> a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

Stablecoin is not a technology. It's an excuse. An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use. Similar to how Airbnb is not a technology but an excuse to do what hotels do without hotel's license.

So it makes no sense to compare it to database, a technology.

Will this excuse work? Banking is a heavily regulated field so it's less likely than Airbnb, but it's ultimately up to lawmakers.

> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

Except they are frequently _not_. I dislike crypto on principle, but you can't look at the exorbitant transfer fees and latency that a lot of banks charge for common transactions (Visa/MasterCard are especially bad) and say that crypto has no potential.

Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.

The problem with banks pointing to banking regulation is that they helped shape the regulation - and they did so to protect their business, not to help consumers.

We know that central banks are great at monetary policy. We know that decentralized protocols remove a lot of the more parasitic traits of banks. Why not have a central bank currency that can be traded on the blockchain, especially since converting it to real money will still entail KYC?

> You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank

stablecoin issuers are for all intents and purposes banks.

they'll try very hard to stop anyone from calling them that, but in essence, they give you a note (a crypto coin, in this case) in exchange for a promise that they'll give you back the amount of fiat printed on the note. this is the primary purpose of a bank.

I think the most disruptive thing about stablecoins is the ability to opt-into your monetary system of choice.

It's hard for the average non-US person to opt-into the US financial system. Sure, they could hold dollars in banks, but local monetary policy can nix that privilege at anytime by imposing foreign exchange controls. It's happened before, in some of the largest economies in the world: China in 2015, India in 2013, Argentina in 2011.

The current way users solve this problem requires a lot of resources. That's why you usually only see rich people have Cayman accounts, Canadian real estate, and shell companies in Panama. Stablecoins on permissionless blockchains make this process 100x more accessible for the average person.

So yes, stablecoins currently let you circumvent regulation.

But regulation can be a prison where you can pay to be free.

So what happens when it costs nothing to get out of jail? What kind of strains do this place on economies that people escape, as well as the economies that people join?

I guess we'll have to wait and see.

If someone spends significant effort to gather documents proving that their family was forcibly relocated from Poland, they may be able to become a Polish resident and then spend a year or so doing paperwork, bringing all of the documents that are required according to the official web site for some task to the appropriate government office where they are then told that other documents are required, or that nobody in that office even knows what documents are required, and so on, and after that time they may achieve Polish citizenship. You know, in recognition of the fact that their family is in fact Polish. But during that year or so, they may have trouble using the banking system because of sanctions on Russia and because no Polish bank will serve them until they become Polish. So their employer may be on the lookout for alternative payment rails.

> But I imagine most banks would point to regulation as a reason for the delays

There is also good regulation e.g. the EU made it so banks process transactions within "10 seconds", including and especially cross-border transfers for SEPA countries (Single Euro Payments Area). https://www.europarl.europa.eu/news/en/press-room/20240202IP...

So banks willingly being slow with transfers is perhaps a question for your local policymaker to remind them they can do better.

> they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

International wire money transfer is far too difficult today. And after you've sent it, you still need to wait minutes (hours?) for the receiving end's bank to actually process the wire and move it into the recipient's account (correctly).

Then you need to nag the receiving party to check their account every few minutes so that they can inform you that they actually did receive it successfully. What if they're in a different timezone? 12 hours off?

Moving money on a blockchain is far simpler.

100% why am I going to use a permissionless blockchain….

To get coins fully controlled by circle.

On a chain with low fees controlled by Coinbase (base) for example.

In this case this new L1 won’t even be distributed by anyone initially too.

It all seems like a Ponzi scheme or small utility for international users. Otherwise I don’t know why you’d trust these centralized authorities.

What stops someone at circle deciding to issue more usdc without real dollar backing

My current best guess is that people are finding stablecoins valuable because they are effectively barer assets issued by an entity in another jurisdiction that has no requirement to surveil or control how those tokens are moved around between parties, and hence it allows you to skip a lot of the regulatory overhead you would normally have in dealing with a local bank. Of course this can be stopped by states eventually, but it helps when the jurisdiction of the issuing entity is allowing it.

Stablecoins are generally used:

- by USA government (indirectly) to re-dollarize the world without generating too much USA inflation, another IMF SDR mimicking China usage of foreign currencies to avoid hyperinflation;

- by many migrants in the I world to send money home, something in the III world could be converted to USD at a much cheaper rates and with much simplicity than classic banking/money transfer solutions;

- as a hedge against local currencies, considering dollar or some other currencies much more stable (see for instance the Argentina forcibly conversion overnight of USD accounts to ARS with enormous loss in 2002;

- as a decorrelated asset for DeFi trading on non-stablecoin cryptos (meaning market timing, buying BTC, ETH, SOL, ... when they dip, swapping then to some stablecoins when they top, waiting with the stablecoin for the next dip to buy).

In that regard the (unlikely) real existence of the collateral they claim is not much relevant: as long as most trade on stablecoins come from DeFi the Venezuelans, Bolivians, ... who choose them to bring USD home, the few company using them to pay B2B stakeholders in various countries are still happy anyway, as long as the stablecoin remain de-correlated to other crypto traders are happy anyway.

Tokenised stocks are more likely used to circumvent regulations since you can buy them swapping non-KYC coins against them avoiding capital gains taxes, at least partially.

The irony is that valid international transactions must be enforced with centralized rules, and thus a decentralized ledger like BitCoin can never operate in this space.

Contradictory requirements.

Stripe's a $90bn+ company because it builds & sells tools that make it easy for software engineers to programmatically move and manipulate money. This is a no brainer for them (regardless of how mainstream stablecoins/cryptocurrencies/blockchain eventually become)

Lots of things have a cost, and lots of things are difficult to manipulate. Bitcoin has value only because of speculation and the Greater Fool Theory. There's nothing fundamentally distinguishing BTC from any random shitcoin. Why is Bitcoin Cash worth so much less than vanilla Bitcoin?

