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MasterCard to open up network to cryptocurrencies

reuters.com

411–420 of 910 posts

Re: MasterCard to open up network to cryptocurrencies

#411

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It's sad that this aspect of the conversation so often gets replaced by everything else. This is (IMO) the most important point about digital currency - the promise of providing consumers in unstable economies the chance to convert to a more stable currency without government intrusion. We're still not there, but that should be the north star for crypto (again, in my opinion).

Say everyone in an unstable economy were paid in usd. If that country has foreign deficit, if that country has high government debt. What happens? How can the government keep paying its own employees? How does it pay retiree checks? How does it subsidize farming when needed? As long as a country cannot print usd itself, this is a fast shortcut to unemployment, hunger, etc... Strong currencies are not the solution to…

> Strong currencies are not the solution to poor governance. Good governance and democracy makes a country and its currency strong. Not vice versa.

That's a good point. Too many people propose individualist solutions to social problems, and all their "solution" would do is make the social problem worse.

I think that stems often stems from an overzealous faith in free markets, which leads to a distorted idea that individual self interest factored over all of society always results in social benefits, so you only need to consider things from the perspective of an individual (which is also far more familiar to most people). Sometimes individual self interest does lead to social benefits, but often it doesn't.

Re: MasterCard to open up network to cryptocurrencies

#412

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The price volatility is way more expensive than transaction cost, if you have billions of dollars.

It's usually in your favour tho. Anyways, there are plenty of stablecoins if that's your thing and you can use Bitcoin (the network) for the rails only.

I don’t think I’d be making decisions on risk for BILLIONS of dollars based on something “usually” being in my favor.

Also, stablecoins staying “stable” is a huge risk you are taking on if you use them.

Again, if you have billions of dollars, you are going to be doing a lot more risk analysis and want a lot less uncertainty than you are going to get with any sort of cryptocurrency that exists today.

Re: MasterCard to open up network to cryptocurrencies

#413

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Full disclosure: I own about $11 worth of bitcoin if I round up a bit, so this might be biased. The most convincing "point" of bitcoin I've heard is to accomodate transfer of large sums of money across borders, quickly, with minimal transaction costs and oversight. Everyone here can afford the fee to transact 8 billion dollars worth of bitcoin. And settlement happens in seconds to a couple minutes. That's appealing t…

Yeah, sure settlement in Bitcoin happens within a few minutes. Getting that converted into usable money is a whole other story, no? I can basically think of two scenario types when you are in need of international, spontaneous money transfer: a) "I just got carjacked in Sierra Leone and need some money for an hotel and a flight home" b) "I have some weird novel business and I would like to pay my contractors in East…

> Go off-grid for two weeks and there is a non trivial chance that some weird shit happened within crypto that is now an obstacle

For people in countries with a more stable economy/currency, this is very true. Even in countries with a bigger inflation, things are a bit more predictable.

But of course, different countries/economies/currencies have different realities.

Re: MasterCard to open up network to cryptocurrencies

#415

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Not when selling or buying crypto.

Not true.

Holla, it is indeed not true. According to the fees section here, they changed it a month ago and added fees on top of the spread:

https://www.paypal.com/us/smarthelp/article/cryptocurrency-o...

Re: MasterCard to open up network to cryptocurrencies

#416

Earlier quoted context omitted.

Full disclosure: I own about $11 worth of bitcoin if I round up a bit, so this might be biased. The most convincing "point" of bitcoin I've heard is to accomodate transfer of large sums of money across borders, quickly, with minimal transaction costs and oversight. Everyone here can afford the fee to transact 8 billion dollars worth of bitcoin. And settlement happens in seconds to a couple minutes. That's appealing t…

> And settlement happens in seconds to a couple minutes That is incorrect. On average it takes 10 minutes to mine a block, but you have to submit the transaction to be included in the block, so > 10 minutes before it appears on the blockchain. However, there are actually many block chains, as miners creates block in parallel, it’s the longest one that is the “official”, but the minute you see your transaction in a bl…

I live and work in the US, but originally I'm from Croatia. I wire money every month to my family back there.

