21–30 of 216 posts
What does this mean for systems like Facebook Credits?
I don't think $500k is much of a barrier to them getting into this business however...
Here goes one more reason to use Bitcoin, that's where the real innovation is.
Earlier quoted context omitted.
If they wanted companies to be licensed they could just require a license. Instead they require a license and a bond worth millions of dollars in some cases, nominally to protect consumers. Yet if you have a million consumers in a state and a $1,000,000 bond, that means that if the company defaults, each consumer gets back a dollar. This doesn't sound like consumer protection to me. It sounds like an artificial barri…
Well, there is a (flawed) line of reasoning that says that if you can come up with $1M then you must be more trustworthy than someone that can't.
Earlier quoted context omitted.
Credit and debit cards are issued by banks and banks are exempt from money transmission laws. This is why you see most startups gravitating toward niche markets that revolve around the existing infrastructure, but those niches are becoming awfully narrow. In contrast, I contend that the system itself is flawed and needs to be replaced.
Ah, thank you for explaining that to me. I some how missed that from reading the link. Though, it was quite verbose and I am, admittedly, partially into a celebratory post-coding-session bottle of wine. I agree. The system most definitely appears to be flawed. Isn't Paypal forced to operate as a bank in Europe as opposed to the way they exist in the U.S.?
Note that banking in Europe is in part regulated by national law of the member states. To operate as a bank in Germany, you need not only 0,5-5 million € as starting capital (depending on the type of financial transactions you are getting into), but you also need two reliable* executive managers who have at least three years experience leading a bank of the intended size (or similar experience).
Thus, the barrier to entry is rather high in Europe, too. But after that, if you get big enough, the tax payers will pay all your bills, like in the US.
* no criminal record and no other facts known that would cast doubt on their trustworthiness.
They want companies that operate like banks, such as PayPal, to be licensed. I'm not sure I see the downside. PayPal has a shocking record of abusing it's customers, and it can only do so because it isn't bound by the same laws as banks are. Personally, I think if you rely on PayPal/etc for your business, you're asking to get financially raped.
This is nothing but downside as it relates to innovation in the payments space. These companies like their business models and don't care for it to be disrupted. They love regulations at this point.
Earlier quoted context omitted.
If they wanted companies to be licensed they could just require a license. Instead they require a license and a bond worth millions of dollars in some cases, nominally to protect consumers. Yet if you have a million consumers in a state and a $1,000,000 bond, that means that if the company defaults, each consumer gets back a dollar. This doesn't sound like consumer protection to me. It sounds like an artificial barri…
Well, there is a (flawed) line of reasoning that says that if you can come up with $1M then you must be more trustworthy than someone that can't.
Would you elaborate?
Here goes one more reason to use Bitcoin, that's where the real innovation is.
Bitcoin is operating in a legally very grey area, you can bet your bottom-dollar that as soon as they get real traction laws like this are going to come down on the ecosystem extremely fast.
Earlier quoted context omitted.
Well, there is a (flawed) line of reasoning that says that if you can come up with $1M then you must be more trustworthy than someone that can't.
I don't think it's that flawed. Would you elaborate?
In the interest of correctness I should point out that the half a million fee is not a fee but a bond. The state does not take it but it is kept in a trust for people that may be injured by the particular money transmission business that gets a license. Thus, if a money transmission business steals someone's money you can sue them and when you win you can take your money from the 500,000 bond so you are sure they wil…
It can be a bond or a cash payment, but either way, the money is locked up and not available to use for operations, or gone.