Apart from any "send money to your relatives back home" service, sms banking in entire continents, or Hawala.
Don't get me wrong, there's so much wrong with the current banking system, and I really hope someone or something manages to disrupt it, but Bitcoin is no solution to that.
people are constantly conflating bitcoin the currency alternative with some kind of new way do banking, finance, monetary policy, and never explain what needs disrupting and what the new world look like. is it just better, faster, cheaper? or some fundamental disruption, not just incrementally less costly.
This is the big problem with crypto. Trust moves around. But there is one solution: escrow backed by smart contracts - see here for one implementation [1]
Personally I think what we'll see in future is people being offered the option of going through existing institutions as a form of insurance for the reasons you mention, but an alternative on offer for people who just want to minimize fees or who don't think they'll need those conflict resolution services.
Also now I have to trust the smart contract developer
Ten+ years ago we were all told that the decentralised cryptocurrency would enable the unbanked masses to make micropayments to one another — and indeed, we could do that in the first few years. However, the mining fees are so exorbitant these days that micropayments end up being very expensive, at least percentage-wise. I didn't have any expectations about the bitcoin exchange rate ten years ago, but the “cheap micropayments” expectations were blown to pieces a long time ago.
Bitcoin Lightning, is that so simple that even my mother could use it without my help? For me that's the acid test.
She could use BCH. Just open Bitcoin.com app on phone, tap "SEND", "Scan a QR code" (or enter email, or phone number, or BCH address), and slide. Video: https://twitter.com/rogerkver/status/1179037602499837954
We can prove that A transferred BTC to B thanks to cryptographic signatures. But what if the ATM machine (turning BTC into USD or whatever) on the other side fails? You still have to trust 3rd parties whenever you do an "off chain" transaction.
------
As long as BTC has huge volatility, it fails as a store of value. Swings up, or down, will incentivize "games" to be played with regards to any BTC / USD exchange.
Bitcoin is well known globally whereas Hawala in a subset of countries.
In OP's example he has to trust the Bitcoin ATM whereas for Hawala you'd have to trust the honour system (thus at least 2 parties).
Bitcoin is digital whereas Hawala requires exchange of money in person. In OP's example this gives him the flexibility of not having to prearrange a transaction.
«SMS banking» → Non existent in our situation (US recipient)
«Hawala» → Maybe, but unworkable in our situation. None of use have used Hawala, we wouldn't even have known WHERE to look for Hawala providers...
Thank you for demonstrating my point. Nothing could have beaten Bitcoin/crypto in this instance.
I can send a wire transfer for free to any other person in Poland at 4am on saturday night, and they will get it instantly (some exceptions apply).
I can even send them a direct code to withdraw a specific amount of money from most ATMs in the country, instantly and anonymously. (Could be to an unbanked person, but we don’t have those really - aside from some very senior citizens).
What you described is not so much a flaw in the banking system in general, but in the US banking system specifically.
Crypto has a ton of awesome use-cases - DeFi is the most promising one. Sending money to other people wirelessly can, and will, be solved by centralised institutions.
Depends on who you are, or who he is (or who he knows) and how much money you're sending, how much you've sent overall in the past X weeks/months, etc...
The concept of having electronic money that no one (banks nor governments) can touch is just incredibly appealing to me and has been so ever since I first discovered Bitcoin. I guess it's the anarchist/libertarian (I'm not politically affiliated) side in me... It goes hand in hand with what made the internet (and BBS's before that) so incredibly exciting back in the 90's.
Bitcoin definitely has its issues, but the attraction is still there, I can't shake it.
Instant transfers are not supported by every single bank yet, and there is a limit to 15k€. As a fallback you have electronic wire transfers that are usually free (or 0.25€), and have a guaranteed delivery of one working day (usually sooner).
You can literally 1M€ for 0 fee, and it gets delivered within 2-4 hours if you send it before 3pm, and if later - by 8am the next day.
After my first date with my gf, she wired me 15€ paying back for dinner, and I wired her back 7€ saying that 15€ was too much. Yes, you can literally flirt with wire transfers - that’s how cheap and common they are :)
As for having money that nobody can touch - sure, it has an appeal. I won’t argue that. But for person to person transfers, most of the world has already figured it out.
In canada we have Interac Online that allows you to send money instantly to anyone in the country but when it comes to international transfer it's usually really slow. (3-10 days). Bitcoin allows tou to send that money anywhere almost instantly.
What cryptocurrencies enables is border-less transfers, where geographic location doesn't matter anymore, as long as you have a internet connection.