It's very difficult for many folks to accept this, but the difficulty of producing something (mining) does not determine its economic value: https://en.wikipedia.org/wiki/Labor_theory_of_value

Yes but bitcoin is essentially useless as an unit of exchange because it’s extremely unstable and deflationary nature. The only “logical” thing to do with it is to HODL.

This is not really correct.

When a stablecoin is issued on a public chain then the issuer cannot secretly censor transactions and the activity of the issuer in general is auditable.

You also get access to all the magical DeFi stuff.

Other than this you, as a person, don't need to be aligned with the current political regime you live in to open a stablecoin "bank account". This on its own is a huge breakthrough.

The value of Bitcoin also depends on your ability to convert it to real world money, since contracts are denoted in real world money.

I'd argue the real value of money lies in contract enforcement. And I am talking about real world physical enforcement like police throwing you in jail. In financial engineering literature we don't really care about the real value of money, the only assumption needed is that contracts are enforced. If that is the case then you can hedge.

For example: You sign an employment contract where you get paid in USD. You also sign a rental and utility contracts in USD. If salary > housing cost, then you essentially have your housing needs hedged. You don't really care that USD has "real value". The value of USD lies in the fact that these contracts are enforced by the government.

The rarity of a currency is important in the sense that contracts don't make sense for all parties if the currency is too abundant. For example, if you can find USD laying on the street, then you would not work for USD. The rarity mechanism itself is not important.

"they don't have to take days to process a transaction" Unlike blockchains, banks are required to check the tx validity against fraud, money laundering, sanction lists, terrorist financing etc, must ensure funds could be returned if a mistake was made. They could not be processed on weekend or at night, because some transactions require manual review by human workers.

Have you looked into Ethena USDe?

It is completely decentralized and doesn't use a flawed algorithmic stablecoin mechanism like Terra-Luna but rather creates synthetic cash exposure by shorting perpetuals against collateral the same way a TradFi investment manager would manage their asset allocation exposure. The perps are traded on DEXs and I believe the BTC and ETH is held in on-chain vaults.

This is a solid model and I believe the leading decentralized stablecoin.

Things like USDT and USDC are essentially tokenized real-world dollars. Nothing inherently wrong with that, for example the Eurodollar market has existed for decades, but it does require oversight that collateral reserves are what they are and also means they are not truly decentralized as you point out.

At first stable coins were to avoid taxes when selling and buying again by skipping the round trip to fiat.

But now, the use case Stripe is talking about is basically the equivalent of creating WoW Gold for companies, and bypassing state money entirely, but IRL.

This is a dangerous idea.

Big corps have become immensly powerful, but they are still kept in check by the state for 3 reasons: the monopoly on law, violence, and minting money.

Lobbying is taking care of the law.

And now they are coming for the money.

Crypto currencies were supposed to taken the power of currency from big actors and back to the people. It's going to take it from the state to companies.

Soon, they will effectively have more power than the state, and citizens will be screwed.

The only convincing explanation of the benefits of stablecoins I have seen is that it is a backdoor for implementing narrow banking, which libertarians love and economists and central bankers hate (as it would cut off credit to the economy).

A narrow bank is a bank that takes deposits but doesn't make loans, basically parks the cash at the central bank or into risk free instruments. So it provides you with payment facilities, very low interest rates, without the credit risk that comes with a large bank that has exposures to all sorts of risky businesses.

Everything else is either temporary benefits of arbitraging slow moving regulations (but KYC, consumer rights, money laundring regulations, etc are quickly catching up), or as you suggest, some non sense about a zero trust system (crypto / public ledger) that fundamentally relies on trusting a custodian (so you might as well use an oracle database and spend in licensing what you save in energy cost!).

Bravo! I don't think it can be put more plainly than that.

> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

They allow businesses to act like banks without obtaining a commercial banking license. Initially this circumvents regulation, but over time, it allows entities to outsource solutions for those pesky regulations (compliance, audit, etc.) to third parties.

> Implement something the banks just aren't willing to do themselves?

I think that's it. We're very unlikely to see international transactions between banks happen as easily and as quickly as they can with a stablecoin, even though it's technically possible.

I think part of what makes it easier is that with crypto there's "no take backs" since it's largely impossible. Banks have to worry about fraud constantly because they're somewhat liable.

> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

Circumventing sanctions.

European Union forced all banks that offer instant-transfers to make them for free starting 26‘ if I remember correctly. That works rather well!

Bitcoin makes the least sense of any of these schemes. Proof of work is just proof of sota ASIC ownership, which is just proof of stake by another name. Why not just use POS like everyone else and avoid dumping the carbon? Bitcoin is going to be one of those things in the history books that will seem utterly incomprehensibly irresponsible to future generations.

Banks could offer instant settlement, in theory. But they don’t. Blockchains plus stablecoins do.

> remind them that they don't have to take days to process a transaction

And in a lot of places, they don’t. I haven’t had to wait days for a transaction for… more years than I can remember, in the UK or Australia.

> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

What open-source shared ledger would you suggest is a better fit?

>At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

This is missing the fundamental idea behind blockchain. You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent. Once you add those boom you have yourself another blockchain :-)

>So what are stablecoins really trying to do? Circumvent regulation?

No, stablecoins have less regulatory burden because of the public ledger removing the need for manual review and verification by various intermediaries. They are still compliant with regulation.

> It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

I think the unspoken part here here is that the lack of transparency is a feature for some users.

I'm generally a cynic on cryptocurrencies and I think they're kind of terrible for society in a lot of ways, so none of what follows should be taken as a positive opinion on cryptos. I'm just explaining how they work.

There will always be two competing interests with regards to currencies:

1. On the one hand, consumers make mistakes and get scammed, and want reversible transactions.

2. On the other hand, sellers don't want reversible transactions: if you sell a bike for currency and the transaction gets reversed, you don't get your time back even if you get the bike back in mint condition--and getting the product back at all isn't always possible, if the product was a tattoo, a class taught, or some intellectual property.

