Visa and Mastercard have surged over the past two decades, reaching a combined $1 trillion market cap. That has attracted unwanted attention from regulators.
Christ…this needed to be major news a year ago. We really need to get banks out of the payment business but fear that they are pulling an Intuit and will make the FedNow system more challenging to use down the road.
FedNow still relies on banks. The only way we can truly get the commerical banks and financial institutions out of the picture is with cryptocurrency (lol) or a CBDC (central bank digital currency). In short, a CBDC would operate like a Government-run Cash App or PayPal and the balance in a CBDC wallet holds the same status as paper money and is legal tender.
I believe that CBDCs are entirely necessary for a digital future. For the everyday citizen, the only form of “cash”, as in “Government-issued legal money”, is paper banknotes and pieces of coinage. This is wholly insufficient for a system where an increasing amount of business is conducted digitally, and all it does is invite middlemen like Visa to insert themselves like a leech and take profit off every transaction. Banks and financial institutions already have digital cash; account balances at the Federal Reserve are as good as cash to banks as far as the law is concerned, but the everyday layman can’t just go into the Federal Reserve and ask to open an account.
This is exactly that CBDCs will solve. Anyone can hold real money (not just a promise to pay money) in a digital format and exchange it peer-to-peer or use it to conduct business free of fees and middlemen.
The only problem is that conservatives in America think that they can’t trust the Government, so it’s better to trust for-profit financial institutions instead. After all, the banks have never fucked it up before, right?
No need for crypto, there are plans on deck for a postal banking system that already include debit card service (and a government union for the workers who have to maintain the infrastructure). That’s pretty much the end of the credit card mafia if it comes to pass.
And credit unions offer accounts with lower fees and higher interest rates than commercial banks, whose only advantages are having more branch offices, ATMs, and a bigger marketing budget.
Postal banking solves this deficit by making every post office a branch of the national credit union.
Obviously my nation! Lol. That’s a good point they would have to break it off and ban the other arms from coming back to the US and using the same name I guess.
Couldn’t tell if this was a joke about the number of cryptocurrencies that exist… But in case it was, we already do have dozens of “fake currencies.” In fact, there are people who make a career through arbitrage between these currencies.
I can understand if you want to call any kind of Fiat currency “fake money” - doesn’t mean I think it should be abandoned in favor of some arbitrary metal or whatever, but I can understand it.
That said, any kind of currency works when it’s standardized. Obviously it will be regionalized by country or whatever. Making up multiple cryptocurrencies as alternatives to what we have now slides us in the direction of a barter system (“I don’t take Bitcoin, you’ll have to get that converted to Ethereum. Oh, BTC is down against that? Sucks to suck!”)
And let’s say the cryptobros get their way and we end up with (whatever crypto you choose) as a standard currency for the country/world/universe. Who would benefit most from that, and why should they? The way I see it, the early adopters would live like kings and if you didn’t gamble on the right crypto early, you better hope you can get something for your assets, including the cash of today.
Because electronic payments that do not require a middleman are inherently better than funneling everything through centralized organizations like Visa. They could make their own dollar based blockchain that has secure and private transactions based on their own stablecoin. It would be the same as a cash payment.
Again, why would the government waste real money doing that with fake money, when they can do it with real money instead? What benefit is there, over just being a regular processor for real money? Because it’s definitely not the inability to reverse transactions in blockchain systems, that’s more of a feature for criminals.
I have a very strong feeling that @[email protected] is being downvoted here, not because they make a bad point, but because they phrased it in terms of cryptocurrency which immediately triggers negative reactions from everyone.
What OP has proposed is neither novel, nor a terrible idea. In fact, economists call it a central bank digital currency. And yes, some countries have adopted it. It’s usually not run with a blockchain, but that’s because if you have a trusted central entity to run the system, that being the central bank, a blockchain is inferior in practically every aspect to a normal relational database. That’s why all current CBDCs still use fairly traditional accounting systems.