> Sending money to other people wirelessly can, and will, be solved by centralised institutions
I wish I could be as optimistic as you. I have been living in three different countries for the last 20 years and heard that "instant wire transfers anywhere in the world" is coming for the last 20 years. Seems only Instant SEPA has been doing some actual work, but it still doesn't even cover 50% of the world.
And why wait for a centralized solution that might come 20 years in the future when you can use the decentralized solution that works today?
Recipient was unbanked (under severe financial hardship)
People keep arguing crypto when internal fiat is likely to end up as central bank digital wallets [2] and cross border transfers will be facilitated by fintechs like TransferWise, with central banks essentially assuming more and more of the cross border infra over time [3].
Anecdote: A friend needed financial help due to COVID, and I was able to get their Citi deposit account setup with Zelle in ~2 minutes and send them cash from our reserves. The transfer was effectively instantaneous. IMHO, the problem isn't the transfer mechanism, it's ensuring that everyone has a a bank account [4].
[1] https://www.zellepay.com/get-started
[2] https://www.atlanticcouncil.org/blogs/econographics/the-rise...
[3] https://asiatimes.com/2020/12/cross-border-payments-on-horiz...
The only time they will ask you questions is if you start with putting in huge amounts of money fast - then AML applies.
I know there is an issue with unbanked population in US, but it’s a regulatory one - it doesn’t have to be that way.
Hope this illustrates that Tesla’s commitment to clean energy is shallow, and their real commitment is to easy to manipulate financial securities.
I work at TransferWise so I know that 34% of our transactions are now instant (less than 20 sec).
However with Bitcoin there is no need for verification because a transfer is irreversible.
[1] https://insights.namescan.io/a-complete-guide-to-aml-regulat...
[2] https://en.wikipedia.org/wiki/Know_your_customer#Laws_by_cou...
Everything was a barrier. Language, paperwork, carrying cash around safely, time and finally most importantly, fees.
No thanks.
I didn't see any Bitcoin ATMs in either place, or Vietnam for that matter, and can't imagine the process of turning Bitcoin into spendable currency there would be easier, especially not for somebody without a local bank account.
And even that is debatable.
A new technology that has ignored the regulatory structure is not apples to apples. Someone could ignore regulations with current tech and be just as "convenient."
You don't need digital assets to commit fraud.
I just gave you no less than 6 reasons!
Slightly is an understatement.
What if I lost my wallet with my debit card, why would I know the language?
You are making a TON of assumptions and not considering A LOT of use cases.
I'm in country with a cash economy, am unable to use my debit card in the local ATMs and don't speak the local language. I login to online banking on my phone or in a cybercafe and send a bank transfer in my currency from my account to WU. Within a few minutes WU confirms receipt of the funds. I walk down the street to the large WU sign, show a MTCN number and my passport to the teller, and collect equivalent cash in local currency, less a bearable-in-the-circumstances transaction fee. (This actually happened by the way.)
Let's for the sake of argument, assume I already have a large fortune in Bitcoins, access on all the major exchanges and private keys memorised and written down in a secure box, all in my possession. Trouble is vendors want local currency not BTC, and I don't have the language skills to convince them that actually BTC is a much better store of value or locate the local BTC enthusiast's group (if there is such a thing) and negotiate an informal money transfer with them. In the end I probably give up and use Western Union...
The issue with those alternatives is that they cost a lot. In your case, this additional cost was worth it in an emergency but that's often not the case.
Think of the vast number of people who send money abroad to support their families.
Even if I could have found someone in a small Moroccan town that knew what a Bitcoin was and how to use it, the daft exchange rate they'd have offered me to convert it into cash would have easily exceeded the cost of Western Union for the same transaction. The villages people send money to support families are not full of hackers playing around with blockchains, and the few people in their country with the knowhow and resources to exchange Bitcoins for cash are not going to be cheaper or easier to deal with than WU.
Sure, I can cash out crypto via my bank account and bankcard pretty easily, but I can cash out cash even more easily...
How much cash do you really want to walk around with if you have lost your wallet which likely included some Of your identification.
Normally, you just have to show Western Union the verification number and your name. You don’t need to chat up the front desk.
> If I had a bank account with balance, why would I use western union?
How often would you not have a bank account, not know the local language, and not be near people you know who would help with money in some extreme case?
—
The other two sibling comments repeated more points. Really all of us are wondering what use cases you’re thinking of.
I don’t think you realize how easy services like Western Union are. I didn’t either until I used it recently.
Because sending money to people in the third world who DON'T have a bank account is almost impossible via a normal transfer. My understanding is that the vast majority of the Somali population in the US, for instance, send money home to friends and family via WU. They have a bank account in the US, their friends/family back home do not.