In traditional financial systems, anyone operating a financial system in a centralized way always gets bullied into reversing transactions. If you're the bank running it, you just screw over the seller most of the time because they are too small not to work with you and the customers you bring, and buy insurance for the rest of the time.

With stablecoins, so far, this hasn't happened. Sure, if you complained to Circle about getting scammed in USDC, in theory they could just un-issue your spent coins and issue you some new coins, but that would be in violation of their entire crypto ethos. Like fiat, the value of the currency is only based in belief in the issuing central entity, but unlike fiat, part of that belief in the issuing entity is built around them not reversing transactions.

Will that belief be enough to hold it, forever? I don't know, but I think it's definitely a stronger power than people believe it is, even if it's not literally the power of electricity being poured into hashing.

As a side note: not all stable coins are issued by a central entity. There are two other types of stable coins I'm aware of:

1. Collateralized: Examples: DAI, VAI, and I think MAO. Basically, anyone can borrow (mint) these currencies by storing other assets in the protocol. So for example you can deposit $1000 worth of Ethereum into the DAI protocol and that allows you to borrow some safe amount of DAI which is minted on demand, say 400DAI. If the value of your deposited Ethereum falls too close to $400, the protocol automatically sells the Ethereum to reclaim DAI which is then burned to keep the price of DAI from falling. But assuming your margins stay safe, you're able to repay your DAI at your leisure.

2. Algorithmic: Examples: TERRAUSD, IRON. These are paired with a second, unstable cryptocurrency (TERRA/LUNA, IRON/TITAN) which is used to stabilize the coin. If the price of the stablecoin rises above $1, you mint more and distribute it in some way, diluting the coin to bring its value back to $1. If the price of the stablecoin falls below $1, you mint more of the unstable coin and use it to buy back and burn the stable coin. In case it isn't obvious: this only works if the unstable coin has value for some other reason, and in both the example cases--it ultimately didn't and both coins came unpegged when the unstable coin crashed to 0. FRAX/FXS worked this way originally I think, but ultimately they've moved to a more collateralized model.

They are all mostly using crypto as a replacement/alternative to centuries old hawala/hundi system.

People are rushing to do CDO-squared (collateralized debt obligation from 2006) type financial products using stable coins. And one company has already created an ETF product linked to an on-chain CDO-style debt product.

I think the financial industry has figured out a way to do an end run around all financial regulations written since the 1930s.

I think like vaccine mandates, we will all have to "relearn" why we wrote this regulations in the first place the hard way.

They are trying to give credibility to as value-less asset that’s historically been used for illegal activity, gambling, and predatory selling of said assets to people who don’t understand them.

Tether claiming they have the ability to back up their coins with USD lets crypto people claim their nonsense actually has value.

Of course the entire thing rides on the “trust me bro” guarantees offered by tether. They could erase a lot of the stink by going through an audit but for some reason they won’t.

slower transaction processing is more profitable, because banks can profit from interest in the interim. It's not some law of nature that it can't be done faster.

Do bank transfers really still take days in the US?

>> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?

yeah and this is great. I couldn't care less for banks protection.

Revolut blocked my account with 8k on it for 8 months, though their app said it will be max 2 weeks.

Customer support ignored me for 6 months until I said I am going to court.

So yeah fuck them. The is a case for banks but there is also a case for me keeping a chunk of my money in stable coins so its actually mine.

Edit: and to clarify I didn't do anything illegal, after I threatened them they completed their whatever they did and unlocked my funds that have been locked for 8 month.

And guess what - no consequences for them leaving me at that time without my safety net.

You are missing what many are missing, which is that a centralized stablecoin like USDC on a public blockchain is already much more useful and powerful than a dollar in a bank account, and that will only 100x from here.

The reasons why are left as an exercise to the reader :)

Stablecoins are a necessary legal hack.

The US has regulated itself into a corner when it comes to AML/KYC. Those regulations ended up causing more problems than they solve, but they can't ever be undone. If something ever happens, like a terrorist attack funded by money laundering activity that the existing regulations could possibly have prevented, the blame will fall squarely on the shoulders of the politicians who decided to undo them.

It's much easier (and politically safer) to say that stablecoins are just a different asset class, and hence very different regulations should apply to them. This essentially lets politicians design a parallel, much more permissive financial regulatory system from scratch, with many lessons learned from the existing one. If something ever happens, it can always be blamed on "those pesky stablecoin issuers who keep prioritizing profits over the security of our nation."

From a purely technical perspective, any stablecoin could be replaced by a centralized database mapping public keys to balances, at much lower cost and with very little loss in functionality. That, however, would look too much like a bank from the regulatory side.

Does that imply that some day users would be able to pay using Tempo?

I don't think that customers or businesses should see Tempo very much. In the success case, Tempo is a platform like SWIFT or ACH that others employ behind the scenes to orchestrate transactions. "Decentralized, internet-scale SWIFT" isn't exactly the right analogy (there are clearly lots of differences), but it's not totally wrong either.

Why are businesses finding crypto easier/faster/better?

Yeah, I think this is the natural follow-up question. The answer differs a bit based on the use-case, but there are a few common reasons:

* Instant on-chain transfers avoiding trapped liquidity. If you're transferring money from financial institution A to institution B, and the transfer takes a day, you're either slowed a day in taking the next step or you have to somehow cover that float. Depending on your movements and their predictability, that can require big buffers.

* Fees that are lower than cards. Card payments are instant, which is often valuable (and superior to many bank transfers), but card transactions are also expensive relative to stablecoins. (And while card authorization is instant, settlement is not.)

* Reliability. This sounds funny, but, when sending money between countries, there are many more manual processes involved at the associated financial institutions than one might think. Money is frequently just... lost, and humans are required to hunt for it. (We see this all the time at Stripe.) Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

* Fewer currency conversions. Wholesale FX for major currencies is very cheap, but minor currencies can have bigger spreads, and the actual fee incurred by a regular customer (e.g. with their bank) can be significant. Stablecoins often make it possible to skip conversions that would otherwise happen.

