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Bitcoin: the Stripe perspective

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Re: Bitcoin: the Stripe perspective

#221

Post by XorNot »

ncallaway wrote: post #185
XorNot wrote: post #183

Earlier quoted context omitted.

This is the exact same thing involved in Bitcoin funds transfer.

The article explicitly notes that PayPal is offering a very similar service. They argue that the open nature of Bitcoin is a competitive advantage to the network in the long run. From the article: "This would not, of course, be the first global payments network. One obvious comparison is with PayPal. The fundamental advantage a Bitcoin gateway ecosystem has over PayPal is that it’s open".

Transacting in US dollars accomplishes the same thing, with far less volatility. In fact, transacting in any commonly exchanged currency does (US is the global reserve for this reason - you can exchange US dollars for any currency on the planet - notably Chinese currency - easily).

Moreover, there's no benefit here: dealing with separate Bitcoin services removes any end-user guarantees. If I send money from Australia to England, Paypal Australia has to deal with the Australian government and the British government to obey consumer law. With a Bitcoin exchanger, once the BTC is transferred you're at the mercy of whatever local exchanger you use at the destination.

Paypal wants to stay in both countries, which means there's an end-to-end legal protection for both parties.

The open-nature of Bitcoin is irrelevant. The USD is pretty damn open.

Re: Bitcoin: the Stripe perspective

#222

Post by sida »

ncallaway wrote: post #185
XorNot wrote: post #183

Earlier quoted context omitted.

This is the exact same thing involved in Bitcoin funds transfer.

The article explicitly notes that PayPal is offering a very similar service. They argue that the open nature of Bitcoin is a competitive advantage to the network in the long run. From the article: "This would not, of course, be the first global payments network. One obvious comparison is with PayPal. The fundamental advantage a Bitcoin gateway ecosystem has over PayPal is that it’s open".

I can't reply the comment below so I will reply to this one.

XorNot: Please correct me if I am wrong.

USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the central bank actually debits and credits the banks. And then several times a day the banks will settle with each other and net out the differences.

But this is not possible internationally, that means banks must each other have direct bank relationship and have an account with each other. And if 2 banks don't have direct relationship, then they have to go through intermediary banks which they do have a relationship.

Enters Bitcoin, what bitcoin provides is not a reserve currency, what it provides in this context is a global ledger. Instead of the Commonwealth bank of Australia (CBA) needing to have a direct account relationship with Wells Fargo (WF) bank. CBA can just simply send bitcoin to WF.

There is a bit more about the underlying transfers here: http://gendal.wordpress.com/2013/11/24/a-simple-explanation-...

Although here is my question:

Why doesn't international transfers just go through the VISA network. The VISA network is essentially the global central bank

Re: Bitcoin: the Stripe perspective

#223

Post by pantaril »

Cyther606 wrote: post #65
IgorPartola wrote: post #13

Earlier quoted context omitted.

Agreed. The more I think about BTC, the more I understand that the exchange protocol is the most useful part of it. Storing value in an encrypted wallet on your computer is inconvenient to say the least. Not that I want local storage of value to go away, but as a consumer I want a very different payment experience than "here, have my CC number" or "let me pay with PayPal".

Satoshi wrote in the genesis block: The Times 03/Jan/ 2009 Chancellor on brink of second bailout for banks Bitcoin was released in staunch opposition to the banking system. > Storing value in an encrypted wallet on your computer is inconvenient to say the least It's possible to store Bitcoin on sheets of paper, or entirely in your brain, safely and securely. I get the distinct feeling you've never used Bitcoin before…

>Bitcoin was released in staunch opposition to the banking system.

No, i think that quote makes it clear that bitcoin was released in staunch opposition to centralized currency, where some authority (central bank) can issue new units of currency at will and devalue the currency for everyone.

Re: Bitcoin: the Stripe perspective

#224

Post by gendal »

sida wrote: post #222
ncallaway wrote: post #185

Earlier quoted context omitted.

The article explicitly notes that PayPal is offering a very similar service. They argue that the open nature of Bitcoin is a competitive advantage to the network in the long run. From the article: "This would not, of course, be the first global payments network. One obvious comparison is with PayPal. The fundamental advantage a Bitcoin gateway ecosystem has over PayPal is that it’s open".

I can't reply the comment below so I will reply to this one. XorNot: Please correct me if I am wrong. USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the cent…

Remember that many (most?) recipients of international remittances don't have bank accounts or access to payment cards. Hence why Western Union et al have to maintain extensive agent networks.

As for visa, I wrote about it recently here: http://gendal.wordpress.com/2014/07/05/why-the-payment-card-...

The thing to remember is that Visa authorisations are done in near real-time but settlement between issuers, Visa, acquirers and on to merchants is done over the normal banking system, as far as I know.

Re: Bitcoin: the Stripe perspective

#225

Post by sida »

gendal wrote: post #224
sida wrote: post #222

Earlier quoted context omitted.

I can't reply the comment below so I will reply to this one. XorNot: Please correct me if I am wrong. USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the cent…

Remember that many (most?) recipients of international remittances don't have bank accounts or access to payment cards. Hence why Western Union et al have to maintain extensive agent networks. As for visa, I wrote about it recently here: http://gendal.wordpress.com/2014/07/05/why-the-payment-card-... The thing to remember is that Visa authorisations are done in near real-time but settlement between issuers, Visa, acq…

Does it mean that even if it goes through the VISA network. Actual settlements still have to hop through layers of peering banks?

Do you see an advantage for bitcoin then by removing the need of peering banks?

Re: Bitcoin: the Stripe perspective

#226

Post by XorNot »

sida wrote: post #222
ncallaway wrote: post #185

Earlier quoted context omitted.

