[evanextreme]

I wouldnt say thats a correct analogy though, a traditional bank / cryptocurrency provide similar user experiences these days with how their mobile apps work. At the end of the day even in crypto an overwhelming majority of users interact with blockchains from centralized bank like platforms that function in an incredibly similar way, especially with the advent of neo banks like Chime. Downloading a song was a completely different experience from driving to a store to get a CD.

[babypuncher]

The analogy falls flat on its face when you realize that crypto transactions both take more time and cost more money than PayPal, credit/debit, ACH, etc.

When Apple introduced iTunes, the appeal to consumers was obvious: You can buy only the songs you want, you are not forced to buy a whole album. You can do it from the comfort of your home. And you don't have to go through the (then time consuming) process of ripping a CD to get it on your iPod.

With cryptocurrencies, I see no such obvious benefits that would compel consumers to trade their bank accounts and credit cards for ethereum wallets. The transaction fees are considerably higher. Their decentralized nature, often touted as their greatest asset, becomes and anti-feature once you need to issue a chargeback for a purchase from a fraudulent seller. Crypto does not solve a problem people regularly deal with, and nothing about it is fundamentally easier than the systems it seeks to replace.

[OrlandoHakim]

It’s true that txs take more time and money in POW chains such as Bitcoin or Ethereum, but it is certainly not true of many many other cryptocurrencies.

For example, Terra is a Proof of Stake blockchain with negligible fees and a 6 second settlement time. It is currently widely used as a payment system in South Korea.

[viceroyalbean]

I live in South Korea and like to think that I keep track of the current state of fintech but I have never heard of Terra or any cryptocurrency being widely used for payments. Where is it usable?

[OrlandoHakim]

https://www.terra.money - to learn about Terra, founded by Do Kwon a Korean Billionaire entrepreneur They offer many currrency mirroring stablecoins including Korean Won in addition to the US dollar-pegged coins.

https://chai.finance/ Chai is the Payments solution. I’m told they have 2 million users in Korea but you may know better. It can be used to pay in MacDonalds and Starbucks to name a couple examples.

[viceroyalbean]

Ah, I see. I haven't used Chai but from what I can tell it's a service that lets you make payments through multiple methods (e.g credit card, bank transfer). I don't think they've published statistics but I'm guessing most of their payments don't go through crypto.

[OrlandoHakim]

Probably true that most payments still go through traditional payment rails. Crypto is still an emerging technology and most people don’t own crypto.

I still find it interesting to know that one can pay for a Big Mac or a Latte using stablecoins as an option in Korea.

[2muchcoffeeman]

What about charge backs? What protections do I have?

[OrlandoHakim]

I can’t speak to the payments solution https://chai.finance/ but UST is censorship-resistant like Bitcoin and does not have chargebacks. I consider that a feature, not a bug.

[babypuncher]

You may consider that a feature, but most people don't. As someone who has had to issue a chargeback in the past, I'm not about to give it up in exchange for solving a hypothetical problem that does not affect me. Chargebacks are not "censorship".

[OrlandoHakim]

Fair enough. I still use my credit card for most purchases also and I too appreciate the ability to chargeback if needed.

Still, it is important to appreciate that consumers do pay a premium for this feature on all transactions built into the price because merchant account for the risk of chargebacks when setting their prices. I can’t estimate the amount of premium but I would guess it adds up to a few percent.

[ipaddr]

No chargebacks and ability for government or corporate deplatforming.

[kaesar14]

That’s not a problem the average consumer has, not even close to the same way music was really annoying to consume before the iPod. Like, sucks for those it happens to, but it just isn’t a “real” problem in the grand scheme of life

[OrlandoHakim]

The average consumer is currently facing the prospect of high-inflation, exploding gas prices, and is facing a real challenge if they want to safely save the purchasing power of their earnings. I consider these to be important problems to solve so the average consumer can continue to stay above water and maybe even get ahead in life.

There is a joke about how the things we want are getting cheaper (iPhones, TVs, music streaming) while the things we need are getting more expensive (food, housing, healthcare, higher education)

Offering society a high-yield stablecoin savings option finally allows people to grow their savings and stay ahead of inflation with low relative risk.