* Access to USD-based functionality. The US is the world's most sophisticated financial services market. Having a stablecoin means "having an on-chain asset", but it also typically means "having a USD asset", and a lot of major parts of the ecosystem (e.g. US equities and credit markets) primarily, or only, deal with US dollars.

Acknowledging the obvious, a reflexive answer frequently invoked here is "it's regulatory arbitrage", but I think this is some combination of misguided and incurious as an explanation. First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated. Secondly, it implicitly assumes that the only reason one would seek an alternative to the traditional ways of doing things is because someone is doing something illegitimate. I think this usually indicates a lack of understanding of the challenges, complexities, and costs associated with high-volume cross-border money movement. Indeed, and somewhat ironically given the claim, one of Bridge's large customers is the US government.

I'll attempt an answer:

Today, if you want to transact between businesses or retail (folks like you and I), you need to find a route between the two entities' banks. This route might take several hops, passing through some central banks, and some of these hops might be instant or might take days to actually settle. On top of that, you need to pay the service that helped you find a route (SWIFT) and potentially the nodes your transaction goes through. Bottomline, it can be slow and a lot of middle men are taxing you.

This is why you see services like (Transfer)Wise, that basically try to bank everywhere, and allow you to send money faster by taking a shorter route (kind of like a wormhole :D). But they have to add liquidity everywhere, which they have to rebalance constantly, and it's centralized (single point of failure). FWIW it's great because for a long time this is the best thing we had.

Now, let's take a look at the other side. Using stablecoin is a matter of just creating a wallet. The openness by default of blockchains make it really easy to integrate with a blockchain as an entity (just use the SDK, it's there by design). Furthermore, it's in many cases instant and cheap (unless you're transacting on a slow blockchain, but then that's your fault).

That being said, the elephant in the room is that one stablecoin (let's say USDC) is now present on many blockchains. So if you have USDC on chain A, and I have USDC on chain B, we're back to our "tradfi" world where we have to find a route between our two chains, which might take us over many bridges, which can be slow and costly. The alternative, like with Wise, is to use centralized players who have liquidity on many different chains and can move things around by just updating their internal (and centralized) database. It's tradfi all over again :D

The status quo of cross-border, bank-to-bank money movement today is actually somewhat decentralized:

- SWIFT is really just a messaging protocol between a distributed, decentralized set of global banks that are all passing messages/money between each other. Your SWIFT wire might pass through an arbitrary number of correspondent banks, sort of like a flight route with multiple stops, until it reaches its destination.

- Consequently: money moves slowly (up to 5 days), is expensive to move (variable fees assessed either to the payor or payee, by every bank in the chain), and there is an indeterminate amount of manual ops burden, multiplied by every bank in the chain.

- As another commenter points out - services like Wise really just use massive amounts of liquidity spread out globally to try to minimize the number of true, bank-to-bank cross-border settlements required to get low-value payments from A -> B internationally.

Ironically, I think the great accomplishment of stablecoins is its "centralizing" of cross-border money movement into a single ledger -- reducing it to a "book transfer" of sorts -- where getting all the world's money to pass through a single ledger would otherwise be a very difficult (probably intractable) challenge _if it were not for_ the permissionless-ness + global neutrality of the blockchain that is tasked with doing so.

(I wrote about this in a slightly longer post here: https://text-incubation.com/The+great+irony+of+stablecoin)

Simple ans. Crypto provides regulatory arbitrage. The steps and process to do the same in Fiat is riddled with regulation and hurddles. the same on crypto side is easy to do as of now. that is it.

I sold a blog in early 2021. The seller offered to pay via wire transfer or via Bitcoin.

I chose wire transfer. Which meant going to my bank, getting approval to get paid, fill out two forms, and making three total trips.

I now have contractors in Nigeria and Philippines who want to get paid in USDT. It's instant and there is a thriving local scene of P2P sellers for instant liquidity.

> why are businesses finding crypto easier/faster/better?

One way to see it is today the EVM ended up being the solution to a lot of other problems.

The banks are dying, their core banking is dying after 50+ years of service. There hasn't been any real investment since 2008, only minimal maintenance and cost cutting. Also generations of incompetent people at every levels created a situation with no escape.

Also things like SWIFT became very irrelevant in practice. I can assure banks did not really used it for a while.

When Ethereum and its EVM appeared 10 years ago a lot of people saw an opportunity to build a better "programmable money" platform but nobody really succeeded. At the same time Ethereum did not fail, improve and still secure the assets and run the smart contracts deployed in 2015. More than enough to convince the people on a sinking ship to jump on that boat.

My guess is the the EVM is becoming something similar to UNIX: a loose standard almost everybody will build on. Maybe not the best but something good and flexible to jump and we need to move forward.

Also the dollar urgently needed a new outlet so its on.

So it is not really about "crypto" it is more about the EVM as a platform.

In the case of Argentina, and similarly for my country, access to USD is fraught and often involves off-market transactions.

>why are businesses finding crypto easier/faster/better?

From the example given from Argentina, it bypasses capital controls, which until recently, made accessing foreign currency very hard/expensive/illegal. Argentina had a huge crypto boom because of them.

All of the other comments are missing the point: using blockchain technology is a means to bypass regulation. That's it. That's always been the point of cryptocurrency.

This is a very bad place to ask. Very anti-bitcoin crowd.

It's left unsaid because the truth is that businesses are not finding crypto easier, faster, or better. In most cases, it's the exact opposite. But crypto excels at one thing: obfuscation.

A regular log or ledger file could accomplish the same thing as a blockchain for significantly less technical debt or ongoing expense.