Your use, however, of the terms “real money” and “fake money” has, I believe, the effect of shutting down intelligent conversation, rather than encouraging it. “Money” is a social construct. “Real money” is whatever the Government declares to be “real” and that the population is willing to use. It doesn’t need to be physical money. And it is unquestionable that in the countries that have adopted the legal framework that allows their central banks to issue CBDCs, the money so issued this way is as real and legally equivalent to paper banknotes and metal coins.
I struggle with the idea that “real money”, even as crypto, needs to be centralized and easily tracked. It’s not just about crime, it’s about privacy. The federal reserve doesn’t need to know the movements of every single individual. If I lend you $10, and you don’t pay me back, it’s both embarrassing for me and embarrassing for you, but we’re good friends and this is just between us. Maybe you could provide that sort of anonymity on a relational database, but it doesn’t have to be centralized. The blockchain tech gets faster and faster and not everyone has to be a full node, they could just run it at banks, maybe even with a bridge to other systems.
Anyway, I understand where people are coming from, blockchain was ruined by cryptobros and scammers. It’s not an inherently evil idea, it may be inadequate in speed as compared to Visa, but the idea that I could take the middleman out of any business while still having common listings, and make it a conversation between a supplier and consumer is fundamentally good. We do not need Sabre or Expedia taking 15% of every hotel or airline booking. We do need Uber’s secret pricing on rideshares. Very little value is added by middlemen in those transactions, where, in the end, the reputation of the provider is paramount- and yes, things can be set up so that provider can be vetted by third parties. The promise of blockchain is not NFTs, it’s freedom to do business in a different way, and some of the limiting factors holding it back are the lack of clear regulations for the industry, and a trusted stablecoin network.
The highest level of anonymity is perfect anonymity, where it is literally impossible to prove a transaction occurred or know anything about that transaction without being a party to that transaction. Some private cryptocurrencies are truly perfectly anonymous because it’s cryptographically infeasible to determine who paid whom and how much was paid without being a party to that transaction. Metal coins are generally perfectly anonymous. Paper money is nearly perfectly anonymous. They still have serial numbers that can be traced. It is easy to make arguments that perfect anonymity is undesirable because the drawbacks of allowing criminals, terrorist organisations, or sanctioned states to transact freely and in complete secrecy outweigh the privacy benefits to normal people compared to what they enjoy with lower levels of anonymity. I am not here to make an argument about this.
The next-highest level is what I will call “legal anonymity”, where knowledge of transaction details is tightly restricted by law. If you think of Swiss bank secrecy laws, this is close to what I mean. A CBDC can operate at this level of anonymity. The central bank would still theoretically know all details of all transactions, but the use of this information would be legally restricted and cannot be used for mass surveillance. However, the information is still retrievable by means of some defined legal process, such as a court subpoena or specific search warrant.
The level below that is what I will call “discretionary anonymity”. This is where a third party knows all the transaction details, and the restrictions on what they can do with this information are either weak or non-existent. Hence, your privacy is at the discretion of whoever holds this information. This form of privacy is weak compared to the other forms but a large portion of the population still finds this level of anonymity to be acceptable for everyday transactions. Bank transactions in the USA are discretionarily private. The bank can use and exploit the transaction data it knows with relatively few legal restrictions.
The final level is pseudo-anonymity, where transaction data is publicly accessible, but some information (such as the exact names of the payor and payee) is not provided. Bitcoin and most other cryptocurrencies are pseudo-anonymous.
Actually, that is a decent point in this idea’s favor. Don’t think that’ll overcome the downsides, but I’ll give you a point for that one all the same.
if the government was to do their own crypto it could do a lot to disrupt the current unregulated “stablecoins” that currently exist, i could see it happing if for no other reason than to fight money laundering. If the fed is doing it, it becomes “real” money and most people would probably prefer a fed coin to something like usdt.
