https://www.courthousenews.com/eu-strongly-condemns-us-sanct...
- tdrz 9mo ago
  An integrated European payments system should be very high up on the priorities list of the European Commision. I believe every EU country already has its own version of a QR code payment, I don't know why can't they connect "easily" connect them.
  - Beretta_Vexee 9mo ago
    It's complicated, there are two types of applications and networks. 1) Direct payment systems via mobile phone, generally designed initially for payments between friends and family. They have been set up in several countries by neobanks, generally based on the Mastercard network (very common among neobanks). A Latvian neobank may expand into the Baltic countries, but is unlikely to succeed in Portugal. These systems are not interoperable with each other. 2) Systems promoted by banking networks, such as Bizum in Spain, which has expanded to the Iberian Peninsula, and Wero, which is supported by BNP Paribas (France, Belgium, Germany). These networks are independent of Mastercard, Visa, etc., but they seek to favor their members and do not seek to become widespread. Discussions have been ongoing for years to achieve interoperability. The idea for the moment was to let the market structure itself naturally without too much intervention, other than to say “we must move towards interoperability at the European level.” This approach has worked very well for bank transfers, which have become simple, fast, and relatively secure, but it has taken a long time (Europe, consensus, etc.).

parsimo2010 9mo ago

This is part of the same reason many people don't use Bitcoin- you can't actually do much with it because retailers don't accept it. But China is definitely thinking about how to fix that problem, and soon they will make it possible to pay directly in CNY in other countries. Once you can buy things with it, the CNY is attractive from a practical perspective. A lot of your stuff is already manufactured in China, once/if using CNY makes your purchase easier then it's going to gain ground on the USD. https://www.atlanticcouncil.org/blogs/econographics/what-to-watch-as-china-prepares-its-digital-yuan-for-prime-time/ https://www.atlanticcouncil.org/blogs/econographics/what-to-...

mothballed 9mo ago
Retailers don't accept crypto not because of the technology so much as the fact it is a capital gains event every time you transfer crypto, which means both the buyer and seller are now forced to keep a log of their gains/losses against the dollar everytime they buy a pack of gum. Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time (edit: stable coin doesn't help here -- you must still report gains on stable coins as it is still a $0 capital gain which is different than no capital gain). Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.
- linkregister 9mo ago
  Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive exchange risk. However, we don't see capital gains nor exchange risk with stablecoins. I assume that network effects are insufficient to drive retail demand for stablecoin support.
  - buckle8017 9mo ago
    > Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive The IRS policy is irrelevant, the law always required payment of capital gains. It's consistently been the hardest thing about accepting Bitcoin for payment. Foreign currency payments are largely exempted.
  - jermaustin1 9mo ago
    The volatility of bitcoin is why there is capital gains on every trade, it has nothing to do with the IRS's new crypto policy. If a bitcoin rises or falls by a calculable amount between when you received it vs when you spent a portion of it, you have gains/losses. That has always been required by the IRS to be reported, whether that is a BTC or chicken feathers.
- Sargos 9mo ago
  You do not need to report a $0 capital gain when using stablecoins. Sure crypto can seem like the wild West with CPAs having different opinions on what little official guidance is out there but that one is simply absurd.
  - mothballed 9mo ago
    CPA Miles Brooks claims you do[] You are required to report capital gains and losses from stablecoins on your tax return (though it’s likely that your gain will be close to 0). [] https://coinledger.io/blog/stablecoin-taxes https://coinledger.io/blog/stablecoin-taxes
selectodude 9mo ago
Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t buy a company (limitations on foreign ownership), can’t buy property (99-year lease that can be canceled on the whims of the government at any time), can’t buy Chinese debt (terrible yields, very small foreign market access, incredibly opaque laws and accounting), and nobody else in the world wants it so I have no choice but to sell it back to China in exchange for a real currency at whatever horseshit exchange rate they’ve concocted. It’s worthless money and I don’t see anything out of china that would cause that to change.
- mullingitover 9mo ago
  > Can’t buy a company (limitations on foreign ownership) This is quickly going away[1]. [1] https://www.nortonrosefulbright.com/en/knowledge/publications/ac881831/china-eliminates-all-access-restrictions-to-foreign-investors-in-the-manufacturing-sector https://www.nortonrosefulbright.com/en/knowledge/publication...
- jama211 9mo ago
  I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.
- throw310822 9mo ago
  I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.
- KaiserPro 9mo ago
  Thats a feature not a bug. The Chinese government spend a lot of money keeping the value of the RMB low.
  - irishcoffee 9mo ago
kevinak 9mo ago
Funnily enough you can use Bitcoin at most merchants that use a Square PoS device, which is like 25% of merchants in the US. It just takes time for folks to change their behaviors. And why would they, if they're getting X% cashback on all purchases using their credit cards?
- slongfield 9mo ago
  The other thing about Bitcoin is that it's deflationary, which leads to people holding the currency rather than spending it, as predicted by Econ 101.
  - throwaway7644 9mo ago
    We've witness deflationary forces in computer hw for decades and no one is holding off their purchases. Time is scarce and it ultimately forces consumption because otherwise, what would you be saving for? Don't need Econ 101 to understand this basic reality.
    - XorNot 9mo ago
      Computer hardware actually does things - it is an economic value producer. Bitcoin is an economic value consumer just to hold it. It does nothing if you have it.
    - qwytw 9mo ago
      Well there is a difference between people not buying anything at all and being significantly less than they are now. Consumer goods and services is only the tip of the iceberg. How much do you think debt would cost and how easy would it be for businesses to get credit? Combining a deflationary currency with a growing (or at least non static) economy is bad a everyone who has a basic understanding of history prior to the 1930s can see that. Something like bitcoin would be even much worse than the gold standard.
      - throwaway7644 9mo ago
tayo42 9mo ago
Don't we already pay in foreign currency? I do this online with foreign websites and credit cards.

