[jcburnham]

> Given that cryptocurrencies don’t produce anything of material value

I've read this "crypto has no use-case" meme a lot recently, and it's always perplexed me. Crypto is clearly the easiest way to do international payments right now, particularly for countries with restrictive capital controls, like, for example, Argentina (https://www.bloomberg.com/news/articles/2021-08-13/argentina...).

Sometimes this is qualified as "crypto has no use-case except crime", but what obligation do I, a US person, have to follow or respect corrupt Argentinian regulations?

[zepto]

This is a completely absurd claim.

I make international payments regularly using things like Wise (formerly transferwise), and it’s far simpler than any crypto solution, and accepted by everyone.

And yes, I own some crypto and could use it if anyone was willing to take it.

The only case where it is simpler is there there are capital control, and in that case it is being used illegally.

[jcburnham]

I'm glad you brought up Wise! I love Wise and use it frequently. However, there are some jurisdictions it simply doesn't work for. For example, there is currently no way for a US company to use Wise Business to pay a Brazilian contractor.

This is not because such payments are illegal, but rather because the Brazilian financial system has poor norms and poor rule-of-law: https://techcrunch.com/2021/03/16/wise-accuses-former-brazil....

[andreskytt]

This absolutely does not stop you from doing what Wise does under the hood: have bank accounts in two countries and settle using comms rather than the banking system. A message comes in “Alice should now be given x amount from the local account” and a local bank transfer is executed.

[jcburnham]

Yes, you could do that if the payment volume was high and bidirectional. It doesn't work at all for a company that occasionally has to pay someone in Brazil, but has no revenue or presence in Brazil.

[csdvrx]

> And yes, I own some crypto and could use it if anyone was willing to take it.

And if you're sending money to Argentinians, they would beg you for it, as otherwise your recipient would just receive a fraction of the USD you send because of the difference between the official rate the government enforce, and the real rate.

Read about Blue Dollar in Argentina and you'll realize you're very mistaken in your idea that Wise is the solution there.

[andreskytt]

Observe, this is a policy limitation rather than a technological one. These policies can and will change and there can and will be limits to crypto in the country. Unless you can get everyone in the country to accept crypto, you’d still need a way to convert it to local fiat. And everyone in the country will absolutely not accept crypto as the transaction costs are prohibitive.

[pwinnski]

Wise doesn't send physical dollar bills to Argentina, so your reference doesn't apply. Send money via Wise or any other app, and either spend it from there, or withdraw it in pesos. Nothing is lost, and it's as easy, fast, and cheap to use as any crypto-currency solution.

[csdvrx]

Oh yes it does apply: send in crypto, and the locals will get more (blue rate) that many (most!) people will gladly accept instead of pesos!

Nothing is lost to you in either case, but if you send it USD in the official ways, something is lost to those who'll receive less money.

[twelve40]

Once it becomes a serious enough problem for the government, they will just strangle the off-ramps, like it's been done before. So this makes such method of transfer... a temporary hack?

[csdvrx]

> Once it becomes a serious enough problem for the government, they will just strangle the off-ramps, like it's been done before. So this makes such method of transfer... a temporary hack?

Temporary, if you believe it can be strangled.

Given the lack of success of the Argentinian government with the Blue Dollar, my Bayesian prior is that it won't be temporary!

[twelve40]

Also, this makes me wonder. If there is such a massive influx of inbound cryptocurrency transfers, where does the cash for them come from? Surely whoever cashes those transfers out has to sell the cryptocurrency to _someone_? It doesn't sound like it's balanced out by the outbound transfers? Or someone is sitting on a massive pile of fiat and handing it out to hold a massive pile of coins?

[csdvrx]

Take this thought experiment: imagine you're given the opportunity to purchase a crypto like BTC for say 20 grands per BTC. Even if you don't believe in the business model of crypto, you would jump on the purchase (irreversible being a nice feature) then you'll immediately flip it (liquidate it) on the open market, for a nice profit, right?

Now think about the general case: you pay a bit less than the going price in the rest of the world, to take into account the problem of "where the cash come from" (certainly not a difficulty for a country with as large as Argentina, with multiple land borders and sea ports) and price in the cost of solving this problem. Given the right price, you'll find clients, as every trade needs a counterparty, for a mutually beneficial exchange.

And you then have the answer to your question.