I have the most incredible news for you about this crazy new thing called… cash.
More seriously, there’s no reason government bodies shouldn’t just create a central digital transaction system with real money, instead of pouring resources into the stupidity of a blockchain system. Save everyone a lot of trouble and wasted compute cycles and just make the source of trust in the system the fact that it’s administrated by a trusted central authority running a database, instead of the various shell game wank of blockchain systems.
The whole reason the shell game wank is an attractive prospect in the first place is a question of who watches the watchmen. If your trusted central authority gets compromised, will you know? And if you know, will you be able to do anything about it?
I don’t exactly think that cryptocoin is the best solution in this regard, but I can at least respect the attitude behind how it came to be.
The counterpoint being that a centralized organization introduces checks, balances, and recovery methods for some losses. If your credit card gets stolen and charged or your bank suddenly becomes insolvent, you have a significant chance that your money will be able to be recovered. Compare that to cryptocurrency, where your wallet information being compromised or a crypto exchange you have assets in going under leaves you at a complete loss and entirely devoid of recourse.
Centralized systems have many issues, obviously, as Visa seems to be on an endless crusade to make everyone supremely aware of, but at the same time cryptocurrency being an alternative doesn’t make it a valuable or viable alternative.
Corporations like Mt Gox and FTX are not blockchains, they are companies that use blockchains.
People keeping their money with them were willingly giving up ownership over their crypto, deliberately sacrificing the benefits they would have gotten by keeping it on-chain
I get criticizing crypto, but I get a bit miffed when I see people directly conflating blockchains as a technology and private corporations that use said technology, and use one’s actions to criticize the non-failings of the other.
Well then I suppose this begs the question of why so many would give up ownership of their crypto and sacrifice the benefits they would have had keeping it on-chain in order to let FTX and Gox take it. It seems like there’s a piece of the puzzle missing here that I suspect points to a flaw in the system.
At least from my past experience observing the media sphere and demographics regarding crypto, it tends to just be newbies that are investing primarily due to the seeking of gains, but not for any sort of ideological reason, as opposed to the people who initially invested in crypto for its other freedom-preserving qualities.
For instance, I had originally mined some Bitcoin years and years ago when I initially just thought the concept of a stateless, distributed-control monetary unit was an interesting concept. I held that bitcoin in a non-custodial (i.e. not on an exchange/company) wallet, because I believed in the actual values prescribed to Bitcoin at the time.
Later, when my father wanted to try investing in crypto because he also thought it was interesting, he invested through an exchange, but refused to withdraw his money because he wasn’t that interested. It was just general intrigue, but not enough to overcome his apathy.
In the Mt Gox days, it was just so early, and Bitcoin was generally so new as a concept, that people didn’t understand the point of self-custody as much. With FTX, it was the masses who downloaded their app simply because they saw it during the Super Bowl and wanted to give it a shot as an investment vehicle, but not because they had any clue what the original values were underpinning the technology.
The people putting their money in the hands of these companies never cared about the ideological reasons for holding crypto (which I believe have now been totally overtaken by greed and wealthy VC firms), they just wanted to see if they could be the next person to get rich.
In my eyes, that’s an ideology problem, not a problem with the technology, but I do see how we could very well disagree on this.
Visa should be nationalized. Let the government run the payment processing if we are only going to have only one.
Check out FedNow. Basically a domestic government run payment system. Still pretty new and growing.
Christ…this needed to be major news a year ago. We really need to get banks out of the payment business but fear that they are pulling an Intuit and will make the FedNow system more challenging to use down the road.
FedNow still relies on banks. The only way we can truly get the commerical banks and financial institutions out of the picture is with cryptocurrency (lol) or a CBDC (central bank digital currency). In short, a CBDC would operate like a Government-run Cash App or PayPal and the balance in a CBDC wallet holds the same status as paper money and is legal tender.
