Comment by feoren
7 days ago
> There's a tremendous amount of waste in the economy related to reconciling different companies' records of who owes what to whom and then getting that info to the bank and then hearing back from the bank about whether the debt was fully or partially paid and then relating that to whether the service continues to be rendered.
Is all that really a tremendous waste, in the days of databases and instant communication? How much waste are we talking about here? I'd wager a lot of money it's at least one order of magnitude less than the literal heat waste produced by validating bitcoin transactions. Crypto is much more wasteful.
> Moving from an accounts-receivable/accounts-payable model to a insert-coin-receive-service model
The monetary system isn't what's preventing this. You can't provide a service and also charge for it in the exact same instant. If I hire a contractor to renovate my bathroom, there's a ton of negotiation, possible disagreements about whether the work is "done" or not, payment deadlines, etc., and crypto vs. fiat currency changes none of that.
> You can't provide a service and also charge for it in the exact same instant.
Sometimes you can, and it's those cases that I'm thinking of.
But even when you can't, why not create the transaction up front and include the conditions under which it should or should not proceed at a later date? If you want a third party as a mediator, just in case, why not make that part of the transaction too? Why not ensure now, that the money you'll be paid later, actually exists and can't be spent on something else in the meantime?
So much becomes possible if both parties are on the same page yet neither had to build that page from scratch.
> How much waste are we talking about here?
Well there's all the business that doesn't happen because while I'm a bit curious about your service, I'm not curious enough to give you my credit card and trust your pinky-promise that you'll charge me like you said you would.
And then there's the business that doesn't happen because micropayments are required for the business model (many tiny credit card transactions being prohibitively expensive).
And then there's all the money that gets wasted when resolving disputes in court when mediators could've been bound to the transaction up front--mediators who are more familiar with the parties and the situations and who have access to a single source of truth about the nature of the disagreement rather than having to reconcile both versions of some "handshake agreement".
And then there's maintenance for all that billing pipeline code which is implemented over and over again--slightly differently by each company but rarely meaningfully so--which has to account for two worlds: one which creates debts, another which eliminates them, just to align the conjunction of those worlds to an arbitrary cadence (typically monthly) which has no correspondence with the product's usage. If you offload the accounting to public infra immediately, then you don't have to build and maintain infra which keeps both worlds in sync.
All told, I think it's quite a lot. As for the waste heat from bitcoin--yes, bitcoin is stone-age crypto. What we need for this probably doesn't exist yet.
I just don't see most of what you're talking about as either actual problems, or as caused by fiat currency / solved by crypto.
> why not create the transaction up front and include the conditions under which it should or should not proceed at a later date
Forcing people to commit money to some Etherium contract before work can begin is not going to grease the wheels of commerce. You hire an engineering firm to design a new regional airport for tens of millions of dollars over three years, and you're supposed to stick all that money in some crypto account where nobody can touch it until an oracle says the work is complete? Where any bugs or security flaws or front-runners might just steal or lock away all the money with no recourse? In the real world, no party ever holds the entire pot of money all at once -- that's a cashflow nightmare! You seem to be lamenting the cashflow problems caused by our current system (which companies would indeed pay a lot to improve), and your solution is to lock up the entire contract value ahead of time?
The current way that people are paying each other is not a problem that needs to be fixed.
> the business that doesn't happen because micropayments are required for the business model
The world is lousy with microtransactions. I heard about this being a problem a decade ago, but not anymore. Besides, what are the current gas fees on major crypto platforms? Isn't crypto terrible for microtransactions?
> money that gets wasted when resolving disputes in court
If people are still signing contracts with each other, this is still happening. Crypto does not solve this. This will still happen, plus all the money that gets wasted when their bitcoin wallet is stolen or their contract is front-run or there's a bug in the exchange.
> maintenance for all that billing pipeline code which is implemented over and over again--slightly differently by each company but rarely meaningfully so--which has to account for two worlds: one which creates debts, another which eliminates them
There are somewhere around 20,000 cryptocurrencies in existence. Twenty thousand. You're lamenting the fact that different companies have to handle dual-entry accounting, a relatively simple practice that has remained basically the same for hundreds of years, to the complexity of implementing cryptocurrency exchanges and blockchains correctly? Why can't companies just rely on third parties for fiat transactions? You're comparing crypto and fiat on completely different playing fields here. A bug in your fiat accounting code requires a manual correction, maybe an audit, and possibly a court case. A bug in your crypto code can permanently cost you all your money with no possible recourse.
> What we need for this probably doesn't exist yet.
So you're comparing the problems with our current fiat system with some hypothetical perfect future crypto system and saying the crypto system is better. Yes, I could compare anything that is happening now with a hypothetical future perfect alternative that might not be possible, and the latter will always look better. That is utterly meaningless. When you compare our current fiat system with any crypto systems that currently exist, the crypto systems are significantly worse in almost every way, except for buying drugs and scamming people. If you have a thousand "innovation points" that you can spend making a cryptocurrency system that doesn't have these problems (doubtful), why not spend that innovation on specific improvements to specific problems with the fiat system instead?
> So you're comparing the problems with our current fiat system with some hypothetical perfect future crypto system and saying the crypto system is better
Well yes, I was attempting to refute:
> This is the only promise that cryptocurrency held
My claim is that there are other promises. I hear you say
> The current way that people are paying each other is not a problem that needs to be fixed.
...and I couldn't disagree more. Have you ever worked at a payment provider? Your code ends up with other payment providers in all directions and the user is nowhere to be found. It's just a big pile of parasites fighting over the money pipe. Outside of work I'd strike up a conversation with a merchant about how I'm familiar with their POS equipment, and there I'd learn that it's practically a hostage situation.
The liquor store near my house has two entirely separate POS systems pointing at two separate bank accounts and they just direct customers to whichever one happens to be enlisted in the least-objectionable shenanigans at the moment.
The needs of the people are not being served, especially if they're people who can't afford a lawyer.
I'm not proposing that anybody should have to use crypto. I'm saying that when crypto is ready, those who do use it will have a competitive advantage because they won't have to deal with the drag exerted by the existing system. The multiplicity of platforms won't be an issue because those two people--whoever they are--will agree on whichever one fits their use case (though I expect they will be fewer by then).
> why not spend that innovation on specific improvements to specific problems with the fiat system instead?
Because the fiat system was not designed to solve any of the problems we're talking about. It was designed to feed the Roman war machine, and since then its primary purpose has been to ensure that power structures established by varying forms of violence remain in effect without the need to trot out that violence again.
It's not the kind of thing you can incrementally improve on. It has the problems it does because the people who maintain it want it to have those problems.
Take credit card companies for example. There's a lot they could do to prevent fraud--there are many ways to build a system where payments happen without leaving secrets like credit card numbers out in the open. But they don't want to solve that problem because it's a problem that puts them in a privileged position--they get to be the money-censors, which is a powerful position that they frequently abuse.
Or consider health insurance claims. They could absolutely provide a price to the patient within a minute or two--fast enough for the patient to factor it into whether or not they get the procedure. But having the bill come six months later and full of surprises is a feature for them, not a bug.
We have a lot of harmful middlemen. Improving the fiat system would just to improve their capacity to do harm.
It may be in a pretty embarrassing state right now, which I hope it snaps out of, but crypto is at least compatible with the idea that we could put control over the system in the hands of its users. Fiat is not.
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