>What if I lost my wallet with my debit card, why would I know the language?
If you lost your wallet and debit card, why would you have thousands of dollars of cash on hand in a country you don't speak the language? That sounds both unlikely and extremely dangerous.
>You are making a TON of assumptions and not considering A LOT of use cases.
I've actually considered most of them, and I've yet to hear a situation that makes any realistic sense outside of illegal activities.
Vs
> If you’re in a third world country
This is a different scenario.
There’s many people that send money back home. What they use varies. I know people that transfer funds to someone and they give the cash to the person minus an amount. The method will depend on the location. I can’t speak for everyone and won’t try to.
>If you lost your wallet and debit card, why would you have thousands of dollars of cash on hand in a country you don't speak the language? That sounds both unlikely and extremely dangerous.
Depends. What country?
And in that country, how much is a room? Where am I staying? How much is a ticket? What do I need to get my stuff replaced? Do I have anything planned? Is it a business trip or leisure?
https://ycharts.com/indicators/bitcoin_average_transaction_f...
Western Union just needs the verification code and proof of who you are to give you money. I don’t see the big barrier with it.
I once sent $100 to someone in South America and it cost me $13.
WU is a relic that targets and takes advantage of the less fortunate and those in 3rd world countries.
A lightning transaction currently costs $0.000432200 but you would have to have an existing channel open (which would make sense for a heavy user to have already)
And that's only looking at on-chain mechanics. Solutions exist to remedy issues with scalability of the underlying blockchain.
I just don't get the Western Union hate.
I just now sent $100 to someone in South America and it cost me $17.
Bitcoin is a fad that targets and takes advantage of gullible people and those involved in the illegal drug trade.
This is for exchanges, right?
You can have a confirmation with Lightning for like less than 1/100th of a penny and there's no ID requirements for Bitcoin.
To start using Bitcoin, you don't need any ID. You can download, install, and use the normal Bitcoin client.
You only need ID to open an account on an exchange, and that's because exchanges have to follow Know Your Customer laws just like banks. But if you sell something for Bitcoin, you can accept it without an account anywhere.
You only need an account somewhere to convert between fiat and Bitcoin, and even that can be avoided if you find someone willing to sell you coins for cash.
However, part of the costs of course arise from supporting
a) a branch network that also enables those without smartphone to use the service, and
b) all the pesky KYC AML measures that Bitcoin conveniently circumvents.
I just looked it up, for BTC you currently pay a transfer fee equivalent to $11, with spikes to $17 in the past month.
With BTC I can buy them via the internet, and the person on the other side can also convert to cash in their own account via the internet, then withdraw on any ATM.
It's worlds apart.
Edit: I guess if you only consider the parent's use-case where the other person went to a Bitcoin ATM it's not that different but my point stands as it's only 1 other layer in the process and it's an online one.
And this is reason enough to replace all other currencies with btc ? Because it's fast ?
If people thought a little beyond their personal use cases, they would understand the NON utility of Bitcoin/crypto for most
What's up with this mindset that Bitcoin must REPLACE the existing system? As a Bitcoin user for 10+ years I always envisioned Bitcoin would simply co-exist with the rest. Your mind is too binary, my friend.
You tell me, I'm not the one who came up with it
https://www.finextra.com/newsarticle/34920/deutsche-bank-pre...
https://cointelegraph.com/news/crypto-will-eventually-replac...
https://www.forbes.com/sites/investor/2019/08/05/crypto-is-r...
and hundreds of other articles...
Not that fast: for most purposes you have to wait about an hour. Not as fast as centralised fast systems.
The whole reason that it is not allowed to send money to an anonymous person is... Well don't actually know where to start explaining it.
Anti money laundering? Counter-terrorism financing? Financial transaction reporting?
With Bitcoin, just like cash, you can freely transfer it as you please.
The disagreement is if that is good or bad.
Perhaps nations would be less likely/able to do things like this if citizens were able to flee without leaving behind their life savings.
As a currency it's dreadful, suffering from tens of thousands of percent in deflation (= value increased relative to the cost of goods).
As a trade product it's terrible, suffering from a lack of oversight from e.g. the SEC, opening it up to price manipulation (see MtGox creating artificial demand, the Tether money printer, the smaller crypto's being fucked around with by traders who have enough money to throw around to influence the price, and the meme coins being influenced by Elon Musk making a tweet about it (although afaik he can't be accused of manipulation directly, this time).
Further, every currency has problems. Is USD perfect in your mind and without it’s own unique set of issues?
One year into its existence, a Pan-European Clearinghouse provided clearing services for participating countries.