The article explicitly notes that PayPal is offering a very similar service. They argue that the open nature of Bitcoin is a competitive advantage to the network in the long run. From the article: "This would not, of course, be the first global payments network. One obvious comparison is with PayPal. The fundamental advantage a Bitcoin gateway ecosystem has over PayPal is that it’s open".

I can't reply the comment below so I will reply to this one. XorNot: Please correct me if I am wrong. USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the cent…

Internationally banks simply have to be able to acquire sufficient foreign currency holdings. Which is trivially easy because every competent reserve bank on the planet has enormous foreign currency holdings.

But this is all irrelevant to Bitcoin - which is marketed by its advocates a consumer currency, not an international system of exchange between institutions. Institutions have no need nor desire for such a thing - it is a saturated marketplace, with literally thousands of avenues of exchange, of which Bitcoin is a particularly poor one.

Which circles back to my original point: foreign currency transactions are very simple for anyone ranging from consumers to medium or large size businesses, barring tax issues (like not paying a lot of it). Bitcoin does not solve a problem not already solved for centuries by the banking system - this is literally the thing that got it started way back with the Knights Templar.

Re: Bitcoin: the Stripe perspective

#227

Post by gendal »

sida wrote: post #225
gendal wrote: post #224

Earlier quoted context omitted.

Remember that many (most?) recipients of international remittances don't have bank accounts or access to payment cards. Hence why Western Union et al have to maintain extensive agent networks. As for visa, I wrote about it recently here: http://gendal.wordpress.com/2014/07/05/why-the-payment-card-... The thing to remember is that Visa authorisations are done in near real-time but settlement between issuers, Visa, acq…

Does it mean that even if it goes through the VISA network. Actual settlements still have to hop through layers of peering banks? Do you see an advantage for bitcoin then by removing the need of peering banks?

I don't know enough about Visa's design to comment authoritatively - but my working assumption is payments from issuing to acquiring banks in-country are done net and through visa - i.e. one net payment per issuer into visa and one net payment out to acquirer. e.g. see the last page of this doc: https://usa.visa.com/download/merchants/visa-core-principles...

What isn't obvious to me is what happens in international scenarios - you ask a great question.

[EDIT] - Actually - here's your answer.... See section 2.3.3 of this doc: http://www.bis.org/publ/cpss53p16.pdf

Re: Bitcoin: the Stripe perspective

#228

Post by sanderjd »

Cyther606 wrote: post #206
sanderjd wrote: post #205

Earlier quoted context omitted.

We disagree. Bitcoin (or other cryptocurrencies) can be safely transferred across large distances more easily than existing currency. It will be a good thing when governments figure out how to regulate it (and I think they will, eventually).

Except NY already figured that part out. In fact, they recently presented their regulatory framework for public review. It involves shutting down Bitcoin as we know it, and replacing it with something in which - every single wallet provider, including makers of open source wallets like Bitcoin-QT, in addition to Bitcoin exchanges and banks, are legally considered "Virtual Currency Businesses" - each customer of a "Vi…

Points taken! That does sound awful. I want to have my cake and eat it too. I want regulations, but "good" ones, where "good" is defined in some vague and totally subjective way.

Re: Bitcoin: the Stripe perspective

#229

Post by sida »

XorNot wrote: post #226
sida wrote: post #222

Earlier quoted context omitted.

I can't reply the comment below so I will reply to this one. XorNot: Please correct me if I am wrong. USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the cent…

Internationally banks simply have to be able to acquire sufficient foreign currency holdings. Which is trivially easy because every competent reserve bank on the planet has enormous foreign currency holdings. But this is all irrelevant to Bitcoin - which is marketed by its advocates a consumer currency, not an international system of exchange between institutions. Institutions have no need nor desire for such a thing…

I have a feeling that international remittance is not as simple acquiring FOREX reserves. Often times you see international transfers from an Australian bank to a US bank taking 4 hops in between over peering banks. The process is complex.

Because unlike domestic transfer where the central bank helps keep a ledger between banks, there is no "global ledger" internationally. So banks have to resort to "correspondant banking" which is why you see so many hops in international transfers.

Bitcoin provides such global ledger. I don't think FOREX is the issue here.

Instead of going through correspondent banking (many hops), 2 banks can simply send bitcoin to each other and immediately net off.

Could you clarify if my understanding is incorrect?

EDIT: Here is a document on how VISA handles international payments

http://www.bis.org/publ/cpss53p16.pdf

2.3.3 Clearing and settlement procedures ... Settlement is not carried out through Base II; Visa merely provides the data to allow settlement to be carried out. For settlement in US dollars, Chase Manhattan Bank, New York, acts as the settlement bank. For multicurrency settlement, Chase Manhattan Bank, London, acts as the settlement bank. All members may hold their own settlement account with any other financial institution, such that all requests for funds or payments are ultimately settled through the correspondent services of domestic clearing and settlement systems. ...

Re: Bitcoin: the Stripe perspective

#230

Post by mrb »

sanswork wrote: post #220
mrb wrote: post #207

Earlier quoted context omitted.

"big banks charge only cents to send large amounts of cash internationally" This is utterly false. The entire reason the remittance industry exists (Western Union, etc) is because banks don't offer cheap ways of sending money internationally, and/or recipients often don't even have bank accounts. In fact, remittance fees are so high[1] that this is precisely why many analysts see Bitcoin's potential to disrupt this i…

You missed out on the word large. Remittances are generally very small. Also the cost of remittances isn't in moving the money it's in having lots of people in the destination country that your family can go to and get cash from. There is no indication that bitcoin would make that cheaper.

The most blatant way Bitcoin can make remittances cheaper is if the recipient can directly spend the bitcoins. So no more Western Union = no middle man pocketing remittance fees!
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