[stillbourne]

Some of us have an understanding of physics and have asked the question, if cryptocurrencies are a store of "value" what is the value that they are storing? If you break it down to its most basic unit of measurement the very concept of Proof of Work is that the "value" is entropy in for form of spent compute. That is all it is. The concept of "wastes energy" doesn't begin to cover it, the value is literally the sunk cost of the net energy used to "mint" a coin. Let me ask you a question, what is the value of used energy? There is none, entropy flows in one direction energy once spent, has no value. I can't get energy back from the spent compute, that power used is not producing anything useful other than a hash value on a ledger. Many of us are then anti-crypto because we're simply stating, The Emperor is wearing no clothes or The value of entropy is nothing. The entire thing is a purely speculative market on the cost of entropy, but entropy has no value.

[hp4k1h5]

The question of physics is entirely relevant and infrequently discussed. I think your line of questioning leads to some very interesting problem sets that bitcoin in particular was built to address.

bitcoin is by design inefficient, and it could have been efficient by design. the inefficiency model implies the need for large compute resources, which is a form of industrial, technological, and infrastructural prowess and capacity. See smaller and more power-insecure nations banning crypto-mining. Bitcoin only makes sense from an electricity standpoint when you have excess electricity that you would otherwise have no way of using. Hydropower, solar, and virtually all power plants have some excess capacity that they could theoretically convert directly to mining operations, for as long as they had no consumer power demands. The theory behind bitcoins numbers/algos is that the power plant shouldn't have to make a choice between serving customers and running crypto operations, they make the most possible serving customers, and burning excess supply.

Market conditions have temporarily distorted bitcoin mining distribution, but with fewer coins left to mine and a growing understanding of bitcoins algorithmically enforced economics, you will see it banned from everywhere that it does "waste energy", and lots of miners will realize that "stateless" currency depends entirely on industrial surcapacity which is entirely dictated and governed by the state. So a nation's governance structures and ability to adapt to a developing world turn out to be just as critical as the country's ability to supply massive energy demand. The places that are able to do this are typically worth spending money in so it makes sense as a unit of "value".

bitcoin was an attempt to replace gold mining and gold transfers, but it was also an effort to represent something about the miner who mined it. A bitcoin miner had to have lots of cheap energy and the technological capability to run distributed compute efficiently. bitcoin has been narrowing in on global energy surcapacity, and it turns out there isn't any. This will have all kinds of effects on the price of bitcoin, as lots of inefficient players and players in insufficiently developed economies are forced out of the mining pool.

however in places where bitcoin is mined efficiently, one could theoretically use those same bitcoins to purchase either cheap (or even green) electricity, efficient (cool) compute, or whatever else goes along with running massive mining facilities.

[stillbourne]

> bitcoin was an attempt to replace gold mining and gold transfers

Imagine replacing a valuable material asset with nothing. I get that bitcoin was designed as a hedge against market volatility. But instead of soaring when the traditional market sours it has become a leading indicator of volatility. If you look at the crash of 2020 and the one happening now buttcoin variants preformed poorly almost a month before the market did meanwhile gold is doing what its supposed to.

> however in places where bitcoin is mined efficiently, one could theoretically use those same bitcoins to purchase either cheap (or even green) electricity, efficient (cool) compute, or whatever else goes along with running massive mining facilities

This is stupid, who would burn energy to buy energy? Bitcoin proponents who believe these lies probably also believe in overunity, free energy and perpetual motion.

[baggy_trough]

Is a hundred dollar bill just a piece of paper?

[stillbourne]

I love this question, the answer is obviously no. The value of the US dollar is determined by the credit of the issuer, its rate of exchange in conjunction with the value of labor. Just like all fiat. Yes, if any of these fluctuate the "value" of the dollar goes up or down but it still has a value that isn't just the paper its printed on.

[baggy_trough]

How is that not an answer to the question you posed about crypto?

[stillbourne]

Labor has no value?

[baggy_trough]

Do you mean, it took more labor to create the hundred dollar bill?

In any case, my point is that the value comes from the societal relationships that invest the asset with value, not the physical nature of it.

[oliwarner]

Urgh, I keep seeing this. It's nonsense. Use a bank and SWIFT and £20 later (bank dependant) you've sent as much money as you like.

The receiving account holder may need to declare the payment to their local tax authorities, but that's true of crypto too, it's just not automatic.

[jcburnham]

Of course you can use SWIFT, at the cost of bank fees, opaque exchange rates and waiting a week. You could also take a briefcase full of cash on a plane.

Whereas with crypto, you get transparent fees/rates, transaction confirmation in minutes, at any time of day, with a permanent cryptographic record of payment, and you don't unnecessarily leak information to the recipient's local tax authorities.