Six years into its existence, in 2008, credit transfers and direct debit are operational across the SEPA area, meaning roughly that international payments are on par with domestic payments (i.e. no fees, 1-2 days wait time).
Eight years into its existence, SEPA transfers have become the dominant form of electronic payments in the Eurozone.
Since 2017 (fifteen years in), anyone with a SEPA bank account can send money to anyone else in the Area instantly³, and free of charge.
Throughout this time: * The Euro didn't suffer hyperdeflation. * There are ways to recover payments that were sent to mistyped IBANs and/or were sent fraudulently. * Users who forgot their e-banking password can get a new one from their bank and not lose all of their assets.
In 2019, SEPA processed about 22 billion credit transfers⁴. That's about 700 transactions per second, or about a hundred times more than the Bitcoin network is able to handle. SEPA also handled about the same number of direct debits, something that BTC doesn't offer. Best of all: SEPA did all that, without using approximately Chile's annual energy use.
Bitcoin is amazing Sci-Fi, brought to life. It's a testament to Satoshi's genius, to a cyberpunk-y spirit, and to applying game theory in a system that actually kinda works. But given its immense costs for miners, users, and society overall, it's something that falls squarely on the dystopian side of sci-fi.
¹: Mainly because the Euro is a multinational project and not a national currency. And also a little bit because the US banking system is a bit of a mess. But mainly for the "international" aspect.
²: Technically, it was created in 1992 and could be used, in electronic form, from 2001 onward. Still, banknotes and coins were introduced in 2002, so that feels like a good starting point.
³: "10 seconds, or up to 20 seconds in some circumstances"
⁴: https://www.europeanpaymentscouncil.eu/what-we-do/be-involve...
No one here can pay for their pizza delivery through SEPA. Intermediaries like PayPal are still needed. I'm baffled that banks can't get their shit together to offer an instant payment solution that works over the internet (ie. no card reader) for small purchases.
What's the problem?
There are several banks that support it. However, for instant transfers to work in practice, both the sending and receiving bank need to support it. I know of at least one person who opened a bank account with an Instant-Transfer-capable bank to get access to Instant Transfers.
The SEC only deals with securities. Bitcoin is not a security.
The problem is that it is a prisoner's dilemma situation, where capital holders do not want to be 'encouraged' to invest their money even if it might be a net benefit to society as a whole.
No one invests for a "net benefit to society as a whole." They invest for a return, and you can NPV your project in both inflationary and deflationary environments.
https://transferwise.com/gb/send-money/instant-money-transfe...
It's impossible for 2 new unverified users to sign up to TW and send money instantly within 1 hour, cash in hand. Lengthy verification steps, etc. So TW wouldn't have worked in our urgent situation.
We've had the Lighting Network but that's not seen good adoption and has it's own problems. Sadly Bitcoin has first mover's advantage, name recognition and good reputation that can't be replicated by other more innovative solutions.
Can I ask why you chose Bitcoin specifically to make the transfer?
95% of the population is banked, but only 11% own bitcoin.
Are you kidding me?
>If people thought a little beyond their personal use cases, they would understand the utility of Bitcoin/crypto for many others.
What use case is that? Skirting AML regulations? You think governments will allow that?
Sending money to an unbanked person in severe financial hardship, for food & shelter. Nothing else worked. Not WU. Not TW.
I've been hearing that for 10 years. From a purely compliance/surveillance viewpoint, government authorities tend to prefer Bitcoin over cash, because they can monitor and run all sorts of analytics on the Bitcoin blockchain, which is not 100% anonymous, but merely pseudonymous. Compare this to cash transactions which are offline, untraceable. If you asked me to bet whether most democracies would crack down and ban Bitcoin within the next few decades, I'd confidently say "not going to happen".
https://business.ebanx.com/en/resources/payments-explained/p...
Imagine the same situation but the other person doesn't have a bank account.
The conversion has occur somewhere or they whole world has to accept bit coin and participate in tax evasion schemes by being so called unbanked.
There is limit to bit coin usage and alike and they will eventually hit the limitation and regulation.
The unbanked people are not buying Tesla. They will pay the tax.
You mention the right things, but it's two separate ones. Sending/receiving currency in 1 hour - this is not impossible with banking technology today. But if you're sending $10000 this to avoid income taxes, fees or any other kind of regulation – then it's a different thing you're talking about.
You are still relying upon a 3rd party to run the ATM or the exchange – and the main differentiator here is – they are not regulated by KYC (Know Your Customer). This means, they are not yet obliged to check who you are, whether you are reporting this $1000 as your income, or the person sending it as service fee, whatever. It's basically black money. In your case – you might have as well transferred $1000 as ransom for releasing your family (god forbid).