I think that’s a honking good idea.

[delabay]

> both take more time and cost more money than PayPal, credit/debit, ACH, etc.

Stopped paying attention here. So, so..so incorrect.

[scubbo]

Wow, did gas fees drop to $0!? That's huge news, I'm surprised the media hasn't reported on it!

[OrlandoHakim]

Right now the average on-chain Bitcoin payment for $0.94 USD. I bought a conference ticket a couple weeks ago from someone in Thailand for $0.24 USD. One confirmation took 6 minutes. This isn’t a Lightning payment which would be nearly instant and almost free. It is a payment on the Bitcoin blockchain.

Remember, that payment includes final settlement, something that can take months for a credit card merchant.

Also, there are many other Proof-of-stake chains that offer faster and cheaper settlement.

[scubbo]

$0.24 > $0.00, though. And:

> something that can take months for a credit card merchant

OK, instant closing is desirable for sellers - but why would a consumer care?

[OrlandoHakim]

Whether consumers realize it or not, the risk of chargebacks does increase the cost to the merchants which they absolutely pass onto consumers in the form of higher prices.

[themacguffinman]

That's quite a high fee for zero fraud protection.

[namibj]

PayPal is around 2-3%, credit/debit around 0.5-5% depending on where and whether you have a physical card reader. ACH is, to my understanding, cents or even less than one, but suffering from an utter lack of security/authentication.

[biztos]

Meanwhile, in the Eurozone, electronic cash and wire transfers have had fees of exactly €0.00 for many years, and my online-only bank does “instant” transfers (takes a few seconds but that’s mostly the app latency) up to €2000 for the same price.

The transaction-cost problem has many possible solutions.

[iudqnolq]

CashApp/Venmo is free from the perspective of the average American if they have a debit card. (They make money off data and credit card fees).

[namibj]

Last I looked, they did not seem to be free for commercial use (including cases with just B2C transactions).

I see these as worse, because they suggest to the average consumer American that sending money is free, reducing pressure on a proper low-delay settlement system with sufficiently low fees to allow users to ignore the fees in most instances. Say, 1ct + 0.05%. (That's AFAIK comparable to SEPA's version of electronic checks (i.e., asynchronous pull), and fees for low-latency push shouldn't exceed 0.2%, either. With delayed settlement, even push should allow the very low fees, though.)

[OrlandoHakim]

Correction: They make money by selling your transaction data to hedge funds and advertisers for profiling and targeting.

[mperham]

You make a lot of sense, babypuncher.

[breakfastduck]

You're missing the point.

The music comparison is not driving to the store compared with downloading.

It's pirating to downloading legally. iTunes made it just as convenient to buy as it did to pirate, which is the main reason people pirate anything - inconvenience. Steam did exactly the same thing for PC gaming. Netflix did the same for TV and Film. (Only now stuff is split between so many streaming services pirating is becoming the path of least resistance again).

[Forgeties79]

Sort of a tangent but your parenthetical about streaming services is why, after roughly 10 years of “keeping my nose clean,” I’ve found myself slowly firing up my home server more and more frequently with “very legal and very cool” content I am slowly (but increasing in speed) acquiring. I don’t mind paying for my content. I have several subscriptions. But the constant shuffles and searches for where i can watch anything is becoming a bigger and bigger obstacle. I’m going to pick the easiest route, not the cheapest one. Hell it’s why I don’t download music - I don’t love Spotify as a company, but damn they make it easy to listen to my music. If they were to fracture or 20 other competitors pop up and licensing starts getting all spread out/hard to follow, then you can bet music will be in line for me too.

[jkubicek]

This doesn't completely fill your needs, but the Apple "TV" app does a great job with cross-app searching. For most any content I want to watch, I have one place to go to search for it, I know if it's available on any of the streaming services I subscribe to and if it's not available for free it's trivially easy to rent / buy a high-quality stream.

It's not perfect, as far as I know Netflix content isn't indexed and frequently it suggests I watch a movie in an app that doesn't actually serve that movie, but it's mostly OK.