fakedang 9mo ago

You can buy with RMB in a lot of countries outside the West, if they have integrated UnionPay or AliPay into their payment processors. But more importantly, you can buy a lot of stuff from the factory of the world. Which is why a lot of countries don't mind holding the RMB. Just not enough for it to become a reserve currency, and certainly no one wants it to become the petroyuan.

Beretta_Vexee 9mo ago

It's more of a payment processor issue than a device issue. If you are in a country or area with a large Chinese population, you can usually pay easily in RMB with Alipay. If you use Visa and Mastercard, you are subject to US regulations, sanctions, and embargoes. Many alternative payment processor exist, PIX in Brazil, UPI in India, etc. There are several systems in the EU: Wero, Bizum, BLIK It is urgent that Europeans coordinate to ensure the interoperability of these systems and reduce the influence of Visa and Mastercard. In the event of conflict, this will be the first service to be cut in order to disrupt European countries. The US already use it for coercing European politicians : https://www.courthousenews.com/eu-strongly-condemns-us-sanctions-against-five-europeans/ https://www.courthousenews.com/eu-strongly-condemns-us-sanct...

tdrz 9mo ago
An integrated European payments system should be very high up on the priorities list of the European Commision. I believe every EU country already has its own version of a QR code payment, I don't know why can't they connect "easily" connect them.
- Beretta_Vexee 9mo ago
  It's complicated, there are two types of applications and networks. 1) Direct payment systems via mobile phone, generally designed initially for payments between friends and family. They have been set up in several countries by neobanks, generally based on the Mastercard network (very common among neobanks). A Latvian neobank may expand into the Baltic countries, but is unlikely to succeed in Portugal. These systems are not interoperable with each other. 2) Systems promoted by banking networks, such as Bizum in Spain, which has expanded to the Iberian Peninsula, and Wero, which is supported by BNP Paribas (France, Belgium, Germany). These networks are independent of Mastercard, Visa, etc., but they seek to favor their members and do not seek to become widespread. Discussions have been ongoing for years to achieve interoperability. The idea for the moment was to let the market structure itself naturally without too much intervention, other than to say “we must move towards interoperability at the European level.” This approach has worked very well for bank transfers, which have become simple, fast, and relatively secure, but it has taken a long time (Europe, consensus, etc.).