[oliwarner]

Transparent?! You've no idea what price the recipient will get for crypto sent.

I can hold foreign currency in my bank account (many banks allow this), so sending money in exact amounts internationally is trivial. And £20 isn't opaque or expensive. Much easier than putting a coin order in and then sending that.

Bypassing local law enforcement isn't a feature for me. These systems exist for reasons.

[bb88]

It's "money-laundering-for-good" but it's still money laundering.

There is a reasonable question where allowing money laundering for good would offset the use cases for those with more evil intentions.

My opinion is probably not since most people in Argentina are going to launder a fraction of a BTC at a time, but all that would be offset by the harm from criminal syndicates (drugs, human trafficking, even oppressive governments).

This feels like solving an edge case with a massive potential downside. It would be a shame to have provided a technology that freed the people of Argentina, but at the same time, allowed the narcos to enslave them.

[gregjor]

Remittances to Argentinian citizens have nothing to do with capital controls put in place to prevent capital flight and exchange rate arbitrage, which involves money leaving Argentina, the opposite of remittances.

If an American wants to send money to someone in Argentina they have plenty of options that are cheaper and safer than Crypto: Wise, PayPal, Xoom, even Western Union.

If an Argentinian wants to evade capital control laws in their own country crypto may be their best option. Just calling it corrupt, as a foreigner, does not make it legal or ethical.

[csdvrx]

I'm afraid you have absolutely no idea about what you are talking about, especially for the people in Argentina. Read about the Blue Dollar.

[gregjor]

From https://bluedollar.net:

> Blue Dollar AKA Dolar Blue or unofficial dollar is parallel dollar rate of USD in Argentina. This is the cost of buying and selling a physical dollar bill in a cueva, or clandestine financial house in Buenos Aires. This is the best price you’ll get if you are buying or selling physical bills, and the transaction is done with no involvement of any government-sanctioned or licensed entity (like a bank).

What does exchanging physical dollar bills in Argentina have to do with remittances, or crypto? Many countries have informal or black markets for exchanging currencies, separate from the official exchange rates. That is not the same as remittances unless you are sending envelopes of dollars to someone in Argentina. My comment responds to the claim "Crypto is clearly the easiest way to do international payments right now," which simply isn't true, not even to Argentina.

[csdvrx]

> What does exchanging physical dollar bills in Argentina have to do with remittances, or crypto?

That, who would have guessed, there are places who'll happily convert the crypto remittances at the Blue rate. So the people you send money to will get more money, while you'll send the same amount, just in a different way.

And the people receiving money, would would guess that, will be happier by receiving more money instead of less :)

[gregjor]

This can work without crypto. I haven't sent dollars to Argentina, but I (US citizen) have lived in a country with currency controls and artificial exchange rates. And I pay a freelancer who lives in a SE Asian country with currency controls and and poor official USD exchange rates (i.e. an informal market for dollars). I pay that guy in USD through PayPal or Wise, and he transfers from the USD account to someone who changes to local currency at the street rate (equivalent to Blue Dollar in the country he lives in). The transaction fees are low and the process is fast, almost instant. I could pay him with crypto if he asked, but he hasn't, because it's easier to just transfer USD. He still has to figure out how to convert USD to his currency at the best rate, a problem he would still have if I paid with BTC.

Reading the Blue Dollar web site I noticed that Argentina recently started taxing crypto transactions, which means the government is requiring exchanges to report those transactions, like they already do for USD transactions.

[csdvrx]

> Reading the Blue Dollar web site I noticed that Argentina recently started taxing crypto transactions, which means the government is requiring exchanges to report those transactions, like they already do for USD transactions

I seriously doubt that people who already use the unofficial exchange rate will use the official exchanges for crypto...

[gregjor]

Apparently crypto remittances are a bigger thing than I thought:

https://www.pymnts.com/news/cross-border-commerce/cross-bord...

A reply with useful information works better than writing that someone absolutely doesn’t know what they’re talking about, but your comment did spur me to look more into the subject.

[csdvrx]

Then I'm happy you gained something from our conversation!

I made my initial reply because the amount of disinformation about crypto on HN is frightening.

You may want to incorporate that to your "reading lens" priors when reading dismissive information here: there is a large probability the person has no idea what they are talking about, and is simply repeating something.

And BTW it's not a value judgement, as repeating stuff that's true is good, valuable, and a valid default heuristic for most other topics on HN.