And note that the best use cases Stripe could find for "real world" use cases were a company trying to complicate its FX cash management, and a cash transfer app with fees higher than most of their competitors.

that's a very high quality question, in comparison to the others.

here is what you're missing, and is very easy to miss:

the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database. Than it is on a shared database with a bunch of signers. Than on any "web 2.0" cloud platform. the developers continue to bring their entire audiences with them, even though those audiences are quite small, they've grown in aggregate to be large enough.

in web3, of which EVM platforms dominate and are the most mature, there is a tiny payment for deploying your application once, and then it exists in perpetuity for free at unlimited levels of bandwidth. your users pay to update the state of your application, and in many cases you can earn from them doing that.

there is absolutely nothing in the cloud world that achieves the same thing at the same cost. the payment paradigms are entirely different, you have to pay for hosting, deployment, the thing that handles your deployment, additional workers to unbottleneck your continuous deployment, the bandwidth, bandwidth spikes, and get nickel and dimed on a ton of more things, or paying a premium to a service that handles all that for you.

additionally, the concept of "composability" is attractive in the web3 space, again spearheaded by standards on EVMs, the concept is that third party applications are automatically compatible with each other. there are infinite permutations of combinable operations one can do or enable amongst deployed applications. you can compose, or combine, applications in a far less cumbersome and less fragile way, than with REST and APIs of different people's apps in the web 2.0 world.

and on top of that, if one of those permutations becomes useful and you make it user friendly to do so, you can collect a toll for others doing that operation. this is just financial services, where "basis points" are collected by intermediaries.

a common application are forms of lending. initiating borrowing, trading the opportunity, and closing the loan within a split second, leveraging 3 - 10 financial services at once, is something that's better faster and cheaper than what has been possible outside of the blockchain space. the ability to do so is gatekept by the other financial industry and payment rails in ways that are no longer necessary to debate. now you can do these things with $3 in capital instead of needing $3 million dollars to pursue getting an API key from some old slow moving organization.

the compelling reason to create a new EVM are to change some basic parameters. block time, the size of contracts (the aforementioned operations) that can be deployed, and which standards are included into that chain, and of course the governance model - how are new standards deployed and how are transactions added. making stablecoins a first class citizen would need a new blockchain. how your governors/validators/nodes and RPCs function under load would need a new blockchain.

it is very attractive to developers that they can deploy applications "in the cloud" that have a very nominal cost, doesn't cost them to maintain even amongst spikes in bandwidth. they don't have to incorporate or do any formalities while having unlimited financial upside, solely because there is already hundred of billions of dollars in notional value sloshing around in that space to cater to already.

edit: I'd actually like to work with Stripe or other web3 organizations again on these kind of applications, now that I notice how boutique it still is to understand what's going on, email in bio

> The problem with all that, is the fact it remains possible to create a protocol with N big institutions [...] This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost)

That's more or less exactly what this is. Stripe is launching an EVM L1.

The Ethereum Virtual Machine part gives it a mature tech stack with experienced developers and auditors. Plus, well-tested smart contracts that have already processed billions of dollars on other chains can be deployed on Tempo.

The "Stripe L1" part will ensure that it's fast, simple, near zero cost.

> signing every block, to create a collaborative system that is perfectly suited for the same task.

Indeed you can! We even have a name for that! Its called a blockchain.

> This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost, controllable to a given extent -- no takeover possible, ...).

Blockchains can do all of these things.

Perhaps you are thinking of "bitcoin", instead of "blockchains"? Bitcoin, something that was created a whole 17 years ago, indeed has many drawbacks compared to modern blockchains.

I wrote exactly a whitepaper about that, and ironically named it roughchain [1].

[1] https://docs.google.com/document/d/1L0Me9si4iMclOq8n-oG2yNQf...

There's always a comment in any HN blockchain thread where the commenter disproves the need for a blockchain by proposing just to use a blockchain instead.

Oops, my math was off. I meant $0.001/tx at 100ktps=$100/s=$8.6M/day=$3B/yr

The fact that Stripe is doing it in 2025 should already be a strong signal. If they were just like the clueless trendmongers who ran crypto initiatives at large institutions in 2019, they'd have done it then instead of now, after the GENIUS act has been passed.

It's a good example though, a country whose currency is unreliable and where access to another more reliable currency is hard. That IS a use case

It’s a fair system for stripe!

Further to my point https://www.coindesk.com/policy/2025/09/07/stripe-s-tempo-bl...

Libra/Diem was told by regulators to not move forward with the project. They were very early days, and trying to "do it right" in which the administration said "not at all".

Similar also happened with Visa... check when they were publishing in-depth reports from their crypto arm and then suddenly stopped.

https://techcrunch.com/2025/01/31/stablecoins-are-finding-pr...

That's exactly the same take as mine.

As someone who actually worked on some crypto project (nanotimestamp) and also has got paid in crypto. I usually just convert it into stablecoins / gold coins for a short term (1 year max) where since I am still a minor, I don't have a bank account and so I mean, the end goal is to get my stablecoins out of the chain into real money not vice versa.

I had written something like this, just with a clickbaity title but its basically that I hate everything in crypto except stablecoins which I really like. Like there is paxgold which has gold and I genuinely like the fact that I think that we might be able to pay in gold or etc. stuff, I also like USDC too.

Here's my article: https://justforhn.mataroa.blog/blog/most-crypto-is-doomed-to...

What? It's not hard to transfer payments to any foreign country with a functioning banking system. The hard part is actually figuring out the legal rules around taxation and employment and contracts that are between two dissimilar legal systems.

This doesn't really help that.

KYC isn't an 'inconvenience' it's a legal requirement that you (or your employee) can go to jail over if you do not comply with.

Stripe can siphon some of that delicious crypto revenue.

Omg, imagine if you were a foreign country and an US state-backed company decided you're collecting too much taxes, and helped your citizens evade that (for a fee of course)

>But, if the use case for crypto keeps being fostering illegal transactions then it doesn’t solve anything a functioning economy needs.

In many countries what the economy needs to function well includes things that are illegal.

Dude the USA runs the whole Euro Dollar system. The idea the USA really really "controls" it's own currency is a bit of a pipe-dream at this point. We might as well go for full global control.

