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A quick breakdown of what SWIFT is and why it matters

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Re: A quick breakdown of what SWIFT is and why it matters

#221

Post by errantmind »

dskloet wrote: post #218
errantmind wrote: post #207

Earlier quoted context omitted.

Bitcoin's Lightning Network scales just fine, but based on your comment it doesn't look like you are interested in how Bitcoin works, instead wanting to jump on a bandwagon.

Lighting doesn't work for large transactions, and isn't trustless for very small transactions. And lightning relies and being able to close channels so lighting security breaks when Bitcoin is congested.

You have pointed out a few caveats, but LN works well for the vast majority of transactions. What point are you trying to make?

Re: A quick breakdown of what SWIFT is and why it matters

#222

Post by [deleted] »

jancsika wrote: post #198

> A cutoff from SWIFT may also have longer-term second-order effects on Bitcoin and non-fiat currencies. And remember that Bitcoin has a fascinating property here-- the more demand there is for transactions on it, the better it gets at scaling for something approaching SWIFT level of transactions. Oh wait I'm thinking of Bittorrent's scaling wrt popular torrents. Yeah, Bitcoin's ability to scale is complete shit.

[deleted]

Re: A quick breakdown of what SWIFT is and why it matters

#223

Post by hurflmurfl »

ex3ndr wrote: post #103
hamilyon2 wrote: post #42

Russian citizens like me will be hit hardest, as usual. Large institutions and wealthy individuals will find another ways to transfer money. Costs of goods and services will rise.

Yeah I just lost my business banking and can't anymore get payments from the states. But, most Russians support war, I don't care about them and ok with small inconvenience.

I know this might be perceived as a flame-inviting response, but who are those "most Russians" that "support war". Even pretty patriotic people in my social circle don't support it. Now, of course, it might just be me and my circle, but the "majority supporting war" might also be someone's circle, and not really representative of reality. In any case, from what I see, most people are just afraid. Withdrawing cash, some stocking food. It's not like the west is watching a horror show, and the people in Russia are watching a comedy. Everyone's losing. I honestly don't know who's the winning party here.

I don't really care much about the state of Russia, and maybe, just maybe the sanctions will have some positive effect; just wanted to say that "most Russians support war" is a very shabby argument in support of approving of punishing "most Russians".

Re: A quick breakdown of what SWIFT is and why it matters

#224

Post by mohanmcgeek »

waterheater wrote: post #168
snovv_crash wrote: post #90

Earlier quoted context omitted.

Bit what if they didn't, and just changed some numbers in their database?

Then you have fraud, likely leading to an economic crisis. Consider the 2007-2008 financial crisis. Abstractly, investors believed that homes had significant value until, one day, society realized the value didn't exist in reality but only "on paper." We know that investment bankers were hiding the problem until the proverbial lid blew. You might consider that our current financial paradigm has never been tried befor…

> The end result is, one dollar now holds value relative to the amount of dollars in existence.

This idea of commodity money is far detached from how it actually works. Thread has several good links if you want to learn how it actually works.

What is the reason behind so many people believing this? Do they teach it like this at school? (This resurfaces everytime money is discussed here)

Re: A quick breakdown of what SWIFT is and why it matters

#225

Post by rowls66 »

dcolkitt wrote: post #104
TekMol wrote: post #26

I often wonder how money is stored. It can't be just a number on a computer in a bank, right? Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping.". So I guess USD needs to be recognized by the US somehow? Could the US simply "void" all USD that are owned by Russia?

Let's just talk about USD specifically. (Other currencies work pretty similar, just with different central banks.) The "single source of truth" is the Federal Reserve. Member banks (about 10,000 US domestic banks) can hold reserves directly at the Fed. Any reserve bank can directly transfer Fed reserves to another member bank or to the US Treasury using FedWire. The Fed "creates money" simply by crediting a member ba…

> In exchange for this regulation, deposits held at Chase or other member banks are treated as equivalent to Federal reserve dollars. That's because if for some reason, Chase is unable to pay back its depositors when they demand their money back, the Federal Reserve will "create money" to meet the obligations. This is essentially why bank runs no longer exist in modern banking.

This is not exactly true. Chase, like many other US banks, is regulated by the Fed, and deposits at Chase are insured by the FDIC (Federal Deposit Insurance Corporation). If Chase becomes insolvent, the FDIC will take over, pay depositors up to the FDIC insured maximum, and liquidate any Chase assets. The Fed is not required to do anything in such a situation.