[Forgeties79]

It’s funny you mention Apple TV. I was considering that just yesterday as a way to simplify things. It just seems kind of silly to buy a (somewhat) redundant piece of hardware though in the age of smart tv’s. I’ve got an LG C1 and I just find it silly I may need to go around the onboard apps to access the exact same stuff. But maybe it’s at least a stop gap idk

[ElFitz]

What is lovely too is how content comes and goes depending on licensing deals and where you physically are.

Want to finish that tv show? Too bad! We didn’t bother telling you, but we lost the deal.

[OrlandoHakim]

Not sure how familiar many here are on the difference in savings rates available in crypto stablecoins vs traditional banks.

My US FDIC savings account offers a measly interest rate of 0.03% APY right now. By contrast rates on crypto stablecoins are often 7-10% APY easily with some such as UST on a Terra offering an amazing 19.53% APY.

Yes the crypto stablecoins are riskier in some ways than USD and FDIC insurance is still the gold standard, at least up to their limit. On the other hand, there are now decentralized insurance protocols available on stablecoin yields which cover risks of a stablecoin or an unintended behavior in a smart contract for ~2% APY.

Everyone should do their own research of course, but crypto can be compelling in that at the very least it can allow your savings to preserve their purchasing power net of inflation, something that isn’t possible with a traditional bank savings account.

[sdoering]

I have no knowledge of stablecoins. But are my savings secured? As in if the bank breaks down, becomes insolvent and dissolved my money is still backed by the government and I will not loose a dime?

Else I don't care about 0.03% or 7 to 10%.

Regardless of me thinking that a growth economy is eating the planet. When it comes toy savings I am more conservative as a mythical pope mixed with Ronald Reagan. I don't care about it growing. I care about it not vanishing in the blink of an eye.

Everything else is just playmoney. No problem if I loose it or use it to light a fire in my fireplace at home. Just printed paper (virtual) that I can spend for whatever.

[OrlandoHakim]

As I mentioned in the GP, for 2.5% per year you can insure any amount of stablecoin savings against risk of loss, so yes they are secured. In a traditional bank your savings are only secure up to a specific limit which is $250k in the US and less everywhere else in the world (e.g. $6,600 USD in Ukraine). Also in a bank your savings are not secure against inflation which is currently -7.5% in the US and as high as -54% in Turkey.

In other words, for a US resident, putting money in the bank is currently virtually guaranteed to lose at least 7.5% of it’s purchasing power per year. It brings new meaning to the expression “safe as money in the bank.”

Here is an example:

1. Purchase UST on an exchange on a 1:1 basis with USD

2. Send it to the Terra Station self-custody wallet on your phone

3. Deposit the UST into a decentralized app (dApp) at www.anchorprotocol.com to earn 19.53% APY accruing every 6 seconds

4. Purchase the equivalent of FDIC insurance for ~2.5% APY from any of Nexus Mutual, InsurAce or Bridge Mutual

5. Enjoy a nice safe net ~17% APY on a USD stable deposit

* Bonus: Because of the payout mechanism this fixed APY yield is considered a capital gain and not interest income so it is taxed more favorably than a traditional savings account and you don’t trigger a taxable event until you sell.

I would suggest it is worth investigating and maybe trying it out with a small amount to see for yourself.

[kenniskrag]

Nexus Mutual InsurAce is a small insurance, which isn't backed by a bigger insurance. Traditional insurances can cross protect the risks e.g. fire & water, europe & asia or sell some risks to a reinsurance company. Maybe there is no regulation on how much reserves in fiat they have to keep. So no not the same protection.

[OrlandoHakim]

Nexus Mutual and InsureAce are two independent entities but still those are fair points.

However did you know that FDIC insurance only requires 1.35% reserves? Of course they can also have the FED print money which drives further inflation for everyone.

Net, net, no the guarantees are not the same but government-backed insurance isn’t as safe as we would like to assume.

Also, outside the US, deposits are only 100% insured up to very modest limits. Banks offer no insurance above these modest limits.

As a timely example in Ukraine only deposits up to 200,000 UAH are insured. At the current UAH:USD conversion rate, that means only up to $6,600USD of deposits are protected. Anything over that amount has zero coverage.

Crypto stablecoins can provide options for those in need. Please don’t immediately dismiss them simply because you personally may not see the use-case.