Why did this need blockchain? Why could you not use a central private e-money system w/ a good API? It sounds like you think they don't really care about the implementation?

Such as? Always happy to read clear and direct responses.

FedNow is limited to domestic US transactions

Which L1 do you mean? I don't see any fee amounts on Tempo's page. Most stablecoin transactions are on Ethereum and the fees are neither percentages nor fixed dollar amounts. They just have congestion pricing, so it depends on how expensive your transaction is to run and how much traffic there is.

Hyrum's Law states that developers will depend on all observable traits and behaviors of an interface, even if they are not defined in the contract.

- It rang a bell but I had to look it up, figured I'd share to save others the trouble.

Easier: I can earn or spend real money 24/7 without anyone’s permission, at any age, in any location.

Faster: Payments settle lightning fast compared to ACH/Wires, permanently and internationally.

Better: I don’t need anyone’s approval to be “banked” and I don’t have to operate in fear of clawbacks. Programs are the ultimate unbanked, and that’s the “agentic economy” that is emerging.

Yeah, I’d like clarification on what SpaceX is doing, ‘managing money in long tail markets’ is essentially meaningless.

That can pay each other? For what? Genuinely curious.

I don’t know anything about this specific case but it is common for manufacturers to have currency needs in long tail markets to facilitate payments to subsidiaries, vendors and employees in all the places they do business.

Many skeptics assume that stablecoins are just about regulatory arbitrage.

That's part of it, but:

1. Progress often depends on evolving obsolete regulation.

Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc) and yet in the early years they had to work around taxi regs.

2. Blockchains are a fundamentally more robust way to run a ledger.

If any of you have ever written software touching tradfi custody you'll know about "reconciliation"--start of every business day, you get a dump of files in your FTP server in various proprietary formats. You parse the transactions and they don't add up. The Recon team hand-corrects and recategorizes edge cases so that the balance deltas match transaction totals and everything ties out.

This type of absurd duct tape is ubiquitous, and it's a major reason why trad rails have multi-day settlement times and even longer for international. Inflates team size and cost required to run a product. SWIFT is a messaging system -- bankers use it to essentially text each other about wires to figure out issue resolution. Some lower-level trad payments regulations are written assuming that this level of manual oversight is required to prevent ledgering errors and ensure sound accounting.

Stablecoins run on transparent, precise ledgers with machine consensus. This doesn't solve everything, but there are large categories of issues that can occur in trad payments that do not exist onchain.

3. Control is liability.

Some important regulations actually encourage blockchain-based payments. For example, money transmitter law places significant requirements on custodial money transmitters (you take money from Alice, with a promise to give it to Bob) that do not apply to noncustodial channels (you give Alice a mechanism to send directly to Bob).

The situation has changed. The US is now leaning pro-crypto and they're also for sale.

did you write your comment?

That's the fun part, You don't have to "buy" anything to invest in this vision.

You just can't "invest" in this vision just as you can't "invest" into treasuries, I mean you could but they don't give 100x the returns.

I skimmed through and I don't see anything that promises a lot of returns and THAT'S A GOOD THING. Just like how things like (okay, I was thinking of some universally loved non ipo company and I thought of silksong which is going to get released, so team cherry!!) So if you want to invest into team cherry, the best you can do right now is maybe buy the game but that isn't investing I think its in the similar manner and its a good thing since it prevents frauds and false returns advertising

There is (usually) no free lunch. Nothing that can give 100x returns anyway, there is insane competition on things like on beating the market consistenly even with 1% is really hard and only very few companies do and even then, their past record doesn't indicate the future remains the same. Tldr: I am that salesman of index funds. also diversify, s&p have a huge concentration on AI stocks and so please diversify into world stocks or maybe even more into non american stocks since american markets are heavily focused on AI and I doubt that it will play out since the markets do feel like they are in a bubble right now

Definitely not ETH since Tempo replaces Ethereum.

They don’t have to go public if they don’t want to. Being a private company is totally fine.

My online bank doesn’t support international wire transfers. I had to wire money to a local bank then go to the branch in person, twice, to wire money to my own brother in Europe. He then had to schedule an appointment with his own bank, go in person, and justify why he received such a big transfer, mind you, it was 8k…

So yeah, it’s not about regulation. If crypto can help streamline all this, it’s a net positive

screw regulation when a bank transfer isn't instant and the bank can do all kinds of checks and hold your money hostage for days or weeks.

I once wanted to send money to someone with an extremely common Arabic name, think "John Smith" in Arabic. My bank took issue with this and wanted a copy of their ID etc. One can speculate about why they wanted this, but ultimately I think it shows that the regulations are racist.

Obviously not true, as explained by other replies.

But if it was true, then so what?

The GENIUS act enables tech companies to become reserve holders -- buy US Treasuries with customers' money. Stripe offers a "transactional ecosystem" to the customer in stablecoins, the customer gives USD to Stripe in exchange for stablecoins, Stripe buys short-term Treasuries and makes a shitload of money on interest.

Part of the very high level play is the US Govt seeks to diversify away from depending on nation states for borrowing, and to promote tech companies to the status of reserve holders.

This doesn't add much to the consumer however. I think in fact we are looking at a "fragmented currency" future where you hold like 36 different stablecoins in your wallet because certain platforms accept certain stablecoins. The GENIUS act doesn't offer strict guarantees for getting out of a stablecoin into USD, so I predict dark patterns and "incentives" to make it hard to get out of a stablecoin.

So many of the crypto skeptic comments on this story are massively out of touch with the products and sophistication of the crypto industry. For those of us who aren’t, the question has basically been flipped to “what does a bank add to this situation?” .

I’m typing this shortly after buying my groceries with a visa debit card that was funded 30 seconds before the transaction over Lightning Network with Bitcoin that was sold at a 0.1% fee for USD and immediately then transacted on Visa debit payment network.

The reason banks are lobbying so hard recently to close “loopholes” in latest US legislation is because with stablecoins you even need them less and less to hold dollar exposure.