The point at which you exchange BTC for your local government cash – can be enforced by the government at any time by mandating KYC. And then things will equalize. Or we can assume there will be no such point, and all the last mile purchases will also be BTC. This means no government cash at all, shops accept BTC directly, and since BTC wallets are encrypted – they can simply report whatever they want as income or expense. But at some point, they have to pay their suppliers. And then we can also assume this extends to the suppiers, and all the way up to the supply chain. No reporting anywhere.
If the entire money circulation becomes black money (unreported, untaxed), then there is basically no way for any government to function at all. Then the state actor has every incentive to simply shutdown power and take majority control over the ledger (remember: the state has impossibly more compute than anyone else).
TL;DR: Lack of regulation is not a feature. It's just a temporary state. We can enjoy it while it lasts.
Bitcoin is the first time in history of a financial asset that no one can take from you plus you can send it. It is gold++
And every bank account I had has this.
Who in this modern era is unbanked and how did that unbanked person turn around and spend the $1,000 in BTC you sent them?
+ Sending actual cash from A to B is not a complicated process.
+ We usually use 'banks' for this process, generally for very good reason, in particular, regulatory compliance, security and especially concerns over fraud and money laundering.
+ That banks create essentially a layer of bureaucracy is not that great, however, it's mild relative to the propagation of unregulated currency.
+ BTC is neither a currency, nor a store of value - it's just monopoly money. It's not a currency because it can't be used in any economic system as a standard means of payment, and it's not a store of value for obvious reasons of volatility and no underlying inherent value. Literally any other classical store of value i.e. real estate, bonds, cash, commodities - are much better 'stores of value'.
+ Almost all of BTC's 'value' thus far expressed, comes down to either 1) playing speculative, Ponzi-like games where massively wealth individuals effectively control the market (defeating any notion of real distribution), or 2) skipping over regulatory concerns to do what amounts to illicit stuff, or 3) novelty and intellectual curiosity, which is nice, but not worth it.
+ The stated value of BTC which is to day 'hedge against debasement' unfortunately does not work. Currency is an essential thing for an economy, a 'super hard currency' (i.e. literally ever note backed by Gold) implies zero flexibility in the system and is guaranteed to cause serious strains on growth and/or very ugly deflationary spirals. And other problems.
What we want, ideally is 'very smart monetary policy' that enables us to move the levers as necessary for everyone's well-being. During the COVID crisis, we would be in serious trouble without monetary policy levers, the economic calamity would be much worse if we were all using BTC for example.
Obviously - having monetary policy, means a risk of debasement, such as we see in Venezuela, but Venezuela did not crash merely because of bad monetary policy - it was 'bad everything policy'. Venezuela faced economic collapse because every part of it's system was corrupted, including the Central Bank. There's a 100% chance, that even with a 'Gold Backed Currency' - that some entity in power will have had a chance to corrupt that system as well. For one - stealing the Gold.
+ Currency is a 'social contract'. It's a 'contract with the economy' and there is absolutely no getting away from the fact that it's somewhat intangible and fungible. $100USD basically means 'Americans owe you about this much'. That's it.
This notion that you can 'hold $10B in your pocket' is kind of myth - it's only even possible due to the complex mechanization of financial markets and the banking system.
You just can't sit on 'something' that's worth that much because there's far too going on in terms of comparative value - either that $10B represent assets that have to be managed, or, in a more long term store of value (like real-estate) whereupon even then the value will shift over time.
+ Some nice regulations to enable more fluid transfer of money would be nice. An instrument that was broadly backed by other things of value i.e. stocks, bonds, basked of currencies - and that which itself could be used as a 'global currency' would be nice as well. That could happen. But it may not have anything to do with blockchain.
+ Finally - Blockchain and decentralization - there's just no way getting around having to have trust in our institutions of various kinds. If they don't work, we all fall down. There's no magical way to wish that away and put trust in our pockets. Maybe better trust and transparency.
Finally: I should note there's a 'disruptive' value in BTC I think. It's a 'demonstrative' meme that can help use 'see' the relative value of blockchain etc. in various scenarios.
It is taxable in your hand as well as theirs. So any tax avoidance agenda makes the trade illegal.
So it is not like a bank transfer which is legit.
Obviously, it is "not like a bank transfer". Then again, that you personally have never seen anything like it, makes no difference in its actual legitimacy or usefulness as a medium of transaction.
If people thought a little beyond their personal use cases, they would understand the utility of Bitcoin/crypto for many others. The technology is a paradigm shift. The financial world is structured as it is because of its existing flaws. Bitcoin/crypto enables things that people don't know they need because they are now possible.