It takes 5 work days for the wire to fully clear. Since 5 days is a full work week, it almost always bleeds over to the weekend and in reality takes 7 days.

BTC might still be a terrible system for international transactions but it's still 168 times faster than the one that exists now.

Re: MasterCard to open up network to cryptocurrencies

#417

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Your view must be skewed by privilege of having stable currency. Currency of my country lost 250% of its value over last 7 years. It's not bitcoin-level volatile, but close to it. Thankfully I have an option to use USD to hoard money, but that option is not something that's given, in many countries you just can't exchange for fair price. I agree that for someone living in US or EU there's no much point using BTC.

It's sad that this aspect of the conversation so often gets replaced by everything else. This is (IMO) the most important point about digital currency - the promise of providing consumers in unstable economies the chance to convert to a more stable currency without government intrusion. We're still not there, but that should be the north star for crypto (again, in my opinion).

But none of that requires cryptocurrencies in their current form.

You’re talking about a supranational currency, and I have sincere doubts that grifters of all sorts would not try to take over and manipulate such a currency, as they have for bitcoin.

The governance is more important than the tech IMO.

Re: MasterCard to open up network to cryptocurrencies

#418
post #355

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> If 25% of circulating USD were created last year, and our economic value is the same or even diminished, wouldn't it follow that there must be significant inflation? Not necessarily, no. The value of money is a function of supply and velocity. If the velocity went down and the supply went up 25% the fed can still nail its 2% target. [1, 2, 3] If the velocity increases next year the fed can shrink the supply commens…

That's very interesting I was not familiar with the concept of velocity. It still seems to me that velocity can vary depending on the underlying entity. So unless every asset has the same velocity measure as the items in the CPI basket, it seems that there has to be some amount of inflation somewhere like possibly US equities.

The idea of velocity is pretty simple. If you print a $1T coin and hand it to me, then I throw it in a safe and forget the code, did the increase in supply cause any material increase in inflation experienced at the point of sale by the average person? Probably not. The supply went up, but the average velocity went down commensurately.

How this interacts with assets is in my opinion not super clear. Pricing of assets is supply and demand, unlike the CPI basket. The CPI basket is based on human need. There's no human need for AAPL shares. However, there's a ton of stimulus money, and folks who remember 2008's V-shaped recovery, and a bunch of people stuck at home day trading. I think that's much more likely to be driving asset prices than supply. After all supply is enacted by changing lending parameters.

To the extent asset prices don't put pressure on CPI, they reflect an increase in welfare, not an increase in inflation.

Re: MasterCard to open up network to cryptocurrencies

#419
post #193

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Bitcoin is used as a speculative instrument because by definition it is deflationary. Which means it is more expensive to buy something with it today, then tomorrow. Just look at Chamath's tweet about how he bought a property for Bitcoin in 2014 for $1.4MM but today that same amount of bitcoin would be $100MM+ https://markets.businessinsider.com/currencies/news/chamath-... This creates an environment there is never a…

And this can go on until GDP is forced to shrink because people and businesses are all hoarding crypto tokens instead of participating in the real economy. This happened almost a hundred years ago when the world got too excited about gold. It' scary to think it could happen again with cryptocoins.

What historical period are you referring to? If you look at the first 200 years of US history, for example, there was plenty of real world growth on spite of slow price deflation. Gold and silver jointly backed the banking system until the Federal reserve started the current USD system in 1913.

In much of the rest of the world, the 40 years prior to WW1 were largely characterized by economic growth, while on an international (albeit decentralized on a national level) gold standard.

What event are you thinking if?

Re: MasterCard to open up network to cryptocurrencies

#420
post #77

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It's not any different than precious metal ETFs.

It is a similar dynamic, but I would be more inclined to trust the ETF. 1) For the metals ETFs I know about, the underlying is held by a bank which is a separate legal vehicle to the ETF. Since the ETF and the bank are both publicly-listed firms, their full-reserve commitments would be regularly audited to a high standard. 2) Brokers participate in risky activity that is unrelated to digital asset trading. This seems…

For a view on what this looks like from a legal standpoint check out the MtGox collapse https://en.wikipedia.org/wiki/Mt._Gox
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