I believe that CBDCs are entirely necessary for a digital future. For the everyday citizen, the only form of “cash”, as in “Government-issued legal money”, is paper banknotes and pieces of coinage. This is wholly insufficient for a system where an increasing amount of business is conducted digitally, and all it does is invite middlemen like Visa to insert themselves like a leech and take profit off every transaction. Banks and financial institutions already have digital cash; account balances at the Federal Reserve are as good as cash to banks as far as the law is concerned, but the everyday layman can’t just go into the Federal Reserve and ask to open an account.
This is exactly that CBDCs will solve. Anyone can hold real money (not just a promise to pay money) in a digital format and exchange it peer-to-peer or use it to conduct business free of fees and middlemen.
The only problem is that conservatives in America think that they can’t trust the Government, so it’s better to trust for-profit financial institutions instead. After all, the banks have never fucked it up before, right?
No need for crypto, there are plans on deck for a postal banking system that already include debit card service (and a government union for the workers who have to maintain the infrastructure). That’s pretty much the end of the credit card mafia if it comes to pass.
What is this service?
I really doubt it will be as revolutionary as you claim.
What service? Debit cards for postal banking accounts?
It absolutely would be because for-profit banks would have to compete with non-profit government services…
What country is this?
In the US, we have credit unions. Credit unions are member-owned not-for-profit financial institutions that offer the same services as banks.
And credit unions offer accounts with lower fees and higher interest rates than commercial banks, whose only advantages are having more branch offices, ATMs, and a bigger marketing budget.
Postal banking solves this deficit by making every post office a branch of the national credit union.
By which nation? It operates pretty much everywhere.
Obviously my nation! Lol. That’s a good point they would have to break it off and ban the other arms from coming back to the US and using the same name I guess.
All of them
I’m
Ah fuck! Did VISA get you?
I’d love to see the federal reserve issue a no fee stablecoin, though I wonder if it would be secure in the long term with quantum coming.
Why would the government put time into making fake money when they can just make more real money?
Our money is already “fake money”
You know what would make it better? If we had dozens of them!
Couldn’t tell if this was a joke about the number of cryptocurrencies that exist… But in case it was, we already do have dozens of “fake currencies.” In fact, there are people who make a career through arbitrage between these currencies.
I can understand if you want to call any kind of Fiat currency “fake money” - doesn’t mean I think it should be abandoned in favor of some arbitrary metal or whatever, but I can understand it.
That said, any kind of currency works when it’s standardized. Obviously it will be regionalized by country or whatever. Making up multiple cryptocurrencies as alternatives to what we have now slides us in the direction of a barter system (“I don’t take Bitcoin, you’ll have to get that converted to Ethereum. Oh, BTC is down against that? Sucks to suck!”)
And let’s say the cryptobros get their way and we end up with (whatever crypto you choose) as a standard currency for the country/world/universe. Who would benefit most from that, and why should they? The way I see it, the early adopters would live like kings and if you didn’t gamble on the right crypto early, you better hope you can get something for your assets, including the cash of today.
Nah it’s been invented, but working for many decades without all the crypto shit
Because electronic payments that do not require a middleman are inherently better than funneling everything through centralized organizations like Visa. They could make their own dollar based blockchain that has secure and private transactions based on their own stablecoin. It would be the same as a cash payment.
Again, why would the government waste real money doing that with fake money, when they can do it with real money instead? What benefit is there, over just being a regular processor for real money? Because it’s definitely not the inability to reverse transactions in blockchain systems, that’s more of a feature for criminals.
I have a very strong feeling that @[email protected] is being downvoted here, not because they make a bad point, but because they phrased it in terms of cryptocurrency which immediately triggers negative reactions from everyone.
What OP has proposed is neither novel, nor a terrible idea. In fact, economists call it a central bank digital currency. And yes, some countries have adopted it. It’s usually not run with a blockchain, but that’s because if you have a trusted central entity to run the system, that being the central bank, a blockchain is inferior in practically every aspect to a normal relational database. That’s why all current CBDCs still use fairly traditional accounting systems.