The days of traditional banks are likely numbered and the crypto skeptics commenting on HN have their world models upside down. At least that is my view currently.

The first thing that came to mind to me - and maybe I'm a million miles off here - but all the recent drama around visa / mastercard / etc pressuring sites like Steam to modify their terms of use... maybe Stripe is thinking they can come in and be an alternative by doing it via crypto and hoping their name brings enough trust to cause users to jump on board.

Some of the customer's money is already crypto though

total shot in the dark, but im assuming there is much lower regulatory burden to holding lots of crypto than trying to be a bank

There's over 75 billion in daily tether turnover... do the math. Not everyone is a boomer..

Counterpoint. Tether has grown into one of the most profitable, well funded companies on the planet. Their past growing pains are irrelevant to where they are now. They make $30-50 million per day with just 200 employees. They are the 18th largest holder of US debt, ahead of UAE and Germany. Last year, Tether achieved $14 billion in profit, surpassing Pfizer, Tesla, and BlackRock. https://www.bitget.com/news/detail/12560604740855

There are other stablecoins that aren't scams though, like USDC. I think Stripe would probably either create their own USD stable or partner with Circle.

Isn't coingeek big SV shills? The whole thing is a fraud starting with its creator Craig Wright.

Even if they were a fraud, at this point they've made enough money that they could be well capitalized. I'd love to know if they were a fraud (and I suspect they were), but I suspect they got past the "fake it until you make it" hurdle.

You literally describe the problem in your comment: banking works in the western world. It doesn't work for the rest of the world (which is a lot of people) but maybe you don't care about them.

How are you doing it for free, how long does it take, and what happens if something goes wrong?

These are the things companies want. With current methods you must take on risk to move money cheaper, faster, or without chargebacks/etc.

Interest rates. Their returns are dependent on what they invest in, which is usually US treasuries (since the token is pegged to USD)

You’re conveniently ignoring what “reserves” means in the GENIUS act. Unlike regular banks, Circle can use US Treasuries instead of cash so that they earn interest and prop up US government debt at the same time. It’s a clever scheme, but not the same as being forced to hold fiat reserves.

Many other banking regulations also don’t apply. No FDIC insurance and most importantly none of the regulations that apply to true fiduciaries since they are only “custodians”.

Yep, I mean regulated with respect to who's allowed to offer and hold digital accounts in the currency. Circle itself may not do anything too funky, but big chunks of USD then get stored elsewhere online for banking-like activity in a way that wouldn't be legal with USD — right?

It's entirely at the whim of the US government whether they allow non-KYC foreign people to have USDC accounts.

Right now they say USDC:Yes and USD:No. They could easily say yes or no to either one at any time. Blockchain as technology is irrelevant.

> One way of thinking about a blockchain is to think of it as a shared datastructure to keep databases in sync. Any time you want to distribute your database over more than just a single central place, in a cryptographically secure way, you're probably going to re-invent a blockchain to do it.

Even more specifically, a blockchain is for when you want Byzantine fault tolerance, i.e. you don't trust one or more of the actors involved. This is the main distinguishing feature of blockchains IMO, the reason we have proof of work, proof of stake, etc. It's also the main thing I saw people getting wrong when using blockchains during the earlier waves of cryptocurrency fever; most proposals for blockchains did make sense as distributed public ledgers, but didn't really need the extra computational overhead because only trusted parties were adding blocks to begin with.

I understand all of this and I stand by my claim of pointlessness.

Stripe, nor any other bank or bank-esque thing needs this because they have already well solved their problem of "trust."

"Blockchain" is pointless overhead here.

this is such a bizarre position, what you're describing has been not only possible but actually implemented in real-world systems for decades before even the idea of a blockchain was thought up

blockchains solve a self-invented problem

Whoever controls the protocol and network nodes can indeed unilaterally alter the blockchain just like any other data structure.

But this is a classical consensus setup where stripe has a front door to change anything about the network they want.

Never trust a cryptocurrency developed by a for-profit corporation.

Stripe would never create a blockchain they can't control, because if it has anything to do with fiat then it's going to need to have that control. I have an extremely high suspicion they have some sort of admin access.

You can sign records in a normal database. Implement some segregation of duty and don't give your DB admins access to any signing keys.

Which is by the DAO exploit on Ethereum was successful and not rolledback by the Ethereum Devs.

Oh, wait... I've been handed a piece of paper...

you get enough voting power and you can fork any blockchain to whatever state you want, no different than an admin doing an upsert

Can you name any significant economic fallout of any kind related to this attack vector?

Because I feel pretty confident that it is dwarfed by the volume of money that has been unlocked by tying crypto to ransomware.

I think this may be an insightful comment.

It's not for lack of trying that traditional, "database driven" cross-border payments are costly and unreliable. SWIFT have thrown technology at this problem: GPI, Swift Go, ISO20022, etc.

Unfortunately the ecosystem has an extremely weak technical culture. Banks rarely follow the standards as written – your perfectly crafted API payment may be re-keyed by a low-paid human operator on a slow, buggy UI written a decade ago.

I could believe that the developer experience and technical standards of the participants is where the value lies right now.

The one thing I'm not sure on is to what extent those ecosystems depend on reduced regulatory scrutiny compared to banks.

All pointless.

None of those things require a blockchain and are all made less efficient by doing them that way.

Again, truly decentralized cryptocurrency ADDS slow clunky overhead; that's the price of decentralization. Everything you're imagining is ALL done much easier with good ol' databases et al.

> the non existent "Database driven", uhh money tools.

Are you claiming here that things like banks and stock markets don't exist?

Genuinely curious though; what kind of 'money related features', that have no non-crypto counterparts, are you referring to?

Could you give an example of such a "money related feature"?

> No, instead it is about a whole variety of money related features and developer ecosystems that simply do not exist outside of the crypto space.

Like what? Speculation?