The Fed may choose to conjure up some new money and loan that new money to Chase, and as Chase is a systemically important bank, the Fed might well do that before the FDIC steps in, but they are not required to.

Re: A quick breakdown of what SWIFT is and why it matters

#226

Post by morelisp »

dmingod666 wrote: post #161
stickfigure wrote: post #74

Earlier quoted context omitted.

That's because Hitler kept winning. He militarized the Rhineland in 1936, the allies did nothing. He took over Austria in 1938, the allies did nothing. He occupied Czechoslovakia later the same year, the allies did nothing. With every win, Hitler's popularity increased at home. He's reported to have been quite surprised when the allies finally declared war after Poland. We have a word for this: https://en.wikipedia.o…

Hitler didn't have nukes and super-sonic missiles -- you cant do to Russia what you would want to do to Hitler.. at least not without a very heavy price..

> Hitler didn't have nukes and super-sonic missiles

While relatively late in the war so it didn't have too much strategic impact, the Nazis literally invented the supersonic missile.

Re: A quick breakdown of what SWIFT is and why it matters

#227

Post by TeeWEE »

lxgr wrote: post #126
TekMol wrote: post #26

I often wonder how money is stored. It can't be just a number on a computer in a bank, right? Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping.". So I guess USD needs to be recognized by the US somehow? Could the US simply "void" all USD that are owned by Russia?

> It can't be just a number on a computer in a bank, right? It really is, but to answer your second question, it's important to consider *which* bank. There's reserves (i.e. balances of banks at the Federal Reserve) and bank deposits (which really are just numbers in banks' databases). Having an account at the former is effectively what makes numbers in the database of the latter "real USD". > Otherwise some Russian…

So reading this: Banks are basically a necessary "evil" to make the current money system work. When I read how banks works, their technology, and how money works in general.. It makes me think: Is this really the way we want it to work.

I'm not sure if crypto is currently ready. But one BIG reason for it to succeed, is that the current system is just old... We have all these fintech startups improving money flow, and transfer times, and easy of payment... But it seems like tech build upon tech. centralized startups/companies owning payment systems (Apple Pay, Stripe, Adyen).... Man, i'm going to buy some more ETH :p

Re: A quick breakdown of what SWIFT is and why it matters

#228

Post by imwillofficial »

krzyk wrote: post #196
imwillofficial wrote: post #131

Earlier quoted context omitted.

Yeah, China isn’t going to side with the US/EU, and the rest of the Asian countries are too small to matter, including Japan/Korea. In fact, China has stepped up their efforts to aid Russia. The next few weeks will be history in the making. Pay attention.

India are far from small, bu they did not condemn Russia.

Yeah I actually have no idea where India stands geopolitically and I had totally forgotten their considerable impact. I wonder how their government views these events?

Re: A quick breakdown of what SWIFT is and why it matters

#229

Post by mohanmcgeek »

snovv_crash wrote: post #90
mohanmcgeek wrote: post #46

Earlier quoted context omitted.

> Russian bank could just increase that number to whatever they like. Money is an IOU from the bank. So that's what all banks do. But they'll need assets on the right side of their balance sheet.

Bit what if they didn't, and just changed some numbers in their database?

Then the left side and the right side of their balance sheet will not add up to the same value

Re: A quick breakdown of what SWIFT is and why it matters

#230

Post by bally0241 »

MatteoFrigo wrote: post #35
TekMol wrote: post #26

I often wonder how money is stored. It can't be just a number on a computer in a bank, right? Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping.". So I guess USD needs to be recognized by the US somehow? Could the US simply "void" all USD that are owned by Russia?

> I often wonder how money is stored. The Bank of England published a summary of how modern banks work. See https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... > It can't be just a number on a computer in a bank, right? It can and it is, see the BOE paper. > So I guess USD needs to be recognized by the US somehow? This is a complicated question that will start a flamewar, but basically, any bank in the wo…

It's amazing to watch people who have never really thought about this before realize the entire banking system is built upon a handful of centralized, permissioned databases which can pretty much be turned on/off at will for certain parties by the central banks.

What is even more amazing is watching these same people (no necessarily you OP, but prevailing opinion on HN...) then go on an argue that a permission-less distributed ledger like Bitcoin is a completely unnecessary waste of resources.

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