[whatshisface]

It sounds like those insurers are offering insurance that's way too cheap for the risks of a deal purporting to give you 20% APY in free money. That, or the insurers are planning to run off with the cash too...

[mardifoufs]

Yeah, they are basically just currently picking the pennies in front of the soon to come steamroller. Though in this case, the "insurer" has basically no regulatory obligations so the owners are probably making out like bandits. If the insurer has no money and no FDIC like scheme to back up any insurer failure, then it's just going to be the "investors" who will get wrecked.

[OrlandoHakim]

As I mentioned in a sister comment, I don’t endorse any of these insurance products as I personally haven’t done the research. Also, as with any insurance product the devil is in the fine print and it pays to understand their ability to payout in a crisis.

That said, this is a fast-moving space with new entrants coming online all the time.

For example I just Learned about Ozone Insurance which claims to be a 100% trustless on-chain insurance plan [0]

[0] https://cointelegraph.com/news/risk-harbor-set-to-take-over-...

[OrlandoHakim]

Three separate insurance companies offer similar rates to protect stablecoin savings so the market seems to disagree. These are all well capitalized insurance programs run by well-known entities so - not fly by night outfits. That said none have been stress tested in a market crisis as yet.

My only argument is that anyone dismissing crypto as a scam with no use case who hasn’t taken the time to investigate is doing themselves a disservice.

This is a rapidly evolving field with lots of innovation and while it pays to be skeptical, it also pays to be curious.

[whatshisface]

Having an insurance company guarantee your 20% APR for 2.5% APR is not a use case, it's one of:

- The insurance company scamming you,

- The insurance company using you to scam their investors.

- All of the above.

[SketchySeaBeast]

If you're making a company guarantee you 17% APY that feels like either some sort of insurance fraud or a ponzi scheme.

[OrlandoHakim]

The current payout rate is 19.53%, so nets to 17% after paying for insurance to a 3rd party.

The accounting is transparent and on the Terra blockchain so it certainly isn’t a Ponzi scheme. However the payout rate is not guaranteed or constant and does fluctuate from time to time. The UST/Anchor Protocol payout is likely not sustainable and should come down overtime. That said the Terra Foundation recently put an additional billion dollars into the incentive pool so the rates should continue for at least another year.

I would never advocate putting money into anything without investigating the risks for oneself. That said, even money in the bank isn’t always safe as savers in Cyprus learned the hard way after the GFC when their government decided the banks needed a bailout more than depositors needed their savings.

[SketchySeaBeast]

I took a look at Nexus mutual - where do they claim they'll pay out 17% guaranteed if the investment fails? It looks like it requires a loss of at least 20% of the cover amount to make a claim, and that's due to either a network failure or a theft of some sort.

[astrange]

> Everyone should do their own research of course, but crypto can be compelling in that at the very least it can allow your savings to preserve their purchasing power net of inflation, something that isn’t possible with a traditional bank savings account.

This is not possible unless there's production available denominated in the stablecoin, you have to buy whatever currency they'll accept first.

Even then it's not possible to "preserve purchasing power" by keeping a currency, because that's not what currencies do - they're a medium of exchange not a store of value. Imagine if everyone held a stable currency, but one day got tired of going to McDonald's and stopped trading with them. Eventually they go out of business; now you can't buy it anymore. You have failed to store value measured in McDonald's purchases. If you want to invest to rebuild it, then it's more expensive and that's supply shock inflation. This is more or less why central banks target 2% and not 0% inflation, to encourage occasional maintenance spending.

There isn't really much that can actually store value. Gold and bitcoin obviously rely on bagholders. But in general "storing value" means compelling other people to do work for you, and they're not always going to be there to do that.

[anchpop]

> On the other hand, there are now decentralized insurance protocols available on stablecoin yields which cover risks of a stablecoin or an unintended behavior in a smart contract for ~2% APY.

I hadn't heard of this, how would someone get set up with something like this?

[OrlandoHakim]

Three options I am aware of are Nexus Mutual, InsureAce and Bridge Mutual.

Fair warning, I am not endorsing any of these as I haven’t done the research on the insurance options yet.