Your use, however, of the terms “real money” and “fake money” has, I believe, the effect of shutting down intelligent conversation, rather than encouraging it. “Money” is a social construct. “Real money” is whatever the Government declares to be “real” and that the population is willing to use. It doesn’t need to be physical money. And it is unquestionable that in the countries that have adopted the legal framework that allows their central banks to issue CBDCs, the money so issued this way is as real and legally equivalent to paper banknotes and metal coins.
I struggle with the idea that “real money”, even as crypto, needs to be centralized and easily tracked. It’s not just about crime, it’s about privacy. The federal reserve doesn’t need to know the movements of every single individual. If I lend you $10, and you don’t pay me back, it’s both embarrassing for me and embarrassing for you, but we’re good friends and this is just between us. Maybe you could provide that sort of anonymity on a relational database, but it doesn’t have to be centralized. The blockchain tech gets faster and faster and not everyone has to be a full node, they could just run it at banks, maybe even with a bridge to other systems.
Anyway, I understand where people are coming from, blockchain was ruined by cryptobros and scammers. It’s not an inherently evil idea, it may be inadequate in speed as compared to Visa, but the idea that I could take the middleman out of any business while still having common listings, and make it a conversation between a supplier and consumer is fundamentally good. We do not need Sabre or Expedia taking 15% of every hotel or airline booking. We do need Uber’s secret pricing on rideshares. Very little value is added by middlemen in those transactions, where, in the end, the reputation of the provider is paramount- and yes, things can be set up so that provider can be vetted by third parties. The promise of blockchain is not NFTs, it’s freedom to do business in a different way, and some of the limiting factors holding it back are the lack of clear regulations for the industry, and a trusted stablecoin network.
There are a few types of “anonymity”.
The highest level of anonymity is perfect anonymity, where it is literally impossible to prove a transaction occurred or know anything about that transaction without being a party to that transaction. Some private cryptocurrencies are truly perfectly anonymous because it’s cryptographically infeasible to determine who paid whom and how much was paid without being a party to that transaction. Metal coins are generally perfectly anonymous. Paper money is nearly perfectly anonymous. They still have serial numbers that can be traced. It is easy to make arguments that perfect anonymity is undesirable because the drawbacks of allowing criminals, terrorist organisations, or sanctioned states to transact freely and in complete secrecy outweigh the privacy benefits to normal people compared to what they enjoy with lower levels of anonymity. I am not here to make an argument about this.
The next-highest level is what I will call “legal anonymity”, where knowledge of transaction details is tightly restricted by law. If you think of Swiss bank secrecy laws, this is close to what I mean. A CBDC can operate at this level of anonymity. The central bank would still theoretically know all details of all transactions, but the use of this information would be legally restricted and cannot be used for mass surveillance. However, the information is still retrievable by means of some defined legal process, such as a court subpoena or specific search warrant.
The level below that is what I will call “discretionary anonymity”. This is where a third party knows all the transaction details, and the restrictions on what they can do with this information are either weak or non-existent. Hence, your privacy is at the discretion of whoever holds this information. This form of privacy is weak compared to the other forms but a large portion of the population still finds this level of anonymity to be acceptable for everyday transactions. Bank transactions in the USA are discretionarily private. The bank can use and exploit the transaction data it knows with relatively few legal restrictions.
The final level is pseudo-anonymity, where transaction data is publicly accessible, but some information (such as the exact names of the payor and payee) is not provided. Bitcoin and most other cryptocurrencies are pseudo-anonymous.
Why, for tracking of course!
Actually, that is a decent point in this idea’s favor. Don’t think that’ll overcome the downsides, but I’ll give you a point for that one all the same.
if the government was to do their own crypto it could do a lot to disrupt the current unregulated “stablecoins” that currently exist, i could see it happing if for no other reason than to fight money laundering. If the fed is doing it, it becomes “real” money and most people would probably prefer a fed coin to something like usdt.