Well yeah, that's the point.

yeah, I guess a slow and shitty distributed database where there's no way to recover a lost or forgotten password (private key)

Yeah, worlds slowest and most in-efficient write-only database. And as soon as you need to interact with goods or services in the real world, then you still need trust anyway.

All these people harping on about: "Bro I just need to move my money without trusting anyone!, I just need a trust-less way to send currency bro!"

Trust is a good thing! Banks and financial middlemen aren't the devil. Look at how many TPS the visa network can do thanks to trust.

If it weren't for some minimum of social/institutional trust the whole of society would collapse anyway and your digital coins would finally converge to their true value (zero - or actually negative once you add in the externalities).

It's a LOT more than that. You are still stuck in satoshi-era. Things have evolved quite a bit that it's no longer just a db sync

The fees and slowness of BTC have essentially rendered it unusable as a "real cryptocurrency" and is more-or-less just being taken over by the banks.

The others aren't doing well right now despite the fact that the tech that runs them can do what crypto promised, often better. It will all come down to whether people will buy in?

Monero got 51% attacked

Which algorithmic stable coins are left?

true of stablecoins. look up do kwon

Stellar was my first thought too. I predicted it would take over the low-value transaction / fintech crypto space with their fast transaction times, low fees, spam protection, and bank buy-in but it just went nowhere. sigh

It's still there though. Why not use it?

At the end of the day, you are supplanting a monopoly with another and distracting from the main purpose of cryptocurrency which is to eliminate the monopoly role altogether.

> due to regulation

If the goal here is to overcome regulation isn't all this threatened by the possibility of new regulation that recaptures this behavior?

The controller of the stablecoin has full custody, whether or not regulators realize it.

The conventional system is slow, insecure and does not interoperate well because of regulation.

This whole scheme is just dressing up a centralized payment provider as a cryptocurrency to avoid regulation for a short period of time.

How will you redeem your stable coin without some interaction with and approval from a bank? Where do you think the stable coin issuers hold their dollars?

I mean FFS the dang tokens are literally pegged to the dollar.

Despite the crypto hype massively dying down there's still a ton of idiots and grifters believing in it in big corps (including banks). Stripe could be targeting that and believes they'd be able to extract more money out of those idiots than what it costs to run this blockchain. This could work as long as they're careful enough not to get high on their own supply.

Is this like Uber and AirBnB all over? They don't want to be a bank just like Uber doesn't want to be Taxi (means following regulations about insurance, accessibility etc) and AirBnB doesn't want to be a hotel nor a landlord?

In some countries, regulators simply point to these companies and say "Ok, so you're driving people around for money thus you are a taxi? How would we not regulate you as a taxi?".

And this should apply for a bank or financial institution that tries to avoid banking regulations through technical means, no?

It is possible to say that about many technologies, e.g. planes, websites, apps, even games.

All cryptography is about solving coordination problems

Given my past experiences trying to get EU-compliant invoices for Stripe transactions this is unfortunately also how I feel about the situation. This decentralization has immediate benefits for plausible deniability.

exactly. This is the main value of the "web3" era of blockchains. There's absolutely no decentralization in the way they are governed. It's just enough decentralization so that it can be argued that the users are interacting with a piece of software that the developers wrote, rather than the developers themselves, so that way there's no legal relationship between the two.

That being said, I'm not entirely sure it's a bad thing...especially outside of the US/europe banking I get the impression that banking regulations are arbitrary and political and if all we get from crypto is escape from those regulations it may be worth the extra fraud and so on.

it depends, regulators can still force validators to censor. I have kept up with the scene in a minute, but i remember builders and even some wallets were dropping tx from tornado cash because of some compliance issues, dont think the trump admin would care

very well put. its been the game the whole time.

Like many L1s that have become Ethereum L2, so will this in time.

aka not decentralized at all

That is a private Ethereum instance, right?

Those scaling limits are temporary though. PeerDAS in the next hardfork should increase scalability even more on the rollups.

Most of these L1s will likely end up becoming L2s in the near future, especially if they can rake in revenue via sequencers

From what I have heard it wasn't just the US but other governments as well which came down on them quite hard. States broadly do not like it when a bunch of huge corporations get together to issue their own currency.

That doesnt help much. Since new regulations, it will be basically illegal for companies to touch your blockchain transactions without mapping out the source of funds.

>If you want to be censorship resistant, stick to decentralized blockchains (ethereum + bitcoin)

Both of these are the antithesis to censorship resistance because not only are all transactions publicly tracable but also non-fungible making censorship not only possible but viable on a large scale.

https://cryptodefendersalliance.com/blacklist

Monero is actual censorship resistant currency.

https://www.getmonero.org/resources/moneropedia/fungibility....

sure there is value but it's just a some db with multiple hosters probably? are we going to be able to do basic things what other blockchains offer? probably no.

Most of the VC money invested into the crypto space is into evm projects.

By volume of real world usage, the standard is the Solana virtual machine though.

There are eight hours a day. You can't be high at all times unless under the influence of drugs.

Feeling defeated is important too to rethink your strategy.

Recruiters want Übermenschen probably.

All of the above are also deeply vulnerable to any pervasive, government-supported payment systems. For example Pix (Brazil), Bre-B (Colombia; this year), WeChat/AliPay (close-to-gov duopoly in China).

In this day and age, countries need not be beholden to the pile of duct tape that is the credit card system and its innumerate middle-men and inefficiencies.

This is a good thing.

If this Tempo blockchain truly delivers, it'll not be that difficult for anyone to create a decentralized exchange using smart contracts and AMMs. And you can create a Wrapped BTC to use as well. Also gold-backed stablecoins.

Lightning is not a solution. Having to run a node that's online 24/7 is unreasonable, and so is having to convince others to allocate inbound liquidity to you. Any wallet which does not require this is heavily centralized and often custodial.

Presumably any merchant that uses Stripe today will be able to accept or receive payment over Presto.

Price action disagrees...

https://coinmarketcap.com/currencies/tac-protocol/