Money is made from belief. Why would the public at large believe it to be a real currency?
if the banks and federal government say it is and accept it as such then it is by definition “real” currency.
Online payments, which is a lot of transactions.
Pretty sure the current system of real money already handles that one friend.
It would be real money if the federal reserve issued it. Cash still exists, is that a feature for criminals or does it benefit the poor and unbanked?
No, as you said, its a stable coin backed by real money.
Cash transactions can easily be reversed, unlike blockchain, but nice bait.
Literally the opposite is true…
I have the most incredible news for you about this crazy new thing called… cash.
More seriously, there’s no reason government bodies shouldn’t just create a central digital transaction system with real money, instead of pouring resources into the stupidity of a blockchain system. Save everyone a lot of trouble and wasted compute cycles and just make the source of trust in the system the fact that it’s administrated by a trusted central authority running a database, instead of the various shell game wank of blockchain systems.
The whole reason the shell game wank is an attractive prospect in the first place is a question of who watches the watchmen. If your trusted central authority gets compromised, will you know? And if you know, will you be able to do anything about it?
I don’t exactly think that cryptocoin is the best solution in this regard, but I can at least respect the attitude behind how it came to be.
The counterpoint being that a centralized organization introduces checks, balances, and recovery methods for some losses. If your credit card gets stolen and charged or your bank suddenly becomes insolvent, you have a significant chance that your money will be able to be recovered. Compare that to cryptocurrency, where your wallet information being compromised or a crypto exchange you have assets in going under leaves you at a complete loss and entirely devoid of recourse. Centralized systems have many issues, obviously, as Visa seems to be on an endless crusade to make everyone supremely aware of, but at the same time cryptocurrency being an alternative doesn’t make it a valuable or viable alternative.
As opposed to Mt Gox and FTX?
Corporations like Mt Gox and FTX are not blockchains, they are companies that use blockchains.
People keeping their money with them were willingly giving up ownership over their crypto, deliberately sacrificing the benefits they would have gotten by keeping it on-chain
I get criticizing crypto, but I get a bit miffed when I see people directly conflating blockchains as a technology and private corporations that use said technology, and use one’s actions to criticize the non-failings of the other.
Well then I suppose this begs the question of why so many would give up ownership of their crypto and sacrifice the benefits they would have had keeping it on-chain in order to let FTX and Gox take it. It seems like there’s a piece of the puzzle missing here that I suspect points to a flaw in the system.
At least from my past experience observing the media sphere and demographics regarding crypto, it tends to just be newbies that are investing primarily due to the seeking of gains, but not for any sort of ideological reason, as opposed to the people who initially invested in crypto for its other freedom-preserving qualities.
For instance, I had originally mined some Bitcoin years and years ago when I initially just thought the concept of a stateless, distributed-control monetary unit was an interesting concept. I held that bitcoin in a non-custodial (i.e. not on an exchange/company) wallet, because I believed in the actual values prescribed to Bitcoin at the time.
Later, when my father wanted to try investing in crypto because he also thought it was interesting, he invested through an exchange, but refused to withdraw his money because he wasn’t that interested. It was just general intrigue, but not enough to overcome his apathy.
In the Mt Gox days, it was just so early, and Bitcoin was generally so new as a concept, that people didn’t understand the point of self-custody as much. With FTX, it was the masses who downloaded their app simply because they saw it during the Super Bowl and wanted to give it a shot as an investment vehicle, but not because they had any clue what the original values were underpinning the technology.
The people putting their money in the hands of these companies never cared about the ideological reasons for holding crypto (which I believe have now been totally overtaken by greed and wealthy VC firms), they just wanted to see if they could be the next person to get rich.
In my eyes, that’s an ideology problem, not a problem with the technology, but I do see how we could very well disagree on this.